Federal Circuit Review - Provided by Patterson, Belknap, Webb & Tyler LLP
The following is a review of Federal Circuit intellectual property cases decided the week ending June 7, 2002.
SUBJECT MATTER JURISDICTION OF THE FEDERAL CIRCUIT
Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., No. 01-408 (S. Ct. June 3, 2002) Opinion by Scalia; Opinion Concurring-in-Part by Stevens; Opinion Concurring in the Judgement by Ginsburg, joined by O'Connor.
Vornado appealed the Federal Circuit's vacatur of the district court's judgment. The Supreme court vacated the Federal Circuit's judgment for lack of subject matter jurisdiction and remanded with instructions for the Federal Circuit to transfer the case to the Tenth Circuit. Plaintiff Vornado asserted claims in the district court for declaratory judgment of no trade-dress infringement and for an injunction restraining Holmes from accusing Vornado of trade-dress infringement in promotional materials. Holmes asserted a compulsory counterclaim for patent infringement. The district court granted Vornado the relief it sought and stayed Holmes' counterclaim pending appeal. Holmes appealed to the Federal Circuit, which vacated the district court's order.
The Supreme Court held that the Federal Circuit lacked jurisdiction to hear the appeal. The Federal Circuit's jurisdictional grant, 28 U.S.C. § 1295(a), authorizes jurisdiction over a final decision of a district court if the court's jurisdiction was based in whole or in part on 28 U.S.C. § 1338. Section 1338(a), in turn, gives district courts original jurisdiction of civil actions "arising under" the patent laws. The Supreme Court held that Section 1338(a), like Section 1331 (the general federal question jurisdictional statute), is governed by the "well-pleaded complaint rule."
Accordingly, a case "arises under" the patent laws if a well-pleaded complaint states a cause of action based on patent law. The existence of a counterclaim based on patent law, even when compulsory, does not provide a basis for Section 1338(a) jurisdiction and therefore does not confer Section 1295(a) jurisdiction in the Federal Circuit. Because it was undisputed that plaintiff's complaint did not assert any claim arising under the patent laws, the Supreme Court ordered that the case be transferred to the regional circuit court for adjudication.
Justice Stevens issued a concurring opinion in which he explained that the jurisdiction of an appellate court is not fixed until the notice of appeal is filed. Thus, if a case began as an antitrust case, but an amendment to the complaint added a patent claim, and that claim was actually litigated, the Federal Circuit would have jurisdiction over the appeal. To the extent the Court's opinion suggested the contrary, Justice Stevens disagreed. Justice Ginsburg, with whom Justice O'Connor joined, issued a concurrence in which she concluded that a compulsory counterclaim that includes a claim "arising under" the patent laws gives the Federal Circuit jurisdiction over the case if the counterclaim is adjudicated on the merits by the district court. Because the district court did not adjudicate Holmes' patent claim, however, Justice Ginsburg concurred in the Court's judgment.
PUBLIC USE; CORROBORATION; INEQUITABLE CONDUCT
Juicy Whip, Inc. v. Orange Bang, Inc., Nos. 01-1263, -1317 (June 7, 2002) Opinion by Linn, joined by Lourie. Dissenting opinion by Mayer.
Federal Circuit Review
Juicy Whip appeals the denial of JMOL to overturn a jury verdict that U.S. Patent No. 5,575,405 (the "'405 patent") is invalid for prior public use and unenforceable for inequitable conduct. The Federal Circuit reversed, finding the '405 patent valid and enforceable, and remanded for a determination of damages.
At trial, six witnesses gave oral testimony that the invention had been in public use more than one year before the application was filed. There were no corroborating documents. The Federal Circuit found that the oral testimony failed to correlate certain claim elements with the allegedly anticipatory devices in public use. The Federal Circuit also held that oral testimony attempting to show prior public use is held to a higher standard of proof, and cited the list of credibility factors set forth in In re Reuter, 670 F.2d 1015 (CCPA 1981). Since the oral testimony did not satisfy the Reuter factors, and there were no corroborating documents, the Federal Circuit reversed.
At trial, the jury found inequitable conduct based on two declarations submitted during prosecution, and failure to disclose a draft letter. The Federal Circuit found that Orange Bang failed to present substantial evidence of materiality for one of the declarations and the draft letter, and failed to present substantial evidence of intent to mislead with respect to the second declaration, and thus set aside the judgment of inequitable conduct.
Chief Judge Mayer dissented, stating that he would affirm the judgment of invalidity based on the oral testimony of the six witnesses. In Mayer's view, the demonstrations performed by the witnesses during trial were sufficient to meet the claim limitations without documentary corroboration.
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The following is a review of Federal Circuit intellectual property cases decided the week ending July 5, 2002
Trintec Industries, Inc. v. Top-U.S.A. Corp., No. 01-1568 (July 2, 2002). Opinion by Rader, joined by Mayer and Gajarsa
Trintec appealed the district court's grant of summary judgment of anticipation. The Federal Circuit vacated the grant of summary judgment of anticipation and remanded for further proceedings, including a determination of obviousness.
Trintec's '717 patent claims a method for producing multicolor faces for watches and other instruments. The district court held that a prior art catalog by Sweda Company inherently anticipated the asserted claims. The Federal Circuit held that the district court erred in finding the Sweda catalog inherently disclosed a "color photocopier" as required by claim 3 because, contrary to the district court's claim construction, the phrase requires the ability both to print and photocopy. The Sweda catalog disclosed only a printer, not a copier. The Federal Circuit noted that although "[t]he difference between a printer and a photocopier may be minimal and obvious to those of skill in this art," "obviousness is not inherent anticipation."
The Federal Circuit further held that the district court erred in finding claim 8 anticipated because it erroneously construed the claim term "creating" to mean either "creating or providing" an instrument face. The Sweda catalog did not disclose "creating" an instrument face using a computer, as required by the claim, but rather only disclosed "providing" an instrument face design to a computer and using the computer as a conduit for printing. According to the Federal Circuit, "[i]t is irrelevant that a skilled artisan might possibly use the computer to create the final desired mage . . . . Inherency does not embrace probabilities or possibilities."
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SUBJECT MATTER JURISDICTION
Telecomm Technical Services, Inc. et al. v. Siemens Rolm Communications, Inc., No. 00-1579, -1580 (July 3, 2002).
Opinion by Gajarsa, joined by Michel and Lourie.
Telecomm sued Siemens for antitrust violations and Siemens counterclaimed for patent and copyright infringement. After grant of summary judgment on certain issues, and a jury trial on the remaining issues (including the patent infringement claims), both parties appealed to the Federal Circuit, predicating jurisdiction on the patent infringement counterclaim.
The Federal Circuit transferred the case to the Eleventh Circuit because it found it lacked appellate jurisdiction over the case under the recent Holmes decision. In Holmes, Supreme Court held that, under the well-pleaded complaint rule, the statutory phrase "arising under" does not give the Federal Circuit jurisdiction over a patent infringement counterclaim. Holmes, 122 S. Ct. at 1895.
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The following is a review of Federal Circuit intellectual property cases decided the week ending July 12, 2002.
PUBLIC USE; ON SALE
Netscape Communications Corp. v. Konrad, No. 01-1455 (July 9, 2002). Opinion by Mayer joined by Newman and Prost.
The district court granted summary judgment of invalidity under the public use and on-sale bars of 35 U.S.C. §102(b). The Federal Circuit affirmed. The Federal Circuit first held that the patentee's demonstration of his invention to the staff of the Lawrence Berkley Laboratory was an invalidating public use under because the patentee made no effort to inform the demonstration attendees of any requirement of confidentiality. The Federal Circuit disagreed that the patentee's invention disclosure submitted to the Lawrence Berkley patent department established an expectation of
confidentiality among all Lawrence Berkeley staff. The Federal Circuit also disagreed that the demonstration was an experimental use, holding that it was geared more towards making the invention commercially attractive. The Federal Circuit then held that the demonstration of the invention to the Stanford Linear Accelerator Center was an invalidating public use despite funding for the project by the Department of Energy, whose employees were
under an obligation of confidentiality to the government during all demonstrations and testing. The Court reasoned that the obligation of secrecy of others using the invention should be owed to the patentee, and not to the persons or entities providing the funding.
Finally, the Federal Circuit held that patentee's offer to set up his invention at the Superconducting Super Collider Laboratory in exchange for four months full time employment or no more than $48,000 constituted a commercial offer for sale. The court recognized that although a commercial offer for sale under §102(b) must be between two separate entities, but in this instance the Department of Energy's joint funding of both the Superconducting Super Collider Laboratory and the Lawrence Berkley Laboratory was not sufficient to render them part of the same entity.
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