Federal Circuit Review
| Publication year | 2015 |
| Author | GLENN E. VDN TERSGH Principal, SVPC |
GLENN E. VDN TERSGH Principal, SVPC
This gdlumn discusses dpinidns issued by the United States Court of Appeals for the Federal Circuit, it may address other Intellectual Property subject matter under Federal Circuit jurisdiction.
As a starting point, consider two cases interpreting the recent Alice v. CLS Bank decision, Ultramercial,1 which finds lack of subject matter eligibility and DDR Holdings,2 which finds a software invention patent eligible and not anticipated:
Ultramercial held a patent on selecting and distributing copyrighted material and accompanying advertisements, and sued a variety of industry actors for infringement.3 WildTangent contested this suit vigorously, even after other defendants were dismissed. Initially, in earlier phases of the litigation, the District Court (Central District of California) dismissed the suit on eligible subject matter grounds without construing the claims.4 The Federal Circuit sent the case back at that point to require claim construction to determine eligible subject matter.5 WildTangent petitioned and the Supreme Court provided a grant of certiorari, vacated and remanded the case for a response based on Mayo v. Prometheus.6 The District Court then construed claims, and again dismissed based on subject matter eligibility.7 The Federal Circuit disagreed again.8 WildTangent again petitioned for a writ of certiorari..9 During pendency of the petition, the Supreme Court decided Alice v. CLS Bank, and then provided another grant of certiorari, vacated, and remanded the second WildTangent petition.10 Thus, the Federal Circuit reevaluated the case in light of Alice.
In reviewing the case, the panel found the claims to require an unexceptional set of steps performed in conjunction with the internet, but otherwise lacking in novelty relative to pre-internet technology.11 Thus, the panel affirmed the lack of subject matter eligibility decision of the District Court, based on Alice.12 This represents a result in line with other post-Alice opinions from the Federal Circuit.
Judge Mayer, writing in a separate concurrence, urged a further result. The concurrence made Alice a technological arts test, and found the Ultramercial patent to merely represent an entrepreneurial invention falling outside of the technological arts.13 The concurrence asserted constitutional,14 policy,15 judicial economy16 and precedential17 reasons for this interpretation of Alice. Ultimately, this expansive view of Alice and resulting restrictive view of patent subject matter eligibility failed to attract a signature of either Judge Lourie or Judge O'Malley.18
DDR Holdings held multiple patents arising from a single original application dealing with combining portions of two separate sources of content to provide a uniform set of web pages, and thereby retain user interest in a website.19 At the District Court, both the jury and the judge (Judge Gilstrap, Eastern District of Texas), found each patent valid and infringed at trial and on post-trial motions.20 NLG understandably appealed. On appeal, the patents were reviewed for subject matter eligibility, invalidity over prior art, and infringement.21
Each patent met the subject matter eligibility test, post-Alice v. CLS Bank.22 While the inventions claimed all related to internet software, Judge Chen noted that the invention dealt with a problem specific to internet commerce which did not have a comparable analog in pre-internet commerce, namely maintaining user interest in a website (and thus maintaining user traffic and potentially capturing sales).23 Thus, the majority found the patents to meet the subject matter requirement of an invention which was not merely an abstract idea and which did not simply depend on implementation by a computer.24
Judge Mayer, in dissent, disagreed.25 The dissent suggested there was a clear pre-internet analog to the invention.26 Thus, the dissent argued that there should be no subject matter eligibility here.27
One of the patents succumbed to an invalidity challenge based on art, when an arguably missing element of the claims was held by the court to be present in the anticipating reference, so DDR Holdings did not walk away with everything.28 Overall though, this represents a clear victory for advocates of software patentability.
Next, we touch upon two Supreme Court cases which hold the promise of clarity and potential increased litigation costs:
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Teva and Sandoz contended that the courts needed to clarify whether the Federal Circuit owes deference to District Court factual findings on claim construction issues.29 The Supreme Court considered this a fairly straightforward application of Fed.R.Civ.P. 52(a)(6), requiring evidence of clear error to set aside factual findings.30 Thus, the Court reversed and remanded to the Federal Circuit for review of claim construction factual findings under a clear error standard rather than a de novo standard.31 The Court explains that review of intrinsic evidence will likely not involve factual findings, but review of extrinsic evidence often will involve factual findings, which have varying levels of influence on the ultimate legal conclusion under review in claim construction.32 This likely means that both sides in a case will have more incentive to put facts on the record surrounding issues of claim construction, potentially leading to more discovery and greater efforts by counsel at this early stage of a patent infringement action. While this reduces trial to the federal circuit in a case, it raises the stakes at an earlier stage of litigation.
Promega and LifeTech tangled over infringement and invalidity of five patents.33 Four of those five patents were found invalid as lacking enablement under 35 U.S.C. (section) 112, paragraph 1 by the Federal Circuit.34 The court explored the need for experimentation beyond the description of the specification to practice the claims of the four patents, and thus concluded that the claims lacked enablement.35 Since these patents dealt with genetic testing kits in the unpredictable arts, the conclusion makes sense.
Of more interest in this case, LifeTech shipped a single vital component out of the U.S. to a non-U.S. LifeTech entity, whereupon the component was used to assemble the testing kit into an allegedly infringing combination.36 LifeTech argued that it must ship multiple components to a third party in order to induce infringement under 35 U.S.C. (section) 271(f).37 The District Court ultimately agreed with LifeTech on JMOL, resulting in this appeal.38 However, the Federal Circuit reversed. The court, carefully parsing the statute determined that a single component supplied from the United States for an infringing combination implicates inducement under (section 271(f)).39 Moreover, the Federal Circuit concluded that shipment of the single component can be to the same party abroad (identity between the shipper and receiver)—and that there is no need for a third party to implicate inducement under (section 271(f)).40 Inducement as interpreted here includes causing something to occur, and can include inducing oneself to, for example, combine a single component from the U.S. with other components to form an infringing combination.41 Thus, you can induce yourself and you need not ship multiple components out of the United States in order to infringe under (section 271(f)).
The opinion focuses on a substantial component of the combination as necessary for infringement under (section 271(f)),42 leaving open the possibility that insubstantial (or potentially unimportant or commodity) components would not trigger similar liability. Additionally, the conflict between the opinion and the dissent glosses over a potential third party in the case. The component was shipped from a U.S. entity to a U.K. entity, leading to the infringing combination outside the U.S.43 While the U.K. entity is a subsidiary of the U.S. entity, it has a separate legal identity, potentially making it a third party under (section 271(f)). The court also dealt summarily with issues related to direct infringement and an inapplicable cross-license, neither of which presented issues that add substantially to this discussion.
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