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Justin E. Gray

IP Litigation Attorney at Foley & Lardner LLP

Former Adjunct Professor at Northwestern University School of Law

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Federal Circuit Distinguishes Teva v. Sandoz

Shire Development, LLC v. Watson Pharmaceuticals, Inc. (Fed. Cir. June 3, 2015)

In this case, the Federal Circuit had previously reversed the district court's construction of two claim terms in a 2014 decision.  After the U.S. Supreme Court issued its Teva v. Sandoz decision clarifying the standard of review of claim construction on appeal, the U.S. Supreme Court vacated and remanded the Federal Circuit's 2014 decision in this case for further consideration under the revised standard of review.  The Federal Circuit subsequently held that "[b]ecause this case does not involve factual findings to which we owe deference under Teva, we again reverse the district court's claim constructions of the disputed claim terms and subsequent findings of infringement, and remand for further proceedings."

Shire had argued that because the district court "heard" testimony from expert witnesses during both a Markman hearing and at trial, the Federal Circuit must defer to the district court's claim constructions at issue on appeal under Teva.  The Federal Circuit disagreed, stating:

The Supreme Court held that we "should review for clear error those factual findings that underlie a district court's claim construction."  Teva, 135 S. Ct. at 842.  The Court did not hold that a deferential standard of review is triggered any time a district court hears or receives extrinsic evidence.  See id.  Here, there is no indication that the district court made any factual findings that underlie its constructions of "inner lipophilic matrix" and "outer hydrophilic matrix."  See J.A. 4566-67.

It will be interesting to see whether, in light of Teva v. Sandoz, district court judges will be more explicit in their Markman Orders on whether they made any factual findings so such orders are in a better position to trigger the Teva clear error standard of review.


Will Federal Circuit Respond to Supreme Court's Discussion of Federal Circuit's Inducement Reasoning?

Limelight Networks, Inc. v. Akamai Technologies, Inc. (U.S. Supreme Court June 2, 2014)

The Supreme Court's decision in this case contains the following passage, which has been described by others as a "comedic error" and "poorly written", but at the very least can be described as curious:

The Federal Circuit's contrary view would deprvie §271(b) of ascertainable standards.  If a defendant can be held liable under §271(b) for inducing conduct that does not constitute infringement, then how can a court assess when a patent holder's rights have been invaded?  What if a defendant pays another to perform just one step of a 12-step process, and no one performs the other steps, but that one step can be viewed as the most important step in the process?  In that case, the defendant has not encouraged infringement, but no principled reason prevents him from being held liable for inducement under the Federal Circuit's reasoning, which permits inducement liability when fewer than all of a method's steps have been performed within the meaning of the patent.

This language is particularly troublesome given the following language from the Federal Circuit's prior en banc opinion in the case:

To be clear, we hold that all the steps of a claimed method must be performed in order to find induced infringement, but that it is not necessary to prove that all the steps were committed by a single entity.

Though the Supreme Court's Limelight decision has been cited in over a dozen district court decisions thus far, the above language has not yet been discussed in any court opinion.  This language also was not mentioned in the oral argument before the Federal Circuit on remand of this case.  It will nonetheless be interesting to see how the Federal Circuit decides to deal with this language, if at all, in its forthcoming opinion in this case.


Another Challenge to the False Marking Provisions of the AIA Bites the Dust

Stauffer v. Brooks Brothers Group, Inc. (Fed. Cir. July 10, 2014)

In this false marking case, one of a handful of qui tam false marking cases filed before the Forest Group floodgates opened in late 2009, the Federal Circuit held that the AIA amendments to the false marking statute do not contitute an impermissible pardon and do not violate a common law principle prohibiting use of a pardon to vitiate a qui tam action once it has commenced.

Stauffer accused Brooks Brothers of falsely marking bow ties with expired patents.  While his case was pending, the AIA was signed into law which eliminated the false marking statute's qui tam provision.  In response to a request by the district court to show why Stauffer's case should not be dismissed in light of the AIA, Stauffer made two arguments.  First, he argued that retroactive application of the AIA amendments usurped the President's pardon power because Stauffer believed the amendments eliminated criminal liability for false marking.  Second, he argued that the amendments violated a common law principle prohibiting use of a pardon to vitiate a qui tam action once it has commenced.  The district court rejected both of these arguments, as well as an argument made by Stauffer for the first time in his reply brief that he had suffered a "competitive injury" because he believed Brooks Brothers' actions inflated the price Stauffer paid for his bow ties.

On appeal, the Federal Circuit first pointed to its prior decisions in the Brooks v. Dunlop and Rogers v. Tristar false marking cases, where the court held that retroactive application of the false marking amendments in the AIA did not violate the Due Process or Intellectual Property Clauses of the Constitution and that qui tam plaintiffs did not have vested rights in pre-AIA false marking lawsuits.

Regarding Stuaffer's pardon argument, the Federal Circuit quickly determined that the amendments to the false marking statute did not grant a pardon, but instead repealed a law, an action within Congress's power.  Regarding Stauffer's common law argument, the Federal Circuit held that since Stauffer does not have a vested right in his lawsuit and the AIA amendments do not constitute a pardon, the AIA amendments do not violate the common law principle relied on by Stauffer.

The court also found that Stauffer's additional arguments made for the first time in his reply brief to the district court, including his argument that he suffered a competitive injury, were waived by not properly raising them before the district court.


Nautilus v. Biosig - What Will Be The New Test For "Reasonable Certainty"?

Nautilus, Inc. v. Biosig Instrucments, Inc. (U.S. Supreme Court June 2, 2014)

As has been written about at length, the Supreme Court has rejected the "insolubly ambiguous" test finding it "does not satisfy" 35 U.S.C. 112 P2 and has instead held that "a patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of invention."  The Court explained that "[t]o tolerate imprecision just short of that render­ing a claim 'insolubly ambiguous' would diminish the definiteness requirement’s public-notice function and foster the innovation-discouraging 'zone of uncertainty,' United Carbon, 317 U. S., at 236, against which this Court has warned."

It will be interesting to see what the Federal Circuit does on remand with the Supreme Court's new standard.  Will the Federal Circuit create a new test to help both itself and lower courts determine what does and does not inform those skilled in the art with "reasonable certainty"?  Perhaps the Federal Circuit will try to formulate a test that expressly includes the idea from Exxon (with its roots in Athletic Alternatives) that "no narrowing construction can be adopted" (an idea that did not appear in the Federal Circuit's Nautilus opinion) and was explained further in a recent Federal Circuit case decided after cert was granted in Nautilus, namely Takeda v. Zydus.  While Exxon (and the "no narrowing construction" language) was cited by the Supreme Court in a footnote as an example of Federal Circuit decisions using the now-defunct "insolubly ambiguous" language, the likelihood that the Supreme Court will take another 112 P2 case in the foreseeable future is small.  Thus, what the Federal Circuit does with the Nautilus remand has the potential to be the new indefiniteness test for quite some time. 

If readers have thoughts on what the Federal Circuit may do with the Nautilus remand, I would appreciate hearing them.  Feel free to email me at


In re Packard - Standard for Indefiniteness Before the USPTO

In re Packard (Fed Cir. May 6, 2014)

In this case, the Federal Circuit considered the question of "what standard for indefiniteness should the U.S. Patent and Trademark Office ("USPTO") apply to pre-issuance claims?"  The applicant argued that the PTAB used the wrong standard for indefiniteness, finding the applicant's claims "contain[] words or phrases whose meaning is unclear" instead of the "insolubly ambiguous" standard.  The Federal Circuit affirmed in a per curiam opinion.

It is notable that this decision comes on the heels of the U.S. Supreme Court hearing oral argument in Nautilus, inc. v. Biosig Instruments, Inc.  But, the Federal Circuit reached its conclusion in In re Packard "without regard to the proper formulation of the judicially-applied indefiniteness standard that may be appropriate for post-issuance assessment of indefiniteness."

The patent application at issue related to a coin change holder.  The Examiner issued a final rejection on lack of written description, indefiniteness, and obviousness, noting that several claim limitations failed to meet the requirements of 35 U.S.C. 112(b) because they lacked an antecedent basis or were otherwise unclear.

The applicant appealed to the PTAB, which affirmed the written description and indefiniteness rejections.  For indefinitness, the PTAB used the standard in MPEP 2173.05(e), specifically "[a] claim is indefinite when it contains words or phrases whose meaning is unclear."  On rehearing, the PTAB did not modify its decision.

On appeal to the Federal Circuit, the applicant argued that the standard used by the PTAB for determining indefiniteness was incorrect and differed from the "insolubly ambiguous" standard used by the FederalCircuit.  The applicant also argued that the "insolubly ambiguous" standard would be more favorable to his case than the standard used by the PTAB.

The court stated:

We conclude that, when the USPTO has initially issued a well-grounded rejection that identifies ways in which language in a claim is ambiguous, vague, incoherent, opaque, or otherwise unclear in describing and defining the claimed invention, and thereafter the applicant fails to provide a satisfactory response, the USPTO can properly reject the claim as failing to meet the statutory requirements of 112(b).  The satisfactory response by the applicant can take the form of a modification of the language identified as unclear, a separate definition of the unclear language, or, in an appropriate case, a persuasive explanation for the record of why the language at issue is not actually unclear.


It makes good sense, for definiteness and clarity as for other validity requirements, for the USPTO initially to reject claims based on a well-founded prima facie case of lack of clarity (in its several forms) based on the perspective of one of ordinary skill in the art in view of the entire written description and developing prosecution history.  Then, if the applicant does not adequately respond to that prima facie case, to confirm that rejection on the substantive basis of having failed to meet the requirements of 112(b).

Judge Plager wrote a concurring opinion that provided a history of the law on indefiniteness as well as policy options behind the interpretative issues in claim construction disputes, which is quite interesting reading for those so inclined.

This decision has already generated, and will continue to generate, much discussion.  For example, Hal Wegner notes that "The most serious aspect of Packard from the standpoint of consequences to the patent examination system is the proposal for a two-part, piecemeal examination of the issue of indefiniteness under what is now 35 USC 112(b).  If Examiners follow the guidance of the per curiam opinion, they can pic any - or every - term in a claim which, in vacuo, may appear to be indefinite and put the burden on the applicanct to explain where in the specification - or elsewhere - the term meets the statutory requirements of Section 112(b)."  See here (posted with permission from the author).  Courtenay Brinckerhoff explains that "the Federal Circuit decision here does not appear to break much new ground, because the burden-shifting framework it supports is common to every issue that examiners raise. Examiners make rejections, applicants respond, and the process continues until agreement is reached on allowable claims, the applicant appeals to the PTAB, or the applicant gives up and abandons the application."  See here


Cybor Watch: Supreme Court to Consider De Novo Appellate Review for Claim Construction

Teva Pharms. USA, Inc. v. Sandoz, Inc. (No. 13-854)

Today, the Supreme Court granted certiorari in this case, where the petitioner has challenged the Federal Circuit's de novo review standard for claim construction.  The question presented by the petition is:

Whether a district court's factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Rule 52(a) requires.


Cybor Watch: Two Haikus Summarizing Lighting Ballast v. Universal Lighting Technologies

Lighting Ballast Control LLC v. Philips Electronics North America Corporation (Fed. Cir. Feb. 21, 2014) (en banc)

Markman: Law or fact?

Stare decisis succeeds.

Rule 52(a)?


Cybor reaffirmed.

Narrow margin: 6 to 4

SCOTUS review next?


More detailed analysis to follow...


Medtronic v. Mirowski – Supreme Court Holds Patentee Bears Burden Of Persuasion In Declaratory Judgment Action Brought By Licensee

In a unanimous decision, the U.S. Supreme Court held in Medtronic, Inc. v. Mirowski Family Ventures, LLC (No. 12-1128) that “[w]hen a licensee seeks a declaratory judgment against a patentee that its products do not infringe the licensed patent, the patentee bears the burden of persuasion on the issue of noninfringement.”  This decision reverses a 2012 decision by the Federal Circuit that in such a case the party seeking the declaratory judgment bears the burden of persuasion of proving non-infringement of the patents at issue.

The parties had entered into a patent licensing agreement in 1991.  As part of the agreement, Mirowski could give notice to Medtronic of Mirowski’s belief that a new Medtronic product infringed a Mirowski patent.  If this happened, Medtronic could either cure the nonpayment of royalties or it could pay royalties but also challenge the assertion of infringement through a declaratory judgment action.  If Medtronic chose to ignore the notice given by Mirowski, Mirowski could then terminate the license and bring an infringement action against Medtronic.  In 2006, the parties modified their agreement providing that if Medtronic chose to pursue a declaratory judgment action, Medtronic could accumulate any disputed royalties in an escrow account, with the prevailing party receiving the escrowed royalties.

In 2007, the parties were at odds over a dispute concerning seven new Medtronic products.  Medtronic then brought a declaratory judgment action in federal district court in Delaware, seeking judgment of non-infringement and invalidity of the patents at issue.  During the litigation, there was a dispute between the parties over which party bore the burden of persuasion concerning the infringement issue:  Medtronic as the plaintiff in the litigation or Mirowski as the patentee.  The district court determined that Mirowski, “[a]s the part[y] asserting infringement,” bore the burden and ultimately held after a bench trial that Mirowski had not proved infringement.

The Federal Circuit reversed, holding that it was Medtronic who bore the burden of persuasion in proving non-infringement.  The court acknowledged that normally it is the patentee, not the accused infringer, that bears the burden of proving infringement, and that this burden will not shift even where the patentee is a counterclaiming defendant in a declaratory judgment action.  But, the court ultimately determined a different rule should apply in a case such as this where the patentee is “foreclosed” from asserting an “infringement counterclaim” by the “continued existence of a license.” The case was then appealed to the U.S. Supreme Court.

Before getting to the merits of the dispute concerning the burden of persuasion, the Supreme Court briefly discussed a jurisdictional matter raised in an amicus brief.  The amicus asserted that the Federal Circuit did not have subject matter jurisdiction over the case because Mirowski’s underlying claim to which the declaratory judgment action related was a breach of contract, not a patent infringement, claim.  The Supreme Court disagreed with this characterization as the license agreement specified that Mirowski could terminate the agreement and bring a claim of patent infringement.  The Supreme Court therefore held there was subject matter jurisdiction.

Turning to the real question presented, the Supreme Court determined that “[s]imple legal logic, resting upon settled case law, strongly supports [the] conclusion” that the patentee bears the burden of persuasion regarding infringement in this type of case.  The Court noted that (1) “[i]t is well established that the burden of proving infringement generally rests upon the patentee,” (2) the Declaratory Judgment Act is only “procedural” and leaves “substantive rights unchanged,” and (3) the burden of proof is a “substantive aspect of a claim,” citing prior Supreme Court precedent.  The Court concluded that “[t]aken together these three legal propositions indicate that, in a licensee’s declaratory judgment action, the burden of proving infringement should remain with the patentee.”

The Court next considered policy considerations that ultimately led the Court to the same conclusion.  The Court determined that shifting the burden depending on the form of the action “could create postlitigation uncertainty about the scope of the patent” as it is possible that a declaratory judgment plaintiff could fail to carry the burden of persuasion of non-infringement and the patentee, in a subsequent case, could also fail to carry its burden of persuasion of infringement. Further, having the licensee bear the burden of persuasion on non-infringement could “create unnecessary complexity by making it difficult for the licensee to understand upon just what theory the patentee’s infringement claim rests.”  Finally, the Court explained that “burden shifting here is difficult to reconcile with a basic purpose of the Declaratory Judgment Act”, namely to “ameliorate the dilemma posed by putting one who challenges a patent’s scope to the choice between abandoning his rights or risking suit” (internal quotations omitted). 

The Supreme Court then discussed the Federal Circuit’s underlying opinion.  The Court disagreed that the Federal Circuit’s reliance on the Supreme Court’s 2005 decision in Schaffer v. Weast (containing language that the “ordinary default rule” is that “plaintiffs” have the “risk of failing to prove their claims”) was applicable as Schaffer was not a declaratory judgment case and that decision also described exceptions to the general rule.  The Court held that a case such as this one is an exception to the Schaffer general rule.  Next, the Court discounted the Federal Circuit’s description of its own holding as a "limited" one, explaining that “the fact that a rule’s scope is limited cannot, by itself, show that the rule is legally justified.” 

Finally, the Court discussed a concern raised in an amicus brief that the Court’s holding would burden patent owners by permitting a licensee to force a patentee into patent infringement litigation.  The Court dismissed this concern as, citing MedImmune, “litigation can occur only in the presence of a genuine dispute, of sufficient immediacy and reality, about the patent’s validity or its application” (internal quotations omitted). 

The Court concluded by noting that “[t]he public interest, of course, favors the maintenance of a well-functioning patent system.  But the ‘public’ also has a ‘paramount interest in seeing that patent monopolies … are kept within their legitimate scope.’  A patentee ‘should not be … allowed to exact royalties for the use of an idea … that is beyond the scope of the patent monopoly granted.’  And ‘[l]icensees may often be the only individuals with enough economic incentive’ to litigate questions of a patent’s scope.  The general public interest considerations are, at most, in balance.  They do not favor a change in the ordinary rule imposing the burden of proving infringement upon the patentee.” (internal citations omitted).


Eastern District of Texas Adopts Model Order to Focus Asserted Patent Claims and Prior Art References

Recently, the Eastern District of Texas adopted a "Model Order Focusing Patent Claims and Prior Art to Reduce Costs."  A copy of the Model Order can be found here.  The Model Order provides for two rounds of narrowing both asserted patent claims and prior art references during litigation.

The first round of narrowing is triggered by the close of claim construction discovery.  At that time, the patent holder must narrow its asserted claims to no more than 10 claims from each patent and no more than a total of 32 claims for all patents-in-suit.  If only one patent is asserted, the limit is modified to 15 total claims.  Fourteen days later, the defendant must narrow its asserted prior art references, with limits of 12 references against each patent-in-suit and 40 total references for all patents-in-suit.  If only one patent is asserted, the limit is modified to 18 total references. 

The second round of narrowing is triggered by the deadline to serve opening expert reports.  No later than 28 days prior to that deadline, the patent holder must further narrow its asserted claims to no more than 5 claims per patent (selected from the 10 previously identified claims) and no more than a total of 16 claims.  If only one patent is asserted, this limit is modified to 8 total claims.  Twenty-eight days later, the defendant must further narrow its asserted prior art references, with limits of 6 references against each patent-in-suit (selected from the 12 previously identified references) and 20 total references.  If only one patent is asserted, the limit is modified to 9 total references.  Each obviousness combination counts as a separate prior art reference. 

Modification of these limits is subject to Court approval if either the parties agree or one party demonstrates good cause for the proposed modification.


Do the Joinder Provisions of the AIA Encourage a Race for Early Claim Construction?

After the America Invents Act ("AIA") went into effect, plaintiffs could no longer join multiple unrelated defendants in a single patent litigation on the sole basis that each defendant allegedly infringed in the patent-in-suit.  See 35 U.S.C. 299.  As a result, we now see certain plaintiffs filing scores of lawsuits against individual defendants in a single day in the same district.

In this post-AIA world, it should now be (at least in theory) easier for such defendants to secure transfer of their cases to a different venue.  In the pre-AIA world this was more difficult because a defendant seeking transfer of a multi-defendant litigation would either need to (1) convince all the other defendants that transfer to another venue would be beneficial to all defendants; or (2) ask the Court to sever and transfer the individual defendant.  Now, defendants are not bound to their pre-AIA co-defendants and can more easily seek transfer to their preferred venue.  Given this new world, an interesting question arises:  do the joinder provisions of the AIA encourage defendants to race to a different venue to seek early claim construction?

Many times in the pre-AIA world when multiple unrelated defendants were sued together in a single case, during claim construction the defendants would jointly propose a single construction for a disputed claim term to the court.  Even in the post-AIA world we may still see this happening, especially when cases are consolidated under Rule 42 for pre-trial purposes.  Of course, while there are times when multiple defendants can agree on a single construction, there are also times when a single construction may not be as advantageous for all defendants.  In our post-AIA world, what happens when a defendant successfully gets its case transferred to a forum that conducts early claim construction?  That defendant may now hold a significant advantage against the plaintiff in its litigation as it will be better able to dictate its own proposed construction regardless of whether that proposed construction would have been amenable to the other defendants in their respective cases back in the original forum.  And, whatever the result of claim construction in the transferee forum, the original forum that still contains the vast majority of the filed cases may decide to defer to the claim construction ordered by the transferee forum.  Else the original forum could run into a situation of construing a claim term in a way that conflicts with the order already issued by the transferee forum. 

Thus, the joinder provisions of the AIA may encourage defendants who want to pursue an aggressive defense to have their cases transferred to district courts that hold early claim construction proceedings so those defendants are more in control of their proposed constructions.  Further, if the transferee court does in fact issue a claim construction order prior to the original court doing so, the defendants still sitting in the original court may be put at a disadvantage. 

These issues are even more important given the pending Lighting Ballast case at the en banc Federal Circuit which could change the standard of review for claim construction orders.