Gray on Claims New Feature: False Marking Settlement Information

Gray on Claims is now offering information on false marking settlements in a chart to be updated periodically.  The chart provides information on dates, names of false marking plaintiffs, and overall settlement amounts.  All of this information is based on publically accessible information received from Freedom of Information Act requests.  The information is available here.

Summary of False Marking Settlements May - December 2010

Based on information received from a Freedom of Information Act request, during the time period of May to December 2010, the U.S. Government has received payments from 112 false marking cases, with the payments to the government totaling approximately $3.4 million.  The median settlement is $50,000 and the mean is approximately $60,000.  The smallest settlement was $2000, and the largest was $350,000.  Only 18% of the settlements were greater than $100,000.  The following provides more detailed information:

Top Plaintiffs by Number of Settlements

1. Patent Group LLC (23)
2. Promote Innovation LLC (18)
3. Patect LLC (12)
4. Unique Product Solutions (10)
5. Tex Pat (6)
6. Patent Compliance Group (6)
7. San Francisco Technology (4)
8. Simonian (4)
9. North Texas Patent Group (4)

Top Plaintiffs by Average Settlement Amount (minimum four cases settled)

1. Simonian ($122,500)
2. San Francisco Technology ($106,787.71)
3. Promote Innovation LLC ($81,833.33)
4. Patent Compliance Group ($68,166.67)
5. Tex Pat ($71,750)
6. Patent Group LLC ($43,346.71)
7. Patect LLC ($42,645.83)
8. Unique Product Solutions ($36,425)
9. North Texas Patent Group ($30,625)

Thanks go out to Farella Braun + Martel LLP, and specifically Rod Thompson, James Morando, and Janel Thamkul for providing the raw data.

NOTE: Based on reader feedback, the author clarifies that the settlement numbers described above are meant to encompass the entire settlement amount for a case, not just the 50% that is sent to the U.S. Government.

Federal Circuit Panel Disagrees on Proper Role of Specification in Claim Construction

Arlington Industries, Inc. v. Bridgeport Fittings, Inc. (Fed. Cir. Jan. 20, 2011)

In this case, the Federal Circuit found that the district court misconstrued claim terms by importing a limitation from the specification into the claims, and vacated a grant of summary judgment.  Judge Lourie filed a dissent-in-part regarding the appropriate role of the specification in claim construction.

The patents at issue related to improved electrical connectors.  The district court construed the claim terms "spring metal adaptor" and "spring steel adaptor" from the patents as requiring a split in the adaptor.  Notably, the parties had already gone through claim construction of one of the patents-in-suit in an earlier case, and that district court did not find that the patent claims required a split adaptor.

On appeal, the Federal Circuit majority found that the district court erred by importing a "split" limitation into the claims.  The majority reasoned that only one of the four embodiments disclosed in the specification would support adding such a limitation, claim differentiation would weigh against adding the limitation, and the file history did not support such a limitation.  In addition, the majority explained that "This court has often acknowledged the fine line between reading a claim in light of the specification and importing a limitation from the specification into the claim.  Review of the intrinsic evidence reveals no intent to limit the term 'spring metal adaptor' by using it in a manner that excludes unsplit adaptors." (internal citations omitted).

In his dissent-in-part, Judge Lourie described claim construction as "[o]ne of the most difficult tasks in adjudicating patent cases."  Judge Lourie also provided the following commentary on claim construction:

But the basic mandate is for claims to be interpreted in light of the specification of which they are a part because the specification describes what the inventors invented.  The specification is the heart of the patent.  In colloquial terms, "you should get what you disclose."

The fine distinctions we often make concerning what is disclosed in a specification arise of course from how the inventors describe aspects of their invention.  They describe embodiments of the invention, preferred embodiments, specific examples, sometimes using language broader than expressed in the claims to describe embodiments, and finally, in frequent boilerplate, indicate that the invention isn't to be limited to what is expressly disclosed (as if they were unable to describe anything else they actually invented).  Questions then arise as to whether an invention is limited to a preferred embodiment, or to the disclosed embodiments, or to what the specification in some language indicates is part of the invention.

…

The problem in claim construction is thus our focus on our muddy, conflicting, and overly formulaic rules, [citing the KSR and Bilski Supreme Court decisions], when the real task of claim interpretation is to read the specification and determine what the inventors meant when they used the language they did.  Obviously the claims define the scope of protection accorded the owners of the patent.  But in construing the claims we should avail ourselves of the knowledge we glean from the patent specification to see what the inventors disclosed as their invention.  The bottom line of claim construction should be that the claims should not mean more than what the specification indicates, in one way or another, the inventors invented." (internal citations omitted)

The majority responded to Judge Lourie's dissent-in-part in a footnote, stating "The concurrence-in-part and dissent-in-part characterizes the specification as the 'heart of the patent' and, using 'colloquial terms,' states that 'you should get what you disclose.'  This devalues the importance of claim language in delimiting the scope of legal protection.  'Claims define and circumscribe, the written description discloses and teaches.'  Indeed, unclaimed disclosures are dedicated to the public."  (internal citations omitted).

2010 False Marking Year in Review, Looking Forward

In 2010, we saw a total of at least 674 new cases involving claims of false patent marking, with over half the cases filed by just eight different plaintiffs, and half the cases filed in just one district, the Eastern District of Texas.  According to public records, at least 120 of these cases have been either settled or voluntarily dismissed.

The Court of Appeals for the Federal Circuit had two decisions on this issue, Solo Cup and Brooks Brothers.  Additionally, two appeals were filed related to the pleading requirements of false marking cases (In re BP Lubricants) and the constitutionality of the false marking statute (FLFMC v. Wham-O).

Two bills were proposed in the House of Representatives to amend the false marking statute, one by Congressman Darrell Issa, and the other by Congressman Robert Latta. 

Looking forward to 2011, the filing of false marking cases has not gone down, with over 50 new cases filed in January alone.  We have seen renewed false marking legislation proposed in the House, and we may see additional guidance provided by the Federal Circuit for these cases.

NUMBER OF NEW CASES FILED BY MONTH (2010)
January - 6
February - 65
March - 66
April - 52
May - 20
June - 36
July - 61
August - 71
September - 89
October - 69
November - 57
December - 82
TOTAL - 674 cases

TOP TEN PLAINTIFFS BY TOTAL CASES FILED (2010)
1. Patent Group, LLC - 100
2. Promote Innovation LLC - 59
3. Main Hastings, LLC - 51
4. Simonian - 40
5. Unique Product Solutions, Limited - 30
6. Tex Pat, LLC - 27
7. Kilts Resources, LLC - 22
8. GHJ Holdings, LLC - 20
9. Texas Data Co., LLC - 16
10. Patent Compliance Group, Inc. - 12

TOP TEN MOST POPULAR DISTRICTS BY NUMBER OF CASES FILED (2010)
1. Eastern District of Texas - 337
2. Northern District of Illinois - 69
3. Northern District of Ohio - 42
4. Northern District of Texas - 23
5. Southern District of Illinois - 20
6. Northern District of California - 19
7. Eastern District of Pennsylvania - 14
8. Southern District of California - 13
9. Southern District of New York - 12
10. Southern District of Texas - 10

Gray on Claims, in conjunction with Docket Navigator®, is providing a false marking chart that is updated daily with new false marking cases as well as status updates on pending cases.  A downloadable PDF chart is available on this page as well including information on the specific patents and products at issue in each litigation.  Other writings on false marking can be found here.

Federal Circuit Rejects Request to Review Infringement De Novo

Uniloc USA, Inc. v. Microsoft Corporation (Fed. Cir. Jan. 4, 2011)

Perhaps lost with the focus on major pronouncements on patent damages, Uniloc nevertheless touches on an important claim construction issue as well.  In this case, the Federal Circuit rejected Microsoft's request that infringement be reviewed de novo.  The patent at issue concerned a software registration system to deter copying of software, and the accused product was Microsoft's Product Activation feature that acts as a gatekeeper to Microsoft's Word XP, Word 2003, and Windows XP software programs.

On appeal, Microsoft argued that "because there is no dispute about how the accused products work, infringement should be reviewed de novo", citing the Federal Circuit's decisions in Athletic Alts., Inc. v. Prince Mfg. Inc., where the Court stated that "[w]here, as here, the parties do not dispute any relevant facts regarding the accused product but disagree over which of two possible meanings of Claim 1 is the proper one, the question of literal infringement collapses to one of claim construction, and should thus be reviewed de novo", as well as General Mills, Inc v. Hunt-Wesson, Inc.

The Federal Circuit responded that "The cases cited by Microsoft involve a procedural posture not present in this case … the infringement issue in General Mills collapsed into claim construction because 'the parties agreed with each other and the district court about how each of two competing claim constructions would apply to the undisputed structure of the accused invention.'  In other words, the parties conceded that under one claim construction there was infringement and under the other there was non, and were arguing only over which claim construction was appropriate.  The infringement issue in Athletic Alternatives also came to this Court with the same posture … this case presents the opposite procedural posture; the claim construction itself is not contested, but the application of that claim construction to the accused device is.  Thus, this court applies the traditional rule for review of jury verdicts of factual issues discussed above."

Top 10 Posts for 2010, Ways to Follow Gray on Claims, and New Features

The following are the top 10 most popular Gray on Claims posts for 2010:

1. "Patent Marking Police" Out in Full Force (link)
2. False Marking - Senate Proposes to End False Marking Onslaught (link)
3. The New Patent Marking Police: Answering Clontech and Forest Group (link)
4. False Marking - Federal Circuit Holds Pequignot v. Solo Cup Oral Argument (link)
5. Federal Circuit Holds that False Marking Statute Applies on a Per Article Basis (link)
6. False Marking - Over 500 Suits Filed in 2010; New Bill Proposed to "Fend Off" Such Suits (link)
7. Summary of Local Patent Rules Affecting Claim Construction Practice (Part 6 of 6) (link)
8. Patent Marking Police Strike Again - 100 Companies Now Affected by False Marking Suits (link)
9. False Marking - District Court Grants Motion to Stay Pending Resolution of Stauffer v. Brooks Brothers Appeal (link)
10. Federal Circuit Affirms Wyeth v. Kappos (link)

Other popular pages on this blog for 2010 include:

• False Marking Case Information (chart provided in conjunction with Docket Navigator)
• Hal Wegner's Recent Writings (including his updated "Top 10" list)

There are many ways to follow the updates on this blog, including:

• Email Updates
• RSS Feed
• Twitter
• Facebook

Recently, I have also added Twitter "Tweet" and Facebook "Like" buttons to the bottom of each blog post and to every other page on this blog for easy sharing.

If there are any features you would like to see added to this blog, or any additional content you would like to see covered in 2011, please email suggestions to grayonclaims@gmail.com.  Thanks go out to each and every person who has taken the time to follow this blog and provide feedback.  Look for more new features to be added in 2011!

Federal Circuit Finds Plaintiff Waived Claim Construction Argument at Trial

Lazare Kaplan International, Inc. v. Photoscribe Technologies, Inc. (Fed. Cir. Dec. 22, 2010)

In this case, the Federal Circuit Found that the plaintiff waived its claim construction argument at trial where the parties had agreed on a claim construction, disagreed on the proper test to determine infringement, and did not ask the district court to further construe the claim term.  While other claim construction issues were discussed in this opinion, this post focuses on the waiver issue.  The patents at issue related to using a fixed laser to create a series of microscopic spots on the surface of gemstones such as diamonds.

The waiver issue concerned the claim term "positional accuracy of placement", which the parties agreed means that "during inscription … the center of each spot is within +/- 1.1 microns of the desired position of the spot on the diamond."  At trial, defendants argued that, in order to prove this limitation was infringed, plaintiff needed to show that each graphitized spot on the diamond was placed within +/- 1 micron of a predetermined reference point on the diamond, whereas plaintiff argued that it need only demonstrate that "when you put down a spot" you can put another spot "right next to it."  Neither party had asked the court to further construe this claim term.

Plaintiff argued on appeal that the district court erred by failing to further construe the claim term under O2 Micro.  Defendants argued that the parties did not dispute the construction of the term, but instead only the proper test to determine infringement.  The Federal Circuit agreed with the defendants, finding that the parties dispute "concerns factual questions relating to the test for infringement and not the legal inquiry of the appropriate scope" of the claim term.  The Court also pointed out that even if plaintiff was correct, it waived its argument by not raising it before the district court.  While plaintiff argued that the district court "was aware of the issue," primarily relying on two statements from the district court during trial, the Federal Circuit stated "it was incumbent upon [plaintiff] to raise its claim construction argument before the district court, and, having failed to do so, [plaintiff] cannot now resurrect that argument on appeal by pointing to ambiguous statements in the record."

Federal Circuit Uses Prosecution Disclaimer; Rejects Claim Differentiation Argument

ERBE Elecktromedizin GmbH v. Canady Tech. LLC (Fed. Cir. Dec. 9, 2010)

In this case, the Federal Circuit affirmed the district court's claim construction, finding that the claim term at issue was limited based on the file history of the patent, and rejected arguments with respect to claim differentiation and surplusage.  The patent at issue related to electrosurgical systems and methods for coagulating biological tissue with a high frequency current using argon plasma through flexible endoscopic probes.

At issue on appeal was the district court's construction of the claim term "low flow rate" as "a rate of flow less than about 1 liter/minute and producing flow velocities less than 19 km/hour such that the gas exiting through the distal end opening forms a non-laminar inert gas temperature," after finding that the patentee distinguished its invention over the prior art based on the flow rate.

On appeal, ERBE argued that the district court "failed to give the term its ordinary and customary meaning, ignored the doctrine of claim differentiation, assumed disclaimers, and erroneously imported quantitative limitations."  More specifically, ERBE argued that "the specification's exemplary flow rates are not quantitative limitations and cannot be imported into the claims because the specification uses a clear qualitative description for the term … the prosecution history here does not limit the invention because there is no express disclaimer … the district court's construction improperly reads the narrow quantitative claim limitation of [a] dependent claim … into [the] broader [independent claim] .. Resulting in the two claims having the same scope in violation of the canon of claim construction … [and] the court's construction improperly renders the express limitation 'less than about 1 liter/minute' in [the] claims … mere surplusage."

The Federal Circuit found that "the prosecution history clearly and unambiguously demonstrates that the applicants unequivocally disclaimed flow rates from 1 to 12 liters per minutes that lead to 'such velocities' of 19 through 229 km/h disclosed in the … prior art."  Regarding the claim differentiation and surplusage arguments, the Federal Circuit stated that "Generally, '[a]ll the limitations of a claim must be considered meaningful.'  However, 'no canon of [claim] construction is absolute in its application.'  Claim differentiation may be helpful in some cases, but it is just one of the many tools used by courts in the analysis of claim terms.  Similarly, surplusage may exist in some claims.  As we have stated, '[a]ll rules of construction must be understood in terms of the factual situations that produced them, and applied in fidelity to their origins.'" (internal citations omitted).  The Court then rejected ERBE arguments with respect to claim differentiation and surplusage as "the prosecution history establishes that the … prior art patent was distinguished based on this 'low flow rate' limitation and thus this term as it appears in the asserted claims is limited."

United States Files Amicus Curiae Brief Arguing that Rule 9(b) Should Apply in False Marking Cases

In response to a petition for writ of mandamus in the Federal Circuit in In re BP Lubricants USA Inc., regarding the issue of whether the pleading requirements of Rule 9(b) apply to false marking cases, the United States has submitted an amicus curiae brief that states:

The position of the United States is that, consistent with other cases "sounding in fraud," False Marking cases should be subject to the pleading requirements of Rule 9(b).  However, under the Rule, intent to deceive "may be averred generally."  This requires that "the pleadings allege sufficient underlying facts from which a court may reasonably infer that a party acted with the requisite state of mind."  Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1327 (Fed Cir. 2009).  The conclusory allegations pled in this case, i.e., that a defendant is a "sophisticated company" which "knows, or should know" that the patent at issue had expired, are insufficient to satisfy Rule 9(b)'s pleading standard, even under its relaxed standard for pleading intent.

After all, an expired patent is just as likely to be the result of inattention as an intent to deceive, and additional facts are necessary to distinguish whether the defendant acts were intentional or inadvertent.

Congress has determined, in the explicit language of the statute, that false marking under 35 U.S.C. 292(a) should be found and punished only in those cases where there was an actual intent to deceive.  Requiring a factual allegation supporting an intent to deceive, as opposed to and distinguishable from mere negligence, will support the integrity of the law and preserve the legislature's intentions by curtailing law suits lacking sufficient allegations of intentionality.  Such an approach also supports the efficiency of the judicial system by curtailing lawsuits that are little more than "fishing expeditions" by potential relators seeking expired patent markings as a basis for initiating a lawsuit without any evidence of an intent to deceive.

The amicus curiae brief can be read in full here.

Gray on Claims, in conjunction with Docket Navigator®, is providing a false marking chart that is updated daily with new false marking cases as well as status updates on pending cases.  A downloadable PDF chart is available on this page as well including information on the specific patents and products at issue in each litigation.  Other writings on false marking can be found here.

Defendant Raises Constitutional Challenge to False Marking Statute Before Federal Circuit

Recently, a defendant in a false marking case pending before the Western District of Pennsylvania (FLFMC v. Wham-O) has appealed that court's finding concerning the constitutionality of the false marking statute.  On appeal to the Federal Circuit, the defendant "asserts that, as drafted, 35 U.S.C. 292(b) violates the 'Take Care' and 'Appointments' clauses of Article II of the United States Constitution as it fails to provide for the necessary supervision of the qui tam litigant who is purporting to enforce a criminal statue on behalf of the government."  At present, the appellant's blue brief is due on January 10, 2011.

Gray on Claims, in conjunction with Docket Navigator®, is providing a false marking chart that is updated daily with new false marking cases as well as status updates on pending cases.  A downloadable PDF chart is available on this page as well including information on the specific patents and products at issue in each litigation.  Other writings on false marking can be found here.