Federal Circuit Review | May 2016
Federal Circuit Construes Claim Term in a Manner that Rendered Claim Language Superfluous
In SimpleAir, Inc. v. Sony Ericsson Mobile Commc’ns AB, Appeal No. 2015-1251, the Federal Circuit vacated the district court’s judgment of infringement and remanded with instructions to enter judgment of non-infringement for Google.
SimpleAir sued Google for patent infringement, alleging that Google’s Cloud Messenger Services infringed its patent. The jury found infringement and awarded SimpleAir $85 million in damages. The district court denied Google’s motions for judgment as a matter of law with respect to invalidity, infringement, and damages. Google appealed.
On appeal, the Federal Circuit overturned the district court’s construction of the term “a data channel.” In doing so, the Federal Circuit acknowledged that its new construction rendered some portions of the claim language superfluous, which is generally disfavored, but found that its new construction was how a person of ordinary skill would have understood the claims in view of the specification. The Federal Circuit then found that no reasonable jury could have found infringement under the proper claim construction and remanded with instructions to enter judgment of non-infringement for Google.
In IPR Proceedings, Petitioners Should Carefully Consider Whether to Present Redundant Anticipation and Obviousness Grounds
In HP Inc. v. MPHJ Tech. Investments, LLC, Appeal No. 2015-1427, the Federal Circuit affirmed the PTAB’s findings that all but one of the challenged claims in an IPR were anticipated.
HP petitioned for inter partes review of all claims in a patent, arguing that all claims were both anticipated and obvious. The PTAB instituted review of all claims on anticipation grounds, but did not institute based on obviousness grounds because it determined they were redundant. In its decision, the PTAB found that all claims, except Claim 13, were unpatentable as anticipated. HP appealed, challenging the Board’s decision not to institute on obviousness grounds.
The Federal Circuit held that it is barred from reviewing the Board’s decision to institute under 35 U.S.C. § 314(d). The § 314(d) bar on judicial review is not limited to the determination whether there is a reasonable likelihood that the petitioner would prevail. However, the Federal Circuit explained that HP will not be estopped from challenging claim 13 based on the obviousness ground because that ground did not become a part of the IPR.
Equitable Estoppel May Preclude an Infringement Suit When a Patent Holder Remains Silent, Knowing that its Customer Buys Non-Licensed Equipment from Competitors
In High Point SARL v. Sprint Nextel Corp., Appeal No. 2015-1298, the Federal Circuit affirmed the district court’s grant of summary judgment that the doctrine of equitable estoppel precluded prosecution of the lawsuit.
In 1995, Sprint began to build a cellular phone network. Sprint collaborated with AT&T (and its successor, Lucent) and Avaya, who were the original owners of the patents-in-suit at various times, and who also supplied equipment to Sprint for the network. As part of this collaboration, AT&T and Lucent granted licenses for the patents-in-suit to Sprint. Sprint also entered an agreement with three of its equipment vendors, Lucent, Nortel, and Motorola, which contained an understanding that each vendor’s equipment would be interoperable with the others for Sprint’s network. Sprint initially purchased licensed equipment from Lucent, but later purchased unlicensed equipment from companies like Motorola and Nortel.
After High Point acquired the patents in 2008, it immediately asserted them against Sprint. The district court granted Sprint’s motion for summary judgment that equitable estoppel barred the lawsuit reasoning that High Point’s predecessors-in-interest placed Sprint in detrimental reliance by waiting and not asserting patent rights with respect to the unlicensed equipment.
On appeal, High Point argued that equitable estoppel required Sprint to demonstrate that its predecessors-in-interest exhibited bad faith. The Federal Circuit rejected this argument, explaining that equitable estoppel only requires misleading conduct or silence. The Federal Circuit upheld the finding of equitable estoppel based on the silence of High Point’s predecessors-in-interest, who were aware of Sprint’s intent to create a network with equipment from multiple vendors. The Federal Circuit also found detrimental reliance based on testimony that Sprint had several options when building its network and would have acted differently if the threat of litigation was a possibility.
Amending Claims Through a Reexamination After a Judgment of Invalidity Does Not Necessarily Mean that Res Judicata Applies to the Reexamined Claims
In Cardpool, Inc. v. Plastic Jungle, Inc., Appeal No. 2014-1562, the Federal Circuit affirmed the district court’s denial of vacatur, concluding that the district court’s final judgment as to an original group of claims does not automatically render that judgment res judicata as to new claims granted upon reexamination.
Cardpool sued Plastic Jungle in 2012 for patent infringement. The district court granted a motion to dismiss because the claims were invalid under 35 U.S.C. § 101. Cardpool then appealed to the Federal Circuit. Prior to the Federal Circuit deciding the appeal, Cardpool filed a request for ex parte reexamination and submitted new and amended claims. Before the USPTO completed reexamination, the Federal Circuit decided the appeal and affirmed the district court’s finding of ineligibility under § 101. Several days later, the USPTO issued a notice of intent to issue a reexamination certificate to the amended and new claims. Cardpool then petitioned for rehearing, requesting that the Federal Circuit vacate the affirmance of the district court’s finding of ineligibility. The Federal Circuit granted a rehearing, vacated the affirmance, and remanded to the district court.
On remand, Cardpool and Plastic Jungle jointly moved the district court to vacate its prior judgment so that the parties could request a voluntary dismissal without prejudice. The district court declined to vacate its prior judgment and explained that it would be against the public interest to allow a losing party to displace a final judgment simply by commencing an ex parte reexamination and amending its invalid claims. Cardpool appealed.
The Federal Circuit reviewed the district court’s determination for abuse of discretion. The Federal Circuit determined that the district court did not abuse its discretion in denying the motion to vacate its judgment, explaining that the district court violated no legal right in preserving its original decision which was limited to the claims and grounds that existed at the time. However, the district court’s judgment does not automatically render that judgment res judicata as to new claims granted upon reexamination.
Federal Circuit Confirms its Prior Decision in VE Holding Corp re Venue for Patent Cases
In In re TC Heartland LLC, Appeal No. 2016-105, the Federal Circuit denied Heartland’s petition for a writ of mandamus to transfer venue from the District of Delaware to the Southern District of Indiana. The Federal Circuit also denied the petition for dismissal due to lack of specific personal jurisdiction.
Kraft Foods sued Heartland for patent infringement in the District of Delaware. Heartland, a company organized under the laws of Indiana and having its principal place of business there, moved the district court to dismiss for lack of personal jurisdiction or transfer venue to the Southern District of Indiana. The district court denied the motion.
Heartland then petitioned for a writ of mandamus to direct the district court to either dismiss or transfer the suit. Heartland first argued that it does not “reside” in Delaware for venue purposes under 28 U.S.C. § 1400(b), interpreting this statute’s phrase “established place of business” to mean corporate residence. The Federal Circuit confirmed its prior holding in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), confirming that that the definition of corporate residence in 28 U.S.C. § 1391(c) applies to § 1400. Under § 1391(c), “an entity . . . shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.”
Regarding personal jurisdiction, Heartland asserted that their sales of the accused infringing product within the state of Delaware were to fulfill a “nationwide” contract and that their sales within Delaware amounted to only 2% of their total nationwide sales. Heartland concluded from these facts that Kraft could only sue in Delaware for these 2% of sales, and if Kraft wanted to sue for all of Heartland’s sales, it would have to sue in Heartland’s state of incorporation. The Federal Circuit concluded that the Delaware sales were enough to establish minimum contacts. The Federal Circuit therefore denied Heartland’s petition for a writ of mandamus to dismiss or transfer the case.
