Federal Circuit Review – Issue 2 – 12-18-2013

Each week in the Federal Circuit Review, we succinctly summarize the preceding week of Federal Circuit precedential patent opinions. We provide the pertinent facts, issues, and holdings. Our Review allows you to keep abreast of the Federal Circuit’s activities – important for everyone concerned with intellectual property. We welcome any feedback you may provide.

– Joe Robinson and Bob Schaffer




Court Reverses Nonobviousness Holding by District Court in Hatch-Waxman Case

Galderma Labs., L.P. v. Tolmar, Inc., No. 2013-1034, 2013 U.S. App. LEXIS 24573 (Fed. Cir. Dec. 11, 2013) (Prost, J.). Click here for a copy of the opinion.

Tolmar, Inc. filed an Abbreviated New Drug Application (ANDA) with the FDA seeking approval to sell a generic version of Galderma’s Differin (R) Gel, used to treat acne. Galderma sued Tolmar in the District of Delaware, alleging Tolmar’s generic product would infringe claims of four Galderma patents. Tolmar argued the claims were obvious in light of prior art that disclosed the active ingredient, adapalene, with a range of concentrations covering the amount claimed by Galderma. After a bench trial, the district court found the claims to be nonobvious.

A divided panel of the Court reversed and concluded the claims were obvious and invalid. “The district court framed the obviousness inquiry as requiring Tolmar to provide motivation in the prior art to triple the concentration of adapalene from 0.1% to 0.3%. Tolmar carried no such burden.” Slip op. at 8 (emphasis added, citation omitted). In a dispute over whether there was a motivation to select the claimed 0.3% adapalene from within a range disclosed in the prior art, the burden “falls upon the patentee to come forward with evidence that (1) the prior art taught away from the claimed invention; (2) there were new and unexpected results relative to the prior art; or (3) there are other pertinent secondary considerations.” Id. at 9 (citing Novo Nordisk A/S v. Caraco Pharm. Labs., Ltd., 719 F.3d 1346, 1352–54 (Fed. Cir. 2013)). The Court concluded that the district court erred in finding that each of these factors supported nonobviousness, and held that the claims were invalid.

In dissent, Judge Newman wrote that the panel did not give enough consideration to the district court’s findings, assessments of credibility, and weight of the evidence after its eight-day bench trial. Judge Newman noted that obviousness in this case was “a close call” and turned on “findings and interpretations of biologic and medicinal evidence.”  In such a case, the “findings and rulings of the trial court warrant particular attention on appellate review.” Dissent at 1.  Rather than giving such “particular” attention, Judge Newman critiqued the panel’s “scant attention to the district court’s analysis” and its substitution of the panel’s “dismissive analysis” of the evidence.


Statute Covers Costs for Faithful and Complete Duplication of Electronic Documents, Not Preparatory or Ancillary Costs

CBT Flint Partners, LLC v. Return Path, Inc., No. 2013-1036, 2013 U.S. App. LEXIS 24759 (Fed. Cir. Dec. 13, 2013) (Taranto, J.). Click here for a copy of the opinion.

Defendants Return Path, Inc. and Cisco IrornPort Systems, LLC prevailed on summary judgment of non-infringement in a suit brought by CBT Flint Partners, LLC. The district court ruled that Return Path and Cisco were entitled to recover their costs under Fed. R. Civ. P. 54(d)(1) and 28 U.S.C. § 1920. The district court’s awarded costs, including fees the defendants had paid to their electronic discovery vendors. CBT Flint appealed the amount of the awarded costs.

Applying the Eleventh Circuit’s interpretation of  § 1920, the Court reversed in part, vacated in part, and remanded to the district court, for a recalculation of the award. The statute only permits recovery of costs “necessary to duplicate an electronic document in as faithful and complete a manner as required by rule, by court order, by agreement of the parties, or otherwise,” including when a party is obligated to produce (or accept) electronic documents in a particular format or with particular characteristics—such as metadata—intact. Slip op., at 9. In particular, such costs may include initial imaging of source media and the extraction of metadata as recoverable steps in the duplication process. Id. at 12. On the other hand, costs of “preparatory or ancillary costs commonly incurred leading up to, in conjunction with, or after duplication” are not covered by the statute. Id. at 10.

Dissenting in part, Judge O’Malley reasoned that the imaging and extraction steps are not covered by § 1920. Judge O’Malley analogized modern electronic discovery to the “traditional process of getting ready to produce paper documents in discovery,” where expenses preceding making the final produced copies are not taxable. Thus, she considered the more technologically advanced “prelude to duplication” as not within the scope of the costs statute.


ITC Cannot Base Exclusion Order on Induced Infringement Where Underlying Direct Infringement Occurs After Import

Suprema, Inc. v. ITC, Nos. 2012-1170, 2012-1026, 2012-1124, 2013 U.S. App. LEXIS 24760 (Fed. Cir. Dec. 13, 2013) (O’Malley, J.). Click here for a copy of the opinion.
Cross Match Technologies, Inc. filed a complaint with the U.S. International Trade Commission alleging that Suprema, Inc. and Mentalix, Inc. violated 19 USC § 1337(a)(1)(B)(i) by importing articles that infringe or are used to infringe three patents owned by Cross Match.  Mentalix, a U.S. company headquartered in Florida, imported fingerprint scanners and software development kits packaged with those scanners made by Suprema, a Korean company.  Mentalix then integrated the scanners with its own software.  Cross Match contended that Suprema’s scanners infringed system claims of its patents, and that use of the scanners with both parties’ software infringed certain method claims. The Commission found that executing Mentalix’s software, integrated with the imported scanners, induced infringement of the method claimed in one of the patents. Thus, the Commission issued a limited exclusion order barring import of Suprema’s scanners.

In an issue of first impression, the Court vacated the exclusion order.  At the time of importation, the scanners did not incorporate the accused software, nor rely on an infringing use.  The Court held, “[T]he statutory grant of authority in § 337 [importation] cannot extend to the conduct proscribed in § 271(b) [infringement] where the acts of underlying direct infringement occur post-importation.” Slip op. at 20. The Court explained that the Commission’s authority reaches only “the infringing nature of the articles at the time of importation, not on the intent of the parties with respect to the imported goods.” Id. at 16. With regard to induced infringement, there is no completed inducement until there has been a direct infringement. Cross Match conceded that the imported scanners did not directly infringe the claimed method at the time of importation, but only when used with domestic software  after importation.  Consequently, the Court vacated the exclusion order based on Suprema’s allegedly induced infringement.  (Other holdings in this case are not summarized in this Review.)

Dissenting in part from this holding, Judge Reyna emphasized that the Commission’s broad grant of authority by Congress indicates no prohibition of investigating acts of inducement leading to infringement.  Judge Reyna argued that the majority erred by “introduc[ing] a strict temporal limitation on the moment on which infringement liability must be ‘complete’ for purposes of the Commission’s authority to remedy violations of Section 337.”


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