Federal Circuit Review – Issue 3 – 01-09-2014

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



Denial of Attorneys’ Fees Vacated for Consideration of Additional Facts Under “Exceptional Cases” Statute

Kilopass Tech., Inc. v. Sidense Corp., No. 2013-1193, 2013 U.S. App. LEXIS 25671 (Fed. Cir. Dec. 26, 2013) (O’Malley, J.). Click here for a copy of the opinion.

Kilopass sued Sidense for infringement of three patents. Earlier in 2013, the Federal Circuit affirmed the district court’s summary judgment in favor of Sidense. Sidense sought an award of attorneys’ fees under 35 U.S.C. § 285, alleging that it was the prevailing party in an “exceptional case.” The district court concluded that Sidense had not “met its burden of establishing with ‘clear and convincing evidence’ that Kilopass brought or maintained the prosecution of its patent infringement in bad faith.” Slip op. at 10 (quoting Kilopass Tech., Inc. v. Sidense Corp., No. 3:10-cv-2066-SI, 2012 U.S. Dist. LEXIS 179651, at *8, 2012 WL 6599428, at *3 (N.D. Cal. Dec. 18, 2012)).

The Federal Circuit vacated the district court’s decision and remanded for further consideration. The Court, citing Brooks Furniture Manufacturing v. Dutailier International, Inc., 393 F.3d 1378 (Fed. Cir. 2005), explained that a case is “exceptional” under § 285 only if (1) the litigation is brought in subjective bad faith and (2) the litigation is objectively baseless. Slip op. at 11–12;see also id. at 22 (“We must, and do, apply our current law, which requires proof of objective blamelessness and subjective bad faith. . . .”). In the panel’s view, the district court improperly focused on the bad faith prong of the test. The Court clarified that the bad faith prong should not be limited to “direct proof”; rather, the district court must consider the totality of the circumstances, including whether a finding of objective baselessness (under the second prong) may give rise to an inference of subjective bad faith.

The district court “prematurely ended the § 285 inquiry.” Id. at 16. Consequently, the Court vacated the denial and remanded for additional consideration “of whether Kilopass’s doctrine of equivalents theory was objectively baseless, and then, whether the totality of the circumstances demonstrates that Kilopass acted with subjective bad faith.” Id. at 28.

In a concurring opinion, Chief Judge Rader argued that a district court should be able to shift fees “when, based on the totality of the circumstances, it is necessary to prevent a gross injustice.” Slip op. at 2 (citing Eltech Sys. Corp. v. PPG Indus., Inc., 903 F.2d 805, 810–11 (Fed. Cir. 1990)).


BPAI’s Obviousness Determination Unsupported by Substantial Evidence

Institut Pasteur v. Focarino, Nos. 2012-1485, -1486, -1487, 2013 U.S. App. LEXIS 25745 (Fed. Cir. Dec. 30, 2013) (Taranto, J.). Click here for a copy of the opinion.
The Institut Pasteur (Pasteur) owns a family of three patents claiming methods and tools for site-directed insertion of genes into eukaryotic chromosomes. In 2009, three years before the three patents expired, Precision BioSciences filed a request for inter partes reexamination of the three patents. The examiner rejected most of the claims as anticipated or obvious over the prior art. Pasteur appealed to the Board of Patent Appeals and Interferences (now the Patent Trial and Appeal Board), and the Board affirmed the examiner’s rejections.

On appeal from the Board, the Federal Circuit reached a different result for each of the three patents. First, the court concluded that the appeal of one patent was moot because the claims had been substantively amended during the reexamination. Consequently, the PTO could not issue an amended claim on the now-expired patent, even if court found error in the rejection.

For the second patent, the court reversed the Board’s obviousness determination. The Board’s factual findings lacked substantial evidence because neither cited prior art reference disclosed cleaving yeast chromosomes in yeast cells. The Board then “compounded its erroneous findings by ignoring teachings” that targeting a cell’s chromosomal DNA could be toxic to the cell. Slip op. at 17. Moreover, the court concluded that Pasteur presented “compelling evidence that the industry had licensed, praised, and copied its inventions,” which served to confirm the non-obviousness of the claims at issue.

Finally, as to the third patent, the court vacated the Board’s obviousness determination and remanded to consider whether there was sufficient motivation and expectation of success with regard to the specific methods claimed.


Extraterritorial Injunction Under State Unfair Competition Law Vacated After Court Finds Appellate Jurisdiction to Hear Case

Allergan, Inc. v. Athena Cosmetics, Inc., No. 2013-1286, 2013 U.S. App. LEXIS 25746 (Fed. Cir. Dec. 30, 2013) (Moore, J.). Click here for a copy of the opinion.

Allergan accused Athena Cosmetics (Athena) of selling an eyelash conditioner that infringed the plaintiffs’ patents and was sold without FDA approval of the product. Following the district court’s claim construction, favorable to Athena, the parties stipulated to a summary judgment of noninfringement, and the court dismissed the infringement claims “without prejudice.” Subsequently, the district court granted summary judgment for Allergan on the California Unfair Competition Law (UCL) claim and ordered a nationwide permanent injunction against sales of Athena’s unapproved product. Athena challenged the district court’s summary judgment order and its holding that the Federal Food, Drug, and Cosmetic Act (FDCA) did not preempt Allergan’s UCL claim.

The Federal Circuit vacated the injunction and remanded. First, the court concluded that it had jurisdiction over the appeal even though no patent issues remained. The court concluded that the prior patent rulings in the case—the district court’s claim construction order and its summary judgment order, even without prejudice—had altered the parties’ legal rights and changed the legal status between them. Next, the court held that the FDCA did not impliedly preempt the UCL claim because the state law’s “requirements parallel the FDCA’s, making compliance with both regimes possible.” Slip op. at 8. Finally, the Federal Circuit agreed with the district court that summary judgment on the UCL claim was proper. But it vacated the nationwide injunction because the state law could only apply to regulate—or bar—conduct within its borders.


The following opinions are not reported in this newsletter:

Motorola Mobility LLC v. ITC, No. 2012-1535, 2013 U.S. App. LEXIS 24831 (Fed. Cir. Dec. 16, 2013) (affirming ITC’s determination that Motorola infringed a patent owned by Microsoft, that Motorola had not shown the asserted claims were obvious, and that Microsoft satisfied the domestic industry requirement under 19 U.S.C. § 1337(a)(2)) (Rader, C.J.). Click here for a copy of the opinion.


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