12
EDITED BY VINCE KOVALICK This publication brings you a synopsis of patent cases decided last month by the United States Court of Appeals for the Federal Circuit based on slip opinions received from the court. You can review and download the full text of each opinion by visiting our website at www.finnegan.com FEDERAL CIRCUIT BALANCES NUANCES OF CLAIM CONSTRUCTION WITH REQUIREMENTS OF 35 U.S.C. § 112 Specification for claimed product meets § 112, ¶ 1 requirements, even though method to generate accused product was developed ten years after application was filed. Amgen, Inc. v. Hoechst Marion Roussel, Inc., No. 01-1191 (Fed. Cir. Jan. 6, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . .1 HERBICIDE-RESISTANT PLANT PATENT FAILS TO RESIST NONENABLEMENT AND NONINFRINGEMENT CHALLENGES Patent law does not support a patentee’s assertion that a patent is entitled to both a broad scope of coverage and a lower standard of enablement. Plant Genetic Sys., N.V. v. DeKalb Genetics Corp., No. 02-1011 (Fed. Cir. Jan. 13, 2003) . . . . . . . . . . . . . . . . . . . . . . . . .2 FEDERAL COPYRIGHT LAW DOES NOT PREEMPT SOFTWARE SHRINK-WRAP LICENSE After petition for rehearing and additional briefing, Court vacates its August 20, 2002, decision and issues revised opinion concluding that a state- contract claim is not preempted by federal law. Bowers v. Baystate Techs., Inc., No. 01-1108 (Fed. Cir. Jan. 29, 2003) . . . . . . . . . . . . . . . . . .3 PATENTEE PERMITTED TO PROVE LOST PROFITS In essence, the two-supplier market test collapses the first two Panduit factors into one “two suppliers in the relevant market” factor. Micro Chem., Inc. v. Lextron, Inc., No. 02-1121 (Fed. Cir. Jan. 27, 2003) . . . . . . . . . . . . . . . . . .4 LIMITED DISCLOSURE IN PATENT SPECIFICATION LIMITS SCOPE OF CLAIMS For complex biological processes, a reference to known general techniques does not establish whether or how such techniques may be success- fully adapted to a particular activity. Biogen, Inc. v. Berlex Labs., Inc., No. 01-1058 (Fed. Cir. Jan. 31, 2003) . . . . . . . . . . . . . . . . . . . . . . . . .5 ANDA SUBMISSION FOR UNPATENTED USE OF DRUG COVERED BY PATENT DOES NOT INFRINGE It is not an act of infringement to submit an ANDA for approval to market a drug for a use when nei- ther the drug nor that use is covered by any exist- ing patent and the patent at issue is for a use not approved under an NDA. Warner-Lambert Co. v. Apotex Corp., No. 02-1073 (Fed. Cir. Jan. 16, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 NOTEBOOK ENTRIES FAIL TO SHOW POSSESSION OF DNA CONSTRUCT Laboratory-notebook pages relied upon by party to interference were uncorroborated and unexplained as to content and relevance. Singh v. Brake, No. 01-1621 (Fed. Cir. Jan. 29, 2003) . . . . . . . . . . .7 A “CLASSIC EXAMPLE” OF COMPETING DAMAGES EXPERTS Each party’s expert supported his royalty determi- nation with analysis of relevant factors based on his client’s view of the disputed facts. Micro Chem., Inc. v. Lextron, Inc., No. 02-1155 (Fed. Cir. Jan. 24, 2003) . . . . . . . . . . . . . . . . . . . . . . . . .8 APPLICANT FAILED TO DEMONSTRATE CRITICALITY OF CLAIMED RANGE TO OVERCOME OBVIOUSNESS A prior art reference that discloses a range encompassing a narrower claimed range is suffi- cient to show a prima facie case of obviousness. In re Peterson, No. 02-1129 (Fed. Cir. Jan. 8, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 COURT UPHOLDS PRELIMINARY INJUNCTION IN SUNGLASSES CASE Claim limitation “vivid colored appearance” for a sunglass lens is sufficiently clear when interpreted in light of the specification. Oakley, Inc. v. Sunglass Hut Int’l, No. 02-1132 (Fed. Cir. Jan. 9, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 CORPORATION LACKED STANDING TO SUE AFTER BEING ADMINISTRATIVELY DISSOLVED State law that reinstated corporate status did not retroactively provide standing to sue. Paradise Creations, Inc. v. UV Sales, Inc., No. 02-1283 (Fed. Cir. Jan. 3, 2003) . . . . . . . . . . . . . . . . . .10 FEBRUARY 2003 The Federal Circuit Last month at Month at a Glance Washington, DC 202.408.4000 Atlanta, GA 404.653.6400 Cambridge, MA 617.452.1600 Palo Alto, CA 650.849.6600 Reston, VA 571.203.2700 Brussels + 32 2 646 0353 Taipei + 886 2 2712 7001 Tokyo + 03 3431 6943

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Page 1: Last The FederalCircuit - Finnegan · 2012-06-22 · and, thus, Amgen did not need to describe later-developed methods for preparing the compositions. Because the specification needs

EDITED BY VINCE KOVALICK

This publication brings you a synopsis of patent cases decided last month by the United States Court of Appeals for the Federal Circuit based on slip opinions received from the court. You can review anddownload the full text of each opinion by visiting our website at www.finnegan.com

FEDERAL CIRCUIT BALANCES NUANCES OFCLAIM CONSTRUCTION WITH REQUIREMENTSOF 35 U.S.C. § 112Specification for claimed product meets § 112, ¶ 1requirements, even though method to generateaccused product was developed ten years afterapplication was filed. Amgen, Inc. v. Hoechst Marion Roussel, Inc., No. 01-1191 (Fed. Cir. Jan. 6, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . .1

HERBICIDE-RESISTANT PLANT PATENT FAILS TO RESIST NONENABLEMENT AND NONINFRINGEMENT CHALLENGESPatent law does not support a patentee’s assertion that a patent is entitled to both a broadscope of coverage and a lower standard of enablement. Plant Genetic Sys., N.V. v. DeKalbGenetics Corp., No. 02-1011 (Fed. Cir. Jan. 13, 2003) . . . . . . . . . . . . . . . . . . . . . . . . .2

FEDERAL COPYRIGHT LAW DOES NOT PREEMPTSOFTWARE SHRINK-WRAP LICENSEAfter petition for rehearing and additional briefing,Court vacates its August 20, 2002, decision andissues revised opinion concluding that a state-contract claim is not preempted by federal law. Bowers v. Baystate Techs., Inc., No. 01-1108 (Fed. Cir. Jan. 29, 2003) . . . . . . . . . . . . . . . . . .3

PATENTEE PERMITTED TO PROVE LOST PROFITSIn essence, the two-supplier market test collapsesthe first two Panduit factors into one “two suppliers in the relevant market” factor. MicroChem., Inc. v. Lextron, Inc., No. 02-1121 (Fed. Cir. Jan. 27, 2003) . . . . . . . . . . . . . . . . . .4

LIMITED DISCLOSURE IN PATENT SPECIFICATION LIMITS SCOPE OF CLAIMSFor complex biological processes, a reference toknown general techniques does not establishwhether or how such techniques may be success-fully adapted to a particular activity. Biogen, Inc. v.Berlex Labs., Inc., No. 01-1058 (Fed. Cir. Jan. 31, 2003) . . . . . . . . . . . . . . . . . . . . . . . . .5

ANDA SUBMISSION FOR UNPATENTED USE OFDRUG COVERED BY PATENT DOES NOTINFRINGEIt is not an act of infringement to submit an ANDAfor approval to market a drug for a use when nei-ther the drug nor that use is covered by any exist-ing patent and the patent at issue is for a use notapproved under an NDA. Warner-Lambert Co. v.Apotex Corp., No. 02-1073 (Fed. Cir. Jan. 16, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

NOTEBOOK ENTRIES FAIL TO SHOW POSSESSION OF DNA CONSTRUCTLaboratory-notebook pages relied upon by party tointerference were uncorroborated and unexplainedas to content and relevance. Singh v. Brake, No.01-1621 (Fed. Cir. Jan. 29, 2003) . . . . . . . . . . .7

A “CLASSIC EXAMPLE” OF COMPETING DAMAGES EXPERTSEach party’s expert supported his royalty determi-nation with analysis of relevant factors based on hisclient’s view of the disputed facts. Micro Chem.,Inc. v. Lextron, Inc., No. 02-1155 (Fed. Cir. Jan. 24, 2003) . . . . . . . . . . . . . . . . . . . . . . . . .8

APPLICANT FAILED TO DEMONSTRATE CRITICALITY OF CLAIMED RANGE TO OVERCOME OBVIOUSNESSA prior art reference that discloses a range encompassing a narrower claimed range is suffi-cient to show a prima facie case of obviousness. In re Peterson, No. 02-1129 (Fed. Cir. Jan. 8, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

COURT UPHOLDS PRELIMINARY INJUNCTION INSUNGLASSES CASEClaim limitation “vivid colored appearance” for asunglass lens is sufficiently clear when interpretedin light of the specification. Oakley, Inc. v. Sunglass Hut Int’l, No. 02-1132 (Fed. Cir. Jan. 9,2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

CORPORATION LACKED STANDING TO SUEAFTER BEING ADMINISTRATIVELY DISSOLVEDState law that reinstated corporate status did notretroactively provide standing to sue. ParadiseCreations, Inc. v. UV Sales, Inc., No. 02-1283 (Fed. Cir. Jan. 3, 2003) . . . . . . . . . . . . . . . . . .10

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The Federal CircuitLast month at

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Washington, DC202.408.4000

Atlanta, GA404.653.6400

Cambridge, MA617.452.1600

Palo Alto, CA650.849.6600

Reston, VA571.203.2700

Brussels+ 32 2 646 0353

Taipei+ 886 2 2712 7001

Tokyo+ 03 3431 6943

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Federal Circuit Balances Nuances ofClaim Construction withRequirements of 35 U.S.C. § 112

Maria T. Bautista

[Judges: Michel (author), Schall, and Clevenger(dissenting)]

In Amgen, Inc. v. Hoechst Marion Roussel, Inc.,No. 01-1191 (Fed. Cir. Jan. 6, 2003), the FederalCircuit affirmed-in-part and vacated-in-part the dis-trict court’s rulings and remanded for further pro-ceedings.

Amgen, Inc.’s (“Amgen”) five patents-in-suitrelate to a non-naturally occurring protein, erythro-poietin (“EPO”), for treating patients who lack nor-mal levels of naturally occurring EPO. Amgen pio-neered a commercial process for producing EPO bytransfecting exogenous (i.e., foreign) DNA intoChinese hamster ovary cells. As a result, the cellsexpressed human recombinant EPO in significantamounts.

Hoechst Marion Roussel, Inc. and TranskaryoticTherapies, Inc. (collectively “TKT”) later developedanother method to produce EPO by using anendogenous (i.e., naturally occurring) EPO gene inhuman cells. TKT transfected a viral promoter andother DNA to alter the endogenous EPO gene,thereby causing the human cells to produce EPO ingreater abundance.

Amgen’s asserted claims are not limited to theuse of exogenous DNA or nonhuman cells.However, TKT alleged that Amgen’s specificationlimited the invention, hence the claims, to the useof exogenous DNA, pointing, e.g., to a descriptionof EPO as being “uniquely characterized . . . [as] theproduct of prokaryotic or eukaryotic host expres-sion . . . of exogenous DNA sequences.” TheFederal Circuit disagreed that the claims should beso limited. Relying in part on the doctrine of claimdifferentiation, the Court found that a nonassertedclaim reciting “exogenous DNA” provided a rebut-table presumption that the asserted claims have adifferent scope. Additionally, the Court did notapply much weight to the Examiner’s remarks com-menting that the application taught only cells trans-formed with exogenous DNA, because theExaminer eventually allowed broader claims.

The Federal Circuit also upheld the districtcourt’s construction that “non-naturally occurring,”“vertebrate cells,” and “mammalian cells” shouldbe given their ordinary and customary meaning toencompass the use of human cells. Amgen’s speci-fication disclosed the use of human cells in cultureand the Court found no record of Amgen’s cleardisavowal of human cells.

The Federal Circuit affirmed the district court’sholding that Amgen’s failure to describe the use ofendogenous DNA in its specification did not invali-date the claims for lack of written description. TheFederal Circuit agreed with the district court thatthe claims at issue were directed to compositions,and thus the written description inquiry need notaddress how the product was made or any futuredevelopments of the process for making EPO.

The Court also found that Amgen’s specifica-tion sufficiently described all vertebrate and mam-malian cells and did not expressly exclude the useof exogenous human EPO DNA in human cells orendogenous DNA. Even though the specificationdescribed only two species of vertebrate or mam-malian cells, neither of which were human cells, theCourt found that one of ordinary skill in the artcould recognize the identity of the members of thegenus, including human cells. Moreover, the Courtfound that vertebrate or mammalian cells did notrelate to new or unknown biological species thatcould be miscomprehended by one of ordinary skillin the art, unlike the technology in Regents of theUniversity of California v. Eli Lilly & Co., 119 F.3d1559 (Fed. Cir. 1997). There, the claims required aprecise definition of the DNA sequence itself. TheCourt found this distinct from Amgen’s claims,which related to the EPO-producing cell and not tothe DNA itself.

TKT cited Gentry Gallery, Inc. v. Berkline Corp.,134 F.3d 1473 (Fed. Cir. 1998), to support its posi-tion that Amgen’s failure to explicitly claim the useof exogenous DNA omitted an “essential” feature ofthe invention. The Gentry court had invalidated theclaims for lack of written description because thepatent did not adequately describe a sectional sofahaving reclining controls in a location other than onthe console. The Court found that Amgen’sallegedly limiting statements in the specification didnot rise to the level of the Gentry specification,which expressly limited the location of the controlsto the only possible location. In contrast, Amgen’sinvention was not about sequence location, butrather, it was about the production of human EPOusing those sequences, according to the Court.

The Federal Circuit found certain compositionclaims enabled even though the claims coveredcompositions derived from TKT’s endogenous DNAmethod developed after Amgen’s application wasfiled. Again, the Court determined that themethod for making the composition was immaterialto the enablement inquiry for a composition claim,and, thus, Amgen did not need to describe later-developed methods for preparing the compositions.Because the specification needs only to teach onemode of making and using a claimed composi-tion—a requirement Amgen satisfied—the Court

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stated that Amgen’s failure to describe endogenousactivation was legally irrelevant.

Amgen was also entitled to claims covering all“vertebrate cells” able to produce certain levels ofhuman EPO, even though Amgen only describedone technique for making the claimed EPO-producing cell. Although disclosing only one ortwo species may not enable a broad genus, theCourt found that Amgen easily bridged any gapsbetween the disclosure and the claim scope,because expert testimony and postfiling publica-tions established that the skilled artisan could havereadily used various vertebrate and mammalian cellsto produce human EPO and could have determinedwhether certain promoter and vertebrate cellswould work.

With regard to validity based on prior art, theCourt concluded that prior art patents are pre-sumed enabled for both claimed and unclaimedsubject matter. The Court noted that the PTO canpresume a cited prior art patent is operable, thusshifting the burden to the applicant to rebut thispresumption. Similarly, the Court reasoned, districtcourts should be entitled to presume enablementfor the entire patent disclosure. A patentee canovercome this presumption by providing persuasiveevidence of nonenablement. The Federal Circuitthen found that the district court had improperlyplaced the burden of rebuttal on TKT, although thiswas harmless error. The Court, nonetheless,remanded the novelty issue to the district court inlight of a new claim construction.

Amgen’s failure to identify a standard test fordetermining whether “glycosylation . . . differs fromthat of human urinary erythropoietin” renderedthose claims invalid for indefiniteness under § 112,second paragraph. The specification describesthree different methods for measuring glycosyla-tion, but the district court found the claims not lim-ited to those methods. Amgen contended that oneof ordinary skill in the art could identify a standardtest based on its specification. Evidence, however,showed that the urinary EPO itself, which was thestandard for comparison, produced variable glyco-sylation patterns. For example, experimentsshowed different glycosylations for two urinary EPOsamples prepared from the same batch of startingmaterials. In light of the variability of the standardand Amgen’s failure to teach a standard test for gly-cosylation, the Court found the claim indefinite asno narrowing construction could be properly adopted.

Herbicide-Resistant Plant PatentFails to Resist Nonenablement andNoninfringement Challenges

Timothy B. Donaldson

[Judges: Michel (author), Newman, and Prost]

In Plant Genetic Systems, N.V. v. DeKalb GeneticsCorp., No. 02-1011 (Fed. Cir. Jan. 13, 2003), theFederal Circuit affirmed the district court’s rulingthat certain claims of Plant Genetic Systems, N.V.’s(“PGS”) U.S. Patent No. 5,561,236 (“the ’236patent”) were invalid for lack of enablement andthat the remaining asserted claims of the ’236patent were not infringed.

The ’236 patent claims a priority date of March11, 1987, and is directed to transgenic plant cells,plants, and seeds that contain an herbicide-resistantgene. DeKalb Genetics Corporation (“DeKalb”)makes and sells transgenic corn seeds that containan herbicide-resistant gene. PGS sued DeKalb forinfringement the day the ’236 patent issued.

The ’236 patent describes genetically engi-neered plant cells that express a gene encoding aprotein that prevents herbicides, such as bialaphosor glufosinate, from blocking the activity of gluta-mine synthetase. As a result, plants containingthese genetically modified cells can grow in thepresence of these glutamine-synthetase inhibitors,while other surrounding plants or weeds die.Claims 1-5 and 10-11 (“the cell claims”) are direct-ed to cell, tissue, and culture claims. The cell claimsdepend from claim 1, which is directed to a plantcell comprising a heterologous DNA encoding aprotein that inactivates a glutamine-synthetaseinhibitor in the plant cell. Claims 8-9 and 12-15(“the plant and seed claims”) are directed to plantsand seeds consisting of the cells of claim 1, wherethe plant or seed is “susceptible to infection andtransformation by Agrobacterium and capable ofregeneration thereafter.”

A key issue in this case was the scope of theterms “plant” or “plant cell” in the claims.Flowering plants can be broadly categorized aseither monocotyledons (“monocots”) or dicotyle-dons (“dicots”), based on whether the initialseedling develops one leaf (monocot) or two leaves(dicot). In the ’236 patent, all the working exam-ples involve dicots. DeKalb’s transgenic corn, onthe other hand, is a monocot.

The district court concluded that the cell claimswere invalid for lack of enablement because it

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would have required undue experimentation as ofMarch 11, 1987, to carry out stable gene transfor-mation in monocots. On appeal, PGS argued thatthe district court’s invalidity decision should bereversed because the district court (1) failed tomake any findings regarding the pioneering natureof the claimed invention; (2) improperly shifted theburden of proof by requiring the patentee to estab-lish enablement; (3) failed to consider all relevantevidence; and (4) improperly relied on posteffectivefiling date work in evaluating enablement. TheFederal Circuit considered each of these argumentsand found none of them persuasive.

First, the Federal Circuit found no precedent tosupport PGS’s argument that a “pioneering” patentis entitled to a lower standard of enablement.Accordingly, the district court did not err by notmaking any findings regarding the “pioneering”status of the ’236 patent.

Next, PGS argued that the district court hadimproperly shifted the burden of proof to PGS byusing In re Goodman, 11 F.3d 1046 (Fed. Cir. 1993)as a starting point for the state of the art in 1985regarding Agrobacterium-mediated transformationof corn and then looking for evidence between1985 and 1987 to alter the Goodman conclusionthat reliable transformation techniques for mono-cots did not exist in 1985. The Federal Circuitrejected this argument, finding that the districtcourt did not exclude any evidence that couldrebut the findings of Goodman and that the districtcourt’s search for evidence of enablement between1985 and 1987 did not shift the burden to PGS,but rather indicated the strength of the nonenable-ment evidence.

The Federal Circuit also rejected PGS’s argu-ment that the district court did not consider certaindocuments cited by PGS, observing that the districtcourt’s failure to cite every piece of evidence in itsopinion does not, by itself, establish that the evi-dence was not considered. Rather, a presumptionexists that the fact finder reviewed all the presentedevidence unless explicitly expressed otherwise.

Finally, the Federal Circuit found that the dis-trict court had properly relied on post-1987 work asevidence of the state of the art in 1987. TheFederal Circuit agreed with the district court thatthe reporting of a first successful monocot transfor-mation after 1987 suggests failure or difficulty in orbefore 1987.

PGS also appealed the district court’s claimconstruction for the plant and seed claims andsought reversal of the district court’s noninfringe-ment decision. Based on the specification andprosecution history of the ’236 patent, the districtcourt construed the limitation “susceptible to infec-

tion and transformation by Agrobacterium andcapable of regeneration” as excluding monocots.In particular, during prosecution of the ’236 patent,the Examiner rejected the plant and seed claims asnonenabled for monocots, including corn. PGSovercame the rejection by adding the limitation atissue. Accordingly, the district court held thatDeKalb’s monocot corn products did not infringethe plant and seed claims of the ’236 patent.

On appeal, PGS argued that the district courthad ignored the plain meaning of the claim lan-guage, which covers any plant, monocot, or dicot.The Federal Circuit, however, disagreed. Relying onthe prosecution history alone, it held that the dis-trict court did not err in its claim construction.Finally, the Federal Circuit rejected PGS’s argumentthat the district court had erred in consideringextrinsic evidence to construe the plant and seedclaims. Here, the district court properly consultedthe intrinsic evidence and then considered extrinsicevidence to ensure that its claim interpretation wasnot inconsistent with the understanding in the rele-vant technical field.

Federal Copyright Law Does NotPreempt Software Shrink-WrapLicense

Donald D. Min

[Judges: Rader (author), Clevenger, and Dyk(dissenting)]

In Bowers v. Baystate Technologies, Inc., No. 01-1108 (Fed. Cir. Jan. 29, 2003), the Federal Circuitissued a revised opinion vacating its original opin-ion entered August 20, 2002, Bowers v. BaystateTechnologies, Inc., 302 F.3d 1334 (Fed. Cir. 2002).In the revised opinion, the Federal Circuit furtherclarified its reasoning as to why Harold L. Bowers’sshrink-wrap license agreement (“the Agreement”)was not preempted by the federal Copyright Act.In addition, the Federal Circuit again affirmed thejury’s verdict that Baystate Technologies, Inc.(“Baystate”) had breached the Agreement andagain reversed the verdict that Baystate hadinfringed Bowers’s U.S. Patent No. 4,993,514 (“the’514 patent”).

Bowers sold a bundle of computer-aideddesign (“CAD”) programs called the Designer’sToolkit, and the Agreement prohibited any reverseengineering of the programs in the Designer’sToolkit. In addition, the Designer’s Toolkit includeda user-template feature that was claimed by the

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‘514 patent. Baystate obtained copies of theDesigner’s Toolkit, reverse-engineered many of itsfeatures, and introduced its own product calledDraft-Pak version 3.

In May 1991, Baystate sued Bowers for a DJthat, among other things, its products did notinfringe the ‘514 patent. Bowers counterclaimedfor copyright infringement, breach of contract, andpatent infringement. A jury found for Bowers andawarded damages for each of the counterclaims.The district court, however, set aside the copyrightdamages as duplicative of the contract damages.Baystate appealed, arguing that the Copyright Actpreempted Bowers’s state-law claim for breach ofthe Agreement. Bowers also appealed, arguing thatthe copyright damages should not have been setaside.

In its first opinion entered August 20, 2002,the Federal Circuit held that, under First Circuit law,the Copyright Act did not preempt the state-lawbreach of contract claim. The Court reasoned thatthe First Circuit would hold that the Copyright Actdoes not preempt contractual restraints on copy-righted articles because a state-law contract claimrequires proof of extra qualitative elements, such asmutual assent and consideration, that are beyond afederal-copyright claim. Therefore, the Court con-cluded that the First Circuit would have found nopreemption of the Agreement.

In its revised opinion entered January 29, 2003,the Court further clarified that it left unaltered theconclusions reached in Atari Games Corp. v.Nintendo of America, Inc., 975 F.2d 832 (Fed. Cir.1992), where it held that the Copyright Act definedthe circumstances in which reverse engineering of acomputer program was considered fair use. TheCourt noted that, in the present case, its applica-tion of First Circuit law was for determiningwhether the state-law contract claim was distin-guishable from the federal-copyright claim and hadnot changed the federal-law definition of fair use.Therefore, the Court concluded that the findings ofAtari were not altered by the present decision.

In addition, the Federal Circuit acknowledgedthat the Fifth Circuit had held that the federalCopyright Act preempted a state law prohibiting allcopying of a computer program. The FederalCircuit found, however, that the First Circuit wouldnot extend the Fifth Circuit’s ruling to preempt acontract between private parties. The FederalCircuit found that the First Circuit would hold thatprivate parties to a contract are allowed to waivetheir rights to reverse-engineer a product underexemptions of the Copyright Act. Therefore, theFederal Circuit concluded that the Agreement wasnot preempted under First Circuit law.

Having settled the preemption issue, theFederal Circuit found that substantial evidence sup-ported the jury’s verdict of breach of contract.Among other things, the Court noted that therecord showed the extensive similarities betweenthe Designer’s Toolkit and Baystate’s product,including the same unusual, idiosyncratic designchoices and inadvertent design flaws. Therefore,the Court agreed that the evidence showedBaystate had reverse-engineered the Designer’sToolkit in violation of the Agreement.

Concerning patent infringement, the Courtconstrued the claims differently than did the districtcourt and concluded, given that construction, thatno reasonable jury could have found infringement.The Court also found that the district court had notabused its discretion in omitting the copyrightdamages since both the contract and copyrightdamages arose from the same copying by Baystate.

Judge Dyk concurred-in-part, but dissentedwith the majority insofar as it holds that the con-tract claim is not preempted by federal law. Heconcluded, based on the petition for rehearing andopposition, that a state is not free to eliminate thefair-use defense provided under federal copyrightlaw. He argued that, unlike a negotiated contract,shrink-wrap licenses allow a copyright holder tounilaterally eliminate the fair-use defense.

Patentee Permitted to Prove LostProfits

Gordon P. Klancnik

[Judges: Rader (author), Schall, and Bryson]

In Micro Chemical, Inc. v. Lextron, Inc., No. 02-1121 (Fed. Cir. Jan. 27, 2003), the Federal Circuitreversed the district court’s judgment that lost prof-its were not available, vacated the reasonable royal-ty award, and denied the patentee’s request for anew judge on remand.

Micro Chemical, Inc. (“Micro Chemical”) suedLextron, Inc. (“Lextron”) over fourteen years agofor infringing U.S. Patent No. 4,733,971, whichrelates to systems using weight to measure and dis-pense microingredients, such as medicines andnutritional supplements, added to livestock andpoultry feed. Both parties provide these systems tofeedlots for free, expecting that each feedlot will, inturn, purchase its microingredients from whichevercompany provided the equipment. Two priorappeals to the Federal Circuit discussed validity andinfringement—this appeal discussed damages. Inparticular, the lower court determined that MicroChemical was not entitled to lost profits, because it

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could not prove “but for” causation using either thePanduit test or the two-market supplier test.

More specifically, the district court ruled thatMicro Chemical could not prove two of the fourPanduit factors—the absence of noninfringing substi-tutes and demand for the patented product. Withrespect to the alleged absence of noninfringing sub-stitutes, the Court explained that a substitute, eventhough not on sale during the infringement, mayaffect the damages calculation only if the materialand know-how of the substitute were readily avail-able. In this case, the substitute, which took Lextronover thirteen hundred hours to design and test, wasnot readily available. Not only did it require special-ly manufactured parts not maintained in inventory,but Lextron also hired consultants to ensure its effi-cacy.

With respect to the lack of demand, the Courtclarified that demand existed for Micro Chemical’smachines, even though they were provided gratis.Indeed, the machines had commercial advantagesover other microingredient dispensers, and eachcompany profited, at least indirectly, from theirplacement with feedlots.

Before explaining Micro Chemical’s entitlementto use the two-market supplier test, the FederalCircuit clarified that this test essentially collapses twoof the Panduit factors into an inquiry into the rele-vant market and the number of suppliers. TheFederal Circuit concluded that the district court haderred in not defining the relevant market as the mar-ket for machines that dispense microingredients byweight. Because the Court ruled that MicroChemical would be allowed to prove lost profits onremand, it also vacated the reasonable royaltyaward.

Lastly, the Federal Circuit denied MicroChemical’s motion for a different judge on remand.Using Tenth Circuit law, the Court found neitherthat the judge held a personal bias nor that reas-signment would be in the best interests of justice.The mere fact that the Federal Circuit had twicereversed portions of the district court’s previous rul-ings was insufficient to show any favoritism towardLextron or antagonism toward Micro Chemical.

Limited Disclosure in PatentSpecification Limits Scope of Claims

Michael A. Holtman

[Judges: Newman (author), Friedman, and Rader(concurring)]

In Biogen, Inc. v. Berlex Laboratories, Inc., No. 01-1058 (Fed. Cir. Jan. 31, 2003), the Federal Circuitaffirmed the district court’s claim construction for

Berlex Laboratories, Inc.’s (“Berlex”) U.S. Patent Nos.5,376,567 (“the ‘567 patent”) and 5,795,779 (“the‘779 patent”), affirmed the SJ of no literal infringe-ment of the ‘567 patent and noninfringement of the‘779 patent, and vacated the SJ of no infringementunder the DOE for the ‘567 patent.

The ‘567 patent and ‘779 patent, a continua-tion of the ‘567 patent, relate to the production ofhuman interferon in Chinese hamster ovary (“CHO”)cells. At issue was whether Berlex’s patents claimboth “linked” and “unlinked” cotransformation ofCHO cells. Linked cotransformation describes aprocess of inserting foreign DNA into a cell using asingle vector containing all the desired genes, suchas the human-interferon gene and a marker gene.Unlinked cotransformation, on the other hand,describes a transformation technique where thedesired genes reside on separate vectors. Biogen,Inc. (“Biogen”) uses an unlinked cotransformationapproach to insert the human-interferon gene and amarker gene into CHO cells.

The district court had determined that the ‘567patent specification discusses a single constructmethod for inserting foreign DNA into CHO cells,that this procedure limits the scope of all claims, andthat the prosecution history and testimony by expertwitnesses supported this narrower scope of the ‘567patent claims. On appeal, Berlex pointed to lan-guage in the specification and prosecution historythat indicates that the ‘567 patent claims cover both(1) the use of CHO cells to produce high levels ofhuman interferon generally, and (2) the use of a sin-gle construct carrying the human-interferon geneand a selectable marker. Berlex argued that linkedcotransformation is only a preferred embodimentand, thus, not limiting on the scope of the broaderclaims. Finally, Berlex noted that the ‘567 patentapplication was filed after claims specific to a singleDNA construct had been allowed in the parentapplication, U.S. Patent No. 4,966,843 (“the ‘843patent”), and that the ‘567 patent claims wereintended to be of different scope.

Biogen responded that Berlex’s asserted breadthof the ‘567 patent claims is not supported by thespecification and would render the ‘567 patentinvalid for lack of an adequate written description.Biogen further responded that, but for a few generalstatements, the entire specification of the ‘567patent is directed solely to the invention, whereby asingle construct comprising the human-interferongene and a marker gene is used to insert the DNAinto CHO cells.

The Federal Circuit agreed with Biogen andaffirmed the district court’s ruling that the ‘567patent specification defines the invention as the useof a single DNA construct to introduce the linkedhuman-interferon gene and selectable-marker geneinto CHO cells. The Federal Circuit found that the

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prosecution record shows that the Examiner alsoviewed the invention of the ‘567 patent applicationas the use of a single DNA construct. In doing so,the Federal Circuit noted the Examiner’s commentsmade during an obviousness-type double-patentingrejection and in his Reasons for Allowance bothindicate to the interested public that the PTOviewed the use of a single DNA construct withlinked genes as the only supportable scope of theclaims.

The Federal Circuit further addressed Berlex’sstatement that the district court had improperlyrelied on arguments made in the prosecution of theparent ‘843 patent to limit the ‘567 patent claims.The Court agreed that while such statementsshould not automatically apply to limit differentclaims in a separate application, they can do so insome circumstances. The Court commented thatthe statement by the applicant during the ‘567patent prosecution that the ‘567 patent claims “fallwithin the scope of subject matter already allowableover the prior art” weighs heavily against the appli-cant’s proposed broader construction in the laterapplication. Additionally, the Court noted that theapplicant’s comments during prosecution cannotenlarge the content of the ‘567 patent specifica-tion.

With respect to infringement of the ‘567patent, the Federal Circuit affirmed the SJ of no lit-eral infringement, but reversed the SJ of nonin-fringement under the DOE, based on prosecution-history estoppel. The Federal Circuit noted that inprosecuting a related application, the applicant isnot barred from raising new arguments or correct-ing past errors. Thus, the district court had erredwhen it summarily concluded that Berlex wasestopped from asserting that multiple DNA con-structs for unlinked cotransformation infringe byequivalence based on the fact that the applicanthas disclaimed such use in the parent ‘843 patent.The Federal Circuit remanded this portion of thecase to determine the facts of infringement byequivalency.

The district court next addressed Berlex’s ‘779patent, which claims a CHO cell-culture composi-tion wherein the human interferon is secreted at aconcentration range of 150,000-600,000 IU/ml ofmedium. The district court determined that theclaimed concentration of 150,000-600,000 IU/mlmust represent interferon concentrations obtainedat the end of the production process. In so hold-ing, it found that even though Biogen’s CHO cul-ture composition secreted interferon within thatrange, it did so only as the cell composition contin-ued to a final interferon concentration of 1,200,000IU/ml. In other words, the district court held thattraversing the range set forth in the ‘779 patentclaims was not sufficient for infringement when thefinal concentration fell outside of that range.

The Federal Circuit agreed but also noted thatduring the prosecution of the ‘779 patent, theapplicant told the Examiner that the activity limitsof 150,000-600,000 IU/ml were included in theclaims only to expedite prosecution. The Courtconcluded that claims deliberately limited to expe-dite prosecution could not later regain a broaderscope for infringement purposes.

ANDA Submission for UnpatentedUse of Drug Covered by Patent DoesNot Infringe

Jennifer Gray Beckman

[Judges: Lourie (author), Michel, and Plager]

In Warner-Lambert Co. v. Apotex Corp., No. 02-1073 (Fed. Cir. Jan. 16, 2003), the Federal Circuitaffirmed the district court’s SJ of noninfringementon the ground that submission of an AbbreviatedNew Drug Application (“ANDA”) for an FDA-approved, off-patent use of a drug does not consti-tute a § 271(e)(2)(A) act of infringement when adifferent claimed use is still under patent protec-tion.

Warner-Lambert Company (“Warner-Lambert”)is the assignee of several patents regarding thedrug gabapentin, sold under the trade nameNeurontin®. The first patent, expired U.S. PatentNo. 4,024,175, claimed the actual compound. Thesecond patent, expired U.S. Patent No. 4,087,544,claimed a method of treating certain cranial dys-functions, such as epilepsy, with gabapentin. Thethird patent, U.S. Patent No. 5,084,479 (“the ‘479patent”), claims the use of gabapentin for the treat-ment of neurodegenerative diseases such as stroke,Alzheimer’s disease, Huntington’s disease, andParkinson’s disease.

Warner-Lambert obtained FDA approval for theuse of gabapentin to treat seizures in adults withepilepsy in 1993. The FDA has not approvedgabapentin for any other uses, notably not for usein treatment of neurodegenerative disorders.

Apotex Corporation (“Apotex”) filed an ANDAin 1998, seeking FDA approval to market a genericform of gabapentin for use as a treatment forepilepsy upon the expiration of Warner-Lambert’sepilepsy method patent in early 2000. Included inthe ANDA was a certification that its proposedmanufacture, sale, and use of gabapentin wouldnot infringe the ‘479 patent, declaring that itslabeling would not include any indication for use intreatment of neurodegenerative diseases.

Warner-Lambert filed suit, alleging thatApotex’s submission of its ANDA was an act ofinfringement of the ‘479 patent. Despite the lackof FDA approval for the use of gabapentin for neu-

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rodegenerative diseases, they argued, patients anddoctors will use and prescribe the Apotex genericfor all the purposes which Neurotin® is customarilyused. The district court granted Apotex’s motionfor SJ, and Warner-Lambert appealed.

The Federal Circuit stated that this case pre-sented an issue of first impression: whether it is anact of infringement under 35 U.S.C. § 271(e)(2)(A)to submit an ANDA seeking approval for an FDA-approved use of a drug if any other use of thatdrug is claimed in a patent.

Warner-Lambert argued that the statutory defi-nition of “act of infringement” extends to coverANDAs filed for a drug having any claimed use in apatent. The Court rejected Warner-Lambert’s read-ing of the statute, concluding that it eviscerated animportant part of the statutory provision by conflat-ing the first and second clauses of § 271(e)(2)(A) inits quotation. Specifically, the phrase “before theexpiration of such patent” cannot be read apartfrom the phrase “if the purpose of such submissionis to obtain approval under such act.” The Courtnoted that the statute may be somewhat unclear,but nevertheless found no merit in Warner-Lambert’s interpretation. “It is abundantly clearthat the statute does not make the filing of anANDA prior to patent expiration an act of infringe-ment unless the ANDA seeks approval to make, use,or sell the drug prior to expiration of a patent thatwould otherwise be infringed by such manufacture,use or sale, apart from the provisions of§ 271(e)(2).” Warner-Lambert, slip op. at 9-10(emphasis in original).

The Federal Circuit also looked to the legislativehistory to support its reading of § 271(e)(2)(A). IfWarner-Lambert’s interpretation were correct, andan ANDA filing constituted an act of infringementfor any use of the drug that was still covered by apatent, a New Drug Application (“NDA”) holderwould be able to maintain exclusivity in the marketby regularly filing new applications claiming meth-ods of use not covered by its NDA, the Court con-cluded. This would frustrate one of the stated pur-poses of the Act: allowing market entry by genericmanufacturers. The Court pointed at language inthe House Report demonstrating that Congress rec-ognized that a single drug could have more thanone indication, and yet that the ANDA applicantcould seek approval for less than all of those indica-tions.

The Federal Circuit also considered the ques-tion of whether Warner-Lambert had demonstratedthe existence of a genuine issue of material factwith respect to inducement to infringe under§ 271(b). Warner-Lambert argued that the districtcourt had erred in requiring proof of Apotex’sknowledge that physicians were prescribinggabapentin for treatment of neurodegeneration,

contending that the correct standard is “shouldhave known.” The Court responded that specificintent and action to induce infringement must beproven. In the absence of any evidence thatApotex has or will promote or encourage doctors toinfringe the neurodegenerative method patent, theCourt found no genuine issue of material fact. TheCourt observed that especially where a product hassubstantial noninfringing uses, intent to induce can-not be inferred, even when the defendant has actu-al knowledge that some users of its products maybe infringing the patent.

Notebook Entries Fail to ShowPossession of DNA Construct

L. Scott Burwell

[Judges: Lourie (author), Friedman, and Prost]

In Singh v. Brake, No. 01-1621 (Fed. Cir. Jan.29, 2003), the Federal Circuit affirmed the Board’sdecision awarding judgment in an interference toAnthony Brake. The Board had held that Brake’sparent application adequately described andenabled the invention of the count, thereby enti-tling Brake to the filing date of that application.The Board had further held that Arjun Singh hadnot met his burden of proving conception prior tothe filing date of Brake’s parent application and thatSingh also had not met his burden of demonstrat-ing diligence between conception and reduction topractice. The Federal Circuit affirmed these rulings.

The count at issue in the interference wasdirected to a DNA construct for use in expressingand secreting foreign proteins in yeast. Brake’s par-ent application disclosing the subject matter of thecount was filed on January 12, 1983, and thepatent issuing from a continuation-in-part of thatapplication was assigned to Chiron Corporation.Singh, whose application was assigned toGenentech, Inc., alleged that he conceived the sub-ject matter of the count in late 1982.

Singh’s attempts to develop the DNA constructof the count began in October 1982, when he wasinformed that the protein he was trying to expressfrom that construct contained eight additionalamino acids not present in the natural protein.Singh then devised a plan to redesign the constructto remove the nucleotides encoding the extraamino acids and testified that in November 1982he had ordered a nucleotide sequence for use in anexperiment designed to delete the extra aminoacids. That order was canceled on the same dayand, a week later, a different nucleotide sequencewas ordered for the deletion experiment.

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Singh argued on appeal that the Board hadfailed to consider the totality of the corroborativeevidence that he had offered to establish his 1982conception, namely, three laboratory-notebookentries that he asserted should be read together.The Federal Circuit rejected that argument, con-cluding that the November notebook entry record-ing the first order of the nucleotide sequence foruse in the deletion experiment merely expressedthe problem to be solved, but did not provide asolution. The Court also noted that the nature ofthe sequence ordered in November cast doubt onthe accuracy of Singh’s testimony that he hadordered that sequence for use in a deletion experi-ment.

The Federal Circuit also agreed with the Boardthat nothing in Singh’s notebook corroborated histestimony that the three laboratory-notebookentries were meant to be read together. Evenassuming that they were, the Federal Circuit ruledthat the totality of the evidence was insufficient toprove by a preponderance of the evidence thatSingh had a definite and permanent idea of anoperative method for making the DNA constructprior to Brake’s filing date. The Court agreed withthe Board that the notebook entries did not provideany protocol or outline of the deletion experiment,and that the entries at best stated a goal that Singhhoped to achieve. The Federal Circuit also conclud-ed that Singh had failed to prove reasonable dili-gence toward reduction to practice by a preponder-ance of the evidence, as the laboratory-notebookpages relied on by Singh were unexplained as tocontent and relevance as well as being uncorrobo-rated.

Singh also appealed the Board’s determinationthat Brake was entitled to the January 12, 1983, fil-ing date of his parent application. Singh assertedthat Brake did not provide an adequate writtendescription of the invention of the count in thatparent application because the application discloseda large genus of over 9000 species, whereas thecount was directed to only two species, and thatthe parent application did not provide adequatedirection to lead a person of ordinary skill in the artto the subgenus of the count. The Federal Circuitrejected that argument, disagreeing with Singh’scalculation of the total number of species disclosedin the priority application and concluding that theparent application disclosed at most seventeenspecies, only two of which were meaningfulembodiments. The Federal Circuit also noted thatthe disclosure of one of the original claims of theparent application provided a clear blaze mark pro-viding in ipsis verbis support for the subject matterof the count.

Finally, the Federal Circuit held that the Boardhad not abused its discretion by returning the par-ties’ briefs without consideration because Singh’sbriefs contained new arguments that were notraised at the outset of the interference.

A “Classic Example” of CompetingDamages Experts

Gordon P. Klancnik

[Judges: Plager (author), Michel, and Lourie]

In Micro Chemical, Inc. v. Lextron, Inc., No. 02-1155 (Fed. Cir. Jan. 24, 2003), the Federal Circuitruled that the lower court had properly performedits gatekeeping role under the Federal Rules ofEvidence and did not abuse its discretion in allow-ing Micro Chemical, Inc.’s (“Micro Chemical”) dam-ages expert to testify. The Court further ruled thatsubstantial evidence supported the jury’s damagesaward.

The patent-in-suit, U.S. Patent No. 5,315,505,relates to a system for tracking the medical recordsof livestock. Both the Plaintiff, Micro Chemical, andthe Defendants, Lextron, Inc. and TurnkeyComputer Systems, Inc., provide feedlots with thesesystems either for free or at a substantial loss, asthese systems support sales of interrelated products.After stipulating that the Defendants’ unmodifiedsystems infringe, the parties’ only dispute remainingat trial related to the amount of damages.

The Defendants filed a motion to exclude testi-mony of the Plaintiff’s expert, Edward Fiorito, argu-ing that Fiorito (1) based his opinion on disputedfacts, and (2) misapplied the Georgia-Pacific factorsin determining a reasonable royalty. The districtcourt denied this motion. Using Tenth Circuit law,the Federal Circuit responded to the Defendants’first argument by explaining that it is not the role ofthe district court to evaluate the correctness of factsunderlying one expert’s testimony. In response tothe second argument, the Court noted that Fioritoproperly applied the Georgia-Pacific factors, includ-ing the effect of sales of nonpatented products ondetermining a reasonable royalty. Thus, accordingto the Court, the Defendants’ contentions werewithout merit, and the district court did not abuseits discretion in permitting Fiorito to testify.

The Federal Circuit also affirmed the districtcourt’s rulings regarding the damages award, not-ing that each side presented an expert supportingits reasonable-royalty calculation. Because the jury’saward hinged on which facts and whose expert wasmore credible, substantial evidence supported theverdict.

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Applicant Failed to DemonstrateCriticality of Claimed Range toOvercome Obviousness

Douglas S. Weinstein

[Judges: Lourie (author), Bryson, and Dyk]

In In re Peterson, No. 02-1129 (Fed. Cir. Jan. 8,2003), the Federal Circuit found substantial evi-dence to support the Board’s factual findings andaffirmed the Board’s conclusion of obviousness.

On December 28, 1994, Lance G. Peterson andIoannis Vasatis (collectively “Peterson”) filed U.S.Patent Application No. 08/365,392, which relatesto a nickel-base single-crystal superalloy, comprisingcontrolled quantities of rhenium, used in makingindustrial gas-turbine engines exposed to high tem-peratures. The claimed composition included,among other elements, “about 1 to 3 percent rhe-nium, [and] about 14 percent chromium.”

The Examiner rejected the claims as obvious inlight of several prior art references, including Shah;Wukusick, either alone or in view of Duhl; andBieber in view of Wukusick. For each of these threegrounds of rejection, the Examiner found a primafacie case of obviousness because of the overlap-ping ranges of the prior art compositions and theclaimed composition. Peterson argued that theprior art did not disclose controlled quantities ofrhenium and did not suggest that advantageousproperties resulted from his claimed invention. TheBoard affirmed each ground of the Examiner’s rejec-tion.

In affirming the Board’s decision, the FederalCircuit focused on the rejection based on Shah.Noting that a prima facie case of obviousness typi-cally exists when a claimed range overlaps theranges disclosed in the prior art, the Court com-pared Shah’s disclosed ranges to Peterson’s claimedranges. Shah discloses superalloys having rheniumin a range of 0-7% compared to the claimed rangeof about 1-3%, and chromium in a range of 3-18%compared to the claimed range of about 14%.Shah’s ranges clearly encompass Peterson’s claimedranges.

But, Peterson argued, it would not have beenprima facie obvious to select the claimed narrowerranges from Shah’s broader ranges. Dismissing thisargument, the Court noted the settled case lawholding that overlapping ranges establish primafacie obviousness, as do disclosed ranges closeenough to the claimed ranges such that one skilledin the art would expect similar properties. Where,as here, the prior art range encompasses theclaimed range, the conclusion is more compellingthan in cases of mere overlap. Thus, a prior art ref-

erence that discloses a range encompassing aclaimed range is sufficient to show a prima faciecase of obviousness, supporting the Board’s findingof prima facie obviousness.

Peterson failed to rebut the prima facie case byestablishing that the claimed range achieves unex-pected results relative to the prior art range. Basedon examples in the specification, substantial evi-dence supported the Board’s finding that the addi-tion of rhenium, neither in the lower portion of therange (1%) nor in the upper portion of the range(3%), yields unexpected results.

While Peterson could have also rebutted theprima facie case by showing that the prior arttaught away from the invention, he failed to do so.Many of the cited prior art references disclosed theadvantages of the claimed ranges, and one,Wukusick, expressly taught that adding rheniumimproves high-temperature strength.

Thus, the Federal Circuit found substantial evi-dence to support the Board’s finding that theclaimed ranges are encompassed by Shah, thatPeterson failed to show unexpected results, andthat the prior art did not teach away from theclaimed invention.

Court Upholds PreliminaryInjunction in Sunglasses Case

Ming-Tao Yang

[Judges: Lourie (author), Newman, and Dyk(concurring)]

In Oakley, Inc. v. Sunglass Hut International, No.02-1132 (Fed. Cir. Jan. 9, 2003), the Federal Circuitaffirmed a district court’s grant of preliminaryinjunction, holding that the district court did notabuse its discretion in ordering the injunction.

Oakley, Inc. (“Oakley”) owns U.S. Patent No.5,054,902 (“the ’902 patent”), which claims a sun-glass lens comprising three layers for producing a“vivid colored appearance” by an interference “dif-ferential effect” of light reflected from the lens.Oakley manufactures “Emerald” and “Ice” sunglass-es allegedly covered by the ’902 patent. SunglassHut International (“SHI”) marketed those sunglassesfor Oakley before Luxottica Group S.p.A., Oakley’slargest competitor, purchased SHI. After the pur-chase, SHI began selling sunglasses manufacturedby other Defendants. Oakley sued SHI and others(collectively “Sunglass Hut”) for infringement of the’902 patent and sought a preliminary injunction.The district court first entered the preliminaryinjunction, enjoining the Defendants from making,using, or selling the Emerald (green) or Ice (blue)sunglasses.

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On appeal, the Federal Circuit reviewed thedistrict court’s assessment of the likelihood of suc-cess concerning both invalidity and infringement.The Federal Circuit concluded that Oakley is reason-ably likely to succeed on the merits at trial againstall of Sunglass Hut’s invalidity challenges. Raisingan indefiniteness argument, Sunglass Hut firstargued that the claimed phrase “vivid coloredappearance,” which is based on the disclosed “dif-ferential effect,” is indefinite. The Court concluded,however, that even though the numerical value ofthe “differential effect,” which is a feature that dis-tinguished Oakley’s patent over the prior art, is notdefined with mathematical precision, one skilled inthe art would understand the term based on thespecification. Inserting its own claim construction,the Federal Circuit reasoned that the dividing line ofthe differential value for producing a “vivid coloredappearance” must be somewhere between 2.3%and 5.45%, the values that the specification pro-vides respectively for the prior art and for the inven-tion.

Having so construed this limitation, the FederalCircuit affirmed the district court’s finding of a likeli-hood of infringement.

Regarding the factors of irreparable harm andbalance of hardships, the Federal Circuit concludedthat the determination of the district court was notclearly erroneous. For irreparable harm, the FederalCircuit agreed that Oakley had made a sufficientlystrong showing of likelihood of success on the mer-its to entitle Oakley to a presumption of irreparableharm. The district court’s finding that Sunglass Hutwas poised to release huge numbers of enjoinedsunglasses also supported such presumption. Forthe balance of hardships, Oakley attacked SunglassHut’s claim of irreparable harm from having torecall products, stating that Sunglass Hut admittedin its press release following the temporary restrain-ing order (“TRO”) that sales to that point had beeninsignificant. The Federal Circuit concluded thatample evidence supported the district court’s deter-mination that the harm to Oakley without issuanceof the injunction would be greater.

Sunglass Hut also argued that the injunctiveorder failed to satisfy the specificity requirement ofFed. R. Civ. P. 65(d) by referring only to Oakley’strade names. The Federal Circuit ruled that the lan-guage of the order is sufficiently specific and thatthe reference to Oakley’s trade names amounts tono more than harmless error. The Court reasonedthat the purpose of Rule 65(d) is to minimize confu-sion and minimize needless contempt proceedings.Here, Sunglass Hut had publicly commented in apress release that the TRO, which uses the same

language as the injunctive order, applied to onlythree models.

Concurring with the majority’s opinion, JudgeDyk wrote separately to stress three points. First,he pointed out that the majority’s tentative claimconstruction in response to the indefiniteness argu-ment may or may not be correct. Second, he dis-agreed with the majority on applying a new claimconstruction to uphold the district court’s discre-tionary preliminary injunction. According to JudgeDyk, the uncontradicted expert testimony in thedistrict court is sufficient to establish a likelihood ofsuccess on infringement. Accordingly, the districtcourt did not err in failing to provide an explicit for-mal claim construction when Sunglass Hut offeredno claim construction. Therefore, Judge Dykstressed that the parties at trial are free to offer newclaim constructions to the district court and evi-dence as to why the accused lenses do or do notinfringe under those claim constructions.

Corporation Lacked Standing to SueAfter Being AdministrativelyDissolved

Kristin Schnell

[Judges: Dyk (author), Bryson, and Lourie (dissenting)]

In Paradise Creations, Inc. v. UV Sales, Inc., No.02-1283 (Fed. Cir. Jan. 3, 2003), the Federal Circuitaffirmed the district court’s grant of SJ and dismissalof the patent-infringement claim on the groundthat Paradise Creations, Inc. (“Paradise”) did nothave standing to file its complaint.

Paradise, a Florida corporation, became admin-istratively dissolved under a Florida corporationsstatute by failing to file its annual report in 1996.Paradise had yet to regain corporate status at thetime it filed its patent-infringement suit in 2000.Rather, Paradise regained its corporate status onJune 29, 2001, a week after UV Sales, Inc. (“UVSales”) moved for SJ and dismissal of the complaintbased on Paradise’s administratively dissolved state.Paradise’s standing at the time it filed suit was inquestion due to the alleged effect Florida corpora-tion law had on a corporation’s ability to transactbusiness while administratively dissolved. Prior tofiling the lawsuit, but during its period of dissolu-tion, Paradise contracted for an exclusive license,allegedly sufficient to sue for infringement, underU.S. Patent 4,681,471. UV Sales argued that

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Florida’s corporations law gave no legal effect tothat contract and, therefore, Paradise had no stand-ing. Paradise countered that Florida’s corporationslaw retroactively gave it standing because a statestatute made the reinstatement effective on the dayof the dissolution back in 1996.

The Court found that Paradise had no enforce-able legal rights at the time it filed its complaintand, therefore, it had no cognizable injury, the firstrequirement of standing. Paradise admitted, due toits administratively dissolved status when it con-tracted for the license and filed the case, that it didnot have legally enforceable rights to the patent atthe time it filed suit, and accordingly, the Courtfound it did not have standing at the time it filedsuit.

The Federal Circuit noted, however, thatParadise could refile now that the contractual rights

to the patent under the license had legal effect, andthe Court expressed no opinion about the effect ofsuch an action.

Judge Lourie dissented, concluding that Floridalaw allowed the reinstatement of corporate statusto give legal effect to the acts occurring during thedissolution period.

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DISCLAIMER:The case summaries reflect the understanding ofthe authors only and are not meant to conveylegal opinions or advice of any kind. The firm dis-claims any liability for any errors or omissions inthese summaries. This promotional newsletterdoes not establish any form of attorney-clientrelationship with our firm or with any of ourattorneys.

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In Last month at The Federal Circuit, certain terms, titles, and names of fed-eral agencies that are frequently referred to in text, appear in abbreviatedforms or as acronyms. These abbreviated forms and acronyms are listed below.

ALJ Administrative Law Judge APA Administrative Procedures ActAPJ Administrative Patent Judge Board Board of Patent Appeals and InterferencesCommissioner Commissioner of Patents and Trademarks CIP Continuation-in-PartDJ Declaratory Judgment DOE Doctrine of EquivalentsFDA Food & Drug AdministrationIP Intellectual PropertyITC International Trade CommissionJMOL Judgment as a Matter of Law MPEP Manual of Patent Examining ProcedurePCT Patent Cooperation TreatyPTO United States Patent and Trademark Office SEC Securities and Exchange CommissionSJ Summary JudgmentSM Special Master