Patents Archives - Kinney & Lange

Cooperative Patent Classification Implementation and Best Practices

Posted on August 1, 2016 by Kinney & Lange, P.A.

The Cooperative Patent Classification (CPC) is a harmonization of the U.S. and European existing patent classification systems, the European Classification System (ECLA) and the U.S. Patent Classification (USPC). The change to the CPC was initiated through a joint partnership between the United States Patent and Trademark Office (USPTO) and the European Patent Office (EPO). The CPC is the result of the USPTO’s effort to provide a modern classification system that is internationally compatible; and a result of the EPO’s effort to eliminate the reclassification of U.S. patent documents and ensure compliance with International Patent Classification (IPC), administered by the World Intellectual Property Organization (WIPO). The CPC is designed to have both US and European patent documents under a single classification scheme with a similar structure to that of the IPC. The joint classification system allows the USPTO and the EPO to efficiently share resources for classifying documents, revise the classification scheme where necessary, and to reclassify documents in an evolving world of technology.

In October 2010, the USPTO and EPO began working together to develop the CPC by incorporating the best practices of both the ECLA and USPC. The CPC was formally launched in January 2013, replacing the ECLA system at the EPO and initiating a two-year transition period at the USPTO for reclassification in an effort to begin phasing out the USPC in 2015. During this transition period the USPTO classified applications both in the CPC and the USPC systems while examiners received training on how to search in the CPC system and place CPC symbols on both granted patents and published patent applications. Going forward, both the EPO and USPTO will share maintenance of the CPC through a multi-year planning system for identifying areas requiring reclassification and a revised classification scheme. ECLA and USPTO symbols will not be removed from patent documents published prior to January 2013 and January 2015, respectively, for historical searching.

Two main objectives were theorized for the transition to the CPC. First, to improve patent searching by creating a more developed classification that the already existent IPC. Second, to efficiently share resources between the USPTO and EPO. Objectives, Cooperative Patent Classification. With these objectives in mind, the expected benefits of the CPC were enhanced examination efficiency, improved access to documents from patent offices around the world, improved navigation and understanding of a single classification system, improved consistency of search results across offices, facilitated work-sharing on applications filed across offices, and more adaptive and actively maintained classification schemes.

The transition to the CPC from the USPTO and ECLA has created a number of new obstacles for searchers and attorneys in the patent searching world. The CPC is divided into nine sections which are then subsequently divided into classes, sub-classes, groups, and sub-groups. In total, the CPC contains approximately 260,000 classification entries. The greater number of classification entries than previously used provides a more detailed scheme breakdown and more descriptive classification titles. See Cooperative Patent Classification(CPC): General Introduction into CPC, United States Patent and Trademark Office (July 10, 2012). As a result, a best practice for searchers and attorneys using the CPC is to understand the more detailed breakdown and recognize that a particular feature may be covered by multiple classes.

The CPC is one scheme that includes an indexing system, which resembles the current IPC indexing system. In the CPC, all symbols belong to a single scheme but differentiate by use and scope, rather than the use of different symbols for each ECLA and USPC scheme. Available tools for searching in the CPC system include the CPC concordances with the ECLA and IPC, and statistical mapping tools from USPC to CPC. The CPC website provides CPC concordances tables for ECLA to CPC and CPC to IPC for reference. Each table provides a conversion of ECLA classifications to CPC classifications or CPC classifications to IPC classifications. For example, a patent classified under a particular ECLA classification is aligned with the respective CPC classification for that patent.

Furthermore, the USPTO provides a statistical mapping tool for mapping from USPC to CPC. The statistical mapping is produced by a statistical analysis of symbols allocated to families of documents classified simultaneously in the CPC and USPC schemes. Each USPC symbol is mapped to a CPC symbol and possibly additional CPC symbols depending on relevance and contribution. Confidence in statistical mapping is low when the statistical results of mapping of one USPC symbol to many CPC symbols is large or the number of families having the corresponding CPC symbol statistically analyzed is small. See Statistical Mapping: FI to CPC, European Patent Office (July 20, 2016). For example, a USPC symbol allocated to a certain family of documents can be mapped to at least one CPC symbol when the statistical mapping returns (in between brackets), first, the number of families bearing the corresponding CPC symbol, and second, the percentage that these corresponding families represent over the total number of families classified under that CPC classification. If the number of families found bearing the corresponding CPC symbol is less than 3, the mapping will return “NOMAP”, meaning that no mapping is possible. Moreover, searchers and attorneys should note that mapping from USPC to CPC may not be reliably precise because mapping is based on statistical analysis due to the fact that the USPC is not based on IPC/ECLA systems.

Searchers and attorneys should also note that any saved alerts or saved search queries based on USPC will no longer return results (after 2015), and may need to be updated. Likewise, any historical search queries based on USPC will not return results (after 2015) if conducted today.

Federal Circuit Reaffirms Patent Exhaustion Doctrine

Posted on June 2, 2016 by Kinney & Lange, P.A.

By: Andrew Swanson

In Lexmark Int’l, Inc. v. Impression Prods., Inc., 16 F.3d 721 (Fed. Cir. 2016) (en banc), the Federal Circuit was asked to determine the applicability of the doctrine of patent exhaustion in two contexts. First, the court was asked to determine whether the sale of a patented article to end users under a restriction that is otherwise lawful and within the scope of a patent grant nonetheless gives rise to patent exhaustion. The court held that a patentee may reserve its patent rights by selling a patented article under otherwise-proper restrictions on resale and reuse that are properly communicated. Second, the court was asked to determine whether a sale of a patented item outside the United States gives rise to patent exhaustion for a U.S. patent. The court held that the doctrine of patent exhaustion is not triggered by a foreign sale of a U.S.-patented article.

A patent gives the patentee the right to exclude others from engaging in certain acts–whoever “without authority” “makes, uses, offers to sell, or sells any patented invention, within the United States, or imports into the United States any patented invention” infringes that patent. 35 U.S.C. § 271(a). The patentee may, however, grant authority to another to engage in one or more of the enumerated acts, such that an otherwise infringing action is non-infringing. The court notes that each of the enumerated acts is joined by the disjunctive “or,” such that the patentee may grant “authority” to engage in as few or as many of the enumerated acts as the patentee wishes.

Lexmark sued Impression for importing and selling printer cartridges covered by a number of Lexmark patents. Lexmark offers its buyers a choice when purchasing printer cartridges. A buyer may purchase a “Regular cartridge” at full price, or a buyer may purchase a “Return Program cartridge” at a discount. Sales of the Regular cartridges were subject to no restriction on reuse or resale of the printer cartridges. The Return Program cartridges were subject to a “single-use/no-resale restriction,” however. Under the single-use/no-resale restriction “the buyer may not reuse the Return Program cartridge after the toner runs out and may not transfer it to anyone but Lexmark once it is used.” Third parties gathered spent Return Program cartridges, replaced protective features that prevented the cartridges from being reused, refilled the cartridges, and sold the cartridges to resellers, such as Impression, for sale to consumers to use with Lexmark printers.

Lexmark alleged infringement for two groups of cartridges: (1) Return Program cartridges that Lexmark sold in the United States under the single-use/no-resale restriction; (2) all cartridges sold abroad by Lexmark, including both Regular and Return Program cartridges. It was undisputed that the patents covering the cartridges were valid and enforceable, that both the first purchaser and Impression had adequate notice of the single-use/no-resale restriction, and that the restriction did not violate antitrust law or exceed the scope of the exclusive rights granted by the Patent Act. Impression instead argued that Lexmark had exhausted its U.S. patent rights by its initial sale of the cartridges, regardless of the existence of any restriction and the location of the sale.

Impression filed a motion to dismiss Lexmark’s claims in the district court. First, the district court granted Impression’s motion to dismiss the claims involving the Return Program cartridges first sold in the United States. In finding for Impression on the issue of domestic sales, the district court distinguished articles manufactured and sold by a patentee from articles made and sold by a licensee. Second, the district court ruled against Impression regarding Impression’s argument that patent exhaustion applied to cartridges initially sold abroad. As such, an initial, authorized foreign sale does not exhaust the patentee’s United States patent rights. The Federal Circuit reversed the district court’s ruling regarding the domestically-sold Return Program cartridges. The Federal Circuit affirmed the district court’s ruling regarding foreign sales of both the Regular cartridges and Return Program cartridges.

Patent exhaustion is a doctrine whereby a patentee confers authority to a purchaser to take certain actions, such as selling or using the purchased product in the United States, which action would be infringing without the authority from the patentee. Under the doctrine of patent exhaustion, an unconditional sale “exhausts” the patentee’s right to control the purchaser’s use of the patented device. In such an instance, the patentee’s rights in the patent are “exhausted” by the sale such that the purchaser may use or sell the purchased device without infringing the patent. The patentee may preserve certain rights by communicating a lawful restriction as to post-sale use or resale, however, and such a communication does not confer “authority” to engage in the activity precluded by the communication. So long as the restriction does not violate some other law or policy, such as antitrust law or engaging in patent misuse, then restrictions on the use of patented goods are allowable.

The Federal Circuit was asked to address two questions related to the doctrine of patent exhaustion. First, does the doctrine of patent exhaustion apply to the domestic sale of a product by the patentee, even where an otherwise-lawful restriction has been clearly communicated? Second, does a foreign sale of a U.S.-patented article trigger the doctrine of patent exhaustion?

In addressing the first question, the court reaffirmed the principles of Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700 (Fed. Cir. 1992). The court noted that Supreme Court precedent clearly leads to the conclusion that a patentee does not exhaust its patent rights upon a first sale where a buyer with knowledge of the restrictions resells or reuses the product in violation of the restrictions. The court was urged to distinguish between patentee sales and licensee sales. The argument behind the distinction was that “any sale of a patented article by a patentee, even when the rights granted are expressly restricted, is automatically an ‘authorized sale,’ causing the patentee to lose all § 271 rights in the item sold.” As such, the argument goes that because Lexmark is both the patentee and the seller, Lexmark has necessarily authorized the sale, thereby exhausting its patent rights regardless of any express restrictions. The court rejected the invitation to draw a distinction between patentee sales and licensee sales, however.

The Federal Circuit reaffirmed the principles of Mallinckrodt and overturned the district court’s ruling as to Return Program cartridges first sold in the United States. In Mallinckrodt, a patentee sold a medical device subject to a single-use restriction. Some purchasers sent used devices to Medipart for refurbishing and Mallinckrodt sued Mediprt for infringement due to the reuse in violation of the single-use restriction. The Federal Circuit found that a sale subject to a lawful, clearly communicated single-use/no-resale restriction does not give rise to patent exhaustion such that buyers, or downstream buyers, have the reuse/resale authority that was expressly denied previously.

The district court had relied on Quanta Computer, Inc. v. LG Electronics, Inc., 552 U.S. 617 (2008), as implicitly overturning Mallinckrodt as to a patentee’s sale of a patented article subject to a lawful single-use/no-resale condition. Quanta involved sales made to a manufacturer by a manufacturing licensee, not a patentee. The patentee had authorized the manufacturing licensee to make and sell the articles at issue, and the authorization was not subject to any conditions. The Federal Circuit distinguished Quanta by noting that Quanta involved no patentee sales and there were no restrictions on the sales made by the licensee. The manufacturer in Quanta raised the argument that patentees may preserve patent rights through lawful restrictions. The Court in Quanta responded to the manufacturer’s argument by concluding that there were no restrictions placed on the first sale of the articles, not that there was any meaningful distinction between patentees and licensees for purposes of patent exhaustion. The Federal Circuit thus concluded that the principles of Mallinckrodt remain after Quanta, such that a patentee may place lawful restrictions on the sales of patented articles regardless of whether the articles are made or sold by the patentee or a licensee.

The Federal Circuit concluded that the principle of Mallinckrodt remains good law. As such, “a patentee may preserve its § 271 rights when itself selling a patented article, through clearly communicated, otherwise-lawful restrictions, as it may do when contracting out the manufacturing and sale.” No practical reason exists to distinguish between sales made by the patentee and sales made by a manufacturing licensee. In fact, the court found that a distinction between patentee sales and licensee sales was “unjustifiably formalistic, [and] not founded in relevant economic substance.” Therefore, a patentee may preserve its exclusionary rights detailed in § 271 of the Patent Act through the use of a clearly communicated, otherwise-lawful restriction. A use in violation of the restriction can thus constitute infringement of the patent.

In addressing the second question the court reaffirmed the principles of Jazz Photo Corp. v. Int’l Trade Comm’n, 264 F.3d 1094 (Fed Cir. 2001). In Jazz Photo, the Federal Circuit concluded that “there is no legal rule that U.S. rights are waived, either conclusively or presumptively, simply by virtue of a foreign sale, either made or authorized by the patentee.” In Jazz Photo, the defendant, Jazz Photo, was importing refurbished disposable cameras originally sold by or with the authority of Fuji Photo Film. The Federal Circuit found that the doctrine of patent exhaustion does not apply to products originally sold abroad, though the circumstances of the sale may confer an express or implied license. As such, a foreign sale alone is insufficient to trigger the doctrine of patent exhaustion. A foreign first sale thus fails to “confer on the buyer ‘authority’ to import the item into the United States or to sell and use it here,” in the absence of an express or implied license.

Impression argued that the Supreme Court decision in Kirtsaeng v. John Wiley & Sons, Inc., 133 S.Ct. 1351 (2013), undermines the no-exhaustion holding of Jazz Photo. In Kirtsaeng, the Court addressed the statutory copyright first sale doctrine, and determined that owners of copyrighted articles may take certain actions with the authority of the copyright holder. However, the Federal Circuit found Kirtsaeng inapplicable for several reasons, including that Kirtsaeng is a copyright case that did not address any patent law, and more specifically, Kirtsaeng failed to address the exhaustion issue at hang in Lexmark, even in the context of copyright law. The Federal Circuit concluded that Kirtsaeng was not controlling; instead, the question of patent exhaustion resulting from foreign sales “requires a separate analysis in its own legal setting” distinct from copyrights.

The Federal Circuit concluded that the principle of Jazz Photo remains good law. As such, “[a] U.S. patentee, simply by making or authorizing a foreign sale of an article, does not waive its U.S. rights to exclude regarding the article.” The Federal Circuit went on to explain that the patent grant is a “market reward,” and that the market within which the reward is realized is necessarily the U.S. market subject to U.S. laws. The territorial nature of patent systems provides a strong indication that the first sale doctrine should not apply to purely foreign sales, as the patentee will not have received the same market award through the foreign sale. The court went on to differentiate the standards required for obtaining a patent to those required for obtaining a copyright, and noted that copyrights are generally easy to acquire and that governmental standards vary considerably less for copyrights than for patents. Foreign sales in the context of copyrights are thus distinguishable from foreign sales in the context of patents. The court further discussed the differences between foreign markets and U.S. markets and the practical effects that would result from foreign sales triggering the doctrine of patent exhaustion. The court concluded that a foreign sale of a U.S. patented article does not exhaust the patentee’s U.S. patent rights in the article sold, even where there is no express reservation of U.S. patent rights. The Federal Circuit thus affirmed the district court’s judgment of infringement as to all cartridges initially sold abroad, even though there was no express reservation of U.S. patent rights by Lexmark for the foreign sales.

The doctrine of patent exhaustion extinguishes a patentee’s ability to exert further control over a patented article after an authorized sale of the article. The patentee may, however, reserve its patent rights by selling the patented article under otherwise-proper restrictions on resale and reuse communicated to the buyer at the time of sale. The sale of a patented article may be so restricted regardless of whether the seller and manufacturer are themselves a patentee or a licensee. In addition, where a foreign sale is made by or with the approval of the U.S. patentee, the foreign sale does not exhaust the patentee’s U.S. patent rights, even when no reservation of the rights accompanies the sale. A foreign sale may cause a loss of U.S. patent rights only through an express or implied license.

Supreme Court Clarifies Standard of Review for Claim Construction

Posted on November 1, 2015 by Kinney & Lange, P.A.

■ Nicholas J. Peterka

In Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., 574 U.S. ___, No. 13-854 (2015), the Supreme Court held that the Federal Circuit must apply the clearly erroneous standard when reviewing a district court’s resolution of subsidiary factual matters made during the court’s patent claim construction.

At dispute was the meaning of the term “molecular weight.” Each party presented extrinsic evidence in the form of expert testimony and, relying on patent owner Teva’s expert, the district court determined that “molecular weight” was not indefinite. Sandoz appealed the claim construction to the Federal Circuit, which reviewed de novo all aspects of the district court’s claim construction and determined that “molecular weight” was indefinite. The Supreme Court granted certiorari and found that, while the determination of questions of law (such as the final claim construction) are reviewed de novo, underlying determinations of subsidiary facts are reviewed for clear error. The Court stated that subsidiary factual matters arise when the court uses extrinsic evidence, such as expert testimony, to aid in claim construction. The Court’s holding will factor into whether a party uses extrinsic evidence, for a party aiming to add more finality to a district court’s claim construction may frame the issues so that extrinsic evidence is vital to the court’s claim construction and, conversely, a party seeking to overturn a claim construction may argue that intrinsic evidence is dispositive and extrinsic evidence is unnecessary. This decision will also affect summary judgment. Because the Court’s holding seemingly elevates the importance of factual determinations in claim construction, factual issues may become potential obstacles to summary judgment, which requires no genuine dispute as to any material fact.

Laches in Patent and Copyright Law: A Different Calculus

Posted on November 1, 2015 by Kinney & Lange, P.A.

■ Adam E. Szymanski

In SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, No. 2013-1564 (Fed. Cir. Sept. 18, 2015), the Court of Appeals for the Federal Circuit, ruling en banc, held that laches remains a defense to legal relief in a patent infringement suit, despite the Supreme Court’s recent decision in Petrella v. Metro Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014) regarding laches in copyright cases.

SCA sued First Quality for infringing U.S. Patent No. 6,375,646 directed to absorbent pants-type diapers. SCA sent a letter to First Quality on October 31, 2003, asserting that First Quality’s Prevail® All Nites™ product infringed its ‘646 patent. First Quality responded on November 21, 2003, saying that U.S. Pat. No. 5,415,649 invalidated the ‘646 patent. SCA requested a reexamination, and, in March 2007, the USPTO found the patent patentable over the ‘649 patent. SCA sued First Quality three-years later on August 2010, in response to which First Quality asserted laches.

In Petrella, however, the Supreme Court held that laches cannot be invoked to preclude adjudication of a claim for damages brought within the three-year window established for copyright infringement actions in 17 U.S.C. §507(b). Paula Petrella sued Metro Goldwyn-Mayer nine years after last contacting the Metro asserting infringement to her copyright in the film “Raging Bull.” The Court determined that the statute of limitations in §507(b) takes account of a delay in suing and removes judicial discretion in addressing timeliness.

The Federal Circuit distinguished its holding from Petrella on its reading of 35 U.S.C. §282(b)(1). Section 282 lists the defenses available in a patent invalidity or infringement action and includes a provision stating “[a]ny other fact or act made a defense by this title.” The Federal Circuit relied on the commentary of P.J. Federico, an original drafter of the 1952 Patent Act, which stated that §282 included equitable defenses like laches. Combining that with Senate and House reports stating the breadth of such defenses, the court concluded that Congress had codified a laches defense into §282 of the Patent Act. The court further concluded that laches as codified can be applied to recovery of legal relief rather than just equitable relief, finding that patent case law supported the use of laches to preclude damages.

The Federal Circuit further noted a distinction between patent and copyright law in proving infringement: “copyright infringement requires evidence of copying, but innocence is no defense to patent infringement.” Proof of access, the court found, ensures that a potential infringer is generally aware of the risk of infringement. As a safeguard, a potential infringer can seek to establish evidence of independent creation. The court concluded that for patents “the calculus is different.” Because patent law lacks independent creation, laches provides the only defense against late claims seeking to collect on a commercial windfall.

Perhaps time will tell whether the Supreme Court agrees with the Federal Circuit’s new math.

‘Means’ Or Not ‘Means’, That Is The Question

Posted on November 1, 2015 by Kinney & Lange, P.A.

■ John D. Leighton

The presence or absence of the word “means” in a claim has long been accompanied by one of two comp-lementary presumptions. Using the word “means” in a claim element creates a rebuttable presumption that §112, para. 6 applies and means-plus-function claiming occurs. Conversely, failure to use the word ‘means’ also creates a rebuttable presumption — this time that §112, para. 6 does not apply. Since 2004, however, these presumptions have been asymmetric ones. The Federal Circuit first established this asymmetry with the Lighting World, Inc. v. Birchwood Lighting, Inc., 382 F.3d 1354, 1358 (Fed. Cir. 2004) decision, which established that “the presumption flowing from the absence of the term ‘means’ is a strong one that is not readily overcome.” (Emphasis added).

The Federal Circuit has recently returned symmetry to these complementary presumptions. The Federal Circuit stated in Williamson v. Citrix Online, LLC., No. 13-1130, 15 (Fed. Cir. 2015) that “Henceforth, we will apply the presumption as we have done prior to Lighting World, without requiring any heightened evidentiary showing and expressly overrule the characterization of that presumption as ‘strong.’”

Background and Procedural History:

In 2011, Williamson filed suit in the United States District Court of California against Citrix Online, et al., for infringement of Williamson’s U.S. Patent No. 6,155,840. “The ‘840 patent describes methods and systems for ‘distributed learning’ that utilize industry standard computer hardware and software linked by a network to provide a classroom or auditorium-like metaphor – i.e., a ‘virtual classroom’ environment.” On September 4, 2012, the district court issued a claim construction order, concluding, inter alia, that the “distributed learning control module” limitation of claim 8 was a means-plus-function term under 35 U.S.C. §112, para. 6. Williamson appealed the district court’s construction of this term. Williamson argued “that the district court failed to give appropriate weight to the ‘strong’ presumption against means-plus-function claiming that attaches to claim terms that do not recite the words ‘means.’”

Williamson v. Citrix Online, LLC:

To overcome the presumption that a “means”-less limitation is not a means-plus-function element, either: i) the claim term must fail to recite sufficiently definite structure; or ii) the claim term must recite function without reciting sufficient structure for performing that function.

The Federal Circuit then turned its attention to the claim limitation in dispute, which recites:

A distributed learning control module

1) for receiving communications transmitted between the presenter and the audience member computer systems and

2) for relaying the communications to an intended receiving computer system and

3) for coordinating the operation of the streaming data module

The court observed that the claim limitation in dispute is in a format consistent with traditional means-plus-function claim limitations. The term “module” replaces the tradition means-plus-function flag term – “means” – and then recites three functions performed by the “distributed learning control module.”

i) Does the claim term recite sufficient definite structure?

The court then observed that the term “module” is a well-known nonce word that can operate as a substitute for “means” in the context of §112, para. 6. Generic terms such as “module,” “mechanism,” “element,” “device,” etc., typically do not connote sufficiently definite structure, by themselves, to remove a claim limitation from the reach of §112, para. 6 claim construction. The court next held that the prefix “distributed learning control” does not impart structure into the term “module.” To determine this, the court construed the prefix in view of the specification. Although “distributed learning control module” is described in the written description, such descriptions failed to impart any structural significance to the term. Furthermore, the court found nothing in the prosecution history that could lead it to construe the expression as something with “sufficient definite structure as to take the overall claim limitation out of the ambit of §112, para. 6.”

ii) Does the claim term recite function without reciting sufficient structure for performing that function?

Although the court conceded that portions of the disputed limitation do describe certain inputs and outputs at a very high level (e.g., communications between the presenter and the audience member computer systems), the claim does not describe how such the recited functions operate “in a way that might inform the structural character of the limitation-in-question or otherwise impart structure.” Williamson attempted to rescue the sought-for structure by pointing to figures of the specification. But the only figures provided therein were exemplary display interfaces and were not considered disclosures of the algorithm corresponding to the claimed function.

Takeaways:

First takeaway: There is now a heightened risk when claiming elements functionally, that a future court may construe the claims according to §112(f), formerly §112, para. 6. Simply omitting the word “means” may not be enough to avoid a §112(f) construction.

Second takeaway: The court gave a test for attorneys to use to evaluate if a claim term is a “nonce” word. The court articulated the test as follows: “Here, the word [insert test word] does not provide any indication of structure because it sets forth the same black box recitation of structure for providing the same specified function as if the term ‘means’ had been used.”

Third takeaway: The written description must disclose sufficient structure for every claim element recited. Disclosed structure is required: i) to rescue a limitation from the reach of §112(f), if so desired, and ii) in construing a §112(f) means-plus-function element, regardless of whether the limitation was intended to be construed so. The court summarized its §112(f) construction requirement “that the specification [must] disclose an algorithm for performing the claimed function.”

Ex parte Kenichi Miyazaki:

The Williamson decision is further illuminated by the Ex parte Miyazaki, 89 U.S.P.Q.2d 1207 (BPAI 2008), decision of the USPTO Board of Patent Appeals and Interferences (BPAI). In Miyazaki, the BPAI grappled with the proper construction of a claim limitation that “is a purely functional recitation with no limitation of structure.” The BPAI noted that “’purely functional claim language’ is … permissible but only under the conditions of 35 U.S.C. § 112, sixth paragraph.” (emphasis added). “[A]ny claim that includes purely functional claim language, and which is not subject to the limited construction under 35 U.S.C. § 112, sixth paragraph, fails to meet the requirements of 35 U.S.C. 112, first paragraph [].”

The BPAI then articulated some concerns addressed by these rules of construction. One concern related to the Williamson decision “is that such unlimited purely functional claiming may reasonably be construed to encompass any and all structures for performing the recited function, including those which are not what the applicant invented.” The USPTO’s main concern is simply “to guard the public against patents of ambiguous and vague scope. Such patents exact a cost on society due to their ambiguity that is not commensurate with the benefit that the public gains from disclosure of the invention.”

In addition to the two above articulated reasons that structure must be disclosed, disclosed structure is also required: iii) to rescue a non-§112(f) limitation from a §112(a) rejection which would automatically attach to non-§112(f) limitations that are purely functional.

The Federal Circuit’s Second En Banc Decision In Akamai Technologies v. Limelight Networks

Posted on November 1, 2015 by Kinney & Lange, P.A.

■ John P. Fandrey

In August of 2015, the Federal Circuit Court of Appeals issued its second en banc decision in Akamai Techs., Inc., v. Limelight Networks, Inc., Nos. 2009-1372, 2009-1380, 2009-1416, 2009-1417 (Fed. Cir., August 13, 2015), a case which began in 2006. The underlying issue is whether there is liability for so-called “divided” or “split” infringement involving multiple actors. The Federal Circuit explained that in patent infringement cases the acts of one actor may be attributed to another where the other “conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.” This test is in addition to the agency relationships, contractual relationships, and joint enterprises that may give rise to direct infringement attributable to a single entity. Despite Akamai’s long procedural history, the Supreme Court’s 2014 opinion and the Federal Circuit’s most recent en banc decision provide two straightforward propositions. First, the Supreme Court has stated that a party cannot be liable for induced infringement where no direct infringement has occurred. Second, the Federal Circuit has expanded the scope of what constitutes direct infringement, holding that where “more than one actor is involved in practicing the steps [of a claimed method], a court must determine whether the acts of one are attributable to [another] such that a single entity is responsible for the infringement.”

Procedural History:

In 2006, Akamai Technologies sued Limelight Networks for infringement of three of Akamai’s patents, U.S. Patent No. 6,108,703, U.S. Patent No. 6,553,413, and U.S. Patent No. 7,103,645. Akamai Techs. Inc. v. Limelight Networks, Inc., 629 F.3d 1311, 1316 (Fed. Cir. 2011). Akamai’s patents claim methods for serving web page content over the internet. A jury found that Limelight infringed Akamai’s 6,108,703 patent and awarded over $40 million to Akamai. Akamai Techs. Inc. v. Limelight Networks, Inc., 629 F.3d 1311, 1316 (Fed. Cir. 2011). Akamai proceeded on a theory of joint liability because the defendant, Limelight, did not perform all the steps of the asserted claims itself. Instead, Limelight’s customers performed a step known as tagging. The jury was instructed that Limelight could only be found liable if the jury found that Limelight’s customers were acting under Limelight’s direction and control.

Limelight moved for judgment as a matter of law after the jury returned its verdict. At first, the district court denied the motion. However, shortly after the jury returned its verdict the Federal Circuit Court of Appeals issued its decision in Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008). Limelight then moved for reconsideration and the district court granted Limelight’s motion finding that Limelight did not infringe Akamai’s patents. On appeal, the Federal Circuit affirmed the district court’s finding of noninfringement citing its decision in Muniauction for the proposition that there can be no infringement unless every step of a patented process is carried out under the control or direction of one party.

The Federal Circuit reheard the case en banc and reversed the district court. Akamai Techs. Inc. v. Limelight Networks, Inc., 629 F.3d 1301 (Fed. Cir. 2012); See also Katherine J. Rahlin, Induced Infringement Broadened, K&L IP News™ (Winter 2012). The Federal Circuit explained that the trial court was correct in its holding that Limelight did not directly infringe Akamai’s patent because it did not direct and control the actions of content providers. However, the Federal Circuit reversed and remanded because it believed Limelight could be liable for inducing infringement.

The United States Supreme Court granted certiorari on the question of “whether a defendant may be liable for inducing infringement of a patent under 35 U.S.C. §271(b) when no one has directly infringed the patent under §271(a) or any other statutory provision.” The Supreme Court, citingAro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 341 (1961), provided that one cannot be liable for inducement if there has been no direct infringement. Limelight Networks, Inc. v. Akamai Techs., No. 12-786 (United States Supreme Court, June 2, 2014). The Court also stated that “[a] method patent claims a number of steps; under this Court’s case law, the patent is not infringed unless all the steps are carried out.”

On remand a three judge panel of the Federal Circuit affirmed the district court’s finding of non-infringement. Akamai Techs. Inc. v. Limelight Networks, Inc., 786 F.3d 899 (Fed. Cir. 2015). The panel, with one judge dissenting, held that Akamai did not show that the allegedly infringing activities of Limelight’s customers could be attributed to Limelight. The panel relied on the fact that Akamai did not show that Limelight’s customers were Limelight’s agents, that they were contractually obligated to Limelight or that they were acting in a joint enterprise with Limelight.

2015 En Banc Decision:

The Federal Circuit granted rehearing en banc and ultimately reversed the district court, holding that the jury had substantial evidence upon which to base its verdict of infringement. Akamai Techs. Inc. v. Limelight Networks, Inc., Nos. 2009-1372, 2009-1380, 2009-1416, 2009-1417 (Fed. Cir. August 13, 2015).

The Federal Circuit stated that in a case of divided infringement “a court must determine whether the acts of one entity or party are attributable to another such that a single entity is responsible for the infringement.”

The Court explained that in applying the direction or control test it continues to consider general principles of vicarious liability, such as agency, contractual relationships and joint enterprises. Direction or control will be found if there is an agency relationship or one party contracts with another to perform one or more steps of a claimed method. However, the Court added that liability can also be found when a party “conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance. In those instances, the third party’s actions are attributed to the alleged infringer such that the alleged infringer becomes the single actor chargeable with direct infringement.”

In supporting this rule, the court cited Metro-Goldwyn-Mayer Studios, Inc. v. Grokster. 545 U.S. 913 (2005). In Grokster, the Supreme Court found that distributors of software could be held liable for inducing copyright infringement where the distributors knew their software was primarily used for copyright infringement and the distributors encouraged such use.

In applying the test above the Federal Circuit, in Akamai, focused on several facts to find that the jury had substantial evidence to support a finding that performance of the claimed steps was a condition to participating in Limelight’s service. Specifically, Limelight’s contract with its customers outlined the steps that customers had to perform in order to use the service. Limelight’s contract also required that customers provide Limelight with all the “cooperation and information reasonably necessary” for Limelight to implement its service. The court also found that there was substantial evidence to support a finding that the timing or manner of performance was established by Limelight. Here the court highlighted: Limelight’s assignment of a technical account manager to each customer to implement Limelight’s service; Limelight providing a hostname for customers to integrate into their webpages; and Limelight’s engineers assisting with installation and performing quality assurance testing.

Implications:

It’s easy to see that some method claims provided little protection to patentees. Prior to the Federal Circuit’s most recent Akamai decision, a would-be infringer could avoid infringement liability by doing two things: 1) allowing a third party to practice some of the steps of a claimed method while 2) avoiding creating an agency relationship, a contractual relationship, or a joint enterprise with the third party.

The most recent Akamai decision may strengthen some patents that were not previously seen as being infringed by the acts of single entities or persons. This is because the decision adds to the list of ways to establish liability for direct infringement when the alleged infringement involves more than one actor. In its second en banc opinion the Federal Circuit provided that “a court must determine whether the acts of one are attributable to [another] such that a single entity is responsible for the infringement.” In addition to the traditional tests of vicarious liability such as, agency and contractual relationships, now an entity that “conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and [establishes] the manner or timing of that performance” may be liable for direct infringement.

Akamai may strengthen some method claims. However, attorneys drafting claims should always try to structure the claims so that only one actor’s conduct will be needed to establish direct infringement. This may not always be possible. If the claims involve computer networks this may be extremely difficult. This is because of the ease with which the steps can be distributed among different actors.