259-1. Federal Circuit Finds No Plain Error in “Ordinary Observer” Jury Instructions
259-1. Federal Circuit Finds No Plain Error in “Ordinary Observer” Jury Instructions
The United States Court of Appeals for the Federal Circuit recently affirmed the United States District Court for the Southern District of West Virginia’s judgment of infringement and denial of new trial in a design patent case involving a “rock dust blower.” The Court held that arguments related to the functional aspects of the design patent were not preserved for appeal. The Court also held that jury instructions did not warrant a new trial because, despite the alleged infringer’s argument that the jury should have been drawn to “aspects of the claimed design that differ from the prior art,” no prior art was presented at trial. See Hafco Foundry & Mach. Co. v. GMS Mine Repair & Maint., Inc., No. 2018-1904, 2020 U.S. App. LEXIS 8197 (Fed. Cir. Mar. 16, 2020) (Before Newman, Chen, and Stoll, Circuit Judges) (Opinion of the Court filed Per Curiam) (Opinion concurring in part and dissenting in part, Newman, Circuit Judge).
Hafco Foundry and Machine Company, Inc. (“Hafco”) owns United States Design Patent No. D681,684 (“the ’684 patent”) related to a “Rock Dust Blower.” The device relates to a drum-type device that holds rock dust, and the dust is applied to the walls of a mine to prevent coal explosions.
Hafco originally asked Pioneer Conveyer LLC, an affiliate of GMS Mine Repair and Maintenance, Inc. (collectively “GMS”), to be a distributor of the blower device. After Hafco terminated the agreement in 2015, GMS produced and sold its own rock dust blower.
Hafco sued GMS for patent infringement in the Southern District of West Virginia. GMS filed a pre-trial motion arguing invalidity because, to GMS, all aspects of the ’684 patent’s design were functional. GMS argued in the alternative that design should be construed to exclude the functional aspects. This motion was denied by the district court. At trial, GMS wanted the jury instruction to include an explanation to exclude the functional aspects, but the explanation was not included. “GMS neither objected to the jury instructions nor presented evidence on the functional aspects of the ’684 patent at trial.”
A jury returned a verdict of willful infringement, awarding $123,650 in damages. The District Court remitted the damages awards to zero and ordered a new trial on damages pending this appeal. GMS subsequently appealed, arguing that “it is entitled to judgment as a matter of law on the issue of infringement; and, in the alternative, [] it is entitled to a new trial on the issue of infringement due to errors of law in the jury instruction.”
GMS first argued that, after excluding the functional and prior art aspects of the patented design, its rock blower did not infringe. However, the Court held that this was the first time this argument was presented and, thus, did not preserve the argument for appeal.
GMS next argued that the jury instructions were improper, and GMS was entitled to a new trial. The opinion provides the jury instructions for both “Infringement – Generally” and “Direct Infringement.” The direct infringement section described the ordinary observer test and stated that the ordinary observer included a buyer and user of the product. GMS argued that the instructions were flawed because they “incompletely and prejudicially abridged the Gorham test,” and “that the jury should have been instructed ‘that the hypothetical ordinary purchaser is to view the patented and accused designs “in the context of the prior art.”’”
Although GMS did not object to the instruction at trial, the Court considered Fourth Circuit standards for setting aside a judgment without an objection, which states “[e]ven if a jury was erroneously instructed, however, we will not set aside a resulting verdict unless the erroneous instruction seriously prejudiced the challenging party’s case.” Bunn v. Oldendorff Carriers GmbH & Co. KG, 723 F.3d 454, 468 (4th Cir. 2013).
GMS, therefore, sought to argue that the “ordinary observer” description in the jury instructions “seriously prejudiced” GMS’s case. However, the Court noted that GMS neither provided a different definition nor requested a particular definition. GMS also argued that the jury should have been instructed that “small differences between the accused and the claimed design” would negate infringement; but this was not requested at trial either, and, even if it was, the instruction is incorrect, as “competing designs can be substantially similar despite minor differences.” (citing Contessa Food Prods., Inc. v. Conagra, Inc., 282 F.3d 1370, 1377 (Fed. Cir. 2002)).
Finally, GMS argued that the jury “should have been instructed to ‘familiarize yourself with each of the prior art designs that have been brought to your attention,’ citing the IPO Model Design Patent Jury Instructions at 25 (2010).” However, GMS did not provide any discussion of prior art at trial and was not precluded from doing so.
Accordingly, the Federal Circuit affirmed the judgment of infringement and denial of new trial and remanded on the question of damages.
Judge Pauline Newman wrote an opinion concurring on all aspects except damages, where she dissented on the majority’s decision to remand for a new trial on the issue. The jury awarded damages of $123,650, though Hafco’s lost profits were $110,000. She believed that the district court should have accepted Hafco’s proposed remittitur to the amount of lost profits, which was not disputed.
The District Court agreed that the award did not represent the lost profits. Hafco argued that remittitur to the correct amount would “reasonably implement the jury’s verdict and intent.” To judge Newman, “[a] new trial, on undisputed facts, is not needed to serve the purposes of the jury verdict.”
To preserve the ability to argue improper jury instructions on appeal, an objection to the jury instruction should be made at trial.
259-2. Federal Circuit Holds PTAB Erred in Allowing Same-Party Joinder and Joinder of New Issues by a Joined Party under 35 U.S.C. § 315(c)
The United States Court of Appeals for the Federal Circuit recently issued a ruling holding the Patent Trial and Appeal Board erred in allowing Facebook to join itself as a party to a proceeding in which Facebook already was a party and in allowing Facebook to add claims by joining later petitions to the original petition for inter partes review. See Facebook Inc. v. Windy City Innovations, LLC, 2018-1400, 2020 U.S. App. LEXIS 8522 (Fed. Cir. Mar. 18, 2020). (Before Prost, Chief Judge, Plager and O’Malley, Circuit Judges) (Opinion for the Court, Prost, Chief Judge).
Windy City Innovations, LLC (“Windy City”) is the owner of U.S. Patent Nos. 8,458,245 (“the ’245 patent), 8,694,657 (“the ’657 patent”), 8,473,552 (“the ’552 patent”), and 8,407,356 (“the ’356 patent) (collectively, “the asserted patents”). The asserted patents each share a common specification and claim priority to the same patent application filed on April 1, 1996. Each of the asserted patents generally relate to “methods for communicating over a computer-based network.” The two features described in the specification of the asserted patents that were relevant to this appeal include: “(1) the ability to handle ‘out-of-band’ multi-media information,” and “(2) the ability to control the dissemination of information among participator computers.”
In 2015, Windy City filed a complaint alleging that Facebook infringed the asserted patents. In the complaint, Windy City did not specify which claims of the asserted patents that Facebook allegedly infringed. Subsequently, in 2016, Facebook timely petitioned for inter partes review of several claims of each of the asserted patents. Four months after the one-year deadline to petition for inter partes review, Windy City identified the claims of the asserted patents that it was alleging Facebook infringed. Some of the claims that Windy City identified were that Facebook did not originally petition for inter partes review. Thus, Facebook subsequently filed two additional petitions for inter partes review of the claims that were not challenged in Facebook’s original petition but were later identified by Windy City. Because these petitions would otherwise be barred under 35 U.S.C. § 315(b), mandating that inter partes review be filed within one year of the complaint alleging infringement, Facebook also filed motions asking the Patent Trial and Appeal Board (“the Board”) to “join each new proceeding to the already instituted IPR on the same patent under § 315(c).” Despite, Windy City opposing such motion, the Board granted Facebook’s motions for joinder and allowed the new claims to be added to the original IPR proceeding. As support for its decision, the Board explained that because Windy City did not originally identify which claims that it was claiming Facebook infringed, Facebook “could not have reasonably determined which claims were asserted against it within the one-year time bar.” In the Board’s final written decision, the Board found that Facebook failed to show by a preponderance of evidence that some of the challenged claims of the asserted patents were unpatentable as obvious and that Facebook did show by a preponderance of evidence that some of the challenged claims of the asserted patents were unpatentable as obvious. In view of the Board’s finding, Facebook appealed and Windy City cross-appealed.
On appeal, Facebook asserted that the Board erred in finding that Facebook failed to prove that claims 1–15, 17–19, and 22–25 of the ’245 patent; claims 203, 209, 215, and 221 of the ’657 patent; claims 1, 4, 6, 8, 9, and 18–58 of the ’552 patent; and claims 14 and 33 of the ’356 patent are unpatentable as obvious. Windy City asserted that the Board erred in finding that a person of ordinary skill in the art would have been motivated to combine the references in each IPR, and that joinder was improper under 35 U.S.C. § 315(c) because the statute does not authorize same-party joinder.
With regards to the joinder issue, Windy City presented two issues of statutory interpretation: (1) whether 35 U.S.C. § 315(c) allows a party to be joined as a party to a proceeding in which the party was already involved and (2) whether the statute permits new issues to be added to an existing IPR through joinder, including issues that would otherwise be time-barred. Windy City argued on appeal that the statute does not allow same-party joinder and does not allow joinder of new issues material to patentability. Ultimately, the Federal Circuit agreed with Windy City, finding that the Board erred in allowing same-party joinder and joinder of new issues during the IPR proceeding.
The Federal Circuit first reviewed the statutory language of § 315(c). The statute § 315(c) recites “[i]f the Director institutes an inter partes review, the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under section 311 that the Director, after receiving a preliminary response under section 313 or the expiration of the time for filing such a response, determines war-rants the institution of an inter partes review under section 314.” (emphasis added). The Federal Circuit noted that allowing Facebook to join its later IPR proceedings with its original IPR proceeding essentially allows joinder of two proceedings, and not joinder of a party to a proceeding. The language of the statute clearly provides that the Director may join a person as a party but does not provide for the joinder of two proceedings. Further, the Federal Circuit explained that it would be “an extraordinary usage of the term ‘join as a party’ to refer to persons who were already parties.” The Federal Circuit additionally explained that the previous decision in Proppant Express Investments, LLC v. Oren Tech., LLC, No. IPR2018-00914, Paper 38 (P.T.A.B. Mar. 13, 2019) permitting a petitioner to be joined to a proceeding to which it already was a party was incorrect. In particular, the Federal Circuit explained that the Board improperly interpreted “any person.” Although “any person” does have a broad meaning, the term still is limited to cover only those who “in normal legal discourse, are capable of being joined as a party to a proceeding” and an existing party would not be capable of doing so. Accordingly, the Federal Circuit held that the clear and unambiguous language of § 315(c) does not provide for joinder of two proceedings and does not allow the Director to join a person to a proceeding in which that person already is a party.
Moreover, the Federal Circuit explained that the language of the statute does not allow for a joined party to bring new issues from a new proceeding to the original proceeding. The Federal Circuit explained that the language of the statute only allows for the Director to “join 1) a person 2) as a party, 3) to an already instituted IPR.” Facebook attempted to argue that the statute does not expressly prohibit joinder of new issues. However, the Federal Circuit found that the lack of express prohibition does not make the statute ambiguous regarding joinder of new issues. The Federal Circuit supported its reasoning by explaining how the legislative history of the statute also indicates that it was not contemplated to allow new issues to be brought into an existing IPR proceeding. Similarly, the Federal Circuit noted that Facebook’s assertion that legislative history does contemplate joinder of new issues as indicated by statements from Senator Jon Kyl (R-Ariz.) were improper. The Federal Circuit explained that Sen. Kyl’s statements were not applicable to the current matter because his statements assume two timely-filed petitions, which is the proper mechanism for combining issues. Further, the Federal Circuit exclaimed that this “single, ambiguous comment from one senator” does not supersede the clear language of the statute. Lastly, Facebook asserted that not allowing joinder of new issues is not in line with the one of the Leahy–Smith America Invents Act’s goals for IPRs “to provide ‘quick and cost effective alternatives’ to litigation in courts.” PPC Broadband, Inc. v. Corning Optical Commc’ns RF, LLC, 815 F.3d 734, 741 (Fed. Cir. 2016) (emphasis added) (quoting H.R. Rep. No. 112-98, pt. 1, at 48 (2011), as reprinted in 2011 U.S.C.C.A.N. 67, 78). The Federal Circuit accepted and recognized Facebook’s policy argument, but explained that in such instance when a party is faced with a large amount of asserted claims when an IPR filing is almost due, the party has several options, including “filing petitions challenging hundreds of claims” to guarantee the party’s IPR will challenge each of the ultimately asserted claims, or challenging the validity of the claims in district court and not through an IPR. Ultimately, the Federal Circuit held that even though Facebook did assert valid policy arguments, “policy considerations cannot create an ambiguity when the words [of the statute] are clear.” SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348, 1358 (2018).
The Federal Circuit then examined the issue of “what, if any, deference is owed to the PTO’s interpretation of § 315(c).” Facebook asserted that the Board’s decision should be entitled deference under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Ultimately, the Federal Circuit disagreed with Facebook, holding that the Board’s interpretation of the statute is not entitled to deference. The Federal Circuit explained that because the language of the statute was not ambiguous, the Federal Circuit did not have to defer to the Board’s interpretation of the statute.
After finding that the Board erred in allowing Facebook to join itself to a proceeding to which it already was a party and to add new claims that were otherwise time-barred, the Federal Circuit next reviewed the technical merits of the appeal regarding obviousness of the challenged claims of the asserted patents. For each asserted patent, the Federal Circuit reviewed the finding of obviousness only with regards to asserted claims in Facebook’s original IPR petition, as the Federal Circuit determined that joinder of the additional claims petitioned in the later two petitions was improper.
With regards to the ’245 patent, the challenged claims were directed to the feature concerning the ability to handle ‘out-of-band’ multi-media information. On appeal, Facebook asserted that the Board’s understanding of a cited reference was improper. However, the Federal Circuit disagreed and determined that there was substantial evidence that supported the Board’s interpretation of the cited reference, and thus, the Board’s determination that the challenged claims would not have been obvious over the prior art was proper. In particular, the Federal Circuit noted that Facebook did not provide any evidence in the record supporting its interpretation of the cited reference and, instead, relied solely on attorney argument. As such, the Federal Circuit was not persuaded that the Board relied on an improper understanding of the cited reference when making its obviousness determination.
With regards to the ’657 patent, the challenged claims were directed to the feature concerning control of dissemination of information among participator computers. On cross-appeal, Windy City asserted that the Board erred in holding that it would have been obvious to combine two cited references because the Board’s analysis was “infected by hindsight” and did not explain how someone skilled in the art would have combined the two cited references to create the disclosed technology. The Federal Circuit disagreed with Windy City, finding “no legal error in these aspects of the Board’s obviousness analysis.” In particular, the Federal Circuit noted that Facebook presented expert testimony that sufficiently explained why a person of ordinary skill would have been motivated to combine the two cited references to achieve the disclosed technology.
With regards to the ’552 patent, the challenged claims also were directed to the feature concerning control of dissemination of information among participator computers. On appeal, Facebook asserted that the Board erred by narrowly construing a required limitation and thus, the Board improperly found Claims 1, 4, 6, 8, 9, and 18–58 unpatentable as obvious. The Federal Circuit disagreed, finding that the Board did not err in its claim construction and that the Board’s construction was adequately supported by figures in the specification of the ’552 patent. On cross-appeal, Windy City asserted that the Board’s finding of unpatentability with respect to Claims 2, 3, 5, 7, 10–17, 59, and 64 was improper because a person having ordinary skill in the art would not have been motivated to combine the two cited references to create the disclosed invention. The Federal Circuit disagreed, finding that substantial evidence supported the Board’s finding that the challenged claims were unpatentable as obvious.
With regards to the ’356 patent, the challenged claims again were directed to the feature concerning control of dissemination of information among participator computers. On appeal, Facebook challenged the Board’s finding that the Claims 14 and 33 were not unpatentable as obvious. However, in a separate IPR proceeding, the Board found Claims 14 and 33 to be unpatentable; thus, Windy City asserted that Facebook’s appeal was moot. The Federal Circuit agreed and dismissed Facebook’s appeal with respect to Claims 14 and 33. On cross-appeal, Windy City challenged the Board’s finding that Claims 1–9, 12, 15–28, 31, and 34–37 were unpatentable as obvious. Windy City asserted that a person having ordinary skill in the art would not have been motivated to combine the two cited references to create the disclosed technology. The Federal Circuit disagreed, finding that there was substantial evidence to support the Board’s finding that the challenged claims were obvious in light of the cited references.
Overall, the Federal Circuit held that the clear language of 35 U.S.C. § 315(c) does not allow same-party joinder or joinder of new issues. Thus, it was improper for the Board to allow Facebook to join new issues that would have otherwise been time-barred under the statute. Accordingly, the Federal Circuit vacated the Board’s final written decisions regarding claims that were improperly added through joinder and found that there was substantial evidence to support the Board’s obviousness determinations with respect to the challenged claims of each of the asserted patents.
At the end of the Federal Circuit opinion, Chief Judge Sharon Prost, Judge S. Jay Plager, and Judge Kathleen M. O’Malley provided additional views regarding the issue of deference to the Board’s interpretation of the § 315(c) statute. The additional views of the judges stated that the majority opinion does not address the question “what, if any, deference is owed by the [United States Patent and Trademark Office’s] interpretation of the § 315(c) by the Board’s Precedential Opinion Panel (‘POP’) in Proppant Express Investments, LLC v. Oren Technologies, LLC,” because the majority opinion found the language of the statute to be unambiguous. Thus, the additional views of the judges examined whether Chevron deference would have been applied to a decision made by the Board’s POP if the statutory language was in fact ambiguous. The additional views indicate that there would be no difference, and that Chevron deference would not apply even if the statutory language was deemed ambiguous. In particular, the additional views of the judges state that deference is only applied to an agency’s implementation of a statute and when Congress has specifically delegated authority to the agency to make rules that would carry the force of law. The judges carefully explained that the POP is not analogous to those agencies that are entitled to deference. Further, the additional views indicate that the Director does not have “substantive rule-making authority with respect to interpretations of the Patent Act.” Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1336 (Fed. Cir. 2008). Similarly, the Board has not been given such authority, as the AIA only provided limited rulemaking authority to the Board. Lastly, the additional views explain that Skidmore deference also would not apply. Skidmore notes various factors that are analyzed when determining whether deference should apply, including thoroughness of the judgement, the validity of the judgment’s reasoning, and the judgment’s consistency with earlier and later pronouncements. The additional views note that these factors “weigh against affording deference” in this instance. Accordingly, the additional views of the judges indicate that the Board’s interpretation of the statute in the POP opinion would have been given no deference even if the § 315(c) statute was determined to be ambiguous.
Under IPR joinder statute 35 U.S.C. § 315(c), a party cannot join itself as a party to the party’s own, earlier-filed IPR petition or add new issues to the party’s earlier-filed IPR petition. Thus, in the instance when a party is faced with a large amount of potential asserted claims, without the opposing party identifying which of the claims will be asserted, and the one-year IPR filing deadline is about to expire, the party should consider filing petitions challenging every claim. Even if this results in challenging hundreds of claims, the strategy can help guarantee that the party’s IPR will challenge each of the ultimately asserted claims. Alternatively, the party can challenge the validity of the claims in district court and not through an IPR.
259-3. Methods of Preparation for DNA Testing Not Directed to Patent-Ineligible Natural Phenomena
The Federal Circuit recently overturned a district court’s grant of summary judgment invalidating patent claims owned by Illumina Inc. (“Illumina”), holding that the claims were not directed to patent-ineligible natural phenomena. See Illumina, Inc. v. Ariosa Diagnostics, Inc., No. 2019-1419, 2020 U.S. App. LEXIS 8327 (Fed. Cir. Mar. 17, 2020) (Before Lourie, Moore, and Reyna, Circuit Judges) (Opinion for the Court, Lourie, Circuit Judge) (Dissent, Reyna, Circuit Judge).
Illumina’s patents at issue were U.S. Patent Nos. 9,580,751 (“the ’751 patent”) and 9,738,931 (“the ’931 patent”), both directed to methods for distinguishing fetal DNA from maternal DNA in a mother’s bloodstream. More specifically, the methods concerned sorting out DNA fragments shorter than 500 base pairs, as the inventors had discovered that fetal DNA was shorter in comparison to larger maternal DNA. Illumina brought suit against Ariosa Diagnostics, Inc. (“Ariosa”) alleging patent infringement of the ’751 and ’931 patents, and Ariosa moved for summary judgment that Illumina’s asserted claims were invalid under 35 U.S.C. § 101. The district court granted summary judgment that the ’751 and ’931 patents were invalid as directed to ineligible subject matter, and Illumina appealed.
Under Section 101, laws of nature, natural phenomena, and abstract ideas are not patentable, but applications and uses of such laws and phenomena may be patentable. To distinguish whether claims directed to natural phenomena are patent-eligible under the Alice/Mayo standard, the Court first looks at whether the claims are “directed to” a natural phenomenon, and if they are, whether the claim limitations “transform the nature of the claim into a patent-eligible application.”
The majority notes from the outset that the patents at issue involved patentable methods of preparation for DNA testing, not diagnostics (which would have been invalid as directed to ineligible subject matter under Federal Circuit precedent) or a method of treatment. The Court determined under step one of the Alice/Mayo inquiry that the asserted claims were not directed to a natural phenomenon, but rather to patent-eligible methods that utilize it. Rather than “simply observe” that fetal DNA is shorter than maternal DNA or detect the presence of that phenomenon, the asserted claims involved “specific process steps—size discriminating and selectively removing DNA fragments that are above a specified size threshold—to increase the relative amount of fetal DNA as compared to maternal DNA in the sample.” In other words, “the inventors used these concrete process steps, not merely to observe the presence of the phenomenon that fetal DNA is shorter than maternal DNA, but rather to exploit that discovery in a method for preparation of a mixture enriched in fetal DNA.”
The Court distinguished the asserted claims from other patent-ineligible diagnostic claims directed to detecting or observing a natural phenomenon, as Illumina’s claims went beyond mere knowledge of natural phenomena or methods to see that a phenomenon exists. The majority further distinguished the Supreme Court of the United States’s decision in Myriad Genetics from these claims, stating that:
[I]n Myriad, the claims were ineligible because they covered a gene rather than a process for isolating it. Here, we encounter the opposite situation, i.e., the claims do not cover cell-free fetal DNA itself but rather a process for selective removal of non-fetal DNA to enrich a mixture in fetal DNA. Thus, the Supreme Court's decision in Myriad is not on point.
After concluding that the asserted claims of the ’751 and ’931 patents were directed to patent-eligible subject matter under Section 101, the Court reversed the district court’s grant of summary judgment and remanded for further proceedings.
In his dissent, Judge Jimmie V. Reyna rejected the asserted claims as ineligible, stating that “the patents’ only claimed advance is the discovery of [the] natural phenomenon.” He argued that “[o]ther than the surprising discovery, nothing else in the specification or the record before [the Court] indicates there was anything new or useful about the claimed invention.”
Judge Reyna believed that the claims were, in fact, directed to a natural phenomenon and that the patent claimed discovery of the natural phenomenon, not a method of preparation as described by the majority. In making this determination, he looked to whether the “claimed advance” of the patent “improves upon a technological process or [is] merely an ineligible concept.” In determining the patent was directed to ineligible matter, he noted that “[i]f a written description highlights the discovery of a natural phenomenon—e.g., by describing the natural phenomenon as the only ‘surprising’ or ‘unexpected’ aspect of the invention or that the invention is ‘based on the discovery’ of a natural law—the natural phenomenon likely constitutes the claimed advance.”
Applying this standard, Judge Reyna argued that the claimed advance of the invention was the “surprising” discovery that fetal DNA tends to be shorter than maternal DNA. The dissent further argued that the claims are ineligible because they “begin and end with a naturally occurring substance.”
Unlike claims reciting natural phenomena, claims directed to methods utilizing that natural phenomena may be considered patent eligible subject matter under Section 101.