July Federal Circuit Review

July 2016

Continuation Applications Filed Same Day as Issuance or Abandonment of a Parent are Entitled to the Priority Date of the Parent

Immersion Corp. v. HTC Corp., No. 15-1574 (Fed. Cir. June 21, 2016)

The Federal Circuit has upheld the Patent Office’s longstanding practice of permitting applicants to file continuing patent applications on the same day as the issuance or abandonment of a parent application for purposes of obtaining the priority date of the parent application.

Immersion Corp. sued HTC Corp. on a patent directed to providing haptic feedback to users of electronic devices. HTC responded by moving for summary judgment of invalidity, based on prior art that the parties agreed would have anticipated Immerson’s patent but for Immerson’s claim of priority to an earlier application. HTC argued Immersion’s patent was not entitled to the earlier priority date because the application that resulted in the patent-in-suit was filed on the same day the earlier application issued as a patent.

Section 120 of the Patent Act permits an application to claim priority to an earlier application if it is filed “before the patenting or abandonment of” the first application. HTC argued that this language implies that a continuation application must be filed at least one day before the parent patent issues. The district court agreed, and granted summary judgment to HTC. Immersion appealed.

The Federal Circuit reversed, holding that the long history of continuation practice in this country supported same-day continuations. Supreme Court decisions as early as 1864 affirmed that a continuation filed the same day as withdrawal or issuance of its parent may be entitled to the parent’s priority date, and the legislative history of the 1952 Patent Act suggests section 120 was intended to codify the common law. This is supported by the Patent Office, which for over 50 years has construed section 120 to permit same-day continuations.

The Federal Circuit concluded that there would be too great an impact on the patent system if over 50 years of agency and public reliance on same-day continuation practice was suddenly overturned. Thus, Immersion’s patent could claim priority to a parent that issued the same day the continuing application was filed.

Key Takeaway: Patent practitioners can continue to file continuation applications up to and including the day of issuance or abandonment of a parent application and still claim the priority date of the parent.

Patent Office Improperly Changed Claim Construction Theories During Inter Partes Review

SAS Institute, Inc. v. ComplementSoft, LLC, Nos. 2015-1346, -1347 (Fed. Cir. June 10, 2016)

In SAS Institute, the Federal Circuit held that a petitioner in an inter partes review before the Patent Trial and Appeal Board is entitled to reasonable notice when the Board changes its claim construction theory during the proceeding.

SAS Institute, Inc. petitioned the Board to review a patent owned by ComplementSoft, LLC directed to integrated development environments used to author source code. In its institution decision, the Board construed the phrase “graphical representations of data flows” in the claims to mean “a depiction of a map of the path of data through the executing source code,” and instituted review on a number of claims. Neither party argued the construction during the proceedings.

In its final written decision, the Board found all but one of the reviewed claims to be obvious in view of the prior art. The Board affirmed the patentability of claim 4 because the prior art did not disclose “graphical representations of data flows,” which the Board had re-construed to mean “a graphical representation comprised of icons depicting data processing steps and arrows to depict the movement of data through source code.” Neither party received notice of the new construction prior to the issuance of the decision.

SAS requested rehearing on the basis of the change in construction but was denied. The Board explained that the new construction did not prejudice SAS because SAS could have made claim construction arguments for the term in its IPR petition.

On review, the Federal Circuit agreed with the final construction but reversed the Board’s decision as contrary to the reasonable notice requirements in the Administrative Procedure Act. Those requirements prevent the Board from changing theories in midstream without giving the parties notice of the change and the opportunity to present argument under the new theory. The court rejected the Board’s assertion that SAS could have argued for a different construction during the proceeding, finding it “difficult to imagine either party anticipating that already-interpreted terms were actually moving targets.” Thus, the court remanded the case to the Board to hear arguments on the new construction.

Key Takeaway: Decisions by the Board, including decisions construing claim terms, must comply with the reasonable notice requirements of the Administrative Procedure Act. The Board may not change claim construction theories during inter partes review without giving the parties notice and an opportunity to respond.

Federal Circuit Reaffirms Objectively Reasonable Standard for Claim Construction in Defense Against Induced Infringement

Warsaw Orthopedic, Inc. v. NuVasive, Inc., No. 13-1576 (Fed. Cir. June 3, 2016)

In Warsaw, the Federal Circuit affirmed a district court’s finding of induced infringement, holding that a jury could conclude Medtronic Sofamor Danek’s non-infringement position was objectively unreasonable and that MSD must have known or was willfully blind to the fact that that its device met the limitations of the claim.

NuVasive, Inc. alleged that Warsaw Orthopedic directly infringed its patent for detecting presence of and measuring distance to a nerve during surgery, and that MSD induced infringement by supplying the accused device to doctors and instructing them in its use. The district court found in favor of NuVasive, and the Federal Circuit affirmed. Soon after, the Supreme Court decided Commil USA v. Cisco Systems, which held that a defendant lacks the intent to induce infringement where his reading of the claims is both different from the plaintiff’s and reasonable. MSD petitioned for certiorari, which was granted by the Supreme Court, and the case was remanded back to the Federal Circuit to decide whether NuVasive had proved MSD had the knowledge required to induce infringement under Commil.

MSD argued it lacked the required intent to infringe the patent because its non-infringement position was reasonable. The asserted claims included a “stopping” step, which required the device to stop the emission of a stimulus signal immediately after detecting a neuro-muscular response.” MSD contended this required the device to cease emitting all signals, and MSD believed it did not infringe because its device continued to emit electrical pulses at lower energy levels after detecting a response.

The Federal Circuit disagreed. The ordinary meaning of the claim required stoppage of only the stimulus signal, and not all signals. MSD’s position was contrary to its own construction of “stimulus signal,” which the district court agreed was a signal capable of eliciting a neuromuscular response. The Federal Circuit found that MSD’s non-infringement position amounted to a late-stage effort to request a revised claim construction that it never sought at the district court.

The Federal Circuit concluded that the jury had enough evidence before it to find that MSD’s non-infringement position was objectively unreasonable, and MSD must have known that its device met the limitations of the asserted claims. The jury could therefore have inferred that MSD must have known, or was willfully blind to the fact, that doctors using the device infringed those claims.

Judge Reyna issued a separate opinion, concurring in the result but faulting the majority for appearing to find sufficient evidence to support induced infringement solely because the device itself directly infringed. While the jury could have found willful blindness based on circumstantial evidence, the Court’s analysis should have specifically discussed that evidence.

Key Takeaway: A defendant will not have the requisite intent to induce infringement if they believe they do not infringe based on a reasonable interpretation of the claims. However, knowledge of the patent combined with an unreasonable non-infringement position may support a jury verdict that defendant must have known, or was willfully blind to the fact, that their device was infringing.