L&A Federal Circuit Review

June 2015

As part of our ongoing effort to keep clients and friends informed of important legal updates, we are pleased to provide the L&A Federal Circuit Review, a monthly publication highlighting recent Federal Circuit and Supreme Court decisions. Each monthly review summarizes a few decisions and the key takeaways. Please contact your lead L&A attorney for additional details.

USA, LLC v. CISCO Systems, Inc., No. 13-896 (Supreme Court) (Indirect Infringement)

In Commil USA, LLC v. CISCO Systems, Inc., the Supreme Court held that a defendant’s belief regarding patent invalidity is not a defense to an induced infringement claim. The decision overturned the Federal Circuit’s earlier decision in the same case, which held that a defendant could submit evidence of a good faith belief the underlying patent was invalid to show it did not deliberately induce infringement. Induced patent infringement is a form of indirect infringement, where a party is liable not for performing the steps of a patented process but by inducing another to perform the steps of the patented process. 35 U.S.C. § 271(b). In contrast to direct infringement, liability for inducing infringement attaches only if the defendant knew of the patent and that the induced acts constitute patent infringement. Slip opinion at p. 7.

The Supreme Court’s Commil decision now precludes a good faith belief in invalidity as a defense to induced patent infringement. From the point of view of a patentee, the decision strengthens the value of a patent by removing a potential defense to an indirect infringement claim. Defendants can no longer argue that they did not specifically intend to cause direct infringement of a patent simply because they held a good faith that the patent was invalid.

In the Commil decision, the Supreme Court confirmed that a good-faith belief in noninfringement does remain a defense to induced patent infringement. Therefore, if a defendant can convince a court that it reasonably believed that the acts it induced did not constitute infringement, even if the court ultimately concludes that the underlying acts did infringe, then the defendant may still avoid liability for inducement.

Key Takeaway: A good faith belief that a patent claim is invalid is not a defense to induced infringement.

Biosig Instruments, Inc. v. Nautilus, Inc., No. 2012-1289 (Fed. Cir.) (Definiteness)

In Biosig Instruments, Inc. v. Nautilus, Inc., the Federal Circuit held that a disputed claim term was sufficiently definite under a new, potentially more stringent, test for indefiniteness recently handed down by the Supreme Court. At issue was a claim term indicating that two electrodes in a heartrate monitor were mounted in a “spaced relationship” with each other. The district court held that the “spaced relationship” claim term was indefinite. On an earlier appeal, the Federal Circuit reversed that holding, under the standard that a term is indefinite only when it is “not amenable to construction” or “insolubly ambiguous.” On appeal, the Supreme Court changed the standard for indefiniteness from “insolubly ambiguous” to one of “reasonable certainty.” The Supreme Court then remanded the Biosig case to the Federal Circuit for application of the new standard.

The Federal Circuit’s much-anticipated decision on remand again upheld the validity of the “spaced relationship” claim term, explaining that, based on the specification and the prosecution history “an ordinarily skilled artisan would be able to determine this language requires the spaced relationship to be neither infinitesimally small nor greater than the width of a user’s hands.” The Federal Circuit placed significant emphasis on the role of the specification and prosecution in explaining the metes and bounds of the “spaced relationship” claim term. The Federal Circuit did not clearly explain the difference between the Federal Circuit’s old “insolubly ambiguous” standard and the Supreme Court’s new “reasonably certain” standard.

Key Takeaway: While the Federal Circuit has begun to apply the Supreme Court’s new “reasonably certain” test for indefiniteness, it remains to be seen how much the bar for indefiniteness has been changed. Nevertheless, in view of this flux in the law, all steps should be taken to make sure claim terms are sufficiently explained and supported in the patent application.

Apple Inc. v. Samsung Electronics Co., Ltd., No. 2014-1335 (Fed. Cir.) (Design Patent Infringement)

In Apple Inc. v. Samsung Electronics Co., Ltd., the Federal Circuit reversed the district court’s judgment of dilution of Apple’s trade dresses, but affirmed infringement of Apple’s design and utility patents and the damages awarded to Apple. Apple sued Samsung for patent infringement and trade dress dilution relating to Apple’s iPhone design. The district court entered judgment in favor of Apple, awarding over $930 million in damages. The infringed patents are directed to the design for the home screen user interface, the overall shape of Apple’s iPhone, and to certain functional features of the iPhone’s user interface. The diluted trade dresses relate to the iPhone’s digital icons and configuration of the iPhone. Samsung challenged the liability findings and damages award.

With respect to trade dress, the Federal Circuit held that trademark law is limited to protection of physical details and the nonfunctional design elements of a product. In determining functionality, the court applied the Ninth Circuit’s Disc Golf factors, which consider whether the design yields utilitarian advantage, whether alternative designs are available, whether advertising touts utilitarian advantages, and whether the method of manufacture is simple or inexpensive. See Disc Golf Assoc., Inc. v. Champion Discs, 158 F.3d at 1006. Based on analysis of these factors, the court found that the alleged trade dresses are functional, and are therefore unprotectable as a trademark.

The Federal Circuit also rejected all of Samsung’s arguments challenging the infringement of Apple’s design patents, including Samsung’s attempt to exclude functional features from the infringement analysis. Importantly, the Federal Circuit also rejected Samsung’s arguments that only a portion of Samsung’s smartphone profits attributable to the design patent infringement be allowed as damages, holding that the damages statute for design patent infringement, 35 U.S.C. §289, explicitly requires the award of the “total profit” from the article of manufacture bearing the patented design. Thus, the total sales of Samsung’s smartphones bearing the infringing designs were awarded as damages.

Key Takeaway: The total profit from the sales of a product that infringes a design patent can be awarded, regardless of whether the profits from the infringing article are actually attributable to the infringing design.

Kaneka Corp. v. Xiamen Kingdomway Group Co., No. 2014-373 (Fed. Cir.) (Claim Construction)

In Kaneka Corporation v. Xiamen Kingdomway, the Federal Circuit affirmed-in-part and vacated-in-part the district court’s summary judgment that Xiamen Kingdomway did not infringe claims in Kaneka’s coenzyme Q10 dietary supplement patent, claimed in U.S. Patent No. 7,910,340. The claims of the ’340 Patent are directed to processes for producing oxidized coenzyme Q10. The district court entered summary judgment of noninfringement based on the claim construction of three claim terms: “inert gas atmosphere,” “sealed tank,” and “oxidizing.” Kaneka appealed both the district court’s claim construction and noninfringement decision.

On appeal, the Federal Circuit held that the district court incorrectly relied on extrinsic evidence, specifically a dictionary definition, to arrive at a construction of “sealed tank” that was inconsistent with the intrinsic record. The Federal Circuit reasoned that, although the specification for the ‘340 patent lacked an explicit definition of “sealed,” Example 8 and Figure 1 of the ‘340 patent suggest that the “sealed tank” should be sealed to the atmosphere but not necessarily to prevent entry or exit of all materials. Thus, the court concluded that word-forword alignment of disclosed embodiments with claim language “is unnecessary when the meaning of a claim term can be ascertained from the intrinsic record.”

Key Takeaway: For claim construction, word-for-word alignment with the specification is unnecessary if the meaning of the claim term can be ascertained from the intrinsic record. Extrinsic evidence, such as dictionary definitions, can be used only if they do not conflict with the intrinsic record.