May Federal Circuit Review

May 2016

Minimum Presence in District of Delaware Affirmed to Be Sufficient Grounds for Suit Brought in Delaware

In re TC Heartland LLC, No. 2016-105 (Fed. Cir. April 29, 2016)

In TC Heartland, the Federal Circuit denied a writ of mandamus to dismiss or transfer out of the District of Delaware a patent infringement suit brought by Kraft Foods Group Brands LLC, finding that 2011 changes to federal law did not change the standard for determining appropriate venue in patent cases.

TC Heartland argued on appeal that the 2011 amendments to the statute governing the jurisdiction of the federal courts required venue determinations in patent cases to be made under the patent-specific provision, 28 U.S.C. § 1400, and not the broader provision, 28 U.S.C. § 1391 concerning venue, generally. These amendments added language to section 1391 to clarify that it applies to venue determinations “[e]xcept as otherwise provided by law.” TC Heartland argued that this change was intended to make section 1400 the exclusive section for determining venue in patent cases.

The difference, according to TC Heartland, was that section 1391 permits a suit to be brought in any venue in which “personal jurisdiction” applies to the defendant, while section 1400 provides that a suit can be brought in any district in which the defendant “resides.” TC Heartland argued that the amendments, and the differences in language between the two sections, were intended to codify a 1957 Supreme Court decision finding that corporate “residence” for the purpose of patent suits was limited only to its state of incorporation. TC Heartland contended that the District of Delaware may have had personal jurisdiction over it, but that TC Heartland did not reside in that district.

The Federal Circuit rejected TC Heartland’s arguments as “utterly without merit or logic.” The Supreme Court decision TC Heartland relied on was superseded by statute in 1988. Since that time, a corporation has “resided” in any state having personal jurisdiction over it. Under prevailing Federal Circuit law, section 1391 helps define section 1400, and does not conflict with that section. There was no evidence in any legislative history that Congress intended to change the law in this respect through the 2011 amendments. The court further noted that Congress is presently considering legislation to “correct” prevailing Federal Circuit venue law, which would not be necessary if the 2011 amendments already effected that change.

Key Takeaways: The Federal Circuit has affirmed that venue in patent cases is appropriate in any judicial district having personal jurisdiction over the defendant. While the court recognizes there is pressure to make patent venue determinations more restrictive, any changes must come from Congress and not the courts.

Functional Elements Given Weight in Design Patent Claim Construction

Sport Dimension, Inc. v. The Coleman Co., No. 15-1553 (Fed. Cir. April 19, 2016)

In Sport Dimension, the Federal Circuit affirmed that questions related to the functionality of elements of a patented design in a design patent are best dealt with during claim construction, and that a patented design consisting of largely functional elements still had some scope, albeit narrow, limited to the patented design’s ornamental aspects.

Coleman alleged Sport Dimension infringed its design patent for a type of floatation device having arm bands and a tapered chest piece. The district court issued a claim construction, identifying the arm bands and tapered chest as having a predominantly functional rather than ornamental purpose, and excluded those elements from the claimed design. Sport Dimension then moved for summary judgment of no infringement, which the district court granted. Coleman appealed to the Federal Circuit.

The Federal Circuit confirmed that the construction of claims having functional elements involves identifying the functional elements, and the ornamental aspects of those elements. A claim having many functional, and few ornamental, characteristics will likely be viewed as having a very narrow claim scope, but the Court will not construe such a design as having no scope at all.

To aid courts in determining whether a particular design element was primarily functional rather than ornamental, the Federal Circuit next borrowed a test traditionally used to determine whether a design patent was invalid as primarily dictated by function; the “Berry Sterling factors.” Under this test, the district court should consider: (1) whether the protected design represents the best design; (2) whether alternative designs would adversely affect the utility of the specified article; (3) whether there are any concomitant utility patents; (4) whether the advertising touts particular features of the design as having specific utility; and (5) whether there are any elements in the design or an overall appearance clearly not dictated by function. The Federal Circuit argued these factors would serve as a useful guide for claim construction functionality.

The Federal Circuit reversed the district court’s judgment on the basis of its incorrect claim construction, but acknowledged that the Coleman design patent contained little surface ornamentation and was likely entitled to very narrow claim scope. The court further suggested that pre-trial resolution of the case might still be appropriate, following a corrected construction.

Key Takeaways: A design patent claim containing functional elements will be entitled to some patent scope, and functional elements should not be omitted completely from design patent claim construction. Courts are encouraged to use the Berry Sterling factors to determine which aspects of a claimed design are primarily functional. Despite holding that functional elements do not entirely destroy claim scope, highly functional design patents may have a very narrow scope of coverage.

Invalidity Determination Would Not Apply to Reexamination Claims That Did not Exist at Time of Judgment

Cardpool, Inc. v. Plastic Jungle, Inc., No. 14-1562 (Fed. Cir. Apr. 5, 2016)

In Cardpool, the Federal Circuit held that a district court was not required to vacate its final judgment that the claims of an asserted patent were invalid as directed to patent-ineligible subject matter under 35 U.S.C. § 101, despite the fact that all of the asserted claims had been amended during ex parte re-examination.

Cardpool sued Plastic Jungle for infringement of a patent on a method for exchanging brand name gift cards. The district court dismissed Cardpool’s claims with prejudice upon a finding that the claims were patent-ineligible under section 101. Cardpool appealed to the Federal Circuit, which summarily affirmed the district court’s dismissal.

While the appeal was pending, Cardpool filed a request for ex parte reexamination of the asserted patent. During reexamination, Cardpool amended all of the asserted claims to avoid certain prior art references alleged by Plastic Jungle to render the claims obvious under 35 U.S.C. § 103. The statutory scope of ex parte reexamination does not permit the patent office to address patentable subject matter under section 101.

Cardpool requested rehearing of the Federal Circuit’s decision, arguing that its affirmance had become moot following the amendment of all of the asserted claims. The Federal Circuit granted a rehearing and vacated its decision, remanding the case to the district court to determine whether further actions were required.

At the district court, Cardpool and Plastic Jungle sought to vacate the Court’s dismissal with prejudice. Cardpool argued that a judgment “with prejudice” could prevent it from bringing an infringement suit in the future under the new amended claims. Plastic Jungle joined in the motion to vacate, as the parties agreed that it had ceased any allegedly infringing activity. The district court denied the request for vacatur, and Cardpool appealed again.

The Federal Circuit upheld the district court’s denial of a motion to vacate. The district court’s decision was properly final as to the claims of the patent as they existed prior to amendment. As to Cardpool’s concern, res judicata, or claim preclusion, would not apply to bar a new suit by Cardpool under the new claims, because those claims did not exist and were not litigated at the time of the original judgment. The effect of the prior judgment on the specific issues raised by Cardpool in a new case would be determined if and when a new case was properly before the district court.

Key Takeaway: Res Judicata will not bar a patent owner from asserting newly amended claims in a future action, following a judgment invalidating antecedent claims. However, a patentee likely cannot erase an adverse district court judgment by later changing the claims in a collateral process, such as through reexamination.

Law of Nature Combined with Mental Process Step Not Patent Eligible

Genetic Technologies Ltd v. Merial L.L.C., No. 15-1202 (Fed. Cir. Apr. 8, 2016)

In Genetic Technologies, the Federal Circuit upheld a district court’s summary judgment of invalidity based on subject matter ineligibility under 35 U.S.C. § 101, finding the claimed method of amplifying and analyzing DNA was directed to an abstract idea and the claim did not recite “significantly more” than the abstract idea to render it patentable.

Genetic Technologies sued several biotechnology and pharmaceutical companies for infringing its patent directed to amplifying and analyzing noncoding DNA. Specifically, the patent described how, in animals, certain non-coding regions of DNA are frequently inherited together with the DNA that codes for proteins. Once a linkage between the coding and non-coding DNA is found, a scientist can determine which specific mutation, or “allele,” an individual has inherited by looking at only small non-coding regions of DNA rather than the larger allele itself. The two-step claim at issue in this case involved 1) amplifying the DNA covering the desired non-coding region, and 2) analyzing the amplified DNA to detect the allele.

The Federal Circuit affirmed a district court determination that the representative claim was directed to patent-ineligible subject matter. Using the two-step framework set out by the Supreme Court, known as the Alice or Mayo test, the Federal Circuit first found that the claim was directed to a law of nature: the relationship between non-coding and coding sequences and the tendency for such non-coding sequences to be representative of the linked coding sequences. In the next step, the court found the claim did not add significantly more to the abstract idea to make it patentable. The patent recited only well-known techniques for amplifying and analyzing DNA.

Genetic Technologies attempted to distinguish its claims from others found to be patent-ineligible on similar facts by arguing that analyzing man-made non-coding DNA to detect an allele had never been performed before and was therefore sufficiently inventive. The Federal Circuit disagreed, finding that the analysis step was a purely mental calculation, which merely asked scientists and physicians to apply the natural law to the product of a routine process. The court further noted that its determination stood despite the fact that the claims were undeniably novel; the patent had survived multiple rounds of reexamination over the prior art.  Novelty of the idea was not sufficient to confer patent-eligibility.

Key takeaway: A claim directed to a natural law, including laws respecting the interrelationship of distinct types of DNA, will not be patent eligible even upon a clear showing of novelty. A patentee must focus on adding significantly more to the claim beyond routine implementations of natural law using known techniques or procedures.