L&A Federal Circuit Review

May 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.

Akamai Techs. Inc. v. Limelight Networks, Inc., No. 2009-1372 (Divided Infringement)

In Akamai Technologies, Inc. v. Limelight Networks, Inc., the Federal Circuit reaffirmed that direct infringement of a method claim only exists when all of the steps of the asserted method are performed by or attributed to a single entity (i.e., the “single entity rule”). Akamai’s Patent covered methods relating to a content delivery service that required replicating web pages on servers and also “tagging the embedded objects” of the page. While the defendant, Limelight, arguably performed some steps of the claimed methods on its content delivery network, only its customers performed the step of “tagging the embedded objects.” The Court held that Limelight could not be held liable for infringement when no one party performs all of the steps of the asserted claims.

In a prior en banc decision, the Federal Circuit held that Limelight could be held liable for induced infringement, even though not all of the claim steps were committed by a single entity. The Supreme Court disagreed, holding that a defendant cannot be liable for inducing infringement when no one has directly infringed the claim. On remand, the current Federal Circuit’s decision is more in line with Supreme Court precedent, holding that direct infringement only occurs when one entity either performs or controls the performance of every step of the claimed method. However, the Federal Circuit stopped short of holding that divided infringement could never occur. The court noted that where one party “masterminds” or exercises sufficient “direction or control” over the actions of another, the combined performance of the steps of a method claim may directly infringe. The Federal Circuit offered that divided infringement may arise in a principal-agent relationship, a contractual relationship, or when parties work together in a joint enterprise as a form of mutual agency.

Key Takeaway: Direct infringement of a method claim requires all steps of the asserted method to be performed by or under the control of a single entity.

EON Corp. IP Holdings LLC v. AT&T Mobility LLC , No. 2014-1392 (Indefiniteness)

In Eon Corp., the Federal Circuit affirmed the district court’s judgment that all claims of U.S. Patent No. 5,663,757 (“’757 patent”) are invalid for indefiniteness. The claims of the ’757 patent are directed to software in a local subscriber data processing station that operates in tandem with a television to interconnect interactive features of the television. The claims of the ’757 patent included several means-plus-function limitations directed to a “replaceable software means.” The Federal Circuit held that these means-plus-function limitations were indefinite.

The district court found that the specification of the ‘757 patent failed to disclose an algorithm to provide structure for these computer-implemented means-plus-function elements. While a patent pay claim a computer- implemented function in a means-plus-function limitation, such claim limitations are construed as covering the corresponding algorithms for performing that function that are disclosed within the specification. However, where no corresponding algorithm is disclosed, a computer-implemented means-plus-function limitation will be found invalid as indefinite. EON did not dispute that the ‘757 patent disclosed no algorithms; however, EON asserted that a microprocessor provided sufficient structure for the computer-implemented functions because they are relatively simple to implement. The Federal Circuit acknowledged there is a narrow exception to the corresponding algorithm rule that allows a standard microprocessor to serve as corresponding structure for routine computer functions. See In re Katz Interactive Call Processing Patent Litigation. 639 F.3d 1303 (Fed. Cir. 2011). However, the Federal Circuit rejected EON’s argument, holding that a standard microprocessor can only serve as structure for a computer-implemented function “where the claimed function is ‘coextensive’ with a microprocessor itself.”. The court reasoned that any computer-implemented functions beyond generic microprocessor capabilities would require special programming and, therefore, the specification would need to provide a corresponding algorithm for that function.

Key Takeaway: Practitioners should be careful to include a corresponding algorithm for each computer- implemented means-plus-function claim limitation. Disclosure of a standard microprocessor will only provide corresponding structure for the basic functions of a microprocessor, without special programming.

Sukumar v. Nautilus, Inc., No. 14-1205- 2015-05-05 (Standing to Assert False Marking)

In Sukumar, the Federal Circuit upheld a district court’s summary judgment that Sukumar lacked standing to bring a false patent marking lawsuit. Sukumar purchased modified fitness machine equipment from Nautilus and then filed a false marking claim under 35 U.S.C. § 292(a), which prohibits marking an unpatented article with the word “patent” or any word or number suggesting that it is patented, for the purpose of deceiving the public. Section 292(b) provides a private right of action to enforce the false marking statute to any “person who has suffered a competitive injury as a result of a violation of this section.”

The Federal Circuit held that Sukumar lacked standing to sue for false patent marking because Sukumar failed to show a competitive injury. The law “does not confer standing upon any entity that claims a subjective intent to compete.” A potential competitor could suffer a competitive injury if it had both (1) an intent to enter the market with a reasonable possibility of success, and (2) taken an action to enter the market. In this case, the Court held that Sukumar failed on both counts.

Key Takeaway: Standing to bring false patent marking cases is difficult to demonstrate after the America Invents Act. “Competitive injury” is necessary to bring a false marking action but such an injury can only be suffered by entities that actually sell products or who have taken action demonstrating a true intent to enter the market.

ArcelorMittal France v. AK Steel Corp., No. 14-1189-2015-05-12 (Reissue Claims Improperly Broadened)

In ArcelorMittal, the Federal Circuit held reissue claims invalid because they were improperly broadened through a reissue application. Prior to reissue, the original patent included an independent claim directed to a specific type of steel that has a “very high mechanical resistance” after thermal treatment. In a subsequent litigation, the Federal Circuit construed the term “very high mechanical resistance” as limited to steel with a tensile strength greater than 1500 MPa. After receiving that adverse claim construction, and outside the two year broadening window under 35 U.S.C. § 251, ArcelorMittal filed a reissue patent application. The reissue application included the same claims as the parent patent, but added two new dependent claims that implied a broader interpretation of the independent claim through claim differentiation.

After the patent reissued, ArcelorMittal attempted to assert the reissued patent in the still-pending litigation and AK Steel counterclaimed seeking a declaration of invalidity of the reissue patent, arguing that the claim had been improperly broadened beyond the 2-year window. In response, ArcelorMittal argued that the independent claim was not broadened because the successful prosecution of the reissue showed that the PTO considered the phrase “very high mechanical resistance” to be broader than construed by the Federal Circuit, and that the new interpretation by the PTO was “new evidence” to support the reconsideration of the previous claim interpretation. The district court disagreed and granted summary judgment to AK Steel, finding that the patent had been impermissibly broadened through reissue.

On appeal, the Federal Circuit held that the fact that the PTO apparently accorded the reissue patent a broader claim construction than the Federal Circuit had was insufficient grounds to revisit the court’s prior claim construction. The court held that a district court is bound by a prior Federal Circuit claim construction in the same case, despite any intervening decisions by the USPTO that implies the Federal Circuit construction may have been too narrow. Furthermore, based on the prior, binding claim construction, the Federal Circuit held that the reissued patent claims represented an impermissible attempt to broaden the claims of the original patent beyond the two-year window for seeking a broadening reissue.

Key Takeaway: A claim whose scope is broadened during reissue outside the two year window will be invalid, even if the broadening is based upon a new claim differentiation argument created by new dependent claims, and not a literally broadening amendment to the claim.