November Federal Circuit Review

November 2016

Joint Infringement not Adequately Pled by Form 18 Complaint

Lyda v. CBS Corp., No. 15-1923 (Fed. Cir. Sept. 30, 2016)

In Lyda v. CBS Corp., the Federal Circuit held a plaintiff fails to state a claim of joint patent infringement with a complaint that follows the model of Form 18 in the Appendix of Forms to the Federal Rules of Civil Procedure.

Edwin Lyda is the owner of two patents directed to methods for allowing television show audience members to register responses, such as votes, using a remote device. Lyda filed suit against CBS Corporation and its wholly owned subsidiary, arguing that the television show Big Brother infringed his patents by allowing audience members to vote during the show using their telephone. Lyda’s complaint suggested his claim was for joint infringement, wherein some but not all of the steps were allegedly performed not by CBS itself but by individuals under the “control or direction” of CBS. CBS moved to dismiss Lyda’s complaint, arguing that it failed to state a plausible claim for relief. The district court granted CBS’s motion, and Lyda appealed.

A complaint may be dismissed under Rule 12(b)(6) of the Federal Rules of Civil Procedure if it fails to state a claim for relief that is plausible on its face. This pleading standard evolved from two Supreme Court decisions in 2007 and 2009, and is sometimes known as the “Iqbal and Twombly” standard. Previously, most complaints were only required to provide a short and plain statement of the cause of action, which is referred to as “notice pleading.” The Federal Circuit has recognized an exception to the Iqbal and Twombly standard where the complaint was modeled after one of the forms in an appendix to the Federal Rules, all of which conformed to the older, notice pleading requirements. Form 18 provided a model complaint for direct patent infringement. But, claims for other forms of patent infringement, such as induced or contributory infringement were not within the scope of Form 18, and were required to conform to the higher Iqbal and Twombly standard.

In view of the pleading standard problem created by the forms, as well as the wide availability of other resources to assist litigants in preparing filings, the Supreme Court abrogated the Appendix of Forms in December, 2015. Lyda’s complaint was filed in 2014, and could therefore claim the benefit of Form 18, if applicable. All newly filed cases must meet the Iqbal and Twombly plausibility standard to survive a motion to dismiss.

The Federal Circuit held that Form 18 cannot be relied on to properly plead claims of joint patent infringement. While joint infringement is considered to be a special type of direct infringement, it requires proof of additional elements that reach beyond the typical infringement claim and is therefore not adequately pled by a form-based complaint. Because Lyda did not dispute that his complaint could not survive a motion to dismiss under the Iqbal and Twombly standard, the dismissal of his Form 18 complaint was affirmed.

Key Takeaway: A complaint alleging joint infringement must state a claim for relief that is plausible on its face, and will not survive a motion to dismiss under a more permissive notice pleading standard.

Reconsideration of Decision to Institute IPR is Not Appealable

Medtronic, Inc. v. Robert Bosch Healthcare Sys., Inc., Nos. 15-1977, -1986, -1987 (Fed. Cir. Oct. 20, 2016)

In Medtronic, the Federal Circuit held that a ruling on a motion for reconsideration of a decision by the Patent Trial and Appeal Board to institute Inter Partes Review (IPR) is non-appealable.

Bosch is the owner of two patents directed to patient monitoring networks and systems. Bosch sued Cardicom, LLC, a subsidiary of Medtronic, for infringement in the U.S. District Court for the Eastern District of Texas. In response, Cardicom filed several petitions for IPR of Bosch’s patents, which were denied. Because Section 315(b) of the Patent Act prevents parties from filing petitions for IPR more than one year after being sued for infringement, Cardicom was forbidden from presenting new petitions after its previous requests were denied. Instead, Medtronic petitioned for IPR under its own name, and those petitions were granted by the Board.

Bosch argued that Medtronic should have identified Cardicom as the real party in interest behind the granted petitions, and thus the proceedings should have been time-barred. After taking discovery on this issue, Bosch moved to terminate the IPRs. The Board agreed with Bosch, and vacated its earlier decision to institute review. Medtronic appealed.

The Federal Circuit lacked jurisdiction to hear Medtronic’s appeal. Section 314(d) of the Patent Act states that the determination to institute review shall be final and non-appealable. This prohibition extends to any actions by the Board that are closely tied to the application and interpretation of the statutes related to the Patent Office’s decision to institute IPR. Thus, if a decision to institute review cannot be appealed, neither can the Board’s reconsideration of that same decision.

Key Takeaway: The statutory prohibition against appeals of the decision to institute IPR extends to actions by the Board to reconsider or vacate that institution decision.

Patent Claims Were an Ineligible, Computerized Mental Process

Synopsis, Inc. v. Mentor Graphics Corp., No. 2015-1599 (Fed. Cir. Oct. 17, 2016)

In Synopsis, the Federal Circuit held that Synopsis’ claims directed to a method for converting a user description of a logic circuit into hardware components was a patent-ineligible mental process, thereby affirming the district court decision holding the claims of the patents-in-suit invalid.

At the district court, Synopsis had asserted three patents against Mentor generally directed to software for designing a circuit. Traditionally, circuit designers would prepare a schematic diagram identifying individual logic components, and interconnections or Boolean logic equations between them, to specify a precise function. A fabrication facility would then build the corresponding physical circuit based on the architecture presented in the detailed design. Synopsis’ patents were directed to software for accepting functional descriptions of the proposed circuit in HDL and then generating circuit designs using “control flow graphs” and “assignment conditions.” The district court found that the claims of the patents-in-suit failed under Alice Corp. because, “[e]ach of the steps in the claimed methods can be performed by a skilled designer either mentally or with pencil and paper.”

On appeal, the Federal Circuit affirmed the district court’s decision. Under the first part of Alice Corp., the court found that the claims were directed to the mental process of generating a circuit design based on functional descriptions. The court cautioned that such mental processes “which can be performed entirely in the human mind are the types of methods that embody the ‘basic tools of scientific and technological work’ that are free to all men and reserved exclusively to none.” The court rejected Synopsis’ arguments regarding the alleged “complexity” of the underlying mental process, in part, because the examples provided in the specification were exceedingly simple and would be covered by the claims.

Under the Alice Corp., step 2, the court also rejected Synopsis’ argument that Mentor failed to meet its burden of proof because it failed to submit any prior art demonstrating that the claimed subject matter was “known and routine.” The court reasoned that, “[i]t is true that ‘the §101 patent-eligibility inquiry and, say, the §102 novelty inquiry might sometimes overlap… But, a claim for a new abstract idea is still an abstract idea.”

Key Takeaway: Mental processes may face significant hurdles under Alice Corp. Practitioners should seek to limit their claims to narrow computer implementations that are distinguishable from prior, “pencil and paper” practices.

Apple’s Slide-to-Unlock, Automatic Spell Correction, and Data Detection Patent Claims Were Not Invalid

Apple, Inc. v. Samsung Electronics Co., Ltd. (Fed. Cir. Oct. 7, 2016)

In this latest installment of the Apple v. Samsung patent wars, an en banc Federal Circuit court reversed a prior panel decision holding that Apple’s well-known “slide-to-unlock,” auto-correct, and data detection patents were invalid. The court found that the panel decision relied on extra record evidence that was not before the district court or properly before the panel when they rendered their decisions.

According to the en banc court, the panel decision had made several mistakes in reversing the district court’s findings of validity. First, with regard to the data detection patent, the panel ignored the Federal Circuit’s prior construction of “analyzer server” as “a server routine separate from a client that receives data having structures from the client.” Instead, the panel held that “Samsung’s accused systems did not infringe because ‘the Samsung software library programs are not ‘standalone’ programs that run separately.’” The en banc court found that the panel was improperly tinkering with the final claim construction when its only task was to determine if substantial evidence supported the jury’s findings.

With regard to the slide-to-unlock patent, the panel improperly substituted the jury’s assessment of the credibility of the expert witnesses for its own. At trial, Apple’s expert had testified that, although the asserted prior art disclosed the necessary limitations, one of ordinary skill in the art would not have been motivated to combine them. The en banc court found that “what a prior art reference teaches and whether a skilled artisan would have been motivated to combine references are questions of fact” and that the jury had found for Apple on these factual questions. As such, it was improper for the panel to reverse, simply substituting the jury’s determination on this point for its own.

Lastly, with regard to the auto-correct patent, Apple’s expert had testified that the asserted prior art had failed to teach every claim limitation as a factual matter. In rendering its decision of validity, the en banc court found that the jury had resolved this fact question in Apple’s favor and that such factual determinations could not be overturned unless they lacked substantial evidence. Here, the expert testimony, alone, provided substantial evidence.

Key Takeaway: District court decisions in patent cases that are grounded in factual determinations will be difficult to overturn on appeal. In obviousness cases, expert testimony may, alone, provide the “substantial evidence” needed to support a jury or district court decision on appeal.