« Disclaimed | Main | Standing »

August 21, 2009

Ticker

Cardiac Pacemakers sued St. Jude Medical for infringing 4,407,288, claiming an implantable cardiac defibrillator (ICD). On second appeal, while multiple issues get the ticker running quicker, what really pumps is excluding method claims from Section 271(f).

Cardiac Pacemakers v. St. Jude Medical (CAFC 2007-1296) precedential

Validity

"The jury found the '288 patent valid and enforceable, but not infringed by St. Jude's ICDs." The judge overturned the jury, finding the patent invalid. The judge was reversed on appeal, including claim construction. The judge found the patent invalid again.

We agree with Cardiac that anticipation was not properly before the district court on remand. In the 2004 Opinion, we clearly stated that the purpose of the remand was "for a new trial of infringement and reassessment of damages." 2004 Opinion, 381 F.3d at 1374. Furthermore, we explicitly "reinstate[d] the jury verdict of validity." Id. The mandate rule requires that the district court follow an appellate decree as the law of the case. Sibbald v. United States, 37 U.S. 488, 492 (1838). Therefore, according to our explicit instructions, any new trial on remand was limited to an assessment of infringement and a calculation of any damages.

But with a new claim construction, invalidity could again rear its head. But only if a changed claim construction created a new opening for prior art to sneak in for the kill. It didn't.

Thus, the question before us now is whether anticipation is a "directly related new issue" in this case, or whether our reinstatement of the jury's validity verdict precludes raising anticipation on remand. The jury found the claims of the '288 patent nonobvious in light of numerous prior art references, including both Duggan and Denniston. In overturning the jury's validity verdict, the district court permitted St. Jude to raise anticipation arguments on remand that St. Jude did not raise at trial. The court based its decision on the fact that "St. Jude may have chosen not to pursue some invalidity defenses, including anticipation, at trial," due to the erroneous claim construction of "determining" used at trial. Damages Decision, 418 F. Supp. 2d at 1033. In finding the claims of the '288 patent nonobvious, the jury necessarily reached the conclusion that some element necessary to prove obviousness had not been demonstrated. For St. Jude to succeed in this appeal, that missing element would have to have been the "determining" limitation.

While it is true that a changed claim construction may permit new anticipation arguments, that cannot be the case here because the "determining" limitation never served as a basis for distinguishing the prior art from the '288 patent and is therefore not a "directly related new issue."

The jury found that those references did not invalidate the patent even though Cardiac did not dispute that the "determining" construction was known in the prior art. Thus, it cannot be said that the jury's decision hinged on the erroneous construction of that claim. Stated differently, the jury's verdict of validity could not have depended upon the erroneous construction of "determining" because it was uncontested during trial that that term was present in the prior art.

Damages

The district court limited damages to devices that infringed the asserted method claim.

We agree with St. Jude that the district court correctly limited damages to those devices that were shown to infringe the '288 patent.

In the present case, however, Cardiac is not seeking lost profits on an apparatus and therefore cannot rely on the reasoning in Stryker. Here, Cardiac seeks royalties on its patented method. "A method claim is directly infringed only by one practicing the patented method." Joy Tech. v. Flakt, Inc., 6 F.3d 770, 775 (Fed. Cir. 1993).

Section 271(f)

The court hears this section C(2) en banc. The district court, following our decision in Union Carbide Chemicals & Plastics Technology Corp. v. Shell Oil Co., 425 F.3d 1366 (Fed. Cir. 2005), found that 35 U.S.C. § 271(f) applied to method claims and that St. Jude's shipment of ICDs abroad could result in a violation of that section. Damages Decision, 418 F. Supp. 2d at 1042-44. On cross-appeal to this court, St. Jude challenged the court's decision. The panel affirmed the court's decision on the basis of Union Carbide. Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 303 F. App'x 884 (Fed. Cir. 2008).

Before analyzing the merits of St. Jude's cross-appeal, some background on Section 271(f) is in order. In Deepsouth Packing Co., Inc. v. Laitram Corp., 406 U.S. 518 (1972), the Supreme Court held that a manufacturer who shipped unassembled parts of a patented shrimp deveining machine abroad was not liable for patent infringement. Because "it is not an infringement to make or use a patented product outside of the United States," the Court held that the shipment of unassembled components of the deveining machine did not constitute patent infringement. Id. at 527, 531.

In response to Deepsouth, Congress enacted Section 271(f). See, e.g., Patent Law Amendments of 1984, S. Rep. No. 98-663, pp 2-3 (1984) (describing Section 271(f) as a response to the "Deepsouth decision which interpreted the patent law not to make it infringement where the final assembly and sale is abroad"); see also Microsoft Corp. v. AT&T Corp., 550 U.S. 437, 444 & n.3 (2007) (AT&T II) (stating that Section 271(f) was enacted with Congress "[f]ocusing its attention on Deepsouth").

Section 271(f) provides in full as follows:

(1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

(2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

35 U.S.C. § 271(f).3

3 Our analysis here focuses on 271(f)(1), but is equally applicable to 271(f)(2). While the two paragraphs differ in some respects, neither party argues that the differences are relevant in this case. Indeed, both paragraphs require the "supply" of "components" that are capable of being "combined outside of the United States." Compare 35 U.S.C. § 271(f)(1) & (2); see also AT&T II, 550 U.S. 437, 454 n.16. The definition of those terms guides our analysis on this issue.

The decision mentioned, in chronological order, Standard Havens Products, Inc. v. Gencor Industries, Inc., 953 F.2d 1360 (Fed. Cir. 1991); Eolas Technolgies, Inc. v. Microsoft Corp., 399 F.3d 1325 (Fed. Cir. 2005); AT&T Corp. v. Microsoft Corp., 414 F.3d 1366 (Fed. Cir. 2005) (AT&T I); and NTP, Inc. v. Research in Motion, Ltd.

The Supreme Court subsequently examined Section 271(f) when it granted certiorari and reversed our decision in AT&T I. AT&T II, 550 U.S. 437 (2007). The Court held that Microsoft did not supply combinable components of a patented invention when it shipped master disks abroad to be copied. Because the foreign-made copies of Windows that were installed on computers were supplied "from places outside of the United States," the Court held that Microsoft had not supplied components from the United States. Id. at 452. The court reserved judgment on whether "an intangible method or process . . . qualifies as a 'patented invention' under § 271(f)," but noted that if so, the "combinable components of that invention might be intangible." Id. at n.13. The Court sent a clear message that the territorial limits of patents should not be lightly breached. Id. at 454-56.

Now to an old sore point. The en banc court, with one notable exception, discriminates against method claims when applying 271(f).

Our precedents draw a clear distinction between method and apparatus claims for purposes of infringement liability, which is what Section 271 is directed to. See, e.g., Joy Tech., 6 F.3d at 773-75 (stating that method claims are infringed only by practicing the steps of the method); NTP, 418 F.3d 1282, 1318 ("[A] patent for a method or process is not infringed unless all steps or stages of the claimed process are utilized."). Section 271(f) "applies only to 'such components' as are combined to form the 'patented invention' at issue." AT&T II, 550 U.S. at 449 (footnote omitted). "Component" is defined as "a constituent part," "element," or "ingredient." Webster's Third New International Dictionary of the English Language 466 (1981); see also AT&T II, 550 U.S. at 449 n.11 (adopting same definition in Section 271(f) case). As we have seen, the patented invention at issue when a method patent is implicated consists of a "series of acts or steps." In re Kollar, 286 F.3d at 1332. The elements of a method are the steps that comprise the method. Thus, method patents do have "components," viz., the steps that comprise the method, and thus they meet that definitional requirement of Section 271(f), but the steps are not the physical components used in performance of the method.

Section 271(c) contrasts "a component of a patented machine, manufacture, combination, or composition" with a "material or apparatus for use in practicing a patented process." 35 U.S.C. § 271(c). Congress clearly believed that a "component" was separate and distinct from a "material or apparatus for use in practicing a patented process." Thus, a material or apparatus for use in practicing a patented process is not a component of that process. The components of the process are the steps of the process.

Although such patented methods do have components, as indicated, Section 271(f) further requires that those components be "supplied." That requirement eliminates method patents from Section 271(f)'s reach. The ordinary meaning of "supply" is to "provide that which is required," or "to furnish with . . . supplies, provisions, or equipment." Webster's Third New International Dictionary of the English Language 2297 (1981). These meanings imply the transfer of a physical object. Supplying an intangible step is thus a physical impossibility, a position that not even Cardiac seems to dispute. See Appellants' Br. 15 (arguing that steps of a patented process, "which conceptually could not be supplied from the United States," were not the components of the process). As we have noted before, "it is difficult to conceive how one might supply or cause to be supplied all or a substantial portion of the steps in a patented method in the sense contemplated by" Section 271(f). NTP, 418 F.3d at 1322.

In sum, the language of Section 271(f), its legislative history, and the provision's place in the overall statutory scheme all support the conclusion that Section 271(f) does not apply to method patents.

The last word on the subject belongs to the finest mind on the federal bench: Judge Newman.

I respectfully dissent from the court's interpretation of 35 U.S.C. §271(f) as excluding all process inventions. The statutory term "patented invention" in §271(f) has the same meaning in this subsection as in every other part of Title 35: it is the general term embracing all of the statutory classes of patentable invention. The court's interpretation of §271(f) to exclude all process inventions is contrary to the text of the statute, ignores the legislative history, is without support in precedent, and defeats the statutory purpose.

From that preamble, Judge Newman sallies forth to attack the heart, and every body part, of the majority's position.

The simple purpose of §271(f) is that, for patented inventions, a United States patent cannot be avoided by providing substantial components from the United States while performing some aspect offshore to avoid a technical act of infringement under §271(a). Section 271(f) draws no distinction between process and product inventions, and such distinction is unrelated to the legislative purpose.

The court's ruling reopens, for process inventions, the loophole that was plugged by §271(f) for all patented inventions.

Posted by Patent Hawk at August 21, 2009 11:56 PM | Case Law

Comments

Newman patent protectionism, move along folks nothing to see here.

Posted by: 6 at August 24, 2009 1:17 AM

6,

Clueless as usual. Newman, not the majority, got it right. 271(f) contains the same "patented invention" language as 271(e)(1) which has been interpreted broadly. Why this term shouldn't be interpreted the same is never explained by the majority.

Whether 271(f) makes economic sense for America's export market is another matter. But that's no excuss for misinterpreting not only the language of the statute, but also the legislative intent.

Posted by: EG at August 24, 2009 4:04 AM

The reason the majority never answer the question is because it is a nonquestion. That is, the majority DOES interpret it the same. They take no issue with including method claims under the "invention" wording of the statute.

The issue is that the party in question never did export any components of the instant method claim. And, as a matter of fact, they never will be able to. Ever. Because method claims do not include components, they include method steps. Therefore, while that stat category is covered by the statute, nobody ever actually violates this statute with a method claim because they never export components of a method claim.

Interestingly Judge Newman never addresses how one exports a step. She simply bses about how to export instructions for doing a step. Nobody gives two shts about instructions in a method claim. They give a sht about steps. The two things are not synonymous. The nearly unified CAFC got it right. End of story.

It would be helpful for you to note that all the CAFC is saying is that the law is defective for this purpose. If congress wrote a defective law then they need to address it, not have the courts fudge for them. All they need to do is say "components, or components utilized in or by a method step,". It really isn't that hard. Frankly, I don't even think that the congress wants that to be included. They wrote a statute just above this one (c? iirc) to address method claims.

Posted by: 6000 at August 24, 2009 12:25 PM

6,

Sorry, but Newman still has the better argument on the meaning of "patented invention" in 271(f). The majority's reliance on 271(c) would be better if 271(f) was contemporaneous with 271(f) but it isn't (by many years). Instead, as Newman points out, 271(f) is contemporaneous with 271(e)(1) which has the same "patented invention" language which SCOTUS has interpreted broadly.

And you are correct that Congress could have written 271(f) better. In fact, 271 is now a patchwork mess of paragraphs that use different phrases to refer to the invention that is covered. This is especially true when comparing 271(f) to 271(g).

Posted by: EG at August 24, 2009 1:36 PM

"Sorry, but Newman still has the better argument on the meaning of "patented invention" in 271(f). "

Her argument is not related to the issue at hand. If it was, then it might be a good one.

Posted by: 6000 at August 24, 2009 2:08 PM