Prior Art Invalidation

With regard to Flashpoint invalidating '075 -

The only references on which Lansa relies for its validity challenge are two user manuals for a software product called "Flashpoint." The issue at trial was whether either or both of these manuals is a "printed publication" in terms of §102(b), and thus available as evidence of anticipation or obviousness. One of the Flashpoint manuals is marked "an unpublished work and is considered a trade secret belonging to the copyright holder." The second manual is not marked with any indicium of either publication or secrecy. There was no evidence as to the source, publication, or public accessibility of either manual. The district court found that "no witness testified, nor was any evidence presented, that either of these documents was ever published or disseminated to the public." ResQNet III, 533 F. Supp. 2d at 414.

Public accessibility is the "touchstone in determining whether a reference constitutes a 'printed publication' bar under 35 U.S.C. §102(b)." In re Hall, 781 F.2d 897, 899 (Fed. Cir. 1986). The only argument presented by Lansa was ResQNet's subsequent inclusion of these manuals in an Information Disclosure Statement (IDS) that ResQNet submitted to the Patent Office during a reexamination proceeding for a different patent. Lansa states that ResQNet amended the claims in reexamination, in response to the examiner's rejection based on one of the IDS manuals, and that ResQNet thereby admitted that the manuals were printed publications. ResQNet responds that it learned of these manuals only when Lansa produced them in this litigation, and deemed it prudent to submit them in the unrelated reexamination proceeding, rather than risk the charge of concealing them. ResQNet states that its submission of the manuals was not an admission that they were publicly available publications. In Abbott Laboratories v. Baxter Pharmaceutical Products, Inc., 334 F.3d 1274, 1279 (Fed. Cir. 2003), the court explained that "mere submission of an IDS to the USPTO does not constitute the patent applicant's admission that any reference in the IDS is material prior art." We agree that ResQNet did not convert these manuals into printed publication prior art by including them with the IDS submitted to the PTO. No other evidence of publication or public availability was provided.

The only references identified by Lansa are the Flashpoint manuals. No error has been shown in the district court's ruling that these documents are not printed publications under §102(b) and thus are not prior art. We affirm that invalidity on the ground of obviousness has not been shown.

Damages

ResQNet got a 12.5% reasonable royalty rate, resulting in a $506,305 damages award. On appeal -

Because the district court's award relied on speculative and unreliable evidence divorced from proof of economic harm linked to the claimed invention and is inconsistent with sound damages jurisprudence, this court vacates the damages award and remands.

Into damages case law as a setup for determining reasonable royalty, boiling down to the requirement that a "trial court must carefully tie proof of damages to the claimed invention's footprint in the market place."

Upon a showing of infringement, a patentee is entitled to "damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer." 35 U.S.C. §284. A "reasonable royalty" derives from a hypothetical negotiation between the patentee and the infringer when the infringement began. See, e.g., Unisplay, S.A. v. American Elec. Sign Co., 69 F.3d 512, 517 (Fed. Cir. 1995). A comprehensive (but unprioritized and often overlapping) list of relevant factors for a reasonable royalty calculation appears in Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970).

"Determining a fair and reasonable royalty is often . . . a difficult judicial chore, seeming often to involve more the talents of a conjurer than those of a judge." Fromson v. Western Litho Plate & Supply Co., 853 F.2d 1568, 1574 (Fed. Cir. 1988). Still, a reasonable royalty analysis requires a court to hypothesize, not to speculate. Id. at 1575. At all times, the damages inquiry must concentrate on compensation for the economic harm caused by infringement of the claimed invention. See, e.g., Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476, 507 (1964) ("[T]he present statutory rule is that only 'damages' may be recovered.").

Thus, the trial court must carefully tie proof of damages to the claimed invention's footprint in the market place. See, e.g., Grain Processing Corp. v. American Maize-Prods. Co., 185 F.3d 1341, 1350 (Fed. Cir. 1999) ("To prevent the hypothetical from lapsing into pure speculation, this court requires sound economic proof of the nature of the market and likely outcomes with infringement factored out of the economic picture."); Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302, 1312 (Fed. Cir. 2002) ("[T]he market would pay [the patentee] only for his product . . . . [The patentee's damages] model [does not support the award because it] does not associate [the] proposed royalty with the value of the patented method at all, but with the unrelated cost of the entire Spirit platform."). Any evidence unrelated to the claimed invention does not support compensation for infringement but punishes beyond the reach of the statute.

The first Georgia-Pacific factor:

1. The royalties received by the patentee for the licensing of the patent in suit, proving or tending to prove an established royalty.

The farther afield the license, the further afoul relevancy to the rule.

With these principles in mind, this court just recently rejected a patentee's reliance on licenses because "some of the license agreements [were] radically different from the hypothetical agreement under consideration" and the court was "unable to ascertain from the evidence presented the subject matter of the agreements." Lucent Techs., Inc. v. Gateway, 580 F.3d 1301, 1327-28 (Fed. Cir. 2009). The majority of the licenses on which ResQNet relied in this case are problematic for the same reasons that doomed the damage award in Lucent.

ResQNet's damages expert, Dr. Jesse David, in a showing targeted to previous licensing, "used licenses with no relationship to the claimed invention to drive the royalty rate up to unjustified double-digit levels."

This trial court, like the one in Lucent, made no effort to link certain licenses to the infringed patent. For his part, Dr. David did not provide any link between the re-bundling licenses and the first factor of the Georgia-Pacific analysis. Without that link, as this court explained in Lucent: "We . . . cannot understand how the [fact finder] could have adequately evaluated the probative value of [the] agreements." 580 F.3d at 1328.

Lansa did not try to counter Dr. David. It needn't have, the CAFC panel majority ruled.

The district court seems to have been heavily influenced by Lansa's decision to offer no expert testimony to counter Dr. David's opinion. But it was ResQNet's burden, not Lansa's, to persuade the court with legally sufficient evidence regarding an appropriate reasonable royalty. See Lucent, 580 F.3d at 1329 ("Lucent had the burden to prove that the licenses were sufficiently comparable to support the lump-sum damages award."). As a matter of simple procedure, Lansa had no obligation to rebut until ResQNet met its burden with reliable and sufficient evidence. This court should not sustain a royalty award based on inapposite licenses simply because Lansa did not proffer an expert to rebut Dr. David. See SmithKline Diagnostics, Inc. v. Helena Labs. Corp., 926 F.2d 1161, 1168 (Fed. Cir. 1991) ("A court is not restricted in finding a reasonable royalty to a specific figure put forth by one of the parties."). Moreover the record already contained evidence of licenses on the claimed technology. Lansa was entitled to rely on that record evidence to show a royalty rate reasonably related to the technology in this litigation.

This court observes as well that the most reliable license in this record arose out of litigation. On other occasions, this court has acknowledged that the hypothetical reasonable royalty calculation occurs before litigation and that litigation itself can skew the results of the hypothetical negotiation. See Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d 1075, 1078-79 (Fed. Cir. 1983) ("[S]ince the offers were made after the infringement had begun and litigation was threatened or probable, their terms should not be considered evidence of an 'established royalty,' since license fees negotiated in the face of a threat of high litigation costs may be strongly influenced by a desire to avoid full litigation.") (quotations and alterations omitted). Similarly this court has long recognized that a reasonable royalty can be different than a given royalty when, for example, widespread infringement artificially depressed past licenses. See, e.g., Nickson Indus., Inc. v. Rol Mfg. Co., 847 F.2d 795, 798 (Fed. Cir. 1988); Fromson, 853 F.2d at 1577 n.15 ("[A] court should not select a diminished royalty rate a patentee may have been forced to accept by the disrepute of his patent and the open defiance of his rights.") (quotation marks and citation omitted). And a reasonable royalty may permissibly reflect "[t]he fact that an infringer had to be ordered by a court to pay damages, rather than agreeing to a reasonable royalty." Maxwell v. J. Baker, Inc., 86 F.3d 1098, 1109-10 (Fed. Cir. 1996); see also TWM Mfg. Co. v. Dura Corp., 789 F.2d 895, 900 (Fed. Cir. 1986) ("That [the patentee] might have agreed to a lesser royalty is of little relevance, for to look only at that question would be to pretend that the infringement never happened.").

The damages award was vacated, and remanded for recalculation.

Judge Newman dissented on damages, with distaste for her colleagues who "create a new rule whereby no licenses involving the patented technology can be considered, in determining the value of the infringement, if the patents themselves are not directly licensed or if the licenses include subject matter in addition to that which was infringed by the defendant here."

My colleagues, in setting strict barriers as to what evidence can be considered, leave the damages analysis without access to relevant information. However, it is not necessary that the identical situation existed in past transactions, for the trier of fact to determine the value of the injury. Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 563 (1931) ("it will be enough if the evidence show the extent of the damages as a matter of just and reasonable inference, although the result be only approximate"); State Industries, Inc. v. Mor-Flo Industries, Inc., 883 F.2d 1573, 1576-77 (Fed. Cir. 1989) ("Deciding how much to award as damages is not an exact science, and the methodology of assessing and computing damages is committed to the sound discretion of the district court.").

Judge Newman made a fine point that Lucent is not analogous to this case.

This damages assessment is not analogous to that criticized in Lucent, where the damages award was based on the entire market value of a system in which the infringing component was but a small part. Here, in contrast, the patented technology was a large part of the "bundled" licenses, and these licenses were fairly considered for their content and value.

As always, Judge Newman's analysis is incisive and cogent, and so her full dissent is worth review as argument material in an area of patent case law that remains in flux.

Sanctions

The district court had sanctioned ResQNet for keeping two patents in suit well after it had admitted non-infringement to Lansa. Yet "the district court's denial of summary judgment of noninfringement reflects the belief that it was reasonable for ResQNet to have retained that patent for suit." Sanctions were reversed on appeal as an abuse of discretion by the district court.

A tale of unfettered commerce by savvy Hong Kong provider Pentalpha -

Defendant Pentalpha is a Hong Kong corporation and a subsidiary of defendant Global-Tech, a British Virgin Islands corporation, which was formerly known as Wing Shing International, Ltd. (For convenience, this opinion will refer to Pentalpha and Global-Tech collectively as "Pentalpha.") Pentalpha began selling its accused deep fryers to non-party Sunbeam Products, Inc. ("Sunbeam") in 1997. In developing its deep fryer, Pentalpha purchased an SEB deep fryer in Hong Kong and copied its "cool touch" features. Shortly after agreeing to supply Sunbeam, Pentalpha obtained a "right-to-use study" from an attorney in Binghamton, New York. The attorney analyzed 26 patents and concluded that none of the claims in those patents read on Pentalpha's deep fryer. Pentalpha, however, did not tell the attorney that it had copied an SEB deep fryer.

Sunbeam resold the Pentalpha deep fryers in the United States under its own trademarks, "Oster" and "Sunbeam." On March 10, 1998, SEB sued Sunbeam in the United States District Court for the District of New Jersey, alleging that Sunbeam's sales infringed the '312 patent (the "Sunbeam Suit"). See SEB S.A. v. Sunbeam Corp., No. 2:98-CV-1050 (date closed May 28, 2002). Pentalpha was notified of the Sunbeam Suit on April 9, 1998. That suit ended in a settlement in which Sunbeam agreed to pay SEB $2 million.

Pentalpha also sold the same deep fryers to non-party Fingerhut Corp. ("Fingerhut") and defendant Montgomery Ward. These sales to Fingerhut and Montgomery Ward occurred after Pentalpha learned of the Sunbeam Suit. Like Sunbeam, Fingerhut and Montgomery Ward also sold the products under their own trademarks, CHEF'S MARK and ADMIRAL. Pentalpha sold these deep fryers to its three customers free on board Hong Kong or mainland China. "Free on board," or "f.o.b.," is a "method of shipment whereby goods are delivered at a designated location, usually a transportation depot, at which legal title and thus the risk of loss passes from seller to buyer." Litecubes, LLC v. N. Light Prods., Inc., 523 F.3d 1353, 1358 n.1 (Fed. Cir. 2008).

Claim construction is touched upon by the CAFC panel, producing salient quotes upon which patent purveyors may rely.

The words of a claim receive the meaning discernible by a person of ordinary skill in the art who has read the entire patent, including the specification, at the time of the invention. Phillips v. AWH Corp., 415 F.3d 1303, 1312-13 (Fed. Cir. 2005) (en banc). The claims themselves, both asserted and unasserted, govern the meaning of claim terms. Id. at 1314.

A loose screw was left untightened, letting the district court skate scot-free on 'completely free.'

Despite this minor inconsistency, the district court's construction of "completely free" rings true.

Read in light of the entire specification and with an eye to the preferred embodiment, then, the term "completely free" means "practically or functionally free." Indeed, the specification uses the two terms "completely" and "practically" interchangeably... This court often assumes that different terms convey different meanings. Symantec Corp. v. Computer Assocs. Int'l, Inc., 522 F.3d 1279, 1289 (Fed. Cir. 2008). That assumption, however, carries less weight when comparing a term in the claim to a term in the specification, especially where, as here, the specification only describes one embodiment. Cf. id.

In any event, this court detects no reversible error in the district court's claim construction.

Pentalpha belatedly argued prosecution estoppel, "arguing that SEB's statements during prosecution should preclude any infringement by its modified deep fryer under the doctrine of equivalents."

See Conoco, Inc. v. Energy & Envtl. Int'l, L.C., 460 F.3d 1349, 1364 (Fed. Cir. 2006) ("To invoke argument-based estoppel . . . the prosecution history must evince a clear and unmistakable surrender of subject matter.").

Finding no "manifest injustice" to ignoring Pentalpha's last-minute attempt at cooking SEB's bacon, "the jury's finding of infringement under the doctrine of equivalents" was honored.

Pentalpha had objected to SEB's technical expert Mr. Van Horn, but did so inexpertly. Van Horn admitted "that he is not skilled in designing deep fryers," but his testimony went not to deep frying, but to heat resistance of polymers, for which he was qualified. This too went undisturbed by the CAFC.

The district court did not abuse its discretion by admitting Mr. Van Horn's testimony. This court will not disturb a district court's evidentiary rulings unless "manifestly erroneous." SR Int'l Bus. Ins. Co. v. World Trade Ctr. Props., LLC, 467 F.3d 107, 119 (2d Cir. 2006) (quotation omitted). District courts enjoy "wide latitude" to determine admissibility and "the mode and order" of evidentiary presentations. Id.

Pentalpha challenged the infringement judgment, based upon ambiguous jury instructions.

Section 271(a) makes it an act of infringement to "without authority make[], use[], offer[] to sell, or sell[] any patented invention, within the United States."

Pentalpha also challenges the district court's judgment under 35 U.S.C. § 271(a) and (b). As to § 271(a), direct infringement, Pentalpha challenges the district court's jury instructions. As to § 271(b), inducement of infringement, Pentalpha contends that the district court erred in its JMOL rulings because Pentalpha had no actual knowledge of the patent during part of the time it was selling deep fryers to Sunbeam. See DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1304 (Fed. Cir. 2006) (en banc) ("The requirement that the alleged infringer knew or should have known his actions would induce actual infringement necessarily includes the requirement that he or she knew of the patent.") (emphasis added). Before addressing either of Pentalpha's arguments, this court must determine if it needs to address direct infringement only, inducement of infringement only, or both.

Under the general verdict rule, where one or more of multiple claims is found legally invalid, a reviewing court must reverse and order a new trial if unable to determine whether the invalid theory tainted the verdict. AIG Global Sec. Lending Corp. v. Banc of America Sec. LLC, 646 F. Supp. 2d 385, 406 (S.D.N.Y. 2009) (collecting cases). That rule has also been held to apply in cases where the jury received multiple legal theories of liability. Id. (same).

Here, the jury received a verdict form with the label "special" rather than general. Using that verdict form, the jury found both direct infringement and inducement of infringement. Normally, such a verdict could support a damages award even if only one theory was correct. As long as the court can "determine" that "the verdict was based upon the [valid] theory," the general verdict rule does not require a new trial. Id. A closer look at the damages question in this verdict form, however, along with the jury instructions, reveals a hopeless ambiguity.

The verdict form itself suggests that the jury was asked to base its damages calculation on inducement only... On the other hand, the jury instructions also indicate that the jury could assess damages for direct infringement.

The record therefore does not clearly indicate that the jury found damages based on inducement alone, or based on direct infringement alone, or both. The general verdict rule requires that the only way this court can affirm in such a circumstance is by determining that the jury's finding of both direct infringement and inducement of infringement was proper. As explained below, after carefully examining the record and the authority cited by both parties, this court discerns that this verdict satisfies that requirement and was proper on both counts.

An aside as to case law unwritten about international offers to sell as infringing.

This court has yet to define the full territorial scope of the "offers to sell" offense in § 271(a). But see Rotec Indus., Inc. v. Mitsubishi Corp., 215 F.3d 1246, 1260 (Fed. Cir. 2000) (Newman, J., concurring) ("[A]n offer to sell a device or system whose actual sale can not infringe a United States patent is not an infringing act under § 271.").

[T]he only evidence on which Pentalpha relies to argue that its sales occurred overseas was that it delivered its products to Sunbeam, Montgomery Ward, and Fingerhut f.o.b. Hong Kong or mainland China. This court has "rejected the notion that simply because goods were shipped f.o.b., the location of the 'sale' for the purposes of § 271 must be the location from which the goods were shipped." Lightcubes, 523 F.3d at 1370.

Not to mention Pentalpha's attention to customer requirements.

Pentalpha itself affixed the American trademarks of Sunbeam, Montgomery Ward, and Fingerhut to the deep fryers, and it manufactured the deep fryers with North American electrical fittings. Moreover, the invoices between Pentalpha and the three U.S. companies all identify delivery to U.S. destinations.

The appeals court panel was induced into elaborating on inducing infringement.

"Whoever actively induces infringement of a patent shall be liable as an infringer." 35 U.S.C. § 271(b). In DSU Medical, which was decided after the jury verdict in this case, this court addressed the intent necessary to support a finding of induced infringement. Under that rule, the plaintiff must show that the alleged infringer knew or should have known that his actions would induce actual infringements. 471 F.3d at 1304. This court further stated that "[t]he requirement that the alleged infringer knew or should have known his actions would induce actual infringement necessarily includes the requirement that he or she knew of the patent." Id. (emphasis added). This court's opinion did not, however, set out the metes and bounds of the knowledge-of-the-patent requirement. Compare Insituform Techs., Inc. v. CAT Contracting, Inc., 161 F.3d 688, 695 (Fed. Cir. 1998) ("A crucial element of induced infringement is that the inducer must have actual or constructive knowledge of the patent.") (emphasis added).

The facts of DSU Medical did not require this court to address the scope of the knowledge requirement for intent. Instead, the court resolved conflicting case law setting forth both a requirement to knowingly induce infringement and to merely knowingly induce the acts that constitute direct infringement. Id. at 1306. In other words, the court decided the target of the knowledge, not the nature of that knowledge. As Chief Judge Michel's concurring opinion noted, the record in DSU Medical showed that the alleged infringer had actual knowledge of the patent-in-suit. Id. at 1311. "Accordingly, the 'knowledge of the patent' issue [was] not before us." Id.

This court has made clear, however, that inducement requires a showing of "'specific intent to encourage another's infringement.'" Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683, 699 (Fed. Cir. 2008) (quoting DSU Medical, 471 F.3d at 1306). As other courts have observed, "specific intent" in the civil context is not so narrow as to allow an accused wrongdoer to actively disregard a known risk that an element of the offense exists. See Crawford-El v. Britton, 951 F.2d 1314, 1318 (D.C. Cir. 1991) (equating specific intent and deliberate indifference); Boim v. Holy Land Found. for Relief & Dev., 549 F.3d 685, 693 (7th Cir. 2008) (equating intentional misconduct with knowledge and deliberate indifference).

The CAFC split the proverbial hairs between "deliberate indifference" and "should have known," the former smacking of subjective assessment of percieved risk versus chimerical objectivity in what one should have known. That said, "the standard of deliberate indifference of a known risk is not different from actual knowledge, but is a form of actual knowledge." In other words, it's not what you thought you ought to do about what you thought you knew, but whether your cover got blown for what you should have known.

Pentalpha argues that the court in DSU Medical did not mean "knew or should have known of the patent" because the decision states "knew of the patent." See 471 F.3d at 1304. At the outset, this court notes that the Supreme Court has indicated, in a different civil context, that "deliberate indifference" is not necessarily a "should have known" standard. Farmer v. Brennan, 511 U.S. 825, 840 (1994). The latter implies a solely objective test, whereas the former may require a subjective determination that the defendant knew of and disregarded the overt risk that an element of the offense existed. See id. ("'[D]eliberate' is better read as implying knowledge of a risk, [but] the concept of constructive knowledge is familiar enough that the term 'deliberate indifference' would not, of its own force, preclude a scheme that conclusively presumed awareness from a risk's obviousness."). For example, an accused infringer may defeat a showing of subjective deliberate indifference to the existence of a patent where it shows that it was genuinely "unaware even of an obvious risk." Id. at 844. More importantly, and as courts have observed in a variety of settings, the standard of deliberate indifference of a known risk is not different from actual knowledge, but is a form of actual knowledge. See, e.g., United States v. Carani, 492 F.3d 867, 873 (7th Cir. 2007) ("Deliberate avoidance is not a standard less than knowledge; it is simply another way that knowledge may be proved."); Woodman v. WWOR-TV, Inc., 411 F.3d 69, 84 n.14 (2d Cir. 2005) ("We note that a party's knowledge of a disputed fact may also be proved through evidence that he consciously avoided knowledge of what would otherwise have been obvious [to] him.").

As just explained, a claim for inducement is viable even where the patentee has not produced direct evidence that the accused infringer actually knew of the patent-in-suit. This case shows such an instance. The record contains adequate evidence to support a conclusion that Pentalpha deliberately disregarded a known risk that SEB had a protective patent. The jury heard evidence that Pentalpha purchased an SEB deep fryer in Hong Kong and copied all but the cosmetics.

The record supplies sufficient evidence to support the jury's conclusion that SEB consistently marked substantially all of its deep fryers.

A failure to inform one's counsel of copying would be highly suggestive of deliberate indifference in most circumstances. Here, the jury also heard testimony that indicated that Pentalpha's president, John Sham, was well versed in the U.S. patent system and understood SEB to be cognizant of patent rights as well... In contrast, Pentalpha did not produce any exculpatory evidence.

What cuts one loose from dancing to induce still holds a deuce.

This opinion does not purport to establish the outer limits of the type of knowledge needed for inducement. For instance, a patentee may perhaps only need to show, as Insituform suggests, constructive knowledge with persuasive evidence of disregard for clear patent markings, similar to the constructive notice requirement in § 287(a). See infra Part VII. This court does not set those boundaries now, just as it did not set them in DSU Medical.

SEB lost its cross-appeal on willful infringement owing to the Seagate standard, which "held that proof of willful infringement requires a patentee to show by clear and convincing evidence that, as a threshold matter, "the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent." 497 F.3d at 1371." But SEB missed a beat: it likely could have gotten a new trial.

Importantly, SEB does not ask this court to order a new trial on willfulness. Had it asked, this court might have granted the request in light of the district court's conclusion that the willfulness verdict could have gone either way under the Seagate test. "An erroneous instruction, unless harmless, requires a new trial." Anderson v. Branen, 17 F.3d 552, 556 (2d Cir. 1994); see Voda v. Cordis Corp., 536 F.3d 1311, 1328 (Fed. Cir. 2008) (remanding and noting that the district court "may at its discretion assess Voda's evidence of willful infringement under the [intervening] Seagate standard to determine whether a new trial on willfulness is necessary"). Instead, SEB argues that the evidence on willfulness is so strong that the district court erred in vacating the enhanced damages and attorneys' fees awards. This court agrees with the district court that SEB's evidence is not so strong that SEB is entitled to a finding of willful infringement as a matter of law.

Affirmed.

The district court judge, applying the imaginary §102 jigsaw puzzle rule, told the jury that anticipation didn't require expressly laying "out the elements in the exact way laid out in the claim," only "that all of the claimed elements could have been arranged as in the claimed invention."

The district court instructed the jury on the law of anticipation as follows:

For anticipation, it is not enough that all of the elements could have been found among two or more references. If, at the time of the patent application, a single prior-art reference already described all of the elements of the claimed invention and would have informed those skilled in the art that those elements could have been arranged as in the claimed invention, then the prior-art reference is deemed to "anticipate" the claimed invention and thereby render it unpatentable and thus invalid. It would not be enough, however, that all of the elements were in random passages in the reference. By the same token, for anticipation to apply, it is not necessary that the prior-art reference expressly lay out the elements in the exact way laid out in the claim. Rather, for anticipation, it is sufficient if the single reference would have informed those skilled in the art that all of the claimed elements could have been arranged as in the claimed invention.

J.A. 5912 (emphases added).

The CAFC found the instruction incorrect "because it makes sufficient, for purposes of anticipation, a prior art disclosure of individual claim elements that 'could have been arranged' in a way that is not itself described or depicted in the anticipatory reference."

The way in which the elements are arranged or combined in the claim must itself be disclosed, either expressly or inherently, in an anticipatory reference. "Anticipation requires the presence in a single prior art disclosure of all elements of a claimed invention arranged as in the claim." Connell v. Sears, Roebuck & Co., 722 F.2d 1542, 1548 (Fed. Cir. 1983). The requirement that the prior art elements themselves be "arranged as in the claim" means that claims cannot be "treated . . . as mere catalogs of separate parts, in disregard of the part-to-part relationships set forth in the claims and that give the claims their meaning." Lindemann Maschinenfabrik GMBH v. Am. Hoist & Derrick Co., 730 F.2d 1452, 1459 (Fed. Cir. 1984). "[U]nless a reference discloses within the four corners of the document not only all of the limitations claimed but also all of the limitations arranged or combined in the same way as recited in the claim, it cannot be said to prove prior invention of the thing claimed and, thus, cannot anticipate under 35 U.S.C. § 102." Net MoneyIN, Inc. v. VeriSign, Inc., 545 F.3d 1359, 1371 (Fed. Cir. 2008) (emphasis added).

The concept of "inherent disclosure" does not alter the requirement that all elements must be disclosed in an anticipatory reference in the same way as they are arranged or combined in the claim. "[A]nticipation by inherent disclosure is appropriate only when the reference discloses prior art that must necessarily include the unstated limitation . . . ." Transclean Corp. v. Bridgewood Servs., Inc., 290 F.3d 1364, 1373 (Fed. Cir. 2002). "Inherency, however, may not be established by probabilities or possibilities. The mere fact that a certain thing may result from a given set of circumstances is not sufficient." Cont'l Can Co. USA, Inc. v. Monsanto Co., 948 F.2d 1264, 1269 (Fed. Cir. 1991) (quoting In re Oelrich, 666 F.2d 578, 581 (CCPA 1981)); see also Trintec Indus., Inc. v. Top-U.S.A. Corp., 295 F.3d 1292, 1295 (Fed. Cir. 2002) ("Inherent anticipation requires that the missing descriptive material is 'necessarily present,' not merely probably or possibly present, in the prior art." (quoting In re Robertson, 169 F.3d 743, 745 (Fed. Cir. 1999))). For a claim to be anticipated, each claim element must be disclosed, either expressly or inherently, in a single prior art reference, and the claimed arrangement or combination of those elements must also be disclosed, either expressly or inherently, in that same prior art reference.

Obviousness

4,545,382 and 4,225,410 were the killers of '551.

The central question with respect to obviousness is whether the prior art disclosed a glucose sensor without a membrane for use in whole blood. The district court found after trial that the prior art '382 patent disclosed electrochemical sensors in which "a protective membrane was optional in all cases except the case of live blood, in which case the protective membrane was preferred--but not required." Trial Opinion, 565 F. Supp. 2d at 1103.

The first two named inventors of the '382 patent were in on the '551 patent. '382 was cited prior art to '551.

Abbott cited the claims of '382 as the patent's scope of disclosure, and that was supposed to mean that a critical feature, of not using a membrane, which '551 embodies, would not have been obvious.

At the outset, it is important to understand the scope and context of the '382 patent. The claims of a prior art patent are part of its disclosure. In re Brenno, 768 F.2d 1340, 1346 (Fed. Cir. 1985) ("[I]t is true . . . that 'a claim is part of the disclosure' . . . ."); In re Smolak, 88 F.2d 838, 841 (CCPA 1937) ("[T]he disclosures in [prior art] specifications . . . include the claims, the written specification, and the drawings." (quotation omitted)); see also Gabrielidis v. Prince Sports Group, Inc., Nos. 99-1469, 99-1490, 2000 WL 1648134, at *7 (Fed. Cir. Nov. 1, 2000). The claims of the '382 patent are plainly directed in part to sensors without a membrane, as is made clear by the dependent claims that specifically include a membrane as an additional feature of the device.

Abbott tried to shade the '382 disclosure by contending "that in the case of blood--as opposed to other fluids--a membrane is required." The word connoisseurs known as the CAFC observed: "The use of the term "preferably" implies that such a membrane is not necessary."

Abbott was disbelieving that that patent-reading hoopleheads would believe what they read, as it went against conventional wisdom.

Abbott, however, contends that a person having ordinary skill in the art would not have read the '382 specification that way. Abbott asserts that the conventional wisdom of those skilled in the art was that a membrane was necessary when testing with blood, and that skilled artisans would not have read the patent's disclosure literally when it said that a membrane was not necessary with blood.

The district court found that incredible, and the CAFC concurred.

Enablement plays into the punch that prior art has: not individually, but collectively.

In order to render a claimed apparatus or method obvious, the cited prior art as a whole must enable one skilled in the art to make and use the apparatus or method. Beckman Instruments, Inc. v. LKB Produkter AB, 892 F.2d 1547, 1551 (Fed. Cir. 1989). An individual prior art reference, on the other hand, "need not be enabled; it qualifies as a prior art, regardless, for whatever is disclosed therein." Amgen, Inc. v. Hoechst Marion Roussel, Inc., 314 F.3d 1313, 1357 (Fed. Cir. 2003); see also Symbol Techs., Inc. v. Opticon, Inc., 935 F.2d 1569, 1578 (Fed. Cir. 1991); Beckman Instruments, 892 F.2d at 1551.

The argument over enablement went to the issue of oxygen sensitivity, and left Abbott out of breath: the courts rejected Abbott's argument on that count.

Abbott argued that there was no motivation to combine references, but the courts weren't motivated to agree.

Abbott cited the product which flew under the banner of '551 as evidence of commercial success that overcomes obviousness.

In order to overcome a finding of obviousness by demonstrating commercial success, "[a] nexus between commercial success and the claimed features is required." Brown & Williamson Tobacco Corp. v. Philip Morris Inc., 229 F.3d 1120, 1130 (Fed. Cir. 2000). "[T]he asserted commercial success of the product must be due to the merits of the claimed invention beyond what was readily available in the prior art." J.T. Eaton & Co. v. Atl. Paste & Glue Co., 106 F.3d 1563, 1571 (Fed. Cir. 1997).

But the CAFC observed:

This is not a situation where the success of a product can be attributed to a single patent, because Abbott's Exactech product embodied at least two patents: the '382 patent and the '551 patent.

The defendants presented uncontroverted evidence demonstrating that the Exactech product's success was due to features already present in prior art such as the '382 patent.

'551 dead one time.

Inequitable Conduct

Non-disclosure leads to exposure of inequitable conduct. Abbott went buck naked* in Europe.

* The American Heritage Dictionary conjectures that the term was originally "butt naked", but was cleaned up to "buck naked" for use in polite company, as if polite company is expounding on nakedness. (But here we are.) Wordsmith Michael Quinon pondered the posterior portion contrary to the putative. "Buck" and "buff" connote nudity, derived respectively from buckskin and buffalo hides. Thomas Dekker, in 1602, went on the record using "buff" to mean naked. Quinon's assumption is that "buck" is simply an alternative to "buff," no cleansing required for the colloquialism. Now, back to our regularly scheduled court ruling.

Following the bench trial, the district court also held the '551 patent unenforceable for inequitable conduct based on a failure to disclose statements made to the European Patent Office ("EPO") during a revocation proceeding of the European counterpart to the '382 patent. Trial Opinion, 565 F. Supp. 2d at 1127.

"[I]nequitable conduct includes affirmative misrepresentation of a material fact, failure to disclose material information, or submission of false material information, coupled with an intent to deceive." Innogenetics, N.V. v. Abbott Labs., 512 F.3d 1363, 1378 (Fed. Cir. 2008) (quoting Pharmacia Corp. v. Par Pharm., Inc., 417 F.3d 1369, 1373 (Fed. Cir. 2005)) (quotation marks omitted). "The party asserting inequitable conduct must prove a threshold level of materiality and intent by clear and convincing evidence. The court must then determine whether the questioned conduct amounts to inequitable conduct by balancing the levels of materiality and intent, 'with a greater showing of one factor allowing a lesser showing of the other.'" Digital Control, Inc. v. Charles Mach. Works, 437 F.3d 1309, 1313 (Fed. Cir. 2006) (quoting Union Pac. Res. Co. v. Chesapeake Energy Corp., 236 F.3d 684, 693 (Fed. Cir. 2001)) (citations omitted).

The penalty for inequitable conduct is severe, as an entire patent is rendered unenforceable. Therefore it is important that courts maintain a high standard. "Just as it is inequitable to permit a patentee who obtained his patent through deliberate misrepresentations or omissions of material information to enforce the patent against others, it is also inequitable to strike down an entire patent where the patentee only committed minor missteps or acted with minimal culpability or in good faith." Star Scientific, 537 F.3d at 1366.

The district court found that Abbott had made directly contradictory representations to the EPO concerning the teaching of the '382 patent in European Patent EP 0 078 636 ("the '636 patent")--a counterpart to the '382 patent with virtually identical specifications--and that Abbott had not disclosed those contradictory representations to the PTO.

In determining whether a failure to disclose material information was intentional, "the involved conduct, viewed in light of all the evidence, including evidence indicative of good faith, must indicate sufficient culpability to require a finding of intent to deceive." Kingsdown, 863 F.2d at 876. Because direct evidence of deceptive intent is rarely available, such intent can be inferred from indirect and circumstantial evidence. Star Scientific, 537 F.3d at 1366.

The credibility of Lawrence Pope ("Pope"), Abbott's patent attorney, and Dr. Sanghera, Abbott's Director of Research and Development, were crucial to evading inequitable conduct. The district court found them incredible, and the CAFC panel majority found those findings "amply supported."

'551 dead two times.

Dissent

Judges DYK and Friedman were the panel majority.

Judge Linn dissented on inequitable conduct. On materiality, Linn thought that the district court, and the majority, had taken only the damning inference when a more innocent inference was possible.

The majority invokes the familiar adage that "[c]lose cases should be resolved by disclosure." LaBounty Mfg., Inc. v. U.S. Int'l Trade Comm'n, 958 F.2d 1066, 1076 (Fed. Cir. 1992) (emphasis added). It is sage advice, and practitioners should take it to heart, so that they may avoid even being accused of inequitable conduct, much less being found to have committed it. But this adage is not a legal rule. We have never recognized a "close case" standard for materiality. The majority, however, believes that if this is such a case, then the duty of disclosure "requires that the material in question be submitted to the examiner." Maj. Op. 26 (emphasis added). Our circuit already entertains five different standards for materiality. See Digital Control, Inc. v. Charles Mach. Works, 437 F.3d 1309, 1315-16 (Fed. Cir. 2006). I do not think that we need a sixth.

Linn put up a stiff defense that Pope and Sanghera were harshly considered, and so intent was not the slam dunk that the majority made it out to be in backing the district court.

In my view, Attorney Pope and Dr. Sanghera's good faith explanations are entirely consistent with the alternative reasonable interpretation of the EPO submissions that renders them immaterial. Indeed, as demonstrated by the myriad footnote citations to the trial record, supra, this alternative reasonable interpretation is the one that the individuals' themselves presented to the district court. Coupled with the fact that these individuals were unaware of the Suzuki patent (or any other contrary teachings), their explanations are certainly plausible.

While agreeing with prior art invalidity, Linn found relying on prior art claims bad form.

The descriptive portions of the prior art patents are alone sufficient to invalidate the claims-in-suit. It is therefore unnecessary, and I believe improper in this case, to look to the claims of the prior art patents as a measure of what the prior art discloses for purposes of obviousness and anticipation. See In re Benno, 768 F.2d 1340, 1346 (Fed. Cir. 1985) ("The scope of a patent's claims determines what infringes the patent; it is no measure of what it discloses.").

The examiner's final rejection and answer to the principal brief were "substantially the same as, if not identical." "Nakashima raised new arguments against the rejection in the Reply11 and at oral argument. Nakashima does not explain what "good cause" there might be to consider the new arguments. On this record, Nakashima's new arguments are belated."

The same language, about the reply brief not being "an opportunity to make arguments that could have been made during prosecution, but were not," is identical in Nakashima and Borden.

Continuing, both rulings of the same script:

Giving cognizance to belated arguments in a reply would vitiate the force of the requirement in Board Rule 37(c)(1)(vii) that "[a]ny arguments or authorities not included in the brief . . . will be refused consideration by the Board, unless good cause is shown." The reference in that section to the "reply brief filed pursuant to § 41.41" does not create a right for the Appellant to raise an argument in the reply brief that could have been raised in the principal brief but was not.

Nakashima had raised a new justification to overcome examiner's obviousness rejection via combining two prior art references: that there was "no reason to combine" the two references used, because the "combination would not have been obvious nor desirable to one skilled in the art."

The Board's rationale, and an appellant's escape value for missing a beat: file a new application or RCE -

In any event, the Appellant can have a full and fair opportunity to raise additional issues and to provide additional evidence by way of refiling the application under an appropriate provision of 37 C.F.R. § 1.53, or by seeking continued prosecution under § 1.114. It is in no way unfair to require applicants for patents, including Appellants to the Board, to present their best arguments in a timely fashion. Belated arguments, if addressed, impose costs on the Agency (specifically on the Examiner, the Technical Center Directors, and the Board), which in turn impose costs on the public (most directly, on other applicants and appellants, who must wait longer for consideration of their applications and appeals; and indirectly, on the general public, which must wait longer for the benefits provided by a healthy and vigorous patent system). Properly interpreted, the Rules do not require the Board to take up a belated argument that has not been addressed by the Examiner, absent a showing of good cause.

In dissent, Administrative Patent Judge Owens.

Because the Appellant's arguments are in the Reply Brief, as specifically permitted by 37 C.F.R. § 41.37(c)(1)(vii), the Appellant did not need to present a showing of good cause as to why the arguments were not presented earlier.

Since July 1, 1998 an argument in a reply brief is not rendered belated by not being limited to a new point of argument in the examiner's answer.

Because the clear meaning of 37 C.F.R. § 41.37(c)(1)(vii) does not forbid new arguments in a reply brief that are not directed toward new points of argument in the examiner's answer, an appellant should not have to refile the application to have those arguments considered by the Board.

Even if a government agency is given the "arbitrary and capricious" standard of review, in my view an agency's interpretation of its own rule as implicitly including a requirement the agency has intentionally explicitly deleted from the rule is arbitrary and capricious.

Well put, Judge Owens.

Hat tip of recognition to Professor Crouch at Patently-O.

To quell untoward speculation: this entry title is merely a continuing foist at being artsy-fartsy. Astute readers will recall that Quinn the Eskimo is a Bob Dylan song. The blog entry title has no particular intimation.

This is a common case of the patent holder wanting broader coverage than the technologies disclosed or envisioned at the time.

Catch Curve argues that the district court erred by limiting the claims to a specific protocol.

Nothing in the specification suggests that the fax messages of the invention are converted to a different format and transmitted to the recipient over a medium other than a switched telephone network.

Because the SAFFs are computers, not fax machines, Catch Curve contends that the communication between the two SAFFs must be in a digital language. While that may be, the common specification makes it clear that the SAFFs are required to communicate with one another over a switched telephone network.

Venali's accused system starts with an ordinary fax over a telephone network, which is then received and converted into computer geekese: a TIFF image encoded in XML sent via HTTP to a data center for conversion to PDF, whereupon forwarded via SMTP. In other words, the accused system was fecklessly fax.

Venali's accused system operates in a fundamentally different manner. Venali's system converts messages into formats other than fax protocol before storing or forwarding the messages and then transmits the messages to their intended destinations via SMTP, HTTP, or HTTPS protocol over the Internet. The messages are not sent to, and are not retrievable by, a conventional fax machine or a "paperless fax terminal" operating in fax protocol. Thus, all the data storage and transfer functions in Venali's system, after the initial receipt and conversion of the fax message, are inconsistent with fax protocol. In particular, Venali's Internet transmissions are quite different from the claimed transmissions of fax message signals over a switched telephone network. The district court therefore correctly concluded that Venali does not practice the methods or systems that are disclosed in the asserted patents and claimed in the numerous claims originally asserted by Catch Curve.

Claim Curve had tied their claim terms to the spec by claiming a SAFF.

By reciting the use of a SAFF, the storage claims, like the other asserted claims of the patents in suit, are necessarily limited to systems that are capable of sending fax messages through fax protocol over a switched telephone network. See Biogen, Inc. v. Berlex Labs., Inc., 318 F.3d 1132, 1139-40 (Fed. Cir. 2003) (limiting both method and apparatus claims "to conform with the basis on which the invention was presented in the specification").

Claim Curve had hung its hope on claims for storing fax messages.

Catch Curve responds by arguing that inventors are allowed to claim less than their full invention, and that the storage claims should not be construed to require a system capable of delivery of fax messages over the switched telephone network because the storage claims do not include the delivery step. However, merely omitting a step in a described process does not perforce expand the scope of the claim to encompass the use of devices that are nothing like those described in the specification as integral to the invention. See Abbott Labs. v. Sandoz, Inc., 566 F.3d 1282, 1288 (Fed. Cir. 2009) ("[C]laims cannot enlarge what is patented beyond what the inventor has described as the invention."), quoting Networld, LLC v. Centraal Corp., 242 F.3d 1347, 1352 (Fed. Cir. 2001); see also Wang Labs., Inc. v. Am. Online, Inc., 197 F.3d 1377, 1382 (Fed. Cir. 1999) (limiting the claim term "frame" to character-based protocol, even though "frame," used generally, could also refer to bit-mapped displays, because the specification described and enabled only systems using character-based protocol).

In sum, Claim Curve overreached.

Affirmed.

Opinion penned by Linn, joined by Judge Friedman.

'094 turns an elevator into a personal valet.

The '094 patent is directed to an elevator system that recognizes a user when he or she enters an entry location of a building, then dispatches an elevator to bring the user to a destination floor based on user-specific data. The system recognizes the user in one of two ways. In a first embodiment, a user carrying an "information transmitter" brings his transmitter within range of a "recognition device" mounted in the building's entry location. Once in range, the transmitter is actuated by an electromagnetic field emitted from the recognition device and then transmits preprogrammed data regarding the user's destination floor. Alternatively, in a second embodiment, the recognition device recognizes the user by his "individual features," such as facial contours, fingerprints, iris, or voice. In either embodiment, once the system has recognized the user, the system identifies the user's destination floor based on the data it received, dispatches an elevator to the user's starting floor, and informs the user which elevator to take. The user thus arrives at a destination floor without having to press any button outside or inside the elevator to designate the destination floor.

The district court adopted a circular claim construction for key terms "information transmitter" and "recognition device."

On April 4, 2008, the district court construed nine disputed sets of claim limitations. Only the first set--"information transmitter" and "recognition device"--is challenged on appeal. The district court construed "information transmitter" to mean "a device that communicates with a recognition device via electromagnetic waves, after being actuated by that recognition device, without requiring any sort of personal action by the passenger." Claim Construction Order, 561 F. Supp. 2d at 362. It construed "recognition device" to mean "a device that actuates and reads data transmitted by an information transmitter without requiring any sort of personal action by the passenger." Id. In the claim construction order, the district court declined to specify the particular kind of "personal action" prohibited under its construction, but stated that it "rules out, not just standing in front of the recognition device, or inputting data into the information transmitter by hand, but any and all types of personal action by the passenger." Id. (emphasis added).

Cross-motions for infringement summary judgment left Schindler with the bum ride.

The district court issued its summary judgment ruling on November 17, 2008. Although it had previously said that "any and all types of personal action" were prohibited under its construction, the district court refined its understanding of "personal action" on summary judgment to expressly permit "walking into the monitored area." Summary Judgment Order, 586 F. Supp. 2d at 237. The district court went on to note that a user of the accused device must "do something in order to bring the card (not just themselves) to a point at which the device embedded in the turnstiles can read it," such as taking the card out of a pocket or holding the card over the glass surface of the turnstile. Id. at 238. Accordingly, the district court held that Otis's accused system could not meet the "information transmitter" and "recognition device" limitations and thus did not infringe the '094 patent as a matter of law.

The infringement two-step -

"An infringement analysis entails two steps. The first step is determining the meaning and scope of the patent claims asserted to be infringed. The second step is comparing the properly construed claims to the device accused of infringing." Markman v. Westview Instruments, Inc., 52 F.3d 967, 976 (Fed. Cir. 1995) (en banc) (citations omitted), aff'd, 517 U.S. 370 (1996).

Noninfringement naturally occurs with narrow claims, which Schindler argued against. A crucial issue is the scope of the claimed "personal action."

Schindler argues that the district court improperly limited the terms "information transmitter" and "recognition device" by requiring those devices to operate "without any sort of personal action by the passenger" and by further defining "personal action" to mean any action "other than walking into the monitored area." According to Schindler, nowhere does the intrinsic evidence prohibit a passenger from using his hands to simply bring an information transmitter within range of a recognition device. The phrase "personal action" appears only once in the specification. In Schindler's view, "personal action" encompasses the action of manually pressing buttons to actuate the transmitter or to select a destination floor, not to the initial act of bringing the transmitter within range of the recognition device. Schindler therefore requests that we remove any reference to "personal action" from each construction. ¹

A footnote indicated foot-in-mouth by Schindler, arguing against what it had previously proposed.

¹ Schindler also requests that we strike the phrase "via electromagnetic waves" from the district court's construction of "information transmitter." But the construction of "information transmitter" that Schindler proposed to the district court included that very phrase. We therefore decline to alter the district court's construction as it pertains to electromagnetic waves.

Based upon the spec and file history, the CAFC agreed with Schindler.

As we shall explain, we agree with Schindler that the district court's construction is too narrow. The statements in the specification and prosecution history on which the district court relied were directed to elevator operations that occur only after the information transmitter is already within range of the recognition device, not to the initial act of bringing the information transmitter within range of the recognition device.

The proposed constructions were entirely within intrinsic evidence, so the CAFC focused its "analysis on the claim language, the specification, and the prosecution history." Case law comprises the claim construction mantra of the simplest construction that works, not introducing anything extraneous.

A claim term is generally given its "ordinary and customary meaning," which is "the meaning that the term would have to a person of ordinary skill in the art in question at the time of the invention." Phillips v. AWH Corp., 415 F.3d 1303, 1313 (Fed. Cir. 2005) (en banc). "[T]he court looks to 'those sources available to the public that show what a person of skill in the art would have understood disputed claim language to mean,' . . . . includ[ing] 'the words of the claims themselves, the remainder of the specification, the prosecution history, and extrinsic evidence concerning relevant scientific principles, the meaning of technical terms, and the state of the art.'" Id. at 1314 (quoting Innova/Pure Water, Inc. v. Safari Water Filtration Sys., Inc., 381 F.3d 1111, 1116 (Fed. Cir. 2004)).

The ground floor -

1. An elevator installation having a plurality of elevators comprising:

a recognition device for recognizing elevator calls entered at an entry location by an information transmitter carried by an elevator user, initializing the entry location as a starting floor of a journey;

a control device receiving the recognized elevator call and allocating an elevator to respond to the elevator call, through a predetermined allocating algorithm;

a call acknowledging device comprising one of a display device and an acoustic device to acknowledge recognition of the elevator call and to communicate a proposed destination floor to the elevator user;

the recognition device, mounted in the access area in the vicinity of the elevators and spatially located away from elevator doors, actuating the information transmitter and comprising a unit that independently reads data transmitted from the information transmitter carried by the elevator user and a storage device coupled between the unit and the control device:

the recognition device one of transmitting proposed destination floor data, based upon the data transmitted from the information transmitter, to the control device, and, transmitting elevator user specific data. based upon individual features of the elevator user stored in the storage device, to the control device.

The district court overlooked rule number one of claim construction: look first to claim language itself. In this case, independent claim 1 told much of the story.

"Quite apart from the written description and the prosecution history, the claims themselves provide substantial guidance as to the meaning of particular claim terms." Id. Here, the district court overlooked several important aspects of the claim language which themselves shed light on whether and to what extent an elevator user undertakes "personal action" in the invention.

First, "the context in which a term is used in the asserted claim can be highly instructive." Id. In claim 1, the term "information transmitter" itself suggests that the transmitter is a thing, separate and apart from an "elevator user" (a separate limitation), which transmits information. The claim also provides that "elevator calls [are] entered at an entry location by an information transmitter." Thus, at least with regard to the transmission of information and the entry of calls, it is the information transmitter--not the elevator user--that performs these tasks. Similarly, the claim provides that a "recognition device . . . actuat[es] the information transmitter" and that "a unit . . . independently reads data transmitted from the information transmitter." Accordingly, the tasks of actuating the transmitter and reading data are performed by the recognition device and the unit, respectively, not by the elevator user. The claim also explicitly provides that the transmitter is "carried by an elevator user." Carrying a transmitter is thus a type of "personal action" that is expressly required in the claims. Nowhere does claim 1 limit the act of carrying to any specific manner of carrying.

Dependent claims can answer questions of the intent of a claimed invention.

Second, "[o]ther claims of the patent in question, both asserted and unasserted, can also be valuable sources of enlightenment as to the meaning of a claim term." Id. Claim 7 depends from claim 1 and adds the phrase "wherein the recognition device reads a key having a code." A "key" is disclosed in the specification as a "building key," which is embedded with an information transmitter that is actuated by a recognition device mounted near a "door lock" of a building. '094 patent col.5 ll.30-32. The door lock recognizes the building key when the passenger uses his key to open the door. Id. col.5 ll.32-33. The specification, in describing a variation of this information transmitter "key" embodiment, notes that the recognition device may be mounted near a "time clock," and an elevator is dispatched when a user clocks in or out of work. Id. col.5 ll.33-35. Because a user would need to use his hands to bring the transmitter key within range of the recognition device to unlock the door, or to clock in or out of work, these types of personal action are implicitly permitted in claim 7 and, by extension, in claim 1. Thus, the claims appear to permit at least those types of personal action that are necessary to bring the information transmitter within range of the recognition device.

Into the spec for confirmation or revelation otherwise -

"[C]laims 'must be read in view of the specification, of which they are a part.'" Phillips, 415 F.3d at 1315 (quoting Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995) (en banc), aff'd, 517 U.S. 370 (1996)). "[T]he specification 'is always highly relevant to the claim construction analysis. Usually, it is dispositive; it is the single best guide to the meaning of a disputed term.'" Id. (quoting Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996)).

The phrase "personal action" is used only once in the specification, in the following sentence:

The advantages achieved by the invention reside in the fact that the desired journey destination is communicated automatically to the elevator control by [(1)] the information transmitters carried by the elevator users or by [(2)] the recognition of features of the elevator users without any personal action being required by the passenger.

'094 patent col.2 ll.49-54 (emphases and bracketed numbers added).

Whatever it takes to be recognized can't fall within the scope of excluding "personal action." The claim's point is that the user doesn't need to indicate destination.

The sentence says nothing about how the passenger initially brings his transmitter (or fingerprints) within recognition range, but merely that, once in range, he need not use personal action to communicate his journey destination to the elevator control.

Contrary to the district court's prohibition against all actions other than walking, the specification itself provides examples where a user would need to do more than just walk to bring his transmitter into recognition range... Once in range, the transmitter is actuated by the recognition device and transmits its encoded data without personal action by the user.

The prosecution history was relevant, and the subject of dissent.

"[T]he prosecution history can often inform the meaning of the claim language by demonstrating how the inventor understood the invention and whether the inventor limited the invention in the course of prosecution, making the claim scope narrower than it would otherwise be." Phillips, 415 F.3d at 1317.

During prosecution, Schindler amended the claims in response to an obviousness rejection over U.S. Patent No. 5,304,752 ("Hayashi") in view of U.S. Patent No. 4,685,538 ("Kamaike"). It was at this time that Schindler first added the "information transmitter" limitation to the claims, and further required that the transmitter be "actuat[ed]" by the recognition device. J.A. 314-17 ("the recognition device . . . actuating the information transmitter" (amendment emphasized))... The examiner allowed the claims to issue in amended form.

For the appeals majority, the district court went too far in adopting a posture of prosecution disclaimer.

An argument made to an examiner constitutes a disclaimer only if it is "clear and unmistakable." Purdue Pharma L.P. v. Endo Pharms., Inc., 438 F.3d 1123, 1136 (Fed. Cir. 2006). An "ambiguous disavowal" will not suffice. Computer Docking Station Corp. v. Dell, Inc., 519 F.3d 1366, 1375 (Fed. Cir. 2008).

The district court reviewed the prosecution history and concluded that Schindler had surrendered coverage of its originally claimed invention and, through its arguments, had disavowed any coverage of elevator systems that do not operate "automatically" and "hands-free." Claim Construction Order, 561 F. Supp. 2d at 361. We agree with the district court that Schindler is not entitled to any interpretation that it disclaimed during prosecution. See Chimie v. PPG Indus., Inc., 402 F.3d 1371, 1384 (Fed. Cir. 2005) ("The purpose of consulting the prosecution history in construing a claim is to 'exclude any interpretation that was disclaimed during prosecution.'" (quoting ZMI Corp. v. Cardiac Resuscitator Corp., 844 F.2d 1576, 1580 (Fed. Cir. 1988))). But we disagree as to the extent of that disclaimer.

The doctrine of prosecution disclaimer attaches where an applicant, whether by amendment or by argument, "unequivocally disavowed a certain meaning to obtain his patent." Omega Eng'g, Inc. v. Raytek Corp., 334 F.3d 1314, 1324 (Fed. Cir. 2003). For example, an amendment that clearly narrows the scope of a claim, such as by the addition of a new claim limitation, constitutes a disclaimer of any claim interpretation that would effectively eliminate the limitation or that would otherwise recapture the claim's original scope. Here, the district court construed the term "recognition device" as a device that "actuates and reads data transmitted by an information transmitter." Because this construction already provides that the recognition device--not the elevator user--actuates the transmitter, there is no risk that Schindler would recapture a broader claim scope than that existing before it added the "information transmitter" and "actuating" language to the claims.

Here, the district court found statements in the prosecution history, similar to those in the specification, which describe the invention as operating "automatically, contactlessly, and independently of the orientation of the information transmitter." The district court read these statements as unambiguously disavowing the use of a passenger's hands for any and all purposes. We disagree.

[W]e read the prosecution history in this case "as support for the construction already discerned from the claim language and confirmed by the written description." 800 Adept, Inc. v. Murex Sec., Ltd., 539 F.3d 1354, 1365 (Fed. Cir. 2008).

The CAFC tool "personal action" out of the construction.

We therefore modify the district court's construction of "information transmitter" and "recognition device" by striking the phrase "without requiring any sort of personal action by the passenger" from each construction.

By doing so, the case opened up.

Under our modified construction of "information transmitter" and "recognition device," Schindler's evidence was sufficient to create a genuine issue of material fact that the RFID cards of the accused system communicate with a card reader via electromagnetic waves after being actuated by the card reader, and that the card reader actuates and reads data transmitted by the RFID cards. On that basis, the district court should not have granted summary judgment of noninfringement.

Vacated and remanded.

Judge DYK in dissent argued the panel majority gave Schindler too much a lift.

Contrary to the majority, it seems to me that the action of swiping a card to call the elevator separate from the action required to gain entry to the building is clearly within the disclaimer of both the specification and prosecution history.

How does the majority avoid this disclaimer? The majority's theory is that there is no requirement of hands-free or automatic action until the transmitter is within range of the recognition device. In other words, the device would be "hands-free" and "automatic" even though the user has to take elaborate action to bring the device within range. See Majority Op. at 16 ("[A] user ought to be able to use his hands, or take other personal action, to simply bring the transmitter within the effective range of the recognition device"). I find this reading of the disclaimer to be inherently improbable and quite inconsistent with the language of the specification and prosecution history. The specification and prosecution history make no such distinction, and consistently emphasize the hands-free and automatic nature of the device without regard to whether it is in range or not.

DYK put down Schindler's self-serving broadening.

The patentees, unlike the majority, argue that the disclaimer has no application to devices where the signal came from the recognition device. On this theory, the disclaimer is rendered entirely meaningless because the patent only covers devices in which the signal is initiated by the recognition device, and the disclaimer is read only to apply to devices in which the signal is initated by the transmitter.

The prior art device involved a system whereby the user activated a transmitter by entering a code that signaled the recognition device. The applicant could have distinguished this prior art solely on the ground that the signal here goes from the recognition device to the transmitter. The applicant did not choose to rest on this ground alone (likely because this was an obvious variant of the prior art), but instead emphasized that the patented device was distinguishable both because of the signal direction and because it was hands-free and automatic. The patentee agreed at oral argument that a card swipe was no less covered by the disclaimer than the pressing of buttons.

We have repeatedly held that a disclaimer cannot be avoided simply by pointing out that the prior art could have been distinguished on another ground. See, e.g., Norian Corp. v. Stryker Corp., 432 F.3d 1356, 1361-62 (Fed. Cir. 2005) (holding that patentees must be held to the scope of what they ultimately claim, and are not allowed to assert that claims should be construed to surrender only what was necessary to avoid the prior art); Fantasy Sports Properties, Inc. v. Sportsline.com, Inc., 287 F.3d 1108, 1115 (Fed. Cir. 2002) ("Fantasy acquiesced in [the examiner's] rejections by canceling all claims that did not contain the 'bonus points' limitation at issue on appeal, and thus cannot now be heard to argue post hoc that it was the combination of the aforementioned limitations that rendered its invention patentable over the prior art."). Schindler's disclaimer must be based on what he said, not on what he could have said. Thus, I find Schindler's reading of the disclaimer to be just as untenable as the majority's reading.

A competitor reading the specification and the prosecution history is entitled to rely on the patent and prosecution history. In my view, the majority's claim construction artificially eliminates that disclaimer in limiting it to actions taken after the transmitter is in range of the recognition device.

Whether Microsoft actually makes any money from patents, net, is an open question. Microsoft constantly infringes patents, facing around 40 lawsuits at any one time. Microsoft's distaste to pay a "patent tax," and its mentality of infantile denial, maximizes what it pays for infringement. The i4i, Uniloc, and Lucent cases are recent examples of maximal self-inflicted damage. i4i and Uniloc were considered nuisance suits by Microsoft, and Microsoft was sorely blindsided by the Lucent damages award. Microsoft itself appears to have zero ability to valuate patents. No wonder, with a patent portfolio objectively guesstimated in value 3.3 times IBM, that the Microsoft patent corral is all hat and no cattle.

Oilmatic made the system used by the two defendant restaurants. Oilmatic came into the action by filing a DJ. What started as three separate cases were consolidated.

District court claim construction sizzled away infringement in summary judgement.

First, the court looked at the contested means-plus-function elements of claim 1. The court determined that the term "means for metering oil to said fryer in predetermined amounts" of claim 1, paragraph (d)(iii), had the function of "supplying oil in a regulated or measured amount," and a corresponding structure of "a manually or electronically operated trigger valve . . ." with a squeezable nozzle. Id at *11-12. The court further found that the "control means" of claim 1, paragraph (e), had the functions of "(1) selectively operating the filtering, waste, supply, and fryer valve means, and (2) selecting a pipe path between a predetermined pair of stations," and corresponding structures of "a manual system of push-pull knobs, or a partially or completely automated system comprised of microprocessor controls." Id. at *13-14. The court found that the piping network of claim 8 could be given its ordinary meaning. Id. at *17.

The failure to infringe was plain: a switch wasn't the same as a valve.

[T]he [district] court found that the accused device did not have the same or an equivalent structure to a squeezable trigger valve with a nozzle. Id. at *16. According to the court, neither the switch nor the push start button on the dipstick assembly is a valve. Id. Nor is either the switch or the push start button the equivalent of a squeezable valve...

There were other differences.

The dipstick [switch] operates by activating one of two pumps, which the court found to be a substantially different manner of operation than the '511 patent's disclosed structure of push-pull knobs mechanically linked to valves. Id. Nor did the accused machine have identical structure to microprocessor controls or their equivalents, as it was not completely or partially automated. Id. at *12.

On appeal, a kindly view of dictionaries, which Phillips v. AWH generally frowned upon, but all things in their proper place.

Our claim construction analysis begins with considering the language of the claims themselves. See Phillips v. AWH Corp., 415 F.3d 1303, 1314 (Fed. Cir. 2005) (en banc). However, "claims must be read in view of the specification, of which they are a part." Id. at 1315 (quotation marks omitted). In addition, courts may "rely on dictionary definitions when construing claim terms, so long as the dictionary definition does not contradict any definition found in or ascertained by a reading of the patent documents." Id. at 1322-23 (quoting Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1584 n.6 (Fed. Cir. 1996)).

The scope of a means-plus-function claim is always circumscribed by a specification's disclosed structure.

Claim terms in the means-plus-function format are construed in a two-step process. Omega Eng'g, Inc. v. Raytek Corp., 334 F.3d 1314, 1322 (Fed. Cir. 2003). First, the court identifies the claimed function based on the claim language and limitations. Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 296 F.3d 1106, 1113 (Fed. Cir. 2002). Second, the court ascertains the corresponding structures disclosed in the specification for performing that function. Omega Eng'g, 334 F.3d at 1322. The claim "shall be construed to cover the corresponding structure . . . described in the specification and equivalents thereof." 35 U.S.C. § 112 ¶ 6.

In order to establish infringement of a means-plus-function term, a patentee must show that "the relevant structure in the accused device perform[s] the identical function recited in the claim and [is] identical or equivalent to the corresponding structure in the specification." Odetics, Inc. v. Storage Technology Corp., 185 F.3d 1259, 1267 (Fed. Cir. 1999) (citations omitted).

While claim 1 was means-plus-function, the contested limitation of claim 8 was not.

For claim 1, having pulled the definition of 'metering' from Webster's dictionary as 'supplying in a regulated or measured amount,' the only disclosed structure in the patent was "a squeezable trigger valve with a nozzle and its equivalents." An adept prosecutor using the means-plus-function claim form is well advised to have a bevy of embodiments, so as not to sphincter claim coverage. That was the failing in the patent at issue: mostly a single disclosed embodiment.

The control mechanisms were disclosed as either push-pull knobs or microprocessors. Naturally RTI wanted everything in between manual and automated.

Appellees argue that there is no "continuum of corresponding structures," and the court properly found that Oilmatic's three-position selector switch and push button that activated a pump were not equivalent to either push-pull knobs or microprocessor controls.

To which the courts agreed.

The claim 8 conundrum was over "interconnecting" the piping system. The courts looked at the spec, which read that ""[t]he stations are interconnected by piping ... capable of carrying the required flow of cooking oil between selected stations for the various purposes as described below." '511 patent, col. 4 ll. 46-49." Single-minded and sloppy specification drafting led to noninfringement.

Because the accused machine does not contain a network interconnecting its various elements, it does not literally infringe the limitation of claim 8, paragraph (e). In particular, the Oilmatic system has one pipeline running from the supply tank to the fryer, one line running from the fryer to the waste station, and a separately housed filter, which connects only to the fryer. Even if the fryer connects these elements, there is no interconnection. Rather, there is one pipe path in the supply direction and one in the waste direction.

Affirmed.

If you want a patent that cooks, contact Platinum Patents.

There's no more concise way to put this than how the court did, other than to say that the PTO came up with curmudgeonly formulaic interpretation of the law, which was ridiculous, then stubbornly insisted on it.

On summary judgment, the United States District Court for the District of Columbia held that plaintiffs Wyeth and Elan Pharma International Ltd. (collectively, "Wyeth") were entitled to extended patent term adjustments under 35 U.S.C. § 154(b) due to the Patent and Trademark Office's (the "PTO's") delay in prosecuting their patent applications. Because section 154(b) expressly permits this legal relief, this court affirms.

In 1994, the law changed the effective term of a patent from seventeen years commencing from issuance to twenty years from filing. See Pub. L. No. 103-465, § 532, 108 Stat. 4809, 4984 (1994). With the change came new ways of compensating patentees for PTO-caused delays during prosecution. Under the previous seventeen-year regime, PTO-caused delays could not affect patent terms because the term commenced upon issuance after any delays during patent acquisition. Under the twenty-year term, however, those delays consumed the effective term of a patent.

In 1999, the American Inventors Protection Act amended 35 U.S.C. § 154(b) to address this new problem. The new Act promised patent applicants a full patent term adjustment for any delay during prosecution caused by the PTO. This promise took the form of three distinct "guarantees" in 35 U.S.C. § 154(b)(1):

(A) Guarantee of prompt Patent and Trademark Office responses.--Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the Patent and Trademark Office to [meet deadlines specified in clauses (i)-(iv)] . . .

the term of the patent shall be extended 1 day for each day after the end of the period specified in clause (i), (ii), (iii), or (iv), as the case may be, until the action described in such clause is taken.

(B) Guarantee of no more than 3-year application pendency.--Subject to the limitations under paragraph (2), if the issue of an original patent is delayed due to the failure of the United States Patent and Trademark Office to issue a patent within 3 years after the actual filing date of the application in the United States . . .

the term of the patent shall be extended 1 day for each day after the end of that 3-year period until the patent is issued.

(C) Guarantee or adjustments for delays due to interferences, secrecy orders, and appeals.--Subject to the limitations under paragraph (2) . . .
the term of the patent shall be extended 1 day for each day of the pendency of the proceeding, order, or review, as the case may be.

(emphases added). To summarize, paragraph A (the "A guarantee" or "A clause") promises "prompt [PTO] responses" by extending the term of the patent one day for each day the PTO does not meet certain examination deadlines in subdivisions (i)-(iv). Id. § 154(b)(1)(A). One of these deadlines, for instance, requires a first response to a filed application within fourteen months. See id. § 154(b)(1)(A)(i). Paragraph B (the "B guarantee" or "B clause") extends the term of the patent one day for each day issuance is delayed due to the PTO's failure "to issue a patent within 3 years after the actual filing date of the application in the United States." Id. § 154(b)(1)(B). Last, paragraph C allows for adjustments relating to delays resulting from interference proceedings, secrecy orders, and appeals. Id. § 154(b)(1)(C). At issue in this case are the A and B guarantees.

Both the A and B clauses are expressly subject to paragraph 2's "In general" limitation:

In general. To the extent that periods of delay attributable to grounds specified in paragraph (1) overlap, the period of any adjustment granted under this subsection shall not exceed the actual number of days the issuance of the patent was delayed.

Id. § 154(b)(2)(A) (emphasis added). In other words, this limitation restricts the period of adjustment when any of the "periods of delay" "overlap." This case asks this court to interpret and enforce the guarantees in the face of an "overlap" and "periods of delay" under section 154(b)(2)(A).

Almost every law offers opportunity for vagaries by its enforcer, as does this one.

Section 154(b)(3) of the statute directs the PTO to "prescribe regulations establishing procedures for the application for and determination of patent term adjustments under this subsection." Id. § 154(b)(3) (emphasis added). Under the guise of that authority, the PTO promulgated 37 C.F.R. § 1.703(f) in 2000: "To the extent that periods of adjustment attributable to the [guarantees] overlap, the period of adjustment granted under this section shall not exceed the actual number of days the issuance of the patent was delayed." (emphasis added). Other than adding the term "periods of adjustment," this language repeated the text of section 154(b)(2)(A). The regulations later defined "periods of adjustment" as "the number of days, if any, in the period beginning on the day after the date that is three years after the date on which the application was filed . . . ." 37 C.F.R. § 1.703(b) (2000). The regulation supplied no explanation about implementation or application of these rules.

The PTO pulled a shenanigan that left applicants sometimes holding the short straw.

In 2004, the PTO amended the regulation to replace "periods of adjustment" with "periods of delay." 69 Fed. Reg. 21706 (2004). The PTO contended that this substitution clarified the regulation:

The language of former § 1.703(f) misled applicants into believing that [periods of A-delay] and [periods of B-delay] were overlapping only if the [period of A-delay] occurred more than three years after the actual filing date of the application. If an application is entitled to a [B-]adjustment . . . the entire period during which the application was pending before the [PTO] . . ., and not just the period beginning three years after the actual filing date of the application; is the period of delay under 35 U.S.C. 154(b)(1)(B) in determining whether periods of delay overlap under 35 U.S.C. 154(b)(2)(A).

Id. (emphasis added). Thus, the "period of delay," according to the PTO's new definition, caused the B guarantee to start with the filing of the application, not three years later. Under that interpretation, "overlap" between A adjustments and B adjustments can arise and begin during the pendency of the patent application. For example, if a patent entitled to twenty days of A adjustments issues twenty days after the three year mark, then it is only entitled to a total of twenty days of adjustment. In other words, the entire period of A delay "overlaps" with the entire period of B delay. Using this framework, the PTO uses either the greater of the A delay or B delay to determine the appropriate adjustment but never combines the two.

Wyeth filed suit seeking an extension of 722 days, whereas the PTO only adjusted 492 days.

In district court, the PTO tried to throw its legal weight around, arguing substantive rule making power. That didn't fly. That notwithstanding, the district court found the PTO interpretation nonsensical.

Citing section 154(b)(3) as evidence of a delegation of authority to draft regulations, the PTO sought Chevron deference for its interpretation. See Chevron U.S.A., Inc. v. Natural Resources Def. Council, Inc., 467 U.S. 837 (1984).

The district court sided with Wyeth, finding first that the PTO "does not have the authority to issue substantive rules, only procedural regulations regarding the conduct of proceedings before the agency." Wyeth v. Dudas, 580 F. Supp. 2d 138, 141 (D.D.C. 2008) (citing Merck & Co. v. Kessler, 80 F.3d 1543, 1549-50 (Fed. Cir. 1996)). The district court further found that even if Chevron was applicable, it would have rejected the PTO's interpretation as contrary to the plain language of the statute. As the district court put it: "The problem with the PTO's interpretation is that it considers the application delayed under [the B guarantee] during the period before it has been delayed." Id. at 142 (emphasis in original).

The CAFC affirmed pitching the PTO's calculator, after bending over backwards to accommodate it, as courts are generally wont to do for the government.

Under the PTO's strained interpretation, B delay can occur anytime after the application is filed. To the contrary, the language of section 154(b) does not even permit B delay to start running until three years after the application is filed. The PTO's position cannot be reconciled with the language of the statute.

This court has also examined the legislative history of the 1999 Act but finds nothing to rescue the PTO's cause. In the first place, only a "most extraordinary showing of contrary intentions" by Congress justifies a departure from the plain language of a statute. Garcia v. United States, 469 U.S. 70, 75 (1984). Far from intentions contrary to the meaning of section 154(b), the legislative history generally supports the interpretation required by the statutory language itself.

The CAFC noted that the statute is at least a bit brain dead too.

Under certain scenarios, both the PTO's interpretation and the statute itself result in some imbalanced treatment of similarly-situated patentees.

Regardless of the potential of the statute to produce slightly different consequences for applicants in similar situations, this court does not take upon itself the role of correcting all statutory inequities, even if it could. In the end, the law has put a policy in effect that this court must enforce, not criticize or correct. See Harbison v. Bell, 129 S. Ct. 1481, 1493-94 (2009) (Thomas, J., concurring) (quoting Eldred v. Ashcroft, 537 U.S. 186, 222 (2003) ("Even if the proper interpretation of a statute upholds a 'very bad policy,' it 'is not within our province to second-guess' the 'wisdom of Congress' action' by picking and choosing our preferred interpretation from among a range of potentially plausible, but likely inaccurate, interpretations of a statute.")).

In the finale -

Section 154(b)'s language is clear, unambiguous, and intolerant of the PTO's suggested interpretation.

Affirmed.

Carlton B. Morgan and three other engineers invented a defibrillator that resulted in 6,241,751, which was originally assigned to Agilent Technologies before landing in Philips' hands.

The '751 patent is an improvement patent on a previous cardiac defibrillator, U.S. Patent No. 5,749,904 (the "Gliner patent")... In sum, the '751 patent discloses a defibrillator with a set of capacitors arranged according to both "patient impedance and desired energy level." Id. at [57].

Cardiac Science filed a patent application, the "Owen application," for a multiple-capacitor cardiac defibrillator, and provoked an interference with '751.

During the interference proceedings, Philips filed five preliminary motions in an effort to terminate the proceedings.

Motion 2 was an argument that an Owen claim was anticipated by Gliner.

Motion 4 was an asserted that Owen failed "failed to provide an adequate written description as required under § 112, ¶ 1." The Board dismissed that, "opining that "Morgan[, the '751 patent inventor,] has [presented] no basis for construing Owen's claims in light of definitions contained in Morgan's specification." The Board explained that the '751 patent's written description was irrelevant to its analysis under the PTO's interference procedures. The Board cited one regulation in particular as authority to disregard the '751 patent in construing the claim term in the Owen application: "A claim shall be given its broadest reasonable construction in light of the application or patent in which it appears." 37 C.F.R. § 41.200(b) (2009) (emphasis added)."

Motion 5 was "expressly contingent on the Board broadly interpreting the term "impedance-compensated defibrillation pulse" to include a capacitor configuration based only on patient impedance, but not based on desired energy level." That construction didn't happen, so the Board dismissed that motion.

[T]he Board opined that determining claim 38's patentability was "not essential for this interference." The Board assumed that the primary examiner could determine whether Owen's claim 38 was anticipated or obvious ex parte after the interference proceeding concluded.

"After denying all of the Philips' motions, the Board" gave Owen priority, whereupon Philips brought suit in the Western District of Washington, seeking review of motions 2, 4, and 5.

After the parties submitted their briefs, the court held a hearing to discuss the Board's rulings on Philips' preliminary motions. During that hearing, Philips' counsel advised the court that Philips "would be asking for a trial if there's no claim construction here" to relitigate the five motions before the Board and to argue no interference in fact. Counsel stated that Philips "can introduce evidence, live evidence to this Court at trial. That's what we intend to do if there's no claim construction in the case."

After the hearing, the district court denied Philips' motion for a claim construction hearing and sua sponte dismissed the complaint with prejudice. The district court affirmed all of the Board's decisions, finding that the Board's "reasons for denying or dismissing each motion were grounded in the application of the Board's own procedures and regulations."

The CAFC overturned the district court's sua sponte dismissal.

[A] district court in the Ninth Circuit may enter summary judgment (1) as long as the losing party has had a full and fair opportunity to present arguments and (2) the parties have no genuine dispute as to a material fact.

Because the district court ignored Philips' request to present new evidence and never heard Philips' argument that the '751 patent had priority, the court did not give Philips a full and fair opportunity to ventilate the issues raised in its complaint and improperly entered summary judgment under Ninth Circuit law. See Grayson, 879 F.2d at 625.

The material facts in dispute related to the Owen application being complaint with § 112, ¶ 1, and whether Gliner anticipated Owen's claim 38.

This court has held that genuine issues of material fact as to written description and anticipation preclude summary judgment. See, e.g., Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317, 1332 (Fed. Cir. 2009) (holding that genuine issues of material fact with respect to anticipation, obviousness, and lack of enablement precluded summary judgment); SunTiger, Inc. v. Scientific Research Funding Group, 189 F.3d 1327, 1334 (Fed. Cir. 1999) (holding that a genuine issue of material fact as to written description precluded summary judgment).

The Board, and the district court, by affirming the Board, left hanging the patentability issues when they should have been addressed as part of the interference. The distinctions of how the issues are to be addressed are nuanced, based on three precedents: Spina, Agilent, and Rowe.

Congress has charged the Board with resolving questions of priority of invention in an interference proceeding when more than one party seeks to patent substantially the same subject matter. 3A Donald S. Chisum, Chisum on Patents § 10.09[1][a] (2005). By statute, the Board "shall determine questions of priority of the inventions and may determine questions of patentability." 35 U.S.C. § 135(a) (2006). This court has held that "the Board should decide issues relating to priority and patentability that are fairly raised and fully developed during the interference, despite the permissive language of § 135(a) with respect to patentability issues." In re Gartside, 203 F.3d 1305, 1317 (Fed. Cir. 2000); see also Schulze v. Green, 136 F.3d 786, 791 (Fed. Cir. 1998) ("[B]y combining the two boards, 'all issues of patentability and priority which arise in an interference can be decided in a single proceeding rather than in a series of complicated inter partes and ex partes proceedings.'" (quoting 130 Cong. Rec. 28,065, 28,072 (1984) (statement of Rep. Kastenmeier))); Perkins v. Kwon, 886 F.2d 325, 328 (Fed. Cir. 1989) ("[I]ssues of patentability and priority that have been fully developed before the Board should be resolved by the Board."). Pursuant to § 135(a), the PTO has issued procedural regulations that govern interference proceedings. See, e.g., 37 C.F.R. §§ 41.200-.208 (2009). The Board and district court relied on one of those regulations in deciding Philips' written description challenge on procedural grounds. That regulation governs claim construction in an interference proceeding: "A claim shall be given its broadest reasonable construction in light of the specification of the application or patent in which it appears." 37 C.F.R. § 41.200(b).

In Spina, this court considered which specification was relevant when interpreting a claim for a written description challenge. 975 F.2d at 856. The court agreed with the Board's approach: "When interpretation is required of a claim that is copied for interference purposes, the copied claim is viewed in the context of the patent from which it was copied." 975 F.2d at 856. Though the Board chose the relevant specification on which to interpret Charles Spina's claim, the court reversed the Board's claim construction on different grounds. See id. at 857-58. After Spina, the court distinguished a written description challenge from a priority challenge under 35 U.S.C. § 102, holding that when a party challenges a claim's validity based on prior art, "the PTO and this court must interpret [a] claim in light of the specification in which it appears." Rowe v. Dror, 112 F.3d 473, 479 (Fed. Cir. 1997). Despite this distinction in Rowe, some parties still misunderstood when the Spina rule should apply.

In Agilent, this court again addressed the differences between a written description challenge and a validity challenge in interference proceedings. The court held: "[W]hen a party challenges written description support for an interference count or the copied claim in an interference, the originating disclosure provides the meaning of the pertinent claim language." Agilent, 567 F.3d at 1375 (emphasis added). In contrast, "[w]hen a party challenges a claim's validity under 35 U.S.C. § 102 or § 103, however, this court and the Board must interpret the claim in light of the specification in which it appears." Id. Consequently, the relevant specification for claim construction depends on whether a party in an interference proceeding challenges the written description under § 112, ¶ 1 or challenges validity under § 102 or § 103. Recall that PTO regulation requires the examiner to give a claim "its broadest reasonable construction in light of the application or patent in which it appears" regardless of the type of challenge in an interference proceeding. 37 C.F.R. § 41.200(b) (emphasis added).

Agilent made clear that 37 C.F.R. § 41.200(b) does not apply in an interference proceeding when one party challenges another's written description. The court applied the Spina rule to a case with the same preliminary motion as in this case: Philips filed a "preliminary motion challenging the validity of the copied claims on the grounds that the [Owen] application did not describe the invention adequately under § 112 ¶ 1." Agilent, 567 F.3d at 1373. As in Agilent, "[t]his case calls for application of the Spina rule, because the question is 'whether the copying party's specification[, Owen,] adequately supported the subject matter claimed by the other party[, the inventors of the '751 patent].'" Id. (quoting Rowe, 112 F.3d at 479).

Based on their failure to apply our precedent, the Board and the district court fundamentally erred by summarily rejecting Philips' written description challenge. A district court must base its analysis of written description under § 112, ¶ 1 on proper claim construction. See Agilent, 567 F.3d at 1383 (reversing the district court's holding that an applicant's written description was adequate because the court erred in its claim construction); Intirtool, Ltd. v. Texar Corp., 369 F.3d 1289, 1296 (Fed. Cir. 2004) ("The district court's reliance on [an] erroneous [claim] construction . . . renders its finding that the . . . patent is invalid for failure to 'contain an adequate written description of the claimed invention' clearly erroneous."). Here, the district court did not construe the disputed term at all. Nor did the court analyze the Owen application's written description, assuming that the Board's procedural grounds obviated claim construction. The district court failed to recognize that "the Board should decide issues relating to . . . patentability that are fairly raised and fully developed during the interference, despite the permissive language of § 135(a) with respect to patentability issues." Gartside, 203 F.3d at 1317. Cardiac Science does not dispute that Philips fairly raised and fully developed its written description challenge before the Board. Consequently, the district court should have corrected the Board's error by deciding whether the Owen application's written description satisfied § 112, ¶ 1.

The CAFC swatted the patent office for its unction in making up it own rules.

The district court and the Board's legal errors stem from a failure to appreciate the consequences of the PTO's rulemaking authority. The PTO lacks substantive rulemaking authority. See Merck & Co., Inc. v. Kessler, 80 F.3d 1543, 1549-50 (Fed. Cir. 1996) ("[T]he broadest of the PTO's rulemaking powers--35 U.S.C. § 6(a)--authorizes the Commissioner to promulgate regulations directed only to 'the conduct of proceedings in the [PTO]'; it does not grant the Commissioner the authority to issue substantive rules." (quoting Animal Legal Def. Fund v. Quigg, 932 F.2d 920, 930 (Fed. Cir. 1991))).

The failure to address motion 5, contingent upon claim construction, was in error because of what the Board failed to do: resolve the § 112, ¶ 1 issue.

The district court indeed erred in dismissing Philips' claim that Owen's claims 1-4, 13, 15, 20-22, and 39 are unpatentable because the Gliner patent anticipated those claims under 35 U.S.C. § 102 or at least rendered the claims obvious under § 103. The court opined that the Board properly dismissed motion 5 "because the contingency on which it was premised never arose." But the contingency never materialized because the Board failed to apply Spina and resolve the written description challenge as a properly raised issue of patentability. Moreover, Agilent makes clear that the district court should have addressed Philips' unpatentability claims under § 102 and § 103 regardless of whether it construed the term "impedance-compensated defibrillation pulse" in light of the '751 patent written description. In Agilent, the court clarified that when a party challenges a claim's patentability under § 102 or § 103--in contrast to a written description challenge--a court "must interpret the claim in light of the specification in which it appears." 567 F.3d at 1375.

Reversed and remanded. Costs to the Appellant, Philips.

While they don't arise often, interferences are messy business. First-to-file would clean up that mess in an instant - no more interferences.

First-to-invent is actually first-to-file-a-patent-in-the-US-and-claim-an-invention-date. Foreign patent filings don't count as prior art, so a foreigner could invent something that someone else can get a US patent for by filing here before the foreign application is published.

Career examiners and PTO management are government bureaucrats. In this country at least, that can't be mistaken for a complement. Unlike the French, the best and brightest Americans are not prone to public service. The smart ones go in for the resume boost and get out within a few years. Einstein's first career was in the Swiss patent office. He didn't linger.

KSR, a politically inspired Supreme Court decision, has made examiners practically insufferable with their unreasoned hand-waving rejections. The nature of the problem is that of lack of examiner competence and awareness: failure to conceptualize and failure to distinguish details. The irony is built in: examiners don't qualify as "one of skill in the art at the time of the invention," and don't examine objectively.

Examination has been heavily geared, post-KSR, to rejection. Examiners get scant training in the grounds to allow claims. The training regime is focused almost solely on the bases for rejection.

Besides examiners suffering logic as a second thought process, there is the less damning but often vexing problem of English as a second language.

KSR was a watershed in regime switching: from permissive too restrictive. KSR transpired as a culmination to the junk patent decade plus, which enveloped the Clinton years, where getting a patent granted was far too easy. It was the junk patent decade that lead to outcry by large computer corporations, assailed with lawsuits where only a fraction were worthy of patent protection.

Examiners work on a production quota point system. Like post office workers used to, to sort the mail. The fundamental flaw in using a production system where quality should take precedent over quantity should be obvious. It was to Patent Office Commissioner Casper W. Oom in 1945:

It has been brought to my attention that the practice prevails [in] the Patent Office of measuring the "amount of work accomplished" by Assistant Examiners during particular periods of time by assigning quotas of production.... This practice necessarily emphasizes quantity rather than quality of work.

Work of the kind in which Patent Office Examiners are engaged involves great public and private interests, and requires exceptional training and experience coupled with matured and considered judgment in its execution. For these reasons, it cannot be measured by methods applicable to routine office operations. High class professional work performance in a favorable environment and adequately compensated inevitably attracts and holds high class men [and women], and the pride of achievement entertained by such men [and women] ordinarily provides a sufficient incentive for work which is commendable both as to quality and quantity.

KSR at least paid lip service to articulating reasoning for combining references to an obviousness rejection. More often than not that articulation is only evident in the breach in an office action. Worse is mischaracterization of prior art, and reading in what was never disclosed. Those logical flaws are running wild in office actions. While the mentality varies from art unit to art unit, the heavy accent is on rejection, logic and regard for the law take the hindmost.

These generalizations are not intended as blanket damnations. Most examiners are at least civil, even the morons. As Pink Floyd observed on The Dark Side of the Moon, "good manners count for something." But, while the facade remains civil, the spirit has generally become meaner in not granting patents on merit since KSR, which was really a watershed in the larger political movement to crack down on patent protection.

Not all patents granted pre-KSR are junk, nor are all post-KSR patents worthy. But there's more than grains of truth in the generalization that, while examination quality may have remained something of a constant, the flip got switched to less garbage output, at the expense of some worthy inventions never reaching patent status.

The patent office is a political creature. This was glaringly apparent with the last director, Jon Dudas, who was nothing shy of a ill-favored political hack, and whose subsequent descent was to a very politically oriented law firm: Foley & Lardner. As to his stated qualifications: "Mr. Dudas is admitted in Illinois only. His practice is limited to matters before federal courts and agencies." Not a patent agent, hence not a prosecutor. Not a patent litigator. And, as his tenure at the PTO showed, not a manager.

The USPTO is practically the only federal agency capable of actually making money. Application and allowance fees almost pay the rent. It's the maintenance fees on granted patents that are the gilt trim of profit.

From 1992 through 2004, Congress pilfered the patent office's piggy bank. That budgetary shortfall created a backlog of 1.2 million applications, estimated to be six years in catch-up work, if adequately funded. 2005-2008, when the agency was fully funded, were largely squandered by Dudas, whose lack of managerial acumen led to both examiner discontent and acrimony from the patent community. The built-in irony is that Dudas has been credited with getting the money to spruce up the agency, but lacked the wherewithal to make productive use of it.

How to fix the PTO? Better management, better training. Easy to say, nearly impossible to do. Especially at a time of fiscal constraint. Which is why the Dudas reign represented such a lost opportunity. A very few years ago the Office was flush, and could afford corrective action. No more, nor likely for years to come. Current Director David Kappos, former patent handler at IBM, has his work cut out for him.

The recession hammered the PTO like it hammered everyone but corporate chieftains. Kappos came on board inheriting a $200 million deficit. So he can neither hire & train new examiners, nor upgrade the agency's reputedly antiquated computer systems. Attrition continues to sap quality, as about 50 examiners a month quit without replacements. The agency has recently launched a campaign to hire back into the fold examiners who quit, thus regaining experience and some talent while saving training costs. The response of silence has been deafening. One erstwhile examiner told me, "I'd rather wait tables than go back to the PTO."

Congress just passed a budget this month larded with pet projects, as usual, but with a restrictive spending ceiling on the PTO. An additional $100 million was stripped at the last-minute.

Lack of quality examination equates to patent abortion. Alas, the damage of not granting patents to merited inventions is inestimable, like proving a negative, that something that should exist doesn't. One cannot easily state one way or another whether commerce, or society, is better off granting fewer or more patents. The hurt is individual: of companies or inventors not getting patents they deserved. The failure of patent protection by merit could doom startup companies that depend on such to raise capital and have a shot at marketing their innovative products without having their lunch eaten by a mega-corporation. The recent i4i v. Microsoft is a case in point.

Kappos is aware of the dilemma, waxing prophetic to make a point: "Every patent application that we sit on is an American job not being created."

That's one of the truisms about patents: it's nearly impossible to make generalizations about their value, other than to say that patents do serve a valuable role in rewarding innovation by providing a return on investment. Not protecting invention means the economy's engine lacks lubrication.

The factory where patents come from is fouled, and there's no fix in sight.

The district court's claim construction "required a lining distinct from the yoke itself." From that, "the district court concluded that Forest presented no evidence that the yoke in Bon Tool's stilts had a separate lining as required by the court's claim construction and granted summary judgment of noninfringement in favor of Bon Tool. The district court then held a bench trial on Bon Tool's counterclaims."

In the bench trial that followed on Bon Tool's counterclaims, the "district court found that Forest falsely marked its S2 stilts with its '515 patent number after November 15, 2007 and assessed Forest a $500 fine for a single offense of false marking.²"

² Mr. Lin testified that he instructed his manufacturer to remove the patent marking from this order of stilts, however, the district court did not find his testimony credible. The court noted the absence of any documents, phone records, emails or letters to support Mr. Lin's claim that he instructed the manufacturer to stop marking the S2 stilts. The court further found it incredible that Lin would not have checked the new parts to ensure that they did not contain the patent number had he instructed the manufacturer to stop marking.

The district court granted summary judgment for Forest on Bon Tool's remaining counterclaims, deciding that Forest did not violate § 43 of the Lanham Act and that the '515 patent was not invalid. Further, the district court found that the case was not exceptional and denied claims for attorney fees by both parties.

Bon Tool appealed, most interestingly "that the district court erred in its interpretation of the false marking statute, 35 U.S.C. § 292, when it determined that the statute provided for a penalty based on each decision to mark rather than on a per article basis."

I. False Marking--Knowledge

The two elements of a § 292 false marking claim are (1) marking an unpatented article and (2) intent to deceive the public. See Clontech Labs. Inc. v. Invitrogen Corp., 406 F.3d 1347, 1352 (Fed. Cir. 2005). "Intent to deceive is a state of mind arising when a party acts with sufficient knowledge that what it is saying is not so and consequently that the recipient of its saying will be misled into thinking that the statement is true." ld. (citing Seven Cases of Eckman's Alterative v. United States, 239 U.S. 510, 517-18 (1916)). A party asserting false marking must show by a preponderance of the evidence that the accused party did not have a reasonable belief that the articles were properly marked. Id. at 1352-53. An assertion by a party that it did not intend to deceive, standing alone, "is worthless as proof of no intent to deceive where there is knowledge of falsehood." Id. at 1352.

The CAFC panel cut Armstong and Lin some slack on what they apparently lacked.

The district court did not clearly err in finding that Forest lacked intent to deceive prior to November 15, 2007. The district court found that Forest genuinely believed its stilts were covered by the '515 patent prior to this date. The district court noted that the patent application was written by experienced patent counsel who had an exemplar of the stilt on which Messrs. Lin and Armstrong sought the patent. The court further noted that neither Mr. Lin nor Mr. Armstrong had "strong academic backgrounds" or "in-depth appreciation of patent law" and that Mr. Lin was not a native English speaker. Forest Group, 2008 U.S. Dist. LEXIS 57134, at *15 n.5.

II. False Marking--Offense

Section 292 provides a civil penalty for false marking of goods. It states in relevant part:

Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word "patent" or any word or number importing that the same is patented, for the purpose of deceiving the public . . . Shall be fined not more than $ 500 for every such offense.

35 U.S.C. § 292(a) (2006).

The plain language of the statute does not support the district court's penalty of $500 for a decision to mark multiple articles. Instead, the statute's plain language requires the penalty to be imposed on a per article basis. The statute prohibits false marking of "any unpatented article," and it imposes a fine for "every such offense." Id. (emphasis added). The statute requires a fine to be imposed for every offense of marking any unpatented article. The act of false marking is the offense punished by the statute. The phrase "for the purpose of deceiving the public" creates an additional requirement of intent but does not change the relationship between the act of marking an article and the penalty. We conclude that the statute clearly requires that each article that is falsely marked with intent to deceive constitutes an offense under 35 U.S.C. § 292.

Policy considerations further support the per article interpretation of § 292. The marking and false marking statutes exist to give the public notice of patent rights. "Congress intended the public to rely on marking as a 'ready means of discerning the status of intellectual property embodied in an article of manufacture or design.'" Clontech Labs., 406 F.3d at 1356 (quoting Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 162 (1989)). Acts of false marking deter innovation and stifle competition in the marketplace.  Donald S. Chisum, Chisum on Patents § 20.03[7][c][vii] (2009). If an article that is within the public domain is falsely marked, potential competitors may be dissuaded from entering the same market. False marks may also deter scientific research when an inventor sees a mark and decides to forego continued research to avoid possible infringement. See Bonnie Grant, Deficiencies and Proposed Recommendations to the False Marking Statute: Controlling Use of the Term 'Patent Pending', 12 J. Intell. Prop. L. 283, 283 (2004). False marking can also cause unnecessary investment in design around or costs incurred to analyze the validity or enforceability of a patent whose number has been marked upon a product with which a competitor would like to compete. Cf. Clontech Labs., 406 F.3d at 1356 n.6 ("In each instance where it is represented that an article is patented, a member of the public desiring to participate in the market for the marked article must incur the cost of determining whether the involved patents are valid and enforceable.").

These injuries occur each time an article is falsely marked. The more articles that are falsely marked the greater the chance that competitors will see the falsely marked article and be deterred from competing. See Lans v. Digital Equip. Corp., 252 F.3d 1320, 1327 (Fed. Cir. 2001) ("In sum, knowledge of the patentee's identity facilitates avoidance of infringement with design changes, negotiations for licenses, and even early resolution of rights in a declaratory judgment proceeding."). This court's per article interpretation of § 292 is consonant with the purpose behind marking and false marking.

Section 292(b) provides that "[a]ny person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States." 35 U.S.C. § 292(b). As noted by Forest, an amicus brief was filed in this case by an individual who created a holding company to bring qui tam actions in false marking cases. Commentators have discussed a surge of such actions in recent years, noting the possible rise of "marking trolls" who bring litigation purely for personal gain. See Donald W. Rupert, Trolling for Dollars: A New Threat to Patent Owners, 21 No. 3 Intell. Prop. & Tech. L.J. 1 (2009) (citing five false marking cases filed since 1997); A. Justin Poplin, Avoiding False Patent Marking Claims, Law360, October 9, 2009, http://www.law360.com/articles/116798 ("Sensing a new source of revenue, individuals have begun suing large corporations for false patent marking when an expired patent number appears on a product.").

Rather than discourage such activities, the false marking statute explicitly permits qui tam actions. By permitting members of the public to sue on behalf of the government, Congress allowed individuals to help control false marking. The fact that the statute provides for qui tam actions further supports the per article construction. Penalizing false marking on a per decision basis would not provide sufficient financial motivation for plaintiffs--who would share in the penalty--to bring suit. It seems unlikely that any qui tam plaintiffs would incur the enormous expense of patent litigation in order to split a $500 fine with the government. Forest's per decision construction is at odds with the clear language of the statute and, moreover, would render the statute completely ineffective.

This does not mean that a court must fine those guilty of false marking $500 per article marked. The statute provides a fine of "not more than $500 for every such offense." 35 U.S.C. § 292(a) (emphasis added). By allowing a range of penalties, the statute provides district courts the discretion to strike a balance between encouraging enforcement of an important public policy and imposing disproportionately large penalties for small, inexpensive items produced in large quantities. In the case of inexpensive mass-produced articles, a court has the discretion to determine that a fraction of a penny per article is a proper penalty.

We hold that the plain language of 35 U.S.C. § 292 requires courts to impose penalties for false marking on a per article basis.

The district court erred. The $500 fine was vacated, and the case remanded for proper determination.

Even though Bon Tool didn't infringe, the patent was not invalidated. This was not considered a frivolous lawsuit claim, and so the "district court's finding that the case was not exceptional was not clearly erroneous."