New section VI. Willfulness

We do not read Microsoft's opening brief as challenging the denial of Microsoft's post-verdict JMOL on willfulness. Although Microsoft did mention willfulness when disputing the propriety of the enhanced damages award, in substance this argument focused on the district court's rationale for awarding enhanced damages, not the jury's willfulness verdict. Whether the district court abused its discretion in weighing the Read factors is not the same question as whether there was a legally sufficient evidentiary basis for the jury's finding of willfulness. Fed. R. Civ. P. 50(a); compare Bryant v. Compass Group USA Inc., 413 F.3d 471, 475 (5th Cir. 2005), with Read, 970 F.2d at 821, 826-27. Whether Microsoft's infringement was willful is a question of fact. Cohesive Techs., Inc. v. Waters Corp., 543 F.3d 1351, 1374 (Fed. Cir. 2008); see Braun Inc. v. Dynamics Corp. of Am., 975 F.2d 815, 822 (Fed. Cir. 1992). This question was submitted to the jury, which answered in the affirmative. Accordingly, appellate review is limited to asking whether that verdict is supported by substantial evidence. ACCO Brands, 501 F.3d at 1311-12. On appeal, Microsoft has never attacked the jury instructions or the basis for the jury's willfulness verdict. In light of what Microsoft actually argued, we do not read Microsoft's passing reference to its post-verdict JMOL on willfulness as raising the issue.

Even if we were to read the solitary sentence, "Microsoft is entitled to judgment as a matter of law on the issue of willfulness," as challenging the jury's finding of willfulness, the result does not change. A reasonable jury could have concluded that Microsoft "willfully" infringed the '449 patent based on the evidence presented at trial. Infringement is willful when the infringer was aware of the asserted patent, but nonetheless "acted despite an objectively high likelihood that its actions constituted infringement of a valid patent." Seagate, 497 F.3d at 1371. After satisfying this objective prong, the patentee must also show that the infringer knew or should have known of this objectively high risk. Id.

In this case, i4i presented sufficient evidence at trial to prove each prong of the Seagate standard for willfulness. The jury heard that Microsoft employees attended demonstrations of i4i's software, which practiced the '449 patent. Further, the jury learned that Microsoft employees received i4i's sales kit, which identified i4i's software as "patented" technology and cited the '449 patent. The jury then saw a series of emails between Microsoft employees discussing a marketing email sent by i4i. One of those emails explained that the "heart" of i4i's software was patented, again citing the '449 patent. Based on this circumstantial evidence, the jury could have reasonably inferred that Microsoft knew about the '449 patent.

At trial, i4i also showed that Word's custom XML editor was designed to and did perform the same methods as i4i's software (which was known to practice the '449 patent). Despite this highly similar functionality, there is no evidence Microsoft took any remedial action, even though Microsoft knew of the '449 patent as early as April 2001, before any work had begun on Word's custom XML editor. For example, Microsoft did not cease its infringing activity or attempt to design around; instead, Microsoft started marketing, selling, and instructing others in the use of Microsoft's custom XML editor in 2002. Cf. DePuy Spine, Inc. v. Medtronic Sofamor Danek, 567 F.3d 1314, 1336-37 (Fed. Cir. 2009). Similarly, there is no evidence Microsoft ever made a good faith effort to avoid infringement; internal emails show Microsoft intended to render i4i's product "obsolete" and assure "there won't be a need for [i4i's] product." Based on this and other evidence presented at trial, it would have been reasonable for the jury to infer that Microsoft went ahead with producing, marketing, and promoting its custom XML editor despite an objectively high likelihood the editor infringed the '449 patent. This same evidence supports the jury's finding as to the subjective prong of Seagate. Given the information Microsoft had about i4i's software and the '449 patent, Microsoft knew or should have known that there was an objectively high risk of infringement.

The fact that Microsoft presented several defenses at trial, including noninfringement and invalidity, does not mean the jury's willfulness finding lacks a sufficient evidentiary basis. See Fed. R. Civ. P. 50(a). The jury heard all of Microsoft's defenses, which it expressly rejected in finding the '449 patent infringed and not invalid. Cf. DePuy Spine, 567 F.3d at 1336-37 (noting that the question of equivalence was "a close one"). Based on its own assessment of the evidence and Microsoft's defenses, the jury was free to decide for itself whether Microsoft reasonably believed there were any substantial defenses to a claim of infringement. Cf. Cohesive Techs., 543 F.3d at 1374.

Here is the December 22, 2009 blog entry (the first CAFC ruling): Unpreserved.

Commercial lysine is produced by mutant bacteria that add up to big bucks: a billion-dollar industry. Bug tinkering bought patent protection to Ajinomoto. But the actual tinkering wasn't fully disclosed.

In contrast to the disclosure in the specification [for '698], it is undisputed that the actual strain used by the inventors had two additional genetic alterations made to it before the addition of mutant ldc.

Ajinomoto scientists identified two bacteria strains into which they introduced mutation.

Yet before filing the Japanese application from which the '160 patent claims priority, the inventors characterized a different strain, AE-70, as their best lysine producer.

After construing the claims, the ITC ALJ (administrative law judge) found the patents buggy.

Specifically, the ALJ found that the asserted claims were invalid for multiple violations of the best mode requirement of 35 U.S.C. § 112, first paragraph, and that both patents were unenforceable for inequitable conduct because of those best mode violations.

The ALJ next held both patents unenforceable for inequitable conduct. For both patents, the ALJ found that materiality was established by the best mode violations and that intent to deceive was established by the inventors' intentional inclusion of fictitious data coupled with their failure to disclose their preferred strains and, with respect to the '698 patent, carbon source at a time when Ajinomoto was facing increased business competition from another lysine supplier. The ALJ then, in weighing materiality and intent, concluded that equity demanded a finding of inequitable conduct because both prongs were established to a high degree.

The Commission backed its ALJ. Hence the appeal.

The road of best mode has two forks in it -

Section 112 of the Patent Act provides that the patent specification "shall set forth the best mode contemplated by the inventor of carrying out his invention." 35 U.S.C. § 112, ¶ 1. Known as the best mode requirement, it comprises part of the quid pro quo of the patent grant, prohibiting inventors from receiving the benefit of the right to exclude while at the same time concealing from the public preferred embodiments of their inventions. See Teleflex, Inc. v. Ficosa N. Am. Corp., 299 F.3d 1313, 1330 (Fed. Cir. 2002). Compliance with the best mode requirement is a question of fact, but the scope of the invention to which the best mode applies is a question of law, which we review de novo. See Bayer AG v. Schein Pharms., Inc., 301 F.3d 1306, 1312, 1320 (Fed. Cir. 2002).

To satisfy the best mode requirement, an inventor must disclose the preferred embodiment of his invention as well as preferences that materially affect the properties of the invention. See id. at 1319. The disclosure requirement, however, is limited to "the invention defined by the claims." Id. at 1315; see also Zygo Corp. v. Wyko Corp., 79 F.3d 1563, 1567 (Fed. Cir. 1996). Subject matter outside the scope of the claims falls outside of the best mode requirement. AllVoice Computing PLC v. Nuance Commc'ns, Inc., 504 F.3d 1236, 1246-48 (Fed. Cir. 2007). Accordingly, we have held that a threshold step in a best mode inquiry is to define the invention by construing the claims. Bayer, 301 F.3d at 1320 (citing N. Telecom Ltd. v. Samsung Elec. Co., 215 F.3d 1281, 1286-87 (Fed. Cir. 2000)).

Once the invention is defined, determining compliance with the best mode requirement is a two-prong inquiry. First, the court must determine whether, at the time the patent application was filed, the inventor possessed a best mode of practicing the claimed invention. United States Gypsum Co. v. Nat'l Gypsum Co., 74 F.3d 1209, 1212 (Fed. Cir. 1996). This prong is highly subjective; it focuses on the inventor's own personal preferences as of the application's filing date. N. Telecom, 215 F.3d at 1286. Second, if the inventor has a subjective preference for one mode over all others, the court must then determine whether the inventor "concealed" the preferred mode from the public. Chemcast Corp. v. Arco Indus. Corp., 913 F.2d 923, 928 (Fed. Cir. 1990)). In other words, the second prong asks whether the inventor's disclosure is adequate to enable one of ordinary skill in the art to practice the best mode of the invention. Id. This second inquiry is objective; it depends upon the scope of the claimed invention and the level of skill in the relevant art. Id.

Ajinomoto didn't challenge the facts, only "that the Commission made multiple legal errors in defining the scope of its claimed inventions and the scope of the best mode requirement."

[F]ocusing on the inventions recited in the asserted claims, the Commission correctly included within the scope of the best mode requirement an obligation to disclose the inventors' preferred host strains.

Infringement requires all claim limitations to be present, not just those that distinguish the claim from the prior art. So too with the best mode requirement, which applies to the invention claimed, with all its limitations, not just the novel ones. Ajinomoto claimed the right to exclude competitors from practicing a method of producing lysine by cultivating a bacterium with an ldc or dapA mutation. Thus, the "two-way street" of the best mode requirement obligated Ajinomoto to disclose its best bacterium for carrying out those inventions.

The inventors could not, consistent with the best mode requirement, claim the cultivation of a bacterium containing an ldc mutation while simultaneously keeping from the public the identity of the one and only bacterium they used to practice that cultivation. See Chemcast, 913 F.2d at 930 ("[W]here the inventor has failed to disclose the only mode he ever contemplated of carrying out his invention, the best mode requirement is violated.").

Ajinomoto tried to wriggle by claiming a different priority date.

A patentee may seek to rely on an earlier priority date to overcome intervening prior art, as did the patentee in Go Medical Industries Pty, Ltd. v. Inmed Corp., 471 F.3d 1264, 1270 (Fed. Cir. 2006), cited by Ajinomoto. A patentee may also argue in the alternative for different priority dates at trial. But a patentee cannot, as Ajinomoto attempts here, reverse a finding of invalidity by unveiling after trial an alternative priority date on which it would now like to rely.

Ajinomoto did not preserve an argument to appeal inequitable conduct because it failed to challenge the ITC's finding intent to deceive.

Affirmed.

Federal Rule of Evidence 702 proscribes unreliable and irrelevant expert input.

Under Rule 702 of the Federal Rules of Evidence, a court may permit opinion testimony from an expert only if such testimony "will assist the trier of fact" and "(1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case." Fed. R. Evid. 702. The district courts act as gatekeepers tasked with the inquiry into whether expert testimony is "not only relevant, but reliable." Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589 (1993). This court must exclude testimony that does not meet the requirements of Rule 702.

The floor for damages is no less than a reasonable royalty. Only marketplace adopters of an asserted patent are entitled to consideration for lost profits.

In a suit for patent infringement, a successful plaintiff 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, together with interest and costs as fixed by the court." 35 U.S.C. § 284 (2006). The statute authorizes two categories of infringement compensation: lost profits and reasonably royalty damages. Lucent Techs., Inc. v. Gateway, Inc., 580 FJd 1301, 1324 (Fed. Cir. 2009). Because IPI does not manufacture or sell products incorporating the patents-in-suit, it has not sought, and is not entitled to, lost profits.

The setting for reasonable royalty is a hypothetical negotiation of what a patentee would be willing to license for vis-à-vis what an infringing, but willing, licensee would be willing to pay.

A reasonable royalty contemplates a hypothetical negotiation between the patentee and the infringer at a time before the infringement began. Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d 1075, 1078 (Fed. Cir. 1983). Critically, the hypothetical negotiation presumes that the patentee is a willing licensor and the alleged infringer is a willing licensee, with both parties assuming the patent was valid, enforceable, and infringed. Georgia Pacific Corp. v. U.S. Plvwood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970). The Federal Circuit "requires sound economic proof of the nature of the market and likely outcomes with infringement factored out of the economic picture" in all damages calculations. Grain Processing Corp. v. Am. MaizeProds. Co., 185 FJd 1341, 1350 (Fed. Cir. 1999). Although some approximation is permitted in calculating the reasonable royalty, the Federal Circuit requires "sound economic and factual predicates" for that analysis. Riles v. Shell Exploration & Production Co., 298 FJd 1302, 1311 (Fed. Cir. 2002) (citation omitted). Where, as here, such sound economic and factual predicates are absent from a reasonable royalty analysis, Rule 702 requires this court to exclude that unreliable proffered evidence.

Now to the nut of it - what evidence backs the barker's call? Here, invoking the "whole market rule," IPI's expert, Mr. Gemini, claimed the product's allure was solely owing to the patented feature.

A reliable reasonable royalty calculation depends on trustworthy evidence of both the royalty base and the royalty rate. Mr. Gemini invoked the "entire market value rule" in identifying the royalty base in this case. Under the entire market value rule, damages are recoverable only "if the patented apparatus was of such paramount importance that it substantially created the value of the component parts." Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538, 1549 (Fed. Cir. 1995) (citation omitted). Therefore, "the patentee must prove that the patent-related feature is the basis for customer demand." Lucent Techs., 580 F.3d at 1336.

Gemini's position boils down to a singularity: greed.

In this case, IPI has accused Red Hat's and Novell's Linux-based operating systems of infringing the patents-in-suit, including the Enterprise Linux Desktop and Server products. IPI alleges that the operating systems' multiple virtual workspaces and workspace switching features infringe the patents-in-suit. In invoking the "entire market value rule," Mr. Gemini included 100% of Red Hat's and Novell's total revenues from sales of subscriptions to the accused operating systems in his proposed royalty base. Mr. Gemini's methodology however does not show a sound economic connection between the claimed invention and this broad proffered royalty base.

The claimed invention is but one relatively small component of the accused operating systems. The evidence shows that the workspace switching feature represents only one of over a thousand components included in the accused products. Mr. Gemini relies on an online user forum for a third-party product to show that some users tout a desktop switching feature as essential. However, selected users' statements in isolation and without a relationship to the actual claimed technology do not show an accurate economic measurement of total market demand for the switching feature, let alone its contribution to the demand for the entire product asserted as the royalty base. The workspace switching feature's small role in the overall product is further confirmed when one considers the relative importance of certain other features such as security, interoperability, and virtualization. Moreover this proffered evidence has no economic foundation.

The oily rubber of greed meets the road, so slick is squeals right past credulity.

Contrary to the proffer of Mr. Gemini, the record---even at this pretrial stage after discovery-suggests that users do not buy the accused operating systems for their workspace switching feature. Most of Red Hat's and Novell's accused sales come from their Server products, the majority of which are not connected to a display and thus do not take advantage of the workspace switching feature. Mr. Gemini made no effort to factor out of his proffered royalty base these products which do not even feature the claimed invention. Once again, this blatant oversight shows that Mr. Gemini did not use the type of reliable economic principles and methods required by Rule 702 for an economic damages expert. Also, the record shows that some accused operating systems are sold to the public with a default setting that does not enable the workspace switching feature. Mr. Gemini made no effort to factor out of his proffered royalty base those operating systems in which the user never affirmatively enables the claimed switching feature. In fact, he made no effort to even discern the percentage of users who would never enable or use the claimed feature. This aspect of his questionable methodology also shows inattention to the economic and factual data necessary for a reliable assessment of a compensatory royalty. Overall, Mr. Gemini never accounts for the record evidence that most users of the accused operating systems do not seem to use the workspace switching feature at all. Accordingly, the record cannot support the unfounded conclusion that the often-unused feature drives demand for a royalty base of 100% of the operating systems as a whole. In sum, this stunning methodological oversight makes it very difficult for this court to give any credibility to Mr. Gemini's assertion that the claimed feature is the "basis for customer demand." See Lucent Techs., 580 F.3d at 1336.

IPI finger points to blame the defendants, a pathetically childish excuse for its stance.

IPI tries to shift the burden to Red Hat and Novell, complaining that they did not provide sufficient information for Mr. Gemini to determine the value of the desktop switching feature relative to other features of the accused products. IPI argues that the defendants' desktop switching feature has no separate valuation, no aftermarket, and thus no way to value the accused feature separately. This court, however, must insist under the law that IPI, not Red Hat or Novell, has the burden of proving damages by a preponderance of evidence. Dow Chern. Co. v. Mee Indus" Inc., 341 F.3d 1370, 1381 (Fed. Cir. 2003). IPI carmot blame the defendants for Mr. Gemini's assertion of 100% of the revenue as royalty base. IPI must show some plausible economic connection between the invented feature and the accused operating systems before using the market value of the entire product as the royalty base.

Back to numbers that don't add up.

Another reason for excluding Mr. Gemini's expert testimony is that he arbitrarily picked a royalty rate that is much higher than the existing royalty rates for licenses to the patents-in-suit... Mr. Gemini offers no evidence that the alleged industry agreements are in any way comparable to the patents-in-suit. See Resgnet.com, Inc. v. Lansa, Inc., Case Nos. 2008-1365, -1366, 2009-1030, slip. op. at 14-16 (Fed. Cir. Feb. 5, 2010) (discrediting license agreements because "none of these licenses even mentioned the patents in suit or showed any other discernible link to the claimed technology").

Gemini was fly-casting to the moon when the fish were in the nearby stream.

Instead of relying on these studies, Mr. Gemini should have at least inaugurated his analysis with reference to the existing licenses to the patents-in-suit. See Georgia-Pacific, 318 F. Supp. at 1120 (considering past and present royalties received by the patentee "for the licensing of the patent-in-suit, proving or tending to prove an established royalty"). "An established royalty is usually the best measure of a 'reasonable' royalty for a given use of an invention because it removes the need to guess at the terms to which parties would hypothetically agree." Monsanto Co. v. McFarling, 488 F.3d 973, 978-79 (Fed. Cir. 2007) (citation omitted). The previous owner of the patents-in-suit, Xerox Corporation, entered into several license agreements that involved one or more of the patents-in-suit. At least two of these agreements were entered into outside of the context of litigation and thus appropriate as touchstones for determining the appropriate royalty rate in this case. Mr. Gemini disregarded these licenses because Xerox entered into these agreements in the mid-1990's, a decade before the alleged hypothetical negotiation date. However, these licenses are far more relevant than the general market studies on which Mr. Gemini primarily relied in his expert report. A credible economic approach might have tried to account for the passage of time since the 1990's agreements on the patents in this case, rather than reject them out of hand.

A dunce's cap on the Daubert deuce.

Accordingly, Mr. Gemini's current expert report improperly inflates both the royalty base and the royalty rate by relying on irrelevant or unreliable evidence and by failing to account for the economic realities of this claimed component as part of a larger system. This court hereby precludes Mr. Gemini from testifying at the trial ofthis case or otherwise presenting his opinions on the issue of damages based on his current expert report... The parties are reminded that expert testimony on the topic of damages will not be allowed absent a firm basis in accepted economic principles with an eye to the facts of this record.

Summary Judgment Motion

Antec wanted a mulligan on its summary judgment motion. No mulligans once the hole has been played and the ball is in the cup.

Antec first contends that the district court erred in denying Antec's motions for summary judgment of noninfringement and invalidity due to obviousness. The district court denied Antec's motions because it determined that genuine issues of material fact existed. See Summary Judgment Order, 2007 WL 2811092, at *4-5. A denial of summary judgment is not properly reviewable on an appeal from a final judgment entered after trial. See Hopp v. City of Pittsburgh, 194 F.3d 434, 439 n.3 (3d Cir. 1999); Baughman v. Cooper-Jarrett, Inc., 530 F.2d 529, 532 (3d Cir. 1976), overruled on other grounds by Croker v. Boeing Co., 662 F.2d 975 (3d Cir. 1981); see also State Contracting & Eng'g Corp. v. Condotte Am., Inc., 346 F.3d 1057, 1067 (Fed. Cir. 2003); Glaros v. H.H. Robertson Co., 797 F.2d 1564, 1573 (Fed. Cir. 1986). Antec's challenge to the district court's denial of summary judgment is therefore improper.

Claim Construction

Claim construction terms were aired out, leaving them intact. First, "case." A broad reading, relying on a general dictionary, is sustained.

With regard to the term "case" in the '955 patent, the district court construed it to mean "a structure for containing and holding something."² Claim Construction Order, 2006 WL 2709382, at *6. Antec argues that the district court's claim construction is too broad, and that a "case" requires at least some type of enclosure. We disagree. While the embodiment disclosed in the '955 patent includes a six-sided rectangular enclosure, this court has repeatedly cautioned against limiting claims to a preferred embodiment. See, e.g., Linear Tech. Corp. v. Int'l Trade Comm'n, 566 F.3d 1049, 1058 (Fed. Cir. 2009); Comark Commc'ns, Inc. v. Harris Corp., 156 F.3d 1182, 1187 (Fed. Cir. 1998). The patent specification does not assign or suggest a particular definition to the term "case." Therefore, in determining the ordinary and customary meaning of the claim term as viewed by a person of ordinary skill in the art, it is appropriate to consult a general dictionary definition of the word for guidance. See Phillips v. AWH Corp., 415 F.3d 1303, 1322-23 (Fed. Cir. 2005) (en banc). A "case" is generally defined, relevant to its use in the '955 patent, as "a box or receptacle to contain or hold something." Webster's Third New International Dictionary 346 (2002). The district court's construction of "case" as "a structure for containing and holding something" is thus appropriate.

Sloppy lawyering on both sides is (foot)noted.

² Both parties on appeal misstate the district court's construction of "case," utilizing the disjunctive "or" in the construction instead of the conjunctive "and." The court's claim construction order and its instructions to the jury both stated that "case" meant "a structure for containing and holding something." See Claim Construction Order, 2006 WL 2709382, at *6 (emphasis added); Transcript at 62, Comaper Corp. v. Antec, Inc., No. 05-CV-1103 (E.D. Pa. Oct. 5, 2007).

Next, "drive bay slot," construed as "the relatively narrow opening in the housing of the computer that leads to the drive bay."

Antec essentially asks us to equate the terms "drive bay" and "drive bay slot," despite their separate use in the '955 patent. There is an inference, however, that two different terms used in a patent have different meanings. Ethicon Endo-Surgery, Inc. v. U.S. Surgical Corp., 93 F.3d 1572, 1579 (Fed. Cir. 1996). While this inference is not conclusive, Bancorp Servs., L.L.C. v. Hartford Life Ins. Co., 359 F.3d 1367, 1373 (Fed. Cir. 2004), the intrinsic evidence supports the district court's construction that "drive bay" and "drive bay slot" have different meanings.

The meaning of the term "drive bay slot" was made clear during prosecution.

The term "second opening" got a second look, which it didn't need.

Inconsistent Verdicts

The jury found dependent claims obvious, but not their independents. Antec wanted a new trial over it.

The jury found that independent claims 1 and 12 of the '955 patent were not obvious. However, it also found that claims 2 and 7, which depend from claim 1, and claim 13, which depends from claim 12, were invalid as obvious. These verdicts are plainly inconsistent, as both the district court and Comaper recognize. JMOL Order, 2008 WL 4140384, at *5 ("[T]he jury's verdict was inconsistent."); Pl.-Cross Appellant's Br. 7 ("[T]he verdict did contain an inconsistency with respect to the obviousness of dependent claims 2, 7, and 13 . . . ."). "A broader independent claim cannot be nonobvious where a dependent claim stemming from that independent claim is invalid for obviousness." Callaway Golf Co. v. Acushnet Co., 576 F.3d 1331, 1344 (Fed. Cir. 2009) (citing Ormco Corp. v. Align Tech., Inc., 498 F.3d 1307, 1319 (Fed. Cir. 2007)).

The district court tried to square the circle by throwing out the obviousness finding.

Here, the district court concluded that the evidence would not support a verdict of obviousness as to claims 2, 7, and 13 of the '955 patent, and resolved the inconsistency in the jury verdicts by granting Comaper's renewed motion for JMOL. See JMOL Order, 2008 WL 41440384, at *12. See generally Mycogen Plant Sci. v. Monsanto Co., 243 F.3d 1316, 1325-26 (Fed. Cir. 2001). The court determined that the evidence was insufficient to support verdicts of obviousness with respect to claims 2, 7, and 13 because the asserted prior art was not analogous to the invention of the '955 patent and the prior art was not sufficiently similar to the claims of the '955 patent. JMOL Order, 2008 WL 4140384, at *10-12. We disagree.

The district court erred in concluding that the prior art asserted by Antec was not analogous prior art; indeed, Comaper itself did not make this argument.

The stiff wind in the decision is a find of definition refined of what qualifies as analogous art.

"Analogous art is that which is relevant to a consideration of obviousness under [35 U.S.C. § 103]." Wang Labs., Inc. v. Toshiba Corp., 993 F.2d 858, 864 (Fed. Cir. 1993). Two criteria are relevant in determining whether prior art is analogous: "(1) whether the art is from the same field of endeavor, regardless of the problem addressed, and (2) if the reference is not within the field of the inventor's endeavor, whether the reference still is reasonably pertinent to the particular problem with which the inventor is involved." In re Clay, 966 F.2d 656, 658-59 (Fed. Cir. 1992).

Antec's art was in the same technology area, hence analogous.

The district court confused anticipation with obviousness, rejecting Antec's obviousness invalidity argument because it didn't fully anticipate in a single reference.

The CAFC riding shotgun to Obzilla sees that the toll booth still takes TSM as currency.

Determining obviousness requires considering whether two or more pieces of prior art could be combined, or a single piece of prior art could be modified, to produce the claimed invention. This analysis typically invokes the familiar teaching-suggestion-motivation ("TSM") test, asking whether a person having ordinary skill in the art would have found some teaching, suggestion, or motivation to combine or modify the prior art references. Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1362 (Fed. Cir. 2007); see also Ortho-McNeil Pharm., Inc. v. Mylan Labs., Inc., 520 F.3d 1358, 1364-65 (Fed. Cir. 2008) (noting that the TSM test, flexibly applied, remains an important tool in an obviousness analysis). The Supreme Court in KSR International Co. v. Teleflex, Inc. emphasized that "[c]ommon sense teaches . . . that familiar items may have obvious uses beyond their primary purposes, and in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle." 550 U.S. 398, 420 (2007). Thus,

[w]hen there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense. In that instance the fact that a combination was obvious to try might show that it was obvious under [35 U.S.C.] § 103.

Id. at 421.

With the correct test in mind, there is no question that there is ample evidence in the record supporting the jury's verdicts that claims 2, 7, and 13 of the '955 patent would have been obvious.

Bizarrely, having found the dependent claims obvious, rather than just damning their independent claims, the CAFC created its own reconcilable inconsistency of jurisprudential diseconomy by vacating and remanding for a new trial on invalidity.

The facts supposedly uncontested, the decision was a treated as a matter of law.

Whether an invention would have been obvious at the time the invention was made is a question of law, which we review de novo, based on underlying factual determinations, which we review for clear error, Takeda Chem. Indus., Ltd. v. Alphapharm Pty., Ltd., 492 F.3d 1350, 1355 (Fed. Cir. 2007), unless, as is the case here, no material facts are in dispute.

A patent may not be obtained "if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." 35 U.S.C. § 103(a). An obviousness analysis is based on several factual inquiries. A court must examine the scope and content of the prior art, the differences between the prior art and the claims at issue, and the level of ordinary skill in the pertinent art. KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 406-07 (2007) (citing Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966)). At that point, a court may consider secondary objective evidence of nonobviousness, such as commercial success, long felt but unsolved need, failure of others, and the like. Id.

A patchwork of prior art was called upon.

The prior art here includes: (a) a trading card with a picture of Marilyn Monroe and a diamond attached to the card ("Monroe"); (b) a piece of a sheet purportedly slept on by one of the Beatles attached to a copy of a letter on Whittier Hotel stationery declaring authenticity ("Whittier"); (c) a piece of fabric purportedly belonging to a Capuchin Friar named Stephen Eckert attached to paper stock including a picture of the friar ("Eckert"); and (d) a greeting card fashioned to look like a novelty item that ostensibly includes a piece of jeans material belonging to James Dean ("Dean").

Media Tech argued unpredictability.

Media Tech asserts that a person of ordinary skill would not have combined the references--or applied them to a sports card--based on: (1) an inability to predict that a trading card would convey memorabilia authenticity; and (2) the trading card field containing an infinite number of identified and unpredictable solutions.

That went over like a lead balloon.

The "inability to predict" argument alleges that "combin[ing] . . . trading cards with a piece of a memorabilia item . . . result[ed in] . . . consumers automatically accept[ing] as authentic a piece of otherwise unidentifiable material." However, as Media Tech itself acknowledges, consumer acceptance comes from the credibility already associated with the 90-year old trading card industry. As such, Media Tech has not shown that the combination of memorabilia with a conventional trading card resulted, or would result, in consumers accepting authenticity.

Regarding the infinite number of identified and unpredictable solutions, the presentation and content characteristics of trading cards are not infinite. These characteristics are limited by the cards' physical characteristics. Moreover, while presentation involves varying parameters (color, typefaces, layout, etc.) to produce distinctive products, the asserted claims are unrelated to presentation. Instead, they relate to content. Content solutions are significantly limited by the theme and physical confines of the card, and the finite number of available solutions were predictable. Defendants need only show that it would have been obvious to one skilled in the art to attach a sports-related item instead of those items attached in the prior art references. Defendants have met this burden, and Media Tech's assertion that a person of ordinary skill would not have combined the references--or applied them to a sports card--must fail.

Secondary considerations were treated like old news.

Secondary objective evidence also fails to establish non-obviousness. Media Tech argues long felt but unsolved need and failure of others; initial skepticism; commercial success; unexpected results; and industry recognition.

Media Tech's "long felt but unsolved need" of "stimulat[ing] demand" suffers two deficiencies. First, the need does not correspond to the asserted claims because it is overbroad. Second, "stimulat[ing] demand" is applied too narrowly to trading card inserts.

With respect to "skepticism," Media Tech's expert states that "[n]umerous articles and commentators, including myself, originally predicted that memorabilia cards would be a short lived phenomenon and many trading card companies such as Fleer and Topps were skeptical of the concept and reluctant to introduce memorabilia cards." But this is not supported by the record. Media Tech also relies on outrage at the idea of "destroying valuable sports memorabilia." Alleged outrage over destroying sports memorabilia, however, does not demonstrate a belief that the trading-card beneficiary of that destruction would fail.

Regarding commercial success, Media Tech has established that the alleged infringing memorabilia cards sold by appellees are commercially successful; however, it has not established the required nexus between the claimed invention and commercial success. Ormco Corp. v. Align Tech., Inc., 463 F.3d 1299, 1312 (Fed. Cir. 2006) ("if the commercial success is due to an unclaimed feature of the device, the commercial success is irrelevant"). It attempts to rely on the "presum[ption] that the commercial success is due to the patented invention." Id. To do so it must show "that the successful product is the invention disclosed and claimed in the patent." Id. (quoting J.T. Eaton & Co. v. Atl. Paste & Glue Co., 106 F.3d 1563, 1571 (Fed. Cir. 1997)).

In arguing unexpected results, Media Tech returns to its argument that a person of ordinary skill would not have predicted commercial success. This is an attempt to recycle its commercial success arguments by making similar arguments under the "unexpected results" heading. Commercial success, however, even if unexpected, is not part of the "unexpected results" inquiry. An unexpected result must arise from combining prior art elements; commercial success is a separate inquiry from unexpected results, and in any event has not been shown here to be a result of the invention as opposed to other factors.

Affirmed.

So far, unremarkable in the post-Obzilla regime. But this was a 2-1 decision, penned by Judge Mayer, joined by Lourie, with a scathing dissent by Judge Rader, the next Chief Judge of the Federal Circuit Court of Appeals. The Pooh-bah-to-be:

Relying on wholly irrelevant prior art and ignoring significant objective indicia of non-obviousness, this court substitutes its judgment on patentability for that of a jury. Lurking just beneath the surface of this court's blindness to the underlying facts supporting non-obviousness is a bias against non-technical arts. No doubt, the invention of the transistor or of the polio vaccine came from more scientific fields and contributed more to the welfare of humanity. This court, however, cannot overlook that many individuals invest vast energies, efforts, and earnings to advance these non-technical fields of human endeavor. Those investments deserve the same protection as any other advances. The incentives for improvement and the protection of invention apply as well to the creator of a new hair-extension design as to a researcher pursuing a cure for cancer. In either case, the PTO and this court are charged with assessing the invention disclosure to determine its worthiness to receive a valuable, but temporally limited, exclusive right. Because this court dismisses this case so readily, I respectfully dissent.

Delving into history, Judge Rader paints a vastly different portrait of invention.

As mentioned, this invention does not advance rocket science or cancer medicine. Still, for many individuals, this avocation wins vast devotion. The trading card industry was born in the late 19th century when tobacco companies began inserting images of baseball players into cigarette packs. Soon thereafter the trading card concept spread to other industries, most notably gum companies. Over the next century, the cards became standardized and sold in stand-alone packs without any tandem product, such as gum or peanuts. By the early 1990s, with competition intensifying, trading card companies introduced limited edition insert cards -- e.g., autographed cards or holographic cards -- to spark sales with the hope of acquiring a scarce and valuable asset.

The '501 patent was filed in 1994. Up until that point, not a single reference in over a century of history disclosed attaching a cut-up piece of a memorabilia item to a baseball card. The concept behind the invention was initially met with much skepticism. The major trading card companies, including the named defendants in this case, rejected Adrian Gluck, the inventor of the '501 patent. They reasoned, quite logically at the time, that the value of a particular memorabilia item depended on its physical preservation. Indeed, all the prior art suggested that the value of an item of memorabilia hinged on its condition. In better condition, the item brought maximum value; in worse condition, far less. Thus, the notion of cutting up an authentic player's jersey into numerous pieces and attaching it to a trading card seemed sure to destroy far more value than it could ever create. According to the standard wisdom in this field, the dismembered jersey could not enhance the value of either the jersey or the card.

A year after Gluck approached Upper Deck with his idea, however, the company undertook an experiment and began selling limited edition cards with accompanying cut-up jersey pieces affixed adjacent to the player's image. The new card product quickly became a hit with collectors and received praise throughout the formerly skeptical industry.

Without even so much as a cursory review of these unexpected results, the skepticism of experts, the commercial success, the flattery of copying, or any other objective facts, this court concludes in a rather passing fashion that the claimed invention would have been obvious at the time of invention based on the prior art references. But viewed in the context of the record as a whole, the prior art does not support that judgment as a matter of law.

Most important, none of the prior art references are remotely related to the sport trading card industry. The defendants' failure to proffer any reference in the relevant field of invention is telling given the century-old history of this industry. Perhaps claim 1 can fairly be interpreted to include memorabilia items beyond the sporting world, but other asserted claims are expressly limited to sports trading cards. Thus, this court ought to seek at least some prior art in the primary field of its application and use. And the absence of any prior art in that area ought to speak volumes.

Setting aside the sports versus non-sports issue, each of the prior art references in this case is still distinctly different from the claimed invention.

Whereupon Rader incisively shines daylight between the patented invention and each of the cited prior art references, concluding with joke prior art.

The Monroe reference discloses a diamond attached to a photo of Marilyn Monroe on a card. Unlike an authentic jersey worn by an athlete during a game or a match, the diamond itself has no inherent value derived from its "connection with historical, events, culture, or entertainment" as required by the district court's construction for "memorabilia item." Rather, the diamond itself attains cultural significance only when attached to a picture of Marilyn Monroe. In addition, the '501 patent teaches cutting a "memorabilia item" into "pieces." The Monroe diamond is not a "piece" of any "memorabilia item" within the context of the '501 patent.

The Whittier reference discloses a cut-up piece of a bed sheet once graced by one of the Beatles. The Whittier prior art reference attaches the scrap of cloth to a stationery paper with a statement of authenticity. It bears the date 1964. Besides the defendant's admission that the bed sheet in one of its proffered exhibits is a fake, the reference also does not disclose any "trading card" or "photo" as those terms are used in the '501 patent. This reference has many differences besides its distant removal in time.

The Eckert reference is a "holy card" used to familiarize the public with a particular religious figure to promote that candidate for sainthood. A picture of a friar named Stephen Eckert appears on paper stock next to fabric represented as a piece of his clothing. As with the Monroe reference, it is a far stretch at best to say that Eckert discloses a "memorabilia item" as contemplated by the district court's construction. Nor were "holy cards" purchased, traded, or valued like typical trading cards or "memorabilia items." Their sole purpose was to increase the fame of the particular religious figure featured.

Finally, the James Dean reference features a picture of James Dean on a greeting card next to an undisputedly fake piece of the celebrity's jeans. It is entitled, "Rebel's Cause Lives: Ecstatic discovery! James Dean's Jeans!" Despite defendants' general admission that the prior art reference itself was intended as a joke, they still maintain that the reference would have motivated a skilled artisan to cut up a memorabilia item for a sports card. Quite the opposite, a reasonable inference could be made -- which this court must credit on summary judgment -- that the James Dean reference teaches away from the claimed invention for the very fact that it was a joke, a fake (not a "memorabilia item"), and, in many other ways, different from the claimed invention. In sum, the prior art references of record are each inherently different and lack much of the uniqueness and novelty of the claimed invention.

The combination that Obzilla so easily uses to unlock novelty into the mundanely obvious is turned on its head by Judge Rader.

Finally, the record is dubious at best -- particularly at this summary judgment stage -- in suggesting that a person with skill in this art would even consider the four prior art references relied on by defendants, much less combine them. In that vein, this court cites primarily to defendants' expert Scott Kelley to make the vast leap from these sketchy and different references taken in isolation. Mr. Kelly's declaration, to my eyes, resounds with conclusory statements that lack any convincing reference to the actual record. To rely on such "expertise" without considering the countervailing factual evidence on record contravenes the role of a court at the summary judgment stage and gives accused infringers a free pass to avoid a jury's judgment on the facts -- in a sense, a get-out-of-jail-free card (no pun intended).

Plaintiff also proffered an expert, Henry Taylor, with credentials similar to those of Mr. Kelly but with opposite conclusions on obviousness. Why, on summary judgment, would this court give Mr. Kelly's opinions more weight than those of Mr. Taylor? Is this an indication that this court views this field of art and this invention as unworthy of the full processes of the law?

In addition, this court's analysis about the finite number of solutions in the art is unconvincing. Under this rationale, no party could receive a patent in the trading card industry because the solutions are "limited by the cards' physical characteristics," "theme," and "physical confines." In fact, as noted above, the trading card industry heralded this invention. Thus, the industry that best evaluates advances in its own field seems to question this court's summary conclusion.

I'm sold. Judge Rader convinces.

The bottomless abyss of kneejerk obviousness created by the courts in the wake of Obzilla, already desolation to many inventions, should be filled with careful logical analysis based on fact, especially context, as in this dissent. This was not that beginning, at least for majority opinion. That Judge Rader was unable to convince his colleagues is telling in the moment, but this dissent may resonate through time more than the majority ruling. Only time will tell.

Infringement

Evaluation of summary judgment of non-infringement requires two steps--proper claim construction and comparison of those claims to the accused product. Abbott Labs. v. Sandoz, Inc., 566 F.3d 1282, 1288 (Fed. Cir. 2009). Because the parties dispute the meaning of terms in the asserted claims, this court reviews the district court's claim construction order under the requirements of Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996).

Claim Construction

The CAFC panel soliloquized on injecting factual understanding into claim construction as a matter of law. This to finally admit to simplistic inconstancy with Supreme Court precedent by the CAFC's own Cybor ruling.

The Supreme Court in Markman held that "the construction of a patent, including terms of art within its claim, is exclusively within the province of the court." Id. at 372. The Supreme Court recognized that claim construction "falls somewhere between a pristine legal standard and a simple historical fact." Id. at 388 (quoting Miller v. Fenton, 474 U.S. 104, 114 (1985)). Although claim construction is not a purely legal matter, the Supreme Court found "sufficient reason to treat construction of terms of art like many other responsibilities that we cede to a judge in the normal course of trial, notwithstanding its evidentiary underpinnings." Id. at 390.

Nevertheless, in Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), this court interpreted Markman as holding that claim construction was solely a question of law, which this court should review without deference. Id. at 1451. The question presented before the Supreme Court was "whether the interpretation of a so-called patent claim . . . is a matter of law reserved entirely for the court, or subject to a Seventh Amendment guarantee that a jury will determine the meaning of any disputed term of an art about which expert testimony is offered." Markman, 517 U.S. at 372. Although the Supreme Court addressed only the role of the trial court in claim construction, this court understood that "the Supreme Court was addressing under which category, fact or law, claim construction should fall." Cybor, 138 F.3d at 1455. This court concluded that "[n]othing in the Supreme Court's opinion supports the view that the Court endorsed a silent, third option--that claim construction may involve subsidiary or underlying questions of fact." Id.

An examination of the Supreme Court's ruling in Markman shows multiple references to factual components of claim construction:

• "[C]onstruing a term of art following receipt of evidence" is "a mongrel practice." Id. at 378.
• Claim construction "falls somewhere between a pristine legal standard and a simple historical fact." Id. at 388.
• "We accordingly think there is sufficient reason to treat construction of terms of art like many other responsibilities that we cede to a judge in the normal course of trial, notwithstanding its evidentiary underpinnings." Id. at 390.

These references in the Supreme Court opinion leaves this court stranded between the language in the Court's decision and the language in this court's Cybor decision.

In order to resolve this case, this court must confront findings by the trial court about the meaning of the disputed claim term "static." In reaching the meaning of that term, the trial court explored and made findings about the technical background of the invention--the inventive features and the timing of those features against the backdrop of the prior art. In addition, the district court determined the meaning that an artisan of ordinary skill in this discipline would assign the term "static." The trial court also made findings about the understanding of such an ordinary artisan about the metes and bounds of the asserted claims. In still another factual setting, the district court determined the way that the ordinary artisan would interpret the patent applicant's statements made to the PTO examiner during the prosecution of the patents-in-suit. These factual determinations about the timing and nature of the history of the patent acquisition process also informed the trial court's claim construction. In sum, claim construction involves many technical, scientific, and timing issues that require full examination of the evidence and factual resolution of any disputes before setting the meaning of the disputed terms.

Of course, as the Supreme Court repeatedly clarified in Markman, the trial court occupies the best vantage point and possesses the best tools to resolve those evidentiary questions:

• "[A] jury's capabilities to evaluate demeanor to sense the mainsprings of human conduct or to reflect community standards are much less significant than a trained ability to evaluate the testimony in relation to the overall structure of the patent." Id. at 389-90 (citations and internal quotation marks omitted).
• "The decisionmaker vested with the task of construing the patent is in the better position to ascertain whether an expert's proposed definition fully comports with the specification and claims and so will preserve the patent's internal coherence." Id. at 390.

The self-anointed power of Cybor proves irresistible, and its gratuitous flaunting a sorry spectacle.

Despite the Supreme Court's emphasis on the trial court's central role for claim construction, including the evaluation of expert testimony, this court may not give any deference to the trial court's factual decisions underlying its claim construction. This court's prior en banc decision requires a review of the district court's claim construction without the slightest iota of deference. See Cybor, 138 F.3d at 1451.

Whereupon Judge Rader succinctly pens edifying claim construction case law.

To construe a claim, courts must determine the meaning of disputed terms from the perspective of one of ordinary skill in the pertinent art at the time of filing. Chamberlain Group, Inc. v. Lear Corp., 516 F.3d 1331, 1335 (Fed. Cir. 2008). The claim terms "are generally given their ordinary and customary meaning." Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005) (en banc) (quoting Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996)). "[T]he claims themselves provide substantial guidance as to the meaning of particular claim terms." Id. at 1314.

But the claims "must be read in view of the specification, of which they are a part." Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995) (en banc), aff'd, 517 U.S. 370 (1996). A patent's specification "is always highly relevant to the claim construction analysis." Phillips, 415 F.3d at 1315 (quoting Vitronics, 90 F.3d at 1582 (Fed. Cir. 1996)). When consulting the specification to clarify the meaning of claim terms, courts must not import limitations into the claims from the specification. Abbot Labs., 566 F.3d at 1288. Therefore, when the specification uses a single embodiment to enable the claims, courts should not limit the broader claim language to that embodiment "unless the patentee has demonstrated a clear intention to limit the claim scope using 'words or expressions of manifest execution or restriction.'" Liebel-Flarsheim Co. v. Medrad, Inc., 358 F.3d 898, 905 (Fed. Cir. 2004) (quoting Teleflex, Inc. v. Ficosa N. Am. Corp., 299 F.3d 1313, 1327 (Fed. Cir. 2002)). In addition, "other claims of the patent . . . can also be valuable sources of enlightenment as to the meaning of a claim term." Id. (citing Vitronics, 90 F.3d at 1582).

In claim construction "a court 'should also consider the patent's prosecution history . . . .'" Phillips, 415 F.3d at 1318 (quoting Markman, 52 F.3d at 980). "[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." Id. (citing Vitronics, 90 F.3d at 1582-83). For example, "a patentee may, through a clear and unmistakable disavowal in prosecution history, surrender certain claim scope to which he would otherwise have an exclusive right by virtue of the claim language." Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317, 1324 (Fed. Cir. 2009) (citations omitted). At the same time, because prosecution history represents an ongoing negotiation between the PTO and the inventor, "it often lacks the clarity of the specification and thus is less useful for claim construction purposes." Netcraft Corp. v. eBay, Inc., 549 F.3d 1394, (Fed. Cir. 2008).

The term "static" in "static display of prices" got a mental workout, and ended up in the same spot.

The specification was heavily relied upon. No foul here for that, but a welcome caution about overreliance on the specification, particularly in narrowing claim limitations.

This court recognizes that this interpretation relies heavily on the specification and risks reading improperly a preferred embodiment into the claim. See Saunders Group, Inc. v. Comfortrac, Inc., 492 F.3d 1326, 1332 (Fed. Cir. 2007) (holding that claim scope is not limited to the disclosed embodiments "unless the patentee has demonstrated a clear intention to [do so]"). This court takes some comfort against this risk from the inventors' use of the term "the present invention" rather than "a preferred embodiment" or just "an embodiment." The inventors' own specification strongly suggests that the claimed re-centering feature is manual.

Because an inventor must evince a "clear intention" to limit the claim terms to a specification embodiment, this court examines other claims to detect any contrary intentions.

Doctrine of Equivalents

The district court prevented TT from relying on the doctrine of equivalents. The trial court reasoned that claim vitiation barred assertion of infringement by equivalents [against accused products...] The Supreme Court discussed these "legal limitations on the application of the doctrine of equivalents" in Warner-Jenkinson Co., Inc. v. Hilton Davis Chemical Co., 520 U.S. 17, 39 n.8 (1997). Under the "all-elements rule," a patentee may not assert "a theory of equivalen[ce] [that] would entirely vitiate a particular claim element." Id. Under prosecution history estoppel, a patentee may not seek to recapture as an equivalent subject matter surrendered during prosecution. Id. This court reviews both legal limitations without deference. Lockheed Martin Corp. v. Space Sys./Loral, Inc., 324 F.3d 1308, 1318 (Fed. Cir. 2003).

The all-elements rule requires this court to consider "the totality of circumstances of each case and determine whether the alleged equivalent can be fairly characterized as an insubstantial change from the claimed subject matter without rendering the pertinent limitation meaningless." Freedman Seating Co. v. Am. Seating Co., 420 F.3d 1350, 1359 (Fed. Cir. 2005). In other words, this rule empowers a court to perform again the standard "insubstantial variation" test for equivalency, but this time as a question of law. Claim vitiation applies when there is a "clear, substantial difference or a difference in kind" between the claim limitation and the accused product. Id. at 1360. It does not apply when there is a "subtle difference in degree." Id.

In this case, the trial court considered whether an occasional automatic re-centering of the price axis in Dual Dynamic is equivalent to "never chang[ing] positions unless by manual re-centering or re-positioning." The court determined that the automatic re-centering would render the claim limitation "static"--synonymous with only manual re-centering--meaningless. The trial court's construction of the claim limitation "static" specifically excludes any automatic re-centering. See SciMed Life Sys. v. Advanced Cardiovacsular Sys., 242 F.3d 1337, 1347 (Fed. Cir. 2001) ("[I]f a patent states that the claimed device must be 'non-metallic,' the patentee cannot assert the patent against a metallic device on the ground that a metallic device is equivalent to a non-metallic device.").

On appeal, this court observes that the Dual Dynamic system may only automatically re-center its price axis once or twice per trading day. Still this occasional automatic re-centering is not a "subtle difference of degree" because the claim forbids all automatic re-centering. This court concludes that the occasional automatic re-centering is not merely an insubstantial variation.

This court further agrees with the district court that prosecution history estoppel precludes TT from relying on the doctrine of equivalents to prove the eSpeedometer system infringes.

Placed in the proper context of the timing for claim construction and prosecution history estoppel, the district court properly prevented the recapture of surrendered subject matter. The trial court construed the claims as amended and properly limited the claims to manual re-centering. Prosecution history estoppel applies at the time of infringement to determine whether the applicant surrendered claim scope during prosecution. See Warner-Jenkinson, 520 U.S. at 39 n.8. TT's argument assumes that the trial court and this court would have construed "static" the same without the full prosecution history. This court need not engage in this conjecture because the inventors narrowed the claim scope during prosecution. Thus, both claim construction and prosecution history estoppel operate in this case with similar limited results. The first limits the claims to manual re-centering. The latter prevents TT from asserting that eSpeedometer is an equivalent, because its price level automatically drifts towards the center of the display after every change in the inside market. Thus, during prosecution, the inventors surrendered any subject matter that moves automatically.

Willfulness

The economic argument of willfulness is that companies should be found negligent for willfully be ignorant of granted patents. After all, the quid pro quo to a patent grant is public notice to advance technology. The legal standard has it precisely opposite.

In In re Seagate Technology, LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc), this court held that "proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness." "[A] patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent." Id. The patentee must also show that the infringer knew or should have known of this objectively high likelihood. Id.

eSpeed began redesigning Futures View immediately after this suit commenced and replaced Futures View with the redesigned Dual Dynamic by the end of December 2004. Prompt redesign efforts and complete removal of infringing products in a span of a few months suggest that eSpeed was not objectively reckless.

Indefiniteness

The parties dispute whether the limitation "single action of a user input device" is indefinite as construed. A patent specification must "conclude with one or more claims particularly pointing out and distinctively claiming the subject matter which the applicant regards as his invention." 35 U.S.C. § 112, ¶ 2. "The statutory requirement of particularity and distinctness in claims is met only when [the claims] clearly distinguish what is claimed from what went before in the art and clearly circumscribe what is foreclosed from future enterprise." United Carbon Co. v. Binney & Smith Co., 317 U.S. 228, 236 (1942). However, absolute clarity is not required. Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342, 1347 (Fed. Cir. 2005). Only claims "not amenable to construction" or "insolubly ambiguous" are indefinite. Id. (citation omitted). This court reviews definiteness without deference. AllVoice Computing v. Nuance Commc'ns, 504 F.3d 1236, 1240 (Fed. Cir. 2007).

The district court's construction correctly sets objective boundaries by distinguishing the invention from multiple-action systems found in the prior art.

Moreover, one of ordinary skill in the art would distinguish user actions as singular or multiple. The claim construction provides an example of a singular action--one or more clicks of a mouse button. Importantly, the district court's construction requires that the "action" must be done in a "short period of time." Although a "short period of time" may vary slightly from one circumstance to the next, an artisan of ordinary skill would not find the term insolubly ambiguous.

Priority

The jury found that the patents-in-suit claimed priority to their provisional application, which was filed on March 2, 2000. Every claim of the patents-in-suit recites use of a "single action of a user input device." In contrast, the provisional application never refers to a "single action of a user input device," but instead refers solely to "a single click of a computer mouse."

Claims enjoy the earlier filing date only if the provisional application provided adequate written description under 35 U.S.C. § 112, ¶ 1. New Railhead Mfg. v. Vermeer Mfg., 298 F.3d 1290, 1294 (Fed. Cir. 2002). The "prior application itself must describe an invention . . . in sufficient detail that one skilled in the art can clearly conclude that the inventor invented the claimed invention as of the filing date sought." Lockwood v. Am. Airlines, 107 F.3d 1565, 1572 (Fed. Cir. 1997). Therefore, the provisional application must describe the invention in such a way that one of ordinary skill in the art "would understand that the genus that is being claimed has been invented, not just the species of a genus." Carnegie Mellon Univ. v. Hoffman-La Roche, Inc., 541 F.3d 1115, 1124 (Fed. Cir. 2008).

The district court judge had let the issue of priority go the jury, as a matter of factual dispute.

Turning to the merits, the record shows substantial evidence to support the jury's verdict that the provisional application's written description was adequate.

T]he parties' experts did not dispute that one of ordinary skill in the art would have known about other forms of "single action" such as a double-click or pressing a key. Considering the undisputed knowledge of those skilled in the art, disclosure of a species in this case provides sufficient written description support for a later filed claim directed to a very similar and understandable genus. Accordingly, the patents-in-suit are entitled to claim priority to the provisional application.

On-Sale Bar

An on-sale bar under 35 U.S.C. § 102(b) applies when the invention was both the subject of a commercial sale and ready for patenting before the critical date. Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67 (1998). The transaction at issue must be a "sale" in a commercial law sense. Allen Eng'g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1352 (Fed. Cir. 2002). "[A] sale is a contract between parties to give and to pass rights of property for consideration which the buyer pays or promises to pay the seller for the thing bought or sold." In re Caveney, 761 F.2d 671, 676 (Fed. Cir. 1985). The invention is ready for patenting, inter alia, if there is "proof of reduction to practice before the critical date." Plumtree Software, Inc. v. Datamize, LLC, 473 F.3d 1152, 1161 (Fed. Cir. 2006).

The basis for accusation was a software development contract by the inventor more than year before filing the provisional application.

ICA2 was not a sales transaction for a product embodying the patented invention. Under ICA2, TT promised to develop trading software for Brumfield because he lacked the technical expertise to do so. ICA2 was a contract for providing hourly programming services to Brumfield--not a computer software license. Brumfield did not sell or offer for sale anything embodying the invention.

Inequitable Conduct

A patent may be rendered unenforceable for inequitable conduct if an applicant, with intent to mislead or deceive the examiner, fails to disclose material information or submits materially false information to the PTO during prosecution. Digital Control Inc. v. Charles Mach. Works, 437 F.3d 1309, 1313 (Fed. Cir. 2006) (citation omitted). Where a judgment regarding inequitable conduct follows a bench trial, as it did here, this court reviews the district court's findings of materiality and intent for clear error and its ultimate conclusion for an abuse of discretion. ACCO Brands, Inc. v. ABA Locks Mfg. Co., 501 F.3d 1307, 1314 (Fed. Cir. 2007). The district court held that TT did not engage in inequitable conduct by not disclosing Brumfield's custom software to the PTO because the software was not material to the question of patentability. This court agrees.

Affirmed.

District Court Judge Clark wrote a chiding concurring opinion, based on the reality that claim construction ultimately has a fact base.

I write separately to respectfully suggest that the current de novo standard of review for claim construction may result in the unintended consequences of discouraging settlement, encouraging appeals, and, in some cases, multiplying the proceedings.

Determination of the meaning that would have been attributed to a claim term by one of ordinary skill in a sophisticated field of art on the date of filing often requires examination of extrinsic evidence--a determination of crucial facts underlying the dispute, as outlined by Judge Rader in the majority opinion. On some occasions, a determination will be made based, in part, on the weight to be given to conflicting extrinsic evidence or even to an evaluation of an expert's credibility.

The standard of review that will be applied by a higher court sets one of the important benchmarks against which competent counsel evaluates decisions regarding settlement and appeal. The importance is highlighted by the fact that every brief must state the standard of review. See Fed. R. App. P. 28(a)(9)(B), (b)(5); Fed. Cir. R. 28(a)(10),(b).

The de novo review standard has at least two practical results, neither of which furthers the goal of the "just, speedy, and inexpensive determination of every action and proceeding." Fed. R. Civ. P. 1. First, rejection of settlement is encouraged, and a decision to appeal is almost compelled, where counsel believes the client's position is valid, even if debatable, depending on the view taken of extrinsic evidence. It is a natural reaction upon receiving an unfavorable claim construction from a trial court to conclude that one's own view of complicated facts will be better understood by the judges of the Federal Circuit, who generally have more experience with patent cases, and who, by their own authoritative rule, review the claim construction without regard to any determination the lower court has made.

A patentee has the opportunity to write clearly enough so that the meaning of the claims can be determined from the specification. What public policy is advanced by a rule requiring the determination of underlying facts by more than one court, especially when the likely result is that another group of citizens will be required to "volunteer" for lengthy jury duty on remand?

A second, although less common, consequence of the de novo review standard is the opportunity it offers to the party that presents a case with an eye toward appeal rather than the verdict. Skilled counsel who believes a client may not be well received by a jury is tempted to build error into the record by asking for construction of additional terms, and/or presenting only a skeleton argument at the claim construction stage.

This is risky, but it would be unusual for this Court to consider a point waived if a particular claim construction had been requested of the trial court and some argument made, but the clearest explanation was presented on appeal. An appellate court normally does not consider an unpreserved point of error, but a more sharply focused argument regarding points presented on appeal, from among those that are technically preserved, is actually the goal of the appellate specialist. This tactic would be less inviting if claim construction was officially accorded some measure of deference, even if it was applied only in those cases in which resort to extrinsic evidence was necessary.

Design Patent "Ordinary Observer"

[Reader beware. Backhanded Zen ahead.] Nothing defines how something looks by how it's described. In other words, a thousand words do not a picture make.

With respect to the design patent, the '789 patent, the administrative judge provided a detailed verbal claim construction...

The CAFC threw a subdued fit with the sub-dude ITC nitwit.

This court has cautioned, and continues to caution, trial courts about excessive reliance on a detailed verbal description in a design infringement case. See, e.g., Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665, 679 (Fed. Cir. 2008) (en banc). In Egyptian Goddess, this court warned that misplaced reliance on a detailed verbal description of the claimed design risks undue emphasis on particular features of the design rather than examination of the design as a whole. Id. at 679-80. In many cases, the considerable effort in fashioning a detailed verbal description does not contribute enough to the infringement analysis to justify the endeavor. See id. at 680. Depictions of the claimed design in words can easily distract from the proper infringement analysis of the ornamental patterns and drawings.

Design patents are typically claimed as shown in drawings, and claim construction must be adapted to a pictorial setting. See, e.g., Contessa Food Prods., Inc. v. Conagra, Inc., 282 F.3d 1370, 1377 (Fed. Cir. 2002) (construing a design patent claim as meaning "a tray of a certain design as shown in Figures 1-3"). Thus an illustration depicts a design better "than it could be by any description and a description would probably not be intelligible without the illustration." Dobson v. Dornan, 118 U.S. 10, 14 (1886). "[A]s a rule, the illustration in the drawing views is its own best description." Manual of Patent Examining Procedure § 1503.01 (8th ed. 2006).

This case shows the dangers of reliance on a detailed verbal claim construction. The claim construction focused on particular features of the '789 patent design and led the administrative judge and the Commission away from consideration of the design as a whole. This error is apparent in the Commission's explicit reference to two details required by the written claim construction but not by the '789 drawings: (1) a strap of uniform width, and (2) holes evenly spaced around the sidewall of the upper.

A patented design is considered in view of an "ordinary observer": an experienced observer whose perceptive awareness of detail is keen, but does not sweat minor details by losing sight of the overriding motif.

In determining whether an accused product infringes a patented design, this court applies the "ordinary observer" test, without any "point of novelty" perspective. Egyptian Goddess, 543 F.3d at 678. To show infringement under the proper test, an ordinary observer, familiar with the prior art designs, would be deceived into believing that the accused product is the same as the patented design. See id. at 681. When the differences between the claimed and accused designs are viewed in light of the prior art, the attention of the hypothetical ordinary observer may be drawn to those aspects of the claimed design that differ from the prior art. Id. If the claimed design is close to the prior art designs, small differences between the accused design and the claimed design assume more importance to the eye of the hypothetical ordinary observer. Id. The ordinary observer, however, will likely attach importance to those differences depending on the overall effect of those differences on the design. Id. Even if the claimed design simply combines old features in the prior art, it may still create an overall appearance deceptively similar to the accused design. In that case, this court will uphold a finding of infringement. Id. at 677-78. In other words, "the deception that arises is a result of the similarities in the overall design, not of similarities in ornamental features in isolation." Amini Innovation, 439 F.3d at 1371. The ordinary observer test applies to the patented design in its entirety, as it is claimed. See Braun, Inc. v. Dynamics Corp. of Am., 975 F.2d 815, 820 (Fed. Cir. 1992). "[M]inor differences between a patented design and an accused article's design cannot, and shall not, prevent a finding of infringement." Payless Shoesource, 998 F.2d at 991 (quoting Litton Sys. Inc. v. Whirlpool, 728 F.2d 1423, 1444 (Fed. Cir. 1984)).

The ITC made a map of the territory, declared the map to be the territory, and missed the forest for the trees.

Turning to this case, the Commission placed undue emphasis on particular details of its written description of the patented design. Those details became a mistaken checklist for infringement. Without a view to the design as a whole, the Commission used minor differences between the patented design and the accused products to prevent a finding of infringement. In other words, the concentration on small differences in isolation distracted from the overall impression of the claimed ornamental features.

Practicing What You Complain About

A company lodging a complaint with the ITC against importers must practice the patent(s) asserted.

One requirement of a patent-based section 337 action is that a domestic industry "relating to the articles protected by the patent . . . exists or is in the process of being established." 19 U.S.C. § 1337(a)(2) (2006). To determine the relationship between a domestic industry and protected articles (the "technical prong" of the domestic industry requirement), the Commission determines whether the industry produces articles covered by the asserted claims. The test for the technical prong of the industry requirement "is essentially the same as that for infringement, i.e., a comparison of domestic products to the asserted claims." Alloc, Inc. v. Int'l Trade Comm'n, 342 F.3d 1361, 1375 (Fed. Cir. 2003). In other words, the technical prong requires proof that the patent claims cover the articles of manufacture that establish the domestic industry. Put simply, the complainant must practice its own patent.

Because the test for the technical prong is essentially the same as for infringement, this court uses the ordinary observer test to compare Crocs's own shoe products to the '789 patent design. This court has stated that test above. Once again, the test applies best in a side-by-side comparison of the drawings of the '789 patent design and the Crocs products.

Based upon faulty perception of design, the ITC had found that Crocs hadn't practiced its design patent. The CAFC concluded that "Crocs satisfies the technical prong of the domestic industry requirement."

Obviousness

Obviousness is a question of law based on underlying factual inquiries including: (1) the scope and content of the prior art; (2) the level of ordinary skill in the art; (3) the differences between the prior art and the claimed invention; and (4) the extent of any objective indicia of non-obviousness. Monarch Knitting Mach. Corp. v. Sulzer Morat GMBH, 139 F.3d 877, 881 (Fed. Cir. 1998). This court reviews the Commission's legal determinations without deference and its factual findings for substantial evidence. Corning Glass Works v. U.S. Int'l Trade Comm'n, 799 F.2d 1559, 1565 (Fed. Cir. 1986). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951) (quoting Consol. Edison Col. v. NLRB, 305 U.S. 197, 229 (1938)).

The error on tap was not grasping a foam strap. ITC fidelity to reality was encumbered by their imbecility.

The Commission relied on two prior art references to find the '858 patent obvious: (1) the Aqua Clog (the base of the '858 shoe); and (2) the Aguerre '249 patent. The '858 patent, however, is not simply a combination of elements found in the prior art. The '858 invention includes a foam strap riveted to a foam base with direct contact--an important part of the combination not in the prior art.

The record shows that the prior art would actually discourage and teach away from the use of foam straps. An ordinary artisan in this field would not add a foam strap to the foam Aqua Clog because foam was likely to stretch and deform, in addition to causing discomfort for a wearer. The prior art depicts foam as unsuitable for straps.

Despite the prior art warnings against inelastic and non-adjustable foam straps, the '858 patent employed foam without a buckle or some other similar adjustment mechanism. Moreover the '858 patent riveted the inelastic foam directly to the base of the footwear. This claimed feature defied the prior art's caution against the poor characteristics of a foam strap. Indeed no prior art reference disclosed a foam strap riveted to a shoe.

The record shows that Crocs's expert testified that artisans of ordinary skill in this art thought that foam shoe components connected through perforations such as by stitching or riveting were excessively prone to tearing. To minimize this record evidence, the Commission relied on In re Gurley, in which this court stated that a "known or obvious composition does not become patentable simply because it has been described as somewhat inferior to some other product for the same use." 27 F.3d 551, 553 (Fed. Cir. 1994). In this case, however, foam straps were not simply "somewhat inferior." Rather the prior art showed that foam was an unsuitable material for shoe straps. Although known in the art, foam was known as unsuitable. The Commission unreasonably determined that foam straps were known in the art without acknowledging that those prior art references rendered the material out of place for use as a strap. Thus, the Commission could not properly conclude that a person of ordinary skill would use foam to attach a foam base portion to a wearer.

The Commission also held that choosing foam as the material for a strap for a shoe that is otherwise made of foam is a logical modification because it produces a shoe of uniform composition. To the contrary, a foam strap is not a logical modification because foam was known to be an unsuitable material that was prone to tearing. One of ordinary skill would have no reason to use foam straps in combination with a foam base portion. Thus, the new combination would not have been obvious at the time of the invention of the '858 patent.

Even if the '858 patent were a combination of known elements according to their established functions--which it is not as foam straps were not in the prior art--it yields more than predictable results; thus, it is non-obvious. See KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 417 (2007).

The doctrine of secondary considerations of non-obviousness gets a workout.

Secondary considerations "can be the most probative evidence of non-obviousness in the record, and enables the . . . court to avert the trap of hindsight." Custom Accessories, Inc. v. Jeffrey-Allan Indus., Inc., 807 F.2d 955, 960 (Fed. Cir. 1986). Judge Learned Hand appreciated the importance of secondary considerations:

In appraising an inventor's contribution to the art, as we have often said, the most reliable test is to look at the situation before and after it appears. . . . Courts, made up of laymen as they must be, are likely either to underrate, or to overrate, the difficulties in making new and profitable discoveries in fields with which they cannot be familiar; and, so far as it is available, they had best appraise the originality involved by the circumstances which preceded, attended and succeeded the appearance of the invention . . . . We have repeatedly declared that in our judgment this analysis [evidence of secondary considerations] is more reliable than prior conclusions drawn from vaporous, and almost inevitably self-dependent, general propositions.

Safety Car Heating & Lighting Co. v. Gen. Elec. Co., 155 F.2d 937, 939 (2d Cir. 1946). Secondary considerations "may often establish that an invention appearing to have been obvious in light of the prior art was not." Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1538 (Fed. Cir. 1983). Indeed this court has recently reiterated: "This evidence is not just a cumulative or confirmatory part of the obviousness calculus but constitutes independent evidence of nonobviousness." Ortho-McNeil Pharm., Inc. v. Mylan Labs., Inc., 520 F.3d 1358, 1365 (Fed. Cir. 2008) (citing Catalina Lighting, Inc. v. Lamps Plus, Inc., 295 F.3d 1277, 1288 (Fed. Cir. 2002) ("Objective indicia may often be the most probative and cogent evidence of nonobviousness in the record.") (internal citation omitted)).

The point here was that Crocs' patented design is what made the shoe a success.

The Commission found that three models of Crocs shoes practice claims 1 and 2 of the '858 patent: the Beach, Cayman, and Kids Cayman shoes. It found that those three models of Crocs shoes have enjoyed a great deal of commercial success. A prima facie case of nexus is made when the patentee shows both that there is commercial success, and that the product that is commercially successful is the invention disclosed and claimed in the patent. See In re GPAC Inc., 57 F.3d 1573, 1580 (Fed. Cir. 1995). Once the patentee demonstrates a prima facie nexus, the burden of coming forward with evidence in rebuttal shifts to the challenger. See Demaco Corp. v. F. Von Lansgdorff Licensing Ltd., 851 F.2d 1387 (Fed. Cir. 1988).

Because the Commission found, based on substantial evidence, that Crocs shoes practice the '858 patent and that the Crocs shoes were commercially successful, Crocs established a prima facie case of nexus. The record discloses little or no evidence to rebut this prima facie case of nexus. This court is aware that many market forces unrelated to the inventiveness of the patent may influence commercial success, but the intervenors must make a convincing case that those market forces indeed were the likely cause of the success. This record does not show any effort to make that rebuttal case. In the absence of a rebuttal, Crocs may add its commercial success to its proofs of non-obviousness. This court gives even more credit to the administrative judge's finding of substantial industry praise for the claimed invention and the products covered by the claimed invention. Still another objective measure tips the scale farther in the direction of non-obviousness, namely the Commission's finding of copying. Copying may indeed be another form of flattering praise for inventive features. In the absence of any record evidence attributing these secondary considerations to causes other than the claimed invention, Crocs may rely on this added support for non-obviousness.

In light of the prior art teaching away from the claimed invention and the claimed features that do not appear in the prior art, this court detects several reasons at the time of the invention that an ordinary artisan would not have been motivated even to try, let alone make, this inventive combination. In addition, the secondary considerations supply additional evidence of non-obviousness. Thus, this court reverses the Commission's holding that the '858 patent would have been obvious and easily attainable at the time of invention.

Reversed and remanded.

6,025,158 ("Gonzalez") "describes linking antibody fragments to a polymer to increase an antibody's circulating half-life for therapeutic purposes." Gonzalez was the singular basis for rejection of Chapman under 35 U.S.C. § 102(e) and 35 U.S.C. § 103(a). The patent board upheld the examiner's rejections.

Chapman appealed to the CAFC. "Both parties agree that the sole question on appeal is the accuracy of the Board's description of Gonzalez, the primary reference."

The CAFC standard of review -

The Patent and Trademark Office ("PTO") is governed by the Administrative Procedure Act ("APA"), and PTO decisions are reviewed under the APA standard. Dickinson v. Zurko, 527 U.S. 150, 152 (1999). Thus, we review Board's legal conclusions without deference, and review its findings of fact to determine if they are supported by substantial evidence. See Hitzeman v. Rutter, 243 F.3d 1345, 1353-54 (Fed. Cir. 2001); see also 5 U.S.C. § 706(2).

The short form of obviousness, sans KSR, was cited in this case -

Whether an invention would have been obvious is a legal question based on underlying findings of fact, including (1) the scope and content of the prior art; (2) the level of ordinary skill in the prior art; (3) the differences between the claimed invention and the prior art; and (4) objective evidence of nonobviousness. In re Gartside, 203 F.3d 1305, 1319 (Fed. Cir. 2000) (citing, ultimately, Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966)).

Chapman argued that Gonzalez taught away from his claimed invention.

Chapman's argument for reversal also rests on his claim that Gonzalez "teaches away" from Chapman's claimed invention as a matter of law. A finding that a reference teaches away can preclude a finding that the reference renders a claim obvious. See DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314, 1326 (Fed. Cir. 2009) ("An inference of nonobviousness is especially strong where the prior art's teachings undermine the very reason being proffered as to why a person of ordinary skill would have combined the known elements."). Whether or not a reference teaches away from a claimed invention is a question of fact. See In re Napier, 55 F.3d 610, 613 (Fed. Cir. 1995).

Chapman argues that Gonzalez teaches away from Chapman's claimed invention because Gonzalez teaches the existence of multiple locations on an antibody fragment to which a polymer molecule, or multiple polymer molecules, can be attached.

The CAFC found that Chapman's 'teaching away' argument an exaggeration at best, because, along with other techniques, Gonzalez disclosed the same mechanism as Chapman was claiming.

Gonzalez specifically discloses a preference for the hinge cysteine as an attachment point for a polymer. See, e.g., Gonzalez, col.19 ll.56-65, col.19 ll.40-46, cols.102-123. Moreover, Gonzalez offers this teaching to solve the very problem that Chapman was trying to solve here--increasing the circulating half-life of the antibody fragment. Id. col.15 ll.15-24. Therefore, Gonzalez does not teach away from using the hinge cysteine as an attachment for a polymer. Further, Chapman argues that while Gonzalez teaches attaching a polymer to a F(ab')2 fragment, Gonzalez does not teach using the polymer as a bridge. While it may be correct that Gonzalez does not explicitly teach using the polymer as a bridge between the two fragments, Gonzalez does not teach away from doing so.

The fine print went to the extent of damage caused by three errors in finding of fact by the Board, which the government admitted as errors on appeal, but which they argued as harmless. The onus is on the appellant to show otherwise.

Alternatively, Chapman argues that three of the Board's factual findings concerning the scope and content of Gonzalez are not supported by substantial evidence and that a reversal is required. As discussed below, the government agrees that the Board's opinion includes three erroneous statements, but the government urges that the three errors in the Board's opinion are harmless. The judicial review provision of the APA includes a harmless error rule. See 5 U.S.C. § 706 ("[D]ue account shall be taken of the rule of prejudicial error"). We have noted that "the harmless error rule applies to appeals from the Board just as it does in cases originating from district courts." In re Watts, 354 F.3d 1362, 1369 (Fed. Cir. 2004) (citing In re McDaniel, 293 F.3d 1379, 1385-86 (Fed. Cir. 2002); Gechter v. Davidson, 116 F.3d 1454, 1457 (Fed. Cir. 1997)). We have said that

to prevail the appellant must not only show the existence of error, but also show that the error was in fact harmful because it affected the decision below. See Munoz v. Strahm Farms, Inc., 69 F.3d 501, 504 (Fed. Cir. 1995) ("The correction of an error must yield a different result in order for that error to have been harmful and thus prejudice a substantial right of a party."); see also Palmer v. Hoffman, 318 U.S. 109, 116 (1943) ("He who seeks to have a judgment set aside because of an erroneous ruling carries the burden of showing that prejudice resulted.").

Id. The Supreme Court has recently reaffirmed that "review of ordinary administrative proceedings" is like "review of civil cases in this respect. Consequently, it is clear that the burden of showing that the error is harmful normally falls upon the party attacking the agency's determination." Shinseki v. Sanders, 129 S. Ct. 1696, 1706 (2009) (citations omitted). In the light of this standard, we proceed to consider the three errors, and whether they were harmless.

Two of the three errors were found pertinent to rejection.

Because we cannot say with confidence that the Board would have reached the same conclusion in the absence of these errors, we are persuaded they are indeed harmful. See Kotteakos v. United States, 328 U.S. 750, 765 (1946) ("[I]f one cannot say, with fair assurance, . . . that the judgment was not substantially swayed by the error, it is impossible to conclude that substantial rights were not affected." This is not a situation where "an agency's path, though convoluted, can be discerned." In re Huston, 308 F.3d 1267, 1281 (Fed. Cir. 2002) (quotation and citation omitted).

Chapman had argued for a clean reversal, but the remand was far from victory for Chapman.

On remand, the Board need only revisit its conclusion of obviousness in light of a corrected understanding of Gonzalez. The Board is in no way precluded from, and indeed may be correct in, finding the claims to be obvious, particularly in the light of Gonzalez's disclosure of joining two antibody fragments together with a polymer to make a dumbbell-shaped structure.

This case appears a close call on the merits, which makes examiner carelessness and PTO overstepping all the more egregious in being a waste of resources, as a little more care would have produced a lot more clarity.

The only surprise on appeal was the CAFC surprised about claim construction going to the jury.

However, although we need not reach the infringement analysis, we note that the district court surprisingly presented the claim construction to the jury. Claim construction has always been a legal issue for the court and not within the fact-finding role of a jury. Sulzer Textil A.G. v. Picanol N.V., 358 F.3d 1356, 1366 (Fed. Cir. 2004). The district court's submission of the claim construction to the jury, leaving the jury free to make its own determination of the meaning of the claims, was error. Here, the error is harmless due to our obviousness ruling but the district court's procedure is not one supported by the law. Id. at 1366-67.

The patents weren't merely obvious, they were most sincerely obvious.

The nine prior art references for claim 32 of the '547 patent were more than sufficient to support the jury's finding of obviousness.

The state of the law on inequitable conduct -

See Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1364-65 (Fed. Cir. 2007). Inequitable conduct requires proof, by clear and convincing evidence, that a patent applicant: 1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information and 2) did so with an intent to deceive. See id. at 1363. With respect to materiality, "information is material when a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent"; information is not material if it is cumulative of other information already disclosed. Star Scientific v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1367 (Fed. Cir. 2008). With regard to deceptive intent, intent cannot be inferred solely from the fact that information was not disclosed; though non-disclosure may support a finding of intent. See M. Eagles Tool Warehouse, Inc. v. Fisher Tooling Co., Inc., 439 F.3d 1335, 1340 (Fed. Cir. 2006).

Affirmed.

All of the rejected claims require a strap that "comprises relatively stretchable material that directly attaches to the attachment means . . . ." The Board held that the '657 patent discloses that limitation because it teaches that the straps can be elastic and that the straps can be directly attached to the support by an attachment means such as Velcro. Dr. Daneshvar argues that the claim language requires the straps to contain a material that is both stretchable and capable of directly attaching to the attachment means, and that the record does not show that the Velcro components disclosed in the '657 patent have both of those properties.

We agree with Dr. Daneshvar. The Board did not reject Dr. Daneshvar's argument that the claim language dictates that the relatively stretchable material must directly attach to the attachment means. Under that construction, if the '657 patent is to anticipate claim 11 it must disclose a material that is both stretchable and capable of attaching directly to the attachment means. The Board found that two separate strap embodiments in the '657 patent disclosed that element: a strap made of the loop-type Velcro described in the patent, and a strap made of elastic material having an end piece of Velcro. Those findings, however, are not supported by substantial evidence in the record. While the '657 patent teaches a strap incorporating a loop-type material and also describes a strap having elastic components, the '657 patent does not disclose a strap made of a material that is both stretchable and capable of attaching directly to the attachment means.

Truth-impaired government attorneys at the PTO tried to cover patent board laxity, but the CAFC panel wouldn't have it.

Regarding the '657 strap embodiment in which the strap is made of loop-type Velcro, the '657 patent does not disclose that the Velcro material is stretchable. The government argues that the Board could properly conclude from the '657 patent that the loop-type Velcro itself constitutes "relatively stretchable material." The Board, however, did not find that the '657 patent described the Velcro as being stretchable. It simply stated that the '657 patent taught that the strap may be stretchable and that the strap may contain Velcro. Yet while the '657 patent teaches both elastic and inelastic straps, it does not indicate that Velcro is an example of elastic material.¹

¹ The government's citation to a commercial pamphlet describing Velcro is of no assistance because the pamphlet was not shown to be evidence of record.

Another careless factual error by the board was overruled, along with dismissing BPAI imagination as a basis for rejection.

Because the '657 patent does not describe loop-type Velcro as being "relatively stretchable" or Velcro end pieces that are integral with and a part of the strap, and because the Board pointed to nothing else in the record to fill those evidentiary gaps, we hold that the Board erred in affirming the anticipation rejection. Moreover, because the Board's obviousness determination was based entirely on its anticipation ruling, the Board's error on anticipation undermines its obviousness determination as well. Thus neither ground of rejection can be sustained.

Its lips for suggestion sealed by law, all the CAFC could do was reverse and remand.

At this stage, we are limited to reviewing the grounds relied on by the agency. See SEC v. Chenery Corp., 332 U.S. 194 (1947); In re Buszard, 504 F.3d 1364, 1367 (Fed. Cir. 2007). Our decision addresses only the grounds employed by the Board, on the record before it, for affirming the examiner's rejections; beyond that limited holding, we do not direct the manner in which the agency should proceed on remand or indicate how the issue of patentability should ultimately be resolved. See, e.g., In re Lister, 583 F.3d 1307, 1317 n.4 (Fed. Cir. 2009). Accordingly, we reverse the Board's decision and remand for further proceedings.

A Patent Hawk search is geared to efficiency: bang for the buck. A search starts with understanding the technology. Working in litigation for a decade, and grasping every patent litigation case law decision like a hawk, Patent Hawk understands claim construction. That's important to ensure that all bases are covered.

A Patent Hawk search is not an exercise of close-enough horseshoes-or-hand-grenades. We consider our reputation for excellence on the line every search. Of course, not all patents are invalid. If the prior art isn't there, it's close but no cigar. All any searcher can ever provide is the closest art. Patent Hawk is the best opportunity to find exactly that.

To get bang for the buck, search vector priority differs based upon the target. Sometimes straight-up keyword search first, sometimes forward-backward on the target or closest non-target art.

Patent Hawk understands that good story art can top a poorly written but technically superior reference. Having to tease out details and explain what a reference was trying to say is a formula for generating skepticism in a judge or jury, especially after the other side tears into it. Often better to have a straight arrow that just misses the mark. Nowadays, KSR serves to fill in the cracks, paints a bigger bulls-eye on the target, making prior art a volley shot with a larger sweet spot. But there is no substitute for the solidity of anticipation. Hunting down a gold-standard 102 can take dedication to excellence.

Patent Hawk reports search results by culling the most relevant quotes of close prior art, thus providing a "Reader's Digest" version of the reference in an email. Salient quotes speeds an attorney's comprehension.

References are posted on a download page. That way, anyone involved in a litigation, whether a file clerk or colleague, has a one-stop shop to all found prior art for a matter, without forwarding emails or shuffling files around.

Anyone who has read the Patent Prospector knows that English isn't a second language for the Hawk. And that's crucial, because, after all, prior art search, like litigation in the large, is ultimately an exercise in storytelling.

If your budget is penny-wise and pound foolish, call Patent Eagle. No kidding. An Indian firm, knowing the Patent Hawk reputation, calls itself Patent Eagle. Imitation is the sincerest form of flattery. But painting lipstick on a pig doesn't make her a beauty. Only Patent Hawk is the real deal.

If you want to turn a threat into a nuisance suit, and a nuisance suit into dismissal with prejudice, there is only one search firm to bank on. Patent Hawk.

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.").