Alerts and Updates
Federal Circuit Alert
February 2006
Federal Circuit Confirms Broad Construction of Critical Claim Term Despite Limiting Language in Specification
nCube Corp. v. SeaChange Int'l, Inc., 03-1341, 03-1366
In a January 9, 2006 decision from a divided panel, the Federal Circuit affirmed the Delaware District Court's judgment after trial that the asserted patent was willfully infringed through literal and induced infringement. The Federal Circuit also affirmed an award doubling the plaintiff's actual damages and two-thirds of its attorney fees. Writing for the majority, Circuit Judge Rader addressed the difficult question of when claim terms are limited by the disclosure in the specification, finding that the claim term at issue was broader than the description of the claim term as part of an embodiment described in the specification.
The plaintiff nCube is the holder of U.S. Patent No. 5,805,804, titled "Method and Apparatus for Scalable, High Bandwidth Storage Retrieval And Transportation Of Multimedia Data On Network" ("the '804 patent"). The '804 patent is directed to an improved method for providing multimedia data (such as interactive shopping, news, games, music and movies) in a networked system by allowing a client flexible access to various multimedia sources. According to the claimed invention, a client device requests the desired multimedia data by sending a message to the "upstream manager." The upstream manager then routes the client's request to a media server which supplies the requested multimedia data. The data is then returned to the client device via a "downstream manager."
A key issue on appeal was the construction of the claim term "upstream manager" and the use of addresses in the invention. The invention of the '804 patent allows the client to receive requested multimedia data from different types of networks by superimposing its own independent addresses on top of the nodes used in the various networks. Thus, the invention uses its own network protocol to route commands and data from the requesting client to the appropriate media server. As part of the connection service described in the specification of the '804 patent, this network protocol assigns a "logical" (i.e., ad hoc) address to the "physical address" (i.e., the real physical location) of a client and stores that relationship in a connection service table in memory.
The District Court construed the claim term "upstream manager" to mean a computer system component that (a) accepts messages from a client bound for services on a server; (b) routes messages from a client to services on a server, and (c) is distinct from the claimed "downstream manager." On appeal, defendant SeaChange argued that the construction of "upstream manager" should require that the "upstream manager" receive and route all messages from clients bound for services on the server. The Federal Circuit rejected SeaChange's contention, finding no requirement that the upstream manager receive and route all messages, particularly since the specification suggested that the invention encompassed divergence from the one embodiment of the invention described in the specification.
A majority on the Federal Circuit panel also rejected SeaChange's contention that the "upstream manager" be construed to be limited to only logical, not physical, addresses of both the sender and receiver of the message. Even though the description of the embodiment in the specification includes the statement that "it is important to note that all routing is accomplished based on logical addresses, not physical addresses," the majority found that the "upstream manager" in the claim was "broader than the upstream manager of this embodiment." The majority further found that to impose such a requirement would improperly require the limitation of a dependent claim to be read into this term rendering the dependent claim redundant. Finally, while noting that it can be appropriate to limit a claim term to the embodiment disclosed in the specification when the meaning of the claim term is unclear, the Federal Circuit found that in this case, the claim term "upstream manager" was not "so amorphous that one of skill in the art can only reconcile the claim language with the inventor's disclosure by recourse to the specification."
Applying the District Court's claim construction, the Federal Circuit refused to "second guess" the jury's credibility determinations or to reevaluate the weight to be given to the uncontradicted opinion of nCube's expert and affirmed the finding of infringement. Moreover, the Federal Circuit upheld the jury's determination that infringement was willful, despite SeaChange having obtained opinion of counsel indicating no infringement. After reviewing the record, the Federal Circuit determined that at least one important technical document was intentionally not supplied to SeaChange's opinion counsel. Thus, since "the best information [was] intentionally not made available to counsel during the preparation of the opinion," the opinion was fatally defective and could no longer serve "its prophylactic purpose of negating a finding of willful infringement."
For the full opinion, see: http://fedcir.gov/opinions/03-1341.pdf
Federal Circuit Affirms Finding of Willful Infringement Despite Multiple Opinions of Counsel
Applied Medical Resources Corp. v. United States Surgical Corp., 05-1149
In a January 24, 2006 decision, the Federal Circuit affirmed the decision of the U.S. District Court for the Central District of California granting judgment of willful infringement of U.S. Patent 5,385,553 (the '553 patent) in favor of Applied Medical Resources ("Applied Medical"), and affirmed the award for damages, enhanced damages, attorney fees and prejudgment interest totaling $64.5 million.
The patent dispute between Applied Medical and U.S. Surgical has a long history, including two appeals that previously reached the Federal Circuit. Applied Medical first sued U.S. Surgical in the District Court for the Eastern District of Virginia in 1996 ("Applied I"), alleging that U.S. Surgical's sale of its Versaport trocars ("Versaport I") infringed the '553 patent, as well as two other Applied Medical patents. The '553 patent is directed to a trocar surgical device which is used as an access port into the abdomen during laparoscopic surgery. The invention of the '553 patent eliminates the need for the use of multiple trocars to accommodate differently sized instruments and provides a single trocar capable of providing a seal around instruments of various sizes using a "floating seal."
In 1997, a jury found that U.S. Surgical willfully infringed the '553 patent as well as the other two patents, and awarded damages based on a 7% reasonable royalty (equaling $20.5 million). The Virginia District Court granted a permanent injunction enjoining further infringing sales effective May 20, 1997. The Federal Circuit affirmed that judgment in Applied Med. Resource Corp. v. U.S. Surgical Corp., 147 F.3d 1373 (Fed. Cir. 1998). Shortly after the Applied I verdict, U.S. Surgical introduced a redesigned Versaport trocar ("Versaport II") to the market and began selling the new trocar in June 1997. In April 1999, Applied Medical filed a second complaint against U.S. Surgical in the U.S. District Court for the Central District of California alleging that Versaport II infringed the '553 patent ("Applied II"). On February 28, 2002, the Central District of California granted Applied Medical's motion for summary judgment of infringement and entered a permanent injunction for sales of the Versaport II. The Federal Circuit affirmed that decision and injunction on September 11, 2003.
The District Court held a separate trial to determine the damages owed to Applied Medical for U.S. Surgical's infringing sales of the Versaport II. U.S. Surgical moved to establish, as a matter of law, that the reasonable royalty for infringing sales of Versaport I (7%) was binding under principles of collateral estoppel, and further, that any evidence relating to the jury's finding of willful infringement in Applied I should be precluded from consideration by the jury. The District Court denied both motions. Following a trial in which the jury found willful infringement, the California District Court also denied U.S. Surgical's motion for judgment as a matter of law of no willful infringement and entered a final judgment on January 27, 2005, in the amount of $64.5 million.
U.S. Surgical appealed, arguing that collateral estoppel barred the relitigation of the reasonable royalty rate in Applied II since the infringement in Applied II was an "uninterrupted continuation" of the infringement found in Applied I. U.S. Surgical argued that the reasonable royalty rate should be based on a "hypothetical negotiation" on the date when infringement first began in 1994, rather than 1997. A reasonable royalty calculation is employed when actual damages cannot be adequately proved and is based on a "hypothetical negotiation" between a willing licensor and willing licensee at the time infringement first occurred. The Federal Circuit found U.S. Surgical's argument unpersuasive because Versaport I and Versaport II "caused two separate infringements, and each infringement commenced on a different date." Therefore, according to the Federal Circuit, the reasonable royalties may be different from each other. The Federal Circuit also rejected U.S. Surgical's argument that the two separate infringements constituted a single "uninterrupted continuation," noting that U.S. Surgical had previously argued before the District Court that Versaport II was different from Versaport I, stating Versaport II was "an entirely different, non-infringing trocar, with a completely new and improved seal system...." The Federal Circuit concluded that collateral estoppel did not apply since the two infringements caused by sales of the Versaport I and Versaport II began at different times and were based on different products, and thus required two different hypothetical negotiation dates for determining the reasonable royalty rate.
Separately, U.S. Surgical argued that the California District Court erred in not granting its motion for judgment as a matter of law of no willful infringement. U.S. Surgical argued it acted with due care and a good faith belief of noninfringement and pointed out there was no evidence of direct copying and that the evidence showed U.S. Surgical engaged in an intense and deliberate program to design around the '553 patent, including uncontroverted evidence that U.S. Surgical regularly consulted with its in-house patent counsel during the redesign, requested advice of outside law firms and did not make a sale of Versaport II until after receiving a written second opinion from a patent attorney at another law firm. With respect to the three written opinions from outside counsel that U.S. Surgical produced at trial, the Federal Circuit determined that a jury could have reasonably concluded that U.S. Surgical paid little if any attention to the opinion letters, describing the first letter as simply "shipped off in the mail," noting the second letter did not address infringement of the claims of the '553 patent, and that the third letter arrived after U.S. Surgical began selling Versaport II. In fact, in affirming the finding of willful infringement, the Federal Circuit found that the jury could have inferred from the evidence that U.S. Surgical sought legal opinions "for their potential evidentiary value on the issue of willful infringement in future litigation" and not as legitimate advice as to whether Versaport II infringed.
For the full opinion, see: http://fedcir.gov/opinions/05-1149.pdf
Federal Circuit Elaborates on Role of Inherent Anticipation in Method Claims
Perricone v. Medicis Pharmaceutical Corp., 05-1022, 05-1023
In a December 20, 2005 decision addressing inherent anticipation analysis for determining patent validity, the Federal Circuit affirmed-in-part and reversed-in-part the decision of the U.S. District Court for the District of Connecticut with respect to its invalidity finding of the two asserted patents. In addition, the Federal Circuit affirmed the District Court's decisions on double patenting.
The plaintiff, Dr. Perricone is the holder of two related patents that claim methods for treating or preventing sunburns (U.S. Patent No. 5,409,693 (the '693 patent)) and methods for treating skin damage or disorders (U.S. Patent No. 5,574,063 (the '063 patent)). Both patents disclose essentially the same subject matter: treatment or prevention of various forms of skin damage by the topical application of ascorbyl fatty acid ester (e.g., ascorbyl palmitate, ascorbyl laurate, ascorbyl myristate, ascorbyl stearate) with a dermatologically acceptable carrier. In 1999, Dr. Perricone sued Medicis, alleging that Medicis' LUSTRA® line of prescription skin depigmenters infringed both the '693 and '063 patents. LUSTRA® is a cream that includes ascorbyl palmitate. Medicis filed motions for partial summary judgment of non-infringement based on the invalidity of the claims asserted. The Connecticut District Court granted Midicis' motions and found both patents invalid.
On the issue of anticipation, the District Court determined that a prior art reference (Pereira) anticipated claims 1-4, 7-9, and 13 of the '693 patent, and claims 1-19 of the '063 patent. Pereira is directed to a cosmetic composition "suitable for topical application to the skin and hair" and discloses various ingredients in that composition, including eight distinct example compositions with specific concentrations of ingredients. The District Court concluded that Pereira anticipates Dr. Perricone's claims because Pereira's disclosed compositions include all the various ingredients in the concentrations claimed by Dr. Perricone. On appeal, Dr. Perricone argued that: 1) Pereira disclosed a composition having ascorbyl palmitate among many others and did not anticipate the specific claimed use of ascorbyl palmitate; (2) the disclosed range of concentration of the Pereira composition only partially overlapped with Dr. Perricone's claimed range; and (3) Pereira did not disclose any benefit directed to skin sunburn.
The Federal Circuit rejected Dr. Perricone's first argument that one ingredient in a longer list cannot anticipate a later claim to that ingredient if it appears without special emphasis. To the contrary, the Federal Circuit affirmed that a disclosure is prior art to the extent it is an enabling disclosure. While disclosure of a broad genus does not necessarily disclose a species within that genus, in this case, the prior art specifically discloses the use of ascorbyl palmitate, and therefore contained a specific reference to a species within that genus. The Federal Circuit also rejected the "partial overlap" argument since Pereira's range entirely encompassed, and did "not significantly deviate from," Dr. Perricone's claimed ranges.
With respect to the particular claimed skin benefits, the Federal Circuit noted first that the District Court's anticipation analysis was based on inherency. Following precedent, the Federal Circuit extended the inherency doctrine to method claims, stating that "when considering a prior art method, the anticipation doctrine examines the natural and inherent results in that method without regard to the full recognition of those benefits or characteristics within the art field at the time of the prior art disclosure." The Federal Circuit proceeded to affirm the District Court's invalidity finding as to the claims of the '063 patent that are directed to the application of the cosmetic composition to "affected skin areas." The specification of the '063 patent explains that such skin areas suffer from "the natural aging process." Because all skin is subject to the aging process, the Federal Circuit reasoned that the claims of the '063 patent apply to the general topical application of the recited composition to all skin. As such, because Pereira discloses the very same composition and teaches its general topical application, the Federal Circuit affirmed the District Court's finding of anticipation through the inherency doctrine. The Federal Circuit, applying a similar reasoning, affirmed the District Court's finding of anticipation with respect to independent claim 8 (and dependent claims 9 and 13) of the '693 patent, which is directed to preventing sunburn since "all skin surfaces are susceptible to sunburn damage, and because one can only realistically apply a composition to a skin surface when that surface is exposed."
However, the Federal Circuit reached a different conclusion with respect to claim 1 of the '693 patent (and dependent claims 2, 3, 4 and 7) since this independent claim specifically recited application of the cosmetic composition to "skin sunburn." Circuit Judge Rader, writing for the majority, found a significant distinction between the topical application of the cosmetic composition to skin generally or for the purposes of preventing sunburn and the narrower application for treatment of skin sunburn. The majority restated the principle that new uses of old products or processes are indeed patentable subject matter. Finding that the treatment of skin sunburn is not analogous to preventing sunburn and, therefore, a topical composition for treating skin sunburn was a new use of an old product, the Federal Circuit reversed the District Court's grant of summary judgment of invalidity on claims 1-4 and 7 of the '693 patent and vacated the District Court's summary judgment of non-infringement on those claims as well. The dissenting opinion disagreed, refusing to find a distinction between application of the cosmetic composition for the purpose of avoiding skin sunburn from the purpose of treating skin sunburn.
In addition, the Federal Circuit agreed with the District Court's finding of non-statutory, or "obviousness-type," double patenting with respect to certain claims of the '063 patent in view of claim 1 of the '693 patent. In determining the differences between the claims, the District Court noted that treatment of "sunburn" in claim 1 of the '693 patent was a species within the genus of "skin disorders" covered by the '063 patent and further that the claimed effective amount in the '063 patent fell within the ranges of effective amounts in the '693 patent. After reviewing the claim scope, the Federal Circuit agreed that certain claims of the '063 patent were obvious in view of claim 1 of the '693 patent. The Federal Circuit reaffirmed the notion that the earlier species renders the later genus claim invalid under non-statutory double patenting. However, contrary to the view of the District Court, the Federal Circuit indicated that the Patent Act and Patent Office rules permit the filing of a terminal disclaimer even after issuance of the second patent. However, given that Dr. Perricone never filed a terminal disclaimer, the Federal Circuit refused to make a hypothetical determination about the retrospective effect of such a terminal disclaimer.
For the full opinion, see: http://fedcir.gov/opinions/05-1022.pdf
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