IP News

The Federal Circuit found that Judge Davis' claim construction “comports with the ordinary meaning of the patent's key terms.” Id. at 16. The claim had been construed to require that the accused website contain an applet that be either executable or operable when it is generated and before it is first transmitted to the client, “which means it must include both the particularized data and the functionality.” Id. at 18. Because Parallel admitted that each of the accused instrumentalities “is missing at least one portion of the functional code or data when the applet is transferred to the client because the applet includes only a link,” summary judgment of non-infringement was proper. Id. at 18.

The Federal Circuit next addressed the denial of Parallel's Rule 59(e) motion to amend its infringement contentions. After noting that “Parallel is seeking to amend its infringement contentions in order to make arguments that could have been made before the entry of summary judgment,” the panel held that “Parallel chose to pursue a theory that allowed it to accuse a larger number of defendants. Having lost, Parallel may not now initiate what would amount to a completely new infringement proceeding.” Id. at 24.

'

Federal Circuit Clarifies Declaratory Judgment Jurisdiction

Hearing an appeal from the Eastern District of Pennsylvania, the Federal Circuit panel of Judges Timothy B. Dyk, S. Jay Plager and Kathleen M. O'Malley held that an Article III case or controversy existed between Arkema and Honeywell, and that Arkema should have been allowed to supplement its complaint to add declaratory judgment claims regarding two patents in Arkema Inc. v. Honeywell Int'l, Inc., No. 2012-1308. Arkema sought a declaratory judgment that by entering into contracts to supply a next-generation automotive refrigerant on which Honeywell allegedly held at least one patent, it would not incur liability as an indirect infringer under two patents that cover methods of using the refrigerant in automobile air conditioning systems. Slip Op. at 2. The district court denied Arkema's attempt to add declaratory judgment claims with respect to these two patents. Id.

In November 2009, Honeywell filed suit against Arkema for indirect infringement of a European patent based on Arkema's offers to sell the refrigerant in Germany, and in June 2010 Arkema brought suit against Honeywell in the Eastern District of Pennsylvania. Id. at 5. While this suit was in discovery, Honeywell obtained two additional patents, and Arkema moved to supplement its complaint to seek declaratory judgment of non-infringement and invalidity of these two additional patents. The district court held that “Arkema could not be charged with directly infringing the '120 and '882 patents because, as a mere supplier, Arkema had no plans to use [the refrigerant] in any manner that could directly infringe those patents, which cover only methods of using [the refrigerant].” Id. at 6.

Citing the Supreme Court's decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), the Federal Circuit stated that “this is a quintessential example of a situation in which declaratory relief is warranted.” Id. at 9. If Honeywell's view of its patent coverage prevails, “then [Arkema] proceeding with its plans would expose Arkema to significant liability.” Id. The Federal Circuit held that there was a justiciable controversy for four reasons. First, it noted that there does not need to actually be acts of direct infringement in order for a supplier to seek declaratory judgment of no indirect infringement. Id. at 9-10. There was no need for a specific threat of infringement against either the potential direct infringers or Arkema. Id. at 10. It was also not required that Honeywell have “directly accused Arkema of potential indirect infringement.” Id. at 11. Even under the old “reasonable apprehension of suit” test, the Federal Circuit reiterated that a sufficient controversy would exist “where the patentee had accused the declaratory judgment plaintiff of misappropriating the same technology in related litigation.” Id. The panel also noted that Honeywell had declined to grant Arkema a covenant not to sue for the two method patents,
suggesting that there is an “active and substantial controversy” between the parties. Id.

Second, the Federal Circuit panel held that there was no dispute that the intended use of the refrigerant would be at least arguably infringing “and actively encouraged by the declaratory judgment plaintiff, a controversy [that would be] 'sufficiently real' for the purposes of declaratory judgment jurisdiction.” Id. at 13. Finally, the panel chastised the district court for finding that the threshold acts of direct infringement are not sufficiently immediate to create an Article III controversy. It was undisputed that long-term supply contracts were already being signed, and that “[s]uch circumstances have put Arkema in a present position of either committing to contracts that could expose it to liability for indirect infringement or abandoning its plans to supply [the refrigerant] to automobile manufacturers in the United States.” Id. at 13. Finally, the Federal Circuit held that Arkema's relevant plans were enough to satisfy the “reality” requirement under MedImmune because it intends to offer the refrigerant for sale.

En Banc

Oral Arguments Heard in Important Patent Cases

On Feb. 8, the en banc Federal Circuit heard oral arguments in CLS Bank v. Alice Corp., No. 11-1301, focusing on whether and when software can be patented. The original appellate decision, authored by Judge Richard Linn, held that Alice's patents covering a computerized trading platform that eliminates settlement risk were valid under 35 U.S.C. ' 101 because they cover the “practical application of a business concept in a specific way, which requires computer implemented steps of exchanging obligations ' ” Slip Op. at 26. In addition, Judge Linn's opinion famously noted that ' 101 is not a “ threshold” test to be applied in every litigation, and it need not be addressed before “other matters touching the validity of the patents.” Id. at 13. At oral argument in the en banc hearing, attorneys for both parties agreed that software is not per se patentable, and also agreed that specially designed computers that perform specific tasks can be patentable. The dispute centers on whether Alice's patents cover a machine specialized enough to be patentable. Several Amici filed briefs in the case, including Google, Dell, Facebook, Red Hat, Zynga, and other tech companies, arguing in favor of the petitioners (CLS Bank) that abstract patents such as Alice's should not be patentable.

On the same date, the en banc Federal Circuit also heard oral arguments in Robert Bosch, LLC v. Pylon Mfg. Corp., No. 2011-1363, focusing on whether the Federal Circuit has jurisdiction “to entertain appeals from patent infringement liability determinations when a trial on damages has not yet occurred[,]” and “ when willfulness issues are outstanding and remain undecided[.]” The case, involving Bosch's windshield wiper blade technology, originated in the District of Delaware (No. 08-542). Judge Sue L. Robinson bifurcated liability from damages, and after a trial on the liability phase, Bosch won an infringement verdict and moved for a permanent injunction, which Judge Robinson denied. On appeal, the Federal Circuit reversed, holding that Judge Robinson erred in denying the injunction. The en banc order focuses on whether the appeal was proper, or whether the trial on damages and willfulness should first have been resolved before taking the appeal.

Jeffrey S. Ginsberg is a partner and Joseph Mercadante is an associate in the New York office of Kenyon & Kenyon LLP.

Federal Circuit Affirms Loss for Parallel Networks

On Jan. 16, 2013, the Federal Circuit panel of Judges Sharon Prost, William C. Bryson and Evan J. Wallach issued its opinion in Parallel Networks, LLC v. Abercrombie & Fitch Co., et al., No. 2012-1227, affirming the decision of Chief Judge Leonard Davis of the Eastern District of Texas. Parallel Networks had sued 120 defendants in four separate cases, and had a stated strategy of “trying to extract an early settlement from as many defendants as possible.” Slip Op. at 12. Judge Davis ordered an early Markman hearing construing three terms that defendants considered to be case dispositive. Id. After construing two of the three terms in the defendants' favor, Judge Davis granted summary judgment of non-infringement in favor of several of the defendants. Id. at 14.

Thereafter, Parallel Networks filed a motion seeking leave to amend its infringement contentions “in order to allege infringement against 45 defendants based on the district court's claim constructions.” Id. at 15. It argued that the court had imposed an additional requirement in the claims, and that the court's construction was “an unexpected and intervening change in the law” to which it deserved a chance to respond. Id. Judge Davis denied the motion, which was appealed along with his claim constructions.

The Federal Circuit found that Judge Davis' claim construction “comports with the ordinary meaning of the patent's key terms.” Id. at 16. The claim had been construed to require that the accused website contain an applet that be either executable or operable when it is generated and before it is first transmitted to the client, “which means it must include both the particularized data and the functionality.” Id. at 18. Because Parallel admitted that each of the accused instrumentalities “is missing at least one portion of the functional code or data when the applet is transferred to the client because the applet includes only a link,” summary judgment of non-infringement was proper. Id. at 18.

The Federal Circuit next addressed the denial of Parallel's Rule 59(e) motion to amend its infringement contentions. After noting that “Parallel is seeking to amend its infringement contentions in order to make arguments that could have been made before the entry of summary judgment,” the panel held that “Parallel chose to pursue a theory that allowed it to accuse a larger number of defendants. Having lost, Parallel may not now initiate what would amount to a completely new infringement proceeding.” Id. at 24.

'

Federal Circuit Clarifies Declaratory Judgment Jurisdiction

Hearing an appeal from the Eastern District of Pennsylvania, the Federal Circuit panel of Judges Timothy B. Dyk, S. Jay Plager and Kathleen M. O'Malley held that an Article III case or controversy existed between Arkema and Honeywell, and that Arkema should have been allowed to supplement its complaint to add declaratory judgment claims regarding two patents in Arkema Inc. v. Honeywell Int'l, Inc., No. 2012-1308. Arkema sought a declaratory judgment that by entering into contracts to supply a next-generation automotive refrigerant on which Honeywell allegedly held at least one patent, it would not incur liability as an indirect infringer under two patents that cover methods of using the refrigerant in automobile air conditioning systems. Slip Op. at 2. The district court denied Arkema's attempt to add declaratory judgment claims with respect to these two patents. Id.

In November 2009, Honeywell filed suit against Arkema for indirect infringement of a European patent based on Arkema's offers to sell the refrigerant in Germany, and in June 2010 Arkema brought suit against Honeywell in the Eastern District of Pennsylvania. Id. at 5. While this suit was in discovery, Honeywell obtained two additional patents, and Arkema moved to supplement its complaint to seek declaratory judgment of non-infringement and invalidity of these two additional patents. The district court held that “Arkema could not be charged with directly infringing the '120 and '882 patents because, as a mere supplier, Arkema had no plans to use [the refrigerant] in any manner that could directly infringe those patents, which cover only methods of using [the refrigerant].” Id. at 6.

Citing the Supreme Court's decision in MedImmune, Inc. v. Genentech, Inc. , 549 U.S. 118 (2007), the Federal Circuit stated that “this is a quintessential example of a situation in which declaratory relief is warranted.” Id. at 9. If Honeywell's view of its patent coverage prevails, “then [Arkema] proceeding with its plans would expose Arkema to significant liability.” Id. The Federal Circuit held that there was a justiciable controversy for four reasons. First, it noted that there does not need to actually be acts of direct infringement in order for a supplier to seek declaratory judgment of no indirect infringement. Id. at 9-10. There was no need for a specific threat of infringement against either the potential direct infringers or Arkema. Id. at 10. It was also not required that Honeywell have “directly accused Arkema of potential indirect infringement.” Id. at 11. Even under the old “reasonable apprehension of suit” test, the Federal Circuit reiterated that a sufficient controversy would exist “where the patentee had accused the declaratory judgment plaintiff of misappropriating the same technology in related litigation.” Id. The panel also noted that Honeywell had declined to grant Arkema a covenant not to sue for the two method patents,
suggesting that there is an “active and substantial controversy” between the parties. Id.

Second, the Federal Circuit panel held that there was no dispute that the intended use of the refrigerant would be at least arguably infringing “and actively encouraged by the declaratory judgment plaintiff, a controversy [that would be] 'sufficiently real' for the purposes of declaratory judgment jurisdiction.” Id. at 13. Finally, the panel chastised the district court for finding that the threshold acts of direct infringement are not sufficiently immediate to create an Article III controversy. It was undisputed that long-term supply contracts were already being signed, and that “[s]uch circumstances have put Arkema in a present position of either committing to contracts that could expose it to liability for indirect infringement or abandoning its plans to supply [the refrigerant] to automobile manufacturers in the United States.” Id. at 13. Finally, the Federal Circuit held that Arkema's relevant plans were enough to satisfy the “reality” requirement under MedImmune because it intends to offer the refrigerant for sale.

En Banc

Oral Arguments Heard in Important Patent Cases

On Feb. 8, the en banc Federal Circuit heard oral arguments in CLS Bank v. Alice Corp., No. 11-1301, focusing on whether and when software can be patented. The original appellate decision, authored by Judge Richard Linn, held that Alice's patents covering a computerized trading platform that eliminates settlement risk were valid under 35 U.S.C. ' 101 because they cover the “practical application of a business concept in a specific way, which requires computer implemented steps of exchanging obligations ' ” Slip Op. at 26. In addition, Judge Linn's opinion famously noted that ' 101 is not a “ threshold” test to be applied in every litigation, and it need not be addressed before “other matters touching the validity of the patents.” Id. at 13. At oral argument in the en banc hearing, attorneys for both parties agreed that software is not per se patentable, and also agreed that specially designed computers that perform specific tasks can be patentable. The dispute centers on whether Alice's patents cover a machine specialized enough to be patentable. Several Amici filed briefs in the case, including Google, Dell, Facebook, Red Hat, Zynga, and other tech companies, arguing in favor of the petitioners (CLS Bank) that abstract patents such as Alice's should not be patentable.

On the same date, the en banc Federal Circuit also heard oral arguments in Robert Bosch, LLC v. Pylon Mfg. Corp., No. 2011-1363, focusing on whether the Federal Circuit has jurisdiction “to entertain appeals from patent infringement liability determinations when a trial on damages has not yet occurred[,]” and “ when willfulness issues are outstanding and remain undecided[.]” The case, involving Bosch's windshield wiper blade technology, originated in the District of Delaware (No. 08-542). Judge Sue L. Robinson bifurcated liability from damages, and after a trial on the liability phase, Bosch won an infringement verdict and moved for a permanent injunction, which Judge Robinson denied. On appeal, the Federal Circuit reversed, holding that Judge Robinson erred in denying the injunction. The en banc order focuses on whether the appeal was proper, or whether the trial on damages and willfulness should first have been resolved before taking the appeal.

Jeffrey S. Ginsberg is a partner and Joseph Mercadante is an associate in the New York office of Kenyon & Kenyon LLP.