IP News

Federal Circuit Interprets 'Broadest Reasonable Interpretation' Claim Construction Standard

On June 16, 2015, a unanimous Federal Circuit panel of Chief Judge Laurie, Circuit Judge Prost, and District Judge Gilstrap (sitting by designation from the Eastern District of Texas), issued an opinion, authored by Judge Prost, in Microsoft Corp. v. Proxyconn, Inc., Case No. 2014-1542, 1543. The panel reversed some claim constructions of the United States Patent and Trademark Office (USPTO) Patent Trial and Appeal Board (PTAB), affirmed others, and remanded.

The appeal began as an inter partes review (IPR) of a patent related to packet-switched networks owned by Proxyconn (the '717 patent). Microsoft appealed the PTAB's finding of patentability of one of the claims, and Proxyconn cross-appealed the finding of unpatentability of several other claims, as well as the denial of its motion to amend. The USPTO then-Deputy Director, now Director intervened to clarify the PTAB's “broadest reasonable interpretation standard” in IPR claim construction. Slip op. at 2-3. The Federal Circuit reviewed the PTAB's claim constructions de novo, “because the intrinsic record fully determine[d] the proper construction.” Id. at 6.

In its opinion, the Federal Circuit stated that the “broadest reasonable interpretation” is the proper standard for IPR claim construction under In re Cuozzo Speed Techs., LLC , 778 F.3d 1271 (Fed. Cir. 2015). Id. However, the Federal Circuit also stated that IPR claim constructions must not be ” unreasonable under general claim construction principles” ' including teachings of the specification, prosecution history, and interpretations of “those skilled in the art.” Id. at 6-7 (emphasis in original). Therefore, in its interpretation of IPR constructions, the Federal Circuit looked to the consistent usage of terms throughout the specification of Proxyconn's patent.

The Federal Circuit also reviewed the PTAB's denial of Proxyconn's motion to amend two claims during the IPR. Relying on PTO regulation C.F.R. '42.20 (implementing the America Invents Act) and upon precedent from Idle Free Sys. Inc., v. Bergstrom, Inc., IPR2012-00027, 2013 WL 5947697 (PTAB June 11, 2013), the PTAB required “patentable distinction” to be shown to justify an amendment to claims. Id. at 25. The Federal Circuit reviewed this PTAB proceeding under the “arbitrary and capricious” standard given by the Administrative Procedure Act. Id. at 23. The court found that “nothing in the statute or regulations precludes the Board from rejecting a substitute claim on the basis of prior art that is of record, but was not cited against the original claim in the institution decision.” Id. at 26.'Further, as a matter of fairness to the patentee, the court stated that 'this was a case where the prior art relied on by the Board was front and center throughout the course of the proceedings.' Id. at 28.'

Federal Circuit: Order Vacated After Claim At Issue Was Cancelled

On June 18, 2015, a Federal Circuit panel of Chief Judge Prost, Judge Dyk, and Judge O'Malley issued an opinion for the court authored by Judge Dyk in ePlus, Inc. v. Lawson Software, Inc. , Case No. 2013-1506, -1587. The opinion vacated a prior injunction and contempt order, which was based on a now-invalid patent claim. Judge O'Malley dissented.

Patent assignee ePlus originally brought suit against Lawson in district court, and a jury found five claims directed toward “methods and systems for electronic sourcing” valid and infringed. Slip op. at 2-3. As a result, the district court issued an injunction against Lawson. Lawson appealed, and the Federal Circuit reversed in part and remanded, leaving one valid claim infringed. On remand, the district court found Lawson in contempt of the prior injunction. This case came to the Federal Circuit on appeal of the contempt order and injunction. However, while the second appeal was pending, the United States Patent and Trademark Office (PTO) cancelled the remaining claim in a reexamination proceeding.

The first issue considered by the Federal Circuit was “whether an injunction can continue after the PTO has cancelled the only claim on which the injunction was based.” Id. at 3. The court cited extensive non-patent literature showing that “an injunction must be set aside when the legal basis for it has ceased to exist” as well as Federal Circuit precedent finding patent infringement injunctions invalid following a court determination of invalidity. Id. at 9-11 (citing Pennsylvania v. Wheeling & Belmont Bridge Co., 54 U.S. 518, 577-79 (1851); Mendenhall v. Barber-Greene Co., 26 F.3d 1573, 1584 (Fed. Cir. 1994)). Based on this precedent, the majority held that “there is no longer any legal basis to enjoin Lawson's conduct based on rights that ' have ceased to exist.” Slip op. at 11.

The second issue considered was the propriety of the prior civil contempt order. The original injunction against Lawson permanently barred the defendant from “directly or indirectly making, using, offering to sell, or selling within the United States or importing into the United States any of the [adjudged infringing] product configurations '.” Id. at 5. On remand, the district court found contempt because, to avoid the infringing product configurations, Lawson sold “redesigned products [that] were no more than colorably different.” Id. at 8. Monetary damages were entered against Lawson. The panel vacated the contempt order based on Federal Circuit precedent in which non-final infringement damages were vacated due to PTO cancellation of the patent claim on which the judgment was based. Id. at 15-16 (citing Fresenius USA, Inc. v. Baxter Int'l, Inc., 721 F.3d 1330, 1344, 1347 (Fed. Cir. 2013)).

Judge O'Malley's dissent questioned the applicability of Fresenius, the Fresenius holding itself, and ultimately 'whether [Lawson] are relieved of all penalties for having violated the injunction during the four years it was in place before the PTO's cancellation was affirmed.' Dissent at 1-2. Further, Judge O'Malley questioned more broadly whether an administrative agency decision (here the PTO) can supersede the judgment of an Article III court. Id. at 17.

The district court's injunction and contempt orders were vacated, and the case remanded for dismissal.

Fed. Circuit: Claim Construction Based on Understanding of 'One Skilled In the Art' Is Reviewed For Clear Error

On June 23, 2015, a unanimous Federal Circuit panel of Judges Lourie, O'Malley, and Reyna issued an opinion for the court authored by Judge Reyna in Lighting Ballast Control LLC v. Philips Electronics North America, Case No. 2012-1014. The opinion, on remand from the United States Supreme Court following its decision in Teva Pharms. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015), affirmed the findings of the district court, which were based on extrinsic evidence “not used to contradict claim meaning that is unambiguous in light of the intrinsic evidence” and not clearly erroneous. Slip op. 14 (citing Phillips v. AWH Corp., 415 F.3d 1303, 1324 (Fed. Cir. 2005)).

Lighting Ballast asserted infringement of U.S. Patent 5,436,529 by Universal Lighting Technologies (ULT) in the Northern District of Texas on Feb. 24, 2009. The '529 patent “discloses an electronic ballast with the ability to shield itself from destructive levels of current when a lamp is removed or becomes defective.” Id. at 6. The district court held claims containing the term “voltage source means” invalid under 35 U.S.C. '112 ' 2 as indefinite because the specification does not disclose a structure corresponding to the means of the means-plus-function claim. Id. at 7. Under motion for reconsideration, the district court reversed itself because its prior opinion discounted “unchallenged expert testimony.” Id . A subsequent jury trial found three claims of the '529 patent valid and infringed.

Defendant ULT appealed. An initial Federal Circuit panel reversed, finding the asserted claims indefinite ( Lighting Ballast I ). The court granted Lighting Ballast's petition for rehearing en banc ( Lighting Ballast II ) to reconsider the holding in Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448 (Fed. Cir. 1998), which established the de novo standard of review for claim construction. Slip Op. at 8. The en banc panel confirmed the de novo standard of review. Lighting Ballast petitioned the Supreme Court for writ of certiorari. Before considering the petition, the Supreme Court issued its opinion in Teva, which held that in Federal Circuit claim construction de novo review “there may be underlying 'subsidiary' factual findings by the district court related to the extrinsic record that are reviewed for clear error.” Id. at 9. In light of Teva, the Supreme Court vacated the decision in Lighting Ballast II and remanded to the Federal Circuit for reconsideration.

At issue on remand was proper claim interpretation based on the Teva standard of deference to the district court's finding that the term “voltage source means” was not indefinite. Because “[t]he District Court made findings of fact based on extrinsic evidence,” Teva dictated that the Federal Circuit apply a clear error standard, not de novo review. Id. at 14. The district court determined that though no specific structure was indicated within the specification for the “voltage source means” limitation, one skilled in the art “would understand a rectifier is, at least in common uses, the only structure that would provide 'a constant or variable magnitude DC voltage.'” Id.'The Federal Circuit held these findings not erroneous, because they were based on expert testimony within the district court record. Id.

The Federal Circuit further considered several remaining claim construction issues in the case, affirming all constructions. Defendant ULT's post-trial motion for JMOL was also considered. The Federal Circuit found the jury's verdict supported by substantial evidence, and thus affirmed the verdict of infringement. Id. at 21.

Jeff Ginsberg is a Partner in the New York office of Kenyon & Kenyon LLP. Brent T. Hagen is a Law Clerk with the firm.

Federal Circuit Interprets 'Broadest Reasonable Interpretation' Claim Construction Standard

On June 16, 2015, a unanimous Federal Circuit panel of Chief Judge Laurie, Circuit Judge Prost, and District Judge Gilstrap (sitting by designation from the Eastern District of Texas), issued an opinion, authored by Judge Prost, in Microsoft Corp. v. Proxyconn, Inc., Case No. 2014-1542, 1543. The panel reversed some claim constructions of the United States Patent and Trademark Office (USPTO) Patent Trial and Appeal Board (PTAB), affirmed others, and remanded.

The appeal began as an inter partes review (IPR) of a patent related to packet-switched networks owned by Proxyconn (the '717 patent). Microsoft appealed the PTAB's finding of patentability of one of the claims, and Proxyconn cross-appealed the finding of unpatentability of several other claims, as well as the denial of its motion to amend. The USPTO then-Deputy Director, now Director intervened to clarify the PTAB's “broadest reasonable interpretation standard” in IPR claim construction. Slip op. at 2-3. The Federal Circuit reviewed the PTAB's claim constructions de novo, “because the intrinsic record fully determine[d] the proper construction.” Id. at 6.

In its opinion, the Federal Circuit stated that the “broadest reasonable interpretation” is the proper standard for IPR claim construction under In re Cuozzo Speed Techs., LLC , 778 F.3d 1271 (Fed. Cir. 2015). Id. However, the Federal Circuit also stated that IPR claim constructions must not be ” unreasonable under general claim construction principles” ' including teachings of the specification, prosecution history, and interpretations of “those skilled in the art.” Id. at 6-7 (emphasis in original). Therefore, in its interpretation of IPR constructions, the Federal Circuit looked to the consistent usage of terms throughout the specification of Proxyconn's patent.

The Federal Circuit also reviewed the PTAB's denial of Proxyconn's motion to amend two claims during the IPR. Relying on PTO regulation C.F.R. '42.20 (implementing the America Invents Act) and upon precedent from Idle Free Sys. Inc., v. Bergstrom, Inc., IPR2012-00027, 2013 WL 5947697 (PTAB June 11, 2013), the PTAB required “patentable distinction” to be shown to justify an amendment to claims. Id. at 25. The Federal Circuit reviewed this PTAB proceeding under the “arbitrary and capricious” standard given by the Administrative Procedure Act. Id. at 23. The court found that “nothing in the statute or regulations precludes the Board from rejecting a substitute claim on the basis of prior art that is of record, but was not cited against the original claim in the institution decision.” Id. at 26.'Further, as a matter of fairness to the patentee, the court stated that 'this was a case where the prior art relied on by the Board was front and center throughout the course of the proceedings.' Id. at 28.'

Federal Circuit: Order Vacated After Claim At Issue Was Cancelled

On June 18, 2015, a Federal Circuit panel of Chief Judge Prost, Judge Dyk, and Judge O'Malley issued an opinion for the court authored by Judge Dyk in ePlus, Inc. v. Lawson Software, Inc. , Case No. 2013-1506, -1587. The opinion vacated a prior injunction and contempt order, which was based on a now-invalid patent claim. Judge O'Malley dissented.

Patent assignee ePlus originally brought suit against Lawson in district court, and a jury found five claims directed toward “methods and systems for electronic sourcing” valid and infringed. Slip op. at 2-3. As a result, the district court issued an injunction against Lawson. Lawson appealed, and the Federal Circuit reversed in part and remanded, leaving one valid claim infringed. On remand, the district court found Lawson in contempt of the prior injunction. This case came to the Federal Circuit on appeal of the contempt order and injunction. However, while the second appeal was pending, the United States Patent and Trademark Office (PTO) cancelled the remaining claim in a reexamination proceeding.

The first issue considered by the Federal Circuit was “whether an injunction can continue after the PTO has cancelled the only claim on which the injunction was based.” Id. at 3. The court cited extensive non-patent literature showing that “an injunction must be set aside when the legal basis for it has ceased to exist” as well as Federal Circuit precedent finding patent infringement injunctions invalid following a court determination of invalidity. Id. at 9-11 (citing Pennsylvania v. Wheeling & Belmont Bridge Co., 54 U.S. 518, 577-79 (1851); Mendenhall v. Barber-Greene Co., 26 F.3d 1573, 1584 (Fed. Cir. 1994)). Based on this precedent, the majority held that “there is no longer any legal basis to enjoin Lawson's conduct based on rights that ' have ceased to exist.” Slip op. at 11.

The second issue considered was the propriety of the prior civil contempt order. The original injunction against Lawson permanently barred the defendant from “directly or indirectly making, using, offering to sell, or selling within the United States or importing into the United States any of the [adjudged infringing] product configurations '.” Id. at 5. On remand, the district court found contempt because, to avoid the infringing product configurations, Lawson sold “redesigned products [that] were no more than colorably different.” Id. at 8. Monetary damages were entered against Lawson. The panel vacated the contempt order based on Federal Circuit precedent in which non-final infringement damages were vacated due to PTO cancellation of the patent claim on which the judgment was based. Id. at 15-16 (citing Fresenius USA, Inc. v. Baxter Int'l, Inc., 721 F.3d 1330, 1344, 1347 (Fed. Cir. 2013)).

Judge O'Malley's dissent questioned the applicability of Fresenius, the Fresenius holding itself, and ultimately 'whether [Lawson] are relieved of all penalties for having violated the injunction during the four years it was in place before the PTO's cancellation was affirmed.' Dissent at 1-2. Further, Judge O'Malley questioned more broadly whether an administrative agency decision (here the PTO) can supersede the judgment of an Article III court. Id. at 17.

The district court's injunction and contempt orders were vacated, and the case remanded for dismissal.

Fed. Circuit: Claim Construction Based on Understanding of 'One Skilled In the Art' Is Reviewed For Clear Error

On June 23, 2015, a unanimous Federal Circuit panel of Judges Lourie, O'Malley, and Reyna issued an opinion for the court authored by Judge Reyna in Lighting Ballast Control LLC v. Philips Electronics North America, Case No. 2012-1014. The opinion, on remand from the United States Supreme Court following its decision in Teva Pharms. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015), affirmed the findings of the district court, which were based on extrinsic evidence “not used to contradict claim meaning that is unambiguous in light of the intrinsic evidence” and not clearly erroneous. Slip op. 14 (citing Phillips v. AWH Corp., 415 F.3d 1303, 1324 (Fed. Cir. 2005)).

Lighting Ballast asserted infringement of U.S. Patent 5,436,529 by Universal Lighting Technologies (ULT) in the Northern District of Texas on Feb. 24, 2009. The '529 patent “discloses an electronic ballast with the ability to shield itself from destructive levels of current when a lamp is removed or becomes defective.” Id. at 6. The district court held claims containing the term “voltage source means” invalid under 35 U.S.C. '112 ' 2 as indefinite because the specification does not disclose a structure corresponding to the means of the means-plus-function claim. Id. at 7. Under motion for reconsideration, the district court reversed itself because its prior opinion discounted “unchallenged expert testimony.” Id . A subsequent jury trial found three claims of the '529 patent valid and infringed.

Defendant ULT appealed. An initial Federal Circuit panel reversed, finding the asserted claims indefinite ( Lighting Ballast I ). The court granted Lighting Ballast's petition for rehearing en banc ( Lighting Ballast II ) to reconsider the holding in Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448 (Fed. Cir. 1998), which established the de novo standard of review for claim construction. Slip Op. at 8. The en banc panel confirmed the de novo standard of review. Lighting Ballast petitioned the Supreme Court for writ of certiorari. Before considering the petition, the Supreme Court issued its opinion in Teva, which held that in Federal Circuit claim construction de novo review “there may be underlying 'subsidiary' factual findings by the district court related to the extrinsic record that are reviewed for clear error.” Id. at 9. In light of Teva, the Supreme Court vacated the decision in Lighting Ballast II and remanded to the Federal Circuit for reconsideration.

At issue on remand was proper claim interpretation based on the Teva standard of deference to the district court's finding that the term “voltage source means” was not indefinite. Because “[t]he District Court made findings of fact based on extrinsic evidence,” Teva dictated that the Federal Circuit apply a clear error standard, not de novo review. Id. at 14. The district court determined that though no specific structure was indicated within the specification for the “voltage source means” limitation, one skilled in the art “would understand a rectifier is, at least in common uses, the only structure that would provide 'a constant or variable magnitude DC voltage.'” Id.'The Federal Circuit held these findings not erroneous, because they were based on expert testimony within the district court record. Id.

The Federal Circuit further considered several remaining claim construction issues in the case, affirming all constructions. Defendant ULT's post-trial motion for JMOL was also considered. The Federal Circuit found the jury's verdict supported by substantial evidence, and thus affirmed the verdict of infringement. Id. at 21.

Jeff Ginsberg is a Partner in the New York office of Kenyon & Kenyon LLP. Brent T. Hagen is a Law Clerk with the firm.