IP News

Federal Circuit Affirms Anticipation of Claims

On Oct. 19, 2015, a Federal Circuit panel of Chief Judge Prost, Judge Newman, and Judge O'Malley issued a majority opinion, authored by Chief Judge Prost, in In re Steve Morsa, Case No. 2015-1107. The majority held that certain claims of the Morsa patent application were anticipated by a prior art reference, Peter Martin Associates Press Release (PMA reference), and affirmed the USPTO Patent Trial and Appeals Board (PTAB) decision invalidating the claims at issue. Judge Newman wrote a separate opinion, dissenting.

A prior Federal Circuit panel decision (Morsa I) had affirmed the PTAB's rejection of certain claims of the Morsa patent application, but had vacated and remanded the decision to invalidate other claims as anticipated under “an incorrect enablement analysis.” Slip op. at 3. On remand the PTAB again found the claims anticipated by the PMA reference.

The Federal Circuit panel majority reviewed the PTAB enablement decision de novo, as a question of law. Following precedent holding that “[e]nablement of prior art requires that the reference teach a skilled artisan ' at the time of filing ' to make or carry out what it discloses in relation to the claimed invention without undue experimentation,” the panel found the PMA reference enabling of the Morsa application. Id. at 4 (citing In re Antor Media Corp., 689 F.3d 1282, 1289-90 (Fed. Cir. 2003)). The majority reasoned that “the specification [of the Morsa application] made clear that a skilled computer artisan would readily know how to use conventional computer equipment and how to program it; thus, only ordinary experimentation would be needed to make the claimed program.” Id . at 6. The panel majority then mapped each limitation of the Morsa claims at issue to the PMA reference, and held that the disclosures of the Morsa application combined with the PMA prior art reference enabled, and therefore anticipated the Morsa application.

Judge Newman's dissent argued that the majority incorrectly “confuse[d] the laws of anticipation and obviousness, and the role of enablement as applied to prior art references.” Dissent at 1. He asserted that under the law of anticipation the majority improperly used the Morsa specification to fill in gaps in the PMA reference. To anticipate, a prior art reference must disclose “all the claim elements and steps.” Id. at 4. Instead of finding all elements within the prior art reference, according to Newman, “[t]he panel majority fills the gaps in the press release by referring to Morsa's statement that various steps of his invention may be conducted by procedures known to persons of skill in computer-implemented methods.” Id. at 5. Newman concluded that “it is improper to transfer Mr. Morsa's teachings into the [prior art] press release in order to enable” it. Id. at 6.

Federal Circuit: No Jurisdiction Over Appeal By Interested Third-Party Attorneys When Underlying Case Had Settled

On Oct. 30, 2015, a Federal Circuit panel of Circuit Judges Newman, O'Malley, and Chen issued a majority opinion, authored by Judge O'Malley, in Tesco Corp. v. Nat'l Oilwell Varco, L.P., Case No. 2015-1041. The majority held that it did not have jurisdiction over the appeal by interested third party appellant attorneys, and dismissed the appeal. Judge Newman wrote a separate dissent.

In the original case, patent owner Tesco asserted two oil well drilling patents against National Oilwell Varco (NOV). NOV filed an answer, counterclaims, request for attorney's fees, and ultimately “a series of motions to compel” related to the “period prior to the on-sale bar date of November 2002.” Slip op. at 3. At conference prior to trial, regarding the existence of particular “brochures created shortly before November 2002,” Tesco's attorney Ballard “insisted that Tesco had produced all responsive documents.” Id. at 3'4. At trial, a low quality copy of the brochure was introduced by NOV as an exhibit. Ballard attempted at that time to contact the animator of the brochure, and represented that the animator told Tesco attorney Luman “unequivocally that [the invention at issue] is not the invention in the brochure.” Id. at 5. Ballard also represented that a second individual who purportedly worked on the brochure had confirmed this. “In light of the non-production of the original brochure, the district court sanctioned Tesco by reversing the burden of proof on validity.” Id. at 6.

Post-trial, hearings were held regarding the brochure. During these hearings, Ballard said that he currently believed that the brochure did disclose the invention, but maintained that the brochure creators had represented otherwise to Luman during trial. Id. at 7. NOV deposed the purported brochure creators, who denied representing that the brochure did not disclose the invention. In response, the district court dismissed the case sua sponte with prejudice, finding “that the representation to the court during trial justified a finding of bad faith.” Id. at 9. The district court did not award fees, but “reserve[ed] the question of whether fees might be appropriate for later consideration.” Id. Tesco and attorneys Ballard and Luman appealed. Subsequently, “Tesco, with new counsel, reached a settlement and a mutual release with all defendants, including a release of the request for attorney's fees under '285.” Id. at 10. Tesco dismissed its appeal. Attorneys Ballard and Luman joined the settlement, but maintained their appeal.

First, the Federal Circuit panel considered whether “the sanctions order that was explicitly issued against Tesco [can] be considered a formal reprimand against the Attorneys so as to provide them with standing to pursue this appeal.” Id. at 13. Appeal without formal reprimand “would open the floodgates to appeals 'by any nonparty who feels aggrieved by some critical statement made by the court.'” Id. at 16 (citing Nisus Corp. v. Perma-Chink Sys., 497 F.3d 1316, 1320 (Fed. Cir. 2007)). Federal Circuit precedent “thus require[s] a formal sanction or reprimand to justify our jurisdiction over an appeal by an attorney from an order criticizing the attorney's conduct.” Id. Ballard and Luman argued that the Federal Circuit should consider the sua sponte district court order to be a formal reprimand “because the dismissal was predicated on the conduct of the Attorneys.” Id . The panel majority concluded that “[t]he intervening settlement, however, render[ed] that determination unnecessary to the resolution of this appeal.” Id.

The Federal Circuit panel next considered “the effect of the settlement by all parties on the redressability of the Attorneys' request for relief.” Id. at 13. The majority looked to similar cases in other circuits where “a change in circumstances ' remove[d] or moot[ed] the underlying judgment.” Id. at 17. Based on the reasoning underlying precedent in other circuits, the panel majority concluded that “[o]nce all parties entered into the settlement agreement, no party ' except the Attorneys for reputational reasons ' had any enduring interest in the underlying order.” Id. at 19. Thus, no interest by any party remained in the judgment, and “Courts of Appeals review judgments, not opinions.” Id. at 22. Accordingly, the Federal Circuit majority held that “there remain[ed] no on-going case or controversy,” and dismissed. Id. at 23.

In dissent, Judge Newman argued that the majority failed to consider the full factual context of the attorneys' appeal, while revisiting and rearticulating the record underlying the district court decision in a manner prejudicial to the interested third party appellant attorneys.

In IPR Appeal, Federal Circuit Reverses PTAB Determination of Nonobviousness

On Nov. 5, 2015, a Federal Circuit panel of Judges Newman, Dyk, and Taranto issued a unanimous opinion, authored by Judge Taranto, in Belden Inc. v. Berk-Tek LLC, Case No. 2014-1575, -1576. The panel held that the USPTO Patent Trial and Appeals Board (PTAB) properly invalidated claims 1'4 for obviousness, but improperly upheld claims 5'6 for obviousness, and therefore affirmed-in-part and reversed-in-part. The panel also affirmed that the PTAB's denial of Belden's motion to exclude Berk-Tek's expert declaration was proper.

In 2012, Berk-Tek filed for inter partes review of Belden's U.S. Patent No. 6,074,503 (the '503 patent), with six claims for methods of making communications cabling systems. Slip op. at 2. Claims 5-6 had been added upon ex parte reexamination in 2010. The PTAB invalidated claims 1'4 as obvious and upheld claims 5'6. During proceedings, Belden had unsuccessfully moved to exclude Berk-Tek's expert testimony regarding obviousness. Belden appealed 'the cancellation of claims 1'4 and the denial of its motion to exclude,' and 'Berk-Tek appeal[led] the upholding of claims 5 and 6.' Id. at 11.

With respect to claims 1 and 4, Belden argued that a particular Japanese prior art reference consider by the PTAB ' '[a] method of manufacturing plastic insulated cables' ' taught 'only the making of quads, which themselves are not cables but mere components of cables.' Id. at 12. However, the claims of the '503 patent do not exclude quads from the category of cables. Id. at 12-13. Therefore, the panel confirmed that the PTAB's finding of obviousness was supported by substantial evidence because the Japanese prior art reference consider by the PTAB ' '[a] method of manufacturing plastic insulated cables' ' would have motivated a person of ordinary skill in the art to align certain elements in the cable.

The validity of claims 2 and 3 turned on the obviousness of combining 'a third die with the method of' the same Japanese reference. Id. at 15. With respect to the obviousness of a 'variation of the prior art,' the PTAB had 'made the required full inquiry' in light of the U.S. Supreme Court decision in KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 417 (2007), and upheld the obviousness of those claims. Id.

In arguing for the obviousness of the remaining claims 5'6, Berk-Tek sought to combine the methods of the Japanese reference with a Canadian reference. The Federal Circuit panel found error in the PTAB's application of the law concerning 'motivation to combine.' Id. at 17. The PTAB reasoned that the Japanese reference 'show[ed] only conductors that are not individually insulated,' so its method did not apply to the individually insulated conductors disclosed in the Canadian reference and at issue in the '503 patent. Id. at 18. However, this reasoning 'violate[d] the principle that a reference must be considered for everything it teaches by way of technology and is not limited to the particular invention it is describing and attempting to protect.' Id. (emphases in original) (citations omitted). Therefore, the panel reversed the PTAB determination that 'Berk-Tek had not proven the obviousness of the methods of claims 5 and 6 of the '503 patent by a preponderance of the evidence.' Id. at 20.

In the second part of its opinion, the panel reviewed the PTAB denial of Belden's motion to exclude Berk-Tek's expert declaration, submitted with its Reply, for abuse of discretion. 37 C.F.R '42.23(b) states: 'A reply may only respond to arguments raised in the corresponding opposition or patent owner response.' Id. at 21. The PTAB found, and the Federal Circuit panel confirmed, that Berk-Tek's expert 'fairly respond[ed] only to arguments made' by Belden. Id. at 22. Further, the panel decided that the expert declaration 'was not necessary for the prima facie case of obviousness' put forth by Berk-Tek. Id. at 24. Finally, the panel addressed whether Belden's procedural rights were denied by the PTAB. The panel noted that in response to Berk-Tek's expert declaration, Belden had multiple options: it could have cross-examined, moved to exclude the declaration, 'dispute[d] the substance of the declaration at oral hearing,' moved to submit a surreply, or 'request[ed] that the [PTAB] waive or suspend a regulation that the patent owner believes impairs its opportunity to respond to the declaration.' Id. at 28. Therefore, Belden did not 'establish[] that it was denied its procedural rights,' and the panel affirmed the PTAB denial of Belden's motion to exclude. Id. at 25.'

Howard J. Shire is Editor-in-Chief of this newsletter and a Partner in the New York office of Kenyon & Kenyon LLP. Brent T. Hagen is a Law Clerk with the firm.

Federal Circuit Affirms Anticipation of Claims

On Oct. 19, 2015, a Federal Circuit panel of Chief Judge Prost, Judge Newman, and Judge O'Malley issued a majority opinion, authored by Chief Judge Prost, in In re Steve Morsa, Case No. 2015-1107. The majority held that certain claims of the Morsa patent application were anticipated by a prior art reference, Peter Martin Associates Press Release (PMA reference), and affirmed the USPTO Patent Trial and Appeals Board (PTAB) decision invalidating the claims at issue. Judge Newman wrote a separate opinion, dissenting.

A prior Federal Circuit panel decision (Morsa I) had affirmed the PTAB's rejection of certain claims of the Morsa patent application, but had vacated and remanded the decision to invalidate other claims as anticipated under “an incorrect enablement analysis.” Slip op. at 3. On remand the PTAB again found the claims anticipated by the PMA reference.

The Federal Circuit panel majority reviewed the PTAB enablement decision de novo, as a question of law. Following precedent holding that “[e]nablement of prior art requires that the reference teach a skilled artisan ' at the time of filing ' to make or carry out what it discloses in relation to the claimed invention without undue experimentation,” the panel found the PMA reference enabling of the Morsa application. Id. at 4 (citing In re Antor Media Corp., 689 F.3d 1282, 1289-90 (Fed. Cir. 2003)). The majority reasoned that “the specification [of the Morsa application] made clear that a skilled computer artisan would readily know how to use conventional computer equipment and how to program it; thus, only ordinary experimentation would be needed to make the claimed program.” Id . at 6. The panel majority then mapped each limitation of the Morsa claims at issue to the PMA reference, and held that the disclosures of the Morsa application combined with the PMA prior art reference enabled, and therefore anticipated the Morsa application.

Judge Newman's dissent argued that the majority incorrectly “confuse[d] the laws of anticipation and obviousness, and the role of enablement as applied to prior art references.” Dissent at 1. He asserted that under the law of anticipation the majority improperly used the Morsa specification to fill in gaps in the PMA reference. To anticipate, a prior art reference must disclose “all the claim elements and steps.” Id. at 4. Instead of finding all elements within the prior art reference, according to Newman, “[t]he panel majority fills the gaps in the press release by referring to Morsa's statement that various steps of his invention may be conducted by procedures known to persons of skill in computer-implemented methods.” Id. at 5. Newman concluded that “it is improper to transfer Mr. Morsa's teachings into the [prior art] press release in order to enable” it. Id. at 6.

Federal Circuit: No Jurisdiction Over Appeal By Interested Third-Party Attorneys When Underlying Case Had Settled

On Oct. 30, 2015, a Federal Circuit panel of Circuit Judges Newman, O'Malley, and Chen issued a majority opinion, authored by Judge O'Malley, in Tesco Corp. v. Nat'l Oilwell Varco, L.P., Case No. 2015-1041. The majority held that it did not have jurisdiction over the appeal by interested third party appellant attorneys, and dismissed the appeal. Judge Newman wrote a separate dissent.

In the original case, patent owner Tesco asserted two oil well drilling patents against National Oilwell Varco (NOV). NOV filed an answer, counterclaims, request for attorney's fees, and ultimately “a series of motions to compel” related to the “period prior to the on-sale bar date of November 2002.” Slip op. at 3. At conference prior to trial, regarding the existence of particular “brochures created shortly before November 2002,” Tesco's attorney Ballard “insisted that Tesco had produced all responsive documents.” Id. at 3'4. At trial, a low quality copy of the brochure was introduced by NOV as an exhibit. Ballard attempted at that time to contact the animator of the brochure, and represented that the animator told Tesco attorney Luman “unequivocally that [the invention at issue] is not the invention in the brochure.” Id. at 5. Ballard also represented that a second individual who purportedly worked on the brochure had confirmed this. “In light of the non-production of the original brochure, the district court sanctioned Tesco by reversing the burden of proof on validity.” Id. at 6.

Post-trial, hearings were held regarding the brochure. During these hearings, Ballard said that he currently believed that the brochure did disclose the invention, but maintained that the brochure creators had represented otherwise to Luman during trial. Id. at 7. NOV deposed the purported brochure creators, who denied representing that the brochure did not disclose the invention. In response, the district court dismissed the case sua sponte with prejudice, finding “that the representation to the court during trial justified a finding of bad faith.” Id. at 9. The district court did not award fees, but “reserve[ed] the question of whether fees might be appropriate for later consideration.” Id. Tesco and attorneys Ballard and Luman appealed. Subsequently, “Tesco, with new counsel, reached a settlement and a mutual release with all defendants, including a release of the request for attorney's fees under '285.” Id. at 10. Tesco dismissed its appeal. Attorneys Ballard and Luman joined the settlement, but maintained their appeal.

First, the Federal Circuit panel considered whether “the sanctions order that was explicitly issued against Tesco [can] be considered a formal reprimand against the Attorneys so as to provide them with standing to pursue this appeal.” Id. at 13. Appeal without formal reprimand “would open the floodgates to appeals 'by any nonparty who feels aggrieved by some critical statement made by the court.'” Id. at 16 (citing Nisus Corp. v. Perma-Chink Sys., 497 F.3d 1316, 1320 (Fed. Cir. 2007)). Federal Circuit precedent “thus require[s] a formal sanction or reprimand to justify our jurisdiction over an appeal by an attorney from an order criticizing the attorney's conduct.” Id. Ballard and Luman argued that the Federal Circuit should consider the sua sponte district court order to be a formal reprimand “because the dismissal was predicated on the conduct of the Attorneys.” Id . The panel majority concluded that “[t]he intervening settlement, however, render[ed] that determination unnecessary to the resolution of this appeal.” Id.

The Federal Circuit panel next considered “the effect of the settlement by all parties on the redressability of the Attorneys' request for relief.” Id. at 13. The majority looked to similar cases in other circuits where “a change in circumstances ' remove[d] or moot[ed] the underlying judgment.” Id. at 17. Based on the reasoning underlying precedent in other circuits, the panel majority concluded that “[o]nce all parties entered into the settlement agreement, no party ' except the Attorneys for reputational reasons ' had any enduring interest in the underlying order.” Id. at 19. Thus, no interest by any party remained in the judgment, and “Courts of Appeals review judgments, not opinions.” Id. at 22. Accordingly, the Federal Circuit majority held that “there remain[ed] no on-going case or controversy,” and dismissed. Id. at 23.

In dissent, Judge Newman argued that the majority failed to consider the full factual context of the attorneys' appeal, while revisiting and rearticulating the record underlying the district court decision in a manner prejudicial to the interested third party appellant attorneys.

In IPR Appeal, Federal Circuit Reverses PTAB Determination of Nonobviousness

On Nov. 5, 2015, a Federal Circuit panel of Judges Newman, Dyk, and Taranto issued a unanimous opinion, authored by Judge Taranto, in Belden Inc. v. Berk-Tek LLC, Case No. 2014-1575, -1576. The panel held that the USPTO Patent Trial and Appeals Board (PTAB) properly invalidated claims 1'4 for obviousness, but improperly upheld claims 5'6 for obviousness, and therefore affirmed-in-part and reversed-in-part. The panel also affirmed that the PTAB's denial of Belden's motion to exclude Berk-Tek's expert declaration was proper.

In 2012, Berk-Tek filed for inter partes review of Belden's U.S. Patent No. 6,074,503 (the '503 patent), with six claims for methods of making communications cabling systems. Slip op. at 2. Claims 5-6 had been added upon ex parte reexamination in 2010. The PTAB invalidated claims 1'4 as obvious and upheld claims 5'6. During proceedings, Belden had unsuccessfully moved to exclude Berk-Tek's expert testimony regarding obviousness. Belden appealed 'the cancellation of claims 1'4 and the denial of its motion to exclude,' and 'Berk-Tek appeal[led] the upholding of claims 5 and 6.' Id. at 11.

With respect to claims 1 and 4, Belden argued that a particular Japanese prior art reference consider by the PTAB ' '[a] method of manufacturing plastic insulated cables' ' taught 'only the making of quads, which themselves are not cables but mere components of cables.' Id. at 12. However, the claims of the '503 patent do not exclude quads from the category of cables. Id. at 12-13. Therefore, the panel confirmed that the PTAB's finding of obviousness was supported by substantial evidence because the Japanese prior art reference consider by the PTAB ' '[a] method of manufacturing plastic insulated cables' ' would have motivated a person of ordinary skill in the art to align certain elements in the cable.

The validity of claims 2 and 3 turned on the obviousness of combining 'a third die with the method of' the same Japanese reference. Id. at 15. With respect to the obviousness of a 'variation of the prior art,' the PTAB had 'made the required full inquiry' in light of the U.S. Supreme Court decision in KSR Int'l Co. v. Teleflex Inc. , 550 U.S. 398, 417 (2007), and upheld the obviousness of those claims. Id.

In arguing for the obviousness of the remaining claims 5'6, Berk-Tek sought to combine the methods of the Japanese reference with a Canadian reference. The Federal Circuit panel found error in the PTAB's application of the law concerning 'motivation to combine.' Id. at 17. The PTAB reasoned that the Japanese reference 'show[ed] only conductors that are not individually insulated,' so its method did not apply to the individually insulated conductors disclosed in the Canadian reference and at issue in the '503 patent. Id. at 18. However, this reasoning 'violate[d] the principle that a reference must be considered for everything it teaches by way of technology and is not limited to the particular invention it is describing and attempting to protect.' Id. (emphases in original) (citations omitted). Therefore, the panel reversed the PTAB determination that 'Berk-Tek had not proven the obviousness of the methods of claims 5 and 6 of the '503 patent by a preponderance of the evidence.' Id. at 20.

In the second part of its opinion, the panel reviewed the PTAB denial of Belden's motion to exclude Berk-Tek's expert declaration, submitted with its Reply, for abuse of discretion. 37 C.F.R '42.23(b) states: 'A reply may only respond to arguments raised in the corresponding opposition or patent owner response.' Id. at 21. The PTAB found, and the Federal Circuit panel confirmed, that Berk-Tek's expert 'fairly respond[ed] only to arguments made' by Belden. Id. at 22. Further, the panel decided that the expert declaration 'was not necessary for the prima facie case of obviousness' put forth by Berk-Tek. Id. at 24. Finally, the panel addressed whether Belden's procedural rights were denied by the PTAB. The panel noted that in response to Berk-Tek's expert declaration, Belden had multiple options: it could have cross-examined, moved to exclude the declaration, 'dispute[d] the substance of the declaration at oral hearing,' moved to submit a surreply, or 'request[ed] that the [PTAB] waive or suspend a regulation that the patent owner believes impairs its opportunity to respond to the declaration.' Id. at 28. Therefore, Belden did not 'establish[] that it was denied its procedural rights,' and the panel affirmed the PTAB denial of Belden's motion to exclude. Id. at 25.'

Howard J. Shire is Editor-in-Chief of this newsletter and a Partner in the New York office of Kenyon & Kenyon LLP. Brent T. Hagen is a Law Clerk with the firm.