IP News

Micron petitioned the Federal Circuit for a writ of mandamus setting aside the district court's denial of its motion. Under Rule 12(h)(1)(A), a venue defense under Rule 12(b)(3) is waived if it is omitted from a motion in the circumstances described in Rule 12(g)(2). Rule 12(g)(2), however, is limited to situations involving “a defense or objection that was available to the party but omitted from its earlier motion.” Fed. R. Civ. P. 12(g)(2) (emphasis added). The Federal Circuit concluded as a matter of law that the venue defense was not available to Micron in August 2016, because it would have been improper for the court to dismiss or transfer for lack of venue before TC Heartland was decided. It explained that TC Heartland changed the controlling law because before the case was decided, V.E. Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1575 (Fed. Cir. 1990) was precedent that a district court would have been bound to follow. V.E. Holding Corp. held that 28 U.S.C. §1391(c)'s definition of “resides,” a definition which would encompass Micron in Massachusetts, applied to 28 U.S.C. §1400(b); however, TC Heartland expressly rejected this holding.

The Federal Circuit, however, refused to order dismissal or transfer, and instead remanded for proceedings which were not limited to waiver considerations under Rule 12(h)(1). It explained that although waiver under Rule 12(h)(1) does not apply, a district court might still find there was forfeiture of a venue defense under the framework set out in Dietz v. Bouldin, Inc., 136 S. Ct. 1885, 1891 (2016). This framework recognizes that district courts have inherent powers to manage their own cases, provided the power is reasonable, and is not contrary to any express grant or limitation contained in a rule or statute. Accordingly, the Federal Circuit held that even though there was no waiver under 12(g)(2) and 12(h)(1)(A), the district court still has the authority to find forfeiture of a venue objection. In remanding to the district court, the Federal Circuit highlighted that apart from the Federal Rules, Congress has provided express authority to consider the timeliness and adequacy of a venue objection under 28 U.S.C. §1406(b). It left open whether considerations other than timeliness might apply, and whether Federal Circuit law or regional law governs forfeiture standards.

Federal Circuit Reverses Award of Lost Profits Because Product Sold to a Single Customer Was an Available Non- Infringing Alternative

On Nov. 21, 2017, a Federal Circuit panel of Judges Dyk, Moore, and Taranto issued a unanimous decision, authored by Judge Dyk, in Presidio Components v. Am. Tech. Ceramics, Case Nos. 2016-2607, 2016-2650. The panel reversed a decision awarding lost profits and an injunction by the United States District Court for the Southern District of California, and remanded for determination of a reasonable royalty and reconsideration of the injunction. The panel also affirmed the district court's opinion regarding the affirmative defense of absolute intervening rights, its refusal to award enhanced damages, and its rejection of the defendant's indefiniteness challenge.

Presidio Components, Inc. (Presidio) sued American Technical Ceramics Corp. (ATC) for infringement of U.S. Patent No. 6,816,356, directed to a multilayer capacitor design. The Federal Circuit agreed that the patent was not indefinite even though the specification did not describe how to apply an insertion loss method for determining the portion of the overall capacitance that is attributable to the fringe-effect. It explained that a patent need not explicitly include information that is already well known in the art, and Presidio's expert testimony established that a person skilled in the art would understand the general approach for the insertion loss method.

The Federal Circuit agreed that there was a substantive change in claim scope after reexamination, because under the original claims theoretical calculations were sufficient to satisfy the claim limitations, while under the amendment claims, measurements were necessary. Accordingly, it found that the district court properly limited damages under the affirmative defense of absolute intervening rights to the period following issuance of the reexamination certificate under 35 U.S.C. §§252, 307(b).

Reviewing the district court's award of lost profits, the Federal Circuit explained that the correct inquiry for an acceptable, non-infringing alternative is whether a non-infringing alternative would be acceptable compared to the patent owner's product, not whether it is a substitute for the infringing product. The district court should have compared ATC's non-infringing 560L capacitor with Presidio's capacitor in a hypothetical market without ATC's infringing 550 capacitor. Instead, the district court incorrectly relied on evidence of sales of ATC's non-infringing 560L capacitor in competition with Presidio's capacitor. Furthermore, the fact that ATC's non-infringing 560L capacitor was not widely advertised and was only sold to a single customer does not show that it was unavailable.

Reviewing the district court's permanent injunction for an abuse of discretion, the Federal Circuit explained that in light of its reversal of lost profits, the injunction needed to be vacated and reconsidered because the district court based its conclusion as to irreparable injury on the jury's lost profit award.

*****
Howard J. Shire is Editor-in-Chief of this newsletter and a Partner in the New York office of Andrews Kurth Kenyon. He can be reached at [email protected]. Michael Block is an associate with the firm. He can be reached at [email protected].