Silent Reference, Loud Expert: PTAB May Rely on Expert Testimony to Show How Reference Discloses a Missing Limitation
In Netlist, Inc., v. Micron Technology, Inc., Appeal No. 24-1707, the Federal Circuit held that even if a prior art reference is purportedly silent as to a limitation, the PTAB may properly find that the reference discloses the limitation if supported by expert testimony explaining how the reference teaches the limitation.
Netlist appealed a Patent Trial and Appeal Board decision holding all challenged claims of a patent directed to computer memory modules unpatentable as obvious. Netlist disputed whether the prior art taught two claim limitations related to the enabling and disabling of a data path through a buffer and whether that data path is enabled at a certain time. The Board found that the prior art disclosed those limitations and concluded that the challenged claims were obvious.
The Federal Circuit affirmed. The court held that substantial evidence supported the Board’s finding that the Ellsberry reference taught enabling and disabling data paths and on the claimed timing. In reaching that conclusion, the Board properly relied on the reference’s disclosures, expert testimony, and applicable industry standards to determine how a person of ordinary skill in the art would have understood the reference. Netlist further argued that even if the Board’s decision was supported by substantial evidence, the Board erred because it relied on a reference which was not part of the petition’s stated grounds. Netlist argued that the Board impermissibly expanded the role of that reference from merely evidencing the general skill in the art to that of a prior art reference used for obviousness. However, the court concluded that any alleged error was harmless because the Board independently found the limitation disclosed by Ellsberry alone.
Netlist also argued that the Board erred in finding Ellsberry taught enabling data paths because Ellsberry was silent as to whether a driver component was even capable of enabling those data paths. The court disagreed and found the Board’s decision was supported by substantial evidence because the Board based its conclusion on expert testimony explaining that the drivers enabled the data paths. The court additionally noted that Netlist ignored the Board’s alternate determination that Ellsberry in combination with another reference taught enabling data paths. Because the Board’s reasoning was adequately explained and supported by substantial evidence, the Federal Circuit affirmed.
A Private Sale Does Not Constitute a Public Disclosure Under § 102(b)(1)(B)
In NCS Multistage Inc., NCS Multistage, LLC v. Nine Energy Service, Inc., Appeal No. 25-1000, the Federal Circuit held that a private sale does not constitute a public disclosure under § 102(b)(1)(B).
NCS Multistage (“NCS”), an oilfield services provider, accused Nine Energy Service’s (“Nine”) BreakThru Casing Flotation Device of infringing claims of NCS’s patent related to a float tool used in the oil and gas industry to assist with inserting a long pipe into a wellbore. The jury returned a verdict in favor of NCS, finding that Nine had directly and indirectly infringed the asserted claims, that the claims were not invalid, and that NCS was entitled to damages. The district court entered final judgment and Nine appealed.
The Federal Circuit vacated the district court’s judgment. The court rejected the district court’s constructions of “internal diameter” and “casing string.” The term “internal diameter” was improperly construed because a claim term is presumed to carry the same meaning throughout a claim unless the specification or prosecution history clearly establishes otherwise, and here the intrinsic evidence was not clear that the term should have different meanings in different portions of the claims. The court also held that the lower court improperly limited the term “casing string” to certain sizes, as the specification contained no clear size restriction.
The Federal Circuit also held that NCS’s 2012 sale of its Airlock device to a third party did not qualify as a public disclosure under § 102(b)(1)(B) that would prevent subsequent third-party sales from qualifying as prior art. NCS’s sale was not a public disclosure because NCS privately sold the device to one customer in a sealed black tube that had to be cut open, the technical manual was labeled confidential, and there was no evidence that the public could discern the claimed features. Thus, the competitor’s later sale of its TDP-PO tool and use of that device was prior art.
Finally, the Federal Circuit upheld the district court’s exclusion of testimony and documents concerning the other sales of the TDP-PO tool that were disclosed two days before the close of fact discovery, as Nine had long known the relevance of these documents and their late disclosure deprived NCS of a meaningful opportunity to address them.
The Federal Circuit vacated the district court’s judgment of infringement, no invalidity, and damages, and remanded for a new trial.
Preambles Do Not Provide a “Universal” Escape from Adverse Claim Construction
In Moskowitz Family LLC v. Globus Medical, Inc., Appeal No. 24-1696, The Federal Circuit reaffirmed that a preamble that provides the antecedent basis for the body of a patent claim can limit the invention.
Moskowitz Family LLC sued Globus Medical, Inc., alleging infringement of patents covering implant systems and tools for spinal fusion surgery. The district court construed the term “universal” to mean “designed to be inserted between [vertebrae / vertebral bodies] in any region of the spine, i.e., cervical, thoracic, or lumbar, using any approach, e.g., posterior, anterior, or lateral.” Moskowitz agreed that the accused products could not infringe any claim that included the “universal” limitation as construed, but argued that the recitation of “universal” only in the preambles was not limiting. Globus moved for summary judgment of noninfringement. The court held the preamble limiting and granted the motion. Moskowitz appealed and argued that the district court erred by holding that the preambles limited the claims and by construing “universal” to mean “one-size-fits-all”.
The Federal Circuit affirmed. The Federal Circuit explained the general rule is that “a preamble limits the invention if it recites essential structure or steps, or if it is necessary to give life, meaning, and vitality to the claim.” The Federal Circuit analyzed the preambles, which recited a “universal” structure with specific features. The court concluded that the lengthy and detailed preambles were necessary to the meaning of the claims because terms in the body of the claim referred back to the preambles for their antecedent basis. The Federal Circuit further explained that the preambles provided significant context about what the invention must do and include. The Federal Circuit then indicated that, without the claims’ respective preambles, the claims would not speak to the essential “universal” characteristic highlighted in the specification as an important part of the invention. After holding the preambles were limiting, the Federal Circuit affirmed the district court’s construction of “universal” as properly reflecting the specification’s disclosure of a tool used in all three spinal regions and that can be modified for use in multiple surgical approaches.
Transfer of All Substantial Rights Allows a Licensee to Stand in the Patentee’s Shoes
In TexasLDPC Inc. v. Broadcom Inc., Appeal No. 25-1074, the Federal Circuit held that a license agreement transferring “all substantial rights” is tantamount to an assignment, permitting the licensee to sue patent infringers in its own name under 35 U.S.C. § 281 and supports a finding that the patent owner is not a necessary party under Fed. R. Civ. P. 19.
TexasLDPC sued Broadcom, LSI, and Avago for patent infringement without joining the patent owner, Texas A&M University. After years of litigation, the district court dismissed the action on two grounds. First, under Rule 12(b)(1), the district court dismissed for lack of subject matter jurisdiction, holding that TexasLDPC’s license agreement automatically terminated when TexasLDPC ceased business operations and shifted to enforcement-only activity. Second, the district court dismissed under Rule 12(b)(7), for failure to join Texas A&M as a necessary party because TexasLDPC lacked “all substantial rights,” and under Rule 19(a)(1)(A), because complete relief could not be accorded without licensing information controlled by Texas A&M. Because sovereign immunity made joinder infeasible, the district court dismissed the case rather than proceed in Texas A&M’s absence.
The Federal Circuit reversed. It first held that the license agreement did not terminate because it unambiguously contemplated enforcement as one of TexasLDPC’s business operations. The Federal Circuit then held that the license agreement transferred “all substantial rights” and was tantamount to an assignment because TexasLDPC held exclusive rights to make, use and sell licensed products, together with the “essentially unfettered” right to enforce the patents and collect infringement damages. Texas A&M’s retained rights to practice patents “for research and education purposes” and to sue a prior non-exclusive licensee were insufficient to preclude TexasLDPC from suing alone.
That determination also resolved the Rule 19(a)(1)(B) inquiry. Texas A&M was not a necessary party because its absence neither impaired its ability to protect its interests nor exposed Defendants to multiple or inconsistent obligations. Separately addressing Rule 19(a)(1)(A), the Federal Circuit held that Rule 19 “is not a discovery tool” and the alleged need to obtain evidence from an absent party does not make that party “necessary.” Because meaningful relief could be provided to the existing parties, the district court could accord complete relief despite Texas A&M’s possession of additional licensing information.
Courts Must Address Pre-Suit Invalidity Red Flags When Denying Sanctions and Fees
In Epic Tech, LLC v. Pen-Tech Associates, Inc., Appeal No. 25-1624, the Federal Cicuit held that a district court must adequately explain its reasoning for denying motions for sanctions and attorneys’ fees to permit meaningful appellate review.
Epic Tech, LLC (“Epic Tech”) sued Pen-Tech Associates, Inc. (“Pen-Tech”) for infringement of its software patent. Pen-Tech successfully moved for summary judgment of invalidity under § 101 and then sought Rule 11 sanctions and attorneys’ fees and costs under 35 U.S.C. § 285, 28 U.S.C. § 1927, and the court’s inherent power. In support, Pen-Tech argued that Epic Tech had pre-suit notice of potential invalidity based on the Supreme Court’s Alice decision, the PTO’s post-Alice § 101 rejections of patentably indistinct claims in related applications, and a prior district court decision invalidating claims of a related patent under § 101. The district court denied the motions, and Pen-Tech appealed.
Applying Eleventh Circuit law, the Federal Circuit explained that “[m]eaningful appellate review of a court’s order denying a Rule 11 sanctions motion is possible only if the court provides adequate explanation.” The panel reasoned that the district court needed to address why Alice, the PTO rejections, and the prior invalidity ruling were insufficient to place Epic Tech on notice of potential invalidity. Further, because those pre-suit indicators of invalidity formed the basis of the Rule 11 motion, the district court’s reliance on Epic Tech’s and its counsel’s pre-suit infringement investigation was misplaced. Therefore, the panel concluded that it could not conduct meaningful appellate review of the district court’s Rule 11 ruling. Nor could it meaningfully review the district court’s § 285 ruling under Federal Circuit law or its § 1927 ruling under Eleventh Circuit law.
Accordingly, the Federal Circuit vacated the district court’s denial of Pen-Tech’s Rule 11, § 285, and § 1927 motions and remanded for further proceedings.
Jeremiah Helm and Sean Murray Examine the Wyeth Decision and the Enablement Requirement in Law360
In the latest column in their monthly Law360 series on recent noteworthy Federal Circuit decisions, Knobbe Martens partners Jeremiah Helm and Sean Murray explore the court’s opinion in Wyeth LLC. V. AstraZeneca Pharmaceuticals LP, a patent infringement dispute focused on methods of treatment of non-small cell lung cancer.
The case turned on the enablement requirement, which dictates that “a patent’s disclosure must enable a person of ordinary skill in the art to make and use the claimed invention without undue experimentation,” explain the authors. In this instance, Wyeth only included in vitro laboratory testing results for unit dosage amounts of its drug in its patent disclosure, which the court ruled would require undue experimentation to determine the correct dosage amount in human patients.
Helm and Murray discuss how Wyeth illustrates the tension between enablement positions in patent disclosures and obviousness positions, which aim to distinguish a patent’s claim as nonobvious over close prior art. “A nonobviousness argument that downplays a skilled artisan’s ability to move from what was known to what has been invented naturally conflicts with a pro-enablement argument that relies on the ability of a skilled artisan to use routine experimentation to implement a claimed invention based on a cursory disclosure,” they write.
The authors maintain that Wyeth is “likely to lead to more enablement challenges” and “may also cause patentees to weigh their own patent’s disclosure carefully when devising nonobviousness positions, particularly whether to emphasize unpredictability and downplay a skilled artisan’s ability to experiment.”
Read the full article, “Meeting The Enablement Requirement,” in Law360.
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