Federal Circuit Review - July 2018

Determining Whether a Claim Element or Combination of Elements Would Have Been Well-Understood, Routine, and Conventional Is a Question of Fact

In Aatrix Software, Inc. v. Green Shades Software, Inc., Appeal No. 2017-1452, and Berkheimer v. HP Inc., Appeal No. 2017-1452, the Federal Circuit denied petitions for rehearing en banc, concluding that Berkheimer and Aatrix are correct in concluding that whether a claim element or combination would have been well-understood, routine, and conventional is a question of fact, falling under step two of the Alice framework.

In two separate orders, the Federal Circuit denied petitions for rehearing en banc, declining to revisit its decisions in Aatrix Software and Berkheimer. Judge Moore, joined by four other judges, stated that “Berkheimer and Aatrix stand for the unremarkable proposition that whether a claim element or combination of elements would have been well-understood, routine, and conventional to a skilled artisan in the relevant field at a particular point in time is a question of fact.” This factual inquiry falls under step two of the Alice framework.

Judge Lourie, in a concurrence joined by Judge Newman, stated that § 101 does not need a two-step analysis to determine whether an idea is abstract and indicated that “the law needs clarification by higher authority, perhaps by Congress.”

Judge Reyna dissented from both denials. According to Judge Reyna, under Federal Circuit precedent, the § 101 inquiry is a question of law and the Aatrix and Berkheimer decisions are contrary to that precedent.

PTAB Must Consider Numerous Factors When Determining Whether Meeting Materials Are “Publicly-Accessible” Prior Art Publications

In Medtronic, Inc. v. Barry, Appeal Nos. 2017-1169, 2017-1170, in determining whether materials distributed at meetings or conferences are reasonably accessible to the public, the Federal Circuit held that the Board must consider numerous factors, not just the exclusive nature and expertise of a group.

This appeal arose from the Board’s final written decisions upholding the validity of all challenged claims in the two patents. The Board held that certain “Video and Slides” that were only distributed in meetings and conferences for a select group of experts in spinal deformity were not reasonably accessible to the public. The Board concluded the Video and Slides were not prior art and declined to consider grounds relating to the Video and Slides.

The Federal Circuit vacated the Board’s determination that the “Video and Slides” did not qualify as prior art. The relative expertise of the recipients and the exclusive nature of the group were not dispositive. A proper analysis required further consideration of: the size and nature of the meetings and whether they are open to people interested in the subject matter of the material disclosed; whether there is an expectation of confidentiality between the distributor and the recipients of the materials; and whether any policies or practices associated with a particular group meeting give rise to an expectation that disclosures would remain confidential despite any formal, legal obligations of confidentiality. The Federal Circuit remanded to the Board to consider whether the “Video and Slides” are publicly-accessible publications.

IPR Petitioner Bears the Burden of Proving that Proposed Amended Claims Are Unpatentable

In Sirona Dental Systems GmbH v. Institut Straumann AG, Appeal Nos. 2017-1341, 2017-1403, the Federal Circuit held that the Patent Trial and Appeal Board erred in an IPR by placing the burden on the patent owner to prove that proposed substitute claims were patentable.

Institut Straumann AG and Dental Wings Inc. (“Petitioners”) petitioned for inter partes review of a patent owned by Sirona Dental Systems. Petitioners asserted that Claims 1–4 and 9–10 were anticipated, and that Claims 1–10 were obvious in view of a German reference. The Board rejected Petitioner’s anticipation arguments, but found that Claims 1–8 were obvious. The Board denied Sirona’s contingent motion to amend because Sirona failed to affirmatively demonstrate that the proposed substitute claims were patentable. Sirona appealed to the Federal Circuit.

The Federal Circuit affirmed the Board’s findings ​about obviousness and anticipation, but vacated the Board’s denial of Sirona’s contingent motion to amend because the Board improperly placed the burden of establishing patentability on Sirona. Rather, in view of Aqua Products, Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017)(en banc), the burden of persuasion properly rests with Petitioners to establish that the proposed substitute claims are not patentable. The Federal Circuit remanded the case for reconsideration, leaving the Board to determine whether it can consider combinations of references not argued by a Petitioner’s opposition to a motion to amend.

A Patentee May Recover Foreign Lost Profits Where the Infringer Exported a Component of a Patented Invention

In WesternGeco LLC V. ION Geophysical Corp., No. 16-1011, the Supreme Court held that a patentee may recover foreign lost profits where the infringer violated § 271(f)(2) by exporting from the United States a component of a patented invention.

A jury found ION Geophysical liable for infringement under § 271(f)(2), and awarded WesternGeco lost profits for lost foreign sales under § 284. On appeal, ION Geophysical argued this decision violated the general rule that federal statutes only apply within the territorial jurisdiction of the United States. The Supreme Court addressed the question of extraterritoriality by analyzing whether the conduct relevant to the statute’s “focus” occurred in the United States. The focus of § 284 is to award damages adequate to compensate for infringement. The infringement statute, § 271(f)(2), focuses on domestic conduct, namely supplying components in or from the United States. The Supreme court reasoned that exporting components from the United States is within the focus of § 271(f)(2), and that by allowing WesternGeco to recover for lost foreign sales, the damages were merely the means by which the statute achieves its end of remedying a domestic infringement.

In dissent, Gorsuch expressed concern that permitting damages for lost foreign sales under U.S. patent law would allow other countries to use their own patent laws to exert control over the U.S. economy. Because the act of patent infringement must be domestic, he argued a patent owner’s recovery should likewise be limited to the infringer’s domestic activities.