Federal Circuit Review - July 2022
July 2022 Federal Circuit Newsletter (Japanese)
July 2022 Federal Circuit Newsletter (Chinese)
Unforced Error: An IPR Challenger Cannot Rely on an Error That a POSITA Would Have Corrected
In LG Electronics Inc. v. Immervision Inc., Appeal No. 21-2037, the Federal Circuit held that, where a reference contains an “obvious” error in a disclosure, even one not immediately apparent from the face of the disclosure, the erroneous statement cannot support a finding of obviousness.
LG Electronics (“LG”) filed an IPR against two of Immervision’s patents. LG argued that a reference contained an embodiment of a panoramic objective lens having image point distribution functions claimed in the challenged claims. When attempting to recreate the embodiment, Immervisions’s expert was unable to create a lens that matched the embodiment. He later determined that a transcription error occurred between the priority application and the published patent such that the aspherical coefficients in the table relied upon by LG’s expert were meant for a different embodiment. The Board determined that this transcription error was the type of obvious error that a POSITA would have recognized and corrected. Because, when the correct coefficients were used, the embodiment did not satisfy the language of the challenged claims, the Board found LG had not met its burden of proving obviousness.
On appeal, the Federal Circuit considered whether substantial evidence supported the Board’s fact finding that the error would have been apparent to a POSITA, such that the person would have corrected the error or disregarded the disclosure. The Federal Circuit found that the aspherical coefficients’ (1) differing values between the patent and the priority application, (2) differing values between the embodiment table and the table encompassing embodiments of the entire lens system, and (3) identical values for two substantially different embodiments within the relied-upon reference – all would have indicated to a POSITA that the patent contained an obvious error. The Federal Circuit found substantial evidence for the Board’s determination that, with the correct information substituted for the erroneous information, the prior art reference did not disclose the claimed image distribution. The Federal Circuit found unpersuasive LG’s arguments that (1) the error would have taken too long to find by a POSITA, and (2) the transcription error in this case differed from the typographical errors in previous cases. The court explained that the obviousness of an error is not determined merely by the time required to discover the error or the nature of the error.
Judge Newman dissented, arguing that the error would not have been obvious to a POSITA given the effort expended by Immervision’s expert to find it, the fact that it was not detected at any point during examination or in the 20 years since publication, and the fact that the error was not merely typographical in nature.
Expert Testimony That Contradicted the Patent Specification Failed to Create a Genuine Issue of Fact
In Caredx, Inc. v. Natera, Inc., Appeal No. 22-1027, the Federal Circuit held that expert testimony that steps of challenged patent claims were unconventional failed to preclude summary judgment of ineligibility where the specification admitted the steps were conventional.
CareDx, Inc. (“CareDx”) sued Natera, Inc. and Eurofins Viracor, Inc. (collectively, “Defendants”) alleging infringement of claims directed at methods for detecting organ-transplant rejection by measuring levels of the organ donor’s cell-free DNA in the recipient’s blood. Defendants moved for summary judgment, arguing that the asserted claims were patent ineligible under 35 U.S.C. § 101 because they were directed to the detection of natural phenomena using only conventional techniques. In support of their motion, Defendants relied on portions of the specification that admitted that each step of the claimed methods were “well known” or “known in the art.” In its opposition, CareDx relied on expert testimony that the steps were not conventional. The district court granted summary judgment, finding that CareDx had failed to create a genuine issue of fact. CareDx appealed.
The Federal Circuit explained that under the Alice/Mayo test, a claim is ineligible if it is directed to a natural law together with conventional steps to detect or quantify the manifestation of that law. The Federal Circuit held that the specification’s numerous admissions that each step of the claimed methods was “well known” or “known in the art” served as intrinsic evidence of ineligibility. CareDx could not rely on extrinsic evidence that plainly contradicted the intrinsic record to create a genuine issue of fact. The Federal Circuit therefore affirmed the district court’s judgment.
Motive Matters – Forum Shopping Can Lead to Attorneys’ Fees
In Realtime Adaptive Streaming LLC v. Netflix Inc., Appeal No. 21-1484, the Federal Circuit held that courts may use their inherent equitable powers to award attorneys’ fees for bad faith conduct.
Realtime Adaptive Streaming (Realtime) filed suit against Netflix in the District of Delaware alleging infringement of six patents. While the action was pending, Netflix moved to dismiss the Delaware action, arguing that several of the patents were ineligible under Section 101. Netflix also filed IPRs challenging the patentability of the patents. After the Patent Office instituted IPR proceedings and a Delaware magistrate judge recommended that several patents be found ineligible, but before the district court ruled on the recommendation, Realtime voluntarily dismissed the suit.
Realtime re-asserted the same patents in the Central District of California, despite having previously argued in Delaware that litigating in California would be an unfair burden. Netflix moved for attorneys’ fees and to transfer the actions back to Delaware. Prior to any decision, Realtime voluntarily dismissed the case. The district court awarded fees for the California actions under Section 285 and, in the alternative, under its inherent equitable powers, finding that Realtime had engaged in impermissible forum shopping.
Applying Ninth Circuit precedent, the Federal Circuit held that the California district court did not abuse its discretion in awarding fees under its inherent equitable powers. The Federal Circuit noted that, while Rule 41 allows a plaintiff to voluntarily dismiss an action and refile in another forum, Realtime’s conduct was blatant gamesmanship to avoid a potentially adverse ruling in Delaware. The Federal Circuit also upheld the district court’s denial of fees for the IPR proceedings and the Delaware action, finding no abuse of discretion in the court’s determination that the Delaware action was not clearly untenable when Realtime filed that action and that the IPR institutions alone were not enough to apprise Realtime of the futility of its litigation efforts.
