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Federal Circuit Review - November 2022

| Irfan LateefDaniel Kiang

November 2022 Federal Circuit Newsletter (Japanese)

November 2022 Federal Circuit Newsletter (Chinese)

Restrictive Definitions Incorporated by Reference Do Not Necessarily Control for Later Patents in the Same Family

In Finjan LLC v. Eset, LLC, Appeal No. 21-2093, the Federal Circuit held that specific definitions provided in an earlier application in a patent family incorporated by reference into a later patent do not restrict the later patent if that patent does not include the definition.

Patent owner Finjan, LLC, sued Eset, LLC for infringement. The district court held a Markman hearing to determine the definition of the term “downloadable” in the asserted patents. In the hearing, the district court relied on a definition of the term from a non-asserted patent in the same family incorporated by reference into the asserted patents. Based on this definition, the court construed the term to mean “a small executable or interpretable application program which is downloaded from a source computer and run on a destination computer.” With the narrow definition in place, Eset moved for summary judgment of invalidity based on indefiniteness. The court granted the motion, finding the asserted patents indefinite based on the word “small.” Finjan appealed. 

On appeal, the Federal Circuit reversed the district court’s claim construction.  The Federal Circuit explained that, though incorporation by reference does include the incorporated patent into the body of the host patent, the disclosure of the host patent controls how the incorporated patents are viewed. Here, the incorporated patents contained more and less restrictive definitions of the term “downloadable,” but the asserted patents used the term in its broader sense by listing examples of downloadables that are not small.  Thus, the Federal Circuit reversed the district court’s ruling adopting the more restrictive construction, vacated the district court’s grant of summary judgment, and remanded the case for further proceedings.

 

Failure to Vacate Adverse Standing Decision Upon Settlement Stops Subsequent Suits

In Uniloc USA, Inc. v. Motorola Mobility LLC, Appeal No. 21-1555, the Federal Circuit held that failure to vacate an adverse ruling regarding a lack of standing when settling a prior suit collaterally estopped the patentee in subsequent suits for lack of standing.

Uniloc sued Motorola in the U.S. District of Delaware for patent infringement.  The district court dismissed, holding that Uniloc lacked Article III standing because it had granted Fortress Credit Co. a license and right to sublicense the asserted patent, pursuant to a default under a revenue sharing agreement.  In a related case, Uniloc sued Blackboard Inc. for patent infringement of two other patents, both of which were subject to the same agreement between Uniloc and Fortress.  There, the district court dismissed for lack of standing, applying the Motorola decision as a matter of collateral estoppel.

On appeal, Motorola and Blackboard defended the district court’s decision by asserting that a decision in another Uniloc case against Apple established that Uniloc lacked standing as a matter of collateral estoppel.  In the Apple case, Uniloc asserted a patent that was subject to the same agreement with Fortress and the district court dismissed the Apple case for lack of standing, finding that: (1) Uniloc had granted Fortress a license and the right to sublicense; and (2) that Uniloc lacked exclusionary rights in the asserted patent, thereby depriving Uniloc of standing.  Uniloc appealed the Apple decision, but the parties reached a settlement agreement before the appeal was decided and the district court’s judgment was not vacated. 

Against this backdrop, the Federal Circuit affirmed the dismissal of the Motorola and Blackboard cases for lack of standing.  The Federal Circuit rejected Uniloc’s argument that Motorola waived the defense of collateral estoppel at the district court, indicating that waiting for the Apple appeal to conclude before raising the issue did not constitute waiver.  The Federal Circuit also rejected the argument that because the Apple case incorrectly found a lack of standing, such an incorrect decision should prevent the application of collateral estoppel.  Thus, the Federal Circuit concluded that the Apple decision was a valid and final prior judgment precluding relitigation of the standing issue even though granting a license generally does not deprive a patentee of Article III standing. 

 

Standing Cured by Revoking an “Irrevocable” License Prior to Commencing Suit

In Uniloc 2017 LLC v. Google LLC, Appeal No. 21-1498, the Federal Circuit held that  an “irrevocable” patent license could be terminated by mutual agreement and such a license was not a right that by its nature would fall within a survival provision of a termination agreement.

Uniloc sued Google for patent infringement and Google moved to dismiss for lack of standing under the theory that Uniloc lacked standing because it had granted Fortress Credit Co. a license and right to sublicense the asserted patents pursuant to a default provision in a revenue sharing agreement.  Uniloc argued that even if it had granted such a license to Fortress, any license was eliminated by a termination agreement executed between Uniloc and Fortress prior to the suit against Google.  The district court granted the motion to dismiss, finding that an “irrevocable” license had been granted, that it survived the termination agreement, and that it deprived Uniloc of standing.

The Federal Circuit indicated that (1) the sole issue was whether the termination agreement eliminated any license Fortress had and (2) if this license was eliminated, then the parties had agreed that Uniloc had standing in this case.  Turning to the language of the termination agreement, the Federal Circuit noted that the agreement appeared to terminate Fortress’s license by stating that the license and any rights “shall terminate.”  The Federal Circuit then explained that the district court misunderstood the meaning of “irrevocable” in the license agreement.  The term meant that the license was “irrevocable” by the unilateral actions of the licensor, but that this did not suggest that the license was “irrevocable” by mutual agreement as occurred in the termination agreement.  The Federal Circuit also rejected Google’s reliance on a survival provision in the termination agreement, distinguishing the Fortress license from other rights that by their nature make them survive termination.  Thus, the Federal Circuit reversed and remanded to the district court. 

 

IPR Disclaimers May Not Be Used to Shapeshift Claims

 In Cupp Computing as v. Trend Micro Inc., Appeal No. 20-2262, the Federal Circuit held that patent Owners cannot attempt to narrow claims by disclaiming claim scope during an IPR proceeding.

Trend Micro filed IPR petitions challenging three CUPP patents related to addressing malicious attacks aimed at mobile devices. During the IPR proceedings, CUPP disclaimed embodiments that did not include a “security system processor” that was remote from a mobile device. CUPP then argued that Trend Micro’s prior art reference did not disclose a “security system processor.”  The PTAB rejected CUPP’s attempt to narrow the claims through an IPR disclaimer and held that the challenged claims were obvious. CUPP appealed.

On appeal, the Federal Circuit affirmed the Board’s decision to ignore CUPP’s disavowal. The Federal Circuit explained that allowing a patentee to tailor challenged claims through disclaimer during IPR proceedings would “substantially undermine the IPR process.” The court noted that Congress designed IPR proceedings to allow the Patent Office to “revisit and revise earlier patent grants.” Allowing patentees to disclaim subject matter would instead force the Patent Office to “focus on claims the patentee now wishes it had secured.” Furthermore, the Federal Circuit explained that Congress created a specialized process for patentees to amend their claims in an IPR, and that the amendment process includes safeguards that would be circumvented with a disclaimer. As an example, the Court explained that the amendment process gives “accused infringers ‘intervening rights’ protection for substantively amended claims, ensuring that such claims have only prospective effect.” Additionally, since IPR petitioners can only challenge claims under § 102 or § 103, accepting disclaimers would allow patentees to modify their claims free of scrutiny for compliance with § 101 requirements. Thus, the Federal Circuit held that disclaimers in IPR proceedings “are not binding in the proceeding in which they are made.” However, the Court emphasized that a disclaimer by the patentee during an IPR is binding in later proceedings.