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Fish Federal Circuit Summary Service: Issue #304

December 19, 2007

Newsletters

Fish Federal Circuit Summary Service: Issue #304

December 19, 2007

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Joint Infringement Requires Control By Defendant of the Other Parties That Perform Part of the Invention
BMC Resources v. Paymentech L.P.
Date:9/20/2007
Panel: Rader, Gajarsa, Prost
Author:Rader
District court:N.D. Tex
Trial judge: Lynn
Summary: BMC Resources, Inc. (BMC) appeals the district court’s decision on summary judgment that Paymentech, L.P. does not infringe asserted claims from two patents owned by BMC. The court determined that Paymentech had not infringed the claims because it performed some but not all of the steps of the asserted method claims. Because the record contains no basis to hold Paymentech vicariously responsible for the actions of the unrelated parties who carried out the other steps, this court affirms the finding of non-infringement.

KEY WORDS: JOINT INFRINGEMENT

Patentee Improperly Enjoined From Notifying Defendant’s Customers of Infringement
GP Indus., Inc. v. Eran Indus., Inc.,
Date:9/20/2007
Panel: Newman, Lourie, and Proust
Author: Lourie
District court:D. Neb
Trial judge: Bataillon
Summary: Federal Circuit reverses preliminary injunction that prevented Eran from contacting GP’s current and future customers regarding Eran’s patents and GP’s accused infringement. (GP was formed by employees terminated from Eran.)
The letters that Eran sent were very strong, and suggested that distributors and contractors could be named in patent, mail fraud, interstate transportation of stolen property, and RICO suits. The district court had reasoned that there was no evidence of an investigation before the letters were sent, the timing of the letters suggested retaliation, and that it was peculiar that Eran had never asserted its patent against makers of similar products (rain gutter covers). The Fed Cir found that the district court abused its discretion because of the high federal protection for giving notice of legal rights (see Mikohn Gaming), and the fact that “bad faith” can be established only if a claim was objective baseless (see Globetrotter Software). Thus, Eran’s motives and level of investigation were irrelevant if its ultimate claims had some merit, and the district court erred in not applying the proper standard (the district court only covered “subjective considerations and unconvincing objective factors”).
Query: If the district court considered objective factors, wasn’t the district court at least implicitly applying the right standard? In other words, would it have been more proper for the Fed Cir to assume the district court applied the right legal standard, and then to have explained by the objective factors on which the court relied were “unconvincing”?

KEY WORDS:PRE, CEASE AND DESIST

Claims Directed Wholly to Mental Steps Are Invalid Under Section 101
In re Comiskey
Date:9/20/2007
Panel:Michel, Dyk, Prost
Author: Dyk
District court: BPAI.
Trial judge:
Summary:Federal Circuit affirms rejection of claimed methods of carrying out arbitration over documents like wills, comprising the steps of connecting a document to its author, adding arbitration language to the document, permitting a request for arbitration, conducting arbitration, supporting the arbitration, and reaching a decision. After determining that Chenery did not block the Section 101 issue that the Board had not reached, because it was a purely legal issue, the Fed Cir provided a long history of patentable subject matter law, and noted that a mental process, to be part of a valid claim, must (1) have a practical application and (2) be tied to some other statutory class of subject matter, such as by being embodied in, operating on, transforming, or otherwise involving a machine, manufacture, or composition of matter. For example, the Diehr Court, according to the majority, found a process reciting an algorithm patentable if it: “(1) is tied to a machine or (2) creates or involves a composition of matter or manufacture.” Applied to the facts, the method claims were not tied to a machine and did not describe a process of manufacture or alter a composition of matter (like in Benson and Flook). Other claims that required the use of a computer passed Section 101, so the Fed Cir remanded for the PTO to consider whether they were obvious or not. Oddly, the Fed Cir suggested that obviousness should be measured against the process steps with computer limitations taken out — i.e., that the Section 103 “prior art” was supplied by Section 101, and not Section 102. That’s certainly a novel and non-obvious legal analysis.

KEY WORDS: CHENERY, SECTION 101, PATENTABLE SUBJECT MATTER, MENTAL STEPS

Claims To a Transitory Digital Signal Invalid Under Section 101
In re Nuijten
Date: 9/20/2007
Panel: Gajarsa, Linn (concur-in-part, dissent-in-part), Moore
Author: Gajarsa
District court: BPAI
Trial judge:Linn
Summary: Federal Circuit affirms rejection of claims to an audio or video signal that is encoded in a manner that counteracts deleterious effects of adding a digital watermark to the file that the signal represents. The Federal Circuit first looked to claim construction, noting that even if the claims inherently required a physical carrier for the signal, they were wide open in allowing any sort of carrier (e.g., a wire, a wave, etc.). As to Section 101, although State Street said it was not important to identify a particular category in 101 for an invention, State Street did not wipe out the requirement that an invention fit into one of the categories. Nuijten was also wrong to read “process” as involving something more than a step-by-step thing, simply because Section 100 defines “process” as “process, art or method”; that is because “art” simply means “process or method” in that section. With that, the signal was clearly not a process. The transitory signal was also not a “machine” because it was not “made of ‘parts’ or ‘devices’ in any mechanical sense.” As for “manufacture,” it is not enough that something be man-made or artificial; rather, an “article” of manufacture must also be a tangible article or commodity, and a transient electric or electromagnetic transmission does not fit that requirement even with wave-particle duality: “energy embodying the claimed signal is fleeting and is devoid of any semblance of permanence during transmission.” (The court distinguished storing the results of a signal, which would involve a (perhaps) patentable storage medium. (see n.4)). As for “composition of matter,” Nuijten did not even claim his signal met this requirement, and the Fed Cir noted that the signal was not a “‘chemical union,’ nor a gas, fluid, powder, or solid.”

In a lengthy dissent, Judge Linn agreed that a signal refers to something with a physical form, but raised concern that the majority’s new line-drawing is best left to Congress and would lead to more confusion. He felt that “article” and “manufacture” should receive a broader definition than the majority gave them (even though he and the majority were both looking at the same definition, from the dictionary the Supreme Court used in Diamond v. Chakrabarty; he did not think resort to a dictionary definition was proper anyway, and at a minimum believed an 18th century dictionary (which he obtained from Google Books) should be used)). He also did not think the claims fell into any exception for patentability.

KEY WORDS: SECTION 101, PATENTABLE SUBJECT MATTER

District Court Claim Construction Was Not Preclusive Against PTO in Re-Exam
In re Trans Texas Holdings Corp.
Date: 8/22/2007
Panel: Michel, Mayer, Dyk
Author: Dyk
District court: W.D. Tex
Trial judge:
Summary: Federal Circuit affirms rejection of claims to an investment vehicle having returns that are “responsive to the rate of inflation.” The Fed Cir first refused to give preclusive effect to a district court claim construction that occurred before the present re-exam was filed, because the PTO was not a party to that suit. Cf. In re Freeman. On the merits, the relevant phrase could not be limited to require immediate changes every time inflation changes, even if every example in the specification showed immediate changes, especially under the broadest reasonable construction, and in light of a relatively broad definition in the written description and in relevant dictionaries (citing Phillips v. AWH for dictionary use). On obviousness, the applicant relied on its proposed claim construction (so it loses), and for dependent claims, there was substantial evidence that the prior art disclosed the relevant features and did not teach away.

KEY WORDS: ISSUE PRECLUSION (NO), CLAIM CONSTRUCTION (BROAD), ONLY EMBODIMENT (NO), DICTIONARY (YES), TEACHING AWAY (NO)

Joint Infringement Requires Control By Defendant of the Other Parties That Perform Part of the Invention
BMC Resources v. Paymentech L.P.
Date:9/20/2007
Panel: Rader, Gajarsa, Prost
Author:Rader
District court:N.D. Tex
Trial judge: Lynn
Summary: BMC Resources, Inc. (BMC) appeals the district court’s decision on summary judgment that Paymentech, L.P. does not infringe asserted claims from two patents owned by BMC. The court determined that Paymentech had not infringed the claims because it performed some but not all of the steps of the asserted method claims. Because the record contains no basis to hold Paymentech vicariously responsible for the actions of the unrelated parties who carried out the other steps, this court affirms the finding of non-infringement.

KEY WORDS: JOINT INFRINGEMENT

Patentee Improperly Enjoined From Notifying Defendant’s Customers of Infringement
GP Indus., Inc. v. Eran Indus., Inc.,
Date:9/20/2007
Panel: Newman, Lourie, and Proust
Author: Lourie
District court:D. Neb
Trial judge: Bataillon
Summary: Federal Circuit reverses preliminary injunction that prevented Eran from contacting GP’s current and future customers regarding Eran’s patents and GP’s accused infringement. (GP was formed by employees terminated from Eran.)
The letters that Eran sent were very strong, and suggested that distributors and contractors could be named in patent, mail fraud, interstate transportation of stolen property, and RICO suits. The district court had reasoned that there was no evidence of an investigation before the letters were sent, the timing of the letters suggested retaliation, and that it was peculiar that Eran had never asserted its patent against makers of similar products (rain gutter covers). The Fed Cir found that the district court abused its discretion because of the high federal protection for giving notice of legal rights (see Mikohn Gaming), and the fact that “bad faith” can be established only if a claim was objective baseless (see Globetrotter Software). Thus, Eran’s motives and level of investigation were irrelevant if its ultimate claims had some merit, and the district court erred in not applying the proper standard (the district court only covered “subjective considerations and unconvincing objective factors”).
Query: If the district court considered objective factors, wasn’t the district court at least implicitly applying the right standard? In other words, would it have been more proper for the Fed Cir to assume the district court applied the right legal standard, and then to have explained by the objective factors on which the court relied were “unconvincing”?

KEY WORDS:PRE, CEASE AND DESIST

Claims Directed Wholly to Mental Steps Are Invalid Under Section 101
In re Comiskey
Date:9/20/2007
Panel:Michel, Dyk, Prost
Author: Dyk
District court: BPAI.
Trial judge:
Summary:Federal Circuit affirms rejection of claimed methods of carrying out arbitration over documents like wills, comprising the steps of connecting a document to its author, adding arbitration language to the document, permitting a request for arbitration, conducting arbitration, supporting the arbitration, and reaching a decision. After determining that Chenery did not block the Section 101 issue that the Board had not reached, because it was a purely legal issue, the Fed Cir provided a long history of patentable subject matter law, and noted that a mental process, to be part of a valid claim, must (1) have a practical application and (2) be tied to some other statutory class of subject matter, such as by being embodied in, operating on, transforming, or otherwise involving a machine, manufacture, or composition of matter. For example, the Diehr Court, according to the majority, found a process reciting an algorithm patentable if it: “(1) is tied to a machine or (2) creates or involves a composition of matter or manufacture.” Applied to the facts, the method claims were not tied to a machine and did not describe a process of manufacture or alter a composition of matter (like in Benson and Flook). Other claims that required the use of a computer passed Section 101, so the Fed Cir remanded for the PTO to consider whether they were obvious or not. Oddly, the Fed Cir suggested that obviousness should be measured against the process steps with computer limitations taken out — i.e., that the Section 103 “prior art” was supplied by Section 101, and not Section 102. That’s certainly a novel and non-obvious legal analysis.

KEY WORDS: CHENERY, SECTION 101, PATENTABLE SUBJECT MATTER, MENTAL STEPS

Claims To a Transitory Digital Signal Invalid Under Section 101
In re Nuijten
Date: 9/20/2007
Panel: Gajarsa, Linn (concur-in-part, dissent-in-part), Moore
Author: Gajarsa
District court: BPAI
Trial judge:Linn
Summary: Federal Circuit affirms rejection of claims to an audio or video signal that is encoded in a manner that counteracts deleterious effects of adding a digital watermark to the file that the signal represents. The Federal Circuit first looked to claim construction, noting that even if the claims inherently required a physical carrier for the signal, they were wide open in allowing any sort of carrier (e.g., a wire, a wave, etc.). As to Section 101, although State Street said it was not important to identify a particular category in 101 for an invention, State Street did not wipe out the requirement that an invention fit into one of the categories. Nuijten was also wrong to read “process” as involving something more than a step-by-step thing, simply because Section 100 defines “process” as “process, art or method”; that is because “art” simply means “process or method” in that section. With that, the signal was clearly not a process. The transitory signal was also not a “machine” because it was not “made of ‘parts’ or ‘devices’ in any mechanical sense.” As for “manufacture,” it is not enough that something be man-made or artificial; rather, an “article” of manufacture must also be a tangible article or commodity, and a transient electric or electromagnetic transmission does not fit that requirement even with wave-particle duality: “energy embodying the claimed signal is fleeting and is devoid of any semblance of permanence during transmission.” (The court distinguished storing the results of a signal, which would involve a (perhaps) patentable storage medium. (see n.4)). As for “composition of matter,” Nuijten did not even claim his signal met this requirement, and the Fed Cir noted that the signal was not a “‘chemical union,’ nor a gas, fluid, powder, or solid.”

In a lengthy dissent, Judge Linn agreed that a signal refers to something with a physical form, but raised concern that the majority’s new line-drawing is best left to Congress and would lead to more confusion. He felt that “article” and “manufacture” should receive a broader definition than the majority gave them (even though he and the majority were both looking at the same definition, from the dictionary the Supreme Court used in Diamond v. Chakrabarty; he did not think resort to a dictionary definition was proper anyway, and at a minimum believed an 18th century dictionary (which he obtained from Google Books) should be used)). He also did not think the claims fell into any exception for patentability.

KEY WORDS: SECTION 101, PATENTABLE SUBJECT MATTER

District Court Claim Construction Was Not Preclusive Against PTO in Re-Exam
In re Trans Texas Holdings Corp.
Date: 8/22/2007
Panel: Michel, Mayer, Dyk
Author: Dyk
District court: W.D. Tex
Trial judge:
Summary: Federal Circuit affirms rejection of claims to an investment vehicle having returns that are “responsive to the rate of inflation.” The Fed Cir first refused to give preclusive effect to a district court claim construction that occurred before the present re-exam was filed, because the PTO was not a party to that suit. Cf. In re Freeman. On the merits, the relevant phrase could not be limited to require immediate changes every time inflation changes, even if every example in the specification showed immediate changes, especially under the broadest reasonable construction, and in light of a relatively broad definition in the written description and in relevant dictionaries (citing Phillips v. AWH for dictionary use). On obviousness, the applicant relied on its proposed claim construction (so it loses), and for dependent claims, there was substantial evidence that the prior art disclosed the relevant features and did not teach away.

KEY WORDS: ISSUE PRECLUSION (NO), CLAIM CONSTRUCTION (BROAD), ONLY EMBODIMENT (NO), DICTIONARY (YES), TEACHING AWAY (NO)

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