• Dow loses "supplemental damages" claim against NOVA because of the change in law brought by Nautilus case

    The case –THE DOW CHEMICAL COMPANY v. NOVA CHEMICALS
    CORPORATION — illustrates what can happen when there is an
    intervening change in law. In law school, one learns of
    the Schooner Peggy case in which the Chief Justice wrote that
    appellate courts were obligated to apply the law as
    it currently exists, including changes intervening between the time of trial and
    final resolution of the appeal,

    Judge Dyk noted in Dow:


    The Dow Chemical Company (“Dow”) filed suit
    against NOVA Chemicals Corporation (Canada) and
    NOVA Chemicals Inc. (Delaware) (collectively, “NOVA”),
    alleging infringement of claims of U.S. Patent No.
    5,847,053 (the “’053 patent”) and U.S. Patent No.
    6,111,023 (the “’023 patent”). A jury found the asserted
    claims to be infringed and not invalid. NOVA appealed,
    and we affirmed, holding, inter alia, that the asserted
    claims were not indefinite. Our mandate issued, and
    NOVA’s petition for certiorari was denied by the Supreme
    Court, NOVA Chems. Corp. v. Dow Chem. Co., 133 S. Ct.
    544 (2012). The district court subsequently conducted a
    bench trial for the supplemental damages period through
    the expiration date of both patents. The district court
    granted supplemental damages in the form of lost profits
    and reasonable royalties and denied Dow’s request for
    enhanced damages. NOVA appealed, and Dow crossappealed.

    (…)

    We hold that the intervening change in the law of indefiniteness
    resulting from Nautilus provides an exception
    to the doctrine of law of the case or issue preclusion.
    In our review of the supplemental damages award, we
    therefore evaluate the indefiniteness of the claims under
    the Nautilus standard. In reviewing the supplemental
    damages award under the Nautilus standard, we hold
    that the claims are indefinite and reverse the award of
    supplemental damages.

    The technology


    On October 21, 2005, Dow filed suit against NOVA,
    alleging infringement of claims of the ’053 patent and the
    ’023 patent. The asserted claims of both patents cover
    ethylene polymer compositions (a type of plastic) with,
    inter alia, improved modulus, yield strength, impact
    strength, and tear strength. These polymers can be made
    into films that can be down-gauged (made thinner) without
    losing strength.

    The issue here is subtle, concerning the fact that Dow
    was looking for SUPPLEMENTAL damages:


    In
    order to prevail on a claim for supplemental damages, a
    patentee must establish infringement for the supplemental
    damages period. If “an act that would have been
    an infringement or an inducement to infringe pertains to
    a patent that is shown to be invalid, there is no patent to
    be infringed.” Commil USA, LLC v. Cisco Sys., Inc., 135 S.
    Ct. 1920, 1929 (2015).

    (…)

    This rule applies to patent infringement claims. As we
    explained just last year,
    traditional notions of claim preclusion do not apply
    when a patentee accuses new acts of infringement,
    i.e., post-final judgment, in a second suit—
    even where the products are the same in both
    suits. Such claims are barred under general preclusion
    principles only to the extent they can be
    barred by issue preclusion, with its attendant limitations.

    Brain Life, LLC v Elekta Inc., 746 F.3d 1045, 1056 (Fed.
    Cir. 2014); see Aspex Eyewear, Inc. v. Marchon Eyewear,
    Inc., 672 F.3d 1335, 1342–44 (Fed. Cir. 2012); see also,
    e.g., SynQor, Inc. v. Artesyn Techs., Inc., 709 F.3d 1365,
    1385–86 (considering whether intent element of induced
    infringement had been shown in the supplemental damages
    period).

    Here, the bulk of the supplemental damages accrued
    after the Rule 54(b) judgment, and it is clear that claim
    preclusion also does not apply to damages accruing after
    the filing of the complaint and not the subject of the first
    judgment. See note 4, supra. All supplemental damages
    here accrued after the filing of the complaint.
    While claim preclusion does not apply, ordinarily issue
    preclusion (or law of the case) would bar relitigation
    in the supplemental damages period of issues (such as
    validity) that were resolved as to the earlier time periods.
    18 Charles Alan Wright, Arthur R. Miller & Edward H.
    Cooper, Federal Practice and Procedure § 4409 (2d ed.
    2002 (“[Although] claim preclusion often cannot apply in
    settings of continuing . . . conduct, . . . it may be proper to
    conclude that the issues precluded by the first litigation
    embrace [issues in the second] . . . .”).

    As to “law of the case,”


    With respect to law of the case, “[p]erhaps the most
    obvious justifications for departing . . . arise when there
    has been an intervening change of law outside the confines
    of the particular case.” 18B Charles Alan Wright,
    Arthur R. Miller & Edward H. Cooper, Federal Practice
    and Procedure § 4478; see Rose Acre Farms, Inc. v. United
    States, 559 F.3d 1260, 1277–78 (Fed. Cir. 2009) (holding
    that intervening Supreme Court decision issued after
    prior appeal rendered prior decision “obsolete,” “[g]iven
    the significant change in the law”); Wopsock v. Natchees,
    454 F.3d 1327, 1333 (Fed. Cir. 2006) (finding that law of
    the case did not apply because “this is a case in which
    there has been a change in the law”). The exception
    applies even if the issue was resolved on appeal in an
    earlier stage of the proceeding. Indeed, the premise of the
    exception in the appellate context is that there was such
    an earlier resolution. See Litton Sys., Inc. v. Honeywell
    Inc., 238 F.3d 1376, 1379–81 (Fed. Cir. 2001) (revisiting
    prior holding on prosecution history estoppel because
    intervening en banc authority adopted a contrary approach,
    noting “[w]e are aware of no decision of this court
    that has applied the law of the case in the face of a relevant
    change in controlling legal authority”); M

    One has

    The change in law exception applies whether the
    change in law occurs while the case is before the district
    court or while the case is on appeal. See Spiegla, 481 F.3d
    at 964 (7th Cir. 2007) (holding that defendants had not
    waived challenge to holding in first appeal where issue
    not raised on remand in district court or initial briefing
    because intervening decision was issued after appellate
    briefing); Mendenhall, 26 F.3d at 1583 (law of the case did
    not apply where new decision issued while case on appeal);
    Morris v. Am. Nat’l Can Corp., 988 F.2d 50, 51–53
    (8th Cir. 1993) (law of the case did not apply where, after
    first appeal and decision on remand by district court,
    Supreme Court case changed prevailing law); Wilson, 791
    F.2d at 154, 157 (exception to issue preclusion applied
    where intervening decision issued while case pending
    before this court).

    The technical issue impacted by the Nautilus decision


    The claim term at issue here provides for “a slope of
    strain hardening coefficient greater than or equal to 1.3.”
    ’053 patent col. 16 ll. 19–20; ’023 patent col. 16 ll. 29–30.
    The patents provide that the “slope of strain hardening
    coefficient” (“SHC”) is calculated according to the following
    equation:
    SHC = (slope of strain hardening)*(I2)0.25
    where I2=melt index in grams/10 minutes. ’053 patent col.
    6 ll. 45–50; ’023 patent col. 7 ll. 22–28. “The SHC coefficient
    is a new Dow construct, not previously known in the
    art . . . .” Dow, 458 F. App’x at 918.
    Strain hardening is a property wherein a material becomes
    harder as it is stretched. The ’053 and ’023 patents
    teach that tensile properties, including strain hardening,
    may be tested using a device called the Instron Tensile
    Tester. The Instron Tensile Tester subjects a sample to an
    increasing load, stretching it until it breaks. The machine
    measures the force, or load, applied to the sample and the
    length that the sample stretches.
    The measurements taken by the Instron Tensile Tester
    are then plotted on a graph. The resulting curve is
    called the “tensile curve” or “stress/strain curve.” On the
    stress/strain curve, the force (or load) applied to the
    sample is plotted on the y-axis, and the resulting elongation
    (or displacement) of the sample is plotted on the xaxis.
    The behavior of the material claimed by the patent
    changes as it is stretched, and those changes are shown
    on the stress/strain curve. A figure from the prior art
    utilized in Dow’s brief illustrates a typical stress/strain
    curve.

    (…)

    NOVA argues that the term “slope of strain hardening
    coefficient,” ’053 patent col. 16 l. 19, is indefinite because
    the patent fails to teach with reasonable certainty where
    and how the “slope of strain hardening” should be measured.
    8
    Although the patents state that “FIG. 1 shows the
    various stages of the stress/strain curve used to calculate
    the slope of strain hardening,” ’053 patent col. 6 ll. 40–41;
    ’023 patent col. 7 ll. 18–19, the patents do not contain the
    FIG. 1 referenced in those passages. Nor do the patents
    include any other figure showing the stress/strain curve.
    The specification of the ’053 and ’023 patents teach that
    “[t]he slope of strain hardening is calculated from the
    resulting tensile curve by drawing a line parallel to the
    strain hardening region of the . . . stress/strain curve.”
    ’053 patent col. 6 ll. 27–29; ’023 patent col. 7 ll. 5–7.
    At trial, Dow’s expert Dr. Hsiao testified that “one of
    ordinary skill in the art would know that the slope of the
    hardening curve would have to be measured at its maximum
    value, which reflects the best tensile performance of
    the material.” Dow, 458 F. App’x at 919. We may assume
    that, as Dr. Hsiao testified and as Dow repeatedly argues,
    it was known that the maximum slope should be measured.

    But three methods existed to determine the maximum
    slope, each providing, as Dow admits, “simply a different
    way of determining the maximum slope.” Appellee’s Br. 45
    (emphasis added). Dow admitted that those three methods
    “all typically occur at the same place—at the end of
    the curve where the maximum slope is located.” Id. We
    refer to these methods as the “10% secant tangent method,”
    “final slope method,” and “most linear method.”

    (…)

    Neither the patent claims nor the specification here
    discusses the four methods or provides any guidance as to
    which method should be used or even whether the possible
    universe of methods is limited to these four methods.
    Nor does either party argue that the prosecution history
    provides any guidance. Further, Dr. Hsiao did not testify
    that one of ordinary skill in the art would choose his
    method over the three known methods. Indeed, he was
    not even aware of the other methods at the time he did
    his analysis. He admitted that he applied only his judgment
    of what a person of ordinary skill would believe and
    did not interview anyone or cite any references discussing
    how a person at the time of the patent application would
    have calculated the slope of strain hardening.
    The question is whether the existence of multiple
    methods leading to different results without guidance in
    the patent or the prosecution history as to which method
    should be used renders the claims indefinite. Before
    Nautilus, a claim was not indefinite if someone skilled in
    the art could arrive at a method and practice that method.
    Exxon, 265 F.3d at 1379. In our previous opinion, relying
    on this standard, we held that the claims were not indefinite,
    holding that “the mere fact that the slope may be
    measured in more than one way does not make the claims
    of the patent invalid.” Dow, 458 F. App’x at 920. This was
    so because Dow’s expert Dr. Hsiao, a person skilled in the
    art, had developed a method for measuring maximum
    slope. See id. at 919–20.

    Under Nautilus this is no longer sufficient.

    There was an allusion to Sandoz v. Teva:

    In this respect this case is quite similar to our recent
    decision in Teva, decided under the Nautilus standard. In
    Teva,9 the claim limitation at issue recited the term
    “molecular weight.” 789 F.3d at 1338. But there were
    three relevant measures for molecular weight—peak
    average molecular weight (“Mp”), number average molecular
    weight (“Mn”), and weight average molecular weight
    (“Mw”)—where each was calculated in a different manner
    and each typically had a different value

    (…)

    The claims here are even more clearly indefinite than
    those in Teva. Here, Dr. Hsiao’s chosen method was not
    even an established method but rather one developed for
    this particular case. As we held in Interval Licensing, a
    claim term is indefinite if it “leave[s] the skilled artisan to
    consult the ‘unpredictable vagaries of any one person’s
    opinion.’” 766 F.3d at 1374 (quoting Datamize, LLC v.
    Plumtree Software, Inc., 417 F.3d 1342, 1350 (Fed. Cir.
    2005)).10 The claims here are invalid as indefinite, and the
    award of supplemental damages must be reversed. Under
    these circumstances, we need not address the crossappeal
    as to enhanced damages.

    link to case: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/14-1431.Opinion.8-25-2015.1.PDF

    ***Of a different issue in retroactive application, note PatentlyO on
    the Dickstein Shapiro malpractice case:


    To put this in context: Because of a 2014 Supreme Court decision, the 2006 case would have been lost anyway because, in 1993, the claims were not eligible for patenting.

    And the argument worked. The district court granted a motion to dismiss for failure to state a claim, finding the subject matter ineligible on the face of the patent.

    I’ll leave the merits of that to others.

    What is interesting is the court’s approach to retroactive application of Alice. The issue was whether in the 2006 case, even had the firm’s alleged malpractice not caused the invalidity judgment, the claims were “invalid” under 101 then. The district court held that Alice did not change the law, but merely stated what it had always been.

    link: http://patentlyo.com/hricik/2015/09/dickstein-malpractice-ineligible.html

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  • Final Written Decision Confirming That Limitations Cannot Be Imported From The Specification IPR2014-00413

    Takeaway: An understanding of claim language may be aided by the written description, but one cannot import into a claim, limitations that are not part of the claim. In its Final Written Decision, the Board held that claims 1-19 of … Continue reading

    The post Final Written Decision Confirming That Limitations Cannot Be Imported From The Specification IPR2014-00413 appeared first on PTAB Trial Blog.

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  • The debate about the proposed IPR carve-out for pharma patents

    Chris Versace (with a position at New Jersey City University (NJCU)) criticizes pharma industry proposals on IPRs, without mentioning the forays of Kyle Bass:


    According to a Politico report, “The drug industry is circulating a sign-on letter to build support for exempting drugs from a streamlined patent challenge process, a key issue stalling the House’s Innovation Act.” Given the growing target market that is domestic aging population and the critical nature of drug patent life, it is hardly surprising to learn the pharmaceutical industry has deployed lobbyists to add a last minute provision that would scale back the Inter Partes Review (IPR), a process that allows an efficient way to challenge illegitimate patents.

    Link from Newsmax.com http://www.newsmax.com/Finance/ChrisVersace/Health-Care-Lobbyists-Patent-Provision/2015/08/30/id/672679/#ixzz3kOvUv3cE

    IAM covered the issue in July 2015, noting:


    During mark-up of the PATENT Act last month, Senator Schumer admitted that work still needed to be done on the legislation to win the support of the life sciences community, as he insisted that “the IPR package will get further refinement”. But the AARP letter demonstrates the complex web of competing interests that has been woven around the subject. In its concluding remarks against the exemption the letter added: “We ask the Committee to fully consider the implications of any such exemption in terms of increased spending for payers, including Medicare and Medicaid, and higher prices for consumers. It would be unfortunate if this issue was to impede progress of the larger patent reform effort.”

    As if to underline the point being made, earlier this month the Center for Economic and Policy Research produced a paper entitled The Impact of Exempting the Pharmaceutical Industry from Patent Reviews. It concluded:

    … the failure to remove improperly awarded patents at an early date could lead to substantially higher drug costs. These costs will translate into higher payments from government run health insurance programs like Medicare and Medicaid.

    The improper award of patents is also likely to lead to misdirected research, potentially wasting billions of dollars in spending in pursuit of patent rents based on the improperly awarded patents. In addition, these patents will provide incentives to mismarket drugs, a process that has led to substantial costs in the form of increased morbidity and increased mortality in the past. This analysis suggests that there could be substantial costs associated with exempting the pharmaceutical industry from the IPR process.

    Undermining pharma’s ability to raise drug prices and bringing down the cost of medications overall is one of the motivations that Bass has claimed is behind his IPR strategy. Those arguments carry a lot more weight when they come from an organisation like AARP and take on tangible form for legislators when converted into dollar estimates of how much more consumers and government agencies might have to pay should a pharma IPR exemption be created. A vote on the Innovation Act in the House of Representatives might happen as early as this week. But it still looks like we’re some way from a reform package reaching the President’s desk.

    link: http://www.iam-media.com/Blog/Detail.aspx?g=d8168919-e9b9-4848-a6f1-38a1eea2012a

    link to the paper The Impact of Exempting the
    Pharmaceutical Industry
    from Patent Reviews by Dean Baker:

    http://www.iam-media.com/files/Pharma%20IPR%20exemption.pdf

    Yes the Baker paper mentions the Smucker patent: The ease of getting
    a patent was famously demonstrated in 1997 when two inventors were able to get a patent on a
    peanut butter and jelly sandwich

    As to the impact on research:


    The above discussion only dealt with the potential impact of improperly granted patents, due to the
    pharmaceutical industry’s exemption from the IPR process, on higher drug prices. However, if a
    pharmaceutical company is wrongly granted a patent which turns out to be central in the production
    of a major selling drug, then it can be expected that it will also lead to a major distortion in research
    spending. Other pharmaceutical companies will try to gain a share of the patent rents by attempting
    to innovate around the wrongly issued patent. This can lead to large amounts of money being
    misspent.
    To be clear, in the case where a pharmaceutical company has a valid patent, this sort of innovation is
    beneficial since it can bring down the price of the drug before the patent expires and generics can
    enter the market. This appears to be happening in the case of Sovaldi, the Hepatitis C drug. There
    are several pharmaceutical companies developing comparable products which either have already
    gained FDA approval or are likely to do so in the near future.

    (…)

    However, if the initial patent was wrongly granted, then this research will have been largely wasted.
    The drug should have already have been available as a generic, and therefore there would be no
    patent rents to be shared.19 This misdirection of research is an important cost associated with
    improperly granted patents. If the pharmaceutical industry’s exemption from IPR increases the
    probability of improperly awarded patents, then we should expect more misdirected research as a
    result

    One notes that the bulk of money to bring a drug to market is in running the trials, not in getting a patent on the drug.

    Baker received his B.A. from Swarthmore College and his Ph.D. in Economics from the University of Michigan.

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  • Interview: IP Enforcement In The US Fashion Industry

    Protecting intellectual property rights in the fashion industry can be a tricky exercise in this fast-moving environment. Several avenues are possible for fashion designers in the United States, such as trademark, trade dress or design patents.Perkins Coie IP litigation partner Ann Schofield Baker, based in New York, participated in an interview with Intellectual Property Watch’s Catherine Saez on ways fashion designers can protect and enforce their rights in the US.

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  • Inline wins claim construction appeal at CAFC

    Judge Newman began the opinion:


    Inline Plastics Corporation sued EasyPak, LLC for infringement
    of United States Patent No. 7,118,003 (the
    ’003 patent) and No. 7,073,680 (the ’680 patent), directed
    to tamper-resistant plastic food containers. Following the
    district court’s claim construction, Inline moved for entry
    of final judgment of non-infringement of its ’003 patent,
    on the premise that the claims as construed are not
    infringed. Inline also granted EasyPak a covenant not to
    sue on the ’680 patent. The district court then entered
    final judgment of non-infringement of the ’003 patent,
    dismissed without prejudice EasyPak’s declaratory judgment
    counterclaims for invalidity, and dismissed Inline’s
    count for infringement of the ’680 patent with prejudice.1

    Inline appeals the district court’s construction of the
    claims of the ’003 patent, stating that the terms “frangible
    section” and “tamper evident bridge” were incorrectly
    construed. We conclude that, on the facts and specification
    of the ’003 patent, the district court erred in limiting
    the claims to a specific embodiment, for the invention as
    claimed is supported by the patent’s broader disclosure.
    We vacate the judgment of non-infringement of the ’003
    patent, and remand for determination of infringement in
    accordance with the corrected claim construction.

    The argument of Inline:

    Applying these criteria, Inline argues that “frangible
    section” was incorrectly construed as requiring at least
    two score lines at the hinge. Inline states that “frangible
    section” should be construed to mean a “section of material
    that includes at least one score line or at least one
    perforation line.” Inline points out that nothing in the
    specification, the prosecution history, or the prior art
    limits “frangible section” by the number of score lines by
    which the frangible section is severed.

    (…)

    Despite this explicit disclosure of an alternative single
    score line, the district court limited “frangible section” to
    require at least two score lines. No prior art or prosecution
    argument underlays this limitation. The district
    court referred only to the frequency with which the specification
    described the frangible section as having two
    score lines that form a severable strip.
    Here, the preferred embodiment is not described as
    having certain unique characteristics of patentable distinction
    from other disclosed embodiments. Nor are other
    embodiments inadequately described in relation to the
    principles of the invention. Absent such traditional
    aspects of restrictive claim construction, the patentee is
    entitled to claim scope commensurate with the invention
    that is described in the specification. See Phillips v. AWH
    Corp., 415 F.3d 1303, 1313 (Fed. Cir. 2005) (“[A]lthough
    the specification often describes very specific embodiments
    of the invention, we have repeatedly warned
    against confining the claims to those embodiments.”).

    (…)

    The patent examiner placed no emphasis on the number
    of severable lines. In allowing the claims, the examiner
    explained: “The container also includes a tamper
    evident feature, such as a tear strip, connecting the cover
    portion to the base portion.” App. No. 10/895,687, Final
    Rejection 2 (June 19, 2006). There is no discussion in the
    specification or the prosecution history of any patentability
    reliance on the number of score lines by which the
    frangible section is severed

    The bottom line


    Thus we correct the district court’s claim construction,
    and construe “frangible section” to mean “a section of
    material that includes at least one score line or at least
    one perforation line.”

    (…)

    We have corrected the claim construction, whereby
    claims 1 and 2 are not restricted to the presence of at
    least two score lines or perforation lines. On this claim
    construction, the judgment of non-infringement of the ’003
    patent cannot stand. We vacate that judgment,

    link: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/14-1305.Opinion.8-24-2015.1.PDF

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