Monday, December 28, 2009

The False Marking Statute, 35 U.S.C. § 292, Imposes Penalties Based on a Per Article Basis

Forest Group, Inc. v. Bon Tool Co., No. 2009-1044 (Fed. Cir. Dec. 28, 2009)


The false marking statute, 35 U.S.C. § 292, imposes penalties based on a per article basis, not each decision to mark. Slip op. at 14.

Relevant Facts:

The patentee marked products with a patent number after knowing that the products were not covered by the patent number based on the summary judgment of noninfringement in a related case. Slip op. at 5. The district court fined the patentee $500 for a single offense of false marking based on one decision to mark. Id. The Federal Circuit vacated this ruling and remanded for further proceedings. Id.


The Federal Circuit clarified that “the false marking statute explicitly permits qui tam actions” and Congress allowed the members of the public to help control false marking by permitting them to sue on behalf of the government. Slip op. at 13.

Section 292(b) provides that “[a]ny person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.” 35 U.S.C. § 292(b).

The Federal Circuit also notes that although the statute provides a fine of up to $500 for every such offense, the penalties can be a fraction of a penny per article for inexpensive mass-produced articles. Slip op. at 13.

Saturday, December 26, 2009

To Preserve Rights to Appeal, Appellant Must Move for Pre-Verdict JMOL Motions

i4i L.P. v. Microsoft Corp., No. 2009-1504 (Fed. Cir. Dec. 22, 2009):


A party must file a pre-verdict JMOL motion on all theories, and with respect to all prior art references, that it wishes to challenge with a post-verdict JMOL. Slip op. at 14.

When a party has waived its right to challenge the factual findings underlying the jury’s implicit obviousness verdict because it did not file a pre-verdict JMOL on obviousness for certain prior art references, the Federal Circuit is limited to determining whether the district court’s legal conclusion of nonobviousness was correct, based on the presumed factual findings. Id. at 14-15.

When a party did not a pre-verdict JMOL on the reasonableness of the other side’s damages calculation, the party has waived this argument for appeal. Id. at 36.

Relevant Facts:

i4i accused that the custom XML editor in certain versions of Microsoft Word infringed i4i’s patent. Slip op. at 1. The jury found Microsoft liable for willful infringement, rejected Microsoft’s argument that the patent was invalid, and awarded $200 million in damages to i4i. Id. The district court awarded $40 million in additional damages for willful infringement. Id. at 2. The district court denied Microsoft’s JMOL motions and motions for a new trial, finding that Microsoft had waived its right to challenge the validity of the patent based on all but one prior art and the sufficiency of the evidence supporting the jury’s damage award. Id. The district court also granted i4i’s motion for a permanent injunction. Id. The Federal Circuit affirmed the issuance of the permanent injunction, though it modified its effective date to accord with the evidence, and affirmed all other rulings. Id.


In this case, it appears that Microsoft made several procedural missteps and did not file several pre-verdict JMOL motions including the one on the reasonableness of the damages calculation.

As a neutral observer and former IT consultant, I think the damages award seems unreasonably high for an XML editor. Had Microsoft preserved this issue for appeal, the Federal Circuit would have had a chance to weigh the evidence and might have reduced the damages award.

So what is the lesson? One may say that a party needs to move for pre-verdict JMOL motions on all issues that may be appealed. However, this is easy to say, but hard to do in terms of knowing what issues would be important. Instead, for a high profile case, one should include an appellate specialist in the trial preparation and trial to preserve issues in preparation for the potential appeals.

Happy Holidays

Happy Holidays! After a short delay, we will resume our posting today.

Saturday, December 19, 2009

The Ordinary Observer Test Is the Test for Invalidity for Design Patents

Int’l Seaway Trading Corp. v. Walgreens Corp., No. 2009-1237 (Fed. Cir. Dec. 17, 2009):


The ordinary observer test is the test for invalidity for design patents. Slip op. at 6.

Relevant Facts:

The design patents are directed to footwear designs. The parties disputed whether the district court erred by basing its invalidity determination solely on the ordinary observer test and by failing to apply the point of novelty test. The Federal Circuit affirmed the district court’s application of the ordinary observer test, but remanded for further proceedings because the district court failed to compare the insole patterns in Seaway’s patented designs to the prior art as part of an overall comparison of the designs.


The Federal Circuit extended the ordinary observer test for infringement in Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665 (Fed. Cir. 2008) (en banc) to invalidity inquiries. In addition, the Federal Circuit clarified that although Contessa Food Prods., Inc. v. Conagra, Inc., 282 F.3d 1370, 1377 (Fed. Cir. 2002) requires a court to consider only those portions of the product that are visible during normal use, normal use includes, not excludes, the point of sales.

The Federal Circuit Continues to Order Cases to be Transferred Out of the Eastern District of Texas

In Re Nintendo Co., Ltd., Misc. No. 914 (Fed. Cir. Dec. 17, 2009) (granting Nintendo’s petition for a writ of mandamus to direct the Eastern District of Texas to vacate its order denying Nintendo’s motion to transfer venue and to direct the Texas district court to transfer the case to the Western District of Washington).

See the previous post here.

Saturday, December 5, 2009

Declaratory Judgment Jurisdiction Found Even Though The Patentee Avoided Words Such As “Litigation” and “infringement”

Hewlett-Packard Co. v. Acceleron LLC, No. 2009-1283 (Fed. Cir. Dec. 4, 2009):


Although a communication from a patentee to another party, merely identifying its patent and the other party’s product line, without more, is insufficient to create declaratory judgment jurisdiction, conduct that can be reasonably inferred as demonstrating intent to enforce a patent can. Slip op. at 5, 7.

Relevant Facts:

Acceleron acquired U.S. Patent No. 6,948,021, and shortly after that, it contacted HP specifically identifying the ’021 patent and HP’s product line, but its correspondence with HP did not contain language threatening to sue for infringement or demand a license. HP proposed a 120-day stand-still period, for which Acceleron rejected. HP filed the DJ action, and Acceleron moved to dismiss the case for lack of DJ jurisdiction. The district court granted Acceleron’s motion and the Federal Circuit reversed.


The Federal Circuit recognized that there is no bright-line rule for analyzing DJ jurisdiction, but the facts of this particular case, when viewed objectively and in totality, including a patentee’s affirmative step of twice contacting a potential infringer directly, making an implied assertion of its rights in a patent, mentioning a specific product, and the disagreement from the potential infringer, could create DJ jurisdiction. Slip op. at 8-9.

It appears that after MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007), to safely avoid a DJ action, all the patentee can do is to merely identify its patent and the other party’s product line, without more, in the first communication, and then request a confidentiality agreement for the future discussions.

The lowering of the standard for filing a DJ action, however, is not economical for the patentees and potential infringers alike. In some situations, the potential infringers may not pay sufficient attention to the matter if the patentee merely identifies its patent and the product line, and ignore the patentee’s initial communications. If the patentee uses stronger languages, the potential infringer could now run to the court to file a DJ action. Consequently, this may force more and more patentees to sue first, and then negotiate a license in the future. As a result, this may increase transaction costs for the parties and the burden for the court system, especially if the parties could resolve the disputes without resorting to the court.

Practically, it may have two consequences. First, for a small stake case, especially where the cost of litigating the case outweighs the value of the case, the parties will negotiate regardless of the language used in the correspondence. Second, for a high stake case, the patentee can only identify the patent and the other party’s product line in its initial correspondence. If the other party ignores, file a lawsuit first. If the other party responds, request a confidentiality agreement and then negotiate a license.

Wednesday, December 2, 2009

A District Court Need Not Construe Undisputed Claim Terms Before Issuing a Summary Judgment of Invalidity

Perfect Web Techs., Inc. v. InfoUSA, Inc., No. 2009-1105 (Fed. Cir. Dec. 2, 2009):


A district court need not construe undisputed claim terms before issuing a summary judgment of invalidity. Slip op. at 14.

“Common sense” and “obvious to try” may be used as reasons to combine the prior art references to achieve the patented invention. Id. at 6, 12.

Relevant Facts:

Before it issued a formal claim construction order, the district court granted InfoUSA’s motion, assuming for summary judgment purposes that Perfect Web’s claim constructions were correct. Id. at 3. Perfect Web’s patent (USP 6,631,400) claims methods of managing bulk e-mail distribution to groups of targeted consumers using steps A-D. Id. at 1-2. Perfect Web concedes that the prior art teaches steps A-C, while InfoUSA concedes that step D, a step that repeats steps A-C, does not appear in the prior art. Id. at 5. InfoUSA, however, contends that step D is based on common sense, and it is obvious for one skilled in the art to try step D. Id. at 5-6. The district court agreed with InfoUSA. The Federal Circuit affirmed.


Nothing is out of ordinary here. Citing KSR, the Federal Circuit found that it is permissible to use “common sense” and “obvious to try” in an obviousness analysis. Id. at 6, 12.

In addition, procedurally, the Federal Circuit held that although a court may not invalidate the claims of a patent without construing the disputed claim limitations and applying them to the prior art, a district court need not construe undisputed claim terms before issuing a summary judgment of invalidity. Id. at 13-14.

The Federal Circuit Orders Yet Another Case to be Transferred Out of the Eastern District of Texas

In re Hoffmann-La Roche Inc., Misc. No. 911 (Fed. Cir. Dec. 2, 2009):

In this case, the Federal Circuit granted the petitioner’s petition for a writ of mandamus to direct the Eastern District of Texas to transfer the case to the Eastern District of North Carolina. In this year alone, the Federal Circuit has ordered multiple cases out of the Eastern District of Texas, a forum that is generally considered to favor plaintiffs/patentees. How this trend will affect the filing of patent infringement cases in the Eastern District of Texas, however, remains to be seen. Presumably, however, the plaintiffs in the future cases will have to think twice about bringing the lawsuits in the Eastern District of Texas.

An interesting note: the local economy in the Eastern District of Texas is reported to be largely supported by patent litigations. If such cases were to drop in the future, it would have a profound impact on the local economy.