Federal Circuit gives a Master Class in Claim Construction

In E.I. du Pont de Nemours & Co., v. Unifrax I LLC, [2017-2575] (April 17, 2019), the Federal Circuit affirmed the district court’s determination that the claims of U.S. Patent No. 8,607,926 on a Composite Flame Barrier Laminate for a Thermal and Acoustic Insulation Blanket, were not invalid and were infringed.

The ’926 patent claims composite laminates that are incorporated into thermal-acoustic blankets installed on the interior of the fuselage in aircraft to shield passengers from flames and reduce noise. At issued was the term “100% by weight” in the claims. Unifrax argued that the “100% by weight” term does not allow for any amount of organic additives in the refractory layer. According to Unifrax, “‘100%’ means one hundred percent.” The Federal Circuit considered whether the context of the entire patent and other intrinsic evidence supports such an interpretation, and concluded it did not.

The Federal Circuit began with the language of the claims, which it noted recited: a residual moisture content of up to “[10%] by weight” in addition to “100% by weight” platelets in the refractory layer undercuts Unifrax’s plain meaning argument that “‘100%’ means one hundred percent.” The Federal Circuit said:

That claim 1 recites a residual moisture content of up to “[10%] by weight” in addition to “100% by weight” platelets in the refractory layer undercuts Unifrax’s plain meaning argument that “‘100%’ means one hundred percent.” Unifrax’s position would require that the term “100% by weight” be considered alone, without reference to the surrounding claim language. The claim’s reference to both “100% by weight” platelets and 10% residual moisture, however, supports the conclusion that “100% by weight” is relative to carrier material. It would be nonsensical if the total percentage of components comprising the inorganic refractory layer exceeded 100%

The Federal Circuit then turned to the specification, which described: “preferably at least 85% of the layer comprises platelets” with the remainder being “some residual dispersant.” The Federal Circuit found that this language supports the district court’s conclusion that the disclosed embodiments, including the 100% platelet embodiment, all allow for some amount of residual dispersant.

Unifax argued that all 24 of the examples had 100% by weight inorganic platelets with no residual dispersant, but the Federal Circuit noted that the specification also listed other “suitable materials” that contain a residual dispersant, and thus, less than 100% inorganic material, for the refractory layer.

The Federal Circuit also rejected Unifax’s argument that it was improper to use the specification of the patent’s parent in construing the claims in the C-I-P patent at issue, noting that the subject matter in the parent was common to the continuation-in-part application.

Finally the Federal Circuit rejected the argument that the patent owner limited the scope of the claims during prosecution. During prosecution the patentees amended the claims to add the 100% limitation to distinguish prior art with a 70% concentration. The Federal Circuit found that in making the amendment, the patent owner did not disclaim the presence of non-carrier materials such as dispersants.

Based upon the claim language it self, the specification, and the specification of related cases, and a careful examination of the prosecution history, the Federal Circuit concluded that the district court’s interpretation of “100% by weight” was not erroneous.

Having affirmed the district court’s claim construction, the Federal Circuit went on to affirm the finding of infringement.

The case was a tutorial in claim construction, giving a practical example of how claim terms are construed in light of the surrounding language, how the entire specification and not just the examples are used in determining the meaning of claim terms; how the specifications of related applications are used in determining the the meaning of claims terms; and even how the prosecution history is used in determining the meaning of claim terms.

Federal Circuit holds PTO to “Reasonably Continuous” Diligence rather than “Continuous Reasonable” Diligence Standard

In ATI Technologies ULC v. Iancu, [2016-2222, 2016-2406, 2016-2608] (April 11, 2019), the Federal Circuit reversed the PTAB’s decisions of invalidity of all but one of the claims challenged in three IPRs, finding that the PTAB erred in its application of the law of diligence, and that on the correct law, diligence was shown, thereby antedating the relevant references.

ATI’s U.S. Patent Nos. 7,742,053, 6,897,871, and 7,327,369 were challenged in three separate IPRs. ATI defended on the grounds that the inventions in these three pre-AIA patents were made before the effective date if the asserted prior art. The Board agreed that conception was established before the primary reference dates, and that constructive reduction to practice occurred on the filing date of each patent. However, the PTAB held that ATI had not established actual reduction to practice and had not established diligence to constructive reduction to practice, for all three patents, and invalidated all but one of the challenged claims.

On the issue of diligence, the Federal Circuit noted that a patent owner need not prove the inventor continuously exercised reasonable diligence throughout the critical period; it must show there was reasonably continuous diligence. The Federal Circuit said that under this standard, an inventor is not required to work on reducing his invention to practice every day during the critical period, and that periods of inactivity within the critical period do not automatically vanquish a patent owner’s claim of reasonable diligence.

The Federal Circuit said that the PTAB applied an incorrect definition of diligence, and Petitioner conceded as much before it withdrew from the appeal. The Federal Circuit rejected the Director’s attempts to characterize the PTAB’s erroneous definition as “boilerplate,” because the PTAB appeared to find a dispositive difference between “continuous reasonable diligence” and “reasonably continuous diligence,” when if found a lack of diligence despite the documentary evidence of activity by ATI on “every business day.” The Federal Circuit concluded that the PTAB applied the wrong legal standard for diligence.

The Federal Circuit expressly rejected the Board’s position that developing and testing of alternative and optional features negated diligence, stating that diligence is not negated if the inventor works on improvements and evaluates alternatives while developing an invention.

Although the significance of diligence to patent law continues to wane ten years after the AIA, because the majority of applications are governed by the AIA and not the pre-AIA law where diligence was required to antedate a reference, the Federal Circuit continues to enforce an element of reasonableness to the determination of this issue (and hopefully others).

When There is a Dispute Regarding the Proper Scope of the Claims, the Court must Resolve that Dispute

In Omega Patents, LLC v. Calamp Corp., [2018-1309] (April 8, 2019), the Federal Circuit affirm the judgment of no invalidity, affirm-in-part, reverse-in-part, vacate-in-part, and remand the judgment as to direct infringement, and vacated the remainder of the judgment and remanded for a new trial on indirect infringement, compensatory damages, willful infringement, enhanced damages, and attorney’s fees, in a case involving U.S. Patent Nos. 6,346,876, 6,756,885, 7,671,727, and 8,032,278 on multi-vehicle compatible systems that can remotely control various vehicle functions such as remote vehicle starting.

After a trial, a jury found all asserted claims to be not invalid and infringed, and the jury also found that CalAmp willfully infringed a valid patent, and awarded Omega $2.98 million in compensatory damages, which the district court trebled for willfulness, awarded attorney’s fees to Omega, added damages for post-verdict sales and pre-judgment interest, for a total of $15 million, with an on-going royalty rate of $12.76 per unit.

Although CalAmp appealed the construction of several claim terms, the Federal Circuit found that these terms had no impact on the prior art actually introduced at trial, and CalAmp had failed to identify to the district court any other prior art that would be impacted by the claim construction ruling. Thus, the Federal Circuit declined CalAmp’s invitation to speculate as to how additional prior art may have been rendered irrelevant under the court’s claim construction. While CalAmp’s challenge to the district court’s claim construction was preserved under Federal Rule of Civil Procedure 51 for purposes of challenging the jury instructions, CalAmp failed to satisfy the requirements of Federal Rule of Civil Procedure 46 by not seeking admission into evidence of, or at least specifically identifying, the additional prior art.

On the issue of direct infringement, several of the claims required “a transmitter and a receiver for receiving signals from said transmitter.” However the Federal Circuit found that the evidence at trial only showed that the “transmitter” transmits signals to a “receiver” on a cell tower, which can then relay that information to CalAmp’s servers, and the “receiver” receives signals from a “transmitter” on the cell tower. The Federal Circuit agreed that CalAmp did not provide all of the elements of the system, as was entitled to JMOL on direct infringement of these claims.

On the issue of induced infringement, the Omega argued that CalAmp’s customers directly infringed when they used CalAmp’s products. The Federal Circuit noted that for purposes of infringement, a party must put the invention into service, i.e., control the system as a whole and obtain benefit from it, and said there was evidence from which the jury could infer that customers controlled and used the system and received the required benefits. Based on the record, the Federal Circuit conclude that this theory does not warrant setting aside the jury verdict.

The induced infringement of some of the claims depending on the construction of “vehicle device,” which the district court refused to construe, defaulting to the ordinary meaning. The Federal Circuit said that when the parties raise an actual dispute regarding the proper scope of the claims, the court, not the jury, must resolve that dispute. The Federal Circuit added that the court is not absolved of this duty to construe the actually disputed terms just because the specification of the patent defines the term. Even if the parties had agreed to the construction, the Federal Circuit said that the district court was still obligated to give that construction to the jury in its instructions. The Federal Circuit said: in the absence of guidance in the form of proper claim construction, the jury lacked a yardstick by which to measure the arguments and evidence on this issue and assess whether Omega’s infringement theory was a valid one. In particular the Federal Circuit could not discern if the jury found infringement of the claims at issue based upon a theory of infringement inconsistent with the proper construction. Therefore, the Federal Circuit set aside aside the jury’s verdict of infringement, and ordered a new trial.

On the issue of induced infringement, CalAmp argued that the jury’s verdict could not be sustained because the verdict form given to the jury (proposed by CalAmp) did not provide written questions on the issue of inducement. CalAmp argued that the absence of such questions on induced infringement precluded the jury from awarding damages on that basis, but the Federal Circuit said that one cannot use the answers to special questions as weapons for destroying the general verdict. The Federal Circuit concluded that induced infringement was properly before the jury, and, thus, CalAmp was not entitled to JMOL of no induced infringement on that basis.

However CalAmp also complained about the district court’s exclusion of testimony as to CalAmp’s state of mind substantially prejudiced CalAmp’s ability to present its defense for indirect infringement. The Federal Circuit found that this exclusion deprived CalAmp of the opportunity to support its defense that there was no inducement because it reasonably believed it did not infringe the patents at the time CalAmp launched the products at issue. The Federal Circuit vacated the jury’s findings as to indirect infringement and remand for a new trial.

On the issue of damages, the Federal Circuit found that although the infringement of the one claim that was sustained, this was not enough to support a damage award based upon all of the products, and thus the Federal Circuit vacated the compensatory damage award.

On the issue of enhanced damages for willful infringement, the jury was asked whether it had found CalAmp willfully “infringed a valid patent,” without specifying which patent or patents or which claim or claims were willfully infringed. Based on the vacation of several findings of infringement the Federal Circuit could not determine which patents or claims, so the finding of willfulness had to be vacated as did the resulting enhanced damages and attorney’s fees award by the district court, both of which were explicitly based on the willful infringement finding.

Many lessons form this case, including insisting on a claim construction of disputed terms, and being extremely careful drafting jury verdict forms.