In a fractured en banc decision, the Federal Circuit affirmed the district court’s holding that the claims at issue in CLS Bank v. Alice Corporation are invalid under 35 USC § 101. The multiple opinions reveal the judge’s fundamental differences as to the meaning and role of the statute, and the difficulty of applying Supreme Court precedent. The court’s inability to agree on even an appropriate framework for assessing patent-eligibility guarantees that this fundamental inquiry will be a murky area of law for the foreseeable future.
On May 25, 2011, the Federal Circuit issued its long-awaited en banc decision in Therasense, Inc. v. Becton, Dickinson & Co. After a panel affirmed the district court’s finding of inequitable conduct, the court agreed to rehear the appeal en banc in order to revisit the law of inequitable conduct. The court’s decision “tightens the standards” for proving inequitable conduct, holding that evidence of “intent” must be considered independently from materiality, and that materiality generally must be proven by a “but-for” test, except in cases of “affirmative egregious misconduct.”
On Monday, November 8, 2010, the Federal Circuit issued its decision in the en banc re-hearing of Hyatt v. Kappos. The en banc court departed from the August 11, 2009 panel decision, and held that there are virtually no limits on the new evidence that a patent applicant can introduce against the USPTO in a district court action under 35 USC § 145 (“Civil Action to Obtain a Patent”). This decision will be welcomed by patent applicants who have received negative USPTO decisions on patentability, and reflects the realities—and difficulties—of marshaling evidence during patent prosecution.
This week brings two en banc hearings at the Federal Circuit. Inequitable conduct issues will be addressed in Therasense, Inc. v. Becton, Dickinson & Co., and contempt proceedings issues will be addressed in Tivo Inc. v. Echostar Corp. Both hearings are scheduled for Tuesday, November 9, at 10:00 am, in courtroom 201.
Therasense, Inc. v. Becton, Dickinson & Co.
The en banc order in Therasense asked the parties to address the following questions:
- Should the materiality-intent-balancing framework for inequitable conduct be modified or replaced?
- If so, how? In particular, should the standard be tied directly to fraud or unclean hands? If so, what is the appropriate standard for fraud or unclean hands?
- What is the proper standard for materiality? What role should the United States Patent and Trademark Office’s rules play in defining materiality? Should a finding of materiality require that but for the alleged misconduct, one or more claims would not have issued?
- Under what circumstances is it proper to infer intent from materiality?
- Should the balancing inquiry (balancing materiality and intent) be abandoned?
- Whether the standards for materiality and intent in other federal agency contexts or at common law shed light on the appropriate standards to be applied in the patent context.
Tivo Inc. v. Echostar Corp.
The en banc order in Tivo asked the parties to address the following questions:
- Following a finding of infringement by an accused device at trial, under what circumstances is it proper for a district court to determine infringement by a newly accused device through contempt proceedings rather than through new infringement proceedings? What burden of proof is required to establish that a contempt proceeding is proper?
- How does “fair ground of doubt as to the wrongfulness of the defendant’s conduct” compare with the “more than colorable differences” or “substantial open issues of infringement” tests in evaluating the newly accused device against the adjudged infringing device?
- Where a contempt proceeding is proper, (1) what burden of proof is on the patentee to show that the newly accused device infringes and (2) what weight should be given to the infringer’s efforts to design around the patent and its reasonable and good faith belief of noninfringement by the new device, for a finding of contempt?
- Is it proper for a district court to hold an enjoined party in contempt where there is a substantial question as to whether the injunction is ambiguous in scope?
Placing Bets Around the Table
I expect the courtroom to be crowded on Tuesday. Interested parties, practitioners, students and reporters will try to figure out which way the judges are leaning from the questions they ask or don’t ask, and from the lines of argument they follow or cut short. While some judges may show their hand during oral hearing, some are inclined to bluff with their questions, testing the limits of each party’s arguments. Tuesday should be an interesting morning at the Federal Circuit, but we won’t know how the court will answer these questions for a few more months, when the written opinions are released.