United States Court of Appeals for the Federal Circuit
__________________________ INNOVENTION TOYS, LLC, Plaintiff-Appellee, v. MGA ENTERTAINMENT, INC., WAL-MART STORES, INC., AND TOYS R US, INC., Defendants-Appellants. __________________________ 2010-1290 __________________________ Appeal from the United States District Court for the Eastern District of Louisiana in Case No. 07-CV-6510, Judge Martin L.C. Feldman. ____________________________ Decided: March 21, 2011 ____________________________ JAMES C. OTTESON, Agility IP Law, of East Palo Alto, California, argued for plaintiff-appellee. MICHAEL A. NICODEMA, Greenberg Traurig, LLP, of Florham Park, New Jersey, argued for defendantsappellants. With him on the brief were MARK R. GALIS and KEVIN J. OSHEA, of Chicago, Illinois. __________________________

INNOVENTION TOYS

v. MGA ENTERTAIN
Before RADER, Chief Judge, LOURIE, Circuit Judge, and WHYTE, District Judge. LOURIE, Circuit Judge. MGA Entertainment, Inc.; Wal-Mart Stores, Inc.; and Toys R Us, Inc. (collectively, MGA) appeal from the summary judgment decision of the United States District Court for the Eastern District of Louisiana that the asserted claims of U.S. Patent 7,264,242 (the 242 patent) were infringed and were not invalid for obviousness. Innovention Toys, LLC v. MGA Entmt, Inc., 665 F. Supp. 2d 636 (E.D. La. 2009). Because the district court correctly found no genuine issues of material fact regarding infringement based on its construction of the claim term movable, we affirm the courts grant of summary judgment of literal infringement. The district court, however, erred in several of its factual findings underlying its nonobviousness determination. We therefore vacate the courts grant of summary judgment of nonobviousness and remand. BACKGROUND I. Innovention Toys, LLC (Innovention) brought suit against MGA for infringement of the 242 patent, which claims a chess-like, light-reflecting board game and methods of playing the same. The disclosed game includes a chess-styled playing surface, laser sources positioned to project light beams over the playing surface when fired, mirrored and non-mirrored playing pieces used to direct the lasers beams, and non-mirrored key playing pieces equivalent to the king pieces in chess. See The Honorable Ronald M. Whyte, United States District Court for the Northern District of California, sitting by designation.
242 patent col.2 l.64col.3 l.35. To play the game, players take turns either moving a playing piece to an unoccupied, adjacent square or rotating (reorienting) a piece within a square. Id. col.3 ll.21-24; col.8 l.49col.9 l.12. After moving or rotating a piece, a player then fires his laser, and if the lasers beam strikes the non-mirrored surface of a playing piece, that piece is eliminated from the game. Id. col.3 ll.26-30; col.9 ll.13-17. To win the game, a player must direct his laser beam to strike, or illuminate, his opponents non-mirrored key playing piece, ending the game. Id. col.3 ll.17-20; col.6 ll.44-47. All the asserted claims, claims 31-33, 39-41, 43-44, 4850, and 53-54, include a key playing pieces limitation in which the key pieces are movable. Claim 31 is representative: A board game for two opposing players or teams of players comprising: a game board, movable playing pieces having at least one mirrored surface, movable key playing pieces having no mirrored surfaces, and a laser source, wherein alternate turns are taken to move playing pieces for the purpose of deflecting laser beams, so as to illuminate the key playing piece of the opponent. Id. claim 31 (emphasis added). MGA counterclaimed, denying infringement and alleging, inter alia, that the 242 patent was invalid under 35 U.S.C. 103. In making its obviousness argument, MGA relied on the combination of (1) two articles describing computer-based, chess-like strategy games, Laser Chess and Advanced Laser Chess (collectively, the Laser Chess references); and (2) U.S. Patent 5,145,182 (the
Swift patent) describing a physical, chess-like, laserbased strategy game. The Laser Chess game is described in an article entitled Laser Chess First Prize $5,000.00 Winner Atari ST Programming Contest, published in the April 1987 edition of Compute!. J.A. 1775-78. Advanced Laser Chess is described in an article published in the Summer 1989 edition of Compute!s Amiga Resource. J.A. 1784-87. Both articles disclose chess-like computer games with virtual lasers and mirrored and non-mirrored pieces, which are moved or rotated by players during alternating turns on a virtual, chess-like playing board. The goal of each game is to manipulate ones laser beam using the various game pieces to eliminate the other players nonmirrored king piece by striking it with the laser beam. In Laser Chess, a players king piece may move squares during game play: [The king] can capture any opposing piece by moving onto its square. J.A. 1776. Similarly, in Advanced Laser Chess Kings possess the ability to capture other pieces [by moving on top of them]. J.A.1784. The Swift patent discloses a physical (rather than electronic) strategy game in which players take turns placing mirrored game pieces onto squares of a chessstyled game board. The players position the pieces so as to direct their lasers beam towards the opposing players scoring module and away from their own. A player scores when his laser beam, having been deflected around the game board, strikes his opponents scoring module. The scoring modules are mounted to the frame of the game board, see Swift patent col.2 ll.51-56, and thus are not physically capable of movement on the game board. MGAs accused game, Laser Battle, is a physical board game for playing a chess-like strategy game.

Players take turns moving or rotating mirrored playing pieces so as to direct a laser beam to strike the opposing players non-mirrored Tower playing piece to win the game. According to the rules of Laser Battle, in Classic Game Play, the Tower pieces are placed on the board at the beginning of the game at one of various standard positions. J.A. 1986. Although the Towers are physically capable of movement on the game board, the rules provide that they should always remain in their original positions on the board. J.A. 1985. However, the standard starting configuration illustrated in the rules show that the Tower pieces can be placed at different locations on the board, and the rules state that during Advanced Game Play, the Towers need not remain in their standard positions. J.A. 1986. II. On October 14, 2009, the district court ruled on the parties cross-motions for summary judgment of infringement and invalidity. Innovention Toys, 665 F. Supp. 2d 636. The district court granted Innoventions motion for summary judgment of literal infringement. Id. at 647. The court first construed the claim term movable in light of the terms plain meaning as capable of movement as called for by the rules of the game or game strategy. Id. at 644-45. In so holding, the court rejected MGAs more cramped construction that the movement must be from space to space or by rotation within a single space. Id. at 643-45; see also id. at 644 n.15. The district court also rejected Innoventions broader construction of movable to mean able to be moved, or possible to move, without any tie to the rules or strategy of the game. Id. at 642-43. Based on its construction, the district court then found that the accused Laser Battle games Tower pieces
met the movable claim limitation, the only disputed limitation. The court found that those key pieces were moveable when the players selected and set up the game pieces in various start formations and layouts. Id. at 647 n.18. The court reasoned that even if the instructions to Laser Battle suggest that its key pieces, the Towers, are not supposed to be moved during game play, they are capable of movement. in that they fit into the recessed spaces on the board like the other pieces, and are capable of rotation within whatever recessed space a player may choose to place the Tower in for the start of game play. Id. at 646-47. The court also observed that although the instructions to Laser Battle note that [t]he Towers should always remain in their original positions on the board, id. at 647 n.18, they also explain that [e]xcept for Advanced Game Play, the Target Tower and the Laser Guns will remain in their standard positions in all formations, see id. at 647 n.18 & 19; J.A. 1986. This instruction suggests that the Tower pieces could be moved in Advanced Game Play because they fit in and are rotatable in the recessed spaces on the board. The district court also granted Innoventions motion for summary judgment of nonobviousness. Id. at 655. The court first found that the Laser Chess references were non-analogous art because they described electronic, rather than real-world, laser games. Id. at 653. The district court then held that, because MGA had provided no evidence to support a finding as to the level of ordinary skill in the art, MGAs obviousness argument could be pursued only on the basis of what would have been obvious to a layperson. Id. at 654. The court then decided that because MGA had not provided any evidence that a layperson would have known of the Laser Chess articles or would have had any reason to modify the teachings of

the Laser Chess references, MGA had failed to state a prima facie case of obviousness. Id. Finally, the court found that Innovention had demonstrated several secondary considerations of nonobviousness. These included (1) commercial success based on the sale of 140,000 games by Innovention, a small company with minimal marketing capabilities, and evidence that fans had started clubs and tournaments around the world; (2) long-felt need based on the games sudden success and media praise; and (3) industry praise based on, inter alia, the games nomination for Outstanding Technology of the Year by the International Academy of Science and its being one of five finalists for the Toy Industry Associations 2007 Game of the Year award. Id. at 654-55. In light of its summary judgment rulings, the district court granted Innoventions motion for a permanent injunction on January 13, 2010. MGA appealed. We have jurisdiction pursuant to 28 U.S.C. 1295(a)(1). DISCUSSION This court reviews a district courts decision on summary judgment de novo, reapplying the same standard applied by the district court. Iovate Health Scis., Inc. v. Bio-Engineered Supplements & Nutrition, Inc., 586 F.3d 1376, 1380 (Fed. Cir. 2009). Summary judgment is appropriate if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). I. Infringement A determination of infringement involves two steps: First, the court determines the scope and meaning of the asserted patent claims. The court then compares the properly construed claims to the allegedly infringing
device to determine whether all of the claim limitations are present, either literally or by a substantial equivalent. Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1454 (Fed. Cir. 1998) (en banc). The first step, claim construction, is a question of law, reviewed de novo. Id. (citing Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995) (en banc)). In contrast, infringement, whether literal or under the doctrine of equivalents, is a question of fact. Bai v. L & L Wings, Inc., 160 F.3d 1350, 1353 (Fed. Cir. 1998). Accordingly, a court may determine infringement on summary judgment when no reasonable jury could find that every limitation recited in the properly construed claim either is or is not found in the accused device. Id. On appeal, MGA does not argue that the district court erred in construing movable to mean capable of movement as called for by the rules of the game or game strategy. Rather, MGA argues that the court improperly broadened its construction during the second step of the infringement analysis by adding capable of movement during game set up, and thus erred in finding that Laser Battles Tower pieces meet the movable limitation. Under the courts original construction, MGA asserts, Laser Battles instructions definitively show that the Tower pieces are not to be moved, either from space to space or by rotation within a space, as part of the games rules or strategy. Rather, MGA urges, the only way that the Tower pieces can be movable during game play or strategy is if the players ignore the games rules and cheat. Moreover, according to MGA, because all the pieces must be moved onto the game board at some point, the district courts altered construction renders everything movable and the movable limitation superfluous. Innovention responds that Laser Battles Tower pieces are clearly capable of movement; each Tower piece is a

separate component that can be placed at any space on the game board and afterwards rotated within that space or moved to another space. In other words, Innovention argues, the Towers are movable since they are not permanently mounted to the game board as are the key playing pieces (scoring modules) disclosed in the Swift patent. Furthermore, according to Innovention, Laser Battles instructions do not require the Tower pieces to remain stationary during all game play; the rules invite players to create more intricate games and tell players that the Towers remain in their standard positions in all formations except during Advanced Game Play. J.A.1986-87. We agree in main with the district court's infringement analysis, 1 and we affirm the district courts decision holding that MGAs Laser Battle game literally infringes the asserted claims of the 242 patent. During claim construction, the district court rejected MGAs narrower construction of movable in which movable was limited to the movements explicitly permitted by the rules of the game during game play, i.e., movable from space to space or by rotation within a single space. Innovention Toys, 665 F. Supp. 2d at 642-43. Rather, the court embraced a definition that distinguished movable from mounted by contrasting the movable key playing pieces of the 242 patent with the fixed scoring modules of Swift. In The district court stated that even if the instructions suggest that the key pieces should not be moved, the capability existed, and this was dispositive of the infringement question. Innovention Toys, 665 F. Supp. 2d at 646-47. To the extent that this analysis implies that there would be infringement regardless of rules requiring particular placement of key pieces during game set up and prohibiting movement of those pieces regardless of the type of play, the analysis goes beyond that required for the disposition of the infringement question here.
particular, the district court stated that while the key pieces disclosed in the Swift reference are permanently fixed to the game board and, therefore, cannot be moved prior to or during game play, the key pieces of the 242 patent may be positioned in different spaces at the beginning of each game and can also be moved during game play. Id. at 644; see also id. at 644 n.15. Thus, the courts construction of movable includes the capability of being positioned in different spaces during set up (i.e., at the beginning of each game) and the capability of being moved during Advanced Game Play. In other words, the Tower pieces are capable of movement as called for by the rules of the game or game strategy. Accordingly, MGA is incorrect when it argues that the district court expanded its construction of movable during the second step of the infringement analysis. The courts construction, not just its application, encompasses movement during game set up. Moreover, such a construction does not render movable superfluous, as MGA asserts, since it distinguishes the 242 patents key pieces from the mounted scoring modules disclosed in Swift. Laser Battles Tower pieces thus meet the movable limitation under the district courts consistent construction based on the pieces undisputed ability to be physically positioned in different squares on the game board. No reasonable jury could find otherwise. Although MGA contends that it does not dispute the district courts construction, implicit in MGAs argument is its disagreement with the construction of movable to mean capable of movement. Because MGA does not challenge the district courts claim construction directly, but rather indirectly based on its application to the accused product, we will not review the district courts construction of movable to encompass the capability of movement. Accordingly, we affirm the district courts

decision granting summary judgment of literal infringement. II. Obviousness Under the Patent Act, [a] patent may not be obtained. if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. 35 U.S.C. 103(a). Although the ultimate determination of obviousness under 103 is a question of law, it is based on several underlying factual findings, including (1) the scope and content of the prior art; (2) the level of ordinary skill in the pertinent art; (3) the differences between the claimed invention and the prior art; and (4) evidence of secondary factors, such as commercial success, long-felt need, and the failure of others. Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966). A patent is presumed valid, 35 U.S.C. 282, and this presumption can be overcome only by clear and convincing evidence to the contrary. Bristol-Myers Squibb Co. v. Ben Venue Labs., Inc., 246 F.3d 1368, 1374 (Fed. Cir. 2001). MGA argues that, rather than being nonobvious, the asserted claims would have been obvious based on the combination of the Laser Chess references, which teach the claimed game in electronic form, and the Swift patent, which teaches a physical laser-based game. According to MGA, the district court erred both (1) in concluding that because the 242 patent relates to a physical game, the Laser Chess articles were non-analogous art; and (2) in assuming that a person of skill in the art was a layperson rather than, as put forth by Innovention, a mechanical engineer with knowledge of optics. Finally, MGA argues, Innoventions unsupported and conclusory assertions of
secondary considerations fail to overcome MGAs prima facie case of obviousness. Innovention responds that the Laser Chess references in combination with the Swift patent fail to teach or suggest every limitation of the asserted claims, and thus MGA has failed to state a prima facie case of obviousness. Specifically, Innovention argues that Swift, as MGA admits, fails to disclose movable key pieces and that the Laser Chess references fail to disclose any physical, nonvirtual game components. Accordingly, Innovention argues that the Laser Chess references are non-analogous art because they are neither within the inventors field of endeavor, i.e., a non-virtual, three-dimensional, laser board game, nor reasonably pertinent to it. Innovention also argues that because MGA offered no evidence as to the level of skill in the art, the skill level defaults to that of a layperson, and that its evidence of secondary considerations provides further evidence that the claimed invention would not have been obvious. We conclude that the district court clearly erred in several of the factual findings underlying its obviousness analysis. The district court erred in finding that the Laser Chess references fail to qualify as analogous art. The court also erred in concluding that the level of skill in the art is that of a layperson. We address each in turn. A. Analogous Art A reference qualifies as prior art for a determination under 103 when it is analogous to the claimed invention. In re Clay, 966 F.2d 656, 658 (Fed. Cir. 1992). Two separate tests define the scope of analogous art: (1) whether the art is from the same field of endeavor, regardless of the problem addressed, and (2) if the reference is not within the field of the inventors endeavor, whether the reference still is reasonably pertinent to the particular

problem with which the inventor is involved. In re Bigio, 381 F.3d 1320, 1325 (Fed. Cir. 2004). A reference is reasonably pertinent if. it is one which, because of the matter with which it deals, logically would have commended itself to an inventors attention in considering his problem. Clay, 966 F.2d at 659. If a reference disclosure has the same purpose as the claimed invention, the reference relates to the same problem, and that fact supports use of that reference in an obviousness rejection. Id. Whether a prior art reference is analogous is a question of fact. Id. at 658. Innovention argues that the Laser Chess articles are non-analogous art because the 242 patents inventors were concerned with making a non-virtual, threedimensional, laser-based board game, a project that involves mechanical engineering and optics, not computer programming. The district court appears to have agreed, finding that the Laser Chess references were nonanalogous art since each discloses an electronic version of the 242 patent. Innovention Toys, 665 F. Supp. 2d at 653. The court, however, failed to consider whether a reference disclosing an electronic, laser-based strategy game, even if not in the same field of endeavor, would nonetheless have been reasonably pertinent to the problem facing an inventor of a new, physical, laser-based strategy game. In this case, the district court clearly erred in not finding the Laser Chess references to be analogous art based on this test as a matter of law. See Wyers v. Master Lock Co., 616 F.3d 1231, 1238 (Fed. Cir. 2010) (holding as a matter of law that prior art padlock seals were analogous since directed to the same problem of preventing the ingress of contaminants into the locking mechanism). The 242 patent and the Laser Chess references are directed to the same purpose: detailing the specific game
elements comprising a chess-like, laser-based strategy game. Specifically, the 242 patent describes (1) the games components, including the game board, 242 patent col.4 ll.45-56, and various types of playing pieces, id. col.6 l.48col.7 l.24; (2) the games specific rules, including how the pieces may move on the game board during a players turn, id. col.3 ll.21-28, col.8 l.49col.9 l.17; and (3) the games ultimate objective, namely, illuminating an opponents key playing piece with a laser beam, id. col.6 ll.4547. The specification even distinguishes prior art patents based on these game elements, stating that U.S. Patent 3,516,671 lacks the unique elements and rules of the [242 patents] invention, id. col.1 ll.47-50, and U.S. Patent 6,702,286 contemplates a game in which the objective is not to illuminate playing pieces, but rather to maneuver ones pieces to flank (or surround) those of the opposing player, id. col.2 ll.16-21. The Laser Chess references likewise describe specific playing pieces, rules, and objectives to create a chess-like, laser-based strategy game. Both Laser Chess and Advanced Laser Chess disclose, for example, (1) various game pieces, each with unique capabilities, J.A. 1775-77, 1784-85; (2) rules for each players turn, J.A. 1777-78, 1785-86; and (3) an ultimate objective of eliminating an opponents king piece, J.A. 1775, 1784. Accordingly, the 242 patent and the Laser Chess references relate to the same goal: designing a winnable yet entertaining strategy game. The 242 patents specification confirms that game design was one objective facing its inventors. In particular, the specification states that [s]trategy games may differ in a variety of ways, such as in board layout, the number and types of playing pieces, and the manner in which each piece moves on the game board, and that [e]ach of these variations affects the strategy of the play and the degree of skill required to

play the game. 242 patent col.2 ll.19-46. The specification thus admonishes that if the game elements are overly simplistic, the game is too easy, will usually end in a draw or a predictable manner, and quickly become uninteresting for the average player. Id. col.2 ll.49-54. Conversely, according to the specification, if the game elements are overly complicated, the game takes too long to learn [and] is frustrating and uninteresting for the average player. Id. col.2 ll.57-60. The specific combination of game elements disclosed and claimed in the 242 patent thus deals with the problem of game design, and game elements from any strategy game, regardless how implemented, logically would have commended itself to an inventors attention in considering [this] problem. Clay, 966 F.2d at 659. Basic game elements remain the same regardless of the medium in which they are implemented: whether molded in plastic by a mechanical engineer or coded in software by a computer scientist. And, as MGAs evidence shows, inventors of numerous prior art patents contemplated the implementation of their strategy games in both physical and electronic formats. Innovention Toys, 665 F. Supp. 2d at 650 n.23. For example, the Swift patent states that [a]lthough the preferred embodiment is played by two players, obvious modifications of the game allow for. a single player playing against a computer. Swift col.2 ll.47-51. Thus, because no reasonable jury could find that the Laser Chess references do not qualify as analogous prior art, and the district court erred in not so concluding as a matter of law. Because of its error, the district court failed to properly consider the scope and content of the relevant prior art as well as the differences between that art and the claimed invention, including whether one of ordinary skill in the art would have been motivated to combine the
teachings of the Laser Chess references with the Swift patent in light of the standard articulated in KSR International Co. v. Teleflex, Inc., 550 U.S. 398 (2007). We therefore remand these factual determinations to the district court to consider in the first instance. Furthermore, should the district court conclude that MGA has made out a prima facie case of obviousness based on the Laser Chess articles and the Swift patent, the court must then determine whether Innoventions secondary considerations overcome MGAs prima facie case. B. Level of Skill in the Art A determination of obviousness requires a factual finding of the level of ordinary skill in the art. 35 U.S.C. 103(a); Graham, 383 U.S. at 17. Yet, a district courts failure to make a correct finding on the level of skill constitutes reversible error only where it affects the ultimate conclusion under 103. Custom Accessories, Inc. v. Jeffrey-Allan Indus., Inc., 807 F.2d 955, 963 (Fed. Cir. 1986). For example, no reversal is necessary where a district court makes a determination that an invention would have been obvious to one having the lowest level of skill, i.e., a layperson, because what is obvious to a layperson is necessarily obvious to one with a higher level of skill in the field of the invention. Kloster Speedsteel AB v. Crucible Inc., 793 F.2d 1565, 1574 (Fed. Cir. 1986), overruled on other grounds by Knorr-Bremse Systeme Fuer Nutzfahrzeuge GMbH v. Dana Corp., 383 F.3d 1337 (Fed. Cir. 2004) (en banc). Conversely, no reversal is necessary where a district court makes a determination of nonobviousness based on a finding of the highest possible level of skill in the relevant art, as fewer inventions are obvious to a person with a lower level of skill than to one with a higher level of skill. Id. A less sophisticated level of skill generally favors a determination of nonobviousness, and thus the patentee, while a higher level of skill favors the

reverse. See Union Carbide Corp. v. Am. Can Co., 724 F.2d 1567, 1573 (Fed. Cir. 1984). In this case, the district court found that MGA had failed to provide any evidence of the level of skill in the art, and thus concluded that MGAs obviousness argument could be pursued only on the basis of what is obvious to a layperson. Innovention Toys, 665 F. Supp. 2d at 654. In so concluding, the district court erred. While MGA is permitted to argue that any level of skill, and thus the skill of a layperson, would suffice to support a holding of obviousness, the factual record in this case does not support such a finding. Here, Innovention conceded to the district court that the level of ordinary skill in the art was greater than that of a layperson. Specifically, Innovention asserted that the development of a threedimensional game would not, in fact, be easy for the average layperson, as it took Innoventions game creators, a Ph.D. in mechanical engineering and two mechanical engineering students, a year and a half to develop and finalize Innoventions game, J.A. 1884 n.10, and that Innoventions patent reveals that the claimed invention requires an understanding of geometrical optics, J.A. 1885. The district court appeared to agree, stating that it seems some knowledge of mechanical engineering or optics is required. Innovention Toys, 665 F. Supp. 2d at 654. The district court thus clearly erred in basing its obviousness analysis on what would have been obvious to a layperson notwithstanding evidence in the record and its apparent factual finding that one of ordinary skill in the art would possess a higher level of skill in the art. Because the district court found nonobviousness based on an inappropriately low level of skill in the art, the error was not harmless. Kloster, 793 F.2d at 1574. Accordingly, on remand, the district court must make a
finding on the level of skill in the art and base its obviousness analysis on that level of skill. III. Permanent Injunction The district court, based on its grant of summary judgment of infringement and nonobviousness, granted a permanent injunction to Innovention. Because we vacate and remand the district courts decision of summary judgment of nonobviousness, we also vacate the district courts permanent injunction. CONCLUSION For the foregoing reasons, we affirm the district courts grant of summary judgment of literal infringement, and we vacate and remand the district courts grant of summary judgment of nonobviousness. AFFIRMED IN PART, VACATED IN PART, and REMANDED

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Rebecca L. Harker
Judges: Lourie, Gajarsa, Linn (author) [Appealed from N.D. Ill., Judge Gettleman] In In re BP Lubricants USA Inc., No. 10-M960 (Fed. Cir. Mar. 15, 2011), the Federal Circuit granted a petition for writ of mandamus in part and directed the district court to dismiss the respondents false marking complaint with leave to amend in accordance with the particularity requirements of Fed. R. Civ. P. 9(b) as described in the Courts Order. BP Lubricants USA Inc. (BP) manufactures motor oil products under the brand name CASTROL. BPs CASTROL products are distributed in a unique bottle design for which BP received a design patent. Respondent Thomas A. Simonian, a patent attorney, filed a qui tam relator complaint on behalf of the United States pursuant to 35 U.S.C. 292, in which he alleged that BPs design patent expired on February 12, 2005, and BP continued to mark its bottles with the patent number after the patent expired. The complaint also asserts mostly upon information and belief, that (1) BP knew or should have known that the patent expired; (2) BP is a sophisticated company and has experience applying for, obtaining, and litigating patents; and (3) BP marked the CASTROL products with the patent numbers for the purpose of deceiving the public and its competitors into believing that something contained or embodied in the products is covered or protected by the expired patent. Slip op. at 3. BP filed a motion to dismiss the complaint, arguing that the relators complaint failed to allege any underlying facts upon which a court could reasonably infer that BP knew its patent had expired when it was marking its products. The district court concluded that the complaint stated an actionable claim and met the requirements of Rule 9(b). The district court explained that in addition to alleging that BP knew or should have known the patent expired, it was enough under Rule 9(b) for the relator to allege that BP had deliberately and falsely marked at least one line of its motor oil products with an expired patent and continues to falsely mark its products throughout the Northern District of Illinois and the rest of the United States with the intent to deceive its competitors and the public. BP petitioned the Federal Circuit for a writ of mandamus directing the U.S. District Court for the Northern District of Illinois to grant its motion to dismiss the relators complaint. The Federal Circuit found that the considerations presented in this case warranted the extraordinary remedy of mandamus because (1) the Court had not previously decided whether Rule 9(b) applies to

false marking cases or discussed the requisite level of pleading required, and (2) trial courts have been in considerable disagreement on this issue. Relying on Supreme Court precedent, the Federal Circuit noted that these exceptional circumstances warrant deciding this issue before final judgment.
Instead, a complaint must in the 292 context provide some objective indication to reasonably infer that the defendant was aware that the patent expired. Slip op. at 7.
The Federal Circuit, as a preliminary matter, addressed whether Rule 9(b)s particularity requirement applies to false marking claims under 292. In all cases sounding in fraud or mistake, Rule 9(b) requires a plaintiff to plead with particularity the circumstances constituting fraud or mistake. Id. at 5 (quoting Fed. R. Civ. P. 9(b)). The Court noted that Rule 9(b) acts as a safety valve to assure that only viable claims alleging fraud or mistake proceed to discovery, thus preventing relators from using discovery as a fishing expedition. The Court commented that under the False Claims Act, an analogous area of the law, every regional circuit has held that a relator must meet the requirements of Rule 9(b) when bringing complaints on behalf of the government. This is because the False Claims Act condemns fraud but not negligent errors or omissions. Id. at 6 (citation omitted). The Federal Circuit saw no sound reason to treat 292 actions differently since 292 condemns fraudulent or false marking. The Court reasoned that permitting a false marking complaint to proceed without meeting the particularity requirement of Rule 9(b) would sanction discovery and adjudication for claims that do little more than speculate that the defendant engaged in more than negligent action. The Federal Circuit noted that although knowledge and intent may be averred generally and that a plaintiff may plead upon information and believe under Rule 9(b), our precedent, like that of several regional circuits, requires that the pleadings allege sufficient underlying facts from which a court may reasonably infer that a party acted with the requisite state of mind. Id. at 6-7 (quoting Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1327 (Fed. Cir. 2009)). The Court emphasized that Exergens pleadings requirements apply to all claims under Rule 9(b), not just inequitable conduct cases. The Court concluded that the district courts reliance on the relators general allegation that BP knew or should have known that the patent expired was clearly incorrect. Instead, a complaint must in the 292 context provide some objective indication to reasonably infer that the defendant was aware that the patent expired. Id. at 7. In reaching the conclusion that the complaint failed to meet the requirements for Rule 9(b), the Federal Circuit found (1) that alleging that BP is a sophisticated company and has experience applying for, obtaining, and litigating patents is equivalent to asserting that the defendant should have known the patent expired, and such conclusory allegations are not entitled to an assumption of truth at any stage in litigation; (2) that a false marking does not inherently show scienter; (3) that the naming of specific individuals is not the only way to set forth facts upon which intent to deceive can be reasonably inferred; rather, a relator can, for example, allege that the defendant sued a third party for infringement of the patent after the patent expired or made multiple revisions of the marking after expiration, although none of these or similar assertions are present in the complaint here; and (4) the bar for proving deceptive intent in false marking cases is particularly high, requiring that the relator show a purpose of deceit rather than simply knowledge that a statement is false. Thus, the complaint failed to meet the requirements of

Rule 9(b) [b]ecause the relators complaint here provided only generalized allegations rather than specific underlying facts from which we can reasonably infer the requisite intent. Id. at 8. Accordingly, the Court granted BPs petition for mandamus in part, directing the district court to dismiss the complaint with leave to amend.

Maryann T. Puglielli

Judges: Newman, Bryson, Mayer (author) [Appealed from N.D. Ohio, Senior Judge Dowd] In Old Reliable Wholesale, Inc. v. Cornell Corp., No. 10-1247 (Fed. Cir. Mar. 16, 2011), the Federal Circuit reversed the district courts finding that the preceding infringement trial was exceptional and the district courts award of attorneys fees to Cornell Corporation (Cornell). Old Reliable Wholesale, Inc. (Old Reliable) is the assignee of U.S. Patent No. 5,069,950 (the 950 patent) directed to multilayered insulated roof board. Cornell sold two types of insulated roof boards: Vent-Top ThermaCal 1 (VT-1), which included a layer of paper felt; and Vent-Top ThermaCal 2 (VT-2), which included two layers of oriented strand board. In 2006, Old Reliable filed suit against Cornell for infringement of the 950 patent in light of Cornells VT-1 product. Cornell countersued that the 950 patent was invalid as anticipated by the VT-2 product and another competitors product, among other reasons. During his deposition, Old Reliables founder and inventor of the 950 patent testified that Old Reliables commercial product, which was based on the claims of the 950 patent, the VT-1 product, and the VT-2 product, each did exactly the same thing. The district court granted Cornells motion for SJ of patent invalidity, concluding that the VT-2 product and the competitors product anticipated the claims of the 950 patent. On appeal, the Court affirmed. Thereafter, Cornell filed a motion in district court asking that the case be declared exceptional and seeking attorneys fees under 35 U.S.C. 285. The district court granted Cornells motion but held that Cornell was only entitled to attorneys fees for the portion of the infringement litigation that continued after the inventors deposition. Prior to that point, the district court found that Old Reliable may have had some basis for its position that the VT-2 product did not anticipate the 950 patent claims. Meanwhile, during the initial infringement suit, the PTO granted Cornells request for ex parte reexamination of the 950 patent. Despite the fact that Old Reliable informed the PTO of the Federal Circuits finding of anticipation and invalidity in the related infringement suit, the PTO issued a notice of intent to issue an ex parte reexamination certificate confirming patentability of all claims in the
950 patent. Soon thereafter, the PTO withdrew the notice of intent, stating that the claims were invalid and noting the Federal Circuits decision.

We conclude, however, that the fact that the PTO confirmed the validity of the 950 patent on reexamination provides probative evidence on the issue of whether Old Reliable had a reasonable basis for its assertion that its patent was not anticipated. Slip op. at 19.
Old Reliable appealed to the Court for a second time, seeking reversal of the district courts awarding attorneys fees to Cornell. Citing Brooks Furniture Manufacturing, Inc. v. Dutailier International, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005), the Court explained that [a]bsent misconduct in conduct of the litigation or in securing the patent, sanctions may be imposed against the patentee only if both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless. The Court also noted the element of objective baselessness depends not on the state of mind of the party against whom fees are sought, but instead on an objective assessment of the merits of the challenged claims and defenses. Keeping these standards in mind, the Federal Circuit concluded that the preceding infringement trial was not an exceptional case that merited awarding of attorneys fees to Cornell. The Court addressed each of the damaging testimonies that emerged during the infringement trial along with the related PTO reexamination proceedings in turn. Regarding the inventors deposition, Cornell argued that Old Reliable had no reasonable basis for maintaining its infringement action once the inventor admitted that Old Reliables product, the VT-1 product, and the VT-2 product did exactly the same thing. The Court disagreed, noting that anticipation requires that all of the claim elements and their limitations be shown in a single reference. Regardless of whether the VT-2 and Old Reliables product did the same thing, there could be no anticipation unless the VT-2 disclosed either expressly or inherently all the structural limitations contained in the asserted claims. Citing In re Ruskin, 347 F.2d 843, 846 (CCPA 1965), the Court explained that even where a prior art device is the functional equivalent of a patented product, it does not anticipate unless it discloses the structure required by the asserted claims. Thus, despite Mr. Crookstons admission and given the fact that Old Reliable had pointed to structural differences between the VT-2 and its claims, the Court found that Old Reliable still had a reasonable basis on which to argue that the VT-2 product did not anticipate the 950 patent claims. The Court also addressed the alleged inconsistency between Old Reliables arguments that the VT-1 infringed the 950 patent claims while the VT-2 failed to anticipate these claims. After reviewing the differences between the two products, the Court found that there was nothing frivolous or inherently implausible about Old Reliables assertion that, from a physical standpoint, separating the insulation from spaced blocks by a thin layer of felt facing was different from separating these components with a bulky layer of oriented strand board. In addition, the Court noted that although Cornell had been selling its VT-2 product for many years before it introduced the VT-1 product, the VT-1 product sales quickly surpassed VT-2 product sales, providing a legitimate basis for Old Reliables arugment that commercial success of the infringing VT-1 product weighed against invalidity of the 950 patent. Moreover, the Court recognized that, even though contrary to its earlier holding affirming invalidity, the PTO nonetheless initially issued a notice of intent to issue an ex parte reexamination certificate after concluding its analysis of the cited art. Though the Court is not bound by the PTOs actions and must make its own determination of invalidity, the Court acknowledged that it was equally true that the PTO

has expertise in evaluating prior art and assessing patent validity. The fact that the PTO initially concluded that the 950 patent claims were valid after assessing the relevant prior art undercut Cornells contention that Old Reliable had no basis for arguing no anticipation of its claims. Moreover, the Court noted that the PTOs initial conclusion of validity, even if later revoked, provided probative evidence on the issue of whether Old Reliable had a reasonable basis for arguing that the 950 patent claims were valid and not anticipated. Finally, the Court addressed the question of whether there was litigation misconduct that could warrant awarding attorneys fees, even absent objective baselessness of the patentees arguments. Citing ICU Medical, Inc. v. Alaris Medical Systems, Inc., 558 F.3d 1368, 1380 (Fed. Cir. 2009), the Court described the standard for litigation misconduct as involving unethical or unprofessional conduct by a party or its attorneys during the course of adjudicative proceedings. Old Reliables refusal to participate in settlement negotiations in the context of the facts and testimony of the infringement trial did not rise to litigation misconduct. Because Old Reliable had an objectively reasonable basis for maintaining an infringement suit, the refusal to make or accept a settlement was not in and of itself sufficient to establish litigation misconduct. Thus, the Court reversed the district court and vacated the award of attorneys fees.

Mindy L. Ehrenfried

Judges: Bryson, Gajarsa, Linn (author) [Appealed from E.D. Va., Judge Smith; N.D. Cal., Judge Hamilton] In American Piledriving Equipment, Inc. v. Geoquip, Inc., No. 10-1283 (Fed. Cir. Mar. 21, 2011), the Federal Circuit affirmed the U.S. District Court for the Eastern District of Virginias (the Virginia district court) grant of SJ of noninfringement. And, in the consolidated appeal of American Piledriving Equipment, Inc. v. Bay Machinery Corp., No. 10-1314 (Fed. Cir. Mar. 21, 2011), the Federal Circuit affirmed in part, reversed in part, and remanded the U.S. District Court for the Northern District of Californias (the California district court) grant of SJ of noninfringement. American Piledriving Equipment, Inc. (American Piledriving) owns U.S. Patent No. 5,355,964 (the 964 patent), which relates to counterweights for so-called vibratory pile drivers. The counterweights consist of an eccentric weight portion either integral to (claim 1) or connected to (claim 16) a cylindrical gear portion. Each eccentric weight portion contains at least one insert-receiving area. American Piledriving brought two similar infringement suitsone against Geoquip, Inc. in the Virginia district court and one against Bay Machinery Corporation in the California district court. American Piledriving alleged that both defendants infringed the 964 patent by selling Model 250 and Model 500 vibratory pile drivers. Additionally, in the California district court proceeding, American Piledriving also accused an earlier, different version of the Model 500, known as the Early Model 500. In both actions, the parties disputed the meaning of the claim terms eccentric weight portion, integral, insert-receiving area, and connected to. The district courts adopted the same construction for integral and connected to, but different constructions for eccentric weight portion and insert-receiving area. In each action, the parties moved for SJ regarding infringement. Each district court granted the respective defendants SJ motion of noninfringement, holding that the accused pile drivers did not meet the integral and insert-receiving area claim limitations. American Piledriving appealed both decisions, and the appeals were consolidated before the Federal Circuit. Given the unusual circumstance of consolidated appeals from two district courts construing the same claim terms, the Federal Circuit commented: In the course of construing the claims in this case, the Virginia district court carefully avoided redefining the claims and reading limitations into the claims from

the written description. The California district court, however, inappropriately added several limitations not contained in the inventors claimed definition of the scope of his invention. This disparate treatment of the same issues before two competent and capable district courts is thus instructive. Slip op. at 10.
In the course of construing the claims in this case, the Virginia district court carefully avoided redefining the claims and reading limitations into the claims from the written description. The California district court, however, inappropriately added several limitations not contained in the inventors claimed definition of the scope of his invention. This disparate treatment of the same issues before two competent and capable district courts is thus instructive. Slip op. at 10.
The Federal Circuit first addressed the construction of the term eccentric weight portion. The Court rejected American Piledrivings argument that the term should be construed functionally rather than structurally. In particular, the Federal Circuit agreed with the Virginia district courts construction, noting that (1) the claim language, an eccentric weight portion connected to said cylindrical gear portion, suggested that the term should not be construed as broadly as American Piledriving proposes because that construction would include the gear itself, thus incorrectly resulting in a requirement that the structure connect to itself; (2) the specifications consistent reference to the eccentric weight portion as structure extending from the face of the gear made it apparent that it relates to the invention as a whole and not just the preferred embodiment as contended by American Piledriving, and the use of the words thereto and therewith to describe the relationship between the gear portion and weight portion suggested a structural rather than a functional construction; and (3) the prosecution history was consistent with the term referring to a structure extending from the gear portion. Additionally, the Court rejected the California district courts overly narrow construction, finding that nothing in the specification compelled reading additional limitations into the construction. The Federal Circuit then addressed the meaning of the term integral, agreeing with the district courts that it means formed or cast as one piece. Focusing on the claims and prosecution history, the Court noted that claim 16 recited an eccentric weight portion connected to the gear portion, whereas claim 19 (which depends from claim 16) recited an eccentric weight portion integral with the gear portion. While the parties disputed the meaning of the term integral, they did not dispute that connected to means joined together, united, or linked. The Federal Circuit rejected American Piledrivings argument that integral should not be limited to one piece because (1) where, as here, the claims describe the same relationship using different terms, the assumption is that the term in the dependent claim has a narrower scope[,] id. at 17, and since claim 16 encompasses one-piece counterweights as well as two-piece counterweights that are joined together, there is nothing inherently incorrect in interpreting integral in claim 19 to mean one piece; and (2) during reexamination, American Piledriving attempted to distinguish a prior art reference by arguing that integral meant one piece, and that argument was sufficient to disavow any potentially broader claim scope. Finally, with respect to claim construction, the Federal Circuit adopted the Virginia district courts construction of insert-receiving area. The Court agreed with American Piledriving that the California district court improperly imported a limitation from the preferred embodiment into the claims because the intrinsic record did not suggest or indicate that the additional limitation must always be present in the claimed invention.

The Federal Circuit next examined the district courts findings of noninfringement, concluding that the Model 250 and Model 500 lack an eccentric weight portion integral with said cylindrical gear portion, as required by the claims, and also lack the insert-receiving area recited in several of the claims. The Court, however, found that the Early Model 500 satisfies all of the limitations of claim 16, which merely requires that the components be connected to one another, as well as claims 17 and 18, and thus infringes those claims. Accordingly, the Federal Circuit agreed with the claim constructions of the Virginia district court, modified the claim constructions of the California district court to match the Virginia district courts constructions, affirmed the noninfringement judgment of the Virginia district court, and affirmed in part, reversed in part, and remanded the noninfringement judgment of the California district court.

Clara N. Jimenez

Judges: Rader, Lourie (author), Whyte (sitting by designation) [Appealed from E.D. La., Judge Feldman] In Innovention Toys, LLC v. MGA Entertainment, Inc., No. 10-1290 (Fed. Cir. Mar. 21, 2011), the Federal Circuit affirmed the district courts grant of SJ of literal infringement and vacated the grant of SJ of nonobviousness. The Court remanded on the issue of obviousness. Innovention Toys, LLC (Innovention) sued MGA Entertainment, Inc., Wal-Mart Stores, Inc., and Toys R Us, Inc. (collectively MGA) for infringement of U.S. Patent No. 7,264,242 (the 242 patent), based on MGAs Laser Battle game. The 242 patent is directed to a chess-like, light-reflecting board game and methods of playing the game. All of the asserted claims include a key playing pieces limitation in which the key pieces are movable. MGAs Laser Battle game is a board game for playing a chess-like strategy game. The games Tower pieces, which are placed on the board at the beginning of the game, can be placed at different locations, and do not need to remain in their standard positions during Advanced Game Play. MGA denied infringement and alleged that the 242 patent was invalid for obviousness under 35 U.S.C. 103. In alleging obviousness, MGA relied on the combination of two articles describing electronic, computer-based, chess-like strategy games (collectively the Laser Chess references) and a U.S. patent describing a chess-like strategy board game. The parties moved for SJ on the issues of infringement and invalidity. The district court granted Innoventions motions for SJ of literal infringement and nonobviousness, and its motion for a permanent injunction. MGA appealed. On appeal, the Federal Circuit affirmed the grant of SJ of literal infringement. The Court based its decision on the district courts construction of movable as capable of movement, because MGA did not directly challenge the construction. The Court held that the district courts construction encompassed movement during game setup, and, therefore, MGAs Laser Battle game infringed.

Stephanie H. Bald

Judges: Rader, Gajarsa (author), Prost [Appealed from TTAB] In Citigroup Inc. v. Capital City Bank Group, Inc., No. 10-1369 (Fed. Cir. Mar. 28, 2011), the Federal Circuit affirmed the TTABs dismissal of Citigroup Inc.s (Citigroup) opposition to registration of Capital City Bank Group, Inc.s (CCB) CAPITAL CITY BANK marks based on a likelihood of confusion with Citigroups CITIBANK marks. CCB filed applications for several CAPITAL CITY BANK-formative marks (the CAPITAL CITY BANK marks) covering various banking and financial services. Citigroup opposed registration of the CAPITAL CITY BANK applications on the grounds of likelihood of confusion and dilution based on Citigroups alleged family of CITIBANK marks for financial services. Citigroup asserted numerous registrations for its CITIBANK marks for banking and financial services. The TTAB found that four of the six likelihood-of-confusion factors set forth in Application of E.I. DuPont de Nemours & Co., 476 F.2d 1357, 1362 (CCPA 1973), favored Citigroup: (1) the fame of the CITIBANK marks; (2) the similarity between the parties services; (3) the similarity between Citigroups and CCBs trade channels; and (4) the similarity of the parties consumers. The TTAB found that two of the relevant DuPont factors favored CCB: (1) the nature and extent of any actual confusion; and (2) the similarity of the marks. After weighing the factors, the TTAB determined that there was no likelihood of confusion or dilution. On appeal, Citigroup challenged only the TTABs finding on the issue of likelihood of confusion and, in particular, its findings on the similarity-of-marks and actual confusion factors. The Federal Circuit, however, found that the TTABs findings were supported by substantial evidence. First, the Court agreed that CCBs marks were not similar to Citigroups marks based on the distinctive spellings of the marks, third-party usage of the phrase City Bank in the financial services industry, and the role of the word Capital in distinguishing the parties marks. Regarding the spelling of the marks, the Court found that the marks were not similar because the CAPITAL CITY BANK marks started with the word CAPITAL; City Bank is two words, not a compound word; and CCBs City is spelled with a y, not an i. The Court also noted the 40+ third-party websites whose names contained the term City Bank and the
registration of the third-party mark SURF CITY BANK. Further, the Court agreed that Capital was the dominant element of CCBs mark and that the public would be sensitive to the differences in the first word of the parties marks, given the extensive third-party use of marks ending in City Bank.

The consideration of only reasonable manners of depicting a standard character mark is unsupported by anything other than [TTAB] practice. The [TTAB] should not first determine whether certain depictions are reasonable and then apply the DuPont analysis to only a subset of variations of a standard character mark. The [TTAB] should simply use the DuPont factors to determine the likelihood of confusion between depictions of standard character marks that vary in font, style, size, and color and the other mark. Slip op. at 12-13.
Citigroup argued that the TTAB had not considered as many variations of the CAPITAL CITY BANK marks as it should have in its likelihood-of-confusion analysis. Specifically, Citigroup pointed to a footnote in the TTABs opinion that stated that minimizing CAPITAL and emphasizing CITY BANK was not a reasonable manner of depicting CCBs marks and, thus, was not considered in the analysis. Because CCBs applications for the CAPITAL CITY BANK marks had been filed in standard character font, Citigroup argued that the TTAB should have considered all manners of depicting the marks (not just reasonable manners). The Federal Circuit agreed with Citigroup that its reasonable manner restriction was unduly narrow. The Court explained, The [TTAB] should not first determine whether certain depictions are reasonable and then apply the DuPont analysis to only a subset of variations of a standard character mark. The [TTAB] should simply use the DuPont factors to determine the likelihood of confusion between depictions of standard character marks that vary in font style, size, and color and the other mark. Slip op. at 13. The Court added that illustrations of how the mark is actually used may help the TTAB visualize other forms in which the mark might appear. Notwithstanding the TTABs misapplication of the reasonable manner standard, however, the Court ultimately held that substantial evidence supported the finding that the parties marks were dissimilar in appearance, sound, connotation, and commercial impression. Additionally, the Court found that substantial evidence supported the TTABs finding of the absence of actual confusion. The Court agreed that the concurrent use of the parties marks in the same geographic markets since 1975 presented a reasonable opportunity for confusion to have occurred, and neither party was aware of any such confusion. Further, the Court dismissed Citigroups argument that the lack of any actual confusion was negated because CCB had not used all of the potential variations of the CAPITAL CITY BANK mark. Although the most potentially confusing form of that marka version deemphasizing Capital and emphasizing City Bankhad not yet been used, the Court found that the critical words were all in use and there had been no confusion. Thus, the Court concluded that the TTABs decision was supported by the record. Finally, the Court found that the TTAB did not err in finding no likelihood of confusion based on its weighing of the relevant DuPont factors. In so doing, the Court found that Citigroups approach of mechanically tallying the DuPont factors was improper, as the factors have differing weights. Id. at 18.

Trenton J. Roche

Judges: Gajarsa, Linn (author), Dyk [Appealed from Board] In In re Jung, No. 10-1019 (Fed. Cir. Mar. 28, 2011), the Federal Circuit affirmed the Boards ruling of invalidity, finding that the examiner properly established a prima facie case of invalidity, and that the Board did not act improperly as a super-examiner in its review of the examiners rejection. Edward K.Y. Jung and Lowell L. Wood, Jr. (collectively Jung) filed U.S. Patent Application No. 10/770,072 (the 072 application) directed to a photo-detector array system for transforming light inputs into electrical signals. The relevant claims at issue recite a well-charge-level controller of the system. During prosecution, the examiner issued a first office action, rejecting all claims of the 072 application in view of U.S. Patent No. 6,380,571 (Kalnitsky). The examiners rejection, in addressing the claimed well-charge-level controller, cited by page and line number to a controller disclosed in Kalnitsky. Jung responded to the office action, indicating that the well-charge-level controller recited in the claim was different from the controller in Kalnitsky. The examiner found this argument unpersuasive and issued a final rejection of all pending claims, prompting Jung to appeal the rejection to the Board. On appeal to the Board, Jung argued for the first time that the well-charge-level controller must perform certain operations disclosed in an exemplary embodiment of the 072 application. The Board rejected this argument, noting that Jung had the opportunity to amend the claims to achieve more precise claim coverage, i.e., to limit the claim to the exemplary embodiment argued on appeal, but failed to do so. Accordingly, the Board affirmed the examiners rejection of the independent claims, but reversed the examiners rejection of a dependent claim. Jung filed a request for rehearing, alleging that the Board erred in failing to address whether the examiner had set forth a prima facie rejection, but the Board rejected Jungs argument. Jung appealed to the Federal Circuit, arguing that the examiner failed to make a prima facie case of anticipation, and that the Board acted as a super-examiner by performing independent fact-finding and applying an improperly deferential standard of review to the examiners rejections. On appeal, the Federal Circuit rejected Jungs arguments, affirming the Boards decision and holding
certain claims of the 072 application not patentable as anticipated. First addressing Jungs argument that the examiner failed to make a prima facie case of anticipation, the Court noted that Jung did not challenge the substance of the prima facie rejection, but only the procedure used in establishing a prima facie case. The Court emphasized that the prima facie case is merely a procedural device that enables an appropriate shift of the burden of production. The Court noted that the PTO satisfies its initial burden of establishing a prima facie case when a rejection satisfies 35 U.S.C. 132, in notifying the applicant by stating the reasons for the rejection, together with such information and references as may be useful in determining whether to continue prosecution of the application. The Court found that the examiners office actions satisfied this initial burden, as they put Jung on notice that the examiner considered Jungs well-charge-level controller to equate to Kalnitskys controller.

The marking of legal argument as confidential under Rule 26(c)(1)(G) cannot be justified unless the argument discloses facts or figures of genuine competitive or commercial significance. Slip op. at 14.
At oral argument, the Federal Circuit did not suggest that marking the license and settlement agreements confidential was itself sanctionable; rather, the Court questioned whether counsel for Sun had violated the Courts rules by marking confidential those parts of its briefs that set forth Suns legal argument. Following oral argument, the Federal Circuit issued a show-cause order to Sun to explain why the Court should not impose sanctions for violating Fed. Cir. R. 28(d). In response to the Federal Circuits showcause order, Sun did not admit error and instead argued that, without the confidentiality designation, the attorney discussion would have divulged the confidential terms of the license agreement. The Federal Circuit explained that Fed. Cir. R. 28(d) permits parties to mark information in briefs as confidential only if the material is subject to confidentiality under a statute or protective order. Implicit in its rule is a requirement that the district courts protective order comply with Fed. R. Civ. P. 26. In this case, the Sanofi-Sun protective order permitted the parties to designate as confidential any form of trade secret or other confidential research, development, or commercial information within the meaning of Rule 26(c)(1)(G) and it properly required the parties to establish good cause and the district court to rule on any motions to seal. For the purpose of considering sanctions, the Federal Circuit determined that it need not decide whether the district courts protective order properly granted confidentiality to the items in question, and instead assumed that the license and settlement agreements were properly designated as confidential. Despite that assumption, the Federal Circuit found Suns confidential designation of case citations, direct quotations from published opinions, and legal argument improper. In particular, the Court reasoned that since the existence and nature of the triggering event was publicly disclosed in the consent judgment, legal argument pertaining to the triggering event was not, and could not, be properly marked as confidential. Further, [t]he marking of legal argument as confidential under Rule 26(c)(1)(G) cannot be justified unless the argument discloses facts or figures of genuine competitive or commercial significance. Slip op. at 14. Since that was not the case here, and Sun made no argument to the contrary, the Federal Circuit concluded that Suns confidential markings were not justified under Rule 26(c)(1)(G). Additionally, the Federal Circuit explained that much of the material marked as confidential by Sun did not even disclose the nature of the triggering event. The result of the extensive and improper markings was that the nonconfidential version of the brief was virtually incomprehensible. In conclusion, the Court found that [n]o good faith reading of our rule could support Suns marking of its legal arguments as confidential. The action of Suns counsel bespeaks an improper causal approach to confidentiality markings that ignores the requirements of public access, deprives the public of necessary information, and hampers this courts consideration and opinion writing. Id. at 15. Accordingly, the Federal Circuit held that, pursuant to Fed. R. App. P. 46(c), Suns extensive use of improper confidentiality markings in its briefs severely violated Fed. Cir. R. 28(d) and justified the imposition of $1,000 in monetary sanctions on Suns counsel.

Spotlight Info

In In re BP Lubricants USA Inc., No. 10-M960 (Fed. Cir. Mar. 15, 2011), the Federal Circuit granted a petition for writ of mandamus in part and directed the district court to dismiss the respondents false marking complaint with leave to amend. BP Lubricants USA Inc. (BP) distributes its motor oil products in a unique bottle design for which BP received a design patent. Respondent Thomas A. Simonian, a patent attorney, filed a qui tam relator complaint on behalf of the United States pursuant to 35 U.S.C. 292. Simonians complaint alleged that after BPs design patent expired on February 12, 2005, BP continued to mark its bottles with the patent number for the purpose of deceiving the public and its competitors into believing that the bottle was protected by the expired design patent. Upon a motion to dismiss from BP, the district court concluded that the complaint stated an actionable claim and met the requirements of Fed. R. Civ. P. 9(b) and denied the motion to dismiss. BP petitioned the Federal Circuit for a writ of mandamus directing the Northern District of Illinois to grant its motion to dismiss Simonians complaint. The Federal Circuit found that the considerations presented in this case warranted the extraordinary remedy of mandamus because (1) the Court had not previously decided whether Rule 9(b) applies to false marking cases or discussed the requisite level of pleading required, and (2) trial courts have been in considerable disagreement on this issue. The Court concluded that the district courts reliance on Simonians general allegation that BP knew or should have known that the patent expired was clearly incorrect, because a complaint must provide some objective indication to reasonably infer that the defendant was aware that the patent expired. Accordingly, the Court granted BPs petition for mandamus in part, directing the district court to dismiss the complaint with leave to amend, noting that leave to amend was particularly appropriate since the Court had not previously opined on the applicability of Rule 9(b) to false marking claims. See the full summary in this issue.

Looking Ahead

On April 4, 2011, the Federal Circuit heard oral argument in Association for Molecular Pathology v. U.S. Patent & Trademark Office, No. 10-1426, which addresses a district courts determination that isolated DNA lacks patent eligibility under 35 U.S.C. 101. In 2009, several plaintiffs filed a lawsuit claiming that patents on two human genes associated with breast and ovarian cancer are unconstitutional and invalid. The district court, inter alia, concluded that the patents at issue, directed to isolated DNA containing sequences found in nature, are unpatentable subject matter. One of the defendants, Myriad Genetics (Myriad), appealed, challenging the district courts jurisdiction and its decision. In addition to raising arguments in favor of patent eligibility, Myriad argued that the plaintiffs lacked standing to file a DJ suit. A decision is expected in the summer of 2011.