In SCA v. First Quality Baby Products, the Supreme Court ‎holds that laches should not be available as a defense in ‎patent cases, refusing to concur with the Circuit’s en banc ‎holding that the Patent Act’s 6-year limitation on damages is ‎different from the Copyright Act’s 3-year statute of ‎limitations. See our report. In Bayer v. Dow and University of ‎Utah v. Max Planck, the Circuit refuses to substitute its ‎judgment for that of the district courts in section 285 ‎determinations, ruling in each case that there was no abuse ‎of discretion in awarding and denying attorney fee awards. ‎In TVIIM v. McAfee, the panel refuses to permit the appellant ‎TVIIM to raise new claim construction arguments on appeal.‎

Thanks to my colleague Graciela Gomez Cowger for her ‎help with this week’s report.‎
Pete

Bayer Cropscience v. Dow Agrosciences, Fed. Cir. Case ‎‎2015-1854 (March 17, 2017)‎

The Circuit easily determines that, under Octane Fitness and ‎Highmark, the district court did not abuse its discretion in ‎awarding Dow attorney fees under section 285 because the ‎case stands out from others both as to its lack of substantive ‎strength and the unreasonable manner in which Bayer ‎conducted the litigation.‎

Bayer sued Dow for patent infringement even though it had ‎entered into a license agreement in which Dow was ‎permitted to commercialize soybeans that were genetically ‎engineered to tolerate herbicides. Bayer took the position ‎that Dow’s license was limited to non-commercial ‎transactions. The district court disagreed, concluding that ‎Bayer’s reading of the contract was “contorted,” and was ‎even contradicted by Bayer’s own witnesses. ‎

The parties agreed that English law governed, so Bayer ‎presented expert testimony from a former Justice of the ‎Supreme Court of the United Kingdom that Bayer’s ‎interpretation was reasonable. However, there was no ‎dispute that under U.K. law, the circumstances surrounding ‎the execution of an agreement are admissible. Not only did ‎all of the evidence of surrounding circumstances support ‎Dow’s position, but Lord Collins conceded that his opinion ‎was “incomplete” because he had only considered the text of ‎the agreement. The surrounding circumstances included ‎contemporaneous correspondence between the parties ‎confirming that the intent of the agreement was to convey all ‎commercial rights to Dow. ‎

The manner in which Bayer litigated the case included the ‎fact that Bayer added this patent infringement claim to an ‎ongoing case between the parties only a few days after Dow ‎issued a press release announcing its plans to ‎commercialize the covered soybean product. And then, ‎eighteen months later, Bayer filed a motion for preliminary ‎injunction, even though Dow had not yet introduced the ‎product. The district court ruled that had Bayer fully ‎investigated its position, even just the evidence in its own ‎control, it would not have filed the action. Moreover, the filing ‎of a preliminary injunction amid targeted discovery that ‎would prove fatal to its case rendered the motion “frivolous,” ‎and unnecessarily increased the costs of the litigation.‎

The panel refuses to accept Bayer’s invitation to reweigh the ‎evidence, as under Highmark the appropriate review is ‎simply to determine if the district court abused its discretion. ‎After reviewing the foregoing evidence, the panel ‎determines that the district court did not abuse its discretion ‎in determining that, under the totality of the circumstances, ‎this was an exceptional case.‎

Read the full opinion

University of Utah v. Max Planck Gesellschaft, Fed. Cir. ‎Case 2016-1336 (March 23, 2017)‎

The Circuit affirms the denial of attorney fees under § 285, ‎showing how deferential it will be in such “abuse of ‎discretion” rulings. The underlying dispute concerns ‎inventorship of the Tuschl II patents, which relate to RNA ‎interference (“RNAi”), a process that may be useful in ‎treating a variety of diseases associated with overactive or ‎mutated genes. Dr. Thomas Tuschl published an article ‎describing various discoveries in the field of RNAi. Less than ‎a month later, Dr. Brenda Bass, of the University of Utah ‎‎(“UUtah”), published a mini-review that summarized the ‎state of RNAi research. Dr. Bass’s mini-review included ‎several of her own hypotheses about enzymatic processes ‎that may be responsible for the RNAi activity reported in Dr. ‎Tuschl’s article.‎

After publishing his article, Dr. Tuschl transitioned to a new ‎line of research that would result in the patented Tuschl II ‎invention. Dr. Tuschl read Dr. Bass’s mini-review, recognized ‎her hypothesis that 3’ overhangs may be relevant to RNAi, ‎and successfully tested that hypothesis. Data from cloning ‎and sequencing revealed that species with 3’ overhangs ‎were prevalent in active RNAi systems. Based on these data, ‎the Tuschl II inventors chemically synthesized candidate ‎molecules with and without 3’ overhangs and tested for RNAi ‎activity. Max Planck filed a patent application for the ‎discovery.‎

UUtah sued Max Planck for correction of ownership, ‎claiming that Dr. Bass should be named as a sole or joint ‎inventor of the Tuschl II patents. UUtah’s claim of sole ‎inventorship turned on allegations that Dr. Bass reduced to ‎practice the concept that molecules with 3’ overhangs would ‎be integral to RNAi, focusing primarily on Dr. Bass’s mini-‎review. Its claim of joint inventorship turned on alleged ‎collaboration between Dr. Bass and the Tuschl II inventors ‎that occurred over several conversations at various ‎academic conferences.‎

During her deposition, Dr. Bass made several admissions ‎undermining UUtah’s allegation that Dr. Bass reduced the ‎Tuschl II invention to practice. When asked if she ever did ‎any of the experiments included in the Tuschl II patents,” she ‎responded: “Not that I know of.” When asked if her lab ever ‎studied how to put siRNAs on cells, she responded: “No.” ‎When asked if she ever tested siRNAs as agents for ‎targeting messenger RNAs, she responded: “No.”‎

On the eve of the deadline for dispositive motions, UUtah ‎withdrew its sole inventorship claims, but declined to ‎withdraw its joint inventorship claim. The district court then ‎granted Max Planck’s motion for summary judgment as to ‎that claim.‎

Max Planck sought eight million dollars in attorney fees ‎pursuant to 35 U.S.C. § 285, which the district court denied. ‎Max Planck argued on appeal that the court disregarded the ‎Supreme Court’s direction in Octane Fitness by failing to ‎consider the substantive weakness of UUtah’s litigation ‎position in light of Dr. Bass’s deposition testimony, but the ‎panel disagrees. District courts have discretion to make ‎exceptional case determinations on a case-by-case basis, ‎considering the totality of the circumstances. A “case ‎presenting either subjective bad faith or exceptionally ‎meritless claims may sufficiently set itself apart from mine-‎run cases to warrant a fee award.” Other factors that may ‎support a finding of exceptional case include frivolousness, ‎motivation, objective unreasonableness of a case’s factual ‎or legal components, and the need in particular ‎circumstances to advance considerations of compensation ‎and deterrence. The district court made no finding that any of ‎these factors applied here, but according to the panel, she ‎had no obligation to write an opinion that reveals her ‎assessment of every consideration. The opinion concludes ‎with the statement that the Circuit will not second guess her ‎determination.‎

Read the full opinion

TVIIM v. McAfee, Fed. Cir. Case 2016-1562 (March 21, ‎‎2017)‎

The Circuit affirms the district court’s findings of non-‎infringement and invalidity under a uniform construction of ‎disputed claim terms after finding that TVIIM waived its right ‎to any new claim construction. The panel also holds that the ‎district court did not abuse its discretion in denying a new ‎trial.‎

TVIIM sued McAfee for infringement of a patented system ‎that both identifies potential security threats to a computer ‎and, under certain conditions, recommends action to a user ‎to stop the threat. McAfee asked the district court to construe ‎a single claim term: “vulnerability.” The court ruled that ‎‎“vulnerability” should have its plain and ordinary meaning, ‎which is not limited to pre-existing security problems or ‎vulnerabilities. The parties agreed that “vulnerability” is an ‎‎“exploitable weakness in a computer system.”‎

The jury returned a verdict finding that McAfee did not ‎infringe and that the patent was invalid. TVIIM moved for ‎JMOL, which the district court denied. TVIIM argued on ‎appeal that the jury’s findings are inconsistent since it could ‎not have issued a verdict of non-infringement and invalidity ‎because the disputed claim terms have more than one ‎ordinary meaning. But the Circuit is quick to note that TVIIM ‎did not seek the district court’s construction of any of the ‎disputed terms. Specifically, TVIIM never presented multiple ‎ordinary meanings of the disputed claim terms or showed ‎that the disputed claim terms are open to varying ‎interpretations. The Circuit thus holds that TVIIM waived any ‎new construction of the disputed claim terms by not ‎requesting that these terms be construed by the district court. ‎The Circuit also rules that substantial evidence supports the ‎jury’s verdict of non-infringement based on using the same ‎construction it used for its invalidity verdict. Finally, the panel ‎holds that even if an error occurred in the jury’s verdict of ‎infringement, such an error was harmless. ‎

Read the full opinion

This article was originally published on Schwabe, Williamson & Wyatt's Ideas Fuel Industries Section

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