Last The FederalCircuit - Finnegan...SmithKline Beecham Corp. v. Apotex Corp., 365 F.3d 1306 (Fed. Cir. 2004), that claim 1 of U.S. Patent No. 4,721,723 (“the ‘723 patent”) was

EDITED BY VINCE KOVALICK

This publication brings you a synopsis of patent cases decided last month by the United States Court ofAppeals for the Federal Circuit based on slip opinions received from the court. You can review anddownload the full text of each opinion by visiting our website at www.finnegan.com

COURT FINDS PAROXETINE PATENT INVALID BASED ON NEW PRIOR ARTAfter en banc Court vacates prior ruling of invalidity based on public use, panelissues new decision of invalidity based on prior art patent. SmithKline BeechamCorp. v. Apotex Corp., No. 03-1285 (Fed. Cir. Apr. 8, 2005) . . . . . . . . . . . . . . .1

DISMISSAL OF DISTRICT COURT ACTION WITH PREJUDICE WAS ABUSE OFDISCRETIONPlaintiff’s failure to show cause as to why it failed to serve complaint in a timely manner did not warrant extreme result of dismissal with prejudice.Bowling v. Hasbro, Inc., No. 04-1364 (Fed. Cir. Apr. 11, 2005) . . . . . . . . . . . . .2

LACK OF DETAIL IN CLAIM-CONSTRUCTION ANALYSIS AND INFRINGEMENTFINDINGS RESULTS IN REMANDAlthough Federal Circuit’s review of claim construction is de novo, the Court must be furnished with sufficient findings and reasoning to permit meaningful appellate scrutiny. Nazomi Communications, Inc. v. ARM Holdings, PLC, No. 04-1101 (Fed. Cir. Apr. 11, 2005) . . . . . . . . . . . . . . . . . . . .2

CLAIM CONSTRUCTION AFFIRMED, BUT REMAND ON INFRINGEMENTClaim scope is tied closely to the specification where the preferred embodimentis described as the invention itself. Rhodia Chimie v. PPG Indus. Inc., No. 04-1246 (Fed. Cir. Apr. 11, 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

SATELLITE PATENT NOT INVALIDExpert testimony supports written description of method for maneuvering satellites in space. Space Sys./Loral, Inc. v. Lockheed Martin Corp., No. 04-1501(Fed. Cir. Apr. 20, 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

WHEREBY CLAUSE IS AN EFFECTIVE LIMITATIONWhen a whereby clause states a condition that is material to patentability, it cannot be ignored in order to change the substance of the invention. Hoffer v. Microsoft Corp., No. 04-1103 (Fed. Cir. Apr. 22, 2005) . . . . . . . . . . . .5

SPECIFICATION IS KEY TO CLAIM CONSTRUCTIONDistrict court’s claim construction improperly excluded disclosed embodiments.Nellcor Puritan Bennett, Inc. v. Masimo Corp., No. 04-1247 (Fed. Cir. Apr. 8, 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

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Court Finds Paroxetine PatentInvalid Based on New Prior Art

Jennifer S. Swan

[Judges: Rader (author), Bryson, andGajarsa]

In SmithKline Beecham Corp. v. ApotexCorp., No. 03-1285 (Fed. Cir. Apr. 8,2005), the Federal Circuit, sitting en banc,vacated the prior panel’s decision,SmithKline Beecham Corp. v. Apotex Corp.,365 F.3d 1306 (Fed. Cir. 2004), that claim1 of U.S. Patent No. 4,721,723 (“the ‘723patent”) was invalid under the “publicuse” bar of 35 U.S.C. § 102(b). The Courtthen remanded the case back to the panelfor further proceedings.

In a new decision, SmithKline BeechamCorp. v. Apotex Corp., 403 F.3d 1331 (Fed.Cir. 2005), issued the same day, the panelagain held that Apotex Corporation(“Apotex”) infringed claim 1, whichrecites a “crystalline paroxetine hydrochlo-ride hemihydrate.” The panel found thatclaim 1 covers any amount of paroxetinehydrochloride hemihydrate without limita-tion and that the scope of this claimwould be clear to those of skill in the art.The panel rejected the district court’sindefiniteness findings, stating that “thetest for indefiniteness does not depend ona potential infringer’s ability to ascertainthe nature of its own accused product todetermine infringement, but instead onwhether the claim delineates to a skilledartisan the bounds of the invention.” Thepanel adopted the district court’s factualfinding that Apotex’s paroxetinehydrochloride anhydrate would containparoxetine hydrochloride hemihydrateand, thus, found that under the correctclaim construction, Apotex would infringeclaim 1.

The Court, however, also held claim 1of the ‘723 patent invalid, but this timeon a different ground than public use.

Following the en banc decision that vacat-ed the public-use determination, theFederal Circuit reversed the district courtand held that claim 1 of the ‘723 patentwas inherently anticipated by U.S. PatentNo. 4,007,196 (“the ‘196 patent”).Apotex had not appealed this decision tothe Federal Circuit. Specifically, in its priorpublic-use opinion, the panel had notedthat “the district court . . . determinedthat Apotex did not present clear andconvincing evidence of inherent anticipa-tion . . . . Apotex does not appeal thatRuling.” SB v. Apotex, 365 F.3d at 1315.

Nevertheless, in a split decision, themajority panel sua sponte reversed the dis-trict court and held the claim invalid forinherent anticipation over the ‘196 patent.The ‘196 patent does not disclose paroxe-tine hydrochloride, but discloses a maleatesalt form of paroxetine. Although therewas no evidence in the record that beforethe preparation of hemihydrate by thenamed inventors, anyone had ever prac-ticed the ‘196 patent and obtained hemi-hydrate, and no evidence that anyone hadever recognized the existence of hemihy-drate in the prior art, the majority heldthat the ‘196 patent necessarily producedundetectable amounts of paroxetinehydrochloride hemihydrate. Thus, themajority invalidated claim 1 under35 U.S.C. § 102(b).

Judge Gajarsa filed a separate opinionconcurring in the judgment. JudgeGajarsa would have held the ‘723 patentinfringed by Apotex, but claim 1 invalidunder 35 U.S.C. § 101.

Judge Newman dissented from thepanel’s inherency holding, stating that it“contravenes long-established precedent.”SmithKline Beecham Corp. v. Apotex,403 F.3d 1328, 1330 (Fed. Cir. 2005).Judge Newman stated that there was noevidence that PHC hemihydrate existed atthe time the ‘196 patent was filed. Shestated that the district court’s finding thatthe PHC hemihydrates had not been pro-

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L A S T M O N T H A T T H E F E D E R A L C I R C U I T

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duced in 1975 was not shown to be clear-ly erroneous. As Judge Newman stated,inherent anticipation requires that theidentical invention was known or its exis-tence would have reasonably been knownto a person of ordinary skill—not that itmight have lain hidden in minisculeamounts, undetected, unsuspected, orunknown.

Dismissal of District CourtAction with Prejudice WasAbuse of Discretion

Alan A. Wright

[Judges: Linn (author), Michel, andGajarsa]

In Bowling v. Hasbro, Inc., No. 04-1364(Fed. Cir. Apr. 11, 2005), the FederalCircuit reversed a district court’s dismissalwith prejudice of Plaintiff’s patent-infringement suit. Michael Bowling hadsued Hasbro, Inc. (“Hasbro”) in the U.S.District Court for the District of Arizona onSeptember 16, 2003. However, Bowlingdid not serve Hasbro with the Complaint.On January 26, 2004, the district courtissued an order to show cause, requiringBowling to explain why his suit should notbe dismissed for failure to serve Hasbrowithin the 120 days provided in Fed. R.Civ. P. 4(m). After Bowling failed torespond to the order, the district court dis-missed the action with prejudice.

The Federal Circuit reversed the districtcourt’s dismissal, stating that the districtcourt had abused its discretion. Applyingregional circuit law, the Federal Circuitconsidered the five factors that the NinthCircuit considers in deciding whether dis-missal is appropriate: (1) the public’sinterest in expeditious resolution of litiga-tion; (2) the court’s need to manage itsdocket; (3) the risk of prejudice to defen-dant; (4) the availability of less drastic

alternatives; and (5) the public policy ofdisposing of the case on its merits. TheFederal Circuit noted that the district courthad weighed these five factors in decidingto dismiss Bowling’s case with prejudice.However, the Court ultimately held thatNinth Circuit law generally emphasizedthe notions of warning and considerationof less drastic alternatives than dismissalwith prejudice. Noting that Rule 4(m),which the district court relied upon as apredicate for dismissal, does not authorizedismissal with prejudice, the FederalCircuit held that the district court hadabused its discretion. Because the districtcourt had failed to provide Bowling withsufficient notice that his suit would facethe extreme result of dismissal with preju-dice, and because Bowling’s behavior was deemed not overly egregious, theFederal Circuit reversed the dismissal andremanded the case.

Lack of Detail in Claim-Construction Analysis andInfringement Findings Resultsin Remand

Christopher S. Schultz

[Judges: Rader (author), Michel, andProst]

In Nazomi Communications, Inc. v. ARMHoldings, PLC, No. 04-1101 (Fed. Cir. Apr.11, 2005), the Federal Circuit vacated andremanded the district court’s grant of SJ ofnoninfringement of U.S. Patent No.6,332,215 (“the ‘215 patent”) due toinsufficiently detailed claim-constructionanalysis and noninfringement findings bythe district court.

The ‘215 patent is directed to a computer-hardware accelerator that trans-lates stack-based Java bytecode instruc-tions into register-based instructions that

are usable by a register-based CPU. Claim1 includes a “hardware unit adapted toconvert stack-based instructions into register-based instructions.” The partiesdisputed the meaning of the term“instructions” in this claim element. Atthe district court, the Plaintiff patentowner, Nazomi Communications, Inc.(“Nazomi”), proposed that the termmeant a command that specifies or causesperformance of an operation or function.The Defendants, ARM Holdings, PLC, ARMLimited, and ARM, Inc. (collectively“ARM”), proposed a narrower definition,including that the instructions be “provid-ed to the processor at its input and thusbe recognizable to the decoder.” ARMfurther sought to limit the term to exclude“control signals,” which are the signalsgenerated by the processor’s decoder thatcontrol downstream hardware.

The district court ruled that the “hard-ware unit or subunit that converts stack-based instructions into the register-basedinstructions [do so] prior to the processingof those instructions by the processor inthe so-called ‘decode stage.’” Under thisconstruction, without analyzing theaccused product, the district court con-cluded that ARM’s device did not infringeliterally or under the DOE, and grantedARM’s motion for SJ of noninfringement.

The Federal Circuit concluded that thedistrict court, at best, glossed over theintrinsic evidence and improperly focusedon reading the claims to preserve theirvalidity. While acknowledging the rulethat, if practicable, claims are to be readto preserve their validity, the Court statedthat the claims must first be properly con-strued, “[o]therwise the construing courthas put the validity cart before the claimconstruction horse.” Nazomi, slip op. at7.

The Federal Circuit then reviewed itslitany of claim-construction inquiries toassist the district court in its claim-construction analysis of the term “instruc-

tions,” including the intrinsic evidence,expert testimony, the prior art, and claimdifferentiation.

The Federal Circuit also found the dis-trict court’s infringement analysis insuffi-cient for review due to a lack of findingsof fact on the nature of the accuseddevice and based on a “circular” infringe-ment analysis that improperly strived topreserve validity. Further, because the dis-trict court had construed the claims differ-ently than the parties, the record did notinclude evidence that the accused productincluded each feature of the construedclaims. Accordingly, the Federal Circuitvacated and remanded to the districtcourt for a detailed claim-constructionanalysis and for factual findings on theinfringement issue.

Claim Construction Affirmed,but Remand on Infringement

Ningling Wang

[Judges: Gajarsa (author), Newman,and Clevenger]

In Rhodia Chimie v. PPG Industries Inc.,No. 04-1246 (Fed. Cir. Apr. 11, 2005), theFederal Circuit affirmed-in-part andreversed-in-part the district court’s SJ infavor of PPG Industries, Inc. (“PPG”), andremanded on infringement because theevidence before the court created a gen-uine issue of material fact regarding oneof PPG’s accused products.

Rhodia Chimie and Rhodia Inc. (collec-tively “Rhodia”) are the assignees of U.S.Patent No. 6,013,234 (“the ’234 patent”),which discloses and claims certain essen-tially spheroidal precipitated silica particu-lates and processes of manufacturingthose particulates. The sole claim at issuecontains the disputed terms “dust-freeand non-dusting” and “atomized precipi-tated silica particulate.” Rhodia identifiedthree silica products made by PPG, i.e.,

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Hi-Sil SC60M, SC72, and SC72C, thatallegedly infringe claim 1 of the ’234patent, and sued PPG for willful infringe-ment.

The Federal Circuit affirmed the districtcourt’s construction of the disputed term“dust-free and non-dusting” to mean “alevel of dust formation associated with thesilica particulates of the ’234 patent, asmeasured in percentage weight accordingto DIN 53 583, that has a fines contentvalue of less than or equal to 13 andweight loss by abrasion value less than orequal to 0.5.” “DIN 53 583” is an indus-trial standard that provides a test formeasuring the fines content and weightloss by abrasion of palletized carbon blackused as fillers in the rubber-processingindustry (the “DIN test”).

The Federal Circuit reasoned that theterm “dust-free and non-dusting” couldnot be read literally to mean that theinvention creates no silica dust at all, asadvocated by PPG, because the testresults disclosed in the written descriptionindicate that the invention itself producessome dust, but less dust than the priorart. The Court also noted that the term“dust-free and non-dusting” could not beconstrued to mean that the level of dust“is very low when compared to other sili-ca forms,” as advocated by Rhodia,because such a definition is “a relativephrase,” which can only be understood incomparison to the prior art. Instead, theFederal Circuit looked at the writtendescription of the ’234 patent, specifically,the ten examples disclosed therein, anddetermined that referring to the DIN testin defining the term “dust-free and non-dusting” reconciles the ambiguous claimlanguage with the inventor’s disclosure.

Rhodia challenged this claim construc-tion on the ground that the DIN test isnot the only method by which to assessthe amount of dust produced by theinvention in comparison to the prior art.Rhodia argued that the pour test disclosed

in the specification could also be used toassess the amount of dust, relying on thestatements made during the prosecutionof the patent showing that the pictures ofthe pour test were cited as evidence ofthe nondusting and free-flowing proper-ties. However, the Federal Circuit heldthat because neither the claims nor thewritten description teaches the use of thepour test to determine the level of dustproduction claimed by the invention, thestatements made during the prosecutionof the ‘234 patent could not serve to fillthat gap.

The Federal Circuit also affirmed the district court’s construction of the dis-puted term “atomized precipitated silicaparticulates” to mean “that a pulverizedslurry of precipitated silica is spray driedusing a liquid pressure nozzle as an atom-izer to form the claimed silica particu-lates,” in view of the prosecution history,where Rhodia distinguished the prior artby emphasizing that its claimed silica par-ticulates could be obtained only by apply-ing liquid-pressure nozzle sprayers to apulverized slurry.

Rhodia further challenged the districtcourt’s decision of no literal infringementon two grounds: (1) the district courtabused its discretion in excluding Rhodia’sDIN testing evidence on PPG’s accusedproducts; and (2) even without theexcluded DIN test results, the evidenceprovided by PPG showing that PPG’s ownDIN testing results for one of the accusedproducts, i.e., SC60M, fall within therange established by the district court’sclaim construction raised a genuine issueof material fact as to literal infringement.

The Federal Circuit held that the dis-trict court did not abuse its discretion inexcluding Rhodia’s DIN testing resultsunder Third Circuit law, because it wasunreasonable for Rhodia to delay investi-gation into DIN testing until after theissuance of the claim-construction opin-ion.

As to Rhodia’s second evidentiaryground in challenging the district court’sdecision of no literal infringement, PPGargued that the evidence on its DIN test-ing results for SC60M was irrelevantbecause the results were produced prior tothe issuance of the ’234 patent and Rhodiaproduced no evidence linking the sampletested to PPG’s postissuance commercialpractices. The Federal Circuit rejectedPPG’s arguments and reemphasized thatevidence regarding preissuance activitiesmay be relevant to establishing that post-issuance products constitute infringement.Therefore, the Court concluded that theevidence on PPG’s own DIN testing resultsfor SC60M created a genuine issue ofmaterial fact as to whether the post-issuance form of SC60M literally infringesthe ’234 patent.

Finally, the Federal Circuit affirmed thedistrict court’s decision of noninfringementunder the DOE because of prosecution his-tory estoppel, as Rhodia made narrowingamendments in the prosecution of thepatent to overcome prior art rejections.

Satellite Patent Not Invalid

Vince Kovalick

[Judges: Newman (author), Michel, andGajarsa]

In Space Systems/Loral, Inc. v. LockheedMartin Corp., No. 04-1501 (Fed. Cir. Apr.20, 2005), the Federal Circuit reversed ajudgment that U.S. Patent No. 4,537,375(“the ‘375 patent”) is invalid for violatingthe written description requirement of35 U.S.C. § 112. Space Systems/Loral, Inc.(“Loral”) owns the ‘375 patent, which isdirected to an improved method for main-taining the orientation and attitude of asatellite. To maintain a correct position inspace, a satellite forms station-keepingmaneuvers by firing its thrusters. The ‘375

patent is directed to a method of reducingfuel consumption during such station-keeping maneuvers. The claims of the‘375 patent concern a two-step process,wherein the satellite conducts a first firingof the thrusters based on a correction esti-mated from historical data of prior station-keeping maneuvers (called the “prebias”step) and a second firing based on theactual remaining error in its position.

Loral brought suit against LockheedMartin Corporation (“Lockheed”) forinfringement of claim 1. Lockheed movedfor SJ of invalidity based on the writtendescription requirement of 35 U.S.C.§ 112, arguing that the specification doesnot adequately describe the second step inwhich the satellite calculates the positionafter the first firing and performs a secondfiring of the thrusters. The district courtadopted Lockheed’s position.

On appeal, the Federal Circuit dis-agreed with the district court’s conclusion,noting that even Lockheed’s own experthad conceded that the second step wasshown in the specification. AlthoughLockheed criticized the expert’s testimonyas being conclusory, the Federal Circuitfound that that expert’s testimony wasquite specific, pointing to specific circuitryof the figures. Accordingly, the FederalCircuit reversed the SJ of invalidity andremanded the case.

Whereby Clause Is an EffectiveLimitation

Vince Kovalick

[Judges: Newman, Bryson, and Dyk (per curiam)]

In Hoffer v. Microsoft Corp., No. 04-1103 (Fed. Cir. Apr. 22, 2005), the FederalCircuit affirmed a judgment of nonin-fringement, but reversed a judgment ofinvalidity on the ground of indefiniteness

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for U.S. Patent No. 5,799,151 (“the ‘151patent”).

The ‘151 patent is directed to anapparatus and method by which remoteusers of computer terminals obtain dataconcerning economic activity from anindex and interactively communicate con-cerning economic topics. The claim inquestion includes a whereby clause, whichrecites that a trade network supports userswho are collectively able to concurrentlyengage in interactive-data messaging ontopic boards. The patent holder, StevenHoffer, argued that the district court haderred in holding that this whereby clauselimited the claim, pointing out that theFederal Circuit had previously held that “awritten clause in a method claim is notgiven weight when it simply expresses theintended result of a process set positivelyrecited.” Minton v. Nat’l Ass’n of Secs.Dealers, Inc., 336 F.3d 1373, 1381 (Fed.Cir. 2003). According to the FederalCircuit, however, when the wherebyclause states a condition that is material topatentability, it cannot be ignored. TheCourt observed that, according to thespecification, this whereby clause is notjust an intended result of a process stepbut is part of the process itself and isdescribed as an integral part of the inven-tive process. Accordingly, the FederalCircuit agreed with the district court’sclaim construction of the whereby clauseand affirmed the judgment of nonin-fringement.

Claim 22 as written is dependent fromclaim 38. However, there is no claim 38in the issued patent. The district courtheld claim 22 invalid for indefinitenessbased on this error. The Federal Circuitvacated that decision, however, conclud-ing that the error in the dependence ofclaim 22 is apparent on the face of theprinted patent and the correct antecedentclaim is apparent from the prosecutionhistory. The error arose through the nor-mal prosecution of deleting and renum-

bering certain claims. The Examiner sim-ply failed to correct the correspondingclaim dependency. Although Mr. Hofferlater obtained a certificate of correction,the district court declined to accept it,deeming it late and concluding that thecourt was powerless to correct the error.The Federal Circuit ruled that absent evi-dence of culpability or intent to deceive, apatent should not be invalidated based onan obvious administrative error. When aharmless error in a patent is not subject toreasonable debate, it can be corrected bythe district court.

Judge Newman concurred in the judg-ment, but wrote separately to express herconcerns that the Court did not reviewthe entire appealed claim construction.

Specification Is Key to ClaimConstruction

Daniel X. Yan

[Judges: Bryson (author), Newman,and Dyk]

In Nellcor Puritan Bennett, Inc. v.Masimo Corp., No. 04-1247 (Fed. Cir. Apr.8, 2005), the Federal Circuit vacated a dis-trict court’s decision granting SJ of nonin-fringement, because the district court haderred in its claim construction.

Nellcor Puritan Bennett, Inc.(“Nellcor”) owns U.S. Patent No.4,934,372 (“the ‘372 patent”), which cov-ers a method and apparatus for determin-ing the oxygen-saturation level in bloodby processing the signals received from apulse oximeter. Claim 1 of the ‘372 patentclaims a method for calculating theamount of a blood constituent, in whichthe aperiodic information is “attenuatedand filtered” from the composite signal.

On appeal, Nellcor first contendedthat the district court had erred in con-struing the phrase “attenuated and fil-

tered” to mean “reduced and removed.”The Federal Circuit agreed. Finding theordinary dictionary meaning of the term“filtered” to be consistent with Nellcor’sproposed definition, the Federal Circuitfocused its analysis on the specification ofthe ‘372 patent and observed that theprocess described in the ‘372 patent doesnot actually remove data. Rather, theinvention covered by the ‘372 patentmerely results in the suppression of aperi-odic noise relative to the periodic signal.Therefore, the Court concluded that theterm “attenuated and filtered” meansconstantly reducing the level of aperiodicsignals, rather than removing unwanteddata all together.

The Federal Circuit noted that the dis-trict court’s reliance on the ‘372 patent’sprosecution history to support its interpre-tation of the terms was misplaced becausethe district court had misconstrued thereasons for applicants’ amendments to theclaims.

The Federal Circuit also agreed withNellcor’s contention that the district courthad erred in ruling that the claims requirea calculation using the relative minimumonly after formation of a composite signal.The Court determined that, based on oneembodiment in the ‘372 patent specifica-tion, the relative minimum, or the zerofrequency, is computed when the averagevalue of the signal is determined. Sincethe average value of the signal is an essen-tial component in the computation of thecomposite signal, calculation of the rela-tive minimum necessarily occurs beforethe formation of the composite signal.


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In Last month at The Federal Circuit, certain terms, titles, and names of fed-eral agencies that are frequently referred to in text, appear in abbreviatedforms or as acronyms. These abbreviated forms and acronyms are listed below.

ALJ Administrative Law Judge ANDA Abbreviated New Drug ApplicationAPA Administrative Procedures ActAPJ Administrative Patent Judge Board Board of Patent Appeals and InterferencesCommissioner Commissioner of Patents and Trademarks CIP Continuation-in-PartDJ Declaratory Judgment DOE Doctrine of EquivalentsFDA Food & Drug AdministrationIDS Information Disclosure StatementIP Intellectual PropertyITC International Trade CommissionJMOL Judgment as a Matter of Law MPEP Manual of Patent Examining ProcedurePCT Patent Cooperation TreatyPTO United States Patent and Trademark Office SEC Securities and Exchange CommissionSJ Summary JudgmentSM Special Master

DISCLAIMER:The case summaries reflect the understanding of the authorsonly and are not meant to convey legal opinions or advice ofany kind. The firm disclaims any liability for any errors oromissions in these summaries. This promotional newsletterdoes not establish any form of attorney-client relationshipwith our firm or with any of our attorneys.

Documents

Last The FederalCircuit - Finnegan...SmithKline Beecham Corp. v. Apotex Corp., 365 F.3d 1306 (Fed. Cir. 2004), that claim 1 of U.S. Patent No. 4,721,723 (“the ‘723 patent”) was