Intellectual Property Law Knowledge Center

2017 Supreme Court and Federal Circuit IP Year in Review

December 27th, 2017

2017 Supreme Court and Federal Circuit IP Year in ReviewThroughout 2017, Panitch Schwarze has carefully watched key intellectual property disputes at the U.S. Supreme Court and the Court of Appeals for the Federal Circuit (CAFC). The following 2017 cases will impact the protection of intellectual property in the United States.

Life Technologies. Corp. v Promega Corp.
The U.S. Supreme Court examined whether shipping a single component of a multi-component patented invention for assembly overseas can constitute patent infringement under § 271(f)(1) of the Patent Act. Promega is the exclusive licensee of a DNA testing process that was sub-licensed to Life Technologies. Life Technologies manufactured one chemical component in the U.S. and shipped the component to the U.K. for assembly with the remainder of the kit. After Life Technologies allegedly impermissibly exceeded the scope of the license agreement, Promega sued for infringement under § 271(f)(1), which requires that “all or a substantial portion of the components of a patented invention be supplied from the U.S.” The Supreme Court ruled that no infringement had taken place because a single component of an invention, however critical, does not constitute “a substantial portion.” The Court, however, did not definitively settle the minimum number of components (greater than one) required for infringement.

SCA Hygiene Products v First Quality Baby Products, LLC
First Quality claimed it owned an antedating patent, which invalidated SCA’s patent when notified of potential infringement. Without further communication, SCA sought and successfully prosecuted reexamination of their patent in view of the First Quality patent, before ultimately bringing an infringement suit against First Quality seven years after the initial communications. The suit sought damages for the prior six years in accord with 35 USC § 286. First Quality argued that the claim was barred by laches due to SCA’s prejudicial delay in bringing a suit; a view that was upheld by the district court and an en banc CAFC panel. The Supreme Court, however, disagreed holding that a claim timely brought within a statute of limitations cannot be barred by the judicial doctrine of laches. The Court found statutes of limitations contain the same or similar protections as laches, and allowing laches to defeat timely claims would impermissibly frustrate the designs of Congress.

Impression Products Inc. v Lexmark International Inc.
Lexmark’s battle with Impression highlights patent exhaustion, a 160-year old doctrine. Lexmark sells printer cartridges to foreign and domestic consumers and restricts re-use and resale in its sales contract. When Impression bought and re-filled Lexmark cartridges from consumers, Lexmark filed an infringement suit. The district court held for Impression domestically, and Lexmark internationally. On first appeal, the CAFC held for Lexmark both domestically and internationally. Specifically, the CAFC affirmed the district court’s ruling on international sales on policy grounds holding that US patent owners do not get the benefit of US patent rights abroad, so they should not be subject to patent exhaustion abroad. The Supreme Court disagreed, holding that patent exhaustion is “uniform and automatic,” occurring even with international sales, and that patent laws may not be used to enforce contract provisions.

TC Heartland LLC v Kraft Food Group Brands LLC
This case puts the spotlight on the scope of the venue statute for patent litigation. When Kraft sued TC Heartland for patent infringement of a flavored drink product, TC Heartland moved for a transfer from Delaware to Indiana, where it is incorporated. The Supreme Court ultimately ruled that the only proper venue for patent suits brought against a domestic corporation is that company’s state of incorporation and that the general venue statute does not read on the patent-specific venue statute. The CAFC has begun wrestling with TC Heartland and its application in such cases as In re Sea Ray Boats, Inc., In re Nintendo of America, In re Techtronic Industries of North America, Inc., In re Cray Inc., and In re Micron Technologies, Inc. TC Heartland decision should limit excessive forum shopping often found in patent infringement suits.

Husky Injection Molding Systems. v Athena Automation Ltd.
Husky Injection Molding Systems, formerly owned by Robert Schad, owned a patent on a type of molding clamp. Schad assigned the patent to Husky, sold the company, and left to form Husky competitor Athena Automation. Athena immediately petitioned the PTO to institute Inter Partes Review (“IPR”) of the Schad patent based on several prior art references, which Husky opposed on the basis of assignor estoppel. IPR was instituted and the majority of the claims were invalidated. On cross-appeals, the CAFC dismissed Husky’s appeal as barred from review relating to the decision to institute IPR and prohibited by the Supreme Court’s 2016 decision in Cuozzo Speed Techs., LLC v. Lee. Regarding Athena’s appeal, the CAFC found that the Patent Trial and Appeal Board (“PTAB”) impermissibly ruled that a prior art reference did not fully incorporate reference material. Under this decision, proper incorporation by reference requires that a reasonably skilled artisan is able to deduce from the language what is intended to be incorporated.

Return Mail, Inc. v United States Postal Service
In August, CAFC affirmed a Patent Trial and Appeal Board ruling that invalidated Return Mail’s patent on a system for processing undeliverable letters and packages. Return Mail sued the USPS in Federal Claims Court, after license negotiations failed, under 28 U.S.C. § 1498(b), an eminent domain-type statute for government patent licenses. The USPS petitioned for covered business method (“CBM”) review, which was instituted and found all claims invalid under 35 USC § 101, as being directed to non-patentable subject matter in light of Alice. Return Mail challenged the USPS’s standing to petition for CBM review, which requires being “sued for infringement.” The CAFC ruled that a § 1498(b) suit operated similar to a § 271 infringement suit to confer standing on the USPS to petition for CBM review.

Aqua Products. v Matal
In a dispute over Aqua Products’ jet-propelled pool cleaner patent, Zodiac Pools petitioned for IPR. During the IPR proceedings, Aqua attempted to substitute new independent claims but was denied by the PTAB for failing to prove the patentability of the new claims. On appeal, Aqua argued that the burden should be on the petitioner to prove unpatentability rather than on the patentee to prove patentability. The CAFC agreed and extended the burden of proof in § 316(d) to include new as well as previously issued claims.

Oil States v Greene’s Energy Group
Arguments before the Supreme Court were heard on November 27 in this contentious case. The issue before the court is whether IPR proceedings violate the Constitution by extinguishing private property rights in a non-Article III forum without a jury. Most commenters believe the Supreme Court will uphold the IPR process as constitutional, but others believe the presence of Justice Gorsuch on the bench may result in a reversal and the case will be decided under administrative law rather than simply patent law.

If you have questions about protecting your intellectual property portfolio, contact Panitch Schwarze at 888-291-5676.

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