Sunday, February 07, 2010

On freedom to operate opinions and ignoring patents

Some IT executives tell employees not to seek or to read patents of competitors. The SEB case illustrates the bad consequences that can occur in following such a strategy.

Within the decision in the case SEB v. Pentalpha :

In developing its deep fryer, Pentalpha purchased an SEB deep fryer in Hong Kong and copied its “cool
touch” features. Shortly after agreeing to supply Sunbeam, Pentalpha obtained a “right-
to-use study” from an attorney in Binghamton, New York. The attorney analyzed 26
patents and concluded that none of the claims in those patents read on Pentalpha’s
deep fryer. Pentalpha, however, did not tell the attorney that it had copied an SEB deep

Of claim construction:

The words of a claim receive the meaning discernible by a person of ordinary skill in the art who has
read the entire patent, including the specification, at the time of the invention. Phillips v.
AWH Corp., 415 F.3d 1303, 1312-13 (Fed. Cir. 2005) (en banc).


“[A] construction that would not read on the preferred embodiment would rarely if ever be correct and would
require highly persuasive evidentiary support.” Chimie v. PPG Indus., Inc., 402 F.3d
1371, 1377 (Fed. Cir. 2005)

Of estoppel:

See Conoco, Inc. v. Energy & Envtl. Int’l, L.C., 460 F.3d 1349,
1364 (Fed. Cir. 2006) (“To invoke argument-based estoppel . . . the prosecution history
must evince a clear and unmistakable surrender of subject matter.”).

Of expert witnesses:

The district court did not abuse its discretion by admitting Mr. Van Horn’s
testimony. This court will not disturb a district court’s evidentiary rulings unless
“manifestly erroneous.” SR Int’l Bus. Ins. Co. v. World Trade Ctr. Props., LLC, 467 F.3d
107, 119 (2d Cir. 2006) (quotation omitted). District courts enjoy “wide latitude” to
determine admissibility and “the mode and order” of evidentiary presentations. Id. In
this case, the district court was in the best place to judge that Mr. Van Horn had the
“knowledge, skill, experience, training, [and] education” of a “specialized” nature that
was likely to “assist the trier of fact to understand the evidence or to determine”
infringement. Fed. R. Evid. 702.


This case comes nowhere close to the unusual situation in Sundance, Inc. v.
DeMonte Fabricating Ltd., 550 F.3d 1356 (Fed. Cir. 2008). In Sundance this court held
that a district court abused its discretion when it admitted the testimony of a patent law
expert “[d]espite the absence of any suggestion of relevant technical expertise.” Id. at
1361-62. Here, as explained, Mr. Van Horn had sufficient relevant technical expertise
for the district court to allow him to testify. This court detects no abuse of discretion.

Of jury verdicts:

Under the general verdict rule, where one or more of multiple claims is found
legally invalid, a reviewing court must reverse and order a new trial if unable to
determine whether the invalid theory tainted the verdict. AIG Global Sec. Lending Corp.
v. Banc of America Sec. LLC, 646 F. Supp. 2d 385, 406 (S.D.N.Y. 2009) (collecting
cases). That rule has also been held to apply in cases where the jury received multiple
legal theories of liability. Id. (same).
Here, the jury received a verdict form with the label “special” rather than general.
Using that verdict form, the jury found both direct infringement and inducement of
infringement. Normally, such a verdict could support a damages award even if only one
theory was correct. As long as the court can “determine” that “the verdict was based
upon the [valid] theory,” the general verdict rule does not require a new trial. Id. A
closer look at the damages question in this verdict form, however, along with the jury
instructions, reveals a hopeless ambiguity.


Pentalpha does not specify the point in the record showing an objection to these
portions of the jury instructions. Fed. R. Civ. P. 51 requires a litigant to make a timely
objection to a jury instruction in order to challenge that instruction on appeal. “The
purpose of this Rule is to require the parties to give the trial court an adequate
opportunity to cure any error in the instructions before the jury deliberates.” Metromedia
Co. v. Fugazy, 983 F.2d 350, 363 (2d Cir. 1992). The United States Court of Appeals
for the Second Circuit reviews jury instructions for which a timely objection is lacking for
fundamental error. Fabri v. United Techs. Int’l, Inc., 387 F.3d 109, 121 (2d Cir. 2004).
“Fundamental error is more egregious than the ‘plain’ error that can excuse a
procedural default in a criminal trial and is so serious and flagrant that it goes to the very
integrity of the trial.” Id. (quoting Jarvis v. Ford Motor Co., 283 F.3d 33, 62 (2d Cir.

The InSituform case was cited:

This court’s opinion did not, however, set out the metes and bounds of the knowledge-of-the-patent
requirement. Compare Insituform Techs., Inc. v. CAT Contracting, Inc., 161 F.3d 688,
695 (Fed. Cir. 1998) (“A crucial element of induced infringement is that the inducer must
have actual or constructive knowledge of the patent.”) (emphasis added).*


At the outset, this court notes that the Supreme Court has indicated, in a
different civil context, that “deliberate indifference” is not necessarily a “should have
known” standard. Farmer v. Brennan, 511 U.S. 825, 840 (1994). The latter implies a
solely objective test, whereas the former may require a subjective determination that the
defendant knew of and disregarded the overt risk that an element of the offense existed.


A grant of JMOL is appropriate only where a reasonable jury would not have
a legally sufficient evidentiary basis to find for the non-movant on the issue. Agrizap,
Inc. v. Woodstream Corp., 520 F.3d 1337, 1342 (Fed. Cir. 2008) (citing Fed. R. Civ. P.


As just explained, a claim for inducement is viable even where the patentee has
not produced direct evidence that the accused infringer actually knew of the patent-in-
suit. This case shows such an instance. The record contains adequate evidence to
support a conclusion that Pentalpha deliberately disregarded a known risk that SEB had
a protective patent. The jury heard evidence that Pentalpha purchased an SEB deep
fryer in Hong Kong and copied all but the cosmetics. The owner of a company related
to Pentalpha testified that Pentalpha’s engineer took a T-Fal deep fryer and used “the
same ring that separates . . . the wall making it a cool touch unit and the construction,
basically everything the same; thermostat, it was the same; the timer was the same, just
a little bit different on the cosmetics of the outside appearance for the deep fryer.”
Again, the record shows that Pentalpha hired an attorney to conduct a right-to-use
study, but did not tell him that it had based its product on SEB’s product.

**One has an interesting name here, Sham==>

A failure to inform one’s counsel of copying would be highly suggestive of
deliberate indifference in most circumstances. Here, the jury also heard testimony that
indicated that Pentalpha’s president, John Sham, was well versed in the U.S. patent
system and understood SEB to be cognizant of patent rights as well. Sham testified
that he was the named inventor on 29 U.S. patents and that Pentalpha and SEB had an
earlier business relationship that involved one of Pentalpha’s patented steamer
products. The record thus contains considerable evidence of deliberate indifference.


But here Pentalpha did not argue that it or its employees
actually believed that an SEB patent did not exist. Pentalpha’s brief implies that it
should be excused because the SEB deep fryer that it copied was not marked with a
U.S. patent number. But Pentalpha does not argue that it relied on the lack of a mark to
come to a belief that the deep fryer was not patented. And even if it had, such an
argument would likely lack credibility unless it were supplemented by an explanation for
why one would expect an SEB deep fryer purchased in Hong Kong to have U.S. patent

And, if you ever wondered how the term "f.o.b." might apply to patents:

Pentalpha sold these deep fryers to its
three customers free on board Hong Kong or mainland China. “Free on board,” or
“f.o.b.,” is a “method of shipment whereby goods are delivered at a designated location,
usually a transportation depot, at which legal title and thus the risk of loss passes from
seller to buyer.” Litecubes, LLC v. N. Light Prods., Inc., 523 F.3d 1353, 1358 n.1 (Fed.
Cir. 2008).


To the contrary, the only evidence on which Pentalpha relies to argue that its
sales occurred overseas was that it delivered its products to Sunbeam, Montgomery
Ward, and Fingerhut f.o.b. Hong Kong or mainland China. This court has “rejected the
notion that simply because goods were shipped f.o.b., the location of the ‘sale’ for the
purposes of § 271 must be the location from which the goods were shipped.”
Lightcubes, 523 F.3d at 1370.

**Of not reading patents, don't forget Linus Torvalds: One recalls Torvalds is the fellow who advised his people not to read patents, sort of setting the public disclosure function of patents on its head.


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