Tuesday, October 16, 2012

CAFC affirms D. Delaware in digital hearing aid case

After a review of the record in ETG v. Demant, the CAFC affirmed D. Delaware. ROBERT GREENE STERNE, Sterne, Kessler, Goldstein, & Fox, PLLC, of Washington, DC, argued for defendants- appellants, William Demant Holding A/S, et al.

The CAFC cited Innova:

Moreover, the specification gives no reason to construe the claims to require that an external computer calculate the values programmed into the filter. See Innova/Pure Water, Inc. v. Safari Water Filtration Sys., 381 F.3d 1111, 1117 (Fed. Cir. 2004) (“[E]ven where a patent describes only a single embodiment, claims will not be read restrictively unless the patentee has demonstrated a clear intention to limit the claim scope using words or expressions of manifest exclusion or restriction.”) (internal quotations omitted). The embodiment described in the specification, which utilized an external computer connected to the hearing aid to calculate coefficients for the programmable filter, reflects the size and complexity of computers at the time of the patent application in 1986.

Written description under 35 USC 112 arose:

To satisfy the written description requirement, the specification must “reasonably convey[ ] to those skilled in the art that the inventor had possession of the claimed subject matter as of the filing date.” Ariad Pharms., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1351 (Fed. Cir. 2010) (en banc). (...)

Thus, this record contained substantial evidence from which the jury could conclude that the ’850 Patent conveys to one skilled in the art that the inventors were in possession of a programmable hearing aid that could use adaptive filtering for feedback cancellation at the time of filing. This court therefore affirms the district court’s denial of JMOL that the ’850 Patent is invalid for lack of written description.

Anticipation arose:

Because it was filed October 17, 1985, Graupe is prior art to the ETG Patents under 35 U.S.C. § 102(e). (...)
Indeed, an accused infringer enjoys a presumption that allegedly anticipating material in a prior art patent is enabled. Impax Labs., Inc. v. Aventis Pharms., Inc., 468 F.3d 1366, 1382 (Fed. Cir. 2006). Even if “cancelling . . . acoustic feedback” was enabled, however, the record does not show that “cancellation” or “reduction” of feed- back, as disclosed by Graupe, is the same as the “substan- tial reduction” claimed in the ’850 Patent. The comparison of cancellation with substantial reduction was a fact question for the jury, which made the implicit finding that Graupe does not disclose “substantial reduc- tion” of acoustic feedback.

Festo arose:

ETG has not overcome the presumption that the nar- rowing amendment was made to secure the patent. Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 739 (2002). The prosecution history in this case shows that the claim limitation at issue was added in response to a rejection of closely related claims, and provides no other explanation for the limitation. Honeywell Int’l v. Hamilton Sundstrand Corp., 523 F.3d 1304, 1315–16 (Fed. Cir. 2008) (“If the prosecution history reveals no reason for the narrowing amendment, the presumption is not rebutted. . . . Silence does not overcome the presumption.”) (internal citation omitted). This court requires a strong showing – not present on this record – to satisfy the “very narrow” exception to prosecution history estoppel for amendments only tangentially
related to the equivalent in question
. Cross Med. Prods.
v. Medtronic, Inc., 480 F.3d 1335, 1342 (Fed. Cir. 2007).
ETG’s argument that it did not relinquish equivalents that involve “determining”—rather than “measuring”— phase and amplitude, also fails. Prosecution history estoppel bars application of the doctrine of equivalents even where the applicant surrendered more claim scope than was necessary to overcome a rejection. See Norian Corp. v. Stryker Corp., 432 F.3d 1356, 1361–62 (Fed. Cir. 2005) (holding patentees are restricted by prosecution history estoppel to “the scope of what they ultimately claim”).

Of damages:

Even if Defendants had not waived this argument, this court cannot “correct” a damages figure by extrapolating a royalty rate from the jury’s lump sum damages award and multiplying that royalty rate by a revised sales base. “Except in those cases in which it is apparent as a matter of law that certain identifiable sums included in the verdict should not have been there, the court may not arbitrarily reduce the amount of damages, for to do so would deprive the parties of their constitutional right to a jury.” 11 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 2815 (2d ed. Supp. 2012). An “identifiable sum” typically must be separately listed on the jury verdict form. Garrett v. Faust, 183 F.2d 625 (3d Cir. 1950) (verdict form sepa- rately listed damages resulting from misrepresentation, and district court appropriately deducted that amount from final award because there was insufficient evidence of misrepresentation); Cornell University v. Hewlett- Packard Co., 609 F. Supp. 2d 279 (N.D.N.Y. 2009) (Rader, J. by designation) (reducing damages by multiplying “jury’s uncontroverted royalty rate of 0.8 percent” by legally correct royalty base).

Here, the verdict form only required the jury to award a lump sum damages figure for each Defendant.

On doctrine of equivalents:

This case is closely analogous to Hughes Aircraft Co. v. United States, 140 F.3d 1470 (Fed. Cir. 1998), in which this court found infringement under the doctrine of equivalents where advances in computer technology occurring after the patents issued allowed changes in the nature and location of claimed calculations. Hughes involved an apparatus to control the orientation of satel- lites using commands from a ground control station. (...)

Defendants argue that their devices cannot be found to infringe under the doctrine of equivalents because, if the claims are “expanded” to cover the adaptive filters in the accused devices, then the claims would also extend to the prior art Graupe patent. See Wilson Sporting Goods Co. v. David Geoffrey & Assoc., 904 F.2d 677, 684 (Fed. Cir. 1990) (overruled in part on other grounds by Cardinal Chem. Co. v. Morton Int’l, 508 U.S. 83 (1993)) (“[A] pat- entee should not be able to obtain, under the doctrine of equivalents, coverage which he could not lawfully have obtained from the PTO by literal claims.”). An accused infringer seeking to avoid infringement under the doc- trine of equivalents on this basis bears the burden of “presenting prior art which shows that the asserted range of equivalence would encompass the prior art,” but the patentee bears the ultimate burden of persuasion to show that its claims do not cover the prior art. Streamfeeder, LLC v. Sure-Feed Sys., Inc., 175 F.3d 974, 984 (Fed. Cir. 1999).

Of evidence:

This court applies regional circuit law to evidentiary issues. The Third Circuit requires a party challenging the district court’s evidentiary ruling to demonstrate that the district court acted irrationally and arbitrarily. In re Paoli R.R. Yard PCB Litig., 113 F.3d 444, 453 (3d Cir. 1997).

The "25% rule" arose:

Defendants seek a new trial on damages because ETG’s expert, Mr. Musika, used the 25 percent rule of thumb in his analysis of a reasonable royalty rate. This court has held that “the 25 percent rule of thumb is a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation. Evidence relying on the 25 percent rule of thumb is thus inadmissible under Daubert and the Federal Rules of Evidence, because it fails to tie a reasonable royalty base to the facts of the case at issue.” Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1315 (Fed. Cir. 2011). This court does not depart from the counsel and holding of Uniloc.

In this case, however, Mr. Musika’s references to the 25 percent “rule” (which is no longer a “rule”) did not irretrievably damage the reasonableness of his method and result in arriving at recommended royalty rates. For instance, Mr. Musika relied more prominently on other factors, such as separately determining that the infring- ing products garner a 9.2% premium on operating profits over non-infringing devices.


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