Dow loses "supplemental damages" claim against NOVA because of the change in law brought by Nautilus case
The case --THE DOW CHEMICAL COMPANY v. NOVA CHEMICALS
CORPORATION -- illustrates what can happen when there is an
intervening change in law. In law school, one learns of
the Schooner Peggy case in which the Chief Justice wrote that
appellate courts were obligated to apply the law as
it currently exists, including changes intervening between the time of trial and
final resolution of the appeal,
Judge Dyk noted in Dow:
The Dow Chemical Company (“Dow”) filed suit
against NOVA Chemicals Corporation (Canada) and
NOVA Chemicals Inc. (Delaware) (collectively, “NOVA”),
alleging infringement of claims of U.S. Patent No.
5,847,053 (the “’053 patent”) and U.S. Patent No.
6,111,023 (the “’023 patent”). A jury found the asserted
claims to be infringed and not invalid. NOVA appealed,
and we affirmed, holding, inter alia, that the asserted
claims were not indefinite. Our mandate issued, and
NOVA’s petition for certiorari was denied by the Supreme
Court, NOVA Chems. Corp. v. Dow Chem. Co., 133 S. Ct.
544 (2012). The district court subsequently conducted a
bench trial for the supplemental damages period through
the expiration date of both patents. The district court
granted supplemental damages in the form of lost profits
and reasonable royalties and denied Dow’s request for
enhanced damages. NOVA appealed, and Dow crossappealed.
(...)
We hold that the intervening change in the law of indefiniteness
resulting from Nautilus provides an exception
to the doctrine of law of the case or issue preclusion.
In our review of the supplemental damages award, we
therefore evaluate the indefiniteness of the claims under
the Nautilus standard. In reviewing the supplemental
damages award under the Nautilus standard, we hold
that the claims are indefinite and reverse the award of
supplemental damages.
The technology
On October 21, 2005, Dow filed suit against NOVA,
alleging infringement of claims of the ’053 patent and the
’023 patent. The asserted claims of both patents cover
ethylene polymer compositions (a type of plastic) with,
inter alia, improved modulus, yield strength, impact
strength, and tear strength. These polymers can be made
into films that can be down-gauged (made thinner) without
losing strength.
The issue here is subtle, concerning the fact that Dow
was looking for SUPPLEMENTAL damages:
In
order to prevail on a claim for supplemental damages, a
patentee must establish infringement for the supplemental
damages period. If “an act that would have been
an infringement or an inducement to infringe pertains to
a patent that is shown to be invalid, there is no patent to
be infringed.” Commil USA, LLC v. Cisco Sys., Inc., 135 S.
Ct. 1920, 1929 (2015).
(...)
This rule applies to patent infringement claims. As we
explained just last year,
traditional notions of claim preclusion do not apply
when a patentee accuses new acts of infringement,
i.e., post-final judgment, in a second suit—
even where the products are the same in both
suits. Such claims are barred under general preclusion
principles only to the extent they can be
barred by issue preclusion, with its attendant limitations.
Brain Life, LLC v Elekta Inc., 746 F.3d 1045, 1056 (Fed.
Cir. 2014); see Aspex Eyewear, Inc. v. Marchon Eyewear,
Inc., 672 F.3d 1335, 1342–44 (Fed. Cir. 2012); see also,
e.g., SynQor, Inc. v. Artesyn Techs., Inc., 709 F.3d 1365,
1385–86 (considering whether intent element of induced
infringement had been shown in the supplemental damages
period).
Here, the bulk of the supplemental damages accrued
after the Rule 54(b) judgment, and it is clear that claim
preclusion also does not apply to damages accruing after
the filing of the complaint and not the subject of the first
judgment. See note 4, supra. All supplemental damages
here accrued after the filing of the complaint.
While claim preclusion does not apply, ordinarily issue
preclusion (or law of the case) would bar relitigation
in the supplemental damages period of issues (such as
validity) that were resolved as to the earlier time periods.
18 Charles Alan Wright, Arthur R. Miller & Edward H.
Cooper, Federal Practice and Procedure § 4409 (2d ed.
2002 (“[Although] claim preclusion often cannot apply in
settings of continuing . . . conduct, . . . it may be proper to
conclude that the issues precluded by the first litigation
embrace [issues in the second] . . . .”).
As to "law of the case,"
With respect to law of the case, “[p]erhaps the most
obvious justifications for departing . . . arise when there
has been an intervening change of law outside the confines
of the particular case.” 18B Charles Alan Wright,
Arthur R. Miller & Edward H. Cooper, Federal Practice
and Procedure § 4478; see Rose Acre Farms, Inc. v. United
States, 559 F.3d 1260, 1277–78 (Fed. Cir. 2009) (holding
that intervening Supreme Court decision issued after
prior appeal rendered prior decision “obsolete,” “[g]iven
the significant change in the law”); Wopsock v. Natchees,
454 F.3d 1327, 1333 (Fed. Cir. 2006) (finding that law of
the case did not apply because “this is a case in which
there has been a change in the law”). The exception
applies even if the issue was resolved on appeal in an
earlier stage of the proceeding. Indeed, the premise of the
exception in the appellate context is that there was such
an earlier resolution. See Litton Sys., Inc. v. Honeywell
Inc., 238 F.3d 1376, 1379–81 (Fed. Cir. 2001) (revisiting
prior holding on prosecution history estoppel because
intervening en banc authority adopted a contrary approach,
noting “[w]e are aware of no decision of this court
that has applied the law of the case in the face of a relevant
change in controlling legal authority”); M
One has
The change in law exception applies whether the
change in law occurs while the case is before the district
court or while the case is on appeal. See Spiegla, 481 F.3d
at 964 (7th Cir. 2007) (holding that defendants had not
waived challenge to holding in first appeal where issue
not raised on remand in district court or initial briefing
because intervening decision was issued after appellate
briefing); Mendenhall, 26 F.3d at 1583 (law of the case did
not apply where new decision issued while case on appeal);
Morris v. Am. Nat’l Can Corp., 988 F.2d 50, 51–53
(8th Cir. 1993) (law of the case did not apply where, after
first appeal and decision on remand by district court,
Supreme Court case changed prevailing law); Wilson, 791
F.2d at 154, 157 (exception to issue preclusion applied
where intervening decision issued while case pending
before this court).
The technical issue impacted by the Nautilus decision
The claim term at issue here provides for “a slope of
strain hardening coefficient greater than or equal to 1.3.”
’053 patent col. 16 ll. 19–20; ’023 patent col. 16 ll. 29–30.
The patents provide that the “slope of strain hardening
coefficient” (“SHC”) is calculated according to the following
equation:
SHC = (slope of strain hardening)*(I2)0.25
where I2=melt index in grams/10 minutes. ’053 patent col.
6 ll. 45–50; ’023 patent col. 7 ll. 22–28. “The SHC coefficient
is a new Dow construct, not previously known in the
art . . . .” Dow, 458 F. App’x at 918.
Strain hardening is a property wherein a material becomes
harder as it is stretched. The ’053 and ’023 patents
teach that tensile properties, including strain hardening,
may be tested using a device called the Instron Tensile
Tester. The Instron Tensile Tester subjects a sample to an
increasing load, stretching it until it breaks. The machine
measures the force, or load, applied to the sample and the
length that the sample stretches.
The measurements taken by the Instron Tensile Tester
are then plotted on a graph. The resulting curve is
called the “tensile curve” or “stress/strain curve.” On the
stress/strain curve, the force (or load) applied to the
sample is plotted on the y-axis, and the resulting elongation
(or displacement) of the sample is plotted on the xaxis.
The behavior of the material claimed by the patent
changes as it is stretched, and those changes are shown
on the stress/strain curve. A figure from the prior art
utilized in Dow’s brief illustrates a typical stress/strain
curve.
(...)
NOVA argues that the term “slope of strain hardening
coefficient,” ’053 patent col. 16 l. 19, is indefinite because
the patent fails to teach with reasonable certainty where
and how the “slope of strain hardening” should be measured.
8
Although the patents state that “FIG. 1 shows the
various stages of the stress/strain curve used to calculate
the slope of strain hardening,” ’053 patent col. 6 ll. 40–41;
’023 patent col. 7 ll. 18–19, the patents do not contain the
FIG. 1 referenced in those passages. Nor do the patents
include any other figure showing the stress/strain curve.
The specification of the ’053 and ’023 patents teach that
“[t]he slope of strain hardening is calculated from the
resulting tensile curve by drawing a line parallel to the
strain hardening region of the . . . stress/strain curve.”
’053 patent col. 6 ll. 27–29; ’023 patent col. 7 ll. 5–7.
At trial, Dow’s expert Dr. Hsiao testified that “one of
ordinary skill in the art would know that the slope of the
hardening curve would have to be measured at its maximum
value, which reflects the best tensile performance of
the material.” Dow, 458 F. App’x at 919. We may assume
that, as Dr. Hsiao testified and as Dow repeatedly argues,
it was known that the maximum slope should be measured.
But three methods existed to determine the maximum
slope, each providing, as Dow admits, “simply a different
way of determining the maximum slope.” Appellee’s Br. 45
(emphasis added). Dow admitted that those three methods
“all typically occur at the same place—at the end of
the curve where the maximum slope is located.” Id. We
refer to these methods as the “10% secant tangent method,”
“final slope method,” and “most linear method.”
(...)
Neither the patent claims nor the specification here
discusses the four methods or provides any guidance as to
which method should be used or even whether the possible
universe of methods is limited to these four methods.
Nor does either party argue that the prosecution history
provides any guidance. Further, Dr. Hsiao did not testify
that one of ordinary skill in the art would choose his
method over the three known methods. Indeed, he was
not even aware of the other methods at the time he did
his analysis. He admitted that he applied only his judgment
of what a person of ordinary skill would believe and
did not interview anyone or cite any references discussing
how a person at the time of the patent application would
have calculated the slope of strain hardening.
The question is whether the existence of multiple
methods leading to different results without guidance in
the patent or the prosecution history as to which method
should be used renders the claims indefinite. Before
Nautilus, a claim was not indefinite if someone skilled in
the art could arrive at a method and practice that method.
Exxon, 265 F.3d at 1379. In our previous opinion, relying
on this standard, we held that the claims were not indefinite,
holding that “the mere fact that the slope may be
measured in more than one way does not make the claims
of the patent invalid.” Dow, 458 F. App’x at 920. This was
so because Dow’s expert Dr. Hsiao, a person skilled in the
art, had developed a method for measuring maximum
slope. See id. at 919–20.
Under Nautilus this is no longer sufficient.
There was an allusion to Sandoz v. Teva:
In this respect this case is quite similar to our recent
decision in Teva, decided under the Nautilus standard. In
Teva,9 the claim limitation at issue recited the term
“molecular weight.” 789 F.3d at 1338. But there were
three relevant measures for molecular weight—peak
average molecular weight (“Mp”), number average molecular
weight (“Mn”), and weight average molecular weight
(“Mw”)—where each was calculated in a different manner
and each typically had a different value
(...)
The claims here are even more clearly indefinite than
those in Teva. Here, Dr. Hsiao’s chosen method was not
even an established method but rather one developed for
this particular case. As we held in Interval Licensing, a
claim term is indefinite if it “leave[s] the skilled artisan to
consult the ‘unpredictable vagaries of any one person’s
opinion.’” 766 F.3d at 1374 (quoting Datamize, LLC v.
Plumtree Software, Inc., 417 F.3d 1342, 1350 (Fed. Cir.
2005)).10 The claims here are invalid as indefinite, and the
award of supplemental damages must be reversed. Under
these circumstances, we need not address the crossappeal
as to enhanced damages.
link to case: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/14-1431.Opinion.8-25-2015.1.PDF
***Of a different issue in retroactive application, note PatentlyO on
the Dickstein Shapiro malpractice case:
To put this in context: Because of a 2014 Supreme Court decision, the 2006 case would have been lost anyway because, in 1993, the claims were not eligible for patenting.
And the argument worked. The district court granted a motion to dismiss for failure to state a claim, finding the subject matter ineligible on the face of the patent.
I’ll leave the merits of that to others.
What is interesting is the court’s approach to retroactive application of Alice. The issue was whether in the 2006 case, even had the firm’s alleged malpractice not caused the invalidity judgment, the claims were “invalid” under 101 then. The district court held that Alice did not change the law, but merely stated what it had always been.
link: http://patentlyo.com/hricik/2015/09/dickstein-malpractice-ineligible.html
CORPORATION -- illustrates what can happen when there is an
intervening change in law. In law school, one learns of
the Schooner Peggy case in which the Chief Justice wrote that
appellate courts were obligated to apply the law as
it currently exists, including changes intervening between the time of trial and
final resolution of the appeal,
Judge Dyk noted in Dow:
The Dow Chemical Company (“Dow”) filed suit
against NOVA Chemicals Corporation (Canada) and
NOVA Chemicals Inc. (Delaware) (collectively, “NOVA”),
alleging infringement of claims of U.S. Patent No.
5,847,053 (the “’053 patent”) and U.S. Patent No.
6,111,023 (the “’023 patent”). A jury found the asserted
claims to be infringed and not invalid. NOVA appealed,
and we affirmed, holding, inter alia, that the asserted
claims were not indefinite. Our mandate issued, and
NOVA’s petition for certiorari was denied by the Supreme
Court, NOVA Chems. Corp. v. Dow Chem. Co., 133 S. Ct.
544 (2012). The district court subsequently conducted a
bench trial for the supplemental damages period through
the expiration date of both patents. The district court
granted supplemental damages in the form of lost profits
and reasonable royalties and denied Dow’s request for
enhanced damages. NOVA appealed, and Dow crossappealed.
(...)
We hold that the intervening change in the law of indefiniteness
resulting from Nautilus provides an exception
to the doctrine of law of the case or issue preclusion.
In our review of the supplemental damages award, we
therefore evaluate the indefiniteness of the claims under
the Nautilus standard. In reviewing the supplemental
damages award under the Nautilus standard, we hold
that the claims are indefinite and reverse the award of
supplemental damages.
The technology
On October 21, 2005, Dow filed suit against NOVA,
alleging infringement of claims of the ’053 patent and the
’023 patent. The asserted claims of both patents cover
ethylene polymer compositions (a type of plastic) with,
inter alia, improved modulus, yield strength, impact
strength, and tear strength. These polymers can be made
into films that can be down-gauged (made thinner) without
losing strength.
The issue here is subtle, concerning the fact that Dow
was looking for SUPPLEMENTAL damages:
In
order to prevail on a claim for supplemental damages, a
patentee must establish infringement for the supplemental
damages period. If “an act that would have been
an infringement or an inducement to infringe pertains to
a patent that is shown to be invalid, there is no patent to
be infringed.” Commil USA, LLC v. Cisco Sys., Inc., 135 S.
Ct. 1920, 1929 (2015).
(...)
This rule applies to patent infringement claims. As we
explained just last year,
traditional notions of claim preclusion do not apply
when a patentee accuses new acts of infringement,
i.e., post-final judgment, in a second suit—
even where the products are the same in both
suits. Such claims are barred under general preclusion
principles only to the extent they can be
barred by issue preclusion, with its attendant limitations.
Brain Life, LLC v Elekta Inc., 746 F.3d 1045, 1056 (Fed.
Cir. 2014); see Aspex Eyewear, Inc. v. Marchon Eyewear,
Inc., 672 F.3d 1335, 1342–44 (Fed. Cir. 2012); see also,
e.g., SynQor, Inc. v. Artesyn Techs., Inc., 709 F.3d 1365,
1385–86 (considering whether intent element of induced
infringement had been shown in the supplemental damages
period).
Here, the bulk of the supplemental damages accrued
after the Rule 54(b) judgment, and it is clear that claim
preclusion also does not apply to damages accruing after
the filing of the complaint and not the subject of the first
judgment. See note 4, supra. All supplemental damages
here accrued after the filing of the complaint.
While claim preclusion does not apply, ordinarily issue
preclusion (or law of the case) would bar relitigation
in the supplemental damages period of issues (such as
validity) that were resolved as to the earlier time periods.
18 Charles Alan Wright, Arthur R. Miller & Edward H.
Cooper, Federal Practice and Procedure § 4409 (2d ed.
2002 (“[Although] claim preclusion often cannot apply in
settings of continuing . . . conduct, . . . it may be proper to
conclude that the issues precluded by the first litigation
embrace [issues in the second] . . . .”).
As to "law of the case,"
With respect to law of the case, “[p]erhaps the most
obvious justifications for departing . . . arise when there
has been an intervening change of law outside the confines
of the particular case.” 18B Charles Alan Wright,
Arthur R. Miller & Edward H. Cooper, Federal Practice
and Procedure § 4478; see Rose Acre Farms, Inc. v. United
States, 559 F.3d 1260, 1277–78 (Fed. Cir. 2009) (holding
that intervening Supreme Court decision issued after
prior appeal rendered prior decision “obsolete,” “[g]iven
the significant change in the law”); Wopsock v. Natchees,
454 F.3d 1327, 1333 (Fed. Cir. 2006) (finding that law of
the case did not apply because “this is a case in which
there has been a change in the law”). The exception
applies even if the issue was resolved on appeal in an
earlier stage of the proceeding. Indeed, the premise of the
exception in the appellate context is that there was such
an earlier resolution. See Litton Sys., Inc. v. Honeywell
Inc., 238 F.3d 1376, 1379–81 (Fed. Cir. 2001) (revisiting
prior holding on prosecution history estoppel because
intervening en banc authority adopted a contrary approach,
noting “[w]e are aware of no decision of this court
that has applied the law of the case in the face of a relevant
change in controlling legal authority”); M
One has
The change in law exception applies whether the
change in law occurs while the case is before the district
court or while the case is on appeal. See Spiegla, 481 F.3d
at 964 (7th Cir. 2007) (holding that defendants had not
waived challenge to holding in first appeal where issue
not raised on remand in district court or initial briefing
because intervening decision was issued after appellate
briefing); Mendenhall, 26 F.3d at 1583 (law of the case did
not apply where new decision issued while case on appeal);
Morris v. Am. Nat’l Can Corp., 988 F.2d 50, 51–53
(8th Cir. 1993) (law of the case did not apply where, after
first appeal and decision on remand by district court,
Supreme Court case changed prevailing law); Wilson, 791
F.2d at 154, 157 (exception to issue preclusion applied
where intervening decision issued while case pending
before this court).
The technical issue impacted by the Nautilus decision
The claim term at issue here provides for “a slope of
strain hardening coefficient greater than or equal to 1.3.”
’053 patent col. 16 ll. 19–20; ’023 patent col. 16 ll. 29–30.
The patents provide that the “slope of strain hardening
coefficient” (“SHC”) is calculated according to the following
equation:
SHC = (slope of strain hardening)*(I2)0.25
where I2=melt index in grams/10 minutes. ’053 patent col.
6 ll. 45–50; ’023 patent col. 7 ll. 22–28. “The SHC coefficient
is a new Dow construct, not previously known in the
art . . . .” Dow, 458 F. App’x at 918.
Strain hardening is a property wherein a material becomes
harder as it is stretched. The ’053 and ’023 patents
teach that tensile properties, including strain hardening,
may be tested using a device called the Instron Tensile
Tester. The Instron Tensile Tester subjects a sample to an
increasing load, stretching it until it breaks. The machine
measures the force, or load, applied to the sample and the
length that the sample stretches.
The measurements taken by the Instron Tensile Tester
are then plotted on a graph. The resulting curve is
called the “tensile curve” or “stress/strain curve.” On the
stress/strain curve, the force (or load) applied to the
sample is plotted on the y-axis, and the resulting elongation
(or displacement) of the sample is plotted on the xaxis.
The behavior of the material claimed by the patent
changes as it is stretched, and those changes are shown
on the stress/strain curve. A figure from the prior art
utilized in Dow’s brief illustrates a typical stress/strain
curve.
(...)
NOVA argues that the term “slope of strain hardening
coefficient,” ’053 patent col. 16 l. 19, is indefinite because
the patent fails to teach with reasonable certainty where
and how the “slope of strain hardening” should be measured.
8
Although the patents state that “FIG. 1 shows the
various stages of the stress/strain curve used to calculate
the slope of strain hardening,” ’053 patent col. 6 ll. 40–41;
’023 patent col. 7 ll. 18–19, the patents do not contain the
FIG. 1 referenced in those passages. Nor do the patents
include any other figure showing the stress/strain curve.
The specification of the ’053 and ’023 patents teach that
“[t]he slope of strain hardening is calculated from the
resulting tensile curve by drawing a line parallel to the
strain hardening region of the . . . stress/strain curve.”
’053 patent col. 6 ll. 27–29; ’023 patent col. 7 ll. 5–7.
At trial, Dow’s expert Dr. Hsiao testified that “one of
ordinary skill in the art would know that the slope of the
hardening curve would have to be measured at its maximum
value, which reflects the best tensile performance of
the material.” Dow, 458 F. App’x at 919. We may assume
that, as Dr. Hsiao testified and as Dow repeatedly argues,
it was known that the maximum slope should be measured.
But three methods existed to determine the maximum
slope, each providing, as Dow admits, “simply a different
way of determining the maximum slope.” Appellee’s Br. 45
(emphasis added). Dow admitted that those three methods
“all typically occur at the same place—at the end of
the curve where the maximum slope is located.” Id. We
refer to these methods as the “10% secant tangent method,”
“final slope method,” and “most linear method.”
(...)
Neither the patent claims nor the specification here
discusses the four methods or provides any guidance as to
which method should be used or even whether the possible
universe of methods is limited to these four methods.
Nor does either party argue that the prosecution history
provides any guidance. Further, Dr. Hsiao did not testify
that one of ordinary skill in the art would choose his
method over the three known methods. Indeed, he was
not even aware of the other methods at the time he did
his analysis. He admitted that he applied only his judgment
of what a person of ordinary skill would believe and
did not interview anyone or cite any references discussing
how a person at the time of the patent application would
have calculated the slope of strain hardening.
The question is whether the existence of multiple
methods leading to different results without guidance in
the patent or the prosecution history as to which method
should be used renders the claims indefinite. Before
Nautilus, a claim was not indefinite if someone skilled in
the art could arrive at a method and practice that method.
Exxon, 265 F.3d at 1379. In our previous opinion, relying
on this standard, we held that the claims were not indefinite,
holding that “the mere fact that the slope may be
measured in more than one way does not make the claims
of the patent invalid.” Dow, 458 F. App’x at 920. This was
so because Dow’s expert Dr. Hsiao, a person skilled in the
art, had developed a method for measuring maximum
slope. See id. at 919–20.
Under Nautilus this is no longer sufficient.
There was an allusion to Sandoz v. Teva:
In this respect this case is quite similar to our recent
decision in Teva, decided under the Nautilus standard. In
Teva,9 the claim limitation at issue recited the term
“molecular weight.” 789 F.3d at 1338. But there were
three relevant measures for molecular weight—peak
average molecular weight (“Mp”), number average molecular
weight (“Mn”), and weight average molecular weight
(“Mw”)—where each was calculated in a different manner
and each typically had a different value
(...)
The claims here are even more clearly indefinite than
those in Teva. Here, Dr. Hsiao’s chosen method was not
even an established method but rather one developed for
this particular case. As we held in Interval Licensing, a
claim term is indefinite if it “leave[s] the skilled artisan to
consult the ‘unpredictable vagaries of any one person’s
opinion.’” 766 F.3d at 1374 (quoting Datamize, LLC v.
Plumtree Software, Inc., 417 F.3d 1342, 1350 (Fed. Cir.
2005)).10 The claims here are invalid as indefinite, and the
award of supplemental damages must be reversed. Under
these circumstances, we need not address the crossappeal
as to enhanced damages.
link to case: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/14-1431.Opinion.8-25-2015.1.PDF
***Of a different issue in retroactive application, note PatentlyO on
the Dickstein Shapiro malpractice case:
To put this in context: Because of a 2014 Supreme Court decision, the 2006 case would have been lost anyway because, in 1993, the claims were not eligible for patenting.
And the argument worked. The district court granted a motion to dismiss for failure to state a claim, finding the subject matter ineligible on the face of the patent.
I’ll leave the merits of that to others.
What is interesting is the court’s approach to retroactive application of Alice. The issue was whether in the 2006 case, even had the firm’s alleged malpractice not caused the invalidity judgment, the claims were “invalid” under 101 then. The district court held that Alice did not change the law, but merely stated what it had always been.
link: http://patentlyo.com/hricik/2015/09/dickstein-malpractice-ineligible.html
posted by Lawrence B. Ebert at 7:52 AM
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