The CAFC in Exmark v. Briggs & Stratton: "While this argument seems facially logical, it fails nonetheless."
The opinion of Chief Judge Joseph F. Bataillon of D. Nebraska did not fare well at the CAFC, which began its opinion:
Exmark Manufacturing Company filed suit against
Briggs & Stratton Power Products Group, LLC in the
United States District Court for the District of Nebraska,
alleging infringement of, inter alia, claim 1 of U.S. Patent
No. 5,987,863. The district court entered summary judgment
that claim 1 was not invalid because the claim
survived multiple reexaminations involving the same
prior art. The district court also denied summary judgment
of indefiniteness with respect to claim 1.1 The case
proceeded to a jury trial, where the jury found that Briggs
willfully infringed Exmark’s patent. The jury awarded
$24,280,330 in compensatory damages, which the district
court doubled as enhanced damages for Briggs’ willful
infringement.
Briggs appeals several of the district court’s orders,
including the district court’s: (1) summary judgment that
claim 1 is not anticipated or obvious, (2) denial of summary
judgment that claim 1 is indefinite, (3) denial of a
new trial on damages, (4) evidentiary rulings related to
damages, (5) denial of a new trial on willfulness, and
(6) denial of Briggs’ laches defense.
We conclude the district court erred by basing its
summary judgment of no invalidity solely on the fact that
claim 1 survived multiple reexaminations. Accordingly,
we vacate the district court’s summary judgment of no
invalidity. We remand to the district court for it to make
an independent determination of whether genuine issues
of material fact preclude summary judgment that claim 1
is not anticipated or obvious in view of the prior art. We
also hold that the district court erred in denying a new
trial on damages because Exmark’s damages expert failed
to provide an adequate explanation as to how she arrived
at a 5% royalty rate for the patented feature relative to
other conventional features of the accused products. We
also conclude that the district court abused its discretion
by limiting the evidence relevant to damages to prior art
that had been commercialized. Likewise, we conclude
that the district court abused its discretion by excluding
from the willfulness trial evidence relating to patent
validity based on its determination that Briggs’ invalidity
defenses were objectively unreasonable. The district
court’s evidentiary ruling does not comport with the
Supreme Court’s recent decision in Halo Electronics, Inc.
v. Pulse Electronics, Inc., 136 S. Ct. 1923 (2016), mandating
that willfulness is to be determined by the jury regardless
of whether Briggs’ defenses were objectively
reasonable. Accordingly, we vacate the jury’s finding of
willfulness, vacate the jury’s damages award, vacate the
district court’s enhanced damages award, and remand for
proceedings consistent with this precedent. We also
affirm the district court’s denial of summary judgment
that claim 1 is indefinite, and affirm its denial of Briggs’
laches defense.
The lack of an independent analysis by the district court
was found to be problematic:
Briggs argues that the district court erred by granting
summary judgment that claim 1 is not invalid as anticipated
or obvious based solely on the fact that claim 1
survived multiple reexaminations involving the same
prior art. We agree.
The district court’s summary judgment decision was
limited to a single paragraph containing a single basis.
(...)
Though the district court stated that
it gave the reexaminations “some, though not determinative,
weight,” id. (emphasis added), it appears from its
cursory decision that, in fact, the court granted summary
judgment based on the claim surviving multiple reexaminations.
No other explanation for granting summary
judgment was provided. The question thus presented is
whether a reexamination confirming patentability of a
claim can form the sole basis for granting summary
judgment that a claim is not invalid based on the same
prior art.
We hold that a reexamination confirming patentability
of a patent claim alone is not determinative of whether
a genuine issue of fact precludes summary judgment of no
invalidity. Surviving a reexamination does not warrant
ipso facto summary judgment that a patent is not invalid.
Holding otherwise would improperly give complete deference
and preclusive effect to the PTO’s patentability
determination, foreclosing challenges to patent validity in
district court based on the same prior art.
The CAFC went on to say:
Our holding is supported by our prior decisions stating
that a district court “is never bound by an examiner’s
finding in an ex parte patent application proceeding.”
Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1359 (Fed. Cir.
2007) (citing Fromson v. Advance Offset Plate, Inc.,
755 F.2d 1549, 1555 (Fed. Cir. 1985)). We have said the
same regarding an examiner’s findings during reissue
proceedings. See Fromson, 755 F.2d at 1555 (“The Examiner’s
decision, on an original or reissue application, is
never binding on a court.”); Interconnect Planning Corp. v.
Feil, 774 F.2d 1132, 1139 (Fed. Cir. 1985) (“IPC’s view is
incorrect that the PTO’s [reissue] decision must be given
controlling weight . . . .”). While the PTO’s findings
during reexamination are “evidence the court must consider
in determining whether the party asserting invalidity
has met its statutory burden by clear and convincing
evidence,” they are not dispositive. Fromson, 755 F.2d at
1555.
Instead, the “deference [owed] to the decisions of the
USPTO takes the form of the presumption of validity
under 35 U.S.C. § 282. That is, by statute a patent is
valid upon issuance and included within the presumption
of validity is a presumption of non-obviousness.” Pfizer,
480 F.3d at 1359 (emphases added) (citations omitted).
This presumption also follows a patent claim surviving
reexamination. See Superior Fireplace Co. v. Majestic
Prods. Co., 270 F.3d 1358, 1367 (Fed. Cir. 2001) (“Challenges
to the validity of claims, whether regularly issued,
issued after a reexamination . . . or issued after a reissue
. . . must meet the clear and convincing standard of
persuasion. This requirement is based on the presumption
of validity.” (emphasis added) (citations omitted)).
The presumption of validity, however, is just that—a
presumption—which can be overcome by the patent
challenger who meets its high burden of proving the
factual elements of invalidity by clear and convincing
evidence. Id. We recognize the district court must consider
reexaminations as evidence “in determining whether
the party asserting invalidity has met its statutory burden
by clear and convincing evidence.” Pfizer, 480 F.3d at
1360 (quoting Fromson, 755 F.2d at 1555). But just as an
original examination resulting in patent issuance does not
foreclose an invalidity attack in district court, so too does
a reexamination confirming a claim not preclude a patent
challenger from meeting its burden of proving invalidity.
We thus “affirm the obligation of the district court to
reach an independent conclusion.” Interconnect, 774 F.2d
at 1139.
The same could be said of a district court's obligation
of de novo review of a magistrate's conclusions of law.
**Of interest:
Finally, Exmark asserts that Briggs’ strategic decision
to challenge validity through reexamination at the
PTO gave Briggs advantages that it would not get in
district court, including a lack of a presumption of validity
and the ability to rely on the broadest reasonable interpretation.
Therefore, Exmark argues, Briggs cannot
ignore the result of reexamination having chosen its
forum and lost. Exmark seems to suggest that because
Briggs was unable to invalidate the claims under a lower
standard of patentability and a broader claim construction
standard, Briggs cannot establish invalidity by clear
and convincing evidence. While this argument seems
facially logical, it fails nonetheless.
It is important to consider the substantive and procedural
differences between challenging patentability in an
ex parte reexamination and challenging patent validity in
federal court. Notably, unlike challenging validity in
district court, in an ex parte reexamination, the claims
are construed under the broadest reasonable interpretation,
the patent challenger does not participate beyond its
initial request for reexamination, the admission of evidence
is not governed by the Federal Rules, and the
burden of proving unpatentability is merely a preponderance
of evidence. Such differences, however, are material
in district court litigation. For example, the scope of the
construed claims, particularly to the extent there are
differences between the PTO’s and district court’s construction,
must be considered in determining whether a
genuine issue of material fact exists as to whether a prior
art reference anticipates or renders a claim obvious.
In this case, the district court adopted the parties’
agreed-to construction of “first flow control baffle” as “a
front structure within the walls of the mower deck that
controls the flow of air and grass clippings.” Exmark Mfg.
Co. v. Briggs & Stratton Power Prods. Grp., LLC, No.
8:10CV187, 2011 WL 5976264, at *4 (D. Neb. Nov. 29,
2011); see also J.A. 1558 at 105:14–18. On appeal of the
reexamination before the Board, in which Briggs did not
participate, Exmark and the examiner disagreed about
the proper interpretation of “baffle” and “flow control
baffle.” Exmark argued that “the entire first flow control
baffle must be a baffle, and thus, the individual baffle
portions must also be baffles,” and that “a ‘baffle’ needs to
control the flow of air and grass clippings.” J.A. 3708.
The Board agreed with Exmark and construed “baffle”
and “flow control baffle” as “an element that ‘controls’ the
flow of air and grass clippings within the mower deck in a
‘meaningful way.’” J.A. 3707.
***Of previously reviewed prior art, note a previous
post on IPBiz, including text:
Beecham's '639 patent on nabumetone (RELAFEN) was found invalid
over prior art that had been examined by the PTO.
There were separate issues of unenforceability (inequitable conduct).
Curiously, in a parallel application to that leading to the '639 patent,
Beecham told the PTO that the prior art did not even disclose the compound nabumetone.
I had written in Intellectual Property Today in July 2001 ("A Tale of Conflicting Models - The Coming Skirmish on the IP Frontier"): (...)
See
GlaxoSmithKline settles RELAFEN case
See also
http://ipbiz.blogspot.fr/2008/08/patent-attorneys-should-not-assume-peer.html
Exmark Manufacturing Company filed suit against
Briggs & Stratton Power Products Group, LLC in the
United States District Court for the District of Nebraska,
alleging infringement of, inter alia, claim 1 of U.S. Patent
No. 5,987,863. The district court entered summary judgment
that claim 1 was not invalid because the claim
survived multiple reexaminations involving the same
prior art. The district court also denied summary judgment
of indefiniteness with respect to claim 1.1 The case
proceeded to a jury trial, where the jury found that Briggs
willfully infringed Exmark’s patent. The jury awarded
$24,280,330 in compensatory damages, which the district
court doubled as enhanced damages for Briggs’ willful
infringement.
Briggs appeals several of the district court’s orders,
including the district court’s: (1) summary judgment that
claim 1 is not anticipated or obvious, (2) denial of summary
judgment that claim 1 is indefinite, (3) denial of a
new trial on damages, (4) evidentiary rulings related to
damages, (5) denial of a new trial on willfulness, and
(6) denial of Briggs’ laches defense.
We conclude the district court erred by basing its
summary judgment of no invalidity solely on the fact that
claim 1 survived multiple reexaminations. Accordingly,
we vacate the district court’s summary judgment of no
invalidity. We remand to the district court for it to make
an independent determination of whether genuine issues
of material fact preclude summary judgment that claim 1
is not anticipated or obvious in view of the prior art. We
also hold that the district court erred in denying a new
trial on damages because Exmark’s damages expert failed
to provide an adequate explanation as to how she arrived
at a 5% royalty rate for the patented feature relative to
other conventional features of the accused products. We
also conclude that the district court abused its discretion
by limiting the evidence relevant to damages to prior art
that had been commercialized. Likewise, we conclude
that the district court abused its discretion by excluding
from the willfulness trial evidence relating to patent
validity based on its determination that Briggs’ invalidity
defenses were objectively unreasonable. The district
court’s evidentiary ruling does not comport with the
Supreme Court’s recent decision in Halo Electronics, Inc.
v. Pulse Electronics, Inc., 136 S. Ct. 1923 (2016), mandating
that willfulness is to be determined by the jury regardless
of whether Briggs’ defenses were objectively
reasonable. Accordingly, we vacate the jury’s finding of
willfulness, vacate the jury’s damages award, vacate the
district court’s enhanced damages award, and remand for
proceedings consistent with this precedent. We also
affirm the district court’s denial of summary judgment
that claim 1 is indefinite, and affirm its denial of Briggs’
laches defense.
The lack of an independent analysis by the district court
was found to be problematic:
Briggs argues that the district court erred by granting
summary judgment that claim 1 is not invalid as anticipated
or obvious based solely on the fact that claim 1
survived multiple reexaminations involving the same
prior art. We agree.
The district court’s summary judgment decision was
limited to a single paragraph containing a single basis.
(...)
Though the district court stated that
it gave the reexaminations “some, though not determinative,
weight,” id. (emphasis added), it appears from its
cursory decision that, in fact, the court granted summary
judgment based on the claim surviving multiple reexaminations.
No other explanation for granting summary
judgment was provided. The question thus presented is
whether a reexamination confirming patentability of a
claim can form the sole basis for granting summary
judgment that a claim is not invalid based on the same
prior art.
We hold that a reexamination confirming patentability
of a patent claim alone is not determinative of whether
a genuine issue of fact precludes summary judgment of no
invalidity. Surviving a reexamination does not warrant
ipso facto summary judgment that a patent is not invalid.
Holding otherwise would improperly give complete deference
and preclusive effect to the PTO’s patentability
determination, foreclosing challenges to patent validity in
district court based on the same prior art.
The CAFC went on to say:
Our holding is supported by our prior decisions stating
that a district court “is never bound by an examiner’s
finding in an ex parte patent application proceeding.”
Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1359 (Fed. Cir.
2007) (citing Fromson v. Advance Offset Plate, Inc.,
755 F.2d 1549, 1555 (Fed. Cir. 1985)). We have said the
same regarding an examiner’s findings during reissue
proceedings. See Fromson, 755 F.2d at 1555 (“The Examiner’s
decision, on an original or reissue application, is
never binding on a court.”); Interconnect Planning Corp. v.
Feil, 774 F.2d 1132, 1139 (Fed. Cir. 1985) (“IPC’s view is
incorrect that the PTO’s [reissue] decision must be given
controlling weight . . . .”). While the PTO’s findings
during reexamination are “evidence the court must consider
in determining whether the party asserting invalidity
has met its statutory burden by clear and convincing
evidence,” they are not dispositive. Fromson, 755 F.2d at
1555.
Instead, the “deference [owed] to the decisions of the
USPTO takes the form of the presumption of validity
under 35 U.S.C. § 282. That is, by statute a patent is
valid upon issuance and included within the presumption
of validity is a presumption of non-obviousness.” Pfizer,
480 F.3d at 1359 (emphases added) (citations omitted).
This presumption also follows a patent claim surviving
reexamination. See Superior Fireplace Co. v. Majestic
Prods. Co., 270 F.3d 1358, 1367 (Fed. Cir. 2001) (“Challenges
to the validity of claims, whether regularly issued,
issued after a reexamination . . . or issued after a reissue
. . . must meet the clear and convincing standard of
persuasion. This requirement is based on the presumption
of validity.” (emphasis added) (citations omitted)).
The presumption of validity, however, is just that—a
presumption—which can be overcome by the patent
challenger who meets its high burden of proving the
factual elements of invalidity by clear and convincing
evidence. Id. We recognize the district court must consider
reexaminations as evidence “in determining whether
the party asserting invalidity has met its statutory burden
by clear and convincing evidence.” Pfizer, 480 F.3d at
1360 (quoting Fromson, 755 F.2d at 1555). But just as an
original examination resulting in patent issuance does not
foreclose an invalidity attack in district court, so too does
a reexamination confirming a claim not preclude a patent
challenger from meeting its burden of proving invalidity.
We thus “affirm the obligation of the district court to
reach an independent conclusion.” Interconnect, 774 F.2d
at 1139.
The same could be said of a district court's obligation
of de novo review of a magistrate's conclusions of law.
**Of interest:
Finally, Exmark asserts that Briggs’ strategic decision
to challenge validity through reexamination at the
PTO gave Briggs advantages that it would not get in
district court, including a lack of a presumption of validity
and the ability to rely on the broadest reasonable interpretation.
Therefore, Exmark argues, Briggs cannot
ignore the result of reexamination having chosen its
forum and lost. Exmark seems to suggest that because
Briggs was unable to invalidate the claims under a lower
standard of patentability and a broader claim construction
standard, Briggs cannot establish invalidity by clear
and convincing evidence. While this argument seems
facially logical, it fails nonetheless.
It is important to consider the substantive and procedural
differences between challenging patentability in an
ex parte reexamination and challenging patent validity in
federal court. Notably, unlike challenging validity in
district court, in an ex parte reexamination, the claims
are construed under the broadest reasonable interpretation,
the patent challenger does not participate beyond its
initial request for reexamination, the admission of evidence
is not governed by the Federal Rules, and the
burden of proving unpatentability is merely a preponderance
of evidence. Such differences, however, are material
in district court litigation. For example, the scope of the
construed claims, particularly to the extent there are
differences between the PTO’s and district court’s construction,
must be considered in determining whether a
genuine issue of material fact exists as to whether a prior
art reference anticipates or renders a claim obvious.
In this case, the district court adopted the parties’
agreed-to construction of “first flow control baffle” as “a
front structure within the walls of the mower deck that
controls the flow of air and grass clippings.” Exmark Mfg.
Co. v. Briggs & Stratton Power Prods. Grp., LLC, No.
8:10CV187, 2011 WL 5976264, at *4 (D. Neb. Nov. 29,
2011); see also J.A. 1558 at 105:14–18. On appeal of the
reexamination before the Board, in which Briggs did not
participate, Exmark and the examiner disagreed about
the proper interpretation of “baffle” and “flow control
baffle.” Exmark argued that “the entire first flow control
baffle must be a baffle, and thus, the individual baffle
portions must also be baffles,” and that “a ‘baffle’ needs to
control the flow of air and grass clippings.” J.A. 3708.
The Board agreed with Exmark and construed “baffle”
and “flow control baffle” as “an element that ‘controls’ the
flow of air and grass clippings within the mower deck in a
‘meaningful way.’” J.A. 3707.
***Of previously reviewed prior art, note a previous
post on IPBiz, including text:
Beecham's '639 patent on nabumetone (RELAFEN) was found invalid
over prior art that had been examined by the PTO.
There were separate issues of unenforceability (inequitable conduct).
Curiously, in a parallel application to that leading to the '639 patent,
Beecham told the PTO that the prior art did not even disclose the compound nabumetone.
I had written in Intellectual Property Today in July 2001 ("A Tale of Conflicting Models - The Coming Skirmish on the IP Frontier"): (...)
See
GlaxoSmithKline settles RELAFEN case
See also
http://ipbiz.blogspot.fr/2008/08/patent-attorneys-should-not-assume-peer.html
posted by Lawrence B. Ebert at 1:37 PM
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