Federal Circuit - The FindLaw Federal Circuit Court of Appeals Opinion Summaries Blog

March 2010 Archives

Decisions in Tax Refund and Patent Infringement Cases

The Federal Circuit decided a suit brought by two taxpayers claiming that the tax assessments against are invalid and a patent infringement suit. 

Bush v. US, No. 09-5008, involved taxpayers' consolidated tax refund suits claiming that the IRS failed to issue deficiency notices as required by law and thus, claiming that the tax assessments against them are invalid.   Although the court agreed with the plaintiffs that the deficiency notices were required, it ultimately affirmed the Tax Court's dismissal of the claims as plaintiffs failed to establish that the failure to send the required notices was harmful. 

HIF Bio, Inc. v. Yung Shin Pharms. Indus. Co., Ltd., No. 06-1522, involved a patent infringement case on remand from the Supreme Court's reversal of a decision that the Federal Circuit lacked appellate jurisdiction to review a district court's remand order based on its decision not to exercise supplemental jurisdiction.  In reversing the remand order, the court held that the district court abused its discretion in remanding the plaintiffs' amended complaint to state court because of the remanded causes of action "arise under" 28 U.S.C. 1338(a), but the district court should have dismissed these causes of action for failure to state a claim for which relief can be granted. 

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Rulings Against Defendant in Patent Case Involving "POL Regulators" Upheld

In Power-One, Inc. v. Artesyn Techs., Inc., No. 2008-1501, the circuit court faced an appeal brought by the defendant in an action claiming infringement of patents relating to power supply systems for controlling, programming and monitoring point-of-load (POL) regulators.

The judgment against defendant was affirmed as: 1) the district court's claim construction of the term "POL regulator" was adequate to fully describe the scope of the claims; 2) the claim term "POL regulator" is not indefinite and does not render the claims of one patent indefinite; and 3) sufficient evidence supports a finding that the scope of prior art was limited, that there are significant differences between the invention disclosed in a patent and the prior art, and that relevant secondary considerations support a finding of nonobviousness.   

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In Enzo Biochem. Inc. v. Applera Corp., No. 09-1281, the Federal Circuit addressed the district court's grant of summary judgment in favor of the defendants that asserted claims of plaintiff's patents were invalid as either indefinite or anticipated and that another of its patent was not infringed. 

In affirming in part and reversing in part the decision of the district court in this patent infringement suit involved patents directed to various techniques for labeling and detecting nucleic acids, the court affirmed the finding of anticipation but not finding of indefinite of patent '928.  The court found that there were genuine issues of material fact as to anticipation with respect to patents '824 and '767 and affirmed the district court's claim construction with respect to '830 patent in finding noninfringement.

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The Federal Circuit decided a case involving a veteran's claim for benefits and a patent infringement case.

In Bastien v. Shinseki, No. 09-7099, the court faced a challenge to the Veteran Court's decision affirming the decision of the Board of Veterans' Appeals that the death of claimant's husband did not result from his military service.  In affirming the decision, the court held that it lacks jurisdiction to review where claimant's substantial contentions involve factual issues.  As for claimant's remaining claims where the court does have jurisdiction to review, her contention that the Board wrongly relied on the Department's medical witnesses because it failed to establish their qualifications as medical experts is rejected by a recent decision, and her argument that the Veterans Court improperly struck the initial version of her opening brief is rejected as it violated procedural prohibition against citing nonprecedential opinions. 

In Pressure Prods. Med. Supplies, Inc. v. Greatbatch Ltd., No. 08-1602, the court decided a patent infringement action relating to a patent for medical device known as an introducer, which is a device that permits a surgeon to place and remove catheters or pacemaker leads into blood vessels during surgical procedures.  In vacating the district court's finding of infringement, the court held that the record does not support the district court's claim construction of the claim term "score line."  However, the record supports the district court's denial of defendant's motions for JMOL and leave to amend its answer.

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In Jade Trading, LLC v. US, No. 08-5045, the Federal Circuit faced a challenge to the Court of Federal Claims' denial of petitioners' motion for readjustment of the partnership items of the company. 

As stated in the decision: "The economic substance doctrine requires disregarding, for tax purposes, transactions that comply with the literal terms of the tax code but lack economic reality.  The doctrine, from its inception,...has been used to prevent taxpayers from subverting the legislative purpose of the tax code by engaging in transactions that are fictitious or lack economic reality simply to reap a tax benefit."

Thus, under the five general principles incorporated in the economic substance doctrine, the court held that the contribution of the spread transaction to the company lacked economic substance and should be disregarded for tax purposes.  However, because the Tax Court did not have jurisdiction to review the application of penalties based on outside bases of the company's partners, the judgment that the petitioners' partner-leven defenses cannot be brought at the partnership level is vacated as moot. 

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The Federal Circuit decided two patent cases today, one involving whether a preamble statement of purpose limits the scope of the patentee's claims, and the other involving Federal Circuit's controversial holding that section 112, first paragraph, contains a written description requirement separate from enablement.

In Marrin v. Griffin, No. 09-1031, the Federal Circuit faced a challenge to the district court's grant of summary judgment finding plaintiff's '448 patent, related to a scratch-off label to mark beverage containers and cups, invalid as anticipated, claiming that the district court erred in treating the "for permitting" language in the preamble as a claim limitation.

As stated in the decision: "Clear reliance on a preamble during prosecution can distinguish a claimed invention from the prior art and render the preamble a claim limitation...but there was no such reliance here.  The prosecution history establishes that the Griffins did not consider the writing use for their claimed invention as being patenably significant."

Thus, in affirming the district court's finding that the patent was invalid for anticipation, the court held that the preamble's statement of purpose does not limit the scope of the claims.

In Ariad Pharm., Inc. v. Eli Lilly & Co., No. 08-1248, the court faced a challenge to its interpretation of 35 U.S.C. section 112, first paragraph, as containing a separate written description requirement in an en banc hearing in the patent infringement action involving a patent relating to the regulation of gene expression by the transcription factor NF-kB. 

Following the plaintiffs' petition, the court vacated the prior panel opinion and directed the parties to brief two questions: (1) Whether 35 U.S.C. section 112, paragraph 1, contains a written description requirement separate from an enablement requirement?; and (2) if a separate written description requirement is set forth in the statute, what is the scope and purpose of that requirement?"

The court held that section 112, first paragraph, contains two separate description requirements:  a written description of the invention and of the manner and process of making and using the invention.  Thus, in reversing the district court's decision in part, the court held that the asserted claims of plaintiff's '516 patent invalid for lack of written description.

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In Odom's Tennessee Pride Sausage, Inc. v. FF Acquisition, LLC, No. 09-1473, the Federal Circuit addressed plaintiff's challenge to the decision of the U.S. P.T.O., Trademark Trial and Appeal Board, granting summary judgment in favor of the defendant in an opposition to a trademark application. 

Plaintiff, a producer of food items such as sausages and breakfast sandwiches, argued that defendant's new mark depicting a farm boy, resembled its registered mark and would likely cause prospective consumers to be confused.  In affirming the decision, the court concluded that under DuPont factors, there were sufficient distinctions between the registered marks such as, the size and shape of the boys' hands and feet, shape and size of their hats, and the fact that the defendant's boy has a piece of straw in his mouth and is wearing shoes while plaintiff's boy has neither. 

In ATK Thiokol, Inc. v. US, No. 09-5036, the court faced a challenge to the Court of Federal Claims' decision that Development Effort costs for plaintiff's upgraded rocket motor were chargeable as indirect independent research and development (IR&D) costs.  In affirming the decision, the court concluded that it was proper for plaintiff to treat its Development Effort costs as indirect costs as the costs were related to a contract with Mitsubishi, but not specifically required by that contract.

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Denial of Spousal Annuity Claim Upheld Due to Valid Waiver

In Braza v. Office of Pers. Mgmt., No. 08-3174, the court faced a challenge to the Merit Systems Protection Board affirming a denial by the Office of the Personnel Management of a widow's claim for survivor annuity as the spouse of a deceased civil service employee. 

As stated in the decision:  "Mrs. Braza does not deny on appeal that she consented to her husband's election to provide her no survivor annuity.  She contends however, that her consent is not a valid waiver of her statutory right to an annuity as required by the statute."

However, in affirming the Board's decision to deny her claims, the court held that the widow waived her right to spousal annuity by completing and signing a written waiver form, and such written form waiver is valid absent fraud, duress, or mental incompetence.  Here, her lack of appreciation for her rights or for the effect of signing the form did not invalidate the waiver. 

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In Woodward v. Dep't of Justice, No. 09-8004, the Federal Circuit faced a challenge to BJA's denial of death benefits to the claimant, for the death of her husband-volunteer firefighter under the Public Safety Officers' Act.  The BJA denied the claim based on a conclusion that smoke inhalation was not a substantial factor in the death, as it was uncertain whether claimant's husband died of a heart attack he suffered shortly after the fire.

In 2003, when the claimants first filed the claim, the regulation required burden of proof that was a more lenient standard, resolving any reasonable doubt in favor of the claimant.  In 2006, while claimant's appeal was pending, the regulation was amended to a more stringent standard requiring claimants to prove all material issues of fact by a "more likely than not" standard. 

Thus, in reversing the denial, the court held that the BJA incorrectly applied the amended regulation as this was a significant change in the law that disfavors retroactive application of the amended regulation. 

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The Federal Circuit decided two cases involving patent infringement and requests for declaratory relief.

In Delaware Valley Floral Group, Inc. v. Shaw Rose Nets, LLC, No. 09-1357, the court faced a challenge to the district court's grant of plaintiff's motion seeking declaratory relief against an inventor and owner of a patent relating to a process for producing larger rose heads by placing elastic, porous nets over the rose heads during the growing process.

In affirming the district court's decision to grant declaratory relief based on the on-sale bar under section 102(b), the court held that the inventor-owner failed to raise a genuine issue of material fact surrounding the dates of conception or commercial sales, and also that the defendant failed to show any error by the district court in disregarding the evidence presented in its motion for reconsideration.

In Lab. Corp. of Am. Holdings v. Metabolite Labs., Inc., No. 08-1597, the court dealt with whether it had jurisdiction over the district court's grant of summary judgment in favor of the plaintiff in its action for a declaratory relief that it did not breach a license agreement for failure to pay know-how royalties after judgment had been entered in a prior patent infringement and breach of contract action.

In holding that it lacked jurisdiction, the court concluded that the present cause of action does not arise under federal patent law nor does defendant's right to relief necessarily depend on resolution of a substantial question of federal patent law.  Thus, the court lacks jurisdiction as the action is a state law contract dispute over know-how royalties brought pursuant to the district court's diversity jurisdiction.

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The Federal Circuit decided a matter involving one of the last Winstar cases arising from the savings and loan crisis of the later 1970s and a case involving a preliminary injunction to enjoin a antidumping duty order on certain wooden bedroom furniture from China.

In American Signature, Inc. v. US, the court faced a challenge to the Court of International Trade's denial of plaintiff's motion for a preliminary injunction, for being subjected to a 2005 antidumping duty order on certain wooden bedroom furniture imported from China.  In reversing the denial, the court held that the plaintiff has satisfied the requirements for a preliminary injunction and thus, the Customs or Commerce is prohibited from taking any action to liquidate or reliquidate import entries that are the subject of this action.

In Anchor Sav. Bank, FSB v. US, No. 08-5175, the court dealt with a case related to the Winstar cases involving plaintiff's suit claiming that the adoption of the FIRREA and its implementing regulations breached the government's obligations under supervisory merger contracts.  In affirming the judgment of the trial court in favor of the plaintiff for the most part, the court held that the trial court did not err in finding that it was foreseeable that the breach would result in lost profits to plaintiff in an amount commensurate to the award, nor did the trial court err in finding a causal connection between the breach and plaintiff's sale of a mortgage banking company and so did not err in in awarding lost profits for the forced sale.  However, the case was remanded to allow the trial court to determine whether an error was made in offsetting plaintiff's mitigations costs.

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Today, the Federal Circuit decided a patent infringement case and another involving an action against the United States for breach of fiduciary duty relating to the government's distribution of revenue derived from an Indian reservation.

In Richardson v. Stanley Works, Inc., No. 09-1354, the court faced a challenge to the district court's finding of noninfringement relating to a design patent for a multi-function carpentry tool that combines a hammer with another tool.  In affirming the decision, the court held that the district court correctly construed the claims at issue and correctly determined that the patent was not infringed. 

In Hoopa Valley Tribe v. US., No. 09-5084, the court faced a challenge to the Court of Federal Claims' entry of judgment in favor of the government on the ground that the plaintiff lacked standing to challenge the distribution of trust funds to the Yurok Tribe, from the Settlement Fund that was established under the Hoopa-Yurok Settlement Act. 

As stated in the decision: "The Hoopa Valley Tribe waived any claim against the government arising from the Act, received its share of the Settlement Fund, and retained no entitlement to the remainder in the Settlement Fund.  As such, at the time DOI distributed the remainder to the Yurok Trine, the Hoopa Valley Tribe was not a beneficiary of, and had no legally protected interest in, the Settlement Fund.

Thus, the court affirmed the decision of the Court of Federal Claims and held that the plaintiff lacked standing because it cannot show an injury in fact.

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In Ajinomoto Co., Inc. v. Int'l Trade Comm'n, No. 09-1081, the Federal Circuit faced a challenge to the International Trade Commission's final determination that the importation and sale of certain lysine feed products did not violate section 337 of the Tarrif Act.  Petitioner's patents claimed an improved method of producing L-lysine with genetically engineered E-Coli bacteria.

In affirming the Commission's finding, the court held that the asserted claims of plaintiffs' patents were invalid under 35 U.S.C. section 112 for failure to comply with the best mode requirement and that they waived their right to challenge the Commission's finding that the '698 patent is unenforceable due to inequitable conduct. 

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In TiVo Inc. v. EchoStar Corp., No. 09-1374, the Federal Circuit faced a challenge to the district court's decision finding EchoStar in contempt of its permanent injunction order relating to TiVo's patent infringement action of its digital video recorder (DVR).

TiVo's patent infringement action against EchoStar began in 2004 when the jury found that EchoStar's accused receivers, the "50X" series and the "Broadcom" series infringed the asserted hardware and software claims and awarded TiVo $74 million in lost profits and reasonable royalties.  As a result of the jury's finding of infringement, the district court issued a permanent injunction ordering EchoStar to stop making, using, offering to sell, and selling receivers that had been found infringing by the jury.  The district court also ordered the defendant to disable the DVR functionality in existing receivers.

In affirming the district court's decision, the court held that, based on clear and convincing evidence before the district court that both types of defendant's receivers continue to infringe, it was not an abuse of discretion for the court to hold EchoStar in contempt of the infringement provision.  The court also held that the district court had sufficient justification in determining that court pre-approval of any new design-around effort was necessary to prevent future infringing activity based on EchoStar's refusal to comply with the order to disable DVR functionality in its existing receivers. 

In Roche v. Merit Sys. Prot. Bd., No. 09-3111, the court decided the issue of whether the Merit Systems Protection Board properly declined to review petitioner's case (appealing his termination from his position as an Air Traffic Control Specialist) for lack of jurisdiction. 

In affirming the Board's dismissal of the petition for lack of jurisdiction, the court held that petitioner does not qualify as an employee under 5 U.S.C. section 7511, as he has only worked for the FAA a little 1.55 year, and section 7511 requires that a person has to complete 2 years of current continuous service in the same of similar position to qualify as Title 5 employees.

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Rulings in Antidumping and Legal Malpractice Cases

The Federal Circuit decided two cases today; one involving a challenge to the Department of Commerce's determination involving frozen warmwater shrimp from Thailand, and a plaintiff's legal malpractice suit against her former attorney related to her patent applications.

In Ad Hoc Shrimp Trade Action Comm. v. US, No. 09-1375, the US Court of International Trade affirmed the Commerce's determination that, under the first step of Chevron, the multinational corporation provision, 19 U.S.C. section 1677b(d) does not apply in the situation when the non-exporting country is a nonmarket economy and normal value is based on a factors-of-production methodology under section 1677b(c).  Under step two of Chevron, Commerce's interpretation of the MNC provision is reasonable. 

In Davis v. Brouse McDowell, LPA, No. 09-1395, the court faced a challenge to the district court's grant of summary judgment in favor of plaintiff's former attorney on her legal malpractice claim.  In affirming the decision, the court held that the district court exercised proper jurisdiction over plaintiff's malpractice cause of action, as the case-within-a-case doctrine applies to the claim.  Thus, the court held that the district court did not err in striking certain portions of plaintiff's patent law expert's affidavit and correctly concluded that plaintiff failed to introduce sufficient evidence to establish a genuine issue of material fact as to the patentability of her inventions.

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In Res. Conservation Group, LLC v. US, No. 09-5091, the Federal Circuit dealt with plaintiff's suit against the United States for breach of an implied contract of fair and honest consideration and violation of the APA, seeking recovery of bid preparation costs and fees for the breach, arising from a solicitation of offers to lease government-owned land.

In construing 28 U.S.C. section 1491(b)(1), the new jurisdictional provision enacted by the ADRA, the court concluded that the Court of Federal Claims correctly held that plaintiff's claim does not fall within the jurisdiction under the statute as "procurement contract" is defined as "a government contract with a manufacturer of supplier of goods or machinery or services under the terms of which a sale or service is made to the government." 

Thus, relief under 1491(b)(1) is unavailable outside the procurement context, as in this case where the solicitaiton of offers is for lease of government-owned land.  However, the Court of Federal Claims did have jurisdiction under section 1491(a)(1) because the implied-in-fact contract jurisdiction in nonprocurement cases that existed prior to 1996 survived the enactment of the ADRA.

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Rulings In Patent Infringement Cases

The Federal Circuit decided two patent infringement cases yesterday.  The first case involved a patent for a memorabilia card and the second case involved a patent directed to a cooling device designed to mount within the drive bay of a computer.

In Comaper Corp. v. Antec, Inc., No. 09-1248, the court faced a challenge to the jury's finding that the defendant had willfully infringed certain of plaintiff's patented claims, that certain independent claims were not invalid as obvious, but that certain dependent claims were obvious.

The court rejected defendant's claim that it was entitled to a new trial because the district court erred in construing certain terms of the patent.  However, with respect to defendant's contention that a new trial is required because of inconsistent jury verdicts on obviousness, the court agreed with the defendant that, under the circumstances of the case, the judgment must be vacated and the case remanded for a new trial on invalidity as the jury's verdicts on obviousness reflect an irreconcilable inconsistency. 

In Media Techs. Licensing, LLC. v. Upper Deck Co., No. 09-1022, the court faced a challenge to district court's conclusion that plaintiff's patents related to memorabilia cards are invalid for obviousness. 

In affirming the decision, the court held that defendants have met the burden of showing that it would have been obvious to one skilled in the art to attach a sport-related item instead of some other items attached in the prior art references.  The court also rejected plaintiff's argument for long felt but unresolved need and failure of others, initial skepticism, commercial success, unexpected results, and industry recognition as secondary objective evidence. 

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