EDITED BY VINCE KOVALICK

This publication brings you a synopsis of patent cases decided last month by the United States Court of Appeals for the Federal Circuit based on slip opinions received from the court. You can review anddownload the full text of each opinion by visiting our website at www.finnegan.com

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COURT CLARIFIES “COMMERCIAL” OFFERFOR SALEOnly an offer that rises to the level of a com-mercial offer for sale, one that the other partycould make into a binding contract by simpleacceptance (assuming consideration), consti-tutes an offer for sale. Group One, Ltd. v.Hallmark Cards, Inc., No. 00-1014 (Fed. Cir. June 15, 2001) . . . . . . . . . . . . . .1

FOR 35 U.S.C. § 102 (g), PROOF NEGATINGSUPPRESSION OR CONCEALMENT IS NOTLIMITED TO ACTIVITIES OCCURRINGWITHIN THE UNITED STATESApotex USA, Inc. v. Merck & Co., No. 00-1272 (Fed. Cir. June 8, 2001) . . . . . . . .2

COURT VACATES INFRINGEMENT JUDGMENT FOR ALMOST $50 MILLION“Oxide coating” required primarily binarymetal oxides containing only metal cationsand oxygen. Durel Corp. v. OsramSylvania Inc., No. 00-1261 (Fed. Cir. June 27, 2001) . . . . . . . . . . . . . . . . . . . . .3

SUMMARY JUDGMENT AGAINSTINFRINGEMENT WHERE ALL ACCUSEDDEVICES MANUFACTURED FOR GOVERNMENTDismissal from district court based on28 U.S.C. § 1498(a) is based on a successful assertion of an affirmative defense,rather than a lack of subject-matter jurisdic-tion. Crater Corp. v. Lucent Techs., Inc., No. 00-1125 (Fed. Cir. June 6, 2001) . . . . .3

DESPITE EFFORTS TO ADD INVENTOR,PATENT NOT INVALID FOR NONJOINDERCourt finds no evidence to corroborate testi-mony that another contributed to invention.AcroMed Corp. v. Sofamor Danek Group, Inc.,No. 00-1163 (Fed. Cir. June 8, 2001) . . . . .4

LAW OF THE CASE CANNOT BE RELITIGATEDResolution of antitrust issues in previous lawsuit is the law of the case and cannot be relitigated. Intergraph Corp. v. Intel Corp., No. 00-1368 (Fed. Cir. June 8, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . .5

PREFERRED EMBODIMENT DOES NOTLIMIT CLAIM SCOPE OF MOUSE PATENTClaim terms given their ordinary meaningwhen it is clear from specification that appli-cant did not mean something extraordinaryabout them. Gart v. Logitech, Inc., No. 00-1088 (Fed. Cir. June 26, 2001) . . . .6

SENIOR PARTY IN INTERFERENCE CAN“REST EASY” ON SLEEP APNEA COUNTSenior party in interference proceeding winsinterference for method of treating sleepapnea. Rapoport v. Dement, No. 00-1451(Fed. Cir. June 28, 2001) . . . . . . . . . . . . . .7

NOTICE REQUIREMENT MUST BE MET BYPATENTEENotice from someone closely associated withthe patent is not enough. Lans v. DigitalEquip. Corp., No. 00-1144 (Fed. Cir. June 4, 2001) . . . . . . . . . . . . . . . . . . . . . .8

“CLEAR GUIDANCE” IN SPECIFICATIONMANDATES CLAIM CONSTRUCTIONUnique Coupons, Inc. v. Northfield Corp. &Menasha Corp., No. 00-1300 (Fed. Cir. June13, 2001) (nonprecedential decision) . . . .9

DEFENDANT’S SUMMARY JUDGMENT OFNONINFRINGEMENT NOT “AIRTIGHT”Scholle Corp. v. Packaging Sys., LLC, No. 00-1248 (Fed. Cir. June 6, 2001) (nonprecedential decision) . . . . . . . . . . . .9

WAFER-PROCESSING DEVICES DO NOTINFRINGESemitool, Inc. v. Novellus Sys., Inc., No. 00-1375 (Fed. Cir. June 8, 2001) (nonprecedential decision) . . . . . . . . . . .10

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Court Clarifies “Commercial”Offer for Sale

Carol L. Cole

[Judges: Plager (author), Lourie, and Gajarsa]

In Group One, Ltd. v. Hallmark Cards, Inc.,No. 00-1014 (Fed. Cir. June 15, 2001), theFederal Circuit affirmed a district court’s decisionregarding a trade-secret issue, but reversed andremanded for further findings on the issue of anon-sale bar.

Group One, Ltd. (“Group One”) suedHallmark Cards, Inc. (“Hallmark”) for infringe-ment of two patents: U.S. Patent No. 5,518,492(“the ‘492 patent”), directed to a machine forproducing curled and shredded ribbon, and U.S.Patent No. 5,711,752 (“the ‘752 patent”),directed to a method for producing the curledand shredded ribbon. Additionally, Group Oneclaimed that Hallmark had misappropriated itstrade secrets regarding the curling and shred-ding machine and method. Hallmark counter-claimed that Group One’s ‘492 patent wasinvalid.

Frederic Goldstein is the managing directorand sole beneficial shareholder of Group One.Before filing a PCT application on November 12,1992, Goldstein commenced a series of commu-nications, beginning on June 24, 1991, withHallmark (and others) to generate interest in hisdevice. Prior to any meetings, a ConfidentialDisclosure Agreement (“CDA”) was drafted, butwas never signed by Hallmark. On February 14,1992, before a scheduled meeting, Goldsteinspoke on the telephone with a Hallmark engineerand discussed the details of Group One’smachine and method. Goldstein had signed theCDA and had assumed that it was in effect.Hallmark then cancelled the meeting and wrotea letter to Goldstein indicating that they haddeveloped their own machine for curling andshredding ribbon. In the spring of 1995,Hallmark began producing its products, a clumpof curled ribbon attached to a card and a gift-bag-stuffing product.

The district court had held that while the pre-November 12, 1991, communications did notconstitute a formal offer for sale in the contractsense, they did constitute an offer for sale in thecontext of 35 U.S.C. § 102(b). The district court

thus ruled that the ‘492 and ‘752 patents wereinvalid.

The district court also held that any misappro-priation had ended with publication of the PCTapplication on May 27, 1993, but that GroupOne could recover for any “head-start” advan-tage gained by Hallmark because Hallmark hadimproperly used the confidential informationduring the period prior to the PCT publicationdate. Group One subsequently stipulated that itcould prove no such damages and the trade-secret counts were dismissed. Group Oneappealed alleging that the district court haderred in declaring its patents invalid and in limit-ing its recovery for misappropriation to prepubli-cation “head-start” damages.

The Federal Circuit noted that there is nobinding precedent in the circuit that requires theacceptance of something less than an offer tocontract as constituting an offer for sale, as thatterm is construed for purposes of the on-sale bar.The Court rejected the district court’s reliance onRCA Corp. v. Data General Corp., 887 F.2d 1056(Fed. Cir. 1989), to support a less formal offercriterion, noting that the dicta in RCA concerningsomething less than a formal commercial offer istoo vague and its parameters are too ill definedfor any sort of analysis. Instead, the FederalCircuit looked to the Uniform Commercial Codeto define whether the series of communicationsrose to the level of a commercial offer for sale.The Court explained that only an offer that risesto the level of a commercial offer for sale, onethat the other party could make into a bindingcontract by simple acceptance (assuming consid-eration), constitutes an offer for sale. Findingthese criteria missing from the Group One corre-spondence, the Federal Circuit reversed the dis-trict court’s finding of invalidity.

Group One also contended that it was offer-ing only to license the patent to Hallmark. TheFederal Circuit noted that there was precedent tothe effect that a sale of rights in a patent is notwithin the scope of the statute and, thus, doesnot implicate the on-sale bar. Hallmark coun-tered that the correspondence documentsdemonstrate that Group One was actually offer-ing to license the machine itself and not just therights in the patent on the machine. However,the Federal Circuit noted that the answer to thisissue is unclear and that its holding on the on-sale bar issue relieved the Court from having toaddress this issue. Judge Lourie wrote separately,

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however, to explain his conclusion that suchoffers to license would not offend the on-salebar.

With regard to the trade-secret issue, GroupOne urged that the harm being remedied is themisappropriation itself and any subsequent publi-cation of a formerly secret material is irrelevantunless the misappropriating party becomesaware of the publication and relies on the publi-cation. Hallmark argued for a stricter interpreta-tion of what constituted a trade secret, i.e., onceformerly secret material is published, it ceases tobe a secret and, therefore, it cannot be misap-propriated. The district court had found that thepublication of the PCT application destroyed thetrade-secret status and, therefore, Hallmark couldnot be liable for damages for any activity afterthat date. The Federal Circuit affirmed.

For 35 U.S.C. § 102(g), ProofNegating Suppression orConcealment Is Not Limited toActivities Occurring Within theUnited States

Vince Kovalick

[Judges: Lourie (author), Clevenger, and Linn]

In Apotex USA, Inc. v. Merck & Co., No. 00-1272 (Fed. Cir. June 8, 2001), the Federal Circuitaffirmed a SJ that U.S. Patent Nos. 5,573,780(“the ‘780 patent”) and 5,690,962 (“the ‘962patent”) are invalid under 35 U.S.C. § 102(g).

The ‘780 and ‘962 patents relate to a processfor making a stable solid formulation of anenalapril sodium for use in the treatment of highblood pressure. Merck & Co. (“Merck”) manu-factures an enalapril sodium under the tradename VASOTEC® and has done so since 1983. During a 1994 trial in Canada between Merck’sand Apotex USA, Inc.’s (“Apotex”) Canadian affil-iates concerning Merck’s Canadian patent cover-ing the enalapril sodium compound, Dr. BernardSherman, an Apotex official, heard the testimonyof Merck’s Vice President of Marketing as he nar-rated a videotape demonstrating Merck’s processfor manufacturing VASOTEC®. Within days ofhearing this testimony, Dr. Sherman allegedlyconceived the patented process at issue. Apotex

obtained the ‘780 and ‘962 patents and latersued Merck for infringement. The district court,however, found the patents invalid on SJ.

On appeal, Apotex argued that the districtcourt improperly invalidated the patents becauseMerck had failed to prove by clear and convinc-ing evidence that it did not suppress or concealthe patented process. Apotex further contendedthat proof that Merck did not suppress or con-ceal the process could not be satisfied by foreigndisclosures or other foreign activities. TheFederal Circuit rejected this argument, however,concluding that proof negating suppression orconcealment is not limited to activities occurringwithin the United States.

The Court then turned to an issue that it hadnot previously squarely addressed, i.e., the bur-dens of proof governing the determination ofsuppression or concealment as negating priorinvention. After reviewing related precedent andinterference law, the Court ruled that § 102(g)requires that once a challenger of a patent hasproven by clear and convincing evidence thatthe invention was made in this country by anoth-er, the burden of production shifts to the patent-ee to produce evidence sufficient to create agenuine issue of material fact as to whether theprior inventor has suppressed or concealed theinvention. The ultimate burden of persuasion,however, remains with the party challenging thevalidity of the patent.

Applying its new law to the case at hand, theCourt found that Apotex had satisfied its burdenof producing evidence sufficient to create a gen-eral issue of material fact that Merck had sup-pressed or concealed its process of manufactur-ing enalapril sodium tablets. Although Merckhad perfected its process and began commercial-ly using its process to manufacture VASOTEC®tablets no later than 1983, Merck took no stepsto make the invention public for nearly five years,when it first published the ingredients used inthe process in the 1988 edition of theDictionnaire Vidal. The Court found that suchdelay raised an inference that Merck had sup-pressed or concealed its invention.

However, Merck had rebutted this inferenceby showing that it had resumed its activity con-cerning this process and made several disclosuresbefore Apotex’s entry into the field. Thus, theCourt affirmed the finding of invalidity of thetwo Apotex patents.

Court Vacates InfringementJudgment for Almost $50 Million

Brian M. Burn

[Judges: Lourie (author), Plager, and Gajarsa]

In Durel Corp. v. Osram Sylvania Inc., No. 00-1261 (Fed. Cir. June 27, 2001), the FederalCircuit reversed the district court’s partial SJ ofinfringement and vacated its partial SJ dismissinga counterclaim of invalidity based on lack ofenablement.

Durel Corporation (“Durel”) is the exclusivelicensee of U.S. Patent No. 5,418,062 (“the ‘062patent”), which is directed to encapsulated elec-troluminescent phosphor particles, each of whichis encapsulated within a metal-oxide coating.Such particles are useful for illuminating watchfaces and instrument panels in motor vehicles.Durel sued Osram Sylvania Inc. (“Sylvania”) forinfringement of the ‘062 patent. Sylvania filed acounterclaim for a DJ of invalidity based on lackof enablement.

The issue of infringement hinged on the defi-nition of “oxide coating.” The district court hadconstrued this term to mean a coating primarilycomposed of metal cations and oxygen, but alsopossibly containing other elements or com-pounds, such as hydrogen.

Sylvania’s electroluminescent phosphor parti-cles were coated with a mixture of aluminumoxide hydroxide, AlO(OH), and aluminum trihy-droxide, Al(OH)3. The district court had con-cluded that since the amount of hydrogen inSylvania’s coating was minor relative to theamount of metal cations and oxygen in the coat-ing, the coating satisfied the oxide coating claimrequirement. Therefore, the district court grant-ed partial SJ of infringement to Durel.

On appeal, Sylvania argued that the districtcourt had erred in its construction of the term“oxide coating,” urging that the definition in thespecification requires that the coating be primari-ly composed of metal oxides, which are binarycompounds. Durel countered that the districtcourt had correctly adopted the definition setforth in the specification, which includes metalcations, oxygen, and minor amounts of otherelements, such as hydrogen.

The Federal Circuit agreed with Sylvania. Inreviewing the specification of the ‘062 patent,the Federal Circuit concluded that the claimed

oxide coating must comprise primarily binarymetal oxides containing only metal cations andoxygen.

Durel acknowledged that the coatings onSylvania’s accused infringing products are mix-tures of AlO(OH) and Al(OH)3. Since theseaccused hydroxide coatings do not meet the def-inition of the claim limitation “oxide coating,”the Federal Circuit reversed the district court’sgrant of partial SJ of infringement. Althoughinfringement under the DOE had not been con-sidered at the district court, the Federal Circuitruled that as a matter of law there could be noinfringement under the DOE because the “oxidecoating” limitation would be vitiated by such aholding.

Turning to the DJ counterclaim of invaliditybased on lack of enablement, the district courthad held that the issue was whether Durel’spatents enabled Sylvania’s accused infringingcoatings. The Federal Circuit found this to be anerror of law. According to the Court, the disposi-tive question of enablement does not turn onwhether the accused infringing product isenabled, but rather on whether the patent speci-fication would have enabled one of ordinary skillin the art to make and use the full scope of theclaimed invention without undue experimenta-tion. However, because the district court onlyhad considered whether Durel’s patents enabledSylvania’s accused infringing coating, the FederalCircuit held there were insufficient bases in therecord to consider whether Durel’s patents wereinvalid for lack of enablement. Accordingly, theFederal Circuit vacated the district court’s partialSJ that the patent was not invalid.

Summary Judgment AgainstInfringement Where All AccusedDevices Manufactured forGovernment

Charles W. Chesney

[Judges: Schall (author), Mayer, and Newman]

In Crater Corp. v. Lucent Technologies, Inc., No.00-1125 (Fed. Cir. June 6, 2001), the FederalCircuit affirmed in-part, vacated in-part, andremanded a district court’s dismissal of a patent

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infringement claim for lack of jurisdiction. TheFederal Circuit so held because pursuant to28 U.S.C. § 1498(a), a private party cannot beheld liable for patent infringement for any goods“used or manufactured by or for the UnitedStates.” The Federal Circuit concluded that adismissal of a lawsuit against a private party pur-suant to § 1498(a) is a dismissal because of thesuccessful assertion of an affirmative defenserather than a dismissal because the district courtlacked subject-matter jurisdiction over the patentinfringement claim. Therefore, the Court con-cluded that although the district court had erredin dismissing the complaint for lack of jurisdic-tion, SJ was properly granted on the affirmativedefense that all the accused devices were manu-factured by or for the United States governmentwith its authorization and consent.

Crater Corporation (“Crater”) brought suitagainst Lucent Technologies, Inc. (“Lucent”) forinfringement of U.S. Patent No. 5,286,129 (“the‘129 patent”), which is directed toward anunderwater coupling device. Crater also allegedstate-law claims against Lucent for breach ofcontract and for misappropriation of tradesecrets.

Lucent moved to dismiss Crater’s complaintfor lack of subject-matter jurisdiction under Fed.R. Civ. P. 12(b)(1) and, in the alternative, for fail-ure to state a claim upon which relief could begranted under Fed. R. Civ. P. 12(b)(6). Citing28 U.S.C. § 1498(a), Lucent argued that it wasnot liable for patent infringement because anywork it performed with respect to the Cratercoupler was done under a government projectand was authorized by the United States.

Shortly after Lucent’s motion was filed, Craterrequested an evidentiary hearing on Lucent’smotion along with leave to conduct discovery insupport of its opposition. The district courtallowed the discovery. After over a year of dis-covery, Crater filed its opposition to Lucent’smotion to dismiss.

In granting Lucent’s motion to dismiss, thedistrict court noted that Crater had failed to pro-duce any evidence indicating that Lucent hadperformed any relevant work for any entity orindividual other than the government or withoutthe government’s authorization or consent.Thus, the district court concluded that the Courtof Federal Claims, not the district court, hadexclusive jurisdiction over this case. The districtcourt therefore granted Lucent’s motion to dis-miss and entered judgment against Crater.

The Federal Circuit first reviewed the lawregarding § 1498(a), which grants the UnitedStates Court of Federal Claims exclusive jurisdic-tion over patent infringement suits against thegovernment. Additionally, the Court referred toFederal Circuit case law holding that § 1498(a)provides an affirmative defense for applicablegovernment contractors. Specifically, the Courtreferred to case law holding that if a patentedinvention is used or manufactured for the gov-ernment by a private party, that private partycannot be held liable for patent infringement.Thus, the Court reasoned, a dismissal of a lawsuitagainst a private party pursuant to § 1498(a) is adismissal because of the successful assertion ofan affirmative defense rather than a dismissal forlack of subject-matter jurisdiction over the patentinfringement claim.

In turning to the case at hand, the Court stat-ed that Crater had failed to come forward withany evidence that raised a genuine issue of mate-rial fact so as to defeat SJ, even though it hadthe opportunity to develop relevant testimony indiscovery. The Court therefore concluded thatthere was no genuine issue of material fact thatLucent’s work on the coupler was done solely forthe government.

As such, the Court held that, although the dis-trict court had erred in dismissing Crater’s com-plaint for lack of subject-matter jurisdiction, SJwas properly granted in favor of Lucent on itsaffirmative defense under § 1498(a). The Courtfurther concluded that the district court, there-fore, had original jurisdiction over the case byreason of Crater’s patent claims and, thus, thedistrict court had supplemental jurisdiction overCrater’s state-law claims. As a result, althoughCrater’s patent infringement claims were proper-ly dismissed, the district court still has the discre-tion to exercise supplemental jurisdiction overthe state-law claims.

Despite Efforts to Add Inventor,Patent Not Invalid for Nonjoinder

Lawrence F. Galvin

[Judges: Rader (author), Michel, and Linn]

In AcroMed Corp. v. Sofamor Danek Group, Inc.,No. 00-1163 (Fed. Cir. June 8, 2001), the FederalCircuit affirmed a district court’s decision grant-

ing JMOL that a first patent was not invalid forimproper inventorship and upholding a jury ver-dict finding all asserted claims of two patents lit-erally infringed and not invalid.

In the early 1980s, Dr. Arthur Steffee devel-oped systems to straighten a patient’s spine. Hissystems fastened long plates to the patient’s ver-tebrae using bone screws. In 1982, he conceivedof certain improvements to his then-existing plate-and-screw system. Working withSteffee, machinist Frank Janson fabricated theimproved plate-and-screw system. Additionally,Janson solved a critical problem, identified bySteffee, related to fixing the relative positions ofthe plates and screws in the improved system.

In 1983, Steffee cofounded AcroMedCorporation (“AcroMed”). As the sole-namedinventor of U.S. Patent Nos. 4,696,290 (“the ’290patent”) and 4,854,311 (“the ’311 patent”), heassigned his rights in both patents to AcroMed.The ’290 patent claimed the improved plate-and-screw system, while the ’311 patent claimed arelated bone screw.

Janson worked for and with AcroMed from1988 until 1994. In 1993, AcroMed suedSofamor Danek Group, Inc. and Danek Medical,Inc. (collectively “Danek”) in the U.S. DistrictCourt for the Northern District of Ohio forinfringement of the ’290 and ’311 patents. Atabout the time Janson left AcroMed in 1994, hemet with Danek’s counsel. Later that year, Jansonrefused AcroMed’s request to sign both a declara-tion and power of attorney adding him as a coin-ventor of the ’290 patent and to assign his rightsin the ’290 patent to AcroMed. Instead, in 1995,he assigned his rights in the ’290 patent toDanek.

After the trial for infringement of the ’290 and’311 patents, the district court had granted JMOLthat the ’290 patent was not invalid for improperinventorship. Additionally, the jury verdict hadfound all asserted claims of both patents literallyinfringed and not invalid, found willful infringe-ment of the ’290 patent, and awarded damages.The district court then denied three motions forJMOL by Danek.

On appeal, the Federal Circuit addressed eachof Danek’s JMOL motions. First, the Court foundthat, despite AcroMed’s failed attempt to belated-ly add Janson as coinventor of the ’290 patent,Danek had not presented clear and convincingevidence of nonjoinder. Second, regarding the’311 patent, the Federal Circuit upheld the dis-trict court’s relatively broad construction of key

means-plus-function claim language, thus findingsufficient evidence to support the jury verdict ofliteral infringement. Third, based upon evidenceput forth by AcroMed and the Federal Circuit’sinterpretation of specific means-plus-functionclaim language, the Court found insufficient evi-dence that a prior art patent anticipated the ’311patent. Based upon these findings, the FederalCircuit affirmed the district court’s decision.

Law of the Case Cannot BeRelitigated

Leonard Smith, Jr.

[Judges: Newman (author), Rader, andGajarsa]

In Intergraph Corp. v. Intel Corp., No. 00-1368(Fed. Cir. June 8, 2001) (“Intergraph II”), theFederal Circuit affirmed the district court’s deci-sion not to relitigate antitrust issues decided inIntergraph Corp. v. Intel Corp., 195 F.3d 1346(“Intergraph I”), and affirmed the district court’sentry of judgment under Fed. R. Civ. P. 54(b).

In 1997, Intergraph Corporation(“Intergraph”) sued Intel Corporation (“Intel”) forinfringement of Intergraph’s patented “Clipper”microprocessor technology, prompting Intel towithdraw special benefits provided to Intergraphunder several nondisclosure agreements.Intergraph argued that Intel’s withdrawal of thebenefits amounted to an antitrust violation undersections 1 and 2 of the Sherman Act. In agreeingwith Intergraph, the district court had brandedIntel a “monopolist,” had held that Intergraphhad a substantial likelihood of success on themerits in proving that the withdrawal of the ben-efits constituted a violation of the Sherman Act,and, thus, granted a preliminary injunction.

The Federal Circuit had reversed that judg-ment, stating that the prohibited conduct mustbe directed toward competitors and must beintended to injure competition. The Court wenton to provide that Intergraph had not establishedgrounds on which to litigate whether Intel was a“monopolist,” since Intergraph’s asserted injurydid not derive from anticompetitive actions byIntel.

On remand, Intergraph sought to relitigate itscharges of antitrust violation by Intel, together

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with several contract and tort claims remainingbefore the district court. Intergraph’s rationalewas that new evidence compiled by the FederalTrade Commission (“FTC”) in its investigation ofIntel or discovered by Intergraph shows the com-pany’s anticompetitive behavior. In denyingIntergraph’s request, the district court had heldthat the resolution of the antitrust issues inIntergraph I is the law of the case and enteredjudgment to that effect under Fed. R. Civ. P.54(b). Prior to reaching its decision, the districtcourt had reviewed the additional informationprovided by Intergraph and noted that whileIntergraph may have obtained more informationrelated to the FTC’s action, the Federal Circuitwas already aware of the actions.

In affirming the district court on this appeal,the Federal Circuit determined that while theinformation was dated well before the decisionin Intergraph I, it was not brought to any court’sattention either before the decision or by peti-tion after the decision was rendered. The Courtfurther observed that Intergraph had failed toexplain how its new evidence provided a basisfor reevaluating the Court’s previous conclusionthat Intel’s conduct with respect to Intergraphdid not constitute the offense of monopolizationor the threat thereof in any market relevant tocompetition with Intergraph.

With regard to the district court’s entry ofjudgment under Fed. R. Civ. P. 54(b), Intergraphargued that it was an abuse of discretion, andthat the district court was required to litigate theantitrust claims along with the contract and tortclaims because all of the claims arose out of thesame core facts. In sustaining the district court’saction, the Federal Circuit ruled that even forclaims that arise out of the same transaction oroccurrence, sound case management may war-rant entry of partial final judgment. In anyevent, the Court ruled that the trial court’s deci-sion whether to certify a judgment under Rule54(b) should not be disturbed unless it is clearlyunreasonable.

Preferred Embodiment Does NotLimit Claim Scope of MousePatent

Kenneth M. Lesch

[Judges: Linn (author), Lourie, and Rader]

In Gart v. Logitech, Inc., No. 00-1088 (Fed. Cir.June 26, 2001), the Federal Circuit provided a

new claim construction for a limitation in theasserted claim and, as a result, vacated a SJ ofnoninfringement by Logitech, Inc. (“Logitech”).The Court also reversed the district court’s find-ing that two letters from Samuel Gart toLogitech did not effect the statutory notice ofinfringement requirement under 35 U.S.C.§ 287(a) for certain Logitech products.

U.S. Patent No. 4,862,165 (“the ‘165 patent”)discloses an ergonomically shaped computermouse for reducing muscle fatigue. The districtcourt had construed the phrase “an angularmedial surface for supporting the three remain-ing ulnar fingers in a wrapped configuration withflexion of the distal, middle, and proximal pha-langes of said ulnar fingers” of claim 7 to requirethat the mouse housing have “an angular ledge”for supporting the three fingers in an enclosed orfolded position. Although both parties suggest-ed that the district court had also construed the“angular ledge” to include a curved undercut orconcave depression, the Federal Circuit statedthat the district court’s opinion was not clear onthis point.

Logitech, supporting the district court’s claimconstruction, contended that (1) all of the draw-ings of the ‘165 patent show a ledge with anundercut area; and (2) the written descriptiondescribes the invention as having a “medialledge undercut” that is not related to the pre-ferred embodiment. The Federal Circuit rea-soned that the specification and the prosecutionhistory should be consulted to construe the lan-guage of the claims when the patentee has cho-sen to be his or her own lexicographer, or whenthe language itself lacks sufficient clarity suchthat there is no means by which the scope of theclaim may be ascertained from the languageused. Otherwise, terms in the claim are to begiven their ordinary and accustomed meaning.

The Court noted that the description in thespecification that Logitech relied upon is merelya description of the preferred embodiment. TheCourt also noted that the specification clearlystates that “an angular medial surface” withoutthe ledge will achieve the object of the inven-tion. Further, the Court determined that thedrawings only depict the preferred embodimentand were not meant to limit the scope of cover-age defined by the claims. Thus, the Court con-cluded that the written description of the inven-tion does not explicitly limit the subject matterof the patent to the ledge configuration.

Logitech further argued that Gart made state-ments in the specification distinguishing theprior art, noting in particular that three refer-ences did not include an undercut ledge. The

Court countered, however, that the specificationalso stated that those same references did notcontain all of the ergonomic surface features ofthe invention or were incompatible with the sur-face shapes needed in a hand controller. Thus,the Court concluded that Gart did not limit theclaims by distinguishing the prior art.

Further, the Court did not agree with Logitechthat in allowing the claims the Examiner hadimplied that “an undercut area” was novel andnonobvious because the Examiner never explicit-ly stated that the patentable difference over theprior art was “the concave undercut area” of theclaimed device. The Court determined thatdrawing inferences of the meaning of claimterms from an Examiner’s silence is not a properbasis on which to construe a patent claim.

With the new claim construction, the Courtcould not determine with certainty based on thefactual record before it whether there were anygenuine issues of material fact regardinginfringement, either literally or under the DOE,by the accused products. Accordingly, the Courtvacated the district court’s grant of SJ of noinfringement and remanded the case for furtherproceedings.

Regarding the notice issue, there were twoletters from Gart to Logitech that the Court ana-lyzed. The first letter stated that Logitech “maywish to have patent counsel examine the . . .patent . . . to determine whether a non-exclusivelicense under the patent is needed” for a firstproduct. The second letter stated that Logitechmight find the patent “particularly interesting”relative to a second product and the first prod-uct. Supporting the district court’s decision,Logitech contended that both letters did not usethe word “infringement” and, thus, were insuffi-cient actual notice because they were at best aninvitation for Logitech to study the patent todetermine whether there might be infringement.The Court disagreed that notice was insufficientwithout an unqualified charge of infringementand a threat of suit.

Reversing the district court, the Court heldthat no reasonable jury could find that Logitechwas not notified of infringement by the firstproduct from the first letter. The Court reachedthis conclusion because the first letter reasonablysuggested to Logitech that Gart had believed themaking and selling of the first product infringedthe ‘165 patent claims. The Court did notbelieve that the second letter alone was sufficient

notice of infringement because it did not reason-ably convey that Gart had believed Logitech wasinfringing the ‘165 patent claims. Again revers-ing the district court, the Court nonethelessfound that no reasonable jury could find thatLogitech was not notified of the infringement ofthe second product. The Court came to thisconclusion because the second letter, in conjunc-tion with the first letter, reasonably apprisedLogitech that Gart had believed that the makingand selling of the second product infringed the‘165 patent.

Senior Party in Interference Can“Rest Easy” on Sleep ApneaCount

Vince Kovalick

[Judges: Clevenger (author), Rader, andGajarsa]

In Rapoport v. Dement, No. 00-1451 (Fed. Cir.June 28, 2001), the Federal Circuit affirmed adecision of the Board, which had awarded judg-ment of priority as to the sole count of an inter-ference in favor of William Dement and others(collectively “Dement et al.”).

The technology at issue concerns a methodfor treating sleep apnea, the transient cessationof breathing during sleep. In particular, thecount in this interference concerned the adminis-tration of a therapeutically effective amount ofcertain azapirone compounds such as buspirone.

The interference was declared in January1992, with Dement et al. designated as the sen-ior party based on a filing date of February 12,1990. The interference count defined azapironecompounds that include buspirone. Junior party,David Rapoport, filed a motion for judgmentclaiming that the subject matter of the countwas anticipated or rendered obvious by a refer-ence he had authored (“the Publication”). TheBoard denied this motion, finding that Rapoporthad established a conception date of May 13,1988, Dement was entitled to a 1986 date ofconception, and Dement’s conception dateinured to the benefit of his coinventors as well.As a result, the Board had awarded priority toDement et al.

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On appeal, Rapoport argued that the Boardhad erred in failing to find that the Publicationanticipated or rendered obvious the Dement etal. claims. In addressing the issue, the Courtreviewed the Board’s claim construction to deter-mine whether the count concerned the treat-ment of the underlying respiratory problems ofsleep apnea or both the underlying respiratoryproblems and consequential symptoms, such asfatigue, irritability, depression, and stress. Afterreviewing the patent and other evidence, theCourt agreed that, properly construed, the countconcerned only the underlying respiratory causesof sleep apnea.

Having so construed the claim, the Court fur-ther agreed that the Publication failed to teachthe use of buspirone to treat the underlying con-ditions of sleep apnea. Rather, the Publicationdisclosed the use of buspirone only to treat anxi-ety in patients suffering from sleep apnea. Thus,the Court affirmed the Board’s holding that thePublication did not anticipate or render obviousthe interference count.

Notice Requirement Must Be Metby Patentee

Elizabeth A. Niemeyer

[Judges: Rader (author), Plager, and Schall]

In Lans v. Digital Equipment Corp., No. 00-1144 (Fed. Cir. June 4, 2001), the Federal Circuitaffirmed a district court’s dismissal of a suit forinfringement brought by the inventor of U.S.Patent No. 4,303,986 (“the ‘986 patent”). TheFederal Circuit also affirmed the district court’sholding that Håkan Lans, the inventor, did notmeet the requirements of Fed. R. Civ. P. 60(b)(2)and affirmed dismissal of a separate actionbrought by Uniboard Aktiebolag (“Uniboard”)for infringement of the ‘986 patent because thepatent had expired and 35 U.S.C. § 287(a) pre-vented recovery of any damages.

The subject matter of the patent is directedtoward a data-display system for a color graphicsdisplay. Lans is the sole inventor of the ‘986patent, which issued in 1981. In 1989, Lansassigned the ‘986 patent to Uniboard, which hadLans as the managing director and sole share-holder. In 1996, Lans sent letters to theDefendants accusing them of infringing the ‘986patent and offering them licenses. In 1997,

without naming Uniboard as a Plaintiff, Lanssued the Defendants.

The Defendants discovered the assignment ofthe patent from Lans to Uniboard and moved forSJ that Lans lacked standing. Lans responded tothis motion by moving to amend the complaintand substitute Uniboard for himself. The districtcourt granted the Defendants’ motion for SJbased on lack of standing and further deniedLans’s motion to amend the complaint because“without standing there was no motion toamend.” Lans, slip op. at 8.

Lans then brought a motion for relief fromjudgment based on a “Clarification-Contract,”which Lans had executed in 1989 and which wasproduced to Lans by Lans’s former accountant inJanuary 2000. The Clarification-Contract pur-ported to transfer the ‘986 patent rights toUniboard, but stated that Lans would own thepatent. The district court denied Lans’s motion,finding that Lans was in constructive possessionof the Clarification-Contract. Therefore, it wasnot newly discovered evidence.

Finally, in November 1999, Uniboard filed suitagainst the Defendants. The Defendants movedto dismiss the complaint for failure to state aclaim upon which relief may be granted, notingthat the patent had expired in January 1999.The Defendants also argued § 287(a) precludeddamages because Uniboard had not properlynotified the Defendants of infringement beforeexpiration of the ‘986 patent.

On appeal, the Federal Circuit affirmed eachof the district court’s holdings. The FederalCircuit reviewed the district court’s dismissal ofUniboard’s complaint, examining § 287(a) andits own precedent, which held that determiningnotice under § 287 depends on the action of thepatentee and not the knowledge of the infringer.Although the Defendants had received noticefrom Lans, the requirements of § 287(a) were notmet until Uniboard gave actual notice of infringe-ment and notice that it was the patentee, whichoccurred when Uniboard filed its complaint.Consequently, the Federal Circuit affirmed thedistrict court’s dismissal of Uniboard’s complaintbecause § 287(a) precluded any award of dam-ages and because no other remedy was available.

The Federal Circuit also held that Lans lackedprudential standing and, consequently, the dis-trict court had been correct in granting SJ, thedistrict court had been well within its broad dis-cretion in denying Lans’s motion to amend, andthe district court had not abused its discretion indenying relief from judgment under Rule 60(b).

“Clear Guidance” in SpecificationMandates Claim Construction

Robert A. Pollock

[Judges: Newman (author), Lourie, andBryson]

In Unique Coupons, Inc. v. Northfield Corp. &Menasha Corp., No. 00-1300 (Fed. Cir. June 13,2001) (nonprecedential decision), the FederalCircuit supplanted a district court’s claim con-struction in light of the embodiment in thepatentee’s disclosure and reversed a finding ofinfringement under the DOE.

Unique Coupons, Inc. (“Unique”) had suedNorthfield Corporation and MenashaCorporation (collectively “Northfield”) forinfringement of U.S. Patent Nos. 5,079,901 and5,588,280 (respectively “the ‘901 and ‘280patents”). The Court first addressed the jurisdic-tional question of whether Unique had standingto bring the infringement action without joiningthe patentee. Unique was the exclusive licenseeof the ‘901 and ‘280 patents. The inventor, how-ever, retained veto rights over any sublicenses orassignments. The Court dismissed the sublicens-ing provision as a minor derogation, but notedthat a limitation on assignment could preclude alicensee from suing on its own. Nevertheless,because the license granted Unique the right tosue on its own, the Court concluded that Uniqueheld all substantial rights in the patents, suchthat it was unnecessary to join the inventor.

The ‘901 and ‘280 patents relate to devicesfor separating and inserting coupons from a con-tinuous web into cereal cartons or other pack-ages. Reviewing the claim construction, theCourt set aside the district court’s constructionand focused on the relative position of threeclaim elements: the coupon sensor, the position-ing rolls, and the feeding rolls. Although the rel-ative position of these elements is not explicitlydefined in the claims, the abstract, summary ofthe invention, and detailed description of bothpatents disclose but a single embodiment, whichrequire that the coupon sensor be positionedbetween the feed and positioning rolls. Becauseit appeared that this arrangement was necessaryfor the proper operation of the invention, theCourt sought to interpret the claims so as tomaintain their validity and found that the claimsrequire a coupon sensor between the positioning

and feeding rolls. Noting that there is a fine linebetween interpreting claim language in light ofthe specification and reading a limitation fromthe specification into the claim, the Court statedthat the present construction was permissible inlight of the clear guidance in the specification.

In contrast to Unique’s claims, so construed,Northfield’s allegedly infringing device had asensing device positioned downstream of thefeed and positioning rolls and, thus, did not liter-ally infringe. Moreover, the Court noted thatNorthfield’s device would not work properly ifthe coupon sensor was positioned between thefeed and positioning rolls. Because differentsensing positions would yield substantially differ-ent results, the Court ruled that Northfield alsodid not infringe under the DOE.

Defendant’s Summary Judgmentof Noninfringement Not“Airtight”

Susanne C. Tinker

[Judges: Dyk (author), Rader, and Plager]

In Scholle Corp. v. Packaging Systems, LLC, No.00-1248 (Fed. Cir. June 6, 2001) (nonpreceden-tial decision), the Federal Circuit held that thedistrict court had erred-in-part in its claim inter-pretation of U.S. Patent No. 4,120,134 (“the‘134 patent”). The Federal Circuit thereforevacated and remanded-in-part the district court’sgrant of the Defendant’s SJ of noninfringementand affirmed the district court’s denial of attor-ney fees.

The ‘134 patent, relating to an apparatus andmethod for filling flexible containers with fluids,includes two independent claims at issue in theappeal. Scholle Corporation (“Scholle”) suedPackaging Systems, LLC (“Packaging”) forinfringement of these claims resulting fromPackaging’s making and/or selling of variousmachines that include a footer positioned in thecenter of the machine to seal off the flow of anyair into the flexible bag being filled. In some ofthese machines, the footer would cause the bagto contact the end of the filling spout, or thefooter could be adjusted by consumers to causesuch contact.

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In granting Packaging’s motion for SJ of non-infringement, the district court had adoptedPackaging’s assertion that the claims of the ‘134patent require an airtight, as opposed to a sub-stantial, seal between the bag and the spout.The district court concluded that Scholle hadfailed to introduce sufficient evidence to establisha triable issue of fact that Packaging’s fillingmachines create such an airtight seal. Further,the district court had rested its decision of nonin-fringement on its view that Packaging’s machineutilized a liquid displacement technique forexcluding air from the bag, which technique dif-fered from that utilized in the ‘134 patent.

On appeal, the Federal Circuit reversed-in-partthe district court’s claim construction. Whileagreeing that physical contact between the bagand the spout was required by the ‘134 patentclaims, the Federal Circuit disagreed that an air-tight seal also was required. Instead, the FederalCircuit construed the ‘134 patent claims torequire only a substantial seal.

The Court rested its conclusion on a portionof the specification that read, “Desirably, sub-stantially all of any such atmosphere should beremoved or excluded from the head space of thebag prior to recapping. . . .” The Court assertedthat “substantially” was used in this passage tomodify both “removed” and “excluded.”

Having so construed the claims, the Courtturned to the issue of infringement. The Courtfirst pointed out that the district court had erredin its assumption that the accused machinescould not infringe if they used a different tech-nique than the ‘134 patent.

The Court then addressed whether theDefendant’s various machines satisfied the physi-cal contact requirement of the ‘134 patentclaims, but remanded this issue to the districtcourt to determine which of the Defendant’s var-ious machines included the requisite bag-to-spout physical contact. The Court instructed thedistrict court that any of the accused machinesthat left a gap between the bag and the spoutdid not infringe the ‘134 patent claims, either lit-erally or under the DOE.

With respect to the issue of whether machinesthat did have physical contact between the flexi-ble bag and the spout also formed a substantialseal, the Court found that a genuine issue ofmaterial fact exists as to whether a substantialseal is formed in the accused machines.

Wafer-Processing Devices Do NotInfringe

L. Scott Burwell

[Judges: Lourie (author), Michel, and Rader]

In Semitool, Inc. v. Novellus Systems, Inc., No.00-1375 (Fed. Cir. June 8, 2001) (nonpreceden-tial decision), the Federal Circuit affirmed a dis-trict court’s grant of SJ of noninfringement infavor of Novellus Systems, Inc. (“Novellus”).

Semitool, Inc. (“Semitool”) had sued Novellusfor infringement of U.S. Patent Nos. 5,222,310(“the ‘310 patent”) and 5,337,708 (“the ‘708patent”), which relate to an automated semicon-ductor wafer-processing tool in which variouschemical and electrochemical processes can beperformed on a single wafer. The district court’sfinding of noninfringement turned on its con-struction of three terms in the claims of thepatents: “substantially enclosed processingspace,” “complementary processing head,” and“wafer support.” Because the accused productsdid not contain those claim limitations as con-strued by the district court, that court had foundno infringement.

Upon de novo review of the district court’sclaim construction, the Federal Circuit agreedwith the construction of the “substantiallyenclosed processing space” limitation, notingthat Semitool had distinguished a prior art refer-ence during prosecution of the ‘310 patent byarguing that the Semitool invention required thecapability to process wafers effectively usinggases. The Federal Circuit also agreed that thedistrict court had correctly interpreted the limita-tion as requiring a “seal” created by the headand the bowl of the tool that permitted theeffective gas processing of a wafer.

The Federal Circuit held that the district courthad erred in giving an overly narrow construc-tion to the “complementary processing head”and “wafer support” limitations. Despite theseerrors, the Federal Circuit affirmed the districtcourt’s holding of noninfringement, holding thatthe accused products did not literally satisfy the“substantially enclosed processing space” limita-tion of the claims. The Court also concludedthat the accused products did not satisfy thatlimitation under the DOE, noting that the “sub-stantially enclosed processing space” limitation

was added during prosecution of the ‘310 patentto distinguish the claims from the prior art.

Accordingly, in light of Festo Corp. v. ShoketsuKinzoku Kogyo Kabushiki Co., 234 F.3d 558 (Fed.Cir. 2000), Semitool was barred by prosecutionhistory estoppel from arguing that anythingother than the head and the bowl of the toolcould form a “seal” satisfying that limitation.The Court further held that prosecution historyestoppel precluded application of the DOE to thesame limitation appearing in the claims of the‘708 patent, which issued from a continuation-in-part application of the ‘310 patent. Finally,the Court held that Semitool had failed to estab-lish a genuine issue of material fact thatNovellus’s products were capable of effective gasprocessing and, therefore, those products couldnot satisfy the “substantially enclosed processing

space” limitation of the patents.Because the Federal Circuit affirmed the dis-

trict court’s grant of SJ of noninfringement onthe basis that Novellus’s products did not satisfythe “substantially enclosed processing space”limitation of the patents, it did not addresswhether those products also satisfied the otherappealed limitations as properly construed.

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DISCLAIMER:The case summaries reflect the understanding ofthe authors only and are not meant to conveylegal opinions or advice of any kind. The firm dis-claims any liability for any errors or omissions inthese summaries. This promotional newsletterdoes not establish any form of attorney-clientrelationship with our firm or with any of ourattorneys.

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In Last month at The Federal Circuit, certain terms, titles, and names of fed-eral agencies that are frequently referred to in text, appear in abbreviatedforms or as acronyms. These abbreviated forms and acronyms are listed below.

ALJ Administrative Law Judge APJ Administrative Patent Judge Board Board of Patent Appeals and InterferencesCommissioner Commissioner of Patents and Trademarks CIP Continuation-in-PartDJ Declaratory Judgment DOE Doctrine of EquivalentsIP Intellectual PropertyITC International Trade CommissionJMOL Judgment as a Matter of Law MPEP Manual of Patent Examining ProcedurePCT Patent Cooperation TreatyPTO United States Patent and Trademark Office SEC Securities and Exchange CommissionSM Special Master SJ Summary Judgment