In a landmark decision, the Unified Patent Court’s (UPC) Local Division Mannheim set standards for enforcing standard essential patents (SEPs) and for negotiating fair, reasonable, and nondiscriminatory (FRAND) licenses under SEPs. In line with the framework previously established by the Court of Justice of the European Union in Huawei Technologies Co. Ltd. v. ZTE Corp., the judgment outlines the obligation on parties in FRAND negotiations. Panasonic Holdings Corp. v. Guangdong OPPO Mobile Telecommunications Corp., Ltd., OROPE Germany GmbH, Case No. UPC_CFI_210/2023; ACT_545551/2023 (Local Division Mannheim Nov. 22, 2024) (Tochtermann, J.; Bötter, J.; Brinkman, J.; Loibner, TJ.)
The Devil Is in the Details: Bioequivalence, In Vitro Testing Not Enough to Establish Infringement
Addressing for the first time the issue of whether bioequivalence data and in vitro testing can show that an abbreviated new drug application (ANDA) product with different immediate and delayed release portions infringed on a patent, the US Court of Appeals for the Federal Circuit upheld the district court’s finding of noninfringement. Galderma Laboratories, L.P. v. Lupin Inc., Case No. 24-1664 (Fed. Cir. Dec. 6, 2024) (Moore, C.J.; Linn, Prost, JJ.)
Galderma owns and markets Oracea® (doxycycline USP) 40 mg capsules, which are used to treat papules and pustules associated with rosacea. Galderma’s patents cover a unique once-daily oral formulation of doxycycline, combining 30 mg of immediate release (IR) and 10 mg of delayed release (DR) pellets. Lupin filed an ANDA to market a bioequivalent 40 mg doxycycline product, featuring 22 mg IR and 18 mg DR pellets, and using the same enteric polymer for the DR portion as Oracea®. Galderma sued Lupin under the Hatch-Waxman Act, alleging patent infringement.
Despite Lupin’s different pellet composition, Galderma contended that Lupin’s product effectively contained 30 mg IR and 10 mg DR because of a “weak enteric coat” on the DR pellets, causing early release of some doxycycline. Lupin presented two key pieces of evidence:
- A two-stage in vitro dissolution test at pH 1.1 and 4.5, showing some DR pellet release at pH 4.5.
- Bioequivalence data comparing Oracea® and Lupin’s product.
The district court ultimately ruled in favor of Lupin. Galderma appealed. The issue on appeal was whether Galderma’s evidence of bioequivalence and in vitro testing was indeed insufficient to establish literal infringement or infringement under the doctrine of equivalents (DoE).
The Federal Circuit agreed with the district court: in vitro testing and bioequivalence were not enough to establish literal infringement. Crucially, Galderma’s two-stage in vitro dissolution test didn’t accurately mimic in vivo conditions. The Court highlighted that the pH 4.5 environment used in the test wasn’t physiologically relevant for a fasted stomach, which typically has a pH between 1 and 2. Moreover, the bioequivalence data failed to address the differing proportions of IR and DR pellets. Consequently, the Court found no clear error in the district court’s factual findings.
Nor did the DoE save Galderma. The Federal Circuit applied two different tests: the function-way-result test and the insubstantial differences test. Under the function-way-result test the court is charged with determining whether the accused product performs the same function, in the same way, to achieve the same result as the claimed invention. Under the insubstantial differences test – as its name suggests – the court is charged with determining whether the differences between the claimed invention and the accused product are insubstantial.
Again, Galderma relied on bioequivalence data and its in vitro testing to argue that either DoE test was satisfied. The Federal Circuit was not persuaded, finding no clear error in the district court’s reasoning. As for the function-way-result test, the in vitro testing did not show that Lupin’s ANDA product used the same function or method as the asserted [...]
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Neck or Nothing? “Quotation” Invalidates On-Sale Bar
The US Court of Appeals for the Federal Circuit found the patents at issue invalid based on the patent owner’s “quotation” letter to a third party, concluding it was a commercial offer for sale under pre-America Invents Act (AIA) 35 U.S.C. § 102(b) notwithstanding the patent owner’s reservation of a post-quote acceptance. Crown Packaging Technology, Inc. v. Belvac Production Machinery, Inc., Case Nos. 22-2299; -2300 (Fed. Cir. Dec. 10, 2024) (Dyk, Hughes, Cunningham, JJ.)
Crown Packaging Technology owns patents for necking machines, which reduce the top diameter of metal beverage cans. The earliest priority date for the patents was April 24, 2008, setting the critical date of April 24, 2007. On November 14, 2006, Crown sent Complete Packaging Machinery a letter quoting one of its necking machines that embodied the claims of its patents.
Crown sued Belvac Production Machinery for infringing Crown’s patents. Belvac raised an invalidity defense under § 102(b), contending that Crown’s pre-critical-date letter to Complete Packaging constituted a commercial offer for sale, which rendered the patents invalid. On summary judgment, Crown argued that its letter could not create a binding contract, was not a commercial offer for sale, and was not an offer for sale “in this country” as required by § 102(b). The district court agreed with Crown, finding that the letter was merely an invitation to make an offer, not an offer in itself. At trial, the jury found the patents valid but not infringed. Both parties appealed.
The Federal Circuit reversed the district court’s validity determination, finding that Crown’s letter was an invalidating offer for sale under § 102(b). The Court’s analysis involved five factors:
- Whether the subject of the offer embodied the claims of the patents.
- Whether the offer occurred “in this country.”
- Whether the offer predated the critical date.
- Whether the invention was the subject of a commercial offer for sale.
- Whether the invention was ready for patenting.
Crown conceded that the necking machine embodied the asserted patent claims, was ready for patenting, and that the letter predated the critical date. Thus, the dispute focused on whether the letter was a commercial offer for sale and whether it was made “in this country.”
The Federal Circuit determined that the letter was a commercial offer for sale. While labeled as a “quotation,” the letter included definite terms typically associated with a binding offer, such as pricing, delivery schedules, payment terms, warranties, and liability conditions. These terms established the mutual obligations of the parties. The Court found that the letter required immediate performance since Complete Packaging was obligated to pay 50% of the purchase price upfront and Crown committed to begin manufacturing upon receipt of payment. Also, despite an explicit clause requiring Crown’s written acceptance, the Court found that the letter was still a commercial offer for sale under established legal precedent.
The Federal Circuit also rejected Crown’s argument that the letter was not made “in this country.” Pre-AIA § 102(b) defines an offer made to a US company at its US [...]
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For Deterrence: Inherent Power to the Rescue to Punish Meritless Lawsuit
The US Court of Appeals for the Federal Circuit affirmed a district court’s decision to use its inherent power to award deterrence sanctions for filing a nuisance patent infringement lawsuit. PS Products Inc. v. Panther Trading Co. Inc., Case No. 2023-1665 (Fed. Cir. Dec. 6, 2024) (Moore, Stoll, Cunningham, JJ.)
PSP filed a design patent infringement lawsuit against Panther. PSP voluntarily dismissed the case with prejudice after Panther threatened to seek Rule 11 sanctions for the filing of a frivolous lawsuit. After the case was dismissed, Panther filed a motion seeking its attorneys’ fees under 35 U.S.C. § 285 and $100,000 in deterrence sanctions under the court’s inherent power. The district court found the case exceptional under § 285 and awarded Panther its attorneys’ fees. The district court also found PSP and its counsel joint and severally liable for $25,000 in deterrence sanctions. PSP did not appeal the finding that the case was exceptional or the decision to grant attorneys’ fees, but it did appeal the award of deterrence sanctions under the court’s inherent power.
Design patent infringement requires showing that an ordinary observer would find the accused product and claimed design “substantially the same” such that the observer would be deceived into believing that the accused product was the patented design. However, in some cases the accused product and the patented design are “plainly dissimilar” such that it would be clear to an ordinary observer the two designs were not “substantially the same.”
The Federal Circuit affirmed the district court’s award of deterrence sanctions, finding that the district court did not err by inferring PSP’s bad faith conduct based on the clear lack of legal merit of the case against Panther. The Court found that Panther’s accused product was “plainly dissimilar” to the patented design (shown below), such that PSP’s case was a nuisance lawsuit.
The Federal Circuit found that bad faith was also reasonably inferred based on PSP’s history of filing 25 meritless lawsuits in the same district, even though the district court did not analyze each suit. PSP cited the general venue statute in all 25 lawsuits rather than the required patent-specific venue statute, and PSP did not have proper venue in the lawsuit against Panther.
The Federal Circuit also found no abuse of discretion when the district court imposed sanctions under its inherent power. Rule 11 sanctions were unavailable since the case was already dismissed, but the district court had no other mechanism to sanction PSP’s bad faith conduct of filing multiple meritless lawsuits except the court’s inherent power. Finally, the Court found that imposing deterrence sanctions under the district court’s inherent power was proper even when it had already awarded attorneys’ fees and costs under § 285 because the statute does not preclude separate sanctions.
The Federal Circuit declined to award Panther its attorneys’ fees for the appeal because while [...]
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Change Between Provisional and Nonprovisional Application Is Lexicography
The US Court of Appeals for the Federal Circuit affirmed a district court judgment of noninfringement, finding that deleting a portion of a definition between a provisional application and a nonprovisional application was evidence that the patentee intended to exclude the deleted language from the claim scope. DDR Holdings, LLC v. Priceline.com LLC and Booking.com B.V., Case Nos. 23-1176; -1177 (Fed. Cir. Dec. 9, 2024) (Chen, Mayer, Cunningham, JJ.)
DDR owns a patent directed to an e-commerce system involving “‘three main parties’ aside from the end consumer: merchants, hosts, and outsource providers.” The specification describes merchants as “the producers, distributors, or resellers of the goods to be sold through the outsource provider.”
DDR sued Priceline for infringement of four patents. In response, Priceline sought inter partes review (IPR), after which three of the challenged patents were found to be unpatentable. The Patent Trial & Appeal Board found that the fourth challenged patent was patentable over the cited prior art. Although the Board’s determination did not turn on the meaning of the term “merchants,” the Board construed “merchants” as “producers, distributors, or resellers of the goods or services to be sold.” In doing so, the Board applied the then applicable “broadest reasonable interpretation” standard.
In the district court case, Priceline proposed that, consistent with the specification, “merchants” should be construed as only including purveyors of goods, while DDR sought to also include purveyors of services. The district court agreed with Priceline and adopted a construction that excluded services. Following the district court’s claim construction, the parties stipulated to noninfringement, agreeing that the court’s construction was case-dipositive in Priceline’s favor on the issue of infringement. DDR appealed.
The Federal Circuit affirmed. The Court reviews “claim construction based on intrinsic evidence de novo and review[s] any findings of fact regarding extrinsic evidence for clear error.” With only two exceptions, the Court gives terms “their plain and ordinary meanings to one of skill in the art when read in the context of the specification or during prosecution.” The exceptions are “when a patentee sets out a definition and acts as his own lexicographer” and “when the patentee disavows the full scope of a claim term either in the specification or during prosecution.”
Here, the provisional application for the asserted patent discussed merchants as both “producers of ‘goods’ in one instance, and ‘products or services’ in another.” The asserted patent did not mention services in relation to merchants, instead limiting “merchant” to purveyor of goods. The Federal Circuit found that a skilled artisan would interpret the deletion of the reference to “products or services” between the provisional application and the asserted patent as “indicat[ing] an evolution of the applicant’s intended meaning of the claim term.” The Court found that this was reinforced by the description that limited merchants to purveyors of goods.
DDR argued that incorporating the provisional application by reference into the specification resulted in “one document” and therefore no deletion took place. However, the Federal Circuit did not find this argument persuasive, explaining [...]
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