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Game Over when Expert Fails to Use Correct Claim Construction

by Cecilia Choy, Ph.D. | Dec 8, 2022 | Patents

The US Court of Appeals for the Federal Circuit concluded that a district court did not abuse its discretion in striking expert testimony where the testimony did not rely on an agreed and court-adopted claim construction. Treehouse Avatar LLC v. Valve Corp., Case No. 22-1171 (Fed. Cir. Nov. 30, 2022) (Lourie, Reyna, Stoll, JJ.)

Treehouse owns a patent that describes a “method of collecting data from an information network in response to user choices of a plurality of users navigating character-enabled network sites on the network.” Valve owns two video games. To play the games, a user downloads the software onto a computer. The software contains data, images, sounds, text and characters. Treehouse sued Valve for patent infringement based on the operation of the accused video games. During the district court proceeding, both parties adopted the interpretation of the term “character enabled (CE) network sites” (CE limitation) that the Patent Trial & Appeal Board reached in a previous inter partes review. Despite the agreed-upon and court-adopted construction for the CE limitation, Treehouse’s infringement expert submitted a report that applied plain and ordinary meaning.

Valve filed a motion to strike portions of the expert’s testimony that relied on the plain and ordinary meaning of the term. Valve also filed a motion for summary judgment of noninfringement while this motion to strike was pending. Treehouse’s opposition appeared to concede that Valve was entitled to summary judgment if Valve’s motion to strike was granted, stating that “assuming that [the expert’s] testimony is not stricken, this portion of Valve’s motion should be denied.” The district court struck every paragraph of the expert’s report that Valve requested and granted Valve summary judgment of noninfringement. Treehouse appealed.

The Federal Circuit found that the district court did not abuse its discretion in striking portions of Treehouse’s expert report that did not address the claim construction of the CE limitation agreed upon by the parties and the district court. Treehouse argued that an expert report that does not recite an agreed claim construction remains admissible as long as the opinions expressed in the report are not inconsistent with that construction. The Court rejected Treehouse’s argument, explaining that “the grant of a motion to strike expert testimony is not improper when such testimony is based on a claim construction that is materially different from the construction adopted by the parties and the court.” The Court further explained that when a trial court has adopted a construction that the parties requested and agreed upon, any expert theory that does not rely upon that agreed-upon construction is suspect. The Court thus concluded that the district court did not abuse its discretion in striking the portions of the expert’s report that applied a “plain and ordinary meaning” of the CE limitation instead of the parties’ agreed-upon construction. In the absence of any admissible expert testimony by Treehouse regarding infringement of the CE limitation, the Court found that the district court properly granted summary judgment of noninfringement.

On the Border of Art and Trademark: First Amendment Trumps the Lanham Act

by Anisa Noorassa | Dec 8, 2022 | Trademarks

The US Court of Appeals for the Eleventh Circuit weighed trademark rights against free speech considerations and found that the First Amendment protected use of an artistic work that was not deliberately misleading. MGFB Properties Inc. et al. v. 495 Productions Holdings LLC et al., Case No. 21-13458 (11th Cir. Nov. 29, 2022) (Luck, Brasher, Hull, JJ.) (Brasher, J., concurring).

The suit was brought by MGFB Properties, Flora-Bama Management and Flora-Bama Old S.A.L.T.S. (collectively, the plaintiffs). The plaintiffs own and operate the Flora-Bama Lounge, Package and Oyster Bar on the Florida-Alabama border. The lounge has been in business since 1964 and is well known in the region. The plaintiffs registered their trademark FLORA-BAMA in 2013.

Viacom and 495 Productions (collectively, the defendants) produce reality television series, such as the hit 2009 series Jersey Shore. In light of Jersey Shore’s success, the defendants produced several spinoffs. In 2016 the defendants decided to develop a new spinoff based on “southern beach culture” and chose the term “Floribama” to describe “relaxing Florida beaches with the down-home Southern vibe of Alabama.” The defendants were aware of the name’s connection to the Florabama Lounge but used the term regardless to identify a specific stretch of the Gulf Coast (the Florida and Alabama coasts) and inserted dialogue into the show to explain the term. The show’s logo emphasized its connection to the Jersey Shore franchise:

The plaintiffs argued that the defendants’ use of “Floribama” was a violation of the Lanham Act and caused unfair confusion and damage to their brand. The district court granted summary judgment for the defendants. Plaintiffs appealed.

The Eleventh Circuit upheld the district court’s judgment that the defendants’ First Amendment rights as the creators of an artistic work outweighed the plaintiffs’ interest in their trademark and in avoiding confusion around their brand: “[c]reative works of artistic expression are firmly ensconced within the protections of the First Amendment.” In reaching its outcome, the Court applied the 1989 Rogers v. Grimaldi test.

Under the first prong of the Rogers test, “an artistically expressive use of a trademark will not violate the Lanham Act unless the use of the mark has no artistic relevance to the underlying work whatsoever.” Here, the Eleventh Circuit found that the defendants’ use of the term “Floribama” to describe the geographic area featured in Floribama Shore and the subculture of that region satisfied the first element of the Rogers test. The Court held that it was sufficient for the defendants’ use of “Floribama” to be relevant to their show, even if the term was not “necessary” to production of the show.

Under the second prong of the Rogers test, the Eleventh Circuit found that the defendants’ use of “Floribama” was not explicitly misleading “as to the source or content of the work” such [...]

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Words Matter: Court Sides with Translation Company in Insurance Coverage Dispute

by Hannah Cohen | Dec 8, 2022 | Trade Secrets

The US Court of Appeals for the First Circuit concluded that a company’s general liability insurer was obligated to provide coverage for legal fees incurred in fending off a trade secret and defamation lawsuit brought by a competitor. Lionbridge Tech., LLC v. Valley Forge Ins. Co., Case No. 21-1698 (1st Cir. Nov. 21, 2022) (Kayatta, Selya, Thompson, JJ.)

Lionbridge and TransPerfect are competitors in the language-translation industry. TransPerfect sued Lionbridge for misappropriation of trade secrets and defamation. TransPerfect alleged that Lionbridge concocted a scheme through its corporate owner to feign interest in acquiring TransPerfect and, through this scheme, improperly gained access to TransPerfect’s trade secrets, which could be used to poach TransPerfect’s customers and otherwise undermine TransPerfect’s business.

Shortly after the lawsuit was filed, Lionbridge informed its liability insurance carrier, Valley Forge, about the litigation. Valley Forge initially indicated that it would provide Lionbridge with coverage for legal costs associated with the litigation. Valley Forge subsequently disputed the requested coverage based on both the reasonableness of the fees incurred and the nature of the suit. Lionbridge filed suit against Valley Forge seeking full coverage from Valley Forge for its defense costs. The dispute centered on whether the fees incurred could be considered injury arising out of “[o]ral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organizations goods, products, or services,” as provided by Lionbridge’s insurance policy. The district court granted summary judgment in favor of Valley Forge, finding that Valley Forge did not owe Lionbridge a duty to defend under the relevant policy provisions and exclusions. Lionbridge appealed.

The First Circuit reversed, explaining that an insurer’s duty to defend depends on whether the allegations in the underlying litigation are reasonably susceptible to an interpretation that the policy provisions apply. The focus of the inquiry is the source of the injury, not any specific theories of liability set forth in the underlying complaint. The Court explained that this inquiry required a comparison of the allegation made in the underlying litigation against the insurance policy provisions.

After analyzing the underlying complaint against the insurance policy, the First Circuit determined that the policy provisions applied because the allegations “roughly sketch[ed]” an injury arising from a defamation claim. TransPerfect’s claims were rooted in alleged reputational harm to its business, which fit within the relevant provision. The Court noted that complete overlap between the policy provisions and the claims was not required.

The First Circuit next considered whether any policy coverage exclusions applied to preclude coverage. The relevant exclusions fell into two buckets:

Injuries caused by an insured with direct knowledge that its actions would inflict injury, or injuries arising out of an oral or written publication that the insured knows is false
Trade secret misappropriation.

Valley Forge carried the burden of proving that either or both categories of exclusions applied. The Court concluded that the first category did not apply because Valley Forge failed to show that all allegations [...]

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Construing the Construction: Federal Circuit Chips Away at IPR Win

by Thomas DaMario | Nov 29, 2022 | Patents

Addressing claim construction issues in inter partes review (IPR) proceedings before the Patent Trial & Appeal Board (Board), the US Court of Appeals for the Federal Circuit affirmed an obviousness finding as to some claims but reversed and remanded an obviousness finding as to another claim because of a claim construction error. VLSI Technology LLC v. Intel Corporation, Case Nos. 21-1826, -1827, -1828 (Fed. Cir. Nov. 15, 2022) (Chen, Bryson, Hughes, JJ.)

VLSI owns a patent directed to a technique for alleviating the problems of defects caused by stress applied to bond pads of an integrated circuit. Bond pads are a portion of an integrated circuit that sit above interconnected circuit layers and are used to attach the chip to another electronic component, such as a computer or motherboard. When a chip is attached to another electronic component, forces are exerted on the chip’s bond pad, which can result in damage to the interconnect layers. The patent discloses improvements to the structures of an integrated circuit that reduce the potential for damage to the interconnect layers when the chip is attached to another electronic component while also permitting each of the layers underlying the pad to be functionally independent in the circuit.

VLSI filed suit against Intel alleging infringement of the patent. During claim construction, the district court construed the claim term “force region” to mean a “region within the integrated circuit in which forces are exerted on the interconnect structure when a die attach is performed.” Before the district court’s construction but after the suit was filed, Intel filed petitions for IPR of the patent and advocated in its petitions for the same construction of “force region” that the district court ultimately adopted.

VLSI did not contest Intel’s construction, but it later became apparent that the two parties disagreed over the meaning of “die attach,” which formed part of the construction. Intel argued that the term “die attach” refers to any method of attaching a chip to another electronic component, including a method known as wire bonding, which was taught by a prior art reference included in Intel’s petitions. VLSI argued that the term refers to a method of attachment known as “flip chip” bonding and does not include wire bonding. In the Board’s final written decisions, it did not address the term “die attach,” but found that “force region” was not limited to flip chip bonding and subsequently found the challenged claims invalid as obvious. The Board also construed a second disputed term “used for electrical interconnection not directly connected to the bond pad,” which is recited in only one claim of the patent, in favor of Intel, and subsequently found that claim unpatentable. VLSI appealed.

On appeal, VLSI raised a number of procedural and substantive challenges to the Board’s construction of the two disputed terms. VLSI argued that the Board failed to acknowledge and give appropriate weight to the district court’s construction of “force region.” The Federal Circuit dismissed this argument, as there was ample evidence in [...]

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Court Uncorks New Way to Serve Trademark Complaints

by Amol Parikh | Nov 29, 2022 | Trademarks

The US Court of Appeals for the Ninth Circuit concluded that Section 1051(e) of the Lanham Act permits a plaintiff in a district court case to serve a complaint against a foreign defendant via the Director of the US Patent & Trademark Office (PTO). San Antonio Winery, Inc. v. Jiaxing Micarose Trade Co., Ltd., Case No. 21-56036 (9th Cir. Nov. 14, 2022) (Siler, Callahan, Thomas, JJ.)

San Antonio Winery is a Los Angeles-based winery best known for its Stella Rosa brand of wines. The winery is owned and operated by the Riboli family. San Antonio has registered the trademarks RIBOLI and RIBOLI FAMILY, which it has used since at least 1998 to market its wines and other products.

Jiaxing is a Chinese company that has sold products using the Riboli name. In 2018, Jiaxing registered the mark RIBOLI for use in connection with articles of clothing and shoes. In 2020, Jiaxing applied to register the mark RIBOLI for use with additional types of products, including wine pourers, bottle stands, containers, cocktail shakers, dishware and various other kitchen and household items.

After learning that Jiaxing was using the Riboli name to sell products in the United States, San Antonio filed a complaint asserting Lanham Act claims for trademark infringement, trademark dilution and false designation of origin, as well as related state-law claims. San Antonio also sought an injunction prohibiting Jiaxing from using the RIBOLI mark in connection with its products, an order canceling Jiaxing’s 2018 registration of the RIBOLI mark, and an order either directing Jiaxing to abandon its 2020 application to register RIBOLI for additional uses or prohibiting the PTO from granting the application.

Because Jiaxing is a Chinese company, San Antonio’s service of process was governed by rules for serving parties abroad, such as by the Hague Convention. Concerned with the amount of time it might take to effect service under the Hague Convention, San Antonio instead sought to serve Jiaxing under Section 1051(e) of the Lanham Act, which applies to foreign domiciliaries who apply to register a trademark. Section 1051(e) states that if a trademark applicant is not domiciled in the United States, the applicant may designate the name and address of a person in the United States who may be served with notices or processes in proceedings affecting the mark. If the designated person cannot be found at the address, the notices or processes may be served on the PTO Director.

Seeking to avail itself of Section 1051(e), San Antonio inquired whether the US-based lawyer who had represented Jiaxing in connection with its trademark applications would accept service on Jiaxing’s behalf. When the lawyer did not respond, San Antonio served the district court complaint on the PTO Director, who then sent a letter to Jiaxing confirming service of process was effectuated pursuant to Section 1051(e).

After Jiaxing did not appear to defend itself in the action, San Antonio filed a motion for default judgment. The district court denied the motion on the ground that Jiaxing had not [...]

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First Amendment Punches Out Alleged Lanham Act Violation

by Anisa Noorassa | Nov 29, 2022 | Trademarks

Addressing the balance between trademark rights under the Lanham Act and the First Amendment right to protected expression, the US Court of Appeals for the Ninth Circuit affirmed a district court judgment finding that the defendant’s use of the term “Punchbowl” was not a Lanham Act violation because it was expressive and not misleading as to its source. Punchbowl, Inc. v. AJ Press, LLC, Case No. 21-55881 (9th Cir. Nov. 14, 2022) (Ownes, Bress, Fitzwater, JJ.)

Punchbowl is an online communications company that provides “online events and celebration invitations and greeting cards” as part of its subscription-based service. Punchbowl has used the mark Punchbowl® since 2006 and the mark was registered with the US Patent & Trademark Office in 2013. Punchbowl describes itself as “The Gold Standard in Online Invitations & Greeting Cards,” and uses the logo of a punch bowl ladle:

Punchbowl filed suit claiming that AJ Press infringed on Punchbowl’s mark through its subscription-based online news publication Punchbowl News. Punchbowl News covers “insider” political topics and reports on events in Washington, DC, and derives its name from the use of the term “punchbowl” by the Secret Service to refer to the US Capitol building. As such, the Punchbowl News logo comprises of an overturned image of the US Capitol filled with purple punch and the slogan “Power. People. Politics.”

AJ Press argued that its use of the term “Punchbowl” was protected under the First Amendment and did not violate the Lanham Act. The district court granted summary judgment to AJ Press, concluding that its use of the name “Punchbowl” did not give rise to liability because it constituted protected expression and was not explicitly misleading as to its source. Punchbowl appealed.

Traditionally, the likelihood of confusion test is used for claims brought under the Lanham Act. When artistic expression is at issue, however, that test fails to account for the full weight of the public’s interest in free expression. If the product involved is an expressive work, courts generally apply a gateway test, grounded in background First Amendment concerns, to determine whether the Lanham Act applies. One approach was set forth in the Second Circuit’s 1989 decision in Rogers v. Grimaldi to determine whether First Amendment concerns were strong enough to outweigh the need to protect a mark. The Rogers test requires the defendant to first “make a threshold legal showing that its allegedly infringing use is part of an expressive work protected by the First Amendment.” Once this threshold is satisfied, the Lanham Act will not apply unless the plaintiff can establish that “the defendant’s use of the mark (1) is not artistically relevant to the work or (2) explicitly misleads consumers as to the source or the content of the [...]

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Functionality Dooms Alleged Trade Dress Protection

by Kathleen Lynch | Nov 29, 2022 | Trademarks

The US Court of Appeals for the Eighth Circuit affirmed summary judgment of noninfringement in a trade dress suit, finding that the trade dress was functional and the attorneys’ fee award—as diminished by the district court—was appropriate. Pocket Plus, LLC v. Pike Brands, LLC, Case No. 21-3414 (8th Cir. Nov. 15, 2022) (Gruender, Melloy, Erickson, JJ.)

Since 2009, Pocket Plus has sold vertically oriented pouches that attach to waistbands or belts to carry water bottles, cell phones and other small objects. Pike Brands, d/b/a Running Buddy, began selling similar pouches in 2012 and introduced a vertical version in 2015. In 2021, Pocket Plus sent cease and desist letters to Running Buddy, then sued for trade dress infringement under Iowa common law and the Lanham Act. Running Buddy moved for summary judgment, arguing that Pocket Plus’s trade dress was unprotectable. Running Buddy also threatened Rule 11 sanctions because of the weakness of the case. After winning summary judgment, Running Buddy moved to recover attorneys’ fees, which the district court partially granted. Both parties appealed, with Pocket Plus challenging the summary judgment grant and both parties challenging the amount of the attorneys’ fee award.

The Eighth Circuit began by noting that the issue of validity was complicated by Pocket Plus’s shifting explanation of what its trade dress was, explaining that its “definition evolved throughout the litigation,” becoming increasingly detailed. Eventually, the Court reasoned that regardless of which definition prevailed, the result was the same.

Addressing the noninfringement finding, the Eighth Circuit recited the relevant legal principles, explaining that to prove infringement, a plaintiff must show that its trade dress is nonfunctional and distinctive and that a lack of protection may confuse customers. The Court explained that it must consider trade dress in its entirety—not as individual elements—and determine whether features are protectable “arbitrary embellishment” or simply essential to product use. In this case, Pocket Plus never registered its trade dress so it did not benefit from a presumption of nonfunctionality. Pocket Plus argued that its vertical orientation and over-the-hip design were nonfunctional elements since competitors made pouches differently and that packaging illustrations likewise made the trade dress nonfunctional. The Court was not persuaded, finding that each feature the plaintiff pointed to was designed to “affect [the pouch’s] suitability for carrying objects,” making each feature essential to purpose and therefore functional. Because the Court found functionality, it affirmed noninfringement without addressing the other requirements.

The Eighth Circuit next considered the attorneys’ fees. Under the Lanham Act, a court may, in its discretion, grant attorneys’ fees to the winning party but only in “exceptional cases” after “considering the totality of the circumstances.” Pocket Plus argued that this case was not “exceptional” while Running Buddy argued that the district court abused its discretion in awarding only a portion of the attorneys’ fees.

The Eighth Circuit addressed both exceptionality and the amount awarded, in turn. To be “exceptional,” a case must be objectively unreasonable, motivated by ill will or frivolous. The Court noted Pocket Plus’s weak [...]

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Delayed Disclaimer: Patent Owner Arguments Made during IPR Not a Claim Limiting Disclaimer in That Proceeding

by Aashish Kapadia | Nov 29, 2022 | Patents

Repeating a conclusion from an earlier non-precedential opinion in VirnetX, the US Court of Appeals for the Federal Circuit held that the Patent Trial & Appeal Board (Board) need not accept a patent owner’s arguments as a disclaimer in the very same inter partes review (IPR) proceeding in which those arguments are made. CUPP Computing AS v. Trend Micro Inc., Case Nos. 2020-2262, 2020-2263, 2020-2264, at *11 (Fed. Cir. Nov. 16, 2022) (Dyk, Taranto, Stark, JJ.)

CUPP Computing is the owner of three related patents each entitled “systems and methods for providing security services during power management mode.” After CUPP sued Trend Micro for patent infringement, Trend Micro filed petitions for IPR against all three patents, asserting that several claims of CUPP’s patents were obvious over two prior art references. The Board instituted all three IPR and found all challenged claims unpatentable as obvious. CUPP appealed.

The Federal Circuit affirmed the Board’s conclusions. The principal issue concerned CUPP’s argument that the Board erred in claim construction. In CUPP’s view, all of the evidence required the claimed “security system processor” be remote from a “mobile device processor.” The Court rejected CUPP’s arguments. Starting with the claims, the Court found that they simply required that the two processors be different. Although some claims required the security system to send a wake signal to or communicate with the mobile device, that language did not support CUPP’s remoteness construction. As the Court explained, just as an individual can send a note to oneself via email, a unit of the mobile device can send signals to and communicate with the same device. Indeed, some of the claims teach communication via an internal port of the mobile device, which was consistent with a preferred embodiment disclosed in the specification in which the two processors could be within the same mobile device.

The Federal Circuit then addressed CUPP’s disclaimer arguments. The Court agreed with the Board that CUPP’s statements made during the original prosecution were far from clear and unmistakable, being susceptible to several reasonable interpretations that are contrary to CUPP’s construction. The Court also agreed with the Board that CUPP’s arguments during the Trend Micro IPRs do not qualify as a disclaimer for purposes of claim construction. While a disclaimer made during an IPR proceeding is binding in subsequent proceedings, the “Board is not required to accept a patent owner’s arguments as disclaimer when deciding the merits of those arguments.”

As the Federal Circuit explained, expanding the application of disclaimers to the proceedings in which they are made—as CUPP proposed—is rife with problems. IPR proceedings are more similar to district court litigation than they are to initial examination, and it is well established that disclaimers in litigation are not binding in the proceeding in which they are made. Further, CUPP’s proposal would effectively render IPR claim amendments unnecessary, as patent owners would be free to change the scope of their claims retrospectively without regard to the protections provided by the IPR claim amendment process, such as [...]

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A Healthy Dose of Seeds: Unique Combination Trade Secrets Entitled to Protection

by Anthony S. Ferrara | Nov 29, 2022 | Trade Secrets

The US Court of Appeals for the Sixth Circuit upheld a jury verdict finding a dietary supplement company liable for misappropriating another company’s research and development (R&D) related to broccoli-seed extract. Caudill Seed & Warehouse Co., Inc. v. Jarrow Formulas, Inc., Case No. 21-5354 (6th Cir. Nov. 10, 2022) (per curiam) (Moore, J., concurring in part and dissenting in part). The decision addressed several issues relating to so-called “combination” trade secrets.

Caudill manufactures and sells various nutritional supplements, including a supplement made using broccoli-seed extract. Caudill sued Jarrow Formulas for trade secret misappropriation after its Director of Research Ken Ashurst left Caudill and joined Jarrow. Ashurst had led Caudill’s R&D efforts for nine years, including extensively researching the development of broccoli-seed derivatives and assembling a large body of research related to broccoli seeds. After he joined Jarrow, Ashurst delivered a curated collection of broccoli product research to Jarrow and helped it bring its own competing broccoli-seed extract supplement to the market in just four months.

The case proceeded to trial. The jury found that Caudill had a protectable trade secret; Jarrow misappropriated said trade secret; and Caudill was entitled to more than $2 million in actual losses, more than $400,000 in unjust enrichment damages, and exemplary damages. Jarrow moved for judgment as a matter of law and for a new trial. After the district court denied the motions, Jarrow appealed.

Jarrow argued that Caudill improperly asserted a “kitchen-sink theory” of trade secrets by broadly defining all its research activities as a single trade secret. Jarrow also argued that Caudill failed to show that it had acquired the alleged trade secret. Finally, Jarrow challenged the damages awards on legal grounds. The Sixth Circuit rejected each of Jarrow’s arguments on appeal.

The Sixth Circuit first found that Caudill properly defined its alleged trade secret as its “research and development on supplements, broccoli, and chemical compounds.” The Court treated Caudill’s alleged trade secret as a “combination” trade secret (i.e., a collection of elements that individually are generally known but are unique in combination.) The Court concluded that Caudill demonstrated it had assembled a unique collection of processes and information relating to its R&D process, and therefore, Caudill properly defined its entire R&D process as a trade secret. The Court rejected Jarrow’s argument that Caudill’s alleged trade secret mostly consisted of public domain materials on the basis that the materials were unique in combination.

The Sixth Circuit also rejected Jarrow’s argument that Caudill failed to show that Jarrow acquired and used the entire combination trade secret. The Court noted differing authority on whether a plaintiff alleging a combination trade secret must show acquisition and use of the entire combination but concluded that trade secret law does not require proving acquisition of “each atom” of the combination trade secret. The Court reasoned that when a trade secret consists of a “mass of public information” that has been collected, the defendant will always be able to identify some minute detail of the combination that it did [...]

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Sleep Better: Amendments Proposed during IPR Deemed Proper and Valid

by Rodney Swartz, PhD | Nov 29, 2022 | Patents

The US Court of Appeals for the Federal Circuit affirmed the Patent Trial & Appeal Board’s (Board) finding that proposed amendments made during an inter partes review (IPR) are valid and proper despite the inclusion of changes not related to patentability issues raised in the petition. Nat’l Mfg., Inc. v. Sleep No. Corp., Case No. 21-1321 (Fed. Cir. Nov. 14, 2022) (Stoll, Schall, Cunningham, JJ.)

We’ve likely all seen the commercials promising a proven quality of sleep. Sleep Number is the owner of numerous patents, including several directed to methods for adjusting “the pressure in an air mattress ‘in less time and with greater accuracy’ than previously known.” The patents state this is achieved by taking pressure measurements at the valve enclosure and applying a pressure adjustment factor that is iteratively revised using an “adjustment factor error.” The patent states that this method allows for monitoring the pressure of the air mattress without the need to turn off the pumps.

American National Manufacturing challenged the validity of the patents in an IPR proceeding, claiming that most were rendered obvious by the prior art of Gifft in view of Mittal and Pillsbury and that six of the dependent claims requiring a “multiplicative pressure adjustment factor” would have been obvious in further view of Ebel. Gifft disclosed an air-bed system using valve assembly pressure to approximate the air chamber pressure and Mittal and Pillsbury both disclosed using additive offsets to improve accuracy. Ebel disclosed using both additive and multiplicative components to accurately measure the actual pressure in an inflating or deflating air bag.

The Board agreed with American National that it would have been obvious to combine Gifft, Mittal and Pillsbury and that the resulting combination rendered most of the claims obvious, but it also noted that the combination failed to show that a “skilled artisan would have applied Ebel’s multiplicative factors” to the prior art. However, in each proceeding Sleep Number filed a motion to amend the claims contingent on a finding that the challenged claims were unpatentable. The proposed claims included the “multiplicative pressure adjustment factor” that the Board had determined was not unpatentable along with other non-substantive changes.

American National took issue with these amendments, arguing they were legally inappropriate, non-enabled because of an error in the specification and lacked written description support. The Board disagreed. American National appealed. Sleep Number cross-appealed the Board’s finding of obviousness.

The Federal Circuit found that the proposed amendments were not improper even though some of the changes were non-substantive changes to address consistency issues. The Court pointed out that “once a proposed claim includes amendments to address a prior art ground in the trial, a patent owner also may include additional limitations to address potential § 101 or § 112 issues, if necessary.” The Court rejected American National’s argument that permitting such amendments creates an “asymmetrical” and “unfair” proceeding “by allowing the patent owner and the Board to address concerns that may be proper for [an] examination or reexamination proceeding, but that [...]

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