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Can’t Overturn Jury Verdicts Based on Reasonable Inferences, but Broad Injunction Is Nonstarter Even for Willfully Misappropriated Trade Secrets

by McDermott Will & Emery | Jan 6, 2022 | Trade Secrets

In a rare appellate trade secret opinion, the US Court of Appeals for the Eleventh Circuit affirmed a district court’s denial of a defendant’s request for a new trial on liability and its refusal of the plaintiff’s requested injunction. It also reversed in part the district court’s denial of judgment as a matter of law (JMOL) on damages for clear error because the plaintiff failed to deduct marginal costs when calculating lost profits. Financial Information Technologies v. iControl Systems, Case No. 20-13368 (11th Cir. Dec. 22, 2021) (Jordan, Newsom, JJ., and Burke, Distr J.).

Competitors Financial Information Technologies (Fintech) and iControl Systems both sell software that processes alcohol sales invoices within 24 hours. Fintech was a lone operator for several years until iControl started servicing the alcohol industry and began selling a very similar product at a lower price point. After Fintech lost its vice president of operations (who was very involved in designing Fintech’s software), a sales representative and several customers to iControl, Fintech filed suit alleging misappropriation of trade secrets. The jury ruled in Fintech’s favor and awarded compensatory and punitive damages. iControl sought a new trial on liability, contending that Fintech’s alleged trade secrets were readily ascertainable and not “secret,” and JMOL on damages since Fintech hadn’t proved lost profits because it hadn’t deducted fixed and marginal costs from its lost revenue calculations. Fintech sought a permanent injunction prohibiting iControl from using either company’s software. The district court denied all three motions, and both parties appealed.

As to the jury verdict, the Eleventh Circuit noted that jury liability findings are generally difficult to overturn, and that the verdict was general and nonspecific regarding which of the seven alleged trade secrets iControl had misappropriated, so Fintech only needed to show evidence under the Florida Uniform Trade Secrets Act (FUTSA) of misappropriation as to one. iControl also did not move for JMOL on liability, and therefore, under the abuse-of-discretion standard of review, the Court could only overturn if “there is an absolute absence of evidence to support the verdict.” However, the Court found that Fintech and its witness presented sufficient evidence at trial to permit a reasonable jury to find that Fintech possessed at least one of the seven alleged trade secrets and that it was misappropriated. The evidence included emails indicating that its former vice president helped iControl discover Fintech’s internal processes to aid software developments, assisted iControl’s chief technology officer in troubleshooting issues in a manner similar to Fintech, shared screenshots of Fintech’s user portal and prompted customers to switch to iControl.

Similarly, the Eleventh Circuit found that the jury reasonably could have inferred from the evidence that iControl schemed to hire Fintech employees to misappropriate Fintech’s software features—an act that demonstrated willfulness.

After assessing the meanings of fixed and marginal costs and the properly fact-intensive revenue and profits figures of the businesses, the Eleventh Circuit agreed that the jury was not required to deduct Fintech’s fixed costs from its revenues to arrive at a proper “actual [...]

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Rounding Error: Intrinsic Evidence Informs Plain and Ordinary Meaning

by Joshua Revilla | Dec 16, 2021 | Patents

Vacating a stipulated infringement judgment based on an incorrect claim construction, the US Court of Appeals for the Federal Circuit explained that it is improper to isolate claim language from the intrinsic evidence when determining the plain and ordinary meaning of a disputed term. AstraZeneca AB v. Mylan Pharms. Inc., Case No. 21-1729 (Fed. Cir. Dec. 8, 2021) (Stoll, J.) (Taranto, J., dissenting).

AstraZeneca sued Mylan Pharmaceuticals for infringement of three patents listed in the US Food and Drug Administration’s (FDA) orange book covering the Symbicort® pressurized metered-dose inhaler for the treatment of asthma and COPD. 3M submitted an abbreviated new drug application (ANDA) to the FDA to manufacture and sell a generic version of the Symbicort® inhaler and certain interests to the ANDA were later transferred to Mylan. After receiving a Paragraph IV letter from Mylan, AstraZeneca filed an infringement suit.

Shortly before trial, the district court held a claim construction hearing to determine the meaning of “0.001%,” the claimed concentration of PVP (one of the active ingredients). The district court construed the term based on its “plain and ordinary meaning, that is, expressed with one significant digit.” Based on this definition, Mylan stipulated to infringement and the district court entered judgment. The district court held a bench trial on invalidity, ultimately determining that Mylan did not prove that the claims were invalid as obvious. Mylan appealed the stipulated judgment stemming from the claim construction determination and the judgment of no invalidity.

First, Mylan challenged the district court’s claim construction of “0.001%.” AstraZeneca argued that the district court improperly construed the term to encompass a range from 0.0005% to 0.0014%. Mylan contended that, in view of the specification and the prosecution history, the term was to be defined precisely at 0.001% with only “minor variations” allowed. The Federal Circuit agreed, finding that Mylan’s proposed construction was more properly aligned with the patent’s description as further informed by the prosecution history.

The Federal Circuit stated that the proper construction of 0.001% only allowed minor variations from 0.00095% to 0.00104%. There was no dispute that the term 0.001% would ordinarily encompass the range of 0.0005% to 0.0014%. AstraZeneca argued that this “ordinary meaning” would control absent lexicography or disclaimer. The Court disagreed, finding that it would improperly isolate the term from the claim language, specification and patent prosecution history. The Court explained that the “ordinary meaning” is not the ordinary meaning in the abstract but is instead the “meaning to the ordinary artisan after reading the entire patent,” and therefore the claims must be read in view of both the written description and the prosecution history. The Court’s rationale for narrower construction was based on the intrinsic record reflecting that the written description and prosecution history showed that very minor differences in PVP concentration would impact stability.

The Federal Circuit found that the written description explained that stability was one of the most important factors and that even very minor differences in PVP concentration could impact stability. The written description also [...]

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Shots Fired: Challenger Must Have Requisite Standing Before Appealing Unfavorable IPR Decisions

by Paul Devinsky | Dec 16, 2021 | Patents

The US Court of Appeals for the Federal Circuit found, in the context of an appeal from an inter partes review (IPR) decision, that the appellant had Article III standing and affirmed a Patent Trial & Appeal Board (Board) decision, holding the challenged claims unpatentable as obvious. ModernaTX, Inc. v. Arbutus Biopharma Corporation, Case No. 20-2329 (Fed. Cir. Dec 2, 2021) (Lourie, J.)

Arbutus owns a patent pertaining to “stable nucleic acid-lipid particles (SNALP) comprising a nucleic acid (such as one or more interfering RNA), methods of making the SNALP, and methods of delivering and/or administering the SNALP.” Moderna petitioned for IPR of the patent, asserting three grounds:

Moderna alleged that all claims of the challenged patent would have been anticipated and/or obvious in light of International Pat. Publ. WO 2005/007196 (‘196 PCT) or US Pat. Publ. 2006/0134189 (‘189 publication).
Moderna alleged that all claims of the challenged patent would have been obvious over a combination of the ‘196 PCT, the ‘189 publication, Lin and Ahmad.
Moderna alleged that all claims of the challenged patent were anticipated by US Pat. Publ. 2006/0240554 (‘554 publication), and alternatively that the claims would have been obvious over the ‘554 publication.

The Board rejected each of Moderna’s allegations, finding that the claims were not unpatentable as obvious. Moderna appealed.

Before addressing Moderna’s appeal on its merits, the Federal Circuit addressed whether Moderna had proper standing to challenge the Board’s decision. The Court stated that well-established precedent dictates that an appellant seeking review of a Board decision in an IPR must have suffered an injury in fact that is fairly traceable to the challenged conduct of the appellee and is likely to be redressed by a favorable judicial decision. The Court underscored that under IPR statute, there is no standing requirement for petitioners to request institution of IPR by the Board, meaning that a requester need not have a concrete stake in the outcome. Additionally, where the statue itself grants judicial review (such as in the case of an IPR), standing criteria of immediacy and redressability may be “relaxed.” Nonetheless, the Court explained that a party’s participation in the underlying IPR alone does not confer standing on that party to appeal the Board decision before an Article III court such as the Federal Circuit. The party seeking review (in this case Moderna) must show that it possesses requisite injury for standing to appeal.

Moderna asserted that substantial risk existed that Arbutus would bring an infringement suit against Moderna based on Moderna’s COVID-19 vaccine if the challenged patent was to remain valid. In support, Moderna submitted a declaration from its senior vice president and deputy general counsel that Moderna was working to harness proprietary mRNA technology and planned on releasing and applying for emergency use authorization for a COVID-19 vaccine in December 2020. The declaration also described how Arbutus’s conduct created a substantial risk that it would bring subsequent infringement action against Moderna. An example of such conduct was a series of public statements [...]

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Obvious to Try Requires Reasonable Expectation of Success Tethered to Claimed Invention

by Mandy H. Kim | Dec 16, 2021 | Patents

Addressing obviousness in the context of method of treatment claims using particular drug dosages, the US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board (Board) final written decision holding that Teva failed to prove obviousness because it failed to show a reasonable expectation of success. Teva Pharms., LLC v. Corcept Therapeutics, Inc., Case No. 21-1360 (Fed. Cir. Dec. 7, 2021) (Moore, C.J.)

Corcept filed a New Drug Application (NDA) for Korlym, a 300 mg mifepristone tablet administered to certain patients with Cushing’s syndrome. The US Food and Drug Administration (FDA) approved Corcept’s application but required a drug-drug interaction clinical trial to determine drug safety when co-administered with strong CYP3A inhibitors such as ketoconazole (Lee memorandum). Corcept conducted the drug-drug interaction study and received a patent relating to methods of treating Cushing’s syndrome by co-administering mifepristone and a strong CYP3A inhibitor based on the data from the Lee memorandum.

Teva sought post-grant review of the patent after Corcept asserted it against Teva in district court. Teva argued that the patent would have been obvious in view of Korlym’s label and the Lee memorandum and submitted a supporting expert declaration. The Board held that Teva failed to prove that a skilled artisan would have had a reasonable expectation of success for safe co-administration of more than 300 mg of mifepristone with a strong CYP3A inhibitor, and thus failed to prove that the patent was obvious. Teva appealed, arguing that the Board erroneously required precise predictability rather than reasonable expectation of success in achieving the claimed invention, and that the Board did not apply Federal Circuit prior art range precedents.

The Federal Circuit affirmed the Board’s decision. Turning first to reasonable expectation of success, the Court explained that the analysis must be tied to the scope of the claimed invention. Because the patent required safe administration of a specific amount of mifepristone, the Board did not err in requiring Teva to show a reasonable expectation of success for a specific mifepristone dosage. Applying this correct standard, the Court found that the evidence supported that a skilled artisan would have had no expectation as to whether co-administering dosages of mifepristone above the 300 mg/day threshold set forth in the Korlym label would be successful. The Federal Circuit also agreed with the Board that Teva’s expert testimony supported a finding of no expectation of success in achieving the claimed invention based on inconsistent testimony before and after institution.

Turning next to the applicability of Federal Circuit prior art range precedents, the Federal Circuit found that Teva had failed to prove that the general working conditions disclosed in the prior art encompassed the claimed invention. Substantial evidence supported the Board’s finding that there was no overlap in ranges because the prior art (Korlym label and industry publications) capped the range of co-administration dosages at 300 mg/day. The Court also noted that Teva’s reliance on mifepristone monotherapy dosages to create an overlap in the claimed ranges failed because the patent claims [...]

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Exclusive Licensee Has Constitutional but Not Statutory Standing

by Paul Devinsky | Dec 9, 2021 | Patents

The US Court of Appeals for the Federal Circuit vacated the dismissal of an exclusive licensee’s complaint for lack of statutory and constitutional standing, despite affirming that the licensee had no statutory standing where the district court erroneously found no constitutional standing. Univ. of So. Florida Res. Found., Inc. v. Fujifilm Med. Sys. U.S.A., Inc., Case No. 20-1872 (Fed. Cir. Nov. 23, 2021) (sealed opinion issued Oct. 22, 2021) (Stoll, J.)

In April 1997, the University of South Florida (USF) received an invention disclosure related to a workstation-user interface for digital mammography. In September 1997, the inventors, USF and the USF Research Foundation (USFRF) entered into a revenue allocation agreement assigning all rights in the invention to USF. The inventors also entered into a separate assignment agreement in 2002. The patent issued in 2003. The revenue allocation agreement was later followed by a nunc pro tunc license agreement, which recited an effective date of July 1997.

In May 2016, USFRF sued Fujifilm Medical Systems for infringement of the issued patent. USFRF pled that USF assigned its rights in the issued patent to USFRF such that USFRF was “currently the owner” of the patent. In June 2019, Fujifilm moved for summary judgment, arguing that USFRF lacked statutory standing because USF had not fully assigned the patent to USFRF. Five days later, USFRF amended its complaint to state that it was an exclusive licensee (i.e., it was not the assignee).

In May 2020, the district court dismissed the case, finding that USFRF lacked both statutory and constitutional standing. Analyzing the nunc pro tunc license agreement, the district court found a lack of statutory standing because the agreement was silent on (and thus did not transfer to USFRF) the right to sue to enforce the patent. The district court also found that USFRF lacked constitutional standing because USFRF had not established that the invention disclosure number in the license agreement corresponded to the issued patent and had not shown that the nunc pro tunc agreement was signed before the complaint was filed. USFRF appealed.

The Federal Circuit analyzed both statutory and constitutional standing and affirmed the district court’s finding with respect to statutory standing, reasoning that this case was analogous to others in which an exclusive licensee lacked statutory standing because the right to sue was either not transferred or only partially transferred. The Federal Circuit found that the district court had clearly erred with respect to constitutional standing, however. First, the Court held that there had been sufficient evidence tying the invention disclosure identified in the assignment agreement to the issued patent. Second, the Court found that it did not matter when the nunc pro tunc agreement was signed because the original revenue allocation agreement was signed before the complaint was filed and conveyed at least one exclusionary right to USFRF—enough for USFRF to have constitutional standing.

Because “the district court’s dismissal was predicated on constitutional standing,” the Federal Circuit remanded for further proceedings, including determination of whether USFRF may join USF.

[...]

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IPR on Written Description? Claims Found Unpatentable Based on Lack of Entitlement to Priority Date

by Art Dykhuis | Dec 9, 2021 | Patents

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board (Board) ruling, based on a written description analysis, that certain claims were invalid as anticipated by an earlier priority application from the same family. Indivior UK Ltd. v. Dr. Reddy’s Labs. S.A., Case Nos. 20-2073, -2142 (Fed. Cir. Nov. 24, 2021) (Lourie, J.) (Linn, J., concurring in part and dissenting in part).

Indivior’s patent, which issued from a fifth continuation application claiming priority back to 2009, claimed orally dissolvable films with therapeutic agents. Some of the claims recited numeric ranges, such as “about 40% wt to about 60% wt of a water-soluble polymeric matrix.” Instead of a range, one claim recited a specific amount of “about 48.2% wt” of the polymeric matrix. The patent’s specification did not expressly mention the claimed ranges or the specific 48.2% amount, but it did contain tables comprising quantities of polymer from which Indivior contended a person of ordinary skill in the art could calculate the percentage of polymer by weight.

Indivior argued that the polymer weight percentage limitations were supported by the priority application and, therefore, the patent was entitled to that priority date. Dr. Reddy’s contended that since the polymer weight percentage limitations were added later, an intervening patent publication (Myers) was prior art and anticipated the claims. Indivior did not contest that if Myers was prior art, it anticipated the claims. As a result, the Board’s decision on anticipation under 35 U.S.C. §102 turned on the priority analysis which, in turn, hinged on written description. The Board found that the tables disclosed formulations from which the “48.2% wt” could be calculated and, thus, claims reciting that limitation were not anticipated by Myers. However, the Board found that the claimed ranges (i.e., about 40% wt to about 60% wt) were not disclosed in the specification, and those claims were therefore anticipated by Meyers. Indivior appealed the Board’s anticipation finding, and Dr. Reddy’s appealed the no anticipation finding.

The Federal Circuit first analyzed the specification and concluded that there was no written description support for the broader range of “about 40% wt to about 60% wt.” The Court explained that the range was not disclosed in the specification, the specific values of 40% and 60% were not disclosed and there was another “inconsistent” teaching for weights of “at least 25%.” The Court noted that two specific tables in the specification “do not constitute ranges; they are only specific, particular examples. For written description support of a claimed range, more clarity is required.” The Court explained that “[h]ere, one must select several components, add up the individual values, determine the aggregate percentages, and then couple those aggregate percentages with other examples in the [] application to create an otherwise unstated range. That is not a written description of the claimed range.” The Court applied similar analysis in finding lack of written description for other claims reciting a slightly different range. Ultimately, the Court agreed that there was no written [...]

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Federal Circuit Reverses Judge Stark Decision, Finds Computer Network Patent Eligible

by Paul Devinsky | Dec 9, 2021 | Patents

The US Court of Appeals for the Federal Circuit concluded that a representative claim was directed to a patent-eligible improvement to computer functionality, and therefore reversed a decision authored by Judge Leonard P. Stark as a sitting judge in the US District Court for the District of Delaware. Mentone Solutions LLC v. Digi International Inc., Case Nos. 21-1202, -1203 (Fed. Cir. Nov. 15, 2021) (Moore, C.J.) (nonprecedential).

Mentone Solutions sued Digi International for infringement of Mentone’s patent directed to an improvement in dynamic resource allocation in a GPRS cellular network utilizing shifted uplink status flags (USF). Digi moved to dismiss under Fed. R. Civ. P. 12(b)(6), arguing that the patent claims were not patent eligible under 35 U.S.C. § 101. The district court granted the motion to dismiss, holding that the representative claim was patent ineligible for being “directed to the abstract idea of receiving a USF and transmitting data during the appropriate timeslots.” Mentone appealed.

The Federal Circuit began its analysis with a detailed explanation of the claimed technology and how its use of a “shifted USF” improved the normal operation of the communication system, noting that the shifted USF specifically allowed a mobile station to access previously restricted multi-slot configurations.

Reviewing the district court’s § 101 eligibility determination de novo, the Federal Circuit applied the Supreme Court’s two-step Alice framework, first determining whether the representative claim was directed to an abstract idea. The Court explained that in cases involving software, step one often turns on whether the claim focuses on specific asserted improvements in the computer’s capabilities rather than on an abstract idea which merely invoked a computer as a tool.

The Federal Circuit compared the claim in issue to those at issue in Packet Intelligence v. NetScout Sys., in which the Court found that the challenged claims were directed to a problem unique to computer networks and that the patent specification provided details on how the solution to the network problem was achieved. In Packet Intelligence, the Court looked to the patent specification to inform its understanding of the claimed invention and found that the specification made clear that the claimed invention solved a challenge unique to computers.

Similarly, in this case, the Federal Circuit explained that the representative claim did not recite generalized steps to be performed on a computer but rather a particular method of breaking the timing between the downlink USF and the subsequent uplink transmission. The Court noted that the term “shifted USF” was coined by the inventor, and that the specification and figures informed the Court’s understanding of the term, the claimed invention, the technical solution and how the elements of the claim work together to provide the solution. The Court concluded that the claimed invention solved a challenge unique to computer networks and was directed to patent-eligible improvements in computer functionality.

The Federal Circuit rejected the district court’s characterization of the claim as directed to the abstract idea of “receiving a USF and transmitting data during the appropriate [...]

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Big Little Lies: Guidelines for Challenging Trademark Acquired Distinctiveness Claims

by Sarah Bro | Dec 2, 2021 | Trademarks

For the second time, the US Court of Appeals for the Federal Circuit examined the standard for demonstrating fraud in a party’s claim of a trademark’s acquired distinctiveness for purposes of registration under Section 2(f) of the Lanham Act. The Federal Circuit found that a party challenging an applicant’s Section 2(f) claim based on substantially exclusive use of that trademark does not need to establish secondary meaning in its own mark to undercut the applicant’s claim of substantially exclusive use. The Court also found that use of the mark by any party, regardless of its relationship to the challenger, may undercut a trademark applicant’s claim of substantially exclusive use. Galperti, Inc. v. Galperti S.R.L., Case No. 21-1011 (Fed. Cir. Nov. 12, 2021) (Taranto, J.)

Galperti S.R.L. (Galperti-Italy) filed a US trademark registration for the mark GALPERTI in 2008. In an effort to overcome the US Patent and Trademark Office’s (PTO) initial refusal to register the trademark as “primarily merely a surname” (and therefore not registrable unless the mark has become distinctive of the applicant’s goods in commerce), Galperti-Italy asserted acquired distinctiveness of the GALPERTI mark under Section 2(f) and stated that the mark had become distinctive of Galperti-Italy’s metal hardware goods through its substantially exclusive and continuous use in commerce for the five years prior to the trademark registration. In 2013, Galperti-USA, a US company unrelated to Galperti-Italy that operates in the similar business of metal flanges and related products, petitioned to cancel Galperti-Italy’s registration on various grounds, including fraud in Galperti-Italy’s claim of substantially exclusive use of the GALPERTI trademark during the years 2002 – 2007. Galperti-USA claimed that it and other third parties also used the mark during that time, undercutting Galperti-Italy’s “substantially exclusive use” claims.

The Trademark Trial and Appeal Board (Board) rejected Galperti-USA’s cancellation claims, including the fraud claim. Galperti-USA filed its first appeal, and the Federal Circuit vacated the Board’s determination that Galperti-USA failed to prove the falsity of Galperti-Italy’s Section 2(f) claim. The Court remanded to the Board to assess whether the other uses of GALPERTI noted by Galperti-USA were significant or inconsequential, which would impact the proof of falsity of Galperti-Italy’s representations to the PTO. On remand, the Board again found that Galperti-USA failed to prove significant—rather than inconsequential—uses of GALPERTI between the years 2002 – 2007 so as to make Galperti-Italy’s representations of “substantially exclusive use” false. Galperti-USA filed its second appeal.

In this appeal, Galperti-USA challenged the Board’s conclusions that (1) Galperti-USA had to show that it acquired secondary meaning in its own GALPERTI trademark during the relevant time period, and (2) Galperti-USA could not undercut Galperti-Italy’s claims of substantially exclusive use with evidence of use by third parties with no privity to Galperti-USA. The Federal Circuit determined that both of the Board’s premises for its fraud analysis were incorrect as a matter of law, and it was therefore unclear whether the Board’s determination was affected by these errors. Taking a closer look at the Board’s conclusions, the Court found that [...]

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Dispute on Arbitrability Needs an Arbitrator

by Paul Devinsky | Dec 2, 2021 | Patents

The US Court of Appeals for the Federal Circuit found that a license agreement between two parties required an arbitrator to determine whether a dispute between the parties had to be heard by an arbitrator. ROHM Semiconductor USA, LLC v. MaxPower Semiconductor, Inc., Case No. 21-1709 (Fed. Cir. Nov. 12, 2021) (O’Malley, J.)

MaxPower owns patents directed to silicon transistor technology and licensed said patents to ROHM Japan in a technology license agreement (TLA) that contained an arbitration clause applicable to any disputes arising from or related to the TLA, including disputes regarding patent validity. A dispute arose between the parties regarding whether the patents covered certain ROHM Japan products. After MaxPower notified ROHM USA that it was initiating arbitration under the TLA, ROHM USA filed a complaint for declaratory judgment of noninfringement of four MaxPower patents in a California district court. After MaxPower filed a motion to compel arbitration, the district court granted the motion and dismissed the district court action, finding that the TLA “unmistakably delegate[s] the question of arbitrability to the arbitrator.” ROHM USA appealed.

The issue on appeal rested on legal determinations concerning whether the parties agreed to arbitrate arbitrability. The Federal Circuit noted that “courts should not assume that the parties agreed to arbitrate arbitrability unless there is ‘clear and unmistakable’ evidence that they did so.” ROHM USA argued that its TLA with MaxPower lacked clear and unmistakable evidence of an agreement to arbitrate arbitrability, and that two provisions of the California Code of Civil Procedure (CCCP) were ambiguous regarding arbitrability. The Court noted that the CCCP sections cited by ROHM were explicitly superseded by another provision of the CCCP for international commercial arbitration.

ROHM USA then challenged the international nature of the case. ROHM USA attempted to position the matter as a dispute between two domestic corporations and stated that ROHM USA was not a signatory to the TLA at issue. The Federal Circuit concluded that ROHM USA clearly was covered by, and obligated under, the TLA, because the TLA explicitly applied to all subsidiaries of ROHM Japan. The Court also noted that the present case was “merely one aspect of a sprawling international dispute” involving MaxPower, ROHM Japan and ROHM USA.

ROHM USA also argued that the meaning of “may” in the CCCP’s statement that “[t]he arbitral tribunal may rule on its own jurisdiction” was ambiguous, but the Federal Circuit found that MaxPower’s interpretation of “may” as permissive (i.e., “may, if arbitrability is disputed”) made sense in the context of the TLA. The Court concluded:

In contracts between sophisticated parties, it is fair to hold the parties to all provisions of their contract, including those incorporated by reference. To hold otherwise would deprive sophisticated parties of a powerful tool commonly used to simplify their contract negotiations—adoption of provisions established by neutral third parties. And to refuse to give effect to the plain language of the contract, both its incorporation of the CCCP and the CCCP’s delegation of arbitrability to an arbitrator, would ignore [...]

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No More Bites at the Apple: Imminent and Non-Speculative Standing Still Required

by McDermott Will & Emery | Nov 18, 2021 | Patents

The US Court of Appeals for the Federal Circuit reiterated that a patent challenger did not have Article III appellate standing to obtain review of a final Patent Trial & Appeal Board (PTAB) ruling because the underlying district court proceedings had been dismissed with prejudice after the parties reached a settlement and license agreement. Apple Inc. v. Qualcomm Inc., Case Nos. 20-1683; -1763; -1764; -1827 (Fed. Cir. Nov. 10, 2021) (Prost, J.) (Newman, J., dissenting).

This is the second dispute between Apple and Qualcomm to reach the Federal Circuit. In the first appeal (Apple I), the Court found that Apple did not have standing to maintain an appeal from the PTAB because the parties had entered into a settlement agreement.

As in the earlier case, here Qualcomm asserted patent infringement in district court, and Apple filed petitions for inter partes review of the patent claims that Qualcomm asserted Apple had infringed. The PTAB instituted on four petitions. While the inter partes review proceedings were pending, the parties settled the district court litigation, whereby Apple received a license in exchange for royalty payments to Qualcomm. The parties filed a joint motion to dismiss Qualcomm’s district court action with prejudice, which the district court granted. Ultimately, the PTAB found that Apple failed to prove that the challenged claims were unpatentable. Apple appealed.

As in Apple I, Qualcomm moved to dismiss the appeal for lack of standing. Apple responded by arguing that “[a]lthough Apple continues to disagree with [Apple I], in light of that decision and the . . . order denying Apple’s petition for rehearing en banc, Apple believes that the present appeal can be resolved on the briefs without the need for oral argument.” The parties filed a joint motion to vacate oral argument, but the Federal Circuit instead held a consolidated oral argument. Apple reiterated its disagreement with the Court’s ruling in Apple I but admitted that the operative facts in this appeal were “the same.” The Court found that other than the specific difference of the patents in issue themselves, the operative facts were the same and the alleged failure of proof as to certain patent claims (regarding whether the petitioner had established them to be unpatentable) were the same. The Court further found that any specific patent differences were irrelevant since the settlement and license agreements in each case covered the patents in issue in that case.

Apple raised a “nuance” not “specifically addressed” in Apple I, namely that Apple I “did not explain why the threat of liability, if Apple ceases the ongoing payment and the agreement is terminated, is not a sufficient injury to support standing.” The Federal Circuit was not convinced that this nuance merited a different treatment because:

The Court would need to sit en banc to change Apple I, and panels of the Court are bound by stare decisis.
Apple acknowledged that this “nuance” was at the core of its denied en banc petition in Apple I.

Accordingly, [...]

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