Justia U.S. Supreme Court Opinion Summaries

Teva’s patent covers a multiple sclerosis drug. When Sandoz tried to market a generic version of the drug, Teva sued for infringement. Sandoz countered that the patent was invalid because a claim that the active ingredient had “a molecular weight of 5 to 9 kilodaltons” was indefinite under 35 U. S. C. 112, for not stating which of three methods was used to determine that weight. The district court upheld the patent. Reversing, the Federal Circuit reviewed all aspects of claim construction de novo, including the determination of subsidiary facts. The Supreme Court vacated. When reviewing a district court’s resolution of subsidiary factual matters made during construction of a patent claim, the Federal Circuit must apply a “clear error,” not a de novo, standard of review. FRCP 52(a)(6) states: a court of appeals must not set aside “[f]indings of fact” unless they are “clearly erroneous.” Clear error review is particularly important in patent cases because a district judge has more opportunity to gain “familiarity with specific scientific problems and principles” than an appeals judge who must read a written transcript. When reviewing only evidence intrinsic to the patent, the judge’s determination is a determination of law, and the court of appeals will review that construction de novo; where the court needs to consult disputed extrinsic evidence to understand, for example, background science, courts need to make subsidiary factual findings about the extrinsic evidence. The ultimate construction of the claim is a legal conclusion subject to de novo review, but to overturn resolution of an underlying factual dispute, the appellate court must find that the judge, in respect to those findings, committed clear error. Here, the district court made a factual finding, crediting Teva’s expert’s account about how a skilled artisan would understand molecular weights. When the Federal Circuit reviewed the decision, it failed to accept that explanation without finding that the determination was “clearly erroneous.” View "Teva Pharma. USA, Inc. v. Sandoz, Inc." on Justia Law

The Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Act), 21 U.S.C. 355(j)(2)(A)(vii)(IV) established procedures for identifying and resolving patent disputes between brand-name and generic drug manufacturers. One procedure requires a prospective generic manufacturer to certify to the FDA that any listed, relevant patent is invalid or will not be infringed by the manufacture, use, or sale of the generic drug (paragraph IV). Generic manufacturers filed paragraph IV applications for generic drugs modeled after Solvay’s FDA-approved, patented drug AndroGel. Solvay claimed patent infringement, 35 U.S.C. 271(e)(2)(A). The FDA approved the generic product, but the generic companies entered into “reverse payment” settlements, agreeing not to bring the generic to market for a number of years and to promote AndroGel to doctors in exchange for millions of dollars. The FTC sued, alleging violation of section 5 of the Federal Trade Commission Act by agreeing to abandon patent challenges, to refrain from launching low-cost generic drugs, and to share in Solvay’s monopoly profits. The district court dismissed. The Eleventh Circuit affirmed. The Supreme Court reversed and remanded, calling for application of a “rule of reason” approach rather than a “quick look.” Although the anti-competitive effects of the reverse settlement might fall within the exclusionary potential of Solvay’s patent, the agreement is not immune from antitrust attack. It would be incongruous to determine antitrust legality by looking only at patent law policy, and not at antitrust policies. The Court noted the Hatch-Waxman Act’s general pro-competitive thrust, facilitating challenges to a patent’s validity and requiring parties to a paragraph IV dispute to report settlement terms to antitrust regulators. Payment for staying out of the market keeps prices at patentee-set levels and divides the benefit between the patentee and the challenger, while the consumer loses. That a large, unjustified reverse payment risks antitrust liability does not prevent parties from settling their lawsuits; they may settle in other ways, e.g., by allowing the generic to enter the market before the patent expires without payment to stay out prior to that point. View "Fed. Trade Comm'n v. Actavis, Inc." on Justia Law

A patent specification must “conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as [the] invention,” 35 U.S.C. 112. The 753 patent involves a heart-rate monitor used with exercise equipment; it asserts that prior monitors were often inaccurate in measuring the electrical signals accompanying each heartbeat (ECG signals) because of the presence of other electrical signals generated by the user’s skeletal muscles that can impede ECG signal detection. The invention claims to improve on prior art by detecting and processing ECG signals in a way that filters out the interference. Claim 1 refers to a “heart rate monitor for use by a user in association with exercise apparatus and/or exercise procedures.” The claim comprises a cylindrical bar fitted with a display device; electronic circuitry including a difference amplifier; and, on each half of the bar, a “live” electrode and a “common” electrode “mounted ... in spaced relationship with each other.” The exclusive licensee alleged that Nautilus, without obtaining a license, sold exercise machines containing its patented technology. The district court granted Nautilus summary judgment on the ground that the claim term “in spaced relationship with each other” failed the definiteness requirement. The Federal Circuit reversed, concluding that a patent claim passes the threshold so long as the claim is “amenable to construction,” and, as construed, is not “insolubly ambiguous.” The Supreme Court vacated. A patent is invalid for indefiniteness if its claims, read in light of the patent’s specification and prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention. Section 112’s definiteness requirement must take into account the inherent limitations of language. The standard mandates clarity, while recognizing that absolute precision is unattainable. The Federal Circuit inquired whether the claims were “amenable to construction” or “insolubly ambiguous,” but such formulations lack the precision section 112 demands. To tolerate imprecision just short of that rendering a claim “insolubly ambiguous” would diminish the definiteness requirement’s public-notice function and foster the innovation-discouraging “zone of uncertainty.” The Court remanded so that the Federal Circuit can reconsider, under the proper standard, whether the relevant claims in the 753 patent are sufficiently definite. View "Nautilus, Inc. v. Biosig Instruments, Inc" on Justia Law

Akamai is the exclusive licensee of a patent that claims a method of delivering electronic data using a content delivery network (CDN). Limelight also operates a CDN and carries out several of the steps claimed in the patent, but its customers, rather than Limelight itself, perform a step of the patent known as “tagging.” Under Federal Circuit case law, liability for direct infringement under 35 U.S.C. 271(a) requires performance of all steps of a method patent to be attributable to a single party. The district court concluded that Limelight could not have directly infringed the patent at issue because performance of the tagging step could not be attributed to it. The en banc Federal Circuit reversed, holding that a defendant who performed some steps of a method patent and encouraged others to perform the rest could be liable for inducement of infringement even if no one was liable for direct infringement. The Supreme Court reversed. A defendant is not liable for inducing infringement under section 271(b) when no one has directly infringed. The Federal Circuit’s contrary view would deprive section 271(b) of ascertainable standards and require the courts to develop parallel bodies of infringement law. Citing section 271(f), the Court stated that Congress knows how to impose inducement liability predicated on noninfringing conduct when it wishes to do so. Though a would-be infringer could evade liability by dividing performance of a method patent’s steps with another whose conduct cannot be attributed to the defendant, a desire to avoid this consequence does not justify fundamentally altering the rules of inducement liability clearly required by the Patent Act’s text and structure. View "Limelight Networks, Inc. v. Akamai Techs, Inc." on Justia Law

The Patent Act provides: “The court in exceptional cases may award reasonable attorney fees to the prevailing party,” 35 U.S.C. 285. The Federal Circuit has interpreted section 285 as authorizing fee awards only “when there has been some material inappropriate conduct,” or when it is both “brought in subjective bad faith” and “objectively baseless.” A health insurance company obtained a declaratory judgment that a patent was invalid and not infringed. The district court found the case “exceptional” and awarded attorney fees of $4,694,727.40, $209,626.56 in expenses, and $375,400.05 in expert fees. The court found a pattern of “vexatious” and “deceitful” conduct by the defendant in attempting to force other companies to purchase licenses, even after its own experts determined that its claims lacked merit. The Federal Circuit reviewed the determination de novo and reversed in part. A unanimous Supreme Court vacated. All aspects of a district court’s exceptional-case determination should be reviewed for abuse of discretion. That determination is based on statutory text that emphasizes that the district court is better positioned to make the “multifarious and novel” determination, which is not susceptible to “useful generalization” of the sort that de novo review provides, and is “likely to profit from the experience that an abuse-of discretion rule will permit to develop.” The word “exceptional” should be given its ordinary meaning: “one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated,” considering the totality of the circumstances. View "Highmark Inc. v. Allcare Health Mgmt. Sys., Inc." on Justia Law

The Patent Act authorizes district courts to award attorney’s fees to prevailing parties in “exceptional cases,” 35 U.S.C. 285. In Brooks Furniture, the Federal Circuit defined an “exceptional case” as one which either involves “material inappropriate conduct” or is both “objectively baseless” and “brought in subjective bad faith” as shown by clear and convincing evidence. ICON sued Octane for patent infringement. The district court granted summary judgment to Octane, but denied attorney’s fees under section 285. The Federal Circuit affirmed. The Supreme Court reversed, finding the Brooks Furniture framework “unduly rigid’ in light of the statutory grant of discretion to district courts. Section 285 imposes only one constraint on the award of attorney’s fees, limiting it to “exceptional” cases. Because the Patent Act does not define “exceptional,” the term should be given it ordinary meaning: “uncommon,” “rare,” or “not ordinary.” An “exceptional” case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both governing law and the facts) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances. The Brooks Furniture standard was so demanding that it appeared to render section 285 superfluous of the courts’ inherent power to award fees in cases involving misconduct or bad faith. Section 285 imposes no specific evidentiary burden. View "Octane Fitness, LLC v. ICON Health & Fitness, Inc." on Justia Law

Medtronic designs, makes, and sells medical devices. Mirowski owns patents relating to implantable heart stimulators. Under a licensing agreement, Medtronic practices certain Mirowski patents in exchange for royalty payments. Mirowski notified Medtronic of its belief that several Medtronic products infringed the licensed patents. Medtronic challenged that assertion in a declaratory judgment action, while accumulating disputed royalties in escrow for distribution to the prevailing party. The district court concluded that Mirowski had not met its burden of proving infringement. The Federal Circuit reversed, reasoning that where the patentee is a declaratory judgment defendant and, like Mirowski, is foreclosed from asserting an infringement counterclaim by the continued existence of a licensing agreement, the party seeking the declaratory judgment (Medtronic) bears the burden of persuasion. The Supreme Court reversed, first holding that the Federal Circuit did not lack subject-matter jurisdiction. Citing 28 U. S. C. 1338(a) and 1295(a)(1), the Court stated that if Medtronic had acted consistent with the understanding of its rights that it sought to establish in the declaratory judgment suit (by ceasing to pay royalties), Mirowski could have terminated the license and sued for infringement. The declaratory judgment action, which avoided that hypothetical threatened action, also “arises under” federal patent law. Operation of the Declaratory Judgment Act is only procedural, leaving substantive rights unchanged, and the burden of proof is a substantive aspect of a claim. When a licensee seeks a declaratory judgment against a patentee that its products do not infringe the licensed patent, the patentee bears the burden of persuasion. Mirowski set this dispute in motion by accusing Medtronic of infringement. There is no convincing reason why burden of proof law should favor the patentee. View "Medtronic, Inc. v. Mirowski Family Ventures, LLC" on Justia Law

Alice Corporation holds patents that disclose a scheme for mitigating “settlement risk,” i.e., the risk that only one party to an agreed-upon financial exchange will satisfy its obligation. The patent claims are designed to facilitate the exchange of financial obligations between parties, using a computer system as a third-party intermediary. The patents claim: a method for exchanging financial obligations; a computer system configured to carry out that method; and a computer-readable medium containing program code for performing that method. CLS, a global network that facilitates currency transactions, challenged the claims as not infringed, invalid, or unenforceable. Alice counterclaimed infringement. After the Supreme Court’s decision in Bilski, the district court held that the claims were ineligible for patent protection under 35 U.S.C. 101. The Federal Circuit and a unanimous Supreme Court affirmed. Section 101, which defines the subject matter eligible for patent protection, contains an implicit exception for laws of nature, natural phenomena, and abstract ideas. In applying the exception, patents that claim the building blocks of human ingenuity, which are ineligible for patent protection, must be distinguished from those that integrate the building blocks into something more, making them patent-eligible. The claims at issue are directed to a patent-ineligible concept: the abstract idea of intermediated settlement, which is “‘a fundamental economic practice long prevalent in our system of commerce.” The method claims, which simply require generic computer implementation, fail to transform that abstract idea into a patent-eligible invention. Stating an abstract idea, adding the words “apply it with a computer,” simply combines two steps, with the same deficient result. Taking the claim elements separately, the functions performed by the computer at each step are purely conventional: creating and maintaining “shadow” accounts, obtaining data, adjusting account balances, and issuing automated instructions. They do not purport to improve the functioning of the computer itself or improve any other technology or technical field. The system claims are no different in substance from the method claims, reciting a handful of generic computer components configured to implement the same idea. View "Alice Corp. v. CLS Bank Int'l" on Justia Law

A patent specification must “conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as [the] invention,” 35 U.S.C. 112. The 753 patent involves a heart-rate monitor used with exercise equipment; it asserts that prior monitors were often inaccurate in measuring the electrical signals accompanying each heartbeat (ECG signals) because of the presence of other electrical signals generated by the user’s skeletal muscles that can impede ECG signal detection. The invention claims to improve on prior art by detecting and processing ECG signals in a way that filters out the interference. Claim 1 refers to a “heart rate monitor for use by a user in association with exercise apparatus and/or exercise procedures.” The claim comprises a cylindrical bar fitted with a display device; electronic circuitry including a difference amplifier; and, on each half of the bar, a “live” electrode and a “common” electrode “mounted ... in spaced relationship with each other.” The exclusive licensee alleged that Nautilus, without obtaining a license, sold exercise machines containing its patented technology. The district court granted Nautilus summary judgment on the ground that the claim term “in spaced relationship with each other” failed the definiteness requirement. The Federal Circuit reversed, concluding that a patent claim passes the threshold so long as the claim is “amenable to construction,” and, as construed, is not “insolubly ambiguous.” The Supreme Court vacated. A patent is invalid for indefiniteness if its claims, read in light of the patent’s specification and prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention. Section 112’s definiteness requirement must take into account the inherent limitations of language. The standard mandates clarity, while recognizing that absolute precision is unattainable. The Federal Circuit inquired whether the claims were “amenable to construction” or “insolubly ambiguous,” but such formulations lack the precision section 112 demands. To tolerate imprecision just short of that rendering a claim “insolubly ambiguous” would diminish the definiteness requirement’s public-notice function and foster the innovation-discouraging “zone of uncertainty.” The Court remanded so that the Federal Circuit can reconsider, under the proper standard, whether the relevant claims in the 753 patent are sufficiently definite. View "Nautilus, Inc. v. Biosig Instruments, Inc" on Justia Law

Akamai is the exclusive licensee of a patent that claims a method of delivering electronic data using a content delivery network (CDN). Limelight also operates a CDN and carries out several of the steps claimed in the patent, but its customers, rather than Limelight itself, perform a step of the patent known as “tagging.” Under Federal Circuit case law, liability for direct infringement under 35 U.S.C. 271(a) requires performance of all steps of a method patent to be attributable to a single party. The district court concluded that Limelight could not have directly infringed the patent at issue because performance of the tagging step could not be attributed to it. The en banc Federal Circuit reversed, holding that a defendant who performed some steps of a method patent and encouraged others to perform the rest could be liable for inducement of infringement even if no one was liable for direct infringement. The Supreme Court reversed. A defendant is not liable for inducing infringement under section 271(b) when no one has directly infringed. The Federal Circuit’s contrary view would deprive section 271(b) of ascertainable standards and require the courts to develop parallel bodies of infringement law. Citing section 271(f), the Court stated that Congress knows how to impose inducement liability predicated on noninfringing conduct when it wishes to do so. Though a would-be infringer could evade liability by dividing performance of a method patent’s steps with another whose conduct cannot be attributed to the defendant, a desire to avoid this consequence does not justify fundamentally altering the rules of inducement liability clearly required by the Patent Act’s text and structure. View "Limelight Networks, Inc. v. Akamai Techs, Inc." on Justia Law