Recent Case Highlights

Patent Defenses turned 20 in 2024

2025 Q1 Patent Defenses Update

Issues of First Impression

Federal Circuit panels decided the following issues of first impression this quarter.

• Cited Portion of a Sec. 102(e) Prior Art Reference Must Be Supported by the Reference’s Provisional Application: “Even if one demonstrates that a provisional application provides written description support for one claim of the non-provisional application or patent, the provisional application must also provide written description support for the specific portions of the patent specification identified and relied on in the prior art rejection. In other words, to claim priority to the provisional filing date, the portion of the application relied on by the examiner as prior art must be supported by the provisional application.” In re Riggs (Fed. Cir. 03/24/25) (remanding to PTAB to conduct this analysis).
• ITC’s Domestic Industry Determination Must Consider U.S. Labor, Capital, etc., Even if the Product Is Made Abroad: Lashify (Fed. Cir. 03/05/25) (exercising our “independent judgment,” rev’g ITC’s statutory interpretation. In determining domestic industry, ITC must consider patent owner’s employment of labor and capital even when they are used in sales, marketing, warehousing, quality control, or distribution of products made outside U.S.)
• Section 156 Patent Term Extension Is Based on Length of Regulatory Review After Issuance of Original Patent, Not Reissue: In Sec. 156(c) (“The term of a patent eligible for extension under subsection (a) shall be extended by the time equal to the regulatory review period for the approved product which period occurs after the date the patent is issued”), the “date the patent is issued” is the original patent’s issue date not that of the reissue patent. Merck Sharp (Fed. Cir. 03/13/25) (agreeing with USPTO interpretation).
• Jepson Preambles Require Written Description Support: “We hold that the limiting preamble of a Jepson claim must be supported with sufficient written description.” In re Xencor II (Fed. Cir. 03/13/25) (aff’g PTAB’s Appeals Review Panel on law and aff’g rejection of claims for lack of written description support of Jepson preamble (“In a method of treating a patient by administering an anti-C5 antibody with an Fc domain, the improvement comprising.”)).

“The Principle of Stuff”

Information has no mass. It’s not stuff. Neither are functions. Computer science often glosses over these distinctions harmlessly, but patent law cannot always afford to. Courts sometimes remind us of this.

• Qualcomm (Fed. Cir. 01/24/25) (non-precedential) (“in explaining the patent’s words, neither party delves beneath the terminology of “buffer” and “memory” in their functional meaning to describe concretely the potential makeup and configuration of the physical components and steps used to perform the functions. Cf. PETER J. DENNING & CRAIG H. MARTELL, GREAT PRINCIPLES OF COMPUTING 59 (2015) (“The terminology of abstractions [common in computer science] often obscures the principle of stuff: the reality that computational actions are implemented as physical processes controlled by programs.”)).

This “principle of stuff” (and “principle of how”) is embedded in Sections 112(b) and 112(f).

• In re Raiz (Fed. Cir. 02/11/25) (aff’g rejection of “means” element for failure of Spec. to “provide a step-by-step explanation of the contract software” that supposedly performs the function on conventional hardware).

Federal Circuit Continues Avoiding a Definitive Ruling on RDOE’s Survival

If the Supreme Court were to decide whether the reverse doctrine of equivalents (RDOE) survived the 1952 Patent Act, it would almost certainly say yes. The 1952 Act introduced nothing mandating that literal compliance with claim language conclusively proves infringement. This may explain the Federal Circuit’s reluctance to tee up this question for Supreme Court review by definitively declaring RDOE dead.

• Federal Circuit Panel Nearly Declares That RDOE Did Not Survive 1952 Act: “We find Steuben’s arguments [that RDOE did not survive] compelling, but need not decide whether RDOE survived the 1952 Patent Act. We have never ‘affirmed a decision finding noninfringement based on the reverse doctrine of equivalents.’” Steuben Foods (Fed. Cir. 01/24/25) (rev’g JMOL of non-infringement because patent owner’s evidence on principle of operation supported jury verdict).
• The panel referred to RDOE as a “defense” to infringement. But that is not how the Supreme Court described RDOE. As recognized by the Federal Circuit predecessor court that considered issues of infringement: “It is well settled that more than a literal response to the terms of the claims must be shown to make out a case of infringement.” Leesona (Ct. Cl. 01/28/76) (citing Supreme Court precedents).

Parallel PTAB and District Court Actions

A final PTAB ruling of patent claim unpatentability—once affirmed or left unappealed—moots district court assertions of those claims because the ruling inevitably leads to claim cancellation. But as this is not on account of issue preclusion the ruling does not bar asserting other claims of the patent.

• PTAB Final Unpatentability Decision on Some Claims of a Patent Is Not Issue Preclusion as to Validity of Immaterially Different Other Claims of the Same Patent: “A prior final written decision of the Board that certain patent claims are unpatentable [does not] preclude[] a patentee from asserting other claims from the same patent, even assuming the asserted claims are immaterially different from the unpatentable claims for purposes of invalidity.” Kroy IP (Fed. Cir. 02/10/25) (rev’g dismissal of Complaint for issue preclusion: “Collateral estoppel generally does not apply when the second action involves application of a different legal standard, such as a different burden of proof.”).

“Comparable Licenses” in Reasonable Royalty Determinations

As we await the en banc Court’s decision in EcoFactor v. Google addressing district court gatekeeping of expert testimony in the context of allegedly “comparable licenses,” a non-precedential ruling reminds us that comparable-license analysis must be rigorous.

• Roland (Fed. Cir. 03/27/25) (non-precedential) (granting infringer new trial on damages on reasonable royalty where damages expert relied on three patent licenses but expert failed to account for those licenses including three non-asserted patents, failed to explain how she accounted for one license being in settlement of litigation, and failed to “coherently explain” how she derived her asserted rate from those in the license agreements).

2024 Q4 Patent Defenses Update

Thinning the Orange Book 

Teva Branded (Fed. Cir. 12/20/24).

• When a pharmaceutical company lists a patent in the Orange Book, it can block the introduction of competing drug products for 30 months. To be listed, the patent must “claim[] the drug for which the applicant submitted the [NDA] application.” This decision interprets that statutory requirement and is an excellent primer on the ANDA statutory regime including the Orange Book.
• A patent “claims the drug” when it “particularly points out and distinctly claims the drug as the invention,” not merely “if it reads on the approved drug.” Teva Branded (Fed. Cir. 12/20/24) (aff’g judgment delisting patents from Orange Book where NDA product was combination of “albuterol sulfate (the active ingredient) with a propellant, ethanol, and an inhaler device to administer the drug” but the claims were directed to improvements in metered-dose inhalers and did not require the presence of the NDA product’s active ingredient).
• FTC press release: “Removal of junk patent listings is critical to ensuring drugmakers can fairly compete to offer generic drugs at a lower price for consumers. This decision is important not only for lowering asthma inhaler costs, it also sets the stage for removal of junk listings on a range of other critical medications where junk device listings impede competition.”

U.S. Court May Enjoin Patent Owner from Enforcing Foreign Court’s Patent-Infringement Injunction on Patents Subject to FRAND Obligation if U.S. Lawsuit Presents an Issue That Might Bar the Patent Owner from Seeking Such a Patent-Infringement Injunction

Telefonaktiebolaget LM Ericsson (Fed. Cir. 10/24/24).

• After Ericsson-Lenovo negotiations to cross-license their standard-essential 5G patents [SEPs] failed, Ericsson filed patent infringement suits in Brazil and Columbia and obtained preliminary injunctions within weeks. Lenovo then (in Ericsson’s pending U.S. patent litigation) moved for an injunction against Ericsson enforcing these foreign-court injunctions on the ground that Ericsson had violated its FRAND obligation by failing to negotiate in good faith.
• The district court denied Lenovo’s motion on the ground that the U.S. lawsuit would not necessarily result in a global cross-license and therefore would not necessarily resolve the foreign actions. The Federal Circuit vacated the district court’s denial as misinterpreting the governing Microsoft (Motorola) (9th Cir. 07/30/15) FRAND antisuit injunction framework.
  • “[T]he ‘dispositive’ requirement [of this framework] can be met even though a foreign antisuit injunction would resolve only a foreign injunction (and not the entire foreign proceeding), and even though the relevant resolution depends on the potential that one party’s view of the facts or law prevails in the domestic suit.”
  • The “dispositive” requirement is met here because as a matter of contract interpretation “Ericsson’s [ETSI] FRAND commitment precludes Ericsson from pursuing SEP-based injunctive relief unless it has first complied with the commitment’s obligation to negotiate in good faith over a license to those SEPs,” and Lenovo might show that Ericsson failed to negotiate in good faith.

Does a Vendor or Customer “Use” a Claimed Distributed System? Is a Vendor Vicariously Liable for a Customer’s Use?

Patent nerds reading these questions will think of Centillion Data (Fed. Cir. 01/20/11) (“We hold that to ‘use’ a system for purposes of infringement, a party must put the invention into service, i.e., control the system as a whole and obtain benefit from it.”) and Akamai Tech. IV (Fed. Cir. 08/13/15) (en banc) (a party is liable for another’s performance of a method step if [other paths omitted] it “contracts with another to perform one or more steps of a claimed method”). This new decision addresses both of these rules.

CloudofChange (Fed. Cir. 12/18/24)

• Merchants, not defendant supplier (NCR) offering Web-based POS [point-of-sale]-builder system, used the system.
  • Merchants “initiate at the POS terminal a demand for service (for example, building or editing a POS) and benefit from the back end providing that service.”
  • While the defendant system-supplier benefitted financially, it did not receive as a benefit the patent-recited purpose of the use of the POS-builder system.
• Defendant system-supplier was not vicariously liable for the merchants’ use.
  • It did not “direct or control its merchants to subscribe to the [POS-builder] system, download the [POS-builder] app on their POS terminals, or put the [POS-builder] system into use by initiating action at the POS terminals to cause the [POS-builder] software to modify its POS terminals,” despite the defendant system-supplier requiring merchants to get own Internet connection.
  • Distinguishing Akamai as directed to method claim where supplier performed all but one step of claimed method and controlled performance of that one step.
• At our January 9 Patent Defenses presentation, we’ll explain the patent drafting mistake that partly led to this result.

False Assertion that a Product Feature Is Patented in Manner Misleading Consumers About Nature, Characteristics, or Qualities of Product, Supports a Lanham Act Counterclaim

• “A cause of action arises from Section 43(a)(1)(B) where a party falsely claims that it possesses a patent on a product feature and advertises that product feature in a manner that causes consumers to be misled about the nature, characteristics, or qualities of its product.” Crocs (Fed. Cir. 10/03/24) (rev’g Summ. J. against counterclaim, distinguishing precedents that false patent assertions which mislead about inventorship or authorship do not support Lanham Act cause of action).

Showing that Unpatented Features Were Conventional Does Not Suffice to Support Using the Entire Market Value Rule

• Provisur (Fed. Cir. 10/02/24) (rev’g denial of new trial on damages: “use of the entire market value rule was impermissible because [plaintiff] failed to present sufficient evidence demonstrating the patented features drove the demand for the entire slicing line,” and instead showed only that unpatented features were conventional).

Several Vehicles Exist for Sanctioning a Patent Owner Who Brings a Bad-Faith Patent Infringement Action

• A district court “can impose sanctions under its inherent power in addition to awarding attorney fees and costs under § 285.” PS Products (Fed. Cir. 12/06/24) (aff’g award of $25K in “deterrence sanctions” payable to district court, under inherent power, in addition to award of attorney fees for bad-faith design patent infringement complaint, where venue plainly was lacking, there was no plausible argument for infringement, plaintiff had filed 25 lawsuits in district, each citing wrong venue statute, and many dismissed voluntarily in response to motions to dismiss, and plaintiff dismissed this action before defendant could file Rule 11 motion, but declining to award fees on the appeal as it was meritless but not quite frivolous).

2024 Q3 Patent Defenses Update

Fed. Cir. Grants En Banc Review on Damages Expert Gatekeeping

The Federal Circuit granted Google’s petition for rehearing en banc to address a district court’s gatekeeping of patent damages experts, here an expert assigning a per-unit royalty rate to the patent owner’s allegedly comparable past lump-sum portfolio license agreements. Klarquist submitted a brief on behalf of seven amici supporting en banc review.

EcoFactor (Fed. Cir. 06/03/24) (2-1) (aff’g damages award and admission of patent-owner expert testimony on royalty rate), vacated and en banc review granted (Fed. Cir. 09/25/24) (briefing “limited to addressing the district court’s adherence to Federal Rule of Evidence 702 and Daubert[,] in its allowance of testimony from EcoFactor’s damages expert assigning a per-unit royalty rate to the three licenses in evidence in this case”).

Whiplash! Obviousness-Type Double Patenting

August 2023: A year ago, the talk of the (patent-practitioner) town was In re Cellect, holding that patent term adjustment (PTA) affects the date of patent expiration for obviousness-type double patenting (ODP) purposes, and affirming the ODP rejection of a (’369) patent expiring later (due to PTA) over a later-filed, later-issued, but earlier-expiring (’036) patent in same family having a common priority date. In re Cellect (Fed. Cir. 08/28/23). Patent practitioners were aghast, and a cert. petition was filed. (The Supreme Court was scheduled to consider this petition at its “long conference” this Monday, September 30.)

August 2024: But now the Federal Circuit, while standing by its holding on the impact of PTA, has declared that the result in In re Cellect will not be repeated.

“A first-filed, first-issued, later-expiring claim cannot be invalidated by a later-filed, later-issued, earlier-expiring reference claim having a common priority date,” in view of “the purpose of the ODP doctrine, which is to prevent patentees from obtaining a second patent on a patentably indistinct invention to effectively extend the life of a first patent to that subject matter,” and because ruling otherwise would “effectively abrogate the benefit Congress intended to bestow on patentees when codifying PTA.” Allergan (Fed. Cir. 08/13/24) (distinguishing In re Cellect as not addressing this question of law at least in part because no party had presented it).

The Patent Office cited Allergan in opposing the In re Cellect cert. petition.

The New “On Sale” Bar (for First-Inventor-to-File Patents) Is Much Like the Old “On Sale” Bar

An applicant’s commercialization of an invention (e.g., through sale of a product of a claimed process) starts the one-year grace period for the applicant to file a patent application, even if it does not publicly disclose the invention.

Celanese (Fed. Cir. 08/12/24) (aff’g ITC that patent applicant’s pre-critical date sales of product made outside U.S. in secret by patented process invalidates the claims under AIA section 102(a)(1): “for patented processes, the on-sale bar applies when one commercially exploits the process by seeking compensation from the public for carrying out that process before the critical date”).

But it does not defeat the prior art status of a third-party “disclosure” before the application was filed, unless the applicant’s commercialization publicly disclosed the invention.

Sanho (Fed. Cir. 07/31/24) (aff’g PTAB obviousness despite inventor having privately (but without confidentiality obligation) sold device embodying claimed invention (and delivered one sample to buyer) before effective filing date of lead prior art reference, in part because “publicly disclosed” is not the same as “public use” (which encompasses a private commercial use), and expressly not deciding “whether to apply the prevailing standard for when a printed publication is sufficiently publicly accessible to qualify as prior art”).

Preliminary Injunction Against a Cancer-Relapse Test in a Two-Supplier Market

Patent preliminary injunctions remain rare, but a new precedential decision may encourage more non-NPE patent owners to seek a preliminary injunction even where that results in a one-supplier market.

Natera (Fed. Cir. 07/12/24) (aff’g preliminary injunction against competing tumor-informed molecular residual disease tests for detecting cancer relapse in two-product market, with carve-out for patients who had already started use with accused product, where direct competitors in two-competitor market, unwillingness to license the patent, potential loss of business relationships, obstacles to customers switching between providers, sufficient causal nexus, and the patentee showed it is more likely than not to prevail over an invalidity challenge, and rejecting argument that accused infringer needed to show “mere vulnerability” of the patent to an invalidity challenge to defeat an injunction).

An Issue Preclusion Profusion

The principles and elements of issue and claim preclusion are well established. For example, under issue preclusion, when an issue of fact or law is actually litigated and determined by a final judgment, the losing party had a full and fair chance to litigate the issue, and the determination is essential to the judgment, the determination (with certain equitable exceptions) is conclusive in a separate, second action between the parties. But the patent-case “fact patterns” to which these principles are applied are quite varied. And panels sometimes seem to disregard the well-settled principles.

• Doctrine of Equivalents Is “Same Issue” as Literal Infringement

Wisconsin Alumni II (Fed. Cir. 08/28/24) (aff’g that later versions of Apple chips accused in second action were “essentially the same” as those accused in first action, and that “doctrine of equivalents” infringement theory in second action is “same issue” as literal infringement issue that plaintiff lost in first action, as they involve same statute, have been treated as same issue by S. Ct., and evidence would be substantially the same).

• Sec. 101 Interlocutory Dismissal Order Became Final for All Dismissed Patent Claims Upon Stipulated Dismissal with Prejudice Despite Amended Complaint Having Dropped Some Claims

Koss (Fed. Cir. 07/19/24) (aff’g that stipulated dismissal of action with prejudice made final the district court’s previously interlocutory order on a motion to dismiss that all claims of three patents were invalid under Section 101 where amended complaint then asserted only limited claims of two of the patents, because order merged with the non-appealed stipulated dismissal, and therefore final order had issue preclusive effect).

• Invalidity-Related Fact Finding Against Patent Owner in IPR Does Not Preclude Patent Owner on That Fact Question in District Court

Due to different standards of proof, “a finding underlying an unpatentability decision in an IPR proceeding [does not] collaterally estop[] a patentee from making validity arguments regarding separate, related claims in district court litigation.” ParkerVision (Fed. Cir. 09/06/24) (rev’g Daubert ruling excluding patent owner expert testimony; the defendant-petitioner proving the capabilities of a prior art apparatus by a preponderance of the evidence (in an IPR proceeding on different patent claims) does not preclude the patent owner on that factual issue where it must be proven by clear and convincing evidence).

• Panel Disregards “Separate, Second Proceeding” Requirement for Issue and Claim Preclusion

Zyxel (Fed. Cir. 07/22/24) (rev’g PTAB non-obviousness as to one original claim and remanding to PTAB to consider whether this creates “collateral estoppel” as to patentability of amended claims with same elements; not forfeited for failure to raise collateral estoppel prior to appeal because not available until Fed. Cir. ruled original claim unpatentable).

101: No “How,” No Way!

Alice in a nutshell: No “how” in the claim, no way it’s valid.

The Federal Circuit insists on what we call “how claims,” i.e., claims that recite as the alleged advance a physical-realm particular way (particular structures, materials, and/or acts) of how to perform a function or achieve a result. Particularity in the mental realm of information and information manipulation, however, does not suffice because even narrow and specific abstract ideas are patent ineligible. Below are excerpts from three of this quarter’s seven Federal Circuit opinions finding claims patent ineligible under these principles:

“Claim 1 does not disclose how to maintain a usage history database, track viewer consumption, or generate a program guide. Instead, the claims recite functions in the abstract.” Broadband (Fed. Cir. 09/03/24).

“These claims consist solely of result-orientated, functional language and omit any specific requirements as to how these steps of information manipulation are performed.” Mobile Acuity (Fed. Cir. 08/06/24).

The claim’s “steps demonstrate that the claims are directed to receiving, storing, transmitting, determining, selecting, and generating information, which place them in the ‘familiar class of claims directed to a patent-ineligible concept.’” Miller Mendel (Fed. Cir. 07/18/24).

The Court also reversed a patent ineligibility judgment this quarter emphasizing that the claims were limited to a particular way of performing the claim-recited functions:

Contour IP (Fed. Cir. 09/09/24) (rev’g Summ. J. ineligibility: claims “require specific, technological means—parallel data stream recording with the low-quality recording wirelessly transferred to a remote device—that in turn provide a technological improvement to the real time viewing capabilities of a [point-of-view] camera’s recordings on a remote device.” The “claims do not cover other ways that a camera processor might generate multiple video streams of varying quality for wireless transmission, such as streams created ‘in sequence.’”).

2024 Q2 Patent Defenses Update

Highlights and Strategies from April – June S. Ct.’s decisions on substantive Patent Law.

The End of Chevron Deference: Impact on Substantive Patent Law

1984 Chevron Deference Rule: Where a statute administered by a federal agency is silent or ambiguous on a point, a court must defer to that agency’s reasonable interpretation thereof, even if the court otherwise would have interpreted the statute differently.

S. Ct.’s Final Application of Chevron Deference Was in Cuozzo, a Patent Case: “This Court, for its part, has not deferred to an agency in­terpretation under Chevron since 2016. See Cuozzo, 579 U.S. at 280 (most recent occasion).” Loper Bright (U.S. 06/28/2024) (6-3). Cuozzo approved USPTO’s use of “broadest reasonable interpretation” claim construction standard in IPRs (which USPTO since has abandoned).

The End of Chevron Deference:

• Loper Bright (U.S. 06/28/2024) (overruling Chevron; under the APA, “agency interpretations of statutes—like agency interpreta­tions of the Constitution—are not entitled to deference,” although courts may “seek aid from the interpretations of those responsible for imple­menting particular statutes,” “interpretations issued contemporaneously with the statute at issue, and which have remained consistent over time, may be especially useful in determining the statute’s mean­ing,” and “an agency’s interpretation of a statute … may be especially in­formative ‘to the extent it rests on factual premises within [the agency’s] expertise.’”).

Impact on Patent Cases:

• Existing and future USPTO and ITC statutory interpretations (not already approved by a reviewing court) now are more open to challenge.
• But USPTO and ITC statutory interpretations already approved by the Supreme Court or, to a lesser extent, the Federal Circuit, are unlikely to be overturned, due to the statutory stare decisis “[W]e do not call into question prior cases that relied on the Chevron framework. The holdings of those cases that specific agency actions are lawful … are still subject to statutory stare decisis despite our change in interpretive methodology.” Loper Bright (U.S. 06/28/2024).
  • For example, the en banc Suprema II (Fed. Cir. 08/10/15) ruling that Section 337 bars importation of goods that when imported do not infringe but after importation are used by the importer to directly infringe at the inducement of the goods’ seller, was based on Chevron deference to ITC interpretation of ambiguous statute.

Loper Bright’s Lesson for a Party Asserting “Indefiniteness” Under Nautilus

The Supreme Court emphasized that even the most impenetrable statute has a best meaning: “Courts instead under­stand that such statutes, no matter how impenetrable, do—in fact, must—have a single, best meaning. That is the whole point of having written statutes; ‘every statute’s meaning is fixed at the time of enactment.’” Loper Bright (U.S. 06/28/2024). The same applies to patent claims. Even ambiguous (indefinite) patent claims have a best meaning and therefore there is nothing inconsistent with a defendant both asserting a (best) construction for a claim term and also arguing that the claim term is “indefinite.”

Silence in a Specification Speaks Volumes

On several patentability issues, a patent specification’s failure to explain something often is treated as admitting that that something already was known to a skilled artisan. This includes Alice step two.

• Beteiro (Fed. Cir. 06/21/24) (“That only 15 lines out of a [98-column Spec.] are addressed to what Beteiro now insists is unconventional technology greatly undermines the plausibility of Beteiro’s allegations. The inventors do not in the specification purport to have advanced GPS or mobile device technology; they provide no description whatsoever of any hardware or software for equipping GPS on a mobile device. In context, this can only plausibly mean that the patent applicant drafted the specification understanding that a person of ordinary skill in the art knew what GPS was, how to include it on a mobile device, and that using it for the purposes disclosed in the patent was routine, conventional, and well-understood.”).

The More You Claim the More You Must Explain

This non-precedential decision is a routine application of full-scope enablement law to a claimed polymer, but it does pen a catchy slogan:

• In re The Pen (Fed. Cir. 06/12/24) (non-precedential) (aff’g rejection of ex parte application claims for lack of full-scope enablement where full scope of the claims encompassed “polymers with any “R” group and an “n” (number of conjugated repeating units) of more than 8, at least 50, or at least 1000,” but closest prior art achieved an “n” to only 8. “In short, the more you claim, the more you must explain.”).

Parallel Proceedings in District Court and PTAB

When a parallel PTAB proceeding is pending, a patent owner win in district court is at risk even, sometimes, after the Federal Circuit affirms a district court finding of infringement liability.

• “We apply a ‘yes/no’ analysis: is there, post-mandate, anything left to do other than execute the judgment? If the answer is ‘yes,’ then the case as a whole is not ‘final’ and is not, therefore, immune to the impact of subsequent developments with respect to the validity of the patents on which its infringement and invalidity claims are based.” Packet Intelligence (Fed. Cir. 05/02/24) (vacating judgment and damages award for patent owner based on Fed. Cir. affirmance of PTAB IPR unpatentability finding even though Fed. Cir.’s earlier mandate had affirmed liability and remanded on damages only).

But the successful patent challenger in an IPR cannot recover its attorney fees.

• Dragon II (Fed. Cir. 05/20/24) (2-1) (aff’g grant of attorney fees for work in litigation but denial of fees for work in successful IPR petition, initiated in response to district court action and leading to stay of the district court action, leading to cancellation of asserted claims, because IPRs are not “cases” under section 285, distinguishing PPG because here defendant voluntarily initiated IPR proceeding).

Value of an Octane Fitness Letter

When receiving a cease and desist letter or complaint asserting patent infringement, one should consider responding with an “Octane Fitness letter,” explaining at least one clear reason why the accused activity does not infringe any claim. The delivery of such a letter later can be a factor supporting an award of attorney fees against the patent owner (and be evidence of no inducement intent).

• Dragon II (Fed. Cir. 05/20/24) (aff’g award of fees where exceptionality based on “clear prosecution history disclaimer, which precluded a finding of infringement by any of the accused products; public availability of information demonstrating noninfringement by the accused products before Dragon filed the infringement suits; notice of noninfringement sent by Appellants to Dragon after the complaints were filed; and Dragon’s continued litigation after being put on notice of the objective baselessness of its infringement allegations.”).

Apportionment Mandate Muddied

Patent-infringement damages should not encompass the value of conventional or non-infringing acts, structures, or materials in the accused method or product. The Federal Circuit often applies this “apportionment” mandate strictly, but not always.

This decision concerns so-called “built-in apportionment,” where a patent owner argues that comparable existing license agreements set a royalty rate that was tied to the contribution of the infringed patent or comparable technology. Here, the allegedly comparable license agreements were three lump-sum portfolio licenses and the defendant, Google, argued that these did not account for apportionment to the single patent asserted against it. The panel disagreed, essentially treating apportionment as a talking point in the hypothetical negotiation rather than a strict mandate. A petition for rehearing en banc is likely.

• EcoFactor (Fed. Cir. 06/03/24) (2-1) (where single patent found infringed, aff’g denial of new trial and admission of patent-owner expert reliance on three existing patent-owner lump-sum portfolio licenses, in part because expert testified this difference would be offset in hypothetical negotiation by those earlier licenses being settlements putting downward pressure on royalty rate).