Author: FCBJ

Volume 31 Number 1 | March 2022
The Federal Circuit Bar Journal

Issue: March 2022
Patents, the Private Property Ideal, and the Public Interest in a Seamless Global Public Health Regime Hannibal Travis
The Dilemma of Applying State Sovereign Immunity in Inter Partes Review Proceedings Boyang Zhang
You Can’t Win the Football Game Without Safety: Why the Lack of Safeguards in Initial Trademark Application Review Results in Abuse Lindsay R. Swinson
Help or Get Out of the Way: How the COVID-19 Pandemic Highlights the Existing Tension Between the Trust Doctrine and Tribal Self-Determination Marcus D. Ireland

Capizzano v. Secretary of Health and Human Services
440 F.3d 1317 (Fed. Cir. 2006)
Authored by Sean Rowland

Statement of Facts: Appellee Rose Capizzano received her second of three hepatitis B vaccine injections on May 3, 1998. Within hours of receiving this vaccine injection, Ms. Capizzano developed a rash on her abdomen. Over the next few days, Ms. Capizzano also developed stiff and painful joints, symptoms of rheumatoid arthritis (“RA”). Ms. Capizzano’s physician decided that, because some vaccine recipients that have been injured by a prior dose of hepatitis B vaccine have developed worsening symptoms after receiving an additional dose, Ms. Capizzano should not receive her third hepatitis B vaccination. When this case reached the Federal Circuit in 2006, Ms. Capizzano continued to suffer from RA, and she took daily medication to keep the pain, swelling, and stiffness under control. The government does not dispute that Ms. Capizzano is diagnosed with rheumatoid arthritis. Ms. Capizzano seeks compensation for her injuries under the Vaccine Act.

Enacted in 1986, Subchapter XIX of Chapter 6A, Title 42, of the United States Code established the National Vaccine Program within the Department of Health and Human Services (“HHS”). The Vaccine Act created the National Vaccine Injury Compensation Program and established that “compensation may be paid for a vaccine-related injury or death.” 42 U.S.C. § 300aa–10(a). The injured person seeking compensation must establish by a preponderance of the evidence that the injury or death was caused by a vaccine. Id. § 300aa–11(c)(1), –13(a)(1). There are two ways to establish causation. First, a petitioner may demonstrate that her injury is one that is listed in the Vaccine Injury Table, that the injury occurred within the time required by the Table, and that the injury meets the requirements of section 300aa–14(a). Causation is presumed in such a case. Second, if the injury is not listed in the Vaccine Injury Table (“off-Table injury”) the petitioner may prove causation in fact. This must be proved by a preponderance of the evidence.

Procedural History: Ms. Capizzano filed her petition in the Court of Federal Claims under the Vaccine Act on December 15, 2000, seeking compensation for her off-Table injury of rheumatoid arthritis. After Ms. Capizzano filed the petition, the court clerk forwarded the petition to the chief special master who assigned the case to himself. In June of 2003, the chief special master held a hearing. On June 8, 2004, the chief special master ruled that Ms. Capizzano had failed to establish that the hepatitis B vaccination caused her rheumatoid arthritis. The chief special master first concluded that hepatitis B vaccination can cause rheumatoid arthritis. The chief special master then addressed whether Ms. Capizzano’s vaccination caused her rheumatoid arthritis. The chief special master approached this causality question with the following context of recent Federal Circuit caselaw.

On March 23, 2001, the chief special master created a five-prong analytical framework for determining whether a petitioner in an off-Table injury case had met his or her burden of establishing causation-in-fact. The five prongs of that test are: (1) that it is medically plausible for a component of the vaccine to cause the injury alleged; (2) that the association between the vaccine and the alleged injury is reported by peer-reviewed medical literature; (3) that the vaccine suffered an injury which is medically accepted as a possible reaction to the vaccine; (4) that the injury occurred within a medically accepted time period; and (5) that alternate causes were considered but otherwise eliminated. Stevens v. Sec’y of Health & Human Services., No. 99-594V, 2001 U.S. Claims LEXIS 67, *158 (Fed. Cl. Spec. Mstr. Mar. 30, 2001).

On September 30, 2003, the Court of Federal Claims issued its decision in Althen v. Secretary of Health & Human Services, 58 Fed. Cl. 270 (2003) (“Althen II”) in which it concluded that the Stevens framework was contrary to the Vaccine Act and Federal Circuit precedent. 58 Fed. Cl. At 281–3. The Federal Circuit affirmed Althen II on July 29, 2005. Althen v. Secretary of Health & Human Services, 418 F.3d 1274 (Fed. Cir. 2005) (“Althen III”). Althen III was decided after briefing in Ms. Capizzano’s case was completed but before the ultimate decision was made in 2006. This is relevant to Ms. Capizzano’s case because it means that the chief special master made his decision in her case with only Stevens and Althen II to look towards. The Federal Circuit in Althen III affirmed the Court of Federal Claims rejection of the Stevens test. In its stead, Althen III created a three-part test for determining causation-in-fact in off-Table Vaccine Act cases. The three-part Althen III test requires that the petitioner show by a preponderance of evidence that the vaccination brought about the injury “by providing: 1) a medical theory causally connecting the vaccination and the injury; 2) a logical sequence of cause and effect showing that the vaccination was the reason for the injury; and 3) a showing of a proximate temporal relationship between vaccination and injury.” Althen III at 1278.

The chief special master decided Ms. Capizzano’s case under both the five-prong Stevens framework and under a new four-prong approach that he designed in an attempt to satisfy Althen II. The chief special master’s new four-prong test required Ms. Capizzano to demonstrate one of four types of evidence to satisfy the “logical sequence of cause and effect” requirement established in Althen II. The four types of evidence were: epidemiologic studies, rechallenge, presence of pathological markers or genetic predisposition, or general acceptance in the scientific and medical communities that the vaccination could cause the injury. The chief special master concluded that Ms. Capizzano had failed to prove that the hepatitis B vaccine caused her rheumatoid arthritis. To reach this decision the chief special master rejected the diagnoses of Ms. Capizzano’s treating physicians concluding that their reasoning was based primarily on the temporal relationship between the vaccination and the onset of rheumatoid arthritis. Capizzano I, 2004 U.S. Claims LEXIS 149, at *88.

On December 7, 2004 the Court of Federal Claims rendered its decision on Ms. Capizzano’s appeal of the chief special master’s opinion. Capizzano v. Secretary of Health & Human Services, 63 Fed. Cl. 227 (2004) (“Capizzano II”). The Court of Federal Claims affirmed both the chief special master’s findings of fact and legal conclusions. Id. The court determined that the chief special master’s four-prong test was not contrary to law and that the factual findings were not arbitrary or capricious. Ms. Capizzano timely appealed the Court of Federal Claims’ decision to the Federal Circuit.

Questions Presented: Does the four-prong test for compensation for an off-Table injury employed by the chief special master in Capizzano I meet the requirements set forth under Althen III?

Holdings: No, it does not. The chief special master impermissibly raised the burden of proof placed upon a petitioner in an off-Table injury case by restricting the ways that a petitioner can prove a case. The proper analysis is whether a petitioner in an off-Table injury case establishes a logical sequence of cause and effect by a preponderance of the evidence. The decision of the Court of Federal Claims affirming the decision of the chief special master is vacated and the case is remanded to determine if Ms. Capizzano has proven causation by a preponderance of the evidence.

Reasoning: The Federal Circuit found it to be clear that the chief special master and the Court of Federal Claims denied Ms. Capizzano’s claim because they essentially determined that she had failed to meet Althen III’s second prong by not demonstrating “a logical sequence of cause and effect showing that the vaccination was the reason for the injury.” Althen III, 418 F.3d at 1278. The Federal Circuit emphasized that “to require identification and proof of specific biological mechanisms would be inconsistent with the purpose and nature of the vaccine compensation program.” Id. at 1280. “The purpose of the Vaccine Act’s preponderance standard is to allow the finding of causation in a field bereft of complete and direct proof of how vaccines affect the human body.” Id. (emphasis added) Pursuant to this, the Federal Circuit concluded that the chief special master’s four-prong test was contrary to Althen III. “A logical sequence of cause and effect” required by Althen III means that the claimant’s theory of cause and effect must be logical. The chief special master erred by not considering the opinions of Ms. Capizzano’s treating physicians. Any of the physicians’ reliance on the temporal proximity of Ms. Capizzano’s injuries to the administration of the vaccines is not disqualifying.

A claimant needs only to show that it is more likely than not that their injury was caused by the vaccine. The fact that there is a possibility that the vaccination did not cause Ms. Capizzano’s rheumatoid arthritis, which appeared immediately after she received her vaccination, “does not prevent a finding that it is more likely than not that the vaccine caused the RA.” Capizzano, 440 F.3d at 1326–1327.The petitioner need only establish a logical sequence of cause and effect by a preponderance of the evidence.

 

DSS Technology Management, Inc., v. Apple, Inc.
2018 U.S. App. LEXIS 7438 (Fed. Cir. 2018)
Authored by Emilee Woodfin

Statement of Facts: Appellant DSS Technology Management, Inc. (“DSS”) owned Patent No. 6,128,290 (“the ’290 patent”). Issued in 2000, the ’290 patent is directed to cover a wireless communication network between a single host device to multiple peripheral devices, allowing both the host and peripherals to send and receive data.

The design outlined in the ’290 patent allows for communications between a host server, typically an individual’s personal digital assistant (PDA) device, and a number of peripheral devices, typically personal electronic accessories (PEA). The goal of the technology is not only for the devices to wirelessly exchange information, but for the ancillary PEAs to only consume power when they are in use with the host server. This is achieved by assigning a subset of time slots to each peripheral unit in which it will receive or transmit data to the server, and during the timeslots when a peripheral PEA unit is neither receiving nor transmitting, its reception and transmission circuitry can be powered down. Thus, the device is only using power when it is cycling through the timeslots of low duty radio frequency (RF) bursts, during actual transmission with the host server.

In dispute is a single claim limitation recited in claim 1 of the ’290 patent which pertains to the “low duty cycle RF bursts,” requiring both the server and peripheral units to comprise transmitters that are able to cycle through low duty burses. This was the only dispute on appeal.

Procedural History: On December 4, 2015, appellee, Apple, Inc. (“Apple”), filed two IPR petitions regarding the ’290 patent. The first petition challenged the validity of claims 1-4 of the ’290 patent and the second challenged the validity of claims 6, 7, 9, and 10. The board conducted two IPRs to determine whether claims 1-4 were obvious, and to determine the obviousness of claims 6 and 7 over U.S. Patent No. 5,696,903 to Mahany. DSS disclaimed 6 and 7 of the ’290 patent.

The PTAB relied on two pieces of prior art in the proceedings: U.S. Patent No. 5,241,542 to Natarajan et al. (“Natarajan”), and U.S. Patent No. 4,887,266 to Neve et al. (“Neve”). The PTAB concluded that Natarajan and Neve rendered all the challenged claims of the ’290 patent obvious. The Federal Circuit only found Natarajan relevant to the appeal, and thus applied the obviousness inquiry only utilizing Natarajan.

The PTAB issued a final written decision on June 17, 2016, finding that all remaining challenged claims, 1-4, 9, and 10, were invalid as obvious over Natarajan in view of Neve. DSS conceded all but one limitation in each of these claims as being disclosed in Natarajan and Neve, but disputed that either formerly issued patent covered the ’290 patent’s limitation regarding the low duty cycle RF bursts. The PTAB found that the modification made by DSS to previously patented material in Natarajan was an obvious modification, because DSS simply applied the low duty cycle RF burst technology to the host server device and the peripheral devices, whereas Natarajan only applied such technology to the host server’s incoming and outgoing capabilities.

The Federal Circuit found that the board did not provide a sufficient explanation for its conclusions and reversed.

Questions Presented: The question was whether the PTAB correctly deemed obvious the low duty use RF cycles claimed in the ’290 patent in light of Natarajan. “Obviousness is a question of law based on underlying findings of fact.” In re Jubin, 561 F.3d 1351, 1355 (Fed. Cir. 2009).

Holdings: No, the PTAB did not correctly deem the ’290 patent claim obvious over Natarajan by because the PTAB failed to provide sufficient explanation for its obviousness finding. There was not adequate evidence for the Federal Circuit to either uphold the PTAB finding, or determine obviousness itself.

Reasoning: In critiquing the PTAB’s insufficient analysis, the Federal Circuit first considered the Arendi “common sense” standard in its obviousness inquiry, noting that three caveats to that standard apply here. Arendi S.A.R.L. v Apple Inc., 832 F.3d 1355, 1361 (Fed. Cir. 2016).

First, common sense is usually used to show a known motivation to combine, not to furnish a missing claim limitation. Second, if common sense is used to fill in a missing limitation, it can only be when the limitation in question was “unusually simple” and the technology particularly straight forward. Finally, whether to supply a motivation to combine, or for a missing limitation, “common sense” cannot be a “wholesale substitute for reasoned analysis and evidentiary support.” The PTAB relied on an “ordinary creativity” standard, which the court found to be no different from the “common sense” standard, adding that an inquiry to supply a missing claim limitation based on either “common sense” or “ordinary creativity” must be more searching than the one the PTAB engaged in.

With this framework, the court found that the PTAB did not satisfy the Arendi standard.

Next, the court determined that the PTAB made insufficient citations to the record in finding that a person of ordinary skill would have thought to modify Natarajan the way that DSS did. The PTAB also erroneously relied on Apple’s expert, Dr. Hu, because it never cited directly to her testimony, and her conclusory findings were insufficient to support the PTAB finding.

The court stated that although the transmission hardware in DSS and Natarajan were similar, it cannot be concluded that the additional claim made in the ’290 patent of low duty cycle RF bursts could be assumed to have been the natural step in improving upon Natarajan without additional, reasons analysis. Ultimately, the court found that the court could not itself determine the question of obviousness based on Natarajan, thus reversed.

Dissenting Opinion: Judge Newman dissented, finding first that the PTAB inquiry was not deficient and second that, even if the PTAB conclusion was erroneous, the proper appellate response was to remand for additional investigation or explanation. Judge Newman asserted that the PTAB’s record was heavy with reference to testimony, arguments, and briefing, such that its conclusion was adequately supported and explained. Judge Newman found that the panel majority failed to recognize the ample evidence cited by the PTAB. Specifically, Judge Newman found Dr. Hu’s testimony to be far more persuasive and that Dr. Hu’s conclusion that the disputed claim in the ’290 patent is the “natural result of Natarajan’s communication protocol” was sufficiently explained.

Further, Judge Newman disagreed with the remedy as merely reversing was rendering a final judgment for DSS where a final conclusion of obviousness was never reached.

 

Romag Fasteners, Inc. v. Fossil, Inc.
866 F.3d 1330 (Fed. Cir. 2017)
Authored by Amelia Spencer

Statement of Facts: Romag Fasteners owned U.S. Patent No. 5,722,126 (“the ’126 patent”) for magnetic snap fasteners, which it sold under its registered trademark, ROMAG, U.S. trademark Reg. No. 2,095,367 (“the ’367 trademark”). Romag licensed the patent and trademark to a Chinese manufacturer, which supplied the fasteners for use in handbags manufactured and distributed by a group of retailers (collectively referred to as “Fossil”). In 2010, a group of Fossil handbags arrived containing what appeared to be counterfeit ROMAG magnetic snaps.

Procedural History: Romag filed suit in the U.S. District Court for the District of Connecticut for patent infringement, trademark infringement, and violation of the Connecticut Unfair Trade Practices Act (“CUTPA”). A jury found Fossil liable for patent and trademark infringement and unfair trade practices under CUTPA. Fossil appealed the patent and trademark infringement verdicts to the Federal Circuit and the court affirmed both judgments of liability. See Romag Fasteners, Inc. v. Fossil, Inc., Nos. 2014-1896, 2014-1897, 2017 WL 1906904 (Fed. Cir. May 3, 2017) (“Romag II”).

Following the trial, Romag requested attorney’s fees under the Patent Act, 35 U.S.C. § 285, Lanham Act, 15 U.S.C. § 1117(a), and CUTPA. The district court granted the request under the Patent Act and CUTPA, but not under the Lanham Act. Fossil appealed the award of fees and Romag cross appealed the district court’s denial of fees under the Lanham Act. The Federal Circuit took jurisdiction of both appeals pursuant to 28 U.S.C. § 1295(a)(1).

Questions Presented: First, did the district court err in deciding that the Octane standard applies only to the Patent Act and not awarding attorney’s fees to Romag under the Lanham Act? Second, did the district court abuse its discretion in awarding attorney’s fees to Romag under the Patent Act?

Holdings: First, yes. The district court erred in holding the Octane standard only applies to the Patent Act. The Octane standard applies equally to the Patent Act and the Lanham Act. However, the Federal Circuit remanded to the lower court to determine whether to award attorney’s fees. Second, yes. The district court made several errors in awarding attorney’s fees to Romag under the Patent Act. The Federal Circuit remanded to the lower court to consider the issue free of the errors identified.

Reasoning: The Patent Act and the Lanham Act both provide that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285; 15 U.S.C. § 1117(a). There are two competing standards at issue in the present case. In 2012, the Second Circuit held in Louis Vuitton Malletier S.A. v. LY USA, Inc., that the Lanham Act “allows recovery of a reasonable attorney’s fee only on evidence of fraud or bad faith.” 676 F.3d 83, 111 (2d Cir. 2012). In a 2014 case involving the Patent Act, the Supreme Court held in Octane Fitness, LLC v. ICON Health & Fitness, Inc., that “an ‘exceptional’ case is simply one that stands out from the others with respect to the substantive strength of a party’s litigating position . . . or the unreasonable manner in which the case was litigated . . . considering the totality of the circumstances.” 134 S. Ct. 1749, 1756 (2014).

In the present case, the district court decided that the standard announced in Octane was more lenient than the standard announced in Louis Vuitton and held that Fossil had not acted fraudulently or in bad faith, as is required by the Louis Vuitton standard. Nevertheless, the Louis Vuitton standard was announced two years prior to the Octane standard and the Second Circuit has not considered a case on this since the Supreme Court issued the holding in Octane. Since Octane, the Third, Fourth, Fifth, Sixth, and Ninth Circuits have all held that the Supreme Court’s definition of “exceptional” in Octane applied not only to the fee provision in the Patent Act, but also to the fee provision in the Lanham Act. Therefore, in light of Octane, the court held that the Lanham Act should be read as having the same standard for awarding attorney’s fees as the Patent Act.

Fossil attempted to argue that even if the lower court considered the question of attorney’s fees under the Octane standard, it would have chosen not to award them to Romag. However, the court held that this issue was best left to the district court upon remand.

Considering attorney’s fees, the court looked to the Octane standard. Under Octane, the court can award attorney’s fees under the Patent Act if a party’s arguments are objectively unreasonable or the case is litigated in bad faith. Fossil initially presented invalidity defenses of anticipation and obviousness to Romag’s patent infringement suit. The district court decided that Fossil did not abandon these defenses until after the trial, and considered this a key factor in awarding attorney’s fees. However, the record established that Fossil withdrew those arguments before the trial, so the district court clearly erred in determining that Fossil did not formally withdraw those defenses until after the trial.

Fossil additionally presented the invalidity defense of indefiniteness in response to Romag’s patent infringement suit, arguing that the ’126 patent’s claim term “rotatable” was indefinite because the patent did not specify the degree of force necessary to cause rotation. The district court determined the term “rotatable” should be construed to mean capable of being rotated and granted summary judgment to Romag. The district court also determined that, based on the summary judgment record, Fossil’s argument was meritless and raised for improper purposes. However, the record merely states that a party moving for summary judgment “runs the risk that if it makes a woefully inadequate showing, not only might its own motion for summary judgment be denied, the court may grant summary judgment sua sponte against the movant.” This is simply a comment on the risks a party takes when moving for summary judgment and is not a comment directed specifically at Fossil’s argument. Summary judgment was not granted due to frivolity of Fossil’s argument, but rather because the definition of the term “rotatable” precluded the indefiniteness argument altogether. Therefore, the district court erred in holding that Fossil’s indefiniteness defense bordered on frivolous.

Earlier in the litigation, the district court sanctioned Romag. Romag knew about the infringement in May of 2010 but did not initiate the suit until November 2010. The district court concluded the reason for this delay was to take advantage of the holiday season and exercise as much leverage as possible over the defendants. Based upon this, the district court found the delay to be unreasonable. Additionally, Romag moved for a temporary restraining order (TRO) based upon reasoning the district court found inadequate and misleading. As a result, the district court sanctioned Romag for acting in bad faith. During the proceedings for attorney’s fees, the district court decided not to further sanction Romag by declining to award attorney’s fees. However, in deciding whether to award attorney’s fees, the court must take into consideration the totality of the circumstances. This includes Romag’s earlier misconduct during litigation. The Federal Circuit found that the district court erred in concluding that the failure to award attorney’s fees amounts to double-sanctioning Romag.

In response to Romag’s patent and trademark allegations, Fossil presented a non-infringement defense, alleging that the magnetic snaps were genuine ROMAG snaps. Romag moved for judgment on the matter as a matter of law, but the district court denied the motion and allowed the jury to decide the issue. During the attorney’s fees proceedings, the district court held that its denial of the motion for judgment as a matter of law precluded a finding that Fossil’s non-infringement argument was so frivolous as to award attorney’s fees. Denying judgment as a matter of law does not preclude a finding that Fossil’s non-infringement argument was frivolous, but the district court also found that Fossil’s argument was not entirely groundless. Although Fossil’s argument may have been weak, it did not rise to the level of being objectively unreasonable.

The district court awarded Romag attorney’s fees in connection to Fossil’s argument for indefiniteness. Due to the errors in the district court’s findings, the supplemental fees awarded for the application for attorney’s fees were also set aside.

Dissenting Opinion: Judge Newman concurred in part and dissented in part. Judge Newman agreed that the decision that the Octane standard applies to both the Patent Act and the Lanham Act is correct and remand is appropriate to determine whether attorney fees are warranted for the trademark infringement.

Judge Newman would have found that the district court did not abuse its discretion in awarding attorney fees pertaining to the patent issues. Fossil pursued its anticipation and obviousness arguments until the night before trial. Fossil also did not withdraw its invalidity defenses or counterclaims until after the trial had begun, when it withdrew them upon Romag’s motion for judgment as a matter of law. The district court reasonably saw the failure to withdraw these claims in a timely manner as too late to negate consideration for attorney fees. The majority is incorrect in stating that the invalidity defenses were withdrawn before the trial.

Judge Newman also believed that the majority places too much weight on the definition of an “exceptional” case provided in Octane and ignores previous guidance from the Supreme Court that the district court is in the best position to determine whether a case is exceptional. Abuse of discretion is an extremely deferential standard of review. The court should exercise restraint in substituting its own judgment for that of the district court judge because the trial court is in the best position to evaluate the conduct of the parties. Romag incurred significant expenditures preparing its patent validity argument and this could have been avoided if Fossil had been more proactive in withdrawing its defense. Therefore, the district court did not abuse its discretion in awarding attorney fees to Romag.

 

Finjan, Inc. v. Blue Coat Systems, Inc.
879 F.3d 1299 (Fed. Cir. 2018)
Authored by Lee Seitz

Statement of Facts: Finjan, Inc. sued Blue Coat Systems, Inc. for infringement of multiple patents concerning malware identification and protection. After trial, the jury found that Blue Coat infringed on four of Finjan’s patents and awarded Finjan $39.5 million. Following a bench trial, the District Court for the Northern District of California found that U.S. Patent No. 6,154,844 (“the ’844 patent”) is directed to patent-eligible subject matter under 35 U.S.C. § 284.

Procedural History: The district court denied Blue Coat’s motions for judgment as a matter of law and a new trial, holding that Finjan had provided substantial evidence to support each finding of infringement and the damages award. Bloat Coat appealed to the Federal Circuit.

Questions Presented: First, whether the district court erred in finding that the ’844 patent’s subject matter was eligible for a patent. Second, whether Blue Coat infringed Finjan’s ’844 patent, U.S. Patent No. 7,418, 731 (“the ’731 patent”), and U.S. Patent No. 6,965,968 (“the ’968 patent”). Third, whether the damages were adequate to compensate for the infringement, where the damages apportioned equal a “reasonable royalty [Finjan] would have received through arms-length bargaining.” 879 F.3d at 1309 (citing Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009).

Holdings: First, no. No error exists in the district court’s subject matter eligibility determination as to the ’844 patent. Second, yes. Substantial evidence supports the jury’s finding of infringement of the ’844 and ’731 patents. However, the district court should have granted judgment as a matter of law motion for the ’968 patent. Third, the awards for the ’731 and ’633 patents were affirmed but the award for the ’968 patent was vacated. The award for the ’844 patent is remanded to the district court for further consideration.

Reasoning: Whether the subject matter of Patent ’844 was patent eligible depends on the two-step framework in Alice Corp. v. CLS Bank International, 134 S. Ct. 2347, 2355 (2014) (“Alice”). For the first step, the court must determine whether the claims are directed to an abstract idea. Id. Because of the result in step one, the court did not proceed to step two of Alice. The court relied on precedent to determine that both general virus screening and virus screening on an intermediate computer are abstract ideas for purposes of patentability, however, the court noted that the claimed method in the ’844 patent does more than that. The ’844 patent includes a behavior-based scan instead of a conventional code-matching scan, and this characteristic represents an improvement in computer functionality. Additionally, the ’844 patent’s approach enables more flexible and nuanced virus filtering. The asserted claims are directed to a non-abstract improvement in computer functionality.

Even assuming the claims are directed to a new idea, Blue Coat argues that the ideas are abstract because Finjan did not sufficiently describe how to implement the idea. Blue Coat cites several cases in support of its arguments, and the court states that these cases stand for the principle that “a result, even an innovative result, is not itself patentable.” 879 F.3d at 1305. In conclusion, the court finds that the claims recite more than a mere result; instead, the ’844 patent represents a non-abstract idea.

Next, the court discusses the jury finding that Blue Coat’s products infringed on the ’844, ’731, and ’968 patents. Blue Coat argues that its product does not infringe because the ’844 patent involves a server-side product evaluating content and linking a security profile to a downloadable before publishing it to the Internet. Alternatively, Blue Coat’s product uses a cloud-based service that evaluates content. The court finds that Blue Coat’s argument is a claim construction issue that it cannot raise for the first time in a post-trial motion. Because of this and the construction presented to the jury, the ’844 patent was supported by substantial evidence.

Blue Coat argues that its product does not infringe on the ’731 patent. The ’731 patent protects a private intranet from malicious software embedded in webpages on the public Internet. The product creates security profiles that comprise a list of computer commands that the file is programmed to perform. Blue Coat argues that its product did not infringe because its product does not contain the requisite list of computer commands. However, below, Blue Coat did not request a construction of the list of commands term. Therefore, the court applied the ordinary meaning of the term. At trial, Finjan presented expert testimony that Blue Coat’s product contained a list of computer commands. The court found that the claim language simply requires a security profile to include a list of computer commands that a corresponding one of the incoming files is programmed to perform. Substantial evidence supports the jury’s finding that the list of commands limitation is satisfied by the certain integers in Blue Coat’s product that Finjan presented as evidence.

Blue Coat argues that its product does not infringe on the ’968 patent. This patent is a program that determines whether a user can access a piece of content based on a policy index; the program saves the results of those policy determination in the policy index. Relying on testimony from Finjan’s expert, the court found that Finjan did not prove that the Blue Coat’s product saves final allowability determinations. Therefore, the jury’s finding that the ’968 patent was infringed is not supported by substantial evidence and Blue Coat was entitled to judgment as a matter of law.

The court noted that Finjan failed to apportion damages to the infringing functionality of the ’844 patent for two reasons. First, Finjan found that the Blue Coat product’s component that performs the infringing method accounts for 4% of that product’s entire web traffic—which is 75 million users. Finjan focused on that specific component because Finjan claimed it is the “smallest, identifiable technical component” tied to the footprint of the invention. 879 F.3d at 1311. However, the component also performs non-infringing features, so further apportionment for purposes of damages is required. Second, once Finjan determined the number of users, Finjan then multiplied that number by a rate of $8 per user, but no evidence exists to support this rate. Finjan’s rationale was that the price is Finjan’s starting price during negotiations and that the this was the rate for damages in previous litigation, but Finjan’s reasons fail to present a case to support the jury’s verdict.

For damages concerning the ’731 and ’633 patents, Finjan’s expert used a Blue Coat diagram that breaks the Blue Coat product into twenty-four parts. Finjan’s expert found that one function infringed the ’633 patent and three functions infringed the ’731 patent. The apportionment is then 1/24th and 3/24, respectively. Blue Coat argues that each of the twenty-four boxes should not be treated as equal; however, the expert’s reliance on Blue Coat’s own diagram and testimony from a Blue Coat engineer for the conclusion that the boxes are equal is substantial evidence.

 

O’Farrell v. Department of Defense
882 F.3d 1080 (Fed. Cir. 2018)
Authored by Christopher Paul

Statement of Facts: Petitioner Michael J. O’Farrell (hereinafter “O’Farrell”) has served in the U.S. Army for 28 years and was transferred to the U.S. Army Reserve Retired List in October 2013. During O’Farrell’s service in the Army, on September 11, 2012, President Barack Obama continued, for one year, the national emergency regarding the terrorist attacks of September 11, 2001.

On April 17, 2013, O’Farrell received an order from the U.S. Army to replace a civilian attorney employed with the U.S. Navy’s Naval Surface Warfare Center (“NSWC”). The Order called him “to active duty for operational support under provision of [10 U.S.C. §] 12301(d),” O’Farrell v. Department of Defense, 882 F.3d 1080, 1082, which was to include “serv[ic]e as[] legal counsel.” Id.

O’Farrell served for 162 days until September 30, 2013. By August 26, O’Farrell had used his fifteen days of military leave pursuant to § 6323(a)(1) and most of his accrued annual leave and advanced leave. O’Farrell requested an additional twenty-two days of leave pursuant to § 6323(b), which entitles an employee of the Reserves who “performs full-time military service as a result of a call or order to active duty in support of a contingency operation as defined in [10 U.S.C. §] 101(a)(13) [2012] . . . ” § 6323(b), to avoid being placed on Military Leave Without Pay for the rest of his active duty service, even though his order did not specifically cite any of the statutory provisions listed in § 101(a)(13) that qualify for support for a contingency operation. Instead, O’Farrell contended in his request that he was “serving under ‘any other provision of law . . . during a national emergency declared by the President or Congress.” 10 U.S.C. § 101(a)(13).

The Defense Logistics Agency (“DLA”) denied O’Farrell’s request, because the order did not state that O’Farrell was under contingency orders. O’Farrell then submitted a request for leave at the Office of Personnel Management (“OPM”). DLA denied this request, stating that O’Farrell’s active duty is not in support of a contingency operation. The Merit Systems Protection Board (“MSPB”) issued a decision denying O’Farrell’s claim that the Government failed to grant him his leave under the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”) and dismissed his appeal.

Procedural History: DLA denied O’Farrell’s initial request for additional leave via email. O’Farrell submitted a request to OPM which was also denied. O’Farrell appealed to the MSPB, where an administrative judge issued an initial decision denying his claim and dismissing his appeal. The full MSPB issued an order stating that the two MSPB members could not agree on the disposition of the petition for review, so the initial decision was to become final. O’Farrell appealed to the Federal Circuit, which reversed the MSPB’s decision.

Questions Presented: (1) Whether the MSPB abused its discretion in denying O’Farrell’s request for twenty-two days of additional military leave; (2) Whether the provision of law pursuant to which O’Farrell was called to active duty qualifies as a “contingency operation,” as defined by § 101(a)(13); (3) Whether O’Farrell’s active duty qualifies as “support” of such contingency operation; and (4) Whether O’Farrell’s request for additional leave needed to identify a specific contingency operation.

Holdings: Judge Wallach, joined by Judges Dyk and Moore, reversed the MSPB’s decision to deny O’Farrell’s request for additional military leave by finding:

(1) The MSBP abused its discretion by basing its decision on an erroneous interpretation of § 6323(b).

(2) Any military operation that results in service members being called to active duty under any provision of law during a declared national emergency qualifies as a “contingency operation” under § 101(a)(13). The armed forces are engaged in a military operation in Afghanistan in conjunction with a national emergency declared by the President.

(3) Indirect support of a contingency operation qualifies as “support.” O’Farrell replacing a NSWC attorney who directly supported the contingency operation through his deployment to Afghanistan, along with O’Farrell providing assistance to the Navy’s warfighting capabilities, and the Order calling O’Farrell to active duty, states that he will provide “operational support, all show that O’Farrell’s activities qualify as “support.”

(4) The service member’s request need not identify a specific contingency operation or use any particular language or take any particular form. The relevant inquiry is not whether O’Farrell identified a specific contingency operation that his active duty supported, but whether he was called to active duty in support of a contingency operation.

Reasoning: The Federal Circuit held that application of an erroneous interpretation of a statute qualified as an abuse of discretion, allowing them to reverse the MSPB’s decision.

The MSPB determined that § 6323(b) required that “a specific contingency operation should be identified in military orders when an employee is activated under [§] 12301(d) in order for the employee to be entitled to [twenty-two] days of additional military leave under [§] 6323(b).” 882 F.3d. 1080, 1083.

The court read the plain language of § 101(a)(13), which defines “contingency operation” for § 6323(b) purposes as needing to be a “military operation” and contains a list of qualifying military operations, and determined that the list is not exhaustive, as § 101(a)(13)(B) includes “or any other provision of law . . . during a national emergency declared by the President.” § 101(a)(13)(B) (emphasis added). Therefore, a provision of law not being included in the list does not preclude it from being counted as a contingency operation.

Since the statute does not specify what specific types of support qualify, the court then determined from the plain language of § 6323(b) that the word “support” should be broadly read in its “ordinary, contemporary, common meaning,” Sandifer v. U.S. Steep Corp., 134 S. Ct. 870, 876 (2014) to encompass acts that provide “assistance or backing.” Support, The Oxford English Dictionary (3d ed. 2012).

The court then considered the overall statutory scheme of Title 5 of the U.S. Code. The subpart involving Pay Allowances stipulates that service members must have provided direct support for a contingency operation to qualify for certain benefits. Since Congress required direct support in this provision and failed to include the direct requirement in § 6323, the court determined that Congress acted “intentionally and purposely in the disparate inclusion or exclusion.” See Sebelius v. Cloer, 569 U.S. 369, 378 (2013).

The court reasoned that the regulatory scheme, particularly 5 C.F.R. § 353.208 suggests that a service member need not identify a specific contingency operation when requesting additional leave. That regulation states that a service member “must be permitted, upon request, to use any . . . military leave under . . . 5 U.S.C. [§] 6323.” 5 C.F.R. § 353.208 (2016) (emphasis added).

Finally, the court reasoned that the legislative history of § 6323 and § 101(a)(13) suggests that Congress intended to provide additional leave for service members in a broad fashion. Congress continually amended these provisions to provide for more and more service members to receive more compensation. In doing this, Congress was motivated by concerns of substantial hardship being faced by certain excluded service members, see, e.g., S. Rep. No. 90-1443, at 4289 (1968); 149 Cong. Rec. S12,582 (daily ed. Oct. 15, 2003); Pub L. No. 102-190, § 555(a)(1).

 

In re Hodges
882 F.3d 1107 (Fed. Cir. 2018)
Authored by Bennett Parker

Statement of Facts: Appellant Kenneth Andrew Hodges applied for a patent for a valve that drains contaminants, condensation, and other fluids that adversely affect the efficiency and function of a pressurized system (“the ’222 application”). The patent examiner held that two prior art references, U.S. Patent No. 5,532,241 to Rasmussen (“Rasmussen”) and U.S. Patent No. 3,262,464 to Frantz (“Frantz”), anticipated Hodges’s claims under 35 U.S.C. § 102(b) and that the Rasmussen and Frantz patents collectively rendered Hodges’s claims as obvious under 35 U.S.C. § 103.

Hodges’s claimed valve included a single “valve body,” downstream of which is an inlet seat and an outlet seat, two valves, and a sensor for measuring fluid pressure. Hodges’s application explains that “[t]he sensor generates a ‘signal’ 42 reflective of the fluid pressure in the chamber between the valves and transmits the signal to . . . a pressure gauge. The signal can then be compared to a predetermined limit to generate a control signal, which, in turn, can be used to control or adjust one or more of the two valves to drain fluid as appropriate. In re Hodges, 882 F.3d at 1110 (Fed. Cir. 2018) (internal citation omitted).

Rasmussen disclosed a “condensate removal device” that senses pressure levels within a system and purges condensate in response to high condensate levels. Id. A sensor within the device measures pressure changes corresponding to condensate levels in a reservoir. When such high levels are indicated, it provides a signal that causes a plunger to move away from a valve seat, thereby opening a drain path for the condensate. A sensor within the device measures pressure changes corresponding to condensate levels in a reservoir.

Frantz disclosed “valves for draining condensate from pressurized reservoirs…one valve automatic and the other, manual.” Id. at 1111. The automatic valve is activated by fluid or air pressure and a second element and seat enable it to limit the duration of draining. The combination of a piston stem and a piston head sense pressure which initiates a mechanical response; the release of a valve.

The ’222 application contains 20 claims, but the parties agree that the claims at issue on appeal are whether Rasmussen and Frantz anticipate the ’222 application. The United States Patent and Trademark Office Patent and Trial Appeal Board (the “PTAB”) affirmed the examiner’s findings that (1) Rasmussen’s unlabeled valve containing the inlet seat is properly considered a part of the drain valve body and was inherently disclosed; and (2) Frantz’s piston stem and head combination generates a signal in the form of mechanical force, similar to that of Hodges’s system. See id. at 1111–12, 14.

Procedural History: The patent examiner rejected the ’222 application under 35 U.S.C. § § 102(b) and 103 because it was both anticipated and obvious in view of two art references: Rasmussen and Frantz. Hodges appealed to the PTAB, which affirmed the examiner’s rejection of Hodges’s claims. Hodges appealed to the Federal Circuit.

Questions Presented: First, whether Hodges’s claims would have been anticipated in view of the cited references, Rasmussen and Frantz. Second, whether Hodges’s claims would have been obvious in view of the cited references, Rasmussen and Frantz.

Holdings: Reviewing both questions of law de novo, the Federal Circuit reversed the PTAB’s patentability determinations as to Rasmussen and vacated the PTAB’s obviousness rejections with regards to Frantz, remanding to the lower court for further factual findings consistent with the court’s decision.

Reasoning: Judge O’Malley, joined in part by Judge Wallach authored the Federal Circuit’s opinion. The court’s first holding rested on the assertion that the unlabeled valve depicted in Rasmussen, and therefore, the inlet seat inside, is not an “internal part of [or] contained within” the outer casing of the drain valve. Id. at 1112. Because the design clearly showed the unlabeled valve outside of the casing, the only permissible factual finding that can be drawn from Rasmussen is that the inlet seat inside the unlabeled valve is not defined by the valve body as required by the claims. The court rejected the PTAB’s claim that the positioning of Rasmussen’s unlabeled valve was similar to the positioning of the valve in Hodges’s application as simply unsupported. As such, the PTAB failed to meet its burden of showing that Rasmussen’s reference anticipated Hodges’s claims.

With regards to its second holding, the court found the Patent Office’s refusal to defend the PTAB’s anticipation finding as detrimental to the PTAB’s Frantz holding. The court also held that the PTAB’s anticipation finding was predicated on an erroneous construction of the term “signal.” By construing “signal” as “an act, event, or the like that causes or incites some action,” virtually any mechanical component within the valve drain that moves in response to the flow of fluid through the drain would be covered. Id. at 1114. While the PTAB must give terms their broadest reasonable interpretation consistent with the specification as understood by those of ordinary skill in the art, here, the court found that the PTAB’s definition was unreasonably broad. Under a more reasonable construction of “signal,” the court held that Frantz’s system could not be fairly characterized as a sensor that generates a signal, much less one that is “reflective of a pressure downstream of [the] inlet seat” and is matched against a predetermined limit, as claimed by Hodges’s ’222 application. Id. at 1115

Concurring/Dissenting Opinion: Judge Wallach agreed with the majority’s decision to: (1) reverse the PTAB’s Frantz anticipation holding and (2) vacate and remand the PTAB’s determination that the asserted claims of the ’222 application would have been obvious in view of both patents. However, Judge Wallach states that reversal of a PTAB decision may only happen in one of two rare circumstances under Federal Circuit precedent: (1) When the PTAB has committed legal error and no further factual findings are required; and (2) When the PTAB has made erroneous factual findings and only one permissible factual finding exists. See id. at 1117–18. Judge Wallach believed that the majority attempted to fit its reversal into the second of the two rare circumstances, but failed in doing so by making unsupported factual findings and by failing to demonstrate the no other factual finding would be permissible. He criticized the majority for engaging in a de novo review and exceeding its appellate authority in reversing the PTAB’s determination that Rasmussen anticipates the ’222 application by relying on an annotated version of Rasmussen’s valve which the appellant provided but was not included in the record. For these reasons, Judge Wallach respectfully dissented with the Rasmussen portion of the majority’s holding.
 

Arthrex, Inc. v. Smith & Nephew, Inc.
880 F.3d 1345 (Fed. Cir. 2018)
Authored by Franchiny M. Ovalle

Statement of Facts: Smith & Nephew filed an inter partes review (“IPR”) petition to challenge claims 1–9 of U.S. Patent No. 8,821,541 (“the ’541 patent”) before the United States Patent and Trademark Office, Patent Trial and Appeal Board (“PTAB”). Arthrex owns the ’541 patent and disclaimed claims 1–9 under 37 C.F.R. § 42.107(e). Arthrex filed a preliminary response stating that no IPR should be instituted based on disclaimed claims under 37 C.F.R. § 42.107(e).

Procedural History: The PTAB entered an adverse judgment against Arthrex under 37 C.F.R. § 42.73(b) because the PTAB can construe a statutory disclaimer of all claims that are challenged as a request for adverse judgment, regardless of whether the disclaimer happened before the PTAB entered a decision on the case. The PTAB entered an adverse judgment and an estoppel effect attached. Arthrex argued that an adverse judgment would affect their three pending continuation patent applications. Arthrex appealed to the Federal Circuit. Smith & Nephew moved to dismiss the appeal, arguing that under 35 U.S.C. § 319 an appeal is allowed only when there is a final written decision and, in this case, the PTAB did not issue a final written decision. The Federal Circuit denied this motion.

Questions Presented: First, whether the adverse final judgment by the PTAB is appealable. Second, whether the PTAB properly entered an adverse judgment under 37 C.F.R. § 42.73(b).

Holdings: First, yes. The adverse judgment by the PTAB is final and terminated the IPR proceeding, therefore, it is appealable. Second, yes. The PTAB is permitted under 37 C.F.R. § 42.73(b) to enter adverse judgments. The Federal Circuit affirms the PTAB.

Reasoning: The Federal Circuit approached the first question by stating the general rule that “judicial review is presumed to be available with respect to final agency action.” 880 F.3d 1345, 1348. The Federal Circuit found that there is language in 28 U.S.C. § 1295 that provides for an appeal when the PTAB enters an adverse final judgment. The decision by the PTAB to enter an adverse judgment against Arthrex with respect to an IPR review is final and such a final decision terminated the IPR proceeding. The Federal Circuit rejected Smith & Nephew’s argument that § 319 must govern because § 319 does not exclusively govern the means for an appeal over IPR decisions and § 1295(a)(4)(A) provides a right to appeal for Arthrex. On the second question, the Federal Circuit found that the judgment by the PTAB was consistent with the language of 37 C.F.R. § 42.73(b). Arthrex argued that § 42.73(b) is inapplicable and “stated that it was not requesting an adverse judgment.” 880 F.3d at 1349. The Federal Circuit responded that it would make no sense for the PTAB to enter an adverse judgment only when requested by the patent owner. Allowing patent owners to avoid an adverse judgment through requests would nullify the rule. Arthrex argued that subsection 2 of § 42.73(b) refers to the cancellation of claims when there is no claim remaining in the trial, and that it only applies to an IPR proceeding that has been instituted. The Federal Circuit found this argument flawed because the claims were cancelled and there is no “meaningful distinction between claims that are cancelled before an IPR proceeding is instituted and claims that are cancelled after an IPR proceeding is instituted . . .” 880 F.3d at 1355. The decision by the PTAB is appealable and the interpretation was consistent with the language of the § 42.73(b).

Concurring Opinion: Judge O’Malley agreed with the majority opinion that the Federal Circuit has jurisdiction under § 1295(a)(4)(A) to review the PTAB adverse judgment against Arthrex and with the interpretation of § 42.73(b) by the PTAB. However, Judge O’Malley pointed out that she has doubts that the Director of the PTAB has the authority under 35 U.S.C. § 316 to issue that type of regulation or even if “[t]he regulation was properly promulgated.” 880 F.3d at 1351. The authority of the PTAB to issue an adverse judgment prior to institution of disclaimed claims is questioned. 37 C.F.R. § 42.73(b) states that parties can request a judgment against itself any time during a proceeding, but PTAB defines proceeding broadly enough to cover the trial and preliminary proceeding. The broad definition of a proceeding and PTAB’s application of proceeding to adverse judgments prior to institution conflicts with the court’s conclusion in Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293, 1300 (Fed. Cir. 2016) holding that an IPR cannot begin until it is instituted. Judge O’Malley also found the framework of the Leahy-Smith American Invents Act “does not address procedural actions before institution beyond the filling of a petition . . .” therefore, the law does not allow PTAB to make patentability determinations with estoppel effect before institution. 880 F.3d at 1352.

Dissenting Opinion: Judge Newman dissented, stating that the majority incorrectly found the action by the PTAB in conformity with the statute and its regulation. In this situation, Judge Newman found that because Arthrex disclaimed all the challenged claims and IPR was not available, the PTAB could not have entered an adverse judgment on the claims. There was no review of claims 1–9 by Smith & Nephew. 880 F.3d at 1352. Rule 37 C.F.R. § 42.73(b) allows for a request of an adverse judgments, but this must be during the trial. In this case, there was no trial because of the disclaimer of claims 1–9 by Arthrex and the PTAB could not have entered an adverse judgment when no trial took place. 37 C.F.R. § 42.107(e) provides that no IPR can take place based on disclaimed claims. For that reason, Judge Newman concluded that the PTAB could not have instituted an IPR, no trial took place, no written final decision by PTAB, and no adverse judgment could have been entered into based on § 42.73(b). Therefore, the decision of PTAB to enter into an adverse judgment against Anthrex was in direct conflict with § 42.73(b) and § 42.107(e).

 

Aatrix Software, Inc. v. Green Shades Software, Inc.,
882 F.3d 1121 (Fed. Cir. 2018)
Authored by Razi Safi

Statement of Facts: Aatrix and Green Shades are software companies. Aatrix Software, Inc. (“Aatrix”) sued Green Shades Software, Inc. (“Green Shades”) for infringement of systems and methods claims in Aatrix’s U.S. Patent No. 7,171,615 (“the ’615 patent”) and No. 8,984,393 (“the ’393 patent”) directed to designing, generating, and importing data into a computer-based viewable form to permit the user to control the form data and generate viewable forms and reports. The preferred embodiment for both patents is a data processing system with three main components: a form file aimed at modelling the physical characteristics of an existing form, a data file able to seamlessly import third-party data, and a viewer that is capable of generating reports for the user. Aatrix also filed declarations discussing the claimed invention which the district court analysis left unconsidered.

Procedural History: After Aatrix filed suit, Green Shades moved to dismiss the complaint under Rule 12(b)(6), arguing that the claims in the asserted patent were ineligible under Section 101. The district court granted Green Shades’s motion and held every claim ineligible; notwithstanding Aatrix’s argument that the motion should be denied to allow for claim construction and for the court to familiarize itself with the claimed inventions. The district court also denied Aatrix’s motion to amend its complaint. In its decision, the district court found that claim 1 of ’615 patent is not directed to a tangible embodiment and is therefore not directed to eligible subject matter under 35 U.S.C. § 101. The court applied the Alice/Mayo two-step analysis to the remaining claims. The court held that the independent claims do not give an inventive concept and, therefore, were directed to patent ineligible abstract ideas. Aatrix appealed.

Questions Presented: Whether subsidiary fact questions must be resolved before § 101 patent eligibility can be determined as a question of law.

Holdings: Yes. As an initial matter, the Federal Circuit held on appeal that the district court erred in holding that that one of the asserted claims was ineligible solely because it was directed to an intangible embodiment. The court rejected the district court’s treatment of the Section 101 decision at the Rule 12(b)(6) stage because subsidiary fact questions must be resolved before the ultimate legal question of patent eligibility.

Reasoning: Judge Moore delivered the court’s opinion. In the initial matter, the court found that the claim recited a data processing system requiring computer operating software, a means for viewing and changing data, and a means for viewing forms and reports. These requirements, the court held, established that the claims were directed to a tangible system.

In rejecting the district court’s treatment of the Section 101 decision at the Rule 12(b)(6) stage, the court explained that although Section 101 patent eligibility is ultimately a question of law, there are subsidiary fact questions which must be resolved before the ultimate legal determination can occur. Here, the factual inquiry was whether the claimed invention was well-understood, routine, or conventional activity under the second step of the Alice/Mayo test. That inquiry cannot be answered adversely to the patent owner based on the sources considered on a motion to dismiss because Aatrix’s second amended complaint included concrete allegations, where the claimed inventions satisfied the requirements under the second step of the Alice/Mayo test and demonstrated an improvement to the functioning of the computer. Thus, there was no proper basis for rejecting those allegations as a factual matter, the court held. Because the court ultimately concluded Aatrix was entitled to file its proposed second amended complaint, the court declined to address whether Aatrix should have been afforded claim construction proceedings before granting the motion to dismiss.

Dissenting/Concurring Opinion: In a separate opinion concurring in part and dissenting in part, Judge Reyna agreed that the district court erred in concluding that one of the asserted claims was ineligible solely because it was directed to an intangible embodiment but disagreed with “the majority’s broad statements on the role of factual evidence in a § 101 inquiry.” 882 F.3d at 1130. Instead, Judge Reyna concluded that the Federal Circuit’s precedent establishes that the matter is a legal question and that the majority’s emphasis on subsidiary fact questions allows plaintiffs fighting a motion to dismiss to simply amend a complaint to allege extrinsic facts regardless of its consistency with the intrinsic record.

 

Althen v. Sec’y of HHS
418 F.3d 1274 (Fed. Cir. 2005)
Authored by David W. Rifkin

Statement of Facts: On March 28, 1997, Margaret Althen (“Althen”) received tetanus toxoid (“TT”) and hepatitis A vaccinations. Within a matter of eighteen days after the administration of the vaccines, Althen began to experience headaches, painful eye movements, and blurred vision in her right eye, which progressed to a complete loss of sight in that eye. She was diagnosed with optic neuritis. Shortly thereafter, Althen began to experience fever, confusion, and neck stiffness. On June 4, 1997, Althen was admitted to the hospital where she was diagnosed with acute disseminated encephalomyelitis (“ADEM”), right optic neuritis, and congenital Duane’s syndrome. From this point forward, Althen’s condition became increasingly worse. On July 2, 1997, Althen returned to the hospital experiencing dizziness and gait instability. The medical staff attributed these symptoms to both encephalitis and ADEM. On July 27, 1998, Althen again began to experience optic neuritis, but this time in her left eye. And on August 6, 2000, Althen suffered a brain seizure. Following a brain biopsy, doctors concluded that Althen had a primary diagnosis of vasculitis with secondary tissue destruction and demyelination consistent with primary angiitis. Althen filed a petition seeking compensation under the National Childhood Vaccine Injury Act of 1986 (“Vaccine Act”) for injuries she suffered as a direct result of the TT vaccination.

Procedural History: The petition for compensation was assigned to the Chief Special Master of the Court of Federal Claims pursuant to 42 U.S.C. § 300aa–10. During an evidentiary hearing, the Special Master denied Althen’s claim for compensation. Applying the Stevens test, the Special Master concluded that despite testimony from a board-certified neurologist that the TT vaccine caused Althen’s injuries and that the onset of her optic neuritis occurred within a medically-accepted time period for a causal connection, because Althen did not provide peer-reviewed literature to support that assertion, she failed to prove causation by a preponderance of the evidence. On a Motion for Review, the Court of Federal Claims reversed, finding Althen sufficiently proved causation and that the Special Master erred as a matter of law in its legal analysis. The government appealed the trial court’s decision to the Federal Circuit.

Questions Presented: First,whether the analytical framework developed in Stevens v. Secretary of Department of Health & Human Services, 99-594V, 2001 WL 387418 (Fed. Cl. 2001) impermissibly raised the burden of proof for showing causation under the Vaccine Act. Second, whether the evidence presented at trial was sufficient to prove by a preponderance of the evidence that the TT vaccination proximately caused Althen’s injuries.

Holdings: First,yes, the Stevens Prongs materially altered the statutory burden of proof under the Vaccine Act and therefore are erroneous as a matter of law. Second,yes, Althen established by a preponderance of the evidence that the TT vaccination caused her central nervous system demyelinating disorder.

Reasoning: The Vaccine Act provides for the establishment of causation in one of two ways: through a statutory presumption of causation under the Vaccine Injury Table (“Table injury”) or by proving causation in fact for an injury not listed in the Vaccine Injury Table (“off-Table injury”). See 42 U.S.C. §§ 300aa–11(c)(1)(C)(ii)(I), –13(a)(1)(A), –14(a). If an injured claimant meets the statutory burden of proving causation under either statutory provision, she will be entitled to judgement as a matter of law. Because Althen sought redress for an off-Table injury, she was required to prove by a preponderance of the evidence that the TT vaccination caused her illness though the use of medical records or medical opinion. The Federal Circuit began by reviewing the Stevens test, an analytical framework developed by the Chief Special Master which required a claimant to prove causation by showing: “(1) medical plausibility; (2) confirmation of medical plausibility from the medical community and literature; (3) an injury recognized by the medical plausibility evidence and literature; (4) a medically-acceptable temporal relationship between the vaccination and the onset of the alleged injury; and (5) the elimination of other causes.” Althen, 418 F.3d at 1279 (citing Stevens, 2001 WL 387418, at *23­26). The Federal Circuit rejected prongs two and three of the test. The court held that the Vaccine Act does not preclude a claimant establishing causation in fact in the absence of peer reviewed literature, so prongs two and three impermissibly increased the statutorily prescribed burden of proof. Moreover, the Federal Circuit reasoned that requiring Althen to support her claim with medical literature impeded her ability to prove causation through the use of circumstantial evidence and contravened Congress’s longstanding intent in resolving ambiguities in favor of injured claimants. However, the court upheld the remainder of the Stevens test as it merely recited well-established precedent.

The Federal Circuit affirmed the Court of Federal Claims’s reversal and reiterated its finding that the Chief Special Master’s duties do not include crafting a legal standard to be used in causation in fact cases. If a question of law arises regarding the interpretation or implementation of the Vaccine Act, answering that question is a matter for the courts, not the Special Master. In elaborating on the causation requirement, the Federal Circuit articulated a three-part test under which Vaccine Act claimants may establish causation by presenting: “(1) a medical theory causally connecting the vaccination and the injury; (2) a logical sequence of cause and effect showing that the vaccination was the reason for the injury; and (3) a showing of a proximate temporal relationship between vaccination and injury.” Althen, 418 F.3d at 1278. Applying these factors, the Federal Circuit found that Althen met the statutory burden for establishing causation by a preponderance of the evidence and concluded that the government failed to prove that factors unrelated to the TT vaccine were principally responsible for her resulting injuries.