Docket No. 2017-2130
NEWMAN, WALLACH, STOLL
September 13, 2017
Brief summary: DC denial of Uber’s motion to compel arbitration of litigation with Waymo affirmed.
Summary: Uber appealed DC denial of its motion to compel arbitration of litigation with Waymo. Uber did not have an arbitration agreement with Waymo, but Levandowski has one in his employment agreements with Waymo, which Uber argued is grounds to compel arbitration between Uber and Waymo. The FC panel explained that CA “courts have, in a few situations, compelled arbitration against an entity that was not a party to an arbitration agreement” through equitable estoppel “when necessary ‘to prevent a party from using the terms or obligations of an agreement as the basis for claims against a non-signatory, while at the same time refusing to arbitrate with the non-signatory under another clause of the same agreement” (Goldman, Cal. Ct. App. 2009; Arthur Andersen, US 2009 (“A non-signatory may compel arbitration where the ‘relevant state contract law allows him to enforce the agreement.’”)) The DC relied Kramer (9th Cir. 2013, which relied on Goldman) which “explained that reliance of a contract” (“raising claims that are intimately founded in or intertwined with that agreement”) “containing an arbitration requirement is the key element in the equitable estoppel inquiry.” The FC panel explained that it first looks to the complaint which it found “not [to] rely on or use any terms or obligations of the [Waymo-Levandowski employment] agreements as a foundation for [its] claims.” Uber argued “that Waymo must necessarily rely on its agreements with Levandowski in order to make out its trade secret claim” but “Waymo stresses that its complain does not rely” on those agreements, with the references thereto being only “to show that Waymo h as taken reasonable measures to safeguard its trade secrets.” But the FC panel disagreed, finding the DC correctly concluded CA courts (Kramer) require “Plaintiffs’ claims themselves [to] intimately rely on the existence of” the agreement in question, “not merely reference them.” Waymo also disclaimed reliance on the employment agreement to the DC “provided Uber does not open the door by reference to these agreements or the lack thereof of those agreements”, the reliance on which Uber argued was error by the DC. The FC panel found that “[s]uch a conditional representation does not demonstrate reliance” on the agreements, and found the DC did not err on this point. The FC panel also found that “Uber’s contentions as to the second Kramer/Goldman circumstance, concerted misconduct, are subject to the same deficiencies” discussed above and since “Waymo states that it is not asserting…that Uber…conspired with Levandowski to breach” the agreements. The FC panel also reviewed Uptown Drug (CA 2013), Metalclad (CA 2013), Turtle Ridge (CA 2006), Torbit (CA 2013 (“[a] close analogy”)), and CardioNet (MA 2017) and found no error with the DC’s “balance of precedent”. It noted that “[t]he general rule is that a contract only applies to the parties of the contract”, and affirmed the DC decision.
Docket No. 2017-2235, -2253
NEWMAN, WALLACH, STOLL
September 13, 2017
Brief summary: Mr. Levandowski’s petition for writ of mandamus was denied because, e.g., he could not show protection under attorney-client privilege or the work-product doctrine.
Summary: Waymo sued Uber et al., “alleging, inter alia, claims of patent infringement and violations of federal and state trade secret laws” including that “it former employee, Mr. Levandowski, improperly downloaded thousands of documents related to Waymo’s driverless technology and then left Waymo to found Ottomotto, which Uber subsequently acquired.” Before completing the acquisition, counsel for Uber and Ottomotto (but not counsel for Levandowski) retained Stroz to investigate Ottomotto employees formerly employed by Waymo (including Mr. Levandowski), which generated a report that is the subject of the discovery dispute appealed here. Intervenor Anthony Levandowski petitioned for mandamus after the DC’s denial of relief from a Magistrate Judge’s orders finding the Stroz report was not protected by attorney-client privilege or under the work-product doctrine. The FC first found that he had “other adequate means to attain the relief he desires” such a post-judgment appeal, and therefore did not meet “Cheney’s first prerequisite” of a writ of mandamus (Cheney, US 2004). It also found it “apparent that Mr. Levandowski cannot invoke attorney-client privilege or work-product protection” and that his “unsupported assertion” that he “would be unable to ‘cleanse the trial of all taint from the improper disclosure’” “is insufficient” (Birdsong, 9th Cir. 2009). The FC panel also found Levandowski could not satisfy Cheney’s second prerequisite (“the petitioner must satisfy the burden of showing that his right to issuance of the writ is clear and indisputable”) because the DC properly determined the common interest or joint defense rule allowing “attorneys for different clients pursuing a common legal strategy to communicate with each other” (In re Pac. Pictures, 9th Cir. 2012) did not apply since, e.g., Levandowski could did not “demonstrate the elements of privilege” and the “pursuit of common legal claims”. The FC panel also concluded the DC correctly found the work-product doctrine protecting documents prepared for litigation or “because of” litigation (i.e., “not prepared exclusively for litigation”) did not apply, including under the common interest doctrine. The Magistrate Judge determined that “under the circumstances of our case, [Uber and Mr.] Levandowski…had adverse rather than common interests…and…Uber therefore waived any work-product [protection]” when it disclosed the report to “adversaries Otto[motto and Mr.] Levandowski”, and so “it must disclose the same work product to Waymo.” The FC panel concluded that Mr. Levandownski did “not establish that he is entitled to work-product protection” since only Uber and Ottomotto, but not Levandowski, “hire[d] Stroz as his representative”. The FC panel also concluded the DC properly determined Mr. Levandowski could not rely on the Fifth Amendment (“[n]o person…shall be compelled in any criminal case to be a witness against himself” that “adheres basically to the person, not to information that may incriminate him” (Couch, US 1973)) since, e.g., he was not “compelled to personally produce the Stroz report.” And the FC panel also found the third Cheney prerequisite (“the issuing court…must be satisfied that the writ is appropriate under the circumstances”) inapplicable since the first two Cheney prerequisites were not satisfied. Finally, the FC panel concluded the Perlman doctrine (“a discovery order directed at a disinterested third party is treated as an immediately appealable order”) did not apply because this is a civil case, “Mr. Levandowski may be able to appeal following final judgment”, and he is “closely affiliated with all parties to this litigation.” Thus, his petition for a writ of mandamus was denied.
Docket No. 2016-2641
MOORE, REYNA, STOLL
September 13, 2017
Brief summary: DC dismissal for lack of subject matter jurisdiction since Stellar only took action against Allied’s distributors in MX but no action against Allied (in MX or the US).
Summary: Allied sought a DJ that Stellar’s US 7,503,974 is not infringed, invalid, unenforceable for inequitable conduct, and for tortious interference with business relationships under Florida state law. The DC dismissed the complaint for lack of subject matter jurisdiction (no case or controversy, no “reasonable belief that Stellar would enforce the ‘974 patent in the [US]”). Allied’s request arose from Mexican litigation between Stellar and Allied’s distributors in Mexico and regarding Stellar’s Mexican patent (MX 279757). Allied makes the products distributed in Mexico in the US, and sells the same product under a different name in the US. Stellar sent notice letters regarding the MX patent to Allied’s distributors, to which Allied’s US counsel responded, identifying Allied as the manufacturer and arguing the products do not infringe that patent. Stellar then filed suit in MX against Allied’s distributors for infringement of claim 16 of the MX patent, which corresponds to claim 16 of Stellar’s corresponding US patent. The FC panel opinion explained “[t]here is no bright-line rule for whether a dispute satisfies” the “case of actual controversy” requirement of the Declaratory Judgment Act (28 USC § 2201(a); Prasco, FC 2008 (“fear of a future infringement suit is insufficient”); MedImmune, US 2007 (“substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a [DJ]”); SanDisk, FC 2007 (DJ “jurisdiction requires some affirmative act by the patentee”). It also explained that “Steller took no actions directed at Allied” (only the MX distributors), “no actions with regard to its ‘974 patent, and no actions under U.S. patent laws”, these being “even less sufficient than those in Innovative Therapies” (FC 2013). In Innovative, ex-employees started a new company to “sell a competing product but worried about potential infringement liability”. One of these ex-employees was told by a current Innovative employee that “the company would ‘act aggressively…You know that” and made other similar statements. The FC found these statements “did not produce a controversy of such immediacy and reality to give the [DC] jurisdiction”. The ex-employees also unsuccessfully attempted to rely on Innovative’s litigation history, but the FC panel found that while “a circumstance” to consider, there was no evidence Innovative took any action against the new company. Allied compared its case to Arkema (FC 2013), citing the FC’s “reliance on foreign litigation as creating a case of controversy regarding a related US patent.” In that case, however, the FC panel explained, “there was also a companion U.S. litigation over” corresponding US patents which “create[d] a sufficient affirmative act on the part of patentee”. The FC panel also distinguished this case from Arris (FC 2011) which “noted that a manufacturer has standing…if…the manufacturer is obligated to indemnify its customers” or there is a induced or contributory infringement controversy between the parties, neither of which were met in this case. Thus, the DC dismissal for lack of jurisdiction was affirmed.
Docket No. 2016-2287
LOURIE, MOORE, HUGHES
September 8, 2017
Brief summary: PTAB obviousness conclusion affirmed (30% reduction limitation is “an observed result on an old process”).
Summary: Southwire appealed PTAB inter partes reexamination decision that claims 1-42 of US 7,557,301 relating to methods for manufacturing electric cable are unpatentable under § 103 (obviousness). The Examiner (affirmed by the Board) rejected all of the claims as obvious over combinations of prior art, one of which is considered here (Summers (US 6,160,940), Dow and UL-719). Southwire argued with the Board’s interpretation of Summers. The ‘301 claims require “the finished electrical cable” to provide “a 30% reduction” in the pulling requird during installation as compared to existing wires, which the Examiner and the Board found was inherently disclosed by Summers (“an inherent result of the cable being made in accordance with the method steps”). The Board rejected all of Southwire’s expert declarations and objective evidence as failing to be complete, lacking “factual support because it contained only ‘general allegation[s]’ without corroborating evidence”, and not establishing “a long-felt need without solution”. The FC panel opinion explained that the Board’s legal determinations are reviewed de novo (In re Elsner, FC 2004; Apple, FC 2016 (obviousness)), and the factual findings underlying those determinations for substantial evidence (In re Gartsdie, FC 2000; Consol. Edison, US 1928 (reasonable mind might accept the evidence)). Southwire argued the Board improperly relied on “inherency” since “a limitation is not inherent…unless it is necessarily, i.e., always, present” and that finding a “reason to select lubricant concentrations” to achieve the claimed limitation “is the antithesis of inherency, which requires certainty, not experimentation.” The FC panel agreed “the Board erred in relying on inherency” by only “finding that it merely renders that limitation obvious” (vs. “Summers necessarily would achieve” the claimed reduction in pulling force) (“in the context of obviousness must be carefully circumscribed” (PAR Pharm., FC 2014) “because ‘[t]hat which may be inherent is not necessarily known’ and that which is unknown cannot be obvious” (Honeywell, FC 2017)). However, it also found the Board’s error harmless because it “made the necessary underlying factual findings to support an obviousness determination” (“None of the patented steps differ in any material way from the process disclosed in Summers (in view of Dow). And there is no evidence that the claimed 30% reduction…would have been unexpected or unattainable from…Summers.”) “[W]here ‘all process limitations…are expressly disclosed by [the prior art reference], except for the functionally expressed [limitations at issue], the PTO can require an applicant ‘to prove that the subject matter shown to be in the prior art does not possess the characteristic relied on” (In re Best, CCPA 1977). The FC panel described the 30% reduction limitation as “an observed result on an old process, written into the claim in an attempt to avoid the prior art process.” And it agreed with the Board’s conclusion regarding Southwest’s proferred objective evidence. The decision was therefore affirmed.
PROST, REYNA (D), TARANTO
September 7, 2017
Brief summary: DC grant of SJ for obviousness and no inequitable conduct affirmed.
Summary: Kraft appealed grant of SJ to Kellogg of invalidity for obviousness of the asserted claims of Kraft’s US 6,918,532 relating to resealable food packages. The ‘532 patent was reexamined, the reexamination certificate being issued for original claims 1-25 and new claims 26-67. In granting SJ for obviousness, the DC found: “In fact, nearly all the elements were found in one Machinery Update article, and the rest already existed in cookie packages. Additionally, the technology is relatively simple. Based on these considerations, a person skilled in the art would have a reason to combine the elements to create the invention.” And the DC was not convinced by Kraft’s secondary consideration evidence commercial success tied to the patent-claimed packaging, industry praise, and copying by Kellogg), “though substantial…do not overcome Kellogg’s extremely strong prima facie showing”. The FC panel explained that under KSR “[o]ne of the ways in which a patent’s subject matter can be proved obvious is by noting that there existed at the time of the invention a known problem for which there was an obvous solution encompassed by the patent’s claims. The FC panel also wrote that “[i]dentification of a ‘motivation’ to make the combination may not give a complete picture of what a skilled artisan, exercising ordinary creativity without the incentive of patent protection, would actually have found it obvious to ‘disclose or devise’ at the relevant time” (Graham, US 1966), and “[e]ven with a motivation proved” secondary considerations can provide reasons why the claims would not have been obvious (Plantronics, FC 2013 (“objective indicia can be important evidence of obviousness, sometimes even the most important evidence”); Demaco, FC 1988; KSR (“secondary considerations do not ‘dislodge’ the determination that a claim would have been obvious”)). It found “no error in the sequence of steps the [DC] took in arriving” at its conclusion since it considered the secondary considerations after considering whether Kellogg had presented a prima facie case of obviousness. Kraft unsuccessfully argued that the DC did not provide “‘explicit and clear reasoning providing some rational underpinning’ for its invocation of common sense in its motivation-to-combine analysis” and that “there was more than one reasonable inference about whether a relevant skilled artisan had” the required motivation (e.g., “One company’s temporary decision about an equipment investment is not sufficient to defeat the otherwise-compelled inference…It was a ‘known problem’ for cookie consumers that [existing] packages did not satisfactorily provide” the packages “consumers wanted”.) Kraft also argued Kellogg’s burden was higher because the same prior art was considered during examination (Sciele, FC 2012), but the FC panel concluded “this is not a case in which what the PTO concluded makes a difference” because the Board did not “expressly consider” one of the articles proffered by Kellogg that was considered by the examiner and “the showing of obviousness is sufficiently strong that no PTO contrary determination could alter the conclusion”. Judge Reyna’s dissent (in part) argued that “[t]here should be no prima facie rule or test in the obviousness inquiry” and “the burden of persuasion should not shift from the challenger to the patent holder afer a legal determination of obviousness has already been made.” Thus, the DC grant of SJ for obviousness was affirmed.
Kellogg alleged Kraft engaged in inequitable conduct during the reexamination but the DC disagreed (“There is no evidence that the attorney knowingly failed to identify the inconsistency between the two articles.” Therasense, FC 2011), and Kellogg appealed. The FC panel disagreed since “the deposition of Kraft’s counsel provides no suggestion of any awareness of a misprint” and “one reasonable inference on the record-especially given Kellogg’s burden of persuasion” (show a “specific intent to mislead or deceive the PTO” (In re Rosuvastatin, FC 2012) “is that Kraft did not believe that there was a misprint.” Thus, the DC grant of SJ for no inequitable conduct was affirmed.
LOURIE, MOORE, O’MALLEY
September 7, 2017
Brief summary: DC grant of Trim-Lok’s motion to dismiss Lifetime’s infringement complaint reversed and remanded since, e.g., LT adequately “alleged that an agent of Trim-Lok installed the seal onto the RV”.
Summary: Lifetime (LT) appealed DC grant of Trim-Lok’s motion to dismiss Lifetime’s infringement complaint regarding US 6,966,590 relating to a “two-part seal” with a slide-out room (formed by extending a portion of the sidewall outward) in recreational vehicles. LT’s first complaint was dismissed for failing to “adequately identify the product or products that allegedly infringed”, but was gratned leave to amend that complaint twice (the first and second amended complaint (“FAC” and “SAC”, respectively). LT alleged “two of its engineers” (Busch and Torrey) “with knowledge of the ‘590 patent and the Lifetime products that it covered left Lifetime and began working for Trim-Lok” and shortly thereafter “Trim-Lok, for the first time, was offering for sale a two-part seal for an RV with a slide-out room at a plant run by Forest River, an RV manufacturer” (“the Forest River plant”). LT alleged that Trim-Lok either directly or indirectly infringed…by causing the two-part seal to be installed on the RV at the Forest River plant”, “‘influenced Forest River’ to include the two-part seal in their RVs, ‘knowing that such combination would fulfill all elements of at least one [‘590] claim” (induced infringement), and that “the two-part seal sold by Trim-Lok had only one purpose-for use on RVs with slide-out rooms” (“not staple articles of commerce suitable for noninfringin use”; contributory infringement). The DC decided against LR because, e.g., “the claims require both a two-part seal and an RV, and Trim-Lok only manufactures seals” and it “had only made conclusory allegations that Trim-Lok had acted knowingly and intentionally”. The FC panel explained the pleading standard requires “a complaint [to] ‘contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face’…that allows the court to draw a reasonable inference that the defendant is liable” (Iqbal, US 2009; Twombly, US 2007; compared to the pre-Dec. 1, 2015 “Form 18” standard). And it agreed with LT that the SAC adequately alleged that Trim-Lok directly infringed” since it “alleged that an agent of Trim-Lok installed the seal onto the RV” (which Trim-Lok does not make), “and that resulting seal-RV combination infringed the ‘590 patent” (“assembling the components of an invention is an infringing act of making the invention” (Siemens, FC 2011; Golden Blount, FC 2006; Cross Med. Prods., FC 2005); “no requirement …to ‘prove its case at the pleading stage’” (Bill of Lading, FC 2012). It also explained that to survive indirect infringement, an allegation “must plead facts plausibly showing that the accused infringer ‘specifically intended [another part] to infringe [the patent] and knew that the [other party’s] acts constituted infringement” (Bill of Lading (alleged infringer had knowledge of patent and customers performed the claimed method)), and agreed LT “had plausibly alleged” those facts. The FC panel also agreed with LT regarding its contributory infringement allegations since it “requires ‘only proof of a defendant’s knowledge, not intent’” (Hewlett-Packard, FC 1990). The DC decision was therefore reversed and remanded.
2016-1749, -1751, -2039 (IPR Nos. 2014-01178, -01297, -01449)
LOURIE, WALLACH, STOLL
September 6, 2017
Brief summary: Board FWD of obviousness affirmed for various reasons.
Summary: Enova appealed final written decisions (FWDs) after IPR that claims 1-53 of its US 7,900,057 relating to a cryptographic processing system (the “SATA protocol”) are unpatentable as obvious. The different FWDs “treat the issues challenged by Enova substantially identically, and Enova does not challenge any…separately from the others,” so the FC panel “cite[d] only the written decision in IPR 2014-01178.” The claims include a “pre-defined category limitation” that Enova argued was not disclosed in the prior art cited by Seagate (“Sullivan” and the SATA protocol). Enova also presented evidence of secondary considerations: “(1) praise for the claimed invention from another company in the industry; (2) commercial success of its own products and Seagate’s purportedly infringing products; and (3) copying and licening by other companies” (TransOcean, FC 2012; Advanced Display, FC 2000) The Board found “that Enova’s arguments attacked each reference individually, when the proper analysis was whether the combination of references would have rendered” the claims obvious, and “that a skilled artisan would not have understood the scope of Sullivan to be” as “narrow” as Enova argued. It also rejected the secondary consideration evidence as not “adequately establish[ing] a nexus” to the claims. The FC panel explained that it reviews the Board’s factual findings (scope and content of prior art, nexus) for substantial evidence (as “a reasonable mind might accept” (Consol. Edison, US 1938)) and its legal determinations de novo (Belden, FC 2015; Randall Mfg., FC 2013; Redline Detection, FC 2015). It found the Board’s conclusions regarding Sullivan to be supported by substantial evidence including expert testimony on what one of skill in the art would have understood therefrom, and Enova’s argument to be “contradicted by the broader disclosure in Sullivan.” Regarding the SATA protocol reference, Enova argued the Board “improperly credit[ed] Seagate’s expert conclusion that the common sense of a skilled artisan would have led to claimed result”, but the FC panel found the Board’s conclusion to again be supported by substantial evidence (“The Board did not rely on a common-sense rationale in making its finding.”) The FC panel also agreed with Seagate and the Board that there was a motivation to combine the references, disagreeing with Enova’s argument that the result of the combination would have been inoperable (Bayer, FC 2013). Enova was also unable to discredit Seagate’s expert testimony by arguing it was “conclusory and infected by hindsight” (Pfizer, FC 2007 (it is ‘the patentee [who] has the burden of going forward with’ evidence tending to rebut a challenger’s obviousness case.”)) The FC panel also found the burder of persuasion on obviousness was not improperly shifted to Enova. And, finally, it agreed with the Seagate and Board that Enova did not show the required nexus between the evidence of secondary considerations and the claims (e.g., In re Antor, FC 2012 (nexus between copying and the claims)). Thus, the Board decision was affirmed.