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November 2015
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Grubbs v. Sheakley Group, Inc.

Plaintiffs Linda Grubbs and the companies she owns, Tri-Serve, Ltd.; TriServe #1, LLC; and Capital Concepts, Inc., appeal the order of the district court dismissing Plaintiffs’ claims under the Lanham Act, 15 U.S.C. § 1125, and the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962, for failure to state a claim, and dismissing all remaining state law claims over which the district court had pendent jurisdiction. For the reasons that follow, we AFFIRM in part, and REVERSE in part, the order of the district court, and remand for further proceedings consistent with this opinion.

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Commonwealth Scientific & Indus. Research Org. v. Cisco Sys., Inc.

Following a bench trial on damages, the district court awarded Commonwealth Scientific and Industrial Research Organisation (“CSIRO”) $16,243,067 for Cisco Systems, Inc.’s (“Cisco”) infringement of CSIRO’s U.S. Patent No. 5,487,069 (“’069 patent”). On appeal, Cisco challenges the district court’s damages award. We conclude that the district court’s methodology in this case— insofar as it relied on the parties’ actual licensing discussions—is not contrary to damages law. However, we also hold that the district court erred in not accounting for the ’069 patent’s standard-essential status and in its reasons for discounting a relevant license agreement. We therefore vacate the district court’s judgment and remand for the district court to revise its damages award.

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MCM Portfolio LLC v. Hewlett-Packard Co.

MCM Portfolio LLC (“MCM”) owns U.S. Patent No. 7,162,549 (“the ’549 patent”), which claims methods and systems for coupling a computer system with a flash memory storage system. Hewlett-Packard Co. (“HP”) filed a petition with the Patent and Trademark Office (“PTO”) requesting inter partes review of claims 7, 11, 19, and 21 of the ’549 patent. The Patent Trial and Appeal Board (“Board”) determined that HP’s petition demonstrated a reasonable likelihood that the challenged claims of the ’549 patent were invalid as obvious and instituted an inter partes review. Thereafter, the Board issued a final decision holding that the challenged claims would have been obvious. MCM appeals.

We hold that we lack jurisdiction to review the Board’s decision that the institution of inter partes review was not barred by 35 U.S.C. § 315(b), but we conclude that we can review the question of whether the final decision violates Article III and the Seventh Amendment. On the merits, we reject MCM’s argument that inter partes review violates Article III and the Seventh Amendment, and we affirm the Board’s decision that claims 7, 11, 19, and 21 of the ’549 patent would have been obvious over the prior art.

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CardSoft, LLC v. VeriFone, Inc.

The case returns to us on remand from the Supreme Court. In CardSoft v. VeriFone, Inc., 769 F.3d 1114 (Fed. Cir. 2014), we decided an appeal by defendant-appellants (collectively, VeriFone) from a decision of the United States District Court for the Eastern District of Texas. In construing the patent claims, the district court adopted plaintiff-appellees’ (collectively, CardSoft’s) proposed construction for the claim term “virtual machine.” Applying the district court’s construction, a jury returned a verdict for CardSoft. Because the district court erred in its construction of “virtual machine,” and because CardSoft waived any argument that Appellants infringe under the correct construction, we reversed the district court’s decision.

Following our first decision in this case, the Supreme Court held that we must review a district court’s ultimate interpretation of a claim term, as well as its interpretations of “evidence intrinsic to the patent,” de novo and its subsidiary factual findings about extrinsic evidence for clear error. See Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 841–42 (2015). The Court also vacated and remanded our Cardsoft decision for further consideration in light of this new standard of review. CardSoft, LLC v. VeriFone, Inc., 135 S. Ct. 2891 (2015). Because this case does not involve the factual findings to which we owe deference under Teva, we again reverse the district court’s construction of the term “virtual machine.”

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IN RE SIMON SHIAO TAM

Section 2(a) of the Lanham Act bars the Patent and Trademark Office (“PTO”) from registering scandalous, immoral, or disparaging marks. 15 U.S.C. § 1052(a). The government enacted this law—and defends it today— because it disapproves of the messages conveyed by disparaging marks. It is a bedrock principle underlying the First Amendment that the government may not penalize private speech merely because it disapproves of the message it conveys. That principle governs even when the government’s message-discriminatory penalty is less than a prohibition.

Courts have been slow to appreciate the expressive power of trademarks. Words—even a single word—can be powerful. Mr. Simon Shiao Tam named his band THE SLANTS to make a statement about racial and cultural issues in this country. With his band name, Mr. Tam conveys more about our society than many volumes of undisputedly protected speech. Another rejected mark, STOP THE ISLAMISATION OF AMERICA, proclaims that Islamisation is undesirable and should be stopped. Many of the marks rejected as disparaging convey hurtful speech that harms members of oft-stigmatized communities. But the First Amendment protects even hurtful speech.

The government cannot refuse to register disparaging marks because it disapproves of the expressive messages conveyed by the marks. It cannot refuse to register marks because it concludes that such marks will be disparaging to others. The government regulation at issue amounts to viewpoint discrimination, and under the strict scrutiny review appropriate for government regulation of message or viewpoint, we conclude that the disparagement proscription of § 2(a) is unconstitutional. Because the government has offered no legitimate interests justifying § 2(a), we conclude that it would also be unconstitutional under the intermediate scrutiny traditionally applied to regulation of the commercial aspects of speech. We therefore vacate the Trademark Trial and Appeal Board’s (“Board”) holding that Mr. Tam’s mark is unregistrable, and remand this case to the Board for further proceedings.

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Akamai Techs., Inc. v. Limelight Networks, Inc.

This case first came to this court after, inter alia, a jury verdict finding Akamai’s U.S. Pat. No. 6,108,703 (“’703 patent”) not invalid and directly infringed by Limelight, followed by the entry of judgment as a matter of law (“JMOL”) overturning the jury’s infringement verdict on the basis of divided infringement. Akamai Techs., Inc. v. Limelight Networks, Inc. (Akamai II), 614 F. Supp. 2d 90 (D. Mass. 2009). After several rounds of appeals and remands, culminating with the en banc court’s reversal of the district court’s JMOL determination on the divided infringement issue, the case returns to this panel, which is tasked with resolving “all residual issues” in the appeal and cross-appeal. Akamai Techs., Inc. v. Limelight Networks, Inc. (Akamai IV), 797 F.3d 1020, 1025 (Fed. Cir. 2015) (en banc).

On this record, the only issues remaining stem from Limelight’s cross-appeal, which argued alternative grounds for overturning the jury’s verdict of infringement and challenged the damages award. Specifically, three issues remain to be adjudicated. First, whether the district court erred in construing the claim term “tagging.” Second, whether the district court properly constructed the term “optimal,” and properly instructed the jury on the construction. Third, whether the district court erred in allowing Akamai to present a lost profits theory based on the testimony of its expert.

Because the district court did not err in its claim constructions and appropriately instructed the jury, and because we find no error in the district court’s allowance of Akamai’s lost profits expert, we decline Limelight’s invitation to find an alternate basis to overturn the jury verdict on infringement and its damages award. Accordingly, we reiterate the en banc court’s reversal of the district court’s grant of JMOL of non-infringement and remand with instructions to reinstitute the jury’s original verdict and damages award. We also confirm our previously reinstated affirmance of the district court’s judgment of non-infringement of U.S. Patent Nos. 6,553,413 (the “’413 patent”) and 7,103,645 (the “’645 patent”).

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Ariosa Diagnostics v. Verinata Health, Inc.

Verinata Health, Inc. owns U.S. Patent No. 8,318,430, which describes and claims methods of noninvasive prenatal testing for the presence of fetal chromosomal abnormalities. In particular, the methods may identify “aneuploidy,” i.e., the presence of an abnormal number of copies of a chromosome—say, three rather than the normal two for chromosome 21, an abnormality that characterizes Down Syndrome. The methods involve obtaining blood samples from several pregnant women; isolating from the samples genomic DNA molecules not contained in cells; choosing particular DNA sequences— some on a chromosome of concern, some not; indexing by maternal source the chromosomes or regions containing those sequences; amplifying (making many copies of) the group of chromosomes or regions; performing massively parallel sequencing on the resulting pool; using the indexing to count, for a particular maternal source, the number of sequences from chromosomes of concern versus the number from reference chromosomes or regions; and determining based on the comparison whether there are fetal chromosomal abnormalities, such as an extra copy of a chromosome of concern.

Ariosa Diagnostics, Inc. petitioned the Patent Trial and Appeal Board for inter partes review of claims 1–18 and, in a separate petition, claims 19–30, challenging the claims for obviousness under 35 U.S.C. § 103. The Board concluded that Ariosa had not met its burden of proving that claims 1–18 and 19–30 would have been obvious. Ariosa Diagnostics v. Verinata Health, Inc., IPR2013-276, 2014 WL 5454541 (PTAB Oct. 23, 2014); Ariosa Diagnostics v. Verinata Health, Inc., IPR2013-277, 2014 WL 5454542 (PTAB Oct. 23, 2014). We vacate the decisions and remand for further consideration because of one matter that the Board’s language suggests it did not sufficiently consider.

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Inphi Corp. v. Netlist, Inc.

Netlist, Inc. (“Netlist”) is the assignee of U.S. Patent No. 7,532,537 (“the ’537 patent”). Inphi Corporation (“Inphi”) filed a request for inter partes reexamination on June 9, 2010. The examiner rejected claims 1–9, 12–31, and 34–44 as obvious in view of the prior art. In order to overcome this rejection, Netlist amended its claims, narrowing them. Thereafter, the examiner withdrew its rejection of the claims and issued a final decision.

Inphi then filed a Notice of Appeal to the Patent Trial and Appeal Board (“PTAB” or “the Board”), alleging, among other things, that the amendment, which introduced a negative claim limitation, failed to satisfy the written description requirement of 35 U.S.C. § 112, paragraph 1 (2006). The Board issued a decision affirming the examiner’s final decision declining to reject the relevant claims. Inphi Corp. v. Netlist, Inc., No. 2013-009066, 2014 WL 187535 (P.T.A.B. Jan. 16, 2014). Inphi filed a request for rehearing on February 18, 2014. The Board denied Inphi’s request and affirmed its decision. Inphi Corp. v. Netlist, Inc., No. 2013-009066, 2014 WL 4180943 (P.T.A.B. Aug. 13, 2014) (“Board Decision”). Inphi appeals from this decision. Because the Board’s determination that the negative claim limitation met the requirements of § 112, paragraph 1 is supported by substantial evidence, we affirm.

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Cubist Pharma., Inc. v. Hospira, Inc.

This case arises under the Hatch-Waxman Act, which governs certain patent disputes between pharmaceutical companies. The plaintiff, Cubist Pharmaceuticals, Inc., owns five patents that relate to the antibiotic daptomycin. The defendant, Hospira, Inc., sought authorization to sell a generic version of Cubist’s daptomycin product, which led Cubist to file this action charging Hospira with patent infringement.

Daptomycin was developed by Eli Lilly & Co. (“Lilly”). The original patent to daptomycin expired in 2002. The five patents at issue in this case are all follow-on patents owned by Cubist. The first is U.S. Patent No. RE39,071 (“the ’071 patent”), which is a reissue of U.S. Patent No. 5,912,226 (“the ’226 patent”) and is directed to antibiotic compounds, compositions, formulations, and methods of treating bacterial infections. The next two are U.S. Patent Nos. 6,852,689 and 6,468,967 (“the ’689 and ’967 patents”), which are entitled “Methods for Administration of Antibiotics” and are directed to dosage regimens for administering daptomycin. The final two are U.S. Patent Nos. 8,058,238 and 8,129,342 (“the ’238 and ’342 patents”), which are entitled “High Purity Lipopeptides” and are directed to the purification of daptomycin compositions.

Cubist sells its daptomycin formulation under the trade name Cubicin. In 2011, Hospira filed an Abbreviated New Drug Application with the Food and Drug Administration seeking approval to manufacture and sell an equivalent daptomycin product prior to the expiration of Cubist’s patents. Pursuant to procedures set forth in the Hatch-Waxman Act, Cubist then filed an action in the United States District Court for the District of Delaware, alleging that Hospira had infringed all five of Cubist’s patents. Hospira responded by challenging the validity of the asserted claims of each of those patents. Two other related actions brought by Cubist were subsequently consolidated with the initial lawsuit.

Following a bench trial, the district court held some of the asserted claims of four of Cubist’s patents invalid for anticipation and all the asserted claims of those patents invalid for obviousness. As for the fifth patent, the court held the two asserted claims not invalid and ruled that Hospira’s proposed products infringed those claims. Both parties appeal from the portions of the judgment adverse to them. We affirm the judgment of the district court, relying heavily on the factual findings made by the court following the trial.

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DeLorme Publ'g Co., ITC

DeLorme Publishing Company, Inc. and DeLorme InReach LLC (collectively, “DeLorme”) appeal from a decision by the International Trade Commission (“Commission”) (1) finding that DeLorme violated a consent order by selling InReach 1.5 and SE devices containing imported components, and (2) imposing a civil penalty of $6,242,500. Certain Two-Way Global Satellite Communication Devices, System and Components Thereof, Inv. No. 337-TA-854 (Enforcement), Comm’n Op. (June 17, 2014) (J.A. 40–90) (“Comm’n Op.”). We affirm.

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