Federal Circuit Review - Issue 50
Federal Circuit Reconsiders Biosig v. Nautilus Under New Indefiniteness Standard
Biosig Instruments, Inc., v. Nautilus, Inc., No. 2012-1289, 2015 U.S. App. LEXIS 6851 (Fed. Cir. Apr. 27, 2015) (Wallach, J.).
After a protracted procedural history, the Federal Circuit took up Biosig Instruments v. Nautilus, Inc. on remand from the Supreme Court. The appellate dispute began when a district court granted summary judgment finding that claims in U.S. Pat. No. 5,337,753 – directed toward a heart rate monitor – were indefinite. The court found that a “spaced relationship” for placing the electrodes of the device was indefinite. The Federal Circuit reversed, holding that a claim term is indefinite only when it is “insoluably ambiguous.” The Supreme Court then granted certiorari to determine whether the “insoluably ambiguous” standard was the appropriate measure of indefiniteness.
In Nautilus, 134 S.Ct. at 2130 (2014), the Supreme Court rejected the “insoluably ambiguous” standard, finding that it lacked precision and noting instead that claims are indefinite when “read in light of the specification delineating the patent, and the prosecution history, [they] fail to inform, with reasonable certainty those skilled in the art about the scope of the invention.” On remand, the Federal Circuit directly addressed what many believed to be a heightened standard for indefiniteness, noting that the Supreme Court did not heighten the requirements for demonstrating indefiniteness, but instead sought to clarify the test by implementing the more familiar standard of “reasonable certainty.”
Applying the Supreme Court’s revised test, the Federal Circuit again concluded that the disputed claims were not indefinite. The Court chose only to “revisit the intrinsic evidence here to make clear that a skilled artisan would understand with reasonable certainty the scope of the invention.” The Federal Circuit held that the intrinsic evidence would sufficiently inform a person of ordinary skill that the “spaced relationship” of the electrodes must be no more than the width of a hand and large enough that electrodes would not overlap. In light of the clarity within the prosecution history and patent itself, the Federal Circuit reached the same conclusion under the clarified standard – that the claims were not indefinite.
A Potential Competitor May Bring False Marking Action if It Suffered Competitive Injury
Ponani Sukumar and Southern California Stroke Rehab. Ass., Inc. v. Nautilus, Inc., No. 2014-1205, 2015 U.S. App. LEXIS 7329 (Fed. Cir. May 4, 2015) (Prost, CJ.).
Sukumar launched several legal actions against Nautilus relating to its purchase of Nautilus’s custom fitness machines. The current litigation was filed by Sukumar and SCSRA (collectively “Sukumar”) after SCSRA (a company founded by Sukumar) had acquired over 100 Nautilus fitness machines. On summary judgment, the district court found that several patents marked on the Nautilus fitness machines did not cover them, which is a violation of 35 U.S.C. § 292(a). However, in order to bring a private action to enforce this provision, 35 U.S.C. § 292 (b) requires the plaintiff to have suffered a “competitive injury as a result of a violation of this section.” The district court found that Sukumar failed to show a competitive injury and therefore lacked standing to bring the suit.
On appeal, Sukumar claimed that although he was not selling products in competition with Nautilus, he suffered competitive injury as a potential competitor because he intended to enter the market. The Federal Circuit examined the statutory text, legislative history, analogous areas of the law, and policy considerations for the false marking statute. It concluded that §292(b) extends standing to potential competitors who “suffered a competitive injury” as a result of the 292(a) violation, i.e. those who are engaged in competition. “[A] potential competitor is engaged in competition if it has attempted to enter the market,” in other words, it intended to enter the market with a reasonable possibility of success and it had taken sufficient steps to enter the market.
Here, Sukumar “intended only to open senior rehabilitation centers” and “to use modified fitness machines in senior rehabilitation and spa centers.” There was no evidence that Sukumar intended to mass produce machines in competition with Nautilus. As part of a litigation settlement strategy, Sukumar attempted to negotiate a license to Nautilus’ patents. The license explained that Sukumar and SCSRA were “interested in developing and operating a series of rehabilitation centers that would provide physical therapy and other rehabilitation services to stroke victims and patients suffering from stroke-like symptoms.” The proposed license envisioned that Sukumar would “make and have made for use exclusively in Sukumar owned rehabilitation centers equipment and parts that are covered by a claim of Nautilus’ patent rights.”
Sukumar’s action to enter the fitness machines market was deemed insufficient. At the time he filed this suit, Sukumar “did not develop a business plan,” “did not attempt to design a prototype,” “did not hire any employees,” “did not gain engineering knowledge,” and “did not investigate developing manufacturing capacity.” The Court therefore affirmed the district court’s summary judgment for lack of standing.
Sukumar also appealed the summary judgment rejecting its unfair competition claims. Sukumar relied on a quotation from the district court decision to argue that the court incorrectly required Nautilus’ false marking to be the “sole cause” of his damages rather than the immediate or but-for cause. The Federal Circuit held that “[w]hile the district court’s particular word choice in that sentence may be imprecise, it does not negate the district court’s two-page recital of what even Sukumar admits is the correct law.” Since the district court also “faithfully applied the correct law” throughout the rest of the opinion, the Federal Circuit affirmed.
The following opinions are not reported in this newsletter:
Eon Corp. IP Holdings LLC v. AT&T Mobility LLC, No. 2014-1392, 2015 U.S. App. LEXIS 7464 (Fed. Cir. May 6, 2015) (affirming the grant of summary judgment of invalidity for indefiniteness).
Takeda Pharmaceuticals U.S.A., Inc. v. West-Ward Pharmaceutical Corp., No. 2015-1139, -1142, 2015 U.S. App. LEXIS 7465 (Fed. Cir. May 6, 2015) (affirming the denial of a preliminary injunction for failure to show a likelihood of success on the merits).
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