Federal Circuit Review - Issue 252
252-1. Attorney’s Fees and Noninfringement Upheld in Favor of “Eko” While Its Claim of Willful Infringement Against “ARM” Denied
The Federal Circuit recently affirmed a decision of the U.S. District Court for the Western District of Washington that awarded attorney’s fees to Eko Brands, LLC (“Eko”), found certain claims of U.S. Patent No. 8,720,320 (“the ’320 patent”) invalid (owned by Adrian Rivera and Adrian Rivera Maynez Enterprises, Inc. (“ARM”)), and found that ARM infringed Eko’s patent (U.S. Patent No. 8,707,855 (“the ’855 patent)). See Eko Brands, LLC v. Adrian Rivera Maynez Enters., Nos. 2018-2215, 2018-2254, 2020 U.S. App. LEXIS 962 (Fed. Cir. Jan. 13, 2020) (Before Dyk, Reyna, and Hughes, Circuit Judges) (Opinion for the Court Dyk, Circuit Judge).
The case began on August 4, 2014, when ARM filed a complaint against Eko and other respondents at the International Trade Commission (“ITC”) alleging infringement of claims 5–8 and 18–20 of the ’320 patent and seeking a limited exclusion order and a cease and desist order. The ’320 patent is directed to an adaptor device for use with Keurig® single-brew coffee machines or similar brewers, which provided compatibility between a single-serve beverage brewer and beverage pods. In proceedings involving other respondents, the ITC found that claims 5–7, 18, and 20 of the ’320 patent were invalid for lack of written description, and the Federal Circuit affirmed. Regarding claims 8 and 19, the ITC made no invalidity determination because those claims were withdrawn as to the other respondents. Eko defaulted in the ITC proceedings with respect to ARM’s allegations that it infringed claims 8 and 19, and the ITC issued a limited exclusion order and cease and desist order.
Then, on April 2, 2015, Eko brought an action against ARM in the United States District Court for the Western District of Washington seeking (1) a declaratory judgment of noninfringement as to claims 8 and 19 of the ’320 patent and (2) a declaratory judgment that claims 8 and 19 were invalid as obvious. ARM counterclaimed alleging infringement of claims 8 and 19. The district court granted Eko declaratory judgment of noninfringement, and, at trial, a jury found claims 8 and 19 of the ’320 patent to be invalid as obvious. The district court also awarded Eko attorney’s fees associated with obtaining a judgment of noninfringement and obviousness.
On appeal, ARM disputed the district court’s findings of noninfringement and obviousness as well as the district court’s fee awards. ARM contended the district court erroneously found claims 8 and 19 of the ’320 patent obvious in view of U.S. Patent No. 3,878,722 to Nordskog (“Nordskog”) based on an improper claim construction of the term “brewing chamber.” The district court construed the term to mean “a compartment in which brewing occurs” that “does not necessarily have to be sealed or fully-enclosed.” In contrast, ARM argued that the term “brewing chamber” requires a “sealed or fully-enclosed” space. Because the specification of the ’320 patent disclosed embodiments with fully-enclosed structures and partially-enclosed structures, the Federal Circuit agreed with the district court’s claim construction, and thus, affirmed the district court’s determination of obviousness.
Regarding the district court’s award of attorney’s fees to Eko, ARM argued that the district court improperly awarded attorney’s fees based on both noninfringement and obviousness. With respect to the award of attorney’s fees based on noninfringement, ARM argued that the district court erred based on its construction of the term “passageway” in claims 8 and 19 as (1) “a narrow space of some depth or length connecting one place to another,” and (2) not “encompass[ing] a receptacle that had no bottom or that utilized a broad, thin mesh.” Despite ARM’s argument, the Federal Circuit found that ARM made no claim that Eko’s receptacle (cup) constitutes a passageway. In fact, the Federal Circuit emphasized the district court’s finding that, “[n]o reasonable person looking at the cut-out openings on the side of [Eko’s] devices would describe them as passageways.” Turning to the district court’s award of attorney’s fees based on the finding of obviousness, the Federal Circuit agreed that ARM’s conduct as to the issue of obviousness was “exceptional” under 35 U.S.C. § 285. Here, ARM argued that the district court’s denial of Eko’s motion for summary judgment on the issue of obviousness demonstrated the validity of its claim, and therefore, a lack of exceptional conduct under § 285. Despite, the denial of summary judgment, the district court stated that ARM offered little explanation for its obviousness position and that ARM was not seriously trying to defend the obviousness of the claims at issue. Accordingly, the Federal Circuit affirmed the award of attorney’s fees to Eko based on ARM’s conduct regarding noninfringement and obviousness.
ARM also argued that the district court erred in construing claim 8 of the ’855 patent as not requiring a “single-serve beverage brewer,” and that the judgment of infringement should be set aside. Although the preamble of claim 8 recites, in part, “[a] beverage brewing device for use with a single-serve beverage brewer having a brewing holster,” the Federal Circuit found that a “single-serve beverage brewer” is only as a “reference point” to define the purpose and structure of the brewing device. The Federal Circuit further made this determination based on no suggestion within the prosecution history that the beverage brewer itself is part of the claim.
Finally, on cross-appeal, Eko challenged the district court’s jury instruction on willful infringement. During the reading of the final jury instructions, Eko objected to the language of the jury instruction. Eko argued that the inclusion of the phrases “especially worthy of punishment” and “willful infringement is reserved for only the most egregious behavior” in the jury instruction were erroneous. The district court considered Eko’s proposed changes and revised the jury instruction to delete the phrase “only the most” from the instruction. Although the Federal Circuit agreed that the jury instruction contained erroneous language, the Court affirmed the district court’s finding, because, to be reversible, the jury instructions read in their entirety must be incorrect or incomplete as given.
Concurring Opinion
Judge Reyna concurred-in-part and dissented-in-part. In particular, Judge Reyna believed the district court improperly read a negative limitation into the term “passageway.” More
specifically, the district court excluded “a broad, thin mesh” from the construction of “passageway,” which was not supported by the specification or prosecution history. Reyna believed the district court
relied on this construction to improperly grant summary judgment on the issue of noninfringement and the award of attorney’s fees. Regarding the remaining issues, Judge Reyna concurred with the Court’s opinion.
A denial of movant’s motion for summary judgment may be insufficient to disprove an award of attorney’s fees for the movant on the later-tried issued when the court gives a reasonable explanation for the denial of summary judgment and the opposing party’s conduct is determined “exceptional” under 35 U.S.C. § 285.
252-2. PTAB Refuses to Apply SAS Institute on Remand as Ordered by Federal Circuit, Federal Circuit Denies Rehearing
The Federal Circuit recently denied a petition by BioDelivery Sciences International, Inc. (BioDelivery) for a rehearing en banc following a refusal by the Patent Trial and Appeal Board (PTAB) to apply the Supreme Court’s decision in SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018). See BioDelivery Scis. Int'l, Inc. v. Aquestive Therapeutics, Inc., Nos. 2019-1643, 2019-1644, 2019-1645, 2020 U.S. App. LEXIS 1030 (Fed. Cir. Jan. 13, 2020) (Before Prost, Chief Judge, Newman, Lourie, Dyk, Moore, O’Malley, Reyna, Wallach, Taranto, Chen, and Hughes, Circuit Judges) (Opinion for the Court, Lourie, Circuit Judge) (Dissenting opinion, Newman, Circuit Judge).
The petition for rehearing arrived at the Federal Circuit following a decision by the PTAB to disregard a remand order by the Federal Circuit ordering the PTAB to apply the Supreme Court’s holding in SAS Institute and decide all of the claims and grounds challenged in an inter partes review. Rather, the PTAB, on remand, withdrew all of its past actions as to the proceedings at issue and denied the petition in its entirety. BioDelivery then petitioned the Federal Circuit for a rehearing en banc, but the Federal Circuit voted to deny the rehearing, with Circuit Judge Newman offering the only dissenting opinion.
In her dissent, Circuit Judge Newman discussed the significance of the Federal Circuit’s decision to deny the rehearing and argued that the denial showed not only that the PTAB is not required to comply with the Court’s remand order but also that the PTAB’s noncompliance is not reviewable. Circuit Judge Newman argued that it was contrary to the America Invents Act, the mandate rule of the Administrative Procedure Act, and the USPTO’s own Office SAS Guidance for the PTAB to disregard the Federal Circuit’s remand order. See 35 U.S.C. § 144; 28 U.S.C. § 2196; 5 U.S.C. §§706(2)(A), (C)); Guidance on the Impact of SAS on AIA Trial Proceedings, U.S. Patent & Trademark Office (Apr. 26, 2018), https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-baord/trials/guidance-impact-sas-aia-trial.
Reiterating that the PTAB’s refusal to comply the Federal Circuit’s remand order should have been reviewed, Circuit Judge Newman argued that “the legislative record contains no contemplation of a PTAB procedure whereby, after full PTAB trial and decision and appeal to the Federal Circuit, the PTAB could annul the appeal and remove the entire action and decisions and procedure from history, insulated from review.” However, despite Circuit Judge Newman’s concerns with the PTAB’s actions, the majority voted to deny the rehearing.
Although the PTAB is generally compelled to follow a remand order from the Federal Circuit, the PTAB may be able to disregard a remand order by denying institution of the trial on remand, and its decision may be unreviewable.