2015 AIPLA IP Practice in Europe Committee June, 2015 Phil Swain Foley Hoag LLP Boston, MA - USA Teva v. Sandoz and other recent decisions and implications for US litigation 1 © AIPLA 2015
Dec 22, 2015
2015 AIPLA IP Practice in Europe CommitteeJune, 2015
Phil Swain
Foley Hoag LLP
Boston, MA - USA
Teva v. Sandozand other recent decisions
and implications for US litigation
1© AIPLA 2015
Disclaimer: The purpose of this presentation is to provide educational and informational content and is not intended to provide legal services or advice. The opinions, views and other statements expressed by the presenter are solely those of the presenter and do not necessarily represent those of AIPLA or of AIPPI-US.
© AIPLA 20152
Supreme Court calls for greater deference to trial court claim construction
Overrules Federal Circuit precedent of treating all aspects of claim construction as purely legal questions to be reviewed de novo
Federal Circuit must now apply deferential “clear error” standard of review to findings of fact underlying trial court claim construction
Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc.
© AIPLA 20153
Disputed claim term “molecular weight”
Defendants argued terms could have three meanings, and therefore was indefinite
Trial court heard evidence from parties’ experts, rejected indefiniteness defense, and construed “molecular weight” to mean “average molecular weight”
Federal Circuit reviewed claim construction under de novo standard of review, and reversed trial court’s ruling
Held that “molecular weight” was indefinite and claim was invalid
Teva background facts
© AIPLA 20154
No “patent law” exception to the “clear command” of Rule 52(a) which requires a “clear error” standard of review of
factual determinations underlying a trial court’s claim construction
consideration of extrinsic evidence regarding background science or meaning of term in the relevant art during relevant time is analogous to evidence concerning trade usage in contract disputes
practical considerations also support deferential reviewo trial judge has comparatively greater opportunity
to gain familiarity with scientific principles at issue and can make credibility determinations about dueling experts
Supreme Court’s reasoning in Teva
© AIPLA 20155
There are distinctions between intrinsic and extrinsic evidence when trial court considers only intrinsic evidence (patent claims,
specification, file history) – legal determination and de novo review
but when trial court makes subsidiary fact findings based on extrinsic evidence, those findings are subject to the “clear error” standard
Federal Circuit erred in reviewing de novo the trial court’s conclusion, based on disputed expert testimony, as to how a person of skill in the art would understand a figure in the specification
Justice Thomas dissent asserted that the majority decision undermined the public notice function of patents, because the ultimate meaning of a patent claim should not depend on the specific evidence presented in a particular case “clear error” review would also undermine uniformity and lead
to costly satellite litigation over what constitutes a subsidiary fact
Supreme Court’s reasoning in Teva (2)
© AIPLA 20156
Gives litigants incentive to shift focus in claim construction from intrinsic evidence (usually treated as
dispositive) to extrinsic evidence warranting factual findings (which will be given greater deference on appeal)
In Markman hearings, expect increased reliance on expert testimony additional claim construction briefing on fact issues submission of proposed findings of fact longer claim construction hearings extensive battles over whether a contested issue is
one of fact or law
Teva’s implications for US patent litigation
© AIPLA 20157
Supreme Court reverses Federal Circuit holding that defendant/accused inducer’s good faith belief of invalidity “may negate requisite intent for induced infringement”
Belief as to patent invalidity “cannot negate the scienter required for induced infringement”
Thus defendant who believes patent is invalid may still be liable for inducing infringement if it turns out patent was valid
Commil USA, LLC v. Cisco Systems, Inc.
© AIPLA 20158
Commil owned patent on wireless networks, sued Cisco for infringement, including induced infringement
Jury found direct infringement, but no liability for inducement in first trial, but judge granted new trial on that issue
In second trial, on inducement only, judge excluded Cisco’s evidence of “good faith belief that Commil patent was invalid” Jury returned verdict for Commil and awarded $63.7 million
Federal Circuit vacated and remanded the infringement holding “It is axiomatic that one cannot infringe an invalid patent” evidence of an infringer’s good faith belief in invalidity may
negate the requisite intent for induced infringement no principled difference between good-faith belief of
invalidity and non-infringement for purposes of intent to induce infringement
Commil background facts
© AIPLA 20159
Inducer must have knowledge that the induced acts constitute infringement
The intent necessary to find inducement liability is the intent to infringe therefore belief it is not causing customer to infringe
is relevant to show lack of intent but belief about invalidity in not relevant to that
intento because invalidity is not a defense to infringement,
it is a defense to liability Practical reasons to reject good faith belief of invalidity
defense accused inducers can attempt to invalidate through
declaratory judgment, PTAB, reexamination, or defense in patent infringement suit
Good faith invalidity defense would make patent litigation more costly
Court reasoning in Commil
10 © AIPLA 2015
Acknowledged problem of frivolous patent suits to obtain nuisance value settlements
Urged lower courts to “sanction attorneys for bringing such suits” using Rule 11 and section 285 of patent statute
These safeguards militate in favor of maintaining the separation between infringement and validity This “dichotomy means that belief in invalidity is no
defense to a claim of induced infringement”
Justice Scalia’s dissent asserts that barring the defense of perceived invalidity “increases the in terrorem power of patent trolls”
Commil’s comments on “patent trolls”
© AIPLA 201511
For defendants re-affirms the importance of the good-faith belief of
non-infringement defense to inducement claims accused infringer should develop evidence of that
belief, such as opinion of counsel, and reliance on that belief
party evaluating a patent may conclude it would not infringe if construed narrowly, and would be invalid if construed broadlyo opinion should address both issues under different
claim constructions, even if invalidity opinion no defense to inducement
For patent owners If patent drawn to method claims, no need to contend
with invalidity belief defenseo may benefit some patents of questionable validity
Implications of Commil
© AIPLA 201512
Direct/divided infringement steps out of the limelight in its return to the Federal Circuit
No direct infringement of method claim under section 271(a) of patent statute unless single actor performs all steps of the method
or performs some of the steps and controls actions of others who perform the rest
Section 271(a):
“Whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.”
Akamai Technologies, Inc. v. Limelight Networks, Inc.
© AIPLA 201513
Limelight performed all steps of Akamai’s patented method, except “tagging” step, which was done by customers Limelight provided instructions to customers in manual Contract explained the customers would have to
perform tagging in order to use service, but did not mandate the tagging
In 2014, the Supreme Court had ruled that Limelight was not liable for indirectly infringing Akamai’s patent because Federal Circuit did not rule there was 271(a) direct infringement Akamai’s argument that Federal Circuit is “too narrowly
circumscribing” 271(a) law did not change requirements of 271(b)
On remand, Federal Circuit left its existing standard intact
Akamai’s procedural history and background
© AIPLA 201514
Direct/divided infringement occurs only if all steps are performed or attributed to a single entity As would be the case, for example, in principal-agent
relationship, or a contractual arrangemento Contractual arrangement must mandate the performance
of the claimed method Legislative history of 1952 Patent Act eliminated liability for
tortious types of infringing behavior, and imposed liability for the acts of others based only on vicarious liability
Judge Moore dissent asserted majority opinion left gaping loophole in infringement law”o Direct infringement should be found under broader set of
circumstances where one party directs or controls the actions of
another to infringe where two parties act in concert to perform the claimed
method pursuant to a common goal, plan, or purpose o But recognized this will require en banc action
Federal Circuit reasoning in Akamai
© AIPLA 201515
For accused infringers Divided infringement defenses remain viable
For patent owners avoid construction of claims in litigation that could
require multiple actors to perform all the steps of patented method
In prosecution, avoid drafting or issuing method claims that requiring multiple actors
For all Stay tuned for en banc review and return to the
Supreme Court
Akamai’s implications
© AIPLA 201516