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Judicial Efficiency and the Policy of Repose Counsels Against Giving Deference on Appeal to PTO’s Reissuance of a Patent After a Trial Court Decision

October 10, 2008

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Last Month at the Federal Circuit - November 2008

Judges: Newman, Plager (author), Schall

[Appealed from: N.D. Cal., Magistrate Judge Seeborg]

In Technology Licensing Corp. v. Videotek, Inc., Nos. 07-1441, -1463 (Fed. Cir. Oct. 10, 2008), the Federal Circuit affirmed the trial court’s judgment of invalidity of U.S. Patent No. 5,754,250 (“the ’250 patent”), rejecting Technology Licensing Corporation’s (“TLC”) argument that the trial court improperly shifted the burden of persuasion. It also affirmed noninfringement of U.S. Patent No. 5,486,869 (“the ’869 patent”) in favor of Gennum Corporation (“Gennum”). It affirmed the trial court’s conclusion of no inequitable conduct during prosecution of the ’250 patent because the alleged omission was cumulative, not material. Finally, the Court affirmed the validity of the ’869 patent, concluding that Gennum did not carry its burden of persuasion.

TLC owns the ’250 and ’869 patents, which relate to separating synchronization signals, or sync signals, from video signals. To accurately reproduce a transmitted image, circuits referred to as sync separators must precisely extract the sync signal from the composite video signal. This indicates the beginning of information for each line of an image. The first step of the process, called clamping, holds a negative peak of the sync signal to a known voltage. The ’250 patent contains claims involving only a single clamp. The ’869 patent, on the other hand, claims a sync separator with two separate clamping operations. The ’869 patent also describes a sync separator that is able to recover sync signals from different types of video signals.

Both patents resulted from a chain of continuation and CIP applications. The inventor filed the first patent application, Serial No. 837,323 (“the ’323 application”) on February 28, 1992. The ’869 patent eventually issued from a continuation application. Before the ’869 patent issued, the inventor filed a CIP application on June 22, 1995. The ’250 patent later issued from another CIP application derived from the 1995 CIP application.

TLC filed a complaint against Videotek, Inc. (“Videotek”), alleging infringement of the ’869 and the ’250 patents for sync separator chips supplied by Gennum to Videotek. Videotek filed a third-party complaint against
Gennum seeking indemnification. TLC and Videotek settled, leaving only the dispute between TLC and Gennum. Gennum manufactured chips with both one- and two-clamp circuits. The trial court found Gennum’s one-clamp chips infringed the asserted claims of the ’250 patent. But it held the ’250 patent invalid as anticipated, rejecting TLC’s argument that the patent was entitled to the filing date of the ’323 application. It also found neither the one- nor two-clamp chips infringed the asserted claims of the ’869 patent. Finally, it rejected Gennum’s challenge to the validity of claim 31 on the ground that it did not meet the written description, enablement, and indefiniteness requirements of 35 U.S.C. § 112.

The Federal Circuit first addressed TLC’s appeal of the invalidity judgment of claim 33 of the ’250 patent. TLC did not dispute that chips made by Elantec, which were described in data sheets published in May and November 1993, contained all the limitations of the asserted claims of the ’250 patent. These data sheets were published after the filing date of the ’323 application, but more than one year before the filing date of the application that resulted in the ’250 patent. The issue for the Court was whether the Elantec chips were prior art. Thus, the Court addressed whether claim 33, and particularly the “other circuit” limitation, was adequately described by the ’323 application and therefore entitled to the benefit of the ’323 application’s 1992 filing date.

On appeal, TLC argued that the trial court erred by shifting the burden of proof to TLC to show the ’250 patent was entitled to the earlier filing date of the ’323 application. TLC contended that the burden of persuasion should have remained on the challenger. On the other hand, Gennum argued that the Court’s decision in PowerOasis, Inc. v. T-Mobile USA, Inc., 522 F.3d 1299 (Fed. Cir. 2008), relieved Gennum of that burden.

Based on its reading of PowerOasis, Gennum argued that the risk of nonpersuasion falls on the patentee, contending that the patentee has the burden of proving entitlement to the earlier effective filing date. The Court noted Gennum was not alone in reading PowerOasis to have modified the traditional burdens rule so that the patentee has the burden of persuasion to prove it was entitled to the earlier filing date. In the Court’s view, however, PowerOasis did not extend so far. “[O]nce a challenger (the alleged infringer) has introduced sufficient evidence to put at issue whether there is prior art alleged to anticipate the claims being asserted, . . . the patentee has the burden of going forward with evidence and argument to the contrary.” Slip op. at 18-19.

Turning to the trial court’s opinion, the Federal Circuit found that the trial court did not improperly shift the burden of persuasion on TLC. The Court interpreted the trial court’s opinion as concluding that, after giving TLC’s evidence due weight, Gennum’s evidence and arguments were sufficient to conclude by clear and convincing evidence that the ’323 application did not provide adequate written support for claim 33.

On the burden issue, TLC also argued that the trial court gave no deference to the PTO’s decision to approve the claim. The prior art at issue was before the examiner, but nothing in the record indicated the PTO determined claim 33 was or was not entitled to the ’323 application filing date. Therefore, absent express evidence by the examiner, the overall assessment of the evidence by the trial court subsumed the deference question. Moreover, the Federal Circuit assumed the trial court properly included the PTO’s expertise in its calculations because TLC produced no evidence to the contrary on appeal.

The Court also addressed the effect that the reissuance of the ’250 patent, subsequent to the decision by the trial court, had on the appeal. It was self-evident to the Court that the PTO’s reissuance of a patent can have no legal effect on an already rendered judgment of a court of competent jurisdiction, but the question of deference on appeal remained. The Court further concluded it would give no deference on appeal to a patent reissued subsequent to a trial court’s decision. “[J]udicial efficiency and the policy of repose” counseled the Court against adding an additional deference factor or asking the trial court to reopen the entire invalidity question to reweigh additional deference. Id. at 23. In the Court’s view, the judicial process would be “held hostage to the timing of” further PTO review. Id. Thus, only the record before the Court on appeal would be consulted without deference to the later reissue decision.

Finally, the Court addressed the merits of the trial court’s determination that the ’323 application does not provide adequate written description support for the “other circuit” limitation of claim 33. TLC argued that two resistors in a figure of the ’323 application provided adequate description support for the “other circuit” limitation in claim 33. The text of the written description, however, made no mention of one resistor and only briefly referred to the other in passing. In contrast, the ’250 patent contained new matter describing resistors in a new figure that corresponded to the “other circuit.” Furthermore, although the inventor identified subject matter from the ’323 application that corresponded to another limitation of claim 33, the only support that he acknowledged for the “other circuit” limitation was the new matter added in 1995.

The Federal Circuit rejected TLC’s argument that the two resistors in the written description of the ’323 application provided adequate support for the “other circuit.” First, the Court noted, comparing the figure in the ’323 application with the figure in the ’250 patent did not address whether the ’323 application itself had sufficient written description for claim 33. Next, the Court noted that the trial court was not persuaded that the inventor had possession of the claimed “other circuit” in 1992 when he filed the ’323 application. Based on the entire record before it, the trial court concluded that a person skilled in the art would not understand the ’323 application to show the inventor had actually invented the claimed subject matter as of 1992. The Court affirmed the trial court’s finding that claim 33 and its dependent claims were not entitled to the benefit of the 1992 filing date and the resultant finding of invalidity.

The Court next turned to the infringement judgment of the asserted claims of the ’869 patent. TLC argued that the trial court erred as a matter of law in excusing infringement by Gennum as de minimis. The Federal Circuit rejected this argument, finding that the trial court concluded Gennum’s chips did not infringe because they did not satisfy the limitations of the claims, not that the chips would infringe but only very quickly or briefly. Accordingly, the Court affirmed the trial court’s judgment of no infringement.

The Court then addressed Gennum’s appeal of the finding of no inequitable conduct during the prosecution of the ’250 patent by failure to disclose certain prior art to the PTO. The trial court concluded, and the Federal Circuit agreed, this prior art was cumulative and thus not material. Gennum, however, urged the Court “to hold that an anticipatory prior art reference is material as a matter of law, regardless of whether it was cumulative to other prior art of record in the patent application.” Id. at 33. Gennum suggested that the Court could modify the PTO rule regarding cumulative references because it was promulgated pursuant to the judicially created doctrine of inequitable conduct. The Court rejected the argument, stating it was bound to follow its own precedent: “[A] cumulative reference is not material for purposes of inequitable conduct.” Id. at 34. Therefore, the Court affirmed the conclusion of no inequitable conduct.

Finally, the Federal Circuit addressed Gennum’s appeal of the trial court’s holding that claim 31 of the ’869 patent was not invalid for indefiniteness. The parties agreed that the claim was written in means-plus-function language. But Gennum argued that the ’869 patent failed to disclose adequate structure in the specification because the claimed circuit element was only shown as a black box with no details of its inner circuitry. The Federal Circuit rejected Gennum’s argument, noting Gennum failed to prove a person skilled in the art would not have recognized the black box as a known structure. Accordingly, the Federal Circuit affirmed the trial court’s finding that the claim was not invalid for indefiniteness.