PTAB’s Final Written Decision in IPR Must Explain Its Basis for a Motivation to Combine References

In In Re: Nuvasive, Inc., Appeal No. 2015-1670, the Federal Circuit vacated the PTAB’s obviousness finding in an IPR, and remanded for the PTAB to make the necessary factual findings and articulate a reasoned explanation for why a person of ordinary skill in the art (POSITA) would have been motivated to combine the prior art references.

The PTAB instituted Medtronic’s IPR against NuVasive’s patent relating to a spinal fusion implant and issued a Final Written Decision concluding that the claims would have been obvious over three prior art references.

On appeal, the Federal Circuit rejected the PTAB’s finding of obviousness because the Final Written Decision did not adequately explain a POSITA’s motivation to combine the location of radiopaque markers disclosed in one reference with the spinal implant of another reference.  The Court found that the PTAB’s analysis was limited to summaries of the parties’ arguments; the PTAB never provided a basis for adopting Medtronic’s position and failed to articulate any motivation to combine the references. The Court also found that the PTAB improperly relied on the conclusory testimony of Medtronic’s expert witness that a POSITA “would have considered it common sense” to place the radiopaque markers in the location required by the claims. Therefore, the court vacated and remanded for additional findings and explanations by the PTAB.

Induced Infringement Requires Proof of Actual Inducement

In Power Integrations, Inc. v. Fairchild Semiconductor Intl., Appeal Nos. 2015-1329, 2015-1388, the Federal Circuit held that induced infringement requires that the accused infringer actually induce a third-party direct infringer. Also, the Federal Circuit held that infringement under the doctrine of equivalents cannot stand where the finding vitiates a claim limitation.

Power Integrations and Fairchild asserted several patents against each other related to power supplies. In a bifurcated liability trial, the jury returned a mixed verdict on infringement and validity. The parties collectively raised twelve issues on appeal challenging, inter alia, induced infringement and claim vitiation under the doctrine of equivalents.

The Federal Circuit vacated the jury’s finding that Fairchild induced infringement. The jury instruction incorrectly stated that to prove induced infringement, direct infringement need not have been actually caused by Fairchild’s actions. Instead, the instructions explained that Fairchild only needed to encourage or assist infringement, regardless of whether that encouragement succeeded. The Federal Circuit held that the jury should have been instructed that Power Integrations had to prove that Fairchild successfully communicated with and induced a third-party direct infringer.

The Federal Circuit also reversed the jury’s finding that Power Integrations infringed a Fairchild patent under the doctrine of equivalents. The asserted claim required two distinct feedback signals. The jury found no literal infringement, meaning that the accused product had only one feedback signal. The Federal Circuit held that the jury’s infringement finding under the doctrine of equivalents vitiated the critical requirement that the second claimed feedback signal was “distinct” from the first feedback signal.

Broader Akamai V Divided Infringement Standard Still Requires Showing of Underlying Direct Infringement

In Medgraph, Inc. v. Medtronic, Inc., Appeal No. 2015-2019, the Federal Circuit held that the underlying direct infringement requirement for indirect infringement liability was not changed by the Federal Circuit’s holding in Akamai V.  

Medgraph sued Medtronic for patent infringement over its CareLink® Therapy Management System for Diabetes.  Medgraph asserted method claims directed toward medical diagnoses of diabetic patients, including performing steps of taking measurements, detaching a measurement device, and inputting at least one medical variable into a computer.  In response, Medtronic argued that it did not infringe the claims because certain steps were performed by doctors and patients, and that Medtronic did not direct or control the activities of doctors and patients as required under the Akamai IV (786 F.3d 899 (Fed. Cir. 2015)) standard of divided infringement liability. The district court agreed and entered summary judgement of non-infringement.  Shortly thereafter, the Federal Circuit issued its en banc decision in Akamai V (797 F.3d 1020 (Fed. Cir. 2015)), broadening the circumstances in which another’s acts could be attributed to an accused infringer to include situations where an alleged infringer “conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.”  Akamai V at 1023.  Medgraph appealed following the Akamai V decision.

On appeal, the Federal Circuit affirmed the district’s finding of non-infringement, explaining that even under the broader standard of Akamai V, Medgraph was still required to show that Medtronic “conditions the use of, or receipt of benefit from,” the CareLink® system on performing all of the steps of the claimed method. However,the record provided no evidence that Medgraph could meet this requirement. For example, Medtronic did not deny patients or doctors the ability to use CareLink® if they did not perform the claimed step of detaching of the measuring device after each measurement.  There was also no evidence that Medtronic offered an incentive to perform this detachment step or that doctors or patients would receive any benefit if this step were performed. Accordingly, even under the new standard, infringement could not be attributed to Medtronic. 

Federal Circuit Reverses Claim Construction Which Contradicted Intrinsic Evidence

In D’Agostino v. MasterCard International, Appeal Nos. 2016-1592, 2016-1593, the Federal Circuit held that the PTAB’s claim construction was unreasonable because it contradicted the specification and prosecution history of the patent.

In an inter partes review, the Board found D’Agostino’s patents invalid on anticipation and obviousness grounds. In doing so, the Board construed a “single merchant” limitation as including a chain of stores where a single store is later selected, and found that limitation disclosed by the prior art. The Board also found that the prior art disclosed the step of defining and designating a “payment category” before generating a transaction code. 

On appeal, the Federal Circuit found the Board’s construction of the “single merchant” limitation unreasonable because it contradicted the specification and prosecution history.  The prosecution history indicated that the single merchant limitation was not related to the particular identity of any store or chain of stores.  In contrast, under the Board’s reasoning, the chain is either more than one merchant, or a single merchant that must be identified in order to choose a store owned by the chain. 

The Federal Circuit affirmed the Board’s finding that the claims required selecting a “payment category” before generating the transaction code.  The court found that the prior art disclosed a user providing “what the single use or the customized credit card number is to be used for.”