“Mere Vulnerability” to an Invalidity Challenge Insufficient to Defeat Preliminary Injunction
In Natera, Inc v. Neogenomics Laboratories, Inc., Appeal No. 24-1324 the Federal Circuit held that preliminary injunction may be valid if a substantial question of invalidity was not raised, even if the asserted patent is vulnerable to an invalidity challenge.
Natera alleged that NeoGenomics’ product, RaDaR assay, infringed Natera’s patents related to detecting ctDNA for early assessment of cancer relapse. The District Court issued a preliminary injunction barring NeoGenomics from making, using, selling, or offering for sale RaDaR assay, as it infringed Natera’s patent, US 11,519,035. The District Court clarified its order several times in order to allow certain research and testing using the RaDar assay to proceed in light of the public interest in such uses. NeoGenomics appealed, arguing (a) that RaDaR assay does not infringe Natera’s patent, (b) that the ’035 patent is invalid in light of a prior art reference and knowledge in the field, and (c) that public interest would dictate allowing the sale of RaDaR assay due to its superior sensitivity. The Federal Circuit disagreed and affirmed the District Court.
On appeal, NeoGenomics argued that the District Court failed to engage in explicit claim construction of the ’035 patent. The Federal Circuit determined that no definitive claim construction was necessary, as NeoGenomics did not present a claim construction dispute until its motion to stay the preliminary injunction pending appeal. NeoGenomics next asserted that the burden for defeating a preliminary injunction is “mere vulnerability” of the patent to an invalidity challenge. The Federal Circuit indicated that NeoGenomics was incorrect. While an accused infringer need not make out a case of actual invalidity to avoid a preliminary injunction, the accused infringer does need to show a “substantial question of invalidity.” NeoGenomics failed to articulate a reason why a skilled artisan would have been motivated to use the prior art reference for cfDNA-based cancer detection, and thus failed to show a substantial question of invalidity.
Finally, NeoGenomics argued that RaDaR has superior sensitivity to Natera’s product, so public interest would require overturning the preliminary injunction to benefit cancer patients. The Federal Circuit found that NeoGenomics assertion of RaDaR’s superiority was unsupported by clinical data and further found that the District Court’s efforts to tailor the injunction to allow research using the RaDaR assays and certain testing to proceed addressed concerns regarding the public interest in access to RaDaR assays.
Repeat Patent Plaintiff Pays Price for Not Appearing in Person
In Backertop Licensing LLC v. Canary Connect, Inc., Appeal No. 23-2367 the Federal Circuit held that Federal Rule of Civil Procedure 45 does not limit the geographical range of a court’s ability to sua sponte issue an order to appear.
Background: Over the past year and a half, the Chief Judge of the District of Delaware has been investigating potential attorney and party misconduct in dozens of related patent cases. The plaintiffs in these cases are limited liability companies that appear to be associated with IP Edge (a patent monetization firm) and Mavexar (consulting shop). Due to concerns that tactics employed by IP Edge and Mavexar concealed from the court the real parties in interest, perpetrated fraud on the court by fraudulently conveying patent to shell LLCs by filing fictitious assignments with the USPTO, violated local disclosure rules, and violated the Rules of Professional Conduct, the District Court held evidentiary hearings to gather information regarding the conduct of the parties. The cases involving Backertop Licensing LLC are part of the District Court’s inquiry.
District Court Proceedings: Ms. LaPray was the sole owner of Backertop Licensing LLC, an entity that had filed at least twelve patent infringement cases across several federal district courts. Ms. LaPray was also the managing member of six other LLCs that had filed at least ninety-seven patent infringement cases. In March 2023, the District Court ordered Backertop, Ms. LaPray, and their attorneys to produce documents relating to the court’s concern regarding potential fraud on the court and ordered Ms. LaPray to identify “any and all assets owned by Backertop.” Backertop sought to have the production order set aside and then subsequently filed a joint stipulation of dismissal. Days later Backertop’s attorneys sought to withdraw as counsel, which Backertop opposed. The District Court set a hearing and ordered all parties to appear in person. The Court denied Backertop’s motion to set aside the production order and, after receiving the production, notified the parties that the District Court had questions for Ms. LaPray which required her physical presence in court. To accommodate Ms. LaPray’s conflicts, the Court set a new hearing date and denied her request to appear telephonically. Backertop moved for reconsideration, arguing that FRCP 45’s geographic limit “preclude[d] the District Court’s order requiring Ms. LaPray to appear in Delaware.” The District Court denied the motion. After Ms. LaPray still refused to attend the scheduled hearing, the District Court found her in civil contempt of court and imposed a fine of $200 per day until she appeared in-person in court. Backertop and Ms. LaPray appealed.
Federal Circuit Proceedings: The Federal Circuit affirmed the District Court, explaining that “[o]n its face, FRCP 45 only applies to a party or attorney’s efforts to subpoena a person required to attend a trial, hearing, or deposition within a 100-mile radius.” Accordingly, Rule 45 did not apply to the district court’s sua sponte order to appear. The Federal Circuit additionally held that the District Court’s order to compel was an “appropriate means to investigate potential misconduct involving Backertop.”
Automating A Process For Performing Background Checks Held Patent Ineligible Under § 101
In Miller Mendel, Inc. v. City Of Anna, Texas, Appeal No. 22-2090 the Federal Circuit held that no live controversy exists over any claims eliminated from infringement contentions prior to a judgment on the pleadings.
Miller Mendel, Inc. (“Miller Mendel”) alleged that the City of Anna, Texas (“City”) infringed its patent claims directed to a software system for managing pre-employment background investigations. Citing § 101 patent ineligibility, the District Court granted City’s motion for judgment on the pleadings. Miller Mendel appealed, inter alia, the Court’s patent ineligibility holding. On cross appeal, City argued that the District Court erred in its Reconsideration Order, which clarified that the judgment limited the invalidity holding to only claims one, five, and fifteen.
First, the Federal Circuit affirmed the District Court’s Reconsideration Order. City argued that the invalidity holding should also extend to claim nine. The Circuit, however, cited a lack of subject matter jurisdiction over the remaining claims. Prior to the District Court’s initial judgment, Miller Mendal amended its infringement contentions. It only alleged infringement of claims one, five, and fifteen. The amendment, therefore, eliminated any existing controversy and undermined the Court’s subject matter jurisdiction over the remaining claims.
Second, the Federal Circuit affirmed the District Court’s patent ineligibility holding. Applying Alice step one, the Circuit held that the claims, while an improvement, constituted a mere abstract idea. Applying step two, the claims failed to contain additional elements that transformed the invention into a patent-eligible application. The limitations required only routine computer and network functionality, and the specification described the invention as automating the “majority of the tasks of a common pre-employment background investigation.”
Estoppel Does Not Apply to Previously Issued Claims
In Softview LLC v. Apple Inc., Appeal No. 23-1005 the Federal Circuit held that estoppel under 37 CFR § 42.73(d)(3)(i) only applies to obtaining new or amended claims in the PTO and does not apply to maintaining already issued claims.
Apple and Motorola requested inter partes reexaminations of SoftView’s patent, directed to displaying internet content on mobile devices. Kyocera also filed a petition for inter partes review (“IPR”) regarding 18 of the 319 SoftView’s patent claims. Apple also filed a separate request for ex parte reexamination, but all the inter partes and ex parte reexaminations were stayed pending the outcome of Kyocera’s IPR. The Board found the 18 challenged claims of SoftView’s patent unpatentable as obvious as a result of the IPR.
After the IPR, the stays on the reexaminations were lifted. During the ex parte reexamination, SoftView amended various claims by combining limitations from multiple canceled claims from the IPR proceeding. Those amended claims issued in an ex parte reexamination certificate. Later, in the inter partes reexaminations, the Board rejected all pending claims, including the previously issued claims from the ex parte reexamination, as unpatentable under 37 C.F.R. § 42.73(d)(3)(i) because they were not “patentably distinct” from those that had been invalidated in the IPR. SoftView appealed the inter partes reexaminations, arguing, among other things, that the Board improperly applied estoppel under § 42.73(d)(3)(i) to previously issued claims.
Section 42.73(d)(3)(i) bars a patent owner from “obtaining in any patent: (i) A claim that is not patentably distinct from a finally refused or canceled claim.” The Federal Circuit agreed with SoftView that, by its terms, Section 42.73(d)(3)(i) only applies to “obtaining” a claim and not maintaining an existing claim. Thus, the Federal Circuit vacated the Board’s decision as to claims that were already issued.
SoftView also argued that the PTO did not have the authority to issue Section 42.73(d)(3)(i) because that regulation renders claims unpatentable based on a comparison to previously canceled claims, rather than to the prior art. The Federal Circuit rejected that argument, finding that the PTO’s regulations were lawfully promulgated under the PTO’s rulemaking authority. Thus, the Federal Circuit affirmed the Board’s decision barring SoftView from obtaining amended claims that were not patentably distinct from those canceled in the IPR proceeding.
A Private Sale Is Not Sufficient for Public Disclosure Under 35 USC 102(b)(2)(B)
In Sanho Corp. v. Kaijet Technology International Limited, Inc., Appeal No. 23-1336 the Federal Circuit held that an invention is not “publicly disclosed” under 35 USC 102(b)(2)(B) by the inventor’s private sale, even though a third party’s private sale may constitute an invalidating “public use” under 35 USC 102(a)(1).
Kaijet petitioned for inter partes review challenging claims of a patent owned by Sanho on grounds that the claims were obvious. Each obviousness combination included a U.S. patent application publication known as Kuo, which had an effective filing date before the Sanho patent. Sanho alleged that Kuo was not prior art because the inventor of the challenged Sanho patent sold and delivered Sanho a device embodying the claimed invention prior to Kuo’s effective filing date. Sanho contended that this private sale qualified as a public disclosure such that Kuo was not prior art under 35 U.S.C. § 102(b)(2)(B). The Board rejected Sanho’s arguments, determining that the private sale was not a public disclosure that qualified for the exemption of § 102(b)(2)(B). Sanho appealed, contending the term “publicly disclosed” in 102(b)(2)(B) should be construed to include all the disclosures described in 102(a)(1), including situations where the invention was “on sale.”
The Federal Circuit affirmed the Board’s decision, holding that a claimed invention is not publicly disclosed vis-à-vis section 102(b)(2)(B) through a private sale. The Federal Circuit noted, that while subject matter may be disclosed under 102(a)(1) through a private sale, a textual reading of the statute indicated that the “publicly disclosed” in 102(b)(2)(B) is a different phrase that should be given narrower meaning by addition of the word “publicly.” Further, the Federal Circuit noted that legislative history indicated that 102(b)(2)(B) public disclosure requires public accessibility. Finally, the Federal Circuit differentiated “public use” and “public disclosure,” with the latter requiring the invention to be made available to the public. The Federal Circuit declined to incorporate judicial interpretations of “public use” in section 102(a)(1) into the definition of “publicly disclosed” in section 102(b)(2)(B). Because the private sale between the inventor and Sanho did not sufficiently disclose the inventive subject matter to the public for the 102(b)(2)(B) exception to apply, the Board did not err in determining that Kuo was prior art.
