Lack of Irreparable Harm Dooms Preliminary Injunction Motion

By R. David Donoghue on Posted in Pleading Requirements

Varex Imaging Corp. v. Richardson Elecs., Ltd., No. 18 C 6911, Slip Op. (N.D. Ill. Sep. 30, 2019) (Blakey, J.).

Judge Blakey denied defendant Richardson Electronics’ motion for preliminary injunction in this dispute involving x-ray tubes.

Varex claimed that Richardson Electronics sale of refurbished x-ray tubes infringed its patents and irreparably harmed Varex. As an initial matter, the Court noted that both parties claimed claim construction was unnecessary and ignored the Court’s request to decide the liability issues on a complete evidentiary record. Instead, the Court was left with a conflicting record that prevented the Court from making a clear assessment of likelihood of infringement or validity.

But that was secondary because Varex was unable to show irreparable harm. Varex has an exclusive contract to sell the x-ray tubes at issue to Toshiba / Canon. But Richardson did not sell to Toshiba / Canon. As a result, the parties were not competitors. And for the same reason, Varex could not show lost sales to Richardson because Richardson did not sell to Varex’s customer. Additionally, Varex claimed that Richardson sold in the refurbished parts market where Varex only sold original parts. The Court noted that it would have to reconsider its decision if Varex conceded there was a market for refurbished x-ray tubes.

Varex’s alleged lost reputation was not sufficient to show irreparable harm because Varex did not explain how its innovation reputation could be harmed by Richardson’s presence in a separate market. Similarly, Varex was not irreparably harm because its patent was expiring in a few years and its ability to exclude others was nearing an end.

Finally, in a prior motion, Richardson raised a substantial question about whether Varex’s patent rights were exhausted as to Richardson product.

Repair versus Reconstruction is a Fact Issue Not Appropriate for Rule 12 Determination

By R. David Donoghue on Posted in Pleading Requirements

Varex Imaging Corp. v. Richardson Elecs., Ltd., No. 18 C 6911, Slip Op. (N.D. Ill. Aug. 27, 2018) (Blakey, J.).

Judge Blakey denied defendant Richardson Electronics’ Fed. R. Civ. P. 12(b)(6) motion to dismiss based upon patent exhaustion in this dispute involving x-ray tubes.

Richardson Electronics alleged that plaintiff Varex’s sale of its x-ray tubes exhausted its patent rights, leaving Richardson Electronics free to refurbish them. Richardson Electronics allegedly procures used Varex’s x-ray tubes, opens them removing certain spent components and then rebuilding / refurbishing the x-ray tubes. The Court held that where Richardson Electronics’ actions sit on the spectrum of repair (allowable) or reconstruction (infringing). Because that analysis is heavily factual, it could not be decided at the Rule 12 stage.

Court Construes Audio-Conferencing Claim Terms

By R. David Donoghue on Posted in Claim Construction

Shure, Inc. v. ClearOne, Inc., No. 17 C 3078, Slip Op. (N.D. Ill. Aug. 25, 2018) (Chang, J.).

Judge Chang construed the remaining claims in this patent case involving audio-conferencing equipment utilizing beam microphones.

Of particular interest, the Court held as follows:

  • The Court construed “Each of the Plurality of Combined Signals Corresponding to a Different Fixed Beam” by holding that “fixed” requires that the beams parameters remain fixed during a conference.
  • The Court construed “Select With a Signal Selection Module One or More of the Combined Echo Cancelled Signals for Transmission to the Far End” as it did at the PI stage as not being means plus function language. The “signal selection module” was a structure.
  • The Court construed “Said Signal Selection Module uses the Far End Signal as Information to Inhibit said Signal Selection Module from Changing the Selection of the Combined Echo Cancelled Signals while Only the Far End Signal is Active” as having its ordinary meaning. There was no need to clarify that the information is from the far end signal. That would be clear to one of ordinary skill in the art.
  • The Court construed “Acoustically Transparent” as “provid[ing] no or minimal resistance to sound.”

The Court construed “Used in a Drop Ceiling Mounting Configuration” as “configured for use in a drop ceiling mounting configuration.”

Preliminary Injunction Denied Based Upon Likely Invalidity Despite PTAB IPR Decision of No Invalidity

By R. David Donoghue on Posted in Trial, Uncategorized

Shure, Inc. v. ClearOne, Inc., No. 17 C 3078, Slip Op. (N.D. Ill. Aug. 25, 2018) (Chang, J.).

Judge Chang denied declaratory judgment defendant ClearOne’s motion for reconsideration of the Court’s denial of a preliminary injunction (PI) in this patent case involving audio-conferencing equipment utilizing beam microphones.

As an initial matter, the Court held that the parties were both incorrect regarding the Federal Rule that ClearOne’s motion was properly considered under. Rule 59(e) was inapplicable because the motion was filed more than twenty eight days after the PI decision. Rule 60(b) was inapplicable because a PI cannot be considered a final judgment. The motion was properly considered pursuant to Rule 54(b) giving the Court authority to reconsider a decision on less than all the merits at any time before a final judgment.

In its original denial of the PI, the Court noted that the PTAB’s institution decision was persuading authority, but not controlling.  Similarly, the PTAB’s final decision – which reversed course finding the challenged claims were not invalidated – was persuasive, but not binding. This was especially true based upon the “high bar” for preliminary injunctive relief.

The PTAB determined that petition had not met its burden of proving that the prior art disclosed fixed beams under the construction of fixed beam shared by the district court and the PTAB – “defined by parameters determined before a conference.” As a side note, this is an excellent example of the value of the Patent Office’s decision to normalize its claim construction standard with that of the federal courts.

The Court’s review of the prior art reference identified that the relevant section discussed adaptive – as opposed to fixed – beamforming at length, as noted by the PTAB. But the PTAB did not acknowledge that the section warned against adapting the beams too frequently during a call. That raised a significant question regarding whether the reference taught the claimed fixed beams.

The Court also was not persuaded to reverse its decision regarding the likelihood of infringement. The Court’s analysis was not based upon a claim that the accused device could not use adaptive beams, rather it was based upon the default fixed beam setting in the accused device. Nothing about the PTAB decision changed those facts or the analysis.

Irreparable Harm Based Upon Difficulty to Ascertain Impact of Lost Sales

By R. David Donoghue on Posted in Trial

Shure, Inc. v. ClearOne, Inc., No. 17 C 3078, Slip Op. (N.D. Ill. Aug. 5, 2019) (Chang, J.).

Judge Chang granted declaratory judgment defendant ClearOne’s preliminary injunction and construed necessary terms of the patent, as the parties had already fully briefed claim construction, in this patent dispute related to in-ceiling beamforming microphone arrays.

Of particular note, the Court held as follows:

  • The Court held that the person of ordinary skill in the art need not necessarily have beamforming microphone array (BFMA) experience, but must have at least one year of work experience in the field of digital signal processing.
  • Declaratory judgment plaintiff Shure’s construction of BFMA – a plurality of microphones that produce audio signals to be used for a directional pick up pattern – was the correct one because it did not include related hardware that does the beamforming. The claim separately addressed that hardware.
  • The Court adopted ClearOne’s construction of “predetermined locations.” When the Court combined the two constructions, a BFMA is “a plurality of microphones positioned at predetermined locations that produce audio signals to be used to form a directional pick up pattern.”
  • The Court adopted ClearOne’s construction of “drop space.” The correct definition was “the space between the surface of the structural ceiling of the room and the lower surface of a suspended ceiling tile.”
  • It did not matter how the BFMA was integrated into a ceiling tile because the claims were not method claims. All that mattered was that the BFMA was integrated into a ceiling tile.
  • While there was a dispute regarding whether certain pads in the ceiling tile were sound dampening, as required by the claims, ClearOne had sufficiently met its burden of showing a likelihood of infringement.
  • Shure’s anticipatory invalidity argument failed because the BFMA was not integrated into a ceiling tile.
  • The Court held that it was not clear that one of ordinary skill in the art would have known to combine Shure’s obviousness references – microphones and ceiling-integrated speakers.
  • ClearOne showed irreparable harm based upon various lost sales because sales of integrated conferencing systems are not frequently made and are typically made not just for one location, but for all locations across a business.
  • ClearOne also showed a nexus between its harm and the patented features.
  • ClearOne’s harm was also difficult to quantify because a single lost sale likely had much further reaching impacts.
  • The Court ordered the parties to confer on an appropriate amount for the required bond.

 

Court Rules on Post-Jury Trial Award of Costs

By R. David Donoghue on Posted in Trial

GC2 Inc. v. Int’l Game Tech., No. 16 C 8794, Slip Op. (N.D. Ill. Jul. 29, 2019) (Kennelly, J.).

Judge Kennelly ruled on plaintiff GC2’s motion for costs after its jury trial win on copyright infringement and Digital Millennium Copyright Act (DMCA) claims.

Of particular note, the Court held as follows:

  • Fees of the Clerk & Marshal
    • The Court award the $400 filing fee.
    • The Court also awarded $398 for service, billed at the Marhal’s rate of $65 per hour and $8 for one forward.
    • The Court denied fees for pro hac vice admissions.
  • Transcripts & Recordings
    • The Court awarded the costs ($2,330.20) for the first real-time trial transcription service (electronic) that GC2 received, but not the additional two forms, paper ($1,780,80) or same-day transcripts ($9,897.80).
    • The Court awarded $418.25 for pre-trial hearing transcripts, in part because the Court ruled on the record in several cases and transcripts were required to fully comply with the Court’s orders.
    • The Court awarded $27,091.50 for deposition transcripts, but not for ancillary fees such as expedited transcripts or multiple copies.
    • The Court also awarded court reporter appearance fees of $4,462.50. The Court awarded $36,036.38 in videographer fees, reduced because the rates exceeded reasonable rate.
    • The Court did not award appearance fees for videographers. The Court awarded $4,142.90 for scanning deposition exhibits because exhibits are usually referred to by exhibit numbers and not Bates numbers, requiring copies of the actual exhibits.
    • The Court denied costs for shipping deposition materials, word indexing and errata fees, and court reporter administrative and travel costs.
  • Printing & Exemplification
    • The Court awarded $550 for trademark file wrappers ordered from the Patent Office.
    • The Court awarded $974.56 in fees for converting electronic discovery to readable formats.
    • The Court awarded $444, a portion of GC2’s costs for blowbacks of discovery document, based upon the prevailing rate allowed in the Northern District.
    • The Court awarded $493 for affidavits supporting screen captures used during court proceedings, but not rush fees for those affidavits.
    • The Court awarded $551.48, the undisputed portion of the costs of making copies of a summary judgment response brief.
    • The Court awarded $8,505.84 for the Court’s and backup copies of exhibits, which are required by the Court.
  • Extraneous E-Discovery Costs
    • The Court awarded the $205 in undisputed additional e-discovery costs, but not the remaining $5,033, which GC2 failed to support after defendants’ objections.

Dog Tug Toy Withstands Section 101 Challenge

By R. David Donoghue on Posted in Pleading Requirements

This is a cross-post written by my partner Anthony Fuga from Holland & Knight’s Section 101 Blog. I am cross-posting because Anthony’s post is about a Judge Durkin 101 opinion in FYF-JB, LLC v. Pet Factory, Inc., No. 19cv2608 (N.D. Ill.). I am also posting it because Anthony’s 101 analysis at the Section 101 Blog is top-notch. Anyone interested in the current state of 101 law should be reading it.

FYF-JB sued Pet Factory for allegedly infringing a patent related to a tug toy that comprises: at least one gripping member; a central portion; and a noise maker designed to emit a sound when one applies force. The patent explains that “noise makers such as squeak toys are known, however, there is currently no tug toy that emits a sound when at least two pets, or a pet and its owner, pull a tug toy” and a tug toy that emits a sound when it’s tugged was needed.

Pet Factory moved to dismiss the complaint, arguing that the asserted patent claims are invalid because they’re directed to the natural law of “force and its direction” and that the patent claims “at best simply limit the natural law of force to the particular environment of a tug toy.”

The patent owner countered that the claims are directed to an article of manufacture – a tug toy – which happens to use force for its operation, and directed the court to a recent decision from Colorado related to a swing that could move in any direction. In that case, the defendant argued that swings were “nothing more than a millennia old application of a pendulum – a natural phenomenon that cannot be patented.” The Colorado court rejected that argument, stating that the inquiry “cannot simply ask whether the claims involve a patent-ineligible concept, because essentially every routinely patent-eligible claim involving physical products and actions involves a law of nature and/or natural phenomenon.”

The N.D. Illinois court agreed with the Colorado court’s analysis and found that the tug toy is “adapted to transmit force to the central portion . . . The claims thus involve force but are not directed to force itself.” When considered as a whole, “simply using the word ‘force’ does not transform the claims into being directed to a law of nature.” The court further noted that Pet Factory’s argument is more suited as a question of whether the patent claims are novel in light of the prior art.

Accordingly, at step 1 of the Alice inquiry, the court found that the patent claims are not directed to an abstract idea and denied Pet Factory’s motion to dismiss.

Claim 1 of the asserted patent reads:

A tug toy comprising:

at least one gripping member and a central portion, wherein said at least one gripping member is attached to said central portion, and

wherein said central portion further includes a noise maker,

wherein said at least one gripping member is adapted to transmit force to said central portion and

wherein said force comprises a first lateral force directed away from the

central portion in the direction of a first gripping member.

Aesthetic Appeal of a Patent’s Claimed Design Is Inadequate to Render It Functional

By R. David Donoghue on Posted in Uncategorized

My partners Steve Jedlinski and Anthony Fuga recently wrote a valuable article about a new Federal Circuit decision dealing with functionality and exhaustion issues for design patents. It is republished below with permission.

In a relatively rare opinion regarding design patents, the U.S. Court of Appeals for the Federal Circuit weighed in recently on the requirements for design patents in its Automotive Body Parts Association v. Ford Global Technologies, LLC, No. 2018-1613 (Fed. Cir. 2019) decision.

The U.S. Patent and Trademark Office (USPTO) grants design patents to inventors with a “new, original, and ornamental design for an article of manufacture.” Automotive Body Parts Association (ABPA), an association of companies that distribute replacement auto parts, sued Ford seeking a declaratory judgment of invalidity and unenforceability on two of Ford’s design patents – one directed to the design of a vehicle’s hood and the other directed to the design of a vehicle’s head lamp. These designs were incorporated into Ford’s F-150 truck.

The U.S. District Court for the Eastern District of Michigan in Detroit entered summary judgment in favor of Ford, and ABPA appealed to the Federal Circuit again arguing that both design patents are invalid due to functionality or unenforceable under patent exhaustion/repair doctrines. For the reasons discussed in this Holland & Knight client alert, the Federal Circuit affirmed the lower court’s decision upholding Ford’s design patents.

The Federal Circuit first looked at ABPA’s invalidity arguments directed to lack of ornamentality under Section 171 of the Patent Act. Design patents must claim an “ornamental” design, not one “dictated by function.” Though a valid design may contain some functional elements, the design may not be “primarily functional.” There is no mandated test regarding the functionality of design patents, but the Federal Circuit has “often emphasized the presence or absence of alternative designs, noting that the existence of ‘several ways to achieve the function of an article of manufacture,’ though not dispositive, increases the likelihood that the design serves a primarily ornamental purpose.”

ABPA argued that consumers seeking replacement parts prefer vehicle hoods and headlamps that “restore the original appearance of their vehicles” and conclude that this preference equates to an aesthetic functional benefit to the designs.

The Federal Circuit disagreed: “the aesthetic appeal of a design to consumers is inadequate to render that design functional” and, therefore, invalid. The court went on, noting that the peculiar or distinctive appearance is the very thing for which the patent is given. “If customers prefer the ‘peculiar or distinctive appearance’ of Ford’s designs over that of other designs that perform the same mechanical or utilitarian functions, that is exactly the type of market advantage . . . contemplated by Congress in the laws authorizing design patents.” The Federal Circuit also noted that there are many alternative designs already existing that could fit the Ford truck and perform the same functions.

ABPA attempted to borrow the principle of “aesthetic functionality” from trademark law, but the court noted that trademarks and design patents serve different purposes and have different governing law: “trademarks promote competition by permitting a perpetual monopoly over symbols that ‘distinguish a firm’s goods and identify their source,’ ” while design patents “expressly grant to their owners exclusive rights to a particular aesthetic for a limited period of time.”

ABPA also asked the court to rule, as a matter of policy, that Ford’s design patents may only be enforced in the initial market for the sale of Ford’s trucks, and not the market for replacement parts. The court, however, noted that this would sidestep precedent, which asks “whether at some point in the life of the article an occasion arises when the appearance of the article becomes a ‘matter of concern.’ ” Accordingly, the court affirmed the district court’s determination that ABPA failed to prove Ford’s designs were functional.

The Federal Circuit also rejected ABPA’s argument that Ford’s authorized sale of its F-150 trucks exhaust Ford’s patent rights and allows the use of Ford’s designs on replacement parts. The court disagreed, and found that ABPA was attempting to establish special rules for design patents. The court, instead, looked to its Quanta Computer exhaustion decision related to the sale of microprocessors that embody a patented method. While the sale of that microprocessor embodying the method exhausts the patent, purchasers of those microprocessors could not make their own new microprocessors using the patent invention.

The court also noted that the right of use transferred to a purchaser by an authorized sale includes the right to repair the patented article. That right to repair, however, does not permit a complete reconstruction of a patented device or component. “The decisions of this Court require the conclusion that reconstruction of a patented entity, comprised of unpatented elements, is limited to such a true reconstruction of the entity as to ‘in fact make a new article.’ ”

Furthermore, though the sale of the Ford truck permits the purchaser (and downstream customers) to repair the designs as applied to the specific hood and headlamps sold on the truck, “the purchaser may not create new hoods and headlamps using Ford’s designs.” The Federal Circuit, accordingly, affirmed the district court’s ruling that ABPA failed to show that Ford’s designs are exhausted. Not surprisingly, this decision reaffirms that design patents do not have distinct exhaustion/repair guidelines but instead, follow the same rules as utility patents.

Client seeking more information may contact the authors or another member of Holland & Knight’s Intellectual Property Group.

 

CLE: “Thou Shalt Not Steal” Includes Moral Rights

By R. David Donoghue on Posted in Legal News

The John Marshall Law School’s Center for Intellectual Property, Information & Privacy Law is hosting a lecture on Thursday, September 12, 2019, from 11:00 am – 12:30 pm CT (1.5 hours CLE credit pending) by DePaul Law Professor Roberta Rosenthal Kwall titled “Thou Shalt Not Steal” Includes Moral Rights. Here is a description of the program:

Normally when we think of the Eighth Commandment we do not contemplate theft of authors’ works or stealing their meanings or messages. Drawing from creativity theory as well as the rich Jewish legal tradition, Professor Kwall’s talk illustrates why violating an author’s moral rights comes within the scope of this Commandment. Her discussion will also touch upon why the Visual Artist’s Rights Act provides insufficient protection for moral rights in this country.

Register here.

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