ELIZABETH v - University of Houston Law Center Survey files/Packet... · Web viewIn short, each step does no more than require a generic computer to perform generic computer functions

INTELLECTUAL PROPERTY SURVEY

PATENT CASES

for FALL 2014

Prof. Janicke

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Supreme Court of the United States

ALICE CORPORATION PTY. LTD.v.

CLS BANK INTERNATIONAL

2014 WL 2765283

Decided June 19, 2014.

Justice THOMAS delivered the opinion of the Court.

The patents at issue in this case disclose a computer-implemented scheme for mitigating “settlement risk” (i.e., the risk that only one party to a financial transaction will pay what it owes) by using a third-party intermediary. The question presented is whether these claims are patent eligible under 35 U.S.C. § 101, or are instead drawn to a patent-ineligible abstract idea. We hold that the claims at issue are drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention. We therefore affirm the judgment of the United States Court of Appeals for the Federal Circuit.

I

A

Petitioner Alice Corporation is the assignee of several patents that disclose schemes to manage certain forms of financial risk.1 According to the specification largely shared by the patents, the invention “enabl[es] the management of risk relating to specified, yet unknown, future events.” App. 248. The specification further explains that the “invention relates to methods and apparatus, including electrical computers and data processing systems applied to financial matters and risk management.” Id., at 243. 1 The patents at issue are United States Patent Nos. 5,970,479 (the ′479 patent),

6,912,510, 7,149,720, and 7,725,375.

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The claims at issue relate to a computerized scheme for mitigating “settlement risk”—i.e., the risk that only one party to an agreed-upon financial exchange will satisfy its obligation. In particular, the claims are designed to facilitate the exchange of financial obligations between two parties by using a computer system as a third-party intermediary. Id., at 383–384. 2 The intermediary creates “shadow” credit and debit records (i.e., account ledgers) that mirror the balances in the parties’ real-world accounts at “exchange institutions” (e.g., banks). The intermediary updates the shadow records in real time as transactions are entered, allowing “only those transactions for which the parties’ updated shadow records indicate sufficient resources to satisfy their mutual obligations.” 717 F.3d 1269, 1285 (C.A.Fed.2013) (Lourie, J., concurring). At the end of the day, the intermediary instructs the relevant financial institutions to carry out the “permitted” transactions in accordance with the updated shadow records, ibid., thus mitigating the risk that only one party will perform the agreed-upon exchange. 2 The parties agree that claim 33 of the ′479 patent is representative of the method claims.

Claim 33 recites:“A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:“(a) creating a shadow credit record and a shadow debit record for each stakeholder party to be held independently by a supervisory institution from the exchange institutions;“(b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;“(c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party’s shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order, and“(d) at the end-of-day, the supervisory institution instructing on[e] of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.” App. 383–384.

In sum, the patents in suit claim (1) the foregoing method for exchanging obligations (the method claims), (2) a computer system configured to carry out the method for exchanging obligations (the system claims), and (3) a computer-readable medium containing program code for performing the method of exchanging obligations (the media claims). All of the claims are implemented using a computer; the system and media claims expressly recite a computer, and the parties have stipulated that the method claims require a computer as well.

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B

Respondents CLS Bank International and CLS Services Ltd. (together, CLS Bank) operate a global network that facilitates currency transactions. In 2007, CLS Bank filed suit against petitioner, seeking a declaratory judgment that the claims at issue are invalid, unenforceable, or not infringed. Petitioner counterclaimed, alleging infringement. Following this Court’s decision in Bilski v. Kappos, 561 U.S. 593, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010), the parties filed cross-motions for summary judgment on whether the asserted claims are eligible for patent protection under 35 U.S.C. § 101. The District Court held that all of the claims are patent ineligible because they are directed to the abstract idea of “employing a neutral intermediary to facilitate simultaneous exchange of obligations in order to minimize risk.” 768 F.Supp.2d 221, 252 (D.C.2011). A divided panel of the United States Court of Appeals for the Federal Circuit reversed, holding that it was not “manifestly evident” that petitioner’s claims are directed to an abstract idea. 685 F.3d 1341, 1352, 1356 (2012). The Federal Circuit granted rehearing en banc, vacated the panel opinion, and affirmed the judgment of the District Court in a one-paragraph per curiam opinion. 717 F.3d, at 1273. Seven of the ten participating judges agreed that petitioner’s method and media claims are patent ineligible. See id., at 1274 (Lourie, J., concurring); id., at 1312–1313 (Rader, C.J., concurring in part and dissenting in part). With respect to petitioner’s system claims, the en banc Federal Circuit affirmed the District Court’s judgment by an equally divided vote. Id., at 1273. Writing for a five-member plurality, Judge Lourie concluded that all of the claims at issue are patent ineligible. In the plurality’s view, under this Court’s decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ––––, 132 S.Ct. 1289, 182 L.Ed.2d 321 (2012), a court must first “identif[y] the abstract idea represented in the claim,” and then determine “whether the balance of the claim adds ‘significantly more.’ ” 717 F.3d, at 1286. The plurality concluded that petitioner’s claims “draw on the abstract idea of reducing settlement risk by effecting trades through a third-party intermediary,” and that the use of a computer to maintain, adjust, and reconcile shadow accounts added nothing of substance to that abstract idea. Ibid. Chief Judge Rader concurred in part and dissented in part. In a part of the opinion joined only by Judge Moore, Chief Judge Rader agreed with the plurality that petitioner’s method and media claims are drawn to an abstract idea. Id., at 1312–1313. In a part of the opinion joined by Judges Linn, Moore, and O’Malley, Chief Judge Rader would have held that the system claims are patent eligible because they involve computer “hardware” that is “specifically programmed to solve a complex problem.” Id., at 1307. Judge Moore wrote a separate opinion dissenting in part, arguing that the system claims are patent eligible. Id., at 1313–1314. Judge Newman filed an opinion concurring in part and dissenting in part, arguing that all of petitioner’s claims are patent eligible. Id., at 1327. Judges Linn and O’Malley filed a separate dissenting opinion reaching that same conclusion. Ibid. We granted certiorari, 571 U.S. ––––, 134 S.Ct. 734, 187 L.Ed.2d 590 (2013), and now affirm.

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II

Section 101 of the Patent Act defines the subject matter eligible for patent protection. It provides:

“Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” 35 U.S.C. § 101.

“We have long held that this provision contains an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable.” Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. ––––, ––––, 133 S.Ct. 2107, 2116, 186 L.Ed.2d 124 (2013) (internal quotation marks and brackets omitted). We have interpreted § 101 and its predecessors in light of this exception for more than 150 years. Bilski, supra, at 601–602, 130 S.Ct. 3218; see also O’Reilly v. Morse, 15 How. 62, 112– 120, 14 L.Ed. 601 (1854); Le Roy v . Tatham, 14 How. 156, 174–175, 14 L.Ed. 367 (1853). We have described the concern that drives this exclusionary principle as one of pre-emption. See, e.g., Bilski, supra, at 611–612, 130 S.Ct. 3218 (upholding the patent “would pre-empt use of this approach in all fields, and would effectively grant a monopoly over an abstract idea”). Laws of nature, natural phenomena, and abstract ideas are “ ‘ “the basic tools of scientific and technological work.” ’ ” Myriad, supra, at ––––, 133 S.Ct., at 2116. “[M]onopolization of those tools through the grant of a patent might tend to impede innovation more than it would tend to promote it,” thereby thwarting the primary object of the patent laws. Mayo, supra, at ––––, 132 S.Ct., at 1923; see U.S. Const., Art. I, § 8, cl. 8 (Congress “shall have Power ... To promote the Progress of Science and useful Arts”). We have “repeatedly emphasized this ... concern that patent law not inhibit further discovery by improperly tying up the future use of” these building blocks of human ingenuity. Mayo, supra, at ––––, 132 S.Ct., at 1301 (citing Morse, supra, at 113). At the same time, we tread carefully in construing this exclusionary principle lest it swallow all of patent law. Mayo, 566 U.S., at ––––, 132 S.Ct., at 1293–1294. At some level, “all inventions ... embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Id., at ––––, 132 S.Ct., at 1293. Thus, an invention is not rendered ineligible for patent simply because it involves an abstract concept. See Diamond v. Diehr, 450 U.S. 175, 187, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981) . “[A]pplication[s]” of such concepts “ ‘to a new and useful end,’ ” we have said, remain eligible for patent protection. Gottschalk v. Benson, 409 U.S. 63, 67, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972).

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Accordingly, in applying the § 101 exception, we must distinguish between patents that claim the “ ‘buildin[g] block[s]’ ” of human ingenuity and those that integrate the building blocks into something more, Mayo, 566 U.S., at ––––, 132 S.Ct., at 1303, thereby “transform[ing]” them into a patent-eligible invention, id., at ––––, 132 S.Ct., at 1294. The former “would risk disproportionately tying up the use of the underlying” ideas, id., at ––––, 132 S.Ct., at 1294, and are therefore ineligible for patent protection. The latter pose no comparable risk of pre-emption, and therefore remain eligible for the monopoly granted under our patent laws.

III

In Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ––––, 132 S.Ct. 1289, 182 L.Ed.2d 321 (2012), we set forth a framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts. First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts. Id., at ––––, 132 S.Ct., at 1296–1297. If so, we then ask, “[w]hat else is there in the claims before us?” Id., at ––––, 132 S.Ct., at 1297. To answer that question, we consider the elements of each claim both individually and “as an ordered combination” to determine whether the additional elements “transform the nature of the claim” into a patent-eligible application. Id., at ––––, 132 S.Ct., at 1298, 1297. We have described step two of this analysis as a search for an “ ‘inventive concept’ ”—i.e., an element or combination of elements that is “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.” Id., at ––––, 132 S.Ct., at 1294. 3 3 Because the approach we made explicit in Mayo considers all claim elements, both

individually and in combination, it is consistent with the general rule that patent claims “must be considered as a whole.” Diamond v. Diehr, 450 U.S. 175, 188, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981); see Parker v . Flook, 437 U.S. 584, 594, 98 S.Ct. 2522, 57 L.Ed.2d 451 (1978) (“Our approach ... is ... not at all inconsistent with the view that a patent claim must be considered as a whole”).

A

We must first determine whether the claims at issue are directed to a patent-ineligible concept. We conclude that they are: These claims are drawn to the abstract idea of intermediated settlement. The “abstract ideas” category embodies “the longstanding rule that ‘[a]n idea of itself is

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not patentable.’ ” Benson, supra, at 67, 93 S.Ct. 253 (quoting Rubber–Tip Pencil Co. v. Howard, 20 Wall. 498, 507, 22 L.Ed. 410 (1874) ); see also Le Roy, supra, at 175 (“A principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right”). In Benson, for example, this Court rejected as ineligible patent claims involving an algorithm for converting binary-coded decimal numerals into pure binary form, holding that the claimed patent was “in practical effect ... a patent on the algorithm itself.” 409 U.S., at 71–72, 93 S.Ct. 253. And in Parker v. Flook, 437 U.S. 584, 594–595, 98 S.Ct. 2522, 57 L.Ed.2d 451 (1978), we held that a mathematical formula for computing “alarm limits” in a catalytic conversion process was also a patent-ineligible abstract idea. We most recently addressed the category of abstract ideas in Bilski v. Kappos, 561 U.S. 593, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010). The claims at issue in Bilski described a method for hedging against the financial risk of price fluctuations. Claim 1 recited a series of steps for hedging risk, including: (1) initiating a series of financial transactions between providers and consumers of a commodity; (2) identifying market participants that have a counterrisk for the same commodity; and (3) initiating a series of transactions between those market participants and the commodity provider to balance the risk position of the first series of consumer transactions. Id., at 599, 130 S.Ct. 3218. Claim 4 “pu[t] the concept articulated in claim 1 into a simple mathematical formula.” Ibid. The remaining claims were drawn to examples of hedging in commodities and energy markets. “[A]ll members of the Court agree[d]” that the patent at issue in Bilski claimed an “abstract idea.” Id., at 609, 130 S.Ct. 3218; see also id., at 619, 130 S.Ct. 3218 (Stevens, J., concurring in judgment). Specifically, the claims described “the basic concept of hedging, or protecting against risk.” Id., at 611, 130 S.Ct. 3218. The Court explained that “ ‘[h]edging is a fundamental economic practice long prevalent in our system of commerce and taught in any introductory finance class.’ ” Ibid. “The concept of hedging” as recited by the claims in suit was therefore a patent-ineligible “abstract idea, just like the algorithms at issue in Benson and Flook . ” Ibid. It follows from our prior cases, and Bilski in particular, that the claims at issue here are directed to an abstract idea. Petitioner’s claims involve a method of exchanging financial obligations between two parties using a third-party intermediary to mitigate settlement risk. The intermediary creates and updates “shadow” records to reflect the value of each party’s actual accounts held at “exchange institutions,” thereby permitting only those transactions for which the parties have sufficient resources. At the end of each day, the intermediary issues irrevocable instructions to the exchange institutions to carry out the permitted transactions. On their face, the claims before us are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk. Like the risk hedging in Bilski, the concept of intermediated settlement is “ ‘a fundamental economic practice long prevalent in our system of commerce.’ ” Ibid. ; see, e.g., Emery, Speculation on the Stock and Produce Exchanges of the United States, in 7 Studies in History, Economics

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and Public Law 283, 346–356 (1896) (discussing the use of a “clearing-house” as an intermediary to reduce settlement risk). The use of a third-party intermediary (or “clearing house”) is also a building block of the modern economy. See, e.g., Yadav, The Problematic Case of Clearinghouses in Complex Markets, 101 Geo. L.J. 387, 406–412 (2013); J. Hull, Risk Management and Financial Institutions 103–104 (3d ed. 2012). Thus, intermediated settlement, like hedging, is an “abstract idea” beyond the scope of § 101. Petitioner acknowledges that its claims describe intermediated settlement, see Brief for Petitioner 4, but rejects the conclusion that its claims recite an “abstract idea.” Drawing on the presence of mathematical formulas in some of our abstract-ideas precedents, petitioner contends that the abstract-ideas category is confined to “preexisting, fundamental truth[s]” that “ ‘exis[t] in principle apart from any human action.’ ” Id., at 23, 26 (quoting Mayo, 566 U.S., at ––––, 132 S.Ct., at 1297) . Bilski belies petitioner’s assertion. The concept of risk hedging we identified as an abstract idea in that case cannot be described as a “preexisting, fundamental truth.” The patent in Bilski simply involved a “series of steps instructing how to hedge risk.” 561 U.S., at 599, 130 S.Ct. 3218. Although hedging is a longstanding commercial practice, id., at 599, 130 S.Ct. 3218, it is a method of organizing human activity, not a “truth” about the natural world “ ‘that has always existed,’ ” Brief for Petitioner 22 (quoting Flook, supra, at 593, n. 15, 98 S.Ct. 2522). One of the claims in Bilski reduced hedging to a mathematical formula, but the Court did not assign any special significance to that fact, much less the sort of talismanic significance petitioner claims. Instead, the Court grounded its conclusion that all of the claims at issue were abstract ideas in the understanding that risk hedging was a “ ‘fundamental economic practice.’ ” 561 U.S., at 611, 130 S.Ct. 3218. In any event, we need not labor to delimit the precise contours of the “abstract ideas” category in this case. It is enough to recognize that there is no meaningful distinction between the concept of risk hedging in Bilski and the concept of intermediated settlement at issue here. Both are squarely within the realm of “abstract ideas” as we have used that term.

B

Because the claims at issue are directed to the abstract idea of intermediated settlement, we turn to the second step in Mayo ‘s framework. We conclude that the method claims, which merely require generic computer implementation, fail to transform that abstract idea into a patent-eligible invention.

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1

[9] At Mayo step two, we must examine the elements of the claim to determine whether it contains an “ ‘inventive concept’ ” sufficient to “transform” the claimed abstract idea into a patent-eligible application. 566 U.S., at ––––, ––––, 132 S.Ct., at 1294, 1298. A claim that recites an abstract idea must include “additional features” to ensure “that the [claim] is more than a drafting effort designed to monopolize the [abstract idea].” Id., at ––––, 132 S.Ct., at 1297. Mayo made clear that transformation into a patent-eligible application requires “more than simply stat[ing] the [abstract idea] while adding the words ‘apply it.’ ” Id., at ––––, 132 S.Ct., at 1294. Mayo itself is instructive. The patents at issue in Mayo claimed a method for measuring metabolites in the bloodstream in order to calibrate the appropriate dosage of thiopurine drugs in the treatment of autoimmune diseases. Id., at ––––, 132 S.Ct., at 1294–1296. The respondent in that case contended that the claimed method was a patent-eligible application of natural laws that describe the relationship between the concentration of certain metabolites and the likelihood that the drug dosage will be harmful or ineffective. But methods for determining metabolite levels were already “well known in the art,” and the process at issue amounted to “nothing significantly more than an instruction to doctors to apply the applicable laws when treating their patients.” Id., at ––––, 132 S.Ct., at 1298. “Simply appending conventional steps, specified at a high level of generality,” was not “enough ” to supply an “ ‘inventive concept.’ ” Id., at ––––, ––––, ––––, 132 S.Ct., at 1300, 1297, 1294. [10] The introduction of a computer into the claims does not alter the analysis at Mayo step two. In Benson, for example, we considered a patent that claimed an algorithm implemented on “a general-purpose digital computer.” 409 U.S., at 64, 93 S.Ct. 253. Because the algorithm was an abstract idea, see supra, at ––––, the claim had to supply a “ ‘new and useful’ ” application of the idea in order to be patent eligible. 409 U.S., at 67, 93 S.Ct. 253. But the computer implementation did not supply the necessary inventive concept; the process could be “carried out in existing computers long in use.” Ibid. We accordingly “held that simply implementing a mathematical principle on a physical machine, namely a computer, [i]s not a patentable application of that principle.” Mayo, supra, at ––––, 132 S.Ct., at 1301 (citing Benson, supra, at 64, 93 S.Ct. 253). Flook is to the same effect. There, we examined a computerized method for using a mathematical formula to adjust alarm limits for certain operating conditions (e.g., temperature and pressure) that could signal inefficiency or danger in a catalytic conversion process. 437 U.S., at 585–586, 98 S.Ct. 2522. Once again, the formula itself was an abstract idea, see supra, at ––––, and the computer implementation was purely conventional. 437 U.S., at 594, 98 S.Ct. 2522 (noting that the “use of computers for ‘automatic monitoring-alarming’ ” was “well known”). In holding that the process was patent ineligible, we rejected the argument that “implement[ing] a principle in some specific fashion” will “automatically fal[l] within the patentable subject matter of § 101.” Id., at 593, 98 S.Ct. 2522. Thus, “Flook stands for the proposition that the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use

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of [the idea] to a particular technological environment.” Bilski, 561 U.S., at 610–611, 130 S.Ct. 3218 (internal quotation marks omitted). In Diehr, 450 U.S. 175, 101 S.Ct. 1048, 67 L.Ed.2d 155, by contrast, we held that a computer-implemented process for curing rubber was patent eligible, but not because it involved a computer. The claim employed a “well-known” mathematical equation, but it used that equation in a process designed to solve a technological problem in “conventional industry practice.” Id., at 177, 178, 101 S.Ct. 1048. The invention in Diehr used a “thermocouple” to record constant temperature measurements inside the rubber mold—something “the industry ha[d] not been able to obtain.” Id., at 178, and n. 3, 101 S.Ct. 1048. The temperature measurements were then fed into a computer, which repeatedly recalculated the remaining cure time by using the mathematical equation. Id., at 178–179, 101 S.Ct. 1048. These additional steps, we recently explained, “transformed the process into an inventive application of the formula.” Mayo, supra, at ––––, 132 S.Ct., at 1299. In other words, the claims in Diehr were patent eligible because they improved an existing technological process, not because they were implemented on a computer. These cases demonstrate that the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention. Stating an abstract idea “while adding the words ‘apply it’ ” is not enough for patent eligibility. Mayo, supra, at ––––, 132 S.Ct., at 1294. Nor is limiting the use of an abstract idea “ ‘to a particular technological environment.’ ” Bilski, supra, at 610–611, 130 S.Ct. 3218. Stating an abstract idea while adding the words “apply it with a computer” simply combines those two steps, with the same deficient result. Thus, if a patent’s recitation of a computer amounts to a mere instruction to “implemen [t]” an abstract idea “on ... a computer,” Mayo, supra, at ––––, 132 S.Ct., at 1301, that addition cannot impart patent eligibility. This conclusion accords with the pre-emption concern that undergirds our § 101 jurisprudence. Given the ubiquity of computers, see 717 F.3d, at 1286 (Lourie, J., concurring), wholly generic computer implementation is not generally the sort of “additional featur[e]” that provides any “practical assurance that the process is more than a drafting effort designed to monopolize the [abstract idea] itself.” Mayo, 566 U.S., at ––––, 132 S.Ct., at 1297. The fact that a computer “necessarily exist[s] in the physical, rather than purely conceptual, realm,” Brief for Petitioner 39, is beside the point. There is no dispute that a computer is a tangible system (in § 101 terms, a “machine”), or that many computer-implemented claims are formally addressed to patent-eligible subject matter. But if that were the end of the § 101 inquiry, an applicant could claim any principle of the physical or social sciences by reciting a computer system configured to implement the relevant concept. Such a result would make the determination of patent eligibility “depend simply on the draftsman’s art,” Flook, supra, at 593, 98 S.Ct. 2522, thereby eviscerating the rule that “ ‘[l]aws of nature, natural phenomena, and abstract ideas are not patentable,’ ” Myriad, 569 U.S., at ––––, 133 S.Ct., at 2116 .

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2

The representative method claim in this case recites the following steps: (1) “creating” shadow records for each counterparty to a transaction; (2) “obtaining” start-of-day balances based on the parties’ real-world accounts at exchange institutions; (3) “adjusting” the shadow records as transactions are entered, allowing only those transactions for which the parties have sufficient resources; and (4) issuing irrevocable end-of-day instructions to the exchange institutions to carry out the permitted transactions. See n. 2, supra. Petitioner principally contends that the claims are patent eligible because these steps “require a substantial and meaningful role for the computer.” Brief for Petitioner 48. As stipulated, the claimed method requires the use of a computer to create electronic records, track multiple transactions, and issue simultaneous instructions; in other words, “[t]he computer is itself the intermediary.” Ibid. (emphasis deleted). In light of the foregoing, see supra, at –––– – ––––, the relevant question is whether the claims here do more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer. They do not. Taking the claim elements separately, the function performed by the computer at each step of the process is “[p]urely conventional.” Mayo, supra, at ––––, 132 S.Ct., at 1298 (internal quotation marks omitted). Using a computer to create and maintain “shadow” accounts amounts to electronic recordkeeping—one of the most basic functions of a computer. See, e.g., Benson, 409 U.S., at 65, 93 S.Ct. 253 (noting that a computer “operates ... upon both new and previously stored data”). The same is true with respect to the use of a computer to obtain data, adjust account balances, and issue automated instructions; all of these computer functions are “well-understood, routine, conventional activit[ies]” previously known to the industry. Mayo, 566 U.S., at ––––, 132 S.Ct., at 1294. In short, each step does no more than require a generic computer to perform generic computer functions. Considered “as an ordered combination,” the computer components of petitioner’s method “ad[d] nothing ... that is not already present when the steps are considered separately.” Id., at ––––, 132 S.Ct., at 1298. Viewed as a whole, petitioner’s method claims simply recite the concept of intermediated settlement as performed by a generic computer. See 717 F.3d, at 1286 (Lourie, J., concurring) (noting that the representative method claim “lacks any express language to define the computer’s participation”). The method claims do not, for example, purport to improve the functioning of the computer itself. See ibid. (“There is no specific or limiting recitation of ... improved computer technology ...”); Brief for United States as Amicus Curiae 28–30. Nor do they effect an improvement in any other technology or technical field. See, e.g., Diehr, 450 U.S., at 177–178, 101 S.Ct. 1048. Instead, the claims at issue amount to “nothing significantly more” than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer. Mayo, 566 U.S., at ––––, 132 S.Ct., at 1298. Under our precedents, that is not “enough ” to transform an abstract idea into a patent-eligible invention. Id., at ––––, 132 S.Ct., at 1297.

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C

Petitioner’s claims to a computer system and a computer-readable medium fail for substantially the same reasons. Petitioner conceded below that its media claims rise or fall with its method claims. En Banc Response Brief for Defendant–Appellant in No. 11–1301 (CA Fed.) p. 50, n. 3. As to its system claims, petitioner emphasizes that those claims recite “specific hardware” configured to perform “specific computerized functions.” Brief for Petitioner 53. But what petitioner characterizes as specific hardware—a “data processing system” with a “communications controller” and “data storage unit,” for example, see App. 954, 958, 1257—is purely functional and generic. Nearly every computer will include a “communications controller” and “data storage unit” capable of performing the basic calculation, storage, and transmission functions required by the method claims. See 717 F.3d, at 1290 (Lourie, J., concurring). As a result, none of the hardware recited by the system claims “offers a meaningful limitation beyond generally linking ‘the use of the [method] to a particular technological environment,’ that is, implementation via computers.” Id., at 1291 (quoting Bilski, 561 U.S., at 610–611, 130 S.Ct. 3218). Put another way, the system claims are no different from the method claims in substance. The method claims recite the abstract idea implemented on a generic computer; the system claims recite a handful of generic computer components configured to implement the same idea. This Court has long “warn[ed] ... against” interpreting § 101 “in ways that make patent eligibility ‘depend simply on the draftsman’s art.’ ” Mayo, supra, at ––––, 132 S.Ct., at 1294 (quoting Flook, 437 U.S., at 593, 98 S.Ct. 2522); see id., at 590, 98 S.Ct. 2522 (“The concept of patentable subject matter under § 101 is not ‘like a nose of wax which may be turned and twisted in any direction ...’ ”). Holding that the system claims are patent eligible would have exactly that result. Because petitioner’s system and media claims add nothing of substance to the underlying abstract idea, we hold that they too are patent ineligible under § 101. 3 For the foregoing reasons, the judgment of the Court of Appeals for the Federal Circuit is affirmed. It is so ordered.

Justice SOTOMAYOR, with whom Justice GINSBURG and Justice BREYER join, concurring.

I adhere to the view that any “claim that merely describes a method of doing business

13















does not qualify as a ‘process’ under § 101.” Bilski v. Kappos, 561 U.S. 593, 614, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010) (Stevens, J., concurring in judgment); see also In re Bilski, 545 F.3d 943, 972 (C.A.Fed.2008) (Dyk, J., concurring) (“There is no suggestion in any of th[e] early [English] consideration of process patents that processes for organizing human activity were or ever had been patentable”). As in Bilski, however, I further believe that the method claims at issue are drawn to an abstract idea. Cf. 561 U.S., at 619, 130 S.Ct. 3218 (opinion of Stevens, J.). I therefore join the opinion of the Court.

14









ASSOCIATION FOR MOLECULAR PATHOLOGYv.

MYRIAD GENETICS, INC.

Supreme Court of the United States

133 S.Ct. 2107

Decided June 13, 2013


Respondent Myriad Genetics, Inc. (Myriad), discovered the precise location and sequence of two human genes, mutations of which can substantially increase the risks of breast and ovarian cancer. Myriad obtained a number of patents based upon its discovery. This case involves claims from three of them and requires us to resolve whether a naturally occurring segment of deoxyribonucleic acid (DNA) is patent eligible under 35 U.S.C. § 101 by virtue of its isolation from the rest of the human genome. We also address the patent eligibility of synthetically created DNA known as complementary DNA (cDNA), which contains the same protein-coding information found in a segment of natural DNA but omits portions within the DNA segment that do not code for proteins. For the reasons that follow, we hold that a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated, but that cDNA is patent eligible because it is not naturally occurring. We, therefore, affirm in part and reverse in part the decision of the United States Court of Appeals for the Federal Circuit.

I

A

[Court provides a general discussion of DNA.]

B

Myriad discovered the precise location and sequence of what are now known as the

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BRCA1 and BRCA2 genes. Mutations in these genes can dramatically increase an individual’s risk of developing breast and ovarian cancer. The average American woman has a 12– to 13–percent risk of developing breast cancer, but for women with certain genetic mutations, the risk can range between 50 and 80 percent for breast cancer and between 20 and 50 percent for ovarian cancer. Before Myriad’s discovery of the BRCA1 and BRCA2 genes, scientists knew that heredity played a role in establishing a woman’s risk of developing breast and ovarian cancer, but they did not know which genes were associated with those cancers. Myriad identified the exact location of the BRCA1 and BRCA2 genes on chromosomes 17 and 13. Chromosome 17 has approximately 80 million nucleotides, and chromosome 13 has approximately 114 million. Within those chromosomes, the BRCA1 and BRCA2 genes are each about 80,000 nucleotides long. If just exons are counted, the BRCA1 gene is only about 5,500 nucleotides long; for the BRCA2 gene, that number is about 10,200. Ibid. Knowledge of the location of the BRCA1 and BRCA2 genes allowed Myriad to determine their typical nucleotide sequence.1 That information, in turn, enabled Myriad to develop medical tests that are useful for detecting mutations in a patient’s BRCA1 and BRCA2 genes and thereby assessing whether the patient has an increased risk of cancer. 1 Technically, there is no “typical” gene because nucleotide sequences vary between

individuals, sometimes dramatically. Geneticists refer to the most common variations of genes as “wild types.”

Once it found the location and sequence of the BRCA1 and BRCA2 genes, Myriad sought and obtained a number of patents. Nine composition claims from three of those patents are at issue in this case.2 Claims 1, 2, 5, and 6 from the ‘282 patent are representative. The first claim [recites] “[a]n isolated DNA coding for a BRCA1 polypeptide,” which has “the amino acid sequence set forth in SEQ ID NO:2.” App. 822. SEQ ID NO:2 sets forth a list of 1,863 amino acids that the typical BRCA1 gene encodes. See id., at 785–790. Put differently, claim 1 [recites] the DNA code that tells a cell to produce the string of BRCA1 amino acids listed in SEQ ID NO:2. 2 At issue are claims 1, 2, 5, 6, and 7 of U.S. Patent 5,747,282 (the ‘282 patent), claim 1 of

U.S. Patent 5,693,473 (the ‘473 patent), and claims 1, 6, and 7 of U.S. Patent 5,837,492 (the ‘492 patent).

Claim 2 of the ‘282 patent operates similarly. It claims “[t]he isolated DNA of claim 1, wherein said DNA has the nucleotide sequence set forth in SEQ ID NO:1.” Id., at 822. Like SEQ ID NO:2, SEQ ID NO:1 sets forth a long list of data, in this instance the sequence of cDNA that codes for the BRCA1 amino acids listed in claim 1. Importantly, SEQ ID NO:1 lists only the cDNA exons in the BRCA1 gene, rather than a full DNA sequence containing both exons and introns. See id., at 779 (stating that SEQ ID












NO:1’s “MOLECULE TYPE:” is “cDNA”). As a result, the Federal Circuit recognized that claim 2 [recites] the cDNA nucleotide sequence listed in SEQ ID NO:1, which codes for the typical BRCA1 gene. 689 F.3d, at 1326, n. 9; id., at 1337 (Moore, J., concurring in part); id., at 1356 (Bryson, J., concurring in part and dissenting in part). Claim 5 of the ‘282 patent claims a subset of the data in claim 1. In particular, it claims “[a]n isolated DNA having at least 15 nucleotides of the DNA of claim 1.” App. 822. The practical effect of claim 5 is to assert a patent on any series of 15 nucleotides that exist in the typical BRCA1 gene. Because the BRCA1 gene is thousands of nucleotides long, even BRCA1 genes with substantial mutations are likely to contain at least one segment of 15 nucleotides that correspond to the typical BRCA1 gene. Similarly, claim 6 of the ‘282 patent claims “[a]n isolated DNA having at least 15 nucleotides of the DNA of claim 2.” Ibid. This claim operates similarly to claim 5, except that it references the cDNA-based claim 2. The remaining claims at issue are similar, though several list common mutations rather than typical BRCA1 and BRCA2 sequences. See ibid. (claim 7 of the ‘282 patent); id., at 930 (claim 1 of the ‘473 patent); id., at 1028 (claims 1, 6, and 7 of the ‘492 patent).

C

Myriad’s patents would, if valid, give it the exclusive right to isolate an individual’s BRCA1 and BRCA2 genes (or any strand of 15 or more nucleotides within the genes) by breaking the covalent bonds that connect the DNA to the rest of the individual’s genome. The patents would also give Myriad the exclusive right to synthetically create BRCA cDNA. In Myriad’s view, manipulating BRCA DNA in either of these fashions triggers its “right to exclude others from making” its patented composition of matter under the Patent Act. 35 U.S.C. § 154(a)(1); see also § 271(a) (“[W]hoever without authority makes ... any patented invention ... infringes the patent”). But isolation is necessary to conduct genetic testing, and Myriad was not the only entity to offer BRCA testing after it discovered the genes. The University of Pennsylvania’s Genetic Diagnostic Laboratory (GDL) and others provided genetic testing services to women. Petitioner Dr. Harry Ostrer, then a researcher at New York University School of Medicine, routinely sent his patients’ DNA samples to GDL for testing. After learning of GDL’s testing and Ostrer’s activities, Myriad sent letters to them asserting that the genetic testing infringed Myriad’s patents. App. 94–95 (Ostrer letter). In response, GDL agreed to stop testing and informed Ostrer that it would no longer accept patient samples. Myriad also filed patent infringement suits against other entities that performed BRCA testing, resulting in settlements in which the defendants agreed to cease all allegedly infringing activity. 689 F.3d, at 1315. Myriad, thus, solidified its position as the only entity providing BRCA testing. Some years later, petitioner Ostrer, along with medical patients, advocacy groups, and



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other doctors, filed this lawsuit seeking a declaration that Myriad’s patents are invalid under 35 U.S.C. § 101. Citing this Court’s decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007) , the District Court denied Myriad’s motion to dismiss for lack of standing. Association for Molecular Pathology v. United States Patent and Trademark Office, 669 F.Supp.2d 365, 385–392 (S.D.N.Y.2009) . The District Court then granted summary judgment to petitioners on the composition claims at issue in this case based on its conclusion that Myriad’s claims, including claims related to cDNA, were invalid because they covered products of nature. The Federal Circuit reversed, Association for Molecular Pathology v. United States Patent and Trademark Office, 653 F.3d 1329 (2011), and this Court granted the petition for certiorari, vacated the judgment, and remanded the case in light of Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S.Ct. 1289 (2012) . On remand, the Federal Circuit affirmed the District Court in part and reversed in part, with each member of the panel writing separately. All three judges agreed that only petitioner Ostrer had standing. They reasoned that Myriad’s actions against him and his stated ability and willingness to begin BRCA1 and BRCA2 testing if Myriad’s patents were invalidated were sufficient for Article III standing. 689 F.3d, at 1323; id., at 1337 (opinion of Moore, J.); id., at 1348 (opinion of Bryson, J.). With respect to the merits, the court held that both isolated DNA and cDNA were patent eligible under § 101. The central dispute among the panel members was whether the act of isolating DNA—separating a specific gene or sequence of nucleotides from the rest of the chromosome—is an inventive act that entitles the individual who first isolates it to a patent. Each of the judges on the panel had a different view on that question. Judges Lourie and Moore agreed that Myriad’s claims were patent eligible under § 101 but disagreed on the rationale. Judge Lourie relied on the fact that the entire DNA molecule is held together by chemical bonds and that the covalent bonds at both ends of the segment must be severed in order to isolate segments of DNA. This process technically creates new molecules with unique chemical compositions. See id., at 1328 (“Isolated DNA ... is a free-standing portion of a larger, natural DNA molecule. Isolated DNA has been cleaved (i.e., had covalent bonds in its backbone chemically severed) or synthesized to consist of just a fraction of a naturally occurring DNA molecule”). Judge Lourie found this chemical alteration to be dispositive, because isolating a particular strand of DNA creates a nonnaturally occurring molecule, even though the chemical alteration does not change the information-transmitting quality of the DNA. See id., at 1330 (“The claimed isolated DNA molecules are distinct from their natural existence as portions of larger entities, and their informational content is irrelevant to that fact. We recognize that biologists may think of molecules in terms of their uses, but genes are in fact materials having a chemical nature”). Accordingly, he rejected petitioners’ argument that isolated DNA was ineligible for patent protection as a product of nature. Judge Moore concurred in part but did not rely exclusively on Judge Lourie’s conclusion that chemically breaking covalent bonds was sufficient to render isolated DNA patent eligible. Id., at 1341 (“To the extent the majority rests its conclusion on the chemical differences between [naturally occurring] and isolated DNA (breaking the covalent





















bonds), I cannot agree that this is sufficient to hold that the claims to human genes are directed to patentable subject matter”). Instead, Judge Moore also relied on the United States Patent and Trademark Office’s (PTO) practice of granting such patents and on the reliance interests of patent holders. Id., at 1343. However, she acknowledged that her vote might have come out differently if she “were deciding this case on a blank canvas.” Ibid. Finally, Judge Bryson concurred in part and dissented in part, concluding that isolated DNA is not patent eligible. As an initial matter, he emphasized that the breaking of chemical bonds was not dispositive: “[T]here is no magic to a chemical bond that requires us to recognize a new product when a chemical bond is created or broken.” Id., at 1351. Instead, he relied on the fact that “[t]he nucleotide sequences of the claimed molecules are the same as the nucleotide sequences found in naturally occurring human genes.” Id., at 1355. Judge Bryson then concluded that genetic “structural similarity dwarfs the significance of the structural differences between isolated DNA and naturally occurring DNA, especially where the structural differences are merely ancillary to the breaking of covalent bonds, a process that is itself not inventive.” Ibid . Moreover, Judge Bryson gave no weight to the PTO’s position on patentability because of the Federal Circuit’s position that “the PTO lacks substantive rulemaking authority as to issues such as patentability.” Id., at 1357. Although the judges expressed different views concerning the patentability of isolated DNA, all three agreed that patent claims relating to cDNA met the patent eligibility requirements of § 101. Id., at 1326, and n. 9 (recognizing that some patent claims are limited to cDNA and that such claims are patent eligible under § 101); id., at 1337 (Moore, J., concurring in part); id., at 1356 (Bryson, J., concurring in part and dissenting in part) (“cDNA cannot be isolated from nature, but instead must be created in the laboratory ... because the introns that are found in the native gene are removed from the cDNA segment”).3 We granted certiorari. 3 Myriad continues to challenge Dr. Ostrer’s Declaratory Judgment Act standing in this

Court. Brief for Respondents 17–22. But we find that, under the Court’s decision in MedImmune, Inc. v. Genentech, Inc., Dr. Ostrer has alleged sufficient facts “under all the circumstances, [to] show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” 549 U.S. 118, 127, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007) (internal quotation marks omitted).

II

A19
















Section 101 of the Patent Act provides:

“Whoever invents or discovers any new and useful ... composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” 35 U.S.C. § 101.

We have “long held that this provision contains an important implicit exception[:] Laws of nature, natural phenomena, and abstract ideas are not patentable.” Mayo, 132 S.Ct., at 1293 (internal quotation marks and brackets omitted). Rather, “ ‘they are the basic tools of scientific and technological work’ ” that lie beyond the domain of patent protection. Id., at ––––, 132 S.Ct., at 1293. As the Court has explained, without this exception, there would be considerable danger that the grant of patents would “tie up” the use of such tools and thereby “inhibit future innovation premised upon them.” Id., 132 S.Ct., at 1301. This would be at odds with the very point of patents, which exist to promote creation. Diamond v. Chakrabarty, 447 U.S. 303, 309, 100 S.Ct. 2204, 65 L.Ed.2d 144 (1980) (Products of nature are not created, and “ ‘manifestations ... of nature [are] free to all men and reserved exclusively to none’ ”). The rule against patents on naturally occurring things is not without limits, however, for “all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas,” and “too broad an interpretation of this exclusionary principle could eviscerate patent law.” 566 U.S., at ––––, 132 S.Ct., at 1293. As we have recognized before, patent protection strikes a delicate balance between creating “incentives that lead to creation, invention, and discovery” and “imped[ing] the flow of information that might permit, indeed spur, invention.” Id., at ––––, 132 S.Ct., at 1305. We must apply this well-established standard to determine whether Myriad’s patents claim any “new and useful ... composition of matter,” § 101, or instead claim naturally occurring phenomena.

B

It is undisputed that Myriad did not create or alter any of the genetic information encoded in the BRCA1 and BRCA2 genes. The location and order of the nucleotides existed in nature before Myriad found them. Nor did Myriad create or alter the genetic structure of DNA. Instead, Myriad’s principal contribution was uncovering the precise location and genetic sequence of the BRCA1 and BRCA2 genes within chromosomes 17 and 13. The question is whether this renders the genes patentable. Myriad recognizes that our decision in Chakrabarty is central to this inquiry. Brief for Respondents 14, 23–27. In Chakrabarty, scientists added four plasmids to a bacterium, which enabled it to break down various components of crude oil. 447 U.S., at 305, and n. 1, 100 S.Ct. 2204. The Court held that the modified bacterium was patentable. It explained that the patent claim was “not to a hitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or composition of matter—a product of human




















ingenuity ‘having a distinctive name, character [and] use.’ ” Id., at 309–310, 100 S.Ct. 2204 (quoting Hartranft v. Wiegmann, 121 U.S. 609, 615, 7 S.Ct. 1240, 30 L.Ed. 1012 (1887); alteration in original). The Chakrabarty bacterium was new “with markedly different characteristics from any found in nature,” 447 U.S., at 310, 100 S.Ct. 2204, due to the additional plasmids and resultant “capacity for degrading oil.” Id., at 305, n. 1, 100 S.Ct. 2204. In this case, by contrast, Myriad did not create anything. To be sure, it found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention. Groundbreaking, innovative, or even brilliant discovery does not by itself satisfy the § 101 inquiry. In Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 68 S.Ct. 440, 92 L.Ed. 588 (1948), this Court considered a composition patent that claimed a mixture of naturally occurring strains of bacteria that helped leguminous plants take nitrogen from the air and fix it in the soil. Id., at 128–129, 68 S.Ct. 440. The ability of the bacteria to fix nitrogen was well known, and farmers commonly “inoculated” their crops with them to improve soil nitrogen levels. But farmers could not use the same inoculant for all crops, both because plants use different bacteria and because certain bacteria inhibit each other. Id., at 129–130, 68 S.Ct. 440. Upon learning that several nitrogen-fixing bacteria did not inhibit each other, however, the patent applicant combined them into a single inoculant and obtained a patent. Id., at 130, 68 S.Ct. 440. The Court held that the composition was not patent eligible because the patent holder did not alter the bacteria in any way. Id., at 132, 68 S.Ct. 440 (“There is no way in which we could call [the bacteria mixture a product of invention] unless we borrowed invention from the discovery of the natural principle itself”). His patent claim thus fell squarely within the law of nature exception. So do Myriad’s. Myriad found the location of the BRCA1 and BRCA2 genes, but that discovery, by itself, does not render the BRCA genes “new ... composition[s] of matter,” § 101, that are patent eligible. Indeed, Myriad’s patent descriptions highlight the problem with its claims. For example, a section of the ‘282 patent’s Detailed Description of the Invention indicates that Myriad found the location of a gene associated with increased risk of breast cancer and identified mutations of that gene that increase the risk. See App. 748–749.4 In subsequent language Myriad explains that the location of the gene was unknown until Myriad found it among the approximately eight million nucleotide pairs contained in a subpart of chromosome 17. See Ibid.5 The ‘473 and ’492 patents contain similar language as well. See id ., at 854, 947. Many of Myriad’s patent descriptions simply detail the “iterative process” of discovery by which Myriad narrowed the possible locations for the gene sequences that it sought.6 See, e.g., id ., at 750. Myriad seeks to import these extensive research efforts into the § 101 patent-eligibility inquiry. Brief for Respondents 8–10, 34. But extensive effort alone is insufficient to satisfy the demands of § 101. 4 The full relevant text of the Detailed Description of the Patent is as follows:

“It is a discovery of the present invention that the BRCA1 locus which predisposes individuals to breast cancer and ovarian cancer, is a gene encoding a BRCA1 protein, which has been found to have no significant homology with known protein or DNA

























sequences.... It is a discovery of the present invention that mutations in the BRCA1 locus in the germline are indicative of a predisposition to breast cancer and ovarian cancer. Finally, it is a discovery of the present invention that somatic mutations in the BRCA1 locus are also associated with breast cancer, ovarian cancer and other cancers, which represents an indicator of these cancers or of the prognosis of these cancers. The mutational events of the BRCA1 locus can involve deletions, insertions and point mutations.” App. 749.Notwithstanding Myriad’s repeated use of the phrase “present invention,” it is clear from the text of the patent that the various discoveries are the “invention.”

5 “Starting from a region on the long arm of human chromosome 17 of the human genome, 17q, which has a size estimated at about 8 million base pairs, a region which contains a genetic locus, BRCA1, which causes susceptibility to cancer, including breast and ovarian cancer, has been identified.” Ibid.

6 Myriad first identified groups of relatives with a history of breast cancer (some of whom also had developed ovarian cancer); because these individuals were related, scientists knew that it was more likely that their diseases were the result of genetic predisposition rather than other factors. Myriad compared sections of their chromosomes, looking for shared genetic abnormalities not found in the general population. It was that process which eventually enabled Myriad to determine where in the genetic sequence the BRCA1 and BRCA2 genes reside. See, e.g., id ., at 749, 763–775.

Nor are Myriad’s claims saved by the fact that isolating DNA from the human genome severs chemical bonds and thereby creates a nonnaturally occurring molecule. Myriad’s claims are simply not expressed in terms of chemical composition, nor do they rely in any way on the chemical changes that result from the isolation of a particular section of DNA. Instead, the claims understandably focus on the genetic information encoded in the BRCA1 and BRCA2 genes. If the patents depended upon the creation of a unique molecule, then a would-be infringer could arguably avoid at least Myriad’s patent claims on entire genes (such as claims 1 and 2 of the ‘282 patent) by isolating a DNA sequence that included both the BRCA1 or BRCA2 gene and one additional nucleotide pair. Such a molecule would not be chemically identical to the molecule “invented” by Myriad. But Myriad obviously would resist that outcome because its claim is concerned primarily with the information contained in the genetic sequence, not with the specific chemical composition of a particular molecule. Finally, Myriad argues that the PTO’s past practice of awarding gene patents is entitled to deference, citing J.E.M. Ag Supply, Inc. v. Pioneer Hi–Bred Int’l, Inc., 534 U.S. 124, 122 S.Ct. 593, 151 L.Ed.2d 508 (2001). See Brief for Respondents 35–39, 49–50. We disagree. J.E.M. held that new plant breeds were eligible for utility patents under § 101









notwithstanding separate statutes providing special protections for plants, see 7 U.S.C. § 2321 et seq. (Plant Variety Protection Act); 35 U.S.C. §§ 161–164 (Plant Patent Act of 1930). After analyzing the text and structure of the relevant statutes, the Court mentioned that the Board of Patent Appeals and Interferences had determined that new plant breeds were patent eligible under § 101 and that Congress had recognized and endorsed that position in a subsequent Patent Act amendment. 534 U.S., at 144–145, 122 S.Ct. 593 (citing In re Hibberd, 227 U.S.P.Q. 443 (1985) and 35 U.S.C. § 119(f)). In this case, however, Congress has not endorsed the views of the PTO in subsequent legislation. While Myriad relies on Judge Moore’s view that Congress endorsed the PTO’s position in a single sentence in the Consolidated Appropriations Act of 2004, see Brief for Respondents 31, n. 8; 689 F.3d, at 1346, that Act does not even mention genes, much less isolated DNA. § 634, 118 Stat. 101 (“None of the funds appropriated or otherwise made available under this Act may be used to issue patents on claims directed to or encompassing a human organism”). Further undercutting the PTO’s practice, the United States argued in the Federal Circuit and in this Court that isolated DNA was not patent eligible under § 101, Brief for United States as Amicus Curiae 20–33, and that the PTO’s practice was not “a sufficient reason to hold that isolated DNA is patent-eligible.” Id., at 26. See also id., at 28–29. These concessions weigh against deferring to the PTO’s determination.7

7 Myriad also argues that we should uphold its patents so as not to disturb the reliance

interests of patent holders like itself. Brief for Respondents 38–39. Concerns about reliance interests arising from PTO determinations, insofar as they are relevant, are better directed to Congress. See Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ––––, ––––, 132 S.Ct. 1289, 1304–05, 182 L.Ed.2d 321 (2012).

C

cDNA does not present the same obstacles to patentability as naturally occurring, isolated DNA segments. As already explained, creation of a cDNA sequence from mRNA results in an exons-only molecule that is not naturally occurring.8 Petitioners concede that cDNA differs from natural DNA in that “the non-coding regions have been removed.” Brief for Petitioners 49. They nevertheless argue that cDNA is not patent eligible because “[t]he nucleotide sequence of cDNA is dictated by nature, not by the lab technician.” Id., at 51. That may be so, but the lab technician unquestionably creates something new when cDNA is made. cDNA retains the naturally occurring exons of DNA, but it is distinct from the DNA from which it was derived. As a result, cDNA is not a “product of nature” and is patent eligible under § 101, except insofar as very short series of DNA may have no intervening introns to remove when creating cDNA. In that situation, a short strand of cDNA may be indistinguishable from natural DNA.9








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8 Some viruses rely on an enzyme called reverse transcriptase to reproduce by copying

RNA into cDNA. In rare instances, a side effect of a viral infection of a cell can be the random incorporation of fragments of the resulting cDNA, known as a pseudogene, into the genome. Such pseudogenes serve no purpose; they are not expressed in protein creation because they lack genetic sequences to direct protein expression. See J. Watson et al., Molecular Biology of the Gene 142, 144, fig. 7–5 (6th ed. 2008). Perhaps not surprisingly, given pseudogenes’ apparently random origins, petitioners “have failed to demonstrate that the pseudogene consists of the same sequence as the BRCA1 cDNA.” Association for Molecular Pathology v. United States Patent and Trademark Office, 689 F.3d 1303, 1356, n. 5 (C.A.Fed.2012) . The possibility that an unusual and rare phenomenon might randomly create a molecule similar to one created synthetically through human ingenuity does not render a composition of matter nonpatentable.

9 We express no opinion whether cDNA satisfies the other statutory requirements of patentability. See, e.g., 35 U.S.C. §§ 102, 103, and 112; Brief for United States as Amicus Curiae 19, n. 5.

III

It is important to note what is not implicated by this decision. First, there are no method claims before this Court. Had Myriad created an innovative method of manipulating genes while searching for the BRCA1 and BRCA2 genes, it could possibly have sought a method patent. But the processes used by Myriad to isolate DNA were well understood by geneticists at the time of Myriad’s patents “were well understood, widely used, and fairly uniform insofar as any scientist engaged in the search for a gene would likely have utilized a similar approach,” 702 F.Supp.2d, at 202–203, and are not at issue in this case. Similarly, this case does not involve patents on new applications of knowledge about the BRCA1 and BRCA2 genes. Judge Bryson aptly noted that, “[a]s the first party with knowledge of the [BRCA1 and BRCA2] sequences, Myriad was in an excellent position to claim applications of that knowledge. Many of its unchallenged claims are limited to such applications.” 689 F.3d, at 1349. Nor do we consider the patentability of DNA in which the order of the naturally occurring nucleotides has been altered. Scientific alteration of the genetic code presents a different inquiry, and we express no opinion about the application of § 101 to such endeavors. We merely hold that genes and the information they encode are not patent eligible under § 101 simply because they have been isolated from the surrounding











genetic material. * * * For the foregoing reasons, the judgment of the Federal Circuit is affirmed in part and reversed in part. It is so ordered.

Justice SCALIA, concurring in part and concurring in the judgment.

I join the judgment of the Court, and all of its opinion except Part I–A and some portions of the rest of the opinion going into fine details of molecular biology. I am unable to affirm those details on my own knowledge or even my own belief. It suffices for me to affirm, having studied the opinions below and the expert briefs presented here, that the portion of DNA isolated from its natural state sought to be patented is identical to that portion of the DNA in its natural state; and that complementary DNA (cDNA) is a synthetic creation not normally present in nature.

UNITED STATES COURT OF APPEALS, FEDERAL CIRCUIT

In re HALL

781 F.2d 897 (1986)

Applicant appealed from a decision of the United States Patent and Trademark Office's former Board of Appeals, sustaining rejection of claims of a reissue application for an enzyme.

Before BALDWIN, Circuit Judge, NICHOLS, Senior Circuit Judge, and KASHIWA, Circuit Judge.FN*

FN* Circuit Judge Kashiwa retired on January 7, 1986. Prior to his retirement, he participated in the consideration and decision of this case, and joined in this opinion.


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BALDWIN, Circuit Judge.

This is an appeal from the decision of the U.S. Patent and Trademark Office's (PTO) former Board of Appeals, adhered to on reconsideration by the Board of Patent Appeals and Interferences (board), sustaining the final rejection of claims 1-25 of reissue Application No. 343,922, filed January 29, 1982, based principally on a “printed publication” bar under 35 U.S.C. § 102(b). The reference is a doctoral thesis. Because appellant concedes that his claims are unpatentable if the thesis is available as a “printed publication” more than one year prior to the application's effective filing date of February 27, 1979, the only issue is whether the thesis is available as such a printed publication. On the record before us, we affirm the board's decision.

Background

A protest was filed during prosecution of appellant's reissue application which included in an appendix a copy of the dissertation “1,4-a-Glucanglukohydrolase ein amylotylisches Enzym ...” by Peter Foldi (Foldi thesis or dissertation). The record indicates that in September 1977, Foldi submitted his dissertation to the Department of Chemistry and Pharmacy at Freiburg University in the Federal Republic of Germany, and that Foldi was awarded a doctorate degree on November 2, 1977.

Certain affidavits from Dr. Erich Will, who is the director and manager of the Loan Department of the Library of Freiburg University, have been relied upon by the examiner and the board in reaching their decisions. One document, styled a “Declaration” and signed by Dr. Will, states that:

[I]n November 1977 copies of the dissertation FOLDI ... were received in the library of Freiburg University, and in ... December 1977 copies of the said dissertation were freely made available to the faculty and student body of Freiburg University as well as to the general public.

In an August 28, 1981 letter responding to an inquiry from a German corporation, Dr. Will said that the Freiburg University library was able to make the Foldi


dissertation “available to our readers as early as 1977.”

The examiner made a final rejection of the application claims. He said: “On the basis of the instant record it is reasonable to assume that the Foldi thesis was available (accessible) prior to February 27, 1979.” He also pointed out that there was no evidence to the contrary and asked the appellant to state his “knowledge of any inquiry which may have been made regarding ‘availability’ beyond that presently referred to in the record.” Appellant did not respond.

By letter, the PTO's Scientific Library asked Dr. Will whether the Foldi dissertation was made available to the public by being cataloged and placed in the main collection. Dr. Will replied in an October 20, 1983 letter, as translated:

Our dissertations, thus also the Foldi dissertation, are indexed in a special dissertations catalogue, which is part of the general users' catalogue. In the stacks they are likewise set apart in a special dissertation section, which is part of the general stacks.

In response to a further inquiry by the PTO's Scientific Library requesting (1) the exact date of indexing and cataloging of the Foldi dissertation or (2) “the time such procedures normally take,” Dr. Will replied in a June 18, 1984 letter:

The Library copies of the Foldi dissertation were sent to us by the faculty on November 4, 1977. Accordingly, the dissertation most probably was available for general use toward the beginning of the month of December, 1977.

The board held that the unrebutted evidence of record was sufficient to conclude that the Foldi dissertation had an effective date as prior art more than one year prior to the filing date of the appellant's initial application. In rejecting appellant's argument that the evidence was not sufficient to establish a specific date when the dissertation became publicly available, the board said:

We rely on the librarian's affidavit of express facts regarding the specific dissertation of interest and his description of the routine treatment of dissertations in general, in the ordinary course of business in his library.


On appeal, appellant raises two arguments: (1) the § 102(b) “printed publication” bar requires that the publication be accessible to the interested public, but there is no evidence that the dissertation was properly indexed in the library catalog prior to the critical date; and (2) even if the Foldi thesis were cataloged prior to the critical date, the presence of a single cataloged thesis in one university library does not constitute sufficient accessibility of the publication's teachings to those interested in the art exercising reasonable diligence.

OPINION

The “printed publication” bar is found in 35 U.S.C. 102:

A person shall be entitled to a patent unless-

*** (b) the invention was patented or described in a printed publication in this or a foreign country ... more than one year prior to the date of the application for patent in the United States....

The bar is grounded on the principle that once an invention is in the public domain, it is no longer patentable by anyone. In re Bayer, 568 F.2d 1357, 1361 (CCPA 1978).

The statutory phrase “printed publication” has been interpreted to give effect to ongoing advances in the technologies of data storage, retrieval, and dissemination. In re Wyer, 655 F.2d 221, 226 (CCPA 1981). Because there are many ways in which a reference may be disseminated to the interested public, “public accessibility” has been called the touchstone in determining whether a reference constitutes a “printed publication” bar under 35 U.S.C. § 102(b). The § 102 publication bar is a legal determination based on underlying fact issues, and therefore must be approached on a case-by-case basis. The proponent of the publication bar must show that prior to the critical date the reference was sufficiently accessible, at least to the public interested in the art, so that such a one by examining the reference could make the claimed invention without further


research or experimentation.

Relying on In re Bayer, appellant argues that the Foldi thesis was not shown to be accessible because Dr. Will's affidavits do not say when the thesis was indexed in the library catalog and do not chronicle the procedures for receiving and processing a thesis in the library.

As the board pointed out in its decision, the facts in Bayer differ from those here. Bayer, who was himself the author of the dissertation relied upon by the PTO, submitted a declaration from the university librarian which detailed the library's procedures for receiving, cataloging, and shelving of theses and attested to the relevant dates that Bayer's thesis was processed. The evidence showed that cataloging and shelving thesis copies routinely took many months from the time they were first received from the faculty and that during the interim the theses were accumulated in a private library office accessible only to library employees. In particular, processing of Bayer's thesis was shown to have been completed after the critical date.

On those facts the CCPA held that Bayer's thesis was not sufficiently accessible and could not give rise to the § 102(b) publication bar. But the court did not hold, as appellant would have it, that accessibility can only be shown by evidence establishing a specific date of cataloging and shelving before the critical date. While such evidence would be desirable, in lending greater certainty to the accessibility determination, the realities of routine business practice counsel against requiring such evidence. The probative value of routine business practice to show the performance of a specific act has long been recognized. See, e.g., 1 Wigmore, Evidence 92 (1940); rule 406, Fed.R.Evid.; 2 Weinstein, Evidence 406[01], 406[03] (1981). Therefore, we conclude that competent evidence of the general library practice may be relied upon to establish an approximate time when a thesis became accessible.

In the present case, Dr. Will's affidavits give a rather general library procedure as to indexing, cataloging, and shelving of theses. Although no specific dates are cited (except that the thesis was received on November 4, 1977), Dr. Will's affidavits consistently maintain that inasmuch as the Foldi dissertation was received by the library in early November 1977, the dissertation “most probably was available for general use toward the beginning of the month of December,


1977.” The only reasonable interpretation of the affidavits is that Dr. Will was relying on his library's general practice for indexing, cataloging, and shelving theses in estimating the time it would have taken to make the dissertation available to the interested public. Dr. Will's affidavits are competent evidence, and in these circumstances, persuasive evidence that the Foldi dissertation was accessible prior to the critical date. Reliance on an approximation found in the affidavits such as “toward the beginning of the month of December, 1977” works no injustice here because the critical date, February 27, 1978, is some two and one half months later. Moreover, it is undisputed that appellant proffered no rebuttal evidence.

Based on what we have already said concerning “public accessibility,” and noting that the determination rests on the facts of each case, we reject appellant's legal argument that a single cataloged thesis in one university library does not constitute sufficient accessibility to those interested in the art exercising reasonable diligence.

We agree with the board that the evidence of record consisting of Dr. Will's affidavits establishes a prima facie case for unpatentability of the claims under the 102(b) publication bar. It is a case which stands unrebutted.

Accordingly, the board's decision sustaining the rejection of appellant's claims is affirmed.

AFFIRMED

SUPREME COURT OF THE UNITED STATES

PFAFF v. WELLS ELECTRONICS, INC.

525 U.S. 55 (1998)

Patentee brought action against competitor, alleging infringement of patent for computer chip socket. The United States District Court for the Northern District


of Texas, Barefoot Sanders, Chief Judge, entered summary judgment of noninfringement, and patentee appealed. The United States Court of Appeals for the Federal Circuit, 5 F.3d 514, reversed and remanded for trial. On remand, the District Court, Sanders, Senior District Judge, held that two claims of patent were invalid but other claims were infringed, and appeal was taken. After reinstating appeal, the Court of Appeals, 124 F.3d 1429, reversed, finding all claims at issue invalid. Patentee's petition for certiorari was granted.

Justice STEVENS delivered the opinion of the Court.

Section 102(b) of the Patent Act of 1952 provides that no person is entitled to patent an “invention” that has been “on sale” more than one year before filing a patent application.FN1 We granted certiorari to determine whether the commercial marketing of a newly invented product may mark the beginning of the 1-year period even though the invention has not yet been reduced to practice.FN2

FN1. “A person shall be entitled to a patent unless-....“(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States, or ....” 35 U.S.C. 102.

FN2. “A process is reduced to practice when it is successfully performed. A machine is reduced to practice when it is assembled, adjusted and used. A manufacture is reduced to practice when it is completely manufactured. A composition of matter is reduced to practice when it is completely composed.” Corona Cord Tire Co. v. Dovan Chemical Corp., 276 U.S. 358, 383, 48 S.Ct. 380, 72 L.Ed. 610 (1928).

I

On April 19, 1982, petitioner, Wayne Pfaff, filed an application for a patent on a computer chip socket. Therefore, April 19, 1981, constitutes the critical date for purposes of the on-sale bar of 35 U.S.C. 102(b); if the 1-year period began to


run before that date, Pfaff lost his right to patent his invention.

Pfaff commenced work on the socket in November 1980, when representatives of Texas Instruments asked him to develop a new device for mounting and removing semiconductor chip carriers. In response to this request, he prepared detailed engineering drawings that described the design, the dimensions, and the materials to be used in making the socket. Pfaff sent those drawings to a manufacturer in February or March 1981.

Prior to March 17, 1981, Pfaff showed a sketch of his concept to representatives of Texas Instruments. On April 8, 1981, they provided Pfaff with a written confirmation of a previously placed oral purchase order for 30,100 of his new sockets for a total price of $91,155. In accord with his normal practice, Pfaff did not make and test a prototype of the new device before offering to sell it in commercial quantities.FN3

FN3. At his deposition, respondent's counsel engaged in the following colloquy with Pfaff:“Q. Now, at this time [late 1980 or early 1981] did we [sic] have any prototypes developed or anything of that nature, working embodiment?“A. No.“Q. It was in a drawing. Is that correct?“A. Strictly in a drawing. Went from the drawing to the hard tooling. That's the way I do my business.“Q. ‘Boom-boom’?“A. You got it.“Q. You are satisfied, obviously, when you come up with some drawings that it is going to go-‘it works'?“A. I know what I'm doing, yes, most of the time.” App. 96-97.

The manufacturer took several months to develop the customized tooling necessary to produce the device, and Pfaff did not fill the order until July 1981. The evidence therefore indicates that Pfaff first reduced his invention to practice in the summer of 1981. The socket achieved substantial commercial success before Patent No. 4,491,377 ( '377 patent) issued to Pfaff on January 1, 1985.FN4


FN4. Initial sales of the patented device were:

1981 $ 350,000

1982 $ 937,000

1983 $2,800,000

1984 $3,430,000

App. to Pet. for Cert. 223a.

After the patent issued, petitioner brought an infringement action against respondent, Wells Electronics, Inc., the manufacturer of a competing socket. Wells prevailed on the basis of a finding of no infringement. FN5 When respondent began to market a modified device, petitioner brought this suit, alleging that the modifications infringed six of the claims in the '377 patent.

FN5. Pfaff v. Wells Electronics, Inc., 9 USPQ2d 1366 (N.D.Ind.1988). The court found that the Wells device did not literally infringe on Pfaff's '377 patent based on the physical location of the sockets' conductive pins.

After a full evidentiary hearing before a Special Master,FN6 the District Court held that two of those claims (1 and 6) were invalid because they had been anticipated in the prior art. Nevertheless, the court concluded that four other claims (7, 10, 11, and 19) were valid and three (7, 10, and 11) were infringed by various models of respondent's sockets. App. to Pet. for Cert. 21a-22a. Adopting the Special Master's findings, the District Court rejected respondent's 102(b) defense because Pfaff had filed the application for the '377 patent less than a year after reducing the invention to practice.

FN6. Initially the District Court entered summary judgment in favor of


respondent, but the Court of Appeals reversed and remanded for trial because issues of fact were in dispute. See 5 F.3d 514 (C.A.Fed.1993).

The Court of Appeals reversed, finding all six claims invalid. 124 F.3d 1429 (C.A.Fed.1997). Four of the claims (1, 6, 7, and 10) described the socket that Pfaff had sold to Texas Instruments prior to April 8, 1981. Because that device had been offered for sale on a commercial basis more than one year before the patent application was filed on April 19, 1982, the court concluded that those claims were invalid under 102(b). That conclusion rested on the court's view that as long as the invention was “substantially complete at the time of sale,” the 1-year period began to run, even though the invention had not yet been reduced to practice. Id., at 1434. The other two claims (11 and 19) described a feature that had not been included in Pfaff's initial design, but the Court of Appeals concluded as a matter of law that the additional feature was not itself patentable because it was an obvious addition to the prior art.FN7 Given the court's 102(b) holding, the prior art included Pfaff's first four claims.

FN7. Title 35 U.S.C. 103 provides: “A patent may not be obtained though the invention is not identically disclosed or described ... if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.”

Because other courts have held or assumed that an invention cannot be “on sale” within the meaning of 102(b) unless and until it has been reduced to practice, see, e.g., Timely Products Corp. v. Arron, 523 F.2d 288, 299-302 (C.A.2 1975); Dart Industries, Inc. v. E.I. du Pont De Nemours & Co., 489 F.2d 1359, 1365, n. 11 (C.A.7 1973), cert. denied, 417 U.S. 933, 94 S.Ct. 2645, 41 L.Ed.2d 236 (1974), and because the text of 102(b) makes no reference to “substantial completion” of an invention, we granted certiorari. 523 U.S. 1003, 118 S.Ct. 1183, 140 L.Ed.2d 315 (1998).

II


The primary meaning of the word “invention” in the Patent Act unquestionably refers to the inventor's conception rather than to a physical embodiment of that idea. The statute does not contain any express requirement that an invention must be reduced to practice before it can be patented. Neither the statutory definition of the term in 100 FN8 nor the basic conditions for obtaining a patent set forth in 101 FN9 make any mention of “reduction to practice.” The statute's only specific reference to that term is found in 102(g), which sets forth the standard for resolving priority contests between two competing claimants to a patent. That subsection provides:

“In determining priority of invention there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other.”

Thus, assuming diligence on the part of the applicant, it is normally the first inventor to conceive, rather than the first to reduce to practice, who establishes the right to the patent.

FN8. Title 35 U.S.C. 100, “Definitions,” states:

“When used in this title unless the context otherwise indicates-“(a) The term ‘invention’ means invention or discovery....”

FN9. Section 101, “Inventions patentable,” provides:

“Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”

It is well settled that an invention may be patented before it is reduced to practice. In 1888, this Court upheld a patent issued to Alexander Graham Bell even though he had filed his application before constructing a working telephone. Chief Justice Waite's reasoning in that case merits quoting at length:


“It is quite true that when Bell applied for his patent he had never actually transmitted telegraphically spoken words so that they could be distinctly heard and understood at the receiving end of his line, but in his specification he did describe accurately and with admirable clearness his process, that is to say, the exact electrical condition that must be created to accomplish his purpose, and he also described, with sufficient precision to enable one of ordinary skill in such matters to make it, a form of apparatus which, if used in the way pointed out, would produce the required effect, receive the words, and carry them to and deliver them at the appointed place. The particular instrument which he had, and which he used in his experiments, did not, under the circumstances in which it was tried, reproduce the words spoken, so that they could be clearly understood, but the proof is abundant and of the most convincing character, that other instruments, carefully constructed and made exactly in accordance with the specification, without any additions whatever, have operated and will operate successfully. A good mechanic of proper skill in matters of the kind can take the patent and, by following the specification strictly, can, without more, construct an apparatus which, when used in the way pointed out, will do all that it is claimed the method or process will do....

“The law does not require that a discoverer or inventor, in order to get a patent for a process, must have succeeded in bringing his art to the highest degree of perfection. It is enough if he describes his method with sufficient clearness and precision to enable those skilled in the matter to understand what the process is, and if he points out some practicable way of putting it into operation.” The Telephone Cases, 126 U.S. 1, 535-536, 8 S.Ct. 778, 31 L.Ed. 863 (1888).

When we apply the reasoning of The Telephone Cases to the facts of the case before us today, it is evident that Pfaff could have obtained a patent on his novel socket when he accepted the purchase order from Texas Instruments for 30,100 units. At that time he provided the manufacturer with a description and drawings


that had “sufficient clearness and precision to enable those skilled in the matter” to produce the device. Id., at 536, 8 S.Ct. 778. The parties agree that the sockets manufactured to fill that order embody Pfaff's conception as set forth in claims 1, 6, 7, and 10 of the '377 patent. We can find no basis in the text of 102(b) or in the facts of this case for concluding that Pfaff's invention was not “on sale” within the meaning of the statute until after it had been reduced to practice.

III

Pfaff nevertheless argues that longstanding precedent, buttressed by the strong interest in providing inventors with a clear standard identifying the onset of the 1-year period, justifies a special interpretation of the word “invention” as used in 102(b). We are persuaded that this nontextual argument should be rejected.

As we have often explained, most recently in Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 151, 109 S.Ct. 971, 103 L.Ed.2d 118 (1989), the patent system represents a carefully crafted bargain that encourages both the creation and the public disclosure of new and useful advances in technology, in return for an exclusive monopoly for a limited period of time. The balance between the interest in motivating innovation and enlightenment by rewarding invention with patent protection on the one hand, and the interest in avoiding monopolies that unnecessarily stifle competition on the other, has been a feature of the federal patent laws since their inception. As this Court explained in 1871:

“Letters patent are not to be regarded as monopolies ... but as public franchises granted to the inventors of new and useful improvements for the purpose of securing to them, as such inventors, for the limited term therein mentioned, the exclusive right and liberty to make and use and vend to others to be used their own inventions, as tending to promote the progress of science and the useful arts, and as matter of compensation to the inventors for their labor, toil, and expense in making the inventions, and reducing the same to practice for the public benefit, as contemplated by the Constitution and sanctioned by the laws of Congress.” Seymour v. Osborne, 11 Wall. 516, 533-534.


Consistent with these ends, 102 of the Patent Act serves as a limiting provision, both excluding ideas that are in the public domain from patent protection and confining the duration of the monopoly to the statutory term. See, e.g., Frantz Mfg. Co. v. Phenix Mfg. Co., 457 F.2d 314, 320 (C.A.7 1972).

We originally held that an inventor loses his right to a patent if he puts his invention into public use before filing a patent application. “His voluntary act or acquiescence in the public sale and use is an abandonment of his right.” Pennock v. Dialogue, 2 Pet. 1, 24, 7 L.Ed. 327 (1829) (Story, J.). A similar reluctance to allow an inventor to remove existing knowledge from public use undergirds the on-sale bar.

Nevertheless, an inventor who seeks to perfect his discovery may conduct extensive testing without losing his right to obtain a patent for his invention-even if such testing occurs in the public eye. The law has long recognized the distinction between inventions put to experimental use and products sold commercially. In 1878, we explained why patentability may turn on an inventor's use of his product.

“It is sometimes said that an inventor acquires an undue advantage over the public by delaying to take out a patent, inasmuch as he thereby preserves the monopoly to himself for a longer period than is allowed by the policy of the law; but this cannot be said with justice when the delay is occasioned by a bona fide effort to bring his invention to perfection, or to ascertain whether it will answer the purpose intended. His monopoly only continues for the allotted period, in any event; and it is the interest of the public, as well as himself, that the invention should be perfect and properly tested, before a patent is granted for it. Any attempt to use it for a profit, and not by way of experiment, for a longer period than two years before the application, would deprive the inventor of his right to a patent.” Elizabeth v. American Nicholson Pavement Co., 97 U.S. 126, 137, 24 L.Ed. 1000 (1877) (emphasis added).

The patent laws therefore seek both to protect the public's right to retain knowledge already in the public domain and the inventor's right to control


whether and when he may patent his invention. The Patent Act of 1836, 5 Stat. 117, was the first statute that expressly included an on-sale bar to the issuance of a patent. Like the earlier holding in Pennock, that provision precluded patentability if the invention had been placed on sale at any time before the patent application was filed. In 1839, Congress ameliorated that requirement by enacting a 2-year grace period in which the inventor could file an application. 5 Stat. 353.

In Andrews v. Hovey, 123 U.S. 267, 274, 8 S.Ct. 101, 31 L.Ed. 160 (1887), we noted that the purpose of that amendment was “to fix a period of limitation which should be certain”; it required the inventor to make sure that a patent application was filed “within two years from the completion of his invention,” ibid. In 1939, Congress reduced the grace period from two years to one year. 53 Stat. 1212.

Petitioner correctly argues that these provisions identify an interest in providing inventors with a definite standard for determining when a patent application must be filed. A rule that makes the timeliness of an application depend on the date when an invention is “substantially complete” seriously undermines the interest in certainty.FN11 Moreover, such a rule finds no support in the text of the statute. Thus, petitioner's argument calls into question the standard applied by the Court of Appeals, but it does not persuade us that it is necessary to engraft a reduction to practice element into the meaning of the term “invention” as used in 102(b).

FN11. The Federal Circuit has developed a multifactor, “totality of the circumstances” test to determine the trigger for the on-sale bar. See, e.g., Micro Chemical, Inc. v. Great Plains Chemical Co., 103 F.3d 1538, 1544 (C.A.Fed.1997) (stating that, in determining whether an invention is on sale for purposes of 102(b), “ ‘all of the circumstances surrounding the sale or offer to sell, including the stage of development of the invention and the nature of the invention, must be considered and weighed against the policies underlying section 102(b)’ ”); see also UMC Electronics Co. v. United States, 816 F.2d 647, 656 (1987) (stating the on-sale bar “does not lend itself to formulation into a set of precise requirements”). As the Federal Circuit itself has noted, this test “has been criticized as unnecessarily vague.” Seal-Flex, Inc. v. Athletic Track & Court Construction, 98 F.3d 1318, 1323, n. 2 (C.A.Fed.1996).


The word “invention” must refer to a concept that is complete, rather than merely one that is “substantially complete.” It is true that reduction to practice ordinarily provides the best evidence that an invention is complete. But just because reduction to practice is sufficient evidence of completion, it does not follow that proof of reduction to practice is necessary in every case. Indeed, both the facts of The Telephone Cases and the facts of this case demonstrate that one can prove that an invention is complete and ready for patenting before it has actually been reduced to practice.

We conclude, therefore, that the on-sale bar applies when two conditions are satisfied before the critical date. First, the product must be the subject of a commercial offer for sale. An inventor can both understand and control the timing of the first commercial marketing of his invention. The experimental use doctrine, for example, has not generated concerns about indefiniteness, and we perceive no reason why unmanageable uncertainty should attend a rule that measures the application of the on-sale bar of 102(b) against the date when an invention that is ready for patenting is first marketed commercially. In this case the acceptance of the purchase order prior to April 8, 1981, makes it clear that such an offer had been made, and there is no question that the sale was commercial rather than experimental in character.

Second, the invention must be ready for patenting. That condition may be satisfied in at least two ways: by proof of reduction to practice before the critical date; or by proof that prior to the critical date the inventor had prepared drawings or other descriptions of the invention that were sufficiently specific to enable a person skilled in the art to practice the invention. In this case the second condition of the on-sale bar is satisfied because the drawings Pfaff sent to the manufacturer before the critical date fully disclosed the invention.

The evidence in this case thus fulfills the two essential conditions of the on-sale bar. As succinctly stated by Learned Hand:

“[I]t is a condition upon an inventor's right to a patent that he shall not exploit his discovery competitively after it is ready for patenting; he must content himself with either secrecy, or legal monopoly.” Metallizing Engineering Co. v. Kenyon Bearing & Auto Parts Co.,


153 F.2d 516, 520 (C.A.2 1946).

The judgment of the Court of Appeals finds support not only in the text of the statute but also in the basic policies underlying the statutory scheme, including 102(b). When Pfaff accepted the purchase order for his new sockets prior to April 8, 1981, his invention was ready for patenting. The fact that the manufacturer was able to produce the socket using his detailed drawings and specifications demonstrates this fact. Furthermore, those sockets contained all the elements of the invention claimed in the '377 patent. Therefore, Pfaff's '377 patent is invalid because the invention had been on sale for more than one year in this country before he filed his patent application. Accordingly, the judgment of the Court of Appeals is affirmed.

It is so ordered.


CITY OF ELIZABETH v. AMER. NICHOLSON PAVEMENT CO.

97 U.S. 126 (1878)

MR. JUSTICE BRADLEY delivered the opinion of the court.

This suit was brought by the American Nicholson Pavement Company against the city of Elizabeth, N. J., George W. Tubbs, and the New Jersey Wood-Paving Company, a corporation of New Jersey, upon a patent issued to Samuel Nicholson, dated Aug. 20, 1867, for a new and improved wooden pavement, being a second reissue of a patent issued to said Nicholson Aug. 8, 1854. The reissued patent was extended in 1868 for a further term of seven years. A copy of it is appended to the bill; and, in the specification, it is declared that the nature and object of the invention consists in providing a process or mode of constructing wooden block pavements upon a foundation along a street or roadway with facility, cheapness, and accuracy, and also in the creation and


construction of such a wooden pavement as shall be comparatively permanent and durable, by so uniting and combining all its parts, both superstructure and foundation, as to provide against the slipping of the horses' feet, against noise, against unequal wear, and against rot and consequent sinking away from below. Two plans of making this pavement are specified. Both require a proper foundation on which to lay the blocks, consisting of tarred-paper or hydraulic cement covering the surface of the road-bed to the depth of about two inches, or of a flooring of boards or plank, also covered with tar, or other preventive of moisture. On this foundation, one plan is to set square blocks on end arranged like a checker-board, the alternate rows being shorter than the others, so as to leave narrow grooves or channel-ways to be filled with small broken stone or gravel, and them pouring over the whole melted tar or pitch, whereby the cavities are all filled and cemented together. The other plan is, to arrange the blocks in rows transversely across the street, separated a small space (of about an inch) by strips of board at the bottom, which serve to keep the blocks at a uniform distance apart, and then filling these spaces with the same material as before. The blocks forming the pavement are about eight inches high. The alternate rows of short blocks in the first plan and the strips of board in the second plan should not be higher than four inches. The patent has four claims, the first two of which, which are the only ones in question, are as follows: --

"I claim as an improvement in the art of constructing pavements:

"1. Placing a continuous foundation or support, as above described, directly upon the roadway; then arranging thereon a series of blocks, having parallel sides, endwise, in rows, so as to leave a continuous narrow groove or channel-way between each row, and then filling said grooves or channel-ways with broken stone, gravel, and tar, or other like materials.

"2. I claim the formation of a pavement by laying a foundation directly upon the roadway, substantially as described, and then employing two sets of blocks: one a principal set of blocks, that shall form the wooden surface of the pavement when completed, and an auxiliary set of blocks or strips of board, which shall form no part of the surface of the pavement, but determine the width of the groove between the principal blocks, and also the filling of said groove, when [**6] so formed between the principal blocks, with broken stone, gravel, and tar, or other like material."


The bill charges that the defendants infringed this patent by laying down wooden pavements in the city of Elizabeth, N.J., constructed in substantial conformity with the process patented, and prays an account of profits, and an injunction.

The defendants answered in due course, admitting that they had constructed, and were still constructing, wooden pavements in Elizabeth, but alleging that they were constructed in accordance with a patent granted to John W. Brocklebank and Charles Trainer, dated Jan. 12, 1869, and denied that it infringed upon the complainant.

They also denied that there was any novelty in the alleged invention of Nicholson, and specified a number of English and other patents which exhibited, as they claimed, every substantial and material part thereof which was claimed as new.

They also averred that the alleged invention of Nicholson was in public use, with his consent and allowance, for six years before he applied for a patent, on a certain avenue in Boston called the Mill-dam; and contended that said public use worked an abandonment of the pretended invention.

These several issues, together with the question of profits, and liability on the part of the several defendants to respond thereto, are the subjects in controversy before us.

***

[After discussing prior literature on roadways of stone and wood --] None of these pavements combine all the elements of Nicholson's, much less a combination of those elements arranged and disposed according to his plan. We think they present no ground for invalidating his patent, and no defence to this suit.

The next question to be considered is, whether Nicholson's invention was in public use or on sale, with his consent and allowance, for more than two years prior to his application for a patent, within the meaning of the sixth, seventh, and


fifteenth sections of the act of 1836, as qualified by the seventh section of the act of 1839, which were the acts in force in 1854, when he obtained his patent. It is contended by the appellants that the pavement which Nicholson put down by way of experiment, on Mill-dam Avenue in Boston, in 1848, was publicly used for the space of six years before his application for a patent, and that this was a public use within the meaning of the law.

To determine this question, it is necessary to examine the circumstances under which this pavement was put down, and the object and purpose that Nicholson had in view. It is perfectly clear from the evidence that he did not intend to abandon his right to a patent. He had filed a caveat in August, 1847, and he constructed the pavement in question by way of experiment, for the purpose of testing its qualities. The road in which it was put down, though a public road, belonged to the Boston and Roxbury Mill Corporation, which received toll for its use; and Nicholson was a stockholder and treasurer of the corporation. The pavement in question was about seventy-five feet in length, and was laid adjoining to the toll-gate and in front of the toll-house. It was constructed by Nicholson at his own expense, and was placed by him where it was, in order to see the effect upon it of heavily loaded wagons, and of varied and constant use; and also to ascertain its durability, and liability to decay. Joseph L. Lang, who was toll-collector for many years, commencing in 1849, familiar with the road before that time, and with this pavement from the time of its origin, testified as follows: "Mr. Nicholson was there almost daily, and when he came he would examine the pavement, would often walk over it, cane in hand, striking it with his cane, and making particular examination of its condition. He asked me very often how people liked it, and asked me a great many questions about it. I have heard him say a number of times that this was his first experiment with this pavement, and he thought that it was wearing very well. The circumstances that made this locality desirable for the purpose of obtaining a satisfactory test of the durability and value of the pavement were: that there would be a better chance to lay it there; he would have more room and a better chance than in the city; and, besides, it was a place where most everybody went over it, rich and poor. It was a great thoroughfare out of Boston. It was frequently travelled by teams having a load of five or six tons, and some larger. As these teams usually stopped at the toll-house, and started again, the stopping and starting would make as severe a trial to the pavement as it could be put to."


This evidence is corroborated by that of several other witnesses in the cause; the result of the whole being that Nicholson merely intended this piece of pavement as an experiment, to test its usefulness and durability. Was this a public use, within the meaning of the law?

An abandonment of an invention to the public may be evinced by the conduct of the inventor at any time, even within the two years named in the law. The effect of the law is, that no such consequence will necessarily follow from the invention being in public use or on sale, with the inventor's consent and allowance, at any time within two years before his application; but that, if the invention is in public use or on sale prior to that time, it will be conclusive evidence of abandonment, and the patent will be void.

But, in this case, it becomes important to inquire what is such a public use as will have the effect referred to. That the use of the pavement in question was public in one sense cannot be disputed. But can it be said that the invention was in public use? The use of an invention by the inventor himself, or of any other person under his direction, by way of experiment, and in order to bring the invention to perfection, has never been regarded as such a use. Curtis, Patents, sect. 381; Shaw v. Cooper, 7 Pet. 292.

Now, the nature of a street pavement is such that it cannot be experimented upon satisfactorily except on a highway, which is always public.

When the subject of invention is a machine, it may be tested and tried in a building, either with or without closed doors. In either case, such use is not a public use, within the meaning of the statute, so long as the inventor is engaged, in good faith, in testing its operation. He may see cause to alter it and improve it, or not. His experiments will reveal the fact whether any and what alterations may be necessary. If durability is one of the qualities to be attained, a long period, perhaps years, may be necessary to enable the inventor to discover whether his purpose is accomplished. And though, during all that period, he may not find that any changes are necessary, yet he may be justly said to be using his machine only by way of experiment; and no one would say that such a use, pursued with a bona fide intent of testing the qualities of the machine, would be a public use, within the meaning of the statute. So long as he does not voluntarily allow others


to make it and use it, and so long as it is not on sale for general use, he keeps the invention under his own control, and does not lose his title to a patent.

It would not be necessary, in such a case, that the machine should be put up and used only in the inventor's own shop or premises. He may have it put up and used in the premises of another, and the use may inure to the benefit of the owner of the establishment. Still, if used under the surveillance of the inventor, and for the purpose of enabling him to test the machine, and ascertain whether it will answer the purpose intended, and make such alterations and improvements as experience demonstrates to be necessary, it will still be a mere experimental use, and not a public use, within the meaning of the statute.

Whilst the supposed machine is in such experimental use, the public may be incidentally deriving a benefit from it. If it be a grist-mill, or a carding-machine, customers from the surrounding country may enjoy the use of it by having their grain made into flour, or their wool into rolls, and still it will not be in public use, within the meaning of the law.

But if the inventor allows his machine to be used by other persons generally, either with or without compensation, or if it is, with his consent, put on sale for such use, then it will be in public use and on public sale, within the meaning of the law.

If, now, we apply the same principles to this case, the analogy will be seen at once. Nicholson wished to experiment on his pavement. He believed it to be a good thing, but he was not sure; and the only mode in which he could test it was to place a specimen of it in a public roadway. He did this at his own expense, and with the consent of the owners of the road. Durability was one of the qualities to be attained. He wanted to know whether his pavement would stand, and whether it would resist decay. Its character for durability could not be ascertained without its being subjected to use for a considerable time. He subjected it to such use, in good faith, for the simple purpose of ascertaining whether it was what he claimed it to be. Did he do any thing more than the inventor of the supposed machine might do, in testing his invention? The public had the incidental use of the pavement, it is true; but was the invention in public use, within the meaning of the statute? We think not. The proprietors of the road alone used the invention, and used it at Nicholson's request, by way of


experiment. The only way in which they could use it was by allowing the public to pass over the pavement.

Had the city of Boston, or other parties, used the invention, by laying down the pavement in other streets and places, with Nicholson's consent and allowance, then, indeed, the invention itself would have been in public use, within the meaning of the law; but this was not the case. Nicholson did not sell it, nor allow others to use it or sell it. He did not let it go beyond his control. He did nothing that indicated any intent to do so. He kept it under his own eyes, and never for a moment abandoned the intent to obtain a patent for it.

In this connection, it is proper to make another remark. It is not a public knowledge of his invention that precludes the inventor from obtaining a patent for it, but a public use or sale of it. In England, formerly, as well as under our Patent Act of 1793, if an inventor did not keep his invention secret, if a knowledge of it became public before his application for a patent, he could not obtain one. To be patentable, and invention must not have been known or used before the application; but this has not been the law of this country since the passage of the act of 1836, and it has been very much qualified in England. Lewis v. Marling, 10 B. & C. 22. Therefore, if it were true that during the whole period in which the pavement was used, the public knew how it was constructed, it would make no difference in the result.

It is sometimes said that an inventor acquires an undue advantage over the public by delaying to take out a patent, inasmuch as he thereby preserves the monopoly to himself for a longer period than is allowed by the policy of the law; but this cannot be said with justice when the delay is occasioned by a bona fide effort to bring his invention to perfection, or to ascertain whether it will answer the purpose intended. His monopoly only continues for the allotted period, in any event; and it is the interest of the public, as well as himself, that the invention should be perfect and properly tested, before a patent is granted for it. Any attempt to use it for a profit, and not by way of experiment, for a longer period than two years before the application, would deprive the inventor of his right to a patent.

***


[Note: As late as 1916, wooden streets were common in the United States, probably because wooden blocks were inexpensive in raw material and workmanship costs relative to cut stones. Below is an ad appearing in a 1916 engineering book, touting the great benefits of wooden streets.




GRAHAM v. JOHN DEERE COMPANY OF KANSAS CITY

383 U.S. 1 (1966)

In a patent infringement action, the United States District Court for the Western District of Missouri, 216 F.Supp. 272, entered judgment for plaintiffs, and defendants appealed. The Court of Appeals, Eighth Circuit, reversed, 333 F.2d 529. In separate actions, plaintiffs sought declaration that patent was invalid and not infringed. The United States District Court for the Western District of Missouri, 220 F.Supp. 414, held that patent was valid and infringed and plaintiffs appealed. The Court of Appeals, Eighth Circuit, affirmed, 336 F.2d 110.

Mr. Justice CLARK delivered the opinion of the Court.

After a lapse of 15 years, the Court again focuses its attention on the patentability of inventions under the standard of Art. I, 8, cl. 8, of the Constitution and under the conditions prescribed by the laws of the United States. Since our last expression on patent validity, Great A. & P. Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147 (1950), the Congress has for the first time expressly added a third statutory dimension to the two requirements of novelty and utility that had been the sole statutory test since the Patent Act of 1793. This is the test of obviousness, i.e., whether ‘the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made.’§103 of the Patent Act of 1952,


35 U.S.C. 103 (1964 ed.).

The questions, involved in each of the companion cases before us, are what effect the 1952 Act had upon traditional statutory and judicial tests of patentability and what definitive tests are now required. We have concluded that the 1952 Act was intended to codify judicial precedents embracing the principle long ago announced by this Court in Hotchkiss v. Greenwood, 11 How. 248, 13 L.Ed. 683 (1851), and that, while the clear language of§103 places emphasis on an inquiry into obviousness, the general level of innovation necessary to sustain patentability remains the same.

***

This Court formulated a general condition of patentability in 1851 in Hotchkiss v. Greenwood, 11 How. 248, 13 L.Ed. 683. The patent involved a mere substitution of materials-porcelain or clay for wood or metal in doorknobs - and the Court condemned it, holding:

‘(U)nless more ingenuity and skill * * * were required * * * than were possessed by an ordinary mechanic acquainted with the business, there was an absence of that degree of skill and ingenuity which constitute essential elements of every invention. In other words, the improvement is the work of the skilful mechanic, not that of the inventor.’ At p. 267.

Hotchkiss, by positing the condition that a patentable invention evidence more ingenuity and skill than that possessed by an ordinary mechanic acquainted with the business, merely distinguished between new and useful innovations that were capable of sustaining a patent and those that were not. The Hotchkiss test laid the cornerstone of the judicial evolution suggested by Jefferson and left to the courts by Congress. The language in the case, and in those which followed, gave birth to ‘invention’ as a word of legal art signifying patentable inventions. Yet, as this Court has observed, ‘(t)he truth is, the word (‘invention’) cannot be defined in such manner as to afford any substantial aid in determining whether a particular device involves an exercise of the inventive faculty or not.' McClain v. Ortmayer, 141 U.S. 419, 427 (1891); Great A. & P. Tea Co. v. Supermarket


Equipment Corp., supra, 340 U.S., at 151. Its use as a label brought about a large variety of opinions as to its meaning both in the Patent Office, in the courts, and at the bar. The Hotchkiss formulation, however, lies not in any label, but in its functional approach to questions of patentability. In practice, Hotchkiss has required a comparison between the subject matter of the patent, or patent application, and the background skill of the calling. It has been from this comparison that patentability was in each case determined.

IV.

The 1952 Patent Act.

The Act sets out the conditions of patentability in three sections. An analysis of the structure of these three sections indicates that patentability is dependent upon three explicit conditions: novelty and utility as articulated and defined in§101 and§102, and nonobviousness *** The pivotal section around which the present controversy centers is 103 [now § 103(a)]. It provides:

Conditions for patentability; non-obvious subject matter‘A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made.’

***

Approached in this light, the § 103 additional condition, when followed realistically, will permit a more practical test of patentability. The emphasis on non-obviousness is one of inquiry, not quality, and, as such, comports with the constitutional strictures.

While the ultimate question of patent validity is one of law, Great A. & P. Tea Co.


v. Supermarket Equipment Corp., supra, 340 U.S. at 155, 71 S.Ct. at 131, the§103 condition, which is but one of three conditions, each of which must be satisfied, lends itself to several basic factual inquiries. Under § 103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background, the obviousness or nonobviousness of the subject matter is determined. Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented. As indicia of obviousness or nonobviousness, these inquiries may have relevancy. ***

What is obvious is not a question upon which there is likely to be uniformity of thought in every given factual context. The difficulties, however, are comparable to those encountered daily by the courts in such frames of reference as negligence and scienter, and should be amenable to a case-by-case development. We believe that strict observance of the requirements laid down here will result in that uniformity and definiteness which Congress called for in the 1952 Act.

***


GRAVER TANK & MFG. CO., Inc., et al. v. LINDE AIR PRODUCTS CO.

339 U.S. 605 (1950)

Mr. Justice JACKSON delivered the opinion of the Court.

***

In determining whether an accused device or composition infringes a valid patent, resort must be had in the first instance to the words of the claim. If accused matter falls clearly within the claim, infringement is made out and that is the end of it.


***

[Note: This case is famous for its enunciation of the modern doctrine of equivalents – that an accused structure outside the scope of the claim language can nevertheless be an infringement of that claim. This doctrine will be taken up in the next case. Graver is less known for the proposition excerpted here, by which claim language determines patent scope. This has led patent draftspersons to devise numerous ways of phrasing claims broadly, to include large classes of structures, compositions, or methods in a single claim. In the written description portion of the patent the law remains unclear whether anything more than a single configuration within the claim is necessary to support the broad claim, except where chemical reactions are involved.]


WARNER-JENKINSON CO. v. HILTON DAVIS CHEM. CO.

520 U.S. 17 (1996)

Patentee brought infringement action against competitor, alleging that competitor's ultrafiltration method for purifying dye infringed patented method under doctrine of equivalents. The United States District Court for the Southern District of Ohio, Herman J. Weber, J., entered judgment in favor of patentee, and competitor appealed. The Court of Appeals of the Federal Circuit affirmed, 62 F.3d 1512, and certiorari was granted.


Nearly 50 years ago, this Court in Graver Tank & Mfg. Co. v. Linde Air Products


Co., 339 U.S. 605 (1950), set out the modern contours of what is known in patent law as the “doctrine of equivalents.” Under this doctrine, a product or process that does not literally infringe upon the express terms of a patent claim may nonetheless be found to infringe if there is “equivalence” between the elements of the accused product or process and the claimed elements of the patented invention. Id., at 609, 70 S.Ct., at 856-857. Petitioner, which was found to have infringed respondent's patent under the doctrine of equivalents, invites us to speak the death of that doctrine. We decline that invitation. The significant disagreement within the Court of Appeals for the Federal Circuit concerning the application of Graver Tank suggests, however, that the doctrine is not free from confusion. We therefore will endeavor to clarify the proper scope of the doctrine.

I

The essential facts of this case are few. Petitioner Warner-Jenkinson Co. and respondent Hilton Davis Chemical Co. manufacture dyes. Impurities in those dyes must be removed. Hilton Davis holds United States Patent No. 4,560,746 ('746 patent), which discloses an improved purification process involving “ultrafiltration.” The '746 process filters impure dye through a porous membrane at certain pressures and pH levels,FN1 resulting in a high purity dye product.

FN1. The pH, or power (exponent) of Hydrogen, of a solution is a measure of its acidity or alkalinity. A pH of 7.0 is neutral; a pH below 7.0 is acidic; and a pH above 7.0 is alkaline. Although measurement of pH is on a logarithmic scale, with each whole number difference representing a ten-fold difference in acidity, the practical significance of any such difference will often depend on the context. Pure water, for example, has a neutral pH of 7.0, whereas carbonated water has an acidic pH of 3.0, and concentrated hydrochloric acid has a pH approaching 0.0. On the other end of the scale, milk of magnesia has a pH of 10.0, whereas household ammonia has a pH of 11.9. 21 Encyclopedia Americana 844 (Int'l ed.1990).

The '746 patent issued in 1985. As relevant to this case, the patent claims as its invention an improvement in the ultrafiltration process as follows:


“In a process for the purification of a dye ... the improvement which comprises: subjecting an aqueous solution ... to ultrafiltration through a membrane having a nominal pore diameter of 5-15 Angstroms under a hydrostatic pressure of approximately 200 to 400 p.s.i.g., at a pH from approximately 6.0 to 9.0, to thereby cause separation of said impurities from said dye....” App. 36-37 (emphasis added).

The inventors added the phrase “at a pH from approximately 6.0 to 9.0” during patent prosecution. At a minimum, this phrase was added to distinguish a previous patent (the “Booth” patent) that disclosed an ultrafiltration process operating at a pH above 9.0. The parties disagree as to why the low-end pH limit of 6.0 was included as part of the claim. FN2

FN2. Petitioner contends that the lower limit was added because below a pH of 6.0 the patented process created “foaming” problems in the plant and because the process was not shown to work below that pH level. Brief for Petitioner 4, n. 5, 37, n. 28. Respondent counters that the process was successfully tested to pH levels as low as 2.2 with no effect on the process because of foaming, but offers no particular explanation as to why the lower level of 6.0 pH was selected. Brief for Respondent 34, n. 34.

In 1986, Warner-Jenkinson developed an ultrafiltration process that operated with membrane pore diameters assumed to be 5-15 Angstroms, at pressures of 200 to nearly 500 p.s.i.g., and at a pH of 5.0. Warner-Jenkinson did not learn of the '746 patent until after it had begun commercial use of its ultrafiltration process. Hilton Davis eventually learned of Warner-Jenkinson's use of ultrafiltration and, in 1991, sued Warner-Jenkinson for patent infringement.

As trial approached, Hilton Davis conceded that there was no literal infringement, and relied solely on the doctrine of equivalents. Over Warner-Jenkinson's objection that the doctrine of equivalents was an equitable doctrine to be applied by the court, the issue of equivalence was included among those sent to the jury. The jury found that the '746 patent was not invalid and that Warner-Jenkinson infringed upon the patent under the doctrine of equivalents. The jury also found, however, that Warner-Jenkinson had not intentionally infringed, and therefore awarded only 20% of the damages sought by Hilton Davis. The District Court


denied Warner-Jenkinson's post-trial motions, and entered a permanent injunction prohibiting Warner-Jenkinson from practicing ultrafiltration below 500 p.s.i.g. and below 9.01 pH. A fractured en banc Court of Appeals for the Federal Circuit affirmed. 62 F.3d 1512 (1995).

The majority below held that the doctrine of equivalents continues to exist and that its touchstone is whether substantial differences exist between the accused process and the patented process. Id., at 1521-1522. The court also held that the question of equivalence is for the jury to decide and that the jury in this case had substantial evidence from which it could conclude that the Warner-Jenkinson process was not substantially different from the ultrafiltration process disclosed in the '746 patent. Id., at 1525. ***

We granted certiorari, 516 U.S. 1145 (1996), and now reverse and remand.

II

In Graver Tank we considered the application of the doctrine of equivalents to an accused chemical composition for use in welding that differed from the patented welding material by the substitution of one chemical element. 339 U.S., at 610, 70 S.Ct., at 857. The substituted element did not fall within the literal terms of the patent claim, but the Court nonetheless found that the “question which thus emerges is whether the substitution [of one element for the other] ... is a change of such substance as to make the doctrine of equivalents inapplicable; or conversely, whether under the circumstances the change was so insubstantial that the trial court's invocation of the doctrine of equivalents was justified.” Ibid. The Court also described some of the considerations that go into applying the doctrine of equivalents:

“What constitutes equivalency must be determined against the context of the patent, the prior art, and the particular circumstances of the case. Equivalence, in the patent law, is not the prisoner of a formula and is not an absolute to be considered in a vacuum. It does not require complete identity for every purpose and in every respect. In determining equivalents, things equal to the same thing may not be equal to each other and, by the same token, things for most purposes different may sometimes


be equivalents. Consideration must be given to the purpose for which an ingredient is used in a patent, the qualities it has when combined with the other ingredients, and the function which it is intended to perform. An important factor is whether persons reasonably skilled in the art would have known of the interchangeability of an ingredient not contained in the patent with one that was.” Id., at 609.

Considering those factors, the Court viewed the difference between the chemical element claimed in the patent and the substitute element to be “colorable only,” and concluded that the trial court's judgment of infringement under the doctrine of equivalents was proper. Id., at 612.

A

Petitioner's primary argument in this Court is that the doctrine of equivalents, as set out in Graver Tank in 1950, did not survive the 1952 revision of the Patent Act, 35 U.S.C. 100 et seq., because it is inconsistent with several aspects of that Act. In particular, petitioner argues: (1) The doctrine of equivalents is inconsistent with the statutory requirement that a patentee specifically “claim” the invention covered by a patent, § 112; (2) the doctrine circumvents the patent reissue process-designed to correct mistakes in drafting or the like-and avoids the express limitations on that process, §§ 251-252; (3) the doctrine is inconsistent with the primacy of the Patent and Trademark Office (PTO) in setting the scope of a patent through the patent prosecution process; and (4) the doctrine was implicitly rejected as a general matter by Congress' specific and limited inclusion of the doctrine in one section regarding “means” claiming, § 112, ¶ 6. All but one of these arguments were made in Graver Tank in the context of the 1870 Patent Act, and failed to command a majority.

Indeed, petitioner's first argument was not new even in 1950. Nearly 100 years before Graver Tank, this Court approved of the doctrine of equivalents in Winans v. Denmead, 15 How. 330, 14 L.Ed. 717 (1854). The dissent in Winans unsuccessfully argued that the majority result was inconsistent with the requirement in the 1836 Patent Act that the applicant “particularly ‘specify and point’ out what he claims as his invention,” and that the patent protected nothing more. Id., 15 How. at 347 (opinion of Campbell, J.).


*** In the context of infringement, we have already held that pre-1952 precedent survived the passage of the 1952 Act. See Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, 342 (1961) (new section defining infringement “left intact the entire body of case law on direct infringement”). We see no reason to reach a different result here.

***

III

Understandably reluctant to assume this Court would overrule Graver Tank, petitioner has offered alternative arguments in favor of a more restricted doctrine of equivalents than it feels was applied in this case. [All these arguments are rejected by the Court.]

In this case, the patent examiner objected to the patent claim due to a perceived overlap with the Booth patent, which revealed an ultrafiltration process operating at a pH above 9.0. In response to this objection, the phrase “at a pH from approximately 6.0 to 9.0” was added to the claim. While it is undisputed that the upper limit of 9.0 was added in order to distinguish the Booth patent, the reason for adding the lower limit of 6.0 is unclear. The lower limit certainly did not serve to distinguish the Booth patent, which said nothing about pH levels below 6.0. Thus, while a lower limit of 6.0, by its mere inclusion, became a material element of the claim, that did not necessarily preclude the application of the doctrine of equivalents as to that element.

We are left with the problem, however, of what to do in a case like the one at bar, where the record seems not to reveal the reason for including the lower pH limit of 6.0. In our view, holding that certain reasons for a claim amendment may avoid the application of prosecution history estoppel is not tantamount to holding that the absence of a reason for an amendment may similarly avoid such an estoppel. Mindful that claims do indeed serve both a definitional and a notice function, we think the better rule is to place the burden on the patent holder to


establish the reason for an amendment required during patent prosecution. The court then would decide whether that reason is sufficient to overcome prosecution history estoppel as a bar to application of the doctrine of equivalents to the element added by that amendment. Where no explanation is established, however, the court should presume that the patent applicant had a substantial reason related to patentability for including the limiting element added by amendment. In those circumstances, prosecution history estoppel would bar the application of the doctrine of equivalents as to that element. The presumption we have described, one subject to rebuttal if an appropriate reason for a required amendment is established, gives proper deference to the role of claims in defining an invention and providing public notice, and to the primacy of the PTO in ensuring that the claims allowed cover only subject matter that is properly patentable in a proffered patent application. Applied in this fashion, prosecution history estoppel places reasonable limits on the doctrine of equivalents, and further insulates the doctrine from any feared conflict with the Patent Act.

Because respondent has not proffered in this Court a reason for the addition of a lower pH limit, it is impossible to tell whether the reason for that addition could properly avoid an estoppel. Whether a reason in fact exists, but simply was not adequately developed, we cannot say. On remand, the Federal Circuit can consider whether reasons for that portion of the amendment were offered or not and whether further opportunity to establish such reasons would be proper.

***

IV

The various opinions below, respondents, and amici devote considerable attention to whether application of the doctrine of equivalents is a task for the judge or for the jury. *** The Federal Circuit held that it was for the jury to decide whether the accused process was equivalent to the claimed process. There was ample support in our prior cases for that holding. Nothing in our recent decision in Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996) necessitates a different result than that reached by the Federal Circuit. *** Whether, if the issue were squarely presented to us, we would reach a different conclusion than did the Federal Circuit is not a question we need decide today.


V

*** Both the parties and the Federal Circuit spend considerable time arguing whether the so-called “triple identity” test-focusing on the function served by a particular claim element, the way that element serves that function, and the result thus obtained by that element-is a suitable method for determining equivalence, or whether an “insubstantial differences” approach is better. There seems to be substantial agreement that, while the triple identity test may be suitable for analyzing mechanical devices, it often provides a poor framework for analyzing other products or processes. On the other hand, the insubstantial differences test offers little additional guidance as to what might render any given difference “insubstantial.”

In our view, the particular linguistic framework used is less important than whether the test is probative of the essential inquiry: Does the accused product or process contain elements identical or equivalent to each claimed element of the patented invention? *** We expect that the Federal Circuit will refine the formulation of the test for equivalence in the orderly course of case-by-case determinations, and we leave such refinement to that court's sound judgment in this area of its special expertise.

***

[Concurring opinion omitted.]


ELI LILLY & CO. v. MEDTRONIC, INC.

496 U.S. 661 (1990)

Justice SCALIA delivered the opinion of the court:


This case presents the question whether 35 U.S.C. § 271(e)(1) renders activities that would otherwise constitute patent infringement noninfringing if they are undertaken for the purpose of developing and submitting to the Food and Drug Administration information necessary to obtain marketing approval for a medical device under § 515 of the Federal Food, Drug, and Cosmetic Act, 90 Stat. 552, 21 U.S.C. § 360e (FDCA).

I

In 1983, pursuant to 28 U.S.C. § 1338(a), the predecessor-in-interest of petitioner Eli Lilly filed an action against respondent Medtronic in the United States District Court for the Eastern District of Pennsylvania to enjoin respondent's testing and marketing of an implantable cardiac defibrillator, a medical device used in the treatment of heart patients. Petitioner claimed that respondent's actions infringed its exclusive rights under United States Patent No. Re 27,757 and United States Patent No. 3,942,536. Respondent sought to defend against the suit on the ground that its activities were "reasonably related to the development and submission of information under" the FDCA, and thus exempt from a finding of infringement under 35 U.S.C. § 271(e)(1). The District Court rejected this argument, concluding that the exemption does not apply to the development and submission of information relating to medical devices. Following a jury trial, the jury returned a verdict for petitioner on infringement of the first patent and the court directed a verdict for petitioner on infringement of the second patent. The court entered judgment for petitioner and issued a permanent injunction against infringement of both patents.

On appeal, the Court of Appeals for the Federal Circuit reversed, holding that by virtue of 35 U.S.C. § 271(e)(1) respondent's activities could not constitute infringement if they had been undertaken to develop information reasonably related to the development and submission of information necessary to obtain regulatory approval under the FDCA. It remanded for the District Court to determine whether in fact that condition had been met. 872 F.2d 402 (1989). We granted certiorari. 493 U.S. (1989).

In 1984, Congress enacted the Drug Price Competition and Patent Term Restoration Act of 1984, 98 Stat. 1585 (1984 Act), which amended the FDCA and the patent laws in several important respects. The issue in this case


concerns the proper interpretation of a portion of section 202 of the 1984 Act, codified at 35 U.S.C. § 271(e)(1). That paragraph, as originally enacted, provided:

"It shall not be an act of infringement to make, use, or sell a patented invention (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913)) solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs." 35 U.S.C. § 271(e)(1) (1982 ed., Supp. II). n1

The parties dispute whether this provision exempts from infringement the use of patented inventions to develop and submit information for marketing approval of medical devices under the FDCA.

n1 Unless otherwise specified, references to sections of the United States Code are to those sections as they existed upon the effective date of the 1984 Act.

A

The phrase "patented invention" in § 271(e)(1) is defined to include all inventions, not drug-related inventions alone. See 35 U.S.C. 100(a) ("When used in this title unless the context otherwise indicates . . . the term 'invention' means invention or discovery"). The core of the present controversy is that petitioner interprets the statutory phrase, "a Federal law which regulates the manufacture, use, or sale of drugs," to refer only to those individual provisions of federal law that regulates drugs, whereas respondent interprets it to refer to the entirety of any Act (including, of course, the FDCA) at least some of whose provisions regulate drugs. If petitioner is correct, only such provisions of the FDCA as § 505, 52 Stat. 1052, as amended, 21 U.S.C. § 355, governing premarket approval of new drugs, are covered by § 271(e)(1), and respondent's submission of information under 21 U.S.C. § 360e, governing premarket approval of medical devices, would not be a noninfringing use.


***

The centrally important distinction in this legislation (from the standpoint of the commercial interests affected) is not between applications for drug approval and applications for device approval, but between patents relating to drugs and patents relating to devices. If only the former patents were meant to be included, there were available such infinitely more clear and simply ways of expressing that intent that it is hard to believe the convoluted manner petitioner suggests was employed would have been selected. The provision might have read, for example, "It shall not be an act of infringement to make, use, or sell a patented drug invention . . . solely for uses reasonably related to the development and submission of information required, as a condition of manufacture, use, or sale, by Federal law." Petitioner contends that the terms "patented drug," or "drug invention" (or, presumably, "patented drug invention") would have been "potentially unclear" as to whether they covered only patents for drug products, or patents for drug composition and drug use as well. Brief for Petitioner 22. If that had been the concern, however, surely it would have been clearer and more natural to expand the phrase constituting the object of the sentence to "patented invention for drug product, drug composition, or drug use" than to bring in such a limitation indirectly by merely limiting the laws under which the information is submitted to drug regulation laws.

On the other side of the ledger, however, one must admit that while the provision more naturally means what respondent suggests, it is somewhat difficult to understand why anyone would want it to mean that. Why should the touchstone of noninfringement be whether the use is related to the development and submission of information under a provision that happens to be included within an Act that, in any of its provisions, not necessarily the one at issue, regulates drugs? ***

As far as the text is concerned, therefore, we conclude that we have before us a provision that somewhat more naturally reads as the Court of Appeals determined, but that is not plainly comprehensible on anyone's view. Both parties seek to enlist legislative history in support of their interpretation, but that sheds no clear light. We think the Court of Appeals' interpretation is confirmed, however, by the structure of the 1984 Act taken as a whole.


B Under federal law, a patent "grants to the patentee, his heirs or assigns, for the term of seventeen years, . . . the right to exclude others from making, using, or selling the invention throughout the United States." 35 U.S.C. § 154. Except as otherwise provided, "whoever without authority makes, uses or sells any patented invention, within the United States during the term of the patent therefor, infringes the patent." 35 U.S.C. § 271(a). The parties agree that the 1984 Act was designed to respond to two unintended distortions of the 17-year patent term produced by the requirement that certain products must receive premarket regulatory approval. First, the holder of a patent relating to such products would as a practical matter not be able reap any financial rewards during the early years of the term. When an inventor makes a potentially useful discovery, he ordinarily protects it by applying for a patent at once. Thus, if the discovery relates to a product that cannot be marketed without substantial testing and regulatory approval, the "clock" on his patent term will be running even though he is not yet able to derive any profit from the invention.

The second distortion occurred at the other end of the patent term. In 1984, the Court of Appeals for the Federal Circuit decided that the manufacture, use, or sale of a patented invention during the term of the patent constituted an act of infringement, see 35 U.S.C. § 271(a), even if it was for the sole purpose of conducting tests and developing information necessary to apply for regulatory approval. See Roche Products, Inc. v. Bolar Pharmaceutical Co., 733 F.2d 858 (CA Fed.), cert. denied, 469 U.S. 856 (1984). Since that activity could not be commenced by those who planned to compete with the patentee until expiration of the entire patent term, the patentee's de facto monopoly would continue for an often substantial period until regulatory approval was obtained. In other words, the combined effect of the patent law and the premarket regulatory approval requirement was to create an effective extension of the patent term.

The 1984 Act sought to eliminate this distortion from both ends of the patent period. Section 201 of the Act established a patent-term extension for patents relating to certain products that were subject to lengthy regulatory delays and


could not be marketed prior to regulatory approval. The eligible products were described as follows:

"(1) The term 'product' means:

"(A) A human drug product.

"(B) Any medical device, food additive, or color additive subject to regulation under the Federal Food, Drug, and Cosmetic Act.

Section 201 provides that patents relating to these products can be extended up to five years if, inter alia, the product was "subject to a regulatory review period before its commercial marketing or use," and "the permission for the commercial marketing or use of the product after such regulatory review period [was] the first permitted commercial marketing or use of the product under the provision of law under which such regulatory review period occurred." 35 U.S.C. § 156(a).

The distortion at the other end of the patent period was addressed by § 202 of the Act. That added to the provision prohibiting patent infringement, 35 U.S.C. § 271, the paragraph at issue here, establishing that "it shall not be an act of infringement to make, use, or sell a patented invention . . . solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs." 35 U.S.C. § 271(e)(1). This allows competitors, prior to the expiration of a patent, to engage in otherwise infringing activities necessary to obtain regulatory approval.

*** It seems most implausible to us that Congress, being demonstrably aware of the dual distorting effects of regulatory approval requirements in this entire area -- dual distorting effects that were roughly offsetting, the disadvantage at the beginning of the term producing a more or less corresponding advantage at the end of the term -- should choose to address both those distortions only for drug products; and for other products named in 201 should enact provisions which not only leave in place an anticompetitive restriction at the end of the monopoly term but simultaneously expand the monopoly term itself, thereby not only failing to eliminate but positively aggravating distortion of the 17-year patent protection.


It would take strong evidence to persuade us that this is what Congress wrought, and there is no such evidence here.

***

It must be acknowledged that the seemingly complete product-correlation between 201 and § 202 was destroyed in 1986, when, without adding "new infant formula" to the defined products eligible for the patent-term extension under 156, Congress established a premarket approval requirement for that product, and thus automatically rendered it eligible for the 271(e)(1) exemption from patent infringement. See Pub. L. 99-570, 4014(a)(7), 100 Stat. 3207-116, codified at 21 U.S.C. § 350a(d). That subsequent enactment does not change our view of what the statute means. ***

[A]bbreviated drug-application provisions incorporated an important new mechanism designed to guard against infringement of patents relating to pioneer drugs. Pioneer drug applicants are required to file with the FDA the number and expiration date of any patent which claims the drug that is the subject of the application, or a method of using such drug. See 21 U.S.C. 355(b)(1). ANDAs [abbreviated new drug applications] and paper NDAs are required to contain one of four certifications with respect to each patent named in the pioneer drug application: (1) "that such patent information has not been filed," (2) "that such patent has expired," (3) "the date on which such patent will expire," or (4) "that such patent is invalid or will not be infringed by the manufacture, use, or sale of the new drug for which the application is submitted." 21 U.S.C. §§ 355(b)(2)(A), 355(j)(2)(A)(vii).

This certification is significant, in that it determines the date on which approval of an ANDA or paper NDA can be made effective, and hence the date on which commercial marketing may commence. If the applicant makes either the first or second certification, approval can be made effective immediately. See 21 U.S.C. §§ 355(c)(3)(A), 355(j)(4)(B)(i). If the applicant makes the third certification, approval of the application can be made effective as of the date the patent expires. See 21 U.S.C. §§ 355(c)(3)(B), 355(j)(4)(B)(ii). If the applicant makes the fourth certification, however, the effective date must depend on the outcome of further events triggered by the Act. An applicant who makes the fourth


certification is required to give notice to the holder of the patent alleged to be invalid or not infringed, stating that an application has been filed seeking approval to engage in the commercial manufacture, use, or sale of the drug before the expiration of the patent, and setting forth a detailed statement of the factual and legal basis for the applicant's opinion that the patent is not valid or will not be infringed. See 21 U.S.C. §§ 355(b)(3)(B), 355(j)(2)(B)(ii). Approval of an ANDA or paper NDA containing the fourth certification may become effective immediately only if the patent owner has not initiated a lawsuit for infringement within 45 days of receiving notice of the certification. If the owner brings such a suit, then approval may not be made effective until the court rules that the patent is not infringed or until the expiration of (in general) 309 months, whichever first occurs. See 21 U.S.C. §§ 355(c)(3)(C), 355(j)(4)(B)(iii). This scheme will not work, of course, if the holder of the patent pertaining to the pioneer drug is disabled from establishing in court that there has been an act of infringement. And that was precisely the disability that the new § 271(e)(1) imposed, with regard to use of his patented invention only for the purpose of obtaining premarketing approval. Thus, an act of infringement had to be created for these ANDA and paper NDA proceedings. That is what is achieved by § 271(e)(2) -- the creation of a highly artificial act of infringement that consists of submitting an ANDA or a paper NDA containing the fourth type of certification that is in error as to whether commercial manufacture, use, or sale of the new drug (none of which, of course, has actually occurred) violates the relevant patent. Not only is the defined act of infringement artificial, so are the specified consequences, as set forth in paragraph (e)(4). Monetary damages are permitted only if there has been "commercial manufacture, use, or sale." 35 U.S.C. § 271(e)(4)(C). Quite obviously, the purpose of (e)(2) and (e)(4) is to enable the judicial adjudication upon which the ANDA and paper NDA schemes depend. It is wholly to be expected, therefore, that these provisions would apply only to applications under the sections establishing those schemes -- which (entirely incidentally, for present purposes) happen to be sections that relate only to drugs and not to other products.

No interpretation we have been able to imagine can transform § 271(e)(1) into an elegant piece of statutory draftsmanship. To construe it as the Court of Appeals decided, one must posit a good deal of legislative imprecision; but to


construe it as petitioner would, one must posit that and an implausible substantive intent as well.

The judgment of the Court of Appeals is affirmed, and the case remanded for further proceedings consistent with this opinion.

So ordered.

[Justice Kennedy’s dissent omitted.]

UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT

TITANIUM METALS CORP. v. BANNER

778 F.2d 775 (1985) Before RICH, Circuit Judge, NICHOLS, Senior Circuit Judge, and NEWMAN, Circuit Judge.

RICH, Circuit Judge.

This appeal is from an Order of the United States District Court for the District of Columbia in a civil action brought pursuant to 35 U.S.C. 145 against Donald W. Banner as Commissioner of Patents and Trademarks authorizing the Commissioner to issue to appellee a patent containing claims 1, 2, and 3 of patent application serial No. 598,935 for "TITANIUM ALLOY." The Commissioner has appealed. We reverse.

Background

The inventors, Loren C. Covington and Howard R. Palmer, employees of appellee to whom they have assigned their invention and the application thereon, filed an application on March 29, 1974, serial No. 455,964, to patent an alloy they developed. The application involved on this appeal is a continuation-in-part


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thereof, filed July 25, 1975, containing the three claims on appeal. The alloy is made primarily of titanium (Ti) and contains small amounts of nickel (Ni) and molybdenum (Mo) as alloying ingredients to give the alloy certain desirable properties, particularly corrosion resistance in hot brine solutions, while retaining workability so that articles such as tubing can be fabricated from it by rolling, welding and other techniques. The inventors apparently also found that iron content should be limited, iron being an undesired impurity rather than an alloying ingredient. They determined the permissible ranges of the components, above and below which the desired properties were not obtained. A precise definition of the invention sought to be patented is found in the claims, set forth below, claim 3 representing the preferred composition, it being understood, however, that no iron at all would be even more preferred.

1. A titanium base alloy consisting essentially by weight of about 0.6% to 0.9% nickel, 0.2% to 0.4% molybdenum, up to 0.2% maximum iron, balance titanium, said alloy being characterized by good corrosion resistance in hot brine environments.

2. A titanium base alloy as set forth in Claim 1 having up to 0.1% iron, balance titanium.

3. A titanium base alloy as set forth in Claim 1 having 0.8% nickel, 0.3% molybdenum, up to 0.1% maximum iron, balance titanium.

The examiner's final rejection, repeated in his Answer on appeal to the Patent and Trademark Office (PTO) Board of Appeals (board), was on the grounds that claims 1 and 2 are anticipated (fully met) by, and claim 3 would have been obvious from, an article by Kalabukhova and Mikheyew, Investigation of the Mechanical Properties of Ti-Mo-Ni Alloys, Russian Metallurgy (Metally) No. 3, pages 130-133 (1970) (in the court below and hereinafter called "the Russian article") under 35 U.S.C. 102 and 103, respectively. The board affirmed the examiner's rejection. However, it mistakenly proceeded on the assumption that all three claims had been rejected as anticipated under 102 by the Russian article and ignored the obviousness rejection. On this appeal the PTO says it does not pursue the 103 rejection further. Appellee proceeds on the basis that only the 102 rejection is before us.







***

3. The merits

Finding, as we do, that claim 3 was never purposefully rejected under 102, both the board and the district court being confused about that fact, we are left with the propriety of the rejection of claims 1 and 2 under 102 and the rejection of claim 3 under 103, both rejections having been held by the district court to have been erroneous. That necessarily follows from the court's conclusion "that the Claims are patentable." We find that conclusion contrary to statutory law and will deal with the two grounds of rejection separately.

A. Anticipation, 102

From consideration of the trial court's memorandum opinion, we are unable to determine whether it erred because of misconstruction of the claims, misreading of what the reference discloses, lack of proper advice on the requirements of the patent statute respecting patentability, or the technical legal meaning of "anticipation," a term which some courts have erroneously used from time to time.

We are left in no doubt that the court was impressed by the totality of the evidence that the applicants for patent had discovered or invented and disclosed knowledge which is not to be found in the reference, nor do we have any doubt about that ourselves. But those facts are beside the point. The patent law imposes certain fundamental conditions for patentability, paramount among them being the condition that what is sought to be patented, as determined by the claims, be new. The basic provision of Title 35 applicable here is 101, providing in relevant part: "Whoever invents or discovers any new ... composition of matter, or any new ... improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title." (Emphasis ours.) The title of the application here involved is "Titanium Alloy," a composition of matter. Surprisingly, in all of the evidence, nobody discussed the key issue of whether the alloy was new, which is the essence of the anticipation issue, including the expert Dr. Williams. Plaintiff's counsel, bringing Dr. Williams' testimony to its climax, after he had explained the nature of the ingredients, the alloys made therefrom, and their superior corrosion resistance in hot brine, etc., repetitively







asked him such questions as "Does the [Russian] article direct you as one skilled in the art to a titanium alloy having nickel present in an amount between .6 and .9 percent molybdenum in an amount between .2 and .4 percent?" (emphasis ours) followed by "Is there anything mentioned in the article about corrosion resistance?" Of course, the answers were emphatically negative. But this and like testimony does not deal with the critical question: do claims 1 and 2, to which the questions obviously relate, read on or encompass an alloy which was already known by reason of the disclosure of the Russian article?

Section 102, the usual basis for rejection for lack of novelty or anticipation, lays down certain principles for determining the novelty required by 101, among which are the provisions in 102(a) and (b) that the claimed invention has not been "described in a printed publication in this or a foreign country," either (a) before the invention by the applicant or (b) more than one year before the application date to which he is entitled (strictly a "loss of right" provision similar to novelty). Either provision applies in this case, the Russian article having a date some 5 years prior to the filing date and its status as "prior art" not being questioned. The PTO was never specific as to what part of 102 applies, merely rejecting on 102. The question, therefore, is whether claims 1 and 2 encompass and, if allowed, would enable plaintiff-appellee to exclude others from making, using, or selling an alloy described in the Russian article. See 35 U.S.C. 154. Kalman v. Kimberly-Clark Corp., 713 F.2d 760 (Fed.Cir.1983) .

To answer the question we need only turn to the affidavit of James A. Hall, a metallurgist employed by appellee's TIMET Division, who undertook to analyze the Russian article disclosure by calculating the ingredient percentages shown in the graph data points, which he presented in tabular form. There are 15 items in his table. The second item shows a titanium base alloy containing 0.25% by weight Mo and 0.75% Ni and this is squarely within the ranges of 0.2- 0.4% Mo and 0.6-0.9% Ni of claims 1 and 2. As to that disclosed alloy of the prior art, there can be no question that claims 1 and 2 read on it and would be infringed by anyone making, using, or selling it. Therefore, the statute prohibits a patent containing them. This seems to be a case either of not adequately considering the novelty requirement of the statute, the true meaning of the correlative term "anticipation," or the meaning of the claims.

By reason of the court's quotations from cases holding that a reference is not an


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anticipation which does not enable one skilled in the art to practice the claimed invention, it appears that the trial court thought there was some deficiency in the Russian article on that score. Enablement in this case involves only being able to make the alloy, given the ingredients and their proportions without more. The evidence here, however, clearly answers that question in two ways. Appellee's own patent application does not undertake to tell anyone how to make the alloy it describes and seeks to patent. It assumes that those skilled in the art would know how. Secondly, appellee's expert, Dr. Williams, testified on cross examination that given the alloy information in the Russian article, he would know how to prepare the alloys "by at least three techniques." Enablement is not a problem in this case.

As we read the situation, the court was misled by the arguments and evidence to the effect that the inventors here found out and disclosed in their application many things that one cannot learn from reading the Russian article and that this was sufficient in law to justify granting them a patent for their contributions--such things as what good corrosion resistance the claimed alloys have against hot brine, which possibly was not known, and the range limits of the Ni and Mo content, outside of which that resistance diminishes, which are teachings of very useful information. These things the applicants teach the art and the Russian article does not. Indeed, appellee's counsel argued in his opening statement to the trial court that the PTO's refusal of a patent was "directly contrary to the requirement of Article I, Section 8, of the Constitution," which authorizes Congress to create a patent law. But throughout the trial counsel never came to grips with the real issues: (1) what do the claims cover and (2) is what they cover new? Under the laws Congress wrote, they must be considered. Congress has not seen fit to permit the patenting of an old alloy, known to others through a printed publication, by one who has discovered its corrosion resistance or other useful properties, or has found out to what extent one can modify the composition of the alloy without losing such properties.

It is also possible that the trial court did not properly interpret the claims and took them to be directed only to the applicants' discoveries about the properties of the alloys instead of to the alloys themselves, as they are, possibly because of the phrase at the end of claim 1, "characterized by good corrosion resistance in hot brine environments," which applies to the other two dependent claims also. No light is shed by its opinion on what the court thought the claims mean as the


opinion does not construe the claims. Until it has been definitely determined what subject matter is being claimed, it is not known what it is that the PTO held to be unpatentable. Claim interpretation, which is the logical starting point of the analysis, is a question of law free from the clearly erroneous standard of review. Raytheon Co. v. Roper Corp., 724 F.2d 951, 956 (Fed.Cir.1983) . It is the correct and necessary construction of all three claims that they simply define titanium base alloys. Claims 1 and 2 state certain narrow limits within which the alloying ingredients, Mo and Ni, are present and necessarily cover a number of alloys. Claim 3 is specific to a single alloy. This said, it is immaterial, on the issue of their novelty, what inherent properties the alloys have or whether these applicants discovered certain inherent properties.

The trial court and appellee have relied on In re Wilder, supra , but they have both failed to note those portions of that opinion most relevant to the present case. The issue there, as here, was anticipation of certain claims. Wilder argued "that even though there may be a technical anticipation, the discovery of the new property and the recitation of this property in the claims 'lends patentable novelty' to the claims." The court answered:

However, recitation, in a claim to a composition, of a particular property said to be possessed by the recited composition, be that property newly-discovered or not, does not necessarily change the scope of the subject matter otherwise defined by that claim. [429 F.2d at 450.] The court in that case also said:

[W]e start with the proposition that claims cannot be obtained to that which is not new. This was the basis of the holding in In re Thuau [135 F.2d 344 (CCPA 1943) ]. It was the law then, is now and will be until Congress decrees otherwise. [Id.]

It is also an elementary principle of patent law that when, as by a recitation of ranges or otherwise, a claim covers several compositions, the claim is "anticipated" if one of them is in the prior art. In re Petering, 301 F.2d 676, 682 (CCPA 1962).

For all of the foregoing reasons, the court below committed clear error and legal


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error in authorizing the issuance of a patent on claims 1 and 2 since, properly construed, they are anticipated under 102 by the Russian article which admittedly discloses an alloy on which these claims read.

B. Obviousness, 103

Little more need be said in support of the examiner's rejection of claim 3, affirmed by the board, on the ground that its more specific subject matter would have been obvious at the time the invention was made from the knowledge disclosed in the reference.

As admitted by appellee's affidavit evidence from James A. Hall, the Russian article discloses two alloys having compositions very close to that of claim 3, which is 0.3% Mo and 0.8% Ni, balance titanium. The two alloys in the prior art have 0.25% Mo--0.75% Ni and 0.31% Mo--0.94% Ni, respectively. The proportions are so close that prima facie one skilled in the art would have expected them to have the same properties. Appellee produced no evidence to rebut that prima facie case. The specific alloy of claim 3 must therefore be considered to have been obvious from known alloys.

Conclusion

For the foregoing reasons, the decision and order of the district court holding that claims 1, 2, and 3 are directed to patentable subject matter and authorizing the issuance of a patent thereon were clearly erroneous and are reversed.

UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT

LIQUID DYNAMICS CORP. v. VAUGHAN CO.

449 F.3d 1209 (2006)

Before GAJARSA, DYK, and PROST, Circuit Judges.




GAJARSA, Circuit Judge.

This is the second time we have heard an appeal in this case. In the previous appeal, Liquid Dynamics ("LD") contested the claim construction and summary judgment of non-infringement entered against it. Liquid Dynamics Corp. v. Vaughan Co., 355 F.3d 1361 (Fed. Cir. 2004) ("LD I"). In that decision, we found error in the district court's claim construction, vacated the grant of summary judgment, and remanded for proceedings based on the revised claim construction. Id.

On remand, the district court held a six-day jury trial to determine whether Vaughan Company, Inc. ("Vaughan") infringed claims 1 and 8 of U.S. Patent No. 5,458,414 ("the '414 patent") and whether the '414 patent was valid. On October 25, 2004, the jury returned a verdict that Vaughan had infringed the '414 patent, that the infringement was willful, and that Vaughan failed to prove that the '414 patent was invalid. The jury awarded damages to LD in the amount of $1,183,722.

Subsequently, the district court held a bench trial on Vaughan's allegation of inequitable conduct, but granted LD's motion for judgment as a matter of law on that issue at the close of evidence. Final judgment was entered on November 15, 2004, and the district court subsequently denied Vaughan's judgment-as-a-matter-of-law ("JMOL") and new-trial motions on the issues of invalidity, infringement, and willfulness. Thereafter, the district court granted, in part, LD's motions for enhanced damages and attorney's fees. The court trebled the jury's damage award based upon the jury's willfulness finding and "Vaughan's behavior as a litigant." Separately, the court awarded attorney's fees amounting to $1,501,239. The court also entered a permanent injunction on February 25, 2005.

Vaughan now appeals the district court's denial of its JMOL motion for non-infringement, invalidity, no willful infringement, and unenforceability due to inequitable conduct. Further, Vaughan appeals the district court's orders for a permanent injunction, enhanced damages, and attorney's fees. For the reasons stated below, we affirm the judgment of the district court.

I. BACKGROUND

The '414 patent involves a system of pumps that stir mixtures of solids and liquids in large 1,000,000-gallon tanks. The invention is primarily directed to applications for mixing wastewater and manure. Because we have already


detailed the invention and its background in LD I, we reproduce only a summary of the relevant facts below:

This case involves the structure of slurry tanks. Slurry tanks are used to store and process chemicals and organic waste products (e.g., manure) that retain value as useful inputs (e.g., fertilizer) into other processes. Large storage tanks house these waste compounds in liquid or semisolid form between their production and their subsequent use. The liquid and solid components of these waste compounds tend to separate when stored, with solid particles either forming a crust on the top of the tank and/or falling to the bottom of the tank. Productive use of the stored compound requires remixing both to suspend the heavy solid particles within the liquid and to ensure that the resulting suspension is uniform. One standard approach has been to stir the mix continuously to avoid settling. Because continuous mixing can be expensive, however, tank designers sought ways to store the mixtures in a still tank, to allow the settling to occur, and to remix only when necessary for use. The '414 patent addressed these concerns.

LD I, 355 F.3d at 1363. A. The '414 Patent

Claims 1 and 8 are the contested claims in this case. The patent recites a method and apparatus for handling wastewater slurries: a storage tank equipped with submerged agitator scapable of generating a flow of liquid throughout the tank. With the relevant language underlined, claim 1 reads:

1. Apparatus for storing a slurry having solid and liquid components, comprising:

a storage tank defining a volume for holding a body of liquid and solid slurry components, including a floor of generally circular configuration and having a center, said storage tank further including an outer surrounding wall positioned generally at a radial distance from the center;

at least two flow generating means positioned to be submerged within the liquid and solid slurry components for generating flow of at least one of the slurry components along a rotational direction, each of said flow


generating means being disposed at distances from the center ranging between approximately 30 percent and 70 percent of said radial distance;

each of said first and second flow generating means being pointed toward the outer surrounding wall for generating a substantial helical flow path of the liquid and solid components therein with the liquid and solid components traveling outwardly, across the tank floor from the center portion of the tank toward the tank wall and then upwardly along the tank outer surrounding wall to a first point and then inwardly along an upper portion of the body toward the center of the tank and then downwardly toward the tank floor, and then outwardly to a second point spaced circumferentially in the direction of rotation of the entire body of liquid, the liquid and solid components continuing to travel in the helical path as the entire body of liquid and solid components continues to rotate;

a pressure source coupled to the first and second flow generating means to generate directed streams from the flow generating means to rotate the body of liquid and solid components and to cause the flow in the helical path; and

said flow generating means creating a substantially volume filling flow of at least one of the slurry components within said storage tank which mixes the liquid and solid slurry components to form a substantially homogeneous slurry suitable for unloading from said storage tank using liquid handling devices.

'414 Patent, col. 8, l. 56 - col. 9, l. 39 (emphases added). In LD I, we construed the term "substantial helical flow" to be "all flow patterns that are generally, though not necessarily perfectly, spiral, and that fill much, though not necessarily all, of the tank's volume." LD I, 355 F.3d at 1369. Claim 8 includes the relevant terms from claim 1. The written description includes the following examples of tank arrangement and helical flow path. In Figure 7 [reproduced below], impellers or pumps 20 that are placed within the claimed radii of r[1] and r[2] create the substantial helical flow as shown in Figures 5 and 6 [also reproduced below].




B. Prior Art and Pre-filing Activities

The inventors named in the '414 patent, James M. Crump and Bruce K. Doyle, Jr., were dealers for the A.O. Smith Corporation ("A.O. Smith") and sold A.O. Smith's tank agitation system containing a single, center-mounted, rotatable agitator nozzle, known as the Slurrystore system. According to Crump, in 1990 the inventors first became involved with the Slurrystore system when A.O. Smith asked them to help move a tank from a farm to a wastewater treatment plant in Plymouth, Indiana.

Commonwealth Engineering, Plymouth's engineering firm, redesigned the tank for use in the wastewater plant by moving the original agitator away from the tank center and adding a second agitator that was placed on the same radial line on the same side of the tank. The first and second agitators were placed at a distance of approximately 25 and 75 percent respectively, from the tank's center to the wall. The nozzles were designed to rotate in position so that the workers could agitate different sections and clean out the tank when needed. According to Crump, this new design did not help the mixing because the tank slurry was still only agitated in zones and not throughout the whole tank. At startup, the Plymouth tank did not operate properly until flow reducers were installed on the nozzles to impart more energy into the liquid volume. LD presented a video tape made in January of 1992 showing that flow occurred in only one section of the Plymouth tank and not the entire tank.

In the summer and fall of 1991, Crump and Doyle designed and sold the next relevant tank system to a hog processing plant called Indiana Packers. LD claims the Indiana Packers tank was the same as the Plymouth tank and did not embody the invention claimed by the '414 patent. Crump's diagrams and testimony suggest that the Indiana Packers tank was similar in layout to Plymouth and, like Plymouth, only mixed the liquid in zones.

In April of 1991, the inventors submitted a proposal to A.O. Smith asking that a patent application be filed for their invention for zone mixing within the Indiana Packers and Plymouth tanks. A.O. Smith declined to develop the proposal because it appeared that the invention, as described, was not patentable. Crump testified that in February of 1992, he and Doyle began to develop the idea for mixing throughout the entire tank volume instead of just mixing in one zone at a time, as the Plymouth and Indiana Packers designs provided. The '414 patent, incorporating the concept of volume-filling flow, was filed on May 7, 1992. Although the original application did not claim a substantially helical flow path, it was later amended to claim such a flow path.


Crump further testified that on May 20, 1991 he offered to sell another system for antibiotic industrial waste to Eli Lilly just after the critical date. According to Crump, the Eli Lilly system was not only offered after the critical date, its nozzle placement was not even within the limitations of the patent. At the time the patent was filed, the Plymouth, Indiana Packers, and Eli Lilly tanks had been installed. C. Infringement Evidence

1. Vaughan's Business History

Vaughan designs and manufactures "chopper pumps," which are used to mix solid materials in large tanks. It claims to have supplied LD with pumps for many years. Vaughan also claims that it was in the business of large-tank mixing designs, decades before the '414 patent, with its roof-mounted chopper pump design called "Scumbuster." Vaughan and LD's relationship soured when Vaughan began manufacturing floor mounted systems and bid on a tank for the city of Augusta, Georgia. LD claims to have been negotiating with Augusta in late 1999 to supply Augusta with its Jetmix system, the commercial product covered by the '414 patent. In December of 1999, LD terminated Richard Behnke, a sales engineer who had been "intimately involved" with the Augusta design and negotiations. Soon thereafter, Behnke was hired by Vaughan and submitted engineering drawings for nozzle layouts to Augusta, which Vaughan presented as its Rotamix System. LD claims these drawings were directly copied by Behnke from LD's previous engineering drawings. LD also includes statements from Glenn Dorsch, Vaughan's Chief Engineer and Vice President, stating:

What is planned and requested is for us to remove the [LD] JetMix nozzles from the drawings and put in our own floor mounts. . . . This should be very easy for Wade to do, once we get final orientations from Rich Behnke.

Vaughan notes that even though the nozzles were located in the same place, they constituted a special dual-nozzle design. Thus, whereas the LD Jetmix design had six nozzles, Vaughan's design had twelve.

2. Vaughan's Business Records as Infringement Evidence.

LD confronted Vaughan with allegations of infringement of the '414 patent, and in June of 2000, Vaughan consulted with patent counsel to evaluate the '414 patent and Vaughan's potentially infringing Rotamix design. At about the same time, Vaughan commissioned AEA Technology to perform two different


computational fluid dynamics ("CFD") studies to analyze the flow patterns in its tanks. The first study, labeled PX20, evaluated a generic 50-foot-diameter tank that was 30-feet high. The second, labeled PX19, was a study conducted for a proposed tank at Merced, California that demonstrated the tank's mixing capabilities to the city's engineer. Dorsch testified that these studies were representative of the flow patterns generated by Vaughan's Rotamix systems.

Vaughan provided patent counsel with these studies to assist in forming an opinion relative to infringement. Based on the CFD studies and the tank designs, patent counsel rendered an opinion for Vaughan concluding that its Rotamix design did not infringe the '414 patent because it did not produce substantially helical flow.

LD relies on Vaughan's CFD studies as evidence of both infringement and willfulness. The report not only shows toroidial n1 flow in the vertical plane with downward velocity in the center of the tank and upward velocity at the walls of the tank, but it also indicates there was a "concern over terrodial [sic] flow." Moreover, as LD notes, the author of the PX20 report explained that "the momentum from the nozzles pushes the fluid to the side walls of the tank" and "then changes direction and heads up the side walls." LD's own expert, Lueptow, relied on these same vertical vector plots to express a similar opinion that Vaughan's tanks generate helical flow.

n1 Webster's defines "toroidal" as "of, relating to, or shaped like a torus or toroid: doughnut-shaped." Webster's Ninth New Collegiate Dictionary 1245 (1985). The meaning of torodial is similar, if not identical, to helical flow for our purposes.

3. Structure Evidence

Next, LD relies on testimony regarding the structure of Vaughan's designs and their similarity to the '414 patent claims. Dorsch, Vaughan's chief engineer and its technical expert at trial, testified that the Vaughan engineering manual included specifications and drawings showing Vaughan's regular method of installation. Vaughan did not keep accurate records of each of the 47 allegedly infringing installations. LD's technical expert Gillette, a wastewater treatment engineer, reviewed the engineering records for all of the accused systems, prepared a report establishing the parameters of each installation, and testified regarding the systems and any missing installation data.


Vaughan correctly points out that Gillette's report lacks nozzle placement and/or nozzle angle data for 11 of the 47 systems. However, Dorsch testified that if records on construction were missing it would be reasonable to assume that the installation was in accordance with the standard procedure described in Vaughan's engineering manual.

4. LD's CFD Analysis

LD contends that 47 Vaughan installations infringe the '414 patent. Since some installations are duplicates, there are 34 unique tank designs. Of these, Vaughan argues that there is insufficient evidence to prove that two contested claim elements are present in the accused tanks, namely "substantial helical flow" and "rotation of the entire body." In addition to Vaughan's business records and its own CFD analysis, LD relies heavily on Lueptow's expert opinion. His opinion concludes that each of the 47 installments infringe by recreating the substantially helical flow path. LD supports Lueptow's conclusions with the following evidence in the record: (1) Vaughan's two CFD studies for the generic 50-foot and Merced tanks; (2) LD's prelitigation CFD study modeling the Merced tank; (3) observation of a tank in Argos, Indiana; and (4) Lueptow's own CFD analysis of nine tank configurations representative of various Vaughan installations.

Lueptow performed his own CFD analysis of the Vaughan systems using the same software Vaughan had used in its own CFD studies; however, he did not recreate each of the 47 tanks at issue in this case because CFDs are very time intensive. Instead, he modeled the flows in nine representative tanks with various tank sizes and nozzle configurations depending on different Vaughan designs. Lueptow based these models on the Vaughan Engineering Manual and Gillette's testimony. Gillette had testified that there was information missing in the record detailing some tank characteristics but that he nonetheless had sufficient information to summarize the tank characteristics for flow modeling.

Lueptow's CFD work resulted in 116 different graphical plots consisting of path-line and vector plots. The vector plots detailed the overall flow path and magnitude in the horizontal and vertical planes. The path-line plots estimated the path an individual particle travels within the tank. Lueptow concluded that the Vaughan systems were very robust and would produce the helical flow despite small changes to each tank. He opined that his representative systems and tanks allowed him to render an opinion on all 47 tanks. This opinion, based on the nine CFD models Lueptow created, the Vaughan data from Merced and a generic 50-foot tank, and LD's Merced Model, was that infringing helical and volume-filling flow is present in all 47 models.


During trial, Vaughan challenged Lueptow's analysis maintaining that the plots simulated conditions just mere seconds after pump startup and that this could not be sufficient evidence of helical and rotational flow during steady-state flow. Lueptow, however, testified that his models were sufficient to determine that helical and rotational flow existed despite the fact that only 40 to 50 iterations were performed.

II. DISCUSSION A. Standard of Review

We review the denial of a JMOL de novo. Juicy Whip, Inc. v. Orange Bang, Inc., 292 F.3d 728, 736 (Fed. Cir. 2002). Upon review, we consider whether the jury verdict is supported by substantial evidence. Id. In other words, we ask whether the record taken as a whole would support the verdict in the mind of a reasonable person. Id. It is not our duty, however, to reevaluate the weight or credibility of the evidence. Comark Commc'ns, Inc. v. Harris Corp., 156 F.3d 1182, 1192 (Fed. Cir. 1998).

Evidentiary rulings by the district court are reviewed under regional circuit law. Advanced Cardiovascular Sys., Inc. v. Medtronic, Inc., 265 F.3d 1294, 1308 (Fed. Cir. 2001). Thus, we review decisions to admit expert testimony for abuse of discretion under Seventh Circuit law. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152, 119 S. Ct. 1167, 143 L. Ed. 2d 238 (1999); United States v. Allen, 390 F.3d 944, 949 (7th Cir. 2004). Inequitable conduct pertains to and arises under the patent laws; we therefore review it pursuant to Federal Circuit law. In re Spalding Sports Worldwide, Inc., 203 F.3d 800, 803-04 (Fed. Cir. 2000). We review an inequitable conduct determination under an abuse of discretion standard and the underlying factual issues of materiality and intent for clear error. Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1234 (Fed. Cir. 2003). B. Infringement Evidence

Vaughan's first alleged error is that LD presented insufficient evidence that each of the 47 accused installations infringed. First, it explains that LD did not present sufficient evidence that 11 of the 47 installations met the required nozzle placement and nozzle angle limitations required by claims 1 and 8. Second,


Vaughan argues that LD's computer simulations presented at trial were inaccurate and therefore did not provide evidence of infringement. Third, Vaughan contends that there is no evidence Vaughan knew or intended that 11 of its systems, which are located outside the United States, indirectly infringe.

1. Tank Structure Limitations

The '414 patent requires that the tank nozzles be placed within 25 to 75 percent of the tank's annular radius and that the nozzle angle be sufficient to "generate flows . . . [that] impart a rotational movement of the entire body of liquid." '414 patent, col. 9, ll. 4-12. Vaughan explains that the structural data compiled by Gillette do not provide nozzle angles for 11 installations and do not provide radial distances and relative nozzle placements for 8 of those 11 installations. Further, it points out that Dorsch testified to his knowledge of four installations with nozzles located outside the annular regions claimed by the patent.

LD agrees that 11 of the tanks had some missing structural information; however, it submits Dorsch's testimony stating that even where there is missing information, one could generally reconstruct a tank using the specification in the Vaughan engineering manual. Moreover, it contends that the Vaughan engineering manual shows nozzle placement within the claim limitations and that one drawing is almost an exact duplicate of the Augusta installation.

Our task on appeal is to determine whether the jury could reasonably have inferred from the engineering manual and Dorsch's testimony that 11 installations infringe even though some structural data is missing from Vaughan's records. LD argues this was a reasonable weighing of the evidence that is exclusively within the province of the jury. We agree.

A patentee may prove direct infringement or inducement of infringement by either direct or circumstantial evidence. Moleculon Research Corp. v. CBS, Inc., 793 F.2d 1261, 1272 (Fed. Cir. 1986). There is no requirement that direct evidence be introduced, nor is a jury's preference for circumstantial evidence over direct evidence unreasonable per se. See Fuji Photo Film Co. v. Jazz Photo Corp., 394 F.3d 1368, 1374 (Fed. Cir. 2005); Moleculon Research, 793 F.2d at 1272 (noting "it is hornbook law that direct evidence of a fact is not necessary"); see also Michalic v. Cleveland Tankers, Inc., 364 U.S. 325, 330, 81 S. Ct. 6, 5 L. Ed. 2d 20 (1960) ("Circumstantial evidence is not only sufficient, but may also be more certain, satisfying and persuasive than direct evidence."). Though Dorsch testified that four tanks were outside the scope of the patent claims, the jury could reasonably have discredited that evidence and given more weight to the


circumstantial evidence of the Vaughan engineering manual, which was created before litigation began. Similarly, the jury could reasonably rely on the engineering manual and complete records for the remaining Vaughan designs to infer that the missing information on 11 tanks also had infringing structural components.

Both parties argue that the other should have submitted additional evidence regarding the tank parameters. Though it is LD's burden to prove infringement, it chose to rely on circumstantial evidence for some installations. While direct evidence may have made LD's case of infringement stronger, it does not render the case presented to the jury unreasonable as a matter of law. Indeed, the jury could have reasonably inferred from the evidence submitted that each of the tanks infringed the claims. Thus, we hold that there is substantial evidence that all 47 accused tanks met the structural limitations of the '414 patent.

2. Computer Simulations

Next, Vaughan challenges the computer simulations used to establish the helical- and rotational-flow claim limitations. Vaughan maintains that Lueptow's simulations were insufficient for two reasons: (1) because the parameters used to run the nine different modeled simulations were inaccurate and (2) because the simulations do not show the required helical flow and general body rotation.

a. Lueptow's Model Parameters

First, Vaughan argues that the modeling parameters were inaccurate. It notes specifically that the simulated Tank A and Tank G groupings in Lueptow's CFDs did not match or approximate many of the known tank parameters such as the height, flow rate, and nozzle diameter. Lueptow admitted that these parameters did not match the real-world parameters as Vaughan points out, but he also testified that the changes in the nozzle design would do little to disrupt the robust helical flow in the tanks. Furthermore, Lueptow performed a simulation of the Tank D parameters with different nozzle spacing and concluded that even though the parameters changed and some aspects of the flow changed, the helical flow was still present.

Vaughan appears to challenge the admissibility and reliability of Lueptow's expert scientific analysis and opinion. LD argues that our previous opinion reversing the district court's grant of summary judgment based on the genuine issue of material fact presented by the vector plots makes the evidence admissible under the law-of-the-case doctrine. Our previous opinion, LD I, did not directly consider the admissibility of the evidence, only that such evidence would


be sufficient to create a genuine issue of material fact for trial. 355 F.3d at 1371. [HN5] Issues not decided by the court in a prior proceeding are not covered by the law-of-the-case doctrine. Stearns v. Beckman Instruments, Inc., 737 F.2d 1565, 1568 (Fed. Cir. 1984). Therefore, the admissibility of Lueptow's testimony had not been previously resolved.

Vaughan's challenges to expert testimony and scientific evidence are analyzed under the Supreme Court's Daubert factors. See Daubert v. Merrell Dow Pharms., 509 U.S. 579, 589, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993). [HN6] When faced with expert scientific testimony, a district court must first determine "whether the expert is proposing to testify to (1) scientific knowledge that (2) will assist the trier of fact to understand or determine a fact at issue." Id. at 592 . This requires an assessment of the reasoning and methodology underlying the testimony to determine whether it is scientifically valid. Id. In Daubert, the Supreme Court set forth four factors for district courts to consider when evaluating the validity and relevance of scientific evidence pursuant to Rule 702 of the Federal Rules of Evidence. Id. at 592-93. These factors include (1) whether the methodology can and has been tested, (2) whether the methodology is subject to peer review, (3) the potential rate of error, and (4) the general acceptance of the methodology. Id. at 593-94. The court further noted that the focus of a court's inquiry into the relevance and reliability of scientific evidence "must be solely on principles and methodology, not on the conclusions that they generate." Id. at 595.

Here, Vaughan's argument focuses on the parameters Lueptow applied, not on the reliability of CFD analysis in general. Indeed, CFD analysis has been previously recognized in the scientific community and has been recognized as reliable by at least one circuit. See Quiet Tech. DC-8, Inc. v. Hurel-Dubois UK Ltd., 326 F.3d 1333, 1343-44 (11th Cir. 2003). In Quiet Tech., the appellant challenged the credibility of CFD analysis for modeling aerodynamic properties in a jet engine. Id. at 1344. The appellant argued that the expert used incorrect data or was missing data to run the CFD software and used the wrong equations to run his CFD analysis of the engine's aerodynamic properties. Id. Such a flawed analysis, it argued, made the testimony and evidence unreliable. Id. at 1344-45. The court held that such an attack goes more to the weight of the evidence than to its admissibility. "The identification of such flaws in generally reliable scientific evidence is precisely the role of cross-examination." Id. at 1345; see also In re TMI Litig., 193 F.3d 613, 692 (3d Cir. 1999) ("'So long as the expert's testimony rests upon "good grounds," it should be tested by the adversary process--competing expert testimony and active cross-examination--rather than excluded from jurors['] scrutiny for fear that they will not grasp its complexities or satisfactory [sic] weigh its inadequacies.'" (quoting Ruiz-Troche v. Pepsi Cola of


Puerto Rico Bottling Co., 161 F.3d 77, 85 (1st Cir. 1998))); Wilmington v. J.I. Case Co., 793 F.2d 909, 920 (8th Cir. 1986) ("Virtually all the inadequacies in the expert's testimony urged here by [the defendant]were brought out forcefully at trial . . . . These matters go to the weight of the expert's testimony rather than to its admissibility.").

Here, Vaughan's challenge goes to the weight of the evidence rather than the admissibility of Lueptow's testimony and analysis. Though he admitted that his models did not exactly match the various accused tanks, this fact was fully discussed on cross examination. As in Quiet Tech., his models were not the perfect models of each individual tank, but they were based on reliable scientific methodology and subject to cross examination and the proffering of further scientific analysis by Vaughan. We conclude that a reasonable juror could consider Lueptow's testimony explaining the very robust, helical flow in the models and infer that the similar accused tanks will produce flow similar to the modeled flow. Therefore, we will not contravene the province of the jury by reweighing Lueptow's testimony.

b. Alleged Flows Vaughan's challenges do not end with allegations of inaccurate data. It also challenges the relevance of Lueptow's testimony regarding general rotation of the fluid in combination with the helical flow. Vaughan argues that Lueptow's analysis performed only 40 to 50 iterations, a time frame that it suggests is only a few seconds after pump startup and, therefore, was not enough time to rotate the entire body of fluid.

However, such arguments do not overcome Lueptow's testimony that there was helical flow and general body rotation in his simulation even after 50 iterations. Furthermore, Lueptow did not rely solely on his CFD plots, but also on those that were admittedly continued for longer periods of time by Vaughan and LD when they simulated the Merced and generic tanks at AEA Technologies. Any fault within Lueptow's opinion was properly covered during cross examination. But, sufficient evidence still existed for a reasonable juror to find infringement.

Vaughan's last contention with the CFD analysis counters LD's reliance on the vertical vector plots from the PX19 and PX20 reports by presenting an argument that they are unreliable. Basically, Vaughan argues that movement shown in the vector plots represents the single-plane movement of a particle flowing in two planes: vertical and horizontal. For purposes of determining helical flow, the vertical-plane vector plot is critical. Vaughan explains that the vertical plot shows


particles with very little movement in the vertical plane, but much more substantial movement in the horizontal plane. It contends that the vertical vector plot in the PX19 report is consistent with a rotational vortex, as in the prior art, rather than helical flow. Essentially, it maintains that even though the vertical vector plots look helical, the actual particles are moving like a whirlpool around a common center and that even in that configuration there will be flow upward and downward somewhere in the tank.

While Vaughan's interpretation could be correct, the evidence presented suggests that the vertical vector plot is subject to different interpretations. There was substantial evidence presented to the jury to suggest that this plot represents a helical pattern. The plot appears to show two vortices on either side of the tank center. While these vortices may be aided by the fluid intake sump in the tank center, it appears clear in this figure that the downward speeds increase towards the pumps. Furthermore, for both the PX19 and PX20 reports, their authors acknowledge that flow vortices do exist in the vertical plane. Upon consideration of the evidence, the jury may have had a different interpretation than that postulated by Vaughan. There is certainly substantial evidence to support this jury's findings.

3. Foreign Infringement

Vaughan makes one final argument with respect to infringement under 35 U.S.C. § 271(f) by six tanks located outside of the United States. It argues that under § 271(f) there was insufficient evidence that it intended for the foreign purchasers to infringe the '414 patent. [HN8] Pursuant to § 271(f)(1), a party may be an infringer if it

supplies . . . in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States. . .

"A finding of inducement requires both an underlying instance of direct infringement and a requisite showing of intent." Fuji Photo Film Co., 394 F.3d at 1377. Here, although Vaughan contends that the requisite intent showing is missing, "[a] patentee may prove intent through circumstantial evidence." Id.


Accordingly, LD identifies evidence in the record that Vaughan knew of the '414 patent after its first sale to Augusta. Moreover, Vaughan's hiring of Behnke, a former LD employee with knowledge of the patented design, and Dorsch's statements indicating that Vaughan was relying on nozzle orientations from Behnke, support the proposition that Vaughan intended for its Augusta design to infringe the claims of the '414 patent. Furthermore, Vaughan's engineering manual was sent to its customers and is replete with examples that are similar to the Augusta designs. This constitutes circumstantial evidence that Vaughan intended for its subsequent buyers, including foreign buyers, to install systems that infringe the claims of the '414 patent. Vaughan argues that the engineering manual itself expresses an intent to mix by rotation, such that Vaughan's dissemination of the manual did not intend its customers to create the infringing helical flow. Vaughan's arguments ask us to reweigh the evidence, a task reserved for the jury, not this court. See Teleflex, Inc. v. Ficosa N. Am. Corp., 299 F.3d 1313, 1335 (Fed. Cir. 2002). Thus, we hold that there is substantial evidence to support the jury's verdict under § 271(f). C. Invalidity of the '414 Patent

Vaughan's second allegation of error is that the court should have found the '414 patent invalid because the specification did not disclose the inventor's best mode of practicing the invention and did not enable the claims. See BJ Servs. Co. v. Halliburton Energy Servs., 338 F.3d 1368, 1371-72 (Fed. Cir. 2003) ; Eli Lilly & Co. v. Barr Labs., 251 F.3d 955, 963 (Fed. Cir. 2001). It argues that the inventors failed to disclose the need for reducers on the tank nozzles and that the specification failed to enable the creation of helical flow in the tank.

1. Best Mode

Vaughan argues that the use of reducers on the tank nozzles was the best mode of practicing the invention, that it was known to the inventors, and that they failed to disclose it in their patent application. Vaughan presented evidence that the inventors installed reducers on the Plymouth and Indiana Packers tanks in order to increase flow velocity and impart more momentum into the large tanks.

Inventors are required by 35 U.S.C. §112, P1 to disclose the best mode for practicing their claimed inventions. A finding of patent invalidity based on best mode " requires clear and convincing evidence that the inventor both knew of and concealed a better mode of carrying out the claimed invention than that set forth in the specification." Teleflex, 299 F.3d at 1330. This is a two-part factual test inquiring into (1) whether the inventor subjectively "considered a particular mode of practicing the invention to be superior to all other modes at the time of


filing" the application and (2) whether the inventor adequately disclosed that superior mode. Id.; accord Eli Lilly & Co., 251 F.3d at 963. The best mode requirement does not require the disclosure of "routine details" that would be apparent to one of ordinary skill in the art practicing the invention. Teleflex, 299 F.3d at 1331-32. "Known ways of performing a known operation cannot be deemed intentionally concealed absent evidence of intent to deliberately withhold that information." High Concrete Structures, Inc. v. New Enter. Stone & Lime Co., 377 F.3d 1379, 1384 (Fed. Cir. 2004).

In light of all the evidence presented on this issue, a reasonable jury could conclude that Vaughan failed to demonstrate by clear and convincing evidence that LD did not disclose the best mode. First, the '414 patent states that "[t]he jet nozzle units 20 are preferably of a type disclosed in U.S. Pat. No. 4,332,484 (herein incorporated by reference) [("the '484 patent")] and commercially available from A.O. Smith, as part of its Slurrystore . . . systems." '414 patent, col. 4, ll. 52-55. The '484 patent describes a nozzle that discharges "a high velocity high volume jet," col. 3, ll. 50-51, and a nozzle which is "concentrically reduced in diameter in its upward extend . . . ," col. 3, ll. 65-68. Second, Crump testified that the Plymouth and Indiana Packers installations did not incorporate the invention and were used to achieve zone mixing instead of helical flow. Third, LD presented evidence that adding reducers is a routine detail and did not need to be disclosed to a person of ordinary skill in the art. Fourth, Lueptow testified that a particular flow velocity did not matter given that the fluid flow began to dissipate further from the nozzle.

Admittedly, the '414 patent does not disclose a particular size of reducer, but Vaughan failed to demonstrate by clear and convincing evidence that it must. Ideal flow rates and flow velocities depend on the nature of the tank to be mixed. Moreover, Vaughan has not made a sufficient showing to overcome the jury determination that the best mode requirement was satisfied.

2. Enablement

Vaughan argues that the '414 specification fails to enable the claimed helical flow. It contends that Crump's testimony that he did not discover helical flow until after his patent application was filed is proof that the specification does not enable the claim to such flow. n2

n2 Vaughan also argues that the district court improperly excluded expert testimony regarding enablement. The district court excluded the expert opinion evidence as irrelevant because it was based on an


impermissible claim construction and relied heavily on Figure 6 of the patent specification that shows perfect helical flow instead of substantial helical flow. Furthermore, the court found that the evidence could prejudice and confuse the jury. Since the enablement inquiry necessarily depends on an interpretation of the claims, we conclude that the district court did not abuse its discretion in excluding the expert's testimony pertaining to enablement.

In order to enable the claims of a patent pursuant to §112 , the patent specification must teach those of ordinary skill in the art "how to make and use the full scope of the claimed invention without undue experimentation." Bruning v. Hirose, 161 F.3d 681, 686 (Fed. Cir. 1998). Some experimentation is permissible although it cannot be unduly excessive. Hybritech, Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1384 (Fed. Cir. 1986). Enablement is a question of law which we ultimately review de novo, but it is based on factual findings that are reviewed for clear error. Bruning, 161 F.3d at 686. Here, because the underlying inquiry was inherently factual, "we look to whether a reasonable jury could have made the underlying factual findings necessary to provide substantial evidence in support of its conclusion." BJ Servs. Co., 338 F.3d at 1371-72.

First, LD submitted Gillette's testimony to establish that even though the patent does not discuss a specific combination of elements to create helical flow, it could be produced by a person of ordinary skill in the art without undue experimentation. Second, Crump's testimony indicates that he conceived of the idea of producing helical flow in late 1991 or early 1992, constructively reduced his idea to practice in the patent application, then confirmed that the helical flow could be produced in his later tank designs. This testimony, along with Lueptow's indication that helical flow is robust, provides substantial evidence that helical flow could be generated by following the '414 patent written description. D. Willful Infringement

Vaughan also argues that there was not clear and convincing evidence to support the jury's verdict of willful infringement. Vaughan's only contentions are that there was no basis on which the jury could disregard Vaughan's reliance on counsel's opinion of non-infringement and that there was insufficient evidence that Vaughan copied the Augusta system.

A finding of willful infringement is made after considering the totality of the circumstances. See Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana


Corp., 383 F.3d 1337, 1342-43 (Fed. Cir. 2004) (en banc). The evidence is weighed and evaluated by the trier of fact. Id. at 1343. "The drawing of inferences, particularly in respect of an intent-implicating question such as willfulness, is peculiarly within the province of the fact finder that observed the witnesses." Rolls-Royce, Ltd. v. GTE Valeron Corp., 800 F.2d 1101, 1110 (Fed. Cir. 1986).

Courts consider several factors when determining whether an infringer has acted in bad faith and whether damages should be increased. They include: "(1) whether the infringer deliberately copied the ideas or design of another; (2) whether the infringer, when he knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed; . . . (3) the infringer's behavior as a party to the litigation;" (4) "defendant's size and financial condition;" (5) "closeness of the case;" (6) "duration of defendant's misconduct;" (7) "remedial action by the defendant;" (8) "defendant's motivation for harm;" and (9) "whether defendant attempted to conceal its misconduct." Read Corp. v. Portec, Inc., 970 F.2d 816, 826-27 (Fed. Cir. 1992) (superseded on other grounds as recognized in Hoechst Celanese Corp. v. BP Chems. Ltd., 78 F.3d 1575, 1578 (Fed. Cir. 1996)). Good faith may normally be shown by obtaining the advice of legal counsel as to infringement or patent validity. See id. at 828. If counsel's opinion is found to be incompetent, however, a fact finder may discount its usefulness in determining a party's good faith. See id. at 828-29; see also Goodwall Constr. Co. v. Beers Constr. Co., 991 F.2d 751, 758 (Fed. Cir. 1993) (holding that a jury could have concluded that the infringing party concealed incriminating evidence from its opinion counsel).

Here, LD cites to several pieces of evidence the jury may have relied on to find copying. One of the most persuasive pieces of evidence appears to be Vaughan's competing bid on the Augusta tank. Though the engineering drawings are virtually duplicates of LD's job proposal, that is not the most persuasive evidence that the jury may have relied upon to infer copying. LD presented evidence that Vaughan used Behnke, a former LD employee with intimate knowledge of the Augusta tank and LD's Jetmix system, to establish a nozzle angle of its own Rotamix system. While Vaughan discounts this evidence because it used a different nozzle height and a dual-nozzle design instead of the single-nozzle design LD proposed to Augusta, the jury could reasonably infer that Vaughan was deliberately trying to create the same flow pattern as LD's Jetmix system in violation of the '414 patent. There is no limitation in the '414 patent requiring single-nozzle systems. In fact, the '414 patent contemplates the use of "various flow devices of a system [that] may be installed at differing heights, if desired . . . and may be combined in pairs." Col. 8, ll. 35-44. Thus, Vaughan's argument that the jury could not find copying because its Augusta proposal made


insubstantial changes to a patented invention does not overcome the substantial evidence to the contrary. Furthermore, the Vaughan engineering manual includes a drawing similar in detail to the Augusta tank layout, a fact the jurors could have used to infer copying.

Though Vaughan relies heavily on its opinion of counsel, LD presented flaws in that opinion's factual basis. LD explains that patent counsel was not given the complete CFD analysis because he was not provided with the vertical vector plots of fluid flow. Patent counsel was advised that the vertical plots did not show anything of significance. In fact, the report on the Merced and generic 50-foot tanks explained that the vertical plots indicated vertical flow and secondary flow vortices. The jury could use such a concealment of evidence from the attorney to discount the opinion. See Goodwall Constr., 991 F.2d at 758 . Although Vaughan asserts that the district court's enhancement of damages should be reversed, the primary basis for this position is that the jury's finding of willfulness should be reversed, an argument we have already rejected. Vaughan's only other argument is that litigation misconduct did not justify enhancement but that argument was made only in a footnote in the opening brief and therefore was not sufficiently preserved. SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312, 1320 (Fed. Cir. 2006). E. Inequitable Conduct Finally, Vaughan argues that the district court improperly granted LD's JMOL for its inequitable conduct claim. Vaughan maintains that the court committed clear error by finding that the Plymouth and Indiana Packers installations were not prior art that should have been disclosed to the patent examiner.

Patent applicants are required to prosecute patents "with candor, good faith, and honesty." See Bristol-Myers Squibb Co., 326 F.3d at 1233 (citation omitted). "A breach of this duty can take several forms: 'affirmative misrepresentation of a material fact, failure to disclose material information, or submission of false material information.' Further, a breach of this duty, when coupled with an intent to deceive or mislead the PTO, constitutes inequitable conduct, which, when proven, renders the patent unenforceable." Id. (citations omitted). In order to establish inequitable conduct, Vaughan must present clear and convincing evidence that the inventors "failed to disclose material information with an intent to mislead the PTO." Id. at 1233-34.

The district court found that Crump's testimony regarding the process of invention was credible and believed that the Plymouth and Indiana Packers installations were not material information because they were "very different


configurations" from the claimed invention and were part of an "evolving process of experimentation by the inventors." The court also found that even if the previous installations had been material, Crump's testimony that he did not intend to deceive the patent office was credible and his extensive prior art disclosures during prosecution strongly suggested good faith.

Our inquiry into materiality is an objective one. "Materiality is not limited to prior art but embraces any information that a reasonable examiner would be substantially likely to consider important in deciding whether to allow an application to issue as a patent." Bristol-Myers Squibb Co., 326 F.3d at 1234 (citation omitted). Here, the district court erred in its analysis of materiality. The court focused on whether the prior installations actually embody the invention, when the correct analysis asks whether a reasonable examiner would find it important. In this case, the inventors explain how they developed the invention and their use of the Plymouth and Indiana Packers tanks to do so. They certainly used the previous tanks to assist in developing the invention and the tanks were part of a sale, not an experiment. A reasonable patent examiner would find such information important to his consideration of the patent application.

However, Vaughan fails to establish that the inventors had the requisite intent to deceive. Intent is a subjective inquiry into whether the inventor knew the information was material and chose not to disclose it. See id. at 1239. Here, Vaughan asks us to reweigh the credibility of the evidence and testimony, something we cannot do. See LNP Eng'g Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347, 1361 (Fed. Cir. 2001). The trial court relied on the evidence that Crump did not believe the prior installations were necessary disclosures because they were not embodiments of the invention and were similar to other disclosures. Furthermore, Crump testified that he did inform the examiner of the prior tanks. We see no reversible error in the district court's analysis of intent. Thus, the court's finding of no inequitable conduct was not clearly erroneous.

III. CONCLUSION In this appeal, Vaughan asks us to review the district court's denial of their JMOL motion for non-infringement, invalidity, no willful infringement, and unenforceability due to inequitable conduct. For the reasons stated in this opinion, we find no reversible error. Accordingly, we affirm.

AFFIRMED


The patent involved in the preceding Liquid Dynamics case is presented in full here:















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ELIZABETH v - University of Houston Law Center Survey files/Packet... · Web viewIn short, each step does no more than require a generic computer to perform generic computer functions