Rexnord Industries, LLC v. Kappos and Habasit Belting, Inc.

In this § 103 case reviewing an appeal from the USPTO Board of Patent Appeals and Inferences (BPAI), the Federal Circuit reversed BPAI, finding the claims obvious as a matter of law.  Generally a routine appeal, Rexnord signifies the court’s rejection of BPAI’s holding they need not consider other grounds presented during reexam, only because they had not been raised on appeal.

Disagreeing, the Federal Circuit held that the patent could be invalid as a matter of law based on factors not presented to the Board or examiner during reexamination, thus enlarging the scope of challenges possible on appeal.  BPAI had denied a motion to rehear the appeal based on rationales other than those argued by the examiner, but the CAFC disagreed, thus allowing new arguments to be raised on rehearing and/or appeal, thus complicating the Board’s job for review and allowing practitioners the ability to “sit on” arguments until rehearing or introduce new ones at various times during the appeals process.

[Panel: Newman (author), Lourie, Prost]

[Full Citation: Rexnord Industries, LLC v. Kappos and Habasit Belting, Inc. , __ F.3d __, No. 2011-1434  (Fed. Cir. Jan. 18, 2013).]

[Find the full opinion here]

Hall v. Bed, Bath & Beyond, Inc. and Nachemin

In this design patent pleading case, the Federal Circuit found clear error and reversed Judge Alvin K. Hellerstein of the Southern District of New York, reopening a case the district court had dismissed at the pleadings stage.

In this case, the Appellant had invented and applied for a design patent for the “Towel Tote,” a towel with zippers to store wallets and phones while at the gym.  Appellant Hall contacted Bed, Bath & Beyond about carrying the device, and rather than deal with him, BB&B mailed Hall’s product to Pakistan and had it copied.  Once the design patent issued, Hall sued, but the district court dismissed the case based on sparse pleading in the complaint.

Every first-year law student in recent years likely recalls the Twombly and Iqbal standards.  Here, the CAFC held that even under those cases, a pleading does not require specifying the “new, original, and ornamental” features of a design patent—but rather, the bare-bones requirements of naming the patent, the patent number, a statement of infringement, and a citation to the relevant patent laws.

The ruling represents the broader tack the CAFC has taken to pleading in general, holding that bare-bones Form 11 pleadings in patent cases, as well as bare-bones pleadings in design patent cases, as here, are special instances that satisfy pleading requirements unique to this genre of litigation.

The case is significant because it keeps the door open for broad pleadings in design patent cases, increasing design patents’ value to potential litigants.  A narrower reading would hold that this case is less significant, if only because novelty is not a necessary element of proof at trial because of legal presumptions available.

[Panel: Newman (author), Linn, Lourie (dissenting)]

[Full Citation: Hall v. Bed, Bath & Beyond, Inc. and Nachemin, __ F.3d __, No. 2011-1165, -1235 (Fed. Cir. Jan. 25, 2013).]

 [Find the full opinion here]

Allflex USA, Inc. v. Avid Identification Systems, Inc.

After the decision in Allflex v. Avid, parties cannot use settlement tricks to keep post-settlement litigation alive through arbitrary clauses in the settlement agreement which put money into play if any of the claims are overturned at a later date.

Normally, parties cannot sue again after entering into a settlement agreement due to mootness concerns—there is no live controversy between the two parties post-settlement.  This serves a number of purposes, the primary of which is to finally settle the controversy in the sake of judicial and economic efficiency.  But with the shifting tides of business and competitive advantage, companies often would like a second- or third-chance lawsuit that may get them out from under an oppressive settlement agreement.

The facts of the case are somewhat irrelevant other than the nature of the settlement-agreement-clause; an out-of-the-air $50,000 penalty if Avid overturned any of the three material legal findings.  That money could not keep the second-run litigation alive on appeal, thus disallowing the losing party to skirt the normal rule—parties cannot appeal findings from a court occurring prior to settlement.

The ruling makes sense; it prevents post-settlement gamesmanship, should strengthen settlement agreements, and benefit the industry in the long run by putting controversies to rest.

[Panel: Lourie, Clevenger, Bryson (author)]

[Full Citation: Allflex USA, Inc. v. Avid Identification Systems, Inc., __ F.3d __, No. 2011-1621 (Fed. Cir. Jan. 17, 2013).] 

[Find the full opinion here]

InterDigital v. USITC and Nokia (on denial of reh’g en banc)

In a resounding denial of rehearing en banc, the Federal Circuit stressed that patent licensing activities alone satisfy the “domestic industry” requirement of section 337 of the Tarif Act of 1930.

The significance of the ruling cannot be overstated—it will be far easier to prove domestic industry in ITC investigations in the future, particularly for foreign-based corporations who only license technology within the United States.  In practical effect, the ruling expands the jurisdiction of the ITC in that many foreign-based corporations with licensing activities within the United States can now rest assured they are permitted to bring actions for infringement and other unfair trade violations at the USITC.

By writing in sole dissent, Judge Newman has proved that the case Federal Circuit almost unanimously agrees—licensing alone is enough to satify the domestic industry requirement in a 1337(a)(2) or 1337(a)(3) violation action.

[Rader (Chief Judge), Newman (dissenting), Mayer, Lourie, Bryson (author), Dyk, Prost, O’Malley, Reyna, Wallach]

[Full Citation: InterDigital v. USITC and Nokia,__ F.3d __, No. 2010-1093 (Fed. Cir. Jan. 10, 2013)(denial of reh’g en banc)]

[Find the full opinion here]

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