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CAFC Weekly: Week of February 18, 2011

by Orlando Lopez

There were two precedential patent related opinions produced during this week, one related to limiting the number of claims considered in a litigation and another one related to declaratory judgment and subject matter jurisdiction.

In the opinion,  In re Katz Interactive Call Processing Patent Litigation, Katz owns  a number of patents related to interactive call processing and asserted those patents against a large number of companies.  In 25 actions, Katz asserted a total of 1,975 claims from 31 patents, against 165 defendants, in 50 groups of related corporate entities.  Those 25 actions have all been transferred to the same District Court Judge.  Several groups of defendants asked the District Court Judge to limit the number of claims to be considered in the litigation.  After hearing proposals from the defendant groups and Katz, the District Court limited the number of claims to 40 claims per defendant group, to be narrowed to 16 claims per defendant group after discovery.  The total number of claims to be asserted in other litigations was limited to 64 claims, but Katz could introduce new claims if they presented new issues of infringement or invalidity.  Katz moved to sever and stay the nonselective claims and the motion was denied by the District Court.  The defendants  moved jointly for summary judgment of invalidity of the selected claims and separately for summary judgment on other issues.  The District Court found all the selected claims to be either invalid or not infringed.  Katz appealed to the CAFC, on the denial of the motion to sever and stay, as well as the summary judgment of invalidity or non-infringement. The CAFC stated that Katz was not limited only to the number of claims initially stated by the District Court, since the District Court had allowed the introduction of new claims if the new claims presented new issues.  The CAFC upheld the claim restriction decision.  The CAFC noted that claim restriction decisions are reviewable, and if the plaintiff requests introduction of new claims that raised new issues and the request is denied, the decision could be reversed.

In regards to invalidity, the District Court had invalidated a claim due to indefiniteness.  A number of the claims were written in functional form (means for form), and the structure in the specification that performed the function was a processor without a clear definition of the algorithm that the processor executed.  The CAFC upheld the judgment of invalidity based on prior cases that require providing details of the algorithm for similar claims.  In other claims that the District Court invalidated for being  indefinite, the function performed by the processor were functions such as “processing,”  “storing” and “receiving.”  The CAFC reversed  the judgment of invalidity of those claims, since those functions are inherent to a processor and remanded for further claim interpretation.  In a number of other claims, the claims were invalidated for being indefinite, since the claims include both a system and a method of use.  The section of the opinion concerning invalidity is also of interest, since it provides guidance as to what claims may be considered definite for claims involving a processor.

In ABB Inc. v. Cooper Industries LLC, Cooper owns a number of patents related to dielectric fluid used to insulate and thermally protect equipment.  In 2003, Cooper had sued ABB claiming that BIOTEMP, a dielectric fluid produced by ABB, infringed the patents.  The parties settled and the Settlement and License agreement gave ABB a non exclusive license to make and use the dielectric fluid.  The agreement did not include the right of a third party to make BIOTEMP, or any fluid covered by the Cooper patents, for ABB.  In the agreement, ABB acknowledged that the patents were valid and that BIOTEMP was covered by the patents.  After signing the agreement, ABB outsourced the manufacture of BIOTEMP to Dow Chemicals.  Cooper wrote a letter to ABB and Dow stating that outsourcing would be a breach of the Agreement and that Cooper would defend its rights provided by the patents.  Abb filed a declaratory judgment action in District Court seeking a declaration that its activities were authorized under the Agreement.  Cooper filed a declaratory judgment action in state court seeking a declaration that the Agreement did not include the right to have Dow make BIOTEMP for ABB.  ABB modified its complaint seeking a declaration that it did not infringe directly or indirectly, any valid claims of the Cooper patents at suit.

Cooper moved for dismissal of the District Court action.  The District Court finding that the matters were governed entirely by state law, dismissed the action for lack of subject matter jurisdiction.  ABB appealed to the CAFC and the CAFC reversed the District Court dismissal.  The CAFC based its reversal on the standard for summary judgment resulting from the US Supreme Court decision in MedImmune v. Genentech, which allowed declaratory judgment when the controversy was “of sufficient immediacy and reality” concerning infringement, and on the judging of the nature of the action in the defendant’s hypothetical complaint.  In this case, the nature of the action in the defendant’s hypothetical complaint is patent infringement, which falls under federal  jurisdiction.  The communication between Cooper, ABB and Dow constitutes a controversy of sufficient immediacy and reality.  The present opinion adds to the body of opinions detailing the impact of MedImmune.


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