Federal Circuit Upholds District Court Liability Determinations But Maintains Denial of Permanent Injunction Motion

In a precedential decision issued on Friday, April 28, 2017, the Federal Circuit resolved cross-appeals following a district court bench trial that resulted in findings of infringement and failure to prove obviousness, and a denial of a permanent injunction, affirming in whole the district court’s judgment and permanent injunction decision.

The case, Nichia Corp. v. Everlight Americas, Inc., Nos. 2016-1585, 2016-1618, slip op. (Fed. Cir. Apr. 28, 2017, involved three patents relating to package designs and methods of manufacturing LED devices.  Id. at 3.  The district court found that all three patents had been infringed, and that the defendant had failed to prove that any of the asserted claims were invalid.  Id. at 4-5.  Nevertheless, the district court refused the patentee’s request for a permanent injunction, reasoning that the patentee had not demonstrated irreparable harm and that monetary damages could adequately compensate for the infringement.  Id. at 5.

On appeal, the Federal Circuit first addressed the district court’s liability determinations, finding no error in the district court’s challenged claim constructions and obviousness conclusions.  See id. at 8-19.   With respect to claim construction, the Federal Circuit notably declined to adopt a rule that “if different words are used in the claims and specification, then [courts] must read that distinction as an intended difference,” elaborating as follows:

We recognized that, in some patents, a distinction between terms may imply a difference in meaning, but this is no hard-and-fast rule. Rather, some inventors might use one term in the specification to inform the meaning of another term in the claims.  For one word to inform the meaning of another, the words need not be identical.

Id. at 10 (citations omitted).  And with respect to obviousness, the Federal Circuit found no error in the district court’s motivation to combine analysis, crediting findings “that the references disclose different structures, resolve dissimilar problems, and propose dissimilar solutions” and “that artisans in th[e] field face myriad design challenges because small design changes may cause unpredictable results and because design considerations often pull in multiple directions.”  Id. at 16; see also id. at 12, 19.

Addressing the district court’s denial of the patentee’s motion for permanent injunction, the Federal Circuit likewise found no error.  See id. at 21-26.  Though it acknowledged the “fundamental nature of patent rights granting the owner the right to exclude,” the Federal Circuit emphasized that “an injunction in patent law must be justified like any other” and found that the district court permissibly concluded that the patentee’s showing was lacking.  Id.  In support, the Federal Circuit pointed to several of the district court’s factual findings that suggested an absence of “meaningful competition” and causal lost sales or price erosion (despite a stipulation that the parties were competitors).  Id. at 23-24.  It then explained the proper role of licensing activities in an irreparable-harm inquiry, agreeing with the patentee that there is no “categorical rule that licenses preclude irreparable harm” but reaffirming that evidence of licensing activities can weigh against such a finding.  Id. at 25.

Other Notable Decisions – Week of April 28, 2017

RecogniCorp, LLC v. Nintendo Co., Ltd., No. 2016-1499 (Fed. Cir. 2017) (precedential): In RecogniCorp, the Federal Circuit affirmed a district court decision granting judgment of patent ineligibility on the pleadings.  The Federal Circuit concluded that the claims-at-issue were directed to the abstract idea of encoding and decoding image data, and rejected the patentee’s argument that the specific algorithm disclosed for the encoding process transformed that abstract idea into a patentable invention.  Noting that claims “directed to a non-abstract idea are not rendered abstract simply because they use a mathematical formula,” the Federal Circuit held that “the converse is also true: A claim directed to an abstract idea does not automatically become eligible merely by adding a mathematical formula.”

Skedco, Inc. v. Strategic Operations, Inc., No. 2016-1349 (Fed. Cir. Apr. 24, 2017) (non-precedential): In Skedco, the Federal Circuit vacated and remanded a district court judgment of non-infringement based on erroneous claim constructions, rejecting an argument that separately listed elements in the claim-at-issue needed to be construed as distinct, separate structures.  The patentee urged that the figures of the patent “would be rendered non-sensical” if one of the claimed elements was a part of the other, but the Federal Circuit concluded that this got its “precedent backwards” and that “a claim is not limited to inventions looking like those in the drawings,” especially where the patent refers to the drawings as “exemplary embodiment[s].”

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