District Court Judgment of Invalidity Overturned Based on Flawed Analysis of Claim Definiteness Under 35 U.S.C. § 112

In 2014, the Supreme Court issued its decision in Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120 (2014), rejecting the Federal Circuit’s “insolubly ambiguous” standard for determining compliance with the definiteness requirement under 35 U.S.C. § 112. Criticizing that standard as leaving “courts and the patent bar at sea without a reliable compass,” the Supreme Court held that a patent is indefinite and invalid if the “patent’s claims, read in light of the specification and the prosecution history fail to inform with reasonable certainty those skilled in the art about the scope of the invention.” Nautilus, Inc., 134 S. Ct. at 2124, 2129-30. On November 20, 2017, the Federal Circuit issued a precedential decision on indefiniteness, adding to its growing jurisprudence applying the Supreme Court’s decision in Nautilus.

The case, BASF Corp. v. Johnson Matthey Inc., No. 2016-1770 (Fed. Cir. Nov. 20, 2017), involved a patent directed towards systems for performing catalytic conversion of nitrogen oxides (NOx) in an exhaust gas stream. Of particular relevance to the Federal Circuit’s decision, the claims recited a partly-dual-layer arrangement of coatings on a substrate over which exhaust passes—a coat along the full length of the substrate containing “a material composition B effective to catalyze selective catalytic reduction (SCR) of NOx,” and beneath part of that coat, on the outlet end of the gas passage, a partial-substrate undercoat containing “a material composition A effective for catalyzing NH3 oxidation [i.e., AMOx].” BASF Corp., slip op. at 2. The district court held that the language “effective to catalyze” and “effective for catalyzing” was indefinite and entered judgment of invalidity on that basis.

On appeal, the Federal Circuit found numerous flaws in the district court’s indefiniteness analysis. Framing the question under Nautilus as whether “the ‘composition . . . effective to catalyze’ language, understood in light of the rest of the patent and the knowledge of the ordinary skilled artisan, [would] have given a person of ordinary skill in the art a reasonable certain understanding of the what compositions are covered,” the Federal Circuit found no basis in the district court’s reasoning for answering that question in favor of an indefiniteness determination. BASF Corp., slip op. at 9 (ellipses in original).

First, the Federal Circuit critiqued the district court’s reliance on the functional character of the claim language as supporting its indefiniteness finding, commenting as follows:

[T]he Nautilus standard of ‘reasonable certainty’ does not exclude claim language that identifies a product by what it does. Nothing inherent in the standard of ‘reasonable certainty’ precludes a relevant skilled artisan from understanding with reasonable certainty what compositions perform a particular function. Not surprisingly, we have long held that nothing in the law precludes, for indefiniteness, defining a particular claim term by its function. What is needed is a context-specific inquiry into whether particular functional language actually provides reasonable certainty.”

BASF Corp., slip op. at 9 (quotations and citations omitted).

Next, the Federal Circuit took on the district court’s assertion that the claims did not “recite a minimum level of function needed to meet [the] ‘effective’ limitation nor a particular measurement methodology to determine whether a composition is effective enough to fall within the claims” and the district court’s conclusion that “[w]ithout such information, a person of ordinary skill in the art could not determine which materials are within the ‘material composition A’ or ‘material composition B’ limitation, and which are not.” BASF Corp., slip op. at 9-10. According to the Federal Circuit in BASF, “[t]he mere observation of information not ‘recited’ does not answer the question whether a person of ordinary skill in the art would need to be given the level and measurement information to understand, with reasonable certainty,” the claim language at issue. Id.

Moreover, the district court’s analysis did not take into account the fact that the advancement over the prior art being claimed, as evidenced by the specification, was not in the selection of particular catalysts but in the arrangement of the claimed SCR and AMOx catalysts. BASF Corp., slip op. at 11. Thus, the Federal Circuit reasoned, “the claims and specification let the public know that any known SCR and AMOx catalysts can be used as long as the play their claimed role in the claimed architecture.” Id. The Federal Circuit also further noted that the claims and specification provide exemplary material compositions, disclose relevant chemical reactions, and illustrate how the purportedly novel arrangement results in improved performance. Id. And it concluded by emphasizing that “breadth is not indefiniteness.” Id.

Then, later in the opinion, the Federal Circuit elaborated:

The intrinsic evidence in this case makes clear that the asserted advance over the prior art is in the partly-dual-layer arrangement to create a two-phase operation for performing the identified conversion processes, not in the choices of materials to perform each of the required catalytic processes. It is in this context that the question of the certainty or uncertainty experienced by a relevant skilled artisan in understanding the claims, read in light of the specification, is presented. And it is in this context that the relevant skilled artisan would be informed by the specification’s numerous examples of qualifying compositions A and B, disclosure of the stoichiometric reactions, and equating of the “composition . . . effective to catalyze” phrases with familiar terms such as “SCR catalyst” and “AMOx catalyst.”

BASF Corp., slip op. at 13. And because the extrinsic evidence did not show that a person of ordinary skill would lack reasonable certainty as to what compositions would qualify as an SCR catalyst and AMOx catalyst in this context, the Federal Circuit found the district court’s indefiniteness determination to be in error. Id. at 13-14.

The Federal Circuit’s decision in BASF is interesting for many reasons, including the role that the invention’s alleged point of novelty played in the Court’s analysis, but above all, it is a great example of how the “context” provided by the intrinsic record can play an important role when analyzing claim definiteness under the “reasonable certainty” standard set forth in the Supreme Court’s Nautilus decision.

Other Notable Decisions – Week Ending November 24, 2017

Presidio Components, Inc. v. Am. Technical Ceramics Corp., Nos. 2016-2607, 2016-2650 (Fed. Cir. Nov. 21, 2017) (precedential): In Presidio, on appeal from a district court decision awarding over $2 million in lost profits and granting a permanent injunction, the Federal Circuit addressed a wide range of issues, including indefiniteness, intervening rights, the award of lost profits, denial of enhanced damages, and  the grant of permanent injunctive relief. The Court affirmed the district court’s entry of judgment rejecting the defendant’s indefiniteness challenge, finding that the claims did not rely on the “unpredictable vagaries of any one person’s opinion.” It upheld the district court’s grant of summary judgment of absolute intervening rights, reasoning that there are products that would infringe the original claims but would not infringe the amended claims allowed during reexamination. It also upheld the district court’s denial of enhanced damages, despite a jury finding of willfulness and the district court’s failure to explicitly address each of the Read factors set forth in Read Corp. v. Portec, Inc., 970 F.2d 816 (Fed. Cir. 1992). The lost profits award, however, was overturned because the district court improperly determined acceptability of alleged non-infringing alternatives by comparison to the infringing product, where the patentee was not practicing the patent. According to the Federal Circuit, “[t]he correct inquiry . . . is whether a non-infringing alternative would be acceptable compared to the patent owner’s product, not whether it is a substitute for the infringing product.”  Finally, because the district court based its grant of injunctive relief on the award of lost profits, the Federal Circuit overturned that decision as well and remanded the case.

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