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SPOTLIGHT: HONEYWELL INTERNATIONAL INC., ET AL. v. HAMILTON SUNSTRAND CORP. In its ongoing effort to fully explicate the Supreme Court’s 2002 Festo decision, the U.S. Court of Appeals for the Federal Circuit on June 2 held that rewriting dependent claims into independent form and canceling the original independent claims creates a presumption of prosecution history estoppel. Honeywell International Inc., et al. v. Hamilton Sunstrand Corp. concerned three claims from two patents directed to an aircraft auxiliary power unit. All three began as dependent claims. In rejecting their related independent claims, the examiner suggested that these three would be allowable if rewritten in independent form. So Honeywell canceled the independent claims and rewrote the dependent claims, amending them to expressly incorporate the limitations of the rejected independent claims. At trial, a jury found willful infringement by Hamilton Sunstrand based on the doctrine of equivalents and awarded more than $45 million in damages. The Federal Circuit ruled that the adding of a new claim limitation, like the amending of an original limitation, is a narrowing amendment that gives rise to estoppel. Then it tackled the controversial issue. Honeywell, of course, argued that although it had surrendered broader independent claims, there should be no presumption of estoppel because it hadn’t narrowed the scope of the rewritten dependent claims. But the Federal Circuit pointed out that in Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., the Supreme Court held that the proper focus is the overall scope of the claimed subject matter. Accordingly, the circuit reasoned, the fact that the scope of the rewritten claims remained unchanged does not preclude estoppel if, by canceling the original independent claims and rewriting the dependent claims, the overall scope of the claimed subject matter has been narrowed to secure the patent. The Federal Circuit dug deep to find support, even citing a 1940 2nd Circuit decision. In Keith v. Charles E. Hires Co., Judge Learned Hand found no difference between a case where a claim is amended to secure allowance and one where a limited claim and a broader claim are filed together and then the broader claim is rejected and canceled. The Federal Circuit did caution that the presumption of surrender applies only to the amended or newly added limitation, and not to unamended limitations that were present in the original independent claims. The case was remanded to the District Court to determine whether Honeywell could overcome the presumption of estoppel. Judge Timothy Dyk wrote the per curiam opinion. In dissent, Judge Pauline Newman wrote that the decision contradicts 35 U.S.C. �112, �4, which assures that claim scope is unrelated to whether a claim is independent or dependent. This new rule, she concluded, will raise the costs and difficulty of examining patents because practitioners will simply use fewer dependent claims. Robert Krupka of the Los Angeles office of Kirkland & Ellis represented Honeywell. Richard Ziegler of the New York office of Cleary, Gottlieb, Steen & Hamilton argued for Hamilton Sunstrand. THE OTHER NINE CASES Gen-Probe Inc. v. Vysis Inc. 359 F.3d 1376 Decided March 5, 2004 Vacating a final judgment of noninfringement and invalidity, the Federal Circuit ordered the patent licensee’s declaratory judgment complaint dismissed for lack of an actual controversy. The court held that, under the totality of the circumstances, there was no “reasonable apprehension” of suit where Gen-Probe, during the litigation, had continued to pay both royalties under its license and royalties associated with its customers’ licenses, which were obtained through an option in the license agreement. Judge Randall Rader’s opinion was joined by Senior Judge Glenn Archer and Judge Arthur Gajarsa. For cross-appellant: R. William Bowen, Gen-Probe Inc., San Diego. For appellant: Jeffrey Weinberger, Munger, Tolles & Olson, Los Angeles. Globetrotter Software Inc., et al. v. Elan Computer Group Inc., et al. 362 F.3d 1367 Decided March 23, 2004 Holding that Globetrotter’s infringement claims were not “objectively baseless,” the Federal Circuit affirmed a grant of summary judgment to Globetrotter on Elan’s counterclaims of tortious interference with prospective economic advantage and unfair competition. The Federal Circuit said that the “objectively baseless” standard set forth by the Supreme Court in Professional Real Estate Investors v. Columbia Pictures Industries (1993) applies to state-law claims of bad-faith publication of prelitigation allegations of infringement. Judge Timothy Dyk’s opinion was joined by Senior Judge Glenn Archer and Judge Richard Linn. For cross-appellant and third-party defendant-appellee: Bruce Wessel, Irell & Manella, Los Angeles. For third-party plaintiffs-appellants: John Alioto, Alioto & Alioto, San Francisco. Phillips v. AWH Corp., et al. 363 F.3d 1207 Decided April 8, 2004 Affirming summary judgment of noninfringement, the Federal Circuit construed a claim for a vandalism-resistant modular wall panel with steel baffles inside the wall as excluding baffles set at 90 degrees. Though the ordinary meaning would not suggest such a restriction, the specification showed no baffles at 90 degrees, and the invention was distinguished from the prior art by its bullet-deflection properties. The court concluded that angles other than 90 degrees were required to permit deflection and that deflection was “essential” to the invention. Judge Alan Lourie’s opinion was joined by Judge Pauline Newman. Judge Timothy Dyk dissented in part. For appellant: Carl Manthei, Boulder, Colo. For cross-appellants: Mark Fischer, Faegre & Benson, Boulder, Colo. Sierra Applied Sciences Inc. v. Advanced Energy Industries Inc. 363 F.3d 1361 Decided April 13, 2004 To determine if there was an actual controversy for declaratory judgment purposes, the Federal Circuit did a product-by-product analysis. The court affirmed dismissal on one power supply model that the accused infringer was still developing. It reversed dismissal on a second model because the patentee’s letters created a reasonable apprehension of suit, and the accused infringer’s de minimus conduct could support jurisdiction. It remanded as to the third model to determine whether the accused infringer had actually used the product, even if in a de minimus testing capacity. Judge Paul Michel’s opinion was joined by Judges Arthur Gajarsa and Timothy Dyk. For appellant: M. Gabriel McFarland, Evans & McFarland, Denver. For appellee: Thomas Grimm, Morris, Nichols, Arsht & Tunnell, Wilmington, Del. SmithKline Beecham Corp., et al. v. Apotex Corp., et al. 365 F.3d 1306 Decided April 23, 2004 The Federal Circuit held the patentee’s U.S. clinical trials of the active ingredient in Paxil before the critical date effected a public-use bar and did not qualify for the experimental-use exception. Because the trials’ purpose was to test the chemical compound’s efficacy in humans, and the patent broadly claimed the structure of the compound without any limitation that it be used as a drug, the court held that the testing was irrelevant to the claimed invention. Judge Randall Rader’s opinion was joined by Judge William Bryson. Judge Arthur Gajarsa concurred. For appellants: Ford Farabow, Finnegan, Henderson, Farabow, Garrett & Dunner, Washington, D.C. For cross-appellants: Deanne Mazzochi, Lord, Bissell & Brook, Chicago. Elan Corp., PLC v. Andrx Pharmaceuticals Inc. 366 F.3d 1336 Decided May 5, 2004 Reversing a judgment of invalidity for violating the one-year on-sale bar, the Federal Circuit held that the patentee’s offer was not to sell a patented invention, but to sell a license and to form a partnership in an as-yet undeveloped and unpatented invention. Thus, the offer did not violate the on-sale bar. Judge Alan Lourie’s opinion was joined by Judges Paul Michel and Timothy Dyk. For appellant: James Monroe, Finnegan, Henderson, Farabow, Garrett & Dunner, Washington, D.C. For cross-appellant: Martin Endres, Hedman & Costigan, New York. Intirtool, Ltd. v. Texar Corp. 369 F.3d 1289 Decided May 10, 2004 Reversing a finding of invalidity, the Federal Circuit also reversed the District Court’s ruling that the infringement suit was barred by laches because speculation of possible infringement, absent any notice of actual infringement, is insufficient to trigger a duty to police. A retailer had said that it could obtain a cheaper alternative and asked the patentee to lower its product’s price, which the patentee refused to do. Sometime later the retailer stopped buying from the patentee. Judge Richard Linn’s opinion was joined by Judges Alvin Schall and Alan Lourie. For appellant: Walter Ames, McLean, Va. For appellee: Lea Speed, Baker, Donelson, Bearman, Caldwell & Berkowitz, Memphis. Knoll Pharmaceutical Co. Inc., et al. v. Teva Pharmaceuticals USA Inc. 367 F.3d 1381 Decided May 19, 2004 Reversing summary judgment of invalidity, the Federal Circuit held that evidence of unexpected results can be developed to rebut a prima facie case of obviousness after the patent is granted. The District Court erred in not considering evidence of the beneficial properties of the drug compound even though the test data the patentee relied upon arose from experiments done after the patent issued. Material fact issues also existed as to whether the prior art taught the unexpected results regarding the compound. Senior Judge Glenn Archer and Judges Pauline Newman and Sharon Prost joined in a per curiam decision. For appellants: James Ferguson, Mayer, Brown, Rowe & Maw, Chicago. For appellees: Kenneth Cohen, Goodwin Procter, Boston. Jacobs v. Nintendo of America Inc. 370 F.3d 1097 Decided May 28, 2004 Affirming summary judgment of noninfringement granted to a manufacturer of tilt-sensitive control boxes, the Federal Circuit held that a settlement agreement — in which the patentee granted a supplier an express license and a covenant not to sue relating to the supplier’s making and selling of accelerometers for use, inter alia, in tilt-sensitive control boxes — created an implied sublicense to the supplier’s customers, i.e., the manufacturer, to use those accelerometers in tilt-sensitive control boxes. Judge William Bryson’s opinion was joined by Judges Paul Michel and Richard Linn. For appellant: John Fisher, Fisher, Rushmer, Werrenrath, Dickson, Talley & Dunlap, Orlando, Fla. For appellee: Robert Gunther, Latham & Watkins, New York. Robert A. Matthews Jr. and Vincent P. Kovalick are partners in the IP firm of Finnegan, Henderson, Farabow, Garrett & Dunner, resident in the firm’s Reston, Va., and D.C. offices, respectively. They can be reached at [email protected] and [email protected].

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