Latest Federal Court Cases – October 2023 #3 | Schwabe, Williamson & Wyatt PC
Cyntec Company, Ltd. v. Chilisin Electronics Corp., Appeal No. 2022-1873 (Fed. Cir. Oct. 16, 2023)
In this week’s Case of the Week, the Federal Circuit reversed and remanded a California district court’s judgment as a matter of law (JMOL) that the asserted patents had not been shown to be obvious, and held that factual disputes on obviousness should have gone to the jury. Additionally, the Federal Circuit vacated a significant lost profits damages award to plaintiff Cyntec, finding that the district court abused its discretion in denying defendant Chilisin’s Daubert motion to exclude Cyntec’s damages expert’s testimony.
The patents at issue, U.S. Patent Nos. 8.922,312 and 9,481,037, relate to molded “chokes” commonly found in modern electronics with batteries or power supplies, which are a type of inductor used to eliminate undesirable signals in a current. The patents address issues that arise from the high temperatures conventionally required to manufacture molded chokes, which could lead to “melting wire insulation, oxidizing components,” and a risk of short circuits. Cyntec’s patents purported to solve these problems by avoiding high-temperature annealing, “using a first magnetic powder and a second magnetic powder, with the particles of the first magnetic powder being larger and harder than those of the second magnetic powder.”
Cyntec filed suit against Chilisin in the district court alleging infringement of the ’312 and ’037 patents. The district court rejected Chilisin’s motion for JMOL of non-infringement; granted Cyntec’s motion for JMOL of nonobviousness over the prior art; and rejected Chilisin’s Daubert argument that Cyntec’s damages expert relied on inaccurate evidence when calculating damages. The jury returned a verdict in favor of Cyntec, and the district court enhanced the jury’s damages for a total award of about $4.6 million in lost profits and over $950,000 in reasonable royalties. Chilisin appealed.
On appeal, the Federal Circuit first addressed the district court’s grant of JMOL to Cyntec on the issue of nonobviousness. The Federal Circuit found that the district court erred by declining to give certain factual disputes to the jury to decide. Specifically, the Federal Circuit reasoned that “whether a skilled artisan would have been motivated to combine references is [] a fact question that would ordinarily be reserved for a jury.” The Federal Circuit more broadly found that Chilisin presented enough evidence for a reasonable jury to find the asserted claims obvious. The Federal Circuit reversed and remanded the district court’s JMOL of nonobviousness. However, the Federal Circuit agreed with the district court’s denial of Chilison’s motion for JMOL of non-infringement, leaving intact the jury’s infringement finding should the claims be found non-obvious on remand.
On the issue of damages, the Federal Circuit reviewed precedent regarding the exclusion of unreliable expert damages testimony, and found that the district court abused its discretion in admitting Cyntec’s expert’s lost profits calculations. Specifically, the Federal Circuit found the expert’s testimony similar to testimony at issue in Power Integrations v. Fairchild Semiconductor International, Inc., 711 F.3d 1348, 1357 (Fed. Cir. 2013) and Niazi Licensing Corporation v. St. Jude Medical S.C., Inc., 30 F.4th 1339, 1343–44 (Fed. Cir. 2022), insofar as the damages expert’s calculations were based on speculative data by including sales of noninfringing products and services. The Federal Circuit reversed the district court’s denial of Chilisin’s Daubert motion and vacated the lost profits award, but left undisturbed the reasonable royalty award, which was not at issue on appeal.
The case was remanded to the Northern District of California for further proceedings.
The opinion can be found here.
By Brittani Gambrell
ALSO THIS WEEK
ABS Global, Inc. v. Cytonome/ST, LLC, Appeal No. 2022-1761 (Fed. Cir. Oct. 19, 2023)
In this case, the Federal Circuit reinforced the long-standing presumption that in patent claiming, use of the indefinite article “a” or “an” should be construed to mean “one or more.” The case concerned an inter partes review decision on a patent directed to microfluidic devices, which are devices that employ small channels to direct the movement of fluids. All of the challenged claims required “an inlet configured to receive a sample stream” and “a fluid focusing region configured to focus the sample stream,” and the Patent Trial and Appeal Board had determined that the “fluid focusing region” must be configured to focus only a single sample stream. Because the asserted prior art disclosed only a fluid-focusing region for focusing multiple streams or a split stream, the Board upheld all challenged claims.
The Federal Circuit disagreed, relying both on the presumption that (at least in open-ended “comprising” claims) “a” or “an” means “one or more,” and also on the patent specification’s express statement to similar effect. The Court also collected authority for the proposition that “[t]he reference-back ‘the’ language takes its meaning from the meaning of the antecedent, so if ‘a sample stream’ has a plural-allowing meaning, so does the reference-back ‘the sample stream’ phrase.” The Court rejected multiple arguments that the “double presumption” should be overcome in this instance, for example finding that a limitation reciting introduction of a separate fluid “with respect to a centerline of the sample stream” “presumptively covers one or more centerlines of one or more sample streams.” Accordingly, “a fluid focusing region configured to focus the sample stream” was broad enough to cover a region focusing multiple streams as described in the prior art.
Based on its reversal of the Board’s claim construction, the Court reversed the Board’s patentability finding as to some challenged claims; vacated as to others; and remanded for further proceedings.
The opinion can be found here.
By Jason A. Wrubleski
Corephotonics, Ltd. v. Apple Inc., Appeal Nos. 2022-1340, -1341, -1455, -1456 (Fed. Cir. Oct. 16, 2023)
In an appeal from an inter partes review decision that found patents unpatentable as obvious, the Federal Circuit affirmed on two procedural grounds, but remanded for further consideration on a narrow issue concerning analogous art. Corephotonics alleged that the Board erred in allowing Apple to fix a mistake Apple made in its contention regarding prior art references as analogous art. It also argued that the Board relied on an analogous art finding that differed from Apple’s original contention. The Federal Circuit held that the Board had made no procedural errors. First, the Federal Circuit held that the Board properly allowed Apple to clarify its analogous art argument in its reply to the patent owner’s response because Apple’s clarification did not “unfair[ly] surprise” Corephotonics. Further, the Court held there was no procedural error in the finding that the first prior art reference was analogous art because the finding was supported by substantial evidence. However, the Federal Circuit did remand the Board’s obviousness determination, and required the Board to better explain why the second prior art reference was analogous art and why this contributed to a final decision of obviousness. The remand for an improved explanation was due to the Board writing that the prior art reference disclosed cameras with different fields of view, however, the reference actually disclosed different points of view. Whether this difference in wording was a mere “typo,” as Apple argues, or a substantive difference that will alter the Board’s obviousness conclusion, will be determined on remand.
The opinion can be found here.
By Ann Bernert
