Sequoia Technology, LLC v. Dell, Inc., Appeal Nos. 2021-2263, -2264, -2265, -2266 (Fed. Cir. April 12, 2023)

In an appeal from a stipulated judgment of noninfringement and invalidity following an adverse claim construction ruling from the U.S. District Court for the District of Delaware, the Federal Circuit addressed the lower court’s construction for “computer-readable recording medium” (CRM), “disk partition,” and “logical volume.”  The Federal Circuit held that the district court’s claim construction for the CRM term was in error and so reversed the district court’s ineligibility determination under 35 U.S.C. § 101.  However, the Federal Circuit agreed with the district court’s claim construction for “disk partition” and “logical volume,” and so affirmed the district court’s noninfringement determination.

The technology at issue is digital storage.  The subject patent explains that servers with important data can use “Redundant Array of Independent Disks” (RAID) to store the same data on multiple hard disks.  The specification further notes how a virtual disk drive—also known as a “logical volume”—can encompass multiple physical disk drives.  A logical volume manager can implement the RAID technique with software to construct a logical volume.  The patent explained that a problem with conventional logical volume managers is that metadata may be too large to manage in huge storage structures and processing speed is too slow when modifying metadata.  When managing a logical volume, the huge size of metadata may delay system booting time and use too much memory.

The subject patent purports to address these problems.  The patent is directed to “a method for managing a logical volume for minimizing a size of metadata and supporting dynamic online resizing,” as well as “a CRM storing a program or data structure for embodying the method.”  The specification explains that using a disk partition as a volume construction unit for the logical volume minimizes metadata.  The subject patent describes a preferred embodiment that has three storage virtualizations: extents, disk partitions, and the logical volume.  Extents are the minimum unit of space allocation to store information and make up disk partitions.  Disk partitions are the minimum unit of the logical volume.  And the logical volume is a union of disk partitions, which can be resized in disk partition units.

Sequoia is the exclusive licensee of the subject patent.  The accused product is Red Hat, Inc.’s software tool that can create and resize logical volumes with units smaller than a whole disk partition, such as extents.

The parties disputed the construction of several claim terms.  Specifically, the parties disputed the construction of “computer-readable recording medium,” “disk partition,” and “logical volume” and, related to the latter two claim construction issues, construed “used or not used” in the context of an extent’s usage in an “extent allocation table.”  The magistrate judge adopted Red Hat’s construction and construed “computer-readable recording medium” to include transitory media (i.e., signals or waves).  He looked to the specification, which discusses “computer readable medium” as “including” a list of items—none of which are transitory, and interpreted that language as leaving the door open for media that could be transitory.  He also relied on Red Hat’s expert’s analysis that a person of ordinary skill in the art would have understood “computer-readable recording medium” to include transitory media—a conclusion the expert reached based on express definitions in thirty-four contemporaneous patents and patent applications.  The district court in turn adopted the magistrate judge’s report and recommendation, finding that the extrinsic evidence was persuasive because no clear language in the specification excluded transitory media.  Because transitory media are ineligible statutory subject matter under 35 U.S.C. § 101, the district court entered a stipulated judgment of invalidity based on its construction of “computer-readable recording medium.”  The district court also adopted Red Hat’s construction for “disk partition,” “logical volume,” and the phrase “used or not used.”  Following claim construction, the parties stipulated to final judgment that the accused products do not infringe the subject patent.

On appeal, Sequoia challenged the district court’s constructions of (1) “computer-readable recording medium,” underlying the court’s judgment of ineligibility under § 101; and (2) “disk partitions,” “logical volumes,” and “used or not used,” underlying the court’s finding of noninfringement.

As to the district court’s construction of “computer-readable recording medium,” the Federal Circuit found that the district court erred.  The Federal Circuit reasoned that the language is not directed to a transient signal, but rather to a non-transient storage medium.  The Federal Circuit also found that the specification further supported this construction because it disclosed only non-transitory media.  In doing so, the Federal Circuit rejected Red Hat’s argument that the specification states that CRM “includ[es]” non-transitory media, and thus its definition is open-ended and could include transitory media.  The Federal Circuit emphasized that the use of a term denoting a nonexhaustive list does not eviscerate the court’s obligation to construe terms in the context of the entire patent.  According to the Federal Circuit, the context made clear that the term “computer-readable recording medium” cannot encompass transitory media.  The Federal Circuit’s decision rested solely on the intrinsic evidence, and the court further found that the district court erred in considering Red Hat’s expert testimony, which was both inconsistent with the intrinsic evidence and also based on different express definitions of CRM in patent specifications directed to different inventions.

Turning next to the terms “disk partition” and “logical volume” and whether the subject patent can allocate less than an entire disk partition to a logical volume, the Federal Circuit held that it cannot and that the intrinsic evidence supported constructing a logical volume using only entire disk partitions.  As such, the Federal Circuit agreed with the district court’s claim constructions for “disk partition” and “logical volume,” and affirmed the district court’s determination of noninfringement.

The opinion can be found here.

By Mario E. Delegato

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Healthier Choices Management Corp. v. Philip Morris USA, Inc., Appeal No. 2022-1268 (Fed. Cir. Apr. 12, 2023)

In this case, the Federal Circuit reversed a decision from the Northern District of Georgia dismissing appellant Healthier Choice’s patent infringement complaint against Philip Morris, denying leave to amend, and awarding Philip Morris attorneys’ fees under 35 U.S.C. § 285.  Healthier Choice’s asserted patent was directed to an electronic cigarette or pipe requiring “a combustion reaction” in the reservoir, and Philip Morris contended that its accused IQOS system, marketed as a “heat-not-burn” system, could not meet the “combustion” limitation in the claims.  In support, Philip Morris pointed to its own self-reported “heat-not-burn” materials submitted to the Food and Drug Administration, which Healthier Choice had attached to its original complaint and which the district court had relied on in granting dismissal for failure to state a claim.  However, both Healthier Choice’s original complaint and proposed amended complaint had contained detailed allegations—including as supported by an expert report with its proposed amended complaint—that its own testing showed that the IQOS system in fact involved a combustion reaction within the meaning of the claims.

In reversing the district court’s decision, the Federal Circuit provided a detailed analysis of Eleventh Circuit case law concerning the effect of statements in exhibits attached to complaints, and when allegations in the complaint contradicting or disavowing such statements should be read to control for purposes of a dismissal analysis.  The Court concluded that the original complaint allegations were plainly concrete and specific enough to overcome any contradictory statements in the attached materials, and that the proposed amended complaint—which omitted any reference to the FDA materials and incorporated expert testimony supporting Healthier Choice’s contentions—presented an even stronger case against dismissal.  The Federal Circuit thus reversed the dismissal and vacated the district court’s award of attorneys’ fees, but stopped short of reassigning the case to a different judge on remand as requested by Healthier Choice.

The opinion can be found here.

By Jason A. Wrubleski

UCB, Inc. v. Actavis Laboratories UT, Inc., Appeal No. 2021-1924 (Fed. Cir. Apr. 12, 2023)

In a consolidated appeal from two rulings from the District Court of Delaware, the Federal Circuit addressed how to evaluate anticipation when a patent-in-suit and the prior art cover overlapping ranges, and when commercial success can overcome a presumption of obviousness.  The patent-in-suit claimed a range of ratios, and the prior art disclosed an overlapping range of ratios.  The district court had applied an analytical framework used when prior art discloses a point within a claimed range, not the framework used when prior art discloses a range overlapping a claimed range.  The Federal Circuit found this to be legal error, and reversed the district court’s finding of anticipation.  However, the Federal Circuit affirmed the district court’s finding that the patent-in-suit was obvious in light of prior art.  A patent claiming a range is presumed obvious when prior art claims an overlapping range.  To attempt to overcome this presumption, patentee UCB argued, among other things, that the commercial success of products embodying the patent-in-suit meant the invention was not obvious.  The district court and the Federal Circuit disagreed, finding that UCB could not show a nexus between the patent-in-suit and the commercial success of the product, as necessary for commercial success to overcome the presumption of obviousness.

The opinion can be found here.

By Tyler Hall

Sanderling Mgmt., Ltd. v. Snap Inc., Appeal No. 2021-2173 (Fed. Cir. Apr. 12, 2023)

In another case concerning Section 101, the Federal Circuit affirmed a district court dismissal of a litigation on the basis that the patents claimed ineligible subject matter.  The patents concerned a “computerized method of distributing a digital image processing function.”  The Court, agreeing with the district court, held that “the asserted patents are not directed to a specific improvement in computer functionality but, instead, to the use of computers as a tool; here, a tool to identify when a condition is met and then to distribute information based on satisfaction of that condition.”  Sanderling argued that the district court erred in reading the claims at too high a level of distraction.  The Federal Circuit disagreed, distinguishing McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299, 1313 (Fed. Cir. 2016).  Sanderling also complained that the district court failed to construe claim terms.  But the Court held that “claim construction is not an inviolable prerequisite to a validity determination” and that “if claims are directed to ineligible (or eligible) subject matter under all plausible constructions, then the court need not engage in claim construction before resolving a Section 101 motion.”  The Court further found that there were no fact disputes in relation to the second step of the analysis, and that the district court did not err by dismissing the case with prejudice, without granting leave to amend.

The opinion can be found here.

By Nika Aldrich

Arbutus Biopharma Corporation v. ModernaTX, Inc., Appeal No. 2020-1183 (Fed. Cir. Apr. 11, 2023)

In an appeal from an inter partes review final written decision finding a patent invalid as anticipated, the Federal Circuit affirmed.  Arbutus’s U.S. Patent No. 9,404,127 (the ’127 Patent), naming three inventors, was directed to stable nucleic acid-lipid particles.  Moderna filed a petition for inter partes review, relying on a different patent (the ’069 Patent) that was also owned by Arbutus.  That patent names five inventors, including the three inventors of the challenged patent.  While the ’127 Patent was filed during the pendency of the ’069 Patent, it does not claim priority to it.  Certain publications were also incorporated by reference into both patents.  Other publications were incorporated by reference into the ’069 Patent.  The main issue was whether a claim limitation concerning 95% of particles having a non-lamellar morphology was inherently disclosed in the ’069 Patent.  The PTAB found that, based on the varied disclosures of the ’069 Patent and its incorporated references, the 95% limitation was inherently disclosed.  The Federal Circuit agreed that the ’069 Patent disclosure included the art that was incorporated by reference into it.  The Court also agreed that the ’069 Patent inherently disclosed the 95% limitation.  The Court disagreed that there was “only a probability” that the limitation would “result from controlling several variations of formulations and processes.”  Rather “[t]his is a case where there are only a limited number of tools—five formulations and two processes—that a person skilled in the art would have to follow.”  The Court also found that other claim limitations were inherently disclosed in the ’069 Patent.  Of note, the Court addressed on oft-litigated issue concerning ranges, and when a disclosure of a single value or a range in prior art anticipates a range claimed in a patent.

The opinion can be found here.

By Nika Aldrich

This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.