Jan 27, 2017Legal
Fresh From the Bench: Precedential Patent Cases From the Federal Circuit

Written by Peter Heuser, Schwabe Williamson & Wyatt

In Tinnus v. Telebrands, the Circuit affirms the grant of a preliminary injunction even though the PTAB previously ruled that the claims were invalid due to indefiniteness and obviousness. In Cumberland v. Mylan, the Circuit rejects Mylan’s inventorship argument that when the FDA asked the inventor to justify the presence of a stabilizer in its formulation, this was tantamount to a suggestion to remove the stabilizer.

Tinnus v. Telebrands – The Circuit affirms the grant of a preliminary injunction in favor of a small company that pursued a larger “as seen on TV” infringer selling its product at Bed Bath and Beyond. The patented toy attaches to a hose to simultaneously fill multiple balloons by directing water through a plurality of hollow tubes. The Tinnus product is called BUNCH O BALLOONS. Telebrands’ product is called BALLOON BONANZA.

Operating in parallel with the district court proceeding ‎was Telebrands’ Post Grant Review seeking to invalidate the Tinnus patent. The PTAB found that claim 1 was likely indefinite because the specification and the prior art both fail to provide any objective standard for ‎measuring the scope of “filled” or “substantially filled,” and ‎the specification sets forth no limit on the amount of ‎shaking needed to detach a filled container from the tube. The ‎PTAB also found that a combination of prior art patents would likely render claim 1 obvious.

The magistrate concluded that the accused product infringed because he found that ‎Telebrands’ claim construction argument hinged on the ‎contention that shaking is not required to detach the ‎balloons from the tubes. This finding was accepted by the district court over the objection of Telebrands. The Balloon Bonanza ‎instruction manual tells users to “turn off water and give ‎balloons a shake to release.” The panel finds that these instructions are at least circumstantial evidence of ‎infringement for ‎any claim elements taught by those ‎materials, and a patentee is entitled to rely on circumstantial ‎evidence to ‎establish infringement.‎

Regarding invalidity, the magistrate found that Telebrands’ indefiniteness and enablement arguments failed to raise a substantial question of validity. Telebrands did not object to these findings, so they were accepted by the district court. On appeal, the Circuit holds that the burden on the ‎accused infringer to show a substantial question of invalidity ‎at the preliminary injunction stage is lower than what is ‎required to prove ‎invalidity at trial. According to the opinion, “vulnerability” is the issue at the preliminary injunction stage, ‎while validity is the issue at trial. The § 282 presumption is sufficient to establish a ‎likelihood of success on the validity issue, the burden being on the challenger to come forward with evidence ‎of invalidity, which the patentee must then rebut. If the trial court concludes there is a substantial question concerning validity, it necessarily follows that the patentee ‎has not succeeded in showing it is likely to succeed at trial on the merits of the validity issue.

As to indefiniteness, Telebrands presented the same arguments it did in the PGR, but because Telebrands did not ‎object to the magistrate’s indefiniteness determination, the panel follows 5th Circuit law and reviews the district court’s determination for plain error. With this degree of deference, the panel rejects Telebrands’ argument, concluding that it is difficult ‎to believe that a person of ordinary skill in the art (with an associate’s degree in a ‎science or engineering discipline) who had read the specification and relevant prosecution history would be unable ‎to determine with reasonable certainty when a water ‎balloon is “substantially filled.”‎

As to obviousness, Telebrands advances several arguments ‎on appeal but, again, because Telebrands did not object to the ‎magistrate’s findings relating ‎to obviousness, the panel reviews the district court’s ‎analysis for plain error. The particular problem confronting the ‎inventor here was how to rapidly fill multiple containers ‎with fluid. This is far removed from the problems associated with an endoscopic balloon insertion device for ‎treating obesity, and Telebrands has not demonstrated that the cited art is reasonably pertinent to the problem addressed in the patent.

Finally, Telebrands alleges that it was clear error for ‎the district court to rely on evidence pre-dating the ’066 patent’s issuance in support of its finding of irreparable harm. Evidence of consumer confusion, harm to reputation, loss of goodwill and a 40% price reduction pre-dating the patent is, at the very least, circumstantial evidence demonstrating the possibility of identical harms once the patent issues. ‎Nonetheless, the record contains additional evidence of harm after the patent’s issuance that is sufficient to support a finding of ‎irreparable harm. For example, the Amazon website states that a customer liked ‎the “off brand” Bunch O Balloons product better than the ‎‎“name brand” Balloon Bonanza. This establishes persisting harm to Tinnus’s reputation and tarnishes its status as the innovator in this market.

The magistrate also concluded that the balance ‎of hardships and public interest factors weighed in Tinnus’s favor due to the relative size of the parties and the ‎strong public interest in enforcing valid patents. Telebrands did not appeal these findings so the grant of preliminary injunction is affirmed. ‎

Comment: This case shows the importance of filing objections to all of the magistrate’s findings and recommendations. Because Telebrands did not do so here, it faced the higher “plain error” standard of review as to indefiniteness and obviousness.

Read the full opinion

Cumberland Pharmaceuticals v. Mylan – The Circuit affirms a determination by the district court that FDA personnel should not be named co-inventors to a Cumberland patent covering a second generation of Acetadote®, an antidote for acetaminophen (Tylenol) overdoses. A determination that the invention was not obvious is also affirmed. 

Mylan filed an ANDA, seeking to market its formulation for the drug, and Cumberland filed suit. Mylan admitted infringement but asserted invalidity on two grounds: derivation of the invention from someone at the FDA, and obviousness. According to the opinion, in order for Mylan to prevail on derivation, it had to prove, by clear and convincing evidence, a complete conception of the entire claimed invention that was communicated to Leo Pavliv, the named inventor on Cumberland’s patent. The district court found that Mylan did not carry that burden. 

The panel rules that the evidence supports this finding. In 2002, the FDA was considering Cumberland’s application for permission to market the original EDTA-containing formulation of Acetadote®. The FDA requested justification for the inclusion of EDTA, a known stabilizer, in the product. According to the district court, this is not tantamount to suggesting that EDTA be deleted, which is part of the claimed invention, let alone replacing it with another agent, again, part of the claimed invention. Mylan argued that the request for data to support the inclusion of EDTA required Cumberland to undertake research that inevitably led it to the invention. According to the district court, and now the Circuit, that is not enough to prove derivation.

The panel also affirms the district court’s rejection of Mylan’s obviousness challenge. According to the opinion, a party seeking to invalidate a patent on the basis of obviousness must demonstrate that a skilled artisan would have been motivated to combine the teachings of the prior art to achieve the claimed invention, and that the skilled artisan would have had a reasonable expectation of success in doing so. The district court found that a skilled artisan would not have reasonably expected the claimed formulation to succeed in being stable without a stabilizer like EDTA. The panel rules that that finding is not clearly erroneous.

Read the full opinion

This article was originally published on Schwabe, Williamson & Wyatt's Ideas Fuel Industries Section

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