In En Banc Ruling, Federal Circuit changes course on product-by-process claims, asserts rights are limited by the process terms in the claim when determining infringement.
In Abbott Labs v. Sandoz, 90 USPQ2d 1769 (Fed. Cir. 2009) (en banc as to product by process issue), Abbott Labs was the exclusive licensee of U.S. Patent 4,935,507 (the “507 patent”), which occasioned litigation in two separate district courts. The Federal Circuit combined the appeals from the judgments of each of those courts and heard the cases together. In one of the cases, the district court had found that the process limitations were substantive such that the literal scope of the claim required showing that the process was followed in order to infringe the product.
While hearing appeals based on summary judgment issues of non-infringement, the Federal Circuit, sua sponte, took en banc the issue of how to construe product-by-process claims for infringement. The Federal Circuit affirmed the lower court’s ruling that product-by-process claims are to be construed under the rule in Atlantic Thermoplastics Co. v. Faytex Corp., 970 F.2d 834 (Fed. Cir. 1992). The Court refused to rely on Scripps Clinic & Research Foundation, which taught that the “correct reading of product-by-process claims is that they are not limited to product prepared by the process set forth in the claims.” Scripps Clinic & Research Foundation v. Genentech, Inc., 927 F.2d 1565, 1583 (Fed. Cir. 1991). In Atlantic Thermoplastics, the patentee asserted that competing, indistinguishable innersoles made by a different process than that outlined in his claim still infringed his patent. The Federal Circuit disagreed and held that product-by-process claims would be limited by the process included in the claim.
To support its decision to rely on Atlantic Thermoplastics, the Federal Circuit relied on numerous Supreme Court cases that noted that “process terms that define the product in a product-by-process claim serve as enforceable limitations.” The Federal Circuit also announced that the U.S. Court of Customs and Patent Appeals and the U.S. Court of Claims agreed with the rule. The Federal Circuit also relied on its sister circuits (the 1st Circuit and 3rd Circuit, as well as a precedential ruling from its predecessor court), to provide support for its decision to utilize Atlantic Thermoplastics. However, the Court merely recited cases, sometimes with parentheticals, without going into the detailed reasoning of the cases to provide a more persuasive argument for its decision.
The Court did provide analysis from Cochrane v. Badische Anilin & Soda Fabrik, (hereinafter “BASF”). Cochrane v. Badische Anilin & Soda Fabrik, 111U.S. 293 (1884). In BASF, the patentee claimed a product artificial alizarine that was produced by a specific process. The artificial alizarine was already known in its natural form, and varied from that natural form depending upon the proportion of alizarine and anthrapurpine in the product. Thus, both alizarine and artificial alizarine were products known in the art. The Supreme Court held that the claim for artificial alizarine was limited to the products made by the process steps in the claim. The Supreme Court asserted that “[E]very patent for a product or composition of matter must identify it so that it can be recognized aside from the description of the process for making it, or else nothing can be held
to infringe the patent which is not made by that process.” 111U.S.at 310.
The Federal Circuit also cited parentheticals to two other Supreme Court cases that showed support for their position and asserted that the PTO followed a similar line of thinking with regard to product-by-process claims. The Federal Circuit also relied on Warner-Jenkinson, which dealt with the doctrine of equivalency, to shore up its reasoning. Specifically, the Federal Circuit noted that the Supreme Court in Warner-Jenkinson Co. v. Hilton Davis Chemical Co., 520 U.S. 17 (1997) held that “[e]ach element contained in a patent claim is deemed material to defining the scope of the patented invention.” 520 U.S. at 19. The Federal Circuit applied that logic to product-by-process claims to assert that each element (including process terms) was material to defining the scope of the patented invention. Thus, the Federal Circuit held that, to the extent it is inconsistent with Warner-Jenkinson as applied to product-by-process claims, the previous rule of Scripps Clinic & Research Foundation was overturned.
The Federal Circuit then dismissed the concerns of the dissent by declaring that the right the dissent “laments” was one that never existed (“the right to assert a product-by-process claim against a defendant who does not practice the express limitations of the claim.”) The Court then upheld the legitimacy of product-by-process claims, stating that its decision only clarified that such claims are not infringed by products made by processes other than the ones claimed.
The Federal Circuit also dismissed the jurisprudence of the Court of Customs and Patent Appeals by citing to a passage from In re Bridgeford, 357 F.2d 679 (CCPA 1966). Specifically, the Federal Circuit referred to a passage from Bridgeford which noted that product-by-process claims were permitted by the PTO to define a patentable product and have developed with the cognizance that courts differ in the interpretation of the claim, with some courts construing such claims to cover only a product made by the particular process set forth in the claim. In its dismissal of this case and the CCPA’s jurisprudence, the Federal Circuit noted that the Supreme Court and every circuit court to consider the issue, had construed product-by-process claims to cover only the product made by the particular process set forth in the claim.
The Federal Circuit noted the import of retaining the product-by-process claim structure, but cautioned that the scope of an invention would be held to how it was explicitly defined in the claims. Specifically, the Court noted that since the inventor chose to claim the product in terms of its process, the courts cannot simply ignore as verbiage the only definition of the invention supplied by the inventor. The Federal Circuit further expounded that, with a product-by-process claim, the only logical way to determine if that claim has been infringed is to compare both products and both processes. The Court explicitly asserts that “[I]f the basis of infringement is not the similarity of process, it can only be similarity of structure or characteristics, which the inventor has not disclosed.” Thus, according to the Federal Circuit, suggesting a different rule for product-by-process claims with known and unknown structures would be unnecessary and logically unsound.
After ruling en banc on the issue of whether processes provided substantive limitations to product claims during litigation, the Federal Circuit analyzed the claims in the 507 patent. However, the remainder of the Court did not participate in this portion of the opinion. In the instant case, the Federal Circuit also rejected the argument that the language “obtainable by” in the product-by-process claims introduced an optional process, such that the claim is not limited to the explicit process terms included in the claim. In support, the Federal Circuit cited again to BASF. The patentee in BASF included similar broad language in its patent claim, only to have it rejected by the Supreme Court. There, the Supreme Court refused to attach import to those words, instead holding that the only identification of the claimed invention was through the processes described in the claim.
The Federal Circuit likened the instant case to BASF, and ruled that Abbott’s claims “do not furnish any test by which to identify the cefdinir crystals except that they are the result of their respectively claimed processes.” The Court noted that, without the process steps, there would be no differentiation between the product-by-process claims and the product claims of the 507 patent. Further, the Court pointed to the specification of the 507 patent, which explicitly used specific language to describe the two processes utilized in the product-by-process claims. The Federal Circuit noted that the language was not open-ended, nor a mere description of the process. The Court asserted that it could not ignore the choice to include that language as part of the claims because it must enforce the ways and terms by which a party chooses to define its invention.
The Federal Circuit observed that the prosecution history of the 507 patent also does not support the patentee’s contention that “obtainable by” offers an optional set of definitional process conditions. First, the Court pointed to the fact that Abbott Labs cancelled a set of process claims that corresponded to the product-by-process claims, because the PTO held that the process claims were obvious in view of the product-by-process claims. The Court states that the cancellation of the process claims is proof of the acceptance of the PTO’s view that the process elements were critical parts of the product-by-process claims. Second, the Federal Circuit notes that, during prosecution, the product-by-process claims were differentiated from a cited reference because of specific process terms in the claims. The Court asserts that terms considered of import during the patentability analysis cannot be jettisoned for an infringement analysis.
Thus, the Federal Circuit held that the mere use of the word “obtainable by” instead of “obtained by” was not sufficient to broaden the scope of the product-by-process claims or evade the limitations of the process terms in those claims. In summary, the Federal Circuit affirmed the District Court’s rulings that the interpretation of product-by-process claims is governed by Atlantic Thermoplastics, and noted that merely using phrases such as “obtainable by” will not broaden the scope of a product-by-process claim or allow it to evade the limitations of its process terms.
Newman’s dissent to the en banc decision limiting the scope of product-by-process claims
In her dissent, Judge Newman objected to both the procedure and the substance of the majority’s en banc decision. With regards to procedure, Judge Newman cited the Federal Circuit’s unexplained disregard for Federal Rules of Appellate Procedure 34 and 35 and the Federal Circuit’s Internal Operating Procedure 14, because the en banc court failed to give proper notice of the impending en banc action, received no briefing, and held no argument. Judge Newman noted that when “ the impact of a sua sponte change of law transcends the interests of the parties to the specific case, notice to the interested public, as well as to the parties, is fundamental to due and fair process.” Judge Newman further disdained the en banc court’s choice to deprive itself “of input concerning the experience of precedent, of advice as to how this change of law may affect future innovation, and of guidance as to the effect on existing property rights.”
With regard to her substantive disagreement with the en banc opinion, Judge Newman advocated a clear distinction between the treatment of product-by-process claims where the products were novel as opposed to such claims where the products were known. Judge Newman began by explaining the reasoning behind product-by-process claims. The “rule of necessity” arose when the courts and the U.S. Patent Office recognized that not all new products could be fully described by their structure because of the state of scientific knowledge or available analytical techniques. It was also recognized that such products could be distinguished from prior art products by reference to how the product was made. Thus, Judge Newman noted that courts and patent administrators established a product-by-process claim, which had taken various forms. The form at issue in the instant case is one in which the product is new and its structure is not fully or readily known, such that it is defined as a product by referring to the process by which it was made.
Judge Newman observed that the product-by-process claim form has been an accepted way to claim products as products, recognized as an exception to the general rule that new products are claimed without reference to the process by which they were made. This exception was specifically recognized in Ex parte Painter in 1891, which noted that the limitations of the English language should not inhibit the rights of an inventor to a patent. Rather, Ex parte Painter held that for a product that cannot be properly defined and discriminated from prior art other than be reference to the process by which it is produced, a product-by-process claim may be utilized. 1891 C.D. 200, 200-01 (Comm’r Pat. 1891). Judge Newman continued by expounding upon the importance of recognizing products in this manner especially as technologies continue to become more complex and cited numerous court decisions from District Courts and the CCPA that recognized that product-by-process claims were properly viewed as product claims. See, e.g. In re Brown, 29 F.2d 873, 874 (D.C. Cir. 1928); In re Butler, 37 F.2d 623, 626 (CCPA 1930); In re Lifton, 189 F.2d 261 (CCPA 1951); Ex parte Pfenning, 65 U.S.P.Q. 577 (Pat. Off. Bd. App. 1945); Ex parte Lessig, 57 U.S.P.Q. 129 (Pat. Off. Bd. App. 1943).
Judge Newman noted that the CCPA confirmed that a product-by-process claim for a novel product was properly construed as a product claim in In re Bridgeford, which was also cited by the en banc opinion. Judge Newman disagreed with the en banc court’s interpretation of In re Bridgeford and offered a more detailed view of the opinion. Specifically, Judge Newman quoted the Bridgeford court to demonstrate that the CCPA held that the product-by-process claims where the product could only be defined by the process by which it was made were defined as a product, not a process. Further, Judge Newman pointed out that the opinion explicitly overruled a prior decision (In re Freeman) that product-by-process claims were coextensive with process claims. Judge Newman observed that the en banc court erred in its interpretation by failing to distinguish product-by-process claims for which the full product scope for invention was justified by the necessity rule.
Judge Newman noted that the CCPA continually affirmed this view in In re Brown, 429 F.2d 531 (CCPA 1972), In re Pilkington, 411 F.2d 1345 (CCPA 1969) and In re Fessman, 489 F.2d 742 (CCPA 1974). Judge Newman also pointed to a well-known treatise,Walker on Patents, published in 2008, which re-affirmed the treatment of product-by-process claims that were justified by the necessity rule as product claims and advocated the necessity of such a treatment.
Judge Newman went on to observe that the en banc court seemingly misunderstood this precedent as it asserted, by citing Hughes, that the CCPA and Court of Claims mandated a rule similar to theirs regardless of whether the product of the product-by-process claim was known or novel. Judge Newman then expanded upon her interpretation of the holding of Hughes, asserting that the Hughes court found the product-by-process claim to be improper because the product could have been described without process steps. However, Judge Newman noted that the Hughes court still reaffirmed that although product-by-process claims may only recite process steps, it is the product which is covered by the claim and not the process steps. Thus, Judge Newman asserted that the en banc court misinterpreted this holding.
Judge Newman also disparaged the en banc court’s misstated precedent of the Court of Claims. Judge Newman distinguished the case which the en banc court cited for support, asserting that the product-by-process claim was directed to a known product. Judge Newman also asserted that the en banc court unfairly disdained the CCPA’s experience with regards to infringement litigation and claimed that the Federal Circuit followed in the footsteps of its predecessor court (the CCPA) in distinguishing product-by-process claims justified from the necessity rule. Specifically, Judge Newman pointed to In re Thorpe, which was also utilized by the en banc court to support the proposition that all product-by-process claims were to be construed as process claims. Judge Newman distinguished In re Thorpe by asserting that the product of the product-by-process claim was not new while stating that the Thorpe court recognized that product-by-process claims are anticipated when the product existed in the prior art even if the product was made by a different process than that claimed.
Judge Newman then cited more recent cases in the biotechnology arena that dealt with a product-by-process claim justified by the necessity rule, with a product that is novel and find that such a claim should be interpreted as a product: Amgen, Inc. v. Chugai Pharmaceuticals Co, 706 F. Supp. 94 (D. Mass 1989); Scripps Clinic & Research Foundation v. Genentech, Inc., 927 F.2d 1565 (Fed. Cir. 1991). Specifically, Judge Newman noted that the Scripps court held that since claims were to be construed the same way for infringement as for validity, infringement could only occur if the two products were the same, regardless of the process by which they had been made.
Judge Newman also discussed the decision from Atlantic Thermoplastics, which was decided by the Federal Circuit a year after the Scripps decision. In that case, the Federal Circuit refused to distinguish between product-by-process claims where the product was either novel or known. The Atlantic court held that the rule of necessity as applied in Scripps was contrary to Supreme Court rulings, but declined to resolve the conflict en banc. Citing Trustees of Columbia University v. Roche Diagnostics GmBH, 126 F. Supp. 2d 16 (D. Mass. 2000), Judge Newman noted that courts have still continued to recognize the rule of necessity after the Atlantic Thermoplastics ruling.
Judge Newman also expressed surprise at the en banc court’s casual misstatement of the PTO’s treatment of product-by-process claims. Judge Newman clarified that the PTO’s operating manual explicitly endorsed the view that product-by-process claims should be considered by the structure implied by the process claims, but not limited to the process itself. MPEP 2113 (8th ed., July 2008 rev.).
Next, Judge Newman considered the Supreme Court cases cited in the en banc opinion, noting that most are directed towards cases where the product in the product-by-process claim was known and thus interpretation of the process claims was appropriate to distinguish over the known product using the novel process. First, Judge Newman discussed the BASF opinion upon which the en banc court relied heavily. Judge Newman disparaged the opinion as providing no support to the position that every product claim that mentions a process step is always restricted to that process, because the product in the BASF claim was known and thus such a ruling relying on the process was consistent with known law.
Judge Newman also detailed the Goodyear Dental cases upon which the en banc court relied. Smith v. Goodyear Dental Vulcanite Co., 93 U.S. (3 Otto) 486 (1876); Goodyear Dental Vulcanite Co. v. Davis, 102U.S. (12 Otto) 222 (1880). The claims in the Goodyear Dental case were not product-by-process claims but rather were written in the then-standard format of incorporating the description in the specification through the phrase “substantially as described.” The Supreme Court held that these claims were for products or manufacture made in a defined manner, and thus could not be separated from the process by which they were created. Further, the Supreme Court held that the products alone would not have been patentable, unless limited to this process. Judge Newman asserted that the en banc court incorrectly took this holding, which was not even explicitly applied to product-by-process claims, to mean that the Supreme Court requires all claims for products whose method of product is set forth in the specification to be infringed only if the method detailed in the specification is utilized.
Judge Newman also distinguished Merrill v. Yeomans, 94 U.S. (4 Otto) 569 (1877), upon which the en banc majority relied for support. Judge Newman detailed that the Merrill case also did not deal with product-by-process claims. The Supreme Court had explicitly found that the invention as a whole was solely directed towards a process, not towards a product. Thus, the claim at suit was necessarily a process claim, not a product claim. Judge Newman held that the en banc court’s assertion that regardless of what the patentee described as his invention, a process step in a product claim would be considered, was inimical on the basis of the Merrill case. The Supreme Court in that case thoroughly considered the specification to determine what was invented, and failed to hold that every product invention must be limited by the process that produced that product.
The en banc majority also relied substantially on Wood Paper Patent, 90 U.S. 566 (1874) as invalidating the Scripps holding. Judge Newman detailed the holdings of the court regarding the two reissued patents at issue in Wood Paper. The Supreme Court held that the claim at issue in the first reissue patent was for a product and not the process by which it was obtained. The Court invalidated the claim on the basis that the product obtained by the new process was not a new product. The Court invalidated the second reissue patent on the basis that it claimed a different invention than that in the original patent. Judge Newman explicitly stated that she had been unable to discern, from either the opinion of the case or the opinion of the en banc court, how the en banc majority could have utilized the Wood Paper Patent case to invalidate the Scripps opinion.
Judge Newman also provided her own analysis of Plummer v. Sargent, 120 U.S. 442 (1887) that the en banc court cited. The claim in the Plummer case was for a new manufacture, substantially as described. Previously, the trial court had found non-infringement of the claim because the defendant had used a different process for achieving the product. The Supreme Court affirmed that the claims were limited to the process described in the specification on the basis that the claims would otherwise be void by reason of anticipation of the prior art cited in the trial court. Judge Newman asserted that the reasoning of the Supreme Court in this case was not based on claim construction but rather based on sustaining the validity of the Plummer patent.
Judge Newman also commented on apparent lack of relevance in the en banc’s use of General Electric Co. v. Wabash Appliance Corp., 304U.S. 364 (1938). Judge Newman observed that the typical claim at issue was directed towards a product, and had no process steps in the claim. Thus, those process steps could not have been construed by the Supreme Court as limiting the scope of the product claim. The Supreme Court held the claim invalid for indefiniteness and noted that the court doubted whether one would ever not be able to describe some aspect of a product’s novelty. However, Judge Newman stated that the Supreme Court’s dictum in this case was insufficient to overturn years of judicial recognition of the rule of necessity.
Judge Newman also noted with surprise the en banc court’s reliance on the decisions of regional circuits that preceded the formation of the Federal Circuit given that court’s disdain for the precedent of the CCPA and Court of Claims. She summarized the cases which the en banc court had noted and expanded the summary to include other pertinent regional court cases. Judge Newman first mentioned Hide-Ite Leather Co. v. Fiber Products Co., 226 F. 34 (1st Cir. 1915), which the en banc court also discussed. In Hide-Ite Leather, the invention was directed towards a product claim with process terms along with a reference to the specification “substantially as described.” The court held that the claim was for a process, not a product.
Judge Newman also analyzed Paeco, Inc. v. Applied Moldings, Inc., 562 F.2d 870 (3rd Cir. 1977). In determining a question of anticipation, the Paeco court stated that the manufacturing process for the product was of utmost importance, and construed the claim in light of that process to preserve the claim’s validity. Judge Newman asserted that the construction of that product claim in light of the process by which it was made was taken out if its proper context by the en banc court.
Judge Newman also cited Dunn Wire-Cut Lug Brick Co. v. Toronto Fire Clay Co., 259 F. 258 (6th Cir. 1919), which emphasized that product claims cover the product regardless of the variations in the method of making the product.
Finally, Judge Newman mentioned Buono v. Yankee Maid Dress Corp., 77 F.2d 274 (2d. Cir. 1935), where the 2nd Circuit held that a claim for a known product made by a novel process would be limited to products produced by that novel process.
In the final section of the dissent, Judge Newman took issue with implications of the en banc court’s change of law. First, she disagreed with the difference in claim construction that the majority allowed with regards to interpretation for validity and for infringement. Second, Judge Newman opposed the en banc majority’s conclusion that the best way to compare compounds for infringement was through analysis of the processes by which the compounds were made. Next, Judge Newman dissented from the application of the en banc court’s opinion to the term “obtainable by.” Finally, she asserted with the majority’s view of the implications of this ruling were misjudged.
Judge Newman took issue with the fact that a patent applicant would have to demonstrate patentability of the product of a product-by-process claim to obtain the patent while infringement of the product-by-process claims would be limited to the infringer’s use of the process steps. Judge Newman provided a barrage of citations that stress that the scope of claims for validity and infringement must be the same. Further, Judge Newman failed to recognize the distinction between the scope of claims for patentability, validity, and infringement. Judge Newman herself cited a Supreme Court case (Plummer) and a 3rd Circuit case (Paeco) in which the courts construed the product-by-process claims to include process terms only the sake of upholding their validity. More research is necessary to clarify this issue and determine if the treatment of claim scope for product-by-process claims differs from that of other claims.
Judge Newman also disagreed with the en banc court’s conclusion that the best way to compare compounds for infringement was through analysis of the processes by which the compounds were made. Judge Newman provided examples, using the subject matter of the invention at issue, of how to determine if two products with unknown structures were identical. Thus, Judge Newman opposed the en banc majority’s simplistic take on novel products whose structures were unknown.
Further, Judge Newman asserted that the application of en banc court’s decision to the interpretation of the term “obtainable by” was incorrect. The majority opinion held that a claim cannot capture a product obtained by or obtainable by processes other than those explicitly recited in the claims. Judge Newman noted that the majority reached this conclusion through the continued misapplication of BASF (the product-by-process claim in BASF was directed towards a known product). Further, Judge Newman disagreed with the majority’s glib dismissal of the applicant’s statement in the file wrapper regarding the heart of his invention. In response, Judge Newman cited Supreme Court and Federal Circuit decisions extolling the importance of utilizing the specification to interpret a claim.
Finally, Judge Newman commented on the misjudgment of the majority opinion’s implications for its ruling. Judge Newman quoted the majority opinions remarks that its ruling enables others to practice a different process than that described in the product-by-process claim to make a product in a better way. Judge Newman countered with the argument that a better product would not be the same product as that claimed in the product-by-process claim. The ruling wasn’t directed towards fostering different processes than those claimed in a product-by-process claim to make better or different products. Rather, the implication of the ruling is directed towards the right to make the same product by making a process change that does not change the product. Judge Newman asserted that majority ensured that right, to the exclusion of the right to patent a novel product that could not be explained except without reference to the process by which it was made.
Significance for Patent Owners
As discussed extensively in Judge Newman’s dissent and set forth in the Feature Comment: The Broadening Chasm Between Claim Interpretation During Litigation and Examination for Product By Process Claims, the implications of Abbot Labs v. Sandoz are many. On one level, the establishment of such a bright line rule will simplify the analysis for purposes of infringement since patent owners will have a single potential claim scope for apparatus claims recited in terms of its manufacturing process. On another level, the implications for existing patent owners and patent applicants are that what was previously thought to be a broad apparatus claim is now greatly narrowed to recite both the product and the process. Additionally, there is now a substantial conflict between how claims are interpreted during examination as compared to how claims are interpreted for purposes of infringement, as well as how claims are interpreted during Markman hearings for purposes of validity and infringement. Therefore, while purportedly simplifying the issue, it remains to be seen if the Federal Circuit will extend this rule in order to ensure that claims have consistent scope for purposes of validity and examination, or whether the Federal Circuit will maintain that such analysis must be distinct for infringement as compared to all other forms of claims analysis.