IP Law Daily Case properly dismissed as moot where patent’s original claims were cancelled and new claims were not asserted
Friday, April 22, 2016

Case properly dismissed as moot where patent’s original claims were cancelled and new claims were not asserted

By Cheryl Beise, J.D.

The federal district court in Houston, Texas, did not err in dismissing an infringement suit brought by Target Training International, Ltd. (TTI) against Extended DISC North America, Inc. (EDNA) on the ground of mootness because all of the asserted claims of TTI’s patent-in-suit had been cancelled during an ex parte reexamination proceeding, the U.S. Court of Appeals for the Federal Circuit has held. Although the USPTO confirmed 30 newly added claims during the reexamination, TTI failed to amend its infringement contentions to assert those claims in the instant case (Target Training International, Ltd. v. Extended DISC North America, Inc., April 22, 2016, O’Malley, K.). The appeals court also affirmed dismissal of a second infringement action TTI filed against Extended DISC International Oy Ltd. (EDI), a Finnish company affiliated with EDNA. The district court dismissed the case for lack of personal jurisdiction, but the Federal Circuit affirmed on the ground of mootness (Target Training International, Ltd. v. Extended DISC International Oy Ltd., April 22, 2016, O’Malley, K.).

TTI is in the business of producing and providing individual employee assessments throughout the United States. TTI is the assignee and owner of U.S. Patent No. 7,249,372 (the ’372 patent), issued on July 24, 2007, and entitled “Network Based Document Distribution Method.” EDI is a Finnish company that produces and provides personality reports through its “Extended DISC System.” Through a franchise agreement, EDI had granted its Texas-based affiliate EDNA exclusive rights to distribute EDI’s product in the United States and Canada.

In September 2010, TTI filed suit against EDNA, alleging infringement of claims 1, 2, and 5-11 of the ’372 patent. In July 2011, TTI filed a second infringement complaint against EDI, after learning through discovery in the EDNA matter of EDI’s ownership interest in, and exclusive franchise arrangement with, EDNA.

In January 2011, EDI filed a request for ex parte reexamination of all of the original claims of the ’372 patent. The PTO initiated reexamination proceedings and issued a final office action rejecting all claims as invalid on the ground of anticipation on January 6, 2012. The PTAB affirmed PTO’s action and the Federal Circuit summarily affirmed. On January 12, 2015, the PTO issued a reexamination certificate cancelling claims 1-11, but issuing 30 new claims—claims 12 through 41—and confirming those claims as patentable.

Both district court actions—which had been stayed pending the issuance of the PTO’s certificate of reexamination—were reopened. In the EDI case, the court granted EDI’s Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction.

In the EDNA case, EDNA moved for summary judgment of noninfringement and invalidity, and, alternatively, moved to dismiss the action as moot. TTI filed a notice with the court informing it of the reexamination certificate, stating that 30 new claims were added during the reexamination, and requesting a scheduling conference to discuss setting any additional or modified deadlines. TTI then moved to strike EDNA’s motion for summary judgment as untimely. The court never responded to TTI’s request for discovery conference, but ordered TTI to provide a substantive response to the motion for summary judgment. In its response, TTI argued that the district court was required to analyze whether the new claims of the ’372 patent were “substantively identical” to the cancelled claims before they could be dismissed. EDNA countered that, because the new claims were not included in TTI’s original infringement contention disclosures, they should not be considered part of the current suit. On June 1, 2015, the court granted EDNA’s motion to dismiss the case as moot, and thus did not address the motion for summary judgment. TTI appealed.

The Federal Circuit first affirmed the district court’s dismissal of the original patent claims, which were found to be anticipated and were cancelled as a result of the reexamination. In Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330, 1340 (Fed. Cir. 2013), the Federal Circuit made clear that “when a claim is cancelled, the patentee loses any cause of action based on that claim, and any pending litigation in which the claims are asserted becomes moot.”

With regard to the 30 claims added during reexamination, TTI argued that the district court erred in cancelling them without first examining them and making a substantive comparison of the scope of the original and newly added claims to determine whether the newly added claims are “substantially identical” to the original claims. Fresenius confirms that the reexamination statute preserves the patentee’s “ability to enforce the patent’s original claims to those claims that survive reexamination in ‘identical’ form.” Id. at 1339.

The Federal Circuit agreed with TTI’s characterization of Fresenius. However, the court pointed out that the issue was not about the scope of the 30 new claims, but “whether the district court appropriately dismissed the case when TTI failed to amend its infringement contentions to assert infringement of any of the thirty newly added claims.” After examining the record in the case, the Federal Circuit concluded that TTI never actually asserted the newly added claims in the existing litigation.

TTI argued that the district court erred in failing to permit TTI to amend its infringement contentions to assert the newly added claims. However, TTI never stated that it had requested or moved for leave to amend its infringement contentions or that the district court ever had denied such a request or motion. At oral argument, TTI’s counsel conceded that there was nothing preventing it from making a formal motion leave to amend its infringement contentions. Although TTI stated that it refrained from making a request to amend because it was waiting for the court’s response to its request for a scheduling conference, TTI knew when the court denied its motion to strike EDNA’s motion for summary judgment that there was “not a scheduling order in place,” the appeals court pointed out. “A district court has no obligation to provide relief not sought,” the court said.

Citing Senju Pharm. Co. v. Apotex Inc., 746 F.3d 1344 (Fed. Cir. 2014), TTI contended that affirming the dismissal of the proceedings potentially could preclude it from asserting the newly added claims in a future action. The Federal Circuit disagreed, noting that Senju was distinguishable, in particular because, unlike inSenju, the district court in the present case never reached a judgment on the merits. Moreover, the Federal Circuit has held that in patent cases, res judicata does not apply to bar the assertion of new claims acquired during the pendency of a litigation that could have been, but were not, litigated or adjudicated in the action. Thus, TTI “would be free to commence a new litigation asserting infringement of the newly added claims, and could even request the incorporation of discovery from the case that was dismissed so as not to waste judicial resources,” the court said.

The district court’s dismissal of EDNA case on the ground of mootness was affirmed. Because the newly added claims were not at issue in the ETI case, the Federal Circuit also affirmed dismissal of that case on the ground of mootness and did not reach the issue of personal jurisdiction.

The cases are Nos. 2015-1873 and 2015-1908 and 2015-1856.

Attorneys: Christine Marie Lebron-Dykerman, Edmund J. Sease, and Robert Scott Johnson (McKee, Voorhees & Sease, P.L.C.) for Target Training International, Ltd. Stephen F. Schlather, John J. Edmonds, and Shea Neal Palavan (Collins, Edmonds, Pogorzelski, Schlather & Tower PLLC) for Extended DISC North America, Inc. Justin Carl Pfeiffer and Dona Szak for (Ajamie LLP) for Extended DISC International Oy Ltd.

Companies: Target Training International, Ltd.; Extended DISC North America, Inc.; Extended DISC International Oy Ltd.

MainStory: TopStory Patent FedCirNews

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