IP Law Daily Granting summary judgment after USPTO’s cancellation of card-shuffling machine claims was error
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Wednesday, May 2, 2018

Granting summary judgment after USPTO’s cancellation of card-shuffling machine claims was error

By Peter Reap, J.D., LL.M.

The federal district court in Las Vegas erred in granting summary judgment to patent infringement defendant DigiDeal as to certain cancelled claims (upon reexamination by the USPTO) of U.S. Patent No. 7,523,935 because suits based upon cancelled claims must be dismissed for lack of jurisdiction, according to the U.S. Court of Appeals for the Federal Circuit. Further, the district court erred by failing to determine whether the new and amended claims that emerged from the USPTO’s reexamination of plaintiff SHFL Entertainment’s asserted ‘935 and U.S. Patent No. 6,651,982, both related to card shuffling machines, are substantially identical to the claims originally asserted in the action. Thus, the grant of summary judgment to DigiDeal on those claims was vacated and the case remanded for the court to make that determination (SHFL Entertainment, Inc. v. DigiDeal Corporation, May 2, 2018, Hughes, T.).

SHFL supplies gaming products and owns the ’935 and ’982 patents, which share a common specification that discloses card shuffling devices and methods of randomizing cards using the shuffling devices. DigiDeal similarly manufactures and markets gaming equipment. SHFL sued DigiDeal for patent infringement, alleging that DigiDeal infringed and continued to infringe the ’935 and ’982 patents by "using and offering to sell" its DigiShuffle product.

While the litigation was pending, the USPTO granted DigiDeal’s requests for ex parte reexaminations of the ’935 and ’982 patents. The district court entered a stay of the litigation and an agreed-to preliminary injunction, which provided that "[d]uring the pendency of the stay of this action" DigiDeal would not make the accused product and would remove any currently operating DigiShuffle.

The USPTO initially found all asserted claims of the ’935 patent invalid as obvious, and all asserted claims of the ’982 patent invalid as anticipated or obvious. In response, SHFL cancelled all asserted claims of the ’935 patent and added a new claim 15 to the patent, and amended all asserted claims of the ’982 patent and added two new claims 52 and 53 to the patent. The USPTO then issued reexamination certificates for the ’935 patent after cancelling asserted claims 1–2, 9–11, and 14 as requested and confirming new claim 15 as patentable, and for the ’982 patent after confirming asserted claims 1–3, 42–44, and 46 in their amended form and new claims 52 and 53 as patentable.

The district court then lifted the stay and SHFL continued to assert the originally asserted claims of the ’935 and ’982 patents, and additionally asserts claim 15 of the ’935 patent and claims 1–3, 42–44, 46, and 52–53 of the ’982 patent—claims that emerged from the reexaminations. The district court eventually granted DigiDeal’s motion for summary judgment and vacated the injunction. SHFL appealed.

The originally asserted claims of the ‘935 patent were cancelled as a result of the reexamination, and the district court found the action moot as to those claims. Although the appellate court agreed with that determination, Suits based on cancelled claims must be dismissed for lack of jurisdiction, the court said. Mootness is a jurisdictional issue, and federal courts have no jurisdiction to hear a case that is moot, where no actual or live controversy exists. Thus, the Federal Circuit vacated the entry of summary judgment as to the cancelled claims of the ’935 patent, and remanded for the district court to dismiss the claims from the action for lack of jurisdiction.

The appellate court then turned to new claim 15 of the ’935 patent, and the new claims 52–53 and amended claims 1–3, 42– 44, and 46 of the ’982 patent, claims that emerged from the reexaminations of the two patents. The district court merely addressed the originally asserted claims of the ’982 patent. Relying on Fresenius, the district court found the case moot as to those claims because the claims were amended to cure invalidity. Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330 (Fed. Cir. 2013).

The district court’s reliance on Fresenius was misplaced because Fresenius involved only cancelled claims, the appellate court reasoned. Section 307(b) makes clear that "[a]ny proposed amended or new claim determined to be patentable and incorporated into a patent following a reexamination proceeding will have the same effect as that specified in section 252 for reissued patents on the right of" any accused infringer. 35 U.S.C. § 307(b). Section 252 in turn provides that "in so far as the claims of the original and reissued patents are substantially identical, such [reissue of the original patent] shall not affect any action then pending nor abate any cause of action then existing . . . " Id. § 252. Read conjunctively, amended or new claims incorporated into reexamined patents do not automatically abate—let alone moot—any pending action against the accused infringer based on the patents if the amended or new claims are "substantially identical" to the original claims.

Thus, the question of whether SHFL’s case was moot as to the new and amended claims that emerged from the reexaminations of the two patents necessarily depended on whether those claims are substantially identical to the originally asserted claims. The district court, however, failed to undertake that evaluation. Therefore, the grant of summary judgment as to those claims was vacated and the dispute remanded.

The case is No. 2016-2705.

Attorneys: Kimball Richard Anderson (Winston & Strawn LLP) for SHFL Entertainment, Inc.

Companies: SHFL Entertainment, Inc.; DigiDeal Corp.

MainStory: TopStory Patent FedCirNews

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