IP Law Daily Infringement, invalidity findings on ‘cochlear stimulator’ patents affirmed in part, reversed in part
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Thursday, November 17, 2016

Infringement, invalidity findings on ‘cochlear stimulator’ patents affirmed in part, reversed in part

By Mark Engstrom, J.D.

A federal district court did not err in finding that one claim of a patent on a method for testing an implantable cochlear stimulator was infringed and two claims of a patent on a multichannel implantable cochlear stimulator were invalid for indefiniteness, the U.S. Court of Appeals for the Federal Circuit has ruled. However, the lower court did err in finding that a separate claim of the infringed patent was indefinite. The Federal Circuit thus affirmed in part and reversed in part the judgment of the district court. In addition, the circuit court vacated and remanded the lower court’s willfulness finding in light of Halo Electronics, Inc. v. Pulse Electronics, Inc., 136 S.Ct. 1923 (2016), and concluded that the appellate court lacked jurisdiction over the damages issue (Alfred E. Mann Foundation for Scientific Research v. Cochlear Corp., November 17, 2016, Hughes, T.).

The Alfred E. Mann Foundation for Scientific Research sued Cochlear Corporation and Cochlear Ltd. for the infringement of U.S. Patent Nos. 5,609,616 (titled "Physician's testing system and method for testing implantable cochlear stimulator") and 5,938,691 (titled "Multichannel implantable cochlear stimulator"). The patents were directed to an ear implant with telemetry functions for testing purposes. Generally, the patents described a two-part system that included: (1) an external wearable system with a wearable processor and headpiece and (2) an internal implantable cochlear stimulator. The Foundation owned both patents and formed Advanced Bionics to manufacture the implants. Advanced Bionics was added to the suit as an involuntary plaintiff.

After jury and bench trials on separate issues, the district court entered a judgment of infringement on claim 10 of the ’616 patent. It also entered a judgment of invalidity on claim 1 of the ’616 patent and claims 6 and 7 of the ’691 patent. Finally, the district court granted judgment as a matter of law (JMOL) to Cochlear on its post-trial motion for a finding of no willful infringement and a new trial on damages. Both parties appealed.

Non-infringement. The district court denied Cochlear’s motion for JMOL of non-infringement of claim 10 of the ’616 patent. On appeal, Cochlear argued that: (1) the district court erred in its construction of claim 10 and (2) even under that construction, Cochlear’s accused system did not infringe.

According to Cochlear, claim 10 required that an infringing system had to display the voltage between two electrodes. The voltage measurements had to be included in the processed status-indicating signals, Cochlear argued, because part (i) of the claim stated that "processed status-indicating signals … convey information … including the measurements made within the implanted stimulator." The Federal Circuit disagreed. Parts (g) and (i) together made it clear that the status-indicating signals, processed or not, had to convey information about the voltage measurements; they did not require that the voltage information be displayed, according to the court.

Cochlear also argued that the "whereby" clause in part (j) was material to patentability such that the voltage had to be made available for display. However, the Federal Circuit agreed with the district court, which found that the "whereby" clause merely provided a more illustrative expression of the "displaying the status-indicating signals" limitation, and provided no additional restrictions on the claim.

Finally, Cochlear’s proposed construction conflicted with the patent specification and the prosecution history. In light of the intrinsic evidence, the Federal Circuit rejected Cochlear’s proposed claim construction.

Indefiniteness. The district court entered a judgment of invalidity for indefiniteness on claim 1 of the ’616 patent and claims 6 and 7 of the ’691 patent. To satisfy the definiteness requirement, a means-plus-function claim—in this case, the "means for generating data indicative of the audio signal"—required sufficient disclosure of the underlying structure—in this case, a microprocessor that implements a logarithmic conversion algorithm to generate data indicative of an audio signal.

The Federal Circuit agreed with the district court, which found claims 6 and 7 indefinite because the specification of the ’691 patent failed to disclose the requisite algorithmic structure to perform the "means for generating data indicative of the audio signal" function. More specifically, the claims were indefinite because: (1) the ’691 patent did not disclose where the logarithmic conversion function occurred and (2) the logarithmic conversion function could be implemented through multiple logarithmic algorithms, none of which the specification described.

The Foundation argued that a person of ordinary skill in the art would know about the logarithmic conversion functions that could be implemented, but that fact did not create structure in a patent that had none to begin with, the Federal Circuit explained.

In claim 1 of the ’616 patent, the limitation "external processor means … for … processing the status-indicating signals to derive information therefrom" was a means-plus-function limitation, and again, the structure was a microprocessor.

The district court rejected the Foundation’s argument that the patent disclosed a two-step algorithm in which: (1) the microprocessor accepts signals that were representative of voltage and (2) the microprocessor applies Ohm’s law to convert the voltage to an impedance value. The district court found claim 1 indefinite because the patent did not identify Ohm’s law and there were multiple ways of calculating impedance. The Federal Circuit disagreed.

The specification disclosed that: (1) voltage and current were both measured and (2) those values were associated with the resulting "status-indicating signal." Moreover, a person of ordinary skill would know to apply Ohm’s law to voltage and current to yield impedance values, and the specification disclosed that impedance was calculated based on voltage and current, the court explained.

Ultimately, the Federal Circuit concluded that the defining structure was adequate to render the bounds of the claim understandable to a person of ordinary skill in the art. For that reason, it reversed the district court’s indefiniteness finding on claim 1 of the ’616 patent.

Willfulness. A jury found that Cochlear had willfully infringed claims 1 and 10 of the ’616 patent and claims 6 and 7 of the ’691 patent. The district court set aside that verdict and granted JMOL of no willful infringement to Cochlear. The district court found that: (1) a reasonable jury could not have found that the objective prong of the Seagate inquiry was established by clear and convincing evidence and (2) the Foundation failed to satisfy Seagate’s subjective prong because it failed to provide pre-suit notice regarding the ’691 patent. Finally, the district court found that Cochlear had responded with reasonable infringement defenses.

In Halo Electronics, the Supreme Court rejected the Seagate test for willful infringement as "unduly rigid" and as "impermissibly encumber[ing] the statutory grant of discretion to district courts." Significantly, the Court rejected the test’s clear-and-convincing standard of proof, its tripartite framework for appellate review, and its requirement that objective recklessness be found in every case before a district court could award enhanced damages.

The Foundation argued that, in light of Halo, the Federal Circuit should vacate and remand the district court’s grant of JMOL on the issue of willfulness. Because the Federal Circuit agreed, it ordered the district court to consider, under Halo’s preponderance of the evidence standard, whether Cochlear’s infringement constituted an egregious case of misconduct that exceeded typical infringement and thus merited enhanced damages under §284. If it did, the district court had to determine the appropriate extent of the enhanced damages.

New trial. For claim 10 of the ’616 patent, the district court vacated the jury’s damages award and ordered a new trial on damages. On appeal, the Foundation argued that the district court had abused its discretion in granting Cochlear’s motion for a new trial, but the Federal Circuit found that it lacked jurisdiction to consider that issue.

Concurence and dissent. Judge Newman wrote separately to concur with the majority’s finding that claim 10 of the ’616 patent was valid and infringed, that claim 1 of the ’616 patent was valid, and that, in view of the changed law, remand was appropriate on the issue of willful infringement.

Nevertheless, Judge Newman did not share the court’s view that claims 6 and 7 of the ’691 patent were invalid for indefiniteness. Because the district court’s finding of indefiniteness was contrary to the testimony of the experts for both sides, the judge dissented from the majority decision in that regard.

Finally, Judge Newman did not think that the district court’s vacatur of the jury’s verdict on damages—and the corresponding order for a retrial on damages—was immune from appellate review.

The case is No. 2015-1580; 2015-1606; 2015-1607.

Attorneys: Thomas M. Peterson, Michael John Lyons, Ehsun Forghany, Jason Evan Gettleman, Corey Ray Houmand, Jacob Joseph Orion Minne, Lindsey M. Shinn, Esther K. Ro, and Daniel Grunfeld (Morgan, Lewis & Bockius, LLP) for Alfred E. Mann Foundation for Scientific Research. Donald Manwell Falk and Paul Whitfield Hughes (Mayer Brown, LLP) for Advanced Bionics, LLC. J. Michael Jakes and David Mroz (Finnegan, Henderson, Farabow, Garrett & Dunner, LLP) and Bruce G. Chapman (Sheppard, Mullin, Richter & Hampton, LLP) for Cochlear Corporation, n/k/a Cochlear Americas and Cochlear Ltd.

Companies: Alfred E. Mann Foundation for Scientific Research; Advanced Bionics, LLC; Cochlear Corporation, n/k/a Cochlear Americas; Cochlear Ltd.

MainStory: TopStory Patent FedCirNews

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