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Patent Extra 01/05/2009


Headlines

D Minn - Ample reason existed to combine involved elements.
SD NY - An actual controversy as to patent's validity persisted.
SD Fla - Request to impose constructive trust was premature.


D Minn - Ample reason existed to combine involved elements.
Allan Block Corp. v. County Materials Corp. (12/17/08)  Full Summary  Decision
The court concluded that County had not satisfied its burden of demonstrating that the asserted claims of the patents-in-suit were anticipated.  However, the facts showed that the asserted claims of the '236 patent were obvious.  The use of blocks to create retaining walls (and thus methods of designing and manufacturing blocks) did not originate in the '236 patent.  Claim 1 of the '236 patent combined a known method of producing retaining wall blocks, with known molding techniques, to produce blocks with known features.  Further, the court discerned a readily apparent reason to combine the involved elements in the market's reaction to the '010 patent's blocks; the '010 patent yielded blocks whose setback was too great.  One skilled in the art would have readily recognized at least two known solutions to this problem and would have known how to make blocks with recesses.

SD NY - An actual controversy as to patent's validity persisted.
Diamonds.net LLC v. Idex Online, Ltd. (12/18/08)  Full Summary  Decision
The court denied Diamond's motion to dismiss Idex's invalidity counterclaim for lack of subject matter jurisdiction.  In the particular circumstances of this case, an actual controversy as to the validity of the '178 patent persisted even after Diamond dismissed its infringement claim with prejudice and covenanted not to sue Idex for infringement of the '178 patent for any activities before February 20, 2008.  Because the dispute extended beyond Diamond's initial infringement claim and the specific version of Idex's website implicated by that claim, the counterclaim continued to be supported by an actual controversy.  The overlap between the parties' systems demonstrated the reasonableness of the contention that Idex was afraid of an ongoing infringement dispute with Diamond.  Moreover, Idex planned to roll out its upgraded system in the United States in the near future.  The primary impediment to Idex launching its upgraded site was the legal uncertainty created by the '178 patent.

SD Fla - Request to impose constructive trust was premature.
Brown v. Toscano (12/18/08)  Full Summary  Decision
The court granted in part and denied in part Brown's motion to dismiss certain of Toscano's counterclaims.  To the extent that the inventorship counterclaim requested the court to decide the correct inventorship relating to the second continuation application, it had to be dismissed for failure to state a claim.  In addition, it was clear that a declaratory judgment as to the invalidity and enforceability of a pending patent application did not present a justiciable case or controversy, as such a declaration would be an impermissible advisory opinion.  Finally, the request to impose a constructive trust as to patent rights that might arise from the patent application and the second continuation application was premature because no such rights presently existed.  Although a patent application could be a form of property, no patent rights would arise until the application matured into a patent.


Allan Block Corp. v. County Materials (D Minn 12/17/08)  Decision  Short Summary
ABC sued County for patent infringement and related claims; the court granted in part and denied in part County's motion for partial summary judgment and granted in part and denied in part ABC's summary judgment motion.

ABC develops and licenses concrete blocks and related technology for use in the construction of segmental retaining walls.  ABC holds the '010 and '236 patents, which claim the concrete block and method of forming the block, respectively.  In 1993, ABC and County's predecessor entered into an agreement for the production and sale of blocks.  County later assumed this agreement, but in 2005, ABC terminated the agreement.  ABC claims that County breached the agreement by failing to cease use of ABC's technology, to return the technology to ABC, and to cease manufacture of the licensed goods upon termination of the agreement.  ABC also claims that County used ABC's technology to develop another block known as the "Victory Block."  ABC alleges that County infringed the '010 and '236 patents by making and selling the Victory Block and by making and selling ABC's products without its consent.

The court concluded that ABC had not raised a genuine issue of material fact as to whether the Victory Block infringed the '010 patent.  The court previously construed the relevant claim language to require a block with a frontal surface featuring a lower vertical portion that abutted to form a right angle with the bottom surface.  The front and bottom surfaces of the Victory Block did not meet to form a right angle.  Regarding the '236 patent, there was evidence in the record that the Victory Block's lip and recess served to inhibit the shifting of blocks after assembly into a wall, the very purpose identified by the specification of the '236 patent.  But whether the 1/4 inch difference in the Victory Block's lip height and recess depth revealed that they were not "substantially equal" was an issue to be resolved by the finder of fact.  As to County's contention that the asserted claims of the '236 patent were invalid for obviousness, the court ultimately agreed.  The use of blocks to create retaining walls (and thus methods of designing and manufacturing blocks) did not originate in the '236 patent.  Claim 1 of the '236 patent differed from the method disclosed in the '010 patent by adding a notch in the lower surface; blocks produced by the method of claim 1 had recesses, while the '010 patent's blocks did not.

In the court's view, claim 1 of the '236 patent combined a known method of producing retaining wall blocks, with known molding techniques, to produce blocks with known features.  Further, the court discerned a readily apparent reason to combine the involved elements in the market's reaction to the '010 patent's blocks; the '010 patent yielded blocks whose setback was too great.  One skilled in the art would have readily recognized at least two known solutions to this problem and would have known how to make blocks with recesses.  Thus, claim 1 of the '236 patent was obvious and the secondary factors on which ABC relied were insufficient to alter this conclusion.


Diamonds.net LLC v. Idex Online, Ltd. (SD NY 12/18/08)  Decision  Short Summary
Diamonds, Internet Diamond Exchange, LLC, Rapaport, and Rapaport USA (collectively "Diamond") sued Idex, Idex Online Israel, Ltd., and others (collectively "Idex") for patent infringement.  The court denied Diamond's motion to dismiss Idex's invalidity counterclaim for lack of subject matter jurisdiction.

Diamond and Idex operate websites for buying and selling diamonds.  Diamond holds the '178 patent directed at a system for facilitating transactions in precious stones.  After Diamond initiated this action, Idex responded by filing a counterclaim alleging that the '178 patent is invalid.  After discovery, Diamond dismissed the infringement claim and covenanted not to sue Idex for infringement of the '178 patent for any of Idex's activities before February 20, 2008.  The covenant specified that Diamond would not sue Idex based on the latter's website as it currently or previously existed.  Diamond moves to dismiss Idex's counterclaim, arguing that because there is no longer any actual controversy concerning the issue of infringement, the court lacks jurisdiction to adjudicate the validity of the patent.

Idex claimed that there was still a live dispute over the validity of the '178 patent because Idex planned to launch an upgraded version of its website that would potentially infringe the '178 patent.  Diamond contended that Idex's future plans were speculative.  In the particular circumstances of this case, an actual controversy as to the validity of the '178 patent persisted.  Because the dispute extended beyond Diamond's initial infringement claim and the specific version of Idex's website implicated by that claim, the counterclaim continued to be supported by an actual controversy.  The court credited the testimony of Idex's CEO, who asserted that Idex's upgraded website would potentially infringe the '178 patent.  Like the system covered by the '178 patent, Idex's upgraded system appeared to automatically execute sales transactions when an offer and a bid matched.  The overlap between the parties' systems demonstrated the reasonableness of the contention that Idex was afraid of an ongoing infringement dispute with Diamond.  Moreover, Idex planned to roll out its upgraded system in the United States in the near future.  As of April 2008, users in the United States were beta testing the upgraded system.  The primary impediment to Idex launching its upgraded site in the United States was the legal uncertainty created by the '178 patent.  In addition, Diamond's history of aggressively defending its rights signaled the existence of an actual controversy.


Brown v. Toscano (SD Fla 12/18/08)  Decision  Short Summary
Brown, General Holdings Co. ("GHC"), and Attaway Services, Inc. (collectively "Brown") sued Toscano, Enviro-Steel Corp., Meaux, and others (collectively "Toscano") for patent infringement.  The court granted in part and denied in part Brown's motion to dismiss certain of Toscano's counterclaims.

In 2003, Brown and Meaux filed a patent application for a process for the installation of a double steel bottom and leak detection system for above ground petroleum storage tanks.  The PTO allowed claims 10 and 12 of the application.  In 2006, Meaux purportedly assigned his rights as a co-inventor to Toscano.  In 2006, the PTO issued a notice of allowance, but Brown refused to pay the issue fee.  As a result, the application was deemed abandoned.  Before the abandonment of the application, Brown filed a continuation application, which requested that the PTO cancel claims 1 through 25 of the application and added a new claim 26.  According to the Brown, the invention of claim 26 corresponds to claims 1 through 25 of the original application.  The continuation application identifies only Brown as an inventor.  Brown assigned his interest in the continuation application to GHC.  Despite the prior assignments, Brown and Meaux then assigned their interests to Attaway.  The continuation application issued as a patent in November 2007.  Brown filed a second continuation application, claiming priority to the original application and listing Brown as the inventor.

In one of his counterclaims, Toscano requested that the court declare that he owned an undivided interest in the second continuation application and any patent resulting therefrom.  The court held that 35 U.S.C. 116 did not provide a cause of action, as it empowered the Director of the PTO to decide inventorship issues relating to a pending patent application.  To the extent that this counterclaim requested the court to decide the correct inventorship relating to the second continuation application, it had to be dismissed for failure to state a claim.  Two of Toscano's counterclaims sought a declaratory judgment that any patent issuing from the second continuation application was invalid and unenforceable.  A declaratory judgment as to the invalidity and enforceability of a pending patent application did not present a justiciable case or controversy, as such a declaration would be an impermissible advisory opinion.  In a final counterclaim, Toscano alleged that Brown and Toscano each owned an undivided interest in the original application.  Toscano asked the court to impose a constructive trust on all patent rights arising from all of the applications.  The request to impose a constructive trust as to patent rights that might arise from the original application and the second continuation application was premature because no such rights presently existed.  Although a patent application could be a form of property, no patent rights would arise until the application matured into a patent.


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