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PATENTS DIGESTS ALS2014B ATTY.BARANDA

ALS2014B Page 59 of 99

Quanta Computer Inc. v. LG Electronics (2008)

Facts:

LG Electronics (LGE), the plaintiffs in the case owned patents on microprocessors, chipsets, systems containing

such microprocessors and chipsets and methods of operating systems containing such chipsets and microprocessors. LGE

had granted a license under the patents to Intel which contained no limitations on how Intel could exploit its rights under

the license and specifically stated that notwithstanding anything to the contrary contained in this Agreement, the partiesagree that nothing herein shall in any way limit or alter the effect of patent exhaustion that would otherwise apply when a

party hereto sells any of its Licensed Products. By a separate agreement, Intel agreed that it would give notice to its

customers that the license given to Intel by LGE and which covered the product sold by Intel to its customers does not

extend expressly or by implication to any product you make by combining an Intel product with any non-Intel product.

Intel manufactured microprocessors and chipsets under the agreements and sold them to Quanta which

incorporated them into systems (i.e. computers) covered by the licensed patents. Intel gave Quanta the notice required

under its agreement with LGE, but Quanta nevertheless combined the purchased microprocessors and chipsets with

parts not obtained from Intel. LGE sued Quanta for infringement of its claims relating to the systems and methods

but not for infringement of patents relating to the microprocessors or chipsets themselves.

The district court found that LGEs rights in the system patents had been exhausted by Intels sale of

microprocessors that could effectively only be used in the patented systems, but, relying on some bald statements inearlier Federal Circuit decisions, held that sale of a product could not exhaust rights in a method patent. In this context

the court pointed out the differences between the exhaustion doctrine and that of an implied licensein the following

terms:

The patent exhaustion doctrine applies when a patentee has, in essence, sold its statutory right to

exclusivity through the unrestricted sale or license of the patent. A patentee who has not abandoned its statutory

right to exclude others from the use of its patent may nevertheless, through conduct that induces reliance, grant to

particular parties an implied license to practice the patent.

The court held that there was no implied license in the present case because of the notice given to Quanta

by Intel.

On appeal to the Court of Appeals for the Federal Circuit, that court simply stated that there was no exhaustion of

rights in patents to either the systems or the methods. The exhaustion doctrine does not apply to an expressly conditiona

sale or license.

According to Quanta, LGEs and Intels rights to restrict the use of articles after an authorized sale, were confined

to what could be secured under contract law in the same way as for articles that had not been patented. Such a rule was

also correct in making sound economic and policy sense: it required the patent owner (or manufacturing licensee) to

extract the full value of its patent rights in one negotiation with the first purchaser, which can then share the burden with

the rest of the distribution chain by charging a higher price. Down-stream purchasers were then safe to use what they had

bought without fear of being sued for patent infringement. Quanta also argued that the exhaustion doctrine was equally

applicable to method claims and system claims when the articles sold had no other reasonable use than in the systems and

methods claimed and that this had been found by the district court and was unchallenged by the Federal Circuit.

According to LGE the traditional exhaustion doctrine is that the unconditional sale of a patented article exhausts

patent rights in that article, but not in other patented systems of which that article might become a component. LGEfurther argued that the exhaustion doctrine could only apply to acts of selling or using a patented article obtained from the

patent owner or its licensee. It could not apply to the separate right of making a patented system, which of necessity had to

be a different invention from the invention embodied in the article that had been sold. What Quanta was doing in the

present case was making the systems covered by the patents in suit. What Quanta was seeking to do was to trivialize the

value of combination inventions by requiring patent owners to extract full economic value of all their the patent rights

from the original purchaser of any component that was to be used in a patented combination. This would discourage

innovation and rational risk and cost allocations among different users of technology.


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The United States government filed an amicus brief in support of Quanta arguing that any restrictions on

downstream use or resale of an article embodying patentees invention had to be a matter of contract law rather than

patent law. Those who acquired valid title to such an article also acquire the right to use it and sell it without fear of patent

infringement claims. According to the governments argument, the Court of Appeals for the Federal Circuit had been

wrong to create an exception from the traditional rule on patent exhaustion by holding that it could be avoided by

imposing conditions on the sale. Creation of such an exception meant that the patent owner could demand royalties along

the entire length of the distribution chain. This went beyond what the patent statute was intended to provide and gaveinadequate scope to the antitrust laws.

Held/Ratio:

The Supreme Courts decision was unanimous and delivered by Justice Thomas. It succinctly disposed of

arguments that there could be no exhaustion of patent rights just because the claims in question were directed to a

combination including the article sold or to a method involving use of the article sold.

On the question of whether sale of an article by the patent owner or its licensee could exhaust rights in method claims , the

court held:

Nothing in this Courts approach to patent exhaustion supports LGEs arguments that method patents cannot be

exhausted. Eliminating exhaustion for method patents would seriously undermine the exhaustion doctrine. Patentees

seeking to avoid patent infringement could simply draft patent claims to describe a method rather than an apparatus. This case illustrates the danger of allowing such an end run around exhaustion. On LGEs theory, although Intel is

authorized to sell a completed computer system that practices the LGE patents, any downstream purchasers of the system

could nevertheless be liable for patent infringement. We therefore reject LGEs argument that method claims, as a

category, are never exhaustible.

On the question of whether sale of a component in a patented combination could exhaust rights in such method or

combination patents, the court held that the products sold by Intel:

constitute a material part of the patented invention and all but completely practice the patent. the incomplete

article substantially embodies the patent because the only step necessary to practice the patent is the application of

common practices or standard parts. Everything inventive about each patent is embodied in the [products sold by Intel]

Quanta was not required to make any creative or inventive decision when it added [these products]. Indeed Quanta had

no alternative but to follow Intels instructions in incorporating [such] products into its computers because it did not knowtheir internal structure, which Intel guards as a trade secret.

The mere fact that the microprocessors and chipsets were claimed in different patents from those which were being sued

upon did not help either. The Court noted:

With regard to LGEs argument that exhaustion does not apply across patents, we agree on the general principle. The sale

of a device that practices patent A does not, by virtue of practicing patent A exhaust patent B. But if the device practices

patent A, while substantially embodying patent B, its relationship to patent A does not prevent exhaustion of patent B.

(Emphasis in the original).

This then left the question of whether the initial sale was of a type that could trigger patent exhaustion. Well, because the

license from LGE to Intel (as opposed to any other agreement) did not in itself impose any conditions on Intel and because

Intel did not impose any conditions on its purchasers, the initial sale was an unconditional one and so clearly fell within

any definition of the type of sale that would trigger patent exhaustion.


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United States v. Unives Lens Co. (1942)

QUICK FACTS: UC has a patent over thefinishedmulti-focal lenses. However, it delivers to licensees (wholesalers and

finishing retailers) only blank lenses so that these 2 groups will be the ones to make the finished lenses. UC has a

licensing system which imposes fixed prices on the finished products sold by its licensees. Is such system valid? Is i

covered by patent monopoly? NO.

The patentee may surrender his monopoly in whole by the sale of his patent, or in part by the sale of an articleembodying the invention. His monopoly remains so long as he retains the ownership of the patented article. But

sale of it exhausts the monopoly in that article, and the patentee may not thereafter, by virtue of his patent, control

the use or disposition of the article.

Doctrines:

1. Sale by a patent owner of an article which is capable of use only in practicing the patent is a relinquishment ofthe patent monopoly with respect to that article.

2. A patent does not confer the right to control the resale prices of the patented articles after their sale by thepatentee.

3. That, with the sale of the lens blanks for use in manufacturing lenses, the patent owner conferred on the buyer theright to practice the patent with respect to the blanks, and parted with the right to assert its patent monopoly withrespect to them, and could no longer control the price at which they might be sold in their unfinished, or their

finished, forms.

Facts:

Univis Lens Company was the owner of a number of patents (and trademarks) relating to multi-focal lenses. In

1931, it organized Univis Corporation (UC). After the organization of the latter, the Lens Company transferred all its

interest in the patents involved. Since then, the Corporation set up the LICENSING SYSTEM which is in issue in this

case.

Under the SYSTEM, UC licenses the Lens Company to manufacture lens blanks and sell them to designated

licensees of UC, upon payment of an agreed royalty (50 cents a pair) to UC.

Description of the lens blanks: rough opaque pieces of glass of suitable size, design, and composition for usewhen ground and polished, as multi-focal lenses in eyeglasses. Each blank is composed of two or more pieces of glass of

different refractive power of such size, shape, and composition, and so disposed that, when fused together in the blank, it

is said to conform to the specifications and claims of some one of the UC's patents.

UC issues 3 classes of licenses: (1) licenses to Wholesalers, (2) to finishing retailers, and (3) to prescription

retailers.

1. The license to wholesalers authorize the latter to purchase the blanks from Lens Company, finish them bygrinding and polishing, and sell them to prescription licensees only at a price fixed by UC. Similarly, the license

to finishing retailers allows the latter to purchase the blanks from Lens Company and sell them to their customers

at prices prescribed by UC.

2. The license to prescription retailers (PR), (who are without facilities for grinding and finishing the lenses by whoprescribe and adjust glasses for their customers), are signed by UC only when prescription retailers agree to selthe only finished lenses to customers and only at prices prescribed by UC. Also, not everyone can become

prescription retailers. UC screens its prescription retailers so that those who are price-cutters would not be

qualified to offer their product.

3. IN SUM, UC retains control of the prices and of who can be licensed up to the prescription retailer.The parties in this case are the government and the UC. The government is praying for an injunction for alleged

violation of sections 1 and 3 of the Sherman Act which make unlawful any contract, combination or conspiracy in

restraint of trade or commerce among the states.


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The LICENSING SYSTEM of UC is allegedly violating these provisions.

The District court found that the patents are forfinished lens, and that, consequently, the grinding and polishing of

the lenses by the wholesalers and finishing retailers after they get the blank lens, is part of the manufacturing of the

patented product. The court thought that, without the granted license, the final step in finishing the lens would infringe

the patent. For this reason, UC could validly condition its licenses upon compliance with the fixed prices. But it held tha

the prescription retailer licenses (3rd type) are not within the patent monopoly, and are proscribed by the Sherman Act.Issues:

1. WON the SYSTEM (for licensing the manufacture and sale of patented multifocal eyeglass lenses) of UC isexcluded by the patent monopoly --- YES

Held/Ratio:

1. The mere fact that the licensee takes the final step in the manufacture of the patented product, it does not followthat the patentee can control the price at which the finished lens is sold. (So, the system fixing the prices is no

valid.)

Thus, the sale of a blank lens by the patentee or his licensee is thus, in itself, a complete transfer of ownership of

the blank and a license to complete the final stage of the patent procedure or production of the lenses.

In the present case, the entire consideration and compensation is the purchase price paid by the finishing licensee

to UC. The question is WON the patentee, no longer aided by the patent, may lawfully exercise control

over the disposition of the patented article after the sale to the licensee. --- NO

The declared purpose of the patent law is to promote the progress of science and the useful arts by granting to the

inventor a limited monopoly, the exercise of which will enable him to secure the financial rewards for his

invention.

The full extent of the monopoly is the patentee's "exclusive right to make use, and vend the invention or

discovery."

The patentee may surrender his monopoly in whole by the sale of his patent, or in part by the sale of an

article embodying the invention. His monopoly remains so long as he retains the ownership of the patented

article. But sale of it exhausts the monopoly in that article, and the patentee may not thereafter, by virtueof his patent, control the use or disposition of the article.

Hence, the patentee cannot control the resale price of patented articles which he has sold, either by resort to an

infringement suit or, consistently with the Sherman Act by stipulating for prince maintenance by his vendees.

After selling the blank lenses, he has thus arted with his right to assert the patent monopoly with respect to it and

is no longer free to control the price at which it may be sold, either in its unfinished or finished form.

No one would doubt that, if the patentee's licensee had sold the blanks to a wholesaler or finishing retailer

without more, the purchaser would not infringe by grinding and selling them. The added stipulation by the

patentee fixing resale prices derives no support from the patent, and must stand on the same footing under the

Sherman Act as like stipulations with respect to unpatented commodities.

Whether the licensee sells the patented article in its completed form or sells it before completion for the purpose

of enabling the buyer to finish and sell it, he has equally parted with the article, and made it the vehicle for

transferring to the buyer ownership of the invention with respect to that article. To that extent, he has parted with

his patent monopoly and has received the benefit of the patent law when he received the purchase price.

If he were permitted to control the price at which it could be sold by others, he would extend his monopolyquite

as much in the one case as in the other, and he would extend it beyond the fair meaning of the patent statutes and

the construction which has hitherto been given to them.

Thus, the price-fixing features of the licensing system which are not within the protection of the patent law violate

the Sharman Act (save only as to the fair trade agreeements). Agreements for price maintenance of articles

moving in interstate commerce are, without more, unreasonable restraints within the meaning of the Sherman Act


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because they eliminate competition, and restrictions imposed by the seller upon resale prices of articles moving in

interstate commerce.

Roche Products v. Bolar Pharmaceuticals (1984)


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Creser Precision System v. Court of Appeals (1998)

Doctrine:

Only the patentee or his successors-interest may file an action for infringement. There can be no infringement until a patent has been issued, since whatever right one has to the invention covered

by the patent arises alone from the grant of patent.Facts:

Floro International Corp. is a domestic corporation engaged in the manufacture, production, distribution and sale

of military armaments, munitions, airmunitions and other similar materials. On Jan. 23, 1990, the Bureau of Patents,

Trademarks and Technology Transfer (BTTT) granted a Letter Patent No. UM-6938 covering an aerial fuze which was

published in the Sept-Oct 1990 Bureau of Patents Official Gazette.

Sometime in November 1993, Floro Intl, through its President, Gregory Floro Jr., discovered that Creser Precision

Systems submitted samples of its parented aerial fuze to the Armed Forces of the Philippines (AFP) for testing. He

learned that petitioner was claiming the aerial fuze as its own and planning to bid and manufacture the same commercially

without license or authority from Floro Intl. To protect its right, Floro Intl. sent a letter to Creser advising it from its

existing patent and its rights thereunder, warning Creser of a possible court action and/or application for injunction

should it proceed with the scheduled testing by the military.

In response to the demand, Creser filed a complaint for injunction and damages arising from the alleged

infringement before the RTC of QC. The complaint alleged, among others: that petitioner is the first, true and actual

inventor of an aerial fuze denominated as Fuze, PDR 77 CB4 which is developed as early as December 1981

under the Self-Reliance Defense Posture Program (SDRP) of the AFP; that sometime in 1986, Creser began supplying the

AFP with the said aerial fuze; that Floros aerial fuze is identical in every respect to Cresers fuze; and that the only

difference between the two are miniscule and merely cosmetic in nature.

RTC issued a TRO and eventually a writ of preliminary injunction in favor of Creser. CA reversed.

Creser argues that it can file, under Section 42 of the Patent Law, an action for infringement not as patentee but as

entity in possession of a right, title or interest to the patented invention. It claims that while the absence of a patent may

prevent one from lawfully suing another for infringement of said patent, such absence does not bar the first true and actua

inventor of the patented invention from suing another who was granted a patent in a suit for declaratory relief recognized

under Patent Laws.

Issue:

1. Whether or not Creser correctly filed a complaint for injunction and damages against Floro Intl?Held/Ratio:

1. NO. Section 42 of the Patent Law (RA 165) provides:Sec.42 Civil action for infringement-Any patentee, or anyone possessing any right, title or interest

in and to the patented invention, whose rights have been infringed, may bring a civil action before

the proper CFI (now RTC), to recover from the infringer damages sustained by reason of the

infringement and to secure an injunction for the protection of his right. XxxUnder this law, only the patentee or his successors-interest may file an action for infringement. There can

be no infringement until a patent has been issued, since whatever right one has to the invention covered by

the patent arises alone from the grant of patent.In short, a person or entity who has not been granted letters

patent over an invention and has not acquired any right or title thereto either as assignee or as licensee, has no

cause of action for infringement because the right to maintain an infringement suit depends on the existence of the

patent.

Creser admits it has no patent over it aerial fuze. Therefore, it has no legal basis or cause of action to institute

petition for injunction and damages arising from the alleged infringement. While Creser claims to be the firs


10/39



inventor of the aerial fuze, still it has no right of property over the same upon which it can maintain a suit unless it

obstains a patent therefor. Under American Jurisprudence, an inventor has no common-law right to a monopoly of

his invention. He has the right to make, use and vend his own invention, but if he voluntarily discloses it, such as

by offering it for sale, the world is free to copy and use it with impunity. A patent, however, gives the inventor the

right to exclude all other. As patentee, he has the exclusive right of making, using, or selling the invention.

Thus, Creser cannot file a declaratory judgment or injunctive suit on the alleged patent invalidity against Florobecause such remedy is available only to the patent holder or his successors-in-interest. The remedy of Creser

would have been to file a petition for cancellation of the patent and raise as a ground therefor that the person to

whom the patent was issued is not the true and actual inventor. Under Sec.28, this action for cancellation is

available within 3 years from the publication of said patent with the Director of Patents.


11/39

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14/39

C.R.Bard v. Advance Cardiovasuclar System (1990) (Contributory Infringement, catheters)

Doctrines:

To establish the direct infringement, it requires a two step analysis. First is a determination of thescope of the claim at issue. Second is an examination of the evidence before the court to

ascertain whether use of the device would infringe the claim as interpreted.

To establish the direct infringement, it requires a two step analysis. First is a determination of thescope of the claim at issue. Second is an examination of the evidence before the court to

ascertain whether use of the device would infringe the claim as interpreted.

Facts:

This is a case of claimed infringement of a method patent for a medical treatment. Advanced

Cardiovascular Systems, Inc. (ACS) was marketing the only perfusion catheter approved by the United

States Food and Drug Administration for use in coronary angioplasty. C.R. Bard, Inc. (Bard) sued ACS

for alleged infringement of U.S. Patent No. 4,581,017 ('017), application for which was filed in 1983 and

which was issued to Harvinder Sahota in 1986. Bard had purchased all rights to the '017 patent as of

December 1986.

The '017 patent relates to a method for using a catheter in coronary angioplasty. To illustrate, theaorta, the body's largest artery, distributes the blood to smaller arteries throughout the body.

Atherosclerosis may cause these arteries to be progressively narrowed (stenosis) by the formation of

plaque within the arteries resulting in coronary artery disease. This decreases blood flow to the heart

muscle and may cause problems. Bypass surgery allows the grafting of a vein to the affected coronary

artery to bypass the stenosis. Percutaneous transluminal coronary angioplasty (PTCA), an alternative

procedure, involves inserting a deflated balloon dilation catheter through the patient's arteries to reach the

stenosis in the coronary artery. The balloon is inflated to dilate the stenosis and then deflated and

removed to restore blood flow to the heart. A difficulty associated with PTCA is that a prolonged

blockage of blood flow to the heart muscle in the course of the procedure, caused by the inflated balloon,

may itself result in angina or a heart attack. Typically during a PTCA, repeated inflations of the balloon,

each lasting from 60-90 seconds, are performed.

U.S. Patent No. '725, filed in 1982 and issued in 1984, discloses a catheter having a multiple

surgical cuff with an inflatable cuff member, and having a central lumen or channel containing side

window openings in fluid communication with the central lumen. The side openings allow blood to

circulate through the central lumen even while the inflatable cuff is inflated, thus avoiding blockage of

fluid flow. It discloses:

the side openings ... should be located at the level of the aorta to create the highest blood pressure

and to prevent the side openings ... from being closed laterally by an adherent small artery wall.

In 1983, inventor Sahota filed the '017 patent, claiming: (1) device claims for a catheter to

administer an angioplasty treatment and (2) method claims for the manner in which a surgeon would use

the catheter. All claims were rejected by the patent examiner. In particular, claim 4 was rejected, interalia, in view of the prior art '725 patent.

Following this rejection, the inventor modified certain claims. These modified claims were also

rejected. Following this rejection, the inventor removed all claims to a catheter, and claimed only

a method of administering an angioplasty. In twice amending claim 4, the inventor argued to the

examiner that "the proximal orifices which admit blood to the main lumen in the blood catheter [are]

`immediately adjacent said balloon'. Claim 4 of the application was ultimately allowed as claim 1 of the

'017 patent, and contained the "immediately adjacent" language.

Meanwhile, the ACS catheter is a balloon-type catheter having side openings in the main lumen

located near the proximal end of the balloon. The ACS catheter's main lumen is simply open past the

distal end of the balloon enabling blood to flow through the catheter while the balloon is inflated.


15/39

Bard argues that by selling its catheter for use by surgeons in angioplasty procedures, ACS is a

contributory infringer of Bard's method claim 1 in the '017 patent. Bard argues that the prior art '725

patent teaches the use of the catheter with the inlets (side openings) where the blood enters the tube

placed only in the aorta, whereas the '017 method in suit involves insertion of the catheter into the

coronary artery in such a manner that the openings "immediately adjacent [the] balloon fluidly connect

locations within [the] coronary artery surrounding [the] proximal and distal portions of [the] tube. Bard

argues, a surgeon, inserting the ACS catheter into a coronary artery to a point where an inlet at thecatheter's proximal end draws blood from the artery, infringes the '017 patent.

Issue:

Whether or not ACS is a contributory infringer.

Held/Ratio:

No. Case is remanded to trial court for further proceedings.

Section 271 of Title 35, United States Code, deals with infringement of patents; subsection (c)

specifies what is necessary to be a contributory infringer. For purposes of this case, the statute requires

that ACS sell a catheter for use in practicing the '017 process, which use constitutes a material part of the

invention, knowing that the catheter is especially made or adapted for use in infringing the patent, and

that the catheter is not a staple article or commodity of commerce suitable for substantial non-infringing

use.

Bard seeks to establish the requisite direct infringement by arguing that there is no evidence that

any angioplasty procedures using the ACS catheter would be non-infringing. Testing this assertion

requires a two step analysis. First is a determination of the scope of the claim at issue. Second is an

examination of the evidence before the court to ascertain whether use of the ACS catheter would infringe

the claim as interpreted.

Claim 1 of the '017 patent claims,

[a] method of administering an angioplasty treatment to a patient to produce acceptable blood flow

in a stenotic region of a coronary artery having restricted blood flow, comprising:inserting a tubehaving an outer surface enclosing a main lumen terminating in a main axial orifice into said

coronary artery ...* * * * * *

channeling blood flow through the wall of said proximal portion of said main lumen immediately

adjacent said balloon to fluidly connect locations within said coronary artery surrounding said

proximal and distal portions of said tube while said balloon is inflated within said coronary artery

to conduct blood downstream from the portion of said coronary artery occluded by the inflated

balloon.

To fully understand this difference, it is important to note that the ACS catheter has a series of

ten openings in the tube near, and at the proximal end of, the balloon. The first of these openings the

one closest to the balloon is approximately six millimeters (less than !inch) from the edge of the

proximal end of the balloon. The remainder are located along the main lumen at intervals, the furthestfrom the balloon being 6.3 centimeters (approximately 2"inches) away.

It would appear that three possible fact patterns may arise in the course of using the ACS catheter

during a PTCA. The first pattern involves positioning the catheter such that all of its side openings are

located only in the aorta. This is clearly contemplated by the prior art '725 patent cited by the examiner.

In the second of the possible fact patterns, all of the side openings are located within the coronary artery.

This situation appears to have been contemplated by the '017 patent, the method patent at issue. In this

situation, it correctly can be said that blood flowing through the main lumen will "fluidly connect

locations within [the] coronary artery surrounding [the] proximal and distal portions of [the] tube." In the

third fact pattern, some of the side openings are located in the aorta and some are located in the artery.

The fact that ACS has added extra holes further from the balloon does not affect the conclusionof infringement, as the patent does not require that all holes be "immediately adjacent" the balloon, nor

that the blood flowing through the balloon come solely from the coronary artery.


16/39

Aro Mfg. Co., Inc. v. Convertible Top Co. (1964) (Redefined doctrine of repair and reconstruction)

Doctrines:

Thereconstruction of a patented entity, comprised of unpatented elements, is limited to such atrue reconstruction of the entity as to "in fact make a new article," after the entity, viewed as a

whole, has become spent.

Facts:

When a purchaser of a patented product replaces some components of that product (either because they

wore out or became unsatisfactory to the owner) should they have to pay royalties to the patentee? In

other words, is it apermissible repair or an impermissible reconstruction?

This case involves convertible tops found in sports cars and other vehicles. Over time, owners of

convertibles wanted to replace to fabric portion of the top because they became torn or discolored, often

due to bird shit. Rather than buy an entire new top (which would be quite expensive) they just wanted toreplace the fabric part of it. Aro Manufacturing is a corporation which supplies replacement cloth tops

that fit various car models. However, the convertible tops were covered by a patent and because Aro

declined to pay a royalty to the patentee, patent infringement litigation followed.

Issues:

1. W/N the replacement of the fabric on a convertible top constituted repair or reconstruction.Held/Ratio:

1. REPAIR.The decisions of this Court require the conclusion that reconstruction of a patented entity,

comprised of unpatented elements, is limited to such a true reconstruction of the entity as

to "in fact make a new article," after the entity, viewed as a whole, has become spent. In

order to call the monopoly, conferred by the patent grant, into play for a second time, it

must, indeed, be a second creation of the patented entity. Mere replacement of individual

unpatented parts, one at a time, whether of the same part repeatedly or different parts

successively, is no more than the lawful right of the owner to repair his property. Measured by

this test, the replacement of the fabric involved in this case must be characterized as permissible

"repair," not "reconstruction."


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Autogiro Company of America v. United States (1967)

Doctrines:

The determination of patent infringement is a two step-process First, the meaning of the claims in issue must bedetermined by a study of all relevant patent documents. Second, the claims must be read on the accused

structures.

Interpreting the Meaning of the Claims

The claims of the patent provide the concise formal definition of the invention. They are the numbered paragraphs

which particularly point out and distinctly claim the invention. Courts can neither broaden nor narrow the claims to give

the patentee something different than what he has set forth. They only interpret them. However, in doing so, they are not

confined to the language of the claims.

A claim cannot be interpreted without going beyond the claim itself. No matter how clear a claim appears to be,

there are documents that may completely disrupt initial views on its meaning. Claims are best construed in connection

with the other parts of the patent instrument and with the circumstances surrounding the inception of the patent

application.

In deriving the meaning of a claim, the felt meaning of the claim shall be reached after all useful documents are

inspected. In seeking this goal, three parts of the patent are used: 1) specification; 2) drawings; 3) file wrapper.

Specification. Section 112 of the 1952 Patent Act requires the specification to describe the manner and process of

making and using the patent so that any person skilled in the art may utilize it. The specification sets forth the best mode

contemplated by the inventor of carrying out his invention. Claim interpretation must not make use of the best mode terms

inasmuch as the patentee need not guard against infringement by listing every possible infringing device in the

specification.

Drawings. Where a visual representation can flesh out words, drawings may be used in the same manner and with

the same limitations as the specification.

File wrapper. The file wrapper contains the entire record of the proceedings in the Patent Office from the first

application papers to the issued patent. One use of the same is file wrapper estoppel, which is thus illustrated: When the

application is rejected, the applicant will insert limitations and restrictions for the purpose of inducing the Patent Office to

grant his patent. When the patent is issued, the patentee cannot disclaim these alterations and seek an interpretation that

ignores them. File wrapper estoppel serves two functions: the applicants statements not only define terms, but also set the

barriers within which the claims meaning must be kept.

The file wrapper can also be utilized to determine the scope of claims. In file wrapper estoppel, it is not the prior

art that provides the guidelines, but the applicants acquiescence with regard to the prior art.

Reading the Claims on the Accused Structures

If the claims read literally on the accused structures, an initial hurdle in the test for infringement is cleared. The

patentee may bring the defendant within the letter of his claims, but if the latter has changed the principle of the device

that the claims of the patent, literally construed, have ceased to represent his actual invention, he can no longer be

adjudged an infringer.

However, if the claims do not read literally on the accused structures, infringement is not necessarily ruled outThe doctrine of equivalence provides that a structure infringes, without there being literal overlap, if it performs

substantially the same function in substantially the same way and for substantially the same purpose as the claims set

forth. To permit imitation of a patented invention which does not copy every literal detail would be to convert the

protection of the patent grant into a useless thing. Such would encourage the copyist to make unimportant and

unsubstantial changes in the patent which, though adding nothing, would be enough to take the copied matter outside the

claim.


18/39



Some guidelines as regards the range of equivalence are drawn: 1) whether persons reasonably skilled in the art

would have known of the interchangeability of an ingredient not contained in the patent with one that was; 2) pioneer

patents are to be given wider ranges of equivalence than minor improvement patents.

The doctrine of equivalence is subservient to file wrapper estoppel. It may not include within its range anything

that would vitiate limitations expressed before the Patent Office.

Facts:

The Autogiro Company, a Delaware corporation owning all patents involved in this litigation, sues to recover the

reasonable and entire compensation for the Governments unauthorized use of 16 of its patented inventions.

The patents in suit are concerned with rotor structures and control systems on rotary wing aircrafts: the helicopter

and the autogiro/gyroplane. The autogiro has both fixed wings and rotary blades a cross between an airplane and a

helicopter; while a helicopter only has rotary blades.

THE CLAIMS:

Claim 3 is a combination claim, the important element of which states: A sustaining rotor construction having

blades mounted for movement with respect to an axis member and so proportioned that, under the influence of air

currents, the blades have an average autorotational speed at the tip substantially in excess of the maximum flight speed of

which the craft is capable.

Claims 28, 29, 36, 37, 38, and 42contain an element which defines a non-manual mechanism for regulating the

rotational speed of rotary wing aircraft rotors. Such changes are achieved through the use of movable weights mounted in

each rotor and attached to the collective pitch control system. The 581 specification states that the purpose is to provide

governing means in cooperation with blade incidence control which will tend to maintain constant rotational speed of the

rotor.

Claim 64 states that the rotor blades sectional mass center be at least as far forward as its aerodynamic center. It states:

adjustment of the weight as well as of the sectional and longitudinal location of the center of gravity of the blade may thus

also be obtained.

Claim 59provides for the placement of weights along the leading edge of the blade near the tip. This helps bring

the mass center of the blade forward of the aerodynamic center to achieve negative pitching moment.

The claims of the 162 patent teach a manual means of obtaining a measure of vertical rise capacity.

The 364 patent provides nonmanual means to accomplish a vertical take-off. When power is connected to the

rotor hub, the blades will lag behind the hub. When the power is stopped, the blades inertial force will swing them in

advance of the hub. These lead-lag tendencies can be translated into actual blade movement if the blade is mounted on a

free axis that permits it to move back and forth without restriction.

The 580 patentteaches cyclic pitch control by tilting the real axis.

Claim 16 teaches cyclic pitch control by tilting the virtual axis.

Issues:

1. W/N Claim 3 is infringed.2. W/N Claims 28, 29, 36, 37, 38, and 42 are infringed.3. W/N Claim 64 is infringed.4. W/N Claim 59 is infringed.5. W/N the claims of the 162 patent are infringed.6. W/N the 364 patent is infringed.7. W/N the 580 patent is infringed.8. W/N Claim 16 is infringed.


19/39



Held/Ratio:

1. No. Claim Interpretation. The term so proportioned is defined in terms of function or result, however, a readingof the term in light of the patent documents shows that it includes a means of accomplishing its function. The

specification shows that the proportioning is a relationship between rotor blades and a fixed wing. The file

wrapper does not compel a different interpretation.

This interpretation does not ignore the concept of claim differentiation, which states that claims should bepresumed to cover different inventions. This means that an interpretation of a claim should be avoided if it would

make the claim read like another one. Claim differentiation is a guide, not a rigid rule. If a claim will bear only

one interpretation, similarity will have to be tolerated.

Claims 4-7 of the 901 patent refer to a substantially fixed aerofoil. Claims 8-17 refer to a relatively fixed lifting

aerofoil surface. Interpreting Claim 3 to refer to a fixed wing would not render any of these claims redundant.

Claim 3 refers to maximum flight speed; Claims 4-5 refer to translational flight. Also, Claim 3 does not have the

specificity of these claims.

Accused Structures. The Vertol, Hiller, and Bell helicopters do not have a fixed wing. They do not operate in

substantially the same way as the claim requires.

2. No. Plaintiffs contention that there must be centrifugal means plus a resilient means to obtain governing means isrejected.

Claim interpretation. The file wrapper supports the idea that the resilient means is not necessary in the governing

means. It only acts as an aid to the maintenance of a constant rotational speed.

Accused structures. The weights on the Bell and Hiller helicopters do not perform a rotor speed governing

function. Rotor speed is manually controlled by the pilot.

3. Yes. Claim interpretation. The term sectional has a directional meaning. Its juxtaposition with longitudinalindicates that it refers to the front-rear or chordwise direction of the blade.

4. No, the bar does not operate in a way substantially similar to the teachings of Claim 59 and with a substantiallysimilar result.

The Bell and Hiller helicopters have a steel bar on their rotor blades, which is close to the leading edge, but is notconcentrated near the tip of the blade. The bar aids in achieving negative pitching moment, but not in

economically increasing the moment of inertia.

5. No. The autogiro cannot use its rotor to achieve vertical take-offs (since it is autorotatively operated) unless it isequipped with some additional mechanism such as that taught by the 162 patent. The accused structures, being

helicopters, do not require vertical take-off assistance. Hence, they do not achieve the same or a substantially

similar result.

6. No. The Bell and Hiller helicopters do not have a free axis; their blades are affixed to the rotor hub with no lead-lag flexibility. These helicopters achieve vertical take-offs by the power directed to their rotors and have no use

for a non-manual take off.

7. No. The Kaman, McCulloch, and Vertol helicopters do not achieve cyclic pitch control by tilting the real axisThe Bell and Hiller helicopters impose control through various linkages on the rotor blades. A member of the realaxis of these two crafts may tilt when control is achieved. However, this tilting is not by itself cyclic pitch control;

it is a coincidental accompaniment to the imposition of cyclic pitch control. Even though all the accused

structures achieve horizontal movement by cyclic pitch control as the 580 patent teaches, they do not do so in the

same or substantially the same way.

8. No. The cyclic pitch system of Claim 16 is interposed between the flapping pivot and the blade mounting; whileBells cyclic pitch control pivot is located at a point higher in the rotor hub assembly than either the blade

mounting or the longitudinal axis of the blade.


20/39



Claim 16 can be read on a combination of the helicopter cyclic and collective pitch control systems since the latter

control is interposed between the flapping pivot and the blade mounting. A combination of these two systems

seems to infringe; however, these systems do not interact or contribute together to produce the result taught by the

claim. There must be an essential correlation or coordination of the systems which mutually contributes to a

common result.

Smith Kline v. CA (2003)

Doctrines (relevant to the topic heading):

When the language of its claims is clear and distinct, the patentee is bound thereby and may not claim anythingbeyond them. And so are the courts bound which may not add to or detract from the claims matters not expressed

or necessarily implied, nor may they enlarge the patent beyond the scope of that which the inventor claimed and

the patent office allowed, even if the patentee may have been entitled to something more than the words it had

chosen would include.

When two or more inventions are claimed in a single application but are of such a nature that a single patent maynot be issued for them. The applicant thus is required to divide, that is, to limit the claims to whichever invention

he may elect, whereas those inventions not elected may be made the subject of separate applications which are

called divisional applications.Facts:

Smith Kline Beckman Corporation - a US corporation licensed to do business in the Philippines filed asassignee, before the Philippine Patent Office (now Bureau of Patents, Trademarks and Technology Transfer) an

application for patent over an invention entitled Methods and Compositions for Producing Biphasic Parasiticide

Activity Using Methyl 5 Propylthio-2-Benzimidazole Carbamate. (Serial No. 18989)

Letters Patent for the invention was issued to petitioner for a term of 17 years.o The letters patent provides in its claims: the patented invention consisted of a new compound (methyl 5

propylthio-2-benzimidazole carbamate) and the methods or compositions utilizing the compound as an

active ingredient in fighting infections caused by gastrointestinal parasites and lungworms in animals

such as swine, sheep, cattle, goats, horses, and even pet animals.

Tryco Pharma Corporation (respondent) is a domestic corporation that manufactures, distributes and sellsveterinary products including Impregon, a drug that has Albendazole for its active ingredient and is claimed to be

effective against gastro-intestinal roundworms, lungworms, tapeworms and fluke infestation in carabaos, cattle

and goats.

Smith Kline sued Tryco Pharma for infringement of patent and unfair competition before the Caloocan (RTC).SMITH KLINEs claimed

its patent covers or includes the substance Albendazole such that Tryco Pharma by manufacturing, selling, using,and causing to be sold and used the drug Impregon without its authorization, infringed various Claims of LettersPatent

committed unfair competition under Article 189, paragraph 1 of the Revised Penal Code and Section 29 ofRepublic Act No. 166 (The Trademark Law) for advertising and selling as its own the drug Impregon although the

same contained petitioners patented Albendazole

Caloocan RTC issued a TRO against private respondent enjoining it from committing acts of patent infringement

and unfair competition. A writ of preliminary injunction was subsequently issued.

Tryco Pharma averred

Letters Patent does not cover the substance Albendazole for nowhere in it does that word appear; that even if thepatent were to include Albendazole, such substance is unpatentable;


21/39



that the Bureau of Food and Drugs allowed it to manufacture and market Impregon with Albendazole as itsknown ingredient;

there is no proof that it passed off in any way its veterinary products as those of petitioner; Letters Patent No. 14561 is null and void, the application for the issuance thereof having been filed beyond the

one year period from the filing of an application abroad for the same invention covered thereby, in violation o

Section 15 of RA No. 165 (The Patent Law);

petitioner is not the registered patent holder. lodged a Counterclaim against petitioner for such amount of actual damages as may be proven; P1,000,000.00 in

moral damages; P300,000.00 in exemplary damages; and P150,000.00 in attorneys fees.

TC:Complaint dismissed. Writ dissolved. Letters Patent null and void.

CA: upheld TC but Letter Patent not void

Smith Kline argues

under the doctrine of equivalents for determining patent infringement, Albendazole, the active ingredient italleges was appropriated by private respondent for its drug Impregon, is substantially the same as methyl 5

propylthio-2-benzimidazole carbamate covered by its patent since both of them are meant to combat worm orparasite infestation in animals.

o It cites the unrebutted testimony of its witness Dr. Orinion that the chemical formula in Letters Patent No14561 refers to the compound Albendazole.

Two substances substantially do the same function in substantially the same way to achieve the same resultsthereby making them truly identical.

CA should have gone beyond the literal wordings used in Letters Patent No. 14561, beyond merelyapplying the literal infringement test, for in spite of the fact that the word Albendazole does not appear in

petitioners letters patent, it has ably shown by evidence its sameness with methyl 5 propylthio-2-

benzimidazole carbamate.

its application with the Philippine Patent Office on account of which it was granted Letters Patent No. 14561 wasmerely a divisional application of a prior application in the U. S. which granted a patent for Albendazole.

both methyl 5 propylthio-2-benzimidazole carbamate and the U.S.-patented Albendazole are dependent on eachother and mutually contribute to produce a single result, thereby making Albendazole as much a part of Letters

Patent No. 14561 as the other substance is.

although methyl 5 propylthio-2-benzimidazole carbamate is not identical with Albendazole, the former is animprovement or improved version of the latter thereby making both substances still substantially the same.

TRYCO contends

that application of the doctrine of equivalentswould not alter the outcome of the case, Albendazole and methyl 5

propylthio-2-benzimidazole carbamate being two different compounds with different chemical and physical properties.

It stresses that the existence of a separate U.S. patent for Albendazole indicates that the same and the compoundin Letters Patent No. 14561 are different from each other;

that since it was on account of a divisional application that the patent for methyl 5 propylthio-2-benzimidazole

carbamate was issued, then, by definition of a divisional application, such a compound is just one of several independen

inventions alongside Albendazole under petitioners original patent application.

Issue:

1. WON there was Patent Infringement by Tryco because Albendazole (the active ingredient in trycosimpregon drug) is included in Smith Klines Letters Patent.


22/39



Held/Ratio:

1. CA Decision affirmed. Tryco was not liable for any infringement of the patent of Smith Kline since Smith Klinefailed to show that Albendazole is the same as the compound subject of Letters Patent No. 14561.

From a reading of the 9 claims of Letters Patent No. 14561 in relation to the other portions thereof, no

mention is made of the compound Albendazole.

When the language of its claims is clear and distinct, the patentee is bound thereby and may not claim anything

beyond them. And so are the courts bound which may not add to or detract from the claims matters not expressed

or necessarily implied, nor may they enlarge the patent beyond the scope of that which the inventor claimed and

the patent office allowed, even if the patentee may have been entitled to something more than the words it had

chosen would include.

Mere absence of the word Albendazole in Letters Patent No. 14561 is not determinative of Albendazoles non-

inclusion in the claims of the patent. While Albendazole is admittedly a chemical compound that exists by a namedifferent from that covered in petitioners letters patent, the language of Letter Patent No. 14561 fails to yield

anything at all regarding Albendazole. And no extrinsic evidence had been adduced to prove that Albendazole

inheres in petitioners patent in spite of its omission therefrom or that the meaning of the claims of the patent

embraces the same.

While petitioner concedes that the mere literal wordings of its patent cannot establish private respondents

infringement, it urges this Court to apply the doctrine of equivalents.

The doctrine of equivalentsprovides that an infringement also takes place when a device appropriates a prior

invention by incorporating its innovative concept and, although with some modification and change, performs

substantially the same function in substantially the same way to achieve substantially the same result.

Yet again, a scrutiny of petitioners evidence fails to convince this Court of the substantial sameness of petitioners

patented compound and Albendazole. While both compounds have the effect of neutralizing parasites in animals

identity of result does not amount to infringement of patent unless Albendazole operates in substantially the same

way or by substantially the same means as the patented compound, even though it performs the same function and

achieves the same result. In other words, the principle or mode of operationmust be the same or substantially

the same.

The doctrine of equivalents thus requires satisfaction of the function-means-and-result test, the patentee

having the burden to show that all three components of such equivalency test are met.

As stated early on, petitioners evidence fails to explain how Albendazole is in every essential detail identical to

methyl 5 propylthio-2-benzimidazole carbamate. Apart from the fact that Albendazole is an anthelmintic agent

like methyl 5 propylthio-2-benzimidazole carbamate, nothing more is asserted and accordingly substantiated

regarding the method or means by which Albendazole weeds out parasites in animals, thus giving no information

on whether that method is substantially the same as the manner by which petitioners compound works. The

testimony of Dr. Orinion lends no support to petitioners cause, he not having been presented or qualified as an

expert witness who has the knowledge or expertise on the matter of chemical compounds.

As for the concept of divisional applications proffered by petitioner, it comes into play when two or more

inventions are claimed in a single application but are of such a nature that a single patent may not be issued forthem. The applicant thus is required to divide, that is, to limit the claims to whichever invention he may elect,

whereas those inventions not elected may be made the subject of separate applications which are called divisiona

applications.

What this only means is that petitioners methyl 5 propylthio-2-benzimidazole carbamate is an invention distinct

from the other inventions claimed in the original application divided out, Albendazole being one of those other

inventions. Otherwise, methyl 5 propylthio-2-benzimidazole carbamate would not have been the subject of a

divisional application if a single patent could have been issued for it as well as Albendazole.

Re: damages (not really that important)


23/39



Court does not sustain the award of actual damages and attorneys fees in favor of Tryco. The claimed actual

damages of P330,000.00 representing lost profits or revenues incurred by private respondent as a result of the

issuance of the injunction against it, computed at the rate of 30% of its alleged P100,000.00 monthly gross sales

for 11 months.

Court does not sustain the grant of attorneys fees to Tryco having been allegedly forced to litigate as a result of

petitioners suit. Even if a claimant is compelled to litigate with third persons or to incur expenses to protect itsrights, still attorneys fees may not be awarded where no sufficient showing of bad faith could be reflected in a

partys persistence in a case other than an erroneous conviction of the righteousness of his cause. There exists no

evidence on record indicating that petitioner was moved by malice in suing private respondent.

Court grants Tryco temperate or moderate damages in the amount of P20,000.00 which it finds reasonable under

the circumstances, it having suffered some pecuniary loss the amount of which cannot, be established with

certainty.


24/39

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