Lifescan Scotland, Ltd. v. Shasta Technologies, LLC

Rudolph that the agree with We Conclusion part analysis depended court’s We have considered the remainder of Indeed, court’s finding of willfulness. parties’ arguments and do not find litigation Rudolph’s repeated references persuasive. them finding inex “and” the willfulness conduct AFFIRMED-IN-PART, REVERSED- exceptional to the case tricably link both IN-PART, AND VACATED-IN-PART vacate the Accordingly, we determination. REMANDED. case and finding exceptional of an court’s attorneys’ fees corresponding award Costs and costs. party. No costs awarded to either

IV. Laches equitable Laches is an defense prove must infringer the accused

for which (1) delay bringing

that: inexcusable,

suit was unreasonable (2) ma alleged infringer suffered delay. prejudice

terial attributable

A. Co. v. R.L. Chaides C. Aukerman SCOTLAND, LIFESCAN LTD. and (Fed.Cir. Co.,

Constr. LifeScan, Inc., Plaintiffs- 1992) (en banc). a district We review Appellees, determination about laches for court’s of discretion. Id. abuse v. court determined that Ru- The district TECHNOLOGIES, SHASTA LLC dolph prove did not laches based on its Technologies, Inc., Conductive unreasonably de-

finding that ITC did not Defendants-Appellants, lay filing The court also determined suit. delay any purported prejudice did not design it Rudolph because the no-touch Corp. Instacare and Pharmatech allegedly developed could have earlier was Inc., Solutions, Defendants- infringe found to under the nevertheless Appellants. equivalents. doctrine of No. 2013-1271. Rudolph argues that we should vacate it fo- the court’s determination because Appeals, United States Court gave prejudice prong cused on the Federal Circuit. unreason- only cursory treatment Nov. delay prong. argues prejudice It able delay it contends that from ITC’s redesigned prod- pre-2007

it could have filed

uct sooner and at lower cost had ITC

suit sooner. agree with ITC that there was no

We finding error in the district court’s

clear Therefore, Ru- delay.

no unreasonable irrelevant,

dolph’s arguments are and we

affirm the determination of no laches. Handler,

MO. Of counsel was Carole E. LLP, Lathrop Gage Angeles, of Los CA. DYK, PROST, REYNA, Before Judges. Circuit DYK, Judge. Circuit LLC; Technologies, Defendants Shasta Inc.; Technologies, Conductive Instacare Solutions, Corp.; and Pharmatech Inc. “Shasta”) (collectively, appeal from a deci- sion of the United States District Court for grant- the Northern District of California ing preliminary injunction in favor of Scotland, Plaintiffs LifeSean Ltd. and Li- (“LifeSean”). feScan, injunction Inc. The prohibited making, using, Shasta from or selling glucose strips. its blood test The making, using, district court found that the selling likely Shasta’s indirect- ly infringes Patent LifeScan’s U.S. No. (“the 7,250,105 patent”). '105 Because we agree that that it Shasta established has defense, has a we re- verse.

Background I glucose This blood moni- case concerns by individ- toring systems, which are used uals with diabetes to assist them main- Diskant, taining healthy glucose levels. Gregory Belknap L. Patterson blood Such LLP, York, NY, Tyler systems typically & of New consist of an electro- Webb argued plaintiffs-appellees. With him disposable strips. chemical meter and test Eugene on the brief were M. Gelernter system, To use the the user first inserts a Crotty. and Kathleen M. Of counsel on meter, a lancet strip into the then uses the brief were Charles Hoffmann and Sean drop places a small of blood and draw Marshall, LLP, Strong Hoffmann Marshall strip. on the test con- drop York, of New NY. electrodes, may tains one or more “working electrodes” or “reference elec- Shaeffer, LLP, Lathrop Gage& John J. trodes,” and which connect to meter CA, Angeles, argued for defen- of Los during operation. working Each electrode him on the brief dants-appellants. With enzyme, glucose is coated with an such as An- were Robert P. Andris and Lael D. oxidase, mediator, ferricyan- such as dará, and a Majeski, Bentley, of Roper, Kohn & glucose CA; enzyme ide: The reacts City, Rudy, Redwood and William A. LLP, City, sample, releasing electrons. The Lathrop Gage & of Kansas the blood the concentration of said substance those electrons to transfers mediator then working sample liquid; elec- working electrode. meter, which connected trode is working part a second sensor down- electric current. resulting measures the working first sensor stream from said correlates with Because this current carri- part generating charge also for sample, in the glucose concentration to the concentration proportion ers measure the user’s is thus able to meter sample liquid of said substance The reaction occur- level. glucose blood working wherein said first and second working electrode does not ring that, at the arranged such parts sensor electrode because condition, occur at the reference an the absence of error is not coated with the reference electrode quantity charge of said carriers Thus, by glucose comparing oxidase. working first sen- generated said electrode to the current at the reference substantially part identical sort] [is] electrode, the me- working current at the quantity charge to the of said carriers verify produced ter can that the current working generated by said second solely electrode is due to the working part; sensor and with enzyme reaction of the and mediator part upstream a reference sensor glucose sample. blood working from and second said first parts sensor which sensor disposable reference glucose Blood meters part is a common reference for both general design test of this first be- working The '105 the first and second sensor came available 1980s. upon sys- parts, part earlier improve claims to said reference sensor comparing working a method of said first and second sensor tems. It claims separate parts being arranged the measurements taken two such readings sample liquid If the is constrained to flow working electrodes. significantly, substantially unidireetionally across working two electrodes differ problems inadequate part such as said reference sensor and said this indicates defects, manufacturing sample working parts; volume or first and second sensor readings working to be discarded. A wherein said first and second and the are parts reference electrode on the serves as sensor and said reference sensor working part provided disposable common reference for both elec- are on a strip; trodes. applying sample liquid to said system, such a LifeScan manufactures device; measuring

which calls the “OneTouch Ultra” blood measuring an current at each electric system. According to glucose monitoring working part proportional sensor LifeScan, system uses its OneTouch Ultra the concentration of said substance technology in the '105 described sample liquid; only independent ent. Claim the claim patent, comparing in the '105 reads: the electric current from working parts each of the sensor measuring the concen- A parameter; establish a difference sample liquid in a tration of substance giving an indication of an error if said comprising steps of: parameter greater difference than a device[,] said de- providing measuring predetermined threshold. vice comprising: 1. 4. In working part gener- a first sensor '105 col. 6 1. 52 to col 8 system, ating charge proportion carriers in to LifeScan’s OneTouch Ultra meters, Shasta, to the lo- can’s parts” according “sensor refer electrodes ex- an strips. “measuring cated on the rights hausted LifeScan’s under its meth- ...,” “comparing electric current the elec- od substantially because the meters ...,” “giving tric current indication embody the invention. steps performed by ...” of an error granted The district court

the meter. motion for a preliminary injunction. With sells 40% of its meters at be- LifeScan’s, respect to likelihood of success prices. cost It distributes the remain- low merits, the court first addressed the ing through of its OneTouch meters 60% issue of began by exhaustion. It providers, give health care who in turn concluding likely that LifeScan was to es meters to diabetic for free. Li- individuals tablish that its was not exhausted way its meters in feScan distributes this respect with expectation “in intent that 60% meters that it custom- ers will use OneTouch Ultra meters distributes for free. It reasoned that pat strips, OneTouch Ultra test [its] ent exhaustion applies only to a “sale” a profit.” JA 319. [it] derivefs] where the has received “consider meters, glucose Shasta does not sell blood ation” in exchange patented prod for the competes but with LifeScan the market . uct It concluded that because LifeScan strips. for “GenStrip” test Shasta’s test no “receive[s] remuneration at the moment designed to work with LifeS- part[s] invention,” [it] [its] can’s meters. likely LifeScan could that patent show ex haustion inapplicable is to the meters dis II 9, for tributed free. JA The court also 9, 2011, September On LifeScan filed concluded that exhaustion would against suit Shasta. In its amended com- apply not to LifeSean’s sale of the remain plaint, alleged that Shasta’s manufacture ing meters because “the '105 is a GenStrips and distribution of would indi- requires both a meter rectly infringe patent.1 alleged the T05 It a prac for an individual to that the users GenStrips of Shasta’s Although tice it.” JA 10. the court ac infringers. direct sought LifeScan also that, Quanta, knowledged under a method prehminary injunction a barring Shasta claim is exhausted the sale of a contributing inducing “from to and in- “ ” ‘substantially embodies’ the inven fringement patent] by selling '105 [the tion, Quanta, 11 (quoting JA 553 U.S. at offering GenStrip product to sell [its] 633, 2109), it that Li- concluded the United States.” JA 62. Shasta ar- “likely embody do not feScan’s meters gued preliminary injunction that a should patent.” inventive feature of the '105 JA issue, alia, not inter had a Shasta rejected 14. The district court also Shas defense based on the doctrine substantial invalidity noninfringement ta’s other Quanta exhaustion under Com- court arguments. Finally, the district con Electronics, Inc., puter, Inc. v. LG 553 in 617, 2109, remaining preliminary cluded that the 170 U.S. L.Ed.2d 996 (2008). junction The sale and distribution LifeS- factors favored LifeScan. complaint infringe- Granting 1. LifeScan’s also asserted Office. Order in Part and Den. patents. Stay, LifeScan, two other Part Defs.' Mot. to No. 11-cv- ment of District Court 1149827, (Mar. granted stay subsequently 2013 WL ECF No. Shasta’s motion 19, 2013). patents perti- patents pending are not action as to those other These other injunction ap- parte pro- preliminary or this the outcome of ex reexamination nent to the ceedings peal. at the U.S. Patent and Trademark I jurisdic have appeals. We Shasta 1292(c)(1). § to 28 U.S.C. pursuant tion argument primary deci that a district court’s the extent “[T]o meters, of its that the distribution injunction preliminary grant sion to trigger gift, sale or does law, our review hinges questions substantially meters do not because its Car, Ltd. v. Can. de novo.” Nat’l Steel embody patent. claims of the '105 Be (Fed. Ltd., F.3d Ry., Pac. patent, cause the '105 is method Cir.2004) marks and alteration (quotation agree gov this issue is parties omitted). granted we April On Supreme Court’s decision erned in stay, staying the motion for Shasta’s Quanta. further order of junction “pending Court had Before Scot., Ltd. v. Shasta court.” held, repeatedly addressing pat device (Fed.Cir. LLC, Techs., Apr. No. 2013-1271 ents, device the sale of 2013). patent-holder’s right to ex exhausted clude, infringement that an suit would Discussion subsequent sale respect not lie with injunction is “an preliminary A Burke, or use of the device. Adams v. may only be extraordinary remedy that infringer argued the accused example, showing that upon a clear awarded coffin lids ex the sale of to such relief.” Winter plaintiff is entitled rights in the lids hausted the Council, Inc., 555 v. Natural Res. Def. though throughout the United States even L.Ed.2d 249 in- assignee from whom the accused (2008) Armstrong, 520 (citing Mazurek v. 972, 1865, purchased only was author 968, fringer 138 L.Ed.2d lids 117 S.Ct. U.S. (1997) curiam)). plaintiff “A in (per geographi 162 ized to sell the lids a limited injunction (17 Wall.) must es seeking preliminary 453, 21 cal area. 84 U.S. L.Ed. likely tablish that he is succeed (1873). explained that “the 700 The Court merits, irrepara likely that he is to suffer person right who has the full sale preliminary ble harm in the absence of make, sell, and use such a machine carries relief, in equities tips the balance right with it the to the use of that machine favor, injunction is in the his and that an to the full extent to which it can be used.” 20; Id. at see also Titan public interest.” applied at 455. The Id. Holland, Inc., 566 Corp. Tire v. Case New in many exhaustion doctrine (Fed.Cir.2009). 1372, If the F.3d 1375-76 involving product patents. other cases infringer accused “raises a substantial See, Folding e.g., Keeler v. Standard Bed infringement or question concerning either Co., 659, 738, 39 L.Ed. 157 U.S. 15 S.Ct. validity,” then the has not estab (1895); Millinger, Bloomer v. 68 U.S. 848 likely that it is to succeed on the lished Wall.) (1 (1864). 340, 17 L.Ed. 581 merits, injunction is not preliminary and a doc applied The Court the exhaustion Amazon.com, Inc. v. appropriate. See product patents to method as well as trine Barnesandnoble.com, Inc., 1343, 239 F.3d Co., an in States v. Univis Lens United (Fed.Cir.2001); Oakley, Inc. v. 1350-51 241, 62 S.Ct. antitrust case. 316 U.S. Int’l, 1331, 1340 Sunglass Hut (1942). 1088, patent- 86 L.Ed. 1408 (Fed.Cir.2003). Because we conclude business. operated eyeglass holder lens Shasta has established a 243-45, patent- at 62 S.Ct. 1088. The Id. law, as a reverse the defense matter we blanks” to holder’s sold “lens licensee injunction grant preliminary of a without retailers, finishing who in case. wholesalers and reaching other issues this

1367 and the lens blanks exhausted the ground polished patents then as well. that could be used in into finished lenses 246-49, 1088; See id. at 62 S.Ct. see also at 62 eyeglasses. S.Ct. 1088. Id. at U.S. 128 S.Ct. 2109 patents numerous re patent-holder owned (“Univis optical held that the sale of lens 246-47, eyeglass id. at lated to lenses. See partially practiced blanks that 1088; v. United States Univis exhausted patents the method that were (S.D.N.Y. Co., 262-63 F.Supp. Lens completely practiced until the blanks 1941) many (listing describing and lenses.”). ground were into patents-in-suit), part and rev’d in aff'd part, 316 U.S. 86 L.Ed. Quanta confirmed the exhaustion (1942). patents Of the at issue in the applies patents doctrine to method case, eight product patents were describ clarified the applicable test. 553 at U.S. size, ing “shape, composition and dis 628-35, Quanta 128 S.Ct. 2109. involved pieces of ... position glass different patents several containing method claims Univis, power refractive blanks.” [lens] performed directed to functions by com- at 62 S.Ct. 1088. The other puter processors chipsets conjunc- patents patents. relevant were method tion computer components, with other such See id. 62 S.Ct. 1088. The memory as and buses. Id. at ... Supreme Court that sale of “assume[d] LGE, S.Ct. 2109. patent-holder, li- by an blanks unlicensed manu [lens] censed pro- Intel manufacture and sell to an facturer unlicensed finisher” to be cessors chipsets embodying ground polished into finished lenses technology. ented Id. at contributory infringe “would constitute Intel, turn, S.Ct. 2109. pro- ment the seller.” sold its 248-49, 62 S.Ct. 1088. chipsets computer cessors and manufac- Quanta turers such Computer, who

The Court held that once the lens blanks processors combined chipsets manufacturer, were sold a licensed unpatented components to create finished patent-holder’s rights them were ex- 249-52, hausted. Id. at computer systems S.Ct. 1088. practiced that the meth- The Court reasoned that incident to “[a]n 624, patents. od Id. at 128 S.Ct. 2109. A article, any purchase pat- whether separate agreement between LGE and In- unpatented, right or is the to ented use required purchasers tel Intel to instruct it,” and sell and that “the authorized sale processors that chipsets those and Intel’s capable only of an article which is of use processors license to make and sell the and practicing patent relinquishment is a chipsets ... any prod- “d[id] extend to patent monopoly respect with to the purchasers] uct combining [the ma[d]e 249, article sold.” Id. at 62 S.Ct. 1088. an Intel product any prod- non-Intel Thus, the that Court held the sale of an 623-24, (quota- uct.” Id. at 128 S.Ct. 2109 article which essential “embodies features” omitted). Nevertheless, Quan- tion marks pat- of a invention exhausted the Computer computers ta manufactured rights ent-holder’s in that at article. Id. processors chipsets which Intel and were 250-52, patent-holder 62 S.Ct. 1088. The 624, parts. at combined with non-Intel Id. that ... conceded “each blank em- [lens] that 128 S.Ct. 2109. LGE contended patented” bodies essential features of the Quanta’s pro- combination of the Intel invention. Id. at 1088. The S.Ct. and with non-Intel memo- chipsets cessors patents pre- Court viewed the- method ry infringed and buses the method claims senting the question same as the device patents, holding patents. that the sale of the blanks of LGE’s Id. memory” and because nected to buses and held that LGE’s Court Supreme

The Intel’s sales to only apparent object of exhaustion. “the by patent was barred suit Quanta incorpo to argument Quanta permit was to rejected LGE’s first The Court chipsets] to apply [processors did not rate the Intel exhaustion that practice pat that it computers stated into that would patents. Court ents.” Id. at patents 2109. The that method 128 S.Ct. “repeatedly held had products of an item that that Intel’s by the sale Court further held were exhausted method,” be pointed substantially patents embodied the embodied about each prior “[everything of such a inventive Univis example as an cause 629, 128 [pro Id. at 2109.2 in the Intel holding. S.Ct. embodied [was] and “because the chipsets]” cessors and next addressed “the extent The Court step necessary practice only additional embody product must application of com patent[s was] Id. at trigger exhaustion.” order of standard processes mon or addition It concluded that the issue 2109. 633, 128 parts.” Id. at 2109. S.Ct. Id. at Univis. governed was above, the Su- 2109. As discussed S.Ct. A finding of exhaustion preme Court’s exhaus- con- The facts relevant Univis was based on the undisputed. Shasta tion issue here are “embodie[d] its lens blanks cession Quanta other argues inven- that under Su- features” of the essential cases, 250-51, transfer of the preme at Court 316 U.S. S.Ct. tion. Quanta and users providers that meters to health care thus held 1088. issue, patent rights. exhausts LifeScan’s LifeS- whether a method the critical involved, disagrees. can It first contends is whether the product patent Quanta meters inapplicable because its “substantially embodies the Rely- uses. i.e., steps noninfringing have reasonable the additional ent” — Quanta noting ing language invention from the complete needed to processors chipsets “had no “inventive” or the Intel product are themselves use,” noninfringing reasonable 553 U.S. at “noninventive.” argues case Applying that test not result in it, component the sale of a does before Court found component where the has rea- processors of Intel’s the authorized sale noninfringing sonable uses. LifeScan’s chipsets exhausted LGE’s theory to be that if the meters had Id. rights. appears 128 S.Ct. 2109. It use, noninfringing then the explained processors chipsets that the and reasonable of the would not necessari- noninfringing had use be- transfer meters no reasonable ly recipient ... that the was authorized they imply “cannot function until con- cause Quanta allegedly anticompetitive licensing Ethyl 2. The Court in also cited Gaso its States, 436, Corp. U.S. pat- line v. United agreements scope were within the 618, (1940) 84 L.Ed. 852 as a case 456-57, monopoly. ent Id. at 60 S.Ct. 618. applied patent exhaustion to where it had "by held that the authorized sales The Court Quanta, 629, patents. U.S. at jobbers patent by to of the fuel refiners 4, Ethyl 629 n. 128 S.Ct. 2109. Gasoline was exhausted, monopoly and after the over it is by government against an antitrust suit may appellant the refiners sale neither nor patentee product and meth that owned both any longer rely patents exercise patents relating tetraethyl od lead for use may price fuel over the at which the control Gasoline, Ethyl 309 U.S. at motor fuel. 457, Id. at 60 S.Ct. 618. be resold.” 445-46, argued patentee 60 S.Ct. 618. The op- the claimed invention as practice are therefore not relevant to the issue of posed noninfringing alternative. patent exhaustion. recently rejected have

We contention B potential non-infringing pre- use that a question where the vents exhaustion usé LifeScan next argues that exhaustion is very contemplated by is the use inapplicable because the meters do not Inc., Keurig, ented invention itself. v. embody the essential features of the '105 Foods, Inc., Sturm No. Quanta, In patent. (Fed.Cir. 2013 WL *3 emphasized that “[everything inventive 2013). Oct. about each embodied in [was] [processors Intel chipsets]” if a showing Even of reasonable nonin- they “controlled]” out” the “carried] fringing of a could alone uses Quan functions described in patents. here, sufficient to avoid exhaustion we ta, 128 S.Ct. 2109. find no argu- merit Similarly, question here is whether the ment. argument LifeScan bases this on meters “carry “control” and out” in expert testimony that Shasta could have ventive functions described the method designed strips new that would work with patent. claims of the '105 See id. noninfringing way. LifeScan’s meter in a question But the is not whether Shasta filed, As originally the application that design could a noninfringing use for LifeS- led to the '105 separate claimed two meters, it can’s is whether individual inventions —the comparing method per (the alleged infringers) users direct have a formed configuration meter and the Here, noninfringing use for the meters. Thus, strips. electrodes the test suggestion there is no that the users can specification describes a “method” in which put noninfringing LifeSean’s meters measuring “the compares device the cur uses. generated by rent working two sensor parts gives error indication if they any event, alternative uses are dissimilar,” are too '105 col. 2 ll. 27- inquiry relevant to the exhaustion under separately origi describes the Quanta only they if are both “reasonable ” nally-claimed arrangement of electrodes on and intended its au working so that the “two thorized licensee. parts arranged sensor one downstream added); 128 S.Ct. 2109 (emphasis see other,” see id. col. ll.3 43-44. How also 316 U.S. at 62 S.Ct. 1088 ever, while the claims directed to the com (noting only object that “the the sale is allowed, paring method were the claims [purchasers] to enable grind polish directed to the test themselves were lens [the blanks] use as a lens rejected. question is what the inven added)). prospective (emphasis wearer” tive features of the method claims were. LifeScan admits that it distributes its me What is “inventive” about claims expectation “in the ters and intent exhaustion context is what dis customers will use its OneTouch Ultra me tinguishes from prior them art. See ters with OneTouch strips,” [its] Ultra test 316 U.S. at 1088. added), (emphasis JA 319 and that such Thus, dissent, practices patent. use the '105 Contrary even to the a biosensor if proposed multiple LifeScan’s alternative uses for with electrodes was known art, its meters were reasonably prior expert available to as own admit- LifeScan’s users, intended, they were plainly not and ted. Patent No. JA See also U.S. court, too, The district Here, tion.” JA 2108-09. the un

5,120,420, ll. 19-30. col. patent that the invention of the '105 found pat of the facts, specification disputed problem of addressing was directed history sug all ent, prosecution and the re- readings comparing inaccurate of concept inventive the claimed gest that working sensors and dis- sults from two lies patent of the '105 method claims message necessary. if an error playing meter, strips, be rather than the in the history particular con- prosecution “carry out” and the meters “control” cause comparing function that the meter’s firms of the method functions the inventive in the key to the invention reflected readings comparing claims During prosecution claims. The text working two electrodes.3 patent, the '105 led to application strongly supports itself '105 parts vention a functions that “[i]n likewise the test makes no they are too dissimilar.” from meter, stating that inaccuracies can arise fects in the par[ing] conclusion current abstract ^[57] detect col. 1 ll. (emphasis “insufficient both generated emphasizes strips. describes the the current measuring accordance with the are its inventive mention of the that the meter’s gives production types and that the invention can See id. added). The abstract an error indication sample liquid” error detection of errors device two invention generated configuration working error-detecting '105 compares concept. specification present strips,” by stating by “eom- patent, by two sensor by the “de Its id. in if working were with two the method claims of the '105 them.4 issue, strips unpatentable, to a final iner once electrode claims directed to the amended LifeScan anticipated, on the require[] limitation that distinguishable explaining they [electrode].” Despite finding strips working electrodes. its claims to the rejection is “downstream from [the] attempted again rejected those claims as and LifeScan steps of its anticipated, the examiner the second to obtain from the disposable However, the method claims apparatus strips LifeScan’s “measuring an abandoned by adding the exam- apparatus prior test response working allowed claims first test art working current at each sensor electric parts,” col. 2 ll. 27-39. working sensor id. part proportional to the concentration Indeed, comparison of this discussion sample liquid; said substance and its performed function the meter current comparing the electric through found error-detecting benefits is working parts sensor to es- each of the See, e.g., col. 3 ll. specification. out the id. giv- parameter; tablish a difference 6; 3-17; col. 1.59 to col. 4 1. id. col. 5 id. if said ing an indication of an error argued ll. 26-63. LifeScan itself greater than a parameter difference comparing district court that “the idea of predetermined threshold.” working from the two sensors the currents found that they’re agree if JA 1849. The examiner thus seeing substantial “measuring,” “comparing,” “giving crux of the inven- ment or not.... is the 11/772,714. too, plication Serial No. There argues that the claims of the '105 3. Shasta rejected attempts Because we are invalid as obvious. the examiner likely prevail that LifeScan is not finding conclude strips, on its test obtain issue, we do not anticipated by strips were both U.S. Patent validity arguments. Shasta's reach 6,258,229 light of U.S. No. obvious 5,120,420. Patent No. attempted patent its 4. LifeScan also Ap- application, U.S. Patent in continuation an an steps indication of error” strips distin- would been separately have patent- guished the prior method claims able or whether the United States Patent art, not the arrangement of the electrodes. Trademark Office erroneously denied Therefore, patent steps, strips.5 those and not on the config- question The whether the strips uration of the electrodes on the strips, embodied inventive features of the claims that were actually were inventive features of the method allowed the examiner. Having allowing claims. patent premised secured a claims, the examiner did on the not at- quality of comparing inventive tribute an inventive feature function, to the strips rather than the particular strip themselves. Having accepted rejec- configuration, LifeSean argue cannot now tion of its claims drawn to strips contrary purposes of exhaustion. themselves abandoning those claims in There is also no dispute that in LifeS- both original its applica- continuation glucose can’s blood testing system, it is the tions, LifeSean cannot argue now that the meter, not the strips, performs strips themselves were the invention. “measuring,” “comparing,” “giving an The fact that specification may have indication of error” steps. LifeSean strips described considerable detail concedes in its brief that its meters “deter- and as “inventive” is of no consequence in glucose mine[ ] blood level the sam- view of the facts that'the claims covering ple by measuring the electrical current the strips were not allowed, and that the produced.” Appellee’s Similarly, Br. at 6. meter strips rather than the performs the LifeSean stated to the district court that inventive feature of claims that separate “[t]he electrical currents meas- were actually allowed.' ured at each working compared sensor are sure, To be if actually had added). by the meter.” (emphasis JA-69 issued strips, the patentability of Finally, expert LifeSean’s testified that it the strips could be relevant to exhaustion. is the meter that “will display an error That principle was announced in Morgan indicating that the is defective.” JA Envelope Albany Co. v. Wrap Perforated 1484. Because it is the meter alone Co., ping Paper performs key these inventive steps of the (1894). There, here, 38 L.Ed. 500 unlike method, claimed the meter substantially actually had issued a subsidiary embodies the method claims of the '105 (toilet rolls) paper element of a patent. See 633-34, 553 U.S. at 427, Id. at combination. 14 S.Ct. 627. 128 S.Ct. 2109. patents had obtained on a LifeSean appears argue also its particular type of roll of paper toilet meter does embody its on the combination of paper those toilet methods its themselves are rolls with a fixture on which the roll was inventive and should have been sep- found 427, 430-31, mounted. Id. at 14 S.Ct. 627. arately patentable. LifeSean bases this After concluding that the themselves rolls argument on expert testimony asserting patentable art, were not prior over the see examiners erred in re- id. at con the Court peatedly rejecting attempts its sidered the sale of the fixture strips, and that the strips in- patent'rights exhausted the combi deed have been separately patentable. nation. See id. at 14 S.Ct. 627. question But the here is not whether the infringer apparently accused conceded 5. The majority's dissent’s statements purposes patentability,” tion coextensive with decision ”make[s] inventiveness for demonstrably exhaus- Dissent at inaccurate. therefore, confirms Envelope Morgan Id. patentable a “involve[d] fixtures the combina of in the mere sale if one item that the argued

novelty,” but had to those who if the paper unpatented toilet rolls of tion is either new from the fixtures purchased concept previously invalid, the inventive and it is infringement not constitute did patentee item, the of sale a then second resides the fix- by of sale of exhaustion because a exhausts item the second 430-31, 14 627. S.Ct. at id. tures. See 432-33, 435, at See id. in the combination. that the sale concluding agreed, The Court equal is principle The same 627. S.Ct. the exhausted the fixtures of claims, Quanta, to method ly applicable 431-35, 627. S.Ct. Id. at rights. 628-29, as at of of one element that the sale noted in Keu recent decision by our confirmed in- in some could combination (Fed. at 1373 No. rig, infringement, indirect stances constitute 2013), held that where we Oct. Cir. it found but at id. in combi a coffee brewer using of principle inapplicable cartridges was ex disposable nation with by alleged the made the element where of the brewer. sale hausted the of manufacture an article infringer is nature, the it is which in its perishable that exhaus- However, argues deliver, and mechanism object of the the here apply does not tion periodically, renewed be must Although parts. not “standard” to use. Of put whenever device Quanta to the referred Supreme Court .subject is the course, product itself if the that were components computer other infringe- it would be a valid patent, of chip- and processors, Intel’s combined with purchase such ment of that parts,” as “standard sets patentee; than another product of suggest not 2109, Quanta does it is unpatentable, product be but if be viewed parts can only standard the machine patentee giving of Rather, focused the Court noninventive. product, by upon benefit of “[everything inventive fact that bought be product to such requiring embodied patent [was] about each him. (em- Id. chipsets].” and [processors Intel added). ex- The Court (emphasis Id. added). Moreover, ref- Court’s phasis that, example, for plained imply not did parts” erence to “standard patenta- of a an element loga [i]f were identical- configured parts were that those log, it sawing such mechanism ble art, refers to but rather ly prior in. would, claimed the construction upon easily parts could fact that standard purchaser require the plaintiff, processors with Intel adapted work buy logs [from] his device sawing Indeed, undisputed chipsets. was mechanism, or sub- of the manufacturers computer Quanta that the infringement. charge to a ject himself the remainder designed specifically only impossibility This exhibits compatibility systems for computer their but patent, of the this construction chipsets ac- processors Intel’s of an treating paper difficulty of Here, specifications.6 cording to Intel’s at all. combination element the Asustek designs and specifically makes See, Supp. Raymond e.g., Chen Decl. of pro- Partial Summ. and Asus for use the functionalities Products to Mot. Asustek Elees., 1-2, ¶¶ v. microproces- LG Inc. Asustek chipsets J. Intel cesses 01-cv326, Inc., ECF No. 163 No. Computer (N.D.Cal. "[djeviations spec- [Intel] sors” 3, 2002) (stating May that “Asustek strips working (“The with two electrodes were S.Ct. 334 monopoly make, limited to by disclosed prior art. The fact that use, and vend may an article not be ex prior art strips might required have panded by limitations as to materials and some reconfiguration to with use LifeS- supplies necessary operation of it.” can’s meters is irrelevant. There is no (quotation omitted)); marks Morgan En suggestion prior art strips with two velope, 433, (find 152 U.S. at 14 S.Ct. 627 working easily electrodes could not be con- ing no infringement indirect “where the figured to work with performing meters a element made by [and sold] the alleged comparing function.7 infringer ... must be periodical renewed ly, whenever by the device paten- [sold 'c use”). put tee] is to

Rejecting a claim of exhaustion in this case would particularly problematic be be principle basic underlying the Su cause LifeSean would be permitted to preme Court’s exhaustion cases is that the competition eliminate in the sale of the authorized transfer of ownership prod in a strips even though strips do not em uct embodying patent carries with it the body the claimed invention and are them right to engage in product’s contem patentable. selves not Allowing LifeSean plated use. See at 631, 553 U.S. to control sale of strips would be akin 128 S.Ct. (noting the intended to allowing tying arrangement whereby use of the Intel processors and chipsets purchasers of the meters could be was to be combined and used with other barred from using the meters with com computer components practice so as to peting strips. See Motion Picture Patents patent); 249, 316 U.S. at 62 S.Ct. Co., Co. v. Universal Film Mfg. 243 U.S. (“[T]he only object of the sale is to 416, (1917) 61 L.Ed. 871 enable [purchaser] grind to and polish (holding unlawful a patentee’s attempt lens [the blank] use as a lens “under color of ... derive its wearer.”); prospective Adams, 84 profit ... unpatented supplies (“The 84 U.S. 453 true ground on with which product] [the which Supreme [the early Court’s exhaus used”); Corp. Carbice Am. v. Am. Pat tion cases] rest is that the by person sale Corp., ents Dev. who (1931) (“Control right make, sell, has the full 75 L.Ed. 819 over the use supply of ... such a unpatented machine carries it the material is be yond the scope right monopo the use of that machine to full ly....”). ”). extent it can be used.... Here, barring the use of the meter with

In both tying cases, exhaustion manufactured the accused in- expressed has particu- fringer would lar concern bar the use of the meters for with extension monopoly contemplated to items that their function and must renewed extend the periodically and that are monopoly improperly themselves as we recent Carbice, patentable. 283 U.S. at 51 ly held in No. Keurig, relating ifications impact functions controlled or principles if a performed [processor] memory and/or were "especially especially adapted made or Asustek technically render Products in- infringement for use in patent, of such operable”). staple not a commodity article of com- merce suitable noninfringing for substantial parties 7. The argued, have not meaning' therefore use” within the of 35 U.S.C. decide, we 271(c). do not any § there would be It monopoly. [patent] 2013). limits hold We (Fed.Cir. Oct. it, longer no and is outside passes LifeS- exhausted the meter that the sale act of Con- of the protection the under rights. patent can’s machine implement .... gress The II private, indi- purchaser’s] [the becomes by the protected not argument property, vidual LifeScan's final is that embody States, the substantially by the but meters if its of the United even laws is nev claims, exhaustion patent is situated. in which it the asserted of State laws 60% of to the inapplicable ertheless added). In other (emphases at 549-50 Id. instead dis but not sold meters that right the of words, transfer patentee’s the that it asserts for free. tributed his “exhaust[ed]” machines the to use them distributing “reward” for received no Univis, machines. See to rights as those without (because distributed they were (citing 1088 62 S.Ct. at 316 U.S. there court the district that charge), and 549-50). How.) (14 at McQuewan, 55 U.S. exhaustion patent found that properly fore to references Thus, frequent despite to therefore asked We are apply. not did has Court “purchasers,” “sales” impression, first decide, a matter of as exhaustion fundamentally described more to a applies exhaustion patent product occurring when as conclude for free. We distributed a transferee hands” of to the “passes of an authorized that, case in the to it. a title” acquires “legally he when title, the of absence transfer unconditional (1 Wall.) (“legally at 351 68 Millinger, U.S. appli to the is no barrier of consideration Belt title”); v. Boston a acquires Chaffee principles. exhaustion cation of How.) 217, 223, (22 16 Co., 63 U.S. ing often Supreme Court has Although hands,” (1859) (“passes 240 L.Ed. a “sale” in terms of exhaustion discussed title”); McQuewan, 55 -acquires “legally see, v. e.g., Bowman “purchaser,” and a How.) (14 (“passes at 549-50 U.S. Monsanto Co., -U.S. -, 133 S.Ct. hands”). has stated Similarly, the Court (2013); 931 L.Ed.2d 185 by a transfer occur can exhaustion Adams, 84 U.S. at U.S. 84 [by ... authorized any person other “from of application never confined has Court 68 Millinger, convey it.” patentee] context. to that exhaustion added); Wall.) (1 (emphasis at U.S. underlying the rationale explained Court How.) (same); (22 at 63 U.S. Chaffee, of the doctrine (1st ed. Dictionary 273 Black’s Law see How.) (14 McQuewan, 55 U.S. Bloomer v. 1891) pass “convey” “[t]o to mean (defining Quan (1853). See also 539, 14 L.Ed. 532 from one property the title or transmit ta, 553 U.S. Univis, another”). too, the Court So á patent effect of McQuewan involved re “monopoly patentee’s stated holding licensees term extension ownership he retains the long so mains ma planning use licenses to 316 U.S. article.” patent term. original during chine added). Each of (emphasis (14 How.) held at 547-48. to in enough is broad formulations these the ... machine purchaser “the title does a transfer clude ordinary using it purpose limitation A a sale. “sale” amount to continue life” was entitled pursuits of the Su be inconsistent indeed the extended during machine using McQuewan, decision preme Court’s explained The Court at 549. term. Id. at issue had machines particular where been sold, but had instead never been passes to the hands machine when the infringer by the accused the manufactured longer it is within no purchaser, permission with the of the patentee. See ing the absence or inadequacy of (14 How.) at 548. Yet that lack of entee’s reward transfer gift. a “sale” was no barrier to application bottom, At has a exhaustion. See id. at 549-50. choice as to how to secure its reward. A Because the machines had been construct- patentee may a particular “demand[]” ed with the authorization and price in exchange for an “article and the “private, were the property”, individual invention which it embodies.” See infringer, the accused they “no long- were 316 U.S. at 1088; see also protection er under the of’ the Patent Act. McQuewan, (14 How.) 55 U.S. at 552. Al Id. The application narrow of ex- ternately, patentee a may give choose to by haustion urged LifeScan would be in- that article away for free in hope consistent with the doctrine’s underlying obtaining benefit, a future as LifeScan did permit rationale —to the owner of an item here. patentee But a cannot evade patent who it in an received authorized transfer exhaustion principles by choosing give to to use it. the article away rather than charging a LifeScan relies language Supreme particular price for it. patentee Where a Court exhaustion decisions mentioning the unconditionally parts with ownership of an receipt of “consideration” or by “reward” article, it later complain cannot that patentee as supporting exhaustion. approach that it chose results in an inade See, e.g., 251, 316 U.S. at quate reward and that therefore ordinary (“[T]he patentee 1088 has received his re- principles of patent exhaustion should not ward for use of the invention by the apply.8 ”); Adams, sale of the article.... 84 U.S. Additionally, (17 while not Wall.) (“[W]hen “controlling” re- at 456 patentee ... garding law, issues of sells a machine ... see Bobbs- whose sole value is Straus, Merrill Co. v. use, 339, 346, its 210 he U.S. receives the 28 consideration for 722, (1908) S.Ct. parts use and he 52 (quotation with the L.Ed. 1086 right to use.”). omitted), control that But marks none of copyright the cases cases further by cited any LifeScan involved suggestion reinforce our conclusion that patent ex- that exhaustion could be avoided show- applies gifts.9 haustion to In Supreme sure, 8. To be compensation sale, amount of is fer an unconditional not a conditional 1107-08; received may some sale or instanc license. Id. at Hewlett- Stencil, Packard question Repeat-O-Type es be v. relevant to the 123 F.3d whether a (Fed.Cir.1997) ("[A] intent, 1453 particular seller's transaction is indeed an uncondi contract, unless embodied in an enforceable tional ownership opposed transfer as ato does not right create a limitation on the of a conditional sale or Corp. license. See Princo use, sell, purchaser to modify or a Comm'n, v. Int'l Trade 616 F.3d 1328 Here, product.”). expressly LifeScan states (Fed.Cir.2010) (en banc). No inquiry such that it "does not contend that the notice necessary Although points here. to forms a binding Appellee's contract.” Br. at a notice packaging on its pur meters’ that Accordingly, LifeScan’s contention that portedly requires customers to use LifeScan’s its transfer of pro the meters to care health appears argue that it has patients viders and was "conditional" or a provided "only users with grant conditional mere "license” is meritless. rights,” Appellee’s of use Br. at our cases make clear that such notices are rele Supreme 9. frequently Court has ex- only they vant if are “in the form of a contrac plained copyright cases inform similar agreement,” tual Corp. Photo v. Int’l Jazz See, cases under law. e.g., Bauer v. Comm’n, (Fed.Cir. Trade 264 F.3d O'Donnell, 1108 1, 13-14, 33 57 S.Ct. 2001). purchaser Unless the (1913) ("In has made an L.Ed. providing grants 1041 for "express undertaking,” contractual rights the trans- privileges exclusive to inventors 1376 Co., U.S. Mach. Kirtsaeng v. decision recent Court’s (1917) (explaining 412, 61 L.Ed. Inc., held Sons, the Court Wiley &

John restraints place “to attempt law copyright doctrine first sale alien- further product’s] doc- upon [a (comparable hateful have been copy- as such trine) [was] ation equally applies ours”). day to in the Unit- Coke’s from Lord manufactured the law work is righted — -, abroad. ed States addressed specifically Ninth Circuit L.Ed.2d S.Ct. first doc- sale copyright’s application sale first copyright’s (2013). Although Inc. v. Recordings, gifts in UMG trine exhaustion, has doctrine, unlike Cir.2011). (9th Augusto, statute, 17 U.S.C. see codified been copyright case, owned UMG looked to 109(a), § at 1177. Id. CDs. promotional content interpret law roots common doctrine’s CDs promotional these It distributed Kirtsaeng, 133 provision. music critics such to individuals free a com- (“The doctrine ‘first sale’ 1363 Augus- Id. When programmers. radio and his- impeccable doctrine mon-law CDs, UMG sold the and to obtained explained The Court pedigree.”). toric in- copyright him for against brought suit was traceable doctrine first sale that consti- his sales that arguing fringement, re- permit refusal law’s common “the rights to of its exclusive a violation tuted Id. of chattels.” the alienation straints 1178; at id. the CDs. See content of policy, that common-law To elaborate on 106(3). The Ninth § also U.S.C. see from Lord length at quoted the Court that UMG’s It held disagreed. Circuit England, of Laws Institutes Coke’s exhausted of the CDs distribution free stating: Augusto, copyright under law. rights horse, ... a of possessed be a man [If] that reasoned The court at 1183. F.3d or give ... and chattell any of other or name, the its distinctive “Notwithstanding upon therein interest ... his whole .sell only when a not applies doctrine sale] [first shall Vendee the Donee condition sold, copy given is when but copy is first same, is the [condition] alien[ate] with- transferred otherwise away or title is is interest ... voi[d], his whole a sale.” Id. the accouterments out possibilitty] no him, hath as he so out “[o]nce explained 1179. The court Trade Reverter, against it and aof item copyrighted places owner copyright con- Traffi[c], and bargaining and and ..., has he of commerce in the stream it man: man and tracting betwee[n] statutory right his exclusive exhausted Author that reason our within (quotation Id. its distribution.” control given power him of all ouster should omitted). marks him. underlying policies The common Coke, 1 E. Institutes (quoting Id. doc first sale and the exhaustion (1628)) 360, p. § England Laws of undermined significantly would be (em- trine (omissions original) and alterations case. in this advocates rule underly- added). Thus, policy phases restriction, re contractual a valid Absent no distinc- doctrine draws ing the first sale sale use or downstream upon the straints The same and sales. gifts tion between against “offend of a doctrine undergirds policy of traffic ordinary and usual freedom Talking v. Victor Straus exhaustion. See Vending’ another patent act and inten- had no Congress authors we think law.”). copyright sense in 'vend' one the term to use tion chattels,” see John D. Park & Sons Co. v. Conclusion Hartman, (6th Cir.1907), 153 F. In summary, we hold that ex- regardless is so of the amount of haustion principles apply equally to all au- consideration demanded thorized transfers of title in property, re- it originally parted when with the product. gardless of the particular transfer Indeed, conditioning patent exhaustion on at issue gift constituted a or a sale. We adequacy further conclude reward that LifeScan’s OneTouch Ultra meters substantially “would cast a cloud of uncertainty” over embody methods claimed in the every '105 transaction every their distribution therefore exhausts Tessera, product. Inc. v. Int’l Trade LifeScan’s patent rights. We therefore Comm’n, (Fed.Cir. reverse the district grant court’s of pre- 2011) (holding ap liminary injunction and remand for further plied even though the seller failed pay with, proceedings consistent opinion. this promised royalties to patentee). That REVERSED AND REMANDED result “wholly inconsistent with the fundamental purpose of patent exhaus Costs prohibit tion—to post[-]sale restrictions on Costs to Shasta. the use of a article.” (citing Id. McQuewan, (14 How.) 549). If REYNA, Circuit Judge, dissenting. patentees could evade merely exhaustion (cid:127) The majority holds that sale by giving away one component appa of an (or promotional giveaway) of its unpatent- ratus or method tying claim and recipi the ed blood glucose meter1 exhausts its ability ent’s to use component rights in method, which re- subsequent purchase of compo another quires specialized con- nent, patent then exhaustion would be a sumed in practicing method, the dead letter and consumers’ reasonable ex the meter “controls and carries out” the pectations regarding private their property functions described in the and Li- would be significantly Quan eroded. See feScan failed obtain a patent for the test ta, 630-31, 553 2109; U.S. at strip. The majority reaches its result United v. Corp., States Masonite 316 U.S. conflating patentability the product of a 265, 280, 1070, 86 L.Ed. 1461 product’s the ability to substantially (1942) (“Since patents privileges are re embody the essential patent- features of a strictive of a economy, free rights the ed method. majority, The reasons that Congress which has attached to them must because LifeScan did obtain not a patent strictly construed so as not derogate strips, its test strips could not those general beyond law the necessary substantially embody the essential features requirements statute.”). of the patent We of Yet, its patent. method the Supreme

therefore patentees conclude that cannot Court recognized has it that makes “no circumvent the application of patent ex difference to the infringement non- or principles by haustion distributing prod infringement of a combination that one of uct embodying for free. its or all elements of its elements 1. packaging On promotional its and only patent materi- applicable design to the meter is a. als, LifeScan's glu- OneTouch® Ultra® blood D546,216 patent, (filed U.S. Patent No. Jul. cose meters and test list a number 11, of 2005), inapplicable which is case. this patents combination, embodied in the but the

1378 Quanta, method. cesses of v. Convertible Mfg. Co. Aro unpatented.” 2109 C‘[T]he 375, 633, 128 S.Ct. at 81 Co., 553 U.S. U.S. 365 Replacement Top cen- (Harlan, J., was not (1961) ] Univis process [in grinding 592 599, 5 L.Ed.2d S.Ct. process v.Co. That standard & Catlin patents. Leeds tral dissenting) (quoting Co., U.S. any 213 of Talking Machine detail included was not Victor (1909)). 816 L.Ed. all in 53 to at S.Ct. not referred and was patents 29 pronouncement recent Court’s Court did The The patents.”). of the two exhaustion method context inventive a line between clearly demarcate in Aro observation Harlan’s Justice makes analysis its but processes, and standard Quanta today. See applicable less no is informative. that case the facts Inc., Elecs., v. LG Computer, Inc. chipset, microprocessor particular, 170 L.Ed.2d S.Ct. part of a material “eonstitute[d] patentability (2008). disagree with I completely all but invention the other casts on majority gloss substantially em- patent,” practice[d] standard straightforward wise processes the inventive bodied I re Accordingly, Quanta. expressed only “the issue because spectfully dissent. patent [wa]s necessary practice step processes common application I. (em- Id. parts.” standard the addition of has held Court added). stan- of those The addition phasis when triggers exhaustion of a sale buses, was memory and components, dard is to use intended only reasonable doing so noninventive, and common substantially em it practice decision or inventive no creative required patent of the features the essential bodies Id. infringer. accused part 631, 128 U.S. at ed invention. em- S.Ct. v. Uni United States 2109 (quoting S.Ct. steps the nature phasized Co., vis Lens characteristic, rather the relevant that is (1942)). no is There L.Ed. components of the patentability than the only the in this case dispute real Id. at themselves. use of LifeScan’s and intended reasonable chip- (“While microprocessor ... each pat the practice meter is to glucose blood individual thousands practices set at 1368-69. Maj. Op. See ent-in-suit. at issue not ents, including [patents] some question Therefore, case turns this analysis case, the exhaustion in this its test meters or LifeScan’s of whether' one more than the by fact altered embody the essential substantially product.”). by the same practiced that the I conclude patent. of the features clear that makes meters, embody analysis The Court’s and not strips, test components of the contributions inventive essential features. those the inventive- method, opposed as apparently misapprehends majority themselves, deter- components ness of which Quanta, in guidance Court’s majority’s essentialness. mine their incorrectly conclude it to causes of the Court’s misunderstanding apparent embody the strips, meters, the test and not two it to err in Quanta causes guidance of LifeScan’s features essential respects. separate In method. es- embodies that a explained A. when of a method features sential Quanta to relies on First, majority or is involved product contains over the meter glucose the blood standard, elevate pro- inventive, opposed as strip test as the essential feature method that used working two patented method. majori- electrodes, Because of the the meter could measure two ty’s belief glucose LifeScan’s blood separate glucose blood readings. Id. As a meters carry “control and out” result, the func- a difference in the readings tions described in the patents, reasons indicate an error condition—either insuffi- that the meters embody alone the essential cient covering blood one of the electrodes features of the patent. method While the aor defective patient electrode—and the majority correctly objective identifies the could be alerted accordingly. But for the method, LifeScan’s inventive reducing specialized test strips required by LifeS- errors in glucose readings blood method, caused can’s patented glucose blood insufficient sample liquid and defects meter alone could not perform the “com- production strips, of test it incorrectly paring” an “giving indication of an concludes the “measuring,” “compar- error” steps viewed the majority as ing,” and “giving an indication of an error” essential to the patented method.2 Ac- steps performed by the meter are essential cordingly, test strips substan- to achieving the objective. stated tially embody the essential features of its patented method.

Prior art glucose blood meters relied a test with only strip two contrast, electrodes—one In glucose blood meter reference and working. one U.S. Patent fairly cannot be viewed ’as embodying the 7,250,105 (filed No. col. 1 ll. 27-29 May essential features of LifeScan’s patented 2003) (“the patent”). '105 When en method. The steps performed by the me zyme coating the working ter, re electrode “measuring,” “comparing,” “giving acted glucose in the blood sample, it error,” indication of an are only made would release electrons that would result possible by unique configuration of the current, an electrical could three electrode test strip, explained measured relative to the reference elec A above. diabetic patient with a LifeScan contrast, trode. the test utilized strip, a pencil, pad of paper, and an (a this ease has ammeter device used to measure elec electrodes, three current) two of which are working tric could “measure an electric capable of measuring an electrical cur current at each working part,” sensor rent. This distinction is crucial. “compare When the electric current from each the working electrode a prior art meter working parts sensor to establish a differ would become severed because of a parameter,” manu ence “give an indication of facturing insufficiently defect was cov an if error parameter difference ..said is ered with blood due to an operator error, greater than predetermined threshold,” a the patient woúld have way no of knowing all without the of glu assistance a blood that the reading was erroneous. See id. cose meter. Benson, See Gottschalk v. 409 2 col. ll. 27-38. Once developed LifeScan U.S. 34 L.Ed.2d 273 2. majority understands the examiner’s art Accordingly, methods. his statement of statement his reasons for allowance gives no way indication steps either which are that he allowed the method claims as patented distin- essential any method. In guishable prior event, from the they art because recognized "[t]his court has that an “measuring,” contained the “comparing,” Examiner’s Statement of Reasons for Allow- " “giving an of steps. indication an error” necessarily ance 'will not limit a claim.' fact, Maj. Op. at 1370-71. Co., In the examiner v. Procter & Gamble 414 Salazar F.3d commenting was on the patentability (Fed.Cir.2005) of LifeS- (quoting ACCO claim, product can’s Brands, than distinguish- Devices, Inc., rather Inc. v. Sec. Micro ing LifeScan’s method claim from other prior (Fed.Cir.2003)). F.3d above, noted As method. patented the operates ... computer

(1972) (“A digital the are essential strips prob test solving LifeScan’s digits, in expressed data on person aas method.3 patented arithmetic by doing lem hand”)- Accordingly, itdo h$gd recent on this court’s majority relies not does meter glucose blood LifeScan’s Sturm, Foods, Inc., v. Keurig, decision pat of its features the essential embody 1370, 2013 WL Inc., 732 F.3d No. per it steps the ented method that held (Fed.Cir.2013), which In and noninventive. common forms are the exhausts brewer of a coffee the sale fairly characterized is more fact, meter the covering the in method rights system in the component as a standard car disposable awith brewer use of the com of application only involves the distinguishable is But case tridge. Quanta, See processes. mon the this case where Unlike this case. 633, 128 2109. test the lies in of the method inventiveness claimed method of the every step strip,

B. with by the brewer performed Keurig is misinterprets majority Second, serving passive as a merely cartridge “essential, or Quanta requiring at 1372- Id. at participant. patent be a method inventive, features” focused Keurig panel Tellingly, com- separately-patentable ain contained had substantial the brewers whether Be- on patent. aby covered ponent (which not at issue is uses appli- noninfringing abandoned cause LifeScan here) majority embodied strip, the than whether its test rather covering cations embody the method cannot that the features concludes essential here). Furthermore, method (which features essential at issue is reasoning is inconsistent This patent. cartridge the brewer both guidance Court’s with pat (by apparatus separately case, focused the Court Quanta. In that not case does in this ents), majority yet steps the inventiveness compo has on effect this explain the method, patenta- than the rather claimed essential features nent embodies them- components underlying bility of patent. 635, 128 S.Ct. selves. patentability Assuming opposed analysis, 2109. The Court’s this was relevant case it, fully majority’s reinterpretation and determined 100(b) Section the statute. consistent fea- embody the essential could component provides explicitly Act of the Patent method, LifeS- since tures of a can obtain entity like patented, glucose meter can’s blood use of new that “includes a for its method the method not exhaust it too would 35 U.S.C. ... machine.” a known majority devotes brief, while ent. majority was 100(b). Accordingly, § patentability the attention to significant the on any significance place incorrect it to demonstrate strip, fails the test strip. test of LifeScan’s patentability patentable. separately is meter test is the What matters not. See that it is suggests The evidence are essential steps that the embodies except every the step alone because the meter glucose me- of its blood sells 3. LifeScan 40% (i.e., a test “measuring device” requires a cost, last strips. without test but ters below (i.e., an part” sensor strip) “working aor strips evident test is made of the essentialness '105 electrode) measuring device. See the on practice could patient that a fact 8 1.4. 1.55 to col. 6 col. Patent with patented method steps of LifeScan’s supra By assuming note 1. that the meter LifeScan sells at below cost without test patentable by was finding it essential to strips and that cannot practice patent- case, method this the ma- ed right box, out of the see supra effect, jority, allows LifeScan to sue note as well as promotional meters competitors that employ any glucose blood that LifeScan distributes for part free as reader currents, measures electric of a Starter Kit. majority reasons that compares currents, the electric give an LifeScan has “received [its] reward” for its error if they indication differ. This ove- patented method on even the meters it patent rextension grant violates the gives away for free it retained the principles every exhaustion and combi- “hope of obtaining a future benefit” on nation case decided this court and the those Maj. meters. Op. at 1375 (citing See, e.g., Quanta, Court. 553 Univis, 1088). at U.S. U.S. 128 S.Ct. 2109. Had the What benefit that is remains a mystery. majority properly on focused the inventive- patient’s Once a use of the meter con- ness of the method steps rather than the sumes the ten strips free included in Li- of the patentability underlying components Kit,5 feScan’s Starter patient will be themselves, misstep this would have been practice able to the method with impunity avoided. For the given, reasons the ma- using generic Shasta’s strips that are jority’s decision to make inventiveness for designed to mimic LifeScan’s OneToueh® exhaustion purposes coextensive with pat- strip. Ultra® instances, such LifeScan entability, Maj. see Op. at cannot will not receive any cognizable reward squared with Supreme prece- from the meters it and, distributes for free dent.4 hence, any purported “future benefit” is speculative and entirely theoretical.

II. “The declared purpose law Applying exhaustion ato case such as is to promote progress of science and this one is especially inappropriate because useful arts granting to the inventor the essential features of monopoly, limited the exercise of which method are embodied strips in test will enable him to secure the immediately financial re consumed during per- wards for his formance invention.” of the though method even Li- feScan has (citing received little to nothing U.S. Const. I, 8). return 8,§ for its art. glucose blood cl. patent system meters. A prem De- that, spite majority concludes that ised granting a “hope of ent applies to the meters that receiving a future benefit” is one where majority 4. The lation, asserts this formulation but do not majority ascribe it to the holding its "demonstrably is inaccurate.” because it is majority's inconsistent Maj. Op. at agree 1371 n. 5. I that this formu- persistent focus on patentability holding lation of its itself misstatement strips themselves. the law and inconsistent with why perplexed I majority am that the 5. It is immaterial that LifeScan distributes "[wjhat hold that is 'inventive' about strips first ten test for free because intends claims in the exhaustion context is patient for the perform to use those distinguishes art,” what i.e., prior them from the I method. do not understand patentable. makes them See id. at Rather, argue contrary. LifeScan to Perhaps majority means “what is ‘inven- patent rights insists that its are not tive’ about method claims in the respect exhausted with strips exhaustion context steps is additional which claim distin- guish patient this prior method claim a from other art combines with the meter after agree method I claims." would to this the strips formu- ten initial have been consumed. 1382 251, 62 S.Ct. (quoting to be had benefit no secure is

there of 1088)). performance successive Each the of progress the promote not that does un- infringement an would be the method reasoning is majority’s useful arts. explic- either patentee, the less licensed in this context problematic particularly case, this facts of theOn itly implicitly. or For involved. is patent method a where a to obtain patient a only means for claims, occurs infringement method Li- of performances subsequent for license steps of all of the performs party a when would method patented feScan’s Techs., Inc. v. Joy method. the claimed additional purchasing through (Fed.Cir.1993); 770, Inc., 773 Flakt, F.3d 6 based strips, but Ultra® OneTouch® Inc., Worlds, Apple v. LLC Mirror see also conclusion, fact majority’s on (“Di- (Fed.Cir.2012) 1351, 1359 of purchase flows from no license can be a method claim infringement of rect is rendered strips generic test Shasta’s of the claimed instance one even on based those use of meaningless because Accordingly, being performed.”). method Accordingly, infringing. not to be are held patent- a practices an individual each time in a case such apply not should infringes the method, the individual ed features of essential where the as this one Bennett, 122 U.S. v. Beedle patent. in a com- are embodied method patented a (1887). (“The 1090, 1074 30 L.Ed. 7 S.Ct. dur- immediately consumed is ponent that drawing water process patent covers This is method. ing performance driven a well by means from earth given is component the initial true whether patent. in the manner described cost, or sold at a free, sold under away for is, there- a well so constructed The use of premium. every as infringement, fore, continuing a different, the patented the contexts Although from the is drawn time water its recent used.”); reasoning in see also Supreme Court’s necessarily is process — support not Co., U.S.-, does in Bowman decision Monsanto v. Bowman ap- that exhaustion majority’s L.Ed.2d conclusion practice patents (2013) (“Rather, plies creation’ ‘a second component.6 monopoly, con- its essential consume which item ‘call[s] Bowman, to find for refused play into a grant, Court ferred ” when Aro, rights exhausted U.S. at (quoting Monsanto’s second time.’ grain a seeds from 599) (alteration original)). purchased Mr. Bowman seeds were though those where the even this one elevator such In a case had seeds Monsanto grown is consumed component essential Monsanto lim- While to other farmers. inappropriate sold it is process, seeds it for the first for the its reward single reward received it that other sold, reasoned that component. the first giveaway of sale (i.e., competi- Monsanto’s companies (“[T]he ‘received seed holder has id. See tors) them- the seeds sold, reproduce the article only for his reward’ who would sell them farmers it.” selves and subsequent recreations not paper and a of toilet roll involving combination consumables principle case Prods., Med relies, Inc. v. Med. Morgan dispenser. Envel See Cross majority which Inc., Danek, Paper Wrapping F.3d Albany ope Co., v. Co. tronic Perforated 14 Sofamor ("[A] governs 38 L.Ed. 500 (Fed.Cir.2005) rule that (1894), case that inapposite. Unlike this may is al claim infringement of method infringed patent, a method involves apparatus infringement of an ways govern practiced, that case every the method time claim.”). covering apparatus dealt only to buy need them reproduce once and able to continue practicing LifeScan’s them plantings. for future Id. at 1767. ented method using generic test strips Monsanto would be deprived of its exclu- supplied by LifeScan’s competitors. Yet rights sive in all of subsequent these sales the mismatch between invention and re- reproductions patented its seeds. ward in this case is even starker than it Id. Accordingly, the Court held that “[t]he was Bowman. While Monsanto re- exhaustion doctrine is limited to the ‘par- ceived a reward for the first set of seeds it ticular sold just item’ to avoid such mis- sold, LifeScan receives no reward whatso- match between invention and reward.” Id. ever on the Starter Kit. Additionally, Li- A contrary holding have caused the feScan will be deprived of its exclusive “plummet in value after the first rights in all of the subsequent perform- sale of the first item containing the inven- ances of its method after the tion,” and the exclusive rights giveaway sample test strips are consumed. only would last one transaction. Id. at Because LifeScan’s strips test embody the essential features of its method, the majority erred finding majority’s holding this case will applied (or once the meter is sold given unquestionably cause away). Accordingly, I respectfully dissent. plummet method to in value and result in rights exclusive over method lasting only one Bowman,- transaction. Similar to patients

after consume the ten Kit, none, they Starter will be

Case Details

Case Name: Lifescan Scotland, Ltd. v. Shasta Technologies, LLC

Court Name: Court of Appeals for the Federal Circuit

Date Published: Nov 4, 2013

Citation: 734 F.3d 1361

Docket Number: 2013-1271

Court Abbreviation: Fed. Cir.