February 22, 2021 - Last Week in the Federal Circuit

Last Week in the Federal Circuit (February 15-19): Equitable Intervening Rights

The Federal Circuit had a slow week, issuing only 8 decisions (just 3 of them precedential).  But among those was an interesting case with a question of first impression about the doctrine of equitable intervening rights.  Below we provide our usual weekly statistics and our case of the week—our highly subjective selection based on whatever case piqued our interest.

Precedential opinions: 3

Non-precedential opinions: 5

Rule 36: 0

Longest pending case from argument:  Canfield Scientific, Inc. v. Melanoscan, LLC, No. 19-1927 (316 days)

Shortest pending case from argument (non-Rule 36): Takeda Pharmaceutical Company v. Torrent Pharmaceuticals Ltd., No. 20-1552 (11 days)

Case of the week:  John Bean Technologies Corp. v. Morris & Associates, Inc., No. 20-1090

Panel:  Judges Lourie, Reyna, and Wallach, with Judge Reyna writing the opinion

You should read this case if:  you have a case involving a reissued or reexamined patent, where there might be a defense of equitable intervening rights

Morris and John Bean make poultry chillers—a business so exciting they are the only two companies in the country to do it.  Their presumably fierce rivalry spilled into the Federal Circuit in our case of the week.

In 2002, John Bean obtained a patent.  Believing the patent was invalid, Morris made poultry chillers with features described in the patent.  Eleven years later, John Bean obtained reexamination of its patent.  Armed with the amended claims, John Bean sued Morris for infringement.

To Morris, this seemed unfair:  It had invested in making poultry chillers based on the patent as it stood in 2002, then the reexamination pulled the rug out from under it.  So Morris asserted the affirmative defense of equitable intervening rights under 35 U.S.C. § 252.  That defense allows a would-be infringer to continue making, using, or selling a product if it did so before reissuance or reexamination.  But that is allowed only “to the extent and under such terms as the court deems equitable for the protection of investments made or business commenced before the grant of the reissue.”

To John Bean, this defense seemed inapplicable:  While the doctrine protects investments made in reliance on earlier circumstances, Morris’s investment had already paid off.  Morris had sold enough poultry chillers since 2002 to recoup all the money it invested in this line of business.

The question for the Federal Circuit was whether a defendant is barred from asserting the defense of equitable intervening rights when it has already recouped all monetary investments made before the reexamination or reissue.  No, the Court held, a court can still grant this equitable remedy even in that scenario. 

Addressing the statute, the Court observed that this was its first “opportunity to examine the boundaries of the phrase ‘protection of investments’ in § 252.”  Noting that the “text does not specify” any “precise[]” limits, the Court saw “no indication” that monetary investments “are the only investments that a court may deem sufficient to protect.”  The Court therefore held that recoupment is only one “factor that a court may consider” in the equitable analysis—not a per se bar.

The Court also emphasized that equitable remedies are “flexible.”  (Apparently, “equity abhors a defendant who has already recouped all monetary investments” is not on anyone’s list of equitable maxims.)  The Court stopped short of setting forth a comprehensive standard for the equitable analysis.  Instead, it held only that the district court did not abuse its discretion, without expressly adopting the district court’s seven-factor test.

The opinion contains another important holding.  John Bean had argued that willful infringement makes a defendant a bad actor unable to assert equitable defenses like equitable intervening rights.  The Court rejected that proposed bar on the equitable-intervening-rights defense, too.  It held instead that a defendant satisfying § 252’s requirements for the equitable-intervening-rights defense is not an infringer at all, and therefore cannot willfully infringe.