“The CAFC explained that the passages [from Nalco] cited by UTTO ‘should not be read as stating a categorical rule against a district court’s adoption of a claim construction in adjudicating a motion to dismiss.’”
The U.S. Court of Appeals for the Federal Circuit (CAFC) on Friday, October 18, issued a precedential decision holding in part that claim construction is not categorically forbidden at the Rule 12(b)(6) stage of a case, but ultimately vacating-in-part a district court’s dismissal of a patent owner’s infringement suit. The opinion was authored by Judge Taranto.
UTTO, Inc. owns U.S. Patent No. 9,086,441, which is directed to methods for detecting underground utility lines and which the patent calls “buried assets.” UTTO sued Metrotech, Corp. alleging patent infringement through sale of its RTK-Pro locator device. UTTO also initially claimed unfair competition and moved for a preliminary injunction, then filed a First Amended Complaint alleging “tortious interference with prospective economic advantage.”
Metrotech moved for dismissal and the district court ultimately denied the preliminary injunction motion, holding that UTTO failed to show a likelihood of success on the merits of the infringement claim. The court at that point also construed the claim language “group of buried asset data points” in two of the limitations of Claim 1 of the patent as requiring “‘two or more’ buried asset data points for each buried asset.”
UTTO eventually filed second and third amended complaints and the district court dismissed both—the third one with prejudice. With respect to patent infringement, the court said that “[t]he inherent problem with UTTO’s argument is that, as alleged, the walk back feature [of Metrotech’s device] uses only one data point at a time and, as explained, the ’441 Patent requires the use of multiple data points to generate the buffer zone.” And as to the tortious interference claim, the court said UTTO “failed to plausibly allege that Metrotech’s conduct was independently wrongful.”
On appeal, UTTO argued in part that “a district court may never engage in claim construction in deciding a motion to dismiss.” It relied on the CAFC’s case law in Nalco Co. v. Chem-Mod, LLC, 883 F.3d 1337 (Fed. Cir. 2018), where the opinion reversed a dismissal of patent infringement claims because the district court rested “on a premature resolution of claim-construction disputes.” However, the CAFC explained that the passages cited by UTTO “should not be read as stating a categorical rule against a district court’s adoption of a claim construction in adjudicating a motion to dismiss.” Rather, said the opinion:
“The passages do not in terms state such a rule. They are readily understood to be drawing a conclusion about the need for further proceedings to resolve the particular claim construction issues in that case before a sound determination of the appropriateness of dismissal could be reached. Nalco should be read in that case-specific way.”
Having said that, however, the CAFC determined that, in the present case, “fuller claim-construction proceedings and analysis are needed than were provided in and by the district court.” While the CAFC flagged the issues for further exploration, it chose to remand to the district court for “additional examination of the case-specific materials and of governing claim-construction precedents.” Specifically, the opinion said that “UTTO raises at least a question as to whether a relevant artisan would read the phrase in light of a recognized meaning of ‘group’ in mathematics to mean one or more, not two or more.”
The CAFC therefore vacated the dismissal of UTTO’s infringement claim and remanded for further claim construction proceedings without deciding whether the district court’s construction was correct.
As for the state law claim, the opinion found UTTO failed to present sufficient arguments on appeal to support reversing the district court’s dismissal and affirmed the dismissal of the claim of tortious interference.
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