Pssst, wanna make $10? It’s yours if you go to Google Answers before Jan. 7 and identify who’s behind JGR Acquisition, the mysterious company that paid $15.5M to acquire key Web Services patents at a Commerce One liquidation auction. Thus far, posters have correctly pegged recently-registered Delaware firm JGR Acquisition as the buyer (confirmed by this SEC filing). JGR’s registered DE agent shares the same phone number and address as the firm of Morris, Nichols, Arsht & Tunnell, whose representative client list includes Amazon.com, AT&T, Citibank and CyberCash.
Spectrum Labs v. Tech International (Fed. Cir. December 29, 2004).
Spectrum sued Tech Int’l for infringement for its patent related to a method of removing unwanted substances from human urine samples. The purification method allows urine to be tested without interference from the unwanted substances. The Nevada District Court granted summary judgment of non-infringement to Tech and granted Tech’s motion for attorney’s fees — noting that the suit was frivolous and in bad faith.
Tech appealed the award of attorney’s fees.
On appeal, the Federal Circuit reversed — finding that the case was not "exceptional" under the statute (35 USC 285).
The CAFC listed types of cases that may create an "exceptional" circumstance: inequitable conduct before the PTO, litigation misconduct, vexatious and otherwise bad faith litigation, frivolous suit or willful infringement. However, the Appeals Court found "none of those circumstances present" in this case.
A district court must provide reasoning for its determination that a case is exceptional for us to provide meaningful review. Further, an exceptional case finding is not to be based on speculation or conjecture but upon clear and convincing evidence. The facts cited in the section 285 order do not provide clear and convincing evidence that Spectrum’s investigation and credit check constituted vexatious behavior. The section 285 order merely highlighted the fact that the credit check and background investigation occurred after issuance of the summary judgment order. Section 285 Order, slip op. at 3. The district court’s open speculation about the purpose of Spectrum’s investigations adds no support to its finding.
The Law: The determination whether to award attorney’s fees under section 285 involves a two-step process. First, the district court must determine whether Tech proved by clear and convincing evidence that this case is "exceptional." . . . Second, if the court finds the case to be exceptional, it must then determine whether an award of attorney’s fees is appropriate.
Comment: This case is really a commentary on claim construction jurisprudence. In my view, the court could not call this an exceptional case because of the uncertainty associated with claim construction.
Anheuser-Busch v. Crown Cork & Seal (Fed. Cir. Dec. 23, 2004) (unpublished)
In an unpublished decision, the Court of Appeals for the Federal Circuit (CAFC) has revived Crown’s case against Anheuser-Busch — sending the patent dispute back to the Wisconsin district court to determine whether A-B’s aluminum cans violate Crown’s patent No. 6,065,634.
Specifically, the Appellate Court disagreed with the lower court’s claim construction — finding that the district court erred by importing a limitation into the claims that was not required by the specification.
The patent does not indicate that the shape of the chuck wall is necessary to accomplish the [strength] goal. THus, no basis exists for the court to import the "flat" limitation from the preferred embodiment into the claims.
The district court must now re-construe the claims and determine whether the new construction alters its prior conclusion that Anheuser-Busch did not infringe Crown’s patent.
The CAFC also affirmed the dismissal of Anheuser-Busch’s claim that Crown violated A-B’s design patent No. D387,987.
I’m taking off the next couple of weeks and headed to Kansas to spend time with family. My dad and I are planning to build three lean-to barns to protect his horses and cows from the winter winds that sweep across the plains. That is the kind of vacation that I like!
UPDATE ON THE BLOG:
Today marks day 246 of this ‘Patently-O‘ website. What began as a simple toy project has evolved into a modestly successful site. During this time, I* have written a brief summary of each patent law appellate opinion. In addition, many interesting unpublished appellate and published district court decisions have been reviewed. The result is about one case brief every two days. I write about other patent law news too — so far a total of 521 posts — averaging out to more than two per day or about three articles per day if I take weekends off.
*While I have written the vast majority of the posts, I have not been alone in the process. Other writers who have contributed include Don Zuhn, Baltazar Gomez, Mark Chael, and Joe Herndon. I hope to get more people involved in 2005.
A couple of months ago, we have moved from a cheesy low-class web address: patentlyo.com to a cheesy high-class web address: patentlyo.com. For those of you who don’t know, this move costs about $8 per year from godaddy.com.
COSTS:
This blog is cheap. Typepad.com hosts the blog — I pay them $15 per month — that includes the blog templates and software for manipulating the various elements and sidebars. I like Typepad, although some people prefer to use Blogger because it is free. I also paid $20 (one time fee) for BlogJet, a “weblog client for Windows that allows you to manage your blog without opening a browser.” Finally, I pay the $8 per year for patentlyo.com domain name.
STATS:
For those of you who are interested: Free stat-counters are not worth much, but mine is approaching 180,000 hits. As expected, the blog is getting many more hits now than it was in the beginning. On weekdays, we can expect about 1500 hits. Ask your IT manager how many hits your Firm website gets each week.
The (incomplete) visitor list includes over 1000 corporations, 150 universities, 70 government agencies, and 250 law firms. This total does not include visitors who reach the site through a “feed reader” such as bloglines or Kinja.
I am also very happy with the 550+ individuals who receive the Patently-O Newsletteron a daily basis.
The Federal Circuit has announced several changes:
LINK: The Federal Circuit has made a change to its rule 27(h)(4), that authorizes the court clerk to grant consented to or unopposed motions to extend the time for filing a principal brief for not more than 60 days. The clerk has already been delegated authority to extend, for up to 30 days, the time for taking any other action permitted by the rules.
LINK: The Federal Circuit has given notice of a proposed rule change to Federal Circuit Rule 28(a)(5) and requests public comment. The proposed change would require that the jurisdictional statement accompanying a brief include a representation that the judgment or order appealed is final, or, if not final, the basis for appealability. (e.g., preliminary injunction, Fed. R. Civ. P. 54(b) certification of final judgment as to fewer than all of the claims or parties, etc.).
According to a report from Federal Computer Week (FCW), the U.S. Patent & Trademark Office is expected to name David Freeland as its new chief information officer. Freeland, a systems chief with the Texas Department of Human Services, is still awaiting clearance from the Office of Personnel Management.
The position of CIO is critical for the PTO as the office is undergoing a transfer to a paperless office. Doug Bourgeois, Freeland’s immediate predecessor, is credited with initiating the move to electronic format:
LINK: If it weren’t for Doug Bourgeois, his colleagues say, patent examiners would still be examining paper submissions as they had for 200 years.
According to the budget for fiscal year 2005, the U.S. Patent and Trademark Office officials will have about $300 million to spend on information technology projects, reportedly a 45 percent increase.
(Thanks to Florence Olsen at FCW for the reports).
Google’s use of a trademarked term for advertising keywords does not create customer confusion — and thus does not violate the Lanham Act. However, the use of the trademarked term itself in sidebar ads does create customer confusion and may violate the Lanham Act.
More Details:
Geico has sued Google for trademark infringement. Geico is upset that Google users may find a competitor’s ads after searching for "Geico." Essentially, the issue is whether the use of trademarks as keywords for paid advertising violates the Lanham Act. A bench trial began last week in U.S. District Court in Alexandria Virginia.
As plaintiff, Geico first presented case-in-chief (excluding damages). At the close of Geico’s case, Google asked the court to grant judgment as a matter of law under Rule 52(c).
Federal Rules of Civil Procedure Rule 52(c) Judgment on Partial Findings. If during a trial without a jury a party has been fully heard on an issue and the court finds against the party on that issue, the court may enter judgment as a matter of law against that party with respect to a claim or defense that cannot under the controlling law be maintained or defeated without a favorable finding on that issue . . . Such a judgment shall be supported by findings of fact and conclusions of law.
In its oral decision on the motion, the court sided with Google in-part. First, the court noted that Geico had not established that the "mere use of its trademark" as an advertising keyword violates the Lanham Act.
Having heard the plaintiff’s case, the Court is satisfied that the plaintiff has not established that the mere use of its trademark by Google as a search word or keyword or even using it in their AdWord program standing alone violates the Lanham Act because that activity in and of itself, there’s no evidence that that activity standing alone causes confusion.
However, on the issue of whether Google’s sponsored ads that actually use GEICO’s name in the title or text of the ad, the court found that the plaintiff had presented sufficient evidence of confusion to allow the case to continue.
However, as to the narrow issue of whether the plaintiff has presented sufficient evidence at this point to let the case continue on the issue of whether Google is liable for violating the Lanham Act for those sponsored ads using GEICO’s name in either the title or the text that appear next to a — and a GEICO organic listing as a result of the AdWord program, at this point, there has been enough evidence of confusion as a result of Dr. Ford’s report to deny the motion and to allow the case to continue so the Court can consider the defendant’s evidence as to whether or not this situation creates a likelihood of confusion in the marketplace and, if so, what damages might be appropriate.
When presenting its case Google will continue to argue that it has a policy in place to prevent the use of the GEICO trademark in competitor’s ads — and that Google should not be held liable when those competitors violate the policy.
The case has been stayed until early January — awaiting the judge’s written decision.
Comment:
Is Google a stand-up company or what! Most defendants who are being sued over their core technology would take any available legal self-help measures. Is anyone surprised that a Google search for Geico still turns up Geico? [Link]
Under the American Inventors Protection Act (AIPA), the Patent Office is required to submit a report to Congress evaluating the success of the newly enacted inter partes reexamination proceedings. Today, the PTO released its Report to Congress on Inter Partes Reexamination [PDF].
Over the past several years, the buzz surrounding inter partes reexamination has increased. However, the report notes that the growth of such re-exams has been slow. For example, only 27 inter partes reexaminations were filed in 2004.
Based upon a review of the statute and comments from interested parties, the USPTO released a set of recommendations for amending the Patent Act in order to improve inter partes reexamination. The PTO points to three areas that need improvement:
Clarifying the inter partes reexamination estoppel provisions.
Permitting the requester of an inter partes reexamination additional opportunities to provide input as to Office actions.
Extending the requester’s statutory for comment (currently 30 days) after the patent owner responds to an Office action, or to permit the USPTO Director to set the period for comment by rule.
In addition, the Patent Office noted that their Post-Grant Review proposal offers “a comprehensive and desirable way to address patentability issues after a patent has been awarded.” Generally, the proposed Post-Grant Review would provide a more comprehensive review model and allow a more adversarial review presided over by USPTO administrative patent judges. The Review would include closely controlled discovery and cross-examination upon the challenger’s presenting sufficient grounds that one or more of the patent claims are unpatentable.
Syngenta v. Monsanto and Dow AgroSciences(D. Del. 2004) (J. Robinson).
Bt-corn is a genetically modified variety of corn that is resistant to the European Corn Borer, an insect that causes billions of dollars of damage to the U.S. corn crop each year. Bt corn hybrids produce an insecticidal protein derived from the bacterium Bacillus thuringiensis, commonly called Bt. The variety has been accepted by U.S. farmers and now represents around a quarter of the corn market. Syngenta seeds holds several patents on producing Bt-corn (transgenic maize). (For example, U.S. patent No. 6,403,865). Syngenta sued the major seed dealers for infringement of these patents. The defendants included Dow AgroSciences, Mycogen Seeds, Monsanto, Pioneer Hi-Bred and DeKalb Genetics Corporation.
According to a report from an attorney involved with the case, Pioneer Hi-Bred settled on the eve of trial, leaving Dow AgroSciences and Mycogen Seeds, Monsanto and DeKalb as the remaining defendants. Because of several pre-trial rulings, Syngenta Seeds came to trial with three patents, two of which had been found to be valid on summary judgment, and with the Defendants’ key piece of prior art excluded. Just prior to the commencement of trial, however, Judge Susan Robinson reversed her grant of summary judgment on validity, and reinstated the Defendants’ key prior art reference.
On the last day of trial Delaware District Court Judge Robinson held two patents not infringed as a matter of law, leaving one patent for the jury to decide. After two days of deliberations, the jury invalidated all claims of the one remaining patent "because the subject matter of the patent was not actually invented by Syngenta." — Seemingly a complete victory for the defendants. Additionally, the jury found the patent invalid due to obviousness.
Syngenta has vowed to appeal the decision to the Federal Circuit.
Pieczenik v. Dyax (Fed. Cir. December 16, 2004) (Unpublished Opinion).
George Pieczenik owns several patents relating to a method of inserting DNA sequences into DNA vectors. (For Example, U.S. Patent No. 4,528,266-A).
In an infringement lawsuit against Dyax, the district court granted summary judgment in favor of Dyax — ruling that Dyax did not infringe the asserted patents.
After the close of the case, Pieczenik filed a motion for reconsideration under Rule 60(b).
Rule 60(b): “On motion and upon such terms as are just, the court may relieve a party or a party’s legal representative from a final judgment, order, or proceeding” under specified circumstances, including: “(2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b).”
Pieczenik alleged that he had uncovered new information that established the falsity of an affidavit of Dyax’s Senior VP that had been submitted in support of its motion for summary judgment. The district court denied the motion to reopen the case.
On appeal, the Federal Circuit affirmed — finding that (i) the evidence presented was not “newly-discovered” because it would have been available to Pieczenik if he had followed through with discovery; and (ii) Pieczenik did not show how the new evidence would alter the district court’s claim construction.
Back in the day, when you filed a patent application, you would send in a filing fee that covered filing expenses, searching, and examination — all for one low price of around $700 (less for small entities). In the recent rash of Fee Changes, the filing fee has been reduced to $300! "Hold-on now," you’re saying, "patent office (and attorney) fees are never reduced." The trick is that the PTO added a search fee $500 and an examination fee $200. Bringing the total due on filing to $1,000.
This break-down of the fees suggests that the PTO may also change its practice.
Is there some chance that the PTO will adapt to the PCT practice of providing a search report? What a grand idea.
Iron Grip is the assignee to U.S. Patent No. 6,436,015, which covers a weight plate with a triad of dispersed grip locations. USA makes allegedly infringing plates. The district court granted USA’s motion for summary judgment that the patent was obvious, finding that “it would have been obvious to a layman to combine the prior art.” On appeal, the Federal Circuit affirmed:
Because the claimed invention falls within a range disclosed in the prior art, and the patentee has not shown that the prior art taught away from the invention or new and unexpected results from a three elongated grip weight plate as compared to those in the prior art, we conclude that the claims are obvious absent substantial evidence of pertinent secondary factors supporting patentability.
Finding of obviousness affirmed
Barbell companies have been getting rejected at the trademark side of the PTO as well. John Welch filled me in on the recent case of in re Ivanko Barbell Company (not precedent).
In Ivanko, the TTAB refused to register the weight plate design (shown above) for two reasons: (i) functionality and, in the alternative, (ii) failure to establish distinctiveness. The applicant had essentially admitted functionality — that is a bad move at the TTAB or when applying for a design patent.
As required by the statute, we must consider whether applicant’s design as a whole is functional. 15 U.S.C. § 1052(2)(5). Here, the evidence supports the examining attorney’s position that the design is de jure functional. Applicant touts the utilitarian advantages of safety and ease of handling of its design.
The Board noted that, because the designs are functional, any evidence of distinctiveness is moot. However, for the sake of completeness, the board discussed the applicant’s contention that its designs had acquired secondary meaning. The applicant had presented survey information in an attempt to show secondary meaning associated with the 7-hole weight plate:
Applicant has the burden of proving that its mark has acquired distinctiveness. . . . Of the survey respondents who were familiar with the Ivanko barbell weigh weight [sic] plate in question with all indicia removed (Picture A-1), 58.65% associated the appearance of the barbell weight plate shown with Ivanko and an additional 8.65% associate it [with] one company.”
However, the majority of survey participants were upper level employees in the barbell business, and thus, the court could not tell whether potential consumers have assigned any secondary meaning to the designs.
In this highly anticipated patent case, the Federal Circuit has vacated the district court’s judgment and injunction.
Accordingly, the judgment and the injunction are vacated, and the case is remanded to the district court for further proceedings consistent with this opinion. We affirm the district court’s judgment in all other respects. We thus affirm-in-part, vacate-in-part, and remand.
HOWEVER, RIM’s win is marginal at best — NTP remains in a strong position as the case returns to the district court. The decision is remanded for the district court to determine what portion, if any, of the jury verdict should be set aside, based on the prejudicial effect of the court’s misconstruction of a single claim term.
Specifically, the Appeals Court only questioned the infringement decision on five of NTP’s patent claims. Presumably, the verdict of infringement on the other eleven claims is upheld.
Background:
NTP’s patents are directed toward an "electronic mail system with RF communications to mobile processors." (e.g., U.S. Patent No. 5,436,960). NTP sued RIM, maker of the BlackBerry for patent infringement.
The district court “construed the disputed terms according to their plain and ordinary meaning, as supported by the specification and prosecution history.” Based on the claim construction, the district court granted summary judgment to NTP on several patent claims — finding that the BlackBerry infringed some of the claims. The remaining claims were decided by the jury.
On every issue presented, the jury found in favor of the plaintiff, NTP. The jury found direct, induced, and contributory infringement by RIM on all asserted claims of the patents-in-suit. The jury also found that the infringement was willful. It rejected every defense proposed by RIM. Adopting a reasonable royalty rate of 5.7%, the jury awarded damages to NTP in the amount of approximately $23 million.
The court awarded monetary damages totalling more than $53 million, with the following approximate division: (1) compensatory damages of $33 million; (2) attorneys’ fees of $4 million; (3) pre-judgment interest of $2 million; and (4) enhanced damages of $14 million. The court also entered a permanent injunction against RIM, enjoining it from further manufacture, use, importation, and/or sale of all accused BlackBerry systems, software, and handhelds.
Claim Construction:
The Court of Appeals for the Federal Circuit reviewed the claims construction de novo, taking an ordinary meaning approach: "In the absence of an express intent to impart a novel meaning to the claim terms, the words take on the full breadth of the ordinary and customary meanings attributed to them by those of ordinary skill in the art," using the written description as examined through the viewing glass of a person skilled in the art to give context to the claim language.
The CAFC agreed with the RIM on only one point:
that the district court misconstrued the term "originating processor." The Appeals Court found that the originating processor as claimed by NTP refers to only one processor – and not three separate processors.
On all other points, the CAFC affirmed the district court ruling, these include (i) construction of all other terms; (ii) a decision that RIM’s Canadian server location does not prevent application of U.S. Patent Laws to the e-mail system; (iii) Denial of RIM’s motion for JMOL; and (iv) exclusion of RIM’s expert and demonstrative testimony.
Conclusion:
RIMM won the appeal on a sliver of an argument, but is still in a position to lose the case.
The CAFC reversal of the claim construction of the District Court does not affect all of the asserted and infringed claims. According to the opinion ‘some’ of the claims are definitely infringed on. However, it was remanded because the jury did not outline how much royalties apply to each infringed claim. The CAFC only reversed the claim construction of "originating processor" found in some claims and not of the comparable "originating device" found in the other claims. The District Court had construed these terms them separately and RIM only appealed "originating processor" and not "originating device". So I guess it can be said the NTP won a "Judgement-in-Part."
You should also note that the re-examination of NTP’s patents continues at the USPTO.
If the BlackBerry’s infringe, why did the the Appeals Court reinstate the injunction against RIM?
Vacating an judgment often does not imply disapproval, but merely clears the deck for further action by a lower court. The U.S. Supreme Court has an established practice known as GVR. When it decides a case there may be several other arguably similar cases in the pipeline from the Court of Appeals. The Supreme Court will (i) Grant review of the case, (ii) Vacate the decision below, and (iii) Remand for reconsideration in light of the recent decision. Very often the Courts of Appeals conclude that little or nothing needs to be changed and simply reinstate their previous ruling.
Foreign Infringement:
Today, this case is important because of the millions of BlackBerry users in the U.S. However, the doctrinal significance of this case will be the Federal Circuit’s stance on the inclusion of foreign components in the infringement analysis.
Under the Patent Act [35 U.S.C. 271(a)], patent rights are limited by the territory of the United States. However, in this case, the court found that plain language of section 271(a) does not preclude infringement where a system such as RIM’s, alleged to infringe a system or method claim, is used within the United States even though a component of that system is physically located outside the United States."
According to the Court, the test is not whether the infringement took place within the United States, but whether "control and beneficial use" of the infringing system was within the United States.
This liberal interpretation of the territoriality restrictions of the Patent Act bodes well for Eolas in the recently heard Microsoft v. Eolas appeal.
Versa owns a patent on an apparatus for creating air channels in bagged compost materials. The air channels allow for decomposition of the material.
Versa filed suit against Ag-Bag for patent infringement. However, in the wake of an adverse Markman hearing, Versa admitted that it could not prove infringement based on the district court’s claim construction. After filing the appeals, the parties entered into a settlement agreement that resolved all issues on appeal other than the proper construction of the “means . . . for creating air channels” limitation. The parties have also agreed that, if we conclude the flutes are required, Ag-Bag will pay Versa an agreed royalty. Thus, the sole question before us is whether under a proper claim construction the claimed bagging machines must include flutes.
The Federal Circuit found that the means-plus-function claim language did not require flutes.
Accordingly, since we hold that flutes are not required structure, the judgment of non-infringement based on the district court’s incorrect claim construction is REVERSED.
In Dissent, Newman:
This case does not present a new question, and it should not have a new answer. The question is, can a patent claim clause written in means-plus-function form be construed, as a matter of law, literally to cover a device that is not the invention described in the specification, that is not shown in any of the drawings, that was not examined for patentability, that was excluded by prosecution arguments, and that is not an asserted equivalent. Statute and precedent require that the question be answered in the negative. Until today.
Eolas v. Microsoft (04-1234)(On appeal at the Federal Circuit)
The parties in this case include Eolas and the University of California as plaintiffs and Microsoft as the defendant. In addition to the parties, a number of amicus briefs were filed at the Federal Circuit by interested parties. These parties include: AOL; Association for Competitive Technology; Autodesk; Bentley Systems; Intel; Macromedia; Netscape; Oracle; Professor Joe Miller; Sun Microsystems; and Wacom Technology.
Amicus Briefs:
All of the Amicus briefs support Microsoft’s position — looks like nobody supports the little guy anymore.
Association for Competitive Technology amicus brief [PDF]. ACT argues that the District Court made a major mistake by failing to undertake "reasonable efforts to find out" what was known or obvious to those skilled in the art at the time of the patent application.
Autodesk, Bentley, Macromedia, WACOM, Professor Miller amicus brief [PDF]. This group argues that section 271(f) was incorrectly expanded by the district court.
Netscape, AOL, Intel, Sun Microsystems amicus brief [PDF]. Netscape & friends argue that the Court should find "that section 271(f) does not apply to components manufactured outside of the U.S., even if they are manufactured using code, prototypes, molds, or templates designed and developed domestically."
Intel was just denied summary judgment in its defense against upstart Voice Capture.
An examination of the relevant case law and the Patent Office procedures leads to the conclusion that the recapture rule applies only to reissue claims that are broader than claims in the original patent that were cancelled to define the claims over prior art. Because the reissue claims at issue in the present case do not pertain to original claims that were cancelled or rejected based on prior art, the recapture rule is inapplicable.
The authors discuss their technique for finding "general purpose technologies" using patent data. It is thought that there are a few technologies that are extremely pervasive in various sectors of the economy and are thus important building blocks for further technological development. In addition to giving us their formula for finding these important technologies using patent data, Hall & Trajtenberg also provide a listing of GPTs in their appendix.
Chapter IV deals with patents: Lichtman focuses on what measures the proverbial "bad man" who owns a patent should be allowed to do. "Courts would need to be able to distinguish instances where a patent holder is attempting to profit from the patented invention, which presumably should be allowed, from instances where a patent holder is instead attempting to protect profits that derive from some underlying illegal act, which probably should not be [allowed]."
I was lucky enough to take part in a weekly seminar with Richard Posner, Gary Becker, and Doug Lichtman (above) while a law school student. These three are great thinkers — Posner and Becker have now started their own blog. Although Lichtman may not follow with his own blog, he has certainly been a contributor to several on-line formats including Patently-O, Crescat Sententia, and Lessig Blog.
POSNER: Patents are a source of great social costs, and only occasionally of commensurate benefits.
BECKER: I do not like the hype and some other salesmanship of big pharma and bio-tech companies, but this industry has made enormous contributions to raising world health. It is likely to become even more important in the future as drugs are developed to match individual genetic differences. One does not want to kill this goose that is laying golden eggs by ill-thought out and counterproductive "reforms".
Merck v. Integra LifeSciences (On petition for writ of cert. at the Supreme Court).
The Drug Price Competition and Patent Term Extension Act (Hatch-Waxman) created a safe harbor that permits drug manufacturers to perform the experiments needed to obtain FDA approval of their drugs without incurring liability for patent infringement, even if their activities infringe others patent rights.
However, the statute, codified at 35 USC § 271(e)(1), was limited by a 2003 decision by the Court of Appeals for the Federal Circuit. The Federal Circuit affirmed a lower court’s finding that the safe harbor against patent infringement does not apply to pre-clinical activities to identify and develop new drugs that will eventually be subject to FDA approval — and thus, that Merck was liable to Integra for patent infringement.
The Case: Integra alleged that Merck and Scripps infringed patents owned by Integra relating to peptides involved in interactions between cell surfaces and the extracellular matrix. Under contract from Merck, Scripps identified several potential anti-tumor peptide candidates and selected the most promising peptide by conducting in vivo and in vitro experiments to evaluate the specificity, efficacy, and toxicity of the peptide candidates for various diseases. Scripps also performed tests to assess the histopathology, toxicology, circulation, diffusion, plasma half-life, and proper mode of administering of the peptides candidates.
The Appeals Court held that these activities did not fall under the safe harbor (§ 271(e)(1)) because they were not done "solely for purposes reasonably related to the development and submission of information" to the FDA.
"the focus of the entire exemption is the provision of information to the FDA . . . [a]ctivities that do not directly produce information for the FDA are already straining the relationship to the central purpose of the safe harbor." (CAFC Opinion).
"Expansion of § 271(e)(1) to include the Scripps-Merck activities would effectively vitiate the exclusive rights of patentees owning biotechnology tool patents."
Supreme Court:
Merck has now appealed the case to the Supreme Court of the United States, petitioning the High Court to hear the question:
Under 35 U.S.C. 271(e)(1), it is generally not an act of infringement to use a patented invention “solely for uses reasonably related to the development and submission of information under a Federal law” regulating the manufacture, use, or sale of drugs. The question presented is whether the court of appeals erred in limiting that exemption to clinical studies designed to provide information for Food and Drug Administration approval of a new drug.
Only a small percentage of cases appealed to the Supreme Court are accepted for hearing. However, the Merck case took a major step closer to being heard last week. On request from the Court, the Solicitor General of the U.S. submitted the Government’s view that the case should be heard. The Government brief makes two major points, one legal and the other social:
Gov’t Brief: The decision of the court of appeals reflects an incorrect view of the law, and is likely to restrict significantly the development of new drugs. Fairly read, the decision below holds that “pre-clinical” research regarding a potential new drug is not protected by the FDA exemption because that exemption is limited to “clinical” research necessary to obtain ultimate FDA approval of a new drug. That holding is inconsistent with the text of the FDA exemption, reflects a mistaken and unduly narrow view of the types of information relevant to the FDA’s two-step process for evaluating potential new drugs, and is in tension with this Court’s decision in Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661 (1990). Moreover, the court of appeals’ decision poses a direct and substantial threat to new drug research by dramatically narrowing the scope of protections enacted by Congress in Section 271(e)(1). Although this case is not an ideal vehicle for considering the issue, see p. 18, infra, the potential impact of the court of appeals’ legal conclusion is sufficiently important that the petition for a writ of certiorari should be granted.
The Court is expected to decide whether to hear the case within the next two months. Wyeth, the AARP, and Eli Lilly are each expected to file Amicus Briefs in support of the petition to rehear the case.
Judge Richard Posner (In Lessig Blog) has advocated the creation of a fair-use exception for patents on research tools:
Link: For example, a generic drug manufacturer is permitted to use the patented drug to demonstrate that its generic equivalent is indeed therapeutically equivalent (the “testing” exception created by the Hatch-Waxman Act). More broadly, an inventor can use the information in the patent to try to invent around the patent. And Landes and I advocate an expansion of the patent fair-use principle to allow scientists to use patented research tools (such as the oncomouse) without license–provided the scientists aren’t allowed to use the tools to produce their own patented products!
In response, Lichtman has noted that Judge Posner’s proposal “is problematic for the simple reason that, often, the key market for research tools is to sell those tools to other researchers. If a researcher’s use of patented research tool is fair use, that would significantly degrade the incentive to create those research tools inthe first place. Moreover, even if your approach works, it is in sharp conflict with the Bayh-Dole instinct that society might very well be better off in a world where academic researchers patent their work. As you know, that legislation was passed in response to evidence that university breakthroughts were sitting on the shelves both because (a) they could not be owned exclusively under old NIH rules; and (b) universities had too little incentive to bring their work to the attention of industry.”
Alza sued Mylan for infringement of its patents relating to administration of fentanyl through the skin. Because fentanyl, a narcotic, is prone to abuse, the inventors developed a patch that minimized the amount of drug that would be used in the system. The patch is sold by Janssen as Duragesic (R).
Alza won at the district court level. On appeal, Mylan argued that (i) the claims were not correctly construed and (ii) one of the patents was unenforceable due to inequitable conduct.
Claim construction: The appeals court looked only to the specification and prosecution history to determine that "fentanyl citrate" was not a "skin permeable form" of fentanyl — thus avoiding prior art.
In determining the meaning of a disputed claim term, a court looks first to the intrinsic evidence of record, examining, in order, the claim language itself, the specification, and the prosecution history.
Inequitable Conduct: The district court found that a statement made by the applicants during prosecution was literally true, but "had the potential to mislead the examiner." However, on the question of intent, the district court could not find the requisite deceitful intent associated with inequitable conduct.
The Federal Circuit affirmed: "We discern no clear error or abuse of discretion."
Dissent (in part) by Dyk: Judge Dyk would have found inequitable conduct.
Here, the patentee made an untrue assertion and simultaneously submitted accurate facts not in accord with that assertion. Such a submission of accurate facts does not cure a false statement.
NOTE: The patent expires January 23, 2005 — Mylan must wait until then to begin selling a generic version of the patch.
In 1990 professor John Dash filed a patent application for producing heat energy using nuclear fusion at a low temperature. Experimental results suggesting that nuclear fusion occurred in their apparatus were submitted to the Patent Office in support of Dash’s attempts to overcome utility rejections mounted by the PTO.
Dash appealed the Board’s rejection of his application for lack of enablement and utility.
On appeal, the CAFC relied on the "scientific community’s considerable doubt" regarding the utility of "cold fusion" in sustaining a prima facie case for lack of utility and enablement — even though the articles relied upon by the PTO were anectodal and not peer-reviewed.
We are aware of no rule that forbids the examiner from relying on related technology, anecdotal information or sources that are not peer-reviewed to establish a case of inoperability. . . .
The Examiner must only establish that a person of ordinary skill in the art would reasonably doubt the asserted utility.
The court then rejected Dash’s Rebuttal Evidence:
For each type of evidence Dash produced, the examiner found at least one sound reason to disbelieve the evidence.
Rejection Affirmed.
Comment: (i) All this comes in the wake of the DOE’s report that they are accepting quality research proposals on cold fusion. (ii) If this were a published opinion, it would be quite a precedent — giving some real teeth to the utility requirement.
Here is the conflict: Applicants use statements from experts saying "a certain result cannot be accomplished" to prove that the result is nonobvious. Now, the court brings a double-edged sword — finding that those statements can now be used to show a lack of utility.
