Patent Law Blog (Patently-O)

WiAV Solutions v. Motorola: Clarifying the Meaning of "Exclusive Licensee"

By Jason Rantanen

WiAV Solutions LLC v. Motorola, Inc. (Fed. Cir. 2010)
Panel: Rader, Linn (author), Dyk

WiAV is the purported exclusive licensee of seven patents relating to aspects of signal transmission and data encoding/decoding owned by Mindspeed Technologies, Inc.  In 2009, WiAV sued a set of companies including Motorola, Inc.; Nokia Corporation; Palm, Inc.; and Sony Ericsson Mobile Communications (USA), Inc. for infringement of the Mindspeed patents.  The defendants contended, and the district court agreed, that WiAV lacked constitutional standing to assert the patents because WiAV is not an exclusive licensee of the patents under Textile Productions, Inc. v. Mead. Corp., 134 F.3d 1481 (Fed. Cir. 1998), which they argued holds that a party cannot be an exclusive licensee of a patent when a third party has the right to license the patent. 

In reversing the district court's dismissal, the CAFC rejected this argument, instead holding that "a licensee is an exclusive licensee of a patent if it holds any of the exclusionary rights that accompany a patent."  Slip. Op. at 17 (emphasis added). This decision is in the vein of the court's earlier decision this year in Alfred E. Mann Foundation For Scientific Research v. Cochlear Corp., 604 F.3d 1354, in which it concluded that a licensee is an exclusive licensee of a patent despite retaining the ability to license the patent to settle lawsuits. 

Scope of the Licensing
The licensing rights at issue were held by six third parties, and stemmed from a series of spin-offs and other agreements that occurred as the patents were transferred from company to company. For example, when Rockwell International Corporation, the original owner of the Mindspeed patents, assigned them to Conexant, the second owner, its subsidiary, Rockwell Science Center, received a limited, non-exclusive license to use the patents in connection with its business, along with the right to sublicense to Rockwell International and its "Affiliates," or to transfer the license in connection with the sale of the respective businesses to which the intellectual property rights relate.  The district court found that several of these licensees retained a limited right to license the patents in the field of wireless handsets, and concluded that under Textile Productions, WiAV could thus not be an exclusive licensee of the Mindspeed Patents.

Any Exclusionary Rights
On appeal, the CAFC rejected the argument that, under Textile Productions  "a licensee cannot be an exclusive licensee of a patent if others retain the right to license the patent."  Slip. Op. at 11.  Turning straight to the constitutional analysis, the court held that the standing determination  focuses only on whether a party has any exclusionary right in a patent:

Because the legally protected interests in a patent are the exclusionary rights created by the Patent Act, a party holding one or more of those exclusionary rights—such as an exclusive licensee—suffers a legally cognizable injury when an unauthorized party encroaches upon those rights and therefore has standing to sue. 
…
Thus, the touchstone of constitutional standing in a patent infringement suit is whether a party can establish that it has an exclusionary right in a patent that, if violated by another, would cause the party holding the exclusionary right to suffer legal injury. Contrary to the suggestion of the Defendants, neither this court’s Textile Productions nor Mars decision freed the constitutional standing inquiry from its legal injury mooring.

Slip Op. at 14-15.  Textile Productions, on the other hand, involved only the narrow question of whether a particular type of contract, a requirements contract for a patented product, automatically converts the exclusive supplier into an exclusive licensee.  "Nowhere did the Textile Productions court suggest that a party holding one or more of the exclusionary rights in a patent does not have standing to sue to protect those rights against infringement by an unauthorized third party. Nor is there any indication that the court created a bright-line rule that a party cannot be an exclusive licensee of a patent if others have the right to license the patent."  Slip. Op. at 16.

The CAFC did impose one important limitation on the broad rule for standing: "Because an exclusive licensee derives its standing from the exclusionary rights it holds, it follows that its standing will ordinarily be coterminous with those rights."  Slip Op. at 17. Thus, an exclusive licensee may have standing to sue some parties, but not others; it may also lack standing to sue a party who has the ability to obtain a license from another party with the right to grant it. 

Applying its holding, the court concluded that none of the pre-existing licenses granted the right to license the Defendants to practice the patents in WiAV's field of exclusivity, and thus WiAV possessed constitutional standing for this case. 

Note: WiAV does not disturb the requirement that "[a]n exclusive licenseee generally must join the patent owner to the suit to satisfy prudential standing constraints, i.e., the 'judicially self-imposed limits on the exercise of federal jurisdiction.'" Slip Op. at 14-15, fn. 1.  Here, WiAV had satisfied those concerns by adding Mindspeed to the suit as the "defendant patent owner." 

Prometheus Laboratories v. Mayo: The Broad Scope of Statutory Subject Matter

By Jason Rantanen

Prometheus Laboratories, Inc. v. Mayo Collaborative Services (Fed. Cir. 2010)
Panel: Rader, Lourie (author), Bryson

Last Friday, the Federal Circuit released its second noteworthy post-Bilski decision (the first being Research Corp v. Microsoft).  The opinion, Prometheus v. Mayo, issued following a grant-vacate-remand order from the Supreme Court instructing the CAFC to revisit its original decision in light of Bilski.  Despite this procedural posture, however, the new opinion is quite similar to the old, arriving at the same conclusion through essentially the same reasoning.   

Prometheus initially came to the Federal Circuit following a district court grant of summary judgment of invalidity under § 101 (lack of patentable subject matter).  After the CAFC reversed the ruling of invalidity using its "machine-or-transformation" test, Mayo sought review by the Supreme Court.  The Court granted certiorari, vacated the CAFC decision, and remanded for consideration in light of its Bilski opinion.  Earlier Patently-O commentary includes a summary of the original Federal Circuit opinion and a discussion of the remand.

The patents-in-suit claim a method for determining whether a patient has received a therapeutically efficacious amount of drugs such as 6-mercaptopurine ("6-MP") and azthiopurine ("AZA"), which are used to treat inflammatory bowel diseases but can produce toxic side effects.  In the human body, these drugs metabolize into 6-MP metabolites, including 6-methylmercaptopurine ("6-MMP") and 6-thioguanine ("6-TG").  By administering the drug, measuring the subject's levels of 6-MMP and 6-TG and comparing them to pre-determined levels, toxicity can be minimized and efficacy maximized. 

Claim 1 of Patent No. 6,355,623 is representative:

1. A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:
    (a) administering a drug providing 6-thioguanine to a subject having said im-mune-mediated gastrointestinal disorder; and
    (b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder,
    wherein the level of 6-thioguanine less than about 230 pmol per 8x108 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and
    wherein the level of 6-thioguanine greater than about 400 pmol per 8x108 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.

Although similar in most respects, some claims of the second patent-in-suit, No. 6,680,302, dispense with the "administering" step.

The Patents Do Not Claim a Physical Phenomena
On remand, the CAFC again rejected Mayo's argument that the '623 and '302 patents claim a "natural phenomenon."  In seeking a judgment of invalidity under Section 101, Mayo contended (and the district court agreed) that the "administering" and "determining" steps are merely necessary data-gathering steps for the use of the correlations between 6-TG and 6-MMP and therapeutic efficacy or toxicity in patients.  Because these correlations are simply natural phenomena, Mayo reasoned, they were unpatentable.

As before, the Federal Circuit disagreed, noting that Bilski provides a broad - although not unlimited - scope for patent protection, and “an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.”  Slip. Op. at 12, quoting Bilski, 130 S.Ct. at 3230.  Furthermore, the court stated, neither the Supreme Court's order to vacate and remand the original Prometheus decision nor Bilski dictates a wholly different analysis or different result.  

The crux of the CAFC's determination that the asserted claims recite a patent-eligible application of naturally occurring correlations between metabolite levels and efficacy or toxicity as opposed to the natural correlation itself rests on the specific treatment steps recited by the claims: the "administering" step and the "determining" step.  "The inventive nature of the claimed methods stems not from preemption of all use of these natural processes, but from the application of a natural phenomenon in a series of steps comprising particular methods of treatment." Slip. Op. at 15-16.

In support of its conclusion, the court reiterated its earlier determination that the treatment methods in Prometheus's patents satisfy the "machine-or-transformation test.  Although this is not the exclusive test, post-Bilski, it nevertheless provides important clues to subject matter patentabilty.  In applying the machine-or-transformation framework, the court specifically rejected Mayo's argument that the disputed claims simply claim natural correlations and the associated data-gathering steps, broadly stating that the asserted claims are "claims to methods of treatment, which are always transformative when one of a defined group of drugs is administered to the body to ameliorate the effects of an undesired condition."  Slip Op. at 17.  Even leaving out the administration step does not make the claims unpatentable, as the CAFC also found the "determining" step to be transformative because it involves "[s]ome form of manipulation, such as the high pressure liquid chromatography method specified in several of the asserted dependent claims or some other modification of the substances to be measured, [which] is necessary to extract the metabolites from a bodily sample and determine their concentration."  Id. at 18.

In reaching this conclusion, however, the court was forced to distinguish its earlier decision In re Grams, 888 F.2d 835 (Fed. Cir. 1989), which similarly claimed a process that involved "(1) performing a clinical test on individuals and (2) based on the data from that test, determining if an abnormality existed and determining possible causes of any abnormality by using an algorithm."  Id. at 20.   Unlike the claims in Grams - which the CAFC found unpatentable "because the tests were just to 'obtain data'" (Slip Op. at 20) - the claims of the Prometheus patents "require the performing of clinical tests on individuals that were transformative." 

Mental Steps
In addition to its overarching analysis of the subject matter issue, the opinion also includes an interesting discussion of the use of mental steps in patent claims.  Although the CAFC agreed that the final "wherein" clauses are mental steps, "A subsequent mental step does not, by itself, negate the transformative nature of prior steps. Thus, when viewed in the proper context, the final step of providing a warning based on the results of the prior steps does not detract from the patentability of Prometheus’s claimed methods as a whole." Slip Op. at 21. Because no claim in the Prometheus patents claims only mental steps, "contrary to Mayo’s assertions, a physician who only evaluates the result of the claimed methods, without carrying out the administering and/or determining steps that are present in all the claims, cannot infringe any claim that requires such steps." Id.

Additional Commentary
In addition to an extensive discussion about the decision in response to Dennis's post on Sunday, other sites commenting on the decision include:

• Patent Docs
• patents4life
• IP Watchdog
• Chris Holman's IP Blog
• Hal Weger of Foley has suggested that another grant of certiorari may be down the road, given the opinion's refusal to discuss a three-Justice dissent from the dismissal of certiorari in Lab. Corp., 548 U.S. 124, that was cited with approval by five Justices in two concurrences in Bilski.

Akamai v. Limelight: Joint Infringement Requires an Agency Relationship or a Contractual Obligation

By Jason Rantanen and Dennis Crouch

Akamai Technologies, Inc. v. Limelight Networks, Inc. (Fed. Cir. 2010)
Panel: Rader, Linn (author), Prost

Three years ago, in BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), the Federal Circuit sharply limited the ability of patent holders to assert claims of joint infringement.  The BMC decision was further bolstered by Muniauction, Inc. v. Thomson Corp. and I-Deal (Fed. Cir. 2008). Akamai v. Limelight expands on the "control or direct" rule announced in BMC and Muniauction, explaining that joint infringement requires an agency relationship or a contractual obligation to carry out the relevant steps. 

Akamai's Claim of Joint Infringement
In order to win a patent infringement case, a patentee must prove that a single entity practiced every element (either literally or by equivalents) of at least one valid, enforceable claim. Joint infringement issues can arise when a patent holder asserts method claims over activities whose steps are not carried out by a single party.  For example, if a patent claims a method involving performing steps A, B, and C, the patent holder may need to argue joint infringement (as opposed to straightforward direct infringement) if steps A and B are performed by one party and step C is performed by a second party. 

In Akamai, while the accused party (Limelight) performed the majority of the steps of the asserted claims, at least one of the steps of each claim was performed by its customers.  The patent, No. 6,108,703, is directed to an improved method for storing web page content.  Conventionally, the entirety of a web page, including both the page itself and embedded content (such as graphics) is stored on a single server, or mirrored in its entirety across multiple servers.  The patents-in-suit claim a new approach, which involves storing only the embedded objects on mirrored servers (called a "Content Delivery Network," or "CDN"), while having the webpage itself continue to reside on the content provider's servers.  In order to make this system work, the claims further require that the object URLs be "tagged" to resolve to the CDN. 

Daniel Lewin and his adviser Thomas Leighton devised these methods (or algorithms) while at MIT where Leighton was the head of MIT's Computer Science and Artificial Intelligence Laboratory.  The pair founded Akamai, and their invention continues to serve as a basis for the company's core business.  Lewin was killed aboard American Airlines flight 11 when it crashed into the north tower of the World Trade Center on September 11, 2001.

Limelight, Akamai's direct competitor in the CDN business, performed most of the claimed steps but had its customers (companies such as Netflix) tag the URLs.  Because some of the steps were performed by Limelight and some by its customers, Akamai relied on a theory of joint liability, arguing that Limelight controls or directs the activities of its customers.  At trial, the jury sided with Akamai and awarded over $40 million in lost-profit-damages. The district court rejected the jury verdict and supplemented its own non-infringement judgment – holding that there was "no material difference between Limelight's interaction with his customers and that of Thomson in Muniauction."

On appeal, Akamai contended that substantial evidence supported the infringement finding, arguing that Limelight "(1) creates and assigns a unique hostname for the content provider; (2) provides explicit step-by-step instructions to perform the tagging and serving claim steps; (3) offers technical assistance to help content providers with their performance of the claim step; and (4) contractually requires content providers to perform the tagging and serving claim steps if they utilize the Limelight service."  Slip Op at 11. 

Important holdings
In affirming the district court's judgment of noninfringement, the CAFC expanded on its ruling in BMC that "joint liability may be found when one party 'control[s] or direct[s]' the activities of another party."  Slip Op. at 9.  After noting the foundational nature of this standard, the Akamai panel further held that "what is essential is not merely the exercise of control or the providing of instructions, but whether the relationship between the parties is such that acts of one may be attributed to the other."   Id. at 12.  The court interpreted this as requiring either an agency relationship or a contractual obligation: "as a matter of Federal Circuit law that there can only be joint infringement when there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps."  Slip Op. at 14.

Analyzing the issue as a question of agency law, the CAFC concluded that no substantial evidence supported a finding that Limelight's customers perform any of the steps of the claimed method as agents for Limelight.  (Citing the Restatement (3rd) of Agency §1.01). The court also rejected Akamai's theory that Limelight's customers are contractually required to perform the tagging step.  Rather, the court stated, the contract does not obligate the customers to perform any of the method steps; instead, it "merely explains that the customer will have to perform the steps if it decides to take advantage of Limelight's service."  Slip Op. at 16.

Note: The court repeated the warning it set forth in BMC Resources, 498 F.3d at 1381, that concerns about the difficulty of proving infringement of claims that must be infringed by multiple parties "by proper claim drafting.  A patentee can usually structure a claim to capture infringement by a single party."  Slip. Op. at 17 (quoting BMC Resources).  Failing this, the court suggested (citing Mark Lemley's Divided Infringement article) that patentees may be able to correct a claim by seeking a reissue patent.

Claim Construction
Akamai also challenged the district court's construction of two claim terms in related patents, contending that both constructions imported limitations from the specification into the claims.  In a fact-intensive analysis, the CAFC rejected Akamai's arguments, concluding that the district court correctly interpreted the disputed terms given the treatment of the invention in the specification and the lack of any contrary evidence in the prosecution history. 

In re Vistaprint Ltd.: Venue Transfer Denied

By Jason Rantanen

In re Vistaprint Ltd. (Fed. Cir. 2010)
Panel: Gajarsa, Schall (author), and Moore

In a counterpoint to its recent decision in In re Acer, this morning the Federal Circuit denied a request for a writ of mandamus seeking transfer of venue out of the Eastern District of Texas.  The underlying action was bought by ColorQuick, LLC, which holds a patent relating to the preparation of production data for printing, against Vistaprint Limited and OfficeMax Incorporated.  As in Acer, none of the parties resided in Texas: Vistaprint, a foreign corporation, has a wholly-owned subsidiary in Massachusetts; OfficeMax is a Delaware corporation with its principal place of business in Illinois; and ColorQuick is a New Jersey corporation.  Both the panel and author in this appeal were identical to the panel and author that granted the writ in In re Acer.

In denying the request for a writ, the CAFC acknowledged the lack of residency, but ruled that the district court did not abuse its discretion in denying transfer.  The panel first noted that although a trial court has broad discretion in transfer decisions pursuant to 28 U.S.C. § 1404(a), "that is not the same as saying that it may accord weight simply as it pleases."  Slip Op. at 4.  Applying that standard, the panel concluded the district court's weighing of factors in this case did not amount to a "patently erroneous result."  Id. (quoting In re Volkswagen of Am., Inc., 545 F.3d 304, 310 (5th Cir. 2008) (en banc)). Specifically, the CAFC concluded that the district court had not abused its discretion in weighing two factors relating to judicial economy: that the trial court had gained substantial experience in construing the claims of the same patent during a prior litigation and that there was a related case currently pending before the same court.

The CAFC also rejected the petitioners' argument that it is always improper for a district court to deny transfer based on judicial economy when all of the convenience factors clearly favor transfer.  While the court noted the importance of the convenience factors, it also recognized that "§ 1404(a) commits the balancing determination to the sound discretion of the trial court based not on per se rules but rather on an 'individualized, case-by-case consideration of convenience and fairness.'"  Slip Op. at 6-7 (quoting Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)).  In this specific case, the CAFC could not conclude that "the trial court's balancing was so unreasonable as to warrant the extraordinary relief of mandamus."  Id. at 8.

Note: The opinion's final footnote appears to summarize the panel's overarching view on mandamus petitions directed to the venue transfer issue.  It states:

Our holding today does not mean that, once a patent is litigated in a particular venue the patent owner will necessarily have a free pass to maintain all future litigation involving that patent in that venue. However, where, as here, the trial court performed a detailed analysis explaining that it is very familiar with the only asserted patent and the related technology, and where there is a co-pending litigation before the trial court involving the same patent-in-suit, and pertaining to the same underly-ing technology and accusing similar services, we cannot say the trial court clearly abused its discretion in denying transfer.

Supreme Court Does not Decide Costco v. Omega Int'l Exhaustion Case

Costco v. Omega (Supreme Court 2010)

In Costco, the Supreme Court was asked to apply the first sale doctrine of copyright law in the context of international sales. Costco had purchased legitimate Omega watches abroad and then imported them into the US.  The watches included a small copyrighted design on the back surface and Omega argued that the importation and further distribution of the watches constituted copyright infringement.  Ordinarily, the purchaser of a legitimate copy of a work can lawfully resell the copy based on the first sale doctrine (also known as copyright exhaustion). The trick, however, is that copyright is territorial in nature and the first sale abroad arguably did not “exhaust” the US copyright. The 9^th  Circuit had sided with Omega — holding that the first sale doctrine did not apply to foreign manufactured copies that were purchased abroad.

Without opinion, and in a 4–4 split, the Supreme Court has affirmed the 9^th  Circuit decision. However, because of the 4–4 split, the case will not be seen as precedent-setting. Thus, as Ryan Vacca wrote in an e-mail this morning: “Our unanswered questions . . . remain unanswered.”

 

Research Corp. v. Microsoft: Section 101 and Process Claims

By Jason Rantanen

There are three articulated exceptions to the scope of patentable subject matter under 35 U.S.C. § 101: laws of nature, physical phenomena, and abstract ideas.  Research Corp. v. Microsoft places a high hurdle in front of challengers who seek to invalidate process patents on the third ground. 

Research Corp. Technologies v. Microsoft Corp. (Fed. Cir. 2010)
Panel: Rader (author), Newman, and Plager

Research Corporation ("RCT") owns several patents relating to digital image halftoning, which is the process of generating electronic display and print images using only a small number of pixel colors (ex.: red, blue and green in the case of color displays) while appearing to present many more colors and shades than were actually used.  Four related patents are relevant to this summary: Nos. 5,111,310, 5,341,228, 5,477,305, and 5,726,772.  The applications for the '310 and '228 patents (a continuation-in-part of the '310 patent) were filed before December 4, 1991; the remaining patents are continuations of the '228 patent and claim priority to the earlier filing dates. 

RCT brought an infringement action against Microsoft based on these patents; in response, Microsoft asserted, and the district court initially concluded, that the patents were unenforceable due to inequitable conduct, invalid and not infringed.  The Federal Circuit reversed that determination in 2008.  Microsoft subsequently sought summary judgment against the '310 and '228 patents on Section 101 patentable subject matter grounds, and asserted that the claims of the '772 patent were not entitled to the earlier priority date, thus rendering them anticipated.  The district court granted Microsoft's motions, and subsequently held that the only remaining claim, claim 29 of the '305 patent, also lacked entitlement to the earlier priority date.  Based on these ruling, the parties stipulated to a dismissal of the suit and RCT appealed.

Section 101 and Process Claims
In reversing the district court's ruling that the '310 and '228 patents failed to satisfy Section 101, the Federal Circuit identified a set of considerations that can be applied when assessing the question of abstractness.  Drawing upon the Supreme Court's precedent in this area, including its recent decision In re Bilski, the opinion first reiterates that there are only three articulated exceptions to subject matter eligibility: "laws of nature, physical phenomena, and abstract ideas." 

Focusing on the category of abstract ideas, the court noted the Supreme Court's admonition in Bilski not to provide a rigid formula or definition for abstractness.  Rather, "the Supreme Court invited this court to develop 'other limiting criteria that further the purpose of the Patent Act and are not inconsistent with its text.'" Slip Op. at 14.  With that guidance, the panel concluded that it perceived nothing abstract in the subject matter of the processes claimed in the '310 and '228 patents.  Specifically, the court observed that:

• "The invention presents functional and palpable applications in the field of computer technology";
• Some claims in the patents require physical components;
• "[I]nventions with specific applications or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act"; and
• The incorporation of algorithms and formulas does not prevent patent eligibility.

Nevertheless, while finding these factors met in the instant case, the panel further noted that its analysis was limited to the context of Section 101, which provides only a coarse filter.  Abstractness challenges can also be brought against specific claims under Section 112 even if the requirements of Section 101 are met.

Comment: The court's discussion of Section 101 suggests that the issue of patentable subject matter should be analyzed with respect to the patent as a whole; in contrast, Section 112 challenges are analyzed on a per-claim basis.

Burden of Proof for Establishing Priority
In addressing the district court's ruling that the asserted claims of the '772 and '305 patents were not entitled to claim priority to the '310 and '228 filing dates, the opinion reinforced the court's prior ruling that the patent holder bears the burden of establishing priority.  As the court held, although a patent challenger has the burden of going forward with invalidating prior art, once it has done so the burden shifts to the patent holder.  Thus, in an instance where the patent holder attempts to defeat the assertion of invalidity by claiming priority to an earlier application, the patent holder bears the burden of proving the entitlement to priority - including that the claims of the earlier patent are supported by the written description of the earlier specification.

Note: The '772 and '305 patents shared the same specification as the earlier '305 and '228 patents.  If the relevant claims had been contained in the '305 or '228 patents, Microsoft would have had the burden of proving lack of written description, as opposed to the burden resting with RCT.  Thus, the fact that the claims were part of a continuation was highly significant with respect to the allocation of the burden.

Comment: A related issue is who bears the burden of proof in the context of claims to a pre-filing conception or reduction to practice date. Although not mandated by the text of the opinion, which specifically refers to the burden to establish "an earlier filing date," the court's analysis could be read to support the conclusion that the patent holder bears the burden of proof in this situation as well.

After dispensing with RCT's challenge to the district court's allocation of burden, the panel proceeded to address the priority claims on the merits.  With respect to the '772 claims, the panel agreed with the district court, concluding that they were unsupported by the prior disclosure.  The panel did reverse on the '305 claim, however, ruling that to satisfy the written description requirement for apparatus claims, the patent need not disclose every method of making the apparatus. 

In re Acer: Transfer Out of the Eastern District of Texas

By Jason Rantanen

In re Acer America Corporation (Fed. Cir. 2010)
Panel: Gajarsa, Schall (Author), and Moore

In 2008, MedioStream, a company headquartered in the Northern District of California, brought a patent infringement suit in the Eastern District of Texas against twelve hardware and software companies, five of which are also headquartered in the Northern District of California.  The defendants moved to transfer venue to the Northern District of California pursuant to 28 U.S.C. 1404(a), which authorizes transfer "[f]or the convenience of parties and witnesses, in the interest of justice."  The district court denied the motion, primarily because one of the defendants, Dell, Inc., is headquarted in Round Rock, Texas, relatively close to (albeit outside) the Eastern District of Texas. The defendants petitioned the Federal Circuit for a writ of mandamus. 

On appeal, the Federal Circuit agreed with the Petitioners, concluding in a precedential opinion that the district court abused its discretion in denying the request to transfer venue.  Particularly important in the panel's analysis was the fact that a substantial number of party witnesses reside in or near the Northern District of California, and requiring them to travel to the Eastern District of Texas would result in substantial expenses for airfare, meals, lodging, and the loss of productivity from time spent away from work, as well as the personal costs imposed on the witnesses.  While it was possible that more than one Dell employee might testify, that number was likely to be insignificant in contrast with the substantial number of party witnesses that would be required to travel to Texas.  Similarly weighing in favor of transfer to California was the venue's ability to compel testmony through subspoena power, the presence of a significant portion of the evidence in the Northern District of Caliornia (and none in the Eastern District of Texas), and the local interest of the Northern District flowing from the residence of many of the parties in that district.

Note: Last month, the court granted a temporary stay of the district court proceedings.

Supreme Court to Decide Microsoft Patent Case that Could Make it Easier to Invalidate Patents

By Dennis Crouch

Microsoft Corp. v. i4i Ltd. (Supreme Court 2010)

The Supreme Court has granted Microsoft's petition for a writ of certiorari and will consider whether patent law requires clear and convincing evidence of invalidity in order to invalidate an issued patent. Microsoft asks that the standard be lowered – at least for the situation where the evidence of invalidity was not considered by the patent office before the patent issued. The Supreme Court has not directly ruled on the issue. However, in KSR v. Teleflex, the Supreme Court did note that the "the rationale underlying the presumption — that the PTO, in its expertise, has approved the claim — seems much diminished" in cases where the patentee "fail[ed] to disclose" the key prior art to the PTO.

I expect that the court will agree that the statutory presumption of validity does not require a clear and convincing standard and that the standard should be lowered when a court is presented with evidence that is substantially different from that considered by the USPTO. Without explanation, Chief Justice Roberts has recused himself from this case – leaving eight justices to decide. At this point, I expect that all members of the court will agree that the standard should be lowered with some disagreement on the exact rule.

Clear and Convincing Evidence: Felony criminal cases require that prosecutors prove their case beyond a reasonable doubt. Most civil cases only require a preponderance of the evidence – often referred to as "more likely than not." Thus, in patent infringement cases, the patentee need only prove that it is more likely than not that the defendant infringed. However, the Federal Circuit has long required that invalidity defenses be proven with clear and convincing evidence. The clear and convincing standard is somewhere between a preponderance of the evidence and beyond a reasonable doubt and is sometimes referred to as "substantially more likely than not." Microsoft has not directly challenged the CAFC's rule of corroborative evidence that a single person's testimony is never sufficient to invalidate a patent.

i4i's case: In 2009, an Eastern District of Texas jury awarded $200 million + interest to i4i after finding that Microsoft willfully infringed the Canadian company's patent. Judge Davis subsequently added-on $40 million for willful infringement. The judge also issued an injunction ordering Microsoft to stop selling Word Products with the capability of using "custom XML." That injunction was stayed by the Federal Circuit pending appeal. On appeal, the Federal Circuit affirmed the lower court's findings of validity, willful infringement, enhanced damages, and permanent injunctive relief. In the meantime, the USPTO has concluded its reexamination of the i4i patent — confirming that the claims at issue are patentable. Microsoft filed a second reexamination request in August 2010 (shortly after it filed its petition to the Supreme Court). However, on November 24, 2010, the USPTO denied the request to begin a new reexamination – finding that the newly asserted prior art failed to raise a substantial new question of patentability (SNQ) as required by statute. Microsoft will likely appeal that denial. In addition, Microsoft apparently patched its software to prevent someone from using custom XML in Word in an effort to avoid the injunction and any further damages.

Microsoft has now moved-on to the Supreme Court — asking the high court to reject the "clear and convincing" evidence standard for proving a patent invalid. As Microsoft wrote in its petition for writ of certiorari, the question is "Whether the court of appeals erred in holding that Microsoft's invalidity defense must be proved by clear and convincing evidence" when the prior-art was not considered by the USPTO. This is essentially the same question that Microsoft raised in its 2008 petition in z4. That petition was withdrawn after the parties settled.

The Patent: i4i's asserted patent (U.S. Patent No. 5,787,449) covers a system for editing the metacodes of an HTML or XML document. The system uses a metacode map that is stored separately from the XML document and provides a menu of potential metacodes. The patent application was filed in 1994 and should remain in-force until 2015.

Microsoft's Invalidity Argument: Microsoft was not able to uncover any prior publication or patent that would invalidate the invention. However, the software giant argued at trial that i4i had sold an embodiment of the invention in the US more than one year prior to the 1994 patent application date. In particular, Microsoft argues that the invention was "embedded in a system called S4 - that the inventors of the ′449 Patent developed and sold to SEMI, a client of i4i's predecessor, over a year before applying for the ′449 Patent." That sale was not disclosed to the USPTO during the original prosecution and could not be presented during reexamination because reexaminations are limited to a review of prior art patents and publications. At the trial, the inventors (Vulpe and Owens) testified that the S4 system did not include a metacode map or separate the map from the marked-up document – two key features of their invention. Because the source-code for the 1993 custom software was no longer available, Microsoft primarily relied on testimony from a former i4i employee and upon written statements that Vulpe had made to investors and to the Canadian Government suggesting that the S4 software did separate metacode information.

The jury form asked "Did Microsoft prove by clear and convincing evidence that any of the listed claims of the '449 patent are invalid?" The jury answered "no." On appeal, the Federal Circuit held that the jury had sufficient evidence to rule that the patent was not anticipated by S4.

Importance of the Rule: A recent study conducted by Etan Chatlynne and published on Patently-O looked at all 119 Federal Circuit decisions on patent validity for the past several years. The study found that lowering the burden of proof would not have made any difference for 74% of those cases but might have made a difference in 26% of the cases. None of the decisions expressly stated that the result would be different if the standard had been reduced.

The clear and convincing standard probably has an important psychological impact in jury (and judicial) deliberations where the defendant's high burden for proving invalidity is contrasted with the plaintiff's lower burden for proving infringement.

Nuance Communications v. Abbyy Software

By Jason Rantanen

Cases involving foreign parties often raise complex procedural issues.  In this case, two of the defendants - a Russian corporation and a Cypriot corproration - argued that the district court lacked personal jurisdiction and that the plaintiff's attempts at service were insufficient.

Nuance Communications, Inc. v. Abbyy Software House (Fed. Cir. 2010)
Panel: Rader (author) Newman, Prost

In 2008, Nuance Communications sued Abbyy USA Software House, Abbyy Production, and Abbyy Software for patent infringement.  Abbyy Production, a corporation organized under the laws of the Russian Federation, and Abbyy Software, a Cypriot corporation, filed a motion to dismiss for lack of personal jurisdiction and improper service of process.  In a short order, the district court granted the motion and declined to consider Nuance's request for jurisdictional discovery by not addressing that issue.

On appeal, the Federal Circuit reversed the district court's ruling.  On the question of personal jurisdiction, the panel first noted that because this is a patent case, Federal Circuit precedent applies rather than that of the regional circuit.  The overarching analysis, however, focused on the traditional "minimum contacts" approach: "whether the defendant purposefully established 'minimum contacts' in the forum state."  Because the question in this case was one of specific jurisdiction, it thus required examining:

(1) whether the defendant purposefully directed activities at residents of the forum; (2) whether the claim arises out of or relates to those activities; and (3) whether assertion of personal jurisdiction is reasonable and fair.

Slip. Op. at 8.  Applying this test, the majority concluded that the district court had erred in dismissing Abbyy Production and Abbyy Software.  With respect to Abbyy Production, the appellate court noted that the defendant had engaged in a variety of activities directed at California, including its distribution of the allegedly infringing software to Abbyy USA, a California entity.  These activities also satisfied the second prong, as Nuance alleged in its Complaint that Abbyy Production's importation of the software into California infringed and induced infringement of the patents-in-suit.  The panel further found that the third prong was met, noting that even beyond the fact that Abbyy Production purposefully targeted activities at the forum state, it and Abbyy USA operated under a shared management team and were represented by the same counsel.

The panel declined to conduct a similar analysis for Abbyy Software, concluding that the extent of its involvement in sales of the accused product was uncertain on the facts before the court.  Consequently, the court remanded for additional jurisdictional discovery.

The Federal Circuit also reversed the dismissal based on improper service of process.  After a lengthy discussion of the applicability of Hague Convention procedures to service of process on corporations in the Russian Federation, the panel declined to opine on whether personal service on corporations was permissible in this case.  Rather, the court held that permitting substituted service under Federal Rule of Civil Procedure 4(f)(3) was called for here, and service on Abbyy USA would be sufficient to satisfy constitutional notions of due process for service on Abbyy Production. 

Note: The panel also reversed the district court's sua sponte dismissal of Abbyy Software for improper service of process, noting that the court lacked authority to do so because Abbyy Software had waived the objection.

Cancer Research Technology v. Barr Laboratories: Prosecution Laches and Inequitable Conduct

By Jason Rantanen

Cancer Research Technology Ltd. v. Barr Laboratories, Inc. (Fed. Cir. 2010)
Panel: Newman, Lourie (author), Prost (dissenting)

Although overshadowed by the en banc Federal Circuit arguments in TheraSense v. Becton Dickinson this morning, Cancer Research Technology v. Barr Laboratories may provide a preview of what the opinions in TheraSense could look like - although it doesn't necessarily indicate which view of inequitable conduct will ultimately prevail.  In Cancer Research, Judges Lourie and Newman reversed a district court finding of prosecution laches and inequitable conduct, while dissenting Judge Prost would have reached the opposite result.

The patent at issue (the '291 patent) involved a set of thirteen tetrazine derivatives that the original 1982 specification identified as possessing anticancer activities based on animal studies.  During the first nine years of prosecution, the examiner repeatedly rejected the claims due to lack of utility; rather than file a response to the office actions, the applicant instead filed continuation after continuation.  In 1991, Cancer Research obtained ownership of the patent application and shortly thereafter responded to the examiner's arguments.  The patent issued in 1993 and expires in 2014. 

Following Cancer Research's clinical testing, the FDA approved one of the compounds covered by the '291 patent (marketed as TEMODAR) for the treatment of one type of cancer in 1999 and a second in 2005.  In 2007, Barr Laboratories filed an Abbreviated New Drug Application ("ANDA") for a generic form of TEMODAR.  Cancer Research sued Barr for infringement four months later.  During the district court proceedings, the parties stipulated to validity and infringement and, after a bench trial, the court found that the patent was unenforceable due to prosecution laches and inequitable conduct. 

Prosecution Laches
Given the nearly ten-year delay before any meaningful response to the examiner's rejection was filed, Barr contended that the patent was unenforceable due to prosecution laches.  The district agreed, concluding that the delay in prosecution was unreasonable and unexplained.

On appeal, the majority reversed the finding of prosecution laches, holding that the doctrine requires not just unreasonable delay, but also a showing of prejudice.  The majority further held that "to establish prejudice, an accused infringer must show evidence of intervening rights, i.e., that either the accused infringer or others invested in, worked on, or used the claimed technology during the period of delay."  (Slip Op. at 9).  Here, there was no evidence of intervening rights during the prosecution period, such as evidence showing that someone other than the patent holder attempted to develop the claimed compounds.  Even Barr itself waited until 2007 - four years later than required - before filing its ANDA.  The majority also noted that there was no public harm: in the absence of the patent, Cancer Research likely would not have been incentivized to develop TEMODAR at all. 

Writing in dissent, Judge Prost rejected the notion that prosecution laches requires prejudice, let alone intervening rights; rather, under her reading of the precedent such a requirement is not part of the laches determination.  Furthermore, in her opinion, both Barr and the public were harmed by Barr's inability to market a generic version of TEMODOR.

Comment: I'm unconvinced by Judge Prost's argument on this point.  If she is correct, then the '291 patent was never enforceable - be it in 2007, when Barr filed its ANDA, or 1993, when it issued.  Yet without an enforceable patent, Cancer Research would never have developed TEMODOR, let alone engaged in the expensive Phase III clinical studies necessary to demonstrate its safety and efficacy.  Thus, the "harm" to the public would been greater in the absence of the '291 patent, not less.

Inequitable Conduct
The majority also rejected the district court's finding of inequitable conduct, while the dissent reached the opposite conclusion.  Both opinions focused on the subject of intent to deceive. 

The inequitable conduct issue in this case revolved around an extensive series of articles by an inventor on the '291 patent that presented data from post-application clinical trials of the claimed compounds.  These articles included conclusions indicating that some of the claimed compounds demonstrated high toxicity and low anticancer activity, which the district court found to be highly material to the patent claims because it directly contradicted statements in the '291 patent regarding the compounds' utility in treating cancers, as well as the patentability of a broadly written claim.

The majority, following the "intent cannot be inferred from materiality" line of thought, concluded that the district court's only basis for finding intent was its determination that the withheld articles were highly material.  "Because the district court did not rely on any other evidence to support its finding of deceptive intent beyond that used to find the withheld data material, the court in effect relied solely on its materiality finding to infer intent to deceive."  Slip Op. at 17.  The majority also concluded that the inference of deceptive drawn by the district court about the inventor's publication of data was not the only reasonable inference; rather, the broad publication of this data in multiple articles is inconsistent with an inference of intent to deceive.  Thus, an equally reasonable inference is that the inventor did not appreciate the potential importance of the published data to the patentability of the patent claims.

Judge Prost, again writing in dissent, would have affirmed the district court's determinations.  In contrast to the majority, which required independent evidence of intent, her view of inequitable conduct is that it does not require separate evidentiary bases for materiality and intent; rather it is appropriate to cite to the same evidence for materiality and intent.  Furthermore, here there was additional evidence of intent in the form of the district court's credibility findings, "which are virtually unreviewable by this court."  Thus, under her approach to intent in inequitable conduct, "[w]e should not draw inference that the district court has already excluded based on its own credibility findings."

Comment: The majority and dissent's views on intent can be partially reconciled under the position that, although an intent to deceive may be partially based on evidence of materiality, materiality cannot be the sole basis for the finding of intent to deceive.  Here, in the majority's opinion, the finding of materiality was the sole basis for the intent to deceive determination, because the only additional factor - the credibility determination - was based on an erroneous inference.  On the other hand, in the dissent's view credibility determinations are unreviewable and are sufficient to provide the "beyond the materiality" support for an intent to deceive finding.

Hyatt v. Kappos: Federal Circuit Opens Door to Post-BPAI Civil Actions

By Dennis Crouch

Hyatt v. Kappos (Fed. Cir. 2010) (en banc)

Summary: In a 6-2-1 en banc decision, the Federal Circuit has reversed its prior precedent and held that a patent applicant must be allowed to introduce new evidence in a Section 145 civil action filed to challenge a USPTO refusal to grant patent rights and that the issues implicated by the new facts must be considered de novo.

[W]e hold that the only limitations on the admissibility of evidence applicable to a § 145 proceeding are the limitations imposed by the Federal Rules of Evidence and Federal Rules of Civil Procedure. Therefore, we hold that the district court applied the wrong legal standard for the admissibility of evidence in a § 145 proceeding and abused its discretion when it excluded Mr. Hyatt's declaration. . . .

The particular significance of a § 145 civil action is that it affords an applicant the opportunity to introduce new evidence after the close of the administra-tive proceedings—and once an applicant introduces new evidence on an issue, the district court reviews that issue de novo.

However, the Court also wrote that an applicant may still be barred from presenting new "issues" in the civil action and that, when no new evidence is presented, that BPAI findings and rulings should be given deference under the Administrative Procedures Act.

Impact: This decision could be seen as relieving some pressure on applicants to ensure that their cases for patentability are exhaustively presented to the USPTO's internal Board of Patent Appeals and Interferences (BPAI). The decision is especially important in light of the growing role of BPAI appeals in the ordinary course of patent prosecution. In its argument, the USPTO suggests that a strategic applicant may now choose hold-back some evidence from the BPAI appeal in order to overcome the APA deference if the case goes to the District Court.

Statute in Question: 35 U.S.C. § 145 creates a right to a "civil action" in Federal District Court against the USPTO Director whenever an applicant is "dissatisfied with the decision of the Board of Patent Appeals and Interferences in an appeal under section 134(a)." In the alternative, an applicant may appeal directly to the Court of Appeals for the Federal Circuit.

Background: Gil Hyatt is a well-known inventor and successful patentee. Hyatt filed a civil action in 2003 after the BPAI sustained written description and enablement rejections for seventy-nine of Hyatt's claims. The examiner had issued "2546 separate rejections of Mr. Hyatt's 117 claims" based on the doctrines of inadequate "written description, lack of enablement, double patenting, anticipation, and obviousness." The Board reversed all of the examiner rejections except for the § 112 p1 arguments. Complicating this case is the fact that the application's claimed priority date is 1975. Hyatt has aggressively pushed the bounds of USPTO practice. This decision is one of more than a dozen Federal Circuit decisions focusing on Hyatt's patent rights. When California pursued Hyatt for tax revenue for his patent licenses, Hyatt took the case to the Supreme Court and eventually won a $388 million judgment against the state of California for invasion of privacy.

After the Board affirmed a set of written description and enablement rejections, Hyatt filed a Section 145 civil action and included a declaration offering new evidence of enablement and written description. The district court excluded that inventor-declaration from evidence based on Hyatt's "negligence" in failing to previously submit the information to the PTO. In a 2009 panel decision, the Federal Circuit held that the district court had properly excluded the new evidence – holding that the district court may properly exclude evidence that Hyatt should have produced to the PTO. That opinion was penned by former Chief Judge Michel and Joined by Judge Dyk. Judge Moore wrote a vigorous dissent that supported a patent applicant's right to a full civil action including the right to submit additional evidence when challenging a PTO decision.

Judge Moore wrote the en banc decision that was joined by Chief Judge Rader and Judges Lourie, Bryson, Linn, and Prost. Judge Dyk dissented and was joined by Judge Gajarsa. Judge Newman Concurred-in-Part – arguing that the civil action should not give deference to PTO factual determinations.

A key to the majority decision is the notion that a Section 145 civil action is not an appeal, but rather a new, separate lawsuit filed to force the PTO to act. In its analysis, the court began with a focus on the 150-year history of the civil action right (and its predecessor Bill in Equity) and the reality that new evidence has always a part of those remedies. See, e.g., Gandy v. Marble, 122 U.S. 432 (1887) (explaining that the [predecessor] § 4915 suit in equity was "not a technical appeal from the Patent Office, nor confined to the case as made in the record on that office"). The court then reviewed the current text of the statute, implications of the APA, and various policy arguments before reaching its conclusions.

In a 37-page dissent, Judge Dyk argued that the majority made an improper leap from (1) the correct premise that new evidence should be admissible in the civil action to (2) the incorrect conclusion that the law provides no meaningful limits on the introduction of new evidence regardless of what was presented at the BPAI.

Notes:

• Michael Barclay's Discussion of the case
• Oral Arguments
• Appellate specialist Aaron Panner argued the case on behalf of Hyatt. The USPTO's case was argued by Beth Brinkman of the DOJ. In the original panel, the late Ken Bass has argued for Hyatt and Bill Jenks for the Government. Michael L. Martinez represented Hyatt in the civil action.

AstraZeneca v Apotex: Affirmance of a Preliminary Injunction

By Jason Rantanen

AstraZeneca LP v. Apotex, Inc. (Fed. Cir. 2010)
Panel: Rader, Bryson (dissenting in part), Linn (majority author),

Contrary to popular opinion, it's still possible to obtain a preliminary injunction in a patent case - it's just very difficult.  Astrazeneca v. Apotex provides an example of an affirmed preliminary injunction, and is significant for that reason alone.  It also raises some interesting inducement issues relating to intent that I'll discuss in a separate post.

Background
This case revolved around AstraZeneca's budesonide inhalation suspension drug product, which consists of a vial containing a single dose of budesonide suspended in a sterile liquid.  The drug is administered by squeezing the entire contents of the vial into a jet neubulizer, then inhaling the resulting mist through a mask attached to the nebulizer.  Because budesonide is an inhaled corticosteroid, the FDA requires that the label include a warning instructing patients to "titrate down" to the lowest effective dose of the medication to avoid any adverse effects from excessive use of the medication. 

The two patents at issue, Nos. 6,598,603 and 6,899,099, both contain method claims covering the once-daily use of the nebulized dose of a budesonide composition and product claims covering AstraZeneca's drug product kit.

Apotex sought approval to market a generic version of AstraZeneca's drug product.  As an ANDA applicant, it was well aware of AstraZeneca's patents, and sought to avoid the once-daily method claims by removing any mention of once-daily dosing from its labels.  While it succeeded in part, the FDA nevertheless required Apotex to keep the titration warning language in the generic product's label.

During the preliminary injunction proceedings, Apotex raised two principal arguments in response to the method claims.  First, it contended that they were anticipated; second, it contended that its distribution of the generic version of the drug would not induce infringement of AstraZeneca's method claims.  The district court rejected Apotex's arguments, and granted a preliminary injunction enjoining Apotex from marketing its product.

Note: The district court agreed with Apotex that the kit claims were invalid.  On appeal, the panel affirmed that determination. 

Anticipation
Apotex's first anticipation argument, involving a prior art patent, turned on a question of claim construction: whether the term "budesonide composition" encompassed budesonide encapsulated in liposomes (the '603 patent teaches dispersing budesonide in a solvent, either as a solution or a suspension that may include liposomes as an excipient).  The majority agreed with AstraZeneca's position, focusing on the discussion contained within the specification and buttressing its conclusions with extrinsic evidence (in this case, expert testimony).  Judge Bryson, dissenting on this point, reached the opposite conclusion: the claim term is not limited to budesonide directly dispresed in solvent, and thus the method claims are anticipated.

Apotex's also argued that a prior art British advertisement for AstraZeneca's product describing it as a twice-daily product anticipated the patents.  The majority again agreed with AstraZeneca that this reference did not anticipate the once-daily method claims, both because it did not disclose once daily dosing and because it was not enabled with respect to that type of dosing.  (Obviousness was apparently not in dispute, as at the time of the earlier reference no one recognized that the product could be administered once per day and still be effective).  Judge Bryson again disagreed, reading the prior art advertisement to suggest the administration of the drug once a day.

Inducement of Infringement
In challenging the district court's finding of inducement of infringement, Apotex focused on the subject of intent, arguing that its instructions did not demonstrate intent to cause the users of its product to engage in once-daily dosing and that it lacked specific intent to cause infringement of Apotex's patent.  The Federal Circuit rejected these arguments, affirming the district court's conclusion that the downward-titration instructions would necessarily result in some users engaging in once-daily dosing and noting that Apotex was well aware of the infringement problems raised by once-daily dosing, yet chose to proceed nonetheless.

Preliminary Injunction "Substantial Question of Invalidity" Standard
Although not playing a major role in the ultimate outcome of this appeal, the court's articulation of the "likelihood of success" standard, along with the subsidiary "substantial question of invalidity" element, is noteworthy given the divergent views on this subject, such as those expressed by Judges Newman and Gajarsa in Abbott Laboratories v. Sandoz, 544 F.3d 1341 (Fed. Cir. 2008).  AstraZeneca v. Apotex follows the approach of requiring a seemingly high threshold for patentees/low threshold for defendants on this issue:

For a patentee to establish that it is likely to succeed on the merits, it “must demonstrate that it will likely prove infringement of one or more claims of the patents-in-suit, and that at least one of those same allegedly infringed claims will also likely withstand the validity challenges presented by the accused infringer.” Ama-zon.com, 239 F.3d at 1351. When reviewing the grant of a preliminary injunction, this court “views the matter in light of the burdens and presumptions that will inhere at trial.” Titan Tire Corp., 566 F.3d at 1376 (citation omitted). A preliminary injunction should not issue if an alleged infringer raises a substantial question regarding either infringement or validity, i.e., the alleged infringer asserts an infringement or invalidity defense that the patentee has not shown lacks substantial merit. Genentech, Inc. v. Novo Nordisk A/S, 108 F.3d 1361, 1364 (Fed. Cir. 1997).

Split Court Denies Rehearing En Banc in Sun Pharmaceuticals v. Eli Lilly

By Jason Rantanen

Sun Pharmaceutical Industries, Ltd. v. Eli Lilly and Company (Fed. Cir. 2010) (denial of rehearing and rehearing en banc)

In Sun Pharmaceutical, a Federal Circuit panel affirmed a district court determination that Eli Lilly's patent for a method of using gemcitabine to treat cancer was invalid due for obviousness-type double patenting based on another application, filed the same day, claiming the compound gemcitabine and disclosing its use for treating cancer.  (The previous Patently-O write-up is here).  This morning the Federal Circuit issued an order denying Eli Lilly's petition for rehearing and rehearing en banc.  The court was closely split on the latter, with four of the nine currently sitting judges dissenting on the decision not to rehear the decision en banc.

The dissent's principal concern was that, in its view, the panel opinion involved a departure from precedent, thus creating an intra-circuit split.  According to the dissent,

the panel held the claims to the anticancer use to be invalid for double patenting because the anticancer use was mentioned (but not claimed) in the continuation-in-part specification that is not prior art, stating that “[t]he asserted claims of the later ’826 patent simply claim the anticancer use disclosed in the specification of the ’614 patent,” reported at 611 F.3d at 1389.

The dissent pointed out that this approach, which focused on the disclosure of the simultaneously filed patent, not its claims, was contrary to precedent:

Uniformly, unlike examination for obviousness based on prior art, the issue of obviousness-type double patenting is directed to whether the invention claimed in a later patent is an obvious variant of the invention claimed in an earlier patent. The panel opinion violates a vast body of precedent.

Furthermore, according to the dissent, expanding the doctrine of obviousness-type double patenting to the facts of this case serves no good policy purpose and creates a schism in the law - a schism that should be addressed by the court en banc:

A change of law “in ways that negatively impact the patentability of important later-discovered uses” serves no public purpose in areas in which commercial development requires patent protection. Id. If the majority of the court now believes, as a matter of policy, that the law should be changed in this new direction, en banc treatment is particu-larly appropriate, for the court’s rule is that the earlier precedent prevails unless overruled en banc. A situation in which the court ignores this rule, and applies whatever law the panel prefers, is an indictment of the ability of this court to provide stable law in the areas entrusted to us.

Comment: Given that there are currently only nine sitting Federal Circuit judges, it seems unlikely that the court will grant a rehearing en banc absent extraordinary circumstances - especially in cases where the panel decision was unanimous.  In that situation, in order for an appeal to be reheard en banc, at least five of the six judges who did not participate on the panel would need to vote to rehear the decision en banc.  Of course, there are instances when this would not apply, as senior judges and visiting judges frequently participate in panel determinations, but it is something to keep in mind for the near future.

US Patent Law Provides Prior-Inventor Rights, NOT Prior-User Rights

Solvay v. Honeywell (Fed. Cir. 2010)

This case presents a nice fact pattern for a law school examination question on the operation of the novelty rules of 35 U.S.C. § 102.  Solvay’s patent covers a method for manufacturing a non-ozone-depleting form of penta-flouro-propane (HFC-245fa) that is primarily used in spray-foam insulation products. Honeywell manufactures and sells over 1,000,000 pounds of the compound each year.

Prior-User Facts: Honeywell (at that time, AlliedSignal), the accused infringer, was in possession of a working model of the invention in the United States (US) prior to Solvay’s invention date. However, Honeywell was not the original inventor. Rather, Honeywell had copied its working model from one created by a Russian agency (in Russia, but under contract with Honeywell).  Honeywell engineers continued to work on the project as they moved toward commercialization. However, by the time that Honeywell began to commercially use or publicize the invention, Solvay had already independently invented the method and filed for patent protection.

The question on appeal is whether any of the novelty provisions of Section 102 render Solvay’s patent claims invalid.  The two primary statutory candidates are 35 U.S.C. § 102(a) and § 102(g)(2). 

A patent claim is invalid under Section 102(a)  if the invention was “known or used by others” in the US prior to the patentee’s date of invention.  If the statute is construed according to the plain meaning of its terms, then Honeywell wins and the patent is invalid.  Several US-based individuals at Honeywell knew of the invention prior to Solvay’s invention date – seemingly satisfying the “known or used by others” in the US requirement of the statute. Unfortunately for Honeywell, courts require that the prior knowledge or use of the invention be somehow public.  In this case, Honeywell had kept its work in the US confidential.  Therefore, Honeywell’s prior knowledge and use of the invention is insufficient to invalidate the asserted claims under Section 102(a).  Many accused infringers (and others) have argued that the law should provide a prior-user defense for situations such as this one.  That defense does not exist except for the limited (now severely limited) case of business method patents.

Section 102(g)(2) creates a prior-inventor defense that can also render a patent claim invalid. However, that defense has a number of important limitations. Under Section 102(g)(2), a claim will be held invalid if, before the patentee’s invention date, the claimed invention “was made in [the US] by another inventor who had not abandoned, suppressed, or concealed it.”  Section 102(g) ends with the statement that the question of invention priority will consider “not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other.”

As I mentioned, Section 102(g)(2) creates a prior-inventor defense, not a prior-user defense.  The original inventor was the Russian agency operating in Russia.  That invention cannot satisfy the elements of the statute because Section 102(g)(2) requires that the prior invention be made in the US. For its part, Honeywell is not a prior inventor because it simply copied the work of the Russian agency. Thus, the patent skates-by Section 102(g)(2) as well.

* * * * *

More Information: The district court held the patent invalid based on Section 102(g)(2). In reaching that conclusion, the district court decided that the made by “another inventor” element of the provision did not actually require that the prior-user be an original-inventor.  Rather, the district court held that for the purposes of Section 102(g), all that is required is that the prior-user “appreciate” the invention.  In coming to that conclusion, the court distinguished the language of  Section 102(f), which does require that the applicant “he … himself invent.”  On appeal, the Federal Circuit rejected that argument — holding that “when the statute uses the words 'the invention was made in this country,' it is referring to the act of inventing in the United States” because “originality is . . .  inherent to the notion of conception.”  In its analysis, the Federal Circuit appears to have added some detail to the common definition of conception which should now read: “the formation in the mind of the inventor, of [the inventor's own] definite and permanent idea of the complete and operative invention, as it is hereafter to be applied in practice.”

Not the First Inventor: Honeywell argued strongly that it does not make sense for Solvay to have a patent since it was clearly not the first inventor and, if you follow the chain of title, the prior invention had never been abandoned, suppressed, or concealed.  Although seemingly sympathetic to Honeywell's policy argument, the appellate court decided that it was bound by the statute.

Whether this holding ignores the realities of globalization and outsourcing by modern-day research companies, as Honeywell contended at oral argument, is not the question before us. The question before us is whether, under the undisputed facts, Honeywell qualifies as “another inventor” under 35 U.S.C. § 102(g)(2). Because Honeywell did not itself conceive the RSCAC process of making HFC-245fa, under 35 U.S.C. § 102(g)(2), as this court has construed the statute, it is not “another inventor” of the subject matter claimed in the '817 patent.

Although perhaps only shorthand, it is interesting that the court focuses on the question of whether the corporate entity –  Honeywell –  was the inventor.  Although some proposed amendments to the Patent Act would lead toward corporate inventorship, the current law is that all inventors must be real persons.
 

Teva v. Eisai: Standing for subsequent Paragraph IV filers

By Jason Rantanen

Teva Pharmaceuticals USA, Inc. v. Eisai Co. (Fed. Cir. 2010)
Panel: Rader, Dyk, and Prost (author)

A company seeking to market a generic version of a previously approved pharmaceutical product must file and receive approval of an Abbreviated New Drug Application (ANDA).  One aspect of the ANDA, called a "Paragraph IV Certification," involves an assertion that each of the patents for that drug listed in the Orange Book is invalid and/or not infringed.  The first manufacturer to file a Paragraph IV Certification is entitled to 180 days of generic marketing exclusivity; until the first-filer's exclusivity period has run, the FDA may not approve ANDA applications by other manufacturers who have filed Paragraph IV certifications for the same patent.   The first-filer's exclusivity period can be triggered by either (1) its commercial marketing of the drug; or (2) entry of a court judgment finding the patent invalid or not infringed.

Eisai holds the New Drug Application for donepezil, and owns five patents listed for this product in the Orange Book.  Of these five patents, one (the '841 patent) was the subject of separate litigation that produced a preliminary injunction barring Teva from marketing a generic version of donepezil until the expiration of the '841 patent in November 2010.  With respect to the remaining four patents, Ranbaxy Laboratories was the first to file a Paragraph IV certification; thus, because Ranbaxy's exclusivity period had not yet run, approval of Teva's ANDA was barred. 

To remedy this issue, Teva brought a declaratory judgment action against Eisai on the remaining four patents, seeking to trigger the exclusivity period.  Ultimately, there was no question as to whether Teva infringed the patents: Eisai had filed a statutory disclaimer for two of them, effectively canceling their claims, and had entered into a covenant not to sue Teva on the remaining two patents.  Nevertheless, all four patents continued to be listed in the Orange Book, precluding approval of Teva's ANDA.

After the Declaratory Judgment action was filed, Eisai moved to dismiss on the ground that Teva had failed to  establish the existence of an Article III case or controversy.  The district court agreed, dismissing the case for lack of jurisdiction.  Teva appealed.

The Federal Circuit reversed the dismissal.  With respect to the jurisdictional issue, the court focused on two cases: Caraco Pharmaceutical Laboratories, Ltd. v. Forest Laboratories, Inc., 527 F.3d 1278 (Fed. Cir. 2008) and Janssen Pharmaceutica, N.V. v. Apotex, Inc., 540 F.3d 1353, 1359 (Fed. Cir. 2008).   Looking to Caraco, the court explained that:

the generic drug company’s injury (i.e., exclusion from the market) is fairly traceable to the defendant’s actions because “but-for” the defendant’s decision to list a patent in the Orange Book, FDA approval of the generic drug company’s ANDA would not have been independently delayed by that patent. 527 F.3d at 1292; see 21 U.S.C. § 355(j)(5)(B)(iv). When an Orange Book listing creates an “independent barrier” to entering the marketplace that cannot be overcome without a court judgment that the listed patent is invalid or not infringed—as for Paragraph IV filers—the company manufacturing the generic drug has been deprived of an economic opportunity to compete. Id. at 1293; see also 21 U.S.C. § 355(j)(5)(B)(4). A declaratory judgment redresses this alleged injury because it eliminates the potential for the corresponding listed patent to exclude the generic drug from the market.

Slip. Op. at 11.  On the other hand, as in Janssen, where a generic manufacturer agrees that an Orange Book patent is valid, enforceable, and infringed, that generic manufacturer lacks standing to pursue a declaratory judgment action against other Orange Book patents for that drug because it cannot market its product even if the exclusivity period runs.  

Applying this framework, the court concluded that Teva had established an actual controversy.  The court distinguished Janssen on the ground that the preliminary injunction associated with the '841 patent was necessarily preliminary, and there was no final determination as to the validity, infringement or enforceability of the '841 patent.  Thus, although Teva could not currently market its product, the preliminary injunciton did not eliminate the existence of a controversy.

With respect to the discretionary component of the Declaratory Judgment Act, the Federal Circuit concluded that the district court had abused its discretion in declining jurisdiction, both because it had relied on its determination that it lacked subject matter jurisdiction as well as being unsupported by the facts. 

Guest Post: An Interesting Preview of Myriad?

By Professor Paul M. Janicke, University of Houston Law Center

The Myriad case from the Southern District of New York, involving patent eligibility of DNA isolates derived from naturally occurring DNA, drew a great deal of attention. The court basically held such isolates ineligible for patent coverage as being too similar to the natural substances, and hence barred by the product-of-nature case law. In the district court Myriad drew twenty-three amici briefs and a great deal of press attention. It is now on appeal at the Federal Circuit, where the first brief is due to be filed October 22. However, in a little-noticed partial dissenting opinion in another case, Circuit Judge Timothy Dyk has given a preview of his likely views on this important question.

The appellate case was Intervet Inc. v. Merial Ltd., decided by a Federal Circuit panel on August 4. The case involved DNA sequences encoding viruses harmful to pigs. According to the patent involved, knowledge of such sequences facilitates detection methods and production of vaccines against the harmful viruses. The patent specification gave full-length DNA sequences for five strains of these types of viruses, and a sequence for a similar but harmless pig virus for comparison purposes. The issues raised below and on appeal were: (i) whether the district court's constructions of certain claim terms were correct; and (ii) whether a narrowing amendment made in the PTO while a claim was under prior art rejection foreclosed all access to the doctrine of equivalents for the territory between the original language and the amended language or left some of it open. No statutory subject matter issue was raised below or in the appeal.

The Intervet panel majority, consisting of Judges Prost and Bryson, decided those issues largely in favor of the patentee, Merial. Judge Dyk issued an opinion concurring in part and dissenting in part on the appealed questions. However, he also took the occasion to caution that the court's decision in the case did not mean the court was acquiescing in the patent-eligibility of DNA, even in isolate form: "I write separately primarily to make clear that in construing the claims, we are not deciding that the claims as construed are limited to patentable subject matter." He proceeded to address the main issue pending in Myriad, namely, whether isolates of DNA similar to DNA found in natural sources like humans or animals are eligible for patenting, or whether they run afoul of the Supreme Court's pronouncements about products of nature in cases such as Funk Bros., Chakrabarty, and the recent Bilski decision. Judge Dyk indicated he did not think claiming the DNA in its isolated form was sufficient to distinguish it, for eligibility purposes, from the naturally occurring substance. He read the Supreme Court cases to require subject matter that is "qualitatively different" from the naturally occurring substance, and said it was "far from clear" that DNA isolates as claimed here met that test.[8] Perhaps foreshadowing his position in Myriad, he stated:  

The mere fact that such a DNA molecule does not occur in isolated form in nature does not, by itself, answer the question. It would be difficult to argue, for instance, that one could patent the leaves of a plant merely because the leaves do not occur in nature in their isolated form.

The impact of Judge Dyk's views is difficult to predict. His is certainly an important judicial voice. However, he may not be on the panel drawn to hear the Myriad appeal, and the case may never be heard en banc. Moreover, these might not be Judge Dyk's final positions on the issues. Only time will tell how this important case plays out. 

* * * * *

[1] Association for Molecular Pathology v. United States Patent & Trademark Office, 2010 U.S. Dist. LEXIS 35418 (S.D.N.Y. April 2, 2010). Myriad Genetics was a co-defendant and co-owner of at least one of the patents in this declaratory action and exclusive licensee under others, hence Myriad has become the popular name of the case.

[2] 2010 WL 3064311 (Fed. Cir. 2010).

[3] See U.S. Patent 6,368,601, col. 1, lines 6-10.

[4] Id. at *9.

[5] Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948).
[6] Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980). 

[7] Bilski v. Kappos, 130 S.Ct. 3218 (2010).

[8] Intervet, 2010 WL 3064311 at *11.

[9] Id.

Written Description, Claim Scope, and Showing Possession of Hidden Embodiments

Laryngeal Mask Co. v. Ambu AS (Fed. Cir. 2010)

The district court rejected LMA's patent on summary judgment — holding that the claims covering a laryngeal mask device were invalid for lack of written description.

The written description issues here are similar to those presented in Liebel-Flarsheim and Lizard Tech.  The patented invention included both (1) a “cuff” with a “thicker and stiffer” region and (2) a “backplate.”  The described embodiments all showed the thick-stiff region of the cuff connected to the backplate,  but the accused device's cuff-backplate connection was in a different location. The claims themselves did not expressly limit the connection-site with reference to the thick-stiff region and therefore arguably covered the accused device.  Given that broad construction of the claims (as requested by the patentee), the district court held the patent invalid on written description grounds because the patent document failed to describe or show possession of the invention as embodied by the accused device.

On appeal, the Federal Circuit panel of Chief Judge Rader, Judge Lourie, and Judge Moore rejected the district court's findings — holding instead that the factual question of written description should be left for the jury in this case. 

Rather than focusing on affirmative evidence of possession, the Federal Circuit highlighted that nothing in the specification suggested that that design of the connection between the cuff and backplate was important or necessary to the invention.

“We agree with LMA that one of ordinary skill in the art could read these disclosures as providing for a cuff reinforcement in the distal region that need not be connected to the backplate. In addition, we agree with LMA that one of ordinary skill in the art could read the Cuff Wall Thickening Passage as disclosing a thickened cuff portion that need not be connected to the backplate.”

Because those factual conclusions raised issues of material fact, the appellate panel reversed the summary judgment holding and remanded.

The Court's approach implicitly presumes that the asserted patent satisfies the written description requirement and then looks to see whether the evidence is sufficient to overcome that presumption. That method of analysis makes sense based on the procedural setup of the case: Namely, (1) clear and convincing evidence is required to prove that the patent lacks written description; (2) the decision being reviewed was one of summary judgment; and (3) written description is a question of fact.

Notes:

• The court also reversed a claim construction holding that had led to summary judgment of non-infringement.
• The asserted claims were all added during prosecution. The original claims required that the backplate be “hermetically bonded to a periphery of the main-cuff” and the new claims have a seemingly broader requirement that the backplate be “attached” to the cuff.  The original claim appears broad enough to cover the link as embodied in the accused device.

 

 

Fujitsu Ltd. v. Netgear

By: Jason Rantanen

Fujitsu Ltd. v. Netgear (Fed. Cir. 2010)
Panel: Lourie, Friedman, and Moore (author)

Indirect infringement claims are particularly relevant in the context of industry-wide interoperablity standards, because frequently companies simply manufacture products capable of particular behavior while the relevant methods are actually carried out by end users.  Patent No. 4,974,952 raises an example of this issue.  The '952 patent claims a method of sending wireless messages involving fragmenting the messages in a particular manner.  Philips, the patent holder, contended that any product that complied with certain sections of the IEEE 802.11 standard infringed the asserted claims, and that by complying with the standard Netgear indirectly infringed the '952 patent (presumably by selling the accused products).

The district court granted summary judgment of noninfringement in favor of Netgear, determining that Phillips had failed to establish either contributory infringement or inducement.  On appeal, the Federal Circuit determined that the district court had erred on some points, but nevertheless affirmed summary judgment of noninfringment with respect to all but four products. 

Use of Standards to establish Direct Infringement: The court's discussion of the use of industry-wide standards to prove infringement may become the most widely-cited portion of this opinion.  After considering the parties' arguments, along with that of amicus Association of Corporate Counsel Intellectual Property Committee, the court held that:

[A] district court may rely on an industry standard in analyzing infringement. If a district court construes the claims and finds that the reach of the claims includes any device that practices a standard, then this can be sufficient for a finding of infringement. We agree that claims should be compared to the accused product to determine infringement. However, if an accused product operates in accordance with a standard, then comparing the claims to that standard is the same as comparing the claims to the accused product....An accused infringer is free to either prove that the claims do not cover all implementations of the standard or to prove that it does not practice the standard.

...

We acknowledge, however, that in many instances, an industry standard does not provide the level of specificity required to establish that practicing that standard would always result in infringement. Or, as with the ’952 patent, the relevant section of the standard is optional, and standards compliance alone would not establish that the accused infringer chooses to implement the optional section. In these instances, it is not sufficient for the patent owner to establish infringement by arguing that the product admittedly practices the standard, therefore it infringes. In these cases, the patent owner must compare the claims to the accused products or, if appropriate, prove that the accused products implement any relevant optional sections of the standard.

Slip Op. at 8-9. Applying this holding, the panel concluded that because the fragmentation feature in the 802.11 standard was optional, and (although present in the Netgear devices) was turned off by default, Phillips was required to prove that customers actually used the infringing feature. On this point, the Federal Circuit agreed with the district court that there was only evidence of actual infringing use with respect to four products.

Substantial Noninfringing Uses: The Federal Circuit applied the analysis of i4i v. Microsoft, focusing on the specific feature at issue.  Here, because the specific feature was infringing when it was activated, there was no substantial noninfringing use.

Material Part of the Invention: Phillips accused two classes of products: those that only fragmented messages and those that only defragmented messages.  Because the claims of the '952 patent were specifically drawn to the fragmenting steps, not the defragmenting steps, the district court concluded that the accused defragmenting products could not infringe.  Phillips argued that because fragmentation necessarily infringes the asserted claims, than the defragmenting products are useful only for infringement, and Netgear should be liable for them.  The panel rejected this argument: even though the usefulness of the claimed method would be lost without data receivers capable of defragmenting messages, the lack of defragmentation steps in the claims means that products that only defragment messages cannot constitute a "material part" of the invention. 

Mental State Components of Indirect Infringement: In analyzing the respective mental state components for contributory infringement and inducement of infringement, the panel found that Netgear's receipt of letters identifying the '952 patent and alleging infringement by any 802.11 compliant standard were sufficient to survive summary judgment.

Comment: my current research focuses on mental state issues in patent law, including in the context of indirect infringement.  In the near future, I'll discuss this subject in more depth. 

Other issues: In addition to the above indirect infringement issues, the Federal Circuit also concluded that the district court had erred in limiting damages based on the patent marking statute (35 U.S.C. § 287), because the claims covered a method and § 287 does not apply where the patent is directed to a process or method.  The Federal Circuit also analyzed the district's construction of relevant claim terms in Patent Nos. 6,018,642 and 6,469,993, and affirmed its grant of summary judgment of noninfringement of those patents.  The analysis in this section may be particularly relevant to those operating in the wireless technology area.

Follow-up comment: Michael Barclay also noted the importance of the standard-as-evidence holding on his blog, IPDuck.  See http://ipduck.blogspot.com/2010/09/federal-circuit-approves-use-of.html

Prometheus v. Mayo: Patenting Medical Methods

Prometheus Labs. v. Mayo Collaborative Services (Mayo Clinic) (Fed. Cir. 2010)

This case is one of several pending Federal Circuit appeals that are questioning whether medical diagnostic and treatment methods are the proper subject of patent protection.

The claims asserted by Prometheus are directed toward a method of “optimizing therapeutic efficacy” by first administering an active drug (6-thioguanine) to a subject and then using the subject's metabolite blood-level to adjust future doses of the drug.  (U.S. Patents 6,355,623 and 6,680,302). Thus, most of the claims are centered around three ordered-steps of:

1. administering the drug to the subject;
2. determining the amount of drug in the subject’s blood; and
3. re-calibrating the drug dosage based on step-2.

A broader claim (claim 46 of the ‘632 patent) eliminates the administering step of claim 1 above.

The district court found the claims invalid as lacking patentable subject matter under 35 U.S.C. 101.  On appeal, the Federal Circuit reversed — holding that the steps of “administering a drug” and “determining the level of 6-thioguanine” were both sufficiently transformative of “a particular article into a different state or thing.”  That Federal Circut decision was based on the court's machine-or-transformation test that was subsequently discredited by the Supreme Court in Bilski v. Kappos (2010).  In the wake of its Bilski decision, the Supreme Court vacated the Federal Circuit's Prometheus decision and remanded for a new opinion.  Seeing this as a potential watershed case, Mayo immediately requested that the Federal Circuit hear the case en banc.

Briefing by October 1: The Federal Circuit has apparently denied the en banc request and has moved-forward with a rapid briefing schedule: By October 1, 2010, both parties are scheduled to submit 20–page briefs “addressing the effect of the Supreme Court’s Bilski decision on the disposition of this case. No additional briefing or oral argument is contemplated at this time.”  The scheduling order was signed by the court clerk Jan Horbaly.

Judges in Charge: The scheduling order suggests that the remand will be taken as a supplement to the original decision. A quirk of that original decision is that the three-member panel included two judges who are not on the Federal Circuit (Chief Judge Paul Michel (Ret.) and E.D. Texas District Court Judge Ron Clark). The third member of the panel is Judge Lourie.  Federal Circuit rules indicate that Judge Clark can retain on the panel on remand, but would not be part of any en banc hearing.

Related cases include Classen Immunotherapies Inc. v. Biogen Idec (method of determining an immunization schedule) and Association for Molecular Pathology v. Myriad Genetics (gene patents). 

Successor Company Holds Patents Assigned to Predecessor Company (Even if Assigned after Predecessor Dissolved)

Tri-Star Electronics Int'l. v. Preci-Dip Durtal SA (Fed. Cir. 2010)

Mr. Kerek (from Ohio) invented the claimed “socket contact” while an employee of Tri-Star and he duly executed an assignment of his rights to to Tri-Star.  The year prior to the invention, Tri-Star (OHIO) had merged and become Tri-Star (CALIFORNIA).  However, Kerek's assignment clearly stated that the assignment of rights was to Tri-Star (OHIO) — even though that Ohio company no longer existed. Later, Tri-Star (CALIFORNIA) merged and became Tri-Star (DELAWARE).

Here, the accused infringer has challenged whether Tri-Star (DELAWARE) has standing as owner of the patent rights.  The Federal Circuit accepted this interlocutory appeal and held that Tri-Star (DELAWARE) is the owner of the patent rights.  

In making its decision, the Federal Circuit found two points of law important:

First, contract law attempts to satisfy the mutual intent of the parties, and here, it was clear that the employee had intended to transfer rights to his employer as required by the employment contract.

Second, even after a merger, a predecessor company continues to exist under Ohio law for the purposes of allowing its property to vest.

Based on these two points, the Federal Circuit held that the stated transfer to the merged Tri-Star (OHIO) equated to a transfer to its successor Tri-Star (CALIFORNIA). The later transfer to Tri-Star (DELAWARE) was not disputed.

* * * * *

I have no problem with the Federal Circuit's statements regarding Ohio law — it is correct as far as I know. However, I do have some concern with the ongoing fallacy that there is no Federal law or policy controlling the transfer of patent rights. On point, there is a Federal Law requiring that patent assignments be done “in writing.” 35 U.S.C. 261. Based on that statute, the court should have considered how the supposed transfer from Kerek to Tri-Star (CALIFORNIA) fits within that statutory requirement. In addition, we have seen an increasing number of companies playing games with the patent recordation system by using shell corporations and by mis-recording assignment records. Here, for instance, the assignment record showed ownership by Tri-Star (CALIFORNIA) despite the documentation in the underlying assignment.  Those concerns are important — especially if we believe that the public properly has an interest in knowing the identity of patent owners.

Preambles as Limitations

By Jason Rantanen

American Medical Systems, Inc. v. Biolitec, Inc. (Fed. Cir. 2010)
Panel: Bryson (author), Dyk (dissenting), and Prost

It may come as no surprise that the law on whether claim preambles can serve as limitations is unclear.  The Federal Circuit is aware of this issue, and at least one judge suggests that it may be time for the court to address this issue en banc.

The patent in this case, No. 6,986,764, relates to technology for vaporizing tissue using laser radiation.  The invention can be used to treat Benign Prostatic Hyperplasia, a condition in which growth of the prostate gland restricts the passage of urine out of the bladder and through the urethra.  By vaporizing or ablating some tissue, the size of the prostate is reduced, thus reducing bladder outlet obstructions.  Although laser radiation was known in the art, various problems were associated with its use.

The inventors of the '764 patent determined that by using high "volumetric power density" (a high amount of energy delivered to a given volume of tissue) they could produce increased vaporization efficiency while minimizing one of the problems associated with the procedure, residual coagulation.  The patent is directed to various methods and devices for achieving this high volumetric power density by manipulating variables such as wavelength, output power, beam quality, irrigant composition, and distance between the optical fiber and the tissue.

The dispute on appeal hinged on whether the preamble constituted a limitation.  Claim 31 is representative of the method claims. (The apparatus claims are similar, but recite "[a]n apparatus for photoselective vaporization of tissue.")  It recites:

A method for photoselective vaporization of tissue, comprising:

delivering laser radiation to a treatment area on the tissue, the laser radiation having a wavelength and having irradiance in the treatment area sufficient to cause vaporization of a substantially greater volume of tissue than a volume of residual coagulated tissue caused by the laser radiation, wherein the delivered laser radiation has an average irradiance in the treatment area greater than 10 kiloWatts/cm2 in a spot size at least 0.05 mm2.

During claim construction, the district court determined that the preamble phrase "photoselective vaporization" was a "fundamental characteristic" of the invention, and construed the term to mean "using a wavelength that is highly absorptive in the tissue, while being absorbed only to a negligible degree by water or other irrigant."  Based on this construction, the court granted summary judgment in favor of the accused infringer.

On appeal, the majority disagreed, concluding that the preamble phrase "photoselective vaporization of tissue" does not limit the claims of the '764 patent.  The court first noted the limited circumstances in which the preamble may limit claim scope:

“Generally,” we have said, “the preamble does not limit the claims.”  Nonetheless, the preamble may be construed as limiting “if it recites essential structure or steps, or if it is ‘necessary to give life, meaning, and vitality’ to the claim.” A preamble is not regarded as limiting, however, “when the claim body describes a structurally complete invention such that deletion of the preamble phrase does not affect the structure or steps of the claimed invention.”  If the preamble “is reasonably susceptible to being construed to be merely duplicative of the limitations in the body of the claim (and was not clearly added to overcome a [prior art] rejection), we do not construe it to be a separate limitation.”  We have held that the preamble has no separate limiting effect if, for example, “the preamble merely gives a descriptive name to the set of limitations in the body of the claim that completely set forth the invention.”

Slip Op. at 8-9 (internal citations omitted).  After rejecting a prosecution history-based argument and the argument that the preamble phrase provided a necessary antecedent basis, the court determined that the phrase "does not embody an essential component of the invention":

Instead, the term “photoselective vaporization” is simply a descriptive name for the invention that is fully set forth in the bodies of the claims....The bodies of the asserted apparatus claims (claims 63-64) describe a structurally complete device, including a laser adapted to deliver “radiation at a wavelength and irradiance . . . sufficient to cause [tissue] vaporization[.]” The bodies of those claims identify the covered wavelengths by function (“sufficient to cause vaporization”), and nothing in the claim language suggests that the term “photoselective” further limits those wavelengths.

Slip Op. at 10 (internal citations omitted).

Judge Dyk disagreed.  After first noting the confusing and unclear nature of the court's jurisprudence on this issue, he suggested that the court should dispense with the current articulation and instead apply the rule that preambles always limit claims:

It seems to me that a rule recognizing that all preambles are limiting would make better sense and would better serve the interests of all concerned. There is, after all, little to be said in favor of allowing an applicant, in the claim drafting process, to include material in the claims that is not binding. If patentees are allowed to include material in the claim definitions that is not bind-ing, patentees can suggest or imply one position before the U.S. Patent & Trademark Office (“PTO”) to secure allowance of the patent on the theory that the preamble is limiting and another, inconsistent position in infringe-ment litigation on the theory that it is not limiting. Principles of fairness thus dictate that the patentee should be required to clearly define the claimed inven-tion’s scope. By creating a uniform rule that all pream-bles are limiting, we would ensure the patentee has the burden of drafting a patent that avoids confusion as to the scope of the claims....Neither the Supreme Court nor our court sitting en banc has ever addressed the preamble limitation issue. I think the time may have come for us to eliminate this vague and confusing rule.

Dissent at 3-4.  He then turned to the issue of whether the preamble phrase in this case limited the scope of the patent, and concluded that it did based on the prosecution history and what he viewed as a definition of the term in the Summary of the Invention.  He also disagreed with the majority that the district court's construction would be inconsistent with the specification. 

GPG v. ITC: Federal Circuit Review of ITC Determinations

By Jason Rantanen

General Protecht Group v. International Trade Commission (Fed. Cir. 2010)
Majority opinion authored by Judge Dyk, joined by Judge Prost.  Dissenting opinion by Judge Newman.

ITC determinations are subject to review by the Federal Circuit under the standards of the Administrative Procedure Act, which allows for de novo review of legal determinations and review of factual findings for substantial evidence.  Although the parties in this appeal largely agreed on the meanings of the relevant claim terms, the majority concluded that the ITC's infringement finding lacked substantial evidence.  Writing in dissent, Judge Newman asserted that the majority's conclusion was based on issues never raised by the appellants.  

* * * *

The three appellants in this appeal, GPG, Trimone, and ELE, import ground fault circuit interrupters ("GFCIs") into the United States.  Pass & Seymour, Inc. obtained an exclusion order from the ITC following the Commission's finding that the devices infringed three patents: 7,283,340; 5,594,398; and 7,164,564. 

On appeal, although the appellants raised "numerous issues" challenging the Commission's determination of infringement, the panel found most of them unpersuasive.  Nevertheless, the majority did conclude that the Commission had erred in some respects, finding that (1) GPG's 2003 and 2006 GFCIs and ELE's 2006 GFCIs do not infringe the '340 patent because they lack a "detection circuit; (2) Trimone's 2006 GFCI's and ELE's 2006 GFCIs do not infringe the '340 patent because they lack the "load terminals" of the patent; and (3) GPG's 2006 GFCI's do not infringe the '398 patent because they perform the function of the "latching means" in a substantially different way than the structure disclosed in the patent.  In all other respects, the court affirmed the lower tribunal's determination.

The disagreement between the majority and dissent is illustrated by their positions on the "detection circuit" claim term, although it permeates the determinations on the other two terms as well.  The Administrative Law Judge construed "detection circuit" to mean "at least one detection circuit having a circuit segment connected between the line terminals and configured to generate a predetermined signal in response to detecting a proper wiring condition, which occurs when the line terminals are connected to a source of AC power.”  Neither ELE nor GPG challenged the construction on appeal; however, they argued that the Commission erred in adopting the ALJ's infringement finding.  The majority agreed that this element was not infringed: 

The construed claims require the “detection circuit” to “generate a predetermined signal in response to detecting a proper wiring condition.” Initial Determination, slip op. at 85 (emphasis added). But as Dr. Harman’s own testimony makes clear, his “predetermined signal” is merely the “current flow” originating from the hot line terminal. J.A. 40,396. The identified circuit does not generate this current; it is the current that comes from the AC power connection. So instead of detecting a proper wiring condition and generating a signal in response, as the properly construed claim requires, the accused GFCIs simply have power to operate, or not. Dr. Harman’s testimony is not substantial evidence to support a finding that ELE’s 2006 GFCIs infringe claims 14, 18, and 30 of the ’340 patent.

(Slip Op. at 9).  The majority applied similar reasoning with respect to GLG. 

In describing both ELE and GPG's arguments, the majority paid particular attention to the dissent's assertion that the appellants did not raise this issue, responding in a footnote that:

The dissent suggests that the parties did not raise this argument, but ELE clearly argued that “[b]y treating the ‘predetermined signal’ as including whatever AC power happens to arrive at a building from the local power plant, the Commission has broadened this limitation beyond all recognition and effectively reads it out of the claim.”

(Slip Op. at 8, fn. 3).

In a strident dissent, Judge Newman took a significantly different view of the ITC decision and majority opinion on appeal:

The Initial Decision of 170 pages and the Commission’s supplemental rulings of 32 pages present a full understanding of the technology, with rigorous discussion of the evidence and extensive analysis, findings, and conclusions. This court now finds its own facts, applies theories that were not raised by any party, uses incorrect standards of review, and creates its own electrical technology contrary to the uniform and unchallenged expert testimony.

(Dissent at 2).  With respect to the majority's "detection circuit" reasoning, after an extensive discussion of the Commission findings, Judge Newman concluded that:

[t]he court creates a theory not proposed by any party, and rules that a signal that originates from the line terminal is not generated by the detection circuit and thus is not “generated.” See Maj. Op. at 9 (“The identified circuit does not generate this current; it is the current that comes from the AC power connection.”). There is no support for this theory. The only signal generated in response to proper wiring as described in the ’340 patent is “generated” in the same way as in the accused devices, that is, the detection circuit uses power from the properly wired line terminals to supply a signal (claim 14) or response (claim 30) that allows the device to be reset. That is how the Commission, and the parties, interpreted the term. The court’s new interpretation of “generate” was not debated and is not briefed.

(Dissent at 8-9).

Notes:

• I understand that Pass & Seymour is seeking a rehearing and rehearing en banc on the ground that the majority's approach is in conflict with the APA, and intends to raise the argument that the court based its determination on issues not preserved or presented by the parties, thus unfairly prejudicing the party against whom the issues were decided and wasting the resources of the parties and ITC.
• The Federal Circuit also issued a companion opinion addressing Pass & Seymour's appeal from the ITC's determination that GPG's 2003 devices and Trimone's 2006 devices do not infringe the '398 patent, and that ELE's 2003 and 2006 devices, GPG's 2003 and 2006 devices, and Trimone's 2006 devices do not infringe Patent No. 7,212,386.  The appeal turned on questions of claim construction, with the majority opinion affirming the ITC's constructions largely by applying a "plain meaning" approach.  Judge Newman concurred in the result, but took the position that, with respect to the '386 patent, the majority should have adhered to the Commission's construction, rather then adopting its own construction. 

Best Mode: District Court Improperly Invalidated Patent that Mis-Identified Best Mode

Green Edge Ent. LLC v. Rubber Mulch Etc. LLC (Fed. Cir. 2010)

You might guess from the names of the parties that the subject matter of the dispute is rubber mulch. Green Edge's patent covers a synthetic rubber mulch that is shaped and colored to imitate a natural mulch. In its patent application, Green Edge indicated that a variety of systems could be used to add color to the rubber, but the application also spelled out one particular "VISICHROME" system by Futura Coatings as being the "most preferred" system. It turns out that Futura Coatings never made or sold system under the name of VISICHROME. Rather, the product Green Edge should have identified was "Product Code 24009." The name VISICHROME apparently came from a sales letter from a Futura Vice President who had referred to a VISICHROME system.

Best Mode: During the infringement litigation, the Eastern District of Missouri court held the patent invalid for failure to disclose the best mode under 35 USC § 112 – finding that VISICHROME did not exist and "that Green Edge had concealed the best mode by disclosing 'a misleading, non-existent name instead of the number' when no similar product was available on the market."

Section 112 of the patent act requires that the patent specification "set forth the best mode contemplated by the inventor of carrying out his invention." Federal Circuit precedent has held that such a "best mode" need only be described if the inventors subjectively possessed a best mode on the filing date of the application. Even then, the question is whether the inventor "concealed" the preferred mode from the public.

The second prong asks whether the inventor has disclosed the best mode and whether the disclosure is adequate to enable one of ordinary skill in the art to practice the best mode of the invention. The second inquiry is objective; it depends upon the scope of the claimed invention and the level of skill in the relevant art.

Although not suggested by the statute, the best mode requirement is generally examined on an element-by-element basis. Here, Green Edge clearly had a preferred approach for coloring the rubber pieces and thus was required to disclose that "best mode."

On appeal, the Federal Circuit reversed – holding that the best mode had not been objectively concealed. The court's reasoning was that a competitor looking for "VISICHROME" might have been able to find it around the time of the invention since at least one Futura Coatings executive had been using that name in sales letters.

The disclosure might have, at the time the application was filed, been specific enough to describe the colorant so as to enable a person of ordinary skill in the art to make the claimed product using Futura's 24009 product. The application for the '514 patent was filed in October 1997, and [the Futura VP's] letter describing Futura's "Visichrome" colorant system was written in July 1997. Thus, despite [the VP's] inability to remember why he used the term "Visichrome" in his letter, it is at least possible, even likely, that in October 1997, at the time of filing, someone contacting Futura to obtain the "Visichrome" colorant system would have received a response similar to Jarboe's letter of that July.

In the end, the court held that summary judgment was inappropriate. On remand, a jury could still find the patent invalid on best mode.

Written Description: Description Must do more than Allow PHOSITA to “Envision” the Claimed Invention

Goeddel v. Sugano (Fed. Cir. 2010)

When two inventors both claim rights to a single invention, the USPTO is charged with awarding rights to the "first applicant to conceive the invention, provided that [inter alia,] the invention is duly reduced to practice, actually or constructively." A foreign-filed patent application can constitute constructive reduction to practice "provided that the requirements of §112 are met."

Sugano filed its original human fibroblast interferon (hFIF) patent applications in Japan in 1979 and 1980 but did not file the claims for the US continuation-at-issue until the 1990s. Meanwhile, Goeddel filed its application in June 1989. In the interference, Goeddel argued that Sugano's original filings did not provide sufficient disclosure to satisfy the written description requirement of 35 U.S.C. §112 (with respect to the claims being litigated in the interference).

The BPAI (Board) held that Sugano's 1980 Japanese Application constituted constructive reduction-to-practice of the claims. On appeal, however, the Federal Circuit has reversed – holding that the disputed claims failed the written description test because claimed DNA sequence used to create an hFIF amino-acid sequence was not explicitly defined by the original application.

The Board erred in ruling that priority is established if a person of skill in the art could "envision" the invention of the counts. Sugano argues that this ruling is supported by Enzo Biochem, Inc. v. Gen-Probe Inc., 323 F.3d 956, 968 (Fed. Cir. 2002) and University of Rochester v. G.D. Searle & Co., 358 F.3d 916, 923 (Fed. Cir. 2004), but these cases do not hold that envisioning an invention not yet made is a constructive reduction to practice of that invention. In Enzo Biochem the court confirmed that depositing an actual sample may meet the written description requirement when science is not capable of a complete written description. Enzo Biochem, 323 F.3d at 970. In University of Rochester the court held that the description of the COX-2 enzyme did not also serve to describe all unknown compounds capable of inhibiting the enzyme. University of Rochester, 358 F.3d at 926-27. Precedent in evolving science is attuned to the state of the science, but remains bound by the requirement of showing "that the inventor actually invented the invention claimed." Bradford, 603 F.3d at 1269; see Fiers v. Revel, 984 F.2d 1164, 1170 (Fed. Cir. 1993).

Sugano had argued that the specific DNA sequence coding for the amino acids was not necessary because a person of skill in the art could have identified the sequence and therefore, it was "unnecessary to spell out every detail of the invention in the specification." The appellate panel rejected that argument – holding that the DNA itself should have been identified since the DNA sequence was claimed.

Notes:

• Genentech owns Goeddel's rights while the Japanese Foundation for Cancer Research owns Sugano's rights. (Schering is a licensee).

Successor Corporation Held Liable for Default Infringement Judgment Against Predecessor

Funai Electric Company v. Daewoo Electronics Corp. (Fed. Cir. 2010)

In 2004, Funai Electric sued four Daewoo entities for infringement of its patents covering various improved video cassette recorders (VCRs). Funai is a Japanese manufacturer of AV equipment. Daewoo was a historic Korean chaebol that splintered after a financial collapse in the late 1990’s.

Successor Liability: Two of the Daewoo defendants are predecessor companies of the other two defendants. One predecessor-successor pair includes Korean companies and the other pair includes their American counterparts.  At the time of the lawsuit, the two predecessor companies had legally transferred assets to their successors but had not yet ceased operations.  About one-year into the lawsuit, the two predecessor companies stopped participating in the litigation. The district court ordered a default judgment and awarded $8 million in default damages.  Funai then asked that the successor companies be held liable for the liabilities of their predecessors. The district court applied Korean corporate and contract law to hold that there is no successor liability. 

On appeal, the Federal Circuit reversed that judgment — holding that US successor-liability law (actually, New Jersey law) should apply when determining whether the American successor company is liable for the actions of its predecessor. Under New Jersey law, a successor company is liable when the business transfer is simply a “new hat” for the business. Since that was the case here, the Federal Circuit determined that the successor is liable for the default judgment.

The 50–page opinion (including a concurrence by Judge Linn) discussed several other issues. Notably, the opinion provides another example of a prosecution amendment made for purposes “tangential to patentability” and that therefore avoids prosecution history estoppel.

Prosecution History Estoppel: Funai argued that one of its asserted claims was infringed under the doctrine of equivalents (DOE).  Daewoo countered that DOE should be limited under the doctrine of prosecution history of estoppel based on a narrowing amendment made during prosecution of the application. In particular, the patentee had cancelled claims 1 and 2 and then added limitations from those claims into a former dependant claim.  The original claim 1 did not spell-out how insulation would take place while the amended claim indicated that a bearing holder would be “made of an insulating material.”

Under the Supreme Court’s Festo decision, an amendment made during prosecution does not implicate a prosecution history estoppel bar if the “rationale underlying the amendment [bears] no more than a tangential relation to the equivalent in question.”  On appeal, the Federal Circuit recognized the amended claim set as being narrowed, but held that “no estoppel exists” because amendment relating to the insulating material was made for purposes merely tangential to the patentability of the claim. 

It is apparent that the nature of the insulating material was not a factor in the allowance of claim 4, for this aspect was not at issue during prosecution. This limitation is in the category that the Court called “merely tangential” to the prosecution, as discussed in Festo.

The court therefore affirmed the holding of infringement under the doctrine of equivalents.

Microsoft (Again) Asks Supreme Court to Lower Clear and Convincing Standard

Microsoft Corp. v. I4I Limited Partnership (on petition for writ of certiorari 2010)

In 2009, an Eastern District of Texas jury awarded $200 million + interest to i4i after finding that Microsoft willfully infringed the Canadian company’s patent. Judge Davis subsequently added-on $40 million for willful infringement.  The judge also issued an injunction ordering Microsoft to stop selling Word Products with the capability of using “custom XML.” That injunction was stayed by the Federal Circuit pending appeal.  On appeal, the Federal Circuit affirmed the lower court’s findings of validity, willful infringement, enhanced damages, and permanent injunctive relief. In the meantime, the USPTO has concluded its reexamination of the i4i patent — confirming that the claims at issue are patentable. In addition, Microsoft apparently patched its software to prevent someone from using custom XML in Word.

Microsoft has now moved-on to the Supreme Court — asking the high court to reject the “clear and convincing” evidence standard for proving a patent invalid. As Microsoft writes in its petition for writ of certiorari, the question is “Whether the court of appeals erred in holding that Microsoft’s invalidity defense must be proved by clear and convincing evidence” even when the prior-art was not considered by the USPTO. This is essentially the same question that Microsoft raised in its 2008 petition in z4. That petition was withdrawn after the parties settled.

The patent statute (35 U.S.C. § 282) indicates that an issued patent is “presumed valid” and that the “burden of establishing invalidity” rests with the party asserting invalidity. The Federal Circuit has held that the presumption of validity is properly realized by a clear and convincing standard.  The Supreme Court has not directly ruled on the issue. However, in KSR v. Teleflex, the Supreme Court did note that the “the rationale underlying the presumption — that the PTO, in its expertise, has approved the claim — seems much diminished” in cases where the patentee “fail[ed] to disclose” the key prior art to the PTO.

By Dennis Crouch

File Attachment: Microsoft.I4I.CertPetition.pdf (172 KB)

Federal Circuit Holds-Line on Patent Misuse Defense

By Dennis Crouch

In a split decision, an en banc Federal Circuit has held that the non-statutory equitable doctrine of patent misuse should be narrowly applied. Here, the court held that an anticompetitive agreement between companies to suppress a given technology would not constitute misuse of a patent covering an alternative technology being promoted by the companies. Thus, the patents can still be enforced. Of course, companies following this pathway could still be liable for antitrust violations.

Princo Corp. v. International Trade Commission and U.S. Philips Corp. (Fed. Cir. 2010) (en banc)

The alleged patent misuse was associated with a CD-R/RW patent-pool arrangement between Philips and Sony. The two companies chose a particular method (Raamaker) of encoding location information on the CD to serve as the standard and then allegedly suppressed another method (Lagadec). (Both methods were covered by patents held by the companies.)

Princo argued here that creation of the patent pool licensing the Raamaker method and the suppression of the Lagadec method constituted patent misuse and should render the patents undenforceable.

Patent Misuse:     

The doctrine of patent misuse is … grounded in the policy-based desire to 'prevent a patentee from using the patent to obtain market benefit beyond that which inheres in the statutory patent right.' Mallinckrodt, 976 F.2d at 704. It follows that the key inquiry under the patent misuse doctrine is whether, by imposing the condition in question, the patentee has impermissibly broadened the physical or temporal scope of the patent grant and has done so in a manner that has anticompetitive effects. B. Braun, 124 F.3d at 1426. Where the patentee has not leveraged its patent beyond the scope of rights granted by the Patent Act, misuse has not been found. See Monsanto, 363 F.3d at 1341 ("In the cases in which the restriction is reasonably within the patent grant, the patent misuse defense can never succeed."); Virginia Panel, 133 F.3d at 869 (particular practices by the patentee "did not constitute patent misuse because they did not broaden the scope of its patent, either in terms of covered subject matter or temporally"). . . .

Given that the patent grant entitles the patentee to impose a broad range of conditions in licensing the right to practice the patent, the doctrine of patent misuse "has largely been confined to a handful of specific practices by which the patentee seemed to be trying to 'extend' his patent grant beyond its statutory limits." USM Corp. v. SPS Techs., Inc., 694 F.2d 505, 510 (7th Cir. 1982).

Recognizing the narrow scope of the doctrine, we have emphasized that the defense of patent misuse is not available to a presumptive infringer simply because a patentee engages in some kind of wrongful commercial conduct, even conduct that may have anticompetitive effects. See C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d 1340 (Fed. Cir. 1998) ("Although the defense of patent misuse . . . evolved to protect against 'wrongful' use of patents, the catalog of practices labelled 'patent misuse' does not include a general notion of 'wrongful' use."). Other courts have expressed the same view. See Kolene Corp. v. Motor City Metal Treating, Inc., 440 F.2d 77 (6th Cir. 1971) (There is no such thing as "misuse in the air. The misuse must be of the patent in suit. An antitrust offense does not necessarily amount to misuse merely because it involves patented products or products which are the subject of a patented process." (citations omitted)); McCullough Tool Co. v. Well Surveys, Inc., 395 F.2d 230 (10th Cir. 1968) (the defense of patent misuse has been allowed "only where there had been a misuse of the patent in suit"). While proof of an antitrust violation shows that the patentee has committed wrongful conduct having anticompetitive effects, that does not establish misuse of the patent in suit unless the conduct in question restricts the use of that patent and does so in one of the specific ways that have been held to be outside the otherwise broad scope of the patent grant.

On appeal, the en banc Federal Circuit held that this case does not fit with other misuse precedent. "This case presents a completely different scenario from the cases previously identified by the Supreme Court and by this court as implicating the doctrine of patent misuse." In particular, the alleged misuse was alleged agreement to suppress "an entirely different patent that was never asserted." "Even if such an agreement were shown to exist, and even if it were shown to have anticompetitive effects, a horizontal agreement restricting the availability of Sony's Lagadec patent would not constitute misuse of Philips's Raaymakers patents or any of Philips's other patents in suit."

Reduced to its simplest elements, the question in this case comes down to this: When a patentee offers to license a patent, does the patentee misuse that patent by inducing a third party not to license its separate, competitive technology?

The court answered this question with a resounding "no" – such an action "would not fall within the rationale of the patent misuse doctrine as explicated by the Supreme Court and this court." In particular, the patent-in-suit there must be a direct connection between the patents-in-suit and the alleged misconduct.

Dissent: Judge Dyk (joined by Judge Gajarsa) wrote a 32-page dissent arguing that the patent misuse doctrine should be given teeth:

Evidently the majority thinks it appropriate to emasculate the doctrine so that it will not provide a meaningful obstacle to patent enforcement. . . . Indeed, the majority goes so far as to suggest that the misuse doctrine be eliminated entirely. I read the relevant Supreme Court cases and congressional legislation as supporting a vigorous misuse defense, clearly applicable to agreements to suppress alternative technology. The majority cabins the doctrine in contravention of this Supreme Court authority. I respectfully dissent.

Lack of "Engineering Details" in Claim Hampers NonObviousness Argument

Martin v. Alliance Machine (Fed. Cir. 2010)

In considering secondary indicia of nonobviousness, Chief Judge Rader tends to focus on whether a nexus exists between the presented objective evidence and the invention as claimed. Here, Judge Rader applied a similar methodology in examining the differences between the prior art and the claimed invention. (Deere).

Martin's patent covers an improved machine for splitting cardboard bundles. The patented design uses top-down pneumatic pistons to hold the bundles in place. The prior art design uses bottom-up pneumatic pistons. In arguing non-obviousness, Martin's expert pointed-out that it would not work to simply flip the prior-art design on its head. Rather, any such conversion would require extensive engineering detail. Judge Rader rejected that argument -- holding that the "engineering details" argument was irrelevant because the claims did not identify any of those details.

[Martin] relies on the testimony of Alliance’s own Director of Research and Development that, “from an engineering standpoint,” one cannot simply take the Pallmac design and flip it from bottom to top. That testimony, however, is irrelevant to the obviousness analysis. With one exception, discussed below, the claims themselves do not recite engineering details but merely require that the compliance structures be mounted to clamps that are “above” the conveyor belts.

After rejecting all of Martin's nonobviousness arguments, the appellate panel affirmed the lower court's invalidity holding.

Construing the "Function" of a Means-Plus-Function Claim Element

Gregory Baran v. Medical Device Technologies (Fed. Cir. 2010)

Dr. Baran sued MDTech for infringing his patents covering automated biopsy instruments. Soon-to-be Federal Circuit Judge Kathleen O’Malley over-saw the district court case. After construing several disputed claims, Judge O’Malley ordered summary judgment of non-infringement. On appeal, the Federal Circuit affirmed.

Means-Plus-Function: I’ll focus on an interesting question raised regarding Baran’s means-plus-function (MPF) limitation. The limitation reads as follows: a “release means for retaining the guide in the charged position.” 

35 USC 112 p6 provides for MPF claim elements expressed “as a means or step for performing a specified function.”  The statute calls for the limitation to be “construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.”  Federal Circuit precedent has logically added that the statutory “corresponding structure” are structures that perform the claimed function.

What is the Claimed Function?: Here, the Federal Circuit was asked to construe Baran’s MPF element to identify the claimed function.  MDTech argued that the claimed “release means for retaining” required a structure that exhibited both a releasing function and a retaining function.  Dr. Baran argued that the claimed function was only that of retaining.  On appeal, the Federal Circuit agreed with the lower court that the means-preamble “release” added a functional limitation to the claim element.

[T]he claim language recites both a release function and a retention function. Dr. Baran’s argument regarding the placement of the term “release” is unavailing. The relevant inquiry is whether the term at issue is purely functional. See Signtech USA, Ltd. v. Vutek, Inc., 174 F.3d 1352, 1356 (Fed. Cir. 1999) (construing “ink delivery means” to be equivalent to “means for ink delivery” because “ink delivery” was purely functional language); Al-Site Corp. v. VSI Int’l, Inc., 174 F.3d 1308, 1318 (Fed. Cir. 1999) (“[W]hen it is apparent that the element invokes purely functional terms . . . the claim element may be a means-plus-function element despite the lack of express means-plus-function language.”). In the context of the ’797 patent, the term “release” is not an idle description but a vital function to be performed by the means-plus-function element. The patent does not recite a biopsy instrument that retains indefinitely without release; rather, the contemplated function is to retain for the express purpose of producing a spring-loaded release on demand. The claim language ties both functions to the same means-plus-function element, so it is appropriate that the element be construed accordingly.

Although it is difficult to take-away lessons from claim construction decisions, a potential best-practices approach to drafting MPF claims may be to eliminate any adjectives tied directly to the “means.”  Of course, my best practice suggestion is intended for those times when you want to draft MPF claims with clarity.

Adams Respiratory Therapeutics v. Perrigo - construction of pharmacokinetic claim terms

Adams Respiratory Therapeutics, Inc. v. Perrigo Company (Fed. Cir., August 5, 2010)
Panel: Linn, Moore (author), Friedman

By Jason Rantanen

Adams holds patent number 5,372,252, which covers an extended release formulation containing guaifenesin (an expectorant used to thin, loosen, and help expel mucus that causes congestion).  Perigo sought FDA approval for a generic version of Adams' product, Mucinex®.  After construing the claims, the district court granted summary judgment of noninfringement.  Adams appealed that decision.

The claim terms in dispute related to pharmacokinetic parameters.  These parameters are used to characterize the rate and extent of absorption of the active pharmaceutical ingredient ("API").  The primary term at issue, C_max, indicates the maximum concentration of the API following dosing.

"Equivalent C_max"
The parties' main dispute was over the meaning of the term "equivalent" in the context of "provides a C_max in a human subject equivalent to the C_max obtained when the first of three doses of a standard immediate release formulation having one third the amount of guaifenesin is dosed."  For purposes of FDA approval, a formulation is considered to be bioequivalent if, among other things, its C_max is within 80% to 125% of the value with which it is being compared at a 90% confidence interval. The district court agreed with Perrigo that "equivalent" should be construed to mean equivalent under the FDA bioequivalence guidelines.

On appeal, Adams challenged the requirement of a 90% confidence interval, arguing that it makes sense when seeking FDA approval, but not when proving infringement. 

The Federal Circuit agreed with Adams.  In doing so, it rejected Perrigo's argument that the inventors had expressly defined "equivalent" as te FDA's bioequivalence guidelines.  Rather, the court construed Adams' reference to the FDA guidelines as referring specifically to the 80-125% range, not to the requirement of a 90% confidence interval.  According to the court:

Requiring a 90% confidence interval would inappropriately raise the bar for establishing infringement.  Adams must show that it is more likely than not that Perrigo's ANDA product will have a Cmax within the 980-125% range. Adams is not required to show that Perrigo's product will meet this requirement 9 times out of 10.

Slip Op. at 8.

Comment: This interpretation opens up a box of statistical worms, and I suspect that down the line the court may regret its venture into probability theory.  For the time being, however, it gives parties useful language to quote when attempting to prove infringement (and perhaps invalidity) via clinical results. 

A ≈ B ≈ C therefore A ≈ C
Adams also appealed the district court's ruling that it  impermissibly compared the accused product to Mucinex.  Adams' argument was that because the accused product was bioequivalent to Mucinex, and Mucinex was bioequivalent to a standard immediate release ("IR") product, then the accused product had a C_max equivalent to the IR product. 

The Federal Circuit agreed that, under the circumstances of this case, Adams' argument was sufficient to preclude summary judgment of noninfringement.  The court cautioned, however, that "[i]f Adams had relied on the mere fact of bioequivalence of the two sets of products (and no PK data or C_max values, that would not be enough to survive summary judgment."  Slip Op. at 11.  Here, however, Adams presented actual PK data and C_max values, which a fact-finder could look at when assessing equivalence between the accused product and an IR product. 

"Bioavailable"
The court also addressed the meaning of the term "bioavailable" in the context of the '252 patent.  The dispute hinged on whether the phrase "fully bioavailable in the subject's stomach" meant "both release and availability in the stomach for absorption, wherever that absorption might occur." 

Perrigo argued that because "bioavailable" is commonly understood to mean absorption, thus requiring the guaifenesin to be absorbed in the stomach.  Because guaifenesin is primarily absorbed in the small intestine, this construction would preclude a finding of infringement.

The court rejected the proposed construction as inconsistent with the specification: "Although the specification never expressly defines bioavailable, it uses the term when describing the availability of the drug for absorption, not the actual absorption."  Slip Op. at 14.  The court further noted that Perrigo's construction would exclude the preferred embodiment, which "is rarely, if ever, correct and would require highly persuasive evidentiary support."

Doctrine of Equivalents
Finally, Adams argued that the district court erroneously precluded it from relying on the doctrine of equivalents with respect to a dependant claim requiring that the total amount of guaifenesin released in to the patient be at least 3500 hr*ng/mL.  The panel concluded that the use of a numerical limit did not preclude Adams from arguing that an amount of 3494.38 hr*ng/mL was equivalent to 3500 hr*ng/mL. 

Kevin Collins: An Initial Comment on King Pharmaceuticals: The Printed Matter Doctrine as a Structural Doctrine and Its Implications for Prometheus Laboratories

Kevin Collins has written a new Patently-O Patent Law Journal essay discussing the recent decision in King Pharmaceuticals. [Read the full essay]

On August 2, 2010, the Federal Circuit affirmed the district court’s summary judgment of patent invalidity in King Pharmaceuticals, Inc. v. Eon Labs, Inc. King Pharmaceuticals is most notable for its extension of the printed matter doctrine from objects claims that recite written texts as limitations to method claims that recite speech acts as limitations.

This Essay proceeds in three parts. Part I summarizes the King Pharmaceuticals opinion. Part II argues that the opinion was correctly decided, and it offers an original thesis about the role that the printed matter doctrine should play to enforce patentees’ disclosure obligations and preserve the deep structure of the Patent Act. Assuming that King Pharmaceuticals was correctly decided, Part III addresses the necessary next step in the continuing refinement of the printed matter doctrine. The Federal Circuit must explain why claims like the claim at issue in Prometheus Laboratories v. Mayo Collaborative Services are novel.

Cite as Kevin Emerson Collins, An Initial Comment on King Pharmaceuticals: The Printed Matter Doctrine as a Structural Doctrine and Its Implications for Prometheus Laboratories, 2010 Patently-O Patent L.J. 111 at http://www.patentlyo.com/Collins.KingPharma.pdf.

Kevin Collins is a professor of law at Washington University in St. Louis.

Guest Post: The Great Haste and Less Milling of Beer v. United States

 

Guest Post: The Great Haste and Less Milling of Beer v. United States (Fed. Cir. 2010, cert. pet. pending)

By Andrew Dhuey

When patent litigators hear the term “rocket docket”, they usually think of the U.S. District Court for the Eastern District of Virginia, long-known for its dedication to accelerated justice. The term doesn’t usually call to mind the U.S. Court of Appeals for the Federal Circuit, though its docketing-to-disposition time has averaged a reasonable 9-10 months. The recent case of Beer v. United States, however, shows that it is possible to have the Federal Circuit decide your appeal on the merits and rule on your en banc hearing petition in a mere 85 days, docketing to disposition.

Beer concerns a newsworthy issue dear to the hearts of federal judges: their pay. Eight current and former federal judges seek to recover cost-of-living adjustments Congress promised federal judges in 1989, but failed to deliver in 1995-97, 1999 and 2007. While the Beer parties disagreed on whether this deprivation of COLAs was an unconstitutional diminishing of judicial pay, they all agreed that the Federal Circuit rejected this exact position in Williams v. United States (Fed. Cir. 2001). In 2002, the Supreme Court denied cert. in Williams over the dissent of Justice Breyer, joined by Justices Scalia and Kennedy.

With the issue resolved in Williams, why did these federal judges raise the same pay issue again in a 2009 U.S. Court of Federal Claims case? The answer rests not with any changes in the law, but instead with changes in the makeup of the Supreme Court. All four justices who joined the court since 2002 (Chief Justice Roberts and Justices Alito, Sotomayor and Kagan) replaced justices who voted to deny cert. in Williams. Assuming the Beer judges still have the three Williams dissenters on their side, they can win on the merits with two of the four newest justices.  

Of course, before they could even file their cert. petition, the Beer judges needed to work their way through the Claims and Federal Circuit courts. To expedite that process, the judges conceded that both the Claims court and the Federal Circuit panel were bound to follow Williams. Their purpose was to overturn Williams, which could only be done by the Federal Circuit sitting en banc, or by the Supreme Court.

On Nov. 3, 2009, thirteen days after filing their notice of appeal at the Federal Circuit, the Beer appellants filed a Petition for Initial Hearing En Banc or, in the Alternative, Motion for Summary Affirmance. Alas, the clerk’s office rejected this filing since the appellants included a copy of their trial court complaint, and that apparently is not okay. [Side note to Judge Beer, et al: none of your court clerks can hold a candle to Federal Circuit clerks when it comes to finding a way to reject a filing]. Appellants’ counsel, Christopher Landau of Kirkland & Ellis, resolved this problem the following day, and the case was then before all 12 active Federal Circuit Judges.

On Jan. 15, 2010, the court denied the petition for initial hearing en banc over the dissent of then-Chief Judge Michel, joined by Judges Lourie and Moore, and the separate dissent of Judge Newman. With that denial of the en banc petition, a three-judge panel granted the Beer appellants’ motion for summary affirmance, with a concurrence by Judge Mayer, who reiterated his previous view that Williams was wrongly decided, but that “neither Congress nor the Supreme Court has done anything in the interim that would warrant this court taking the matter up again.” The Federal Circuit had thus resolved Beer on the merits, en banc, only 85 days after docketing.  

So what, you ask? How could this possibly be of interest to you, a patent litigator? Well, you have a point – you probably won’t have occasion to stipulate at the district court or the BPIA, and on appeal, that your client is toast due to applicable, binding Federal Circuit case law. But some patent litigants are out to make a big, precedential splash (e.g. ,the ACLU in its challenges to the BRCA gene patents). Perhaps in some of these “big picture” cases, a litigant has no realistic hope on the merits, absent the overruling of a Federal Circuit panel decision. [This was not the case for the ACLU, which actually won at the district court].  Or perhaps obliterating a binding precedent would be so valuable to a litigant (e.g., a “frequent defendant”) that it would be willing to concede away weak but non-frivolous arguments on the merits in order to directly attack the harmful precedent, post haste.

Maybe you’ll never have a Beer, but in the right, highly-exceptional patent case, you might want to use the Beer strategy.

Andrew Dhuey is an appellate lawyer last seen being chased by a flower-carrying guy in a dress.

NO JOINT INFRINGEMENT despite Strategic Partnership, Joint Distribution Agreement, and Packaged Sales

By Dennis Crouch

Golden Hour Data Systems, Inc. v. emsCharts, Inc. and Softtech (Fed. Cir. 2010)

Opinion by Judge Dyk and joined by Judge Friedman. Dissent by Judge Newman.

After trial, Judge Ward (E.D.Tx.) rejected the jury verdict of infringement and granted JMOL for the defendants — holding that no single party had infringed each element of the asserted claims.  The lower court also held the asserted patent unenforceable due to inequitable conduct during prosecution.

Joint Infringement: EMS delivers web-based medical charting.  Softtech’s software coordinates air-flight information.  The two companies formed a “strategic partnership” and signed a distribution agreement that would allow their two products to combine as a package.  The products were then sold as a package.

Patent law doctrine allows a finding of direct infringement only when a single entity is responsible for practicing each element (or step) of a claimed invention. Federal Circuit law holds that two or more entities can avoid liability for infringement so long as (1) each entity is responsible for practicing only a subset of the claimed elements and (2) no single entity exercises “control or direction” over the entire infringing process. Here, as in other Federal Circuit cases, such as Muniauction v. Thomson and BMC v. Paymentech, the Federal Circuit continued this doctrinal line — holding that the claim against emsCharts must fail because the plaintiff presented insufficient evidence for the “jury to infer control or direction.”

In BMC, Judge Rader acknowledged that strict adherence to the “control or direction” requirement highlighted an easy avenue for avoiding infringement. “This court acknowledges that the standard requiring control or  direction for a finding of joint infringement may in some circumstances allow parties to enter into arms-length agreements to avoid infringement. Nonetheless, this concern does not outweigh concerns over expanding the rules governing direct infringement.”

Dissenting from this opinion, Judge Newman argued that, despite Muniauction and BMC, the law of joint infringement does not strictly require that a single entity have control of the operation. Rather, a “collaborative effort as here . . . is not immune from infringement simply because the participating entities have a separate corporate status.”  Here, the two companies “combined their procedures into an integrated system that met all of the limitations of claims 1, 6-8, and 15-22, thus finding joint infringement and inducement to infringe these claims. The panel majority acknowledges that the defendants in collaboration infringed the claims, but without discussion overturns the jury verdict.”

Inequitable Conduct: The court also addressed inequitable conduct. Golden Hour had failed to submit an un-dated brochure that included undisclosed information that contradicted statements made by the applicant regarding a prior art AeroMed system.

Golden Hour first suggested that it had no duty to disclose the brochure because it was not clearly prior art. The Federal Circuit rejected that argument because the duty of disclosure is not limited to prior art. As stated in the MPEP, “[t]here is no requirement that the [submitted] information must be prior art references in order to be considered by the examiner.” MPEP § 609 (2008).

On materiality, the court held that the brochure was clearly material because it contradicted a statement made by the applicant in the specification. In finding the contradiction, the court looked to English grammar.  The specification stated that the AeroMed system “does not” provide comprehensive integration. According to the court, the present-tense representation indicates the applicant’s contention that the AeroMed system will not provide comprehensive integration at any time “throughout the pendency of the application.”  (DDC Says: What is Judge Dyk thinking?).

On intent to deceive the PTO, the court held that intent could be inferred if there was evidence that either of the prosecuting attorneys actually read the brochure (but if they did not read the reference then they would only be guilty of gross negligence).  Here, the court did not find evidence that the attorneys actually read the reference and therefore vacated the inequitable conduct decision for lack of intent to deceive.  (The appellate court suggests that inequitable conduct will likely be found again on remand.).

In Dissent, Judge Newman wrote:

As for materiality, I do not share the conclusion that the undated AeroMed brochure, obtained at a trade show (the Association of Aeromedical Services) a few weeks after this patent application was filed, and found not to be invalidating prior art, was so clearly and convincingly “material to patentability” that failure to provide a copy of the brochure while quoting its front page, invalidates the patent that was found valid over the entire content of the brochure. The record does not show that the brochure was published before the Golden Hour patent application was filed. The defendants provided no documentary evidence of any publication date, and the district court did not find the brochure to be prior art; their only evidence was the “uh-huh’s” of the brochure’s author, quoted at footnote 1 of the majority opinion. 

The record showed that when the brochure came into Golden Hour’s possession at the trade show, it was given to Golden Hour’s patent attorney, who referred to it in the Invention Disclosure Statement filed with the PTO, including quotation of the cover page but not the inner page. At the trial, the full brochure was in evidence, and stressed by the defendants, and the jury found that it was not invalidating. In view of the majority’s ruling that deceptive intent was not established in the district court, and the jury’s verdict of validity despite the brochure, the charge of inequitable conduct should be laid to rest.  

 

TheraSense v. BD: Briefs on the Merits

By Dennis Crouch

Briefing continues in the en banc appeal of TheraSense (Abbott) v. BD and Bayer. That case stems from a district court finding that the TheraSense patent was unenforceable due to inequitable conduct during prosecution of the patent. The Federal Circuit is taking the case as a vehicle for re-evaluating the judge-made-law of inequitable conduct. I have collected the majority of merits briefs filed thus far in the en banc rehearing.  Becton Dickinson & Bayer’s opposing brief is due October 8, 2010.  Amici-briefs in support of BD/Bayer are due the following week. Oral arguments are scheduled for November 9, 2010 in Washington DC.  (This post merely provides briefs. Analysis to follow.)

Court Decisions:

• District Court Opinion
• Original Panel Decision
• En Banc Order

Party Briefs:

• TheraSense (Abbott) Opening Brief: TheraSense.pdf (608 KB)

Amicus Brief filed in Support of TheraSense

• Sanofi-Aventis and Microsoft: AventisMicrosoft.pdf (791 KB)
• Ole Nilssen: Nilssen.pdf (1608 KB)

Amici Briefs filed in Support of Neither Party

• Apotex: Apotex.pdf (904 KB) 
• United States Patent & Trademark Office (USPTO): USPTO.pdf (770 KB)
• Intellectual Property Owners Association (IPO): IPO.pdf (213 KB)
• Federal Circuit Bar Association (FCBA): FCBA.pdf (3291 KB)
• American Intellectual Property Law Association (AIPLA): AIPLA.pdf (1036 KB)
• Biotechnology Industry Organization (BIO): BIO.pdf (4318 KB)
• American Bar Association (ABA): ABA.pdf (1501 KB)
• Boston Patent Law Association: BostonPLA.pdf (290 KB)
• Conejo Valley Bar Association: ConejoValley.pdf (385 KB)
• Houston IP Law Association: HIPLA.pdf (1424 KB)
• San Diego IP Law Association: SDIPLA.pdf (1246 KB)
• Kentucky IP Law Students: Kentucky.pdf (731 KB)
• IP Law Association of Chicago: Chicago.pdf (1080 KB)
• Washington State IP Law Association: WashingtonState.pdf (194 KB)
• Patent Attorneys from Eli Lilly: EliLilly.pdf (416 KB)
• SAP: SAP.pdf (126 KB)
• Acacia: Acacia.pdf (481 KB)
• Dolby: Dolby.pdf (128 KB)
• Professor Hricik: Hricik.pdf (102 KB)
• Professor Mammen: Mammen.pdf (616 KB)
• J&J + P&G: JJPG.pdf (1539 KB)
• 22 Patent Law Firms: PatentFirms.pdf (244 KB)
• Verizon: Verizon.pdf (151 KB)
• ECore International: ECoreIntl.pdf (1192 KB)
• EISAI Pharmaceuticals: EISAI.pdf (1490 KB)
• Pharmaceutical Research and Manufacturers of America (PhRMA): PhRMA.pdf (2425 KB)

Ring Plus v. Cingular Wireless

By Jason Rantanen

Although the court ultimately reversed the determination of inequitable conduct based on a lack of intent, its discussion of materiality is significant because the misrepresentation at issue occurred in the patent itself, in the form of statements about a prior art reference.  Prosecutors may want to take special note of this opinion in crafting their Background of the Invention sections. 

Ring Plus, Inc. v. Cingular Wireless Corp. (Fed. Cir., August 6, 2010)
Panel: Lourie, Gajarsa and Moore (author)

Ring Plus is the assignee of Patent No. 7,006,608 (the '608 patent), which relates to a software based algorithm and method for generating and delivering messages over a phone line that replace or overlay a ring-back signal.

After granting summary judgment of noninfringement, the district court held a bench trial on the unenforceability of the '608 patent.  Following the bench trial, the district court concluded that the '608 patent was unenforceable due to inequitable conduct.  Ring Plus appealed both determinations, along with the denial of its motion to disqualify Cingular's counsel. 

Inequitable conduct: Materiality but no Intent
The district court's inequitable conduct determination was based on two alleged misrepresentations concerning the substance of two prior art references, Strietzel and Sleevi.  The district court found that the first misrepresentation was in the Background of the Invention section of the '608 patent, which asserted that both references proposed hardware based systems but no software to operate those systems.  Contrary to this assertion, the district court found, one of skill in the art would have understood the references to disclose software-based algorithms.¹ 

The panel agreed that this was a material misrepresentation.  Although neither reference explicitly disclosed software, the panel could not say that the district court clearly erred in finding that a person of ordinary skill in the art would have understood the references to disclose software-based algorithms. 

In arriving at the conclusion that the statement about the contents of the prior art constituted a misrepresentation, the panel rejected the contention that it was merely attorney argument.  The court did not address this issue in any depth, merely stating that because the statement was a misrepresentation, it "was outside the boundas of permissible attorney argument."  Slip Op. at 9.

Comment: I am a troubled by the court's cursory statement on this point because of the ambiguity it creates.  These types of sweeping assertions, made without addressing the substance of the argument or citing relevant authorities, are the kinds of things that are likely to tie attorneys and judges in knots.  Indeed, the court's quotation from Rothman is particularly perplexing, as Rothman reached the opposite conclusion on similar facts.  At a minimum, one would expect the court to explain why Rothman does not apply.

Ultimately, however, the panel concluded that Cingular had failed to present clear and convincing evidence of intent to deceive.  In arriving at this conclusion the court noted that the references were ambiguous as to operating software, and the prosecuting attorney's testimony gave rise to the inference that the applicants believed that the two references did not disclose software for operating a telephone system.  Because this inference was as reasonable as the district court's inference of deceptive intent, the district erred in its finding of deceptive intent.

Other holdings
The panel also addressed Ring Plus's challenge to the district court's construction of two claim terms, which formed the basis of the noninfringement ruling.  The court affirmed the district court's construction, relating to the sequence of steps in the '608 patent.  In addition, the court rejected Ring Plus's argument that Cingular's counsel should have been disqualified for ex parte contact with a Ring Plus director and officer.  The court concluded that there was no evidence of impropriety under Fifth Circuit law.

¹The district court also found that the applicants made a misrepresentation about these references during prosecution; the panel concluded that this statement was not a misrepresentation.

Genus-Species; Doctrine of Equivalents; and Patentable Subject Matter

By Dennis Crouch

For many, the most interesting aspect of this case comes at the end in Judge Dyk’s dissent. Dyk makes the case that genes should not be patentable. 

* * * *

Intervet Inc. v. Merial Limited (Fed. Cir. 2010)

In 2006, Intervet filed a complaint against Merial — asking the DC District Court for a declaratory judgment that Intervet’s Porcine Circovirus vaccine (PCV-2) did not infringe Merial’s gene patent.  Merial’s patent claims both the isolated DNA molecule of PCV-2 and a vector that contains the DNA.  The application includes a listing of several different sequences that all fall within the PCV-2 category. 

Although Intervet also uses a PCV-2 vector. The DJ plaintiff argues that its DNA molecule is different from the one described and deposited by Merial. The district court agreed — holding that the Intervet product was only 99.7% homologous to the closest deposited sequence and therefore outside of the literal claim scope. The district court also applied prosecution history estoppel to rejected Merial’s claims of infringement under the doctrine of equivalents (DOE). On appeal, the Federal Circuit reversed on both claim construction and DOE.

Genus Not Limited to Examples: The asserted claim includes a limitation of a “PCV-2” DNA molecule. The District Court limited that term to cover only the DNA sequences that were deposited with the PTO. On appeal, the Federal Circuit rejected that construction as overly limiting. Rather, the appellate panel held that the deposited sequences serve as a representative sample of PCV-2 DNA sequences. “Sequences are representative of the scope of broader genus claims if they indicate that the patentee has invented species sufficient to constitute the genera. Here, the deposited strains are representative species of the larger ‘type II’ genus, where the genus is identified and claimed as the invention.” In describing its invention, the specification noted that the PCV-2 desposited sequences had a 96% homology and that the invention did not cover PCV-1 sequences that at most shared 76% homology with the deposited sequences.  Taking those quantitative limits from the specification, the Federal Circuit ruled that the claimed PCV-2 molecule should be construed as being “about 96% or more homologous with the … sequences disclosed in the present specification, and about 76% or less homologous with the [disclosed PCV-1] sequence.”

What is Equivalents are Surrendered by a Narrowing Amendment: An accused infringer may still be liable even though its product does not literally infringe every element of an asserted patent claim.  Under the doctrine of equivalents (DOE), a patentee may be able to provie infringement by showing that one or more elements of the accused product are equivalent to elements in the claim.  Under the limiting doctrine of prosecution history estoppel (PHE), a patentee will ordinarly be estopped from claiming DOE over a claim element that was narrowed during prosecution. (A narrowing amendment made for purposes related to patentability creates a rebuttable presumption that estoppel applies.)

Here, one of Merial’s original claims was directed to a markush group of open reading frames (ORFs) that had been described in the specification as “ORFs 1–13.”  In an initial rejection, the examiner suggested that the limitation could refer to ORFs of non-PCV-2 molecules. Although the patentee argued that the claim was clear, it still added the limitation that the claimed ORFs were PCV-2 ORFs.  The Federal Circuit held that this was a narrowing amendment substantially related to patentability. That narrowing amendment therefore created a presumption that the patentee had surrendered all equivalents that relate to non-PCV-2 ORFs. The district court erred, however, in holding that this narrowing amendment would estopp the the patentee from asserting that the claims cover a non-claimed PCV-2 ORF as an equivalent. “Such a draconian preclusion would be beyond a fair interpretation of what was surrendered. The rationale for the amendment was to narrow the claimed universe of ORFs down to those of PCV-2, and bore only a tangential relation to the question of which DNA sequences are and are not properly characterized as PCV-2.”

Dissenting-in-part, Judge Dyk discussed his argument that the claims directed toward the isolated form of a naturally occurring gene are likely unpatentable under 35 U.S.C. § 101.

[T]he isolated DNA claim raises “substantial issues of patentable subject matter under 35 U.S.C. § 101. . . . Neither the Supreme Court nor this court has directly decided the issue of the patentability of isolated DNA molecules. Although we have upheld the validity of several gene patents, none of our cases directly addresses the question of whether such patents encompass patentable subject matter under 35 U.S.C. § 101. . . .

I think that such patents do in fact raise serious questions of patentable subject matter. The Supreme Court’s recent decision in Bilski v. Kappos has reaffirmed that “laws of nature, physical phenomena, and abstract ideas” are not patentable. No. 08-964, slip op. at 5 (U.S. June 28, 2010) (quoting Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980)); Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948). Just as the patentability of abstract ideas would preempt others from using ideas that are in the public domain, see Bilski, slip op. at 13, so too would allowing the patenting of naturally occurring substances preempt the use by others of substances that should be freely available to the public. Thus, “a new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter. Likewise, Einstein could not patent his celebrated law that E=mc2; nor could Newton have patented the law of gravity.” Chakrabarty, 447 U.S. at 309. These aspects are properly conceptualized as representing a public domain, “free toall men and reserved exclusively to none.” Id. (quoting Funk Bros., 333 U.S. at 130) (quotation mark omitted).

In Funk Brothers, the Court considered the patentability of a mixture of several naturally-occurring species of bacteria. 333 U.S. at 128-31. The patented product was a mixture of bacteria used in agricultural processes, enabling plants to draw nitrogen from the air and convert it for usage. The inventor discovered that certain strains of the bacteria were effective in combination with one another, and contrary to existing assump-tions, did not exert mutually inhibitive effects on each other. The Court held that the invention was not pat-entable subject matter. Id. at 131. The inventor “did not create a state of inhibition or of non-inhibition in the bacteria. Their qualities are the work of nature. Those qualities are of course not patentable.” Id. at 130. The Court furthermore noted:

The qualities of these bacteria, like the heat of the sun, electricity, or the qualities of metals, are part of the storehouse of knowledge of all men. They are manifestations of laws of nature, free to all men and reserved exclusively to none. He who discovers a hitherto unknown phenomenon of na-ture has no claim to a monopoly of it which the law recognizes. If there is to be invention from such a discovery, it must come from the applica-tion of the law of nature to a new and useful end.

Id.

In Chakrabarty, the Court considered whether a human-made microorganism is patentable subject matter under section 101. 447 U.S. at 305. The microorganism in question was a bacterium that had been genetically engineered to break down crude oil. In concluding that the man-made bacteria was patentable, the Court observed that the claim “is not to a hitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or composition of matter.” Id. at 309. The Court went on to distinguish Funk Brothers on the ground that the Chakrabarty bacterium possessed “markedly different characteristics from any found in nature. . . . His discovery is not nature’s handiwork, but his own; accordingly it is patentable subject matter under § 101.” Id. at 310 (em-phasis added).

Thus, it appears that in order for a product of nature to satisfy section 101, it must be qualitatively different from the product occurring in nature, with “markedly different characteristics from any found in nature.” It is far from clear that an “isolated” DNA sequence is qualita-tively different from the product occurring in nature such that it would pass the test laid out in Funk Brothers and Chakrabarty. The mere fact that such a DNA molecule does not occur in isolated form in nature does not, by itself, answer the question. It would be difficult to argue, for instance, that one could patent the leaves of a plant merely because the leaves do not occur in nature in their isolated form.

 

 

Gene Patents on Appeal: ACLU's Recusal Motion

Association for Molecular Pathology (AMP) and the American Civil Liberties Union (ACLU) v. United States Patent and Trademark Office (USPTO) and Myriad Genetics (Myriad) (Fed. Cir. 2010)

In a May 2010 decision, Judge Sweet of the Southern District of New York issued an opinion that would render most gene patents invalid for failing to claim patentable subject matter under 35 U.S.C. 101.  That high-profile case is now on an appeal, and has the potential of shifting US patent law both by its in-court and out-of-court impact.

Even before filing a substantive brief on the merits, the declaratory judgment plaintiffs (AMP & ACLU) filed a motion asking that Chief Judge Rader recuse himself from potentially hearing the decision. AMP argues that the Chief’s public statements regarding this case “have created an appearance of partiality that calls into question his ability to engage in impartial legal analysis.”

Notably, while attending a BIO meeting, Judge Rader reportedly responded to a comment by Professor Whealan (and former Rader clerk) that there are no real “legal standards for making [a Section 101] decision. . . [U]sing Section 101 to say that the subject matter is unpatentable is so blunt a tool that there is no neutral step to [draw] a line here [between what is and is not patentable].”  In Judge Rader’s construct, the lack of a clear legal standard means that the decision will then be based on “politics. It’s what you believe in your soul, but it isn’t the law.”  In another conference (this time at Fordham Law School), AMP’s attorney Dan Ravicher was speaking and Chief Judge Rader asked Ravicher a question “hinting at disagreement” with Ravicher’s position.  In particular, the Ravicher-Rader colloquy was quoted as follows:

Ravicher (pointing to a bottle of water): "Was that [purification] sufficient intervention between what God gave us ... and what man created to merit a patent?"

Chief Judge Rader: "How many people have died of water pollution over the course of human events? Probably billions."

Two responses to the ACLU motion have been filed. 

First, Myriad responded that the cited statements by Chief Judge Rader “do not even suggest how Chief Judge Rader might vote, were he a member of the panel assigned to decide this case.”

The second filing is by the Federal Circuit Bar Association (FCBA) as amicus. The FCBA argues strongly that Judges should be encouraged to participate in educational conferences such as the BIO meeting and Fordham Law School.  The FCBA makes the important point that “Just as it is important that judges recuse themselves when the rules require it, it is equally important that judges refuse to recuse themselves where the rules do not require it.”  Granting recusal on the thin-evidence presented here would have the two primary effects of (1) discouraging sitting Federal Circuit judges from participating in public conversations and (2) encourage more strategic recusal motions.  The FCBA motion was a joint effort by former Deputy Solicitor General Thomas Hungar (Gibson Dunn) and the oft-paired team of Ed Reines & Amber Rovner (Weil Gotshal).

This particular motion may never be decided. Since the panel has not yet been assigned for this appeal, the CAFC has refrained from deciding the motion. In a letter to AMP, the court indicated that “[i]n the event that Judge Rader is assigned, the motion will be transmitted to him.” 

Documents:

• File Attachment: RecusalMotion.pdf (449 KB)
• File Attachment: RecusalResponse.pdf (566 KB)
• File Attachment: Recusal.FCBA.pdf (888 KB)

Divorce and Patents

Enovsys v. Nextel (Fed. Cir. 2010)

Mundi Fomukong is a co-inventor of the patents-in-suit. At the time of the invention, Fomukong was married to Fonda Whitfield. Sometime after the first patents issued, Fomukong and Witfield divorced. Later, the second patent issued; Fomukong formed Enovsys; and he (along with his co-inventor) assigned their rights to the new company. Later, when Enovsys sued Sprint-Nextel, the defendant challenged the case on standing. Sprint's argument is based on the rule that any patent infringement actions must be brought jointly by all co-owners of the patent. Specifically, Sprint argued that Ms. Whitfield retained an interest in the patent rights even after the divorce and, without Ms. Whitfield's support, Enovsys lacked standing. (Ms. Whitfield assigned her rights to Sprint.)

In the US, patent ownership rights are primarily controlled by state laws. At times, patent attorneys are called to understand their local laws of contracts, employment, inheritance, and (here) divorce. Thus, in deciding this case, the court looked first to the law of California -- the site of the marriage, invention, and divorce.

California is a "community property" state and “all assets acquired during a marriage are presumptively community property.” In their divorce filings, however, Fomukong and Whitfield checked the box next to the statement that “We have no community assets or liabilities.” Without citing specific California law, the Federal Circuit held that that the final divorce decree coupled with this box-checking stripped Whitfield of her community property rights in the patent. "[A]lthough the final divorce decree was silent as to particular property, it nevertheless adjudicated the parties’ rights with respect to that property because it was based on an uncontested complaint which alleged that there was no community property."

With the issue of ownership settled, the court then affirmed the lower court's claim construction and infringement verdict.

 

Ignoring Non-Patentable Elements While Judging Novelty

By Dennis Crouch

The Federal Circuit offers some clues to its post-Bilski patentable-subject-matter jurisprudence, but leaves that fight for another day.  Instead, the court held the claims anticipated by explicitly ignoring novel claim elements.

* * * * *

King Pharmaceuticals, Inc. v. Eon Labs, Inc. and Elan Pharmaceuticals, Inc. (Fed. Cir. 2010)

King’s patent claims a method of increasing oral bioavailability of the muscle relaxant metaxalone by putting metaxalone in food eaten by the patient. Claim 21 includes a step of “informing the patient that the administration [of the drug with food] results in an increase [in absorption].  This step likely has two benefits: (1) increasing patient compliance with the drug regimen and (2) taking advantage of any placebo effect that may exist.  The drug metaxalone itself was already a known muscle relaxant well prior to King’s 2001 application date.

Patenting Methods of Treatment: The district court held claim 21 invalid under 35 U.S.C. 101 based on the Federal Circuit’s machine-or-transformation test from Bilski. On appeal, the Federal Circuit rejected the lower court analysis — noting that when examined “as a whole”, the claim requires treatment and “methods of treatments ‘are always transformative when a defined group of drugs is administered to the body to ameliorate the effects of an undesired condition.’” (quoting Prometheus Labs., Inc. v. Mayo Collaborative Serv., 581 F.3d 1336, 1346 (Fed. Cir. 2009), cert. granted and vacated, 78 U.S.L.W. 3254 (U.S. June 29, 2010)).

Although the appellate panel rejected the lower court’s Section 101 analysis, it stopped short of providing any positive position on the patentability of medical treatment methods — presumably saving that battle for the pending remands of Prometheus and Classen. 

Instead, the appellate court held that a Section 101 decision was not necessary because the claims of interest are anticipated under Section 102.

Ignoring Non-Patentable Elements: Here, the novelty question is interesting because the “informing” step was not specifically identified in the prior art. On appeal, the Federal Circuit held that claiming a step of “informing someone about the existence of an inherent property” of a method cannot render the claim patentable. “[I]n light of our holding that the method of taking metaxalone with food to increase the drug’s bioavailability, as recited in claim 1, is not patentable, it readily follows that claim 21, which recites the same method with the sole additional step of informing the patient about this increase in bioavailability, is not patentable.” 

In its decision, the court ties its case to the precedential foundation of “printed matter” cases that have barred the patentability of known products by the inclusion of printed matter describing the product.

In some ways, this decision may be seen as reviving the suggestion found in the now vacated 2007 In re Comiskey decision. There, the court suggested that, during nonobviousness analysis, any portion of an invention that constitutes nonstatutory subject matter will be considered de facto obvious.

Panel: Judges Bryson, Gajarsa, and Prost. Authored by Judge Gajarsa. 

 

 

Sun Pharmaceuticals v. Eli Lilly: obviousness-type double patenting in the pharmaceutical context

Sun Pharmaceutical Industries, Ltd. v. Eli Lilly and Company (Fed. Cir. July 28, 2010)

By Jason Rantanen

Double-patenting issues arise when two commonly owned applications cover the same or similar inventions.  The issues in this appeal revolved around an earlier patent claiming a composition of matter and describing a method for using that composition, and a later patent claiming that method of use. 

Both of the patents in this case, Patent No. 4,808,614 (the '614 patent) and Patent No. 5,464,826 (the '826 patent) relate to gemcitabine, the active ingredient of Lilly's Gemzar® product.  The '614 patent claims both gemcitabine itself, as well as a method of using it to treat viral infections.  In addition, the '614 patent's specification discloses using gemcitabine to treat cancer.  The '826 patent claims a method of treating cancer comprising administering a therapeutically effective amount of gemcitabine.  The difference was important: the '614 patent expired on May 15, 2010, while the '826 patent does not expire until November 7, 2012.

Note: The applications leading to both the '614 and '826 patents were filed on the same day, December 4, 1984.  The '614 was a continuation-in-part of application No. 473,883 ("the '883 application"), which did not disclose using gemcitabine to treat cancer.  That information was added as part of the continuation-in-part. 

After filing an Abbreviated New Drug Application ("ANDA") for a generic version of Gemzar®, Sun Pharmaceuticals, sought a declaratory ruling that the '826 patent was invalid and not infringed.  Lilly counterclaimed for infringement of the '826 and '614 patents.  The '614 patent was not at issue in this appeal.

Obviousness-type double patenting applies
Applicants are barred from obtaining multiple patents covering the same invention by the doctrine of double patenting.  There are two types of double patenting: statutory double patenting, which prohibits a later patent from covering the identical invention, and obviousness-type double patenting, which prevents a later patent from covering a slight variation of an earlier patented invention.

On appeal, the panel agreed with the district court and Sun that the latter type of double patenting occurred here, thus invalidating the asserted claims of the '826.  The basis for the court's decision were two prior opinions, Geneva v. GlaxoSmithKline, 349 F.3d 1373, and Pfizer v. Teva, 518 F.3d 1353.  In Geneva, the earlier patent claimed a compound and the specification disclosed its effectiveness for inhibiting beta-lactamase.  The later patent claimed a method of using the compound to affect beta-lactamase inhibition.  Similarly, in Pfizer, the earlier patent claimed several compounds and the specification disclosed their use in treating inflamation; the later patent claimed a method of using these compounds for treating inflammation.  In both cases, the court ruled that the claims were not "patentably distinct," and thus the latter claims were invalid for obviousness-type double patenting.  

While Lilly argued that Geneva and Pfizer did not apply because "the specification of the earlier patent disclosed a single use for the claimed compound, which was an essential part of the patented invention and thus necessary to patentability," Slip Op. at 8, the court rejected that argument for two reasons.  First, the court disagreed that the specification in Pfizer disclosed more than one utility for the claimed compound.  In addition, the court read the rule of Pfizer as simply that "obviousness-type double patenting encompasses any use for a compound that is disclosed in the specification of an earlier patent claiming the compound and is later claimed as a method of using that compound.  Pfizer never implies that its reasoning depends in any way on the number of uses disclosed in the specification of the earlier patent."  Slip Op. at 10. 

The court also rejected Lilly's argument that the specification of an earlier application should have been consulted, as opposed to the specification of the '614 patent.  Drawing upon its claim construction precedent, the court noted that the specification is relevant to determining the coverage of the claims, which is at the heart of the obviousness-type double patenting analysis.  The court further noted that "consulting the specification of the issued patent, as opposed to an earlier version, is consistent with the policy behind double patenting," which rests "on the fact that a patent has been issued and later issuances of a second patent will continue protection, beyond the date of expiration of the first patent of the same invention or an obvious variation thereof."  Slip Op. at 14-15.

Becton, Dickinson and Co. v. Tyco Healthcare Group (Fed. Cir. 2010)

Tyco appealed a jury verdict that its safety needles infringed BD’s US Patent No. 5,348,544.  The claims require a “spring means” that is “connected to said hinged arm” and is designed “for urging said guard along said needle cannula.” 

On appeal, the Federal Circuit reversed the infringement decision based on claim construction — holding that as a matter of English-language-logic, the claims require a spring and hinged arm that are structurally distinct.

The unequivocal language of the asserted claims . . . requires a spring means that is separate from the hinged arm. . . . Where a claim lists elements separately, “the clear implication of the claim language” is that those elements are “distinct component[s]” of the patented invention. (Quoting Gaus v. Conair Corp., 363 F.3d 1284, 1288 (Fed. Cir. 2004)). . .  There is nothing in the asserted claims to suggest that the hinged arm and the spring means can be the same structure.

If the hinged arm and the spring means are one and the same, then the hinged arm must be “connected to” itself and must “extend between” itself and a mounting means, a physical impossibility. A claim construction that renders asserted claims facially nonsensical “cannot be correct.”

Because the hinged arm of the Tyco needles performed the spring function themselves (as opposed to having a separate spring), the court ruled that those needles could not infringe.

In dissent, Judge Gajarsa provides a de-construction of the majority opinion — writing that:

The majority avoids the critical issue upon which this decision turns; i.e., whether 35 U.S.C. § 112, ¶ 6 governs the claim construction of the “spring means” limitation. In a brief footnote, the majority sweeps and brushes aside the means-plus-function analysis as unnecessary in light of the “plain language of the claims.” Without having analyzed the scope of the claims, the majority somehow concludes that the claim language covers only devices having separate “spring means” and “hinged arm” structures. Then applying this simplistic claim construction to analyze the sufficiency of the evidence, the majority improperly overturns the jury’s verdict finding infringement.

Wyers v. Master Lock

Is "obviousness" a question of law or fact?  The rote answer is that it's both: it's a question of law based on underlying findings of fact.  Drawing that line, however, can be tricky, especially when the jury issues a general verdict.  In addition to addressing this issue, the case discussed below is also noteworthy due to its commentary on KSR on the subject of  motivation to combine. 

Wyers v. Master Lock Co. (Fed. Cir. July 22, 2010)
Wyers involved three patents relating to trailer hitch locks.  Trailer hitch locks are mechanisms used to secure trailers to towing vehicles.  It was undisputed that the prior art disclosed the use of dumbbell-shaped locks for this purpose, so the case turned on the the patentee's modifications to these types of locks.  The following images illustrate the prior art:

Wyers' patents claimed dumbbell-shaped locks with two additional elements: a series of sleeves that could be placed over the center section (the "shank") in order to increase its diameter, and an external seal designed to keep dirt out of the locking mechanism.  The only issue before the jury was whether it was obvious to add these two elements to the prior art locks.

The jury concluded that it was not, and issued a general verdict of nonobviousness. After the district court denied Master Lock's motion for Judgment as a Matter of Law, Master Lock appealed. 

Opinion of the Court
Drawing heavily on KSR, the Federal Circuit concluded that the patents were obvious as a matter of law.  The court considered each of the factual questions before it: whether the art was analogous, whether there was sufficient motivation to combine the reference, and the secondary considerations of nonobvious, and concluded that none favored the patentee.

In reaching this conclusion, the Federal Circuit gave no deference to the jury.  On each issue of fact, the panel found that no evidence supported nonobviousness.  For example, when addressing the issue of whether the prior art was analogous, the court reasoned that it was "clearly within the same field of endeavor as the sleeve patents," and was pertinent as a matter of law.

Particularly interesting, however, were the panel's views on motivation to combine.  While recognizing this as an important aspect of the obviousness inquiry, the panel applied the "common sense" approach outlined in KSR:

"We conclude that it was a matter of common sense to combine the Down patent with the prior art barbell locks in order to arrive at the invention claimed in the ’115 and ’426 patents, and that one of ordinary skill in the art would have had a reasonable expectation of success in doing so."

Slip Op. at 23. Furthermore, "where all the limitations of the patent were present in the prior art references, and the invention was addressed to a 'known problem,' 'KSR ... compels the grant of summary judgment ofobviousness.'"  Id. at 17.  Such an approach is particularly appropriate when the technology is "easily understandable." 

Finally, on the issue of secondary considerations, the court concluded that, even if Wyers had established the requisite nexus, it would have been insufficient:

Moreover, secondary considerations of nonobviousness—considered here by the district court—simply cannot overcome a strong prima facie case of obviousness.

Slip Op. at 28

Concurrence
Judge Linn concurred with the opinion, but wrote separately to warn parties of the dangers of general verdicts.  He noted that although the law permits general verdicts, verdicts involving special interrogatories are encouraged in the obviousness context due to the mixed question of law and fact.  He further noted that, while the court must presume that the jury resolved the underlying factual disputes in favor of the verdict winner when there are no special interrogatories,

"[b]ecause there is no way to determine from a general verdict on obviousness the specific findings of fact made by a jury on the factual questions underlying its verdict, the court in examining the first part of the obviousness question is left to infer whether substantial evidence existed from which the jury could have made the factual findings necessary to support the verdict. Here, the majority examined the record and after considering the factual inferences concluded that support was lacking and that the claims at issue would have been obvious as a matter of law."

Slip op., concurrence at 4-5.  In other words, when a general verdict is give, the Federal Circuit has to attempt to reconstruct the underlying findings of fact.  Here, it could not discern anything that might reasonably have been in dispute, and thus judgment as a matter of law was appropriate. 

Federal Circuit Review of Patent Term Extensions

By Jason Rantanen

During the summer, the Federal Circuit is a relatively quiet place.  The judges often take their non-sitting months during this time, and the pace of opinions tends to drop.  Thus, for the next few weeks, I'll mostly be posting summaries of cases that issued this past spring and early summer.  The two cases discussed below deal with a relatively minor — but still important — issue in the pharmaceutical and medical device context: patent term extensions based on extensive regulatory review periods. 

Ortho-McNeil Pharmaceutical, Inc. v. Lupin Pharmaceuticals, Inc. (Fed. Cir.  May 10, 2010)
Photocure ASA v. Kappos (Fed. Cir. May 10, 2010)

35 U.S.C. §156 allows a patentee to obtains a term extension if the patent covers a product that has been subject to a regulatory review period before it can be marketed or used.  Pharmaceuticals and medical devices are subject to such a review period, and new drug products in particular often involve a lengthy application and testing process.  The initial determination as to whether a patent term extension should be granted is made by the USPTO, in consultation with the FDA.  That decision is subject to review or challenge in district court proceedings.

One of the key issues in determining whether a patent term extension is warranted for a drug is whether it is the first time regulatory approval has been granted for this particular drug product, a determination that turns on whether or not the "active ingredient" had previously been approved by the FDA.  Ortho-McNeil and Photocure, both authored by Judge Newman and issued on the same day, provide an interesting contrast on this issue. 

Ortho-McNeil v. Lupin
In Ortho-McNeil, the extension issue arose in the context of an injunction entered against Lupin Pharmaceuticals prohibiting it from making, using, selling, etc. a drug product covered by U.S. Patent No. 5,053,407 (the '407 patent) during the extension period.  In that case, the district court affirmed the PTO's determination that an enantiomer was a different drug product then its racemate. In doing so, the district court noted that the PTO's determination should be afforded great deference.

Note: Enantiomers are molecules that are mirror images of one another.  Due to their different orientation, they have different properties.  A racemate is a composition consisting of equal parts of the two enantiomers.  The '407 patent covered a substantially purified form of one of the two enantiomers (levofloxacin) in the racemate ofloxacin.  There was no dispute that levofloxacin was separately patentable from ofloxacin.

On appeal, the Federal Circuit agreed with the district court, concluding that there was no basis for challenging the established FDA and PTO practices of treating enantiomers as different drug products and rejecting Lupin's legislative intent argument.

Photocure v. Kapos
Photocure involved a contrary determination by the PTO: that the drug product at issue was not a different "active ingredient," and thus the patentee was not entitled to an extension.  In Photocure, the product at issue ("MAL") was a methyl ester of a compound ("ALA") that had previously been approved for the same therapeutic use.  While the FDA treated MAL as a new drug, requiring a full approval process, the PTO rejected the extension based on its conclusion that § 156(f)(2) does not mean the product approved by the FDA, but rather the "active moiety," which it concluded was the same in both MAL and ALA.

Both the district court and Federal Circuit disagreed.  In rejecting the PTO's interpretation of 156(f)(2), the Federal Circuit reasoned that § 156 focuses on the product that is subject to approval by the FDA, not the underlying pharmacological mechanism. Furthermore, Skidmore and Chevron deference standards did not apply because the statute was not unambiguous and the PTO's interpretation was neither persuasive nor consistent. 

Note: although not the primary focus of the opinon, the panel also concluded that the PTO was wrong even under its  "active moiety" interpretation as the biological properties of ALA and MAL are indisputably different.

* * * *

In addition to the issues discussed above, the scope of the injunction in Ortho-McNeil is worth noting.  Although the extension authorized by 35 U.S.C. § 156 covers the "selling" or "using" of the product covered by the patent, the district court enjoined Lupin from engaging in any of the traditional forms of direct infringement, including "making" or "importing."  Despite the literal language of §156, the Federal Circuit affirmed the scope of this injunction because there are no non-pharmaceutical "uses" of the drug product, a point that Lupin apparently conceded.  Although as a practical matter this distinction may be of little value, as pharmaceutical companies often have production facilities located outside the United States, it is something to consider when seeking or opposing litigation under § 156. 

Patents that Exhibit "Potential Vagueness and Suspect Validity"

In eBay v. MercExchange (2006), the Supreme Court ruled that an adjudged infringer should only suffer permanent injunctive relief once the traditional four-factor test of equity had been satisfied. This general priciple was recently supported by the non-patent Supreme Court case of Monsanto v. Geertson (2010). In Monsanto, the court wrote “An injunction is a drastic and extraordinary remedy, which should not be granted as a matter of a course.” The court’s apparent patent-law-centrist, Justice Kennedy, wrote a concurring opinion suggesting that times-have-changed and that courts may have good reason to frequently deny injunctive relief. With some flair, Justice Kennedy suggested that the “potential vagueness and suspect validity of some … patents may affect the calculus under the four-factor test.”

In many respects, Justice Kennedy’s statement from eBay seems odd. The issue of permanent injunctive relief only arises after trial — after the patents are deemed valid and infringed. The trial is intended to remove any question regarding potential invalidity of the patent rights. However, in a recent amicus brief to the Federal Circuit, Verizon attempts to provide some explanation and some teeth to Kennedy’s proposal. (Justice Kennedy’s statement has been quoted and discussed in over 80 law review articles over the past four years.)

The Verizon brief was filed in the pending en banc case of TiVo v. EchoStar. That case focuses on whether the infringement of new products introduced by an adjudged infringer should be analyzed through contempt proceedings or through a new trial.

Verizon’s brief does not focus on the questions at issue in TiVo, but rather addresses the broader question of whether injunctive relief should be issued in-the-first-place. Expanding on Justice Kennedy’s statements, Verizon argues that — even after a patent is determined valid at trial — the court must consider the possibility that the patent is invalid as part of the injunction analysis:

The need to ensure that equity “mould[s] each decree to the necessities of the particular case,” Hecht, 321 U.S. at 329, requires that a district court take into account the possibility that a patent – issued and adjudged to be valid in the context of an infringement trial – is, in fact, invalid.

To explain its position, Verizon points to a specific (and common) situation — where the infringed patent is pending reexamination at the USPTO. The brief states boldly that “the pendency of a PTO reexamination proceeding weighs strongly against imposition or continuation of an injunction.”

Notes:

• Verizon filed its brief early, the first round of briefs are not due until July 26, 2010.
• Read Verizon’s brief here [File Attachment: TiVo.Amicus.Verizon.pdf (150 KB)]
• Edited to correct an error (I had said that Chief Justice Roberts wrote the eBay majority).

 

 

Attorney Fees and Equal Treatment for Plaintiffs and Defendants

Media Queue v. Netflix (Fed. Cir. 2010)

This case involves a classic “improvement patent” scenario. Nick Gross was a longtime Netflix user when he came-up with the idea that the service should provide additional user notifications — such as when the movie queue runs dry. Just before filing suit, Gross and partners formed Media Queue as a holding company. Media Queue then sued Netflix, Blockbuster, and others for patent infringement. Nick is also a patent attorney and a nice guy. We met at a conference last spring.

After construing the claims, the district court dismissed the case based on its summary judgment finding of non-infringement.  The court, however, refused to award attorney-fees to the defendants because the case was not entirely frivolous or filed in bad faith.  Media Queue has appealed the summary judgment.  However, the more interesting aspect of the case is the counter-appeal by Netflix asking the Federal Circuit for an en banc hearing to on the issue of when a court may find an “exceptional case” and award attorney fees to the prevailing party. In particular, Netflix argues that the current law of attorney-fee awards is imbalanced in favor of the plaintiff-patentee.

35 USC 285 simply states that “The court in exceptional cases may award reasonable attorney fees to the prevailing party.”  Several decisions have held that a prevailing-patentee may obtain attorney fees based on a finding of willful infringement — i.e., that the accused infringer was aware of an objectively high likelihood that the patentee would prevail.  Willfulness can be found even when the defendant has a non-frivolous non-infringement of invalidity argument. On the flip-side, however, a prevailing-defendant (accused infringer) seeking attorney fees must show a seemingly higher standard of litigation misconduct or inequitable conduct.

The appeal asks the Federal Circuit to apply the Supreme Court precedent of Fogerty v. Fontasy, Inc. (1994) in holding that plaintiffs and defendants in patent cases are entitled to equal treatment in obtaining attorneys' fees.

The appeal is filed by Mark Lemley’s team at Durie Tangri. Amazon, Facebook, Microsoft, Oracle, Toyota, and others “frequent defendants” have filed briefs supporting en banc hearing.

Documents:

•  Download 2010-07-01 Petition for Hearing En Banc
• Download 2010-07-01 Netflix Principal and Response Brief

Federal Circuit Extends the Scope of 102(e) "Secret Prior Art"

In an important case, the Federal Circuit has expanded the scope of so-called 102(e) “secret prior art.” Under the decision, a US patent or published application will be considered prior art as of the filing date of its qualifying provisional application.  The case is important because of the large number of provisional patent applications being filed each year.

* * * * *

In re Giacomini (Fed. Cir. 2010)

Giacomini’s patent application was filed on November 29, 2000.  In his search, the examiner found U.S. patent 7,039,683 (the “Tran patent”) and asserted that patent as prior art over Giacomini.  The Tran patent application was filed in December 2000 (after Giacomini) and issued in 2006. However, the USPTO asserted that the patent should be considered 102(e) prior art because it claims priority to a U.S. provisional application that was filed in September 2000.

35 U.S.C. 102(e)(2) bars patentability if

the invention was described in . . . a patent granted on an application for patent by another filed in the United States before the invention by the applicant for patent, except that an international application filed . . . shall have the effects for the purposes of this subsection of an application filed in the United States only if the international application designated the United States and was published under Article 21(2) of [the PCT] in the English language.

The question in this case is whether the 102(e) priority date for prior art reaches-back to the filing date of the provisional application. On appeal, the Federal Circuit agreed with the USPTO that the provisional filing date is the 102(e) priority date.

In the 1968 case of In re Klesper, the Federal Circuit predecessor court (the CCPA) held that the 102(e) follows the prior precedent of treating a prior art disclosure found in an issued patent as being disclosed as of the “filing date of the earliest U.S. application to which the patent is entitled, provided the disclosure was contained in substance in the said earliest application.”  The Federal Circuit agreed that this provision applies equally to provisional patent applications “ so long as the provisional application [provides] written description support for the claimed invention . . . in accordance with Section 119(e).”  Giacomini never argued that the provisional failed to describe the invention found in the prior art.

Therefore, the Tran patent “shall have the same effect,” [Citing 119(e)] including a patent-defeating effect, as to the claimed invention as though it was filed on the date of the Tran provisional. Accordingly, Giacomini, who filed his application after Tran filed his provisional application, cannot receive a patent covering the same subject matter under 35 U.S.C. § 102(e).

This decision follows the BPAI’s 2008 precedential of Ex parte Yamaguchi, 61 U.S.P.Q.2d 1043 (BPAI 2008). However, the decision is in tension with the Hilmer doctrine. In re Hilmer, 359 F.2d 859 (CCPA 1966) (a U.S. application’s 102(e) priority date does not extend to its Section 119 foreign filing date). Giacomini had argued that provisional applications should be treated like foreign filings rather than like non-provisionals because the priority statute for provisional applications is also found in Section 119 and becaues provisional applications lack the formality of non-provisionals. 

Note: US Court interpretations of 103(a)/102(e) offer a major difference between US practice and European practice. Namely, in the US secret 102(e) prior art is available to be combined as part of an argument for obviousness while in most European countries, the filing date of prior art is only important for novelty purposes.

Explaining Patentable Subject Matter: The First Bilski Test Cases

RESEARCH CORPORATION TECHNOLOGIES v. MICROSOFT (Fed. Cir. 2010)

One of the first cases that may address the Supreme Court's ruling in Bilski v. Kappos involves RCT's claimed method of halftoning color images. The district court held the asserted claims invalid for failing to satisfy Section 101 of the patent act. The following two claims are representative:

1. A method for the halftoning of gray scale images by utilizing a pixel-by-pixel comparison of the image against a blue noise mask in which the blue noise mask is comprised of a random non-deterministic, non-white noise single valued function which is designed to produce visually pleasing dot profiles when thresholded at any level of said gray scale images.

11. A method for the halftoning of color images, comprising the steps of utilizing, in turn, a pixel-by-pixel comparison of each of the plurality of color planes of said color image against a blue noise mask in which the blue noise mask is comprised of a random non-deterministic, non-white noise single valued function which is designed to provide visually pleasing dot profiles when thresholded at any level of said color images, wherein a plurality of blue noise masks are separately utilized to perform said pixel-by-pixel comparison and in which at least one of said blue noise masks is independent and uncorrected with the other blue noise masks.

Microsoft argues that the inventive portion of the claims are directed to the unpatentable mathematical operation of halftoning and the remaining portions use well known technology to preempt use of the mathematical operation.

* * * * *

IN RE BONNSTETTER (Fed. Cir. 2010)

A second pending Section 101 case involves Bonstetter's claimed "method of benchmarking a job." The specification reports that the invention can be implemented "using pencil and paper" and the claim involves a simple four step process:

Claim 1. A method of benchmarking a job comprising:
identifying subject matter experts (SMEs) for the job;
facilitating discussion with the SMEs to identify and prioritize key accountabilities of the job;
giving a survey to SMEs to determine soft skills necessary for superior performance in the job, the survey incorporating the key accountabilities;
combining responses to the survey from multiple subject matter experts into a composite report identifying and prioritizing skills for superior performance for the job; and
interviewing a job candidate relative to said prioritized skills.

Neither the examiner nor the BPAI suggested that the claim would fail under Section 101. However, in its brief to the Federal Circuit, the USPTO indicated that the claim certainly failed the machine or transformation test (as well as being obvious). The USPTO explained the delayed Section 101 analysis based on internal USPTO delay -- the examiner's rejection was entered in July 2007, before the Federal Circuit's Bilski decision. The USPTO brief only mentions the patentable subject matter issue in a footnote (FN7). However, the issue will likely arise -- especially if the obviousness rejection is reversed.

* * * * *

Accenture Global Servs. GmbH v. Guidewire Software, 2010 U.S. Dist. LEXIS 65193 (D. Del. 2010)

In the Accenture case, district court Judge Sue Robinson has requested briefing on whether Accenture's asserted patents are invalid based on Bilski v. Kappos. The court had previously delayed its ruling on Section 101 pending outcome of that case.

Accenture's claim 1 reads as follows:

Claim 1. A method for generating a file note for an insurance claim, comprising the steps of, executed in a data processing system, of:
prefilling a first set of fields with information identifying a file note, said information comprising at least one suffix indicating a type of insurance coverage for a participant in a claim and identification of the participant, wherein the at least one suffix is preselected from one or more types of insurance coverage applicable to the claim;
obtaining a selection of fields of a first set of fields from a user, the selection identifying information for a second set of fields;
displaying in the second set of fields, the information identified by selection of field of the first set of fields;
permitting the user to add data to a predefined text area related to each field of the second set of fields based on the selected fields;
generating a file note that contains the first set of fields, the second set of fields, and the data in the predefined text area;
identifying a level of significance of the file note; and
storing the file note with the identified level of significance in a claim database including file notes associated with the claim.

Federal Circuit Splits on Validity of Means Plus Function Claim

Telcordia Technologies, Inc. v. Cisco Systems (Fed. Cir. 2010)

Chief Judge Rader and Judge Prost sparred over the level of explanation necessary to ensure that a means plus function (MPF) claim is found definite. The Patent Act (35 U.S.C. 112 p6) permits claim limitations written as a "means or step for performing a specified function." The statute provides that an MPF "claim [limitation] shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof." However, the claim will be found indefinite and therefore invalid if the specification fails to include at least some structure that is clearly linked or associated with the claimed function. “The question is not whether one of skill in the art would be capable of implementing a structure to perform the function, but whether that person would understand the written description itself to disclose such a structure.” (Quoting Tech. Licensing Corp. v. Videotek, Inc., 545 F.3d 1316, 1338 (Fed. Cir. 2008)).

Telcordia's patent in this case is directed to a double-ring network that is designed to withstand either a line-cut or a failed node. One element of the claim requires a "monitoring means, associated with the first ring and the second ring, for evaluating the integrity of the multiplexed subrate communications on the first ring and the second ring."

Writing for the majority, Chief Judge Rader (joined by Judge Lourie) held that the claimed "monitoring means" had been properly described in the specification. The dissent cited the same precedent but could not find anything in the specification that links disclosed structures to the claimed function. In discussing the opinion, Foley's Hal Wegner described the opinion as "pitting the leader of the older generation [of Federal Circuit Judges] against a contender from the next generation."

Stats: About 15% of newly issued patent included at least one claim having an MPF limitation. And, of those patents that include an MPF limitation, about half recite fewer than five such limitations. It appears that attorneys are using MPF claim language primarily as a back-up. Longer claim-sets are more likely to include means-plus function language. Thus 21% of patents with above-average-sized claimsets (by character count) include a means-plus-function limitation while only 11% of patents with below-average-sized claimsets include an MPF limitation. Looking claim-by-claim, I found that only 3% of the recently issued patents include means-plus-function limitations in every independent claim. Patents with MPF terms are more frequently associated with non-assigned patents (usually individual inventors). Patents arising from certain countries are much more likely to include MPF limitations. The chart below looks at the most common foreign filing jurisdiction for priority claims and reports the percentage of US patents arising from those foreign filings that include MPF limitations. [More Data]

 

Bilski v. Kappos and the Anti-State-Street-Majority

The 1998 Federal Circuit decision in State Street Bank opened the door to patent protection on a wider variety of innovations — especially in the fields of business methods and software. State Street held that an invention should be patent eligible under 35 U.S.C. §101 if it involves some practical application and “it produces a useful, concrete and tangible result.”

Although not rejected by the majority opinion, it is clear that the broad “useful, concrete, and tangible result” test is dead. That test is conclusively rejected by what I term the Anti-State-Street Majority — a majority created by the combining the two concurring opinions in Bilski and their five-justice majority. The result is that the scope of patentable subject matter is certainly narrowed from its 1998 high-water-mark.

* * * * *

In Bilski v. Kappos (2010), the majority opinion neither endorses nor rejects State Street — writing instead that “nothing in today’s opinion should be read as endorsing interpretations of §101 that the Court of Appeals for the Federal Circuit has used in the past. See, e.g., State Street, 149 F. 3d, at 1373; AT&T Corp., 172 F. 3d, at 1357.”

The two concurring opinions in Bilski (2010) both explicitly reject the Useful-Concrete-And-Tangible-Result test of State Street. Justice Stevens writes that “it would be a grave mistake to assume that anything with a ‘useful, concrete and tangible result,’ may be patented. (Justice Stevens concurrence at FN 1). Justice Breyer reiterated his prior statement that “if taken literally, the statement [that anything which produces a useful, concrete, and tangible result, is patentable] would cover instances where this court has held the contrary.” (Justice Breyer concurrence). The two concurrences are in agreement on this point and are signed by five Supreme Court Justices — leading to a second majority on that particular point.

Of course, in its In re Bilksi decision, the Federal Circuit already repudiated State Street as inadequate and "insufficient to determine whether a claim is patent-eligible under § 101."

Cumulatively, this means that the broadest notion of patentable subject matter as represented by State Street is not the law. Although not "the test" it appears that the USPTO will continue to use the machine-or-transformation test as a "tool" for determining whether particular process claims fit within Section 101. A recent Post-Bilski notice to examiners indicated as much:

Examiners should continue to examine patent applications for compliance with section 101 using the existing guidance concerning the machine-or-transformation test as a tool for determining whether the claimed invention is a process under section 101. If a claimed method meets the machine-or-transformation test, the method is likely patent eligible under section 101 unless there is a clear indication that the method is directed to an abstract idea. If a claimed method does not meet the machine-or-transformation test, the examiner should reject the claim under section 101 unless there is a clear indication that the method is not directed to an abstract idea. If a claim is rejected under section 101 on the basis that it is drawn to an abstract idea, the applicant then has the opportunity to explain why the claimed method is not drawn to an abstract idea.

I'm sure that our notion of the law will continue to develop as the Bilski decision makes its way into daily practice.

• Bilski v. Kappos: A Preliminary Analysis of the Opinion
• Bilski v. Kappos: Read the Opinion