All posts by Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law

No Willful Infringement Since Infringer’s Litigation Arguments were “Not Without Reason”

by Dennis Crouch

Sryker v. Zimmer (Fed. Cir. 2014)

In 2010, Stryker sued its competitor Zimmer for infringing three patents covering pulsed lavage devices used for wound cleaning.  U.S. Patent Nos. 6,022,329, 6,179,807, and 7,144,383. A jury sided with the patentee awarded $70 million in lost profits and also found that the infringement willful.  Taking that verdict, the district court then awarded treble damages for willfulness, attorney fees based upon the exceptional case, and a permanent injunction against Zimmer.   On appeal, the Federal Circuit has affirmed the underlying damage award, but reversed the district court’s judgment that the infringement was willful — finding that the noninfringement and invalidity defenses raised by Zimmer were “not unreasonable.”

Treble Clef

Treble Damages: The Patent Act sets up a two-step process for determining patent infringement damages.  First, the court must award “damages adequate to compensate for the infringement” that are at least “a reasonable royalty.” 35 U.S.C. 284.  Next, “the court may increase the damages up to three times the amount found or assessed.”  Id.  To add some mystique to the system, we term this ‘treble damages’ rather than ‘triple damages’ or – as the statute suggests – ‘three times.’

The statute itself offers no further limitations or guidance as to when triple damages are appropriate, only that a court “may increase the damages.”

Seagate vs the Statute: Despite the broad discretion seemingly offered by the statute, the Federal Circuit has held that increased damages are only available when a defendant is guilty of its complex willful infringement schema that requires clear and convincing evidence that (1) an adjudged infringer took its wrongful actions “despite an objectively high likelihood that its actions constituted infringement of a valid patent” and (2) that the objectively-defined risk was subjectively known (or should have been known) to the infringer.  In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc).

Ex Post Reasonableness: Because willfuness includes the objective inquiry, it turns out that an infringer who made the intentional decision to infringe, believing fully that the act was infringement, and that was that later judged to be infringing can still avoid being stuck with enhanced damages with a later-concocted (but ultimately incorrect) argument that the patent is invalid or not infringed – so long as that argument is “susceptible to a reasonable conclusion.”   Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292 (Fed. Cir. 2011).

Although the jury decided the willfulness question in the Federal Circuit has held that insufficient under the Seagate test. Rather, a judge must determine at least the objective portion of the test (objectively reckless) and that determination is reviewed de novo on appeal. Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., 682 F.3d 1003, 1007 (Fed. Cir. 2012).

Here, reviewing the lower court’s decision de novo, the Federal Circuit found that the defendant had offered a construction that was “not unreasonable” or at least “not without reason.”

 

Federal Circuit: Next Round of Myriad Patent Claims Are Also Invalid

by Dennis Crouch

In an important decision, the Federal Circuit has affirmed the invalidity of a number of additional genetic testing claims.  Based upon this decision, the USPTO may need to again reevaluate its subject matter eligibility procedures. 

In AMP v. Myriad (2013), the Supreme Court found that some of Myriad’s BRCA gene patent claims were valid – or at least that they did not violate the prohibition against patenting products of nature.  Following the decision, several companies – including Ambry – began marketing BRCA genetic testing, and Myriad sued.

The new lawsuit – captioned In re BRCA1- and BRCA2-Based Heredity Cancer Test Patent Litigation (Fed. Cir. 2014) – was brought by Myriad (the exclusive patent licensee) along with patent owners University of Utah and University of Pennsylvania. The plaintiffs here assert a set of patent claims that were not previously a part of the Supreme Court or lower court analysis.  Now asserted are U.S. Patent Nos. 5,753,441 (claims 7 & 8); 5,747,282 (claims 16 & 17); and 5,837,492 (claims 29 & 30).

The appeal here stems from the Utah District Court’s denial of Myriad’s motion for a preliminary injunction based upon its conclusion that the asserted claims are “likely drawn to ineligible subject matter.”  On appeal the Federal Circuit has now affirmed and taken a step further by holding on de novo review that none of the asserted claims are patent eligible.

DNA Primers: The asserted claims from the ‘282 and ‘492 patents are all directed to DNA primers used to bind the chromosomal section of the BRCA1 gene during PCR (the DNA-amplification process).  In reviewing these claims, the Federal Circuit found that the “primers before us are not distinguishable from the isolated DNA found patent-ineligible in Myriad and are not similar to the cDNA found to be patent-eligible.”

Now, although not particularly claimed, it appears that the primers are synthetically created through a lab process. In the appeal, the Federal Circuit rejected the importance of that distinction – holding that “it makes no difference that the identified gene sequences are synthetically replicated.”  Rather, the rule of law is that:

[N]either naturally occurring compositions of matter, nor synthetically created compositions that are structurally identical to the naturally occurring compositions, are patent eligible. . . .  A DNA structure with a function similar to that found in nature can only be patent eligible as a composition of matter if it has a unique structure, different from anything found in nature. . . . Primers do not have such a different structure and are patent ineligible.

The difference here from the cDNA patents that were allowed in Myriad is that(a) the cDNA is structurally different from naturally occurring DNA because the introns had been removed leaving exons only and (2) the cDNA is structurally different from naturally occurring exon-only mRNA because cDNA is a different substance. “To the extent that the exon-only sequence does not exist in nature, the lab technician “unquestionably creates something new when cDNA is made.”

Method of Screening: The asserted ‘441 patent claims are directed to a particular method of screening for BRCA1 mutation by comparing a patient’s gene sequence with a germline BRCA sequence. Both claims 7 and 8 depend from claim 1 that the Federal Circuit found invalid in its 2012 decision as “a patent-ineligible abstract idea of comparing BRCA sequences and determining the existence of alterations.”

Following the two-step analysis from Mayo and Alice, the Federal Circuit first determined that the asserted claims embody an abstract idea through the comparison steps.

Here, under our earlier decision, the comparisons described in the first paragraphs of claims 7 and 8 are directed to the patent-ineligible abstract idea of comparing BRCA sequences and determining the existence of alterations. The methods, directed to identification of alterations of the gene, require merely comparing the patient’s gene with the wild-type and identifying any differences that arise.

Going to the second part of the Alice/Mayo test, the court looked to the claims to find any “non-patent-ineligible elements” sufficient to “transform the nature of the claim into a patent-eligible application.”  Here, the claims require various physical transformations, including hybridizing the gene probe; amplification of the gene; and sequencing the gene.   However, according to the appellate panel, those transformations are insufficient – primarily because those steps “set forth well-understood, routine and conventional activity engaged in by scientists at the time of Myriad’s patent applications” and are the activities that a scientist would have relied upon to achieve the goals of the invention.

The second paragraphs of claims 7 and 8 do nothing more than spell out what practitioners already knew—how to compare gene sequences using routine, ordinary techniques. Nothing is added by identifying the techniques to be used in making the comparison because those comparison techniques were the well-understood, routine, and conventional techniques that a scientist would have thought of when instructed to compare two gene sequences.

With the claims invalid, Myriad has now lost the case.  In my view, an en banc reversal is highly unlikely.

IP as a Corporate Human Right

by Dennis Crouch

I am enjoying Professor Osei-Tutu’s (FIU) new article on intellectual property as a human right.  Corporate ‘Human Rights’ to Intellectual Property Protection, ___ Santa Clara L. Rev. ___ (2015) (forthcoming).

The background of the article stems from movements in both Europe and the developing world to define aspects of intellectual property as a fundamental human right.  In one recent case, for instance, the European Court of Human Rights looked to balance the human right to freedom of expression against the human right of intellectual property ownership.  See Kolmisoppi v. Sweden (40397/12), [2013] E.C.H.R.

Osei-Tutu sees a real problem with identifying IP as a human right – especially in the U.S. context where non-human actors (e.g., corporations) are increasingly able to claim fundamental rights. See Citizens United v. Fed. Election Comm’n, 558 U.S. 310 (2010) (concluding that a “prohibition on independent corporate expenditure is a ban on speech”) and Burwell et. al v. Hobby Lobby Inc. et. al, 573 U.S.__ (2014) (protecting corporate persons’ free exercise of religion).  For the author, this corporate co-opting would largely eliminate the distributive justice that has been a major purpose of the human right schema. Osei-Tutu is writing to an international audience where human rights have become a major part of the international legal framework, but the framing of this debate will also impact the US.  In the U.S., although we do not identify human rights, we do recognize fundamental rights to corporate property ownership. Thus, for the U.S., the boat may have already sailed on this idea.

IP5 Annual Report

by Dennis Crouch

From the perspective of the leading patenting countries, the World Intellectual Property Organization (WIPO) has become a non-productive and fairly toxic environment with regard to international cooperation and substantive harmonization.  Although the US continues to fully participate in WIPO, most progress and cooperation has come through bilateral and multilateral agreements between trading partners and regional patent offices.

The leading new organization is the IP5 that is a cooperative group including the USPTO, European Patent Office (EPO), Japanese Patent Office (JPO),  Korean Intellectual Property Organization (KIPO), and the Chinese Patent Office (SIPO).  The organization formerly operated as the tri-lateral cooperative, but in recent years added KIPO and SIPO to the ranks. (The EPO includes 37 European Nations.)

Over 90% of all utility patents originate from inventors residing within the jurisdiction of one of the five offices. The chart below shows how the trend has changed over the past few years.

IP5Tally

[Read the IP5 Report]

 

Trademarks: You Don’t Own the Word – Just the Right to Avoid Some Market Confusion

by Dennis Crouch

On Patently-O, our primary focus is patent law, but sometimes we remember that the “Patent Office” is actually the United States Patent and Trademark Office (USPTO). The USPTO has two primary administrative appellate bodies – the Patent Trial & Appeal Board (PTAB) deciding patent issues and the Trademark Trial & Appeal Board (TTAB).

In the recent decision captioned In re St. Helena Hospital (Fed. Cir. 2014), the Federal Circuit has reversed the TTAB’s refusal to register St. Helena’s mark TakeTen.

If you want a lifestyle shift, St. Helena Hospital offers a ten-day residential program that they have branded TakeTEN.  When the hospital attempted to register the term as a trademark, the USPTO refused — finding that St. Helena’s TakeTEN to be confusingly similar to the registered mark “Take 10!” owned by the ILSI Foundation.  “Take 10!” is used in conjunction with various programs encouraging kids to exercise at least ten minutes per day.

Although trademark prosecution is generally termed a ‘registration’ process rather than ‘examination’, trademark examiners do conduct an examination to determine whether the proposed mark is registrable.  One fundamental question asked is whether the proposed mark is to confusingly similar to an already registered mark.  For that point, trademark examiners must determine whether the proposed mark so resembles a registered mark “as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive.” 15 U.S.C. § 1052(d).

Importantly, trademarks are registered for particular market areas.  The owners of the “Take 10!” mark do not generally own the phrase or control all of its uses. Rather, the trademark rights are focused on the particular market where the registrant uses its mark and serves to protect against customer confusion in that market.

“TakeTen” and “Take 10!” are – in the abstract – quite similar.  And, that reasonable conclusion is certainly an important factor in determining a likelihood of confusion. However, even identical marks are not necessarily confusing if used in different market areas.  More generally, the USPTO considers what have become known as the DuPont Factors:

(1) the similarity or dissimilarity of the marks in terms of appearance, sound, meaning and commercial impression; (2) the similarity or dissimilarity and nature of the goods and services; (3) the similarity or dissimilarity of established, likely-to-continue channels of trade; and (4) the conditions under which and buyers to whom sales are made, i.e., degree of consumer care.

Application of E.I. DuPont DeNemours & Co., 476 F.2d 1357, 1361 (C.C.P.A. 1973).

In the appeal, the Federal Circuit found that the three final DuPont factors had not been proven with substantial evidence.

Of notable interest, the TTAB had noted that both TakeTEN and Take 10! were advertised over the Internet. In the appeal, the Federal Circuit quoted McCarthy on Trademarks in holding that fact “proves little, if anything, about the likelihood that consumers will confuse similar marks used on such goods or services.” Kinbook, LLC v. Microsoft Corp., 866 F. Supp. 2d 453, 470–71 n.14 (E.D. Pa. 2012) (quoting J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 24:53.50 (4th ed. Supp. 2011)).

Examination Guidelines on Patent Eligibility

The US Patent Office has released a new set of guidelines for judging patent eligiblity based upon the Supreme Court’s recent quartet of Bilski, Mayo, Myriad, and Alice.  The guidelines do not carry the force of law but are designed to serve as a manual for examiners when determining eligibility.

The guidelines follow the same two-step analysis described in Mayo and Alice. And,  although the two-step test was not applied directly in the cDNA case of Myriad, the guidelines suggest that the test is uniform across the subject matter areas.   However, the particular examples show that the USPTO intends to be less aggressive at finding eligibility problems with products of nature or natural phenomenon as compared those directed toward abstract ideas.

It will take some time to digest these, but the info is below:

DDR Holdings – Federal Circuit Forges a Sensible Path on Software Patents

Guest post by Bart Eppenauer

Amidst all the angst and uncertainty following the Supreme Court’s decision in Alice Corp. v. CLS Bank (2014), patent owners and inventors in the Information Technology world should be celebrating the decision last week in DDR Holdings v. Hotels.com from the Federal Circuit.  While the Alice decision fell short of ushering in a bright line test with absolute clarity, a vocal minority has grabbed the opportunity to generate headlines suggesting that software patents are all but dead in the water.  This kind of hysteria is not only unfounded, but it sends the wrong message to our policymakers, and to startups and innovative companies of all sizes across all industries.  Perhaps its wishful thinking to expect that DDR Holdings will quell opponents of software patents in any respect, but the decision should send a strong signal that software patents are far from dead.  As I’ve recently urged, the proper course of action at this point is to take a calm, measured and rational approach as we work through the current state of affairs.

As noted by Professor Crouch in his earlier post on DDR Holdings, the DDR ‘399 patent at issue under Section 101 involved an e-commerce syndication system for generating a composite web page that combines selected visual elements of a host website with content of a third-party merchant.  While I can acknowledge the view that the analysis in DDR Holdings could be in tension with the Federal Circuit’s Ultramercial decision, I firmly believe that the DDR patent falls within the contours of patent eligible subject matter.  And I respectfully take issue with the characterization of the DDR patent as a “business method” patent.  In my view, the DDR patent, both in the disclosure and in the claims, sets forth and defines a technical solution to a technical problem through the implementation of computer software in the context of e-commerce.  A cursory review of the specifications and claims of the DDR patent, the representative Alice patent and the Ultramercial patent reveals the stark differences in the level (or absence thereof) of technology-based, software-based disclosure in these patents.

The Alice patents were drawn to an abstract business method for intermediated settlement – i.e., escrow – hardly a new business concept.  The patents contained token references to performing the purported invention on a generic computer.  The patent in Ultramercial involved a business method for allowing consumers to access copyrighted content over the internet in exchange for viewing an advertisement.  In that patent, there is absolutely no disclosure whatsoever of software or computer technology, or of any other technological advancement in the form of computer software or hardware, or anything else.  The Ultramercial patent was simply a business method and nothing more.  In both cases, the now-defunct patents mentioned computers, but did not provide a technological connection between their described method and any kind of actual software innovation.

That connection is exactly what real software enables.  The Supreme Court explicitly stated that the Alice patent claims did not purport to improve the functioning of a computer itself, nor did they advance an improvement in any other technology or technical field.  And contrary to the assertions that the decision threatens all software patents, the Supreme Court specifically acknowledged, as if there was any question to begin with, that many computer-implemented claims (i.e., software) are indeed within the domain of patent-eligible subject matter.  In Ultramercial, the Federal Circuit followed suit in its recognition that at some level all inventions embody or otherwise use abstract ideas or laws of nature, but that they “do not purport to state that all claims in all software-based patents will necessarily be directed to an abstract idea.” Ultramercial at p. 10 (emphasis added).

Turning to the DDR patent, the Federal Circuit justifiably recognized that “the claimed solution is necessarily rooted in computer technology to overcome a problem specifically arising in the realm of computer networks” (DDR at p. 20), whereas the patents from earlier cited decisions claimed nothing more than the performance of abstract business practices on the Internet or using a generic computer.  Just a brief snippet of technical disclosure from the DDR patent illustrates that this is so:

    • The Link Generator allows host to create and maintain the shopping opportunities that they can then place on their site. Each Link is assigned a unique Link ID. The Link ID identifies who the host is, who the merchant is, and what commerce object (catalog, category, product or dynamic selection) is linked to.
    • The first time a host builds a Link to a merchant’s product, category or catalog, an approval of that host for that merchant may be made. Until the host is approved, they cannot see the Link ID that has been assigned to the newly created Link.
    • The code the host embeds on their web site is as follows:
      < !—BEGIN NEXCHANGE LINK—>
      < !—For more information go to http://www.nexchange.com—>
      < !—The following 2 lines MUST NOT BE CHANGED to ensure proper crediting—>
      < IMG BORDER=‘0’ SRC=‘http://www.nexchange.net/img.asp?LinkID=xxxx’>
      < a href=‘http://www.nexchange.net/route.asp?LinkID=xxxx’>
      < !—Substitute your own text or image below—>
      **YOUR TEXT OR IMAGE HERE**</a>
      < !—END NEXCHANGE LINK—>
    • There are several points to note here:
      • The image src (img.asp) is actually an ASP program that returns a single transparent pixel. This is used to track impressions (how many times the link was displayed on the host site).
      • The route.asp page is a page that routes the customer to the shopping page. As additional servers are added, this will become very important for load balancing.
      • The ‘xxxx’ for the LinkID=‘xxxx’ is the Link ID assigned to the Link in the Link Generator.

This, along with many other examples of software-based technical disclosure in the patent specification, supports the Federal Circuit’s conclusion that the DDR patent claims “specify how interactions with the Internet are manipulated to yield a desired result” and “recite an invention that is not merely the routine or conventional use of the Internet.” (DDR at pp. 22-23).  In other words, the DDR patent claims, while relating to a business challenge, are simply not directed to an abstract idea under the Alice test.

So why all the purported confusion surrounding software patents, business method patents, and the differences there between?  After more than two decades in the IP field, I believe it comes down to a fundamental misunderstanding (and sometimes willful disregard to advance an ideology) of the true nature of “software.”

By way of the briefest of explanations, the execution of a typical software program illustrates that software implemented processes perform rapid activation and deactivation of transistors.  Software defined instructions operate on the information stored within transistor elements.  A software program in a modern computer can perform at least hundreds of millions of such operations per second.  In essence, software instructions literally, but temporarily, reconfigure electronic pathways and transform computing hardware to perform real, useful, and physical activity.

When an algorithm is implemented “purely in software,” it necessarily controls hardware components to carry out computerized actions.  I was struck by Professor Crouch’s Halloween report on his 9 year old daughter’s amazingly insightful viewpoint on how software actually transforms computers into different machines and provides very different experiences.  In discussing the differences between using Microsoft Word and playing her WarriorCat game, she explained – “Sure, the box is the same in both situations.  But, Microsoft Word obeys me and the game thwarts my moves. I see them as very different.  Its brain changes.”

Reducing software code to “just math” or sweeping it away as an abstraction is an inaccurate reading of patent case law that could jeopardize the future of innovation in this country.  The vast majority of companies that obtain software patents are manufacturing companies that integrate software into products they manufacture to deliver valuable new advancements.  These inno­va­tions power technologies ranging from modern smartphones to advanced robotic manufacturing, fly-by-wire aircraft systems, artificial retinas, driverless cars, GPS, medical and diagnostic tools, just to scratch the surface.

The past few years have been a time of unprecedented change to patent law.  Clearly there will be many more Section 101 cases to come that land on both sides of the abstract idea line (whatever and wherever that line may be).  While we’re just at the early stages of a post-Alice world, in my view the DDR decision forges a sensible path on software patentability.  With so much at stake in terms of America’s role as an innovation leader and the incredible economic impact that the IT industry fuels, let’s hope that more decisions follow the path of DDR.

Bart Eppenauer is the Managing Partner of the Seattle office of Shook Hardy & Bacon.

Supreme Court to test its Spidey-Sense in Patent-Antitrust Case

The Supreme Court has granted certiorari in the patent licensing case of Kimble v. Marvel Enterprises (13-720) with the following question:

Whether the Court should overrule Brulotte v. Thys Co., which held that “a patentee’s use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se.”

The policy goal behind the 1964 Brulotte decision is to avoid the potential antitrust harm associated with an ongoing patent monopoly beyond the 20-year term.  However, antitrust law has generally moved away from this sort of per se rule – especially as to freedom-of-contract.

In this case, the patentee’s patent has expired, but the license agreement seemingly calls for ongoing payments even beyond expiration.  The Ninth Circuit held that, under Brulotte, Marvel is no longer required to pay royalties on its sales of the Spider-man toy.  The Solicitor General recommend that the Supreme Court not take the case — a move that I called “somewhat surprising” since the government had previously noted that Brulotte does not mesh well with contemporary antitrust practice.

With Brulotte on the chopping block, we can also expect that the holding in Lear v. Adkins, 395 U.S. 653 (1969). In that case, the court held that a contractual promise not to challenge a patent’s invalidity is unenforceable.

Obviousness: Analogous Art and Hindsight

by Dennis Crouch

In an interesting September 2014 decision, the Federal Circuit upheld a USPTO determination of obviousness.  The majority decision (authored by Judge Newman) touches on both (1) analogous-art and (2) motivation to combine references. The problem-focused approach taken by the majority in determining analogous art is fascinatingly similar to parts of the abstract-idea analysis in Alice Corp. — looking generally to the problem-to-be-solved as the overarching focus of the invention.  Writing in dissent, Judge Moore characterized the obviousness determination as “[h]indsight, hindsight, hindsight.”  [Decision]

Scientific Plastic Products (SPP) holds a number of patents relating to cartridges for low pressure liquid chromatography (LPLC) with a resealable screw-on cap. See U.S. Patent Nos. 7,138,061, 7,381,327 and 7,410,571. When SPP sued Biotage for infringement, the defendant responded by filing an inter partes reexamination.  Reexam Nos. 95/000,495, ‘496, and ‘497 (filed in 2009, pre-AIA).  Based upon his consideration of the prior art, the patent examiner rejected all of the claims of each patent — finding them obvious under 35 U.S.C. 103. That decision was affirmed by the PTAB and is the subject of the appeal here.  Meanwhile, the district court case has been stayed pending outcome of the reexamination.  On appeal here, a split panel of the Federal Circuit has affirmed the USPTO rejection – with Judge Newman joined by Judge Wallach writing the majority and Judge Moore in dissent.

The primary obviousness reference in the case apparently discloses all of the elements of the patented LPLC cartridge except for one – a tapered lip of the cartridge that corresponds to a taper in the screw-on cap.  The tapering helps create a better seal and avoid leakage when the cap is on.  It turns out that the tapered lip feature is not new, and the USPTO identified two different patents from the soda-pop bottle industry that disclosed the approach.  See for example, Strassheimer (Patent No. 5,100,013).

Obviousness: Section 103 of the Patent Act provides the basic test for obviousness — whether “differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious . . . to a person having ordinary skill in the art to which the claimed invention pertains.”   The two primary interpretations of this decision are Graham v. John Deere Co., 383 U.S. 1 (1966)(outlining test) and KSR Int’l Co. v. Teleflex, Inc, 550 U.S. 398 (2007) (explaining that test should not be rigid but instead apply common sense).

Deere explained that there are four factual prerequisites to consider when determining the legal question of obviousness.

  1. The level of ordinary skill in the art;
  2. The scope and content of the prior art;
  3. The differences between the claimed invention and the prior art;
  4. Any objective indicia of nonobviousness.

Those who know Deere well will notice that I have re-arranged the order of the test by placing the level of ordinary skill in the art as the first step in the analysis. I do that because – as explained below – the scope-and-content of the prior art is impacted by the level of skill in the art.

In many obviousness cases, all of the elements of the invention are found within a limited set of prior art references. The argument then is that it would have been obvious for one skilled in the art to think of combining the elements from those references to create the claimed invention.  In KSR, the Court held that the justification for such a combination can be based upon common sense or other evidence and does not require a particular teaching-suggestion-or-motivation found within the prior art itself.

Scope of the Prior Art: The scope and content of prior art is determined by several factors. First, evidence must fall within the prior art definitions for anticipatory references under 35 U.S. 102.  Second, the prior art must also be seen as “analogous art.”  The analogous art requirement is based upon the idea that someone working in a particular field would be unlikely to search through or know all possible prior art but rather would focus attention on what is known (1) in the same field of endeavor or (2) to be addressing the same problem.  The general question is whether it would have been “reasonable” for a person of ordinary skill in the art to consider the given prior art in order to solve the problem confronting the inventor. In re Clay, 966 F.2d 656 (Fed. Cir. 1992).

Here, the problem identified by the inventor was to prevent leakage on a plastic screw-cap and everyone knows that the soda-pop bottles have solved that problem. From that framework this is an easy case.  However, the patentee here argued that this analysis involves improper hindsight because the leakage problem was one identified by the inventor as part of the invention process and was not previously identified in the prior art.

The Federal Circuit implicitly agreed that it would be improper hindsight to rely upon the problem first identified by the inventor for determining analogous art. However, the court rejected that argument as applied to the facts here.  In particular, the PTAB noted that the primary LPLC reference includes a particular o-ring seal that serves as an implicit recognition leakage could be a problem. On appeal, the Federal Circuit confirmed that the implicit concern was sufficient to avoid  hindsight concerns.  Affirmed.

= = = =

Writing in dissent, Judge Moore argues that majority opinion is hindsight of the worst kind, ‘wherein that which only the invention taught is used against its teacher.’ quoting W.L. Gore & Assocs., Inc. v. Garlock, Inc., 721 F.2d 1540(Fed. Cir. 1983).

The patents do not indicate that leakage was a problem identified in the prior art or a problem known to those of skill in the art. Rather they indicate that the claimed design will avoid leakage. These inventors identified a design problem, articulated it, and solved it. There is absolutely no evidence of the existence of a known leakage problem that would have motivated skilled artisans to modify Yamada. The Board is taking the ingenuity of these inventors and, without any record basis, attributing that knowledge to all skilled artisans as the motivation to make the inventions at issue. Hindsight, hindsight, hindsight. . . .

I would reverse because I conclude that the Board’s cancellation of the claims at issue was based entirely on hindsight reconstruction—there is no record evidence that one of skill in the art would have been motivated to modify Yamada with soda pop bottle sealing closures.

An implicit suggestion from Judge Moore is that in hotly contested post-issuance cases invalidating evidence should be high quality:

These were inter partes reexamination proceedings between sophisticated parties. Both parties put on expert testimony regarding obviousness. Yet there is no evidence that the chromatography cartridges in Yamada had
a leakage problem that skilled artisans would have been motivated to address.

Judge Moore also challenged the PTAB’s failure to determine the level of ordinary skill in the art.  “An ordinarily skilled chemist would have likely looked to a different body of prior art than an ordinarily skilled mechanical engineer with industrial design experience. . . We cannot answer the analogous art question without knowing who the person of ordinary skill is.”

It is Time to Confirm Michelle Lee

There were no surprises with this morning’s consideration of Michelle Lee as the nominee to the position of Under Secretary of Commerce and Patent Office director.  The Senate should – but will not – move quickly to confirm the nomination.  In particular, Senator Grassley – upcoming Judiciary Chair – indicated that the Republicans will not allow a vote on the nomination until the next Congress begins in January.  Because the new Congress would hold new hearings, confirmation is unlikely before March 2015.  That timeline will mean that the USPTO will have been without a Senate confirmed director for more than two years.

For the past year, Lee has been serving as the USPTO’s unofficial director – leading the agency through a time of tremendous systemic change. However, her position has been without the imprimatur of Senate Confirmation as the official Director. In the politics-heavy beltway game, Lee’s lack of official leadership title has impacted her activities both inside and outside the USPTO.  These challenges extend both to factions within the USPTO (e.g., patent operations and activities of the chief information officer); interactions with the White House and Commerce Department leadership; and in providing guidance to Congress regarding legislative reforms.

At times, the Senate has legitimate questions regarding a nominee’s qualifications or ethical lapses. That is not the case with Lee.  In an email, Hal Wegner writes:

The nominee has been center stage for quite some time.   No ethical blemishes or other smudges appear to tarnish a squeaky clean personal image.  There is thus no reason to block her nomination.  Indeed, it has been more than two full years since the most recent Under Secretary had announced his resignation. . . . [T]the nominee should be confirmed in the present lame duck session.

As Wegner notes, in DC politics – we often see a vast difference between what should happen and what does happen.

Next Steps in Shifting Pleading Standards for Patent Cases

by Dennis Crouch

Changing the Rules of Civil Procedure: The Federal Rules of Civil Procedure operate with the force of law, but their implementation procedure is unusual.  In 1934, Congress adopted the Rules Enabling Act that shifts power in drafting the rules to the courts.  The process starts with the Judicial Conference that proposes any rule changes.  The Supreme Court can then vote to adopt the proposed changes.  Congress did not fully abdicate its power. Rather the statute provides Congress the power to reject the Supreme Court’s proposed rules.  The default, however, is that rules will become effective if Congress does nothing. Timing-wise, rules adopted by the Supreme Court by May 1 will become effective on December 1 of that same year.

Pleading Standards and R.84: In Iqbal and Twombly, the Supreme Court raised the standards required for pleadings (complaints, answers, etc) to now require that facts be pled sufficient to make relief plausible rather than mere conclusionsleading to conceivable relief.  In the patent context, for instance, merely pleading that “defendant infringes the the ‘XYZ patent” would seemingly be insufficient without adding more factual context.   However, Iqbal and Twombly have not been applied in the patent infringement context because the Rules include a special loophole known as Rule 84 and the Form Complaints.  Basically, the rules of civil procedure include an appendix of form complaints that include Form 18 – a patent infringement complaint – and Rule 84 declares that complaints that follow the form will be deemed sufficient.

In many cases (but certainly not all), patentees provide bare-bones complaints that fail, for instance, to identify which products infringe which claims of which asserted patents.  Some courts have adopted a requirement that such detail be provided in an early mandatory disclosure, but many courts delay that requirement for months.

Eliminating R 84 and the Form Complaints: The September 2014 Judicial Conference proposal would eliminate R.84 and the form complaints. The result then would be that patent infringement complaints would be judged under the higher standard of Iqbal and Twombly – just like all other federal cases.

Up to now, the Supreme Court has not adopted or otherwise acted on the proposal.  Under the statute, the Court’s delay has no meaningful impact because it cannot be implemented until December 1 2015 at the earliest.

Supreme Court Racing against Congress: However, the Supreme Court is not operating in a vacuum. Rather Congress is also considering its own amendments to the rules that would go well beyond Iqbal and Twombly. Notably, the Goodlatte proposal would require that a patent infringement complaint identify with specificity how each limitation of each asserted claim is infringed by each accused instrumentality.

Supreme Court action here will largely serve to eliminate the demand for Congressional pleading reforms.  I see that as strongly positive because of problematic features of the Goodlatte pleading proposal. However, time will tell which side wins this slow-motion race.

See also: Dennis Crouch, Heightened Pleading Requirements: Patent Reform through the Supreme Court and Judicial Conference, Patently-O (2014); K-Tech Telecommunications v. Time Warner (Fed. Cir.2013)

 

Federal Circuit Supports USPTO’s Refusal to Withdraw Terminal Disclaimer

by Dennis Crouch

Japanese Foundation for Cancer Research v. Michelle Lee (Fed. Cir. 2014)

[Note – Read Prof Hricik’s discussion here]

The Japanese Foundation holds several patents relating to treatment of malignancies with a drug causing cell apoptosis.  See U.S. Patent No. 6,194,187.  The ‘187 patent issued in 2001.  In October 2011, Japanese Foundation’s attorney filed a disclaimer of the remaining term of the ‘187 patent. Then, two months later, the Foundation petitioned the USPTO to withdraw the disclaimer.  However, the USPTO refused to withdraw the disclaimer — indicating that neither statute nor the rules of practice provide a mechanism for withdrawal or amendment of a fully processed terminal disclaimer.

According to the explanation from the Foundation, a paralegal at the Japanese Firm mistakenly sent a request to Foley & Lardner to abandon the patent rather than an inquiry regarding disclaimer.  In particular, the USPTO argues that it should be able to fully rely upon statements by a patentee’s legal representative.

After failing to convince the USPTO to reconsider, the Foundation filed a civil action in the E.D. Va. Federal Court.  The district court sided with the patentee and held that the PTO must withdraw the disclaimer “absent a finding that the Foundation actually authorized its filing.”

On appeal, the Federal Circuit has reversed – siding with the USPTO and finding that the USPTO had not acted arbitrarily and capriciously nor had it abused its discretion by refusing to withdraw the terminal disclaimer.

Under the Administrative Procedures Act (APA), an agency’s action will be set aside if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A).  This standard is normally met only if the [agency] decision was not based on the relevant factors or it fails toexamine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made.” However, unlike actions of many federal agencies, USPTO statutory interpretations are ordinarily given no deference and USPTO decisions based upon an erroneous interpretations of the law will also be overturned.

An oddity of the case here is, although the Foundation did not file for a certificate of correction under 35 U.S.C. 255, it argued on appeal that the USPTO has inherent authority to withdrawing the disclaimer that is housed in Section 255.

In the appeal, however, the Federal Circuit found no basis for issuing a certificate of correction because the mistake in filing the disclaimer was not “of a clerical or typographical nature, or of minor character.”

Director Michelle Lee: Confirmation Hearing

For the past year, USPTO Deputy Director Michelle Lee’s status has been in-limbo.  Although she has been acting as director of the USPTO, the law did not allow her to be identified as the acting director.  During this time, the Obama administration informally floated several potential directorship nominees. However, none of those made the political cut.  Finally, in October 2014, the White Housenominated Lee to move up from Deputy Director to Director.  That position also comes with the title of Undersecretary of Commerce.

The Democrats in the Senate appear to be hoping to move quickly before Republicans take control in January.

 

Supreme Court Sanctions for Faulty Brief

Anyone who read Sigram Schindler’s petition for writ of certiorari would have walked away confused.  To say that the petition makes little sense is perhaps over stating its value.  The question presented by Schindler was as follows:

Does the US Constitution, in legal decisions based on 35 USC §§ 101/102/103/112, require instantly avoiding the inevitable legal errors in construing incomplete and vague classical claim constructions – especially for “emerging technology claim(ed invention)s, ET CIs” – by construing for them the complete/concise refined claim constructions of the Supreme Court’s KSR/Bilski/Mayo/Myriad/Biosig/Alice line of unanimous precedents framework, or does the US Constitution for such decisions entitle any public institution to refrain, for ET CIs, for a time it feels feasible, from proceeding as these Supreme Court precedents require – or meeting its requirements just by some lip-service – and in the meantime to construe incomplete classical claim constructions, notwithstanding their implied legal errors?”

The Supreme Court has now – as expected – denied the petition.  However, the court took a major step further — ordering Schindler’s Supreme Court attorney to “show cause … why he should not be sanctioned”:

D-2827 IN THE MATTER OF DISCIPLINE OF HOWARD NEIL SHIPLEY

Howard Neil Shipley, of Washington, D.C., is ordered to show cause, within 40 days, why he should not be sanctioned for his conduct as a member of the Bar of this Court in connection with the petition for a writ of certiorari in No. 14-424, Sigram Schindler Beteiligungsgesellschaft MBH v. Lee.

The brief was filed by Howard Shipley of the Foley firm along with his partner George Quillen.  Although I do not know, I suspect that the Foley firm agreed to file the brief as drafted by Dr. Schindler and without providing any substantive input or editing.

Tony Mauro has more.

This case is unlikely to help shift the Supreme Court’s perspective on the Federal Circuit and the current state of patent law doctrine.

 

Not so fast: Phase III Biosimilar Clinical Trial & Infringement Threat does not Create Justiciable Case or Controversy

by Dennis Crouch

Sandoz v. Amgen is one of the first decisions by the Federal Circuit relating to the biosimilars and the Biologics Price Competition and Innovation Act of 2009 (BPCIA) (codified principally at 42 U.S.C. § 262).  By rejecting jurisdiction here, the court adds incremental value to biologic patents at the cost of some chilling of the development of follow-on biosimilars.

In this case, the Sandoz sued Amgen — asking the court for a declaratory judgment that two of Amgen’s patents covering its Enbrel formulation are invalid.  Patent Nos. 8,063,182 and 8,163,522.  The district court rejected the lawsuit altogether — finding no case-or-controversy sufficient to create jurisdiction.  On appeal, the Federal Circuit has affirmed, although on narrower grounds than did the district court.

Unlike generic drugs, follow-on (“generic”) biologics will typically require additional research because biosimilars are typically – and as their name suggests – only similar to the original treatment product.  This means that a follow-on company will likely make substantial research investments prior to seeking FDA approval.

The BPCIA creates a biosimilars scheme akin to what Hatch-Waxman does with generics.  In particular – like Hatch-Waxman – BPCIA creates a paper-cause-of-action labeling the filing an FDA biosimilarity application as a form of patent infringement.  The particulars of BPCIA is substantially different from Hatch-Waxman, but they run in parallel at least from a 30,000-foot framework.

Here, Sandoz is working on a biosimilar of Enbrel and Amgen has notified Sandoz that its proposed biosimilar would infringe the patent.  In 2013 Sandoz took two simultaneous actions: (1) it began a major (and expensive) Phase III trial of its version of the treatment product and (2) it filed this declaratory judgment action — asking the federal court for a holding that the Amgen patents are both invalid and would not be infringed by Sandoz’ product.  Although Sanoz has already invested in the research, an adverse decision in the DJ case could help the company avoid wasteful spending.  Because pharmaceutical patent litigation takes years to complete, the early-stage lawsuit may well only be complete at around the product launch date.   Importantly, however, courts often make early claim-construction decisions that could be helpful for Sandoz in developing a non-infringing alternative.  Notably, Sandoz research is not alleged to be infringing since (1) it is being done abroad and (2) it likely qualifies for the research exception of 35 U.S.C. 271(e).

Rather than hearing the case, the district court dismissed based upon lack of jurisdiction.  Applying two alternate theories, the district court held (1) that the controversy was not sufficiently immediate and real as required by Supreme Court doctrine on cases-and-controversies; and (2) that the BPCIA preempts declaratory judgment lawsuits prior to the DJ-plaintiff’s FDA biosimilar application filing.

The U.S. Constitution (as interpreted by the Supreme Court) requires an actual and immediate case-or-controversy between the parties.  The approach is to ask “whether the facts alleged … show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”  MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007).

On appeal, the Federal Circuit affirmed – finding no immediate case or controversy between the parties. In addition to the fact that no infringement occurs until at least the FDA filing, the Federal Circuit found that the Sandoz ongoing research could still potentially result in a product that is clearly non-infringing.  Importantly, because the court found no case-or-controversy under MedImmune, the Federal Circuit chose not to address the alternative judgment that BPCIA preempts the lawsuit.

Biopharmaceuticals are on the rise as an important and useful facet of medical technology. However the impact of BPCIA is still yet to be solidified.

Slicing the Bologna: Judge Chen Distinguishes this Business Method from those Found Ineligible in Alice, Bilski, and Ultramercial

By Dennis Crouch

Typically, Supreme Court patent cases alter Federal Circuit precedent, while – at the same time – leaving many open questions for the appellate court to address.  That standard certainly fits the recent set of patent eligibility cases.  In Alice Corp v. CLS Bank (2014) the Supreme Court outlined an eligibility test whose practical impact will vary greatly depending upon how it is implemented by the Patent Office and the court: broadly or narrowly?

In DDR Holdings v. Hotels.com, the Federal Circuit has affirmed the patent eligibility of DDR’s eCommerce patent.  U.S. patent No. 7,818,399. Particularly, Judge Chen authored the majority opinion that was joined by Judge Wallach. Judge Mayer wrote in dissent.  The case is close enough to the line that I expect a strong push for en banc review and certiorari.  Although Judge Chen’s analysis is admirable, I cannot see it standing up to Supreme Court review and, the holding here is in dreadful tension with the Federal Circuit’s recent Ultramercial decision.

The basic idea behind DDR’s patent (as claimed) is to allow a website operator to include various pages within its website that each corresponds to a different merchant (such as a cruise line) with products being sold through a broker (such as a cruise broker).  The various pages will have a look-and-feel that corresponds to the particular merchant (by including, for instance the cruise line logo).  And, the system dynamically populates product options on the site by pinging the broker’s server.  To accomplish all this, the invention uses computer networks in what appears to be standard form without what I would call “new technology.”  Judge Chen writes that a major purpose of this setup is to be able to provide a diversity of stores while keeping customers on the same overall website. Representative claim 19 is posted below.  The accused infringers summarize this as simply “syndicated commerce on the computer using the Internet.”

Patent Eligibility under Alice Corp: The two-step approach to eligibility decreed by Alice Corp first queries whether the invention is directed to an abstract idea. And, if so, then looks to whether the invention includes an “inventive concept” sufficient to “transform” that abstract idea into a patentable invention. In Alice, the Supreme Court particularly held that transformation is not satisfied by merely the recitation of generic computer limitations.

Here, Judge Chen finds that neither step of Alice Corp implicate the patent in question.  In doing so, Judge Chen attempts to cabin-in the scope of ideas that qualify as “abstract ideas.”

Not An Abstract Idea: First, Judge Chen found the solution here to be internet-focused with no direct corresponding offline equivalence. That conclusion is important because it helps distinguish Alice Corp where the Supreme Court found the patented invention there abstract because it related to a longstanding business practice. Judge Chen writes:

[The asserted claims do not] recite a fundamental economic or longstanding commercial practice. Although the claims address a business challenge (retaining website visitors), it is a challenge particular to the Internet.

In the dissent, Judge Mayer challenges this conclusion by drawing an analogy to the pre-internet business of having kiosk within a mall or warehouse shore that sells third-party cruise vacation packages.  Judge Chen rejects that analogy because it does not “account for the ephemeral nature of an Internet “location” or the near-instantaneous transport between these locations made possible by standard Internet communication protocols.”  According to Judge Chen, those differences introduce new problems – and it is those problems that are particularly addressed by the patented invention.

In Ultramercial, the Federal Circuit found that even novel ideas can be abstract. Distinguishing from that case, Judge Chen writes that the claims here:

are different enough in substance from those in Ultramercial because they do not broadly and generically claim “use of the Internet” to perform an abstract business practice (with insignificant added activity). Unlike the claims in Ultramercial, the claims at issue here specify how interactions with the Internet are manipulated to yield a desired result—a result that overrides the routine and conventional sequenceof events ordinarily triggered by the click of a hyperlink.

Moving on, Judge Chen finds that – even if the claims are directed to an abstract idea – they do not preempt that idea but instead represent a “specific way” of creating a composite web page “in order to solve a problem faced by websites on the Internet.”

Writing in dissent, Judge Mayer argues that the patents at issue here are “long on obfuscation but short on substance. Indeed, much of what they disclose is so rudimentary that it borders on the comical.”

DDR’s claims … simply take a well-known and widely-applied business practice and apply it using a generic computer and the Internet. The idea of having a “store within a store” was in widespread use well before the dawn of eCommerce. For example, [NLG], one of the defendants here, previously “sold vacations at . . . BJ’s Wholesale Clubs through point of purchase displays.” . . . DDR’s patents are directed to the same concept. Just as visitors to [BJ’s] could purchase travel products from NLG without leaving the BJ’s warehouse, the claimed system permits a person to purchase goods from a third-party vendor, but still have the visual “impression that she is viewing pages served by the [original host merchant].” Indeed, any doubt as to whether the claimed system is merely an Internet iteration of an established business practice is laid to rest by the fact that one of the named inventors acknowledged that the innovative aspect of his claimed invention was “[t]aking something that worked in the real world and doing it on the Internet.”  . . .

The solution offered by DDR’s claims, however, is not rooted in any new computer technology. Its patents address the problem of preventing online merchants from losing “hard-won visitor traffic,” and the solution they offer
is an entrepreneurial, rather than a technological, one. DDR has admitted that it did not invent any of the generic computer elements disclosed in its claims. There is no dispute, moreover, that at the time of the claimed invention the use of hyperlinks to divert consumers to particular web pages was a well-understood and widely-used technique. While DDR’s patents describe the potential advantages of making two web pages look alike, they do not disclose any non-conventional technology for capturing the “look and feel” of a host website or for giving two web pages a similar appearance.

In concluding that DDR’s claims meet the demands of section 101, the court focuses on the fact that “they recite a specific way to automate the creation of a composite web page . . . .” The Supreme Court, however, has emphatically rejected the idea that claims become patent eligible simply because they disclose a specific solution to a particular problem. . . . Indeed, although the claims at issue in Alice described a very specific method for conducting intermediated settlement, the Court nonetheless unanimously concluded that they fell outside section 101.

= = = = =

This case may end up again delaying the expected USPTO examiner guidance on abstract idea analysis.

= = = = =

The patent itself issued in 2006 but claims priority to a 1998 filing.  Five inventors are listed including father-son pair: DD Ross, Sr. and Jr. – hence DDR Holdings.

= = = = =

Claim 19. A system useful in an outsource provider serving web pages offering commercial opportunities, the system comprising:

(a) a computer store containing data, for each of a plurality of first web pages, defining a plurality of visually perceptible elements, which visually perceptible elements correspond to the plurality of first web pages; (i) wherein each of the first web pages belongs to one of a plurality of web page owners; (ii) wherein each of the first web pages displays at least one active link associated with a commerce object associated with a buying opportunity of a selected one of a plurality of merchants; and (iii) wherein the selected merchant, the outsource provider, and the owner of the first web page displaying the associated link are each third parties with respect to one other;

(b) a computer server at the outsource provider, which computer server is coupled to the computer store and programmed to: (i) receive from the web browser of a computer user a signal indicating activation of one of the links displayed by one of the first web pages; (ii) automatically identify as the source page the one of the first web pages on which the link has been activated; (iii) in response to identification of the source page, automatically retrieve the stored data corresponding to the source page; and (iv) using the data retrieved, automatically generate and transmit to the web browser a second web page that displays: (A) information associated with the commerce object associated with the link that has been activated, and (B) the plurality of visually perceptible elements visually corresponding to the source page.

USPTO Patent Grants

GrantsPerYearAlthough December has just begun, the USPTO has already issued more patents in calendar year 2014 than in any other prior year.  I expect that the total will be around 304,000 utility patents issued this year. The number of grants has more than doubled since 2005.

We can expect some further increase in 2015 – especially if Congress grants PTO full spending authority over its collected fees.

[Note – blue bar in 2014 shows the expected number of grants in the remaining four weeks of FY2014.]

 

Federal Circuit Continues to Support Claiming Pharmaceutical Function

by Dennis Crouch

Par Pharma v. TWI Pharma (Fed. Cir. 2014)

In a strong opinion, the Federal Circuit has overturned a lower court summary judgment that Par’s megestrol formulation patent claims are obvious.  (U.S. Patent No. 7,101,576).  The case is interesting because it further solidifies the appellate court’s stance that functional claim limitations should be given their full weight and merit even when serving as the point-of-novelty of the invention.

As with many drug-related patents, Par’s claims include limitations regarding the effect of the drug. Here, the real benefit of Par’s formulation is that it is equally effective if administered in both a “fed” and “fasted” state.  During prosecution (and in response to an obviousness rejection), par added the follow food-effect limitation: “wherein after a single administration … there is no substantial difference in the Cmax of megestrol when the formulation is administered to the subject in a fed versus a fasted state.”  The remainder of the claim involves a series of specific dosages and particle size limitations to be used in the drug administration.

At trial, the district found the claims obvious based upon a combination of prior art references. Notably, the prior art was not shown to teach the food-effect limitation. However, the district court determined that the wherein clause deserved no weight in the obviousness analysis because it was simply describing a result inherent to the formulation.

On appeal, the Federal Circuit has vacated that finding — noting that the district court “incorrectly applied our law on inherency in the context of obviousness.”

Inherency: The traditional approach to inherency is with reference to the prior art — even when not expressly disclosed by the prior art, a feature will be deemed inherent to the prior art if “the natural result flowing from the operation as taught would result in the performance of the questioned function.” Hansgirg v. Kemmer, 102 F.2d 212, 214 (C.C.P.A. 1939).  In the obviousness-combination context, the question is whether the non-disclosed limitation is the natural result of the combination of reference.  In re Oelrich, 666 F.2d 578, 581 (C.C.P.A. 1981) (“[M]ere recitation of a newly discovered function or property, inherently possessed by things in the prior art, does not distinguish a claim drawn to those things from the prior art.”).  The Federal Circuit here writes “the limitation at issue necessarily must be present, or the natural result of the combination of elements explicitly disclosed by the prior art.”

Of importance, however, the “natural flow” must be proven with clear and convincing evidence and may not be established by probabilities or possibilities or expectation.

In reviewing the evidence presented in this case, the appellate panel found that the challenger had failed to present sufficient evidence of inherency.   In particular, althought the evidence presented showed that the combination would improve the food-effect, there was no evidence presented that the food effect was substantially eliminated as required by the claims.

While it may be true that a reduction in particle size [as disclosed in the prior art] naturally results in some improvement in the food effect, the district court failed to conclude that the reduction in particle size naturally results in “no substantial difference” in the food effect.

On remand, the district court will likely consider further evidence with regard to inherency.

The case here also ties-in with Mayo v. Prometheus.  Following that decision, the claimed food-effect as a result of the particular administration would be seen as an unpatentable law of nature.  The question then is whether that claimed function can serve as the point of novelty sufficient to overcome the prior art.