Testifying as to Obviousness and Remanding to the PTAB

by Dennis Crouch

Icon Health and Fitness v. Strava (Fed. Cir. 2017) (Reexamination of U.S. Patent No. 7,789,800)

Expert Testimony on the Conclusion of Obviousness:  In the inter partes reexamination case here, the issue arose with the patent challenger (Strava) used an expert witness to testify to the legal conclusion that the claims at issue were obvious.  This is problematic because in ordinary circumstances it is improper for an expert witness to testify as to a question of law. Rather, the ordinary use of expert testimony is solely to “help the trier of fact to understand the evidence or to determine a fact in issue.” FRE 702.  Of course, the Federal Rules of Evidence do not apply to the Patent Trial & Appeal Board proceedings or patent reexaminations.

On appeal here, the Federal Circuit appears to agree with the challenger – that an expert can make conclusions of obviousness/non-obviousness and that the PTO can rely upon those statements.

[T]here is no per se prohibition against relying on an expert’s declaration … solely because the declaration states that something “would have been obvious.” Indeed, we frequently have affirmed PTAB determinations on obviousness that rely on expert declarations that include such statements, so long as other aspects of the declarations contain statements related to factual findings. See Veritas Techs. (Fed. Cir. 2016) (affirming the PTAB’s conclusion of obviousness that relied on, inter alia, an expert’s statements that “it would have been obvious”); MCM Portfolio (Fed. Cir. 2015) (affirming the PTAB’s conclusion of obviousness that was based, in part, upon an expert’s statement that “it would have been obvious”). To determine if an expert’s statement is directed to factual findings or the legal conclusion of obviousness, we look to the statement not in isolation, but in the context of the whole declaration.

The decision here appears to carry the same weight whether a PTAB case or district court litigation.

Spelling Out the Factual Findings: The decision goes on to find some errors in the PTAB merits decision.  In particular, rather than spelling out its factual findings of where each claim element is found in the prior art, the Board issued a general catchall statement that “we agree with [Strava’s] rebuttal . . . as well as the Examiner’s response.”  The statement appeared to incorporate-by-reference a prior examiner’s statement which itself had incorporated statements by Strava’s witness.

On appeal, the Federal Circuit found that such a multi-layered incorporation by reference can be sufficient.  Here, however, none of the PTO created documents actually included the required factual findings.  Although the incorporated documents from Strava’s attorneys did include purported factual findings, the Federal Circuit indicated that those unsworn statements cannot be treated as evidence or factual findings.  [On this last point, I believe that the court incorrectly correlated evidence with factual findings].

Remand or End the Case: The decision splits at this point between the two judge majority (Judges Wallach and Reyna) and dissent-in-part (Judge O’Malley).

Since the error in failing to write-down sufficient factual findings was potentially a merely-technical-error, the majority remanded the case “for further poceedings consistent with this opinion.”  Thus, on remand, the PTAB/Examiner may have another opportunity to explain its judgment as to the invalidity of the claims:

Because the PTAB failed to comport with what these [fact finding] principles demand, the PTAB’s rejection of these claims must be vacated and the case remanded for additional PTAB findings and explanation. See, e.g., In re Van Os, 844 F.3d 1359 (Fed. Cir. 2017) (explaining that the court vacates and remands when additional fact finding and explanation is warranted).

 

Judge O’Malley dissented from this approach – arguing that remand is not appropriate for cases such as these where the PTAB has failed to establish obviousness or unpatentability generally. In this regard, Judge O’Malley agrees with Judge Newman’s dissent in Van Os.

 

Life Technologies Corp. v. Promega Corp. and the Absent Presumption Against Extraterritoriality

Guest Post by Tim Holbrook, Professor of Law at Emory University School of Law.  Professor Holbrook has written extensively on the extraterritorial application of U.S. patent law. – DC

The Supreme Court’s decision in Life Technologies Corp. v. Promega Corp. is fairly straightforward.  The Court held that 35 U.S.C. § 271(f)(1) does not apply when only a single component of a patented invention is exported.  Instead, more than one component is required to constitute a “substantial portion” of the patented invention.  While what the Court said is important, in some ways, what is more interesting is what it didn’t say and omitted.

In particular, most viewed this case as one of a series of cases in which the Court was elaborating on the presumption against extraterritoriality.  At oral argument, the questions from the justices suggested that likely was the case as well.  The term was used over twelve times in the argument, with the Chief Justice engaging in a colloquy with Carter Phillips about whether this case truly involved extraterritoriality.  Although the Chief Justice eventually recused himself from the case, his questions suggested that he was attempting to apply the Court’s recent extraterritoriality decision in RJR Nabisco, Inc. v. European Community.  Indeed, in my amici brief before the Court, I criticized the Federal Circuit for giving short shrift to the issue.

Yet, neither the term “extraterritoriality” nor any discussion of the presumption against extraterritoriality appears in the final decision.  Instead, in the first line of the decision, Justice Sotomayor describes the case as “concern[ing] the intersection of international supply chains and federal patent law.”

Interestingly, the petitioners did not frame the case in this fashion. The petitioners’ brief never discusses supply chains expressly.  Instead, this framing of the issue apparently came from the amicus briefs.  Although the brief by Bundesverband der Deutschen Industrie E.V.  addressed the issue, Agilent Technologies’ brief is the one that seemed to catch the Court’s attention. That brief had a lengthy discussion of the modern way that supply chains work, and the commensurate potential exposure to patent liability under the Federal Circuit’s interpretation.  Justice Kennedy even referenced it during oral argument, bringing the issue of supply chains to the fore.

This concern with these chains – and the risk that some parts of the chain could be exposed to patent infringement liability – may underlie some of the Court’s reasoning.  For example, in interpreting the phrase “substantial portion of the components of a patented invention,” the Court adopted a quantitative approach as opposed to one that considered both the quantity of components supplied and their relative importance.  The Court seemed concerned with the ability of such actors ability to discern when liability may arise.  The Court asked, “How are courts—or, for that matter, market participants attempting  to  avoid  liability—to  determine the relative importance of the components of an invention?”

To those who follow the Court’s patent jurisprudence, this sudden concern for public notice and audience seems a bit ironic given the Court’s penchant for eliminating the Federal Circuit’s more predictable, formalistic rules.  But it does show the importance of amicus briefs that can bring real-world concerns to the Court.

The Courts silence as to the presumption against extraterritoriality, though, may be more important than it seems.  The presumption had been central to § 271(f).  Congress adopted § 271(f) to overrule Deepsouth Packing Co., Inc. v. Laitram Corp., which held, in part based on the presumption against extraterritoriality, that manufacturing and exportation of all of the invention’s components.  The Supreme Court’s first interpretation of this provision in Microsoft Corp. v. AT&T Corp., the Court also relied on the presumption to afford the provision a narrower interpretation. Yet, here….silence.

That silence may reflect a significant shift in the Court’s extraterritoriality jurisprudence.  In a decision from its October 2015 term, RJR Nabisco, Inc. v. European Community, the Court provided a two-step analysis for assessing whether the presumption applies.  First, a court should assess “whether the presumption against extraterritoriality has been rebutted—that is, whether the statute gives a clear, affirmative indication that it applies extraterritorially.”  If the presumption has been rebutted, then the statute is afforded extraterritorial reach.  If after step one, however, a court concludes “the statute is not extraterritorial,” then the statute may yet afford protection.  Step two is to “determine whether the case involves a domestic application of the statute … by looking to the statute’s ‘focus.’” If the acts involving the statute’s focus occur in the United States, then the statute applies.

Applying this methodology to § 271(f) would appear to end at step one: the statute clearly contemplates extraterritorial application of U.S. law with the hook of domestic manufacture of the components.  The silence in Life Technologies may reflect this shift, and a departure from the use of the presumption as a basic statutory interpretation tool.

The Chief Justice’s comments at oral argument suggested that he believed the presumption had no role in this case.  He noted:

I’m not sure I agree with your understanding of the extraterritorial principle. I don’t – I mean, do you really take that down into the minutiae of every little clause? It seems to me its once the law applies, then you apply normal principles of statutory interpretation. I think we have cases about that in other – in other areas, which is sort of what is the reach, I think, may be the presumption against infringement in sovereign immunity, is – a case I can’t recall right away that said, well, once you get over it, you know, its over, and then you apply normal principles.

The Chief Justice appears to be referencing the RJR Nabisco approach.  Although he ultimately recused himself from the case, perhaps his comments cast a long shadow over the decision.  The silence on extraterritoriality, therefore, may be speaking volumes.  It may reflect a shift away from the use of the presumption in interpreting particular provisions within a particular statute once the extraterritorial reach of that provision already has been confirmed.

 

It’s a Good Idea to Actually Own the Patents you Sue on

The following is a guest post by Bryan Wheelock, Principal at Harness, Dickey & Pierce.  He originally published it on the HDP Blog. – Dennis

In National Oilwell Varco, L.P. v. Omron Oilfield and Marine, Inc., [2015-1406] (January 25, 2017), in a non-precedential opinion, the Federal Circuit affirmed the dismissal of claim for infringement of U.S. Patent No. 5,474,142 because of problems with the chain of title which deprived NOV of standing.

Bobbie Bowden, the named inventor on the ’142 Patent assigned the patent to Wildcat Services, L.P., on October 9, 2001.  Wildcat Services, L.P. assigned the ’142 Patent to MD/Totco, a Division of Varco, L.P., on June 30, 2004.  NOV claimed it purchased the ’142 Patent from Varco, L.P., pursuant to an Asset Contribution Agreement dated January 1, 2006.

NOV initially refused to produce the ACA, instead producing only a “Assistant Secretary’s Certificate,” which assigned only “physical assets.”  After being forced to produce the ACA, Omron renewed its motion to dismiss for lack of standing.  The district court agreed that that NOV could not prove ownership of the ’142 Patent as of the filing date of this case, and dismissed the case, with prejudice, for lack of standing.

The Federal Circuit agreed with the District Court, noting that the ACA contains no reference to patents except within Exhibit A, which had a column labeled “Patents – Patents.”  The Federal Circuit said that the district court correctly interpreted the ACA to find that its plain meaning did not include transferring the ’142 Patent from Varco, L.P. to NOV because the Exhibit A spreadsheet shows a “0” where the patents row intersects with the MD/Totco column.  The Federal Circuit concluded that a plain reading of the ACA reveals that it did not transfer the ’142 Patent from MD/Totco to NOV.

PTAB: A written decision on “every claim challenged”

SAS Institute v. Lee (Supreme Court 2017)

New petition for writ of certiorari from SAS asks the following question:

Does 35 U.S.C. § 318(a), which provides that the Patent Trial and Appeal Board in an inter partes review “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner,” require that Board to issue a final written decision as to every claim challenged by the petitioner, or does it allow that Board to issue a final written decision with respect to the patentability of only some of the patent claims challenged by the petitioner, as the Federal Circuit held?

The basic issue – under the statute, can the PTO (the PTAB acting as the Director’s delegate) institute inter partes review to a subset of the challenged claims?  Or, does the requirement for a “final written decision as to every claim challenged” require that the Board grant or deny the petitions as a whole.

[sas-petition-for-certiorari][SCOTUS Docket 16-969]

Life Tech v. Promega: Supreme Court Limits Contributory Liability for Exports

Life Technologies Corp. v. Promega Corp. (Supreme Court 2017)

In a largely-unanimous opinion, the Supreme Court has ruled that the “supply of a single component of a multicomponent invention for manufacture abroad does not give rise to §271(f)(1) liability.”

The case interprets the patent infringement statute 35 U.S.C. §271(f)(1) that creates liability for supplying from the US “all or a substantial portion of the components of a patented invention” to be combined abroad in a manner that would infringe the US patent (if it had been combined in the US).  The patent covers a genetic testing kit that includes five different components.  The accused infringement was shipping one component of the kit (Taq polymerase) to the UK for combination with the other components. The Federal Circuit had ruled that a single component could constitute a “substantial portion of the components” under the statute.

Writing for the court, Justice Sotomayor found that the “substantial portion” should be seen as a quantitative requirement and that a single component is not sufficient.

Although they joined with the bulk of the opinion, Justices Alito and Thomas did not join the portion suggesting that 271(f) was intended as a narrow provision enacted by congress only to fill the gap left by Deepsouth Packing Co. v. Laitram Corp., 406 U. S. 518 (1972).  Rather, in a concurring opinion, justice Alito writes that congress intended “to go at least a little further.”  The concurrence also includes its interpretative statement on the majority opinion:

I note, in addition, that while the Court holds that a single component cannot constitute a substantial portion of an invention’s components for §271(f)(1) purposes, I do not read the opinion to suggest that any number greater than one is sufficient. In other words, today’s opinion establishes that more than one component is necessary, but does not address how much more.

[14-1538_p8k01]

For CBM Review: _Claims_ Must be Directed to Financial Service

by Dennis Crouch

This case represents an important decision limiting the scope of Covered Business Method reviews.  However, its short consideration of agency-deference leaves it open to further challenge. 

Secure Axcess v. PNC (and other banks) (Fed. Cir. 2017) [secureaxcess]

The America Invents Act created a temporary mechanism (8-year) for challenging certain “covered” business method patents.  The program will sunset for new petitions in the “Transitional Program for Covered Business Method Patents” (“CBM review”) sunsets on September 16, 2020. The program allows for CBM patents to be challenged on any ground of patentability (e.g., Sections 101, 102, 103, and 112) and is not limited to post-AIA patents.

Not all business method patents fit within the program, but only those covering non-technological inventions related to a financial product or service.  In particular, the defintion states:

For purposes of this section, the term “covered business method patent” means a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.

AIA Section 18(d)(1).

Here, Secure Axcess’s patent covers a computer security method that uses an authenticity key to “create formatted data” that is then sent to another computer to be used to locate an authenticity stamp from a preferences file. Patent No. 7,203,838.   Although the the patent is not limited to financial services, the patentee has sued dozens of banks and financial service providers for patent infringement.  In particular, it appears that the patentee has only sued financial service providers.

The PTAB determined that the patent here fits the CBM definition. On appeal, however, the Federal Circuit reversed holding that “the patent at issue is outside the definition of a CBM patent that Congress provided by statute.”  This decision follows the court’s recent decision in Unwired Planet, LLC v. Google Inc., 841 F.3d 1376 (Fed. Cir. 2016).

Claiming Financial Services: In its decision, the court walked through the statute – noting that the focus is on the claimed invention rather than the asserted marketplace or potential uses of the invention.  Thus, the relevant question is not how the invention is used, but rather whether the claims are directed to a financial service.  According to the court, any other reading, would “give the CBM program a virtually unconstrained reach.”

Statutory Interpretation – A Question of Law: A very interesting aspect of the decision is the standard-of-review.  Both parties suggested that the USPTO should be given some deference of its own interpretation of the statute.  With only limited discussion, the Federal Circuit rejected that suggestion and instead held that statutory interpretation is simply a matter of law, reviewed de novo on appeal:

[T]he issue here is whether the Board properly understood the scope of the statutory definition. That is a question of law.

The court did not, however cite or refer to Chevron or other Supreme Court precedents requiring deference to certain agency interpretations of law.

= = = =

The majority opinion was penned by Judge Plager and joined by Judge Taranto. Judge Lourie wrote in dissent.   The dissent would expand the scope of CBM to include patents directed to financial services even when claims themselves are not expressly limited to financial services.  In this case, the exemplary embodiment of the invention uses the security mechanism for financial services.  Further, the only example URL in the patent is “bigbank.com.”  Judge Lourie also found the patentee’s “litigation pattern” relevant to the financial services use (having asserted the patent against dozens of banks, and nobody else).

Of interest for administrative law folks, Judge Lourie also failed to consider whether deference should be given to PTO interpretation of the statute.

= = = = =

In a parallel decision, the Federal Circuit today issued a R.36 judgment (improperly in my view) affirming the PTAB’s cancellation of the the claims of a family member patent as obvious. U.S. Patent No. 7,631,191.

 

Patently-O Reader Survey – Thank you!

A team of students from the University of Missouri School of Journalism (AdZou) is using Patently-O as their capstone project.  As part of that project, they have created the following 10-minute survey that will help provide some additional perspectives and inputs from you – the Patently-O reader.  Someone will win a $50 Amazon gift card.

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Google v. Oracle: Fair Use of a Copyrighted API

by Dennis Crouch

Google v. Oracle (Fed. Cir. 2017) (pending software API copyright case)

In its return-trip to the Federal Circuit, the Oracle’s JAVA-Copyright case against Google appears have some chance of once again making interesting precedent.  I previously described the case as follows:

When Google wrote its program-interface (API) for Android, the company made a strategic decision to mimic the method-calls of Java.  Java was already extremely popular and Google determined that free-riding on Java popularity would facilitate its catch-up game in the  third-party app marketplace.  As an example, Google used the Java method header “java.lang.Math.max(a,b)”.  When called, the “max” function returns the greater of the two inputs.  In Android’s API, Google copied a set of 37 different Java “packages” that each contain many classes and method calls (such as “max()”).  Overall, Google copied the header structure for more than six-thousand methods.  Although Java is offered for both open source and commercial licenses, Google refused to comply with either regime.

Java’s originator Sun Microsystems was known for broadly sharing its creations without enforcing its IP rights.  That aura changed when Sun was purchased by Oracle.

Back in 2012, the N.D. Cal. district court ruled that the portions of Java structure that Google copied were not themselves entitled to copyright protection.  On appeal, however, the Federal Circuit reversed and ordered a new trial. In particular, the Federal Circuit panel led by Judge O’Malley held that the Java API taxonomy copyrightable as a whole and rejected the applicability of idea/expression merger doctrine. “Merger cannot bar copyright protection for any lines of declaring source code unless Sun/Oracle had only one way, or a limited number of ways, to write them.”

On remand, the jury sided with Google – finding that the accused use was a “fair use” and therefore not infringement.  On appeal, Oracle asks the court to overturn that verdict – both based upon the evidence presented and the additional evidence excluded.

Oracle has filed its opening brief that is supported by eleven additional amicus briefs. [Oracle Brief: 02-10-17_oracle-opening-brief-second-appeal].  Google’s will be due next month as well as amicus supporting the broader conception of fair use.

Although the briefs provide good arguments for the limited nature of fair use and the ‘creativity’ associated with API development, none of them squarely addressed how partial failings under 17 USC 102(b) should impact the fair use determination under Section 107.

102 (b) In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.

Although the API was found not to violate the limitations of 102(b), I would suggest that this close-call should have a relevant impact on the scope of fair use.  I would also suggest that platform-interoperability and being able to take advantage of a skilled work-force (i.e., Java Programmers) should be included within the fair use debate even if they don’t fully reach the 102(b) threshold.  Prof. Randy Picker works in this area and tries to tease-out what counts as legitimate restrictions on access and those that are illegitimate.

The Fair Use provision is written as follows:

107 [T]he fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include —

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above
factors.

In walking through these factors, Oracle argues:

  1. Google’s purpose was purely commercial; not transformative; and not in good faith.
  2. API’s packages should be given strong protections because they are “undisputedly creative.”
  3. The API’s represent the “heart” of Java.
  4. The copying led to significant harms both to current and potential markets.

McNealy and Sutphin are former Sun Microsystems executives who helped develop and promote Java. In their amicus brief, the pair provide a nice overview of how Java works and its purpose.  The key portion of the brief here is the allegation that Google’s copying allowed it to “steal the legions of developers already using the Java platform.” The question for me is whether that is a harm protectable through copyright. [2017-02-17_mcnealy-sutphin_amicus-brief]  Software engineers Spafford, Ding, Porter, and Castleman add that the Java API should be given strong copyright protection because “design and expression of an API reflects the creative choices and decision-making of its author.” [2017-02-17_spafford-ding-porter-castleman_amicus-brief]

A group of 13 law professors have filed their brief in support of the copyright holder Oracle – arguing, inter alia, that (1) fair use is narrow by design; and (2) there is no special fair use test for copyrighted software.  Again here, the scholars do not address the 102(b) bar or the functional nature of the API – other than by noting that Google’s copying “achieve[d] the same functions as Oracle” and therefore was not transformative.   [2017-02-17_ip-scholars_amicus-brief]   Falling in-line, the RIAA suggests that the purpose-focused-transformation-test has no basis in the statute and should not be relied upon for fair use analysis.  [2017-02-17_riaa-amer-assn-of-publishers_amicus-brief]  Likewise, New York’s IP Law Association [2017-02-17_nyipla_amicus-brief] argues that a mere “change in context” cannot be seen as transformative for first amendment analysis.

The old Perfect-10 case almost seems to treat Google as if it is a library providing a major public service.  A number of briefs attempt to counter this pro-Google bias.  CCA (smaller mobile carries), for instance, argues that “Google’s current marketplace dominance with respect to mobile software platforms, online advertising, and online traffic is the result of many strategic decisions, including its decision to flout Oracle’s copyrights in Java – harming competition and CCA members.”  The ask her is simply: Treat Google as you would any other commercial market participant. [2017-02-17_competitive-carriers-assn_amicus-brief]

In perhaps the most moderate brief of this first round, the BSA argues that the equitable origins of the Fair Use analysis suggest favoring broad admissibility of evidence – unlike what happened in this case. [2017-02-17_bsa-the-software-alliance_amicus-brief].  Fair use should be limited to its origins as a “narrow and equitable tool for promoting public benefits like criticism, comment, news reporting, teaching, scholarship, or research.” [2017-02-17_paca-digital-licensing-assn_photographers_amicus-brief]. Former Register of Copyrights Ralph Oman agrees with this approach. “Google’s copying of the Java APIs is inconsistent with the historic goals of the Fair Use Doctrine.” [2017-02-17_ralph-oman_amicus-brief].

The MPAA, Screen Actors Guild and other combined efforts in a short brief arguing simply that the market for a copyrighted work should not be limited to the existing market for the work, but should also include “traditional, reasonable, or likely to be developed markets.” Quoting Am. Geophysical Union v. Texaco Inc., 60 F.3d 913, 930 (2d Cir. 1994). [2017-02-17_mpaa-ifta-sag-aftra_amicus-brief]. Here, the district court refused to consider (or allow the jury to consider) potential markets for JAVA including television, automobile, and wearabledevice markets. The Copyright Alliance agrees that the district court’s approach to looking at impact on current market (rather than potential market) in the fair use analysis is “particularly problematic for small businesses and individual creators . . . who may not have the resources to enter all potential or derivative marketes at once.”  [2017-02-17_the-copyright-alliance_amicus-brief]

 

In Defense of the Federal Circuit: TC Heartland and Patent Venue

Guest Post by Professors Megan M. La Belle & Paul R. Gugliuzza

Patent litigation is, as we all know, highly concentrated in a small number of districts.  Most notably—some might say, notoriously—the rural Eastern District of Texas hears about forty percent of all patent cases nationwide.  Many lawyers and scholars consider this case concentration to be a critical flaw in the patent system.

Against this background, TC Heartland doesn’t seem like a case the Supreme Court would hear simply to affirm.  As Dennis reported last week, nearly twenty amicus briefs have been filed urging reversal, including one signed by sixty-one law professors and economists.  Predictions of a unanimous ruling against the Federal Circuit are not hard to find.  Indeed, TC Heartland looks like other recent cases in which the Supreme Court has reversed the Federal Circuit without breaking a sweat:  It involves a procedural-type rule so favorable to patent owners that, one could easily assume, it must conflict with the rules in other areas of federal litigation.

The Federal Circuit, in the caselaw on review in TC Heartland, has interpreted the patent venue statute to allow patentees to sue corporations for patent infringement in any district where personal jurisdiction exists.  For companies that sell products nationwide, venue is proper almost anywhere, and that enables litigation to cluster in places like East Texas.  Surely, the conventional wisdom seems to be, the Supreme Court will not permit the Federal Circuit to make the venue statute a dead letter in most patent cases.

In our forthcoming article, we defend the Federal Circuit’s venue doctrine, and we challenge the notion that Federal Circuit venue law is outside the mainstream.  As we explain in detail, the expansive venue options available in patent cases are consistent with historical trends in venue law more generally.  For over a century, Congress has steadily expanded plaintiffs’ venue choices, particularly in cases against corporations.  In fact, the Wright and Miller treatise has gone so far as to say that Congress has “nearly eliminate[d] venue as a separate restriction in cases against corporations.”  Venue in patent cases, simply put, is just like venue in other federal cases.

In the article, we also explain why the Federal Circuit’s interpretation of the venue statute is doctrinally sound.  Though the relevant statutes are somewhat complicated and have been amended several times, our defense of the Federal Circuit’s venue law is simple.  It is based on the plain language of two sections of the Judicial Code:  28 U.S.C. §§ 1391(c) and 1400(b).  Section 1391(c)(2), a subsection of the general venue statute, says that, “[f]or all venue purposes,” corporate defendants “reside” in any district in which they are subject to personal jurisdiction.  Section 1400(b), a venue statute specifically for patent infringement cases, says that infringement suits may be brought, among other places, “where the defendant resides.”  Reading the two statutes together, a corporation can be sued for patent infringement in any district in which it is subject to personal jurisdiction—just like in all other types of federal cases.  That is precisely what the Federal Circuit held in its seminal 1990 decision, VE Holding Corp. v. Johnson Gas Appliance Co.

Of course, there’s more law on this issue than the statutes alone.  The petitioner in TC Heartland argues that the question presented is “precisely the same” as in Fourco Glass Co. v. Transmirra Products Corp., a 1957 decision in which the Supreme Court held that the general venue statute—as it read at the time—did not supplement the patent venue statute.  The Court in Fourco relied heavily on its 1942 decision, Stonite Products Co. v. Melvin Lloyd Co., in which the Court interpreted an even older version of the venue statute and held that, in patent infringement cases, a defendant “resided” only in the state in which it was incorporated.

The petitioner in TC Heartland, building on the theme of “patent exceptionalism” that has resonated with the Supreme Court in recent years, claims that the Federal Circuit has ignored this authoritative Supreme Court precedent.  As we explain in the article, however, even if the Supreme Court decided Fourco correctly (which is not beyond doubt), the general venue statute today is far different than it was at the time of Fourco.  Recent amendments to the statute make plain that the definition of corporate residence in the general venue statute does in fact apply to the patent venue statute.

To be sure, as a matter of policy, granting plaintiffs unbridled discretion over choice of forum in patent litigation may be problematic.  It has incentivized judges, particularly in East Texas, to adopt rules and practices favorable to patent holders in an effort to attract cases.  It has encouraged litigants to engage in unseemly tactics to influence prospective jurors. Ultimately, discretion in forum choice can threaten innovation by facilitating nuisance litigation.  But, contrary to the prevailing wisdom, these problems are emphatically not the result of a misinterpretation of the venue statute by the Federal Circuit, nor does Federal Circuit venue doctrine reflect any sort of patent exceptionalism.

There are better ways to reform the law of forum selection in patent cases.  Congress could amend the venue statute.  Or it could reduce the incentive for litigants to forum shop—and the ability of district judges to “forum sell”—by mandating increased procedural uniformity in patent cases.  Or the Supreme Court could alter personal jurisdiction doctrine, which, for corporate defendants, is tightly linked to venue.  Later this Term, the Court will decide a personal jurisdiction case that could have major consequences for patent litigation.

For a more detailed explanation of these points, read our draft article, which is forthcoming in a terrific symposium issue of the American University Law Review.

Megan La Belle is Associate Professor of Law at Catholic University of America.
Paul Gugliuzza is Associate Professor of Law at Boston University School of Law. 

First Possession and Patent Law

This is a bit abstract, but I’m wondering how you might describe the actual moment that a patent issues in terms of the creation of a new property right and transfer of that right to the patentee.  If we could slow-down time to look at what exactly happens: Is the right first created by the government and then granted to the patentee? Or, is the right simply created already in the hands of the patentee.  Assuming the inventor is no longer the right-holder, does anything pass through the inventor’s hands at that moment?

In the “land patent” system, ownership is originally vested in the sovereign and then transferred to the recipient, but it seems to me that the patents on inventions probably work differently.  In the end, I expect that this may have some impact on the public-rights cases. -DC

Claim Construction: “support an entire body”

by Dennis Crouch

I have been waiting for the Federal Circuit’s decision in Metalcraft of Mayville (Scag Power) v. Toro.  In my patent law class last semester, we used the appeal of a preliminary injunction order as the basis for our 5th annual Patent Law Moot-Court Competition (sponsored by McKool Smith).  I want to also thank the attorneys at Boyle Fredrickson and Merchant & Gould for being good sports and providing us with documents from the case.

[Read the Decision: 16-2433-opinion-2-14-2017-11]

SCAG and TORO are competitors in the lawnmower market.  In 2016, SCAG sued TORO for infringing its U.S. Patent No. 8,186,475 that covers a vehicle (lawnmower) having an operator-platform-suspension-system. This design differs from the more traditional seat-suspension because it supports the “entire body” of the operator and helps reduce harmful shock and vibrations on users.

In the case, the district court issued a preliminary injunction against Toro to cease “making, using, selling, and offering to sell lawnmowers equipped with platform suspension systems that infringe SCAG’s patent.”  Toro appealed both the merits of the infringement case (under a proper claim construction, no infringement) and also the terms of the injunction (Failure of the injunction order to include “reasonable detail” as required by Fed. R. Civ. Pro. 65(d)).  On appeal, the Federal Circuit has affirmed, but with a slightly modified injunction.

The patent drawing below an operator platform that supports the foot rest and the seat.  In the patent drawings, the hand-controls (55) are also supported by the operator platform. However, in the accused Toro lawnmower, the controls are directly attached to the chassis and thus not supported by the operator platform.

scagpatentimage

The claims require that the operator platform “support an entire body of an operator” during operation use of the vehicle.  Toro argued that users of its mowers must keep their hands on the hand-controls during operation and – since hands are part of the body – their platform does not support the “entire body.”  On appeal though, the Federal Circuit rejected that argument for narrowing claim scope.  Most importantly, the court found that the claims do not specifically require steering controls mounted to the operator platform.  Moving from there, the court attempts (but in my view fails) to adequately address the core argument:

Moreover, the specification makes clear that the operator platform supports the entire body and that steering controls are connected to, but not part of, the operator platform. The specification consistently distinguishes the operator platform from components that may be attached to it.

The court here seems to suggest that the platform must directly support the entire body rather than through a component.  The problem with this argument is the seat (another component attached to the platform) actually supports most of the operator’s body.  For the claim to make any sense, the platform’s support function must pass through these attached components.

By accepting the broader claim construction, the court was also able to affirm the finding that Scag is likely to succeed on the merits of the case (proving infringement). Here, the district court’s order enjoins Toro from “making, using, selling, and offering to sell lawnmowers equipped with platform suspension systems that infringe Scag’s patent, U.S. Patent No. 8,186,457.” J.A. 6. Toro argues the district court’s preliminary injunction is overly broad. We do not agree. The Decision and Order in which the district court grants the motion for the preliminary injunction discusses both the claims at issue as well as the defendants’ accused products which it enjoins. J.A. 6–18. Claim 21 was argued to cover all the accused products, and Toro has made no meaningful arguments which delineated among the accused products. We have affirmed the district court’s conclusion that the patentee has established a likelihood of success that the accused products infringe claim 21 and that there is not a substantial question of validity as to claim 21. In such a case, we affirm the preliminary injunction as to the accused products.

Scope of the Injunction: Fed. R. Civ. Pro. R. 65(d)(1) requires that every order granting an injunction to “state the reasons why it issued; state its terms specifically; and describe in reasonable detail—and not by referring to the complaint or other document—the act or acts restrained or required.” Here, the order stated merely that TORO must cease “making, using, selling, and offering to sell lawnmowers equipped with platform suspension systems that infringe SCAG’s patent, U.S. Patent No. 8,186,475.”  On appeal, the Federal Circuit affirmed the order, with the caveat of limiting it to the accused products. “We affirm the preliminary injunction as to the accused products.”

Whether a Patent Right is a Public Right

publicprivate

by Dennis Crouch

Another interesting en banc petition by Robert Greenspoon and Phil Mann: Cascades Projection v. Espon and Sony, Appeal No. 17-1517 (Fed. Cir. 2017).  The petition asks one question: “Whether a patent right is a public right.” Of course, the Federal Circuit has already decided this in MCM – which is why the petitioner is bypassing the initial appeal and asking directly for an en banc hearing.

[S]ince this Court has not had a chance (as a full court) to consider the exceptionally important constitutional question, since intervening decisions after MCM have encroached upon the MCM constitutional holding, since patentees continue to bring the same constitutional challenge in hopes of overturning the MCM constitutional holding, and since overturning the MCM holding will potentially reduce this Court’s ballooning USPTO docket, Appellant seeks initial en banc review.

The “public rights” issue is complicated, but the basic outcome is simple – if patents rights are not public rights (but instead private rights) then an administrative agency cannot lawfully revoke a patent once issued (without the permission of the patentee).

The Supreme Court appeared to speak directly on this issue in McCormick Harvesting Mach. Co. v. Aultman-Miller Co., 169 U.S. 606 (1898):

The only authority competent to set a patent aside, or to annul it, or to correct it for any reason whatever, is vested in the courts of the United States, and not in the department which issued the patent. Moore v. Robbins, 96 U. S. 530, 533; U. S. v. American Bell Tel. Co., 128 U. S. 315, 364, 9 Sup. Ct. 90; Lumber Co. v. Rust, 168 U. S. 589, 593, 18 Sup. Ct. 208.

Although the direct case is 100+ years ago, we’re still working with the same United States Constitution that protects private property rights against governmental intrusion that violate due process and equal protection principles.

In MCM, the Federal Circuit distinguished these old cases by noting that patent office cancellations were not authorized by Congress: “McCormick … certainly did not forbid Congress from granting the PTO the authority to correct or cancel an issued patent.” MCM (opinion by Judge Dyk, joined by Judges Prost and Hughes).  The petition offers several responses: (1) McCormick does not actualy provide the ‘statutory caveat’ but instead limits PTO authority “for any reason whatever.” (2) The reissue statute in force in McCormick did expressly authorize examiners to reject the issued claims – whether original or amended. Thus, the McCormick decision did limit the power of Congress to increase PTO power.

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One of the petitioner’s justifications for en banc review here is that it might allow the court to limit its docket.  In the process, the petition cites my recent Wrongly Affirmed Without Opinion article for the proposition that the court’s opinion writing docket may soon be further ballooning. “If Professor Crouch is right, it could be serendipitous if the Court overrules MCM, thus reducing docket load through reduction of incentives of patent owners to appeal.”

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= = =

The public/private divide is, in reality, a false dichotomy since the Court is comfortable with the notion of “quasi-private right” — which has the aspects of a private property right, but which can be subjected to administrative agency control.  A key recent opinion on point is B&B Hardware (2015) – albeit the dissent by Justice Thomas (with Scalia):

Trademark registration under the Lanham Act has the characteristics of a quasi-private right. Registration is a creature of the Lanham Act, which “confers important legal rights and benefits on trademark owners who register their marks.” Because registration is merely a statutory government entitlement, no one disputes that the TTAB may constitutionally adjudicate a registration claim.

By contrast, the right to adopt and exclusively use a trademark appears to be a private property right that “has been long recognized by the common law and the chancery courts of England and of this country.” In re Trade–Mark Cases, 100 U.S. 82, 92, 25 L.Ed. 550 (1879). As this Court explained when addressing Congress’ first trademark statute, enacted in 1870, the exclusive right to use a trademark “was not created by the act of Congress, and does not now depend upon it for its enforcement.” Ibid. “The whole system of trade-mark property and the civil remedies for its protection existed long anterior to that act, and have remained in full force since its passage.” Ibid. Thus, it appears that the trademark infringement suit at issue in this case might be of a type that must be decided by “Article III judges in Article III courts.” Stern, 564 U.S., at ––––, 131 S.Ct., at 2609.

B & B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293, 1317, 191 L. Ed. 2d 222 (2015) (Thomas, J. Dissenting).

Federal Circuit to PTO: EXPLAIN WITH PARTICULARITY AND EVIDENCE

PersonalWeb Tech v. Apple (Fed. Cir. 2017) [personalweb]

Following an administrative trial, the PTAB found the challenged claims of PersonalWeb’s Patent No. 7,802,310 obvious based upon a combination of two prior art references.  On appeal, however, the Federal Circuit has vacated the judgment – holding that the Board’s factual findings  were not supported by substantial evidence. In particular, the Federal Circuit could not find substantial evidence for the conclusions (1) that the prior art taught each element of the challenged claims or (2) that PHOSITA would have been motivated to combine the references to form the invention as claimed.

Substantial Evidence: For me, the substantial evidence rule is a misnomer because it suggests that a decision is based upon a substantial amount of evidence (and thus seems like a reasonable approach).  I would rename it as the “scintilla rule” because, under the rule, factual conclusions made by the PTAB are affirmed on appeal so long as supported by “more than a mere scintilla” of evidence.  I previously wrote:

[T]o be clear, the appellate court will affirm a factual determination even when that determination is likely wrong so long as some amount of evidence supports the determination. We have all heard the adage that ‘reasonable minds can differ.’ I think of the substantial evidence rule as a relaxed version that ‘somewhat reasonable minds can differ.‘ Or, in other words, the PTO’s factual determinations will be affirmed if somewhat reasonable.

Although the PTAB burden is not great, the Board must fully explain its conclusions and their bases.  (This is a major difference when compared with the ‘black box’ of a jury trial).  As part of its explanation, the Board must also specifically contend with evidence that “detracts from an agency’s decision.”  The court explained in its 2002 Lee decision:

For judicial review to be meaningfully achieved within these strictures, the agency tribunal must present a full and reasoned explanation of its decision. The agency tribunal must set forth its findings and the grounds thereof, as supported by the agency record, and explain its application of the law to the found facts.

In re Lee, 277 F.3d 1338, 1343 (Fed. Cir. 2002).  That is, the Board, “must articulate ‘logical and rational’ reasons for its decision.” (quoting Synopsys).

Here, the court explained that the rational in an obviousness case includes

  1. Particularly identifying where each element of each claim is taught by the prior art references.  Here, the Board failed to explain the particular location within Woodhill that taught the claim limitation of comparing a name with a “plurality of values.” (yes, that’s right.)
  2. Explaining the motivation to combine.

Explaining motivation to combine is a big deal because it comes up in almost every patent case before the PTO. Here, the Board simply wrote that:

“a person of ordinary skill in the art reading Woodhill and Stefik would have understood that the combination of Woodhill and Stefik would have allowed for the selective access features of Stefik to be used with Woodhill’s content-dependent identifiers feature.”

On appeal, the Court found that justification inadequate.

Indeed, the Board nowhere clearly explained, or cited evidence showing, how the combination of the two references was supposed to work. At least in this case, such a clear, evidence-supported account of the contemplated workings of the combination is a prerequisite to
adequately explaining and supporting a conclusion that a relevant skilled artisan would have been motivated to make the combination and reasonably expect success in doing so. . . .

A brief explanation may do all that is needed if, for example, the technology is simple and familiar and the prior art is clear in its language and easily understood. See Ariosa, 805 F.3d at 1365–66. On the other hand, complexity or obscurity of the technology or prior-art descriptions may well make more detailed explanations necessary. Here, the Board’s explanation is wanting. Apple’s attempts in this court to explicate both the Board’s explanation and the underlying evidence do not persuade us otherwise.

On remand, the Board will give it another go – and we’ll see whether the exercise of actually explaining its reasoning causes the Board to change its mind as well.

= = = = =

My explanation of the case skipped over details of the patent at issue.  Claim 1 is shown below and basically includes three steps: (a) sending a “content based name” for a data-item from one computer to another; (b) check to see if the name is on a list; and (c) grant or deny access to the data-item depending upon the result of (b).

1. A computer-implemented method … comprising the steps:

(a) at a first computer, obtaining a content-based name for a particular data item from a second computer …, the content-based name being based at least in part on a function of at least some of the data which comprise the contents of the particular data item, wherein the function comprises a message digest function or a hash function, and wherein two identical data items will have the same content-based name; and

(b) … a processor at said first computer ascertaining whether or not the content-based name for the particular data item corresponds to an entry in a database comprising a plurality of identifiers; and

(c) based at least in part on said ascertaining in (b), determining whether or not access to the particular data item is authorized.

The patentee claims that Apple’s iTunes and iCloud services infringe.

USPTO Still Michelle Lee’s For Now

What an oddity – for the past 26 days, it has been an open secret that Michelle Lee remains USPTO Director but officials at the office have repeatedly refused to confirm or deny that role or to provide any answer to the question “Who is in charge at the USPTO?”

According to a Politico squib report, both Rep. Darryl Issa and USPTO PR Director Paul Fucito have confirmed that Dir. Lee is “in charge” but it is unclear whether she is still USPTO Director.

Paul Fucito tells [Politico Reporter] Nancy that Lee has been signing the certificates since since Inauguration Day. That function by law is handled by the director, but Fucito declined to clarify Lee’s status at the agency.

[Politico Report]  I requested both confirmation and further comment from the USPTO and Department of Commerce and was provided with “no comment.”

Representative Issa is now the Congressman with the most direct influence and oversight of USPTO activities in his role as chair of the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet.   Also communicating with Politico, Issa indicated his support for Dir. Lee but suggested that she may be transitioned into another administration role outside of the USPTO – such as trade negotiations or as a member of the Office of Science and Technology Policy.  Thus, we may still have a new USPTO director this spring.

We will not begin to see action until a Commerce Secretary (likely Mr. Ross) is confirmed and puts in place his pick for PTO Director.  This will likely happen next week.

For anyone pushing patent reform this term – either at the PTO or in the courts, you should recognize that all roads lead through Rep. Issa – nothing will go forward without his direct support.

 

 

Patentlyo Bits and Bytes by Anthony McCain

Get a Job doing Patent Law                  

Scan-to-Email Patent Finally Done; Claim Scope Broadened by Narrow Provisional Application

MPHJ Tech v. Ricoh (Fed. Cir. 2017)[16-1243-opinion-2-9-2017-11]

MPHJ’s patent enforcement campaign helped revive calls for further reform of the patent litigation system.  The patentee apparently mailed out thousands of demand letters to both small and large businesses who it suspected of infringing its scan-to-email patents.  The primary patent at issue is U.S. Patent No. 8,488,173.

Ricoh, Xerox, and Lexmark successfully petitioned for inter partes review (IPR), and the PTAB concluded that the challenged claims (1–8) are invalid as both anticipated and obvious.[1] On appeal, the Federal Circuit has affirmed.

Claim 1 is a fairly long sentence – 410 words, but basically requires a scanner with the ability to both store a local file and also email a file that can be operated with a “go button” followed by “seamless” transmission.  The patent itself is based upon a complex family of 15+ prior US filings, most of which have been abandoned, with the earliest priority filing of October 1996.

Although more than 20 years ago, there was prior art even back then.  However, the identified prior art process was apparently not entirely “seamless” in operation. On appeal, the patentee asked for a narrowing construction of the claim scope to require “a one-step operation without human intervention.”  Unfortunately for MPHJ, the claims are not so clear.

Relying upon the Provisional to Interpret the Claims: Attempting to narrow the claim scope, MPHJ pointed to one of the referenced provisional applications that disclosed a “one step” process requiring the user to simply push “a single button”  On appeal, the Federal Circuit agreed that the provisional is relevant, but not how MPHJ hoped. Rather, the court found that the fact MPHJ omitted those limiting statements when it drafted the non-provisional serves as a suggestion that the claims were not intended to be limited either.

We agree that a provisional application can contribute to understanding the claims.[2] . . . In this case, it is the deletion from the ’798 Provisional application that contributes understanding of the intended scope of the final application. . . . We conclude that a person of skill in this field would deem the removal of these limiting clauses to be significant. The [challenged] Patent in its final form contains no statement or suggestion of an intent to limit the claims to the deleted one-step operation. Neither the specification nor the claims state that this limited scope is the only intended scope. Instead, the ’173 Patent describes the single step operation as “optional.” . . . A person skilled in this field would reasonably conclude that the inventor intended that single-step operation would be optional, not obligatory.

MPHJ’s efforts really should be written up as a case-study.  Unfortunate for patentees that this is the case members of the public will continue to hear about for years to come.

For patent prosecutors.  Here we have another example of how a low-quality provisional filing failed the patentee.  Now, you have to recognize that changes you make when filing the non-provisional will be used against you in the claim construction process.  While there may be ways to use this strategically, I expect that more patentees will be trapped than benefited.

 

 

 

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[1] Ricoh Ams. Corp. v. MPHJ Tech. Invs., No. IPR2014-00538, 2015 WL 4911675, (P.T.A.B. Aug. 12, 2015).

[2] See Trs. of Columbia Univ. in New York v. Symantec Corp., 811 F.3d 1359, 1365 (Fed. Cir. 2016) (looking to the provisional application for guidance as to claim construction); Vederi, LLC v. Google, Inc., 744 F.3d 1376, 1383 (Fed. Cir. 2014) (same).

IPO’s Next Legislative Proposal: 35 U.S.C. 103

commonsenseFollowing IPO’s recent proposal to effectively eliminate 35 U.S.C. 101, a Patently-O reader (“MM”) proposed the following amendment to 35 U.S.C. 103 for the organization’s consideration:

35 U.S.C. 103:  A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Common sense shall not be used or references in any part of the analysis of the claim. Under no circumstances will any element in the claim be deemed to be non-limiting for any reason. Individual claim elements, whether or not disclosed by the prior art, shall never be discussed or analyzed separately from the other claim elements. The term ‘monopoly’ must never appear in the analysis.

(Added language underlined.) According to the anonymous Patently-O reader, this would make it the “Best. Patent. System. Ever.”  Certainly, the provision would take care of KSR v. Teleflex that has been so frustrating for patentees and time consuming for the Court of Appeals.  (Satire).

March 10: Implementing and Evaluating the Defend Trade Secrets Act of 2016.

I am really looking forward to our next event here at Mizzou sponsored by the Center for Intellectual Property and Entrepreneurship.  March 10: Implementing and Evaluating the Defend Trade Secrets Act of 2016Featured Speakers include Berkeley Law Professor Peter Menell and Trade Secrets Expert Mark Halligan (among others).  I am really excited about our dynamic keynote speaker Professor Orly Lobel from the University of San Diego.  Professor Lobel is the author of the great book Talent Wants to Be Free

thumbnail_lobel-author-1

Details:

  • University of Missouri School of Law (Courtroom)
  • March 10, 2017: 8:25 am – 2:00 pm.
  • No cost to attend – CLE as well.

Let me know if you are planning to attend, I would love to meet up in person – Dennis Crouch (crouchdd@missouri.edu)

Enforcing Intellectual Property Theft

President Donald Trump’s first action on intellectual property is buried within his newly released Presidential Executive Order on Enforcing Federal Law with Respect to Transnational Criminal Organizations and Preventing International Trafficking.   The executive basically orders the already existing inter-agency Threat Mitigation Working Group to delve further into its already-existent mission of fighting transnational organized crime.  The primary action item is a report due in June 2017 that discusses the extent of penetration of those organziations into the US and mechanisms for combating their crimes.

The IP part is small:

Policy. It shall be the policy of the executive branch to (a) strengthen enforcement of Federal law in order to thwart transnational criminal organizations and subsidiary organizations, including criminal gangs, cartels, racketeering organizations, and other groups engaged in illicit activities that present a threat to public safety and national security and that are related to, for example . . . intellectual-property theft.

Theft here suggests a crime – and so we are probably talking primarily about criminal copyright infringement and identity theft.

“Consisting Of” Creates Closed Group and Provides Avenue to Avoid Infringement

Shire Development v. Watson Pharma (Fed. Cir. 2017) [16-1785-opinion-2-8-2017-11]

In a short opinion, the Federal Circuit has reversed a lower court infringement claim — holding instead that Watson’s generic product does not infringe.

In U.S. Patent law, it is an act of infringement to file an Abbreviated New Drug Application (ANDA) with the Food and Drug Administration (FDA) seeking to market a generic version of a patented drug listed in the FDA Orange Book.  That is just what Watson did here and Shire sued on its U.S. Patent No. 6,773,720.  The drug at issue is LIALDA, a mesalamine drug used to treat ulcerative colitis.  The claimed compound includes the following limitation:

said outer hydrophilic matrix consists of compounds selected from the group consisting of polymers or copolymers of acrylic or methacrylic acid, alkylvinyl polymers, hydroxyalkyl celluloses, carboxyalkyl celluloses, polysaccharides, dextrins, pectins, starches and derivatives, alginic acid, and natural or synthetic gums;

The basic question on appeal the scope of the claimed Markush group and whether it is a “closed group.”   In other words: is the hydrophilic matrix limited only to substances in the list.  This issue is a deciding factor in the case because Watson’s proposed generic version includes an inner hydrophilic matrix with additional substances not listed.

Consisting Of: In its analysis, the Federal Circuit began by recognizing that the phrase “consisting of” and “consists of” are terms of art in patent claims and “creates a very strong presumption that that claim element is ‘closed’ and therefore ‘exclude[s] any elements, steps, or ingredients not specified in the claim.'” quoting Multilayer Stretch Cling Film Holdings, 831 F.3d 1350, 1358 and AFG Indus., Inc. v. Cardinal IG Co., 239 F.3d 1239, 1245 (Fed. Cir. 2001). Although the presumption of standard meaning can be overcome, it requires that the patentee have documented the redefinition during prosecution in ways ““unmistakably manifest.”  However, as an exception to the standard meaning, the court may still find infringement when elements are added to the group that are “unrelated to the invention.” Norian Corp. v. Stryker Corp., 363 F.3d 1321, 1331 (Fed Cir. 2004).

Here, the generic proposal includes magnesium stearate within the matrix.  Citing Noriam, the district court still found infringement – noting that magnesium stearate is lipophilic and therefore including it within the hydrophilic outer matrix was “unrelated to the invention.”

On appeal, the Federal Circuit has reversed – noting that the “unrelated” exception is a “rare exception” to the general rule that “consisting of” closes the group.  The court explained here that the existence of magnesium stearate would certainly impact the invention by placing a lipophilic compound in an area designed to be hydrophilic.

When the outer, hydrophilic matrix interacts with a person’s digestive fluids, the matrix creates a swollen barrier preventing aqueous solution from reaching the inner, lipophilic matrix. This delay permits the product to proceed through the digestive system until the water breaks apart the outer matrix, releasing the lipophilic granules.

The court here found that the adding mag stearate to the outer layer has the potential of changing this process.  As such, the Norian exception does not apply, and Shire’s Markush claim is closed.  No infringement.

Question: Tell me why did Shire use “consisting of” instead of “comprising” or “consisting essentially of”?

Answer: In response to this inquiry, a reader correctly pointed us to MPEP 2173.05(h), which states” “It is improper to use the term ‘comprising’ instead of ‘consisting of’ [in a Markush group.]”  Citing Ex parte Dotter, 12 USPQ 382 (Bd. App. 1931).  In Dotter, the patentee sought a patent on an air purifier apparatus that relied upon a “mass of loose granules of a natural material of the group comprising wood and grains.”  Although the Board objected to the use of “comprising”, it did not explain the legal basis for its objection. Board wrote:

The word “comprising” does not exclude other materials besides wood and grains. It is considered that the word “consisting” would be more appropriate in this relation in confining the material strictly to these materials –wood and grains. If this formal change is made in claim 17 it may be allowed.

The word “comprising” does not exclude other materials besides wood and grains. It is considered that the word “consisting” would be more appropriate in this relation in confining the material strictly to these materials –wood and grains. If this formal change is made in claim 17 it may be allowed.

It turns out that the MPEP’s quote is from a case, just not Dotter.  It comes from In the precedential case In re Harnish, 631 F.2d 716, 723 (C.C.P.A. 1980)(“It is improper to use the term ‘comprising’ instead of ‘consisting of.'”)  Again, however, the court fails to justify its reasoning or basis for that objection. However, there is a slight suggestion elsewhere in the decision that the objection might be based on lack of unity of invention.

An interesting bit of the claim at issue here is that they make double-use of the consist/consisting of language.

said outer hydrophilic matrix consists of compounds selected from the group consisting of

I wonder whether the PTO would object to a reformulation claiming the “matrix comprising compounds selected from the group consisting of …” Thoughts?