August 2007

Continuation Rules to Issue August 21

Patent, , ,

After some persistence, the PTO revealed the substance of the new continuation rules to Dow Jones reporter Stuart Weinberg:

Applicants will have the right to file two so-called continuations and one request for continued examination. Applicants seeking additional continuations will need to explain why the request is necessary. Current practice allows applicants to file an unlimited number of continuations. . . . [The PTO also] plans to limit the number of claims an applicant may include in an initial application to 25. Applicants that include more than 25 claims will be required to include a prior-art search, a detailed report that explains how their invention differs from what’s already in the public domain. The new rules, which will be published on the PTO’s Web site Tuesday [August 21], are scheduled to go into effect Nov. 1.

…The number of continuation requests has been rising in recent years. In 2006, almost 30% of applications were devoted to continuation requests, up from 27% in 2005 and 25% in 2004, Peterlin said. . . . Peterlin alluded to misuse of continuations when discussing the pending rule changes. “What we have found is, sometimes, people engage in a little
post-filing research,” she said, adding that, while this may make good business sense, it doesn’t make for an effective patent system.

Although we have not seen the final rules, it appears that applicants will not be losing rights at the time the final rules are published. Rather, the new rules will become effective on November 1, 2007. Do expect the rules to be retroactive in that they will apply to pending applications.

Pre-view of rules via Venable Law Firm

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2007 Patent Litigation: Timing the Transition from Patent Issuance to Patent Litigation

Academic Studies, Patent

In the past, I have filed patent infringement lawsuits on the same day that the patent issued.  That highly aggressive strategy is not the only approach — many patentees delay years before filing suit.

In order to determine how long patentees usually delay before filing suit, I pulled-up all twenty-one hundred US patents that have been asserted in patent litigation or reexamination cases in 2007. (Restricted to lawsuits filed 1/1/2007 to 8/15/2007 notice of litigation had been filed with the USPTO). 

For cases filed in year 2007, the ‘average’ patent issued seven years ago in 2000. The median issue year was 2001 — a six year delay in filing.  The histogram below provides an idea of the distribution of the number of years between patent issuance and commencement of litigation for the 2007 lawsuits.

Although most lawsuits are filed by the time a patent is six years old, it is striking that about twenty-five percent of the patents in the 2007 lawsuits are more than a decade old.

ScreenShot016

Patent Public Advisory Committee (PPAC)

Patent

It is time again to nominate three new members to the USPTO’s Patent Public Advisory Committee. The PPAC is a group of nine individuals selected by the Commerce Secretary (on the advice of the PTO Director).  The committee’s purpose is to advise the PTO Director on the management of operations of the Office.  The nine-member PPAC is on a three-year rotating schedule.  Each year three new members are appointed. 

Nominations for this year’s appointment may be sent to PPACnominations@uspto.gov. Although formal nominations are required, I’m sure that the Chief of Staff would not mind receiving some informal suggestions as well.

Current PPAC Members:

  • Chair – Kevin Rivette (VP IBM IP Strategy, Author of Rembrandts in the Attic) 2006
  • Maximilian A. Grant (Latham & Watkins Partner)
  • Carl E. Gulbrandsen (Managing Director of WARF)
  • Dean L. Kamen (Inventor of Segway)
  • Gerald J. Mossinghoff (Former PTO Director, Oblon Spivak)
  • Lisa K. Norton (Associate at DLA PIPER)
  • Douglas Patton (Patton Design – Product Designer) 2006
  • M. Andrea Ryan (General Counsel TransForm Pharmaceuticals)
  • W. David Westergard (Patent guy at Micron) 2006

Notes: 

Patent Plaintiffs Continue to Push for Expanded notion of Joint Infringement.

Contributory Infringement, Patent, Patent Cases 2007,

AdvanceME v. RapidPay (E.D. Tex. 2007).

Traditionally, direct patent infringement requires a single actor that causes infringement of each element of the asserted patent claim. An agency doctrine allows for multiple actors acting under control of a single entity. However, the common law of patents has long resisted calls for liability for any looser form of “joint infringement.”

In AdvanceME, the Texas court provided additional dicta expanding our notion of circumstances where two separate entities can combine to infringe a patent even when neither entity infringes all claim elements. Here, the court finds that multi-actor infringement requires (1) that all elements of the claim be performed and (2) that there be a “sufficient connection” between the accused actors. “A showing of ‘agency’ or ‘working in concert’ is not required.” The sufficient connection could instead “be shown through a contractual relationship.”

According to the court, joint infringement is easier to prove when a patent claim includes steps performed by two entities. The patent at issue here involves claims that move money from a customer to a merchant then to a merchant processor which is directly infringed by the merchant and merchant processor.

The infringement finding is, however, moot as the patent was also found invalid as anticipated and obvious.

Notes:

  • Read the case

  • The issue of joint infringement is “squarely raised” in another case – BMC v. PaymenTech. [See Divided Infringement]. Oral arguments were held in that case in April, and a decision is expected by October.

  • The expanded joint infringement notion is supported by the CAFC’s recent On Demand decision where the court noted that “[i]t is not necessary for the acts that constitute infringement to be performed by one person or entity.”

  • See Cross Medical (“However, if anyone makes the claimed apparatus, it is the surgeons, who are, as far as we can tell, not agents of Medtronic. Because Medtronic does not itself make an apparatus with the “interface” portion in contact with bone, Medtronic does not directly infringe.”)

  • In PharmaStem, the CAFC did not decide the issue, but noted that the “viability and scope of [the theory of joint infringement] liability is a subject of considerable debate.”

  • Applied Interact, LLC v. Vermont Teddy Bear Co., Inc.  2005 WL 2133416 (S.D.N.Y.,2005), the district court noted that infringement by separate entities requires “some connection” between the entities.

  • Free Standing Stuffer, Inc. v. Holly Dev. Co., 187 U.S.P.Q. 323 (N.D. Ill. 1974), requires a “sufficient connection to, or control over” third party entities performing some of the elements.

  • Cordis Corp. v. Medtronic AVE, Inc., 194 F. Supp. 2d 323 (D. Del. 2002) (requiring close relationship between defendant and the doctors performing part of the patented process).

  • Shields v. Halliburton Co., 493 F.Supp. 1376 (W.D. La. 1980) (finding defendants liable for infringement based on the combined actions of two entities).

  • Sriranga Veeraraghavan, Joint Infringement of Patent Claims: Advice for Patentees, 23 Santa Clara Computer & High Tech L.J. 211 (2006),

Unavoidable Delay: Ignorance as an Excuse?

Patent

PatentLawPic012FemSpec (FemSuite) v. Dudas (N.D.Ca. 2007)

Dr. Johnson invented an inflatable speculum for gyne exams. After Dr. Johnson was diagnosed with malignant cancer, the PTO expedited examination and the patent issued a few months before Dr. Johnson committed suicide.  The son, Mr. Johnson (who had no experience with patents) became owner of the patent.  The PTO was not given forwarding address information, and the patent eventually expired due to failure to pay the maintenance fee. After the patent had expired, FemSpec (a Gyne product manufacturer) bought the patent rights.

Late Maintenance Fee: Congress has designated three time-periods for late maintenance fee repayments.

  • Within six months of due date: Late payment always allowed;
  • Within thirty months of due date: Late payment allowed if delay was unintentional;
  • Any time after that: Late payment allowed if delay was unavoidable. 35 USC 41(c).

After purchasing patent rights, FemSpec immediately filed its petition to accept late payment of maintenance fees due to an unavoidable delay – citing the following evidence: 

  • Dr. Johnson was suffering from terminal cancer and was prosecuting the patent pro se – and thus did not provide any instructions for maintenance fees to be paid by his heirs.
  • Even if he had provided a calendar notation of maintenance fees, his heirs would not have understood its meaning because of their lack of patent law experience.
  • Mr. Johnson (the heir) had no idea that a maintenance fee was due. And, because he moved, he did not receive any notice from the PTO regarding fees due.

For an unavoidable delay, however, the PTO requires due care in docketing the relevant dates and a showing that the applicant “treated payment of the maintenance fee as his most important business. In addition, the PTO requires a showing that the entire delay be unavoidable and that, despite all precautions, the patentee was “prevented from making the payment.”

Ignorance as an Excuse: On appeal from the PTO, the District Court noted “that there are situations in which ignorance of the requirements to pay maintenance fees may support a finding of unavoidable delay.” Citing In re Mattulath (D.C. Cir. 1912).  However, the ignorance excuse requires that the unrepresented patent holder make some “effort to inform himself of the legal obligations associated with owning a patent.” See California Med. v. Tecnol Med. (D. Del. 1995).  Complete ignorance of the fact that the patent exists can also create an avoidable excuse.

Petition to for late payment denied — Patent is expired.

Cite: FemSpec L.L.C. v. Dudas, 2007 U.S. Dist. LEXIS 8482 (N.D.Ca. 2007)

DC is Improper Venue for Appeal of PTO Petition by Foreign Patentee

Patent,

PatentLawPic011Michilin Prosperity v. Dudas (D.D.C 2007)

Michilin’s patented shredder is designed for handling both paper and CDs. Michilin’s claim 1 requires a “paper touch switch” and a “disc touch switch.” Claim 4, which depends upon claim 1, indicates a “single touch switch.”  Seeing a technical error, Michilin filed for a certificate of correction to transform claim 4 into an independent claim.  The PTO denied that request — indicating that a reissue may be the proper recourse. Michilin, a Taiwanese company, appealed the PTO’s denial to district court in the District of Columbia.

On appeal, the PTO quickly requested dismissal based on venue — arguing that the case must be brought in Virginia.

Venue Statutes:

  • 28 U.S.C. § 1391(e): Actions against a US Gov’t officer acting in his official capacity must be filed in a jurisdiction where (1) the defendant resides; (2) a substantial part of the claim arises; (3) the property is located; or (4) where the plaintiff resides if no real property is at issue.
  • 35 U.S.C. § 1(b): The residence of an official defendant is the “official residence” of the officer or agency.

The PTO’s Virginia headquarters is both Mr. Dudas’s official residence and the site of the denial of Michilin’s request. That, according to the court makes Virginia the only proper venue for an appeal of this case. Case transferred to E.D.Va.

Two failed arguments:

  1. Dudas is also an officer in the Department of Commerce, which is located in DC. This fails because Dudas is being sued in his capacity as Director of the USPTO.
  2. The patent is “located” in DC because Michilin had filed parallel patent infringement litigation in DC. This argument may have some weight, but failed here because that case had already been dismissed.

Cite: Michilin Prosperity Co. v. Dudas, 2007 U.S. Dist. LEXIS 55216 (D.D.C. July 31, 2007).

CAFC: Patent Attorney Has No Right to Defend Himself Against Charges of Inequitable Conduct

Patent, Patent Cases 2007, Patent Prosecution

Nisus Corp. v. Perma-Chink Sys. v. Michael Teschner (Fed. Cir. 2007).

Nisus Corp’s patent relates to a method of putting Boron in a tree to kill termites and prevent forest fires. After a bench trial, the patent was found unenforceable due to inequitable conduct.  Apparently, Nisus had failed to disclose material documents from a prior lawsuit involving closely related patents.  The court specifically mentioned Nisus’s former patent attorney, Michael Teschner, as one cause of the inequitable conduct.

Teschner sued to intervene in the case and clear his name, but the district court denied him the opportunity. On appeal, the CAFC likewise found Teschner without standing.

Appeal by Nonparty: Usually, a nonparty has no standing to appeal. However, an attorney that is formally reprimanded may appeal to the CAFC.  However, other (informal) “judicial criticisms of lawyers’ actions are not reviewable.”  The court’s comments regarding Teschner here do not rise to a formal reprimand, and thus offer no standing for appeal.

To allow appeals by attorneys, or others concerned about their professional or public reputations, merely because a court criticized them or characterized their conduct in an unfavorable way would invite an appeal by any nonparty who feels aggrieved by some critical statement made by the court in an opinion or from the bench. Treating such critical comments by a court as final decisions in collateral proceedings would not only stretch the concept of collateral proceedings into unrecognizable form, but would potentially result in a multiplicity of appeals from attorneys, witnesses, and others whose conduct may have been relevant to the court’s disposition of the case but who were not parties to the underlying dispute. Nor would it be appropriate to limit such appeals to attorneys, while forbidding others from appealing from critical court comments, as such a limitation would smack of special treatment for members of the bar and would be difficult to justify as a matter of principle.

Thus, a finding of inequitable conduct does not create any standing for an aggrieved prosecuting attorney to appeal.

Postscript: Mr. Teschner declined my offer for an interview, noting that the matter is still pending at the PTO. His lone statement is that he is “glad that the Federal Circuit found merit in [his] argument.”

Overall, has your company made money from the patent system?

Academic Studies, Articles and Publications, Business Developments, Patent

On August 7–8, 2007, I conducted a simple survey through Patently-O. [See Survey].  Readers were asked whether the patent system, taken as a whole, had been positive (made money) or negative (lost money) for their company.  The results below show the responses of 131 corporate employees who are all highly involved with their company patents.

The results here follow a predictable pattern: On average, pharmaceutical companies see patents as a profit center while software companies see patents as an overall loser.  (At 95%CI, Software & EE results each differ significantly from Pharm results).

PatentLawPic010

Notes:

  • Next time: Is this an important question?
  • The Survey [LINK]
  • Bessen & Meurer: Negative Return on the Patent System
  • On the process:
    • The above graph merges responses from small corporations with those from large corporations. It also excludes individuals at law firms, government entities, and educational institutions. 
    • Individuals responded to the question: “Overall, has your company made money from the patent system?”  There were three potential responses: “Clearly positive (made money”, “Unsure whether positive or negative”, and “Clearly negative (lost money).” For the graph above, these responses were converted to a simple numerical scale: 1, 0, and -1, respectively. The y-axis above ranges from -1 to 1.

Priority to Foreign Application Requires “Inventor’s Knowledge or Consent” at the Time the Foreign Application was Filed

Inventors, Patent, Patent Cases 2007, Priority Rights, Statutory Construction

PatentLawPic009Boston Scientific SciMed v. Medtronic Vascular (Fed. Cir. 2007).

SciMed’s patent application was originally filed by a European company (MinTec) in February 1994 as an European Patent Application. At that time, however, the inventors (Cragg & Dake) had not yet assigned rights to MinTec. Cragg assigned his rights a few months later. Dake did not assign his rights until 1996.

Medtronic has a US priority filing date of June 1994 on the same invention. In the interference, the question is whether a US patent applicant claim priority to a foreign application filed by an entity that was not acting on behalf of the US applicant at the time of filing? CAFC Answer: No priority unless foreign application was filed on behalf of the US applicant.

Under the court’s ruling here, 35 USC 119(a) provides a personal right to the inventor. Consequently, there must be a “nexus…between the inventor and the foreign applicant at the time the foreign application was filed.” That nexus requires at least “knowledge or consent” of the inventor.

“Indeed, as a matter of pure logic, an entity could not have filed a foreign application “on behalf of” an inventor without the inventor’s knowledge or consent; that the foreign application may have been filed in accordance with the laws of the country in which it was filed has no bearing here.”

Holding:

“[A] foreign application may only form the basis for priority under section 119(a) if that application was filed by either the U.S. applicant himself, or by someone acting on his behalf at the time the foreign application was filed.” (emphasis in original)

Notes:

  • This decision [LINK]: Scimed Life Sys., Inc. v. Medtronic Vascular, Inc., — F.3d — (Fed. Cir. 2007).
  • Final BPAI Decision: Patent Interference No. 104,192, Paper No. 187, 2001 WL 1339890 (B.P.A.I. July 21, 2001).
  • Trial Court Decision: Scimed Life Sys., Inc. v. Medtronic Vascular, Inc., 486 F. Supp. 2d 60 (D.D.C. 2006).

 

Survey: Is the patent system beneficial for your company or clients?

Patent

Patent holders make money from their patents in lots of different ways. They may, for instance, receive a check based on a licensing agreement or infringement damage awards; or raise prices after excluding competitors from their market niche.  Of course, those same companies will also spend money on patents — paying for prosecution and litigation of their own patents; licensing and litigating against other patents; and avoiding market opportunities because of competitor patents.

When you have a few moments, please complete the following survey on the microeconomics of patents:

======================================================

Where do you work: Law Firm
Large Corporation
Small Corporation
Government
Educational
Other
Major area of technology for your company / clients: Biotechnology
Electrical / Electronic
Mechanical
Software
Other Chemical
Pharmaceutical
Other
How involved are you with your company / client's patents: Highly involved
Somewhat involved
Not involved
Overall, has your company made money from the patent system? Clearly positive (made money)
Unsure whether positive or negative
Clearly negative (lost money)
Please explain why your company/client made/lost money.
Email Address: (OPTIONAL)

free forms

V-Chip Declaratory Judgment Patent Case Reinstated by CAFC

Declaratory Judgment, Patent, Patent Cases 2007

VchipSony Electronics v. Guardian Media (Fed. Cir. 2007).

Guardian holds several patents for blocking naughty TV shows based on program classification codes. In 1999, Guardian sent a “notice of patent infringement” to Sony asserting that its V-Chip products “infringe the claims,” and later followed-up with a claim chart. Four years later, Guardian sent another letter offering to license its patents. After unsuccessful negotiations, Sony filed a declaratory judgment action in the Southern District of California — alleging non-infringement, invalidity, and unenforceability.

On motion, the district court dismissed the suit for lack of declaratory judgment jurisdiction — finding no actual controversy as required by the Constitution. In particular, the court noted that Guardian had not threatened to sue and the circumstances did not imply a threat of immediate suit. The court then went on to hold that even if jurisdiction existed it would use its discretion to decline hearing the case because (1) the question of jurisdiction is “close” and (2) it appears that the DJ plaintiffs are using the case as a negotiation tool rather than as a means to settle the dispute.

Particular Adverse Positions => DJ Jurisdiction: On appeal, the CAFC determined that an actual controversy certainly existed between Sony and Guardian at the time of the complaint. The parties had taken particular adverse positions regarding infringement and validity (associating particular claims with particular products; requesting a particular amount of money; arguing whether particular prior art references demonstrated particular claim elements). The facts of this dispute make it “manifestly susceptible of judicial determination.” (quoting 300 US 227 (1939)).

In short, because Guardian asserts that it is owed royalties based on specific past and ongoing activities by Sony, and because Sony contends that it has a right to engage in those activities without a license, there is an actual controversy between the parties within the meaning of the Declaratory Judgment Act.

Discretionary Dismissal: The Declaratory Judgment Act allows a court “substantial discretion” not to hear cases even when there exists an actual controversy. However, here, the CAFC found that the lower court’s two reasons for declining to hear the case were arbitrary and thus insufficient. Specifically, the question of jurisdiction is not a close call as the lower court had determined — rather it was only close because of an error of law. Additionally, the CAFC could not discern any “affirmative evidence” of plaintiffs’ nefarious reasons for filing suit.

Vacated and remanded to determine whether there may be other reasons for discretionary dismissal.

Notes:

  • Four other DJ plaintiffs had similar experiences and are discussed in the decision.

Summary Judgment of Non-Infringement: Downward Force <> Upward Force

Patent, Patent Cases 2007, Summary Judgment

SafeTCare v. Tele-Made (Fed. Cir. 2007).

SafeTCare’s patent covers a bariatric hospital bed designed for obese patients. On summary judgment, the district court found that the Tele-Made beds do not infringe. Other defendants and counterclaims are still pending.

Jurisdiction: On appeal, the CAFC sua sponte questioned jurisdiction. Because the judgment was not complete as to all parties and the judge had not issued a Rule 54(b) order of appealability (See Bashman), the CAFC did not have jurisdiction at the time of oral arguments. However, the CAFC allowed the parties time to ask for such an order from the district court before dismissing the appeal. (This pragmatism is perhaps due to Judge Robinson’s place on the panel).

LEVER_SMUpward Force: SafeTCare’s patent requires a plurality of motors exerting a pushing or upward force on the bed.  Tele-Made’s motors are essentially attached to one end of a lever, and by pulling down, cause an upward force on the other end of the lever. However, because SafeTCare’s specification implied a direct link between the motor and the bed, the levered approach was non-infringing. Prosecution history estoppel blocks DOE coverage.

Non-infringement affirmed.

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Ernie L. Brooks 1942-2007

Patent

Ernie_Brooks_CoverSad news today in the patent law world. Ernie Brooks, head of Brooks Kushman was killed yesterday in an automobile accident. Mr. Brooks litigated over 50 cases to decision — including last year’s case of z4 v. Microsoft. In z4, Mr. Brooks lead the trial team to a $133 million verdict for its tiny client. He was 64 years old.

Sarnoff: Granting Patents Immunity from Market Regulation is Neither Warranted Nor Sensible

Academic Studies, Patent

ScreenShot009In the most recent Patent Law Journal article, Professor Joshua Sarnoff discusses implications of BIO v. DC. He opens with the following:

In Biotechnology Industry Organization v. District of Columbia,  the U.S. Court of Appeals for the Federal Circuit took another big step toward assuring that a granted patent conveys immunity from market regulation. 

Professor Sarnoff then explains why granting such immunity is “neither warranted nor sensible.”

Reasonable Pertinence may be Sufficient to Combine References in Obviousness Rejection

Obviousness, Patent, Patent Cases 2007

ScreenShot003In re Icon Health and Fitness (Fed. Cir. 2007).

ICON has been a party in more than 50 patent infringement lawsuits and has asserted its treadmill patent (5,676,624) against at least six defendants.  In the midst of litigation, ICON also filed for reexamination, and now appeals the PTO’s final rejection of its patent to the CAFC.

ICON admits that all but one of the claimed elements are disclosed in a Danmark International advertisement.  The remaining element, a gas stabilizing spring, is found in Teague where it is used to assist in opening and closing of a Murphy style bed.

Reasonably Pertinent Art: To be used in an obviousness rejection, prior art must be “reasonably pertinent to the problem addressed” by the patent applicant. Usually this is satisfied by references in the same field of technology or that address the same problem. Here, the CAFC saw enough similarity to find the bed art pertinent:

“Nothing about Icon’s folding mechanism requires any particular focus on treadmills; it generally addresses problems of supporting the weight of such a mechanism and providing a stable resting position. Analogous art to Icon’s application, when considering the folding mechanism and gas spring limitation, may come from any area describing hinges, springs, latches, counterweights, or other similar mechanisms—such as the folding bed in Teague.”

Although the patent applicant lost this argument, this portion of the case is good news for applicants – because of what the opinion did not say. Specifically, the court could have begun with the announcement that “In KSR, the Supreme Court expanded the notion of pertinent obviousness-type prior art when it announced that ‘patent examiners should look [beyond] the problem the patentee was trying to solve.’ . . .”  Instead, the CAFC decided to stick to its narrower jurisprudence.

All elements = Obvious: Under KSR, once the elements are shown in reasonably pertinent art, then an obviousness determination is as simple as connecting the dots. The court says as much:

[W]hile perhaps not dispositive of the issue, the finding that Teague, by addressing a similar problem, provides analogous art to Icon’s application goes a long way towards demonstrating a reason to combine the two references.

Here, the Court explained a connection be tween Teague and the claimed invention by showing that both used the spring in similar ways.

Notes:

  • A report from Steve Sereboff indicates that the PTO has already taken this decision to heart in its new examiner training: “Basically, the examiners can make a prima facie case of obviousness simply by showing that all of the elements in the claim were known.”

CAFC Finds Washington DC Drug Price Law to be Unconstitutional

Patent

BIO and PhRMA v. District of Columbia (Fed. Cir. 2007).

In 2005, the District of Columbia (DC) adopted a set of legislation to reduce prescription drug costs. In particular, the law would bar a manufacturer from placing minimum retail price restrictions or from charging “excessive prices.”

The two major innovator pharmaceutical organizations quickly sued and won a ruling that the law was unconstitutional as (1) preempted by the patent laws and (2) invalid under the commerce clause because the new law restricted transactions that occur outside of DC borders. On appeal, the CAFC affirmed that law is unconstitutional.

CAFC Jurisdiction: Normally, the CAFC has jurisdiction over cases that arise under the patent laws. In addition, the CAFC claims jurisdiction in this type of case because interpretation of patent law is a “necessary element” of the plaintiffs’ claim.

Patent law is indeed a necessary element of the claim here. If the plaintiffs are able to show that the patent laws preempt the Act, the Act will be declared unenforceable and enjoined, but if they cannot, their preemption claim will fail and their members may be required to defend against suits under the Act.

Standing of BIO and PhRMA: BIO and PhRMA are not involved in any of the activities covered by the Act. However, their members would be affected. The Supreme Court has held on several occasions that an organization may sue on behalf of its members if (i) the members would have standing on their own; (ii) the suit is related to the purpose of the organization; and (iii) the member’s are not individual claimants.  The individual members certainly would have standing here because the Act creates injuries that are “(a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical.” (Quoting 528 U.S. 167). This issue is likely the sticking point for the Aharonian-Peterlin lawsuit.

Preemption: Federal Law is the Supreme Law and when State law (or here, DC law) is in conflict, it is the State Law that must yield. Even when there is no direct conflict, a state law may still be found invalid if it “stands as an obstacle” to accomplishing the full goals and purposes of Federal Law.  For the Patent Laws, the fundamental goal is to “promote the progress of science and useful arts.” This goal is accomplished, according to the CAFC, by offering exclusive rights that allow for above market pricing during the term of the patent. However, there is also the competing issue of keeping prices reasonable for consumers. As the Supreme Court outlined in Bonito Boats, Congress has taken charge of balancing these competing interests.

Here, the DC Act would limit the “full exercise of market power” by restraining excessive prices. That action is contrary to the incentive goals of the patent act, and thus preempted.

Affirmed

Notes.

  • It is important here that the DC Act focused exclusively on patented drugs. If it had a broader focus – perhaps all health care related equipment, drugs and services – then the court would have had a more difficult time shooting it down.
  • Patently-O previous discussion of the case
  • BIO = Biotechnology Industry Organization
  • PhRMA = Pharmaceutical Research and Manufacturers of America

     

Rules of Federal Procedure: Timing of an Answer to an Amended Complaint

Patent

General Mills v. Kraft Foods (Fed. Cir. 2007)

On petition for rehearing, the CAFC panel clarified its holding that a defendant’s filing of a motion dismiss does not toll the deadline for filing an answer or counterclaim to an amended complaint unless the motion to dismiss is filed before the date that the original answer would have been due.

Under the Federal Rules of Civil Procedure, a response to an amended complaint is governed by Rule 15, that does not provide for tolling. The tolling section (Rule 12(b)(4)) only applies to timing of responses filed under Rule 12 – such as answering an original complaint.

Because Rule 15 allows a response to an amended complaint either within 10 days or within the time for responding to the original complaint, the due date for responding will be tolled if the motion to dismiss is filed before the original answer would have been due.

Practice Tip: The court has discretion to push-back the response due date. If you are filing a motion to dismiss an amended complaint, first request that the date be tolled.

  • Discussion of the original CAFC Opinion.
  • Crafty lawyers may now choose to file amended complaints to trip-up their opponents. . .
  • This is now a case begging for a student law review article or note.