by Dennis Crouch

The Federal Circuit is now considering a pending en banc petition in Novartis Pharm. Corp. v. Accord Healthcare, Inc., Docket No. 21-1070; petition from 38 F.4th 1013 (U.S. Fed. Cir. 2022).  The case involves a negative limitation added to a drug treatment method claim during prosecution, and substantive question on appeal is whether the claim limitation lacks written description support. The original Federal Circuit opinion penned by Judge O’Malley sided with the patentee; Chief Judge Moore wrote in dissent.  Judge O’Malley subsequently retired and Judge Hughes was added to the panel to consider Accord’s rehearing petitioning.  The new panel flipped the outcome with Judge Hughes joining the Chief’s position that the claims are invalid. We already have several posts on the case in Patently-O:

• Dennis Crouch, The Sound of Silence and the Inherency Doctrine for Written Description, Patently-O (July 29, 2022)
• Chris Holman, Federal Circuit Flips “Negative Claim Limitation” Decision after Change in Panel Composition, Patently-O (June 23, 2022)

Two groups of law professors have each filed an amicus brief in support of the petition. The first focuses on substantive written description issues and the second focuses on problematic appellate procedure presented by the panel recomposition.

Substance: The key substantive controversy centers on Chief Judge Moore’s restatement of the written description doctrine–that it requires all claim limitations be disclosed in the original specification either (a) expressly or (b) inherently in a fashion where the “particular limitation would always be understood by skilled artisans as being necessarily” present in the disclosure.  The patentee in the case argues that inherency is too strict a standard and that it goes beyond what is required by the statute and prior precedent.

The Novartis patent claims a particular long-term drug dosage for a chronic disease. During prosecution the examiner rejected the claims based upon a prior art reference that began with a loading dosage before dropping down to a similar long-term dosage.  The patentee amended the claims to state that its dosage does not follow a loading dose. “[A] daily dosage of 0.5 mg, absent an immediately preceding loading dose regimen.”  Prior to that amendment, the specification had not previously disclosed any information about loading dosages.  But loading doses were already known to be useful for this particular class of drug, and four experts testified that the original specification implicitly disclosed no-loading dose examples.  On appeal though, the Federal Circuit concluded that implicit disclosure does not rise to the level of inherent disclosure.

I substantive amicus was is signed by a number of law professors with all-but-one having ongoing ties to George Mason University’s Antonin Scalia Law School.  Professor Emily Michiko Morris was a primary author and so I’m calling it the “Morris Brief.” The Morris Brief argues that that the panel opinion reflects a new standard for the written description requirement:

[T]he Federal Circuit—until now—has never suggested that, absent in haec verba disclosure, the written description requirement can only be met through inherent disclosure, wherein the specification “necessarily” or “always” includes a positive limitation or excludes a negative one.

Morris Brief.   The brief argues that a more flexible approach allowing for patentees to claim a non-expressed invention if PHOSITA would find the invention sufficiently disclosed based upon the “text, structure and technological context of the specification” and “without wooden rules.”   The brief also argues that the decision “erroneously places the burden of proving validity upon the owner of an issued patent.”

This case is typical of written description arguments centered on whether amendments to avoid prior art were sufficiently disclosed.  The Morris Brief notes that the ability to amend claims using negative limitations is an important feature of the patent system, and the decision here will limit the ability of applicants to make those amendments.  The brief finally argues that the new panel improperly disregarded  fact finding by the district court and instead effectively treated written description as an issue of law.  Written description is a question of fact, and that the panel made a number of factual findings based upon evidence presented at the bench trial.  On appeal though, the Moore court rejected these conclusions based upon its legal determination of no inherency and that “testimony from a skilled artisan as to possibilities or probabilities that the recited element would be excluded would not suffice, lest such testimony could effectively eliminate the written description requirement.” Slip op.

Procedure: The second brief focuses on appellate procedure and was filed by a group of CivPro / IP professors including Prof. David Hricik.  The Hricik Brief spells out the arguments as follows:

This case presents an extraordinary circumstance in which, after a three-judge panel issued a 2-1 decision affirming the district court, a new panel was created for purposes of rehearing. That panel, with one new judge, reached a result opposite from the first. In effect, the majority opinion became the dissent, and the dissent the majority. This series of procedural events was contrary to this Court’s rules and precedent. The events here also run against longstanding tradition in the federal courts that panel rehearing may be granted only with the vote of at least one judge in the original majority. Numerous decisions from around the country show that where the departure of one of a panel’s original members leaves a 1-1 split, a petition for rehearing must be denied unless the remaining judge who had been in the majority changes his or her mind. In addition, the second opinion in this case violates the law-of-the-circuit doctrine, which provides that one three-judge panel must abide by prior panel decisions, absent en banc or Supreme Court rulings. . . .

The result here is all the more concerning because of a lack of transparency in the process. The second opinion did not acknowledge the change in panel, much less explain it. There was no notice to the parties as to why a different panel was needed to decide a petition for rehearing, let alone how the law authorized a different panel to address the petition.

The panel should grant rehearing and vacate the June 21 decision, thereby restoring the January 3 decision. Alternatively, the Court should grant rehearing en banc.

Hricik Brief.  Accord is unlikely to file a responsive brief unless requested by the Court. FRAP 35(e).

Documents:

• Petition for Rehearing
• Hricik Brief
• Morris Brief

Claim at issue:

1. A method for reducing or preventing or alleviating relapses in Relapsing-Remitting multiple Sclerosis in a Subject in need thereof, comprising orally administering to said Subject 2-amino-2-2-(4-octylphenyl)ethylpropane-1,3-diol, in free form or in a pharmaceutically acceptable salt form, at a daily dosage of 0.5 mg, absent an immediately preceding loading dose regimen.

by Dennis Crouch

Section 101 has some magic to it.  The short provision has remained essentially unchanged since it was originally handwritten in the 1700s and signed into law by President George Washington.

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

35 U.S.C. 101.  But the courts have taken the general provision and given it substantial meaning beyond the text.

Senator Tillis has introduced legislation that would re-write Section 101 — taking back authority from the courts and detailing the scope of eligibility as broadly extending to technology-based innovation.  Because the Supreme Court’s interpretation of Section 101 is largely atextual, the proposed amendment does not change the core text cited above. Rather, the Bill adds detail in the form of “eligibility exclusions” and notes that the broad provisions of Section 101 are subject “only to” the statutory exclusions.”  In his press release, Senator Tillis indicates that the proposal “is the product of almost four years of consensus driven stakeholder conversations from all interested parties.”

Unfortunately, due to a series of Supreme Court decisions, patent eligibility law in the United States has become confused, constricted, and unclear in recent years. This has led to inconsistent case decisions, uncertainty in innovation and investment communities, and unpredictable business outcomes. This has resulted in a wide range of well-documented negative impacts.

Tillis.  The Bill does not include a statement about whether its impact would be retroactive to apply to already issued patents and pending applications.  If it is retroactive, the legislation would have an immediate impact on many thousands of of patents and pending applications.

The Bill lists four particular eligibility exclusions that would be codified within a new Section 101(b)(1).  In particular, the statute would deny patent protection “for any of the following, if claimed as such:”

(A) A mathematical formula, apart from a useful invention or discovery.

(B) A process that— (i) is a non-technological economic, financial, business, social, cultural, or artistic process; (ii) is a mental process performed solely in the human mind; or (iii) occurs in nature wholly independent of, and prior to, any human activity.

(C) An unmodified human gene, as that gene exists in the human body.

(D) An unmodified natural material, as that material exists in nature.

These four exclusions are the only exceptions to Section 101’s broad text. The provision goes on with additional “CONDITIONS” that endeavor to ensure that the exclusions are narrowly read:

(2) CONDITIONS.—

(A) CERTAIN PROCESSES.—Notwithstanding paragraph (1)(B)(i), a person may obtain a patent for a claimed invention that is a process described in such provision if that process is embodied in a machine or manufacture, unless that machine or manufacture is recited in a patent claim without integrating, beyond merely storing and executing, the steps of the
process that the machine or manufacture perform.

‘(B) HUMAN GENES AND NATURAL MATERIALS. … a human gene or natural material that is isolated, purified, enriched, or otherwise altered by human activity, or that is otherwise employed in a useful invention or discovery, shall not be considered to be unmodified [i.e., is patentable].

The Bill would also add a process for determining whether or not an invention is eligible.

(c) ELIGIBILITY.—

(1) IN GENERAL.—In determining whether, under this section, a claimed invention is eligible for a patent, eligibility shall be determined—

(A) by considering the claimed invention as a whole and without discounting or disregarding any claim element; and

(B) without regard to—(i) the manner in which the claimed invention was made; (ii) whether a claim element is known, conventional, routine, or naturally occurring; (iii) the state of the applicable art, as of the date on which the claimed invention is invented; or (iv) any other consideration in section 102, 103, or 112.

The proposed amendment makes clear that invalidity via eligibility is still potentially available via motion to dismiss.

Finally, the provision also modifies and adds definitions to Section 100 of the Patent Act:

 (b) [Amended] The term “process” means process, art or method, and includes a new use, application, or method of manufacture of a known or naturally occurring process, machine, manufacture, composition of matter, or material.

(k) [New] The term ‘useful’ means, with respect to an invention or discovery, that the invention or discovery has a specific and practical utility from the perspective of a person of ordinary skill in the art to which the invention or discovery pertains.

Read the legislation yourself here.

By Dennis Crouch

A few years ago I read a great series of fantasy books, The Wandering Inn.  A key series storyline involves the protagonist meeting with ant-like Antinium and, through their interactions, transforming some of more computer-like hive members into individuals.  The word individual is important for U.S. Patent Law, because the U.S. Patent Act was amended in 2011 to expressly require that inventors be “individuals.” 35 U.S.C. § 100(f) (2022). For Antinium, becoming individual meant breaking away from the hive-mind.  In its newest decision on the topic, the Federal Circuit declares instead, for the purposes of patent law, an inventor must be human.

Here, there is no ambiguity: the Patent Act requires that inventors must be natural persons; that is, human beings.

Thaler v. Vidal, 2021-2347, 2022 WL 3130863 (Fed. Cir. Aug. 5, 2022). In the case, Thaler claims to own a computer named DABUS, and that DABUS conceived-of two patentable inventions.  But, Thaler refused to claim credit as the inventor.  And, the USPTO refused to issue a patent without a listed human inventor.

In my mind, it was always clear that the Federal Circuit would refuse Thaler’s petition, but it remains a fascinating topic in my mind.  American legal personhood continues to ingenerate debate well beyond AI, including the contexts of legal fictions such as corporations, pre-birth human, and even non-human organisms (such as rivers).  The result here shuts-down the debate – at least for the patent law concept of inventorship.

Of all the arguments presented, I thought that Thaler’s best relied upon Section 103’s statement that patentability shall not depend upon “the manner in which the invention was
made.” Thaler argued that the PTO was, in fact, refusing to issue a patent because the invention was made by an AI rather than a human.  On appeal, the Federal Circuit held that provision should be limited only to apply to the obviousness context. “Section 103 is not about inventorship. Instead, it provides, in relevant part, that inventions may still be nonobvious even if they are discovered during ‘routine’ testing or experimentation.” Slip Op.

The court went on to expressly explain that it is only interpreting the words given by Congress. If someone wants to change the rules, the correct path is through legislation.  Thaler will petition to the Supreme Court, but is unlikely to win.

* Thanks to Avery Welker for helping with this post.

Editor’s Note: Avery Welker is a rising 3L at Mizzou and likely a future patent attorney. He authors a series linking law school canonical cases with intellectual property counterparts, and the views expressed are his own. You can email ideas for future posts to avery@patentlyo.com.  – Dennis Crouch

By Avery Welker

TecSec, Inc. v. Adobe Inc., 978 F.3d 1278 (Fed. Cir. 2020) [decision link]

Last semester, I took a class on the Federal Rules of Evidence. We began the course by learning about relevance. As we progressed through the semester, relevance continued to stay, well, relevant! Many evidentiary analyses ended with the great gatekeeper of Federal Rule of Evidence 403, and our professor said that Rule 403 requires the dangers listed in Rule 403 to substantially outweigh the probative value of the evidence.[1] Our professor taught us that the Rule can limit relevant evidence but doesn’t always result in a sweeping exclusion, much to TecSec, Inc.’s delight during a 2020 appeal to the Federal Circuit.[2]

In 2010, TecSec asserted several patents against Adobe covering file-encryption methods transmitted over a data network.[3] The district court construed several terms in the patents on March 3, 2011, resulting in a judgment of noninfringement for Adobe.[4] However, the Federal Circuit reversed the judgment and construction of a term, remanding for further proceedings under the new term construction.[5] The case bounced up and down from the district court to the Federal Circuit.[6]

In October 2018, before trial, Adobe submitted a motion in limine to exclude any evidence of Adobe’s intent or willfulness to infringe TecSec’s patents between March 3, 2011 and October 18, 2013 unless TecSec agreed to allow the March 3, 2011 stipulation of noninfringement, order, and judgment, which Adobe argued were relevant to determining an infringer’s state of mind.[7] The district court granted Adobe’s motion and barred the evidence, stating that allowing TecSec to argue inducement of infringement is too prejudicial to Adobe without allowing Adobe to introduce the three documents it requested, and, if the court admitted the evidence, it would prejudice TecSec and confuse the jury.[8] Finally, the dispute went to a jury trial in late 2018.[9] After entering final judgment for Adobe (see a previous Patently-O post regarding this judgment here), TecSec (among other issues) appealed Adobe’s previous motion in limine.[10]

On appeal, Adobe attempted to protect the district court’s ruling on the motion in limine by arguing that the court was permitted to exclude the evidence because Rule 403 allowed the court to prevent unfair prejudice and avoid confusing the jury.[11] However, the Federal Circuit noted that Adobe’s presented applications of the Rule did not support such a sweeping exclusion of evidence.[12] The district court erroneously excluded an entire class of evidence (evidence of induced infringement after March 3, 2011) instead of excluding a piece or fixed set of evidence that would allow TecSec to present any other relevant and admissible evidence on the issue of induced infringement.[13]

Adobe’s motion scope addressed only whether Adobe could admit the March 3, 2011 claim construction results and TecSec’s stipulation; it did not bring up TecSec finding all evidence of inducement intent to determine a triable issue of infringement inducement after March 3, 2011.[14] The Federal Circuit found that Adobe’s motion in limine did not give the district court the basis to take the extreme measure of preventing the admission of all evidence of infringement inducement after March 3, 2011.[15]

Additionally, the Federal Circuit found that the district court determined that admitting the documents Adobe requested would unduly prejudice TecSec, but TecSec never indicated that it would drop its inducement claim after March 3, 2011 if the documents were introduced into evidence.[16] The Federal Circuit noted that the district court should have listened to whether TecSec would drop its inducement suit for the post–March 3, 2011 time frame before determining that the evidence would be too prejudicial to TecSec.[17] The Federal Circuit reversed the district court’s decision to exclude evidence of infringement inducement post–March 3, 2011.[18]

[1] Fed. R. Evid. 403.

[2] TecSec, Inc. v. Adobe Inc., 978 F.3d 1278 (Fed. Cir. 2020).

[3] Id. at 1282–83.

[4] Id. at 1283.

[5] Id.

[6] Id. at 1283–85.

[7] Id. at 1284.

[8] Id. at 1284–85.

[9] Id. at 1283–85.

[10] Id. at 1286. The motion in limine resulted in the court excluding TecSec’s expert witness deposition testimony of Adobe’s alleged induced infringement after March 3, 2011. Id.

[11] Id. at 1288.

[12] Id.

[13] Id.

[14] Id.

[15] Id. at 1288–89.

[16] Id. at 1289.

[17] Id.

[18] Id.

by Dennis Crouch

The basic issue in Novartis v. Accord is quite familiar. A new limitation was added to the claims during prosecution that is not found expressly in the specification, but would be expected by someone of skill in the art.  Does the claim violate the written description requirement of 35 U.S.C. 112? In its most recent statement, the Federal Circuit finds failure of written description unless the invention is either expressly or inherently disclosed in the original specification. Novartis Pharm. Corp. v. Accord Healthcare, Inc., 38 F.4th 1013 (Fed. Cir. 2022) (rehearing decision). One quirk here is that the court identifies the particular limitation as a “negative claim limitation” and there are wide ranging policy views on how those limitations should be treated. However, the Novartis court explained that its express-or-inherent holding here applies regardless of whether claim limitations are expressed in positive or negative form.  Novartis has no petitioned for en banc rehearing.

• Novartis En Banc Petition
• Chris Holman, Federal Circuit Flips “Negative Claim Limitation” Decision after Change in Panel Composition, Patently-O (June 23, 2022)

The appellate procedure in this case is strange and important to its current status: The district court sided with Novartis (infringed + not-invalid) and the Federal Circuit affirmed on appeal in a January 2022 decision.  That original CAFed decision was penned by Judge O’Malley and joined by Judge Linn.  Chief Judge Moore wrote in dissent — arguing that the majority had been way too lenient.

By January 2022, Judge O’Malley had already announced her plans to retire from the judiciary in early March 2022. The appellant’s rehearing petition would have ordinarily been due on Groundhog Day, February 2, but HEC requested and was granted a 21-day delay and that meant that Novartis’s response would not be due until after Judge O’Malley’s retirement.  Rather than waiting for the deadline, Novartis  filed its responsive brief with a four-day turn around.  But to no avail; Judge O’Malley retired before acting on the rehearing petition.

After Judge O’Malley’s retirement, the court added Judge Hughes to the panel to decide the rehearing.  Of any judge that might have been added, Judge Hughes was one very likely to find against the patentee in this situation.  My understanding is that the court did not announce Judge Hughes addition to the panel until it issued a revised panel opinion on June 21, 2022.  Presumably in this case, there was some randomness in Judge Hughes’ selection, but the rules don’t expressly require that.

The panel re-composition flipped the outcome.  Chief Judge Moore had previously written in dissent, but now Judge Hughes joined her opinion–putting her in the majority. With the loss of Judge O’Malley, Judge Linn’s position flipped to the dissent.  Thus, the new opinion sided with the accused infringer–concluding that the district court “clearly erred” in finding the claims not invalid.   The decision here is apparently the first time that a Federal Circuit panel has flipped the outcome following a change in panel composition.

Now, Novartis has filed its petition for rehearing.  The petition raises two issues: one on the merits of the written description issue; and a second focusing on the unusual appellate procedure.

1. Patent Law Merits: Whether 35 U.S.C. §112 and this Court’s precedent require that, to have adequate written description, a claim limitation must be either expressly disclosed in the specification or necessarily present in some express disclosure, even if a skilled artisan would otherwise read the specification to disclose possession of the limitation.
2. Appellate Procedure: Did the court procedurally err by issuing the new decision on rehearing.

Lets start with procedure and panel dependence. The other circuits have an internal rule or practice that a panel rehearing will not be ordered unless at least one judge in the majority votes for the rehearing.  The idea behind a panel rehearing to raise issues that the majority can recognize that it “overlooked or misapprehended.” FRAP 40(a)(2). But, no one in the majority changed their outlook. Rather, the addition of Judge Hughes provided an end-run around the majority by adding a new panel member.

The Federal Circuit has previously written about this issue – but not in a self-reflective way. Rather the court was in its then supervisory role of the US Claims Court. Universal Restoration, Inc. v. U.S., 798 F.2d 1400 (Fed. Cir. 1986).  In Universal, one panel member of the Claims Court had been replaced following its original determination.  That recomposition resulted in a flipped the outcome on rehearing.   On appeal, the Federal Circuit reversed on the merits, but in a footnote explained that the recomposition was improper:

Where the original panel reconsiders and changes a decision, a member of the original majority must vote for the change. In the Supreme Court where less than a majority may order rehearing, a member of the original majority must vote for the rehearing. These procedures are readily acceptable as “fair.” Sup.Ct.R. 51.1 (1980); Ambler v. Whipple, 90 U.S. (23 Wall.) 278, 281–82 (1874). . . . What appears to be the case here is that there was in fact no reconsideration. A different panel simply disagreed with the first decision.

Id.  The Federal Circuit does have a rule regarding replacement of a missing panel member. Federal Circuit Rule 47.11. That rule calls for the Chief Judge to secure an additional judge in situations where “a judge of a panel that has heard oral argument or taken under submission any appeal, petition, or motion is unable to continue with consideration of the matter.”  If the remaining two judges are unable to resolve the matter,  then the chief judge should appoint another judge.  Id.  In its petition, the Novartis argues that this rule is inapplicable based upon the aforementioned general tradition and because panel rehearing petitions are not “argued” or “taken under submission.”

On the merits: The petition argues that the new majority opinion improperly creates an “express-or-inherent rule:” That the invention as claimed must be either expressly or inherently disclosed within the specification.  Chief Judge Moore explained:

[I]t is possible that the written description requirement may be satisfied when a skilled artisan
would understand the specification as inherently disclosing the negative limitation. . . [However], testimony from a skilled artisan as to possibilities or probabilities that the recited element would be excluded would not suffice, lest such testimony could effectively eliminate the written description requirement. If silence were generally sufficient, all negative limitations would be supported by a silent specification. If, however, a patent owner could establish that a particular limitation would always be understood by skilled artisans as being necessarily excluded from a particular claimed method or apparatus if that limitation is not mentioned, the written description requirement would be satisfied despite the specification’s silence.

Id.   The petition argues that Judge Moore has improperly created a bright-line rule in an area where “there are no bright-line rules.”

The new majority’s inflexible heightened standard conflicts with a substantial body of precedent. It makes written description turn not on what the specification “reasonably conveys to those skilled in the art,” but on what the specification expressly or necessarily discloses. And because the new majority expressly declined to limit its holding to negative claim limitations, that holding could be applied to reverse any written-description finding.

Novartis En banc Petition.

What is the invention: Fingolimod was a known immune suppressant.  In its patent, Novartis claims a method of treating multiple sclerosis (RRMS) by administering fingolimod at a particular daily dosage of 0.5 mg.

Many drug regimens begin with a loading-dose to quickly raise the blood-level. The dosage is then reduced to a lower maintenance dosage. During prosecution some prior art was uncovered that started with a loading dose and then reduced dosage down to a level close to that claimed by Novartis. But the Novartis invention did not require a loading dose.  Prosecutors amended the claims to make that clear: “a daily dosage of 0.5 mg, absent an immediately preceding loading dose regimen.”

The Sound of Silence: The problem identified by Chief Judge Moore is that the Novartis patent application documents never mention loading doses or the absence of loading doses. They don’t say anything one-way-or-the-other.  Novartis provided evidence that loading doses in this area were common and that PHOSITA would have understood that silence regarding loading doses was actually a disclosure that no-such loading doses were required.  Judge Moore rejected this argument; holding instead that “Silence is not disclosure.”  Further, Judge Moore adopted the inherency doctrine as a limiting rule. That doctrine is quite tight and only finds  disclosures inherent if they necessarily flow from express teachings.

Guest Post by Edward Reines.  Reines Co-Chairs the nationwide Patent Litigation practice at Weil Gotshal. He represents CareDx and Stanford in the pending patent lawsuits.

Professor Holman’s recent post on the Federal Circuit’s CareDx v. Natera opinion is a thoughtful addition to Professor Crouch’s review of that decision.  Professor Holman concludes that the Stanford inventions were doomed from the start because they can be labelled as “molecular diagnostics methods” and are thus patent ineligible under Federal Circuit law.  Professor Holman’s conclusion is troubling.  It would limit the patentability of new inventions in an entire scientific discipline merely based on a label.

This labelling mode of analysis is fundamentally flawed because the Supreme Court’s Alice decision mandates a two-step test focused on the claimed advance of the patent, no matter the field of invention.  The test is designed to “distinguish between patents” that would pre-empt a field by broadly claiming “[l]aws of nature, natural phenomena, and abstract ideas” and patents that do not pose this risk because they add to these concepts with “human ingenuity.” There is thus nothing inherent about molecular diagnostics that precludes their patentability and merely labelling a method as “molecular diagnostics” should not be a kiss of death.

Take the Stanford patents.  Those patents document that the natural correlation between organ rejection and elevated levels of cell-free DNA of the organ donor was known for almost a decade before the inventions.   The patents then explain that numerous scientists motivated to measure that increase in cell-free DNA failed to come up with the patented measurement methods.   The patents cite an article published right before the Stanford patent filing that concluded that it was altogether “impractical” to measure cell-free DNA to monitor organ rejection.

The Stanford patents distinguish the failed prior art measurement efforts and describe new inventions on how to better measure cell-free DNA using advanced DNA analysis techniques.  The claimed inventions are better measurement methods that previously eluded the field – not the discovery of the natural correlation itself.  And there was no claim that they posed the pre-emption risk that animated Alice.

Federal Circuit law places at the heart of Alice step one whether the “claimed advance” is the natural law.  In CareDx, as Magistrate Judge Burke had originally concluded, the claimed advance of the Stanford patents is an improved human-devised measurement method.  The Federal Circuit’s opinion failed to properly focus on the “claimed advance” analysis and failed to squarely address that the patents describe numerous prior art failures. This prior art history is irreconcilable with the panel’s conclusion that the patented measurement methods are so conventional as applied to the natural correlation that they could not possibly qualify as patent-eligible human invention.

Instead, the Federal Circuit imported the “conventionality” analysis from step two into step one in lieu of a proper “claimed advance” analysis of Federal Circuit precedent.  As originally contemplated in Mayo, the “conventionality” analysis was akin to determining if the claims included mere trivial additions on top of discovery of a natural law.   Here, the conventionality analysis instead became a short-cut obviousness analysis.  Yet, even that fails because the decade of prior failures at measuring the cell-free DNA for a good organ rejection test proves that it was not conventional to use the patented measurement methods for this purpose – otherwise the many groups working on the problem would have arrived at that solution ultimately invented by the Stanford team.  And the supposed disclaimers in the patents never even suggest that applying the claimed measurement techniques to the tough context of cell-free DNA somehow was not an invention.  Everything about the description of the inventions is inconsistent with that conclusion.

The Federal Circuit cannot blame the Supreme Court for this latest constriction of molecular diagnostic patenting even though many Federal Circuit judges have bemoaned the stinginess of the Supreme Court’s Alice test in this area.  As explained long ago in Diamond v. Diehr, and as repeated in Bilski and Mayo, the Supreme Court recognizes that: “It is now commonplace that an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.”  Even if the Stanford measurement methods were known (and the prior art history calls that into serious doubt) their application to a natural law can certainly be patent eligible if it is the product of human innovation, as claimed by the patents.

Professor Holman’s conclusion that the Federal Circuit labelling method may have controlled the CareDx outcome should give real pause to the patent law community.   Such labelling might be useful to describe the inventions at issue in prior decisions, but it is not a basis to proscribe whether an invention is eligible for patenting.   The Stanford patents are plainly directed to a better measurement method that evaded many motivated prior artists.  Such human innovation is the claimed advance and is patent eligible under Alice even if it can be labelled as a molecular diagnostic method.

by Dennis Crouch

Canada Hockey LLC (Michael Bynum) v. Texas A&M University (Supreme Court 2022)

E. King Gill started the TAMU Aggie’s “12th Man” tradition back in 1921 by coming down from the stands back ready to step-in and play after a player injury.

Michael Bynum spent over 1,500 hours preparing a book on Gill.  The book included a short biography of Gill written by Whit Canning (under a work-made-for-hire agreement).  Bynum was seeking more materials from TAMU and sent a PDF draft version of the book to TAMU athletics publicity folks. The email and PDF included several statements indicating it was copyrighted and not for redistribution.

TAMU publicity liked the 1-page biography and so retyped it; changed the byline to “by Whit Canning, special to Texas A&M Athletics”; and sent it out electronically to 100,000+ folks (all without permission or notification).

Bynum sued for copyright infringement.  But, the action was stymied by the Supreme Court’s decision in Allen v. Cooper, 140 S. Ct. 994 (2020).  That case held that sovereign immunity protected states from copyright infringement liability despite direct Congressional statements otherwise.  In his new petition for certiorari, Bynum presents two end-runs around Allen:

1. Actual Violation of the 14th Amendment.  Even if Congress did not have the power to entirely eliminate sovereign immunity for copyright infringement, a copyright holder still has an action if the infringement itself constitutes an actual violation of the 14th Amendment under United States v. Georgia, 546 U.S. 151 (2006).
2. Taking. Although a state might not be liable under a copyright infringement theory, it may still be liable for a Fourteenth Amendment taking.

[Petition for Certiorari]

In rejecting the actual due-process violation claim, the 5th Circuit concluded that the plaintiff’s copyright claims were
“viable [as a] takings claim against TAMU for copyright infringement under the Texas Constitution.” Canada Hockey, L.L.C. v. Texas A&M U. Athletic Dept., 20-20503, 2022 WL 445172, at *8 (5th Cir. Feb. 14, 2022).  Since the state provided an adequate potential remedy, the 5th Circuit found no due process violation by the state of Texas. The court did recognize that the Texas Supreme Court recently rejected a copyright takings claim in Jim Olive Photography v. Univ. of Hous., ––– S.W.3d ––––, 2021 WL 2483766, at *9 (Tex. June 18, 2021).  But, the 5th circuit pointed to a concurring opinion that it is possible that – in some circumstances – the state might find copyrights to have been unduly taken.

Federal Takings Claim: Likewise, the 14th Amendment due process clause also makes the 5th amendment takings clause applicable to the states.  But, states retain sovereign immunity in this context if they provide an adequate remedy under state law.  Here, the 5th Circuit court found again that Texas takings law suffices and so no due process problem.

= = =

Background Law:

• The Eleventh Amendment states that “The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.”
• The Copyright Remedy Clarification Act of 1990 (“CRCA”) indicates that individual states can be held liable for copyright infringement and “shall not be immune, under the Eleventh Amendment of the Constitution of the United States or under any other doctrine of sovereign immunity, from suit in Federal court by any person . . . for a violation of any of the exclusive rights of a copyright owner.”
• In Allen v. Cooper, the Supreme Court held that congress lacked power to prophylactically abrogate sovereign immunity.
• In United States v. Georgia, 546 U.S. 151 (2006), in the context of applying ADA to state prisons, the court held that Congress had power to apply the law to state prisons in situations where the conduct actually violates the 14th amendment on a claim-by-claim basis.  This is a distinct justification from the prophylactic approach discussed in Allen. The Allen court did not directly address the US v. Georgia arguments.

By Chris Holman

A couple days ago Dennis posted a nice review of the Federal Circuit’s recent decision in CareDx v. Natera, in which he emphasized the fact that the court characterized a number of boilerplate statements in the patent document as “admissions” that the various DNA analysis technologies recited in the claims, e.g., next-generation sequencing (“NGS”) and digital PCR, were “conventional” for purposes of step two of the Alice/Mayo framework. I decided to write this follow-up post to explain why, in my view, these “admissions” in the patent document did not affect the outcome in the case, and that these claims were doomed irrespective of the patent’s characterization of the technologies.

The reason these claims were deemed patent ineligible, in my view, is that they are directed towards a molecular diagnostic method, and, as Judge Moore bemoaned in her dissent from the Federal Circuit’s denial of en banc rehearing of Athena Diagnostics v. Mayo, 927 F.3d 1333 (Fed. Cir. 2019), the Federal Circuit’s current interpretation of the Supreme Court’s decision in Mayo v. Prometheus has “resulted in a per se rule that excludes all diagnostics from eligibility.”  She notes that ‘[s]ince Mayo, we have held every single diagnostic claim in every case before us ineligible.” As such, the outcome in CareDx was, in my opinion, preordained. In fact, it would have been quite unexpected if the Federal Circuit had upheld the eligibility of the claims, given that in Athena Diagnostics all 12 of the judges that heard the case appeared to agree with Judge Moore’s assessment of the current state of affairs at the Federal Circuit regarding the eligibility of diagnostic claims of this type.

Athena Diagnostics is a very interesting decision for those of us concerned about the patent eligibility of molecular diagnostics. It resulted in eight separate opinions, in which all 12 of the judges who decided the case joined, in various combinations. Interestingly, as Judge Moore pointed out, ‘”[n]one of [her] colleagues defend[ed] the conclusion that claims to diagnostic kits and diagnostic techniques, like those at issue, should be ineligible.” In fact, my reading of the decisions is that all of the judges agreed that molecular diagnostics should generally be eligible for patent protection, and that the fact that they currently are not is a significant cause for concern.

There is a split of the court, however, with respect to whether the Federal Circuit has the ability to address the problem without an intervention by the Supreme Court or Congress. A seven judge majority (Lourie, Reyna, Chen, Hughes, Prost, Taranto, and Dyk) believes that the court’s hands are tied, and that Mayo dictates that diagnostic methods are patent ineligible. Judge Lourie, for example, wrote that the court could “accomplish little in [rehearing this case], as we are bound by the Supreme Court’s decision in Mayo.”  Judge Hughes “agree[d] that the language in Mayo, as later reinforced in Alice, forecloses this court from adopting an approach or reaching a result different from the panel majority’s.”

In light of this interpretation of Supreme Court precedent, these judges thought it would be futile to take up the case en banc. For example, Judge Hughes wrote that, while he “agree[d] that the bottom line for diagnostics patents is problematic[,] this is not a problem that we can solve. As an inferior appellate court, we are bound by the Supreme Court.”

The five dissenting judges (Moore, O’Malley, Wallach, Stoll, and Newman), on the other hand, expressed the view that, in fact, Mayo had not rendered all molecular diagnostics patent ineligible per se, and that the Federal Circuit had erred in interpreting Mayo in this restrictive manner. Judge Newman, for example, found the “majority’s position [to be] a flawed interpretation of the Court’s decision in [Mayo].  The Court did not hold that methods of diagnosis are subject to unique patent-eligibility rules. We have mistakenly enlarged the Court’s holding, in substance and in application.”  These five judges would have reheard the case en banc, allowing the Federal Circuit an opportunity to correct this perceived error, and opening up the door for the patenting of at least some molecular diagnostics.

Notably, two of the judges that decided CareDx, Lourie and Hughes, were part of the Athena Diagnostics majority that interpreted Mayo as requiring a finding of patent ineligibility for diagnostic claims of this type. The third judge on the CareDx panel, Judge Bryson, was a senior judge at the time Athena Diagnostics was decided, and did not participate in that decision.

In CareDx, the patent owner tried unsuccessfully to convince the court that the DNA analysis techniques specifically recited in the claims were “unconventional” enough to avoid the strictures of Mayo. While implicitly acknowledging that techniques such as PCR and DNA sequencing are conventional, CareDx basically argued that digital PCR and next-generation sequencing were sufficiently cutting edge at the time of the purported invention as to be not “conventional” for purposes of the Mayo two-part framework. But these techniques were apparently known to those of skill in the art at the time, and under the Federal Circuit’s current interpretation of Mayo I think the court would have found the use of any known method of DNA analysis to be lacking in the “inventiveness” required to meet the standard. While the “admissions” in the patent document provided a convenient route for the court to conclude that the methods were conventional, I think it would have arrived at the same conclusion regardless of any statements made in the patent, given that these techniques were presumably not novel at the time of invention.

by Dennis Crouch

Arthrex v. Smith & Nephew (Fed. Cir. 2022)

In this ongoing litigation IPR litigation, Arthrex has filed another petition for  rehearing — arguing that it still has not received the promised “Director Review” sufficient to cure the appointments clause problem apparent in the prior PTAB decision cancelling its patent claims.

The Supreme Court remanded this case so Arthrex could seek review of the Patent Trial and Appeal Board’s decision by a principal officer appointed by the President and confirmed by the Senate. On remand, Arthrex never received that principal officer review. Instead, Arthrex’s petition was denied by Commissioner Hirshfeld, who purported to exercise the Director’s functions during a vacancy in the office.

Arthrex’s particular argument focuses on the Federal Vacancies Reform Act providing “the exclusive means for temporarily authorizing an acting official to perform the functions and duties” of a principal office.   Hirshfeld did not qualify for that role under FVRA.  If you recall, Hirshfeld was never particularly identified as the “acting director” as a linguistic twist around the statute. Rather, Hirshfeld’s title was “performing the functions and the duties” of the Director.

The merits of the IPR turned on the Board’s decision that Arthrex’s purported priority application did not provide written description support of the challenged claims. The result was that Arthrex could not claim the benefit of that earlier filing data and intervening various prior art references rendered the claims invalid.   In its petition, Arthrex also focuses on this issue and argues that “the Board acted beyond the scope of its statutory grant of authority” when it considered the Section 112 issues.  Rather, under §311(b), review is limited only to consideration of Section 102/103.

Arthrex Petition 2022.  Jeffrey Lamkin argued the case before the Supreme Court and continues to represent Arthrex in this appeal.

by Dennis Crouch

Wireless Protocol Innovations (WPI) v. TCT Mobile, Inc. (Fed. Cir. 2022) (non-precedential)

Literally Disclosed: In IPR round one, the PTAB sided with patent challenger TCT Mobile and found claims 1 & 3-5 of US8274991 unpatentable as obvious.  On appeal though the Federal Circuit partially reversed, vacated and remanded.  The appellate decision altered claim construction and told the PTAB to try its analysis again with the new construction.

Not Literally Disclosed: On remand, the patent challenger TCT successfully shifted its argument based upon the Federal Circuit’s new claim construction.  The PTAB again found the claims obvious based upon the same prior art–albeit with a slightly different explanation. In its original decision, the PTAB concluded that the prior art disclosed a particular claim element. On remand, that conclusion was no longer appropriate because of the altered claim construction.  Still, the PTAB concluded that it would have been obvious to modify the prior art achieve the invention as construed. I call this the not-literally-disclosed ground.

On appeal this time, the Federal Circuit has fully reversed–holding that TCT had waived the not-literally-disclosed ground by failing to raise it in IPR Round One–prior to the first Federal Circuit appeal.   The court suggests here that an altered argument might be appropriate if the new claim construction had suddenly arrived out of the blue sky. But in this particular case, the Federal Circuit’s preferred claim construction was the construction argued throughout the IPR by the patent owner WPI.

TCT was on notice of WPI’s claim construction position [during the IPR Round One briefing] and TCT thus forfeited the Sen-modification argument by failing to even attempt to introduce it prior to remand. Our decision in Wireless Protocol I did not set forth a new claim construction never contemplated by the parties.

Slip Op.

The original Federal Circuit decision issued in the summer of 2019.  The Board took 21 months to issue the new decision on remand.  The patentee had also argued that the delay was improper because it blew past the 6-month goal set within the Board’s Standard Operating Procedure.  On appeal, the Federal Circuit concluded that the parties had no appealable right in this situation:

We disagree with WPI that the Board violated WPI’s due process rights or any statute, regulation, or internal operating procedure by not meeting the goal to issue remand decisions within six months of this court’s mandate as set forth in the Board’s Standard Operating Procedure 9.

Slip Op. (emphasis in original).

Hypo: Copycat would like to copy Competitor’s product. The patent covering the product expired as have patents covering some methods-of-use, but Competitor still has one method-of-use patent in force.  The question–when you sell its product, how careful does Copycat need to be to avoid inducing infringement?

This hypothetical situation gets trickier when we are talking about FDA regulated drugs because the FDA dictates labeling content for generic (ANDA) filers.  And, for the most part, the content of the generic label is derived directly from the brand-patentee’s label.

An important drug case involving this situation is pending on petition for certiorari before the Supreme Court. Teva Pharms. USA, Inc. v. GlaxoSmithKline LLC, SCT Docket No. 22-37 (2022).  Teva has petitioned its “skinny label” induced infringement loss to the Supreme Court–seeking a ruling that the FDA-approved process creates a limited safe harbor for its label content.

Once a brand drug is no longer patented, the fact that some of the drug’s uses remain patented “will not foreclose marketing a generic drug for other unpatented [uses].” Caraco (2012). Instead, a generic manufacturer can sell its product with a “skinny label” that “carves out” any patented uses found in the brand drug’s labeling—and thereby avoid inducing infringement of the brand manufacturer’s patent rights. See 21 U.S.C. § 355(j)(2)(A)(viii). To aid in this process, brand manufacturers must provide a sworn statement to FDA identifying “the specific section(s)” of their labeling “that describes the method of use” claimed by their patents. 21 C.F.R. § 314.53(c)(2)(i)(O)(2), (c)(2)(i)(P)(2). Those are the sections that generic manufacturers then carve out of their labeling in order to obtain FDA approval despite the brand manufacturer’s remaining patents.

The question presented is:

If a generic drug’s FDA-approved label carves out all of the language that the brand manufacturer has identified as covering its patented uses, can the generic manufacturer be held liable on a theory that its label still intentionally encourages infringement of those carved-out uses?

Teva Pharms. USA, Inc. v. GlaxoSmithKline LLC, SCT Docket No. 22-37 (2022).

Background: The drug carvedilol (a beta blocker) was patented, but those patents have expired.  GSK sells the drug with FDA approved labelling for treatment of three different cardiac-related problems: (1) congestive heart failure; (2) hypertension; and (3) left ventricular disfunction following myocardial infarction.  GSK had patent rights covering all three uses, but by 2007 the patents covering uses (2) and (3) had expired.  Teva obtained FDA approval to begin selling and marketing a generic version of the drug, but with a “skinny label” that doesn’t mention the still-patented method of use for congestive heart failure.  As you might expect, folks paying the bills in American healthcare immediately realized that Teva’s much cheaper drug was therapeutically equivalent to GSK’s branded ver$ion and began substituting the generic to treat congestive heart failure as well.  GSK sued Teva for inducing infringement and won a jury verdict for $235 million, but the district court rejected the verdict on JMOL. (Judge Stark, now at the Federal Circuit). On appeal, the Federal Circuit reinstated the jury verdict–critically finding that the FDA-required label on Teva’s generic drugs encouraged doctors to prescribe the drug.  The basic problem was that a medical professional could examine the label information about how the drug works for the non-patented uses and gain an understanding that it also works for congestive heart failure.  The majority opinion from Chief Judge Moore and Judge Newman was per curium.  Judge Prost filed a strong dissent in the case:

GSK’s sworn FDA filings identified just one use as patented. So Teva carved out that use and came to market with its “skinny” label. It played by the rules, exactly as Congress intended.

Prost in dissent. Beyond the label itself, GSK also presented evidence of a limited amount of Teva advertising that its version was “indicated for treatment of heart failure and hypertension” and was a “generic equivalent” of GSK’s branded drug.  That evidence helped the Federal Circuit reinstate the jury verdict.  But, the majority still relied upon language from the label itself in finding inducement.  The majority in the case also noted that on remand the district court might still decide the case in Teva’s favor on the theory of equitable estoppel based upon GSK’s statements to the FDA that were relied upon by Teva (to its detriment).

The petition provides two reasons for granting the writ:”

The divided panel’s controversial opinion upends the legal rules facing the modern prescription-drug marketplace, wreaking doctrinal havoc in two equally troubling ways. Such a radical transformation warrants this Court’s intervention now.

First, the decision below eviscerates the key element of inducement liability: the requirement that a plaintiff prove “active steps taken to encourage direct infringement.” Grokster. Actively encouraging or instructing an infringing use has always been required to support inducement, and merely “mentioning” or “describing” an infringing use has always been legally insufficient. Now, however, that difference has disappeared, leaving would-be defendants who sell off-patent products labeled for unpatented uses in the dark about whether and when they will face massive infringement verdicts.

Second, the decision below effectively nullifies a Congressional enactment created specifically to encourage precisely what Teva did here: bring a low-cost generic drug to market labeled for unpatented uses. For decades, the skinny-label statute has worked as intended by providing generic manufacturers with the predictability they need to bring low-cost generic drugs to market labeled for unpatented uses. If they carved out the portions of the labeling that brandname manufacturers themselves identified as covered by method-of-treatment patents, they could launch without risk of infringement liability. But now, every skinny-label launch is an at-risk launch—and patients, FDA, and the healthcare system will suffer the consequences.

Petition. The petition was filed by highly regarded Supreme Court litigator William Jay (Goodwin) on July 11, 2022.  This is a case that I would ordinary expect to see a CVSG from the Supreme Court. We’ll see.