In re Sprouts Farmers Market, Inc. (Fed. Cir. 2020)

Sprouts is a supermarket chain sued by Motion Offense, LLC in W.D.Tex. for infringing its patents, US10013158  & US10021052 (processing and sharing a “data object”).  The basic allegation in the case is that Sprouts’ is infringing the patents by using Dropbox.  After hearing that its customers were being sued, Dropbox itself brought a declaratory judgment action in D.Del. against Motion Offense seeking a non-infringement declaration.

Asserting a “customer-suit exception,” Sprouts motioned for a stay of the W.D.Tex case pending outcome of the D.Del. dispute.  Judge Albright refused to stay the case and Sprouts then petitioned for writ of mandamus.  Meanwhile, the Delaware court ordered the DJ lawsuit transferred to W.D.Tex so the cases could be decided together, but also stayed that action pending outcome of the mandamus.

The Federal Circuit has now denied mandamus without particularly discussing the “customer-suit exception,” the court found that Sprouts had not met the “very demanding standard” of mandamus.

Only exceptional circumstances, amounting to a clear abuse of discretion or judicial usurpation of power, will justify the extraordinary remedy of mandamus. In re Cordis Corp., 769 F.2d 733 (Fed. Cir. 1985).

On remand, the court did not provide any order to the district court but did offer its expectation:

now that both related cases are in the Western District of Texas, we expect the district court to consider whether the most efficient resolution entails staying or consolidating at least some of the underlying proceedings.

Id.

More Background: The “customer suit exception” is an exception to the normal first-to-file approach to civil litigation stays.  The first-to-file approach works as follows:

• When there are multiple similar and overlapping lawsuits filed in parallel, the district court may want to stay some of the lawsuits for judicial economy.
• The first-to-file “rule” indicates that the court should let the first-filed lawsuit keep running and stay the later filed lawsuits.

I’ll note here that this first-to-file approach is not a RULE rule but rather a rule-of-thumb type of rule — a typical approach within the sound discretion of the district court judges involved in the litigation.

In patent cases, courts have recognized a customer suit exception to the first to file rule in a situation where there are parallel lawsuits involving (1) the prime manufacturer/originator of an infringing product/service and also (2) customers of the prime manufacturer. Even if the customers were sued first, courts have found it proper and appropriate to stay those cases pending outcome of the big one against the prime manufacturer. Other approaches abound — including synchronizing motion practice and partial joinder.  The guiding principles for all of these approaches is “efficiency and judicial economy” Tegic Commc’ns Corp. v. Bd. of Regents of Univ. of Texas Sys., 458 F.3d 1335 (Fed. Cir. 2006).  As stated by Rule 1 of the Federal Rules of Civil Procedure: The rules “should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.”

by Dennis Crouch

My Civil Procedure class at Mizzou is now “Online Civil Procedure.”  The final topic in the course will be “respect for judgments.”

A basic setup of our  legal system is to offer substantial justice — giving all parties due process including an opportunity to be heard and judged by an impartial tribunal.  Once that process is complete, the result is then seen as final and further challenges regarding the same issues or claims are precluded.

In patent law, the sense of finality and respect for judgment has been substantially complicated with the rise of AIA trials.

A case-in-point is Chrimar Systems v. Ale USA (Supreme Court 2020).  Chrimar is typical of many contemporary cases because it involves parallel district court and PTAB litigation.

Here is a timeline of the district court litigation.

• Chrimar sued ALE for infringement on four patents.
• ALE admitted infringement and a jury rejected ALE’s invalidity defenses. The district court entered judgment awarding damages and ongoing royalties.
• On appeal, the Federal Circuit affirmed except to claim construction of one term in one of the four patents. The appellate court particularly stated that the partial reversal was “immaterial to damages
  because any damages that would result from the alleged
  infringement of the [remanded] ’012 patent also results from
  the infringement of the ’107 and ’760 patents.”
• Back on remand, Chrimar issued a covenant-not-to-sue on the ‘012 patent and the district court amended its final judgment favoring Chrimar – now  just include the other three patents with the same damage award.

Meanwhile at the PTAB:

• After the original lawsuit was filed, Chrimar filed for IPR petitions — challenging each of the asserted patents.  The PTAB granted those petitions.
• After the jury verdict and district court (original) final judgment, the PTAB sided ALE — cancelling the all of the asserted claims.

Finally at the Federal Circuit:

• September 9, 2019: The Federal Circuit affirmed the PTAB Decisions in a R.36 Judgment Without Opinion
• September 9, 2019: The Federal Circuit vacated the district court final judgment and “remanded for dismissal.” The court held that its simultaneous affirmance of the IPR decisions gives effect to the PTAB judgments that applies to all still pending cases. Since an appeal was still pending in the district court litigation, that it applies there. “Our affirmance of the Board’s decisions of unpatentability of the patent claims at issue in the present case has ian immediate issue-preclusive effect on any pending or copending actions involving the patent[s].’ XY, LLC v. Trans Ova Genetics, 890 F.3d 1282, 1294 (Fed. Cir. 2018).

Now to the Supreme Court:

Chrimar has now petitioned the U.S. Supreme Court in the case with the basic argument that the lawsuit was already finally decided by the district court and an administrative agency (the PTO) does not have the right or power to reopen that final judgment.  The petition explains:

Chrimar brought an action for infringement against ALE under four patents. A jury rejected ALE’s invalidity defenses and awarded past damages. The District Court then awarded post-judgment ongoing royalties. The … Federal Circuit affirmed liability and damages, expressly holding that a partial remand to reconstrue one patent was “immaterial to damages because any damages that would result from the alleged infringement of the [remanded] ’012 patent also results from the infringement of the ’107 and ’760 patents.” App. 48a.

After the District Court’s entry of the eventually-affirmed judgment, the Patent Trial and Appeal Board (“PTAB”) (part of an Executive Branch agency) rendered final decisions finding unpatentable all asserted claims (a decision later affirmed). On this basis, the Federal Circuit ordered that the Article III damages judgment be vacated and remanded for dismissal. The Federal Circuit reasoned that the later Executive Branch administrative outcome required vacating the prior already-affirmed Article III judgment.

The questions presented are:

1. Whether the Federal Circuit may apply a finality standard for patent cases that conflicts with the standard applied by this Court and all other circuit courts in non-patent cases.

2. Whether a final judgment of liability and damages that has been affirmed on appeal may be reversed based on the decision of an administrative agency, merely because an appeal having nothing to do with liability, damages or the proper calculation of the ongoing royalty rate is pending.

The petition here is correct that the Federal Circuit’s preclusion principle here “is the sole invention of the Federal Circuit, having been adopted by no other court.”

This legal rule has earned sharp rebuke from academics and jurists alike. It is legally incorrect and conflicts with the decisions of all other circuits and of this Court. The legal rule incentivizes unfairness against patentees, motivates gamesmanship by accused infringers, leads to wasted judicial effort by trial and appeals courts, and disincentivizes innovation by undermining confidence in the patent system.

Petition at 4. See  Paul R. Gugliuzza, (In)valid Patents, 92 Notre Dame L. Rev. 271 (2016); Peggy P. Ni, Rethinking Finality in the PTAB Age, 31 Berk. Tech. L.J. 557 (2016)

Guest post by Saurabh Vishnubhakat, Professor at the Texas A&M University School of Law and the Texas A&M College of Engineering. Disclosures: Professor Vishnubhakat was formerly an advisor at the USPTO, but his arguments here should not be imputed to the USPTO or to any other organization. Professor Vishnubhakat was an author of amicus briefs by Professors of Patent and Administrative Law in Wi-Fi One v. Broadcom (in support of neither party) and in Thryv v. Click-to-Call Technologies (in support of the respondent), both of which cases are discussed below.

The March 18, 2020 precedential Federal Circuit opinion in Facebook v. Windy City has notable implications for the system of inter partes review proceedings before the USPTO Patent Trial and Appeal Board. The case was about how two important provisions of the IPR statute—the one-year time bar of § 315(b) and the Director’s discretion to permit joinder under § 315(c)—interact with each other. (As those who follow PTAB issues know, the one-year time bar is also currently before the Supreme Court in Thryv v. Click-to-Call Technologies, on whether PTAB determinations about the time bar are subject to judicial review.) The holding in Windy City is fairly straightforward. The broader implications deserve some elaboration.

The Panel Decision

The panel held that § 315(c) does not authorize same-party joinder, i.e., does not allow a petitioner who has filed an inter partes review petition to join its own, earlier inter partes review petition. The panel also held that § 315(c) does not authorize issue joinder, i.e., does not allow joinder that would introduce new issues material to patentability, such as new patent claims or new grounds for cancellation. (As to the merits of the PTAB’s final written decisions on claims from each of Windy City’s four patents, the panel affirmed that the PTAB’s findings of obviousness were supported by substantial evidence—except as to the patent claims that had been improperly joined through Facebook’s later, time-barred petitions.)

The Dispute’s Background and Timeline

The case began with an infringement suit in which Windy City asserted four patents against Facebook. Exactly one year after it had been served with Windy City’s complaint, Facebook timely sought inter partes review of some, but not all, claims across all four of Windy City’s asserted patents. Taken together, the four patents contained 830 claims, though it was not yet clear which claims were in suit. The PTAB instituted review as to nearly all of the patent claims that Facebook challenged in its petitions. By the time Windy City had clarified which particular patent claims it was asserting in its district court suit, the one-year bar of § 315(b) had passed.

Facebook still sought inter partes review on the remaining patent claims asserted against it, along with a motion under § 315(c) to join these IPRs to the earlier IPRs that the PTAB had already instituted. The PTAB instituted both petitions and allowed joinder.

The Court’s Statutory Analysis

On the question of same-party joinder, the panel explained that the Director’s discretion under § 315(c) is only to “join as a party to that inter partes review any person who” meets certain conditions. Slip op. at 14 (emphasis added). This language excludes the joinder of a petitioner who is already a party to the existing IPR, as Facebook was in this case. The court analogized to the Federal Rules of Civil Procedure, under which “joinder of a person as a party is uniformly about adding someone that is not already a party.” Id. at 16 (emphasis in original). It also noted that joinder under § 315(c) pertains to persons, not proceedings, and that combining one IPR proceeding with another, earlier IPR proceeding was best understood in terms of a different statutory provision: consolidation under § 315(d). Id. at 14–15.

Importantly, this reading of § 315(c) does not depend on whether the later-filed petition or petitions were time-barred under § 315(b). The USPTO’s contrary view had been expressed a year ago by Precedential Opinion Panel’s review of Proppant Express Investments v. Oren Technologies. The agency’s conclusion was that same-party joinder is permissible under § 315(c)—indeed, is permissible even if the later-filed petition may otherwise be time-barred under § 315(b).

Similarly on the question of issue joinder, the panel started from the same premise that the Director’s discretion under § 315(c) is only to join a person as a party to an earlier IPR who meets certain conditions. Among these conditions is the limitation that such a joinder must be to “to an already-instituted IPR.” Slip op. at 17 (emphasis in original). This point matters because the already-instituted IPR “is governed by its own
petition and is confined to the claims and grounds challenged in that petition.” Id. at 17–18 (citing SAS Institute v. Iancu, especially that “the petitioner’s petition, not the Director’s discretion, is supposed to guide the life of the litigation”). That confinement, the court concluded, does not allow “the joined party to bring new issues from the newer proceeding into the existing proceeding.” Id. at 18.

As with same-party joinder, the court’s view against issue joinder did not depend on whether the later-raised issues were time-barred under § 315(b). And here, too, the court explained that allowing a new petition with new issues to be combined with an already-instituted petition with its own issues was simply not the purview of party joinder under § 315(c). Rather, it was the stuff of consolidation under § 315(d). Id. at 18–19.

The Court’s Deference Analysis

On both of these statutory questions, the panel concluded that the plain language of § 315(c) is unambiguous. As a result, the USPTO’s contrary view was not entitled to deference under the familiar two-step framework of Chevron v. NRDC. Id. at 23–24. The agency lost at step one.

The entire panel also went further, however, in a separate concurring opinion that offered additional views about what deference, if any, might have been owed to the USPTO as a result of its Precedential Opinion Panel’s conclusion in Proppant. The panel in its concurring opinion concluded that, even if § 315(c) were deemed ambiguous in the contexts at issue here—same-party joinder and issue joinder—the agency’s views as expressed through the Precedential Opinion Panel would still fail at Chevron step two: the most reasonable reading of § 315(c) would remain the one adopted in the majority opinion. Slip op. at 2 (Prost, C.J., conc.).

This position of non-deference and the precedential interpretations of joinder and the one-year bar together represent a major milestone in the PTAB’s adjudicatory power as well as in Federal Circuit oversight of the USPTO. It is these two very practical concerns, which are at the heart of the AIA’s system of administrative patent revocation, where the larger significance of Windy City really lies.

Implications for the PTAB and the USPTO

The District Courts vs. the Agency

That first concern of adjudicatory power is, to be more precise, about the separation of the PTAB’s power from that of the federal courts—indeed, about the AIA’s intended plan that the PTAB should act as a substitute for the courts. The one-year time bar is an especially important safeguard of that substitutionary choice, which the AIA requires petitioners to make. As I have previously discussed on this blog, the boundary-enforcing function of the one-year bar makes § 315(b) a robust statutory limit on the Director’s discretion in institution-related matters.

For purposes of judicial review, § 315(b)’s work as a statutory limit means that the en banc Federal Circuit correctly decided Wi-Fi One v. Broadcom, holding that the nonappealability of institution decisions under § 314(d) does not extend to PTAB determinations about the one-year time bar. It also suggests that the Supreme Court in Thryv v. Click-to-Call, argued last December, should affirm that § 315(b) determinations are judicially reviewable.

The problem of joinder, however, raises further questions both on its own and in combination with the one-year bar. On its own, PTAB joinder offers a mechanism for socially beneficial collective action in challenging patents whose validity may be in question. The problem of resolving patent validity through litigation in the federal courts is not limited to cost, delay, and potential inaccuracy due to the relative technical inexpertise of most judges and juries. That problem also includes the high constitutional barrier of access to federal court—in the form of Article III standing—that allows only certain parties with certain kinds of incentives even to enter the fray. PTAB proceedings under the AIA have no such standing requirement and so reduce this barrier to entry considerably.

Moreover, the Blonder-Tongue doctrine means that an unsuccessful patent validity challenge in federal court estops only the challenger, whereas a successful validity challenge invalidates the patent as against the world. Thus, federal-courts litigants with a concrete enough stake in challenging a patent generally bear all the costs of losing but must share with the world—including their competitors—the benefits of winning, creating a collective action problem. By contrast, the relatively lower costs of entering and conducting PTAB review and the ability to join inter partes review petitions as co-challengers reduce this collective action problem.

Empirical research on the PTAB offers good evidence of this intuition. For example, inter partes review (unlike covered business method review) allows not only defensive petitions by parties sued in district court for infringement but also entirely preemptive petitions by those who have yet to be sued on the patent in question. Thus, when so-called “standard” petitioners who act defensively file IPR petitions, they may subsequently be joined by “nonstandard” petitioners who are interested in striking preemptively. And across most major fields of technology, the share of standard IPR petitions (in which at least one petitioner was previously sued on the same patent) is greater than the share of standard IPR petitioners (who have themselves previously been sued on the same patent). In fact, this disparity is quite high for certainly technology categories, such as Drugs and Medical (48.5% vs. 70.8%) and Mechanical (53.1% vs. 70.2%).

What this disparity reveals is that petitioners who are not prior district-court defendants tend to use § 315(c) to join IPR petitions that have been filed by prior defendants.

Source: Saurabh Vishnubhakat, Arti K. Rai & Jay P. Kesan, Strategic Decision Making in Dual PTAB and District Court Proceedings, 31 Berkeley Tech. L.J. 45 (2016) [SSRN].

Still, though joinder under § 315(c) offers benefits for socially desirable collective action, it is easy to see how it can conflict with the overarching boundary between district courts and the PTAB, the very boundary that the one-year time bar of § 315(b) exists to enforce. If parties can evade the one-year deadline by joining already-instituted petitions, whether their own or those of others, then the substitutionary function of PTAB review is undermined, potentially significantly. But if patent owners can “run out the clock” in district court before identifying their patent claims in suit—as Facebook cautioned in this case, slip op. at 21—then petitioners may not be able to make fully meaningful use of inter partes review.

Given these competing policy choices, the practical question becomes: who should decide the contours of the PTAB-district court boundary, the USPTO or the Federal Circuit? By construing the statute for itself and giving no deference to the USPTO’s interpretation, the Federal Circuit has sent a strong signal about the degree to which the USPTO still does not enjoy full policymaking authority in the patent system.

The Federal Circuit vs. the Agency

That same strong signal from the Federal Circuit also pervades the second major concern, regarding appellate oversight of the USPTO. The panel opinion’s direct holding about § 315(c) sidesteps whether the substance of the Precedential Opinion Panel’s position would merit Chevron deference, as the statute here was deemed unambiguous. The court’s dicta in its separate concurring opinion, however, offers a stark picture of how the agency’s future positions might fare in debates over judicial deference.

In that picture, the role of the Precedential Opinion Panel is of central importance. Created in September 2018 to streamline the process by which PTAB opinions could be designated precedential, the POP marked a departure from the USPTO’s preexisting Standard Operating Procedure, which had required discussion and a majority vote from the entire PTAB membership followed by approval from the Director. That process had proven relatively unwieldy for generating case law that could effectively bind PTAB panels, and the resulting lack of precedential force had hamstrung the USPTO’s desire for deference.

For example, the Federal Circuit had previously “decline[d] to give Chevron deference to these nonprecedential Board decisions, which do not even bind other panels of the Board”—observing further that, “[i]ndeed, this court has not yet opined on whether deference is warranted for precedential Board decisions.” Power Integrations v. Semiconductor Components, 926 F.3d 1306, 1318 (Fed. Cir. 2019). And even in the present case, the Windy City concurrence still noted that “precedential value alone does not add up to Chevron entitlement.” Slip op. at 13 (Prost, C.J., conc.).

What matters more for Precedential Opinion Panel review, the court explained, is whether Congress has delegated to the USPTO the authority to speak with the force of law and whether the USPTO’s relevant statutory interpretation represents an exercise of that authority. Id. at 6 (citing United States v. Mead Corp., 533 U.S. 218, 226–27 (2001)). In the court’s view, the POP process does not rise to that level. It is true that § 316 confers rulemaking authority to govern the conduct of inter partes review proceedings. However, that authority is limited to prescribing regulations and does not include other means for adopting legal standards and procedures. Id. at 7. In this regard, POP review “is not equivalent in form or substance to traditional notice-and-comment rulemaking” and so does not rise to Chevron-worthy agency action. Id. at 12–13.

It is also true that §§ 3(b) and 3(c) delegate adjudicatory authority over inter partes review proceedings and that, according to the Supreme Court in Mead itself, the power to adjudicate is as quintessential a form of lawmaking authority as rulemaking. Id. at 8. However, that authority belongs in this case to the PTAB itself whereas the rulemaking authority of § 316 is delegated to the Director. The court observed that most modern Congressional delegations of authority to administrative agencies vest “a single delegee with both rulemaking and adjudicatory powers”—that delegee being the agency head. Id. at 9–10. The AIA, by contrast, divided the powers of rulemaking and adjudication between the Director and the PTAB. In this sort of “bilateral structure,” the two forms of lawmaking cannot be exercised interchangeably in order to achieve Chevron deference. Id. at 10 (citing Martin v. OSHRC, 499 U.S. 144, 154–55 (1991)).

Notably, the USPTO has been here before. As the Federal Circuit held in its complex and fractured en banc decision in Aqua Products v. Matal (Fed. Cir. 2017), the USPTO was not entitled to Chevron deference for its interpretation of § 316(e), which places “the burden of proving a proposition of unpatentability” upon the petitioner. The USPTO’s view at the time was that, for patent claim amendments offered during inter partes review, the patent owner bears the burden of proving that the amended claims are patentable—not the petitioner to prove that the amended claims are unpatentable. The en banc court concluded by a 7–4 majority that the USPTO’s approach did not merit Chevron deference, but the split in reasoning did much to shape the outcome.

Only five of the eleven judges had concluded that § 316(e) was unambiguous on the relevant question; the other six concluded that the statute was ambiguous. But of those latter six judges, only four concluded that Chevron deference was appropriate for the USPTO’s interpretation of § 316(e). The other two judges held that the agency had not engaged in APA-compliant rulemaking and so was not entitled to deference. Thus, the USPTO’s engagement in APA-compliant rulemaking could potentially have turned a 7–4 defeat into a 6–5 victory on the question of Chevron deference.

Source: Saurabh Vishnubhakat, The Mixed Case for a PTAB Off-Ramp, 18 Chi.-Kent J. Intell. Prop. 101 (2019) [SSRN].

Conclusion

The concurring opinion in Windy City seems to offer much the same lesson. It is not enough simply that the AIA contained delegations of lawmaking authority and that the USPTO has attempted to speak with the force of law. The institutional details of who in the USPTO received which powers—and how specifically those powers were exercised to generate the agency’s views—matters a great deal. Following an initial period of judicial latitude toward broad USPTO assertions of authority and discretion, the Federal Circuit’s more recent jurisprudence has reflected some retrenchment, such as its en banc reversal in Wi-Fi One. The same is true of the Supreme Court, which after a broadly drawn affirmation of agency discretion in Cuozzo v. Lee, took a considerably more skeptical view two years later in SAS Institute v. Iancu. This retrenchment, if it continues, will demand an increasingly formal, increasingly specific exercise of the authority that the USPTO believes it is exercising.

by Dennis Crouch

Illumina, Inc. and Sequenom, Inc. v. Ariosa Diagnostics, Inc. (Fed. Cir. 2020)

These parties were before the Court back in 2015 in a case that ended with a big holding that Illumina & Sequenom’s patents were invalid as directed to an unpatentable natural phenomenon.  The discovery here is super interesting — a pregnant mother has the baby’s DNA floating around in her plasma.  Turns out that there is lots of DNA floating around in a human body: mother DNA; baby DNA; bacterial DNA; viruses; mitochondrial; etc.  The researchers here used a smart way to find the baby-DNA in the mess that relies on the fact (i.e., natural phenom) that baby-DNA is part mother and part father.  The researchers got a sample of paternal DNA (from the father) and then looked for DNA in the mother’s plasma that included segments that matched the father’s DNA.  Prior to this breakthrough some parents agonized over whether to collect some baby DNA by sticking a big needle into the amniotic sac.  That approach had the problem of causing death in a small number of cases.   In any event, the 2015 Federal Circuit held the patent claims ineligible and the Supreme Court denied certiorari.

The present case involves two additional patents that use the same natural phenomena to solve the same problems.  An important added element here is that the inventors also found that baby-DNA fragments in the plasma tend to be shorter than the mother-DNA in the plasma.  Both patents here take advantage of this phenomenon to claim methods of preparing DNA for testing. The patent document explains this finding as follows:

[S]urprisingly, the majority of the circulatory extracellular fetal DNA has a relatively small size of approximately 500 base pairs or less, whereas the majority of circulatory extracellular maternal DNA in maternal plasma has a size greater than approximately 500 base pairs. . . . This surprising finding forms the basis of the present invention according to which separation of circulatory extracellular DNA fragments which are smaller than approximately 500 base pairs provides a possibility to enrich for fetal DNA sequences from the vast bulk of circulatory extracellular maternal DNA.

‘751 Specification.

The district court ruled the asserted claims ineligible.  On appeal here, however, the Federal Circuit has reversed — holding that these claims are directed at a technical solution that crosses the threshold into a patent eligible invention.

We conclude that the claims are not directed to that natural phenomenon but rather to a patent-eligible method that utilizes it.

This is a split decision with Judge Lourie explaining why the claims are patent eligible and Judge Reyna dissenting. Judge Moore signed-on with the Louri opinion making the result 2-1.

= = = =

The patents here both relate to preparing sample to be tested. U.S. Patent 9,580,751 claims a method of “preparing a DNA fraction from a pregnant human female.” Claim 1 includes three steps:

(a) extracting DNA from pregnant mother’s blood plasma [this should include both fetal and maternal DNA fragments];

(b) using “size discrimination” to remove DNA fragments greater than ~500 bp; [This results in what the claims call a “fraction of the DNA”.]

(c) analyzing a genetic locus in the fraction of DNA produced in (b). [Although not stated, this analysis could discern whether the DNA is fetal and the presence of genotypic abnormalities.]

U.S. Patent 9,580,751 Claim 1. The ‘931 patent is almost identical — it removes DNA fragments < 300 bp instead of 500 bp.

Note here that prior to the invention researchers already knew how to do all of these steps individually. However, there was no reason to separate-out the <500 bp fragments prior to the discovery of the phenomenon that most of those would be fetal DNA. This is what lead Judge Reyna to reject the claims as ineligible:

The patents’ only claimed advance is the discovery of that natural phenomenon. The claims, the written description, and the legal precedent applicable to this case all support the conclusion that the patents are ineligible. . . .

The inventors discovered a natural phenomenon: that cff-DNA tends to be shorter than cell-free maternal DNA in a mother’s blood. . . . Other than the surprising discovery, nothing else in the specification or the record before us indicates there was anything new or useful about the claimed invention.

Bottom line, researchers discovered that most of the fetal DNA in the plasma is <500 bp and the resulting invention directly applies that and broadly claims fractioning-out DNA from the plasma that is <500 bp.

The majority agreed that “the inventors were not entitled to patent the natural phenomenon that cell-free fetal DNA tends to be shorter than cell-free maternal DNA.”  Here, however, the majority concludes that the claimed method merely takes advantage of that phenomenon “by employing
physical process steps to selectively remove larger fragments of cell-free DNA and thus enrich a mixture in cellfree fetal DNA.”

In prior cases the Federal Circuit has distinguished between unpatentable diagnostic methods and patent eligible methods of treatments. In this case, the court places the inventions at issue in a third category: method of preparation.

This is not a diagnostic case. And it is not a method of treatment case. It is a method of preparation case.

This line allows the court to distinguish the case from the prior Ariosa decisions and find the claims patent eligible.

The Supreme Court has postponed oral arguments for its upcoming March session.  This includes two IP cases:

• PTO v. Booking.com (Can .COM transform an otherwise generic term into a protectable trademark?)
• Google v. Oracle (Is a software interface [an the JAVA API] protectable by copyright?)

The Federal Circuit’s next oral arguments are in April and so the court can delay any particular decision on the issue.  If you have a case before a district court judge or PTAB, check with your judges and clerks to understand timelines going forward.

The chart above should be no surprise. Most pending applications before the PTO are now post-AIA patent applications. These are applications that were filed on or after March 16, 2013 and don’t claim priority to any prior patent filing. Note here that the PTO does not appear to enter the final AIA-status for some new applications filed with missing parts and so the numbers for the recently published cases may shift somewhat. The bulk of U.S. patents issue within four years of their priority filing date. However, there is a fairly long-tail. The patent with the longest pedigree for 2020 (thus far) is US10539396 for a dual-mode seeking missile (using both IR and RF sensors to direct a missile. The patent application was kept confidential on Gov’t order from 1976 – 2018.