by Dennis Crouch
I recently provided a set of interesting data on the large number of patents that are "at risk" of being invalidated based on the Federal Circuit's Cellect decision. This post follows up with a discussion of a recent article titled "Fixing Double Patenting" released in draft form by Stanford Professors Mark Lemley and Lisa Larrimore Ouellette. The article takes a critical look at the practice of obviousness-type double patenting in the U.S. patent system.
by Dennis Crouch
Many have been thinking of the potentially large impact of Cellect v. Vidal, which is now pending before the Supreme Court. This week I uncovered striking data that a very large number of patents have been impacted.
Some background:
by Dennis Crouch
The Federal Circuit's practice of issuing no-opinion affirmances under Rule 36 is facing renewed scrutiny in two recent petitions for rehearing en banc. In UNM Rainforest Innovations v. ZyXEL Communications Corp. and Island Intellectual Property LLC v. TD Ameritrade, Inc., the petitioners argue that the court's use of one-word Rule 36 judgments allowed it to sidestep key legal and factual issues raised on appeal. These petitions highlight ongoing concerns about the Federal Circuit's frequent use of Rule 36 and its impact on patent law development. The failure to provide an explanatory opinion is an appellate-procedure issue - the two patentees also argue that the lower tribunal made substantive legal errors.
I don't see the court as having a truly nefarious reason for its common no-opinion judgments, but the situation does call to mind the ancient fable about the emperor's new clothes adapted and popularized by Hans Christian Andersen.
by Dennis Crouch
Amarin Pharma, Inc. v. Hikma Pharmaceuticals USA Inc., No. 2023-1169 (Fed. Cir. June 25, 2024).
This is another "skinny label" generic pharmaceutical patent case. The basic setup involves a drug that has several different approved uses; with the branded manufacturer holding patents covering only some of the uses. The generic company is then permitted to sell the drug, but is labelled only for non-patented uses. These labels are known as carve-out or "skinny" labels under 21 U.S.C. § 355(j)(2)(A)(viii).
It is inevitable that people will purchase and use the generic drugs for the patented uses, and that the generic distributer will be accused accused of inducing those infringing acts. Although the generic typically makes a profit on these sales, it those profits pale in comparison to the profits lost by the branded company.
Amarin v. Hickma highlights some of the challenges that generics are facing when marketing drugs with these carved-out labels. One difficulty is that the FDA severely limits what the generic can say about the drug and its uses, and the carve-out is generally based upon statements made by the patentee. Here, the court follows a label-plus approach. The skinny label itself will not be enough to show inducement, but that evidence can be combined with other evidence (such as marketing) to prove liability.
by Dennis Crouch
The U.S. Supreme Court has granted certiorari in Dewberry Group, Inc. v. Dewberry Engineers Inc., a trademark damages case focused on how corporate separateness principles apply to disgorgement remedies under the Lanham Act, 15 U.S.C. § 1117(a). The Fourth Circuit's decision affirmed a $43 million disgorgement award against petitioner Dewberry Group (DG) for trademark infringement, an amount that included profits earned by DG's "legally separate" corporate affiliates. Apparently, the affiliates were “single-purpose entities,” also privately owned by John Dewberry, whose sole function was to own commercial properties serviced by DG.
Pierce the Veil: In its literal sense, a veil is a delicate fabric that separates the visible from the concealed, a barrier that can be easily lifted or parted. However, the phrase has a history of extending beyond the material world, with a veil often serving as a boundary between the physical and spiritual realms in our universe. Many of us go through life, only occasionally glimpsing beyond this veil into the hidden spiritual dimensions that, according to story tellers, lie alongside our own. In the corporate world, the veil of corporate personhood serves to shield the owners from personal liability, creating a legal fiction that separates the actions of the company from those of its shareholders. This veil of protection is not impenetrable, however, and can be pierced by the courts in cases of serious misconduct or wrongdoing, exposing the owners to personal responsibility. Although the truth of owner identity may already be known, piercing the corporate veil removes the protection against responsibility by attempting to holding accountable those who would misuse its protections. But, the legal doctrine of corporate separateness is quite strong and I might venture that it is easier to pierce the veil of our spiritual realms than the corporate analogue.
by Dennis Crouch
The Federal Circuit's 2023 decision in Axonics, Inc. v. Medtronic, Inc. marked an important change in inter partes review procedure, ensuring petitioners have an opportunity to respond patentee's newly proposed arguments, with the hope of discouraging patent owners from holding-back ("sandbagging") at the institution stage. Case-in-point is the Federal Circuit's recent Apple v. Omni MedSci decision authored by Judge Alan D. Albright sitting by designation.
by Dennis Crouch
The Federal Circuit has affirmed a D.N.J. court's dismissal of patentee Beteiro's infringement complaints against DraftKings, et al., agreeing that the asserted claims are directed to patent ineligible subject matter under 35 U.S.C. § 101. Beteiro, LLC v. DraftKings Inc., No. 2022-2275 (Fed. Cir. June 21, 2024). The patents at issue were directed to methods of facilitating remote gambling activity using devises equipped with GPS.
by Dennis Crouch
A second amicus brief has been filed - this one from the Intellectual Property Owners Association (IPO) - encouraging the Supreme Court to grant certiorari in Cellect, LLC v. Vidal, No. 23-1231. The case concerns the interplay between the Patent Term Adjustment (PTA) statute, 35 U.S.C. § 154(b), and the judicially-created doctrine of obviousness-type double patenting (ODP).
By Dennis Crouch
The Federal Circuit has reversed a preliminary injunction order in a trade secret misappropriation case, finding that the district court abused its discretion by failing to properly evaluate the likelihood of success on the merits and the balance of harms. Insulet Corp. v. EOFlow, Co., No. 2024-1137 (Fed. Cir. June 17, 2024). The appellate court held that the district court's analysis was deficient in several key respects, including not addressing the statute of limitations defense, defining trade secrets too broadly, and not sufficiently assessing irreparable harm and the public interest.
This classic trade secret case involves former employees left to join a competitor. As free humans, they are permitted to take their skill and wisdom to the new jobs, but are forbidden from misappropriating trade secret knowledge. That line drawing is particularly difficult, and one reason why many employers moved toward contractual non-compete agreements. The case is also complicated because the defendant here admit to reverse engineering that apparently lead to some substantial similarities between the products.
The decision highlights a high bar for obtaining a preliminary injunction, even in trade secret cases involving competitors where we previously may have assumed irreparable harm. The Federal Circuit here explained that lower courts are required to individually evaluate each of the four injunction factors - likelihood of success on the merits, irreparable harm, balance of hardships, and public interest. Conclusory assertions of competitive harm are insufficient to show irreparable injury. For trade secret claims in particular, the alleged trade secrets must be defined with specificity. But, this proof is often difficult at the preliminary injunction stage of a case when the particular knowledge used by the defendant has not been fully discovered.
The Federal Circuit has been seen as largely supporting strong trade secrecy rights. However, this decision may put a damper on forum shopping attempts.