Dissent: Three justices, led by Justice Breyer would have heard the case and would have found the patent invalid:

There can be little doubt that the correlation between homocysteine and vitamin deficiency set forth in claim 13 is a "natural phenomenon." . . . [The claimed] process instructs the user to (1)obtain test results and (2) think about them. . . . At most, respondents have simply described the natural law at issue in the abstract patent language of a "process." But they cannot avoid the fact that the process is no more than an instruction to read some numbers in light of medical knowledge.

The dissent also took shots at the State Street decision that started the business method craze.

Neither does the Federal Circuit’s decision in State Street Bank help respondents. That case does say that a process is patentable if it produces a "useful, concrete, and tangible result." But this Court has never made such a statement and, if taken literally, thestatement would cover instances where this Court has held the contrary. The Court, for example, has invalidated a claim to the use of electromagnetic current for transmitting messages over long distances even though it producesa result that seems "useful, concrete, and tangible." Morse. Similarly the Court has invalidated apatent setting forth a system for triggering alarm limits inconnection with catalytic conversion despite a similarutility, concreteness, and tangibility. Flook. And the Court has invalidated a patent setting forth a process that transforms, for computer-programming purposes,decimal figures into binary figures—even though theresult would seem useful, concrete, and at least arguably (within the computer’s wiring system) tangible. Gottschalk.

Documents:

• Read the LabCorp v. Metabolite Dissent 04-607.pdf
• NYTimes Article by Andrew Pollack

Tom Goldstein, attorney for respondents (and SCOTUS Blog proprietor) has filed a response to the SG.  In the response, Teleflex argues that CAFC precedent continues to evolve and extensively discusses the recent Kahn decision that detailed the full scope of CAFC obviousness treatment.

In Kahn, the court affirmed the PTO’s finding of obviousness, explaining at great length that a "teaching, suggestion, or motivation" can be found "implicitly" based on precisely the factors that the Solicitor General says are relevant: "what the combined teachings, knowledge of one of ordinary skill in the art, and the nature of the problem to be solved as a whole would have suggested to those of ordinary skill in the art." 441 F.3d 987. In Cross Medical, the court of appeals applied the "implicit" obviousness standard to reverse a district court ruling that a patent was not obvious, explaining that obviousness could be found on the basis of a "problem [that] was within the general knowledge of those of ordinary skill in the art," 424 F.3d 1322, even if the patent is not directed at "the identical problem addressed in [the] prior art," id. No fair distinction can be drawn between the rule proposed by the Solicitor General and the flexible standard articulated by the Federal Circuit in these more recent decisions and adhered to in this case.

Teleflex's arguments regarding "implicit" motivation is an attempt to show that the CAFC has softened its approach to nonobviousness.  The "implicit" argument is also an attempt to subtly shift the conversation -- The question before the court is whether any "proof" of a motivation should be required. Of course, the proof could take the form of explicit or implicit evidence.

SG Support = Certiorari: A recent (unreleased) study by a patent law professor looked at all invited amici petition briefs filed by the solicitor general for the past five terms. The SG gave an unqualified recommendation for certiorari (as in KSR) in 15 cases. In all 15 cases, the Supreme Court then granted certiorari. 

Documents:

• Party Briefs
  • KSR’s Petition for Cert (Including the CAFC and District Court decisions in Appx. A & B);
  • Teleflex’s Brief in Opposition
  • KSR Reply Brief (314 KB)
  • Teleflex Supplement
• Amicus Briefs
  • Government in support of petition;
  • 24 Law Professors in support of petition;
  • Progress Freedom Foundation in support of petition;
  • Microsoft, Cisco, Hallmark, et al. in support of petition.

Links:

• Patently-O Discussion of Government's Brief in Support of Certiorari;
• Patently-O Discussion of Microsoft’s Amicus Brief;
• Patently-O Discussion of the CAFC decision;
• Patently-O Discussion of Law Professors Brief;
• Patently-O Discussion of In re Kahn.

The potential vagueness and suspect validity of some of these patents may affect the calculus under the four-factor test.

If I understand them, the four justices are telling lower courts to reevaluate a patent’s validity and enforceability at the injunction stage — even after those issues have been decided in the patentee’s favor.  If you remember, the question of an injunction only arises after the patent has been found valid, enforceable, and infringed.

Perhaps there are parallels between Kennedy’s position and the sentencing of a convicted criminal.  At the sentencing stage, the sitting judge has a rather free hand to consider the evidence at hand in mitigating the prison time — even if the jury made opposite conclusions.  Here, even if the jury found that the patent was valid and infringed, Kennedy would allow the court to deny an injunction based on the patent’s “suspect validity.”

Of course this approach is wrong, but if you are a cautious patent attorney the solution is simply to not write vague or questionable patent applications.

Links:

• Patently-O General Discussion of the eBay Decision.
• Patently-O on the Radio.
• Professor Randy Picker on the “unanimous” decision. 

Like that little blue engine, KSR’s case continues to move forward despite significant obstacles. Now, the Solicitor General has filed its brief on behalf of the U.S. government supporting KSR’s petition for certiorari.

This case takes a direct assault on the Federal Circuit’s longstanding obviousness jurisprudence that requires some explicit reason as to why one of ordinary skill in the art would have known to combine two or more references to solve a particular problem.  The question presented reads as follows:

Whether a claimed invention can be “obvious,” and therefore unpatentable under 35 U.S.C. 103(a), without proof of some “teaching, suggestion, or motivation” to modify or combine the prior art in the manner claimed.

The statute in question, 35 U.S.C. 103(a) is not so specific.  Rather, the statute requires that a patent be denied if

the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art.

35 U.S.C. 103(a).  The Solicitor General’s brief, filed last week, sees the disjunct between the CAFC rule, Section 103(a), and prior Supreme Court decisions such as Graham.  In a blunt rebuke, the SG argues that “the Federal Circuit’s teaching-suggestion-motivation test extends patent protection to non-innovative combinations of familiar elements.”  Rather, the SG argues for a return to the broad factors outlined in Graham for determining the level of one of ordinary skill in the art: “the scope and content of the prior art, the differences between the prior art and the claims at issue, and the level of ordinary skill in the pertinent art.”

The SG’s support for certiorari is rare in patent cases and is often the most cherished of a petitioner’s amici.

Notes: Of course, most inventions involve “a combination of old elements” where each element is found somewhere in the prior art.  (In re Kahn).  After the teaching-suggestion-motivation test is gone, what standard will a patent examiner use to decide whether a new combination is non-obvious? To be sure, the current test is formalistic and has been both under– and over-inclusive.  However, has anyone proposed a better test — one that can be carried out by the PTO even in light of the high-turnover and young workforce in the agency’s examining corps? A patent attorney e-mailed his fear that a less formal test will give examiner’s permission to make the dreaded “because I say so” conclusory argument.

The EPO also has a rather formalistic approach known as the "problem-solution" test. That test also has its detractors, but is seen by many as a superior approach. In the UK, the “Windsurfing” test takes its name from the case of Windsurfing Int’l v. Tabur Marine. In that case, the court looked to whether, when viewed without knowledge of the alleged invention, the differences between what is known to a “skilled but unimaginative technician” and the alleged invention constitute steps that would have been obvious to the technician or whether they require any degree of invention. The hypothetical technician does not consider the commercial consequences which might follow if the step or process in question were found in practice to achieve or assist the objective which he had in view.

Another e-mail that I received focused on the low-tech nature of this case. 

Like sectional couches with remote controls in the arm rest (recall that nightmare?), the technology [here] is so simple that everyone believes they understand it once it is laid out for them.  The technology most [patent attorneys] deal with on a day to day basis is not this simple - drugs, catalysts, biotechnology, automation, software.  The risk of a result-driven declaration of the law on obviousness is keeping me awake at night.

These comments at least have anecdotal weight — in the recent eBay oral argument, Chief Justice Roberts was heard to quip that even he could have invented invention in question (or at least created the software flow-charts).

Documents:

• Party Briefs
  • KSR’s Petition for Cert (Including the CAFC and District Court decisions in Appx. A & B);
  • Teleflex’s Brief in Opposition
  • KSR Reply Brief (314 KB)
• Amicus Briefs
  • Government in support of petition;
  • 24 Law Professors in support of petition;
  • Progress Freedom Foundation in support of petition;
  • Microsoft, Cisco, Hallmark, et al. in support of petition.

Links:

• Patently-O Discussion of Microsoft’s Amicus Brief
• Patently-O Discussion of the CAFC decision;
• Patently-O Discussion of Law Professors Brief;
• Patently-O Discussion of In re Kahn;

• Coast-to-Coast Show link.
• MP3 download.
• Windows Media stream.
• Craig Williams’ Blog: May it Please the Court.
• Robert Ambrogi’s Blog: LawSites.

The Supreme Court is contemplating hearing this case that questions the standards for inherent anticipation of a patent. The drug in question is Paxil, and the case history has more twists than a Hazzard County road. But, the question now before the Court is simple:

Whether a compound that is inevitably produced by the prior art is inherently anticipated by the prior art, and thus not novel under 35 U.S.C. 102.

Another way to focus on the particular question is whether any human recognition of the inherency is required.

Here, Paxil (a PHC hemihydrate) is inevitably produced by a PHC anhydrate, and PHC anhydrate (A.K.A. Ferrosan) was well known before the Paxil patent.

Judge Posner (sitting by designation) determined that Paxil was not inherently anticipated because its inevitable production from Ferrosan was not a “scientific []certainty.” On appeal, the CAFC reversed that particular decision — finding that the patent was inherently anticipated because PHC hemihydrate “inevitably results from production of” PHC anhydrate.

Now, the Solicitor General has provided the government’s views on the case, and supported the CAFC decision:

The court of appeals correctly held that the patent claim is invalid because PHC hemihydrate was inherently anticipated by the prior art that inevitably produced it. . . . a characteristic of a pre-existing product is not patentable even if no one had previously recognized that characteristic.

Because the Gov’t fully supports the CAFC decision, it also recommended against hearing the case.

• Discussion of the original panel opinion: Part I, Part II, Part III, and part IV.
• Discussion of the en banc order and new appellate opinion: Part V, Part VI.
• My premature conclusion: Part VII.
• Solicitor General’s Brief
• Aaron Barkoff’s Orange Book Blog

Earlier this year, the Supreme Court granted MedImmune’s petition for certiorari to determine when a patent licensee can challenge the validity of a patent.  The CAFC has held on a number of occasions that a licensee in good standing has no standing to sue for declaratory judgment because it is not under threat of being sued for patent infringement.  However, this conclusion pushes against the Supreme Court’s 1969 decision in Lear v. Adkins which held that a public policy interest in invalidating bad patents was strong enough to warrant a limitations on a licensee’s ability to give up its right to challenge a patent’s validity. 

The specific question presented is as follows:

Does Article III’s grant of jurisdiction of "all Cases . . . arising under . . . the Laws of the United States," implemented in the "actual controversy" requirement of the Declaratory Judgment Act, 28 U.S.C. § 2201(a), require a patent licensee to refuse to pay royalties and commit material breach of the license agreement before suing to declare the patent invalid, unenforceable or not infringed?

MedImmune’s brief and the first batch of amicus briefs have been filed and are reviewed below.

MedImmune’s Argument is quite simple — neither the Declaratory Judgment Act nor the Constitution exclude patent licensees from the scope of DJ jurisdiction, and such a per se rule is wrong because there are situations where an actual case or controversy exists between the licensee and licensor.  The linchpin of MedImmune’s case is their argument that “apprehension of suit is not a necessary condition [of establishing a concrete legal controversy], and this Court has never suggested such a thing.”

U.S. Government filed its brief and presents a number of interesting arguments. Specifically, the SG argues that the CAFC “has erected an unwarranted obstacle to declaratory relief in patent cases” that “cannot be justified by considerations of patent policy.”

[The CAFC’s] limitation on the availability of declaratory relief cannot be squared with this Court’s cases or with the congressional purposes underlying the Act. As demonstrated by decisions of this Court involving pre-enforcement challenges to statutes, it is sufficient for a declaratory judgment plaintiff to demonstrate a genuine risk of enforcement and a reasonable likelihood that he would engage in the proscribed conduct if the threat were removed. A declaratory judgment plaintiff need not run the risks entailed in actually violating the law in order to make out an “actual controversy.” See, e.g., Steffel v. Thompson, 415 U.S. 452, 459, 475 (1974). Indeed, this Court has already rejected the proposition that a licensee’s ongoing payment of patent royalties negates any justiciable dispute over the validity of the patent. Altvater v. Freeman, 319 U.S. 359 (1943). Yet the Federal Circuit’s insistence on compliance with its two-part test requires a patent licensee to commit a material breach of its license agreement in order to create an “actual controversy.” That result is contrary to the congressional purposes behind the Act, which was adopted to free parties of the requirement that they act at their peril on their own interpretation of their rights before being able to obtain a judicial construction of those rights.

When the Petitioner and Government briefs are examined together, you will see that they have presented a strong attack on the CAFC’s decision, and might just change the face of the licensor-licensee relationship.

Professor Brief (Dratler & Oddi) argue that DJ jurisdiction should extend “up to the constitutional limits. Indeed, it would begin and end with those limits.”  Licensee’s should fall within this standard.

The Generic Pharmaceutical Association discusses the CAFC’s requirement of an “actual controversy” and argues that “Article III controversies arise even when the patentee is not about to commence an action.  This argument is even more focused in the recent briefs in the Apotex v. Pfizer case.

Medtronic discusses the importance of DJ actions in patent cases. The case is especially compelling in areas where dozens of patents are licensed in a single agreement that sweeps together both the good and the bad.

National Resources Defense Counsel is not interested in patent issues, but believes that this case could have some effect on its ability to bring certain environmental litigation.  NRDC presents three requisites of an Article III case or controversy: injury in fact, causation, and redressability.  Here, MedImmune satisfies those requisites because it is paying a license fee under protest, the causation is the allegedly invalid patent, and the redress is to declare the patent invalid.

The Licensing Executive Society (LES) directly addresses Lear v. Adkins, arguing that case “held that licensees could not be precluded from challenging the validity of a licensed patent under the doctrine of licensee estoppel.” However, because of inconsistent application of the Lear doctrine, licensees today have difficulty in known when or even if they can challenge the validity of their licensed patent. “The Court is now in a position to resolve uncertainty in this area by issuing a ruling that clarifies and explains the continuing validity and scope of the Lear doctrine. LES urges the Court to provide such clarity.”

Documents:

• Merits:
• Party Briefs:
• MedImmune Brief
• Amici in Support of Petitioner
• Solicitor General
• Law Professors (Dratler Oddi)
• Generic Pharma Assn
• Medtronic
• NRDC
• Amici in Support of Neither Party
• Licensing Executives Society
• Petitions Stage
• Genentech:
• MedImmune’s Genentech Petition (6509 KB)
• Genentech's opposition to certiori
• MedImmune's Genentec Reply
• Centocor:
• MedImmune’s Centocor Petition
• Centocor’s opposition to certiori
• MedImmune’s Centocor reply

Links:

• CAFC Decision in MedImmune v. Genentech;
• CAFC Decision in MedImmune v. Centocor;
• MedImmune Petition Granted
• Lear v. Adkins;
• Professor Miller’s comments
• Supreme Court on the March.

FTC v. Schering-Plough (on petition for certiorari).

In a March 2005 decision, the 11th Circuit Court of Appeals set aside an FTC order that barred Schering-Plough from settling an infringement suit with generic makers regarding the patented blood pressure drug K-Dur.  In the settlement, Schering-Plough made a “reverse payment” to the potential infringers to settle the lawsuit. The FTC had concluded that the settlement was an "unreasonable restraint of trade."  The 11th Circuit, however, disagreed, finding that payment from a patent holder to a generic competitor cannot be the sole basis of a violation of antitrust law (and thus spurring deals totaling billions of dollars). 

In its petition for certiorari, the FTC presents the question:

Whether an agreement between a pharmaceutical patent holder and a would-be generic competitor, in which the patent holder makes a substantial payment to the challenger for the purpose of delaying the challenger’s entry into the market, is an unreasonable restraint of trade.

Before considering the petition, the Court requested the Solicitor General’s views on the case — i.e., the Court asked the DOJ to comment on whether FTC’s case should be heard.  In a response made public today, the Government’s view is that the issues are important, but the FTC has not brought a good case. 

[Reverse payment] settlements may pose a risk of restricting competition in ways that are not justified by a lawful patent, to the detriment of consumers. This case, however, does not present an appropriate opportunity for this Court to determine the proper standards for distinguishing legitimate patent settlements, which further the important goals of encouraging innovation and minimizing unnecessary litigation, from illegitimate settlements that impermissibly restrain trade in violation of the antitrust laws.

The DOJ’s arguments are essentially that: (1) the particular issues were not squarely addressed by the appellate court and (2) there is no circuit split.

As Foley’s Hal Wegner has noted, the Solicitor General’s view is not controlling.  For instance, in the upcoming LabCorp v. Metabolite case, the SG unsuccessfully argued against certiorari.

I’m sure that we’ll find more information at the Orange Book Blog.

In 2005, the CAFC decided Teva v. Pfizer and declared that the court does not have declaratory judgment jurisdiction over a case between an ANDA filer and the patent holder unless the patent holder at least threatens suit.  Orange Book listing - on its own– does not create a reasonable apprehension of suit.

Apotex is facing the same situation in the present case.  They filed their ANDA request, Pfizer did not file suit or threaten litigation.  However, Apotex is afraid that as soon as it begins to manufacture the new drug that Pfizer will sue and potential force Apotex to pay “massive patent liability.”

Thus, Apotex has asked the Supreme Court to determine whether declaratory judgment jurisdiction can exist based on this “prospect of massive patent liability that deters generic manufacturers from entering the marketplace.”

The Supreme Court has asked the Solicitor General to present the government’s view on whether declaratory judgment jurisdiction can exist in this situation.  This request by the High Court is seen as a potential stepping stone to grant of Petitioner's request for certiorari.  The FTC made its position clear on this issue in a recent brief in the Tamoxifen Citrate Antitrust Litigation (“Under the panel ruling, pharmaceutical companies are now free to pursue this anticompetitive ploy without fear of antitrust liability.”).

Notes:

• Orange Book Blog has the briefs;
• Joseph Miller’s Notes.

In eBay, the concurrence almost begged lower courts to force compulsory licenses when the asserted patent is a “business method.”

In addition injunctive relief may have different consequences for the burgeoning number of patents over business methods, which were not of much economic and legal significance in earlier times. The potential vagueness and suspect validity of some of these patents may affect the calculus under the four-factor test.

In LabCorp, the High Court will review the question of whether a patent can claim rights to a basic scientific relationship used in medical treatment if the claim is limited to “correlating” test results.  Although the claim in question is a “medical method” it is not far afield from the much maligned “business methods.”

It appears highly likely that Justice Kennedy’s group of four (Justices Kennedy, Stevens, Souter, and Breyer) will stick together in an attempt to invalidate this patent (and potentially many others).  And, they only need one more Justice to have a majority.  On the other hand, as Professor Joseph Miller points out, the loose language of Kennedy’s concurrence might be a sign that they could not get a majority for the LabCorp decision.

I wondered though, as I read eBay, whether it was a sign the Court is not striking down the claim in LabCorp … on the theory that the Kennedy Four in eBay, knowing they had failed to muster a majority in LabCorp, were all the more determined to speak plainly, and a bit sharply, about the problems with the contemporary patent system that make automatic injunctions especially imprudent (assuming, for a moment, the merits of that critique).

Chief Justice Roberts, who led the more conservative concurrence will likely not take part in the decision because of a potential conflict of interest.