In 2018, Eagle filed its Abbreviated New Drug Application (ANDA) with the FDA seeking to market a generic version of Par’s vasopressin injection product (Vasostrict) used for emergency blood pressure treatment. Par had listed two patents in the Orange Book as covering its product and so, as required, Eagle’s ANDA included a Paragraph IV certification that the two patents were either (1) invalid or (2) would not be infringed. 35 U.S.C. § 355(j)(2)(A)(vii)(IV).
In order to facilitate resolution of brand-generic patent conflict, the Patent Laws include a form of paper infringement–a legal fiction that simply filing an ANDA and Paragraph IV certification counts as a form of patent infringement. This gives the branded drug maker (here PAR) the ability to immediately sue to keep the generic off the market (if the patent turns out to be enforceable). But, these Hatch-Waxman lawsuits are considered a form of declaratory relief and no actual damages are available. This setup also means that these cases are not “Suits at common law” and so the Seventh Amendment right to a jury trial does not apply. Thus, ANDA patent lawsuits are ordinarily decided by bench trial–and typically by one of the Delaware district court judges. In patent law, injunctive relief has been difficult to obtain, but under the Hatch-Waxman law, the FDA will automatically delay any market approval by 30 months if the brand-patentee sued.
Vasopressin is a naturally occurring mammalian hormone and been generally known for decades. As its name suggests the chemical has always been known since its naming for its ability to constrict blood vessels — the same use that Par’s patents claim. Par’s two patents here cover a particular vasopressin composition (9,750,785) and a method of treatment using the composition (9,744,209).
Both Par patents include a pH requirement: “wherein the unit dosage form has a pH of 3.7-3.9.” In its ANDA, Eagle was careful to specify that its product would have a slightly different pH range: 3.4–3.6. Eagle then argued that this difference was enough to avoid infringement.
Despite its nominal specifications, Par presented evidence that (it claims) Eagle’s product pH would “drift up” while sitting on the shelf. It coupled that evidence with the very slight difference between Eagle’s product and Par’s patent to make the argument that Eagle’s product “would inevitably drift into Par’s claimed range.” Slip Op. The district court (Judge Connolly) held a three-day bench trial and ultimately issued a judgment of noninfringement. In particular, Judge Connolly concluded that the evidence failed to prove any upward drift of pH, but rather simply “minor fluctuations” without “any discernable trend.” Id. On appeal, the Federal Circuit has affirmed–seeing no “clear error” in the district court’s factual findings.
I mentioned above that this form of ANDA-filing infringement is a legal fiction created by Congress to facilitate a more competitive marketplace. One problem then is that there is no actual product to inspect. We have the ANDA filing, but there are always substantial design choices before final release. The prophetic inquiry thus looks to what is the “probable ANDA product” and asks whether that probable product would be infringing if actually made.
Still, the primary guide is the ANDA documents as the source of infringement in this highly regulated area. At times, a court can look to other relevant evidence, but only when the ANDA filing fails to “speak clearly and directly to the question of infringement.” Rather, the court assumes that the ANDA filer will “act in full compliance with its representations to the FDA.” In re Brimonidine Patent Litig., 643 F.3d 1366, 1378 (Fed. Cir. 2011).
Here, the ANDA documents are clear that the product does not infringe. The pH range in Eagle’s ANDA document is different than that claimed by Par. And, the ANDA filings also indicate that the pH range will remain stable throughout the shelf life of the product. Thus, the ANDA documents indicate no drift into Par’s protected space.
No Declaratory Judgment of Infringement. (Neither court decision discusses the doctrine of equivalents.)
I have not thought through all the claim preclusion issues. But, once the product is released Par may be precluded from suing again based upon res judicata and the Kessler Doctrine.
= = =
Judges: Moore, Prost, Hughes
Opinion by: Moore
Attorneys: Martin Black (Dechert) for the patentee Par along with Sharon Gagliardi, Brian Goldberg, Luke Reilly, Robert Rhoad, Daniel Roberts, and Jonathan Loeb. John O’Quinn (Kirkland) for Eagle along with Bill Burgess, Bryan Hales, Benjamin Lasky, and Jenna Wacker.
Ordinarily, a conflict of interest leads to disqualification, but they can lead to fee disgorgement (an attorney is supposed to be loyal, and like any other agent, is not entitled to keep a fee earned while being disloyal) and, on occasion, damages. In a case affirmed by the Ohio Court of Appeals, those damages were $32 million.
In RevoLaze, Dentons US (part of a verein of many Dentons “entities”) had represented a patentee, RevoLaze, in an ITC proceeding and 17 related infringement suits. At the start of the matter, Revolaze received funding from a litigation funding group, and Dentons US agreed to reduce and cap its fees but had the right to a percentage of any recovery. Dentons had indicated to the litigation funding group that the recovery indicated potential damages of around a billion dollars, and so it vetted the patents and the case and after that agreed to fund the proceeding and related litigation, in phases, for up to $8 million.
But, Dentons US knew the ITC proceeding would be adverse to The Gap, and that Dentons Canada represented The Gap. Thus, if Dentons US was part of the same firm as Dentons Canada, then Dentons US’ representation of the patentee in the ITC proceeding was adverse to one of Dentons US’s clients, and it would be subject to disqualification. There was no evidence that Dentons had advised RevoLaze of the risk of disqualification or of steps to reduce the impact if it happened.
Of course, The Gap moved to disqualify, and the ITC granted that motion. By that time, Dentons US had billed a significant amount, RevoLaze was struggling, and disqualification caused it to pay an additional $1 million to get replacement counsel up to speed. The litigation funding group agreed to move up some funding to help, but RevoLaze settled the infringement cases and eventually dismissed the ITC proceeding while appeal of the disqualification order was pending there.
RevoLaze then sued Dentons, arguing the conflict had been foreseeable and that it had been damaged by, among other things, failing to obtain an ITC exclusion order and lost licensing revenue, with the total damages between $23 and $39 million.
To support breach — that disqualification had been foreseeable and so a reasonable lawyer would have either obtained informed consent or not taken the case — RevoLaze’s lawyers showed that Dentons US had been concerned about a conflict caused by the ITC proceeding with a client of a different “part” of Dentons (and so had not named that client in the ITC proceeding), it had a single conflicts database, Dentons’ own expert had written an article discussing the risk that a court would consider different “parts” of a verein to be one big law firm, and other facts
To support causation and proximate cause, RevoLaze had experts opine that but-for disqualification, the litigation funding costs would have been lower, RevoLaze would have obtained an exclusion order, and it would have obtained better settlements (i.e., better licensing and so had incurred lose profits).
The jury awarded $32 million. Then, the appellate court held the evidence was sufficient to support the verdict and the amount of damages.
This case, of course, is odd in that breach turned on whether Dentons was “one law firm” or separate firms, not on whether there was a conflict with a client. But the same logic would apply where a law firm undertakes a representation where it is foreseeable that it would be deemed to be adverse to a client, and so subject it to disqualification.
It appears from this June 2022 filing Dentons is seeking review by the Ohio Supreme Court, and it looks like on the issue of causation, so stay tuned.
Update: A reader sent a link to an interesting student-authored article on the ITC decision that explains the verein (which auto-corrects to “vermin”) structure.
Almost all patent law professionals will agree that an accused infringer with good prior art generally has a much better chance of getting the claims cancelled via IPR rather than asking a jury to decide. Accused infringers also prefer IPRs because they effectively bifurcate the trial between validity and infringement, with the IPR validity questions being decided first while infringement litigation is stayed. The result is that the IPRs are also a low risk option for accused infringers since no liability attaches from that decision. If they lose the IPR, accused infringers still have another shot of escaping liability in the actual infringement trial. At trial, the accused infringer can still raise invalidity defenses. However, the estoppel provisions of 35 U.S.C. § 315(e) bar relitigation of “any ground that the petitioner raised or reasonably could have raised during that inter partes review.”
The Federal Circuit recently gave some further interpretation to the scope estoppel in Click-to-Call, LP v. Ingenio, Inc., 22-1016, — F.4th — (Fed. Cir. August 17, 2022). Ingenio filed its IPR petition back in 2013. At the time, the PTAB was still doing “partial institutions” pre SAS. And, in this case the Board instituted the IPR on three grounds and denied to institute on three grounds. The Board eventually sided with the petitioner in its final written decision and cancelled the challenged claims. There are two additional important procedural elements of the IPR: (1) The petitioner had challenged claim 27, but the Board denied to institute that particular ground. Thus, claim 27 survived the IPR. (2) While the IPR was on appeal to the Federal, SAS was decided banning partial institution. SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018). In a strategic decision Ingenio did not seek remand for full institution to try to also catch the one remaining claim 27.
On remand, the district court judge (Yeakel, W.D.Tex.) allowed Ingenio to challenge claim 27 on the same grounds raised at IPR and ultimately issued a summary judgment of invalidity. The district court clearly erred in its decision by analyzing the argument as only raising issue preclusion. In general, issue preclusion is much narrower because it applies only to arguments actually litigated and decided whereas IPR estoppel applies more broadly to cover grounds that “reasonably could have [been] raised.”
But Ingenio argues that the error was harmless. In particular, if you look at the estoppel statute, it appears to apply only to claims that were part of the inter partes review. Although claim 27 had been challenged in the petition, it never became part of the inter partes review itself and was not subject to a final written decision. On appeal though the Federal Circuit concluded that claim 27 was only missing from the IPR because of a deliberate choice by Ingenio in failing to seek remaind post-SAS.
The fact that the Board, due to a legal error corrected by SAS, failed to include claim 27 in its final written decision does not absolve Ingenio of the estoppel triggered by its choice to challenge claim 27 at the Board. . . . [Under SAS], the scope of the IPR as defined in the petition included claim 27. . . . Ingenio’s choice to leave unremedied the Board’s mistake does not shield it from estoppel as to a claim it included in its IPR petition.
Slip Op. I mentioned that Ingenio made a strategic decision to not request remand following SAS to remedy the partial institution. In its brief, Ingenio explains that it was concerned that the PTAB would have denied the entire petition–thus undermining all the work that it had completed in the process. “It is equally likely the
PTAB would have rejected the entire petition instead of instituting the entire petition in the post-SAS world.” Ingenio Brief. The Federal Circuit’s response–tough cookies. You make your choices and get the results.
The court identifies this case as a unique situation resulting from an intervening Supreme Court decision. But I would also recognize it as a broader statement from the court on the scope of estoppel and what a petitioner “reasonably” can do. Summary judgment of invalidity reversed. Here in particular, the scope now includes legal or procedural steps that could have been made.
= = = = =
Changing focus post-IPR: The infringement litigation was filed back in 2012 and later that year Ingenio submitted its infringement contentions listing the particular claims being asserted. Ingenio subsequently filed its IPR petition in 2013 challenging all of the asserted claims. At that point, the district court stayed litigation until the IPR concluded in 2020. In the first joint-status report the parties made a joint statement that the patentee “intends to proceed with litigation of the asserted claims not affected by the Inter Partes Review proceedings: specifically, claims 24, 27, and 28.” In its statement to the court, the defendant indicated its intent to challenge the validity of those claims, but did not object to the fact that claims 24 and 28 had not been one of the claims originally asserted in the infringement contentions.
The Magistrate Judge Hightower refused to permit the patentee to change its infringement contentions despite the changes that took place during the proceeding seven years where the case had been stayed. Without analysis, the court simply wrote that “Click-to-Call has not provided good cause for leave to amend nearly eight years after its original selection of claims for trial.” Judge Yeakel then adopted the Magistrate Judge’s recommendations. On appeal, the Federal Circuit affirmed — finding no abuse of discretion. On this point, the district court had noted that it issued a stay because the IPR would likely simply the case for trial since “all but one of the claims to be asserted at trial” were being reviewed in the IPR. On appeal, the court concluded that the district court’s approach from the beginning to narrow issues for trial and “did not envision adding other claims to the case following the IPR.” The appellate court also suggested that at some point during the six-year delay Click to Call should have indicated its plans to amend. Of course, during that time of the case being stayed, the district court was not permitting or considering any procedural motions of this type. The court also noted the magistrate judge’s terse analysis, but found it appropriate given that Click-to-Call had only put “minimal effort” into making the argument in the first place.
Refusal to permit amendments to the infringement contentions affirmed on appeal.
= =
Panel: Stoll, Schall, and Cunningham
Decision by: Stoll
Attorneys: Dan Shih (Susman Godfrey) for plaintiff-appellant (along with Brian Melton & Max Tribble); Amanda Brouillette (Kilpatrick) for defendant-appellee (along with Clay Holloway and Mitch Stockwell).
While this might not be the most newsworthy federal document archives story this week, it’s something that patent practitioners and others who practice before the Federal Circuit might want to take note of. Today the Federal Circuit issued an order in Miscellaenous Docket 2022-160, “In re: Unsealing of Court Case Records.” The order reads:
The court is in the process of accessioning its remaining paper case records to the National Archives and Records Administration for permanent retention. These records predate the court’s transition to its electronic case management filing system in 2012 and once transferred to the National Archives will remain in only paper format and will not be made available online. Pursuant to Federal Circuit Rule 25.1(a)(1), “[a]fter five years following the end of all proceedings in this court, the court may direct the parties to show cause why confidential filings (except those protected by statute) should not be unsealed and made available to the public.” Through the review of these records, the court has identified several cases containing confidential filings that remain under seal more than fiveyears following the end of all proceedings.
The order goes on to direct parties to the identified cases to this order to show cause within 60 days as to why confidential material in those cases should not be unsealed, along with instructions for what to do. The order is followed by 60 pages of case docket numbers and names. Almost all of them arise from the district courts, but there are a few from other origins. You can access it here: https://cafc.uscourts.gov/wp-content/uploads/22-160.pdf (archived version: 22-160).
For context, in 2012 the Federal Circuit switched from an older version of the court electronic records system to a newer version. As a result, appeals filed prior to the transition without subsequent case activity are only in the older system. (Appeals filed before the transition but with activity after the transition show up in both systems.) Many of the older materials are only available in paper form, and if you’ve ever tried to get them you know that it is very expensive and difficult.
I was curious about what portion of appeals this order applied to, so I plugged the docket numbers from the order into the Federal Circuit Dataset Project to get a sense of what portion of cases this applied to. (The list of docket numbers from the order is linked here: https://doi.org/10.7910/DVN/FRHXWT). In total, there are 1,151 appeal numbers listed in the order (plus 3 duplicates). Of these, 1,122 matched an appeal docketed in 2000 or later that’s available in PACER; 16 don’t match a record that shows up in PACER (likely because the entire docket is confidential) and 13 involve appeals filed before 2000. The latest appeal was docketed in 2012, and most of the appeals listed were docketed between 2003 and 2010. Out of the 12,225 appeals docketed between 2000 and 2011, 977 show up on this list (about 8%).
However, most of the appeal dockets on the court’s list are appeals from the district courts, and those are only a portion of the court’s cases. Because these are records from the older generation of PACER, we don’t have as much information about them as for later appeals. (See this forthcoming article for details: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4162979.) However, when I combined the list in the court’s order with our document dataset, which goes back to late 2004, and limited it to opinions and Rule 36 summary affirmances issued between 2005 and 2012, it turned out that about 25% of appeal dockets arising from the district courts that resulted in an opinion or Rule 36 in those years were listed on the court’s order (517/1,459), with about the same percentage for appeals arising from the ITC (79 out of 305). This isn’t exclusive; there are some numbers on the list that didn’t result in an opinion or order. But there’s a good chance that if you had an appeal in a patent infringement case that resulted in an opinion or Rule 36 affirmance between 2000 and 2011, it’s on the court’s list.
Bottom line: this is a lot of appeal dockets, both just in raw numbers and as a fraction of appeals in patent infringement cases and from the CIT. The appeals were filed over a decade ago, and likely haven’t had any actions since 2012, but it may be worth a ctrl-F on the order to see whether your clients are impacted.
One thing that I do hope is that the court doesn’t de-accession the existing PACER docket search for pre-2012 cases. It provides only limited data and access to documents, but it’s the only publicly accessible directory or index for that information. As far as I know (and I’d love to be wrong!), there’s no existing paper analog.
The Secretary of Commerce recently appointed Derrick Brent as Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office. As here, the Deputy Director, Brent will serve as the principal advisor to Dir. Vidal. His key role will likely be in helping Dir. Vidal navigate the political side of the office as well as substantial outreach.
Deputy Dir. Brent is a mechanical engineer (OSU) and lawyer (Northwestern) and also a musician. After law school, Brent worked both for Vorys Sater and then the USDOJ before being recruited as Senior Counsel by Sen Boxer where he spent lots of time on the America Invents Act. Since 2012, Brent has been working as in-house counsel or doing similar consulting work.
His diverse professional experience has included Senior Counsel for U.S. Senator Barbara Boxer, Senior Trial Attorney in the Department of Justice, and Associate at Vorys, Sater, Seymour and Pease LLP. His work has principally focused in litigation and policy related to intellectual property, civil rights, employment and commercial law.
Welcome!
The statute:
Deputy under secretary and deputy director.— The Secretary of Commerce, upon nomination by the Director, shall appoint a Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office who shall be vested with the authority to act in the capacity of the Director in the event of the absence or incapacity of the Director. The Deputy Director shall be a citizen of the United States who has a professional background and experience in patent or trademark law.
35 U.S.C. 3. Additional Leadership Changes:
Longtime USPTO leader Drew Hirshfeld left the agency this summer and has now joined the Schwegman firm.
Andrew Faile is Deputy Commissioner for Patents and has stepped-up to serve as Acting Commissioner until the Secretary of Commerce appoints a new Commissioner. The statute provides a 5-year term for the Commissioner once appointed. Although the position requires a political appointment, it is most-often an internal hire because the Commissioner really needs to understand Office complexities.
Shirin Bidel-Niyat is Dir. Vidal’s chief of staff. Bidel-Niyat is a relative newcomer to the office — having joined in 2021 as a Senior Advisor. Her role will likely involve substantial internal political strategy and White House interfacing.
Longtime PTO employee Dede Zecher had been acting chief of staff and is now Chief Advisor to the Director. Zecher is a former patent examiner, SPE, and advisor to the Deputy Commissioner.
The PTO also has a new Chief Communications Officer (CCO), Russell Lopez. Lopez has spent his career as doing communications for various California gov’t authorities.
David Berdan has moved back to his role as USPTO General Counsel. The GC’s office has three Deputy GCs: (1) Will Covey who is also Director of OED; (2) David Shewchuk who runs the “office of general law” — handling non-IP issues; and (3) Thomas Krause who is the USPTO Solicitor.
In Arthrex, the Supreme Court found the Congressionally created IPR scheme unconstitutional because it gave too much authority to PTAB judges. United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021). In a hope for some political accountability, the Constitution requires Officers of the Government to be appointed by the US President. U.S. Constitution, Art. II, § 2, cl. 2. The problem–PTAB judges have authority to cancel substantial property rights but are not appointed by the President. Rather than rendering the AIA dead on arrival, the Supreme Court decided to cure the defect by taking some authority from the PTAB judges and handing it to the USPTO Director, who was properly nominated by the President and confirmed by the Senate. Under the Arthrex model, any PTAB final written decision (in the AIA-trial context) can then be reviewed by the USPTO Director.
But, what about IPR institution decisions. If you recall, inter partes review proceedings begin with an IPR Petition and an institution decision. If the IPR is instituted then the case moves to trial and a final written decision by the PTAB. If the IPR is not instituted, the case is closed with no right for appeal. One quirk of all this involves the division of labor. As mentioned above, the statute calls for the PTAB to decide the final written decision, but then in Arthrex the Supreme Court added the additional Director Review. At the institution stage, the statute follows a different scheme calls for the USPTO Director to decide whether or not to institute. 35 USC 314. Despite the statute, the USPTO Director has never personally signed an institution decision but rather issued regulations giving institution authority to the PTAB. The regulations do not allow for any subsequent director review. 37 C.F.R. § 42.71. If the institution petition is granted, the Arthrex approach suggests eventual director review following a final written description. The USPTO has stated in its interim guidance documents that the USPTO “does not accept requests for Director review of decisions on institution.”
Although none of the issued rules or guidance suggests that the Director retains any authority, when Dir. Vidal took office, she issued a set of interim guidance documents stating that she has authority to review institution decisions. Further, the new interim guidance documents state that the “Director has always retained and continues to retain the authority to review such decisions sua sponte after issuance (at the Director’s discretion).” And, in recent months the Director has issued sua sponte review of two IPR institution decisions.
In 2021, Centripetal Networks sued Palo Alto Networks (PAN) for patent infringement. PAN responded with two AIA trial petitions; IPR2021-01151 for U.S. Patent No. 10,659,572 and PGR2021-00108 for U.S. Patent No. 10,931,797. The PTAB Denied institution. PAN attempted to seek director review, but was told that the USPTO dies not accept requests for Director Review of institution decisions and that “there will be no further review of the Board’s decision by the Office.”
By statute, institution decisions are not appealable, but can be reviewed on extraordinary writ — writ of mandamus. PAN petitioned, but the Federal Circuit has now denied the petition. On mandamus, the Federal Circuit concluded that “there is no structural impediment to the Director’s authority to review institution decisions either by statute or by regulation.” Although the Director has delegated substantial decisionmaking authority, the court found that the Director is still the “politically accountable executive.” Further, it apparently is of no concern that the system provides no formal mechanism for petitioning the Director for intervention. The decision here suggests that in reality the Director has authority to intervene in any pending case before USPTO.
The majority decision was written by Judge Dyk and joined by Judge Chen. Judge Reyna wrote in concurrence and that “a categorical denial by the Director to accept any requests for review raises potential constitutional concerns.” However, Judge Reyna suggested that the new director’s approach of sua sponte review might be enough.
When PAN’s briefing began, the USPTO’s position appeared clear cut of no director review of institution decisions, and their case was undermined by the interim actions by Dir. Vidal who decided to begin reviewing those as well. In his concurring decision, Judge Reyna writes: “We should not compel an agency to take specific action that the agency demonstrates it has already taken.”
Note: The two cases with pending director review of institution decisions are:
OpenSky Indus., LLC v. VLSI Tech. LLC, IPR2021-01064, Paper No. 41 (P.T.A.B. June 7, 2022);
Pat. Quality Assurance, LLC v. VLSI Tech. LLC, IPR2021-01229, Paper
No. 31 (P.T.A.B. June 7, 2022).
In both of these cases, the PTAB granted institution. Initial briefs in these director reviews are due on August 18, 2022.
UMN’s U.S. Patent No. 5,859,601 is super interesting because it is so similar to the patent rejected by the Supreme Court in Gottschalk v. Benson, 409 U.S. 63 (1972). Benson’s claims were directed toward a method of converting binary-coded decimal numbers into pure binary numbers. Similarly UMN’s claims are directed also to a method for converting binary numbers–this time from “m-bit binary datawords into n-bit binary codewords” by applying “maximum transition run (MTR) codes.” UMN’s basic idea is that researchers were finding long binaries with lots of transitions were more likely to lead to read-errors. Example, 010101010101 has lots of transitions while 111111000000 has only one transition. If the algorithm finds a long sequence of consecutive transitions then it does something (like adding a pause or transition code) to reduce the probability of error detection. The algorithm also adds an additional transition code at a regular interval.
UMN sued LSI for patent infringement in 2016 in the N.D. Cal.; LSI responded with its petition for inter partes review. The IPR proceedings were initially delayed by UMN’s claim of sovereign immunity. In 2019, the Federal Circuit held that “state sovereign immunity does not apply to [IPR] proceedings.” Regents of the Univ. of Minnesota v. LSI Corp., 926 F.3d 1327 (Fed. Cir. June 14, 2019), cert. denied, 140 S. Ct. 908, 205 L. Ed. 2d 458 (2020). Back on remand, the PTAB issued a split decision–finding independent claim 13 unpatentable but concluding that LSI failed to show that claims 14 and 17 were obvious. These claims add the allegedly unique limitation that the maximum transition run size is somewhere between 1 and 10.
LSI appealed its loss on the dependent claims and the Federal Circuit has now affirmed. LSI Corp. v. Regents of U. of Minnesota, 2021-2057, — F.4th — (Fed. Cir. Aug. 11, 2022). The original 2019 decision was authored by Judge Dyk and joined by Judges Hughes and Wallach. The Federal Circuit has an Internal Operating Procedure involving appeals following remand to attempt to reconstitute the same panel or one with at least two of the same judges. Judge Wallach took senior status in 2021 and so Judge Reyna was added to the new 2022 panel. Judge Dyk again wrote the opinion.
Prior Art By Another: Seagate was a collaborator with the UMN inventors (Moon and Brickner). And, back in September 1995, the inventors submitted a report to Seagate about their work. They filed their patent application April 1996–well within the 1-year statutory grace period. But, in January 1996 Seagate filed a patent application (Tsang) that does not list the UMN inventors. Tsang describes MTR coding in its background section and references the Seagate Report. Tsang also provided further improvements on the MTR methodology.
Once Tsang published/issued, it became prior art as of its filing date. Pre-AIA Section 102(e). Section 102(e) refers to “an application for patent . . . by another.” Here, Tsang is clearly another, but the particular portion of Tsang referenced was clearly derived from the UMN inventors Seagate Report. Under longstanding precedent, Section 102(e) has been interpreted exclude material derived from the inventors. In re Costello, 717 F.2d 1346 (Fed. Cir. 1983). In other words, regardless of the listed inventors on a purported prior art reference, we look to the actual underlying disclosure and ask whether that information was “by another.” Still LSI argued that Tsang was a proper 102(e) reference
Tsang’s summary of, and reliance on, the earlier work of Dr. Moon and Dr. Brickner does not make Tsang an inventor of the earlier work.
Slip Op. Thus, that portion of Tsang was properly excluded from prior art consideration. The court’s interpretation of Section 102(e) stretches our statutory interpretation limits since 102(e)’s prior art test is at the application level, and the court here drills down to specific disclosures and portions of the application. The AIA remedied this statutory stretching by creating the exception of 102(b)(2) that focuses on the disclosure level.
Shifting Arguments: LSI had Separately relied upon two tables found in a prior patent Okada. The problem — although the petition relied upon Okada, petitioner’s reliance on the particular tables didn’t happen until the IPR Hearing. In its decision the board found that the new theory was both untimely and unpersuasive. On appeal, did not address the untimely conclusion — only the persuasiveness. The Federal Circuit did not like that approach and concluded that untimeliness was a separate and independent ground that LSI forfeited “by failing to challenge it in its opening brief on appeal.”
The case should now head back to the Northern District of California where UMN is asserting both surviving claims. The lawsuit has been stayed for the past four years awaiting resolution to the IPR. Meanwhile, LSI’s motion for judgment on the pleadings that the asserted claims are patent-ineligible has remained undecided throughout that time. LSI 101 Motion.
Patrick McElhinny (K&L Gates) argued the IPR appeal for UMN and Kristopher Reed (Kilpatrick) argued for LSI. The same teams are also handling the underlying litigation.
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The defense of assignor estoppel has been in flux. The Federal Circuit had previously broadly applied the non-statutory doctrine to prevent a prior owner of patent rights (the “assignor”) from later challenging the validity of those rights. The basic idea was that the assignment of rights includes an implicit warranty. In a 2021 decision, the Supreme Court shrunk the doctrine by creating important caveats. Minerva Surgical, Inc. v. Hologic, Inc., 141 S. Ct. 2298 (2021). Although the Court retained the doctrine generally, it concluded that assignor estoppel is limited to situations where “the assignor’s claim of invalidity contradicts explicit or implicit representations made in assigning the patent.” Id. The court noted potential situations of no-estoppel: (1) assignment made prior to the inventor even seeing the patent document; (2) a change in the law that renders the patent invalid; and (3) after the assignment, the new owner changes the scope of the patent claims that goes “beyond what the assignor intended to claim as patentable.” A key example of this would be claim changes that result in scope that is “materially broader” than those originally assigned.
On remand, the Federal Circuit concluded that estoppel still applies despite the Supreme Court’s added limitations. Hologic, Inc. v. Minerva Surgical, Inc., 19-2054, — F.4th — (Fed. Cir. 2022). In particular, the appellate court found that the claims at issue in the litigation are not materially broader than what the assignor intended to claim at the time of the assignment.
The invention here relates to “an endometrial ablation device used to treat abnormal uterine bleeding (menorrhagia) by destroying targeted cells in the lining of the uterus.” Slip Op. The invention generally proposed use of a “fluid permeable elastic member” for moisture removal; except that one claim in the application did not require the use of the permeable member. (Claim 31).
Prior to the assignment at issue, the examiner had a restriction requirement and the patentee cancelled Claim 31 so that all of the remaining claims required the permeable member. The patent application was in this state — with only permeable member claims — when the assignment at issue took place. Later, the patentee obtained a patent covering the invention without the permeable member and then sued the assignor who had formed a competing company. In the litigaiton, the defendant challenged the broader claims as lacking written description, but the district court barred those challenges.
On appeal, the Federal Circuit found that in this context, the cancelled claim should still be considered part of the invention that the assignor expected to be patented.
[T]his 2002 cancelation in response to the Examiner’s restriction requirement says nothing, implicitly or explicitly, about the patentability of claim 31. Put another way, Mr. Truckai canceled claim 31 for reasons other than patentability. Indeed, an assignee would have understood that the restriction requirement and subsequent cancelation in response to the restriction requirement meant that the patent applicant could later prosecute claim 31’s subject matter. . . . Although claim 31 was canceled for purposes of further prosecution of the ’072 application, cancelation did not nullify the claim, as it remained viable for further prosecution in a divisional application filed by whomsoever owned the ’072 application. . . . The 2004 assignment assigned not just the rights to the ’072 application, but also the rights to any continuation, continuation-in-part, or divisional patent applications not yet filed. For certain, canceled claim 31 traveled with the ’072 application and its assignment to Hologic.
Slip Op. Thus, to understand changes in the patent claims, the court will delve into the prosecution history to uncover the reasons for any changes to claim scope and then make some conclusions about whether those reasons fit within the assignor’s implicit intent-to-claim. In a footnote, the opinion reserves the particulars for another day:
Our holding in this regard is limited to the facts of this case. We do not address whether a claim canceled for reasons other than to comply with a restriction requirement would be part of the 2004 assignment.
Slip Op., Note 4.
I’ll note that the facts of Hologic do not reflect an ordinary patent case. The assignment at issue was part of a $300 million company sale and thus was highly lawyered. The assignment particularly included an express warranty that the IP rights being assigned were both valid and enforceable. In the ordinary case, the inventor will be assigning rights to their employer pre-filing without the particular warranty or level of knowledge.
Prior to 1952, the Reissue Statute text only allowed for (1) narrowing claim scope and (2) fixing a “defective or insufficient” specification. The 1952 Patent Act edited the law to allow for reissue for “error[s]” where the patentee claimed either “more or less than he had a right to claim.” Thus, for the first time the statute expressly permitted broadening reissues. At the time, Congress also added a statutory caveat that broadening reissue must be applied for within two years of the patent grant. On paper, these changes might appear significant, but they were not overly controversial since the Patent Office and Courts had already allowed broadening reissues along with the two-year laches caveat.
The 1952 Act remained silent on another broadening caveat — the rule against recapture that the courts had developed in the 1880s in response to perceived abusive practices. Following the ’52 Act, courts concluded that the rule against recapture remained effective, and in recent years have expanded its scope. The most recent expansion is found with In re McDonald, 2021-1697, — F.4th — (Fed. Cir. Aug. 10, 2022) (applying recapture to amendments to overcome eligibility rejections).
The recapture rule has ordinarily been used to prohibit later recapture of scope that had been eliminated in an attempt to avoid a prior art rejection. Carl Moy’s treatise explains the rule against recapture as follows:
[The rule against recapture] seeks to hold the patentee to the positions she impliedly took during prosecution of the original patent regarding the scope and cont[ent] of the prior art. Specifically, where the patentee relinquished claims of a given scope in the original application, in response to a rejection based on the prior art, this is taken as tantamount to her admission that the relinquished claim is in fact unpatentable over the art. The patent owner is later held to that admission during reissue.
5 Moy’s Walker on Patents § 16:107 (4th ed.); See also, Robert A. Matthews, §4 Annotated Patent Digest § 25:76 (“Surrender arises from a patentee’s canceling or amending a claim to avoid a prior art rejection and relying on the amended matter as avoiding the prior art.”).
Likewise, the MPEP finds impermissible recapture only when the original surrender relied on by the patent applicant to overcome the prior art.
If an original patent claim limitation now being omitted or broadened in the present reissue application was originally relied upon by applicant in the original application to make the claims allowable over the art, the omitted limitation relates to subject matter previously surrendered by applicant. The reliance by applicant to define the original patent claims over the art can be by presentation of new/amended claims to define over the art, or an argument/statement by applicant that a limitation of the claim(s) defines over the art.
MPEP 1412.02 (flowchart below as well). See also, Mentor Corp. v. Coloplast, Inc., 998 F.2d 992, 996 (Fed. Cir. 1993) (“Error under the reissue statute does not include a deliberate decision to surrender specific subject matter in order to overcome prior art.”); Medtronic, Inc. v. Guidant Corp., 465 F.3d 1360, 1372–73 (Fed. Cir. 2006) (“[T]he deliberate surrender of a claim to certain subject matter during the original prosecution of the application for a patent made in an effort to overcome a prior art rejection is not such ‘error’ as will allow the patentee to recapture that subject matter in a reissue.”); Cubist Pharm., Inc. v. Hospira, Inc., 805 F.3d 1112, 1121 (Fed. Cir. 2015) (“the recapture rule applies only if the patentee surrendered subject matter in the original prosecution in order to overcome a prior art rejection.”); In re Clement, 131 F.3d 1464, 1469 (Fed. Cir. 1997) (“we look to … changes to the claims made in an effort to overcome a prior art rejection.”); QXMedical, LLC v. Vascular Sols., LLC, 408 F. Supp. 3d 996, 1005 (D. Minn. 2019) (applying the Cubist rule); Stephen G. Kunin & Kenneth M. Schor, The Reissue Recapture Doctrine: Its Place Among the Patent Laws, 22 Cardozo Arts & Ent. L.J. 451, 456 (2004) (the doctrine applies “if a patent applicant narrowed the scope of the claims during the prosecution of an application to overcome art of record (i.e., to distinguish the claims from the art)”).
In McDonald, the court rejected these treatises and statements found in a large number of prior cases limiting unavailable recapture to the “prior art” context. Instead, the court applied the doctrine to prevent recapture of scope relinquished to overcome an eligibility rejection.
McDonald filed his patent application back in 2008 claiming a computer-implemented method of displaying primary and secondary search results. In 2010, the examiner rejected the claims as lacking eligibility and the applicant amended the claims to add a requirement that the search algorithms are “executed by a processor.” That amendment was enough for the PTO to overcome the eligibility issue. A patent eventually issued (in a continuation application), but the patentee later figured out that its “a processor” amendment was going to tie the claims to operating both queries on a single processor. The patentee then filed its reissue application within the two-year timeline, but sought to recapture the scope that had been amended-away. The PTO refused to allow the amendment as impermissible recapture. On appeal, the Federal Circuit has affirmed — holding that the court’s repeated prior statements limiting the rule to overcoming prior art were merely context specific dicta.
The public’s reliance interest on a patent’s public record applies not only to subject matter surrendered in light of § 102 or § 103 rejections but also to subject matter surrendered in light of § 101 rejections. Mr. McDonald focuses on the “prior art” language of certain decisions—citing language describing the initial amendments as made in an effort “to overcome a prior art rejection”—in an attempt to limit the recapture rule to § 102 or § 103 rejections. Although we previously addressed cases centered on prior art rejections, this does not mean that the recapture rule is limited to that context.
Slip Op. The court has previously held that the recapture prohibition did not apply to amendments made to overcome a Section 112 indefiniteness rejection. Cubist Pharm., Inc. v. Hospira, Inc., 805 F.3d 1112, 1121 (Fed. Cir. 2015). In Cubist though the court gave two reasons for rejecting the recapture rules: (1) amendment were not for the purpose of avoiding prior art; and (2) amendment was not actually broadening. Cubist. In McDonald, the Federal Circuit recharacterized Cubist as a case only about the broadening question. Similarly, the court rejected the MPEP as having any authority.
In Cubist, the court wrote that the “recapture rule applies only if the patentee surrendered subject matter in the original prosecution in order to overcome a prior art rejection.” On appeal here, however, the court concluded that none of its prior cases “expressly prohibit the recapture rule from applying to amendments made for other purposes.” Slip Op.
Although the court has not previously applied the recapture doctrine in the eligibility context, there are a number of cases that don’t state the “prior art” requirement. For example:
Where an applicant for a patent to cover a new combination is compelled by the rejection of his application by the patent-office to narrow his claim by the introduction of a new element, he cannot after the issue of the patent broaden his claim by dropping the element which he was compelled to include in order to secure his patent.
In re Byers, 230 F.2d 451 (C.C.P.A. 1956).
Because there is no express statutory rule here other than the word “error,” the court appears to be willing to consider policy arguments in making its conclusions. In its decision, the appellate panel reflects that McDonald offered no persuasive justification for distinguishing amendments to avoid Section 101 rejections from amendments made to avoid prior art. The largest consideration here is likely that that this issue appears already well settled — with the Federal Circuit previously treating the rule as “rigid.”
The doctrine here has its roots in equity and concern that a reissue will operate as a “trojan horse” to by an “unscrupulous attorney” to cover competing products after the original patent issued and expectations had been settled. Of course, in the area of eligibility expectations were not settled at the time. Further, we should recognize that during this time Congress also amended the reissue statute to eliminate the patentee’s “deceptive intent” as a hurdle to obtaining reissue. (Do be clear, there is no suggestion that McDonald’s attorneys acted improperly in any way).
I believe that there is a good chance that McDonald will petition for en banc rehearing.
Every year, law schools advertise open faculty positions via a Faculty Appointments Register sponsored by the American Association of Law Schools (AALS). This year’s list was just released, and lots of schools are looking to hire patent and IP professors. The list includes:
Akron, American University, Barry University, Baylor, Chicago-Kent, Drake, Duquesne, Florida A&M, GWU, Hawaii, Louisville, New England, New York Law School, Northern Kentucky, Oklahoma, Ole’ Miss, Seattle, Stetson, Suffolk, Suffolk, Texas Tech, U Florida, U Mass, UC Davis, UC LA, UIC (Chicago), UNH (Franklin Pierce), USC, & U San Francisco.
Note that top ranked law schools rarely advertise for particular subject matter areas. For the most part, new tenure-track law professors will have already published law review articles and have some sort of teaching experience. A number of schools though are also considering clinical and administrative positions that would have different expectations. The hiring process is a bit cumbersome at most schools because the faculty as a whole typically vote on whether to extend an offer. At Mizzou, we begin the recruitment process in late August and then usually vote in early December. The new hire then starts work the following summer. We’re not hiring in IP this year, but are looking to hire several candidates folks — primarily focusing on the areas of Criminal Law/Procedure; Evidence; Constitutional Law courses (including First Amendment); Contracts; Dispute Resolution; and Veterans benefits (clinic).
What do folks think of this claim that is now pending on appeal to the Federal Circuit in Steuben Foods, Inc. v. Vidal, No. 20-1083 (Fed. Cir. 2022)?:
19. A method for automatically aseptically bottling aseptically sterilized foodstuffs comprising the steps of:
providing a plurality of bottles;
aseptically disinfecting the bottles at a rate greater than 100 bottles per minute, wherein the aseptically disinfected plurality of bottles are sterilized to a level producing at least a 6 log reduction in spore organism; and
aseptically filling the bottles with aseptically sterilized foodstuffs.
US6945013. It appears to me that the only point of novelty is the effective 100 bottles per minute feature, which is claimed here in purely functional form. I.e., it claims the result rather than how it actually happens. According to the briefing, the invention here is the “first high speed aseptic bottling system that would meet the FDA’s regulations related to aseptic packaging, which are the most stringent in the world.” According to the briefing, the real novel feature has to do with careful management of airflow “to ensure that air flows away from the bottle filling station of the aseptic bottling machine.” The drawing below shows the big vacuum tube (60) that sucks the air away. While that feature seems important, it is not actually claimed (by the broader claims being challenged).
Note that this case is IPR2014-01235, based upon an IPR petition filed in 2014. The court previously reversed the PTAB’s finding in favor of the patentee. On remand, the PTAB found the claim obvious. Nestle filed the IPR, but the parties eventually settled their dispute. The USPTO has intervened to defend its decision on appeal.
The Federal Circuit has denied HP’s petition for mandamus in its attempt to escape Judge Albright’s W.D.Tex. courthouse. Intellectual Ventures sued HP for patent infringement in 2021 for infringing its United States Patent No. 6,779,082. The lawsuit focuses on HP’s SimpliVity data storage solution. The HP product was mostly developed by the SimpliVity Corp in Massachusetts. HP bought SimpliVity in 2017 and moved further development to India. Still, in the litigation HP argued that Massachusetts was clearly more convenient than Texas.
On mandamus, the Federal Circuit gave deference to Judge Albright’s refusal to transfer and concluded that HP had not proven its case. In particular, HP “failed to identify any specific documents in Massachusetts.” I’ll reiterate my prior thoughts that, for patent cases, courts should rethink the notion the storage facility location for electronic documents should not be much of a factor (if any) regarding convenience unless the location somehow places the documents outside of the legal reach of the US court system.
= = =
The patent application was filed back in 2001 and was originally owned by ADC who sold that division to SS8. In 2006, SS8 sold the patent to the “Imaginex Fund I”, an Intellectual Ventures shell. In 2012, IV merged Imaginex back into an IV fund. Claim 1 is written quite broadly to cover cloud computing:
1. A data storage system comprising:
a network;
a plurality of distributed data storage units coupled to the network … having a plurality of external inputs and outputs; and
an object management system (OMS) manager unit coupled to the plurality of distributed data storage units via the network,
the OMS manager unit and the plurality of distributed data storage unit implementing an object management system, wherein the object management system preferentially selects a first one of the plurality of distributed data storage units for file access in response to a file access request provided that the file access request is associated with an external input/output of the first distributed data storage unit;
wherein the object management system is configured such that, in response to a file retrieval request that is associated with a data file and an external output of the first distributed data storage unit, the object management system preferentially returns a hostname and pathname of a copy of the data file that is stored within the first distributed data storage unit.
HP filed for inter partes review (IPR) and the board granted the petition to institute. HP’s motion to stay litigation pending IPR is now pending before Judge Albright. The brief makes three key points:
If HP wins the IPR, it will end the lawsuit or at least greatly simplify the case.
The patent is expired — that means that the only potential prejudice is delay in obtaining damages. This will not unduly prejudice IV.
The lawsuit is at an early stage.
This is one that appears a good candidate for stay, although would push-back the trial scheduled for March 2023.
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:
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 alwaysbe 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 notfollow 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).
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.
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.
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]
[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.
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.
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.
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.
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.
