I still need to post my view about how to predict the Supreme Court's view on 101 (it turns on two variables), but in preparing for class, I'm reading Pfaff. Over and over again, the court talks about the text of the act, and how "nontextual arguments" should be rejected.
I can't wait to see this issue of whether 101 is a defense resolved…
Consolidated Appropriations Act was signed by the President and enacted into law on December 8, 2004. The Consolidated Appropriations Act revises certain patent application and maintenance fees; provides separate fees for a basic filing fee, a search fee, and an examination fee; and requires an additional fee for any patent application whose specification and drawings exceed 100 sheets of paper (application size fee). The new patent fees are now effective and will remain in effect during the remainder of fiscal year 2005 and during fiscal year 2006. The patent maintenance fee changes apply to any maintenance fee payment made on or after December 8, 2004, regardless of the filing or issue date of the patent for which the fee is submitted. The revised maintenance fees took effect on December 8, 2004. Thus, any maintenance fee paid at any time on (or after) December 8, 2004 is subject to the revised maintenance fee amounts set forth in the Consolidated Appropriations Act.
NOTES:
by Dennis Crouch
The U.S. Court of Appeals for the Ninth Circuit recently issued a pair of decisions in the qui tam case Silbersher v. Valeant Pharmaceuticals concerning the False Claims Act’s (FCA) public disclosure bar. The case sets significant precedent in linking FCA claims to patent prosecution and fraud upon the patent office. The case can be contrasted with Silbersher v. Allergan, Inc., 21-15420, — F.4th — (9th Cir. Aug. 25, 2022) [21-15420], that Silbersher lost.
Background
The False Claims Act (FCA) allows private citizens, known as “relators,” to file qui tam suits on behalf of the government against those who have submitted false or fraudulent claims to the Federal Government. A relator who successfully prosecutes an FCA action is entitled to receive a percentage of any recovery. This bounty system is meant to encourage whistleblowers to come forward with information about fraud against the government. However, the FCA also contains a “public disclosure bar” to prevent opportunistic litigation by relators who do not contribute any original information. The public disclosure bar mandates dismissal of qui tam suits where the allegations are substantially the same as information already publicly disclosed through certain channels enumerated in the statute. The public disclosure bar applies to block FCA claims when: (1) the disclosure occurred via a specified channel, (2) the disclosure was public, and (3) the relator’s allegations are substantially the same as what was disclosed. 31 U.S.C. § 3730(e)(4)(A). If the bar is triggered, courts must dismiss the FCA claim unless the relator qualifies as an “original source” of the information.
In this case, the relator, Zachary Silbersher, brought an FCA lawsuit alleging that Valeant Pharmaceuticals and Dr. Falk Pharma fraudulently obtained patents covering their Apriso drug. According to Silbersher, Valeant intentionally withheld material prior art references showing that Apriso’s delayed-release formulation was obvious. Valeant then allegedly used the fraudulently obtained patents to charge Medicare/Medicaid inflated prices for Apriso.
Silbersher is a patent attorney and represented GeneriCo in an inter partes review (IPR) proceedings that invalidated one of Valeant’s patents related to Apriso. In the course of that investigation, Silbersher found that Valeant (allegedly) took inconsistent positions in prosecuting related patents several years apart regarding whether Apriso’s effectiveness without food would have been obvious.
The district court dismissed the suit under the FCA’s public disclosure bar discussed above. The court held that the inter partes review (IPR) proceedings invalidating one of Valeant’s Apriso patents qualified as a public disclosure and contained substantially the same allegations as Silbersher’s complaint. Thus, because the fraud was already subject of public disclosure, it could not serve as the basis for a False Claims Act Claim.
Ninth Circuit’s Analysis
On appeal, the Ninth Circuit reversed, holding that the IPR proceedings did not qualify as a public disclosure under § 3730(e)(4)(A). The provision spells out the types of public disclosures that bar FCA claims:
[Barring disclosures may be found in] … (i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party; (ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or (iii) from the news media …
Id. The appellate panel explained that IPRs are primarily adversarial and adjudicatory rather than investigative. With the government not a party to the IPR, the proceeding did not qualify under channel (i) as a “hearing in which the Government … is a party.” Nor did it qualify under channel (ii) as an “other Federal … hearing” since IPRs are not focused on fact-finding or obtaining information, but rather serve as an adversarial proceeding.
While the patent prosecution histories qualified as public disclosures under channel (ii), the Ninth Circuit held they did not disclose substantially the same allegations or transactions as Silbersher’s complaint. Critically, neither the prosecution histories nor any other single qualifying document revealed Valeant’s allegedly inconsistent positions taken before the PTO. According to the Ninth Circuit, publicly disclosing a “fraudulent transaction” requires revealing both the alleged misrepresentation and the true facts, which was absent here.
Key Takeaways
The decisions provide a roadmap for litigators to structure FCA claims based on “fraudulent transactions” arising from allegations of inequitable conduct or inconsistent representations before the PTO. Carefully piecing together the elements of fraud from various public sources may avoid triggering the public disclosure bar. For defendants, these cases highlight the importance of the pleadings and demonstrating that the “essential elements” of alleged fraud have already been publicly disclosed. A prosecution history that explains any inconsistencies with parallel proceedings would also avoid the potential problem.
by Dennis Crouch
U.S. ex rel Silbersher v. Allergan, Inc., 21-15420, — F.4th — (9th Cir. Aug. 25, 2022) [21-15420]
Zachary Silbersher is a NY Patent Attorney. In 2018, Silbersher filed a qui tam action against Allergan under the False Claims Act (FCA). The allegation was that Allergan fraudulently obtained patents covering Alzheimer’s drug treatments with the result of inflated Medicare drug prices. The district court denied a motion to dismiss but certified the issue for interlocutory appeal. Silbersher v. Allergan Inc., 506 F. Supp. 3d 772, 809 (N.D. Cal. 2020). The Ninth Circuit has now decided the case in Allergan’s favor–holding that the action fails under the FCA’s “public disclosure bar.”
The FCA has been a part of U.S. government since 1863 (the “Lincoln Law”) and is designed as a mechanism for catching (and thus deterring) fraud against the Federal Government. The law incentivizes whistleblowing — non-governmental folks (known as “qui tam relators”) can file the action on behalf of the U.S. government and will then receive a portion of any recovered damages (15-30% depending upon whether the Gov’t steps in to do the litigating).
In its current embodiment, the FCA contains a “public disclosure bar” that prohibits qui tam actions when the allegations are ‘based upon’ information that had already been publicly disclosed. The statute particularly defines public disclosure as being publicly disclosed in at least one of three ways:
(i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party;
(ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or
(iii) from the news media,
31 U.S.C. § 3730(e)(4)(A) (2010). Here, the basis of Silbersher claim stem from the prosecution history files of the Allergan patent applications. On appeal, the Federal Circuit concluded that the patent prosecution files stemmed from an administrative hearing and thus qualifies as an “other Federal … hearing.” Part ii above is a bit quirky as written, but the Ninth Circuit concluded that the best interpretation is that four type-ii disclosures are: “report, hearing, audit, or investigation.” Further, those disclosures qualify under ii if they are “congressional, Government Accountability Office, or other Federal.” Id.
An ex parte patent prosecution is clearly “Federal”: the PTO is an agency of the U.S. Department of Commerce. To determine the meaning of “other,” we look to look to dictionaries. . . . “Other” means distinct from that just mentioned, different, or additional. “[O]ther Federal” here clearly means Federal reports, hearings, audits, or investigations not from Congress or the Government Accountability Office, a definition that of course includes ex parte administrative hearings before the PTO. Congress, then, intended for “other” to be a broader category that includes additional, information-obtaining methods distinct from those already mentioned.
U.S. v. Allergan, Inc. The result of this interpretation is that “other Federal” is controlling and the provision could have simply been written as “in a Federal report, hearing, audit, or investigation.” The appellate panel justifies its broad interpretation by the Supreme Court’s 2011 pronouncement that the public disclosure bar has a “generally broad scope.” Schindler Elevator Corp. v. U.S. ex rel. Kirk, 563 U.S. 401 (2011) (interpreting a prior version of the Act).
The result then is that Silbersher’s qui tam case is likely blocked. The law does have a separate provision though would allow the case to move forward if he is an “original source” of the information in his complaint rather than simply finding it within the patent prosecution record. On remand, the district court will need to determine that origin question.
Allergan is looking to win on a ‘technicality,’ but to be clear, the company also argues that it did not make any false claims and so would also ultimately win on the merits.
By Ed Reines and Nathan Greenblatt*
The Patent Reform Act of 2009 includes a provision allowing interlocutory appeals of claim construction orders.[1] As drafted, the provision gives the authority for approval of such an appeal to the district courts, without giving the Federal Circuit discretion to decline the appeal.[2] This approach is misguided. Failure to give the court of appeals a voice in the interlocutory appeals process flouts cautions inherent in the final judgment rule since its enactment in 1789, ignores the different institutional concerns of district and appellate courts, and will create problems of piecemeal appeals, undue delay, and crowded dockets that will impair the effectiveness of the Federal Circuit and contravene the purpose for enacting the provision in the first place.
In addition, the perceived problem of excess reversals of claim construction rulings that has motivated the current provision is a function, if anything, of the de novo review standard applicable to claim construction, not the final judgment rule.[3] Thus the proposed solution does not address the true issue in any event – it masks it.
Continue reading the article Interlocutory Appeals of Claim Construction in the Patent Reform Act of 2009.pdf
* The views expressed in this article are those of the authors and do not necessarily reflect the views of Weil, Gotshal & Manges LLP or any of its clients.
[1] See S. 515 sec. 8(b).
[2] Id. (amending 28 U.S.C. § 1292(c)(2) by giving the Federal Circuit exclusive jurisdiction):
(3) of an appeal from an interlocutory order or decree determining construction of claims in a civil action for patent infringement under section 271 of title 35. Application for an appeal under paragraph (3) shall be made to the court within 10 days after entry of the order or decree. The district court shall have discretion whether to approve the application and, if so, whether to stay proceedings in the district court during the pendency of such appeal.
[3] See, e.g., 6/6/2007 Testimony of Mary E. Doyle before the Senate Committee on the Judiciary regarding “Patent Reform: The Future of American Innovation” at 9-10 (arguing that interlocutory appeal is needed because “claim construction rulings are so frequently reversed by the Federal Circuit”).
By Dennis Crouch
Reps. Honda, Lofgren, and Eshoo (All D-Ca) have collectively introduced the Patents and Trademarks Encourage New Technology (PATENT) Jobs Act of 2013 with the sole purpose of exempting the USPTO from the sequestration process for FY2014-2021. As I noted in my recent congressional testimony, the greatest impact of the America-Invents-Act has been increased funding at the USPTO and the resulting improved ability of the Agency to address the workload requirements. Although all of the USPTO's expenditures are matched by user-fee revenue, the sequester has been applied to the agency in a way that guarantees that a portion of every user-payment to the PTO is spent on general federal expenditures rather than for patent examination.
Both the AIPLA and IPO are strong supports of the proposed bill.
by Dennis Crouch
When listed as a potential survey response, Princeton University School of Law regularly ranks as a top-ten law school. Although Princeton actually has no law school, the Ivy League university does have a set of world class thinkers in areas of public policy, political science, and political economics. Several years after I graduated from Princeton's School of Engineering, the University founded its Center for Information Technology Policy (CITP) with Professor Ed Felton as its leader.
On Friday, May 11, 2012 I'll be returning to by alma mater for a CITP conference on patent law and policy titled: Patent Success or Failure? The America Invents Act and Beyond. Speakers include USPTO Director Kappos; CAFC Chief Judge Rader and former Chief Judge Michel; Professors Arti Rai, Colleen Chien, Jason Schultz, and myself; Joe Matel from the Senate Judiciary Committee; Dan Ravicher from PubPat; and industry leaders from industry (IBM, Google, J&J) and practice.
The event is free and open to the public. Register here: https://citp.princeton.edu/event/patent-success-or-failure/
Notes:
Also in June, I'll be speaking at the 2012 IP Business Congress held at a resort/casino near Lisbon, Portugal. http://www.ipbusinesscongress.com/2012/About.aspx
The Patent Reform Act of 2005 is changing as it moves through congress. In the latest amendment, Representative Smith has eliminated some of the most controversial aspects of the bill, including the injunction provision and the provision that would limit the scope of claims in continuing applications.
The reform measures still include a move to first-to-file; changes to the duty of candor; limitations on infringement and willfulness damages; post grant opposition procedures; and a revised venue statue.
Links:
Robert Matthews discusses the law controlling false-marking suits when multiple plaintiffs sue for the same act of false marking. Matthews extrapolates the case-law to make two primary points: (1) a false-marking defendant cannot be subjected to multiple penalties for the same act of patent false marking; and (2) based on the first-to-file tradition, federal comity, and standing principles, the second-filed suit should be dismissed.
Cite as Robert A. Matthews, Jr., When Multiple Plaintiffs/Relators Sue for the Same Act of Patent False Marking, 2010 Patently-O Patent L.J. 95 at www.patentlyo.com/matthews.falsemarking.pdf.
The CARES Act (March 27, 2020) provides the USPTO Director with authority to extend deadlines to account for our current national emergency regarding the COVID-19. Dir. Iancu today announced a set of extensions noting that “we are working to provide as much relief as possible to our stakeholders, consistent with our ability to maintain the USPTO’s fee-funded operations. We are especially mindful of the outsized impact on small businesses and independent inventors, and have provided additional relief for these groups. Ultimately, our goal is to ensure not only that inventors and entrepreneurs can weather the storm, but that they can hit the ground running once it passes.”
The basic rule is that most PTO prosecution deadlines March 27 to April 30 are eligible for a 30-day extension if filed with a statement that the delay “is due to the COVID-19 outbreak” and some party involved with the prosecution “was personally affected.” Here, the personal impact can apply to applicants, patent owners, 3rd party requesters, inventors, practitioners, etc. This list presumably includes non-human corporate owners. The “personally affected” clause is quite broad and includes office closures, cash flow interruptions, inaccessibility of files, travel delays, family illnesses, or other non listed reasons.
Read the rules: NOTICE of waiver of patent-related timing deadlines.
Note, the extension does not cover original filing deadlines; PCT or national stage filing deadlines; Deadlines for filing a non-provisional application following a provisional; or deadline for filing an inter partes review petition.
Finally, the notice says “Yes” — “The USPTO is open for the filing of patent documents and fees.”
By Dennis Crouch
President Barack Obama has now signed-into-law the Patent Law Treaties Implementation Act of 2012, Pub. Law 112-211 (December 19, 2012). The new law contains two titles that provide domestic law required to implement a treaty.
In the grand scheme of patent law, neither treaty is especially substantive. However, the Hague Agreement will likely have a much more substantial impact on the practice of protecting design rights on a global scale. In particular, the Hague Agreement creates a direct connection between US design patent application filing and European (and other) design right registration application and allowing a combined international application. The Hague Agreement implementation has a (likely) one-year effective date and will apply to applications filed after the effective date.
A draft mark-up and commentary can be downloaded here: /media/docs/2012/12/PLT.pdf
David French has been writing about the proposed change to a first-to-file system in the Patent Reform Act of 2010. Mr. French was closely involved with Canada’s 1989 switch to a first-to-file system.
Rather than moving to an absolute novelty system, the proposal calls for a limited grace period for “disclosures made one year or less before the effective filing date of the claimed invention.” To qualify for the grace period, the disclosures must either (A) come from the inventor(s), either directly or indirectly or (B) disclose subject matter that had already been publicly disclosed by the inventor(s), either directly or indirectly.
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Section 102(b) EXCEPTIONS: DISCLOSURES MADE 1 YEAR OR LESS BEFORE THE EFFECTIVE FILING DATE OF THE CLAIMED INVENTION A disclosure made one year or less before the effective filing date of the claimed invention shall not be prior art to the claimed invention under subsection(a)(1) if (A) the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or (B) the subject matter had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or others who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor. |
In a limited sense, this rule promotes pre-filing disclosure because the grace period is only available for those who publicly disclose the invention before filing. I am confident that the prudent approach will usually be to file the patent application as early as possible.
It is unclear to me how the provision would operate during a nonobviousness determination. I.e., what if the inventor disclosed INV-A; then a few months later someone else disclosed INV-B; and then the inventor filed on INV-A? Would the grace period apply to “knock-out” the INV-B disclosure as prior art?
I would personally prefer the addition of a caveat (C) to the grace period that “the subject matter had been previously invented by the inventor or a joint inventor.”
The USPTO has released an interim rule of practice that implements provisions of the CREATE Act that amended 35 U.S.C. 103(c). (Published at 70 FR 1818). The purpose of the Act is to promote cooperative research -- such as between a university and start-up company. The main thrust of the new law is to exclude some prior art from obviousness (103) consideration if the prior art arose from a joint research agreement.
According to the new rules, to overcome a 103(a) rejection by invoking the CREATE Act, an applicant must:
The new rules cannot be used to overcome rejections based on anticipation. Likewise, the PTO indicated that the new rules will likely not apply to reissue applications that were initially granted prior to December 10, 2004.
The PTO asks for your comments on the design of the final rule. Please contact ab76comments@uspto.gov by February 10, 2005 with you comments.
The Bar Association of the District of Columbia PTC Section roundtable that will be held at 3:30 PM EST on January 12 will discuss the changes. A telephone hookup remains available for that meeting. For information on either personal attendance or about the telephone hookup, please contact Jean Shim, jshim@foley.com, who is the registrar for this meeting. The meeting will be held at Suite 500, 3000 K Street NW in Georgetown. (Thanks to Hal Wegner for information on the meeting).
Parental Guide of Texas v. Thomson (Fed. Cir. 2006).
The most interesting aspect of this case is that the CAFC was willing to decide it. In a post-settlement dispute over damages, Parental Guide originally appealed to the Fifth Circuit. On motion, the Fifth Circuit transferred the case to the CAFC because the settlement agreement “expressly refers to the patent statute, 35 U.S.C. § 284.”
Because it was “at least plausible” that a determination of Section 284 would be necessary to decide the case, the appellate panel felt compelled to hear the appeal.
Edward Reines and Nathan Greenblatt have returned with an extension of their 2009 article on the proposed right of interlocutory appeals of claim construction. This new article considers the impact of the recent Supreme Court decision of Mohawk Industries, Inc. v. Carpenter as well as proposed modifications to the Patent Reform Act of 2009. [Download Reines.2010]