October 2005

LabCorp v. Metabolite: Supreme Court To Hear Patent Case Questioning Patentability Of Medical Method

InfringingProducts008Laboratory Corp. of America (LabCorp) v. Metabolite Laboratories (Supreme Court 2005).

The Supreme Court has announced that it will hear LabCorp’s appeal that will again question the scope of patentability in the U.S.  Specifically, the High Court will review the question of whether a patent can claim rights to a basic scientific relationship used in medical treatment if the claim is limited to “correlating” test results.

The question on review is as follows:

Whether a method patent setting forth an indefinite, undescribed, and non-enabling step directing a party simply to “correlat[e]” test results can validly claim a monopoly over a basic scientific relationship used in medical treatment such that any doctor necessarily infringes the patent merely by thinking about the relationship after looking at a test result.

Patent in suit: This case revolves around claim 13 of Metabolite’s U.S. Patent No. 4,940,658

13. A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of:

assaying a body fluid for an elevated level of total homocysteine; and

correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.

Thus, the method comprises two steps, (i) assaying a body fluid and (ii) correlating the measure with a mineral deficiency.

LabCorp’s argument: LabCorp argues that claim 13 is invalid for a number of reasons.  Most pointedly, although the claim requires a step of “correlating,” there is no description of how the correlation would take place. According to the petitioner, “[s]uch a vague claim cannot be valid; for if it could be, parties could claim patent monopolies over basic scientific facts rather than any novel inventions.” In addition, the claim arguably fails the written description requirement because “the specification does not describe what a practitioner must do to perform the active ‘correlating’ step.”

Comment: The Supreme Court appears bent on making this case a question of subject matter patentability.  If it takes that course, it will likely answer many of the questions left open by Lundgren and Fisher.  Of course, as a general rule the decisions from the Court raise more questions than they answer.

Eolas v. Microsoft

Eolas v. Microsoft (Continuing Saga).

The Supreme Court has denied Microsoft’s petition for a writ of certiorari.  And, the case will be wholly returned to the district court to resolve a number of pending issues.  At first glance, Microsoft seems to be running out of legal arguments: M$ lost $500 million at the district court; substantially lost on appeal, lost in its bid to get the Supreme Court to hear the case, and lost in its bid for the Patent Office to reject the patent on reexamination.

On a closer look, however, the reexamination may actually give Microsoft breathing room again at the district court.  The Examiner’s reasons for allowance make clear that the Eolas claims require an “‘executable application’ that is a separate application from the browser application.” (emphasis in original). Of course, it would be difficult for Eolas to argue that Microsoft’s accused ActiveX controls, applets and plug-ins are separate applications rather than components that are called by an application.

It will be interesting to see whether Microsoft can capitalize on this implicit limitation that has been created by the PTO.

Settlement of declaratory judgment action based on pre-filing statements insufficient to trigger 180-day exclusivity period

Teva Pharmaceuticals v. FDA (D.D.C. 2005)

Generic manufacturer Teva filed an abbreviated new drug application (ANDA) in 2000 seeking permission to sell generic pravastatin once one of the patents expires in April 2006(paragraph III certification) and an assertion that the generic version would not violate three patents on the drug (paragraph IV certification).  After Teva filed, several other generic manufactures filed parallel applications.

After approving Teva’s application, the FDA determined that Teva’s 180–day exclusivity period was started by the conclusion of a lawsuit between Apotex and BMS involving the same patents. (Under Hatch Waxman, the 180–day exclusivity is triggered by a “decision of a court” or “holding” that has preclusive effect.)

In that case, Apotex had sued BMS for declaratory judgment of noninfringement even though BMS had told Apotex that it would not sue on the patents based on Apotex’s proposed formulation.

BMS & Apotex reached a voluntary dismissal prior to any hearing taking place, and filed a “consensual stipulated dismissal” based on the pre-suit representations by BMS.

Teva argued that the Apotex-BMS settlement was not a “decision of a court” and thus should not have triggered the start of the exclusivity period.

The DC Court agreed with Teva, finding that the stipulated dismissal was insufficient to fulfill the requirements of Hatch Waxman.

The underlying terms of the stipulation are not physically incorporated into the four corners of the dismissal order, and there is no statement of a “good cause” finding on the face of the order. Neither Apotex nor BMS ever asked the district court to look beyond the signed stipulation, and no hearing or argument ever took place. Thus, the district court could only review the voluntary, private settlement agreement: it did not have to weigh evidence, or make any implicit determinations. Indeed, it did not even have to sign the document, and under Second Circuit and D.C. Circuit law, as well as Rule 41(a)(1)(ii), the filing of the signed stipulation of dismissal automatically effectuated the dismissal without any court action. The district court was divested of jurisdiction at the very moment that the stipulation, containing the signatures of both BMS and Apotex, was filed — there cannot have subsequently been any predicate finding of fact as to estoppel or any other issue. And there is nothing in the record to suggest that, notwithstanding this jurisdictional bar, any predicate finding of fact was actually made.

The Apotex-BMS decision was “not a court decision or holding” and “Teva’s 180-day exclusivity clock was never triggered.” As such, the D.C. Court determined that the FDA’s determination was “arbitrary, capricious . . . or otherwise not in accordance with the law” under § 706(2) of the APA.

Read the decision.

Upcoming Conferences

BlawgThink 2005

Leading legal bloggers will be in Chicago November 11 and 12 for BlawgThink 2005: a bold new approach to learning about legal blogging. Day One will feature more traditional sessions broken-out led by top legal bloggers on topics such as blogging how-to, blogging tools, marketing tips, content strategies, RSS and ethics. Day Two will have some planned activities, but will be agenda will be primarily attendee driven with collaborative brainstorming and small group discussions. This will be one of the most innovative, creative, and energetic conference that you have ever attended.  The organizers have lined up nice sponsors with some great freebies. . . Contact Matt Homann (matt@lexthink.com) for an invitation.  A number of IP bloggers will in attendance including Stephen Nipper, Matthew Buchanan, Douglas Sorocco, Cathy Kirkman, Brandy Karl, Russ Krajec, and me.

Doctrine of Equivalents: Vitiation and Estoppel

If you are in Kansas City on November 16, I would love to meet you at the KCMBA sponsored luncheon from 12:30 to 1:30.  I will be discussing the DOE and how recent case-law has changed our perspective.  Sean Bradley of Erikson & Kleypas will moderate.


USPTO Releases New Business Method Guidelines: Requires “physical transformation” or “concrete and tangible result”

In the wake of the Lundgren case, the USPTO has released a set of interim examination guidelines for determining subject matter eligibility of patent applications. (Link).  The guidelines will be used by examiners “in determining, on a case-by-case basis, whether a claimed invention falls within a judicial exception to statutory subject matter (i.e., is nothing more than an abstract idea, law of nature, or natural phenomenon), or whether it is a practical application of a judicial exception to statutory subject matter.”

The crux of the new guidelines is that an invention falls within the scope of 35 U.S.C. 101 “if the claimed invention physically transforms an article or physical object to a different state or thing, or if the claimed invention otherwise produces a useful, concrete, and tangible result.”  The application itself should enable one of ordinary skill in the art to understand the utility of the invention.


How to find Statutory Invention Registrations

Although rarely used, an inventor can apply for a statutory invention registration with the patent office under 35 U.S.C. 157.  Under the law, the inventor must waive the right to receive a patent on the invention.  The statutory inventions are searchable through the USPTO patent database and are given “H-numbers”—such as H342. 

There are currently just over 2100 published SIRs, most of which were filed by the U.S. government.  This search (SEARCH) will grab them all.

(NOTE — This tip comes from the PUIG newsgroup).


IP Due Diligence: A How-To Guide (Free Webinar Thursday Oct 27)

Two partners at MBHB (my firm), Jim McCarthy and Emily Miao, have put together what looks to be a great “webinar” on intellectual property due diligence to be held on Thursday, October 27, 2005 at 2:00 pm CST. Issues to be discussed:
  • When should a due diligence review be conducted?
  • How can validity of a patent or strength of a trademark be determined?
  • What can be done if any intellectual property is the subject of a lawsuit?
There will be a Q&A session at the end as well.
Please contact Megan McKeon at 312.913.2105 or mckeon@mbhb.com for more information or to register. (Must register by 1:00 pm CST).

NTP v. Research-in-Motion: Supreme Court Denies Stay

NTP v. Research-in-Motion

After the CAFC denied RIM’s request to stay proceedings pending an appeal to the Supreme Court, RIM took its argument directly to new Chief Justice John Roberts — asking him to stay the issuance of an injunction pending the outcome of the Canadian company’s petition for writ of certiorari.  Roberts denied that request without comment and trading of RIM’s stock was again halted.


Declaratory Judgment Jurisdiction: Fourteen Month Time Lag Destroys Apprehension of Imminent Suit

ScreenShot005Citizen Electronics v. Osram (D.D.C. 2005)

Osram owns several patents related to multi-color LEDs.  In 2003, Osram and Citizen discussed potential licensing, but the two companies never reached a deal. Osram sued several LED importers in the ITC and in Europe and announced that it “would not tolerate any infringement of its patent rights and would take legal action against unauthorized use.”  However, after 2003, the two companies did not have any direct discussions regarding the patents.

Fourteen months later, Citizen filed suit against Osram asking for a declaratory judgment of invalidity and noninfringement.  Osram challenged the basis for jurisdiction.

The court agreed that Osram’s actions in the other lawsuits did not give rise to any “reasonable apprehension of suit.”

[W]hether OSRAM broadly interpreted its patent rights in a suit against a third party (as opposed to filing the suit) does not provide plaintiff with a reasonable apprehension of suit, since it is mere conjecture to argue that OSRAM would have acted on its interpretation by instituting suit against Citizen.

In addition, the court found that the “nervous state of mind” created by the 2003 communications between the companies “not enough to demonstrate a reasonable apprehension of suit” in January 2005. Specifically, the court noted that there must be a reasonable apprehension of imminent suit, and a fourteen month time lag belies any such apprehension.

Case dismissed with prejudice for lack of subject matter jurisdiction.

Almost 20% of patent applicants receive an office action within nine months of filing.

Tim Palmer helped me to grab some data for a new paper on patent office statistics. Here are some preliminary results:

Using data from Series 10 (Serial No. 10/xxx,xxx) with filing dates from October 2001 through May 2005, I created a simple cumulative percentage table showing the expected time delay for a first office action.  As can be seen, around seven percent of cases receive a first OA within the first six months, and the median delay is between one and two years.  Of course, this table is slightly skewed because the October 2001 start date does not allow for delays of more than four years.


Three Months 1%
Six Months 7%
Nine Months 18%
One Year 32%
Two Years 82%
Three Years 96%

NTP v. RIM in Hands of District Court.

As predicted by several Patently-O readers, the CAFC has denied RIM’s petition to stay the infringement suit brought by NTP while the case is appealed to the Supreme Court.  Now, this case will continue on three parallel tracks: (i) district court adjudication in the wake of the August 2005 revised appellate opinion; (ii) Reexamination of NTP’s patents at the USPTO; and (iii) the petition for writ of certiorari at the Supreme Court.

Reissue Patent Invalid Because Reissue Was Filed To Correct Procedural Error

Patentlyo025Medrad v. Tyco (W.D. Pa 2005).

Medrad sued Tyco for infringement of its patented injection system for use with an MRI.  The patent, RE 37,602, underwent two reissue procedures before being asserted by Medrad. 

Tyco asserts, however, that the reissue patent is invalid because the reissue process was not initiated to correct one of the four statutorily identified errors:

  1. Defect in the specification;
  2. Defect in the drawing;
  3. Error in claiming too much; or
  4. Error in claiming too little.

Rather, in this case, the patentee filed the second reissue to correct a mistake made during the prosecution of the original reissue. (The patentee failed to file a supplemental reissue declaration in compliance with PTO Rule 1.175).

The district court agreed with the defendant that Section 251 (Reissue) can only be used to correct an error in the specification, drawings or claims and cannot be used to correct a procedural error that is not reflected in the patent grant itself.

“While we recognize that this holding produces a harsh result — ultimately, plaintiff’s patent is invalidated because it failed to file a supplemental declaration with the PTO — we cannot reconcile plaintiff’s legal argument with the language of section 251, and the controlling case law interpreting it.

Thus, the court found Medrad’s reissue patent invalid because the reissue was filed for a purpose other than that enumerated in the statute.

Comment: This case should serve as a reminder to patent practitioners that the PTO can occasionally be convinced to give you more than what the law allows. If that happens, it is the patentee who pays the ultimate price.

Licensee Lacks Standing; Dismissed With Prejudice

Patentlyo024Sicom Systems v. Agilent (Fed. Cir. 2005).

Sicom’s lawsuit was dismissed by the Delaware district court after finding that the plaintiff was not an “effective patentee” and thus lacked standing to sue.

The patent in question uses “eye patterns” for automatic monitoring of signal transmissions.  (Patent).  The patent was originally assigned to the Canadian Government and then licensed to Sicom, a company owned by the inventors. Under the license agreement Sicom had rights to bring “commercial infringement actions.”  However, the district court found that such rights were insufficient to allow a licensee to bring suit because “Canada may still be able to pursue non-commercial customers of Defendants like governmental entities, the military and universities, thereby creating multiple risk of litigation over the same patent, a result which is inconsistent with a genuine exclusive right to sue.”

Generally, a patentee and successors in title have rights to sue for patent infringement as do licensees who receive “all substantial rights under the patent.” Thus, a nonexclusive license confers “no constitutional standing on the licensee to bring suit.”

On appeal, the CAFC agreed that Sicom did not possess all substantial rights under the patent — focusing on Canada’s ability to sue other infringers and Canada’s retention of a right to practice the invention.

Dismissal With Prejudice: Sicom also argued that the lower court’s dismissal with prejudice should be set aside to give Sicom a third chance to establish standing.  However, because the company already had one chance to correct the standing defect, the CAFC affirmed, finding that the district court was within its discretion to dismiss the case with prejudice.


CAFC Jurisdiction Set At Filing of Complaint

MedImmune v. Genentech (Fed. Cir. 2005)

MedImmune, a licensee in good standing, filed a declaratory judgment action to challenge the patents validity and enforceability. The district court dismissed the action, without prejudice, finding no “case of actual controversy.” On appeal, the CAFC affirmed holding that a licensee in good standing is not under threat of being sued for patent infringement and thus cannot bring a DJ action. (Citing MedImmune v. Centocor).

MedImmune also had pending antitrust claims and asked that once the Federal Circuit had disposed of all the patent claims, the case be transferred to the Ninth Circuit Court of Appeals.  The CAFC panel disagreed, finding that “the jurisdiction of the Federal Circuit is established by the well-pleaded complaint in the district court, whereupon the Federal Circuit must exercise jurisdiction of all of the issues in the case.”  According to the panel, jurisdiction is determined “at the outset of litigation” and does not change — except when sham charges of patent infringement are brought to manipulate the appeals process.

In dissent, Judge Clevenger argued that the district court’s dismissal without prejudice was “equivalent for jurisdictional purposes to an amendment removing the declaratory judgment claims from the complaint.”  Because no other claims in MedImmune’s complaint “arise under” patent law, Clevenger argued that the regional circuit should now have jurisdiction over the case.

Real Business Method Patents

Ex parte Lundgren, Appeal No. 2003-2088 (BPAI 2005).

Because of the “technological arts” requirement, I have always thought the term “business method” to be a misnomer when applied to patents.  Famous business method patents such as Bezos one-click patent and the State Street patent are really directed at software for e-commerce and data processing.

However, when a skilled business person thinks of a method of doing business, their proposal is generally not limited to software or tied to a computer.  I can’t count the number of times that I have explained to a confused business inventor that the PTO would not allow their broad claim because of a form-over-function limitation that a “computer” must be recited in the claim.

Regardless of your stance on patenting of business methods, the “technological arts” rule — requiring simply that a computer be recited somewhere in the claim — was indefensible.  I’m just happy that I will now be able to explain business method patents in terms that business leaders understand.


Patent Board Eliminates “Technological Arts” Requirement For Business Method Patents

Ex parte Lundgren, Appeal No. 2003-2088 (BPAI 2005).

In a landmark decision, the Board of Patent Appeals and Interferences has issued a precedential opinion eliminating the Patent Office procedure of rejecting patents under 35 U.S.C. § 101 as outside of the “technological arts”

Our determination is that there is currently no judicially recognized separate “technological arts” test to determine patent eligible subject matter under § 101.  We decline to create one. Therefore, it is apparent that the examiner’s rejection can not be sustained. 

This decision will once again expand the role of business method patents by freeing them from being tied to a computer or other electronic device.  At the same time, this decision widens the gap between the US and many other countries who are still debating patentability of software.

It is unclear at this point whether the PTO solicitor will ask the Federal Circuit to review this case.

The Majority Opinion:

Lundgren had claimed a “method of compensating a manager” that involved several steps of calculating a proper compensation based on performance criteria and then transferring payment to the manager. The examiner rejected the claims arguing that they were “outside the technical arts, namely an economic theory expressed as a mathematical algorithm without the disclosure or suggestion of a computer, automated means, apparatus of any kind, the invention as claimed is found non-statutory.”

A five member panel reviewed this action, and three signed on to the per curiam majority opinion that found the claim to “produce a useful, concrete, tangible result” without being a “law of nature, physical phenomenon or abstract idea.”  Regarding the PTO “technological arts” test, the majority found that such a test does not exist under the law.

Rejection reversed, there is no judicially recognized “technological arts” test for patentability.

Dissent by Judge Smith:

Judge Smith dissented, arguing that the “technological arts” standard is simply the modern lexical equivalent to the phrase “useful arts” found in the US Constitution. He then argued that Congress does not have power to pass patent laws that expand beyond those “useful arts.”

While I do not question the power of Congress to pass laws to carry out this mandate, whatever law passed by the Congress cannot be applied in such a manner as to enlarge the constitutional mandate.  Thus, any laws passed by the Congress to grant patents should be applied in a manner that is consistent with the constitutional mandate. 

The dissent then implicitly calls for the Federal Circuit to review the case and explicitly calls fro Congress to “step in and clarify the limits of 35 U.S.C. § 101.”

Dissent by Judge Barrett:

In a 78 page dissent, Judge Barrett suggests a new test under section 101 that would require some transformation of physical matter.


  • The BPAI holds its appeals in secret — and the Ex parte Lundgren opinion is yet to be officially released by the Board.  I published this article on the case after receiving copies of the opinion from reliable sources. Opinion.v1; Opinion.v2.
  • Link. Read more about Dr. Lundgren.

CAFC affirms Salad Spinner claim construction

Patentlyo022World Kitchen and OXO v. Zyliss Haushaltwaren (Fed. Cir. 2005) (nonprecedential). 

OXO and Zyliss both make salad spinners. OXO’s spinner has “push-to-spin” technology while the Zyliss spinner uses a pull-cord.  OXO sued for patent infringement and asked for a preliminary injunction to get the Zyliss product off the market.  After a preliminary claim construction the district court denied the PI motion, finding that OXO had not shown a likelihood of success on the merits.

On appeal, OXO argued that lower court erred by construing the term “lid” according to its ordinary meaning.  The CAFC, however, affirmed — agreeing with the district court that a “lid” is “something that covers the opening of a hollow container,” but does not include items secondarily attached to the lid that do not serve the function of covering the opening. Thus, in this case, the brake disc used to stop the salad spinner is not part of the lid because it does not participate in covering “the opening of a hollow container.” (File under “if it looks like deference and smell like deference . . .”).

Denial of PI affirmed.

Amendment to 271(g)

35 U.S.C. 271(g) makes clear that importation of a product that is made by a patented process is infringement. However, the statute includes limitations that the “product” is no longer infringing if it is either “materially changed by subsequent processes” or is “a trivial and nonessential component of another product.”

KinikKinik v. ITC: In 2004, the Federal Circuit determined that the language of 271(g) does not apply to Section 337 * actions at the ITC. [Opinion]  In that decision, court noted that the statute explicitly limits itself “for the purposes of this title.”

Thus, when a defendant is accused of improper imports under Section 337, he cannot raise the defenses of material change by subsequent processes or trivial component.

Amendment: Now, there is a movement afoot to change this aspect of the law, striking words that limit those defenses to actions under the Patent Act so that they could be applied with equal force at the ITC.

* Section 337: The Tariff Act of 1930 allows administrative relief through the International Trade Commission (ITC) to determine whether there is unfair competition in the importation of products into the US. Section 337 of the act makes infringement of a US patent an unlawful practice in import trade.  ITC actions are extremely fast as compared to traditional patent infringement suits and are often the best way to stop an infringing importer.


Patently-O Tidbits

1. Book Reviews Ok’d: Last week, I started a new series known as “Book Review Monday.”  Although I gave a good review to David Pressman’s book, I am glad to know that negative book reviews published on the internet are not actionable — Hammer v. Amazon.com (“[N]egative reviews could not be construed as anything other than opinion.”).

2. Reader Survey: The Patently-O archives are growing rapidly (900+ articles) but several readers have lamented that would like a better access to the actual cases.  I wonder whether any readers would find it useful if I provided a Westlaw or Lexis (or BNA) link to the case in each case review? Of course, after clicking on the link, you would still have to login and pay the rates.  Please let me know if this would be a beneficial feature? (crouch@mbhb.com).

3. The Latest Information on the New Patent Bar Exam: PLI is presenting this free audio briefing via either phone (register phn) or web (register web) on Wednesday October 19, at Noon (Central). You can also register via phone by calling (800) 260-4754 and mentioning Priority Code: PRW5-8AEM1.

4. BlawgThink 2005: If you are interested in starting a legal blog, BlawgThink 2005 is the place to be — November 11, 12. A number of IP bloggers will be leading discussions including Stephen Nipper, Matthew Buchanan, Douglas Sorocco, Cathy Kirkman, Brandy Karl, and me.