October 2007

CAFC: Director Cannot Issue Interim Term Extensions Pending Appeal of Extension Denial

Patent

PatentLawPic059Somerset Pharmaceuticals v. Dudas (Fed. Cir. 2007)

Somerset filed a Patent Term Extension Application with the PTO about one year before its pharmaceutical patent was set to expire.  The PTO eventually denied the application with one month left on the patent term. (The PTO only acted in July 2007 – after Somerset filed an emergency motion with the CAFC).

On appeal, Somerset asked the appellate court for a preliminary injunction that would order the PTO director to issue an interim term extension pending the patent holder’s appeal of the extension denial.

In the Federal Circuit, preliminary relief is only granted where the moving party establishes at least a threshold “reasonable likelihood of success on the merits.”  The appellate panel found no likelihood of success — thus denying the appeal.

Somerset had appealed the PTO’s failure to issue an interim extension.  However, once the PTO denied the extension application, the director no longer had power to issue an interim extension. 35 U.S.C. § 156(e)(2). Consequently, the PTO’s denial of Somerset’s extension application means that the company’s case for an an interim order loses its merit.

Notes:

  • This opinion was originally published on July 31, 2007, but was reissued as precedential on October 4, 2007.
  • Perhaps without noticing, this case appears to raise the “threshold” level of potential success required for a preliminary injunction from “a likelihood” to “a reasonable likelihood.” See Nat’l Steel Car, Ltd. v. Canadian Pac. Ry., Ltd., 357 F.3d 1319, 1325 (Fed. Cir. 2004) (“[A] movant is not entitled to a preliminary injunction if he fails to demonstrate a likelihood of success on the merits.”).
  • It appears that the formal positioning of the case – created by the PTO’s delay in issuing a decision – helped the PTO win the appeal.  If Somerset has some likelihood of winning an appeal on the merits of the PTO’s extension denial then it might have asked the court to issue an interim extension (rather than ask the court order the PTO director to do so).
  • This decision continues the formal reading of the PTE statute. See, Merck & Co. v. Hi-Tech Pharmacal Co., 482 F.3d 1317 (Fed. Cir. 2007).
  • Orange Book Blog on the decision

Patently-O Tidbits

Patent
  • PatentLawPic057Patent Sharks: The recording industry has focused its message — individuals who download share songs without paying will be sued. [$200k verdict against single mother]  In the 19th century, ‘patent sharks’ went after individuals in the same way — leading to major patent reforms. [Link] [Kirkman Blog]
  • PTO Morass: GAO Report on the PTO: “Hiring Efforts Are Not Sufficient to Reduce the Patent Application Backlog”. In response, the PTO will conduct its own study to “review assumptions the agency uses to establish production goals for patent examiners.” [Link] The Department of Commerce also notes that the new rule changes should help fix the employment mess. (p.36 of the report).
  • Obviousness: Milton & Anderson suggest a new obviousness acronym — the common sense selection (CSS) test. “[M]ere selection of elements from various prior art references and combining them together with no change in their respective functions is a matter of common sense to one skilled in the art, and, therefore, obvious and not patentable. On the other hand, a combination that includes something new or produces a new function or an unpredictable result remains potentially patentable.” [LINK]
  • Patent Reform:
  • Political Economist & Harvard Professor Mike Scherer has an excellent new paper on the Political Economy of Patent Reform in the US. [TIIP]
  • One report I’ve seen announces that the Senate has 41 anti-reform votes — enough to block consideration of the reform measures. A reformed reform bill may still have a chance.
  • Kathi Lutton (Fish & Richardson’s Chief Litigator) & Kelly Hunsaker continue to develop their Patent Reform Updates.

Claimed ‘plant cell’ must enable monocots and dicots; CAFC affirms noninfringement and invalidity of Monsanto GM corn patents

Patent, ,

Monsanto Co. v. Syngenta Seeds, Inc. (Fed. Cir. 2007)

Monsanto and its Dekalb subsidiary hold three patents covering Roundup-Ready Corn.

  • 4,940,835 covers a GM gene that confers glyphosate resistance to plants.
  • 5,538,880 covers the process of producing herbicide and insect resistant corn.
  • 6,013,863 covers the process of producing glyphosate resistant corn having a marker gene.

Syngenta grew Dekalb GM seeds that had been produced according to the patented methods and then grew genetically identical progeny exhibiting the same GM traits. 

In the ensuing infringement litigation, the district court held that the ‘835 patent invalid for under 35 USC 112 for lack of enablement and held that Syngenta did not infringe the two process patents because the accused infringer did not perform the initial step of the claims. (That initial step of “bombarding … cells with DNA-coated microprojectiles” was performed by Bayer prior to issuance of the patents).

Enablement: The ‘835 patent is not limited to corn. Rather, it claims to be applicable to ‘plant cells.’ During claim construction, the district court found that the patent scope extended to all plant cells – including both monocots and dicots. However, the ‘835 patent was filed before genetic transformation of monocot cells was possible.

“The claim requires transformation of the plant cell. Without the ability to transform a monocot cell, one skilled in the art could not determine whether the plant gene could carry out the claimed functions and thus fall within the scope of the claim.”

Thus, the ‘835 patent is invalid for lack of enablement.

Infringement of Dependent Process Claims: Generally, a dependent claim includes all the limitations of its parent.  Here, however, Monsanto argues that its process claim structure necessitates an alternative viewpoint.  In particular, Monsanto argued in the alternative that its Claim 4 is (1) not a dependent and (2) even if a dependent does not require all the limitations of Claim 1. The process claims line-up as follows:

  • Claim 1: A process for producing a fertile transgenic Zea mays plant comprising the steps of …
  • Claim 4: A process comprising obtaining progeny from a fertile transgenic plant obtained by the process of claim 1 which comprise said DNA.

Thus, Claim 4 is directed to a process of growing seeds from a plant that was produced according to the manner of claim 1.  This could be considered a claim directed to a process of using a product of a process.

The CAFC quickly shot-down Monsanto’s argument — holding that claim 4 is a dependent and the all element rule applies.

“Although in a somewhat unusual format, claim 4 is dependent from claim 1 because it only stands if all three steps recited in claim 1 have been performed. In other words, the additional fourth step of obtaining progeny depends on the performance of the process comprising the three steps recited in claim 1 for obtaining a fertile transgenic plant. Claim 4 contains each element of a dependent claim.”

The court also repeated its rule that one “cannot infringe” a dependent claim without also infringing the parent claim.

271(g) Infringement: Under 271(g), a product made by a patented process also creates infringement liability.  Here, however, Syngenta could not be held liable because several steps of the process were performed prior to issuance of the patent.

“Infringement is not possible under § 271(g) when the three first steps of the claimed process are performed before the issuance of the patent.”

Summary judgment of noninfringement and invalidity affirmed.

 

 

Short Article Request: Short-term Reaction to PTO Rule Changes

Patent

On November 1, 2007, the PTO’s new rules will become effective. Those claims will limit the number of continuation applications that may be filed as well as the number of claims included in each application.

Article request: I would like to publish two separate short articles (<1000 words) written by Patently-O readers. Topics: (1) What action, if any, should a patent applicant take between now and November 1 to preserve rights in an of an already pending valuable patent application?; (2) Are there any actions that should be taken prior to November 1 to preserve rights in a valuable invention that is not yet associated with a patent application?

Please send your questions and short articles to: dcrouch@patentlyo.com.

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Of interest is the following statement from the PTO’s Rule Change FAQ: “[A]pplicant may file as many continuation or CIP applications as applicant wants between August 21, 2007 and October 31, 2007, without a petition and showing, regardless of the number of previously filed continuing applications.”

New Patent Fees

Patent

TenThe PTO has enacted a modest fee increase of roughly 3%. The largest bump is in appeal fees. An appeal with oral arguments now costs $2050 in fees. (I would query whether this appeal fee increase is meant to cover costs or as a disincentive)

Due on filing:

  • Utility Filing Fee: $310
  • Utility Search Fee: $510
  • Utility Examination Fee: $210
  • Total: $1030 (was $1000)

Due later:

  • Notice of Appeal: $510 (was $340 in 2005)
  • Appeal Brief: $510 (was $340 in 2005)
  • Oral Hearing: $1030 (was $340 in 2005)
  • Utility Issue Fee: $1440
  • 3.5 Year Maintenance Fee: $930
  • 7.5 Year Maintenance Fee: $2,360
  • 11.5 Year Maintenance Fee: $3,910

Fee Schedule

 

Emergency Injunction Denied

Patent

The CAFC occasionally grants emergency motions to stay injunctive relief pending the outcome of an appeal. That occurred earlier in 2007 in the Verizon v. Vonage litigation.

Going the other way, Novartis recently filed an emergency motion to enjoin Teva from selling a generic version of Famciclovir pending outcome of the patent litigation. In early September 2007, the CAFC granted a temporary injunction to block Teva’s introduction into the market. Now, however, after considering the merits of the case, the Court has denied the Novartis suggestion to continue the injunction throughout the litigation.

Consideration of Delayed Injunctive Relief Demanded by CAFC

Academic Studies, Patent

The recent Verizon v. Vonage majority opens the door to an expanded use of what I would call delayed injunctive relief.  In particular, the two-member majority (JJ Dyk & Gajarsa) explains in Footnote 12 that the district court “should have” considered whether to allow the adjudged infringer Vonage more time to implement a workaround before enforcing an injunction.

“One factor that is relevant to the balance of the hardships required by the Supreme Court’s decision in eBay was not considered by the district court, namely whether the district court should have allowed time for Vonage to implement a workaround that would avoid continued infringement of the ’574 and ’711 patents before issuing its injunction.”

The appellate panel also notes that Verizon’s interest in putting Vonage “out of business” is not a legitimate interest — rather, the court’s obligation is to protect Verizon’s patent interests without disrupting other business activity.

“Verizon had a cognizable interest in obtaining an injunction to put an end to infringement of its patents; it did not have a cognizable interest in putting Vonage out of business.”

Historically, a finding of patent infringement resulted in a relatively quick form of complete injunctive relief requiring that any adjudged infringement cease immediately.  The Supreme Court’s EBay v. MercExchange opinion considered injunctive relief a yes/no decision — either an injunction is granted or denied based on the traditional four-factor analysis.  Here, the CAFC appears to be reformulating debate to focus on a timing question —  i.e., if not now, at what point will the four-factors favor the patent holder?

In this case, the Court’s words are relegated to a footnote because Vonage never requested a workaround period.  And, in addition, sufficient time has already passed since the verdict.

“Vonage made no request for a workaround period to the district court, and Vonage has already had several months since the district court’s judgment to implement a workaround.”

Patent Assignment: “obligation to assign” treated differently than concurrent assignment

Patent

IpVenture v. ProStar (Fed. Cir. 2007)

IpVenture sued ProStar for infringement of its patent directed to a thermal and power management system for computers.

One of the inventors — Douglass Thomas — had been a patent attorney at HP at the time of the invention. The district court found that Thomas had an obligation under his employment contract with HP to assign rights to that company. Consequently, the district court dismissed the case for lack of standing. On appeal, the CAFC reversed.

All entities with independent substantial patent rights must be included in a patent infringement lawsuit — they are “indispensable or necessary parties” to the infringement suit.  The policy behind this judicial rule is to ensure that an accused infringer is only sued once.

Here HP has no rights for two reasons:

  1. Under contract law, HP did not have immediate ownership in the patent rights because the inventor’s employment agreement only created an “obligation to assign” the rights.  (The employment contract could have alternatively included terms such as “the inventor hereby grants all rights present and future…”).
  2. In 2005, HP agreed (via contract with IpVenture) that it did not own any rights to the asserted patent.

After disavowing any rights to the patent, HP ensured that it would not be able to sue ProStar for infringement — as a consequence, IpVenture had standing to sue without joining HP.

Dismissal vacated.

Notes:

  • Beware: Patent assignments are contracted interpreted under state law
  • There is some California state law supporting the idea that the assignment had ‘vested’ even though it was only an agreement to assign.

Stay Pending Appeal: Strong Likelihood of Success on Appeal Wins Stay

Patent

Muniauction v. Thompson Corp (Fed. Cir. 2007)

Thompson appealed a permanent injunction barring it from participating in municipal bond auctions over electronic networks in violation of Muniauction’s patent. The jury had found the Muniauction patent valid and willfully infringed based on a theory of joint infringement — the theory recently rejected in Paymentech.

Prior to the substance of the appeal, Thompson moved for a stay of the permanent injunction, which the court granted.

Stays Pending Appeal: Stays of injunctive relief follow the same jurisprudence regardless of whether the relief is permanent or preliminary.  The same four-factor test is also used when granting preliminary relief. The factors asses the chances of success on the merits (of the appeal) and weigh ‘hardships’ to the parties and to the public.

Four factor tests are tricky to apply — some factors may be required while others merely ‘balanced’ with various thresholds in between.  For stays, a moving party’s “strong likelihood of success on the merits” generally receives a stay of relief without regard to hardship of the parties. To win, the movant must present at least a threshold “substantial case on the merits.” In that instance, a stay would issue if coupled with proof of hardships associated with the injunction.

Here, the district court based its infringement decision on the faulty law of joint infringement — creating a high likelihood that the defendant will succeed on appeal. When the first factor is so strongly proven, a stay will always be granted.