November 2011

Federal Circuit Again Declines to Revisit Cybor

Claim Construction, Dissent, En Banc, Patent, Patent Cases 2011,

By Jason Rantanen

Retractable Technologies, Inc. v. Becton, Dickinson and Company (Fed. Cir. 2011) (CAFC en banc denial) Download 2010-1402 en banc order
Before Rader (dissenting), Newman, Plager, Lourie, Bryson, Linn, Dyk, Prost, Moore (dissenting), O'Malley (dissenting), and Reyna.

As in the past, the Federal Circuit has again expressly declined an invitation to revisit its 1998 en banc holding in Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448 that claim construction is reviewed de novo.  Once again, however, that decision was not without dissent.  Both Judge Moore, joined by Chief Judge Rader, and Judge O'Malley wrote to express their view that Cybor should be revisited. Professor Tun-Jeng Chiang expresses his views on this issue below.

In addition to recommending that the court reconsider the issue of deference, Judge Moore's dissent emphasizes the problematic nature of claim construction review by the Federal Circuit itself: on the one hand, "[c]laim construction is the single most important event in the course of a patent litigation"; on the other, "our rules are still ill-defined and inconsistently applied, even by us."  Moore dissent at 1.  This problem is especially acute in Retractable Technologies: "Retractable simply cannot be reconciled with our en banc decision in Phillips."  Id. at 4.  Here, Judge Moore asserts, the majority applied its own approach to claim construction, not that of Phillips, "[c]hanging the plain meaning of a claim term to tailor its scope to what the panel believes was the actual invention."  Id. at 6.  This is not an isolated instance, Judge Moore points out, but is a common practice that points to a fundamental split on the court about the nature of claim construction: a disagreement over whether claim scope should be limited to "what the inventor actually invented" or instead construed according to the plain meaning to one of skill in the art, a meaning that may be informed – but is not dictated – by the specification.

Note: In  support of her view that the Federal Circuit's own claim construction is ill-defined and inconsistently applied, Judge Moore cited the views of several commentators who "have observed that claim construction appeals often lead to frustrating and unpredictable results for both the litigants and trial courts," including Dennis's post on the panel decision and Hal Wegner's post on Arlington Industries v. Bridgeport Fittings on IP Frontline. 

Guest Post by Tun-Jen Chiang: Functionalism versus Faux Formalism at the Federal Circuit

Articles and Publications, Claim Construction, En Banc, Guest Post, Patent,

Guest Post by Tun-Jen Chiang, Assistant Professor of Law, George Mason University School of Law

One of the longstanding myths about the Federal Circuit is that it is formalist.  This is usually levied by academics as a criticism, but no one does more than the Federal Circuit itself to spread the myth.  For judges, being labeled as a jurisprudential machine is a badge of honor.  Thus, even where their true motivation is clearly policy-based, judges invariably couch their opinions in legalistic terms.

The recent dissents from en banc rehearing in Retractable Technologies, Inc. v. Becton, Dickinson & Co. provide perfect examples.  The issue in Retractable is an old one: should the Federal Circuit give deference to district judges on claim construction?  Judge Moore (joined by CJ Rader) and Judge O’Malley both argued the court should.  Their dissents each begin with the assertion that the Supreme Court in Markman held that claim construction is a “mongrel practice” with both legal and factual components, and this counsels for deference to trial judges.

Let me start by debunking this legalistic argument.  The Supreme Court in Markman did not hold that claim construction is a “mongrel practice.”  It started off by observing that claim construction is intrinsically a mongrel practice, and then held that the Court would adopt a legal fiction that claim construction was a pure question of law.

Why do I say this?  If it is correct that Markman held that claim construction has a factual component, then the result under traditional common law principles is not that trial judges get to decide the factual component.  Trial judges do not decide facts; juries do.  Some well-known exceptions are for suits in equity, for jurisdictional facts, and for procedural facts.  But nobody contends that these exceptions apply.  The claim-construction-is-factual line of reasoning is a legalistic and logical dead end.

Rather, the case for deference to district judges on claim construction must succeed, if at all, entirely based on policy-based concerns.  Trial judges have better access to evidence than appellate judges, and yet they are more experienced at dealing with legal documents like patents than juries.  This is a perfectly plausible policy-based argument, and is almost certainly the true reason for Judges Moore and O’Malley to seek deference for trial judges.  Too bad they feel the need to couch the argument in formalist terms.

Ongoing Battles over Patentable Subject Matter

Patent, Patent Cases 2011, Patentable Subject Matter, Software, , ,

By Dennis Crouch

In Ultramercial v. Hulu, the Federal Circuit held that Ultramercial's asserted Patent No. 7,346,545 fit within the subject matter eligibility guidelines of 35 U.S.C. § 101 and was not merely an unpatentable abstract idea. The patent claims a method of distributing copyrighted products (such as a movie) over the internet. The novel idea is that the copyrighted product be both (1) offered for sale and (2) delivered for free if the consumer agrees to view an advertisement. The district court held the patent invalid under section 101. On appeal, however, the Federal Circuit reversed – holding that the patent claims a "practical application" of the idea that "advertising can serve as a currency." An important element of the decision was the finding that "[v]iewing the subject matter as a whole, the invention involves an extensive computer interface."

Now, WildTangent (one of the accused infringers) has petitioned for a rehearing en banc. The public interest organization Electronic Frontier Foundation (EFF) has filed a brief in support of the rehearing – arguing that an en banc determination is necessary in light of (1) the court's failure to follow Bilski v. Kappos; (2) inconsistencies in application of the law apparent from the court's recent decisions in Ultramercial, Classen Immunotherapies v. Biogen IDEC, and CyberSource Corp. v. Retail Decisions, Inc.; and (3) a growing intra-circuit division regarding patentable subject matter jurisprudence. This filing ties-in closely with the pending Supreme Court case of Mayo v. Prometheus, which questions the patentability of a method of personalizing the dosage of a pharmaceutical and the pending case of AMP v. Myriad, which questions the patentability of isolated human DNA. Other pending Section 101 cases include DealerTrack, Inc. v. Huber (App. No. 2010-1544) (Claims 1, 3, and 4 of U.S. Patent No. 7,181,427); FuzzySharp Tech., Inc. v. 3DLabs Inc. (App. No. 2010-1160) (U.S. Patent Nos. 6,172,679 and 6,618,047); CLS Bank Int'l. v. Alice Corp (App. No. 2011-1301) (Patent No. 7,725,375); Cognex v. ITC (App. No. 2011-1098) (Patent Nos. 7,016,539 and 7,065,262); and Fort Properties, Inc. v. American Master Lease LLC (App. No. 2009-1242) (Patent No. 6,292,788).

Operating Efficiently Post-Bilski by Ordering Patent Doctrine Decision-Making

Academic Studies, Articles and Publications, Patent, Patent Cases 2011, Patentable Subject Matter, ,

Last year, Professor Merges and I co-authored this short article on the administration of Bilski. In light of the pending Section 101 cases and Judge Rader's opinion in Classen Immunotherapies v. Biogen, I thought I would post it here again. Download the twenty-page essay from SSRN.

Here is the introduction:

Now that the Supreme Court has decided Bilski v. Kappos, there is an enormous amount of speculation about the case's impact on patent applicants, litigants, and other participants in the patent system. Most of the commentary is concerned with the holding in Bilski, how this holding will be applied by courts and the Patent Office, and ultimately, the effect of the holding on inventors, and those who hold and seek patents.

We take a different approach; rather than try to cut through the complexity of Bilski, or predict how it will be applied, we talk about how to avoid it. We are interested in how to minimize the cost and confusion that accompany a review of patents for § 101 subject-matter eligibility. To be specific, we propose that the § 101 issue of Bilski be considered only when doing so is absolutely necessary to determine the validity of a claim or claims in a patent. We believe any claim that can be invalidated under one of the less controversial and less complex requirements for patentability—§§ 102, 103, and 112, for instance—ought to be disposed of without considering subject matter patentability. In other words, the Bilski issue should be avoided wherever it is not strictly necessary. To support this conclusion, we present a set of empirical data that indicates that the vast majority of patent claims challenged on subject matter eligibility grounds were also challenged on other patentability issues.

We set the stage for our proposal in Part II, which briefly reviews the history behind Bilski and explains its open-ended holding and individualized approach. The difficulty of applying the Bilski ruling to different types of patent claims leads us to Part III, in which we call into question an accepted (if largely implicit) principle of patent law—that the lexical priority of statutory provisions in the 1952 Patent Act dictates a necessary logical sequence of invalidity tests. We reject this widespread assumption. There is nothing in the statute that requires this.

Indeed, in Part III we argue that in many ways the very idea of a sequence of discrete patentability requirements is conceptually misleading. Claims can be and often are rejected by the Patent Office for multiple reasons, suggesting that at least certain claims suffer from defects that transcend specific statutory validity requirements. We argue further that the policy underpinnings of various requirements overlap in complex ways, so that in reality patentability doctrine does not test for a series of discrete and independent qualities that are distinct from and mutually exclusive of each other. In the same way, transcendent qualities of an invention can influence multiple doctrines simultaneously, with pioneering inventions (due to both a liberal treatment under enablement, and a broad reach under infringement doctrines) being a prime example. This demonstrates again that there is not and should not be a strong separation between various patent law doctrines. Another argument along these lines recognizes that while patentability doctrines are not discrete entities, neither is "the invention" whose validity is being considered. Patent applicants routinely present multiple, overlapping claims, all of which cover fine-grained variations on a central inventive insight or advance. So it is inaccurate to visualize patentability as a stepwise series of tests applied to a single "invention." It is not true for example that "invention X" passes § 101 and should thus proceed in logical sequence to be tested under § 102. One claim growing out of inventive insight X might present no § 101 problems at all, yet another claim in the same patent application might raise a difficult issue under this provision. Each claim, being a unique slice of the overall inventive insight, ought to be considered on its own terms, and in whatever order makes the most sense. Put another way, the mental model of a stepwise sequence of patentability determinations overlooks the highly granular nature in which different slices of the inventive concept are presented for validity testing.

This analysis is further developed in Section III.A. When a claim fails to pass muster under any single test of validity, that claim should be invalidated. No further tests should be applied. We describe this as "chain" theory of validity: once one link in the chain is broken, the claim fails, and there is no reason to proceed further. Beyond that point, any expenditure of resources on validity questions is inefficient. Pragmatic considerations enter at this point. Issues of cost, justiciability, and spillover effects are perfectly appropriate in determining the actual sequence in which validity tests are applied with respect to any particular patent claim. The non-linearity of patent validity tests, together with the principle of efficient administration, yields a simple rule: start with chain links that are, in general, easiest and cheapest to test, and when the chain fails, stop the process. That way, the costliest and most complex doctrines—the trickiest "links in the chain"— are often avoided, and in any event are put off until later. Therefore, § 101 should often be avoided, both at the Patent Office and in the courts. We justify this not only on efficiency grounds, but also by analogy to the Supreme Court rules of avoidance.

In Part IV, we apply this simple principle. It leads to several recommendations. First, though the PTO has good reasons for its longstanding practice of rejecting claims for multiple reasons, we recommend that §101 be used only as an exception or last resort even at the PTO. Next, we contend that the courts should proceed in a stepwise fashion, beginning with §§ 102, and 103, and 112, changing the order of doctrines as dictated by pragmatic considerations, and stopping as soon as a claim is conclusively invalidated. In all cases, the complex and costly process of deciding whether a claim presents patentable subject matter under § 101 should be deferred until very late in the process. Therefore, we recommend, courts should in effect hold off on the difficult task of evaluating claims under § 101—ideally deploying the full § 101 analysis only when that is essential, i.e., when a claim passes muster under the other validity doctrines.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1953512. Thanks!

UK Patent Case Lowers Bar on Utility (Industrial Application)

Patent, Patent Cases 2011, Pharma

Human Genome Sciences v. Eli Lilly (UK Supreme Court, 2 Nov 2011) [Decision] Case No. [2011] UKSC 51.

The Supreme Court of the United Kingdom (UKSC) began hearing cases in 2009 — taking on the role of court-of-last-resort formerly played by the House of Lords. The UKSC normally sits in five-member panels — here the panel consisted of Lords Hope, Walker, Neuberger, Clarke, and Collins. 

This decision focuses on EPC and UK version of the utility doctrine — the requirement that a patentable invention be “susceptible of industrial application“. In a unanimous decision, the court determined that US utility doctrine creates an unduly high bar of patentability.  Thus, rather than requiring proof of specific, credible, and substantial utility at the time of filing, the UK court agreed that HGS’s genetic sequence coding for Neutrokine-α was patentable even though there was no known use of the protein at the time the patent application was filing. The patent did not reveal how the protein “could be used to solve any particular problem” nor did it identify “any disease or condition which it could be used to diagnose or treat.”  Yet, the UK court held that the industrial application requirement was met because the protein a member of a “TNF ligand superfamily” and all members of that family have been associated with important biologic activity.  “[A]ll known members of the TNF ligand family were expressed on T-cells and were able to co-stimulate T-cell proliferation, and therefore Neutrokine-α would be expected to have a similar function.”  The UK Court of Appeals (Sir Robin Jacob) had previously held the patent invalid.

In his opinion, Lord Neuberger explicitly rejected the US cases of Brenner v Manson, 383 U.S. 519 (1966) and in re Fisher, 421 F 3d 1365 (2005) — finding that “there are obvious risks in relying on US jurisprudence when considering the precise nature of the requirements of Article 57 in relation to a claim for a patent for biological material under the EPC.” 

There have been moves over the past fifty years (and more) to harmonise patent law across jurisdictions (the EPC and TRIPS – the Trade-Related Aspects of Intellectual Property Protection – being two important examples), and it is a laudable aim to seek to ensure that all aspects of the law of patents are identical throughout the world. However, the achievement of such an aim is plainly not currently practicable, and, although they have a great deal in common, there are significant and fairly fundamental differences (over and above the different words used in Articles 52 and 57 of the EPC and section 101 of 35 USC) between US patent law and the EPC (two notorious examples being the first to file rule in Europe, and file wrapper estoppel in the US).

Accordingly, particularly when it comes to a nice question such as the precise delineation of boundaries between patentability and unpatentability on the ground of industrial application, it would be unsurprising if the law was not identical under the two jurisdictions.

Instead of following US law, the panel instead latched onto the jurisprudence of the EPO — the body that also interprets the European Patent Convention (EPC).

Notes:

  • The UK court of first instance (Kitchin J) found the patent invalid while the EPO Board had held the patent valid.
  • The patent in question is European Patent 0,939,804
  • IPKAT
  • Of course, it is interesting that both HGS and Lilly are US-based companies.
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We the People: Petitioning President Obama to End Software Patents

Patent,

The White House's “we the people project” implements a system for petitioning the Administration.  Any petition that receives 25,000 or more signatures within 30–days of being posted will be reviewed and given an “official response.” (Prior to October, the threshold was 5,000 signatures).

One recent petition asks the Administration to “direct the Patent Office to cease issuing software patents.” 

Under the patent office's current activity, patents have been come a way to stifle innovation and prevent competition rather than supporting innovation and competitive markets. They've become a tool of antitrust employed by large companies against small ones.

To return sanity to the software industry – one of the few industries still going strong in America – direct the patent office to cease issuing software patents and to void all previously issued software patents.

The petition has received over 14,000 signatures and Quentin Palfrey, from the White House office of the CTO provided an official response that that primarily focuses on the benefits of the newly enacted America Invents Act and the leadership of Director Kappos. Palfrey did, however, take one sentence to specifically address software patents:

We understand that the concern about software patents stems, in part, from concerns that overly broad patents on software-based inventions may stifle the very innovative and creative open source software development community. As an Administration, we recognize the tremendous value of open source innovation and rely on it to accomplish key missions. For example, the U.S. Open Government National Action Plan recently announced that the source code for We the People and Data.gov would be open sourced for the entire world. Federal agencies are likewise spurring innovation through open source energy. For example, the Department of Defense issued clarifying guidance on the use of open software at the Department. And, the Department of Health and Human Services has become a leader in standards-based, open sourced policy to power innovations in health care quality and enable research into efficient care delivery. The tremendous growth of the open source and open data communities over the years, for delivery of both commercial and non-commercial services, shows that innovation can flourish in both the proprietary and open source software environments.

Folks opposed to software patents saw this response as inadequate and have now created a new petition asking the administration to “pursue software patent abolition.”  The petition states:

The Obama Administration's response to a previous petition shamefully attempted to absolve the President of responsibility and placate us with the toothless America Invents Act. We summarily reject his response and demand immediate action.

Rapid growth in the software industry during economic malaise demonstrates the importance and power of this market. The President must use his full power and influence to fight harmful forces from entrenched incumbents and non-producing entities.

There are no possible reforms to be made to the USPTO that will enable it to keep pace with innovation in the software industry. Those who truly understand software are creating it.

This new petition was created on November 1 and on that same day had already collected 400 signatures. Another new petition is the “petition to take petitions seriously.”

Mayo v. Prometheus: the Patentee’s Section 101 Argument

Patent, Patent Cases 2011, Patentable Subject Matter, , ,

Mayo Collaborative Services v. Prometheus Labs., Inc. (Supreme Court 2011)

The briefing continues in this patentable subject matter case pending before the US Supreme Court. (Read Professor Golden's discussion of the first round of merits briefs).  In its newly filed merits brief, Prometheus attempts to refocus attention on the "concreteness" of its patented method of personalizing the dosage of a particular drug treatment. The refocus begins with the statement of the question presented.  Download 2011-10-31_Prometheus Merits Brief. 

Mayo, the petitioner challenging the patent, opened briefing with a question of whether a patent that "covers observed correlations between blood test results and patient health, so that the patent effectively preempts use of the naturally occurring correlations, simply because well-known methods used to administer prescription drugs and test blood may involve "transformations" of body chemistry."  This language of Mayo's question is directly suggestive of the decisions of Benson and Flook — both of which held claimed methods to be unpatentable.

In its brief, Prometheus restates the question in a way that instead highlights the concrete and practical application language found in Diehr and Brenner v. Manson. Prometheus asks: "Whether the Federal Circuit correctly held that concrete methods for improving the treatment of patients suffering from autoimmune diseases by using individualized metabolite measurements to inform the calibration of the patient's dosages of synthetic thiopurines are patentable processes under 35 U.S.C. §101."

Prometheus describes its challenged invention as follows:

First, most of the claims begin with the administration of a thiopurine compound to a patient with an autoimmune disorder. As noted, the thiopurine converts within the body into metabolites that do not otherwise exist in nature.

Second, the patient's metabolite levels are determined. Because "metabolite levels are not detectable in raw human tissue," all methods for measuring their concentration require "significant chemical and physical alteration of blood or human tissue" and sophisticated laboratory equipment and machines. Some of the dependant claims, for example, specify the use of high pressure liquid chromatography (HPLC), which entails an intricate series of operations on the blood (including heating, centrifuging, separating, and adding various reagents), running the resulting solution through a computer-controlled chromatography instrument, calculating the peak height or peak area, and feeding those figures into an equation, which finally outputs the metabolite levels.

Third, the metabolite measurements are compared to the patents' reference levels, "warning" the physician about the potential efficacy or toxicity of the patient's dosage.

Several important points are hidden by the patentee's statement of its invention: First, although most of the patented claims do require administration of thiopurine some claims do not include that particular step.  Second, although current technological methods of measuring metabolite levels apparently require the extraction of human tissue and the use of "sophisticated laboratory equipment," the broadest claims only require "determining" of the metabolite levels.  Finally, it is likely important to recognize that the claimed method is about tweaking the dosage of thiopurine and at the time of the invention most of the individual elements of the claim were already well known: It was well known that thiopurine could be used to treat IBD; it was well known that that the body converted thiopurine to the claimed metabolite; it was known that individuals had varying responses to thiopurine; and it was known that dosage should be adjusted so that it would be both effective and nontoxic.

Summary of the Prometheus argument:

First, to be patent-eligible, a process must really be a process—a series of steps that involve physical action in the real world, as opposed to merely an idea or principle stated in the abstract. Second, that process must be described at a narrow and specific enough level of generality that it does not preempt abstract ideas or basic building blocks of science that go far beyond what the patentee actually invented: A process for using a telegraph is patentable; the basic idea that information might be transmitted at a distance by exploiting laws of electromagnetism is not.

A. Prometheus's patented methods describe concrete methods for improving treatment of seriously ill patients with specific synthetic drugs. These patents do not claim the "correlations" they employ in the abstract, but as part of specific physical processes employing drugs and machines. . . . As the Federal Circuit recognized, the patents-in-suit pass [the machine-or-transformation] test with flying colors and easily satisfy the requirements of §101. Mayo attempts to avoid that conclusion in three ways, none of which has merit. First, Mayo invites this Court to discard the two initial steps (administering the thiopurines and determining the resulting metabolite levels) because they were "well known" in the art. But this Court rejected that "point-of-novelty" approach over 30 years ago in Diehr and again recently in Bilski. Second, Mayo argues that those same two initial steps should be disregarded because, according to Mayo, they are not "central" to the patents' purpose. Mayo does this only by ignoring the Federal Circuit's settled construction that the claims are limited to patient treatment (a question not presented here) and that those two steps are essential to that purpose. Third, Mayo invites this Court to invent, out of whole cloth, a categorical rule that processes ending with the provision of useful information cannot be patentable—even if preceding steps involve machines and physical transformations. That argument also is inconsistent with Bilski, and it would impose an arbitrary and (in the information age) absurd limitation on patentability.

B. The patents-in-suit do not preempt natural phenomena in any relevant sense. Their "correlations" concern certain properties attending certain uses of non-natural thiopurine compounds, which would not exist but for the handiwork of man. A patent system that recognizes thiopurine compounds themselves as potentially patentable subject matter, allowing preemption of all uses of these compounds, cannot be concerned that a process patent may preempt some of their uses. . . .

C. Prometheus agrees with the United States that the Patent Act's express statutory criteria for patentability—under 35 U.S.C. §§102, 103, and 112—make expansive judicial lawmaking under §101, of the sort invited by Mayo's arguments, unnecessary. But the application of those provisions is not before the Court in this case, and presents difficult and fact-bound questions that the lower courts should address in the first instance on remand.

II. Mayo proposes to transform §101 into an invitation for ad hoc, case-by-case evaluation of whether granting a particular patent will promote or retard the progress of the useful arts. That would create an unadministrable morass for courts and patent examiners, doom any hope for consistent administration of the patent laws, and usurp Congress's authority to determine the appropriate scope of the patent laws.

III. Any change in the Court's §101 jurisprudence that permitted a ruling in Mayo's favor, on whatever grounds, would have drastic and unfortunate consequences. It would upend settled expectations by invalidating thousands of diagnostic and personalized treatment patents. And it would stifle investment and innovation in the nascent field of personalized medicine. Contrary to Mayo's understanding, government funding does not translate pure academic research into practical products that benefit patients, and doctors themselves cannot bring to bear the resources necessary to fuel innovation and commercialize inventions on a large scale. Mayo's contention that patents like these hinder medical care is also unpersuasive. The United States is the world leader in biotechnology and personalized medicine, in part because investors have committed billions of dollars in capital in reliance on the prospect of patents like these. Thousands have been issued, including many to Mayo itself. Mayo's short-sighted view would exchange long-term innovation (including cost reductions) for ephemeral savings. In any event, Congress already considered Mayo's invitation to broadly restrict patent protection for medical diagnostic and treatment methods—and chose to adopt a limited personal immunity for doctors instead.