by Dennis Crouch

On October 12, 2022, the Supreme Court will hear oral arguments in the fair use copyright case of Andy Warhol Foundation, Inc. v. Goldsmith, Docket No. 21-869 (2022).  Roman Martinez (Latham Watkins) is set to argue for Warhol and Lisa Blatt (Williams Connolly) for Goldsmith.  The Court is also giving 15 minutes to Yaria Dubin (USDOJ) who also filed a brief supporting Goldsmith.

Andy Warhol admittedly used Lynn Goldmith’s copyrighted photographs of Prince as the basis for his set of sixteen silkscreens. Warhol’s Estate argues that the artworks represent a commentary on the dehumanizing nature of celebrity whereas the Goldsmith photos merely reflect Prince in his unique human form.

The Supreme Court has taken-up the case to consider the extent that the doctrine of transformative fair use should value “differences in meaning or message,” especially in cases where the works share core artistic elements and have the same purpose.

Question presented: Whether a work of art is “transformative” when it conveys a different meaning or message from its source material (as the Supreme Court, U.S. Court of Appeals for the 9th Circuit, and other courts of appeals have held), or whether a court is forbidden from considering the meaning of the accused work where it “recognizably deriv[es] from” its source material (as the U.S. Court of Appeals for the 2nd Circuit has held).

Although Andy Warhol is dead, his art, legacy, copyrights, and potential copy-wrongs live on.  In the 1980s, Warhol created a set of silkscreens of the musician Prince. Prince did not personally model for Warhol. Rather, Warhol worked from a set of studio photographs by famed celebrity photographer Lynn Goldsmith. Vanity Fair had commissioned Warhol to make an illustration for its 1984 article on Prince. As part of that process, the magazine obtained a license from Goldsmith, but only for the limited use as an “artists reference” for an image to be published in Vanity Fair magazine. The published article acknowledges Goldsmith.  One reason why the magazine knew to reach-out to Goldsmith was that her photos had also previously been used as magazine cover-art. Warhol took some liberties that went beyond the original license and created a set of sixteen Prince silkscreens. Those originals have been sold and reproduced in various forms and in ways that go well beyond the original license obtained by Vanity Fair.  (Warhol was never personally a party to the license).

Warhol claimed copyright over his artistic creations and his Estate continues to receive royalty revenue long after his death in 1987. Goldsmith argues that her copyrighted photographs serve as the underlying basis for Warhol’s art and that she is owed additional royalties. After unsuccessful negotiations, Warhol’s Estate sued for a declaratory judgment and initially won. In particular, the SDNY District Court granted summary judgment of no-infringement based upon the doctrine of transformative fair use. The district court particularly compared the works “side-by-side” and concluded that Warhol’s creation had a “different character, a new expression, and employs new aesthetics with [distinct] creative and communicative results.”  This test quoted comes from another famous a photo-transformation case, Patrick Cariou v. Richard Prince, 714 F. 3d 694 (2d Cir. 2013).

Richard Prince had modified Cariou’s photographs of a Jamaican Rastafarian community and exhibited his work as “appropriation art.”  The copier eventually won, with an appellate holding that the majority of Richard Prince’s works were clearly transformative in their newly presented “aesthetic.” In that case, the 2nd Circuit also held that the new work can still be a transformative fair use even if not a “satire or parody” of the original work, or even be commenting on the original work in any way. That said, uses of someone’s copyright work for a the purpose of parody, news reporting, comment, or criticism make it much more likely that the use will be deemed a fair use.

After losing at the district court, Goldsmith appealed to the Second Circuit who reversed and instead concluded that Warhol’s art was “substantially similar to the Goldsmith Photograph as a matter of law” and “all four [fair use] factors favor Goldsmith.”  The appellate court warned against too broadly reading its prior Cariou decision.

Warhol’s key legal precedent on point is Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994).  Campbell involved 2 Live Crew’s parody of the famous Roy Orbison song “Oh, Pretty Woman.”  The unanimous decision by Justice Kennedy delves into the first statutory fair use factor (“purpose and character of the use”) and distinguishes between (a) uses that simply replace or supersedes the original work and (b) those that are transformative of the original work. The more transformative a work, the more likely that it will be deemed a fair use and thus not infringing.  Campbell goes further and explains that transformativeness is not solely about new expression—it is also focused on whether the new work has “a further purpose or different character, altering the first with new expression, meaning, or message.”

Goldsmith argues that transformative meaning is only one element of a wide-ranging fair use analysis appropriately conducted by the Second Circuit.  As the Supreme Court recently explained in Google v. Oracle decision, the process is a “a holistic, context-sensitive inquiry” operating without any “bright line rules.”

The Copyright Act promises the original creator some amount of control over similar and follow-on works. In fact, the copyright owner is given exclusive rights to control preparation of any “derivative works based upon the copyrighted work.” For Warhol to rely entirely upon transformativness for his fair-use defense, the use must be so transformative as to leap beyond these derivative use rights.  Still, Warhol argues that the Second Circuit erred by refusing to give weight to the transformed “meaning or message” even if underlying elements of his artwork were similar to elements of the original photographs. As the Court wrote in Campbell, transformative uses “lie at the heart of the fair use doctrine’s guarantee of breathing space within the confines of copyright.” Warhol’s particular complaint with the Second Circuit is its apparent ruling that “a new work that indisputably conveys a distinct meaning or message” will still not be deemed transformative if its expression unduly retains “the essential elements of its source material.” Warhol argues that legal conclusion was recently rejected by the Supreme Court  in Google. Goldsmith responds that Warhol is misreading the Second Circuit’s decision – making a caricature of its holding.  Rather, Goldsmith argues, the Second Circuit properly weighed all the fair use factors. Further, although “message and meaning” is an aspect of fair use, it not found in the statutory nor intended by its creator (Judge Leval) to fully explain fair use.

Goldsmith also cites a list of historic cases where “conveying new meanings or messages did not save infringers.” One famous case is the Supreme Court’s 1884 decision in Burrow-Giles Lithographic Co. v. Sarony involving a photograph and lithograph copy of the famous playwright Oscar Wilde. Sarony was the first Supreme Court case confirming copyright protection in photographs. Goldsmith notes that the lithographer made a number of stylistic changes to Wilde’s appearance—shifting Wilde’s gaze from a “thousand-yard stare [of a] calculated ennui” to a “soulful gaze and brooding eyebrows [of a] dashing poet.” Despite these shifts, everyone seemed to agree that infringement was clear: “the lithograph was so obviously nontransformative the lithographer did not even try to raise fair use.” Goldsmith’s description of the images of Wilde has the reverb of a pedantic academic art critic—and one may suspect that tone was strategic in order to demonstrate the potentially ridiculous nature of the inquiry into the “message and meaning” of artistic works.

A large number of amicus briefs were filed in the case. The most important of these is likely the brief of the Solicitor General filed on behalf of the U.S. Government (Biden Administration).  The government brief focuses on transformative-use and notes that the Goldsmith and Warhol works have been used for the same purpose (republication in magazine articles about Prince) and do not involve a parody. In this same-use scenario, fair use is much less likely because the new work can be seen as little more than a replacement of the original. Regarding the meaning or message intended by Warhol, the government argues that Warhol failed to explain why he needed to reproduce Goldsmith’s work in order for that expression to take place. Thus, the government is attempting to cabin-in the transformative meaning doctrines to areas where the copying is further justified by reasoning or evidence.

The case’s impact on appropriation art and documentary filmmaking is easy to see, but there are other areas that may also see some big shifts depending upon the Supreme Court’s outcome. Although Warhol used pre-computer technology for his screen printing, the case has important implications for online copyright protections in a world of digital cut-and-paste and fingertip access to AI tools to transform digital works. You may have even seen apps that automatically transform photos into a Warhol-style work. A simple and broad holding from the Supreme Court supporting fair use would give substantial space allow these creative activities (and app development) to expand. But, that would be to the detriment of original creators seeking to protect their copyrights. A win for Goldsmith may require a re-tooling of these apps in order to fit within the stricter fair use requirements.

In his amicus brief, Berkeley Professor Peter Menell argues for Goldsmith, writing that “the Prince series consists of unauthorized derivative works prepared for a commercial purpose and without substantial transformative qualities.” Although Warhol’s work has become iconic within our culture, classifying the work as a “derivative work” creates the quirky conundrum that Warhol’s estate holds no copyright at all. This ruling then might extend to other areas—such as museum exhibits (since Goldsmith would then own the right to public display). I will note that Warhol already paid licensing fees to the owner of the underlying work in a number of situations, including for his use of Henri Dauman’s photo of Jacqueline Kennedy that had appeared in LIFE magazine.

This is not exactly a free speech case, but “meaning and message” certainly seem like forms of protected speech. In earlier cases, the Supreme Court ruled that fair use is a stand-in for First Amendment protections in the copyright world. We have seen copyright used in ways akin to SLAPP actions as well as by artists who do not want their work used to support unworthy causes (such as by politicians they oppose). The outcome here will shift those activities, either in favor of control by the original copyright holder, or more liberty to the potential (unwanted) user.

by Dennis Crouch

I assume that you have read The Onion amicus brief in Novak v. City of Parma Ohio.  If not, please do it is a total classic.

• Novak Parma Onion Amicus Brief PDF

The case involves Anthony Novak who created a parody Facebook page to mock his the local police department in Parma, Ohio.  The posts were clearly parody after perhaps a bit of initial confusion. Once Novak heard that the police were upset, he took down the posts (after 12 hours online).  Still, Novak was eventually arrested, jailed, and prosecuted for disrupting police functions. His home was searched, and all of his electronic equipment was seized. A jury eventually acquitted Novak. He then turned around and sued for violation of his constitutionally protected civil rights.  But, the courts found the arresting officers entitled to qualified immunity. Novak v. City of Parma, Ohio, 33 F.4th 296 (6th Cir. 2022).

The petition for certiorari asks two questions:

1. Whether an officer is entitled to qualified immunity for arresting an individual based solely on speech parodying the government, so long as no case has previously held the particular speech is protected.
2. Whether the Court should reconsider the doctrine of qualified immunity.

Novak Petition.  Novak’s basic position is that the “police shouldn’t be able to arrest you for making a joke at their expense.”

One problem with Novak’s posts is that over the past few years it has become more and more difficult to tell the difference between satire and reality.  The Sixth Circuit suggested a preemptive “THIS IS PARODY” warning, but that doesn’t seem quite right. For parody to really work, there needs to be some initial source confusion — the parody has to be initially plausible to get full comedic effect.

Over at The Onion, journalists are sad-proud about the fact that they regularly forecast future events with their “reporting.”  They give the example of their 2017 post on nuclear codes sitting around at Mar-A-Lago.  Those folks are obviously concerned that their work may also be held

The Onion files this brief to protect its continued ability to create fiction that may ultimately merge into reality. As the globe’s premier parodists, The Onion’s writers also have a self-serving interest in preventing political authorities from imprisoning humorists. This brief is submitted in the interest of at least mitigating their future punishment.

Onion Brief. According to the Supreme Court docket, the court has twice rejected the Onion Brief, but I’m confident that the court went ahead and read the thing.

Let me know what you think.

= = =

I feel compelled to mention that I spent a summer living in Parma Ohio (in one of the houses below). I was 19 and just had a 10-speed bicycle that I rode to work each day. As far as I recall, there was nothing good in that town; and it was worse for someone without a car. I also spent an afternoon in Parma Italy. This was after a month tooling around northern Italy, and we were craving something American. So, we stopped at the Parma Ikea and had Swedish Meatballs.

Judge Dyk’s autobiography is newly released (with Bill Davies).  It is a little bit pricy, but I have ordered my copy already. ($40 from Amazon).

by Dennis Crouch

Today in Patent Law Class, we covered the Supreme Court’s important decision in Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996) focusing on the question of whether the patentee has a 7th Amendment right to have a jury decide “genuine factual disputes about the meaning of a patent?”  The Supreme Court’s answer: No, although claim construction might involve underlying factual determinations, the doctrine is ultimately a question of law best decided by a judge.  Id.  Twenty years later, the Supreme Court reiterated these same principle in Teva Pharm. USA, Inc. v. Sandoz, Inc., 574 U.S. 318 (2015) (holding that, underlying factual findings should be given deference on appeal).

The underlying patent (RE33,054) was directed to an inventory control system for a drycleaner.  A jury sided with the patentee and found infringement, but the district court rejected the verdict. Rather, the district court awarded Judgment as a Matter of Law to the defendant on grounds of non-infringement.  The district court particularly considered the claim term “inventory” and construed that term to be tied to individual articles of clothing–as would be necessary to satisfy the claimed inventive result to “detect and localize spurious additions to inventory.”  Under that construction, the defendant could not infringe because its system tracked transactions rather than articles of clothing, and each transaction might include multiple articles.  On appeal, the Federal Circuit issued an in banc affirmance.  Then on certiorari, the Supreme Court also affirmed.  This double affirmance means that the Federal Circuit’s decision also continues to have precedential merit.  Markman v. Westview Instruments, Inc., 52 F.3d 967 (Fed. Cir. 1995), aff’d, 517 U.S. 370 (1996).

The law-fact divide is an important feature of complex civil litigation procedure — especially patent law.  The importance arises in several different contexts.  In Markman, the question was “who decides” judge or jury; In Teva, the question was appellate deference to district court fact finding; In Microsoft Corp. v. I4I, Justice Breyer explained that the law-fact divide is important for burdens of proof since burdens such as clear-and-convincing-evidence only apply to factual findings and no such burden is associated with issues of law. Microsoft Corp. v. I4I Ltd. Partn., 564 U.S. 91, 114 (2011) (Breyer, J, concurring). In addition, the evidentiary standards tied to the Federal Rules of Evidence applies to issues of fact, and does not (necessarily) bind the inquiry into questions of law.  Thus, in deciding a question of law, a court may consider information that might not be available to a jury when deciding a question of fact.

The Markman hearing quickly became a popular process for district courts to receive argument and evidence before construing the claims (often resulting in summary judgment). Because of their popularity, Markman is – by far – the most cited Supreme Court patent case of the 1990s.   Markman hearings show how timing is also important for the law-fact divide.  Claim construction is decided before trial; leaving juries regularly being seen as irrelevant to questions of infringement and anticipation.  This is especially true when parties craft their proposed claim construction to hone-in on the ultimate questions of infringement or validity.

To support its conclusion that the 7th Amendment does not require a jury trial to decide factual disputes about the meaning of a patent, the Supreme Court first looked to history.  The court suggested that historical preservation analysis is the best approach since the 7th Amendment requires that “trial by jury shall be preserved.”  This amendment was part of the Bill of Rights ratified in 1791 and so the court generally looks back to that time for its historic preservation analysis.  The problem though is that 1791 (and prior) patents did not include claims, and so there was no relevant historic answer as to who decides claim scope. The court then looked to precedent–citing a number of 19th century cases and treatises reflecting that claim construction was a judicial function.  And, the court also concluded that giving the authority to judges would get better results, since judges are better at construing legal documents than juries, and also lead to more uniformity of law.

In Markman, we learned that it is the judge’s role to construe the claims, but courts continued to argue for the next decade+ about claim construction methodology and procedure.  The proposed uniformity was lacking.  In my view, the uniformity has now largely been realized, at least within the court system, once Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc) was decided and the dust settled.

by Dennis Crouch

Zahner Design Group v. Vidal (Supreme Court 2022)

D746,078 (Patent being litigated)

Zahner’s Design Pat. D746,078 covers the ornamental design of a shower curtain as shown in the figures above.  Zahner sued Katri Sales for infringement, and the defendant turned-around and filed a request for ex parte reexamination. The examiner found some great prior art from 2013, which predates this particular design application filing date. But, the design patent also claimed priority to Zahner’s prior utility patent application (Serial No. 09/617,402) that predates the reference. The utility application includes a number of drawings that are similar-to, but not exactly the same as those in the Design Patent. (Images below).

The basic question in the case then was whether the priority drawings provide sufficient written description support for the eventual design as claimed.

09/617,402 (Priority filing)

The PTAB found the design claim was not sufficiently supported by the priority disclosure and so the priority claim was invalid.  And, without the priority claim, the invention had become obvious by the time of the later actual filing date. The basic problem, can be seen in the design patent’s perspective view shown below.   The perspective shows that the inner surface of the aperture is flat and with right-angled edges.  According to the PTAB, those features are new to the design patent and not disclosed by Figure 21 of the priority filing.  On appeal, the Federal Circuit affirmed without opinion.

Close-up of the Design Patent drawing

Zahner disagrees with the merits of the decision here, but has also suggested that it will raise procedural challenges in an upcoming petition for writ of certiorari.  In particular, Zahner intents to raise the same question that Arthrex will likely raise, although this time in the reexamination context:

Question: Does the Reexamination Statute permit a challenge to priority claims?

Zahner has also argued that its situation is particularly egregious because the priority question was particularly addressed by the examiner during the original prosecution.  That is important because reexaminations are limited to “new” questions of patentability.

After receiving the R.36 no-opinion affirmance, Zahner filed a petition for panel rehearing that included the following line: “A written opinion on this issue is respectfully requested.”  The Federal Circuit though denied the petition without opinion.   This situation thus raises the issue I addressed in my 2017 paper titled Wrongly Affirmed without Opinion. In that paper, I argue that these no-opinion judgments are contrary to the statutory requirement of Section 144 requiring the court to issue an opinion in appeals from the PTO. Although this argument has been raised in dozens of cases, the court has not yet responded to the argument, and the peculiar procedural setup allows this status quo.  In a recent request for extension of time, Zahner indicated to the Supreme Court that it also plans to raise the no-opinion question.

I mentioned Arthrex above, its petition to the Supreme Court will be due in November 2022.  In its failed petition for rehearing on the IPR-priority issue, Arthrex asked the following question:

Whether 35 U.S.C. § 311(b)’s restriction “only on a ground that could be raised under section 102 or 103” permits IPR challenges that depend solely on compliance with the written description requirement of section 112.

Arthrex en banc rehearing petition.

by Dennis Crouch

In re: Janke, Docket No. 22-1274 (Fed. Cir. 2022) (R.36 Judgment)

Mr. Garth Janke is a former HP engineer and now a patent attorney at Garth Janke LLC.  Janke is also an inventor. Most recently, he has been pursuing patent protection on his clog-free leaf rake.  His Dulcinea. I live in a forest and have a basic rule against raking or blowing leaves–otherwise my grass would grow and then I would need to mow. But, to each his own.

Janke’s invention can be seen in the two drawings above. The Fig. 1 is a traditional prior art rake. Janke’s improvement is shown in Fig. 3. The improvement is to put a hole toward the end of each rake-tine.  A user can thread a string-trimmer line through the holes to help prevent leaf-clog.  Janke’s claim 1 is directed at a rake with holes through the tines. And he did a nice job of making clear to everyone “the holes through the tines are the only thing about the product of Claim 1 that is new.”

But, Claim 1 isn’t at issue in this appeal. Rather, the appeal focuses on the steps of constructing the rake, which the PTAB concluded lacked eligibility.  Claim 21 is directed to putting a 3-d model of the rake on a computer; Dependent claim 26 is adds a step of actually building the rake by printing-out the model using a 3D printer.

21. A process for enabling a clog-resistant feature in a hand-held leaf rake, comprising installing a first mathematical model on a computer [that represents the rake with holes in the tines].

26. The process of claim 21, further comprising applying the first mathematical model on a commercially available 3D printer to result in transforming the first mathematical model into a real leaf rake head product as defined by the first mathematical equations.

The procedure of the case is a bit wonky. Janke agreed with the examiner and the PTAB that the claims lacked eligibility under Section 101 – as interpreted by the Supreme Court.  The PTAB thus complied and affirmed the examiner rejections.  Janke then brought his appeal to the Federal Circuit, again beginning with an opening statement against his interest:

Appellant agrees with the Patent Office that the Claims 21-35 on appeal fall within the judicial exceptions to the 35 U.S.C. § 101 statutory allowances for patent-eligibility arising from Gottschalk v. Benson and Parker v. Flook.

The brief went-on to argue that two decisions are wrongly decided because and that they create a difficult threshold problem.  Representing himself, Janke asks the Federal Circuit to answer the following question:

Starting with the mathematical model itself, i.e., the “first” mathematical model of the leaf rake head product recited in Claim 21, then considering the additional limitation in Claim 21 of installing the model on a computer, then considering the additional limitation in Claim 26 of applying the model on a 3D printer to result in making the product, and finally considering Claim 1 to the product itself, when does the claimed subject matter become patent eligible and why?

Janke Appellate Brief.  On appeal, the Federal Circuit did not bite, but rather has simply issued another Rule 36 Affirmance without opinion.  I expect Janke will climb back on Rocinante and continue his fight to the the Supreme Court.

by Dennis Crouch

This post is about using U.S. Courts to obtain discovery in order to facilitate foreign litigation; with the pending global litigation between Eli Lilly and Novartis serving as our key example.

In 1938, the Federal Rules of Civil Procedure were adopted in the U.S., including powerful and expansive procedures for automatic disclosures and forced discovery.  The standard today is that prior to trial the litigating parties will share “mutual knowledge of all relevant facts.”  Hickman v. Taylor, 329 U.S. 495 (1947).  We do this through various required disclosures as well as requests for documents & admissions, depositions & interrogatories.  But, the U.S. is an outlier.  Although most international civil courts offer some access to discovery, no other country has as extensive or powerful of a process.   Italian law, for instance, has no obligation of discovery absent a specific court order.

Eli Lilly and Novartis are in the midst of complex European patent and competition (antitrust) litigation regarding their competing monoclonal antibody drugs used to treat autoimmune symptoms such as psoriasis and arthritis.  The cases are pending in Ireland, Italy, and Austria; with a German action already settled.  In each of these cases, Novartis is the plaintiff asserting patent infringement.  One quirk is that the Novartis patents were not developed alongside the company’s Cosentyx product.  Rather, Genentech held the patents and was actually looking to enforce them against both Novartis and Lilly.  In 2019/2020, Novartis purchased the portfolio from Genentech, took over prosecution of the pending cases (including some US applications) and started its enforcement campaign.

Lilly has argued that Novartis’ approach violates European competition laws.  Part of what is going-on is that Novartis was trying to challenge the patents when they were held by Genentech–arguing  invalidity at the time.  Novartis changed its tune once it became the owner.  In order to build its case, Lilly wants Novartis to turn-over its internal documents relating to its prior-opposition and subsequent purchase of the patents, including the actual Purchase Agreement.

If the lawsuits were pending in the U.S., a court would almost certainly compel discovery because the request appear to seek relevant information (absent an appropriate privilege or work-product exception).  BUT, the litigation is in Europe where discovery is much less powerful.  So far, Novartis has refused to produce the requested documents, such as the Purchase Agreement.

In 2021, Lilly brought the case to the U.S. with a petition in the E.D.Va. seeking “leave to obtain discovery for use in foreign proceedings.”  This type of application is authorized by Congress in 28 U.S.C. § 1782(a).

(a) The district court [where] a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal. . . . The order may be made . . . upon the application of any interested person.

Id.  The 1728 statutory provision has a key geographic limitation. The district court can only compel discovery from a person who “resides or is found” within the district.  Id.  Novartis is a Swiss company and so seemingly “resides” over there.  And, according to the 4th Circuit, a corporation can be “found” only in locations where its physical presence is shown “by its officers and agents carrying on the corporation’s business.” In re Eli Lilly and Co., 37 F.4th 160 (4th Cir. 2022).  Thus, the 4th Circuit concluded that 1782 does not authorize discovery E.D. Va.

In 2018, the 2nd Circuit interpreted the same provision and concluded that “resides or is found” should be more broadly interpreted to extent to the scope allowed by personal jurisdiction due process limitations.  In re del Valle Ruiz, 939 F.3d 520 (2d Cir. 2019).  If you recall International Shoe, personal jurisdiction includes “purposeful availment” leading to specific jurisdiction.  Here, specific jurisdiction likely works because Novartis has been prosecuting the offending patent family at the USPTO, which is located in the E.D. Va.  See Deprenyl Animal Health, Inc. v. Univ. of Toronto Innovations Found., 297 F.3d 1343 (Fed. Cir. 2002) (“Obtaining such a patent is a meaningful contact with the United States; it requires a patentee purposefully to avail him or herself of a significant benefit of United States law.”).  That ongoing prosecution is arguably related to the European patent and competition litigation.  The 4th Circuit noted a second problem–the statute provides discretionary authority (“the district court … may order …”), and here discretion was properly denied.

Lilly has not yet filed its petition for writ of certiorari, but started the process with a request for extension of time that was granted by Chief Justice Roberts.  As is common, Lilly set out some aspects of its case within the request:

On appeal, the Fourth Circuit created a split of authority by holding that the word “found” means that the corporation must be “physically present by its officers and agents carrying on the corporation’s business.” The opinion conflicts with the Second Circuit’s decision in In re del Valle Ruiz, 939 F.3d 520 (2d Cir. 2019), which is the only other circuit court decision to have considered this issue.

Lilly Application for Extension.

A Corporation’s legal location has been in-flux for a number of years with several Supreme Court cases narrowing the scope to basically the corporation’s state of registration.  But, in my view, Section 1782 has the feel of a venue statute, rather being jurisdictional. One clue to that is the limit to the particular district rather than state. Another clue is that by 1948 (when this statute was originally passed) personal jurisdiction was recognized by as guided by the Constitution rather than federal statute.  The venue angle is important because Congress has spoken about the definition of “resides” in the context of venue:

(c)Residency.—For all venue purposes— (2) an entity with the capacity to sue and be sued … shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court’s personal jurisdiction with respect to the civil action in question.

28 U.S.C. § 1391(c).  The petition for certiorari in the 4th Circuit case will be due in December.

There is one more pending case on the same issue with the same parties–this one in the 9th Circuit. Lilly filed a parallel application in the Northern District of California seeking discovery from the third party Genentech.  Novartis intervened in that litigation to try to block discovery, but was unsuccessful. As such, Genentech turned over some amount of information, such as the price Novartis paid.

Have you ever tried to put a cat in a bag? Once the cat is out, it is not going back in.  Information is the same.  Novartis has appealed the N.D. Cal. order, but it can’t exactly ask for the information to be totally excised. It doesn’t work that way.  Rather, Novartis is seeking a court order to prevent anyone who has learned of the purchase price from participating in any subsequent license negotiations between Lilly and Novartis, or at least an order prohibiting the use of the purchase price in any subsequent global license negotiations.  This would be pretty powerful since the folks who are working on the litigation have some of the best information about the patents themselves.  The district court denied Novartis’ motion for a protective order, but that has been stayed pending appeal.  Oral arguments in the 9th Circuit are set for November.

= = =

Katherine Helm and her team at Dechert is representing Lilly in the US litigation, including the Supreme Court briefing.  Willy Jay and his team at Goodwin represents Novartis.

by Dennis Crouch

OpenSky Indus v. VLSI, IPR 2021-1064 (Before Dir. Vidal)

Stepping-in like a court of equity, Dir. Vidal today issued a Precedential Order finding that OpenSky had abused the IPR process.  OpenSky filed its IPR petition soon after VLSI won a $2 billion judgment against Intel.  At that point though, OpenSky offered to work on behalf of either VLSI or Intel. Essentially, asking for some pay-off to either continue its challenger or to bow-out. Dir. Vidal writes:

I determine that OpenSky, through its counsel, abused the IPR process by filing this IPR in an attempt to extract payment from VLSI and … Intel, and expressed a willingness to abuse the process in order to extract the payment. OpenSky’s behavior in this proceeding is entirely distinguishable from conventional settlement negotiations that take place in an adversarial proceeding. I also find that OpenSky engaged in abuse of process and unethical conduct by offering to undermine and/or not vigorously pursue this matter in exchange for a monetary payment. Taken together, the behavior warrants sanctions to the fullest extent of my power.  . . . The conduct of the individual attorneys in this case might also rise to the level of an ethical violation under the rules of their respective bars

Vidal Precedential Order.  As a sanction, the order excludes OpenSky from participating and also demands that OpenSky “show cause” as to why it should not be ordered to pay damages and attorney fees to VLSI.

Great work Dir. Vidal.

by Chris Holman

Mylan Pharms. Inc. v. Merck Sharp & Dohme Corp., 2022 WL 4541687 (Fed. Cir. Sept. 29, 2022)

As a general rule of thumb, the prior art disclosure of a chemical species anticipates (and thus renders unpatentable) a chemical genus encompassing that species. The prior art disclosure of a chemical genus, on the other hand, generally does not anticipate a species falling within the scope of the genus – except when it does.  In re Petering, 301 F.2d 681 (C.C.P.A. 1962), decided by the Court of Customs and Patent Appeals (the predecessor of the Federal Circuit) in 1962, provides an example in which the court holds that prior art disclosing a genus of 20 chemical compounds anticipated a species falling within that genus. The Petering court explained that the prior art may be deemed to disclose each member of a genus when, reading the reference, a person of ordinary skill can “at once envisage each member of this limited class.”

Mylan v. Merck provides an example going the other way, with the Federal Circuit affirming a Patent Trial and Appeal Board decision finding that the prior art disclosure of a genus comprising 957 predicted salts did not anticipate the following claim, which recites one of those salts.

1. A dihydrogenphosphate salt of a 4-oxo-4-[3-(trifluoromethyl)-5,6-dihydro [1,2,4]triazolo[4,3-a]pyrazin-7(8H)-yl]-1-(2,4,5-trifluorophenyl)butan-2-amine of Formula I:

or a hydrate thereof.

The claimed salt is sitagliptin dihydrogenphosphate (“sitagliptin DHP”), a dipeptidyl peptidase-IV (“DP-IV”) inhibitor and the active ingredient in JANUVIA, which is marketed by Merck for the treatment of non-insulin-dependent (i.e., Type 2) diabetes.  Mylan petitioned for inter partes review (IPR) of a number of patent claims of U.S. Patent 7,326,708 (the “’708 patent”), including the independent claim presented above, as part of its bid to bring a generic version of JANUVIA to market prior to expiration of the patent. Mylan argued that the challenged claims were anticipated and/or rendered obvious by the disclosure of the genus of 957 salts in an earlier Merck-owned U.S. patent and its equivalent International Patent Publication (referred to collectively as “Edmondson”).

In particular, Mylan argued that under In re Petering Edmondson’s disclosure of the genus anticipated the challenged claims because a skilled artisan reading Edmondson would “at once envisage” the sitagliptin DHP salt. But the Board rejected this argument, finding that none of the challenged claims were anticipated by Edmondson. The Federal Circuit affirmed, finding that while In re Petering does stand for the proposition that a skilled artisan may “at once envisage each member of [a] limited class,” the “key term” in this statement is the word “limited.”  The court found that the genus of 957 salts disclosed in Edmondson is a far cry from the 20 compounds “envisaged” by the narrow genus in Petering.

The Federal Circuit went on to explain:

We cannot provide a specific number defining a “limited class.” It depends on the “class.” But we agree with Merck and hold that the Board did not err in finding that a class of 957 predicted salts[, as disclosed in Edmondson,] is insufficient to meet the “at once envisage” standard set forth in Petering.

The manner in which Edmondson discloses the genus probably had some bearing on the outcome. Edmondson does not explicitly define a genus of 957 salts. Instead, Edmondson discloses a list of 33 compounds, one of which was sitagliptin.  It also discloses eight “preferred salts,” one of which was phosphate, the salt used in sitagliptin DHP.  The product of multiplying 33 x 8 is 264, so there are at least 264 possible combinations of the 33 chemical compounds with the eight salts. But there are also possible differences in stoichiometry, i.e., the ratio of the salt’s ions. For example, the stoichiometry of the claimed sitagliptin DHP is 1:1, i.e., a 1-to-1 ratio of sitagliptin to phosphate.  However, other stoichiometry’s are possible.  For example, Merck was also able to prepare sitagliptin phosphates having stoichiometries of 3:2 and 2:1. Taking into account the various possible stoichiometries, the court accepted Merck’s representation that the 33 compounds could potentially be formulated into a total of 957 different salt forms using the eight preferred salts.

Of course, the fact that Edmondson does not anticipate the claims does not necessarily mean that it would not render them obvious, particularly in combination with other prior art references. In this case, however, Edmondson could not be used as a prior art reference for purposes of obviousness with respect to a number of the claims at issue in the IPR, including Claim 1. In a nutshell, the reason for this was that under pre-AIA 35 U.S.C. 103(c)(1) Edmondson could not be used as 102(e)/103 prior art because Edmondson and the challenged patent were both owned by Merck, and Merck was able to antedate Edmondson as a 102(a)/103 reference with respect to Claim 1 and some of the other claims at issue.

Merck was not able to antedate Edmondson with respect to some of the other challenged claims, including Claim 4, which depends from Claim 1 and recites a crystalline monohydrate form of the (R)-enantiomer of sitagliptin DHP.  I think it is safe to assume that Claim 4 corresponds to the proposed generic product, given that in Canadian proceedings (discussed below) Mylan stipulated that its product would infringe the Canadian equivalent of Claim 4. The Board addressed the merits of Mylan’s assertion that Edmondson (in combination with other prior art) rendered Claim 4 obvious, and concluded that it did not. The Federal Circuit affirmed this conclusion.

This past April, a Canadian court issued a decision finding the Canadian equivalent of Claim 4 not invalid for obviousness and/or insufficiency (i.e., lack of enablement).  Significantly, the Canadian Court found that “[t]he evidence indicates that the [skilled artisan] would not have any specific motivation arising from [Edmondson] to focus on the particular crystalline form of a salt of sitagliptin over the other compounds disclosed within [Edmondson].”

Last month, Merck announced that the U.S. District Court for the Northern District of West Virginia had found the ‘708 patent not invalid and infringed in a Hatch-Waxman infringement suit brought against Mylan (which is now a part of Viatris).  I tried to take a look at that decision, but found that it had been filed under seal.  The case is being appealed to the Federal Circuit, and it will be interesting to see what happens if that appeal results in a decision.  Bear in mind that in patent infringement litigation the accused infringer (e.g., Mylan) is able to rely on prior art (e.g., public use or on-sale events) and grounds for invalidation (e.g., obviousness-type double patenting or lack of enablement) that are not available in IPR proceedings.