Federal Circuit: Patentability of Isolated Genes

Association for Molecular Pathology v. USPTO and Myriad Genetics (Fed. Cir. 2010)

In a landmark 2010 declaratory judgment decision, a Southern District of New York court invalidated claims from seven Myriad patents associated with the BRCA1/2 breast and ovarian cancer genes.  The patents include both composition claims covering isolated DNA molecules and method claims covering the processes of detecting and screening for BRCA mutations.  The lower court held that these claims all fail the patentable subject matter eligibility test of 35 U.S.C. §101.  A typical invalidated claim includes Claim 1 of Patent No. 5,747,282 which reads “1.  An isolated DNA coding for a BRCA1 polypeptide, said polypeptide having the amino acid sequence set forth in SEQ ID NO:2.” (The amino acid sequence No. 2 was provided as a part of the patent filing).

Myriad has now filed its Federal Circuit appeal brief on the merits and argues two main points: (1) that the declaratory judgment plaintiffs had no standing to sue because there was no actual case or controversy between them and Myriad and (2) that Myriad's patents cover inventions that fit well within the broad scope of Section 101 subject matter eligibility. As I wrote earlier, I believe that the Federal Circuit will reverse.

Standing: A general rule of appellate advocacy is to lead with your best argument. One caveat involves standing — when standing is argued, it is invariably argued first. Although the weaker of its two primary arguments, Myriad led with its case for no standing.

It is important to remember how this case arose — with twenty plaintiffs joining together to sue Myriad and to ask the Federal Court to declare Myriad's patents invalid.

Declaratory Judgment Jurisdiction is governed by Article III of the US Constitution, the Declaratory Judgment Act of 1934, and most recently, the 2007 Supreme Court case of MedImmune v. Genentech which eliminated the reasonable-apprehension-of-suit test that had been previously followed by the Federal Circuit. 

The basic question for this case is whether sufficient controversy and adversity exists between the parties or, as Myriad argues, did the lower court improperly provide an advisory opinion.  The Supreme Court restated its standing test in MedImmune — asking “whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” Myriad argues that there is no controversy between the parties because Myriad has not taken any (recent) action toward the plaintiffs and that any controversy between the parties lacks “sufficient immediacy.”

Here, neither plaintiffs’ complaint nor the district court’s opinion identifies any “affirmative act” by Myriad within the past ten years putting plaintiffs at risk of an infringement suit. There is no allegation, much less evidence, that Myriad ever identified the patents-in-suit (or any claim thereof) to any plaintiff, or identified any plaintiff’s product or conduct as infringing. In fact, there is no allegation that Myriad was even aware of any plaintiff’s “ability and desire” to infringe (A1034-64), let alone that Myriad evaluated any product or conduct to determine infringement. Accordingly, plaintiffs have no basis for declaratory judgment jurisdiction because “the totality of the circumstances analysis in the instant case is that which has not occurred.”

The district court disagreed with these arguments — holding that a controversy existed based on Myriad's activity against researchers along with an understanding “within the research community . . . [that] Myriad has taken the position that any BRCA1/2 related activity infringes its patents and that Myriad will assert its patent rights against parties engaged in such activity.” 

Discovering the Importance of a Mutation: The important scientific discovery in this case is the knowledge that BRCA mutations predict breast and ovarian cancer.  Of course, that informational discovery by-itself cannot be patented because it represents an abstract idea rather than a useful implementation.  The mutation itself occurs in nature and therefore is not sufficiently new to be patentable. The patents therefore were drafted to cover “isolated” forms of the mutated gene and methods of isolating the gene.  As with many software algorithm patents that are “tied” to a computer, the core of the Myriad invention rests in the unpatentable information/algorithm but the claims are drafted to include technical features that ground the invention in a specific, practical use of the information discovered.  Here, once the information regarding BRCA mutations was known, the actual isolation of the genes arguably did not take any further inventing because the generic isolation process was already well known.

With this setup, the Federal Circuit will be asked to determine whether tying the informational discovery to the isolated compound or method of isolation is sufficient to move the patent outside of the scope of abstract ideas and natural phenomena.  The question may be whether the Court should follow Diehr or instead follow Flook and Benson. The Bilski decision does not help in analyzing the claim here other than by revitalizing the precedential value of Flook and Benson.

Amicus briefs supporting Myriad will be filed shortly.

Teva v. Eisai: Standing for subsequent Paragraph IV filers

By Jason Rantanen

Teva Pharmaceuticals USA, Inc. v. Eisai Co. (Fed. Cir. 2010)
Panel: Rader, Dyk, and Prost (author)

A company seeking to market a generic version of a previously approved pharmaceutical product must file and receive approval of an Abbreviated New Drug Application (ANDA).  One aspect of the ANDA, called a "Paragraph IV Certification," involves an assertion that each of the patents for that drug listed in the Orange Book is invalid and/or not infringed.  The first manufacturer to file a Paragraph IV Certification is entitled to 180 days of generic marketing exclusivity; until the first-filer's exclusivity period has run, the FDA may not approve ANDA applications by other manufacturers who have filed Paragraph IV certifications for the same patent.   The first-filer's exclusivity period can be triggered by either (1) its commercial marketing of the drug; or (2) entry of a court judgment finding the patent invalid or not infringed.

Eisai holds the New Drug Application for donepezil, and owns five patents listed for this product in the Orange Book.  Of these five patents, one (the '841 patent) was the subject of separate litigation that produced a preliminary injunction barring Teva from marketing a generic version of donepezil until the expiration of the '841 patent in November 2010.  With respect to the remaining four patents, Ranbaxy Laboratories was the first to file a Paragraph IV certification; thus, because Ranbaxy's exclusivity period had not yet run, approval of Teva's ANDA was barred. 

To remedy this issue, Teva brought a declaratory judgment action against Eisai on the remaining four patents, seeking to trigger the exclusivity period.  Ultimately, there was no question as to whether Teva infringed the patents: Eisai had filed a statutory disclaimer for two of them, effectively canceling their claims, and had entered into a covenant not to sue Teva on the remaining two patents.  Nevertheless, all four patents continued to be listed in the Orange Book, precluding approval of Teva's ANDA.

After the Declaratory Judgment action was filed, Eisai moved to dismiss on the ground that Teva had failed to  establish the existence of an Article III case or controversy.  The district court agreed, dismissing the case for lack of jurisdiction.  Teva appealed.

The Federal Circuit reversed the dismissal.  With respect to the jurisdictional issue, the court focused on two cases: Caraco Pharmaceutical Laboratories, Ltd. v. Forest Laboratories, Inc., 527 F.3d 1278 (Fed. Cir. 2008) and Janssen Pharmaceutica, N.V. v. Apotex, Inc., 540 F.3d 1353, 1359 (Fed. Cir. 2008).   Looking to Caraco, the court explained that:

the generic drug company’s injury (i.e., exclusion from the market) is fairly traceable to the defendant’s actions because “but-for” the defendant’s decision to list a patent in the Orange Book, FDA approval of the generic drug company’s ANDA would not have been independently delayed by that patent. 527 F.3d at 1292; see 21 U.S.C. § 355(j)(5)(B)(iv). When an Orange Book listing creates an “independent barrier” to entering the marketplace that cannot be overcome without a court judgment that the listed patent is invalid or not infringed—as for Paragraph IV filers—the company manufacturing the generic drug has been deprived of an economic opportunity to compete. Id. at 1293; see also 21 U.S.C. § 355(j)(5)(B)(4). A declaratory judgment redresses this alleged injury because it eliminates the potential for the corresponding listed patent to exclude the generic drug from the market.

Slip. Op. at 11.  On the other hand, as in Janssen, where a generic manufacturer agrees that an Orange Book patent is valid, enforceable, and infringed, that generic manufacturer lacks standing to pursue a declaratory judgment action against other Orange Book patents for that drug because it cannot market its product even if the exclusivity period runs.  

Applying this framework, the court concluded that Teva had established an actual controversy.  The court distinguished Janssen on the ground that the preliminary injunction associated with the '841 patent was necessarily preliminary, and there was no final determination as to the validity, infringement or enforceability of the '841 patent.  Thus, although Teva could not currently market its product, the preliminary injunciton did not eliminate the existence of a controversy.

With respect to the discretionary component of the Declaratory Judgment Act, the Federal Circuit concluded that the district court had abused its discretion in declining jurisdiction, both because it had relied on its determination that it lacked subject matter jurisdiction as well as being unsupported by the facts. 

Genus-Species; Doctrine of Equivalents; and Patentable Subject Matter

By Dennis Crouch

For many, the most interesting aspect of this case comes at the end in Judge Dyk’s dissent. Dyk makes the case that genes should not be patentable. 

* * * *

Intervet Inc. v. Merial Limited (Fed. Cir. 2010)

In 2006, Intervet filed a complaint against Merial — asking the DC District Court for a declaratory judgment that Intervet’s Porcine Circovirus vaccine (PCV-2) did not infringe Merial’s gene patent.  Merial’s patent claims both the isolated DNA molecule of PCV-2 and a vector that contains the DNA.  The application includes a listing of several different sequences that all fall within the PCV-2 category. 

Although Intervet also uses a PCV-2 vector. The DJ plaintiff argues that its DNA molecule is different from the one described and deposited by Merial. The district court agreed — holding that the Intervet product was only 99.7% homologous to the closest deposited sequence and therefore outside of the literal claim scope. The district court also applied prosecution history estoppel to rejected Merial’s claims of infringement under the doctrine of equivalents (DOE). On appeal, the Federal Circuit reversed on both claim construction and DOE.

Genus Not Limited to Examples: The asserted claim includes a limitation of a “PCV-2” DNA molecule. The District Court limited that term to cover only the DNA sequences that were deposited with the PTO. On appeal, the Federal Circuit rejected that construction as overly limiting. Rather, the appellate panel held that the deposited sequences serve as a representative sample of PCV-2 DNA sequences. “Sequences are representative of the scope of broader genus claims if they indicate that the patentee has invented species sufficient to constitute the genera. Here, the deposited strains are representative species of the larger ‘type II’ genus, where the genus is identified and claimed as the invention.” In describing its invention, the specification noted that the PCV-2 desposited sequences had a 96% homology and that the invention did not cover PCV-1 sequences that at most shared 76% homology with the deposited sequences.  Taking those quantitative limits from the specification, the Federal Circuit ruled that the claimed PCV-2 molecule should be construed as being “about 96% or more homologous with the … sequences disclosed in the present specification, and about 76% or less homologous with the [disclosed PCV-1] sequence.”

What is Equivalents are Surrendered by a Narrowing Amendment: An accused infringer may still be liable even though its product does not literally infringe every element of an asserted patent claim.  Under the doctrine of equivalents (DOE), a patentee may be able to provie infringement by showing that one or more elements of the accused product are equivalent to elements in the claim.  Under the limiting doctrine of prosecution history estoppel (PHE), a patentee will ordinarly be estopped from claiming DOE over a claim element that was narrowed during prosecution. (A narrowing amendment made for purposes related to patentability creates a rebuttable presumption that estoppel applies.)

Here, one of Merial’s original claims was directed to a markush group of open reading frames (ORFs) that had been described in the specification as “ORFs 1–13.”  In an initial rejection, the examiner suggested that the limitation could refer to ORFs of non-PCV-2 molecules. Although the patentee argued that the claim was clear, it still added the limitation that the claimed ORFs were PCV-2 ORFs.  The Federal Circuit held that this was a narrowing amendment substantially related to patentability. That narrowing amendment therefore created a presumption that the patentee had surrendered all equivalents that relate to non-PCV-2 ORFs. The district court erred, however, in holding that this narrowing amendment would estopp the the patentee from asserting that the claims cover a non-claimed PCV-2 ORF as an equivalent. “Such a draconian preclusion would be beyond a fair interpretation of what was surrendered. The rationale for the amendment was to narrow the claimed universe of ORFs down to those of PCV-2, and bore only a tangential relation to the question of which DNA sequences are and are not properly characterized as PCV-2.”

Dissenting-in-part, Judge Dyk discussed his argument that the claims directed toward the isolated form of a naturally occurring gene are likely unpatentable under 35 U.S.C. § 101.

[T]he isolated DNA claim raises “substantial issues of patentable subject matter under 35 U.S.C. § 101. . . . Neither the Supreme Court nor this court has directly decided the issue of the patentability of isolated DNA molecules. Although we have upheld the validity of several gene patents, none of our cases directly addresses the question of whether such patents encompass patentable subject matter under 35 U.S.C. § 101. . . .

I think that such patents do in fact raise serious questions of patentable subject matter. The Supreme Court’s recent decision in Bilski v. Kappos has reaffirmed that “laws of nature, physical phenomena, and abstract ideas” are not patentable. No. 08-964, slip op. at 5 (U.S. June 28, 2010) (quoting Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980)); Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948). Just as the patentability of abstract ideas would preempt others from using ideas that are in the public domain, see Bilski, slip op. at 13, so too would allowing the patenting of naturally occurring substances preempt the use by others of substances that should be freely available to the public. Thus, “a new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter. Likewise, Einstein could not patent his celebrated law that E=mc2; nor could Newton have patented the law of gravity.” Chakrabarty, 447 U.S. at 309. These aspects are properly conceptualized as representing a public domain, “free toall men and reserved exclusively to none.” Id. (quoting Funk Bros., 333 U.S. at 130) (quotation mark omitted).

In Funk Brothers, the Court considered the patentability of a mixture of several naturally-occurring species of bacteria. 333 U.S. at 128-31. The patented product was a mixture of bacteria used in agricultural processes, enabling plants to draw nitrogen from the air and convert it for usage. The inventor discovered that certain strains of the bacteria were effective in combination with one another, and contrary to existing assump-tions, did not exert mutually inhibitive effects on each other. The Court held that the invention was not pat-entable subject matter. Id. at 131. The inventor “did not create a state of inhibition or of non-inhibition in the bacteria. Their qualities are the work of nature. Those qualities are of course not patentable.” Id. at 130. The Court furthermore noted:

The qualities of these bacteria, like the heat of the sun, electricity, or the qualities of metals, are part of the storehouse of knowledge of all men. They are manifestations of laws of nature, free to all men and reserved exclusively to none. He who discovers a hitherto unknown phenomenon of na-ture has no claim to a monopoly of it which the law recognizes. If there is to be invention from such a discovery, it must come from the applica-tion of the law of nature to a new and useful end.


In Chakrabarty, the Court considered whether a human-made microorganism is patentable subject matter under section 101. 447 U.S. at 305. The microorganism in question was a bacterium that had been genetically engineered to break down crude oil. In concluding that the man-made bacteria was patentable, the Court observed that the claim “is not to a hitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or composition of matter.” Id. at 309. The Court went on to distinguish Funk Brothers on the ground that the Chakrabarty bacterium possessed “markedly different characteristics from any found in nature. . . . His discovery is not nature’s handiwork, but his own; accordingly it is patentable subject matter under § 101.” Id. at 310 (em-phasis added).

Thus, it appears that in order for a product of nature to satisfy section 101, it must be qualitatively different from the product occurring in nature, with “markedly different characteristics from any found in nature.” It is far from clear that an “isolated” DNA sequence is qualita-tively different from the product occurring in nature such that it would pass the test laid out in Funk Brothers and Chakrabarty. The mere fact that such a DNA molecule does not occur in isolated form in nature does not, by itself, answer the question. It would be difficult to argue, for instance, that one could patent the leaves of a plant merely because the leaves do not occur in nature in their isolated form.



Federal Circuit Lowers Bar for Declaratory Judgment Jurisdiction When Patentee is a Holding Company

Hewlett-Packard v. Acceleron 09-1283.pdf (Fed. Cir. 2009)

Acceleron’s patent No. 6,948,021 covers a hot-swappable server blade. In September 2007, Acceleron wrote to “call [HP’s] attention to the referenced patent.” HP responded that they “would be willing to agree not to file” a declaratory judgment action for 120 days. Going back, Acceleron simply suggested that no declaratory judgment jurisdiction existed.

Rather than negotiating, HP filed a declaratory judgment action in Delaware District court. However, Judge Robinson dismissed that case – finding the potential for litigation by Acceleron “too speculative a prospect to support declaratory judgment jurisdiction.”

On appeal, the Federal Circuit found Acceleron’s actions were sufficient to support a declaratory judgment action — a holding that the court admits “undoubtedly marks a shift from past declaratory judgment cases.”


The Constitution limits federal court jurisdiction to actual cases and controversies. Under the Supreme Court’s 2006 MedImmune decision, the question of declaratory judgment jurisdiction is answered after considering “all the circumstances” rather than any bright line rule. Subsequently, the Federal Circuit indicated that declaratory judgment jurisdiction exists when a patentee asserts rights against “certain identified ongoing or planned activity of another party, and where that party contends that it has the right to engage in the accused activity without license.” (Quoting SanDisk). Likewise, a party who has “actually been charged with infringement of a patent” will be able to identify declaratory judgment jurisdiction. (quoting Cardinal Chem).

Here, Acceleron argues that a patent owner should have some mechanism for contacting another party to discuss patent rights without raising declaratory judgment jurisdiction. Without disagreeing with that premise, the Federal Circuit held that this is not such a case.

Although Acceleron made no direct charges of infringement, the company did indicate that its patents were “relevant” to HP’s product line; that HP’s response must come within two-weeks; and asked HP not to file a DJ action. “Under the totality of the circumstances, therefore, it was not unreasonable for HP to interpret Acceleron’s letters as implicitly asserting its [patent] rights.”

Although dicta, the Federal Circuit also suggested that the “totality of the circumstances” analysis should included the fact that Acceleron is “solely a licensing entity.” That fact apparently creates a greater shadow of litigation because “without enforcement [Acceleron] receives no benefits from its patents.”

Declaratory Judgment: Personal Jurisdiction over Foreign Patent Holder

Autogenomics v. Oxford Gene Tech (Fed. Cir. 2009) 08-1217.pdf

The opposing viewpoints of Judges Newman and Moore continues to be seen in Federal Circuit decisions. This appeal arrived at the Federal Circuit after the Central District of California district court dismissed the case for lack of personal jurisdiction over the declaratory judgment defendant (and patent holder) Oxford Gene Technology.Writing for the majority, Judge Moore (joined by N.D. Ill. Judge Gettleman sitting by designation) affirmed the judgment. Judge Newman wrote in dissent.

Even in patent cases, a federal court’s personal jurisdiction over parties is based on state boundaries. Here, the case was filed in a federal court sitting in California. When a defendant challenges personal jurisdiction, the court must consider two general factors: (1) whether the forum state’s long-arm statute permits service of process and (2) whether assertion of personal jurisdiction would violate due process.” Most states have extended their long-arm statutes to the bounds of due process. Thus, the question collapses to a consideration of the US Constitutional as applied at the geographic state boundaries.

The Constitutional limits of due process can be met by either showing general personal jurisdiction (based on continuous and systematic contacts with the state) or specific personal jurisdiction (based on a defendant’s activities in the state that relate to the cause of action.)

Focusing on specific personal jurisdiction, this case is in some ways a repeat of the court’s 2008 Avocent holding that a patentee’s efforts at commercialization are irrelevant to the specific jurisdiction question. Rather, the minimum contacts for specific jurisdiction must relate to “only enforcement or defense efforts related to the patent.” Thus, although Oxford has licensed its patents to several California companies, those licenses do not work toward a finding of specific personal jurisdiction over the foreign company.

DJ Jurisdiction over a Non-US Company: Both the majority and dissent expressed concern that foreign patent holders may often fly under the radar in such a way that no US court would have personal jurisdiction. Of course, the patent statute deals with that potential eventuality. For a non-US patent holder, the District of Columbia Federal Court has jurisdiction “to take any action respecting the patent or rights thereunder” to the same extent “that it would have if the patentee were personally within the jurisdiction of the court.” 35 USC 293.

Section 293 makes an exception for non-US patent holders who designate a US person to receive process. The statute does not indicate that such designation serves as consent to personal jurisdiction in the person’s home location. However, cases have held that designating a US process agent under Section 293 operates as consent to personal jurisdiction. See In re Papst Licensing, 590 F. Supp. 2d 94 (D.D.C. 2008).

Section 293 reads as follows.

Every patentee not residing in the United States may file in the Patent and Trademark Office a written designation stating the name and address of a person residing within the United States on whom may be served process or notice of proceedings affecting the patent or rights thereunder. If the person designated cannot be found at the address given in the last designation, or if no person has been designated, the United States District Court for the District of Columbia shall have jurisdiction and summons shall be served by publication or otherwise as the court directs. The court shall have the same jurisdiction to take any action respecting the patent or rights thereunder that it would have if the patentee were personally within the jurisdiction of the court.

In the past year, about 11 patent infringement cases were filed in DC District Court.

Federal Circuit Finds DJ Jurisdiction Even After Time-Limited Covenant Not To Sue

Revolution Eyewear v. Aspex Eyewear (Fed. Cir. 2009)pic-8.jpg

After several years of litigation, the patentee-plaintiff Revolution delivered a covenant not to sue to Aspex. The covenant was limited to the asserted patent and to activities prior to dismissal of the action. The district court dismissed the case, but Aspex did not let go. The accused infringer wanted assurances that it could continue selling the accused version of its eyeglass design without worrying about future charges of infringement.

In the appeal, Judge Newman agreed that a case or controversy continues to exist and that under MedImmune, the district court still retains jurisdiction. In the backdrop, the Newman was careful to differentiate this case from those where an accused defendant may be hoping to seek a speculative judicial opinion on future product lines:

This case is of larger substance than merely a would-be competitor seeking to test the waters by way of an advisory judicial opinion on an adverse patent….These parties are already in infringement litigation initiated by the patentee, the case has been pending since 2003, and already has produced a summary judgment of invalidity (which was later vacated by this court, 175 Fed. Appx. 350); the patentee filed its covenant in 2007, after four years of litigation, on the eve of trial of the question of enforceability. Throughout this period the accused eyewear were removed from the market by Aspex, and would not be shielded by the covenant should it be returned to the market, as Aspex states is its intention. Aspex states, and Revolution agreed at the argument of this appeal, that it is reasonable to believe that Revolution will again file suit should Aspex return to this market with the same product as it previously sold. By now barring the counterclaims that have been pending since 2003, Aspex states that this court would enable the “scare-the-customer-and-run” tactics that were deplored in Arrowhead.

Dismissal Reversed. On remand, the lower court retains subject matter jurisdiction over the declaratory judgment counterclaims.

Federal Circuit Finds Personal Jurisdiction Over Declaratory Judgment Defendant

Patent.Law150Campbell Pet Co. v. Theresa Miale & Ty-Lift Ent. (Fed. Cir. 2008)

Ms. Miale holds two patents relating to stretchers for carrying injured animals her company (a partnership with her mother) sells products based on the patents.

The issue in the case is one of personal jurisdiction – whether the Federal Court sitting in Washington State has sufficient power over the patentee and her company to adjudge Campbell’s declaratory judgment action.

The facts are that Ty-Lift sold several thousand dollars worth of equipment to Washington residents, opened its internet website to Washington residents, and Ms. Miale even demonstrated the product at a Convention in the state.  While there, Miale and her mother “confronted several Campbell employees” and accused them of infringing Miale’s patents.  They also allegedly asked the convention director to remove the Campbell products and told customers of the infringement.

The district court originally dismissed the case – finding that Miale’s contacts were not sufficient for either general jurisdiction or specific jurisdiction.  

“[T]he [district] court found that the defendants had purposely engaged in transactions in Washington during the three-day convention in June 2007, and the court found that the cause of action for a declaratory judgment of patent noninfringement and invalidity arose from or was connected with those transactions. However, relying on our decision in Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 2003), the court found that due process considerations barred the court from exercising personal jurisdiction over the defendants based on the activities at the June 2007 convention in Seattle.< ?xml:namespace prefix ="" o />

The district court noted that the notion of “fair play and substantial justice” should “afford a patentee sufficient latitude to inform others of its patent rights without subjecting itself to jurisdiction in a foreign forum.”

On appeal, the Court of Appeals for the Federal Circuit reversed – finding that constitutional due process considerations of International Shoe do not bar the suit.  For the Federal Circuit, “sending letters to another state” is not sufficient to satisfy the requirements of due process and thus personal jurisdiction – even if those letters threaten litigation.  Here, the facts asserted show more than simply “attempts to inform.”

“Of critical importance to the issue of personal jurisdiction, Ms. Miale’s attempts at “extra-judicial patent enforcement” were targeted at Campbell’s business activities in Washington and can fairly be characterized as attempts to limit competition from Campbell at the Seattle convention.”

Reversed: The district court does have the power to hear this case.



Potential of Extending Exclusive Generic Period by Delaying Generic Launch Does Not Create Actionable Harm

Janssen Pharmaceutica v. Apotex, Inc (Fed. Cir. 2008)

Like most of today’s pioneer-generic drug patent battles, this case involves multiple parties all looking for some advantage in the end-game battle over exclusivity.

Three JANSSEN patents are listed in the FDA orange book as covering its blockbuster anti-psychotic drug sold under the name Risperdal. ($2.5 billion in 2007 sales). TEVA was the first to challenge the patents and receives the Hatch-Waxman 180 days of generic market exclusivity. APOTEX came later and hoped to shorten TEVA’s clock by invalidating the patents. The Federal Circuit, however, rejected APOTEX case – finding no declaratory judgment jurisdiction. In particular, the court saw no case or controversy between APOTEX and JANSSEN. (APOTEX wanted to shorten TEVA’s rights).

TEVA had challenged only two of the three JANSSEN patents. On June 29, 2008, the unchallenged patent expired and the next day the FDA approved TEVA’s generic application. To date, however, the generic company has apparently not yet launched. TEVA’s 180 day clock will not be triggered until either (1) it launches its generic alternative or (2) the other two patents are found invalid by a court. If the court invalidates the JANSSEN patents, then TEVA’s 180 days will end sooner – allowing APOTEX to enter the market at an earlier date. (TEVA’s 180 days would have been triggered even earlier if APOTEX had successfully challenged the third patent (the ‘663 patent). It instead agreed that the ‘663 patent was valid.). To get out of the case, JANSSEN promised not to sue APOTEX on the other two patents.

On appeal, the three judge panel (CJ Michel, J Moore, and J Rader) recognized the harm APOTEX was feeling – but decided that the harm was not sufficient for declaratory judgment jurisdiction.

“[W]e conclude that the harm that has continuously existed in the present case—Apotex’s inability to launch its generic product immediately upon the expiration of the ‘663 patent—is not sufficient to give rise to declaratory judgment jurisdiction.”

What are they talking about?: This decision involves a multi-billion dollar drug and APOTEX – a leading generic provider – would be in a position to obtain at least millions in generic sales by launching sooner. Furthermore, the harm to APOTEX is not just waiting more than the 180 days, but also in giving TEVA more time to solidify its generic market position down the road. YET, the court concludes that the harm is “not sufficient to give rise to declaratory judgment jurisdiction.”

Head in the Sand: It turns out that the court based its ruling on facts developed before we knew that TEVA would delay its launch:

“We heard oral arguments in this case on July 7, 2008, approximately a week after Teva could have launched its generic product. However, we are not deciding whether the facts alleged on July 7, 2008—the date we heard oral arguments—give rise to a justiciable Article III case or controversy. We hold that at the time when the district court entered final judgment in this case, Apotex’s alleged harm of indefinite delay of approval was too speculative to create an actual controversy to warrant the issuance of a declaratory judgment”

The CAFC is probably correct that when the lower court made its decision months ago, the harm – TEVA’s potential delayed marketing after expiration – was too speculative to support DJ jurisdiction.

Now that TEVA’s delay is no longer speculative, APOTEX may well be able bring suit to invalidate the JANSSEN patents. However, that result is merely my own speculation.

The Multi-Factor Test for Declaratory Judgment Jurisdiction in Patent Cases

PatentLawPic324Cat Tech LLC v. TubeMaster, Inc. (Fed. Cir. 2008)

Cat sued TubeMaster — alleging infringement of its patent covering a method of using a catalyst loading devices to simultaneously load thousands of tube reactors.  Cat’s infringement allegations were focused on one particular TubeMaster commercial configuration. During the litigation, TubeMaster filed a counterclaim for declaratory relief that its other three configurations did not infringe. On appeal, the CAFC first looked to see whether the district court had proper jurisdiction over the declaratory relief counterclaims.

In MedImmune, the Supreme Court rejected the Federal Circuit’s “rigid” two prong test for DJ jurisdiction that required that the DJ plaintiff (1) have a reasonable apprehension that the patentee will file suit and (2) conduct “meaningful preparation” to conduct potentially infringing activity.  The MedImmune decision eliminated the first prong — finding the that the “reasonable apprehension” test excluded at least some actual “cases and controversies” under Article III of the U.S. Constitution. 

New Multi-Factor Test for Declaratory Judgment Jurisdiction: In Cat Tech, the Federal Circuit found that the second prong of “meaningful preparation” is still intact — at least as a factor working to determine whether a dispute is immedate and real.

“[T]he issue of whether there has been meaningful preparation to conduct potentially infringing activity remains an important element in the totality of circumstances which must be considered in determining whether a declaratory judgment is appropriate. . . . If a declaratory judgment plaintiff has not taken significant, concrete steps to conduct infringing activity, the dispute is neither ‘immediate’ nor ‘real’ and the requirements for justiciability have not been met.”

From this decision by Judge Mayer, it appears that the new test for DJ jurisdiction has moved from two prongs to a broader “totality of the circumstances” under the umbrella of a “fundamental inquiry” of “whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”  (quoting MedImmune). Meaningful preparation toward potential infringing activity is important (but perhaps not a required element) in this fundamental inquiry because actual steps taken toward infringement are indicators of both “immediacy and reality.”

On the facts of this case, the CAFC found “meaningful preparation” toward each product was sufficiently shown by “AutoCAD drawings for each of its four configurations”; successful manufacture of one of the configurations; being ready to deliver products under any configuration “within a normal delivery schedule” after receiving an order; and because the company “does not expect to make substantial modifications to its loading device designs once production begins.”

Finally, although also a factor in the analysis, the fact that TubeMaster had not created any sales literature or begun advertising its alternate configurations did not negate the immediacy and reality of the controversy.


Threatening Letters to Infringer’s Clients Are Not Actionable Unless “Objectively Baseless” (Although They Will Create DJ Jurisdiction)

PatentLawPic039GP Industries v. Eran (Fed. Cir. 2007)

Eran makes “leakproof” rain gutter covers. Several Eran employees were fired during the summer of 2005.  Those individuals reorganized as GPI — a potential competitor to Eran. As a preemptive strike, Eran mailed letters to its distributors and contractors noting that GPI’s planned to sell a competitive product that infringed Eran’s patent.

After GPI filed for declaratory judgment, the district court (Nebraska) granted GPI’s motion for a preliminary injunction — stopping Eran from “(1) seeking to prevent GPI from making and selling its gutter products during the pendency of this litigation and (2) making vague and unspecified allegations of infringement against GPI in the marketplace.”

On appeal, the CAFC reversed — finding that the preliminary injunction had been improperly granted.

The party seeking a preliminary injunction has the burden of showing: “(1) a reasonable likelihood of success on the merits; (2) irreparable harm; (3) a balance of hardships in its favor; and (4) public interest in favor of the injunction.” Once granted, a preliminary injunction will only be vacated for clear error.

Injunction against Communications: Based on First Amendment rights and 35 U.S.C. § 287 (notice), injunctions relating to communications must pass a higher hurdle. In particular, “bad faith” is required in order to bar communications.

“One has a right to inform others of his or her patent rights. See 35 U.S.C. § 287. Thus, an injunction against communication is strong medicine that must be used with care and only in exceptional circumstances.”

In Globetrotter Software, the CAFC held that “bad faith” communications require “objectively baseless claims.”  Notably, these determinations are based on federal law that preempt any state laws that may be less strict.

Here, the CAFC found that Eran’s statements could not be “objectively baseless” since the lower court had noted the real potential that Eran would eventually succeed on the merits of the case.

Preliminary Injunction Reversed


  • Hovey Williams of Kansas City, Missouri represented the patentee, Eran.
  • Kirton & McConkie of Salt Lake City, Utah represented the accused infringer.

V-Chip Declaratory Judgment Patent Case Reinstated by CAFC

VchipSony Electronics v. Guardian Media (Fed. Cir. 2007).

Guardian holds several patents for blocking naughty TV shows based on program classification codes. In 1999, Guardian sent a “notice of patent infringement” to Sony asserting that its V-Chip products “infringe the claims,” and later followed-up with a claim chart. Four years later, Guardian sent another letter offering to license its patents. After unsuccessful negotiations, Sony filed a declaratory judgment action in the Southern District of California — alleging non-infringement, invalidity, and unenforceability.

On motion, the district court dismissed the suit for lack of declaratory judgment jurisdiction — finding no actual controversy as required by the Constitution. In particular, the court noted that Guardian had not threatened to sue and the circumstances did not imply a threat of immediate suit. The court then went on to hold that even if jurisdiction existed it would use its discretion to decline hearing the case because (1) the question of jurisdiction is “close” and (2) it appears that the DJ plaintiffs are using the case as a negotiation tool rather than as a means to settle the dispute.

Particular Adverse Positions => DJ Jurisdiction: On appeal, the CAFC determined that an actual controversy certainly existed between Sony and Guardian at the time of the complaint. The parties had taken particular adverse positions regarding infringement and validity (associating particular claims with particular products; requesting a particular amount of money; arguing whether particular prior art references demonstrated particular claim elements). The facts of this dispute make it “manifestly susceptible of judicial determination.” (quoting 300 US 227 (1939)).

In short, because Guardian asserts that it is owed royalties based on specific past and ongoing activities by Sony, and because Sony contends that it has a right to engage in those activities without a license, there is an actual controversy between the parties within the meaning of the Declaratory Judgment Act.

Discretionary Dismissal: The Declaratory Judgment Act allows a court “substantial discretion” not to hear cases even when there exists an actual controversy. However, here, the CAFC found that the lower court’s two reasons for declining to hear the case were arbitrary and thus insufficient. Specifically, the question of jurisdiction is not a close call as the lower court had determined — rather it was only close because of an error of law. Additionally, the CAFC could not discern any “affirmative evidence” of plaintiffs’ nefarious reasons for filing suit.

Vacated and remanded to determine whether there may be other reasons for discretionary dismissal.


  • Four other DJ plaintiffs had similar experiences and are discussed in the decision.

Declaratory Judgment Jurisdiction Denied in Biotech Research Patent Case

Benitec Australia v. Nucleonics (Fed. Cir. 2007)

Benitec’s infringement suit against Nucleonics was derailed by several factors. Perhaps most critically, the Supreme Court’s Merck v. Integra decision expanding the research exemption of 271(e)(1) left Benitec with no viable infringement claim. Benitec voluntarily dismissed its claims against the defendant Nucleonics and also issued a covenant not to sue for Nucleonics current activities. (Covenant submitted within its appeal opposition brief).

In the meantime, Nucleonics had filed declaratory judgment counterclaims — asserting invalidity and unenforceability.  Nucleonics wants the patent invalidated to remove any investor concerns regarding future products.  On appeal, the CAFC determined whether DJ jurisdiction still exists in this case.

The Supreme Court’s jurisdiction requires “a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” MedImmune.

DJ jurisdiction clearly existed at the time of filing. However, when the controversy disappears, so does jurisdiction. Here, the CAFC found that the controversy was gone and that Nucleonics “future work” was too speculative and might not be infringing anyway.

We also recognize that Nucleonics wishes to receive the benefit of a ruling on the validity and scope of Benitec’s patent now, while Nucleonics undertakes any nascent animal work. There is currently, however, no “substantial controversy, between [Benitec and Nucleonics], of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” MedImmune, 127 S. Ct. at 771. And there may never be. Although Nucleonics lost the appeal, it certainly won a major victory by forcing Benitec to issue a covenant not to sue.

Dismissal affirmed.

In Dissent, Judge Dyk would have allowed the DJ case to continue:

Supreme Court precedent requires that, if a patentee files an infringement lawsuit and the particular claim of infringement is mooted, a counterclaim for invalidity should not be dismissed unless the patentee demonstrates that there is no possibility of a future controversy with respect to invalidity. See Cardinal Chem. Co. v. Morton Int’l, Inc., 508 U.S. 83, 98 (1993). In my view, Benitec made no such showing.


  • Sitting by designation, Judge Whyte penned the opinion. This is only the second CAFC opinion where a judge sitting by designation cast the deciding vote, and is the only CAFC case where a judge sitting by designation penned an opinion and another judge dissented.  The N.D. California IP Bar has often called for Judge Whyte’s appointment to the CAFC. This opinion my provide some guidance as to his potential jurisprudential conduct.
  • Although formally a loser, Nucleonics’ appeal forced Benitec into issuing a covenant not to sue — a major litigation victory.