On April 20, 2005, the Supreme Court heard oral arguments in the case of Merck KGaA v. Integra (Statutory safe harbor for drug development activity). A transcript of the oral arguments is attached.
Based on the briefs and the oral arguments, I expect that the CAFC decision narrowly interpreting 35 USC 271(e)(1) will be reversed. Respondent Integra’s strongest argument is a technicality — that the question on appeal is not based on any case or controversy remaining between the parties.
In many eyes, the question is not whether Merck’s actions are protected by the statutory safe harbor. Rather, the point of speculation is: How far will the Supreme Court extend the safe harbor?
On April 20, 2005, the Supreme Court heard oral arguments in the case of Merck KGaA v. Integra (Statutory safe harbor for drug development activity). However, the oral arguments do not appear to have raised any new issues that will impact the case.
The High Court was critical of the Federal Circuit prose:
“not a crystal clear opinion by any means” (J. Ginsburg).
“pretty foggy” (J. Breyer).
These remarks did not extend to the substance of the opinion. Book-makers expect that the CAFC’s decision will be at least partially reversed — the real question is the eventual breadth of the statute.
In January 2005, Tom Mauro of the Legal Times reported that Justices Sandra Day O’Connor and Stephen Breyer did not participate in the decision to grant cert. Interestingly, both Justices took part in the oral arguments.
Space Systems/Loral v. Lockheed Martin (Fed. Cir. 2005)
By John Smith
Loral, the owner of U.S. patent 4,537,375 (the ‘375 patent), sued Lockheed for infringement of claim 1. The District Court ruled in favor of Lockheed, finding the claim invalid for violating the written description requirement of 35 U.S.C. § 112.
The ‘375 patent is directed to an improved method for maintaining the orientation and attitude of a satellite in space by a process known as station-keeping. After an initial thrust, the satellite re-checks its position, and often fires its thrusters again to better correct its position. Station-keeping thus uses the limited fuel supply on board a satellite and contributes to shortening the life of satellites. The ‘375 patent discloses a method directed to improving the efficiency of the corrective procedure.
Claim 1 of the ‘375 patent entails a multi-step procedure of thruster-firing, data storage, checking of position and correction of position, and minimization of error in correction of position. Essentially, the satellite fires its thrusters to correct its position, then checks its position and compares its current error in position to its previous error in position before firing its thrusters again. Lockheed argued that the patent was invalid, because the second step of claim 1 was not adequately described in the specification.
Defendant Lockheed’s expert, when asked at deposition where one would find the second step description, answered (over counsel objections) that the second step was depicted in Item 96 of Figure 2B. The court found this, along with the testimony of plaintiffs’ expert, established that the specification sufficiently described the claim.
Lockheed also argued that the second step of claim 1 was not inherent in the written description because the specification did not state that the second step was necessarily used in the satellite position correction procedure. On appeal, the Federal Circuit noted that the second step of the claim at issue in the procedure comes only (if at all) after thrusters are fired and actual position error and historical position error are compared. According to the Federal Circuit, this “does not diminish the descriptive content of the specification.”
The Federal Circuit reversed the finding of invalidity, and remanded back to the U.S. District Court for the Northern District of California for further proceedings.
John Smith is an attorney at MBHB LLP in Chicago. He earned both his JD and PhD (inorganic chemistry) from Vanderbilt University. He has co-authored numerous articles and served as a faculty member in the Chemistry Department of Lipscomb University in Nashville, Tennessee.
In his Case Alert, David Long of the Howrey firm correctly noted that this case should be “kept in mind by litigators taking or defending technical expert depositions on written description issues.”
Pamela Jones at GrokLaw, the fabulous pro-Linux blog, has created a patent resource page with links to all the patent resources that you would like to find:
House Subcommittee on the Courts, the Internet and Intellectual Property, chaired by Congressman Lamar Smith (R Tex) has released a patent legislation discussion draft that includes a number of proposed patent reform measures. The House Subcommittee is scheduled to hold an oversight hearing on the discussion draft on Wednesday, April 20, 2005 at 4:30 PM. [Link]. The witness list includes J. Jeffrey Hawley of Eastman Kodak testifying on behalf of the Intellectual Property Owners Association (IPO); Richard J. Lutton of Apple, testifying on behalf of the Business Software Alliance; Jeffrey Kusham, testifying on behalf of Genentech; and William LaFuze of the ABA. In a parallel action, the Senate’s newly formed Subcommittee on Intellectual Property is scheduled to hold a hearing on the patent system April 21. [Link]. [NOTE — Strong indications are that the Senate will postpone the hearing to April 25].
The current patent statute (35 USC §283) allows courts to grant injunctions to prevent violation of patent rights, but provides little guidance, specifying only that injunctions be "in accordance with the principles of equity." The terms of the injunctions need only be "as the court deems reasonable."
The proposed statute would keep the current language intact, but would add another section spelling out the grounds for granting such injunctions. Under the new language, "a court shall not grant an injunction unless it finds that the patentee is likely to suffer irreparable harm that cannot be remedied by the payment of money damages." In making this finding, the court is not to presume the existence of irreparable harm, but is instead required to "consider and weigh evidence" relating to equitable factors. One of these factors is "the extent to which the patentee makes use of the invention."
One result of the proposed new language is that, in a preliminary injunction determination, a reasonable likelihood of success on the merits would no longer lead to a presumption of irreparable harm. The concept of "irreparable harm" has been extensively adjudicated; that body of case law would seem to remain largely relevant in making the determination called for by the proposed statute.
In the recent case of Eolas v. Microsoft, the Court of Appeals for the Federal Circuit expanded the scope of Section 271(f) – a section that creates a cause of action for infringement due to foreign sales when a component of a patented invention is supplied from the U.S., knowing that the component will be combined in an infringing manner outside the U.S. The court ruled that the statute (i) had no tangibility requirement and (ii) was not limited to apparatus claims.
The proposed legislation would make it clear that a component "is a tangible item that is itself combined physically with other components to create the combination that is alleged to infringe."
This change would essentially overrule Eolas v. Microsoft.
Under the current statute, an employer has quite a bit of trouble filing a patent application when the inventor refuses to sign a declaration or is otherwise unavailable.
In order to file the application without the inventor’s help, the statute (35 U.S.C § 118) requires a proof that such action is “necessary to preserve the rights of the parties or to prevent irreparable damage.”
The proposed changes make it easier for the company to file the application without the inventor’s assistance. Specifically, the proposal allows an assignee (or a person owed an obligation to assign) to apply for a patent after showing that the action is “appropriate.”
The legislation proposes to completely rewrite 35 U.S.C. Section 102 to change (expand) the definition of qualifying prior art. A major change is to substantially eliminate the one-year grace period except in the case where public access of the invention was disclosed (directly or indirectly) by the inventor.
Under the new Section 102, a patent would not be available if:
The claimed invention was (1)(A) patented, described in a printed publication, or otherwise known more than one year before the effective filing date of the claimed invention, (1)(B) patented, described in a printed publication, or otherwise known before the effective filing date of the claimed invention, other than through disclosures made by the inventor or by others who obtained the subject matter disclosed directly or indirectly from the inventor; or (2) the claimed invention was described in a patent issued under section 151, or in an application for patent published under section 122(b), in a case in which the application or the patent names another inventor and the application was effectively filed before the effective filing date of the claimed invention.
According to the proposed statute, an invention becomes “known” when it is “reasonably and effectively accessible” and can be “accessed and comprehended without resort to undue efforts.” The proposal would eliminate 102(c)-(g). The need for these sections seemingly eliminated by the switch to a First-to-File system (supra).
The attached legislative proposal was prepared by the House Subcommittee on Intellectual Property chaired by Congressman Lamar Smith (R Tex). Although the proposal is merely a discussion draft at this point, it is expected that a parallel Bill will be introduced within the next few days. The Senate’s newly formed Subcommittee on Intellectual Property is scheduled to hold a hearing on the patent system April [25th]. It is quite possible that this proposal will serve as an agenda for the Senate hearings.
The proposed legislation includes changes to:
Creating a post-grant opposition procedures;
Willfulness: Increased damages may not be awarded based merely on the knowledge of a patent or its contents;
Over the past year, the AIPLA, IPO, Microsoft, and others have all been beating the patent reform drum — each with a separate agenda. This proposal appears to be an amalgamation of all the proposals — with enough controversial points to get most everyone up in arms.
Over the next few weeks, Marcus Thymian, Jennifer Swartz, and I will discuss the various sections of the proposal in a series of posts.
KSR International v. Teleflex (On Petition for Certiorari)
In January 2005, the CAFC decided Teleflex v. KSR — holding that when combining two or more references in an obviousness finding, there must be a suggestion or motivation to combine the teachings. This “teaching-suggestion-motivation test” has been a stalwart of Federal Circuit obviousness jurisprudence for twenty years. During that time, the Supreme Court has not heard a single obviousness case.
Now, KSR has petitioned the Supreme Court for a writ of certiorari. In its petition, the company makes a couple of interesting points that may push the High Court to accept the case:
In Anderson’s-Black Rock (1969) and Sakraida (1976), the Supreme Court held that “a combination which only unites old elements with no change in their respective functions” is precluded from patentability under 103(a). Under the Sakraida standard, which remains law, the Teleflex patent is arguably obvious.
With the emergence of Holmes Group, circuit splits will become more of a possibility in patent law. On this issue, the Federal Circuit has acknowledged the existence of a circuit split between itself and the Fifth Circuit. KSR points out that the split extends to other circuits as well. The other circuits have followed the Sakraisa standard while the CAFC sticks to its requirement of an explicit motivation to combine.
A consortium of five major corporations, including Microsoft, Cisco, and Hallmark have filed as amicus supporting the petition. Their brief argues that the current structured test for obviousness is too easy a hurdle for patentees and that the formalities of the test undermines courts ability to truly determine whether an invention is obvious to one skilled in the art.
In addition, Teleflex has filed its opposition to the petition — arguing that (1) obviousness is well settled law and need not be revisited; (2) the CAFC’s test is consistent with Graham; and perhaps most importantly (3) this case does not hinge on the obviousness issue.
In a much anticipated decision, Judge Richard Young of the Southern District of Indiana has ruled that Eli Lilly’s patent covering the drug Zyprexa is valid, enforceable and infringed. The patent is not scheduled to expire until 2011.
The well-written 224 page opinion reads like a biography of Patent No. 5,229,382, the Zyprexa patent. In particular, the court details the prosecution history of the patent and provides a full analysis of the prior art references that the generic manufacturers cited against the patent. In the end, court determined that the generics could not prove invalidity or unenforceability:
Defendants have failed to prove by clear and convincing evidence that claims 1, 2, 3, 7, 8, and 15 of the ’382 patent are invalid as anticipated under 35 U.S.C. § 102, as obvious under 35 U.S.C. § 103, under the double patenting doctrine, or as barred by prior public use under 35 U.S.C. § 102. Defendants have further failed to prove by clear and convincing evidence that the ’382 patent is unenforceable for inequitable conduct.
The defendant generic manufacturers had stipulated that if the ’382 patent is valid and enforceable, then their actions constitute infringement. Thus, the court found that their ANDA submissions constituted an act of infringement.
For years, the TechnoLawyer community has provided insightful e-newsletters with interesting and helpful content. Each week, I receive the TechnoLawyer intellectual property newsletter, known as “IP Memes,” that is written by intellectual property attorney Stephen Nipper. IP Memes is continually filled with important discussions that were often missed by mainstream news organizations.
Jack v. Department of Commerce (Fed. Cir. 2005) (05–3023) (NONPRECEDENTIAL).
Todd Jack is an Examiner at the US Patent Office (PTO). In 2000 Mr. Jack alleged to the FBI that he had been approached by employees of the PTO who “proposed that he join them in a scheme to sell patents and perform patent searches for persons outside the PTO for cash payments.” Mr. Jack made several other allegations regarding identity theft and bribe-taking by PTO employees and he brought his case to several agencies, including a congressional office, the Secret Service, Department of Commerce security officers, and the Office of Inspector General.
Later, in 2002, Mr. Jack’s supervisor gave him a written and oral warning that his performance was “unacceptable.” Another supervisor proposed that Mr. Jack be removed for “(1) Harassing and threatening behavior exhibited toward your supervisor and co-workers; (2) Making false statements concerning another employee; (3) Creating a hostile work environment; and (4) Inappropriate behavior in the workplace.”
In January 2003, the PTO sustained all the charges against Mr. Jack, but reduced the proposed removal to a 120–day suspension.
Mr. Jack filed an appeal at the PTO Board. The administrative judge assigned to the appeal held that the Board lacked jurisdiction and that Mr. Jack had failed to make a non-frivolous allegation that would be protected whistle-blowing activity.
On appeal again, the Court of Appeals for the Federal Circuit (CAFC) did not touch the issue of “whistle-blowing activity.” Rather, the appellate panel found that Mr. Jack’s claims regarding improper procedure at the Board were without merit, and thus, upheld the Board’s decision denying his appeal.
In her most recent patent opinion, Northern District of Illinois Judge Joan Lefkow took both parties to task for their failure to comply with “the straightforward Local Rules of the U.S. District Court for the Northern District of Illinois.”
Before determining whether a genuine issue of material fact exists with regard to either Tel-Lock’s claims or Jasco’s counterclaims, the court must wade through the parties’ Local Rule 56.1 filings. [Motion for Summary Judgment]. It is apparent to the court that both parties, Tel-Lock in particular, require instruction.
Judge Lefkow proceeded to detail the improper legal conclusions submitted, the failure to cite to supporting evidence, and the submission of affidavits filled with conclusory allegations.
In the end, the court granted partial summary judgment to the defendant, Jasco on the issue of price erosion, but denied its invalidity motion. In addition, the Court granted Tel-Lock’s motion to dismiss Jasco’s trademark counterclaim.
On April 20, 2005, the Supreme Court will hear Merck KGaA v. Integra to determine boundaries of the statutory safe harbor created by 35 USC 271(e)(1). The safe harbor immunizes would-be infringing activity when the activity is done while preparing an FDA application for drug approval. Attorneys for both Merck and Integra as well as for the U.S. Government are expected to present oral arguments.
Merck KGaA has now filed its reply brief that focuses on picking-apart Integra’s answer. In particular, Merck begins its argument with the statement that “everyone agrees” that “preclinical experiments reasonably related to an IND application are immune from patent infringement claims as clinical trials.”
Importantly, Merck challenged Integra’s procedural argument that the is “no present controversy.” This issue is one that could allow the High Court to completely avoid deciding the important statutory issues.
The SCOTUS Blog provides an excellent preview of the case here.
Michael Bowling’s infringement case against Hasbro was dismissed with prejudice by th Arizona district court after Bowling failed to properly serve Hasbro, basing its decision on FRCP 4(m) and 41(b). The district court then denied Bowling’s motion for reconsideration.
On appeal, the CAFC applied 9th Circuit law and reversed.
The CAFC first determined that FRCP 4(m) does not permit dismissal with prejudice:
Thus, Bowling is correct that the district court’s dismissal with prejudice could not be based on Rule 4(m).
Regarding FRCP 41(b), the CAFC found that the 9th Circuit “places strong emphasis on warning and consideration of less drastic alternatives.” Because the district court had only warned as to a Rule 4(m) dismissal, the appellate court determined that the warnings were insufficient to warrant a dismissal with prejudice.
As an aside, do not attempt to obtain attorney’s fees by citing a non-existent rule:
Hasbro argues that it is entitled to attorney’s fees and expenses incurred in this appeal under Federal Circuit Rule 47.7(1), even though it chose not to submit any substantive argument in support of the district court’s dismissal. Because no such rule exists, we assume that Hasbro is asserting an entitlement to attorney’s fees under Federal Circuit Rule 47.7(a)(1). In view of our disposition of this case, we see no reason to award Hasbro its attorney’s fees and expenses for this appeal. (Emphasis added).
Rhodia Chimie v. PPG Industries Inc., (Fed. Cir. 2005)
By Baltazar Gomez, Ph.D.
Rhodia is an international chemical company and the assignee of U.S. Pat. No. 6,013,234 (“the ‘234 patent”). The patent discloses and claims certain essentially spheroidal precipitated silica particulates. Rhodia markets “Micropearl” which is a silica particulate covered by the patent. PPG also makes three silica products, namely, Hi-Sil SC60M, SC72 and SC72C. Rhodia alleges that these products infringe claim 1 of the ‘234 patent.
The district court granted summary judgment for noninfringement in favor of PPG. On appeal, Rhodia argued that the district court erred in interpreting claim 1. The CAFC, however, affirmed the district court’s construction.
Claim 1 of the ‘234 patent partly reads as follows: Dry, dust-free and non-dusting, solid and homogeneous atomized precipitated silica particulates essentially spheroidal in geometrical configuration… (emphasis added)
In addition, the specification included examples tested both for flowability and dusting properties. Flowablity tests were performed by a pour test which compared the flowability of Micropearl with the prior art. The dusting tests were measured by the German DIN 53 583 standard (the “DIN test”).
During the district court’s claim construction hearing, PPG asserted that the phrase “dust-free and non-dusting” should be interpreted literally to mean “no dust cloud whatsoever.” Conversely, Rhodia argued that such a meaning was improper in view of the results of the pour test that showed production of some dust. Accordingly, Rhodia advocated construing “dust-free and non-dusting” to mean “very low dust.”
The district court was concerned, however, that Rhodia’s proposed definition of the phrase was relative and that such a definition would not meet the statutory requirement that the claims particularly point out and distinctly claim the invention. Thus, to resolve the perceived ambiguity of the phrase, the district court adopted a construction based upon the only meaningful guidance provided in the patent, namely the DIN test.
On appeal, Rhodia argued that the DIN test was not the only means by which to assess the amount of dust produced by the invention. Rhodia asserted that the pour test could also be used to determine the level of dustiness, and therefore, it is inappropriate for the district court to limit the phrase “dust-free and non-dusting” to the DIN test. Further, Rhodia cited statements made during prosecution of the ‘234 patent explaining that the pour test could be used to show the non-dusting and free-flowing properties of the ‘234 patent.
In affirming the district court’s construing of “dust-free and non-dusting”, CAFC noted that although the pour test may also provide evidence of dustiness, the results of the pour tests presented in the ‘234 patent were only identified as evidence of the products’ flowability. The CAFC further noted that there is no language in either the claims or the written description that taught the application of the pour test to determine the level of dustiness. Finally, CAFC stated that Rhodia’s statements made during prosecution cannot serve to fill such a gap. Thus, the CAFC concluded that the district court did not erred in limiting the scope of the claims by defining the phrase “dust-free and non-dusting” to the only disclosure in the patent.
Note: Dr. Baltazar Gomez is a scientific advisor at McDonnell Boehnen Hulbert & Berghoff LLP in Chicago. Dr. Gomez obtained his PhD in biochemistry from the University of Texas and researched retrovirology as a PostDoc at Cornell University.
Apotex v. Pfizer (Fed. Cir. 2005) (NONPRECEDENTIAL)
Apotex filed an ANDA to begin manufacturing a generic version of Pfizer’s patented drug quinapril. After Pfizer refused to file an infringement suit, Apotex filed a declaratory judgment action — hoping to prove that the patent was invalid.
At the district court level, this case fell in line with the recent CAFC decision Pfizer v. Tevaholding that an ANDA filing does not, by itself, create a reasonable apprehension of suit. In dissent in Teva, Judge Mayer argued that the statute does provide that an ANDA filing constitutes an act of infringement sufficient to trigger a justiciable controversy. As it turns out, Judge Mayer was also a panel member for the Apotex v. Pfizer appeal, along with Judges Plager and Gajarsa.
Less than one week before oral argument, and after learning that Judge Mayer would be a panel member, Pfizer covenanted not to sue Apotex for infringement of U.S. Patent No. 4,743,450. In their decision, the Appellate Panel unanimously found that the covenant not to sue was determinative:
A covenant not to sue, such as that provided by Pfizer, moots an action for declaratory judgment. . . . As a result, the judgment and opinion of the district court are vacated and the case is remanded with instructions to dismiss for lack of jurisdiction.
During oral arguments, the Judges were clearly displeased with Pfizer’s litigation strategy. Although Pfizer won the day, the court did award costs to Apotex.
Nazomi Communications v. ARM Holdings (Fed. Cir. 2005)
In a dispute over a patented “Java hardware accelerator” for translating Java bytecode into native instructions for a CPU, the district court construed the claim term “instruction” and found that ARM’s accused device did not infringe.
On appeal, the Federal Circuit found that the lower court had not been detailed enough in its claim construction ruling:
This court’s review of a district court’s claim construction, albeit without deference, nonetheless is not an independent analysis in the first instance. Moreover, in order to perform such a review, this court must be furnished "sufficient findings and reasoning to permit meaningful appellate scrutiny." Gechter v. Davidson, 116 F.3d 1454, 1458 (Fed. Cir. 1997). This requirement for sufficient reasoning applies with equal force to issues of law, such as claim construction, and issues of fact, such as infringement. Id.
This opinion was written by Judge Rader and the panel members include Chief Judge Michel and Judge Proust. Harold Wegner has noted, and I tend to agree, that this opinion appears to be written as a foreshadow of where Rader would take the Phillips decision — a decision that not expected until late this summer.
Space Systems/Loral v. Lockheed Martin (Fed. Cir. 2005) 
Eli Lilly v. Zenith Goldline (N.D. Ill. 2005). 
In her most recent patent opinion, Northern District of Illinois Judge Joan Lefkow took both parties to task for their failure to comply with “the straightforward Local Rules of the U.S. District Court for the Northern District of Illinois.”
Bowling v. Hasbro (Fed. Cir. 2005) (04–1364). 
Rhodia Chimie v. PPG Industries Inc., (Fed. Cir. 2005) 
Apotex v. Pfizer (Fed. Cir. 2005) (NONPRECEDENTIAL)