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Court: Pepcid Complete Generic Does not Provide “Immediate Relief” and Therefore Does not Infringe

Patent

by Dennis Crouch

This case provides an example of the all-elements-rule of infringement.  Here, the patentee failed to prove that the accused infringer each-and-every element of the claimed invention.  Here, the failed element was providing “immediate relief” after administration of the generic Pepcid Complete  

Brigham & Women’s Hospital, Inc., v. Perrigo Company (Fed. Cir. 2019) (non-precedential)

Brigham’s U.S. Patent 5,229,137 covers a method of treating heartburn using H2-blockers and antacids. Both ingredients were known in the art to provide relief with antacids having a immediate-but-fleeting action and  H2-blockers providing slower but sustained relief.  The invention here is to use both drugs at once and – surprise – the result is “immediate and sustained relief.”

The asserted claims are directed to a “method of providing immediate and sustained relief” by providing an effective amount of antacid and H2-blocker “for providing the human with immediate and sustained relief from pain, discomfort and/or symptoms associated with episodic heartburn.”  The claims go on to require that “the immediate and sustained relief” of the combined treatment must last longer “than when the human is orally treated with only the antacid” and must be more immediate “as when the human is orally treated with only the histamine H2 -receptor antagonist.”

The specification also particularly defines the term: “immediate and sustained relief:”

It means herein immediate, temporary and sustained relief which starts within about 5-10 minutes following ingestion of the active ingredients and continues and remains constant for at least about 4-6 hours after ingestion of the active ingredients.

Johnson & Johnson exclusively licensed the patent and listed it in the Orange Book listing for Pepcid Complete.  However, when Perrigo filed its generic ANDA and Paragraph IV certification, J&J chose not to file suit, but rather sued on a different listed patent and lost.  At that time, the ‘137 patent was also removed from from the FDA Orange Book listing. (I don’t know why).

In the present case, the Massachusetts jury sided with the patent holder — finding the patent enforceable and infringed and awarding $10 million in past damages (the patent expired in 2012).  However, in a post verdict decision the district court rejected the jury verdict — holding instead that no reasonable jury could have found infringement based upon the evidence presented.

Looking here at the infringement analysis, the patentee argued that the accused product included the same ingredients as Pepcid Complete, which is covered by the patent claims.  In this copy-cat situation, however, the decision maker has to be careful to focus on the patent claims, not simply compare the copied products.  Here, the district court considered the clinical evidence presented at trial and found that it “did not demonstrate that Pepcid Complete provided immediate relief from episodic heartburn.”  In particular, the evidence showed relief within 15 minutes, but not the 5-10 minutes required by the definition of immediate.

On appeal, the Federal Circuit has affirmed. Although the patentee presented evidence of very rapid change in esophageal pH after taking the drug (within 5-10 minutes), the court found that a change in esophageal pH does not directly correlate with immediate relief of episodic heartburn.

At most, the study suggests that Pepcid Complete might provide immediate and sustained relief; such speculative data, however, cannot sustain Brigham’s burden of proof.

A related study did show fairly-rapid action, but the shortest period measured was 15 minutes.

There is no dispute that adequate relief first measured at 15 minutes after administration is a parameter different from relief starting 5–10 minutes after administration. . . . As Studies 110 and 127 did not measure the result that Brigham claimed in the ’137 patent, we agree with the district court that they do not support the jury verdict. . . . Because only speculation supports Brigham’s contention that data showing adequate relief at 15 minutes implies that relief started within 5–10 minutes, it cannot sustain the jury verdict.

I’ll also note that the the inventor of the ‘137 patent (Wolfe) participated at trial as an expert witness.  Wolfe testified that he took the Perrigo product and that it worked on him within five to ten minutes.  On appeal, the Federal Circuit rejected that statement as “uncorroborated, conclusory, and interested testimony … insufficient to carry Brigham’s burden of proof and to sustain the jury verdict.”

 

Hikma Case Set for Supreme Court Consideration

Patent

by Dennis Crouch

Hikma Pharmaceuticals USA Inc. v. Vanda Pharmaceuticals Inc. (Supreme Court 2019)

Briefing is now complete in this important eligibility case pending before the Supreme Court. Hikma’s petition presents the following question:

Whether patents that claim a method of medically treating a patient automatically satisfy Section 101 of the Patent Act, even if they apply a natural law using only routine and conventional steps

Hickma’s question clearly mischaracterizes the Federal Circuit opinion – a common approach these days.  In its opposition brief, the patentee Vanda calls-out the intentional error:

Hikma’s Petition wrongly asserts that the Federal Circuit declared all method-of-treatment claims to be “automatically” patent-eligible under Section 101. . . [Hickma’s] Question is not presented by the decision
below or any other decision.

Although Hickma does a good job of nit-picking, the underlying reality is important — the Federal Circuit’s decision in Vanda is not easily reconciled with its Ariosa decision or the Supreme Court’s decision in Mayo v. Prometheus.  And, the Federal Circuit and USPTO have effectively green-lighted patents on methods of treatment that would be ineligible if recharacterized as methods of diagnosis or creating a treatment plan.

The amicus briefs in this case all focus on the same issue — arguing that the Federal Circuit’s Vanda decision conflicts with Mayo and Flook. The Law Prof brief explains:  “The Federal Circuit’s decision effectively overturns this court’s precedents, thwarts the proper development of patent eligibility law, and will lead to countless improperly issued patents.”  The Law Professor Brief was filed by Stanford’s IP Clinic – although neither Mark Lemley nor Lisa Larrimore Ouellette signed-on.  Professors Josh Sarnoff (DePaul) and Katherine Strandburg (NYU) substantially drafted the brief.  Top pharma-patent litigator Douglass Hochstetler (KelleyDrye) filed the AAM brief.

= = =

In a previous post, I explained that Vanda’s drug dosage claims that have two basic steps:

  1. Determining whether a patient is likely a poor metabolizer of the drug iloperidone based upon DNA analysis (i.e., determine if the patient has has the CYP2D6 genotype)
  2. Administering iloperidone at a lower dose to predicted poor metabolizers in order to reduce the risk of “QTc prolongation” for poor metabolizers.

In the case, iloperidone was already known as a drug treatment and it was also known that some folks were poor metabolizers in a way that created the particular health risk and that a lower dosage is still effective for poor metabolizers (since the drug stays in the body longer).  A remaining problem solved by the inventors was how to predict who should get the low dosage.  The core discovery here is that a genetic difference substantially explains the risk.  The inventors made that important discovery and then implemented it with straightforward administration steps.  The question then is whether this approach is patent eligible.

No Sovereign Immunity for Patent-Asserting State University

Patent

by Dennis Crouch

University of Florida Research Foundation, Inc. v. General Electric Company (Fed. Cir. 2019)

UF’s asserted patent is titled “Managing Critical Care Physiologic Data Using Data Synthesis Technology.” U.S. Patent No. 7,062,251.  From the patent title, keen Patently-O readers will recognize a potential eligibility problem.  N.D.Fla. District Court Judge Mark Walker dismissed the case on a R.12(b)(6) motion without taking any evidence — finding the asserted claims ineligible as a matter of law. On appeal, the Federal Circuit has affirmed.

Sovereign Immunity: Before reaching the merits of the eligibility claim, the Federal Circuit first addressed Florida claim of Sovereign Immunity under the 11th Amendment of the U.S. Constitution.  In a prior decision, the PTAB refused to consider an inter partes review (IPR) challenge of the ‘251 patent based upon sovereign immunity grounds. IPR2016-01275 (note – this is a questionable decision under St. Regis Mohawk).

The 11th Amendment has been seen as quite strong — preventing the Federal Courts from hearing “any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” U.S. Const. amend. XI.

The for UF here is Waiver — UF filed the infringement lawsuit against GE and GE raised invalidity as a defense.  The Federal Circuit has clear precedent that “a state waives its Eleventh Amendment immunity when it consents to federal court jurisdiction by voluntarily appearing in federal court.” Regents of the Univ. of N.M. v. Knight, 321 F.3d 1111 (Fed. Cir. 2003).  As the court explained in a prior case, “the Eleventh Amendment applies to suits ‘against’ a state, not suits by a state.” Regents of the Univ. of Cal. v. Eli Lilly & Co., 119 F.3d 1559, 1564–65 (Fed. Cir. 1997).

Eligibility as a Defense: As part of its holding, the court continued-on to explain that lack-of-eligibility is a proper defense:

Even if § 282 did not extend to a § 101 eligibility challenge, such a challenge would still be a defense to a claim
of infringement. [Since w]e and the Supreme Court have long treated § 101 eligibility as a “condition[] of patentability” alongside §§ 102 and 103.

An interesting aspect of the court’s explanation here is the two citations that it uses:

  • Versata Dev. Gr., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1330 (Fed. Cir. 2015) (“It would require a hyper-technical adherence to form rather than an understanding of substance to arrive at a conclusion that § 101 is not a ground available to test patents.”);
  • Aristocrat Techs. Austl. PTY Ltd. v. Int’l Game Tech., 543 F.3d 657, 661 (Fed. Cir. 2008) (“It has long been understood that the Patent Act sets out the conditions for patentability in three sections: sections 101, 102, and 103.”).

The “hyper-technical” admonishment of Versata can be juxtaposed to the hyper-technical holding in Aristocrat holding the improperly reviving an abandoned patent cannot be a defense in patent cases because it does not fall within Section 282. Id. (“The salient question, then, is whether improper revival is “made a defense” by title 35. We think that it is not.”)

Eligibility Analysis: Moving now to the merits, the court looked at representative claim 1 that is directed toward “a method of integrating physiologic treatment data” and that requires steps of :

  • receiving physiologic treatment data from at least two bedside machines;
  • converting [the] data from a machine specific format into a machine independent format within a [remote] device …;
  • performing [a] programmatic action involving [the] data; and
  • presenting results from said programmatic actions upon a bedside graphical user interface.

The court explained this method as automating pen-and-paper methods — i.e., “do it on a computer.”

This is a quintessential “do it on a computer” patent: it acknowledges that data from bedside machines was previously collected, analyzed, manipulated, and displayed manually, and it simply proposes doing so with a computer. We have held such claims are directed to abstract ideas. . . . That the automation can “result in life altering consequences,” is laudable, but it does not render it any less abstract.

In examining the patent, the court was unable to identify any specific technological improvements but rather the particular key features of the system are defined in functional terms.  Thus, in addition to being directed to an abstract idea, the claims also fail Alice step two as merely reciting “well-understood, routine, conventional activit[ies]. . . . Here, the claims do no ‘more than simply instruct the practitioner to implement the abstract idea . . . on a generic computer.’ Quoting Alice.

Invalidity Affirmed.

Google v. Oracle Filings Thus Far

Patent

Google LLC, Petitioner v. Oracle America, Inc., SCT Docket No. 18-956

Questions Presented:

  1. Whether copyright protection extends to a software interface.
  2. Whether, as the jury found, petitioner’s use of a software interface in the context of creating a new computer program constitutes fair use.

Party Documents (more…)

Why 65 Intellectual Property Scholars Filed an Amicus Curiae Brief in Support of Google’s Petition for Cert in the Oracle Case

Patent

Guest Post by Pamela Samuelson, Berkeley Law School.  Prof. Samuelson has been involved with digital copyright law for the past 35 years. She recently led an amicus effort pushing against the Federal Circuit’s enforcement of Copyrights on the method call names (API) for Java. – DC

[Read the Amicus Brief]

In January 2018, Google filed a petition to ask the U.S. Supreme Court to review two adverse rulings by the Court of Appeals for the Federal Circuit in the Oracle Am. Inc. v. Google Inc. case. The first was the Federal Circuit’s 2014 decision overturning a district court ruling that several thousand declarations that Google used for its Android platform, which it derived from 37 of 166 Java application program interface (API) packages, were unprotectable by copyright law. Although disagreeing with the lower court’s copyrightability analysis, the Federal Circuit remanded the case, saying that there was a triable issue of fact on Google’s fair use defense. In the spring of 2016, Google’s fair use defense prevailed before a jury. The second adverse ruling was the Federal Circuit’s decision that no reasonable jury could have found fair use. Google’s petition asks the Court to review both the copyrightability and fair use rulings. Oracle will be filing its brief opposing Supreme Court review later this spring. Amicus curiae (friend of the court) briefs, whether in support of Google’s petition or in support of neither party, were filed this week.

One of the amicus curiae briefs supporting Google’s petition on the copyrightability issue was co-authored by me and my Berkeley colleague Catherine Crump, who is the Director of the Samuelson Law, Technology and Public Policy clinic at Berkeley Law School. Although the Supreme Court denied Google’s previous petition seeking review of the Federal Circuit’s copyrightability ruling, our amicus brief on behalf of 65 scholars of intellectual property law has asked the Court to grant the petition because, as the brief explains, we

are alarmed that the Federal Circuit’s copyrightability ruling has deepened splits in circuit court interpretations of several major copyright doctrines as applied to computer programs. That ruling disrupted the relative equilibrium of more than two decades of software copyright precedents and upset settled expectations within the software industry. Th[e] Court’s guidance is urgently needed to address and resolve circuit conflicts affecting this $564 billion industry. [Our] sole interest in the case lies in [our] concern for the proper application of traditional principles of copyright law to computer programs. Because amici have devoted [our] careers to understanding the balancing principles built into copyright and other intellectual property laws, [our] views can aid the Court in resolving the important issues presented by the Petition.

While there is much that IP scholars will have to say on the merits if the Court grants the petition, our brief concentrates on numerous respects in which the Federal Circuit’s ruling is in conflict with Supreme Court and other appellate court rulings.

Before presenting the brief’s summary of our argument, it is worth noting that the district court gave three reasons for holding that the Java API declarations were unprotectable by copyright law: first, because they constituted an unprotectable method or system under 17 U.S.C. § 102(b), second, because the merger doctrine precluded copyright protection for the declarations as there was, in effect, no other way to say them, and third, because the declarations were unprotectable under the words and short phrases doctrine. The Federal Circuit rejected all three rationales in its copyrightability ruling.

While our brief focuses primarily on the merger issue because the Federal Circuit’s interpretation of that doctrine is so clearly contrary to Supreme Court as well as other appellate court precedents, it also identifies the proper application of § 102(b) method/system exclusion in software copyright cases as another cert-worthy question. In addition, the brief touches on the words and short phrases issue, albeit less extensively.

We reprint the Summary of Argument below. The entire brief is available from the Supreme Court’s website [LINK]

= = = =

SUMMARY OF ARGUMENT

The Federal Circuit’s copyrightability ruling in Oracle has deepened splits in circuit court interpretations of several major copyright doctrines as applied to computer programs.

This brief makes three principal points. First, the Federal Circuit’s merger analysis is in conflict with this Court’s ruling in Baker v. Selden, 101 U.S. 99 (1880), and decisions by the First, Second, Fifth, Sixth, and Eleventh Circuits. Second, the Federal Circuit’s interpretation of the scope of copyright protection available to computer programs is at odds with Baker and decisions of the First, Second, Tenth, and Eleventh Circuits. Third, the Federal Circuit’s interpretation of the words and short phrases doctrine cannot be reconciled with holdings of the Third and Sixth Circuits.

The merger doctrine holds that expressions in works of authorship are unprotectable by copyright law when, as a practical matter, there is only a limited number of ways to express an idea, fact, or function. When ideas, facts, or functions, in effect, “merge” with expression, copyright protection will be withheld from the merged elements. The merger doctrine fosters socially beneficial competition and ongoing innovation as well as promoting the ongoing progress of science and useful arts, as the Constitution commands. U.S. Const. art. I, § 8, cl. 8.

The Federal Circuit’s copyrightability ruling conflicts with Baker in three respects: first, because the Federal Circuit concluded that merger can only be found if a first author had no alternative ways to express an idea when creating the work; second, because it held that constraints on a second comer’s design choices are never relevant to merger; and third, because it ruled that merger is only a defense to infringement, and never raises a copyrightability issue.

Post-Baker cases from the First, Second, Fifth, Sixth, and Eleventh Circuits have conceptualized and applied the merger doctrine more broadly than the Federal Circuit. These idea/expression, fact/expression, and function/expression merger cases have resulted in uncopyrightability rulings, which contradict the Federal Circuit’s holding on merger.

Beyond merger, the Federal Circuit’s interpretation of the scope of copyright protection available to software innovations conflicts with the rulings of other circuits in four respects. First, the Federal Circuit’s interpretation of the exclusion of methods and systems from copyright’s scope under 17 U.S.C. § 102(b) is contrary to the First Circuit’s interpretation in Lotus Development Corp. v. Borland International, Inc., 49 F.3d 807 (1st Cir. 1995), aff’d by an equally divided Court, 516 U.S. 233 (1996). Second, several circuit courts have ruled in favor of compatibility defenses in software copyright cases. Only the Third and Federal Circuits have rejected them. Third, the Federal Circuit’s conception of “structure, sequence, and organization” (SSO) of programs as protectable expression as long as it embodies a modicum of creativity conflicts with the Second Circuit’s landmark decision, Computer Associates International, Inc. v. Altai, Inc., 982 F.2d 693 (2d Cir. 1992). Altai rejected the conception of SSO as determinative of protectable expression. Id. at 706. Fourth, the Federal Circuit’s assertion that copyright and utility patents can provide overlapping protection to program SSO is in conflict with Baker as well as Tenth and Eleventh Circuit decisions.

There is, moreover, conflict among the circuits concerning the protectability of “words and short phrases.” The District Court denied Oracle’s claim in part based on its view that names and short phrases are not copyrightable, but the Federal Circuit held that words and short phrases, such as the names of individual Java declarations, could, if original, be eligible for copyright protection. However, the Third and Sixth Circuits have denied similar claims in cases involving identifiers such as names and numbers. Granting the Petition would enable this Court to resolve this split as well.

Walker-Process Antitrust Case is Back Before the Federal Circuit

Patent

by Dennis Crouch

The Court of Appeals for the Federal Circuit (CAFC) has exclusive appellate jurisdiction over any “appeal from a final decision of a district court of the United States . . . in any civil action arising under . . . any Act of Congress relating to patents.”  28 U.S.C. § 1295(a)(1).  “Arising under” jurisdiction clearly include patent cases, but it also includes a “special and small category” of cases that don’t directly arise under the Patent Act, but involve patents decisions at such a deep level that it should be deemed a patent case.   In drawing these lines, a clear data point came in Gunn v. Minton, 133 S. Ct. 1059 (2013).  In that case, the Supreme Court was faced with a patent attorney malpractice case that would require determination of various fundamental patent law issues.  In its decision, the court nevertheless ruled that it did not arise under the patent laws because the patent issues were not “substantial.” In particular, the court wrote that “[a]lthough such  cases may necessarily raise disputed questions of patent law, those cases are by their nature unlikely to have the sort of significance for the federal system necessary to establish jurisdiction.”

The pending appeal between Xitronix and KLA involves a single cause of that stems from Xitronix allegation that KLA fraudulently obtained its U.S. Patent No. 8,817,260 with claims identical-to or broader than claims of KLA’s previously invalidated U.S. Patent No. 7,362,441.  Although the issue here requires development of a core patent law issue (patent office procedure), the actual cause of action is monopolization in violation of the Sherman and Clayton Acts (Walker Process monopolization).

The district court dismissed the case on summary judgment — finding no evidence of fraud.  Rather than fraud by the applicant, the district court suggested that the fault lies with a power-hungry PTO:

[T]he Court suspects the examiner was in fact aware of the Court’s [prior invalidity] holding but chose to ignore it. It would not be the first time the PTO, an administrative agency, overrode a final judgment of an Article III court, and it will likely not be the last. (Order).

The Patent Office can now come to a different conclusion than district court[s], the circuit court, [the] Supreme Court, for that matter, and until the Supreme Court or the Congress suggests that, there’s no stability in patent law. . . . It’s an egotistical war between the patent office and the circuit court for sure. But they’re not bound by a jury verdict. They’re not bound by a judge’s judgment. They made that clear, expressly in writing.

On appeal, the Federal Circuit did not consider the merits of the district court decision but rather found that it lacked jurisdiction — holding that the case did not “arise under” the U.S. patent laws. Xitronix Corp. v. KLA-Tencor Corp., 882 F.3d 1075 (Fed. Cir. 2018), en banc rehearing denied at Xitronix Corp. v. KLA-Tencor Corp., 892 F.3d 1194 (Fed. Cir. 2018) (over dissent by Judge Newman).  Lacking its own special appellate jurisdiction, the Federal Circuit transferred the case to the appropriate regional circuit court of appeals – the the United States Court of Appeals for the Fifth Circuit.

The Federal Circuit’s determination was a precedential change based upon the Gunn decision.  Prior to this decision, Walker Process monopolization claims have been seen as triggering jurisdiction of the Federal Circuit (if patent law questions are at issue).  The Fifth Circuit’s last time such a case was 1975. Becton, Dickinson, & Co. v. Sherwood Med. Indus., Inc., 516 F.2d 514 (5th Cir. 1975);

In its recent decision, the Fifth Circuit has also refused jurisdiction — finding it “implausible that we are the proper court to decide this appeal.” The “implausible” statement is important here because a transferee circuit must accept the transfer if it is at least “plausible.”

An important aspect of the decision here is an analysis of Gunn. In Gunn, the Supreme Court focused on protecting our system of Federalism and substantial independence of state law.  However in Xitronix, the debate is not about whether the case should be heard by a state or federal court — rather, the debate is about which federal appellate court will hear the case.  The 5th Circuit opinion went on to largely follow Judge Newman’s dissenting analysis — finding that the patent issues to be decided in the case are clearly substantial and that there are no substantial non-patent issues to divert the case.

Christiansen v. Colt involved the same double-transfer with the Federal Circuit eventually deciding despite its lack of statutory jurisdiction. The court explained at the time:

We have again concluded that this court has not been granted jurisdiction over an appeal from this type of summary judgment in an antitrust case, and that this court acted in the interest of justice when it transferred this appeal to the regional circuit court. However, now that the transferee court has transferred the case back to this court, new considerations arise.

The “interest of justice” provision in 28 U.S.C. § 1631 was intended to require a balancing of a transfer to a court having jurisdiction against dismissal for lack of jurisdiction in the transferring court. Nonetheless, the present special circumstances equally implicate the need to act in the interest of justice. Our action here is, accordingly, strictly limited to these circumstances, in which we balance the institutional costs of deciding the case on the merits against the needs of the parties.

Because the Seventh Circuit and this court have each determined that the other has jurisdiction, it would at first appear that certification to the Supreme Court would be warranted, pursuant to, pursuant to 28 U.S.C. § 1254(3).

[Note – Section 1253(3) has been shifted to 1254(2), but allows for certification]. I expect that this case will likely follow a parallel path unless members of the court shift their views based upon the Fifth Circuit decision.

Invention-Theft Charges against Goodyear Revived by the Federal Circuit

Patent

by Dennis Crouch

Coda Development v. Goodyear Tire & Rubber (Fed. Cir. 2019)

Coda and Goodyear cooperated in a project to commercialize self-inflating tire technology invented by the CEO of Czech-based Coda (Hrabal).  Coda shared its information as well as functional prototypes with Goodyear representatives, including Robert Benedict.  At the meeting Benedict photographed the prototype without permission (after asking to be left alone for a moment).  All of this sharing was done under a non-disclosure agreement between the companies.  Benedict then ghosted and did not return attempted contacts from Coda.

Self-Inflating-Tire: Pause here to note that this is pretty neat technology. As a tire rolls along, its sidewalls are repeatedly squashed and then expanded in a rotating procession. That squash-expand cycle is used here to power a simple air pump that keeps pressure in the tires.

Back to the Story: One month after their meeting with Coda, Goodyear applied for a patent titled “Self-Inflating Tire Assembly” Naming Benedict and Mr. Losey as inventors.  The patent issued as U.S. Patent No. 8,042,586 “with claims covering the allegedly novel, proprietary, and confidential information Coda disclosed to Goodyear.”

Coda was clued-in to what happened at a later date from an email from a former Goodyear employee stating:

I am retired now from Goodyear and see in the news today that they have copied your SIT. Unfortunate.  I thought China companies were bad.

Coda sued, requesting to add Hrabal as inventor on the ‘586 patent and delete Benedict and Losey.  See 35 U.S.C. 256. Coda also identified eleven other Goodyear patents included confidential technology invented by Hrabal, and requested that he be added as inventor on those as well. The complaint also alleges trade secret misappropriation.

Although the story might sound sounds compelling, the district court still dismissed the complaint for failure to state a claim.  The crux of the dismissal centers on an additional piece of evidence – 2008 article published by Hrabal that, according to the district court found, disclosed the information that Coda “now claims was secret when disclosed to Goodyear in 2009.”  The district court denied Hrabal’s request to amend its complaint to provide details regarding the differences between the published article and the information taken by Goodyear.

On appeal, the Federal Circuit has vacated the dismissal — finding that Hrabal’s complaint sets out a plausible claim for correction of inventorship. In particular, the court held that the facts outlined above “allow the reasonable inference that Mr. Hrabal conceived the invention of the ’586 patent and that Messrs. Benedict and Losey did not” and that Hrabal should be considered a joint inventor.  The appellate panel identified the lower court’s error as procedural. Namely, in its motion-to-dismiss, the court considered evidence outside of the pleadings (the 2008 publication), but did not permit Hrabal to present explanatory evidence. Under motion-to-dismiss rules, [i]f a court does consider material outside the pleadings, the motion to dismiss must be treated as a motion for summary judgment under Rule 56 and all parties must be given a reasonable opportunity to present all material pertinent to the motion.” See Fed. R. Civ. P. 12(d).

In this case, the parties “hotly” dispute whether the 2008 publication actually discloses the alleged novel trade secrets – and so a judicial conclusion is inappropriate at the pleadings stage.

The district court erred in considering the Hrabal article for this purpose without converting Defendants’ motion to dismiss into one for summary judgment and giving Plaintiffs a reasonable opportunity to present all pertinent material.

On remand, the district court will need to reconsider these issues and must also permit the plaintiff to amend its complaint in order to clarify the trade secrets and inventive elements at issue.  “We …. aware of no reason why they should not be permitted to file their proposed amended complaint on remand.”

= = = =

The district court had also dismissed the trade-secret claims as time-barred based upon the Ohio statute of limitations that requires a claim filed “within four years after the misappropriation is discovered or by the exercise of reasonable diligence should
have been discovered.” Ohio Rev. Code § 1333.66.  On appeal, the court also found substantial factual dispute – making this an issue not appropriate for dismissal on the pleadings.

Defendants ask us to infer, from the complaint itself, that Plaintiffs should have begun investigating in 2009 and that, had they done so, they would have discovered the application leading to the ’586 patent as of its publication
date eighteen months later. Defendants argue that the only reasonable inference to be drawn is against Plaintiffs. We disagree. Plaintiffs might have assumed Goodyear lost interest in the technology, given its previous failed investment. Or they might have thought that Goodyear would honor the nondisclosure agreement.

On remand, the court must allow this issue to proceed past the pleadings stage.

Lessons to Learn? Federal Circuit Disqualifies Firm Adverse to Members of Corporate Family of a Client

Ethics, Patent

By David Hricik, Mercer Law School

In an order granting motions to disqualify — rather than analyzing with discretion a decision of a district court — the Federal Circuit disqualified Katten Muchin Rosenman LLP (“KM”) from representing parties in appeals styled Dr. Falk Pharma GMBH v. Salix Pharma. Int’l., Inc. and Salix Pharma., Inc. v. Mylan Pharma., Inc., available here.

The case involves a number of issues, some of which are obscured by discussion of agreements that, in large measure, turned out to not affect the court’s analysis.  To be clear, this post simplifies the case a lot, but I’ll mention a few weeds at the end.

The story begins in 2001, when a lawyer at KM began to represent Bausch & Lomb (“Bausch”) in trademark matters.  Those representations, apparently a series of off-and-on work (as is common) continued for years.  While it was disputed whether that work continued, at the time of the motion to disqualify, KM was representing Bausch in trademark litigation.  Plainly, the firm could not be adverse to Bausch.

Meanwhile, two lawyers at Alston & Bird (“A&B”) were representing Mylan in patent suits and an IPR.  A&B was plainly representing Mylan, and so could not be adverse to it. Those matters largely wrapped up and were, with one exception, fully briefed before the Federal Circuit.

Then, in May 2018, after all but one of the patent cases and IPR proceeding had been fully briefed before the Federal Circuit, the lawyers who were representing Mylan left A&B for KM.  They then entered appearances for KM in those appeals. (To be clear, some motion practice occurred in the district court before final judgment, but that was stayed and the motions dealt with by the Federal Circuit.)

Thus, as things stood, KM lawyers were representing Mylan in several patent appeals.  Bausch, KM’s client, was not a party to those appeals.

The motions to disqualify filed in the Federal Circuit were based upon the fact that Bausch was a corporate affiliate of parties who were adverse to Mylan in the appeals.  Thus, the motion asserted KM’s representation of Bausch precluded it from being adverse to Bausch’s afiliates in the Mylan matters.  Among the affiliates in the Mylan matters was Bausch’s ultimate parent, Valeant-CA.

So, after motions to intervene and other things, the question the Federal Circuit faced was whether KM could be adverse to a current client’s ultimate (but indirect) parent corporation and its other affiliates, also indirectly related.  Judge O’Malley held it could not.  She gave two rationales for holding that representing Bausch precluded KM from being adverse to the entities involved in the Mylan appeals.

First, the Outside Counsel Guidelines were part of an engagement letter relating to KM’s representation of Bausch that identified Valeant-CA as the client.  KM was representing Mylan against Valeant-CA.  Further, language in the engagement letter indicated that corporate affiliates were also the client, and some affiliates were adverse to Mylan, and so KM was adverse to them.  Thus, KM was adverse to a current client by operation of the OC Guidelines and engagement letter.

Second, Judge O’Malley assumed, arguendo, there was some ambiguity, and relied upon principles developed by the Second Circuit (the Mylan patent cases were in the Third and Fourth, and from the PTAB, but she reasoned those jurisdictions would follow the Second Circuit’s lead), which set out a multi-factor test to determine whether, if there is no agreement, affiliates of a client should be considered to be the client for conflicts purposes, which include: “(i) the degree of operational commonality between affiliated entities, and (ii) the extent to which one depends financially on the other.” Based upon those factors, and the affidavit from the movants showing the interrelationships, she held that by representing Bausch, KM was representing all of the various entities.

After concluding that KM was adverse to a current client, Judge O’Malley noted that there is a split on whether being adverse to a current client automatically requires disqualification or, instead, leads to equitable balancing.  She concluded that, even looking at the equities, disqualification was warranted.

Why does the case matter?

First, if client identity is not clear, a firm’s representation of an entity can result in inability to be adverse to all parts of a far-flung enterprise.  Further, leaving client identity unclear subjects the firm, and existing and future clients, to the multi-factor test, which hardly helps practical planning.

Second, Judge O’Malley in a footnote noted that Federal Circuit law does not apply to ethical issues. Here, she noted that the because the appeals were from New Jersey and Virginia, those regional circuit’s laws applied. The rules are not always the same. Further, although she noted one appeal was from an IPR from the PTAB, she stated — incorrectly — that the USPTO disciplinary rules apply.  But motions to disqualify in the USPTO are not governed by those rules.

Third, her comments about adversity should give pause to patent practitioners.  While obviously being across the “v.” on an appeal is adverse, she observed that “we look to the total context, and not whether a party is named in a lawsuit, to assess whether the adversity is sufficient to warrant disqualification.” (Internal quote marks and citation omitted).

Fourth, and finally, while here disqualification does not appear to have caused significant disruption — briefing in all but one of the cases was done, and co-counsel seems to have been involved — that is not always the case.  Disqualification can hurt clients, and severely.

So, be careful out there.

Cancelling a TM License via Bankruptcy

Patent

by Dennis Crouch

This week the Supreme Court heard oral arguments in Mission Product Holdings v. Tempnology.  The setup for the case involves a trademark licensor who filed for bankruptcy.  The basic question is whether that license is an executory contract that can be rejected by the bankruptcy trustee. And, if it is rejected, does the licensee retain any rights to use the mark — is the rejection equivalent to termination of the license?

11 U.S.C. § 365, indicates plainly that “the [bankruptcy] trustee, subject to the court’s approval, may assume or reject any executory contract or unexpired lease of the debtor.”  In the 1985 Lubrizol decision, the 4th Circuit held that a “technology license” fit within § 365 and thus could be rejected by the Trustee — leaving a former licensee with no right to continued use of the technology.  Congress then legislatively overruled Lubrizol — effectively allowing “intellectual property” licensees to retain license rights even after a rejection by the trustee.  The problem for trademark holders is that the statute specifically defines “intellectual property” to include patents, copyrights, and trade secrets — but not trademarks.  11 U.S.C. § 101.  Without the express protection of § 365(n), the trademark licensee has to fall-back on more basic licensing principles and the meaning of “rejection” under the Bankruptcy Code.

Setup:

  • TM-Owner licenses to TM-User
  • TM-Owner declares bankruptcy and “Rejects” the license (a breach of contract under § 365(g)).
  • Following rejection, what rights do the TM-User retain?

In Sunbeam Products, Inc. v. Chicago Manufacturing, LLC, 686 F.3d 372 (7th Cir. 2012), the Seventh Circuit rejected Lubrizol and held that the TM-User gets to keep using the mark even after rejection of a TM license.  Here, however, the First Circuit followed Lubrizol and held that the bankruptcy rejection cancelled all of the licensee’s rights to use the mark under the license agreement.

The issue in the case is presented as follows:

Issue: Whether, under Section 365 of the Bankruptcy Code, a debtor-licensor’s “rejection” of a license agreement—which “constitutes a breach of such contract,” 11 U.S.C. § 365(g)—terminates rights of the licensee that would survive the licensor’s breach under applicable non-bankruptcy law.

DANIELLE SPINELLI argued on behalf of the licensee MISSION PRODUCT but split time with ZACHARY TRIPP from the Solicitor General’s Office who supported the petition. DOUGLAS HALLWARD-DRIEMEIER argued on behalf of the bankrupt TM-Owner TEMPNOLOGY, LLC, NKA OLD COLD LLC.

Ms. Spinelli began with an her argument that a rejected license does not eliminate the already-granted license rights:

MS. SPINELLI: [Following rejection,] the debtor will not fulfill any remaining unperformed obligations under the contract, and the counterparty will have a prepetition claim against the debtor for any resulting damages.

But that’s all rejection is, the estate’s decision not to take on the debtor’s future performance obligations, which are therefore breached.

The overwhelming consensus of courts and scholars is that rejection can’t give the estate any greater rights with respect to the rejected contract than the debtor would have outside bankruptcy.

And as Respondent doesn’t contest, outside bankruptcy, a licensor could not use its own breach of contract as a basis to terminate the licensee’s rights under the agreement.

The justices appear to have affirmatively latched-onto this argument — making it likely (in my view) that the court will limit the licensor’s right to cancel an already-given license as part of the bankruptcy process.

Trademark licenses are often treated differently than patent/copyright licenses. Part of the treatment is that there is more actual upkeep that needs to take place – both by the licensor and licensee. In addition, the mark generally needs to be linked with goods and products and so is not merely a bare IP license.  Here, the licensee (Mission Product Holdings) was buying products from the licensor (Tempnology) that were already marked and then using the mark for advertising, etc.  So, the rejection of the TM license here is wrapped-up in the refusal to supply goods.  However, one aspect of the contract apparently allows Mission to find an alternative supplier if Tempnology refuses.

MS. SPINELLI: Well, what happened, Justice Sotomayor, is that, prior to bankruptcy, Tempnology attempted to terminate the contract. Mission placed a purchase order. Tempnology said, we’re not going to fill that order. . . . But, Justice Sotomayor, we had a right under the agreement, if Tempnology failed to provide us with goods, to source those goods elsewhere.

A major additional sticking point in the case is the role of the exception for all-other-IP in 365(n) – and whether the absence of TM from provision creates a negative implication that TM licenses are revocable. The argument is that Congress expressly stated in 365(n) that when a licensor trustee rejects a Patent or Copyright license that the licensee can elect to either (1) treat the license as terminated or (2) retain its right to the license.  One way to read 365(n) is for the implication that Trademark licenses should be treated differently, and that difference can be explained by usual differences in TM licenses where those are typically wrapped-up in additional supply, quality, monitoring and business good will activities.

Read the oral arguments transcript.

Return Mail: We start from the baseline that the government is not a person

Patent

by Dennis Crouch

[Oral Arguments Transcript]

Today, the Supreme Court heard oral arguments in the business method review case of Return Mail Inc. v. U.S. Postal Service.  The basic question in the case is whether the United States government (here the USPS) counts as “a person who is not the owner of a patent.”  If the US is a person, then it has standing to file a petition for inter partes review, post grant review, covered business method review. See 35 U.S. Code § 321.* Question presented:

Whether the government is a “person” who may petition to institute review proceedings under the Leahy-Smith America Invents Act.

The patentee (Return Mail) owns patents covering ways to more efficiently sort mail — and the prime potential infringer/licensee is the USPS. For their part, the USPTO and Federal Circuit both concluded that the US is a “person” in this context, while noting that there is “no hard and fast rule of exclusion, and much depends on the context, the subject matter, legislative history, and executive interpretation.”

The AIA does not define “person,” but Title 1 of the U.S.Code does have a definition that extends to companies, but does not appear to include governments.

The words ‘person’ and ‘whoever’ include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals.

1 U.S.C. § 1 (the Dictionary Act). Although the definition does not expressly include governments, it also does not expressly exclude them either. In 2000, the Supreme Court stated that the sovereign is usually not treated as a “person” in U.S. law. Vt. Agency of Nat. Res. v. US ex rel. Stevens, 528 U.S. 765 (2000).  The flip-side of this is we’re really clear on the fact that a government can obtain a patent even though Section 102 of the patent act states that “A person shall be entitled to a patent …”.  At other points, the patent act uses “person” to refer only to humans.  See 35 U.S.C. 3 (“The Director shall be a person.”).

Covington attorney Beth Brinkman argued for the petitioner Return Mail and Deputy SG Malcolm Stewart on behalf of the US Postal Service.

Ms. Brinkman began as follows:

MS. BRINKMANN: The term “person” in this case does not extend to include the government for three reasons. First, the other branches rely on the Dictionary Act definition of person and this Court’s presumptive definition of “person” to not include the government. That is a stable framework that’s critical to that communication between the branches.

Second, the estoppel that was enacted by Congress specifically references the jurisdiction of the district court and the International Trade Commission, not the Court of Federal Claims, where the government’s patent litigation takes place, reinforcing the definition of “person” not to include the government.  . . .

And the third point I wanted to make, Your Honor, was that this does not exclude the government from going after bad patents. To the contrary, the government … [already] has the most powerful tools to do that.

Justice Ginsberg took an active role in oral arguments — and quickly got to the point of why:

JUSTICE GINSBURG: Why would Congress want to leave a government agency out of this second look if the idea is to weed out patents that never should have been given in the first place?

MS. BRINKMANN: Because the government already has opportunities through both the reexamination and through challenging the validity. All of the grounds for validity can be challenged in the Court of Federal Claims.

For its part, the Government argued that the Dictionary Act definition does not hold sway here because of the context — however, the Justices did not appear to really buy into his arguments.

MR. STEWART: I would say that the strongest contextual evidence [for defining person to include gov’t] is that the word “person” in the provisions that define IPR and CBM review is used to make available to the general public a procedural mechanism, an advantage. It’s made available on a widespread basis.

JUSTICE GORSUCH: Isn’t that flipping the presumption? I mean, the presumption is that “person” doesn’t include the government, and you’re suggesting, well, because “person” is broad and it’s a big term, it includes the government.

MR. STEWART: I think there are at least two or three different prerequisites to my theory about the context. The first is that it is making available a benefit as opposed to imposing a disadvantage. And that goes all the way back to Dollar Savings Bank in the 19th Century.

The second is that the benefit is broadly available. . . .

The third is that there is no evident reason that Congress — that Congress would have wanted to exclude federal agencies because the rationales for creating these mechanisms in the first place apply equally when the federal agency is the
requestor.

JUSTICE KAGAN: I guess what I was hoping for was that you would have an argument from particular statutory provisions.

JUSTICE KAVANAUGH: Because we start from the baseline of the government’s not a person, is you need the context to strongly support you.

Ms. Brinkman chimed-in on the not-a-person presumption — rhetorically asking:

MS. BRINKMANN: The question is, is there anything affirmative to indicate that the government was included?

Although I enjoy the theoretical debate about whether a government is a person. I don’t see this as one of the important burning questions in patent law.  Justice Kavanaugh focused on that issue in his discussion with the Mr. Stewart:

JUSTICE KAVANAUGH: If you were not to prevail here, what would the real world problems be for the government?

MR. STEWART: You know, I’m told by the PTO that in the years since the AIA was enacted, federal agencies have submitted 20 requests for all forms of AIA post-issuance review combined.
I mean, if you look at it from the standpoint of the government’s overall litigation efforts across all subject matters, it’s pretty small.

As some have suggested, perhaps it is best for the Court to play in this sandbox rather than addressing core patent law issues.

—

* Note, Section 321 applies to Post-Grant Review, but the Business Method Review (CBM) program follows the same requirements as indicated by Section 18 of the AIA. Section 18 is not codified in the U.S.Code because it is a sun-setting provision rather than permanent.

 

Court Awards $15,000 for Linguine Car Wash Massacre

Patent

by Dennis Crouch

Artist Christopher Boffoli is known for his detailed photographs contrasting small people with large food. In 2015, Atemis LLC allegedly posted a couple of images of Boffoli works on Facebook and mis-attributed the works to other artists in the same small-people-large-food genre.  Atemis has a food-ordering app called “Let Eat Go” and the FB posts were in conjunction a FB page for the app.

Two years later – December 2017, Boffoli discovered the use of his images and then sued for copyright infringement in 2018. I’ll note that naming-the-wrong-artist itself is not copyright infringement, but may have triggered Boffoli enough to sue.

Atemis did not show up to court and so the clerk awarded default under FRCP 55(a).

Entering a Default. When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party’s default.

R.55(a).  After a bit of back-and-forth with the Judge, the court has now also awarded Default Judgment under R. 55(b) for $15,000.

When the complaint asks for a “sum certain,” then the court clerk will simply enter that amount as the default judgment. R. 55(b)(1).  Here, the plaintiff asked for $150,000 as a statutory damages for willful infringement.  However, the district court implicitly ruled that 55(b)(1) doesn’t apply — perhaps since the copyright act expressly puts the calculation of statutory damages in the hands of the judge.

[C]opyright owner may elect … statutory damages … in a sum of not less than $750 or more than $30,000 as the court considers just. . . . In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000.

Here, the court first ruled that the evidence submitted in its motion for default judgment was not sufficient to prove willful infringement.  The court then found that $15,000 was the “just” amount.

Atemis may still escape judgment on personal jurisdiction. It may turn-out that the W.D. Washington court has no personal jurisdiction over the Delaware company. In that case, the default judgment would be void under R. 60(b)(4).

Boffoli has been a frequent copyright litigant — having filed more than a dozen additional infringement suits over the past decade.

Non-Analogous Art — More than Simply Different

Patent

Obviousness is the central patentability doctrine.  Obvious innovations are not patentable. Instead, to be patentable, and invention must embody a substantial step beyond what was known in the prior art.  Unlike its more rigid brother-doctrine of anticipation, obviousness is flexible to its core.  This flexibility leaves the doctrine both powerful and subject to many lawyer arguments.

A new petition for writ of certiorari to the Supreme Court asks two seemingly simple questions:

  1. In making rejections under 35 U.S.C. § 103(a), what standard should be applied in determining whether prior art is “analogous?”
  2. If the prior art is demonstrated to be non-analogous, does that render any such obviousness rejection void?

Macor v. USPTO, Sct. Docket No. 18-1072.

Although the questions presented may be interesting in the abstract – the actual underlying arguments are extremely weak:

The invention in this case stems from a problem in the collectables market of certifying authenticity.  The patent application here claims a FLASH-drive that contains an “immutable digital image” of a collectable (such as a coin).  The drive itself will also include “tamper resistant visual markings” that tie it to the particular collectable.

 

The examiner rejected the pending claims as obvious based upon U.S. Patent No.
6,250,549 (DeFabio) both alone and in combination with other references.

DeFabio is also focused collectable authentication — particularly celebrity signatures.  That patent discloses the idea of taking a photograph or video of the celebrity signing the particular collectable item (having a unique identifier) and distributing memorablia kit that includes both the original signed collectable and a storage medium with the image.

The applicant’s non-analogous argument here is simply that DeFabio uses a different method of authentication.  That approach, however, would prove too much, since all obvousness-type art exhibit some differences from the invention at issue.  Macor’s line would effectively exclude all obviousness-type prior art and entirely undermine the doctrine.  In patent law class, I like to discuss the idea of eliminating the obviousness doctrine as a hypothetical what-if scenario.  But, the Supreme Court will certainly not be the body that takes that transformational step.  The Federal Circuit decided this case without opinion and I expect the Supreme Court to follow that approach as well.

Read the Petition.

 

Patently-O Bits and Bytes by Juvan Bonni

Bits and Bytes, Patent

Recent Headlines in the IP World:

Commentary and Journal Articles:

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A Written Description of the Invention (including how it is made?)

Patent

by Dennis Crouch

CenTrak v. Sonitor Tech (Fed. Cir. 2019) is a quirky case that basically stands for the (wrongheaded) proposition that the Written Description Requirement does not usually require a description of how to make the invention actually work. Here, largely the court relied on the broad language of Alcon Research Ltd. v. Barr Labs., Inc., 745 F.3d 1180, 1191 (Fed. Cir. 2014) (“written description is about whether the skilled reader of the patent disclosure can recognize that what was claimed corresponds to what was described; it is not about whether the patentee has proven to the skilled reader that the invention works, or how to make it work, which is an enablement issue.”).  

The district court dismissed this infringement lawsuit on summary judgment — finding the asserted claims invalid for lack of written description or not infringed (or both).  On appeal the Federal Circuit reversed that determination — finding both issues ripe with “genuine disputes of material fact.”

The patent at issue here claims the use of ultrasound signals to track location of a mobile device (typically a patient in a hospital).  U.S. Patent 8,604,909.  There are several reasons why ultrasound can be a better option than WIFI or infrared (IR) signals for location detection within a small area.  For example, the steeper proximity decay makes it much less likely that a distant base-station would pick-up the signal. Thus, location can be discovered and without needing triangulation or highly precise equipment.  Both the patentee and accused infringer deal in ultrasonic location equipment.

All the claims are directed to the ultrasound approach.  However, it does not appear that the inventor initially cared much about the ultrasound approach. Rather, the original provisional application does not mention ultrasound at all [60881269].  While the subsequent priority non-provisional application also focuses primarily on the use of IR and RF signals, it does does include two-sentences disclosing ultrasound signalling:

Although IR base stations 106 are described, it is contemplated that the base stations 106 may also be configured to transmit a corresponding BS-ID by an ultrasonic signal, such that base stations 106 may represent ultrasonic base stations. Accordingly, portable devices 108 may be configured to include an ultrasonic receiver to receive the BS-ID from an ultrasonic base station.

The original priority filing also included one claim directed to ultrasonic detection.  That claim was the subject of a restriction requirement and withdrawn.  The patent at issue is the resulting divisional application filed with a set of 25 claims all directed to ultrasonic detection.

At trial, the inventor admitted that the invention did not describe an ultrasonic portable device:

Q. But there’s no ultrasonic portable device that is actually described in the ’909 patent; right?

A. This is correct, yeah.

But, the inventor indicated (supported by expert testimony) that a person of skill in the art would have little trouble adapting the disclosure to build the ultrasound system.

[To make the invention]  You have to understand how to drive an ultrasonic transmitter, how to receive an ultrasonic signal, and how to process them. But this is known art to people who are knowing ultrasound.

In its invalidity decision, the district court focused on the testimony of no example device and concluded that the mere mention of ultrasonic techniques was not sufficient to satisfy the written description requirement.  The court explained, for instance, that the claims include timing synchronization elements that were explained for IR, but that timing could be quite different for ultrasound of speed (speed of light vs speed of sound) and reflection differences.

= = =

The written description requirement is a test of for sufficiency of disclosure — The disclosure must “reasonably convey . . . that the inventor had possession of the claimed subject matter as of the filing date.” Ariad.  The basic question is whether the specification as originally filed provides evidence that that the inventor actually invented what is being claimed.

In looking at the evidence on appeal, the Federal Circuit found a “genuine issues of material fact” as to whether “disclosure of the implementation details” is necessary to satisfy the written description requirement.  According to the court, written description does not demand examples, or actual reduction to practice. Rather, the law only requires “identif[ication] of the claimed invention . . . in a definite way” quoting Ariad.

Here, the court concluded, “the specification at least mentions base stations and receivers that use ultrasound,” and in many cases such a mention is sufficient to satisfy WD.  One question that arises from Ariad is the level of detail required. In that case, the court explained that “the level of detail required to satisfy the written description requirement varies depending on the nature and  cope of the claims and on the complexity and predictability of the relevant technology.”  Here, the court concluded that the level of complexity and predictability is a factual issue in dispute and thus that it should go to trial rather than be decided on summary judgment.

In this process, the court noted that on remand, the district court should also consider the separate doctrine enablement that may bear more teeth in this type of situation.

On infringement, the district court also dismissed the case for lack of infringement. The claims require use of wireless computer network, including a backbone, Wi-Fi access points, and server hardware. The accused infringer does not supply this material but instead piggy-backs its systems as an add-on to the already existent network.  The district court found that no single entity had “made” the system and so Sonitor could not be liable as a direct infringer.

On appeal, the Federal Circuit rejected that analysis — finding material evidence that Sonitor was the “final assembler” of the system and thus could be held liable for “making” the invention.   I’ll note here that the hospitals themselves could be held liable, but the patentee would rather extract rents from its direct competitor rather than its potential clients.

 

User Interface Claims are Technological and Thus Not Subject to Business Method Review

Patent

by Dennis Crouch

IBG LLC v. Trading Technologies Int’l (Fed. Cir. 2019) (non-precedential)

This appeal stems from Covered Business Method (CBM) Review decisions on four related patents owned by TT.  The PTAB instituted all four CBM reviews. However, by the time of final decision, two of the challenged patents had been already upheld on eligibility by the Federal Circuit.  For those two patents, the PTAB followed the court’s lead and found the patents were directed to eligible subject matter. However, claims of the second set of patents were ruled invalid as ineligible and obvious.

On appeal, the Federal Circuit took a shortcut. Rather than directly addressing the underlying patentability question, the court vacated the PTAB determinations on jurisdiction grounds.  The court held that the inventions at issue are “technological” and therefore not “covered business methods.”

Section 18 of the America Invents Act (AIA) creates the “Transitional Program for Covered Business Method Patents.” The program, which sunsets in 2020 allows broad challenges of business method patents — including challenges on eligibility grounds.  However, the law includes a strict and limited definition of what counts as a “covered business method patent.”

The term “covered business method patent” means a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.

18(d)(1).

In its prior statement on the TT patents, the Federal Circuit ruled that the user interface patents were “directed to a specific improvement to the way computers operate.”  Here, the court found its prior holding (as adopted by the PTAB) automatically leads to a conclusion that “the patents are also for a ‘technological invention’ under any reasonable meaning of that term.”  The Board’s holding otherwise, according to the court, is “internally inconsistent and therefore arbitrary and capricious.”  The result here is that the PTAB does not have authority to conduct a CBM review of these patents because they are “technological.”

CONFLICT DISCLOSURE: While in practice at the MBHB firm, I represented Trading Technologies and personally filed several infringement complaints asserting some of the patents at issue here.  MBHB is also the primary financial sponsor of Patently-O. – DC

 

Case Dismissed: No Standing When Deal Fell Through

Patent

Momenta Pharma v. Bristol-Myers Squibb Co. (Fed. Cir. 2019)

In this recent decision, the Federal Circuit dismissed Momenta’s appeal — finding that the company lacks standing to appeal its loss before the PTAB.  The decision stands on fairly controversial grounds and in some tension with Supreme Court jurisprudence on appellate jurisdiction requirements.  Still, I suspect it will be cabined-in by its facts and not have a large precedential impact.

In 2015, Momenta petitioned for inter partes review of US Patent 8,476,239 owned by BMS. The patent covers a particular immunosuppressive formulation sold as ORENCIA .  At the time, Momenta was exploring an ORENCIA biosimilar as part of a partnership with Mylan.  And, over the years, Momenta has apparently conducted clinical trials on aspects of the product.  According to Momenta, during that time the ‘239 patent has been a clear obstacle to the project’s success.

Back to the administrative action: In the IPR, the PTAB sided with the patentee BMS — finding that the claims were not proven invalid (i.e., confirming the claims). Momenta appealed.

The Patent Act allows for any “person” to file IPR petitions and also indicates that the losing party of an IPR (here the patent challenger) has a right to appeal the decision to the Federal Circuit.  Although the statute provides a right to appeal, the U.S. Constitution has a further standing requirement before the courts are allowed to step in and pass judgment.  In particular, the Case and Controversy clause of Article III requires a genuine material dispute between the parties that can be resolved by the litigation.

By the time the appeal rolled around, Momenta’s clinical trials turned out to be a failure and BMS filed for dismissal — arguing that Momenta was no longer planning to use the invention and thus had no stake in the validity/invalidity of the patent. Momenta first responded that it was still intent on producing an ORENCIA biosimilar, but later the court was updated with information showing that Momenta was exiting its partnership with Mylan and was no longer developing the biosimilar.  Momenta did not provide any further explanation as to whether it had standing — and the Federal Circuit ultimately determined that Momenta no longer had standing. Thus, the appeal was dismissed for absence of standing/jurisdiction and for mootness.

A party filing an appeal must have a “concrete and particularized” interest at stake in order for a court to have Constitutional jurisdiction over the case (“Article III Jurisdiction”).  This interest required during all parts of the litigation.  Here, the court ruled that Momenta may have once had an interest at stake, but that interest “has now been eliminated by Momenta.”

Although momenta still has a potential of receiving royalties on a future biosimilar impacted by the patente, the court agreed with the patentee that interest was “too speculative to support standing.”

= = = =

There are a long line of Supreme Court and DC Circuit cases that involve situations parallel to this that begin with a statutory right to an administrative action.  In those cases, the standing issue arises when the party attempts to appeal a negative administrative decision.  The basic rule in these cases is that a concrete and particularized interest needs to exist before the court will get involved. That said, the courts have allowed for a reduced standing requirement in these appeal cases as compared with what is required for a new district court action.

My concern with this case is the basic notion that Momenta’s standing to challenge the patent completely disappeared based solely on a mid-appeal SEC filing stating that a particular deal had fallen-through.  From that front, this appears to be a rash decision by the Federal Circuit.  On the other hand, I think that the better frame for seeing this case is to recognize that Momenta could have (but did not) update and explain its standing argument based upon its withdrawal from the Mylan-biosimilar project.  In Federal Court each party is expected to affirmatively make its case, and Momenta simply did not make its case.

Perhaps Momenta did not provide any explanation because it no longer cared about the case — providing a precise primary justification for the standing rule in the first place.

Progress and Potential: A profile of women inventors on U.S. patents

Patent

The following comes directly from the USPTO: 

On February 11, 2019, the USPTO released “Progress and Potential: A profile of women inventors on U.S. patents,” a report on the trends and characteristics of U.S. women inventors named on U.S. patents granted from 1976 through 2016. The report shows that women still comprise a small minority of patent inventors. Further, it highlights the untapped potential of women to spur U.S. innovation. Women, like other under-represented groups, are among the “lost Einsteins”—people who may contribute valuable inventions had they been exposed to innovation1 and had greater access to the patent system.

line chart showing consistent upward trend of three variables: patents with at least one woman, women inventor rate, and women's share of total patenting. X-axis shows time 1976-2016. Y-axis shows percentage from 0-25 percent.

Download report

Major findings:

  • The share of patents that include at least one woman as an inventor increased from about 7 percent in the 1980s to 21 percent by 2016.
  • Even with this increase in patent counts, women inventors made up only 12 percent of all inventors on patents granted in 2016.
  • Gains in female participation in science and engineering occupations and entrepreneurship are not leading to broad increases in female patent inventors.
  • Technology-intensive U.S. states, and those where women participate more in the overall workforce, show higher women inventor rates.
  • Women inventors are increasingly concentrated in specific technologies and types of patenting organizations, suggesting that women are specializing where female predecessors have patented rather than entering into male-dominated fields or firms.
  • American businesses have the lowest women inventor rates among the various categories of U.S. patent owners.
  • Women are increasingly likely to patent on large, gender-mixed inventor teams, highlighting the growing importance of understanding the relationship between gender and innovative collaboration.

 

1 Alex Bell, Raj Chetty, Xavier Jaravel, Neviana Petkova, John Van Reenen; Who Becomes an Inventor in America? The Importance of Exposure to Innovation, The Quarterly Journal of Economics, forthcoming, https://doi.org/10.1093/qje/qjy028(link is external)