CAFC: Ordinary Meaning Defined By Context of Written Description

Patent, Patent Cases 2005

PatentlyO060Medrad v. MRI Devices (Fed. Cir. 2005).

Medrad filed suit against MRI Devices for allegedly infringing Medrad’s patented radio frequency (RF) coils used in magnetic resonance imaging (MRI).  The district court granted a partial summary judgment of invalidity after construing the claims of the patent.

On appeal, the CAFC struggled to give meaning to a claim that “itself provides little guidance.”

Interpreting the term “substantially uniform,” the court rejected Medrad’s argument that the “court may not look to how an invention functions in determining the meaning of claim terms” — finding that proposition “as unsound as it is sweeping.”

We cannot look at the ordinary meaning of the term . . . in a vacuum. Rather, we must look at the ordinary meaning in the context of the written description and the prosecution history. Quoting DeMarini Sport (Fed. Cir. 2001).

Basing its decision on (1) claim language, (2) the specification, and (3) expert testimony, the appellate court found that “substantially uniform” in reference to a magnetic field meant that the magnetic field is sufficiently uniform to obtain useful MRI images.

Affirmed.

 

CAFC: Claims Construed Based on Specification and Prosecution ‘Read as a Whole’

Patent, Patent Cases 2005

ASM America v. Genus (Fed. Cir. 2005)

In a dispute over a method of sequential atomic layer deposition (ALD), ASM sued Genus for infringement of its patents.  After construing the claims, the magistrate granted summary judgment of non-infringement in favor of Genus.  ASM appealed the construction.

On appeal, the CAFC affirmed, finding that the district court was "on firm ground." 

The disputed construction involved the term "evacuate."   ASM argued that evacuate should encompass use of an inert gas to push gases out.  However, the Appellate Panel found that, "when the specification and the prosecution history are read as a whole, it becomes clear that the insertion of inert gas may help render the process of evacuation more efficient, but is not part of the evacuation itself."

Summary judgment of non-infringement affirmed.

Appeals Court Partially Reverses eBay Patent Case: Setting the Stage for a Permanent Injunction

Patent, Patent Cases 2005,

Patentlyo058

MercExchange v. eBay (Fed. Cir. 2005)

by Dennis Crouch

At the district court level, Thomas Woolston, creator of the MercExchange and Patently-O Reader, won a $35 million patent infringement suit against eBay for infringement of his patents covering live internet auctions.  On March 16, 2005, the Federal Circuit released its decision on appeal, reversing the decision in-part, but setting the stage for a permanent injunction against eBay.

On appeal, the Federal Circuit partially overturned the district court’s decision, finding that at least one of the MercExchange patents invalid but vacating the lower court’s ruling that another patent was invalid.

Perhaps most importantly, MercExchange challenged the district court’s refusal to issue a permanent injunction against eBay’s use of the invention.  The CAFC agreed with MercExchange, that the district court “did not provide any persuasive reason that this case is sufficiently exceptional to justify the denial of a permanent injunction.”  Specifically, the CAFC found that the fact that MercExchange expressed a willingness to license was not a valid reason for depriving it of the right to an injunction to which it would otherwise be entitled.

If the injunction gives the patentee additional leverage in licensing, that is a natural consequence of the right to exclude and not an inappropriate reward to a party that does not intend to compete in the marketplace with potential infringers. . . . We therefore see no reason to depart from the general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.

Of course, there is only a very small likelihood that eBay would allow its servers to be shut-down rather than settle the case.  In addition, it is unclear how an injunction would operate in this case, although it would most likely only alter e-bay’s ‘buy it now’ feature.

Finally, the appellate panel affirmed the portion of the judgment denying an award of enhanced damages or attorney fees for MercExchange.

AFFIRMED IN PART, REVERSED IN PART, VACATED IN PART, and REMANDED.

The MercExchange patents are also under reexamination at the Patent Office.  However, if the litigation concludes before the reexam is complete, there is some question as to whether the reexam can be used by eBay to re-open the case.  One issue stems from the 1803 case of Marbury v. Madison where the Supreme Court held that the Judiciary, not the Executive Branch that determined the law.  In this case, the PTO (Executive Branch) would be telling the Judiciary to change its mind.

Links:

March 16, 2005 04:02 PM US Eastern Timezone

eBay Statement on U.S. Court of Appeals Ruling in MercExchange Case

SAN JOSE, Calif.–(BUSINESS WIRE)–March 16, 2005–eBay (Nasdaq:EBAY) is pleased with today’s decision by the U.S. Court of Appeals that invalidates one of MercExchange’s patents, and as a result, throws out all the related damages. Looking forward, we believe that any injunction that might be issued by the District Court with respect to the other patent will not have an impact on our business because of changes we have made following the District Court’s original verdict. The U.S. Patent and Trademark Office is actively reexamining all of MercExchange’s patents, having found that substantial questions exist regarding the validity of MercExchange’s claims. The Patent and Trademark office has already initially rejected all of the claims of one of MercExchange’s patents. We are confident in our position against MercExchange and do not believe that these matters will have any impact on our business.

BlackBerry lawsuit settles for $450M US: Patent Law Questions Remain

Patent, Patent Cases 2005

The legal saga involving NTP’s patents covering Research-In-Motion’s BlackBerry (R) technology appears to be over. According to news reports, RIM has settled the BlackBerry Lawsuit for $450M (US). 

The lawsuit did produce what appears to be an expansion of U.S. patent laws to cover infringing activity that partially occurs on foreign soil.  However, the settlement leaves a number of open questions regarding application of the newly expanded theory of liability. 

Links:

NOTE: The drawing above was used in RIM’s brief at the U.S. Federal Circuit Court of Appeals to graphically show how a substantial portion of the ‘infringing’ activity occurred on foreign soil.  The Court rejected RIM’s argument that activity across the border could not create liability under the U.S. patent laws.

CAFC: References on Face of Patent are Intrinsic Evidence for Claim Construction

Patent, Patent Cases 2005

Inline_skate

V-Formation v. Benetton Group & Rollerblade, Inc. (Fed. Cir. 2005).

By Marcus Thymian

In its March 15 decision, the Federal Circuit affirmed a district court’s grant of summary judgment of non-infringement of the claims of three patents relating to in-line skate technology.  The patents were directed to a particular frame design for attaching the wheels to the boot.  To provide flexibility in frame and wheel adjustment of a skate, the frame included two sidewalls “releasably attached” by a plurality of fasteners to toe and heel plates of the skate.   (For example, see U.S. Patent No. 5,873,584).

The dispute centered on whether rivets could serve as fasteners that “releasably attach.”  The embodiments set forth in the patents-in-suit utilized screws as the releasably attaching fasteners.  The district court had construed the term “releasably attaching” to mean that the fasteners “must permit the sidewalls to be easily removed and replaced” and determined that one skilled in the art would not consider rivets to fall under that definition.  In reaching that conclusion, the district court looked to the specification of the patents-in-suit, as well as the specification of a patent (the “Meibock patent”) cited on the face of one of the patents-in-suit.  Finally, the district court supported its construction by referring to an uncontrolling decision of the Federal Circuit that interestingly addressed the unremovable nature of rivets in in-line skates:  “Screws, unlike rivets and laminates, are meant to be unscrewed, that is, to be removed.  A rivet or a laminate, to the contrary, is meant to remain permanent, unremovable unless one is bent on breaking the permanent structure apart.”

The Federal Circuit first agreed that the intrinsic evidence called for “releasably attaching” to be construed per the district court’s definition.  It agreed that the intrinsic evidence included not only the patent specification, but also the cited Meibock patent:

    The district court properly considered other intrinsic evidence to aid its construction.  For instance, the district court considered [the Meibock patent].  The Meibock patent is prior art that was listed as a reference on the face of the ‘466 patent and in an Information Disclosure Statement.  This prior art reference to Meibock is not extrinsic evidence.  This court has established that “prior art cited in a patent or cited in the prosecution history of the patent constitutes intrinsic evidence. …  The Meibock patent explains that the toe and heel plates are “permanently attached … through the use of rivets or releasably attached through the use of fasteners such as screws or bolts.” …  Thus, the district court correctly concluded:  “[The] Meibock patent provides evidence that rivets are considered by persons of ordinary skill to be permanent fasteners.”

Finally, the Federal Circuit approved of the district court’s reference to its earlier uncontrolling decision addressing the removability of rivets, since the district court had merely used it to supports its independent conclusion in this case.

Marcus Thymian is a partner at McDonnell Boehnen Hulbert & Berghoff LLP in Chicago. Mr. Thymian is experienced in planning, creating, enforcing, and defending against patent portfolios, and has logged many miles on in-line skates over the past 20 years. [link to bio]

Links:

CAFC: Implied Final Judgment Does Not Create Appellate Jurisdiction

Patent, Patent Cases 2005

Pause Technology v. TiVo (Fed. Cir. 2005).

At the district court, TiVo was awarded summary judgment of non-infringement — The court found that TiVo’s digital video recorder (DVR) 2.0 did not infringe Pause Tech’s patent. (Reissue Patent No. 36,801). 

The Federal Circuit, however, refused to hear the case for lack of subject matter jurisdiction.  Specifically, because the district court had not ruled on TiVo’s invalidity counterclaim, the appeal was “not from a final decision within the meaning of 28 U.S.C. § 1295(a)(1).”  Citing the Supreme Court case of Catlin v. United States, the CAFC defined a final judgment as a decision by the district court that “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.”  From a policy standpoint, this rule ensures that appeals are not taken piecemeal.

In the present case, the district court did not expressly dispose of the invalidity counterclaim and no finding that the counterclaim was moot.  Thus, according to the CAFC, “the invalidity counterclaim remains pending.”  As such, the summary judgment at the district court was not final.

Accordingly, this appeal is dismissed for lack of jurisdiction, subject to reinstatement under the same docket number without the payment of an additional filing fee if, within 30 days of the date of this opinion, a party appeals from the entry of a final judgment on the entire case or obtains a certification for appeal pursuant to Rule 54(b). If the appeal is reinstated, it will be decided by the present panel, based on the briefs already filed and the oral argument heard on January 13, 2005.

Dismissed.

CAFC Judge Mayer: “maybe posting paneling is a very, very bad thing.”

Patent, Patent Cases 2005

In December 2004, the Federal Circuit began a pilot program to announce the composition of appellate panels the week before holding oral arguments.  This program is now in jeopardy.

On March 10, the Federal Circuit heard oral arguments in Apotex v. Pfizer.  The New York district court had dismissed Apotex’s declaratory judgment action due to a lack of case and controversy. At the district court level, this case fell in line with the recent CAFC decision Pfizer v. Teva holding 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.

Keith Scala, who attended the Apotex v. Pfizer oral hearing noted that, according to counsel’s arguments, Pfizer had executed a covenant not to sue Apotex a few days before the appellate arguments — but only after learning that Judge Mayer would be a member of the appellate panel.  The covenant not to sue is seen to greatly strengthen Pfizer’s argument that Apotex lacked jurisdiction to bring the DJ action.  However, executing the covenant may have been unnecessary had the appellate panel comprised a group more like that in Pfizer v. Teva.

According to Scala, at one point, Judge Mayer leaned over, looked squarely at Pfizer’s counsel and said,

“maybe posting paneling is a very, very bad thing.” 

Judge Mayer was, of course, referring to the the CAFC procedure of identifying the composition of panels several days in advance of the hearing. 

A decision will be expected in this case within the next few months.

CAFC: Marking must be pled, but specificity is optional

Patent, Patent Cases 2005

Sentry Protection v. Eagle Manufacturing (Fed. Cir. 2005)

In a case involving patented technology for protecting structural columns from motor vehicle accidents, the Federal Circuit affirmed-in-part and remanded.

One question on appeal involved whether the patentee could obtain damages for pre-suit infringement under a theory of constructive notice via marking.  The CAFC held:

  1. Pleadings/Waiver: Although there is a requirement that "constructive notice" must be pled, pleading that the "infringement have been willful and with full knowledge of the . . . patents" was sufficient to avoid waiver.
  2. Summary Judgment: Plaintiff had produced evidence of marking and an affidavit stating that its products had been marked — this evidence is sufficient to reverse the district court’s summary judgment of noninfringement for lack of constructive notice.

Links

Payment from a Patentee to a Generic Manufacturer Does Not Create an Antitrust Violation.

Patent, Patent Cases 2005

Schering-Plough v. FTC (11th Cir. 2005).

In a March 8 decision, the 11th Circuit Court of Appeals set aside an FTC order that barred Schering-Plough from settling an infringement suit with generic makers over the patented blood pressure drug K-Dur.  FTC had concluded that the settlement was an "unreasonable restraint of trade."

The Appellate Court determined that because the suit involved patented products, neither a per se nor a rule of reason analysis would be appropriate.

We think that neither the rule of reason nor the per se analysis is appropriate in this context. We are bound by our decision in Valley Drug where we held both approaches to be ill-suited for an antitrust analysis of patent cases because they seek to determine whether the challenged conduct had an anticompetitive effect on the market. 344 F.3d 1294. By their nature, patents create an environment of exclusion, and consequently, cripple competition. The anticompetitive effect is already present. “What is required here is an analysis of the extent to which antitrust liability might undermine the encouragement of innovation and disclosure, or the

Applying their rule to the facts, the Court concluded that payment from a patent holder to a generic competitor cannot be the sole basis of a violation of antitrust law.

Simply because a brand-name pharmaceutical company holding a patent paid its generic competitor money cannot be the sole basis for a violation of antitrust law.

Accordingly, the court SET ASIDE the decision of the Federal Trade Commission and VACATED its cease and desist order.

Links:

Request for Attorneys Fees Does Not Create Subject Matter Jurisdiction

Patent, Patent Cases 2005

Sony Electronics v. Soundview Technologies (D. Conn. 2005) [pdf]

The district court granted summary judgment of non-infringement to the alleged infringers, and that decision was affirmed at the Federal Circuit.  Now Soundview, the patentee, has moved to dismiss all pending counterclaims because the patent has expired and, in light of the summary judgment, the remaining counterclaims are moot.

One defendant, however, argued that its declaratory judgment counterclaim seeking a finding of inequitable conduct during reexamination is not moot because it is a basis for an award of attorneys fees under 35 U.S.C. § 285.

Connecticut District Court Judge Janet Bond Arterson determined that the counterclaim should be dismissed because there was no actual controversy remaining that would be sufficient to create subject matter jurisdiction:

Section 285 . . . is not an independent basis for jurisdiction, providing only that "the court in exceptional cases may award reasonable attorney fees to the prevailing party." Thus, Sharp is entitled to seek attorneys fees on the underlying litigation on which Sharp has prevailed, but cannot create more litigation that is otherwise moot merely to create an alternative basis for attorneys fees.

Case Dismissed.

Design Patents: Appeals Court Finds Cell-Phone Infringement Suit to be Frivolous

Patent, Patent Cases 2005,

Colida v. Sharp Electronics and Audiovox (Fed. Cir. March 9, 2005; NONPRECEDENTIAL).

Tony Colida has brought his patent infringement arguments to the federal circuit on several occasions.  (Background reading). In 2004, Colida lost patent infringement cases against Sanyo, Kyocera, and Matsushita.  In each case, the CAFC affirmed the lower court ruling that the accused products did not infringe Colida’s design patents.

In the most recent case, the CAFC again affirmed — finding that the district court did not err in granting summary judgment of noninfringement.

In Gorham v. White (1871), the Supreme Court announced the test for design patent infringement.

[I]f, in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is such as to deceive such an observer, inducing him to purchase one supposing it to be the other, the first one patented is infringed by the other.

Following that rule, the federal circuit compared the accused phone with the design patent and found that the differences were sufficient for a finding of noninfringement on summary judgment.

In addition, the federal circuit found Colida’s case to be frivolous:

Colida, in this case, continues his pattern of repeatedly filing meritless infringement complaints and pursuing appeals when the accused designs bear no realistic similarity to his design patents. Such conduct unnecessarily wastes the limited resources of the court. The differences between the [] patents and the [accused] handset are so obvious and pronounced that Colida’s allegation that the [accused] handset infringes his [] patents and that the district court erred in granting summary judgment is "beyond the reasonable contemplation of fair-minded people." Thus, we hold that the appeal is frivolous.

CAFC: Substantially Flattened Is Defined As Flatter Than A Cylinder

Patent, Patent Cases 2005

[Link to the patent drawings]

The Federal Circuit has given its ruling in a dispute over patented tampon technology.  (U.S. Patent No. 4,536,178 [pdf]).  At the district court level, the judge had awarded summary judgment of noninfringement to the alleged infringer.  However, on appeal, the CAFC reversed, finding that the lower court had improperly interpreted the term "substantially flattened" to mean "flattened."

The issue is whether the patentee properly claimed an oval as a "substantially flattened" circle, or more specifically, an elliptical cylinder as a "substantially flattened" cylinder. In construing the term "substantially flattened surfaces" as something flat in practice the district court erred in going beyond the intrinsic evidence. That evidence clearly indicated that the patent contemplated curved surfaces. Thus, we reverse the district court’s claim construction and conclude that "substantially flattened surfaces" means surfaces, including flat surfaces, materially flatter than the cylindrical front portion of the applicator.

In what may be a fore-shadowing of the upcoming Phillips opinion, the Court rejected the idea that (i) the term was ambiguous; (ii) that an expert’s testimony could be used to modify the ordinary meaning; or (iii) that the drawings limited the scope of the claimed term.

On remand, the Federal Court in Ohio must determine whether the newly interpreted claims cover the allegedly infringing product.

LINK:

  • Download the Decision: Playtex v. P&G (Fed. Cir. 2005) [pdf].

The Expanding Reach of U.S. Patent Laws

Patent, Patent Cases 2005

Eolas and RIM Decisions Change the Potential for U.S. Damages Based on Foreign Infringing Activities

As I mentioned earlier, from a legal standpoint, the most important aspect of the Eolas v. Microsoft decision [pdf] is its treatment of extraterritorial infringement. Under traditional notions, U.S. patent law did not extend beyond the territorial bounds of the country. Although this principle was affirmed in the CAFC 2004 case of Pellegrini v. Analog Devices (cert. denied 2004), it appears now that Pellegrini has been narrowly interpreted.

With the one-two punch of Eolas and RIM v. NTP [pdf decision], the CAFC has laid-out a clear path for patent holders to collect damages for certain infringing activity occurring abroad. These cases are based on software-type technology, however, I see clear applications to other technologies, including biotechnology.

In Eolas, the patentee claimed an “executable application” used for a specific purpose. The CAFC upheld Microsoft’s liability for infringement due to its foreign sales under Section 271(f) of the patent statute. Section 271(f) 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. 

As in the figure above, Microsoft had shipped a master copy of computer code for Internet Explorer (IE) to its foreign suppliers who then copied the disk and sold the copies on foreign soil.  This activity was seen as infringing, even though the patented invention was not practiced until at least the 3rd step above.

Thus, two principles of emerge from Eolas: (i) there is no "physicality" requirement for a component of a patented invention to fall within the statute; and (ii) the shipped component itself need not be part of the infringing use, rather a foreign produced copy of the shipped component can create infringement liability when the copy is to be used in an infringing manner.

Of course, one of the closest parallels to computer code is genetic code.  Quite easily, the CAFC Eolas decision could be expanded to include shipment of DNA or other genetic material abroad for replication and incorporation into a patented invention.

The RIM (RIMM) v. NTP opinion concerning the hand-held BlackBerry held that plain language of section 271(a) does not preclude infringement where a system is used within the United States even though a component of that system is physically located outside the United States.  According to the Court, the test is not whether the infringement took place within the United States, but whether "control and beneficial use" of the infringing system was within the United States.  It appears that "control and beneficial use" will be liberally construed — for instance, in RIM’s case, control of the system and RIM headquarters were in Canada.  End users, however, were located in the U.S.  At a minimum, control and beneficial use of the BlackBerry system was located in both the U.S. and Canada.

The RIM case has potential to have a major impact on outsourcing of manufacturing and services.  Essentially, a call center located in India may now be found to be infringing a U.S. patent if a court finds that the control and beneficial use of the system can be seated in the U.S.

CAFC: On-Sale Bar Requires Conception of Invention

Patent, Patent Cases 2005

Patentlyo032

Sparton Corp. v. United States (Fed. Cir. 2005).

Sparton, a military contractor, sued the U.S. government to recover money under 28 U.S.C. Section 1498(a) for unlicensed use of its patented inventions by the U.S. government.  The U.S. Claims Court has jurisdiction over this type of claim and held that Sparton’s two patents were invalid because they were offered for sale more than one year before the patents were filed.  Specifically, the Claims Court found that an engineering proposal submitted by Sparton to the Navy created the bar.

On apppeal, the Federal Circuit panel (Archer) explained that, although "the Supreme Court has not explained what is necessary for a "commercial offer for sale," we have held that two elements are necessary. Namely, a court must find that (1) there was a "commercial offer"; and (2) that offer was for the patented invention."

Sparton argued that the proposal that they submitted was not an offer for the patented invention, and thus, could not present an on-sale bar.  Both sides agreed that the proposal did not describe the complete patented invention.  However, the lower court had construed the proposal using standard contract law to determine that the proposal/offer would also include the patented invention.

The Federal Circuit agreed with the patentee, finding that the claim’s court’s "result is illogical. . . . With no conception of an invention, there cannot be an offer for sale or a sale of that invention."

REVERSED AND REMANDED

Links:

High Court asks for government’s view on patentability of tests to determine vitamin deficiency.

Patent, Patent Cases 2005, ,

LABORATORY CORP. OF AMERICA (LabCorp) V. METABOLITE LABORATORIES, ET AL. (on petition for cert at the Supreme Court 2005).

The Supreme Court moved a step closer to granting cert in the case by inviting the Acting Solicitor General to file a brief expressing the views of the United States on the following question:  

Respondent’s patent claims a method for detecting a form of vitamin B deficiency, which focuses upon a correlation in the human body between elevated levels of certain amino acids and deficient levels of vitamin B. The method consists of the following:

First, measure the level of the relevant amino acids using any device, whether the device is, or is not, patented;

second, notice whether the amino acid level is elevated and, if so, conclude that a vitamin B deficiency exists.

Is the patent invalid because one cannot patent laws of nature, natural phenomena, and abstract ideas? Diamond v. Diehr, 450 U.S. 175, 185 (1981).

In the opinion below, the CAFC (Rader, J.) affirmed the jury verdict of indirect infringement and breach of contract, and affirmed the district court’s award of over $8 million in damages to Metabolite (including damages for willfulness).  The dissent (Schall, J.) argued that claim interpretation had been mishandled. Metabolite Laboratories, Inc. v. Laboratory Corp. of America Holdings, dba as LabCorp., 370 F.3d 1354 (Fed. Cir. 2004) (read my summary)

The question that the High Court is now considering does not appear to have even been addressed by the CAFC decision.  The Court’s docket shows that the case has already been distributed for conference five times since January 1, 2005.  

In its petition for a writ of certiorari, LabCorp presented three questions to the Court:

1. Whether liability can be imposed for willfully inducing patent infringement under 35 U.S.C. § 271(b) based solely on evidence that a party has disseminated a basic scientific fact to others.

2. Whether an express limitation in a patent claim can be ignored so as to allow the patent to cover the exact opposite of what was claimed.

3. Whether a method patent setting forth an indefinite, undescribed, and non-enabling step directing a party simply to “correlat[e]” test results can validly claim a monopoly over a basic scientific relationship used in medical treatment such that any doctor necessarily infringes the patent merely by thinking about the relationship after looking at a test result.

The Court, however, appears to be interested only the extent that a basic scientific relationship used in medical treatment is patentable.  LabCorp’s introduction provides a compelling story and sets the stage for the debate:

The holding of the Federal Circuit in this case is truly extraordinary. The court construed a patent to confer on respondents a legally-protected monopoly to bar any doctor in the Nation from even about a well-known scientific correlation. It then went even further, holding—in conflict with other Federal Circuit decisions—that petitioner LabCorp indirectly “induced” such infringement merely by publishing truthful information informing doctors of this basic scientific fact. And further compounding its errors, the Federal Circuit violated well-established tenets of patent law by expanding the patent beyond its express terms, and by upholding its validity.

Documents:

Thanks to Jonathan Franklin at Hogan & Hartson and Glenn Beaton at Gibson Dunn for copies of the briefs and to appellate attorney Howard Bashman at How Appealing for the heads-up on the case.

Supreme Court to Hear Patent Case on Federal Circuit’s Power to Overturn a Jury’s Verdict

Patent, Patent Cases 2005

Unitherm Food Systems, Inc., Petitioner  v. Swift Eckrich, Inc., dba Conagra Refrigerated Foods, et al. (Supreme Court 2005).

The Supreme Court has decided to hear an appeal in Unitherm Food v. Swift-Eckrich that was petitioned from the Federal Circuit. The question to be heard will help outline powers of the CAFC.  Specifically, the petition for a writ of certiorari is granted limited to the following question:

Whether, and to what extent, a court of appeals may review the sufficiency of evidence supporting a civil jury verdict where the party requesting review made a motion for judgment as a matter of law under Rule 50(a) of the

Federal Rules of Civil Procedure before submission of the case to the jury, but neither renewed that motion under Rule 50(b) after the jury’s verdict, nor moved for a new trial under Rule 59?

In this case, a jury determined that ConAgra’a pre-litigation activities constituted tortious interference and created antitrust violations. On appeal at the Federal Circuit (GAJARSA) affirmed all appealed actions except for the antitrust holdings.

Because the district court erred, however, in allowing the jury to decide Unitherm’s antitrust claims despite the total absence of economic evidence capable of sustaining those claims, we vacate the judgment finding ConAgra liable for violating § 2 of the Sherman Act. We also vacate all damages awarded consequent to antitrust liability. We remand the matter to the district court for further proceedings consistent with this opinion.

Prior to litigation, ConAgra had written to several companies who sell equipment for preparing and browning pre-cooked meats. ConAgra attached a copy of the ‘027 Patent to that letter, which included the explicit warning:

“Others in the industry may approach your company regarding this patent, and we would appreciate it if you would inform them that we intend to aggressively protect all of our rights under this patent.”

The patent (No. 5,952,027) involves a method for “browning precooked, whole muscle meat products” and involves coating a liquid pyrolysis product onto the surface of a precooked meat product.

Eight is Enough: Eight important patent cases for Spring 2005

Patent, Patent Cases 2005, , , , , , , ,

There are lots of great cases on the Federal Circuit’s spring calendar.  Several cases pending at either the Federal Circuit or Supreme Court that are ‘worth a special look,’ according to Hal Wegner.  Here are some highlights of Mr. Wegner’s list, with my own comments.

  • Merck v. Integra, Supreme Court decision by June 27, 2005.
  • LabCorp v. Metabolite, petition for cert submitted, Supreme Court has requested Solicitor General’s Opinion on Cert.  The case involves a patentability question — whether Metabolite’s patented method of detecting vitamin B deficiency should be invalid as "because one cannot patent laws of nature, natural phenomena, and abstract ideas." 
  • Purdue Pharma v. Endo, CAFC heard oral arguments in early November on the question of whether patentee’s conduct was ‘inequitable’ for failing to disclose that results used to establish patentability were prophetic rather than experimental. A decision is expected soon.
  • SmithKline Beecham v. Apotex, awaiting decision on petition for rehearing.  This case now revolves around the question of whether use of an invention to confirm utility for FDA approval is an ‘experimental use’ that saves a patent from anticipation under 102(b).
  • Phillips v. AWH, awaiting en banc decision on claim construction methodology.
  • Eolas Technologies v. Microsoft, Federal Circuit decision awaited, hopefully discussing the scope of 271(f). The upcoming appeal of AT&T v. Microsoft presents the same ‘golden master disk‘ scenario as Eolas, and will become important if Eolas is decided on other grounds.
  • Independent Ink v. Illinois Tool Works, In January, the CAFC determined that, in an antitrust tying case, a patent presumptively defines the relevant market as the nationwide market for the patented product itself.  There is some potential for cert in this case.
  • NTP, Inc. v. Research in Motion, Ltd., there is a good chance for a rehearing in this case involving RIM’s BlackBerry product.  This case will be important in defining extraterritorial application of U.S. patent laws in the modern era of networked computing systems.
  • In re Fisher is not yet on the CAFC calendar.  In this case, the BPAI affirmed a rejection for lack of utility and enablement (101 and 112 p1) because the specification lacked a specific teaching of a substantial utility.  According to the decision, without a specific teaching of substantial utility, then virtually all chemicals would meet the requirements of section 101 as at least "useful in research."

Although not patent litigation, Sarah Stirland (one of the few reporters focusing on intellectual property) at the National Journal has written a nice article regarding the potential for legislation in the 109th Congress.

Printable Version

(more…)

Supreme Court Briefs: Merck KGaA v. Integra

Patent, Patent Cases 2005, , , ,

Merck KGaA v. Integra (on certiorari at the Supreme Court, 2005).

In 2003 Court of Appeals for the Federal Circuit (CAFC) narrowly interpreted the safe harbor statute that permits a drug manufacturer to perform potentially infringing experiments needed to obtain FDA approval without incurring liability for patent infringement.  Integra LifeSciences I, Ltd. v. Merck KGaA, 331 F.3d 860 (Fed. Cir. June 6, 2003) [PDF] (Interpreting 35 U.S.C. §271(e)(1)). In January 2005, the Supreme Court granted certiorari in the case and will hear the appeal on April 20.  Cert. granted, No. 03-1237 (U.S. Jan. 7, 2005).  The question revolves around what types of experiments are ‘safe’ from liability under the statute. 

The party and amicus briefs are summarized below Of course, the length of individual summaries below does not indicate my view of that brief — in fact, my view is often that the length of an argument has an inverse relationship with the quality of the argument. 

Merck’s substantive brief was filed on February 15. I split Merck’s arguments into two categories.

  1. The Law: The FDA exemption covering any “use . . . reasonably related to the development and submission of information” to the FDA should be interpreted broadly.  Merck argues that any research that is “directed at developing information relevant to an IND application” should fall under the 271(e)(1) safe harbor.
  2. The Facts: The allegedly infringing experiments in this case falls under the safe harbor statute because (i) it was reasonably believed that the compound was a viable drug candidate and (ii) the experiments produced information that is considered in an IND application.

You can download the Merck KGaA brief here [pdf].

Brief of the United States in Support of Merck: The government has already played an important role in this case by filing a brief in support of Merck’s petition for cert.  Now, the Government has filed it brief on the merits.  Essentially, the U.S. argues that the statutory exemption should protect “all activities that are undertaken in the course of attempting to develop a particular drug and are reasonably related to the development of the types of information that would be relevant to an INDA or NDA.”

  1. The exemption should apply to pre-clinical studies.
  2. The exemption should begin to apply once research “progresses beyond basic research and begins efforts to develop a particular drug.”

The Government brief also discusses the research tool market, saying that the CAFC “erred by artificially narrowing the statutory exemption in an effort to protect research tools.”  According to the Government, it is unclear whether the statute even applies to research tools. 

You can download the Government brief here [pdf].

AIPLA’s Amicus Brief:  The AIPLA brief is officially in support of neither party.  However, the brief makes the argument that the Federal Circuit erred on both the facts and the law.  Here is a summary of some of the AIPLA arguments:

  1. Limiting the safe harbor protection to only (i) clinical tests that are (ii) related only to the exact drug for which FDA approval is ultimately sought would leave the statute much too narrow.
  2. The road to FDA approval involves much more than clinical tests.  The Federal Circuit payed too little attention to the FDA regulatory scheme in its decision.
  3. The earliest stage of experiments do not fall under the safe harbor statute.  The brief notes, for instance, that high-throughput screening of drugs for potential activity should not fall within the safe harbor.
  4. Finally, the Supreme Court should not weigh-in on the common-law experimental use exception.  [NOTE: Although I understand the AIPLA’s legal reasoning on this point, I do not understand their motivation.  If not now, when will the Court look at the common-law experimental use exception]

William McGeveran at Foley Hoag was kind enough to supply a copy of the AIPLA brief.  You can download the AIPLA brief here [pdf].

Eli Lilly, Wyeth & Merck as Amicus in Support of Merck: The three big drug manufacturers submitted an eloquently written brief that makes strong practical points:

Virtually Every Experiment is Reasonably Related to FDA Approval: Because the length, risks and costs of innovative drug development are so great, every activity in the development process has a purpose and a clear rationale. Each is designed to generate information that ultimately goes into the decision of whether a potential new drug will progress to the next hurdle. Each is aimed at the same ultimate goal: to gain FDA approval. . . . Innovative new drug development, thus, resembles a funnel. Just as a funnel is widest at the top, so too the early phases of drug development involve many more potential drugs than eventually emerge. The narrowing of the funnel represents the winnowing of less attractive potential new drugs. Blocking the funnel at any point cuts off the entire flow of new drugs. The Federal Circuit in its 1993 decision blocked the funnel.

The decision enables patent holders to prevent others from entering, or moving down the funnel. As a result, drug development will slow and its costs will mount in what is already a lengthy, high risk, high cost process; patients will be deprived of timely access to new, safer, more effective drugs; the entry of generic equivalents will be delayed; promising drugs to treat unmet medical needs will never be developed; and drug development activities along with valuable American jobs will be exported to countries having more favorable legal environments.

You can download the brief here [pdf].

NYIPLA Amicus Brief in Support of Merck: The New York Intellectual Property Law Association is filing an Amicus brief.  (The Brief is available here [pdf] ). The NYIPLA’s conclusions parallel many of those outlined by the AIPLA.  For instance, the NYIPLA argues that the statutory safe harbor was construed too narrowly and that the experiments performed in this case were “reasonably related” to the process of FDA approval.

Additionally, the NYIPLA presents a nuanced statutory construction argument that is derived from Professor Janice Mueller’s recent paper on the Experimental Use Exception (56 Baylor L. Rev. 101 (2004)).

  1. The Federal Circuit misused a de minimis maxim to narrowly construe the safe harbor statute.
  2. The statutory FDA exemption arises from Article 1, Section 8 of the Constitution and from the economic principles echoed in numerous Supreme Court cases. See, e.g., Universal Oil Products Co. v. Globe Oil & Refining Co., 322 U.S. 471, 484 (1944). These first principles indicate that the statute should be given a broader interpretation.

Thanks to David Ryan at Fitzpatrick Cella for providing a copy of the brief.

Amicus Brief for PhRMA in Support of Merck: PhRMA is an association of the largest drug development companies in the U.S. Last year PhRMA members spent $38 billion on drug development and have been responsible for almost all innovative new medicines approved during the last ten years. According to PhRMA’s brief, the CAFC 2003 decision in this case “represents a direct and substantial threat to future drug development.” The brief argues that pre-clinical testing is an essential part of drug development and an FDA requirement.

Download the PhRMA brief here [pdf].

Amicus Briefs of Professors Rochelle Dreyfuss, John Duffy, Arti Rai and Katherine Strandburg:  The professors argue that the Court should not determine the reach of the common-law experimental use exception in this case. And, in fact, the brief asks that a clear disclaimer be placed in the Supreme Court opinion so that the opinion cannot be used by the Federal Circuit to decide issues on experimental use. In the professors’ view, the disclaimer may encourage litigants to bring the common-law issue to the Supreme Court. Of note, the professors find no “generally applicable relationship between the coverage of” the common-law experimental use exception and the statutory safe harbor.

You can download the Professors’ Brief Here [pdf]. Thanks to Professor Strandburg at DePaul for providing a copy of the brief.

Amicus Brief of The Bar Association of the District of Columbia (BADC): According to the BADC, regardless of a statutory safe harbor under 271(e)(1), the allegedly infringing “development activities are of the type that have traditionally been excluded from infringement liability under the common law experimental use exemption. . . .Failure to recognize this important exemption to infringement will deter research in the United States and encourage companies to conduct their research and development off-shore.”

You can download the BADC Brief Here [pdf]. Thanks to Susan Dadio at Burns Doane for providing a copy of the brief. Lynn Eccleston is the counsel of record.

Brief of EON LABS as Amicus Curiae in Support of Merck KGaA: Shashank Upadhye, VP and Counsel at the Generic Manufacturer Eon Labs has submitted a brief that explicitly supports Merck’s position.

  1. The statute discusses “reasonably related . . . information.”  Logically, exemption applies to any information that the FDA would normally request or that it mandates be submitted. For instance, the FDA has promulgated regulations that mandate certain pre-clinical or screening information be submitted.
  2. Generic drug companies often engage in the same kind of screening activities that Merck KGaA did in order to find a bio-equivalent product. This activity is shielded.

Eon also provides a nice description of the two most common types of drug research covered by the safe harbor regime: (i) testing and information collection on brand new drugs and proving safety and efficaciousness; and (ii) testing and information collection related to approving a generic bio-equivalent version of a preapproved drug.  Eon argues that the Federal Circuit erred by fixating on policy of safe harbor applying to generic drugs only.

You can download the EON Labs brief here [PDF].

Brief of the Consumer Project and the EFF as Amicus Curiae in Support of Merck KGaA: The consumer brief, filed by professor Joshua Sarnoff, makes the compelling argument that Section 271(e) and the common law experimental use exception provide overlapping protection. Sarnoff asks the Court to “confirm that Congress intended a broad experimental use exception to promote the progress of science and technology.”

It is critically important that the Court take this opportunity to correct the Federal Circuit’s improperly narrow interpretations of the experimental use exception in Roche, Embrex, Madey, and this case. This is likely to be the best (and, given the chill these cases exert, may be the only foreseeable) opportunity to set the historic and statutory record straight and to explain how Section 271(e) and Section 271(a) and its experimental use exception relate to each other.

You can download the Consumer/EFF brief here [pdf].

The Biotechnology Industry Organization (BIO) filed in support of neither party: According to BIO, this “is not a case about whether Section 271(e)(1) is limited to generic drugs and/or required regulatory activity. Instead, it is a case about whether the particular animal and in vitro studies at issue are “reasonably related to the development and submission of information” for regulatory approval and therefore non-infringing under Section 271(e)(1).”

BIO makes four specific arguments:

  1. Section 271(e)(1) is not limited to generic drugs.
  2. Section 271(e)(1) is not limited to required regulatory activity.
  3. Section 271(e)(1) protects “reasonably related” testing activities.
  4. Section 271(e)(1)’s “reasonably related” inquiry must be fact-based. For instance, if a researcher pursues more safety information than what Federal regulators require, the researcher should not be punished for being careful.

Finally, BIO makes the practical point that even the potential for an errant application of Integra could have a great and adverse impact on many avenues of research and funding critical to BIO members. You can download the BIO brief here [pdf].

Amicus Brief for Sepracor in Support of Merck: Michael Dzwonczyk at Sughrue assisted with the Sepracor brief.  He also provided a copy of the brief for Patently-O and the following summary [slightly edited]:

The brief for amicus Sepracor takes the position that the federal circuit misinterpreted the scope of the exemption under §271(e)(1) by suggesting that the statutory immunity is limited to clinical activities in furtherance of FDA approval of a generic version of a commercialized drug. Notwithstanding the Supreme Court’s reliance in Eli Lilly on the public policies underlying the Hatch-Waxman Act that the §271(e)(1) infringement exemption and §156 patent term extension remedy symmetrical, yet opposing, patent term distortions imposed by the FDA regulatory process, the scope of the immunity conferred by §271(e)(1) is not limited to subject matter also encompassed by §156, which is far narrower in scope.  Because FDA routinely requires pre-clinical data in evaluating INDs and NDAs, activities directed to generating this data should be exempt under §271(e)(1).

You can download Sepracor’s brief here [pdf].

AARP in Support of Merck: The AARP’s brief argues that the Federal Circuit mistakenly focused on generic drug approval rather and mistakenly omitted a discussion of how the statute provides a safe harbor for the development of innovative drugs as well.  As would be expected, AARP also argues that a narrow exemption delays medical advancement and increases the costs of prescription drugs.

The Federal Circuit’s unwillingness to allow a broader experimental use exemption to patent infringement as Congress intended will lead to delay of medical advances by hampering the free exchange of scientific knowledge and by postponing competition beyond the patent term. The costs for prescription drugs, which already are so high as to prohibit many people from accessing their benefits, will be driven even higher.

You can download the AARP Brief Here [pdf]. Thanks to Sarah Lens Lock, author of the brief, for providing the PDF copy. 

Genentech and Biogen Idec in Support of Merck: The Biologic companies bring out the important point that drug development of biologics is quite different than that of chemically-synthesized drugs, and that those differences alters the FDA approval process.  The conclusion is that, perhaps even more than traditional chemical drugs, the FDA requires an incredible amount of pre-clinical research before a new biologic will be approved.

You can download the Biologics Brief here [PDF].  Thanks to Raymond Arner for providing a copy of the brief.

Integra LifeScience’s Brief on the Merits: In their brief, respondents Integra and the Burnham Institute attempt to shift the direction of the argument away from whether certain experimental activities may fall within the scope of FDA requirements to an examination of Merck’s activities and whether they were taken recklessly.

[Merck] did not proceed with caution in the face of patent rights held by [Integra].  This case did not arise from a decision by Merck to perform experiments designed to satisfy FDA regulatory requirements. . . This case arose from Merck’s reckless decision to hire [Scripps] to embark on a basic research program to search for new drugs

Integra also asks the High Court to dismiss the case for lack of controversy.  “Given that the parties agree that the District Court’s jury instruction applied the correct legal standard, and given that Merck did not seek a sufficiency of the evidence review of the jury’s verdict in its petition for certiorari, there is essentially no controversy for this Court to adjudicate.

Finally, in an attempt to lessen the perceived importance of the case, Integra argues that companies who “seek a safe harbor under the FDA Exemption for preclinical work in their own laboratories in compliance with FDA regulations have nothing to fear. . . . Merck’s problems in this case are of its own making and are unique to it.”

Benitec Australia’s brief in support of Integra: Benitec argues that the safe harbor does not extend to “identifying, characterizing and developing new drugs.” Such a right would interfere substantially and selectively with the rights of certain patentees and undermines the fundamental principles of the patent system.

Interestingly, the counsel for Benitec (in support of Integra) is the same as for BIO (in support of neither party).

Vaccinex brief in support of Integra: Vaccinex makes the important policy point that patented research tools are essential to the development of new drugs.  Without patent protection, the development of future tools is at substantial risk. As a rule, Vaccinex argues that the exemption extends “only to infringing activities that are ‘solely for uses reasonably related to the development and submission of information’ to the FDA.”

Applera and ISIS brief in support of Integra: Applera argues that from a textual statutory construction, that the plain meaning of section 271(e)(1) limits the exemption to uses that are “solely for the purposes of regulatory approval,” and that the Petitioner’s interpretation of the meaning treats the word “solely” as mere surplusage.

The statute provides that the exemption applies to making, using, and selling “a patented invention . . . solely for uses reasonably related to development” for FDA approval 

Applera’s argument is that the sole pupose of the invention should be for uses related to FDA approval while Merck argues that solely applies to the infringing act.

Invitrogen et al. brief in support of Integra:  The research tool makers request a ruling from the Court that expressly states that the 271(e) safe harbor does not extend to patented research tools. 

WARF brief in support of Integra: Among other arguments, WARF outlines its position that the Federal Circuit’s decision effectively thwarts the purposes of the Bayh-Dole Act.

STATUTE: The primary statute relevant to this proceeding is the FDA exemption, found at 35 U.S.C. § 271(e)(1) (2000):

It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) which is primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other process involving site specific genetic manipulation techniques) solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.

Also at issue are various statutory provisions and regulations governing the FDA: 21 U.S.C. § 355 (2000 & Supp. 2001); 21 C.F.R. §§ 58.3, 312.22-312.23, 314.50 (2004).

Links:

Briefs on the Merits:

  • In Support of Merck:
  • In Support of Neither Party:
  • In Support of Integra:

    • Reference Material:

    • John F. Duffy, Harmony and Diversity in Global Patent Law, 17 Berkeley Tech. L. J. 685 (2002).
    • John F. Duffy, Rethinking the Prospect Theory of Patents, 71 U. Chi. L. Rev. 439 (2004).
    • Rochelle Dreyfuss, Protecting the Public Domain of Science: Has the Time for an Experimental Use Defense Arrived?, 46 Ariz. L. Rev. 457 (2004).
    • Rebecca S. Eisenberg, Patents and the Progress of Science: Exclusive Rights and Experimental Use, 56 U. Chi. L. Rev. 1017 (1989).
    • Janice M. Mueller, The Evanescent Experimental Use Exception from United States Patent Infringement Liability: Implications for University/Nonprofit Research and Development, 56 BAYLOR L. REV. 917 (2004).
    • Katherine J. Strandburg, What Does the Public Get? Experimental Use and the Patent Bargain, 2004 Wisc. L. Rev. (2004).
    • Noonan, Greenfield, and Zuhn, Paradise Lost: The Uncertain Future of Research Tool Patents, 15 INTELL. PROP. & TECH. L.J. 1 (2003).
    • Richard Epstein and Bruce Kuhlik, Is There a Biomedical Anticommons?, Regulation, Summer 2004.

    • Shashank Upadhye, Understanding Patent Infringement Under 35 U.S.C. 271(e): The Collisions Between Patent, Medical Device, and Drug Laws, 17(1) Santa Clara Comp. & High Tech. L.J. 1, 23 2000)(available at http://www.lordbissell.com/Newsstand/UPIUSUpadhye-1999.pdf).

    Patent Owner Held Liable For Attorney Fees In Case Brought By Licensee

    Patent, Patent Cases 2005, ,

    Evident v. Church & Dwight (Fed. Cir. 2005)

    Evident sued Church & Dwight for infringement of its licensed technology covering toothpaste. The patent owner, Peroxydent, was joined to the lawsuit early-on through a counterclaim by Church & Dwight.  After a bench trial, the district court found that the inventors had withheld material references from the PTO with intent to deceive.  As a result, the patent was unenforceable due to inequitable conduct.  This holding was affirmed without opinion. Evident Corp. v. Church & Dwight Co., Inc., 78 Fed. Appx. 113 (Fed. Cir. Oct. 9, 2003). The district court also determined that the case was exceptional and awarded almost $1.3 million to Church & Dwight for attorney fees and expenses.  Evident & Peroxydent were found jointly liable for the fees — these fees are the subject of the appeal.

    On appeal, Peroxydent and Evident argue that Evident had no standing to sue in the first place, and thus, that the court did not have jurisdiction to find attorney fees.

    In effect, Evident and Peroxydent, being on the losing side of both their own patent infringement claim and an opposing claim for attorney fees, now appear to seek escape from the judgment by arguing that Evident lacked standing in the first place and that the original lawsuit was improperly filed.

    The court found that the defendants’ counterclaim that brought Peroxydent into the suit eliminated any standing problem.

    Nonetheless, regardless whether Peroxydent was brought into the suit by the accused or the licensee, there is no standing problem. . . . Accordingly, we conclude that Peroxydent’s presence in the litigation as a third-party defendant fully satisfied any standing requirements.

    Affirmed

    Filing Counterclaim Does Not Waive Objections to Personal Jurisdiction

    Patent, Patent Cases 2005

    Patentlyo028

    Rates Technology v. Nortel Networks (Fed. Cir. 2005).

    by Bradley Crawford

    The defendant, Nortel, was sued for patent infringement but raised the affirmative defense of lack of personal jurisdiction. Later, the defendant filed a permissive counterclaim. The plaintiff subsequently asserted that Nortel waived its lack of personal jurisdiction defense when it filed its permissive counterclaim. The district court disagreed. It ruled that the defendant’s filing a permissive counterclaim did not waive the lack of personal jurisdiction defense. It also ruled that it lacked personal jurisdiction over the defendant and dismissed the case.

    (more…)