Tag Archives: Federal Circuit En Banc

Muddling Through Claim Construction

Claim Construction, Patent, Patent Cases 2009,

Vehicle IP v. General Motors Corp. and OnStar (Fed. Cir. 2009)(Nonprecedential)

VIP’s patent covers a vehicle navigation system. After construing the asserted claims, the W.D. Wisc. court granted summary judgment of non-infringement. This appeal focuses on construction of the phrase “a notification region defined by a plurality of notification coordinates.”

The infringing systems use scalars – such as a distance – and the debate is whether those scalars fit the claimed “coordinates” limitation. The majority opinion (Prost & Bryson, JJ) held that the “plain language of the claims precludes the possibility that a coordinate can be a scalar.” According to the claim, the location of the device must “substantially corresponds to a notification coordinate,” and a bare distance does not correlate to a location. The majority also found suggestions in the prosecution history supporting a narrow construction of coordinate.

In dissent, Judge Mayer would not have limited the coordinate to “a longitude latitude pair.”

“In mathematics, there are many types of coordinate systems and the common ground is that they all define a point. For instance, in a curvilinear system, coordinates are defined with a fixed origin point, and a scalar distance offset from that point along a known curve, such as a section of road. A distance offset necessarily has a “partner” to define a point, as offsets are necessarily set off from another known point. A coordinate should not be construed to exclude defining a point by an offset from another point along a known path.”

In Hal Wegner’s words, this decision “demonstrates the different views that can be reached by reasonable minds on claim construction issues which, due to appellate de novo review, creates the opportunities for so much judicial uncertainty.” And, as suggested by dissenting judges in Phillips v. AWH, that en banc decision did little to create predictability in claim construction.

Federal Circuit Transfers Case Out of Texas (Applying New Fifth Circuit Precedent)

Patent, Patent Cases 2008,

In re TS Tech USA Corp. (Fed. Cir. 2008) (precedential order)

Responding to an interlocutory petition for a writ of mandamus, the Federal Circuit has ordered a patent case transferred from Judge Ward’s courtroom in the Eastern District of Texas to the Southern District of Ohio. Both venues were “proper,” but the appellate panel found the Ohio venue “far more convenient.”

In 2007, Michigan based Lear Corp (not Lear Jets) sued TS Tech for infringing its patent covering a pivotable vehicle headrest. The accused TS headrest assemblies were supplied to Honda and used in the Civic and Accura RDX. TS is a Japanese company, but the defendants are TS’s North American subsidiaries headquartered in Ohio and Canada.

In 2008, the Fifth Circuit (TX, LA, MS) decided another venue case on mandamus – finding that cases should be transferred from the Eastern District of Texas when the new venue is “clearly more convenient.” In re VW (5th Cir. 2008) (en banc)(cert petition pending). On mandamus, a lower court’s refusal to transfer will only be reversed if it produces a “patently erroneous result.”

Here, the lower court erred in its application of 5th Circuit law in several ways:

  • Plaintiff’s Choice: The lower court gave too much (“inordinate”) weight to the plaintiff’s choice of venue.
  • Distance from Home: When a defendant is more than 100 miles from home, “inconvenience to witnesses increases in direct relationship to the additional distance to be traveled.” Here, all the witnesses are in Michigan, Ohio, and Canada. All of those witnesses “would need to travel approximately 900 more miles to attend trial in Texas than in Ohio.”
  • Physical Evidence: “Because all of the physical evidence, including the headrests and the documentary evidence, are far more conveniently located near the Ohio venue, the district court erred in not weighing this factor in favor of transfer.”
  • Public Interest: Texas has no interest in handling this patent dispute since the only relevant connection to the venue is that some vehicles containing the accused headrest assembly were sold in the venue. “None of the companies have an office in the Eastern District of Texas; no identified witnesses reside in the Eastern District of Texas; and no evidence is located within the venue.” Thus, the “citizens of the Eastern District of Texas have no more or less of a meaningful connection to this case than any other venue.”

Patently erroneous: Although “patentably erroneous” is difficult to define, the Federal Circuit found the errors sufficient to grant the writ. They reasoned that the 5th Circuit VW case – where mandamus was also granted – was based on essentially identical errors.

Transfer Ordered.

Tags:

Federal Circuit Invalidates Immunization Patent for lack of Patentable Subject Matter

Patent

Classen Immunotherapies v. Biogen IDEC (Fed. Cir. 2008)(Nonprecedential)

Judge Moore penned the one-paragraph Classen decision:

“In light of our decision in In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), we affirm the district court’s grant of summary judgment that these claims are invalid under 35 U.S.C. § 101. Dr. Classen’s claims are neither “tied to a particular machine or apparatus” nor do they “transform[] a particular article into a different state or thing.” Bilski, 545 F.3d at 954. Therefore we affirm.”

Classen’s claims focus on several methods for evaluating vaccine immunization schedules. Claim 1 of patent 5,723,283 is reproduced below:

  1. A method of determining whether an immunization schedule affects the incidence or severity of a chronic immune-mediated disorder in a treatment group of mammals, relative to a control group of mammals, which comprises:

    immunizing mammals in the treatment group of mammals with one or more doses of one or more immunogens, according to said immunization schedule, and

    comparing the incidence, prevalence, frequency or severity of said chronic immune-mediated disorder or the level of a marker of such a disorder, in the treatment group, with that in the control group.

The claims here are quite similar to those addressed in the ill-fated Metabolite Supreme Court case. That case was dismissed by the court prior to reaching a final decision based on procedural failures.

The question left in my mind is how the step of “immunizing mammals” is properly disqualified.

Notes:

  • The panel consisted of Federal Circuit Judges Newman and Moore and District Court Judge Farnan sitting by designation from Delaware. Judge Farnan is a highly experienced patent law judge. The short opinion may well be the only consensus reached amongst the panel. I suspect that Judge Newman would write a much different “full” opinion on the case than would Judge Moore.
  • The accused infringers here include Biogen IDEC, GlaxoSmithKline, Merck & Co, Chiron, and others. I am surprised that these companies – which rely heavily on treatment method patents – would have argued strongly that the “immunizing” step was not sufficient to overcome

Federal Circuit Invalidates Immunization Patent for lack of Patentable Subject Matter

Patent

Classen Immunotherapies v. Biogen IDEC (Fed. Cir. 2008)(Nonprecedential)

Judge Moore penned the one-paragraph Classen decision:

“In light of our decision in In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), we affirm the district court’s grant of summary judgment that these claims are invalid under 35 U.S.C. § 101. Dr. Classen’s claims are neither “tied to a particular machine or apparatus” nor do they “transform[] a particular article into a different state or thing.” Bilski, 545 F.3d at 954. Therefore we affirm.”

Classen’s claims focus on several methods for evaluating vaccine immunization schedules. Claim 1 of patent 5,723,283 is reproduced below:

  1. A method of determining whether an immunization schedule affects the incidence or severity of a chronic immune-mediated disorder in a treatment group of mammals, relative to a control group of mammals, which comprises:

    immunizing mammals in the treatment group of mammals with one or more doses of one or more immunogens, according to said immunization schedule, and

    comparing the incidence, prevalence, frequency or severity of said chronic immune-mediated disorder or the level of a marker of such a disorder, in the treatment group, with that in the control group.

The claims here are quite similar to those addressed in the ill-fated Metabolite Supreme Court case. That case was dismissed by the court prior to reaching a final decision based on procedural failures.

The question left in my mind is how the step of “immunizing mammals” is properly disqualified.

Notes:

  • The panel consisted of Federal Circuit Judges Newman and Moore and District Court Judge Farnan sitting by designation from Delaware. Judge Farnan is a highly experienced patent law judge. The short opinion may well be the only consensus reached amongst the panel. I suspect that Judge Newman would write a much different “full” opinion on the case than would Judge Moore.
  • The accused infringers here include Biogen IDEC, GlaxoSmithKline, Merck & Co, Chiron, and others. I am surprised that these companies – which rely heavily on treatment method patents – would have argued strongly that the “immunizing” step was not sufficient to overcome

BPAI: PTO Should Apply Broadest Reasonable Claim Interpretation to Section 101 Analysis

Patent, , ,

Ex parte Koo (BPAI 2008)

Acting sua sponte, a BPAI panel recently entered a new ground for rejection against an IBM patent application: That the claimed process is unpatentable subject matter based on the Federal Circuit’s recent en banc decision in Bilski. The claim is directed to a method of optimizing relational database queries and appears to be specifically directed to speeding up queries where a table is joined to itself. Although the preamble does focus on a “relational database management system,” the body of the claim does not refer to any specific machinery beyond queries, sub-expressions, rows, and sets.

The legal point to consider from this case is that the PTO will apply its “broadest reasonable” claim interpretation during its §101 analysis. Here, the BPAI panel found that the broadest reasonable interpretation of IBM’s claim does not necessarily “require computer or machine implementation” and thus that the claim fails the “tied to a particular machine” prong of Bilski machine-transformation test.

“Claim 1 does not recite any steps that necessarily involve machine implementation. While the preamble of claim 1 recites a “system,” the “system” of claim 1 is not recited in terms of hardware or tangible structural elements. Rather, the “system” could be a software system, where the elements of claim 1 are implemented solely in software or algorithms. Thus, the nominal recitation of a “system” in the preamble does not transform claim 1 into patentable subject matter under § 101.”

The BPAI also found that the claim “does not call for any transformation of an article to a different state or thing, nor does it require any transformation of data or signals.” Based on the claimed step of “reforming the query,” I would argue that the claim does require a transformation, but that transformation does not satisfy Bilski because the thing transformed (the query) is not “representative of physical objects or substances.”

Notes & Comment

  • In the appeal, the BPAI overturned the examiner’s obviousness rejection based on the absence of a “self join” in the cited prior art.
  • The disputed claim:

1. A method for optimizing a query in a relational database management system, the method comprising:

  • evaluating the query to determine whether a sub-expression of the query is being joined to itself and whether a predicate of the query comprises an equality test between a same column of the sub-expression;
  • determining whether a first row set producible from a first set of references of the query to the sub-expression is subsumed by a second row set producible from a second set of references of the query to the subexpression; and
  • reforming the query to eliminate the joining of the sub-expression to itself based on evaluation of the query and determination of whether the first row set is subsumed by the second row set.

Federal Circuit Internal Operating Procedure

Patent

The Court of Appeals for the Federal Circuit generally follows its own set of “internal operating procedures.” Although these are not citable rules, they do represent the usual standard practice for the court. The court provides them to the public to try to steer appellate practice away from a purely old boy system and allow the public to understand the court’s process. Transparency is especially important for the Federal Circuit. Although located in Washington DC, the court’s jurisdiction reaches across the nation. And, lawyers from across the country come to DC to argue on behalf of their clients. The Federal Circuit – especially Judge Michel – should be commended for its work toward a more open system that is more transparent than ever. The court has done an excellent job with its online public release of new opinions that provides equal access to new information. That system is especially important when a case involves a major product (such as a blockbuster pharmaceutical) of a publicly traded company. The audio files have also been useful for non-Washington insiders to understand the impact of particular oral arguments. The court is working on the next step –immediate online access to briefs and other pleadings.

Back to the new procedures: Anyone planning to practice before the court should read the internal operating procedures. In a recent update, the court provided two additional bits of information about its operation. The first statement describes the process of selecting three judge panels. According to the court, the three-judge panels are randomly selected, subject to the availability of each judge.

“The chief judge provides to the clerk’s office a list of judges that are available for each day of an argument session. The clerk’s office runs a computer program that randomly generates three-judge panels for each month, subject to the judges’ availability.”

The second new discussion in the IOP explains how pre-release precedential opinions are circulated to all Federal Circuit judges and the “senior technical assistant” prior to publication. Non-panel members have seven working days to provide comments or request that publication be held pending en banc poll.

“When all panel votes are in on a precedential opinion or order, the authoring judge circulates the opinion and any concurring or dissenting opinions, with a transmittal sheet, to each judge. A copy is also circulated to the senior technical assistant (STA), and the STA shall provide information on potential conflicts between the panel-approved opinion and any other prior opinions of the court or other relevant precedents. The nonpanel members of the court will have seven working days (twelve working days for opinions circulated during the summer period) to review a circulated precedential opinion or order. Nonpanel members may send comments to the authoring judge, to the panel, or to all judges. A nonpanel member judge in regular active service may submit a hold sheet pending a request for an en banc poll. Absent transmittal of a hold sheet or a request for an en banc poll during the circulation period, the authoring judge sends the opinion, and any concurring or dissenting opinions, to the ASO for copying and delivery to the clerk for issuance.”

Notes:

  • Revised IOP [PDF file]
  • Mark Davies Book on Federal Circuit Appellate Procedure:

Federal Circuit Internal Operating Procedure

Patent

The Court of Appeals for the Federal Circuit generally follows its own set of “internal operating procedures.” Although these are not citable rules, they do represent the usual standard practice for the court. The court provides them to the public to try to steer appellate practice away from a purely old boy system and allow the public to understand the court’s process. Transparency is especially important for the Federal Circuit. Although located in Washington DC, the court’s jurisdiction reaches across the nation. And, lawyers from across the country come to DC to argue on behalf of their clients. The Federal Circuit – especially Judge Michel – should be commended for its work toward a more open system that is more transparent than ever. The court has done an excellent job with its online public release of new opinions that provides equal access to new information. That system is especially important when a case involves a major product (such as a blockbuster pharmaceutical) of a publicly traded company. The audio files have also been useful for non-Washington insiders to understand the impact of particular oral arguments. The court is working on the next step –immediate online access to briefs and other pleadings.

Back to the new procedures: Anyone planning to practice before the court should read the internal operating procedures. In a recent update, the court provided two additional bits of information about its operation. The first statement describes the process of selecting three judge panels. According to the court, the three-judge panels are randomly selected, subject to the availability of each judge.

“The chief judge provides to the clerk’s office a list of judges that are available for each day of an argument session. The clerk’s office runs a computer program that randomly generates three-judge panels for each month, subject to the judges’ availability.”

The second new discussion in the IOP explains how pre-release precedential opinions are circulated to all Federal Circuit judges and the “senior technical assistant” prior to publication. Non-panel members have seven working days to provide comments or request that publication be held pending en banc poll.

“When all panel votes are in on a precedential opinion or order, the authoring judge circulates the opinion and any concurring or dissenting opinions, with a transmittal sheet, to each judge. A copy is also circulated to the senior technical assistant (STA), and the STA shall provide information on potential conflicts between the panel-approved opinion and any other prior opinions of the court or other relevant precedents. The nonpanel members of the court will have seven working days (twelve working days for opinions circulated during the summer period) to review a circulated precedential opinion or order. Nonpanel members may send comments to the authoring judge, to the panel, or to all judges. A nonpanel member judge in regular active service may submit a hold sheet pending a request for an en banc poll. Absent transmittal of a hold sheet or a request for an en banc poll during the circulation period, the authoring judge sends the opinion, and any concurring or dissenting opinions, to the ASO for copying and delivery to the clerk for issuance.”

Notes:

  • Revised IOP [PDF file]
  • Mark Davies Book on Federal Circuit Appellate Procedure:

Rewarding Breakthrough Innovation

Patent

I understand that design patents are worth only a fraction of their utility patent namesakes. Each year, the number of design patent applications are only a small fraction of the number of utility patent applications filed., and design patents are – on average – less valuable than utility patents.

I do believe that utility patent law can learn something from design patent law. Let’s start with the recent en banc design patent case of Egyptian Goddess v. Swisa. In that case, the Federal Circuit defined the meaning of “infringement” of a design patent. The test created by the court looks to whether an “ordinary observer” who is “familiar with the prior art” would find an accused design “substantially similar” to the patented design. Thus, the test looks for substantial similarity in the context of the prior art.

“When the differences between the claimed and accused design are viewed in light of the prior art, the attention of the hypothetical ordinary observer will be drawn to those aspects of the claimed design that differ from the prior art. And when the claimed design is close to the prior art designs, small differences between the accused design and the claimed design are likely to be important to the eye of the hypothetical ordinary observer.”

Another way of interpreting the Egyptian Goddess test is that the scope of infringement varies inversely with the scope of prior art. When a patented design is in a field crowded with similar prior designs, the only infringing designs will be those that are strikingly similar to the patented design yet different from the prior art. Alternatively, when the patented design stands alone as a breakthrough design, the potential variety of infringing activity actually increases.

I like the idea of rewarding breakthrough innovations that go beyond ordinary invention. Here, Egyptian Goddess does that by increasing the potential claim scope when the invention goes well beyond the prior art. The question here is whether the law of utility patents can be arranged to likewise provide the best rewards for the most innovative creations.

Software Method Claims: Bilski in light of Benson

Patent,

In re Bilski and Gottschalk v. Benson

It is important to remember that the Supreme Court’s decision in Gottschalk v. Benson is still controlling law. In that 1972 decision, the Supreme Court held unpatentable a method of converting a signal from “binary coded decimal” into “binary.” The Benson method operates by using a “reentrant shift register” – a particular electronic memory circuit of the day. The rejected claim reads as follows:

8. The method of converting signals from binary coded decimal form into binary which comprises the steps of:

  • storing the binary coded decimal signals in a reentrant shift register,
  • shifting the signals to the right by at least three places, until there is a binary `1′ in the second position of said register,
  • masking out said binary `1′ in said second position of said register,
  • adding a binary `1′ to the first position of said register,
  • shifting the signals to the left by two positions,
  • adding a `1′ to said first position, and
  • shifting the signals to the right by at least three positions in preparation for a succeeding binary `1′ in the second position of said register.

In Bilski, the en banc court struggles with Benson because – on its face – the rejected Claim 8 from Benson satisfies the machine-or-transformation test of Bilski. The claimed BCD conversion method is tied to a particular machine. The Bilski majority admits as much: “the claimed process operated on a machine, a digital computer, but was still held to be ineligible subject matter.” According to the en banc panel however Benson’s claim still fails the machine-or-transformation test because the claimed physical limits were “not actually limiting.” In particular, since the only uses of the BCD converter would be on a computer, tying the claims to a computer offered no practical limitation to the otherwise preemptive claim of an algorithm.

“[I]n Benson, the limitations tying the process to a computer were not actually limiting because the fundamental principle at issue, a particular algorithm, had no utility other than operating on a digital computer.”

Thus under Bilski/Benson, tying a software algorithm to particular computer hardware may well be unpatentable subject matter if the patent would still preclude all practical uses of the otherwise unpatentable algorithm.

Notes:

  • Patently-Unobvious suggests that careful drafting could have avoided the whole problem for Benson: “If only the inventors had been less forthcoming, more obtuse, and called their claim a method for operating a shift register, who would have seen that the machine-implemented signal processing method surprisingly also happens to convert a binary coded decimal signal into a binary coded one?”

Professor Collins: In re Bilski: Tangibility Gone “Meta”

Academic Studies, Articles and Publications, Patent, Patent Cases 2008, Patentable Subject Matter, , ,

By Professor Kevin Emerson Collins (Indiana University Law School – Bloomington) [PDF Version]

In its recently issued en banc majority opinion in In re Bilski, the Federal Circuit articulates a “machine-or-transformation” test for patent-eligible subject matter under § 101 of the Patent Act. Although they are both legitimate questions, this short comment addresses neither whether there is a legitimate statutory basis for this test nor whether Supreme Court precedent should be interpreted so as to mandate (or even support) this test. Rather, it focuses solely on the criteria that the court offers to draw the line between patentable and unpatentable transformations. The Federal Circuit has added a new twist to the tangibility test that has for many years played a role in determining patent-eligibility: the tangibility test has gone “meta.” The tangibility of the formal data that is actually transformed by a method of processing information is not relevant to patent-eligibility, but the tangibility of the things that the data is about—the tangibility of the informational content of the data or the things to which the data refers—now appears to be dispositive.

Bilski sets out a disjunctive two-prong “machine-or-transformation” test for patent-eligible subject matter: “A claimed process is surely patent-eligible subject matter under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.” Slip op. at 10. The opinion declines to elaborate on the implications of the particular-machine prong of the test because the applicants conceded that their claim did not satisfy this prong. Id. at 24. It addresses only the transformation prong. It puts forward a conjunctive, two-prong test that must be satisfied for a method to “transform[] a particular article into a different state or thing” and thus to qualify as patent-eligible subject matter. First, the transformation implicated “must be central to the purpose of the claimed process.” Id. In other words, it must also “impose meaningful limits on the claim’s scope” and not “be insignificant extra-solution activity.” Id. Second, the transformation only qualifies as patent-eligible if it transforms a certain type of “article.” “[T]he main aspect of the transformation test that requires clarification here is what sorts of things constitute ‘articles’ such that their transformation is sufficient to impart patent-eligibility under § 101.” Id. at 24–25. This is the distinction—the distinction between the “articles” that, if transformed, constitute patent-eligible subject matter and the other “articles” that, if transformed, do not constitute patent-eligible subject matter—on which the opinion elaborates at length, id. at 25–32, and on which this comment focuses.

Most importantly for the point addressed here, the Federal Circuit implies in Bilski that there are two different categories of “electronically-manipulated data,” id. at 25, and that the data in each category is a different type of “article” insofar as patent-eligibility is concerned. The data in the first category is an “article” that, if transformed by a method claim, constitutes patent-eligible subject matter, but a method that transforms the data in the second category is not a patent-eligible method.

The first category is comprised of data that represents a “physical object or substance.” Id. at 28. For example, citing In re Abele, 684 F.2d 902 (C.C.P.A. 1982), the Federal Circuit stated that a method that transforms data that “clearly represent[s] the physical and tangible objects, namely the structure of bones, organs, and other body tissues” is a patent-eligible method. Slip. op. at 26.

The second category of data seems to have two distinct subsets. The first subset is data that, as claimed, does not represent anything (or, alternatively, that can represent anything). This data is semantically empty; it is a variable without any specified informational content. Bilski again uses Abele—but this time the claims that the court rejected under § 101—as an example. Id. The fact that methods reciting the transformation of this meaningless (or infinitely meaningful) data are not patent-eligible should come as no surprise to those familiar with the history of patent-eligibility in the last several decades: methods that recite the manipulation of variables without semantic meaning are nothing more than methods that recite mathematical algorithms in the abstract.

The second subset of the second category, however, is likely to raise some eyebrows: it contains data that represents something specific or something in particular, but that something represented is itself intangible. Here, the informational content of the data—the thing in the world to which the data refers—is intangible. The Federal Circuit holds that the method at issue in Bilski is not patent-eligible because it “transform[s]” or “manipulat[es]” data representing “public or private legal obligations or relationships, business risks, or other such abstractions,” which critically is not data “representative of physical objects or substances.” Id. at 28.

The idea that the meaning that the user attributes to the data transformed or manipulated by an information processing method is relevant to patent-eligibility is not a novel feature of the “machine-or-transformation” test announced in Bilski. For example, the “concrete, useful and tangible result” test of State Street Bank required the courts to examine the meaning of the data, variables or “numbers” in the course of determining patent-eligibility. State St. Bank & Trust Co. v. Signature Fin. Group, 149 F.3d 1368, 1373–75 (Fed. Cir. 1998). However, what is new in Bilski is the importance now placed on the physicality of the thing to which the data refers. Thus, the tangibility test has gone “meta”: it is no longer the tangibility of jostling electrons that is of concern (as it was in the early days of patents on computer-executed information processing methods), but the tangibility of the stuff represented by those electrons-as-symbols. In the language of semiotics, the tangibility analysis has shifted from a concern about the tangibility of the signifier—the physical configuration of matter that forms a symbol—to a concern about the tangibility of the signified—the informational content of or the thing represented by the symbol.

There is in my opinion much that needs to be said about this move in Bilski that takes the long-standing concern about tangibility in the patent-eligibility analysis “meta,” transforming it from a concern about a signifier to a concern about a signified. Here, however, I limit myself to raising two initial, narrow questions.

First, the move raises a normative question: Why should we treat information about tangible things in a manner that is categorically different from the manner in which we treat information about intangible things? Having taken its cue from the Supreme Court, the Federal Circuit clearly wants to prevent patent-eligible method claims from pre-empting mathematical “fundamental principles.” Slip op. at 26. However, the most appropriate means to achieve this end would seem to be a focus on the specificity, not the intangibility, of what is meant. Why should the manipulation of data that represents my height (a presumptively physical property of my body) be patentable, yet the manipulation of data that represents my expected longevity (a property that is difficult to classify as a physical one) be unpatentable?

Second, the move raises concerns about administrability. Is data about my expected longevity about something physical, namely my body? If it is, then why isn’t the data at issue in Bilski also about something tangible? The data is after all about a property of lumps of coal, namely their expected future rate of consumption or the legal rights that individuals have with respect to them. Or, to formulate the administrability problem in a recursive manner, what about data that is about the structural qualities of electronic signals? To determine whether a method that manipulates such data is patent-eligible, it would seem again to be necessary to confront the tangibility of an electronic signal—the very question that patent doctrine has been trying to render irrelevant for several decades—but this time with the signal as a signified rather than as a signifier.

Patently-O Bits and Bytes

Bits and Bytes, Patent

In re Bilski: Patentable Process Must Either (1) be Tied to a particular machine or (2) Transform a Particular Article

Patent, Patent Cases 2008, Patentable Subject Matter, , , , , ,

In re Bilski, __ F.3d __ (Fed. Cir. 2008)(en banc)

The Federal Circuit has affirmed the PTO’s Board of Patent Appeals (BPAI) finding that Bilski’s claimed invention (a method of hedging risks in commodities trading) does not satisfy the patentable subject matter requirements of 35 U.S.C. § 101. In doing so, the nine-member majority opinion (penned by Chief Judge Michel) spelled out the “machine-or-transformation” test as the sole test of subject matter eligibility for a claimed process.

The Supreme Court … has enunciated a definitive test to determine whether a process claim is tailored narrowly enough to encompass only a particular application of a fundamental principle rather than to pre-empt the principle itself. A claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.

….

Because the applicable test to determine whether a claim is drawn to a patent-eligible process under § 101 is the machine-or-transformation test set forth by the Supreme Court and clarified herein, and Applicants’ claim here plainly fails that test, the decision of the Board is AFFIRMED.

State Street Test Is Out: In State Street, the Federal Circuit used the “useful, concrete, and tangible result” of a process as a touchstone for patentability. In Bilski, the en banc panel found the State Street formulation “insufficient to determine whether a claim is patent-eligible under § 101.”

[W]e also conclude that the “useful, concrete and tangible result” inquiry is inadequate and reaffirm that the machine-or-transformation test outlined by the Supreme Court is the proper test to apply.

Some Business Methods and Software Are Still In: Still, the court made clear that business methods and Software will still be patentable – if they meet the machine-or-transformation test.

We rejected [a categorical] exclusion in State Street, noting that the so-called “business method exception” was unlawful and that business method claims (and indeed all process claims) are “subject to the same legal requirements for patentability as applied to any other process or method.” We reaffirm this conclusion.

…

[A]lthough invited to do so by several amici, we [also] decline to adopt a broad exclusion over software or any other such category of subject matter beyond the exclusion of claims drawn to fundamental principles set forth by the Supreme Court

To be clear, the machine-or-transformation test is not a physicality test – i.e., a claim can still be patentable even if it does not recite sufficient “physical steps.” On the flip-side, “a claim that recites ‘physical steps’ but neither recites a particular machine or apparatus, nor transforms any article into a different state or thing, is not drawn to patent-eligible subject matter.” Here, the court spelled out the specific issue in mind: a claimed process where every step may be performed entirely in the human mind. In that situation, the machine-or-transformation test would lead to unpatentability. “Of course, a claimed process wherein all of the process steps may be performed entirely in the human mind is obviously not tied to any machine and does not transform any article into a different state or thing. As a result, it would not be patent-eligible under § 101.”

Along this line, the court also dispelled two rising concerns, noting that that (1) neither novelty nor obviousness have any relevance to the section 101 inquiry, and (2) the fact that an individual claim element is – standing alone – patent ineligible does not render the claim unpatentable because patent eligibility is considered while examining the claim as a whole.

What is a Transformation?: The courts have already developed an understanding of transformation as it relates to the Section 101 inquiry. Here, the Federal Circuit referred to the distinction made in the 1982 Abele case. There, the court distinguished between two of Abele’s claims – finding only one patentable. The unpatentable claim recited “a process of graphically displaying variances of data from average values” without specifying “any particular type or nature of data … or from where the data was obtained or what the data represented.” The patentable dependent claim identified the “data [as] X-ray attenuation data produced in a two dimensional field by a computed tomography scanner.” In retrospect, the Federal Circuit sees the difference between these two claims to be that of transformation. The second claim included sufficiently specific transformation because it changed “raw data into a particular visual depiction of a physical object on a display.” Notably, the transformation did not require any underlying physical object. As the court noted later in the opinion, the transformed articles must be “physical objects or substances [or] representative of physical objects or substances.”

The Bilski claims themselves were not seen as transforming an article:

Purported transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances. Applicants’ process at most incorporates only such ineligible transformations. . . . As discussed earlier, the process as claimed encompasses the exchange of only options, which are simply legal rights to purchase some commodity at a given price in a given time period. The claim only refers to “transactions” involving the exchange of these legal rights at a “fixed rate corresponding to a risk position.” Thus, claim 1 does not involve the transformation of any physical object or substance, or an electronic signal representative of any physical object or substance.

The principle behind the test is to prevent a patentee from obtaining claims that preempt the use of fundamental principles. That principle reaches back more than 150 years to the Morse case where the inventor was precluded from claiming all uses of electromagnetism to print characters at a distance.

We believe this is faithful to the concern the Supreme Court articulated as the basis for the machine-or-transformation test, namely the prevention of pre-emption of fundamental principles. So long as the claimed process is limited to a practical application of a fundamental principle to transform specific data, and the claim is limited to a visual depiction that represents specific physical objects or substances, there is no danger that the scope of the claim would wholly pre-empt all uses of the principle.

What is a “Particular Machine”?: For software and business methods, the question will remain as to whether a general purpose computer is sufficiently particular to qualify as a “particular machine.” “We leave to future cases the elaboration of the precise contours of machine implementation, as well as the answers to particular questions, such as whether or when recitation of a computer suffices to tie a process claim to a particular machine.” As Professor Duffy noted in an earlier Patently-O article, the PTO Board of Patent Appeals (BPAI) has already answered this question: “A general purpose computer is not a particular machine, and thus innovative software processes are unpatentable if they are tied only to a general purpose computer.” See Ex parte Langemyr (May 28, 2008) and Ex parte Wasynczuk (June 2, 2008). More commonly, the claim may tie the software to computer memory or a processor – is that sufficiently particular? I suspect this fact pattern will arise shortly.

Unpatentability Affirmed

Notes:

  • Although three dissenting opinions were filed, Judge Newman is the only judge who found patentable subject matter in Bilski’s claim.
  • In Dissent, Judge Mayer thought the decision did not go far enough: “Affording patent protection to business methods lacks constitutional and statutory support, serves to hinder rather than promote innovation and usurps that which rightfully belongs in the public domain.” Citing work by Professors Dreyfuss and Pollack, Mayer argues that business method patents have the overall effect of stifling innovation by restricting competition.
  • In his Dissent, Judge Rader asks the insightful question of why a new test is necessary when settled law already answers the question. Rader would have decided the opinion with one line: “Because Bilski claims merely an abstract idea, this court affirms the Board’s rejection.” I believe Rader’s position is quite defensible. In particular, the majority justifies its need for the test as a way to ensure that we avoid the “preemption of fundamental principles.” In the majority construct, the machine-or-transformation test serves as a fairly accurate proxy for preventing preemption. The court does not, however, answer why any proxy is necessary – if the purpose is to exclude overbroad abstract ideas why not simply rely on the current rule preventing patenting of abstract ideas (as well as the law requiring full enablement)?

Concurring opinion by Judge DYK (joined by Judge LINN) attempt to reconcile the history of the patent system with the new rule of patentability.

Rethinking the four ‘factors’ of preliminary injunctive relief

Injunctions, Patent, Patent Cases 2008

Abbott Laboratories v. Sandoz, Inc., (Fed. Cir. 2008)(Newman, J.)

Preliminary injunctions decisions are blessed with their own four-factor equitable test. I like to think of the test as having two required elements (likelihood of success on the merits and potential irreparable harm) and two optional factors (balance of the equities and public interest). A preliminary injunction (PI) will only issue when (1) the first two elements are demonstrated by the patentee and (2) the combined result of all four elements/factors weighs in favor of a PI.

The district court granted a preliminary injunction to Abbott to stop Sandoz from making or selling a generic version of its extended release clarithromycin antibiotic. In 75 pages of split opinion, the Federal Circuit affirmed with Judge Newman writing the majority opinion; Senior Judge Archer signing-on except for the two juicy parts: I and VI; and Judge Gajarsa in vigorous dissent.

The dispute revolves around the meaning of the required PI element of ‘likelihood of success on the merits.’ To win on this element, the patentee typically needs to provide evidence of infringement of at least one valid claim. Often this element turns on the defendant’s rebuttal proof of invalidity. Here, the defendant provided some evidence of potential invalidity, but not conclusive evidence. Thus, while the defendant did raise a substantial question of the vulnerability of the patent, it did not provide any clear and convincing evidence of invalidity.

Judge Gajarsa argued that Federal Circuit precedent requires a PI be denied when substantial questions of validity are raised. This standard is exemplified in the Federal Circuit’s recent Erico decision – which found the threshold “substantial question” met by evidence which simply “cast[s] doubt on the validity” of the asserted claims.

Judge Gajarsa: “Under our precedent, the likelihood of success factor is properly analyzed by considering whether the alleged infringer raises a substantial question as to validity.”

 

On the other side, Judge Newman argues that a patentee may still be likely to succeed on the merits even when vulnerabilities and substantial invalidity questions are raised by the defense.

Judge Newman: “The question is not whether the patent is vulnerable; the question is who is likely to prevail in the end, considered with equitable factors that relate to whether the status quo should or should not be preserved while the trial is ongoing. The presentation of sufficient evidence to show the likelihood of prevailing on the merits is quite different from the presentation of substantial evidence to show vulnerability. “

Both sides are well supported by conflicting precedent, and this case may well be a good vehicle for an en banc discussion of preliminary injunctive relief.

Federal Circuit Finds No Antitrust Liability for Hatch-Waxman Reverse Payment Settlements

Patent,

In re Ciprofloxacin Hydrochloride Antitrust Litigation (Fed. Cir. 2008)

Bayer’s patent on Cipro was challenged by Barr. However, the parties settled on the eve of trial. In all, Bayer paid $398 million to Barr to ensure that it didn’t receive a judgment of invalidity or unenforceability. Subsequently, Bayer filed for reexam to ensure that there would not be a later inequitable conduct problem. When other companies later challenged the patent, it was repeatedly found valid.

To many, the Barr settlement looked like a way to prop-up the drug price at the expense of consumers, health insurance companies. Various groups filed suit – arguing violations of Sections 1 and 2 of the Sherman Act and violations of state antitrust and consumer protection laws.

On summary judgment, the Federal District Court in New York applied a rule of reason to find no antitrust violations as follows:

  1. The relevant market is CIPRO and Bayer had market power in that market.
  2. However, any “adverse effects on competition” due to the settlement could not create antitrust violations because the settlement was “within the exclusionary zone of the ‘444 patent.”

In its holding, the district court rejected the notion that the “exclusionary zone” would be narrowed or altered by the potential invalidity of the patent. Furthermore, the district court held that unenforceability due to prosecution misconduct cannot be the subject to a Walker-Process antitrust violation – rather, the misconduct must be market-based misconduct. And, the Walker-Process argument failed because Bayer later successful litigation showed that its approach with Barr was not a ‘sham.’

On appeal, the Federal Circuit affirmed the summary judgment in favor of the pharmaceutical companies.

Per Se vs Rule of Reason: Some activities are considered so pernicious that they will be considered per se violations of the Sherman Act. Most actions, however, are judged under the rule of reason to determine if the particular activities had a potentially pro competitive impact. Here, the federal circuit could find no basis for “confidently predict[ing]” that such reverse-payment settlement agreements were unlawful – and consequently should be judged under the rule of reason.

Patents and Antitrust: Patents lead to anticompetitive behavior – that is the nature of the right to exclude. A patentee will not have antitrust liability for activity within the “zone of exclusion” of its patent. On appeal, the Federal Circuit agreed that the reverse payment was within the zone of exclusion.

Reverse Payments: In patents, a reverse payment is a payment by a patentee to an accused infringer to end litigation and perhaps to keep the infringer off the market. Remember, typically, it is the patentee who is looking for damages, not seeking to pay. The plaintiffs argued that such a reverse payment could not be considered within the ordinary scope of patentee behavior. The appellate court disagreed, finding that through the payment, Bayer was protecting its market share in its patented product and thus was well within its rights.

Pursuant to the Agreements, the generic defendants agreed not to market a generic version of Cipro until the ‘444 patent expired and not to challenge the validity of the ‘444 patent, and Bayer agreed to make payments and optionally supply Cipro for resale. Thus, the essence of the Agreements was to exclude the defendants from profiting from the patented invention. This is well within Bayer’s rights as the patentee. . . .

A settlement is not unlawful if it serves to protect that to which the patent holder is legally entitled—a monopoly over the manufacture and distribution of the patented invention.

In addition, the court found that settlements are favored even when anti-competitive.

Furthermore, there is a long-standing policy in the law in favor of settlements, and this policy extends to patent infringement litigation. Settlement of patent claims by agreement between the parties—including exchange of consideration—rather than by litigation is not precluded by the Sherman Act even though it may have some adverse effects on competition.

And, settlements normally include a promise not to challenge validity – something allowed under antitrust laws:

Settlements in patent cases, however, frequently provide that the alleged infringer will not challenge the validity of the patent. Thus, the mere fact that the Agreements insulated Bayer from patent validity challenges by the generic defendants was not in itself an antitrust violation.

Affirmed

Notes

  • On the panel were Circuit Judges Schall and Prost and Judge Ward from the Eastern District of Texas sitting by designation. The opinion was written by Judge Prost.
  • Expect petitions for en banc hearing and certiorari. The reverse payment issue has been brewing for some time.
  • During the post-9/11 anthrax scares, the Federal Government threatened to break the patent and begin manufacturing a generic version if sufficient supplies were not available. [Link]

CAFC allows Venue Transfer to Texas

Patent, Patent Cases 2008,

In re Volkswagen (Fed. Cir. 2008) (nonprecedential denial of mandamus)

In July 2007, MHL filed a patent infringement suit against VW in the Eastern District of Texas. Hoping to avoid that venue, the automobile company countersued in the Eastern District of Michigan. Although primarily a declaratory judgment action, VW included Michigan state law claims of unfair competition, defamation, trade disparagement, and abuse of process. In a preliminary hearing, the Michigan court declined its powers of supplemental jurisdiction over the state law claims and ordered the case be transferred to Texas. Because the transfer was not a final action, VW had no right to an appeal. Instead, it filed a writ of mandamus.

The Federal Circuit considered the writ, but ultimately declined to exercise authority over the case – finding that VW had not shown the importance of immediately deciding the issue. “A party seeking a writ bears the burden of proving that it has no other means of attaining the relief desired.”

In Texas, the 5th Circuit Court of Appeals just released its en banc opinion in another In re VW case. In that case, the 5th Circuit held that the E.D. Texas (Marshall) court had unreasonably refused to transfer VW’s case to a Northern District court in Dallas. The AIPLA filed a brief in that case, noting that the Eastern District of Texas rarely allows an out-transfer. From the AIPLA brief: “The routine filing of patent infringement complaints in the Eastern District of Texas that have essentially no connection to that district has been encouraged by the seeming reluctance of courts in that district to transfer cases under § 1404(a).” [Link]

In another venue case, Judge Patel of the Northern District of California noted that venue games are “perfectly legitimate”

“It is clear that both parties are attempting to achieve tactical advantage in the choice of a forum (which is a perfectly legitimate goal in an adversarial system of justice).” 

In Sorensen v. Phillips, Judge Patel transferred the case to the Southern District of California where a parallel proceeding was already underway (and stayed pending reexamination).

Notes:

 

Tags: ,

IGT Petitions for En Banc Rehearing: Asking Court to Allow Invalidity Defense for “Improper Revival”

Patent, ,

Aristocrat v. IGT (Fed Cir. 2008 – on rehearing) ITG PETITION

IGT has petitioned the Federal Circuit for a rehearing en banc. IGT asks the court to consider which violations of the Patent Act would be sufficient to render a patent invalid during litigation.

In this case, Aristocrat filed its US national-stage application one day late. The PTO allowed the applicant to revive the application as unintentionally abandoned. In litigation, IGT argued that the patent should be held invalid as improperly revived because the statute only allows for revival of unavoidably abandoned applications in this situation.

Without reaching the merits of IGTs validity argument, the Federal Circuit summarily dismissed IGT’s claim – finding that ‘improper revival’ is not a ‘cognizable defense’ because it does not fit within any of the four defenses listed in 35 U.S.C. §282 and it is not otherwise justified in equity.

This unanimous decision – signed by Judges Newman, Bryson, and Linn – has broader implications. It calls into question whether traditional invalidity defenses such as nonstatutory double patenting and improper inventorship remain. IGT provides its own list of challenges that will be barred even after PTO error. Notably the gaming company argues that under the new rule, improper revivals of any type could not be challenged nor could failure to pay the maintenance fees.

In its brief, IGT seeks to overturn the panel’s narrow interpretation of a “condition for patentability.” Section 282(2) allows for an invalidity defense based on failure to meet a condition for patentability. However, the appellate panel limited that section only to issues of novelty, utility, and nonobviousness.

‘Section 131 supports [a] common sense reading of the statute. It states that the PTO “shall issue a patent” only if “the applicant is entitled to a patent under the law.” 35 U.S.C. § 131. The plain meaning of that provision is that lawful entitlement to a patent is a condition of patentability. An applicant who abandoned its application without reviving it under the statutory mandated standard is not lawfully entitled to a patent and should have no right to enforce it. The panel’s decision overthrows these common-sense principles as set forth in the Patent Act.’ IGT rehearing motion.

IGT also argues that improper revival was “made a defense” by Congress when it created the law of abandonment that allows only revival for unavoidable delay in cases like these. IGT argue essentially that failure to comply with any patent statute is sufficient to render the patent invalid in litigation.

Notes:

  • DDC Comment: The Case Should be Heard. The Patent Office serves as a threshold check to establish presumptive property rights. However, both the technology and the law are complicated enough to warrant a ‘second look’ to ensure that each legal requirement is met. It is clear that a significant number of issued patents would be found invalid if challenged. The second look could be through litigation challenges, reexamination proceedings, or some other ex post proceeding. This opinion, however, concludes that no challenge is available in a variety of potential cases. That result is wrong from a policy perspective and It appears that IGT has a strong statutory construction argument as well.
  • Hat Tip: Thanks to Chico Gholz and Mark Lemley for suggesting specific implications of the panel holding.

En Banc Federal Circuit Revives Design Patent Law

Design Patent, En Banc, Patent, Patent Cases 2008,

Egyptian Goddess v. Swisa (Fed. Cir 2008, en banc)

In a rare unanimous en banc opinion, the Court of Appeals for the Federal Circuit has revived the value of design patent protection by loosening the standard for infringement. The opinion – penned by Judge Bryson – rejects the “point of novelty” test as a requirement to prove infringement of a design patent. Instead, the judges agree that the 1871 Gorham “ordinary observer” test is the “sole test for determining whether a design patent has been infringed.”

The focus of the Gorham test is to look for substantial similarity between the patented design and the accused design. It is called the ordinary observer test because the similarity is considered from the perspective of an ordinary observer who is familiar with the art. Although Gorham only requires a comparison between the patented and accused designs, prior art designs will generally be useful for highlighting differences. A second pro-patentee rule that emerges from this case is that the burden of production of prior art designs will fall on the accused infringer. On claim construction, the Federal Circuit agreed that a ‘verbal description’ of the diagrams is not required, but will not – by itself – be reversible error.

Ordinary Observer With a Tight Focus: Although the patentee was able to change the law, it actually lost the day. In the appeal, the CAFC concluded that even under the ordinary observer test, “no reasonable fact finder could find that EGI met its burden of showing, by a preponderance of the evidence, that an ordinary observer, taking into account the prior art, would believe the accused design to be the same as the patented design.”

The courts application of the law shows that proving infringement under the ordinary observer test will not be a walk in the park for design patent holders. Many cases will likely still turn on technical points of similarity rather than simply a broader totality of similarity. Yet, despite the potential difficulties, the situation is vastly improved from the hardships imposed by the point of novelty test.

More to come…

Appellate Decisionmaking: Unanimity or Dissent

Academic Studies, Patent

The graph above is based on a review of almost 400 CAFC patent decisions that include a dissent. To calculate the percent of patent decisions that include a dissent, I pulled each decision associated with each judge and then added up the number of decisions that involved a dissent (regardless of whether the judge in question dissented). I am confident in these results, but a little more work is needed to handle the en banc decisions (which are more likely to involve a dissent). My RA Ryan Starnes helped in compiling the data.

Inequitable Conduct: Out of the Frying Pan?

Patent, , , ,

By Prof. Paul M. Janicke, HIPLA Professor of Law, University of Houston Law Center< ?xml:namespace prefix ="" o ns ="" "urn:schemas-microsoft-com:office:office" />

In the 1980s patent practitioners were being pressed by clients to keep costs down. At the same time they were seemingly presumed by courts to understand right away any prior-art reference that made its way into their offices, and how that reference might relate to patent applications they were writing or prosecuting. They were rather upset with the drift of the law on inequitable conduct. It seemed the courts were allowing something short of intentional deception to make out that defense and to ruin a client’s otherwise solid case for validity and infringement. Language like “gross negligence” had crept into some of the appellate decisions. With enough time and funding by the challenger, many non-cited things in a patent practitioner’s possession could be made years later to look important to patent prosecution, and explanations for non-citation always seemed at that late date a little lame. All the challenger needed to do is find one of those things and persuade the judge to label the non-citation as gross negligence.

Patent.Law129The Federal Circuit recognized the problem and in 1988 handed down Kingsdown Medical Consultants Ltd. v. Hollister Inc.,[1] wherein the court reiterated that intent to deceive the PTO had to be proved by clear and convincing evidence. In an in banc section of the opinion labeled “Resolution of Conflicting Precedent,” the court held that gross negligence could not alone suffice to make out inequitable conduct.[2] The profession breathed a little easier. They were perhaps out of the frying pan.

However, shortly after Kingsdown a number of other cases rightly pointed out that deceivers seldom come forth and say they acted with intent to deceive. “Such intent usually can only be found as a matter of inference from circumstantial evidence.”[3] Through the 1990s the Federal Circuit appreciated the continuing need to make an actual finding that a particular person acted to mislead the PTO in a particular way. It told us “a finding of intent to deceive the PTO is necessary to sustain a charge of inequitable conduct.”[4] In a withholding-type accusation, reaching that conclusion of course requires a subsidiary finding that the person appreciated the significance of the withheld item. Without that appreciation, he can hardly be trying to deceive the examiner about the item. 

In the last three years Federal Circuit panels have slipped back into “should have known” language to arrive at the conclusion of intent to deceive or mislead the PTO.[5] That is the language of simple negligence. Even more troublesome, they seem to have reached the “should have” finding by reference to the importance (materiality) of the item to the prosecution proceeding, the logic of which is somewhat elusive. In 2008 a number of cases have now explained how all this is consistent with Kingsdown. Negligence alone might not be enough, but when material information is found in the hands of persons connected to patent prosecution, they need to provide a “credible explanation” or suffer a finding of bad intent.[6]

The trouble with this approach is that it allows even simple negligence (“should have known”) to shift the burden of persuasion on intent to the patent owner. This shift will happen in just about every case, because the finding of materiality in a combative courtroom setting will nearly always generate the “should have known” prong, shifting the entire burden of credibly showing benign intent onto the patentee. In the dynamic of actual patent litigation years after the events in question, that burden is indeed a fearsome one. In life, consider how often we ask ourselves when bad situations arise: “Why did I do that? Why didn’t I see the connection?” Credible-sounding explanations are not that easy to come by, even when we know we are innocent. Explanations on the ground of human fallibility feel hollow, and this is especially so in the majestic setting of a court proceeding. The patent bar and their clients have gone out of the frying pan and into the fire.

Some rays of hope have appeared for rectifying the situation. Judge Newman dissented in Nilssen, the small-entity status case.[7] And Judge Rader has seen the problem in what I regard as its proper light. In May of this year two panel judges sitting with him upheld a district court’s finding of inequitable conduct in a withholding-of-information case. The two were unwilling to reverse the lower court’s conclusion that the explanation given for non-citation was not credible.[8] Dissenting, Judge Rader said: “[M]y reading of our case law restricts a finding of inequitable conduct to only the most extreme cases of fraud and deception. . . Although designed to facilitate USPTO examination, inequitable conduct has taken on a new life as a litigation tactic. The allegation of inequitable conduct opens new avenues of discovery; impugns the integrity of patentee, its counsel, and the patent itself; excludes the prosecuting attorney from trial participation (other than as a witness); and even offers the trial court a way to dispose of a case without the rigors of claim construction and other complex patent doctrines.”[9] Amen to that. This is not the place to try to rectify perceived weaknesses in the patent examination process or to make amends with district judges by according more weight to their rulings. Worthy and important goals those may well be, but shifting burdens on inequitable conduct is not the way.

Inequitable conduct burdens have in the past rightly been placed on the challenger. Establishing this defense has required a finding not about what a person should have known, but that the person involved actually did appreciate of the significance of the information to the prosecution process. Now the burden on the intent prong has de facto shifted. Hopefully it will return to where it was. I have always thought the relative importance of the item as seen years later has little to do with finding an intent to mislead. Most of the time it is just as easy in life to fail to connect important dots as unimportant ones.


[1] 863 F.2d 867 (Fed.Cir. 1988), cert. denied, 490 < ?xml:namespace prefix ="" st1 ns ="" "urn:schemas-microsoft-com:office:smarttags" />U.S. 1067 (1989).

[2] Id. at 876.

[3] Hewlett-Packard v. Bausch & Lomb, 882 F.2d 1556, 1562 (Fed. Cir. 1989).

[4] RCA Corp. v. Data General Corp., 887 F.2d 1056, 1065 (Fed. Cir. 1989), emphasis in original.

[5] See Ferring BV v. Barr Labs. Inc., 437 F.3d 1181, 1191-92 (Fed. Cir. 2006) (applicant should have known non-disclosed relationships of affiants to assignee company were important); Cargill Inc. v. Canbra Foods Ltd., 476 F.3d 1359, 1367-68 (Fed. Cir. 2007) (applicant should have known lab tests on a property were important); Bruno Indep. Living Aids Inc. v. Acorn Mobility Services Ltd., 394 F.3d 1348, 1351 (Fed. Cir. 2005) (from what was said to FDA, applicant should have known prior powered staircase was important to PTO).

[6] See Nilssen v. Osram Sylvania, Inc., 528 F.3d 1352, 1359-60 (Fed. Cir. 2008) (inequitable conduct finding upheld based on wrongful claiming of small entity status, where explanation testimony was not credible); Pfizer Inc. v. Teva Pharms. USA, 518 F.3d 1353, 1367 (Fed. Cir. 2008) (finding of no inequitable conduct in non-citation of reference showing similar structure affirmed where explanation was credible); Monsanto Co. v. Bayer Bioscience N.V., 514 F.3d 1229, 1241 (Fed. Cir. 2008) (inequitable conduct finding upheld where explanation for non-citation of meeting notes was not credible).

[7] Supra, note 6, 528 F.3d at 1362-65.

[8] Aventis Pharma S.A. v. Amphastar Pharm. Inc., 525 F.3d 1334, 1349 (Fed. Cir. 2008).

[9] Id. at 1349-50.

Obviousness of Chemical Compounds; Split over Inequitable Conduct

Inequitable Conduct, Obviousness, Patent, Patent Cases 2008, ,

PatentLawPic378EISAI v. DR. REDDY’S LABORATORY and TEVA PHARMACEUTICALS (Fed. Cir. 2008)

Eisai’s blockbuster ulcer drug AcipHex boasts over $1 billion in annual worldwide sales.  The company holds a patent covering the active ingredient – rabeprazole – and its salts. Dr. Reddy’s and Teva each filed ANDAs and Eisai filed suit to block generic entry.

Eisai won a summary judgment decision that the patent is infringed and enforceable. The appeal focuses on obviousness and inequitable conduct.

Obviousness of Chemical Compounds: Structural similarity is the touchstone of the obviousness inquiry for patents claiming a novel chemical compound. A looming question for pharmaceutical companies, however, is how the Supreme Court’s decision in KSR v. Teleflex will impact chemical patents.

In KSR, the Supreme Court eased a defendant’s pathway for invalidating a patent as obviousness. KSR’s focus, however was on inventions created by combining known elements.  Here, the individual components of Eisai’s claimed compound were all known. However, the Eisai decision cabins-in KSR’s importance by showing that the assumptions found in KSR often do not apply to chemical compound cases.

“The Supreme Court’s analysis in KSR thus relies on several assumptions about the prior art landscape. First, KSR assumes a starting reference point or points in the art, prior to the time of invention, from which a skilled artisan might identify a problem and pursue potential solutions. Second, KSR presupposes that the record up to the time of invention would give some reasons, available within the knowledge of one of skill in the art, to make particular modifications to achieve the claimed compound. Third, the Supreme Court’s analysis in KSR presumes that the record before the time of invention would supply some reasons for narrowing the prior art universe to a “finite number of identified, predictable solutions.” In Ortho-McNeil Pharmaceutical, Inc. v. Mylan Laboratories, Inc., 520 F.3d 1358, 1364 (Fed. Cir. 2008), this court further explained that this “easily traversed, small and finite number of alternatives . . . might support an inference of obviousness.” To the extent an art is unpredictable, as the chemical arts often are, KSR’s focus on these “identified, predictable solutions” may present a difficult hurdle because potential solutions are less likely to be genuinely predictable.”

Thus, in chemical compound cases, “a prima facie case for obviousness for a chemical compound still, in general, begins with the reasoned identification of a [prior art] lead compound.”  Obviousness can then based on structural similarity along with some “motivation that would have led one of ordinary skill in the art to select and then modify a known compound (i.e. a lead compound) in a particular way to achieve the claimed compound.”  Although the motivation to modify the prior art can come from many different fields, some motivation is needed. In chemical cases, this motivation may be proved by showing a ‘sufficiently close relationship’ between the prior art and claimed compound that would ‘create an expectation . . . that the new compound will have similar properties to the old.’ (internal quotation marks removed). In other words, an obvious substitution would be ‘predictable.’

In this case, the lead compound – Lansoprazole – is quite similar to the claimed compound Rabeprazole. The difference is only found in a trifluroethoxy substituent at the 4–position (see figure) versus a methoxypropoxy substituent.  Although structurally similar, the CAFC could not find any motivation to substitute the active groups. In particular, the court noted that it would not make sense to drop trifluroethoxy from the prior art — since it is that substituent that activated Lansoprazole.

“The record, however, shows no discernible reason for a skilled artisan to begin with lansoprazole only to drop the very feature, the fluorinated substituent, that gave this advantageous property.”

Nonobviousness affirmed.

A High Bar for Inequitable Conduct: As usual, Judge Rader took a hard stance against inequitable conduct. He writes:

“Inequitable conduct in prosecuting a patent application before the United States Patent & Trademark Office may take the form of an affirmative misrepresentation of material fact, a failure to disclose material information, or the submission of false material information, but in every case this false or misleading material communication or failure to communicate must be coupled with an intent to deceive.  Innogenetics, N.V. v. Abbott Labs., 512 F.3d 1363, 1378 (Fed. Cir. 2008).  Materiality, defined as “what a reasonable examiner would have considered important in deciding whether to allow a patent application,” and intent are both questions of fact, and require proof by clear and convincing evidence.  Id.  To satisfy the “intent” prong for unenforceability, “the involved conduct, viewed in light of all the evidence, including evidence indicative of good faith, must indicate sufficient culpability to require a finding of intent to deceive.”  Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 876 (Fed. Cir. 1988) (en banc) (citing Norton v. Curtiss, 433 F.2d 779 (CCPA 1970)).  Gross negligence is not sufficient.  Id.  This is a high bar.”

This opinion along with Judge Rader’s recent dissent in the Aventis case may show a growing split within the court on the issue of inequitable conduct.

Notes:

  • I updated this report to add a squishy word: “often.” The modified sentence now reads: “However, the Eisai decision cabins-in KSR’s importance by showing that the assumptions found in KSR often do not apply to chemical compound cases.”