Tag Archives: reasonable expectation of success

Hypothesis alone Does not Make the Results Obvious

December 18, 2017Patentobviousness, reasonable expectation of successDennis Crouch

by Dennis Crouch

My former bosses Paul Berghoff and Alison Baldwin (at MBHB) won an interesting case today on behalf of Genzyme and its corporate parent Sanofi-Aventis.

Genzyme Corp. v. Dr. Reddy’s Labs., Ltd. (Fed. Cir. 2017)

Genzyme’s patent No. 7,897,590 is an important part of modern stem-cell practice in the treatment of non-Hodgkin’s lymphoma and multiple myeloma. The patented process stimulates mobilization of a donor’s bone marrow by administering both a “granulocyte-colony stimulating factor” and also plerixafor (See Claim 19). The plerixafor drug (sold under the brand name Mozobil) is no longer patented, but the treatment protocol is patented.

In the ANDA lawsuit, the generic defendants argued that the asserted claim was obvious. Following a bench trial (no right to jury trial in ANDA cases), the district court sided with the patentee — finding insufficient evidence of obviousness. On appeal, the Federal Circuit has also affirmed.

For obviousness analysis, the first consideration is typically the scope-and-content of the prior art. Any reference used must qualify as prior art under Section 102 and must also be considered analogous or pertinent. The key prior art reference – Hendrix discussed the pharmacokinetics and use of plerixafor – but was focused on use of the drug in HIV treatment. The district court excluded Hendrix – finding that it was not analogous art since one of skill in the art would not have been looking for this type of drug in researching stem cell mobilization. On appeal, the Federal Circuit did not review that particular holding – instead finding that even if considered pertinent to an obviousness analysis, it still would not be sufficient to render the claim invalid.

For the Federal Circuit, the basic dispute comes down to whether a person of skill would have a “reasonable expectation of success” – i.e., a reasonable expectation that combining Hendrix with the other references would lead to a treatment that mobilizes stem cells as claimed.

Here, the district court found that a skilled artisan would not have had a reasonable expectation of success that plerixafor would mobilize stem cells. DRL has not shown that this determination was clearly erroneous.

The basic difficulty is that the prior art stem-cell mobilization research focused on a “completely different family of receptors” than those triggered by plerixafor; and that stem cells exhibit “around one hundred different types of receptors.” Thus, according to the court, it would have been a major leap to use plexifora as described in Hendrix for stem cell mobilization.

The one difficulty with the Federal Circuit and District Court analysis is that this key prior art reference “Hendrix” actually states that the drug may cause stem-cell mobilization.

These combined observations suggest that binding of [plexifora] to CXCR4 may inhibit the chemotactic effects of SDF-1α, causing release of WBCs from the endothelium and/or stem cells from bone marrow.

Hendrix. The Federal Circuit recognizes what’s happening here and does an interesting word dance – attempting to explain-away the statement:

Although Hendrix hypothesized in an isolated sentence, without explanation, that plerixafor may cause stem cell mobilization, the rest of the seven-page article focused on the elevation of WBC counts. . . . A skilled artisan would have recognized that Hendrix never tested for the presence of stem cells. The primary speculation in Hendrix for the phenomenon associated with elevated WBC counts was “demargination,” which refers to the release of WBCs from the endothelium. This emphasis on demargination is consistent with how an independent group of contemporary researchers perceived Hendrix.

The district court’s finding that stem cell mobilization was highly unpredictable at the time of the invention also runs counter to an expectation of success. In particular, there was great uncertainty about the role of SDF-1 or CXCR-4, if any, in the process of stem cell mobilization. …

Holding of non-obviousness affirmed since there was no reasonable expectation of success.

Note here – Although MBHB does not exert any editorial control over Patently-O, they are the primary advertiser for the site, and my former employer. DC.

Obviousness Law: A Reasonable Expectation of Success

August 25, 2017Patentmotivation to combine, obviousness, reasonable expectation of successDennis Crouch

In re Stepan Co. (Fed. Cir. 2017)

In a split decision, the Federal Circuit has vacated the PTAB ruling that Stepan’s claims are not patentable. The claims here are directed to the use of ultra-high concentrate glyphosate and a particular surfactant to ensure “better adherence to leaves, thereby enhancing penetration.” Although the PTAB (Board) found motivation to combine elements of the prior art to form the claimed system, the Board did not fully support that PHOSITA would have a ‘reasonable expectation’ that the combination would be a success.

The decision here thus goes to the core of obviousness law:

The majority: An obviousness determination requires finding both “that a skilled artisan would have been motivated to combine the teachings of the prior art . . . and that the skilled artisan would have had a reasonable expectation of success in doing so.” quoting Intelligent Bio-Sys., Inc. v. Illumina Cambridge Ltd., 821 F.3d 1359 (Fed. Cir. 2016). . . . Absent some additional reasoning, the Board’s finding that a skilled artisan would have arrived at the claimed invention through routine optimization is insufficient to support a conclusion of obviousness. (Majority opinion by Judge Moore and joined by Judge O’Malley).

The Dissent (Judge Lourie): Where, as here, there is a single prior art reference, there does not need to be a finding of reasonable expectation of success for those skilled in a particular art to make conventional modifications to the prior art and look for improvements in some parameter. See In re Ethicon, Inc., 844 F.3d 1344, 1351 (Fed. Cir. 2017).

Majority’s Response in FN.1: The dissent suggests the PTO need not establish a reasonable expectation of success where there is a single prior art reference. We do not agree. Whether a rejection is based on combining disclosures from multiple references, combining multiple embodiments from a single reference, or selecting from large lists of elements in a single reference, there must be a motivation to make the combination and a reasonable expectation that such a combination would be successful, otherwise a skilled artisan would not arrive at the claimed combination.

To be clear here, the PTAB did appear to find a reasonable expectation of success. [PTAB Decision] The holding here though is that such a broad conclusory finding must also be supported by specific factual findings targeted to the patent at hand. An important element of this decision is that the majority particularly held that the lack of factual findings supporting the PTO’s conclusion meant that the agency had not even established a prima facie case of obviousness.

Supreme Court Update: Are Secondary Indicia of Invention Relevant to Eligibility?

February 8, 2017PatentAbstract Idea, Affirmed Without Opinion, AIA Trials, anticipation, Claim Construction, Damages, IPR, Licenses, obviousness, Personal Jurisdiction, PGR, reasonable expectation of success, Subject Matter Eligibility, Supreme Court, Trade Secrets, USPTO Director, VenueDennis Crouch

by Dennis Crouch

The Supreme Court is on recess until Feb 17.

I don’t know if my end-of-April prediction will hold true, but I do expect Neil Gorsuch to become a Justice on the United States Supreme Court. As a 10th Circuit Judge, Gorsuch never decided a patent case, but does have a handful of interesting IP cases.

There are a few petitions filed that we have not discussed here:

In its newest petition, DataTreasury takes 101 for a new spin by taking the 101/103 analysis to its next logical level. If we are going to include a 103 analysis as part of the eligibility doctrine then lets go whole hog. Thus, DataTreasury asks: whether a court must consider secondary indicia of invention as evidence in its eligibility analysis? In the case, the Federal Circuit had affirmed the PTAB judgment without opinion under R.36. A second eligibility petition is found in TDE Petroleum Data Solutions, Inc. v. AKM Enterprise, Inc., dba Moblize, Inc. TDE asks the court to “please reconcile Diehr and Alice.” (I’m not literally quoting here). The patent at issue (No. 6,892,812) claims a four-step process of “determining the state of a well operation.” (a) store several potential “states”; (b) receive well operation data from a plurality of systems; (c) determine that the data is valid by comparing it to a threshold limit; and (d) set the state based upon the valid data.

In Wi-LAN v. Apple, the patentee revives both Cuozzo and Markman claim construction arguments – this time focusing on “whether claim terms used to define the metes and bounds of an invention are generally given their “plain and ordinary meaning,” or are redefined (limited) to match the scope of the exemplary embodiments provided in the specification.”

duPont v. Macdermid asks whether summary judgment of obviousness is proper because of the factual disputes at issue. Similarly, in Enplas v. Seoul Semiconductor, the petitioner argues that a finding of anticipation by the PTAB must be supported by findings each and every element of the subject patent claim is disclosed in the prior art. In Enplas, the Federal Circuit affirmed the PTAB on a R.36 Judgment Without Appeal — it difficult for the petitioner to point to the particular deficiencies.

=== THE LIST===

1. 2016-2016 Decisions:

Design Patent Damages: Samsung Electronics Co. v. Apple Inc., No 15-777 (Total profits may be based upon either the entire product sold to consumers or a component); GVR order in parallel case Systems, Inc. v. Nordock, Inc., No. 15-978. These cases are now back before the Federal Circuit for the job of explaining when a component

2. Petitions Granted:

Argued – Awaiting Decision: SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, No. 15-927 (laches in patent cases)
Argued – Awaiting Decision: Life Technologies Corporation, et al. v. Promega Corporation, No. 14-1538 (infringement under 35 U.S.C. § 271(f)(1) for supplying single component)
Briefing: Impression Products, Inc. v. Lexmark International, Inc., No. 15-1189 (unreasonable restraints on downstream uses) Oral arguments set for March 21, 2017.
Briefing: Sandoz Inc. v. Amgen Inc., et al., No. 15-1039 (Does the notice requirement of the BPCIA create an effective six-month exclusivity post-FDA approval?)
Briefing: TC Heartland LLC v. Kraft Food Brands Group LLC, No 16-341 (Does the general and broad definition of “residence” found in 28 U.S.C. 1391(c) apply to the patent venue statute 1400(b)) Oral arguments set for March 27, 2017

3. Petitions with Invited Views of SG (CVSG):

4. Petitions for Writ of Certiorari Pending:

Claim Construction: Wi-LAN USA, Inc., et al. v. Apple Inc., No. 16-913 (“plain and ordinary meaning”)
Is it a Patent Case?: Boston Scientific Corporation, et al. v. Mirowski Family Ventures, LLC, No. 16-470 (how closely must a state court “hew” federal court patent law precedents?) (Appeal from MD State Court)
Anticipation/Obviousness: Google Inc., et al. v. Arendi S A.R.L., et al., No. 16-626 (can “common sense” invalidate a patent claim that includes novel elements?) (Supreme Court has requested a brief in response)
Anticipation/Obviousness: Enplas Corporation v. Seoul Semiconductor Co., Ltd., et al., No. 16-867 (“Whether a finding of anticipation under 35 U.S.C. § 102 must be supported by findings that each and every element of the subject patent claim is disclosed in the prior art?”)
Anticipation/Obviousness: E.I. du Pont de Nemours and Company v. MacDermid Printing Solutions, L.L.C., No. 16-905 (summary judgment of obviousness proper)
Jury Trial: Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, et al., No. 16-712 (“Whether inter partes review … violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”) [oilstatespetition]
Jury Trial: Nanovapor Fuels Group, Inc., et al. v. Vapor Point, LLC, et al., No. 16-892 (Can a party forfeit a properly demanded trial by jury without an explicit, clear, and unequivocal waiver?)
Is it a Patent Case?: Big Baboon, Inc. v. Michelle K. Lee, No. 16-496 (Appeal of APA seeking overturning of evidentiary admission findings during reexamination – heard by Federal Circuit or Regional Circuit?)
Laches: Medinol Ltd. v. Cordis Corporation, et al., No. 15-998 (follow-on to SCA); Endotach LLC v. Cook Medical LLC, No. 16-127 (SCA Redux); Romag Fasteners, Inc. v. Fossil, Inc., et al, No. 16-202 (SCA Redux plus TM issue)
Eligibility: TDE Petroleum Data Solutions, Inc. v. AKM Enterprise, Inc., dba Moblize, Inc., No. 16-890 (Please reconcile Diehr and Alice)
Eligibility: DataTreasury Corporation v. Fidelity National Information Services, Inc., No. 16-883 (secondary indicia as part of eligibility analysis).
Eligibility: IPLearn-Focus, LLC v. Microsoft Corp., No. 16-859 (evidence necessary for finding an abstract idea)

5. Petitions for Writ of Certiorari Denied or Dismissed:

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The Last Inventorship Case? (102(f))

January 26, 2017Patentinventorship, obviousness, reasonable expectation of successDennis Crouch

Cumberland Pharma v. Mylan (Fed. Cir. 2017) [cumberland]

Cumberland’s Patent No. 8,399,445 is listed in the Orange Book as covering Acetadote, an intravenous antidote for overdoses of acetaminophen. Following the process set out in the Hatch-Waxman Act, Generic manufacturer Mylan filed an abbreviated new drug application (ANDA) with the FDA to market its own version of the drug and Cumberland sued for infringement. While patent infringement ordinarily requires some making/using/selling of the invention, 35 U.S.C. 271(e)(2)(A) creates a form of paper-infringement – stating that “It shall be an act of infringement to submit (A) an application under section 505(j) of the Federal Food, Drug, and Cosmetic Act or described in section 505(b)(2) of such Act for a drug claimed in a patent or the use of which is claimed in a patent.”

The ‘445 patent (August 24, 2005 priority date) covers a non-chelating form of Acetadote. Back in 2002, Cumberland was seeking FDA approval of a form of the drug that included a chelating agent (EDTA). In a letter, to the listed inventor (Pavliv) of the ‘445 patent, the FDA requested justification for including EDTA in the formulation and later requested data proving that EDTA should be included. Shortly after that letter, the inventor Pavliv had the idea of a formulation without the EDTA.

Based upon these (and a few other) facts, Mylan argues that (1) the ’patent had been derived from someone at the FDA – and therefore the patentee was not the “inventor” as required by pre-AIA law, 35 U.S.C. 102(f); and (2) the invention would have been obvious in light of the FDA communications. On appeal, however, the Federal Circuit affirmed the lower court holding siding wholly with the patentee.

A request for justification of the inclusion of EDTA, supported by data, is not the same as a suggestion to remove it, let alone to remove it and not replace it with another chelating agent.

Further, the claim was not obvious because the defendant failed to prove “a reasonable expectation of success” if the non-EDTA version was tried. That seems to be right here (based upon the evidence presented). The inventor previously believed that EDTA (or similar agent) was needed to ensure formulation stability, but later was able to show that the non-EDTA version was still stable (and the claims expressly reflect that the formulation is stable but non-EDTA). On appeal, the Federal Circuit agreed with the patentee:

Considerable evidence supports the finding that relevant skilled artisans believed that chelating agents were necessary to sequester metal contaminants and prevent oxidative degradation of acetylcysteine and that such artisans had no reasonable expectation of stability without such an agent. . . . As late as 2011, Mylan’s own scientists expressed concern that the removal of EDTA would make the product more vulnerable to oxidation.

Judgment of Not-Invalid Affirmed.

Supreme Court 2017 – Patent Preview

January 16, 2017PatentAbstract Idea, Affirmed Without Opinion, AIA Trials, anticipation, Claim Construction, Damages, IPR, Licenses, obviousness, Personal Jurisdiction, PGR, reasonable expectation of success, Subject Matter Eligibility, Supreme Court, Trade Secrets, USPTO Director, VenueDennis Crouch

by Dennis Crouch

A new Supreme Court justice will likely be in place by the end of April, although the Trump edition is unlikely to substantially shake-up patent law doctrine in the short term.

The Supreme Court has decided one patent case this term. Samsung (design patent damages). Five more cases have been granted certiorari and are scheduled to be decided by mid June 2017. These include SCA Hygiene (whether laches applies in patent cases); Life Tech (infringement under 35 U.S.C. § 271(f)(1) for supplying single component); Impression Products (using patents as a personal property servitude); Sandoz (BPCIA patent dance); and last-but-not-least TC Heartland (Does the general definition of “residence” found in 28 U.S.C. 1391(c) apply to the patent venue statute 1400(b)).

Big news is that the Supreme Court granted writs of certiorari in the BPCIA dispute between Sandoz and Amgen. The BPCIA can be thought of as the ‘Hatch Waxman of biologics’ – enacted as part of ObamaCare. The provision offers automatic market exclusivity for twelve years for producers of pioneer biologics. Those years of exclusivity enforced by the FDA – who will not approve a competitor’s expedited biosimilar drug application during the exclusivity period. The statute then provides for a process of exchanging patent and manufacturing information between a potential biosimilar producer and the pioneer – known as the patent dance. The case here is the Court’s first chance to interpret the provisions of the law – the specific issue involves whether the pioneer (here Amgen) is required to ‘dance.’ [Andrew Williams has more @patentdocs]

A new eligibility petition by Matthew Powers in IPLearn-Focus v. Microsoft raises eligibility in a procedural form – Can a court properly find an abstract idea based only upon (1) the patent document and (2) attorney argument? (What if the only evidence presented supports eligibility?). After reading claim 1 and 24 (24 is at issue) of U.S. Patent No. 8,538,320, you may see why the lower court bounced this. Federal Circuit affirmed the district court’s ruling without opinion under Federal Circuit Rule 36 and then denied IPLF’s petition for rehearing (again without opinion).

1. A computing system comprising:

a display;

an imaging sensor to sense a first feature of a user regarding a first volitional behavior of the user to produce a first set of measurements, the imaging sensor being detached from the first feature to sense the first feature, the first feature relating to the head of the user, and the first set of measurements including an image of the first feature, wherein the system further to sense a second feature of the user regarding a second volitional behavior of the user to produce a second set of measurements, the second feature not relating to the head of the user; and

a processor coupled to the imaging sensor and the display, the processor to:

analyze at least the first set and the second set of measurements; and determine whether to change what is to be presented by the display in view of the analysis.

24. A computing system as recited in claim 1, wherein the system capable of providing an indication regarding whether the user is paying attention to content presented by the display.

=== THE LIST===

1. 2016-2016 Decisions:

Design Patent Damages: Samsung Electronics Co. v. Apple Inc., No 15-777 (Total profits may be based upon either the entire product sold to consumers or a component); GVR order in parallel case Systems, Inc. v. Nordock, Inc., No. 15-978. These cases are now back before the Federal Circuit for the job of explaining when a component

2. Petitions Granted:

Argued – Awaiting Decision: SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, No. 15-927 (laches in patent cases)
Argued – Awaiting Decision: Life Technologies Corporation, et al. v. Promega Corporation, No. 14-1538 (infringement under 35 U.S.C. § 271(f)(1) for supplying single component)
Briefing: Impression Products, Inc. v. Lexmark International, Inc., No. 15-1189 (unreasonable restraints on downstream uses)
Briefing: Sandoz Inc. v. Amgen Inc., et al., No. 15-1039 (Does the notice requirement of the BPCIA create an effective six-month exclusivity post-FDA approval?)
Briefing: TC Heartland LLC v. Kraft Food Brands Group LLC, No 16-341 (Does the general and broad definition of “residence” found in 28 U.S.C. 1391(c) apply to the patent venue statute 1400(b))

3. Petitions with Invited Views of SG (CVSG):

4. Petitions for Writ of Certiorari Pending:

Is it a Patent Case?: Boston Scientific Corporation, et al. v. Mirowski Family Ventures, LLC, No. 16-470 (how closely must a state court “hew” federal court patent law precedents?) (Appeal from MD State Court)
Anticipation/Obviousness: Google Inc., et al. v. Arendi S A.R.L., et al., No. 16-626 (can “common sense” invalidate a patent claim that includes novel elements?) (Supreme Court has requested a brief in response)
Civil Procedure – Final Judgment: Johnson & Johnson Vision Care, Inc. v. Rembrandt Vision Technologies, L.P., No. 16-489 (Reopening final decision under R.60).
Anticipation/Obviousness: Enplas Corporation v. Seoul Semiconductor Co., Ltd., et al., No. 16-867 (“Whether a finding of anticipation under 35 U.S.C. § 102 must be supported by findings that each and every element of the subject patent claim is disclosed in the prior art?”)
Post Grant Admin: Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, et al., No. 16-712 (“Whether inter partes review … violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”) [oilstatespetition]
Eligibility: IPLearn-Focus, LLC v. Microsoft Corp., No. 16-859 (evidence necessary for finding an abstract idea)
Post Grant Admin: SightSound Technologies, LLC v. Apple Inc., No. 16-483 (Can the Federal Circuit review USPTO decision to initiate an IPR on a ground never asserted by any party)
Is it a Patent Case?: Big Baboon, Inc. v. Michelle K. Lee, No. 16-496 (Appeal of APA seeking overturning of evidentiary admission findings during reexamination – heard by Federal Circuit or Regional Circuit?)
Laches: Medinol Ltd. v. Cordis Corporation, et al., No. 15-998 (follow-on to SCA); Endotach LLC v. Cook Medical LLC, No. 16-127 (SCA Redux); Romag Fasteners, Inc. v. Fossil, Inc., et al, No. 16-202 (SCA Redux plus TM issue)
Eligibility and CBM: DataTreasury Corporation v. Fidelity National Information Services, Inc., No. 16-883 (I have not seen the petition yet, but underlying case challenged whether (1) case was properly classified as CBM and (2) whether PTAB properly ruled claims ineligible as abstract ideas) (Patent Nos. 5,910,988 and 6,032,137).

5. Petitions for Writ of Certiorari Denied or Dismissed:
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Supreme Court Patent Cases: Post Sale Exhaustion

November 14, 2016PatentAbstract Idea, AIA Trials, anticipation, Claim Construction, Damages, Licenses, obviousness, Personal Jurisdiction, PGR, reasonable expectation of success, Subject Matter Eligibility, Supreme Court, Trade Secrets, USPTO Director, VenueDennis Crouch

by Dennis Crouch

Substantive Patent Law: Newly filed petition in Merck & Cie v. Watson Labs raises a core substantive patent issue – does the on sale bar apply to secret sales? The defendant asks:

Whether the “on sale” bar found in § 102(b) applies only to sales or offers of sale made available to the public, as Congress, this Court, and the United States have all made clear, or whether it also applies to non-public sales or offers of sale, as the Federal Circuit has held.

The Merck petition is focused on pre-AIA patents. The PTO (and patentees) are arguing more forcefully that the AIA certainly intended to exclude secret sales from the scope of prior art in cases now pending before the Federal Circuit.

The second new substantive patent law case is Google v. Arendi that challenge’s the Federal Circuit’s limitations on the use of common sense in the obviousness analysis. In its decision, the Federal Circuit limited KSR to combination patents and held that “common sense” cannot be used to supply missing limitations. Google argues that the Federal Circuit’s approach is contrary to the broad and flexible obviousness analysis required by KSR. Patentees bristle term “common sense” – they see an overly flexible analysis as providing opportunities to invalidate patents without evidence. The question: “Did the Federal Circuit err in restricting the Board’s ability to rely on the common sense and common knowledge of skilled artisans to establish the obviousness of patent claims?”

As these new petitions were being filed, the Supreme Court has also denied the pending obviousness, anticipation, and eligibility petitions. In addition, Cooper v. Square has also been denied.

Civil Procedure: In J&J v. Rembrandt, the defendant J&J won at trial. However, Rembrandt later learned that J&J’s expert had testified falsely and the Federal Circuit ordered the case re-opened under R.60(b)(3) that empowers district courts to revisit final judgments after a showing of “fraud …, misrepresentation, or misconduct by the opposing party.” The various circuits follow different standards and procedures for analyzing process and J&J has asked the Supreme Court to reconcile these (in its favor). Another CivPro petition was also filed by Eon Corp that questions whether an appellee needed to file a R.50 JMOL motion to overturn a jury verdict that was based upon a faulty legal conclusion by the district court (here claim construction). The Question Presented is:

Whether the Federal Circuit erred in ordering entry of judgment as a matter of law on a ground not presented in a Rule 50 motion in the district court, even though the ground presented a purely legal question.

Both J&J and Eon are only marginally patent cases, the core procedure case now pending is TC Heartland that would substantially upset the status quo of patent lawsuit concentration in E.D. Texas. Briefing continues in TC Heartland. In recent weeks a set of seven amici briefs were filed on the top side.

Next week Supreme Court conference includes review of the most likely-to-be-granted petition of Impression Products, Inc. v. Lexmark International, Inc. that focuses on important questions of post-sale exhaustion of patent rights. The setup – If I buy a used product that was made and sold by the patentee, do I still need to worry that I might get sued for patent infringement? The Federal Circuit says yes. The Supreme Court is likely to add some caveats to that. The US Government (Obama Administration via DOJ) has argued that the case should be reviewed and that the Federal Circuit’s position should be rejected. Both parties then filed supplemental responsive briefs. Lexmark’s best argument here is that these principles are well settled and that Congress can take on the role of tweaking them if needed.

Upcoming Supreme Court Oral Argument: Life Tech (export of components) set for December 6, 2016.

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Supreme Court Update: Extending the ITC’s Reach Beyond US Borders

October 13, 2016PatentAbstract Idea, AIA Trials, anticipation, Claim Construction, Damages, IPR, Licenses, obviousness, Personal Jurisdiction, PGR, reasonable expectation of success, Subject Matter Eligibility, Supreme Court, Trade Secrets, USPTO Director, VenueDennis Crouch

by Dennis Crouch

Constitutional Challenge to Inter Partes Review: Although the Constitutional issues in Cooper v. Lee and MCM v. HP were law-professor-interesting, they were not substantial enough for certiorari. The Supreme Court has now denied the Cooper and MCM petitions — leaving the IPR regime unchanged. Although Cooper v. Square is still pending, its chances are slight. The Supreme Court has also denied certiorari in Encyclopaedia Britannica (malpractice), Gnosis (appellate review), and GeoTag (case-or-controversy).

A new 101 Challenge: In its first conference of the term, the Supreme Court denied all of the pending petitions regarding patent eligibility. However, Trading Technologies has filed a new petition asking whether a new card game is categorically unpatentable so long as it uses a standard deck (rather than a novel deck) of cards. My post on the case asks: Does the Patent Statute Cabin-in the Abstract Idea Exception? That question references Section 100 of the Patent Act that expressly allows for the patenting of new use of a known manufacture.

Extra Territoriality of Trade Secrecy Law: On the trade secrecy front, Sino Legend has petitioned to review the Federal Circuit’s affirmance of the International Trade Commision’s ban on Legend’s importation of rubber resins used for tire production. The underlying bad-act was a trade secret misappropriation that occurred in China and the question on appeal asks: Whether Section 337(a)(1)(A) permits the ITC to adjudicate claims regarding trade secret misappropriation alleged to have occurred outside the United States. A Chinese court looked at the same case and found no misappropriation.

Design Patent Damages: Oral arguments were held earlier this week in Samsung v. Apple. During the arguments, all parties agreed that (1) the statute does not allow for apportionment of damages but rather requires profit disgorgement; (2) the article-of-manufacture from which profits can be calculated may be a component of the product sold to consumers; and (3) the determination of what counts as the article-of-manufacture is a question of fact to be determined by the jury. The only dispute then was on the factors that a jury should be considered and when the “inside gears” of a product should ever be included in the calculation.

Upcoming Supreme Court Oral Argument: SCA Hygiene (laches) on November 1; Star Athletica (copyright of cheerleader outfit) on October 31.

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Supreme Court Patent Cases – September 28 Update

September 28, 2016PatentAbstract Idea, AIA Trials, anticipation, Claim Construction, Damages, Licenses, obviousness, Personal Jurisdiction, PGR, reasonable expectation of success, Subject Matter Eligibility, Supreme Court, USPTO Director, VenueDennis Crouch

by Dennis Crouch

Cooper v. Lee and Cooper v. Square are both ask the same question: whether 35 U.S.C. §318(b) violates Article III of the United States Constitution, to the extent that it empowers an executive agency tribunal to assert judicial power canceling private property rights amongst private parties embroiled in a private federal dispute of a type known in the common law courts of 1789, rather than merely issue an advisory opinion as an adjunct to a trial court.” The issues here are also parallel to those raised in MCM Portfolio v. HP (“Does IPR violate Article III of the Constitution?”). The cases received a boost this month with the Court’s call for response (CFR) in Cooper v. Square. Square had previously waived its right to respond, but its response is now expected by October 11, 2016. Under Supreme Court R. 37, the Call for Response reopens the period for filing of an amicus curiae brief in support of petitioner. (~ due October 8, 2016). Eight Amici Curiae briefs were filed in MCM and two in Cooper v. Lee. In general, each brief additional brief incrementally increases the odds of certiorari. Statistical analysis also suggests that a call for response significantly increases the odds of certiorari being granted.

I wrote earlier this week about the new IPR process challenge in Ethicon where the patentee has challenged Director Lee’s delegation of institution decision authority to the PTAB. The case is one of statutory interpretation but uses the separation-of-function doctrine as an interpretive guide. The same question is also presented in LifeScan Scotland, Ltd. v. Pharmatech Solutions, Inc. Both petitioners (Ethicon and LifeScan) are owned by J&J.

The final new petition is a personal jurisdiction case: Mylan v. Acorda. The Hatch-Waxman setup involved Mylan preparing and filing its abbreviated new drug application that created a cause of action for infringement under 35 U.S.C. 271(e)(2). Although the ANDA preparation occurred in West Virginia and the filing in Maryland, the infringement lawsuit was filed by Acorda in Delaware. Mylan asks: “Whether the mere filing of an abbreviated new drug application by a generic pharmaceutical manufacturer is sufficient to subject the manufacturer to specific personal jurisdiction in any state where it might someday market the drug.” The argument builds on the non-patent decision Daimler AG v. Bauman, 134 S. Ct. 746 (2014). In the pro-business case of Daimler, the Supreme Court reduced the scope of general personal jurisdiction to states where the defendant company is incorporated or has its personal place of business.

In the claim construction front, the Supreme Court also called for a response in Google v. Cioffi. In that case Google suggests an interpretative principle of “strictly construing” amended claim language against the patentee. [GoogleCioffiPetition]

On the merits side – we have three patent cases pending oral arguments. First-up is the design patent damages case of Apple v. Samsung. Although not a party, the Solicitor General has ~~requested to~~ been granted leave to participate in oral arguments. Its brief, the SJ argued (1) Section 289 does not permit apportionment but rather requires award of the infringers profits on the relevant article of manufacture; but (2) the article of manufacture can be a “component” rather than a finished product sold to end-users. In the end, the SJ argues that the jury should have been tasked with determining the appropriate article-of-manufacture and that the case should be remanded to determine whether a new trial is warranted. Briefing continues in both SCA Hygiene (laches) and Life Tech (Component Export liability).

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Supreme Court Patent Cases: Malpractice, Obviousness, and Venue

September 18, 2016PatentAbstract Idea, AIA Trials, anticipation, Claim Construction, Damages, obviousness, PGR, reasonable expectation of success, Subject Matter Eligibility, Supreme Court, VenueDennis Crouch

by Dennis Crouch

The Supreme Court will begin granting and denying petitions in early October. Meanwhile, several new petitions are now on file. Last week I wrote about the TC Heartland case as a mechanism for limiting venue. Without any good reason, the Federal Circuit overruled a 1957 Supreme Court case that had strictly limited patent venue as spelled out in the patent venue statute 1400(b). See VE Holdings (explaining its overruling of Fourco Glass). A result of VE Holdings is the expansive venue availability that facilitated the rise of E.D. Texas as the most popular patent venue. TC Heartland simply asks the Supreme Court reassert its Fourco holding – something that could almost be done with a one-line opinion: “REVERSED. See Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957).” The best arguments for the Federal Circuit’s approach are (1) the reasoning of Fourco itself is a bit dodgy; and (2) VE Holdings is well settled doctrine (decided 26 years ago) and Congress has revised the statutory provisions several times without amending. As a side note, several members of Congress have suggested they will act legislatively if SCOTUS fails to act.

Two new petitions (Grunenthal v. Teva and Purdue v. Epic) stem from the same Federal Circuit OxyContin case and focus on anticipation and obviousness respectively. Grunenthal v. Teva questions how ‘inherently’ operates for anticipation purposes. Purdue suggests that – despite the final sentence of Section 103, that the actual circumstances of the invention should be available to help prove non-obviousness (but still not be available to prove obviousness). Another new petition includes the BPCIA case Apotex v. Amgen that serves as a complement to the pending Sandoz case questioning the requirements and benefits of providing notice of commercial marketing.

Finally – Encyclopedia Britannica v. Dickstein Shapiro is a patent prosecution malpractice action. The lower court held the lawyers harmless since Alice would have invalidated the patents even if drafted to perfection. The petition asks whether Alice Corp can excuse patent prosecutors from alleged prosecution errors made well prior to that decision.

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Supreme Court Patent Cases: Previewing the October Term 2016

September 5, 2016PatentAbstract Idea, AIA Trials, Claim Construction, Damages, Licenses, obviousness, PGR, reasonable expectation of success, Subject Matter Eligibility, Supreme CourtDennis Crouch

by Dennis Crouch

When the Supreme Court’s October 2016 Term begins in a few weeks, its first patent hearing will be the design patent damages case of Samsung v. Apple. In Samsung, the Court asks: Where a design patent is applied to only a component of a product, should an award of infringer’s profits be limited to those profits attributable to the component? The statute at issue – 35 U.S.C. § 289 – indicates that, someone who (without license) “applies” the patented design (or colorable imitation thereof) to an article of manufacture, “shall be liable to the owner to the extent of his total profit.” Up to now, courts have repeatedly held that the “profits” are profits associated with the product (i.e., the article of manufacture) being sold, but Samsung is asking that the profits be limited only to components of the product closely associated with the patented design. Although Apple’s position is supported by both the text and history and is the approach easiest to calculate, I expect that many on the Court will be drawn to the potential unjust outcomes of that approach. Apple wins in a 4-4 split. Oral arguments are set for October 11, 2016.

The court has granted certiorari in two other cases for this October 2016 term with briefing ongoing. In Life Tech v. Promega, the court again takes up the issue of exporting components of a patented invention and the extraterritorial application of US law. 35 U.S.C. § 271(f)(2). The question here is whether export of one component can legally constitute the “substantial portion of the components” required by statute for liability to attach. In the case, the component (Taq) is a commodity but is also an admitted critical aspect of the invention. In SCA Hygiene v. First Quality, the Court asks whether the equitable defense of laches applies in patent cases. The case is a follow-on to the Supreme Court’s 2014 holding in Petrella v. MGM that laches does not apply in copyright cases. In its decision, the Federal Circuit distinguished Petrella based both upon statutory and policy arguments. Oral arguments in SCA are set for November 1, 2016.

The three pending petitions most likely to be granted certiorari are Impression Products (exhaustion); Amgen (BPCIA); and GlaxoSmithKline (antitrust reverse payments) However, these cases are awaiting views of the Solicitor General — which likely will not be filed until well after the presidential election.

A substantial number of cases are set for the Supreme Court’s September 26 conference. These include the constitutional challenges to IPR coming in MCM and Carl Cooper as well as the interesting eligibility case of Genetic Tech v. Merial.

It looks to be an interesting term.

The big list:

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DuPont v. MacDermid Printing: The importance of a Patentee’s Pre-Filing Statements

August 23, 2016PatentAIA Trials, First to Invent, motivation to combine, obviousness, PGR, reasonable expectation of successDennis Crouch

by Dennis Crouch

A skilled patent attorney working with a qualified searcher could cobble together a colorable obviousness argument against the vast majority of issued patent claims. Part of the difficulty for patentees stem from the the billions of prior art references available via increasingly effective search tools. Even when an invention results from a ‘flash of genius,’ patent law typically back-fills extensive knowledge for the obviousness analysis – even when that knowledge was not actually available at the time of the invention. The larger difficulty though is likely the large number of hard-to-pin-down facts such as the motivations, common sense, and level of creativity of a person having ordinary skill in the art.

The “expansive and flexible” approach to nonobviousness is frustrating to many, but it is seen as a feature of the system fully supported by the Supreme Court. In KSR, the court wrote:

Throughout this Court’s engagement with the question of obviousness, our cases have set forth an expansive and flexible approach. . . . Rigid preventive rules that deny fact finders recourse to common sense… are neither necessary under our case law nor consistent with it.

KSR v. Teleflex (2007) [04-1350]. Conventional wisdom post-1980 has been that the factual inquiry makes summary judgment of obviousness difficult for a patent challenger. Rather, obviousness goes to the jury. Since KSR, that attitude has shifted somewhat. (The even newer model is that obviousness goes to the PTO in an IPR proceeding – save that for a different essay).

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Summary Judgment of Obviousness: In DuPont v. MacDermid Printing (Fed. Cir. 2016) [15-1777], the NJ district court granted summary judgment of obviousness against the patentee DuPont – holding that the asserted claims of DuPont’s U.S. Patent 6,773,859 invalid under 35 U.S.C. 103. The ‘859 patent relates to the manufacture of a flexo plate for digital printing — a plate used to print digital images on flexible materials. The claimed advance involves heating-up the plate to remove unpolymerized material (rather than using a harsh solvent).

The obviousness case combines two prior art references: “Martens [a 3M patent] teaches a process for developing an analog plate using heat” and “Fan [DuPont patent] teaches developing a digital plate using solvents.” The inventor (Roxy Fan) is also the first named inventor of DuPont’s ‘859 patent being challenged in this case. The Fan prior-art patent, however, was filed a decade prior. Reviewing these two references, the court found that the ‘859 patent uses “the same technology and processes pertaining to digital imaging” previously disclosed by Fan and the same thermal development process disclosed in Martens. In finding a motivation-to-combine these references, the district court walked through several factors.

Limited set of potential combinations: The prior art only had two imaging styles (digital and analog) and four development techniques (thermal, etc.) – this makes the ‘859 combination more likely obvious to try.
Benefits of Moving to Digital: The prior art taught benefits of switching to digital (thus suggesting the substitution), including an article published by DuPont
Market Incentive: DuPont marketing material suggest a “strong incentive” to combine the thermal process with digital plates.

The district court also rejected DuPont’s evidence of commercial success, longfelt need, and industry praise – finding them insufficient to overcome the “strong showing of obviousness.”

On appeal of this summary judgment finding, DuPont focused on the standard-of-review – noting that the district court had failed to “draw reasonable inferences” in its favor. In the process, DuPont pointed to a long list of factual disputes between the parties where it would be reasonable to draw different conclusions from the evidences.

The Federal Circuit affirmed – finding that the strong undisputed evidence of prior art and motivation to combine fully supported the summary judgment finding.

[T]he record contains strong evidence that a skilled artisan would have had a reason to combine two known technologies and would have had a reasonable expectation of success in doing so. Indeed, DuPont itself promoted the digital and thermal technologies as technological breakthroughs in prior art publications. Thus, in view of the record as a whole, even drawing all justifiable inferences in favor of DuPont, the objective evidence is insufficient to preclude summary judgment on the ultimate legal conclusion of obviousness.

Doomed by Its Own Prior Statements: The obviousness case against DuPont here is interesting because (1) one of the core prior art references was a DuPont reference and (2) DuPont’s own statements regarding its prior inventions led to the motivation-to-combine finding. DuPont’s private case study will likely walk through and consider whether it should have taken a different pathway regarding the public disclosures.

Caveat: Although the patentee’s pre-filing disclosures are important – it is also important to remember that the question of obviousness is an objective analysis focusing on the hypothetical mind of a person having ordinary skill in the art. What this means is that the patentee’s disclosures are should not be treated as “party admissions” and given special treatment in the obviousness analysis. Rather, the disclosures are simply added to the body of knowledge available to the artisan. Here, the Federal Circuit came dangerously close to crossing the line into giving information actually available to and created by DuPont special weight in the obviousness analysis.

Obviousness for Pharma/BIO

July 4, 2016Patentobviousness, reasonable expectation of successDennis Crouch

The new petition for writ of certiorari in MacDermid v. DuPont focuses on the central question of U.S. patent law – obviousness. In the case, the patent challenger asks that the Supreme Court reinvigorate the doctrine with flexibility – especially with regard to the ‘unpredictable arts.’ The question presented:

Whether the Federal Circuit has erred in holding that there “must” be a proven “reasonable expectation of success” in a claimed combination invention in order for it to be held “obvious” under 35 U.S.C. § 103(a).

It is a well known secret that both the USPTO and the Federal Circuit treat pharmaceutical and biotechnology obviousness cases differently than they do electronics, software, and mechanical inventions. This has to be kept a secret though, because both are applying the same law and the same Supreme Court precedent. The case here looks to rejoin the two — in a way that makes it easier to invalidate the pharma/bio patents.

Read the petition: MacDermid

Amicus Briefs on Enhanced Damages

December 20, 2015PatentAIA Trials, Damages, First to Invent, obviousness, PGR, reasonable expectation of successDennis Crouch

by Dennis Crouch

This term the Supreme Court is addressing one patent issue,[1] that of enhanced damages.[2] Two cases have been joined together for a single one hour hearing. Merits briefing is ongoing. In an earlier post I briefly discussed the merits briefs that were filed in early December 2015. Now a set of friend-of-the-court briefs have also been filed either in support of the patentee-petitioners or in support of neither party. Respondent briefs as well as any briefs in support of respondent will be due in the upcoming weeks.

For the most part, the briefest stick to a model of focusing on a particular set of questions:

Is willfulness a prerequisite to enhanced damages under section 284?
Does the two-step test of Seagate create too high and too rigid of a standard?
Is subjective bad faith sufficient for enhanced damages award?
Should the District Court apply a totality of the circumstances test when determining enhanced damages?
What level of proof is required: preponderance of evidence or clear and convincing evidence?
When and enhanced damage award is appealed, what level of review should be applied?

The following is a short review of the amicus briefs that have been filed in the case.[3]

United States Government

When the United States government files and amicus brief, that brief is usually seen as the most important amicus brief in the case. Often, it is seen as the most important brief in the case – even more important than briefs filed by the parties themselves. The brief was filed in a joint effort by both the Department of Justice Solicitor’s office and the USPTO.

The government brief supports the petitioners’ position that the Federal Circuit test is too rule-based and too restrictive. “The Federal Circuit’s recent decisions, including its decisions in these cases, have imposed unwarranted restrictions on awards of enhanced damages.” In particular, the government argues that Seagate should be overruled. At the same time, the government takes pains to clarify that enhanced damages should only be awarded in cases of “unusually egregious acts of patent infringement.” An interesting question not addressed by the brief is how “unusually egregious” corresponds to the “exceptional” requirement for attorney fees.

The government brief does particularly ask the court to limit enhanced damages only to cases involving willful infringement. In particular, the brief quotes affirmatively from Aro Mfg., that enhanced damages are available for “willful or bad-faith infringement.”[4] Earlier courts, the brief notes, allow enhanced damages “for the infringer’s unlawful conduct was intentional, willful, flagrant, or undertaken in bad faith.”

Regarding the questions addressed above, the government brief argues that a preponderance of the evidence – the lower standard – is sufficient to prove enhanced damages and that District Court determinations regarding enhanced damages should be reviewed for abuse of discretion on appeal, not de novo.

Prof. Rantanen and Chris Seaman

Professors Rantanen and Seaman take a statutory and historical approach in their argument that willfulness is the appropriate standard for determining whether damages should be enhanced. The historical case law they argue was bolstered by the AIA language which states that failure to obtain or introduce evidence of counsel “may not be used to prove that the accused infringer willfully infringed the patent”[5] It is clear from context that this new provision was intended to be a defense against enhanced damages under Section 284.

The professors argue that the determination of whether the infringement was willful should be accomplished through a totality of the circumstances test and reviewed on appeal for abuse of discretion as has been the law since 1836.

Mentor Graphics, Microsoft, and SAP

John Vandenberg of Klarquist Sparkman filed this brief arguing that trial courts should be given discretion to increase damages following a judgment of infringement. Parties on this brief all have valuable patent portfolios. However, they are also subject to infringement allegations – typically from nonpracticing entities. In that framework is not surprising they argue that the behavior of the patent owner, not just the infringer, should be relevant to the willfulness inquiry. In particular the brief suggests that the court should consider whether the patentee “implemented a scientifically or commercially significant advance” and “diligently provided actual and clear notice.” They also suggest that a patentee who, instead of suing the source of infringement, sues that infringers customers, should be less likely to receive enhanced damages.

Brief also asks the Supreme Court to make clear that enhanced damages are a question for the judge, not for a jury.

Nokia

John Haynes of Alston & Bird filed Nokia’s brief that argues for broader enhanced damages. Stating that “the Federal Circuit’s grafting of a willfulness requirement onto section 284 is contrary to the legislative history of the statute and ignores the compensatory aspect of enhanced damages.” A weakness of this argument from Nokia is that it fails to consider 19^th-century Supreme Court cases on point such as Seymour v. McCormick (1854).

Prof. Mossoff

The purpose of Prof. Mossoff’s brief is to highlight his research that the current “crisis” in the patent system is nothing new rather. Patent licensing entities have been around for more than 100 years and serve an “important role in the development of innovation”.

Licensing Executives Society

Daniel Stringfield from Steptoe and Johnson filed the LES brief is interesting because it is somewhat equivocal. The brief argues that the Seagate rule is beneficial because it appears to encourage predictable and consistent results at the same time, the brief recognizes that a more flexible approach may do a better job of deterring undesirable infringement and better protecting patented inventions.

Intellectual Property Owners Association

My former boss Paul Berghoff of MBHB filed the IPOs short brief. The brief supports Seagate and argues that enhanced damages should only be allowed based upon sufficient evidence that the infringement was subjectively willful and also objectively reckless. In general, a party that “mounted a good-faith defense against allegations of infringement” should not be punished with punitive damages even if defense was ultimately unsuccessful.

Public Knowledge, the Electronic Frontier Foundation, and Engine Advocacy

Charles Duan filed a brief for these three public interest groups acting together. In general these groups can be termed “anti-patent.” The brief argues that the threat of enhanced damages are regularly used against small companies with “devastating results” such as practically requiring opinion letters for legitimate threat creating an incentive not to read patents. The brief also argues that lowering the bar would increase the likelihood of abusive patent demands.and C That petitioner’s policy concerns are detached from reality.

Ericsson

Mike McKool of McKool Smith filed Ericcson’s brief arguing that the Federal Circuit’s limits on enhanced damage awards are “practically insurmountable”, “too high”, and have “fostered patent holdout and diminished respect for intellectual property rights”. Ericcson argues that the extensive body of precedent stretching back to the 1832 patent act provide sufficient standards and guidance for district courts considering enhanced damage awards.[6] On particulars, the brief argues that there should be no objectively reckless requirement, no clear and convincing evidence requirement and no de novo review of District Court decisions regarding enhanced damages.

AIPLA

Peter Sullivan of Foley Hoag filed the AIPLA brief. Brief argues that “willful infringement” should be read into the statute as a limit on when damages may be enhanced. For that point, the brief sites Seymour v. McCormick (1854) where the court wrote distinguished between, on the one hand, a “good faith” or ignorant infringer from a “wanton and malicious pirate.”

Of course, is not a clean dividing line between “good faith” acts and willfully bad acts. The brief does not delve into that potential middleground other than stating that proof of willful infringement should be a requirement. However, the association does argue that the Seagate standard “goes too far, allowing blameworthy conduct to go unpunished.” The brief argues instead that proof of subjective bad faith should be sufficient. The brief also cautions the Supreme Court to be wary of giving too much discretion to District Court judges. For instance, it argues that a totality of the circumstances test has the potential of leading to both unpredictability and imprecision in punitive damage awards.

Foreman, Morinville, and the “Small Inventors”

IP attorney Andy Baluch filed a brief on behalf of a group of self-identified “small inventors” including Lewis Foreman, Paul Morinville, and James Innes. The brief lays out the argument that contemporary intellectual property licensing has been undermined by the rise of what is termed “efficient infringement.” In 1L contract law, budding attorneys learn of the economic concept of efficient breach that, in certain circumstances and jurisdictions, permits a contracting party to breach a contract when the harm (penalty) caused by the breach is less than the benefit associated with breach. Manufacturers and the uses of technology are using the same concept now to continually infringe patent rights with the expectation that their benefit from infringing will be greater than any potential penalty they must pay. That balance has shifted in recent years as today the ordinary penalty is simply payment of a reasonable royalty since both injunctive relief and enhanced damages are so difficult to obtain. Brief argues that this “anti-patent climate is particularly harmful to America’s individual inventors and startups.”

Askeladden

Askeladden’s brief was filed by Kevin Colligan’s team at Goodwin Procter in New York. Brief makes two primary conclusory arguments. First, despite the open language of section 284, enhanced damages should only be available for acts of willful infringement. That conclusion is supported by what Askeladden sees as “established” law in the patent field and “consistency” with the ordinary rules of punitive damages. Second, adjudged infringer’s should have an absolute defense to enhanced damages if the infringement occurred in good faith and based upon a reasonable belief that the patent was either invalid or not being infringed.

Innovention

James Otteson’s counsel of record for Innovention Toys. That company won an infringement action against MGA entertainment – makers of “Bratz.” Although the district court awarded enhanced damages for willful infringement based upon strong evidence of copying, Federal Circuit reversed finding that MGA’s obviousness defense was not objectively reckless. The company has a petition for writ of certiorari pending.[7] brief here stands with the petitioners, arguing that enhanced damages should not even require finding of willfulness but instead should be based upon the totality of the circumstances as determined by the District Court judge and only reviewed on appeal for substantial evidence/clear error.

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[1] Certiorari has been granted on only one patent issue thus far. A number of petitions remain pending.

[2] Halo Electronics, Inc. v. Pulse Electronics, Inc., et al., Supreme Court Docket No. 14-1513 (2015) and Stryker Corporation, et al. v. Zimmer, Inc., et al., Supreme Court Docket No. 14-1520 (2015). See, Dennis Crouch, Expanding the Framework for Enhanced Patent Damages, Patently-O (December 13, 2015).

[3] Opening briefs by the petitioners are available on Patently-O at: https://patentlyo.com/patent/2015/12/expanding-framework-enhanced.html.

[4] Aro Mfg. Co. v. Convertible Top Replacement Co., 377 US. 476, 508 (1964).

[5] 35 U.S.C. § 298.

[6] See, for example Bott and Read.

[7] Innovention Toys, LLC v. MGA Entertainment , et al. , No. 15-635 (U.S. Nov. 10, 2015).

Obviousness: Despite KSR, Still Tough to Win in Court

September 10, 2015PatentAIA Trials, IPR, motivation to combine, obviousness, reasonable expectation of successDennis Crouch

Ivera Medical v. Hospira (Fed. Cir. 2015)

On summary judgment, the district court found Ivera’s asserted patent claims invalid as obvious under 35 U.S.C. § 103. On appeal, the Federal Circuit has reversed – finding that Ivera’s submitted expert testimony raised genuine issues of material fact.

Ivera’s patents are directed to a more reliable mechanism for disinfecting connectors (such as an IV port). The idea is basically a screw-on cap full of disinfectant.

The patented cap at issue here is an improvement on the original idea found in several prior art references. In particular, Ivera added a vent in the cap “to allow evaporation of the cleaning agent from the inner cavity and to inhibit a buildup of pressure in the cap when the cleaning material is compressed by the site of the medical implement.”

Although the primary prior art reference (Hoang) did not disclose the vent limitations, the district court found – as a matter of law on summary judgment – that a person of skill in the art would have recognized the need for a vent to relieve pressure. I suspect that the district court was swayed by the fact that the patent is also under final-rejection in an inter partes reexamination based upon the same prior art reference. On appeal, the Federal Circuit found that the facts were not so clear.

Law of Obviousness:

“A party seeking to invalidate a patent on obviousness grounds must demonstrate by clear and convincing evidence that a skilled artisan would have been motivated to combine the teachings of the prior art references to achieve the claimed invention, and that the skilled artisan would have had a reasonable expectation of success in doing so.” InTouch Techs., Inc. v. VGO Commc’ns, Inc., 751 F.3d 1327 (Fed. Cir. 2014). Determining whether one of ordinary skill in the art would have been motivated to combine the teachings of different references is a flexible inquiry, and the motivation is not required to be found in any particular prior art reference. KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007).

Here, the evidence before the district court included declarations from Huang (the inventor of the prior art) and others explaining how the Ivera idea was a significant invention because it broke with the conventional wisdom of having a fluid tight seal. The appellate court saw these submissions as sufficient to raise a genuine dispute of fact that cannot be resolved on summary judgment.

The panel also noted in passing that the examiner during the inter partes review had refused to consider the same declarations because they were filed late in the process — leading to the implication that – if filed earlier – the declarations might have changed the examiner’s viewpoint. The examiner’s reexamination decisions have been appealed to the PTAB and are awaiting judgment.

This case again highlights the power of expert evidence to explain the invention within the context of the prior art.

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I should also note Ivera has a separate infringement case going against Hospira for another cap patent. In that case, the PTAB instituted an IPR (brought by another defendant) that case was settled before final judgment. In a recent determination, the district court ruled on motion-in-limine to exclude evidence of the PTAB’s decision to institute the inter partes review – finding that it has “little probative value” and “would be confusing to the jury and prejudicial.” [OrderInLimine]

Hughes on Obviousness: The Problem Motivates the Solution

September 7, 2015Patentmotivation to combine, obviousness, reasonable expectation of success, USPTO DirectorDennis Crouch

by Dennis Crouch

Dome Patent v. Michelle Lee in her capacity as Director of the USPTO (Fed. Cir. 2015)

Patent No 4,306,042 issued in 1981 and expired in 1998, but is still being litigated. The patent covers a method of making oxygen-permeable material used for contact lenses. Back in December 1997, the patent owner (Dome) sued a set of defendants for infringement. That lawsuit has been stayed since 1999 pending resolution of an ex parte reexamination requested by one of the defendants. In a 2006 final ruling, the USPTO confirmed patentability of claims 2-4, but cancelled claim 1 as obvious. Dome then filed a civil action in DC challenging the PTO ruling. That case – filed in 2007 – concluded in July 2014 with the district court’s de novo determination that claim 1 was obvious over a combination of three prior art patents. On appeal here, the Federal Circuit has affirmed that ruling – finding that “district court did not commit reversible error in its determination that the claimed subject matter would have been obvious to a person of ordinary skill during the relevant time period.” Judge Hughes penned the opinion that was joined by the two other panel members, Judges Reyna and Schall.

In typical close cases, each of the major elements of a claimed invention are found in a collection of prior art — leaving the question of whether the combination as claimed would have been obvious to a person of ordinary skill in the art. An important intermediary factual question is whether there is any evidence showing why a skilled artisan might or might not be inclined to combine the references. In the Supreme Court’s KSR decision, the Supreme Court indicated that the motivation question involves an ‘expansive and flexible’ analysis and can consider the common sense of the skilled artisan. Citing KSR, Judge Hughes writes:

If all elements of a claim are found in the prior art, as is the case here, the factfinder must further consider the factual questions of whether a person of ordinary skill in the art would be motivated to combine those references, and whether in making that combination, a person of ordinary skill would have had a reasonable expectation of success.

Evidence of a motivation to combine prior art references may flow from “the nature of the problem to be solved.” Here, the district court found that the motivation came from the prior art evidence indicating a search for high oxygen permeability in contact-lens materials. That finding was then affirmed on appeal: “This understanding would have motivated a person of ordinary skill to combine the Tris monomer disclosed in Gaylord with the Tris-type cross-linking agent disclosed in Tanaka to increase the oxygen permeability of a contact lens.” There was also some amount of teaching away (the non-Tris prior art outlined the problems of using Tris), but the appellate court affirmed the obviousness finding.

It was important for the appeal here that the ‘motivation’ found by the district court was seen as an issue of fact — a subset of some unnamed Graham factor — rather than a question of law. Thus, although the appellate court may have disagreed with some aspects of the original decision, the district court’s findings were not “clearly erroneous.”

Review of Civil Action: As I mentioned above, the case began as a reexamination and, after losing, the patentee filed a civil action in district court who reviewed the case de novo. Under i4i, a court patent may only invalidate a patent after being presented with clear and convincing evidence proving that result. See also 35 U.S.C. 282(a) (“In General. – A patent shall be presumed valid.”). On the other hand, the USPTO operating in reexamination mode only requires a preponderance of the evidence to render the claims null and void. These competing standards came to a head in the civil action challenging the reexamination finding. On appeal here, the Federal Circuit affirmed that in this situation only a preponderance is necessary.

“‘[A reexamination] is in essence a suit to set aside the final decision of the board.’ Fregeau v. Mossinghoff, 776 F.2d 1034 (Fed. Cir. 1985).

[I]f the Patent Office decides after an ex parte reexamination that a preponderance of the evidence establishes the claimed subject matter is not patentable, § 145 authorizes the district court to review whether that final decision is correct. The § 145 action in such a case does not concern the different question of whether, as part of a defense to an infringement action, clear and convincing evidence establishes that an issued and asserted patent should be held invalid.

Somewhat oddly, the court ruled that Section 282 does not apply here because that section only relates to defenses in patent infringement litigation. “The § 145 action before the district court did not involve a defense to a charge of infringement of an issued patent. Section 282 therefore does not apply in this instance.

Judge Chen and Nonobviousness

June 12, 2014PatentAffirmed Without Opinion, anticipation, Claim Construction, obviousness, reasonable expectation of successJason Rantanen

By Jason Rantanen

The past two weeks have seen a substantial number of nonobviousness opinions emerge from the Federal Circuit. These decisions are particularly interesting because they contain pairs of opinions with opposite outcomes. Judge Lourie, the second longest-tenured active judge on the court, wrote two of them while Judge Chen, the second-newest member of the court, wrote a third and a dissent in the fourth. Each found (or would have found) the patents in question to be obvious in one opinion and nonobvious in the other. For those interested in the jurisprudential views of Judge Chen, especially, the pairing may provide some useful insights.

Allergan, Inc. v. Apotex Inc. (Fed. Cir. 2014) Download Allergan v. Apotex
Panel: Prost (author), Reyna, and Chen (dissenting in part)

Allergan and Duke University hold a pair of patents relating to an ophthalmic solution used as a treatment for eyebrow hair loss. Allergan sells LATISSE a 0.03% bimatoprost ophthalmic solution as a topical treatment for eyebrow hair loss. After Apotex and other manufacturers submitted Abbreviated New Drug Applications to the FDA seeking to market generic versions of LATISSE, Allergan and Duke sued for infringement. Following a bench trial, the district court rejected the generic manufacturers’ invalidity arguments, found infringement, and entered an injunction. The manufacturers appealed.

On appeal, the Federal Circuit addressed claim construction, anticipation and obviousness, affirming the district court’s contested claim construction of “treating hair loss” and its determination that the patents were not anticipated, but reversing the finding of nonobviousness. I could write a lengthy post on the majority opinion alone, but this passage particularly caught my eye since it relates specifically to the issue of what subjects the Federal Circuit considers to be issues of law versus fact in the nonobviousness inquiry:

In sum, even if the district court did not commit clear error in its findings of fact, failure to consider the appropriate scope of the ’029 patent’s claimed invention in evaluating the reasonable expectation of success and secondary considerations constitutes a legal error that we review without deference.

Slip Op. at 23 (emphasis added). The substantial breadth of the asserted claims of the ‘029 patent was particularly troubling to the majority, both in assessing the Graham factors and the nexus for secondary considerations.

Writing in dissent, Judge Chen would have found the ‘029 patent to be nonobvious. In reaching this conclusion, he placed much more weight on the determination of the examiner during prosecution:

To begin with, issued patents enjoy a presumption of validity, which can only be rebutted by clear and convincing evidence. Microsoft Corp. v. i4i Ltd. P’ship, 131 S. Ct. 2238, 2245–46 (2011). A party challenging a patent’s validity must do so with “evidence which produces in the mind of the trier of fact an abiding conviction that the truth of [the] factual contentions are highly probable.” Buildex Inc. v. Kason Indus., Inc., 849 F.2d 1461, 1463 (Fed. Cir. 1988) (citing Colorado v. New Mexico, 467 U.S. 310, 316 (1984)). This is not a burden that is easily satisfied.

Dissent at 2. Particularly persuasive to Judge Chen was the fact that examiner considered the key reference during examination and allowed the claims over it following an amendment by the patentee:

In light of the particularly heavy burden to show obviousness over a reference disclosed during prosecution and discussed by the examiner, Appellants have
not shown that Johnstone now somehow teaches or suggests the very structural feature that the patentee claimed to distinguish the Johnstone compounds.

Id. at 4. On his part, Judge Chen found the disclosure Johnstone reference to be meaninglessly broad and generic:

This is not a situation in which there are a finite number of identified, predictable solutions. See KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 421 (2007). Rather, the
single sentence in Johnstone actually proposes hundreds of thousands, or even millions, of variations on the alpha chain. [] The compound in Johnstone
could have a saturated bond at any position on the alpha chain, an unsaturated bond at any position, a triple bond at any position, or even a combination of any of these bonds. As a result, a person of ordinary skill in the art was not faced with a “small or easily traversed” number of options based on Johnstone. [] In this instance, covering everything effectively tells us nothing.

Id. at 5-6 (internal citations omitted).

Bristol-Myers Squibb Company v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2014) Download BMS v Teva
Panel: Prost, Plager, Chen (author)

Bristol-Myers Squibb (BMS) owns Patent No. 5,206,244, which relates to certain antiviral compounds. At issue was claim 8, which covers entecavir, a treatment for hepatitis B that BMS markets under the name BARACLUDE. Teva submitted an ANDA seeking to market a generic version of entecavir; BMS sued for infringement. After trial, the district court held claim 8 to be obvious based on the selection of 2’CDG as a lead compound from the prior and a finding that a skilled artisan would have been motivated to make the necessary modification with a reasonable expectation of success at creating a compound with beneficial antiviral properties. BMS appealed.

Unlike the Allergan case, the analytic framework presented by the parties for the question of obviousness was the lead-compound approach. BMS contended that the district court had erred in selecting 2′-CDG as a lead compound, a particular legal framework that is frequently used in chemical compound cases. The Federal Circuit disagreed, agreeing with the district judge’s conclusion that “those of ordinary skill in the art would have selected 2′-CDG, a carbocyclic analog, as a lead compound for
further development efforts before BMS applied for the 244 patent in October 1990.” Slip Op. at 10-11. The appellate court also rejected BMS’s argument on motivation to modify the lead compound to make the patented compound, pointing to detailed evidence and testimony on why the modification would have been obvious.

Nor was the presence of unexpected results sufficient to establish nonobviousness on their own.

Contrary to BMS’s argument, unexpected results do not per se defeat, or prevent, the finding that a modification to a lead compound will yield expected, beneficial
properties. Rather, as secondary considerations of nonobviousness, they come into play in determining “the ultimate question of patentability.”

…

Secondary considerations of nonobviousness “must always when present be considered,” and can serve as an important check against hindsight bias. See Cyclobenzaprine, 676 F.3d at 1075-76, 1079 (quoting Stratoflex, Inc. v. Aeroquip Corp, 713 F.2d 1530, 1538-39 (Fed. Cir. 1983)). While secondary considerations must be taken into account, they do not necessarily control the obviousness
determination.

Slip Op. at 15-16. Here, the district court did not commit error in its factual findings that the unexpected properties did not compel a finding of nonobviousness, and the two legal errors that it committed (“(1) comparing entecavir to another hepatitis B drug on the market instead of the closest prior art, 2′-CDG; and (2) inappropriately look[ing] to what the inventor knew at the time of the invention—instead of one of ordinary skill in the art—to determine what was expected.” Slip Op. at 18) were harmless.

First Impressions: My reading of Judge Chen’s majority opinion is that it reflects a careful, thorough review of the district court’s opinion (which itself is helpfully quite detailed and Magistrate Judge Burke should be commended for his own thoughtful analysis). Conclusions are supported by detailed discussions and even if one disagrees with the overall conclusion of obviousness here, that disagreement seems less likely due to the carefulness of his approach and more likely due to some of the core difficulties inherent in pharmaceutical innovation such as the challenge of ascertaining marketable in vivo efficacy and the high value our society places on large-scale data-driven safety and efficacy determinations, determinations that can be quite costly yet have little if any direct role in substantive patent law questions.

Another possible reading of these two opinions is that they reflect a fair amount of deference to the decision making of others more familiar withe the specific facts. In Allergan, in addition expressly referencing the examiner’s decision to allow the patent, Judge Chen’s view would also have affirmed the district court’s ruling of nonobviousness. And in BMS, Judge Chen drew heavily on the district court’s findings. (That said, one reason why these opinions aren’t in as much tension as they might be is because the district court’s analysis of obviousness in Allergan was at least an order of magnitude thinner than that of the judge in BMS). At this point, this is merely an observation, and we’ll have to wait for future opinions from Judge Chen.

Allergan v. Sandoz: The Thin Line of Nonobviousness

May 2, 2013Obviousness, PatentClaim Construction, First to Invent, motivation to combine, obviousness, reasonable expectation of successJason Rantanen

By Jason Rantanen

Allergan, Inc. v. Sandoz Inc. (Fed. Cir. 2013) Download Allergan v Sandoz
Panel: Dyk (dissenting-in-part), Prost (author), O'Malley

Allergan illustrates how thin the line between obvious and nonobvious can sometimes be. Allergan owns several patents relating to its COMBIGAN combination ophthalmic drug treatment: Patent Nos. 7,323,463, 7,642,258, 7,320,976, and 7,030,149. Representative claim 1 of the '463 patent states:

1. A composition comprising about 0.2% timolol by weight and about 0.5% brimonidine by weight as the sole active agents, in a single composition.

Sandoz sought to market a generic version of COMBIGAN, triggering Allergan to file suit under 35 U.S.C. § 271(e)(2)(A) alleging infringement of its four patents. Sandoz stipulated to infringement of most of the asserted claims following claim construction and the district court subsequently found that all of the remaining asserted claims were not invalid after a bench trial. Sandoz's appeal focused primarily on the district court's nonobviousness ruling. For purposes of the appeal, the asserted claims of the '463, 258, and '976 patents were treated as a single group (I'll refer to these collectively as the '463 claims, since that's how the court refers to them) with claim 4 of the '149 patent treated separately.

The '463 claims – obvious: On appeal, the court unanimously reversed the district court's determination that the claims of the '463 patent were nonobvious. Both timolol (a beta blocker) and brimodine (an alpha2-agonist) were commercially available in their claimed concentrations at the time of the invention and were used to treat opthalmic conditions. The primary prior art reference, DeSantis, expressly taught serially administering both a beta blocker, such as timolol, with a brimodine in a fixed combination. It also provided "an express motivation to combine alpha2-agonists and beta blockers in order to increase patient compliance." Slip Op. at 8.

So where did the district court go wrong? First, the Federal Circuit held that it committed clear error by finding that "“while patient compliance may have created a need for fixed combination products, it did not motivate a person of skill in the art to develop fixed combinations with a reasonable expectation of success, because the FDA did not consider improving patient compliance as a factor in its approval decision.” Id. at 9, quoting district court. While FDA approval may be relevant to the motivation inquiry:

There is no requirement in patent law that the person of ordinary skill be motivated to develop the claimed invention based on a rationale that forms the basis for FDA approval. Motivation to combine may be found in many different places and forms; it cannot be limited to those reasons the FDA sees fit to consider in approving drug applications.

The CAFC also concluded that the district court erred by over-relying on the recognized unpredictability in the formulation carts. While unpredictablity is also relevant to the obviousness inquiry, it can be overcome simply by establishing that there was a reasonable probability of success. Furthermore, Allergan's challenges in developing its commercial COMBIGAN product were not particularly probative of the obviousness inquiry because the relevant inquiry is whether a person of ordinary skill in the art would have a reasonable expectation of success in developing the claimed invention, not COMBIGAN (which contains many elements in addition to those embodied in the claims).

In addition, the Federal Circuit concluded that the district court's factual findings on teaching away were insufficient to overcome the motivation provided by DeSantis and that the secondary considerations of nonobviousness did not weigh heavily in this analysis.

Claim 4 of the '149 patent – nonobvious: While the full panel agreed on the obviousness of the '463 claims, it split over claim 4 of the '149 patent. Claim 4 states:

4. A method of reducing the number of daily topical ophthalmic doses of brimondine administered topically to an eye of a person in need thereof for the treatment of glaucoma or ocular hypertension from 3 to 2 times a day without loss of efficacy, wherein the concentration of brimonidine is 0.2% by weight, said method comprising administering said 0.2% brimonidine by weight and 0.5% timolol by weight in a single composition.

The underlined language is essentially the same as claim 1 of the '463 patent. Central to the majority's conclusions was thus its treatment of the italicised language as a claim limitation: even though the creation of a single composition of 0.2% brimonidine by weight and 0.5% timolol by weight was obvious, administering it twice a day instead of three times a day without loss of efficacy was not.

The majority reached this because it was understood at the time of the invention that when brimonidine is dosed twice per day as opposed three times per day there is a loss of efficacy in the afternoon (the "afternoon trough") and Sandoz did not identify any "evidence in the prior art that would allow us to conclude that the addition of timolol to brimonidine dosed twice per day would eliminate the afternoon trough issue." Slip Op. at 13. Furthermore, even though it was "true that the prior art shows concomitant administration of brimonidine and timolol was dosed twice per day," that was insufficient to establish the obviousness of claim 4 because "this art does not show that there was no loss of efficacy associated with that treatment, let alone an elimination of the afternoon trough." Id. at 14.

Judge Dyk's dissent: Writing in dissent, Judge Dyk would have found Claim 4 invalid. Judge Dyk's disagreement highlights the issue of whether a claim can nonobvious if it is drawn to an unknown – but inherent – property of an obvious invention. "While a new and nonobvious method of using an existing (or obvious) composition may itself be patentable, [] a newly-discovered result or property of an existing (or obvious) method of use is not patentable." Slip Op. at 18 (internal citations omitted).

In Judge Dyk's view, claim 4 includes only a single limitation (in this case, a step): "applying a fixed combination of 0.2% brimonidine and 0.5% timolol twice a day." Given the prior art, [t]he method of applying a fixed combination of 0.2% brimonidine and 0.5% timolol twice a day would therefore have been obvious over the prior art." Id. at 19.

This did not end the nonobviousness inquiry for the majority, however. "The majority’s outcome appears to rest, therefore, on the notion that claim 4 was not obvious because it claims the result of twice-a-day dosing—avoiding “a loss of efficacy in the afternoon.” Id., quoting Maj. Op. 13. This is not a limitation: "[a]voiding a “loss of efficacy” is not a separate step, but rather a result of the claimed method. []. We should recognize in this case, as we did in Bristol-Myers Squibb, that '[n]ewly discovered results of known processes directed to the same purpose are not patentable.' Bristol-Myers Squibb, 246 F.3d at 1376." Slip Op. at 19 (internal citations omitted).

Consequences: It's worth noting that even though it prevailed in establishing the obviousness of the asserted claims of the '463 patent, Sandoz still cannot market its generic version of COMBIGAN: "The ’258, ’976, and ’149 patents each expire on April 19, 2022. Because we concludd that claim 4 of the ’149 patent is not invalid, the Appellants will be unable to enter the market until that date. Accordingly, we find it unnecessary to address the claims of the ’258 and ’976 patents." Slip Op. at 15.

Oral Arguments in Bowman v. Monsanto

February 20, 2013PatentDamages, Licenses, obviousness, reasonable expectation of successDennis Crouch

By Dennis Crouch

Bowman v. Monsanto Company (SCOTUS 2013) Transcript

The Supreme Court heard oral arguments today in the patent exhaustion case involving Monsanto's glyphosate-resistant soybeans. Acting in a pro bono basis, Mark Walters represented Mr. Bowman, the Indiana farmer accused of patent infringement. Decidedly not pro bono, Seth Waxman represented Monsanto, and Melissa Arbus Sherry spoke on behalf of the US Government.

My expectation here is that the court will side with Monsanto and find that a sale of patents seeds does not exhaust the patent rights as to progeny seeds that are grown. I will not be surprised if that result is 9-0. I suspect that there will also be a concurring opinion arguing that the Federal Circuit's conditional sale doctrine is bad law and that restrictions on the use of personal property do not normally bind subsequent purchasers who are not privy to that restriction agreement – regardless of whether the personal property is covered by a patent right.

= = = = =

There are two major questions at stake: (1) what is the scope of patent exhaustion for goods that are naturally self-reproducing; and (2) to what extent do use restrictions placed on a licensed grower (or manufacturer) persist as servitudes that create potential liability for downstream purchasers.

Everyone agrees that the first authorized and unrestricted sale of a patented article exhausts the patent rights in that particular article and allows the purchaser to use and sell the article without fear of patent liability. Bowman argues that, for seeds, this right to use includes the right to sow the seeds and use the harvest. Under Bowman's construct, once a seed is sold without restriction, the patent rights are exhausted to that seed and to its generations of progeny. Bowman's argument also relies upon the disputed assumption that the patent rights covering the initial seeds he purchased were actually exhausted. Monsanto has kept tight control over its product throughout the years and always requires farmers who want to plant its seeds to sign a technology licensing agreement. That agreement includes a promise not to save and replant seeds. Monsanto has argued that use restriction (or license limitation) is binding on subsequent purchasers – even those who purchase the seeds in a fungible commodity market without agreeing to any restriction. Thus, for Bowman to win, the court needs to find (1) that the rights in the original seeds were exhausted by the time Bowman purchased them from the commodity market and (2) that the exhaustion applies to all future progeny of the seeds. So far, the courts have sided with Monsanto.

Out of the gate, a plurality of justices appeared concerned about the policy implications of a decision in favor of Bowman.

Chief Justice Roberts: Why in the world would anybody spend any money to try to improve the seed if as soon as they sold the first one anybody could grow more and have as many of those seeds as they want?

There are several ways to answer this question: (1) an innovator could use contract law to ensure a better market structure; (2) patent rights are rarely sufficient alone to ensure profit; and (3) that soybeans are not really fungible in the way that you might think. The Court already knew the first two answers wanted to explore the third.

Mr. Walters: [S}eed that's available at a grain elevator is not a very good source of seed and farmers are not going to be able to eliminate the need to go to Monsanto or the other seed companies every year by going to the grain elevator. . . . Taking our example here where — where Petitioner bought commodity seeds, it's an undifferentiated mixture, it can't be overemphasized how different every single seed is, you don't know a Monsanto from a Pioneer from an Asgrow. You don't know the maturity rate. If I am a farmer, I need a particular maturity bean for my field because I don't want it to mature before it gets high enough for the combine to come around and cut it.

So you want to be able to have — you have all these things dialed in, these different variabilities. So if you go to the grain elevator and you don't know what exactly it is that you want and you just get a mixture, that's not going to be real -competitive at all to Monsanto's first generation seed. Now, the possibility of somebody selecting one and saying, ah, that's the exact one that I need for my field, I'm going to cultivate that and let it grow into enough seeds so I can plant my first crop, that would take a number of years to grow a 1,000-acre farm, and it's not — and by that time, farmers — the nature would have changed and evolved where you would want the latest disease resistance by that point….

Justice Scalia: Some of them would — would grow at different rates than others.

Mr. Walters: Absolutely. . . .

Justice Scalia: The original batch that he buys from Monsanto, in addition to being resistant to the chemical that kills the weeds, in addition to that, they all mature at the same rate.

Mr. Walters: Exactly. They're a uniform variety. They are exactly what a farmer needs …

Justice Scalia: So all the Monsanto seeds are not — are not fungible.

In addition to these elements, both Ms. Arbus Sherry and Mr. Waxman explained that the seed lines are additionally protected by PVPA certificates and that grain elevators are sales are prohibited by state and federal law from labeling its commodity goods as seed.

On the actual law of exhaustion Mr. Walters did not appear to fare so well.

Justice Sotomayor: I'm sorry. The Exhaustion Doctrine permits you to use the good that you buy. It never permits you to make another item from that item you bought. So that's what I think Justice Breyer is saying, which is you can use the seed, you can plant it, but what you can't do is use its progeny unless you are licensed to, because its progeny is a new item.

Mr. Walters: This is obviously a brand-new case where we're dealing with the — the doctrine of patent exhaustion in the context of self-replicating technologies.

It was around this point that Justice Breyer gave his best one-liner of the day, declaring that "three generations of seeds is enough." (see Buck v. Bell).

The government's Ms. Arbus Sherry began her discussion with a somewhat disingenuous parade of horribles that was quickly countered by Justice Scalia his is well known for his parades.

Ms. Arbus Sherry: If the concept is the sale of a parent plant exhausts the patentholder's rights not only with respect to that seed but with respect to all the progeny seed, we would have to go all the way back to the very first Roundup Ready plant that was created as part of the transformation event. Every single Roundup Ready seed in existence today is the progeny of that one parent plant and, as Your Honor pointed out, that would eviscerate patent protections. There would be no incentive to invest, not just in Roundup Ready soybeans or not even agricultural technology, but it's quite a bit broader than that.

In order to encourage investment, the Patent Act provides 20 years of exclusivity. This would be reducing the 20-year term to essentially one and only sale. It would be near impossible to recoup your investments with that first sale and so the more likely consequence is that research dollars would be put elsewhere.

Justice Scalia: That's a pretty horrible result, but let me give you another horrible result, and that is if — if we agree with you, farmers will not be able to do a second planting by simply getting the undifferentiated seeds from a grain elevator, because at least a few of those seeds will always be patented seeds, and no farmer could ever plant anything from a grain elevator, which means — I gather they use it for second plantings where the risks are so high that it doesn't pay to buy expensive seed. Now they can't do that any more because there's practically no grain elevator that doesn't have at least one patented seed in it.

Ms. Arbus Sherry: And the answer to that is this is actually not a traditional farming practice. Despite what Petitioner says, farmers do not generally go to grain elevators, buy commingled grain, plant it in the ground as seed.

Mr. Waxman's performance appears to be a tour-de-force, although he did not push for affirmance of the Federal Circuit's conditional sale doctrine. The one area where the court focused attention was on innocent infringement.

Justice Kagan: Mr. Waxman, there is a worrisome thing on the other side, though, too. And that is the Bureau position has the — has the capacity to make infringers out of everybody. And that is highlighted actually in this case by how successful this product is and how large a percentage of the market it has had.

So that — you know, seeds can be blown onto a farmer's farm by wind, and all of a sudden you have RoundUp seeds there and the farmer is infringing, or there's a 10-year-old who wants to do a science project of creating a soybean plant, and he goes to the supermarket and gets an edamame, and it turns out that it's Roundup seeds.

And, you know, these Roundup seeds are everywhere, it seems to me. There's, what, 90 percent of all the seeds that are around? So it seems as though — like pretty much everybody is an infringer at this point, aren't they?

Mr. Waxman: …Your point about the ubiquity of Roundup Ready's use is a fair one. I mean, this is probably the most rapidly adopted technological advance in history. The very first Roundup Ready soybean seed was only made in 1996. And it now is grown by more than 90 percent of the 275,000 soybean farms in the United States.

But size — that is, success — has never been thought and can't be thought to affect the contour of patent rights. You may very — with soybeans, the problem of blowing seed is not an issue for soybeans. Soybeans don't — I mean, it would take Hurricane Sandy to blow a soybean into some other farmer's field. And soybeans, in any event, are — you know, have perfect flowers; that is, they contain both the pollen and the stamen, so that they — which is the reason that they breed free and true, unlike, for example, corn.

The point that there may be many farmers with respect to other crops like alfalfa that may have some inadvertent Roundup Ready alfalfa in their fields may be true, although it's — it is not well documented. There would be inadvertent infringement if the farmer was cultivating a patented crop, but there would be no enforcement of that.

The farmer wouldn't know, Monsanto wouldn't know, and in any event, the damages would be zero because you would ask what the reasonable royalty would be, and if the farmer doesn't want Roundup Ready technology and isn't using Roundup Ready technology to save costs and increase productivity, the — the royalty value would be zero. …

Justice Breyer: And some of the self-replicating items, which are infringing items, end up inadvertently all over the place. Is there anything — is there precautions that you take? I mean, is there anything in patent law that helps?

Mr. Waxman: So infringement is — unlike contributory infringement or induced infringement, the act of infringement, that is a violation of Section 271 is a strict liability tort, but it requires affirmative volitional contact -conduct. That is, it's not that — a thing doesn't infringe; a person infringes. …

Justice Breyer: But you're just saying that would need a modification in patent law.

Mr. Waxman: Of course.

We can expect a decision by June.

Droge: Appealing Board Decisions (And Losing)

September 24, 2012Patentobviousness, reasonable expectation of successDennis Crouch

By Dennis Crouch

In re Droge (Fed. Cir. 2012)

In a unanimous panel opinion, the Federal Circuit has affirmed a decision by the Board of Patent Appeals and Interferences (now Patent Trials and Appeals Board) that Droge’s claims are unpatentable as obvious when compared against the known prior art. In this case, it was the inventors’ own previously published academic article that ended the case.

Droge’ claimed invention covers a phage-mediated recombinant DNA method for use in eukaryotic cells and the inventor’s prior paper involved a similar technique in prokaryotic cells. Droge presented a credible argument that differences in the cell types and protein co-factors meant that someone skilled in the art would not expect the prokaryotic technique to work in eukaryotic cells.

On appeal, the Federal Circuit found two problems with Droge’s arguments: (1) the prior art does not need to create a true expectation that the new invention will work – rather, the question is whether it creates a “reasonable expectation of success.” For that point, court quoted the 2009 Kubin decision: “Obviousness does not require absolutely predictability of success … all that is required is a reasonable expectation of success.” In re Kubin, 561 F.3d 1351, 1360 (Fed. Cir. 2009)). (2) Because the expectation of success is a factual question, the Board’s decision will only be overturned if that decision is unreasonable and lacks substantial evidence. That low evidentiary standard means that the Board’s decisions are affirmed unless clearly wrong.

After rejecting Droge’s arguments, the Federal Circuit then affirmed the rejection – finding the claims unpatentable.

Interesting – Dr. Peter Droge appears to be the owner of the patent application – having received an assignment from the other two inventors in 2002. The trio are also the listed inventors of U.S. Patent No. 7,491,539 that – according to the spotty USPTO assignment records – is co-owned by Dr. Droge and Boehringer Ingelheim.

Recent Federal Circuit Nonobviousness Opinions: Alcon v. Apotex

August 15, 2012Obviousness, Patentobviousness, reasonable expectation of successJason Rantanen

By Jason Rantanen

I'm catching up with recent Federal Circuit opinions this week. First up, a trio of precedential opinions involving nonobviousness, a surprisingly hot topic.

Alcon Research, Ltd. v. Apotex Inc. (Fed. Cir. 2012). Panel: Prost, Moore (author), O'Malley Download 11-1455

Apotex submitted an Abbreviated New Drug Application to the FDA seeking approval to market a generic version of the anti-allergy eye drop PATANOL; in response, Alcon sued Apotex for patent infringement under 271(e)(2)(A). In a bench trial, the district court held that eight of the asserted claims of the patent were nonobvious, and Apotex appealed.

The Federal Circuit reversed on six of the claims. Focusing on the primary issue, whether there was a motivation to adapt the formulation disclosed in the prior art (which was tested in guinea pigs) for use in in treating humans, the CAFC concluded that the district court had applied an overly strict reason to modify requirement to the six claims involving a range that overlapped with the prior art. Given the district court's factual finding that "animal tests, including guinea pig models, are predictive of a compound's antihistaminic activity and its topical ocular activity in humans," the "district court clearly erred when it concluded that a person of skill in the art would not have been motivated to use the olopatadine concentration disclosed in Kamei in human eyes." Slip Op. at 12. It did not help Alcon's argument that its patent was based only on in vitro tests of the compound in human cells.

The CAFC reached a different conclusion on two claims that did not cover a range of the active compound that overlapped with the prior art, finding no clear error in the district court's conclusion that "a person of ordinary skill in the art would not have a reasonable expectation of success for increasing the highest dosage used in [the prior art] by an order of magnitude." Slip Op. at 17.

While the CAFC considered the objective evidence, it played a relatively secondary role. On the six claims that the panel concluded were obvious, despite agreeing with the district court that the objective considerations fell in Alcon's favor, the CAFC nevertheless concluded that after balancing the objective evidence against the strong case of obviousness presented by Apotex the claims were obvious. No explanation of why this was so was offered. Similarly, on the two claims in which there was no reasonable expectation of success, the court commented that the objective evidence "further supports" the nonobvious holding, citing particularly evidence of commercial success.

Comment: The opinion avoids labeling the first part of the analysis as a "prima facie" case of obviousness, perhaps in response to recent concerns about the confusing use of that term in infringement suits. See In Re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litigation, 676 F.3d 1063 (Fed. Cir. 2012). The court refers to it only as the "evidence of obviousness discussed above" when contrasting it with the objective indicia of nonobviousness. But this is somewhat cumbersome, and sparks the question of how should we refer to this stage of the obviousness analysis if not as the "prima facie case of obviousness?" Possible suggestions, all of which have their problems: the first three Graham factors; the 'paper case' of obviousness; the 'theoretical' case of obviousness. Other suggestions?