by Dennis Crouch

Anza Tech., Inc. v. Mushkin, Inc. (Fed. Cir. 2019).

The district court dismissed Anza’s infringement lawsuit — finding it barred by the six-year statute of limitations on collecting back-damages.  The statute:

Except as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action.

35 U.S.C. § 286.

The original complaint filed March 2017 was within six-years of the alleged infringement.  However, once the patentee got around to filing its second amended complaint in June 2018, the six year deadline was passed.  The district court dismissed the case holding that the second complaint did not sufficiently “relate back” to the original complaint and therefore was given its actual (later) filing date.  On appeal the Federal Circuit has reversed – finding the “district court’s application of the relation back doctrine … overly restrictive.”

Relation Back: Fed. R. Civ. Proc. R. 15(c) provides the rules for when an amendment “relates back” to the original. This issue almost always arises in the situation seen here — the original filing was timely, but the amendment was made after expiration of some statute of limitations. Under the Rule, an amended pleading relates back to the original pleading if its claims “arise out of upon the conduct, transaction, or occurrence set out—or attempted to be set out—in the original pleading.” (Note the Rule provides three mechanisms for relating back, and this is the most relevant for this case).

In its appeal, the Federal Circuit ruled that its own law applies (rather than the regional circuit court) because the relation-back question can depend upon an “analysis of the accused acts of infringement.”  Here, the court treated the relation-back issue as a question of law (reviewed de novo on appeal) except as to factual conclusions made by the district court, which are reviewed for clear error.

The relevant complaint timeline:

• Original complaint – March 2017 – alleging Mushkin infringed U.S. Patent 7,124,927 associated with 16 products.
• First amended complaint – September 2017 – joining Avant Tech as co-defendant (that case was then severed and the Mushkin case transferred from California to Colorado)
• Second amended complaint – June 2018 – dropping the ‘927 patent and instead added two different patents U.S. Patents 6,354,479 and 6,651,864; dropping ten of the accused products and adding two additional products.

By the third filing, the original patent is no longer asserted but rather two family member patents; and two new products had been added as infringing (along with ten being deleted).

On appeal, the Federal Circuit held that the claims directed to the six originally accused products properly relate back to the original complaint. For the allegations again the two new products, the court remanded for a new analysis on whether those allegations should also relate back.

In its opinion, the appellate panel primarily focused on the question of notice — finding that the “technological overlap [between the patents] suggests that the aggregate of operative facts underlying infringement under the ’927 patent in the original complaint gave notice of the substance of the claims of infringement under the ’479 and ’864 patents in the second amended complaint.”

= = = = =

What is a Statute of Limitations: One element of interest in this case is the the statement by the court that Section 286 is a “statute of limitations.” I have always called it such, but others have regularly called-me-out on that point — arguing that patent law does not have a statute of limitations or statute of repose.  This opposing argument is that Section 286 limits back-damage recovery but does not prevent the lawsuit itself.  Of course, that argument is bunk.  The Supreme Court explained as much in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 137 S. Ct. 954, 961–62 (2017):

First Quality contends that … § 286 of the Patent Act is not a true statute of limitations. A true statute of limitations, we are told, “runs forward from the date a cause of action accrues,” but § 286 “runs backward from the time of suit.”  . . .  This argument misunderstands the way in which statutes of limitations generally work. First Quality says that the accrual of a claim, the event that triggers the running of a statute of limitations, occurs when “a plaintiff knows of a cause of action,” ibid., but that is not ordinarily true. As we wrote in Petrella, “[a] claim ordinarily accrues ‘when [a] plaintiff has a complete and present cause of action.’ ” 572 U.S., at ––––, 134 S.Ct., at 1969; see Graham County Soil & Water Conservation Dist. v. United States ex rel. Wilson, 545 U.S. 409, 418–419, 125 S.Ct. 2444, 162 L.Ed.2d 390 (2005). While some claims are subject to a “discovery rule” under which the limitations period begins when the plaintiff discovers or should have discovered the injury giving rise to the claim, that is not a universal feature of statutes of limitations.

So, it is nice to see that the Federal Circuit has at least accepted this instruction from the Supreme Court by specifically identifying Section 286 as a “statute of limitations.”

by Dennis Crouch

Nalpropion Pharmaceuticals, Inc. v. Actavis Laboratories FL, Inc. (Fed. Cir. 2019)

It is always surprising to see the Federal Circuit reverse a non-obviousness holding; However, the most important aspect of this decision is likely the written description discussion. 

This Hatch-Waxman litigation was triggered by the Abbreviated New Drug Application (ANDA) filed by Actavis — seeking permission from the FDA to begin marketing weight loss drugs naltrexone hydrochloride and bupropion hydrochloride extended-release tablets. Nalpropion is the branded distributor of the Contrave and owner of the Orange Book listed patents U.S. Patents 7,375,111, 7,462,626, and 8,916,195.  The lawsuit was started by Orexigen who held rights at the time. Nalproprion bought rights from Orexigen out of Bankruptcy in a $75 million asset purchase. (The problem is that the pills are not overly effective — ~10% weight loss, but only when combined with diet changes and exercise.)

The patentee won the district court litigation and obtained an injunction against generic entry by Actavis until expiration of the patents in suit. On appeal, the Federal Circuit has partially reversed — finding some of the asserted claims obvious.

The active ingredients were already known in the art, and so the claims at issue are directed toward (1) a method of treating obesity with naltrexone and bupropion and (2) a sustained release formulation of the two drugs in a single pill.

The key prior art taught use of the two drugs (in sustained release form) to avoid weight gain associated with smoking cessation (rather than losing weight for obese/overweight patients).  A second reference taught using bupropion for weight loss. Another reference taught the use of the two drugs as a treatment of depression and included case studies showing weight loss. The district court considered these references but found the weight loss effect were not clear enough and that there were too many potential side-effects to encourage experimentation.

On appeal, the Federal Circuit reversed — finding the claims obvious as a matter of law.

The prior art here discloses the claimed components of the composition claims and the steps of the method claims including the use claimed by the method. . . .

Given that both drugs had shown weight loss effects, we conclude that a person of ordinary skill would have been motivated to combine them. In fact, such persons did so [in the prior art]. O’Malley [the first reference] teaches a combination of effective amounts of sustained-release bupropion and naltrexone for minimizing weight gain. Likewise, Dante teaches use of an opioid antagonist, preferably naltrexone, and an antidepressant, including bupropion, for decreasing sugar cravings, noting that naltrexone administration alone led reduced sugar cravings and weight loss in two examples. A person of skill would have understood that a combination for reducing weight gain and decreasing carbohydrate  cravings may affect weight loss as well. . . .

The inescapable, real-world fact here is that people of skill in the art did combine bupropion and naltrexone for reductions in weight gain and reduced cravings—goals closely relevant to weight loss. Contrary to Nalpropion’s view, persons of skill did combine the two drugs even without understanding bupropion’s mechanism of action but with an understanding that bupropion was well-tolerated and safe as an antidepressant.

As a result here, the court held these claims obvious.

Power of a Portfolio: Important note here is that the the obviousness decision invalidated claims from only two of the three patents.  The claims in the third patent include more specific dosing and and extended release elements that were not found in the prior art. (E.g., 32 mg of naltrexone; 360 mg bupropion; release of 39-70% within one hour; …).  U.S. Patent No. 8,916,195.  End result appears likely the same — injunction to prevent generic entry.

Dissent on Written Description:  Chief Judge Prost wrote in dissent — arguing that the claims of the third ‘195 patent should also be found invalid as lacking written description.  The particular issue is that the patent claimed use of a particular standard (“USP 2”) for measuring the extended-release profile of the pills; but the specification apparently discloses a different standard (“USP 1”).   In the case the patentee’s expert testified that the two methods are “substantially equivalent,” and that was enough to satisfy both the district court and the majority here (Judges Lourie and Wallach). Chief Judge Prost disagreed — arguing that disclosure of a “substantial equivalent” of the claimed invention is not sufficient.

A substantially equivalent disclosure, even if it would render the claim limitation obvious, cannot satisfy the written description requirement. See Ariad (“[A] description that merely renders the invention obvious does not satisfy the requirement.”); Lockwood v. Am. Airlines, Inc., 107 F.3d 1565, 1572 (Fed. Cir. 1997) (“The question is not whether a claimed invention is an obvious variant of that which is disclosed in the specification.”).

Chief Judge Prost went on to argue (1) that the claim element is certainly “limiting”; and (2) no evidence of record shows that the two methods produce the same results. For its part, the majority explains that “[i]t is not necessary that the exact terms of a claim be used in haec verba in the specification, and equivalent language may be sufficient.

I pulled up the prosecution history on this case using PAIR. Originally the claims did not mention any dissolution test at all for measuring the sustained release. Later, the patentee added that the test was a “standard” test.  The examiner rejected that amendment as failing the written description requirement and the patentee then changed the test to USP 2 (“a dissolution test of USP Apparatus 2 Paddle Method at 100 rpm in a dissolution medium of water at 37 deg C”). The office action response states that “there is sufficient disclosure in the specification to demonstrate possession of the claimed release profile” as amended. The examiner then allowed the case — mentioning the USP 2 profile in the reasons for allowance. All of this tends to favor Judge Prost’s analysis. On the other hand – when I read the patent document it actually discloses the use of USP 2 in the specification or “other test conditions substantially equivalent thereto.” However, the example given of actual dissolution measurements uses USP 1.

= = = =

Dominick Conde of Venable (NY) argued the case for Nalpropion; Jonathan Ball of Greenberg Traurig (NY) argued for Actavis assisted by Justin MacLean, et al.

by Dennis Crouch

Swagway v. ITC and Segway (Fed. Cir. 2019) (Swagway II Revised Opinion)

The Federal Circuit previously released its opinion in this appeal that I discussed in an essay titled Who Needs Proof of Actual Confusion? Not a TM Plaintiff, Patentlyo-O (May 9, 2019) (Swagway I).  Now, the court has released a new opinion focusing on the preclusive impact of ITC orders.

Background: Although Swagway is clearly playing on the Segway brand to create some initial interest, Swagway argued that there was no proof of actual confusion despite years of both brands being on the market.  In this case, however, the court found insufficient evidence of “long-term, concurrent use in the same channels of trade.”  As such, proof of a likelihood of confusion was enough for an infringement verdict.

Consent Order vs Exclusion Order:  At the ITC, Swagway had proposed a consent order that it “would not sell for importation, import, or sell after importation into the United States products sold under the SWAGWAY mark.”  Rather than entering the consent order, however, the ITC entered an enforcement and cease-and-desist order prohibiting importation of “SWAGWAY-branded personal transporters …”

On appeal, Swagway wanted the consent order granted and the exclusion order removed.  Although this was not expressly argued in the briefs, Swagway felt that the consent order (as a settlement) would not have the same preclusive impact the ongoing parallel district court litigation  as would the exclusion order (as a judgment on the merits).

Swagway contended at oral argument that the difference between its proposed consent order and the orders issued by the Commission was the preclusive effect it believed would be afforded to the Commission’s final decision and its resulting orders.

Swagway I.  In its original decision, the Federal Circuit found no basis bringing the appeal since ITC trademark decisions “do not have preclusive effect.”

Rehearing: Segway has now successfully petitioned for rehearing — arguing that the court had gone too far with the “no preclusion” statement. In particular, the Federal Circuit had cited decades old precedent for its no-preclusion holding while recent Supreme Court cases point in the other direction.  In its brief, Segway explains:

In reaching this [no-preclusion] conclusion, the panel makes no mention of the Supreme Court decision that a trademark adjudication by an administrative agency should be given preclusive effect. B & B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293 (2015). Nor does the panel mention the fact that the First, Second, and Fourth Circuits have all reached the opposite conclusion: that the Commission’s decisions in Section 337 cases regarding non-patent rights do have preclusive effect. . . .

These precedents show that while there is evidence that Congress did not intend decisions of the Commission on patent issues to have preclusive effect, there is no such evidence regarding the Commission’s decisions on non-patent cases. These precedents also show that there is a strong policy in favor of giving preclusive effect to administrative adjudications unless there is clear Congressional intent to the contrary. The panel did not “see” those reasons because it did not have the benefit of any briefing on the issue, which was not raised by Swagway until oral argument.

Based upon this briefing, the panel has withdrawn its original opinion and issued a new one.  The new opinion has the same result, but removes the declaration that the ITC order would have no preclusive effect.

In particular, the court found that the error alleged in Swagway’s appeal was that the ITC denied the consent order motion using the wrong paper — in the Final Initial Determination [ID] rather than in an Order.  Since on remand the ITC could simply reissue the denial in an “Order” — the court found no actual harm.

Biggest bottom line: Non-patent ITC orders are likely to begin having preclusive effect in parallel district court litigation.  This improves the attractiveness of the ITC for enforing trademarks, copyrights, and trade secrets against companies importing products into the US.  The result then – get a quick win on the merits at the ITC and obtain an exclusion order; then take decision to the district court to collect damages.

by Dennis Crouch

Eli Lilly and Co. v. Hospira, Inc. (Fed. Cir. 2019)

On summary judgment, the district court found for the patentee Eli Lilly — holding that the ANDA filings by Hospira & Dr. Reddy infringed Lilly’s U.S. Patent 7,772,209.

On appeal, the Federal Circuit found error’s in claim construction and consequently reversed the judgment of literal infringement.  However, the court affirmed the alternative judgment of infringement under the doctrine of equivalents (DOE).

The drug at issue is pemetrexed (Lilly brand “Alimta”) approved for treatment of inoperable malignant pleural mesothelioma.  The drug operates as an anti-folate (blocking folic acid from binding and being harnessed for cancer cell growth).

The ‘209 patent does not cover the drug itself, but instead covers an “improved method for administering pemetrexed disodium to a patient in need of chemotherapeutic treatment.” I previously wrote about the patent being challenged in separate IPRs and explained that “the claimed invention calls for a pre-treatment of a patient with folic acid and vitamin B12 in order to reduce the risk skin rashes, fatigue, etc.”

Eligibility Cannot be Raised in IPR Appeal

In the litigation here, Hospira argues that its proposal does not infringe because it calls for intravenous administration of pemetrexed ditromethamine dissolved in saline and other compounds — that solution makes it different than the “pemetrexed disodium” as claimed.  Basically, a dissolved salt is not a salt.

The district court sided with the patentee writing that

Administration of pemetrexed disodium . . . refer[s] to a liquid administration of pemetrexed disodium. . . ., accomplished by dissolving the solid compound pemetrexed disodium into solution.

District Court Summary Judgment Decision. On appeal, the Federal Circuit reversed that decision — finding no literal infringement:

A solution of pemetrexed and chloride anions and tromethamine and sodium cations cannot be deemed pemetrexed disodium simply because some assortment of the ions in the solution consists of pemetrexed and two sodium cations. . . . Once diluted, the salt’s crystalline structure dissolves, and the individual ions dissociate. In other words, pemetrexed disodium no longer exists once dissolved in solution, and, as a corollary, a different salt of pemetrexed dissolved in saline is not pemetrexed disodium.

Thus, the appeallate panel found no literal infringement.

Doctrine of Equivalents. In yet another strong doctrine of equivalents decision, the Federal Circuit has held that the proposed generic solution of dissolved salts is the equivalent of the salt itself — and therefore infringes.

Few propositions of patent law have been so consistently sustained by the Supreme Court as the doctrine of equivalents. See Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushki Co., 535 U.S. 722, 733 (2002) (“Festo VIII”) (“[E]quivalents remain a firmly entrenched part of the settled rights protected by the patent.”); Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 40 (1997) (“[W]e adhere to the doctrine of equivalents.”); Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 339 U.S. 605, 608 (1950) (“Originating almost a century ago in the case of Winans v. Denmead, [56 U.S. 330 (1853)] . . . [the doctrine of equivalents] has been consistently applied by this Court and the lower federal courts, and continues today ready and available for utilization when the proper circumstances for its application arise.”). It is settled that a patentee is entitled “in all cases to invoke to some extent the doctrine of equivalents,” Seymour v. Osborne, 78 U.S. 516, 555 (1870), without a “judicial exploration of the equities of a case” beforehand.

Here, Lilly had narrowed its claims during prosecution, but the court found that the amendment was “tangential” to the equivalent in question — “touching lightly or in the most tenuous way.” Webster’s Third New International Dictionary (2002).

The reason for Lilly’s amendment, as the district court concluded, was to narrow original claim 2 to avoid Arsenyan, which only discloses treatments using methotrexate, a different antifolate.

The amendment was not intended to avoid dissolved pemetrexed disodium.

In summary, these cases are eminently suitable for application of the doctrine of equivalents, and we conclude that neither prosecution history estoppel nor the disclosure-dedication rule bars Lilly from asserting infringement through equivalence.

Thus, ultimately the judgment of infringement is affirmed despite the lack of literal infringement.

= = = = =

Prosecutors: It makes sense to consider the prosecution history of this case to consider how to limit prosecution history estoppel.

by Dennis Crouch

Ajinomoto Co., Inc. v. ITC; CJ CheilJedang Corp. v. ITC (Fed. Cir. 2019)

Some aspects of patent law are unduly complicated.  Here is one: Prosecution History Estoppel (PHE) as applied to the Doctrine of Equivalents (DOE).

The DOE finds infringement when someone is practicing something very similar (albeit different) than what is literally claimed.  Although the doctrine is court-created, courts are also wary of the potentially unmoored doctrine and thus have created a number of major limitations on the doctrine that have severely limited its scope.  Prosecution History Estoppel is one such limitation and arises when patent claims are narrowed during patent prosecution (something that happens in the vast majority of cases).

Under PHE, a narrowing limitation during prosecution is “presumed to be a general disclaimer of the territory between the original claim and the amended claim.” Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722 (2002).  In Festo though, the Supreme Court identified the disclaimer as rebuttable upon proof that “the amendment cannot reasonably be viewed as surrendering a particular equivalent.”  The high court particularly identified three mechanisms of such proof:

1. The equivalent was unforeseeable at the time;
2. The reasons for the amendment bear only a “tangential relation to the equivalent”; or
3. “some other reason.”

The Federal Circuit has noted in the past that these exceptions are “very narrow”  Cross Med. Prods., Inc. v. Medtronic Sofamor Danek, Inc., 480 F.3d
1335, 1342 (Fed. Cir. 2007)). Further, proof of the exceptions and the patent applicant’s intent must be “objectively apparent” and “discernible from the prosecution history record.”

Like I said, unduly complicated.  The easiest way to state this (recklessly ignoring the various burdens) is that PHE applies to cut-of DOE when there is a narrowing amendment reasonably related to the equivalent at issue.

I also have to say that this is a really poorly written opinion by Judge Taranto in that it muddles together various facts over many pages — often without spelling out which facts are relevant for what purposes.  The dissent by Judge Dyk is much more clear-headed as written.

= = = =

Ajinomoto’s patent claims E. coli bacteria genetically engineered with the yddG gene to increase L-amino acid production (including tryptophan) and also claims the method of making the amino acids by cultivating the aforementioned bacteria.  Ajinomoto filed a complaint against CJ CheilJedang in the USITC, and the Commission eventually sided with the patentee — finding infringement under the doctrine of equivalents.

The claim structure here is odd.   Claim 20 is the claim at issue and is couched as a multiple dependent method claim — the method of producing the L-amino acid by cultivating bacteria “according to any one of claims 9-12, 13, 14, 15-18, or 19.”  The appeal here focuses only on claim 20’s L-amino acid production according to claim 9.

The dissent explains why CJ does not literally infringe:

Claim 9 covers a recombinant bacteria having [sic] a “protein consist[ing] of the amino acid sequence of SEQ ID NO: 2.” Id. col. 22, ll. 56–57. This corresponds to the amino acid sequence of E. coli YddG protein (a membrane-bound protein involved in the cellular export of aromatic amino acids). [CJ’s] Strain B does not
literally infringe claim 9 because it produces a protein with an amino acid sequence that differs from SEQ ID NO: 2. Instead, Ajinomoto asserts infringement under the doctrine of equivalents, arguing that Strain B’s non-E. coli YddG protein is equivalent to the E. coli YddG protein (SEQ ID NO: 2) in claim 9.

Although not literally the same as what was claimed, the ITC found that it was the equivalent and therefore infringing.  On appeal, the Federal Circuit agreed — that DOE applies generally, but then focused on whether it was limited by PHE.

The original claim language covered SEQ ID NO: 2 along with modification such as “deletion, substitution, insertion or addition of one or several amino acids” of SEQ ID NO: 2. That claim was narrowed after an anticipation rejection to get around a different naturally occurring protein (YfiK).  By narrowing the claim, it also now excludes the particular YddG protein variation used by CJ.

On appeal, the Federal Circuit held that the purpose of the appeal was to get around the YfiK prior art, not the YddG prior art.  As such, the reasons for the amendment were merely tangential to the equivalent in question.

Judge Dyk writing in dissent argued the other side:

Originally, the claim covered proteins with amino acid sequence variations from SEQ ID NO: 2, which would have included the non-E. coli YddG protein at issue here. The examiner rejected the original claim based on anticipating prior art, and the patentee responded with a narrowing amendment. Instead of continuing to define the covered proteins in terms of amino acid sequence variations from SEQ ID NO: 2, the patentee deliberately chose to redefine the claimed proteins in terms of the ability of their encoding nucleotide sequences to hybridize with SEQ ID NO: 1 under the claimed conditions. The amended claim language excluded the prior art protein (Livshits) because it was made based on a nucleotide sequence that did not meet the newly added hybridization requirement. The accused equivalent is similarly not covered by the amended claims because it is produced based on an encoding nucleotide sequence that does not hybridize with SEQ ID NO: 1 under the claimed conditions. Thus, I do not see how the reason  for the narrowing amendment is tangential to the accused equivalent. . . .

In my view the tangential exception cannot apply. The equivalent is directly related to the reason for the amendment—to exclude those proteins made by an encoding nucleotide sequence that does not hybridize with SEQ ID NO: 1 under the specified conditions.

The majority disagreed with this analysis and affirmed the infringement holding.

by Dennis Crouch

VirnetX v. Cisco Systems (Fed. Cir. 2019)[Decision]

This one here stems from a set of longstanding inter partes reexamination proceedings that Apple and Cisco filed against VirnetX’s U.S. Patent Nos. 7,418,504 and 7,921,211 (establishing a secure internet connection). The examiner found the claims obvious/anticipated and the PTAB affirmed. (more…)

Guest Post by Shubha Ghosh, Crandall Melvin Professor of Law and Director, IP & Tech Commercialization Law Program and Syracuse Intellectual Property Law Institute, Syracuse University College of Law.  I asked Professor Ghosh to offer his views on the ACLU and Law Professors’ letter.  Below is is response. -Jason

As a law professor, I am in the camp of those who are critical of the proposed bipartisan, bicameral legislation (“the Coons-Tillis bill”) to amend provisions of the Patent Act dealing with patentable subject. I am also in the camp of those who find the “two-step test” introduced by the Supreme Court in its Mayo v, Prometheus, 566 U.S. 66 (2012), and Alice v CLS Bank, 573 U.S. 208 (2014), decisions unworkable and inconsistent with its own precedent. I am also in the perhaps much smaller camp that is skeptical of the approach adopted by the Court in its Association for Molecular Pathology v. Myriad, 569 U.S. 576 (2013) decision (even if I agree with the result that identified genetic sequences are not patent eligible). Here are my thoughts about the Coons-Tillis bill and the comments in the letter from the ACLU and the law professors and practitioners organized by Professor Ted Sichelman of University of San Diego Law School.

A proposed provision of the Coons-Tillis legislation states: “No implicit or other judicially created exceptions to subject matter eligibility, including ‘abstract ideas,’ ‘laws of nature,’ or ‘natural phenomena,’ shall be used to determine patent eligibility under section 101, and all cases establishing or interpreting those exceptions to eligibility are hereby abrogated.”

The language expresses frustrations with judge-made exceptions to patentable subject matter based on implications drawn from the language of the Act or from judge made common law reasoning. If enacted, the amendment would not only remove established exceptions to patentable subject matter, but also would limit the power of the federal judiciary to create exceptions based on its own reasoning and interpretation of the Patent Act. Such legislation is in conflict with the long-established relationship between federal courts and Congress. If enacted, it would invite constitutional challenges claiming violation of the separation of powers, under Article III, of the Constitution. The proposed amendment would very likely be found unconstitutional.

Federal courts have as their role the interpretation of statutes. By abrogating the federal court’s power to develop any implications from the statutory language and to engage in common law reasoning in interpreting the statute, Congress invades long-standing judicial power.  Although a full analysis of the separation of powers is beyond the scope of this post, Congressional limitations on judicial power in other realms have failed under judicial scrutiny. At the extreme, Congress is limited in its power to legislate that federal courts cannot hear certain cases or controversies. See Boumediene v. Bush, 553 U.S. 723 (2009) (suspension of writ of habeas corpus unconstitutional); United States v. Klein, 80 U.S. 128 (1871) (Congress’ limitations on claims relating to confiscated and abandoned property unconstitutional). But see Patchak v. Zinke, 138 S.Ct. 897 (2018) (Congress’ stripping federal court jurisdiction over claims arising from Department of Interior’s taking of land into trust was not unconstitutional).

I am not suggesting that the proposed abrogation goes as far as the suspect legislation in Boumediene and Klein. Federal courts can still adjudicate patent law questions under the Coons-Tillis bill. But the bill does put limitations on how courts can decide cases. This attempt to bind the way federal judges approach a federal question is as problematic as taking away their power to adjudicate in the first place. The Coons-Tillis bill if enacted as drafted will invite substantive litigation which may well lead to the legislation being struck down, in part, as an unconstitutional exercise of Congressional power.

The drafters of the ACLU letter express the concern that the abrogation of the established exceptions will essentially reverse the Supreme Court’s ruling in Myriad that isolated gene sequences are not patentable subject matter. I am not as sure of the specter of genes coming back under patent should Coons-Tillis be enacted. My hesitation stems from what I find to be the opacity in the Supreme Court’s analysis in Myriad. If the Court’s reasoning rested on a constitutional holding that natural occurring substances like genetic sequences are not the “discovery of an inventor” contributing to “progress” in the “useful arts,” as required by Article I, Section 8, Clause 8 of the Constitution, then perhaps the Myriad holding survives a possible enactment of the Coons-Tillis bill.

That is the promise of the Law Professor Letter promoted by Ted Sichelman (and his co-authors Kevin Noonan and Adam Mossoff).  Their principal point is that courts can base patent subject matter exceptions in the constitutional language rather than in a murky common law. This point they contend is true for the established exceptions of abstract ideas, laws of nature, and natural phenomena.  But this optimistic assertion is far from clear; it is certainly possible, but not guaranteed. The Coons-Tillis bill, however, offers no guidance on how the courts should assess patentable subject matter. The proposed legislation requires courts to consider eligibility based on “the claimed invention as a whole” and to disregard the manner in which the invention was made, the state of the art at the time of invention, whether limitations are well-known, conventional or routine, or to the standards of novelty, nonobviousness, or enablement. I would assert that there is some general acceptance for excluding laws of nature, abstract ideas, and natural phenomena from patent eligibility (even if there is disagreement on the scope of these exceptions). I find little comfort in abrogating am established body of law on the hope that a Constitutional analysis will either not change the status quo or provide more light.

In summary, the Constitution may not come to the rescue of the proposed abrogation and more likely the Constitution will be its downfall.

Instead of shackling judicial decision making, a bill more carefully tailored to address the problems with the two-step test of Alice/Mayo and the unclear holding of Myriad would be more desirable.

The two-step test requires the PTO or a court to first determine whether patent claims are directed to an abstract idea, natural phenomenon, or law of nature.  If they are not, then the claims are patentable subject matter. If the patent claims are directed to ineligible subject matter, the second step requires the agency or court to identify an inventive concept for which the ineligible subject matter is embodied, used, or applied. What “directed to” and “inventive concept” mean has been the source of controversy with courts often failing to find an inventive concept beyond the ineligible subject matter. The problem is that there is no meaningful definition of an inventive concept beyond the notions of novelty, nonobviousness, usefulness, and enablement. The Coons-Tillis bill attempts to finesse this problem by basing a determination of patent eligibility on a consideration of the “claimed invention as a whole,” but this only begs the issue.

More targeted reform would abrogate the two-step test with its confusing language of “directed to” and “inventive concept.”  Instead, Congress might attempt to more clearly define the established exceptions, drawing on precedent. The Supreme Court tried to do something like this in its Bilski v. Kappos, 561 U.S. 593 (2010), decision. Justice Stevens’ concurrence would have established an exception for “business methods” but for the switch in Justice Kennedy’s vote. Although the Court, Congress, and the patent bar disfavor exceptions for broad classes of inventions, like software or business methods, Justice Stevens’ approach would have set forth a more principled approach to defining the exception that rested on a careful interpretation of the word “process” in the Patent Act.  Instead of this potentially fruitful approach, we were given an open-ended opinion by Justice Kennedy that quite correctly avoided any specific test while endorsing open ended standards.  Justice Stevens’ policy-based interpretation of the word “process” would have taken us further. The irony is that despite Justice Kennedy’s refusal to adopt a specific test, the Court adopts a rigid, unworkable test in Mayo/Alice.

Congress can follow the trail blazed in Justice Stevens’ Bilski concurrence by spending time offering more helpful definitions of the established exceptions.  The Court’s Myriad decision illustrates the need for more clear definitions.  In determining whether Myriad’s isolated gene sequences were natural phenomena, Justice Thomas’s opinion took us through an exploration of biotechnology that read like outtakes from an episode of Nova. The purpose of his scientific exegesis was to explain why the isolated gene sequences were in fact identical at the level of code to the natural phenomena of the naturally-occurring gene sequences. Justice Scalia would have none of this exegesis and simply concluded, in his concurrence, that the two were in fact the same based on his reading of the record. Notably, the Federal Circuit came to the opposite conclusion, ruling that the isolated sequences differed in chemical composition from the naturally occurring sequences.  This conflict as to determining how the subject matter of an invention compares to ineligible subject matter shows to me that guidance from Congress would be desirable.

One source of uproar over the state of the patent subject matter doctrine is the Federal Circuit’s decision in Ariosa v. Sequenom, 788 F.3d 1371 (Fed. Cir. 2015), finding ineligible an arguably valuable pre-natal diagnostic test because it involved cell-free fetal DNA. The court’s analysis is a collision of two errors, combining the two-factor test in Mayo/Alice with the question of when isolated DNA is naturally occurring in Myriad.  Finding the claims directed to natural phenomena and laws of nature, the court failed to find an inventive concept. Its analysis reduced the test to its nonpatentable elements and not finding more. The case illustrates the mechanical application of the two-step test combined with the uncertainties of determining when an invention is identical to ineligible subject matter.

Can Congress set forth clearer definitions of the recognized categories of ineligible subject matter? Can it clarify the definition of process as Justice Stevens set forth in Bilski? The politics of patent reform may inevitable corrupt the process.  But better than stripping courts of common law decision making in patent law, Congress should nudge the process along through clearer statutory guidance.

By Jason Rantanen

This past spring, Senators Tillis (R-NC) and Coons (D-DE), ranking members of the Senate Judiciary Committee, together with Representative Collins, Johnson and Stivers, released draft bill text for bipartisan patent legislation focusing especially on Section 101 (read here).  The Senate Judiciary Subcommittee on Intellectual Property conducted hearings on patent eligibility and disclosure requirements in June, and there was a sense that a proposed bill would drop before the August recess.  With the Senate recess beginning on Saturday, that is looking unlikely.  More likely we will see something in a few weeks, once Congress reconvenes.

There’s still a day and a half to go, however, and two recent letters to the Senate Judiciary Subcommittee on Intellectual Property have presented opposing viewpoints on the central issue being addressed by the proposed legislation: patent-eligible subject matter.

Letter from medical, health and civil rights organizations:

The first, signed by over 200 organizations, including the ACLU, Mayo Clinic Laboratories and Women’s March, begins:

We, the undersigned civil rights, medical, scientific, patient advocacy, and women’s health organizations, write to express our opposition to the recent proposal to amend Section 101 of the Patent Act. The draft legislation if enacted would authorize patenting products and laws of nature, abstract ideas, and other general fields of knowledge. Most troublingly, the legislation would permit patenting of human genes and naturally-occurring associations between genes and diseases. Allowing these patents will prevent the discovery of novel treatments for diseases including cancer, muscular dystrophy, Alzheimer’s disease, heart disease, and other rare and common diseases. It would also create barriers to patients’ access to potentially lifesaving genomic tests, eliminate access to confirmatory testing and dramatically increase the cost of tests that have benefited from innovation that led to reduced costs of DNA sequencing technology. Further, it will stymie competition for developing and improving diagnostic and medical tests, and increase the cost and hinder advancement of targeted therapeutics involving genomic markers. That means higher costs for patients, payers, and the healthcare system overall.

It further asserts that:

The draft legislation released by your offices not only rewrites Section 101 of the Patent Act, it states explicitly that any judicially created exception to patent-eligibility will be abrogated, thereby overturning the Mayo, Myriad, and Alice decisions. If enacted, this threatens to take us back to a time of greater uncertainty regarding patent eligibility. The draft goes further than that, as well. Beyond explicitly abrogating judicial precedent holding that genes, isolated from the genome, are not patentable, the legislation also would define the concept of what is useful to mean “any invention or discovery that provides specific and practical utility in any field of technology through human intervention.” This language essentially adopts the argument for patenting isolated genes that the Supreme Court rejected in Myriad. Myriad argued for, and the PTO granted,15 the patents on the BRCA1 and BRCA2 genes because the DNA was “isolated” from the cell through an act of human intervention. Isolation is required for scientific work with DNA, and permitting patents on isolated DNA resulted in the issuance of patents covering an estimated 20% of the human genome.16 Defining “useful” to include essentially any invention or discovery that was developed through human intervention reinvigorates the argument that human genes are patent-eligible.

Read the whole letter here: ACLU Letter

Law Professor Response Letter

A letter in response, signed by a group of 24 law professors, former government officials, and scholars (some of whom testified at the June hearings) opens with:

As law professors, former government officials, and scholars, we write to express our support for the congressional effort at reforming patent eligibility doctrine. As Congress considers legislation to bring balance back to the patent system in promoting the high-tech and biopharmaceutical inventions that drive the U.S. innovation economy, it is imperative that its deliberations are based on accurate statements of the law and of the real-world performance of the U.S. patent system.

The letter takes direct aim at the health and civil rights’ organizations’ letter:

We are deeply concerned about misapprehensions of law and misleading rhetoric in a recent letter to Congress submitted by the American Civil Liberties Union (ACLU) and other medical and policy organizations that oppose this legislative reform effort. Their claim, for instance, that the “draft legislation if enacted would authorize patenting products and laws of nature, abstract ideas, and other general fields of knowledge” is a profoundly mistaken and inaccurate statement. Rather, the proposed amendments preclude “implicit or judicially created exceptions to subject matter eligibility,” and do not eliminate constitutional and statutory bars to patenting laws of nature, abstract ideas, and general fields of knowledge.

Read the full letter here: Law professor response letter

Stay tuned for a third perspective, offered by Syracuse University  College of Law professor Shubha Ghosh.

By Jason Rantanen

Celgene Corp. v. Peter (Fed. Cir 2019)18-1167.Opinion.7-30-2019

Panel: Prost (author), Bryson, Reyna

While Oil States v. Greene’s Energy, 138 S.Ct. 1365 (2018), answered the question of whether inter partes review proceedings were unconstitutional generally, it left unanswered the question of whether application of inter partes review proceedings to patents granted prior to the America Invents Act constituted a taking under the 5th Amendment.  Here, the Federal Circuit directly addresses that question, concluding that it is not.

Constitutional challenges like this one can be challenging to raise effectively on appeal.  While usually, the issues are brought up in a footnote or single sentence, this was not one of those instances: Celgene devoted 8 pages of its principal brief to its takings argument, making a serious go at it.  Still, Celgene had not raised the argument before the Board and requests to address an argument for the first time on appeal are granted only in exceptional circumstances.  However, given the circumstances–Celgene’s raising of an issue not directly resolved by Oil States, the growing number of retroactivity challenges following Oil States, and the thoroughness of the briefing on the issue, among other considerations–the court concluded that “this is one of those exceptional circumstances in which our discretion is appropriately exercised to hear Celgene’s constitutional challenge even though it was not raised below.”  Slip Op. at 25.

Celgene’s argument on the merits rested on a regulatory takings theory.  It contended that “subjecting its pre-AIA patents to IPR, a procedure that did not exist at the time its patents issued, unfairly interferes with its reasonable investment-backed expectations without just compensations.”  Id. at 26.  In response, the PTO argued that (1) the patent owner never had a valid property right because the patent was erroneously issued in the first instance,” and (2) “patents have been subject to reconsideration and cancellation by the USPTO in administrative proceedings for nearly four decades, and Celgene’s own patent[s were] issued subject to this administrative revocation authority,” and that “the AIA did not alter patent holders’ substantive rights.”  Id. at 26, 27 (internal quotation marks omitted).

The Court’s analysis focused on the degree of the change: “specifically whether IPRs differ from the pre-AIA review mechanisms significantly enough, substantively or procedurally, to effectuate a taking.”  Id. at 27.  The court concluded that they were not, a conclusion that was also in line with its precedent rejecting “constitutional challenges to retroactive application of the pre-AIA ex parte reexamination mechanism.”  Id.  The money quote:

The validity of patents has always been subject to challenge in district court. And for the last forty years, patents have also been subject to reconsideration and possible cancellation by the PTO. As explained below, IPRs do not differ significantly enough from preexisting PTO mechanisms for reevaluating the validity of issued patents to constitute a Fifth Amendment taking.

The bulk of the court’s remaining discussion walks through the various administrative revocation procedures in place over the past few decades, comparing and contrasting them with IPRs.  While the court recognized differences between ex parte and inter partes reexaminations, on the one hand, and inter partes review proceedings on the other, it viewed the similarities as “far more significant.”  Id. at 30.  The substantive grounds for review are the same (anticipation and obviousness, based on the same categories of prior art, the same evidentiary standard applies (preponderance of the evidence), the same claim construction standard applies (broadest reasonable interpretation applied in this set of IPRs), in both cases the Director has discretion to initiate the proceeding, and serve essentially the same purpose.

In the end, “Although differences exist between IPRs and their reexamination predecessors, those differences do not outweigh the similarities of purpose and substance and, at least for that reason, do not effectuate a taking of Celgene’s patents.”  Slip. Op. at 36.

The court also affirmed the PTAB’s decisions finding the appealed claims obvious.

By Jason Rantanen

Solutran, Inc. v. Evalon, Inc., U.S. Bancorp (Fed. Cir. 2019) 19-1345.Opinion.7-30-2019

Panel: Chen (author), Hughes and Stoll

This opinion involves review of a district court opinion denying summary judgment that claims 1-5 of U.S. Patent NO. 8,311,945 are invalid for failure to recite patent-eligible subject matter.  (The district court also granted summary judgment that the claims were infringed.)

Claim 1 is below.  Without knowing more, can you predict how the court resolved the appeal?

1. A method for processing paper checks, comprising:

a) electronically receiving a data file containing data captured at a merchant’s point of purchase, said data including an amount of a transaction as-sociated with MICR information for each paper check, and said data file not including images of said checks;
b) after step a), crediting an account for the mer-chant;
c) after step b), receiving said paper checks and scanning said checks with a digital image scanner thereby creating digital images of said checks and, for each said check, associating said digital image with said check’s MICR information; and
d) comparing by a computer said digital images, with said data in the data file to find matches.

The answer is after the jump.

(more…)

By Jason Rantanen

Amgen Inc v. Coherus Biosciences Inc. (Fed. Cir. 2019)  18-1993.Opinion.7-29-2019

Judges Reyna, Hughes, Stoll (author)

The doctrine of equivalents (“DOE”) may be every patent law student’s favorite doctrine to hate.  (Edit: to clarify, I mean that it can be complicated not that it’s conceptually a “bad” doctrine.) I sometimes introduce it as “the rule against perpetuities – except more complicated and economically significant.”  Under the DOE, a patent can be infringed even when the accused product or process doesn’t literally meet all the limitations of the claim.

Central to the DOE is prosecution history estoppel: a doctrine that prevents “a patentee from using the doctrine of equivalents to recapture subject matter surrendered from the literal scope of a claim during prosecution.”  Slip Op. at 8, quoting Trading Techs. Int’l, Inc. v. Open E Cry, LLC, 728 F.3d 1309, 1322 (Fed. Cir. 2013).  Because prosecution history estoppel is a question of law, it often functions as threshold question that is resolved before moving to the fact-specific equivalents analysis.  Indeed, David Schwartz, Lee Petherbridge and others have argued that PHE is one of the key mechanisms that the Federal Circuit has used to limit the application of the doctrine of equivalents following Warner-Jenkinson.

Often when we think about prosecution-history estoppel, we think about amendment-based estoppel, which can arise when an applicant makes a narrowing amendment to a pending claim.  This case involves one of the trickier aspects of PHE: argument-based estoppel.

Background

Amgen sued Coherus for infringement of Patent No. 8,273,707, which relates to methods of purifying proteins using hydrophobic interaction chromatography (“HIC”).”  Slip Op. at 2.  This process uses a combination of a buffered salt solution containing the protein that is poured into a HIC column.  The proteins bind to column matrix and impurities are poured off.  The ‘707 patent claims a process that increases the maximum amount of protein in solution that can be loaded into the HIC column by using certain combinations of salts “chosen form one of three pairs: citrate and sulfate, citrate and acetate, or sulfate and acetate.”  Slip Op. at 4.

During prosecution (this gives rise to the PHE ruling), the examiner rejected the claims as obvious in view of a prior art patent that “disclosed several salts for improving hydrophobic interactions between a protein and the column matrix.” Slip Op. at 4.   Amgen responded by pointing out that “the pending claims recite a particular combination of salts.  No combinations of salts [are] taught nor suggested int eh Holtz et al. patent, nor [are] the particular combinations of salts recited in teh pending claims taught nor suggested in this reference.”  Id. at 4-5.  A supporting inventor declaration pointed out the three pairs above “reduced purification costs on a commercial scale as compared to using only a single salt.”  Id. at 5.  After another rejection, Amgen further pointed out that “choosing a working salt combinationw as a ‘lengthy development path’ and that ‘merely adding a second salt’ would not result in the invention” and the examiner allowed the claims.  Id. at 6.

In 2016, Coherus filed an abbreviated Biological License Application for an Amgen product.  Because Coherus’s protein purification method uses a chromatography buffer containing a salt combination, but not one of the specific combinations recited in Amgen’s claim, when Amgen sued for infringement in 2017, Amgen’s infringement theory rested on the doctrine of equivalents rather than literal infringement.  The district court subsequently granted Coherus’s motion to dismiss on the pleadings for failure to state a claim.

Federal Circuit: Argument-based prosecution history estoppel applies here

On appeal, the Federal Circuit affirmed the application of argument-based estoppel. “To invoke argument-based estoppel, ‘the prosecution history must evince a clear and unmistakable surrender of subject matter.'” Slip Op. at 9, quoting Conoco, Inc. v. Energy & Envtl. Int’l, L.C., 460 F.3d 1349, 1363 (Fed. Cir. 2006).  Here, the court held, argument-based estoppel applies “because Amgen clearly and unmistakably surrendered unclaimed salt combinations during prosecution.”  Id. at 9.  Amgen repeatedly pointed to the particular combinations of salts as important in distinguishing the prior art references.  As a result, “a competitor would reasonably believe that Amgen surrendered unclaimed salt combinations.”  Id. at 10 (internal quotation marks omitted).

Amgen’s primary argument, that it asserted other reasons for distinguishing the prior art reference, was not persuasive as “our precedent instructs that estoppel can attach to each argument.”  Id. at 11.  Nor was the court persuaded by Amgen’s argument that it’s last response before the claims were allowed did not contain the particular-salt-combination argument.  But “[t]here is no requirement that argument-based estoppel apply only to arguments made in the most recent submission before allowance.”  Id. at 11.  For those seeking to avoid this outcome, note the court’s final words on the subject: “We see nothing in Amgen’s final submission that disavows the clear and unmistakable surrender of unclaimed salt combinations made in Amgen’s January 6, 2011 response.”  (I’m curious: has any applicant ever disavowed an argument made earlier in prosecution?  This seems like a risky strategy for getting claims allowed.)