Patent Docs

Dey, L.P. v. Sunovion Pharmaceuticals, Inc. (Fed. Cir. 2013)

By Kevin E. Noonan --

Enactment of the Leahy-Smith America Invents Act in 2011 focused the patenting community on the changes of U.S. patent law from "first to invent" under the 1952 Patent Act to "first inventor to file" under the AIA as the basis for deciding priority and defining the scope of prior art to a claimed invention.  Nevertheless, the provisions of the 1952 Act remain in force for any application filed prior to March 16, 2013, and the Federal Circuit's recent decision in Dey, L.P. v. Sunovion Pharmaceuticals, Inc., illustrates that there remain issues in the "old" law that will continue to be explicated and addressed.

The issue in the Dey case is the patentability bar under 35 U.S.C. § 102(b) that arises from "public use" of an invention more than one year prior to an applicant's filing date.  The circumstances surrounding the assertion of invalidity under this provision of the statute were somewhat unusual, as recognized by the Court:  typically it is the accused infringer who asserts a patentee's own prior public use as invalidating, but here defendant Sunovion asserted its own prior clinical trial as a public use of Dey's claimed invention.  Specifically, both Sunovion and Dey developed pharmaceutical formulations of a known drug, formoterol, as a nebulized formulation for treating chronic obstructive pulmonary disorders (COPS) such as emphysema.  Both companies owned patents on their formulations:  No. 6,040,344 to Sunovion (filed in 1998 and issued in March 2000); and Nos. 7,348,362; 7,462,645; 7,465,756; 7,473,710; and 7,541,385 to Dey (all claiming priority to July 10, 2003).  Sunovion was the first to market in 2007 with its Brovana product, after what the Court terms a "long" path to obtaining regulatory approval.  Sunovion's clinical trials began in 1998, and of interest in the decision is a particular Phase III clinical trial, Study 50, that began in February 2002, wherein one of the formulations tested was identical to the Brovana formulation.

Just prior to launch, Dey sued Sunovion for infringement of its patents, and Sunovion filed a motion for summary judgment of invalidity for prior public use under § 102(b), based on its own clinical trials.  Under Sunovion's legal theory, the Phase III clinical trial identified as Study 50 included a formulation (given to 124 clinical trial participants) that was within the scope of Dey's patent claims and the conditions of the clinical trial constituted a prior public use that occurred more than one year before Dey's earliest filing date of July 10, 2003.  The conditions Sunovion cited in support of the prior art status of its clinical trial were:

• Patients were told that they were being given a formulation of formoterol
• Patients enrolled in the trial were told they could (and indeed should) inform their personal physicians about the trial
• Patients enrolled in the study were under no conditions of confidentiality
• At least some of the vials ("a fraction of one percent") of the formulated drug were unaccounted for during and after the clinical trial

The District Court granted summary judgment against Dey, finding that Sunovion had established by clear and convincing evidence that the asserted claims of Dey's patents in suit were invalid as being anticipated under the "public use" prong of § 102(b).

The Federal Circuit reversed, in an opinion by Judge Bryson, joined by Judge O'Malley over a dissent by Judge Newman.  The panel noted that the purpose of the bar was to "discourage[e] the removal, from the public domain, of inventions that the public reasonably has come to believe are freely available," citing Tone Bros., Inc. v. Sysco Corp., 28 F.3d 1192, 1198 (Fed. Cir. 1994).  The test for deciding whether a prior use was a "public use" under the statute has two elements:  "'whether the purported use:  (1) was accessible to the public; or (2) was commercially exploited,'" citing Invitrogen Corp. v. Biocrest Mfg., L.P., 424 F.3d 1374, 1380 (Fed. Cir. 2005).  Factual issues to be considered when determining whether a prior use constitutes a "public use" include "'the nature of the activity that occurred in public; the public access to and knowledge of the public use; [and] whether there was any confidentiality obligation imposed on persons who observed the use'" according to the opinion, citing Bernhardt, L.L.C. v. Collezione Europa USA, Inc., 386 F.3d 1371, 1379 (Fed. Cir. 2004).  In the absence of commercial exploitation a confidentiality agreement could "negate" the status of a prior use as a public use.  Invitrogen at 1382.

The status of a prior use as a public use is not dependent on the public use being an applicant's use; activities of third parties (such as Sunovion here) can constitute an invalidating prior public use.  Eolas Techs. Inc. v. Microsoft Corp., 399 F.3d 1325, 1334 (Fed. Cir. 2005).  But such a third party use must be a public not a private use (i.e., the fact that there was a prior use by another does not by itself constitute a public use) according to the Court, citing Woodland Trust v. Flower- tree Nursery, Inc., 148 F.3d 1368, 1371 (Fed. Cir. 1998), and W.L. Gore & Assocs. v. Gar- lock, Inc., 721 F.2d 1540, 1549-50 (Fed. Cir. 1983).  The opinion notes that, as with all question under § 102 this is a question of fact depending on the circumstances, such as a situation where there is no confidentiality agreement:  there, "the skill and knowledge of those observing an invention can shed light on the degree to which it was kept confidential" and even "limited disclosure" may suffice if it is to "those who are skilled enough to know, understand, and 'easily demonstrate the invention to others,'" citing Netscape Commc'ns Corp. v. Konrad, 295 F.3d 1315, 1321 (Fed. Cir. 2002).

The Federal Circuit reversed the District Court's summary judgment because it found disputed issues of material fact that made summary judgment inappropriate.  However the majority opinion went on to set forth the considerations important for making the determination and the places where in the majority's opinion the District Court went astray.  The majority identified two issues important to the District Court's decision that warranted comment.  The first was the lower court's determination that the use of the particular "infringing" formulation during the clinical trial was "open and free," a determination with which the Court disagreed.  The basis for this disagreement revolved around the incapacity of the clinical trial participants to "reverse engineer" the formoterol formulation even knowing the identity of the drug.  In addition, the panel majority disagreed that the study participants were provided with a "personal supply" of the formulations that they could use "however they saw fit" and that provided them with an "unfettered use of the composition for weeks at a time."  The panel agreed with Dey that the use by the study participants was anything but "unfettered," citing the restrictions contained in agreements between the clinical trial administrators and participants, including requirements that the participants be the only individuals taking the medication and that they keep "accurate usage logs"; the Court also noted that despite the extremely low level of the formulation that was unaccounted for the participants and administrators in the trials were required to return all unused portions of the drug and to account for all administered and inventory supplies of the formulated drug.  Specifically the opinion states:

The fact that a tiny fraction of the thousands of vials were lost without penalizing the responsible test subject(s), or that the practicalities of the study required self-administration at home rather than physician administration in a closed facility, does not preclude a reasonable jury from concluding that the use of Batch 3501A was sufficiently controlled and restricted, rather than unfettered and public.

The majority also disagreed that the details of the clinical trial were not required to be kept confidential by trial participants.  The issue for the Court was what information was kept confidential and here the panel noted that "the particulars of its invention -- embodied in the formulation and stability characteristics of Batch 3501A -- were kept sufficiently confidential to avoid a finding of 'public use.'"  Also important for the panel's decision were the confidentiality obligations imposed on the clinical investigators (clearly more knowledgeable than the patients), who were required to sign confidentiality agreements.  The panel majority found that the individuals most likely to have sufficient disclosure for the clinical trial to be a public use were under an obligation not to disclose (thereby negating the clinical trial as a public use as to those individuals), and that the individuals (the patients) not under  any confidentiality obligations had insufficient information to constitute prior disclosure of the invention.

The panel majority noted that the circumstances surrounding the clinical trial were common and that prior precedent "routinely rejected the argument that such an arrangement necessarily strips the trial of confidentiality protection or renders it accessible to the public," citing Bayer Schering Pharma AG v. Barr Labs., Inc., No. 05- CV-2308 (PGS), 2008 WL 628592, at *11-12, *38-42 (D.N.J. Mar. 3, 2008); Eli Lilly & Co. v. Zenith Goldline Pharm., Inc., 364 F. Supp. 2d 820, 873-75, 912-13 (S.D. Ind. 2005), aff'd, 471 F.3d 1369, 1380-81 (Fed. Cir. 2006); Janssen Pharmaceutica N.V. v. Eon Labs Mfg., Inc., 374 F. Supp. 2d 263, 276 (E.D.N.Y. 2004), aff'd, 134 F. App'x 425, 430-31 (Fed. Cir. 2005); and In re Omeprazole Patent Litig., 490 F. Supp. 2d 381, 508 (S.D.N.Y. 2007), aff'd on other grounds, 536 F.3d 1361 (Fed. Cir. 2008).  Circumstances in common in such cases and the case at bar noted by the Court is that study participants were informed as to the identity of the administered drug, that such patients were entrusted to administer doses themselves not under the control or supervision of a study administrator or doctor and that these prior participants were permitted to discuss the trial with their personal physicians.

Finally, the panel majority identified several other "misconceptions" underlying the District Court's decision.  These included that lack of any confidentiality obligations to Dey by Sunovion's clinical trial participants, which the panel recognized would require any third party prior use (even a secret use) to be a patent-invalidating public use.  And the panel rejected Sunovion's attempt, in their view, to stretch precedent related to "experimental use," such as New Railhead Mfg., L.L.C. v. Vermeer Mfg. Co., 298 F.3d 1290, 1299 (Fed. Cir. 2002), and City of Elizabeth v. American Nicholson Pavement Co., 97 U.S. 126, 136 (1877), to apply in this situation.  In those cases the invention was "public" but was not appreciated by the public under circumstances where the use was necessary to demonstrate reduction to practice of the invention ("During experimentation, the public might have knowledge of an invention (because they see it), but may not be using the invention within the meaning of the statute (because the inventor is experimenting)").  Accordingly, the Court remanded the case to the District Court for reconsideration on the merits.

Judge Newman's dissent was not based on her disagreement with the outcome but rather because she would prefer the Court remand with instructions to deny the motion on the grounds that the Sunovion clinical trials did not constitute a "public use."  "No sound reason appears for remanding for findings or trial, when the matter is readily resolved on undisputed facts.  Nor is there any reason for casting judicial doubt on the standard confidentiality procedures of clinical trials, at this late date of decades of established practice," in Judge Newman's view.

Dey, L.P. v. Sunovion Pharmaceuticals, Inc. (Fed. Cir. 2013)
Panel: Circuit Judges Newman, Bryson, and O'Malley
Opinion by Circuit Judge Bryson; dissenting opinion by Circuit Judge Newman

Supreme Court Grants Certiorari in Medtronic v. Boston Scientific

By Andrew Williams --

On May 20, 2013, the Supreme Court granted certiorari in the Medtronic Inc. v. Boston Scientific Corp. case (Supreme Court docket number 12-1128).  The sole issue on appeal is encapsulated by the question presented:

QUESTION PRESENTED:

In Medlmmune, Inc. v. Genentech, Inc., 549 U.S. 118, 137 (2007), this Court ruled that a patent licensee that believes that its products do not infringe the patent and accordingly are not subject to royalty payments is "not required . . . to break or terminate its . . . license agreement before seeking a declaratory judgment in federal court that the underlying patent is . . . not infringed."

The question presented is whether, in such a declaratory judgment action brought by a licensee under Medlmmune, the licensee has the burden to prove that its products do not infringe the patent, or whether (as is the case in all other patent litigation, including other declaratory judgment actions), the patentee must prove infringement.

As suggested, this wrinkle is the inevitable consequence of the Court's previous MedImmune decision, which allowed a patent licensee to challenge the validity (and non-infringement) of a patent in a DJ action without repudiating the license.  In such a case, however, the patent holder could not have brought its own patent infringement action (because of the license agreement), and more importantly, the patent holder could not bring an infringement counterclaim.  The Supreme Court did not address in MedImmune whether the patent holder would still have the burden of proving infringement in such a case where the licensee was seeking to disturb the status quo ante.  This issue was answered in the negative by the Federal Circuit in Medtronic Inc. v. Boston Scientific Corp., 695 F.3d 1266 (Fed. Cir. 2012), as we reported at the time.  In its petition for cert., Medtronic equated this with a "presumption of infringement," and noted that proving the negative can be "a formidable task."  In any event, it can be assumed that the Supreme Court took up this case because it disagreed with the Federal Circuit's decision, and therefore the burden will likely shift back to the patentee to prove infringement in the MedImmune context.  Nevertheless, it may be useful to look at the factual differences between the MedImmune and Medtronic cases, and identify what to do if faced with a similar situation in the interim.

One of the most significant differences between these two cases is that, despite the lengths that Justice Scalia takes to categorize the suit in MedImmune as one for a determination of non-infringement, that earlier case was really a case about validity.  MedImmune had entered into a license agreement with Genentech for rights to an existing patent related to the production of chimeric antibodies, and for the future rights to a then-pending patent application related to the coexpression of immunoglobulin chains in a host cell.  That pending application issued as the "Cabilly II" patent, and Genentech informed MedImmune that its manufacture of Synagis, a drug used to prevent respiratory tract disease in infants and young children, was covered by this patent.  MedImmune's precise position on whether the Cabilly II patent covered the manufacture of Synagis is unclear from the description in the Court's opinion.  However, it appears that MedImmune believed that it did not "infringe any valid claim," and did not believe that there would be no infringement regardless of the validity of the claims.

The situation in the current Medtronic case is distinct.  Medtronic had entered into a license agreement in 1991 with the predecessor-in-interest of the patents-in-suit, which covered cardiac resynchronization therapy ("CRT") devices.  However, the products that were the subject of this case were not marketed until 2004, and therefore (obviously) they were not specifically identified in the license.  Nevertheless, the license contained a provision by which the licensor could identify new Medtronic products that it believed were covered by its patents.  If Medtronic believed that any newly identified products were not covered by the agreement, they had the option to initiate a declaratory judgment action to challenge the non-infringement and/or validity of the asserted patents.  In other words, this agreement had a MedImmune provision more than 15 years before the Supreme Court decided the case.  So, at its heart, the present case is a non-infringement case (non-infringement of the licensed patents), not necessarily a validity case (even though there were validity counts in the lower court).

So, why does this matter?  Well, it might not.  But, a review of the reasoning used by the Supreme Court in MedImmune shows that the logic begins to unravel if it is applied to every factual situation.  In MedImmune, the Court gave the impression that it is axiomatic that a licensee can bring a declaratory judgment action without repudiating the contract, but in so doing, it needed to overcome many logical hurdles to reach that conclusion.  This is because the existence of a license should remove any case-or-controversy as required by Article III.  Nevertheless, as the Court put it:  "[t]he rule that a plaintiff must destroy a large building, bet the farm, or (as here) risk treble damages and the loss of 80 percent of its business, before seeking a declaration of its actively contested legal rights finds no support in Article III."  MedImmune Inc., 549 U.S. at 134.  Is this always the case, though?  It would not appear to be in situations where the patent and the licensed product or method existed when the license agreement was reached.  In such a case, if the licensee had a reasonable belief that the patent was invalid (or not infringed), such as an opinion of counsel, then it should not be at risk of treble damages.  Instead, after MedImmune, such a licensee can negotiate the best terms possible, and still be able to subsequently attack the patents while hiding behind the license as a shield.  The MedImmune logic, therefore, only appears to be applicable to after-arising patents or products/methods.

In fact, the MedImmune case had the ideal fact situation for the logic presented.  MedImmune needed the license to the first patent to practice its method of manufacture without fear of suit.  Therefore, it could not repudiate the agreement, even though it believed that the claims of the issued Cabilly II were invalid (and, unfortunately, the Court's opinion in silent as to why the Cabilly II application was included in the first place).  This is the classic "bet-the-farm" situation.  This is not necessarily the case for the Medtronic fact scenario, which encompasses after-arising products that were not part of the agreement.  Specifically in that case, it was the license provision dealing with new products that required Medtronic to bring its declaratory judgment action.  However, in these cases, it all comes down to license drafting -- what mechanism does the agreement use to incorporate products or methods that do not exist at the time of execution?  Correspondingly, the response to the question presented of whether the licensor patent holder or the licensee should have the burden of proving infringement/non-infringement should also depend on the particular facts.

But, in the end, this distinction will likely not matter, because the MedImmune decision was decided as a non-infringement case (over the protests of Justice Thomas in dissent).  It is possible that Justice Scalia took such pains to describe the case as such, because a DJ case directed solely to validity of patents would have looked a lot more like an advisory opinion, and therefore satisfaction of Article III's case-or-controversy requirement would have been more suspect.  It can therefore be presumed that a majority of the Court will still not view these cases as factually distinct.  And, given that cert. was granted, it is likely that the Medtronic burden-of-proof issue will swing back to the patentee.

What actions should a licensor patent holder take if now faced with a MedImmune-style DJ action?  It would clearly seem advisable to put on the best infringement case possible, in case the burden of proof does shift back.  Otherwise, it would seem critical to treat all of these issues upfront when entering into a license agreement.  Careful attention should go into any provision that would determine how any new patent or product/method would get incorporated into the agreement, if such a provision is even included at all.  It is not inconceivable that that parties would need to renegotiate for any subsequent activity that might be incorporated to the agreement.

Patent Docs will continue to monitor this case and provide any updates as warranted.

CLS Bank Int'l v. Alice Corp. (Fed. Cir. 2013) (en banc) -- Opinions by Judge Moore, Judge Newman, and Judges Linn and O'Malley

By Michael Borella --

A previous post presented the background of this case, as well as Judge Lourie's plurality concurrence, and a second post addressed Chief Judge Rader's concurrence-in-part and dissent-in-part.  As noted in those posts, Alice's claimed inventions involved the reduction of settlement risk using a third-party intermediary.  This post continues the story of Alice by discussing the dissenting-in-part opinion by Circuit Judge Moore, the concurring-in-part and dissenting-in-part opinion by Circuit Judge Newman, and the dissenting opinion by Circuit Judges Linn and O'Malley.

Judge Moore's dissent-in-part

Judge Moore begins her opinion, which was joined by Judges Rader, Linn, and O'Malley, with a warning:  "if all of these claims, including the system claims, are not patent-eligible, this case is the death of  hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents."  She noted that 320,799 patents were granted over a 13 year period in the USPTO's "Electrical Computers, Digital Processing Systems, Information Security, Error/Fault Handling" technology area, and that all of these patents were potentially at risk under Judge Lourie's opinion.

Like Judge Rader, Judge Moore stated that claims must be considered as a whole, and under that standard, Alice's system claims would be patent-eligible.  She noted that Prometheus explicitly indicated that interpreting the judicial exceptions to subject matter patentability too broadly would "eviscerate patent law" because at some level all inventions are based on abstract ideas, laws of nature, and/or natural phenomena.

Judge Moore also argued against the conflation of § 101, § 102, and § 103.  She noted that Judge Lourie's "inventive concept" analysis introduced a time-dependency into the § 101 inquiry that was more appropriate for the inquiries of the other sections.  To illustrate this point, she provided examples:

Even though the concept of addition is an abstract idea, the first calculator that could perform addition was a patent-eligible machine under § 101.  If someone subsequently discovered that, by rewiring the calculator, it could perform addition and subtraction (both abstract mathematical concepts), the improved calculator would similarly be patent-eligible.  The act of modifying the circuitry of a known device such that it is configured to apply an abstract idea does not transform it into an abstract idea.

Accordingly, largely based on the same general reasoning as Judge Rader, Judge Moore would have found Alice's system claims patent-eligible.

Judge Newman's concurrence-in-part and dissent-in-part

Judge Newman begins by noting that this case has provided three incompatible standards for § 101 analysis, opening the door for "opportunistic litigation, whose result will depend on the random selection of the panel."  She plainly stated that the Federal Circuit has failed to clarify the interpretation of § 101.

Judge Newman's position, like that of four of her colleagues, is that the § 101, § 102, and § 103 inquiries are separate.  She writes "it is not necessary, or appropriate, to decide whether subject matter is patentable in order to decide whether it is eligible to be considered for patentability."  She propounded a simplification of the § 101 inquiry by suggesting that "when the subject matter is within the statutory classes in section 101, eligibility is established."  Invoking the oft-quoted phrase that patent law embraces "anything under the sun that is made by man," she would push off all considerations of claim breadth to the other sections of the statute.

Ultimately, Judge Newman positioned her separate opinion as call for the Federal Circuit to affirm three basic principles of patentable subject matter.

1)  "The court should hold that section 101 is an inclusive statement of patent-eligible subject matter."  Judge Newman advocated eliminating claims that are abstract or that pre-empt abstract ideas or the other judicial exceptions using "laws of novelty, utility, prior art, obviousness, description, enablement, and specificity."

2)  "The court should hold that the form of the claim does not determine section 101 eligibility."  Whether the invention is claimed as a method, CRM, or system, and whether it is implemented with hardware or software, would not be relevant to the § 101 inquiry for Judge Newman.  Like Judge Lourie, she would attempt to decrease the impact of the so-called "clever draftsman."

3)  "The court should confirm that experimental use of patented information is not barred."  Perhaps most important of the three, Judge Newman believes that the popular media has misconstrued the debate on patentable subject matter to mean that a patented invention cannot further be studied.  In particular, she would have the Court hold that experiments that improve or build upon patented subject matter, compare it with alternatives, seek to understand its mechanisms, and to find new applications should be considered non-infringing activities.

Judge Linn's and Judge O'Malley's dissent

In stark contrast to their colleagues, Judges Linn and O'Malley would reverse the District Court ruling and find all claims patent-eligible for procedural reasons.

Since the summary judgment motions were filed prior to claim construction, the District Court gave the claims, for purposes of considering these motions, an interpretation defined by Alice.  Thus, Judges Linn and O'Malley afforded that the District Court was "required to read into the claims whatever limitations Alice asserted a skilled artisan would assume they possessed."  And, as noted above, the parties stipulated at trial that all claims required a computer and a memory to be performed.

Consequently, Judges Linn and O'Malley faulted Judges Rader and Moore of improperly construing the method claims more broadly than the system claims, and also reproached Judge Lourie for importing the breadth of the method claims into the system and CRM claims.  Judges Linn and O'Malley would have all claims rise or fall together.

With respect to the patent-eligibility of the system claims, the judges reiterated the position of Judge Rader.  However, they would also apply the same analysis to the method and CRM claims, and find those claims meeting the § 101 requirements as well.

Judges Linn and O'Malley concluded with a discussion of software patents at large.  Rather than use § 101 to mitigate a supposed "proliferation and aggressive enforcement of low quality software patents" concerning the various amici curiae, they would push this issue back to Congress for legislative action.  They suggested that Congress could limit the term of software patents, or limit their scope by requiring functional claiming.

CLS Bank Int'l v. Alice Corp. (Fed. Cir. 2013) (en banc)
Opinion for the court per curiam; concurring opinion by Circuit Judge Lourie, joined by Circuit Judges Dyk, Prost, Reyna, and Wallach; concurring-in-part and dissenting-in-part opinion by Chief Judge Rader, joined by Circuit Judge Moore, and by Circuit Judges Linn and O'Malley as to all but part VI of that opinion; dissenting-in-part opinion by Circuit Judge Moore, joined by Chief Judge Rader and Circuit Judges Linn and O'Malley; concurring-in-part and dissenting-in-part opinion by Circuit Judge Newman; dissenting opinion by Circuit Judges Linn and O'Malley; additional reflections by Chief Judge Rader.

CLS Bank Int'l v. Alice Corp. (Fed. Cir. 2013) (en banc) -- Chief Judge Rader's Concurrence-in-part and Dissent-in-part

By Michael Borella --

A previous post presented the background of this case, as well as Judge Lourie's plurality concurrence.  As noted in that post, Alice's claimed inventions involved the reduction of settlement risk using a third-party intermediary.  Despite the claims being of various statutory classes, including process, article of manufacture, and machine, Judge Lourie found that they were all directed to patent-ineligible abstract ideas, and thus they failed to meet the requirements of 35 U.S.C. § 101.

This post continues the story of Alice by discussing Chief Judge Rader's concurrence-in-part and dissent-in-part.

Chief Judge Rader, joined by Judges Linn, Moore, and O'Malley, presented the lengthiest opinion in opposition to Judge Lourie.  Chief Judge Rader and Judge Moore would have affirmed the patent-ineligibility of Alice's method and computer-readable medium (CRM) claims, but came to this conclusion based on different reasoning than Judge Lourie.  On the other hand, Chief Judge Rader and Judge Moore believed that the system claims passed the § 101 bar.  Judges Linn and O'Malley would have held that all claims were patent-eligible.  Based on the style with which this opinion was drafted, it may have been in competition with Judge Lourie's concurrence for a majority of the en banc panel.

Throughout, Chief Judge Rader expounded the broad language of § 101, as well as for the separation of the §§ 101, 102, and 103 patentability analyses, which he accused Judge Lourie of conflating.  In doing so, he provided an overview of the legislative history, from the 1952 Patent Act, of the modern interpretation of § 101.  He further pointed to both statements of the authors of the 1952 Act, as well as subsequent case law and commentaries, that indicate that the § 101 analysis is not an "inventiveness" analysis, and that such an analysis instead falls within the ambit of § 103.  In a rebuttal of Judge Lourie's "discovery vs. invention" dichotomy, Chief Judge Rader pointed to the language of 35 U.S.C. § 100(a), which states that "[t]he term 'invention' means invention or discovery."

Regarding laws of nature, natural phenomena, and abstract ideas, he advocated restraint when applying these judicial exceptions so that they do not swallow the statutory language of § 101.  He also emphasized that claims pass the § 101 bar if they recite the application of such an exception, such as a practical use of an abstract idea.  As opposed to Judge Lourie's piecemeal approach, Chief Judge Rader advocated that determining whether this is the case for a given claim requires consideration of the claim as a whole.

Citing support in Diehr and Prometheus, he wrote:

Any claim can be stripped down, simplified, generalized, or paraphrased to remove all of its concrete limitations, until at its core, something that could be characterized as an abstract idea is revealed . . . .  A court cannot go hunting for abstractions by ignoring the concrete, palpable, tangible limitations of the invention the patentee actually claims.

Indeed, he strongly implied that Judge Lourie's approach could be used to render virtually any claim abstract.

He then stated that "[t]he relevant inquiry must be whether a claim includes meaningful limitations restricting it to an application, rather than merely an abstract idea," and proposed six factors to consider when undertaking this analysis:

•  First, "a claim is not meaningfully limited if it merely describes an abstract idea or simply adds 'apply it.' "

•  Second, "if a claim covers all practical applications of an abstract idea, it is not meaningfully limited."

•  Third, "if a claim does not wholly pre-empt an abstract idea, it still will not be limited meaningfully if it contains only insignificant or token pre- or post-solution activity -- such as identifying a relevant audience, a category of use, field of use, or technological environment."

•  Fourth, "a claim is not meaningfully limited if its purported limitations provide no real direction, cover all possible ways to achieve the provided result, or are overly-generalized."

•  Fifth, "a claim is meaningfully limited if it requires a particular machine implementing a process or a particular transformation of matter."

•  Sixth, "[a] claim also will be limited meaningfully when, in addition to the abstract idea, the claim recites added limitations" that are "central to the solution itself."

Remarkably, these factors overlap to a large degree with the four factors of Judge Lourie's "inventive analysis."  The main difference between the two is that Judge Lourie suggested considering whether the human contribution to the claim amounts "to more than well-understood, routine, conventional activity previously engaged in by researchers in the field."  Chief Judge Rader would eschew separate consideration of such a human contribution, and instead consider each claim as a whole.  However, the inclusion of the Chief Judge's sixth factor may make this consideration more difficult to achieve in practice.

His factors also reject the notion that there is an inventiveness or ingenuity requirement component in the § 101 analysis.  Instead, he stated that "[t]he eligibility inquiry is not an inquiry into obviousness, novelty, enablement, or any other patent law concept . . . [e]ach section plays a different role and no one section is more important than any other."  Unlike Judge Lourie, Chief Judge Rader would read the "inventive concept" language of Prometheus as:

[S]horthand for its inquiry into whether implementing the abstract idea in the context of the claimed invention inherently requires the recited steps.  Thus, in Prometheus, the Supreme Court recognized that the additional steps were those that anyone wanting to use the natural law would necessarily use.  If, to implement the abstract concept, one must perform the additional step, then the step merely separately restates an element of the abstract idea, and thus does not further limit the abstract concept to a practical application.  (Internal citation omitted.)

He went on to discuss how computer-specific limitations should be considered in light of these factors.  Invoking shades of the Bilski machine or transformation test, he wrote:

The key to this inquiry is whether the claims tie the otherwise abstract idea to a specific way of doing something with a computer, or a specific computer for doing something; if so, they likely will be patent eligible, unlike claims directed to nothing more than the idea of doing that thing on a computer.  While no particular type of limitation is necessary, meaningful limitations may include the computer being part of the solution, being integral to the performance of the method, or containing an improvement in computer technology.  (Emphasis in original.)

While Judge Lourie seemed to believe that adding general purpose computer components (e.g., a processor, data storage, a transceiver, etc.) to a claim failed to provide meaningful limitations, Chief Judge Rader disagreed.  In fact, he quoted the language of In re Alappat, stating that "a general purpose computer in effect becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software."

Applying his reasoning to the system claims, the Chief Judge found all of them patent-eligible under § 101.  Acknowledging that issue before the Federal Circuit was whether to grant CLS's motion for summary judgment, he found that there was a lack of clear and convincing evidence that the claims were directed to an abstract idea.  Instead, relying on the reasoning of Bilski, he posited that "[i]f tying a method to a machine can be an important indication of patent-eligibility, it would seem that a claim embodying the machine itself, with all its structural and functional limitations, would rarely, if ever, be an abstract idea."  He also noted claiming an invention to include "circuitry, transistors, capacitors, and other tangible electronic components," or "electronically programmable machines that can fit in the palm of your hand," makes no difference on the abstractness of the claim.

Specifically, the representative system claim included "at least four separate structural components:  a computer, a first party device, a data storage unit, and a communications controller coupled via machine components to the computer and the first party device."  Chief Judge Rader found that, given this recited structure as well as further structural limitations of the invention's configuration, labeling the claim as abstract would defy the meaning of that term.  Particularly, he noted that "someone can use an escrow arrangement in many other applications, without computer systems, and even with computers but in other ways without infringing the claims," and that the recited structure was not inherent in the steps of performing a third-party escrow transaction.

With respect to the method and CRM claims, he considered these together because Alice had conceded that the CRM claims rise or fall with the method claims, despite the CRM claims having a different statutory category.  He framed the issue for the Court as "whether the recited steps are inherent in an escrow and claimed at a high level of generality, such that in fact the claim is not to a practical application of the concept of an escrow, but in effect claims the abstract concept of an escrow."

Nonetheless, in applying his analysis, he broke (or, at least, severely bent) his own rules on not conflating the analyses of § 101 and § 103, and considering the claim as a whole.  Particularly, in determining that the concept of an escrow is abstract, he cited to a prior art accounting reference.  He also performed a step-by-step analysis of the claim and found that each step "recites merely a general step inherent within the concept of an escrow, using a third party intermediary in this fashion."

Finally, Chief Judge Rader indicated that that method claims recited no computer structure.  He found that the stipulation of the method merely being performed by computer was insufficient to meet § 101 requirements due to its lack of specificity about how the computer implementation is arranged.  Chief Judge Rader's reasoning echoes that of the panel in Dealertrack v. Huber, which found a computer-aided method unpatentable because "[t]he claims are silent as to how a  computer aids the method, to what extent a computer aids the method, and the significance of a computer performance of the method.

Additional discussion of the open questions coming out of this decision will be the subject of future posts.

CLS Bank Int'l v. Alice Corp. (Fed. Cir. 2013) (en banc)
Opinion for the court per curiam; concurring opinion by Circuit Judge Lourie, joined by Circuit Judges Dyk, Prost, Reyna, and Wallach; concurring-in-part and dissenting-in-part opinion by Chief Judge Rader, joined by Circuit Judge Moore, and by Circuit Judges Linn and O'Malley as to all but part VI of that opinion; dissenting-in-part opinion by Circuit Judge Moore, joined by Chief Judge Rader and Circuit Judges Linn and O'Malley; concurring-in-part and dissenting-in-part opinion by Circuit Judge Newman; dissenting opinion by Circuit Judges Linn and O'Malley; additional reflections by Chief Judge Rader.

Court Report

By Sherri Oslick --

About Court Report:  Each week we will report briefly on recently filed biotech and pharma cases.

AbbVie Inc. v. Hetero USA Inc. et al.
1:13-cv-00852; filed May 15, 2013 in the District Court of Delaware

• Plaintiff:  AbbVie Inc.
• Defendants:  Hetero USA Inc.; Hetero Labs Ltd.

Infringement of U.S. Patent Nos. 7,148,359 ("Polymorph of a Pharmaceutical," issued December 12, 2006), 7,364,752 ("Solid Dispersion Pharmaceutical Formulations," issued April 29, 2008), 8,268,349 ("Solid Pharmaceutical Dosage Form," issued September 18, 2012), 6,037,157 ("Method for Improving Pharmacokinetics," issued March 14, 2000), and 6,703,403 (same title, issued March 9, 2004) following a Paragraph IV certification as part of Hetero's filing of an ANDA to manufacture a generic version of AbbVie's Norvir® (ritonavir, used to treat human immunodeficiency virus (HIV) infection).  View the complaint here.

Senju Pharmaceutical Co. Ltd. et al. v. Strides Inc. et al.
1:13-cv-00851; filed May 15, 2013 in the District Court of Delaware

• Plaintiffs:  Senju Pharmaceutical Co. Ltd.; Kyorin Pharmaceutical Co. Ltd.; Allergan Inc.
• Defendants:  Strides Inc.; Agila Specialties Private Ltd.

Infringement of U.S. Patent No. 6,333,045 ("Aqueous Liquid Pharmaceutical Composition Comprised of Gatifloxacin," issued December 25, 2001) following a Paragraph IV certifications as part of defendants' filing of an ANDA to manufacture a generic version of Allergan's Zymar® (0.3 w/v % gatifloxacin ophthalmic solution, used for the treatment of bacterial conjunctivitis) and of Allergan's Zymaxid® (0.5 w/v % gatifloxacin ophthalmic solution, used to treat bacterial conjunctivitis).  View the complaint here.

Endo Pharmaceuticals, Inc. v. Par Pharmaceutical Companies, Inc. et al.
1:13-cv-03284; filed May 15, 2013 in the Southern District of New Yorkk

• Plaintiff:  Endo Pharmaceuticals, Inc.
• Defendants:  Par Pharmaceutical Companies, Inc.; Par Pharmaceutical, Inc.

Endo Pharmaceuticals Inc. v. Sandoz Inc.
1:13-cv-03287; filed May 15, 2013 in the Southern District of New York

Endo Pharmaceuticals Inc. v. Roxane Laboratories, Inc.
1:13-cv-03288; filed May 15, 2013 in the Southern District of New York

Endo Pharmaceuticals Inc. v. Mallinckrodt LLC
1:13-cv-03288; filed May 15, 2013 in the Southern District of New York

Endo Pharmaceuticals Inc. v. Teva Pharmaceuticals USA, Inc. et al.
1:13-cv-03288; filed May 15, 2013 in the Southern District of New York

• Plaintiff:  Endo Pharmaceuticals, Inc.
• Defendants:  Teva Pharmaceuticals USA, Inc.; Teva Pharmaceutical Industries Ltd.; Barr Laboratories, Inc.

The complaints in these cases are substantially identical.  Infringement of U.S. Patent Nos. 7,851,482 ("Method for Making Analgesics," issued December 14, 2010), 8,309,122 ("Oxymorphone Controlled Release Formulations," issued November 13, 2012), and 8,329,216 (same title, issued December 11, 2012) following a Paragraph IV certification as part of defendants' filing of an ANDA to manufacture a generic version of Endo's Opana® ER CRF (oxymorphone hydrochloride, crush-resistant formulation, used to treat moderate to severe pain in patients requiring continuous, around-the-clock opioid treatment for an extended period of time).  View the Par complaint here.

Bayer Pharma AG et al. v. Par Pharmaceutical Inc. et al.
1:13-cv-00845; filed May 14, 2013 in the District Court of Delaware

• Plaintiffs:  Bayer Pharma AG; Bayer Intellectual Property GmbH; Bayer HealthCare Pharmaceuticals Inc.
• Defendants:  Par Pharmaceutical Inc.; Par Pharmaceutical Companies Inc.

Infringement of U.S. Patent Nos. 6,362,178 ("2-phenyl Substituted Imidazotriazinones as Phosphodiesterase Inhibitors," issued March 26, 2002) and 7,696,206 (same title, issued April 13, 2010) following a Paragraph IV certification as part of Par's filing of an ANDA to manufacture a generic version of plaintiffs' Staxyn® (vardenafil hydrochloride, used to treat erectile dysfunction).  View the complaint here.

Astrazeneca AB et al. v. Watson Laboratories, Inc.- Florida et al.
3:13-cv-03038; filed May 10, 2013 in the District Court of New Jersey

• Plaintiffs:  Astrazeneca AB; Astrazeneca LP; KBI-E Inc.; Pozen, Inc.
• Defendants:  Watson Laboratories, Inc.- Florida; Watson Pharma, Inc.; Actavis, Inc.

Infringement of U.S. Patent Nos. 5,714,504 ("Compositions," issued February 3, 1988), 6,369,085 ("Form of S-omeprazole," issued April 9, 2002), 6,875,872 ("Compounds," issued April 5, 2005), 7,411,070 ("same title," issued August 12 ,2008), and 7,745,466 (same title, issued June 29, 2010) following a Paragraph IV certification as part of Watson's filing of an ANDA to manufacture a generic version of AstraZeneca's Vimovo® (naproxen and esomeprazole magnesium, used to relieve the signs and symptoms of osteoarthritis, rheumatoid arthritis, and ankylosing spondylitis, and to decrease the risk of stomach (gastric) ulcers in patients at risk of developing stomach ulcers from treatment with non-steroidal anti-inflammatory drugs (NSAIDs)).  View the complaint here.

Purdue Pharma L.P. et al. v. Impax Laboratories, Inc.
1:13-cv-03188; filed May 10, 2013 in the Southern District of New York

• Plaintiffs:  Purdue Pharma L.P.; The P.F. Laboratories, Inc.; Purdue Pharmaceuticals L.P.
• Defendant:  Impax Laboratories, Inc.

Infringement of U.S. Patent No. 8,337,888 ("Pharmaceutical Formulation Containing Gelling Agent," issued December 25, 2012) following a Paragraph IV certification as part of Impax's filing of an ANDA to manufacture a generic version of Purdue Pharma's OxyContin® (controlled release oxycodone hydrochloride, used to treat pain).  View the complaint here.

Conference & CLE Calendar

May 21, 2013 - Ethics in IP Practice (Intellectual Property Law Association of Chicago) - Chicago, IL

May 21-23, 2013 - Pharma Legal Affairs (IBC Life Sciences) - Shanghai, China

May 27, 2013 - A Harmonized Patent World -- Are We Getting There? (Intellectual Property Owners Association) - Brussels, Belgium

May 29, 2013 - AIA and Patent Due Diligence Understanding the AIA Impact and Best Practices for the Due Diligence Process (Strafford) - 1:00 - 2:30 pm (ET)

May 30, 2013 - Harmonization of USPTO Ethical Standards in the Post-AIA Era (McDonnell Boehnen Hulbert & Berghoff LLP) - 10:00 - 11:15 am (CT)

June 5-7, 2013 - Advanced Forum on Biosimilars (American Conference Institute) - New York, NY

June 9-11, 2013 - IP Business Congress (Intellectual Asset Management) - Boston, MA

June 12-14, 2013 - Fundamentals of Patent Prosecution 2013: A Boot Camp for Claim Drafting & Amendment Writing (Practising Law Institute) - New York, NY

July 15-19, 2013 - Patent Law Summer Intensive (Benjamin N. Cardozo School of Law) - New York, NY

June 25-26, 2013 - Maximising Pharma Patents (C5 (UK)) - London, England

July 10-12, 2013 - Fundamentals of Patent Prosecution 2013: A Boot Camp for Claim Drafting & Amendment Writing (Practising Law Institute) - San Francisco, CA

July 31 to August 2, 2013 - Advanced Patent Law Seminar (Chisum Patent Academy) - Seattle, WA

August 5-7, 2013 - Advanced Patent Law Seminar (Chisum Patent Academy) - Seattle, WA

***Patent Docs is a media partner of this conference or CLE

Chisum Patent Academy Patent Law Seminar

The Chisum Patent Academy will be offering its next Advanced Patent Law Seminars from July 31 to August 2, 2013 and from August 5-7, 2013 in Seattle, WA.  The three-day seminar will focus on the following patent law topics:

• Patent Practice Gone Wrong: Lessons from Recent Cases on Patent Malpractice and Rule 11 Sanctions
• CLS Bank v. Alice Corp.: Making Sense Out of Nonsense
• Blockbuster Supreme Court and en banc Federal Circuit cases: Myriad (patent eligible subject matter--pending), Lighting Ballast Control (claim interpretation standard of review--pending)
• Giving Meaning to Means Clauses
• Drafting and Enforcing Method and System Claims: Active Inducement, Divided Infringement, Territoriality Issues
• Design Patents and Injunctions: Apple v. Samsung as a Case Study
• AIA Review: Where Are We So Far?
• Recent Nonobviousness Developments
• Pleading Requirements for Infringement Actions

The seminar is co-taught by Donald Chisum, author of the treatise Chisum on Patents (LexisNexis), and Janice Mueller, who was a tenured full Professor at the University of Pittsburgh School of Law from 2004-2011.  The registration fee for the seminar is $2,000; a maximum of ten registrations will be accepted for each seminar.  Those interested in registering for the seminar can do so here.  Additional information regarding the seminar can be obtained here or by e-mailing info@chisum.com.

IPLAC Program on IP Ethics

The Intellectual Property Law Association of Chicago (IPLAC) will be offering a program on "Ethics in IP Practice" on May 21, 2013 from 12:00 to 5:00 pm (Central) at the offices of Winston & Strawn LLP in Chicago, IL. Wendy Muchman, Chief of Litigation/Professional Education, ARDC; Michael Barrett, Director of Risk Control, CNA; and William Covey, Deputy General Counsel and Director for Office of Enrollment and Discipline, USPTO will discuss the new professional code of conduct and other ethical considerations. The registration fee for the program is $25 for IPLAC members and students and $30 for non-members. Those interested in registering for event can do so by e-mailing cwagner@winston.com. Additional information regarding the event can be found here.

WIPO Reports Increase in International Application Filings in 2012

By Donald Zuhn --

In March, the World Intellectual Property Organization (WIPO) announced that International patent applications filed under the Patent Cooperation Treaty (PCT) increased by 6.6% in 2012.  WIPO noted that of the 194,000 PCT applications filed last year, Japan and U.S. accounted for nearly half (48.8%) of those applications.  Five countries had double-digit growth in PCT filings in 2012:  the Netherlands (+14.0%), China (+13.6%), Republic of Korea (+13.4%), Finland (+13.2%), and Japan (+12.3%).  PCT filings in several countries dropped in 2012, including Turkey (-16.3%), Mexico (-15.6%), India (-9.2%), Canada (-6.7%), South Africa (-5.3%), the Russian Federation (-4%), Spain (-2.4%), and Australia (-1.8%).

With regard to technical field, electronic machinery (7.5% of published applications), digital communications (7.1%), computer technology (7%), medical technology (6.4%), and pharmaceuticals (4.4%) saw the largest shares of published applications.  Biotechnology applications had a 3.0% share of published applications in 2012.  While several technical fields saw double-digit growth in share of published applications between 2011 and 2012, including IT methods for management (+22.8%), micro-structural and nano-technology (+21.2%), computer technology (+18.2%), transport (+17.5%), electrical machinery (+17.1%), optics (12.3%), measurement (10.8%), and machine tools (10.6%), biotechnology and pharmaceutical application share rose by only 1.0% and 1.1%, respectively.

WIPO released the following infographic on PCT filings for 2012.

Court Report Supplement

By Ann Palma --

About Court Report Supplement:  Periodically, we will report on biotech and pharma cases that were inadvertently omitted from our Court Report column.

Tawnsaura Group, LLC v. Direct Digital, LLC
8:13-cv-00004; filed January 2, 2013 in the Central District of California

Infringement of U.S. Patent Nos. 5,874,471 ("Orthomolecular medical use of L-Citrulline for vasoprotection, relaxative smooth muscle tone and cell protection," issued February 23, 1999) and 6,028,107 (same title, February 22, 2000) based on Defendant's manufacture, use, offers for sale, and sales of nutritional supplements containing L-Citrulline and/or L-Citrulline Malate used to boost testosterone levels, including Defendant's Nugenix products.  View the complaint here.

Tawnsaura Group, LLC v. M.D. Science Lab, LLC
8:13-cv-00051; filed January 11, 2013 in the Central District of California

Infringement of U.S. Patent Nos. 5,874,471 ("Orthomolecular medical use of L-Citrulline for vasoprotection, relaxative smooth muscle tone and cell protection," issued February 23, 1999) and 6,028,107 (same title, February 22, 2000) based on Defendant's manufacture, use, offers for sale, and sales of nutritional supplements containing L-Citrulline and/or L-Citrulline Malate used to activate the nitric oxide pathways for vasodilation, including Defendant's "Herbal Viva Super Sex Booster" product.  View the complaint here.

Tawnsaura Group, LLC v. Tribravus Enterprises, LLC (d/b/a iForce Nutrition)
8:13-cv-00080; filed January 16, 2013 in the Central District of California

Infringement of U.S. Patent Nos. 5,874,471 ("Orthomolecular medical use of L-Citrulline for vasoprotection, relaxative smooth muscle tone and cell protection," issued February 23, 1999) and 6,028,107 (same title, February 22, 2000) based on Defendant's manufacture, use, offers for sale, and sales of nutritional supplements containing L-Citrulline and/or L-Citrulline Malate used to increase the plasma concentration of arginine, including Defendant's "Hemavol"-branded products.  View the complaint here.

Tawnsaura Group, LLC v. Muscle Warfare, Inc.
8:13-cv-00143; filed January 29, 2013 in the Central District of California

Infringement of U.S. Patent Nos. 5,874,471 ("Orthomolecular medical use of L-Citrulline for vasoprotection, relaxative smooth muscle tone and cell protection," issued February 23, 1999) and 6,028,107 (same title, February 22, 2000) based on Defendant's manufacture, use, offers for sale, and sales of nutritional supplements containing L-Citrulline and/or L-Citrulline Malate used to increase the plasma concentration of arginine, including Defendant's "Napalm"-branded products.  View the complaint here.

Massachusetts Institute of Technology, et al. v. Shire PLC, et al.
1:13-cv-10020; filed January 4, 2013 in the District of Massachusetts

• Plaintiffs:  Massachusetts Institute of Technology; Children's Medical Center Corp.
• Defendants:  Shire PLC; Shire Pharmaceuticals, Inc.; Shire Regenerative Medicine, Inc.

Infringement of U.S. Patent Nos. 5,759,830 ("Three-dimensional fibrous scaffold containing attached cells for producing vascularized tissue in vivo," issued June 2, 1998), 5,770,417 (same title, June 23, 1998), and 5,770,193 ("Preparation of three-dimensional fibrous scaffold for attaching cells to produce vascularized tissue in vivo," June 23, 1998) based on Defendants' manufacture, marketing, and sales of products for a human fibroblast-derived dermal substitute indicated for use in treatment of full-thickness diabetic foot ulcers, including Defendants' Dermagraft.  View the complaint here.

Biologix Research Company, LLC v. Max Scientific, LLC
1:13-cv-2021; filed March 26, 2012 in the District of Delaware

Suit brought against Defendant for alleged breach of contract, fraud and misrepresentation, and conversion, among others, based on the Defendant's infringement of the rights and interests of Biologix Research Company, LLC concerning U.S. Patent No. 6,946,258 ("Rapid, immunochemical process for measuring thiopurine methyltransferase," September 20, 2005) and the sale of products containing at least Thiopurine Methyltransferase (TPMT) — TPMT-1501-08 (8-patient TPMT kit); the TMPT-1501-24 (24- patient TPMT kit); and the TPMT-1501-40 (40-patient TPMT kit). View the complaint here.