Patent Docs

Dr. Falk Pharma GmbH v. GeneriCo, LLC (Fed. Cir. 2019)

By Kevin E. Noonan --

This decision of the Federal Circuit in Dr. Falk Pharma GmbH v. GeneriCo, LLC involves disqualification due to conflict of interest of counsel representing Mylan Pharmaceuticals in three separate appeals.  As set forth in the beginning of the opinion:

Valeant Pharmaceuticals International, Inc. ("Valeant-CA") and Salix Pharmaceuticals, Inc. ("Salix") move to disqualify in Valeant Pharmaceuticals International, Inc. v. Mylan Pharmaceuticals Inc., No. 2018-2097 ("Valeant II"), Salix moves to disqualify in Salix Pharmaceuticals, Inc. v. Mylan Pharmaceuticals Inc., Nos. 2017-2636, 2018-1320 ("Salix II"), and Valeant-CA and Salix move to disqualify in Dr. Falk Pharma GmbH v. GeneriCo, LLC, No. 2017-2312 ("Dr. Falk II").

The facts surrounding this representation (and motions to disqualify) are as follows.  Lawyers from Katten Muchin Rosenman LLP represent Bausch & Lomb ("B&L") in trademark litigation (over the mark MOISTURE EYES).  Bausch and Lomb is a "corporate affiliate" of Valeant-SA and Salix, who are adverse to Mylan in these litigations.  Katten's engagement letter with B&L defined the scope of the engagement to be with any Valent entity and, importantly, incorporated Valeant's Outside Counsel Guidelines into the terms of the engagement.  The Katten lawyers representing Mylan were first at Alston & Bird and during the course of their representation which continues, after they moved to Katten.  These circumstances raised the conflict predicate for Valeant's motion to disqualify, which was heard by the Federal Circuit because the parties were before that Court when the conflict arose.

Regarding the OC Guidelines, they specified that the engagement was between "Valeant Pharmaceuticals International[,i.e. Valeant-DE], its subsidiaries and affiliates. . . and outside counsel."  Any conflicts that were to arise could "only be approved, waived or otherwise cleared by the written agreement of the Valeant General Counsel" under the Guidelines.  The Guidelines also stated that Valeant expected "a significant degree of loyalty from its key external firms," and these firms "should 'not represent any party in any matters where such party's interests conflict with the interests of any Valeant entity.'"

The matter raising the conflict was ANDA litigation between Valeant and Salix and Mylan for infringement of U.S. Patent No. 8,552,025, and separate proceedings between Mylan and Salix and Dr. Falk in district court and before the PTAB in an inter partes review involving U.S. Patent No. 8,865,688, also in the ANDA context.  In all these cases, the parties appealed to the Federal Circuit while the Katten lawyers were still at Alston and Bird, and thus the basis for disqualification arose during the course of the three appeals."  Valeant et al. asserted to grounds for disqualification:  first, that Katten's representation of B&L was on-going and fell within the scope of the engagement letter and OC Guidelines (requiring Valeant's agreement to affirmatively waive the conflict, which it refused to do) and second, the relationships between Valeant and its affiliates was "so interrelated that representation of one constitutes representation of all."

The Federal Circuit issued an Order granting the motions to disqualify, in an opinion by Judge O'Malley (herself a former U.S. district court judge) joined by Judges Lourie and Reyna.  Applying the law of the regional Circuits (Third Circuit, Valeant; Fourth Circuit, Salix; and the U.S. PTO's ethical rules under 37 C.F.R. §11.107(a), Dr. Falk), the opinion found recourse in the American Bar Association's Model Rules of Professional Conduct (specifically, Rule 1.7(a) to determine the scope of the conflict and the proper ethical consequences thereof.  The Rule, as set forth in the opinion, is thus (in pertinent part):

a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:

 (1) the representation of one client will be directly adverse to another client . . . .

The Court also made reference to Comment 34 of the Model Rules to establish corporate context for their decision:

A lawyer who represents a corporation or other organization does not, by virtue of that representation, necessarily represent any constituent or affiliated organization, such as a parent or subsidiary.  See Rule 1.13(a).  Thus, the lawyer for an organization is not barred from accepting representation adverse to an affiliate in an unrelated matter, unless the circumstances are such that the affiliate should also be considered a client of the lawyer, there is an understanding between the lawyer and the organizational client that the lawyer will avoid representation adverse to the client's affiliates, or the lawyer's obligations to either the organizational client or the new client are likely to limit materially the lawyer's representation of the other client.

Based on these rules and this context the Federal Circuit found a conflict of interest existed sufficient to justify disqualification of Katten from the lawsuit.  Specifically, the panel held that this conclusion was supported by the terms of the engagement letter and OC Guidelines between Katten and Valeant, and the interrelatedness of Valeant and its affiliates, specifically B&L.  The engagement letter creates an on-going representation by Katten of Valeant and its affiliates, including B&L.  The Court rejected Katten's argument that because they were not a "key firm" they should be held to a lower ethical standard; on the contrary, key firms according to the Court's reading of the OC Guidelines were held to an even higher standard of loyalty, precluding adverse representations that might be ethical but would be otherwise objectionable to Valeant (for example, so-called "business conflicts).  The OC Guidelines expressly require firms representing Valeant to "adhere to local rules and ethics rules relating to conflict of interest and client representation" such as Model Rule 1.7(a).  And "even if there were any plausible ambiguity in the engagement letter," the opinion states, the interrelationships established by Valeant were sufficient to give rise to a "corporate affiliate conflict."  In this regard, the Federal Circuit followed Second Circuit law (which provided guidance on the question lacking in the other Circuits; see, GSI Commerce Solutions, Inc. v. BabyCenter, L.L.C., 618 F.3d 204, 211–12 (2d Cir. 2010)), where the Court set forth the following factors relevant to the issue:  "(i) the degree of operational commonality between affiliated entities, and (ii) the extent to which one depends financially on the other."  Applying these rubrics to the relationships between Valeant and B&L, the panel found that Valeant and B&L satisfied them and thus were sufficiently related that a conflict arose by Katten's simultaneous representation of these parties and Mylan.

The opinion notes that the only Federal Circuit precedent for disqualification based on a Rule 1.7(a) violation was in a nonprecedential opinion (Freedom Wireless, Inc. v. Bos. Commc'ns Grp., Inc., No. 2006-1020, 2006 WL 8071423 (Fed. Cir. Mar. 20, 2006)) and that different district courts in the Third Circuit have favored mandatory disqualification while others have considered the totality of the circumstances including "the impact, nature, and degree of a conflict, the prejudice or hardship to either party, and which party was responsible for creating the conflict," for example Bos. Scientific Corp. v. Johnson & Johnson Inc., 647 F. Supp. 2d 369, 374 (D. Del. 2009).  The Court considered none of these complicating factors here, finding that they all weigh in favor of disqualification.  Specifically, the panel found that Mylan would not be prejudiced or suffer undue hardship because they will not need to file new briefs in two of the appeals (Salix II and Dr, Falk II) and the Court had stayed briefing in Valeant II so new counsel can draft its briefs in the first instance.  Finally, the course of conduct (including not notifying Valeant of the conflict as required under the OC Guidelines) made insufficient Katten's offer to raise an ethical wall between the conflicted lawyer and lawyers representing B&L in other matters.

This decision raises at least the following Practice Tips.  First, engagement letters should limit the scope of representation to the client engaged and leave for another day representation of affiliates, related companies, etc.  Second, OC Guidelines should be negotiated and, if there is no flexibility in them, ensure that there are ways to exit representation without risking disqualification.  Finally, when assessing the desirability of hiring lateral lawyers, a firm should be very diligent in identifying existing or potential conflicts and their effects on current and prospective relationships with clients or potential clients.

Dr. Falk Pharma GmbH v. GeneriCo, LLC (Fed. Cir. 2019)
Panel: Circuit Judges Lourie, O'Malley, and Reyna
Order by Circuit Judge O'Malley

Law Review Article Advocates Supreme Court's Patent Eligibility Law is Unconstitutional

By Kevin E. Noonan --

Sherry Knowles, former chief patent counsel of GlaxoSmithKline, and Dr. Anthony Prosser, a member of her team at Knowles Intellectual Strategies LLC, have written an article recently published in The John Marshall Review of Intellectual Property Law entitled "Unconstitutional Application of 35 U.S.C. 101 by the U.S. Supreme Court."  The authors' thesis is stark:  that the Supreme Court has improperly (and unconstitutionally) arrogated to itself a definition of patent eligibility that is inconsistent with over 200 years of statutory law enacted by Congress under its Article I powers.

The authors tracked the legislative history of 35 U.S.C. § 101 from the beginning of the U.S. patent system to enactment of the Leahy-Smith America Invents Act, and set forth a side-by-side comparison of the statute with the "common law" created by the U.S. Supreme Court case law during this period, which the authors consider to be inconsistent.  The conclusion is expressed in a simple but compelling premise that "A or B" is inconsistent with "A not B," which represents the structure of the statute ("Whoever invents or discovers"), compared to the Supreme Court's common law approach (that an applied discovery cannot constitute an invention; see, e.g., AMP v. Myriad Genetics).  According to the authors, since the Constitution gives sole authority to Congress to create laws that promote the progress of science and the useful arts, any opinions by the Supreme Court that fail to apply the first four words of the statute in the disjunctive is an assertion of an authority the Constitution does not give the judiciary.

The authors take direct aim at the "judicial exceptions" to patent eligibility created by the Court.  Their position is that despite diligent effort they can find no legal basis for the Supreme Court to make a judicial exception to any federal statute, much less § 101.  In this context, these authors note an opinion handed down by the Court on January 8, 2019, in the arbitration setting, in which the Justices unanimously held that the pattern of creating an exception to a federal statute by certain Courts of Appeal was inconsistent with the text of the Act and its precedent (see Henry Schein, Inc. et al. v. Archer & White Sales, Inc., No 17-1272).

The article supports these arguments with a review of the many and various Patent Acts (up to and including the 1952 Patent Act authored by Giles Sutherland Rich and PJ Federico and the Leahy-Smith America Invents Act)*, showing that "discoveries," as enunciated in Article I, Section 8, Clause 8 comprise statutory subject matter in all of them (except for a brief time in the early 19th Century, prior to the 1836 Act that established peripheral claiming for U.S. patents).  Specifically, regarding the 1952 Patent Act, the authors set forth testimony and statements from the legislative history, including a discussion of Funk Bros. Seed Co. v. Kalo Inoculant Co, that provides evidence that Congress was encouraged to eliminate "discovery" from the statute but declined to do so.  For example, the authors highlight that the Department of Justice gave testimony at the hearings on the 1952 Act specifically asking Congress to remove the words "or discoveries" from the statute, using the typical arguments that have been propounded for that.  Instead of refusing the request, Congress did the opposite -- it added a definition of invention to 35 U.S.C. § 100 to affirm its intent that discoveries be included (35 U.S.C. § 100(a)).  This was only a few years after Funk, and according to the authors, is a direct rebuke of the case.

The authors argue that this evinces a determination by Congress that discoveries are patent-eligible, and that the judiciary must respect this determination by the legislature.  Indeed, the article cites various authority from the Court itself that its only proper role is to interpret the laws as Congress has written them, citing Lockhart v. U.S., 136 S. Ct. 958, 962 (2016); D.C. v. Heller, 554 U.S. 570, 598 (2008); Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6 (2000); Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 253-254 (1992); and Caminetti v. United States, 242 U.S. 470, 485 (1917).  In this context, the "implicit" or "judicial" exceptions enunciated by the Court is, in the authors' view, improper.

The article next explicates some of the relevant case law, from Le Roy v. Tathum, 5 U.S. 156 (1853), through O'Reilly v. Morse, 56 U.S. 62 (1854), for an understanding of how the Court fulfilled its reviewing role in those days.  The authors correctly note that neither of these cases stand for a broad proposition of what is and isn't patent eligible (Le Roy being remanded on novelty grounds and Morse based on overbreadth and lack of support) and that they both concur that while a patent cannot be granted on the natural law, it can be obtained for an application of that law.  The authors find the break with judicial tradition, and the beginning of Supreme Court overstep in this aspect of the law, in Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948), an opinion by Justice Douglas that has been used more recently by the Court and others to justify the modern expansionist application of the judicial exceptions, in their opinion, in direct contradiction to the language of 35 U.S.C. §§ 100(a) and 101.  The authors find error in Justice Douglas contradicting the well-established principle that an application of a law of nature was patent eligible; after all, the patent at issue in Funk Bros. was for a composition comprising combinations of nitrogen-fixing bacteria based on their ability to grow together without mutual growth inhibition.  The article argues that this application of the biological principle was well within the proper boundaries of applications of laws of nature that should be patent-eligible (a position supported by the almost wholesale neglect for this precedent after enactment of the 1952 Patent Act; indeed the case was only resurrected by Justice Thomas on his Myriad opinion).  They characterize Justice Douglas's opinion as stating that:

[A] commercial product based on the application of a discovery about how nature works to produce a new and useful scientific advance cannot form the basis for a patent unless it is also an invention. This statement not only directly contradicts the earlier Le Roy opinion, it also directly contradicts the statutory determination by Congress that any composition of matter "invention or discovery" is patent eligible.  This faulty analysis formed the initial threads for the Supreme Court's parallel case law on patent eligibility, and is repeatedly cited by the Court as its authority.

This section then explicates the Court's misapplication of its role in Gottschalk v. Benson, 409 U.S. 63 (1972) (Justice Douglas again), and Parker v. Flook, 437 U.S. 584, 587 (1978) (Justice Stevens) (over a dissent by Justices Stewart, Rehnquist, and Burger).  Of Benson, the authors write:  "The Court was concerned with affirming such a broad scope of monopoly, but that was not their decision to make, which should be limited to strict statutory construction."  The authors credit the Chakrabarty Court for recognizing the importance of the legislative history and Congressional intent ("anything under the sun made by man") despite this decision's role in canonization of the "judicial exception" narrative.  Diamond v. Chakrabarty, 447 U.S. 303 (1980).  Also, with regard to these cases, the authors term "exaggerated and false" examples of discoveries such as the law of gravity and E=mc² to discredit discovery, saying that "Congress had already given clear legislative intent that such as not patent eligible" and "[t]he Court need go no further than statutory construction and legislative intent to reach a patent eligibility decision."  And the authors refute the Court's claim of statutory stare decisis in Bilski v. Kappos, 561 U.S. 593 (2010), in support of its assertion of the judicial exceptions, insofar as Congress has included the term "discovery" in the Patent Act the entire time the Court has been developing its jurisprudence on the scope of patent eligibility.

The authors find cause for particular opprobrium in the Court's recent decisions, AMP v. Myriad and Mayo v. Prometheus, for different reasons.  Regarding the Mayo decision, the authors note that the Court ignored the Government's arguments that the defects in the Prometheus claims were better addressed by other sections of the Patent Act (§§ 102 and 103, specifically) and substituted its judgment on a policy issue for those of the Executive branch.  The authors cite both these decisions as examples of judicial overreach, noting for example the policy statements Justice Breyer asserts in the Mayo opinion regarding the economic balance between patent protection and third party freedom to operate (otherwise known as "the Goldilocks effect"; see A Modest Proposal (or Two)):

The Constitution has not granted any authority to the Supreme Court to carry out economic analysis of what should be patent eligible, nor is it equipped to do so.  The Supreme Court does not have the power to commission white papers, take testimony, review independent evidence, have one-on-one meetings with stakeholders or to take depositions, which are necessary to create public policy.  Amicus briefs, while useful, do not take the place of these tools.  The Supreme Court is arguably the worst equipped of the three branches of the government to evaluate patent policy.  For this reason, our founding fathers did not give the Supreme Court the authority to set policy, although, as illustrated by the Mayo case, the Court has crossed that line.  Creating a careful balance between the scope of incentive to promote the progress of science and impeding ancillary research is the sole domain of Congress.

Regarding the Myriad decision (which the authors term the "apex" of the Supreme Court's unconstitutional application of Section 101), these authors call out Justice Thomas's statements that, no matter how beneficial or groundbreaking an invention may be, if based on an isolated DNA molecule it is a product of nature and thus not patent-eligible ("Groundbreaking, innovative, or even brilliant discovery does not by itself satisfy the § 101 inquiry").  These statements have been used, most notably in Ariosa v. Sequenom, to invalidate several just such groundbreaking inventions, with clearly negative effects on innovation (see Ariosa Diagnostics, Inc. v. Sequenom, Inc. (Fed. Cir. 2015); Cleveland Clinic Foundation v. True Health Diagnostics LLC (Fed. Cir. 2017); and Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC (Fed. Cir. 2019)).

The authors' points are well stated, and perhaps it is only by raising the clarion call against the Supreme Court's jurisprudence that effective steps can be taken.  The bold premise is bound to motivate conversation in a needed area.  This conversation is important because unfortunately for the American patent system, innovation, and economy (see U.S. Drops to 13th in Worldwide Patent Protection According to Study Released by U.S. Chamber of Commerce), the only path other than the Court "seeing the light" (which could perhaps arise should the Wall Street Journal ever run the headline, "Supreme Court Destroys U.S. Industry"), will be to wait until Congress gets around to changing the law.  And the negative consequences, to innovation and American competitiveness, are clear (if not patent) and deleterious.  Part of the problem is the failure of the Office and the Federal Circuit to push back and overly (and slavishly) apply the recent cases unnecessarily broadly.  As Nancy Linck told Drew Hirschfeld at BIO a few years ago, it is the Executive Branch's responsibility to use the Court's rulings as a guidance in applying the law.  A quick re-read of In re Bergy illustrates how the Federal Circuit should have decided Ariosa.  But in the absence of forcing the Court to recognize its errors by working through their consequences, all that is left is the current legislative remedy, with all its accompanying deficiencies.

Until then we are stuck with The Tyranny of the Judiciary, a consequence of our system of government recognized by the Founders.  But if we are to have any traction in changing the current circumstances and their consequences, then policy makers, legal academics, editorial writers and pundits both patent and general need to heed these authors' concluding words:

How many industries will be destroyed and applied discoveries not advanced for the promotion of science in the meantime?

* Patent Act of 1970, Pub. L. No. 1-34, 1 Stat. 109 (1790); Patent Act of 1793, Pub. L. No.2-53, 2 Stat. 318 (1793); Patent Act of 1836, Pub. L. No. 24-357, 5 Stat. 117 (1836); Patent Act of 1842, Pub. L. No. 27-288, 5 Stat. 543 (1842); Patent Act of 1870, Pub. L. No. 41-230, 15 Stat. 198 (1870); Patent Act of 1897, Pub. L. No. 55-391, 29 Stat. 692 (1897); Plant Patent Act of 1930, Pub. L. No.71-312, 46 Stat. 376 (1930); Patent Act of 1952, Pub. L. No. 82-593, 66 Stat. 792 (1952).

Supreme Court Hears Oral Argument in Return Mail v. U.S. Postal Service

By Josh Rich --

Earlier today, the Supreme Court heard oral argument in Return Mail, Inc. v. U.S. Postal Service, which presented the simple question whether the federal government is a "person" entitled to petition for post-grant review under the Leahy-Smith America Invents Act ("AIA").  While the issue may rarely arise, it poses a significant threat to the careful balance of the CBM, PGR, and IPR proceedings created by the AIA.

Four basic tenets of federal law -- including patent law -- stand in tension in the Return Mail case.  First, absent an indication to the contrary in a specific statute, the federal government is not a "person."  Second, for almost forty years, the federal government has been considered a "person" entitled to seek post-grant review of patents.  Third, the AIA carefully balanced the availability of AIA post-grant proceedings with a broad estoppel against relitigation of issues that were raised, or could have been raised, in the proceedings in district court or International Trade Commission litigation, but not in the Court of Federal Claims.  And fourth, the federal government is generally not subject to estoppel in the form of issue preclusion.

The starting point for determining who is a person under federal law is the federal Dictionary Act:  "In determining the meaning of any Act of Congress, unless the context indicates otherwise . . . the words 'person' and 'whoever' include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals."[1]  Return Mail argued, supported by Supreme Court precedent, that the Dictionary Act's definition of "person" presumptively excludes government entities.  While it pointed out that the definition is an inclusive list, not an exclusive one that excludes government entities, the Postal Service did not really fight that point.  Rather, it focused on the initial, pre-definition clause and asserted that the Patent Act does indicate otherwise.

The Postal Service's argument relied on the text and structure of the Patent Act, and specifically the AIA, to suggest that the context does indicate that it is a person under the Act.  First, it is uncontested that federal agencies are entitled to obtain patents (as assignees of rights); the language of 35 U.S.C. §§ 102, 118, and 119 identify that a "person" is entitled to a patent, may apply for a patent as an assignee, and may claim priority to a foreign application.  Similarly, a "person" may be entitled to intervening rights under § 252 (and other provisions), and government entities have been found to have that right.  As the government noted, "'[I]dentical words used in different parts of the same statute' are generally 'presumed to have the same meaning'" and that presumption is "doubly appropriate" when the various provisions are closely related and enacted at the same time.  Some of the key provisions, including amended § 102 and some of the intervening rights provisions, are part of the AIA and closely related to the post-grant review proceedings.

However, Return Mail pointed out a number of other places in the Patent Act, including the AIA, where the government was not considered to be a "person."  And, indeed, many of the provisions on which the Postal Service relied are more explicit in including government entities as "persons," contrary to the AIA's silence on post-grant proceedings.  Thus, the parties read the Patent Act in completely opposite ways, with the Postal Service saying that it established an exception to the Dictionary Act and Return Mail saying that it did not.

The Postal Service therefore looked at the history of federal agencies' participation in the patent system, and most importantly post-grant proceedings.  Unquestionably, federal agencies have been permitted to participate as "persons" in pre-AIA post-grant proceedings.  Specifically, since 1980, federal agencies have repeatedly been involved in ex parte reexamination and inter partes reexamination.  The latter proceedings are especially relevant, since "any person" is allowed to petition and the proceedings gave rise to an estoppel.  Specifically, a requester in inter partes reexamination was estopped from asserting in a civil action the "invalidity of any claim finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings."[2]

However, while both inter partes reexamination and AIA post-grant proceedings call for estoppels, the scope of estoppel for AIA post-grant proceedings is importantly different.  In both the earlier and current proceedings, estoppel is an important quid pro quo for the right to participate in the proceedings.  But for inter partes reexamination, the estoppel would arguably apply to government agencies.  Today, under the AIA, the estoppel applies only in district courts and the ITC:

The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not assert either in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review. [3]

That is, the estoppel clearly would not apply in actions brought in the Court of Federal Claims.  Thus, there is no quid pro quo for government agencies, but that constituted a change from the previous statute.  Return Mail argued that indicates that there was no intent to allow government agencies to participate in post-grant proceedings; the Postal Service argued that it indicated a reasoned decision by Congress, having considered prior statutes, to allow government agencies to have the benefit of participating in such proceedings without the concomitant burden of any estoppel.  And while there are almost four decades of practice that would support allowing the government to participate in such proceedings, the Supreme Court has made it clear that it will show no deference to longstanding Federal Circuit practices that it determines to be incorrect under the law.[4]

The question of statutory estoppel is heightened because, unlike a private litigant, the government is generally not subject to estoppel.  Of course, it is subject to collateral estoppel, but that relates only to issues actually litigated and determined in a prior proceeding.  The statutory estoppel of AIA § 315 also applies to issues that could have been raised, but were not.  Thus, government entities would be at a substantial advantage in avoiding statutory estoppel under the AIA.

The Justices, however, chose to focus their attention (and questions) elsewhere.

Several of the Justices, including Justices Ginsburg[5] and Breyer, were clearly bothered by the fact that government entities were entitled to participate in ex parte proceedings (including ex parte reexamination and third party submissions of art)[6], but would not be entitled to participate in "more efficient" inter partes proceedings.  They questioned how a government department could be a "person" in ex parte proceedings but not in inter partes proceedings.  That ex parte proceedings were in place long before the AIA, and have some textual support for considering a governmental entity to be a "person," seemed less of an issue than the incongruity of allowing government entities to participate in one type of proceeding and not the other.

On the other hand, several of the Justices -- most clearly Justice Kavanaugh -- questioned the government's position based on the premise that the executive branch is presumed, and entitled, to speak with one voice.  It is one thing for one agency (such as the Postal Service) to turn back to the Patent and Trademark Office as the subject matter expert in patentability to correct an error in post-grant proceedings.  It is quite another for that same agency, dissatisfied with the outcome of those post-grant proceedings, to be able to then go to the Court of Federal Claims and assert a defense that its sister agency erred in the post-grant proceedings.  That is, the Postal Service's argument seems to conflict with the fundamental structural presumptions of the executive branch.  And it certainly did not help that the government was unable to point to a clear textual basis for understanding that it was entitled to be a "person" for purposes of the AIA post-grant proceedings, and instead resorted to policy arguments to seek to turn the presumption that the government generally is not considered a "person" on its head.

Also notably, both parties gave little attention to a rule of construction that the Federal Circuit rested its opinion heavily upon:  that the statute should be construed to allow a government entity to be a "person" if it would be benefited by such a reading, but not if the reading would be detrimental.  The government mentioned the argument, but spent little time and faced no question on the issue.  Rather, the government sought to stress more strongly that it could be a participant in post-grant proceedings as a patentee, but not as a challenger (at least, if Return Mail prevails).  It was that unfairness that the government sought to highlight rather than the Federal Circuit's rule of thumb.

One last point raised during the government's argument made it clear, however, that the stakes of the case are relatively low.  The government was asked about how frequently the issue before the Court arises.  Since the enactment of the AIA in 2011, the government has brought only 20 post-grant proceedings.  Thus, while there is significant academic question about the case, there is little direct practical effect to the Court's decision, regardless of how it rules.

[1] 1 U.S.C. § 1.
[2] Pre-AIA 35 U.S.C. § 315(c).  The statute provided:

A third-party requester whose request for an inter partes reexamination results in an order under section 313 is estopped from asserting at a later time, in any civil action arising in whole or in part under section 1338 of title 28, the invalidity of any claim finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings.  This subsection does not prevent the assertion of invalidity based on newly discovered prior art unavailable to the third-party requester and the Patent and Trademark Office at the time of the inter partes reexamination proceedings.

The Postal Service argues that provision is broader than current § 315.
[3] 35 U.S.C. § 315(e)(2).
[4] See TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017).
[5] Justice Ginsburg asked the first question in her return to the bench after several weeks away for cancer treatment.
[6] The Justices also asked about a government entity calling the Director of the Patent and Trademark Office, seeking sua sponte reexamination of patents, as a means of post-grant review.

USPTO Extends One Pilot Program But Declines to Extend Another

By Donald Zuhn --

Last month, in Federal Register notices published on the same day (84 Fed. Reg. 411), the U.S. Patent and Trademark Office announced that it was extending the Cancer Immunotherapy Pilot Program, but that it had decided to discontinue the Extended Missing Parts Pilot Program.  According to the Office's notices, the Cancer Immunotherapy Pilot Program has been extended to June 30, 2020, and the Extended Missing Parts Pilot Program came to an end on January 2, 2019.

The Extended Missing Parts Pilot Program was initiated by the Office on December 8, 2010 to "effectively provide a 12-month extension to the existing 12-month provisional application period, providing applicants additional time to find financial help, evaluate a product's worth in the marketplace or further develop the invention for commercialization."  Under the Extended Missing Parts Pilot Program, the Office modified its current missing parts practice such that applicants could file a nonprovisional application within the 12-month statutory period after the provisional application was filed (as well as pay the basic filing fee) and then be given a 12-month period within which to decide whether the nonprovisional application should be completed by paying the required surcharge and the search, examination, and any excess claim fees.

When implementing the pilot program, however, the Office noted that participation in the program would have patent term adjustment (PTA) effects, with the Office's certification and request form stating that:

Any patent term adjustment (PTA) accrued by applicant based on certain administrative delays by the USPTO is offset by a reduction for failing to reply to a notice by the USPTO within three months.  See 37 CFR 1.704(b).  Thus, if applicant replies to a notice to file missing parts more than three months after the mailing date of the notice, the additional time that applicant takes to reply to the notice will be treated as an offset to any positive PTA accrued by the applicant.

The Office also explained at the time that:

[T]he extended missing parts period does not affect the twelve-month priority period provided by the Paris Convention for the Protection of Industrial Property.  Thus, any foreign filings must still be made within twelve months of the filing date of the provisional application if applicant wishes to rely on the provisional application in the foreign-filed application or if protection is desired in a country requiring filing within twelve months of the earliest application for which rights are left outstanding in order to be entitled to priority.

In its notice announcing the end of the Extended Missing Parts Pilot Program, the Office indicated that the pilot program was being allowed to expire because of "the limited number of grantable requests and the administrative burden on the USPTO in processing improper requests."  In particular, the Office noted that it had received fewer than 200 grantable requests per year during the pilot program's tenure, and that the number of grantable requests had decreased over the past year.

The Cancer Immunotherapy Pilot Program was initiated on June 29, 2016 to provide for earlier review of patent applications pertaining to cancer immunotherapy in support of the "National Cancer Moonshot," an initiative of the Obama Administration to achieve ten years' worth of cancer research from 2016 to 2021 (see "FACT SHEET: Investing in the National Cancer Moonshot").  Under the Cancer Immunotherapy Pilot Program, applications containing at least one claim reciting a method of treating a cancer using immunotherapy are advanced out of turn for examination if the applicant files a grantable petition to make special, with the goal of completing examination of the application within twelve months of special status being granted.  In order to participate in the Cancer Immunotherapy Pilot Program, an applicant must satisfy the following requirements:

(1) File a petition to make special under 37 C.F.R. § 1.102(d) in a non-reissue, nonprovisional utility application filed under 35 U.S.C. § 111(a), or an international application that has entered national stage under 35 U.S.C. § 371.  The petition must be filed at least one day prior to the date that notice of a first Office action (which may be an Office action containing only a restriction requirement) appears on PAIR, or with a Request for Continued Examination (RCE).  For applications in which the claimed cancer immunotherapy is the subject of an active Investigational New Drug (IND) application, a petition to make special may be accepted any time prior to appeal or final rejection.  The Office recommends that applicants use form PTO/SB/443 for filing the petition, as the form contains check boxes that will allow the applicant to comply with several certification requirements under the new pilot program.

(2) The application cannot contain more than three independent claims, more than twenty total claims, or any multiple dependent claims.  For applications not meeting this requirement, an applicant must file a preliminary amendment to cancel the excess claims or multiple dependent claims at the time the petition to make special is filed.

(3) The application must include at least one claim to a method of treating a cancer using immunotherapy, and such claim must "encompass[] a method of ameliorating, treating, or preventing a malignancy in a human subject wherein the steps of the method assist or boost the immune system in eradicating cancerous cells."  Examples of acceptable claims include those directed to "the administration of cells, antibodies, proteins, or nucleic acids that invoke an active (or achieve a passive) immune response to destroy cancerous cells," "the co-administration of biological adjuvants (e.g., interleukins, cytokines, Bacillus Comette-Guerin, monophosphoryl lipid A, etc.) in combination with conventional therapies for treating cancer such as chemotherapy, radiation, or surgery," "administering any vaccine that works by activating the immune system to prevent or destroy cancer cell growth," or "in vivo, ex vivo, and adoptive immunotherapies, including those using autologous and/or heterologous cells or immortalized cell lines."

(4) If restriction is required, the applicant must agree to make an election without traverse in a telephonic interview, and elect an invention directed to a method of treating a cancer using immunotherapy.  The applicant will be given two working days to respond to an examiner's request for an election, and in the event that the applicant fails to respond within that period, the examiner will treat the first group of claims directed to a method of treating a cancer using immunotherapy as being constructively elected without traverse.

(5) The application cannot have been previously granted special status.

(6) The petition to make special must be filed electronically via the EFS-Web, and the document description "Petition for Cancer Immunotherapy Pilot" must be selected for the petition.

(7) If the application has not been published, the applicant must file a request for early publication in compliance with 37 C.F.R § 1.219 with the petition to make special (or a rescission of a nonpublication request if one was filed).

For the purposes of the pilot program, the fee for a petition to make special under 37 C.F.R. § 1.102(d) has been waived by the Office.

In its notice extending the Cancer Immunotherapy Pilot Program, the Office noted that as of the date of the notice, more than 300 petitions requesting participation in the pilot program had been filed, and more than 100 patents had been granted under the pilot program.

For additional information regarding this and other related topics, please see:

• "USPTO Extends Missing Parts Pilot Program for Another Year," December 28, 2016
• "USPTO Implements Pilot Program to Support President's National Cancer Moonshot," July 19, 2016
• "USPTO Extends Missing Parts Pilot Program Once Again," January 14, 2014
• "USPTO Extends Missing Parts Pilot Program Again," January 10, 2013
• "USPTO Implements Pilot Program Extending Provisional Application Period," December 13, 2010
• "USPTO Seeks to Effectively Double Provisional Application Period," April 4, 2010

Conference & CLE Calendar

February 19, 2019 - Post-argument discussion on the Return Mail Inc. v. United States Postal Service case (American University Washington College of Law Program on Information Justice & Intellectual Property) - 4:00 to 6:00 pm (Eastern), American University Washington College of Law, Washington, DC

February 20, 2019 - "New Developments in Patent-Eligibility with a Focus on the Abstract Idea Exception" (McDonnell Boehnen Hulbert & Berghoff LLP) - 10:00 am to 11:15 am (CT)

February 21, 2019 - "Infringement of IP Rights in Augmented and Virtual Reality -- Protecting and Monitoring Trademarks, Right of Publicity, Copyrights" (Strafford) - 1:00 to 2:30 pm (EST)

February 21, 2019 - "Life After SAS and Oil States: What Has Changed and Where Do We Go from Here?" (Federal Circuit Bar Association PTAB/TTAB Committee Committee) - 3:00 pm to 4:00 pm (EST)

February 26, 2019 - "New EU Guidelines for Patenting AI and Machine Learning Technologies: Comparison With U.S. Approach -- Navigating EPO and USPTO Rules to Maximize Patent Protection" (Strafford) - 1:00 to 2:30 pm (EST)

February 27, 2019 - "Conducting and Analyzing Prior Art Searches -- Strategies for Validity, Patentability, Infringement, FTO and State-of-the-Art Searches" (Strafford) - 1:00 to 2:30 pm (EST)

February 27, 2019 - "Patent Wars" (John Marshall Law School Center for Intellectual Property, Information & Privacy Law) - 1:15 to 2:45 pm (CST), John Marshall Law School, Chicago, IL

March 5, 2019 - Customer partnership meeting of Technology Center 2600 (U.S. Patent and Trademark Office) - 8:30 am to 4:00 pm (EST), USPTO's Madison Auditorium, North, Alexandria, VA

March 5, 2019 - "The USPTO's Updated Guidance on Section 101: Adjusting Your IP Evaluations for Maximum Protection" (Technology Transfer Tactics) - 1:00 pm to 2:00 pm (ET)

Washington College of Law Post-Argument Discussion of Return Mail Inc. v. United States Postal Service

As part of its ongoing Supreme Court series, the American University Washington College of Law Program on Information Justice & Intellectual Property will be hosting a post-argument discussion on the Return Mail Inc. v. United States Postal Service case from 4:00 to 6:00 pm (Eastern) on February 19, 2019 at the American University Washington College of Law in Washington, DC.

Additional information about the post-argument discussion, including registration/CLE information, and a link to a webcast, can be found here.

JMLS Presentation on the Effect of Patents on Innovation

The John Marshall Law School Center for Intellectual Property, Information & Privacy Law will be hosting Prof. Thomas F. Cotter of the University of Minnesota Law School, who will be giving a presentation entitled "Patent Wars" from 1:15 to 2:45 pm (CST) on February 27, 2019 at the John Marshall Law School in Chicago, IL.  Prof. Cotter will provide an examination of the current state of patent law, showing how patents affect everything from the food we eat to the cars we drive to the devices that entertain and inform us.  Beginning with a general overview of patent law and litigation, the presentation will address such issues as the patentability of genes, medical procedures, software, and business methods; the impact of drug patents and international treaties on the price of health care; trolls; and the smartphone wars.  Taking into account both the benefits and costs that patents impose on society, Prof. Cotter will highlight the key issues in current debates and explores what still remains unknown about the effect of patents on innovation.

There is no registration fee for the presentation.  Those interested in registering for the pre4sentation can do so here.