Patent Docs

Yet Another "Patent-Troll" Bill – Senator Leahy Introduces Patent Transparency and Improvements Act

By Andrew Williams --

There has been a flurry activity recently in both the House and Senate aimed at addressing the perceived patent-troll problem.  We have recently reported on the introduction of both the "Innovation Act," from Rep. Bob Goodlatte (R-Va), and the "Patent Litigation Integrity Act," from Sen. Orrin Hatch (R-Utah).  The Goodlatte bill was marked-up today by the House Judiciary Committee in a session that lasted into the early evening (we will provide details on the amendments at a future date).  In addition, on the heels of a hearing by the U.S. House Energy & Commerce subcommittee on "The Impact of Patent Assertion Entities on Innovation and the Economy," Rep. Jared Polis (D-Co.) introduced the "Demand Letter Transparency Act."  According to a statement on Rep. Polis's website, this Act "strikes the right balance in protecting the rights of legitimate patent holders to enforce their patents while protecting consumers and businesses against non-legitimate abusers of the patent system."  Adding to this ever-increasing mass of proposed legislation, Sen. Patrick Leahy (D-Vt.), chair of the Senate Judiciary Committee, introduced S. 1720 (the "Patent Transparency and Improvements Act of 2013") on Monday, November 18, 2013.  Because this Act contains some provisions not found in any of the other pieces of legislation, and because of Sen. Leahy's influential position in Congress with regard to intellectual-property matters, an analysis of the provisions of this Act is warranted.

Transparency of Patent Ownership

As the title of the Act would suggest, one of the provisions of the bill is aimed at making the ownership of patents transparent.  Sen. Leahy has a couple of different ways to accomplish this.  First, any patentee that files an action in Federal Court would be required to disclose any and all persons that have a financial interest in the controversy or a party to the proceedings, or that have an interest that could be affected by the outcome of the proceedings.  The complication comes in the definition of "financial interest."  The proposed legislation refers to 28 U.S.C § 455(d), which is the section of the U.S. Code that addresses the disqualification of federal judges.  "Financial interest" is defined as "ownership of a legal or equitable interest, however small, or a relationship as director, advisor, or other active participant in the affairs of a party," providing any of the enumerated exceptions do not apply, such as passive ownership through a mutual or common investment fund.  As a result, a publically traded corporation brining a patent infringement lawsuit would be required to provide a list of every stockholder, no matter how many (or few) shares are actually owned.  Such a requirement would be incredibly onerous, and would serve as a significant barrier to patent litigation for such patent holders.

Another "solution" provided for in this bill is an assignment disclosure requirement at the U.S. Patent Office.  When "all substantial rights in an issued patent" have been assigned, the name of the assignee and the ultimate parent entity of the assignee would need to be recorded with the Office within three months.  However, the only hint as to what "all" substantial rights means in this context is whether the assignment "results in a change to the ultimate parent entity."  The penalty for not complying would be that a party asserting infringement "may not recover increased damages under section 284 or attorney fees under section 285 with respect to infringing activities taking place during any period of noncompliance," and the party may be responsible for the reasonable attorney fees incurred by an alleged infringer in discovering the "ultimate patent entities in the chain of title."  Nevertheless, in relation to other mandatory assignment recordation provisions that have been discussed, this one does not appear to be overly demanding.  If this provision passes, it would behoove any patent owner to confirm that all assignments had been properly recorded at the first signs of any potential infringing activity.  It would also be necessary to conduct the proper due diligence related to assignment recordation before taking any interest in a patent, because the ability to recover such fees for some period of time may already have been forfeited.

Customer Stay

In order to address the concern that "patent trolls" are preying on customers, not manufacturers, Sen. Leahy's bill contains a provision allowing for the stay of litigations where both a customer and manufacturer have been sued for patent infringement.  This section is not dissimilar to other proposed legislation.  The requirement for the grant of a motion for stay would include the consent in writing of both the manufacturer and the customer, that the manufacturer be a party to the action or a separate action involving the same patents and relating to the same product or process, that the customer must agree to be bound by the decision, and that the motion must be filed early in the case.  The Act also provides that the stay can be lifted by a motion showing that a major issue in the customer action will not be resolved by the manufacturer action, or if the stay would unreasonably prejudice the party seeking to lift the stay.  Finally, the estoppel effect of the stay could be waived if the manufacturer seeks or consents to a consent judgment or fails to prosecution to a final, non-appealable judgment at least one common issue that gave rise to the stay.

Bad-Faith Demand Letters

There has been a lot of activity in the past week or so directed to the impact of demand letters on the patent system.  This is interesting, because demand letters themselves do not necessarily fall within the scope of the patent statute.  Still, the prototypic activity of a putative "patent troll" is the sending of demand letters, and if the anecdotal evidence is to be believed, all of these letters have little to no information.  However, any attempt to solve this problem through legislation will certainly have unintended consequences, likely to detriment of legitimate patent holders.  Moreover, it is difficult to see how the First Amendment rights of patent holders can be protected in the attempt to curtail this practice.  Finally, it would appear that one potential out for the patent holder would be to pre-emptively file a complaint, which could then be included with, or substituted for, any demand letter.  Of course, Rule 11 would need to be satisfied.  Nevertheless, it would appear that to have the intended effect, "demand letter" legislation will need to go hand-in-hand with some form of heightened pleading standards.  The concern is that such legislation may introduce more problems than it solves, as we have highlighted in previous posts in this forum.

The Leahy bill addresses the demand letter issue by empowering the Federal Trade Commission to consider such conduct an "unfair or deceptive act or practice."  In order to be classified as such, the patent holder must "engage in the widespread sending of written communications" that "falsely threaten that administrative or judicial relief will be sought if compensation is not paid or the infringement issue is not otherwise resolved."  The demand letter would also be considered to be "unfair or deceptive" if it lacks a reasonable basis in fact or law, or if the content "is likely to materially mislead a reasonable recipient."  Of course, the success of this section will depend on the definitions of several key terms.  For example, just what does it mean to "falsely threaten"?  Will this apply anytime a lawsuit does not result?  Or will it be necessary to demonstrate that the patent holder never had any intention of filing suit (which may be difficult to prove without a "smoking gun").  Still, by giving the power to the FTC to combat this issue, it may solve some of the issues that were highlighted above for any attempt to directly legislate the issue.

AIA-Related Provisions

The Leahy bill also includes provisions that expand upon some of the changes brought about by the America Invents Act ("AIA").  For example, the bill provides for the use of claim construction rules in post-grant and inter partes reviews that are consistent with those used in federal court.  Currently, the Patent Trial and Appeals Board ("PTAB") uses the broadest reasonable interpretation standard, similar to that employed by the Office during the patent application examination process.  The problem is that these two different claim construction rules could result in two different oppositely-dispositive constructions based solely on while rule was applied.  There is general agreement that such a provision is necessary.  Another AIA-related provision is the codification of the double-patenting doctrine for first-inventor-to-file patents.  Finally, Leahy's bill includes some technical corrections to the AIA.

Other Miscellaneous Provisions

Leahy's Patent Transparency and Improvements Act of 2013 also contains several provisions that do not fall within these various categories.  First, the bill provides for small business education and outreach.  The only issue is that it must be funded from existing sources.  Next, there is a section of the bill that provides for the protection of intellectual-property licenses in bankruptcy.  Finally, the bill calls for several studies to be carried out by the Patent Office or other organizations.  For example, the bill requires the Patent Office Director to undertake a study "to develop legislative recommendations to ensure greater transparency and accountability in patent transactions occurring on the secondary market," "to examine the economic impact that the patent secondary market has on the United States," "to examine licensing and other oversight requirements that may be placed on the patent secondary market," and "to examine the requirements placed on other markets."  The bill would also require the Director to conduct a study on patents owned by the United States Government.  The GAO would be required to study patent examination at the Office and the technologies available to improve patent quality.  Finally, the Director of the Administrative Office of the United States Court would be charged with conducting a study to examine the idea of a patent small claims court.  These studies are clearly an attempt to get at the heart of a lot of the complaints that have been levied at the so-called patent trolls.

We will continue to monitor the legislative activity in Congress directed to patents and addressing perceived abusive patent litigation, and we will continue to report on any significant activity that occurs.

Tufts Report Shows Dramatic Shift from Small Molecule to Biologic Drugs

By Donald Zuhn --

Last week, the Tufts Center for the Study of Drug Development (CSDD) at Tufts University released a report showing that the pharmaceutical industry has dramatically shifted its focus from a historical concentration on small molecule drugs to include an increasing number of biotechnology drugs.  In a press release announcing the release of the Tufts CSDD Impact Report, the independent, academic, non-profit research group noted that biotech products, which in 2001 accounted for 7% of the revenue top 10 selling biopharm products worldwide, accounted for 71% of the top 10 selling products in 2012.  Tufts CSDD Director Dr. Kenneth Kaitin explained that "[t]he transformation of Big Pharma has been driven as much by new technologies that have enabled development of new products that improve disease outcomes and command high prices, as by the expiring patents on many top-selling small molecule drugs."

The transformation of the pharma pipeline can be seen in the number of commercially available biotech drugs, which the report indicates rose from only 13 in 1989 to 210 by 2012, with worldwide sales growing by 353% from $36 billion in 2001 to $163 billion in 2012.  The industry's R&D focus also shows evidence of the shift, with clinical trials of biotech products rising 155% from 355 in 2001 to 907 in 2012.  The report indicates that in 2012, the 21 largest pharmaceutical companies had 429 biotech drugs in clinical development, and that 58% of these products were monoclonal antibodies.  The report also notes that Big Pharma was involved in nearly 40% of biotech drug clinical development in 2012.

Biotech financing also showed a significant increase between 2001 and 2012, increasing from $10.5 billion to $103 billion over this period.  Finally, the report compares biotech company acquisitions by Big Pharma in the 1998-2002 and 2008-2012 time frames, and notes that such acquisitions increased five-fold from 15 in the earlier time frame to 75 in the later time frame.

In view of the report's findings, Dr. Kaitin concluded that "[t]he notion that large pharmaceutical companies primarily develop small molecule drugs no longer holds."

The First IPR Decision -- A Win for the Patent Challenger

By Andrew Williams --

Last week, the Patent Trial and Appeal Board ("PTAB" or "Board") issued the first inter partes review opinion in case IPR2012-00001, Garmin USA, Inc. (Petitioner) v. Cuozzo Speed Technologies LLC (Patent Owner).  In what is being considered good news for parties wishing to challenge the validity of patents at the Office, the PTAB invalidated claims 10, 14, and 17 of Patent No. 6,778,074 ("Speed limit indicator and method for displaying speed and the relevant speed limit") as obvious in view of two different combinations of prior art.  The Board also denied Cuozzo's motion to amend the claims.  Even though the '074 patent does not deal with the Biotech or Pharmaceutical industry, the reasoning of the Board should be of interest to parties involved in all technologies.

As suggested by the title, the '074 patent relates to determining local speed limits, and it does so by using a Global Positioning System ("GPS").  Figure 1 from the patent is representative:

The speedometer 12 is mounted on dashboard 26, and has a backplate 14 with speed markings, a color display 18 (described as red in the example), and a plastic needle 20 mounted on the backplate.  The GPS receiver is able to track the location of the vehicle, and the speed limit indicator correlates the vehicle position with a database containing the speed limit for that location.  The colored filter adjusts so that speeds above the legal speed are displayed in red, while legal speeds are displayed in white.  Claim 10 reads as follows:

10.    A speed limit indicator comprising:
    a global positioning system receiver;
    a display controller connected to said global positioning system receiver, wherein said display controller adjusts a colored display in response to signals from said global positioning system receiver to continuously update the delineation of which speed readings are in violation of the speed limit at a vehicle's present location; and
    a speedometer integrally attached to said colored display.

Cuozzo had asserted this claim against Garmin and Chrysler in the U.S. District Court for the District of New Jersey, alleging in part that "Garmin components in Chrysler's Uconnect system provide a display and warning indicating when the vehicle speed exceeds the speed limit."  The following picture of the accused device was found in the Amended Complaint at paragraph 26, with the picture being credited to the Dodge website:

Important in the Board's decision was the construction of the term "integrally attached."  Of course, the PTAB does not use the same standard as a district court to construe issued claims -- the Board is required to use the broadest reasonable interpretation.  The Board determined that "integrally attached" required that the speedometer and the colored display be separately identifiable from each other, otherwise "'attached' effectively would be read out of the claim."  Therefore, the claim term was construed to mean "discrete parts physically joined together as a unit without each part losing its own separate identity."  In so doing, it rejected Cuozzo's attempt to construe the term to mean that the two parts be joined or combined to work as a complete unit.  Looking at the above picture, it would appear that Cuozzo was pressing for such a construction because it had its eye on the accused Garmin's product.

The Board was also required to determine the date of Cuozzo's invention, because two of the prior art references qualified under 35 U.S.C. § 102(e)(2), and therefore Cuozzo could have antedated these references.  The references in question had effective filing dates of October 19, 2000, and March 8, 2001.  Cuozzo, the inventor, explained that he conceived his invention on November 28, 1999, when he was pulled over and ticketed for speeding.  As he stated in his declaration:

I [Giuseppe A. Cuozzo] came up with the idea of using GPS technology combined with instrumentation for displaying a speed limit and its relation to vehicle speed in a manner that would alert a driver as to whether he or she was speeding without requiring the driver to refer to roadside speed limit signs.

However, even though he provided the speeding ticket as evidence, the Board did not consider this sufficient corroboration.  Such a story can be invaluable when describing a case to a jury, but the Board was more skeptical.  Part of the reason was that it could not see how the account provided for all of the limitations as found in the claims.  Cuozzo also provided his written disclosure to the "Invention Submission Corporation" ("ISC").  Again, the Board found this document insufficient to corroborate the inventor's alleged date.  The document had the hand-written date of October 30, 2000, which could not itself establish that it was prepared on that date.  Instead, the Board afforded a date of conception of December 8, 2000, the date on which a patent attorney contacted Cuozzo describing the invention record.  Nevertheless, the Board did not find that Cuozzo had acted diligently in reducing his invention to practice.  There were two extended periods of little activity, which the Board found were not adequately explained.  First, Cuozzo took about two months to respond to the attorney about a preliminary patentability report.  In addition, Cuozzo took several months to get the required fee to the ISC.  Cuozzo did not appear to be a sophisticated party with regard to the patent system, so such delays may well be understandable.  However, the Board was not convinced, probably based in part on inconsistencies found in the inventor's testimony.  As a result, the two cited art references were available for consideration in the obviousness determination.

Without going into a lot of technical detail regarding the obviousness analysis, both grounds involved one or two references that provided a way to display the vehicle speed with the maximum legal speed limit indicated in a single unit (not integrally attached).  The first ground used one reference ("Aumayer"), which provided such an electronic embodiment (such as a liquid crystal display), in which the legal speed was obtained from an on-board GPS.  The second ground used two references ("Tegethoff" and "Awada"), one which described the speedometer display, and the other which provided for reporting the legal speed limit.  Because these references did not contain the "integrally attached" limitation, the Board also cited to "Evans," which provided for a permanent "indicator plate" that would alert the driver when a certain speed was reached (even though the speed could only be changed by manually changing the plate), and "Wendt," which provided a movable pointer that the driver could rotate himself when the speed limit changed.  It was therefore possible to see how one skilled in the art could have derived the claimed invention.  What appeared to be lacking from the decision was an explanation of why or how one skilled in the art would do so.  Instead, the Board cited In re Kahn, 441 F.3d 977 (Fed. Cir. 2006) for the proposition that "[t]here only need be an articulated reasoning with rational underpinnings to support a motivation to combine teachings."  Id. at 988.  However, the Board's "articulated reasoning" was not very satisfying.  The Board appeared to simply conclude that "[o]ne with ordinary skill in the art would have known to apply the same automated approach to the manually-adjusted colored plate suggested by Evans and Wendt."  As further support, the Board noted that Cuozzo did not even argue that one of skill in the art would not have known how to implement this system.  But, is this sufficient to show the requisite motivation to combine?  One clear lesson for patent holders is that they will need to develop a strong case for all of the Graham factors when responding to an obviousness challenge before the Board.

Finally, the PTAB denied Cuozzo's attempt to amend the claims.  For example, Cuozzo sought to amend claim 10 to add the limitation:  "wherein the speedometer comprises a liquid crystal display, and wherein the colored display is the liquid crystal display."  Cuozzo argued that these limitations simply incorporated limitations found in the dependent claims.  However, the Board pointed out that such a limitation would read "integrally attached" out of the claims.  Because a claim amendment in an inter partes review cannot enlarge the scope of claims or introduce new matter, the Board denied the motion.  It does not appear that such an amendment would have had any impact on the validity ruling.  Cuozzo was again probably seeking such a change because of the concurrent trial court action against Garmin.

This decision is important because the patent community is getting its first view at how the PTAB will be deciding these inter partes reviews.  This decision should be good news for all of the parties challenging patents, and should be good news for everyone worried about the perceived patent-troll problem.  The cost of an IPR proceeding, while not inexpensive, is likely to be much cheaper than a corresponding action in district court.  Moreover, in case anyone was worried that the Board would rubber-stamp the original decision of the patent examiners, it is clear that patent owners could face significant challenges in defending their issued patents.  It will be interesting to observe the trends as more of these decisions are issued.

Court Report

        By Sherri Oslick --

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

Eli Lilly and Company et al. v. Watson Laboratories Inc et al.
3:13-cv-00637; filed November 14, 2013 in the District Court of Nevada

• Plaintiffs:  Eli Lilly and Company; Acrux DDS Pty. Ltd.; Eli Lilly Export S.A.
• Defendants:  Watson Laboratories Inc; Actavis, Inc.; Actavis Pharma, Inc.

Eli Lilly and Company et al. v. Watson Laboratories, Inc. et al.
1:13-cv-01799; filed November 12, 2013 in the Southern District of Indiana

• Plaintiffs:  Eli Lilly and Company; Eli Lilly Export S.A.; Acrux DDS Pty Ltd.
• Defendants:  Watson Laboratories, Inc.; Actavis, Inc.; Actavis Pharma, Inc.

The complaints in these cases are substantially identical.  Infringement of U.S. Patent Nos. 6,299,900 ("Dermal Penetration Enhancers and Drug Delivery Systems Involving Same," issued October 9, 2001), 6,818,226 (same title, issued November 16, 2004), 6,923,983 ("Transdermal Delivery of Hormones," issued August 2, 2005), 8,071,075 (Dermal Penetration Enhancers and Drug Delivery Systems Involving Same," issued December 6, 2011), 8,419,307 ("Spreading Implement," issued April 16, 2013), and 8,435,944 ("Method and Composition for Transdermal Drug Delivery," issued May 7, 2013) following a Paragraph IV certification as part of Watson's filing of an ANDA to manufacture a generic version of Eli Lilly's Axiron® (testosterone metered transdermal solution, used to treat males for conditions associated with a deficiency or absence of endogenous testosterone).  View the Nevada complaint here.

Pfizer Inc. et al. v. Fresenius Kabi USA LLC
1:13-cv-01893; filed November 13, 2013 in the District Court of Delaware

• Plaintiffs:  Pfizer Inc.; Wyeth LLC; Pfizer Pharmaceuticals LLC; PF Prism C.V.; Pfizer Manufacturing Holdings LLC; Wyeth Holdings LLC; Wyeth Holdings Corp.
• Defendant:  Fresenius Kabi USA LLC

Infringement of U.S. Patent Nos. RE40,183 ("7-Substituted-9-Substituted Amino-6-Demethyl-6-Deoxytetracyclines," issued March 25, 2008), 7,879,828 ("Tigecycline Compositions and Methods of Preparation," issued February 1, 2011) and 8,372,995 ("Crystalline Solid Forms of Trigecycline and Methods of Preparing Same," issued February 12, 2013), licensed to Pfizer, following a Paragraph IV certification as part of Fesenius' filing of an ANDA to manufacture a generic version of Pfizer's Tygacil® (tigecycline injectible, used for the treatment of complicated skin and skin structure infections, complicated intra-abdominal infections, and community-acquired bacterial pneumonia).  View the complaint here.

Millennium Pharmaceuticals Inc. v. Apotex Corp. et al.
1:13-cv-01874; filed November 8, 2013 in the District Court of Delaware

• Plaintiff:  Millennium Pharmaceuticals Inc.
• Defendants:  Apotex Corp.; Apotex Inc.

Infringement of U.S. Patent Nos. 6,713,446 ("Formulation of Boronic Acid Compounds," issued March 30, 2004) and 6,958,319 (same title, issued October 25, 2005), licensed exclusively to Millennium, following a Paragraph IV certification as part of Fresenius' filing of an NDA (under § 505(b)(2) of the Food, Drug and Cosmetic Act) to manufacture a generic version of Millenium's Velcade® (bortezomib, used to treat multiple myeloma).  View the complaint here.

Genzyme Corp. et al. v. Dr. Reddy's Laboratories, Inc. et al.
1:13-cv-06827; filed November 8, 2013 in the District Court of New Jersey

• Plaintiffs:  Genzyme Corp.; Southern Research Institute
• Defendants:  Dr. Reddy's Laboratories, Inc.; Dr. Reddy's Laboratories, Ltd.

Infringement of U.S. Patent No. 5,661,136 ("2-Halo-2'-Fluoro ARA Adenosines as Antinoplastic Agents," issued August 26, 1997) following a Paragraph IV certification as part of Dr. Reddy's filing of an ANDA to manufacture a generic version of Genzyme's Clolar® (clofarabine injection, used to treat acute lymphoblastic leukemia).  View the complaint here.

Novartis Pharmaceuticals Corp. v. Akorn, Inc.
2:13-cv-06835; filed November 8, 2013 in the District Court of New Jersey

Infringement of U.S. Patent Nos. 7,932,241 ("Pharmaceutical Products Comprising Bisphosphonates," issued April 26, 2011) and 8,324,189 ("Use of Zolendronate for the Manufacture of a Medicament for the Treatment of Bone Metabolism Diseases," issued December 4, 2012) following a Paragraph IV certification as part of Akorn's filing of an ANDA to manufacture a generic version of Novartis' Zometa® (zoledronic acid, used for the prevention of skeletal-related complications associated with cancer).  View the complaint here.

Teijin Ltd. et al. v. Apotex Inc. et al.
1:13-cv-01851; filed November 6, 2013 in the District Court of Delaware

• Plaintiffs:  Teijin Ltd.; Teijin Pharma Ltd.; Takeda Pharmaceuticals USA Inc.
• Defendants:  Apotex Inc.; Apotex Corp.

Teijin Ltd. et al. v. Sun Pharma Global FZE et al.
1:13-cv-01852; filed November 6, 2013 in the District Court of Delaware

• Plaintiffs:  Teijin Ltd.; Teijin Pharma Ltd.; Takeda Pharmaceuticals USA Inc.
• Defendants:  Sun Pharma Global FZE; Caraco Pharmaceutical Laboratories Ltd.

The complaints in these cases are substantially identical.  Infringement of U.S. Patent No. 6,225,474 ("Polymorphs of 2-(3-cyano-4-isobutyloxyphenyl)-4-methyl-5-thiazolecarboxylic acid and Method of Producing the Same," issued May 1, 2001) following a Paragraph IV certification as part of defendants' filing of an ANDA to manufacture a generic version of Takeda's Uloric® (febuxostat, used for the chronic management of hyperuricemia in patients with gout).  View the Apotex complaint here.

Johns Hopkins University v. 454 Life Sciences Corp.
1:13-cv-01853; filed November 6, 2013 in the District Court of Delaware

Review of the decision of the Board of Patent Appeals and Interferences awarding priority of invention to 454 Life Sciences in the interference between U.S. Patent Application No. 12/361,690 ("Method and Compositions for Detection and Enumeration of Genetic Variations," filed January 29, 2009), assigned to Johns Hopkins and U.S. Patent Application No. 13/033,240 ("Bead Emulsion Nucleic Acid Amplification," filed February 23, 2011), assigned to 454 Life Sciences.  View the complaint here.

Forest Laboratories Inc. et al. v. Sandoz Inc.
1:13-cv-01830; filed November 4, 2013 in the District Court of Delaware

• Plaintiffs:  Forest Laboratories Inc.; Forest Laboratories Holdings Ltd.; Royalty Pharma Collection Trust
• Defendant:  Sandoz Inc.

Infringement of U.S. Patent Nos. 6,602,911 ("Methods of Treating Fibromyalgia," issued August 5, 2003), 7,888,342 ("Methods of Treating Fibromyalgia Syndrome, Chronic Fatigue Syndrome and Pain," issued February 15, 2011), and 7,994,220 ("Milnacipran for the Long-Term Treatment of Fibromyalgia Syndrome," issued August 9, 2011), all licensed to Forest, following a Paragraph IV certification as part of Sandoz's filing of an ANDA to manufacture a generic version of Forest's Savella® (milnacipran hydrochloride, used in the management of fibromyalgia).  View the complaint here.

Conference & CLE Calendar

November 17-20, 2013 - Creating and Leveraging Intellectual Property in Developing Countries: A Power Tool for Social and Economic Growth*** (Companies and IP Commission and National IP Management Office of South Africa) - Durban, South Africa

November 19, 2013 - PTAB or the District Court: Which Is the Better Option When Challenging Patent Validity? (McDonnell Boehnen Hulbert & Berghoff LLP) - 10:00 to 11:15 am (CT)

November 19, 2013 - Patenting Biotech Inventions (California Healthcare Institute (CHI) and D Young & Co) - San Diego, CA

November 20, 2013 - Patenting Biotech Inventions (California Healthcare Institute (CHI) and D Young & Co) - San Francisco, CA

November 21, 2013 - "Leveraging the AIA's Expanded Prior Use Defense for Patent Infringement Claims" (Strafford) - 1:00 to 2:30 pm (EST)

November 22, 2013 - "Global Utility Requirements For Pharmaceutical and Biological Inventions" (American Bar Association (ABA) Section of Intellectual Property Law, Young Lawyers Action Group, Young Lawyers Division, and Center for Professional Development) - 1:00 to 2:30 pm (Eastern)

December 3, 2013 - "Post-AIA Preissuance Prior Art Submissions at the USPTO -- Best Practices for Third-Party Challenges to Patent Applications and for Monitoring Competition" (Strafford) - 1:00 to 2:30 pm (EST)

December 4, 2013 - Congress on Biotech & Pharma Patenting*** (C5 (UK)) - London, UK

December 5, 2013 - Forum on Biosimilars*** (C5 (UK)) - London, UK

December 9-10, 2013 - Patent Infringement Litigation Summit (Legal iQ (IQPC)) - San Francisco, CA

December 10-11, 2013 - Advanced Forum on Patent Litigation*** (American Conference Institute) - New York, NY

December 10-11, 2013 - International Patent Litigation (IBC Legal) - London, UK

December 12, 2013 - "Using Competitive Technical Intelligence Techniques to Assess University Patents" (Technology Transfer Tactics) - 1:00 - 2:00 pm (Eastern)

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

International Patent Litigation Conference

IBC Legal Conferences will be holding its 5th annual International Patent Litigation conference on December 10-11, 2013 in London.  IBC Legal faculty will offer presentations on the following topics:

• The Unified Patent Court -- progress and implications -- How patent litigation behaviour may change as the unitary system becomes a reality;
• Future of UK patent litigation after Virgin Atlantic;
• Patent litigation, after America Invents Act: Strategy update needed?
• Current problems with privilege;
• "Plausibility" in patent law -- UK case law and EPO jurisprudence;
• FRAND after the Huawei v. ZTE;
• Recent developments in SPC law?
• Issues around enforcing second medical use patents;
• Germany and UK -- Do the German Courts need English guidance?
• New developments in granting injunctions;
• Use of expert witnesses -- Comparing current practices in the UK and EU under the UPC;
• Patent settlements/Pay-for-Delay -- Are they so incompatible?
• Trolls: Positions that each country is taking against NPEs;
• Competence of EU and member states to interpret patent provisions on TRIPS; and
• How to obtain real-life damages in patent infringement proceedings?

A complete brochure for this conference, including an agenda, detailed descriptions of conference sessions, list of speakers, and registration form can be obtained here.

The registration fee for the conference is £1,499.  Those interested in registering for the conference can do so here, by e-mailing [email protected], by calling +44 (0)20 7017 5503, or by faxing a registration form to +44 (0)20 7017 4746.

Webinar on Assessment of University Patents

Technology Transfer Tactics will be offering a webinar entitled "Using Competitive Technical Intelligence Techniques to Assess University Patents" on December 12, 2013 from 1:00 - 2:00 pm (Eastern).  Alan Porter, Professor Emeritus of Industrial & Systems Engineering, and of Public Policy, Georgia Institute of Technology; Barry Brager, Founder and Managing Partner of Perception Partners®; and Laura A. Schoppe, president of Fuentek, LLC will help attendees adopt the key methods and tools they use to improve their IP assessments and apply high-level market and competition analysis to their early-stage technologies, and also focus on how to systematically use Competitive Technical Intelligence (CTI) for detailed technology assessment and decision-making.  The webinar will cover the following topics:

• Demystify CTI through a case study approach
• Understand your IP's value proposition, market share and application potential
• How to keep your budget in check while maintaining high quality data
• Identify emerging trends in a technology space for:
    -- Research and development
    -- Licensing
    -- Sales
• Identify competitive threats and risks when developing IP
• Visualize how the technology landscape is changing and where your IP fits in
• Find and leverage information on market players, products, and positioning
• Use CTI to help set achievable goals
• Craft useful deliverables that deliver clear messages to the non-technical/rushed/executive mindset

The registration fee for the webinar is $197.  Those interested in registering for the webinar, can do so here.

Sanofi-Aventis v. Pfizer Inc. (Fed. Cir. 2013)

By Donald Zuhn --

Last week, in Sanofi-Aventis v. Pfizer Inc., the Federal Circuit affirmed an award of priority to Pfizer by the Board of Patent Appeals and Interferences in an interference involving the cDNA for the human interleukin-13 receptor binding chain (IL-13bc).  In particular, the appeal concerned the Board's decision with respect to the following count:

Count 3.  The isolated protein of 6,268,480 claim 4;

OR

The isolated polynucleotide of 5,710,023 claim 1, selection (b) (an isolated polynucleotide comprising a nucleotide sequence of SEQ ID NO:3 from nucleotide 103 to nucleotide 1242).

As the Federal Circuit noted, the parties disagreed as to the dispositive question in the interference, with Pfizer arguing that the question was "who first had in hand the actual isolated DNA of the count and appreciated its IL-13bc function," and Sanofi arguing that the question was "the date each party first knew the complete sequence" of nucleotides 103 to 1242 (i.e., the protein encoding portion of IL-13bc).  In the interference, Sanofi was awarded the benefit of its December 6, 1995 priority date, and Pfizer presented evidence that by October 16, 1995, it had isolated a clone for human IL-13bc from a human cDNA library.  While the sequencing of that human IL-13bc clone was completed by November 15, 1995, eight possible errors were subsequently identified in the 1143-nucleotide sequence, yielding an amino acid sequence that was correct at 379 of 380 residues.  Although the Board concluded that Pfizer did not have a corrected sequence until February 7, 1996, it nevertheless determined that Pfizer had established conception of the subject matter of the count when it selected, isolated, and obtained the desired IL-13bc full-length polynucleotide and verified that it was the desired product, regardless of whether the fully correct sequencing of the polynucleotide was complete.

On appeal, Sanofi argued that by awarding priority to Pfizer, the Board had erred as a matter of law.  In particular, Sanofi argued that Pfizer cannot be credited with conception before December 6, 1995 (Sanofi's date) because Pfizer's sequence analysis was in error as to eight nucleotides.  In other words, Sanofi contended that until Pfizer had correctly analyzed the polynucleotide, neither conception nor reduction to practice could occur, because Federal Circuit precedent requires the full and correct nucleotide sequence to establish conception and reduction to practice.  In support of its argument, Sanofi pointed to Amgen Inc. v Chugai Pharmaceutical Co., 927 F.2d 1200 (Fed. Cir. 1991), Fiers v. Revel, 984 F.2d 1164 (Fed. Cir. 1993), and Burroughs Wellcome Co. v. Barr Laboratories, Inc., 40 F.3d 1223 (Fed. Cir. 1994).

In affirming the Board's award of priority to Pfizer, the Federal Circuit indicated that Amgen did not support Sanofi's argument that Pfizer did not, as a matter of law, have a complete conception until Pfizer had the full correct nucleotide sequence.  Instead, "[t]he court in Amgen held that when 'an inventor is unable to envision the detailed constitution of a gene' there may nonetheless be conception and reduction to practice of the gene when the inventor is in possession of the gene and a method for its preparation, i.e. 'after the gene has been isolated,' accompanied by knowledge of 'other characteristics sufficient to distinguish it from other genes.'"  In this case, "[t]he Pfizer activity meets these criteria."  With respect to Fiers, which Sanofi argued established a per se rule that conception of an isolated DNA requires the full and correct nucleotide sequence, the Federal Circuit noted that "[t]he Board distinguished Fiers and Amgen as holding that conception and reduction to practice did not occur until the gene was isolated, for in those cases neither structure nor definitive properties had been established for the isolated gene," and indicated that "Amgen and Fiers did not hold, as Sanofi asserts, that conception requires the complete and correct sequencing of the isolated DNA; the court instead referred to 'whatever characteristics sufficiently distinguish it.'"  With respect to Sanofi's citation of Burroughs Wellcome, the Court stated that this case "did not change these requirements, in holding that conception requires that the claimed DNA is possessed as a physical embodiment," adding that "[k]nowledge of the specific nucleotide sequence was not required in Burroughs Wellcome."

The Federal Circuit explained that its "[p]recedent illustrates a variety of circumstances in which this requirement was met although the complete nucleotide sequence was not known," citing Enzo Biochem, Inc. v. Gen-Probe Inc., 323 F.3d 956 (Fed. Cir. 2002) (upholding claims for DNA probes that were made available by deposit in a public depository although the nucleotide sequence had not been determined); University of New Mexico v. Knight, 321 F.3d 1111 (Fed. Cir. 2003) (explaining that "a chemical structure is simply a means of describing a compound; it is not the invention itself"); and In re Wallach, 378 F.3d 1330 (Fed. Cir. 2004) (finding that the inventors were in possession of a protein that was described by a partial amino acid sequence in addition to other characteristics sufficient to identify it).  Stating that "[w]hen the subject matter is a DNA segment, conception requires possession and appreciation of the DNA segment that is claimed," the Federal Circuit concluded that "the Board correctly based conception and reduction to practice on the possession of the isolated DNA segment that was shown to have the desired properties."  The Court therefore concluded that the Board had applied the correct law, and affirmed the Board's award of priority to Pfizer.

Sanofi-Aventis v. Pfizer Inc. (Fed. Cir. 2013)
Panel: Circuit Judges Newman and Lourie and District Judge Davis, sitting by designation
Opinion by Circuit Judge Newman

AstraZeneca LP v. Breath Ltd. (Fed. Cir. 2013)

By Donald Zuhn --

In an appeal decided last month, the Federal Circuit reversed and remanded a decision of noninfringement by the District Court for the District of New Jersey with respect to U.S. Patent No. 7,524,834, and affirmed the District Court's finding of obviousness with respect to U.S. Patent No. 6,598,603.  The panel also affirmed the District Court's dismissal of invalidity counterclaims brought by Defendants-Cross Appellants Apotex, Inc. and Apotex Corp., and the lower court's decisions regarding the bond amount.

The '834 patent is directed to a sterile, pharmaceutically effective budesonide product, which is used to treat asthma in children.  Claims 1 and 50 of the '834 patent recite (emphasis in opinion):

1.  A pharmaceutically acceptable micronized powder composition at least 98.5% by weight of which is pure budesonide or an ester, acetal or salt thereof, wherein the composition meets the criteria of sterility according to the US Pharmacopoeia [sic] 23/NF18, 1995, pages 1686-1690 and 1963-1975. ’834 Patent col. 11 ll. 48–52.

50.  A pharmaceutically acceptable suspension consisting of a micronized powder composition at least 98.5% by weight of which is pure budesonide or an ester, acetal or salt thereof suspended in an aqueous solution, wherein the suspension meets the criteria of sterility according to the US Pharmacopoeia [sic] 23/NFl8, 1995, pages 1686-1690 and 1963-1975.

The '603 patent is directed to a once-daily treatment of patients with budesonide administered by nebulizer.  Independent claim 1 of the '603 patent recites:

1.  A method of treating a patient suffering from a respiratory disease, the method comprising administering to the patient a nebulized dose of a budesonide composition in a continuing regimen at a frequency of not more than once per day.

AstraZeneca markets a "once-daily nebulized budesonide suspension used to treat asthma in children" under the name Pulmicort Respules®.

Seeking approval to market generic versions of AstraZeneca's Pulmicort Respules® drug, Appellees Breath Ltd.; Apotex, Inc. and Apotex Corp.; Sandoz, Inc.; and Watson Laboratories, Inc. filed Abbreviated New Drug Applications (ANDAs) with the FDA.  In response to those ANDA filings, AstraZeneca brought suit against the Appellees for induced infringement of the patents at issue, and the Appellees counterclaimed for declaratory judgments of invalidity and noninfringement.

With respect to Appellees Apotex, Inc. and Apotex Corp. (Apotex), the District Court granted AstraZeneca's request for a preliminary injunction, preventing Apotex from launching its generic product, subject to AstraZeneca's posting of a bond.  In response to a motion made by Apotex at trial, the District Court increased the bond amount to cover future damages, but refused to increase the bond amount to cover past damages.  Following a bench trial, the District Court found that claims 50 and 51 of the '834 patent were not infringed by Apotex and Sandoz, and that claims 1, 2, 50, and 51 of the '834 patent were not infringed by Breath and Watson.  Although the District Court determined that Appellees' labels induce infringement of claims 1-3, 7, 8, 12-17, and 24-28 of the '603 patent, the lower court also found these claims invalid as anticipated and obvious.  Finally, the District Court declined to exercise jurisdiction over Apotex's invalidity counterclaims directed to certain claims of the '603 patent (the lower court had first dismissed AstraZeneca's assertion of infringement with respect to these same claims).

The District Court's finding of noninfringement with respect to the '834 patent was based on the lower court's construction of the phrase "micronized powder composition" as meaning "heat sterilized finely divided dry particles."  The District Court also determined that "heat sterilized" refers to "particles that have been sterilized through a process, consistent with heat sterilization, that allows them to essentially maintain the same pharmacological activity, physico-chemical properties, chemical purity, and physical form as the starting material."  AstraZeneca argued that the District Court erred by importing limitations into the claims because the plain meaning of the phrase "micronized powder composition" has nothing to do with heat sterilization.  In reversing and remanding the District Court's finding of noninfringement, the Federal Circuit noted that "[w]ith respect to the ordinary, plain meaning of the term 'micronized powder composition,' none of the three words imposes, or even implies, any form of sterilization."  While acknowledging that "[t]here is no dispute that the patent refers only to dry heat sterilization as the preferred method of achieving the claimed 'micronized powder composition' and criticizes, often sharply, other forms of sterilization," the panel determined that such criticism did not rise to the level of a disavowal of the phrase's otherwise plain meaning.  Noting that the '834 patent describes processes, products, and methods of use, the opinion states that "[a]t most, the specification is confusing with respect to whether it limits only the disclosed process to a specific form of sterilization or both the process and the disclosed product to a specific form of sterilization," adding that this "confusion leaves available an interpretation of the patent that the products, as opposed to the processes, are not limited to any particular form of sterilization."  Because the Court could not conclude that AstraZeneca disclaimed non-heat sterilized micronized powder compositions, the panel determined that the District Court erred by adding the "heat sterilized" limitation into the asserted claims, and that a more accurate construction of the phrase "micronized powder composition" would be "finely divided dry particles."

As for the District Court's finding of invalidity with respect to the asserted claims of the '603 patent, the lower court determined that the '603 patent disclosed "once-daily dosing of nebulized budesonide" and that a skilled artisan would have been motivated to arrive at this "obvious conclusion."  In particular, the District Court found that the prior art included numerous studies that "taught the safety and efficacy of once-daily inhaled budesonide," including once-daily treatment of children and that practitioners would attempt to titrate a drug dose down to the lowest possible dose, i.e., a once-a-day dose.  The District Court also found that the prior art taught that nebulizers were the "most practical delivery device for certain patients like young children."  In affirming the District Court's finding of obviousness, the panel identified no clear error in the lower court's underlying factual determinations, and determined that those facts established by clear and convincing evidence that the asserted claims of the '603 Patent are obvious.

With respect to the District Court's decision to decline jurisdiction over Apotex's invalidity claims, the panel declined to say that the lower court abused its discretion in dismissing those counterclaims, as "[t]he decision whether to accept jurisdiction of a Declaratory Judgment counterclaim is quintessentially left to the discretion of the district court."

Finally, with respect to District Court's decisions regarding the bond amount, the Federal Circuit first noted that a bond amount is a procedural issue that is not unique to patent law, and therefore, that the law of the Third Circuit applied.  Looking to the Third Circuit's decision in Sprint Commc'n Co. v. Cat Commc'n Int'l, 335 F.3d 235 (3d Cir. 2003), the Federal Circuit concluded that "the Third Circuit would consider improper an increase to cover past damages even in the present circumstances."  In affirming the District Court's refusal to increase the bond amount to cover past damages, the opinion explains that:

AstraZeneca expected that its liability would be limited to the bond amount before Apotex's motion.  AstraZeneca cannot be fairly informed after it obtained the benefit of the injunction that it must later pay more for the benefit it already obtained in order to obtain the benefit of a continued injunction.  The bond would no longer serve to cabin or fix liability, and that would result in an unexpected liability, which Sprint sought to prohibit.  It is immaterial whether the injunction has been dissolved, as in Sprint, or continues, as it does here.  Either way: the party securing the injunction decided to accept the preliminary relief by posting the bond required at the time.  Later requiring that party to post a higher bond for a period that already has passed results in a situation where that bond no longer fixes exposure or caps liability.  The party no longer simply could withdraw its request for an injunction over that period because that period already would have passed.

AstraZeneca LP v. Breath Ltd. (Fed. Cir. 2013)
Nonprecedential disposition
Panel: Chief Judge Rader and Circuit Judges Bryson and Linn
Opinion by Circuit Judge Linn

When NPR Podcasters Hit the Patent System – An Update

By Andrew Williams --

In May of this year, the NPR podcast "Planet Money" released an episode entitled "When Patents Hit the Podcast."  At that time, we reported on this podcast, and the misconceptions of the patent system that the show perpetuated (see "When NPR Podcasters Hit the Patent System").  NPR rebroadcast the episode last week, including an update related to the podcasting patent that was featured in that show, owned by Personal Audio LLC ("Personal Audio").  Even though that patent does not deal with the Biotech or Pharmaceutical industry, the criticisms that the show levied against the patent system affect all patents.  Therefore, an update of our story seemed appropriate.

As suggested, the majority of the Podcast was a straight repeat of the earlier show.  One of the updates provided was a description of the recently introduced patent-reform legislation.  The only other update was a report that, as Planet Money host Zoe Chace put it, the Electronic Frontier Foundation ("EFF") recently filed "a complaint" with the Patent Office saying that the podcast patent "should not exist."  The EFF is an organization that describes itself as a "donor-funded nonprofit" that "has championed the public interest in every critical battle affecting digital rights."  The originally aired episode explained that the EFF was seeking to invalidate this patent at the United States Patent Office.  The EFF has now filed a petition for inter partes review of U.S. Patent No. 8,112,504 ("System for Dissmeinating Media Content Representing Episodes in a Serialized Sequence"), the so-called podcasting patent.  Interestingly, the EFF basically crowd-sourced both the cost of filing the petition, and the technological substance found within the petition.  A link can still be found on the EFF website for the "Save Podcasting" donation page, on which it is reported that the original goal of $30,000 was met in under 10 hours.  The website solicited donations at levels from its Silicon/Student Member ($25) to as high as its Super Major Donor ($2,500).  The site reports having received $76,890 to date, although it does not indicate what it will do with the excess money, other than its work to "stop trolls and stupid patents for good."

With regard to the art cited in the petition, the EFF appears to have crowd-sourced this information also.  The EFF website contains a link labeled "Prior Art," which opens an "Ask Patents" webpage requesting help to "bust a patent being asserted against podcasting."  Claim 31, the claim that has been asserted against several podcasters, reads as follows:

13. Apparatus for acquiring and reproducing media files representing episodes in a series of episodes as said episodes become available, said apparatus comprising: a digital memory, a communications port coupled to the Internet for transmitting data requests for data identified by specified URLs, for receiving downloaded data identified by said URLs in response to said requests, and for storing said downloaded data in said digital memory, and a processor coupled to said digital memory and to said communications port for executing one or more utility programs for: performing, from time to time, one of a sequence of update operations, each of said update operations comprising: downloading via the Internet the current version of a compilation file identified by a predetermined known URL, and storing attribute data contained in said current version of said compilation file in said digital memory, said attribute data describing one or more episodes in a series of episodes, said attribute data for each given one of said episodes including one or more episode URLs identifying one or more corresponding media files representing said given one of said episodes, accepting a selection of a particular episode described by attribute data stored in said digital memory by the operator of said apparatus, downloading and storing the particular media file identified by an episode URL included in the attribute data for said particular episode if said particular media file is not already stored in said digital memory, and reproducing said particular media file in a form perceptible to said operator.

This patent claims priority back to October 2, 1996.  The Planet Money hosts noted that Personal Audio originally distributed magazine content via audio tapes.  They joked, therefore, that the patent could be invalidated by any teenager in the 1980s that created a mixed tape.  Clearly, such a tape would not invalidate the above claim (which speaks volumes regarding the patent sophistication of the Planet Money reporters).  The EFF, on the other hand, has an understanding of the patent system, even if they are skeptical of it.  They requested on the webpage "prior art that describes accessing a series of media files organized as episodes, tracks, installments, or the like, through the use of "compilation" data that (a) available to be downloaded by a client device, and (b) updated to describe the media files that are currently available."  To date, they received 107 answers.

The inter partes review petition for the '504 patent references three different prior art "publications" that were alleged to anticipate or render obvious at least claims 31-35 of the patent.  The first piece of prior art included was the "Geek of the Week" Internet talk radio show.  The first two grounds referenced in the petition were (1) the website www.ncsa.uiuc.edu/radio/radio.html, appearing on April 22, 1993, and (2) the April 22, 1993 edition of the SurfPunk Technical Journal.  These "publications" were cited as 35 U.S.C. § 102(b) prior art.  The first of these publications was one of the webpages for the "Geek of the Week" Internet talk radio show.  The SurfPunk Technical Journal publication, on the other hand, republished the "Geek of the Week" webpage as it existed on April 22, 1993.  The petition also included a third ground for invalidity related to the Geek of the Week publications themselves.  In an abundance of caution, the EFF alleged that the Geek of the Week publications collectively contained all of the limitations, and therefore rendered the claims 31-35 obvious.  To help provide some context of these early "podcasts," the Planet Money updated episode contained some of the audio from these early "Geek of the Week" shows.

The second prior art reference was a Canadian Broadcasting Corporation ("CBC") Radio Article, which appeared on January 1, 1996, and which described an Internet radio trial that was available on demand beginning in December 1993.  This article allegedly described the "availability of regularly-updated episodic radio programs on a web page at a predetermined location."  This was cited as 35 U.S.C. § 102(a) prior art.  Finally, the third prior art publication was the "Internet CNN Newsroom," which was a master's thesis submitted to MIT in May 1995, and made available on August 10, 1995.  Apparently the limitation of an "updated" compilation file was missing from the publication, but the EFF alleged that such a file would have been an obvious design choice.

We take no position on the merits of this inter partes review petition, but we will continue to monitor its progress.  As we noted at the time, such a proceeding is a completely legitimate mechanism to address these so-call "bad" patents that people consider to be overbroad.  It would appear that if the EFF's characterization of these prior art publications is correct, even if they do not serve to invalidate the claims, it is a distinct possible that the claims will be narrowed such that Personal Audio will no longer be able to assert them against podcasters.  This is because the cited art appears to be similar to the same activity that gave rise to the demand letters and infringement lawsuits (such as the dissemination of podcasts like Marc Maron's WTF podcast and "The Adam Carolla Show").  Of course, we have not yet heard from Personal Audio, because they have filed no response yet with the Patent Office.  Nevertheless, it would not be surprising if Personal Audio was able to identify some distinction between their claims and these Internet radio shows from years earlier.

NIH Declines to Exercise March-in Rights over Abbott Laboratories' Norvir®

By Kevin E. Noonan --

Last week, the National Institutes of Health denied a petition from a coalition of "public interest" groups who petitioned the agency to exercise so-called "march-in rights" under provisions of the Bayh-Dole Act against Abbott (now, AbbVie) over its antiretroviral drug ritonavir, exclusively sold by Abbott Laboratories under the name Norvir®.  These rights, and the conditions triggering their exercise, are set forth in 35 U.S.C. § 203:

35 USC § 203 - March-in rights

(a) With respect to any subject invention in which a small business firm or nonprofit organization has acquired title under this chapter, the Federal agency under whose funding agreement the subject invention was made shall have the right, in accordance with such procedures as are provided in regulations promulgated hereunder to require the contractor, an assignee or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, and if the contractor, assignee, or exclusive licensee refuses such request, to grant such a license itself, if the Federal agency determines that such—

(1) action is necessary because the contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use;
(2) action is necessary to alleviate health or safety needs which are not reasonably satisfied by the contractor, assignee, or their licensees;
(3) action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the contractor, assignee, or licensees; or
(4) action is necessary because the agreement required by section 204 has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of its agreement obtained pursuant to section 204.

(b) A determination pursuant to this section or section 202 (b)(4) shall not be subject to chapter 71 of title 41. An administrative appeals procedure shall be established by regulations promulgated in accordance with section 206. Additionally, any contractor, inventor, assignee, or exclusive licensee adversely affected by a determination under this section may, at any time within sixty days after the determination is issued, file a petition in the United States Court of Federal Claims, which shall have jurisdiction to determine the appeal on the record and to affirm, reverse, remand or modify, as appropriate, the determination of the Federal agency. In cases described in paragraphs (1) and (3) of subsection (a), the agency's determination shall be held in abeyance pending the exhaustion of appeals or petitions filed under the preceding sentence.

Regulations on how these rights can be petitioned for exercise by the relevant Federal agencies (such as the National Institutes of Health) have been promulgated:

37 C.F.R. § 401.6 Exercise of march-in rights.

(a) The following procedures shall govern the exercise of the march-in rights of the agencies set forth in 35 U.S.C. 203 and paragraph (j) of the clause at § 401.14.

(b) Whenever an agency receives information that it believes might warrant the exercise of march-in rights, before initiating any march-in proceeding, it shall notify the contractor in writing of the information and request informal written or oral comments from the contractor as well as information relevant to the matter. In the absence of any comments from the contractor within 30 days, the agency may, at its discretion, proceed with the procedures below. If a comment is received within 30 days, or later if the agency has not initiated the procedures below, then the agency shall, within 60 days after it receives the comment, either initiate the procedures below or notify the contractor, in writing, that it will not pursue march-in rights on the basis of the available information.

(c) A march-in proceeding shall be initiated by the issuance of a written notice by the agency to the contractor and its assignee or exclusive licensee, as applicable and if known to the agency, stating that the agency is considering the exercise of march-in rights. The notice shall state the reasons for the proposed march-in in terms sufficient to put the contractor on notice of the facts upon which the action would be based and shall specify the field or fields of use in which the agency is considering requiring licensing. The notice shall advise the contractor (assignee or exclusive licensee) of its rights, as set forth in this section and in any supplemental agency regulations. The determination to exercise march-in rights shall be made by the head of the agency or his or her designee.

(d) Within 30 days after the receipt of the written notice of march-in, the contractor (assignee or exclusive licensee) may submit in person, in writing, or through a representative, information or argument in opposition to the proposed march-in, including any additional specific information which raises a genuine dispute over the material facts upon which the march-in is based. If the information presented raises a genuine dispute over the material facts, the head of the agency or designee shall undertake or refer the matter to another official for fact-finding.

(e) Fact-finding shall be conducted in accordance with the procedures established by the agency. Such procedures shall be as informal as practicable and be consistent with principles of fundamental fairness. The procedures should afford the contractor the opportunity to appear with counsel, submit documentary evidence, present witnesses and confront such persons as the agency may present. A transcribed record shall be made and shall be available at cost to the contractor upon request. The requirement for a transcribed record may be waived by mutual agreement of the contractor and the agency. Any portion of the march-in proceeding, including a fact-finding hearing that involves testimony or evidence relating to the utilization or efforts at obtaining utilization that are being made by the contractor, its assignee, or licensees shall be closed to the public, including potential licensees. In accordance with 35 U.S.C. 202(c)(5), agencies shall not disclose any such information obtained during a march-in proceeding to persons outside the government except when such release is authorized by the contractor (assignee or licensee).

(f) The official conducting the fact-finding shall prepare or adopt written findings of fact and transmit them to the head of the agency or designee promptly after the conclusion of the fact-finding proceeding along with a recommended determination. A copy of the findings of fact shall be sent to the contractor (assignee or exclusive licensee) by registered or certified mail. The contractor (assignee or exclusive licensee) and agency representatives will be given 30 days to submit written arguments to the head of the agency or designee; and, upon request by the con- tractor oral arguments will be held before the agency head or designee that will make the final determination.

(g) In cases in which fact-finding has been conducted, the head of the agency or designee shall base his or her determination on the facts found, together with any other information and written or oral arguments submitted by the contractor (assignee or exclusive licensee) and agency representatives, and any other information in the administrative record. The consistency of the exercise of march-in rights with the policy and objectives of 35 U.S.C. 200 shall also be considered. In cases referred for fact-finding, the head of the agency or designee may reject only those facts that have been found to be clearly erroneous, but must explicitly state the rejection and indicate the basis for the contrary finding. Written notice of the determination whether march-in rights will be exercised shall be made by the head of the agency or designee and sent to the contractor (assignee of exclusive licensee) by certified or registered mail within 90 days after the completion of fact-finding or 90 days after oral arguments, whichever is later, or the proceedings will be deemed to have been terminated and thereafter no march-in based on the facts and reasons upon which the proceeding was initiated may be exercised.

(h) An agency may, at any time, terminate a march-in proceeding if it is satisfied that it does not wish to exercise march-in rights.

(i) The procedures of this part shall also apply to the exercise of march-in rights against inventors receiving title to subject inventions under 35 U.S.C. 202(d) and, for that purpose, the term ''contractor'' as used in this section shall be deemed to include the inventor.

(j) An agency determination unfavorable to the contractor (assignee or exclusive licensee) shall be held in abeyance pending the exhaustion of appeals or petitions filed under 35 U.S.C. 203(2).

(k) For purposes of this section the term exclusive licensee includes a partially exclusive licensee.

(l) Agencies are authorized to issue supplemental procedures not inconsistent with this part for the conduct of march-in proceedings.

A little over one year ago, four groups (the American Medical Students Association (AMSA), Knowledge Ecology International (KEI), U.S. Public Interest Research Group (PIRG), and the Universities Allied for Essential Medicines (UAEM)) filed a petition with the NIH requesting the agency to exercise these march-in rights over the anti-AIDS drug ritonavir, exclusively sold by Abbott Laboratories (see "Groups Petition for NIH Exercise of March-in Rights over Abbott Laboratories' Norvir®").  Significant to the NIH's latest decision, AbbVie's Norvir® product was the subject of a challenge by a group called Essential Inventions filed a petition, based not on private interests but on what it characterized as the "public interest" for lower prices on the HIV drugs.  In this case, there was no university party involved; Abbott/AbbVie had been funded by research monies from the Reagan administration in an effort to develop more effective anti-AIDS drugs.  The patents at issue (U.S. Patent Nos. 5,541,206; 5,635,523; 5,648,497; 5,674,882; 5,846,987; 5,886,036; the agency notes that not all of these patents were developed under government contract and thus the Bayh-Dole march-in provisions do not apply to these patents) were the same patents that were the subject of the current petition, as was the basis in the statute:  that the requirement for licensing on "reasonable terms" ("upon terms that are reasonable under the circumstances") was violated by Abbott's pricing for Norvir®.  The NIH held public hearings and received written and oral testimony from a "variety of groups and individuals representing universities, the AIDS community, pharmaceutical interests, drafters of the Bayh-Dole Act, and other interested parties."  Despite these arguments (including arguments that Abbott's pricing was preventing state government agencies from providing Norvir® to patients), the NIH refused to exercise its march-in rights, saying:

[T]he issue of the cost or pricing of drugs that include inventive technologies made using Federal funds is one which has attracted the attention of Congress in several contexts that are much broader than the one at hand.  In addition, because the market dynamics for all products developed pursuant to licensing rights under the Bayh-Dole Act could be altered if prices on such products were directed in any way by NIH, the NIH agrees with the public testimony that suggested that the extraordinary remedy of march-in is not an appropriate means of controlling prices.  The issue of drug pricing has global implications and, thus, is appropriately left for Congress to address legislatively.

In the latest petition, the allegations again involved the cost of Abbott's Norvir® to U.S. patients.  In view of the agreement following the 2004 petition that has Abbott selling the drug to state and Federal government agencies at reduced cost, the petition focused on the impact of these costs on private parties.  In this regard the petitioners argued that, in view of the financial crisis, these high[er] drug costs were "undermining the international competitiveness of [U.S.] employers" and harming the economy (leaving unsaid the hope for a different outcome from a different administration). 

The petition asked for two specific remedies to be imposed "without prejudice to" further march-in rights in response to "anticompetitive, abusive or unfair practices" by a licensee.  These remedies are:

• A ceiling on prices for U.S. residents, to be imposed when US prices for a drug are higher than 7 of 10 comparison countries, among "high income" countries as determined by the World Bank, or prices for U.S. residents, when are 10% higher than the median price in those countries (these circumstances would be "presumptively not reasonable" under the statute); and

• Licenses specific for use of a patented invention in the development of a "dependent" technology, such as a co-formulation of a patented drug with another drug.

In addition, the petition requested imposition of "open" licensing for the drug under the agency's march-in rights provisions.  Petitioners suggested two additional "legal mechanisms" for achieving these ends:  royalty-free government licenses (involving participation by the government in drug distribution, etc.) and the grant of government licenses to third parties.

In addition to the public health and unreasonable licensing grounds asserted in the petition, petitioners further argued that the Americans with Disabilities Act (as it has been interpreted by the Equal Employment Opportunities Commission) and the PPACA (the "healthcare law") imposes requirements on employers that implicate the provisions of § 203(a)(3) that allow the agency to exercise march-in rights to permit compliance with Federal regulations.  Finally, the petition asserted the policy rationale that "[t]he failure to grant a single march-in request in more than 30 years has sent a signal to the patent holder that the NIH will permit almost anything, no matter how abusive that action is to the public that paid for the research."

After setting forth the facts as alleged by petitioners (and otherwise) and controlling law, the agency cited the following grounds for denying the petition.  First, the agency found that AbbVie had "achieved practical application of the Subject Patents" as required under § 203(a)(1) because "Norvir® has now been on the market as an FDA approved drug since 1995," primarily as a coadministered drug used to "booster the effectiveness of protease inhibitors."  The agency further stated that "[t]he Requestors have provided no information, and no information was identified to suggest, that ritonavir is in short supply" either as a standalone drug or when co-formulated or co-administered.  In addition, the agency noted that Matrix Laboratories and Gilead had both received FDA approval for combinations of ritonavir and other antiretroviral drugs.  Accordingly, "AbbVie's record of manufacture and ritonavir's availability and use around the world demonstrate that" AbbVie has satisfied the requirements of § 203(a)(1).

Second, the agency rejected Petitioner's argument that AbbVie had failed to satisfy the requirements of § 203(a)(2) to alleviate health or safety needs of the public due, according to Petitioners, to its high price.  The agency cited evidence that AbbVie had adopted a "Patient Assistance Program" for patients prescribed the drugs having no prescription drug insurance, and the company's testimony that it "provides access to Norvir® at no cost or at reduced prices for eligible patients."  The agency also relied upon the previous denial of exercise of march-in rights for Norvir®, wherein the agency had determined that "Norvir® has been approved by the FDA as safe and effective and is being widely prescribed by physicians for its approved indications."  And the changes that have occurred since this earlier agency determination involved "new formulations and combination therapies using ritonavir," developments that increased rather than decreased access.  Accordingly the agency found "[n]o new information [] to suggest [that] AbbVie failed to 'reasonably satisfy' the health and safety need standard of [§ 203(a)(2)] of the Bayh-Dole march-in statute."

Finally, the agency found that recently enacted provisions of the Americans with Disabilities Act (ADA) and the Patient Protection and Affordable Care Act (PPACA) do not constitute "Federal regulations" under § 203(a)(3) unsatisfied by AbbVie.  That portion of the statute applies, according to the NIH, "when a statute or regulation, e.g., a safety or standards regulation, specifically requires the use of a patented technology, and the patent owner is not willing to grant licenses to third parties required to use it in their products.  Finding that these circumstances do not apply in this instance, the NIH denied the petition because "these statutes do not apply as a basis for consideration of march-in rights."  The NIH also rejected "additional government actions" including a request for use of the government's "use" license and a request that the NIH develop rules when there are price disparities between the U.S. and other developed countries.  As to the former, the agency stated that while the NIH has the authority to grant a non-exclusive license under § 202(c)(4) the agency "is a research institution not a drug manufacturer" and that "[e]ven if the NIH were to exercise its Government license [] it would not address the majority of the patients listed" in the Orange Book that were not government-owned.  Further, the NIH noted that "there is already a statutory mechanism, the Hatch-Waxman Act, to address barriers to generic [drug] entry" and that, in fact, "Hatch-Waxman proceedings have been instituted for at least three generic companies" for ritonavir.

Regarding the request that the NIH issued rules for addressing price disparities, the agency rejected the scheme.  As set forth in the petition decision, Petitioners had asked the NIH to establish two rules:

Rule 1: there will be a rebuttable presumption that the price of an NIH-supported drug is not "reasonable" when the price in the U.S. is higher than the price in "seven of the ten largest countries" (measured by Gross National Product) or when the U.S. price is 1at least 10% higher than in the reference countries.  Under this Rule, the NIH would "award contracts or grant license to competitors" if the presumption was not rebutted.  These countries include "high-income" countries such as Norway, Italy, France, Canada, Australia, the Netherlands, New Zealand, and the United Kingdom.

Rule 2 is a compulsory licensing provision, that requires the NIH Director to grant such a license "subject to the payment of a reasonable royalty and [be limited to an] appropriate field of use, for "a drug, drug formulation, delivery mechanism, medical device, diagnostic or similar invention" that "is used or is potentially useful to prevent, treat, or diagnose [human] medical conditions or diseases," where "co-formulation, co-administration, or concomitant use with a secondary product is necessary to effect significant health benefits from the second product" under circumstances where the patentee has "refused a reasonable offer for a license."

The agency rejected Rule 1 because "[i]t is not appropriate to assess the price of one drug out of the context of a country's entire health care delivery and drug pricing/reimbursement system" (particularly because "the United States does not have a delivery system like any of these other country comparators").  The NIH refused to consider Rule 2 because in its view the Bayh-Dole Act does not provide for the authority to grant such compulsory licenses when a Petitioner has not identified "any of the four Bayh-Dole march-in criteria."

The agency noted in its conclusion that it is "sensitive to the impact of the pricing of drugs and their availability to patients."  However, the NIH also noted that its authority is limited to policing compliance with the Bayh-Dole Act, and that here as in 2004 "the extraordinary remedy of march-in is not an appropriate means of controlling prices of drugs broadly available to physicians and patients," suggesting petitioners pursue "legislative and other remedies.

There is one additional aspect of this decision that bears mentioning.  Senator Patrick Leahy (D-VT) recently sent a letter to Francis Collins, NIH Director, asking that the agency exercise its march-in rights with respect to Myriad's BRCA gene testing patents (see "Senator Leahy Urges NIH to Use March-In Rights on Myriad BRCA Test").  While it is impossible to assess how the agency will react to a request from a Senator and politician rather than a groups such as Petitioners here, many of the factual considerations that mitigated against exercise of march-in rights here exist in the Myriad case.  (Of course, in Myriad what is at issue is the availability of a test for a relatively rare genetic mutation, rather than price availability for a drug for patients with a life-threatening and incurable infection.)  Thus, what might be truly extraordinary would be if the NIH came to a different decision in Myriad than it has here.

News from Abroad: Is an Emergency Marketing Authorisation Valid Basis for an SPC Application for a Plant Protection Product?

The Court of Justice of the European Union (CJEU) has recently ruled that an emergency Marketing Authorisation (MA) for a plant protection product does not provide a valid basis for an SPC for that plant protection product.

Background

Clothiamidine is the active ingredient of the insecticide product, Poncho®.  Clothiamidine was protected by European patent EP0376279, filed 27 December 1989, which covered Germany amongst other countries.  In December 2003, Sumitomo Chemical Co. Ltd. was granted an emergency MA for Clothiamidine by the German authorities due to an imminent threat to various crops.  The emergency MA was valid for 120 days.

In May 2004 Sumitomo filed an SPC at the German Patent and Trade Mark Office for Clothiamidine on the basis of the emergency MA and EP0376279.  The SPC application was refused.

Sumitomo appealed the decision to refuse the SPC to the German Federal Patents Court.  The Court, in turn, sought guidance from the CJEU as to whether an emergency MA provides proper basis for the grant of an SPC.

CJEU’s Decision

The CJEU noted that the SPC Regulation specifies a 6 month period from the grant of a marketing authorisation in which to validly file an SPC application for a plant protection product.  While the 6 month period in respect of the emergency MA had not passed when the SPC application as filed, because the emergency MA was only in force for 120 days, it was not valid when the SPC application was filed.  In effect, the emergency MA expired the day before the SPC filing date.

Notwithstanding the issue concerning the expiry of the emergency MA, the CJEU decided that the SPC Regulation ought to be interpreted as precluding the grant of an SPC for a plant protection product on the basis of an emergency MA for the product.  The CJEU noted that an emergency MA, by its very definition, is granted in special circumstances in which an emergency MA is needed in order to counteract an unforeseeable danger to a crop which cannot be contained by means other than the use of the active ingredient in question.  Plant protection products for which an emergency MA is granted do not undergo the same scientific testing and risk evaluation as plant protection products which are granted a provisional MA and which may serve as proper basis for an SPC application.

As an additional point, around 4 months after filing the SPC application, the German authorities granted a provisional MA for Clothiamidine.  Sumitomo attempted to amend its SPC application to refer to the provisional MA.  However, the CJEU confirmed that the SPC Regulation precluded the grant of an SPC for a plant protection product on the basis on an MA which was granted after the SPC application was filed.

This report comes from European Patent Attorneys at WP Thompson & Co., 55 Drury Lane, London UK.  Further details and commentary can be obtained from Gill Smaggasgale, a partner at the firm.

Court Report

        By Sherri Oslick --

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

Advec Inc. v. Vector Biosystems Inc.
1:13-cv-00217; filed November 1, 2013 in the Northern District of Florida

Infringement of U.S. Patent No. 6,120,764 ("Adenovirus for Control of Gene Expression," issued September 19, 2000) based on Vector Biosystem's manufacture and sale of its Ad-FLPe and Ad-CMV-Cr products.  View the complaint here.

Purdue Pharma L.P. et al. v. Sandoz, Inc.
1:13-cv-07776; filed November 1, 2013 in the Southern District of New York

• Plaintiffs:  Purdue Pharma L.P.; P.F. Laboratories, Inc.; Purdue Pharmaceuticals L.P.; Grunenthal GmbH
• Defendant:  Sandoz, Inc.

Infringement of U.S. Patent Nos. 8,337,888 ("Pharmaceutical Formulation Containing Gelling Agent," issued December 25, 2012) and 8,309,060 ("Abuse-Proofed Dosage Form," issued November 13, 2012) following a Paragraph IV certification as part of Sandoz'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.

Otsuka Pharmaceutical Co., Ltd. v. Wockhardt Ltd. et al.
3:13-cv-06604; filed October 31, 2013 in the District Court of New Jersey

• Plaintiff:  Otsuka Pharmaceutical Co., Ltd.
• Defendants:  Wockhardt Ltd.; Wockhardt USA LLC; Wockhardt Bio AG

Infringement of U.S. Patent No. 6,977,257 ("Aripiprazole Oral Solution," issued December 20, 2005) following a Paragraph IV certification as part of Wockhardt's filing of an ANDA to manufacture a generic version of Otsuka's Abilify® (aripiprazole, used to treat bipolar disorder and schizophrenia).  View the complaint here.

Conference & CLE Calendar

November 12, 2013 - "IPR Proceedings at the USPTO -- Strategic Approaches to the New Patent Proceedings" (Law Seminars International) - 1:00 to 2:30 pm (Eastern)

November 13, 2013 - "How University TTOs Can Slash Patent Expenses While Improving Patent Quality" (Technology Transfer Tactics) - 1:00 to 2:00 pm (Eastern)

November 13, 2013 - Unitary Patent (UP) and Unified Patent Court (UPC) (D Young & Co) - 4:00 am, 7:00 am, 12:00 pm (EST)

November 14, 2013 - Obviousness Standard After the AIA: Leveraging Latest PTO and Court Guidance -- Overcoming Challenges of Obviousness and Attacks on Patent Validity (Strafford) - 1:00 to 2:30 pm (EST)

November 14, 2013 - "The Nuts & Bolts of Patents and the Drug Approval Process" (American Bar Association Section of Intellectual Property Law, Young Lawyers Action Division, Young Lawyers Division, and Center for Professional Development) - 1:00 to 2:30 pm (Eastern)

November 15, 2013 - "Cracking the Code: Ongoing § 101 Patentability Concerns in Biotechnology and Computer Software" (George Washington Law Review) - George Washington University Law School

November 17-20, 2013 - Creating and Leveraging Intellectual Property in Developing Countries: A Power Tool for Social and Economic Growth*** (Companies and IP Commission and National IP Management Office of South Africa) - Durban, South Africa

November 19, 2013 - PTAB or the District Court: Which Is the Better Option When Challenging Patent Validity? (McDonnell Boehnen Hulbert & Berghoff LLP) - 10:00 to 11:15 am (CT)

November 19, 2013 - Patenting Biotech Inventions (California Healthcare Institute (CHI) and D Young & Co) - San Diego, CA

November 20, 2013 - Patenting Biotech Inventions (California Healthcare Institute (CHI) and D Young & Co) - San Francisco, CA

November 21, 2013 - "Leveraging the AIA's Expanded Prior Use Defense for Patent Infringement Claims" (Strafford) - 1:00 to 2:30 pm (EST)

November 22, 2013 - "Global Utility Requirements For Pharmaceutical and Biological Inventions" (American Bar Association (ABA) Section of Intellectual Property Law, Young Lawyers Action Group, Young Lawyers Division, and Center for Professional Development) - 1:00 to 2:30 pm (Eastern)

December 3, 2013 - "Post-AIA Preissuance Prior Art Submissions at the USPTO -- Best Practices for Third-Party Challenges to Patent Applications and for Monitoring Competition" (Strafford) - 1:00 to 2:30 pm (EST)

December 4, 2013 - Congress on Biotech & Pharma Patenting*** (C5 (UK)) - London, UK

December 5, 2013 - Forum on Biosimilars*** (C5 (UK)) - London, UK

December 9-10, 2013 - Patent Infringement Litigation Summit (Legal iQ (IQPC)) - San Francisco, CA

December 10-11, 2013 - Advanced Forum on Patent Litigation*** (American Conference Institute) - New York, NY

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