Patent Docs

Japanese Foundation for Cancer Research v. Lee (Fed. Cir. 2014)

When you file a disclaimer, you'd better mean it

By Kevin E. Noonan --

The Federal Circuit reversed a District Court decision this week in a case involving an improperly filed statutory (terminal) disclaimer, in Japanese Foundation for Cancer Research v. Lee.  Caught between miscommunication between patentee, assignee, and U.S. counsel as to whether the patent at issue, U.S. Patent No. 6,194,187, should be disclaimed, the high standard for overcoming agency action (arbitrary and capricious action contrary to law) and the deference the courts must give to agency action within its proper purview, the Foundation found its patent rights irrevocably lost (and, in a footnote, received a direction from the panel that will discomfit any practicing patent practitioner).

The case involved the filing of a terminal disclaimer for the claims in the '187 patent prior to patent expiry for failure to pay a maintenance fee.  From the Patent Office perspective, the attorney-of-record filed a statutory disclaimer on October 11, 2011, pursuant to 37 C.F.R. § 1.321(a).  Two months later, on December 13, 2011 the attorney-of-record filed a petition to withdraw the statutory disclaimer under 37 C.F.R. § 1.182 (a provision that permits the Office to address situations not otherwise encompassed by the rules).  This petition asserted as its basis that the disclaimer had not been necessitated by court order or Patent Office requirement, and that the public interest was not implicated because the Office had not yet made the filing public on the Patent Application Information Retrieval (PAIR) database.  The Office denied the petition, on the grounds that the attorney of record properly filed the petition and there was no recourse under the patent statute (35 U.S.C. § 253) for the Office to take the requested action.  The patentee then filed a second petition, under both 37 C.F.R. § § 1.182 and 1.183 (a provision that permits the Office to suspend the rules in the interests of justice), followed by subsequently filed other petitions, a request for reconsideration, and an interview between Office officials and the Foundation's attorney.

These additional submissions provided additional "newly revealed information" and "newly discovered evidence" to the effect that the Foundation had only intended to ask U.S. counsel whether the patent could be disclaimed prior to expiry, and that the request had come from a patent paralegal working for Japanese counsel to one of the Foundation's licensees.  This paralegal's efforts were superseded by the earthquake and resulting tsunami that disrupted business in Japan for months, and it was only after the Foundation's U.S. attorney sent the filed disclaimer that the paralegal and her superiors realized the misunderstanding.  (It must be noted that the letter sent to U.S. counsel states that "[o]ur clients would like to abandon the captioned patent positively and invalidate this patent before the case lapses by non-payment of the next maintenance fees, which will be due on August 27, 2012," which seems to fairly indicate an intention to disclaim.)  Also proffered was evidence in the form of a letter from the Foundation's Executive Director asserting that the Foundation had not requested nor authorized the disclaimer to be filed and that no one with such authority had done so.  The efforts to withdraw the statutory disclaimer commenced almost immediately after the mistake was recognized.

The PTO rejected the contention that it had inherent authority to withdraw the disclaimer, and the Foundation filed suit in District Court to challenge the agency's decision under the Administrative Procedures Act.  Specifically, patentee alleged that the Patent Office's denial was an abuse of discretion, arbitrary and capricious and contrary to law.  The District Court granted patentee's summary judgment motion and ordered the Office to withdraw the disclaimer unless it could make a showing that the Foundation had authorized the disclaimer to be filed by U.S. counsel.

The Federal Circuit reversed, in an opinion by Chief Judge Prost joined by Judges Dyk and Taranto.  The panel recognized that in reviewing agency action it cannot "substitute its judgment for that of the agency," citing Bowman Transp., Inc. v. Ark.-Best Freight Sys., Inc., 419 U.S. 281, 285 (1974), but that its review of the Office's interpretation of the patent statute is "without deference," citing Liesegang v. Sec'y of Veterans Affairs, 312 F.3d 1368 (Fed. Cir. 2003).  Turning to the standard for the deficiencies in agency action the Foundation based its allegations upon, the opinion defined an abuse of discretion as being where the agency's decision is based on a faulty interpretation of the law, citing Burandt v. Dudas, 528 F.3d 1329, 1332 (Fed. Cir. 2008).  And arbitrary and capricious agency action is defined by the panel as occurring "only if the decision was not based on the relevant factors or it fails to 'examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made,'" citing Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983).

Applying these standards to the facts before it, the Court distinguished the Foundation's argument that the Office has the power to withdraw an erroneously filed terminal disclaimer under 35 U.S.C. § 255 (and thus that refusing to do so is an abuse of discretion) based on the Court's earlier decision in Carnegie Mellon Univ. v. Schwartz, 105 F.3d 863 (3d Cir. 1997).  In that case, counsel had intended to file a terminal disclaimer in an application but had in error entered the serial number of a granted patent, so that the disclaimer was entered in the wrong case.  There the Office had granted the petition to withdraw and issued a certificate of correction in the patent (and presumably then entered the terminal disclaimer in the correct application).  The panel noted (citing the MPEP at § 1490) that this was accepted PTO practice, but that these facts were not the facts in this case.  The opinion states that "[i]mportantly" Carnegie Mellon intended to file a terminal disclaimer and that the error was in identifying the correct file, whereas here the issue is whether the Office could withdraw a disclaimer that was intentionally filed (in the correct patent), i.e. where there was not the kind of error in Carnegie Mellon that justified the contrary results.  (In an interesting argument that the Court ultimately rejected, the patentee argued that the error in Carnegie Mellon was identified as a "clerical error" under 35 U.S.C. § 255 and that, because the error here was made by a patent paralegal it should also be considered "clerical" in nature.  And the Foundation's additional argument that a "clerical error" can be one made by "a subordinate act[ing] contrary to binding instructions, distinguishing the subordinate from one whose duty involves exercising 'original thought or judgment,'" citing Ford Motor Co. v. United States, 157 F.3d 849, 860 (Fed. Cir. 1998) was distinguished because, here, the terminal disclaimer was filed by the U.S. attorney of record.)  Thus, the Court found no error in the Office's interpretation of its (lack of) authority under this section of the patent statute.

Turning to the question of the Office's inherent authority, the opinion first rejected the Foundation's argument that the Office could have withdrawn the disclaimer because it had not yet been "recorded" when the Foundation filed its first petition to withdraw, based on Vectra Fitness, Inc. v. TNWK Corp., 162 F.3d 1379 (Fed. Cir. 1998), the panel stating that the patentee had misread its opinion.  The correct statement of the law according to the Court is that a disclaimer is "recorded" when it is properly submitted and received by the Office, based on the Court's interpretation of 35 U.S.C. § 253 and 37 C.F.R. § 1.321.  The opinion recognized that an agency have "inherent authority" to reconsider its decisions, as provided for in the regulations upon which the Foundation had based its arguments(37 C.F.R. §§ 1.182 and 1.183).  But here any PTO review would reveal, and did reveal, that the disclaimer was properly filed by the attorney of record and that there was no basis on these facts to review and change its decision (the opinion notes that these were the grounds under which the Office rendered its first decision to deny the Foundation's petition).  And while the District Court had opined that the Office would have had the authority to withdraw a fraudulently filed disclaimer, the Federal Circuit stated that "it is also not our place to define what hypothetical circumstances might allow or require the PTO's action, where those circumstances are not at issue here."  The Office had articulated its reasoning why it did not have the authority to withdraw the disclaimer under the facts in this case and that was enough for the Federal Circuit.

Finally, the opinion acknowledged the patency of the Office's two additional reasons it articulated for its decision.  The first was that the public was entitled to rely on the disclaimer and the panel rejected the argument that the Foundation's petitions would negate any such reliance, on the grounds that "nothing in the file actually indicated that the PTO had any doubt about the disclaimer's validity."  Second, the opinion rejected the Foundation's argument regarding the miscommunication between the Japanese paralegal and U.S. counsel, on the grounds that the patentee had empowered its attorney of record to represent its interests before the Office, including the power to file disclaimers, and that the Office "need not examine alleged miscommunications between the patentee and its attorney of record because of the principle that it holds the patentee to be 'bound by the actions or inactions of his voluntarily-chosen representative.'"  Here the Court opined that it must defer to how the agency interprets its procedures and regulations, absent "the kind of 'extremely rare circumstances' that could 'justify a court in overturning agency action because of a failure to employ procedures beyond those required by the statute,'" citing Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc., 435 U.S. 519, 524, (1978).  Accordingly, the Court held that "the PTO did not act arbitrarily, act capriciously, or abuse its discretion in declining to use any inherent authority that it might have in withdrawing the terminal disclaimer on the '187 patent that the Foundation's attorney of record duly filed in accordance with the PTO's regulations."

And as for that cautionary note, it comes in the final footnote:  in addressing the District Court's suggestion that the PTO was the sole source of relief for the Foundation with regard to its lost property rights, the panel stated that "in circumstances where a client may be deprived of a claim based on its attorney's conduct, and the facts indicate that the 'attorney's conduct falls substantially below what is reasonable under the circumstances, the client's remedy is against the attorney in a suit for malpractice,'" citing Link v. Wabash R.R. Co., 370 U.S. 626, 634, n.10 (1962).  Not a happy circumstance to contemplate.

Japanese Foundation for Cancer Research v. Lee (Fed. Cir. 2014)
Panel: Chief Judge Prost and Circuit Judges Dyk and Taranto
Opinion by Chief Judge Prost

PTAB Update -- Hatch-Waxman-Watch Edition

By Andrew Williams --

The pharmaceutical industry has been closing watching the proceedings at the Patent Trial and Appeal Board ("PTAB" or "Board") to see if inter partes review ("IPR") will be a viable option for generic drug companies seeking to challenge Orange-Book-listed patents.  On December 9, 2014, the PTAB released two sets of decisions that handed major victories to pioneering pharmaceutical companies.  In what is thought to be the first set of Final Written Decisions ("FWDs") of Orange-Book-listed patents, the PTAB ruled that three patents covering Galderma Laboratories's Oracea^® drug product for the treatment of acne rosacea were not invalid as obvious in view of the cited art.  Specifically, the Board concluded that the petitioner, Amneal Pharmaceuticals, LLC, had failed to show that the cited secondary reference disclosed the claim limitations.  In the second set of decisions, the PTAB denied the institution of three IPR's for patents that cover Gilead Sciences, Inc.'s Viread^® drug product for the treatment of HIV-1.  A fourth IPR was also filed at the same time, but a decision on institution is forth-coming.  In this post, we will review the Galderma FWDs, and the circumstances surrounding them.  We will follow-up at a future date with a review of the decisions not to institute in the Gilead cases.

The active ingredient in Oracea^® is doxycycline, an antibiotic tetracycline compound.  The oral administration of the drug is done at sub-antibacterial dosages, which was found to be effective in treating acne rosacea without the known undesirable side effects accompanying antibacterial dosages.  During development of the drug, scientists at Shire Laboratories Inc. developed a formulation using two different release profiles, an immediate release ("IR") and a delayed release ("DR"), which facilitated a once-daily dosing regimen.  This formulation was first described and claimed in U.S. Patent No. 7,749,532 ("the '532 patent"), which had related continuations U.S. Patent Nos. 8,206,740 ("the '740 patent"), 8,394,405 ("the '405 patent"), and 8,394,406 ("the '406 patent").  These last three patents were the subject of the three IPRs at issue, IPR2013-00368, IPR2013-00371, and IPR2013-00372, respectively, (filed in June, 2013).  The IPRs were entitled Amneal Pharmaceuticals, LLC v. Supernus Pharmaceuticals Inc. – Shire was the predecessor to Supernus.  Representative claims of these three patents include:

1.  An oral pharmaceutical composition of doxycycline, which at a once-daily dosage will give steady state blood levels of doxycycline of a minimum of 0.1 µg/ml and a maximum of 1.0 µg/ml, the composition consisting of
    (i) an immediate release (IR) portion comprising 30 mg doxycycline;
    (ii) a delayed release (DR) portion comprising 10 mg doxycycline; and
    optionally, (iii) one or more pharmaceutically acceptable excipients.

'740 Patent, claim 1;

1.  An oral pharmaceutical composition comprising about 40 mg of total doxycycline, which at a once-daily dosage will give steady state blood levels of doxycycline of a minimum of 0.1 µg/ml and a maximum of 1.0 µg/ml, wherein the composition consists of 70 to 80 percent of the doxycycline formulated as an immediate release (IR) formulation and 20 to 30 percent of the doxycycline formulated as a delayed release (DR) formulation.

'405 Patent, claim 1; and

1.  An oral pharmaceutical composition comprising less than 50 mg of total doxycycline, which at a once-daily dosage will give steady state blood levels of the doxycycline between 0.1 µg/ml and 1.0 µg/ml, and a C_max of the doxycycline between 0.4 µg/ml and 0.8 µg/ml, the composition consisting of
    (i) an immediate release (IR) formulation of the doxycycline,
    (ii) a delayed release (DR) formulation of the doxycycline comprising at least one enteric polymer, and
    (iii) one or more pharmaceutically acceptable excipients, wherein the doxycycline in the IR and DR formulations is in a ratio of 75:25.

'406 Patent, claim 1.

Interestingly, the '532 patent was involved in a Hatch-Waxman-type litigation in the U.S. District Court for the District of Delaware.  We reported at the time on the Federal Circuit appeal of the outcome of that case (see "Research Foundation of State University of New York v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2013)").  The Delaware District Court had held that the '532 patent (the patent not subject to an IPR) was not invalid as obvious, and the appeals court affirmed.  In addition to the Research Foundation of State University of New York v. Mylan Pharmaceuticals Inc. case, there have been several litigations involving the Orange Book patent covering Oracea^®, including Galderma Labs. v. Amneal Pharms. in the Delaware District Court.  Only the '740 patent was in common between the IPRs and the Amneal case.

The three IPRS were virtually identical, so this post will focus on IPR2013-00368 as representative.  The Board first construed the claim term "delayed release."  Oddly, even though neither party proposed a construction for this term, the Board appeared to request one during oral argument.  Everyone was in agreement that the term means "release of a drug at a time other than immediately following oral administration."  However, there was disagreement whether the broadest reasonable construction required that there be no substantial release in the stomach.  Supernus argued that the patent described this term as allowing "no substantial release of doxycycline in the acidic stomach environment of approximately below pH 4.5."  Amneal, on the other hand, argued that this construction was too narrow, and that the delay should only include drug release after a time lag, irrespective of whether there is release in the stomach.  The Board agreed with Amneal and chose not to read the limitation form an embodiment into the claim term.

All three IPRs were instituted with only one ground of rejection, that the claims at issue were obvious in view of Ashley '932 (WO 02/080932 AI), which incorporated by reference provisional application No. 60/281,854, and Sheth (U.S. Patent No. 5,348,748).  According to the FWDs, "Ashley '932 discloses administering a tetracycline compound, e.g., doxycxline or minocycline, in sub-antibacterial doses to treat acne, including acne rosacea."  The provisional application disclosed controlled release of the drug product in order to reach a sub-antibacterial serum level of 0.4 to 0.8 µg/ml.  This reference was, however, missing the once daily dosage utilizing an IR and DR formulation, and it ratio.  Amneal argued that Sheth provided the additional limitations, and that one of skill in the art would have combined the two references together.  The FWD describes Sheth as disclosing "a once-daily formation of minocycline that provides an antibacterial total daily dose."  This is accomplished using quick-release pellets and a secondary loading component of slow-release pellets.  The issue came down to whether these slow-release pellets provided "delayed release."  The Patent Owner took the position that the secondary loading portions were not delayed because they begin release "in the stomach promptly after administration."  The petitioner, on the other hand, argued that there was a "lag" before release.  In fact, they cited testimony of Supernus's expert, who said:  "Again, you're over simplifying the question.  I think there would be some lag between when the polymer hydrated and the drug diffused through, but you wouldn't consider that a delay."  The Board agreed that Sheth did not describe a "delayed release," noting that the lag time to wet the material would not be considered a "delay."  The Board also indicated that Amneal had failed to explain how there would be an appreciable delay "once water in the patient's saliva or gastric fluid has begun to solubilize the pH-insensitive polymer in the coating."  Finally, the Board concluded that petitioner's "argument that Sheth discloses the claimed IR:DR ratio (or makes the claimed ratio reachable through routine experimentation) thus becomes untenable."  Without this evidence, the challenge failed.

It goes without saying that it will be interesting to see how the other Orange-Book-listed patents fare in the other IPRs that are currently ongoing.  It will also be informative to find out if patents (or related patents) that have also been unsuccessfully challenged in district court will be more likely to be upheld by the PTAB.  Patent-owning practitioners often contemplate whether the filing of a Patent Owner Response is the best course of action.  It can essentially "tip you hand" as to your arguments, providing the petitioner with an additional opportunity to respond.  However, it is also considered advisable to prevent institution in the first place, which may only be possible in some cases with the filing of a response.  In this case, Supernus did file such a response.  Nevertheless, as explained above, even though the IPR was instituted, the Board did not follow-through, but instead found the patent to not be invalid.  On the other hand, we will explore in a future post the Gilead case, in which institution of an IPR for pharmaceutical patent was successfully defended against.

News from Abroad: Research Exemptions and Active Ingredient Manufacture

By Ralph Cox* & Kinjal Kondhia** --

After a series of papers, reports and consultations on the scope of the research exemptions to patent infringement stretching over 10 years, section 60 of the Patents Act 1977 was finally amended on 1 October 2014 by the introduction of new subsections 6D to 6G.  These subsections clarify the pre-existing 'Bolar' exemption for clinical trials for generic drugs in subsection 6(5)(i) as well as extending it to regulatory tests for new drugs so as to put the UK on a level playing field for the conduct of trials with countries such as Germany, which introduced a wider Bolar exemption from the outset.  But the amendments seem to leave an important point unresolved:  would a manufacturer of active pharmaceutical ingredients (API) infringe by supplying a patent protected drug to another for use in clinical trials? 

Background

The Department of Trade & Industry and the Intellectual Property Institute issued a paper in 2004 saying that the research exemptions in the Patents Act were unclear and pointing to anecdotal evidence that the fear of proceedings dissuaded small research groups particularly from conducting potentially infringing research.  This was picked up by the Gower Report on Intellectual Property in 2006 which recommended that section 60 of the Patents Act be clarified.  Formal and informal consultations by the UK Intellectual Property Office followed between 2008 and early 2014 which, though initially considering research exemptions generally, ended up focusing on whether and how the Bolar exemption should be widened to match its implementation in other European countries.

The Bolar exemption was introduced into the Patents Act 1977 in October 2005 by insertion of 60(5)(i) in order to implement European Union (EU) Directives 2004/27/EC and 4004/28/EC, for veterinary and human drugs respectively.  The Directives limited the exemption to acts required to obtain a marketing authorisation for a generic drug and accordingly so did section 60(5)(i).  While some EU member states took a similarly narrow approach, such as Ireland, Sweden and the Netherlands, others took a wider approach, generally because they had pre-existing Bolar-type provisions in their legislation.  Thus countries such as Germany, France, Italy, Spain and Poland exempted trials conducted for regulatory approval of innovative as well as generic drugs from patent infringement.  This was seen as putting the UK at a competitive disadvantage as a country in which to conduct clinical trials.

A further issue was the scope of the acts covered by the Bolar exemption.  While both the Medicines and Healthcare Products Regulatory Agency (MHRA) and the UK Intellectual Property Office (UK IPO) gave guidance on the activities they considered to be covered, uncertainty persisted, particularly whether conducting bioequivalence and stability studies for a generic marketing authorisation would constitute infringement.  Also, assessments of drugs by, for example, the National Institute for Health and Care Excellence (NICE) to decide whether to recommend their use by the National Health Service, and which could involve comparison studies with patented drugs, were not covered.

Extended Bolar Exemption

As mentioned, the upshot of the consultations was the insertion of new subsections 6D to 6G in section 60 of the Patents Act 1977 from 1 October 2014.  Subsections 6D and 6E read:

"(6D)    For the purposes of subsection (5)(b), anything done in or for the purposes of a medicinal product assessment which would otherwise constitute an infringement of a patent for an invention is to be regarded as done for experimental purposes relating to the subject-matter of the invention.

(6E)      In subsection (6D), "medicinal product assessment" means any testing, course of testing or other activity undertaken with a view to providing data for any of the following purposes—

(a)        obtaining or varying an authorisation to sell or supply, or offer to sell or supply, a medicinal product (whether in the United Kingdom or elsewhere);

(b)       complying with any regulatory requirement imposed (whether in the United Kingdom or elsewhere) in relation to such an authorisation;

(c)        enabling a government or public authority (whether in the United Kingdom or elsewhere), or a person (whether in the United Kingdom or elsewhere) with functions of—

(i)        providing health care on behalf of such a government or public authority, or

(ii)       providing advice to, or on behalf of, such a government or public authority about the provision of health care,

to carry out an assessment of suitability of a medicinal product for human use for the purpose of determining whether to use it, or recommend its use, in the provision of health care."

Subsection 6F then defines "medicinal product" as a human or veterinary drug and 6G says that nothing in 6D to 6F affects the application of the general research exemption in section 60(5)(b) to acts falling outside 6D.  Section 60(5)(b) exempts from infringement acts "done for experimental purposes relating to the subject-matter of the invention".  Quite what research falls within the "subject-matter of the invention" and how the section applies to tests for commercial purposes were concerns that underlay the 2004 paper mentioned above[1].

Apart from making section 60(5)(i) redundant, the effects of 6D to 6F are to extend the Bolar exemption to innovative drugs and to all forms of regulatory drug assessment as well as to clarify that data generated in UK trials can be used for regulatory approval in other jurisdictions.  As the UKIPO's Explanatory Document[2] says, "in short, any tests or studies which are required by regulatory bodies will be allowed".

Discussion

While these amendments are undoubtedly welcome for the pharmaceutical industry, particularly the innovative side, they do not address the remaining uncertainty over section 60(5)(b)'s scope and nor do they address a more recent issue on the supply of API for clinical trials. 

The issue arose from litigation between Astellas Pharma Inc. and Polypharma SA in which the Polish Supreme Court held in October 2013[3] that a third party supplier of an API to a pharma company conducting trials for regulatory approval would not be within the Bolar exemption as it was making the API for its own commercial purposes and had not directly applied for regulatory approval itself.  In a parallel action in Germany a similar decision was reached by the Landgericht Düsseldorf that such a supplier would only be within the exemption if it was a co-organiser of the trials.  The German appeal court sought guidance on the issue of third party supply from the Court of Justice of the EU[4], and the UK IPO consulted on whether to intervene, but the reference was withdrawn in May 2014 with no decision having been made.  This leaves it unclear outside Poland and Germany whether a pharmaceutical company that does not manufacture API itself can source from a third party for a clinical trial. 

For the UK, new subsections 6D to 6F at first read would seem to allow third party supply as they allow "anything done in or for the purposes of a medicinal product assessment".  There is nothing restricting the exemption to acts by the party intending to apply for regulatory approval only and there is no good reason why just because manufacture of an API for use in a clinical trial is outsourced it should infringe.  On the other hand, the UK IPO's guidance[5], while not explicitly addressing the issue, says that "The new provisions do not extend to commercial activities, such as sale, commercial supply, or manufacture in preparation for sale or supply".  Some commentators have taken this to indicate that third party supply for a clinical trial would infringe following similar reasoning to the Polish Supreme Court.  The authors' view is that the UK IPO's statement is directed at commercial supplies generally, rather than the specific circumstances of concern here, and so should not be read as qualifying the broad "anything done" language in 6D.  Third party supply should therefore be within the scope of the extended Bolar exemption but, as ever with new legislation, it is a point that will have to wait for the courts to decide.  In the meantime it leaves unwelcome uncertainty, particularly for smaller generic companies that tend not to manufacture their own API and for EU based API manufacturers, which will lose custom to non-EU competitors.

* Ralph Cox is a Partner with Fasken Martineau LLP (London, UK)
** Kinjal Kondhia is a Trainee Solicitor with Fasken Martineau LLP (London, UK)

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[1] Though the obiter decision in Corevalve v Edwards Lifesciences [2009] FSR 8 gave some clarity by holding that if the preponderant purpose of the experiments is to gain information rather than generate revenue then it will be within the s60(5)(b) exemption.

[2] The explanatory document on “The Legislative Reform (Patents) Order 2014.

[3] CSK 92/13, Astellas v Polypharma.

[4] C-661/13 - Astellas Pharma Inc.

[5] “Changes to patents legislation made by the Legislative Reform (Patents) Order 2014 from 1 October 2014”

Sandoz Inc. v. Amgen Inc. (Fed. Cir. 2014)

By Andrew Williams --

Last year, Sandoz filed a declaratory judgment action against Amgen and Roche related to its etanercept biosimilar drug product, which it developed to compete with Amgen's Enbrel® TNF inhibitor.  Specifically, Enbrel® is a receptor fusion protein that binds TNF-α, thereby acting as a decoy receptor molecule.  In the Sandoz complaint, it alleged that two Hoffman-LaRoche patents created a "cloud of legal uncertainty" over its drug product, and that it was entitled to a determination that the two patents were not infringed, invalid, and unenforceable.  Of course, Congress enacted the Biologics Price Competition and Innovation Act of 2009 ("BPCIA") to address such uncertainty.  Therefore, members of the biotech patent community viewed this as an attempt by Sandoz to sidestep the requirements of the BPCIA.  The Northern District of California dismissed the case on jurisdictional grounds because Sandoz had not yet filed its application with the FDA, and there was no cognizable case or controversy.  However, it did observe in the process that both Sandoz and Amgen were barred from filing a lawsuit unless they engaged in the BPCIA's statutorily-mandated patent exchanges (the so-called biosimilar "patent dance").  Last Friday, in Sandoz Inc. v. Amgen Inc., the Federal Circuit affirmed the lower court's dismissal because "Sandoz did not allege an injury of sufficient immediacy and reality to create subject matter jurisdiction."  The Appeals Court, however, stopped short of addressing the District Court's interpretation of the statute ("Our resolution of this case makes it unnecessary for us to address the district court's BPCIA rationale").  Therefore, the biotech community is left to wonder whether such a course of action will end up being a viable mechanism to skirt the requirement of the BPCIA.

As way of background, Amgen's predecessor, Immunex, received a Biologics License to market Enbrel® in 1998.  Subsequently, in 2011 and 2012, Hoffman-LaRoche received two patents that claimed specific proteins and related pharmaceutical compositions (U.S. Patent No. 8,063,182, or the '182 patent) and methods of using host cells that include specific polynucleotides, the polynucleotides themselves, and vectors and cells containing them (U.S. Patent No. 8,163,522 or the '522 patent).  Amgen had identified these two patents as covering etanercept.  Before these two patents issued, in 2004, Sandoz began developing its own etanercept product.  In 2010, it began a series of meetings with the FDA to plan for the required application.  After consultation from the FDA, Sandoz announced a large-scale Phase III trial in June of 2013, which was expected to run into 2015.  At the same time, it filed the complaint currently at issue against both Amgen and Hoffman-LaRoche.

The Federal Circuit began by reviewing what is required for a Federal court to have jurisdiction pursuant to the Declaratory Judgment Act.  Quoting the Supreme Court in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), the Court noted that for there to be a "case-or-controversy," a court must determine "whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment."  Id. at 127 (emphasis added).  To determine whether there is immediacy, it is necessary to consider "how far in the future the potential infringement is, whether the passage of time might eliminate or change any dispute, and how much if any harm the potential infringer is experiencing, at the time of suit, that an adjudication might redress."  Similarly, reality is assessed "by examining any uncertainties about whether the plaintiff will take an action that will expose it to potential infringement liability and, if so, exactly what action."  The Court focused on the question of timing and contingency regarding whether a need for adjudication exists.  In other words, quoting the Supreme Court again, the Court indicated that "[a] claim is not ripe for adjudication if it rests upon contingent future events that may not occur as anticipated, or indeed may not occur at all."  Texas v. United States, 523 U.S. 296, 300 (1998).

As already suggested, the Federal Circuit concluded that the Sandoz complaint did not present a case or controversy.  The fact that Sandoz was still conducting clinical trials and had not even filed an application was significant in the Court's analysis: "Amgen has not suggested that anything Sandoz is currently doing exposes it to infringement liability, and there is no dispute that Sandoz cannot engage in the only liability-exposing conduct at issue with FDA approval of an application precisely defining the products it may market."  The Court found "significant uncertainties" surrounding this case.  For example, it could not assume that the Phase III trial would be successful.  Instead, if it fails, Sandoz may be prevented from filing its application, or forced to modify the drug product in material ways.  Such eventualities would either eliminate the need for a patent dispute, or alter it significantly.  Because of these uncertainties, the Court concluded that in the pre-application context, the infringement liability that Sandoz may be facing "may not occur as anticipated, or indeed may not occur at all."  Citing Texas, 523 U.S. at 300.

The Federal Circuit did focus on the content of Sandoz's complaint, or more accurately, what was missing from its complaint.  For example, the complaint said nothing about specific patent claims, or how they might relate to the Sandoz drug product.  Instead, it mainly relied on Amgen's assertions that the patents-at-suit cover Enbrel®, and that Amgen intends to enforce its rights.  Practitioners faced with a related situation might be wise to include such specifics about the patent claims in the complaint.  Moreover, the complaint should explain why there is no "potential for elimination or alteration of any needed adjudication."

Finally, the Court pointed out how this outcome is consistent with Hatch-Waxman Act jurisprudence.  No declaratory judgment jurisdiction has been found in any case where an ANDA application had not yet been filed.  In fact, the Court has often focused on whether such an application has been filed before holding that jurisdiction exists.  The Federal Circuit noted that Congress established in the Hatch-Waxman act an "artificial" act of infringement which provides for early adjudication of the patent issues.  Moreover, the Court suggested that Congress "borrowed" from the Hatch-Waxman Act when enacting the BPCIA.  Correspondingly, it concluded, the filing of an application in the present context should also be required for conferring jurisdiction.  The Federal Circuit did not say, however, that a DJ action would have been appropriate if an application had been filed.  Instead, the Court specifically pointed out that it did "not decide whether, once an application is filed under the BPCIA, that statute forecloses a declaratory-judgment action concerning whether the ultimate marketing of the application-defined product would infringe under 35 U.S.C. § 271(a)."

This case, unfortunately, does not answer the question whether the "patent dance" of the BPCIA can be skirted by a biosimilar applicant through the use of a declaratory judgment action.  Therefore, this continues to be of interest in the biotech patent community.  In fact, last week Judge Crotty of the United States District Court for the Southern District of New York dismissed two such declaratory judgment cases related to the reference drug product drug Remicade®.  Patent Docs will address these lower court's decisions and their implications for BPCIA litigation in a future post.

Sandoz Inc. v. Amgen Inc. (Fed. Cir. 2014)
Panel: Circuit Judges Dyk, Taranto, and Chen
Opinion by Circuit Judge Tranato

DDR Holdings, LLC v. Hotels.com, L.P. (Fed. Cir. 2014)

By Michael Borella --

DDR Holdings ("DDR") sued Hotels.com and several other defendants in the United States District Court for the Eastern District of Texas, alleging infringement of U.S. Patent Nos. 6,993,572 and 7,818,399.  DDR eventually settled with all defendants except for National Leisure Group, Inc. ("NLG") and Digital River, Inc.  After a trial, the jury found that the asserted claims of the '572 and '399 patents were infringed and not invalid.

In motions for a JMOL, NLG contended that the claims of the '399 patent were invalid under 35 U.S.C. §§ 101 and 112, while Digital River argued that the claims of the '572 patent were invalid as either anticipated under 35 U.S.C. § 102, obvious under 35 U.S.C. § 103, or indefinite under 35 U.S.C. § 112 ¶ 2.  The District Court denied the motions, and both defendants appealed.  Prior to oral arguments before the Federal Circuit, DDR and Digital River settled.

Judges Wallach, Mayer, and Chen heard the arguments, and Judge Chen authored the majority opinion.  Judge Mayer dissented.

This case is important because it is the first time since the Supreme Court handed down the Alice Corp. v. CLS Bank Int'l decision that the Federal Circuit has concluded that computer-implemented claims survive a § 101 challenge.  Herein, we will focus on the Court's discussion of § 101 matters, despite the other avenues through which the validity of the patents were attacked.

The Court's § 101 analysis focused on claim 19 of the '399 patent, which recites:

A system useful in an outsource provider serving web pages offering commercial opportunities, the system comprising:
    (a) a computer store containing data, for each of a plurality of first web pages, defining a plurality of visually perceptible elements, which visually perceptible elements correspond to the plurality of first web pages;
        (i) wherein each of the first web pages belongs to one of a plurality of web page owners;
        (ii) wherein each of the first web pages displays at least one active link associated with a commerce object associated with a buying opportunity of a selected one of a plurality of merchants; and
        (iii) wherein the selected merchant, the outsource provider, and the owner of the first web page displaying the associated link are each third parties with respect to one other;
    (b) a computer server at the outsource provider, which computer server is coupled to the computer store and programmed to:
        (i) receive from the web browser of a computer user a signal indicating activation of one of the links displayed by one of the first web pages;
        (ii) automatically identify as the source page the one of the first web pages on which the link has been activated;
        (iii) in response to identification of the source page, automatically retrieve the stored data corresponding to the source page; and
        (iv) using the data retrieved, automatically generate and transmit to the web browser a second web page that displays: (A) information associated with the commerce object associated with the link that has been activated, and (B) the plurality of visually perceptible elements visually corresponding to the source page.

The Court described the invention as being directed to "generating a composite web page that combines certain visual elements of a host website with content of a third-party merchant."  As an example, "the generated composite web page may combine the logo, background color, and fonts of the host website with product information from the merchant."  In comparing the invention to the prior art, the inventors noted that a problem in previous systems was that they "allowed third-party merchants to lure the host website's visitor traffic away from the host website because visitors would be taken to the third-party merchant's website when they clicked on the merchant's advertisement on the host site."  The Court found that the invention:

[P]rovides a solution to this problem (for the host) by creating a new web page that permits a website visitor, in a sense, to be in two places at the same time.  On activation of a hyperlink on a host website -- such as an advertisement for a third-party merchant -- instead of taking the visitor to the merchant's website, the system generates and directs the visitor to a composite web page that displays product information from the third-party merchant, but retains the host website's look and feel.

In this way, the host website retains visitor traffic while displaying the third-party merchant's products.

In Alice, the Supreme Court set forth a two-prong framework for evaluating the patent-eligibility of a claim under § 101.  First one must determine whether the claim is directed to a patent-ineligible law of nature, natural phenomenon, or abstract idea.  If so, then one determines whether any additional claim elements transform the claim into a patent-eligible application that amounts to significantly more than the ineligible concept itself.

Judge Chen began this analysis by acknowledging that "[d]istinguishing between claims that recite a patent-eligible invention and claims that add too little to a patent-ineligible abstract concept can be difficult, as the line separating the two is not always clear."  Historically, adding a physical machine, such as a computer, to claims that incorporate an abstract idea was enough to pass the Court's machine-or-transformation test of patent-eligibility.  But the Supreme Court, in Alice and Mayo Collaborative Servs. v. Prometheus Labs., Inc., made it clear that "not all machine implementations are created equal."  Notably, "recitation of generic computer limitations does not make an otherwise ineligible claim patent-eligible."

Judge Chen briefly discussed a number of recent post-Alice Federal Circuit decisions, including Ultramercial, Inc. v. Hulu, LLC, buySAFE, Inc. v. Google, Inc., Accenture Global Servs., GmbH v. Guidewire Software, Inc., and Bancorp Servs., L.L.C. v. Sun Life Assur. Co.  In each of these cases, Judge Chen noted, the claims were "recited too broadly and generically to be considered sufficiently specific and meaningful applications of their underlying abstract ideas," despite the claims including computer hardware elements.  Instead, Judge Chen found that these claims were directed to the patent-ineligible concept of "the performance of an abstract business practice on the Internet or using a conventional computer."

Turning to the '399 patent, Judge Chen observed that the asserted claims "do not recite a mathematical algorithm . . . [n]or do they recite a fundamental economic or longstanding commercial practice."  In spite of the business-related nature of the claims (retaining or increasing website traffic), Judge Chen found that this problem, as well as the claimed solution, was "particular to the Internet."

With respect to the first prong of Alice, Judge Chen entertained NLG's characterization of the claims as encompassing the abstract ideas of "making two web pages look the same," "syndicated commerce on the computer using the Internet," and "making two e-commerce web pages look alike by using licensed trademarks, logos, color schemes and layouts."  But ultimately, he punted on the first prong and instead held that the claims satisfy the second prong of the test.

In doing so, he went to lengths distinguishing the claims from those of Ultramercial, another case that featured claims related to Internet commerce, but one in which the claims were invalidated under § 101 just three weeks earlier.  Rather than viewing DDR's invention as a business method, Judge Chen found that "the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks," and that the claims "address the problem of retaining website visitors that, if adhering to the routine, conventional functioning of Internet hyperlink protocol, would be instantly transported away from a host's website after clicking on an advertisement and activating a hyperlink."

In contrast to Ultramercial, the '399 patent does not "broadly and generically claim use of the Internet to perform an abstract business practice (with insignificant added activity)."  Instead, the claims "specify how interactions with the Internet are manipulated to yield a desired result -- a result that overrides the routine and conventional sequence of events ordinarily triggered by the click of a hyperlink."  The claimed system changes the normal operation of the Internet so that the visitor is directed to a "hybrid web page that presents product information from the third-party and visual look and feel elements from the host website."  Thus, Judge Chen concluded that, when viewed an as ordered combination, the claimed invention "is not merely the routine or conventional use of the Internet," nor do the claims preempt any of the abstract ideas suggested by NLG.

Not only does this case give us another data point of how a computer-implemented invention that incorporates an abstract idea can be patent-eligible (Diamond v. Diehr is the other notable example), but it also provides the first appellate use of the second prong of the Alice test to do so.  Although he does not explicitly say as much, Judge Chen appears to believe that the claimed technical improvement to the operation of the Internet meets the "significantly more" criteria from Alice and Mayo, where an improvement to the operation of a computing system is enough to satisfy the second prong of the test.

In dissent, Judge Mayer (who is notable for his sweeping applications of this test when concurring in Ultramercial and I/P Engine, Inc. v. AOL Inc.) found DDR's patents too broad and vague to be patent-eligible, and that their "reach is vastly disproportionate to their minimal technological disclosure."  Instead, Judge Mayer asserted that the claims recite "a goal -- confusing consumers by making two web pages look alike -- but disclose no new technology, or inventive concept."

Judge Mayer held the inventions in disdain because "much of what they disclose is so rudimentary that it borders on the comical."  He would categorize the claimed elements of a data store, a web page with a hyperlink, and a computer processor as generic, and therefore insufficient to meeting the second prong of Alice.  Moreover, Judge Mayer found that the 10,000-foot level concept recited by the claims, of "a store within a store" was in widespread use in the physical world well before the advent of e-commerce.

Now, to his credit, Judge Mayer did rely on inventor testimony to establish this notion.  Nonetheless, just because there is some possible real-world analogy to a computer-implemented claim does not imply that such a claim operates in the same fashion as the analogous behavior, or preempts the concept itself.  In fact, Judge Chen explicitly rejected this notion.  Judge Mayer's refusal to view the claimed elements as a whole -- as an ordered combination -- seems to be a basis of his disagreement with Judge Chen.

When viewed through a warped lens, almost any technical invention can be seen as entrepreneurial or a business method.  After all, the goal of many inventions is to make the inventors rich.  But, according to the Supreme Court, claims that improve the operation of a computer are patent-eligible even if those claims recite an abstract idea such as a business method.  DDR's claims changed the operation of a computer so that new and beneficial features were possible.  Judge Mayer's far-reaching application of the Alice test is evidence that the Federal Circuit is still fractured over § 101.

DDR Holdings, LLC v. Hotels.com, L.P. (Fed. Cir. 2014)
Panel: Circuit Judges Wallach, Mayer, and Chen
Opinion by Circuit Judge Chen; dissenting opinion by Circuit Judge Mayer

Court Report

        By Sherri Oslick --

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

Reckitt Benckiser Pharmaceuticals Inc. et al. v. Teva Pharmaceuticals USA Inc.
1:14-cv-01451; filed December 2, 2014 in the District Court of Delaware

• Plaintiffs:  Reckitt Benckiser Pharmaceuticals Inc.; RB Pharmaceuticals Ltd.; MonoSol Rx LLC
• Defendant:  Teva Pharmaceuticals USA Inc.

Infringement of U.S. Patent Nos. 8,475,832 ("Sublingual and Buccal Film Compositions," issued July 2, 2013), 8,017,150 ("Polyethylene Oxide-Based Films and Drug Delivery Systems Made Therefrom," issued on September 13, 2011), and 8,603,514 ("Uniform Films for Rapid Dissolve Dosage Form Incorporating Taste-Masking Compositions," issued December 10, 2013) following a Paragraph IV certification as part of Teva's filing of an ANDA to manufacture a generic version of Reckitt Benckiser's Suboxone® (buprenorphine hydrochloride and naloxone hydrochloride sublingual film, used for the maintenance treatment of opioid dependence).  View the complaint here.

Meda Pharmaceuticals Inc. et al. v. Apotex Inc. et al.
1:14-cv-01453; filed December 2, 2014 in the District Court of Delaware

• Plaintiffs:  Meda Pharmaceuticals Inc.; Cipla Ltd.
• Defendants:  Apotex Inc.; Apotex Corp.

Infringement of U.S. Patent Nos. 8,163,723 ("Combination of Azelastine and Steroids," issued April 24, 2012) and 8,168,620 (same title, issued May 1, 2012), licensed to Meda, following a Paragraph IV certification as part of Apotex's filing of an ANDA to manufacture a generic version of Meda's Dymista® (azelastine hydrochloride and fluticasone prioionate combination nasal spray.  View the complaint here.

Helsinn Healthcare S.A. et al. v. Exela Pharma Sciences LLC et al.
1:14-cv-01444; filed December 1, 2014 in the District Court of Delaware

• Plaintiffs:  Helsinn Healthcare S.A.; Roche Palo Alto LLC
• Defendants:  Exela Pharma Sciences LLC; Excela PharmSci Inc.; Exela Holdings Inc.

Infringement of U.S. Patent Nos. 8,518,981 ("Liquid Pharmaceutical Formulations of Palonosetron," issued August 27, 2013) and 8,598,218 (same title, issued December 3, 2013) following a Paragraph IV certification as part of Exela's filing of an ANDA to manufacture a generic version of Helsinn's Aloxi® (palonosetron hydrochloride intravenous solution, used to prevent chemotherapy induced nausea and vomiting).  View the complaint here.

Otsuka Pharmaceutical Co., Ltd. v. Alembic Pharmaceuticals Ltd. et al.
1:14-cv-07405; filed November 26, 2014 in the District Court of New Jersey

• Plaintiff:  Otsuka Pharmaceutical Co., Ltd.
• Defendants:  Alembic Pharmaceuticals Ltd.; Alembic Ltd.; Alembic Global Holding SA; Alembic Pharmaceuticals Inc.

Infringement of U.S. Patent No. 8,759,350 ("Carbostyril Derivatives and Serotonin Reuptake Inhibitors for Treatment of Mood Disorders," issued June 24, 2014) following a Paragraph IV certification as part of Alembic'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.

Bausch & Lomb Inc. et al. v. Micro Labs USA, Inc. et al.
1:14-cv-07406; filed November 26, 2014 in the District Court of New Jersey

• Plaintiffs:  Bausch & Lomb Inc.; Bausch & Lomb Pharma Holdings Corp.; Senju Pharmaceutical Co., Ltd.
• Defendants:  Micro Labs USA, Inc.; Micro Labs Ltd,

Infringement of U.S. Patent No. 8,784,789 ("Aqueous Liquid Preparations and Light-Stabilized Aqueous Liquid Preparations," issued July 22, 2014) following a Paragraph IV certification as part of Micro's filing of an ANDA to manufacture a generic version of Bausch & Lomb's Bepreve® (bepotastine besilate ophthalmic solution, used for the treatment of itching associated with allergic conjunctivitis).  View the complaint here.

Noven Therapeutics, LLC v. Prinston Pharmaceutical Inc. et al.
2:14-cv-07400; filed November 26, 2014 in the District Court of New Jersey

• Plaintiff:  Noven Therapeutics, LLC
• Defendants:  Prinston Pharmaceutical Inc.; Solco Healthcare U.S., LLC; Huahai US Inc.

Infringement of U.S. Patent Nos. 5,874,447 ("4-Phenylpiperidine Compounds for Treating Depression," issued February 23, 1999), 7,598,271 ("Crystalline Paroxetine Methane Sulfonate," issued October 6, 2009), and 8,658,663 ("Method of Treating Thermoregulatory Dysfunction with Paroxetine," issued February 25, 2014) following a Paragraph IV certification as part of Prinston's filing of an ANDA to manufacture a generic version of Noven's Brisdelle® (paroxetine mesylate, used for the treatment of moderate to severe vasomotor symptoms (VMS) associated with menopause).  View the complaint here.

Supernus Pharmaceuticals, Inc. v. Zydus Pharmaceuticals (USA) Inc. et al.
2:14-cv-07272; filed November 21, 2014 in the District Court of New Jersey

• Plaintiff:  Supernus Pharmaceuticals, Inc.
• Defendants:  Zydus Pharmaceuticals (USA) Inc.; Cadila Healthcare Ltd.

Infringement of U.S. Patent Nos. 8,298,576 ("Sustained-Release Formulations of Topiramate," issued October 30, 2012,), 8,298,580 (same title, issued October 30, 2012), and 8,663,683 (same title, issued March 4, 2014) following a Paragraph IV certification as part of Zydus' filing of an ANDA to manufacture a generic version of Supernus' Trokendi XR® (topiramate extended-release, used to treat certain types of seizures).  View the complaint here.

Conference & CLE Calendar

December 8, 2014 - "Demonstrating Patent Eligibility Post-Alice Corp. Decision -- Navigating the Nuances and Leveraging Guidance From Federal Circuit and PTAB Opinions" (Strafford) - 1:00 to 2:30 pm (EST)

December 10, 2014 - European Patent Reform Forum (Managing Intellectual Property) - San Jose, CA

December 11, 2014 - "Is Inequitable Conduct Making Its Comeback?" (American Intellectual Property Law Association) - 12:30 - 2:00 pm (Eastern)

December 11, 2014 - "IP Due Diligence in M&A Transactions -- Conducting IP Investigations and Leveraging Results During Deal Negotiations" (Strafford) - 1:00 to 2:30 pm (EST)

December 11, 2014 - "Appealing to the Federal Circuit From PTAB Decisions in AIA Review Proceedings" (Federal Circuit Bar Association) - 12:00 to 1:00 pm (EST)

December 12, 2014 - European Patent Reform Forum (Managing Intellectual Property) - New York, NY

December 15, 2014 - "Evolving PTAB Trial Practice: Navigating Complex Procedural Rules -- Strategically Using Routine and Additional Discovery, Requests for Joinder, and Motions to Amend" (Strafford) - 1:00 to 2:30 pm (EST)

December 16, 2014 - "Strategic Considerations Before Kick-Starting an IPR" (American Bar Association (ABA) Center for Professional Development and Section of Intellectual Property Law) - 1:00 to 2:30 pm (ET)

December 16, 2014 - "Inter-Partes and Post-Grant Reviews: How to Protect Your University IP" (Technology Transfer Tactics) - 1:00 to 2:00 pm (ET)

December 18, 2014 - "Protecting Your Intellectual Property: Best Practices for China" (American Bar Association (ABA) Center for Professional Development, Law Practice Division, Section of Intellectual Property Law, Section of International Law, Section of Science & Technology Law, and Solo, Small Firm and General Practice Division) - 11:00 am to 12:30 pm (ET)

January 13-14, 2015 - Advanced Summit on Life Sciences Patents (American Conference Institute) - New York, NY

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

ACI Conference on Life Sciences Patents

American Conference Institute (ACI) will be holding an Advanced Summit on Life Sciences Patents on January 13-14, 2015 in New York, NY.  ACI faculty will offer sessions on:

• Protecting patents in light of increasingly strict § 101 patentability standards post-Myriad and USPTO patent eligibility guidelines
• Demystifying the doctrine of obviousness-type double patenting and analyzing its interplay with patent term extension (PTE) post-Gilead
• Using inter partes review (IPR) and post-grant review (PGR) offensively and defensively in the life sciences space
• Drafting strong claims and protecting patents in light of written description and indefiniteness challenges post-Abbvie and Nautilus

In particular, ACI's faculty will offer presentations on the following topics:

• Policy and Patents: How the Federal Circuit and PTO Can Best Work Together to Protect Life Sciences Innovation Going Forward
• Crisis in the Industry: Protecting Life Sciences Patents in Light of Increasingly Strict § 101 Patentability Standards
• Practical Strategies for Dealing with the Shifting Landscape of Obviousness-Type Double Patenting
• It's All about How Many Days, Months, Years are Left. . . Patent Term Adjustment and Patent Term Extension: Understanding the Practical Impact of this Year’s Game Changing Cases -- to be presented in part by Patent Docs author Kevin Noonan
• Lessons Learned From the First IPRs and PGRs: Best Practices for Offensive and Defensive Use of AIA Procedures in the Life Sciences Space
• Focus on Antibodies: Understanding Tightened § 112 Standards for Written Description
• Bracing for the Fallout from Inducement and Divided Infringement on Method of Treatment Claims for Pharmaceutical, Biotechnology, and Diagnostic Patents
• In-House Round Table: Strategically Executing a Cohesive International Life Sciences Patent Strategy for Established and Emerging Markets
• ETHICS and Life Sciences IP: Inequitable Conduct, New PTO Ethical Rules, and Special Concerns for Contested Matters Before the PTO

In addition, a pre-conference master class entitled "They're Here: Incorporating Biosimilars into Current Life Sciences Patent Strategies" will be offered from 9:00 am to 12:00 pm on January 13, 2015, and a post-conference interactive working group entitled "Working with SPEs: Best Practices Guide for Life Sciences Patent Practitioners" from 3:30 to 5:30 pm on January 14.

An agenda for the conference can be found here, and additional information regarding the master class and working group can be found here.  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 is $2,295 (conference and master class or working group) or $2,895 (conference and both master class and working group).  Those registering by December 12, 2014 will receive a $200 discount.  Those interested in registering for the conference can do so here, by e-mailing CustomerService@AmericanConference.com, by calling 1-888-224-2480, or by faxing a registration form to 1-877-927-1563.

Patent Docs is a media partner of ACI's Advanced Summit on Life Sciences Patents.

Webinar on PTAB Trial Practice

Strafford will be offering a webinar/teleconference entitled "Evolving PTAB Trial Practice: Navigating Complex Procedural Rules -- Strategically Using Routine and Additional Discovery, Requests for Joinder, and Motions to Amend" on December 15, 2014 from 1:00 to 2:30 pm (EST).  Greg H. Gardella and Scott A. McKeown of Oblon Spivak McClelland Maier & Neustadt will provide guidance to counsel on Patent Trial and Appeal Board (PTAB) trial practice, focusing on discovery, joinder and motions to amend, and examine guidance issued by the PTAB, as well as lessons from recent PTAB decisions.  The webinar will review the following questions:

• What is the PTAB’s current approach to joinder?
• How can counsel use the PTAB’s recent guidance on routine and additional discovery most effectively?
• What are best practices for using joinder in a case before the PTAB?

The registration fee for the webinar is $297 ($362 for registration and CLE processing).  Those interested in registering for the webinar, can do so here.

Webinar on IPR Strategy

The American Bar Association (ABA) Center for Professional Development and Section of Intellectual Property Law will be offering a live webinar entitled "Strategic Considerations Before Kick-Starting an IPR" on December 16, 2014 from 1:00 to 2:30 pm (ET).  Jennifer Lee Bailey, Kim E. Choate, Margaret McInerney Welsh, and Thomas Victor Miller discuss factors that a potential Petitioner should consider before filing an inter partes review (IPR), including:

• Statutory and regulatory requirements
• Claim construction
• Asserted grounds
• Expert declarations

The registration fee for the webcast is $150 for members and $195 for the general public.  Those interested in registering for the webinar, can do so here.

FCBA Webcast on Appealing PTAB Decisions

The Federal Circuit Bar Association (FCBA) will be holding a panel discussion webinar entitled " Appealing to the Federal Circuit From PTAB Decisions in AIA Review Proceedings" on December 11, 2014 from noon to 1:00 pm (EST).  Scott Weidenfeller of the USPTO Office of the Solicitor, John Dragseth of Fish & Richardson P.C., and Timothy Salmon of Cuozzo Speed Technologies LLC and Empire IP LLC will discuss appeals of final decisions of the USPTO's Patent Trial and Appeal Board (PTAB) in AIA review proceedings (i.e., inter partes review, post-grant review, and covered business method patent review) to the United States Court of Appeals for the Federal Circuit and the unique aspects of and interesting issues in these types of appeals.  The panel discussion will be held at the USPTO, Knox Building, 10th Floor.  Those wishing to participate online can do so by visiting the FBCA's registration website.  Information about registering for this event can be found here.

The registration fee for the webcast is $120 (non-member private practitioners), $35 (non-member government/academic/retired), or complimentary for FCBA members.  Those interested in registering for the webcast, can do so here.

PTAB Update -- Amending Claims in an IPR Proceedings

By Andrew Williams --

Just what does it take to amend your claims during an IPR proceeding before the PTAB?  Of course, the America Invents Act ("AIA") specifically provides that Patent Owners may file one motion to amend the claims.  AIA, § 316(d)(1).  However, most people in the patent community are well aware that the PTAB has only granted one such motion, in a case in which the motion to amend was unopposed, and in which the patent owner was the United State of America!  Therefore, it is understandable that most practitioners view the prospect of amending claims as futile.  To appease these concerns, the PTAB has been issuing instructions and guidance for well over a year.  In an early example, the Idle Free Systems, Inc. v. Bergstrom, Inc. case (IPR2012-00027) provided one of the first sets of guidance on motions to amend on June 11, 2013 (Paper 26), which is still cited regularly today.  In fact, it can be found on the Patent Office PTAB Representative Decisions page under the heading "Motions to Amend."  The Patent Office also released a message on its AIA Blog on May 5, 2014, entitled "How to Make Successful Claim Amendments in an AIA Trial Proceeding."  Nevertheless, either no one was paying attention, or more likely, amending claims is not as easy as the PTAB has suggested it would be.  In its latest attempt, a three-APJ panel released an order "On Motion to Amend Claims" on October 30, 2014 in the Corning Optical Communications RF, LLC v. PPC Broadband, Inc. case, IPR2014-00441 (Paper 19).

The Corning Optical guidance was issued after a telephone conference between the parties and Judges Jameson Lee, Josian C. Cocks, and Jacqueline Wright Bonilla.  Specifically, the Patent Owner was satisfying its requirement "to confer" as found in 37 C.F.R. § 42.121(a).  Nevertheless, the Board provided verbal guidance, followed by the issued order.  Importantly, the Board authorized the Patent Owner to include its proposed substitute claim set as an appendix so as to not count toward the restrictive 15-page limit.

The Substitute Claim Set

The PTAB regulations require that the substitute claim set appear as a claim listing and be responsive to the ground of unpatentability.  See C.F.R. § 42.221(a)(2)(i) and (b).  Moreover, there is a presumption that for every claim at issue, only one substitute claim is reasonable.  The Board warned, however, that this does not mean that the Patent Owner can simply maintain the same number of claims.  Instead, each substitute claim must be traceable back to an original patent claim at issue.  In addition, the Patent Owner should not eliminate any feature or element from the claims.  If the Patent Owner believes that more than one substitute claim is required for one or more particular claims, they should "articulate a special circumstance to justify the request."  Finally, the substitute claim set must identify what the changes are to the original claims, ideally with the use of brackets for deletions and underlining for additions.

Burden of Proof

The regulations provide that the Patent Owner bears the burden of proof in establishing it is entitled to amended claims.  37 C.F.R. § 42.20(c).  The reason that is commonly given by the Office is that if the motion is granted, the claim set will be added to an issued patent without examination.  Of course, this is contrary to the justification provided for the use of the Broadest Reasonable Interpretation standard for claim construction (which is used, in part, because the claims are allegedly being examined and can therefore be amended).  Nevertheless, in general, the Patent Owner must show patentability.

An IPR can only be instituted based on citation to certain types of prior art (patents and printed publications) on 35 U.S.C. § 102 (anticipation) or § 103 (obviousness) grounds.  However, with respect to showing that a substitute claim set is patentable, there is no such limitation.  As we reported at the time, the Board in the Ariosa Diagnostics v. Isis Innovation Ltd. Final Written Decision, IPR2012-00022 (Paper 166) denied a motion to amend claims because the Patent Owner failed to show patentability under 35 U.S.C. § 101.  As the Board stated, "when considering a motion to amend, we do not examine and allow or reject the substitute claims, but determine whether the patent owner has met its burden of establishing that it is entitled to the substitute claims that it seeks in its motion to amend" (emphasis in original).  Important to this decision, however, was that the original claims had been found by a District Court to have failed the patent eligibility requirement of § 101.  Nevertheless, if there is any question, it might be advisable for any Patent Owner to explain why the substitute claims are patent eligible (in addition to the other requirements related to patentability).

Writing Description Support

The regulations also provide that the Patent Owner must show where written description support can be found in the specification for the proposed substitute claims.  37 C.F.R. § 42.221(a)(2)(ii).  This citation should be to the original disclosure, not the issued patent.  Also, support must be shown for the entire claim, not just the newly added feature.

Claim Construction

If the meaning of any newly added term can reasonably be thought to be in dispute, the Patent Owner should provide a proposed claim construction.  If this is a means-plus-function, the corresponding structure, material, or act should be identified.  Moreover, it is unsufficient to state that the term should be given its plain and ordinary meaning.  Instead, such meaning should be provided with any supporting evidence.

Patentability

Notwithstanding the outcome in the Ariosa Final Written Decision, the Board in this guidance noted that the Patent Owner must show patentability over the prior art if the trial was instituted over prior art.  Of course, this demonstration is not limited to references cited by the Petitioner, but instead must account for all prior art.  For example, for any new feature found in the substitute claims, "it should be revealed whether the feature was previously known anywhere, in whatever setting, and whether or not the feature was known in combination with any of the other elements in the claim."  Luckily, the Patent Owner is not expected to be aware of everything that the hypothetical person ordinary skill in the art is, but it should reveal what it does know, and how it might be relevant.  Of course, the Patent Owner should explain the level of skill in the art, ideally as it relates to the newly added claim limitation.  It would also be useful to include any textbooks or conventional practices related to the added feature.  And, as we have seen, conclusory statements of patentability are not useful.

Based on a review of the outcome of these motions, this requirement appears to be the reason most are not granted.  Therefore, it might be instructive to look at the only case that granted (in part) a motion to amend -- International Flavors & Fragrances Inc. v. The United States of America (IPR2013-00124).  That case related to a patent with methods for repelling arthropods (such as ticks and mosquitoes) using particular isolongifolenone analogs.  The claim amendment sought to limit the broadest independent claim drawn to the genus by specifying a markush group of five analogs from which the isolongifolenone analog could be selected.  The Patent Owner did reference the publication cited during institution as the "'apparent' closest prior art."  The Board believed that the Patent Owner's statement was conclusory.  However, the Patent Owner's explanation of what would have been understood by one of ordinary skill in the art carried the day (with the possible help of an expert declaration and citation to several publications).

Specifically, the Board noted the Takeda standard for determining the obviousness of small molecules:  "it remains necessary to identify some reason that would have led a chemist to modify a known compound in a particular manner to establish prima facie obviousness of a new claimed compound."  Takeda Chem. Indus., Ltd. v. Alphapharm Pty., Ltd., 392 1350, 1357 (Fed. Cir. 2007).  In this case, the Patent Owner cited to several references demonstrating that minor structural changes to the relevant compounds can result in very different properties, especially with regard to repelling insects.  Because there was not a "small or easily traversed" number of molecules disclosed in the prior art references, and the Patent Owner was able to demonstrate why one of ordinary skill in the art would not have modified the lead compound, the Board found that the Patent Owner established patentability of the substitute claim set.

Not every case is going to have such a straight forward proof of the negative -- that the prior art does not render the claims unpatentable.  Nevertheless, if possible, a Patent Owner would be well advised to cite to prior art references that establish that the substituted claims are both not present in the prior art, nor rendered obviousness in the view of the art.  This will help to turn a negative proof (it's not unpatentable) into a positive one (the prior art establishes that one skilled in the art would not have arrived at the claimed invention).

It can only be hoped with this newly issued guidance for seeking to amend claims in IPR proceedings will result in making it easier to amend claims.  We will continue to monitor such motions, to see if Patent Owners are heeding the advice of the PTAB, or to see if it is truly futile to seek to amend claims, regardless what the PTAB has been recently saying.

Par Pharmaceutical, Inc. v. TWi Pharmaceuticals, Inc. (Fed. Cir. 2014)

By Kevin E. Noonan --

That it is more difficult today to be a patentee able to defend her patent rights than any time since the 1940's is nicely illustrated by the Federal Circuit's decision in Par Pharmaceutical, Inc. v. TWI Pharmaceuticals, Inc., where the patentee prevailed only to face almost certain defeat on remand.

This is an ANDA case involving certain formulations of megestrol acetate, a compound known in the art as an appetite stimulant for use with cancer patients and AIDS patients to treat cachexia and for treating anorexia and other conditions where there is a significant loss of body mass.  The invention provided modified megestrol formulations where the drug was administered as "nanosized" particles; the prior art administered megestrol acetate in micronized form, sold by Bristol-Myers Squibb as Megace OS, which formulation had been the target of ANDA litigation.  Par had obtained FDA approval for marketing its own form of Megace OS, but rather than enter the marketplace with this formulation contracted with Alkermes Pharma Ireland (formerly Elan Pharmaceuticals) to adapt that company's nanoparticle technology (termed "NanoCrystals") to make nanosized megestrol acetate formulations (which it termed Megace ES and for which Par also received FDA approval).

During prosecution, the PTO rejected method claims for using these formulations as being obvious over the combination of prior art disclosing micronized megestrol acetate formulations with prior art NanoCrystal formulation methods.  The Office initially found these formulation claims obvious, but Par obtained U.S. Patent No. 7,101,576 by including "wherein" clauses, based on its discovery that the nanosized formulations had a reduced "food effect" when compared to micronized formulations; specifically, the nanosized version did not increase nutrient absorption (rate or extent) which the panel noted was important for treating AIDS patients.  Claim 1 of the '576 patent is illustrative:

A method of increasing the body mass in a human patient suffering from anorexia, cachexia, or loss of body mass, comprising administering to the human patient a megestrol formulation, wherein:
    (a)  the megestrol acetate formulation is a dose of about 40 mg to about 800 mg in about a 5 mL dose of an oral suspension;
    (b)  the megestrol acetate formulation comprises megestrol particles having an effective average particle size of less than about 2000 nm, and at least one surface stabilizer associated with the surface of the megestrol particles; and
    (c)  the administration is once daily;
    wherein after a single administration in a human subject of the formulation there is no substantial difference in the C_max of megestrol when the formulation is administered to the subject in a fed versus a fasted state,
    wherein fasted state is defined as the subject having no food within at least the previous 10 hours, and wherein fed state is defined as the subject having a high-calorie meal within approximately 30 minutes of dosing.

TWi Pharmaceuticals filed an ANDA for Par's nanosized formulation, and in its Paragraph IV letter asserted invalidity on four grounds: "(1) the claims are invalid as obvious under 35 U.S.C. § 103 []; (2) the claims do not cover patentable subject matter under § 101; (3) the claims are not enabled under § 112; and (4) Par does not have standing to assert its claims."

The District Court did not reach any of TWi's invalidity contentions other than obviousness, for which it based its opinion on several prior art references that fell into two broad categories:  first, art related to "the pharmacokinetic properties of megestrol, and [second] the use of nanoparticle technology in drug formulation."  In addition to the prior art use of Megase OS, the Court considered scientific references relating to how the drug was absorbed using micronized formulations.  With regard to nanoparticle technology used for drug formulations the District Court considered prior U.S. and EP patents showing that particles having sizes in the range of 400-1000 nm were useful particularly for drugs having low aqueous solubility.  Included in these references was U.S. Patent No. 5,145,684 ("'684 patent"), which disclosed improved bioavailability of Class II drugs related to megestrol using nanosized technology. Another reference particularly noted by the District Court was a reference suggesting that nanosized drug formulations could be used to improve bioavailability and decrease the food effect, in R.H. Müller et al, Nanosuspensions as Particulate Drug Formulations in Therapy: Rationale for Development and What We Can Expect for the Future, 47 Advanced Drug Delivery Rev. 3–19 (2001); Par relied upon these advantages to overcome an obviousness rejection during patent prosecution.

While the District Court was unwilling to grant summary judgment of invalidity to TWi, it did enter judgment against Par after a bench trial, finding that the use of megestrol and the advantages of nanosized drug formulations were known in the prior art.  To counter Par's argument that the prior art did not teach the advantageous properties of nanosized megestrol acetate formulations on the "food effect" as recited in the "wherein" clauses of Par's claims, the District Court held that these were the consequence of the "pharmacokinetic parameters of these formulations" and thus were "inherent" properties of these formulations.  The Court also found that known patient-to-patient variabilities in prior art micronized megestrol formulations like Megace OS provided sufficient motivation to use nanosized formulations of megestrol even in the absence of any teachings in the art regarding the beneficial reduced food effect.  Thus, the District Court found for TWi that Par's claims were obvious.

The Federal Circuit disagreed, vacating the judgment and remanding for further fact-finding, in an opinion by Judge O'Malley, joined by Judges Wallach and Hughes.  After setting forth the standard of review and the law of obviousness generally, the panel set forth the dispositive issue in the case:  whether all the claimed limitations were disclosed in the prior art (which the opinion sets out as a threshold issue that must be satisfied before questions regarding motivation to combine or reasonable expectation of success can be considered), citing Medichem, S.A. v. Rolabo, S.L., 437 F.3d 1157, 1164 (Fed. Cir. 2006).  The parties generally agreed about the content of the prior art.  In particular, it was also undisputed that the prior art did not expressly disclose any food effect associated with megestrol administration.  The question was whether the food effect limitation was disclosed in the prior art under the principles of inherency.  The District Court found that the food effect limitation was inherently disclosed in the art; the Federal Circuit held this was error.

The panel's analysis began with the definition of inherency and the established principle that "inherency may supply a missing claim limitation in an obviousness analysis," citing Santarus, Inc. v. Par Pharm., Inc., 694 F.3d 1344, 1354 (Fed. Cir. 2012); Alcon Research, Ltd. v. Apotex Inc., 687 F.3d 1362, 1369 (Fed. Cir. 2012); In re Kao, 639 F.3d 1057, 1070 (Fed. Cir. 2011); In re Kubin, 561 F.3d 1351, 1357 (Fed. Cir. 2009), and Ansonia Brass & Copper Co. v. Elec. Supply Co., 144 U.S. 11 (1892) (later in the opinion the panel notes that none of these cases have changed the fundamental approach to the question cited below).  But the opinion reiterates the Court's caution that inherency cannot be based on what may happen but what must happen by a combination of prior art that purportedly will inherently have a property recited as an affirmative limitation in a claim being examined for obviousness, citing In re Rijckaert, 9 F.3d 1531, 1533–34 (Fed. Cir. 1993); In re Oelrich, 666 F.2d 578, 581 (C.C.P.A. 1981); and Application of Shetty, 566 F.2d 81, 86 (C.C.P.A. 1977).  The principle at play in the Court's assessment of the District Court's decision is found in Hansgirg v. Kemmer, 102 F.2d 212, 214 (C.C.P.A. 1939):

Inherency, however, may not be established by probabilities or possibilities.  The mere fact that a certain thing may result from a given set of circumstances is not sufficient.  If, however, the disclosure is sufficient to show that the natural result flowing from the operation as taught would result in the performance of the questioned function, it seems to be well settled that the disclosure should be regarded as sufficient.

Here, the Federal Circuit found that the District Court did not require TWi to produce clear and convincing evidence of such inevitability.  Indeed, the panel noted that the claims themselves contain limitations that contradict what the opinion calls the "district court's broad diktats regarding the effect of particle size on bioavailability and food effect."  The panel acknowledged that it may be the case that reducing particle size is accompanied by a decrease in the food effect, but vacated the judgment because the lower court did not require TWi to provide clear and convincing evidence that such a correlation between decreasing particle size and decreased food effect must occur as required for an inherently disclosed element of a claim when evaluating it for obviousness.  Thus the panel remanded, after further finding that the District Court had not erred in finding both a motivation to combine the cited art and a reasonable expectation of success in producing the claimed formulations.  In coming to these conclusions the panel rejected Par's contention that the skilled worker would not have combined the art to achieve the claimed effect, reminding the parties (and us) that the motivation identified by a court need not be the same motivation that compelled the inventors, citing Allergan, Inc. v. Sandoz, Inc., 726 F.3d 1286, 1292 (Fed. Cir. 2013).  This principle addressed Par's challenge that motivation to combine could not have been present because the art did not recognize the benefits of the combination with regard to the food effect discovered by the patentees.  The Federal Circuit found several other motivations related to, inter alia, interpatient variability in the prior art that served it quite nicely in satisfying the requirement for a motivation to combine.  And while Par argued that these motivations were better served by other modifications in prior art micronized megestrol formulations, the panel noted that "the motivation [need not] be the best option, only [] a suitable option from which the prior art did not teach away," citing Galderma Labs., L.P. v. Tolmar, Inc., 737 F.3d 731, 738 (Fed. Cir. 2013), and Bayer Healthcare Pharm., Inc. v. Watson Pharm., Inc., 713 F.3d 1369, 1376 (Fed. Cir. 2013).

Regarding the reasonable expectation of success, the opinion found that the NanoCrystal technology was sufficiently well established that the skilled worker would have expected to be able to adapt the prior art micronized formulations of megestrol acetate to the claimed nanosized formulations and that these would have a reasonable likelihood (albeit not a certainty, which is not required under the In re O'Farrell standard, 853 F.2d 894, 903–04 (Fed. Cir. 1988)) to be operable.  The panel also rejected Par's contentions that the prior art taught away from micronized megestrol acetate formulations, particularly because that art did not discuss important features of the claimed invention (such as nanosized megestrol formulations).  Finally, the opinion also rejected Par's evidence of secondary considerations.

Despite this victory on appeal, Par's problems are only beginning in view of TWi's assertion of an invalidity defense based on subject matter eligibility.  In addition to being several district courts' basis du jour for invalidating claims, the similarities between the claims at issue in this case and the Prometheus claims struck down by the Supreme Court in Mayo v. Prometheus is uncanny:

Not to belabor the point, but megestrol acetate formulations and methods for administering them were well established in the art, like the administration step in the Prometheus claims, and formulating megestrol into nanosized particles can easily be encompassed within the Mayo court's "well-established, routine and conventional" rubric.  Most telling, the novelty of the Par claims, like the novelty of Prometheus's claims, reside in the "wherein" clauses, which were in Mayo and are likely to be here insufficient to provide that ineluctable "something more" required by the Mayo opinion to provide subject matter eligibility.

Rendering Par's prevailing in its appeal a likely Pyrrhic victory at best and suggesting that the exercise before the Federal Circuit was merely a way station to a negotiated settlement.  No doubt such a settlement will then be subject to FTC scrutiny under FTC v. Actavis to determine whether settling raises antitrust liability.

Par Pharmaceutical, Inc. v. TWi Pharmaceuticals, Inc. (Fed. Cir. 2014)
Panel: Circuit Judges O'Malley, Wallach, and Hughes
Opinion by Circuit Judge O'Malley

Examination of Myriad-Mayo Guidance Comments -- The Coalition for 21st Century Medicine -- Part II

By Donald Zuhn --

On March 4, the U.S. Patent and Trademark Office issued a guidance memorandum, entitled "Guidance For Determining Subject Matter Eligibility Of Claims Reciting Or Involving Laws of Nature, Natural Phenomena, & Natural Products" (or "Myriad-Mayo Guidance"), to implement a new procedure for determining the subject matter eligibility of claims under 35 U.S.C. § 101 in view of the Supreme Court's decisions in Association for Molecular Pathology v. Myriad Genetics, Inc. (2013), and Mayo Collaborative Services v. Prometheus Laboratories, Inc. (2012).  At a public forum hosted at the USPTO in May, the Office encouraged shareholders to submit written comments on the Guidance.  Since the forum, the Office has encouraged the patent community to provide further feedback regarding the Guidance (despite the Office's announced deadline of July 31 for submitting comments).

Comments regarding the Guidance, including five received after the July 31 deadline, have been posted on the USPTO website.  The comments have been divided into seven groups (with the number of submissions in each group also provided):  Intellectual property organizations and other associations (21), government agencies (0), academic and research institutions (4), law firms (7), companies (8), individuals (43), and comments received after August 1, 2014 (5).  Yesterday, we presented Part I of an examination of comments submitted on August 6, 2014 by The Coalition for 21st Century Medicine (note: the Coalition also was a signatory on joint comments submitted on October 14, 2014 by the Biotechnology Industry Organization, five companies, and six individuals (see "Examination of Myriad-Mayo Guidance Comments -- BIO Joint Comment")).  Today, we present Part II of our examination of the Coalition's comments.

The Coalition's 45-page letter provides proposed examination processes for analyzing composition claims and method claims (pages 3-12) and more than 30 pages of examples providing 41 exemplary claims and an analysis of each claim under the Coalition's proposed "practical framework".  In Part I of our examination of the Coalition's comments, we discussed the group's proposed process for analyzing composition claims.  Today, we discuss the Coalition's proposed process for analyzing method claims.  In a subsequent post, we will examine some of the examples and exemplary claims set forth in the Coalition's letter.

With respect to method claims, the Coalition contends that:

The case law urges a fairly simple threshold question:  "Has the applicant claimed a law of nature per se?"  While claims to laws of nature per se are ineligible, claims to applications of laws of nature are eligible.

The letter notes that this two-step analysis was set forth in Mayo, as discussed by the Court in Alice Corp. v. CLS Bank Int’l. (2014):

In Mayo Collaborative Services v. Prometheus Laboratories, Inc. we set forth a framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts.  First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts.  If so, we then ask, "[w]hat else is there in the claims before us?"(internal citations omitted).

The Coalition explains that "[b]ecause applicants are unlikely to explicitly claim a bare law of nature, precedent urges patent reviewers to look a little closer at method claims to make sure the applicant hasn't in effect claimed the law of nature by, e.g., merely including a token reference to 'applying' the law of nature."  However, the Coalition argues that "[t]his caution from the courts should not be over read, however, to mean that broad applications are categorically ineligible or that method claims must recite specifics of the process at arbitrarily high levels of detail."

In examining method claims for subject matter eligibility, the Coalition suggests that the following questions be addressed:

1.  Does the claim appear, on its face, to recite a natural principle?

2.  What is the natural principle potentially claimed and how is it recited in the claim?

3.  Does the claim recite a process that is different in any way from that which is well understood, routine and conventional in the art?

With respect to the first question, the letter notes that:

The primary cases in this area are Benson, Flook, Diehr, Mayo, and Alice.  These cases tend to give not an actual analytical framework but instead examples from which general principles of analysis can be gleaned.  For example, Benson, Flook and Diehr together teach that a claim reciting a mathematical algorithm facially raises the question of whether an abstract idea is being claimed.  This is not to say that all claims involving such an algorithm are improperly directed to an abstract idea, as made clear by Diehr.  Instead, these cases teach that the presence of the algorithm facially raises the issue and warrants further analysis . . . ."

Mayo similarly teaches that "wherein" clauses in a method claim will often facially raise the question of whether an abstract idea or natural principle is being claimed.  Again, this is not because "wherein" clauses are always problematic.  Such clauses can often recite important structure or steps in a process that meaningfully limit a claim to an application of a natural principle.

Moving on to the second question, the Coalition declares that "[t]his may be the most important part of the analysis," adding that in answering the question, "[i]t is critical to understand the difference between a law of nature and a statistical correlation."  The Coalition then points to gravity as an example of a law of nature, and the relationship between a numerical gene expression score and the presence of brain cancer as an example of a statistical correlation.  The letter then explains that:

There cannot be any single, direct mechanistic connection between a human-created numerical score (i.e., a number) and the presence of the disease.  . . .  [T]he critical question is whether humans truly made the process or not.  No human made gravity; we simply discovered it and the natural laws by which it operates.  A human created the numerical expression score and likewise "created" the correlation through statistics (a human-created mathematical endeavor).

Nevertheless, the letter acknowledges that "a claim to a statistical correlation may not be patent-eligible as it is arguably an abstract idea."  As an example, the letter suggests that if one determines that obese patients tend to have higher blood lipid levels, one "cannot claim 'the correlation between obesity and blood lipid levels' or even 'a method comprising determining whether a patient is obese, wherein obesity indicates (or correlates to) increased blood lipid levels,'" but rather "must claim an application of the statistical correlation such as a method of using obesity as a prescreen for determining which patients should have their blood lipid levels tested."

The Coalition then discusses the final prong of its proposed process of analyzing method claims.  In answering the third question, the Coalition suggests that "one helpful way to assess whether a natural principle is being claimed is to find the closest prior art process and compare it side-by-side to the claimed process."  The letter uses the Mayo case as an example of such a comparison, providing the following chart:

The letter states that:

The [Mayo] Court found that the only difference between the prior art method and the claimed method was the "wherein" clauses.  But these merely describe (or inform an audience about) a pre-existing but newly "discovered" fact about the process; they do not specify any new or even modified step, structure or element of the process.  In this way they are not truly a part of the process and do not "meaningfully limit" the claim (or even limit it at all).  This simple fact is the central reason the claims in Mayo were patent ineligible[.]

Despite asking whether a claim recites a process that differs from that which is well understood, routine and conventional in the art, the Coalition argues that "[i]t is critical to recognize that, despite the use of terms like 'well-understood,' 'routine,' or 'conventional,' this is not an obviousness analysis."  In particular, the Coalition contends that "[a] claimed process is not ineligible simply because it differs from what was routine and conventional in a way that, in view of the newly discovered natural principle, would have been obvious."

In a subsequent post, we will examine some of the examples and exemplary claims set forth in the Coalition's letter and how the group applies its proposed examination processes for analyzing composition claims and method claims to those exemplary claims.

For additional information regarding this topic, please see:

• "Examination of Myriad-Mayo Guidance Comments -- The Coalition for 21st Century Medicine," Ecember 1, 2014
• "BIO IPCC Panel Discusses Impact of Myriad-Mayo Guidance," November 13, 2014
• "USPTO Provides Update on Status of Revised Myriad-Mayo Guidance," November 12, 2014
• "Examination of Myriad-Mayo Guidance Comments -- University Community Joint Comment," October 28, 2014
• "Examination of Myriad-Mayo Guidance Comments -- BIO Joint Comment," October 23, 2014
• "Sherry Knowles Addresses Real World Impact of Myriad-Mayo Guidance at BIO Symposium," October 15, 2014
• "Guest Post: Myriad -- A Direct and Unexceptional Approach," October 12, 2014
• "USPTO Outlines Changes to Myriad-Mayo Guidance at BIO Symposium," September 30, 2014
• "USPTO Expected to Issue Revised Myriad-Mayo Guidance in October," September 17, 2014
• "Guest Post: Myriad-Mayo Guidance -- Consistency With International Harmonization and TRIPS," August 26, 2014
• "Examination of Myriad-Mayo Guidance Comments -- AUTM, COGR, AAU, and APLU," August 21, 2014
• "Examination of Myriad-Mayo Guidance Comments -- International Bioindustry Associations," August 11, 2014
• "Examination of Myriad-Mayo Guidance Comments -- ACLU," August 5, 2014
• "Guest Post: Overview of First Published Comments on Myriad-Mayo Patent Eligibility Guidance," July 13, 2014
• "Guest Post: USPTO Public Forum on Patent Guidance: My Thoughts as a Speaker and Attendee," June 11, 2014
• "USPTO Holds Forum on Subject Matter Eligibility -- Part IV," May 22, 2014
• "USPTO Holds Forum on Subject Matter Eligibility -- Part III," May 15, 2014
• "USPTO Holds Forum on Subject Matter Eligibility -- Part II," May 14, 2014
• "Guest Post: How to Patent Grapefruit Juice -- The New USPTO Guidance for Patent Eligible Subject Matter Is Both Sticky and Sour," May 13, 2014
• "USPTO Holds Forum on Subject Matter Eligibility -- Part I," May 12, 2014
• "USPTO Tries to Address Public Misunderstandings Regarding Myriad-Mayo Guidance," April 16, 2014
• "USPTO Issues Guidance for Analyzing Subject Matter Eligibility of Claims Reciting Laws of Nature/Natural Principles, Natural Phenomena or Natural Products," March 4, 2014