Patent Docs

IPO Webinar on Teva v. Sandoz

The Intellectual Property Owners Association (IPO) will offer a one-hour webinar entitled "After Teva: How Will Patent Litigation Change?" on February 5, 2015 beginning at 2:00 pm (ET).  Paul Berghoff of McDonnell Boehnen Hulbert & Berghoff LLP, Andrei Iancu of Irell & Manella LLP, and Kevin Rhodes of 3M Innovative Properties Co. will untangle the predictions and give their own best analysis regarding the impact of the Supreme Court's decision in Teva v. Sandoz on patent litigation.

The registration fee for the webinar is $130 (government and academic rates are available upon request).  Those interested in registering for the webinar can do so here.

Webinar on Overcoming § 101 Rejections Post-Alice

Strafford will be offering a webinar/teleconference entitled "Overcoming Sect. 101 Rejections Post-Alice Corp. -- Leveraging USPTO Guidance and Recent Decisions to Meet Sect. 101 Patent Eligibility Requirements" on February 12, 2015 from 1:00 to 2:30 pm (EST).  Charles Bieneman of Bejin Bieneman; Denise M. Kettelberger, Ph.D., of Sunstein Kann Murphy & Timbers; and Katherine M. Kowalchyk, Ph.D., of Merchant & Gould will provide guidance for patent counsel for overcoming §101 rejections, and review recent case law and USPTO guidance on §101 patent eligibility and offer strategies to address §101 rejections.  The webinar will review the following questions:

• What impact has the Alice Corp. decision had on §101 rejections?
• What guidance does the USPTO’s memorandum on Preliminary Examination Instructions in light of Alice Corp. provide?
• What other strategies should patent counsel implement to overcome §101 rejections?
• How can patent counsel guide applicants in reducing the likelihood of rejection?

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.

Pro-Patent Coalition Writes Letter to the House and Senate Judiciary Committees

By Kevin E. Noonan --

Last week, what is described as "a broad coalition" representing patent holders and inventors sent a letter to Representatives Bob Goodlatte (VA, 6th) and John Conyers (MI, 13th), Chairman and Ranking Member, respectively, of the House Judiciary Committee; and Senators Chuck Grassley (R-IA) and Patrick Leahy (D-VT), Chairman and Ranking Member, respectively, of the Senate Judiciary Committee, regarding the potential for "patent reform" legislation in this Congress.

The letter begins with the groups bona fides, that the signatories "represent the majority of the nation's patent holders and inventors," and a reminder that they represent "thousands of organizations that employ millions of workers in the United States."  The letter then gets right to the point:  first, that "the future of the U.S. economy, including domestic job growth and our competitive advantage in the global economy" requires a strong patent system that not only provides incentives for inventors to inventor but "protects their inventions from unfair copying by others."

De reguerre, the letter expresses appreciation for the hard work of the committee and a desire to work together.  But the letter also promises that the coalition "will continue to strongly oppose legislation that would weaken the overall patent system and thereby diminish innovation and job creation in the U.S."  The letter also points out that the legal landscape has changed since Rep. Goodlatte introduced his whimsically named "Innovation Act" (H.R. 3309) in the last Congress.  These changes include the five patent cases decided by the Supreme Court in 2014 (Alice, Nautilis, Limelight, Octane Fitness and Highmark), which "are already making it easier to defeat patents, including the kind of patents that often are asserted in abusive litigation, and disincentivizing the bringing of meritless claims."  Also noted are the IPR and CBM provisions of the Leahy-Smith America Invents Act, which "increase patent quality and reduce abusive practices"; the effects of these provisions (which "allow anyone to challenge patents in a fast, relatively inexpensive proceeding before the [] PTAB") "are only now beginning to take hold."  The availability of these provisions have affected litigation, wherein district court judges "are now granting 80% of all motions to stay patent litigation" for patents involved in such proceedings.  Evidence for the effectiveness of IPR and CBM proceedings before the PTAB as illustrated by the statistics that "more than 2,300 patents" have been challenged in the two years since the PTO began implementation, and "fully 75% of the involved claims have been found unpatentable and only about 20% of all patents have survived the proceedings with no changes."

The letter also cites the changes adopted by the Judicial Conference of the United States raising the pleadings standards for patent cases and limiting discovery to what is "proportional to the needs of the case," which the letter asserts will "reduc[e] the ability of patent plaintiffs to use unnecessary discovery requests to drive up [litigation] costs for defendants in an effort to force unwarranted settlements."  These changes are expressly directed to provisions of H.R. 3309 intended to have just those effects.

Finally, the letter notes the efforts of the Federal Trade Commission and states attorneys general to "combat abusive patent demand letters and protect small businesses and consumers from unscrupulous practices" and the settlements imposed on MPHJ Technology investments by the FTC and N.Y. State attorney general.

The letter concludes that "[t]aken together, these judicial and administrative developments, and the plunge in the patent litigation rate, have fundamentally changed the landscape under which patent legislation should be considered."  These developments should be considered "[a]s Congress considers potential changes to the patent system that threaten the constitutionally-guaranteed property rights of innovators."  While again pledging their support "to make improvements to patent law that protect small business, consumers, and the general public from abusive patent litigation," the letter promises that its signatories will "zealously guard[] the United States' competitive edge as the dominant global leader in innovation."

This letter is a refreshing, robust and impassioned defense of the U.S. patent system, which has become the whipping boy for every politician, editor, and putative technology pundit (as well as not a few misguided Supreme Court Justices) over the past ten years.  It's about time.

* These include companies such as Amgen, Dolby Laboratories, Qualcomm, Tessera Technolgies, Alexion Pharmaceuticals, AstraZeneca Pharmaceuticals, DuPont, Biogen Idec, Genzyme, Sunovion Pharmaceuticals, Monsanto, Bayer Crop Science, Celgene, DSM North America, and Merck & Co.; industry groups including BIO, Arizona BioIndustry Association, BioFlorida, San Diego Inventors Forum, Colorado Bioscience Association, CURE – Connecticut United for Research Excellence, BayBio,  SoCalBio, IEEE-USA, Medical Device Manufacturers Association, National Small Business Association, National Venture Capital Association, PhRMA, Small Business Technology Council, Indiana Manufacturers Association, Massachusetts Biotechnology Council, and the North Carolina Biosciences Organization; universities and university groups, including Association of American Universities,  Association of Public Land Grant Universities, Cedar Sinai Medical Center,  Colorado School of Mines, and WARF.

Big Ten Lobbies Congress to Tread Lightly on "Patent Reform"

By Kevin E. Noonan --

One of the frustrations for participants in the patent wars of the early 21st Century has been the failure of many of the most vulnerable stakeholders to take a stand against overreaching proposals by proponents of a crisis atmosphere in patent enforcement (such as the Goodlatte bill, H.R. 3309, ironically entitled "The Innovation Act" passed by the House of Representatives in the last Congress).  Having been spared passage of this bill in the Senate (purportedly by the trial lawyers, who pointedly told the Democratic leadership that they would lose the lawyers support in the midterm elections should the bill pass), at least members of the Big Ten conference of universities have gotten the message.  In a letter to Rep. Sean Duffy (WI 7th) sent January 20th, the presidents and chancellors of all thirteen of the conference's universities* argued against a repeat in this Congress of the provisions in the Goodlatte bill.

After pledging to wish to work with Congress, the letter notes that technology transfer from universities "has brought about hundreds of billions of dollars in economic activity and over three million jobs in the past thirty years nationwide" and that the only way to reap those benefits is to have "a strong defensible patent" to protect the investment needed for commercializing university inventions.  Enacting a bill like the Goodlatte bill "would [make] using the courts to enforce any patent much more difficult," according to the letter, specifically calling out the "loser pays" and joinder provisions as being particularly problematical.  These provisions "would have the effect of making patent licensing negotiations more complex and likely discourage at least some of [the conference's] members from licensing their inventions at all."  Litigation would be restricted to those "legitimate patent owners" with "deep pockets" because of the attorneys' fees risk.

The letter reassures the Representative that the Big Ten does not approve of those "who abuse the patent system," and pledges support for "narrow legislation that targets those individuals."  But "[u]nless patent holders are able to defend and assert their patents," the letter warns that the value of the patent system [will be] eroded and fewer businesses will be willing to license and develop these patents into the new products, new drugs and medical devices that will improve the quality of life and increase economic growth" in America.

This is a good beginning, but clearly much more must be done to counter those lobbying groups whose masters would like nothing less than to inhibit small patent owners and universities from being able to enforce them against those who would rather just expropriate the technology (as was done before passage of the Bayh-Dole Act in 1980).

* These include Phyllis M. Wise, Chancellor, University of Illinois at Urbana-Champagne; Mark Schlissel, President, University of Michigan; Michael V. Drake, President, The Ohio State University; Michael A McRobbie, President, Indiana University; Eric W. Kaler, President, University of Minnesota; Eric J. Barron, President, Pennsylvania State University; Sally Mason, President, University of Iowa; Harvey Perlman, Chancellor, University of Nebraska-Lincoln; Walla D. Loh, President, University of Maryland; Lo Anna K. Simon, Michigan State University; Morton O. Schapiro, President, Northwestern University; Robert L. Barchi, President, Rutgers University; and Rebecca M. Blank, Chancellor, University of Wisconsin-Madison.

USPTO Issues Post-Alice Abstract Idea Examples

By Michael Borella --

On January 27, the USPTO provided its promised set of examples of patent-eligible and patent-ineligible claims relating to the abstract idea exception to 35 U.S.C. § 101, in light of Alice Corp. v. CLS Bank.  These examples are intended to be used in conjunction with the Office's 2014 Interim Guidance on Patent Subject Matter Eligibility.  While the latter document includes examples of claims that were considered by the Supreme Court or Federal Circuit, some of the new examples are hypothetical claims designed to illustrate the contours of § 101.

Out of the eight example claims, four are considered by the Office to be patent-eligible, while four are not.  Additionally, five of these claims appear to be identical to those of particular Federal Circuit cases, two claims are based on particular Federal Circuit cases, and one claim appears to be fashioned by the Office for purposes of example.  (Actually, more than eight claims are provided, as some of the examples include distinct method, computer-readable media, and/or system claims; but for purposes of this discussion we will consider only one claim per example, as statutory category does not impact the analysis of patent-eligibility of any claim.)

These example claims may prove useful when prosecuting applications before the Office, or in IPR proceedings.  However, it is unlikely that courts will give deference to the Office's reasoning in this memo, to the extent that it goes beyond that of the Supreme Court or Federal Circuit.

With respect to business method claims, these examples provide little additional insight.  The Office does not provide an example of an eligible business method, perhaps because the Supreme Court and Federal Circuit have yet to find any business method patent-eligible since Alice.

However, with respect to computer-implemented claims, these examples elucidate the difference between the recent Ultramercial v. Hulu and DDR Holdings v. Hotels.com cases.  The former indicates that adding a limitation such as "the Internet" to an otherwise disembodied method claim will not render that claim patent-eligible, while the latter holds that making a fundamental change to how a networked server operates is patent-eligible.  Consequently, applicants and patentees may focus their § 101 arguments on the similarities between their claims and those of DDR, as well as the differences between their claims and those of Ultramercial.

Another notable point in these examples is that the two claims based on particular Federal Circuit cases are both based on pre-Alice cases, and the Office provides narrower versions of each herein.  It appears that the Office may be walking back from their analysis of these cases in the 2014 Interim Eligibility Guidance, where the Office suggested that these claims would survive review under Alice.

Eligible Example 1: Isolating and Removing Malicious Code from Electronic Messages

A computer-implemented method for protecting a computer from an electronic communication containing malicious code, comprising executing on a processor the steps of:
    receiving an electronic communication containing malicious code in a computer with a memory having a boot sector, a quarantine sector and a non-quarantine sector;
    storing the communication in the quarantine sector of the memory of the computer, wherein the quarantine sector is isolated from the boot and the non-quarantine sector in the computer memory, where code in the quarantine sector is prevented from performing write actions on other memory sectors;
    extracting, via file parsing, the malicious code from the electronic communication to create a sanitized electronic communication, wherein the extracting comprises
    scanning the communication for an identified beginning malicious code marker,
    flagging each scanned byte between the beginning marker and a successive end malicious code marker,
    continuing scanning until no further beginning malicious code marker is found, and
    creating a new data file by sequentially copying all non-flagged data bytes into a new file that forms a sanitized communication file;
    transferring the sanitized electronic communication to the non-quarantine sector of the memory; and
    deleting all data remaining in the quarantine sector.

This claim recites a method for protecting a computer from electronic communication (e.g., email) that potentially includes malicious code (e.g., a computer virus).  While the communication is in quarantined memory, the computer scans the communication for a beginning malicious code marker and an end malicious code marker, flagging all bytes between these markers.  The computer then creates a new version of the communication without the flagged bytes, releases it from the quarantine memory, and deletes the original version of the message.

According to the Office, "[t]he claim is directed towards physically isolating a received communication on a memory sector and extracting malicious code from that communication to create a sanitized communication in a new data file," and [s]uch action does not describe an abstract concept" similar to those of Bilski v. Kappos or Alice.  Instead, the claim is "inextricably tied to computer technology."  Consequently, the claim is patent-eligible, and there is no need to carry out the two-prong patent-eligibility analysis of Alice.

Eligible Example 2: E-Commerce Outsourcing System/Generating a Composite Web Page

This example claim is that of DDR Holdings, LLC v. Hotels.com, a case that we have already discussed in detail (see this previous analysis for a presentation of the claim).  The claim is directed to "automatically generating and transmitting a web page in response to activation of a link using data identified with a source web page having certain visually perceptible elements."

In the Office's view, this claim "does not recite a mathematical algorithm; nor does it recite a fundamental economic or longstanding commercial practice."  Instead, it "addresses a business challenge (retaining website visitors) that is particular to the Internet."  But unlike business method claims that merely recite the performance of a business practice over the Internet, the claim is "necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks."

The Office suggests that the claim is patent-eligible, and that there is no need to carry out the two-prong patent-eligibility analysis of Alice.  However, the Office also notes that in the actual case, the Federal Circuit found that additional limitations in the claim amounted to more than just applying an abstract idea on the Internet, and therefore the claim would pass the second-prong of the Alice test.

Eligible Example 3: Digital Image Processing

A computer-implemented method for halftoning a gray scale image, comprising the steps of:
    generating, with a processor, a blue noise mask by encoding changes in pixel values across a plurality of blue noise filtered dot profiles at varying gray levels;
    storing the blue noise mask in a first memory location;
    receiving a gray scale image and storing the gray scale image in a second memory location;
    comparing, with a processor on a pixel-by-pixel basis, each pixel of the gray scale image to a threshold number in the corresponding position of the blue noise mask to produce a binary image array; and
    converting the binary image array to a halftoned image.

This claim is based on that of Research Corporation Technologies Inc. v. Microsoft Corp., a pre-Alice Federal Circuit decision, but recites a more specific variation of the invention.  Particularly, the claim recites "generating a blue noise mask and using that blue noise mask to halftone a gray scale image."

Due to the iterative mathematical operations of the claim, and because mathematical operations are examples of abstract ideas, the Office concludes that this claim is directed to an abstract idea.  Notably, the Office indicated that the background of the patent defines generation of the blue noise mask to be a mathematical operation, which is a suggestion to applicants that what they say in the specification may have a role in determining the patent-eligibility of their claims.

Applying the second prong of the Alice test, the Office notes that the claim's recitation of generic processor and memory elements "is not sufficient to transform a judicial exception into a patentable invention."  However, the claim also recites "comparing the blue noise mask to a gray scale image to transform the gray scale image to a binary image array and converting the binary image array into a halftoned image," which "tie the mathematical operation (the blue noise mask) to the processor's ability to process digital images."  Further (and again looking to the patent's specification), the Office states that, when viewed as an ordered combination, "the steps recited in addition to the blue noise mask improve the functioning of the claimed computer itself," as well as digital image processing technology.  In particular, the claimed invention "allows the computer to use to less memory than required for prior masks, results in faster computation time without sacrificing the quality of the resulting image as occurred in prior processes, and produces an improved digital image."  As a result, the claim would pass the second prong of the Alice test, and therefore be patent-eligible.

Eligible Example 4: Global Positioning System

A system for calculating an absolute position of a GPS receiver and an absolute time of reception of satellite signals comprising:
    a mobile device comprising a GPS receiver, a display, a microprocessor and a wireless communication transceiver coupled to the GPS receiver, the mobile device programmed to receive PN codes sent by a plurality of GPS satellites, calculate pseudo-ranges to the plurality of GPS satellites by averaging the received PN codes, and transmit the pseudo-ranges, and
    a server comprising a central processing unit, a memory, a clock, and a server communication transceiver that receives pseudo-ranges from the wireless communication transceiver of the mobile device, the memory having location data stored therein for a plurality of wireless towers, and the central processing unit programmed to:
    estimate a position of the GPS receiver based on location data for a wireless tower from the memory and time data from the clock,
    calculate absolute time that the signals were sent from the GPS satellites using the pseudo-ranges from the mobile device and the position estimate,
    create a mathematical model to calculate absolute position of the GPS receiver based on the pseudo-ranges and calculated absolute time,
    calculate the absolute position of the GPS receiver using the mathematical model, and
    transmit the absolute position of the GPS receiver to the mobile device, via the server communication transceiver, for visual representation on the display.

This claim is based on that of SiRF Technology Inc. v. International Trade Commission, another pre-Alice Federal Circuit decision.  Like the previous claim, this example claim is narrower than that of the claim at issue in the case.  The claim recites ways to "improve GPS techniques by enabling the mobile GPS receiver to determine its position more accurately and improve its signal-acquisition sensitivity to operate even in weak-signal environments."

Applying the Alice test, the Office finds that that claim recites "mathematical operations (e.g., calculating pseudo-ranges and absolute times, and the mathematical model)" which fall into the category of abstract ideas.

In regard to the second prong of the test, the Office notes that merely reciting a generic CPU, memory and clock adds nothing to the patent-eligibility of the claim.  But, these elements act in concert with the claimed mobile device "to improve an existing technology (global positioning) by improving the signal-acquisition sensitivity of the receiver to extend the usefulness of the technology into weak-signal environments and providing the location information for display on the mobile device."  When viewed as a whole, these features amount to significantly more than the abstract idea.  Therefore, the claim is patent-eligible.

Ineligible Example 5: Digital Image Processing

This example claim is that of Digitech Image Tech., LLC v. Electronics for Imaging, Inc., a post-Alice case that we have already discussed in detail (see this previous analysis for a presentation of the claim).  The claim is directed to "generating first data and second data using mathematical techniques and combining the first and second data into a device profile."

The Office notes that the claim is directed to an abstract idea because it "simply describes the concept of gathering and combining data by reciting steps of organizing information through mathematical relationships."  Due to the fact that the claim does not recite any additional elements beyond this abstract idea, the claim is not patent eligible.

Ineligible Example 6: The Game of Bingo

This example claim is that of Planet Bingo, LLC v. VKGS LLC, another post-Alice case that we have already discussed in detail (see this previous analysis for a presentation of the claim).  The claim involves "an automated Bingo system having the ability to print sets of numbers on tickets . . . , track the sale of the tickets and to validate winning tickets."

The Office indicates that the claim recites computerized steps of "managing a game of Bingo, including for example inputting and storing two sets of Bingo numbers, assigning a unique player identifier and control number, and verifying a winning set of Bingo numbers," and that these steps recite a way of organizing human activity similar to those of Bilski and Alice.  Therefore, the claim is directed to an abstract idea.

While the claim also recites "a computer with a central processing unit (CPU), memory, a printer, an input and output terminal, and a program," these generic computer components merely instruct one to implement the abstract idea on a computer.  With no further meaningful limitations, the claim amounts to no more than the abstract idea itself.

Ineligible Example 7: E-Commerce providing Transaction Performance Guaranty

A method, comprising:
    receiving, by at least one computer application program running on a computer of a safe transaction service provider, a request from a first party for obtaining a transaction performance guaranty service with respect to an online commercial transaction following closing of the online commercial transaction;
    processing, by at least one computer application program running on the safe transaction service provider computer, the request by underwriting the first party in order to provide the transaction performance guaranty service to the first party,
    wherein the computer of the safe transaction service provider offers, via a computer network, the transaction performance guaranty service that binds a transaction performance guaranty to the online commercial transaction involving the first party to guarantee the performance of the first party following closing of the online commercial transaction.

This claim is from buySAFE, Inc. v. Google, Inc., another post-Alice Federal Circuit decision.  The Office describes the claim as reciting "methods for conducting reliable transactions in an e-commerce environment."

In applying the Alice test, the Office finds that "the steps of creating a contract, including receiving a request for a performance guaranty (contract), processing the request by underwriting to provide a performance guaranty and offering the performance guaranty" describe the creation of a contractual relationship, similar to the abstract idea of Bilski.  The Office also notes that "narrowing the commercial transactions to particular types of relationships or particular parts of that commercial transaction (e.g., underwriting) would not render the concept less abstract."  As a result, the claim is directed to an abstract idea.

Applying the second prong of Alice, the Office concludes that "the claim limitations in addition to the abstract idea include a computer application running on a computer and the computer network."  These recitations of generic computer technology do not amount to more than the abstract idea itself, and consequently the claim is not patent-eligible.

Ineligible Example 8: Distribution of Products over the Internet

This example claim is that of Ultramercial v. Hulu, a post-Alice case that we have already discussed in detail (see this previous analysis for a presentation of the claim).  The claim is directed to "distributing products covered by intellectual property, such as copyright, over a telecommunications network by allowing a consumer to choose to view or interact with a sponsor's message in exchange for access to copyrighted material."  For instance, one may be required to watch an advertisement before viewing an online video.

In applying the Alice test, the Office finds that the claim "describes the concept of using advertising as an exchange or currency," which is similar to the claimed subject matter of Bilski.  Thus, the claim is directed to an abstract idea.

With respect to the second prong of the test, the additional limitations of "accessing and updating of an activity log . . . only represent insignificant pre-solution activity," while "requiring a consumer request and restricting public access is insignificant pre-solution activity."  Further, recitation of "the Internet" is "simply an attempt to limit the abstract idea to a particular technological environment."  Thus, the claim is not patent-eligible.

Myriad Throws in the Towel

By Kevin E. Noonan --

In the aftermath of the Supreme Court's decision in AMP v. Myriad Genetics in 2013, Myriad (paradoxically to those either not paying attention or who over interpreted the scope of the Court's holding in its opinion) filed suit against six genetic diagnostic test providers (Ambry Genetics, Gene-by-Gene, Quest, GeneDx, Invitae, and LabCorp) and was itself sued in declaratory judgment actions by three others (Quest, Invitae, and Counsyl) (see "Myriad Genetics Sues LabCorp over BRCA Gene Testing").  On Myriad's motion, the Judicial Panel on Multidistrict Litigation consolidated five of these actions (involving Ambry Genetics, GeneDx, Quest Diagnostics (infringement), and Quest and Counsyl (declaratory judgment) in the District of Utah (Myriad's "home court") under 28 U.S.C. § 1407 under the caption In Re: BRCA1- and BRCA2-Based Hereditary Cancer Test Patent Litigation (see "Panel on Multidistrict Litigation Consolidates Myriad Cases in Utah District Court").  The Panel decision also noted that other cases, such as the ones involving Invitae Corp. and LabCorp, could be consolidated as "potential tag-along actions."

As it turned out, Utah District Court Judge Shelby denied Myriad's preliminary injunction motion, on the grounds that Myriad was unlikely to prevail on the merits regarding the asserted claims (*) in view of the Supreme Court's Myriad opinion (see "Utah Judge Denies Myriad's Preliminary Injunction Motion").  This decision was affirmed by the Federal Circuit last month in an opinion that left little more for the District Court to do than consider motions for judgment by the infringement defendants and declaratory judgment plaintiffs (see "In re BRCA1- and BRCA2-based Hereditary Cancer Test Patent Litigation (Fed. Cir. 2014)").

And it also turns out that that won't be necessary, at least for Ambry Genetics, LabCorp, Invitae, and Pathway Genomics (this company was sued by Myriad in June 2014 and was not part of the consolidated case), all of whom issued a press release announcing that the action as to them had settled.  (Another defendant, Gene-by-Gene, settled early in 2014 on essentially the same terms announced by these defendants.)  The press releases, using similar language, stated that Myriad's infringement allegations had been dismissed "with prejudice" and that each of the parties had received a "covenant not to sue" by Myriad.  The only financial considerations announced were that each party would bear its own costs of the litigation, which Myriad may count as a "win" in view of its potential liability under even more recent Supreme Court precedent (Octane Fitness v. ICON Health & Fitness and Highmark v. Allcare Health Management); this is particularly true of the Pathmark settlement, insofar as Myriad sued Pathmark after both the District Court's opinion denying its preliminary injunction and the Supreme Court lowered the threshold for attorneys' fees in patent litigation.

It can be reasonably expected that Myriad will settle with the remaining defendants/DJ plaintiffs, ending a series of cases that changed the landscape for biotechnology patenting.  It is hard for even an evenhanded observer not to be tempted to ask, "Are you happy now, Myriad?"

Myriad's patents on its BRCA gene technology begin to expire early next year.

* The specific claims Myriad alleges are infringed include the following:  claim 6 of U.S. Patent No. 5,709,999; claims 6, 16 and 17 of  U.S. Patent No. 5,709,999; claims 7, 8, 12, 23, and 26 of U.S. Patent No. 5,753,441; claims 29 and 30 of U.S. Patent No. 5,837,492; claim 4 of U.S. Patent No. 6,033,857; claims 2, 3 and 4 of U.S. Patent No. 5,654,155; claims 2, 3, 4, 5, 6, and 7 of U.S. Patent No. 5,750,400; claim 5 of U.S. Patent No. 6,951,721; and claims 3, 4, 5, 6, 7, 8, 11, 14, 17, 18, 19 of U.S. Patent No. 7,250,497.  Missing from the complaint against Gene by Gene were allegations of infringement of claims 32 and 33 of U.S. Patent No. 6,051,379 asserted in the complaint Myriad filed against Ambry Genetics.  Similar combinations of these claims were asserted against the other defendants.

House Fly Genome Sequenced

By Kevin E. Noonan --

The phylogenetic Order Diptera comprises the "true" flies (defined as having a single pair of wings arising from the thorax) and is first found in the fossil record in the Middle Triassic (~245 million years ago).  It is one of the most evolutionarily successful, comprising 120,000 known species and thought to encompass almost twice that number.  The group comprises a number of species associated with humans and with human diseases, including a number of mosquito species (Culex, Aedes, Anopheles), the tsetse fly (Glossina morsitans) and the common house fly, Musca domestica.  While some mosquito species and the tsetse fly genome have been determined previously, only last October an international and interdisciplinary group* disclosed the house fly genome.  The house fly is particularly important for human health, being capable of transmitting  more than 100 human diseases.  These include:  salmonellosis, anthrax, ophthalmia, shigellosis, typhoid fever, tuberculosis, cholera and infantile diarrhea; protozoan infections including amebic dysentery; helminthic infections including pinworms, roundworms, hookworms and tapeworms; and viral and rickettsial infections.

The house fly genetic complement was known to be contained in five autosomes and an X/Y pair of sex chromosomes.  The Y chromosome contains the male dominant factor, M, but there are house fly strains known to have translocated the M factor onto any one of the 5 autosomes (and even in some cases the X chromosome); these "autosomal M" males are usually XX, but M-factor mutants exist that can be female determinants.

The report, published in Genome Biology ("Genome of the house fly, Musca domestica L., a global vector of diseases with adaptations to a septic environment," 15: 466) sequenced six adult females of aabys strain; the sequenced genome size is 691 Mb and was found to contain 15,345 genes, of which 14,180 genes were predicted from open reading frames and 1,165 comprised "non-coding" genes.  Overall the  genes from the house fly shared ~64% identity with genes from the fruit fly Drosophila melanogaster, one of the most well-studied animal species and the best-characterized member of the Diptera.

Genic characteristics of the house fly genome
Feature	Count	Mean length
Genes	15,345	13,553
Transcripts	18,779	2,097
mRNA	17,508	2,221
tRNA	947	74
Single exon transcripts	2,566	797
Exons	67,886	431
Introns	52,875	3,889

 Compared with Drosophila, the group reported detection of 49% of the predicted housefly genes to be single copy orthologs, and another 37% to comprise conserved paralogous groups, with the remaining 1,934 genes (14%) having no homologs in the Drosophila genome.  Fifty-two percent of house fly genomic DNA was found to be made up of interspersed repeats, one genomic feature that distinguishes this species from Drosophila melanogaster.  Also, about one-half of the house fly interspersed repeats are class II transposons (capable of excision and reintegration into the fly chromosomes).  Gene ontology analysis found that 12.1% of the genes were involved in single-organism processes and another 12% in cellular processes; 11.4% were metabolic genes and 10.8% were involved in biological regulation.  The most abundant cellular components were cell (32.6%) and organelle (29.2%).  The most abundant molecular processes were binding (48.1%) and catalytic activity (28.9%).  Overall, these breakdowns in gene ontology showed a very similar distribution to genes in Drosophila.

The significant differences between the house fly and Drosophila genomes involved "immune-relates" genes, genes for olefaction and genes for detoxification.  Regarding the immune-related genes, the house fly has 771 such genes, compared with 416 in Drosophila.  The putative function of these genes involved "recognition proteins that identify pathogen-associated molecular patterns, proteins that belong to signaling pathways that activate the transcriptional response to infection, and effector molecules that kill pathogens," all of which relate to similar genes in other insect species.  While immune signaling genes and their pathways are conserved compared with Drosophila, there have been "substantial increases" in both gene copy number and genic diversity for genes involved in recognition and effector components (including in particular genes, such as Nimrod and thioester-containing proteins, Teps, involved in phagocytosis, wherein there has been a large expansion of such genes in houseflies compared with Drosophila).  Of the effector protein genes, four classes of antimicrobial genes (attacins, diptericins, cecropins, and defensins) are shared with Drosophila; these have expanded in housefly (29 genes vs. 19 in Drosophila).

Another gene type having expanded in houseflies compared with Drosophila are metabolism/detoxification genes, comprising the three groups of cytochrome P450s, esterase/hydroxylases, and conjugation enzymes.

cytochrome P450s  -  146 genes (84 in Drosophila), 11 pseudogenes, largest expansion in the CYP4 (43%) and CYP6 (46%) families

esterase/hydroxylases  -  92 genes (phosphodiesterase, acetylcholinesterase, thioesterase, carboxylesterase, metallophosphoesterase, neuropathy target esterase and palmitoyl-protein thioesterase) distributed as 39 carboxylic-ester hydrolases (EC 3.1.1), 10 thioester hydrolases (EC 3.1.2), three phosphoric-monoester hydrolases (EC 3.1.3) and 40 phosphoric-diester hydrolases (EC 3.1.4)

conjugation enzymes  -  33 GST genes/3 spice variants (33/11 in Drosophila)

The Report also contains the sequences for genes involved in fast synaptic transmission, members of the cys-loop ligand-gated ion channel (cysLGIC) superfamily, with 23 subunit-encoding genes (the same as Drosophila).  These genes are important, according to the Report, as being targets for insecticides and may provide a rational basis for designing new and more effective and/or specific insecticides against the house fly.

Also reported were chemoreceptor genes in the house fly genome, which include odorant binding proteins (OBP, 87 genes in house fly/52 genes in Drosophila), odorant receptors (OR, 85 genes (86 transcripts) in house fly/60 genes (62 transcripts) in Drosophila), gustatory receptors (GR, 79(103)/60(68)), and ionotropic receptors (IR, 110/65), with the species sharing evolutionary-conserved genes in this category but also showing rapid evolution of genes and pseudogenes: "while there are roughly equal numbers of gene losses and pseudogenes in each species, M. domestica has duplicated and retained more genes in each family.  These gene subfamily expansions are particularly prominent in the candidate gustatory receptors, especially those implicated in perception of bitter tasting compounds."  And "M. domestica also has large expansions of ORs related to [] receptors involved in repulsion from aversive chemicals in larvae and in perception of a male-produced pheromone."  From these data the report concludes that "M. domestica has evolved an expanded repertoire of chemoreceptors and associated proteins compared with D. melanogaster.  This expansion is mostly associated with gustation, specifically perception of bitter tasting compounds" and that "[i]t may be that the more diverse and potentially toxic food sources and larval habitats of M. domestica have led to retention and specialization of gene duplicates in these receptor gene subfamilies."

Another interesting aspect of house fly biology is sex determination and sex-biased gene expression and evolution.  The group reports sequencing of "Md-tra^D alleles of 22 to 24 individuals from 7 populations sampled across Europe, North America, Asia, Africa and Australia," finding Md-tra^D alleles on all continents; "[s]urprisingly," according to the report, the same molecular signatures in Md-tra^D alleles were found in all populations tested, "but different alleles for the non-dominant form, containing insertions or deletions in exon 3."

Premature translation termination occurs in exon 2b and exon 3 mutants in males, while these lesions are "skipped" in mutant females.  With regard to sex-based expression, the report tested 10,096 genes with expression levels high enough to compare sex-related expression patterns, and found 113 having male-biased expression and 81 have female-biased expression, with no significant differencs found in the various gene ontology categories noted above.  This is a substantial difference from Drosophila, which show a ten-fold higher level of sex-based expression.

The report also notes that the house fly has five actin genes (to four in Drosophila) that have high sequence homology with Drosophila genes, and several miRNA loci, showing transporting/processing/function genes conserved with Drosophila.

The report ends with a statement that might be applied to every advance in the genomics field with regard to the hoped-for consequences of this work:

The availability of the house fly genome should accelerate the pace of research on this important vector of human and animal diseases.  The house fly genome provides a rich resource for enabling work on innovative methods of insect control, for understanding the mechanisms of insecticide resistance, genetic adaptation to high pathogen loads, host parasitoid interactions, and for exploring the basic biology of this important pest.

* The interdisciplinary group included scientists from Cornell University, Washington University School of Medicine, the University of Groningen, the University of Zurich, the University of Illinois/Champagne-Urbana, Auburn University, the University of Houston, the National Institutes of Health, the University of Tennessee, Harvard University, and University College, London

Court Report

        By Sherri Oslick --

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

Tris Pharma Inc. v. Par Pharmaceutical Inc. et al.
1:15-cv-00068; filed January 21, 2015 in the District Court of Delaware

• Plaintiff:  Tris Pharma Inc.
• Defendants:  Par Pharmaceutical Inc.; Par Pharmaceutical Companies Inc.

Infringement of U.S. Patent Nos. 8,062,667 ("Modified Release Formulations Containing Drug-Ion Exchange Resin Complexes," issued November 22, 2011), 8,287,903 ("Orally Effective Methylphenidate Extended Release Powder And Aqueous Suspension Product," issued October 16, 2012 to), 8,465,765 (same title, issued June 18, 2013), 8,653,033 (same title, issued October 22, 2013), and 8,778,390 (same title, issued July 15, 2014) following a Paragraph IV certification as part of Par's filing of an ANDA to manufacture a generic version of Tris' Quillivant XR® (methylphenidate hydrochloride oral solution, used to treat attention deficit hyperactivity disorder, distributed by Pfizer).  View the complaint here.

Boehringer Ingelheim Pharma GmbH & Co. KG et al. v. Mylan Pharmaceuticals Inc.
1:15-cv-00010; January 21, 2015 in the Northern District of West Virginia

• Plaintiffs:  Boehringer Ingelheim Pharma GmbH & Co. KG; Boehringer Ingelheim International GmbH; Boehringer Ingelheim Pharmaceuticals, Inc.
• Defendant:  Mylan Pharmaceuticals Inc.

Infringement of U.S. Patent No. 6,087,380 ("Disubstituted Bicyclic Heterocycles, the Preparations and the Use Thereof as Pharmaceutical Compositions," issued July 11, 2000) following a Paragraph IV certification as part of Mylan's filing of an ANDA to manufacture a generic version of Boehringer's Pradaxa® (dabigatran etexilate mesylate, used to reduce the risk of stroke and systemic embolism in patients with non-valvular atrial fibrillation).  View the complaint here.

Teva Pharmaceuticals USA Inc. v. AstraZeneca Pharmaceuticals LP et al.
1:15-cv-00050; filed January 19, 2015 in the District Court of Delaware

• Plaintiff:  Teva Pharmaceuticals USA Inc.
• Defendants:  AstraZeneca Pharmaceuticals LP; Amylin Pharmaceuticals LLC

Declaratory judgment of non-infringement of U.S. Patent Nos. 7,297,761 ("Pharmaceutical Compositions containing Exendins," issued November 20, 2007) and 7,741,269 ("Exendins and Exendin Agonists for Weight Reduction and Obesity," issued June 22, 2010) based on Teva's Paragraph IV certification as part of its filing of an ANDA to manufacture a generic version of AstraZeneca's Byetta® (exenatide injection, used to improve blood sugar control in adults with Type II diabetes, when used with diet and exercise).  View the complaint here.

Laboratoire HRA Pharma v. Teva Pharmaceuticals USA Inc.
1:15-cv-00045; filed January 16, 2015 in the District Court of Delaware

Infringement of U.S. Patent Nos. 8,426,392 ("Method for Providing Emergency Contraception," issued April 23, 2013), 8,512,745 ("Ulipristal Acetate Tablets," issued August 20, 2013), and 8,735,380 (same title, issued May 27, 2014) following a Paragraph IV certification as part of Teva's filing of an ANDA to manufacture a generic version of Laboratoire's Ella® (ulipristal acetate, used for emergency contraception to prevent pregnancy within five days after unprotected intercourse or a known or suspected contraceptive failure).  View the complaint here.

Boehringer Ingelheim Pharma GmbH & Co. KG et al. v. Teva Pharmaceuticals USA Inc. et al.
1:15-cv-00048; filed January 16, 2015 in the District Court of Delaware

• Plaintiffs:  Boehringer Ingelheim Pharma GmbH & Co. KG; Boehringer Ingelheim International GMBH; Boehringer Ingelheim Pharmaceuticals Inc.
• Defendants:  Teva Pharmaceuticals USA Inc.; Teva Pharmaceutical Industries Ltd.

Infringement of U.S. Patent No. 6,087,380 ("Disubstituted Bicyclic Heterocycles, the Preparations and the Use Thereof as Pharmaceutical Compositions," issued July 11, 2000) following a Paragraph IV certification as part of Teva's filing of an ANDA to manufacture a generic version of Boehringer's Pradaxa® (dabigatran etexilate mesylate, used to reduce the risk of stroke and systemic embolism in patients with non-valvular atrial fibrillation).  View the complaint here.

Shionogi & Co., Ltd. et al. v. Aurobindo Pharma Ltd. et al.
1:15-cv-00478; filed January 16, 2015 in the Northern District of Illinois

• Plaintiffs:  Shionogi & Co., Ltd.; Shionogi Inc.
• Defendants:  Aurobindo Pharma Ltd.; Aurobindo Pharma U.S.A., Inc.

Shionogi & Co., Ltd. et al. v. Aurobindo Pharma Ltd. et al.
3:15-cv-00319; filed January 16, 2015 in the District Court of New Jersey

• Plaintiffs:  Shionogi & Co., Ltd.; Shionogi Inc.
• Defendants:  Aurobindo Pharma Ltd.; Aurobindo Pharma U.S.A., Inc.

The complaints in these cases are substantially identical.  Infringement of U.S. Patent No. 8,247,402 ("Crystal Form of Pyrrolidylthiocarbapenem Derivative," issued August 21, 2012) following a Paragraph IV certification as part of Aurobindo's filing of an ANDA to manufacture a generic version of Shionogi's Doribax® (doripenem injection, used to treat complicated intra-abdominal infections and complicated urinary tract infections, including pyelonephritis).  View the NDIL complaint here.

Senju Pharmaceutical Co., Ltd. et al. v. Apotex Inc. et al.
1:15-cv-00336; filed January 16, 2015 in the District Court of New Jersey

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

Senju Pharmaceutical Co., Ltd. et al. v. Paddock Laboratories, LLC et al.
1:15-cv-00337; filed January 16, 2015 in the District Court of New Jersey

• Plaintiffs:  Senju Pharmaceutical Co., Ltd.; Bausch & Lomb Inc.; Bausch & Lomb Pharma Holdings Corp.
• Defendants:  Paddock Laboratories, LLC; L. Perrigo Co.; Perrigo Co.

The complaints in these cases are identical.  Infringement of U.S. Patent Nos. 8,129,431 ("Aqueous Liquid Preparation Containing 2-amino-3-(4-bromobenzoyl)phenylacetic acid," issued March 6, 2012), 8,669,290 (same title, issued March 1, 2014), 8,754,131 (same title, issued June 17, 2014), 8,871,813 (same title, issued October 28, 2014), and 8,927,606 (same title, issued January 6, 2015) following a Paragraph IV certification as part of defendants' filing of an ANDA to manufacture a generic version of B&L's Prolensa® (bromfenac ophthalmic solution, used to treat postoperative inflammation and reduction of ocular pain in patients who have undergone cataract surgery).  View the Apotex complaint here.

Senju Pharmaceutical Co., Ltd. et al. v. Lupin, Ltd. et al.
1:15-cv-00335; filed January 16, 2015 in the District Court of New Jersey

• Plaintiffs:  Senju Pharmaceutical Co., Ltd.; Bausch & Lomb Inc.; Bausch & Lomb Pharma Holdings Corp.
• Defendants:  Lupin, Ltd.; Lupin Pharmaceuticals, Inc.

Infringement of U.S. Patent Nos. 8,871,813 ("Aqueous Liquid Preparation Containing 2-amino-3-(4-bromobenzoyl)phenylacetic acid," issued October 28, 2014) and 8,927,606 (same title, issued January 6, 2015) following a Paragraph IV certification as part of Lupin's filing of an ANDA to manufacture a generic version of B&L's Prolensa® (bromfenac ophthalmic solution, used to treat postoperative inflammation and reduction of ocular pain in patients who have undergone cataract surgery).  View the complaint here.

Supernus Pharmaceuticals, Inc. v. Par Pharmaceutical Companies, Inc. et al.
2:15-cv-00326; filed January 16, 2015 in the District Court of New Jersey

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

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), 8,663,683 (same title, issued March 4, 2014), and 8,877,248 (same title, issued November 4, 2014 following a Paragraph IV certification as part of Par's 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.

Supernus Pharmaceuticals, Inc. v. TWI Pharmaceuticals, Inc. et al.
1:15-cv-00369; filed January 16, 2015 in the District Court of New Jersey

• Plaintiff:  Supernus Pharmaceuticals, Inc.
• Defendants:  TWI Pharmaceuticals, Inc.; TWI International LLC

Infringement of U.S. Patent Nos. 7,722,898 ("Modified-Release Preparations Containing Oxcarbazepine and Derivatives Thereof," issued May 25, 2010), 7,910,131 ("Method of Treating Seizures Using Modified Release Formulations of Oxcarbazepine," issued March 22, 2011), 8,617,600 ("Modified Release Preparations Containing Oxcarbazepine and Derivatives Thereof," issued December 31, 2013), and 8,821,930 (same title, issued September 2, 2014) following a Paragraph IV certification as part of TWI's filing of an ANDA to manufacture a generic version of Supernus'Oxtellar XR (oxcarbazepine extended-release tablets, used for adjunctive therapy in the treatment of partial seizures in adults and in children 6 to 17 years of age).  View the complaint here.

Sanofi-Aventis U.S. LLC et al. v. Apotex Corp. et al.
1:15-cv-00044; filed January 15, 2015 in the District Court of Delaware

• Plaintiffs:  Sanofi-Aventis U.S. LLC; Aventis Pharma S.A.; Sanofi
• Defendants:  Apotex Corp.; Apotex Inc.

Infringement of U.S. Patent Nos. 5,847,170 ("Taxoids, Their Preparation and Pharmaceutical Compositions Containing Them" issued December 8, 1998) and 7,241,907 ("Acetone Solvate of Dimethoxy Docetaxel and its Process of Preparation" issued July 10, 2007) following a Paragraph IV certification as part of Apotex's filing of an ANDA to manufacture a generic version of Sanofi's Jevtana® (cabazitaxel injection, used in combination with prednisone for the treatment of patients with hormonerefractory metastatic prostate cancer previously treated with a docetaxel-containing treatment regimen).  View the complaint here.

Alcon Laboratories, Inc. et al. v. Akorn, Inc.
2:15-cv-00285; filed January 14, 2015 in the District Court of New Jersey

• Plaintiffs:  Alcon Laboratories, Inc.; Alcon Pharmaceuticals Ltd; Senju Pharmaceutical Co., Ltd; Mitsubishi Chemical Corp.
• Defendant:  Akorn, Inc.

Infringement of U.S. Patent No. 6,114,319 ("Compositions Containing Difluprednate," issued September 5, 2000) following a Paragraph IV certification as part of Akorn's filing of an ANDA to manufacture a generic version of Alcon's Durezol® (difluprednate ophthalmic emulsion, used to treat pain and swelling following eye surgery).  View the complaint here.

Sumitomo Dainippon Pharma Co., Ltd. et al. v. Emcure Pharmaceuticals Ltd. et al.
2:15-cv-00280; filed January 14, 2015 in the District Court of New Jersey

• Plaintiffs:  Sumitomo Dainippon Pharma Co., Ltd.; Sunovion Pharmaceuticals Inc.
• Defendants:  Emcure Pharmaceuticals Ltd.; Emcure Pharmaceuticals USA, Inc.

Sumitomo Dainippon Pharma Co., Ltd. et al. v. InvaGen Pharmaceuticals, Inc.
2:15-cv-00281; filed January 14, 2015 in the District Court of New Jersey

• Plaintiffs:  Sumitomo Dainippon Pharma Co., Ltd.; Sunovion Pharmaceuticals Inc.
• Defendants:  InvaGen Pharmaceuticals, Inc.

The complaints in these cases are substantially identical.  Infringement of U.S. Patent No. 5,532,372 ("Imide Derivatives, and Their Production and Use," issued July 2, 1996) following a Paragraph IV certification as part of defendants' filing of an ANDA to manufacture a generic version of Sumitomo's Latuda® (lurasidone hydrochloride, used to treat depressive episodes associated with Bipolar I Disorder (bipolar depression) as monotherapy and as adjunctive therapy with lithium or valproate and used for the treatment of schizophrenia).  View the Emcure complaint here.

Horizon Pharma Ireland Ltd. et al. v. Paddock Laboratories, LLC et al.
1:15-cv-00368; filed January 13, 2015 in the District Court of New Jersey

• Plaintiffs:  Horizon Pharma Ireland Ltd.; HZNP Ltd.; Horizon Pharma USA, Inc.
• Defendants:  Paddock Laboratories, LLC; Perrigo Co.

Infringement of U.S. Patent Nos. 8,217,078 ("Treatment of Pain with Topical Diclofenac," issued July 10, 2012), 8,252,838 ("Diclofenac Topical Formulation," issued August 28, 2012), 8,546,450 ("Treatment of Pain with Topical Diclofenac," issued October 1, 2013), 8,563,613 ("Diclofenac Topical Formulation," issued October 22, 2013), 8,618,164 ("Treatment of Pain with Topical Diclofenac," issued December 31, 2013), and 8,871,809 ("Diclofenac Topical Formulation," issued October 28, 2014) following a Paragraph IV certification as part of Paddock's filing of an ANDA to manufacture a generic version of Horizon's Pennsaid® (diclofenac sodium topical solution, used for the treatment of signs and symptoms of osteoarthritis of the knee(s)).  View the complaint here.

Johnson Matthey Inc. et al. v. Pfizer, Inc. et al.
2:15-cv-00014; filed January 13, 2015 in the Eastern District of Virginia

• Plaintiffs:  Johnson Matthey Inc.; Johnson Matthey Pharmaceutical Materials, Inc.
• Defendants:  Pfizer, Inc.; Pfizer Ireland Pharmaceuticals; Pfizer Ltd.

Declaratory judgment of noninfringement and invalidity of U.S. Patent No. 6,124,363 ("Dofetilide Polymorphs," issued September 26, 2000) based on plaintiffs' filing of a DMF (drug master file) with the FDA for the manufacture of a generic version of Pfizer's Tikosyn® (dofetilide, used for the maintenance of normal sinus rhythm in patients with atrial fibrillation/atrial flutter of greater than one week duration who have been converted to normal sinus rhythm and for the conversion of atrial fibrillation and atrial flutter to normal sinus rhythm).  View the complaint here.

Conference & CLE Calendar

January 29, 2015 - "IPR Defense: An Overview of Strategic Considerations and Potential Pitfalls From the Patent Owner's Perspective" (American Bar Association Center for Professional Development and Section of Intellectual Property Law) - 1:00 to 2:30 pm (ET)

January 29, 2015 - "Combating Patent Trolls: Third-Party Solutions and Defense Strategies in Post-Grant and Litigation -- Leveraging Counterclaim, Summary Judgment and Other Tactics; Utilizing Legislative, Insurance and Third-Party Tools" (Strafford) - 1:00 to 2:30 pm (EST)

February 5, 2015 - "On Sale and Public Use Bars to Patentability After AIA -- Minimizing the Risk of Patent Ineligibility or Invalidation" (Strafford) - 1:00 to 2:30 pm (EST)

February 12, 2015 - "USPTO Section 101 Guidelines:  Part 1" (American Intellectual Property Law Association) - 12:30 - 2:15 pm (Eastern)

February 19, 2015 - "Readjusting the USPTO 101 Guidance for Life Science Inventions to Alice and Public Input: Are We There Yet?" (American Intellectual Property Law Association) - 12:30 - 2:00 pm (Eastern)

February 25, 2015 - "Prevailing Before the PTAB 'Death Squad': Practical Considerations for Petitioners and Patent Holders" (McDonnell Boehnen Hulbert & Berghoff LLP) - 10:00 am to 11:15 am (CT)

February 26, 2015 - "Coordinating Post-Grant Patent Opposition in Europe and the U.S. -- Navigating Timing, Grounds for Opposition, Discovery, and Amendments to Maximize Protection in Both Jurisdictions" (Strafford) - 1:00 to 2:30 pm (EST)

March 4-5, 2015 - Medical Device Patents (American Conference Institute) - Chicago, IL

March 5-6, 2015 - Advanced Patent Law Seminar (Chisum Patent Academy) - Cincinnati, OH

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

Webinar on Post-Grant Patent Opposition in Europe and the U.S.

Strafford will be offering a webinar/teleconference entitled "Coordinating Post-Grant Patent Opposition in Europe and the U.S. -- Navigating Timing, Grounds for Opposition, Discovery, and Amendments to Maximize Protection in Both Jurisdictions" on February 26, 2015 from 1:00 to 2:30 pm (EST).  Michael J. Flibbert and Leythem A. Wall of Finnegan Henderson Farabow Garrett & Dunner will provide patent counsel with guidance for addressing post-grant patent oppositions in both Europe and the U.S., and offer best practices for navigating the two systems to maximize patent protection in both jurisdictions.  The webinar will review the following questions:

• What are the grounds for opposing a patent in the U.S. and how do they differ from those in Europe?
• How will the differences relating to discovery and the use of expert testimony impact opposition strategy?
• What strategies should counsel employ to coordinate post-grant patent oppositions in Europe and the U.S.?

The registration fee for the webinar is $297 ($362 for registration and CLE processing).  Those registering by February 6, 2015 will receive a $50 discount.  Those interested in registering for the webinar, can do so here.

What's Next? Some Consequences of the Teva v. Sandoz Decision

By Kevin E. Noonan --

It has escaped almost no one's notice that the Supreme Court has spent the past decade or so being much more involved in patent law than in the preceding twenty years.  Evident but perhaps less discussed is the change in the nature of how U.S. patent law is now developed as a result.  With the institution of the Federal Circuit, the law developed gradually, relatively consistently and as an organic whole (insofar as an area of law subject to disputes between private parties can).  With the advent of more frequent Supreme Court scrutiny the law is now episodic, sporadic and much less predictable, with decisions reversing thirty years of established precedent being common and such decisions having a "gotcha!" effect on U.S. patent holders.  This is particularly true because of the manner with which the Court has exercised its supervisory authority over the Circuit Court, relying on its own precedents (even those from the pre-Industrial Age) to the denigration of the body of law that had flourished under the Federal Circuit in the intervening time since its establishment in 1982.

We are at another installment of this scenario when contemplating the Court's recent partial reversal of the Federal Circuit's precedent (most clearly enunciated in Cybor v. FAS Technologies) involving the standard of review of claim construction in the district courts.  The genesis of this jurisprudence is the Supreme Court itself, which decided in Markman v. Westview Instruments that claim construction was a question of law for a district court to decide, subject to de novo review by the Federal Circuit.  While not setting out detailed instructions on how this should be accomplished (a fact that permitted Justice Breyer in the majority opinion in Teva to disavow any complicity by the Court in the purported "error" by the Federal Circuit in how it reviewed the factual underpinnings of the legal questions involved), in that opinion and at that time the Court was content to permit the Circuit Court to apply its "special expertise" in determining the most jurisprudentially effective way of performing its appellate role.  As has been clear for some time, those days are over.

Now, in its Teva decision the Court has decided that appellate review of claim construction is limited by Federal Rule of Civil Procedure 52(a)(6), wherein Federal Circuit review of "subsidiary" facts "underpinning" claim construction must be reviewed with deference to the district court and overturned only where there is clear error in the court's decisions:

In cases where those subsidiary facts are in dispute, courts will need to make subsidiary factual findings about that ex­trinsic evidence.  These are the "evidentiary underpin­nings" of claim construction that we discussed in Markman, and this subsidiary factfinding must be reviewed for clear error on appeal.

This will arise when "the district court will need to look beyond the patent's intrinsic evidence and to consult extrinsic evidence in order to understand, for example, the background science or the meaning of a term in the rele­vant art during the relevant time period."  See, e.g., Seymour v. Osborne, 11 Wall. 516, 546 (1871).

Such deference is not absolute, however:  the opinion states that where the district court's construction is limited to the intrinsic evidence, i.e., the "plain meaning" of the claim language, the specification and ("when in evidence") the history of prosecution in the Patent and Trademark Office, then the appellate court's review can be plenary and give no deference to the district court's construction.  It is only when there is "extrinsic" evidence (which, up until now has been disfavored; Philips v. AWH) must the Federal Circuit tread lightly on what was decided below and adhere to the deferential standard of clear error.

To be sure there is a logic in the Court's opinion, because indeed when the district court hears expert testimony it engages its capabilities of assessing the credibility of the witnesses and its capacity to immerse itself in the technical minutiae attendant upon construing claims in the first place.  This capacity has been enhanced in some cases by some district courts with the practice of appointing "special masters," frequently academics in the appropriate technological field, to advise the court with regard to the frequently arcane subject matter before it in some patent cases.  This distinction may have been less pertinent in earlier iterations of the Federal Circuit, wherein some members have had (and in some instances still have) technical backgrounds, and even today seasoned members of the Court become comfortable with a wide swath of technology if only due to their constant immersion in it when deciding the cases that come before the Court.  But Justice Breyer is not wrong in recognizing that in some instances the exercise of the district court's experience at trial might make it more likely that its determination of the facts upon which it predicates its claim construction has a better provenance than can be had at the appellate level:

A district court judge who has presided over, and listened to, the entirety of a proceeding has a comparatively greater opportunity to gain that familiarity than an appeals court judge who must read a written transcript or perhaps just those portions to which the parties have referred.

Having drawn these judicial lines, the question for patent practitioners and judges, at all levels, is to decide how to implement them.  It is clear that the principal concern for those who advocated that de novo review was both necessary and appropriate was dismissed categorically in Justice Breyer's opinion:  that sometimes (and perhaps more often than that) the "factual" determination of what a claim term means will be dispositive of the legal question, the Court stating that "the ultimate question of construction will remain a legal question" and that "be­cause a factual finding may be nearly dispositive does not render the subsidiary question a legal one."  But there are other foreseeable consequences that implicate not only the frequency with which district court claim construction determinations will be overturned on appeal but the behavior of the parties (particularly accused infringers) as a result of the Court's Teva opinion.

For example, and particularly when considered in view of the Court's Nautilis v. Biosig decision last term, patentees can be expected to attempt to forestall the need for expert testimony regarding the meaning of claim terms by including express definitions of such terms, such as with glossaries.  Concerns about the meaning of claim terms (and that these could be manipulated by "bad actor" patentees) was embodied in the Court's Biosig decision and efforts by the White House to improve then quality of U.S. patents, and the Patent and Trademark Office instituted a pilot program last year to encourage patent applicants to include glossaries in applications submitted to Art Units in certain technological areas.  However, glossaries cannot be the entire answer (particularly for patents already in force) and they are also not panaceas even for applications filed after the Teva decision.  A good example of the limitations of setting out express definitions in a patent specification is the claim construction outcome in Promega v. Hoffman-LaRoche for the following claim:

Purified thermostable Thermus aquaticus DNA polymerase that migrates on a denaturing polyacrylamide gel faster than phosphorylase B and more slowly than does bovine serum albumin and has an estimated molecular weight of 86,000-90,000 daltons when compared with a phosphorylase B standard assigned a molecular weight of 92,500 daltons.  U.S. Patent No. 4,889,818

As might be imagined, the specification contained express definitions and examples for the terms "thermostable," "Thermus aquaticus,"  "DNA polymerase," "denaturing polyacrylamide gel," "phosphorylase B," "bovine serum albumin," and "molecular weight."  But what was not expressly defined was the term "purified" and upon construction of that term hinged the validity of the patent claim.  This is because there was a reference, a Ph.D. thesis (reminiscent of the factual situation in the In re Hall case) from the 1970's (half a decade before Kary Mullis invented the polymerase chain reaction that motivated Randi Saiki to isolate Taq polymerase for use in that method) wherein the DNA polymerase from Thermus aquaticus was studied in crude extracts which were, compared to their native state, "purified."  When the district court construed the term (not otherwise defined, expressly or inherently) to include preparations at this level of impurity as being "purified," the thesis was properly a reference and the validity of the claim fatally impacted.

The moral:  no patent practitioner can ever know what terms must be expressly defined, and the only alternative is to accept a "zone of uncertainty" regarding the scope or validity of patent claims or to burden every specification with every definition of every term that could possibly be relevant in future.  In short, both an impractical and impossible standard to hold either patents or patent practitioners to satisfy.

Additionally, the reality is that, expressly defined or not the claim terms will be construed by a district court judge generally without any scientific training or ability.  The lay judge will not be in any position to understand, from her own experience, the "ordinary and customary" meaning of claim terms in the claims she must construe, and even definitions may present a challenge if (the specification being directed to those of ordinary skill in the art) the very language used is foreign to her experience.  Dictionaries, treatises and expert witnesses may be appropriate and indeed should be encouraged under such circumstances as aids to the court in coming to a construction fair to both the patentee and the public.  (And perhaps sources such as dictionaries and treatises may be sufficiently outside the need for weighing of credibility as to be treated for evidentiary purposes as intrinsic evidence and thus fall outside the "clearly erroneous" standard of review, insofar as they can be understood as well by an appellate panel as by a district court judge.)  But a district court hearing from one or several experts will then engage in the activities that provided the Supreme Court with its rationale for invoking Rule 52(a)(6) as mandating deferential review before the Federal Circuit.  This circumstance is sure to provide motivation for at least one party to wish to avoid having the district court hear such testimony.

Another consequence of the Court's decision in the Teva case is that it will disproportionately affect different areas of technology.  Unlike the Federal Circuit practice of attempting to establish technology-independent legal principles, the Teva decision will disproportionately affect more technology-intensive arts, including biotechnology, pharmaceuticals and the high technology sector.  This is because in these arts it is even more likely that there will be "ordinary and customary" meaning of the terms that will be understood by the judge and the judge will need to rely more heavily on the type of extrinsic evidence the Supreme Court considers to be involved in determining the "subsidiary facts" entitled to deferential review by the Federal Circuit.

Finally, it is clear that the Teva decision will alter behavior of patentees and patent litigants, either by motivating applicants to attempt to immunize their claims from the effects of the decision with more extensive definitions or, in litigation, for the party that believes there is a technologically relevant term that can be defined to its benefit by expert testimony to make sure that the district court hears that testimony, whether proffered in an expert report or by live testimony.  Being litigants, once one party submits such a report or proffers such testimony the other party will be obligated to follow suit, again setting up precisely the situation where the district court's determination of "subsidiary facts" will raise the deference standard of appellate review mandated by Rule 52(a)(6).

The Court's decision in Teva is another example of the Supreme Court applying its view of patent law on the Federal Circuit, which is of course entirely within their purview in our Constitutional system.  The propriety of its wisdom in doing so, on the other hand, is much less certain, and once again introduces uncertainty in an area of the law that most (but not, seemingly, the Court itself) understand can least afford it.

Teva v. Sandoz: The Dissent

By Kevin E. Noonan --

The recent history of Supreme Court patent cases has made the dissent a seemingly endangered species, the Court consistently deciding important patent cases by 9-0 votes and, at best, garnering concurring opinions for Justices to further set forth their views.  In the Teva v. Sandoz decision this trend came to an end, with a dissent by Justice Thomas joined by Justice Alito that challenged both the majority's decision regarding the standard of appellate review for claim construction and Justice Breyer's rationale for reaching this conclusion.

The majority had determined that claim construction was ultimately a question of law but one that could depend on "subsidiary" fact-finding by the district court.  According to Justice Breyer's majority opinion, Federal Rule of Civil Procedure 52(a)(6) mandates that an appellate court give substantial deference to district court fact finding and to contravene the lower court's factual determinations only if there was "clear error."  In addition, the Court majority asserted jurisprudential policy grounds for its decision, including that the district court was in the best position to assess (expert) witness credibility and to become familiar with the technology involved in the invention.

Justice Thomas disagreed, taking the position that while Justice Breyer and his brethren would have applied the law correctly if there were underlying facts to be determined, in the context of claim construction there are no "subsidiary facts" to be determined and that Teva and the Court misapplied the law in arriving at this conclusion.  Simply stated, in the Justice's opinion, Rule 52(a)(6) simply does not apply here.

Justice Thomas believes that the majority did not "engage the 'vexing . . . distinction between questions of fact and questions of law,'" citing Pullman-Standard v. Swint, 456 U. S. 273, 288 (1982), by going back to how the law made these distinctions when Rule 52 was adopted (1937).  He notes that the Rules are based on the common law (citing Justice Scalia's concurring and dissenting opinion in Tome v. United States, 513 U. S. 150, 168 (1995)) but finds the pre-1937 law is "inconclusive" with regard to the fact/law dichotomy in claim construction (considering of course only the Court's jurisprudence in the matter).  Citing Coupe v. Royer, 155 U. S. 565, 576 (1895); Loom Co. v. Higgins, 105 U. S. 580, 584–587 (1882); Tilghman v. Proctor, 102 U. S. 707, 729–731 (1881); and Winans v. Denmead, 15 How. 330, 339 (1854), the dissent notes that the Court gave "no apparent deference to the District Courts' findings" based on factual considerations but also did not find that any of these decisions were based on a disagreement over such "subsidiary [factual] evidence."

In the absence of determinative (or even illustrative) case law in his survey of the prior law, Justice Thomas discerns that the practice has been to treat district court determinations as "facts" when they are constrained by the issues between the parties, and for district court decisions to be more akin to legal conclusions "the more they define rules applicable beyond the parties' dispute," citing Miller v. Fenton, 474 U. S. 104, 116 (1985); Bose Corp. v. Consumers Union of United States, Inc., 466 U. S. 485 (1984); and Baumgartner v. United States, 322 U. S. 665, 671 (1944).  If we are to draw a line between these two categories of district court decisions, he believes that claim construction "fall[s] on the law side of the dividing line."

As the Court did in deciding Markman v Westview Instruments, 517 U. S. 370 (1996) two decades ago, Justice Thomas compared how patent claims are construed with how courts construe other written instruments (specifically, statutes, deeds and contracts), and notes that there is no disagreement on the Court that construing written instruments is a matter of law for courts.  In Justice Thomas's view, the closest analogy to patent claim construction is statutory construction, which while assessed for "legislative intent" remains a legal analysis (because the Court cannot be concerned about any particular Member's reasons or motivations to vote for the bill).  The Justice also sees similarities in federal land grants (property rights in Federal land) where courts are allowed to consider the historical facts in order to ascertain how to construe the statute without deference.

The reason that statutes are construed as a matter of law not dependent on legislative "facts," according to the dissent, is the scope of a statute, which extends to the public as a whole, and thus "subsidiary evidentiary findings shape legal rules that apply far beyond the boundaries of the dispute involved."  Citing The Binghamton Bridge, 3 Wall. 51, 75 (1866), Justice Thomas asserts that the public's interest has "consciously shaped" the Court's rules of statutory construction and that the public interest in patents (and the affect of claim construction on that public interest) is the decisive similarity that mandates de novo appellate review.

The dissent then contrasts review under the de novo statutory construction standard with how deeds and contracts are construed, being private matters where subsidiary facts can be at issue -- based on the need to understand the "intention of the [private] parties," citing Reed v. Proprietors of Locks and Canals on Merrimac River, 8 How. 274, 288– 289 (1850).  In those circumstances intent is a factual matter because, according to the Justice, it depends on "real intentions [] embodied in an actual meeting of minds or an actual conveyance of a physical parcel of land -- that have an existence outside the written instrument and that the instrument merely rec­ords" (and even these findings are not always factual).  Accordingly:

The question we must ask, then, is whether the subsidi­ary findings underlying claim construction more closely resemble the subsidiary findings underlying the construc­tion of statutes or those underlying the construction of contracts and deeds that are treated as findings of fact.  This, in turn, depends on whether patent claims are more like statutes or more like contracts and deeds.

In answering this question the dissent provides a brief history of patents as "an official document reflecting a grant by a sovereign that is made public, or 'patent,'" Marvin M. Brandt Revocable Trust v. United States, 572 U. S. ___, ___ (2014), and explains that originally patents were royal prerogatives, limited ultimately in England by the Statute of Monopolies in 1624.  While the patent grant is implemented much differently in the U.S. -- being a power of Congress enumerated in Article I of the Constitution -- a patent remains a grant from the sovereign and thus implicates concerns for the public interest inherent in any such grant.

Looking at patents another way, the dissent notes that patents are ultimately regulatory in nature, by restraining others from "manufacturing, using, selling, offering to sell or importing the patented article,' citing Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U. S. 502, 510 (1917).  Because the exclusionary patent right is defined by the claims, any "subsidiary findings" district courts make in construing claims "contribute to rules that limit conduct by the public at large."  And in this way patents resemble statutes, according to the dissent, being "governmental dispositions" that "provide rules that bind the public at large."  The patentees "intentions" (so relevant to construing deeds and contracts) regarding the scope of her invention are not relevant to this aspect of patenting at all, except "to the extent that they are expressed in the public record," citing Keystone Bridge Co. v. Phoenix Iron Co., 95 U. S. 274, 279 (1877), and Goodyear Dental Vulcanite Co. v. Davis, 102 U. S. 222, 227 (1880).  Because of this public effect, having a circuit court perform de novo review of a district court's claim construction "helps to ensure that the construction is not skewed by the specific evidence presented in a given case" and this consistency inures to the public benefit not counterbalanced by any private interest on the part of the patentee.

Continuing in this line of reasoning, Justice Thomas notes that contracts and deeds are less like patents and statutes due to their private nature that does not implicate the public interest in the same way.  Unlike a contract, for example, "[a] patent is perhaps better characterized as a reward for feats already accom­plished -- that is, innovation and public disclosure -- than as a mutual exchange of executory promises," citing Motion Picture Patents Co., supra, at 513; Seymour v. Osborne, 11 Wall. 516, 533–534 (1871); Grant v. Raymond, 6 Pet. 218, 242 (1832); and Markman v. Westview Instruments, Inc., 52 F. 3d 967, 985, n. 14 (CA Fed. 1995), aff 'd 517 U. S. 370 (1996).  And, insofar as patents resemble deeds ("describing rights that the owner holds against the world," citing Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U. S. 141, 162 (1989)), they should be analogized to land grants rather than private conveyances, as being "sovereign dispositions," citing Leo Sheep Co. v. United States, 440 U. S. 668, 680–682 (1979); Missouri, K. & T. R. Co. v. Kansas Pacific R. Co., 97 U. S. 491, 497 (1878); and Leavenworth, L. & G. R. Co. v. United States, 92 U. S. 733, 740–741 (1876).

The dissent also maintains that the nature of the "subsidiary facts" involved in patents versus contract and deeds "differ substantially."  With patents, any such "subsidiary facts" are not "historical facts" ("such as what the parties agreed to do or how a given parcel of land is situated"), illustrating this point by stating that how a skilled artisan would understand a term of art is a "legal fiction" used to construe claims and "[having] no existence independent of the claim construction process."  Unlike parties to a contract, according to the Justice, the difference between contracts and patent is that there is no "skilled artisan" -- she is a hypothetical construct not an "omniscient factfinder":

Neither is the skilled artisan's understanding a proxy for some external fact that, could the court know it, would supply the meaning of a patent claim.  Whatever the scope of the inventor's right under the patent before the introduction of claims, the law has limited that right to the claims as written in the patent [citing Markman].

Accordingly:

Because the skilled artisan inquiry in claim construction more closely resembles determinations categorized as "conclusions of law" than determinations categorized as "findings of fact," I would hold that it falls outside the scope of Rule 52(a)(6) and is subject to de novo review.

Regarding the majority opinion, Justice Thomas cites the majority's reliance on Great Northern R. Co. v. Merchants Elevator Co., 259 U. S. 285, 292 (1922), which involved a determination on the scope of a railway tariff.  There, the factual question was referred to the Interstate Commerce Commission, the administrative agency that set the tariff.  This was not a case involving the proper judicial actor to best decide the "subsidiary facts" involved as between the district court and an appellate court; "the distinction the Court drew pertains more to an emerging rule of administrative deference than to a definitive classification of judicial determinations."

The dissent then summarizes the legal principle Justice Thomas would apply, that "the nature of the legal instrument dictates our treatment of subsidiary findings."  "[A]lthough terms in statutes and regulations frequently have technical meanings unknown outside the specialized community they are meant to regulate, we treat the inquiry into those meanings as involving only conclusions of law,' citing Norfolk & Western R. Co. v. Hiles, 516 U. S. 400, 401–407, 413–414 (1996), and Aluminum Co. of America v. Central Lincoln Peoples' Util. Dist., 467 U. S. 380, 390 (1984).  The dissent illustrates the implications (and limitations) of the majority's reasoning by stating that "[i]f claim construc­tion involves subsidiary questions of technical meaning or usage that are indistinguishable from those questions submitted to the jury in the contract context, [] then one might wonder why such issues are not submitted to the jury in the patent and statute con­texts, too."

Justice Thomas also addressed the majority's analogizing of the fact/law dichotomy in claim construction with how the Court has analyzed obviousness:  "[b]ut this analogy is even further off the mark because obviousness turns on historical facts about the circum­stances of the invention, rather than on the construction of a written instrument."

Having discussed the legal bases for his dissent, the Justice turned to policy considerations, the most germane of which is that appellate courts are better situated to promote uniformity in the law while district courts are better suited to assessing testimony and evidence (witness credibility, etc.):

To the extent that the construction of a patent claim turns on testimony of expert witnesses, especially live testimony, there is no denying that it falls within the bounds of a district court's special competence.   [But, t]he arguments favoring allocation to the district court, dimin­ished by the majority's own prediction [that this will rarely make a difference], are outweighed by the remaining rule-of-law and uniformity considerations that factored into our allocation in Markman.

These principles, for Justice Thomas, are at the root of what judicial review means:  "when a judge construes a patent, he is, in a very real sense, 'say[ing] what the law is,'" citing Marbury v. Madison, 1 Cranch 137, 177 (1803), "not just for the parties to the dispute, but for the public at large."  Deferring to factual determinations made by a district court in the context of a specific dispute between particular parties implicate the policy consideration that the specific facts of each case can influence the scope of the patent grant against the public.  And this can harm the uniformity (in patent law, and in the construction given to claims in particular patents) that de novo appellate review provides:

"Uniformity is a critical fea­ture of our patent system because '[t]he limits of a patent must be known for the protection of the patentee, the encouragement of the inventive genius of others and the assurance that the subject of the patent will be dedicated ultimately to the public.'" Markman, 517 U. S., at 390.

"If the boundaries of the patent right could shift from case to case, then the result would be "a 'zone of uncertainty which enterprise and experimentation may enter only at the risk of infringement,'" citing Markman and Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U. S. 722, 731 (2002). So damaging is this unpredictability that we identified uniformity as an 'independent ' justify­ing our allocation of claim construction to the court" in Markman, supra, at 390.

These considerations lead to the following predictions for the consequences of the majority's decision:

The majority's rule provides litigants who prevail in district court a significant opportunity and incentive to take advantage of this uncertainty by arguing on appeal that the district court's claim construction in­volved subsidiary findings of fact.  At best, today's holding will spawn costly -- and, if the majority is correct about the frequency with which these evidentiary determinations make a difference, meritless -- collateral litigation over the line between law and fact.

But I fear worse:  that today's decision will result in fewer claim construction decisions receiving precedential effect, thereby injecting uncertainty into the world of invention and innovation.

These and other predictions regarding likely consequences of the majority's opinion will appear in future posts.

Teva Pharmaceuticals USA, Inc. v. Sandoz Inc. (2015)

Is Deference in Claim Construction Review a Good Thing for the Patent System?

By Andrew Williams --

As we reported earlier today, the Supreme Court held in a 7-2 decision authored by Justice Breyer that an "appellate court must apply a 'clear error,' not de novo, standard of review" to the evidentiary underpinnings of a district court's claim construction determination.  Teva Pharmaceuticals USA, Inc. v. Sandoz Inc., No. 13-854, slip op. at 1-2 (U.S. Jan. 20, 2015).  The Court grounded its decision in Federal Rule of Civil Procedure 52(a)(6), which provides that in matters tried to district court, the court's "[f]indings of fact . . . must not be set aside unless clearly erroneous."  But if the answer was that straightforward, why had the Federal Circuit been applying de novo review to all claim construction determinations since the Cybor Corp decision in 1998?  The answer, as Justice Thomas writing in dissent phrased it, lies in whether claim construction really involves findings of fact.

In arriving at the conclusion that the appropriate review standard should de novo, the Federal Circuit's Cybor Corp. opinion relied heavily on the Supreme Court's decision in Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996) (Markman II).  That opinion did repeatedly note the factual components involved in claim construction, referring to it as a "mongrel practice" and observing that the issues can often fall "between a pristine legal standard and a simple historical fact . . . ."  But, the Supreme Court in Markman II did find "sufficient reason to treat construction of terms of art like many other responsibilities that we cede to a judge in the normal course of trial, notwithstanding its evidentiary underpinnings."  Id. at 390.  In addition, the Markman II Court stressed the public policy of uniformity, because "treating interpretive issues as purely legal will promote (though it will not guarantee) interjurisdictional certainty through the application of stare decisis on those questions not yet subject to interjurisdictional uniformity under the authority of the single appeals court."  Id. at 391.  Finally, and perhaps most importantly, the Federal Circuit emphasized the fact that when the Supreme Court affirmed its Markman I decision, it affirmed a decision that used the de novo standard of review.

Nevertheless, the Court today made clear that Markman II did not create, nor argue for, "an exception to Rule 52(a)."  Instead, Markman II stood for the proposition that, much like the proper construction of a document is a question of law, the proper construction of patent should be a question of law, which is a task for the judge.  And, as the Court explained "sometimes, when a written instrument uses 'technical words or phrases not commonly understood,' those words may give rise to a factual dispute" (citations omitted).  Therefore, the Court continued, "Markman no more creates an exception to Rule 52(a) than would holding that judges, not juries, determine equitable claims, such as requests for injunctions."

However, for Rule 52(a) to apply, claim construction must involve findings of fact.  Justice Thomas, in dissent, concluded that it does not.  We will address the substance of the dissent's argument in a future post.

The Supreme Court also addressed the issue of uniformity, perhaps in response to a criticism raised by the dissent.  As Justice Thomas pointed out, "[t]he need for uniformity . . . weighs heavily in favor of de novo review of subsidiary evidentiary determinations."  This is because, with a deferential standard, there is a risk that different jurisdictions construing the same claim term might result in divergent constructions.  The majority dismissed this notion, however, because "[a]fter all, the Federal Circuit will continue to review de novo the district court's ultimate interpretation of the patent claims."  But the Court cannot be suggesting that if differing jurisdictions reach different claim constructions because of different findings of subsidiary fact, the appellate court can simply ignore those findings without identifying clear error.  Moreover, issue preclusion will only be available in limited circumstances.  Ultimately, in this case, the majority ducked the tough questions by concluding that "subsidiary factfinding is unlikely to loom large in the universe of litigated claim construction."

But is this conclusion true?  Or, more importantly, will this conclusion continue to be true?  First of all, as the dissent points out, the notion of issue preclusion as a safeguard was already rejected by this Court -- in the Markman II decision.  More importantly, if litigants were not necessarily incentivized to raise every possible subsidiary factual issue before, they certainly are now.  The result is that the cost and complexity of claim construction is likely to increase, because all parties will now be encouraged to introduce extrinsic evidence, especially expert testimony, in an attempt to maximize deference to a favorable decision.  It is also easy to imagine that trial courts will end up relying on this "subsidiary factfinding" to insulate their decisions from deferential review.

Another unfortunate consequence of this decision is that it could embolden patent assertion entities seeking to abuse the patent system with overly broad and vaguely worded patent claims -- the so-called "patent trolls."  District courts will be more likely to allow additional discovery related to claim construction, which will only serve to increase the cost of patent litigation.  Moreover, under deferential review, district courts may delay claim construction until the end of a case, virtually eliminating early informed settlement discussions.  As the dissent put it, "today's decision will result in few claim construction decisions receiving precedential effect, thereby injecting uncertainty into the world of invention and innovation."  It is this uncertainty that may encourage accused infringers to settle earlier, thereby playing right into the strategy of the prototypic patent troll.

Teva Pharmaceuticals USA, Inc. v. Sandoz Inc. (2015)
Opinion of the Court by Justice Breyer, joined by Chief Justice Roberts and Justices Scalia, Kennedy, Ginsburg, Sotomayor, and Kagan; dissenting opinion by Justice Thomas, joined by Justice Alito

Teva Pharmaceuticals USA, Inc. v. Sandoz Inc. -- "Evidentiary Underpinnings" of Claim Construction: Supreme Court Holds Findings of Fact Require Deference

By Andrew Williams --

In a 7-2 decision authored by Justice Breyer, the Supreme Court held today that an "appellate court must apply a 'clear error,' not de novo, standard of review" to the evidentiary underpinnings of a district court's claim construction determination.  Teva Pharmaceuticals USA, Inc. v. Sandoz Inc., No. 13-854, slip op. at 1-2 (U.S. Jan. 20, 2015).  But what are those evidentiary underpinnings?  Apparently everyone was in agreement that "when the district court reviews only evidence intrinsic to the patent (the patent claims and specification, along with the patent's prosecution history), the judge's determination will amount solely to a determination of law, and the Court of Appeals will review that construction de novo."  Id. at 11-12.  In contrast, when a district court consults extrinsic evidence, it "will need to make subsidiary factual findings about that extrinsic evidence."  Id. at 12.  It is this fact finding that is entitled to deference under Federal Rule of Civil Procedure 52(a)(6).  Nevertheless, the Court was clear that "the ultimate question of construction will remain a legal question."  Id. at 13.  Therefore, "[f]or example, if a district court resolves a dispute between experts and makes a factual finding that, in general, a certain term of art had a particular meaning to a person of ordinary skill in the art at the time of the invention, the district court must then conduct a legal analysis: whether a skilled artisan would ascribe that same meaning to that term in the context of the specific patent claim under review."  Id. at 12.  Using the present case as illustrative, when the District Court credited the explanation of Teva's expert regarding how a skilled artisan would use a patent figure to determine what a potentially ambiguous claim term meant ("molecular weight"), it resolved a subsidiary factual issue.  And because the Federal Circuit did not afford any deference to this finding on review, the appellate court's judgment was vacated, and the case was remanded for further processing consistent with the Supreme Court's opinion.

Justice Thomas, joined by Justice Alito, dissented.  He framed the question as "whether claim construction involves findings of fact," and would have held that it does not.  Teva Pharm., No. 13-854, slip op. at 1 (U.S. Jan. 20, 2015) (Thomas, J., dissenting).  Patent claim construction is most closely analogized to statutory interpretation, according to the dissent, "[b]ecause they are governmental dispositions and provide rules that bind the public at large . . . ."  Id. at 7.  The dissent warned that "today's decision will result in fewer claim construction decisions receiving precedential effect, thereby injecting uncertainty into the world of invention and innovation."  Id. at 15.  Interestingly, this was a concern expressed by several companies that will be directly impacted by this decision.  Only three amicus briefs were submitted by operating companies (representing 20 companies in total), but each of these urged maintaining the de novo standard of review because of the impact any change will have on their respective businesses.  See "Teva v. Sandoz -- Is Deferential Review a Boon for Patent Trolls?"

Patent Docs will provide additional analysis of this opinion in subsequent posts.