Patent Docs

Moderna Sues Pfizer and BioNTech over mRNA Vaccine Technology

By Kevin E. Noonan --

On Friday, August 26th, Moderna Tx, Inc. and Moderna US, Inc. filed a complaint for patent infringement in Federal district court for the District of Massachusetts against Pfizer, Inc., BioNTech SE, BioNTech Manufacturing GmbH, and BioNTech US, Inc.  (A parallel suit was filed in Germany asserting Moderna's corresponding German patents.)  There are several interesting aspects to this complaint, and perhaps of even greater interest has been the reaction to the filing in light of Moderna's earlier "pledge" to refrain from asserting any of its patents "during the pandemic."

The complaint asserts three patents, identified herein in the context of the claims set forth in the complaint itself:

U.S. Patent No. 10,898,574

Claim 2.  A pharmaceutical composition comprising:
    a plurality of lipid nanoparticles comprising a cationic lipid, a sterol, and a PEG-lipid,
    wherein the lipid nanoparticles comprise an mRNA encoding a polypeptide,
    wherein the mRNA comprises one or more uridines, one or more cytidines, one or more adenosines, and one or more guanosines and wherein substantially all uridines are modified uridines.

Claim 9.  The pharmaceutical composition of claim 2, wherein the modified uridine is 1-methyl-pseudouridine.

U.S. Patent No. 10,702,600

Claim 1.  A composition, comprising:
    a messenger ribonucleic acid (mRNA) comprising an open reading frame encoding a betacoronavirus (BetaCoV) S protein or S protein subunit formulated in a lipid nanoparticle.

U.S. Patent No. 10,933,127

Claim 1.  A method comprising administering to a subject
    a messenger ribonucleic acid (mRNA) comprising an open reading frame encoding a betacoronavirus (BetaCoV) S protein or S protein subunit formulated in a lipid nanoparticle
    in an effective amount to induce in the subject an immune response to the BetaCoV S protein or S protein subunit
    wherein the lipid nanoparticle comprises 20-60 mol% ionizable cationic lipid, 5-25 mol% neutral lipid, 25-55 mol% cholesterol, and 0.5-15 mol% PEG-modified lipid.

Of these three asserted patents, the '574 patent has the broadest claims, not being limited to a particular virus or antigenic protein thereof, while the '600 and '127 patents expressly recite mRNAs encoding a b-coronavirus Spike protein; these claims would encompass vaccines to SARS-CoV-1 (the original SARS pandemic vaccine) as well as MERS and SARS-CoV-2 (COVID19).  These claims in particular form a basis for Moderna's allegations of infringement by the Pfizer/BioNTech Comirnaty® vaccine, as recited in several paragraphs in the complaint.  In particular, Moderna alleges that the Comirnaty® vaccine was a direct copy of their vaccine (a path taken over three other competing candidate vaccines), citing public statements by Pfizer CEO Albert Bourla on June 9, 2020, at Goldman Sachs Virtual 41st Annual Global Healthcare Conference (¶20 of the complaint).

Perhaps in recognition of the post-pandemic patent zeitgeist, the complaint has two remarkable features.  The first is a long expostulatory section explaining the long antecedents of the technology Moderna was able to apply towards making its Spike mRNA SARS-CoV-2 vaccine (and the skepticism those efforts elicited pre-pandemic).  This portion of the complaint includes a history of Moderna's development of the underlying mRNA technology as well as its efforts to develop its vaccine (unnoted is that Moderna abjured participation in "Operation Warp Speed" with its attendant Federal government financial support) during the pandemic (and makes the point that their technology is not limited to vaccines against COVID infections).  The complaint also makes the case that the company's IP was both the technical foundation for its successful and rapid development of the COVID vaccine and provided protection against the significant financial and investment risk occasioned by Moderna's development of its vaccine.

The second remarkable feature of the complaint, and Moderna's strategy in bringing suit, is in the Prayer for Relief (and certain sections explaining the limitations of the remedy Moderna asks the Court to grant).  In addition to a judgment that Pfizer and BioNTech infringe by sales of its Comirnaty® vaccine (and that such infringement was willful), Moderna seeks money damages that expressly exclude damages it would be entitled to from "sales to the U.S. government that are subject to 28 U.S.C. § 1498 or to the 92 low- and middle-income countries in the Gavi COVAX Advance Market Commitment (AMC)."  And in the litany of other remedies routinely requested in patent infringement cases (a finding that this is an exceptional case, with an award of attorneys' fees, costs, and expenses under 35 U.S.C. § 285, and treble damages for willful infringement under 35 U.S.C. § 284), expressly excluded is an injunction from "such other relief the Court may deem just and proper."  Deigning to forego compensation for sales to the government under 28 U.S.C. § 1498 is likely done in an effort to avoid any attempt by Pfizer or BioNTech to have the case adjudicated under the statute in the Court of Federal Claims; disclaiming any interest in sales outside the U.S. to countries falling within the scope of the COMAX AMC avoids (or at least tries to) allegations that Moderna is putting its profits and patent rights over the health and lives of the citizens of those countries.

The complaint also addresses Moderna's promises regarding assertion of its IP, specifically quoting its October 8, 2020 press release stating that "while the pandemic continues, Moderna will not enforce our COVID-19 related patents against those making vaccines intended to combat the pandemic" (italics in original) (¶22).  The complaint also provides Moderna's rationale and justification for filing this complaint at this time:

By early 2022, however, the collective fight against COVID-19 had entered a new endemic phase and vaccine supply was no longer a barrier to access in many parts of the world, including the United States.  In view of these developments, Moderna announced on March 7, 2022, that it expected companies such as Pfizer and BioNTech to respect Moderna's intellectual property and would consider a commercially-reasonable license should they request one.  This announcement was widely publicized, including through coverage in The Wall Street Journal.  Critically, however, and to further its belief that intellectual property should never be a barrier to access, as part of this announcement, Moderna committed to never enforce its patents for any COVID-19 vaccine used in the 92 low- and middle-income countries in the Gavi COVAX Advance Market Commitment ("AMC").  This includes any product manufactured outside the AMC countries, such as the World Health Organization's project in South Africa, with respect to COVID-19 vaccines destined for and used in the AMC-92 countries.  Although they have continued to use Moderna's intellectual property, Pfizer and BioNTech have not reached out to Moderna to discuss a license.  (¶23)

The complaint has nonetheless raised the issue of the status of Moderna's promise in the context of patent pledges in other industries, notably for standard-essential patents (SEP) and FRAND ("fair, reasonable, and non-discriminatory") agreements.  Academics (in particular, Jacob Sherkow from the University of Illinois Law School and Jorge Contreras, S.J. Quinney College of Law, University of Utah Law School) have raised the specter of successful suit by Moderna in the face of its earlier promise as creating a challenge threatening the substantial edifice of patent pledges used in these other contexts.  Some distinctions immediately come to mind, however.  One is that the patent pledges in the SEP/FRAND context are associated with consideration for the pledging party, that consideration consisting of, inter alia, compliance by companies licensing SEPs owned by the pledging patentee that provide stability and consistency in licensing regimes and create impediments against non-compliant companies.  Moderna received no such consideration for its pledge (and the effects of any "good will" it might have hoped to gain was ephemeral; after all, all the pledges in the world did not deter the WTO from adopting a patent waiver agreement at the behest of India, South Africa, and other countries who could expect to benefit and did benefit from agreements like the one in Moderna's complaint exempting sales to the COVAX AMC countries from any damages claims sought by Moderna).  Another distinction is that a fair reading of Moderna's promise-by-press-release was its essentially contingent nature; forgoing (or postponing exercise of) its patent rights was always limited to during the pandemic (although it is a fair question to ask who decides when the pandemic is over).  Finally it is not unfair to say that the SEP/FRAND situation is vastly different from patenting vaccines against a pandemic virus; there is, after all, no analogous risk to global health and welfare arising from patent pledges relating to such patents.

On the other hand, if a court does hold Moderna's patent promise to be enforceable (under the doctrine of promissory estoppel, for example), it most likely will be the last time any biotechnology or pharmaceutical company makes such a promise.

There is one other consideration here that may explain Moderna's willingness to file suit at this time that abjures the lion's share of any damages it could reasonably have expected to receive.  Moderna has achieved something of a Holy Grail of patenting:  true platform patents that can be and will be used for the next vaccine, and the one after that, etc.  Bringing a successful suit might result in a healthy damages award but these may pale compared with what could happen during the ~10 -15 years of patent life remaining.  Of course, any suit brings risks and it is not unlikely that Pfizer/BioNTech will petition for inter partes review; indeed, at least one patent owned by the University of Pennsylvania, U.S. Patent No. 8,691,966 (naming BioNTech principal Katalin Kariko as an inventor), discloses and claims mRNA modifications comprising 1-methylpseudouridine (albeit outside the SARS context); this patent has an earliest priority date about 4 years prior to Moderna's patents asserted in the litigation.

All these considerations make for a compelling story that will almost certainly be the subject of future posts.

U.S. Chamber of Commerce Supports House and Senate Legislation Prohibiting Biden Administration from Negotiating Modifications to WTO TRIPS Agreement Without Congressional Authorization

By Donald Zuhn --

Earlier this month, the U.S. Chamber of Commerce sent a letter to members of Congress indicating that the Chamber "strongly supports" recent House and Senate legislation that the Chamber noted "would prohibit the Administration from negotiating or concluding any modifications to the World Trade Organization (WTO) Trade-Related Aspects of Intellectual Property (TRIPS) agreement, without the explicit authorization of Congress."  The Chamber contended that "[i]nternational negotiations on IP, focused on undermining the WTO TRIPS agreement, are fundamentally misguided," suggesting that "[a]ny agreement that undermines IP would limit the ability of innovative companies to develop the cure for the next pandemic or global health threat and bargain away US competitiveness."  According to the Chamber, the global community should instead "focus on the overwhelming problem of vaccine distribution," as well as "the real issues preventing more shots in arms, such as logistical hurdles, supply chain bottlenecks, and vaccine hesitancy."

The House and Senate bills that have garnered the support of the Chamber are the "Protecting American Innovation Act" (H.R. 7430) and the "No Free TRIPS Act" (S. 4063), which were introduced on April 6, 2022 and April 7, 2022, respectively.  H.R. 7430 was introduced by Rep. Adrian Smith (R-NE) and co-sponsored by Rep. Vern Buchanan (R-FL), Rep. Drew A. Ferguson, IV (R-GA), Rep. Jackie Walorski (R-IN), Rep. Darin LaHood (R-IL), Rep. Brad R. Wenstrup, Brad (R-OH), Rep. Gregory Murphy (R-NC), Rep. Ron Estes (R-KS), Rep. Carol D. Miller (R-WV), Rep. Lloyd Smucker (R-PA), and Rep. Kevin Hern (R-OK).  S. 4063 was introduced by Sen. Marsha Blackburn (R-TN) and co-sponsored by Sen. Thomas Tillis (R-NC), Sen. Tommy Tuberville (R-AL), Sen. Kevin Cramer (R-ND), Sen. Bill Hagerty (R-TN), Sen. Cynthia M. Lummis (R-WY), Sen. Marco Rubio (R-FL), and Sen. Mike Lee (R-UT).

The longer of the two bills, H.R. 7430, which is intended "[t]o establish limitations on modifications to trade agreements," would prevent the President from "enter[ing] into any suspension of or modification to a trade agreement," unless the President complied with all of the consultation requirements set forth in the Act and Congress either enacted legislation or adopted a resolution approving of the suspension or modification.  The House bill sets forth several findings of Congress, including the following:

• "Section 8 of article I of the United States Constitution provides Congress with authority over international trade. Congress has used that authority to approve a number of trade agreements, including the WTO Agreement."

• "Section 8 of article I of the United States Constitution provides Congress with authority to provide intellectual property protections in order to 'promote the progress of science and useful arts'."

• "The United States may not withdraw or otherwise alter the rights and obligations for the United States arising from a congressionally approved trade agreement without the consent of Congress."

• "Innovators in the United States successfully and rapidly brought to fruition vaccines that provide highly effective protection against COVID–19."

• "Longstanding intellectual property protections are critical to efforts by the United States and the biopharmaceutical industry to develop and manufacture vaccines for both people in the United States and around the world."

• "Many experts on vaccine production and distribution are warning that waiving intellectual property protections will undermine the global response to the COVID–19 pandemic and compromise vaccine safety, including by disrupting the distribution of scarce raw materials for vaccines that existing vaccine makers with proven track records for delivering high-quality, safe, and effective vaccines need to continue their own production."

• "The United States Trade Representative announced without any consultation with Congress that the United States will support a waiver of intellectual property protections under the TRIPS Agreement for COVID–19 vaccines."

• "The Trade Representative has not explained how a waiver of the TRIPS Agreement will expand vaccine production and access . . . ."

• "Waiving intellectual property protections . . . raises serious economic and national security concerns."

The House bill also indicates the sense of Congress as including the following:

• "intellectual property protections for COVID–19 vaccines have not impeded vaccination efforts for COVID–19;"

• "intellectual property protections in fact help ensure the safe and efficient manufacturing of COVID–19 vaccines;"

• "waiving intellectual property protections could lead to the production of substandard, ineffective, and potentially unsafe COVID–19 vaccines;"

• "the Trade Representative must consult with Congress before taking a position on the current TRIPS Agreement waiver proposal before the WTO and any further proposals to waive or weaken intellectual property obligations under the TRIPS Agreement;" and

• "the United States must oppose any waiver to intellectual property obligations under the TRIPS Agreement for the response to the COVID–19 pandemic until those implications are fully analyzed."

Among the "consultation requirements" set forth in the House bill are two reports to be submitted to Congress.  One report would be prepared by the Secretary of Commerce, in consultation with the Trade Representative, the Secretary of Health and Human Services, the Commissioner of the Food and Drug Administration, and the Director of the Centers for Disease Control and Prevention, and would assess the impact of a TRIPS waiver on the following:

(i) access to vaccines in the United States;
(ii) access to vaccines globally;
(iii) global supply chains of COVID–19 vaccines and related technologies and the inputs needed to produce those vaccines and related technologies;
(iv) the gross domestic product of the United States;
(v) exports and imports by the United States of COVID–19 vaccines and related technologies and the inputs needed to produce those vaccines and related technologies;
(vi) manufacturing in the United States of COVID–19 vaccines and related technologies and the inputs needed to produce those vaccines and related technologies; and
(vii) investment in vaccine production in the United States and in research and development for future vaccines[.]

The other report would be prepared by the Secretary of Defense, in consultation with the Secretary of Commerce, the Secretary of Health and Human Services, and the Trade Representative, and would determine the effects of a TRIPS waiver with respect to addressing the COVID–19 pandemic on U.S. national security.

The House bill would also require the U.S. Trade Representative to publish a notice in the Federal Register identifying the objectives of any trade agreement negotiation, the rationale for why the trade agreement does not allow the U.S. to meet those objectives, and the provisions of the trade agreement that would be suspended or modified.  In addition, the bill would require the U.S. Trade Representative to:

[C]onsult closely and on a timely basis with the appropriate congressional committees, keeping those committees fully apprised of those negotiations, and provide to those committees, including staff with appropriate security clearance, access to the text of any negotiating proposal or any other document presented by the United States that presents concepts or considerations for the negotiations . . . .

The bill also calls for the International Trade Commission to publish a report on the suspension or modification of any provisions of the trade agreement being proposed by the U.S. Trade Representative and to conduct a public hearing on the proposal.

S. 4063, by comparison, is far more concise.  In particular, the bill states that:

The President, and any official, employee, or agent of the United States, may not negotiate or conclude any withdrawal, suspension, waiver, or modification to the TRIPS Agreement without obtaining explicit authorization from Congress before beginning negotiations with respect to that withdrawal, suspension, or modification.

H.R. 7430 has been referred to the House Ways and Means and House Rules committees.  S. 4063 has been referred to the Senate Finance committee.

For additional information regarding this topic, please see:

• "Senators Send Letter to Commerce Secretary Regarding WTO Waiver Compromise," March 28, 2022
• "The Proposed WTO IP Waiver: Just What Good Can It Do? -- An Analysis," March 24, 2022
• "IP Associations 'Concerned' by Reports of TRIPS Waiver Compromise," March 24, 2022
• "More on Leaked WTO COVID-19 Vaccine Patent Waiver Compromise," March 21, 2022
• "Compromise Reportedly Reached on COVID-19 Vaccine Patent Waiver," March 16, 2022
• "Sen. Tillis Writes to U.S. Trade Representative (Again) Regarding TRIPS Waiver," December 12, 2021
• "U.S. Trade Representative Responds to Letters from Senators Regarding TRIPS Waiver," November 14, 2021
• "U.S. Chamber of Commerce Urges Administration to 'Double Down' on Global Vaccine Distribution," November 3, 2021
• "Is This the WTO Waiver End Game?" July 25, 2021
• "BIO Declaration on Global Access to COVID-19 Vaccines and Treatments and Role of IP," June 24, 2021
• "GOP Legislators Write in Opposition to Proposed TRIPS Waiver," May 16, 2021
• "Population of Patents at Risk from Proposed WTO Patent Waiver," May 12, 2021
• "Sen. Daines Urges Biden Administration to Withdraw Support for COVID-19 IP Waiver," May 12, 2021
• "Pfizer CEO Pens Open Letter on COVID-19 Vaccine IP Waiver," May 10, 2021
• "If the Devil of the WTO IP Waiver Is in the Details, What Are the Details?" May 9, 2021
• "The Road to Hell Is Paved with What Everybody Knows," May 6, 2021
• "BIO & IPO Issue Statements on Biden Administration's Support for Proposed WTO Waiver," May 6, 2021
• "Biden Administration Supports Waiver of IP Protection for COVID-19 Vaccines," May 5, 2021
• "Suspending IP Protection: A Bad Idea (That Won't Achieve Its Desired Goals)," April 26, 2021
• "Sen. Tillis Asks Biden Administration to Oppose WTO Waiver Proposal," April 21, 2021
• "IP Organizations Support Continued Opposition to Waiver Proposal," April 5, 2021
• "Industry Coalition Supports Continued Efforts to Oppose Waiver Proposal," March 29, 2021
• "BIO and PhRMA Urge Biden Administration to Oppose Proposed WTO TRIPS Waiver," March 11, 2021
• "IPO Sends Letter on IP Law and Policy to President-Elect and Vice President-Elect," January 4, 2021

Life Sciences Court Report & COVID-19 Impact on District Court Filings

By Bryan Helwig --

The COVID-19 pandemic has brought the world economy to a standstill and the U.S. legal industry has not been immune.  Firms continue to implement cost-saving measures by reducing salaries, implementing furloughs, and in dire situations, reducing staff and attorney numbers.  The legal industry is now clearly a COVID-19 work-from-home profession.  District courts, in an effort to adapt to the changing landscape while maintaining a sense of normalcy, have been forced to shift dockets, institute remote hearings, and postpone cases.

A review of patent-related district court filings over the past eight weeks reveals that, starting in late March, the number of new district court cases in the pharmaceutical industry began to show a COVID-19-related slowing of new filings.  As shown in the graph below, while total new district court filings remained steady, and have even trended upwards in the last two weeks, pharmaceutical-related filings, including ANDA filings, have seen a significant decline.  The drop is accompanied by an increase in statewide stay-at-home orders, many of which are being partially lifted in the month of May, reflecting an industry-wide conservative litigation approach in the pharmaceutical industry during the ongoing COVID-19 crisis.

The eight-week review of new district court patent litigation filings spans from March 9 to May 1.  Week 1, beginning March 9, 2020, saw 62 new patent-related district court filings.  Twenty of those filings, or 32%, were in the pharmaceutical field.  However, the pharmaceutical filings trended above average for the week as on March 11 Celgene filed seven ANDA-related infringement complaints related to POMALYST®, used for the treatment of multiple myeloma.  Similarly, on Friday, March 13, Bausch Health (f/k/a Valent Pharmaceuticals) filed nine ANDA litigations related to its efinaconazole topical solution to treat nail fungus.  March 13 is further characterized by the National Emergency declared by President Trump under the National Emergencies Act.[1]

Despite the National Emergency, district court filings remained steady during the week of March 16, with 9 of the 71 (15%) district court filings related to infringement of pharmaceutical patents.  The normalized trend continued into the week of March 23, where 13 of the 68 district court filings were pharmaceutical-related.  The consistent trend occurred at a time when only 9 states (i.e., CA, IL, LA, MA, NJ, NY, OH, OR, and WA) enacted statewide orders to stay-at-home or shelter-in-place.

Highlighting the urgency of containment efforts, three days later on March 26, statewide stay-at-home orders were enacted in 26 states.  Included in the stay at-home-orders were New Jersey, on March 21 and Delaware on March 24, two states that represent a significant number of pharma-related district court filings.

The CARES ACT, announced Friday, March 27, marked a second major event in the COVID-19 timeline.  As previously summarized, the CARES ACT mainly impacts patent prosecution and prosecution-related deadlines.  The CARES ACT was accompanied, by numbers reported on March 30, of statewide stay-at-home orders issued in 30 states.  Although a decline in district court filings may have been expected as the spread of COVID-19 strengthened its grip on a dormant U.S. economy, March 30 saw 85 new district court filings.  However, the upward trend in total filings included only three new pharmaceutical-related district court filings (i.e., 3.5% of all new filings) for the week.  This trend continued into the first week of April where only 3 of the 72 district court patent-related filings (i.e., 4%) were from the pharmaceutical industry.  As of April 7, all but eight states had enacted stay-at-home-orders.

This trend continued into the week of April 13 when 67 total district court cases were filed, but included only two pharmaceutical-related district court cases (2% of all new filings).  The week of April 20 was characterized by an almost 30% increase in district court filings, but no pharma-related district court filings.  This trend continued into the week of April 27, where total district court filings increased by almost 40% compared to the week of April 20, but only included 4 pharma related filing.  Overall, there were 382 district court filings in the month of April, but only 12 of these filings, as summarized below, were in the pharma space (~3%).  When compared to pre-COVID filings, the total number of pharma-related district court filings for the month of April was approximately the same as the weekly pharma-related district court filings prior to the COVID-19 pandemic.

Meanwhile, the trend of pharmaceutical cases accounting for less than five percent of all district court filings is likely to continue.  Consistent with this, pharma-related district court filings for the week of May 4 revealed two pharma-related cases out of the first 22 district court filings for the week.

The end of April brought discussions of states instituting partial reopenings as shown on the graph by a drop in the total number of states instituting strict stay at home orders.  The re-openings, while ill-advised by health experts, are unique to each state, with health experts raising valid concerns of a second COVID-19 outbreak.  Until the pharma industry is successful in producing a vaccine or antibody test, it is possible that district court pharmaceutical-related filings will not return to pre-COVID-19 levels in the near future.

[1] https://www.whitehouse.gov/presidential-actions/proclamation-declaring-national-emergency-concerning-novel-coronavirus-disease-covid-19-outbreak/

District Court Cases -- April 2020

TherapeuticsMD, Inc. v. Teva Pharmaceuticals USA, Inc.
2-20-cv-03485; filed April 1, 2020 in the District Court of New Jersey

• Plaintiff:  TherapeuticsMD, Inc.
• Defendants:  Teva Pharmaceuticals USA, Inc. and Teva Pharmaceutical Industries Ltd.

Claim:  Infringement of U.S. Patent Nos.:

• 10,258,630: "Vaginal inserted estradiol pharmaceutical compositions and methods"
• 10,398,708: "Vaginal inserted estradiol pharmaceutical compositions and methods"
• 10,471,072: "Vaginal inserted estradiol pharmaceutical compositions and methods"
• 9,180,091: "Soluble estradiol capsule for vaginal insertion"
• 9,289,382: "Vaginal inserted estradiol pharmaceutical compositions and methods"

Synoposis:  TherapeuticsMD asserts infringement of the '630, '708, '072, '091, and '382 patents.  TherapeuticsMD is the holder of approved NDA No. 208564 for the manufacture and sale of Imvexxy® (estradiol vaginal inserts) for the treatment of moderate to severe dyspareunia.  Teva has submitted ANDA No. 214137, seeking approval to engage in the commercial manufacture, use, and/or sale of generic estradiol vaginal Inserts.  TherapeuticsMD asserts that the method of manufacture and/or the sale of of generic Imvexxy® are covered by one or more claims of the patents-in-suit.

View the complaint here.

Merck Sharp & Dohme B.V. v. Mylan Pharmaceuticals Inc.
1-20-cv-61; filed April 2, 2020 in the District Court of West Virginia

• Plaintiffs:  Merck Sharp & Dohme B.V. and Organon USA Inc.
• Defendants:  Mylan Pharmaceuticals Inc., Mylan Inc., and Mylan API US LLC

Claim:  Infringement of U.S. Patent No.:

• RE44733: "6-mercapto-cyclodextrin derivatives:reversal agents for drug-induced neuromuscular block"

Synoposis:  Merck asserts infringement of the '733 patent.  The '733 patent is a reissue of U.S. Patent No. 6,670,340.  Organon is the holder of approved NDA No. 022225 for the manufacture and sale of Bridion® (sugammadex) Injection for the reversal of neuromuscular blockade induced by rocuronium bromide and vecuronium bromide in adults undergoing surgery.  Mylan has submitted ANDA No. 213915, seeking to obtain approval to engage in the commercial manufacture, use, offer to sell, or sale of generic sugammadex.  Merck asserts that the method of manufacture and/or the sale of generic Bridion® are covered by one or more claims of the '733 patent.

View the complaint here.

Chiesi USA, Inc. v. Hikma Pharmaceuticals USA Inc.
1-20-cv-00484; filed April 8, 2020 in the District Court of Delaware

• Plaintiffs:  Chiesi USA, Inc. and Chiesi Farmaceuti S.P.A.
• Defendants:  Hikam Pharmaceuticals USA Inc., Europhealth (U.S.A.) Inc., and Hikmma Pharmaceuticals PLC

Claim:  Infringement of U.S. Patent No.:

• 7,049,328: "Use for deferipron"

Synoposis:  Chiesi asserts infringement of the '328 patent.  Chiesi is the holder of approved NDA No. 021825 for the manufacture and sale of the Ferriprox® (deferiprone) for iron chelation in patients with transfusional iron overload due to thalassemia syndromes.  Hikma has submitted ANDA No. 213239, seeking approval to engage in the commercial manufacture, use, and/or sale of generic deferiprone.  Chiesi asserts that the method of manufacture and/or the sale of generic Ferriprox® are covered by one or more claims of the '328 patent.

View the complaint here.

Actelion Pharmaceuticals Ltd. v. MSN Pharmaceuticals Inc.
2-20-cv-03859; filed April 9, 2020 in the District Court of New Jersey

• Plaintiffs:  Actelion Pharmaceuticals Ltd. and Nippon Shinyaku Co., Ltd.
• Defendants:  MSN Pharmaceuticals Inc., MSN Laboratories Private Ltd., Alembic Pharmaceuticals Ltd., Vgyaan Pharmaceuticals LLC, Aizant Drug Research Solutions Private Ltd., Zydus Worldwide DMCC, and Zydus Pharmaceuticals (USA) Inc.

Claim:  Infringement of U.S. Patent Nos.:

• 7,205,302: "Heterocyclic compound derivatives and medicines"
• 8,791,122: "Form-I crystal of 2-{4-[N-(5,6-diphenylpyrazin-2-yl)-N-isopropylamino]butyloxy}-N-(methylsu- lfonyl)acetamide and method for producing the same"
• 9,284,280: "Use of form-I crystal of 2-{4-[N-(5,6-diphenylpyrazin-2-yl)-N-isopropylamino]butyloxy}-N-(methylsu- lfonyl)acetamide"

Synoposis:  Actelion asserts infringement of the '302, '122, and '280 patents.  Actelion is the holder of approved NDA No. 207947, for the manufacture and sale of UPTRAVI® (selexipag) for the treatment of pulmonary arterial hypertension to delay disease progression and reduce the risk of hospitalization for pulmonary arterial hypertension.  Defendants have submitted ADNA No. 214414 (Alembic), ANDA No. 214367 (MSN), ANDA No. 214055 (Aizant), and ANDA No. 214302 (Zydous), seeking approval to manufacture, use, market, or sell generic selexipag tablets.  Actelion asserts that the method of manufacture, use, market, and sale of generic UPTRAVI® are covered by one or more claims of the patents-in-suit.

View the complaint here.

Eisai R&D Management Co. v. Sandoz Inc.
3-20-cv-03895, filed April 9, 2020 in the District Court of New Jersey

• Plaintiffs:  Eisai R&D Management Co., Eisai Co., and Eisai Inc.
• Defendants:  Sandoz Inc. and Sandoz International GmbH

Claim:  Infringement of U.S. Patent No.:

• RE46965: "Austad  Intermediates for the preparation of analogs of Halichondrin B"

Synoposis:  Eisai asserts infringement of the '965 patent.  Eisai is the holder of approved NDA No. 201532 for Halaven® (eribulin mesylate) to treat patients with metastatic breast cancer who have previously received at least two chemotherapeutic regimens.  Halaven® has also been approved by the FDA to treat patients with unresectable or metastatic liposarcoma.  Sandoz Inc. submitted ANDA No. 214310, seeking approval to engage in the commercial manufacture, use, offer for sale, or sale generic eribulin mesylate.  Eisai asserts that the commercial manufacture, use, offer for sale, or sale of generic eribulin mesylate are covered by one or more claims of the '965 patent.

View the complaint here.

Huvepharma EOOD v. BASF Corp.
Huvepharma EOOD v. Koninklijke DSM N.V.
1-20-cv-00513 and 1-20-cv-00514; filed April 15, 2020 in the District Court of Delaware

• Plaintiffs:  Huvepharm EOOD (f/k/a Huvepharma AD) and Huvepharma, Inc.
• Defendants:  BASF Corp. and BASF SE (1-20-cv-00513) and Koninklijke DSM N.V.; DSM Nutritional Products, LLC; and DSM Nutritional Products Ltd. (1-20-cv-00514)

Claim:  Infringement of U.S. Patent No.:

• 8,993,300: "Overexpression of phytase genese in yeast systems"

Synopsis:  Huvepharma EOOD asserts infringement of the '300 patent.  Huvepharma sells OptiPhos®, a feed additive for animals.  This includes an E. coli derived 6-phytase, which is recombinantly produced in a heterologous yeast host in a submerged fermentation process.  Huvepharma exclusively licenses OptiPhos® from Cornell University.  Huvepharma asserts that the Defendants, during prosecution of their patent application, cited the child application of the '300 patent.  Despite the application being rejected, Defendants allegedly continued to sell the accused product after the '300 patent issued.  As such, Huvepharma alleges Defendants knowingly infringed the '300 patent.

View the complaint here (1-20-cv-00513) and here (1-20-cv-00514).

Purdue Pharma L.P. v. Intellipharmaceutics International Inc.
1:20-cv-00515; filed April 15, 2020 in the District Court of Delaware

• Plaintiffs:  Purdue Pharma L.P., Purdue Pharmaceuticals L.P., P.F. Laboratories, Inc., Rhodes Technologies, and Grüenthal GmbH
• Defendants:  Intellipharmaceutics International Inc., Intellipharmaceutics Corp., and Intellipharmaceutics Ltd.

Claim:  Infringement of U.S. Patent Nos.:

• 10,369,109: "Abuse-proofed dosage form"
• 10,407,434: "Process for preparing oxycodone compositions"

Synopsis:  Purdue asserts infringement of the '109 and '434 patents.  Purdue is the holder of approved NDA No. 022272 for OxyContin® (oxycodone hydrochloride), an extended-release pain medication.  Intellipharmaceutics submitted NDA No. 209653, seeking approval to engage in the commercial manufacture, use, or sale of a generic extended-release oxycodone product.  Purdue asserts that the method of manufacture and/or the use of generic OxyContin® are covered by one or more claims of the patents-in-suit.

View the complaint here.

Astellas US LLC v. Glenmark Pharmaceuticals Ltd.
1-20-cv-00516; filed April 15, 2020 in the District Court of Delaware

• Plaintiffs:  Astellas US LLC, Astellas Pharma Inc., and Gilead Sciences Inc.
• Defendant:  Glenmark Pharmaceuticals Ltd.

Claim:  Infringement of U.S. Patent Nos.:

• 8,106,183: "Process for preparing an A.sub.2A-adenosine receptor agonist and its polymorphs"
• 8,524,883: "Monohydrate of (1-{9-[4S,2R,3R,5R)-3,4-dihydroxy-5-(hydroxymethyl)oxolan-2-yl]-6-aminopu- rin-2-yl}pyrazol-4-yl)-N-methylcarboxamide"
• RE47301: "Process for preparing an A2A-adenosine receptor agonist and its polymorphs"

Synopsis:  Astellas asserts infringement of the '183, '883, and '301 patents.  Astellas is the holder of approved NDA No. 022161 for the marketing and sale of Lexiscan® (regadenoson) for use in cardiac nuclear stress tests.  Glenmark submitted ANDA No. 214440, seeking approval to commercially market a generic version of Lexiscan®.  Asrtellas asserts that the method of manufacture and/or the use of generic Lexiscan® are covered by one or more claims of the patents-in-suit.

View the complaint here.

Pharmacyclics LLC v. Zydus Worldwide DMCC
1-20-cv-00560; filed April 16, 2020 in the District Court of Delaware

• Plaintiffs:  Pharmacyclics LLC and Janssen Biotech, Inc.
• Defendants:  Zydus Biotech, Inc. and Cadila Healthcare Ltd.

Claim:  Infringement of U.S. Patent Nos.:

• 10,010,507: "Pharmaceutical formulations of a bruton's tyrosine kinase inhibitor"
• 10,106,548: "Crystalline forms of a Bruton's tyrosine kinase inhibitor"
• 10,125,140: "Crystalline forms of a bruton's tyrosine kinase inhibitor"
• 10,213,386: "Pharmaceutical formulations of a Bruton's tyrosine kinase inhibitor"
• 10,478,439: "Use of inhibitors of bruton's tyrosine kinase (Btk)"
• 7,514,444: "Inhibitors of bruton's tyrosine kinase"
• 8,008,309: "Inhibitors of bruton's tyrosine kinase"
• 8,476,284: "Inhibitors of Bruton's tyrosine kinase"
• 8,497,277: "Inhibitors of Bruton's tyrosine kinase"
• 8,697,711: "Inhibitors of bruton'S tyrosine kinase"
• 8,735,403: "Inhibitors of Bruton's tyrosine kinase"
• 8,754,090: "Use of inhibitors of bruton's tyrosine kinase (Btk)"
• 8,754,091: "Inhibitors of bruton's tyrosine kinase"
• 8,952,015: "Inhibitors of Bruton's tyrosine kinase"
• 8,957,079: "Inhibitors of Bruton's tyrosine kinase"
• 9,181,257: "Inhibitors of Bruton's tyrosine kinase"
• 9,296,753: "Crystalline forms of a Bruton's tyrosine kinase inhibitor"
• 9,725,455: "Crystalline forms of a bruton's tyrosine kinase inhibitor"

Synopsis:  Pharmacyclics asserts infringement of the '507, '548, '140, '386, '439, '444, '309, '284, '277, '711, '403, '090, '091, '015, '079, '257, 753, and '455 patents.  Pharmacyclics is the holder of NDA No. 210563 for IMBRUVICA® (ibrutinib) to treat mantle cell lymphoma, Waldenström's macroglobulinemia, chronic lymphocytic leukemia, small lymphocytic lymphoma, and chronic graft-versus-host-disease.  Zydus submitted ANDA No. 214296, seeking approval to market generic versions of IMBRUVICA®.  Pharmacyclics asserts that the method of manufacture and/or the use of generic IMBRUVICA® are covered by one or more claims of the patents-in-suit.

View the complaint here.

Amgen Inc. v. Hospira, Inc.
1-20-cv-00561; filed April 26, 2020 in the District Court of Delaware

• Plaintiffs:  Amgen Inc. and Amgen Manufacturing Ltd.
• Defendants:  Hospria Inc. and Pfizer Inc.

Claim:  Infringement of U.S. Patent No.:

• 10,577,392: "Capture processes for proteins expressed in a non-mammalian system"

Synopsis:  Amgen asserts infringement of the '392 patent.  Amgen manufactures and sells NEUPOGEN® (filgrastim) for the treatment of neutropenia.  Amgen is a Reference Product Sponsor and Hospira a biosimilar applicant for a biosimilar version of NEUPOGEN®.  Hospira used the subsection (k) pathway and submitted abbreviated Biologic License Application (aBLA) No. 761080.  In July 2018, Hospira received FDA approval for NIVESTYM® (filgrastim), a biosimilar to Neupogen® (filgrastim), for all eligible indications of the reference.  Amgen alleges that Hospira submitted the aBLA before expiration of the '392 patent, thereby infringing the '392 patent.

View the complaint here.

Tris Pharma, Inc. v. Teva Pharmaceuticals USA, Inc.
1-20-cv-05212; filed April 28, 2020 in the District Court of New Jersey

• Plaintiff:  Tris Pharma, Inc.
• Defendant:  Teva Pharmaceuticals USA, Inc.

Claim:  Infringement of U.S. Patent Nos.:

• 9,545,399: "Methylphenidate extended release chewable tablet"
• 9,844,544: "Methylphenidate extended release chewable tablet"
• 9,844,545: "Methylphenidate extended release chewable tablet"

Synoposis:  Tris asserts infringement of the '399, '544, and '545 patents.  The patents are directed at QuilliChew ER® (methylphenidate), a long-lasting chewable for the treatment of ADHD in children.  Teva submitted ANDA NO. 214202, seeking approval to manufacture and commercially market a generic version of QuilliChew ER®.  Tris asserts that the method of manufacture and/or the use of generic QuilliChew ER® are covered by one or more claims of the patents-in-suit.

View the complaint here.

TherapeuticsMD, Inc. v. Amneal Pharmaceuticals, Inc.
3-20-cv-05256; filed April 29, 2020 in the District Court of New Jersey

• Plaintiff:  TherapeuticsMD, Inc.
• Defendants:  Amneal Pharmaceuticals, Inc., Amneal Pharmaceuticals LLC, and Amneal Pharmaceuticals of New York LLC

Claim:  Infringement of U.S. Patent Nos.:

• 10,052,386: "Progesterone formulations"
• 10,206,932: "Natural combination hormone replacement formulations and therapies"
• 8,633,178: "Natural combination hormone replacement formulations and therapies"
• 8,846,648: "Natural combination hormone replacement formulations and therapies"
• 8,846,649: "Natural combination hormone replacement formulations and therapies"
• 8,987,237: "Natural combination hormone replacement formulations and therapies"
• 8,993,548: "Natural combination hormone replacement formulations and therapies"
• 8,993,549: "Natural combination hormone replacement formulations and therapies"
• 9,006,222: "Natural combination hormone replacement formulations and therapies"
• 9,114,145: "Natural combination hormone replacement formulations and therapies"
• 9,114,146: "Natural combination hormone replacement formulations and therapies"
• 9,301,920: "Natural combination hormone replacement formulations and therapies"

Synopsis:  TherapeuticsMD asserts infringement of the '386, '932, '178, '648, '649, '237, '548, '549, '222, '145, '146, and '920 patents.  TherapeuticsMD holds approved NDA No. 210132 for the BIJUVA® (estradiol and progesterone capsule) for the treatment of moderate to severe vasomotor symptoms due to menopause.  Amneal submitted ANDA No. 214293, seeking approval to commercially manufacture, import, market, offer for sale, and/or sell generic BIJUVA®.  TherapeuticsMD asserts that the method of manufacture and/or the use of BUJUVA® are covered by one or more claims of the patents-in-suit.

View the complaint here.

Impact of COVID-19 Pandemic on Patent Offices and Federal Courts -- March 29 UPDATE

By Donald Zuhn --

On March 11, World Health Organization Director-General Tedros Adhanom declared that the COVID-19 outbreak "can be characterized as a pandemic," cautioning that the WHO has "rung the alarm bell loud and clear."  At the time of the announcement, the WHO noted that there were 118,000 cases reported globally; in its latest situation report, the WHO indicates that there have been 634,835 cases as of March 29.  The WHO's declaration earlier this month -- and global developments since then -- raise the question of how the pandemic has been affecting the patent community.

We have been reporting (see links below) on the impact of the COVID-19 pandemic on the U.S. Patent and Trademark Office, World Intellectual Property Organization, European Patent Office, IP Australia, Intellectual Property Office of New Zealand (IPONZ), Brazilian Patent and Trademark Office (INPI), Canadian Intellectual Property Office (CIPO), Mexican Institute of Industrial Property (IMPI), National Office of Intellectual Property (ONAPI) in the Dominican Republic, Intellectual Property India, National Intellectual Property Office (NIPO) in Sri Lanka, Israel Patent Office, Intellectual Property Office of Vietnam (NOIP), and Directorate General of Intellectual Property (DGIP) in Indonesia, as well as U.S. Federal courts, including, in particular, the Supreme Court and Federal Circuit.  Today we present further developments in Mexico, Indonesia, and at the Federal Circuit in response to the COVID-19 pandemic.

Last week, Mexican patent law firm OLIVARES notified the patent community that the Mexican Patent and Trademark Office (IMPI) had issued a decree stating that no terms would run from March 24 to April 19, 2020.  At the time, OLIVARES noted "that IMPI will remain open and that it will be possible to file applications and briefs even though their filing date will be considered as April 20, 2020," and that the suspension would not apply to the release of preliminary injunctions imposed by IMPI during an infringement proceeding.

On Friday, OLIVARES provided an update on IMPI developments, noting that the IMPI issued an additional decree on March 26, suspending all of its activities from March 27 to April 19, 2020.  As a result, it will not be possible to file motions until April 20, 2020.  While it will be possible to pre-file applications online, such applications will have to be digitally signed on April 20, at which time an application number will be assigned by the IMPI.  The IMPI decree also indicated that the Office could summon a limited staff to attend to procedures that are necessary to mitigate the consequences of the pandemic, or related to the release of preliminary injunctions imposed by the IMPI during an infringement proceeding.

On Saturday, OLIVARES provided a further update, noting that the Ministry of Health had issued a decree in which it was suspending, due to force majeure, the legal terms during the period from March 26 to April 19, 2020, in all administrative actions and procedures that are processed with the Ministry of Health, its administrative units and decentralized administrative bodies, including the Federal Commission for the Protection Against Sanitary Risks (COFEPRIS).  As a result, only authorizations for medicines, medical devices, and import of supplies strictly related to attending to the COVID-19 pandemic may continue before COFEPRIS during said period.  COFEPRIS issued a statement in which it specified that its Comprehensive Services Center (CIS) would also remain open to receive and attend to non-COVID-19-related procedures necessary to continue the supply of medical products in response to the health needs of the Mexican population.

Last week, we noted that the Directorate General of Intellectual Property (DGIP) in Indonesia had announced that until April 5, the Intellectual Property Integrated Service Counters at the DGIP would be closed and that dispensations would be provided by the DGIP for the late filing of all formality documents for Intellectual Property applications that would otherwise have been due in March 2020.  On Friday, Indonesia patent law firm LSP Partnership notified the patent community that the DGIP was temporarily closed (with LSP indicating that such closure would run until March 31), that IP applications could be filed online (except for the payment of annuities), and that the DGIP would provide extensions of time for any formality documents and payment of fees (including for patent maintenance) that are due in March 2020, and up until the DGIP resumes for services.

In a notice posted on its website on Friday, the U.S. Court of Appeals for the Federal Circuit noted that the Clerk's Office has issued new guidance on how counsel may accomplish service outside of CM/ECF (Case Management/Electronic Case Files), which is most frequently required when serving pro se parties or confidential materials.  In particular, the Court explained that:

Under Federal Rule of Appellate Procedure 25(c)(2), parties may electronically serve each other outside of the court's electronic filing system "by sending it by other electronic means that the person to be served consented to in writing."  Service through this method is complete on "sending, unless the party making service is notified that the paper was not received by the party served."  Fed. R. App. P. 25(c)(4).  The court is not involved when parties agree in writing to provide service through alternate electronic means, such as through email.  Consistent with the court's November 1, 2019 notice, the filing party must include a proof of service noting the form of service [emphasis in original].

The Clerk's Office also recommended two other options when a person to be served does not consent to an alternate method of service.  Those options can be found in the new guidance.

Patent Docs will continue to monitor and report on patent-related developments related to the COVID-19 pandemic.  In addition, we encourage our readers to let us know about developments related to the COVID-19 pandemic at other patent offices.

For additional information regarding this topic, please see:

• "Impact of COVID-19 Pandemic on Patent Offices and Federal Courts -- March 26 UPDATE," March 26, 2020
• "Impact of COVID-19 Pandemic on Patent Offices and Federal Courts -- March 19 UPDATE," March 19, 2020
• "Impact of COVID-19 Pandemic on Patent Offices and Federal Courts -- March 18 UPDATE," March 18, 2020
• "Impact of COVID-19 Pandemic on Patent Offices and Federal Courts -- March 17 UPDATE," March 17, 2020
• "Impact of COVID-19 Pandemic on Patent Offices and Federal Courts – UPDATED," March 16, 2020
• "Impact of COVID-19 Pandemic on Patent Offices and Federal Courts," March 15, 2020

Qui Tam Action Filed under False Claims Act over Certain Prescription Drug Prices

By Kevin E. Noonan --

Those with moderate memories may recall that there was a spate of qui tam actions several years ago for false marking of patented articles, aimed at manufacturers who had neglected to remove patent marking from their products after their patents had expired.  Some of these transgressions were of ancient provenance, particularly with regard to consumer goods; these were attractive targets because the "damages" to the private attorneys general accrued on a "per instance" basis and thus the reward (50% of which going to the "relator" who brought the action) could be sizable.  Alas, for these enterprising public guardians, the troll-like nature of these actions was enough for Congress to amend the statute as part of the Leahy-Smith America Invents Act for them to disappear as quickly as they had arisen.

Recently, a complaint was filed in the U.S. District for the District of New Jersey on behalf of the relator (a New York-based patent attorney) and the States of California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Vermont, Virginia, Washington, and the District of Columbia against Janssen Biotech, Jansen Oncology, Janssen R&D, Johnson and Johnson, and BTG International alleging violation of the Federal False Claims Act (31 U.S.C. §§ 3729-3733) and corresponding state laws.  The alleged "false claims":  "Medicare, Medicaid, and other government program[]" reimbursement for the prostate cancer drug Zytiga® (abiraterone acetate, administered in combination with prednisone) paid after expiration of Orange Book-listed U.S. Patent No. 5,604,213, which expired on December 13, 2016.  The complaint was based on an allegation that Orange Book-listed U.S. Patent No. 8,822,438 was obtained by "fraud,", i.e. inequitable conduct.  (That patent has been invalidated in related inter partes review (IPR) proceedings but has not been held to have been obtained as the result of inequitable conduct in ANDA litigation.  Rather, in a consolidated action the District Court held the patent to be invalid for obviousness, and the Federal Circuit affirmed both the District Court decision and the Final Written Decisions of obviousness in the related IPRs.)

As set forth in the complaint, the basis for the action is "civil liability [that arises] when a defendant makes, or causes to be made, a false or fraudulent claim for payment to the government."  The "false claim" here is "overpriced prescription drugs," which the complaint asserts are the basis for "many FCA cases."  Here, in addition to allegedly improperly obtaining allowance of the '438 patent, the complaint alleges that defendants "manipulate[ed] the regulatory structure for generic approval [that] allowed Defendants to wrongfully shield over $1 billion in Zytiga revenue, most of it paid by federal and state government funds."  (Elsewhere in the complaint, the amount rises to $2.5 billion.)  The rhetoric regarding the nature of the problem of prescription drug prices and the perfidy of these defendants is reliably purple, and a review of the substance of the allegations useful for discerning whether there is any basis for the allegations.

According to the complaint, the two "fraudulent" acts alleged to have been performed by defendants were 1) failing to disclose that "one of its competitors had not obtained FDA approval [for its competing drug] during the time period for which Defendants were making critical market share comparisons between Zytiga and its biggest competitor, Xtandi®" and "withheld material information from the Patent Office that the claimed commercial success of Zytiga lacked any nexus" to the invention claimed in the '438 patent.  Their allegation is "but for" -- by engaging in inequitable conduct, Defendants were able to exclude generic competition and thus their reimbursement by the Federal government amounted to filing false claims with the government.  The complaint lays out the course of patent prosecution for the '438 patent, whose claims were repeatedly rejected on obviousness grounds under 35 U.S.C. § 103.  Defendant patent owner Janssen asserted so-called "secondary considerations" or objective indicia of non-obviousness in response to these rejections, specifically that the commercial success of Zytiga rebutted the prima facie obviousness case established by the Office.  The course of prosecution of the application (U.S. Application No. 13/034,340) was not excessively lengthy, the application having been filed in February 2011 and granted on September 2, 2014.  The defect in applicants' assertion of commercial success is purportedly due to a failure to properly establish commercial sales with the benefits of the putatively obvious invention to be patented, which the complaint further states must show "increasing market share and the maintenance of such shares in the face of competitors and other adverse market forces," citing Gaderma Labs L.P. v. Tolmar Inc. and Ashland Oil v. Delta Resins & Refractories.  (The complaint includes the further caveat that the success cannot be due to blocking patents or other "reasons other than the merits of the claimed invention.")

The complaint characterizes as "misleading and fraudulent" statements made by Defendants in response to the Office refusing to accept the evidence of commercial success first submitted, based on statements that market share increased from 15% to 20%, instead of relator's calculation that it was only an increase of 3%, and that one of the comparator drugs, Xtandi®, had not been approved by the FDA.  The complaint further alleges inequitable conduct because Xtandi® overtook Zytiga sales "by the end of 2015"; however, to the extent the '438 patent was granted on September 2, 2014, is it difficult to understand how this datapoint supports an inequitable conduct allegation.  For another subset of the patient market (chemorefractory patients), Xtandi® overtook Zytiga sales in the relevant timeframe, but Defendants' representations were with regard to the ~70% of the market that was "chemo-naïve" and thus the relevance of this market information is somewhat questionable, particularly because the complaint states that "[i]n the same submission" Defendants acknowledged the reduction in sales.  If the "submission" was not Defendants' response to the Office's obviousness rejection, it is unclear that is intended, and if it was, then Defendants seem to have satisfied their duty of disclosure.  Additional allegations regarding relative timing of FDA approval for Zytiga and competing drugs, and the complex interplay between market share and the pattern in which the drugs are prescribed will no doubt be more fully argued by relator and Defendants' experts at trial.  But the central allegation -- that the Office granted the '438 patent based on the arguments for commercial success -- is supported by the prosecution history.

The complaint also alleges that the '213 patent was a "blocking" patent and makes much of the procedural facts that the '438 patent was not a continuation of the '213 patent and that the Examiners of the two patents were not the same, but neglects to allege than the '213 patent was cited to the Examiner of the '438 patent.  Other allegations have less potential persuasive punch, such as asserting Defendants' statements that Zytiga was "the most successful oral oncology launch in history" was misleading because "numerous non-oral cancer drugs have been far more successful than Zytiga" (which is a non sequitur on its face).  And others lack context in the complaint sufficient to be persuasive without further expert explication.

Relator will be required to establish his theories regarding misrepresentation and show the requisite intent to deceive, both by clear and convincing evidence, in order to prevail.

In addition, the complaint alleges that listing the '438 patent in the Orange Book was in itself a "false and fraudulent statement to the U.S. government," raising another, related ground for bringing this qui tam action.  And citing requirements for federal contracts that suppliers affirm and attest that their prices are "fair and reasonable" the complaint established its own nexus between the alleged fraud in procuring the '438 patent, listing the purportedly invalid and unenforceable '438 patent in the Orange Book, and collecting branded prices from the government on account of avoided regulatory approval of presumably lower priced generic competitors (there having been more than a dozen ANDA filers precluded by the market by the Orange Book-listed '438 patent after expiry of the '213 patent in December 2016).

The prayer for relief includes the statutory amount of treble damages as well as "not less than $5,500 or more than $21,916" for "each and every" violation of the Federal False Claims Act, as well as treble damages and other penalties in each of the state law-based violations.

The false-marking qui tam plaintiffs would be no doubt envious of the potential windfall due the relator should he prevail.

Novartis Pharmaceuticals Corp. v. Par Pharmaceutical Inc. (D. Del. 2019)

By Donald Zuhn --

Last week, in Novartis Pharmaceuticals Corp. v. Par Pharmaceutical Inc., District Judge Richard G. Andrews of the U.S. District Court for the District of Delaware granted a Motion for Estoppel under 35 U.S.C. § 315(e)(2) filed by Novartis Pharmaceuticals Corp.  Defendant Par Pharmaceutical Inc. had taken no position on the estoppel issue.

The dispute between the parties began when Novartis filed three suits against Par (as well as related suits against Breckenridge Pharmaceutical, Inc. and West-Ward Pharmaceutical Corp.), with the parties agreeing that the validity of the patent at issue, U.S. Patent No. 5,665,772, would be tried only once.  Defendants challenged the validity of claims 1-3, 7, and 10 of the '772 patent, arguing that the claims were obvious in view of 27 references.

While litigation was pending, Par challenged claims 1-3 and 8-10 of the '772 patent in an inter partes review proceeding.  After the U.S. Patent and Trademark Office Patent Trial and Appeal Board instituted Par's IPR, the other Defendants filed four additional IPR petitions challenging the '772 patent, along with motions to join Par's IPR.  The Board instituted two of the four additional IPRs and joined them with Par's IPR.  The Board declined to institute and join IPRs challenging claim 7 of the '772 patent because claim 7 had been omitted from Par's IPR.

In March 2017, the District Court determined that the asserted claims of the '772 patent were invalid for obviousness-type double patenting, but did not address Defendants' obviousness defenses or counterclaims, and the District Court's decision was appealed.  The Federal Circuit reversed the District Court's finding of obviousness-type double patenting in Novartis Pharmaceuticals Corp. v. Breckenridge Pharmaceutical Inc., 909 F.3d 1355, 1367 (Fed. Cir. 2018).  Prior to the Federal Circuit's reversal, the Board issued a final written decision in Par's IPR upholding the patentability of claims 1-3 and 8-10 of the '772 patent.

Following the Board decision and appeal, the District Court asked the parties to file a status report summarizing the issues that still needed to be addressed in litigation.  Novartis suggested that 35 U.S.C. § 315(e)(2) would possibly estop Defendants' obviousness defenses and counterclaims based on the Board's final written decision, and the District Court issued an order requesting briefing from Novartis on estoppel and from Defendants on obviousness.  Following that order, the suits involving Breckenridge and West-Ward were dismissed by joint stipulation, and Novartis filed its Motion for Estoppel under 35 U.S.C. § 315(e)(2).  In addition to taking no position on the estoppel issue, Par also declined to file a brief on obviousness, stating that it believed that a decision could be rendered based on the briefing and testimony already submitted to the Court.

In considering Novartis' motion, the Court noted that § 315(e)(2) provides that:

The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a) . . . may not assert in either a civil action arising in whole or in part under section 1338 of title 28 . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter parties review.

While pointing out that the Federal Circuit has not directly addressed the issue of whether estoppel applies to prior art references that were not raised in the IPR proceeding, the District Court listed a number of decisions in which a majority of District Courts had determined that IPR estoppel applies to any prior art reference that reasonably could have been raised, even if not actually raised, in an IPR proceeding (including decisions in the District of Delaware, the Eastern District of New York, the Eastern District of Wisconsin, and the Eastern District of Texas).  The Court also noted that:

[T]he general purpose of the statute as well as the statutory language indicate that the most plausible interpretation is that any prior art that the IPR petitioner could have raised in the proceeding is estopped if there is a final written decision from the PTAB that the challenged claims are valid.

In addition, the Court pointed out that "one of the policy objectives behind the introduction of IPR proceedings was an intention to conserve judicial resources," adding that "[a]llowing an IPR petitioner to have two bites at the apple by holding back certain obviousness combinations runs counter to both the clear language and purpose behind § 315."  Despite Breckenridge's argument that IPR estoppel should not apply after a district court has held trial, the Court indicated that it did "not think the application of IPR estoppel is dependent on the order in which certain events occur," and stated that "[t]he plain language of the statute does not indicate that Congress intended for there to be a time limitation upon the estoppel effect of a final written decision of an IPR."

On the issue of whether estoppel should apply to the 27 references put forward by Defendants at trial, Novartis argued that the 27 references all "could reasonably have been raised" in the IPR proceeding because they were used in the September 2016 trial which occurred before the reply due date in the IPR.  The District Court therefore determined that Defendants were precluded from pursuing a § 103 invalidity argument as to claims 1-3 and 8-10 of the '772 patent.  However, because no IPR was instituted as to claim 7 of the '772 patent, the Court determined that IPR estoppel did not apply for this claim.  Nevertheless, Novartis had withdrawn its infringement contention as to claim 7 and had agreed to provide Par with a covenant not to sue on that claim.  The Court therefore granted Novartis' Motion for Estoppel with respect to claims 1-3 and 8-10 of the '772 patent.

Novartis Pharmaceuticals Corp. v. Par Pharmaceutical Inc. (D. Del. 2019)
Memorandum Order by District Judge Andrews

In re Silver -- Texas Supreme Court Recognizes Patent Agent Privilege

By Josh Rich --

In reversing an appellate court decision that had caused concerns throughout the patent world, the Texas Supreme Court recognized that communications between patent agents and clients could be covered by the attorney-client privilege.[1]  In Patent Office proceedings and patent litigation, patent agent-client communications could already be protected; in non-patent litigation, however, it is far less clear -- and the prior Texas appellate court decision suggested such communications could be revealed in discovery.  By reversing the appellate court decision, the Texas Supreme Court should have patent agents feeling more confident that their representation of clients in patent prosecution is no different than that provided by patent attorneys . . . and their clients breathing a sigh of belief.

In this case, Mr. Silver was the named inventor on a patent application related to a stand-alone tablet designed to allow restaurant customers to order food and pay without having to interact with a waiter or waitress.  He hired a patent agent to prosecute the application before the U.S. Patent and Trademark Office, which the agent did successfully.  Mr. Silver sold the patent to Tabletop Media, LLC, who then licensed it to restaurant chains.[2]  Tabletop allegedly failed to pay him, and Mr. Silver sued Tabletop for breach of contract.  In the breach of contract case, brought by Mr. Silver in Texas state court, Tabletop sought production of communications between Mr. Silver and his patent agent.

The trial court compelled production of the communications, and the Texas Court of Appeals refused to overturn the trial court's decision in responding to Silver's petition for writ of mandamus.[3]  It did so because it understood Mr. Silver as requesting the court to establish a patent agent-client privilege separate from the attorney-client privilege, which it indicated that it was not empowered to do.[4]  One of the appellate court judges dissented from the panel opinion, understanding Mr. Silver's request not as the creation of a new privilege, but as an application of the existing attorney-client privilege to the patent agent-client relationship.[5]  Ultimately, the Texas Supreme Court unanimously agreed with the dissent.[6]

In Texas, claims of attorney-client privilege are governed by Texas Rule of Evidence 503.  Under that rule, "[a] client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made to facilitate the rendition of professional legal services to the client [between, among others] between the client or the client's representative and the client's lawyer."[7]  In that context, a "lawyer" is defined as "a person authorized, or who the client reasonably believes is authorized, to practice law in any state or nation."[8]  Thus, the key question was whether a patent agent was a person "authorized to practice law" in a state or nation.

While not controlled by Federal decisions, the Texas Supreme Court's answer to that question was informed by them.  Over five decades ago, in Sperry v. State of Florida ex rel. Florida Bar,[9] the Supreme Court had held that a patent agent's prosecution of applications before the U.S. Patent and Trademark Office did not constitute the unauthorized practice of law.  Then, in In re Queen's University at Kingston, which was decided just months before the Texas appellate court's decision, the Federal Circuit had determined as a matter of Federal common law that the attorney-client privilege included "a patent-agent privilege extending to [a client's] communications with non-attorney patent agents when those agents are acting within the agent's authorized practice of law before the Patent Office."[10]  In both cases, the Federal courts had reached the conclusion based on the belief that a patent agent's role in patent prosecution was not just law-like activity, it was the practice of law itself.

The Texas court also looked to Texas statutes and dictionary definitions for its decision, since Rule 503 does not itself define what "the practice of law" entails.  The Texas State Bar Act includes a definition of the practice of law in the context of unauthorized practice of law, but it is not necessarily coextensive with Rule 503.[11]  Similarly, both Webster's and Black's provide dictionary definitions.  The definition in Black's Law Dictionary includes "preparing papers to bring about various transactions,"[12] which is exactly what patent prosecution involves.  Both the Texas statutes and dictionaries also require that a lawyer's services be provided directly to a client, but that unquestionably occurs with patent agents within the scope of patent prosecution.

For the privilege to apply, Rule 503 also requires a lawyer to be authorized to practice by a state or nation.  The defendant argued that meant that a person had to be licensed as a lawyer by a state or nation, regardless of authorization by the U.S. Patent and Trademark Office.  Again, the Texas court considered the Sperry and Queen's University cases as persuasive authority.  But more importantly, it focused on the distinction between being "authorized" to practice law and being "licensed" to practice law.  It found the latter to be a subset of the former, not coextensive therewith.  Under U.S. Patent and Trademark Office regulations, a patent agent is authorized to practice before it even if he or she is not licensed to do so.  Accordingly, the Texas Supreme Court found that a patent agent is a "lawyer" for purposes of the application of the attorney-client privilege in relation to communications regarding patent prosecution.

While it might otherwise seem that the Texas Supreme Court's decision in In re Silver is merely one more case supporting the existence of a patent agent-client privilege,[13] it bears greater importance because it reversed a decision to the contrary.  The Texas Appellate Court's decision had raised great concerns that states, in breach of contract or other state law claim litigation, would not extend privilege to such communications.  The appellate court's decision had a chilling effect on clients' choice of practitioners:  to ensure the application of attorney-client privilege, they were opting for patent attorneys or patent agents supervised by attorneys.  Now, with that decision reversed, there is less reason for fear of revelation of communications and greater freedom to discuss patent applications directly with patent agents.  Thus, today, all precedent points to patent agent-client communications being privileged.

[1] In re Silver, Case No. 16-0682 (Tex. Feb. 23, 2018).
[2] If you've used a Ziosk tablet or Abuelo's, Chili's, or Red Robin, you may be part of Mr. Silver's damages claim.
[3] In re Silver, 500 S.W. 3d 644, 647 (Tex. App. 2016).
[4] Id. at 645.
[5] Id. at 650 (Evans, J., dissenting).
[6] For a more complete discussion of the Texas Appellate Court's decision, and other recent patent agent privilege decisions and regulations, see "Patent Office Ethics Developments: Patent Agent Privilege and Duty of Disclosure," Snippets (Winter 2017).
[7] Tex. R. Evid. 503(b)(1).
[8] Tex. R. Evid. 503(a)(3).
[9] 373 U.S. 379 (1963).
[10] 820 F.3d 1287, 1302 (Fed. Cir. 2016).  For an excellent recap of the Queen's University case, see "In re Queen's University at Kingston (Fed. Cir. 2016)".
[11] See Tex. Gov't Code § 81.101.
[12] The Court showed its respect for patent prosecutors by not only acknowledging that patent applications are legal documents, but actually constitute "one of the most difficult legal instruments to draw with accuracy."
[13] In the interim between the Texas Appellate Court's decision and the Texas Supreme Court's decision, the Patent and Trademark Office adopted patent agent privilege as a rule for Patent Trial and Appeal Board proceedings.  See "USPTO Issues Final Rule Establishing Patent Agent Privilege".

Braintree Laboratories, Inc. v. Breckenridge Pharmaceutical, Inc. (Fed. Cir. 2017)

By Kevin E. Noonan --

The Federal Circuit's decision on Friday, in Braintree Laboratories, Inc. v. Breckenridge Pharmaceutical, Inc., illustrates the risks a litigant can take when agreeing to a stipulation in an effort at least to reduce litigation costs and issues presented at trial.

The case involved ANDA litigation over ANDA defendant Breckenridge Labs' generic version of Braintree's bowel preparation kit (SUPREP), sold to purge a patient's colon prior to inter alia colonoscopy.  The formulation as sold by Braintree comprises "two six-ounce bottles of an aqueous hypertonic solution of potassium sulfate, magnesium sulfate, and sodium sulfate," which according to the FDA-approved label are filled to 16 ounces prior to consumption (which occurs once in the evening before the procedure and once the morning of a colonoscopy).  Claim 15 of Braintree's patent in suit (U.S. Patent No. 6,946,149) is representative:

A composition for inducing purgation of the colon of a patient, the composition comprising from about 100 ml to about 500 ml of an aqueous hypertonic solution comprising an effective amount of Na₂SO₄, an effective amount of MgSO₄, and an effective amount of K₂SO₄, wherein the composition does not produce any clinically significant electrolyte shifts and does not include phosphate.

At issue was construction of the terms "purgation" and "from about 100 ml to about 500 ml."  The former limitation was earlier construed in an unrelated litigation -- Braintree Laboratories, Inc. v. Novel Laboratories, Inc. -- where the Federal Circuit held that the term means "an evacuation of a copious amount of stool from the bowels after oral administration of the solution."  This is relevant here because under this construction the two claim terms at issue are not contradictory (insofar as complete purging of the bowels is not achieved by ingesting only one bottle of the formulation, and both bottles together have a greater volume (946 mL) than the volumetric limitation permits).

Here, ANDA defendant Breckenridge stipulated that the construction of "purgation" in the Novel case would apply in this case (representing acquiescence to the reality that the Federal Circuit's construction in the Novel appeal would apply in any case).  But Breckenridge's stipulation went further, wherein defendant agreed to be bound by any parts of the Novel opinion bearing on invalidity or non-infringement.  As it turned out, the Novel decision did not address the volumetric limitations, and the District Court granted summary judgment that Breckenridge did not directly infringe nor induce infringement of the claims of the '149 patent, on two grounds.  The first was that the term "from about 100 ml to about 500 ml" meant the entire volume ingested, which was incontestably greater (946 mL) than the recited 500 mL limit.  Second, the District Court held that Breckenridge's label could not induce infringement under 35 U.S.C. § 271(e) because anything less than "full" colonic purging was not an approved use of the formulation.  Braintree appealed.

The Federal Circuit reversed and remanded, in an opinion by Judge Moore, joined by Judges Newman and Wallach.  The opinion rejects Breckenridge's view that the Novel opinion was not preclusive with regard to the volumetric limitation.  In the panel's view, "[t]he meaning of the term 'from about 100 ml to about 500 ml' was necessarily connected to our construction of 'purgation.'"  Novel had "intertwined" the two claim limitations in its noninfringement arguments, and the panel read the Court's earlier opinion to hold that "cleansing" (i.e., complete purgation), while recited as a goal expressly disclosed in the specification was not a claim limitation.  The panel also read the Novel opinion to mean that "from about 100mL to about 500mL" was sufficient to induce purgation under the claims of the '149 patent.  Citing the Novel opinion, this panel reminds the parties that:

Each of those half-dose sixteen ounce solutions has a total volume of 473 mL, which is within the range found in the asserted claims of the '149 patent, but Braintree concedes that neither dose accomplishes a full cleansing.  Thus, Braintree's "one bottle" infringement theory asserts that one (half-dose) bottle of SUPREP, diluted with water to become a sixteen ounce solution, falls within the asserted claims.  This infringement theory can prevail if purgation means the "evacuation of a copious amount of stool from the bowels after oral administration of the solution," which is something less than a full cleansing.

The Court also asserts that it is cognizant of the due process requirements, recited in Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 329 (1971), that a party not be estopped by a claim construction decision where it is neither a party nor in privity with one.  But Breckenridge stipulated that it would be bound by the Court's earlier decision.  This stipulation foreclosed the District Court from construing the "from about 100mL to about 500mL" limitation otherwise.

With regard to the § 271(e) argument, the opinion also disagrees with the District Court's distinction between "purgation" and full colonic cleaning, based on the lower court's reading of the Novel decision.  The panel says this case is unlike its earlier decisions, holding that an ANDA defendant's label could not induce infringement, based on the factual differences between those cases and this one.  (The panel cited Warner-Lambert Co v. Apotex Corp., 316 F.3d 1348 (Fed. Cir. 2003); Allergan, Inc. v. Alcon Labs., Inc., 324 F.3d 1322 (Fed. Cir. 2003); and Bayer Schering Pharma AG v. Lupin, Ltd., 676 F.3d 1316, 1321 (Fed. Cir. 2012) in this regard.)  In contrast with those cases, the Court states that "inducing purgation" is not a distinct use of the claimed formulation, because inducing purgation is just a means for achieving the desired result (inducing purgation of the colon of a patient) recited in the preamble of the '149 patent claims.  And Breckenridge conceded that this is what its formulation was intended to do.  Accordingly, the Court held that Breckenridge's generic formulation "recommends or suggests to physicians that the drug is safe and effective for administration to patients for the purposes of inducing [purgation]."  This being the only FDA-approved use for Braintree's SUPREP, the Court held that a physician would understand that the generic label is also "safe and effective" for this use.  Indeed, "[t]o hold otherwise would lead to the absurd result that a physician would understand Breckenridge's proposed product to be safe and effective for fully cleansing the colon, but not safe and effective at accomplishing a partial colon cleansing" according to the Court.

Due to Breckenridge's stipulations, that its proposed generic product would infringe the asserted claims of the '149 patent absent summary judgment, and that it would not raise defenses or counterclaims other than its noninfringement defense, the Court reversed and remanded with instructions that the District Court enter judgment in favor of Braintree.  And the Court awarded Braintree its costs.

Braintree Laboratories, Inc. v. Breckenridge Pharmaceutical, Inc. (Fed. Cir. 2017)
Nonprecedential disposition
Panel: Circuit Judges Newman, Moore, and Wallach
Opinion by Circuit Judge Moore

Ferrum Ferro Capital Files Motion to Strike Allergan's Complaint Alleging Misuse of IPR Process

By Donald Zuhn --

In June, Allergan, Inc. and Allergan Sales, LLC filed suit against Ferrum Ferro Capital, LLC and Kevin Barnes ("FFC") in the U.S. District Court for the Central District of California, alleging that FFC attempted to extort Allergan by misusing the Inter Partes Review ("IPR") process established under the Leahy-Smith America Invents Act, and that FFC's misuse of the patent system constituted attempted civil extortion and malicious prosecution under California law and also violated California's Unfair Competition Law.  On Monday, FFC moved to strike Allergan's complaint under California's "anti-SLAPP" (strategic litigation against public participation) statute (California Code of Civil Procedure § 425.16), which FFC indicates is a creation of state law that "protect[s] defendants from interference with the exercise of their constitutional rights, particularly the right to petition the government" (emphasis in original).

In the memorandum accompanying its motion to strike, FFC contends that the only reason Allergan filed suit was to retaliate against FFC for filing an IPR petition with the U.S. Patent and Trademark Office's Patent Trial and Appeal Board to invalidate an Allergan patent (U.S. Patent No. 7,030,149).  FFC argues that because Allergan filed suit against FFC as retaliation for "FFC engaging in the fundamental First Amendment right to petition the government," the first requirement of the anti-SLAPP statute is satisfied.  FFC also argues that "[s]ince there are sound legal arguments to support FFC's position that Claim 4 of the '149 Patent is non-patentable as obvious, Allergan cannot demonstrate a probability of prevailing," and therefore the second requirement of the anti-SLAPP statute is satisfied.

With regard to the first requirement, FFC argues that its IPR petition is "clearly protected conduct."  FFC indicates that:

[It] is a venture fund focused on the strategic deployment of capital towards socially beneficial ends.  One of the company's core social interests is expanding the availability of lower-cost pharmaceutical products for senior citizens suffering from debilitating medical conditions such as glaucoma.  While FFC is currently not directly in the business of distributing pharmaceuticals, it looks for opportunities where it can apply its capital to create opportunities to promote its core principles while still obtaining a return on its capital.

FFC continues by stating that "Allergan presently holds the exclusive rights over its tellingly named drug, Combigan, which merely combines two other drugs (brimonidine and timolol) to treat glaucoma," and asserting that "[u]nder a belief that Allergan's Combigan patents are obvious and therefore invalid," FFC filed an IPR petition for the '149 patent.  FFC indicates that:

If the IPR proceeding is successful, Allergan's artificial monopoly on this market would be lifted, allowing other generic producers, including producer(s) financed by FFC, to make and distribute affordable solutions to patients seeking a cost efficient solution to their ailment, thereby satisfying Ferrum Ferro's core missions of reducing the cost of pharmaceutical products for senior citizens suffering from debilitating medical conditions.

As for Allergan's motivation in filing its complaint, FFC argues that:

Plaintiffs filed this action with the specific intent of censoring Ferrum Ferro's petition, or to pressure Ferrum Ferro into dropping its case.  Their motive?  To protect Allergan's artificial monopoly that has allowed it to extract a premium price for the mere act of combining two known medications into a single solution.  Using threats of civil litigation as a means of intimidating people from petitioning their government as Plaintiffs has done here is the precise conduct from which California's Anti-SLAPP statute seeks to shield speakers.

With regard to the second requirement of the anti-SLAPP statute, and in support of its assertion that "[a] reasonable person reviewing all the facts could conclude that claim 4 of the '149 patent is obvious and therefore nonpatentable," FFC states that "after carefully reviewing evidence as presented in district court, an esteemed judge of the Federal Circuit, in a strongly worded opinion, stated that claim 4 of the '149 patent is indeed obvious and therefore nonpatentable and invalid."  FFC's reference is to Judge Dyk's concurring-in-part and dissenting-in-part opinion in Allergan, Inc. v. Sandoz Inc., 726 F.3d 1286 (Fed Cir. 2013).  FFC also notes that the standard before the Federal Circuit (clear and convincing evidence) is higher than the standard before the Board (preponderance of the evidence), and therefore asserts that "the defendants were unsuccessful [in the Allergan, Inc. v. Sandoz Inc. case] because they were required to prove by clear and convincing evidence that claim 4 of the '149 patent was obvious" (emphasis in original).  FFC declares that:

Understandably, Allergan would prefer to avoid defending its patent in the face of this lower standard of proof.  Allergan understands there is a statistically significant probability that FFC will prevail on its claims.  Accordingly, to retaliate for FFC's [IPR] petition, and to bring collateral pressure on FFC to drop its case, Allergan seeks to distort the law and allege claims that have no basis in order to prevent the Inter Partes Review from proceeding.

FFC adds that:

Rather than defend the IPR, Allergan followed its usual modus operandi by resorting to aggressive litigation in district court to keep treatments out of the eyes of under-insured patients, while maximizing their own profits.  In doing so, Plaintiffs make the extraordinary assertion that petitioning the government for an Inter Partes Review constitutes "extortion," "unfair competition," and "malicious prosecution."

In a footnote, FFC continues:

It is ironic that Allergan calls [FFC's] actions "extortion," when Allergan itself makes its profits by trying to artificially inflate the costs of glaucoma treatments.  Allergan combined two drugs that already existed, and despite the obviousness of this "invention," if a suffering patient can’t afford Allergan's "patent premium" then as far as Allergan is concerned, that patient should simply go blind.  Despite this being the true narrative here, Allergan has the audacity to use the word "extortion" to describe Defendants' quest to bring these treatments to under-insured patients for a lower cost.  Perhaps the senior citizens currently unable to see because Allergan blocks their ability to afford sight-saving treatments would have another word for it.

On the specific claim of extortion, FFC argues that Allergan cannot show that FFC wrongfully obtained Allergan's property by threatening to do an unlawful injury to Allergan or Allergan's property, and therefore cannot succeed on its attempted civil extortion claim.  As for Allergan's unfair competition claims, FFC argues that "[i]f the underlying act is legal, then one cannot impose a duty to refrain from it through California’s Unfair Competition Law (UCL)."  Addressing Allergan's allegations in support of its UCL claim, FFC argues that:

Allergan's assertion that [use of a mail drop box in connection with running its business] is an unfair business practice . . . seems nonsensical, and their inclusion of what they think is a scurrilous photograph of the facility makes their intent questionable.  The use of a private mail drop box is certainly not an unfair business practice, and such an allegation is absurd.

As for Allergan's assertion that FFC prepared a false proposed FDA filing for a hypothetical generic brimonidine tartrate/timolol maleate ophthalmic solution, FFC noted that its counsel wrote in a letter that "FFC is prepared to seek FDA approval via a Paragraph III ANDA filing to produce and market a generic brimonidine tartrate/timolol maleate ophthalmic solution with a Manufacturing Parter ("CMP") upon the invalidation of the Combigan Orange Book-listed patents" (emphasis in FFC's memo).  FFC contends that its counsel "made it clear, via the proposed Paragraph III as opposed to Paragraph IV FDA ANDA submission, that FFC would not infringe on the '149 patent as long as it was valid."

Finally, with respect to Allergan's malicious prosecution claim, FFC argues that "[t]his is the most obviously sanctionably weak claim," stating that although "Allergan admits in its Complaint that an essential element of a malicious prosecution claim under California law is that the proceedings brought against the party claiming malicious prosecution must have been concluded in its favor," "[t]he face of the complaint establishes that . . . the civil proceedings at question [i.e., the IPR proceeding] have not been concluded at all, much less in Allergan’s favor."

FFC's motion will be heard on November 9, 2015.  Patent Docs will continue to report on further developments in the case.

Rep. Goodlatte Releases Report on H.R. 9

By Kevin E. Noonan --

Last week, Rep. Bob Goodlatte, Chairman of the House Judiciary Committee, released a 200-page Report on H.R. 9, "The innovation Act," introduced by Chairman Goodlatte with several co-sponsors earlier this year.  The bill sets forth several "reforms" of U.S. patent law, primarily directed to addressing the "problem" of so-called "patent trolls."

The Report sets forth the language of the bill and a provision-by-provision explication of the bill in its entirety.  Much of the majority's Report sets out the purported "new consensus" constituting "broad agreement" among "industry leaders from different sectors . . . on a common set of reforms that will address the most serious abuses currently afflicting the patent-enforcement system."  The majority Report expresses the sentiment that "[e]very member of this Committee wishes to see the patent system fulfill its constitutional mandate to ''promote the progress of science and the useful arts.'''  The Report also states that:

It is the goal of this Committee to ensure that American manufacturing, small businesses, and start-up companies are protected against patent-enforcement abuse, while also ensuring that the patent system continues to protect and encourage American ingenuity.  The Innovation Act, which has earned the support of a broad coalition of America's most innovative companies, recalibrates the Nation's patent-enforcement mechanisms in a manner that strikes a balance between these overlapping and sometimes conflicting goals, and that ensures that the Nation's patent system continues to drive technological innovation and economic growth.

Most of the remainder of the majority section of the Report sets forth testimony, from this and the last Congress that illustrate this "new consensus."  (Included in these sections of the majority Report are the views of USPTO Director Lee, who agrees with the expressed need for litigation reform but is much less supportive of the changes in PTO, especially PTAB, procedures.)  For most provisions in the law (particularly the litigation-related provisions), the Report contains quotations from such hearing testimony supporting the changes encompassed by the bill.  These include the provisions related to attorney's fees, heightened pleading standards, mandatory joinder, venue, patent ownership transparency, the customer-suit exception, and "recommendations to the Judicial Conference," including changes in discovery rules.

This pattern changes when the Report moves onto the provisions changing how intellectual property rights are discharged in bankruptcy and "corrections and improvements to the America Invents Act."  Here, the Report discusses the historical and policy reasons for the changes that would be effected by enactment of the bill.  An example of the former change is elimination of the "could-have-raised" estoppel provisions of the post-grant review provisions of the AIA.  The Report cites statements from the AIA's legislative history that inclusion of this estoppel was a simple mistake that needed correction inter alia because of its negative effects on the effectiveness of the post-grant review provisions of the law.  The Report set forth reasons for and against changing the claim construction standard before the PTAB in post-grant review and inter partes review proceedings, with the weight of these considerations favoring changing the broadest-reasonable-interpretation standard to the standard used by courts as set forth in Phillips v. AWH Corp.  These changes do not extend to covered business method reviews, however, the Report noting that recent Supreme Court cases (including Bilski v. Kappos and Alice Corp. v. CLS Bank Corp.) make the validity of these claims sufficiently questionable that "the Committee finds it unnecessary to burden the Board with applying the district courts' claim-construction approach to define the precise metes and bounds of the unpatentable subject matter claimed in such patents."

The Report also castigates the Federal Circuit from departing from settled law (traced to Thomson-Houston Elec. Co. v. Ohio Brass Co.) in support of its codification of obviousness-type double patenting.  The bill proposes changes in 35 U.S.C. § 121 (to eliminate the provisions related to OTDP) in favor of election provisions as part of revised § 102(e)(2).  These new § 102 provisions would prevent the abuses (litigation by different patentees over claims that are not patentably distinct) that are the only justification for the continued vitality of the OTDP doctrine in view of the changes in patent term effected by the GATT/TRIPS agreement.

The Report also addresses the policy concerns behind the provisions of the bill that abrogate the Supreme Court's Gunn v. Minton decision and once again bring patent malpractice cases under the Federal Circuit's "arising under" jurisdiction.

The Report sets forth the history of the hearings and witnesses before the committee, and the roll call votes on the bill itself (which passed by a vote of 24-8) and three proposed but defeated amendments.  Director Lee's statement on the bill is also included.

The minority portion of the Report was signed by nine Democratic members of the committee, including Ranking Member Rep. John Conyers, Jr. and Reps. JACKSON LEE, JOHNSON, JR., DEUTCH, BASS, CICILLINE, and PETERS.  The minority Report sets forth several reasons against the bill.  Under the heading "The Innovation Act Limits The Rights Of All Patent Holders, Not Just So–Called ''Patent Trolls,'' And Presents Other Policy Concerns," the minority Report sets out the following negative consequences of certain provisions of the bill:

• Impose burdensome pleading requirements for plaintiffs that exceed what is required in other civil cases and which demand details plaintiffs may not know before conducting discovery (Section 3(a));
• Discourage, through a presumptive fee shifting standard, small businesses and individual inventors from bringing meritorious lawsuits because the risk of having to pay the other sides court costs may outweigh the benefits of winning (Section 3(b));
• Deter investments by venture capitalists in entrepreneurs, start-ups, and individual inventors through harsh joinder rules that may make the investors liable for paying attorneys' fees (Section 3(c));
• Limit discovery for plaintiffs that will lead to costly litigation and case delays (Section 3(d)); and
• Improperly shield some of the most culpable infringers through an over-broad stay of litigation for end users of infringing products (Section 5).

The minority Report then discusses in depth the grounds these Representatives have for concluding that the heightened pleadings requirements will prevent meritorious lawsuits by "legitimate inventors"; that the fee-shifting provisions favor parties with "deep pockets" and can similarly prevent meritorious claims from inventors to be brought; that the joinder provisions can be expected to chill investment in individual inventors and entrepreneurs; that the discovery provisions are better left to the courts to develop and as written invite abuse; and that the customer stay provisions could "deprive legitimate patent owners of meaningful relief."  This section also characterizes the change in the post-grant review estoppel provisions as being "controversial" and not just a "scrivenor's error" that needs more robust consideration and debate before being enacted.

The minority Report also contends that the bill will be ineffective in  achieving its purported goals, in a section having the heading "The Innovation Act Does Not Effectively Address The Deceptive Use Of Demand Letters, Stop Abuse Of Post-Grant Proceedings At The USPTO, or Improve Patent Examination Quality At The USPTO."  This section addresses the particular problem of "extortionate use of demand letters," the "abuse" of post-grant proceedings (including use of inter partes review by certain hedge funds) and the problems in patent quality caused by fee diversion of USPTO user fees.

The final section of the minority Report, entitled "Recent Developments Make Many Of The Provisions In The Innovation Act Unnecessary," sets out the changing landscape of patent law since the bill was first proposed  These include that:

• Courts are Already Awarding Fees at a Much Higher Rate
• Patent Case Filings Have Decreased Significantly Over the Last Year
• Pleading Standards are Already Set to Increase Due to the Elimination of Form 18
• District Courts Have Developed Local Case Management Rules
• The USPTO Has Begun an Enhanced Patent Quality Initiative

(This section also contends, perhaps somewhat gratuitously, that "H.R. 9 Is More Objectionable than the Senate's PATENT Act.")

The minority Report concludes (urging their colleagues to "reject this flawed measure"):

Congress must respond to the problems of abusive patent litigation in the courts and the gaming of the patent process at the USPTO, and we are willing to work with any and all stakeholders and interested parties to develop a fair process to find common sense solutions.  That is why we supported amendments at the Committee markup to make reasonable improvements that would protect patent rights, while still curtailing abusive patent litigation and exploitation of the patent process.  We must take a targeted approach that includes deterring further abuses of IPR proceedings and ending fee diversion from the USPTO to ensure adequate hiring, proper training of examiners, and sustained patent quality.  And, serious patent reform legislation must stop the extortionate use of deceptive demand letters.  Unfortunately, we cannot support H.R. 9 because it includes changes that go well beyond the problems of so-called ''patent trolls;'' it creates an imbalance in the patent system tilted against individual inventors and small businesses; and it will have a chilling effect on innovation.

While many have considered eventual passage of H.R. 9 to be a near certainty, the bill did not come to the House floor for a vote before the August recess.  As mentioned in the minority Report there is a competing (and different) bill in the Senate and that bill has not been passed out of committee.  Thus, the fate of H.R. 9, and patent "reform" generally, is much less certain in this Congress that it appeared in January when Rep. Goodlatte introduced the bill.

Allergan Fights Back, Files Complaint Against Venture Fund That Filed IPR Petition

By Donald Zuhn --

Last month, Allergan, Inc. and Allergan Sales, LLC filed suit against Ferrum Ferro Capital, LLC and Kevin Barnes ("FFC") in the U.S. District Court for the Central District of California, alleging that FFC attempted to extort Allergan by misusing the Inter Partes Review ("IPR") process established under the Leahy-Smith America Invents Act, and that FFC's misuse of the patent system constituted attempted civil extortion and malicious prosecution under California law and also violated California's Unfair Competition Law.  The dispute concerns an IPR petition that FFC filed on March 9, 2015 challenging the validity of Allergan's U.S. Patent No. 7,030,149.  In particular, FFC's IPR petition asserts that the '149 patent is obvious in view of four references.  The '149 patent is one of at least six patents protecting Allergan's COMBIGAN®, a combination of brimonidine and timolol for topical ophthalmic use in treating patients suffering from glaucoma and/or ocular hypertension.

In its complaint, Allergan notes that "[t]he development of COMBIGAN® required the investment of tens of millions of dollars by Allergan and thousands of hours in research and development."  Allergan also notes that it is the holder of an approved New Drug Application for brimonidine tartrate/timolol maleate ophthalmic solution 0.2%/0.5%, sold under the COMBIGAN® trademark, and that numerous generic companies had filed Abbreviated New Drug Applications seeking approval to market generic versions of COMBIGAN®.  In response, Allergan filed suit against the ANDA filers, eventually prevailing in the U.S. District Court for the Eastern District of Texas, which rejected the generic companies' validity challenge to the '149 patent (the generic companies had asserted that the '149 patent was obvious in view of the same four references FFC asserted in its IPR petition).  The Federal Circuit subsequently affirmed (see "Allergan, Inc. v. Sandoz Inc. (Fed. Cir. 2013)") and then denied a petition for rehearing and rehearing en banc.  The Supreme Court later denied certiorari.

Allergan's complaint alleges that FFC is a privately held venture fund having no principal place of business and maintaining a mail drop box in Wilmington, DE (the complaint includes a photo of the mail drop box location; at right).  The complaint also alleges that named Defendant Kevin Barnes is one of FFC's founders.

According to Allergan's complaint, FFC's website is "a shell, with no information available on it about any of FFC's supposed activities," and is almost identical to the website of another venture fund owned by Mr. Barnes, Hyacinth Sloop Capital, LLC.  The complaint alleges that FFC:

• "has no facilities in which to conduct research and development to create a generic formulation of Allergan's COMBIGAN®, or any other pharmaceutical drug";
• "has not financed any research and development activities to create a generic formulation of Allergan's COMBIGAN®, or any other pharmaceutical drug";
• "has hired no scientists or other personnel capable of performing any research and development activities to create a generic formulation of Allergan’s COMBIGAN®, or any other pharmaceutical drug"; and
• "has hired no regulatory or other personnel necessary to prepare, submit and prosecute an ANDA application for any generic drug with the FDA."

Allergan's complaint states that FFC sent a letter to Allergan on March 9, 2015 "falsely represent[ing] to Allergan that FFC was prepared to 'seek [Federal Food and Drug Administration ('FDA')] approval via a Paragraph III ANDA filing to produce and market a generic brimonidine tartrate/timolol maleate ophthalmic solution with [an unnamed] Contract Manufacturing Partner ('CMP'),'" which Allergan alleges was "clearly a sham."  FFC also included its IPR petition with its March 9 letter.  According to Allergan:

FFC attempt[ed] to extract compensation from Allergan by stating [in the March 9 letter] that it "firmly believes that a company such as Allergan should be given a single opportunity to support FFC's core social and investment interests before other time-barred producers are able to file for joinder in the '149 Patent IPR, and before FFC files additional IPR petitions against the COMBIGAN® patents and proceeds with a Paragraph III filing.  As such, FFC is amenable to discussing an immediate and confidential settlement with Allergan."

Alleging that FFC "did not have and still do[es] not have a reasonable basis for filing the IPR petition against the '149 patent based on the same prior art and the same grounds that were already rejected by the U.S. District Court and the Federal Circuit," Allergan asserts that FFC's conduct constitutes attempted civil extortion under the California Penal Code.  Allergan also alleges that FFC's conduct in "[p]reparing a false 'proposed FDA filing,'" falsely representing that it was "prepared to 'seek FDA approval via a Paragraph III ANDA filing,'" "[f]iling an objectively baseless IPR petition of the unlawful purpose of extorting Allergan," and "[a]ttempting to intimidate Allergan into settling quickly" constitutes unfair, unlawful and/or fraudulent business acts or practices under the California Business and Professions Code.  Finally, Allergan alleges that FFC's conduct in filing the IPR petition constitutes malicious prosecution under California law.

Defendants have until August 10 to Answer Allergan's complaint.  Patent Docs will report on further developments in the case.

Patent Litigation Report Raises Questions

By Grantland Drutchas --

A recent publication by PricewaterhouseCoopers announced that patent suit filings in 2014 had reduced by 13% from the prior year, and concluded that this "dramatic shift" was "[d]riven by Alice Corp. v. CLS Bank, which raised the bar for patentability and enforcement of software patents" (see "2015 Patent Litigation Study: A change in patentee fortunes").  This rather strong attribution has in turn driven a number of news outlets, such as IPLaw 360 and bloggers to pick up the story (see "Patent Lawsuits Took First Dive In Years, Report Says" and "Patent Litigation Study Should Cause Patent Reform Pause").

A more careful analysis of the government's data, however, shows that PricewaterhouseCoopers' theory is almost certainly wrong.

First, the data that PricewaterhouseCoopers relied upon for its "[a]pproximately 5,700 cases" in 2014 statistic (Judicial Facts and Figures (US Courts)) is not for the calendar year 2014, but for the Federal Court's fiscal year, which ran from October 31, 2013 to September 30, 2014.  Thus, the data is already pretty old (see "Judicial Business 2014 Tables" at Table C-7, citing 5686 total patent cases filed through September 30, 2014).

Second, the Supreme Court issued its Alice decision on June 19, 2014 (see "Supreme Court Issues Decision in Alice Corp. v. CLS Bank"), only a little over three months before the close of the Court's fiscal year.  It is hard to imagine that Alice would have had such a significant effect on the filing of new complaints within just that period of time.  In fact, if the 13% annual reduction occurred only in these last 3 1/3 months of the fiscal year, it would have required a 50% reduction of all new patent cases filed in that time period.  An unlikely scenario.

A far more comprehensive analysis of new district court filings was performed by Lex Machina (see "Patent Case Trends and the Business of Litigation"), which looked at a monthly comparison for new filings in 2014 over 2013 (calendar year).  It also looked at the effect of Alice on case termination, a more directly attributable result.  As for new patent filings, however, the data cited by Lex Machina shows that new patent filings were down more than 8% in the first 5 months of 2014 over 2013 (2330 vs. 2537), i.e., even before the Alice  Supreme Court decision came out.  That downward trend simply continued the rest of the year.

Although Alice, together with the other § 101 decisions issued by the Supreme Court, are impacting and will continue to impact patent litigation, both new case filings and termination of proceedings, it is a little too simplistic to say that the trend in the data cited by PricewaterhouseCoopers was "driven" by Alice.

Game Over for Myriad

(Or, and then there was one)

By Kevin E. Noonan --

As discussed at the end of January, Myriad has given up its Quixotic quest to validate its BRCA gene testing franchise and has abandoned its several lawsuits (many of which were consolidated before the District of Utah under 28 U.S.C. § 1407 and captioned In Re: BRCA1- and BRCA2-Based Hereditary Cancer Test Patent Litigation; see "Panel on Multidistrict Litigation Consolidates Myriad Cases in Utah District Court").  With its agreement to dismiss actions (with prejudice) against Ambry Genetics, LabCorp, Invitae, and Pathway Genomics, the earlier settlement agreement reached with Gene-by-Gene (see "Gene-by-Gene Cries Uncle, Settles with Myriad Genetics"), and a separate settlement with Counsyl, the only actions remaining before the Utah court were against Quest and GenDx.

Until this week, when Quest and Myriad announced that this case has settled as well.  The terms are the same in this settlement as in the earlier, more recent ones:  Myriad's infringement allegations had been dismissed "with prejudice" and Quest has 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.

That leaves GeneDx, but that case is in a slightly different posture because GeneDx challenged Myriad's patents before the Patent Trial and Appeals Board under the inter partes review (IPR) provisions of the Leahy-Smith America Invents Act.  Such IPR actions can be settled, but once instituted can also be pursued to their conclusions sua sponte by the Board.  The patents at issue in that action are U.S. Patent Nos. 5,654,155; 5,753,441; 6,033,857; 6,051,379; 6,083,698; 6,951,721; 7,470,510; 7,563,571; 7,622,258; 7,670,776; and 7,838,237.

More Misinformation Regarding the Patent System and Non-Practicing Entities

By Michael Borella and Andrew Williams --

The press has been all too eager to decry the so-called "broken" U.S. patent system and the alleged "scourge" of non-practicing entities (NPEs).  However, few if any articles attempt to provide an even-handed analysis of these issues.  Recently, Jon Potter and Julie Samuels published a piece in Roll Call, urging Congress to pass comprehensive patent reform legislation to clamp down on NPEs, while James Bessen, in The Atlantic, lauded the Supreme Court's recent Alice Corp. v. CLS Bank Int'l decision for already having a deleterious impact on business method patents.  Samuels was formerly of the Electronic Frontier Foundation (EFF), a group with an anti-patent agenda.

The need for patent reform has arguably diminished.  Three decisions handed down by the Supreme Court last year, Alice, Octane Fitness, LLC v. Icon Health & Fitness, Inc., and Nautilus, Inc. v. Biosig Instruments, Inc., each addressed one of the alleged weakness in the patent system that so-called trolls are thought to exploit.  These cases have been credited for the drop in patent litigation seen since the end of the Court's last term.  Moreover, the Patent Trial and Appeals Board ("PTAB") has been accused of becoming a patent "death squad" because of the large number of inventions that it has recently found to be unpatentable.

These articles, therefore, appear to be desperate attempts to flame the anti-patent fervor that existed last year.  As we have come to expect, both articles present only one side of the story, and do not consider the negative consequences that further anti-NPE legislation could bring about, and that the Alice decision has already produced.  Further, the authors make unsupported assertions, draw questionable conclusions, and exhibit a profoundly flawed understanding of patent law.

For example, as with similar articles, the Potter and Samuels's article starts from the presupposition that "our patent system is out of balance," citing the Alice decision for support.  The unsuspecting reader will assume that this is a forgone conclusion.  Nevertheless, it is through their explanation of how this decision and proposed legislation are meant to "solve" the supposed crisis, the authors reveal a lack of understanding of the historical and philosophical basis of the patent system.

To that point, the authors equate "trolls" with NPEs (non-practicing entities).  The term NPE, however, encompasses all entities that do not manufacture products, including most universities, research institutions, and individual inventors.  Interestingly, Ms. Samuels's previous organization, the EFF, accused universities of fueling the patent troll problem.  Patent asserting organizations have been acknowledged by most, including the White House, to serve an important role as mediator between such NPEs and operating companies often necessary to commercialize inventions.  In fact, the United States' patent system purposefully encourages such actions by making patent property rights freely assignable and eschewing a "working" requirement.  This philosophy goes back to the framers of the Constitution, and allows the patent system to be accessible to everyone, not just those with abundant resources.

Potter and Samuels go on to assert, without citing any support, that NPEs "grievously injure innovators, bankrupt small companies, and waste judicial resources."  Yet, the current functioning patent system is essential to the business models of these same innovators and small companies.  Without patents, the innovations of a small software company can be easily reverse engineered and copied by larger players with more market clout, or foreign companies with lower overheads.  Trademarks, copyrights, and trade secrets do little to help in these situations.

In addition, the authors fail to consider the fact that these "innovators" and "small companies" (or any defendant in a patent litigation case for that matter), might actually infringe a valid patent.  If so, should they be allowed to freeload off the labor of others without penalty just because the patent at issue encompasses a business method or software, or happens to be owned by an NPE?

Bessen states that a recent the Government Accountability Office ("GAO") report "attributed 89 percent of the increase in patent litigation [in the 2007-2011 time frame] to software patents."  This report, however, conflated actual software patents and business method patents, collectively referring to both as "software patents."  In fact, the GAO found that "operating companies brought most of the patent infringement lawsuits from 2007 to 2011."  Additionally, the report indicated that the number of defendants in software and business method patent litigation increased 89 percent, but the number of lawsuits increased more modestly.  According to the report, the increase in the number of patent lawsuits in 2011 "was most likely influenced by the anticipation of changes in the 2011 Leahy-Smith America Invents Act (AIA), which made several significant changes to the U.S. patent system, including limiting the number of defendants in a lawsuit, causing some plaintiffs that would have previously filed a single lawsuit with multiple defendants to break the lawsuit into multiple lawsuits."

Of course, even if there was an increase in software patent litigation, it would have likely been a reflection of the increased importance of software in our everyday lives.  The 2007-2011 time frame tracks the rise of the smartphone and always-on computing, dramatic growth in social media, and a multimedia streaming revolution led by Netflix and YouTube, among other factors.  Like it or not, software is now an integral part of our personal and professional lives, as we carry our laptops, tablets, phones, e-readers, and digital fitness trackers with us whether we are going to work or on vacation.  An increase in the number of software patents granted, as well as an increase in software patent litigation, is a natural consequence of the ubiquity of software.

Certainly, no one is denying that there are bad actors that abuse the litigation system both with regard to intellectual property rights and otherwise.  However, elevating this minority of cases to be representative of the norm is not a reason to dispense with the entire system.  In fact, Bessen's methodologies for assessing the cost of so-called patent trolls have been called into question.  See, e.g., Schwartz & Kesan, Analyzing the Role of Non-Practicing Entities in the Patent System, Cornell Law Review, Vol. 99:2, pp. 425-56 (2014).  As a result, the implications that can be drawn from the data with regard to the impact of NPEs on the system are dubious at best.

With respect to the Alice decision, both sets of authors ignore the damage that this case has already caused to the patent system.  Under Alice, when determining whether a patent claim meets the statutory requirements for patent-eligibility, one must determine whether the claim is directed to a patent-ineligible law of nature, natural phenomenon, or abstract idea.  If so, then one determines whether any additional claim elements transform the claim into a patent-eligible application that amounts to significantly more than the ineligible concept itself.

This two-prong test has been widely criticized for its vagueness and subjectivity.  The Supreme Court refused to define what it meant by the term "abstract idea," leading to consternation among patentees, patent attorneys, and even federal judges.  For instance, Judge Wu of the United States District Court for the Central District of California criticized Alice for setting forth an "I know it when I see it" test.  Judge Pfaelzer, a colleague of Judge Wu, wrote that the Supreme Court's patent-eligibility cases "often confuse more than they clarify [and] appear to contradict each other on important issues."

The Supreme Court also blurred the lines between the assessment of patent-eligibility and other patentability requirements.  The patent law requires that, among other things, claims must be novel and non-obvious, as well as encompassing patent-eligible subject matter.  In 1981, the Supreme Court clarified that each of these inquiries were separate and distinct, and that it was "inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis."  Alice, as well as its 2012 predecessor case Mayo Collaborative Servs. v. Prometheus Labs., Inc., turned this notion around.  Now, when conducting a patentable subject matter review, claims can be analyzed element by element and compared to prior art.

As many commentators have articulated since the Mayo opinion was handed down, determining whether the breadth of a claim is appropriate is better served by conducting the well-understood and more objective and established analyses of novelty and obviousness.  Despite the lack of any suggestion from Congress that patent-eligibility is to be used for these purposes, the Supreme Court, now followed by the Federal Circuit, has made patentable subject matter a perverse weapon for the unsupported rejection and invalidation of claims.

The well-understood obviousness analysis asks whether the differences between the claimed invention and the prior art would have been obvious to one of ordinary skill in the art.  The Alice test, for a claim that incorporates a preexisting algorithm or a longstanding practice, inquires if the claim adds "significantly more" to that algorithm or practice.  The substantive difference between the two is that the obviousness test is grounded using prior art as a reference point for what is known, while the Alice test is not.  This eliminates much of the objectivity from the Alice analysis, putting thousands of patents in a state of legal uncertainty.  The "validity" of such patents may depend on which judge or panel conducts the test.

Bessen goes as far as to suggest that while the Alice decision is limiting the number of granted business method patents, it hasn't gone far enough to similarly limit software patents.  But why should we view patents in such sweeping terms, with the connotation that business method and software patents are inherently bad?  Patents are either valid or invalid, regardless of the technology claimed therein.

Furthermore, the implication that software should not warrant patent protection unfairly singles out one of the greatest drivers of the U.S. economy over the last forty years.  A major aspect of innovation is to make products and services faster, cheaper, and better.  The patent system is intended to incentivize individuals and organizations to publicly disclose such inventions, and as a result receive a limited exclusive-use property right thereover.  Despite contentions of the deleterious impact of a "broken" patent system on the software industry, the computer and information industry as a whole continues to grow, as evidenced by recent record-breaking stock values, billion-dollar acquisitions, and successful initial public offerings. A broad exclusion of computer-implemented inventions is illogical and disregards the fundamental tradeoff on which the system is based.

Graphic of troll (above) by JNL was modified (cropped) from a graphic available at the Wikipedia Commons, pursuant to the Free Art License.  Any use of the modified graphic is subject to the same license.