Patent Docs

Is It Time for Federal Circuit to Rethink Its Subject Matter Eligibility Jurisprudence?

August 24, 2020

By Kevin E. Noonan —

The Federal Circuit's inchoate attempts to fashion a consistent, rational application of the Supreme Court's recent subject matter eligibility jurisprudence, while understandably Herculean in view of the difficulties inherent in that precedent, raises questions regarding the value of having a "specialized" Circuit Court for the purpose of harmonizing U.S. patent law (see "The Proper Role of the Federal Circuit"; "In Defense of the Federal Circuit: A Response to Judge Wood"). Such sentiments are understandable, particularly in view of the dissension amongst the Federal Circuit judges themselves (see, e.g., "Ariosa Diagnostics, Inc. v. Sequenom, Inc." and "Athena Diagnostics v. Mayo Collab. Servs."). The most recent example of the fractured nature of the Court on this issue is American Axle & Mfg. v. Neapco Holdings LLC. The opinions of the Circuit Judges on the question of granting American Axle's request for rehearing en banc is illustrative that these issues will not disappear soon without Supreme Court intervention. (Whether such intervention would clarify or render the standard even more opaque is itself an open question.)

The Court split 6:6 on whether to grant rehearing, thus denying the request. Of the Judges denying the request, Judges Dyk, Wallach, and Taranto based their decision not to grant en banc reconsideration squarely on O'Reilly v. Morse (all other precedent cited in their opinion relies on what they consider the proper application of this decision). In their view, the claims whose invalidation here the panel affirmed (while reversing this determination in the revised opinion as to other claims) suffered under Section 101 by not reciting the specific means by which the scientific principle was applied; this determination was challenged by Judge Moore's dissent in both the original panel decision and the amended decision issued with the Court's decision not to rehear the matter en banc as amounting to a "super-enablement" requirement.

O'Reilly v. Morse was decided in 1853. In the 167 years since that decision no court (not the Court of Customs and Patent Appeals, the Federal Circuit's predecessor court, no regional Circuit Court of Appeals including the Federal Circuit, not even the Supreme Court) has used the Morse precedent as the Federal Circuit has done in American Axle to support a finding of lack of subject matter eligibility for such claims. The ancient principle that "the exception probes the rule" here works in reverse: the fact this the decision is an exception is an indication that the rule, fully probed, has been improperly applied in this decision. And Judges Dyk, Wallach, and Taranto provide cold comfort when their opinion against granting rehearing en banc asserts that their opinion is somehow narrow in scope. As has been seen all too often in subject matter eligibility cases, when the Federal Circuit gives some litigants (and some district courts) a subject matter eligibility inch they take, if not a mile, then at least the next step in expanding the scope of claims that can be held ineligible.

Nor does Judge Chen's agreement with his naysaying brethren (joined by Judge Wallach) convince in stating the judicial equivalent of "nothing to see here, move along." While the Judge is correct that the application of law to fact in the Section 101 context has always been a case by case judgment, it can also be a misjudgment, the characterization of which can be discerned, inter alia, by the reaction to the decision of other learned judges on the Court. This decision is clearly terra nova for patent eligibility if only for the reason that six other Federal Circuit judges believe it to have been decided in error. (While not discounting their views, it is not surprising that Judges Dyk and Taranto agree to not rehear en banc, being the two judges who joined in both the original panel decision and the amended decision; using this calculus four of the judges not on that panel agree with their decision and six at least think that the entire court should rehear the case.) While the Judge is also correct that O'Reilly v. Morse "remains good law," that is not the issue; the question is whether (as six of his colleagues agree) the failure is in the application of the law by the panel majority.

One other aspect of Judge Chen's decision provides support for the position that the law has been improperly interpreted here. Judge Chen writes:

If claim 22 had omitted any reference to mass and stiffness, such that the claim simply recited "tuning to match the relevant frequency or frequencies," there would be no basis to say that the claim invokes Hooke's law.

There is at least the following deficiency in this position. It suggests that a way to obtain a claim to a practical application of a natural law is, no matter what you do, don't inform the public about the law upon which your method is based. While Hooke's Law is of ancient provenance, that will not always be the case (indeed it may rarely be the case). And to the extent that the law is interpreted in this way, that interpretation, and not permitting patenting of claims depending on a natural law, is the Constitutionally infirm position because it is directly contrary to "promoting progress." This statement also is reminiscent of the U.S. Patent and Trademark Office's valiant but failed attempt to circumvent the Federal Circuit's Sequenom decision by setting a standard whereby a claim directed to merely detecting a natural law, without reciting the application of that natural law in providing a diagnosis, was patent eligible. The Federal Circuit overruled that attempt ("properly" in view of the Sequenom decision) in Cleveland Clinic Foundation v. True Health Diagnostics LLC and at the same time rejected reliance on the Office's expertise for the sake of "the need for consistent application of our case law."

Judge Newman's dissent from denial of rehearing en banc, joined by Judges Moore, O'Malley, Reyna, and Stoll illustrates (albeit not as forcefully as Judge Moore's dissent from the panel decision) the state of the Court's doctrinally incoherent precedent. (Respectfully, Judge Reyna's presence on this dissent speaks volumes about the serious questions raised by the panel majority's decision, if only to the extent that rehearing en banc is warranted.) Judge Newman's views and concerns regarding the Court's subject matter eligibility decisions echo her dissent in Athena; she states "[t]he court's rulings on patent eligibility have become so diverse and unpredictable as to have a serious effect on the innovation incentive in all fields of technology" and her concern remains that "[t]he victim is not only this inventor of this now-copied improvement in driveshafts for automotive vehicles; the victims are the national interest in an innovative industrial economy, and the public interest in the fruits of technological advance."

The opinions of the Federal Circuit judges that denied rehearing en banc are not consistent with Supreme Court precedent to the extent that the Court recognized and cautioned that invalidation or denial of patent eligibility based on an overbroad application of Section 101 posed significant risks to innovation:

At the same time, we tread carefully in construing this exclusionary principle lest it swallow all of patent law. . . . At some level, "all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas." . . . Thus, an invention is not rendered ineligible for patent simply because it involves an abstract concept. . . . "[A]pplication[s]" of such concepts " 'to a new and useful end,' " we have said, remain eligible for patent protection. . . . Alice Corp. v. CLS Bank Int'l, 573 U.S. 208, 217 (2014) [some citations omitted].

Judge Newman's dissent recognizes these principles, citing Le Roy v. Tatham, 55 U.S. 156 (1852), that "[a]ll technology is based on scientific principles—whether or not the principles are understood" and that "[t]he Court then and now understood the distinction between the basic principles of science and their practical application." Her dissent also cites many of the cases following from O'Reilly v. Morse cited by her brethren denying rehearing en banc but distinguishing them in ways they do not, based on principles versus their application.

Judge Stoll writes (joined by Judges Newman, Moore, O'Malley, and Reyna again), specifically challenging her colleagues' argument that what Judge Moore in her dissent from the panel opinion and the amended opinion characterizes as the "nothing more test" is consistent with O'Reilly v. Morse. Indeed, Judge Stoll questions Judge Chen's reliance on the Morse precedent, stating:

I note that Judge Chen does not identify any prior court opinions or articles that specifically refer to an "O'Reilly test," nor am I aware of any. To the extent that the Supreme Court has cited O'Reilly, it has been for the general propositions that there is an implicit exception to § 101 and that preemption is an important concern in patent law.

And with regard to the "how to" aspect of the majority's opinion, Judge Stoll writes:

Even assuming that claim 22 applies Hooke's law (or any other unnamed law of nature), the claim seems sufficiently specific to qualify as an eligible application of that natural law. The claim identifies specific variables to tune, including "a mass and a stiffness of at least one liner." . . . It requires that the tuned liner attenuate specific types of vibration, including "shell mode vibrations" and "bending mode vibrations," and further requires that the tuned liner is inserted in a "hollow shaft member." . . . With this level of specificity, claim 22 appears to be properly directed to "the application of the law of nature to a new and useful end," not to the law of nature itself. Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948) (collecting cases). Yet this level of detail is insufficient in the majority's view, and it remains unclear how much more "how to" would have been sufficient to render the claim eligible under the majority's approach [citations to the record omitted].

Judge Stoll is also properly concerned with how far the Court has strayed from traditional principles of patent eligibility:

The majority invokes § 101 to hold ineligible a method for manufacturing a drive shaft assembly for a car—a class of invention that has historically been patent eligible. See, e.g., Diehr, 450 U.S. at 184 ("Industrial processes . . . have historically been eligible to receive the protection of our patent laws."). In my view, the result in this case suggests that this court has strayed too far from the preemption concerns that motivate the judicial exception to patent eligibility. The claims at issue here are far removed from the canonical ineligible claim that "simply state[s] the law of nature while adding the words 'apply it.'" Mayo, 566 U.S. at 72 (citing Gottschalk v. Benson, 409 U.S. 63, 71–72 (1972)). Indeed, the claims at issue do not recite any particular law of nature, much less preempt the use of Hooke's law in any particular context. Instead, they are directed to a specific "method for manufacturing a shaft assembly" with a liner that attenuates certain types of vibrations. '911 patent col. 11 ll. 24–36. Even assuming that Hooke's law is required to tune the claimed liner (despite not being mentioned anywhere in the specification or claims), so are innumerable other laws of nature. And there remain innumerable ways to apply Hooke's law to achieve the goal of mitigating problematic vibrations in a shaft assembly—perhaps, for instance, by using something other than a liner tuned to attenuate at least two different kinds of vibrations.

After all, Judge Stoll notes that as one amicus posited, "the majority's original approach would have placed the combustion engine at risk of ineligibility—a proposition that would have seemed absurd just a few years ago, but now seems eerily plausible. . . one can still reasonably ponder whether foundational inventions like the telegraph, telephone, light bulb, and airplane—all of which employ laws of nature—would have been ineligible for patenting under the majority's revised approach" (see, e.g., "Federal Circuit Finds Calculating Machine Ineligible"; "Federal Circuit Invalidates Edison's Light Bulb Patent"; "Federal Circuit Invalidates A. G. Bell's Telegraphy Patent").

All these are ample reasons, for Judge Stoll and in a more rational age anyone conversant in patent law to believe rehearing en banc is warranted.

Finally, Judge O'Malley writes in dissent (joined by Judges Newman, Moore, and Stoll) based on her view that the panel majority, in both their original and amended opinion, transgressed the procedural standards advocated by The Advisory Committee on Appellate Rules pursuant to a letter to all Circuit Courts of Appeal from the American Academy of Appellate Lawyers. The majority's rulings in her view were subject to the following procedural defects:

(1) it announces a new test for patentable subject matter at the eleventh hour and without adequate briefing; (2) rather than remand to the district court to decide the issue in the first instance, it applies the new test itself; and (3) it sua sponte construes previously undisputed terms in a goal-oriented effort to distinguish claims and render them patent ineligible, or effectively so.

These are enough, in Judge O'Malley's view, to merit rehearing en banc.

The answer to the question posed in the title is clearly "yes" but it is good to consider why it should be done (and soon). There is a principle in rhetoric of reductio ad absurdum, that you can probe whether a logical argument is flawed by taking it to its extreme and seeing whether the outcome is ridiculous. The American Axle decision is a good illustration of the application of this principle by the Federal Circuit (no matter how unintentional or unrecognized by at least half of the judges). While it is but a faint hope, the trend is somewhat positive: in Sequenom the vote to deny rehearing en banc was 8 to 4; in Athena it was 7 to five, and in American Axle it was 6 to 6. Like a lifeline, the opportunity to revisit if not reverse the Federal Circuit's trend to affirm invalidating granted patents under Section 101, no matter how absurd the outcome, is the only one that might compel the Supreme Court to clarify its position on subject matter eligibility. Nothing in the Court's decisions has mandated the lengths to which the district courts have applied this section of the statute, nor compelled the Federal Circuit to affirm against the better judgment of an increasing percentage of its judges. To the extent that several of those judges have stated in their opinions that they are compelled by the Supreme Court's recent decisions to apply the law as they have applied it, they have at the same time ignored the Court's admonition that it is up to the inferior courts to apply the law in light of the broad proscriptions in their decisions to (like Blackstone) probe the contours of what the law commands. The failure to do so has provided no impetus for the Court to reconsider its own decisions or to correct any over-application of them to cases that they did not consider (American Axle being the latest and most egregious of these). The Federal Circuit, a court created to apply its specialized expertise (an expertise recognized by the Supreme Court; see Warner Jenkinson Co. Hilton-Davis Chemical Co., 520 U.S. 17 (1997), and other cases), owes it to its institutional integrity (and to the rest of us) to give the Court the opportunity to do so. After all, if the front page of The Wall Street Journal one day runs the headline "Court Destroys American Industry," shouldn't that court be the Supreme Court?
Federal Circuit Finds Calculating Machine Ineligible

August 23, 2020

August 23, 1891

WASHINGTON, DC

In a unanimous panel ruling, the Federal Circuit has found that the calculating machine of U.S. Patent No. 388,116 fails to meet the eligibility requirements of 35 U.S.C. § 101. Inventor W.S. Burroughs of St. Louis described the machine as "mechanically assisting arithmetical calculations." Particularly, it includes "one or more registers, of a series of independent keys and intervening connections constructed, arranged, and operating, as fully specified hereinafter, so as to indicate upon the register the sum of any series of numbers by the proper manipulation of the keys, and also so as to print or permanently record the final result." But this device ran afoul of recent Federal Circuit case law regarding the so-called "abstract idea" exception to patentability.

In a challenge brought by a potential licensee, the Court was asked to review the validity of the '116 patent. While the Court agreed with the U.S. Patent and Trademark Office's ultimate conclusion that the claimed invention was novel and non-obvious, it found that the Office did not apply the § 101 test strictly enough during prosecution.

At play was claim 1, which recites:

The combination of a series of numbered independent indicators, a series of independent keys to each indicator, connections between each of the series of keys and each indicator, said connections being arranged to insure the movement of each indicator upon the movement of any key of its series and including a series of stops to each series of keys adjustable by but independent of the keys, arranged to vary the extent of movement of the indicator according to the position of the key struck, substantially as described.

The Court began its analysis by stating that "under § 101 we first determine the focus and character of claim, including the problem that it purports to solve." Here, the Court found that the '116 patent addresses the summing of numbers through the mathematical operation of addition. The Court observed that such simple arithmetic functions have been performed by hand and with assistance by machines for thousands of years. For instance, "the first abacus was introduced no later than 2700 B.C. to perform sums as well as to store partial results of more complex operations — clearly addition had previously been performed by humans in their minds or in writing prior to that." Thus, the Court viewed the invention as being directed to an abstract idea. Or, in the Court's words, no more than "a longstanding principle or an idea of itself."

More specifically, the Court wrote that "the claim is directed to a fundamental concept of the sort that could be performed mentally; that is, a person, armed with paper and pencil, could perform the claimed operations." The Court also found claim 1 to lack specificity, using result-oriented language that "recites what the inventor hopes to achieve without reciting how the inventor purports to have achieved that goal." In particular, the arrangement of connections and the positions of the series of stops were "claimed so broadly as to encompass the mere idea of their functionality and not a specific implementation thereof."

Burroughs argued that the invention of the '116 patent was a technical improvement in that it "eliminated painstaking and error-prone manual calculations required to sum a list of numbers." But the Court disagreed, stating that "we have held many times in the past that automating an activity previously performed manually is not in and of itself patentable, even if said automation produces a faster and more accurate result."

Moving on, the Court looked to the remaining elements of the claim to determine whether it included an inventive concept — something significantly more than the abstract idea that constituted a practical application of that idea. It found that the additional elements of claim 1, indicators, keys, connections, and stops, were all well-understood, routine and conventional components claimed at a high level. The Court concluded that "considering the elements of the claim both individually and as an ordered combination, they recite no additional parts or steps that would suffice to transform the nature of the claim into a patent-eligible application."

Burroughs argued that claim 1 recited several inventive concepts that were neither previously known, nor conventional or routine. But the Court found his position lacking, and instead reasoned that:

Mr. Burroughs argues that his invention is an improvement in tallying sums. As we noted earlier, that is no more than an abstract notion. Our case law makes clear that improvements that are abstract themselves do not render a claimed abstract idea eligible for patent protection. Furthermore, since the claim at hand merely recites the achievement of a result — a result that has previously been achieved in a similar manner for most of written history — the Burroughs machine is not the type of invention that patent law is intended to protect.

Consequently, the Court held that '116 patent invalid under § 101, and Mr. Burroughs must return to the proverbial drawing board.

The above is a sarcastic parody; our earlier sarcastic parodies can be found here:

• "Federal Circuit Rules Public Key Cryptography Algorithm Invalid Under 35 U.S.C. § 101," July 22, 2020
• "Federal Circuit Invalidates Edison's Light Bulb Patent," October 20, 2019
• "Federal Circuit Invalidates A. G. Bell's Telegraphy Patent," September 2, 2019
Conference & CLE Calendar

August 23, 2020

August 25, 2020 – "Chasing technology 'unicorns' – How to spot acquisition targets early on" (LexisNexis IP and IPWatchdog) – 12:00 pm (ET).

August 27, 2020 – "Drafting Patents to Ground Electric Power: AI and Section 101" (Intellectual Property Owners Association) – 12:00 pm to 1:00 pm (ET)

September 11, 2020 – IP, Technology & Social Justice in the Age of Coronavirus (Center for Intellectual Property, Information & Privacy Law at UIC John Marshall Law School and Institute for Intellectual Property & Social Justice) – 7:40 am to 3:00 pm (CT)

September 15, 2020 – "Traps for the Unwary Prosecutor: What Practitioners Should Know About US and European Patent Practice" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

September 23-24, 2020 – Summit on Biosimilars: Legal, Regulatory, and Commercial Strategies for the Innovator and Biosimilars Marketplace (American Conference Institute) – virtual conference

September 23-24, 2020 – FDA Boot Camp (American Conference Institute) – virtual conference
FDA Boot Camp

August 23, 2020

American Conference Institute (ACI) will be holding its FDA Boot Camp conference on September 23-24, 2020 as a VIRTUAL conference.

The conference will provide attendees with presentations on these topics:

• The organization, jurisdiction, functions, and operations of FDA
• The essentials of the approval process for drugs and biologics
• The role of the Hatch-Waxman Act in the patenting of drugs and biologics
• Clinical trials for drugs and biologics
• Labeling in the drug and biologics approval process
• cGMPs and other manufacturing concerns relative to products liability
• Proactive adverse events monitoring and signal detection
• Recalls, product withdrawals, and FDA oversight authority

The conference presentations will be group into the Pre-Approval and Approval Process; FDA Review and Approval; IP Overview for Drugs and Biologics: Hatch-Waxman, BPCIA, Trademarks, and More; Post-Approval; Advertising, Promotions, and Related First Amendment Concerns.

Co-Chairs Kurt K. Karst of Hyman, Phelps, McNamara PC and Rebecca K. Wood of Sidley Austin will speak on "Understanding the Relevance of New FDA Initiatives and Policies and How They May Redefine the Life Sciences Industry in the Aftermath of COVID-19."

In addition, two pre-conference workshops will be offered on September 22, 2020. The first, entitled "FDA Law 101: A Guide to Agency Structure, Jurisdiction, Regulation, and Applicable Laws," will be offered from 9:00 am to 12:00 am, and the second, entitled "Medical Devices, Combination Products, and Companion Diagnostics Boot Camp: A Review of FDA Guidelines and Regulations," will be offered from 1:30 pm to 4:30 pm.

There will also be a post-conference workshop offered on September 24, 2020, entitled "Hatch-Waxman and BPCIA in the Trenches: Exclusivity and Bioequivalency Working Group," from 2:45 pm to 6:15 pm.

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

The registration fee is $1,995 for registration by August 28, 2020 and $2,095 for registration thereafter. The workshops are $600 apiece. Patent Docs readers are entitled to a 10% discount off of the registration fee using discount code D10-806-806FX03. Those interested in registering for the conference can do so here, by e-mailing CustomerService@AmericanConference.com, or by calling 1-888-224-2480.

Patent Docs is a media partner of ACI's FDA Boot Camp.
MBHB Webinar on Traps for the Unwary Patent Prosecutor

August 22, 2020

McDonnell Boehnen Hulbert & Berghoff LLP will be offering a live webinar entitled "Traps for the Unwary Prosecutor: What Practitioners Should Know About US and European Patent Practice" on September 15, 2020 from 10:00 am to 11:15 am (CT). In this presentation, Patent Docs author and MBHB attorney Donald Zuhn, MBHB attorney Sarah Fendrick, Forresters attorney Charlotte Teall, and D Young & Co attorney Simon O'Brien will review some aspects of U.S. and European patent practice that can, if patent practitioners are not aware of them, lead to issues during the prosecution of U.S. and European applications. Among the topics that the panel will discuss are priority claims, double patenting, novelty-only prior art and disclaimers, and data requirements and plausibility in Europe, and Patent Term Adjustment, Information Disclosure Statements, inequitable conduct, and obviousness-type double patenting in the U.S.

While there is no fee to participate, attendees must register in advance. Those wishing to register can do so here. CLE credit is pending for the states of California, Illinois, New Jersey, New York, North Carolina, and Virginia.
IPO Webinar on AI and Section 101

August 22, 2020

The Intellectual Property Owners Association (IPO) will offer a one-hour webinar entitled "Drafting Patents to Ground Electric Power: AI and Section 101" on August 27, 2020 from 12:00 pm to 1:00 pm (ET). Thomas Burton of Siemens Corp., Michael Kiklis of Bass, Berry & Sims PLC, and Christine Lam of NetApp will analyze the Electrical Power Group line of cases and provide patent prosecutors with practical advice on how to avoid its pitfalls for AI related inventions, consider more than a year's experience with the USPTO's 2019 patentable subject matter guidelines for software inventions, and share lessons from six PTAB ex parte decisions on this issue that were recently deemed precedential or informative, including both affirmances and reversals of examiner rejections.

The registration fee for the webinar is $135 (IPO member) or $150 (non-member) (government and academic rates are available upon request). Those interested in registering for the webinar can do so here.
Webinar on How to Spot Acquisition Targets

August 22, 2020

LexisNexis IP and IPWatchdog and will be offering a webinar entitled "Chasing technology 'unicorns' – How to spot acquisition targets early on" on August 25, 2020 at 12:00 pm (ET). Gene Quinn of IPWatchdog.com and William Mansfield of PatentSight® — A LexisNexis Company will analyze the decision made by Amazon Inc. to "buy" Zoox Inc. Patent data retrieved from patents belonging to the technology field of Autonomous Driving were studied and analyzed in order to explain why Amazon decided to acquire Zoox for approx. $1.2 billion. The panel will discuss other unicorn companies in this field that would make for great acquisition targets, and provide:

• an overview analysis of the Autonomous Driving patent landscape
• a comparison of selected automotive OEMs and their portfolio in Autonomous Driving
• a break-down analysis of Zoox's patent portfolio in Autonomous Driving
• the specifics of Amazon's patent portfolio in Autonomous Driving before and after the acquisition
• implications for the automotive industry and other Autonomous Driving unicorns like Zoox Inc.

There is no registration fee for this webinar. However, those interested in registering for the webinar, should do so here.
Takeda Pharmaceuticals U.S.A., Inc. v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2020)

August 20, 2020

By Kevin E. Noonan —

ANDA litigation, pursuant to the Hatch-Waxman Act, has become more complicated over the years since enactment of the statute in 1984, with more patents being asserted and more parties participating over the opportunity to market a generic version of a branded, innovator drug. Particularly under circumstances where there are several ANDA litigants, and where most of them are not the sole "first filer" entitled to 180-day market exclusivity should they prevail in invalidating the innovator's patent(s) or (less often) showing that their generic product will not infringe, there is an incentive for the branded drug maker and at least some of the competing generic companies to enter into a settlement agreement. (It should be noted that these settlements are not in the manner of "pay-for-delay" agreements; that is a separate topic). One feature of these settlement agreements is that, absent any first filer garnering exclusivity status, each settling generic company seeks an agreement granting them the right enter the market when any non-settling generic company succeeds in invalidating the branded drug patent(s) or proving non-infringement. The Federal Circuit's decision over such a settlement agreement in Takeda Pharmaceuticals U.S.A., Inc. v. Mylan Pharmaceuticals Inc. illustrated the impossibility of crafting an agreement that encompasses all contingencies, the difficulty in foreseeing all contingencies, and the efforts a patentee will expend to enforce provisions of an agreement despite the agreement not being satisfied (as well as the toxic effect even the hint of gamesmanship can produce, even where the fact of a party engaging in gamesmanship may be very much in doubt).

This case arose over Takeda's Colcrys® product, involving 0.6 mg tablet formulations of colchicine for treating gout flares. Takeda asserted 17 Orange Book-listed patents in that litigation and the parties settled, specifying a date certain in future (later than the date of the settlement but prior to the expiration date of the last-to-expire of the asserted patents). The Settlement Agreement contained this provision for accelerating the date Mylan could bring its generic version of Colcrys® to market and the events that could trigger such an accelerated date:

[Mylan would become entitled to launch its generic product on t]he date that is [a specified time period] after the date of a Final Court Decision (as defined in Exhibit A) holding that all unexpired claims of the Licensed Patents that were asserted and adjudicated against a Third Party are either (i) not infringed, or (ii) any combination of not infringed and invalid or unenforceable[.]

(Section 1.2(d); emphasis added). Exhibit A defines a Final Court decision as "entry by a federal court of a final judgment from which no appeal . . . has been or can be taken." Another relevant passage, Section 1.10, provides that any breach of this agreement would cause Takeda irreparable harm.

Concurrently, Takeda was also pursuing patent infringement litigation against another generic drug maker, Hikma, in a litigation styled as Takeda Pharm. USA v. West-Ward Pharm. Corp. In that litigation, defendant Hikma did not file an ANDA application but rather a § 505(b)(2) New Drug Application which the FDA approved for Hikma's Mitigare® product. In that litigation, Takeda asserted 8 patents against Hikma, but during the course of the litigation the parties agreed to dismiss the complaint with prejudice as to 5 of the 8 asserted patents and litigate only the remaining 3 patents. The district court ultimately granted summary judgment in Hikma's favor over the claims of these 3 remaining patents. Takeda did not appeal that judgment.

As a consequence of that outcome, Mylan informed Takeda that it was invoking the provisions of Section 1.2(d) and planned on immediate market entry. In response. Takeda filed suit and sought a preliminary injunction against the proposed Mylan launch; in the interim the parties agreed that Mylan would voluntarily cease sale and distribution of Mylan's Colcrys® generic product.

The District Court denied Takeda's motion, on the grounds that Takeda had "failed to show it is likely to succeed on the merits or that it will suffer irreparable harm." With regard to the likelihood of success prong, the District Court agreed with Mylan that the decision in Hikma's favor without an appeal triggered the provisions of Section 1.2(d). The Court rejected Takeda's argument that the decision in Hikma did not do so because of the five initially asserted patents that were withdrawn from that litigation; according to the Court the three remaining patents that the parties had litigated satisfied the "all unexpired claims of the Licensed Patents that were asserted and adjudicated against a Third Party" provision because those were the patents that had been "asserted and adjudicated." (In addition to basing its decision on this exercise of contract interpretation, a question of law, the District Court noted that "Takeda's proposed interpretation would prevent Mylan from ever relying on the clause to enter the market because Takeda could always 'withdraw one patent (or one claim on one patent),' whether through gamesmanship or through the normal course of litigation, to avoid triggering Section 1.2(d)"). The District Court also rejected Takeda's contention that this provision was only triggered by litigation against a Colcrys® generic which excluded application for Mitigare®. The Court's decision was based on the parties' use of terms like "Generic Equivalent" or "Authorized Generic Products" elsewhere in the agreement but not in Sections 1.2(d), (e), or (f).

Turning to the question of inequitable harm, the District Court rejected Takeda's contention that the circumstances here invoked the inequitable harm provisions of Section 1.10, which required Takeda to show that Mylan had breached the settlement agreement. Accordingly, the District Court found that Takeda would not be able to successfully contend irreparable harm but rather should be satisfied with money damages. This appeal followed.

The Federal Circuit affirmed, in an opinion by Chief Judge Prost joined by Judge Hughes; Judge Newman dissented. The panel majority construed the terms of Section 1.2(d) and held that the Hikma decision triggered the provisions of Section 1.2(d), and as a consequence Takeda would not be able to prevail on the merits under Delaware law (which controlled under an express provision in the Settlement Agreement). The panel rejected Takeda's argument that the term "all" in Section 1.2(d) required adjudication of the five patents the parties dismissed in addition to the three patents that went to trial. The panel majority held that this interpretation was not consistent with the plain language of the agreement, based on use of the phrase "asserted and adjudicated" in this section of the Agreement. One basis for this decision is that Takeda's interpretation would render the word "adjudication" meaningless in the panel majority's view. Perhaps equally persuasive was the panel majority's recognition that Takeda's construction would "lead[] to the absurd result that Takeda could prevent Mylan from ever relying on the clause by simply asserting and then withdrawing a claim from a proceeding," which the opinion characterized as "gamesmanship."

The panel majority also rejected Takeda's contention that the intent of the parties was to permit Mylan's "early" entry into the colchicine market based on a change in the status quo (or the status of the licensed patents) for the entire market, because the Agreement did not have terms reciting this intention. And the panel majority rejected Takeda's further contention that the Agreement did not contemplate Hikma's Mitigare® product, saying that considering the Hikma litigation as a triggering event was "exactly a circumstance Takeda asserts Section 1.2(d) was intended to cover" (and in a footnote, notes that the Hikma litigation was ongoing when the Settlement Agreement with Mylan was being negotiated).

With regard to the question of whether Takeda would be irreparably harmed, the panel majority held that Takeda's reliance on Section 1.10 is fatal to its claim, because that provision requires Mylan to have breached the provisions of Section 1.2(d) in order for that provision to apply. Absent that, the panel majority states that Takeda made "no credible assertion" of irreparable harm or that it could not be recompensed with money damages. The panel majority recognizes that "price erosion and loss of market share may in some cases be irreparable injuries" but that Takeda's "bare assertion" of irreparable harm is insufficient to support this prong of the preliminary injunction standard. Accordingly, the Federal Circuit affirmed the District Court's denial of Takeda's motion for preliminary injunction.

Judge Newman saw things differently in her dissent. For this Judge, the Settlement Agreement contained an "explicitly agreed provision" regarding when Mylan was entitled to accelerate its market entry date, and it breached that agreement by informing Takeda it would begin selling its generic Colcrys® after the Hikma decision was final. In addition to violating "fundamental principles of contract law and commerce," the Judge also believed there were strong public policy concerns raised by the majority's decision. In Judge Newman's view, Mylan was not entitled to invoke the acceleration provisions of Section 1.2(d) because "the cited event [finality of the Hikma decision] relates to a different product of a different provider having a different FDA approval for different uses, and is not a generic counterpart of Colcrys®" (emphasis added). Showing that different judges can come to different conclusions on the same facts, the same coincidence of the Settlement Agreement negotiations cited (albeit in a footnote) by the majority to support their conclusion that the parties could have expressly included the Hikma litigation in the Settlement Agreement is cited by Judge Newman to support her interpretation, i.e., that the parties could have and should have included the outcome of the Hikma litigation in Section 1.2(d) if they intended it to provide a triggering event for Mylan's acceleration of its marketing date. In addition, using a "balance of the harms" analysis Judge Newman believes is contained in Section 1.10 of the Settlement Agreement, her dissent states that "if it were to turn out that the requested injunction were wrongfully granted, Mylan could be made whole by the injunction bond required by Fed. R. Civ. P. 65(c); whereas if the injunction were wrongfully denied Takeda could not be made whole from the market impact of Mylan's entry." Under Delaware law, "contractual stipulations as to irreparable harm alone suffice to establish that element for the purpose of issuing preliminary injunctive relief" Judge Newman contends, citing Cirrus Holding. Co. v. Cirrus Indus., Inc., 794 A.2d 1191, 1209 (Del. Ch. 2001), and TP Group-CI, Inc. v. Vetecnik, No. CV 16-00623-RGA, 2016 WL 5864030, at *2 (D. Del. Oct. 6, 2016). Judge Newman also sees a violation of the public's interest in settlements and upholding the integrity of contracts in the majority's decision as another basis for her dissent.

Takeda Pharmaceuticals U.S.A., Inc. v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2020)
Panel: Chief Judge Prost and Circuit Judges Newman and Hughes
Opinion by Chief Judge Prost; dissenting opinion by Circuit Judge Newman
“Creativity Machine” Cannot Be Named As Inventor

August 18, 2020

By Donald Zuhn —

In a Decision on Petition issued in April, and signed by Deputy Commissioner for Patent Examination Policy Robert W. Bahr, the U.S. Patent and Trademark Office refused to vacate a Notice to File Missing Parts of Nonprovisional Application mailed on August 8, 2019 in U.S. Application No. 16/524,350. The '350 application, which is entitled "Devices and Methods for Attracting Enhanced Attention, was filed on July 29, 2019.

The Decision notes that an Application Data Sheet ("ADS"), substitute statement under 37 CFR 1.64 in lieu of declaration under 35 U.S.C. § 115(d), statement under 37 CFR 3.73(c), assignment, and Statement of Inventorship accompanied the application papers. The ADS listed a single inventor with the given name "[DABUS]" and the family name "(Invention generated by artificial intelligence)," and listed the Applicant as the Assignee "Stephen L. Thaler." The substitute statement listed "DABUS (the invention was autonomously generated by artificial intelligence)" as the inventor and was executed by Mr. Thaler. The 3.73(c) statement identified Mr. Thaler as the assignee of the application. The assignment assigned the interest of "DABUS, the Creativity machine that has produced the . . . invention" in the '350 application to Mr. Thaler, with Mr. Thaler executing the document on behalf of both DABUS, as legal representative of the assignor, and himself as assignee. The Statement of Inventorship states that the invention was conceived by a "creativity machine" named "DABUS."

The Office issued a Notice to File Missing Parts of Nonprovisional Application on August 8, 2019, which indicated that the ADS for the '350 application did not identify each inventor by his or her legal name. In response to the Notice, a petition under 37 CFR 1.181 was filed, requesting supervisory review of the Notice and also requesting that the Notice be vacated as unwarranted and/or void. The Office issued a second Notice to File Missing Parts of Nonprovisional Application on December 13, 2019, and dismissed the petition under 37 CFR 1.181 on December 17, 2019. In response to the second Notice, a second petition under 37 CFR 1.181 was filed on January 20, 2020, requesting reconsideration of the Office's dismissal of the first petition.

In the second petition, the Petitioner asserted that the invention disclosed in the '350 application was generated by a machine named "DABUS," and that the machine recognized the novelty and salience of the invention. The Petitioner argued that inventorship should not be limited to natural persons and, therefore, that the naming of DABUS as the inventor in the '350 application was proper.

In response, the Decision states that:

To the extent the petitioner argues that an "inventor" could be construed to cover machines, the patent statutes preclude such a broad interpretation. Title 35 of the United States Code consistently refers to inventors as natural persons. For example, 35 U.S.C. § 101 states "Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter . . . may obtain a patent therefore, subject to the conditions and requirements of this title" (emphasis added). "Whoever" suggests a natural person.

The Decision indicates that "interpreting 'inventor' broadly to encompass machines would contradict the plain reading of the patent statutes that refer to persons and individuals."

The Decision also cites the Federal Circuit's decision in Univ. of Utah v. Max-Planck-Gesellschaflzur Forderung der Wissenschaflen e.V., 734 F.3d 1315, 1324 (Fed. Cir. 2013), in support of its position. In Univ. of Utah, the Federal Circuit explained that "inventors must be natural persons and cannot be corporations or sovereigns." The Decision also noted that the Federal Circuit in Beech Aircraft Corp. v. EDO Corp., 990 F.2d 1237, 1248 (Fed. Cir. 1993), stated that "only natural persons can be 'inventors.'"

The Decision concludes that "because the ['350] application names a machine, '[DABUS] (Invention generated by artificial intelligence),' as the inventor, and because current statutes, case law, and USPTO regulations and rules limit inventorship to natural persons, the ['350] application does not comply with 35 U.S.C. § 115(a)."

In response to the Petitioner's argument that the Office should consider the position adopted by the European Patent Office and the Intellectual Property Office of the United Kingdom that DABUS created the invention at issue, but DABUS cannot be named as the inventor, the Decision notes that "the EPO and UKIPO are interpreting and enforcing their own respective laws (i.e., the European Patent Convention and the UK Patents Act 1977) as they apply to the applications before them." Under U.S. patent law, however, a machine is not allowed to be named as the inventor in a patent application.

The Petitioner also argued that because the Office has granted patents relating to the DABUS machine itself, it had implicitly legalized the process by which DABUS arrived at the invention disclosed in the '350 application. In response, the Decision countered that:

The granting of a patent under 35 U.S.C. § 151 for an invention that covers a machine does not mean that the patent statutes provide for that machine to be listed as an inventor in another patent application––any more than a patent for a camera allows the camera [to] hold a copyright.

The Decision therefore granted the petition to the extent that the decision of December 17, 2019 was reviewed, but denied the petition with respect to the Petitioner's request to vacated the Notice to File Missing Parts of Nonprovisional Application issued August 8, 2019.
Homo sapiens Exonerated, Scientists Find

August 17, 2020

Turns Out, Early Humans Not the Cause of Woolly Rhinoceros Extinction

By Kevin E. Noonan —

Paleogenomics (the use of genetic analysis of DNA contained in ancient remains) has developed rapidly since Svante Pääbo first showed that DNA could be extracted in sufficient quantity and of sufficient quality to be useful in making evolutionary comparisons between, inter alia, modern Homo sapiens sapiens and Homo sapiens neanderthalis. See Krings, Stone, Schmitz, Krainitzki, Stoneking, and Pääbo, "Neandertal DNA sequences and the origin of modern humans," Cell. 90(1): 19–30 (1997). Since then, ancient DNA (both genomic, gDNA, and mitochondrial, mtDNA) have been used to establish relationships, geographic localization, and patterns of extinction. One such pattern involves the wooly rhinoceros (Coelodonta antiquitatis) whose extinction was believed to have arisen at the predacious hand of human beings.

But in a recent paper, an international team of scientists* found this not to be the case. The paper, entitled "Pre-extinction Demographic Stability and Genomic Signatures of Adaptation in the Wooly Rhinoceros," Current Biology (2020), presented evidence that this is not the case. Wooly rhinoceros populations in northern Siberia went extinct about 14,000 years ago. The species were "widely distributed" in northern Eurasia in late Pleistocene (2.58 million to 11,700 years ago). These researchers determined the sequence of one sample of genome gDNA (from an ~18,500 year old specimen) and 14 mtDNA samples ranging in age from more than 50,000 years ago to about 14,000 years ago. These authors identified more than 28 million single nucleotide polymorphisms (SNPs) in the gDNA sample, having an average heterozygosity of 1.7 sites per 1000 basepairs, which is higher than what has been reported for the mammoth genome (1.25 heterozygous sites/1000bp), the Sumatran rhinoceros Dicerorhinus sumatrensis (their closest living relative) (1.3 heterozygous sites/1000bp), or the Northern or Southern White rhinoceros (1.1 and 0.9 heterozygous sites/1000bp, respectively). Runs of homozygosity (ROH) analysis was also consistent with relatively low levels of inbreeding, "on par with non-African human populations," although higher than that detected in the mainland mammoth from this period.

A closer sequence comparison between the gDNA from the wooly rhinoceros and the Sumatran rhinoceros of 19,556 coding genes showed 1,524 genes with non-synonymous mutations, consisting of 1,386 missense mutations and 138 with loss-of-function or non-sense mutations. These genes were associated with "cellular component organization or biogenesis, cellular process, localization, reproduction, biological regulation, response to stimulus, developmental processes, and metabolic processes." Not detected were such mutations in genes relating to fat deposition or circadian rhythm changes, which was different from the patterns found inter alia in wooly mammoth. There were 89 genes in both wooly mammoth and wooly rhinoceros that showed non-synonymous mutations, including Transient Receptor Potential subfamily A (involved in adaptation to cold tolerance), and a member of potassium channel subfamily K analogous to TWIK-Related Arachidonic Acid-Stimulated Potassium Channel Protein involved in cold perception. Finally, a more in-depth assessment of the amino acid sequence changes these mutations caused (and their expected effects on encoded protein structure) showed 284 variants of the 17,888 genes analyzed having maximal change in protein structure, and 83 of these were in olfactory receptor genes.

Shown below (in panel A) are the regions where the sample were obtained. The importance of this Siberian region during interglacial periods in the Pleistocene is reflected in the putative origination of extant wolf species** in northeastern Siberia, highly divergent mtDNA lineages in horse, bison, and collared lemming populations, and admixing of human populations in the region prior to colonialization of North America (see "Genetic Research Continues to Reveal Ancestry Relationships in Early Human Migrations").

Population genetic studies based on comparative mtDNA sequencing revealed a pattern of the development of two clades having the geographic distribution shown in panel B:

Panel B shows the phylogenetic relationship between the 14 specimens; the two main branches diverged ~205,000 years ago, with the Wangel Island branch diverging about 154,00 years ago (consistent with its island location). The structure of the interrelationships between the various related groups consistent with isolation during interglacial periods. The diversification in each branch estimated to have arisen between 86,000 and 22,000 years ago.

Population genetic analysis via mtDNA showed a stable population without evidence on inbreeding or reduction in genetic heterogeneity that would have been indicative of being driven to extinction through, for example, human hunting. Indeed, the population remained stable until about 4,500 years before the extinction event after an initial increase in population. The effective population size increased gradually (i.e., there was no evidence of a population explosion) beginning at around 1 million years ago, reaching a peak of around 21,000 animals about 152,000 years ago during the Marine Isotope Stage 6 (MIS6) glaciation. Thereafter, population size decreased 10-fold fold from 152,000 to 29,700 years ago, experiencing a minimum size at about 33,000 years ago. The population then experienced a rapid expansion resulting in a stable population size until 4,500 prior to the extinction event. These population dynamics are not shared by the wooly mammoth during this period. This suggests that the wooly rhinoceros was particularly well-adapted to the climate during this period, and thus relatively more susceptible to population decline as a consequence of population changes with climate warming. Overall, the authors' assessment was that this population pattern was more indicative of changes in climate, i.e., warming during the interglacial period with changes in local flora used by these animals as a food source.

The authors conclude that:

[O]ur analyses of nuclear and mitochondrial genomic diversity in the woolly rhinoceros provide no evidence for a decline in population size preceding the samples analyzed here, nor any indication of elevated inbreeding typical of small populations. While we cannot exclude the role of humans in woolly rhinoceros' extinction, our results imply that the arrival of anatomically modern humans in northeastern Siberia was not correlated with a demographic decline in the woolly rhinoceros.

The paper concludes with these thoughts:

Taken together, these findings highlight the utility of genomic data in unraveling previously unknown evolutionary processes in extinct species and illustrate the need to investigate demographic trajectories in other megafauna to develop a better understanding of the timing and rate of demographic change during the Late Quaternary.

* Edana Lord, Nicolas Dussex, Marcin Kierczak, David Díez-del-Molino, Oliver A. Ryder David W.G. Stanton, M. Thomas P. Gilbert, Fátima Sánchez-Barreiro ,Guojie Zhang, Mikkel-Eske Willerslev, Albert Protopopov, Fedor Shidlovskiy, Sergey Fedorov, Hervé Bocherens, Senthilvel K.S.S. Nathan, Benoit Goossens, Johannes van der Plicht, Yvonne L. Chan, Stefan Prost, Olga Potapova, Irina Kirillova, Adrian M. Lister, Peter D. Heintzman, Joshua D. Kapp, Beth Shapiro, Sergey Vartanyan, Anders Götherström, and Love Dalén

** In an uncanny coincidence, CNN reported today that a "perfectly preserved" wolf pup, dating from ~14,000 years ago, was found to have wooly rhino meat in his stomach, thus providing another suspect for their extinction. See CNN report.

Image of Reconstruction of Wooly Rhinoceros – Coelodonta antiquitatis, from Late Pleistocene of Europe and Asia by ДиБгд, from the Wikimedia Commons under the Creative Commons Attribution-Share Alike 4.0 International license.

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