Patent Docs

Story Telling

March 24, 2020

By Kevin E. Noonan —

Patent law (and, consequently, patent lawyers) can be viewed as having at least a slightly tighter tether on concrete, factual reality than other areas of the law, at least to the extent that making patent-related legal arguments are more fact-specific. This can cause some interesting contrasts when addressing arguments to a court; this was seen dramatically during the Myriad litigation, where some lawyers interpreted the claims to BRCA genes to encompass total genomic DNA, and of course to the infamous "magic microscope" argument (although choosing lithium as an example of a patent-ineligible product of nature was clever, insofar as the bonds in elemental lithium have a significant covalent character).

These realities impact storytelling in patent law, because telling a compelling story is a hallmark of good lawyering, whether in a patent application (to the Patent Office and investors) or in litigation (to a district court, the Federal Circuit, or the PTAB; by the time a case gets to the Supreme Court it is rare that the facts are as important or likely to be properly understood). But another thing Myriad taught patent lawyers is the flexibility of argument and how facts can be interpreted almost any way an advocate wants; as a former partner used to say, "your strengths are also your weaknesses" in homage to the pliability of fact-based argument.

An illustration of this principle, in an area far removed from legal argument (and indeed, being scientific argument might be thought to be devoid of the malleability of argumentation that arises in the law) was the interpretation of analogous biological features, as set forth by William Buckland, in The Bridgewater Treatises, Volume 6 (1836), with regard to Ichthyosaurus, a marine dinosaur, fossils of which had been discovered by several proto-paleontologists. The fossil was (and is) remarkable as appearing to be a combination of several parts recognized in other animals: "paddles similar to those of a whale, a crocodile-like head, vertebrae like those of a fish, and a sternum like that of the enigmatic creature from Australia, the platypus" (see B. Switek, Written in Stone, Bellevue Library Press, Kindle Edition, p. 56).

Buckland interpreted the animal thusly in finding it an example of God's handiwork:

The introduction to these animals, of such aberrations from the type of their respective orders to accommodate deviations from the usual habits of these orders, exhibits a union of compensative contrivances, so similar in their relations, so identical in their objects, and so perfect in the adaptation of each subordinate part, to the harmony and perfection of the whole; that we cannot but recognise throughout them all, the workings of one and the same eternal principle of Wisdom and Intelligence, presiding from first to last over the total fabric of Creation.

Of course, this interpretation was prior to Darwin's publication of the Origin of Species by Means of Natural Selection which, despite providing a mechanism by which evolution could occur, and the Herculean efforts of Thomas Henry Huxley to defend, was not immediately adopted. But Darwin's insight provided an alternative explanation (the modern one) to observations of the fossil anomaly, that of convergent evolution or homology, wherein, for example, the forelimbs of whale, bat, and human are derived from one another and illustrate "descent with modification," a mechanism that does not explain the forelimb of a crab (an example of an analogous rather than homologous structure). It is facile to mock Buckland's argument today, but better perhaps to recognize that his explanation was one dependent on his presumptions and lacking the theoretical structure Darwin (and his philosophical descendants) have provided to us.

These considerations are relevant, in a way, to the philosophical debates surrounding patent law today. These include patent eligibility, the role of patent exclusivity on drug prices, and the extent to which innovation should be protected by robust patents. These questions abound in the public discourse and in government, wherein a particular party's positions are frequently determined by a desired outcome rather than having a sound epistemological basis (see "FTC to the Rescue Regarding High Drug Prices and Patents"). But they have been nonetheless persuasive to policymakers and the public (see "A Solution in Search of a Problem"; "More Ill-conceived Remedies from Congress Regarding Prescription Drug Costs"; and "Even More Ill-Conceived Remedies from Congress Regarding Prescription Drug Cost"); it may be easy to remember tense Thanksgiving dinner discussions amongst patent lawyers' family members about why it was right for any to try to patent a person's genes (see "In Support of Gene Patents"). Similar arguments are arising today regarding, for example, university technology transfer (see "Pigs Fly, Hell Has Frozen Over, and the New York Times Supports Small Inventor and University Patenting"), or high insulin prices, or biologic drug pricing in the hundreds of thousand dollars annually (see "Cancer Drug Prices Continue to Rise").

There are arguments, of course, and explanations for apparent anomalies in the effects of patent law on society (see, e.g., "The Effect of Patents and Drug Price Regulation on New Drug Diffusion Globally"). But these tend to fail the "cocktail party" test (wherein making these arguments rapidly causes people to eschew remaining in them for very long). The answer is not (solely) "educating the public" (with all the risks of condescension that arise from such efforts). Perhaps it is how the argument is made, evidence of which has begun to become evident in television commercials by pharmaceutical and biotechnology companies discussing the value new drugs bring. Testimonials, from the beneficiaries of these drugs, can also be useful. But there is also a need for economic research and arguments about the macroscopic effects of these advances, not regarding only their immediate costs but societal benefits with regard to economic productivity and reductions in ultimate healthcare costs, in addition to the less quantifiable aspects on the children and loved ones of those whose lives have been saved or extended by these medical advances (see, e.g., "Addressing Increased Drug Costs — A Proposal").

There is no magic bullet or overarching argument that can save the day. But changing or at least challenging the current memes that threaten to kill the golden goose of innovation is a necessary place to start if short-term pursuit of immediate benefits (see "The ACLU, Working for the Man") that disregards the long-term consequences of poorly thought out changes to how innovation is promoted and protected is to be accomplished. It is critical that we do so and it needs to be done now.
Allen v. Cooper (2020)

March 23, 2020

By Kevin E. Noonan —

In a decision containing not a small amount of whimsy (more regarding that aspect anon), Justice Kagan, joined almost unanimously by her brethren today upheld a State's (here, North Carolina) sovereign immunity against suit for copyright infringement, in Allen v. Cooper.

The case (and the whimsy) arose over Petitioner Allen's suit against North Carolina's unauthorized use of copyrighted materials relating to the discovery and salvage of the pirate Blackbeard's "flagship" Revenge off the coastal waters of that state and, hence, being State property. Petitioner relied on the provisions of the Copyright Remedy Clarification Act of 1990 (CRCA), codified at 17 U. S. C. § 511:

[A] State "shall not be immune, under the Eleventh Amendment [or] any other doctrine of sovereign immunity, from suit in Federal court" for copyright infringement. 17 U. S. C. §511(a). [I]n such a suit a State will be liable, and subject to remedies, "in the same manner and to the same extent as" a private party. §511(b).

North Carolina asserted sovereign immunity under the Eleventh Amendment:

The Judicial Power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of an- other State, or by Citizens or Subjects of any Foreign State.

The District Court found for plaintiff, based on the express provisions of the CTCA, and on Section 5 of the Fourteenth Amendment, in view of the "the States' 'pattern' of 'abus[ive]' copyright infringement." The Fourth Circuit reversed, based on the Supreme Court's decision in Florida Prepaid Postsecondary Ed. Expense Bd. v. College Savings Bank, 527 U. S. 627 (1999), holding the Patent Remedy Act, enacted by Congress on the same day and having substantially the same provisions.

The Court affirmed, in a decision by Justice Kagan and joined by the Court with the exception of two portions of the opinion in which Justice Thomas did not join; in addition, Justice Breyer wrote a concurring opinion joined by Justice Ginsberg. The opinion noted that the express language of the Eleventh Amendment is not unequivocal but that sovereign immunity stands for the "presupposition of our constitutional structure which it confirms," citing Blatchford v. Native Village of Noatak, 501 U. S. 775, 779 (1991). This presumption is, first, that "each State is a sovereign entity in our federal system," citing Seminole Tribe of Fla. v. Florida, 517 U. S. 44, 54 (1996). Second, "[i]t is inherent in the nature of sovereignty not to be amenable to [a] suit" absent consent, cited in Seminole Tribe relying on The Federalist No. 81, p. 487 (A. Hamilton). Finally, that "fundamental aspect of sovereignty constrains federal 'judicial authority'" according to the Court, citing Blatchford.

The immunity is not absolute and the Court has recognized exceptions, in instances where Congress enacts a statute having "unequivocal statutory language" that abrogates a State's sovereign immunity (citing Dellmuth v. Muth, 491 U. S. 223, 228 (1989)) and there is some constitutional provision that excuses Congress's encroachment on sovereign state prerogatives (citing Kimel v. Florida Bd. of Regents, 528 U. S. 62, 78 (2000)). In this case the first prong of the test was indisputably met. As for the second prong, Petitioner relied on Congress's Article I power to grant copyrights, and the Fourteenth Amendment's grant to Congress of the power to enforce the Amendment's due process provisions.

The Court rejected these arguments, the opinion stating that "[t]he slate on which we write today is anything but clean." The Article I power to grant copyrights (and patents) "impose a corresponding duty (i.e., not to infringe) on States no less than private parties," according to the Court, citing Goldstein v. California, 412 U. S. 546, 560 (1973). Hence, abrogation of North Carolina's sovereign immunity is the best, or only, way to protect Petitioner's copyright (according to Petitioner). But, the opinion asserts, "[t]he problem for Allen is that this Court has already rejected his theory, in Florida Prepaid. While that case involved Congress's failed attempt to abrogate State sovereign immunity for patent infringement, the constitutional basis for copyright protection arises in in the same provision of Article I as patent protection (Section 8, clause 8) and thus that decision mandates the Court's opinion here. The Court noted that the justifications for stripping States of sovereign immunity in Florida Prepaid for patents were the same as asserted here: "to ensure 'uniform, surefire protection' of intellectual property." While acknowledging that this was a "proper Article I concern," the opinion reiterates the holding of Florida Prepaid that it isn't enough to satisfy the second prong, that there is a constitutional provision supporting this exercise of federal power, based on the Court's decision in Seminole Tribe v. Florida. The rubric from the case is that Congress does not have the power, under Article I, to "circumvent" the limitations sovereign immunity places on federal jurisdiction. As stated in the opinion, "the power to 'secur[e]' an intellectual property owner's 'exclusive Right' under Article I stops when it runs into sovereign immunity."

The Court also rejected Petitioner's argument that Central Va. Community College v. Katz provided "an exit ramp" from the Florida Prepaid precedent. 546 U. S. 356, 359 (2006). Katz involved the Bankruptcy Clause, which the Court decided enabled Congress to compel states to participate in bankruptcy proceedings. But the opinion notes that the Court had expressly exempted bankruptcy proceedings from Seminole Tribe's general rule. The Court refused here to extend "bankruptcy exceptionalism" to the Copyright Clause. Bankruptcy proceedings were "in rem" according to the Court, and accordingly "it does not implicate States' sovereignty to nearly the same degree as other kinds of jurisdiction," citing Katz. In addition, the Court in Katz found that bankruptcy proceedings and the Bankruptcy Clause had a "unique history" that produced in the Court "a felt need to curb the States' authority." This need stemmed from the "wildly divergent schemes" different States had at the founding of the Republic for discharging debt in bankruptcy and that the States at that time had a history of not respecting discharge orders from other states. As is its wont, the Court reverted to the origins and purposes (the Framers' intentions) of the Bankruptcy Clause for justification for its distinction. And the Court in Katz had found that by ratifying the Constitution, the States had agreed to yield their sovereign immunity (in view of the language of the Bankruptcy Clause itself); because a State can always waive its immunity any apparent inconsistency was thus resolved.

Florida Prepaid, and stare decisis, were enough in the Court's view to determine the outcome here, because finding abrogation of North Carolina's sovereign immunity would be directly contrary to affirming Florida's sovereign immunity in the Court's earlier precedent. The only way to abrogate sovereign immunity in this case would be to overrule the Court's recognition of Florida's sovereign immunity. Calling stare decisis a "foundation stone of the rule of law" (and citing Michigan v. Bay Mills Indian Community, 572 U. S. 782, 798 (2014), a case on Indian tribe immunity for the principle), the opinion states that there must be a "special justification" for doing so (as well as a belief that the earlier case had been wrongly decided), which the Court did not find here.

Regarding Section 5 of the Fourteenth Amendment, the Court recognized that the Amendment "fundamentally altered the balance of state and federal power," citing Seminole Tribe, and that the Court has held that (under the right circumstances) the this Amendment gives Congress the power to abrogate State sovereign immunity, citing Fitzpatrick v. Bitzer, 427 U. S. 445, 456 (1976). But this power is limited: for example, it must be tailored to "remedy or prevent" State conduct that violates the Amendment's due process guaranties, citing City of Boerne v. Flores, 521 U. S. 507, 519 (1997). The Court has fashioned a "means-ends test" in this regard, wherein "Congress can permit suits against States for actual violations of the rights guaranteed in Section 1" of the Amendment. The Court requires a "congruence and proportionality between the injury to be prevented or remedied and the means adopted to that end." But the limits on this grant of power are what the amendment actually bars, which are violations of due process. In this case, the question the Court apprehends is "[w]hen does the Fourteenth Amendment care about copyright infringement?" finding the answer is "sometimes," particularly when States deprive a citizen of property without due process of law. But "sometimes" does not mean "always," according to the opinion, excluding for example instances of negligence, citing Daniels v. Williams, 474 U. S. 327, 328 (1986). Copyright infringement must be intentional, or at least reckless, for the due process protections of the Fourteenth Amendment to come to bear, and only where the State does not offer a remedy for the infringement, citing Hudson v. Palmer, 468 U. S. 517, 533 (1984).

In resolving the question before it regarding the Fourteenth Amendment, the Court once again turned to its decision in Florida Prepaid, as defining unconstitutional infringement to be "intentional conduct for which there is no adequate state remedy." In that case, "the statute's abrogation of immunity [the Patent Remedy Act], the equivalent of the CRCA's—was out of all proportion to what it found [in the legislative history]." This was because, inter alia, "Congress did not identify a pattern of unconstitutional patent infringement" (indeed, the Court characterized the evidence as "thin," amounting to only two examples in the context of most States complying with the Patent Statute). In addition, that evidence was that States' infringement was "innocent or at worst negligent" rather than reckless or intentional. The Court noted that the Patent Remedy Act was disproportionate to the harm that provoked it, stating "it exposed all States to the hilt" of liability for patent infringement. It was not carefully and narrowly claimed to correct a problem but provided "a uniform remedy for patent infringement." It did not "enforce" Section 1 (due process) of the Fourteenth Amendment and thus was not "appropriate" for enforcing the Amendment under Section 5.

In view of the "identical scope" of the statute at issue here the Court rhetorically asks "[c]ould . . . this case come out differently" (and answering "no") unless there was stronger evidence of intentional or reckless (i.e., unconstitutional) infringement. In this case there was a greater quantum of evidence supporting State infringement of copyrights (including a 155-page report from the Register of Copyrights). But the Court held that even this wasn't enough. The Court found the evidence "scarcely more impressive" ("only a dozen possible examples of state infringement" and "seven court cases brought against States" as well as "five [uncorraborated] anecdotes taken from public comments") than the evidence for States' patent infringement in Florida Prepaid. And only two of these examples raised any due process issues. Under this analysis the Court found that this statute failed the "congruence and proportionality" test and the outcome could not differ from the Court's earlier decision in Florida Prepaid.

The opinion concludes with the Court suggesting that Congress could pass a statute abrogating State sovereign immunity. Noting that Congress passed both the Patent Remedy Act and the CRCA prior to the Court's decision in Seminole Tribe, the opinion suggests that "Congress will know the rules" regarding "the importance of linking the scope of its abrogation to the redress or prevention of unconstitutional injuries—and of creating a legislative record to back up that connection" should Congress decide to pursue another statute to abrogate State sovereign immunity. Such a "tailored statute" could "effectively stop States from behaving as copyright pirates" and, as a consequence, "bring digital Blackbeards to justice."

Justice Thomas wrote separately in concurrence, joining all but two sections of the Court's opinion and raising a question he believes unsettled in the law. Regarding the first of these section of the opinion, regarding stare decisis, the Justice believes that the Court has a responsibility to overrule earlier precedent for error without requiring "special justifications" as discussed in the opinion. His second disagreement involved the opinion's discussion of the possibility of future legislation abrogating State sovereign immunity; here the Justice thinks such talk goes beyond the Court's role to provide opinions "only [on] the case before us in light of the record before us," citing Manhattan Community Access Corp. v. Halleck, 587 U. S. ___, ___ (2019) (slip op., at 15). As for the question, Justice Thomas is not convinced that "[c]opyrights are a form of property."

Justice Breyer also wrote a concurring opinion, joined by Justice Ginsberg. The gist of the concurring opinion (also colorfully set forth) is that the Court's decision in Florida Prepaid was incorrect, and setting forth the Justice's more fulsome explication of his views in Justice Stevens' dissent in Florida Prepaid and the Court's opinion in Kimble v. Marvel Entertainment, LLC, 576 U. S. 446, 455–456 (2015), as well as his own dissent in Franchise Tax Board of California v. Hyatt, 587 U.S. ___, ___ (2019).

Allen v. Cooper (2020)
Opinion by Justice Kagan, joined by Chief Justice Roberts and Justices Alito, Sotomayor, Gorsuch, and Kavanaugh, joined by Justice Thomas except for the final paragraph in Part II–A and the final paragraph in Part II–B; opinion concurring in part and concurring in the judgment by Justice Thomas; opinion concurring in the judgment by Justice Breyer, joined by Justice Ginsburg
Facebook, Inc. v. Windy City Innovations, LLC (Fed. Cir. 2020)

March 22, 2020

By Joshua Rich —

It's often said that hard cases make bad law. And that is what had happened here: faced with an unreasonable number of potentially asserted claims in litigation, and a Plaintiff not required to identify which of those claims it would actually assert within the filing limit (one-year) between being served with a complaint and filing to initiate an inter partes review (IPR) proceeding, Facebook played the novel gambit of trying to join its own IPR to attack the claims actually asserted against it. At the Patent Trial and Appeal Board, it actually worked (with a little assistance from the USPTO Director). But the Federal Circuit held otherwise, finding that joinder was only permitted for other parties who were seeking review of the same issues, not for the same party seeking to change the scope of the review. Thus, it vacated the PTAB's decision on the late-added claims, despite otherwise affirming the PTAB's decision on the merits of the claims.

The dispute between Facebook and Windy City began on June 2, 2015, when Windy City sued Facebook for infringement of four patents in the U.S. District Court for the Western District of North Carolina. Those four patents, U.S. Patent Nos. 8,458,245; 8,694,657; 8,473,552; and 8,407,356, have 58, 671(!), 64, and 37 claims, respectively. The Complaint did not identify which of those 830 claims Facebook allegedly infringed. Facebook was served with the Complaint the day after it was filed, and moved to dismiss it on July 24, 2015, arguing that the Complaint was deficient because it did not identify the allegedly infringed claims. Facebook then filed a motion to transfer the case to the Northern District of California on August 25, 2015.

The North Carolina District Court did not take action on either motion for over six months. Then, on March 16, 2016, over ten months after Facebook had been served, that North Carolina District Court transferred the case to the U.S. District Court for the Northern District of California without ruling on the motion to dismiss. The Northern District judge didn't rule on the motion either, but entered a scheduling order on April 6, 2016 that included a case management conference for July 7, 2016. Under the Northern District's Patent Local Rules, Windy City wouldn't have to identify its asserted claims until two weeks after that conference, on July 21, 2016. Cognizant that the deadline for filing petitions for inter partes review — one year after service of the complaint[i] — was more than a month earlier than that and was also quickly approaching, Facebook moved for an order requiring Windy City to identify no more than 40 asserted claims by May 16, 2016. The Northern District denied that motion.

On June 3, 2016, the very last day on which it could timely file IPR petitions, Facebook filed petitions challenging the validity of some of the claims of each of the four asserted patents. The Patent Trial and Appeal Board instituted review of all but two of the challenged claims,[ii] on all the obviousness grounds in the petitions. But Facebook's foresight was not perfect; when Windy City ultimately identified its asserted claims on October 19, 2016, there were a number of claims in the '245 and '657 patents that hadn't been challenged in the IPR petitions. With the statutory deadline for filing petitions to challenge those claims long past, Facebook tried to get the newly identified claims in through a procedural back door. It filed additional petitions on those claims, along with motions for joinder with the earlier-filed petitions.

The provisions of the America Invents Act governing joinder and consolidation in IPRs, 35 U.S.C. § 315(c) & (d), provide in relevant part:

(c) Joinder.—
If the Director institutes an inter partes review, the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under section 311 that the Director, after receiving a preliminary response under section 313 or the expiration of the time for filing such a response, determines warrants the institution of an inter partes review under section 314.

(d) Multiple Proceedings.—
Notwithstanding sections 135(a), 251, and 252, and chapter 30, during the pendency of an inter partes review, if another proceeding or matter involving the patent is before the Office, the Director may determine the manner in which the inter partes review or other proceeding or matter may proceed, including providing for stay, transfer, consolidation, or termination of any such matter or proceeding.

Over Windy City's objection, the PTAB granted the motions for joinder, reasoning that the newly-challenged claims, although not identical, involve "substance . . . very similar such that the addition of [the new] claims . . . is not likely to affect the scope of the trial significantly." The Board noted that the addition of the new claims would not significantly disrupt the schedule, briefing, or discovery, and that Facebook did not unduly delay challenging those claims. Indeed, the Board indicated that under the circumstances here, Facebook could not have reasonably determined which claims were asserted against it by the expiration of the one-year deadline.

This joinder was not without controversy, however. Two of the Administrative Patent Judges on the panels granting joinder concurred in the decision to express "concerns with permitting a party to, essentially, join to itself." They did not themselves believe that "§ 315(c), when properly interpreted, [would] authorize same-party joinder because a party cannot be joined to a proceeding 'as a party' if it already is a party to that proceeding." However, in light of the USPTO Director's repeated espousal for allowing such joinder — including in a brief filed as an intervenor in these proceedings — the concurring APJs agreed to follow their boss's interpretation despite their disagreement.

The IPRs then proceeded to final written decisions, in which the PTAB found Facebook had shown some claims of each of the patents invalid as obvious, but had failed to do so for certain other claims of each of the patents. Both parties appealed: Facebook on the claims found not invalid, and Windy City on both the question of same-party joinder and on the claims found invalid.

The Federal Circuit took up the issue of same-party joinder first. Both sides argued that § 315(c) is unambiguous,[iii] but they reached opposing conclusions as to what it meant. Facebook asserted that it permits same-party joinder (including to raise new claims); Windy City asserted that it does not allow same-party joinder or the inclusion of new issues upon joinder. Ultimately, the Federal Circuit determined that Windy City's position was correct: not only is the statute unambiguous, it prohibits both same-party joinder and the inclusion of new issues upon joinder.

The Federal Circuit's analysis started, as it must, with the language of the statute. The time-bar provision, § 315(b), was clearly the impetus for the attempted joinder. However, that section expressly indicates that "[t]he time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c)." The joinder provision in subsection (c) then indicates that the Director has the discretion in an instituted IPR to "join as a party to that inter partes review any person who properly files a petition under section 311 . . ." For the Federal Circuit, the critical word in that provision is a "party." That is, the joinder provision clearly relates to adding new persons to a proceeding, not new questions or issues. In this case, a petitioner is already a party to an IPR and therefore logically cannot be joined.

The Federal Circuit noted that the PTAB appeared not to be viewing the joinder provision in that manner, and instead was viewing the provision in terms of joining later proceedings to earlier proceedings. The Federal Circuit rejected that understanding under the plain language of the statute. But it also indicated that the distinction between the two views was analogous to the distinction between Rules 19 and 20 of the Federal Rules of Civil Procedure and Rule 42. The former two rules clearly relate to parties rather than issues, whereas Rule 42 relates to issues rather than parties. Furthermore, there is another provision, § 315(d), relating to consolidation of proceedings with potentially different issues rather than joinder. Thus, the structure of the statute would not suggest that different proceedings could be "joined."

The Federal Circuit recognized that the Board's Precedential Opinion Panel had previously analyzed this issue in Proppant Express Investments, LLC v. Oren Technologies, LLC, No. IPR2018-00914, Paper 38 (P.T.A.B. Mar. 13, 2019), and came to the opposite conclusion. But the Federal Circuit reviews the statutory construction de novo, and potentially defers to the Board only if it finds ambiguity in the statute. Since it did not find any ambiguity, the Federal Circuit rejected any deference to the POP decision.

The Federal Circuit also relied on the fact that Facebook had changed the scope of the proceedings by adding new claims. As the Supreme Court had found in the SAS case, "Congress chose to structure a process in which it's the petitioner, not the Director, who gets to define the contours of the proceeding."[iv] That meant that the original petition created the scope of the IPR proceeding, which could not be altered by a second petition (even one by the same petitioner). Finally, the Federal Circuit considered the legislative history of the statute and found that it supported its interpretation.

Having resolved that the statute did not permit same-party joinder, the Federal Circuit vacated the PTAB's findings of invalidity of any claims not included in the original petitions. It then proceeded to consider whether the PTAB's decision on the other claims was supported by substantial evidence. It found that the PTAB's analysis was sufficiently clear and supported to affirm.[v]

In addition to the panel opinion, the Federal Circuit included additional views to address the POP's decision in Proppant, which issued after primary briefing in the appeal, and whether deference would be appropriate. Facebook had earlier suggested the Federal Circuit should defer under Chevron, but the Federal Circuit had never done so with a nonprecedential Board decision (and expressly refused to do so here). But Proppant was precedential, which caused the Federal Circuit to look more closely. Proppant suggested that the Director had discretion to allow same-party joinder, but would only exercise that discretion where fairness requires it and would alleviate unfairness to a party.

The Federal Circuit again rejected that deference for a number of reasons. First, it found the statute unambiguous, which preempts Chevron deference. Second, although the AIA gave the Director rulemaking authority in relation to the procedures for joinder in IPRs (and therefore deference would be most appropriate), it found that was different from interpreting the statute itself. The panel found that there was no deference indicated for statutory interpretation, just filling in the interstices of the statute. Finally, the Federal Circuit found that there were other ways to alleviate the potential unfairness to parties (including patent local rules, which normally would call for early disclosure of asserted claims) that would cause less disruption to the statutory scheme. Thus, it rejected the Proppant decision.

In rejecting same-party joinder, or joinder that would change the scope of an IPR, the Federal Circuit brought the process into harmony with joinder rules in Federal litigation. And while Facebook was not accorded the quick, less expensive justice that IPRs are intended to provide, it is unlikely that its situation will recur. Had the Federal Circuit found otherwise, it might have created a back door that would allow procrastinating defendants more time to determine whether they wanted to challenge all of the claims asserted in litigation.

Facebook, Inc. v. Windy City Innovations, LLC (Fed. Cir. 2020)
Panel: Chief Judge Prost and Circuit Judges Plager and O'Malley
Opinion by Chief Judge Prost; additional views by Chief Judge Prost and Circuit Judges Plager and O'Malley

[i] See 315 U.S.C. § 315(b).

[ii] The IPR institution decisions were made prior to the Supreme Court’s resolution of SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018).

[iii] As discussed below, Facebook also argued that the Federal Circuit should defer under Chevron to the USPTO’s interpretation of the statute, which would only be appropriate if the statute were ambiguous. See Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

[iv] SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348, 1355 (2018).

[v] The PTAB had construed the claims according to the broadest reasonable interpretation, the standard that was in place at that time.
Conference & CLE Calendar

March 22, 2020

March 26, 2020 – "China and the Changing Global Patent System" (LexisNexis IP) – 1:00 pm (ET)

April 27-28, 2020 – Paragraph IV Disputes Master Symposium (American Conference Institute) – New York, NY POSTPONED

May 20-21, 2020 – Advanced Summit on Life Sciences Patents (American Conference Institute) – New York, NY POSTPONED
Webinar on China and the Changing Global Patent System

March 22, 2020

LexisNexis IP will be offering a webinar on "China and the Changing Global Patent System" on March 26, 2020 at 1:00 pm (ET). Gene Quinn of IPWatchdog.com; Hon. Randall Rader, Chief Judge (ret.) of the United States Court of Appeals for the Federal Circuit; and Robert Sterne of Sterne Kessler will discuss whether Eastern preferences for out of court solutions and negotiations will lead to mediation and arbitration becoming increasingly important for the disposition of patent infringement and associated trade disputes as litigation in the U.S. declines and continues to move overseas to Germany and increasingly to China. The webinar will address the following topics:

• How the Collapse of the UPC is a damaging blow to Europe;
• Why the fall of the Unitary Patent creates opportunities in China; and
• Will China and German courts become even more important alternatives to U.S. litigation?

There is no registration fee for this webcast. However, those interested in registering for the webinar, should do so here.
Naples Roundtable Requests PTAB to Make Decisions Precedential

March 20, 2020

The Naples Roundtable, a 501(c)(3) non-profit organization whose primary mission is to explore ways to improve and strengthen the U.S. patent system, will on Monday, March 23rd file a Request with the U.S. Patent and Trademark Office, to designate Ex parte Olson (Appeal 2017-006489), and Ex parte Fautz (Appeal 2019-000106) as precedential. Both were designated "informative" on July 21, 2019. In each case, the Patent Trial and Appeal Board reversed an Examiner's decision rejecting the claims in each application as being directed to patent-ineligible subject matter under 35 U.S.C. § 101 under the Supreme Court's Mayo/Alice jurisprudence. The basis for the Board's decision reversing the Examiner in each case was the 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019) (hereinafter "Guidance").

The Olson claims were directed to a catheter navigation system involving mathematical equations used in the claimed system and methods that reduced registration errors in a 3D imaging system resulting in improved catheter placement in a patient. The Board found error in the Examiner's application of Revised Step 2A, 2nd Prong, wherein the claims recited additional limitations that applied the results of the mathematical formulae to achieve the claimed result, i.e., reduce errors in catheter placement by accounting for patient-specific non-linearities and inhomogeneities in catheter navigation, again finding similarities to how the Arrhenius equation was used in Diamond v. Diehr.

The Fautz claims were directed to magnetic resonance tomography (MRT) and methods for performing MRT using the apparatus and recited three mathematical formulae and four calculations that use those formulae. As in Olson, the Board held that the Examiner improperly applied Revised Step 2A, 2nd Prong.

And in each case, the rationale for the Board's decision avoided having to consider Revised Step 2B, regarding whether the claim recited that ineluctable "something more" recited in the Revised Guidance.

The letter is signed by Gary Griswold, Naples Roundtable President; Kevin E. Noonan, Patent Docs author and MBHB Partner: Andrew Baluch, Naples Roundtable Amicus Committee Chair; and Teresa Summers, Naples Roundtable Treasurer.
Impact of COVID-19 Pandemic on Patent Offices and Federal Courts — March 19 UPDATE

March 19, 2020

By Donald Zuhn —

Last week, 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 114 countries. In its latest situation report, the WHO indicates that as of March 19, there have been 209,839 cases in 167 countries. The Director-General also stated that "[t]his is not just a public health crisis, it is a crisis that will touch every sector – so every sector and every individual must be involved in the fight." The WHO's declaration last week – and global developments since then – raise the question of how the pandemic is affecting the patent community.

All week, we have been reporting (here, here, here, and here) 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), and Mexican Institute of Industrial Property (IMPI), and U.S. Federal courts, including, in particular, the Supreme Court and Federal Circuit. Today we present recent developments in the USPTO and Dominican Republic in response to the COVID-19 pandemic.

In a USPTO Alert e-mail distributed earlier today, the USPTO announced that it considered the effects of COVID-19 to be an "extraordinary situation" within the meaning of 37 C.F.R. § 1.183 for affected patent and trademark applicants, patentees, reexamination parties, and trademark owners. AS a result, the USPTO was waiving the requirements under 37 C.F.R. § 1.4(e)(1) and (2) for an original handwritten signature for certain correspondence with the Office of Enrollment and Discipline and certain payments by credit card. In its Alert, the Office noted that the requirements of § 1.4(e)(1) and (2) are the only USPTO requirements for original handwritten, ink signatures, and that the Office has no other requirements for original handwritten, ink signatures.

Dominican patent law firm Troncoso y Caceres notified the patent community regarding developments in the Dominican Republic. The Judicial Power of the Dominican Republic has communicated through its Council that in compliance with the state of national emergency requested by the President, court hearings throughout the country are suspended until April 13, and has provided that courts will only be in operation for document reception service with the minimum necessary personnel. The National Office of Intellectual Property (ONAPI) has suspended all legal terms granted to individuals for the registration of distinctive signs until March 31, 2020, and with the exception of patent, utility model, and industrial design applications for registration, for which face to face service remains, is otherwise accepting only online service.

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.
Mallinckrodt Files Certiorari Petition in iNO v. Praxair

March 19, 2020

By Kevin E. Noonan —

Mallinckrodt filed a certiorari petition with the Supreme Court last week, over the Federal Circuit panel decision (by Chief Judge Prost joined by Judge Dyk; Judge Newman dissented on the issue before the Court in this petition) affirming dismissal of a suit by Mallinckrodt's subsidiary, iNO Pharmaceuticals, in iNO Therapeutics LLC v. Praxair Distribution Inc. From the first sentence, the petition frames the issue as one of lower court confusion with the Supreme Court's subject matter eligibility jurisprudence:

In the years since this Court's decision in Mayo Collaborative Services LLC v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012), the lower courts have struggled to apply the judicially-created exceptions to the subject matter that Congress declared eligible for patent protection in 35 U.S.C. § 101.

In addition to painting the Federal Circuit with a brush both familiar to and consistent with the Court's view on its appellate junior, the petition makes the characterization that "[t]here is no more pressing issue in patent law than resolving the uncertainty that has surrounded the judicial exceptions to §101." To be honest, however, following these exhortations with a reiteration of the situation at the Federal Circuit, including the almost cri de coeur nature of the concurrences and dissents by Federal Circuit judges in Athena Diagnostics Inc. v. Mayo Collaborative Services LLC is likely to fall on deaf ears, having already done so when the Court denied Athena's cert petition. The petition is perhaps on firmer ground when adding a reminder of the Government's views, from the Solicitor General in Hikma Pharm. USA Inc. v. Vanda Pharma. Inc. (see "Solicitor General Recommends That Supreme Court Deny Certiorari in Hikma Pharmaceuticals v. Vanda Pharmaceuticals"), because there the SG urged the Court to revisit its subject matter eligibility jurisprudence just not in that case (specifically stating (and quoted in this petition) that "further guidance from this Court is amply warranted" and should be provided "in a case where the current confusion has a material effect on the outcome of the Section 101 analysis). This gives this petition the opportunity to affirmatively state that "[t]his is just such a case."

As a reminder, the case involved methods (and devices) for treating infants with inhaled nitric oxide gas; perhaps more accurately, the claims recited methods to identifying infants in respiratory distress who should not be administered the conventional iNO treatment, due inter alia to their having a congenital defect, left ventricular hypertrophy, which predisposed such infants to pulmonary edema. Illustrative claims of the patents-in-suit* include:

Claim 1 of U.S. Patent No. 8,795,741:

1. A method of treating patients who are candidates for inhaled nitric oxide treatment, which method reduces the risk that inhalation of nitric oxide gas will induce an increase in pulmonary capillary wedge pressure (PCWP) leading to pulmonary edema in neonatal patients with hypoxic respiratory failure, the method comprising:
    (a) identifying a plurality of term or near-term neonatal patients who have hypoxic respiratory failure and are candidates for 20 ppm inhaled nitric oxide treatment;
    (b) determining that a first patient of the plurality does not have left ventricular dysfunction;
    (c) determining that a second patient of the plurality has left ventricular dysfunction, so is at particular risk of increased PCWP leading to pulmonary edema upon treatment with inhaled nitric oxide;
    (d) administering 20 ppm inhaled nitric oxide treatment to the first patient; and
    (e) excluding the second patient from treatment with inhaled nitric oxide, based on the determination that the second patient has left ventricular dysfunction, so is at particular risk of increased PCWP leading to pulmonary edema upon treatment with inhaled nitric oxide.

Claim 1 of U.S. Patent No. 8,776,794:

1. A gas delivery device comprising:
    a gas source to provide therapy gas comprising nitric oxide;
    a valve attachable to the gas source, the valve including an inlet and an outlet in fluid communication and a valve actuator to open or close the valve to allow the gas through the valve to a control module that delivers the therapy gas comprising nitric oxide in an amount effective to treat or prevent hypoxic respiratory failure; and
    a circuit including:
    a memory to store gas data comprising one or more of gas identification, gas expiration date and gas concentration; and
    a processor and a transceiver in communication with the memory to send and receive signals to communicate the gas data to the control module that controls gas delivery to a subject and to verify one or more of the gas identification, the gas concentration and that the gas is not expired.

(where the italicized limitations are relevant to the Federal Circuit's decision).

The District Court held/found that the claims of the HF patents (vide infra) were directed to patent-ineligible subject matter, and a divided panel of the Federal Circuit affirmed; the Court refused to rehear the decision en banc.

The petition terms method-of-treatment claims as "the one island of stability" in subject matter eligibility jurisprudence, which the decision below has disrupted by "extend[ing] the judicially created exceptions to the plain text of 35 U.S.C. §101 far beyond anything envisioned by this Court," characterizing the case as an opportunity for the Supreme Court to "rein in the Federal Circuit's runaway jurisprudence" on § 101 that "threatens innovation at the forefront of medical science." The petition asserts three reasons why the Court should grant certiorari. First, the decision below "heightens confusion" because it is contradictory to the "traditional understanding" (not upset by the Court's decision in Mayo) that method-of-treatment claims are eligible for patenting. The petition illustrates this confusion by returning to statements made by most of the Federal Circuit judges in concurrences and dissents in Athena, as well as additional similar statements in Interval Licensing LLC v. AOL, Inc., 896 F.3d 1335, 1348 (Fed. Cir. 2018) by Judge Plager; Berkheimer v. HP Inc., 890 F.3d 1369, 1374 (Fed. Cir. 2018) by Judges Lourie and Newman; Smart Sys. Innovations, LLC v. Chicago Transit Auth., 873 F.3d 1364, 1377 (Fed. Cir. 2017) by Judge Linn; and Ariosa Diagnostic, Inc. v. Sequenom Inc., 788 F.3d 1371, 1381 (Fed. Cir. 2015) by Judge Linn; (where the combination of such citations may be effective to further illustrate this confusion). The petition terms this an "extraordinary" "collective and consistent cry for help from the Federal Circuit" with evident justification. The petition also cites such luminaries as former Chief Judge Paul Michel, in testimony before the Senate Subcommittee on Intellectual Property last June (see "Senate Subcommittee on Intellectual Property Holds Hearings on Proposed Revisions to 35 U.S.C. § 101"), public statements by current PTO Director Andrei Iancu and former Director David Kappos, testimony by practitioners and patent law groups (Including the American Bar Association and American Intellectual Property Lawyers Association), and legal scholars (including Mark Lemley and Christopher Holman), all asserting that the uncertainty created by inconsistent decisions by the Federal Circuit and district courts are harmful to innovation and the patent system.

The petition then turns to the potential for harm this decision poses, in disrupting the "island of stability" of patent eligibility for method-of-treatment claims, citing Natural Alternatives Int'l. Inc. v. Creative Compounds, LLC, 918 F.3d 1338 (Fed. Cir. 2019), and Endo Pharma. Inc. v. Teva Pharm. USA Inc., 919 F.3d 1347 (Fed. Cir. 2019), as well as Vanda. This case "breaches that firewall" by holding for the first time that a method-of-treatment claim is patent ineligible. The petition characterizes as the Federal Circuit "finess[ing] the point" by considering the claims to instruct inaction, which Petitioner counters by interpreting Mallinckrodt's claims as being directed to "an integrated treatment protocol" involving "selective action" (anticipating at least some of the argument Respondent can be expected to make). And the evils this decision could occasion are not limited to such selective treatment claims, the petition asserting that this principle "could reach . . . manufacturing processes in which testing and predefined criteria are used to determine whether a step previously performed on all batches can be skipped in some instances, increasing efficiency . . .," this argument taking the issue outside the realm of diagnostics and illustrating the potential scope of the problem.

The petition next makes the bald assertion that "the Federal Circuit's decision is wrong." And the basis for the statement is, first, that Congress spoke expansively in drafting Section 101 and the implicit judicial exceptions recognized by the Court are not as expansive as the Federal Circuit's decision below makes them. The petition characterizes (properly) the claims in Mayo as being "an oddity" and accordingly, readily distinguishable from Mallinckrodt's claims (most easily by noting that the Mayo claims did not require any action on the part of a physician who had practiced the claimed method to determine whether the amount of administered drug was in the therapeutic range). The Federal Circuit's mistake here was in disregarding this distinction and in failing to heed the Court's prescription that claims must be considered as a whole, citing (of course) Diamond v. Diehr, 450 U.S. 175, 188 (1981). The petition also criticizes the decision below for attempting to distinguish the Vanda decision (noting that the author of this opinion dissented in that one), the deficiency in the attempt being crafting an "arbitrary distinction" between "treating and not treating" steps neither found or required by the statute or the Court's eligibility decisions (and further noting that the scope of the Vanda claims were even broader, wherein was claimed all dosages of the drug at 12 mg/day or less, while the claims here recited a "single, specific course of action," the petition reciting unclaimed, potential alternatives that reduced the scope of preemption).

The final reason the petition asserts supporting the Court's grant is the threat to personalized medicine, which Petitioner calls "the next frontier of medical research." While compelling writing, such paeans to the coming beneficent future and the threat subject matter eligibility restrictions pose to it have become commonplace (due, at least in part, to the truth of these assertions), but frankly the Court has shown no tendency to be persuaded by them. Perhaps this is due to the expected salvo of amicus briefing and legal and popular literature to the contrary, that patenting is a tax and an impediment to innovation, and perhaps it reflects the individual Justice's views on the proper place for patents involving medicine. No matter how well written or how cogent the arguments made (here, by Seth Waxman, a preeminent Supreme Court advocate), it is hard to place much hope in any change of heart in this regard by the Court in this case.

Mylan will have an opportunity to file a responsive brief in due course, and the Court should it grant certiorari can be expected to hear argument in the Fall term (COVID-19 willing).

* The full list of claims asserted by iNO and Mallinckrodt include U.S. Patent Nos. 8,282,966; 8,293,284; 8,795,741; 8,431,163; and 8,846,112, collectively termed the "heart failure patents" or "HF patents," and U.S. Patent Nos. 8,573,209; 8,776,794; 8,776,795; 9,265,911; and 9,295,802, collectively termed the "delivery system infrared patents" or "DSIR patents."
Impact of COVID-19 Pandemic on Patent Offices and Federal Courts — March 18 UPDATE

March 18, 2020

By Donald Zuhn —

Last week, 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 114 countries. In its latest situation report, the WHO indicates that as of March 18, there have been 191,127 cases in 160 countries. The Director-General also stated that "[t]his is not just a public health crisis, it is a crisis that will touch every sector – so every sector and every individual must be involved in the fight." The WHO's declaration last week – and global developments since then – raise the question of how the pandemic is affecting the patent community.

Since Sunday, we have reported (here and here and here) on the impact of the COVID-19 pandemic on the U.S. Patent and Trademark Office (USPTO), World Intellectual Property Organization (WIPO), European Patent Office (EPO), IP Australia, Intellectual Property Office of New Zealand (IPONZ), Brazilian Patent and Trademark Office (INPI), Canadian Intellectual Property Office (CIPO), and U.S. Federal courts, including, in particular, the Supreme Court and Federal Circuit. Today we present recent developments in response to the COVID-19 pandemic in Mexico and at the Federal Circuit.

Earlier today, Mexican patent law firm Olivares notified the patent community regarding developments in its country. Olivares advised that both federal and local jurisdictional authorities have suspended their activities from March 18 to April 19, 2020, and have decreed that no procedural terms will run during that period. The suspension and interruption of procedural deadlines is being carried out by the Supreme Court of Justice, Collegiate Circuit Courts, Single-judge Circuit Courts, District Courts, Civil and Commercial Courts, and Federal Court of Administrative Affairs, including the Special Chamber for Intellectual Property Matters and the Special Chamber for Environmental and Regulatory Matters.

However, Olivares also noted that the Mexican Institute of Industrial Property (IMPI), the Federal Copyright Office (INDAUTOR), the Federal Commission on Sanitary Risks (COFEPRIS), and the Consumer's Protection Bureau (PROFECO) continue to operate in a normal manner, and have not declared any suspension of their procedural terms and deadlines.

In a notice posted on its website today, the Federal Circuit announced that all cases scheduled for argument during the April 2020 sitting will now be conducted by telephonic conference and no in-person hearings will be held. Parties in all cases will receive an updated notice in their respective cases.

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.
DOE Infringers Petition for Certiorari over PHE “Tangential Relationship” Test

March 18, 2020

By Kevin E. Noonan —

Recently, the Federal Circuit has taken up issues relating to infringement under the doctrine of equivalents (DOE) and a related doctrine, prosecution history estoppel (PHE), that limits the scope of equivalents that can be asserted under DOE. See, e.g., Pharma Tech Solutions, Inc. v. Lifescan, Inc.; Amgen Inc. v. Coherus BioSciences Inc.; Indivior Inc. v. Dr. Reddy's Laboratories, S.A.; and UCB, Inc. v. Watson Laboratories Inc. In three cases (stemming in one instance from a Federal Circuit opinion consolidated from two cases in the district court, by Eli Lilly & Co. against two ANDA defendants), the defendants found to be infringers under the DOE have filed petitions for certiorari challenging how the Federal Circuit adjudged the interplay between the DOE and PHE in affirming the infringement determinations (see Eli Lilly & Co. v. Hospira, Inc. and Ajinomoto Co. v. International Trade Commission).

It will be recalled, by way of background, that the DOE arose in the modern era in Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605 (1950), wherein the Supreme Court recognized that an "unscrupulous copyist" could practice a claimed invention without literal infringement in some circumstances, and as a consequence, the patent right could be turned into a "hollow and useless thing." But the doctrine fell into disfavor at the Federal Circuit during the 1990s and arguably provided the first inkling to the Supreme Court that the Federal Circuit's patent jurisprudence would benefit from closer oversight. In Warner-Jenkinson Co. v. Hilton Davis Chem. Co., and later in Festo v. Shoketsu Kinzoku Kogyo Kabushiki, the Supreme Court reiterated the vibrancy of the doctrine, Festo in particular setting forth the metes and bounds of the limitations PHE puts on the DOE. Specifically, the Court held that while any amendment to a claim element during prosecution raised a presumption that the applicant had relinquished all equivalents to the element, this presumption could be rebutted in three instances:

The equivalent may have been unforeseeable at the time of the application; the rationale underlying the amendment may bear no more than a tangential relation to the equivalent in question; or there may be some other reason suggesting that the patentee could not reasonably be expected to have described the insubstantial substitute in question.

The question of proper application of the "tangential relationship" test was at issue in each of the cases underlying the certiorari petitions. A brief background on the cases is set forth to provide the context for these petitions.

Eli Lilly & Co. v. Hospira

This decision arose in a consolidated appeal (Eli Lilly & Co. v. Hospira, Inc. and Eli Lilly & Co. v. Dr. Reddy's Laboratories, Ltd.) regarding infringement in ANDA litigation under the doctrine of equivalents of U.S. Patent No. 7,772,209, related to Lilly's anticancer drug Alimta® (pemetrexed disodium). The accused generic competitor drugs comprised a different salt, pemetrexed ditromethamine. During prosecution, Lilly had amended the claims to limit the pemetrexed salt species to the disodium salt itself.

The District Court held and the Federal Circuit affirmed DOE infringement, on the basis that the narrowing amendment had only a tangential relationship to the differences in these salts, the amendment being made to distinguish different antifolate species and not different salt forms thereof. Lilly did not dispute that its amendments satisfied the fundamental requirements of behavior that raises the estoppel: that "the amendment in question was both narrowing and made for a substantial reason relating to patentability." Lilly relied on the exception that the rationale for its amendments "[bore] no more than a tangential relation to the equivalent in question," citing Festo. Hospira and Dr. Reddy's Laboratories colorfully argued that "the tangential exception is not a patentee's-buyer's-remorse exception" and that the tangential relationship exception should be construed narrowly (themes that would recur in Hospira's cert petition). The Court agreed with the District Court's assessment that Lilly had narrowed the claims of the earlier, related application to overcome a rejection based on treatment with methotrexate, and that "the particular type of salt to which pemetrexed is complexed relates only tenuously to the reason for the narrowing amendment," which was to avoid prior art directed to methotrexate administration. The Court further reasoned that the exception itself "only exists because applicants over-narrow their claims during prosecution" and that "the reason for an amendment, where the tangential exception is invoked, cannot be determined without reference to the context in which it was made, including the prior art that might have given rise to the amendment in the first place." According to the panel, "[w]e do not demand perfection from patent prosecutors, and neither does the Supreme Court" (citing Festo). Lilly's burden was to show that pemetrexed ditromethamine was 'peripheral, or not directly relevant, to its amendment . . . [a]nd as [the panel] concluded . . . , Lilly [had] done so."

Ajinimoto v. ITC

Ajinomoto petitioned the International Trade Commission (ITC) under Section 337 (19 U.S.C. § 1337) for an exclusion order against CJ Cheiljedang for importing animal feed-grade L-tryptophan amino acid products produced by several different strains of Escherichia coli that infringed Ajinomoto's U.S. Patent No. 7,666,655. The claimed bacteria have been genetically engineered to increase L-aromatic amino acid production by fermentation, and in particular production of L-tryptophan. The basis for this increased production depends on an E. coli gene, yddG, encoding an aromatic amino acid transporter that causes the bacteria to excrete these amino acids into the culture medium. This is achieved in one of three ways: either by introducing (via plasmid transduction) additional copies of the gene into the bacteria (denoted as [3a] in the opinion); integrating additional copies of this gene into the bacterial chromosome ([3b]); or using a transcriptionally "stronger" promoter to express the endogenous yddG gene ([3c]). The full Commission reviewed and affirmed an ALJ's decision, of noninfringement of the imported products made by the earlier, [3a] strain, and reversed as to the ALJ's invalidity determination and noninfringement for products made using the later [3b] and [3c] strains under the doctrine of equivalents.

The Federal Circuit agreed, on the grounds that prosecution history estoppel did not bar a determination of infringement under the doctrine of equivalents based on the "tangential relationship" test. With regard to limitations introduced into the claims during prosecution regarding the second of the two later strains, the Commission had found that "the YddG protein encoded by the codon-randomized non-E. coli yddG gene of this strain [as practiced by the accused infringer] is an equivalent of SEQ ID NO:2" recited in claim 9.

CJ challenged this ruling on two grounds: that the amendments made during prosecution raised an estoppel against infringement under the doctrine of equivalents; and that the protein expressed in CJ's second strain failed to satisfy the "structure-way-result" rationale for infringement under the doctrine. Citing Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 740 (2002), the majority recognized that the second of the three exceptions to PHE, that "the rationale underlying the amendment may bear no more than a tangential relation to the equivalent in question," was dispositive to the issue before the Court. The basis for the majority's view was that during prosecution, patentees made an amendment to distinguish over prior art that narrowed the scope of the claim from alternatives to the protein having an amino acid sequence identified as SEQ ID NO: 2 that differed by "deletion, substitution, insertion, or addition of several amino acids." The amendment changed the claim language to recite instead "a protein which comprises an amino acid sequence that is encoded by a nucleotide sequence that hybridizes with the [corresponding] nucleotide sequence of SEQ ID NO:1 under stringent conditions." The standard the Federal Circuit majority applied to determine whether the "tangential relationship" test is adequate to rebut the estoppel "focuses on the patentee's objectively apparent reason for the narrowing amendment." The majority held that Ajinomoto had satisfied this standard.

Judge Dyk disagreed, on the ground that the amendments to the claims of the '655 patent had a direct relationship to the elements at issue (non-E. coli YddG protein of CJ's second later strain) and thus L-tryptophan produced by either of CJ's later two bacterial strains did not infringe under the doctrine of equivalents (a rationale relied upon by all three of the Petitioners for certiorari).

Two of the certiorari petitions relate to whether the Federal Circuit properly applied the tangential relationship test to limit the effects of PHE on Lilly's claims reciting pemetrexed disodium. Although the arguments were similar (that the Federal Circuit had erred, that this was an important issue having wide import on innovation that the Supreme Court should address, and that this case was a proper vehicle for Supreme Court correction of the Federal Circuit's error), there are some informative differences.

Hospira's petition

The question presented is:

Whether a patentee may recapture subject matter via the doctrine of equivalents under the "tangential relation" exception by arguing that it surrendered more than it needed to during prosecution to avoid a prior art rejection, even if a claim could reasonably have been drafted that would literally have encompassed the alleged equivalent.

Hospira minces no words regarding its position, asserting that "[t]he Federal Circuit's tangentiality jurisprudence has gone seriously awry" because "the Federal Circuit now holds that even when the patentee indisputably could 'reasonably be expected to have drafted a claim that would have literally encompassed the alleged equivalent' . . . the doctrine of prosecution history estoppel applies so long as the patentee can show that its purpose for an amendment is sufficiently disconnected from its theory of equivalence." (The District Court based its opinion finding infringement under the DOE on the grounds that "the rationale underlying the amendment may bear no more than a tangential relation to the equivalent in question.") This way of applying the Supreme Court's Festo jurisprudence "unfairly skews the patent playing field in favor of patentees, by artificially expanding the scope of patent monopolies and handcuffing the ability of competitors to design their products in a manner that avoids infringement," in Hospira's view.

In this case, according to Hospira, Lilly's claims as filed encompassed all antifolates. Lilly amended the claim to pemetrexed disodium, which were the claims at issue in the underlying ANDA litigation. Hospira admits that its generic antifolate, pemetrexed ditromethamine, would have fallen within the scope of claims as filed directed to antifolates but not claims to pemetrexed disodium as granted. The Federal Circuit's error was permitting Lilly to expand the scope of its claims reciting pemetrexed disodium to encompass its antifolate. In Hospira's view "[t]his case should have been easy" because Lilly could have narrowed its claims to have literally encompassed Hospira's alleged equivalent (e.g., by amending to recite pemetrexed and its salts). Hospira argues that the Federal Circuit's affirmance of the District Court's DOE infringement decision is contrary to the Supreme Court's rubric in Festo that equivalents should be found under circumstances where a patentee "lacked the words to describe the subject matter in question." Rather, according to Hospira, the Federal Circuit used "Lilly's subjective goal in amending its claim . . . to distinguish pemetrexed compounds from other antifolates, not to distinguish one pemetrexed compound from another."

Hospira contends that the general importance of the Federal Circuit's decision, and the reason for the Court to grant certiorari, is the harm it does to the public notice function of claims (a concern the Supreme Court has recognized in its DOE jurisprudence; see, e.g., Hilton-Davis) ("There can be no denying that the doctrine of equivalents, when applied broadly, conflicts with the definitional and public-notice functions of the statutory claiming requirement," Warner-Jenkinson v. Hilton Davis Chem. Co., 520 U.S. at 29 (1997)), nullifying the claim-limiting effects of decisions applicants make during prosecution in order, inter alia, to overcome rejection over prior art. The Federal Circuit's decision permits applicants to play "bait-and-switch games" during prosecution, "making the strategic decision to narrow a claim during prosecution, then expanding the claim via the doctrine of equivalents by making post-hoc arguments about the reason for that narrowing" (emphasis in the petition), in Hospira's view.

According to the petition, the question before the Court is "when the record makes clear that the patentee could reasonably have been expected to have drafted a claim that would have literally encompassed the alleged equivalent, can the patentee nonetheless take refuge in the 'tangential relation' exception?" (The answer in Hospira's view is "no.") The Federal Circuit erred in looking at the purpose of the amendment rather than its effect, that purpose being to exclude antifolates other than pemetrexed from the scope of the claim. Lilly's amendment not only excluded other antifolates but excluded all antifolates other than pemetrexed disodium and thus Lilly should be estopped from asserting its claims against Hospira's pemetrexed ditromethamine. This is the Federal Circuit's legal error in applying PHE under the Court's Festo precedent. And the basis for this error was that the Federal Circuit put the patentee's interest over the public interest that PHE is intended to protect.

Finally, the petition contends that the Court should grant certiorari because "[the] question presented recurs frequently and is important to the sound administration of American patent law." The petition asserts (without citation) that "[i]t It is an unfortunate but routine tactic for patentees to narrow claims during prosecution in the Patent Office and then, after the patent is allowed, attempt to re-broaden them in the courts via the doctrine of equivalents" in support of its argument that the Court should grant its petition. What the petition does support with citations (nine of them) is that disputes like the ones before the Court here arise with sufficient frequency to support the Court's review (one of which is Ajinimoto and Judge Dyk's dissent consistent with Hospira's position here).

The petition completes its argument by identifying "internal inconsistencies" in Federal Circuit decisions involving the tangential relationship test (specifically citing Norian Corp. v. Stryker Corp., 432 F.3d 1356 (Fed. Cir. 2005)), as well as Felix v. American Honda Motor Co., 562 F.3d 1167 (Fed. Cir. 2009); Integrated Tech. Corp. v. Rudolph Techs., Inc., 734 F.3d 1352, 1358 (Fed. Cir. 2013); and Chimie v. PPG Indus. Inc., 402 F.3d 1371, 1383 (Fed. Cir. 2005).

Finally, Hospira argues that this case is the "ideal vehicle" because "the facts are remarkably stark" and the issue clear-cut.

Dr. Reddy's petition

Not surprisingly, Dr. Reddy's certiorari petition tracks Hospira's closely. The question presented by Dr. Reddy's is:

[W]hether, under Festo's "tangential" exception to prosecution history estoppel, patent owners may recapture subject matter they could have claimed in prosecution but did not, by arguing that they surrendered more than they needed to during prosecution to address a rejection by the Patent Office.

Slightly less aggressively than Hospira, Dr. Reddy's petition asserts that the Federal Circuit has "puzzled" over the proper application of the Festo tangential relationship test, and its cases have given two answers that are irreconcilable. This case is an "ideal vehicle" (because, truthfully, there are few alternative ways to make this important point to the Court) because the outcome below depended on which of these two rationales was used.

Like Hospira, Dr. Reddy's makes the case that Lilly made a strategic decision to narrow its claims to pemetrexed disodium (the active ingredient of its Alimta® drug product) rather than to alternative salts of the pemetrexed antifolate, illustrating these relationships with a helpful graphic:

Like Hospira, Dr. Reddy's declares that this should have been an "easy case" under Festo, because "Respondent could 'reasonably be expected to have drafted a claim that would have literally encompassed the alleged equivalent.'" Instead, Lilly in this case limited the claims excessively, to literally encompass only its active pharmaceutical ingredient, or API. This circumstance has arisen in other cases decided (reaching the opposite outcome) by the Federal Circuit, wherein the Court held that "a patent owner cannot invoke the tangential exception by arguing that, in hindsight, it surrendered more than it needed to address the Patent Office's invalidity rejection." The other line of precedent, which the Federal Circuit followed in this case, has held the opposite: that "[a] patent owner can invoke the tangential exception by arguing that, in hindsight, it surrendered more than it needed to address the Patent Office's invalidity rejection" (emphasis in petition). Dr. Reddy's petition calls this a "prosecution remorse exception" (language also present in its arguments below). And, Dr. Reddy's argues, the Federal Circuit's decision has the prejudicial effect on petitioners that they could not rely on the claim scope limiting amendments when developing their own drug with an antifolate that fell outside the literal scope of Lilly's claims.

The petition cites copious Supreme Court precedent on the importance of PHE to cabin the scope of DOE and provide a reliance interest in competitors regarding non-infringement of their products based on PHE (including Schriber-Schroth Co. v. Cleveland Trust Co., 311 U.S. 211, 220-21 (1940); Exhibit Supply Co. v. Ace Patents Corp., 315 U.S. 126, 136-37 (1942); Smith v. Magic City Kennel Club, 282 U.S. 784, 790 (1931); Weber Elec. Co. v. E.H. Freeman Elec. Co., 256 U.S. 668, 677-78 (1921); Morgan Envelope Co. v. Albany Perforated Wrapping Paper Co., 152 U.S. 425, 429 (1894); and Shepard v. Carrigan, 116 U.S. 593, 598 (1886)). As in Hospira's petition, Dr. Reddy also warns that failure to correct the Federal Circuit could lead to a situation where "the inventor might avoid the [Patent Office's] gatekeeping role and seek to recapture in an infringement action the very subject matter surrendered as a condition of receiving the patent," citing Festo.

Dr. Reddy's petition asserts the "internal division" at the Federal Circuit as a reason why the Court should grant certiorari (an argument that may have persuasiveness due to being the Federal Circuit's equivalent to a "circuit split" amongst the remainder of the Federal Courts of Appeal). The petition cites Federal Circuit cases illustrating the differences in various Federal Circuit judges' attitudes regarding the tangential relationship test starting with Festo and including Cross Med. Prods., Inc. v. Medtronic Sofamor Danek, Inc., 480 F.3d 1335, 1346-48 (Fed. Cir. 2007); Regents of Univ. of Cal. v. Dakocytomation Cal., Inc., 517 F.3d 1364, 1380-82 (Fed. Cir. 2008); Honeywell Int'l, Inc. v. Hamilton Sundstrand Corp., 523 F.3d (1304, 1321-22 (Fed. Cir. 2008); and Judge Dyk's dissent in the recent Ajinomoto case).

The petition synthesizes these disparate decisions into two "irreconcilable" approaches:

• Under one approach, the court asks why the patentee made the specific narrowing amendment it chose to make. See, e.g, Felix v. Am. Honda Motor Co., 562 F.3d 1167, 1184 (Fed. Cir. 2009); Amgen Inc. v. Hoechst Marion Roussel, Inc., 457 F.3d 1293, 1315 (Fed. Cir. 2006).

Under this approach, according to the petition, "the 'tangential exception' applies when an amendment adds multiple limitations to a claim at the same time, and not all relate to an examiner's rejection. The limitations unrelated to the examiner's rejection may fit the tangential exception," the petition noting that this was the approach followed by Judge Dyk's dissent in Ajinimoto. Relevant to the question presented here, the petition contends that "[w]here, as here, the patentee focused on a particular claim element, and responded to an examiner's rejection by narrowing in a way that excludes a defendant's allegedly equivalent product, the rationale for the narrowing amendment cannot be 'tangential' to the alleged equivalent," citing Honeywell Int'l, Inc. v. Hamilton Sundstrand Corp.

• Under the other approach, "[s]ome panels accept precisely the type of buyer's-remorse arguments that other panels reject and base the tangential-exception inquiry on a post hoc assessment of what the patent applicant needed to surrender to avoid an examiner's rejection. Those panels begin by phrasing the "reason" for the disputed narrowing amendment as surrendering only what was necessary to avoid a specific rejection—often to distinguish a particular piece of invalidating prior art," citing Insituform Techs., Inc. v. CAT Contracting, Inc., 385 F.3d 1360, 1370 (Fed. Cir. 2004) and Primos, Inc. v. Hunter's Specialties, Inc., 451 F.3d 841, 849 (Fed. Cir. 2006).

In such cases, the "unnecessarily surrendered claim scope is 'tangential' to that reason—without regard to the applicant's choice of how far to go in avoiding the examiner's rejection," citing Ajinimoto, Regents, and Primos. This was the approach taken in the case at bar.

These two approaches are "fundamentally irreconcilable" according to the petition. The petition is honest enough to admit that one approach (which it prefers) tends to result in PHE precluding a finding of infringement under DOE, while the approach taken by the District Court and Federal Circuit here tends to permit assertion of equivalents without prelusion by PHE. Yet the petition also asserts that "[b]oth approaches cannot be right, and the approach applied here is plainly wrong."

The petition also argues that the second approach (and necessarily the decision below) cannot be reconciled with Festo and other Supreme Court precedent. And perhaps at least equally importantly:

Under the approach the panel applied here, the public cannot objectively rely on narrowing amendments in prosecution to learn what a patent holder does not own. Patent owners will be able to argue—as Lilly did here—that the "reason" for any narrowing amendment was to avoid a particular rejection, and that any surrender of scope that was not necessary to that reason is "tangential." This invites precisely the sort of circumvention of the examination process that prosecution history estoppel is designed to prevent, where "the inventor might avoid the [Patent Office's] gatekeeping role and seek to recapture in an infringement action the very subject matter surrendered as a condition of receiving the patent," citing Festo.

The petition concludes that "[o]nly this Court can explain what it meant when it announced the "tangential" exception in Festo (noting elsewhere in the petition that the tangential relationship standard arose solely from the Court without any explication in its Festo decision) and in the face of 18 years of Federal Circuit decisions that have not resolved the issue. The petition emphasizes the importance of resolving the scope of the tangential relationship test by invoking the effects of uncertainty on "the ability of productive companies to determine their potential liability ex ante, before making substantial investments in competing products," including as examples that "[d]eveloping and securing FDA approval of a generic drug product, for example, typically costs millions of dollars"; "[a]nalogous costs for follow-on biologic manufacturers are hundreds of millions of dollars or more"; and "[a] new semiconductor plant costs billions of dollars." Under these circumstances, "[t]oo much uncertainty in the scope of patents chills beneficial investments in legitimate products, as recognized by the Court in Festo and Merrill v. Yeomans, 94 U.S. 568 (1876). And as has been noted in Hospira's petition, this case is "an ideal vehicle" for the Court to clarify the scope and application of the tangential relationship test because "the applicability of the tangential exception decides the entire case" and "this case cleanly exemplifies a recurring fact pattern in patent litigation: a patent applicant surrenders more than necessary to avoid a rejection in prosecution, then tries to recapture some of that claim scope in litigation."

CJ Cheiljedang's petition

The question presented is:

Whether, to avoid prosecution history estoppel under Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., "the rationale underlying the amendment" must be the rationale the patentee provided to the public at the time of the amendment.

While the facts in this case differ substantially from the Hospira and Dr. Reddy's petitions, the issue as set forth in the petition are strikingly similar: "the public's ability to rely on a patentee's representations to the Patent Office during prosecution (called the 'prosecution history') to determine the metes and bounds of a claim." But here the petitioner asserts that the Federal Circuit adopted a new rule, wherein the tangential relationship exception to PHE applies "even where the patentee gave no contemporaneous explanation in the prosecution history for why it chose the particular amended claim language or how the amendment overcame the rejection." This permits a patentee to expand the equivalent scope of amended claims "improperly" on a "post-hoc rationale" for any narrowing amendment, in light of the accused product, to enable the patentee to recapture scope voluntarily surrendered during prosecution. The result "creates perverse incentives at odds with the Patent Act's and this Court's focus on public notice" because it does not encourage transparency in patent prosecution but rather encourage an applicant to withhold any explanation for patent prosecution decisions in order to "craft with hindsight a rationale designed to be "tangential" to the alleged equivalent." The results, according to petitioner, will be "devastating" because "[t]he public will be denied notice of the actual scope of the surrender or what is subject to subsequent recapture as an "equivalent" until the end of infringement litigation, with the prospect of millions of dollars in damages and potential injunctions," analogous to indefiniteness in claims considered by the Court in Nautilus, Inc. v. Biosig Instruments, Inc., 572 U.S. 898 (2014).

Petitioner here analyzes the Federal Circuit's cases involving the tangential relationship test for PHE to have "specifically looked to the patentee's explicit explanation in the prosecution history of how its amendment overcame the rejection," citing Insituform Techs., Inc. v. CAT Contracting, Inc., 385 F.3d 1360 (2004); Regents of Univ. of Cal. v. Dakocytomation Cal., Inc., 517 F.3d 1364 (2008); and Intervet Inc. v. Merial Ltd., 617 F.3d 1282 (2010). In petitioner's view, the Federal Circuit "made a dramatic departure from [its] historical precedent" in its decision in Hospira and in this case. These decisions "significantly frustrate the public notice function of the prosecution history" and "allow a patentee to recapture claim scope it voluntarily surrendered during prosecution in order to secure allowance of its patent, despite the patentee's having provided no notice to the public that it intended to surrender any less than the entire territory between the original and amended claims." This creates uncertainty that Petitioner asserts will "stifle the progress of science and the useful arts" because "[p]otential innovators, who would otherwise be able to design around a patent, may instead decline to do so, unwilling to run the risk of being found to infringe under a doctrine of equivalents theory that recaptures what a patentee appears on the face of the patent and the prosecution history to 'have surrendered,'" particularly in the pharmaceutical industry due to high development costs, according to the petition.

The petition also emphasizes the important role PHE plays in the public notice function of patents, by striking a balance that "seeks to guard against [both] unreasonable advantages to the patentee and disadvantages to others arising from uncertainty as to their rights" citing General Elec. Co. v. Wabash Appliance Corp., 304 U.S. 364, 369 (1938). The apprehension PHE addresses is of early provenance in U.S. patent law, with the brief citing Evans v. Eaton, 20 U.S. 356, 434 (1822), for the proposition that a patentee cannot be permitted to "practi[ce] upon the credulity or the fears of other persons, by pretending that his invention is more than what it really is." The Court's jurisprudence regarding DOE is limited to particular circumstances where language is insufficient to "capture the essence" of the invention, according to petitioners. And because "the Court has always recognized that . . . the doctrine of equivalents 'conflicts with the definitional and public-notice functions of the statutory claiming requirement,' Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 29 (1997), [the DOE] must be applied with restraint, so as not to stifle innovation." The petition applies these considerations to its argument for Supreme Court review, arguing that the Federal Circuit's decisions, in its case and in the Hospira case, has upset this balance by permitting patentees to supply post-hoc rationales in support of equivalents arguments, harming the public notice function of patents as cabined by PHE.

As in the other two certiorari petitions, this one maintains that the Federal Circuit's decision is an "ideal vehicle" for Supreme Court review, because the prosecution history is devoid of any argument or explanation as to "how its narrowing amendment overcame the prior art rejection, why it chose the amended claim language that it did, or whether it intended to surrender any less than the full territory between its original and amended claims," as Judge Dyk noted in his dissent (emphasis in petition). There is thus no need for the Court to weigh evidence or argument — the issue is whether the Federal Circuit should have considered "post-hoc" rationales for the amendments at all, or found that the patentee could not bear its proper burden of overcoming the presumption that the narrowing amendment precluded a finding of infringement under the DOE.

Patentees in each case will have the opportunity to respond (if they so choose) and the Court will consider the petitions in due course over the next month or so, with argument in the Fall Term should the Court grant certiorari in any or all of them.

recent posts

about