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

    By Kevin E. Noonan —

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

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

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

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

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

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

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

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

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

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

  • Athena Diagnostics v. Mayo Collaborative Services — The Dissents

    By Donald Zuhn —

    Federal Circuit SealOn July 3, the Federal Circuit issued a per curiam Order in Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC, denying a petition for rehearing en banc filed by Plaintiffs-Appellants Athena Diagnostics, Inc., Oxford University Innovation Ltd., and the Max-Planck-Gesellschaft zur Forderung der Wissenschaften E.V.  The Court also denied Plaintiffs-Appellants a panel rehearing.

    The four page per curiam Order was accompanied by eight opinions, four concurring in the denial of the petition and four dissenting in the denial of the petition, adding an additional 82 pages to the Order.  The four concurring opinions were authored by Circuit Judges Lourie, Hughes, Dyk, and Chen, with Chief Judge Prost and Circuit Judges Reyna, Taranto, and Hughes joining in one of the concurrences and Circuit Judge Chen joining in one concurrence and several parts of another.  The four dissenting opinions were authored by Circuit Judges Moore, Newman, Stoll, and O'Malley, with Circuit Judges O'Malley and Stoll joining in one of the dissents and Circuit Judge Wallach joining in three of the dissents.  Thus, a total of seven members of the Court (Chief Judge Prost and Circuit Judges Lourie, Dyk, Reyna, Taranto, Chen, and Hughes) authored or joined opinions concurring in the denial, and a total of five members (Circuit Judges Newman, Moore, O'Malley, Wallach, and Stoll) authored or joined opinions dissenting in the denial.

    Last week, we reviewed the procedural history of the case and provided a brief summary of the eight concurring and dissenting opinions (see "Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC (Fed. Cir. 2019)").  On Sunday, we reviewed the four opinions concurring in the Order's denial of the petition for rehearing en banc (see "Athena Diagnostics v. Mayo Collaborative Services — The Concurrences").  In this post, we focus more closely on the four opinions dissenting in the Order's denial of the petition for rehearing en banc.  As we noted last week, several of the dissenting authors disagreed with the concurring authors that Mayo compelled a finding of patent ineligibility in this case.

    In the first dissent (which at just over twenty-two pages is the longest of the four dissents), Judge Moore, joined by Judges O'Malley, Wallach, and Stoll, disagrees with the majority of her colleagues that "believe that our hands are tied and that Mayo requires this outcome," indicating instead that "[t]he claims in this case should be held eligible, and they are distinguishable from Mayo."  Judge Moore contends that the Court "should reconsider this case and clarify our precedent."

    Judge Moore begins her opinion by noting that:

    This is not a case in which the judges of this court disagree over whether diagnostic claims, like those at issue in Athena, should be eligible for patent protection.  They should.  None of my colleagues defend the conclusion that claims to diagnostic kits and diagnostic techniques, like those at issue, should be ineligible.  The only difference among us is whether the Supreme Court's Mayo decision requires this outcome.  The majority of my colleagues believe that our hands are tied and that Mayo requires this outcome.  I believe Mayo does not.

    Citing Cleveland Clinic Found. v. True Health Diagnostics LLC (Fed. Cir. 2019) ("Cleveland Clinic II"); Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC (Fed. Cir. 2019); Roche Molecular Sys., Inc. v. CEPHEID (Fed. Cir. 2018); Cleveland Clinic Found. v. True Health Diagnostics LLC (Fed. Cir. 2017) ("Cleveland Clinic I"); Genetic Techs. Ltd. v. Merial L.L.C. (Fed. Cir. 2016); Ariosa Diagnostics, Inc. v. Sequenom, Inc. (Fed. Cir. 2015); In re BRCA1- and BRCA2-Based Hereditary Cancer Test Patent Litig. (Fed. Cir. 2014); and PerkinElmer, Inc. v. Intema Ltd. (Fed. Cir. 2012), Judge Moore notes that "[s]ince Mayo, we have held every single diagnostic claim in every case before us ineligible," concluding that "[w]e have turned Mayo into a per se rule that diagnostic kits and techniques are ineligible."  According to Judge Moore, the per se rule is a result of the Federal Circuit's "fervor for clarity and consistency."  However, she does not fault her colleagues, "who under protest have concluded that they have no choice but to hold the claims in Athena ineligible because of Mayo," explaining that:

    There is surely some broad language in Mayo which could lead to this conclusion.  I, however, think we have extended Mayo too far.  Reading the entirety of Mayo and the subsequent Myriad decision, the Supreme Court did not intend Mayo to be the "sweeping" decision my colleagues have concluded it is.

    Nevertheless, her opinion calls of the members of the Court "to rethink our interpretation of Mayo."

    In the second part of her opinion, Judge Moore asserts that "diagnostic techniques and kits when narrowly claimed are precisely the type of innovation the patent system exists to promote," pointing out that "[t]he importance of diagnostics and their cost-reducing effects on patient treatment cannot reasonably be questioned."  She contends that "when there are specific advances, discoveries, or inventions in the diagnostics industry, they must be eligible for patent protection," explaining that:

    Unless one opposes the notion of patent protection entirely, it cannot be reasonably disputed that claims to diagnostic kits and techniques, like pharmaceuticals, which require enormous initial investments in terms of both time and money, are the reason we suffer the promise of a monopoly.  As many have explained, without patent protection, there will be little incentive for companies to invest the monumental amount of time and money necessary to develop diagnostic kits, tools and techniques.

    Judge Moore concludes the second part of her opinion by stating that:

    The math is simple, you need not be an economist to get it:  Without patent protection to recoup the enormous R&D cost, investment in diagnostic medicine will decline.  To put it simply, this is bad.  It is bad for the health of the American people and the health of the American economy.  And it is avoidable depending on our interpretation of the Supreme Court’s holding in Mayo.

    Turning to Athena's claims in the third part of her opinion, Judge Moore declares that "[i]t is my view that § 101 and Mayo, when read together and in their entireties, compel the holding that the claims in Athena are eligible."  Looking at Mayo, Judge Moore explains that:

    The breadth and generality of the Mayo claims led to their demise, as they recited nothing more than the natural law.  We have since ignored these considerations, treating every claim that includes a law of nature as directed to that law, even if the claim as a whole recites a specific way of applying that law of nature to a new and useful end.

    And she concludes that "[t]he Athena claims differ significantly from the Mayo claims."  In particular, she finds that "[t]he [Athena] claims are not directed to a natural law or phenomenon."  More specifically, Judge Moore explains that:

    Athena discovered that 20% of people suffering from MG [Myasthenia gravis] generate autoantibodies that bind to a MuSK protein.  Its claims recite concrete steps to detect the presence of autoantibodies to MuSK to diagnose MG.  These antibody/MuSK complexes had never been used by prior art MG diagnostic tests.  In contrast, the claims in Mayo recited a generic "determining" step, with no laboratory test at all specified by the claims, and the specification itself stated that the methods were "well-understood, routine, and conventional activity already engaged in by the scientific community."

    Judge Moore concludes her opinion by stating that she did "not believe that the Supreme Court intended Mayo to be the sweeping decision it has become," adding that:

    I do not understand Mayo to render ineligible a claim which covers a specific, concrete application of a natural law simply because such a claim is diagnostic as opposed to therapeutic.  Both should be eligible.  The last word on this from the Supreme Court came in Myriad where the Court made clear "patents on new applications of knowledge about BRCA1 and BRCA2 genes" could be eligible.  569 U.S. at 596.  To the extent that this Court has read Mayo so broadly that it precludes exactly that sort of patent, we have erred.  Doing so leaves Mayo at odds with the patent statutes and the later Myriad decision.

    As for diagnostic method claims, Judge Moore finds that their eligibility "is no longer uncertain," reiterating that "[s]ince Mayo, every diagnostic claim to come before this court has been held ineligible," and suggesting that there was no need for patentees "to waste resources with additional en banc requests," as "[y]our only hope lies with the Supreme Court or Congress."

    In the second dissent (which a numbers just over thirteen pages), Judge Newman, who dissented in the panel decision, asserts in her opinion dissenting in the denial of the petition for rehearing en banc (which was joined by Judge Wallach) that:

    The majority's position is a flawed interpretation of the Court's decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012).  The Court did not hold that methods of diagnosis are subject to unique patent-eligibility rules.  We have mistakenly enlarged the Court's holding, in substance and in application.

    Judge Newman begins her opinion by noting that with respect to Athena's claims, "[t]he reaction between the specified antibodies and the MuSK protein was not previously known, and the specified claim steps had not previously been performed, separately or in combination."  She then reminds that in Diamond v. Diehr, 450 U.S. 175, 188 (1981), the Supreme Court stressed that "[i]t is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis."  Judge Newman states that "[t]his established rule does not evaporate when the subject matter is a diagnostic method," adding that "[t]he Mayo Court did not effect such a change."

    According to Judge Newman, the Mayo Court also did not create a § 101 distinction between diagnostic methods and therapeutic methods.  Nevertheless, she points to the Federal Circuit's "inconsistent rulings between diagnosis and treatment of disease," citing In re BRCA1- & BRCA2-Based Hereditary Cancer Test Patent Litigation (Fed. Cir. 2014); Ariosa Diagnostics, Inc. v. Sequenom, Inc. (Fed. Cir. 2015); Genetic Technologies Ltd. v. Merial L.L.C. (Fed. Cir. 2016); Cleveland Clinic Foundation v. True Health Diagnostics LLC (Fed. Cir. 2017); Roche Molecular Systems, Inc. v. CEPHEID (Fed. Cir. 2018); and Cleveland Clinic Foundation v. True Health Diagnostics LLC (Fed. Cir. 2019), as examples of cases in which "the claims were held ineligible under section 101, whether or not the method of diagnosis was new and unobvious, and independent of patentability under sections 102, 103, and 112"; and citing Rapid Litigation Management Ltd. v. CellzDirect, Inc. (Fed. Cir. 2016); Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals Int'l Ltd. (Fed. Cir. 2018); Natural Alternatives Int'l, Inc. v. Creative Compounds, LLC (Fed. Cir. 2019); and Endo Pharmaceuticals Inc. v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2019), as examples of cases in which method of treatment claims were held to be patent eligible.

    As for the instant case, Judge Newman concludes by stating that:

    This case presents an opportunity for judicial review and judicial remedy.  Although diagnostic methods are not the only area in which section 101 jurisprudence warrants attention, Federal Circuit precedent is ripe for reconsideration specific to diagnostic methods, to correct our application of the Mayo decision and to restore the necessary economic incentive.

    In the third dissent (which at three pages is the shortest of the four dissents), Judge Stoll, joined by Judge Wallach, contends that the Federal Circuit had, "[i]n a series of cases since the Supreme Court's decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012), . . . established a bright-line rule of ineligibility for all diagnostic claims."  While conceding that "[t]his rule as applied to the facts of this case dictated that the majority panel find the claimed invention ineligible," she asserts that "this court's bright-line rule is based on an over-reaching and flawed test for eligibility, a test that undermines the constitutional rationale for having a patent system—promoting the progress of science and useful arts," and therefore she concluds that the Federal Circuit "should take this opportunity to correct its erroneous rule."

    Despite indicating that she "stand[s] by the panel decision in this case," Judge Stoll explains that her dissent is warranted "because the question of the eligibility of diagnostic inventions is exactly the type of exceptionally important issue that warrants full consideration by this court."  She also states that:

    En banc rehearing would not only permit us to have a more extensive view of the various considerations underlying Mayo, but it would also allow us to create judicial doctrine geared toward the practical application of Mayo's principles.  At the very least, en banc review would help the court develop an articulable standard for its § 101 jurisprudence moving forward.

    Judge Stoll concludes by declaring that "[i]n my view, by consistently bypassing en banc review of a critical issue that goes to the heart of this court's jurisdiction, we are abdicating our responsibility."

    In the fourth and final dissent (which numbers five pages), Judge O'Malley agrees with her dissenting colleagues that the Federal Circuit's precedent "applies the Supreme Court's holding in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012) too broadly."  However, she also opines that:

    [C]onfusion and disagreements over patent eligibility have been engendered by the fact that the Supreme Court has ignored Congress's direction to the courts to apply 35 U.S.C. sections 101, et seq ("Patent Act") as written.  Specifically, the Supreme Court has instructed federal courts to read into Section 101 an "inventive concept" requirement—a baffling standard that Congress removed when it amended the Patent Act in 1952.  I encourage Congress to amend the Patent Act once more to clarify that it meant what it said in 1952.

    Judge O'Malley begins her opinion by providing some "historical perspective" on "the 'invention requirement'—itself 'invented' by the Supreme Court rather than Congress or the Constitution," noting that "[i]f the invention requirement and its criticisms sound familiar, that is because they are."  And Judge O'Malley suggests that even though, in 1952, "Congress attempted to address these criticisms by amending the Patent Act to replace the ill-defined and judicially-created invention requirement with the more workable anticipation and obviousness tests codified in Sections 102 and 103," "the search for an inventive concept—now enshrined in the § 101 inquiry via Mayo—calls back to the invention requirement that Congress quite deliberately abrogated through the Patent Act of 1952."

    Judge O'Malley wonders whether the outcome in Athena would be different "[h]ad the Supreme Court not disregarded Congress's wishes for a second time."  She concludes by stating that:

    Because the Supreme Court judicially revived the invention requirement and continues to apply it despite express abrogation, I dissent to encourage Congress to clarify that there should be no such requirement read into § 101; to clarify that concepts of novelty and "invention" are to be assessed via application of other provisions of the Patent Act Congress designed for that purpose.

  • UCB, Inc. v. Watson Laboratories Inc. (Fed. Cir. 2019)

    By Kevin E. Noonan —

    Federal Circuit SealThe doctrine of equivalents, a Supreme Court-created patent doctrine of vintage similar to inequitable conduct, arose in Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605 (1950) (an uncharacteristically pro-patent decision by the Court, the doctrine 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"):

    Such a limitation would leave room for — indeed encourage — the unscrupulous copyist to make unimportant and insubstantial changes and substitutions in the patent which, though adding nothing, would be enough to take the copied matter outside the claim, and hence outside the reach of law.  One who seeks to pirate an invention, like one who seeks to pirate a copyrighted book or play, may be expected to introduce minor variations to conceal and shelter the piracy.  Outright and forthright duplication is a dull and very rare type of infringement.  To prohibit no other would place the inventor at the mercy of verbalism and would be subordinating substance to form.  It would deprive him of the benefit of his invention and would foster concealment rather than disclosure of inventions, which is one of the primary purposes of the patent system.

    The doctrine fell into disfavor at the Federal Circuit during the 1990s and arguably provided the first inkling to the Court that the Federal Circuit's patent jurisprudence would benefit from the Court's closer oversight.  In Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 36 (1997), and the seemingly interminable Festo v. Shoketsu Kinzoku Kogyo Kabushiki, the Supreme Court reiterated the vibrancy of the doctrine; nevertheless its successful assertion has continued to decline.  Thus, the Federal Circuit's decision a few weeks ago in UCB, Inc. v. Watson Laboratories Inc., affirming a District Court's determination in ANDA litigation that the generic challenger's product infringed under the doctrine was a welcome surprise.

    According to the Federal Circuit opinion, the case involved Neupro, a transdermal patch for delivering rotigotine (the (S) enantiomer of (-)-5,6,7,8-tetrahydro-6-[propyl-[2-(2-thienyl)ethyl]amino]-1-naphthalenol) for treating Parkinson's disease, for which U.S. Patent Nos. 6,884,434 and 8,232,414 were listed in the Orange Book.  Individual Plaintiff's interests are set forth in the opinion as follows:  UCB Mfg. Ireland Ltd. and LTS Lohmann Therpie-Systeme AG are co-assignees of '434 patent, and UCB Pharma GmbH is the assignee of the'414 patent; UCB Inc. owns the NDA for Neupro.  The claims at issue in ANDA litigation against Watson Labs Inc. and Actavis Labs UT, Inc. are set forth in the opinion:

    The '434 patent:

    1.  A transdermal therapeutic system comprising a self-adhesive matrix layer containing the free base (–)-5,6,7,8-tetrahydro-6-[propyl-[2-(2-thienyl)ethyl]amino]-1-naphthalenol [rotigotine] in an amount effective for the treatment of the symptoms of Parkinson's syndrome, wherein the matrix is based on [] an acrylate-based or silicone-based polymer adhesive system having a solubility of ≧5% (w/w) for the free base [rotigotine], all of said free base being present in the matrix in the absence of water; a backing layer inert to the components of the matrix layer; and a protective foil or sheet covering the matrix layer to be removed prior to use.

    The '414 patent:

    1.  A polymorphic form of rotigotine characterized by at least one parameter selected from the group consisting of:
        (a) a powder X-ray diffraction spectrum comprising at least one peak at the following °2θ angles (± 0.2): 12.04, 13.68, 17.72, and 19.01;
        (b) a Raman spectrum comprising at least one peak at the following (±3 cm-1): 226.2, 297.0, 363.9, 737.3, 847.3, 1018.7, and 1354.3 cm-1;
        (c) a DSC peak with a Tonset at 97°C. ± 2°C. measured with a heating rate of 10°/min; and
        (d) a melting point of 97°C. ± 2°C.

    2.  The polymorphic form of rotigotine of claim 1, wherein the polymorphic form of rotigotine is characterized by at least the following powder X-ray diffraction peaks at °2θ angles (± 0.2): 12.04, 13.68, 17.72 and/or 19.01.

    3.  A polymorphic form of rotigotine having a powder X-ray diffraction spectrum substantially as shown in FIG. 1.

    At trial, Defendants alleged that the claims of the '434 patent were invalid for obviousness and the claims of the '414 patent were anticipated, the latter theory on a unique set of facts.  After FDA approval of the transdermal patch claimed in the '434 patent:

    [B]atches of rotigotine patches were manufactured for distribution in the United States [and u]ntil August 2007, UCB manufactured Neupro patches by dissolving rotigotine in ethanol, among other steps, to create a rotigotine solution.  It then prepared a coating mass from this solution and other components (including a silicone-based polymer), which, after drying, produced a matrix.  The matrix did not contain crystalline rotigotine, and the rotigotine in the resulting patches, pre-distribution, was non-crystalline.

    On August 7, 2007, an unknown solid precipitated during the dissolution step, causing UCB to halt manufacture of Neupro patches.  Over the next few months, UCB investigated and determined that the solid was a polymorph of rotigotine, characterized by unique single-crystal X-ray diffraction parameters.

    UCB filed a patent application to cover the newly dis-covered Form II polymorph of rotigotine.  This resulted in the '414 patent . . . .

    The earliest priority date for the '414 patent was November 28, 2007, and Plaintiffs did not adduce evidence of any earlier date of invention than this filing date.  There was, on the other hand, evidence at trial that patients were treated with patches that contained this polymorph and that those patches were produced prior to the November 28, 2007 priority date of the '414 patent.

    The basis for the District Court's determination that Defendants' generic patches containing rotigotine infringed under the doctrine of equivalents is that those patches contained a polyisobutylene (PIB) adhesive, not the acrylate-based or silicon-based adhesives recited in the '434 patent claims.  The District Court found these embodiments to be "substantially similar" and that application of the doctrine of equivalents was not precluded by prosecution history estoppel, vitiation, ensnarement, or dedication to the public based on patentee's choice to claim narrowly.  The District Court also rejected Defendants' invalidity contentions under §§ 102 and 103.  The District Court found the asserted claims of the '414 patent to be invalid under § 102 based on the existence of the claimed polymorphic form of rotigotine in batches produced prior to the asserted priority date of November 28, 2007.

    The Federal Circuit affirmed, in an opinion by Judge Chen joined by Judges Schall and Taranto.  Regarding infringement of the '434 patent under the doctrine of equivalents, the opinion first discussed the lack of any limitation to the doctrine of equivalents.  With regard to prosecution history estoppel, the Court noted that the claims that granted in the '434 patent had not been amended during prosecution, the usual route for finding estoppel under Festo.  Specifically, the claim language that the patches included "acrylate-based or silicone-based polymer adhesive system having a solubility of ≥ 5% (w/w) for [rotigotine free base]" was never amended during prosecution, according to the Court.  There had been a restriction requirement that involved an unclaimed group reciting the use of polyvinylpyrrolidone (PVP) as a solubility enhancer, which was useful for embodiments comprising silicone-based but not acrylate-based polymers.  Both the District Court and the Federal Circuit rejected Defendants' argument that the election of embodiments not including PVP raised an estoppel because generally restriction requirement responses do not do so, citing Bayer Aktiengesellschaft v. Du-phar Int'l Research B.V., 738 F.2d 1237, 1243 (Fed. Cir. 1984).  In addition, taking the rubrics on the proper application of estoppel to election decisions enunciated in Merck & Co. v. Mylan Pharm., Inc., 190 F.3d 1335, 1340 (Fed. Cir. 1999), the opinion states that the restriction requirement was not directed at the choice of adhesive and thus plaintiffs did not "give up" scope that would include Defendants' PIB adhesive.

    Next, the opinion addressed Defendants' argument that Plaintiffs had relinquished scope that encompassed PIB by choosing to claim more narrowly.  While the Supreme Court has recognized a "foreseeability" limitation to the doctrine of equivalents for claims amended during prosecution to which estoppel can apply, the opinion states that there has never been such a limitation to unamended claims.  The opinion sets forth the logical necessity for this distinction:  "known interchangeability" is the basis for finding equivalents, so that "foreseeability at the time of claim drafting is not a per se bar to the application of the doctrine of equivalents."  Considering the totality of the evidence, the panel concluded that:

    [T]here is not enough indication from the patent specification, claims, or the record evidence of the inventor's knowledge here to conclude that UCB surrendered polyisobutylene as a possible equivalent.  In the absence of such facts, we agree with the district court that UCB's claiming of acrylates and silicates does not bar treating polyisobutylenes as an equivalent for infringement purposes.

    And:

    [W]e note as a policy matter that the patent system should not incentivize inventors to claim equivalents that they had not invented or tested, just because they know of the possibility of an equivalent, and also should not force inventors to delay filing for a patent on what they have invented while testing all known possible equivalents for fear of being unable to assert infringement under the doctrine of equivalents in the future.

    Regarding the doctrine of vitiation (that equivalents fails "if it renders a claim limitation inconsequential or ineffective," Akzo Nobel Coatings, Inc. v. Dow Chem. Co., 811 F.3d 1334, 1342 (Fed. Cir. 2016), and cannot "eliminate [an] element in its entirety"), including PIB as an equivalent does not result in such elimination, according to the Federal Circuit, because it does not thereby include all adhesives within the scope of the claim.  And regarding ensnarement, the panel agreed with the District Court that including PIB as an equivalent did not "ensnare" the prior art.  In making this determination, the Court engaged in the exercise of crafting a hypothetical claim that literally encompassed embodiments comprising PIB as an adhesive, and then assessed the prior art asserted by Defendants to determine whether the hypothetical claim was patentable over that art.  Unfortunately for Defendant, that art also disclosed acrylate-based and silicone-based adhesives, so that inclusion of PIB in the hypothetical claim did not uniquely encompass the prior art.

    Turning to the merits, the panel deferred to the District Court on the factual determination, which in a bench trial required a finding of clear error.  Here, the Federal Circuit did not find clear error in the District Court's finding that there were insubstantial differences between PIB and the acrylate-based and silicone-based adhesives recited in the claims and thus affirmed:

    [A]t the time the '434 patent was filed, silicates, acrylates, and polyisobutylenes were the most commonly used pressure-sensitive adhesives in transdermal patches.  The district court then identified a set of properties that silicates, acrylates, and polyisobutylenes share: they are pressure-sensitive, adhesive, biologically inert, non-irritating, and non-toxic.  Thus, the district court found that a skilled artisan "would recognize that polyisobutylene is not substantially different from the classes of adhesives literally within the scope of the claims."

    The District Court arrived at this conclusion despite evidence of differences in polarity, the presence of different functional groups, and the capacity to interact with crosslinking groups between polyisobutylene and acrylate-based and silicone-based adhesives, which the Court held were not substantial based on comparisons between Neupro and Defendants' generic alternatives.

    Regarding Defendants' invalidity arguments, the panel affirmed the District Court's decision that failed prior art efforts to develop rotigotine transdermal patches neither anticipated nor rendered obvious the claims of the '434 patent.  That art did not disclose a water-free patch having rotigotine in free base rather than salt form and thus comprised significant amounts of water (10-15% w/w) to solubilize the salt form of the drug.  And none of the other art asserted by Defendants "fill[ed] the gap" in this disclosure, because they did not disclose rotigotine or other anti-Parkinson's disease drugs, and in particular did not disclose the free base form of the drug in the absence of water in the formulation.  The Federal Circuit also affirmed the District Court's finding that other art, disclosing transdermal rotigotine administration by direct application to skin and transdermal patches not comprising water, did not render the claims of the '434 patent obvious because there was no "adequate rationale for combining the references' teachings" nor reasonable expectation of success at treating Parkinson's disease using a transdermal patch.  The opinion finds the cited art as being "a list of thousands of possibilities out of which a skilled artisan would have to select the claimed combination as one to try" and thus would not have provided the skilled worker with a reasonable expectation of successfully achieving the claimed patch.

    Turning to the '414 patent, the Federal Circuit affirmed the District Court's determination that the claimed rotigotine polymorph was used in the art prior to the earliest claimed priority date based on the presence of the polymorph in patches produced prior to that date, which constituted prior public use of the polymorph.  Because (as with all factual determinations) appellate review of questions of fact before the district court is reviewed for clear error, the Federal Circuit found no clear error that Defendants had shown anticipation by clear and convincing error, and thus affirmed.

    UCB, Inc. v. Watson Laboratories Inc. (Fed. Cir. 2019)
    Panel: Circuit Judges Taranto, Schall, and Chen
    Opinion by Circuit Judge Chen

  • Athena Diagnostics v. Mayo Collaborative Services — The Concurrences

    By Donald Zuhn —

    Federal Circuit SealOn July 3, the Federal Circuit issued a per curiam Order in Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC, denying a petition for rehearing en banc filed by Plaintiffs-Appellants Athena Diagnostics, Inc., Oxford University Innovation Ltd., and the Max-Planck-Gesellschaft zur Forderung der Wissenschaften E.V.  The Court also denied Plaintiffs-Appellants a panel rehearing.

    The four page per curiam Order was accompanied by eight opinions, four concurring in the denial of the petition and four dissenting in the denial of the petition, adding an additional 82 pages to the Order.  The four concurring opinions were authored by Circuit Judges Lourie, Hughes, Dyk, and Chen, with Chief Judge Prost and Circuit Judges Reyna, Taranto, and Hughes joining in one of the concurrences and Circuit Judge Chen joining in one concurrence and several parts of another.  The four dissenting opinions were authored by Circuit Judges Moore, Newman, Stoll, and O'Malley, with Circuit Judges O'Malley and Stoll joining in one of the dissents and Circuit Judge Wallach joining in three of the dissents.  Thus, a total of seven members of the Court (Chief Judge Prost and Circuit Judges Lourie, Dyk, Reyna, Taranto, Chen, and Hughes) authored or joined opinions concurring in the denial, and a total of five members (Circuit Judges Newman, Moore, O'Malley, Wallach, and Stoll) authored or joined opinions dissenting in the denial.

    Last week, we reviewed the procedural history of the case and provided a brief summary of the eight concurring and dissenting opinions (see "Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC (Fed. Cir. 2019)").  In this post, we focus more closely on the four opinions concurring in the Order's denial of the petition for rehearing en banc.  As we noted last week, the general theme of the concurrences is that the Supreme Court's decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc. left the members of the Court with no choice other than to deny the petition.

    In the first concurrence, Judge Lourie, joined by Judges Reyna and Chen, declares in a 4-page opinion that the Court "can accomplish little in [rehearing the case en banc], as we are bound by the Supreme Court's decision in Mayo," adding that:

    If I could write on a clean slate, I would write as an exception to patent eligibility, as respects natural laws, only claims directed to the natural law itself, e.g., E=mc2, F=ma, Boyle's Law, Maxwell's Equations, etc.  I would not exclude uses or detection of natural laws.  The laws of anticipation, obviousness, indefiniteness, and written description provide other filters to determine what is patentable.

    "But," as Judge Lourie states, "we do not write here on a clean slate; we are bound by Supreme Court precedent."

    Judge Lourie notes that the Federal Circuit has "held claims focused on detecting new and useful natural laws with conventional steps to be ineligible," citing Cleveland Clinic Found. v. True Health Diagnostics LLC and Ariosa Diagnostics, Inc. v. Sequenom, Inc. in support (without mentioning that both examples concern claims to diagnostic methods), but that "[i]n contrast, new method of treatment patents do not fall prey to Mayo's prohibition," citing Vanda Pharm. Inc. v. West-Ward Pharm. Int'l Ltd.  Judge Lourie also notes that "unconventional arrangements of known laboratory techniques, even if directed to a natural law" have also been found by the Federal Circuit to be patent eligible, citing Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc.  However, the instant case, as he points out, "involves neither scenario."

    While explaining that "[t]he only unconventional aspect is the inventors' discovery of what the Supreme Court would call the natural law—the correlation between MuSK autoantibodies and the neurological disorder myasthenia gravis," Judge Lourie concedes that the Court "cannot premise eligibility solely on the natural law's novelty."  Judge Lourie also opines that:

    Under Supreme Court precedent, I do not believe that specific yet purely conventional detection steps impart eligibility to a claim that otherwise only sets forth what the Court has held is a natural law.  That is the situation presented in Ariosa, Cleveland Clinic, and now Athena.  Accordingly, as long as the Court's precedent stands, the only possible solution lies in the pens of claim drafters or legislators.  We are neither.

    And to those in the patent community (including amici) who have complained that the Federal Circuit's eligibility precedent is "confused," Judge Lourie responds that "our cases are consistent," explaining that the Court has "distinguished between new method of treatment claims and unconventional laboratory techniques, on the one hand, and, on the other hand, diagnostic methods that consist of routine steps to observe the operation of a natural law," which he finds to be "a clear line."  He concludes his opinion by stating that beyond this distinction, he does "not see a way clear to distinguish Mayo in a useful, principled, fashion," and therefore is left to concur with the denial of the petition "because I do not believe we can convincingly distinguish Mayo in this case."

    In the second concurrence (which at a little over a page is the shortest of the concurring opinions), Judge Hughes, joined by Chief Judge Prost and Judge Taranto, notes that "[t]he multiple concurring and dissenting opinions regarding the denial of en banc rehearing in this case are illustrative of how fraught the issue of § 101 eligibility, especially as applied to medical diagnostics patents, is."  However, he also notes that while "the bottom line for diagnostics patents is problematic . . . this is not a problem that we can solve," adding that "[a]s an inferior appellate court, we are bound by the Supreme Court."

    Judge Hughes concludes by stating that:

    I, for one, would welcome further explication of eligibility standards in the area of diagnostics patents.  Such standards could permit patenting of essential life saving inventions based on natural laws while providing a reasonable and measured way to differentiate between overly broad patents claiming natural laws and truly worthy specific applications.  Such an explication might come from the Supreme Court.  Or it might come from Congress, with its distinctive role in making the factual and policy determinations relevant to setting the proper balance of innovation incentives under patent law.

    In the third concurrence (which numbers more than thirteen pages), Judge Dyk, joined by Judges Hughes and Chen (with Judge Chen only joining the last three parts of the concurrence), points out (to begin Part IV of his opinion) that:

    [T]here is tension between Mayo and the Supreme Court's later decision in Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013), and that the holding of Mayo may be overbroad.  The language of § 101 does cover "discover[ies]," 35 U.S.C. § 101, and there is no doubt that determining the relationship between specific genetic abnormalities and specific diseases constitutes an important discovery with proven utility.  There is much to be said for the patentability of claims to such discoveries, if not drafted overbroadly.

    Of the authors of the four concurring opinions, Judge Dyk stands apart in finding something beneficial in the Supreme Court's precedent on subject matter eligibility.  In Part I of his opinion, Judge Dyk explains that:

    In the realm of abstract ideas, the Mayo/Alice framework has successfully screened out claims that few would contend should be patent eligible, for example, those that merely apply well-known business methods and other processes using computers or the Internet.  The Mayo/Alice framework has thus proven to be both valuable and effective at invalidating overly broad, non-inventive claims that would effectively "grant a monopoly over an abstract idea."

    In support of his position, he cites Trading Techs. Int'l, Inc. v. IBG LLC (Fed. Cir. 2019); SAP Am., Inc., v. Investpic, LLC (Fed. Cir. 2018); Credit Acceptance Corp. v. Westlake Servs. (Fed. Cir. 2017); Elec. Power Grp., LLC v. Alstom S.A. (Fed. Cir. 2016); Intellectual Ventures I LLC v. Capital One Bank (Fed. Cir. 2015); Ultramercial, Inc. v. Hulu, LLC (Fed. Cir. 2014); and buySAFE, Inc. v. Google, Inc. (Fed. Cir. 2014).  However, Judge Dyk also notes that the Federal Circuit's subject matter eligibility precedent "has allowed room for claims that do more than recite conventional applications of abstract concepts," citing Ancora Techs., Inc. v. HTC Am., Inc. (Fed. Cir. 2018); Finjan, Inc. v. Blue Coat Sys., Inc. (Fed. Cir. 2018); and Enfish, LLC v. Microsoft Corp. (Fed. Cir. 2016) in support.

    In Part II of his opinion, Judge Dyk defends the need for Alice/Mayo framework, contending that "[d]espite assertions to the contrary, the doctrines of novelty under § 102, obviousness under § 103, and enablement and written description under § 112 cannot adequately guard against the dangers of overclaiming."  Judge Dyk also notes that these provisions do not "typically allow early stage resolution of the 'threshold' issue of patent eligibility . . . necessary to avoid the costs of lengthy litigation," and therefore concludes that the patent eligibility analysis of "§ 101 serves an important purpose not served by these other provisions in the Patent Act."  Offering an example of the alleged inadequacy of the other provisions to guard against overclaiming, Judge Dyk suggests that "[i]f the first person to identify the relationship between a genetic abnormality and a disease had sought a broad patent on a method of searching for genetic abnormalities and determining their relationship to disease, the claims would have been neither anticipated nor obvious."

    For Judge Dyk, "[t]he problem with § 101 arises not in implementing the abstract idea approach of Alice, but rather in implementing the natural law approach of Mayo," explaining in Part III of his opinion that "[a]lthough Mayo's framework is sound overall, I share the concerns expressed by my dissenting colleagues that the Mayo test for patent eligibility should leave room for sufficiently specific diagnostic patents."  However, as Judge Hughes indicated in his concurrence, Judge Dyk states that "it is the Supreme Court, not this court, that must reconsider the breadth of Mayo."

    In Part IV of his concurrence, Judge Dyk elaborates on the tension between the Supreme Court's decisions in Mayo and Myriad, stating that:

    Myriad thus recognized that an inventive concept can sometimes come from the discovery of an unknown natural phenomenon and its application for a diagnostic purpose.  This appears to be in tension with Mayo.  Under Mayo, a natural phenomenon itself, no matter how narrow and specific, cannot supply the requisite "inventive concept."

    Judge Dyk suggests that "it would be desirable for the Supreme Court to refine the Mayo framework to allow for sufficiently specific diagnostic patent claims with proven utility," contending that "[t]he inventive concepts in this area may lie primarily in the application of a natural law."

    According to Judge Dyk, however, the refinements to the Mayo framework that are needed are "limited."  In particular, Judge Dyk explains in Part V of his opinion that "if the claim is sufficiently tied to a specific and useful application of a natural law at Mayo step one, that application itself should serve as the necessary inventive concept at Mayo step two."  However, "the application must be more than determining the precise correlation of a known relationship using prior art processes, as was the case in Mayo itself."

    With respect to the claims at issue in Athena, Judge Dyk suggests in Part VI of his concurrence that "this case may involve claims that could be patent eligible under []his suggested approach."  He points out that "claims 7–9 do not claim the natural law itself—the relationship between MuSK autoantibodies and MG, a rare neurological disorder—but rather claim specific methods of diagnosing neurological disorders like MG by detecting MuSK autoantibodies."  Thus, according to Judge Dyk, Athena, unlike Mayo, "involves a 'discovery' of the relationship, not mere determination of the precise correlations of a known natural law using prior art processes."  Judge Dyk concludes his opinion by suggesting that "this case could provide the Supreme Court with the opportunity to refine the Mayo framework as to diagnostic patents."

    In the fourth and final concurrence (which at more than sixteen pages is the longest of the concurring opinions), Judge Chen states that "[w]hile I believe our court would benefit from the Supreme Court's guidance as to whether it intended to override central tenets of [Diamond v.] Diehr [450 U.S. 175 (1981)], Mayo's reasoning is clear and we are bound by it," adding that the analysis in Mayo "requires the affirmance of the district court’s decision to invalidate Athena's claims."  Judge Chen notes, however, that "[e]ven though Athena's claims likely would be found patent-eligible under Diehr's framework, it is not an inferior court's role to dodge the clear, recent direction of the Supreme Court."

    Judge Chen begins his concurrence by noting that the Supreme Court in Diehr "adopted a relatively narrow and more administrable version of the judicial exceptions to the statutory text of 35 U.S.C. § 101 compared to what the Court articulated three years earlier in Parker v. Flook, 437 U.S. 584 (1978)."  He also suggests that "[u]nder Diehr's 'claim as a whole' principle, which does not divide the claim into new versus old elements, Athena's claims, particularly claims 7 and 9, likely would have been found to be directed to a patent-eligible process."  However, he acknowledges that in Mayo, the Supreme Court "set forth an inventive concept/point of novelty framework, which is a more far-reaching, aggressive version of the judicial exceptions to the statute and is largely incompatible with Diehr's core rationale," even though "nothing in Mayo suggests that it sought to repudiate Diehr's analysis."

    Judge Chen provides a detailed analysis of Diehr, Flook, Mayo, and Alice, before turning to Athena's claims.  With respect to Diehr and Flook, Judge Chen contends that "[g]iven Diehr's evident disagreement with Flook's analysis, Diehr, as the later opinion, was widely understood to be the guiding, settled precedent on § 101 for three decades," with Diehr "reject[ing] the point of novelty/inventive concept approach to patent eligibility."  According to Judge Chen, "Mayo provided a framework for the judicial exceptions that strongly tracked the reasoning of Flook and the Diehr dissent."  Thus, Judge Chen argues that "Mayo is in considerable tension with Diehr's instruction to consider claims 'as a whole' and Diehr's disapproval of dissecting claims into elements and ignoring non-novel elements in the § 101 analysis."  And, as Judge Chen explains:

    When it comes to applying the judicial exceptions, it bears noting that the Mayo analytical approach is considerably harder to apply consistently than the Diehr framework, and more aggressive in its reach.  Consider the claim in Mayo.  If that claim had recited just the single step of administering a synthetic drug to a patient, that single-step claim would be patent-eligible, but lack novelty under § 102.  And if that claim added a second step for determining the subsequent level of a non-naturally occurring metabolite in a patient, that claim also would pass muster under § 101, but lack novelty.  But when the claim further recites a relationship between a metabolite level and its efficacy in a patient, that claim suddenly would be invalid under § 101 for violating the law of nature exception.  In other words, steps 1 and 2 now get pushed aside and declared insignificant, and the last step is designated as the "focus" of the claim, i.e., the heart of the invention.  The notion that adding claim language can convert an otherwise patent-eligible claim into a patent-ineligible claim is counterintuitive and a very difficult thing to explain to 8,000 patent examiners.  Moreover, the process of determining what the claim is "really about" when the claim is viewed in pieces, rather than as a whole, can be highly subjective and impressionistic.

    According to Judge Chen, "there is a serious question today in patent law as to what extent Diehr remains good law in light of Mayo," and he indicates that this is a question for the Supreme Court to resolve.

    In the last part of his opinion, Judge Chen examines the claims at issue in Athena.  While conceding that "the Supreme Court has made clear that detecting a law of nature (without more than conventional steps for accessing the law of nature) does not qualify as a patent-eligible application of a law of nature," Judge Chen notes that "given that the dual 'invention or discovery' structure consistently has been part of every Patent Act since 1790, this statutory provision suggests that at least some discoveries, including Athena's 'discovery' of how to diagnose myasthenia gravis, have always been contemplated as patentable subject matter."  Thus, while Judge Chen "do[es] not think the claims here can withstand Mayo's scrutiny," he argues that "perhaps when read 'as a whole' under Diehr, claims such as claims 7 and 9 in this case could be viewed as methods of testing for a specific medical condition, employing a sequence of steps that physically transform materials," adding that "this sounds like a contribution to the 'useful arts' stated in Article I, Section 8, Clause 8 of the U.S. Constitution."

    Judge Chen concludes his opinion by suggesting that:

    New methods for diagnosing medical conditions, as a general matter, intuitively seem to be the kind of subject matter the patent system is designed for:  to encourage the risky, expensive, unpredictable technical research and development that people would not otherwise pursue in the hope that if they discover something of great medical value, then they will be protected and rewarded for that successful effort with a patent.

    Nevertheless, Judge Chen declares that he is bound by "the clear, recent direction of the Supreme Court" to concur with the denial of Athena's petition for rehearing en banc.

    In a subsequent post, we will focus more closely on the dissenting opinions.

  • The STRONGER Patents Act of 2019: Weakening Post-Grant Proceedings

    By Joshua Rich —

    Washington - Capitol #5The sponsors of the STRONGER Patents Act of 2019[1] — introduced to the Senate on Wednesday — may be from both political parties,[2] but they share one clear trait:  they hate what post-grant proceedings have done to patent litigation.  So they introduced a bill that would roll back the availability, attractiveness, and effectiveness not only of inter partes review and post-grant review, but also the availability and attractiveness of ex parte reexamination.  The bill also seeks to supplant state anti-troll laws through specific federal unfair trade practices provisions directed at "targeting rogue and opaque letters" that would preempt such laws.  And it includes a number of unrelated provisions that would make permanent injunctions easier to obtain, end PTO fee diversion, reduce university patent fees, and seek to aid small businesses in the patent system.

    The narrowing of inter partes review ("IPR") and post-grant review ("PGR") would start with who can bring such proceedings:  in order to have standing to bring an IPR or PGR, a petitioner (or its privy or real party in interest) must have been sued for infringement of the patent or charged with infringement under the patent in a manner that would give rise to declaratory judgment jurisdiction.  In doing so, the bill gets rid of one of the two main rationales for the AIA's post-grant proceedings:  having an avenue that would allow the interested public to get rid of "bad" patents.  Furthermore, in combination with other provisions, it forces the petitioner to choose between taking a single shot[3] with an IPR or PGR petition or litigating the invalidity issues in Federal court or the International Trade Commission; it gets rid of the possibility of parallel proceedings.  So only those parties who could otherwise bring their arguments in Federal court or the ITC would be able to file a petition, and then they wouldn't be able to argue invalidity in court.[4]

    Next, the bill limits the number of petitions a patentee will face, prohibiting the Director from instituting any petition directed to a claim if a previous petition has been instituted with regard to that claim.  Given the estoppel that would now set in upon filing — not Final Written Decision — that provision could result in a party being prohibited from arguing invalidity in post-grant proceedings or court.  For example, if an IPR petition were filed one day after another petitioner's, and the other petitioner's IPR were to be instituted, the second filer would be shut out even if it was raising different arguments.  The combination of those two provisions would severely limit the use of IPRs and PGRs, but it raises fundamental First Amendment concerns.[5] Similarly, IPR and PGR cannot be instituted if there is a final judgment on validity in either a Federal court or the ITC, apparently even if the case didn't involve the petitioner.  Again, a petitioner who files before the judgment but would have the institution decision made after a judgment against a third party would be shut out of both post-grant proceedings and court litigation.

    The bill then creates a higher bar for institution, making the institution standards the same as those already applied in court.  In making the institution decision, the PTAB must presume every claim to be valid, and the petitioner bears the burden of showing invalidity by clear and convincing evidence.  In evaluating the petition, the PTAB panel must construe the claims in the same manner as a court, and must consider any prior construction of a challenged claim term.  Notably, the panel that decides whether to institute an IPR or PGR cannot then sit in review of the instituted proceeding.  Furthermore, the bill would open institution decisions up for appellate review much more broadly.  A patentee would be able to appeal the institution decision on any basis other than whether there was a reasonable likelihood that the petitioner would prevail (a small sacrifice, since the ultimate decision is appealable on the merits); an unsuccessful petitioner would be barred from appealing a denial of institution.  The net effect is to create a much higher standard for institution of post-grant proceedings and remove the incentive for even eligible petitioners to choose them over litigation.

    The disincentives would not stop even after a petition was instituted.  If a court renders a final judgment on validity, a pending IPR or PGR would be stayed while the case is appealed.  If the validity of the claims is upheld on appeal, the IPR or PGR will be terminated.  Thus, even on the eve of oral hearing, post-grant proceedings could apparently be halted for the litigation of validity issues in an unrelated party's lawsuit.

    Finally, the definition of a real party in interest — important for both disclosure and estoppel — is clarified and broadened to include anyone funding the petition, and is subject to discovery during an IPR or PGR.

    But the bill doesn't just discourage AIA post-grant proceedings, it also limits ex parte reexamination.  It would get rid of one of the significant benefits of such proceedings, the ability to bring them through a strawman.  Instead, a petition for ex parte reexamination would now have to identify the real party in interest.  In addition, it could only be instituted if the reexamination petition is filed within one year of service of a complaint alleging infringement of that patent.  Thus, even ex parte reexamination, which preceded the AIA, would be discouraged under the STRONGER Patents Act.

    The bill also has a number of provisions not related to post-grant proceedings.  It would partially reverse the eBay v. MercExchange case[6] by calling for a presumption of irreparable injury and inadequacy of remedies at law upon a finding of infringement of a valid, enforceable claim.  That is, it would make permanent injunctions easier to obtain, requiring showings of only two of the traditional four factors.  The bill would prohibit fee diversion from the PTO and allow institutions of higher learning and their technology transfer offices to claim micro entity status for purposes of paying fees to the PTO.  And it would broaden the patent pilot program in certain district courts in order to address special issues faced by individuals and small businesses charged with infringement.  Notably, it would also assist small businesses by requiring the PTO to make all of the patent and trademark information available at the PTO's Public Search Facility also available for free online.

    Finally, the bill has a separate title to address Federal prohibition of misleading or deceptive letters purporting to assert patents against the recipients.  Currently, there are state "anti-troll" laws that prohibit such letters; the bill would pre-empt them in favor of Federal Trade Commission[7] enforcement against parties who send out letters asserting infringing in any of a number of potentially deceptive circumstances.

    The STRONGER Patents Act of 2019 would actually strengthen patent owners' positions, but only through weakening other parties' defenses.  It would essentially eliminate post-grant proceedings as a means of obtaining an early and rapid adjudication of validity before product launch.  Even after product launch, it would establish so many hurdles to effective review that it would make seeking PTAB review far less attractive than before, and likely less attractive than court litigation.  Thus, it would beat back the wave of post-grant proceedings that have eliminated many patents.  While it may be true that the AIA went overboard in making the PTAB into patent death squads,[8] the STRONGER Patents Act appears to go overbroad in tightly shackling petitioners.

    [1] The full title of the bill is the "Support Technology and Research for Our Nation's Growth and Economic Resilience Patents Act of 2019," S. 2082.

    [2] The bill is sponsored by Senator Coons (D-DE) and cosponsored by Senators Cotton (R-AR), Durbin (D-IL), Hirono (D-HI), Kennedy (R-LA), and Cramer (R-ND).

    [3] There is a minor exception that would allow a party to file an additional petition if it is subsequently charged with infringement of additional claims.

    [4] An IPR petitioner would be able to argue in court that a claimed invention was in public use, on sale, or otherwise available to the public before the effective filing date, but those arguments are not available in an IPR.

    [5] "Congress shall make no law . . . abridging . . . the right of the people . . . to petition the Government for a redress of grievances."

    [6] eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).

    [7] The bill would also allow State Attorneys General to enforce the law in certain circumstances.

    [8] At least according to then Chief Judge Rader, speaking at the October 2013 AIPLA annual meeting.

  • Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC (Fed. Cir. 2019)

    By Donald Zuhn —

    Federal Circuit SealLast week, the Federal Circuit issued a per curiam Order in Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC, denying a petition for rehearing en banc filed by Plaintiffs-Appellants Athena Diagnostics, Inc., Oxford University Innovation Ltd., and the Max-Planck-Gesellschaft zur Forderung der Wissenschaften E.V.  The Court also denied Plaintiffs-Appellants a panel rehearing.

    The four-page per curiam Order was accompanied by eight opinions, four concurring in the denial of the petition and four dissenting in the denial of the petition, adding an additional 82 pages to the Order.  The four concurring opinions were authored by Circuit Judges Lourie, Hughes, Dyk, and Chen, with Chief Judge Prost and Circuit Judges Reyna, Taranto, and Hughes joining in one of the concurrences and Circuit Judge Chen joining in one concurrence and several parts of another.  The four dissenting opinions were authored by Circuit Judges Moore, Newman, Stoll, and O'Malley, with Circuit Judges O'Malley and Stoll joining in one of the dissents and Circuit Judge Wallach joining in three of the dissents.  Thus, a total of seven members of the Court (Chief Judge Prost and Circuit Judges Lourie, Dyk, Reyna, Taranto, Chen, and Hughes) authored or joined opinions concurring in the denial, and a total of five members (Circuit Judges Newman, Moore, O'Malley, Wallach, and Stoll) authored or joined opinions dissenting in the denial.

    Before turning to the eight opinions concurring or dissenting in the Order's denial of the petition for rehearing en banc, it may be helpful to review the procedural history of this case.  In February, a divided panel affirmed a decision by the District Court for the District of Massachusetts, holding claims 6-9 of U.S. Patent No. 7,267,820 invalid under 35 U.S.C. § 101, and dismissing under Fed. R. Civ. P. 12(b)(6) a complaint filed by Plaintiffs-Appellants for infringement of the '820 patent.

    Athena Diagnostics is the exclusive licensee of the '820 patent, which is directed to methods for diagnosing neurological disorders by detecting antibodies to a protein called muscle-specific tyrosine kinase (MuSK).  Athena markets a test called FMUSK that functions by evaluating those antibodies.  After Mayo developed two competing tests, Athena filed suit against Mayo for infringement of the '820 patent, and Mayo moved to dismiss under Rule 12(b)(6), arguing that the asserted claims of the '820 patent were invalid under § 101 for claiming patent ineligible subject matter.  The District Court granted Mayo's motion, and Athena appealed for a determination of whether claims 6-9 are patent eligible under § 101.

    The '820 patent notes that about 80% of patients with Myasthenia gravis (MG) produce acetylcholine receptor autoantibodies, and that the remaining 20% do not.  The named inventors of the '820 patent discovered that many of the 20% of MG patients without acetylcholine receptor autoantibodies instead generate autoantibodies to MuSK.  The '820 patent discloses and claims methods of diagnosing neurological disorders such as MG by detecting autoantibodies that bind to a MuSK epitope.  The '820 patent contains only one independent claim, which, while not at issue in the case, recites:

    1.  A method for diagnosing neurotransmission or developmental disorders related to muscle specific tyrosine kinase (MuSK) in a mammal comprising the step of detecting in a bodily fluid of said mammal autoantibodies to an epitope of muscle specific tyrosine kinase (MuSK).

    Claims 6-9, which were at issue in the case, recite:

    6.  A method according to claim 3 whereby the intensity of the signal from the anti-human IgG antibody is indicative of the relative amount of the anti-MuSK autoantibody in the bodily fluid when compared to a positive and negative control reading.

    7.  A method according to claim 1, comprising contacting MuSK or an epitope or antigenic determinant thereof having a suitable label thereon, with said bodily fluid, immunoprecipitating any antibody/MuSK complex or antibody/MuSK epitope or antigenic determinant complex from said bodily fluid and monitoring for said label on any of said antibody/MuSK complex or antibody/MuSK epitope or antigen determinant complex, wherein the presence of said label is indicative of said mammal is suffering from said neurotransmission or developmental disorder related to muscle specific tyrosine kinase (MuSK).

    8.  A method according to claim 7 wherein said label is a radioactive label.

    9.  A method according to claim 8 wherein said label is 125I.

    In the panel opinion, authored by Judge Lourie and joined by Judge Stoll (with Judge Newman dissenting), the Court affirmed the District Court's determination that claims 6-9 are invalid under § 101.  The panel majority "ultimately agree[d] with Mayo that, under Mayo [Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66, 70 (2012)], the claims are directed to a natural law," and that in the instant case, the natural law "is the correlation between the presence of naturally-occurring MuSK autoantibodies in bodily fluid and MuSK related neurological diseases like MG."  The panel majority also agreed with Mayo that "the steps of the claims not drawn to ineligible subject matter, whether viewed individually or as an ordered combination, only require standard techniques to be applied in a standard way."  In a lengthy footnote, the panel majority responded to Judge Newman's dissent by explaining that:

    The dissent states much that one can agree with from the standpoint of policy, and history, including that "the public interest is poorly served by adding disincentive to the development of new diagnostic methods."  We would add further that, in our view, providing patent protection to novel and non-obvious diagnostic methods would promote the progress of science and useful arts.  But, whether or not we as individual judges might agree or not that these claims only recite a natural law, . . . the Supreme Court has effectively told us in Mayo that correlations between the presence of a biological material and a disease are laws of nature, and "[p]urely 'conventional or obvious' '[pre]-solution activity' is normally not sufficient to transform an unpatentable law of nature into a patent-eligible application of such a law," . . . .  Our precedent leaves no room for a different outcome here [citations omitted].

    In her dissent, Judge Newman declared that "[t]he court again departs from the cautious restraints in the Supreme Court's Mayo/Alice application of laws of nature and abstract ideas," adding that "[t]his court's decisions on the patent-ineligibility of diagnostic methods are not consistent, and my colleagues today enlarge the inconsistencies and exacerbate the judge-made disincentives to development of new diagnostic methods, with no public benefit."  She contended that "[t]he '820 inventors did not patent their scientific discovery of MuSK autoantibodies," but rather "applied this discovery to create a new method of diagnosis, for a previously undiagnosable neurological condition."

    Turning to the eight opinions concurring or dissenting in the Order's denial of the petition for rehearing en banc, the general theme of the concurrences is that the Supreme Court's decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc. left the members of the Court with no choice other than to deny the petition:

    • Judge Lourie, joined by Judges Reyna and Chen, declared that the Court "can accomplish little in [rehearing the case en banc], as we are bound by the Supreme Court's decision in Mayo," adding that:

    If I could write on a clean slate, I would write as an exception to patent eligibility, as respects natural laws, only claims directed to the natural law itself, e.g., E=mc2, F=ma, Boyle's Law, Maxwell's Equations, etc.  I would not exclude uses or detection of natural laws.  The laws of anticipation, obviousness, indefiniteness, and written description provide other filters to determine what is patentable.

    "But," as Judge Lourie stated, "we do not write here on a clean slate; we are bound by Supreme Court precedent."

    • Judge Hughes, joined by Chief Judge Prost and Judge Taranto, noted that "[t]he multiple concurring and dissenting opinions regarding the denial of en banc rehearing in this case are illustrative of how fraught the issue of § 101 eligibility, especially as applied to medical diagnostics patents, is."  However, he also noted that while "the bottom line for diagnostics patents is problematic . . . this is not a problem that we can solve," adding that "[a]s an inferior appellate court, we are bound by the Supreme Court."

    • Judge Dyk, joined by Judges Hughes and Chen (with Judge Chen only joining the last three parts of the concurrence), pointed out (to begin Part IV of his opinion) that:

    [T]here is tension between Mayo and the Supreme Court's later decision in Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013), and that the holding of Mayo may be overbroad.  The language of § 101 does cover "discover[ies]," 35 U.S.C. § 101, and there is no doubt that determining the relationship between specific genetic abnormalities and specific diseases constitutes an important discovery with proven utility.  There is much to be said for the patentability of claims to such discoveries, if not drafted overbroadly.

    • Judge Chen stated that "[w]hile I believe our court would benefit from the Supreme Court's guidance as to whether it intended to override central tenets of [Diamond v.] Diehr [450 U.S. 175 (1981)], Mayo's reasoning is clear and we are bound by it," adding that the analysis in Mayo "requires the affirmance of the district court’s decision to invalidate Athena's claims." Judge Chen concluded his opinion by noting that "[e]ven though Athena's claims likely would be found patent-eligible under Diehr's framework, it is not an inferior court's role to dodge the clear, recent direction of the Supreme Court."

    Several of the dissenting authors disagreed with the concurring authors that Mayo compelled a finding of patent ineligibility in this case:

    • Judge Moore, joined by Judges O'Malley, Wallach, and Stoll, disagreed with "[t]he majority of my colleagues [that] believe that our hands are tied and that Mayo requires this outcome," indicating instead that "[t]he claims in this case should be held eligible, and they are distinguishable from Mayo."  Judge Moore contended that the Court "should reconsider this case and clarify our precedent."

    • Judge Newman, who dissented in the panel decision, asserted in her dissenting opinion (which was joined by Judge Wallach) that:

    The majority's position is a flawed interpretation of the Court's decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012).  The Court did not hold that methods of diagnosis are subject to unique patent-eligibility rules.  We have mistakenly enlarged the Court's holding, in substance and in application.

    • Judge Stoll, joined by Judge Wallach, contended that the Federal Circuit had, "[i]n a series of cases since the Supreme Court's decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012), . . . established a bright-line rule of ineligibility for all diagnostic claims."  While conceding that "[t]his rule as applied to the facts of this case dictated that the majority panel find the claimed invention ineligible," she asserted that "this court's bright-line rule is based on an over-reaching and flawed test for eligibility, a test that undermines the constitutional rationale for having a patent system—promoting the progress of science and useful arts," and therefore she concluded that the Federal Circuit "should take this opportunity to correct its erroneous rule."

    • While Judge O'Malley agreed with her dissenting colleagues that Federal Circuit precedent "applies the Supreme Court's holding in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012) too broadly," she also opined that:

    [C]onfusion and disagreements over patent eligibility have been engendered by the fact that the Supreme Court has ignored Congress's direction to the courts to apply 35 U.S.C. sections 101, et seq ("Patent Act") as written.  Specifically, the Supreme Court has instructed federal courts to read into Section 101 an "inventive concept" requirement—a baffling standard that Congress removed when it amended the Patent Act in 1952.  I encourage Congress to amend the Patent Act once more to clarify that it meant what it said in 1952.

    In subsequent posts, we will focus more closely on the concurring and dissenting opinions.

    Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC (Fed. Cir. 2019)
    Per curiam
    Circuit Judge Lourie concurring in the denial of the petition for rehearing en banc, joined by Circuit Judges Reyna and Chen;
    Circuit Judge Hughes concurring in the denial of the petition for rehearing en banc, joined by Chief Judge Prost and Circuit Judge Taranto;
    Circuit Judge Dyk concurring in the denial of the petition for rehearing en banc, joined by Circuit Judge Hughes and joined as to Parts IV, V, and VI by Circuit Judge Chen;
    Circuit Judge Chen concurring in the denial of the petition for rehearing en banc;
    Circuit Judge Moore dissenting from the denial of the petition for rehearing en banc, joined by Circuit Judges O'Malley, Wallach, and Stoll;
    Circuit Judge Newman dissenting from the denial of the petition for rehearing en banc, joined by Circuit Judge Wallach;
    Circuit Judge Stoll dissenting from the denial of the petition for rehearing en banc, joined by Circuit Judge Wallach;
    Circuit Judge O'Malley dissenting from the denial of the petition for rehearing en banc.

  • New CRISPR Interference: The Details

    By Kevin E. Noonan —

    USPTO SealOn June 24th, the U.S. Patent and Trademark Office declared an interference (No. 106,115) between patents and applications owned by the Regents of the University of California, the University of Vienna, and Emmanuelle Charpentier (designated in the interference Declaration as the Junior Party) and the Broad Institute, Inc., the Massachusetts Institute of Technology, and the President and Fellows of Harvard College (designated as the Senior Party).  As in the earlier interference between these parties on this subject matter, Administrative Patent Judge Deborah Katz was designated by the Office to manage the interference.

    The Declaration explains the determination of which party is Senior and which Junior, by noting that the Office has not given the benefit of any earlier-filed priority application to either party.  To the extent that Berkeley's applications were all filed last fall (as part of an apparent strategy to have this interference declared, although they did not formally provoke it), the decision not to grant the parties benefit mandates the Senior/Junior party designations.  However, it can be expected that the parties each will file motions during the first phase of the interference to establish the benefit of the earliest priority possible.

    The count of the interference is set forth in the alternative, either as claim 18 of the Broad's U.S. Patent No. 8,697,359 (dependent on claim 15), which taken together recites the following invention:

    An engineered, programmable, non-naturally occurring Type II CRISPR-Cas system comprising a Cas9 protein and at least one guide RNA that targets and hybridizes to a target sequence of a DNA molecule in a eukaryotic cell, wherein the DNA molecule encodes and the eukaryotic cell expresses at least one gene product and the Cas9 protein cleaves the DNA molecules, whereby expression of the at least one gene product is altered; and, wherein the Cas9 protein and the guide RNA do not naturally occur together, wherein the guide RNAs comprise a guide sequence fused to a tracr sequence.

    (where the underlined portion recites the relevant language from claim 18).

    Claim 156 of Berkeley's U.S. Patent Application No. 15/981,807 provides the alternative count language:

    A eukaryotic cell comprising a target DNA molecule and an engineered and/or non-naturally occurring Type II Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR)-— CRISPR associated (Cas) (CRISPR-Cas) system comprising
        a) a Cas9 protein, or a nucleic acid comprising a nucleotide sequence encoding said Cas9 protein; and
        b) a single molecule DNA-targeting RNA, or a nucleic acid comprising a nucleotide sequence encoding said single molecule DNA-targeting RNA; wherein the single molecule DNA-targeting RNA comprises:
            i) a targeter-RNA that is capable of hybridizing with a target sequence in the target DNA molecule, and
            ii) an activator-RNA that is capable of hybridizing with the targeter-RNA to form a double-stranded RNA duplex of a protein- binding segment,
        wherein the activator-RNA and the targeter-RNA are covalently linked to one another with intervening nucleotides; and
        wherein the single molecule DNA-targeting RNA is capable of forming a complex with the Cas9 protein, thereby targeting the Cas9 protein to the target DNA molecule, whereby said system is capable of cleaving or editing the target DNA molecule or modulating transcription of at least one gene encoded by the target DNA molecule.

    As a reminder, an interference proceeds in two stages.  The first stage involves the parties presenting motions that can modify the count, have certain claims declared outside the scope of the count (or vice versa), seek to establish an earlier priority date, and ask for a finding that the claims are invalid under any of the provisions of the patent statute.  It will be recalled that the Broad and Berkeley attempted to file such motions in the first interference (see "CRISPR Interference Motions Set").  If these motions are not decided in a way that would disqualify one or both parties, then the interference will move to a second stage, where the Junior Party (Berkeley, unless it can establish an earlier priority filing date) will present its proofs of conception and reduction to practice and the Senior Party will be permitted to oppose.  The Senior Party is under no obligation to present proofs earlier than its earliest filing date unless the Junior Party evinces evidence of (at least) earlier conception.  In practice, the parties can both be expected to submit their priority evidence.

    The declaration also contains the scheduling statement that there will be a telephone conference between APJ Katz and the parties on August 5th, and that four business days prior, the parties will submit a list of motions it proposes to file.  (Except in instances where this list is vanishingly small, it is unlikely that the Board will grant the parties' motions to file all these proposed motions.)  In the last interference, the Broad filed a motion that there was no interference-in-fact (unlikely in this interference); several motions that the Broad's dozen patents involved in the interference should be accorded the benefit of priority to 16 provisional applications; a motion that the University's claims corresponding to the count are unpatentable for lack of written description (granted); a motion that the University's claims corresponding to the count are unpatentable for lack of enablement (deferred); motions that the University claims are not patentable over "certain prior art" (deferred); and motions for access to pending Berkeley applications (which was denied).  Berkeley's motions were in some ways more compelling, to the extent they suggested grounds for invalidating the Broad patents that were foreclosed by the PTAB's determination that there was no interference-in-fact.  These motions included:  a motion that all of the claims of all of the Broad's patents are invalid over the publication of the University's application in interference, based on an error in how the Broad's application was filed involving changes resulting from the America Invents Act (deferred); five motions to change the count (one was granted but mooted by the Board's decision); a motion for priority benefit to an earlier provisional application (granted); a motion that the Broad's involved claims are anticipated by certain prior art (deferred); a motion that each of the Broad's patents are unpatentable under the doctrine of obviousness-type double patenting (deferred); a motion that each of the Broad's patents are unpatentable for improper inventorship (deferred); and a motion that each of the Broad's patents were obtained by inequitable conduct (denied).

    What motions the parties file should be available on the PTAB website shortly after the August 5th teleconference and will be the subject of a future post.

  • Cellspin Soft, Inc. v. Fitbit, Inc. (Fed. Cir. 2019)

    By Michael Borella —

    Federal Circuit SealBackground

    Cellspin Soft Inc. (Cellspin) filed an infringement suit against Fitbit Inc. (Fitbit) and ten other defendants in the Northern District of California, asserting U.S. Patent Nos. 8,738,794, 8,892,752, 9,258,698, and 9,749,847.  These patents have a common specification and their claims are directed to a data capture device being connected to a mobile device so that captured data can be published to a web site.  The defendants moved the District Court to dismiss all counts under Rule 12(b)(6) or 12(c), alleging that the patents did not meet the eligibility requirements of 35 U.S.C.§ 101.  Ultimately, the District Court not only granted this motion, but also awarded the defendants attorney fees under § 285.  Cellspin appealed.

    In Alice Corp. v. CLS Bank Int'l, the Supreme Court set forth a two-part test to determine whether claims are directed to patent-eligible subject matter under § 101.  One must first decide whether the claim at hand involves a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exclusion.  But elements or combinations of elements that are well-understood, routine, and conventional will not lift the claim over the § 101 hurdle.  While this inquiry is generally carried out as a matter of law, factual issues can come into play when determining whether something is well-understood, routine, and conventional.

    The Claimed Inventions

    As a representative example of the claimed inventions, the '794 patent "teaches a way to transfer and upload data automatically or with minimal user intervention using a data capture device and a mobile device."  Notably, a client application on the mobile device wirelessly receives data from the data capture device and then publishes this data to one or more websites.  Such a procedure takes place "automatically or with minimal user intervention."

    Claim 1 of this patent recites:

    A method for acquiring and transferring data from a Bluetooth enabled data capture device to one or more web services via a Bluetooth enabled mobile device, the method comprising:
        providing a software module on the Bluetooth enabled data capture device;
        providing a software module on the Bluetooth enabled mobile device;
        establishing a paired connection between the Bluetooth enabled data capture device and the Bluetooth enabled mobile device;
        acquiring new data in the Bluetooth enabled data capture device, wherein new data is data acquired after the paired connection is established;
        detecting and signaling the new data for transfer to the Bluetooth enabled mobile device, wherein detecting and signaling the new data for transfer comprises:
            determining the existence of new data for transfer, by the software module on the Bluetooth enabled data capture device; and
            sending a data signal to the Bluetooth enabled mobile device, corresponding to existence of new data, by the software module on the Bluetooth enabled data capture device automatically, over the established paired Bluetooth connection, wherein the software module on the Bluetooth enabled mobile device listens for the data signal sent from the Bluetooth enabled data capture device, wherein if permitted by the software module on the Bluetooth enabled data capture device, the data signal sent to the Bluetooth enabled mobile device comprises a data signal and one or more portions of the new data;
            transferring the new data from the Bluetooth enabled data capture device to the Bluetooth enabled mobile device automatically over the paired Bluetooth connection by the software module on the Bluetooth enabled data capture device;
            receiving, at the Bluetooth enabled mobile device, the new data from the Bluetooth enabled data capture device;
            applying, using the software module on the Bluetooth enabled mobile device, a user identifier to the new data for each destination web service, wherein each user identifier uniquely identifies a particular user of the web service;
            transferring the new data received by the Bluetooth enabled mobile device along with a user identifier to the one or more web services, using the software module on the Blue-tooth enabled mobile device;
            receiving, at the one or more web services, the new data and user identifier from the Bluetooth enabled mobile device, wherein the one or more web services receive the transferred new data corresponding to a user identifier; and
            making available, at the one or more web services, the new data received from the Bluetooth enabled mobile device for public or private consumption over the internet, wherein one or more portions of the new data correspond to a particular user identifier.

    The other asserted claims are substantially similar, though they recite further variations including: (1) a polling mechanism through which the mobile device checks for and then pulls data from the data capture device, (2) establishing a connection between the mobile device and the data capture device using encryption, (3) the mobile device using the hypertext transfer protocol (HTTP) to transfer the captured data to the web sites, and (4) broader embodiments that do not use Bluetooth.

    District Court Proceedings

    One month after the defendants filed the motion to dismiss, Cellspin filed a notice of supplemental authority.  The notice cited the recently-decided Aatrix Software, Inc. v. Green Shades Software, Inc. and Berkheimer v. HP Inc., two cases that established the contours of the factual analysis in the Alice test's second part.  Cellspin also amended its complaints to allege that the combination of elements recited by the claims was unconventional at the time the patents were filed.

    Applying part one of the Alice test, the District Court found that the claims were directed to the abstract idea of "acquiring, transferring, and publishing data and multimedia content on one or more websites."  The District Court noted that "Cellspin failed to show that the data acquisition, transfer, and publication described in the '794 patent represents something more than a simple automation of a conventional (manual) process."

    Moving on the part two, the District Court "concluded that the various claim elements, e.g., the data capture device and Bluetooth enabled mobile device, represent generic computer components performing as expected according to their ordinary use."  The District Court acknowledged that there was a factual dispute between the parties regarding whether the combination of these elements was well-understood, routine, and conventional.  But the District Court declined to take this factual dispute into account because, in the District Court's view, Berkheimer only applied to the summary judgment stage, and also because Cellspin did not identify where the specification described the unconventional aspects of the claimed inventions as alleged in the amended complaint.  Thus, all claims were found invalid under § 101.

    A number of the defendants moved the District Court for attorney fees.  The District Court found that the case met the definition of "exceptional" under § 285 because the "claims were manifestly directed to an abstract idea" and "exceptionally meritless."  Further, the District Court determined that Cellspin litigated aggressively, noting that Cellspin amended "its complaint only three days prior to the hearing on the motions to dismiss."

    The District Court further admonished Cellspin for "a refusal to analyze its patents critically before filing suit," noting that "Cellspin could have litigated a test case but instead chose to file and pursue aggressively fourteen lawsuits simultaneously."  The District Court recommended this approach because "Cellspin's patents are not presumed eligible under Section 101."

    Based on these factors, the District Court awarded attorney fees to the defendants.

    Appeal to the Federal Circuit

    On appeal, the Federal Circuit re-applied the Alice test and also considered the attorney fees award.

    Particularly, the Court found that, under part one of Alice, the claims were indeed directed to an abstract idea.  The Court determined that this outcome was required given the similarities between Cellspin's claims and those held abstract in In re TLI Communications LLC Patent Litigation ("claims reciting recording . . . transmitting . . . and storing digital images were directed to an abstract idea") and Elec. Power Grp., LLC v. Alstom S.A. ("claims reciting collecting information, analyzing it, and displaying certain results" are typically abstract in nature).

    Moving on to part two of Alice, the Court looked to Cellspin's amended complaint for allegations that its claims are unconventional.  There, it found Cellspin's argument that "prior art devices included a capture device with built in mobile wireless Internet," and that "at the time of the patent priority date . . . the combined apparatus was bulky, expensive in terms of hardware, and expensive in terms of requiring a user to purchase an extra and/or separate cellular service for the data capture device."  Cellspin further argued that "it was unconventional to separate the steps of capturing and publishing data so that each step would be performed by a different device linked via a wireless, paired connection" and that doing so "allows data capture devices to be smaller and cheaper to build."  Additionally, Cellspin asserted that the ordering of the claimed elements was also unconventional, as prior art devices "forwarded data to a mobile device as captured," whereas the claims involve "establishing a paired connection between the mobile device and the data capture device before data is transmitted."  According to Cellspin, this has the advantage of data only being transmitted "if the mobile device is capable of receiving it."

    As noted above, the District Court faulted Cellspin for not citing to support in the specification for these allegations.  But the Federal Circuit disagreed that this was required, noting that under Aatrix, "allegations in the complaint [are sufficient] to conclude that the disputed claims were potentially inventive."  The Court went on:

    While we do not read Aatrix to say that any allegation about inventiveness, wholly divorced from the claims or the specification, defeats a motion to dismiss, plausible and specific factual allegations that aspects of the claims are inventive are sufficient.  As long as what makes the claims inventive is recited by the claims, the specification need not expressly list all the reasons why this claimed structure is unconventional.  In this case, Cellspin made specific, plausible factual allegations about why aspects of its claimed inventions were not conventional, e.g., its two-step, two-device structure requiring a connection before data is transmitted.  The district court erred by not accepting those allegations as true.

    The Court also made it clear that Aatrix "expressly stated that patentees who adequately allege their claims contain inventive concepts survive a § 101 eligibility analysis under Rule 12(b)(6)."  Thus, the District Court's reliance on Berkheimer to discount Cellspin's allegations was misplaced.

    Putting this all together, the Court stated "accepting the allegations stated above as true, we cannot conclude that the asserted claims lack an inventive concept . . . we have no basis, at the pleadings stage, to say that these claimed techniques, among others, were well-known or conventional as a matter of law."  A major factor that led the Court toward this conclusion was that "Cellspin did more than simply label [the claimed] techniques as inventive . . . [i]t pointed to evidence suggesting that these techniques had not been implemented in a similar way."  Thus, based on the allegations, the claims "recite a specific, plausibly inventive way of arranging devices and using protocols rather than the general idea of capturing, transferring, and publishing data," and cannot be found ineligible at this point in the case.

    As the District Court's opinion was vacated, the attorney fees award was necessarily vacated as well.  To that point, the Federal Circuit clarified the principle that an issued patent has a presumption of validity:

    This presumption reflects the fact that the Patent and Trademark Office has already examined whether the patent satisfies the prerequisites for issuance of a patent, including § 101.  While an alleged infringer may attempt to prove that the patent never should have issued in the first place, i.e., challenge its validity, the alleged infringer must prove that the patent does not satisfy these prerequisites before the patent loses its presumption of validity.  To the extent the district court departed from this principle by concluding that issued patents are presumed valid but not presumed patent eligible, it was wrong to do so.

    The Court also found that the District Court erred when admonishing Cellspin for amending its complaints so close to the hearing thereon.  Looking to the record, the Court observed that "Cellspin's amendment was timely based on a scheduling order entered by the district court just three days before Cellspin's amendment," and that "Cellspin's decision to amend was also justified in light of Berkheimer and Aatrix, decided just a few weeks earlier."

    Thus, both issues of patent eligibility and attorney fees were remanded to the District Court for further review.

    Cellspin Soft, Inc. v. Fitbit, Inc. (Fed. Cir. 2019)
    Panel: Circuit Judges Loruie, O'Malley, and Taranto
    Opinion by Circuit Judge O'Malley

  • Conference & CLE Calendar

    CalendarJuly 17-19, 2019 – Patent Fundamentals Bootcamp 2019: An Introduction to Patent Drafting, Prosecution, and Litigation (Practising Law Institute) – San Francisco, CA

    July 18, 2019 – "Not So Obvious: Secondary Considerations at the PTAB" (Fitch Even) – 12:00 to 1:00 pm (ET)

    July 18, 2019 – "Strategies for IP Protection in China — What Georgia Businesses Need to Know" (U.S. Patent and Trademark Office and Georgia Tech Library) – Scheller College of Business, Georgia Institute of Technology, Atlanta, GA

    July 18, 2019 – "Freedom to Operate Searches" (Intellectual Property Law Association of Chicago Corporate and Biotechnology Committees) – 5:30 to 6:30 pm (CT), Chicago, IL

  • Panel Discussion on Freedom to Operate Searches

    IPLACThe Intellectual Property Law Association of Chicago (IPLAC) Corporate and Biotechnology Committees will be presenting a panel discussion on "Freedom to Operate Searches" on July 18, 2019 from 5:30 to 6:30 pm (CT) at Porter Kitchen + Deck in Chicago, IL.  The panel includes Dimitry Kapmar of Zebra Technologies, Saumil Mehta of Gogo LLC, Pete Slawniak of Argonne National Lab, and Adam Wolek of Taft Stettinius & Hollister LLP.

    The registration fee for the presentation is $10 for non-members; there is no registration for IPLAC members.  Those interested in registering for event can do so here.