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  • Webinar on Drafting and Defending Software Patents

    Strafford #1Strafford will be offering a webinar entitled "Drafting and Defending Software Patents: Meeting Sections 102, 103 and 112 Requirements" on January 24, 2019 from 1:00 to 2:30 pm (EST).  Michael L. Kiklis of Bass Berry & Sims and Stephen G. Kunin of Maier & Maier will guide patent practitioners on how to draft their software patent applications to comply with Section 102, 103 and 112 requirements, will provide guidance on how to defend software patents from attacks under those statutory sections, and will discuss federal court guidance, prosecution guidelines, and offer litigation and prosecution strategies.  The webinar will review the following issues:

    • What are the hurdles for patent counsel to demonstrate a software-related claim is novel and non-obvious during prosecution?
    • What is the best way to defend against Section 102, 103 or 112 attacks at the District Court and the PTAB?

    The registration fee for the webcast is $347.  Those interested in registering for the webinar, can do so here.

  • Guest Post — Linking It Up: Antibody-Drug Conjugates

    By Steve Kennedy* and Anthony D. Sabatelli** —

    As discussed in our previous article, antibody-drug conjugates (ADCs) have emerged as a highly promising class of anti-cancer drugs, and significant technical innovations are being made in all three components of the ADC, i.e., the antibody, the drug payload, and the linker joining them.  The linker has been an area of particular focus, both within pharmaceutical development and the patent space.  The primary considerations for effective ADC linkers are their stability during circulation followed by release at the target site and their method of attachment to the antibody.  The latter can determine the ratio of payload to antibody, formulation homogeneity, and ease of manufacture, and will be the focus of the current article.

    Early ADCs, including the FDA-approved Mylotarg and Kadcyla, were created by directly functionalizing solvent-accessible lysine residues on the antibody using N-hydroxysuccinimide (NHS) esters.  Although this method is convenient, owing to the abundance of solvent-exposed lysine residues and mild reaction conditions required for conjugation, the resulting conjugates of this method are heterogeneous in their conjugation sites and amount of payload conjugated.  Although the average drug-to-antibody ratio (DAR) of a formulation can generally be controlled to the desired range of 3:1-4:1, because there are approximately 90 accessible lysines on the antibodies typically used as scaffolds, a high degree of isomeric variability is still present in these mixtures.  These mixtures can have varying pharmacokinetics, efficacy, and solubility.  Especially considering the contribution of formulation heterogeneity to the temporary withdrawal of Mylotarg from the market, homogeneity is a key goal for next-generation ADC therapies.

    The most common method for designing homogeneous ADCs is to conjugate the linker to cysteine residues on the antibody by reacting maleimide derivatives with cysteine sulfhydryl groups.  Earlier applications, including the FDA-approved Adcetris (U.S. Patent No. 7,829,531), were produced by reducing native interchain disulfide bonds in the antibody to provide accessible cysteines (U.S. Patent No. 7,837,980).  To improve antigen affinity, site-directed mutagenesis is now commonly employed to insert solvent-accessible cysteines that could be used for conjugation.  These engineered antibodies, termed THIOMABs, have been used in the design of several ADCs (U.S. Patent Nos. 8,937,161; 7,723,485; and 9,000,130, and U.S. Patent Application No. 15/592,072).

    Another promising method that has been used for the production of cysteine-linked ADCs, which does not require the engineering of mutant cysteine residues, is disulfide rebridging.  In the human IgG antibodies generally used as templates for ADCs, there are many disulfide bonds.  Some disulfide bonds, particularly intrachain bonds, can be important for proper binding of the target antigen, but several disulfide bonds have been shown to be reducible under mild conditions and nonessential for proper antibody function.  This finding led to academic applications where ADCs were linked through cysteine residues at broken disulfide bonds.  However, a more robust approach, which has seen activity in the biotech and patent arenas, is to bridge disulfide bonds with linkers attached to a cytotoxic payload.  By temporarily reducing and then rebridging the disulfide bond, the structural integrity of the antibody remains intact, improving antigen binding and stability (U.S. Patent No. 9,884,127; U.S. Patent Application Nos. 14/807,234; 14/437,537; 13/412,816; International Publication Nos. WO 2013/190272 and WO 2015/155753; and U.S. Patent Application Publication No. US 2015/0283259).  Particularly interesting, this strategy has recently been used to generate homogeneous ADCs linked to two different payload drugs, potentially allowing for further potency (International Publication No. WO 2018/185526).

    Yet another strategy designed to avoid the disruption of binding sites is conjugation at the N- and C-termini of the antibody.  Since the termini are distant from the antigen binding domains and key structural elements for antibody stability, the termini are promising locations for the addition of the linker and payload.  For example, antibodies have been engineered with a specific amino acid sequence at their C-termini, which allows for the specific conjugation of perfluoroaromatic linkers.  The conjugation of a perfluoroaromatic monomethyl auristatin E (MMAE) derivative  to an engineered cysteine on trastuzumab was shown to retain the native antigen binding affinity and improve potency against HER2 breast cancer cells (International Publication No. WO 2018/140590).

    The recent rapid progress in generating proteins with specific, genetically-encoded non-natural amino acids has led to several interesting applications in ADCs.  Major advantages of non-natural amino acids are that they can contain functional groups not present on native amino acids, allowing for unique chemistry at specific sites and improved homogeneity, and potentially greater stability relative to native amino acids.  Several non-natural amino acids, including p-azidomethyl-N-phenylalanine (U.S. Patent Application Publication No. US 2017/0362334) and p-acetyl-L-phenylalanine (U.S. Application No. 14/786,402) have been engineered into trastuzumab to generate homogeneous ADCs with high efficacy against cancer cells.  Most significantly, both of these ADCs demonstrated improved stability and safety in vivo relative to trastuzumab.

    Although still in its infancy, another means of peptide side chain conjugation used in ADCs shows significant promise.  Several groups have reported enzymatic methods to ligate linkers to antibodies.  This method takes advantage of enzymes that generate post-translational modifications of proteins in a site-specific manner (U.S. Patent Application Publication No. US 2018/0140714).  For example, bacterial transglutaminase has been used to conjugate lysine-containing linker-payload combinations to a glutamine side chain of human IgG1 (U.S. Patent No. 9,717,803).  This strategy yielded a conjugate with improved targeting of tumor cells relative to chemically-conjugated molecules and is under active development.

    In addition to conjugation of linkers to peptide components of the antibody, glycoengineering approaches have shown significant promise as well, and this topic will be discussed in a future article in this series.  As evidenced by the diverse and robust research and IP activity focused on ADC linker chemistries, the linker provides exciting opportunities for both improvements in potency and safety as well as novel ADC IP.  Especially in the ADC arena fraught with overlapping claims on naked antibodies, payloads, and established linkers, new modalities in linker chemistries provide needed avenues for innovation.

    Table 1a Table 1b

    * Steve Kennedy is a Ph.D. Candidate in the Chemistry Department at New York University. He specializes in biophysical characterization of protein complexes and is currently focused on the role of adaptor proteins in signaling pathways. Prior to attending NYU, Steve obtained his B.S. in Chemistry with Cum Laude honors at the University of Massachusetts – Boston, during which time he conducted bioanalytical mass spectrometry method development and lipidomics research.
    ** Dr. Sabatelli is a Partner with Dilworth IP

  • USPTO Patent Quality Chat Webinar Series

    The U.S. Patent and Trademark Office will be offering the next webinar in its Patent Quality Chat webinar series from 2:00 to 3:00 pm (ET) on January 10, 2019.  In the latest webinar, on the "Revised Subject Matter Eligibility Guidance," USPTO Deputy Commissioner for Patent Examination Policy Bob Bahr and Senior Legal Advisor Matthew Sked will discuss the revised guidance and the changes it makes to how USPTO personnel apply the first step of the Supreme Court's Alice/Mayo test (Step 2A in Office guidance) for subject matter eligibility, and specifically, how the revised guidance creates a new inquiry in Step 2A, in which a claim is not "directed to" a recited judicial exception if the claim integrates the judicial exception into a practical application.  The revised guidance also groups the types of subject matter that are considered abstract ideas and directs USPTO personnel to use these groupings to identify abstract ideas in revised Step 2A.

    Additional information regarding this webinar, including instructions for viewing the webinar, can be found here.

  • Coqui Technologies, LLC v. Gyft, Inc. (D. Del. 2018)

    By Joseph Herndon —

    District Court for the District of DelawareIn the U.S. District Court for the District of Delaware, a patent directed to electronic gift card distribution was found to be directed to patent-ineligible subject matter.

    Coqui filed related patent infringement actions claiming infringement of U.S. Patent No. 7,580,864, entitled "Method for Circulating an Electronic Gift Certificate in Online and Offline System," which claims a method of circulating electronic gift certificates and managing sales of electronic gift certificates according to requests made through wired and wireless networks.

    The '864 patent describes that a gift certificate database and a gift certificate service server manage sales of the electronic gift certificates according to requests by a communication terminal through wired and wireless networks.  A user provides a purchase request from a communication terminal, and the server determines if proper funds were supplied for the gift certificate.  If so, the purchased electronic gift certificate is provided to the user and stored in the gift certificate database.  A user can buy a desired product at an online shopping mall through a terminal such as a subscriber's computer, and perform an online settlement with the user's electronic gift certificate.  Here, the electronic gift certificate circulation system can authenticate the user by using a telephone number of the subscriber's communication terminal and an electronic gift certificate password through the online shopping mall, and then settle the corresponding electronic gift certificate.

    Claim 1 of the '864 patent is representative and is reproduced below:

    1.  A gift certificate service system for managing sales, gifting, and usage of electronic gift certificates according to a request by a user's communication terminal through a wired network, wireless network, or both, comprising:
        a gift certificate service server for managing purchase, gifting, and usage operations on the electronic gift certificates from the communication terminal;
        a gift certificate database, accessed by the gift certificate service server, for storing electronic gift certificate information prior to transferring the gift certificate to a transferee, and processing a reply to an inquiry of electronic gift certificate usage from the gift certificate service server; and
        a network server, accessed by the gift certificate service server and accessed by the user's communication terminal through the wired network, wireless network, or both, for performing a client interface function with the purchase, gifting, and usage of the electronic gift certificates, and transmitting the user's gift certificate purchase particulars and gift certificate information for usage of the corresponding gift certificate to the communication terminal,
        wherein the electronic gift certificate is a multimedia message including barcode data, wherein the network server is responsive to use of the electronic gift certificate occasioned by displaying the barcode data on the communication terminal, and wherein the electronic gift certificate information stored by the gift certificate database includes at least one of a gifting history of the gift certificates or a usage history of the gift certificates.

    The '864 patent describes that by unifying an electronic gift certificate management system and a mobile communication system into a single system, the invention simplifies an electronic gift certificate circulation system and allows the electronic gift certificates to be quickly and accurately purchased, gifted, and used.

    Defendants filed motions to dismiss for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6).  According to Defendants, Coqui's complaint fails to state a claim because the patents-in-suit are ineligible for patent protection under 35 U.S.C. § 101.

    The Court followed the two-step framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts.

    A.    Step 1

    In step 1, the Court determined whether the claims at issue are directed to a patent-ineligible concept.  Applying the first step of the framework to the asserted claims, the Court concluded that the claims are directed to the abstract idea of selling, gifting, and using electronic gift certificates over a network, which is a longstanding commercial practice.

    Coqui argued that claims of the '864 patent represent patent eligible material unique to the Internet directed to a concrete method of purchasing and using an electronic gift card-in the form of a barcode received via a MMS message and displayed on a display device with Internet access-as well as tracking the usage and gifting history of the particular electronic gift card.  In addition, Coqui argued that the additional security provided by the patented method's authentication of gift certificate membership and usage histories is not an established commercial practice defeating Defendants' abstract idea allegation.

    However, the Court found that the claims of the '864 patent relate to the abstract idea of selling, gifting, and using an electronic gift certificate.  The preamble of claim 1 identifies a gift certificate service system for managing sales, gifting, and usage of electronic gift certificates according to a request by a user's communication terminal through a wired network, wireless network, or both.  Claim 1 subsequently lists the following elements:  (1) a gift certificate service server; (2) a database; and (3) a network server.  Each of the subsequent claim 1 limitations refer back to either managing the purchase, gifting and usage operations or the gifting or usage history of electronic gift certificates.

    The Court noted that a gift certificate is defined in the '864 patent as a bill that has an exchangeable value so that a user may give it to a shop to make a purchase or get a discount on a desired product.  Applying the Internet and computer components to the commercial practice of electronic gift certificates does not preclude a finding that the '864 patent is abstract.

    The Court highlighted that the claims of the '864 patent do not improve the functioning of a computer or any of the other components involved in the method.  Instead, the asserted claims add conventional computer components to well-known business practices.

    The Court found that the '864 patent's alleged security benefits do not confer patent eligibility because the authentication of a gift certificate transaction could be performed by a human with a pen and paper.  The preferred embodiment of the '864 patent describes a database that stores a gifting history and usage history as well as a history of gift certificates bought by the client to authenticate that the client's gifting or usage of the electronic gift certificate is fair.  Such authentication could be performed using a pen and paper; therefore, the Court found that the '864 patent is directed to an abstract idea despite the added security benefits that might result from using a computer to perform authentication.

    In addition, authenticating and verifying the balance of the electronic gift certificate was found to be abstract because it relates to the "organizing of human activity."

    B.    Step 2

    Because the '864 patent was found to be directed to the abstract idea of selling, gifting, and using electronic gift certificates, the Court turned to the inventive concept analysis in step 2.

    The '864 patent claims implement the longstanding commercial practice of selling, gifting, and using gift certificates by using a generic computer and networking components in conventional ways.

    Coqui argued that the '864 Patent offers a useful, non-conventional and non-generic arrangement of components and functionality, namely, an inventive configuration of components that solve problems associated with conventional gift certificate circulation like the requirement of being physically present to purchase a gift certificate and additional settlement processes.

    But the computer components described in the '864 patent are generic and function in conventional ways.  The communication terminal is used as a "mobile user interface."  The service server is used for "managing purchase, gifting, and usage operations."  The database is used "for storing electronic gift certificate information."  The network server is used for "transmitting . . . gift certificate information . . . to the communication terminal."  These components, as described in the '864 patent, operate in their typical capacities in conventional ways and do not embody an inventive concept.  The '864 patent does not specify precise devices that must be used in the method or provide any explanation about how the software solves a technological problem.

    Coqui also did not explain or argue that the arrangement of the components or some type of configuration unique to the '864 patent improves the functionality of a generic computer or solves a technical problem.

    The Court noted that the application of barcodes, MMS messages, and devices with Internet access to a system comprising generic computing components for circulating electronic gift certificates is not an inventive concept.

    The Court discounted the idea that the '864 patent improves the electronic gift certificate process by facilitating the purchase, usage, and gifting of certificates without requiring the customer to be physically present in the store as not being an inventive concept because it was found that the claims at issue here do not solve a technological problem.  Instead, the claims provide a conventional technological environment (i.e., computers and the Internet) in which to carry out the abstract idea of using electronic gift certificates.

    Because the claims were found to be directed to an abstract idea without an inventive concept, the Court recommended to grant defendants' motions to dismiss pursuant to Rule 12(b)(6).

    Coqui Technologies, LLC v. Gyft, Inc. (D. Del. 2018)
    Report and Recommendation by U.S. Magistrate Judge Sherry R. Fallon

  • USPTO Issues Updated Subject Matter Eligibility Guidance

    By Michael Borella —

    USPTO SealOn January 4, the U.S. Patent and Trademark Office published updated examination guidance regarding the subject matter eligibility of inventions involving abstract ideas.  The guidance went into effect on January 7, upon its publication in the Federal Register.

    In substance, the new guidance falls in line with statements made previously by USPTO Director Andrei Iancu.  But at first blush, it does not appear to be a radical departure from substantive USPTO examination practice despite raising a few additional procedural hurdles that examiners are to overcome before rejecting claims under 35 U.S.C. § 101.  Further, the guidance is non-binding on examiners and the PTAB.[1]

    Will the existence of the guidance result in more consistent examining practices across USPTO technical centers, art units, and examiners?  Time will tell.  But at the very least, the way in which § 101 rejections are rebutted by applicants is likely to become more nuanced.

    Prior USPTO § 101 examination practice was to combine the § 101 statutory language with the exceptions set forth in Alice Corp. v. CLS Bank Int'l.  First, in what the USPTO refers to as step 1, the examiner was to determine "whether the claimed subject matter falls within the four statutory categories of patentable subject matter identified by 35 U.S.C. 101: process, machine, manufacture, or composition of matter."  If the answer to this question is that it does not, then the claims are to be rejected as non-statutory.

    Otherwise, the two-part Alice test is applied.  The USPTO refers to these parts as steps 2A and 2B.  Step 2A involves determining whether a claim is directed to a judicial exception, such as an abstract idea.  If not, then no § 101 rejection can be made.  But if the claim involves such an exception, step 2B is applied to determine further whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exception.  If this is the case, the claim is patent-eligible under § 101.  If not, it can be rejected.  Notably, under step 2B, elements that are well-understood, routine, and conventional, alone and in combination, have no patentable weight.

    The January 4 guidance only modifies step 2A, and leaves steps 1 and 2B intact.  But in a rather odd and semi-redundant manner, the USPTO is now breaking step 2A into two sub-steps that mirror the language and procedure of steps 2A and 2B.

    In particular, these two sub-steps (let's call them 2A(i) and 2A(ii) for purposes of clarity), involve the following:

    • In sub-step 2A(i), the examiner is to determine whether the claim recites a judicial exception, such as an abstract idea.
    • If so, then in sub-step 2A(ii), the examiner is to determine further "whether the recited judicial exception is integrated into a practical application of that exception."

    In an attempt to make sub-step 2A(i) easier to follow, the USPTO has set forth three general classes of abstract ideas.  We can think of them as the "three M's" — math, money, and mental steps.  Or, in the words of the USPTO:

    a) Mathematical concepts – mathematical relationships, mathematical formulas or equations, mathematical calculations;

    b) Certain methods of organizing human activity – fundamental economic principles or practices (including hedging, insurance, mitigating risk); commercial or legal interactions (including agreements in the form of contracts; legal obligations; advertising, marketing or sales activities or behaviors; business relations); managing personal behavior or relationships or interactions between people (including social activities, teaching, and following rules or instructions); and

    c) Mental processes – concepts performed in the human mind (including an observation, evaluation, judgment, opinion).

    Thus, rather than reviewing the case law and attempting to make an analogy between the claim under examination and a precedential opinion, examiners can consult this list of abstract ideas.  But the list is not meant to be exhaustive nor exclusive.  The USPTO notes that "[i]n the rare circumstance in which an examiner believes a claim limitation that does not fall within the enumerated groupings of abstract ideas should nonetheless be treated as reciting an abstract idea", the examiner can view the claimed as directed to a "tentative abstract idea."  If this categorization would result in a rejection, "the examiner should bring the application to the attention of the Technology Center Director," who then must approve the rejection and "provide a justification for why such claim limitation is being treated as reciting an abstract idea."

    The new sub-steps of 2A are worth digging into.  The goal of step 2A as revised is to clarify the determination of whether a claim is directed to an abstract idea.  Presumably this clarification is needed because the exact scope of the "directed to" language of this step has proven difficult to define.

    Sub-step 2A(i) instructs examiners to "identify the specific limitation(s) in the claim under examination (individually or in combination) that the examiner believes recites an abstract idea."  But examiners are also asked to "determine whether the identified limitation(s) falls within the subject matter groupings of abstract ideas" listed above.  Thus, the examiner's burden under sub-step 2A(i) is two-fold:  point out specific claim language reciting an abstract idea, and explain how that language fits into one or more of the three categories of abstract ideas.

    If the analysis moves on to sub-step 2A(ii), the examiner determines "whether the claim as a whole integrates the recited judicial exception into a practical application of the exception."  Such a claim "will apply, rely on, or use the judicial exception in a manner that imposes a meaningful limit on the judicial exception, such that the claim is more than a drafting effort designed to monopolize the judicial exception."

    The examiner carries out this latter inquiry by "(a) identifying whether there are any additional elements recited in the claim beyond the judicial exception(s); and (b) evaluating those additional elements individually and in combination to determine whether they integrate the exception into a practical application, using one or more of the considerations laid out by the [courts]."  A successful integration of an abstract idea into a practical application may include:

        an additional element reflects an improvement in the functioning of a computer, or an improvement to other technology or technical field;
        an additional element that applies or uses a judicial exception to effect a particular treatment or prophylaxis for a disease or medical condition;
        an additional element implements a judicial exception with, or uses a judicial exception in conjunction with, a particular machine or manufacture that is integral to the claim;
        an additional element effects a transformation or reduction of a particular article to a different state or thing; and
        an additional element applies or uses the judicial exception in some other meaningful way beyond generally linking the use of the judicial exception to a particular technological environment, such that the claim as a whole is more than a drafting effort designed to monopolize the exception.

    This language should look familiar.  It mirrors that of step 2B — the second prong of the Alice test.  But the USPTO clarifies that "revised Step 2A specifically excludes consideration of whether the additional elements represent well-understood, routine, conventional activity."  Putting this together, revised 2A appears to require that examiners consider all elements of the claim, dividing the claim into the recitation of the abstract idea and the additional elements.  Then examiners are to determine whether the sum of the additional elements results in an integration into a practical application, but do so without any consideration of whether these additional elements are known (i.e., in the prior art).  In other words, for computer-implemented inventions, whether a claimed technique is performed by generic processors, memory, and peripherals should be irrelevant to revised step 2A.[2]

    But even if the applicant loses on step 2A and the claim is found to be directed to an abstract idea by sub-steps 2A(i) and 2A(ii), step 2B still applies.  This guidance does not touch that part of the test.  Therefore, a claimed invention that is not well-understood, routine, or conventional should still be patent-eligible under Alice as interpreted in Berkheimer v. HP Inc.

    The USPTO provides an example in an attempt to clarify the distinction between sub-step 2A(ii) and step 2B:

    For example, when evaluating a claim reciting an abstract idea such as a mathematical equation and a series of data gathering steps that collect a necessary input for the equation, an examiner might consider the data gathering steps to be insignificant extra-solution activity in revised Step 2A, and therefore find that the judicial exception is not integrated into a practical application.  However, when the examiner reconsiders the data gathering steps in Step 2B, the examiner could determine that the combination of steps gather data in an unconventional way and therefore include an "inventive concept," rendering the claim eligible at Step 2B.

    So why is the USPTO promulgating a potentially confusing two-prong test to replace one prong of another two-prong test?  Is this the first step of making the Alice inquiry infinitely recursive?  To hazard a guess, it is an attempt to mitigate one of the most controversial and problematic aspects of Alice — how much of the § 101 analysis should be decided as a matter of law and how much should be a matter of fact.  By effectively eliminating prior art from the revised step 2A analysis, examiners can now find claims to be patent-eligible without comparing the claimed invention to what is well-understood, routine, and conventional.  But to find claims patent-ineligible, such a comparison should be made and it may incorporate factual questions per Berkheimer.

    Despite all of that, revised step 2A opens a new can of worms.  What exactly does it mean for "the recited judicial exception [to be] integrated into a practical application of that exception?"  How much integration is required?  How does one identify a practical application thereof?  As noted above, the examples provided by the new guidance mirror the language of the Alice decision itself, which is not a paragon of clarity.  Further, how broadly are examiners going to interpret the three categories of abstract ideas?  While the "math" and "mental processes" buckets are relatively cut and dry, the "methods of organizing human activity" bucket is fairly expansive.

    Current § 101 examination practice in the USPTO can vary dramatically between technical centers, art units, and even examiners within the same art unit.[3] While a handful of examiners appear to have a reasonable, if not above-average, grasp on the nuances of the § 101 case law, others do not.  Consider a business method invention that claims a technical improvement.  Review by a poorly-trained junior examiner, in an art unit with a § 101 specialist that believes virtually all data processing to be per se abstract, can rapidly devolve into absurdity that would make both Kafka and Monty Python proud.

    And will the courts give any deference at all to claims issued under the new guidance?  Probably not, as the judiciary's concern is whether a claimed invention complies with the relevant case law rather than whether the USPTO's test is satisfied.

    In sum, we will have to wait and see how the new guidance plays out in practice.  If anything, the additional procedural requirements introduced and the limiting of abstract ideas to only three categories is likely to favor applicants for at least some types of inventions.  It is unlikely that any claims that could be found patent-eligible under previous examination procedures are suddenly going to be viewed as ineligible under the new guidance.  Modulo examiner variability, of course.

    Applicants will likely have to adjust their § 101 rebuttal strategies to specifically address and argue sub-steps 2A(i) and 2A(ii).  But applicants should still argue the case law as well, because it may be helpful to have such arguments on the record should the file history be reviewed.

    [1] "All USPTO personnel are, as a matter of internal agency management, expected to follow the guidance.  Failure of USPTO personnel to follow the guidance, however, is not, in itself, a proper basis for either an appeal or a petition."

    [2] Then again, if reciting "an improvement in the functioning of a computer" renders a claim patent-eligible under step 2A(ii), what is the frame of reference for evaluating this improvement?  What does the claim improve upon if not the prior art?

    [3] In the new guidance, the USPTO states that "[t]he legal uncertainty surrounding Section 101 poses unique challenges for the USPTO, which must ensure that its more than 8500 patent examiners and administrative patent judges apply the Alice/Mayo test in a manner that produces reasonably consistent and predictable results across applications, art units and technology fields."

  • Top Five Stories of 2018

    By Donald Zuhn –-

    FireworksAfter reflecting upon the events of the past twelve months, Patent Docs presents its 12th annual list of top patent stories.  For 2018, we identified fifteen stories that were covered on Patent Docs last year that we believe had (or are likely to have) a significant impact on patent practitioners and applicants.  In previous posts, we counted down stories #15 to #11 and stories #10 to #6, and today we count down the top five stories of 2018.  As with our other lists (2017, 2016, 2015, 2014, 2013, 2012, 2011, 2010, 2009, 2008, and 2007), links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look.  As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with anything we included, please let us know.  In addition, we will be offering a live webinar on the "Top Patent Law Stories of 2018" on January 16, 2019 from 10:00 am to 11:15 am (CT).  Details regarding the webinar, which will focus on a handful of the most important stories on this year's list, can be found here.

    5.  Supreme Court Denies Certiorari in Regeneron Pharmaceuticals v. Merus

    In October, the Supreme Court denied certiorari to Regeneron Pharmaceuticals in its appeal of the Federal Circuit's decision in Regeneron Pharmaceuticals v. Merus that affirmed the District Court's decision that the claims of Regeneron's patent-in-suit were unenforceable due to inequitable conduct.  In so doing, the Court passed up the opportunity to consider whether the Federal Circuit's split panel decision was consistent with its inequitable conduct jurisprudence, most recently handed down en banc in Therasense, Inc. v. Becton, Dickinson and Co.  The case arose over Regeneron's infringement suit against Merus involving U.S. Patent No. 8,502,018, which is directed to transgenic mice expressing human variable domain immunoglobulin (Ig) genes.  During prosecution of the '018 patent, four references were known to Regeneron and its counsel, but were not cited to the U.S. Patent and Trademark Office.  Although neither the District Court nor the Federal Circuit found these references, alone or in combination, satisfied the requirements in the statute for invalidating the '018 patent claims, the District Court found that these references were "but for" material and this satisfied the first prong of the Therasense test for finding inequitable conduct.  With regard to the second prong of the Therasense test, intent to deceive, the Federal Circuit found the District Court's drawing of an adverse inference based on the litigation misconduct catalogued by the District Court in its opinion was not an abuse of discretion.  Because intent to deceive is personal (insofar as it applies only to those individuals who have a Rule 56 duty to disclose), it seems inequitable to draw such an inference against the attorneys who prosecuted the '018 patent based on the conduct of litigation counsel who did not have a Rule 56 duty of candor and were not involved in prosecuting the '018 patent to allowance.  The decision also perhaps raises questions of whether improperly rendering a patent unenforceable for inequitable conduct by a misapplication of the Therasense standard may amount to a 14th Amendment violation for taking property rights without due process.  These issues, however, were not enough for the Supreme Court to consider them worthy of its review.

    For information regarding this and other related topics, please see:

    • "Supreme Court Denies Certiorari in Regeneron Pharmaceuticals v. Merus," October 7, 2018


    4.  Federal Circuit Rejects Use of Tribal Sovereign Immunity to Shield Patents in Inter Partes Review Proceedings

    In July, in St. Regis Mohawk Tribe v. Mylan Pharmaceuticals, the Federal Circuit affirmed the decision by the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office that denied the Tribe's motion to terminate Mylan's inter partes review proceedings as being barred by tribal sovereign immunity.  The issue arose over six IPRs (and parallel IPRs filed by Petitioners Teva Pharmaceuticals USA, Inc. and Akorn, Inc., which had been joined with Mylan's IPRs) instituted against six U.S. patents.  After the PTAB instituted IPRs against the six patents owned by Allergan and directed to its Restasis® product, Allergan assigned its rights in the patents to the Tribe in return for a license.  The Tribe argued unsuccessfully before the Board that as rightful owner of the patents the Board lost jurisdiction based on tribal sovereign immunity.  The Board held that, as an issue of first impression, the Tribe had not borne its burden of showing it was entitled to the requested relief, and that the nature of the license left all substantive patent rights with Allergan, and thus that the company could amply represent the Tribe's rights even in its absence.  The Federal Circuit affirmed, with Fed. Maritime Comm'n v. S.C. State Ports Auth., 535 U.S. 743 (2002), forming the basis of the panel's opinion.  In particular, the panel found IPRs to be more akin to federal administrative proceedings (in which the Federal government is the "superior sovereign" and tribal immunity does not apply) than to a dispute between private parties, in which a government agency plays an adjudicatory role (as in the FMC precedent).  It is very likely that the Tribe will file a petition for certiorari to the Supreme Court.  In view of the importance of the issue of the proper scope of tribal sovereign immunity (and the Court's recent penchant for patent law cases), there is a good chance that the final decision on this matter has not been rendered.  So, it is likely that tribal sovereign immunity will be back on our Top Stories list again next year.

    For information regarding this and other related topics, please see:

    • "St. Regis Mohawk Tribe Petitions Federal Circuit for En Banc Review of Panel Decision Voiding Sovereign Immunity in Inter Partes Review," August 21, 2018
    • "Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2018)," July 22, 2018
    • "Federal Circuit Issues Stay in St. Regis Mohawk Tribe Sovereign Immunity Appeal," March 28, 2018
    • "Senators Introduce Bill to Abrogate Tribal Sovereign Immunity," March 14, 2018
    • "St. Regis Mohawk Tribe (and Allergan) File Motion to Preclude PTAB Final Written Decision in IPR," March 12, 2018
    • "St. Regis Mohawk Tribe and Allergan Appeal Denial of Motion to Dismiss on Sovereign Immunity Grounds," March 1, 2018
    • "PTAB Denies St. Regis Mohawk Tribe's Motion to Terminate IPRs based on Sovereign Immunity," February 25, 2018
    • "Amicus Briefs Filed in Mohawk Tribe's Motion to Dismiss IPRs," January 28, 2018
    • "The PTAB Strikes Back — Issues Order Prohibiting St. Regis Mohawk Tribe from Filing Any Additional Papers in IPR," January 8, 2018
    • "Skeptical St. Regis Mohawk Tribe Requests Discovery Regarding Panel Selection Circumstances," January 3, 2018


    3.  PTAB to Adopt Same Claim Construction Standard Used in Litigation

    In May, the U.S. Patent and Trademark Office published a notice of proposed Rulemaking in the Federal Register to change the claim construction standard used in inter partes reviews, post-grant proceedings, and covered business method reviews.  Instead of the broadest reasonable interpretation standard, the Office proposed adopting the same standard used by district courts and the ITC.  In October, the Office published a new rule specifying that the PTAB apply the same claim construction standards in IPRs, PGRs, and CBMs filed on November 13, 2018 or later as would apply in litigation.  Under the new rule, the PTAB will also consider claim construction decisions from litigation (whether from courts or the U.S. International Trade Commission) in construing claims in AIA proceedings.  The new rule abandons the PTO's former approach of using the broadest reasonable interpretation in claim construction, and thereby reflects a continuing move from considering AIA proceedings analogous to prosecution to considering them analogous — or part of — the litigation process.  Notably, the new rule recognizes — and adopts — the canon of construction that claims will be construed, if possible, to preserve their validity.  The wholesale adoption of the Phillips standard for claim construction provides a clear benefit:  court and ITC claim constructions will be directly relevant to AIA proceedings, and vice versa.  While the outcome of the claim construction process was previously generally the same under either standard, it technically involved different legal standards.  Now, the decisions in the two types of fora will be directly relevant to one another, increasing efficiency and decreasing cost.  And because the rule specifically indicates that "[a]ny prior claim construction determination concerning a term of the claim in a civil action, or a proceeding before the [ITC], that is timely made of record in the . . . proceeding will be considered," the chance of inconsistent decisions will be greatly lessened.

    For information regarding this and other related topics, please see:

    • "PTAB Adopts Litigation Standards for Claim Construction in AIA Proceedings," October 11, 2018
    • "USPTO Proposes Harmonizing Claim Construction Standard In PTAB Proceedings," May 9, 2018


    2.  Federal Circuit Holds That Patent Eligibility is Question of Law That May Contain Underlying Facts

    In February, the Federal Circuit provided a degree of clarity as to the evidentiary standard applicable to a § 101 challenge on summary judgment in Berkheimer v. HP Inc.  In that case, Steven E. Berkheimer brought an action against HP in the Northern District of Illinois, alleging infringement of U.S. Patent No. 7,447,713, which is directed to "digitally processing and archiving files in a digital asset management system."  After a Markman hearing in which the District Court construed several claim terms, HP moved for summary judgment under § 101.  The District Court granted the motion and Berkheimer appealed.  On appeal, Berkheimer argued that summary judgment was improper because whether the claimed invention is well-understood, routine, and conventional is an underlying fact question for which HP offered no evidence.  The Federal Circuit concluded that "[w]hether claims 4-7 perform well-understood, routine, and conventional activities to a skilled artisan is a genuine issue of material fact making summary judgment inappropriate with respect to these claims."  The Federal Circuit's holding and supportive reasoning appear to be the first time that the Court has explicitly required that a district court make findings of fact in order to justify a § 101 decision.  In April, the U.S. Patent and Trademark Office issued a memorandum on the Berkheimer decision to the patent examining corps, noting that when applying the second part of the Alice test, an Examiner should not find that an additional element is well-understood, routine or conventional unless the Examiner can expressly support (in writing) that finding using one of four rationales:  a citation to an express statement in the specification or to a statement made by an applicant during prosecution, a citation to one or more court decisions, a citation to a publication (provided that the publication demonstrates that the additional elements are widely prevalent or in common use in the relevant field), or a statement that the Examiner is taking official notice (provided that the Examiner follows the procedures of MPEP § 2144.03 for taking official notice).  In May, the Federal Circuit denied en banc review of Berkheimer (and of the related case, Aatrix Software, Inc. v. Green Shades Software, Inc.).  However, in September HP filed a petition for writ of certiorari with the Supreme Court, and the case was distributed for conference on January 4, 2019.  So, it is likely that the Berkheimer case will be back on our Top Stories list again next year.

    For information regarding this and other related topics, please see:

    • "In re Marco Guldenaar Holding B.V. (Fed. Cir. 2018)," December 30, 2018
    • "Deadline to Submit Comments to USPTO on Berkheimer Memo Approaching," August 5, 2018
    • "Will Alice Become the New Markman?" July 19, 2018
    • "Federal Circuit Denies En Banc Review of Berkheimer and Aatrix," June 3, 2018
    • "USPTO Updates Patent Eligibility Guidance in View of Berkheimer," April 23, 2018
    • "Berkheimer Files Response to HP's Petition for En Banc Review," April 1, 2018
    • "Whether Facts Matter in the Patent Eligibility Analysis: HP Files Petition for En Banc Rehearing," March 20, 2018
    • "Aatrix Software, Inc. v. Green Shades Software, Inc. (Fed. Cir. 2018)," February 18, 2018
    • "Berkheimer v. HP Inc. (Fed. Cir. 2018)," February 8, 2018


    1.  Supreme Court Finds Inter Partes Review Proceedings Constitutional

    In April, the Supreme Court held in Oil States Energy Services, LLC v. Greene's Energy Group, LLC that inter partes review proceedings do not violate Article III or the Seventh Amendment of the Constitution.  Justice Thomas, writing for the 7-2 majority, explained that a grant of a patent is a matter involving a public right.  Moreover, because IPR proceedings involve the same basic matter as the grant of a patent, they also fall within the public rights doctrine.  As a result, the Constitution does not prohibit the Patent Office from resolving issues of validity post issuance outside of an Article III Court.  Important to the Court's analysis was the lack of distinction between IPR proceedings and the initial grant of the patent because "[p]atent claims are granted subject to the qualifications that the PTO has 'the authority to reexamine – and perhaps cancel – a patent claim' in an inter partes review."  Justice Gorsuch dissented, and was joined by Chief Justice Roberts.  In his dissent, Justice Gorsuch explained that the history of the patent system and the prior case law required the finding that patents are private rights, and therefore must be adjudicated in Article III courts.  Both the majority and dissent cited to the 1898 Supreme Court decision in McCormick Harvesting Machine v. Aultman in support of their opinions.  Justice Gorsuch pointed to the broad sweeping language from that case that stated "[t]he only authority competent to set a patent aside, or to annul it, or to correct it for any reason whatever, is vested in the courts of the United States, and not in the department which issued the patent."  The majority, however, pointed out that this language is "best read as a description of the statutory scheme that existed at that time," and did not address whether Congress had authority to establish an entirely different scheme.  In fact, before the 1870 change to the patent statute discussed in McCormick Harvesting, Congress had provided examiners with absolute discretion to cancel any reintroduced original claim in a reissue proceeding.  It was the fact that Congress withdrew this grant of authority before McCormick Harvesting that made the Patent Office's cancellation of original claims in reissue proceedings a violation of due process and an invasion on the then-exclusive jurisdiction of the judicial branch by the executive.

    For information regarding this and other related topics, please see:

    • "Oil States Energy Services, LLC. v. Greene's Energy Group, LLC (2018)," April 24, 2018

  • Conference & CLE Calendar

    CalendarJanuary 3, 2019 – "International Post Grant Practice: Strategic Considerations Before the USPTO, EPO and CNIPA" (Intellectual Property Owners Association) – 12:00 to 1:00 pm (ET)

    January 8, 2019 – "New EU Guidelines for Patenting AI and Machine Learning Technologies: Comparison With U.S. Approach — Navigating EPO and USPTO Rules to Maximize Patent Protection" (Strafford) – 1:00 to 2:30 pm (EST).

    January 10, 2019 – "Maximizing Patent Prosecution Opportunities in Europe: Tactics for Counsel When Drafting U.S.-Origin Applications — Navigating Differing USPTO and EPO Legal Standards While Maintaining U.S. Patent Strategy" (Strafford) – 1:00 to 2:30 pm (EST)

    January 10, 2019 – "Supreme Court Patent Law Update 2019" (Federal Circuit Bar Association Patent Litigation Committee) – 1:00 pm to 2:00 pm (EST)

    January 10, 2019 – "PTAB — A Year in Review" (Foley & Lardner) – 1:00 to 2:00 pm (ET)

    January 10, 2019 – "Inequitable Conduct After Regeneron: What Litigators, Patent Prosecutors, and Patent Owners Need to Know" (Intellectual Property Owners Association) – 2:00 to 3:00 pm (ET)

    January 15, 2019 – "Patent Eligibility and Engineered Natural Products — Overcoming 101 Challenges, Leveraging Options to Obtain IP Protection" (Strafford) – 1:00 to 2:30 pm (EST)

    January 16, 2019 – "Top Patent Law Stories of 2018" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

    January 17, 2019 – "Patent Application Preparation in View of Recent Court Decisions: Updates and Strategies" (Practising Law Institute) – 3:00 pm (Eastern)

    January 17, 2019 – "Preparing for and Navigating PTAB Appeals Before the Federal Circuit — Conducting PTAB Trials With Eye to Appeal, Determining Errors for Appeal, Understanding PTO Practice and Federal Circuit Law" (Strafford) – 1:00 to 2:30 pm (EST)

  • IPO Webinar on Inequitable Conduct After Regeneron

    IPO #2The Intellectual Property Owners Association (IPO) will offer a one-hour webinar entitled "Inequitable Conduct After Regeneron: What Litigators, Patent Prosecutors, and Patent Owners Need to Know" on January 10, 2019 from 2:00 to 3:00 pm (ET).  Prof. David Hricik of Mercer University School of Law, Kevin Noonan of McDonnell Boehnen Hulbert & Berghoff LLP, and Rohit Singla, Munger of Tolles & Olson LLP will assess the significant ongoing impact of the 2017 Federal Circuit decision in Regeneron v. Merus, which found a patent unenforceable due to inequitable conduct based partly on the behavior of litigators, on litigation and patent prosecution.  The panel will discuss:

    • Peerless Industries v. Crimson AV in the Northern District of Illinois (2018), where the court decided "as in Regeneron, plaintiff's litigation misconduct in this case was designed to obfuscate its prosecution omissions and misrepresentations."
    • Howmedica Osteonics v. Zimmer in the District of New Jersey (2018), where the court granted the defendant's motion for $13 million in attorney fees and costs in part because of plaintiff's inequitable conduct before the USPTO
    • The relationship between materiality under Therasense, the court's claim construction, and the prosecutor's judgment about what is cumulative
    • Approaches that may be taken by defendants' experts at trial
    • The reinforced imperative for patent owners who are plaintiffs to closely oversee aggressive litigation counsel

    The registration fee for the webinar is $135 (government and academic rates are available upon request).  Those interested in registering for the webinar can do so here.

  • Webinar on PTAB Appeals Before the Federal Circuit

    Strafford #1Strafford will be offering a webinar entitled "Preparing for and Navigating PTAB Appeals Before the Federal Circuit — Conducting PTAB Trials With Eye to Appeal, Determining Errors for Appeal, Understanding PTO Practice and Federal Circuit Law" on January 17, 2019 from 1:00 to 2:30 pm (EST).  Erika H. Arner and Michael J. Flibbert of Finnegan Henderson Farabow Garrett & Dunner will provide guidance to patent counsel on preparing a PTAB case for appeal to the Federal Circuit, and also offer strategic tips for conducting a PTAB trial with an eye to appeal and best practices for prevailing on appeal.  The webinar will review the following issues:

    • Current statistical trends relating to Federal Circuit appeals from the PTAB
    • How the Federal Circuit will address potential review issues
    • The Federal Circuit's current guidance on standing to appeal
    • Strategies in PTAB proceedings to build a record and preserve issues for appeal
    • How to strategically position and effectively present a Federal Circuit appeal

    The registration fee for the webcast is $347.  Those interested in registering for the webinar, can do so here.

  • FCBA Supreme Court Patent Law Update

    Federal Circuit Bar AssociationThe Federal Circuit Bar Association (FCBA) Patent Litigation Committee will be offering a webcast entitled "Supreme Court Patent Law Update 2019" on January 10, 2019 from 1:00 pm to 2:00 pm (EST).  George Webb, Director & Counsel for Industry Relations, Rice University; Kirk T. Bradley of Alston & Bird LLP; and Lawrence M. Hadley of Glaser Weil will provide an update on the most recent patent cases in the U.S. Supreme Court, including Helsinn Healthcare v. Teva Pharmaceuticals.

    The webinar is complimentary for FCBA members, $100 for government, academic, or retired practitioners, or $175 for private practitioners.  Those interested in registering for the webcast, can do so here.