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  • USPTO Issues Memo Clarifying Written Description Guidance

    By Donald Zuhn –-

    USPTO SealIn a memorandum distributed last week to the U.S. Patent and Trademark Office patent examining corps, Robert Bahr, the Deputy Commissioner for Patent Examination Policy, sought to clarify the Office's guidance regarding the written description requirement of 35 U.S.C. § 112(a), and in particular, the examination of claims directed to antibodies for compliance with the written description requirement.  The memorandum, entitled "Clarification of Written Description Guidance For Claims Drawn to Antibodies and Status of 2008 Training Materials," is divided into three sections, which address the Federal Circuit's recent decision in Amgen Inc. v. Sanofi, the Written Description Training Materials released by the Office in 2008, and the Office's current guidance on the written description requirement.

    In the first section of the memorandum, Deputy Commissioner Bahr discusses the Federal Circuit's clarification in Amgen Inc. v. Sanofi of the written description requirement as applied to antibodies.  In that case, the Federal Circuit clarified how the Court (and U.S. Patent and Trademark Office) should apply the written description requirement in 35 U.S.C. § 112(a) to properly circumscribe the scope of claims to monoclonal antibodies.  Perhaps the most significant portion of the opinion involved the jury instructions, which relied on Noelle v. Lederman for the proposition that characterizing a new antigen was sufficient to satisfy the statute for claims encompassing a broad genus of antibodies that could bind to the new antigen.  The Federal Circuit determined that this instruction "is not legally sound and . . . not based on any binding precedent," finding the instruction to be improper because it effectively eliminated the written description requirement from the statute in favor of enablement, contrary to the Court's en banc Ariad Pharmaceuticals, Inc. v. Eli Lilly & Co. decision, stating that "[b]y permitting a finding of adequate written description merely from a finding of ability to make and use, the challenged sentence of the jury instruction in this case ran afoul of what is perhaps the core ruling of Ariad."  In setting forth its abrogation of the "fully characterized antigen" test more directly, the Federal Circuit declared that:

    [T]he "newly characterized antigen" test flouts basic legal principles of the written description requirement.  Section 112 requires a "written description of the invention."  But this test allows patentees to claim antibodies by describing something that is not the invention, i.e., the antigen.  The test thus contradicts the statutory "quid pro quo" of the patent system where "one describes an invention, and, if the law's other requirements are met, one obtains a patent."  Indeed, we have generally eschewed judicial exceptions to the written description requirement based on the subject matter of the claims [citations omitted].

    The Office's memorandum explains that "[t]he Amgen court expressly stated that the so-called 'newly characterized antigen' test, which had been based on an example in USPTO-issued training materials and was noted in dicta in several earlier Federal Circuit decisions, should not be used in determining whether there is adequate written description under 35 U.S.C. § 112(a) for a claim drawn to an antibody."  The memorandum states that "[i]n view of the Amgen decision, adequate written description of a newly characterized antigen alone should not be considered adequate written description of a claimed antibody to that newly characterized antigen."  The memorandum also notes that the Manual of Patent Examining Procedure (MPEP) will be updated to incorporate the Amgen decision in due course.

    The second section of the memorandum indicates that Written Description Training Materials that were made available by the Office in March of 2008 are now considered by the Office to be outdated.  In a series of articles published in 2008 and 2009, we reported on the Training Materials (albeit not on Examples 13 and 14, which concern antibodies to a single protein and antibodies to a genus of proteins, respectively).  According to the Office's memorandum, the Written Description Training Materials "are outdated and should not be relied upon as reflecting the current state of the law regarding 35 U.S.C. §§ 101 and 112."  The memorandum also notes that the Office is currently preparing written description training materials containing examples that will reflect recent developments in the law regarding 35 U.S.C. §§ 101 and 112.

    The memorandum concludes by providing the examining corps with a list of currently available guidance on the examination of claims for compliance with the written description requirement.  According to the memorandum, "USPTO personnel should continue to follow the guidance in the MPEP regarding written description (see, e.g., MPEP 2161.01 and 2163), except insofar as MPEP 2163 indicates that disclosure of a fully characterized antigen may provide written descriptive support of an antibody to that antigen."  The memorandum notes that the following materials "remain applicable and should be followed by USPTO personnel":

    • The 2015 training module entitled "Examining Claims for Compliance with 35 USC 112(a) : Overview & Part I – Written Description";
    • The 2015 Written Description Workshop materials; and
    • The 2015-16 training slide set entitled "Antibody Decisions and Their Compliance with the Written Description Requirement."

  • A Modest Proposal Redux

    By Kevin E. Noonan –

    Supreme Court Building #2Motivation is an important factor in any policy-based decision.  Understanding motivation — whether considering legislation, programs by administrative agencies, or judicial decisions — can go a long way towards creating strategies to support or counteract a policymaker's activities.

    The Supreme Court is not supposed to be a policy-making institution, but to deny the role of motivation in its decisions would be to miss the Justices' humanity.  It is evident in many of the Court's recent patent eligibility decisions that, in addition to their concern that overbroad eligibility standards "would risk disproportionately tying up the use of the underlying natural laws, inhibiting their use in the making of further discoveries," (see "Mayo Collaborative Services v. Prometheus Laboratories, Inc. (2012)"), there is a particular concern regarding interfering with the practice of medicine.  This is evidenced by dicta from the dissent from the Court's decision to dismiss certiorari as being improvidently granted in the Laboratory Corp. v. Metabolite Labs., Inc. decision:

    As construed by the Federal Circuit, claim 13 provides those researchers with control over doctors' efforts to use that correlation to diagnose vitamin deficiencies in a patient.  Does the law permit such protection or does claim 13, in the circumstances, amount to an invalid effort to patent a 'phenomenon of nature'?

    and from Mayo itself:

    They tell a treating doctor to measure metabolite levels and to consider the resulting measurements in light of the statistical relationships they describe.  In doing so, they tie up the doctor's subsequent treatment decision whether that treatment does, or does not, change in light of the inference he has drawn using the correlations.  And they threaten to inhibit the development of more refined treatment recommendations (like that embodied in Mayo's test), that combine Prometheus' correlations with later discovered features of metabolites, human physiology or individual patient characteristics.

    Washington - Capitol #3This is not the first instance of patent practices being considered overzealous and a threat to the practice of medicine.  And a remedy to this concern has been found before, to address patent claims directed to methods for performing eye surgery.  The patent, U.S. Patent No. 5,080,111 to Dr. Pallin, was being asserted (Pallin v. Singer, 1996 WL 274407 (D. Vt., Mar. 28, 1996)) against medical doctors and eye clinics in the mid-1990's and prompted swift Congressional action.  The measure that ultimately passed, introduced by Senator Bill Frist of Tennessee (himself a physician), was codified as 35 U.S.C. § 287(c):

    35 U.S.C. 287 Limitation on damages and other remedies; marking and notice.

                                                                       * * *

    (c)(1) With respect to a medical practitioner's performance of a medical activity that constitutes an infringement under section 271(a) or (b) of this title, the provisions of sections 281, 283, 284, and 285 of this title shall not apply against the medical practitioner or against a related health care entity with respect to such medical activity.
        (2) For the purposes of this subsection:
            (A) the term "medical activity" means the performance of a medical or surgical procedure on a body, but shall not include (i) the use of a patented machine, manufacture, or composition of matter in violation of such patent, (ii) the practice of a patented use of a composition of matter in violation of such patent, or (iii) the practice of a process in violation of a biotechnology patent.
            (B) the term "medical practitioner" means any natural person who is licensed by a State to provide the medical activity described in subsection (c)(1) or who is acting under the direction of such person in the performance of the medical activity.
            (C) the term "related health care entity" shall mean an entity with which a medical practitioner has a professional affiliation under which the medical practitioner performs the medical activity, including but not limited to a nursing home, hospital, university, medical school, health maintenance organization, group medical practice, or a medical clinic.
            (D) the term "professional affiliation" shall mean staff privileges, medical staff membership, employment or contractual relationship, partnership or ownership interest, academic appointment, or other affiliation under which a medical practitioner pro- vides the medical activity on behalf of, or in association with, the health care entity.
            (E) the term "body" shall mean a human body, organ or cadaver, or a nonhuman animal used in medical research or instruction directly relating to the treatment of humans.
            (F) the term "patented use of a composition of matter" does not include a claim for a method of performing a medical or surgical procedure on a body that recites the use of a composition of matter where the use of that composition of matter does not directly contribute to achievement of the objective of the claimed method.
            (G) the term "State" shall mean any state or territory of the United States, the District of Columbia, and the Commonwealth of Puerto Rico.
        (3) This subsection does not apply to the activities of any person, or employee or agent of such person (regardless of whether such person is a tax exempt organization under section 501(c) of the Internal Revenue Code), who is engaged in the commercial development, manufacture, sale, importation, or distribution of a machine, manufacture, or composition of matter or the provision of pharmacy or clinical laboratory services (other than clinical laboratory services provided in a physician's office), where such activities are:
            (A) directly related to the commercial development, manufacture, sale, importation, or distribution of a machine, manufacture, or composition of matter or the provision of pharmacy or clinical laboratory services (other than clinical laboratory services provided in a physician's office), and
            (B) regulated under the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act, or the Clinical Laboratories Improvement Act.
        (4) This subsection shall not apply to any patent issued based on an application the earliest effective filing date of which is prior to September 30, 1996.

    The policy justification for the bill was, as eloquently expressed by Senator Frist, because "innovations in surgical and medical procedures do not require the midwifery of patent law."  As enacted into law, the bill reflects a carefully crafted ("narrowly tailored") balance between the concerns of the medical community and the patent community, particularly the biotechnology community.  For example, "biotechnology patents" are expressly excluded from the exemption; such patents are defined (under 35 U.S.C. § 103(b)) as "a process of genetically altering of inducing a single or multi-celled organism" or "cell fusion procedures yielding a cell line that expresses a specific protein" or "methods of using a product produced" by the above processes.  Also not exempt are individuals involved in the commercialization of "a machine, manufacture, or composition of matter" related to a medical activity.  Importantly, the provision does not exempt commercial clinical labs, including ones regulated under CLIA, who perform medical diagnostic methods.

    Expressly and by implication, these exclusions to the exemption do not include clinical laboratory services provided in a physician's office, and the statute is expressly directed to the "performance of a medical activity," which is defined as "a medical or surgical procedure on a body."  The statute does not include "diagnostic methods" within this definition of a "medical activity," but this is not an instance where the absence can be used to read anything into the legislative history, because the excluded provision was in fact in a different bill that was not considered by Congress.  But (perhaps) significantly, the exclusions to the exemption eschew mention of only one category of patent-eligible subject matter, methods.

    Including diagnostic methods (limited to those performed in a physician's office) to the exemption might address the policy concerns raised by Justice Breyer in Mayo (and before that in Laboratory Corp. v. Metabolite Labs., Inc.).  Such balancing of policy concerns has been done in other patent law provisions, such as the safe harbor provisions of 35 U.S.C. § 271(e)(1); there, the policy purpose was to permit generic drug makers to prepare for market entry upon innovator drug patent expiration (ignoring for the moment the real effect of providing strong incentives for generic companies to utilize the provisions of § 271(e)(2) to challenge those patents rather than waiting for them to expire).  It is thus possible to read the law as containing (sub silentio, to be sure) diagnostic methods within the scope of the safe harbor.

    Commentators are almost uniform in rejecting this interpretation, however, believing that Congress must more expressly enunciate the exemption in order for it to be effective.  See Sirjani & Keyhani, "35 U.S.C. 287(C): Language Slightly Beyond Intent," 3 Buffalo Intellect. Prop. Law J. 13 (Fall 2005); Rundle, "The Physician's Immunity Statute: A Botched Operation or a Model Procedure?" 34 Iowa J. Corp. L. 943 (Spring 2009); and Hu and Mallin, "Medical Method Patents: Treating 'The Physicians' Immunity Statute,'" 23 Syr. Sci Technol. Law Reporter 63 (Fall 2010).  In part, this conclusion is based on the phrase "medical or surgical procedure on a body," which is interpreted to exclude assays of blood, urine, tissue, or other biological samples that are taken from a body.

    There has been one effort along these lines, in the crafting of the Leahy-Smith America Invents Act, related to "second opinion" genetic diagnostic testing:

    Proposed 35 U.S.C. § 287(d):

    (1) With respect to a genetic diagnostic test provider's performance of, or offering to perform, a confirming genetic diagnostic test activity that constitutes infringement of a patent under section 271(a) or (b) of this title, the provisions of section 281, 283, 284 and 285 of this title shall not apply against the genetic diagnostic test provider with respect to such confirming genetic diagnostic test activity.

    This proposed section was withdrawn and converted to Section 27 of the AIA (calling for the U.S. Patent and Trademark Office to produce a study on the need for protection from patenting of second opinion genetic diagnostic tests) in response to lobbying by ACLU and others that the bill reflects a supposition that patents on genetic testing are valid (this being prior to the Supreme Court's decision in Association for Molecular Pathology v. Myriad Genetics, Inc.).  It is clear that deleting the limiting words "genetic" and "confirming genetic" from this proposed statute could include diagnostic testing within the scope of the "practice of medicine" safe harbor.

    Should Congress deign to make inclusion of medical diagnostic methods within the scope of the exemption, such an action would comport with Justice Breyer's invitation at the end of the Mayo opinion ("we must recognize the role of Congress in crafting more finely tailored rules where necessary").  Such a legislative scheme might reduce the temperature of those whose concern over the possibility that patent protection might inhibit medical services delivery has created the greater likelihood that innovation will be harmed by a lack of patent protection (or worse, that disclosure will decline, reducing the pace of innovation).

  • In re Silver — Texas Supreme Court Recognizes Patent Agent Privilege

    By Josh Rich —

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

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

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

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

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

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

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

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

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

  • PTAB Denies St. Regis Mohawk Tribe’s Motion to Terminate IPRs based on Sovereign Immunity

    By Kevin E. Noonan –

    USPTO SealIn an extensive, 42-page per curiam opinion, the Patent Trial and Appeal Board (PTAB) surprised no one last Friday by denying the St. Regis Mohawk Tribe's motion to terminate several inter partes review proceedings based on the Tribe's assertion of tribal sovereign immunity.  In an effort to avoid undue suspense, the Board provided a pithy summary of its decision at the beginning of the opinion:

    Upon consideration of the record, and for the reasons discussed below, we determine the Tribe has not established that the doctrine of tribal sovereign immunity should be applied to these proceedings.  Furthermore, we determine that these proceedings can continue even without the Tribe's participation in view of Allergan's retained ownership interests in the challenged patents.  The Tribe's Motion is therefore denied.

    The Board's decision is consistent with Board rule, 37 C.F.R. § 41.121(b), that the proponent of a motion bears the burden of establishing their right to the relief requested.  It is also consistent with the Board's evident policy position from recent decisions (see Ericsson Inc. v. Regents of the University of Minnesota, Case IPR2017-01186 (PTAB Dec. 19, 2017) (Paper 14) ("Ericsson"), and LSI Corp. v. Regents of the University of Minnesota, Case IPR2017-01068 (PTAB Dec. 19, 2017) (Paper 19) ("LSI")) that, once instituted, it will not terminate post-grant review proceedings (absent settlement, and perhaps not even then) on sovereign immunity grounds, unless the Director, Congress, or the courts compel them to do so.  And the opinion, in its recitation of the relevant facts, provided the panel with another opportunity to display its pique (see "The PTAB Strikes Back — Issues Order Prohibiting St. Regis Mohawk Tribe from Filing Any Additional Papers in IPR") at the Tribe's representatives, stating:

    The Tribal Council Resolution states that the Tribe was approached by the law firm Shore Chan DePumpo LLP "to engage in new business activities related to existing and emerging technologies, which may include the purchase and enforcement of intellectual property rights, known as the 'Intellectual Property Project."

    In setting forth the legal basis for its decision, the Board recognized that "[a]s a matter of federal law, an Indian tribe is subject to suit only where Congress has authorized the suit or the tribe has waived its immunity," citing Kiowa Tribe of Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 754 (1998).  Nevertheless, the Board applying at least Rule 121(b), refuges in the fact that there is no "controlling precedent or statutory basis" for applying sovereign immunity to IPR.  Acknowledging that this is a "case of first impression" (making its mention of a lack controlling precedent at least inherently redundant), the opinion distinguishes Federal Maritime Commission v. South Carolina State Ports Authority, 535 U.S. 743 (2002) ("FMC"), on the grounds that FMC was concerned with State sovereign immunity which is distinct from tribal sovereign immunity by being protected by the Eleventh Amendment and not being subject to abrogation by Congress as tribal immunity is.  The Board states that:

    The Tribe and its supporting amici, however, have not pointed to any federal court or Board precedent suggesting that FMC's holding with respect to state sovereign immunity can or should be extended to an assertion of tribal immunity in similar federal administrative proceedings.

    The opinion also distinguished State sovereign immunity decisions that recognized the immunity for state universities acting as an "arm of the state" (Covidien LP v. Univ. of Fla. Research Found. Inc., Case IPR2016-01274 (PTAB Jan. 25, 2017) (Paper 21); Neochord, Inc. v. Univ. of Md., Case IPR2016-00208 (PTAB May 23, 2017) (Paper 28); and Reactive Surfaces Ltd, LLP v. Toyota Motor Corp., Case IPR2016-01914, (PTAB July 13, 2017) (Paper 36)) on this basis.

    The opinion also disregards analogous decisions of other agencies ("[w]e are not bound by those agency decisions") and also curiously distinguishes Bodi v. Shingle Springs Band of Miwok Indians, 832 F.3d 1011, 1021 (9th Cir. 2016), and Contour Spa at the Hard Rock, Inc. v. Seminole Tribe of Fla., 692 F.3d 1200, 1201 (11th Cir. 2012), both cases having declined to Lapides v. Bd. of Regents of the Univ. Sys. of Ga., 535 U.S. 613 (2002), concerning waiver of state's sovereign immunity based on litigation conduct, to tribal immunity).  The opinion expressly relies on the Board's precedential decision in Athena Automation Ltd. v. Husky Injection Molding Sys. Ltd., Case IPR2013-00290, slip op. at 12–13 (PTAB Oct. 25, 2013), to assert that in contrast to 19 U.S.C. 1337(c) where "[a]ll legal and equitable defenses may be presented' in International Trade Commission (ITC) investigations" that is not the case for 35 U.S.C. § 311(a).

    The Board went further than deigning not to grant the Tribe's motion; no doubt in part to stem the expected tide of similar assignment and licensing arrangements, the Board declared that tribal sovereign immunity does not apply to IPR proceedings.  The basis for this decision represents somewhat of a turning of the tables:  rather than addressing the Tribe's point that sovereign immunity should lie unless Congress has specifically abrogated it, the Board decision characterizes IPR proceedings as being the product of a "generally applicable statute" that does not implicate sovereign immunity concerns or protections.  This determination is based on the applicability (or risk) of IPR proceedings against any patent "regardless of ownership," their being "subject to the conditions and requirements of [the Patent Act]."  The opinion cites authority limiting application of tribal immunity for "laws of general applicability," including Donovan v. Coeur d'Alene Tribal Farm, 751 F.2d 1113, 1116 (9th Cir. 1985) (quoting U.S. v. Farris, 624 F.2d 890, 893–94 (9th Cir. 1980), to the effect that such laws must affect "exclusive rights of self-governance in purely intramural matters"; involve "abrogat[ing] rights guaranteed by Indian treaties"; or that there be legislative history that supports a conclusion that Congress did not intend the law to apply to an Indian tribe.  Of course, in this instance none of these apply.

    Portions of the opinion appear to imply that IPRs are an assertion of "superior sovereign powers" of the Federal government that tribal immunity cannot thwart, citing Quileute Indian Tribe v. Babbitt, 18 F.3d 1456, 1459 (9th Cir. 1994), and that tribal immunity has not prevented assertion by the Federal government of other administrative proceedings, citing Consumer Fin. Prot. Bureau v. Great Plains Lending, LLC, 846 F.3d 1049, 1058 (9th Cir. 2017), and Menominee Tribal Enters. v. Solis, 601 F.3d 669, 674 (7th Cir. 2010).  In this the Board disregards at least the distinction that in those cases the action was by the government represented by a government lawyer.  The Board also gives little credence to the argument that in an IPR a private third party remains involved, stating that "a private entity's continued involvement as a party in a federal administrative proceeding does not necessarily entitle a tribal entity to assert its immunity in the proceeding."

    The opinion contains additional discussion of sovereign immunity as a "common law" concept granting immunity from suit, on the grounds that an IPR is not that sort of suit, and also notes the public interest inherent in IPRs, citing Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2144 (2016).  While not basing its decision on the distinction made by several amici (see "Amicus Briefs Filed in Mohawk Tribe's Motion to Dismiss IPRs") between actions in personam and in rem (to the effect that IPRs as an in rem proceeding are not subject to an assertion of sovereign immunity), the Board does note that it has the authority to hold IPR proceedings in cases where the patent owner does not appear and the ability for the Board to continue an IPR even if the parties settle, stating "[t]he Board's authority to proceed without the parties' participation underscores its independent role in ensuring the correctness of granting patentable claims."

    Finally, the Board says that the IPR can continue with Allergan alone (i.e., without the Tribe's participation), based on the rights in the patents granted by the license(s) and agreeing with Petitioners that Allergan remains the "patent owner" despite the assignment (while taking pains not to assert that the ownership transfer is a sham).  The opinion cites the Federal Circuit for holding that the "party that has been granted all substantial rights under the patent is considered the owner regardless of how the parties characterize the transaction that conveyed those rights," citing Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245, 1250 (Fed. Cir. 2000), and also Alfred E. Mann Found. for Sci. Research v. Cochlear Corp., 604 F.3d 1354, 1358–59 (Fed. Cir. 2010), for the proposition that "[a] patent owner may transfer all substantial rights in the patents-in-suit, in which case the transfer is tantamount to an assignment of those patents to the exclusive licensee."  The Board panel recognizes the following analysis of "the rights transferred and the rights retained under the license agreement, including:

    (1) the nature and scope of the right to bring suit; (2) the exclusive right to make, use, and sell products or services under the patent; (3) the scope of the licensee's right to sublicense; (4) the reversionary rights to the licensor following termination or expiration of the license; (5) the right of the licensor to receive a portion of the proceeds from litigating or licensing the patent; (6) the duration of the license rights; (7) the ability of the licensor to supervise and control the licensee's activities; (8) the obligation of the licensor to continue paying maintenance fees; and (9) any limits on the licensee's right to assign its interests in the patent.

    Azure Networks, LLC v. CSR PLC, 771 F.3d 1336, 1343 (Fed. Cir. 2014) (vacated on other grounds); see also Alfred E. Mann Found. for Sci. Research v. Cochlear Corp., 604 F.3d at 1360–61.  The opinion compares the Allergan-Mohawk Tribe license using these factors; here is the scorecard:

    Table
    With regard to the first factor, the opinion notes that "[e]ach of the challenged patents is listed in the FDA's 'Orange Book.'  . . .  As such, we find that any viable infringement allegation for the challenged patents would have to necessarily be limited to drug products that require FDA approval . . ." and "[b]ased on the record before us, we find that the Tribe has not retained anything more than an illusory or superficial right to sue for infringement of the challenged patents."  The Tribe's rights to make, use, and sell the patented invention was negligible in the Board's view, because "the claims of the challenged patents are directed to pharmaceutical compositions and methods used to treat human medical conditions, [and under these circumstances] we find Allergan's exclusive right to exploit the challenged patents 'or all FDA-approved uses in the United States' to be a substantial right."  Allergan's rights under the license are "co-extensive in scope" with the claimed invention and the license thus does not limit Allergan's rights "in any meaningful sense."  The opinion further notes that the Tribe's right to sublicense and assign its patents to a third party are restricted, and that "[w]ith respect to 'Contested PTO Proceedings' in particular, which include these inter partes review proceedings, the License provides that '[a]s between the Parties, Allergan shall have . . . the first right, but not the obligation, to defend and control the defense of the validity, enforceability and patentability of the Licensed Patents in such Contested PTO Proceeding.'"

    In toto, the Board concluded from this analysis that:

    We find these provisions to be significant restrictions on the Tribe's purported ownership rights.  "The right to dispose of an asset is an important incident of ownership, and such a restriction on that right is a strong indicator" of whether a license agreement transferred all substantial rights under the patent.

    and:

    In sum, upon considering the relevant License terms, we find that Allergan obtained all substantial rights in the challenged patents.  The Tribe points out that Allergan executed an assignment of the challenged patents to the Tribe, and this assignment was recorded at the PTO.  . . .  As recognized by the Tribe, however, a recordation of a patent assignment only creates a rebuttable presumption regarding ownership.  See SiRF Tech., Inc. v. Int'l Trade Comm'n, 601 F.3d 1319, 1328 (Fed. Cir. 2010).

    Importantly, the opinion also states that "[i]n reaching this conclusion, we do not comment on whether the License and the other agreements between the Tribe and Allergan constitute a 'sham' transaction, nor do we need to decide whether the agreements are otherwise improper under the law."

    As a consequence, the Board further held that the Tribe is not an indispensible party under Federal Rule of Civil Procedure.  This is important because Supreme Court precedent holds, in Republic of Philippines v. Pimentel, that:

    "[a] case may not proceed when a required-entity sovereign is not amenable to suit . . . where sovereign immunity is asserted, and the claims of the sovereign are not frivolous, dismissal of the action must be ordered where there is a potential for injury to the interests of the absent sovereign.  553 U.S. 851, 867 (2008) and "once a tribunal recognizes that an assertion of sovereign immunity is 'not frivolous,' it is 'error' for the tribunal to proceed further to address the merits" (Pimentel, 553 U.S. at 864).

    The Board distinguished Pimentel on its facts (involving a foreign sovereign), and on the need for courts to assess based on Rule 19(b) rather than the mere non frivolous assertion of sovereign immunity, citing Univ. of Utah v. Max-Planck-Gesellschaft Zur Forderung Der Wissenschaften E.V., 734 F.3d 1315, 1326 (Fed. Cir. 2013).  The Board noted that its proceedings are not bound by the FRCP.  Even if the Board applied Rule 19, the opinion states the Tribe is not an indispensible party:

    Allergan has at least an identical interest to the Tribe—if not more of an interest as the effective patent owner for the reasons discussed above—in defending the challenged patents.  Thus, we do not find that the Tribe will be significantly prejudiced in relation to the merits of the patentability challenges in these proceedings if it chooses not to participate based on its alleged tribal immunity because Allergan will be able to adequately represent any interests the Tribe may have in the challenged patents.

    The original panel rendered this decision, putting at rest for the moment any inference of possible impropriety at least implied by the Tribe's motion for discovery on this issue (among others); see "Skeptical St. Regis Mohawk Tribe Requests Discovery Regarding Panel Selection Circumstances").  But this clearly is not the end of the matter; it remains to be seen whether the Board quickly follows with a Final Written Decision on the merits (due within the statutorily mandated twelve months on March 31st) or whether the Tribe files a Notice of Appeal on this issue (although the availability of such an appeal, likely to be considered interlocutory in nature, is uncertain; it is unlikely the PTAB will certify the question or otherwise facilitate an early appeal).  And there remain efforts in Congress (inter alia, by Senator Claire McCaskill; see "A Bill to abrogate sovereign immunity of Indian tribes as a defense in inter partes review of patents") to abrogate by statute assertion of sovereign immunity by Indian tribes in patent cases.  Stayed tuned.

  • Conference & CLE Calendar

    CalendarFebruary 26, 2018 – "Chinese Patent Developments" (Practising Law Institute) – 4:00 to 5:00 pm (Eastern)

    February 27, 2018 – "Patent Inventorship: Best Practices for Determination and Correction — Distinguishing Between Inventor and Contributor; Navigating Joint Inventorship, Disclosure of Ownership, Real Party in Interest" (Strafford) – 1:00 to 2:30 pm (EST)

    February 28, 2018 – "Going Global with Patents" (Bereskin & Parr) – 12:00 to 1:00 pm (EST)

    March 3, 2018 – "Patent Post-Grant Practice" (John Marshall Law School Center for Intellectual Property, Information & Privacy Law) – 9:00 am to 4:30 pm, Chicago, IL

    March 5-6, 2018 – Advanced Patent Law Seminar (Chisum Patent Academy) – Houston, TX

    March 7, 2018 – "Inside the European Patent Office: Questions & Answers" (Intellectual Property Law Association of Chicago Patents-International Committee) – 11:45 am to 1:00 pm (CT), Chicago, IL

    March 8, 2018 – "Patent Exclusivity Health Checks for Small Molecules: Are Your U.S. Patents Ready to Maximize ROI? — Phase II Efficacy Trials, Phase III Clinical Trials, NDA Submission, Approval and Marketing" (Strafford) – 1:00 to 2:30 pm (EST)

    March 8-9, 2018 – Advanced Patent Law Seminar (Chisum Patent Academy) – Cincinnati, OH

    March 13, 2018 – "Top Stories at the PTAB: What You Need to Know" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

    March 14, 2018 – Patent Litigation Seminar (New Jersey Intellectual Property Law Association) – 12:00 to 5:00 pm, Iselin, NJ

    March 15, 2018 – "On Sale and Public Use Bars to Patentability: Minimizing the Risk of Patent Ineligibility or Invalidation" (Strafford) – 1:00 to 2:30 pm (EDT)

    March 15, 2018 – 2018 Business Methods Partnership Meeting (U.S. Patent and Trademark Office) – 1:00 to 4:00 pm (ET), Alexandria, VA

  • MBHB Webinar on PTAB

    MBHB Logo 2McDonnell Boehnen Hulbert & Berghoff LLP will be offering a live webinar entitled "Top Stories at the PTAB: What You Need to Know" on March 13, 2018 from 10:00 am to 11:15 am (CT).  In this presentation, Patent Docs author and MBHB attorney Andrew Williams and MBHB attorney George "Trey" Lyons, III will examine the Supreme Court's Oil States Energy Services case and the impact it might have on future PTAB practice, and also address the following topics:

    • Estoppel, and the impact the Supreme Court might have on protecting patent owners in the future.
    • Has claim amendment practice changed since the Aqua Products, Inc. v. Matal decision (and should it be changing more)?
    • What issues related to institution decisions are now reviewable in the wake of Wi-Fi One?
    • How is the PTAB handling the growing number of remands from the Federal Circuit (and how could this impact your trial and appeal)?
    • What is the Board doing to address multiple petitions against the same patent (and should they be doing more)?

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

  • IPLAC Presentation on EPO

    IPLACThe Intellectual Property Law Association of Chicago (IPLAC) Patents-International Committee will be offering a presentation by Alfred Keyack, EPO Attaché to the United States, entitled "Inside the European Patent Office: Questions & Answers" on March 7, 2018 from 11:45 am to 1:00 pm (CT) at DePaul College of Law in Chicago, IL.

    The registration fee for the presentation is $20 (IPLAC members and seniors), $30 (non-members), free (students).  Those interested in registering for event can do so here.  Additional information regarding the seminar can be found here.

  • On Sale and Public Use Bars Webinar

    Strafford #1Strafford will be offering a webinar entitled "On Sale and Public Use Bars to Patentability: Minimizing the Risk of Patent Ineligibility or Invalidation" on March 15, 2018 from 1:00 to 2:30 pm (EDT).  Thomas L. Irving of and Doris Johnson Hines of Finnegan Henderson Farabow Garrett & Dunner and Daniel G. Brown of Latham & Watkins will examine the on-sale and public use bars to patentability/validity and the impact of the AIA on these statutory bars. The panel will also discuss recent court treatment and offer best practices to minimize the risk of patent ineligibility or invalidation.  The webinar will review the following issues:

    • How do AIA changes impact the on sale bar and the public use bar?
    • How are courts and PTAB treating the on-sale bar and the public use bar?
    • What best practices can counsel employ to adapt patent prosecution and enforcement strategies?

    The registration fee for the webcast is $297.  Those interested in registering for the webinar, can do so here.

  • USPTO 2018 Business Methods Partnership Meeting

    USPTO SealThe U.S. Patent and Trademark Office will be holding 2018 Business Methods Partnership Meeting (BMPM) from 1:00 to 4:00 pm (ET) on March 15, 2018.  The BMPM was established to create a collaborative forum providing attendees with the opportunity to meet and share ideas, experiences, and insights with management from the Business Methods Technology Center.

    The meeting will be held in the USPTO's Madison-North Auditorium, 600 Dulany Street, Alexandria, VA, with webcast viewing sessions at the USPTO regional offices in Dallas, Denver, Detroit, and San Jose.  Those wishing to attend the meeting can register here.  Additional information regarding the customer partnership meeting can be found here.

  • Motions to Amend at the PTAB — Does Anyone Have the Burden (And Will That Change)?

    By Andrew Williams —

    USPTO SealLast year, the Federal Circuit decided the Aqua Products, Inc. v. Matal case en banc in what could be considered the epitome of a fractured decision.  After 148 pages and five separate opinions, the only agreed-to result could be summed up in two conclusions:  (1) that the PTO had not adopted a rule regarding the burden of persuasion, and that (2) because there was nothing that was entitled to deference, "the PTO may not place that burden on the patentee."  Nevertheless, Judge Rayne's concurrence-in-part, at Part III, articulated a rule regarding the burden of production, even if there was disagreement whether it was a judgement of the Court or mere "cogitations."  This conclusion was that, in the absence of a properly promulgated rule, "the Patent Office must by default abide by the existing language of inter partes review statute and regulations, § 316(d) and 37 C.F.R. § 42.121, which only allocate a burden of production to the patent owner."  At the time, we did not know whether the Board would follow Judge Rayne's pronouncement.  But in the interim, the picture has become clear.

    The writing was on the proverbial wall when Chief Judge Ruschke issued his memorandum on November 21, 2017 entitled "Guidance on Motions to Amend in view of Aqua Products" (see "PTAB Motions to Amend Post-Aqua Products — Chief Judge Ruschke Issues Guidance").  The tenor of his message was that there is "nothing to see here" (and that we should all just move along).  He indicated that the only actual outcome from Aqua Products was that the Board will no longer "place the burden of persuasion on a patent owner with respect to the patentability of substitute claims presented in a motion to amend."  As a result, the Chief Judge explained, the "practice and procedure before the Board will not change," except when the entirety of the evidence is in equipoise, in which case the motion to amend will now be granted.

    The guidance did make clear that a patent owner still must satisfy the requirements of 35 U.S.C. § 316(d) and 37 C.F.R. § 42.121.  In fact, perhaps tellingly, the Board has been citing to Judge's Rayne's decision at Part III in Aqua Products for this proposition.  See, e.g., Apple Inc. v. Personalized Media Communications LLC, IPR2016-01529, Paper 38 at 56 (PTAB Feb. 15, 2018) ("'There is no disagreement that the patent owner bears a burden of production in accordance with 35 U.S.C. § 316(d).  Indeed, the Patent Office has adopted regulations that address what a patent owner must submit in moving to amend the patent.' [Aqua Products] at 1341.")  But with regard to who has the burden of persuasion, the Board appears to have taken the position that no one actually does.  Instead, they have indicated that they will rule on the motion by simply looking at the entirety of the record.  For example, in one of the more recent final written decisions, the Board set out what it is required to do when deciding a Motion to Amend:

    Accordingly, we base our decision on the substitute claims provided in the Motion to Amend on the entirety of the record before us.  Petitioner's arguments regarding the patentability of the substitute or new claims, as well as Patent Owner's Reply thereto, are considered below, after consideration of the procedural requirements of Rule 121 and 35 U.S.C. § 326(d).

    Id. at 57.  Again, tellingly, there is no mention of which party actually has the burden of persuasion with regard to the motion to amend.  This raises the question about whether the Board could deny a motion to amend in cases where the patent owner has satisfied the requirements articulated in 35 U.S.C. § 316(d), but where the petitioner has not opposed the motion (or provided any evidence with regard to the substitute claims).  Without any burden on the petitioner, this eventuality would appear to be a possibility.

    Of course, not every APJ seems to be on board with this absence of an articulation as to who has the burden.  As we recently reported, APJ Michael J. Fitzpatrick filed a concurrence in the Taiwan Semiconductor Manufacturing Company v. Godo Kaisha IP Bridge (IPR2016-01249) final written decision.  He stated he was of the belief that the decision should explain who bears the burden(s) because future "patent owners will be left guessing what their motion to amend must contain."  His solution would have been to explicitly hold that both the burden of production and the burden of persuasion be on the petitioner.  With regard to the burden of persuasion, he indicated that it should be put on the petitioner "because doing so is consistent with the most relevant statutory provision and there is no applicable rule requiring otherwise."  He did nevertheless acknowledge that the initial burden of production should be on the patent owner to show that the written description requirement has been met, because (among other reasons) 35 U.S.C. § 316(d)(3) states that "[a]n amendment . . . may not . . . introduce new matter."  He also acknowledged that the Aqua Products did not overrule Rule 42.20(c) ("Burden of proof. The moving party has the burden of proof to establish that it is entitled to the requested relief."), and therefore the burden of production is still on the patent owner to establish that a substitute claim is responsive to an instituted ground of unpatentability.

    A final interesting note about the Aqua Products case relates to the fact that the Federal Circuit's holding in Aqua Products was not that the Patent Office could not promulgate a rule assigning the burden of persuasion to patent owners.  Instead, it was only that such a rule was not promulgated.  Correspondingly, it is possible that the Patent Office could take use back to pre-Aqua Products days.  There has been no indication from the Office that it intends to do so, but a new Director of the Patent Office has just been confirmed and sworn in, so it remains to be seen what will happen.  But in an action that might have tipped the hand of the Office, the Under Secretary of Commerce for Intellectual Property and Director, U.S. Patent and Trademark Office as intervenor in the case of Bosch Automotive Service Solutions, LLC v. Matal recently filed an Intervenor's Petition for Panel Rehearing.  The Office is not asking the Federal Circuit to alter its judgment in that case.  Rather, it believes that the panel decision incorrectly stated the holding of Aqua Products when it said:  "Rather, the petitioner bears the burden of proving that the proposed amended claims are unpatentable 'by a preponderance of the evidence.' 35 U.S.C. § 316(e)."  The Office reasoned that, because there were only two take-aways from the Aqua Products case (as articulated above), this reading is an impermissible extension of that holding.

    The Office may have a valid point.  35 U.S.C. 316(e) reads: "In an inter partes review instituted under this chapter, the petitioner shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence."  If the above quoted language from the Bosch Automotive case is correct, then the statute is not ambiguous and the Patent Office could not promulgate a rule placing the burden of persuasion on patent owners for motions to amend.  However, as the Office points out, a majority of judges in Aqua Products found that this statutory language was ambiguous.  Therefore, as the Office's petition puts it:

    Thus, Aqua Products simply holds that under the current landscape, the USPTO cannot place the burden of persuasion with respect to patentability of amended claims on the patentee.  It recognizes, however, that it might be possible for the USPTO to do so in the future.  But the panel's reading of Aqua Products could leave the mistaken impression that the panel foreclosed what Aqua Products expressly left open.

    Of course, this begs the question whether the Office is currently planning on promulgating such a rule.  On the one hand, it can be argued that the Office simply wants the Court to be as precise as possible, and therefore this is no indication of its intent to undo Aqua Products.  However, on the other hand, why expend the energy and resources of the Office to request this small change unless it does have plans to promulgate a new rule.  It remains to be seen what will happen, but it may no longer be a surprise if we see a Notice of Proposed Rulemaking from the Patent Office in the near future.