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  • Webinar on TC Heartland

    Dorsey & WhitneyDorsey & Whitney will be offering a web conference entitled "Heartland & Lexmark – The Business Impact" on October 18, 2017 from 9:00 to 10:00 am (PDT).  Case Collard and Gina Cornelio of Dorsey & Whitney will ;provide a business-focused review of the Supreme Court's recent decisions in Impression Products, Inc. v. Lexmark International, Inc. and TC Heartland LLC v. Kraft Foods Group Brands LLC, including a look at the overall effect on day to day decisions and strategy.

    Registration is complimentary, but space is limited to 150 people.  Those interested in attending the webinar can register here.

  • Natural Alternatives International, Inc. v. Allmax Nutrition, Inc. (S.D. Cal. 2017) — Part II

    By Donald Zuhn —

    District Court for the Southern District of CaliforniaLast month, we reported on a decision in Natural Alternatives International, Inc. v. Allmax Nutrition, Inc., in which District Judge Marilyn L. Huff of the U.S. District Court for the Southern District of California denied a Motion for Reconsideration filed by Natural Alternatives International, Inc. ("NAI"), and determined that NAI's claim for patent infringement remained dismissed with prejudice.  NAI had initiated the dispute against Allmax Nutrition, Inc. ("Allmax") by alleging, inter alia, that Allmax infringed U.S. Patent Nos. 5,965,596; 7,504,376; 7,825,084; and RE45,947 by offering to sell and selling dietary supplements containing beta-alanine.

    The patents-in-suit are directed to compositions, dietary supplements, and methods of regulating hydronium ion concentrations in a subject/human.  In particular, representative claim 1 of the '596 patent recites:

    1.  A method of regulating hydronium ion concentrations in a human tissue comprising:
    providing an amount of beta-alanine to blood or blood plasma effective to increase beta-alanylhistidine dipeptide synthesis in the human tissue; and exposing the tissue to the blood or blood plasma, whereby the concentration of beta-alanylhistidine is increased in the human tissue.

    Representative claims 1, 7, 8, and 11 of the '376 patent recite:

    1.  A composition, comprising: glycine; and a) an amino acid selected from the group consisting of a beta-alanine, an ester of a beta-alanine, and an amide of a beta-alanine, or b) a di-peptide selected from the group consisting of a beta-alanine di-peptide and a beta-alanylhistidine di-peptide.

    7.  A composition comprising at least 0.2, 0.3, 0.4, 0.5, 1.0, 1.5, 2.0, 2.5, 3.0, 3.5, 4.0, 4.5 or 5 grams of a peptide or an ester comprising a beta-alanine per dosage.

    8.  A composition comprising at least 0.2, 0.3, 0.4, 0.5, 1.0, 1.5, 2.0, 2.5, 3.0 grams of a peptide or an ester comprising a beta-alanine in an injectable form per dosage.

    11.  A composition for humans comprising at least 200, 250, 300, 450, 500, 550, 600, 650, 700, 750 or 800 mg of a beta-alanine per dosage.

    Representative claims 1, 5, 9, and 13 of the '084 patent recite:

    1.  A human dietary supplement, comprising a beta-alanine in a unit dosage of between about 0.4 grams to 16 grams, wherein the supplement provides a unit dosage of beta-alanine.

    5.  A composition for increasing beta-alanylhistidine dipeptide in a subject, comprising a mixture of creatine and anserine or balenine in an amount for increasing beta-alanylhistidine dipeptide in a subject.

    9.  A dietary supplement, comprising a mixture of creatine and anserine or balenine.

    13.  A method of regulating hydronium ion concentration in a tissue of a subject, comprising administration of a composition comprising a mixture of creatine and anserine or balenine to the subject to increase beta-alanylhistidine dipeptide synthesis in a tissue, whereby the anaerobic working capacity of the tissue is increased.

    Representative claims 34 and 35 of the '947 patent recite:

    34.  A human dietary supplement for increasing human muscle tissue strength comprising a mixture of creatine, a carbohydrate and free amino acid beta-alanine that is not part of a dipeptide, polypeptide or an oligopeptide, wherein the human dietary supplement does not contain a free amino acid L-histidine, wherein the free amino acid beta-alanine is in an amount that is from 0.4 g to 16.0 g per daily dose, wherein the amount increases the muscle tissue strength in the human, and wherein the human dietary supplement is formulated for one or more doses per day for at least 14 days.

    35.  A human dietary supplement for increasing human muscle tissue strength comprising a mixture of creatine monohydrate, a carbohydrate and free amino acid beta-alanine that is not part of a dipeptide, polypeptide or an oligopeptide, wherein the human dietary supplement does not contain a free amino acid L-histidine, wherein the free amino acid beta-alanine is in an amount that is from 0.4 g to 16.0 g per daily dose, wherein the amount increases the muscle tissue strength in the human, and wherein the human dietary supplement is formulated for one or more doses per day for at least 14 days.

    After forcing NAI to file two amended complaints, resulting in the addition of HBS International Corp. ("HBS") as a Defendant, Allmax filed a motion for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c) and HBS filed a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6).  After filing an opposition to both motions, NAI filed its own motion for judgment on the pleadings.

    In its motion for judgment on the pleadings, NAI argued that Allmax was precluded from asserting an affirmative defense and counterclaim that all asserted claims from the patents-in-suit were invalid because Allmax and HBS were parties to separate license agreements with NAI containing provisions that prohibited them from contesting the validity of NAI's patents.  In denying NAI's motion, the District Court determined that the no-contest provisions in the license agreements were unenforceable under Lear, Inc. v. Adkins, 395 U.S. 653 (1969), since the agreements were entered into prior to any litigation between the parties.

    In their Rule 12 motions, Allmax and HBS sought to have NAI's claims for violation of Lanham Act § 32, patent infringement, and civil conspiracy dismissed.  With regard to NAI's patent infringement claim, Allmax and HBS argued that the claim should be dismissed because the patents-in-suit are invalid under 35 U.S.C. § 101 as failing to claim patent eligible subject matter.  In assessing the validity of the patents-in-suit, the District Court focused on claim 1 of the '084 patent, claim 1 of the '596 patent, claim 34 of the '947 patent, and claim 6 of the '376 patent, each of which were specifically referenced in NAI's amended complaint and discussed in Defendants' Rule 12 motions.  Because NAI's opposition to Defendants' Rule 12 motions did not contest Defendants' focus on these four representative claims, and NAI's own § 101 analysis focused on the same four claims, the District Court focused on the same four claims.

    In determining whether the four representative claims fall outside the scope of § 101, the District Court applied the two-stage framework set forth by the Supreme Court in Alice Corp. Pty. v. CLS Bank Int'l, 134 S. Ct. 2347, 2355 (2014).  In particular, the District Court determined (1) whether the claim is directed to a patent-ineligible concept, i.e., a law of nature, a natural phenomenon, or an abstract idea, and if so, (2) whether the elements of the claim, considered both individually and as an ordered combination, add enough to transform the nature of the claim into a patent-eligible application.

    With regard to representative claim 1 of the '084 patent, the District Court noted that beta-alanine is the only ingredient of the claimed human dietary supplement, and that the '084 patent specification discloses that beta-alanine is an amino acid that is present in the muscles of humans and other vertebrates.  According to the Court, "the '084 patent acknowledges that beta-alanine is a natural occurring phenomenon," and therefore "claim 1 of [the] '084 patent is directed to excluded subject matter — specifically beta-alanine, a natural phenomenon — thereby satisfying step one of the Alice inquiry."  Noting that " the inventive concept described in claim 1 of the '084 patent is placing a specific dosage of beta-alanine into a human dietary supplement," and further that "[t]he '084 patent acknowledges that placing a natural substance into a dietary supplement is conventional activity," the Court concluded that "employing a dietary supplement to administer the beta-alanine, a natural phenomenon, is insufficient to render claim 1 patent eligible."  The Court therefore determined that representative claim 1 of the '084 patent is directed to patent-ineligible subject matter, and thus is invalid under § 101.

    With regard to representative claim 34 of the '947 patent, the District Court noted that claim 34 is directed to a human dietary supplement containing a mixture of beta-alanine, creatine, and a carbohydrate, and that each of these substances is a naturally occurring phenomenon.  Finding that claim 34 is directed to excluded subject matter, the Court proceeded to step two of the Alice inquiry.  With respect to its step two analysis, the Court explained that:

    In Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130-31 (1948), the Supreme Court held that mixing different natural phenomena together — specifically, in that case different bacterial species — is insufficient to render an invention patent eligible even though it was not previously known that the substances could be mixed together, and the combination provided certain advantages.  Thus, in the present case, mixing beta-alanine, a natural phenomenon, with a carbohydrate and creatine, two other natural phenomena, and placing that mixture in a human dietary supplement, a conventional activity, is insufficient to render claim 34 patent eligible.  . . .  Accordingly representative claim 34 of '947 patent is directed to patent-ineligible subject matter, and, thus, is invalid under 35 U.S.C. § 101.

    Representative claim 6 of the '376 patent depends from claim 5 of the '376 patent, which in turn depends from claim 1 of the '376 patent.  Claim 1 of the '376 patent is set forth above, and claims 5 and 6 of the '376 patent recite:

    5.  The composition of claim 1, wherein the composition is a dietary supplement or a sports drink.

    6.  The composition of claim 5, wherein the dietary supplement or sports drink is a supplement for humans.

    The District Court's analysis of claim 6 of the '376 patent was similar to its analysis of claim 34 of the '947 patent.  In particular, the Court noted that claim 6 recites a human dietary supplement containing a mixture of beta-alanine and glycine, each of which is a naturally occurring phenomenon.  Determining that step one of the Alice inquiry was satisfied for claim 6, the Court then determined that:

    Under the Supreme Court's decision in Funk Bros., mixing beta-alanine, a natural phenomenon, with glycine, a natural phenomenon, and placing that mixture in a human dietary supplement, a conventional activity, is insufficient to render claim 6 patent eligible.  . . .  Accordingly representative claim 6 of '376 patent is directed to patent-ineligible subject matter, and, thus, is invalid under 35 U.S.C. § 101.

    Finally, with regard to representative claim 1 of the '596 patent, the District Court noted that it "agrees with Defendants that this claim is directed to a law of nature, specifically the principle that ingesting beta-alanine, a natural substance, will increase carnosine concentration in tissue and, thereby, aid in regulating the hydronium ion concentration in the tissue."  Moving to step two of the Alice inquiry, the Court stated that:

    [T]he elements contained in claim 1 of '596 patent do not disclose an inventive concept sufficient to transform the claimed law of nature into a patent-eligible application.  The Court agrees with Defendants that the language in claim 1 does nothing more than simply state the law of nature and add the words apply it to human tissue.  Specifically, the language in claim 1 simply acknowledges the natural law that providing beta-alanine to human tissue will increase the carnosine concentration in the tissue and aid in regulating hydronium ion concentration, and then merely instructs to do so.  This is insufficient to render the claim patent-eligible.

    In response to NAI's argument that claim 1 is directed to eligible subject matter because the claimed method increases the carnosine content in the tissue through a non-natural process, the Court indicated that:

    There is nothing in the claim language requiring that the carnosine concentration achieved by the method be at unnatural levels.  Moreover, there is nothing in the claim language requiring that the beta-alanine used in the method come from non-natural sources, and, thus, the claim appears to encompass natural methods of exposing beta-alanine to human tissue and, thereby, increasing the carnosine content in the tissue.

    The District Court therefore concluded that representative claim 1 of the '596 patent is directed to patent-ineligible subject matter, and thus invalid under 35 U.S.C. § 101.

    Having determined that all four representative claims from the patents-in-suit are directed to patent-ineligible subject matter, and therefore invalid under § 101, the District Court granted Defendants' Rule 12 motions and dismissed NAI's claim for patent infringement.


    Natural Alternatives International, Inc. v. Allmax Nutrition, Inc.     (S.D. Cal. 2017)
    Order: (1) Granting Defendant Allmax's Motion for Judgment on the Pleadings and Defendant HBS's Motion to Dismiss with Partial Leave to Amend; and (2) Denying Plaintiff's Motion for Judgment on the Pleadings by District Judge Huff

  • Guest Post — Patent Exhaustion and Pharmaceuticals

    By Michael Hinrichsen* and Anthony D. Sabatelli** —

    On May 30th, the Supreme Court ruled in Impression Products, Inc. v. Lexmark International, Inc. that all patent rights are automatically exhausted upon the sale of a product irrespective of contract stipulations and regardless of whether the sale is made domestically or internationally.  While the dispute in this case involved articles of manufacture, the decision has strong implications for the biotechnology and pharmaceutical Industry, and may make it easier for drugs sold legally overseas to make their way back to the U.S. market.

    Lexmark, a manufacturer of laser printers, holds multiple patents on the toner ink cartridges used in their laser printer products.  To protect their market position, Lexmark had U.S. customers sign a contract when they bought a toner cartridge, agreeing to neither reuse nor resell the purchased cartridge.  Despite the contract, many of these customers subsequently sold their spent cartridges to outside companies, called remanufacturers, who then refilled the empty cartridges with new toner for resale.  Remanufacturers also purchased and resold spent cartridges from customers outside the U.S.  Lexmark sued Impression Products on the grounds of patent infringement, asserting that they still held patent rights on the resold cartridges because of the contracts signed by U.S. customers, and because rights cannot be exhausted on products that are sold outside the U.S.

    Agreeing in part with both sides, the District Court initially ruled that while all patent rights are immediately exhausted when a product is sold domestically, patent rights are not exhausted for international sales.  The Federal Circuit agreed with regard to international sales, but reversed the domestic portion, ruling that patent rights can be retained so long as the seller specifies which rights are being retained.  The Supreme Court reversed the Federal Circuit ruling on both counts, finding that all patent rights are automatically exhausted wherever a sale is made, regardless of a signed contract.

    Impact on the pharmaceutical industry

    The Lexmark decision has implications for any industry that sets different prices for the same product, and makes it easier for customers charged a relatively low price to resell the product at a profit to customers being charged more.  In the pharmaceutical industry, this kind of price differential is common between countries, with prices in the U.S. often being higher.  This situation is due in part to strong governmental price controls present in other developed nations, and the steep discounts, patent exceptions and donations granted in developing countries.

    It might appear at first blush that there are a few avenues for drugs sold overseas to make their way to the U.S. market.  Drugs could be resold by customers, either directly to customers in the United States, or to a third party company, who would then import the drugs in bulk to the U.S. for resale.  Alternatively, drug wholesalers or pharmacies in other countries could sell directly to U.S. wholesalers, or pharmacies, or customers.  What currently blocks these importations is not patent law but FDA regulations.  To sell a prescription drug in the U.S., the drug must be approved by the FDA in order to ensure that it is safe, effective, labelled properly, and manufactured and tested using approved protocols.  Although drugs manufactured overseas can be sold in the U.S., all production facilities must be registered with the FDA and undergo regular inspection.  Since the FDA cannot verify that all drugs sold overseas pass these stringent safety requirements, the agency currently prevents the resale of drugs across U.S. borders.

    Given the safety risks, it seems unlikely that the FDA would allow drugs purchased from individual consumers in other countries to be resold in the U.S.  In the current political environment, however, restrictions on all drug imports are by no means guaranteed.  Several congressional bills have been proposed in recent years that would allow U.S. citizens to buy drugs from pharmacies in countries with similar safety standards to our own [1], and a recent survey found that a majority of Americans support these proposals [2].  Should such legislation pass, the Lexmark decision could prove critical, as it removes patent law as a means to exclude such drug imports.  Assessing the exact impact that foreign drug imports would have on U.S. drug prices is difficult.  Should these bills achieve their intended goal and cause drug prices to drop significantly, a potential unintended consequence could be a reduction in research and development spending, as has occurred in European and other countries after employing strong price controls [3].

    Another possible effect of the Lexmark decision is a decrease in drug donations from pharmaceutical companies to developing nations, out of concern that these drugs could be potentially resold in the U.S.  This concern has basis in the Federal Circuit's decision in Lifescan v. Shasta, which found that compensation is not necessary in a transaction for patent rights to be exhausted.

    Are there any legal recourses left to pharmaceutical companies?

    As Chief Justice Roberts notes in the Court's decision, the Lexmark ruling does not prevent companies from placing post-sale restrictions on a product.  Rather, it only prevents the use of patent law to enforce these restrictions.  Pharmaceutical companies could have overseas pharmacies and wholesalers enter contracts with provisions against reselling drugs in the U.S. market.

    [1] The Affordable and Safe Prescription Drug Importation Act. S. 469, 115th Cong. (2017).
    [2] The Henry J. Kaiser Family Foundation (2017). Kaiser Health Tracking Poll (April, 2017)., "The Future of the ACA and Health Care & the Budget."
    [3] Eger, S. and J.C. Mahlich. Pharmaceutical regulation in Europe and its impact on corporate R&D. Health economics review, 2014. 4(1): p. 23.

    * Mike Hinrichsen is a Ph.D. Candidate in the Molecular Biophysics and Biochemistry department at Yale University.  His thesis research is focused on using protein design to develop novel methods for imaging proteins and genomic loci in living cells.
    ** Dr. Sabatelli is a Partner with Dilworth IP

  • In re Stepan Co. (Fed. Cir. 2017)

    By Kevin E. Noonan –

    Federal Circuit SealThe Patent Trial and Appeal Board (PTAB) gets most of its attention (judicial and otherwise) regarding its decisions in inter partes review and covered business method proceedings.  But the Board also has responsibility for deciding ex parte appeals of Examiner rejections that fell within the purview of its predecessor, the Board of Patent Appeals and Interferences.  In August, the Federal Circuit reviewed the Board's decision affirming rejection of claims for obviousness in In re Stepan Co. in a precedential decision vacating the decision and sending it back on remand for a proper application of the law.

    The application at issue, U.S. Application No. 12/456,567 (U.S. Patent Application Publication No. US 2009/0318294 A1), claimed an invention related to herbicidal formulations of glyphosate salt and a surfactant, which the specification described as being "based on the unexpected discovery that surfactant systems comprising dialkoxylated alkylamine, water miscible solubilizer and amine oxide allow for formulation of ultra-high loaded ('high-strength') glyphosate salt concentrates possessing high or no cloud points."  The advantage of the formulation having high or no cloud point was quicker formulation and quicker delivery to market.  Claim 1 is representative:

    Claim 1:  An ultra-high load, aqueous glyphosate salt-containing concentrate comprising:
        a.  water;
        b.  glyphosate salt in solution in the water in an amount greater than about 39 weight percent of acid equivalent, based on the weight of the concentrate, said glyphosate salt being selected from the group consisting of the isopropylamine salt of glyphosate, the potassium salt of glyphosate, mixtures of the isopropylamine salt and the potassium salt of glyphosate and mixtures of the potassium salt and the ammonium salt of glyphosate;
        c.  a surfactant system in an amount ranging from about 1 to about 20 weight percent, based on the weight of the concentrate, comprising:
            i.  from about 10 to about 60 weight percent, based on the weight of the surfactant system, of one or more dialkoxylated alkylamines;
            ii.  from about 5 to about 30 weight percent, based on the weight of the surfactant system, of one or more water miscible solubilizers; and
            iii.  from about 30 to about 75 weight percent, based on the weight of the surfactant system, of one or more amine oxides;  
        said concentrate having a cloud point above at least 70oC or no cloud point when the concentrate is heated to its boiling point.

    Dependent Claim 26 specifies that the water miscible solubilizer is a polyalkylene glycol with a molecular weight from about 200 to about 1000, and claim 27 further limits the water miscible solubilizer to polyethylene glycol.

    The Examiner rejected all claims as being obvious under 35 U.S.C. § 103 over prior art disclosing glyphosate formulations with surfactants having cloud points of 50-60oC (Pallas).  The Examiner contended that this art taught species recited in dependent claims, and as to the ranges recited in the claims these were "routine optimization."  Higher cloud points (i.e., 70oC) disclosed in the prior art were also unconvincing in establishing non-obviousness for the Examiner as being merely optimization of the claimed formulations.

    With regard to dependent claim 26 and 27, the Examiner rejected these claims as being obvious over the combination of the Pallas reference and U.S. Patent No. 5,843,866, which discloses formulations comprising PEG 600 (falling within the range of 200-1000).

    The Board adopted these grounds of rejection and Stepan appealed.

    The Federal Circuit vacated the Board decision and remanded to the PTAB for further consideration, in a decision by Judge Moore, joined by Judge O'Malley; Judge Lourie filed a dissenting opinion.  While acknowledging that its review of factual matter required the Court to give deference to the Office the opinion faulted the Board for failing to provide sufficient basis for review:

    Because the Board failed to adequately articulate its reasoning, erroneously rejected relevant evidence of nonobviousness, and improperly shifted to Stepan the burden of proving patentability, we vacate the Board's decision that claims 1–31 of the '567 application would have been obvious.

    According to the opinion, the Examiner (and the Board) failed to explain the basis for finding the distinctions between the claimed invention and the prior art to be nothing more than routine experimentation.  This failure to make findings of fact sufficient for reviewing court to "conduct meaningful review" required the matter to return to the Board for proper explication of the Office's reasoning in the Court's opinion, citing In re Lee, 277 F.3d 1338, 1346 (Fed. Cir. 2002).  Merely stating that the skilled worker would have arrived at the claimed invention through routine experimentation does not satisfy the standard, because what is missing is why this is the case.  The opinion analogizes the case before it and the Board's failure to enunciate its reasoning to cases where the Board has based rejection on "common sense" or "intuition" without explanation, such as Arendi S.A.R.L. v. Apple Inc., 832 F.3d 1355, 1362 (Fed. Cir. 2016), and In re Van Os, 844 F.3d 1359, 1360 (Fed. Cir. 2017).  The explanation of the Board's reasoning was held to be insufficient in these cases and the same reasoning applies here according to the majority.

    Of all the rationales proffered by the Office on appeal, the panel majority considered them to be "post hoc generalizations" and not a proper basis for the required findings.

    The panel also based its decision on the grounds that the Board did not enunciate a reason why the cited art would not have given the skilled worker a reasonable expectation of success: "to have a reasonable expectation of success, one must be motivated to do more than merely to vary all parameters or try each of numerous possible choices until one possibly arrived at a successful result," citing  Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1365 (Fed. Cir. 2007) (quoting Medichem, S.A. v. Rolabo, S.L., 437 F.3d 1157, 1165 (Fed. Cir. 2006)).

    The opinion also found that the Board ignored Stepan's evidence that the claimed surfactants had failed in the experiments disclosed in the Pallas reference and directed the Board to consider this evidence on remand.

    Finally, the panel opined that the Board had shifted the burden of proof onto Stepan without providing a prima facie case of obviousness because it failed to articulate its reasoning, citing In re Kahn, 441 F.3d 977, 986 (Fed. Cir. 2006).  In this regard, the panel held that the Board did not properly consider the cloud point element in considering obviousness (which was a feature the majority found might distinguish the prior art formulations with regard to nonobviousness).

    Judge Lourie's dissent was based on his opinion that the claims were obvious based on their expressly recited elements and not on the cloud point limitation (which he considered a feature and not a limitation that Stepan could rely upon to establish nonobviousness).  Furthermore, in Judge Lourie's reading of the claims the Pallas reference itself almost anticipates claim 1, based on the recited elements.  The claims in his view in this case are broad, and broad ("shotgun") claims cannot be non-obvious due to a discovery of a new property (in this case, the cloud point).

    And with regard to the reasonable expectation of success requirement he states:  "Where, as here, there is a single prior art reference, there does not need to be a finding of reasonable expectation of success for those skilled in a particular art to make conventional modifications to the prior art and look for improvements in some parameter," citing In re Ethicon, Inc., 844 F.3d 1344, 1351 (Fed. Cir. 2017)

    In re Stepan Co. (Fed. Cir. 2017)
    Panel:  Circuit Judges Lourie, Moore, and O'Malley
    Opinion by Circuit Judge Moore; dissenting opinion by Circuit Judge Lourie

  • Broadsoft, Inc. v. Callwave Communications, LLC (D. Del. 2017)

    Telephone Call Processing Patent Claims Found Invalid under 35 U.S.C. § 101

    By Joseph Herndon —

    District Court for the District of DelawareIn the United States District Court for the District of Delaware, Plaintiff filed a declaratory judgment action on seeking a declaration that none of Plaintiff's accused products infringed any valid claims of Defendant's U.S. Patent Nos. 8,351,591 and 7,822,188, and further that one or more claims of those patents were invalid under 35 U.S.C. § 101.

    The '591 and '188 patents share a common specification and generally relate to "systems and methods for processing and placing telephone calls."  The parties separate the asserted claims into two categories:  the sequential dialing claims and the single number outcall claims.  Generally, the patents are directed to flexible call processing systems.  In one example, an inbound call intended for a called party can be rerouted based on whether the call is successfully connected or not.  The methods for rerouting include the sequential dialing or single number outcall methods.

    A.  Sequential Dialing Claims

    Claim 40 of the '188 patent is an independent claim and is representative of the sequential dialing claims.  It reads as follows:

    40.  A method of processing calls, comprising:
        receiving at a call processing system a message from an Internet protocol proxy regarding a first call from a caller;
        determining if the first call is directed to a telephone address of a subscriber of services offered by the call processing system, wherein at least partly in response to determining that the telephone address is that of a subscriber:
        accessing an account record associated with the subscriber, the account record including at least one subscriber instruction;
    based at least in part on the subscriber instruction, placing a first outcall to a first communication device associated with the subscriber;
        if the first outcall is not answered within a first number of rings or period of time, placing a second outcall to a second communication device associated with the subscriber; and
        receiving a call connect instruction from the subscriber; and
        instructing the call processing system to connect the first call to a third communication device.

    Abstract Idea

    The analysis under 35 U.S.C. § 101 first requires determination of whether the claims at issue are directed to an abstract idea.

    Plaintiff argued that the claims are like the concept of sending, receiving, and managing information between a subscriber and a network, and as such, are directed to the abstract idea of sequentially dialing a list of telephone numbers.

    Plaintiff also asserted that the sequential dialing claims provide no improvement to any computer or technological process; instead, they merely access a list of telephone numbers in a database associated with the called party and sequentially dial them in the ordinary fashion, providing simple automation of a task previously performed manually.

    All of Plaintiff's arguments centered around comparing the claims of the patents to claims previously held to be patent ineligible in other cases.

    Defendant countered that Plaintiff's analogy oversimplified the sequential dialing claims.  According to Defendant, the problem addressed by the invention is redirecting the call to another number associated with the subscriber without hanging up and redialing after receipt of a busy signal from one of the subscriber's phone numbers.  Defendant further argued that the claims are not abstract because humans have not practiced and cannot practice the claims:  a conventional operator cannot redirect a call in a situation where the caller does not know the called party's other phone numbers.

    The Court agreed with Plaintiff that claims are directed to an abstract idea.  Like Plaintiff, the Court simplified the claim into functions that can be considered directed to organizing human activity:  accessing stored information when prompted by a user's incoming call, and executing an automated response according to stored instructions provided in advance by a subscriber.

    The Court noted that the '188 patent describes the problem addressed by the claims as callers receiving busy signals or getting sent to voicemail instead of successfully connecting with the called party.  Thus, the Court found that the "problem" addressed by the claims is a human unavailability problem, rather than a problem specific to telephony technology.  As a result, the claims were not found to improve telephony technology, and instead invoked known telephony technology merely as a tool to address this human unavailability problem.

    Inventive Concept

    The determination that a patent is directed to an abstract idea does not render the subject matter ineligible.  Having decided that the patent's claims are directed to an abstract idea, the Court must next determine whether the claims do significantly more than simply describe the abstract method so as to involve an inventive concept.

    Plaintiff argued that the claims lack an inventive concept because the claims merely implement the idea of sequential dialing in the context of computer telephony and recite only conventional telephony elements.

    Defendant again complained that Plaintiff improperly oversimplified each limitation in the claims and failed to consider each claim as a whole.  Defendant asserted that an inventive concept exists because the patent contemplates employing a select set of timing rules for the length that the first outcall is permitted to go unanswered before placing the second outcall.

    The Court found, however, that the rules here merely require initiating a second outcall after a preset number of rings or period of time.  Here, unlike McRo, no rule derivation is required, and the rules are not directed to a complex interaction.  The Court found nothing inventive about using a preset amount of time to determine when to initiate a particular step in a process, and it is difficult to imagine using in this system alternative rules not based on the passage of some period of time.

    Further, the Court found that the rules recited here do not represent an improvement to telephony technology.  The Court rejected all of Defendant's arguments, and found that the claims of the '188 patent are drawn to an abstract idea and do not provide an inventive concept.  Thus, the claims were found to be patent ineligible under 35 U.S.C. § 101.

    B.  Single Number Outcall Claims

    Claim 1 of the '591 patent is representative of the single number outcall claims, and it reads as follows:

    1.  A method of processing calls, the method comprising:
        storing in computer readable memory associated with a call processing system a first phone address associated with a first subscriber;
        storing in computer readable memory a plurality of phone addresses for the first subscriber;
        participating at the call processing system in a first call associated with the first subscriber, the first call associated with a second phone address different than the first phone address;
        placing a first outcall from the call processing system to a first called party, wherein the call processing system inserts at least a portion of the first phone address in a callerID field associated with signaling information associated with the first outcall;
        causing the first call and the first outcall to be bridged;
        participating at the call processing system in a second call associated with the first subscriber, the second call involving a subscriber communication device associated with a third phone address different than the first phone address placing a second outcall from the call processing system to a second called party, wherein the call processing system inserts at least a portion of the first phone address in a callerID field associated with signaling information associated with the second outcall; and
        causing the second call and the second outcall to be bridged.

    Abstract Idea

    Plaintiff argued that the asserted single number outcall claims are directed to the abstract idea of identifying a caller with a single telephone number.  Plaintiff asserted that the claims do not improve telephony technology; instead, the claims merely store information (i.e., telephone addresses), categorize that information (i.e., associate the telephone addresses with particular subscribers), and then transmit the information (i.e., insert the telephone address into a callerID field).

    Plaintiff also asserted that the abstract concept to which the claims are directed has been practiced for decades because a call involving an assistant located in an office who connects an employee working from home with a third party would display a number for the office, rather than the employee's home phone number, in the callerID field.  In this scenario, although the employee would initiate the call from a home phone address (the second phone address), the callerID field would display the office phone address (the first phone address), not the employee's home phone address when the employee was connected to the called party.

    The Court agreed with Plaintiff that the asserted single number outcall claims are directed to an abstract idea.  The Court found that essentially, the claim is directed to storing data in a database, looking up data from that database in response to the initiation of a phone call, and inserting at least a portion of that data in the already-existing callerID field.

    The claims do not focus on a specific means or method that improves the relevant technology but are instead directed to a result or effect that itself is the abstract idea and merely invokes generic processes and machinery.

    Inventive Concept

    Plaintiff argued that the single number outcall claims lack an inventive concept because the claim scope is not limited to anything narrower than identifying a caller with a single telephone number.  Plaintiff further contended that the claims merely implement this abstract idea using generic and conventional components and operations.

    For the same reasons discussed with respect to the sequential dialing claims, the Court agreed with Plaintiff that the call processing system fails to provide an inventive concept for the single number outcall claims.

    Defendant admitted during oral argument that the hardware that was utilized in the patent claims was known at the time, but asserted that what was new was combining those known hardware elements together through programming in a new way.  But rather than disclosing a detailed program to achieve the claimed functionality, the patents simply append conventional steps, specified at a high level of generality, which is not enough to supply an inventive concept.

    Thus, the Court found that the single number outcall claims are directed to an abstract idea and do not provide an inventive concept.  Thus, the claims were found to be patent ineligible under 35 U.S.C. § 101.

    Looking at the outcome here, most of Plaintiff's arguments centered around comparing the claims of the patents to claims previously held to be patent ineligible in other cases.  This can be a high burden to overcome for the Defendant because now the Defendant must either demonstrate that the claims are unlike those previously found invalid, or demonstrate that the claims previously found invalid were done so improperly.  This brings up a problematic issue because a Court is unlikely to consider previous cases to have been decided improperly.  As a result, once a case is decided finding claims to be patent ineligible under 35 U.S.C. § 101, those claims now are examples to use for all future section 101 challenges.

    As with many of the patent ineligible decisions, many other additional arguments were focused on demonstrating that the claims are directed to old technology, or as stated here, to technology that "has been practiced for decades".  Of course, if that is the case, the proper validity challenge should arise under section 102 or 103 to invalidate the claims based on prior art.  I still cannot agree that a patent eligibility issue has anything to do with whether the claims recite new/novel features.

    Memorandum Opinion by Richard G. Andrews, U.S. District Judge

  • Conference & CLE Calendar

    CalendarOctober 10, 2017 – "The Ever-Evolving Estoppel Effect of PTAB Decisions" (LexisNexis) – 1:30 to 2:00 pm (ET)

    October 12, 2017 – "Patent Term Adjustments and Extensions: Leveraging Recent Decisions and USPTO Rules" (Strafford) – 1:00 to 2:30 pm (EDT)

    October 17, 2017 – "The Good, the Bad, and the Ugly: Patent Litigation Forum Selection in the Wake of TC Heartland" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

    October 17, 2017 – "Strategic Considerations in Anticipation of Oil States" (LexisNexis) – 1:30 to 2:00 pm (ET)

    October 18, 2017 – "Patent Trolls Uprising: Tips and Strategies to Win the War Against Them" (The Knowledge Group) – 12:00 to 1:30 pm (EST)

    October 26, 2017 – "Drug Substance Patents: FDA Guidance, Protecting Composition-of-Matter Patents, Drafting Solid Form Claims" (Strafford) – 1:00 to 2:30 pm (EDT)

    November 2-3, 2017 – Summit on IP Due Diligence*** (American Conference Institute) – Philadelphia, PA

    ***Patent Docs is a media partner of this conference or CLE

  • Webcast on Drug Substance Patents

    Strafford #1Strafford will be offering a webcast entitled "Drug Substance Patents: FDA Guidance, Protecting Composition-of-Matter Patents, Drafting Solid Form Claims" on October 26, 2017 from 1:00 to 2:30 pm (EDT).  Eyal H. Barash of Barash Law and Dr. Steef Boerrigter, Senior Research Investigator, Materials Science, SSCI will examine solid forms, provides specific examples of products in the Orange Book using patents to such forms to provide drug substance protection beyond composition of matter, discuss both patentability and infringement issues related to such patents, and also discuss the recent FDA guidance on co-crystals and implications for patent strategy, outline how solid form claims are drafted, and review lessons from recent cases.  The webinar will review the following topics:

    • A brief scientific introduction to solid forms
    • What are the key patentability issues when preparing solid form patents?
    • How are pharmaceutical companies using solid form patents?
    • What is different about claiming solid form patents with respect to “organic chemistry” claims in other composition-of-matter patents?
    • What impact does the FDA guidance on co-crystals have on patenting composition of matter?

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

  • Webinar on the Estoppel Effect of PTAB Decisions

    LexisNexisLexisNexis will be offering a webinar on "The Ever-Evolving Estoppel Effect of PTAB Decisions" on October 10, 2017 from 1:30 to 2:00 pm (ET).  Gina Shishima and Tom Owens of Norton Rose Fulbright and Miri Beiler of LexisNexis will discuss the following:

    • How the PTAB has interpreted the estoppel provision
    • Federal court cases interpreting the estoppel provision
    • The potential impact of the Supreme Court's coming decision in SAS Institute Inc. v. Matal, considering whether a final written decision in an IPR must address all challenged claims, and its implications for the scope estoppel

    Those interested in registering for the webinar, can do so here.

  • Webcast on Winning the War Against Patent Trolls

    The Knowledge GroupThe Knowledge Group will offer a live webcast entitled "Patent Trolls Uprising: Tips and Strategies to Win the War Against Them" on October 18, 2017 from 12:00 to 1:30 pm (EST).  Neal Rubin, Senior Vice President at RPX Corporation, Herbert H. Finn of Greenberg Traurig, LLP, and Mark P. Wine of Orrick will provide attrendees with an overview of the latest trends and critical issues with respect to the rise of patent trolls, and also offer best practices in developing and implementing effective tips and strategies to win the war against patent trolls.  Key topics to be addressed by the webcast include:

    • The Rise of Patent Trolls
    • Recent Court Decisions
    • Emerging Trends and Critical Issues
    • Significant Implications to Patent Owners and Businesses
    • Defense Tips and Strategies
    • Best Practices in Battling Patent Trolls

    The registration fee for the webcast is $99.  Those interested in registering for the webinar can do so here.  Additional information regarding the webinar can be found here.

  • Webinar on Oil States Energy Services, LLC v. Greene’s Energy Group, LLC

    LexisNexisLexisNexis will be offering a webinar on "Strategic Considerations in Anticipation of Oil States" on October 17, 2017 from 1:30 to 2:00 pm (ET).  Orion Armon of Cooley LLP, Sarah Guske of Baker Botts LLP, and Miri Beiler of LexisNexis will discuss the following:

    • The potential impact of the Supreme Court's decision in Oil States
    • Guidance for how to use IPRs while Oil States is pending
    • How to leverage PTAB proceedings in district court even if the Supreme Court finds IPRs unconstitutional

    Those interested in registering for the webinar, can do so here.