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  • FDA Report: Agency Announces Expedited Review of Certain ANDAs

    By Andrew Williams —

    FDAOn June 27, 2017, the U.S. Food and Drug Administration issued a press release stating how it would begin implementing its plan to increase competition for prescription drugs.  This comes on the heels of FDA Commissioner Scott Gottlieb's blog post last week, in which he indicated that the FDA would begin lifting the barriers to drug competition.  The first of the two new initiatives announced this week was to publish a list of branded drugs that were off patent but nevertheless had no approved generics.  The second initiative was to implement a policy to expedite the review of ANDAs for any drugs until there are three approved generics.  However, even though the press release indicated that these initiatives reflect the Administration's goal of improving access to prescription drugs, it did not address the potential reality that there may be little economic incentive for generic manufactures to seek marketing approval for these drugs.

    The FDA press release was accompanied by two documents, each of which was directed to one of the two initiatives.  The first, entitled "List of Off-Patent, Off-Exclusivity Drugs without an Approved Generic," includes two sections: (1) a list of drug products for which the FDA could immediately accept an ANDA; and (2) a list of drug products for which there might be legal, regulatory, or scientific issues.  The FDA suggested that any sponsor wishing to seek approval of a drug product on the second list should first submit an initial inquiry to the Office of Generic Drugs.  Such drug products on this second list can include those that are more appropriate for the 505(b)(2) abbreviated approval pathway, those for which there are "regulatory complexities," and those that are proteins and may be transition products pursuant to the BPCIA.  No NDA drug products that have been approved in the past year have been included, and the FDA suggests that it will update the list every six months.

    The second document was an updated "Prioritization of the Review of Original ANDAs, Amendments, and Supplements," as found in the Manual of Policies and Procedures for the Office of Generic Drugs.  The accompanying "Change Control Table" indicates that the revisions found in this version were to "include prioritization of generic products for which there are fewer than three ANDAs approved for the reference listed drug (RLD) and updated certain external references."  Nevertheless, this prioritization appears to be contingent on there being no blocking patents.  For submissions that contain Paragraph IV certifications, additional criteria were provided before expedited review could be received.

    These documents related to the expediting of certain ANDAs were released about a week after newly appointed and confirmed Commissioner Gottlieb posted to his blog, the FDA Voice.  In this blog post, Commissioner Gottlieb indicated that the FDA was working on a Drug Competition Action Plan to address "some of the scientific and regulatory obstacles to generic competition across the full range of FDA-approved drugs."  The post, however, explicitly excluded patent and statutory exclusivity periods from these obstacles.  The only example of "gaming" the system provided was the alleged "increasing unavailability of certain branded products for comparative testing," either through restrictions placed on distributors, or the adoption of voluntary Risk Evaluation and Mitigation Strategies (or REMS) by the NDA holder.  The Commissioner also indicated that the FDA would be looking at how best to coordinate with the FTC to identify and publicize anti-competitive practices.  Finally, he announced a July 18 meeting, in which the FDA would seek input from the public about ways in which the current rules were no having their intended effects.  Of course, this post reverses a long-standing principal of the FDA to not get involved in issues of drug pricing.  We will continue to monitor any updates from the FDA or the current administration on any policies related to generic drugs.

  • Prism Technologies LLC v. T-Mobile USA, Inc. (Fed. Cir. 2017)

    An Obviousness Rejection in Patent-Eligibility Clothing?

    By Michael Borella —

    Federal Circuit SealIn Mayo v. Prometheus, the Supreme Court wrote "[w]e recognize that, in evaluating the significance of additional steps, the § 101 patent-eligibility inquiry and, say, the § 102 novelty inquiry might sometimes overlap."  The ongoing existence of this overlap has resulted in a catch-22 for patentees — one can use prior art (or just an unsupported allegation that a claim element is conventional) to attack the validity of a patent, but the patentee cannot use the absence of such prior art to establish eligibility under § 101.  Given that the § 101 inquiry is considered (or at least it is supposed to be considered) as a matter of law, patent challengers often take the less rigorous path of attacking claims under § 101 rather than § 102 or § 103, both of which have effectively higher evidentiary standards.  As a consequence, § 101 has become overworked, often performing the duties of both § 102 and § 103, as well as § 112.

    Or expressed in a more cynical tone, when invalidating a patent under § 101, facts don't matter.

    In Mayo, Justice Breyer contended that "to shift the patent-eligibility inquiry entirely to these later sections risks creating significantly greater legal uncertainty, while assuming that those sections can do work that they are not equipped to do."  His rationale was that "§§ 102 and 103 say nothing about treating laws of nature as if they were part of the prior art when applying those sections" and that "studiously ignoring all laws of nature when evaluating a patent application under §§ 102 and 103 would make all inventions unpatentable."

    In practice, however, §§ 102 and 103 are often better-equipped to handle invalidity contentions in a consistent and logical fashion than § 101.  Laws of nature are by definition not human-made, and therefore must be part of the prior art — and they can be invoked as such by judicial notice.  Reading this into §§ 102 and 103 would do far less damage than what has been done by the reading of the largely unworkable two-prong test of Mayo and Alice Corp. v. CLS Bank Int'l into § 101.  And to rebut Justice Breyer's second point, § 103 is already used to evaluate claims that combine elements both in the prior art and not in the prior art (or combinations of elements all within the prior art).

    In short, the Court's reasoning for stuffing analyses traditionally undertaken as part of §§ 102 and 103 into § 101 might sound reasonable in theory, but falls apart in practice.

    To that point, on June 23, 2017, the Federal Circuit used conclusory reasoning to invalidate claims under § 101, even though it is likely that these claims could have been easily disposed of under § 103 in a more rationally-grounded fashion.

    Prism Technologies LLC brought an infringement action against T-Mobile USA, Inc. in the District of Nebraska, asserting its U.S. Patent Nos. 8,127,345 and 8,387,155.  The '155 patent is a continuation of the '345 patent, and the earliest priority date of each (by way of a continuation–in-part) is in 1997.  T-Mobile moved for summary judgment on the pleadings, contending that Prism's claims were ineligible under § 101.  The District Court sided with Prism, the case continued to trial, and the jury determined that T-Mobile did not infringe.  Prism appealed, requesting a new trial, and T-Mobile cross-appealed, re-raising its § 101 position.

    Claim 1 of the '345 patent was deemed representative, and it recites:

    A method for controlling access, by at least one authentication server, to protected computer resources provided via an Internet Protocol network, the method comprising:
        receiving, at the at least one authentication server from at least one access server, identity data associated with at least one client computer device, the identity data forwarded to the at least one access server from the at least one client computer device with a request from the at least one client computer device for the protected computer resources;
        authenticating, by the at least one authentication server, the identity data received from the at least one access server, the identity data being stored in the at least one authentication server;
        authorizing, by the at least one authentication server, the at least one client computer device to receive at least a portion of the protected computer resources requested by the at least one client computer device, based on data associated with the requested protected computer resources stored in at least one database associated with the at least one authentication server; and
        permitting access, by the at least one authentication server, to the at least the portion of the protected computer resources upon successfully authenticating the identity data and upon successfully authorizing the at least one client computer device.

    This claim describes a common authentication technique that has been used since the early- to mid-1990s.  Remote access to a computer network by an device or user often requires that the device and/or user first be authenticated before they are permitted access to use the network or the information therein.  Originally focused on dial-up modem Internet access, servers centralize the authentication, authorization, and accounting (AAA) procedures so that individual remote access gateways (e.g., modem pools) do not need to maintain separate databases of device and user profiles.  Such a AAA server is often referred to as a RADIUS server, as RADIUS is the protocol with which it communicates with the remote access gateways.

    In any event, the Federal Circuit applied the Mayo / Alice test to evaluate the claim under § 101.  In this test, one must first determine whether the claim at hand is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further determine whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exclusion.  But generic computer implementation of an otherwise abstract process does not qualify as "significantly more."  On the other hand, a claimed improvement to a computer or technological process is not abstract.

    With respect to prong one, the Court agreed with the District Court that "the asserted claims are directed to the abstract idea of providing restricted access to resources."  Apparently, the Court was swayed by T-Mobile's analogies between the claim and pre-computer access control technologies.

    Turning to prong two, the Court rejected the District Court's conclusion that the claim includes an inventive concept beyond the aforementioned abstract idea, because its elements "modify the way the Internet functions to provide secure access over a protected computer resource."  Instead, the Court found that the claim merely recites "a host of elements that are indisputably generic computer components."  Looking to the text of the specification, the Court found enough evidence to conclude that the applicant admitted, or at least implied, that the additional elements of the claim were conventional.  The Court further asserted that the combination of these elements was merely a set of "generic computer components employed in a customary manner."

    As such, the Court ruled the claims invalid under § 101.

    The irony here is that, as discussed above, there would be ample evidence to challenge the validity of these claims under § 103.  Prior to 1997, companies such as Livingston Enterprises and Funk Software were designing, implementing, and selling RADIUS servers, and these servers were deployed within several large telecommunications networks (see the Wikipedia page on RADIUS and the citations therein for detail).  The functions of these servers were largely indistinguishable from the plain language of claim 1.

    In viewing the prosecution history of the '345 patent, the applicant submitted numerous non-patent literature (NPL) references disclosing the existence of such RADIUS servers.  In fact, the applicant submitted so many of these references that the Examiner contended that the volume of references was excessive and that he only performed a "cursory review" thereof.  None of these NPL references were cited against the claims during prosecution of the '345 patent.  Therefore, it is questionable whether they were fully considered by the Examiner, and this may explain why these claims were allowed in view of well-known prior art.

    Thus, even if it is proper to invalidate this patent (or at least claim 1), this case demonstrates that doing so under § 101 rather than § 103 can be fraught with peril.  Here, the Federal Circuit applied conclusory reasoning under both prongs of Alice to do so, despite its recent insistence in Enfish v. Microsoft and McRO v. Bandai Namco Games America that such a practice of viewing the claims at a high level was inappropriate.  On the other hand, it is likely that a reasoned analysis under § 103 could have come to the same result without all of the judicial hand waving, and without doing further violence to the patent statute.

    Prism Technologies LLC v. T-Mobile USA, Inc. (Fed. Cir. 2017)
    Nonprecedential disposition
    Panel: Chief Judge Prost and Circuit Judges Lourie and Schall
    Opinion by Chief Judge Prost

  • Nantkwest, Inc. v. Matal (Fed. Cir. 2017)

    By Josh Rich —

    Federal Circuit SealPatent applicants dissatisfied with final outcome of patent prosecution proceedings have long had two options for court review of a Patent and Trademark Appeal Board decision:  an appeal to the Federal Circuit under 35 U.S.C. § 141 or a civil action in the Eastern District of Virginia under 35 U.S.C. § 145.  For over 175 years, applicants faced the same risk of paying the Patent and Trademark Office's fees in either proceeding.  But in the Nantkwest case, the Patent and Trademark Office asserted that it was entitled to recover attorneys' fees (and other expenses) regardless of the outcome of the case; a divided panel of the Federal Circuit affirmed that it was entitled to receive those fees.  As a result, future applicants dissatisfied with Patent and Trademark Office results are likely to think twice before filing an action under § 145.

    Background

    Dr. Hans Klingemann filed a patent application in 2001 directed to a method of treating cancer by administering natural killer cells.  His claims were rejected for obviousness by the examiner, and he appealed the Patent Trial and Appeal Board.  The Board affirmed the examiner's rejection.  Dr. Klingemann's assignee, Nantkwest, filed a civil action under § 145.  The District Court granted summary judgment of obviousness to the Patent and Trademark Office (which was upheld on appeal by the Federal Circuit).  The Patent and Trademark Office then sought to recover all of its expenses, including expert, paralegal, and attorneys' fees.

    Section 145 permits applicants dissatisfied with the final outcome of patent prosecution proceedings to file a civil action; it also provides that "[a]ll the expenses of the proceedings shall be paid by the applicant."  Traditionally, the Patent and Trademark Office applied that provision to seek recovery of costs — not attorney's fees — in cases in which it had prevailed.

    The Nantkwest District Court held that the Patent and Trademark Office was entitled to recover expert costs, but not attorneys' fees.  Nantkwest, Inc. v. Lee, 162 F. Supp. 3d 540 (E.D. Va. 2016).  It started with the strong presumption of the "American Rule":  that each party is required to pay its own attorneys' fees, regardless of the outcome of the case, in the absence of a clear statutory or contractual obligation to the contrary.  Id. at 542.  In doing so, the District Court relied on decades of Supreme Court decisions holding that "departures from the American Rule are authorized only when there is a 'specific and explicit provision[] for the allowance of attorneys' fees under [the] selected statute[].'"  Id. (quoting Baker Botts L.L.P. v. ASARCO LLC, ___ U.S. ___, 135 S.Ct. 2158, 2164 (2015); Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 260(1975)).  The District Court found that § 145 was not sufficiently specific and explicit to vary from the American Rule.  Id. at 543-45.  In doing so, it asserted that it was not compelled to follow the Fourth Circuit's decision in Shammas v. Focarino, 784 F.3d 219 (4th Cir. 2015), cert. denied sub nom. Shammas v. Hirshfeld, 136 S. Ct. 1376 (2016), because Shammas was erroneously decided.  Id. at 545-46.

    In the Shammas case, the Fourth Circuit considered whether the Patent and Trademark Office could recover fees when a dissatisfied applicant in an ex parte trademark proceeding elected to commence a de novo action in the district court.  As with § 145, 15 U.S.C. § 1071(b) permits such an action in relation to a trademark application.  But 15 U.S.C. § 1071(b)(3) provides, "In any case where there is no adverse party, a copy of the complaint shall be served on the Director, and, unless the court finds the expenses to be unreasonable, all the expenses of the proceeding shall be paid by the party bringing the case, whether the final decision is in favor of such party or not."

    The Fourth Circuit started from the proposition, admitted by Shammas, that "all the expenses of the proceeding" would generally be a broad enough term to include attorneys' fees.  784 F.3d at 222.  Shammas argued, however, that § 1071(b)(3) would have had to expressly identify attorneys' fees if it were to include them.  The Fourth Circuit recognized that the American Rule would compel such a requirement if it applied.  But it then determined that the American Rule did not apply because:

    [§ 1071(b)(3)] is not a fee-shifting statute that purports to rebut the presumption of the Rule.  Rather than imposing expenses based on whether the PTO prevails, § 1071(b)(3) imposes the expenses of the proceeding on the ex parte plaintiff, "whether the final decision is in favor of such party or not."  (Emphasis added).  Thus, even if Shammas had prevailed in the district court, he still would have had to pay all of the PTO's expenses.  Because the PTO is entitled to recover its expenses even when it completely fails, § 1071(b)(3) need not be interpreted against the backdrop of the American Rule.  Therefore, even assuming that a statute must explicitly provide for the shifting of attorneys fees to overcome the presumption of the American Rule, that requirement is not applicable here.

    Id. at 223-24.  Thus, the Fourth Circuit awarded attorneys' fees to the Patent and Trademark Office.

    The Federal Circuit's Nantkwist Decision

    Like the Fourth Circuit in Shammas, the Federal Circuit in Nantkwest started with the question of whether the American Rule was applicable to the case.  The Federal Circuit rejected Nantkwest's argument that the Supreme Court's Baker Botts precedent applied to all fee-shifting statutes.  Rather, it found that the precedent only applied when a party was "attempting to extend [a fee-shifting statute's] reach to ancillary litigation Congress never intended."  Nonetheless, the Federal Circuit decided that attorneys' fees should be assessed, regardless of whether the American Rule applied.

    As the Supreme Court held in the Alyeska Pipeline case, the American Rule does not apply when a statute specifically and explicitly authorizes an award of fees.  Relying on the Shammas case and a Second Circuit case (United States v. 110-118 Riverside Tenants Corp., 886 F.2d 514 (2d Cir. 1989)), the Federal Circuit found that § 145 was sufficiently clear to authorize fees under the American Rule.  Specifically, it relied upon legal dictionaries and treatises to support the inclusion of attorneys' fees in expenses, and distinguished between costs — which normally do not include fees — and expenses.  The Court relied upon the belief that its conclusion was "particularly important here in the context of § 145's all expenses provision."  Unlike private attorneys, the Patent and Trademark Office relies upon the Office of Solicitor's employees, who do not bill hours individually or collect fees from a client.  Thus, it asserted that those fees were more similar to expenses for the government than a "fee."

    The majority of the panel also rejected Nantkwest's argument that the Patent and Trademark Office would have had to pay the attorneys' salaries regardless of whether it had to defend against Nantkwest's suit.  The Court rejected that argument "because the litigation required the lawyers to divert their time away from other pending matters."  Notably, the Court considered the imposition of expenses under § 145 regardless of the outcome of the case to be an intentional disincentive for the bringing of such a de novo case because of the expense and difficulty imposed by a review of all issues, with discovery available to the aggrieved applicant.  Thus, it held that the Patent and Trademark Office could recover all expenses including attorneys' fees in any such case.

    Judge Stoll dissented from the majority's decision, relying primarily on the American Rule.  She found that § 145 "neither mentions 'attorneys' fees' nor reflects a congressional intent to authorize them."  Unlike the majority, she relied primarily on the language of the statute and its lack of mention of attorneys' fees as a particularly telling sign.  Unlike other statutes that permit recovery of attorneys' fees, there is no discussion of fees, either as part of recoverable expenses or otherwise.  That was especially true in light of sources contemporaneous with the 1839 enactment of § 145's predecessor statute, which defined expenses as costs, and vice versa.  Finally, Judge Stoll noted that it would be particularly unusual to view § 145 as a fee-shifting statute in light of the imposition of expenses on both unsuccessful and successful litigants.

    Conclusion

    In light of the Federal Circuit's Nantkwest decision, applicants disappointed with Patent and Trademark Office proceedings will have to think twice before pursuing a de novo district court action.  The added cost of the Patent and Trademark Office's fees and expenses — in this case, over $100,000 — will have to be weighed against the greater chance of obtaining a patent.  If the pivotal issue is a question of law, rather than some fact missing from the record before the Board, it strongly suggests seeking an appeal to the Federal Circuit under § 141.  Only when additional fact-finding is required, and the patent application is especially important, will a district court action under § 145 be worth it.

    Nantkwest, Inc. v. Matal (Fed. Cir. 2017)
    Panel: Chief Judge Prost and Circuit Judges Dyk and Stoll
    Opinion by Chief Judge Prost; dissenting opinion by Circuit Judge Stoll

  • Cleveland Clinic Foundation v. True Health Diagnostics LLC (Fed. Cir. 2017)

    By Kevin E. Noonan –

    Federal Circuit SealMost people have had the experience of becoming lost and, having arrived at their destination, realizing that it was only one false turn that caused their confusion.  For those with a physics background one can recall the feature of vector calculus that a small displacement at a first position can result in a large displacement at a later position further along the vector's path.  Both these thoughts come unbidden when reading the Federal Circuit's decision on June 16th in Cleveland Clinic Foundation v. True Health Diagnostics LLC (where the one false turn was the Court's decision in Ariosa Diagnostics v. Sequenom and that initial "small nudge" can be found in the Supreme Court's Mayo Collaborative Services v. Prometheus Laboratories decision).

    The case involved Cleveland Clinic's lawsuit for patent infringement against True Health over U.S. Patent Nos. 7,223,552, 7,459,286, and 8,349,581.  The technology disclosed and claimed in these patents relate to methods for detecting myeloperoxidase (MPO) in a bodily sample; a fourth patent, No. 9,170,260, is directed to methods for treating a patient having cardiovascular disease.  The following claims are representative according to the opinion:

    For the '522 patent:

    11.  A method of assessing a test subject's risk of having atherosclerotic cardiovascular disease, comprising comparing levels of myeloperoxidase in a bodily sample from the test subject with levels of myeloperoxidase in comparable bodily samples from control subjects diagnosed as not having the disease, said bodily sample being blood, serum, plasma, blood leukocytes selected from the group consisting of neutrophils, monocytes, subpopulations of neutrophils, and sub-populations of monocytes, or any combination thereo[f]; wherein the levels of myeloperoxidase in the bodily from the test subject relative to the levels of [m]yeloperoxidase in the comparable bodily samples from control subjects is indicative of the extent of the test subject's risk of having atherosclerotic cardiovascular disease.

    14.  A method of assessing a test subject's risk of developing a complication of atherosclerotic cardiovascular disease comprising: determining levels of myeloperoxidase (MPO) activity, myeloperoxidase (MPO) mass, or both in a bodily sample of the test subject, said bodily sample being blood, serum, plasma, blood leukocytes selected from the group consisting of neutrophils and monocytes, or any combination thereof; wherein elevated levels of MPO activity or MPO mass or both in the test subject's bodily sample as compared to levels of MPO activity, MPO mass, or both, respectively in comparable bodily samples obtained from control subjects diagnosed as not having the disease indicates that the test subject is at risk of developing a complication of atherosclerotic cardiovascular disease.

    15.  The method of claim 14, wherein the test subject's risk of developing a complication of atherosclerotic cardiovascular disease is determined by comparing levels of my[elo]peroxidase mass in the test subject's bodily sample to levels of myeloperoxidase mass in comparable samples obtained from the control subjects.

    For the '286 patent:

    21.  A method of assessing the risk of requiring medical intervention in a patient who is presenting with chest pain, comprising characterizing the levels of myeloperoxidase activity, myeloperoxidase mass, or both, respectively in the bodily sample from the human patient, wherein said bodily sample is blood or a blood derivative, wherein a patient whose levels of myeloperoxidase activity, myeloperoxidase mass, or both is characterized as being elevated in comparison to levels of myeloperoxidase activity, myeloperoxidase mass or both in a comparable bodily samples obtained from individuals in a control population is at risk of requiring medical intervention to prevent the occurrence of an adverse cardiac event within the next six months.

    22.  A method of determining whether a patient who presents with chest pain is at risk of requiring medical intervention to prevent an adverse cardiac event within the next six months comprising: comparing the level of a risk predictor in a bodily sample from the subject with a value that is based on the level of said risk predictor in comparable samples from a control population, wherein said risk predictor is myeloperoxidase activity, myeloperoxidase mass, a myeloperoxidase generated oxidation product, or any combination thereof, and wherein said bodily sample is blood, serum, plasma, or urine, wherein a subject whose bodily sample contains elevated levels of said risk predictor as compared to the control value is at risk of requiring medical intervention to prevent an adverse cardiac event within 6 months of presenting with chest pain, and wherein the difference between the level of the risk predictor in the patient's bodily sample and the level of the risk predictor in a comparable bodily sample from the control population establishes the extent of the risk to the subject of requiring medical intervention to prevent an adverse cardiac event within the next six months.

    For the '581 patent:

    5.  A method of determining whether a patient who presents with chest pain is at risk of requiring medical intervention to prevent an adverse cardiac event within the next six months comprising: determining the level of risk predictor in a bodily sample from the subject, wherein said risk predictor is myeloperoxidase activity, myeloperoxidase mass, a myeloperoxidase (MPO)-generated oxidation product or any combination thereof, wherein said bodily sample is blood, serum, plasma or urine, wherein said myeloperoxidase-generated oxidation product is nitrotyrosine or a myeloperoxidase generated lipid peroxidation product selected from [list of products] or any combination thereof, and comparing the level of said risk predictor in the bodily sample of the patient to the level of said risk predictor in comparable samples obtained from a control population, wherein a subject whose bodily sample contains elevated levels of said risk predictor as compared to the control value is at risk of requiring medical intervention to prevent an adverse cardiac event within 6 months of presenting with chest pain.

    The opinion notes that the prior art taught that MPO in blood was an early symptom of heart disease associated with atherosclerotic plaques that could be "indirectly" detected in blood, and that the inventors here "purportedly discovered how to 'see' MPO in blood and correlate that to the risk of cardiovascular disease."  The specification (as was the practice prior to the Mayo decision) disclosed that MPO could be detected "by any of a variety of standard methods known in the art," and that commercially available kits could be modified to detect MPO according to the methods disclosed and claimed in these patents.  In addition, according to the opinion, the patents disclosed and claimed statistical methods derived from populations of cardiovascular disease patients and "control" groups of individuals without disease to provide a basis for diagnosing cardiovascular disease using MPO detection.

    The '260 patent, which claims methods of treatment, "builds on" the diagnostic patents according to the opinion; claim 1 is representative:

    1.  A method for administering a lipid lowering agent to a human patient based on elevated levels of myeloperoxidase (MPO) mass and/or activity comprising:
        (a) performing an enzyme linked immunosorbent assay (ELISA) comprising contacting a serum or plasma sample with an anti-MPO antibody and a peroxidase activity assay to determine MPO activity in the serum or plasma sample;
        (b) selecting a patient who has elevated levels of MPO mass and/or activity compared to levels of MPO mass and/or activity in apparently healthy control subjects; and
        (c) administering a lipid lowering agent to the selected human patient.

    Defendant True Health is a diagnostics company according to the opinion, that Cleveland Clinic sued for literal infringement of the '522, '286, and '581 patents, and for contributory infringement and inducement of infringement of the '260 patent.  The District Court granted True Health's motion to dismiss under Fed. R. Civ. Proc. 12(b)(6) for failure to state a claim with regard to the diagnostic method patents, because the claims of these patents were directed to patent-ineligible subject matter (i.e., "laws of nature").  The Court also granted True Health's motion regarding the contributory and inducement claims.  These motions were granted without claim construction, which the District Court justified based on Cleveland Clinic's purported failure to offer any proposed construction for any claim terms and for failing to point out any claim used by the Court as a representative claim that plaintiff asserted was not representative.  With regard to the substantive basis for granting True Health's motion, the District Court relied upon the Mayo/Alice two-step analysis, finding that the claims were directed to the "law of nature" regarding the correlation between MPO levels in blood and cardiovascular disease.  The Court then found the claims to lack the ineluctable "something more" required by the Mayo/Alice test, in view of the specification's disclosure regarding the use of conventional detection methods.  In addition, the Court found that "comparing" MPO blood levels in patients with population control values constituted "a bare mental process."  For the method of treatment claims, the District Court determined that a testing service was not a "material or apparatus" as required for contributory infringement to lie, citing In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1337 (Fed. Cir. 2012).  Finally, the District Court based its finding that Cleveland Clinic had not sufficiently plead inducement on its appreciation that there were insufficient facts in the complaint to support the allegation.

    The Federal Circuit affirmed, in an opinion by Judge Reyna joined by Judges Lourie and Wallach.  Addressing the procedural issues, the panel held that considering (and granting) a motion to dismiss based on Fed. R. Civ. Proc. 12(b)(6) without claim construction was not error, nor was there error in considering certain claims to be representative.  Curiously, the Court based its affirmance of the latter principle on substantive grounds, that it disagreed with Cleveland Clinic that other claims provided the requisite "inventive concept" that the representative claims did not.  This basis does not address the underlying question, of whether generally a district court can cherry pick claims asserted by a plaintiff to find that the Mayo/Alice test is not satisfied, and while this conclusion may be the correct one, in this case affirming this procedural shortcut precludes future plaintiffs of the ability to overcome a Section 101 challenge based on there being at least one asserted claim that satisfies the test.  Of course, the precedent regarding Cleveland Clinics' second challenge, that a district court can grant a motion to dismiss without claim construction, is as prevalent as it is mystifying, and the panel here relies upon some of it to affirm the procedural posture of the case (e.g., Genetic Techs. Ltd. v. Merial L.L.C., 818 F.3d 1369, 1373–74 (Fed. Cir. 2016).

    Turning to the substance, the panel easily found the diagnostic method claims ineligible, relying heavily on its earlier decision in Ariosa v. Sequenom.  This manner of deciding the question has the benefit of efficiency; in a decision comprising about 6,000 words, it takes the Court less than 1500 to apply its Ariosa precedent here.  With regard to step one of the Mayo/Alice test, many of the same tropes in the earlier case recur:  that the method claims are directed "merely" to the "discovery that patients with cardiovascular disease have significantly greater levels of leukocyte and [MPO]," (constructively reading the word "discovery" out of Section 101); that the claims "do not purport to alter MPO levels in any way" (creatively analogizing these claims to those in Genetic Techs v. Merial, where the court stated those claims "involved[d] no creation or alteration of DNA sequences"); that the detected elevated MPO levels "exists in principle apart from human action"; and that Cleveland Clinic had not invented any new and useful laboratory technique to detect MPO levels, thus distinguishing these methods from the patent-eligible methods at issue in Rapid Litigation Management Ltd. v. CellzDirect, Inc., 827 F.3d 1042 (Fed. Cir. 2016).

    Turning to step 2 of the Mayo/Alice test, the opinion dutifully recites the requirement that the claims be considered "as a whole" ("as an ordered combination"), but not surprisingly fails to find an inventive concept, again with frank reliance on the Court's Ariosa decision and based on the patentee's failure to invent a new method for detecting MPO levels in blood (not surprisingly, because that was not their invention).  The panel's final application of its Ariosa precedent comes in dismissing Cleveland Clinics' argument regarding lack of preemption, because in Ariosa the Court held that "[w]here a patent's claims are deemed only to disclose patent ineligible subject matter under the Mayo framework, as they are in this case, preemption concerns are fully addressed and made moot."  Even less is made of claims that the invention here was groundbreaking; as considered by the Federal Circuit any such characteristic does not imbue a claim with patent-eligible weight.

    On the issue of contributory or induced infringement, the opinion finds that the District Court did not err, under Sixth Circuit precedent, in denying Cleveland Clinic the opportunity to amend its complaint to cure the purported deficiencies in its factual allegations.  This precedent, abuse of discretion, is sufficiently deferential to the District Court that the Federal Circuit easily affirmed the decision below.

    The outcome here is not surprising, and the failure of the Cleveland Clinic in an Ohio courtroom to defeat a motion to dismiss indicates how difficult it has become to assert claims such as the ones at issue here.  There may be ways for the creative draftsman to work around the constraints created by the Mayo/Alice framework as elucidated in the Ariosa precedent and its related cases (now including this one) for new technologies.  But unless the Supreme Court sees the error in its ways, or Congress overrules its Mayo/Alice decisions, technology transfer of university inventions will not be to startups and licensees but to copycats and pirates for the foreseeable future.

    Cleveland Clinic Foundation v. True Health Diagnostics LLC (Fed. Cir. 2017)
    Panel: Circuit Judges Lourie, Reyna, and Wallach
    Opinion by Circuit Judge Reyna

  • GlaxoSmithKline LLC v. Glenmark Pharmaceuticals Inc. (D. Del. 2017)

    District Court Overrules Defendants' Objections to Magistrate's Report on Lost Profits

    By Donald Zuhn —

    District Court for the District of DelawareEarlier this month, in GlaxoSmithKline LLC v. Glenmark Pharmaceuticals Inc., U.S. District Judge Leonard P. Stark of the U.S. District Court for the District of Delaware issued a Memorandum Order that, inter alia, overruled objections by Defendants Glenmark Pharmaceuticals Inc., USA and Teva Pharmaceuticals USA, Inc. to a Report and Recommendation issued by Magistrate Judge Burke and adopted the Report.  The Report had recommended, in part, that the District Court deny Defendants' motion for summary judgment related to a claim for lost profits by Plaintiffs GlaxoSmithKline LLC and SmithKline Beecham (Cork) Ltd.

    Glenmark and Teva had objected to the Magistrate's Report on two grounds, the first of which is relevant to this discussion.  In particular, Defendants argued that the Report wrongly permitted GlaxoSmithKline to present a lost profits calculation that contemplates a "but-for" world that excludes non-party manufacturers' generic products (in this case, generic carvedilol products).  In summarizing Defendants' argument, the Court noted that:

    Defendants insist that the but-for world to which comparisons must be made in order to assess GSK's claim for lost profits damages is a world in which non-party manufacturers of generic carvedilol would have existed, and from which direct infringers (i.e., physicians) would have obtained carvedilol.  It follows, then, that GSK lost no profits due to Defendants' allegedly infringing conduct, because even absent Defendants' infringement, GSK would still have lost those same sales — albeit to non-party manufacturers, rather than to Defendants.

    The District Court, however, found Defendants' argument to be unpersuasive.  Although the Court noted that "at all times relevant to the lost profits analysis, there were generic carvedilol tablets available from at least eight different generic manufacturers," the Court also noted that the Report had properly explained that "the law is clear that a lost profits analysis must be based on a world in which infringement of the asserted patent does not exist, and therefore it does not allow for infringing alternatives to be available in the hypothetical 'but for' world."  The Court indicated that "the generic carvedilol of these non-party manufacturers is an infringing alternative — and not a non-infringing alternative," and therefore concluded that "[t]hese non-parties' products, thus, would not exist in the but-for world, which must be constructed to include 'likely outcomes with infringement factored out of the economic picture'" (emphasis in Memorandum Order).

    The Court also stated that "[t]he issue for the lost profits calculation is whether the product is non-infringing, not whether the alternative supplier has been, or could be, successfully sued for infringement," agreeing with GlaxoSmithKline that "[i]t doesn't matter whether the sales by other generic suppliers would be non-infringing, because the ultimate use of those products by doctors would be infringing and thus not a permissible consideration" (emphasis in Memorandum Order).  In denying Defendants' objections to the Report and adopting the Report, the Court concluded that "because the but-for world is one in which no infringing alternatives exist, other generic carvedilol products that directly infringe [GlaxoSmithKline's patent] must be excluded, even if the sales of those products are not induced by Defendants."

  • Conference & CLE Calendar

    CalendarJune 27, 2017 – "CRISPR Confusion: A Legal and Practical Analysis for IP Professionals" (Technology Transfer Tactics) – 1:00 to 2:00 pm (Eastern)

    June 27, 2017 – "Essential Developments in Patent Subject Matter Eligibility: What Lies Ahead in 2017?" (The Knowledge Group) – 12:00 to 2:00 pm (EST)

    June 28, 2017 – "Exhaustion Unleashed: Licensing, Other Business Strategy, and Litigation after Lexmark" (Intellectual Property Owners Association) – 2:00 to 3:00 pm (ET)

    June 29, 2017 – Judicial Conference (U.S. Patent and Trademark Office Patent Trial and Appeal Board) – 1:00 to 5:00 pm (ET) – Alexandria, VA

    June 29, 2017 – "Section 102 and Prior Art: Navigating the Expanded Scope of Prior Art and AIA Exceptions" (Strafford) – 1:00 to 3:30 pm (EDT)

    June 29, 2017 – "Patent Eligibility Determination in a Post-Alice World: Significant Updates & Developments" (The Knowledge Group) – 12:00 to 1:30 pm (EST)

    June 30, 2017 – "Important Developments in Japanese Patent Law" (Intellectual Property Law Association of Chicago) – 5:00 to 6:00 pm (CT), Chicago, IL

    July 6, 2017 – "Lessons from PTAB Full or Partial Denials to Obtain a Denial and Avoid an IPR" (Strafford) – 1:00 to 2:30 pm (EDT)

    July 13, 2017 – "Labeling and Induced Infringement in Pharma Patent Litigation and Protecting IP Rights" (Strafford) – 1:00 to 2:30 pm (EDT)

    August 10-11, 2017 – Advanced Patent Law Seminar (Chisum Patent Academy) – Seattle, WA

    August 14-15, 2017 – Advanced Patent Law Seminar (Chisum Patent Academy) – Seattle, WA

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

  • IPO Webinar on Exhaustion

    IPO #2The Intellectual Property Owners Association (IPO) will offer a one-hour webinar entitled "Exhaustion Unleashed: Licensing, Other Business Strategy, and Litigation after Lexmark" on June 28, 2017 from 2:00 to 3:00 pm (ET).  Paul Jahn of Morrison & Foerster LLP; William Krovatin of Merck & Co., Inc.; and Richard Rainey of Covington & Burling LLP will explore the significant ramifications of the recent U.S. Supreme Court decision in Impression Products v. Lexmark, and will discuss how companies will need to react to the newly-fortified power of exhaustion, including:

    • Structuring licenses as a way around exhaustion;
    • Antitrust concerns about enforcing post-sale restrictions through contracts after Lexmark; and
    • Structuring patent ownership, supply chain management, and inventory management to reduce exhaustion, and important tax implications.

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

  • Webinar on Labeling and Induced Infringement in Pharma Patent Litigation

    Strafford #1Strafford will be offering a webinar/teleconference entitled "Labeling and Induced Infringement in Pharma Patent Litigation and Protecting IP Rights" on July 13, 2017 from 1:00 to 2:30 pm (EDT).  Thomas L. Irving and Barbara R. Rudolph of Finnegan Henderson Farabow Garrett & Dunner will provide guidance to patent counsel on the implications of recent cases for labeling and discuss strategic considerations of label language, and offer best practices for labeling.  The webinar will review the following topics:

    • What impact will recent decisions have on label language?
    • How do use codes fit in?
    • What strategic considerations should patent owners keep in mind when labeling drugs?

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

  • Seminar on Japanese Patent Law Developments

    IPLACThe Intellectual Property Law Association of Chicago (IPLAC) International Patent Committee will be offering a seminar on "Important Developments in Japanese Patent Law" by Kisaragi Associates on June 30, 2017 from 5:00 to 6:00 pm (CT) in Chicago, IL.  The seminar will provide important guidance on important developments in Japanese Patent Law and Administrative Practices, including information on the following topics:

    • How to obtain patents for software-related inventions in Japan that will be enforceable in courts.
    • The benefits of Japan’s accession to the Patent Law Treaty.
    • Methods to accelerate patent prosecution in Japan, including use of the Japanese version of the Patent Prosecution Highway (PPH).

    The registration fee for the webinar is $10 (IPLAC members) or $20 (non-members).  Those interested in registering for event can contact John S. Paniaguas of Clark Hill PLC at johnp@clarkhill.com or Prof. Joshua Sarnoff of DePaul University College of Law at jsarnoff@depaul.edu.  Additional information regarding the seminar can be found here.

  • Webcast on Developments in Patent Subject Matter Eligibility

    The Knowledge GroupThe Knowledge Group will offer a live webcast entitled "Essential Developments in Patent Subject Matter Eligibility: What Lies Ahead in 2017?" on June 27, 2017 from 12:00 to 2:00 pm (EST).  Fang Xie of Greenberg Traurig, LLP; Robert McFarlane of Hanson Bridgett LLP; Mark Thronson of Blank Rome LLP; and Alison Maddeford of Riley Safer Holmes & Cancila LLP will provide attendees with an in-depth analysis of the fundamentals as well as essential developments in patent subject matter eligibility.  The panel will cover the following topics:

    • Patent Subject Matter Eligibility – Laws and Regulations
    • Judicial Framework for Determining Patentability
    • The 2016 Subject Matter Eligibility Cases
    • Recent Court Decisions
    • Recent Trends, Developments and Updates

    The registration fee for the webcast is $99.  Those interested in registering for the webinar can do so here.