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  • The Medicines Company v. Hospira, Inc. (Fed. Cir. 2016) (en banc)

    By Kevin E. Noonan —

    Medicines CompanyThe past decade or so of U.S. patent law has been characterized by a consistent theme between Federal Circuit decisions and the Supreme Court's invalidation of them (and sometimes can be discerned even in those rare instances when the High Court deemed the Federal Circuit's decision below to have been correct).  This theme is that the Court has had to intervene to prevent the Federal Circuit from establishing "bright-line" rules in patent cases, or in too stringently applying even those rules that would otherwise be capable of being implemented with sufficient flexibility to pass Supreme Court muster.  There have been exceptions, including the Court's two-prong test for determining whether the on-sale bar under 35 U.S.C. § 102(b) would invalidate a patent.  As set forth in Pfaff v. Wells Electronics, Inc., 525 U.S. 55 (1998), the Court commanded that invalidation required that there be a commercial sale or offer for a commercial sale of a patented product, and that the invention embodied in that product be "ready for patenting" at the time of the sale or offer for sale.  The question before the Court in Pfaff was focused on the circumstances that would satisfy the second prong of this test.  Yesterday, in The Medicines Company v. Hospira, Inc., the Federal Circuit considered en banc the requirements for there to be a commercial sale or offer to sell that would satisfy the first prong.

    The case arose in the context of ANDA litigation involving Hospira's generic version of TMC's bivalirudin drug (sold as Angiomax®), an anticoagulant used in heart surgery.  The invention claimed in the patents-in-suit, U.S. Patent Nos. 7,582,727 and 7,598,343, can be appreciated by the following representative claims:

    Claim 1 of the '727 patent:

    Pharmaceutical batches of a drug product comprising bivalirudin (SEQ ID NO: 1: [Phe Pro Arg Pro Gly Gly Gly Gly Asn Gly Asp Phe Glu Glu Ile Pro Glu Glu Tyr Leu]) and a pharmaceutically acceptable carrier for use as an anticoagulant in a subject in need thereof, wherein the batches have a pH adjusted by a base, said pH is about 5-6 when reconstituted in an aqueous solution for injection, and wherein the batches have a maximum impurity level of Asp9-bivalirudin that does not exceed about 0.6% as measured by HPLC.

    Claim 1 of the '343 patent:

    Pharmaceutical batches of a drug product comprising bivalirudin (SEQ ID NO: 1: [Phe Pro Arg Pro Gly Gly Gly Gly Asn Gly Asp Phe Glu Glu Ile Pro Glu Glu Tyr Leu]) and a pharmaceutically acceptable carrier, for use as an anticoagulant in a subject in need thereof, said batches prepared by a compounding process comprising: (i) dissolving bivalirudin in a solvent to form a first solution; (ii) efficiently mixing a pH-adjusting solution with the first solution to form a second solution, wherein the pH-adjusting solution comprises a pH-adjusting solution solvent; and (iii) removing the solvent and pH-adjusting solution solvent from the second solution; wherein the batches have a pH adjusted by a base, said pH is about 5-6 when reconstituted in an aqueous solution for injection, and wherein the batches have a maximum impurity level of Asp9-bivalirudin that does not exceed about 0.6% as measured by HPLC.

    Bivalirudin is too acidic for direct injection into patients and TMC had attempted to develop formulation methods for overcoming this limitation.  Prior compounding methods produced a degradation product, Asp9 bivalirudin (caused by deamination of Asn9); in high enough concentrations (>1.5%) Asp9 bivalirudin contaminants were unacceptable (per FDA).  Production of bivalirudin batches contaminated with high levels of Asp9 bivalirudin prior to the filing date of the patents-in-suit caused TMC to shut down commercial production for more than a year.  The company's attempts to produce formulations of the drug for commercial sale were unsuccessful, and led TMC to hire a consultant to investigate why there were problems making the drug.  These efforts determined that there were certain ways of adjusting the pH that reduced the impurity levels to less than 0.6% and resulted in the '343 and '727 patents.  The resulting patent applications were filed July 27, 2008, making July 27, 2007 the critical date for determining whether the patents were invalid under the on-sale bar.

    HospiraIn the ensuing ANDA litigation, Hospira alleged that the patents were invalid under the on-sale bar of 35 U.S.C. § 102(b), were obvious under § 103 and invalid under § 112 for lack of written description, non-enablement, and indefiniteness.  TMC had a long-standing (1997-2006) relationship with Ben Venue Laboratories to make bivalirudin for commercial sale, and the  evidence established that TMC paid Ben Venue Laboratories $347,500 to manufacture three batches of bivalirudin using the claimed methods, said batches being completed on October 31, 2006, November 21, 2006, and December 14, 2006 (i.e., prior to the critical date).  These batches (which were worth $20 million on the market) were delivered to TMC's authorized and exclusive distributor, Integrated Commercial Solutions (ICS) pending FDA approval per a distribution agreement between TMC and ICS effective February 27, 2007.  None of the batches were released for sale until August 2007, after the critical date.  Hospira urged that bivalirudin produced by Ben Venue prior to the critical date constituted a commercial sale, and delivery of these batches to ICS amounted to an offer for commercial sale.

    The District Court disagreed; although the District Court determined that the invention was ready for patenting and thus satisfied the second prong of the Pfaff test, Ben Venue's activities did not constitute a commercial sale nor was transfer of the drug to ICS an offer for sale.  The District Court's reasoning was that the product produced by Ben Venue was produced on TMC's behalf, which always retained title.  Although this by itself was not sufficient, in addition the product was not produced for (immediate) commercial sake but for "validation purposes."  According to District Court, the purpose of the on-sale bar must be considered, which is "to preclude attempts by the inventor or his assignee to profit from commercial use of an invention for more than a year before an application for patent is filed," citing D.L. Auld Co. v. Chroma Graphics Corp., 714 F.2d 1144, 1147 (Fed. Cir. 1983).  Under these circumstances, according to the District Court, this was not the case here; in addition, the District Court found (sua sponte) that these activities constituted "experimental use" and thus avoided the on-sale bar.  The District Court held that the claims were not invalid for violation of the on-sale bar (or any of the other reasons advanced by Hospira) and also were not infringed.

    A merits panel, addressing only the question of whether the on-sale bar invalidated TMC's patents, reversed in an opinion by Judge Hughes, joined by Judges Dyk and Wallach (see "The Medicines Company v. Hospira (Fed. Cir. 2015)").  The panel considered this question de novo (Robotic Vision Sys., Inc. v. View Eng'g, Inc., 249 F.3d 1307 (Fed. Cir. 2001)) and applied the Supreme Court's Pfaff standard for applying the on-sale bar.  This question reduced to whether there was a commercial sale or offer to sell (there being no dispute that the invention was ready for patenting and satisfied the second prong of the Pfaff test).  The panel agreed that Ben Venue "invoiced the sale as manufacturing services and title to the pharmaceutical batches did not change hands," but this was not dispositive.  What determined whether the on-sale bar had been breached in the merits panel's opinion was whether an inventor has commercially exploited the invention before the critical date.  Applying this standard, the merits panel found "no principled distinction between the commercial sale of products prepared by the patented method [] and the commercial sale of services that result in the patented product-by-process" that occurred in this case.  The opinion stated that "the sale of the manufacturing services here provided a commercial benefit to the inventor more than one year before a patent application was filed," thus implicating the policy considerations the panel identified as motivating the on-sale bar.

    The Federal Circuit vacated this opinion and reinstituted the appeal en banc, ordering the parties (and amici) to brief these issues:

    (a) Do the circumstances presented here constitute a commercial sale under the on-sale bar of 35 U.S.C. § 102(b)?
        (i) Was there a sale for the purposes of § 102(b) despite the absence of a transfer of title?
        (ii) Was the sale commercial in nature for the purposes of § 102(b) or an experimental use?
    (b) Should this court overrule or revise the principle in Special Devices, Inc. v. OEA, Inc., 270 F.3d 1353 (Fed. Cir. 2001), that there is no "supplier exception" to the on-sale bar of 35 U.S.C § 102(b)?

    Sitting en banc, the Federal Circuit affirmed the District Court's determination that there was no on-sale bar violation, in an opinion for a unanimous court by Judge O'Malley.  The en banc Court held that "to be 'on sale' under § 102(b), a product must be the subject of a commercial sale or offer for sale, and that a commercial sale is one that bears the general hallmarks of a sale pursuant to Section 2-106 of the Uniform Commercial Code."  Under the circumstances here there was no commercial sale and thus the District Court correctly found that the claims were not invalid under § 102(b).

    The opinion sets forth the en banc Court's understanding ("a brief overview") of the legal and precedential history of the on-sale bar and the policy reasons behind it over the nearly 200 years U.S. law has recognized this requirement.  While grounded generally in the novelty requirements in the Patent Act of 1793, the Court finds the first clear enunciation of the bar in Pennock v. Dialogue, 27 U.S. (2 Pet.) 1 (1829), and later codified in Section 6 of the Patent Act of 1836 (albeit with a later-added two-year grace period which was reduced to one year in 1939).  The opinion recounts its own "totality of the circumstances" test applied under the 1952 Patent Act prior to the Supreme Court's Pfaff opinion (see, for example, Envirotech Corp. v. Westech Eng'g Inc., 904 F.2d 1571 (Fed. Cir. 1990), and Ferag AG v. Quipp Inc., 45 F.3d 1562 (Fed. Cir. 1995)); the Federal Circuit notes that the Supreme Court in Pfaff found the Federal Circuit's test to be "unnecessarily vague."  The opinion also notes that its earlier opinions had considered a "sale" that satisfied the first prong to be one "in a commercial law sense," citing Trading Technologies International, Inc. v. eSpeed, Inc., 595 F.3d 1340, 1362 (Fed. Cir. 2010).

    The Court began its analysis of the case at bar by stating three points it thinks the opinion clarifies.  First, "the mere sale of manufacturing services by a contract manufacturer to an inventor to create embodiments of a patented product for the inventor does not constitute a "commercial sale' of the invention."  Second, "'stockpiling' by the purchaser of manufacturing services is not improper commercialization under § 102(b)."  Finally, "commercial benefit—even to both parties in a transaction—is not enough to trigger the on-sale bar of § 102(b); the transaction must be one in which the product is 'on sale' in the sense that it is 'commercially marketed.'"  These conclusions are supported in this case by three factors:

    (1) only manufacturing services were sold to the inventor—the invention was not; (2) the inventor maintained control of the invention, as shown by the retention of title to the embodiments and the absence of any authorization to Ben Venue to sell the product to others; and (3) "stockpiling," standing alone, does not trigger the on-sale bar.

    With regard to the question of whether there was a sale, the Court based its conclusions on what was claimed — pharmaceutical batches — and the activities of the parties, which was practice of the disclosed processes by Ben Venue to produce batches of the bivalirudin formulation for TMC.  In evaluating whether product-by-process claims were practiced, the panel cites SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312 (Fed. Cir. 2006), for the proposition that such claims are directed to the product, not the process.  Hospira asserted that Ben Venue practiced the unclaimed method, according to the Court, and while sale of tangible objects can fall within the scope of the UCC "'[a] process, however, is a different kind of invention . . . [and] thus [is] not sold in the same sense as is a tangible item.'"  In this regard the Court reiterated its use of the UCC standards for determining what constitutes a sale.  Sale of Ben Venue's services in preparing bivalirudin was not a sale of the patented pharmaceutical batches under the Court's reasoning, and Ben Venue's actions are analogous to acting as 'a pair of 'laboratory hands'" for TMC.  Under these circumstances there was no "sale" of the invention according to the Court, a conclusion supported by the confidentiality of the transaction, the lack of transfer of title and the small amount paid by TMC to Ben Venue relative to the value of the commercial product.  The Court agreed with Hospira that the UCC should not and does not have "talismanic significance" in deciding whether there was a sale, and stated that it is not drawing a bright line rule on the question.  No one factor or even set of factors is dispositive in the en banc Court's view; rather, the Court apparently considered the totality of the circumstances surrounding the parties' activities in arriving at its conclusion that there was no invalidating commercial sale.

    Turning to the question of whether "stockpiling" implicates the on-sale bar, the Court held that it does not, because "commercial benefit generally is not what triggers § 102(b); there must be a commercial sale or offer for sale."  Under Pfaff, the Federal Circuit says the Supreme Court has directed that "we are not to look to broad policy rationales in assessing whether the on-sale bar applies; we are to apply a straightforward two-step process—one which permits an inventor to 'both understand and control the first commercial marketing of his invention.'"  Accordingly:

    [T]he mere stockpiling of a patented invention by the purchaser of manufacturing services does not constitute a "commercial sale" under § 102(b).  Stockpiling—or building inventory—is, when not accompanied by an actual sale or offer for sale of the invention, mere pre-commercial activity in preparation for future sale.  This is true regardless of how the stockpiled material is packaged [here, so that the product was ready for commercial marketing].  The on-sale bar is triggered by actual commercial marketing of the invention, not preparation for potential or eventual marketing.  [N]ot every activity that inures some commercial benefit to the inventor can be considered a commercial sale.  Instead, stockpiling by an inventor with the assistance of a contract manufacturer is no more improper than is stockpiling by an inventor in-house.

    The opinion characterized TMC's payment to Ben Venue for batches of formulated Angiomax® as "a pre-commercial investment" that should be treated no differently than "a company with in-house manufacturing capabilities" and hence not a violation of the on-sale bar.

    Finally, the Court addressed Hospira's allegations that finding no on-sale bar in this case would be inconsistent with several earlier panel decisions, for example, in Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 182 F.3d 888 (Fed. Cir. 1999); Special Devices, Inc. v. OEA, Inc., 270 F.3d 1353 (Fed. Cir. 2001); and Hamilton Beach Brands, Inc. v. Sunbeam Products, 726 F.3d 1370 (Fed. Cir. 2013).  The en banc Court provides several grounds for distinguishing these cases from its opinion here.  But the Court concludes that "to the extent language in those cases might be viewed as dictating a different result here, they are overruled" with the important caveat that the Court is not creating "a blanket 'supplier exception'"; that relationship may be "an important indicator that the transaction is not a commercial sale," but it is not determinative on its own.  For example, "[w]here the supplier has title to the patented product or process, the supplier receives blanket authority to market the product or disclose the process for manufacturing the product to others, or the transaction is a sale of product at full market value, even a transfer of product to the inventor may constitute a commercial sale under § 102(b)."  it is not the identities of the participants but rather the "commercial character of the transaction" that determines whether there has been an offer for a commercial sale according to the Court — in short, the totality of the circumstances considered in a commercial context.  The Court returned the appeal to the merits panel for its consideration of the other issues raised by the parties.

    Any en banc decision by the Federal Circuit is significant, if only because it gives the patent community (and even the Supreme Court) the benefit of the Federal Circuit's special and particular expertise in patent law.  More than a dozen years of being reversed and sometimes chastised by the Supreme Court for its (mis)understanding of the law may have created, at the Court and elsewhere, the false impression that the Federal Circuit has lost this expertise; even respected jurists like Judge Diane Wood of the 7th Circuit has opined that other circuits could make as many mistakes as the Federal Circuit has, as an argument that the Federal Circuit should lose exclusive appellate jurisdiction over patent law.  Recent decisions have hinted that the Federal Circuit may be making an attempt to reassert its earlier patent law preeminence (at least at anything less than the 30,000 foot level commanded by the Supreme Court).  It cannot be anything but good if the Federal Circuit seizes every opportunity it gets to get its patent law mojo back.

    The Medicines Company v. Hospira, Inc. (Fed. Cir. 2016) (en banc)
    Panel: Chief Judge Prost and Circuit Judges Newman, Lourie, Dyk, Moore, O'Malley, Reyna, Wallach, Taranto, Chen, Hughes, and Stoll
    Opinion by Circuit Judge O'Malley

  • Amgen Inc. v. Apotex Inc. (Fed. Cir. 2016)

    By Andrew Williams —

    AmgenLast year, the Federal Circuit described the Biologics Price Competition and Innovation Act ("BPCIA") as "a riddle wrapped in a mystery inside of an enigma" in the Amgen v. Sandoz case.  Nevertheless, one of the provisions of the BPCIA was still shrouded in mystery after that opinion — the Notice of Commercial Marketing provision found at 42 U.S.C. § 262(l)(8)(A).  While at the same time describing this Notice provision as both mandatory and a stand-alone provision (independent of the information-disclosure and patent-exchange provisions that comprise the rest of § 262(l)), the Amgen v. Sandoz Court limited the holding to cases in which the biosimilar applicant failed to comply with disclosure provision of § 262(l)(2)(A).  Amgen v. Sandoz, 794 F.3d 1347, 1360 (Fed. Cir. 2015) ("where, as here, a [biosimilar] applicant completely fails to provide its aBLA and the required manufacturing information to the RPS by the statutory deadline, the [notice] requirement of paragraph (l)(8)(A) is mandatory.").

    Apotex #1On July 5, 2016, in Amgen v. Apotex, the Court clarified that the commercial-marketing provision is always mandatory–even when the biosimilar applicant engaged in the so-called "patent dance."  Moreover, the Court held that this provision is enforceable by injunction.  Not surprisingly, this decision does not solve the entire riddle that is the BPCIA, and in fact may end up creating more confusion.  One problem is that this opinion suggested that the FDA may begin providing tentative licensure for a biosimilar product, although such action is not specifically provided for in the BPCIA and the FDA has not suggested that it would begin doing so.  Moreover, even though it was not at issue in this case, the opinion would appear to have answered one of the outstanding questions of the BPCIA — what happens if the RPS does not identify all of the relevant patents during the patent dance?  Even though commentators have been split on the interpretation of 35 U.S.C. § 271(e)(6)(C), and the parties did not even tackle this section of the patent statute (as it was irrelevant to their case), the Federal Circuit in dicta appears to have inadvertently determined that no infringement action will ever be possible for a patent not identified by the RPS during the patent dance.

    We previously provided the background of this case.  Briefly, in 2014, Apotex filed an application for an FDA license to market a biosimilar version of Amgen's reference product Neulasta® (pegfilgrastim).  But, unlike Sandoz before it, Apotex participated in the patent dance, beginning with its notice of FDA acceptance and the disclosure of its aBLA.  During the subsequent lawsuit, Apotex notified Amgen that it did not believe it was required to, and indeed did not intend to, provide the Notice of Commercial Marketing specified under § 262(l)(8)(A) of the BPCIA.  Amgen sought a preliminary injunction, which was issued by Judge Cohn of the Southern District of Florida requiring Apotex to "provide Amgen with at least 180 days notice before the date of the first commercial marketing of the biological product approved by the FDA."  Apotex appealed that decision to the Federal Circuit.

    The panel of Amgen v. Apotex consisted of Judges Bryson, Wallach, and Taranto, none of whom was on the panel that decided the Amgen v. Sandoz appeal.  The unanimous opinion, authored by Judge Taranto, held that while the (2)(A) notice given by Apotex created a factual distinction from the Amgen v. Sandoz case, it did not create a legally material distinction.  As such, "[t]he (8)(A) requirement of 180 days' post-licensure notice before commercial marketing . . . is a mandatory one enforceable by injunction whether or not a (2)(A) notice was given."  The Court rejected all assertions by Apotex why the two cases were distinct.  First, section (8)(A) "contains no words" that would make the notice requirement turn on whether the earlier (2)(A) notice was given.  Moreover, unlike with the notice and disclosure provision of (2)(A), there is no language in 271(e) that would create a specific remedy for non-compliance.  The Court also explained that the statutory purpose of the Notice of Commercial Marketing provision was to reduce the "reliability-reducing rush that would attend requests for relief against immediate market entry that could cause irreparable injury" — a purpose that would be frustrated if section (8)(A) notice were not mandatory.

    Apotex argued, just as Sandoz did before it, that if the Notice provision of (8)(A) is mandatory, the 12-year exclusivity period of the RPS would be effectively extended six months.  These parties expressed the concern that if a biosimilar applicant cannot give effective notice until after the FDA has licensed its biosimilar product, and the FDA cannot license the product until the 12-year exclusivity period has run, an RPS would always gain an extra six months of exclusivity.  The Court reiterated and expounded on the view expressed by the majority opinion in Amgen v. Sandoz that this would not be an issue for aBLA filings that occur before the expiration of the 12-year period.  This conclusion, however, assumes that the FDA will provide "tentative licensure," although the FDA has provided no guidance on whether it intends to do so.  There is support in the statute to support such an understanding.  § 262(k)(7)(A) does state, in part, that "[a]pproval of an application under this subsection may not be made effective by the Secretary until the date that is 12 years after the date on which the reference product was first licensed . . . ."  As such, the Court pointed out, approval and effectiveness could be two distinct events, with approval serving as a "tentative licensure," potentially before the expiration of the 12-year period.  Of course, now that the Court has made this view explicit, and tacitly approved it, the FDA may face pressure to undertake such a practice.

    More problematic, the Court may have inadvertently spoken on an unsettled issue related to the BPCIA, making the pronouncement in dicta.  When the patent infringement statute was amended, 35 U.S.C. § 271(e)(6)(C) was added:

    The owner of a patent that should have been included in the list described in section 351(l)(3)(A) of the Public Health Service Act, including as provided under section 351(l)(7) of such Act for a biological product, but was not timely included in such list, may not bring an action under this section for infringement of the patent with respect to the biological product.

    Essentially, this section limits the ability of the RPS and/or patent owner to bring an infringement suit if the patent was not identified during the patent dance or was not included in a proper supplement of the list.  Of course, it is not clear what "under this section" means?  Does it mean 271(e), such that an RPS and/or patent holder would be unable to assert that the filing of an aBLA is an act of infringement with regard to such a patent, and instead would be required to wait until actual infringement occurs to allege infringement?  Or does "section" mean the entirety of 35 U.S.C. § 271 — in which case the failure to properly list a patent would bar any claim of patent infringement related to the biosimilar product at any time.  Such an outcome would be draconian to say the least.

    Before the Amgen v. Apotex decision, commentators were fairly split on the subject.  For example, the Treatise "Generic and Innovator Drugs: A Guide to FDA Approval Requirements," eighth edition, authored by Donald O. Beers and Kurt R. Karst, took the former position:

    Second, a reference product sponsor's failure to include a relevant patent in its Paragraph 3(A) list, or to timely supplement such list after issuance of a new patent, bars the reference product sponsor from bringing an infringement action under Section 271(e).

    Chapter 13, § 13.04[B].  This paragraph was supported by footnote 135, which read:

    See id. § 271(e)(6)(C).  The statue does not specifically refer to Section 271(e), but rather states "under this section," presumably referring to Section 271(e).  A reference product sponsor could perhaps later bring an action under 35 U.S.C. §§ 271(a)-(c) once the biosimilar applicant has launched its product after FDA approval.

    Kurt Karst is, of course, one of the authors of the FDA Law Blog.  Other commentators have posited the more draconian reading of the statute.  See, e.g., "Shall We Dance? FDA Biosimilar Approval Process Litigation Options."  In fact, in 2013, shortly after the BPCIA was passed, two individuals (one of which was Patent Docs author Kevin Noonan) presented a webinar (the presentations materials of which are achieved here), in which they raised the question:

    Could [an] RPS file an action under 35 USC § 271(a) after [the] Biosimilar product [is] on market or a DJ action [] launch is imminent?

    Slide 51.

    The Federal Circuit appears to have answered the question.  Unfortunately, it did so in dicta without any party addressing the question, as it was not at issue in this case.  In describing how patent infringement works in 35 U.S.C. § 271(e) and the BPCIA, the Court stated:

    Second: If a patent that the reference product sponsor should have included on its (3)(A) list or its (7) supplement "was not timely included," then the owner of that patent may not sue for infringement under 35 U.S.C. §271 with respect to the biological product product.  35 U.S.C. § 271(e)(6)(C).

    Of course, § 271(e)(6)(C) is not so clear.  A patent holder in the future wishing to assert such a patent under 35 U.S.C. § 271(a) will now have an uphill battle in convincing any Court of a reading of the statute that would not bar it from doing so.  The argument can be made that the Court was not speaking on this issue, and that because this section of the opinion is dicta, it should have no controlling authority.  Nevertheless, district courts may be loath to rule contrary to explicit language from the Federal Circuit.  Therefore, we will probably need to wait years for certainty on this issue, until the question is presented to the Federal Circuit.  In the meantime, any RPS and/or patent holder would be well advised to carefully list its patents during the patent dance exchange, and when possible to err on the side of over-inclusion (provided, of course, that the patents can reasonably be asserted).

    Amgen Inc. v. Apotex Inc. (Fed. Cir. 2016)
    Panel: Circuit Judges Wallach, Bryson, and Taranto
    Opinion bu Circuit Judge Taranto

  • Senate Passes GMO Food Labeling Legislation

    By Donald Zuhn —

    Senate SealEarlier this month, the Senate passed legislation (S. 764) that would amend the Agricultural Marketing Act of 1946 to require the Secretary of Agriculture to establish a national disclosure standard for bioengineered foods.  Pursuant to the bill, which was passed by a 63-30 vote, the Secretary would have to establish a national mandatory bioengineered food disclosure standard within two years of enactment of the legislation.  The bill defines bioengineering with respect to food as referring to food that contains genetic material that has been modified through in vitro recombinant DNA techniques, and for which the modification could not otherwise be obtained through conventional breeding or found in nature.

    The legislation also specifies that the form of bioengineered food disclosure promulgated by the Secretary of Agriculture must be a text, symbol, or electronic or digital link, but that such disclosure would not apply to "food contained in small or very small packages" prepared by "small food manufacturers" or "very small food manufacturers".  For small food manufacturers, the legislation requires that the manufacturers provide on-package disclosure options that consist of a telephone number and Internet website.  The legislation excludes food very small food manufacturers (as well as food served in a restaurant or "similar retail food establishment").

    In addition to requiring the Secretary to create a national mandatory bioengineered food disclosure standard, the bill also requires the Secretary to conduct a study within a year of enactment "to identify potential technological challenges that may impact whether consumers would have access to the bioengineering disclosure through electronic or digital disclosure methods."  When conducting the study, the Secretary must also solicit and consider comments from the public.  The legislation also allows the Secretary to provide additional and comparable disclosure options that may be identified during the study.

    With respect to existing state food labeling standards, the legislation mandates that no state establish (or continue in effect) any bioengineered food labeling or disclosure requirements for food that is involved in interstate commerce and subject to the national bioengineered food disclosure standard that are not identical to the national bioengineered food disclosure standard.  The legislation would also prohibit state labeling requirements for seed that is genetically engineered or that was developed or produced using genetic engineering.

  • Conference & CLE Calendar

    CalendarJuly 12, 2016 – "Conflicts in Patent Prosecution: Avoiding the Ethical Pitfalls — Minimizing Risks of Malpractice Liability and Ethics Sanctions" (Strafford) – 1:00 to 2:30 pm (EDT)

    July 12, 2016 - Patent Quality Chat webinar series on "Opportunities for Examiner Interviews: First Action Interview Pilot and General Practice" (U.S. Patent and Trademark Office) – 12:00 to 1:00 pm (ET)

    July 13, 2016 – "Understanding and Applying the Defend Trade Secrets Act of 2016" (Technology Transfer Tactics) – 1:00 to 2:00 pm (Eastern)

    July 14, 2016 – "Patent Prosecution in the Post-Alice Era" (Juristat) – 1:00 to 2:00 pm (EDT)

    July 14-15, 2016 - Advanced Patent Prosecution Workshop 2016: Claim Drafting & Amendment Writing (Practising Law Institute) – New York, NY

    July 19, 2016 – "Willful Patent Infringement and Enhanced Damages After Halo — Navigating the New Standard Under 35 U.S.C. 284 Following Supreme Court Ruling" (Strafford) – 1:00 to 2:30 pm (EDT)

    July 21, 2016 – "Structuring Freedom-to-Operate Opinions: Reducing Risk of Patent Infringement — Combating Troubling FTO Results, Overcoming Potential Roadblocks, Addressing Impact of Post-Grant Process on FTO Opinions" (Strafford) – 1:00 to 2:30 pm (EDT)

    July 26, 2016 – "Pharma and Chemical Patent Applications: Meeting Written Description Requirement — Demonstrating Evidence of Possession of the Invention, Navigating the Guidelines, Maintaining Chain of Priority" (Strafford) – 1:00 to 2:30 pm (EDT)

    August 4-5, 2016 - Advanced Patent Law Seminar (Chisum Patent Academy) – Seattle, WA

    August 8-9, 2016 - Advanced Patent Law Seminar (Chisum Patent Academy) – Seattle, WA

    August 18-19, 2016 - Advanced Patent Prosecution Workshop 2016: Claim Drafting & Amendment Writing (Practising Law Institute) – San Francisco, CA

    September 14-15, 2016 - Advanced Patent Prosecution Workshop 2016: Claim Drafting & Amendment Writing (Practising Law Institute) – Chicago, IL

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

  • PLI Advanced Patent Prosecution Workshop

    PLI #1Practising Law Institute (PLI) will be holding its "Advanced Patent Prosecution Workshop 2016: Claim Drafting & Amendment Writing" on July 14-15, 2016 in New York, NY, on August 18-19, 2016 in San Francisco, CA, and on September 14-15, 2016 in Chicago, IL.  Patent Docs author Donald Zuhn will chair and Patent Docs author Kevin Noonan will be presenting at the Chicago workshop.

    At the New York and Chicago seminars, PLI's faculty will offer presentations on the following topics:

    • Ethics in the PTO
    • Concurrent Sessions I: Advanced Specification Drafting Issues — all concurrent sessions and workshops will provide lectures specific to four different technologies: biotechnology, chemical/pharmaceutical, electromechanical, and electronics/computers
    • Concurrent Sessions II: Advanced Claim Drafting Issues
    • Concurrent Workshops I: Advanced Claim Drafting
    • Patent Eligible Subject Matter After Mayo, Myriad, and Alice
    •     Lessons Learned from Three Years of Post-Grant Proceedings
    • Concurrent Sessions III: Advanced Patent Prosecution Issues
    • Concurrent Workshops II: Advanced Amendment Drafting
    • Roundtable Discussions in Advanced Patent Prosecution Issues and Wrap-Up

    At the San Francisco seminar, presentations will be offered on the following topics:

    • Ethics for Patent Prosecutors
    • The New 35 U.S.C. § 102
    • Advanced Claim Drafting Issues — class to split into technology groups, including Electromechanical/Mechanical, Electronics/Computers, and Life Sciences (Biotechnology, Chemical/Pharmaceutical)
    • Patentable Subject Matter
    • Claim Drafting Workshops — class to split into technology groups
    • Advanced Issues for Written Description — class to split into technology groups
    • Countering the Obviousness Rejection — class to split into technology groups
    • Post Issuance Proceedings Prosecution
    • The Litigation Perspective on Patent Prosecution
    • Amendment Workshops — class to split into technology groups

    A complete program schedule, including descriptions of the presentations and a list of speakers for each seminar can be found here.

    The registration fee for each conference is $1,795.  Those interested in registering for the conference can do so here.

  • Webinar on Freedom-to-Operate Opinions

    Strafford #1Strafford will be offering a webinar/teleconference entitled "Structuring Freedom-to-Operate Opinions: Reducing Risk of Patent Infringement — Combating Troubling FTO Results, Overcoming Potential Roadblocks, Addressing Impact of Post-Grant Process on FTO Opinions" on July 21, 2016 from 1:00 to 2:30 pm (EDT).  Doris Johnson Hines and Thomas L. Irving of Finnegan Henderson Farabow Garrett & Dunner and Laura A. Labeots, Ph.D. of Husch Blackwell will provide guidance to patent counsel preparing and providing freedom-to-operate (FTO) opinions for companies developing new products, and outline best practices for drafting FTO opinions to reduce infringement risks.  The webinar will review the following issues:

    • What are best practices for patent counsel when analyzing FTO issues and structuring FTO opinions?
    • What is the impact of the post-grant process on FTO opinions?
    • When should counsel seek FTO opinions to protect new research and products from infringement claims?

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

  • USPTO Patent Quality Chat Webinar Series

    USPTO SealThe U.S. Patent and Trademark Office will be offering the next webinar in its Patent Quality Chat webinar series on July 12, 2016 from 12:00 to 1:00 pm (ET).  The latest webinar, which will focus on "Opportunities for Examiner Interviews: First Action Interview Pilot and General Practice," will be hosted by Wendy Garber, Director of Technology Center 3700, and Timothy Callahan, Director of Technology Center 2400.  The presenters will discuss how to use examiner interviews to more effectively advance prosecution of patent applications.  The presenters look forward to hearing customer feedback on this topic.

    Instructions for viewing the webinar can be found here.  Additional information regarding the Patent Quality Chat webinar series can be found on the USPTO's Patent Quality Chat webpage.

  • Webinar on Patent Prosecution Post-Alice

    JuristatJuristat will offer a one-hour webinar entitled "Patent Prosecution in the Post-Alice Era" on July 14, 2016 from 1:00 to 2:00 pm (EDT).  James Cosgrove and Aubrey Mann will guide participants through the new realities of patent prosecution in light of the Supreme Court's 2014 decision in Alice Corp. v. CLS Bank.  The webinar will review the following subjects:

    • How to draft claims in such a way as to avoid Alice-heavy art units;
    • The best way to respond to Alice rejections; and
    • When to appeal a final rejection and how to win those appeals.

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

  • Webinar on Willful Infringement and Enhanced Damages

    Strafford #1Strafford will be offering a webinar/teleconference entitled "Willful Patent Infringement and Enhanced Damages After Halo — Navigating the New Standard Under 35 U.S.C. 284 Following Supreme Court Ruling" on July 19, 2016 from 1:00 to 2:30 pm (EDT).  Matthew P. Becker pf Banner & Witcoff and Michael Hawes of Baker Botts will provide guidance to patent counsel on the Supreme Court's new standard for enhanced damages under 35 U.S.C. § 284, and explain the Court's recent decision and its implications.  The webinar will review the following issues:

    • How will the district courts apply the new standard for enhanced damages?
    • Should companies reevaluate policies regarding when to obtain formal opinions on noninfringement?
    • Will the Halo decision inspire patent trolls?

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

  • Open Parking, LLC v. Parkme, Inc. (W.D. Penn. 2016)

    By Michael Borella —

    135px-Pennsylvania-westernEvery day, millions of people are subjected to a frustrating experience — finding a place to park their automobiles.  Whether at the train station, the sports stadium, a festival, or a popular restaurant, circulating through parking lots is not an enjoyable way to spend either your work day or leisure time.  The fundamental issue is that a driver has no idea of parking lot occupancy beyond what he or she can see.  Thus, instead of making a beeline to the nearest open spot, the driver is forced (along with other drivers) to seek out such a spot in semi-random fashion.  Locating parking boils down to a classic resource scheduling problem — but it is one that technology can solve.

    The Invention and the Dispute

    U.S. Patent Nos. 6,501,391 and 6,750,786 disclose such a solution.  Particularly:

    A portable wireless remote graphical display device structured and arranged to access the Internet from home, office, vehicle, or any other location comprising a specific software application on the portable wireless remote graphical display device for commanding a server at a parking lot or remote location to transmit parking lot occupancy data corresponding to one or more parking lots over the Internet to the portable wireless remote graphical display device and for receiving and displaying the parking lot occupancy data on the portable wireless remote graphical display device as a real-time representation of the parking lot indicating vacant parking spaces within the parking lot.

    Both were filed in 1999, well before smartphones with GPS, or the parking spot location / reservation apps that we enjoy today.

    In late 2015, patent owner Open Parking brought an infringement action against Parkme in the Western District of Pennsylvania.  Parkme responded by contending that both patents were directed to ineligible subject matter under 35 U.S.C. § 101, and filed a 12(b)(6) motion to dismiss for failure to state a claim on which relief can be granted.

    Claim 1 of the '786 patent was deemed representative.  It recites:

    A parking system comprising:
        a wireless communications device capable of accessing the Internet; and
        a software application for receiving parking data transmitted over the Internet to the wireless communications device,
        wherein the parking data can be rendered by the wireless communications device as a substantially real-time representation indicating an occupancy condition of an available parking lot, and
        the occupancy condition changes according to presence and absence of vacant parking spaces within the available parking lot.

    Under § 101, patent claims can be invalidated if they fail to meet the eligibility requirements set forth by the Supreme Court in Alice Corp. v. CLS Bank Int'l.  Of notable importance is the two-prong test provided therein.  First, one must 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 exception.  Notably, generic computer implementation of an otherwise abstract process does not qualify as "significantly more."

    Prong One of Alice

    After a discussion of whether claim construction was necessary in order to evaluate the claims under § 101 (it wasn't), the Court applied prong one of the Alice test.  In doing so, it discussed two recent Federal Circuit § 101 cases:  Enfish, LLC v. Microsoft Corp. and TLI Communications LLC v. AV Automotive, L.L.C.

    Quoting the former, the Court noted that "a relevant inquiry at step one is to ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea."  Particularly, the invention in Enfish was directed to "an innovative logical model for a computer database, i.e., a model of data for a computer database explaining how the various elements of information are related to one another," thus providing a "specific improvement in the way computers operate."

    On the other hand, the Court observed that the invention in TLI was "directed to the abstract idea of classifying and storing digital images in an organized manner and failed to add an inventive concept sufficient to confer patent eligibility."  This invention was abstract "despite requiring tangible components such as a telephone unit and a server," because these "physical devices merely provided a generic environment in which to carry out the abstract idea."

    A distinction between Enfish and TLI, not made by the Court but worth keeping in mind, is whether the claimed invention involves a technological improvement or uses existing technology.  Enfish's improved database format is a new technological tool that can be used by any number of higher-level software applications.  In contrast, TLI's image classification and storage technique required the use of technological tools (e.g., the telephone unit and server), but in the view of the Federal Circuit, did not create or improve on any such technologies.

    A similar distinction can be made between a previous pair of Federal Circuit cases.  In Ultramercial v. Hulu, claims directed to making online users watch an ad before being able to watch a video of their choosing was deemed ineligible under § 101.  In DDR Holdings v. Hotels.com, claims directed to changing how a web server operates so that it can incorporate visual aspects of two different web sites was found to satisfy the requirements of § 101.  Again, the difference between these two cases is that Ultramercial merely made use of existing technology (e.g., servers and the Internet), whereas DDR improved the operation of a specific technology.

    When viewed in this fashion, these four cases provide a distinction between eligible and ineligible claims.  While this distinction is certainly debatable (and there are those who would argue that the inventions of all four cases should have been eligible or ineligible), the Federal Circuit has provided us with a rough roadmap to patent-eligibility post-Alice.  But as we will see, this roadmap is still fraught with hazard.

    The Court considered the arguments of the parties.  Parkme contended that the claims amounted to no more than an abstract idea for "shuffling data from one place to another . . . that could be completed with pencil and paper."  Open Parking countered that the claims recited "a new and useful result of allowing a commuter to use an open parking mobile app on a smartphone to remotely view a changing occupancy condition of a parking lot when commuting and before arrival so that the commuter can readily locate an available parking space or decide to search for parking elsewhere."

    The Court noted that "the 'pen and paper' test is a valid method to evaluate abstraction," as method steps that can be performed in the human mind or with pen and paper are usually a hallmark of an abstract idea.  While the Court concluded that "the rendering of the parking lot occupancy [in] 'substantially real time' could not be performed by a parking lot attendant handing out maps," but "the 'occupancy condition' of a parking lot, i.e. data about whether there are any open spots, could be rendered by humans using a pen and paper."

    Here, the Court, probably prompted by Parkme, undertook some rather detailed speculation:

    Perhaps there is an attendant at the gate who looks around the lot and writes the number of open spaces on a chalkboard for passersby to see.  Or there could be a simple "vacancy/no vacancy" sign outside of a lot, or a "real time" electronic sign showing the then-existing number of open spaces, based on the entry/exit of cars.  These examples are means to the same end: transmitting to commuters whether there are any open spots in a parking lot, via a graphical display and in substantially real time . . . .  Information about open parking spaces has long been broadcast to drivers who cannot actually see the open spaces.  For example, in many major cities, parking garages in which spots are shielded from view have displays on the outside indicating if (and in some cases how many) spots are vacant.

    As a result, the Court concluded that "what the patents are really trying to get at is the transmission of substantially real time data of whether there are any open parking spaces in a given lot."  Thus, "the patents are aimed at moving data (open parking spots or not, and maybe where they are) from one place (the parking lot) to another (the driver's location)."  Consequently, the Court found the claims to be abstract.

    Prong Two of Alice

    Turning to prong two, the Court looked for an inventive concept in the claims — "additional features that amount to more than well-understood, routine, conventional activity."  Open Parking took the position that the claims are "limited to specific emerging handheld wireless devices capable of communications including Internet access," require a computer, and involve only the transmission of parking data rather than generic data — and were therefore significantly more than just an abstract idea.

    The Court disagreed.  Citing TLI, the Court concluded that the invention involved "software . . . being executed on a generic computer," and did not solve a problem unique to the Internet.  Particularly:

    The seemingly ubiquitous problem of finding open parking spaces during the busy morning rush necessarily exists outside of the Internet, and outside computers altogether for that matter.  Transmitting that data over the Internet to mobile devices might be useful, but it does not override the routine and conventional sequence of events pertaining to finding a parking space.  The process is still (1) look for open space, (2) drive to open space, (3) park in open space.  With these patents, the driver merely looks to her mobile device rather than through her windshield.

    Thus, the Court found that the recitation of this process using "basic computer functions" is no more than an abstract idea, and therefore the claims are invalid.

    Conclusion

    This case, like many that involve § 101 rulings, is certainly open to criticism.  Particularly, when characterizing the invention, the Court did not focus on the ability of drivers to use the invention to travel directly to an open spot, instead of seeking one out in a more iterative fashion.  In fact, the invention could be used before one even begins driving, which is something that is unique to the Internet and cannot be carried out with pen and paper.  Most likely, the broadness of the representative claim convinced the Court to perform the eligibility analysis at a higher level.  Perhaps a more carefully drafted and narrower claim might have won the day.

    Nonetheless, cases such as this one are helpful in understanding how district courts are viewing the Enfish / TLI and Ultramercial / DDR dichotomies.  Such an understanding can be instrumental for patentees to navigate the § 101 paths of the U.S. Patent and Trademark Office as well as our court system.