• By Donald Zuhn –-

    PricewaterhouseCoopers (PWC)A report issued by PwC's Health Research Institute (HRI) in June projects next year's medical cost trend (i.e., the projected percentage increase in the cost to treat patients) to be 6.5%, which is level to the medical cost trend for 2016 and comparable to the medical cost trend for the past three years.  According to the report, entitled "Medical Cost Trend: Behind the Numbers 2017," the projected increase in the medical cost trend for 2017 will be due to increases in access to care, particularly primary and behavioral health services, and not to increases in drug spending.

    With respect to drug costs, the report notes that by employing more aggressive strategies with drug makers, pharmacy benefit managers (PBMs) will help keep overall drug cost trends in check in 2017, and that "political and public pressure will tamp down the largest drug cost increases."  In addition, the report points out that "[m]any of the new prescription drugs that are coming on market are not arriving alone but at close to the same time as competitors' drugs," and that such competition will help to keep drug prices down.  The report also indicates that specialty drug costs, which outpace traditional drug spending, are not expected to grow as fast as in previous years.

    Of significance to the pharmaceutical and life sciences industry, the report states that "[d]rug spending is still a relatively small portion of overall health spending and, as such, concerns of ever-increasing cost growth from new cures may trigger false alarms."  More specifically, the report indicates that approximately half of all medical costs come from hospital spending, about 30% comes from physicians, and 17% from prescription drugs.  The report notes that:

    It is important to understand the weight of these components to put health spending in context.  Prescription drug spending is a prime example since individual drug costs can be high enough to garner national media attention but, as a whole, are a relatively small portion of total health spending: a 10% jump in the growth in prescription drug spending would increase the overall medical cost trend by about 1.7%, for instance.

    In explaining what the projections mean for various sectors of the health care industry, the report suggests that for the pharmaceutical and life sciences sector, "[t]he need for innovative, cost effective medicines continues to rise as regulators, payers, healthcare providers and patients demand greater value for money."  The report also states, however, that "[t]he reputation of the pharmaceutical industry has been weakened as a result of the high-profile pricing strategies of some manufacturers during the past few years."

    The full report can be obtained here.

  • By Michael Borella —

    Federal Circuit SealPatent owner Electric Power Group asserted U.S. Patent Nos. 7,233,843, 8,060,259, and 8,401,710 against Alstom S.A. and various other parties in the Central District of California.  The District Court granted Alstom's motion for summary judgment that the asserted claims were ineligible under 35 U.S.C. § 101.  Electric Power Group appealed to the Federal Circuit.

    Claim 12 of the '710 patent was deemed representative.  It recites:

    12.  A method of detecting events on an interconnected electric power grid in real time over a wide area and automatically analyzing the events on the interconnected electric power grid, the method comprising:
        receiving a plurality of data streams, each of the data streams comprising sub-second, time stamped synchronized phasor measurements wherein the measurements in each stream are collected in real time at geographically distinct points over the wide area of the interconnected electric power grid, the wide area comprising at least two elements from among control areas, transmission companies, utilities, regional reliability coordinators, and reliability jurisdictions;
        receiving data from other power system data sources, the other power system data sources comprising at least one of transmission maps, power plant locations, EMS/SCADA systems;
        receiving data from a plurality of non-grid data sources;
        detecting and analyzing events in real-time from the plurality of data streams from the wide area based on at least one of limits, sensitivities and rates of change for one or more measurements from the data streams and dynamic stability metrics derived from analysis of the measurements from the data streams including at least one of frequency instability, voltages, power flows, phase angles, damping, and oscillation modes, derived from the phasor measurements and the other power system data sources in which the metrics are indicative of events, grid stress, and/or grid instability, over the wide area;
        displaying the event analysis results and diagnoses of events and associated ones of the metrics from different categories of data and the derived metrics in visuals, tables, charts, or combinations thereof, the data comprising at least one of monitoring data, tracking data, historical data, prediction data,  and summary data;
        displaying concurrent visualization of measurements from the data streams and the dynamic stability metrics directed to the wide area of the interconnected electric power grid;
        accumulating and updating the measurements from the data streams and the dynamic stability metrics, grid data, and non-grid data in real time as to wide area and local area portions of the interconnected electric power grid; and
        deriving a composite indicator of reliability that is an indicator of power grid vulnerability and is derived from a combination of one or more real time measurements or computations of measurements from the data streams and the dynamic stability metrics covering the wide area as well as non-power grid data received from the non-grid data source.

    Though lengthy, this claim is broader than it initially appears due to its use of the disjunctive at several points.  The Court described the claimed invention as "performing real-time performance monitoring of an electric power grid by collecting data from multiple data sources, analyzing the data, and displaying the results."

    Patent-eligibility is determined by whether claims at issue meet the eligibility requirements set forth by the Supreme Court's two prong test in Alice Corp. v. CLS Bank Int'l.  First, one must determine whether a claim 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."

    The District Court determined that the claims were directed to the abstract idea of "monitoring and analyzing data from disparate sources," then concluded that they lacked any further significant limitations.

    In providing its opinion, the Federal Circuit reflected on the two-prong test, noting that "we have described the first-stage inquiry as looking at the 'focus' of the claims, their 'character as a whole,' and the second-stage inquiry (where reached) as looking more precisely at what the claim elements add—specifically, whether . . . they identify an 'inventive concept' in the application of the ineligible matter."

    Nonetheless, the Court rapidly found the claims to be abstract.  Particularly, the Court characterized the claims to be focused on "collecting information, analyzing it, and displaying certain results of the collection and analysis."  For each of these three steps, the Court cited to recent precedent that found similar aspects to be abstract.  The Court further determined that there was nothing non-abstract in the combination thereof.

    Comparing this case to Enfish, LLC v. Microsoft Corp., which involved eligible claims, the Court distinguished between "computer-functionality improvements and . . . uses of existing computers as tools in aid of [abstract] processes."  (We briefly discussed this distinction between tool creation and tool use in our review of Open Parking, LLC v. Parkme, Inc.)  The Court admitted that relying on this notion for the § 101 analysis of software inventions "may present line-drawing challenges because of the programmable nature of ordinary existing computers."

    Turning to the second prong of Alice, the Court found that the claims limited the scope of the invention to "the particular technological environment of power-grid monitoring" which was insufficient to transform them into a non-abstract application.  In a rather amusing aside, the Court noted that the claimed invention did not "invoke any assertedly inventive programming."  How the Court came to this conclusion is a mystery — the steps of a software claim can be implemented in a virtually unlimited number of ways.  And as anyone who has programmed for a living would know, even the most mundane-seeming applications can be innovatively (or non-innovatively) programmed.

    Ultimately, the Court seemed to reject the eligibility of these claims based on their broad functional language — in other words, the Court took issue with the claims defining a fuzzy, aspirational goal rather than a concrete series of steps to achieve a more specific outcome.  The Court distinguished between "ends sought and particular means of achieving them, between desired results (functions) and particular ways of achieving (performing) them."  Quoting the District Court, the panel opined "there is a critical difference between patenting a particular concrete solution to a problem and attempting to patent the abstract idea of a solution to the problem in general."  As a result, the claims were ruled invalid under § 101.

    The more one thinks about this decision the more that it seems as if the Court is using § 101 as a proxy for §§ 103 and 112.  If the claims are too broad or indefinite, then these parts of the statute should be used to knock them down.  But right now, § 101 is the proverbial big hammer, and claims like those of Electric Power Group apparently (to the Federal Circuit at least) resemble a nail.

    Electric Power Group, LLC v. Alstom S.A. (Fed. Cir. 2016)
    Panel: Circuit Judges Taranto, Bryson, and Stoll
    Opinion by Circuit Judge Taranto

  • By Donald Zuhn —

    PTAB Introduces New Patent Review Processing System

    USPTO SealIn a post on the USPTO's "Director's Forum" blog, the Chief Judge for the Patent Trial and Appeal Board (PTAB), David P. Ruschke, announced that the PTAB was transitioning from the Patent Review Processing System (PRPS) e-filing system to the Patent Trial and Appeal Board End to End (PTAB E2E) system.  The new system, which is accessed via a web browser — the Chief Judge indicating that Chrome was the preferred browser — allows petitioners and patent owners to provide metadata and upload pdf documents, and also provides an interface to the USPTO's Next Generation financial system (FPNG) for paying fees.  The Chief Judge also noted that the new features of the PTAB E2E system include:

    • full text document search
    • metadata search
    • additional search filters
    • a dashboard that includes the most recent document upload activity and status of filed cases
    • an improved docket
    • easier navigation of AIA review papers and exhibits
    • filter search on the docket

    The first three features will be available to all external users, and the last three features will be available to external users using a login email address.

    The PTAB E2E system will initially be used for Inter Partes Reviews (IPR), Covered Business Method Reviews (CBM), and Post Grant Reviews (PGR), with Derivations (DER) to be migrated to the system later this year.  Links to the PTAB E2E system, a user manual, FAQs, and a quick reference guide can be found at the PTAB webpage.  The PTAB is also asking customers to provide feedback regarding the new system; comments can be sent to PTABE2EADMIN@uspto.gov.

    USPTO Promotes AIR

    In a video posted on YouTube last month, the U.S. Patent and Trademark provides a brief introduction to the USPTO's Automated Interview Request (AIR) tool and encourages customers to schedule Examiner Interviews (including video interviews) using the tool.  We previously reported on AIR here.  The video also informs customers about the Office's interview specialists, who are subject matter experts in interview practices and policies.

    USPTO Updates Certificate of Mailing Form

    Earlier this month, the U.S. Patent and Trademark Office announced that an updated version of the "Certificate of Mailing under 37 CFR 1.8" form was now available on the Office's Patents Forms webpage.  The updated PTO/SB/92 form, entitled "Certificate of Mailing or Transmission under 37 CFR 1.8," can be used as a certificate of mailing, certificate of facsimile transmission, or certificate of EFS-Web transmission.  As a result of the introduction of the new form, the Office has retired the Certificate of Transmission under 37 CFR 1.8 form (i.e., PTO/SB/97).

  • CalendarAugust 4, 2016 – "Challenging Patents in IPR: Strategies for Filing Petitions — Determining Whether and When to File, Filing Multiple Petitions on the Same Patent, Constructing Claims" (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 9, 2016 - European biotech patent law update (D Young & Co) – 4:00 am, 7:00 am, and 12:00 pm (ET)

    August 9, 2016 - Patent Quality Chat webinar series — Post-Prosecution Pilot (P3) Program (The U.S. Patent and Trademark Office) – 12:00 to 1:00 pm (ET)

    August 10, 2016 – "Section 101 – The Way Ahead — software" (Intellectual Property Owners Association) – 2:00 to 3:00 pm (ET)

    August 11, 2016 – "Section 101 – The Way Ahead — life science" (Intellectual Property Owners Association) – 2:00 to 3:00 pm (ET)

    August 11, 2016 – "Patent Prosecution in the Post-Alice Era" (Juristat) – 1:00 to 2:00 pm (ET)

    August 17, 2016 – "Navigating Patent Eligibility: Leveraging New USPTO Guidance and the Enfish and TLI Communications Decisions" (Strafford) – 1:00 to 2:30 pm (EDT)

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

    August 25, 2016 – "The Next Wave of Data Privacy: What the GDPR, Privacy Shield and Brexit Mean for U.S. Intellectual Property Litigation" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

    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

  • IPO #2The Intellectual Property Owners Association (IPO) will offer two one-hour webinars entitled "Section 101 – The Way Ahead".  The first webinar, concerning the impact of § 101 on the software industry, is being offered on August 10, 2016 from 2:00 to 3:00 pm (ET).  Stephen Durant of Schwegman, Lundberg & Woessner, P.A.; Michelle Macartney of Intellectual Ventures, LLC; and Amir Penn, Brinks Gilson & Lione will discuss several recent useful ex parte PTAB decisions that overturned examiners' Section 101 rejections.  The second webinar, concerning the impact of § 101 on the life science industry, is being offered on August 11, 2016 from 2:00 to 3:00 pm (ET).  Deborah Martin of Pfizer Inc.; Christopher Jeffers of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.; and Warren Woessner of Schwegman, Lundberg & Woessner, P.A. will discuss both therapeutics and diagnostics.

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

  • USPTO SealThe U.S. Patent and Trademark Office will be offering the next webinar in its Patent Quality Chat webinar series on August 9, 2016 from 12:00 to 1:00 pm (ET).  The latest webinar, which will focus on the Office's new Post-Prosecution Pilot (P3) Program, will be hosted by Tariq Hafiz, Director of Technology Center 2600, and Jerry Lorengo, Director of Technology Center 1600.

    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.

  • JuristatJuristat will offer a one-hour webinar entitled "Patent Prosecution in the Post-Alice Era" on August 11, 2016 from 1:00 to 2:00 pm (ET).  The webinar 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, and 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.

  • By Joseph Herndon —

    USPTO Seal - backgroundLife Technologies Corp. filed a petition requesting covered business method (CBM) patent review of a number of claims of U.S. Patent No. 6,996,538.  The PTAB determined that the claims are unpatentable under 35 U.S.C. § 101 as being directed to non-statutory subject matter.  Ultimately, the PTAB found that the claims were simply directed to software for inventory management that recited nothing more than fundamental business and economic practices of inventory management that have long been performed manually in our system of commerce.

    The '538 patent describes electronic inventory tracking by a third party, for example, via the Internet.  The specification states that the present invention improves upon the prior art by shifting the burden of inventory tracking onto a third party; this concept is referred to as vendor managed inventory, or VMI.  When a third party provides VMI services for multiple companies, it gains significant buying power which it can use to negotiate better deals, improve supplier responsiveness, and streamline the buying process when additional inventory is deemed necessary.

    The '538 patent describes that VMI works by tracking inventory and automatically contacting suppliers, manufacturers, or distributors when additional supplies are needed.  While purchasing is a large part of inventory maintenance, the invention of the '538 patent purports to facilitate other transactions, such as allowing customers to resell products or equipment to other businesses, or other communication between customers.

    Of the challenged claims, claim 67 is illustrative and is reproduced below (as allowed in ex parte Reexamination Control No. 90/013,050).

    67.  A method for inventory management, comprising:
        (a) collecting and storing, on one or more databases having client software, at least the following data:
            (1)   customer   inventory   information,   the   customer inventory information including a number of items at a customer,
            (2)  inventory  and  cost  information  for  a  plurality  of manufacturers,  suppliers,  or  distributors,  the  inventory information for the plurality of manufacturers, suppliers, or distributors including: a product identifier and a number of items in manufacturer, supplier or distributor inventory, and
            (3)  inventory restocking  parameters  provided  by  said customer;
        (b) evaluating via at least one computer said customer inventory information and inventory or cost information for a plurality of manufacturers, suppliers, or distributors in light of said restocking parameters provided by said customer;
        (c)  ordering manufacturer, supplier, or distributor inventory which   best fulfills said inventory restocking parameters provided by said customer;
        (d) tracking inventory items in said databases for (1) the number of items at said customer and (2) the number of items at said manufacturer, supplier, or distributor, as inventory items are added to, restocked to, or removed from said inventories;
        (e) updating said data on said one or more databases, using information obtained in said inventory tracking, through at least one software interface to said databases; and
        (f) providing access via client software to information in said one or more databases to each said customer, manufacturer, supplier, or distributor,
        wherein said client software allows one or more customers, manufacturers, suppliers, or distributors to be classified into groups, and where permissions or roles are assigned to such groups.

    Covered Business Method Patent

    A "covered business method patent" is a patent that "claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions."  AIA § 18(d)(1); 37 C.F.R. § 42.301(a).  A patent need have only one claim directed to a covered business method to be eligible for review.

    The Petitioner asserted that the challenged claims are directed to "methods and computer systems for activities that are financial in nature, i.e., inventory management to support product sales, including customer interfaces and data management related thereto, as well as tracking and storing cost information related to those products."  The Petitioner also pointed to the USPTO's classification of the '538 patent in Class 705, defined as "Data Processing: Financial, Business Practice, Management, or Cost/Price Determination."

    However, the Patent Owner argued that patent classification of the '538 patent is misplaced because none of the claims are directed to a financial transaction.  The Patent Owner argued that the patent itself distinguishes between the act of ordering inventory, which is claimed, and payment for inventory, which is not.  According to the Patent Owner, because the challenged claims deal with inventory tracking and ordering, not payment, they do not recite a covered business method as defined by the AIA.

    But, the PTAB stated that the patent claims must only be broad enough to cover a financial product or service in order to be considered for CBM review, and this covers activities that are financial in nature, incidental to a financial activity, or complementary to a financial activity.

    The PTAB found that subject matter recited in the challenged claims is at least incidental to a financial activity.  The PTAB highlighted some claim language supporting this conclusion, such as "collecting and storing, on one or more databases . . . inventory and cost information" and "inventory restocking parameters provided by said customer," and "ordering . . . inventory which best fulfills said inventory restocking parameters provided by said customer."  The terms "cost information" and providing a customer access to that information amounts to a financial service, according to the PTAB.

    The technological features of claim 67 include "one or more databases," "client software," and "at least one computer."  Thus, the PTAB found that claim 67 does not recite a technological feature that is novel or unobvious over the prior art, and also does not recite any technical solution that solves a technical problem.  As a result, the technological exception did not apply and the '538 patent was determined to be eligible for CBM review.

    Challenge under 35 U.S.C. § 101

    The claims of the '538 patent were challenged under 35 U.S.C. § 101 as being directed to patent-ineligible subject matter.

    As for step 1 of the § 101 patentable subject matter determination, the Petitioner asserted that all of the challenged claims recite an abstract idea because they are directed to the fundamental business and economic practice of inventory management, a "fundamental economic practice long prevalent in our system of commerce" under Alice.  The PTAB easily agreed.

    In defense, the Patent Owner argued that each of the claims recites some form of "ordering," which provides a tangible, real-world impact achieved by the claimed computer technology.  But, the Petitioner was able to sufficiently establish that ordering inventory that best fulfills said inventory restocking parameters provided by a customer, as recited in claim 67, for example, was a basic, already well-known aspect of inventory management and corresponds to an action that can be done manually (e.g., by making a telephone call), without benefit of a computer.  Also, other features of claim 67 are directed to well-known processes that could be performed manually, or by using already commercially available computer products.

    As for step 2 of the § 101 patentable subject matter determination, i.e., whether limitations of the challenged claims individually and as an ordered combination provide additional elements that transform the nature of the claim into a patent-eligible application, the PTAB found that components recited in the claims (databases, software, and computer) were well-known at the time of filing and were found to be routine, conventional activities to implement a method of collecting, storing, and analyzing information or data.

    For this determination, the PTAB noted that the specification itself states that the "Inventory System 130" may include software already commercially available to the public, and that "Web Server 220 and Database Server 230" include commercially available software.

    In defense of a purported "inventive concept", the Patent Owner argued that the claims describe a specific improvement over existing approaches to electronic VMI by providing "specially programmed computer systems that combine technology in novel ways to address technical inadequacies in existing systems."  The alleged novelty was for "dynamically" analyzing information to provide improved, automated decision-making in a multi-seller environment.

    But, the PTAB found that the claims do not address problems particular to the use of databases, software, and computers, but rather are directed to the general concept of inventory management.

    The PTAB referenced recent decisions by the Federal Circuit including Bascom Global Internet Servs., Enfish, and DDR Holdings, and stated that the "Enfish claims, understood in light of their specific limitations, were unambiguously directed to an improvement in computer capabilities".  In comparison, the '538 patent claims are not directed to an improvement of the technical equipment itself, i.e., the recited databases and software.  Rather, the PTAB found that any inventive concept comes from knowing what data and information to place, analyze, use, and manipulate on those databases and software, and such concepts fail to improve an existing technological process.  As a result, the PTAB found that the claims failed step 2 of the § 101 patentable subject matter determination, and were found to be unpatentable.

    Before Administrative Patent Judges Jacqueline Wright Bonilla, Hyun J. Jung, and Neil T. Powell
    Final Written Decision by Administrative Patent Judge Bonilla

  • By Donald Zuhn –-

    USPTO SealAs we reported earlier this month, the U.S. Patent and Trademark Office announced that it was extending the deadline for customers to migrate their deposit accounts and electronic funds transfer accounts (EFTs) to Financial Manager, the Office's new online fee payment management tool.  The Office, however, indicated at that time that a new deadline would be announced at a later date.

    In an e-mail alert distributed today, the Office announced that the new migration deadline will be August 5, 2016.  After that date, the Office will no longer accept legacy deposit account or EFT credentials for payments, and customers who have not migrated their deposit accounts and EFTs to Financial Manager will only be able to make payments as a guest using a credit or debit card.  The Office also noted that after the August 5, 2016 deadline, Financial Manager will be updated with enhancements to strengthen user permission settings and improve reports.

    Financial Manager allows customers to store and manage different payment methods (e.g., credit or debit cards, deposit accounts, or EFTs) and generate transaction history and monthly statements.  Additional information regarding Financial Manager can be found here.  In order to migrate deposit accounts and EFTs, customers will first need to create a uspto.gov account.  In addition to the Financial Manager webpage, the Office has provided several additional resources regarding Financial Manager.  To migrate accounts to Financial Manager, the Office has provided a Financial Manager Quick Start Guide and Introduction to Payment Method Migration.

  •     By Kevin E. Noonan —

    GenzymeThe Federal Circuit affirmed the decision by the Patent Trial and Appeals Board (PTAB) in an inter partes review (IPR) that the claims of Genzyme's U.S Patent Nos. 7,351,410 and 7,655,226 were obvious, in Genzyme Therapeutic Products, Inc. v. Biomarin Pharmaceutical, Inc.

    The claims at issue are directed to methods for treating Pompe's disease, a deficiency in the lysosomal enzyme acid α-glucosidase (GAA), which is expressed as an inability to break down glycogen, particularly in muscle, causing glycogen buildup in muscle tissue.  There are two forms of the disease, early onset and late onset, with sufferers of the early onset form having no GAA activity; these infants do not live for more than a year without treatment due to weakening of the heart and muscles involved in respiration.  Late onset patients present (generally) during childhood and rarely develop cardiac symptoms.  According to the opinion, early efforts at enzyme replacement therapy failed because GAA injected into the bloodstream was cleared by the liver before the enzyme could be delivered to skeletal and cardiac muscles.  Later, more successful efforts used GAA modified to include mannose-6-phosphate, which promoted skeletal and cardiac muscles uptake.  In 1997, Duke University applied for Orphan Drug Application for treatment using recombinant GAA modified with M6P, which application was associated with a press release asserted as prior art in the IPR reviewed by the Federal Circuit.

    Claim 1 of the '410 patent is representative of the claims involved in the IPR:

    A method of treating a human patient with Pompe's disease, comprising intravenously administering biweekly to the patient a therapeutically effective amount of human acid alpha glucosidase, whereby the concentration of accumulated glycogen in the patient is reduced and/or further accumulation of glycogen is arrested.

    BiomarinBiomarin requested an IPR in 2013 based on four grounds for the '410 patent, with the PTAB instituting on two of them:  under § 103 based on the combination of the Duke press release and two prior art references (the Barton reference and van der Ploeg '88 references); and also under § 103 for the combination of the another reference, the Reuser reference, with the Barton and van der Ploeg '88 references.  For the '266 patent, the PTAB instituted under § 103 for claims 1 and 3 based on the combination of the Duke press release, the van der Ploeg '88 reference, and the van Hove reference, and for claims 4-6 based on the combination of the Duke press release, the van der Ploeg '88 reference, the Barton reference, and the Reuser reference.

    Genzyme responded to Biomarin's request by arguing that none of the cited references disclosed the results of in vivo tests in humans or animals.  In response, Biomarin asserted two additional references that disclosed in vivo administration of M6P-modified GAA in mouse (van der Ploeg '91) and Japanese quail (Kikuchi).

    The Board found the challenged claims to be obvious, based on disclosure in the Reuser reference of all elements of the claimed invention except the dosing interval which, according to the PTAB, was the result of "routine optimization."  The PTAB discounted the effects of no clinical trials having been performed at the earliest priority date, on the grounds that the skilled worker would have been motivated to pursue clinical trials in view of the teaching of the Reuser reference.  With regard to whether there was a reasonable expectation of success, the Board stated that "all that remained to be achieved over the prior art was the determination that a specific dose within a previously suggested dose range, and its corresponding dosing schedule, would have been safe and effective for the treatment of human patients."  The PTAB based its determination on the cited art, production of recombinant M6P-modified GAA in transgenic animals (milk) and the FDA's Orphan Drug status for enzyme replacement therapy using M6P-modified GAA for treating Pompe's disease.  All that was needed, according to the Board, was the application of "no[thing] more than routine processes" to develop the claimed methods and thus they were obvious.

    The Federal Circuit affirmed, in an opinion by Judge Bryson, joined by Judges Moore and Reyna.  The Court rejected Genzyme's procedural challenge under the Administrative Procedures Act (APA), that the Board had erred in relying on "facts and legal arguments" not asserted in the request, as a violation of the Act's notice and opportunity to respond requirements.  While acknowledging that "formal adjudication" such as an IPR imposes "certain procedural requirements" on the PTO under the APA, including "timely notice" and an opportunity to "submit facts and argument" under 5 U.S.C. §§ 554(b)-(c), 557(c), the Court stated that these provisions were intended to prevent an agency from "chang[ing] theories in midstream" without giving a respondent the opportunity to address the changed theory, citing Belden v. Berk-Tek LLC, 805 F.3d 1064, 1080 (Fed. Cir. 2015) (quoting Rodale Press, Inc. v. FTC, 407 F.2d 1252, 1256-57 (D.C. Cir. 1968).  This was not the case here, according to the opinion, because Genzyme had ample notice and opportunity to rebut Biomarin's obviousness case against its claims.  Support for this conclusion was had by noting that the Board based its final determination of obviousness on the same references it used for deciding to institute the IPR.  The fact that the Board cited references (the in vivo references, van der Ploeg '91, and Kikuchi) in its final determination that were not included in the combination used to institute the IPR was not to the contrary, because "the introduction of new evidence in the course of the trial is to be expected in inter partes review trial proceedings and, as long as the opposing party is given notice of the evidence and an opportunity to respond to it, the introduction of such evidence is perfectly permissible under the APA."

    Genzyme's argument to the contrary, according to the Court, was based on "misunderstanding of the role of the institution decision in inter partes review proceedings before the Board":

    There is no requirement, either in the Board's regulations, in the APA, or as a matter of due process, for the institution decision to anticipate and set forth every legal or factual issue that might arise in the course of the trial.  See Boston Carrier, Inc. v. ICC, 746 F.2d 1555, 1560 (D.C. Cir. 1984) (even when adjudicating charges of misconduct, an agency "is not burdened with the obligation to give every applicant a complete bill of particulars as to every allegation that carrier will confront").  Because the institution decision comes at the outset of the proceedings and the patentee is not obligated to respond before the Board makes its institution decision, it is hardly surprising that the Board cannot predict all the legal or factual questions that the parties may raise during the litigation.

    Indeed, the opinion goes on to say that "development of evidence in the course of the trial is in keeping with the oppositional nature of an inter partes review proceeding," with the requestor asserting its invalidity case to the PTAB and the patent owner presenting amendments (sic), and with the Board then deciding whether the challenger has borne the burden of proving invalidity (citing the Senate legislative history of the IPR provisions, despite the differences in how Congress may have thought it was providing for IPRs and the PTAB's decisions on how to implement the statute).

    The "critical question" under the APA is "whether Genzyme received 'adequate notice of the issues that would be considered, and ultimately resolved, at that hearing'" the Court opined, citing Pub. Serv. Comm'n of Ky. v. FERC, 397 F.3d 1004, 1012 (D.C. Cir. 2005).  The panel concluded that Genzyme had not shown that there were any issues of fact or law used by the PTAB as the basis of its obviousness determinations for which Genzyme had not had adequate notice or opportunity to be heard.  Finally, the opinion also noted that PTO procedures provide means for moving to exclude evidence (such as 37 C.F.R. § 42.64(c)) or to file a surreply when Biomarin introduced this evidence during the institution proceedings, neither of which procedural avenues Genzyme used.

    In this regard it did not help Genzyme's case that it had itself "raised the issue" of the Kikuchi reference, and "other in vivo studies" with regard to whether they should be available to Biomarin as rebuttal evidence.  And the issue had been thoroughly explored at oral argument before the Board, including concessions by Genzyme that the Board could rely on the prior art "as a whole" in making its obviousness determination.  In addition, the panel cited Ariosa Diagnostics v. Verinata Health, Inc., 805 F.3d 1359 (Fed. Cir. 2015), for their earlier precedent that the Board erred in not considering prior art because it had not been introduced at the institution phase, with this panel saying that the type of use sanctioned by the Ariosa court was "exactly" how the Board used the in vivo references in this case, as evidence of the state of the prior art at the earliest priority date.

    On the merits, Genzyme argued that the Board erred in its claim construction with regard to the "whereby" clause contained in the claims of both the '410 and '226 patents:

    whereby the concentration of accumulated glycogen in the patient is reduced and/or further accumulation of glycogen is arrested.

    In both the institution decision and the final written determination the Board construed this clause "as describing the result achieved when a patient is given a therapeutically effective dose of GAA" and not as a separate step of the claimed methods.  Genzyme argued that the Board had changed its interpretation of this clause between institution and final determination, but the Court found "no merit in that argument."  Genzyme also argued that the clause should be construed to require reduction in glycogen accumulation to occur in skeletal muscle and not elsewhere in the body (including heart or liver).  The panel rejected this argument based on the Federal Circuit's validation of the Board's use of the "broadest reasonable interpretation" standard for claim construction in In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1278 (Fed. Cir. 2015), cert. granted, 136 S. Ct. 890 (2016).  The Board found no claim language that "expressly or impliedly" limited reduction in glycogen accumulation to skeletal muscle, and also found that the portions of the specification Genzyme cited in support of its interpretation in fact supported the Board's broader construction (as did the prosecution history).

    The Court also rejected Genzyme's assertion that the Board had erred by not expressly defining the level of skill possessed by the person of ordinary skill in the art, finding no requirement that the Board do so (citing Okajima v. Bourdeau, 261 F.3d 1350, 1354-55 (Fed. Cir. 2001), quoting Litton Indus. Prods., Inc. v. Solid State Sys. Corp., 755 F.2d 158, 163-64 (Fed. Cir. 1985)) and noting that both parties' description of this level of skill used "nearly identical language."  Finally, the panel rejected Genzyme's argument that the Board's determination that there was a likelihood of success was not supported by substantial evidence based on its understanding of (and extensive citation to) Biomarin's expert's testimony.

    Genzyme Therapeutic Products Ltd. v. Biomarin Pharmaceutical Inc. (Fed. Cir. 2016)
    Panel: Circuit Judges Moore, Bryson, and Reyna
    Opinion by Circuit Judge Bryson