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  • Webinar on Defend Trade Secrets Act

    Technology Transfer Tactics will be offering a webinar on "Understanding and Applying the Defend Trade Secrets Act of 2016" on July 13, 2016 from 1:00 to 2:00 pm (Eastern).  Andrew M. Howard of Shore, Chan, DePumpo, LLC will look at the provisions of the Defend Trade Secrets Act of 2016 (DTSA), and how universities can best apply the DTSA to protect their valuable IP.  The webinar will cover the following topics:

    • Legislative history and purpose of the DTSA
    • What is a "trade secret" under the DTSA?
    • What constitutes "misappropriation" under the DTSA?
    • Can you obtain a seizure of trade secrets, an injunction, and/or damages?
    • How does the DTSA affect different university constituents, including faculty, students, technology transfer offices, incubated companies, and joint ventures/sponsors?
    • What outreach and education is needed to ensure faculty and others involved in research commercialization don't inadvertently weaken trade secret protection?
    • How to protect trade secrets when key faculty and staff exit
    • Differences between the DTSA and UTSA
    • Procedural aspects of the DTSA
        – Statute of Limitations, jurisdiction, and territorial reach

    The registration fee for the webinar is $197.  Those interested in registering for the webinar, can do so here.

    Technology Transfer Tactics

  • Webinar on Conflicts in Patent Prosecution

    Strafford #1Strafford will be offering a webinar/teleconference entitled "Conflicts in Patent Prosecution: Avoiding the Ethical Pitfalls — Minimizing Risks of Malpractice Liability and Ethics Sanctions" on July 12, 2016 from 1:00 to 2:30 pm (EDT).  Jacob R. Osborn of Goodwin Procter and Dr. Sandra P. Thompson of Slater Hersey & Lieberman will provide guidance to IP counsel on the conflicts issues that often arise in patent prosecutions, and outline best practices to identify and address the risks — and to minimize conflicts that can lead to malpractice liability and ethical violations.  The webinar will review the following issues:

    • What policies and practices should counsel have in place to identify potential conflicts in patent prosecutions?
    • What steps can patent prosecutors take to minimize the risk of subject matter conflicts?
    • How should patent counsel respond after identifying conflicts?

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

  • Webinar on Waivers of Privilege

    AIPLA #1The American Intellectual Property Law Association (AIPLA) will be offering a webinar entitled "Arrival of a New Privilege and a Review of Potential Waivers of Privilege in Business Contexts" on June 29, 2016 from 12:30 – 2:00 pm (Eastern).  John A. Bauer of Mintz Levin Cohn Ferris Glovsky and Popeo, PC, and Henrik D. Parker of BakerHostetler will highlight two key areas:

    1.  Potential waiver pitfalls in business transactions. How much information is too much?  Should a buyer/licensee/funder ask to review privileged documents related to the prosecution of the target's patents?  Can the two sides to a deal share privileged information without the privilege being lost?  Does the answer depend on whether or not a deal is consummated or what district is involved?

    2.  How the recent case of In Re: Queen’s University at Kingston, PARTEQ Research and Development Innovations has re-shaped the landscape of privilege when patent agents are involved.

    The registration fee for the program is $145 (AIPLA member rate) or $195 (non-member rate).  Those interested in registering for the program, can do so here.

  • Webinar on Cuozzo v. Lee

    Strafford #1Strafford will be offering a webinar/teleconference entitled "Cuozzo v. Lee: Implications for Post-Grant Review Following New Supreme Court Ruling" on July 7, 2016 from 1:00 to 2:30 pm (EDT).  Erika H. Arner, M. Paul Barker, Thomas L. Irving, and James D. Stein of Finnegan Henderson Farabow Garrett & Dunner will examine the Supreme Court's decision in the Cuozzo v. Lee case and will discuss the implications of that decision for post-grant proceedings and patent validity.  The webinar will review the following issues:

    • The standard of review for patent validity in IPR proceedings before the PTAB;
    • The appealability of the Board's decision whether to institute an IPR proceeding; and
    • Implications of the Cuozzo decision for post-grant proceedings.

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

  • Program on Unitary Patent & Unified Patent Court

    Premier CerclePremier Cercle will be offering a program entitled "Unitary Patent & Unified Patent Court 2016" on July 7, 2016 at the European Patent Office in Munich, Germany.  The Program will offer sessions on the following topics:

    • UP & UPC Latest Updates from EPO Select Committee and UPC Preparatory Committee
    • Rules of Procedures and Material Law. How to get Consistency between the Divisions?
    • Keynote Address by Margot Fröhlinger, Principal Director Unitary Patent, European and International Legal Affairs, European Patent Office
    • UP&UPC: An International Perspective
    • Tailoring New IP Strategies for Your Business

    An agenda for the program, including detailed descriptions of sessions and list of speakers, can be found here.

    The registration fee for the program is EUR 499.00.  Those interested in registering for the conference can do so here.

  • IPO Webinar on Willfulness and Enhanced Damages After Halo

    IPO #2The Intellectual Property Owners Association (IPO) will offer a one-hour webinar entitled "Goodbye to Seagate: Willfulness and Enhanced Damages After Halo" on June 30, 2016 from 2:00 to 3:00 pm (ET).  David Caine of Arnold & Porter, Steven Cherny of Kirkland & Ellis, and Mark Davies of Orrick will discuss litigation strategy going forward, and other questions, such as whether companies should reevaluate policies regarding opinions of counsel on non-infringement during product development.

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

  • MAG Aerospace Industries, Inc. v. B/E Aerospace, Inc. (Fed. Cir. 2016)

    Equitable Assignor Estoppel Doctrine Expanded by Federal Circuit

    By Kevin E. Noonan —

    Federal Circuit SealArcane aspects of the law are frequently analogized as constituting "traps for the unwary," and patent law seems to have more than its share of minutiae that fall within that characterization.  The equitable principle of assignor estoppel is one example of such minutiae, and it recently became even easier to entrap the unwary with the Federal Circuit's decision in MAG Aerospace Industries, Inc. v. B/E Aerospace, Inc.

    The case involved U.S. Patent Nos. 6,536,054 ("'054 patent"), 6,536,055 ("'055 patent"), and 6,353,942 ("'942 patent") directed to repairing vacuum toilets used in commercial aircraft.  The details of the substantive portions of the case, including claim construction and summary judgment of non-infringement, were unremarkable.  But the District Court granted summary judgment that the claims of the three patents-in-suit were not invalid not on substantive grounds but on the basis that defendant B/E was estopped from challenging validity based on assignor estoppel.

    The factual predicate for the District Court's decision is as follows.  One of the named inventors, Mark Pondelick, assigned his rights to his employer who in turn assigned its rights to MAG.  Thereafter, Mr. Pondelick was employed by B/E and there was evidence adduced at trial that he was hired as part of B/E's efforts to market a product to compete with MAG.  This evidence was sufficient for the District Court to apply the assignor estoppel doctrine in granting summary judgment in favor of MAG.

    The Federal Circuit affirmed, in an opinion by Chief Judge Prost joined by Judges Mayer and Reyna.  The opinion relies upon Diamond Sci. Co. v. Ambico, Inc., 848 F.2d 1220, 1224 (Fed. Cir. 1988) for the principle that the assignor or his privity is estopped from challenging the validity of the assigned patent.  The showing of privity, that is, extending the estoppel from the inventor to another party in privity with the inventor, is (like the doctrine itself) dependent on the equities.  The Court recited these considerations, taken from its Shamrock Techs., Inc. v. Med. Sterilization, Inc., 903 F.2d 789, 793 (Fed. Cir. 1990) decision, as follows:

    If an inventor assigns his invention to his employer company A and leaves to join company B, whether company B is in privity and thus bound by the doctrine will depend on the equities dictated by the relationship between the inventor and company B in light of the act of infringement.  The closer that relationship, the more the equities will favor applying the doctrine to company B.

    The factors relied upon by the District Court (that formed the basis for the Federal Circuit's affirmance) were also taken from the Court's Shamrock Technologies decision and included:

    (1) the assignor's leadership role at the new employer;
    (2) the assignor's ownership stake in the defendant company;
    (3) whether the defendant company changed course from manufacturing non-infringing goods to infringing activity after the inventor was hired;
    (4) the assignor's role in the infringing activities;
    (5) whether the inventor was hired to start the infringing operations;
    (6) whether the decision to manufacture the infringing product was made partly by the inventor;
    (7) whether the defendant company began manufacturing the accused product shortly after hiring the assignor; and
    (8) whether the inventor was in charge of the infringing operation[.]

    Here, the District Court found that B/E benefited from Mr. Pondelick's knowledge of the claimed invention in developing the accused infringing product and indeed that B/E hired him specifically to develop that product.  Mr. Pondelick was B/E's Director of Engineering and later Vice President and General Manager of the company division that made the product.  B/E argued that Mr. Pondelick joined the company only after it had made the decision to develop the accused infringing toilet and that he was hired in an effort to avoid infringement.  In addition, unlike the precedent relied upon by the District Court, Mr. Pondelick did not have any more than a "negligible" financial interest in B/E.

    The Federal Circuit held that, in view of all these factors it could not conclude that the District Court erred, particularly insofar as B/E had "'availed itself of [Mr. Pondelick's] knowledge and assistance' to conduct the alleged infringement," citing  Intel Corp. v. U.S. Int'l Trade Comm'n, 946 F.2d 821, 839 (Fed. Cir. 1991).

    While this decision, like all decisions in equity, is fact-specific and particular to the parties involved and their conduct, the decision does suggest that the Federal Circuit will permit district courts to spread a wide net in discerning assignor estoppel whenever the assigning inventor is employed by the accused infringer and the infringer has made use of the inventor's particular knowledge in designing the accused infringing article.  This suggests that parties should scrutinize prospective employees' backgrounds carefully; the very expertise that may make someone an attractive hire may make it less likely that a company will ever be able to challenge the validity of any patent with which the employee has been involved.

    MAG Aerospace Industries, Inc. v. B/E Aerospace, Inc. (Fed. Cir. 2016)
    Panel:  Chief Judge Prost and Circuit Judges Mayer and Reyna
    Opinion by Chief Judge Prost

  • The CREATES Act of 2016: Senate Listens to Generics Industry

    By Kevin E. Noonan —

    Senate SealLast week, co-sponsors Senators Leahy (D-VT), Grassley (R-IA), Klobucher (D-MN), and Lee (R-UT) introduced a bill (S. 3056), entitled the "Creating and Restoring Equal Access to Equivalent Samples Act of 2016" or the "CREATES Act of 2016".  According to Senator Grassley:

    [C]oncerns have been raised that some brand-name companies are misusing an FDA program, known as the Risk Evaluation and Mitigation Strategy, to thwart that process by preventing the sale of samples of their product and refusing to allow generic competitors to participate in their Risk Evaluation and Mitigation Strategy protocol.  These tactics result in blocking generic drug approval and keeping drug prices high for consumers.  The Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act addresses this anticompetitive behavior by giving generic companies an opportunity to obtain relief in a timely fashion rather than through lengthy antitrust litigation.

    The bill was referred to the Judiciary Committee, a sub-committee of which has already held a hearing on the subject matter the bill was introduced to address.

    After an introductory section, the bill provides in Section 2 "Findings."  In addition to encomiums to the effectiveness of the Drug Price Competition and Patent Term Restoration Act of 1984 (Public Law 98-417; 98 Stat. 1585) and the Biologics Price Competition and Innovation Act of 2009 (Subtitle A of title VII of Public Law 111-148; 124 Stat. 804), the bill asserts that "developers of generic drugs and biosimilar biological products [] must be able to obtain quantities of the reference listed drug or biological product with which the generic drug or biosimilar biological product is intended to compete [] for purposes of supporting an application for approval by the Food and Drug Administration."  Moreover, the Findings state that, for those drugs subject to a "risk evaluation and mitigation strategy" or REMS, or a REMS with elements to assure safe use ("REMS with ETASU"), the FDA requires the branded/innovator and the generic/biosimilar to have "a single, shared system of elements [pursuant to (21 U.S.C. 355-1)] to assure safe use and supporting agreements, or secure a variance therefrom"

    The problem, according to the bill's cosponsors, is that "certain license holders (i.e., branded drug and biologics companies) are preventing generic product developers from obtaining quantities of the covered product necessary for the generic product developer to support an application for approval by the Food and Drug Administration, including testing to show bioequivalence, biosimilarity, or interchangeability to the covered product, in some instances based on the justification that the covered product is subject to a risk evaluation and mitigation strategy with elements to assure safe use."  And, according to the Director of the Center for Drug Evaluation and Research (CDER) at FDA, "some manufacturers of covered products have used REMS and distribution restrictions adopted by the manufacturer on their own behalf as reasons to not sell quantities of a covered product to generic product developers, causing barriers and delays in getting generic products on the market."  The FTC has voiced similar concerns, and the Findings also allege that "certain license holders are impeding the prompt negotiation and development on commercially reasonable terms of a single, shared system of elements to assure safe use, which may be necessary for the generic product developer to gain approval for its drug or licensing for its biological product."  While the antitrust laws provide one avenue for addressing this problem (insofar as it exists; the bill contains allegations but no examples of specific anticompetitive behavior), the bill contains the statement that it would be better to have "a more tailored legal pathway" which this bill is intended to provide.  (In this regard, the drafters have included a provision later in the text of the bill that the causes of action and remedies provided by the bill are not intended to foreclose access to such antitrust remedies under appropriate circumstances (Sec. 3(d)(2)).

    Section 3 of the bill, entitled "ACTIONS FOR DELAYS OF GENERIC DRUGS AND BIOSIMILAR BIOLOGICAL PRODUCTS," is directed to "covered products" (defined as "any drug approved under subsection (b) or (j) of section 505 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355) or biological product licensed under subsection (a) or (k) of section 351 of the Public Health Service Act (42 U.S.C. 262)") or combination thereof, or device or drug marketed for use thereof.  The bill expressly excludes from its ambit any drug or biological product "that the Secretary [of Health and Human Services] has determined to be currently in shortage and that appears on the drug shortage list in effect under [] 21 U.S.C. 356e" provided that the shortage has not been in effect for more than 6 months.  The bill then sets forth a new cause of action ("Civil Action") under Sec. 3(b)(1)(A):

    An eligible product developer [a generic drugmaker or biosimilar applicant] may bring a civil action against the license holder for a covered product [i.e., the generic or biosimilar drug] seeking relief under this paragraph in an appropriate district court of the United States alleging that the license holder has declined to provide sufficient quantities of the covered product to the eligible product developer on commercially reasonable, market-based terms.

    The elements to be proven, by a preponderance of the evidence (Sec. 3(b)(1)(B)), are:

    "(I) that —
        (aa) the covered product is not subject to a REMS with ETASU; or
        (bb) if the covered product is subject to a REMS with ETASU–
            (AA) the eligible product developer has obtained a covered product authorization from the Secretary in accordance with clause (ii); and
            (BB) the eligible product developer has provided a copy of the covered product authorization to the license holder;
    (II) that, as of the date on which the civil action is filed, the product developer has not obtained sufficient quantities of the covered product on commercially reasonable, market-based terms;
    (III) that the eligible product developer has requested to purchase sufficient quantities of the covered product from the license holder; and
    (IV) that the license holder has not delivered to the eligible product developer sufficient quantities of the covered product on commercially reasonable, market-based terms–
        (aa) for a covered product that is not subject to a REMS with ETASU, by the date that is 31 days after the date on which the license holder received the request for the covered product; and
        (bb) for a covered product that is subject to a REMS with ETASU, by 31 days after the later of–
            (AA) the date on which the license holder received the request for the covered product; or
            (BB) the date on which the license holder received a copy of the covered product authorization issued by the Secretary in accordance with clause (ii).

    The bill also permits an eligible product developer to submit a written request (Sec. 3(b)(1)(B)(ii)(I)) to the Secretary of Health and Human Services to obtain sufficient quantities of a covered product, which request shall be granted by the Secretary "not later than 90 days after the request [] is received for a product subject to a REMS with ETASU."  The sample of covered product will be sufficient to perform testing with or without human clinical trials as necessary.  The license holder (NDA or BLA) will be absolved of any violation of the REMS for the covered products if the product is supplied under the Secretary's authorization.  (Sec. 3(b)(1)(B)(ii)(III)).

    The bill further contains, as an affirmative defense (Sec. 3(b)(1)(C)) to the cause of action created by the Act, provisions that absolve the NDA or BLA holder from liability where neither the license holder or any of its "agents, wholesalers, or distributors was engaged in the manufacturing or commercial marketing of the covered product"; and that none of the license holder or any of its "agents, wholesalers, or distributors otherwise had access to inventory of the covered product to supply to the eligible product developer on commercially reasonable, market-based terms.''  Alternatively, it will be an affirmative defense if the license holder or its "agents, distributors, or wholesalers" sells the product, without restrictions "explicit or implicit" against selling to an eligible product developer, and an eligible product developer could purchase the covered product "in sufficient quantities on commercially reasonable, market-based terms from the agents, distributors, or wholesalers of the license holder."

    The bill also contains (Sec. 3(b)(1)(D)(i)) the following remedies for the eligible product developer:  an order from the Secretary that the license holder must provide the eligible product developer with "sufficient quantities of the covered product on commercially reasonable, market-based terms" without delay; an award of attorneys' fees and costs; and a monetary award "sufficient to deter the license holder from failing to provide other eligible product developers with sufficient quantities of a covered product on commercially reasonable, market-based terms," provided that the license holder either delayed in providing the covered product "without a legitimate business justification" or the license holder failed to comply with an order by the Secretary under the statute.  The amount of the monetary award is capped (Sec. 3(b)(1)(D)(ii)) at the revenue the license holder earned on the covered product (in its entirety) during a period beginning 31 days after the date the license holder received the request for the product or, for a product covered by a REMS with ETASU, 31 days after the later of when the license holder received the request or the Secretary's authorization order.  The statutory term for calculating the maximum extent of the monetary award ends on the date the license holder provides the sufficient amount of the covered product.  Thus, the bill provides incentives for the license holder to provide the sufficient quantities either upon request by the eligible product developer or as soon thereafter as possible.

    In addition, the bill has provisions (Sec. 3(b)(2) et seq.) relating to failure of the license holder and the eligible product developer to reach agreement on "a single, shared system of elements to assure safe use with respect to the covered product" or where the license holder has refused to permit the eligible product developer to "join a previously approved system of elements to assure safe use with respect to that product."  In order to prevail the eligible product developer must show that she has sought approval of a drug under Section 505(b)(2) or (j) or Section 351(k) referencing a covered product subject to a "REMS with ETASU that requires a single, shared system of elements to assure safe use with respect to the covered product"; that at least 120 days have elapsed from the date on which the eligible product developer "first initiated an attempt to reach an agreement with the license holder that would allow the product developer to participate in a single, shared system of elements to assure safe use"; and the license holder and eligible product developer have not reached agreement.  Recovery is also dependent on the Secretary not waiving the requirement that the covered product be part of "a single, shared system."  As in other parts of the statute, the remedy is an order from the Secretary to the license holder to "enter into a single, shared system of elements to assure safe use with the eligible product developer on commercially reasonable terms" or that the eligible product developer "join a previously approved system of elements to assure safe use with respect to the covered product on commercially reasonable terms."  Recovery is also allowed if the Secretary waives the requirement.  The remedies contained in the bill (Sec. 3(b)(2)(C)) include attorneys' fees and costs, as well as a monetary amount "sufficient to deter the license holder from failing to reach agreements that would allow other eligible product developers to participate in a single, shared system of elements to assure safe use on commercially reasonable terms."  These remedies are available only upon a showing by the eligible product developer, by a preponderance of the evidence, that the license holder, not having any legitimate business justification, delayed entry of the eligible product developer into the "single, shared system of elements to assure safe use with respect to the covered product," or delayed securing a waiver from the Secretary, or failed to comply with the Secretary's order pursuant to the provisions of the bill.  This portion of the bill (Sec. 3(b)(2)(C)(ii)) also contains maximums the eligible product developer can be awarded, which comprise no more than entirety of the revenue the license holder makes on the product from a time that is 121 days "after the date on which the product developer first initiated an attempt to reach an agreement with the license holder that would allow the product developer to participate in a single, shared system of elements to assure safe use with respect to the covered product" and ending on the date "on which the eligible product developer and license holder reached an agreement that would allow the product developer to participate in a single, shared system of elements to assure safe use with respect to the covered product."  The final provisions of the bill (Sec. 3(c)) include a limitation on liability for the license holder, wherein "[a] license holder shall not be liable for any claim arising out of the failure of an eligible product developer to follow adequate safeguards to assure safe use of the covered product during development or testing activities described in this section, including transportation, handling, use, or disposal of the covered product by the eligible product developer."

    Again according to Senator Grassley, the bill is supported by "consumer groups, generic drug manufacturers, antitrust experts, physicians, pharmacists, hospitals, insurers and other groups that advocate for lower-cost drugs, including:  the Generic Pharmaceutical Association, AARP, the National Coalition on Healthcare, Consumers Union, Families USA, the Center on Medicare Advocacy, Public Citizen, the American College of Physicians, the American Hospital Association, the Healthcare Supply Chain Association, the National Association of Chain Drug Stores, the Pharmaceutical Care Management Association, Express Scripts, Blue Cross Blue Shield Association, the Premier Healthcare Alliance, the AFL-CIO, the American Federation of Teachers, the Public Sector Healthcare Roundtable and the UAW Retiree Medical Benefits Trust.  With the exception of the GPhA these are all patient, consumer, or physicians' groups, all of which have a personal, economic and vested interest in getting generic or biosimilar drugs to market, without necessarily being overly concerned with the realities of producing any of these drugs or getting them to market (much less the commercial considerations involved).  The Senators are doing what our system expects them to do, listen to their constituents.  And while it is not impossible that sometimes it may look like branded and biologics companies are being obstructionist against their generic or biosimilar counterparts it is not always so, and Congress has the responsibility to ensure the litigation and sanctions envisioned by the statute are necessary to forestall any unnecessary delay that may occur (and are not excused by the express provisions of the bill).  In view of the impending summer recess, followed by the Presidential and Congressional elections, it is unlikely that this bill will make it to the President's desk before November.  But it is certainly a bellwether for what we can expect from the 115th Congress when it convenes early next year.

  • Amgen v. Sandoz Update — Supreme Court Seeks Views of United States

    By Andrew Williams —

    Sandoz #1In other Supreme Court news from Monday, June 20, 2016, the Court invited the Solicitor General to file briefs in the Sandoz v. Amgen (No. 15-1039) and Amgen v. Sandoz (No. 15-1195) appeals to express the views of the United States.  As we previously reported, Sandoz petitioned the Court on February 16 for a writ of certiorari to review one of the issues decided by the Federal Circuit on July 21, 2015, specifically:

    Whether notice of commercial marketing given before FDA approval can be effective and whether, in any event, treating Section 262(l)(8)(A) as a stand-alone requirement and creating an injunctive remedy that delays all biosimilars by 180 days after approval is improper.

    AmgenSince that time, Amgen filed a brief in opposition on March 21 asking the Court to deny Sandoz's petition.  At the same time, Amgen filed a conditional cross-petition asking the Court for a writ of certiorari to review a second question in the event it granted the Sandoz Petition, because both questions relate to the "patent-resolution scheme of the BPCIA."  Specifically, the question posed in the conditional cross-petition was:

    Is an Applicant required by 42 U.S.C. § 262(l)(2)(A) to provide the Sponsor with a copy of its biologics license application and related manufacturing information, which the statute says the Applicant "shall provide," and, where an Applicant fails to provide that required information, is the Sponsor's sole recourse to commence a declaratory-judgment action under 42 U.S.C. § 262(l)(9)(C) and/or a patent-infringement action under 35 U.S.C. § 271(e)(2)(C)(ii)?

    Nevertheless, Amgen stressed that this petition was expressly conditional on the grant of Sandoz's petition, and that it ultimately urged the Court to deny both petitions.

    Supreme Court Building #2The Supreme Court's action on Monday can be seen as a delay tactic on the part of the Court.  Obviously, no decision on whether the Court will hear this case will be made before the Court's next term.  Moreover, the Solicitor General does not have a deadline for expressing the views of the United States.  Nevertheless, this still can be seen as a positive for Sandoz.  It would not have been surprising for the Court to deny the petition outright; especially considering the Federal Circuit opinion was the first significant interpretation of the BPCIA by a Court of Appeals.  In fact, Amgen argued in its opposition brief that this case was a poor vehicle for review because the issues are still be developed by the lower courts.  However, the Supreme Court did not wait for the case law to develop at the PTAB and the Federal Circuit regarding the new IPR proceedings, but instead took up the first appeal it could, which culminated in the Court's opinion in Cuozzo v. Lee on Monday.  As a result, a lot could hinge on the views of the United States, which we will likely see later this year.  Patent Docs will continue to monitor this case and provide updates as necessary.

  • Cuozzo Speed Technologies, LLC v. Lee (2016) — Question 2 — PTAB Shenanigans and Reviewability

    By Andrew Williams —

    Supreme Court Building #3The saga of the first-filed IPR petition (IPR2012-00001) came to a close today when the Supreme Court decided the Cuozzo Speed Technologies, LLC v. Lee case.  We have been following this case ever since the PTAB issued its Final Written Decision — the first that the PTAB ever issued.  On the first question, the Court unanimously approved of the USPTO's decision to use the "broadest reasonable interpretation" standard for claim construction in IPR proceedings.  This question will be addressed in a separate post.  On the second question, six members of the Court agreed that the statute mandated that the decision to institute an IPR was not subject to judicial review.  Justice Breyer authored the decision of the Court, with Justice Alito penning a dissent on the second question, which was joined by Justice Sotomayor.

    The second question centered on the correct interpretation of 35 U.S.C. § 314(d) ("No appeal. — The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.").  Cuozzo took the position that the Board's institution of the IPR proceeding in this case was contrary to the statute.  Specifically, the PTAB had instituted trial for at least some of the claims on grounds that were not explicitly identified in the petition.  According to Cuozzo, this violated § 312(a)(3), which requires that the petition set forth the grounds for challenge "with particularity."  The Patent Office instead took the position that any issue related to institution cannot be reviewed.  Following oral argument, it was difficult to predict how the Court would resolve this question, particularly because very little of the time was dedicated to this issue.  Justice Breyer resolved the question by looking to the congressional objective in passing the AIA — to give "the Patent Office significant power to revisit and revise earlier patent grants."  As a result, he concluded that Congress intended to bar review of the Board's decisions about whether the "reasonable likelihood" standard of ultimately prevailing in the case had been met.  Justice Breyer also believed that cases "where a patent holder grounds its claim in a statute closely related to that decision to institute" the IPR proceedings cannot be reviewed.

    This did not mean that Justice Breyer believed that all questions related to institution should be unreviewable.  For example, the decision states that the Justices "need not, and do not, decide the precise effect of §314(d) on appeals that implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond 'this section.'"  Therefore, according to the Court, constitutional questions related to due process could still be appealed.  In addition, if the Patent Office were to partake in "shenanigans," the Federal Circuit could set aside the decision as "'contrary to constitutional right,' 'in excess of statutory jurisdiction,' or 'arbitrary [and] capricious.'"  Justice Breyer used as an example the invalidation of a claim as indefinite under § 112, which would be a clear violation of statutory authority for IPR proceedings.  Justice Alito's dissent-in-part disagreed with the majority.  Under his understanding, many more institution decisions would be reviewable because of the strong presumption favoring judicial review.  This dictated his conclusion that this statutory provision did not prevent any review, but merely channeled any appeal though the Board's final written decision.

    While the majority appears to have drawn a bright line between what is and is not reviewable, the line gets fairly blurry when considering some of the questions that the Federal Circuit has determined are unreviewable.  At first glance, the new standard looks similar to the "authority to invalidate" test articulated by the Federal Circuit appeared in Versata Dev. Grp., Inc. v. SAP America, Inc.  In that case, the Federal Circuit reviewed whether the patent at issue was a proper CBM patent — whether it was a patent covering a financial product or service, and whether the patent was for a technological invention.  The Federal Circuit distinguished this case from its Cuozzo case (In re Cuozzo) by pointing to the distinction between institution and invalidation.  Because the determination whether the patent at issue was a covered business method patent related to the Board's "authority to invalidate," review of the decision was found to be appropriate.  In other words, if the patent at issue was not a proper CBM patent, it would be outside the statutory jurisdiction of the Board.  Therefore, without necessarily using the same terminology, the Cuozzo v. Lee decision is consistent with allowing review of CBM patent determinations.

    The difficulties arise because the "authority to invalidate" standard did not take hold at the Federal Circuit outside the context of CBMs.  Many hypotheticals have been posited about the horrors that could result from the Federal Circuit's refusal to review any institution decision.  Probably the most concrete example was when the Court refused to review whether a third-party was a real party in interest.  This case, Achates Reference Publ'g, Inc. v. Apple Inc., did not rest on that singular question, however, but rather the Federal Circuit concluded it could not review any decision related to the statutory time-bar — whether a petitioner was barred from filing an IPR petition because it had been sued in district court more than one year beforehand.  Justice Breyer's decision suggests that this situation would fall within the "shenanigans" standard and thus allow review of such cases.  However, because of the broad language used by the Supreme Court, this decision means that only time will tell if the Federal Circuit agrees.  Therefore, even though we won't have any more Cuozzo decisions, the fallout from Cuozzo v. Lee is likely to be felt for years to come.

    Cuozzo Speed Technologies LLC v. Lee (2016)