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  • Webinar on Use of Objective Evidence in IPRs, Patent Prosecution, and Litigation

    AIPLA #1The American Intellectual Property Law Association (AIPLA) will be offering a webinar entitled "What's the Trick? Making Effective Use of Objective Evidence in IPRs, Patent Prosecution, and Litigation" on June 8, 2016 from 12:30 – 2:00 pm (Eastern).  Tom Irving and M. Paul Barker of Finnegan Henderson Farabow Garrett & Dunner will examine case examples from the courts, the PTAB, and prosecution on the successful and unsuccessful use of objective evidence of nonobviousness and will discuss how the necessary link between the evidence and the merits of the claimed invention may be made, and also discuss developing and using objective evidence of nonobviousness during prosecution to increase the likelihood of success in later proceedings.

    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.

  • Webcast on Patent Settlement Agreements

    The Knowledge GroupThe Knowledge Group will offer a live webcast entitled "Patent Settlement Agreements: Impacts on Antitrust Enforcement" on May 27, 2016 from 10:00 am to 12:00 pm (ET).  Lauren K. Peay, Federal Trade Commission, Health Care Division; Brian Ellman, Vice President, Analysis Group, Inc.; Zoya Marriott, Cornerstone Research; Professor Daryl Lim, Associate Professor and Director, Center for Intellectual Property, Information Technology & Privacy Law, John Marshall Law School; and David Blackburn, Vice President, NERA Economic Consulting will offer a 2016 outlook on current issues relating to patent settlement agreements and their impact on antitrust enforcement, and also share helpful approaches when entering into settlements involving competitors to avoid antitrust issues.  The panel will cover the following issues:

    • Patent Settlement Concerns
    • Overview of Antitrust Laws
    • Anticompetitive Issues
    • Actavis Opinion: Guidance and Ambiguity
    • Economists' Approaches to Evaluating "Reverse Payments"
    • Application and Interpretation of Actavis Decision in Lower Courts
    • Recent FTC Actions
    • Insights on Recent Cases

    The registration fee for the webcast is $299 to $349 (regular rate) or $199 (government/nonprofit rate).  Those interested in registering for the webinar can do so here.

  • U.S. Trade Representative Issues 2016 Special 301 Report

    By Kevin E. Noonan —

    U.S. Trade RepresentativeOn April 27th, Ambassador Michael B.G. Froman, U.S. Trade Representative (USTR), issued the 2016 Special 301 Report.  According to the USTR website, "[i]ntellectual property is a critical source of economic growth and high-quality jobs for the United States, and it is more important than ever to prevent foreign governments and competitors from ripping off United States innovators who are trying to support high-paying jobs by exporting their goods and services to consumers around the world," language much more assertive and less conciliatory than the USTR has used in recent years.  Noting that this is the final Special 301 Report of the Obama Administration, Ambassador Froman states that this Report "underlines the great value that unique American creativity and innovation  have for millions of families — ranging from small businesses owners to medical researchers to employees of the recording and motion picture industries — as well as the efforts of the executive branch, our bipartisan partners in Congress, and the United States business community to vigilantly monitor abuses of American intellectual property rights anywhere they exist in the world."  He backs up these assertions with dollars and cents logic:  1.9 million American jobs and $121 billion in total wages from the U.S. film and television industries, for example, and $16.3 billion in exports created by 89,000 small businesses, figures submitted by the Motion Picture Association of America's CEO, former Senator Chris Dodd.  The aggressive stance taken by Ambassador Froman is echoed (and applauded) by Cary Sherman, CEO of the Recording Industry Association of America (RIAA), who cites the Report as "an actionable moment for named countries to step up and address these problems."

    As it did last year, the Report highlights China as a country that, although still on the Priority Watch List has made "wide-ranging intellectual property law reform efforts" as well as "certain positive enforcement initiatives" but notes that there are both "new and longstanding concerns about IPR protection and enforcement," especially with regard to "trade secret theft, rampant online piracy and counterfeiting, continued high levels of physical pirated and counterfeit goods, and localization requirements that condition market access on use of IPR developed in or transferred to China."  The USTR also cites India for what he calls "lack of sufficient measurable improvements to its IPR framework," despite "robust engagement and positive steps forward on IPR protection and enforcement" by the Indian government.  The Report also promises — or threatens — to undertake "out-of-cycle review [(OCR)] should either positive or negative developments warrant (and it remains to be seen whether the latest pronouncements regarding compulsory licensing of pharmaceuticals in India rise to a level to so warrant).

    (In this regard the Report also announced that the USTR will conduct OCRs for Colombia, Pakistan, Tajikistan, and Spain, seemingly as an incentive, "to promote engagement and progress on specific IPR opportunities and challenges identified in this year's review.")

    The Report does mention some positive developments, in Pakistan, Ecuador, Tajikstan, Belarus, and Trinidad & Tabago, but has added Switzerland to the Priority Watch List due to diminished protection of copyrighted works online.

    The Report is promulgated pursuant to Section 182 of the Trade Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of 1988 and the Uruguay Round Agreements Act (enacted in 1994).  The Trade Representative is required under the Act to "identify those countries that deny adequate and effective protection for IPR or deny fair and equitable market access for persons that rely on intellectual property protection."  The Trade Representative has implemented these provisions by creating a "Priority Watch List" and "Watch List."  Placing a country on the Priority Watch List or Watch List is used to indicate that the country exhibits "particular problems . . . with respect to IPR protection, enforcement, or market access for persons relying on intellectual property."  These watch lists are reserved for countries having "the most onerous or egregious acts, policies, or practices and whose acts, policies, or practices have the greatest adverse impact (actual or potential) on the relevant U.S. products."  New this year is implementation of the Trade Facilitation and Trade Enforcement Act of 2015, signed into law by President Obama on February 24, 2016.  The Act amended the statute to require the USTR "to develop action plans for each country that USTR identifies as a Priority Watch List country and that has been on the Priority Watch List for at least one year," as well as to "consider whether foreign countries provide adequate and effective means for U.S. persons to secure, exercise and enforce their rights relating to trade secrets."

    The USTR reviewed 73 of this country's trading partners and identified eleven countries on a "Priority Watch List" (down from thirteen last year) and another 23 countries on the "Watch List" (down by one compared with last year), all relating to deficiencies in intellectual property protection in these countries.  The Priority Watch List in the 2016 Report cites Algeria, Argentina, Chile, China, India, Indonesia, Kuwait, Russia, Thailand, Ukraine, and Venezuela, all countries that were also on the list last year; leaving the list this year is Pakistan.  Countries on this list "do not provide an adequate level of IPR protection or enforcement, or market access to persons relying on intellectual property protection."  On the Watch List this year are Barbados, Bolivia, Brazil, Bulgaria, Canada, Columbia, Costa Rica, Dominican Republic, Ecuador (back on the list this year), Egypt, Greece, Guatemala, Jamaica, Lebanon, Mexico, Pakistan (back on the list this year but removed from the Priority Watch List), Peru, Romania, Switzerland (new to the list this year), Turkey, Turkmenistan, Uzbekistan, and Vietnam.  Belarus, Paraguay, Tajikstan and Trinidad & Tobago have left the list compared to last year.

    The Report lists a "wide range of concerns, including "(a) the deterioration in IPR protection and enforcement in a number of trading partners; (b) reported inadequacies in trade secret protection in China, India, and elsewhere; (c) troubling "indigenous innovation" policies that may unfairly disadvantage U.S. right holders in markets abroad; (d) the continuing challenges of online copyright piracy; (e) measures that impede market access for U.S. products embodying IPR and U.S. entities that rely upon IPR protection; and (f) other ongoing, systemic IPR enforcement issues in many trading partners around the world."

    The Report notes the USTR's continued efforts to enhance public engagement.  In addition to written comments (from 62 interested parties, including 16 trading partner governments), there was a public hearing on March 2, 2016 that heard testimony from "representatives of foreign governments, industry, and non-governmental organizations" (where the comments, video, and transcript of the hearing are available on the USTR website).

    The Report contains two Sections (on "Developments in Intellectual Property Rights Protection and Enforcement" and "Country Reports") and two Annexes on particular issues (the statutory bases of the Report, and government technical assistance and capacity building efforts).  In Section I, the Report reiterates its purpose, "to support and implement the Administration's commitment to protect vigorously the interests of American holders of IPR in other countries while preserving the incentives that ensure access to, and widespread dissemination of, the fruits of innovation and creativity."  Infringement can result in "significant financial losses," undermines the advantages of American competitiveness in the global marketplace stemming from U.S. innovation and creativity, and could even be a public danger (citing counterfeit medicines, car parts, and semiconductors).  Despite these ominous beginnings, the Report notes some "positive developments" in the past year, including a broad-ranging overhaul of [] intellectual property-related laws and regulations" in the PRC, at least some of which  "appear to be consistent with recommendations offered by the United States and statements by the Government of China expressing a commitment to protect and enforce IPR."  In addition, the Report cites an agreement by the General Administration of Customs in China and the U.S. National Intellectual Property Rights Coordination Center regarding collaboration on customs law enforcement (expanding on an earlier agreement).  In Honduras, the Report cites "significant actions to improve IPR protection and enforcement."  Honduras had been the subject of a 2015 OCR and pursuant to an agreement developed an "Intellectual Property Work Plan" that strengthened criminal penalties for IPR violations, among other things.  These efforts kept Honduras off the Watch List for 2016 and called Honduras's approach to IPR protection "a model for similarly situated countries in Central America" (indeed, Costa Rica is developing a similar plan with U.S. assistance).

    The Report calls out Paraguay for its efforts to improve IPR protections, which resulted in the country being removed from the Watch List this year.  After an OCR, Paraguay signed a Memorandum of Understanding with the U.S. where it committed to "take specific steps to improve its IPR protection and enforcement environment" as well as participate in bilateral efforts with the U.S. to strengthen its IPR protection and rights enforcement regime.

    The Report notes a "global trend" for improving copyright protection, evidenced by actions by Canada, Jamaica and Italy.  And in Africa, Kenya was mentioned for taking steps towards reducing counterfeiting.

    Two international agreements were mentioned in this section of the Report.  The 1991 Act of the International Union for the Protection of New Varieties of Plants Convention, which "requires member countries to grant IPR protection to breeders of new plant varieties," now has 55 members, including Canada, Montenegro, and Tanzania, which joined this year.  Also mentioned are the WIPO Internet Treaties (the World Intellectual Property Organization (WIPO) Performances and Phonograms Treaty (WPPT) and the WIPO Copyright Treaty (WCT)), each of which has 94 parties including Burundi (April 12, 2016).

    The Report contains once again this year a subsection on "best practices" among U.S. trading partners, including "predictability, transparency, and meaningful engagement between governments and stakeholders" in developing IPR law, regulations and practices (emphasis in the Report).  These characteristics are important not because the USTR thinks so, but the Report states that "[s]takeholders report that such transparency and participation allow governments to avoid unintended consequences and facilitate stakeholder compliance with legislative and regulatory changes.  In this regard the Report cites India, for issuing for public comment a draft of its proposed amendments to its IPR regulations.  A second point highlighted in the Report is cooperation among various government agencies having an interest in IPR, which the Report states the U.S. has implemented and it encourages our trading partners to join in those efforts; Paraguay, Mexico, and Malaysia are reported to have made strides in this area.  Specialized IPR enforcement units in Brazil and Malaysia are also mentioned for fighting counterfeiting and IPR piracy.

    As in last year's Report, this Report highlights the development and participation in "innovative mechanisms that enable government and private sector rights holders to donate or license pharmaceutical patents voluntarily and on mutually-agreed terms and conditions" (emphasis in the Report).  Some of the benefits of such programs again this year cited in the Report are "to facilitate the diffusion of technology in support of public policy goals," citing the U.S. government's participation in the Medicines Patent Pool under the auspices of the World Health Organization and participation of the U.S., Brazil, and South Africa in the WIPO Re:Search Consortium, which the Report characterized as "a voluntary mechanism for making IPR and know-how available on mutually-agreed terms and conditions to the global health research community to find cures or treatments for neglected tropical diseases, malaria, and tuberculosis."

    The Report includes this year a best practice of raising awareness about IPR protection, citing the Brand Protection Group in Lebanon and the Business Action to Stop Counterfeiting and Piracy (BASCAP) in the Philippines.  The Report also opines that "use and procurement of licensed software by government agencies sets the right example for private enterprises, exemplifying Mexico for obtaining Verafirm certification of software used by the Ministry of Economy, the Tax Administration (SAT) and the Mexico Institute of Industrial Property (IMPI)" (emphasis in the Report).  Finally in the "best practices" section the Report cites the information in Annex 2 regarding "active participation of government officials in technical assistance and capacity building" as a best practice (emphasis in the Report).

    Several multilateral and "plurilateral" initiatives were also mentioned in the Report.  As in the Reports from the last several years, these included the Trans-Pacific Partnership (TPP) Agreement, between the U.S. and Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, going into considerably more detail on the provisions of the treaty regarding copyright, trademark and geographical indications, trade secrets, patents, pharmaceuticals, and enforcement provisions than in earlier Reports (no doubt because the final version of the treaty has been signed by the parties).  Also mentioned again this year is the Transatlantic Trade and Investment Partnership (T-TIP) between the U.S. and the EU; and actions by the World Trade Organization in support of IP rights.  The latter discussion includes initiatives like the TRIPS Council initiative "IP and Innovation: Education and Diffusion" between the United States, Australia, the EU, Hong Kong, Japan, Peru, Russia, Singapore, and Taiwan.  Bilateral and regional initiatives cited in the Report include the U.S.-China Joint Commission on Commerce and Trade (JCCT) and the U.S.-China Strategic and Economic Dialogue (S&ED) and free trade agreements and Trade and Investment Framework Agreements (TIFAs), including ones between the U.S. and Argentina, Armenia, and Laos, respectively.

    Regional cooperation efforts cited in the Report include the Asia-Pacific Economic Cooperation (APEC) Intellectual Property Experts Group (IPEG) regarding a U.S. proposal to "identify best practices in trade secret protection" and "enhance protection and enforcement of trade secrets"; USTR Trade Preference Program Reviews; and efforts to engage with "members of the Caribbean Community and Common Market (CARICOM)."

    The Report then notes that the U.S. "remains seriously concerned by reports that U.S. songwriters, composers, and music publishers are reportedly not compensated or undercompensated for the public performance of their musical works on TV and radio broadcasts and via cable transmissions in Antigua & Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Lucia, St. Vincent & the Grenadines, and Trinidad & Tobago."

    The Report then discusses IPR protection and enforcement, including border enforcement against counterfeiting.  This problem persists "on a global scale," according to the Report, and counterfeited goods include "semiconductors and other electronics, chemicals, automotive and aircraft parts, medicines, food and beverages, household consumer products, personal care products, apparel and footwear, toys, and sporting goods."  The Report cites China as a source, with these counterfeit goods passing through Indonesia and the United Arab Emirates to countries including Brazil, Nigeria, and Thailand.  The Report goes on the assert that:

    Trademark counterfeiting harms consumers, legitimate producers, and governments.  Consumers may be harmed by fraudulent and potentially dangerous counterfeit products, particularly medicines, automotive and airplane parts, and food and beverages that may not be subjected to the rigorous "good manufacturing practices" used for legitimate products.  Producers and their employees face diminished revenue and investment incentives, an adverse employment impact, and loss of reputation when consumers purchase fake products.  Governments may lose tax revenue and find it more difficult to attract investment because infringers generally do not pay taxes or appropriate duties and often disregard product quality and performance.

    The Report voices "particular concern" by the U.S. over counterfeit pharmaceuticals distributed by China, Brazil, Guatemala, India, Indonesia, Lebanon, Peru, and Russia, with a best estimate that "up to 20 percent" of drugs sold in India being counterfeit, and reports that 97% of the counterfeit drugs seized at the U.S. border in 2015 were from China, Hong Kong, India, and Singapore (although the Report goes on to commend efforts by Hong Kong and Singapore to increase efforts against counterfeit drugs).  This section of the Report ends with a recitation of efforts the U.S. has made to encourage and assist our trading partners to reduce or eliminate counterfeit goods entering the stream of global commerce from their countries.

    The Report then examines trends in trademark protection, asserting that "[t]rademarks help consumers distinguish providers of products and services from each other and thereby serve a critical source identification role."  Despite their importance, the Report cites "legal and procedural obstacles" in many countries (such as China) in securing trademark rights, or in challenging trademark appropriation (Argentina, Brazil, India, Malaysia, Mexico, Panama, the Philippines, and Russia).

    Trademark issues and Internet domain name disputes are also mentioned in the Report, due to the importance of these IPRs in distinguishing the source of products and services.  China, Denmark, Germany, The Netherlands, Spain, Sweden, and Switzerland are named as countries where protection is ineffective or governments are uncooperative.

    Turning to software and digital piracy, the Report notes that governments can be the biggest "bad actors" in unauthorized use of software programs, citing a 2014 study by BSA | The Software Alliance, that "the commercial value of unlicensed software globally is at least $62 billion."  "Further work" in ensuring that governments abide by and respect software licensing is needed with "certain trading partners," including China, Macedonia, Pakistan, Panama, Paraguay, South Korea, Taiwan, Tajikistan, Thailand, Turkmenistan, Ukraine, and Vietnam.

    For piracy based on broadband access, the Report cited Brazil, Canada, China, India, Russia, Switzerland, and Ukraine as countries having "commercial-scale IPR counterfeiting and piracy," and China, India, Paraguay, and Vietnam for optical disk piracy.  Additional examples of Internet-based piracy cited in the Report include pirated retransmission of sports programming; "camcorded" copies of first-run movies; "'pirate servers' or 'grey shards' that allow users to play unauthorized versions of cloud-based entertainment software; online distribution of software and devices that allow for the circumvention of TPMs, including "game copiers" and mod chips that allow users to play pirated games on physical consoles; and set-top or media boxes preloaded with large volumes of pirated content or configured with apps to facilitate access to infringing websites."

    Once again this year the Report contains a subsection on trade secrets and forced technology transfer.  Trade secret theft (the Report eschewing the more genteel "misappropriation" moniker) " threatens to diminish U.S. competitiveness around the globe, and puts U.S. jobs at risk."  The U.S. Office of the National Counterintelligence Executive (ON-CIX) cites China as an example of "specific gaps in trade secret protection and enforcement" in a publication entitled "Foreign Spies Stealing U.S. Economic Secrets in Cyberspace," which states expressly that "Chinese actors are the world's most active and persistent perpetrators of economic espionage."  China and India are cited as countries where effective remedies for trade secret misappropriate are "difficult to obtain" and trade secret theft was cited as involving "departing employees . . ., failed joint ventures, cyber intrusion and hacking, and misuse of information submitted to government entities for purposes of complying with regulatory obligations."  The Report also cites a publication by the U.S. Intellectual Property Enforcement Coordinator on February 20, 2013 of "Administration Strategy on Mitigating the Theft of U.S. Trade Secrets," which "highlights U.S. efforts to combat the theft of trade secrets that could be used by foreign governments or companies to gain an unfair commercial and economic advantage."

    The Report also notes an increase in foreign government efforts "touted as means to incentivize domestic 'indigenous innovation,' but that, in practice, can disadvantage U.S. companies, such as by requiring foreign companies to give up their IPR as the price of market entry."  These practices can raise barriers to market entry and discourage foreign investment into "'local' manufacturers, distributors, and retailers."

    Certain foreign governments, under the guise of promoting "indigenous innovation" can adopt "trade-distortive policies," the Report citing as examples:

    • Requiring the transfer of technology as a condition for obtaining regulatory approvals or otherwise securing access to a market, or for allowing a company to continue to do business in the market;
    • Directing SOEs in innovative sectors to seek non-commercial terms from their foreign business partners, including with respect to the acquisition and use or licensing of IPR;
    • Providing national firms with a competitive advantage by failing to effectively enforce foreign-held IPR, including patents, trademarks, trade secrets, and copyrights;
    • Failing to take meaningful measures to prevent or deter cyber intrusions and other unauthorized activities;
    • Requiring use of, or providing preferences to, products or services that contain locally-developed or owned IPR or that are produced by local manufactures or service providers, including with respect to government procurements;
    • Manipulating the standards development process to create unfair advantages for national firms, including with respect to the terms on which IPR is licensed; and
    • Requiring the (often unnecessary) submission of excessive confidential business information for regulatory approval purposes and failing to protect such information appropriately.

    China, India, Indonesia, and Nigeria are specifically identified as countries having policies that amount to such enforced technology transfer.

    Next the Report contains a section on "Market Access and Pharmaceutical and Medical Device Innovation."  Algeria, India, and Indonesia are noted as being of particular concern regarding the latter category of IPR, as well as Algeria, Austria, Belgium, China, Colombia, Czech Republic, Ecuador, Hungary, Italy, Korea, Lithuania, New Zealand, Portugal, Romania, Taiwan, and Turkey as countries having "issues" related to "pharmaceutical innovation and market access," with specific examples set forth in the Report for several countries.

    New this year is a section in the Report on geographical indications, by which is meant the practice of distinguishing local from imported products based on geographical naming conventions.  The European Union is cited as being a particular concern because it comprises an organized agenda that "raises concerns regarding the extent to which it impairs the scope of trademark protection, which remains among the most effective ways for companies, including SMEs, to create value, promote their goods and services, and protect their brands, including with respect to food and beverage products covered by the EU GI system."  This has negative economic effects, for example there being "a significant trade deficit" between the U.S. and Europe, citing "the case of cheese [where] the EU exports nearly $1 billion of cheese to the United States each year [and] the United States exports only about $6 million to the EU."  The U.S. is engaged in bilateral negotiations with Canada, China, Costa Rica, El Salvador, Japan, Jordan, Morocco, the Philippines, South Africa, and Vietnam with the goals of:

    • Ensuring that the grant of GI protection does not violate prior rights (for example, in cases in which a U.S. company has a trademark that includes a place name);
    • Ensuring that the grant of GI protection does not deprive interested parties of the ability to use common names, such as parmesan or feta;
    • Ensuring that interested persons have notice of, and opportunity to oppose or to seek cancellation of, any GI protection that is sought or granted;
    • Ensuring that notices issued when granting a GI consisting of compound terms identify its common name components; and
    • Opposing efforts to extend the protection given to GIs for wines and spirits to other products.

    Once again the Report contains a subsection on IPR and the environment, the Report stating that "[s]trong IPR protection and enforcement are essential to promoting investment in innovation in the environmental sector" with innovation "not only promot[ing] economic growth and support[ing] jobs, but also [being] critical to responding to environmental challenges."  On the other hand, "[c]ertain national policies and practices advanced domestically and in multilateral fora may have the effect of undermining innovation needed to address serious environmental challenges."  India's National Manufacturing Policy, which "promotes the compulsory licensing of patented technologies as a means of effectuating technology transfer with respect to green technologies," is cited as an example of a policy that "will discourage, rather than promote, investment in and dissemination of green technology innovation, including those technologies that contribute to climate change adaptation and mitigation."  On the other hand, UN Framework Convention on Climate Change (UNFCCC) "succeeded in enshrining the critical role of technological innovation in the context of climate change" as part of the Paris Agreement.

    As it has for the past few years, the Report contains a subsection on "Intellectual Property and Health Policy," again specifically mentioning the 2001 Doha Declaration on the TRIPS Agreement.  The Report states that the Declaration "recognized the gravity of the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria, and other epidemics," and that the U.S. "respects [our] trading partners' right to protect public health and, in particular, to promote access to medicines for all."  The U.S. "strongly supports" the WTO General Council Decision on the Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health.

    Section I of the Report closes with a discussion of the WTO and particularly its dispute resolution provisions as ways to address issues raised in this and earlier Reports.  This portion of the Report contains a synopsis of U.S. efforts to address issues between its trading partners using these mechanisms.  Finally, the Report contains a section on dispute settlement and enforcement under the auspices of the WTO.

    Section II of the Report is a detailed, country-by-country discussion for each country on the Priority Watch List and the Watch List, relating to the activities (or lack thereof) of each country that results in placement of that country on these lists.

    As it has for the past several years (and across otherwise very different Administrations), the U.S. Trade Representative Special 301 Report provides insights into both the concerns of U.S. IP rights holders and the Administration's intentions to work with, cajole, coerce, or threaten other countries to increase protection for IP rights of U.S. IP rights holders.  By including subsections on the importance of IPR for the environment, and the negative effects of piracy in the pharmaceutical and other areas, the Report seems less focused on mere threats of enforcement and more on developing a global consensus that protection of IPR is an important component of world economic progress for all.  However, the tone and tenor of this final Report from the Obama Administration is more assertive regarding IP rights and America's intention to negotiate international agreements that protect American innovation and commercial interests.

    For additional information regarding this and other related topics, please see:

    • "U.S. Trade Representative Issues 2015 Special 301 Report," April 30, 2015
    • "U.S. Trade Representative Issues 2014 Special 301 Report," May 19, 2014
    • "U.S. Trade Representative Issues 2013 Special 301 Report," May 30, 2013
    • "U.S. Trade Representative Issues 2012 Special 301 Report," May 1, 2012
    • "U.S. Trade Representative Releases Special 301 Report on Global IPR," May 4, 2011
    • "U.S. Trade Representative Releases Special 301 Report on Global IPR," May 19, 2010
    • "New Administration, Same Result: U.S. Trade Representative's Section 301 Report," May 6, 2009
    • "Congressmen Criticize U.S. Trade Representative over Special 301 Report," July 1, 2008
    • "U.S. Continues Efforts to Protect Patent Rights Abroad," April 29, 2008

  • Court Report — Part II

            By Sherri Oslick —

    Gavel About Court Report:  Each week we will report briefly on recently filed biotech and pharma cases.

    Amgen Inc. et al. v. Sandoz Inc. et al.
    3:16-cv-02581; filed May 12, 2016 in the Northern District of California

    • Plaintiffs:  Amgen Inc.; Amgen Manufacturing, Ltd.
    • Defendants:  Sandoz Inc.; Sandoz International GmbH; Sandoz GmbH; Lek Pharmaceuticals, d.d.

    Infringement of U.S. Patent Nos. 8,940,878 ("Capture Purification Processes for Proteins Expressed in a Non-Mammalian System" issued January 27, 2015) and 5,824,784 ("N-Terminally Chemically Modified Protein Compositions and Methods," issued October 20, 1998) based on Sandoz's filing of an aBLA to market a biosimilar version of Amgen's Neulasta® (pegfilgrastim, used to decrease the incidence of infection in patients receiving myelosuppressive anti-cancer drugs).  View the complaint here.


    Rhodes Pharmaceuticals L.P. v. Actavis, Inc. et al.
    2:16-cv-02667; filed May 11, 2016 in the District Court of New Jersey

    • Plaintiff:  Rhodes Pharmaceuticals L.P.
    • Defendants:  Actavis, Inc.; Actavis Elizabeth LLC; Actavis LLC; Allergan PLC

    Infringement of U.S. Patent Nos. 6,419,960 ("Controlled Release Formulations Having Rapid Onset and Rapid Decline of Effective Plasma Drug Concentrations," issued July 16, 2002), 7,083,808 ("Controlled/Modified Release Oral Methylphenidate Formulations," issued August 1, 2006), 7,247,318 ("Controlled Release Formulations Having Rapid Onset and Rapid Decline of Effective Plasma Drug Concentrations," issued July 24, 2007), 7,438,930 (same title, issued October 21, 2008), 8,580,310 (same title, issued November 12, 2013), and 9,066,869 (same title, issued June 30, 2015) following a Paragraph IV certification as part of Actavis' filing of an ANDA to manufacture a generic version of Rhodes' Aptensio XR® (methylphenidate hydrochloride extended-release capsules, used for the treatment of Attention Deficit Hyperactivity Disorder (ADHD)).  View the complaint here.


    Mylan Institutional LLC et al. v. Aurobindo Pharma Ltd. et al.
    2:16-cv-00491; filed May 11, 2016 in the Eastern District of Texas

    • Plaintiffs:  Mylan Institutional LLC; Apicore US LLC
    • Defendants:  Aurobindo Pharma Ltd.; Aurobindo Pharma USA Inc.; AuroMedics Pharma LLC

    Infringement of U.S. Patent Nos. 7,662,992 ("Process for Preparation of Isosulfan Blue," issued February 16, 2010) and 8,969,616 (same title, issued March 3, 2015) based on defendants' filing and approval of an ANDA to manufacture isosulfan blue products.  View the complaint here.


    Ajinomoto Co., Inc. et al. v. CJ Cheiljedang Corp. et al.
    1:16-cv-03498; filed May 10, 2016 in the Southern District of New York

    • Plaintiffs:  Ajinomoto Co., Inc.; Ajinomoto Heartland Inc.
    • Defendants:  CJ Cheiljedang Corp.; CJ America, Inc.; PT Cheiljedang Indonesia

    Infringement of U.S. Patent Nos. 7,666,655 ("Escherichia Bacteria Transformed with the yddG Gene to Enhance L-Amino Acid Producing Activity," issued February 23, 2010) and 6,180,373 ("Microorganisms for the Production of Tryptophan and Process for the Preparation Thereof," issued January 30, 2001) based on defendants' manufacture and sale of its BestAminoTM feed-grade L-tryptophan product.  View the complaint here.


    AstraZeneca LP et al. v. Watson Laboratories Inc.
    1:16-cv-00338; filed May 9, 2016 in the District Court of Delaware

    • Plaintiffs:  AstraZeneca LP; AstraZeneca AB; AstraZeneca UK Ltd.; AstraZeneca Pharmaceuticals LP
    • Defendant:  Watson Laboratories Inc.

    Infringement of U.S. Patent Nos. 6,525,060 ("Triazolo(4,5-d)pyrimidine Compounds," issued February 25, 2003), 7,250,419 ("Trisubstituted Triazolopyrimidines for Use in Platelet Aggregation Inhibition," issued July 31, 2007), and 7,265,124 ("Cristalline and Amorphous Form of a Triazolo (4,5-D) Pyridimine Compound," issued September 4, 2007) following a Paragraph IV certification as part of Watson's filing of an ANDA to manufacture a generic version of AstraZeneca's Brilinta® (ticagrelor, used to reduce the rate of cardiovascular death, myocardial infarction, and stroke in patients with acute coronary syndrome or a history of myocardial infarction).  View the complaint here.

  • In re Certain Activity Tracking Devices, Systems, and Components Thereof

    Pepys (17th century) recorded his sleep patterns, so wearable devices that record sleep patterns unpatentable?

    By Joseph Herndon —

    International Trade Commission (ITC)On April 27, 2016, the U.S. International Trade Commission (ITC) issued an Order indicating that two patents owned by Jawbone are directed to ineligible subject matter.  In a matter between activity tracking providers (Jawbone vs. Fitbit), Fitbit, Inc. filed a motion for summary determination, during an ITC proceeding, that U.S. Patent Nos. 8,961,413 and 8,073,707 are directed to ineligible subject matter under 35 U.S.C. § 101.

    The ITC found that claims of the '413 and '707 patents seek a monopoly on the abstract ideas of collecting and monitoring sleep and other health-related data, and are therefore ineligible under section 101.  No innovative concept was found to be claimed in either patent so as to save the patents from the claws of section 101.  Specifically, with respect to systems for organizing human activity, the ITC found that courts have determined that a patent is not eligible when it claims the use of computer technology to accomplish tasks that were in the past performed by human beings.

    Turning to the patents, the '413 and '707 patents are in the same patent family, and the '413 patent covers sleep monitoring, and the '707 patent adds an output step to the generic version of the computerized system using sensors for monitoring health and wellness data.

    First, the '413 patent is entitled "Wireless Communications Device and Personal Monitor," and is generally directed to a user-worn device for collecting and monitoring sleep and other health-related data.  Jawbone asserted claims 1, 2, 3, 9, 11, and 12, and claim 1 is representative and reproduced below.

    1.  A system for monitoring and reporting a human status parameter of an individual, said system comprising:
        a.  a sole, unitary housing configured to be removably mounted on said individual's body;
        b.  a first physiological sensor which automatically generates a first electronic sensor signal representative of a first physiological parameter of said individual, said sensor mounted within said housing;
        c.  a second sensor, mounted within said housing, which automatically generates a second electronic sensor signal representative of at least one of a contextual and a second physiological parameter of said individual;
        d.  a processing unit, mounted within said housing and in electronic communication with said sensors to receive said first and second electronic output signal representative of said individual's sleep-related analytical status data from at least one of said first and second electronic sensor signals, wherein the sleep-related analytical status data includes sleep onset and wake information that is derived from the at least one of said first and second electronic sensor signals; and
        e.  a transceiver unit, mounted within said housing and in electronic communication with said processing unit which receives said electronic output signal from said processing unit, said transceiver unit generating an electronic transmission output signal for reception by another device.

    Second, the '707 patent has claims that are similar to the '413 patent and add aspects of making data from the system available to the individual, "preferably over an electronic network."  The '707 patent states, however, that components of the device are well-known, and data collected can be stored in memory and uploaded "in various ways," to a personal computer, and further that once the data is received, it is optionally compressed and encrypted by any one of a variety of "well-known methods" and then sent out over a local or global electronic network.  The '707 patent goes so far as to state that electronic components of the system are off-the-shelf items available for purchase, and then lists specific products and companies offering the products.

    Section 101 — Ineligible Subject Matter

    The Supreme Court's two-step test was utilized by the ITC to determine whether the claims satisfied section 101.  In the first step, the court must decide whether a patent is drawn to an abstract idea.  If the patent claims an abstract idea, the court in the second step seeks to identify an "inventive concept" sufficient to transform the claimed abstract idea into patent-eligible subject matter.  The limitations must "narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself."

    The '413 patent

    Step One: The ITC stated that claim 1 of the '413 patent describes steps and means for collecting and recording information about an individual's sleep status using conventional electronic components housed in a wearable device, and that utilizing conventional electronic devices to obtain and manipulate sleep-related data of an individual is an abstract idea bereft of any innovative technological concept.  The ITC found that this type of information can be and has been collected and recorded by human minds and hands, and like other methods of organizing human activity that collect and manipulate data using a general-purpose computer, discloses an abstract idea directed towards ineligible subject-matter.

    The ITC stated that monitoring sleep patterns using generic sensors and computer processors does not make claim 1 of the '413 patent less abstract.  Referring to the Ultramercial decision, the ITC noted that a process of collecting data, organizing it in a computer database, and generating reports from the database to be communicated to the product's user is "an abstraction."

    The ITC found that "[r]ecording times of sleep and wakefulness is a function that can be carried out in the human brain by an individual or by someone observing the individual, with or without the use of sensors," and thus, because such methods can be performed mentally or are the equivalent of human mental work, the methods are unpatentable abstract ideas.

    The ITC went so far as to say that human beings have recorded their sleep patterns for ages, and that the 17th century English diarist Samuel Pepys recorded this fact using quill and paper, and he passed it on to generations of readers over the centuries by means of print media.

    Even assuming that Pepys was the first person on earth to invent the idea of organizing the events of his life and recording them in a diary, Pepys would not be permitted under Alice to patent his system so as to preclude others from using a quill and paper to record, for example, the time they awoke each day.  Moreover, if Pepys used a ball point pen to record his diary entries more quickly and easily than with his quill, he still could not patent his system of organizing and recording the events of his daily life by writing them down on paper, so as to compel other diarists to pay him when they recorded, using a ball point pen, the time they awoke.  It follows that, even if Pepys owned a unitary, wearable housing containing electronic components that could organize the events of his daily life and enable him to blog on the Internet that he was "up betimes" (which is exactly the sort of thing Pepys would do), he still would not be allowed under Alice to obtain a patent to exclude others from using computers to organize, record and transmit data about their own sleep habits.  Obviously, if Pepys had invented quill, paper, pen, electronic sensors, processors, and transceivers, he could patent his inventions and prevent others from using these devices without a license during the statutory period to make a record of the days of their lives, but he did not.

    That the '413 patent claims physical components does not rescue it from ineligibility.  The ITC concluded that here, as in Alice, the recitation of a system consisting of "a handful of generic computer components" and a wearable device to house them is in substance no different than the abstract idea itself.

    Step Two: The generic, off-the-shelf components included in the '413 patent's system lack any inventive aspect.

    The '707 Patent

    Step One: The ITC similarly found that the independent claim of the '707 patent claims an abstract idea:  collecting information about an individual's health status and presenting information to the individual based on the data obtained.

    Jawbone asserted that human beings cannot perform the functions of its patented system; but the ITC found that there is nothing to stop human beings from making the same calculations that a computer can perform using data derived from conventional sensors.

    Jawbone claims that the system "transforms" the quality of the data, but the ITC stated that the actual claims do not encompass any transformation:  the data inputs are manipulated in conventional, programmable devices that present the results to the user.  The data remain data, and the patent describes only the use of generic computer functions using known methods.

    Step Two: The '707 patent describes no technological advance and relies purely on conventional electronic devices.

    Perhaps in this instance, based on how courts have been invalidating software claims with ease, looking forward some claims of this type could have been drafted more specifically to define how the first and second electronic output signal is representative of said individual's sleep-related analytical status data, or to define how the sleep onset and wake information "is derived from" the at least one of said first and second electronic sensor signals.  Without definitions, and only the broad/vague recitation, the court effectively ignored such limitations in the claims.  Such limitations also seem to go to the heart of novel aspects, and could use additional details to guard against section 101 attacks.

    Order by Dee Lord, Administrative Law Judge

  • Court Report

            By Sherri Oslick —

    Gavel About Court Report:  Each week we will report briefly on recently filed biotech and pharma cases.

    Endo Pharmaceuticals Inc. v. Impax Laboratories, Inc.
    2:16-cv-02526; filed May 6, 2016 in the District Court of New Jersey

    Infringement of U.S. Patent Nos. 8,309,122 ("Oxymorphone Controlled Release Formulations," issued November 13, 2012), 8,329,216 (same title, issued December 11, 2012), and 8,808,737 ("Method of Treating Pain Utilizing Controlled Release Oxymorphone Pharmaceutical Compositions and Instruction on Dosing for Renal Impairment," issued August 19, 2014) in conjunction with Impax's manufacture and sale of a generic version of Endo's Opana® ER (oxymorphone hydrochloride, used to treat moderate to severe pain in patients requiring continuous, around-the-clock opioid treatment for an extended period of time).  View the complaint here.


    Imprimis Pharmaceuticals, Inc. v. Regents of the University of California et al.
    3:16-cv-01063; filed May 3, 2016 in the Southern District of California

    • Plaintiff:  Imprimis Pharmaceuticals, Inc.
    • Defendants:  Regents of the University of California; Urigen Pharmaceuticals, Inc.

    Declaratory judgment of invalidity of U.S. Patent No. 7,414,039 ("Interstitial Therapy for Immediate Symptom Relief and Chronic Therapy in Interstitial Cystitis," issued August 19, 2008) relating to certain of Imprimis' commercialization of its Hep-Lido-A product (used to treat interstitial cystitis).  View the complaint here.


    Aurobindo Pharmaceuticals Ltd. et al. v. Daiici Sankyo, Inc. et al.
    1:16-cv-04876; filed May 2, 2016 in the Northern District of Illinois

    • Plaintiffs:  Aurobindo Pharmaceuticals Ltd.; Aurobindo Pharma, Inc.
    • Defendants:  Daiici Sankyo, Inc.; Daiichi Sankyo Co., Ltd.; Mylan Pharmaceuticals Inc.

    Declaratory judgment of non-infringement of U.S. Patent No. 6,878,703 ("Pharmaceutical Composition," issued April 12, 2005) in conjunction with Aurobindo's filing of ANDAs to manufacture a generic version of Daiichi's Benicar® (olmesartan medoxomil, used to treat hypertension) and Benicar® HCT (olmesartan medoxomil/ hydrochlorothiazide, used to treat hypertension).  View the complaint here.


    Otsuka Pharmaceutical Co., Ltd. v. Zhejiang Huahai Pharmaceutical Co., Ltd. et al.
    1:16-cv-02476; filed May 2, 2016 in the District Court of New Jersey

    • Plaintiff:  Otsuka Pharmaceutical Co., Ltd.
    • Defendants:  Zhejiang Huahai Pharmaceutical Co., Ltd.; Huahai US Inc.; Prinston Pharmaceutical Inc.; Solco Healthcare U.S., LLC

    Infringement of U.S. Patent No. 9,089,567 ("Method of Treating Cognitive Impairments and Schizophrenias," issued July 28, 2015) following Zhejiang's filing of an ANDA to manufacture a generic version of Otsuka's Abilify® (aripiprazole, used to treat bipolar disorder and schizophrenia).  View the complaint here.


    Otsuka Pharmaceutical Co., Ltd. v. Zhejiang Huahai Pharmaceutical Co., Ltd. et al.
    1:16-cv-02475; filed May 2, 2016 in the District Court of New Jersey

    • Plaintiff:  Otsuka Pharmaceutical Co., Ltd.
    • Defendants:  Zhejiang Huahai Pharmaceutical Co., Ltd.; Huahai US Inc.; Prinston Pharmaceutical Inc.; Solco Healthcare U.S., LLC

    Infringement of U.S. Patent No. 8,759,350 ("Carbostyril Derivatives and Serotonin Reuptake Inhibitors for Treatment of Mood Disorders," issued June 24, 2014) following a Paragraph IV certification as part of Zhejiang's filing of an ANDA to manufacture a generic version of Otsuka's Abilify® (aripiprazole, used to treat bipolar disorder and schizophrenia).  View the complaint here.


    BTG International Ltd. et al. v. Amerigen Pharmaceuticals, Inc. et al.
    2:16-cv-02449; filed May 2, 2016 in the District Court of New Jersey

    • Plaintiffs:  BTG International Ltd.; Janssen Biotech, Inc.; Janssen Oncology, Inc.; Janssen Research & Development, LLC
    • Defendants:  Amerigen Pharmaceuticals, Inc.; Amerigen Pharmaceuticals Ltd.

    Infringement of U.S. Patent No. 8,822,438 ("Methods and Compositions for Treating Cancer," issued September 2, 2014) following a Paragraph IV certification as part of Amerigen's filing of an ANDA to manufacture a generic version of Janssen's Zytiga® (abiraterone acetate, used in combination with prednisone for the treatment of patients with metastatic castration-resistant prostate cancer).  View the complaint here.


    AstraZeneca AB et al. v. Hetero USA Inc. et al.
    3:16-cv-02442; filed April 29, 2016 in the District Court of New Jersey

    • Plaintiffs:  AstraZeneca AB; Aktiebolaget Hassle; AstraZeneca LP; Zeneca Inc.
    • Defendants:  Hetero USA Inc.; Hetero Labs Ltd. Unit-III; Hetero Labs Ltd.

    Infringement of U.S. Patent Nos. 6,369,085 ("Form of S-omeprazole," issued April 9, 2002) and 7,411,070 (same title, issued August 12, 2008) following a Paragraph IV certification as part of Hetero's filing of an ANDA to manufacture a generic version of AstraZeneca's Nexium 24HR® (esomeprazole magnesium, used for the treatment of gastroesophageal reflux disease).  View the complaint here.


    Boehringer Ingelheim Pharmaceuticals Inc. et al. v. Dr. Reddy's Laboratories, Ltd. et al.
    3:16-cv-02394; filed April 28, 2016 in the District Court of New Jersey

    • Plaintiffs:  Boehringer Ingelheim Pharmaceuticals Inc.; Boehringer Ingelheim International GmbH; Boehringer Ingelheim Corp.; Boehringer Ingelheim Pharma GmbH & Co. KG
    • Defendants:  Dr. Reddy's Laboratories, Ltd.; Reddy's Laboratories, Inc.; Prinston Pharmaceutical Inc.; Solco Healthcare U.S., LLC; Huahai US Inc.; Zhejiang Huahai Pharmaceutical Co., Ltd.; Invagen Pharmaceuticals Inc.

    Infringement of U.S. Patent No. 9,173,859 ("Uses of DPP-IV Inhibitors," issued November 3, 2015) following a Paragraph IV certification as part of defendants' filing of an ANDA to manufacture a generic version of Boehringer's Tradjenta® (linagliptin, used as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes mellitus) and Jentadueto® (linagliptin and metformin hydrochloride, used an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes mellitus when treatment with both linagliptin and metformin is appropriate) products.  View the complaint here.

  • Intendis GmbH v. Glenmark Pharmaceuticals Inc., USA (Fed. Cir. 2016)

    By Kevin E. Noonan —

    Federal Circuit SealThe Federal Circuit and the Supreme Court spent an inordinate amount of time wrestling with each of their conceptions of the scope and application of the doctrine of equivalents a dozen years ago, coming to an accommodation in the last of the Federal Circuit's decisions in Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., Ltd. (Fed. Cir. 2007).  In Intendis GmbH v. Glenmark Pharmaceuticals Inc., USA the Federal Circuit demonstrated the resulting equipoise in affirming a district court's determination that the doctrine applied to an accused infringing generic formulation.

    The case involved ANDA litigation between the parties over Orange Book Listed U.S. Patent No. 6,534,070 directed to Finacea® Gel, a topical medication for various skin disorders.  This product is a formulation comprising 15% by weight azelaic acid and excipients including triglycerides and lecithin provided as a hydrogel.  Claim 1 of the '070 patent at issue in this litigation reads as follows:

    1.  A composition that comprises:
        (i) azelaic acid as a therapeutically active ingredient in a concentration of 5 to 20% by weight,
        (iii) at least one triacylglyceride in a concentration of 0.5 to 5% by weight,
        (iv) propylene glycol, and
        (v) at least one polysorbate, in an aqueous phase that further comprises water and salts, and the composition further comprises
        (ii) at least one polyacrylic acid, and (vi) lecithin,
        wherein the composition is in the form of a hydrogel. (emphases in opinion).

    Glenmark PharmaceuticalsThe accused infringing article that was the subject of Glenmark's ANDA was a 15% azelaic acid formulation where the ANDA formulation substituted isopropyl myristate for the combination of lecithin and triglyceride, which substitution Glenmark contended was non-infringing.  The District Court found the claims not invalid for obviousness and infringed under the doctrine of equivalents (DOE).  The District Court used the "function-way-result" test to find DOE infringement, and rejected Glenmark's arguments that 1) if infringing the claims would encompass the prior art, and 2) that DOE infringement was marred by prosecution history estoppel.  The District Court also rejected Glenmark's validity challenge for obviousness, based on failure to show motivation to combine the asserted prior art references and failure to show a reasonable expectation of success.  In addition, the District Court found that the objective indicia, including unexpected results and commercial success, "weighed in favor of non-obviousness."

    The Federal Circuit affirmed, in an opinion by Judge Moore joined by Chief Judge Prost and Judge Taranto.  With regard to DOE infringement, the panel applied the "clear error" standard appropriate for questions of fact in a bench trial, citing Allergan, Inc. v. Sandoz Inc., 796 F.3d 1293, 1311 (Fed. Cir. 2015).  Although there was no objection by either party to the District Court using the function-way-result test for determining whether there was infringement under the doctrine of equivalents, Glenmark contended that the District Court erred in its application of the "function" prong (and the opinion expressly points out that the question of the substantiality vel non of the differences in chemical structure between isopropyl myristate, triglycerides, and lecithin was not before it).  The District Court found that isopropyl myristate in Glenmark's formulation had the same function as the combination of lecithin and triglyceride in the claimed formulation, i.e., to enhance azelaic acid's penetration into the skin, based on expert testimony and statements in Glenmark's ANDA itself.  For the "way" prong, the District Court found that Glenmark's isopropyl myristate component worked in substantially the same way as the patent combination of lecithin and triglyceride, "by disrupting the lipids in the skin's outermost layer, known as the stratum corneum."  Finally, the District Court found that use of isopropyl myristate in Glenmark's formulation produced substantially the same result as the combination of lecithin and triglyceride in the claimed formulation, so that "a therapeutically effective azelaic acid composition [] is able to penetrate the skin in order to deliver the active ingredient."

    Glenmark's argument against these factual conclusions was that the District Court erred in finding that the combination of lecithin and triglyceride acted as skin penetration enhancers.  In support of this argument Glenmark asserted that the '070 patent itself was silent on this question (which was "fatal to Intendis' infringement case") as well as evidence from Finacea's NDA (which characterized lecithin as an emulsifier and triglyceride as an emollient) and the absence of any scientific literature support for skin penetration-enhancing properties of these compounds or their combination.

    The Federal Circuit rejected this argument, stating that its cases did not require a patentee to establish the mechanism through which a claimed invention operated, in favor of recourse to how the ordinarily skilled artisan would understand the specification and claims.  Instead of being confined to the intrinsic record, according to the opinion, "[t]he relevant inquiry is what the claim element's function in the claimed composition is to one of skill in the art, and a fact finder may rely on extrinsic evidence in making this factual determination," citing Zenith Labs., Inc. v. Bristol-Myers Squibb Co., 19 F.3d 1418, 1425 (Fed. Cir. 1994).  In addition, the panel said that it was "fatal to Glenmark's argument" that its own ANDA contained statements "repeatedly referring to the claimed excipients (triglyceride and lecithin) as penetration enhancers."  (And somewhat amusingly, the opinion cited "seemingly extemporaneous arguments" during oral argument in the case where counsel asserted that any such statements in Glenmark's FDA filings were "a 'guess' and 'wrong.'")

    Turning to the question of whether the District Court's interpretation of the claims and the equivalence of isopropyl myristate with lecithin and triglyceride would "encompass the prior art," the opinion cites DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., 567 F.3d 1314, 1322 (Fed. Cir. 2009), and Ultra-Tex Surfaces, Inc. v. Hill Bros. Chem. Co., 204 F.3d 1360, 1364 (Fed. Cir. 2000), that making this determination requires a two-prong analysis.  First, the court should craft a "hypothetical" claim that literally ensnares the accused infringing article.  Second, the court should determine whether that hypothetical claim is patentable over the prior art or record; note that the patentee bears burden of establishing patentability of this hypothetical claim.  In performing the hypothetical claim analysis, the District Court included isopropyl myristate as an alternative expressly recited in the claim; unfortunately for Glenmark, the art it asserted disclosed dimethyl sulfoxide as a penetration enhancer and not isopropyl myristate, lecithin, or triglyceride.

    On appeal Glenmark argued that the District Court erred by crafting a hypothetical claim that was narrower than the actual claims at issue, and that the Court should have created a hypothetical claim that recited any penetration enhancer (which would have ensnared the art disclosing DMSO).  The Federal Circuit rejected this criticism, stating that "[t]he district court's infringement finding was that the excipient in Glenmark's product (isopropyl myristate) was equivalent to the claimed excipients (lecithin and triglycerides); it was not a finding that any penetration enhancer would be equivalent to the claimed excipients," citing Graver Tank & Mfg. Co. v. Linde Air Prods. Co., 339 U.S. 605, 609 (1950).  Because Glenmark challenged the District Court's choice of hypothetical claim and not its conclusion that the claims would be patentable, the Federal Circuit found no reversible error in the lower court's factual findings.

    The panel also rejected Glenmark's third argument on appeal, that prosecution history estoppel barred application of the doctrine of equivalents to these claims.  The basis for Glenmark's argument was that, during prosecution, the examiner objected to language in two dependent claims because this language could be interpreted to result in formulations having no lecithin (concentrations of "up to 1%" and "up to 3%" could include 0%, i.e., none).  Applicants argued that this interpretation was inconsistent with dependency on claim 1, which affirmatively recited that the formulation contained lecithin (albeit without specifying a particular amount).  In addition, however, these dependent claims were amended to recited concentrations of "from more than 0 to 1%" or "from more than 0 to 3%" to overcome the examiner's rejections and Glenmark argued that prosecution history estoppel should therefore apply to claim 1.  The District Court rejected Glenmark's argument that these amendments amounted to disclaimer and the Federal Circuit (reviewing this determination de novo) agreed, stating that it could find "no clear and unmistakable surrender of subject matter" as required, inter alia, by Deering Precision Instruments, LLC v. Vector Distrib. Sys., Inc., 347 F.3d 1314, 1326 (Fed. Cir. 2003).  And because the amendments did not narrow the scope of the dependent claims, the panel agreed that these were "clarifying" amendments that did not raise prosecution history estoppel against asserted claim 1.

    Finally, the opinion also rejected Glenmark's argument that claim 1 of the '070 patent was obvious.  The asserted prior art ("previously-marketed Skinoren® cream" combined with references disclosing formulations comprising the claimed excipients and art disclosing azelaic acid formulations) did not render the claimed compositions obvious due to "certain undesirable qualities" of the prior art Skinoren® cream that would have led the skilled artisan to develop a "different dosage form given the market forces and deficiencies of the prior art formulation."  Although the District Court acknowledged that this art would have motivated the skilled worker to pursue hydrogel formulations like the claimed invention, the Court did not find any motivation to use the claimed lecithin and triglyceride excipients.  And the District Court also found that even if the art could be viewed a providing the required degree of motivation to combine the art to arrive at the invention claimed in the '070 patent there was insufficient likelihood of success to support an obviousness determination.  The Federal Circuit disagreed with Glenmark's challenges to the District Court's determinations (reciting and dismissing them cursorily) and upheld the District Court's conclusion that the claims were not obvious.

    Intendis GmbH v. Glenmark Pharmaceuticals Inc., USA (Fed. Cir. 2016)
    Panel: Chief Judge Prost and Circuit Judges Moore and Taranto
    Opinion by Circuit Judge Moore

  • Merck & Cie v. Watson Laboratories, Inc. (Fed. Cir. 2016)

    By Kevin E. Noonan —

    MerckThe Federal Circuit had the occasion to revisit the proper application of the on-sale bar under 35 U.S.C. § 102(b) in Merck & Cie v. Watson Laboratories, Inc., ANDA litigation over claim 4 of U.S. Patent No. 6,441,168, which reads:

    A crystalline calcium salt of 5-methyl-(6S)-tetrahydrofolic acid [MTHF] with 2 theta values of 6.5, 13.3, 16.8 and 20.1 (Type I) said crystalline salt having a water of crystallization of at least one equivalent per equivalent of 5-methyltetrahydrofolic acid.

    The earliest priority date this claim was entitled to was April 17, 2000, making the critical date April 17, 1999, one year before.  Scaltech, Inc. v. Retec/Tetra, LLC, 269 F.3d 1321 (Fed. Cir. 2001).  The relevant facts, and the timing of Merck's activities, were as follows.  In 1997, Merck "began 'exploring a strategic partnership to introduce dietary supplements with Merck ingredients into the United States.'"  One proposal was for a joint venture with Weider Nutrition to market and distribute MTFH in the U.S., in an agreement signed in February 1998.  Language of that Confidentiality Agreement relevant to the opinion reads:

    Unless and until such definitive agreement regarding a transaction between Weider and Merck has been signed by both parties, neither party will be under any legal obligation of any kind with respect to such a transaction.

    Weider backed out of the arrangement in August 1998, but inquired with Merck regarding purchase of 2kg of MTHF.  Merck responded with a set price and reassurance that Merck could provide more product if Weider desired it.  Weider requested safety and analytical specifics on the product on September 16, 1998, which was provided on September 25, 1998.  The order was confirmed by Merck on October 8, 1998, but over the next few months there were communications back and forth between the parties, culminating in a "mutual decision" to cancel Weider's "existing order" on January 9, 1999.  In the meantime, Merck met with a Weider competitor who wanted exclusive rights to market MTHF in the U.S.

    Watson PharmaceuticalsMerck & Cie (a Merck subsidiary), along with co-plaintiffs Bayer Pharma and Bayer Healthcare Pharmaceuticals, brought suit against Watson for infringing claim 4 of the '168 patent under 35 U.S.C. § 271(e)(2) for filing an ANDA for two contraceptives, Safyral® and Beyaz® that comprise the claimed MTHF salt.  Watson stipulated to infringement and went to trial on the validity issue.  The District Court rejected Watson's contentions and evidence that claim 4 was invalid for anticipation, obviousness, and failure to satisfy the written description requirement, and specifically found that claim 4 was not invalid under the on-sale bar.  In applying the Pfaff analysis, Pfaff v. Wells Electronics, 525 U.S. 55 (1998), the District Court found that the circumstances satisfied the first prong of the test, that the invention was "ready for patenting" prior to the critical date.  However, the District Court found that there had been no "commercial offer to sell or sale" of a product falling within the scope of the claims.  In reviewing the evidence, the District Court did not believe that the September 9, 1998 facsimile was "sufficiently definite to qualify as a commercial offer"; specifically with regard to the absence of the safety and quality specifics requested thereafter by Weider.  In addition, the District Court considered the language of the Confidentiality Agreement between the parties to require that there be a "definitive agreement" signed by the parties.  In the absence of such an agreement (which was not in evidence) the District Court held that there had not been a "legally binding sale" and thus the on-sale bar had not been raised prior to the critical date.

    The Federal Circuit reversed, in a decision by Judge Mayer, joined by Judges Dyk and Hughes.  Like obviousness, whether there had been a violation of the on-sale bar prior to the critical date is a matter of law based on questions of fact.  The panel quickly passed over the first prong, because Merck had not challenged that the invention was ready for patenting by September 9, 1998.  The question thus for the Federal Circuit was whether there had been a commercial sale or offer for sale more than one year before the earliest priority date of the '168 patent.

    In reviewing the District Court's decision, the panel applied "traditional contract law" as a matter of Federal Circuit law.  Grp. One, Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041 (Fed. Cir. 2001).  The Federal Circuit's view of the facts was that Weider had decided that it did not wish to enter into a joint venture with Merck by August 1998.  However, Weider did express a desire to purchase 2kg of MTHF from Merck at that time.  In response, Merck's representative provided the unit cost of the product, provided specifics on how Merck was willing to deliver the product, and reassured Weider that Merck was prepared to sell Weider more than 2kg if requested.  Indeed, "[Merck's] detailed fax — providing essential price, delivery, and payment terms — contained all the required elements to qualify as a commercial offer for sale" in the panel's opinion, citing Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1369 (Fed. Cir. 2007), and Linear Tech. Corp. v. Micrel, Inc., 275 F.3d 1040, 1052 (Fed. Cir. 2001).  Moreover, according to the panel Merck's offer was "not qualified," i.e., it contained no reservations or other indicia of uncertainty or unmet requirements.

    Merck argued that whether there had been a commercial offer for sale was belied by the parties' behavior, both parties not acting in a way consistent with the existence of an offer for sale.  To the contrary, the Federal Circuit believed that the activity between the parties in the period after the September 9, 1998 facsimile evidenced the existence of an "unequivocal offer" by Merck to sell Weider the MTHF product.  These activities included the express language of subsequent communications, the request for safety and analytical specifications from Weider, and requests and reassurances of a certificate of insurance to protect against loss during delivery.  This evidence led the Federal Circuit to conclude that:

    Regardless of whether the communications between Merck and Weider in the fall of 1998 were sufficient to establish a binding contract for the sale of MTHF, they confirm that, at a minimum, both parties understood that Martin's September 9, 1998, fax was an offer to sell the product.

    The fact that as things turned out Merck never did deliver the product and the parties agreed to negate the sales agreement was of no moment:  "[a]n offer to sell is sufficient to raise the on-sale bar, regardless of whether that sale is ever consummated" according to the opinion, citing Hamilton Beach Brands, Inc. v. Sunbeam Prods., Inc., 726 F.3d 1370, 1374–76 (Fed. Cir. 2013).

    In assessing the District Court's opinion, the Federal Circuit considered and rejected evidence the Court relied upon regarding sales of this product:  that MTHF was "a potentially dangerous new drug" and thus the request for safety and analytical information were necessary components of an offer for sale.  According to the panel, there was no evidence supporting the assertion that MTHF was a "potentially dangerous drug" and indeed there was evidence to the contrary.  Also unpersuasive was testimony regarding what were "standards" for such contracts because, according to the Federal Circuit there was no supporting evidence for such standards.  Finally, the "conclusory" testimony offered by Merck's expert was inconsistent with the documentary record, which the opinion characterized as "unambiguous."

    Turning to the confidentiality agreement that formed the basis for the District Court's opinion, the Federal Circuit distinguished the purpose of that agreement (because the parties entered into that agreement "during a period when they were contemplating entering into a broad-ranging joint venture relationship") and the issue here was a simple offer to sell 2kg of the MTHF product.  Moreover, while the agreement contains language that might encompass an actual sale, it does not apply to an offer to sell, which is enough to implicate the on-sale bar.  And the panel concludes this portion of the opinion by noting that the offer to sell was not for experimental purposes, thus eliminating the "experimental use" exception from the argument.

    While not unremarkable, the opinion is notable for extending the scope of the on-sale bar to include the type of informal commercial activity between potential partners (even when that partnership does not occur) and unfulfilled commercial activity that happened here.  It provides an additional cautionary tale that patentees and potential patentees must be careful, once an invention is ready for patenting, to engage in no activity that could be construed as commercial activity, and to file an application for such an invention as soon as the invention is patent-ready.

    Merck & Cie v. Watson Laboratories, Inc. (Fed. Cir. 2016)
    Panel: Circuit Judges Dyk, Mayer, and Hughes
    Opinion by Circuit Judge Mayer

  • Section 101 and the Growing Alice Backlash

    By Michael Borella —

    35 U.S.C. § 101 states that "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof" is patent-eligible.  However, the Supreme Court has traditionally acknowledged the existence of several exceptions to these categories — namely that laws of nature, natural phenomena, and abstract ideas are not patentable in and of themselves.  Despite the Court's warnings that one should "tread carefully in construing this exclusionary principle lest it swallow all of patent law," and that "all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas," lower courts and the USPTO have often viewed these exceptions with a wide lens.

    In the nearly two years since the Alice Corp. v. CLS Bank decision, this lens has grown dramatically for certain types of inventions.  For instance, in 2015, approximately 70% of all patents challenged under Alice in district courts were invalidated, while the monthly § 101 rejection rates for USPTO Technical Centers 3620, 3680, and 3690 were over 85% for most of the year.[1]  These sobering statistics are due to the new subject matter eligibility test set forth in Alice.  Particularly, one must first determine whether the claim at hand is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further determine whether any element, or combination of elements, in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exception.  Notably, generic computer implementation of an otherwise abstract process does not qualify as "significantly more."

    The Court refrained from explicitly defining the scope of abstract ideas, and provided only limited examples of what might be "significantly more" than a judicial exclusion.  As a consequence, the Alice test is inherently subjective, and is often applied in a conclusory fashion.  Perhaps because of this subjectivity, as well as the thousands of claims shot down under Alice, we may be seeing the beginning of a backlash against applying the test too strictly.

    In April, David Kappos, the former USPTO Director, stated that "[i]t's time to abolish Section 101, and the reason I say that is that Europe doesn't have 101 and Asia doesn't have 101 and they seem to be doing just fine in constraining patent-eligible subject matter."  Kappos was concerned that the same software and biotech fields that have been the most impacted by Alice are also "the crown jewel of the innovation economy" and that patentees may be inclined to seek protection in other countries instead of the U.S. for these types of inventions.  This may lead to foreign competitors of U.S. companies taking advantage of the relatively weak U.S. patent protection in these areas, and being able to exploit such technologies without being subject to an actionable remedy.

    Kappos is now in private practice, and thus one might argue that he is biased toward a strong U.S. patent system.  But he is far from the only member of the patent community to raise issues with Alice.  Indeed, federal judges and the USPTO administration, neutral parties who apply the law as they understand it, seem to be pushing back at the Alice juggernaut.

    Judge Sue Robinson of the District of Delaware recently wrote four opinions upholding the validity of patents challenged under § 101 (Improved Search LLC v. AOL, Inc., Intellectual Ventures I LLC v. Ricoh Americas Corp., Network Congestion Solutions, LLC v. U.S. Cellular Corp., and SRI International Inc. v. Cisco Systems Inc.).  Prior to these decisions, the District of Delaware had the highest rate of finding patents invalid based on Alice in the entire country.  Judge Robinson was critical of the Supreme Court's patent-eligibility jurisprudence, writing that "most of the patent claims now being challenged under § 101 would have survived such challenges if mounted at the time of issuance, [but] these claims are now in jeopardy" and that "it is less than clear how a § 101 inquiry that is focused through the lens of specificity can be harmonized with the roles given to other aspects of the patent law (such as enablement under § 112 and non-obviousness under § 103)."

    Is Judge Robinson resisting the broad application of Alice?  Or are these four rulings, all coming down within a month of one another — with three on the same day — merely a coincidence?

    The Federal Circuit recently found claims to be patent-eligible post-Alice for only the second time in Enfish, LLC v. Microsoft Corp.  In this decision, however, the Court made a point of strongly reiterating the patentability of properly-claimed software inventions, noting that "[w]e do not read Alice to broadly hold that all improvements in computer-related technology are inherently abstract."  Further, the Federal Circuit criticized the District Court from which this case was appealed, noting that, when carrying out prong one of Alice, "describing the claims at such a high level of abstraction and untethered from the language of the claims all but ensures that the exceptions to § 101 swallow the rule."

    The latter quote may be a sign that the Court has heard the concerns from numerous parties about how the Alice test is being misapplied.  For instance, it is all too common for a judge or a USPTO examiner to: (1) view a claim at a 10,000 foot level to remove from it all devices and machines, (2) this subjective "gist" of the remaining aspects of the claim is declared abstract, and (3) when the devices and machines are examined separately from this gist of the claim, they are determined to be no more than routine and conventional, adding no patentable weight.  Following such a formula, virtually any software or business method claim can be rendered invalid.  But, as pointed out in Enfish, this formula fails to follow the Supreme Court's directive that we must consider claims as an "ordered combination" when carrying out prong two of the test.

    Which brings us to the USPTO.  On May 6th, the Office published a memorandum entitled Formulating a Subject Matter Eligibility Rejection and Evaluating the Applicant's Response to a Subject Matter Eligibility Rejection.  The memo states that "it is particularly critical to address the combination of additional elements, because while individually-viewed elements may not appear to add significantly more, those additional elements when viewed in combination may amount to significantly more than the exception by meaningfully limiting the judicial exception."  As noted in the USPTO's July 2015 Update Appendix 1: Examples, under Alice, the claims in Diamond v. Diehr are patent-eligible only when considered as an ordered combination: "when viewing the claim as a whole, the combination of all these steps taken together, including the constant determination of the temperature of the mold, the repetitive calculations and comparisons, and the opening of the press based on the calculations, amount to significantly more than simply calculating the mold time using the Arrhenius equation because they add meaningful limits on use of the equation."

    In issuing this memo, the USPTO seems to be requiring that examiners provide more detailed written memorializations of their Alice analyses as part of the examination records.  Particularly, some (but certainly not all) examiners have been rejecting claims under Alice without explicitly considering all elements of the claim, without reviewing these elements as a whole or an ordered combination, and while omitting any discussion of dependent claims.

    The USPTO is likely recognizing these procedural problems.  Notably, with respect to the latter, the memo states that "the eligibility of each claim should be evaluated as a whole using the two-step analysis detailed in the Interim Eligibility Guidance" (emphasis added).  When required to make the Alice analysis more explicit, examiners may find that fewer claims are invalid.

    Ultimately, it may take months to determine how all of this will play out.  Examiners are just beginning to be trained on the memo, and the USPTO may have to publish a significant update to its overall § 101 guidance to account for Enfish.  Further, district court interpretation of Enfish remains to be seen, but undoubtedly patentees in litigation will be advocating that the Federal Circuit has changed its approach to Alice in a major way.  Also, Judge Robinson's recent decisions may have persuasive weight on other judges presiding over patent cases.

    On the policy level, Kappos's words may grab the attention of Congress.  In view of the current election cycle, members of the legislature now realize that there is a strong protectionist sentiment in certain constituencies, and that the weakening affect that Alice has on the patent system will not play well with software and biotech businesses seeking to secure their investments in technology from foreign competitors.

    Within the course of two months, four sources have provided reasoned criticisms of procedural and substantive aspects of Alice.  It seems that the § 101 pendulum is finally swinging back to a more moderate view of subject matter eligibility.

    [1] Statistics derived in part from http://www.bilskiblog.com/.

  • Conference & CLE Calendar

    CalendarMay 18, 2016 – "The PTAB Front and Center at the Federal Circuit and the Supreme Court: The First Year of Appellate Review" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CDT)

    May 18, 2016 – "USPTO and Section 101: New Examiner Guidelines" (Intellectual Property Owners Association) – 2:00 to 3:00 pm (ET)

    May 18-19, 2016 - Due Diligence Summit for Life Sciences*** (ExL Events) – Boston, MA

    May 24-26, 2016 - EU Pharmaceutical Law Forum (Informa Life Sciences) – Brussels, Belgium

    May 26, 2016 – "Challenging Pending Patent Applications: When, Where and What Type — Navigating Third-Party Submissions, Protests and Derivation Proceedings for Pre-Grant Applications" (Strafford) – 1:00 to 2:30 pm (EDT)

    June 15-17, 2016 - Fundamentals of Patent Prosecution 2016: A Boot Camp for Claim Drafting & Amendment Writing (Practising Law Institute) – New York, NY

    July 6-8, 2016 - Fundamentals of Patent Prosecution 2016: A Boot Camp for Claim Drafting & Amendment Writing (Practising Law Institute) – San Francisco, CA

    June 9, 2016 – "Overcoming §103 Rejections for Biotech and Chemical Patents: Leveraging Recent Decisions and USPTO Guidance" (Strafford) – 1:00 to 2:30 pm (EDT)

    June 14, 2016 – "Patent Eligibility, Prior Art and Obviousness 2016: Current Trends in Sections 101, 102 and 103" (Practising Law Institute) – San Francisco, CA (also webcast)

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