Patent Docs

Peschke Map Technologies LLC v. Rouse Properties Inc. (E.D. Va. 2016)

March 22, 2016

By Michael Borella —

Plaintiff Peschke Map Technologies ("Peschke") sued Rouse Properties ("Rouse") for infringement of U.S. Patent No. 6,397,143, directed to a computer-based map navigation and display system. Rouse filed a 12(b)(6) motion to dismiss on the pleadings, alleging that the '143 patent is invalid because it claims an ineligible abstract idea. In a perfect storm of broad claims and aggressive application of the 35 U.S.C. § 101 judicial exclusions, the Court granted the motion.

Claim 1 of the '143 patent recites:

A method of presenting and providing navigation through a series of maps, comprising:
    (a) providing at least one first level map depicting plural store layouts;
    (b) providing description pages corresponding to each of said store layouts comprising information related to said corresponding store; and
    (c) providing links from each of said plural layouts to each of said corresponding description pages whereby activation of said link causes said description page to be displayed.

On its face, this claim is rather broad, and does not explicitly require computer implementation. Nonetheless, the Court read such a limitation into the claim based on the patent's specification. Particularly, the Court described the invention as follows.

The basic iteration of the system is a map of a shopping mall that displays the location and shape of all of the different stores in the mall. Each store functions as a link that, when clicked on, takes the user to a "description page" containing information about that particular store. The system might also contain several levels of maps that permit a user to zoom in to and out of the shopping mall from a larger region or neighborhood. This system is designed to give consumers access to information about different stores using the physical layout of a mall as opposed to, for example, navigating through a list of the names of the stores at a mall.

Peschke first contended that it was improper to dismiss the claims under § 101 prior to claim construction. The Court disagreed, noting that patent-eligibility is decided as a matter of law, and that the Federal Circuit allows district courts to determine whether claim construction is needed for the § 101 analysis. Particularly, the Court stated that "the claimed subject matter is readily ascertainable from the face of the '143 patent" and proceeded to cite to a number of sections of the patent's specification in which aspects of the claims were described. The Court also observed that "nearly all of the technical terms used in the '143 patent — including click, layout, link, hyperlink, neighborhood, region, shopping center, and store — have been defined in the glossary section." Thus, despite its position that the claims did not need to be formally construed, the Court still carried out a form of claim construction by pointing out where, in the patent itself, claim term definitions could be found.

Not helping its argument, Peschke only suggested that one claim term needed to be defined in order to construe the claim terms. The Court further disagreed that this term required definition, and instead ruled that the motion to dismiss was not premature.

Peschke then argued that the claims were valid under § 101, which prompted the Court to review the two-prong test for patent-eligibility set forth in Alice Corp. v. CLS Bank Int'l. First, one must determine whether the claim at hand is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea. If so, then one must further determine whether any element, or combination of elements, in the claim is sufficient to ensure that the claim amounts to something more than the judicial exception. Notably, generic computer implementation of an otherwise abstract process does not qualify as "something more."

Applying the first prong, the Court characterized the claimed invention as "an electronic map navigation system that enables a user to locate a particular store through the use of location and layout information and that provides a link to a description page containing information about the store." The invention further allows the user to "zoom in and out of larger or smaller geographic areas depicted on these maps." The Court found these ideas to be well-understood, routine, and conventional.

In coming to this conclusion, the Court was apparently persuaded by evidence introduced by Rouse relating to a 1798 map of the town of Alexandria. According to the Court, this map "depicts the layout of Alexandria and identifies the location of several structures, which have been labeled with numbers [where the] "Remarks" section of the map identifies the building that corresponds to each number." The Court ultimately found that this map "achieves the same result as the invention described in the '143 patent . . . [t]he only difference is that the process described in the '143 patent occurs on a computer and uses hyperlinks that cause a description page to appear instead of using markers that direct a user to an index or legend." Thus, according to the Court, "numbers perform the same function as the hyperlinks."

The Court also stated that "the use of multiple layers of maps that enables users to zoom into and out of a geographic area is an unpatentable abstract idea," despite the claims not reciting such language. Nonetheless, the Court found that the '143 patent admitted that such zooming was well know, and that "atlases have long provided maps of large geographic areas along with corresponding maps of smaller portions of these larger maps that contain more detail."

Peschke attempted to make an analogy between its claims and those of DDR Holdings v. Hotel.com. However, the Court quickly shot this notion down, stating that the '143 patent does not address a challenge particular to the Internet — instead it addresses a problem from the pre-Internet world.

Thus, the claims were found to be abstract under the first prong of Alice. Moving to the second prong, the Court considered whether the claims recited an inventive concept above and beyond the abstract ideas therein. Particularly, the Court compared the '143 patent's claims to those in Benson v. Gottschalk and Diamond v. Diehr, and determined that the claims were closer to Benson. Specifically, the Court noted that the claimed invention "does not apply the abstract idea, using a computer, to a new technological process or in an otherwise new way to solve a unique problem."

Peschke contended that "when the computerized mapping system was invented it was not commonplace to use an object overlaid on a map as a hyperlink to an information page." But the Court found this to be merely the automation of the well-known process of "using a map that depicts the shapes of stores as seen from above to provide the map user with information about those different stores."

Failing both prongs of the Alice test, the claims were ruled invalid.

The outcome of this case is not surprising given the breadth of the claims, but procedurally it raises a number of issues. When performing the Alice test, the Court deviated in a significant fashion from the actual claim language, and used phrases from specification instead to represent the invention. Thus, as noted above, the Court seems to have performed a de facto claim construction.

Notwithstanding that odd approach, the Court's analogies between paper maps and computerized maps (and between numbers and hyperlinks in particular) were tenuous at best. Unfortunately, this reflects a broader trend in both the courts and the USPTO, where a software claim is held to be abstract if one can find a previously-known act or article that is tangentially similar. Moreover, the use of the 1798 map in this case is telling, as once again the notion that § 101 is to be assessed as a matter of law is undermined by the introduction of "prior art."
Sequenom Petitions for Certiorari

March 21, 2016

By Kevin E. Noonan —

Sequenom filed its anticipated petition for certiorari today for Supreme Court review of the Federal Circuit's decision in Ariosa v. Sequenom. The petition advises the Court that it "should take this opportunity to provide the guidance the Federal Circuit is openly seeking, and avoid a result neither it nor Congress could have intended."

The "Question Presented" reads as follows:

QUESTION PRESENTED

In 1996, two doctors discovered cell-free fetal DNA (cffDNA) circulating in maternal plasma. They used that discovery to invent a test for detecting fetal genetic conditions in early pregnancy that avoided dangerous, invasive techniques. Their patent teaches technicians to take a maternal blood sample, keep the non-cellular portion (which was "previously discarded as medical waste"), amplify the genetic material within (which they alone knew about), and identify paternally inherited sequences as a means of distinguishing fetal and maternal DNA. Notably, this method does not preempt other demonstrated uses of cffDNA.

The Federal Circuit "agree[d]" that this invention "combined and utilized man-made tools of biotechnology in a new way that revolutionized prenatal care." Pet.App. 18a. But it still held that Mayo Collaborative Servs. v. Prometheus Labs., 132 S. Ct. 1289 (2012), makes all such inventions patent-ineligible as a matter of law if their new combination involves only a "natural phenomenon" and techniques that were "routine" or "conventional" on their own. Multiple judges wrote separately below to explain that while this result was probably not intended by Mayo, it controlled, and only this Court could now "clarify" Mayo's reach to prevent a "crisis" in life-science innovation.

The Question Presented is: Whether a novel method is patent-eligible where: (1) a researcher is the first to discover a natural phenomenon;(2) that unique knowledge motivates him to apply a new combination of known techniques to that discovery; and (3) he thereby achieves a previously impossible result without preempting other uses of the discovery?

The Petition asserts three grounds: that:

• The Decision Below Has Dangerously Overextended Mayo, and the Court needs to clarify that its precedents permit patenting meritorious inventions like this one.

• This Issue is Vitally Important.

• This Case Is An Ideal Vehicle.

The Statement of the Case recites the inventiveness of the claimed invention, including that the fraction of maternal blood from which the cffDNA was detected was routinely discarded. It recounts the surprise and acclaim with which the invention was greeted in the art, and the application of human ingenuity required to make a practical genetic test from their discovery that cffDNA could be found in maternal blood, i.e., specifically targeting paternally derived portion of the cffDNA. Specifically recited in this regard are the utilities of detecting Downs syndrome, fetal gender and Rh disease using a simple blood test instead of invasive conventional methods (amniocentesis, e.g.). The Petition also mentions the parsimoniousness of the claimed invention, being limited to the test and not including the cffDNA itself or having claims that would preempt all uses of cffDNA by others, citing peer-reviewed journal articles describing alternative methods that would not infringe the claims invalidated by the inferior courts. Tellingly, the Petition asserts that what is inventive is the combination, not the individual steps which were all well known.

The Petition also recites the procedural history of the case and the decisions of the courts below, making special mention of Judge Linn's "remarkable" concurrence. It characterizes the panel decision as being based on "evident rationale was that, because the discovery of cffDNA in maternal plasma directly motivated the '540 patent's new combination of known techniques, that invention merely reflected that patent-ineligible discovery itself. According to the majority, that rendered the patent ineligible under Section 101 as a matter of law, even though it 'agree[d]' that the patent 'combined and utilized man-made tools of biotechnology in a new way that revolutionized prenatal care.' Id. (emphasis added)." It further characterizes (as error) the panel's treatment of the preemption issue as "a one-way ratchet: It 'may signal patent ineligible subject matter,' but 'the absence of complete preemption does not demonstrate patent eligibility.'" Finally the Petition notes that Judge Linn's concurrence, as well as the concurrences to the Federal Circuit's decision denying rehearing en banc, evince the conclusion that "despite this patent's inventive merit, the case would have to be resolved in this Court because Mayo tied the Federal Circuit's hands."

The Petitioner then boldly states that "[t]his is as straightforward a certiorari candidate as any patent case can be," because the judges below clearly stated that only correction by the Court would remedy the situation. The practical effect is clear: "Right now, Section 101 doctrine lacks any discernable limits, and so no company can trust in the patent system when deciding whether to invest in bringing an invention to market." How to do so is simple, according to Petitioners: "this case allows the Court to emphasize that a new combination of otherwise conventional techniques is patent-eligible even if it is straightforwardly motivated by a patentee's unique discovery of a natural law or phenomenon." In this regard, the Petition cites Justice Breyer's dicta in Mayo that "a new use for a known drug" should remain patent eligible, and Justice Thomas's citation in Myriad with approval Judge Bryson's view that the party who discovers a natural phenomenon would be in the best position to claim applications of that knowledge." — which is just the case here.

This portion of the Petition recites a litany of horrors if the Court does not review (and reverse) the decision below — from preventing patenting (and development) of vaccines against, for example, the Zika virus, to the conclusion that prior inventions would be patent-ineligible on drugs like aspirin, and even PCR itself, which in Kary Mullis's own words was "a simple idea that 'lay unrecognized for more than 15 years after all the elements for its implementation were available.'" As a consequence, "anyone who would invest in making, validating, or commercializing inventions like these for human medical use must invite others along for the free ride, with predictably unfortunate results."

Worse, according to petitioners, the Federal Circuit's decision "jettison[ed]" the one objective basis for making a Section 101 determination: preemption. "An approach to Section 101 that reduces such a critical fact to a 'moot' afterthought is too badly broken to let lie."

The Petitioners further note that that Justice Breyer himself did not intend the Mayo decision to be the end of the development in the law, but to merely "sketch the outer shell of the content" of Sec 101.

The Petition cites Diehr, Mayo, and Myriad for the proposition that a new combination of old steps should be enough to pass Section 101 muster, illustrating the principle with the statements from Mayo regarding new uses of an old drug:

[T]he Court intimated that "a new way of using an existing drug" would be patent eligible. But that can be true only if patent eligibility extends to new combinations of routine steps that would be self-evident to researchers who knew about a new discovery: After all, the drug is known, the means of administering it are known, and the only new insight is the natural law that the drug treats a disease no one previously knew it treated. So, unless the "inventive concept" that Mayo requires can be found in combining existing techniques in a new way to capitalize on a newly discovered natural phenomenon, Mayo itself is wrong about the patent eligibility of new uses for existing drugs. Conversely, if Mayo (like Diehr) is better understood to permit patenting unconventional combinations of known techniques and materials to accomplish new results that capitalize on newly discovered natural phenomena, the invention at issue here is patent-eligible, because that description fits it to a T.

And regarding preemption:

[T]he preemption concern is not that the patent covers all the immediately useful ways in which an insight known only to the inventor can be harnessed right now. . . . Instead, the concern is that a patent covers all the ways a natural discovery might ever be put to use, including highly innovative ones the patentee does not know and cannot teach.

Finally in this section Petitioner outlines the dangers to innovation that the decisions below create, including invalidation of almost all prior patents including the first one ever granted, on a method for making potash, and otherwise comprising an exhaustive list of suddenly and retrospectively patent ineligible inventions.

With regard to the importance of the issue the Petition cites the twelve "trustworthy amici" who participated at the en banc rehearing stage, as well as the Solicitor General's similar warnings in Mayo. The "suddenly muddled" state of Section 101 law discourages innovation in the life sciences according to the Petition and, ironically, "now affirmatively encourages researchers to keep as secret as possible those very 'basic tools of scientific and technological work' that Section 101 doctrine is designed to render into a public good for the benefit of scientific progress." Repeating a meme developed below:

After the decision below, those seeking new vaccines, new uses for existing drugs, and even holy grail insights like early, non-invasive cancer screens, may conclude that the game isn't worth the candle. And who could blame them: They could revolutionize their field, teach their colleagues a method that is the diametric opposite of conventional wisdom, create a practical, non-invasive test that confers enormous medical benefits on society, have their research cited a thousand times, and yet still lose their patent (after incurring a huge expense in reliance on its protection) because their previously unknown method relies on too fundamental an insight they alone had into the natural world. If this is the permanent reality, neither aspiring scientists nor venture capitalists may see much to gain in developing or commercializing biomedical research.

And then there are the international obligations (ironic in light of Justice Breyer's recent exposition on how the laws of other nations can inform the interpretation of American law, albeit to be fair not patent law; see, The World and the Court: American law and the New Global Realities) that are contravened by the suddenly limited view of patent eligibility that distinguishes what it eligible in the U.S. from what is eligible in the rest of the world.

The section arguing why this case as an ideal vehicle for review repeats the mantra that even the Federal Circuit recognized that it rendered the "wrong" decision but felt hamstrung by Mayo. Accordingly only the Court can correct this error. The Petition ends on three final points:

• The record below, which includes a preliminary injunction motion, claim construction and inter partes review is better developed than most Section 101 cases;

• The claims at issue include independent and dependent claims, down to the scope of individual tests, which imposes particular granularity for the Court to consider in deciding what should be patent eligible; and

• Finally, this may be the last chance for the Court to correct the situation, because left intact this decision will turn genetic diagnostic inventions into trade secrets and other forms of protection when available, and will preclude certain innovations entirely.

Amicus briefs are due in 30 days, and as stated in the Petition are expected to encourage the Court to grant certiorari.
Will “Open Source” be the Future of Genetic Diagnostics?

March 20, 2016

By Kevin E. Noonan —

One of the effective arguments made by the ACLU in the AMP v. Myriad case was that somehow permitting patents on genes implicated a patient's privacy right in her genetic material. This was also the theme of their public relations campaign to raise money and gain members, and when the Supreme Court handed down its decision, the group hailed it as a victory on that basis (among others).

But an interesting aspect of this debate is that genetic bases for disease (and for methods for detecting or diagnosing diseases with a genetic basis) is not an individual phenomenon. A particular person's genetics is of course very important to them, but developing a genetic diagnostic test depends on a population of individuals who share a particular genetic variant and are at risk for or actually have a disease with a genetic basis. This is one reason why the University of Utah was successful in isolating the BRCA genes (and earlier, before the widespread application of genomic sequencing), due to the genealogical (population) information amongst the relatively homogeneous Mormon population. Records of births, deaths and causes of death extended in some cases into the 19th century, and a similar population demographic was behind Decode Genetics' attempt to sequence the population of Iceland. This reality is not readily appreciated; indeed, President Obama, in extoling the virtues and promise of the administration's "Precision Medicine Initiative," stated that the goal was to pool a great deal of data (for up to a million patients) so we can discern the underlying similarities. And yet, in his very next breath Mr. Obama said that genetic data should belong to the individual. Which misses the point, that no matter who owns the individual data, the value is in the database, not in the individual data points that make it up.

It is helpful to have these factors in mind when considering the announcement last week by Ambry Genetics that the company was going to put online its database of genetic variants complied from the results of their genetic diagnostic tests (from among other things its BRCA testing, which was the subject of a lawsuit it won against Myriad in In re Utah Research Foundation (Myriad III) (see "Myriad Throws in the Towel"). According to this announcement, data from 10,000 Ambry customers would be released into a publicly accessible database, as reported in the New York Times and Genomeweb (see "Putting It Out There"). Predictably, interested parties like the President of the Personalized Medicine Coalition, Edward Abrahams, reacted by saying Ambry "should be applauded" according to the report. But as noted by Professor David Goldstein of Columbia University, data from 10,000 patients doesn't "change[] the game much." However, Ambry promises to add data from 200,000 patients per year going forward, which if accomplished should achieve one of the President's goals of removing the siloing of genetic data that occurs when these tests are limited to an academic environment. Similar efforts have been announced by others, for example by requesting Myriad's customers to voluntarily submit their genetic data in an effort to replicate the much larger Myriad database of BRCA gene mutations (see "Consortium Launches Public Database of BRCA Data" and "Myriad Genetic Database Under Siege").

Of course, Ambry it still far behind Myriad in the size of its database, which is one consequence of not being the first mover in what used to be a new technology of genetic diagnostics. But these circumstances raise the question of whether the changing paradigm instituted by the Supreme Court's Myriad and Mayo decisions will in fact ultimately promote or inhibit the goal of discovering genetic correlates to disease for the most people and the most diseases. Fortunately, the Court had not put its judicial thumb on the diagnostic scale in 1997, and as a consequence Myriad was able to use its patent exclusivity to justify the costs of developing the support infrastructure of genetic counselors and gynecologists to get the test to patients effectively, and convince payors that the results were reliable enough that paying for tests would reduce the costs of paying for treatment. The effectiveness of these tests being established (by Myriad and others in the ensuing decades), the issue now is whether altruism (purported or actual) will be sufficient to motivate the type of cooperation that is at the base of the President's vision for a public database. Perhaps, but there is just as good a chance that the data will be kept in proprietary databases and thus fail to promote the progress in understanding the genetic basis of disease that the President seeks. For now, policymakers seem to think betting on this view of how technology develops is worth trying. It will take time to determine whether they are right, but if they are not, it will be reasonable to ask at what cost we have decided to take this particular path.
Court Report

March 20, 2016

By Sherri Oslick —

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

Vanda Pharmaceuticals Inc. v. Roxane Laboratories Inc.
1:15-cv-00919; filed October 13, 2015 in the District Court of Delaware

Vanda Pharmaceuticals Inc. v. Inventia Healthcare Pvt. Ltd.
1:15-cv-00921; filed October 13, 2015 in the District Court of Delaware

The complaints in these cases are substantially identical. Infringement of U.S. Patent No. 9,138,432 ("Methods for the Administration of Iloperidone," issued September 22, 2015) in conjunction with defendants' filing of an ANDA to manufacture a generic version of Vanda's Fanapt® (iloperidone, used for the acute treatment of adults with schizophrenia). View the Roxane complaint here.

Vanda Pharmaceuticals Inc. v. Taro Pharmaceuticals USA, Inc. et al.
1:15-cv-00920; filed October 13, 2015 in the District Court of Delaware

• Plaintiff: Vanda Pharmaceuticals Inc.
• Defendants: Taro Pharmaceuticals USA, Inc.; Taro Pharmaceutical Industries, Ltd.

Vanda Pharmaceuticals Inc. v. Apotex Inc. et al.
1:15-cv-00922; filed October 13, 2015 in the District Court of Delaware

• Plaintiff: Vanda Pharmaceuticals Inc.
• Defendants: Apotex Inc.; Apotex Corp.

The complaints in these cases are substantially identical. Infringement of U.S. Patent Nos. 8,586,610 ("Methods for the Administration of Iloperidone," issued November 19, 2013) and 9,138,432 (same title issued September 22, 2015) following a Paragraph IV certification as part of Taro's filing of an ANDA to manufacture a generic version of Vanda's Fanapt® (iloperidone, used for the acute treatment of adults with schizophrenia). View the Taro complaint here.

Helsinn Healthcare S.A. et al. v. Fresenius Kabi USA, LLC
1:15-cv-00918; filed October 13, 2015 in the District Court of Delaware

• Plaintiffs: Helsinn Healthcare S.A.; Roche Palo Alto LLC
• Defendant: Fresenius Kabi USA, LLC

Infringement of U.S. Patent Nos. 7,947,724 ("Liquid Pharmaceutical Formulations of Palonosetron," issued May 24, 2011), 8,518,981 ("Liquid Pharmaceutical Formulations of Palonosetron," issued August 27, 2013), 8,598,218 (same title, issued December 3, 2013), 9,066,980 (same title, issued June 30, 2015), and 9,125,905 (same title, issued September 8, 2015) following a Paragraph IV certification as part of Fesenius' filing of an ANDA to manufacture a generic version of Helsinn's Aloxi® (palonosetron hydrochloride intravenous solution, used to prevent chemotherapy induced nausea and vomiting). View the complaint here.

Boehringer Ingelheim Pharma GmbH & Co. KG et al. v. Sandoz Inc. et al.
1:15-cv-07461; filed October 13, 2015 in the District Court of New Jersey

• Plaintiffs: Boehringer Ingelheim Pharma GmbH & Co. KG; Boehringer Ingelheim International GmbH; Boehringer Ingelheim Pharmaceuticals, Inc.
• Defendants: Sandoz Inc.; Sun Pharma Global FZE; Sun Pharmaceutical Industries, Ltd.; Sun Pharmaceutical Industries, Inc.

Infringement of U.S. Patent No. 6,015,577 ("Pharmaceutical Compositions Containing Dipyridamole or Mopidamol and Acetylsalicylic Acid or the Physiologically Acceptable Salts Thereof, Processes for Preparing Them and Their Use in Treating Clot Formation," issued January 18, 2000) following a Paragraph IV certification as part of defendants' filing of an ANDA to manufacture a generic version of Boehringer's Aggrenox® (extended-release dipyridamole/acetylsalicylic acid, used to reduce the risk of stroke in patients who have had transient ischemia of the brain or completed ischemic stroke due to thrombosis). View the complaint here.

Novartis AG et al. v. Roxane Laboratories, Inc. et al.
2:15-cv-02905; filed October 13, 2015 in the Southern District of Ohio

• Plaintiffs: Novartis AG; Novartis Pharmaceuticals Corporation
• Defendants: Roxane Laboratories, Inc.; Boehringer Ingelheim Roxane Inc.

Infringement of U.S. Patent Nos. 6,894,051 ("Crystal Modification of a N-phenyl-2-pyrimidineamine Derivative, Processes for Its Manufacture and Its Use," issued May 17, 2005) and RE43,932 ("Crystal Modification of a N-phenyl-2-pyrimidineamine Derivative, Processes for Its Manufacture and Its Use," issued January 15, 2013) following a Paragraph IV certification as part of Roxane's filing of an ANDA to manufacture a generic version of Novartis' Gleevec® (imatinib mesylate, used for various indications, including treatment of myeloid leukemia). View the complaint here. [NB: The complaint was later dismissed.]
Conference & CLE Calendar

March 20, 2016

March 22, 2016 – "Federal Circuit Practice Around 2020: A Look Ahead" (Federal Circuit Bar Association) – 12:00 to 1:00 pm (EDT)

March 24, 2016 – "Structuring Patent Licensing Agreements: Avoiding Litigation, Allocating Risk and Maximizing Patent Value" (Strafford) – 1:00 to 2:30 pm (EDT)

March 24, 2016 – "Structuring Patent Licensing Agreements: Avoiding Litigation, Allocating Risk and Maximizing Patent Value" (Strafford) – 1:00 to 2:30 pm (EDT)

March 30, 2016 – "Patent Prosecution from a Litigator's Viewpoint: Position Your Patent to Succeed in Litigation & Post-Grant Procedures" (American Intellectual Property Law Association) – 12:30 – 2:00 pm (Eastern)

March 31, 2016 – "Conducting and Analyzing Patent Searches — Strategies for Validity, Patentability, Infringement, FTO and State-of-the-Art Searches" (Strafford) – 1:00 to 2:30 pm (EDT)

April 5-7, 2016 – IP Strategy, Patent Portfolio Development and Innovation*** (Fleming) – Boston, MA

April 12, 2016 – "A Federal Trade Secrets Act? The Defend Trade Secrets Act of 2016" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CDT)

April 13, 2016 – "Protecting Your IP Overseas: WIPO Services and Initiatives" (World Intellectual Property Organization, American Intellectual Property Law Association, and U.S. Patent and Trademark Office) – Nashville, TN

April 15, 2016 – "Protecting Your IP Overseas: WIPO Services and Initiatives" (World Intellectual Property Organization, American Intellectual Property Law Association, and U.S. Patent and Trademark Office) – Atlanta, Georgia

***Patent Docs is a media partner of this conference or CLE
Webinar on Patent Licensing Agreements

March 19, 2016

Strafford will be offering a webinar/teleconference entitled "Structuring Patent Licensing Agreements: Avoiding Litigation, Allocating Risk and Maximizing Patent Value" on March 24, 2016 from 1:00 to 2:30 pm (EDT). John M. Augustyn of Leydig Voit & Mayer and Peter J. Toren of Weisbrod Matteis & Copley will prepare IP counsel to craft effective patent licenses by reviewing key clauses and licensing in joint development projects, and outline best practices for structuring the agreement to avoid litigation, allocate risk and maximize patent value. The webinar will review the following issues:

• What are the key contract terms to include in patent licensing agreements?
• What steps should be taken when structuring a licensing agreement in the context of a joint development project?
• What factors must be considered to structure a patent license to avoid or minimize litigation?

The registration fee for the webinar is $297. Those interested in registering for the webinar, can do so here.
WIPO, AIPLA & USPTO Program on WIPO Services and Initiatives

March 19, 2016

The World Intellectual Property Organization (WIPO), American Intellectual Property Law Association (AIPLA), and U.S. Patent and Trademark Office will be co-sponsoring a program on "Protecting Your IP Overseas: WIPO Services and Initiatives" on April 13, 2016 in Nashville, TN and on April 15, 2016 in Atlanta, Georgia. The Program will offer sessions on the following topics:

• Introduction to WIPO — Development of the International Legal Framework Major Intellectual Property Economic Studies
• Global Intellectual Property Systems: The International Registration of Trademarks, using the Madrid System
• Global Intellectual Property Systems: Protecting your Inventions Internationally using the Patent Cooperation Treaty (PCT)
• Global Intellectual Property Systems: The Hague System; A Simplified Application Process for Obtaining "Registered Designs" (or, "Design Patents"), for the Protection of Industrial Designs in Many International Jurisdictions
• How WIPO Alternative Dispute Resolution (ADR) Services (which provide alternatives to conventional court actions) May be used to More Efficiently Settle IP Disputes
• How WIPO Databases and Tools may be used to Support the Knowledge Economy

An agenda for the program can be found here. The registration fee for the program is $50. Those interested in registering for the conference can do so here.
FCBA Webcast on Federal Circuit Practice in 2020

March 19, 2016

The Federal Circuit Bar Association (FCBA) will be offering a webcast entitled "Federal Circuit Practice Around 2020: A Look Ahead" on March 22, 2016 from 12:00 to 1:00 pm (EDT). Michael Franzinger of Sidley Austin LLP will moderate a panel consisting of Polk Wagner, Professor, University of Pennsylvania Law School; Daralyn Durie of Durie Tangri LLP; Jennifer Hillman, Former Commissioner, USITC and Visiting Professor, Georgetown University Law Center; and Christopher Yukins, Lynn David Research Professor in Government Procurement Law, George Washington University Law School. The panel brings together leading practitioners and professors to share their views on issues primed to shape several areas of Federal Circuit jurisdiction, including patent law, international trade, and government contracts, in the years ahead.

The registration fee for the webinar is $125 (non-member private practitioner), $50 (non-member government/academic/retired), or free (FCBA member). Those interested in registering for the webinar, can do so here.
Mitchell International, Inc. v. Audatex North America, Inc. (PTAB 2016)

March 17, 2016

PTAB Ignores District Court Claim Construction, Finds Patent Invalid

By Joseph Herndon —

On February 19, 2016, the USPTO Patent Trial and Appeal Board (PTAB) issued a final written decision in the Covered Business Method (CBM) patent review between Mitchell International, Inc. and Audatex North America, Inc. in which all challenged claims were found to be drawn to a patent ineligible abstract idea. While the CBM review had a predictable result of finding non-technical business method claims unpatentable, the claim construction analysis by the PTAB is troubling.

Mitchell filed a petition requesting a CBM review of claims 1-29 of U.S. Patent No. 7,912,740. The '740 patent issued on March 22, 2011 and relates generally to a method and system for entering data relating to an insurance claim for a damaged vehicle, and the data is processed into a valuation report that is transmitted through the world wide web. According to the background of the patent, when a vehicle is damaged, the owner of the vehicle may file a claim with an insurance carrier, and if the repair costs of the damaged vehicle exceed its value, or a certain percentage of its value, the vehicle may be considered "totaled". A problem with some existing systems is that the valuation does not account for specific variations of the vehicle, such as the condition of the vehicle or added aftermarket equipment. To obtain a more accurate valuation, an adjuster may access a more extensive database through the internet.

Claim 1, reproduced below, is illustrative of the claims at issue:

1. A method for obtaining an automobile insurance claim valuation report, comprising:
    transmitting a uniform resource locator over an electronic communication network from a client computer;
    connecting with a web site that corresponds to the uniform resource locator, the web site provides a plurality of web pages that allow an operator to input data relating to an insurance claim for a damaged vehicle;
    entering data relating to the insurance claim;
    processing the entered data to generate a valuation report for the damaged vehicle, the valuation report provides a market value for the damaged vehicle; and
    transmitting the valuation report to the client computer over the electronic communication network.

Standing and Claim Construction

The PTAB stated that the '740 patent is a covered business method patent because at least one claim of the '740 patent is directed to a covered business method. No analysis was given, but because the Patent Owner did not dispute such determination in the Patent Owner Response, the PTAB moved forward with the CBM review.

In a CBM patent review, claim terms are interpreted according to their broadest reasonable construction in light of the specification of the patent in which they appear. Under the broadest reasonable interpretation standard, and absent any special definitions, claim terms are given their ordinary and customary meaning as would be understood by one of ordinary skill in the art in the context of the entire disclosure.

The PTAB construed a number of claim terms. Of note was the construction of the terms "insurance claim" as encompassing, but not being limited to, "any data that would be used in making an insurance claim". A CBM may only be instituted when the underlying patent has been asserted, and here, the District Court in the co-pending litigation construed "insurance claim" in a different more limiting way, namely to be a "request to recover market value or repair cost in association with an insurance policy."

The District Court's construction was pointed out to the PTAB, but the PTAB ignored the District Court's construction. The PTAB stated that the Federal Circuit in Phillips v. AWH Corp., 415 F.3d 1303, 1315 (Fed. Cir. 2005) (en banc), requires that the claims "must be read in view of the specification, of which they are a part". Using the claim construction standards set forth in Phillips, the PTAB found that there is nothing in the specification of the '740 patent that would limit the claim term "insurance claim" in the more limiting way. Presumably, the District Court also used those same claim construction standards set forth in Phillips, and so it is troubling to see conflicting claim constructions used by the PTAB and District Court.

While the differing claim constructions between the PTAB and the District Court likely do not amount to much difference for patentability of the claims, seen below, it is a problem to have variation in claim construction performed parallel to each other.

Patentable Subject Matter Under 35 U.S.C § 101

Mitchell asserted that claims 1–29 of the '740 patent are not directed to patent-eligible subject matter under 35 U.S.C. § 101.

The PTAB followed the framework from the Alice decision for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts. First, it must be determined whether the claims at issue are directed to a patent-ineligible concept. Second, the elements of each claim must be considered both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application.

The PTAB disposed of the claims rather quickly under § 101. Each of the challenged claims was found to be directed to the fundamental concept of providing a vehicle valuation using information about the vehicle. The only technological features recited in the claims at issue are generic computer implementation systems performing generic computer functions. As acknowledged by Audatex's expert, the claims do not improve the function of the computer, they do not solve a problem unique to the internet, nor are they tied to a particular machine or apparatus.

Thus, the PTAB found that claims 1–29 are directed to patent-ineligible subject matter under 35 U.S.C. § 101.

Audatex's Motion to Amend

Audatex filed a contingent Motion to Amend to substitute new claims 30–58 for original claims 1–29, respectively. The PTAB denied this motion.

The ultimate burden of persuasion is with the Patent Owner, Audatex, to demonstrate the patentability of the amended claims, and because this burden was not met, the Motion to Amend was denied.

The new claims recited the same limitations of claims 1-29 and added the following underlined limitations of "the insurance claim being a request to recover market value or repair cost in association with an insurance policy", "providing a parts list and calculated estimate data through the web site", and "processing the entered data to generate a valuation report for the damaged vehicle, the valuation report provides a market value for the damaged vehicle, before the damaged vehicle was damaged, based on factors including mileage, condition, and geographic location."

The PTAB found that Audatex did not establish that the amended claims are patentable under 35 U.S.C. § 101. Audatex argued that the amended claims recite a system and method that solves a technical problem, and that the amended claims do not preempt all means for obtaining a valuation report. But, the PTAB found that the claims still are drawn to the abstract idea of providing a vehicle valuation report, and recite no more than a generic computer for doing so. The § 101 analysis remained the same.

The PTAB also found that Audatex did not establish that the claims are patentable over the prior art. Not discussed here, but the PTAB found claims 1-29 were unpatentable under § 101 and also anticipated by a prior art reference to Reimel. The PTAB found that, it would have been well within the level of skill of the ordinary artisan to use the vehicle valuation system of Reimel to provide a parts list and calculate estimate data, as well as leave out the damage caused by an accident to obtain a pre-damage valuation for the vehicle, as recited in the amended claims.

Thus, because Audatex did not meet its burden of demonstrating the patentability of the proposed substitute claims, and the Motion to Amend was denied. As a result, the '740 patent was left with invalid claims.

Mitchell International, Inc. v. Audatex North America, Inc. (PTAB 2016)
Before Lora M. Green, William V. Saindon, and Patrick M. Boucher, Administrative Patent Judges.
Final Written Decision by Lora M. Greeb
In re Queen’s University at Kingston (Fed. Cir. 2016)

March 16, 2016

By Andrew Williams —

Are communications between a patent agent and a client privileged? Up until last week, the Federal Circuit had not addressed the subject, although there had been a split with the district courts that had considered the issue. But, in In re Queen's University at Kingston, the Federal Circuit decided the question in the affirmative. Therefore, unless the Court rehears this case, otherwise takes up the issue en banc, or the holding is overturned by the Supreme Court, there will be a patent agent-client privilege. The panel was not in complete agreement, however. Writing in dissent, Judge Reyna indicated that he would not have created this new privilege. He complained, in part, that the extent of the new privilege is unclear. However, without trying to be tautological, the privilege should extend as far as a patent agent is ethically allowed to practice before the Patent Office.

The facts of the case are essentially irrelevant. The Canadian Queen's University at Kingston and PARTEQ Innovations had sued Samsung in the Eastern District of Texas, alleging that the SmartPause feature on Samsung's newest devices infringed the patents-in-suit. Samsung moved the District Court to compel the production of documents withheld because of "privilege relating to communications with its patent agents." The magistrate judge granted the motion to compel. The District Court did not alter that determination and did not certify the issue. However, it did agree to stay production pending a writ of mandamus (from which this case stems).

The first question is whether the Federal Circuit should even have granted mandamus review in the first place. There are three considerations for review when a claim of privilege is at issue: "whether (1) there is raised an important issue of first impression, (2) the privilege would be lost if review were denied until final judgment, and (3) immediate resolution would avoid the development of doctrine that would undermine the privilege." Slip Op. at 5 (citing In re Seagate Tech., LLC, 497 F.3d 1360, 1367 (Fed. Cir. 2007) (en banc)). As noted above, this is a case of first impression for the Federal Circuit. In addition, the Court reasoned that if it waited until final judgement on the merits, it would basically be impossible for the Court to "disentangle" the impact of these documents. It is, however, unclear how this element would ever be considered in the negative (wouldn't it always be difficult to disentangle the impact of wrongly-compelled produced documents). Finally, immediate resolution would avoid further inconsistent development of the doctrine in the district courts. As such, even though the Court noted that the legal standard is exacting, it found it to be present in this case.

In ultimately finding that the privilege exists, the Court relied heavily on Sperry v. State of Florida, 373 U.S. 379 (1963). This is the same case that the Patent Office cites as authority for promulgating ethics rules, such as the recent adoption of the USPTO Rules of Professional Conduct (see "USPTO Publishes Final Rule Adopting New Rules of Professional Conduct"). The Federal Circuit in this case relied on Sperry because Rule 501 of the Federal Rules of Evidence allows a court to define new privileges based on the common law, which is not static but interpreted "in light of reason and experience . . . ." The Sperry case addressed two issues. First, the Supreme Court determined that non-attorney patent agents practicing before the Patent Office were, in fact, practicing law. Second, it held that the State of Florida could not regulate this practice. This is because Congress authorized this practice of law by non-attorneys, and the States could therefore not prohibit or regulate this activity. As the Federal Circuit noted, "[i]n holding that the State of Florida had no authority to regulate the admitted practice of law by patent agents, the Supreme Court emphasized that it is Congress who has authorized and continues to permit the practice of law by patent agents when appearing before the Patent Office."

Of course, new privileges are not created lightly. Indeed, the Court noted that there is a presumption against recognizing a new privilege. The attorney-client privilege is most well-known, which exists to "encourage full and frank communication." However, there are plenty of cases where new privileges were not adopted, such as with accountants and jailhouse lawyers. It was the unique role of patent agents as established by Congress that weighed in favor of the privilege. In essence, clients have a reasonable expectation that all communications related to legal services in preparing and prosecution patent applications will be kept privileged. As the Court put it:

Whether those communications are directed to an attorney or his or her legally equivalent patent agent should be of no moment. Indeed, if we hold otherwise, we frustrate the very purpose of Congress's design: namely, to afford clients the freedom to choose between an attorney and a patent agent for representation before the Patent Office.

Slip Op. at 19.

The dissent did call into question the scope of the patent agent-client privilege. The majority did address the issue in the original analysis: "reason and experience compel us to recognize a patent-agent privilege that is coextensive with the rights granted to patent agents by Congress." Slip Op. at 18. Nevertheless, it also included a section entitled "D: Scope of Privilege," in which it held that:

Communications between non-attorney patent agents and their clients that are in furtherance of the performance of these tasks, or 'which are reasonably necessary and incident to the preparation and prosecution of patent applications or other proceeding before the Office involving a patent application or patent in which the practitioner is authorized to practice' receive the benefit of the patent agent-privilege.

Slip Op. at 24-25. Conversely, "[c]ommunications that are not reasonably necessary and incident to the prosecution of patents before the Patent Office fall outside of the scope of the patent-agent privilege." Slip Op. at 25. Of course, such a pronouncement was probably unnecessary, because if a patent agent were to so make a communication, it would likely be an unauthorized practice of law, as the Court recognized and noted in Footnote 8.

Because the standard for creating new privileges is exacting, it was not surprising that one of the judges dissented. The dissent had several reasons why it did not think it was appropriate to create a patent-agent-client privilege. As already referenced, one of the top reasons was that the new privilege was complicated and uncertain. Judge Reyna did not see the scope of a patent agents work as being cut-and-dry. In fact, he found that there was plenty of grey area, such as issuing invalidity opinions for potential reexamination or inter partes review filings or drafting assignments for still pending applications. In fact, in a somewhat ironic twist, the dissent noted:

I believe that advising clients on whether a privilege would apply in court to the various acts a patent agent might be asked to perform is itself outside scope of an agent's authorized practice before the USPTO. Therefore, a client concerned about maintaining a privilege may need to hire an attorney to determine whether this court's newly created agent-client privilege would apply in her circumstances.

Slip Op. at 10 (J. Reyna, dissenting).

Judge Reyna's logic probably faltered a bit when he tried to argue that there is insufficient public interest to support such a finding. For example, in his footnote 2, he compares the zero amicus briefs that were filed in the present case with the 14 that were filed in the Supreme Court case of Jaffee v. Redmond. However, even he must recognize the distinction between an original three-judge panel at an appellate court and a case for which the Supreme Court has granted cert. Almost certainly if this case is reheard at the Federal Circuit, there will be amicus briefs filed. Moreover, Judge Reyna asserts that because both a patent agent and a patent applicant have a duty of disclosure with the Patent Office, that a privilege between the two is unnecessary. According to the argument, the encouraging of "full and frank communication" is less effective. Of course, this does not address the fact that communications between an agent and its client to determine what falls within this duty are the exact types of communications that should be privileged. If not, then it does not make sense to protect any communication related to patent practice before the Office, regardless of whether it is made by an agent or attorney.

Because there was a dissent filed in this case, it is very possible that there will be a request for rehearing or a petition for cert. to the Supreme Court. We will continue to monitor this case in the event that there are any further developments.

In re Queen's University at Kingston (Fed. Cir. 2016)
Panel: Circuit Judges Lourie, O'Malley, and Reyna
Opinion by Circuit Judge O'Malley; dissenting opinion by Circuit Judge Reyna

recent posts

about