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  • News from Abroad: High Court of Australia Hears Myriad Appeal

    By Claire Gregg & Martin O'Brien —

    Australia Coat of ArmsThe High Court of Australia today heard the long anticipated appeal from the unanimous decision of a 5-judge bench of the Full Federal Court to allow Myriad's claims to isolated nucleic acids1.

    The question before the High Court is whether the invention claimed in claims 1-3 of Australian Patent No. 686004,2 owned by Myriad Genetics, is a manner of manufacture within the meaning of s 6 of the Statute of Monopolies, as required by section 18(1)(a) of the Patents Act 1990.  The test for "manner of manufacture" was defined by the High Court in NRDC,3 and requires that the claimed invention involve an artificially created state of affairs in a field of economic utility.

    Today's hearing follows yesterday's decision by the High Court to deny leave to the Institute of Patent and Trade Mark Attorneys (IPTA) to be heard as amicus curiae.  IPTA made submissions to the Court on the basis that section 51(xviii) of the Constitution is broad enough to cover isolated nucleic acids, and that in the absence of explicit exclusions the Patents Act should be interpreted to "occupy the full permissible landscape given by section 51(xviii) of the Constitution".4

    MyriadThe Commonwealth, through the Attorney-General, also sought to intervene in the event that the High Court granted IPTA leave to be heard.  Whilst explicitly stating that the Commonwealth makes no submissions on the ultimate question of whether isolated nucleic acid is patentable, the Attorney-General was critical of IPTA's submissions, noting that the question before the Court "can be decided fully and completely on the proper construction of the Patents Act without the need to examine the reach of the grant of power under s 51(xviii) of the Constitution".5  Further that the "Court should not resolve the appeal by deciding a constitutional question in circumstances where this not necessary of the matter".6

    The decision of the High Court to deny IPTA leave to be heard meant that the Court only heard from the original two parties today and no new arguments were heard.

    In today's hearing, counsel for the Appellant, Mr Catterns QC, argued that, while the isolation of the BRCA1 gene by Myriad may be a "fine and laborious piece of science", claims to isolated nucleic acids without any limitation to a useful application are claims to products of nature, which Mr Catterns submitted is the "antithesis of an artificially created state of affairs" and therefore excluded from patentability.

    The Appellant's arguments relied heavily on the reasoning of the US Supreme Court in AMP v Myriad Genetics7, asserting that the isolated nucleic acids are in substance identical to the corresponding sequences in nature.  Contrary to Myriad's submissions that isolated nucleic acids are chemically, structurally and functionally different from the naturally occurring nucleic acids and have new applications which do not apply to the sequences as found in nature,8 Mr Catterns argued that the isolated polynucleotide sequences code for the same polypeptides as encoded by the gene as found in nature and are therefore, in substance, the same.

    Following the Appellant's submissions, counsel for Myriad, Mr Shavin QC, argued that claims 1-3 of the Myriad patent are not to genetic information, rather they are claims to a new chemical entity and that there is "no jurisprudential basis or normative principle upon which claims to isolated nucleic acids should be treated differently from any other technology".9

    Myriad's arguments centered on the notion that the isolated nucleic acids have utility in isolated form that they do not possess in their native form inside a cell.  Accordingly, Mr Shavin argued that an isolated nucleic acid is "different from nature in the critical sense that it has utility".  The Court accepted that utility is inextricably linked to what is isolated, however the Court also noted the utility needs to be linked to the artificiality in order to define patentable subject matter.  In light of the fact that the sequence of nucleic acids is substantially unaltered by the isolation process, the Court did not appear to consider that the utility was sufficiently linked to the artificiality of the isolated material.

    While Mr Shavin cautioned the Court against "carving out" from the principles of NRDC, it may not be necessary for the Court to do so in order to find that the claims at issue do not relate to an artificially created state of affairs.  Further, the day's proceedings suggest that the Court's consideration will be confined to claims to isolated nucleic acids, leaving aside any broader question of patentability of isolated biological material.

    The decision, expected later this year, will be keenly awaited.

    1 D'Arcy v Myriad Genetics Inc. [2014] FCAFC 115.
    2 Due to expire on 11 August 2015.
    3 National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252; endorsed by the High Court in Apotex Pty Ltd v Sanofi Aventis [2013] HCA 50.
    4 IPTA Submissions at [34].
    5 Attorney-General's Submissions at [6].
    6 Ibid at [10].
    7 Association for Molecular Pathology v Myriad Genetics 569 US 12-398 (2013)
    8 First Respondent's Submissions at [48]-[50].
    9 Ibid at [45]

    Dr. Gregg is a Patent Scientist and Dr. O'Brien is a Principal of Spruson & Ferguson in Sydney, Australia.

  • Interim Guidance Status Check

    By Grantland Drutchas —

    USPTO SealAs of Tuesday, June 16th, we have been living with the U.S. Patent and Trademark Office's "2014 Interim Guidance on Patent Subject Matter Eligibility" ("Guidance") for six months.  Although the USPTO subsequently issued some examples and sought public comment, it started training examiners on the new Guidance almost immediately.  And, of course, the PTAB has started implementing these standards as well.  So the question stands, where are we now?

    Several organizations and individuals, including the IPO, the ABA,  and AIPLA, submitted comments that were directed to perceived shortcomings in the Guidance.  These comments can be found here.  Persistent themes throughout many of these comments include the hope that the USPTO and Examiners should tread lightly when applying a judicial exception, concerns over the application of the "significantly more" test, the need for greater emphasis by the USPTO on preemption, and clarifying the evidentiary burden on the USPTO to establish the bases for a prima facie 101 rejection.  Six months later, these concerns remain.

    Reportedly, the application of the Guidance has varied on a Technology Center-by-Technology Center basis, fueled, perhaps, by the lack of examples in many technology areas.  Although it is difficult to quantitatively assess the application of the Guidance on a center-by-center basis, implementation of § 101 principles by the PTAB provide some indication of the USPTO's approach in implementing the Guidance.  In all, the PTAB has addressed § 101 in about 40 separate decisions since the implementation of the Guidance.  In more than 20 other decisions, although it didn't address the § 101 issues itself, it suggested that the Examiner consider the Guidance in further review of the claims sent back on other grounds.

    USPTO's Evidentiary Burden:

    The Guidance was silent, for example, on the USPTO's evidentiary burden in examination in establishing such grounds for unpatentability as whether a claim recites "a law of nature, natural phenomenon, or an abstract idea" under step 2A of the analysis, or whether the claim adds "significantly more" or simply "routine or conventional" under step 2B of the analysis.  On rejections on other grounds, the USPTO bears the initial burden of presenting a prima facie case supported by substantial evidence; an "assessment of basic knowledge and common sense not based on any evidence in the record" fails to meet this standard.  See In Re Oetiker, 977 F.2d 1443, 1445 (Fed. Cir. 1992); In re Zurko, 258 F.3d 1379, 1385 (Fed. Cir. 2001).  That is, "the PTO [must] stat[e] the reasons for [its] rejection, or objection or requirement, together with such information and references as may be useful in judging of the propriety of continuing the prosecution of [the] application."  In re Jung, 637 F. 3d 1356, 1362 (Fed. Cir. 2011) (citing 35 U.S.C. § 132 and Chester v. Miller, 906 F.2d 1574, 1578 (Fed. Cir. 1990)).

    The PTAB has itself found that this same burden applies to § 101 decisions under the two-step analysis required by Alice:

    The PTO bears the initial burden of establishing a prima facie case of patent-ineligible subject matter under 35 U.S.C. § 101.  Because the facts and evidence do not support the finding that claim 1 is "an attempt to claim a new set of rules for playing a card game" and therefore, necessarily, is an abstract idea, a prima facie case of patent-ineligible subject matter under 35 U.S.C. § 101 has not been established in the first instance by a preponderance of the evidence.

    In re Renald Poisson, Appeal 2012-011084 (Feb. 27, 2015).  See also Ex parte Martin (Appeal 2012-001578) (March 24, 2015) (reversing rejection where Examiner failed to address factors other than the "machine-or-transformation" analysis in support of its prima facie rejection);

    Application of the "significantly more" test:

    The PTAB has addressed issues involving the "significantly more" test in a number of decisions.  In one, it grappled with the difference, if any, between the novel and nonobvious standards on the one hand and "conventional and routine" on the other.  The PTAB has tried to differentiate these standards, finding, for example that a step can be a "routine and conventional" implementation of an abstract idea, even though the step itself may be both novel and nonobvious:

    Appellant appears to argue that, because the claimed subject matter is novel, the game cannot be "conventional."  We find this argument unpersuasive as it misapplies the law governing compliance with 35 U.S.C. § 101.  The Supreme Court has made clear that the analysis of whether claims satisfy the requirements of 35 U.S.C. § 101 is independent of whether those claims satisfy the other requirements for patentability under the patent statute — indeed, the § 101 analysis is a threshold inquiry.  See Bilski v. Kappos, 561 U.S. 593, 594 (2010).  In other words, whether the subject matter of the claims under appeal are novel and non-obvious is immaterial to the § 101 inquiry.

    More significantly, the Decision did not determine that the steps of the claimed invention were "conventional" in the sense that they are not novel or are obvious.  Instead, the test under Alice is whether the elements of the claim, alone or in combination, amounts to significantly more than a patent upon the [ineligible concept] itself — in this case, the abstract rules of playing and wagering on a type of card game.  See Alice, 134 S. Ct. at 2355.  In other words, "[i]f, to implement the abstract concept" — play Blackjack under then claimed set of rules — "one must perform the additional step, or the step is a routine and conventional aspect of the abstract idea, then the step merely restates an element of the abstract idea, and thus does not further limit the abstract concept to a practical application."  Ultramerical, Inc. v. Hulu, LLC, 722 F.3d 1335, 1348 (Fed. Cir. 2013).

    Ex parte Christian A. Schlumbrecht, Appeal 2012-012597 (May 13, 2015).

    Although claims to games are typically deemed patent ineligible, a couple of cases showcase how providing something more — whether or not it complies with the machine-or-transformation test — can render even a game patentable.  In Ex Parte Kuester, Appeal  2013-001127 (May 6, 2015), the PTAB reversed a § 101 rejection for a claim to a card game that required a base that includes compartments "sized and shaped to receive and retain each card in place for the duration of a game after said cards have been arranged in one of a plurality of different configurations" and "retaining each card in place for the duration of a game."  The added specific structural components — which would meet the machine-or-transformation test — added a degree of particularity so as to transform the claimed abstract idea into patent eligible subject matter.

    In Ex parte Jimick, Appeal 2012-009601 (February 2, 2015), by contrast, the PTAB found that a claim to a game was patentable under § 101 that had steps involving setting up markers on a specific board and requiring specific jumping arrangements based in part on the lack of preemption.  Although this game did not meet the machine-or-transformation test, this is not the only test.

    Importance of Preemption:

    Like the Ex parte Jimick case noted above, the PTAB has found that the lack of preemption was grounds for finding a claim patentable in several other cases as well.  In Ex parte Schmid et al., Appeal 2012-002155 (December 26, 2014) (reversing § 101 rejection of claims for "communicating information concerning the sleep position of an infant to the infant's caregiver" that were limited to "use of an infant sleep garment"), for example, it found that limiting the use of an abstract idea to a specific structure provided the "additional features" that ensure the claims are "more than a drafting effort designed to monopolize the [abstract idea]."

    Preemption also figures heavily in several of the other cases discussed elsewhere in this note.

    Machine-or-transformation test:

    In Ex Parte Nguyen, Appeal 2012-006173 (Jan. 9, 2015), the PTAB found that a claim directed to a web "portal" ('a transaction management portal engine, a management database, and a user interface") is a physical entity, i.e., a machine, and as such, it falls within one of the four statutory categories of patentable subject matter.  Although the claim also called for the portal engine to execute a "business rule" and was coupled to a "management database," the PTAB found the focus of the claim on the portal was sufficient to confer patentability.

    In Ex Parte Hyde, Appeal 2012-009430 (April 29, 2015), the PTAB found that claims broad enough to read on software per se were unpatentable under section 101, but that claims with means-plus-function limitations, which necessarily required the specific structure (circuitry) disclosed in the patent or equivalent, were patentable.

    On the other hand, where the claims are not directed to the machine itself, the mere recitation of a machine (even other than a computer) is not enough.  In Ex parte Huynh, Appeal 2013-006708 (May 26, 2015), the PTAB found that a method for designing a machine (in this case, an integrated circuit) was itself not patentable under § 101.  The PTAB found a method for generating a physical layout for an integrated circuit using modular tiles was unpatentable where the claimed method was not tied to a particular machine or apparatus, did not transform an article to a different state or thing, and did not require the manufacture of the integrated circuit itself.  Moreover, such tile modules used to specify and form the IC involved "a standard IC fabrication process," and thus were themselves routine and conventional.

    In conclusion, the PTAB has worked to implement these principles and its decisions provide a blueprint for argument that may help in prosecution.  Although many of these decisions are simply "informative" and not "precedential," they still provide an important bellwether of the USPTO's views on these 101 issues and application of the Guidance.

  • Court Report

            By Sherri Oslick —

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

    Janssen Pharmaceuticals Inc. v. Vintage Pharmaceuticals, LLC
    1:15-cv-00429; filed May 28, 2015 in the District Court of Delaware

    Janssen Pharmaceuticals, Inc. v. Vintage Pharmaceuticals, LLC
    2:15-cv-03542; filed May 26, 2015 in the District Court of New Jersey

    The complaints in these cases are substantially identical.  Infringement of U.S. Patent No. 6,214,815 ("Triphasic Oral Contraceptive," issued April 10, 2001) following a Paragraph IV certification as part of Vintage's filing of an ANDA to manufacture a generic version of Janssen's Ortho Tri-Cyclen® Lo (norgestimate and ethinyl estradiol, used for oral contraception).  View the New Jersey complaint here.

    Duchesnay Inc. et al. v. Mylan Pharmaceuticals Inc.
    1:15-cv-00092; filed May 27, 2015 in the Northern District of West Virginia

    • Plaintiffs:  Duchesnay Inc.; Duchesnay USA Inc.
    • Defendant:  Mylan Pharmaceuticals Inc.; Mylan Pharmaceuticals Inc.

    Infringement of U.S. Patent No. 6,340,695 ("Rapid Onset Formulation," issued January 22, 2002) following a Paragraph IV certification as part of Mylan's filing of an ANDA to manufacture a generic version of Duchesnay's Diclegis® (doxylamine succinate and pyridoxine hydrochloride delayed-release tablets, used for the treatment of nausea and vomiting of pregnancy in women who do not respond to conservative management).  View the complaint here.


    Takeda GmbH et al. v. Mylan Pharmaceuticals Inc.
    1:15-cv-00093; filed May 27, 2015 in the Northern District of West Virginia

    • Plaintiffs:  Takeda GmbH; Astrazeneca Pharmaceuticals LP; Astrazeneca UK Ltd.
    • Defendant:  Mylan Pharmaceuticals Inc.

    Infringement of U.S. Patent Nos. 5,712,298 ("Fluoroalkoxy-Substituted Benzamides And Their Use As Cyclic Nucleotide Phosphodiestrerase Inhibitors," issued January 27, 1998), 8,536,206 ("Process for the Preparation of Roflumilast," issued September 17, 2013), 8,604,064 (same title, issued December 10, 2013), and 8,618,142 (same title, issued December 31, 2013) following a Paragraph IV certification as part of Mylan's filing of an ANDA to manufacture a generic version of AstraZeneca's Daliresp® (roflumilast, used to reduce the risk of COPD exacerbation in patients with severe COPD associated with chronic bronchitis and a history of exacerbation).  View the complaint here.

    Cipla Ltd. v. Sunovion Pharmaceuticals Inc.
    1:15-cv-00424; filed May 26, 2015 in the District Court of Delaware

    Infringement of U.S. Patent No. RE43,984 ("Process for Preparing Isomers of Salbutamol," issued February 3, 2015) based on Sunovion's manufacture and sale of its Xopenex® HFA product (levalbuterol hydrochloride inhalation aerosol, used to treat bronchospasm caused by asthma and chronic obstructive pulmonary disease).  View the complaint here.

  • Conference & CLE Calendar

    CalendarJune 15, 2015 – "Patent Eligibility, Prior Art and Obviousness 2015: Current Trends in Sections 101, 102 and 103" (Practising Law Institute) – San Francisco, CA (also offered as webcast)

    June 15-17, 2015 – Fundamentals of Patent Prosecution 2015: A Boot Camp for Claim Drafting & Amendment Writing (Practising Law Institute) – New York, NY

    June 15-18, 2015 – BIO International Convention (Biotechnology Industry Organization) – Philadelphia, PA

    June 18, 2015 – "Patent Infringement Letters: Considerations and Best Practices for Senders and Recipients — Patent Holder Strategies for Leveraging Letters and Avoiding DJ Actions; Defense and Response Strategies for Alleged Infringers" (Strafford) – 1:00 to 2:30 pm (EDT)

    June 23, 2015 – "Practical Patent Prosecution Strategies and Considerations" (American Bar Association (ABA) Center for Professional Development, Section of Intellectual Property Law, and Young Lawyers Division) – 1:00 to 2:30 pm (ET)

    June 25, 2015 – "Patent Inventorship: Best Practices for Determination and Correction" (Strafford) – 1:00 to 2:30 pm (EDT)

    July 8-10, 2015 – Fundamentals of Patent Prosecution 2015: A Boot Camp for Claim Drafting & Amendment Writing (Practising Law Institute) – San Francisco, CA

    July 9, 2015 – "Leveraging Post-Grant Patent Proceedings Before the PTAB — Best Practices for Patentees and Third Parties in Inter Partes Review, Post-Grant Review and Covered Business Method Patent Challenges" (Strafford) – 1:00 to 2:30 pm (EDT)

    July 14, 2015 – Patent Quality Chat webinar series – Face-to-face Examiner Interviews: A Demonstration of USPTO Tools – noon to 1:00 pm (EDT)

    August 11, 2015 – Patent Quality Chat webinar series – Measuring Patent Quality – noon to 1:00 pm (EDT)

    August 12-14, 2015 – Advanced Patent Law Seminar (Chisum Patent Academy) – Seattle, WA

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

  • Webinar on Leveraging Post-Grant Patent Proceedings

    Strafford #1Strafford will be offering a webinar/teleconference entitled "Leveraging Post-Grant Patent Proceedings Before the PTAB — Best Practices for Patentees and Third Parties in Inter Partes Review, Post-Grant Review and Covered Business Method Patent Challenges" on July 9, 2015 from 1:00 to 2:30 pm (EDT).  Greg H. Gardella and Scott A. McKeown of Oblon Spivak McClelland Maier & Neustadt will discuss post-grant patent practice and offer best practices for counsel to either patentees or third parties in inter partes review, post-grant review, and covered business method challenges.  The webinar will review the following questions:

    • How has post-grant practice developed since the PTAB started?
    • How is the PTAB adapting to the increased workflow and what rule changes are anticipated in the months ahead?
    • What are the best practices for these proceedings together with concurrent litigation?
    • How are patentees adapting to the threat of PTAB challenges and what concurrent office proceedings are available to hedge against such attacks?

    The registration fee for the webinar is $297 ($362 for registration and CLE processing).  Those registering by June 19, 2015 will receive a $100 discount ($165 discount for registration and CLE processing).  Those interested in registering for the webinar, can do so here.

  • CLE on Patent Eligibility, Prior Art and Obviousness

    PLI #1Practising Law Institute (PLI) will be offering a seminar entitled: "Patent Eligibility, Prior Art and Obviousness 2015: Current Trends in Sections 101, 102 and 103" on June 15, 2015 in San Francisco, CA.  The seminar will also be webcast.  The seminar includes not only the important touchstones of prior art and obviousness, but also patent eligibility post-Alice.  PLI faculty will provide predictions about what will happen during a patent's enforcement period now that the U.S. Supreme Court has taken an interest in the patent system, and give practical tips as to how best to find clarity where there often isn't any.  The seminar will address the following topics:

    • The moving target of 101: A closer look at the Supreme Court and PTO Guidelines;
    • Dates and timelines of 102: Is there a "grace period"?
    • What does "effective filing date" mean from a global perspective?
    • A review of the universe of KSR and 103;
    • Impact of proper and improper benefit claims on the prior art date of a reference and the effective filing date of the application being examined; and
    • Applying 101 and 103 guidance after Myriad, Mayo, Alice and KSR retrospectively.

    PLI faculty will offer presentations on the following topics:

    • Overview of the Program 101, 102, and 103 from now to the advice horizon
    • Section 102: Inside and outside the PTO — the AIA and the future
    •  KSR and 103: Tools you can use?
    • 35 USC 103 and the CAFC
    • The Concept of Old 102(e) Recast as New 102 (a)(2) as Implemented by New 102(d): Effects of Priority Under 119, 120, 121, 365

    The registration fee for the seminar or webcast is $1,695.  Those interested in registering, can do so here.

  • OIP Technologies, Inc. v. Amazon.com, Inc. (Fed. Cir. 2015)

    By Michael Borella —

    AmazonIn its first substantive application of Alice v. CLS Bank in 2015, the Federal Circuit has once again shot down claims for not meeting the patent-eligibility requirements of 35 U.S.C. § 101.

    In 2012, OIP sued Amazon in the Northern District of California, alleging infringement of U.S. Patent No. 7,970,713.  The District Court granted Amazon's motion for judgment on the pleadings, finding that the '713 patent is not directed to patent-eligible subject matter, as the claims "merely use a general-purpose computer to implement the abstract idea of price optimization."  Judges Taranto, Mayer, and Hughes heard the appeal.

    Claim 1 of the '713 patent recites:

    A method of pricing a product for sale, the method comprising:
        testing each price of a plurality of prices by sending a first set of electronic messages over a network to devices;
        wherein said electronic messages include offers of said product;
        wherein said offers are to be presented to potential customers of said product to allow said potential customers to purchase said product for the prices included in said offers;
        wherein the devices are programmed to communicate offer terms, including the prices contained in the messages received by the devices;
        wherein the devices are programmed to receive offers for the product based on the offer terms;
        wherein the devices are not configured to fulfill orders by providing the product;
        wherein each price of said plurality of prices is used in the offer associated with at least one electronic message in said first set of electronic messages;
        gathering, within a machine-readable medium, statistics generated during said testing about how the potential customers responded to the offers, wherein the statistics include number of sales of the product made at each of the plurality of prices;
        using a computerized system to read said statistics from said machine-readable medium and to automatically determine, based on said statistics, an estimated outcome of using each of the plurality of prices for the product;
        selecting a price at which to sell said product based on the estimated outcome determined by said computerized system; and
        sending a second set of electronic messages over the network, wherein the second set of electronic messages include offers, to be presented to potential customers, of said product at said selected price.

    In short, the '713 patent claims a computer-implemented method for testing the uptake of various different prices for a product, determining which of these prices resulted in a desirable outcome (e.g., highest number of sales or highest profitability), and then using this price for future sales of the product.

    According to the '713 patent, "traditionally merchandisers manually determine prices based on their qualitative knowledge of the items, pricing experience, and other business policies . . . [i]n setting the price of a particular good, the merchandiser estimates the shape of a demand curve for a particular product based on, for example, the good itself, the brand strength, market conditions, seasons, and past sales."  But, "the merchandiser is slow to react to changing market conditions, resulting in an imperfect pricing model where the merchandiser often is not charging an optimal price that maximizes profit."  A purported advantage of the invention is that it "helps vendors automatically reach better pricing decisions through automatic estimation and measurement of actual demand to select prices."

    After noting that § 101 issues are matters of law reviewed de novo, the Federal Circuit set forth the two-prong patent-eligibility test of Alice.  The first prong is to determine whether the claims are directed to a patent-ineligible law of nature, natural phenomenon, or abstract idea.  If so, the second prong is to determine whether any additional claim elements transform the claim into a patent-eligible application that amounts to significantly more than the ineligible concept itself.

    The Court noted that "[c]laim 1 broadly recites a method of pricing a product for sale," and that "[t]his concept of offer based pricing is similar to other fundamental economic concepts found to be abstract ideas by the Supreme Court and this court."  Further, "that the claims do not preempt all price optimization or may be limited to price optimization in the e-commerce setting do not make them any less abstract."

    Turning to the second prong, the Court found that, beyond this abstract idea, "the claims merely recite well-understood, routine conventional activities, either by requiring conventional computer activities or routine data-gathering steps."  Additionally, the Court indicated that "the claims are exceptionally broad and the computer implementation limitations do little to limit their scope" and that "the specification makes clear that this programming and the related computer hardware refers to any sequence of instructions designed for execution on a computer system."  Also swaying the Court's opinion was its belief that "relying on a computer to perform routine tasks more quickly or more accurately is insufficient to render a claim patent eligible."

    On this basis, the Court concluded that the claims did not meet the requirements of § 101, and affirmed the District Court.

    Judge Mayer wrote separately to reiterate his previously-expressed view (see I/P Engine, Inc. v. AOL Inc. (Aug 2014) and Ultramercial Inc. v. Hulu LLC (Nov. 2014)) that patent-eligibility should be addressed at the outset of a case, for example, in the pleadings as was done by Amazon.  Particularly, he contended that doing so "not only conserves scarce judicial resources and spares litigants the staggering costs associated with discovery and protracted claim construction litigation, it also works to stem the tide of vexatious suits brought by the owners of vague and overbroad business method patents."  But then he went on to state that the Supreme Court has instructed that § 101 is to be resolved at the first opportunity.

    As we have noted previously, Judge Mayer is taking liberties with his interpretation of the Supreme Court's position.  No Supreme Court cases (or Federal Circuit cases for that matter) actually go as far as stating that § 101 determinations must be made early in litigation.  These cases may suggest the § 101 inquiry should take place before §§ 102 and 103 examination, but they do not state that this is a requirement.

    And for good reason.  Unfortunately, the Alice test is often decided on vague notions of whether a claim is "too abstract," "too broad," or whether it resembles those reviewed in Alice and Bilski v. Kappos.  Use of this "walks like a duck" criteria allows courts, as well as the Patent and Trademark Office, to strip patentees of their property rights without discovery, claim construction, or determination of ordinary skill in the art.  No doubt, Judge Mayer's proposal would reduce the size of courts' dockets, and probably result in some "bad" patents being invalidated.  All patents challenged under § 101, however, would be at risk of being thrown out with the bathwater.

    OIP Technologies, Inc. v. Amazon.com, Inc. (Fed. Cir. 2015)
    Panel: Circuit Judges Taranto, Mayer, and Hughes
    Opinion by Circuit Judge Hughes; concurring opinion by Circuit Judge Mayer

  • News from Abroad: Pravastatin Sodium Case, Japan Product-by-Process Claiming Practice: Supreme Court Overrules the Grand Panel of the IP High Court

    By Dr. Shoichi Okuyama* —

    Japan FlagProduct-by-process claim drafting and interpretation practice were greatly modified by the Pravastatin Sodium Case decisions (Japan Supreme Court, June 5, 2015, Second Petty Bench, case Nos. 2012(ju)1204 and 2012(ju)2658).  Japan's highest court reversed the Grand Panel of the IP High Court; two points were emphasized in the opinion of the Court:

    Products made by a Different Process Infringe the Claim:  "[E]ven if a patent claim concerning a product invention recites the manufacturing process of a product, the technical scope of the patented invention should be determined to cover products that have the same structure and characteristics, etc., as those of the product made in accordance with the manufacturing process."

    Product-by-Process Claims When Only Way to Define Product:  "[W]hen patent claims concerning a product invention recite the manufacturing process of a product, the claims would satisfy the requirement [that] "the invention be clear" according to Article 36(6)(ii), Patent Act, only if circumstances exist under which it is impossible or utterly impractical to directly identify the structure or characteristics of the product at the time of filing."

    An analysis follows, with more expansive extracts from the Supreme Court opinion at the end of this paper.

    The Supreme Court Lipase Decision (1991):  The Supreme Court in this decision recognized the importance of the public notice function of patent claims.  Citing the Lipase Decision, the Court in the Pravastatin Sodium Case reiterated the public notice function of patent claims.  In the earlier Lipase Decision the Supreme Court rejected the idea of reading a limitation from the specification into pending claims.  The Tokyo High Court (now IP High Court) read "lipase" in the claim as the species "Ra lipase" because all examples in the specification in the context of the patent examination proceedings were for Ra lipase.  The Lipase Decision was an appeal from a JPO decision to reject the application.

    The Supreme Court stated that:

    When the patentability requirements according to Article 29(1) and (2), Patent Act are examined; that is, the novelty and inventive step of an invention found in a patent application, the gist of the invention in the application has to be determined in order for the invention to be compared with prior art defined in Article 29(1).  Unless special circumstances exist, this determination of the gist has to be made based on the recitations in the claims.  Only if special circumstances exist such as when the technical meaning of a recitation in the claim cannot be understood without ambiguities, or when it is apparently clear that such recitation is an error with reference to the detailed descriptions of the invention in the specification, it is permitted to refer to the detailed description of the invention in the specification.

    The Supreme Court has thus apparently Justice Yamamoto's sharply worded Concurrence once again rejected the idea of differentiating the scope of a patent claim based on circumstances or conditions that exist outside the claim.

    Justice Yamamoto's Sharply Worded Concurrence:  Justice Yamamoto, who started his career as a bureaucrat at the Ministry of International Trade and Industry (now the Ministry of Economy, Trade and Industry), concurred with the Judgement but criticized the majority opinion.

    Supreme Court Reference to American Court decisions:  In the supporting opinion, Justice Chiba discussed the en banc decision of the Federal Circuit in Abbott Labs. v. Sandoz, Inc. (2009), and the Nautilus United States Supreme Court decision.

    Implications for Product-by-Process Claiming:  Under these new Supreme Court decisions, the Japan Patent Office now has to examine patent applications containing product-by-process claims to determine whether or not any circumstances exist under which it was impossible or utterly impractical to directly identify the structure or characteristics of the product at the time of filing.  The burden rests on the applicant to show to show such circumstances existed as of the filing date.  It is generally not easy to show that something is impossible to accomplish while it may be easier to show the contrary.  Also, the applicant may have to make sure that the structures or characteristics of, say, antibiotics, microorganisms or modified cells are described in detail in the patent application, although claims identifying such structures or characteristics may be more difficult to understand.

    Questioning the Validity of Existing Patents:  The validity of existing patents that have product-by-process limitations in the claims may have to be questioned.

    * * *

    Pravastatin Sodium Case
    Case No. 2012 (ju) 1204
    Patent infringement case demanding injunction
    June 5, 2015
    Ruling of the Second Petty Bench

    Excerpts from the opinion**

    Judgement

    The original decision is reversed.

    The case is remanded to the Intellectual Property High Court.

    Reason

    Concerning the first, second, fourth, and fifth points raised in the Petition for Acceptance of Final Appeal by appeal attorney Kiyoshi Kamiya.

    1        In the present case, the appellant, who has a patent including a so-called product-by-process claim which recites the manufacturing process of a product with the patent being granted on a product invention, asked for an injunction on the manufacture and sale of pharmaceutical products the appellee produces and the disposal of such products, because the appellee's pharmaceutical products allegedly infringe on the appellant's patent.  The appellee asserts, for example, that such pharmaceutical products does not fall under the technical scope of the patented invention of the appellant.  An issue in dispute is how the technical scope of a patented invention should be determined when the manufacturing process is recited in a patent claim directed to a product invention.

    2        Summary of the original court decision and determined facts are as follows.

    (1) The present patent
    The appellant has a patent on an invention entitled "Pravastatin sodium substantially free of pravastatin lactone and epi-pravastatin, and compositions containing same," (patent No. 3,737,801, and the number of claims is nine. Hereinafter, it is called "the subject patent.")

    (2) The present invention
    Claim 1 of the claims of the patent (hereinafter referred to as "the subject claim.") is as follows (hereinafter referred to as "the present invention").
    "Pravastatin in which the mixing amount of the pravastatin lactone is less than 0.5 wt%, pravastatin sodium contamination of epiprava is less than 0.2% by weight, prepared by a process comprising the following steps:
        a) forming a concentrated organic solution of pravastatin;
        b) precipitating pravastatin as an ammonium salt thereof;
        c) purifying the ammonium salt by recrystallization;
        d) transposing the ammonium salt to the pravastatin sodium; and
        e) isolating pravastatin sodium."

    (3) The appellee's product

    A. The appellee manufactures and sells pravastatin Na salt tablets 10mg of the drug "KH" (formerly known as pravastatin Na salt tablets 10mg "Merck", hereinafter referred to as "the appellee product".).

    B. The appellee's product contains pravastatin sodium that has less than 0.5 wt% of mixed pravastatin lactone and less than 0.2 wt% of mixed epiprava.  Its method of manufacture, at least, does not involve "a) forming a concentrated organic solution of pravastatin" recited in the subject claim.

    3        The original decision made determinations as follows and dismissed the demand of the appellant.

    (1) The technical scope of a patented invention, when the manufacturing process of a product is recited in patent claims directed a product invention, the technical scope of such invention should be limited to products manufactured according to the manufacturing process described in the claim, unless there exist circumstances in which it is impossible or difficult at the time of filing to directly identify the product by its structure or characteristics.

    (2) Since no such circumstances as in (1) above exist for the present invention, the technical scope of the present invention should be limited to those produced by the production process.  The process for making the appellee's product does not involve at least "a) forming a concentrated organic solution of pravastatin" recited in the subject claim, the appellee's products do not fall within the technical scope of the present invention.

    4        However, we cannot accept the criteria indicated in 3(1) above discussed in the original decision, and we cannot accept the determination made on the basis of such criteria discussed in 3(2) above.  The reasons for this are as follows:

    (1) The claims attached to the application has the function of defining the technical scope of the patented invention based on what is described in the claims (Article 70(1), Patent Act), and also determining the gist of the invention in the patent application for which examination of patentability requirements such as those prescribed in Article 29 of the same Act is carried out based on what is in the claims (Supreme Court decision of March 8, 1991, Case No. 1987(gyotsu), the ruling of the Second Petty Bench, published in Minshu, Vol. 45, No. 3, page 123).  While patents are granted on product inventions, method inventions, and inventions of processes for producing products, when a patent is granted on a product invention, the effect of the patent covers products that have the same structure and characteristics, etc. as those of the patented product without any regards to the manufacturing process.

    Therefore, even if a patent claim concerning a product invention recites the manufacturing process of a product, the technical scope of the patented invention should be determined to cover products that have the same structure and characteristics, etc., as those of the product made in accordance with the manufacturing process.

    (2)  By the way, according to Article 36(6)(ii), Patent Act, recitations in the claims have to satisfy the requirement that "the invention be clear".  The patent system is to provide protection over inventions for patentees by granting patents that are monopolistic rights to those who disclosed inventions, and encourage the utilization of inventions by letting third parties know of patented inventions, for the purpose of encouraging inventions, and thereby contributing to the development of industry (Article 1, Patent Act).  We understand that the requirement of clarity of the invention in the claims according to Article 36(6)(ii) is provided for this purpose.  In view of this, in every case where the manufacturing process of a product is described in a patented claim directed to a product invention, if the effect of the patent is determined in such a manner that the technical scope of a patented invention is determined to cover products that have the same structure and characteristics, etc. as those of the product made in accordance with the manufacturing process, it is problematic in that third party interests may possibly be unjustifiably prejudiced.  In other words, if the manufacturing process is recited in a patented claim directed to a product invention, it is generally unclear what structures or characteristics of the product are represented by the manufacturing process, or it is unclear whether the technical scope of the claim directed to a product invention is limited to products manufactured by the manufacturing process.  The reader of such recitation in the claims cannot clearly understand the content of the invention, and it makes unpredictable what scope of monopoly the proprietor has.  This is not entirely appropriate.

    On the other hand, in patent claims directed to a patent for a product invention, such product is ordinarily identified by clearly reciting its structure and characteristics in a direct manner.  However, depending on the nature, property or the like of the product, it may be technically impossible to analyze its structure or characteristics at the time of filing, or it may require an outrageously large economic expenditure or time to carry out work necessary to identify.  In view of the nature of patent applications which requires speed, etc., there may be cases where it is not practical to require applicants such identification.  Therefore, it should be made possible to recite a manufacturing process in a claim directed to a product invention.  If the above-mentioned circumstances exist, third party interests would not be unjustifiably harmed even if the technical scope of the patented invention is determined to be products that have the same structure and characteristics, etc. as those of the product made by such manufacturing process.

    As we have discussed above, when patent claims concerning a product invention recite the manufacturing process of a product, the claims would satisfy the requirement of "the invention be clear" according to Article 36(6)(ii), Patent Act, only if circumstances exist under which it is impossible or utterly impractical to directly identify the structure or characteristics of the product at the time of filing.

    5        Differing from the above, the judgement in the original decision, which says that when the manufacturing process of a product is recited in the claims, while generally allowing such recitation in the claims, the technical scope of the patented invention should be determined to be limited, as a rule, to products manufactured according to the manufacturing process described in the claim, contains a clear violation of law which affects the conclusion of the decision.  The drift of the arguments is reasoned, and the original decision has to be reversed.  Then, the case is remanded to the original court, so that in accordance with what is discussed in this decision, proceedings should be completed concerning whether the recitation in the claims satisfies the requirement of "the invention be clear" and allowable when the circumstances discussed in section 4(2) above exist, and the technical scope of the invention should be determined.

    Thus, in the opinion of the justices unanimously, it is ruled as in the Judgment.  In addition, Justice Katsumi Chiba has a supporting opinion[1], and Justice Tsuneyuki Yamamoto has an opinion[2].

     — The rest of the decision has not been translated —

     

    * Patent Attorney with Okuyama & Sasajima
     
    ** This is a tentative English Translation of the Majority Opinion of the Supreme Court of Japan in Case No. 2012(ju)1204 as published on the web site of the Supreme Court (Supporting Opinion by Justice Katsumi Chiba and Opinion by Justice Tsuneyuki Yamamoto are not included. Underlining is shown as it appears in the decision.)

    [1] Justice Chiba explained the majority opinion (about 5 pages) in greater detail in a lengthy discussion (about 8 pages).

    [2] Concurring in judgement

  • A Sea Change for IPRs? — Part II

    By Grantland Drutchas —

    House of Representatives SealYesterday, we reported on the inter partes review (IPR)-specific provisions of the Managers Amendment to the PATENT ACT bil, which was passed last week by the Senate Judiciary Committee (see also "Senate Judiciary Committee Passes PATENT Act").

    On June 9th, in the House of Representatives, Rep. Bob Goodlatte submitted an "Amendment in the Nature of a Substitute to H.R. 9" for his INNOVATION ACT bill.  This bill does not comport fully with the Senate bill, but the amendment does include tweaks to the Litigation Reform proposals in his prior bill (see "Rep. Goodlatte Introduces His Patent Reform Bill (Again)" and "Rep. Goodlatte Introduces His Patent Reform Bill (Again) — Part II"), and a couple of the IPR/PGR-related provisions of the PATENT ACT Manager's Amendment addressed in our report yesterday.  It also contains a couple of new IPR/PGR provisions, relating to consideration of due process rights in implementing IPR/PGR regulations and requiring that a petitioner certify that it has engaged in hedging or demanded payment from the patent owner.

    Note that the Goodlatte Innovation Act bill introduced on February 5, 2015 already included one of the Standards and Burden of Proof provisions of the Senate bill — requiring the Phillips' ordinary and customary claim construction standard to be applied as opposed to the broadest reasonable interpretation.  It also required that the PTAB consider any prior claim construction by a Court.

    Thus, the new IPR/PGR provisions introduced by amendment in the Goodlatte bill are as follows:

    EVIDENCE:
    Allows the Preliminary Response to Petition for an IPR or PGR to include affidavits or declarations of supporting evidence and opinions.  Also allows the Commissioner to accept a reply by the Petitioner to any new issues raised in the response [similar to the Senate bill].

    CONSIDERATION OF DUE PROCESS:
    Requires the Director in implementing any regulations regarding IPRs and PGRs to consider the effect of those regulations on due process of the patent owner [new provision].

    PEITIONER CERTIFICATION:
    Precludes review unless the petitioner certifies: (1) that it does not own a financial instrument designed to hedge or offset any decrease in market or equity value of the patent owner or an affiliate, and (2) that it has not demanded payment from the patent owner in exchange for foregoing filing an IPR/PGR (unless the petitioner or real party in interest has been sued or charged with infringement under patent)  [new provision].

    Patent Docs will provide more information on amendments to the Innovation Act in a subsequent post.

  • A Sea Change for IPRs?

    Late-Breaking Section 11 Regarding IPRs Part of the PATENT Act Approved by Senate Judiciary Committee

    By Grantland Drutchas —

    Washington - Capitol #3As reported here last week, the Senate Judiciary Committee passed the PATENT Act bill, with a Managers Amendment that includes several IPR-specific provisions.

    With this Amendment, the PATENT Act now has two major components:  changes to IPRs to help counterbalance the Litigation Reform efforts.  It seems to signal a compromise brewing among moderate forces in the various camps — the Pharma sector might accept Litigation Reform if there are fixes to the IPR regime.  And the Tech sector might accept changes to the IPR regime if there are further improvements to Litigation Reform.

    The primary IPR provisions with the Manager's Amendment to the PATENT Act are as follows:

    EVIDENCE:
    Concern:  The petitioner could put in declarations, affidavits, etc., but the patent holder is limited to attorney arguments in response to the petition.  This is an issue of fairness, particularly where witness credibility or fact issues arise.

    Managers' Amendment (pp. 42-43):  The patent owner can put in affidavits or declarations of supporting evidence and opinions in its preliminary response.  The petitioner may seek leave to file a reply to respond to new issues raised in the preliminary response.

    REVIEW BASED ON SAME EVIDENCE AS CONSIDERED BY COURTS:
    Concern:  In some cases where the PTAB has taken on review after the district court, it has addressed the same evidence as the district court.  The PTAB has actually cited the different standards of review as a basis for granting a petition.  As a result, there have been requests to amend so that if courts considered the same or substantially the same evidence, the PTAB must give deference to district court decision.

    Managers' Amendment (Section 11, pp. 43-44):  The PTAB should consider the interests of justice — whether the same or substantially the same evidence has been involved in a court proceeding.

    STANDARDS AND BURDEN OF PROOF:
    Concern:  Differing standards in PTAB trials from district court litigation have made the PTAB look like a death squad.  Many, especially in the pharmaceutical and biotech sectors, have requested that the PTAB apply uniform standards as the district courts — 3 prongs: 
1) Phillips' ordinary and customary claim construction standard to be applied as opposed to broadest reasonable interpretation, 2) clear and convincing evidence invalidity standard to be applied, and 
3) presumption of validity to be applied throughout the course of proceedings.

    Managers' Amendment (Section 11, pp. 48, 50):  District Court Philips standard and presumption of validity (1 and 3 only).  Clear and convincing evidence not in amendment and burden is still the same (preponderance).  It is not clear how a presumption would be applied if the standard is not clear and convincing evidence.

    ABILITY TO AMEND CLAIMS:
    Concern:  Lack of a real opportunity to amend — combined with broadest reasonable interpretation, this makes PTAB trials particularly problematic.  Amendment has only been permitted in a handful of IPRs to date.

    Managers' Amendment (Section 11, pp. 55-56):  Regulations to be promulgated that allow substitute claims under certain conditions.  Also, currently permits challenger to argue "unpatentability" — not clear whether challenger can raise 112 arguments against amended claim.

    INSTITUTION:
    Concern:  Merits panel having the same composition decides on the institution of the petition and then resolves final decision –- viewed as stacked against patent holder because the same group that made the initial decision to institute may be pre-disposed regarding patentability in reaching a final decision.

    Managers' Amendment (Section 11, p. 57):  No more than one decision maker can overlap with merits panel; regulations may prescribe that a different group than the PTAB make the decision to institute altogether.