Patent Docs

In re BRCA1- and BRCA2-based Hereditary Cancer Test Patent Litigation (Fed. Cir. 2014)

December 17, 2014

By Kevin E. Noonan —

In a decision that will surprise no one (written by Judge Dyk, which made the conclusions foregone from the first page of the opinion), the Federal Circuit today affirmed the Utah District Court's decision denying Myriad Genetics' motion for a preliminary injunction in the consolidated Multidistrict Litigation styled In re BRCA1- and BRCA2-based Hereditary Cancer Test Patent Litigation. What might have been anticipated but is still surprising is the opinion's apparent willingness to ignore established patent law principles (and the statute) in favor of obsequious obedience to what the panel perceives to be Supreme Court precedent while at the same time ignoring Myriad's arguments that relied upon express language from the Court's recent § 101 cases.

To recap, the appeal was over the following claims from Myriad's asserted patents (in a footnote the opinion noted that Myriad was no longer pursuing an appeal with regard to claims 2 and 4 of U.S. Patent No. 5,654,155, claim 5 of U.S. Patent No. 6,951,721, and claim 4 of U.S. Patent No. 6,033,857).

From U.S. Patent No. 5,753,441 ("the '441 patent"):

7. A method for screening germline of a human subject for an alteration of a BRCA1 gene which comprises comparing germline sequence of a BRCA1 gene or BRCA1 RNA from a tissue sample from said subject or a sequence of BRCA1 cDNA made from mRNA from said sample with germline sequences of wild-type BRCA1 gene, wild-type BRCA1 RNA or wild-type BRCA1 cDNA, wherein a difference in the sequence of the BRCA1 gene, BRCA1 RNA or BRCA1 cDNA of the subject from wild-type indicates an alteration in the BRCA1 gene in said subject [The method of claim 1] wherein a germline nucleic acid sequence is compared by hybridizing a BRCA1 gene probe which specifically hybridizes to a BRCA1 allele to genomic DNA isolated from said sample and detecting the presence of a hybridization product wherein a presence of said product indicates the presence of said allele in the subject.

8. A method for screening germline of a human subject for an alteration of a BRCA1 gene which comprises comparing germline sequence of a BRCA1 gene or BRCA1 RNA from a tissue sample from said subject or a sequence of BRCA1 cDNA made from mRNA from said sample with germline sequences of wild-type BRCA1 gene, wild-type BRCA1 RNA or wild-type BRCA1 cDNA, wherein a difference in the sequence of the BRCA1 gene, BRCA1 RNA or BRCA1 cDNA of the subject from wild-type indicates an alteration in the BRCA1 gene in said subject [The method of claim 1] wherein a germline nucleic acid sequence is compared by amplifying all or part of a BRCA1 gene from said sample using a set of primers to produce amplified nucleic acids and sequencing the amplified nucleic acids.

(where claim language in italics recites limitations from the independent claim, and language in bold and italics is relevant to the Court's opinion).

From U.S. Patent No. 5,747,282 ("the '282 patent"):

16. A pair of single-stranded DNA primers for determination of a nucleotide sequence of a BRCA1 gene by a polymerase chain reaction, the sequence of said primers being derived from human chromosomne 17q, wherein the use of said primers in a polymerase chain reaction results in the synthesis of DNA having all or part of the sequence of the BRCA1 gene.

17. The pair of primers of claim 16 wherein said BRCA1 gene has the nucleotide sequence set forth in SEQ ID NO:1.

From U.S. Patent No. 5,837,492 ("the '492 patent"):

29. A pair of single-stranded DNA primers of at least 15 nucleotides in length for determination of the nucleotide sequence of a BRCA2 gene by a polymerase chain reaction, the sequence of said primers being isolated from human chromosome 13, wherein the use of said primers in a polymerase chain reaction results in the synthesis of DNA comprising all or at least 15 contiguous nucleotides of the BRCA2 gene.

30. The pair of primers of claim 29 wherein said BRCA2 gene has the nucleotide sequence set forth in SEQ ID NO:1.

Myriad moved in the District Court for a preliminary injunction, which the Court denied; while it found that Myriad had established the required risk of irreparable harm, the public interest was "in equipoise" and the balance of the hardships tipped slightly in Ambry's favor. The Court denied the injunction because it found Myriad had not demonstrated a likelihood of success on the merits, based on its application of the Supreme Court's Myriad decision in determining that the asserted claims were invalid for failure to recite patent-eligible subject matter.

The Federal Circuit's opinion was written by Judge Dyk, joined by Chief Judge Prost and Judge Clevenger. The Court performed its invalidity assessment on the composition of matter claims from the '282 and '492 patents separately from its analysis of the '441 patent's method claims, with the Supreme Court's prior opinion on the validity of other claims from these patents casting a determinative shadow on the opinion. The panel's characterization of the Myriad opinion set the stage:

The Supreme Court, in its Myriad decision, held that claims of the '282 patent directed to isolated DNA were drawn to patent-ineligible subject matter because the isolated DNA strands, which are naturally occurring and separated from the rest of the human genome, were natural phenomena.

For these composition of matter claims, and using claim 16 of the '282 patent as being representative and further being "guided by [the Supreme Court's] Myriad [decision]" the Court analogized the claimed primers to genomic DNA (based on no asserted change in sequence) and rejected Myriad's attempts to distinguish based on their synthetic nature. With little explanation of what the panel thought its statements meant as a factual matter, the opinion stated that its earlier Myriad opinion had established that DNA fragments are "synthesized" in nature as well as by man, neglecting the distinction between the claimed single-stranded oligonucleotides (ssDNA) and "naturally occurring" double stranded DNA fragments. In a pattern that returns with even more force in the method claims, the opinion notes the breadth of the claimed primers, which can be any short DNA molecules that hybridize to any portion of the BRCA1 or BRCA2 genomic DNA. It will be appreciated that Myriad's own claim language was helpful in reaching this conclusion, insofar as claim 16 recites "said primers being derived from human chromosomne 17q" and that "the primers support[] PCR amplification of all or part of the sequence of the BRCA1 gene." Again not surprisingly, the panel cites to In re Roslin Institute (another Judge Dyk opinion) for the principle that there must be a structural change to distinguish a product of nature from a patent-eligible derivative thereof.

The opinion also asserts that ssDNA binds to DNA in vitro as it does in vivo to reject Myriad's argument regarding differences in function, ignoring the fact that there is little evidence that hybridization of oligonucleotides exist in vivo. In this regard, of course, the breadth of the claims regarding any pair of primers worked against the patentee, because there was no limitation to a particular pair of primers having a particular structure that could have been argued provided the "hand of man" as required by the Supreme Court's Diamond v. Chakrabarty decision (a decision the Myriad Court followed). The opinion ends this section with its harshest statement, that there "must" be a difference in structure, relying on dicta in the Supreme Court's Myriad decision that extend the Court's rationale beyond what the case actually says.

With regard to the method claims of the '441 patent, the panel eschewed analysis under the Supreme Court's Mayo v. Prometheus decision (which was the basis argued by the appellees and inevitable amicus, the American Civil Liberties Union). Rather, the opinion held these claims to be patent-ineligible for reciting an "abstract idea" under Alice v. CLS Bank and applied that Supreme Court decision's "two-step test" to make its determination. In doing so, the panel dissected the claims to a first set of paragraphs, "which describe the comparison of wildtype genetic sequences with the subject's genetic sequence and correspond to the first step of Alice" and the second set of paragraphs, "which describe the techniques to be used in making the comparisons and correspond to the second step of Alice."

The panel opined that these first steps are bound by the Court's earlier decision in AMP v. Myriad, wherein the "comparing" step was held to be patent-ineligible because it encompassed "an abstract mental process of 'comparing' and 'analyzing' two gene sequences." From that Myriad opinion the Court cites:

[The] claim thus recites nothing more than the abstract mental steps necessary to compare two different nucleotide sequences: one looks at the first position in a first sequence; determines the nucleotide sequence at that first position; looks at the first position in a second sequence; determines the nucleotide sequence at that first position; determines if the nucleotide at the first position in the first sequence and the first position in the second sequence are the same or different, wherein the latter indicates an alteration; and repeats the process for the next position.

Applied to the claims from the '441 patent, the panel stated that:

The methods, directed to identification of alterations of the gene, require merely comparing the patient's gene with the wild-type and identifying any differences that arise. [Citing the '441 patent specification for support.] The number of covered comparisons is unlimited. The covered comparisons are not restricted by the purpose of the comparison or the alteration being detected. Because of its breadth, the comparison step covers detection of yet undiscovered alterations, as well as comparisons for purposes other than detection of cancer. Even with respect to cancer, the comparisons are not limited to the detection of risk of breast or ovarian cancer.

This, of course, is an argument about preemption, but rather than cite Mayo, the opinion cited for support is Gottschalk v. Benson, 409 U.S. 63, 64 (1972) — reminiscent of the District Court in Ariosa v. Sequenom citing Parker v. Flook rather than Mayo in support of its invalidity determination under § 101 — and avoided any discussion regarding the applicability of § 112 to this analysis.

As for the second paragraphs of these claims, the panel stated that the District Court had found that the recited steps ("hybridizing a BRCA1 gene probe which specifically hybridizes to a BRCA1 allele to genomic DNA isolated from said sample and detecting the presence of a hybridization product" from claim 7, and "amplifying all or part of a BRCA1 gene from said sample using a set of primers to produce amplified nucleic acids and sequencing the amplified nucleic acids" in claim 8) "set forth well-understood, routine and conventional activity engaged in by scientists at the time of Myriad's patent applications," a characterization the Court said Myriad did not dispute. In addition, the panel stated that "the claims contain no otherwise new process for designing or using probes, primers, or arrays beyond the use of BRCA1 and BRCA2 sequences in those processes," which Myriad also did not dispute. Thus, the opinion concluded that "[n]othing is added by identifying the techniques to be used in making the comparison because those comparison techniques were the well-understood, routine, and conventional techniques that a scientist would have thought of when instructed to compare two gene sequences."

Except, of course, that it was not "routine, conventional and well-understood" to use these methods to identify cancer propensity-associated mutations in human DNA, because neither the genes nor the mutations were known. The Court expressly chose not to credit that portion of the Supreme Court's opinion that seems the most related to the question before this panel:

Similarly, this case does not involve patents on new applications of knowledge about the BRCA1 and BRCA2 genes. Judge Bryson aptly noted that, "[a]s the first party with knowledge of the [BRCA1 and BRCA2] sequences, Myriad was in an excellent position to claim applications of that knowledge. Many of its unchallenged claims are limited to such applications," citing Judge Bryson's opinion concurring-in-part and dissenting-in-part with the Federal Circuit's Myriad decision (689 F. 3d, at 1349).

The opinion makes this rhetorical pirouette by focusing on the argument that the method claims at issue are similar to claim 21 of the '441 patent, which recites:

A method for detecting a germline alteration in a BRCA1 gene, said alteration selected from the group consisting of the alterations set forth in Tables 11 and 12 which comprises analyzing a sequence of the BRCA1 gene or BRCA1 RNA from a human sample or analyzing the sequence of BRCA1 cDNA made from mRNA from said sample[,] wherein a germline alteration is detected by hybridizing a BRCA1 gene probe which specifically hybridizes to an allele of one of said alterations to RNA isolated from said human sample and detecting the presence of a hybridization product, wherein the presence of said product indicates the presence of said allele in the sample.

This claim was, according to the opinion, "cited with approval" by Judge Bryson and "seemingly" also by the Supreme Court. Regardless, the opinion correctly noted that this claim was not before the Court in Myriad (Federal Circuit or Supreme Court) and thus there is no precedent regarding its validity. However, how the opinion distinguishes the patent eligibility vel non of claim 21 suggests that, once again, there is an overbreadth issue here better addressed under § 112 rather than § 101, and that if the claims at issue were so limited (i.e., to specific mutations) at least the preemption concerns would be diminished, perhaps to the point that the panel could have seen its way clear to a more favorable patent-eligibility decision.

Unfortunately, the opinion doesn't even give lip service to the direction in the Alice opinion that the claims must also be considered as a whole, using its fragmented analysis as the only justification for coming to the conclusion that the claims are not patent eligible. In doing so, the Court was able to avoid the issue of whether the claims are eligible because of the application of an old method to a new composition, which has always been patent eligible regardless of the patentability of the composition per se (and consistent with the distinctions drawn by the Supreme Court in its Myriad decision).

Finally, nowhere in the opinion does the court address the presumption of validity; this opinion suggests that, at least for patent eligibility there is no presumption (a position consistent with Judge Mayer's concurrence in I/P Engine, Inc. v. AOL Inc. (Fed. Cir. 2014)).

And to add insult to injury, the Court awarded costs to appellee.

The most grave risk arising from this opinion is that the Patent Office, which only on Monday issued revised guidelines that acknowledged that functional differences between a patented invention and a natural product can be sufficient for patent eligibility, could once again be swayed by the winds of perceived judicial fiat to renege on this more reasoned approach and return to the much-lamented structural requirement approach set out in the Guidance promulgated on March 4th. This risk is more than just a possibility, in view of the express note in the Guidance that it was a "work-in-progress" subject to further revision in view of pending Federal Circuit cases including Myriad v. Ambry. With luck, cooler heads will prevail and this decision will be limited to its facts. But in the continuing saga of the Myriad patents nothing can be considered certain, and the Office's present to the patent community of the revised Guidance could just as quickly turn to a lump of coal in our stockings.

In re BRCA1- and BRCA2-based Hereditary Cancer Test Patent Litigation (Fed. Cir. 2014)
Panel: Chief Judge Prost and Circuit Judges Clevenger and Dyk
Opinion by Circuit Judge Dyk
Impact of Interim Guidance on Business Method and Software Claims

December 17, 2014

By Michael Borella —

On December 15, the United States Patent and Trademark Office (USPTO) published its 2014 Interim Guidance on Patent Subject Matter Eligibility. This Interim Guidance was the long-anticipated update to the Procedure for Subject Matter Eligibility Analysis of Claims Reciting or Involving Laws of Nature / Natural Principles, Natural Phenomena, and/or Natural Products from March, and Preliminary Examination Instructions in view of the Supreme Court decision in Alice Corp. from June. The Interim Guidance supersedes the former and supplements the latter.

The Interim Guidance was recently discussed in general on this site. This article focuses on the impact of the Interim Guidance on claims that potentially incorporate an abstract idea — i.e., those focused on business methods and software.

The discussion of abstract ideas begins with a non-exhaustive list thereof, including: mitigating settlement risk, creating a contractual relationship, using advertising as an exchange or currency, processing information through a clearinghouse, comparing new and stored information and using rules to identify options, using categories to organize, store and transmit information, organizing information through mathematical correlations, managing a game of bingo, the Arrhenius equation for calculating the cure time of rubber, a formula for updating alarm limits, a mathematical formula relating to standing wave phenomena, and a mathematical procedure for converting one form of numerical representation to another. All of these types of abstract ideas were gleaned from respective pre-Alice and post-Alice Supreme Court and Federal Circuit cases. This list is far more extensive than that of the Preliminary Examination Instructions of June.

As we know, if a claim appears to be directed to such an abstract idea, an examiner is then to determine "whether the elements of the claim, considered both individually and as an ordered combination, are sufficient to ensure that the claim as a whole amounts to significantly more than the exception itself." The Preliminary Examination Instructions set forth a few categories of elements that meet or do not meet this requirement. In the Interim Guidance, these lists have been fleshed out.

Limitations that may be enough to qualify as ''significantly more'' when recited in a claim with a judicial exception include:

• Improvements to another technology or technical field;*
• Improvements to the functioning of the computer itself;*
• Applying the judicial exception with, or by use of, a particular machine;
• Effecting a transformation or reduction of a particular article to a different state or thing;
• Adding a specific limitation other than what is well-understood, routine and conventional in the field, or adding unconventional steps that confine the claim to a particular useful application; or
• Other meaningful limitations beyond generally linking the use of the judicial exception to a particular technological environment.*

Limitations that were found not to be enough to qualify as ''significantly more'' when recited in a claim with a judicial exception include:

• Adding the words ''apply it'' (or an equivalent) with the judicial exception, or mere instructions to implement an abstract idea on a computer;*
• Simply appending well-understood, routine and conventional activities previously known to the industry, specified at a high level of generality, to the judicial exception, e.g., a claim to an abstract idea requiring no more than a generic computer to perform generic computer functions that are well- understood, routine and conventional activities previously known to the industry;*
• Adding insignificant extrasolution activity to the judicial exception, e.g., mere data gathering in conjunction with a law of nature or abstract idea; or
• Generally linking the use of the judicial exception to a particular technological environment or field of use.

* Appeared verbatim or in a similar form in the Preliminary Examination Instructions.

The Interim Guidance goes on to discuss the cases that resulted in the above list of abstract ideas and the "significantly more" factors. For the most part, the USPTO's interpretation of these cases sticks with the respective court's actual language. Indeed, when viewed as a whole, the Interim Guidance sets forth a reasonable reading of the law. In the USPTO, claims directed to disembodied methods that could potentially be performed manually are not patent-eligible, and any recited generic computer hardware or insignificant pre-solution or post-solution activity will essentially be ignored for these purposes. However, claims that require a machine for their substantive performance, improve the performance of such a machine, and/or produce a tangible result are likely to be considered patent-eligible.

In this light, it is surprising that one of the examples in the Interim Guidance is SiRF Technology v. ITC. Therein, a disembodied method claim directed to "calculating an absolute position of a GPS receiver and an absolute time of reception of satellite signals" was found to patent-eligible, despite the claim being theoretical capable of being carried out manually. This claim was evaluated prior to the Alice decision, and it is questionable whether the claim would survive judicial scrutiny under that case's two-prong test.

Regardless, the Interim Guidance contains a couple of additional nuggets of good news for applicants. First, examiners are instructed to "[i]n the rejection, identify the exception by referring to where it is recited (i.e., set forth or described) in the claim and explain why it is considered an exception. Then, if the claim includes additional elements, identify the elements in the rejection and explain why they do not add significantly more to the exception." In the 35 U.S.C. § 101 rejections that we have seen so far, it is not uncommon for an examiner to provide a terse, conclusory statement that the claims at issue are patent-ineligible. The Interim Guidance provides rebuttal material from the applicant, who can now argue that a rejection lacking specificity with respect to the analysis of either prong is facially insufficient.

Further, the Interim Guidance states that "[f]or claims that may recite a judicial exception, but are directed to inventions that clearly do not seek to tie up the judicial exception" a streamlined eligibility analysis may apply. This streamlined analysis should be used "for a claim that may or may not recite a judicial exception but, when viewed as a whole, clearly does not seek to tie up any judicial exception such that others cannot practice it." For such a claim, patent-eligibility "will be self-evident." As an example of a self-evident patent-eligible claim, the USPTO provides the hypothetical example of "a robotic arm assembly having a control system that operates using certain mathematical relationships." Under the Interim Guidance, this is "clearly not an attempt to tie up use of the mathematical relationships and would not require a full analysis to determine eligibility." Again, such language provides applicants with ammunition for rebutting overzealous examiners who have rejected analogous claims.

Despite the Interim Guidance offering a reasonably fair and thorough overview of the current law of patent-eligibility, applicants must remain cautious. The Interim Guidance is for examination of patents only. Courts may give little or no weight to its reasoning. As a result, claims that are allowable by the USPTO under a particular rationale may be invalidated by a reviewing court, even in the presence of this rationale.
USPTO Issues Interim Guidance on Subject Matter Eligibility

December 16, 2014

By Donald Zuhn —

Earlier today, the U.S. Patent and Trademark Office published its interim guidance regarding the examination of claims for subject matter eligibility under 35 U.S.C. § 101 (which the Office announced yesterday) in the Federal Register (79 Fed. Reg. 74618). The Federal Register notice, entitled "2014 Interim Guidance on Patent Subject Matter Eligibility," outlines an examination process that supplements the Office's "Preliminary Examination Instructions in view of the Supreme Court Decision in Alice Corporation Pty. Ltd. v. CLS Bank International," which was issued in June (see "USPTO Issues Preliminary Examination Instructions Regarding Alice Corp. v. CLS Bank International"), and supersedes the Office's "Procedure for Subject Matter Eligibility Analysis of Claims Reciting or Involving Laws of Nature/Natural Principles, Natural Phenomena, and/or Natural Products, which was issued in March (see "USPTO Issues Guidance for Analyzing Subject Matter Eligibility of Claims Reciting Laws of Nature/Natural Principles, Natural Phenomena or Natural Products") ("Myriad/Mayo guidance"). The notice indicates that the interim guidance takes effect today, and includes a request for public comment.

With respect to the Office's Myriad/Mayo guidance, the Office's notice states (in a footnote) that the analysis outlined in the interim guidance:

[D]iffers from the [analysis outlined in the Myriad/Mayo guidance] in certain respects. Note, for example, the test for determining whether a claim is directed to a "product of nature" exception is separated from the analysis of whether the claim includes significantly more than the exception. Also, the application of the overall analysis is based on claims directed to judicial exceptions (defined as claims reciting the exception, i.e., set forth or described), rather than claims merely "involving" an exception. For instance, process claims that merely use a nature-based product are not necessarily subject to an analysis for markedly different characteristics. Additionally, the markedly different analysis focuses on characteristics that can include a product's structure, function, and/or other properties as compared to its naturally occurring counterpart in its natural state. [Emphasis in original.]

The differences between the interim guidance and Myriad/Mayo guidance correspond to statements made by Office representatives over the past few months (see "Docs @ BIO: USPTO Provides Update on Myriad-Mayo Guidance"; "USPTO Expected to Issue Revised Myriad-Mayo Guidance in October"; "USPTO Outlines Changes to Myriad-Mayo Guidance at BIO Symposium"; and "USPTO Provides Update on Status of Revised Myriad-Mayo Guidance").

As for the Office's preliminary Alice Corp. guidance, the notice points out that the preliminary Alice Corp. guidance superseded some subject matter eligibility guidance in the MPEP (§§ 2106(II)(A) and 2106(II)(B)) and that the interim guidance supersedes some subject matter eligibility guidance in the MPEP (§ 2105, in part, and § 2106.01), but that "[e]xaminers should continue to follow the MPEP for all other examination instructions."

The notice indicates that the interim guidance "offers a comprehensive view of subject matter eligibility in line with Alice Corp, Myriad, Mayo, and the related body of case law," and is responsive to the public feedback the Office has received concerning the Myriad/Mayo guidance and preliminary Alice Corp. guidance. While the Office acknowledges that "there may be variations in the precise contours of the analysis for subject matter eligibility that will still achieve the same end result," the Office asserts that the analysis outlined in the interim guidance will "promote[] examination efficiency and consistency across all technologies."

Following the presentation of a flowchart, which sets forth the eligibility test for both products and processes, the interim guidance is divided into five parts: (1) a two-part analysis for determining whether a claim is directed to a judicial exceptions, (2) a brief reminder about complete examination, (3) examples of claims, based on Supreme Court decisions, analzyed using the interim guidance analysis, and (4) summaries of Supreme Court and Federal Circuit decisions relating to laws of nature, natural phenomena, and abstract ideas. Today, we will provide an overview of the interim guidance and a discussion of the first two parts of the guidance. More detailed analyses of Parts III and IV of the interim guidance, as well as additional perspectives of how the interim guidance will impact applicants and practitioners in both the Myriad/Mayo space and Alice space, will be provided in subsequent posts.

The analysis to be used in determining "whether a claim is drawn to patent-eligible subject matter" is illustrated in the interim guidance by the following flowchart (click on flowchart to expand):

According to the interim guidance, the current two-step analysis for determining subject matter eligibility under 35 U.S.C. § 101, as set forth in MPEP § 2106, consists of: (1) determining whether the claimed invention is "directed to one of the four statutory categories" (i.e., process, machine, manufacture, or composition of matter), and (2) determining whether the claimed invention is "wholly directed to subject matter encompassing a judicially recognized exception." In the flowchart included in the interim guidance, the first step of the above analysis is shown in the first diamond (labeled "Step 1"), and the second step of the analysis is shown in the second and third diamonds (labeled "Step 2A" and "Step 2B"). The interim guidance notes that the second step has been divided into two steps (or diamonds) in the flowchart to correspond with the two-step (or two-part) analysis from Alice Corp. (which was set forth earlier in Mayo). These last two steps/diamonds are the subject of the interim guidance.

The interim guidance indicates that in Step 2A (the second diamond on the flowchart), which corresponds to part 1 of the Alice Corp./Mayo test, the examiner shall "[d]etermine whether the claim is directed to a law of nature, a natural phenomenon, or an abstract idea (judicial exceptions)." As for Step 2B (the third diamond on the flowchart), which corresponds to part 2 of the Alice Corp./Mayo test, the interim guidance indicates that the examiner shall "[d]etermine whether any element, or combination of elements, in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exception."

With regard to Step 2A, the interim guidance states that if the examiner determines that the claimed invention is not directed to any judicial exceptions, the claim is eligible and needs no further eligibility analysis. In discussing this step, the interim guidance states that "[a] claim is directed to a judicial exception when a law of nature, a natural phenomenon, or an abstract idea is recited (i.e., set forth or described) in the claim."

As for the judicial exceptions, the interim guidance indicates that "[l]aws of nature and natural phenomena, as identified by the courts, include naturally occurring principles/substances and substances that do not have markedly different characteristics compared to what occurs in nature." The notice then lists several types of concepts that courts have found to be laws of nature and natural phenomena: an isolated DNA (Association for Molecular Pathology v. Myriad Genetics, Inc.), a correlation that is the consequence of how a certain compound is metabolized by the body (Mayo Collaborative Services v. Prometheus Laboratories, Inc.), electromagnetism to transmit signals (O'Reilly v. Morse), and the chemical principle underlying the union between fatty elements and water (Tilghman v. Proctor).

With respect to abstract ideas, the interim guidance indicates that "[a]bstract ideas have been identified by the courts by way of example, including fundamental economic practices, certain methods of organizing human activities, an idea 'of itself,' and mathematical relationships/formulas." The notice then lists several types of concepts that courts have found to be abstract ideas: mitigating settlement risk (Alice Corp. v. CLS Bank); hedging (Bilski v. Kappos); creating a contractual relationship (buySAFE, Inc. v. Google, Inc.); using advertising as an exchange or currency (Ultramercial, LLC v. Hulu, LLC and WildTangent); processing information through a clearinghouse (Dealertrack Inc. v. Huber); comparing new and stored information and using rules to identify options (SmartGene, Inc. v. Advanced Biological Laboratories, SA); using categories to organize, store and transmit information (Cyberfone Systems v. CNN Interactive Group); organizing information through mathematical correlations (Digitech Image Tech., LLC v. Electronics for Imaging, Inc.); managing a game of bingo (Planet Bingo, LLC v. VKGS LLC); the Arrhenius equation for calculating the cure time of rubber (Diamond v. Diehr); a formula for updating alarm limits (Parker v. Flook); a mathematical formula relating to standing wave phenomena (Mackay Radio & Telegraph Co. v. Radio Corp. of America); and a mathematical procedure for converting one form of numerical representation to another (Gottschalk v. Benson).

In applying the Step 2A analysis to nature-based products, the interim guidance notes that an examiner should determine whether a nature-based product limitation in a claim needs to be evaluated using a markedly different characteristic analysis, and if so, to carry out that analysis. (In a footnote, the notice recognizes that "[t]his revised analysis represents a change from prior guidance, because now changes in functional characteristics and other non-structural properties can evidence markedly different characteristics, whereas in the [Myriad/Mayo guidance] only structural changes were sufficient to show a marked difference.")

The notice explains that "[a] nature-based product can be claimed by itself (e.g., 'a Lactobacillus bacterium') or as one or more limitations of a claim (e.g., 'a probiotic composition comprising a mixture of Lactobacillus and milk in a container')," and indicates that in the latter case, "the markedly different characteristics analysis should be applied to the resultant nature-based combination, rather than its component parts." According to the notice, the markedly different characteristics analysis compares the nature-based product limitation to its naturally occurring counterpart in its natural state, or to the closest naturally occurring counterpart when there is no naturally occurring counterpart to the nature-based product. The interim guidance states that "[m]arkedly different characteristics can be expressed as the product's structure, function, and/or other properties," noting that "even a small change can result in markedly different characteristics from the product's naturally occurring counterpart." The interim guidance also states that:

In accordance with this analysis, a product that is purified or isolated, for example, will be eligible when there is a resultant change in characteristics sufficient to show a marked difference from the product's naturally occurring counterpart. If the claim recites a nature-based product limitation that does not exhibit markedly different characteristics, the claim is directed to a "product of nature" exception (a law of nature or naturally occurring phenomenon), and the claim will require further analysis to determine eligibility based on whether additional elements add significantly more to the exception.

The notice provides several examples of the types of characteristics considered by the courts when determining whether there is a marked difference, including: biological or pharmacological functions or activities (citing Funk Bros. Seed Co. v. Kalo Inoculant Co., Diamond v. Chakrabarty, In re King, and Myriad); chemical and physical properties (citing Parke-Davis & Co. v. H.K. Mulford Co. and Funk Bros.; phenotype, including functional and structural characteristics (citing In re Roslin Inst.); and structure and form, whether chemical, genetic or physical (citing Chakrabarty, Parke-Davis, and Myriad).

The interim guidance notes that "[i]f the claim includes a nature-based product that has markedly different characteristics, the claim does not recite a 'product of nature' exception and is eligible . . . unless the claim recites another exception (such as a law of nature or abstract idea, or a different natural phenomenon)." Otherwise, the examiner must then proceed to Step 2B of the analysis.

In Step 2B, the examiner must "determine whether the elements of the claim, considered both individually and as an ordered combination, are sufficient to ensure that the claim as a whole amounts to significantly more than the exception itself," which the interim guidance characterizes as "a search for an 'inventive concept.'" The notice cautions that "[i]t is important to consider the claim as whole," as "[i]ndividual elements viewed on their own may not appear to add significantly more to the claim, but when combined may amount to significantly more than the exception." The notice lists examples of considerations identified by the Supreme Court for determining whether a claim with additional elements amounts to significantly more than the judicial exception itself, including limitations that may be enough to qualify as "significantly more" when recited in a claim with a judicial exception and limitations that were found not to be enough to qualify as "significantly more" (see page 74624 of notice).

If after the Step 2B analysis, the claim is found to be directed to patent-ineligible subject matter, the interim guidance indicates that the examiner should "identify the exception by referring to where it is recited (i.e., set forth or described) in the claim and explain why it is considered an exception," and "[t]hen, if the claim includes additional elements, identify the elements in the rejection and explain why they do not add significantly more to the exception."

Part I of the interim guidance concludes with a brief discussion of claims reciting a plurality of exceptions and a streamlined eligibility analysis. With respect to the former concept, the notice states that for claims directed to a plurality of exceptions, examiners should conduct the eligibility analysis for one of the exceptions. The interim guidance suggests that "if the claim fails under Step 2B for one exception, the claim is ineligible, and no further eligibility analysis is needed." As for streamlined analysis, the interim guidance explains that this analysis "can be used for a claim that may or may not recite a judicial exception but, when viewed as a whole, clearly does not seek to tie up any judicial exception such that others cannot practice it." The notice includes four examples of subject matter for which the streamlined analysis could be used: (1) a robotic arm assembly having a control system that operates using certain mathematical relationships (which the notice states is clearly not an attempt to tie up use of the mathematical relationships), (2) an artificial hip prosthesis coated with a naturally occurring mineral (which the notice states is not an attempt to tie up the mineral), (3) a cellphone with an electrical contact made of gold, (4) a plastic chair with wood trim.

Part II of the interim guidance reminds examiners that "[r]egardless of whether a rejection under 35 U.S.C. 101 is made, a complete examination should be made for every claim under each of the other patentability requirements: 35 U.S.C. 102, 103, 112, and 101 (utility, inventorship and double patenting) and nonstatutory double patenting."

Part III of the interim guidance provides examples, based on Supreme Court decisions, where the examination procedure set forth in the interim guidance is used to analyze claims for subject matter eligibility. The six examples include:

Example 1. Diamond v. Chakrabarty (U.S. Patent No. 4,259,444)
Example 2. Association for Molecular Pathology v. Myriad Genetics, Inc. (U.S. Patent No. 5,747,282)
Example 3. Diamond v. Diehr (U.S. Patent No. 4,344,142)
Example 4. Parker v. Flook
Example 5. Mayo v. Prometheus (U.S. Patent No. 6,355,623)
Example 6. Alice Corp. v. CLS Bank (U.S. Patent Nos. 5,970,479 and 7,725,375)

As noted above, Patent Docs will provide more detailed analyses of Part III in subsequent posts (readers may note that detailed analyses of several of the cases used in Part III have been previously provided in this space, including Myriad (here and here), Mayo, and Alice Corp. (here and here)).

Part IV of the interim guidance provides brief summaries of Supreme Court and Federal Circuit decisions in which the claims at issue were analyzed with respect to judicial exceptions for subject matter eligibility. This section of the interim guidance provides summaries of the following Supreme Court decisions:

• O'Reilly v. Morse (U.S. Reissue Patent No. RE 117)
• Tilghman v. Proctor (U.S. Patent No. 11,766)
• Mackay Radio & Telegraph Co. v. Radio Corp. of America (U.S. Patent No. 1,974,387)
• Gottschalk v. Benson
• Bilski v. Kappos

This section also provides summaries of the following Federal Circuit decisions (divided into two groups: abstract idea decisions issued prior to the Supreme Court's Alice Corp. decision and abstract idea decisions issued since the Alice Corp. decision):

• SiRF Technology v. ITC (U.S. Patent No. 6,417,801)
• Research Corp. Tech. v. Microsoft Corp. (U.S. Patent No. 5,111,310)
• Dealertrack Inc. v. Huber (U.S. Patent No. 7,181,427)
• SmartGene, Inc. v. Advanced Biological Laboratories, SA (U.S. Patent No. 6,081,786)
• Cyberfone Systems v. CNN Interactive Group (U.S. Patent No. 8,019,060)
• Digitech Image Tech., LLC v. Electronics for Imaging, Inc. (U.S. Patent No. 6,128,415)
• Planet Bingo, LLC v. VKGS LLC (U.S. Patent No. 6,398,646)
• buySAFE, Inc. v. Google, Inc. (U.S. Patent No. 7,644,019)
• Ultramercial, LLC v. Hulu, LLC and WildTangent (U.S. Patent No. 7,346,545)
• DDR Holdings, LLC v. Hotels.com, L.P. (U.S. Patent No. 7,818,399)

As noted above, Patent Docs will provide more detailed analyses of Part IV in subsequent posts (readers may note that detailed analyses of many of the cases discussed in Part IV have been previously provided in this space, including the following cases: Bilksi, SmartGene, Cyberfone Systems, Digitech Image Tech., Planet Bingo, Ultramercial, and DDR Holdings).

The notice also indicates that explanatory training examples relating to nature-based products, replacing the examples in the Myriad/Mayo guidance, will be released (those examples were posted on the Office's interim guidance website on Monday; Patent Docs will provide a more detailed analysis of the nature-based products examples in a subsequent post). The notice further indicates that explanatory example sets relating to claims that do and do not amount to significantly more than a judicial exception are being developed and will be issued at a future date (Drew Hirshfeld, U.S. Patent and Trademark Office Deputy Commissioner for Patent Examination Policy, indicated during a conference call on Monday that those examples were expected to be released in one to two weeks).

In addition to outlining the Office's interim guidance on subject matter eligibility, the notice includes a request for public comment regarding the interim guidance as well as suggestions for examples to be used in examiner training and in the explanatory example sets that have been (and will be) posted on the Office's interim guidance website. Echoing comments made by Mr. Hirshfeld during Monday's conference call, the notice states that "[i]mplementation of examination guidance on eligibility will be an iterative process continuing with periodic supplements based on developments in patent subject matter eligibility jurisprudence and public feedback." Written comments regarding the interim guidance and suggesting additional examples can be sent by e-mail to: 2014_interim_guidance@uspto.gov. The deadline for submitting written comments is March 16, 2015.

The notice also indicates that the Office will be holding a public forum in mid-January 2015 to discuss the interim guidance and receive additional oral input on the interim guidance. Mr. Hirshfeld indicated during Monday's conference call that the forum would take place on January 21, 2015. The Office's interim guidance website further indicates that the eligibility forum will take place from 1:00 to 5:00 pm (EST) on that date in the USPTO's Madison Auditorium North (Concourse Level) in Alexandria, VA. Information regarding the forum, which will be accessible via WebEx, can be found on the interim guidance website.
USPTO to Release Revised Subject Matter Eligibility Guidance

December 15, 2014

By Donald Zuhn —

In a conference call this morning, Drew Hirshfeld, U.S. Patent and Trademark Office Deputy Commissioner for Patent Examination Policy, announced that the USPTO would be releasing revised guidance on subject matter eligibility later today and that the guidance would be published in the Federal Register on Tuesday. In fact, the revised guidance was made available for public inspection in the Federal Register reading room during the conference call (and can be found here).

The revised guidance will provide an integrated approach, applying to all types of subject matter, and take the Association for Molecular Pathology v. Myriad Genetics, Inc., Mayo Collaborative Services v. Prometheus Laboratories, Inc., Alice Corp. v. CLS Bank International, and other decisions into account. In particular, the revised guidance will use the two-step analysis described by Justice Breyer in Mayo and discussed further in Alice (see "Thoughts on Alice Corp. v. CLS Int'l").

Mr. Hirshfeld noted that the Office's delay in releasing the guidance was due, at least in part, to incorporating more recent decisions such as Ultramercial Inc. v. Hulu LLC and even DDR Holdings, LLC v. Hotels.com, L.P. into the guidance. In fact, he pointed out that the revised guidance was "pulled back" to incorporate DDR Holdings, which was issued by the Federal Circuit on December 5.

Noting that the Office has "taken to heart the feedback the public has given us," Mr. Hirshfeld indicated that the publication of the revised guidance would open a 90-day comment period, and he encouraged the public to submit comments on the guidance, adding that "we are still very interested in receiving people's feedback." In addition, he announced that the Office would be holding a public forum on the revised guidance on January 21. Mr. Hirshfeld added that the Office viewed the process of revising the guidance as an "iterative" one, and that the Office would "not hesitate" to make further changes as dictated by future court decisions and public feedback. He said that Office was "trying to be as open and transparent" as possible with respect to the guidance.

With regard to the revised guidance itself, Mr. Hirshfeld declared that "most people will see that we made significant changes" as compared with the Office's prior subject matter guidance. Most of these changes will come on the life sciences side, where Mr. Hirshfeld noted the "feedback was more critical." In response to a question regarding changes to the guidance, Mr. Hirshfeld indicated that the revised guidance would incorporate all of the changes that the Office has been discussing publicly for the past several months (and which have been described in this space in a number of posts). In particular, he noted that by applying to claims that recite or involve a judicial exception, the Office was using "too broad of a funnel." In view of the Alice decision, the process outlined in the guidance would apply to claims that recite or are directed to a judicial exception rather than those that merely "involve" a judicial exception. The revised guidance will also differ with respect to application of the "markedly different" standard. Mr. Hirshfeld acknowledged that while the previous guidance was "heavily weighted on structure," the revised guidance has been broadened to include other markedly different characteristics such as functionality. Examiners will also be asked to apply a markedly different analysis in the first step of the test, which Mr. Hirshfeld expected would "help examiners make an early determination" as to subject matter eligibility, and thereby "simplify" the process. In an effort to further simplify the process, the Office has removed the 12-factor test that was set forth in the Myriad/Mayo guidance from the revised guidance, which Mr. Hirshfeld said was "too confusing." As the Office has been suggesting for months, however, the revised guidance, like the Myriad/Mayo guidance released in March, will not be confined to DNA.

Among the changes will be several new examples in the Myriad/Mayo space. These examples will be made available on the Office's subject matter eligibility website, which will be going live later today. Mr. Hirshfeld noted that some of the new examples will be similar to those presented by June Cohan, a Legal Advisor with the USPTO's Office of Patent Legal Administration, at the BIO International Convention in San Diego in June (see "Docs @ BIO: USPTO Provides Update on Myriad-Mayo Guidance"). Mr. Hirshfeld noted that examples in the Alice space are expected to be added to the website in one or two weeks, with the delay on the hi-tech side being due to the recent Ultramercial and DDR Holdings decisions. He also stated that "carefully crafted hypotheticals" were required in the Alice space because "we feel we need to give more guidance than examiners are getting from the cases."

Patent Docs will provide a more detailed analysis of the revised guidance in a subsequent post.
Celltrion Healthcare Co. v. Kennedy Trust for Rhematology Research (S.D.N.Y. 2014); Hospira Inc. v. Janssen Biotech Inc. (S.D.N.Y. 2014)

December 14, 2014

By Kevin E. Noonan —

Earlier this month, Judge Paul Crotty, U.S. District Court Judge for the Southern District of New York handed down rulings in two separate cases related to the biosimilars law (the Biologics Price Competition and Innovation Act, or BPCIA) and how the Act's dispute resolution provisions (also called the "patent dance") should be interpreted. While consistent with the recent Federal Circuit decision addressing similar issues (see "Sandoz Inc. v. Amgen Inc. (Fed. Cir. 2014)"), the determinations further explicate the metes and bounds of the law.

Both cases were brought as declaratory judgment actions. The Celltrion case involved a rheumatoid arthritis drug covered by patents owned by the Kennedy Institute (U.S. Patent Nos. 7,846,442; 8,298,537; and 8,383,120) and licensed to Janssen Biotech for sale as a combination of an anti-TNFα antibody (such as Janssen's Remicade®) and methotrexate. Claim 1 of the '442 patent is representative of these claims:

1. A method of treating an individual suffering from rheumatoid arthritis whose active disease is incompletely controlled despite already receiving methotrexate comprising adjunctively administering with methotrexate therapy a different composition comprising an anti-human tumor necrosis factor-α antibody or a human tumor necrosis factor-α binding fragment thereof to the individual, wherein the anti-human tumor necrosis factor-α antibody or fragment thereof (a) binds to an epitope on human tumor necrosis factor-α, (b) inhibits binding of human tumor necrosis factor-α to human tumor necrosis factor-α cell surface receptors and (c) is administered at a dosage of 0.01-100 mg/kg, and wherein such administration reduces or eliminates signs and symptoms associated with rheumatoid arthritis.

As the Court noted, these patents are also embroiled in reexamination and reissue proceedings and subject to a motion for stay by Celltrion (that motion was denied).

Celltrion applied for FDA approval of its Remsima® drug (a Remicade® biosimilar) and filed this declaratory judgment action instead of invoking the patent litigation provisions of the BPCIA. The Kennedy Institute filed a motion to dismiss Celltrion's DJ complaint under Fed. R. Civ. Pro. 12(b)(6) for failure to state a claim and the District Court granted the motion.

The Court's opinion sets out its understanding of the structure and purpose of the Act relating to patent disputes, the Court saying that these provisions were enacted to "ensure that patent disputes are resolved prior to the end of the reference product sponsor's exclusivity period," thus "enabling biosimilar products to enter the market promptly upon the expiration of the exclusivity." In particular, the Court noted that the Act provides that neither party can file a declaratory judgment action while the patent dance is on-going, but that the reference product sponsor can do so if the biosimilar applicant does not comply with the patent litigation provisions set forth in the Act.

In his opinion, Judge Crotty cited Second Circuit law for the jurisdictional requirements for declaratory judgment actions, particularly regarding whether there is an "actual controversy." Nike, Inc. v. Already, LLC, 663 F.3d 89, 95 (2d Cir. 2011). As the Court stated, the Second Circuit uses a totality-of-the-circumstances standard, relying on Medimmune, Inc. v. Genentech, Inc., 549 U.S. 118, 126-27 (2007). Judge Crotty also cited Federal Circuit precedent to the effect that a district court retains its discretion "in determining whether and when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional prerequisites." 3M Co. v. Avery Dennison Corp., 673 F.3d 1372, 1376 (Fed. Cir. 2012) (citing Wilton v. Seven Falls Co., 515 U.S . 277, 282 (1996)).

While the Court recognized that Celltrion had exhibited a "true intention" to bring its biosimilar drug to market (as demonstrated by "the amount of money it has invested in Remsima; the completion of its clinical trials; its close work with the FDA; its manufacturing facilities; and its ability to have stockpiles of Remsima prepared upon receiving FDA approval"), the opinion holds that "Celltrion is simply too far from receiving FDA approval of Remsima for the exercise of declaratory judgment jurisdiction to be proper." Part of Celltrion's deficiency was the number of events that would need to transpire for Remsima to get on the market before the patent(s) expired (August 1, 2016). These include "Celltrion's application would have to be accepted for review; Celltrion would have to become the first ever biosimilar approved by the FDA; Celltrion's application would have to include cA2 [an infringing antibody]; [and] Celltrion would have to receive approval of Remsima for the same use as Remicade." Any estimate of when the FDA might approve Remsima (by either party) was nothing more than "speculation" according to the Court, which amounted to "the disfavored 'hypothetical state of facts'" that cannot support declaratory judgment jurisdiction. Any allegation by Celltrion that the Kennedy Institute is likely to pursue infringement litigation was countered by examples of the Institute granting licenses to Celltrion in other jurisdictions. Under the totality of the circumstances applied in the Second Circuit, the Court determined that there was not a sufficient "justiciable controversy" to support declaratory judgment jurisdiction here.

With regard to the BPCIA, the Court exercised its discretion not to hear the case in deference to the statutory framework for patent litigation established under the Act. There was no allegation by Celltrion, and no evidence of record before the Court, that those provisions would be insufficient to resolve the dispute between the parties. Relying on the decision in the Amgen v. Sandoz case in the Northern District of California (2013 WL 600069 (N.D. Cal. 2013)), the Court opined that Celltrion was barred from bringing a declaratory judgment action because it did not comply with the application and patent exchange provisions of the Act, stating that "Celltrion's attempts to skirt the BPCIA's dispute resolution mechanisms while reaping the benefits of its approval process is improper." The Court also noted what it terms the "inherent tension" (and could also be called contradictions) of Celltrion arguing that the controversy was sufficiently ripe for declaratory judgment jurisdiction but not ready for the information-exchanging process mandated by the Act.

In sum the Court said:

The BPCIA purposefully keys its dispute resolution procedures to the occurrence of certain events on the path to FDA approval. Celltrion has failed to show why this carefully crafted and well-timed procedure should be avoided here. Should Celltrion have a ripened patent dispute against Kennedy once it properly engages in the BPCIA dispute resolution procedures and once it is further along the pathway towards approval of its biosimilar, Celltrion may litigate those issues at that time.

With regard to the Hospira case, Judge Crotty expressly relied on his own rationale from the Celltrion case. The basis for the dispute in this case was an agreement between Hospira and Celltrion that will permit Hospira to sell Celltrion's Remicade biosimilar infliximab under the name Inflectra upon FDA approval. The patents at issue here are the same patents as in the Celltrion case (the 442, '537, and '120 patents, owned by The Kennedy Institute) as well as two Janssen patents (U.S. Patent Nos. 6,284,471 and 7,223,396); claim 5 of the '471 patent is representative:

5. A chimeric antibody, comprising two light chains and two heavy chains, each of said chains comprising at least part of a human immunoglobulin constant region and at least part of a non-human immunoglobulin variable region, said variable region capable of binding an epitope of human tumor necrosis factor hTNFα, wherein said light chains comprise variable regions comprising SEQ ID NO: 3 and said heavy chains comprise variable regions comprising SEQ ID NO: 5.

The Court's opinion asserts that "motion to dismiss is granted for many of the same reasons as those discussed in the Court's dismissal order in Celltrion. Indeed, the instant case presents an even more compelling reason for dismissal than that presented in Celltrion" because "Hospira seeks to benefit from the BPCIA where it can, and ignore those features of the BPCIA that hinder its ambitions," and in the Court's view "Hospira cannot have it both ways."

The reasons the Court made this determination is that, in its view Hospira attempts to rely on Celltrion's efforts to bring the biosimilar drug to market for purposes of establishing declaratory judgment jurisdiction (characterizing these efforts as treating Celltrion as Hospira's "alter ego") but then distances itself from Celltrion with respect to the dispute resolution requirements of the BPCIA, on the grounds that Celltrion and not Hospira is the biosimilar applicant. In this case the Court relied even more heavily on the purported primacy of these dispute resolution provisions of the Act, again basing its decision on the Court's inherent discretionary powers. The Court finds that Congress intended with the BPCIA to "tie[] the dispute resolution process to events throughout the biosimilar approval process, ensuring that full information exchange occurs at relevant and crucial periods during the approval process." This intention would be frustrated, according to the Court, if "adjudicating this case would enable any biosimilar developer to partner with another distributor and thereby skirt the dispute resolution procedures Congress purposefully enacted for use in such situations." And Hospira's case was not helped by Celltrion's decision to voluntarily dismiss its case (In the District of Massachusetts) against Janssen and to begin the information exchange process mandated under the Act.

Hospira, Inc. v. Janssen Biotech, Inc. (S.D.N.Y. 2014) – Opinion & Order
Celltrion Healthcare Co. v. Kennedy Trust for Rheumatology Research (S.D.N.Y. 2014) – Opinion & Order
Conference & CLE Calendar

December 14, 2014

December 15, 2014 – "Evolving PTAB Trial Practice: Navigating Complex Procedural Rules — Strategically Using Routine and Additional Discovery, Requests for Joinder, and Motions to Amend" (Strafford) – 1:00 to 2:30 pm (EST)

December 16, 2014 – "Strategic Considerations Before Kick-Starting an IPR" (American Bar Association (ABA) Center for Professional Development and Section of Intellectual Property Law) – 1:00 to 2:30 pm (ET)

December 16, 2014 – "Inter-Partes and Post-Grant Reviews: How to Protect Your University IP" (Technology Transfer Tactics) – 1:00 to 2:00 pm (ET)

December 18, 2014 – "Estoppel and Privity in Post-grant Proceedings and Parallel Litigation" (Intellectual Property Owners Association) – 1:00 to 2:00 pm (ET)

December 18, 2014 – "Protecting Your Intellectual Property: Best Practices for China" (American Bar Association (ABA) Center for Professional Development, Law Practice Division, Section of Intellectual Property Law, Section of International Law, Section of Science & Technology Law, and Solo, Small Firm and General Practice Division) – 11:00 am to 12:30 pm (ET)

January 13-14, 2015 – Advanced Summit on Life Sciences Patents (American Conference Institute) – New York, NY

January 20, 2014 – "Top Patent Law Stories of 2014" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

***Patent Docs is a media partner of this conference or CLE
Webinar on Top Patent Law Stories of 2014

December 12, 2014

McDonnell Boehnen Hulbert & Berghoff LLP will be offering a live webinar on the "Top Patent Law Stories of 2014" on January 20, 2014 from 10:00 am to 11:15 am (CT). For the past seven years, the Patent Docs weblog has presented an annual, end-of-the-year review of the top stories in patent law. In this presentation, Patent Docs co-authors Donald Zuhn and Kevin Noonan and Patent Docs contributor Michael Borella will take a look back at the top patent stories of 2014, many of which will likely impact patent applicants and practitioners in the coming year.

While there is no fee to participate, attendees must register in advance. Those wishing to register can do so here. CLE credit is pending for the states of California, Illinois, New Jersey, New York, North Carolina, and Virginia.
IPO Webinar on Post-grant Proceedings and Parallel Litigation

December 12, 2014

The Intellectual Property Owners Association (IPO) will offer a one-hour webinar entitled "Estoppel and Privity in Post-grant Proceedings and Parallel Litigation" on December 18, 2014 beginning at 2:00 pm (ET). Nicholas Groombridge of Paul, Weiss, Rifkind, Wharton & Garrison LLP; Mark Matuschak of Wilmer Cutler Pickering Hale and Dorr, LLP; and Jon Wright of Sterne, Kessler, Goldstein & Fox, PLLC will review the estoppel provisions in the AIA law and the PTAB Trial Rules and Practice Guide, and consider PTAB decisions that already touch on estoppel and privity, and discuss the many important questions that remain open. These questions include:

• When a petition is filed against a patent owner by a lawsuit-protection entity, who is estopped?
• Only that entity or also its members?
• Could a PTAB petition filed by one member of a joint defense group open the group to discovery by the patent owner?
• Does estoppel apply to all the issues "raised" or "reasonably could have been raised" by the petitioner, or just grounds on which the PTAB proceeds?

The registration fee for the webinar is $130 (government and academic rates are available upon request). Those interested in registering for the webinar can do so here.
Japanese Foundation for Cancer Research v. Lee (Fed. Cir. 2014)

December 11, 2014

When you file a disclaimer, you'd better mean it

By Kevin E. Noonan —

The Federal Circuit reversed a District Court decision this week in a case involving an improperly filed statutory (terminal) disclaimer, in Japanese Foundation for Cancer Research v. Lee. Caught between miscommunication between patentee, assignee, and U.S. counsel as to whether the patent at issue, U.S. Patent No. 6,194,187, should be disclaimed, the high standard for overcoming agency action (arbitrary and capricious action contrary to law) and the deference the courts must give to agency action within its proper purview, the Foundation found its patent rights irrevocably lost (and, in a footnote, received a direction from the panel that will discomfit any practicing patent practitioner).

The case involved the filing of a terminal disclaimer for the claims in the '187 patent prior to patent expiry for failure to pay a maintenance fee. From the Patent Office perspective, the attorney-of-record filed a statutory disclaimer on October 11, 2011, pursuant to 37 C.F.R. § 1.321(a). Two months later, on December 13, 2011 the attorney-of-record filed a petition to withdraw the statutory disclaimer under 37 C.F.R. § 1.182 (a provision that permits the Office to address situations not otherwise encompassed by the rules). This petition asserted as its basis that the disclaimer had not been necessitated by court order or Patent Office requirement, and that the public interest was not implicated because the Office had not yet made the filing public on the Patent Application Information Retrieval (PAIR) database. The Office denied the petition, on the grounds that the attorney of record properly filed the petition and there was no recourse under the patent statute (35 U.S.C. § 253) for the Office to take the requested action. The patentee then filed a second petition, under both 37 C.F.R. § § 1.182 and 1.183 (a provision that permits the Office to suspend the rules in the interests of justice), followed by subsequently filed other petitions, a request for reconsideration, and an interview between Office officials and the Foundation's attorney.

These additional submissions provided additional "newly revealed information" and "newly discovered evidence" to the effect that the Foundation had only intended to ask U.S. counsel whether the patent could be disclaimed prior to expiry, and that the request had come from a patent paralegal working for Japanese counsel to one of the Foundation's licensees. This paralegal's efforts were superseded by the earthquake and resulting tsunami that disrupted business in Japan for months, and it was only after the Foundation's U.S. attorney sent the filed disclaimer that the paralegal and her superiors realized the misunderstanding. (It must be noted that the letter sent to U.S. counsel states that "[o]ur clients would like to abandon the captioned patent positively and invalidate this patent before the case lapses by non-payment of the next maintenance fees, which will be due on August 27, 2012," which seems to fairly indicate an intention to disclaim.) Also proffered was evidence in the form of a letter from the Foundation's Executive Director asserting that the Foundation had not requested nor authorized the disclaimer to be filed and that no one with such authority had done so. The efforts to withdraw the statutory disclaimer commenced almost immediately after the mistake was recognized.

The PTO rejected the contention that it had inherent authority to withdraw the disclaimer, and the Foundation filed suit in District Court to challenge the agency's decision under the Administrative Procedures Act. Specifically, patentee alleged that the Patent Office's denial was an abuse of discretion, arbitrary and capricious and contrary to law. The District Court granted patentee's summary judgment motion and ordered the Office to withdraw the disclaimer unless it could make a showing that the Foundation had authorized the disclaimer to be filed by U.S. counsel.

The Federal Circuit reversed, in an opinion by Chief Judge Prost joined by Judges Dyk and Taranto. The panel recognized that in reviewing agency action it cannot "substitute its judgment for that of the agency," citing Bowman Transp., Inc. v. Ark.-Best Freight Sys., Inc., 419 U.S. 281, 285 (1974), but that its review of the Office's interpretation of the patent statute is "without deference," citing Liesegang v. Sec'y of Veterans Affairs, 312 F.3d 1368 (Fed. Cir. 2003). Turning to the standard for the deficiencies in agency action the Foundation based its allegations upon, the opinion defined an abuse of discretion as being where the agency's decision is based on a faulty interpretation of the law, citing Burandt v. Dudas, 528 F.3d 1329, 1332 (Fed. Cir. 2008). And arbitrary and capricious agency action is defined by the panel as occurring "only if the decision was not based on the relevant factors or it fails to 'examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made,'" citing Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983).

Applying these standards to the facts before it, the Court distinguished the Foundation's argument that the Office has the power to withdraw an erroneously filed terminal disclaimer under 35 U.S.C. § 255 (and thus that refusing to do so is an abuse of discretion) based on the Court's earlier decision in Carnegie Mellon Univ. v. Schwartz, 105 F.3d 863 (3d Cir. 1997). In that case, counsel had intended to file a terminal disclaimer in an application but had in error entered the serial number of a granted patent, so that the disclaimer was entered in the wrong case. There the Office had granted the petition to withdraw and issued a certificate of correction in the patent (and presumably then entered the terminal disclaimer in the correct application). The panel noted (citing the MPEP at § 1490) that this was accepted PTO practice, but that these facts were not the facts in this case. The opinion states that "[i]mportantly" Carnegie Mellon intended to file a terminal disclaimer and that the error was in identifying the correct file, whereas here the issue is whether the Office could withdraw a disclaimer that was intentionally filed (in the correct patent), i.e. where there was not the kind of error in Carnegie Mellon that justified the contrary results. (In an interesting argument that the Court ultimately rejected, the patentee argued that the error in Carnegie Mellon was identified as a "clerical error" under 35 U.S.C. § 255 and that, because the error here was made by a patent paralegal it should also be considered "clerical" in nature. And the Foundation's additional argument that a "clerical error" can be one made by "a subordinate act[ing] contrary to binding instructions, distinguishing the subordinate from one whose duty involves exercising 'original thought or judgment,'" citing Ford Motor Co. v. United States, 157 F.3d 849, 860 (Fed. Cir. 1998) was distinguished because, here, the terminal disclaimer was filed by the U.S. attorney of record.) Thus, the Court found no error in the Office's interpretation of its (lack of) authority under this section of the patent statute.

Turning to the question of the Office's inherent authority, the opinion first rejected the Foundation's argument that the Office could have withdrawn the disclaimer because it had not yet been "recorded" when the Foundation filed its first petition to withdraw, based on Vectra Fitness, Inc. v. TNWK Corp., 162 F.3d 1379 (Fed. Cir. 1998), the panel stating that the patentee had misread its opinion. The correct statement of the law according to the Court is that a disclaimer is "recorded" when it is properly submitted and received by the Office, based on the Court's interpretation of 35 U.S.C. § 253 and 37 C.F.R. § 1.321. The opinion recognized that an agency have "inherent authority" to reconsider its decisions, as provided for in the regulations upon which the Foundation had based its arguments(37 C.F.R. §§ 1.182 and 1.183). But here any PTO review would reveal, and did reveal, that the disclaimer was properly filed by the attorney of record and that there was no basis on these facts to review and change its decision (the opinion notes that these were the grounds under which the Office rendered its first decision to deny the Foundation's petition). And while the District Court had opined that the Office would have had the authority to withdraw a fraudulently filed disclaimer, the Federal Circuit stated that "it is also not our place to define what hypothetical circumstances might allow or require the PTO's action, where those circumstances are not at issue here." The Office had articulated its reasoning why it did not have the authority to withdraw the disclaimer under the facts in this case and that was enough for the Federal Circuit.

Finally, the opinion acknowledged the patency of the Office's two additional reasons it articulated for its decision. The first was that the public was entitled to rely on the disclaimer and the panel rejected the argument that the Foundation's petitions would negate any such reliance, on the grounds that "nothing in the file actually indicated that the PTO had any doubt about the disclaimer's validity." Second, the opinion rejected the Foundation's argument regarding the miscommunication between the Japanese paralegal and U.S. counsel, on the grounds that the patentee had empowered its attorney of record to represent its interests before the Office, including the power to file disclaimers, and that the Office "need not examine alleged miscommunications between the patentee and its attorney of record because of the principle that it holds the patentee to be 'bound by the actions or inactions of his voluntarily-chosen representative.'" Here the Court opined that it must defer to how the agency interprets its procedures and regulations, absent "the kind of 'extremely rare circumstances' that could 'justify a court in overturning agency action because of a failure to employ procedures beyond those required by the statute,'" citing Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc., 435 U.S. 519, 524, (1978). Accordingly, the Court held that "the PTO did not act arbitrarily, act capriciously, or abuse its discretion in declining to use any inherent authority that it might have in withdrawing the terminal disclaimer on the '187 patent that the Foundation's attorney of record duly filed in accordance with the PTO's regulations."

And as for that cautionary note, it comes in the final footnote: in addressing the District Court's suggestion that the PTO was the sole source of relief for the Foundation with regard to its lost property rights, the panel stated that "in circumstances where a client may be deprived of a claim based on its attorney's conduct, and the facts indicate that the 'attorney's conduct falls substantially below what is reasonable under the circumstances, the client's remedy is against the attorney in a suit for malpractice,'" citing Link v. Wabash R.R. Co., 370 U.S. 626, 634, n.10 (1962). Not a happy circumstance to contemplate.

Japanese Foundation for Cancer Research v. Lee (Fed. Cir. 2014)
Panel: Chief Judge Prost and Circuit Judges Dyk and Taranto
Opinion by Chief Judge Prost
PTAB Update — Hatch-Waxman-Watch Edition

December 11, 2014

By Andrew Williams —

The pharmaceutical industry has been closing watching the proceedings at the Patent Trial and Appeal Board ("PTAB" or "Board") to see if inter partes review ("IPR") will be a viable option for generic drug companies seeking to challenge Orange-Book-listed patents. On December 9, 2014, the PTAB released two sets of decisions that handed major victories to pioneering pharmaceutical companies. In what is thought to be the first set of Final Written Decisions ("FWDs") of Orange-Book-listed patents, the PTAB ruled that three patents covering Galderma Laboratories's Oracea^® drug product for the treatment of acne rosacea were not invalid as obvious in view of the cited art. Specifically, the Board concluded that the petitioner, Amneal Pharmaceuticals, LLC, had failed to show that the cited secondary reference disclosed the claim limitations. In the second set of decisions, the PTAB denied the institution of three IPR's for patents that cover Gilead Sciences, Inc.'s Viread^® drug product for the treatment of HIV-1. A fourth IPR was also filed at the same time, but a decision on institution is forth-coming. In this post, we will review the Galderma FWDs, and the circumstances surrounding them. We will follow-up at a future date with a review of the decisions not to institute in the Gilead cases.

The active ingredient in Oracea^® is doxycycline, an antibiotic tetracycline compound. The oral administration of the drug is done at sub-antibacterial dosages, which was found to be effective in treating acne rosacea without the known undesirable side effects accompanying antibacterial dosages. During development of the drug, scientists at Shire Laboratories Inc. developed a formulation using two different release profiles, an immediate release ("IR") and a delayed release ("DR"), which facilitated a once-daily dosing regimen. This formulation was first described and claimed in U.S. Patent No. 7,749,532 ("the '532 patent"), which had related continuations U.S. Patent Nos. 8,206,740 ("the '740 patent"), 8,394,405 ("the '405 patent"), and 8,394,406 ("the '406 patent"). These last three patents were the subject of the three IPRs at issue, IPR2013-00368, IPR2013-00371, and IPR2013-00372, respectively, (filed in June, 2013). The IPRs were entitled Amneal Pharmaceuticals, LLC v. Supernus Pharmaceuticals Inc. – Shire was the predecessor to Supernus. Representative claims of these three patents include:

1. An oral pharmaceutical composition of doxycycline, which at a once-daily dosage will give steady state blood levels of doxycycline of a minimum of 0.1 µg/ml and a maximum of 1.0 µg/ml, the composition consisting of
    (i) an immediate release (IR) portion comprising 30 mg doxycycline;
    (ii) a delayed release (DR) portion comprising 10 mg doxycycline; and
    optionally, (iii) one or more pharmaceutically acceptable excipients.

'740 Patent, claim 1;

1. An oral pharmaceutical composition comprising about 40 mg of total doxycycline, which at a once-daily dosage will give steady state blood levels of doxycycline of a minimum of 0.1 µg/ml and a maximum of 1.0 µg/ml, wherein the composition consists of 70 to 80 percent of the doxycycline formulated as an immediate release (IR) formulation and 20 to 30 percent of the doxycycline formulated as a delayed release (DR) formulation.

'405 Patent, claim 1; and

1. An oral pharmaceutical composition comprising less than 50 mg of total doxycycline, which at a once-daily dosage will give steady state blood levels of the doxycycline between 0.1 µg/ml and 1.0 µg/ml, and a C_max of the doxycycline between 0.4 µg/ml and 0.8 µg/ml, the composition consisting of
    (i) an immediate release (IR) formulation of the doxycycline,
    (ii) a delayed release (DR) formulation of the doxycycline comprising at least one enteric polymer, and
    (iii) one or more pharmaceutically acceptable excipients, wherein the doxycycline in the IR and DR formulations is in a ratio of 75:25.

'406 Patent, claim 1.

Interestingly, the '532 patent was involved in a Hatch-Waxman-type litigation in the U.S. District Court for the District of Delaware. We reported at the time on the Federal Circuit appeal of the outcome of that case (see "Research Foundation of State University of New York v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2013)"). The Delaware District Court had held that the '532 patent (the patent not subject to an IPR) was not invalid as obvious, and the appeals court affirmed. In addition to the Research Foundation of State University of New York v. Mylan Pharmaceuticals Inc. case, there have been several litigations involving the Orange Book patent covering Oracea^®, including Galderma Labs. v. Amneal Pharms. in the Delaware District Court. Only the '740 patent was in common between the IPRs and the Amneal case.

The three IPRS were virtually identical, so this post will focus on IPR2013-00368 as representative. The Board first construed the claim term "delayed release." Oddly, even though neither party proposed a construction for this term, the Board appeared to request one during oral argument. Everyone was in agreement that the term means "release of a drug at a time other than immediately following oral administration." However, there was disagreement whether the broadest reasonable construction required that there be no substantial release in the stomach. Supernus argued that the patent described this term as allowing "no substantial release of doxycycline in the acidic stomach environment of approximately below pH 4.5." Amneal, on the other hand, argued that this construction was too narrow, and that the delay should only include drug release after a time lag, irrespective of whether there is release in the stomach. The Board agreed with Amneal and chose not to read the limitation form an embodiment into the claim term.

All three IPRs were instituted with only one ground of rejection, that the claims at issue were obvious in view of Ashley '932 (WO 02/080932 AI), which incorporated by reference provisional application No. 60/281,854, and Sheth (U.S. Patent No. 5,348,748). According to the FWDs, "Ashley '932 discloses administering a tetracycline compound, e.g., doxycxline or minocycline, in sub-antibacterial doses to treat acne, including acne rosacea." The provisional application disclosed controlled release of the drug product in order to reach a sub-antibacterial serum level of 0.4 to 0.8 µg/ml. This reference was, however, missing the once daily dosage utilizing an IR and DR formulation, and it ratio. Amneal argued that Sheth provided the additional limitations, and that one of skill in the art would have combined the two references together. The FWD describes Sheth as disclosing "a once-daily formation of minocycline that provides an antibacterial total daily dose." This is accomplished using quick-release pellets and a secondary loading component of slow-release pellets. The issue came down to whether these slow-release pellets provided "delayed release." The Patent Owner took the position that the secondary loading portions were not delayed because they begin release "in the stomach promptly after administration." The petitioner, on the other hand, argued that there was a "lag" before release. In fact, they cited testimony of Supernus's expert, who said: "Again, you're over simplifying the question. I think there would be some lag between when the polymer hydrated and the drug diffused through, but you wouldn't consider that a delay." The Board agreed that Sheth did not describe a "delayed release," noting that the lag time to wet the material would not be considered a "delay." The Board also indicated that Amneal had failed to explain how there would be an appreciable delay "once water in the patient's saliva or gastric fluid has begun to solubilize the pH-insensitive polymer in the coating." Finally, the Board concluded that petitioner's "argument that Sheth discloses the claimed IR:DR ratio (or makes the claimed ratio reachable through routine experimentation) thus becomes untenable." Without this evidence, the challenge failed.

It goes without saying that it will be interesting to see how the other Orange-Book-listed patents fare in the other IPRs that are currently ongoing. It will also be informative to find out if patents (or related patents) that have also been unsuccessfully challenged in district court will be more likely to be upheld by the PTAB. Patent-owning practitioners often contemplate whether the filing of a Patent Owner Response is the best course of action. It can essentially "tip you hand" as to your arguments, providing the petitioner with an additional opportunity to respond. However, it is also considered advisable to prevent institution in the first place, which may only be possible in some cases with the filing of a response. In this case, Supernus did file such a response. Nevertheless, as explained above, even though the IPR was instituted, the Board did not follow-through, but instead found the patent to not be invalid. On the other hand, we will explore in a future post the Gilead case, in which institution of an IPR for pharmaceutical patent was successfully defended against.

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