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  • Ultramercial Inc. v. Hulu LLC — Party Briefs

    By Michael Borella —

    Introduction

    Federal Circuit SealThis case has a storied history.  Ultramercial sued Hulu, YouTube, and WildTangent for infringement of U.S. Patent No. 7,346,545.  Hulu and YouTube were eventually dismissed from the case.  On a 12(b)(6) motion, the District Court held that the '545 patent does not claim patent-eligible subject matter under 35 U.S.C. § 101.  On appeal, the Federal Circuit reversed and remanded.  However, that decision was vacated by the Supreme Court.  Back in the Federal Circuit again, a unanimous panel of Chief Judge Rader, Judge O'Malley, and Judge Lourie once again reversed the District Court, finding the claims did indeed address patent-eligible subject matter.  Notable here was the agreement between Chief Judge Rader and Judge Lourie, who had previous adopted opposing views regarding the test to apply to claims that incorporate one of the exceptions to § 101.

    WildTangent petitioned for Supreme Court review.  On June 30th of this year, the Court granted the petition for writ of certiorari, vacated the Federal Circuit's judgment, and remanded the case back to the Federal Circuit for further consideration in view of the Court's then-recent Alice Corp. v. CLS Bank decision.  Since Chief Judge Rader has stepped down in the interim, the remand will be heard by Judges O'Malley and Lourie.  If these two judges cannot reach an agreement about the case, a third Federal Circuit judge will be appointed to break the tie.  (See Fed. Cir. R. 47.11.)

    While oral arguments have yet to be scheduled, both Ultramercial and WildTangent submitted supplemental briefs in late August.  These briefs argue why the Alice decision should or should not change the panel's ruling.  Bubbling under the surface of these arguments, however, is evidence that the Supreme Court's Alice decision not only muddied the waters between patent-eligibility and obviousness, but has essentially turned the patent-eligibility analysis into an obviousness analysis in which prior art does not need to be cited.

    Example Claim

    Claim 1 of the '545 patent recites:

    A method for distribution of products over the Internet via a facilitator, said method comprising the steps of:
        a first step of receiving, from a content provider, media products that are covered by intellectual property rights protection and are available for purchase, wherein each said media product being comprised of at least one of text data, music data, and video data;
        a second step of selecting a sponsor message to be associated with the media product, said sponsor message being selected from a plurality of sponsor messages, said second step including accessing an activity log to verify that the total number of times which the sponsor message has been previously presented is less than the number of transaction cycles contracted by the sponsor of the sponsor message;
        a third step of providing the media product for sale at an Internet website;
        a fourth step of restricting general public access to said media product;
        a fifth step of offering to a consumer access to the media product without charge to the consumer on the precondition that the consumer views the sponsor message;
        a sixth step of receiving from the consumer a request to view the sponsor message, wherein the consumer submits said request in response to being offered access to the media product;
        a seventh step of, in response to receiving the request from the consumer, facilitating the display of a sponsor message to the consumer;
        an eighth step of, if the sponsor message is not an interactive message, allowing said consumer access to said media product after said step of facilitating the display of said sponsor message;
        a ninth step of, if the sponsor message is an interactive message, presenting at least one query to the consumer and allowing said consumer access to said media product after receiving a response to said at least one query;
        a tenth step of recording the transaction event to the activity log, said tenth step including updating the total number of times the sponsor message has been presented; and
        an eleventh step of receiving payment from the sponsor of the sponsor message displayed.

    WildTangent's Brief

    WildTangentWildTangent begins its brief by restating the two-prong subject matter 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 nature of the claim into a patent-eligible application that amounts to significantly more than the ineligible concept itself.

    WildTangent then characterizes the '545 patent as being drawn to "the abstract idea of offering free media in exchange for watching advertisements," contending that this "basic concept of using advertising as a form of currency, which has grounded the broadcast television industry for decades, is unquestionably a fundamental economic practice."  WildTangent then contends that this concept is similar to the concepts in other "business method" inventions that were found to be abstract by the Federal Circuit, including those of Accenture Global Servs. v. Guidewire Software, Inc., Bancorp Servs., LLC v. Sun Life Assurance, Dealertrack, Inc. v. Huber, Fort Props., Inc. v. American Master Lease LLC, and CyberSource Corp. v. Retail Decisions, Inc.

    Moving to the second prong of the Alice test, WildTangent asserts that the '545 patent's lengthy claim 1 merely breaks this abstract idea into a series of steps without introducing any meaningful, narrowing limitations.  Eight of these steps, according to WildTangent, "simply instruct the practitioner to implement the abstract advertisement-media-exchange idea or various necessary prerequisites," while the remaining three steps recite insignificant pre- or post-solution activity.  Further, WildTangent contends that the claims being directed to distribution of a media product is a field of use limitation that is insufficient to provide subject matter eligibility under Alice.

    WildTangent also takes the position that the adding "well-known . . . Internet functionality" to a claim is the same as adding well-known generic computer functionality to a claim, in that such functionality is not a significant limitation that would lend patentability to the claim.  In doing so, WildTangent essentially argues that the claimed use of the Internet is in the prior art.  When all is said and done, WildTangent represents that the "claims themselves provide no guidance beyond restating the abstract idea and directing practitioners to apply it," which places the '545 patent in the same place as Alice's patents with regard to § 101.

    If WildTangent's argument seems like it seeks to establish obviousness under § 103 rather than patent-ineligibility under § 101, that is no mistake.  After Alice, these notions appear to be analogous, because claims that fail that case's § 101 test are effectively obvious per-se.

    Turning to the procedural issue (which may have won the day for Ultramercial in the previous Federal Circuit opinion), WildTangent notes that "patent-eligibility is a question of law and no formal claim construction or fact finding is necessary to dispose of this case under § 101."  Thus, WildTangent believes that this action is suitable for a 12(b)(6) motion, and no fact discovery or claim construction is needed for the Federal Circuit to invalidate of the claims.

    Ultramercial's Brief

    UltramercialUltramercial starts off its argument by describing the patented technology as new, noting that the invention "did not appear in brick-and-mortar stores, and it did not appear online, where all advertising was passive in nature."  Ultramercial accuses WildTangent of "shoehorn[ing] the claimed method into the artificial construct of advertising as currency . . . artfully recasting [the] claim at the highest possible level of generality" in a way that was forbidden by Alice.

    Similarly, Ultramercial disputes WildTangent's notion that the '545 patent was directed to a fundamental, longstanding economic principle.  Instead, Ultramercial writes "[i]f the '545 patent reflected such well-understood, routine, conventional activity, one would expect to find at least some evidence that this activity existed before the claimed method was disclosed in the '545 patent."  Ultramercial states that WildTangent has been unable to cite any such evidence, and that the "patented process was the very opposite of well-understood, routine, or conventional, which is exactly why it proved a groundbreaking and successful means of operating commercial website."

    If it seems as if Ultramercial is making a non-obviousness argument and invoking a secondary consideration while doing so, that is also no mistake.  Without actually coming out and saying it, Ultramercial is viewing a § 101 defense under Alice in the same light as a § 103 defense.  In fact, Ultramercial accuses WildTangent of having such a dearth of prior art to cite against the '545 patent that WildTangent relies on § 101 because it is "reluctant to rely instead on §§ 102 or 103 for its defense."

    Ultramercial sets forth a measured view of the first prong of Alice, asserting that the Supreme Court "offered no indication that every idea – including novel, groundbreaking innovations – were automatically included within § 101's exceptions so long as an accused infringer could somehow reduce the claimed invention to some form of abstract concept."  Indeed, the Court warned that the exclusions to § 101, if improperly applied, could "swallow all of patent law" because "at some level, all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas."

    Ultramercial further rebuts the notion that its patent is directed to "advertising as currency."  Instead, Ultramercial describes the invention as pairing "copyrighted content with advertisements on a web server, and gat[ing] that content to limit accessibility until a user (after making an affirmative election) viewed the advertisement in its entirety, completed any interactive steps, or purchased a product."  Ultramercial characterizes its technology as "a dramatic shift [because it held] back an advertisement until [the advertisement] was affirmatively selected by the user."

    Again addressing a secondary consideration of non-obviousness, Ultramercial contends that "[o]nce reduced to practice, the patented method was quickly adopted by major advertisers and online publishers."  Ultramercial staked out this position to rebut WildTangent's claims that the patented process is fundamental or longstanding.

    Moving to the second prong of the Alice test, Ultramercial offered that "claims are patent-eligible if they improve an existing business process in a way that involves more than simply migrating an existing business process to a generic computer."  To back up this point, Ultramercial points to specific and rather narrow claim elements, such as when "a server sends each individual end-user an interactive page containing very specific items:  an explicit offer to purchase content or the choice of activating a prompt to begin an interposed message to obtain the same content," and when "the computer receives the end-user's selection and either completes a credit or debit sale or delivers the interposed advertisement."

    Finally, Ultramercial reminds the Federal Circuit that on review of the 12(b)(6) motion, the claims have to be interpreted in its favor.  Ultramercial again invokes § 103, by contending that the extent of claim interpretation necessary for a § 101 analysis is "a question of law, [that] still rests on fact-bound considerations," and that the District Court is the place to introduce such evidence.

    Analysis

    The Federal Circuit can make quick work of this remand by denying WildTangent's 12(b)(6) motion, either because the § 101 analysis does require at least some findings of fact, or because interpreting the claims in Ultramercial's favor results in the claims being patent-eligible.  However, the Federal Circuit may take this opportunity to expound upon the Alice test, and signal how it is going to view the patent-eligibility of computer-implemented inventions in the future.

    If the panel gets beyond the procedural issues of this case, the outcome will depend on how expansively the Court views the notion of an abstract idea.  When considered piece by piece, claim 1 of the '545 patent indeed seems to recite well-known aspects of communication technology.  However, when viewed as a whole, Ultramercial's point that the claimed configuration of these pieces is novel becomes compelling.

    This case also illustrates the ambiguity that the Supreme Court has left us with post-Alice.  It is a bedrock principle that a patented invention is defined by its claims.  But, when a claimed invention is boiled down to a mere "concept" or considered piecemeal in order to determine whether that invention incorporates an abstract idea, the exposition of this concept, rather than the language of the claims, can determine whether the patent is valid or invalid.  Such a dissection of claim language, in the words of the Supreme Court itself from Diamond v. Diehr, is inappropriate.

  • Lex Machina Looks at ANDA Cases

    By Kevin E. Noonan —

    Lex MachinaLex Machina, a commercial venture spinning out of the "quantitative statistics" trend in patent scholarship popularized by Mark Lemley, Kimberly Moore, David Schwartz, and others, has released a Report on ANDA litigation that provides a slew of statistics ripe for interpretation (or at least speculation).

    Written by Brian C. Howard (Legal Data Scientist and Director of Analytics Services) and Jason Maples (Legal Data Analyst), the Report covers the years 2009 to date and begins with a brief summary defining what an ANDA case entails.  Then it dives right into the statistics, some of which are not surprising.  For example, the Report shows (Figure 1) that most ANDA litigation occurs in the District of Delaware (678 cases), the District of New Jersey (481 cases) and the Southern District of New York (148 cases); the Northern District of Illinois, with 39 cases, is a distant fourth in ANDA case frequency.  Within those judicial districts, the judges hearing ANDA cases are easily recognizable to those representing ANDA clients (Figure 2): Judges Sleet (195 cases), Robinson (187 cases), Stark (139 cases) and Andrews (122 cases) in Delaware; Judges Pisano (64 cases), Cooper (49 cases), Chesler (38 cases) and Sheridan (34 cases) in New Jersey; and Judge Stein (33 cases) in New York, as well as Judge Keeley (27 cases) in the Northern District of West Virginia.  Similarly, that 98% of drugs involved in ANDA litigation are prescription drugs will come as no surprise and, indeed, is almost a requirement for ANDA litigation (albeit about 2.5% of drugs involved in the cases reported are "over the counter" drugs; Figure 15).

    Filing trends have been relatively consistent over this period (Figure 3), during which they have averaged between 239 and 293 cases per year between 2009-2013; this year has seen 323 cases filed by the end of June with the biggest uptick having occurred in the first two quarters of the year (Figure 4).  Curiously, most of these cases seem to have been filed in Delaware (Figure 6).  The Report provides (Figure 7) some perspective, however, noting that while there have been 323 ANDA cases filed so far this year, that number pales in comparison to the 3,564 "non-ANDA" patent cases filed so far in 2014 (and the 5,167 and 5,793 such cases filed in 2013 and 2012, respectively).

    The Report also notes (Figure 8) that in 70.3 percent of ANDA cases an injunction is obtained by the prevailing patentee, compared with a 57.6% rate in non-ANDA cases; generally, a prevailing patentee is rewarded an injunction to prevent "at risk" launch and the FDA does not approve the generic drug until the Orange Book listed patents have expired.  Thus, this statistic may merely reflect the percentage of the time an NDA holder prevails in ANDA litigation where the Court grants relief only under 35 U.S.C. § 271(e)(4)(a).

    Using "word cloud" graphics (Figures 12 and 13) the Report identified oxycodone and metformin as the drugs involved in the greatest number of ANDA litigations, which is not surprising in view of the patient populations existing (and growing) for these drugs.  These drugs are also involved in ANDA litigation having some of the largest number of Orange Book listed patents at issue (metformin, 20 patents, exceeded only by testosterone having 23 asserted patents) and the greatest number of cases (oxycodone, more than 50 cases; metformin, 38 cases) as shown in Figure 14.

    The surprising statistics are set forth at the end of the Report, having to do with the time in an Orange Book-listed patent's term that ANDA litigation ensues.  For example, Figure 20 shows that the median "patent age" at ANDA filing has decreased, from 10 years in 2009 to 5.1 years in 2014 (with the trend beginning in earnest last year).  Conversely, the time between the median date of FDA approval and ANDA litigation filing has increased, from 3.9 years in 2009 to 4.9 years in 2014.  One explanation for the former trend is a statistical one:  looking at the "raw" data in Figure 22, the decreased age may have something to do with a sharp skew in the data for 100-200 patents challenged within the first three years of their term.  Alternatively, this trend may reflect slower innovation rates in the industry, so that truly "new" drugs are fewer than the combinations or follow-on drugs.  This has a lot to do with economics, and with the "low hanging" fruit of these drugs having been harvested, as well as competition by biologic drugs which are more expensive (and may be more profitable) but also more specific for their biological targets.  The second trend (Figure 21) is more difficult to sort out, but perhaps it just reflects generic challengers waiting (or having to wait) for the innovator to grow the market to a size worth pursuing.  The raw data supporting these numbers (Figure 23) shows "negative" times wherein an ANDA case is filed before approval, which suggests that the statistics include declaratory judgment actions filed by generic challengers trying to invalidate the patents before they are even listed in the Orange Book.

    Finally, the time before expiration at approval (based on expected expiration dates) has risen, from 8.1 years in 2009 to 15.4 years in 2014 (Figure 25).  This may merely reflect faster approval times by the FDA, perhaps spurred by the increase in combination therapies using individual drugs already approved, or the frequency of filings for approval of related," evergreening" forms of a drug such as purified enantiomers, or a greater reliance on patent term extensions to increase patent life, or some combination of these factors.

    While these statistics are fascinating, it is well to remember Twain's imprecation against "lies, damned lies, and statistics" when considering them (as well as the proverbial "grain of salt").  Perhaps more important than any of these statistics are recognized trends in the industry, which include at least the following:

    • There are more ANDA filers for each branded drug than in the past (when, if you were not the first filer you might not file at all)

    • There are more follow-on or derivative branded drugs, or combinations of drugs which are based on older, well-established drugs

    • The Supreme Court's recent Actavis decision, and FTC actions (and private party actions supported by the FTC), make it harder to settle

    And, of course, the ANDA statute requires a branded drug maker to file suit (or be subject to a DJ action that does not postpose generic approval), so that the actions of the generic filers and trends on that side of the fence influence what branded, NDA holders do (and must do).  While the type of statistics provided by Lex Machina are interesting and may even be informative, they are just a reflection of these, and other, larger trends in the pharmaceutical industry.  These include, of course, the 800 pound gorilla of biologic drugs which most industry observers have noted are the fastest growing sector of the pharmaceutical industry and are completely outside the scope of ANDA litigation or the Hatch-Waxman regime.

    For additional information regarding this topic, please see:

    • Silverman, "Sue Me, Sue You Blues: More Generic Patent Litigation is Being Filed," WSJ Pharmalot, November 5, 2014

  • Judge Sheridan Dismisses More Plaintiffs in Lipitor Antitrust Case

    By Kevin E. Noonan —

    PfizerLate last week, District Court Judge Peter Sheridan (D.N.J.) dismissed with prejudice the complaint for antitrust injury by the so-called "End Payor Class Purchasers" against the parties in previous ANDA litigation in the case styled In re Lipitor Antitrust Litigation (Order).  The gravamen of the complaint was that the defendants violated Sections 1 and 2 of the Sherman Antitrust Act by entering into a "reverse payment settlement agreement" in that ANDA litigation.  Curiously, the agreement between the parties did not contain a reverse payment (i.e., a payment from the branded, patent-holding innovator to the generic challengers).

    To recap, the lawsuit involved Pfizer's Lipitor® drug (atorvastatin calcium), which was so profitable at the time that Plaintiffs' alleged sales amounted to $ 1 billion per month.  These plaintiffs were placed by the Court into four groups = (1) a proposed class of direct purchaser plaintiffs asserting claims under the Sherman Act ("Direct Purchaser Plaintiffs"), who had seen their complaint dismissed with prejudice on Memorandum and Order dated September 12, 2014; (2) several opt-out groups of direct purchaser plaintiffs asserting nearly identical claims to the direct purchaser class; (3) a proposed class of end-payor plaintiffs asserting claims under various states' laws; and (4) the RP Healthcare plaintiffs, a group of pharmacist plaintiffs, asserting claims under California law.  Defendants were the parties to the ANDA settlement agreement:  Pfizer, Inc., Pfizer Manufacturing Ireland (formerly known as Pfizer Ireland Pharmaceuticals and previously Warner Lambert Export, Ltd.), and Warner-Lambert Company, the branded drug companies; and generic drugmakers Ranbaxy Inc., Ranbaxy Pharmaceuticals, Inc., and Ranbaxy Laboratories Ltd.

    This settlement agreement was highly complex, encompassing three separate ANDA litigations as well as more than two dozen other actions in foreign jurisdictions, and involving Pfizer drugs Accupril® and Caduet® as well as Lipitor®.  The Lipitor® ANDA litigation involved seven patents:  U.S. Patent No. 4,681,893 (the "'893 patent") and U.S. Patent No. 5,273,995 (the "'995 patent," reissued later as U.S. Reissue Patent No. 40,667), directed to the active pharmaceutical agent (API); U.S. Patent No. 6,126,971 (the "'971 patent"), U.S. Patent No. 5,686,104 (the "'104 patent"), directed to formulations (the "Formulation Patents"); U.S. Patent No. 6,087,511 (the "'511 patent"), and U.S. Patent No. 6,274,740 (the "'740 patent"), directed to specific processes of making amorphous atorvastatin calcium using crystalline Form I atorvastatin as a starting material (the "Process Patents"); and U.S. Patent No. 5,969,156 (the "'156 patent"), directed to the crystalline form of the API.  The API patents and the Formulation Patents were listed in the Orange Book, while the Process Patents were ineligible for listing.

    Ranbaxy was the first ANDA filer, and its Paragraph IV letter with regard to the '893, '995, '156, '971 and '104 patents asserted non-infringement based on its ANDA for sale of amorphous (not crystalline) Lipitor®.  In the underlying ANDA case, Ranbaxy failed on all its validity and unenforceability challenges as to product patents, which the Federal Circuit affirmed as to the '893 patent and reversed as to validity of asserted claim 6 of '995 patent.  Thereafter the District Court entered an injunction that kept Ranbaxy off the market until March 24, 2010, and Pfizer filed for and obtained Reissue Patent No. RE40,667 based on the '995 patent.  (Pfizer also filed a declaratory judgment action as to the Process Patents which settled outside ANDA context and the settlement agreement at issue here.)

    In the first Accupril® litigation (Accupril I), Teva was the first ANDA filer and Ranbaxy the second filer over U.S. Patent No. 4,743,450.  In that action, Pfizer was awarded summary judgment against Teva, with the District Court rejecting all Teva's validity and unenforceability assertions.  The second Accupril litigation (Accupril II) resulted from an exclusive "distribution and supply agreement" between Teva and Ranbaxy, in return for which Teva gave up its rights to the 180 day exclusivity period as first filer.  Ranbaxy launched "at risk" based on structural distinctions between Pfizer's approved drug and its generic drug and the District Court granted Pfizer an injunction keeping Ranbaxy's generic Accupril off the market.  This action was included in the settlement agreement at issue here.

    In the Caduet® litigation, the accused generic drug was a combination of atorvastatin and amlodipine (and thus subject to infringement liability for the '893 patent); there was also a related declaratory judgment action involving the Process Patents and both actions were part of the settlement agreement before the Court.

    That settlement agreement was a "non-monetary" reverse payment, that contained terms "absolving Ranbaxy of damages accrued from Accupril litigation" and "resolved and terminated patent litigation on the three drugs Lipitor®, Caduet® and Accupril®."  Under the terms of the agreement, "the U.S. actions [falling under the scope of the settlement] were the Accupril II litigation, Lipitor Process litigation, Caduet ANDA litigation, and Caduet Process litigation" as well as all (26) foreign litigations between the companies.  The agreement delayed generic entry into the Lipitor market until November 30, 2011 (a 20 month delay from the earlier District Court injunction) and contained a promise by Ranbaxy not to challenge the Process Patents (the '511 or the '740 patents).  Generic entry of Caduet was also delayed until November 30, 2011 and also contained an agreement not to challenge the relevant patents.  Regarding damages for the "at risk" Accupril® sales, Ranbaxy paid Pfizer $1M.  Finally, Pfizer agreed to be Ranbaxy's API supplier for Lipitor, and Ranbaxy changed its formulation to (putatively infringing) crystalline atorvastatin calcium instead of the amorphous form.

    The case was consolidated in the District of New Jersey by the Panel for Multidistrict Litigation, and defendants filed motions to dismiss by defendants under Fed. R. Civ. Proc. 12(b)(6), directed here to the class of "End Payor Class Plaintiffs."  As with the other plaintiffs whose complaints were dismissed by the Court, the only claim remaining against defendants was the reverse payment claim.

    The Court did not revisit its earlier legal reasoning regarding Plaintiff's allegations  but incorporated its earlier Order in a terse statement that "the facts supporting the claims pleaded in the Amended Complaint of the End Payor Class Plaintiffs are substantially similar to the claims pleaded by the Direct Purchaser Class Plaintiffs" and "for the reasons set forth in the Memorandum dated September 12, 2014" the Court dismissed the End Payor Class Plaintiff's complaint with prejudice.  (Although not directly addressing why the dismissal was "with prejudice" it can be apprehended that these plaintiffs had had similar opportunities to file a complaint that passed Fed. R. Civ. Pro. Rule 12 muster and, as with the earlier Plaintiffs, the Court was not inclined to provide any additional opportunities.

    Thus the Court once again (albeit by reference) affirmed its determination that the Supreme Court's FTC v. Actavis decision was not limited to settlement agreements where cash money traded hands from branded drug maker patentee plaintiffs to generic challengers, but that courts should look at the value of what was transferred.  Put another way, the Court (in its earlier Memorandum) made plain that if Plaintiffs (but not these Plaintiffs) could properly plead the economic value of what was transferred then a court could assess, under the Actavis rubrics, whether the agreement constituted an antitrust violation using the "rule of reason."  But the Court also reaffirmed here (by reference to its earlier Memorandum) that the burden was on Plaintiffs to plead sufficient facts to support their antitrust contentions, citing the Supreme Court in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009).

    This case is another in the continuing process of "working out" the contours of the Court's Actavis decision, where (to be kind) various courts have understood and applied the law in various ways.  To date, there have been several such cases:

    • In re Nexium (Esomeprazole) Antitrust Litig., 968 F. Supp. 2d 367 (D. Mass. 2013) (no authorized generic; mixed decision on state law)

    • In re Wellbutrin XL Antitrust Litig., No. 08cv-2431, DKT No. 534 (E.D. Pa. Jan. 17, 2014) (no authorized generic triggered rule of reason analysis)

    • In re Lamictal Direct Purchaser Antitrust Litig., 2014 WL 282755 (D.N.J. Jan. 24, 2014) (money means money) (this case is on appeal to the 3rd Circuit, which has granted the FTC to appear as an amicus)

    • In re Loestrin 24 FE Antitrust Litig., MDL No. 13-2472-S, DKT No. 116 (D.R.I. Sept. 4, 2014) (money means money)

    • In re Niapsan Antitrust Litigation, 2014 U.S. Dist. LEXIS 124818 (E.D. Pa. Sept. 5, 2014) (monetary terms not required)

    • In re Lipitor Antitrust Litigation, 3:12-cv-02389 (PGS) (Sept 12, 2014) (antitrust allegations dismissed on the pleadings)

    • In re Effexor Antitrust Litigation, 11:5479 (PGS) (Oct. 6, 2014) (accord with Lipitor decision)

    The outcomes in many of these cases, and the likely outcome to the question of what constitutes a "reverse payment" that triggers "rule of reason" antitrust scrutiny, is that courts will not be limited to reviewing agreements that set forth express reverse payments of money (a trend away from such agreements has been evident since the FTC was successful in getting the right to review these agreements by requiring the parties to a reverse payment settlement agreement in ANDA litigation to submit the agreements to the Commission).  The only silver lining is that, should the question come before the Supreme Court at a time after the constitution of that Court has changed, there is the possibility that the Chief Justice will be able to garner enough votes to reverse the Actavis decision or expressly limit its scope to cases of monetary payments.  For now (or at least before the 3rd Circuit rules in the Lactimal case), the existing patchwork quilt of legal decisions will inhibit at least some ANDA litigation, with whatever negative consequences those limitations shall impose upon the parties and the public.

  • USPTO News Briefs

    By Donald Zuhn —

    ILPO to Act as ISR and IPEA for PCT Applications Received by USPTO

    ILPOLast month, the U.S. Patent and Trademark Office announced that as of October 1, 2014, the Israel Patent Office (ILPO) can act as an International Searching Authority (ISR) and International Preliminary Examining Authority (IPEA) for International applications filed with the USPTO as the Receiving Office.  The ability of the ILPO to act as an ISR/IPEA for any International application received by the USPTO will depend on the satisfaction of four requirements:  (1) the application is submitted in English, (2) the ILPO has not received more than 75 such applications in a given fiscal quarter, (3) the application does not contain any claims relating to a business method, and (4) the ILPO is chosen as a competent authority by the applicant.  The search fee for the ILPO acting as an ISA for International applications received by the USPTO is currently $1,021.  With the addition of the ILPO, U.S. applicants can now elect the USPTO, European Patent Office (EPO), Korean Intellectual Property Office (KIPO), IP Australia, Rospatent, or ILPO as the ISA or IPEA.  Additional information about the arrangement between the USPTO and ILPO with respect to International applications received by the USPTO can be found here.

    USPTO and SIPO Launch Priority Document Exchange Program

    SIPOLast month, the U.S. Patent and Trademark Office and the State Intellectual Property Office of China (SIPO) announced the launch of a new system that would allow the two offices to electronically exchange patent application priority documents directly.  The program will allow the USPTO and the SIPO, with appropriate authorization, to obtain electronic copies of priority documents filed with the other office at no cost to the applicant.  The USPTO's announcement notes that while applicants will no longer need to obtain and file paper copies of the priority documents, they will still be responsible for ensuring that priority documents are provided in a timely manner.  Additional information regarding priority document exchange between the USPTO and SIPO can be found here.


    USPTO and KIPO Sign Agreement on Cooperative Patent Classification System

    KIPO #2In September, the U.S. Patent and Trademark Office announced that the Korean Intellectual Property Office (KIPO) had agreed to fully classify its patent applications and utility models using the Cooperative Patent Classification (CPC) system.  The two offices reached the agreement during a bilateral meeting in Geneva, Switzerland.  USPTO Deputy Director Michelle Lee expressed the hope that other IP5 offices would follow KIPO's lead in utilizing the CPC system, which was jointly developed by the USPTO and the European Patent Office (EPO).  KIPO had been using the CPC system in selected technology areas as part of a pilot program since June of 2013 (see "SIPO and KIPO to Use Cooperative Patent Classification System").


    USPTO Revises Rules of Practice to Replace Express Mail References

    USPSLast month, the U.S. Patent Trademark Office issued a Federal Register notice (79 Fed. Reg. 63036) indicating that the Office would be revising the rules of practice to replace all references to Express Mail® with references to Priority Mail Express®.  The change is being made in response to the decision by the United States Postal Service (USPS) to rename Express Mail® as Priority Express Mail®.  The changes to the rules took effect on October 22, 2014.  While the continued adoption of electronic filing has diminished the need for Priority Express Mail® filings, astute patent practitioners may still want to strike the now obsolete Express Mail® phrase from their lexicon.

  • Court Report

            By Sherri Oslick —

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

    Amgen Inc. v. Sanofi et al.
    1:14-cv-01349; filed October 28, 2014 in the District Court of Delaware

    • Plaintiff:  Amgen Inc.
    • Defendants:  Sanofi; Aventisub LLC; Regeneron Pharmaceuticals Inc.

    Infringement of U.S. Patent Nos. 8,871,913 ("Antigen Binding Proteins to Proprotein Convertase Subtilisin Kexin Type 9 (PCSK9)," issued October 28, 2014) and 8,871,914 (same title, issued October 28, 2014) based on defendants' current and/or imminent manufacture, use, sale, offer to sell, and/or importation into the U.S. of alirocumab, an anti-PCSK9 antibody (used to treat dyslipidemia and other cholesterol disorders).  View the complaint here.

    Otsuka Pharmaceutical Co., Ltd. v. Apotex Corp. et al.
    3:14-cv-06707; filed October 27, 2014 in the District Court of New Jersey

    • Plaintiff:  Otsuka Pharmaceutical Co., Ltd.
    • Defendants:  Apotex Corp.; Apotex Inc.

    Infringement of U.S. Patent Nos. 7,053,092 ("5-HT1A Receptor Subtype Agonist," issued May 30, 2006), 8,642,600 ("Method of Treating Autism," issued February 4, 2014), and 8,759,350 ("Carbostyril Derivatives and Serotonin Reuptake Inhibitors for Treatment of Mood Disorders," issued June 24, 2014) following a Paragraph IV certification as part of Aptoex's filing of an ANDA to manufacture a generic version of Otsuka's Abilify® (aripiprazole, used to treat bipolar disorder and schizophrenia).  View the complaint here.

    Amgen Inc. et al. v. Sandoz Inc. et al.
    3:14-cv-04741; filed October 24, 2014 in the Northern District of California

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

    Infringement of U.S. Patent No. 6,162,427 ("Combination of G-CSF With a Chemotherapeutic Agent for Stem Cell Mobilization," issued December 19, 2000) in conjunction with Sandoz's submission of a BLA seeking approval under the BPCIA to market a biosimilar of Amgen's Neupogen® (filgrastim, used to treat side effects of certain forms of chemotherapy).  Also claims of unfair competition and conversion.  View the complaint here.

    AstraZeneca Pharmaceuticals LP v. Pharmadax USA, Inc., et al.
    1:14-cv-06557; filed October 22, 2014 in the District Court of New Jersey

    • Plaintiffs:  AstraZeneca Pharmaceuticals LP; AstraZeneca UK Ltd.
    • Defendants:  Pharmadax USA, Inc.; Pharmadax Inc.; Pharmadax (Guangzhou) Inc.

    Infringement of U.S. Patent No. 5,948,437 ("Pharmaceutical Compositions Using Thiazepine," issued September 7, 1999) following a Paragraph IV certification as part of Pharmadax's filing of an ANDA to manufacture a generic version of AstraZeneca's Seroquel® XR (quetiapine fumarate, used to treat schizophrenia and bipolar disorder).  View the complaint here.

  • Conference & CLE Calendar

    CalendarNovember 5, 2014 – "Computers, Software, Biology: The USPTO and Supreme Court's Slippery Slope Explored" (American Bar Association (ABA) Center for Professional Development, Section of Intellectual Property Law, and Section of Science & Technology Law) – 1:00 to 2:30 pm (ET)

    November 10-12, 2014 – 2014 Fall Intellectual Property Counsels Committee (IPCC) Conference (Biotechnology Industry Organization) – Nashville, TN

    November 13, 2014 – "Leveraging Patent Reissue for Patent Portfolio Management — Strengthening Patent Portfolios, Correcting Patents, and Understanding the Risks and Limitations of Reissue" (Strafford) – 1:00 to 2:30 pm (EST)

    November 14, 2014 – IP Law Symposium (Intellectual Property Law Association of Chicago) – Chicago, IL

    November 20, 2014 – "PTAB Invalidity Proceedings — Lessons Learned in the First Two Years" (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 Disparate Classes of Inventions

    ABAThe American Bar Association (ABA) Center for Professional Development, Section of Intellectual Property Law, and Section of Science & Technology Law will be offering a live webinar entitled "Computers, Software, Biology: The USPTO and Supreme Court's Slippery Slope Explored" on November 5, 2014 from 1:00 to 2:30 pm (ET).  Joseph R. Carvalko, professor of Law, Science and Technology at Quinnipiac University School of Law will moderate a panel consisting of Carl Giordano of Carl Giordano, PC and John Yankovich of Ohlandt Greeley Ruggiero & Perle LLP will discuss the similarities and differences between disparate classes of inventions, and address both conventional and novel ideas for thinking through claims that might successfully skirt the margins of currently un-protectable technology.

    The registration fee for the webcast is $150 for members and $195 for the general public.  Those interested in registering for the webinar, can do so here.

  • IPLAC IP Law Symposium

    IPLACThe Intellectual Property Law Association of Chicago (IPLAC) will be holding its annual IP Law Symposium on November 14, 2014 at the Standard Club in Chicago, IL.  The Symposium will offer presentations on the following topics:

    • State of the Court in the N.D. of Illinois — Hon. Ruben Castillo, Chief Judge, N.D. of Illinois

    • Recent Developments in Patent Law

    • Recent Supreme Court IP Decisions

    • Recent Cases Involving Post Grant Proceedings

    • Ethics

    • PTAB: Views from the Bench — panel featuring PTAB Chief Judge James Donald Smith and PTAB Judge David McKone

    • Federal Circuit Discussion — panel featuring Hon. James Holderman, Hon. Matthew Kennelly, and Hon. Virginia Kendall, N.D. of Illinois

    The registration fee for the Symposium is $275 (IPLAC members) or $425 (non-members).  The registration fee includes breakfast and luncheon buffets.  Those interested in registering can do so here.

  • Webinar on Leveraging Patent Reissue

    Strafford #1Strafford will be offering a webinar/teleconference entitled "Leveraging Patent Reissue for Patent Portfolio Management — Strengthening Patent Portfolios, Correcting Patents, and Understanding the Risks and Limitations of Reissue" on November 13, 2014 from 1:00 to 2:30 pm (EST).  Thomas L. Irving, Deborah M. Herzfeld, and John Mulcahy of Finnegan Henderson Farabow Garrett & Dunner and Donna M. Meuth, Associate General Counsel for Eisai will provide guidance to patent counsel for parties impacted by the patent reissue process, and discuss how patent reissues can be used to strengthen a patent portfolio, the risks and limitations of patent reissue, and examine reissue with other tools for correcting patents by patent owners.  The webinar will review the following questions:

    • When should counsel be considering the possibility of reissue?
    • How have the AIA changes impacted patent reissue?
    • What are the risks and limitations of using reissue proceedings to proactively resolve patent validity/unpatentability issues?

    The registration fee for the webinar is $297 ($362 for registration and CLE processing).  Those interested in registering for the webinar, can do so here.

  • Patent Litigation Reform — Will the Outcome of the Mid-Term Elections Matter, and Is Reform Still Necessary?

    By Andrew Williams —

    Washington - Capitol #5Unless you have been hiding under a rock, you are probably aware that mid-term elections are next Tuesday.  And the issue on every voter's mind is obviously patent litigation reform.  In all seriousness, even though the subject of patent reform has not been raised in most races, the concern about so-called patent trolls has not gone away.  Along with those concerns, there are a sufficient number of interest groups that will likely push a patent-reform agenda.  Therefore, the question exists whether the outcome of the elections will have an impact on whether any such legislation will pass next year.

    At first blush, it appears that patent litigation reform is a bipartisan issue.  Without a doubt, the Innovation Act passed by an overwhelming majority in the House of Representatives (325-91).  This feat is not possible unless a significant number of politicians from both parties voted in favor of the bill.  Nevertheless, it was clear that the opposition to such reform came disproportionately from the Democrats.  For example, 64 Democrats voted against the Innovation Act, while only 27 Republicans joined them from across the aisle.  The lop-sided opposition was clearer when observing the actions of the Committee on the Judiciary.  Two of the most vocal committee members against the legislation were Rep. Conyers (D-MI) and Rep. Watt (D-NC).  Moreover, the bill was approved by the committee by a vote of 33-5, with three Democrats, Rep. Scott (D-VA), Rep. Jackson Lee (D-TX), and Rep. Johnson (D-GA), joining their two colleagues in opposition.  This seemed counter-intuitive, considering patent reform has been on the President's agenda from some time now, and the Republicans are normally considered to be pro-patent.

    With that in mind, it is unlikely that next week's election will impact what the House of Representatives does.  The conventional wisdom is that the Republicans will maintain control.  Therefore, unless the party leadership has had a change of heart, it would be surprising not to see the Innovation Act reintroduced and passed.

    However, this is not necessarily the case in the Senate.  Even though Sen. Leahy (D-VT), current chair of the Judiciary Committee, co-sponsored the bill, he eventually took it off the committee's agenda because of an apparent lack of support behind the bill.  Similar to the House, there was bipartisan support for patent reform, with several different pieces of legislation introduced by members of both parties.  In fact, Sen. Schumer (D-NY) had been one of the harshest critics of the current patent system, and one of the most vocal proponents of litigation reform (see "Stopping Bad Patents — Senator Schumer Takes on the 'Patent Trolls'").  Nevertheless, it was the Democrats that again voiced opposition to the bill.  Sen. Durbin (D-IL) and Sen. Feinstein (D-CA) both expressed concerns about the bill, in part because of letters and information they received from such organizations as universities, the biotech community, and venture capital groups (see "Senate Judiciary Committee Tables Patent Reform, Again").  This is not surprising considering how important these industries are in Illinois and California.  The mid-term elections should not change this dynamic — Sen. Feinstein is not currently up for reelection, and Sen. Durbin is currently the frontrunner in his race.

    Where the midterm elections could change the outcome in the Senate is with a change in the majority party.  While it is too soon to tell, many experts think that the Republicans will take back control of the Senate.  If that is true, any potential roadblocks to the passage of the bill might be removed.  The Washington rumor-mill suggested at the time Sen. Leahy removed the legislation from the agenda that the call came from Harry Reid.  He allegedly told Sen. Leahy that even if the bill passed out of committee, it would not reach the floor of the Senate (see "Patent Reform Legislation Off The Table — For Now").  Therefore, if this was true, a change in leadership should allow the Senate bill clear passage to a vote of the body-at-large.

    The outcome in the Senate, however, may signal more problems in the House when the Innovation Act is reintroduced.  Last year, the bill moved from introduction to passage in only a few short months — much faster than anyone outside of the government anticipated.  As a result, the organizations that eventually opposed the legislation in the Senate may have been caught "napping."  This certainly will not happen a second time.  It is unclear if this opposition will have any impact, but there might be more of a balanced debate in House the second time around.

    Is Patent Litigation Reform Still Necessary?

    The overarching question, however, is whether patent reform is still necessary.  The impetus behind the legislation in the first place was to deter so-called patent trolls and to "stop bad patents."  However, intervening events may have decreased the need to accomplish these goals.  One of the complaints about the current system is that non-practicing entities had very little disincentive in bringing allegations of patent infringement.  Part of this stems from the fact that it was very difficult to get a district court to deem a case "exceptional," and consequently shift the attorney's fees to the non-prevailing party.  The Supreme Court altered this dynamic when it clarified what constituted an exceptional case under 35 U.S.C. § 285 in the Octane Fitness case.  Instead of the Federal Circuit's two-part objective and subjective test, an exceptional case is now "simply one that stands out from others with respect to the substantive strength of a party's litigating position."  As a result, the floodgates have been opened with regard to fee-shifting motions, with a corresponding increase in the number of such motions being granted.

    A corresponding shift has been seen with regard to the perceived "bad" patent situation.  Critics often lay blame for the problem on allegedly vague patents plaguing the system.  The Supreme Court also spoke to this situation, clarifying and most-likely tightening the standard for definiteness in the Nautilus case.  Also, the Court further eroded the subject matter eligible for patent protection in the Alice case.  Correspondingly, district courts have been more confident in invalidating patents on § 101 grounds, sometimes even at the pleadings stage.  Moreover, the Patent Office has demonstrated its willingness to cancel issued claims in the PTAB post-issuance proceedings of IPRs and CBMs, ushered in by the America Invents Act.

    It is not surprising, therefore, that studies have found a decrease in patent litigation since the end of the Supreme Court's last term.  The IAM magazine blog just posted that two separate organizations released studies showing a drop in patent litigation activity in the third quarter of 2014, anywhere from 23% to 40%.  It suggested this decrease was caused by less activity from non-practicing entities.  In fact, the same blog interviewed Mark Lemley earlier this month, and quoted him as saying that "the case for Congressional patent reform is far weaker than it was a year ago."  If this is true, even if we see Congress tackle patent reform again, it is possible that the emphasis will shift.  Instead of changing the fee-shifting statute to a default rule in favor of the prevailing party, perhaps Congress will focus more on pre-litigation activity, such as demand letter reform.  If such provisions are crafted narrowly enough to avoid First Amendment concerns, while at the same time retaining some teeth to make an impact, this may be the best hope to address the so-called troll problem while minimizing unintended consequences.  At least we can hope, as we get out the vote next week.