Patent Law Weblog

recent posts

about

  • 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.

  • President and Fellows of Harvard College v. Lee (Fed. Cir. 2014)

    By Kevin E. Noonan —

    Harvard OncomouseOne of the most iconic inventions of the biotechnology era is the "Harvard Oncomouse" invented by Philip Leder and Timothy Stewart in the early 1980's.  One of the first transgenic mice transformed with DNA encoding something other than a mammalian virus, these mice were susceptible to certain cancers due to the presence in their germline (and thus all somatic tissues) of an activated form of the c-myc oncogene.

    Ultimately three patents arose from the disclosure of this invention, having the following representative claims:

    • U.S. Patent No 4,736,866 (filed June 22, 1984, granted April 12, 1988, and expired on April 12, 2005):

    1.  A transgenic non-human mammal all of whose germ cells and somatic cells contain a recombinant activated oncogene sequence introduced into said mammal, or an ancestor of said mammal, at an embryonic stage.

    (The perceptive will note the affirmative limitation that the transgenic animal must be a non-human animal, a limitation included in these and all transgenic animal claims under the mandate of the 13th Amendment.)

    • U.S. Patent No. 5,087,571 (filed March, 22, 1988, granted February 11, 1992, and expired on April 12, 2005 as the result of a terminal disclaimer filed in this application, instead of February 11, 2009 which was 17 years from the issue date this application was filed as a "voluntary divisional" of the '866 patent, i.e. because there was no restriction requirement imposed by the Office during prosecution of the '866 patent):

    1.  A method of providing a cell culture comprising
        (1) providing a transgenic non-human mammal, all of whose germ cells and somatic cells contain a recombinant activated oncogene sequence introduced into said mammal, or an ancestor of said mammal, at an embryonic stage; and
        (2) culturing one or more of said somatic cells.

    2.  A cell derived from a somatic cell obtained from a transgenic non-human mammal, all of whose germ cells and somatic cells contain a recombinant activated oncogene sequence introduced into said mammal, or an ancestor of said mammal, at an embryonic stage which cell contains said recombinant activated oncogene sequence.

    • U.S. Patent No. 5,925,803 (a continuation of the '571 patent, filed September 19, 1991, granted July 20, 1999; its expiry date is the subject of the Court's decision):

    1.  A method of testing a material suspected of being a carcinogen, comprising exposing a transgenic mouse to said material and detecting neoplasms as an indication of carcinogenicity, wherein the germ cells and somatic cells of said mouse contain an activated oncogene sequence introduced into said mouse, or an ancestor of said mouse, at an embryonic stage.

    A Third Party Requestor filed an ex parte reexamination request against the '803 patent on the grounds that the '866 patent (in combination with one or several secondary references) rendered these claims invalid for obviousness-type double patenting (see "Re-examination Ordered on "Expired" Harvard Oncomouse Patent").  In the course of this reexamination the Examiner refused to enter seven additional claims on the grounds that the '803 patent had expired due to the terminal disclaimer filed in the '571 parent patent in response to an obviousness-type double patenting rejection asserted by the Examiner.  Assignees Harvard and DuPont appealed to the Board of Patent Appeals and Interferences (now, the Patent Trial and Appeal Board) and then sued in district court, which granted summary judgment to the Patent and Trademark Office that the terminal disclaimer operated to cause the '803 patent to expire on April 12, 2005.  This appeal followed.

    The Federal Circuit affirmed, in an opinion by Judge Moore, joined by Judges Lourie and O'Malley.  Applying the "arbitrary, capricious, contrary to law or abuse of discretion" standard under the Administrative Procedures Act, 5 U.S.C. § 706(2)(A), the panel held that this agency action fell within none of these invalidating standards.  They rejected Harvard's contentions that there was no evidence of record that the fee required for a terminal disclaimer had ever been paid, and further that the '803 patent did not contain a Notice that the term of the patent was subject to a terminal disclaimer.  One reason for rejecting these assertions was that the burden was on the patentee to establish that agency action was "arbitrary, capricious, contrary to law or abuse of discretion" and the only evidence presented was negative evidence that there was no affirmative evidence that, inter alia, the proper procedures were followed in 1988, based on affidavits from the prosecuting attorney and Controller of the firm that had prosecuted the patents.  The Court also rejected arguments that the Patent Office's own record keeping provided no evidence that the terminal disclaimer had been properly entered in the '571 patent, in violation of procedures found in MPEP § 717.01 (5th ed. Rev. 6, Oct. 1987) (from the relevant time frame).  Harvard even argued that the fact that the Examiner withdrew the obviousness-type double patenting rejection after the terminal disclaimer was not filed is not dispositive, because the Examiner noted in the record that she had withdrawn this rejection based on applicant argument and did not specifically cite the terminal disclaimer in this regard.

    Judge Moore's opinion also relied on deference by the trial court to the PTO, saying that "[w]hile we might have reached a different result if we were weighing the evidence in the first instance, this we cannot do," citing Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983).  Citing In re Gartside, 203 F.3d 1305, 1312 (Fed. Cir. 2000), the opinion further noted that the "arbitrary and capricious" standard was the most deferential and would be satisfied only when "a reviewing court can conclude with 'definite and firm conviction' that a clear error of judgment or a mistake has been committed," citing PGBA, LLC v. United States, 389 F.3d 1219, 1231 (Fed. Cir. 2004).

    The Court used a "rationality" test to come to its conclusion, explained in the opinion as those instances where "we must sustain an agency action evincing rational reasoning and consideration of relevant factors," ultimately based on the Supreme Court's dictates in Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 285 (1974), and Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416 (1971).  The Court found that the Patent Office's decision contained the required evidence of rationality based on 1) the plain meaning of the text in the terminal disclaimer, wherein Harvard purported to attest that the fees had been paid ("accompanying this disclaimer is the fee set forth in 37 C.F.R. § 1.20(d)"); 2) the Examiner's withdrawal of the obviousness-type double patenting rejection after Harvard filed the terminal disclaimer (noting that there was no other response to this rejection other than filing the terminal disclaimer); and 3) the evidence that the Patent Office had recorded the terminal disclaimer despite any other record keeping irregularities cited by patentee.  "Collectively, this evidence provides a rational basis for the PTO's factual finding that the terminal disclaimer fee was filed" said the Court.  Against that the Court assayed the declaration evidence from twenty years after the fact and these record-keeping irregularities, none of which provided the "overwhelming" evidence the panel stated was necessary to rise to a finding that the Patent Office's actions were arbitrary and capricious.  What's more, the panel cited precedent directly contrary to Harvard's position:  in Vectra Fitness, Inc. v. TWNK Corp., 162 F.3d 1379, 1381–82 (Fed. Cir. 1998), these same types of record keeping irregularities were held not to be enough to find that the terminal disclaimer in that case was without effect.  Thus, "while the PTO may have procedurally mishandled the terminal disclaimer when placing it in the file, this does not render arbitrary and capricious the PTO's factual finding that the terminal disclaimer fee was nonetheless paid."

    Thus ends the period of exclusivity for the Harvard Oncomouse patents.

    "All things are artificial, for nature is the art of God."  Sir Thomas Browne (Harvard patented mice).

    Patented MiceTOLES © The Washington Post. Reprinted with permission of UNIVERSAL UCLICK. All rights reserved.

    President and Fellows of Harvard College v. Lee (Fed. Cir. 2014)
    Nonprecedential disposition
    Panel: Circuit Judges Lourie, Moore, and O'Malley
    Opinion by Circuit Judge Moore

  • Examination of Myriad-Mayo Guidance Comments — University Community Joint Comment

    By Donald Zuhn —

    AAUOn March 4, the U.S. Patent and Trademark Office issued a guidance memorandum, entitled "Guidance For Determining Subject Matter Eligibility Of Claims Reciting Or Involving Laws of Nature, Natural Phenomena, & Natural Products" (or "Myriad-Mayo Guidance"), to implement a new procedure for determining the subject matter eligibility of claims under 35 U.S.C. § 101 in view of the Supreme Court's decisions in Association for Molecular Pathology v. Myriad Genetics, Inc. (2013), and Mayo Collaborative Services v. Prometheus Laboratories, Inc. (2012).  At a biotechnology/chemical/pharmaceutical (BCP) customer partnership meeting in April, the Office announced that it would be hosting a public forum on the Guidance in May to receive public feedback on the Guidance, and at that forum encouraged shareholders to submit written comments on the Guidance.  Since the forum, the Office has encouraged the patent community to provide further feedback regarding the Guidance (despite the Office's announced deadline of July 31 for submitting comments).

    ACEComments regarding the Guidance, including at least three received after the July 31 deadline, have been posted on the USPTO website.  The comments are divided into seven groups (with the number of submissions in each group also provided):  Intellectual property organizations and other associations (21), government agencies (0), academic and research institutions (4), law firms (7), companies (8), individuals (43), and comments received after August 1, 2014 (3).  Today, we examine the joint comment submitted on October 15, 2014 by the Association of American Universities (AAU), American Council on Education (ACE), Association of American Medical Colleges (AAMC), Association of Public and Land-grant Universities  (APLU), Association of University Technology Managers (AUTM), and Council on Governmental Relations (COGR).

    AAMCFour of the six (AUTM, COGR, AAU, and APLU) signatories to the October 15 letter had signed a comments letter submitted prior to the July 31 deadline (see "Examination of Myriad-Mayo Guidance Comments — AUTM, COGR, AAU, and APLU").  In that letter, the academic organizations noted that they were "deeply concerned about the PTO Guidance Memorandum and its unwarranted, as well as legally inconsistent broad changes in examination practice," and argued that "[t]he Guidance adversely and unnecessarily impacts our ability not only to license and commercialize future discoveries and inventions, but also the validity of many existing patents for products, particularly in life science areas which make up the majority of university patents."  In particular, the groups suggested that the Guidance was flawed for "contravene[ing] the Supreme Court's own warning in Mayo against over-interpreting its holdings in a way that might stifle innovation" and for "emphasi[zing] structure rather than the functional characteristics of a product."

    APLUIn their latest comments letter, those four organizations, joined by ACE and AAMC, indicate that they are "look[ing] forward to the final guidance that the U.S. Patent and Trademark Office (USPTO) will issue to address the subject matter eligibility of claims reciting or involving laws of nature, natural phenomena, and natural products."  Noting that "USPTO officials have suggested during recent public events that elements of the March Guidance will be revised and included in the final Guidance," the groups "request the USPTO to re-issue the revised Guidance in draft form to allow the patent community and the public to comment on any significant proposed changes to the criteria used to determine patent eligibility or to the patent prosecution process."

    AUTMThe letter also "urge[s] the USPTO to consider carefully the effect that the revisions will have on applications that are currently in progress," and expresses the view that such applications "not be adversely impacted or penalized by the shifting rules."  Similar to the BIO joint comments letter, the academic organizations argue that "Applicants who received a first rejection under the March Guidance should be allowed to respond to rejections under the revised Guidance as if they are responding to new grounds of rejection."  The groups conclude their latest letter by expressing "hope that the USPTO will continue to reach out to the patent stakeholder community and the end users of new technologies so that the final Guidance will benefit from as much thoughtful input as possible and will be implemented in a way that ensures that the U.S. patent system continues to support the universities and industries that are essential to our nation’s health and economic vitality."

    COGRAs USPTO representatives noted at the bicoastal biotechnology/chemical/pharmaceutical (BCP) customer partnership meeting on September 17 and at the Biotechnology Industry Organization (BIO) IP & Diagnostics Symposium on September 26, the revised Guidance is expected to be issued by the end of this month or shortly thereafter.

    For additional information regarding this topic, please see:

    • "Examination of Myriad-Mayo Guidance Comments — BIO Joint Comment," October 23, 2014
    • "Sherry Knowles Addresses Real World Impact of Myriad-Mayo Guidance at BIO Symposium," October 15, 2014
    • "Guest Post: Myriad — A Direct and Unexceptional Approach," October 12, 2014
    • "USPTO Outlines Changes to Myriad-Mayo Guidance at BIO Symposium," September 30, 2014
    • "USPTO Expected to Issue Revised Myriad-Mayo Guidance in October," September 17, 2014
    • "Guest Post: Myriad-Mayo Guidance — Consistency With International Harmonization and TRIPS," August 26, 2014
    • "Examination of Myriad-Mayo Guidance Comments — AUTM, COGR, AAU, and APLU," August 21, 2014
    • "Examination of Myriad-Mayo Guidance Comments — International Bioindustry Associations," August 11, 2014
    • "Examination of Myriad-Mayo Guidance Comments — ACLU," August 5, 2014
    • "Guest Post: Overview of First Published Comments on Myriad-Mayo Patent Eligibility Guidance," July 13, 2014
    • "Guest Post: USPTO Public Forum on Patent Guidance: My Thoughts as a Speaker and Attendee," June 11, 2014
    • "USPTO Holds Forum on Subject Matter Eligibility — Part IV," May 22, 2014
    • "USPTO Holds Forum on Subject Matter Eligibility — Part III," May 15, 2014
    • "USPTO Holds Forum on Subject Matter Eligibility — Part II," May 14, 2014
    • "Guest Post: How to Patent Grapefruit Juice — The New USPTO Guidance for Patent Eligible Subject Matter Is Both Sticky and Sour," May 13, 2014
    • "USPTO Holds Forum on Subject Matter Eligibility — Part I," May 12, 2014
    • "USPTO Tries to Address Public Misunderstandings Regarding Myriad-Mayo Guidance," April 16, 2014
    • "USPTO Issues Guidance for Analyzing Subject Matter Eligibility of Claims Reciting Laws of Nature/Natural Principles, Natural Phenomena or Natural Products," March 4, 2014