Patent Docs

Rep. Anna Eshoo to Address Congressional Battle for Biotech on BioCentury This Week

May 2, 2014

Rep. Anna Eshoo (D-CA) will appear on BioCentury This Week on Sunday, May 4 to address "The Congressional Battle for Biotech." BioCentury This Week television host Steve Usdin will interview Rep. Eshoo about her life sciences agenda, in which Rep. Eshoo:

• Makes the case for increasing funding for federal health R&D;
• Suggests that Congress create a "safe harbor" for companies that provide compassionate access to experimental drugs;
• Says the FDA needs to do more to make the biosimilars pathway work; and
• Calls for Congress to write "rules of the road" for personalized medicine.

The interview can be viewed on WUSA from 8:30 to 9:00 EST or online at www.biocenturytv.com beginning at 9:00 am EST.
Sherry Knowles “Speaks Truth to Power” on the PTO’s § 101 Guidelines

May 1, 2014

By Kevin E. Noonan —

Last week, Sherry Knowles, former chief patent counsel for GlaxoSmithKline and now principal at Knowles Intellectual Property Strategies, LLC submitted to Managing Intellectual Property magazine a detailed critique of the U.S. Patent and Trademark Office's Guidelines for examination under Section 101 of the Patent Act in view of the Supreme Court's opinions in Mayo v. Prometheus and AMP v. Myriad Genetics. Her detailed (and critical) assessment of the Guidelines was prompted by a spirited defense of those Guidelines by Drew Hirschfield published by MIP in its March 4th issue, which in turn was occasioned by Ms. Knowles' assertion on March 26th at a MIP-sponsored panel session where, among other things, she characterized the Guidelines as "horrifying to the pharmaceutical and biotech industry."

Ms. Knowles raises the issue recognized by many in the patent community upon first inspection of the Guidelines: rather than merely attempting to administer the Court's decisions by limiting them to their facts (a particularly appropriate approach in view of the fact-specific bases for the Court's decisions in each case), she asserts that "these Guidelines appear to expand the Supreme Court analyses, apply the expanded analysis to products and methods that have not yet been litigated, and in doing so arguably de facto expand the law, which currently stands only in the form of judicial exceptions to patentability." These are not prospective or potential problems; Ms. Knowles rightly notes that this expansion of the "natural products" judicial exception is forming the grounds for rejecting U.S. patent applications now, and that the expected consequence (delay in obtaining patent protection and uncertainty about the validity and scope of such protection) could easily "chill[] any ability to attract venture capital and strip[] the value of numerous emerging life science companies."

She also raises the specter of the U.S. being out of step with the rest of the world, noting that many U.S. trade partners and competitors on the world stage (including the countries of Europe, China, Australia, Japan and Russia) grant patent protection for products now outside U.S. patent protection (according to the Guidelines) and that this reality threatens the U.S.'s position as a global biotechnology leader. Insofar as developing countries look to the U.S. to lead, these Guidelines encourage the sort of "anti-innovation" sentiments the U.S. has long opposed (for example, those preventing pharmaceutical patenting that were part of the impetus for the GATT treaty).

Ms. Knowles asks a simple but fundamental question: How did we get here? In her analysis, which reviews the Constitutional approach to patent protection as implemented by U.S. patent law and in particular, the 1952 Act, places at least some of the blame for the current circumstance on Congress, which "has only issued one sentence on what constitutes patentable subject matter in the United States." As a consequence, the "great void" created by this lack of attention has been filled by the Supreme Court, which is "immune from the political process" and lacks the resources needed to appreciate the effects on U.S. innovation its economy of its policy decisions. This institutional lack of competence is illustrated by the Court's decision in Funk Bros. Seed Co. Vs. Kalo Inoculant Co. (333 U.S. 127; 68 S.Ct 440 (1948), which forms the basis for the PTO's interpretation of the Court's recent cases. (Indeed, in a panel discussion at the Spring BIO IPCC meeting last week in Palm Springs, the Office's reliance on Funk Bros. was readily acknowledged by its representative on the panel.) Ms. Knowles notes that the "fatal flaw" in Kalo's patent claim (Claim 4 of U.S. Patent No. 2,200,532) was that it attempted to encompass all combinations of Rhizobium species that could permit growth in each other's presence, a case of "an aspiration which defined the material not by what it is but by what it does." This problem is one governed not by Section 101 of the Patent Act but rather Section 112, first paragraph (now Section 112(a)), for failure to provide an adequate written description of the invention. Rather than rely on this principle (which, while as recited was part of the revisions to the patent laws enacted four years after Funk Bros., but which was already enshrined in prevailing law), the Court relied on its "gut-feel that if one simply tells the public to find a bacteria that works, and use a prior art method to do so, that alone is not patentable." The result was "immeasurable damage []caused by using 101 as the rationale and with expansive, unnecessary and not politically tested verbiage that any mixture of natural materials is not patentable." (As close readers of the opinion have long recognized, Ms. Knowles references Justice Frankfurter's concurring opinion which is much more informative than Justice Douglas's principle opinion on the Court's concern and intended scope of its opinion.) And she puts paid to the misunderstanding of the case (that persists even today on the Court and particularly in the PTO) by citing Judge Giles S. Rich (author of the 1952 Patent Act) on this issue:

The real vice or inadequacy of the judge-made requirement for "invention" was in the truism Mr. Federico [one of the drafters of the 103 statute] restated, "the so-called standard of invention is an unmeasurable quantity having different meanings for different persons." It left every judge practically scott-free to decide this often controlling factor according to his personal philosophy of what inventions should be patented, whether or not he had any competence to do so or any knowledge of the patent system as an operative socioeconomic force. This was too great a freedom because it involved national policy which should be declared by Congress, not by individual judges or even groups of judges on multiple-judge courts.

Per Judge Rich, the test for "invention," as that term was inexactly used for many years by the Court, is embodied in Section 103 and adoption of that section of the patent law evinces Congress's judgment on how best to put into effect the Constitutional purpose of the patent grant.

Fast forward to the present day, and Ms. Knowles assays the current Court's statements in its Mayo and Myriad decisions showing that these principles and appreciation of Congressional intent have been forgotten if ever appreciated at all. She notes that the Court has expressly stated that "mere discovery" does not satisfy the legal standard for invention, which requires the Court to ignore the words of the statute that "Whosoever invents or discovers any new and useful process, machine, manufacture or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor," and asks "[d]oes the Supreme Court have the right to pencil out two very important words of a statute? Can the Supreme Court decide to honor only part of a statute and judicially except the rest?" This is not interpreting the law, Ms. Knowles contends; it is changing it (and about that she is completely correct).

The next section of her piece is perhaps the most salient to the policy question raised by the Court and improvidently addressed by the Guidelines. Relying on a 2012 report from the National Institutes of Health, Natural Product Branch, she recites the statistics relating to the number of FDA approvals (a total of 1,355) for new drugs falling into the following categories:

Drug type/source                                Number

Biological (B)                                            203

Natural product (N)                                    55

Natural product (botanical) (NB)               149

Derived from a natural product (ND)          298

Totally synthetic (S)                                  393

Total synthesis/natural product (S*)           176

Vaccine (S)                                                 81

These statistics illustrate the consequences of the Court's and the Office's policymaking; of the 1,355 drugs approved between 1981 and 2010:

• 968 (71%) are outside the scope of the Guidelines

• 636 (47%) are B, N, NB, and V

• 50% of all small molecule drugs are natural products (2000-2010)

• About 75% of antibacterial drugs are natural products or derived from natural products

• Almost 80% of small molecule anticancer drugs were natural products or derivatives

The Report also has specific information on particular drugs among these different catagories.

Ms. Knowles does not state the obvious: these statistics are chilling. It is of particular note that during the 1982-2010 timeframe only 15% of approved drugs were biologics; every study has shown that the percentage of drugs that are biologics has been growing and will be the predominant type of drug developed in the 2011-2030 time period. And these drugs are the among the ones that the PTO would preclude from patenting, based on its over-interpretation of the Court's decisions in Mayo and Myriad.

In closing, Ms. Knowles does not shy away from the implications of her analysis, that what we have here is a breakdown of the separation of powers that is the basis of our Federal government. The Supreme Court is legislating rather than interpreting the law, and Congress seems unable to identify the portions of the patent law that are actually important for innovation, producing the legislative void the Court has taken upon itself to fill. She notes that the Guidelines cite the "judicial exceptions to patent[-eligibility]" eighty-two times, without citing the relevant language of the Patent Act at all. The short term answer may be as simple as having the Office listen to the patenting community and the outrage the Guidelines have created, but that may be a false hope: the Office was tone-deaf enough to promulgate these Guidelines without notice and comment (which, even if not necessary would have alerted the relevant parties to provide whatever counter-arguments they are now raising after the fact). And she is even more hopeful in calling for us all to "encourage our Congressional representatives to open the political process to update the patent statutes, and in doing so, provide the necessary clarity and leadership on patentability in this complex technology space and override the Supreme Court's 'judicial exceptions to patentability.'" The solution may be as simple as the Office rescinding these Guidelines, publishing them for notice and comment, and then working with its relevant stakeholders to find a workable compromise. No matter how this is resolved, we owe it to ourselves if not the public to try to educate our leaders on these important issues.
Software Sector Leads First Quarter Venture Funding to Thirteen Year High; Biotech Sector Finishes Second (Again)

April 30, 2014

By Donald Zuhn —

Earlier this month, the National Venture Capital Association (NVCA), a trade association representing the U.S. venture capital industry, released the results of its MoneyTree Report on venture funding for the first quarter of 2014. The report, which is prepared by the NVCA and PriceWaterhouseCoopers LLP using data from Thomson Reuters, indicates that venture capitalists invested $9.469 billion in 951 deals in the first quarter, which constituted a 12% increase in dollars and a 14% decrease in deals as compared with the fourth quarter of 2013, when $8.441 billion was invested in 1,112 deals (see chart below, which shows total venture funding from the first quarter of 2011 through the first quarter of 2014; data from MoneyTree Reports; click on chart to expand). The nearly $9.5 billion invested in the first quarter was the highest quarterly total since the second quarter of 2001.

Venture funding in the biotechnology sector dropped from $1.375 billion in the fourth quarter of 2013 to $1.062 billion in the first quarter of 2014 (see chart below, which shows venture funding for the biotech (blue), medical devices (red), and software (green) sectors since the first quarter of 2011; data from MoneyTree Reports; click on chart to expand). In addition to suffering a 23% drop in dollars, the biotech sector also dropped 21% in deals in the first quarter of 2014. However, funding in the biotech sector was up from the first quarter of 2013, when $871 million was invested.

While the biotech sector secured enough funding to place second among the seventeen sectors tracked by the NVCA, the biotech sector received only 25% of the $4.008 billion in funding that was poured into the software sector in the first quarter — the first time since the fourth quarter of 2000 that the software sector broke the $4 billion mark. The software sector has now captured the top spot for eighteen straight quarters, with the biotech sector finishing second in all but two of those quarters (the industrial/energy sector knocked the biotech sector to third in the second quarter of 2010 and first quarter of 2011), and the software sector has received more than $2 billion in funding for eight consecutive quarters.

Medical device and equipment investment increased by 28% with respect to dollars and dropped by 37% in deals in the first quarter, with $588 million being invested in 61 deals. Overall, nine of the seventeen sectors tracked by the NVCA saw decreases in dollars invested in the first quarter.

For additional information regarding this and other related topics, please see:

• "Biotech Venture Funding Rebounded in 2013 After Strong Fourth Quarter," January 26, 2014
• "Biotech Venture Funding Sees Second Quarter Rebound," July 22, 2013
• "Biotech Venture Funding Down 33% in First Quarter," April 30, 2013
• "Annual Venture Funding Drops for First Time in Three Years," February 4, 2013
• "Biotech Venture Funding Up 64% in Third Quarter," October 29, 2012
• "Venture Funding in Life Sciences Sector Drops 9% in Second Quarter," July 22, 2012
• "Biotech Venture Funding Drops 43% in First Quarter," May 3, 2012
• "Venture Funding Increased 22% in 2011," February 2, 2012
• "Life Sciences Venture Funding Drops in Third Quarter," October 27, 2011
• "Life Sciences Venture Funding up 37% in Second Quarter," August 1, 2011
• "VentureSource Reports 35% Increase in 1Q Venture Funding," April 26, 2011
• "NVCA Reports Modest Gains in First Quarter Venture Funding," April 19, 2011 
• "NVCA Reports 31% Drop in Venture Funding for Third Quarter," October 17, 2010 
• "NVCA Reports 34% Increase in Venture Funding for Second Quarter," July 22, 2010 
• "NVCA Report Shows First Quarter Drop in Venture Funding," April 20, 2010 
• "Biotech/Pharma Financing Improving, R&D Spending Up," August 31, 2009
• "NVCA Study Shows Increase in Third Quarter Venture Funding," October 23, 2009 
• "First Quarter Venture Capital Funding at 12-Year Low," April 23, 2009 
• "NVCA Study Shows Decline in 2008 Investment; BIO Study Predicts Biotech Rebound in 2009," February 16, 2009
“Standing Out” — A Closer Look at the “Exceptional Case” Standard Articulated in Octane Fitness

April 29, 2014

By Andrew Williams —

As we reported earlier today, the Supreme Court issued opinions in the Octane Fitness, LLC v. ICON Health & Fitness, Inc. (Supreme Court docket number 12-1184) and Highmark Inc. v. Allcare Health Mgmt. Sys., Inc. (Supreme Court docket number 12-1163) cases. The statute at issue in these cases was 35 U.S.C. § 285, which provides that a "court in exceptional cases may award reasonable attorney fees to the prevailing party." The Federal Circuit had previously established that exceptional cases were either based on litigation-related misconduct or if the litigation was both (1) brought in subjective bad faith and (2) objectively baseless." See Brooks Furniture Mfg. v. Dutailier, Inc., 393 F.3d 1378 (Fed. Cir. 2005). The Supreme Court found this test to be "overly rigid." First, the litigation-related misconduct identified by the Federal Circuit, such as willful infringement, fraud, or inequitable conduct, and conduct that violates Fed. R. Civ. P. 11, are all otherwise, independently sanctionable. The Court did not think this was an appropriate benchmark. Instead, the opinion clarified that even if a party's unreasonable conduct is not necessarily independently sanctionable, it can still give rise to a finding of an "exceptional" case. Moreover, the Court believed that either subjective bad faith or an objectively baseless suit could be sufficient to find a case "exceptional," without requiring both. Finally, the test established by the Federal Circuit in Brooks Furniture rendered § 285 superfluous. This is because of the "long recognized [] common-law exception to the general 'American Rule' against fee-shifting." In other words, district courts already had an inherent power to shift fees in the cases that would satisfy the Brooks Furniture test.

It was not overly surprising that the Supreme Court discarded the Federal Circuit standard from 2005. Indeed, as the opinion noted in one of the only footnotes unanimously agreed to by the Court, even Chief Judge Rader recently criticized the Brooks Furniture case, complaining that the court "'should have remained true to its original reading of §285.'" Octane, slip op. at 4-5, FN 4 (citing Kilopass Tech. Inc. v. Sidense Corp. No. 2013-1193, 2013 WL 6800885, at *14 (Fed. Cir. Dec. 26, 2013) (Rader, C.J., concurring)). What wasn't clear was what the new standard for an "exceptional" case would be. In fact, during oral arguments, several choices were bandied about, ranging from "frivolousness," to "objectively baseless," to "gross injustice," to "objectively reasonable," to "just let the District Court decide." Justice Scalia even had problems with the term meritless, noting that "every time you win [a] summary judgment motion, that's a determination that the claim is without merit." Instead, the Court resorted to dictionary definitions of the word "exceptional" to arrive at the new standard — "an 'exceptional' case is simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated." Octane, slip op. at 7-8. But what does it mean to "stand out"? Does this mean that there is some normative aspect to the test? After all, this case has garnered a lot of attention because of the implications for so-called "patent-troll" litigation tactics. In fact, if the statistics of some of the anti-troll organizations are to be believed, "troll" litigations make up the majority of court filings. If this is so, do these cases truly stand out? Even the much smaller number of suits brought by patent assertion entities, 19%, identified by the GAO hardly makes these cases the antithesis of "run-of-the mill" litigation anymore.

Nevertheless, the new standard provides two types of situations that might make a case "stand out." First, the court can look to the "substantial strength" of a party's position, either legally or factually. This begs the question whether the assertion of a (presumed valid) issued patent can ever result in an exceptional case finding. Obviously, a patent holder could overreach by asserting its patent against an accused infringer whose activities objectively do not fall within the claim scope. But if the infringement count would satisfy Rule 11, would the assertion of a questionable, but still valid patent, ever "stand out?" Moreover, if the accused infringer does not file invalidity counterclaims, would they still be subject to this prong of the standard. In other words, if they had an objectively weak position in denying allegations in an Answer or asserting affirmative defenses, could a defendant be subject to fee shifting for refusing to settle? Finally, is there a temporal character to this prong? For example, is this standard to be considered only at the pleading stage, or can an adverse ruling turn a party's position "substantially weak," such that the suit (or defense) should not be maintained?

This brings up the second situation — when cases are litigated in an unreasonable manner. Presumably such nefarious actions can turn even the strongest cases "exceptional." But where will the line be drawn? If a party's attorney is overzealously advocating for his or her client, when do such actions cross the line? Certainly seeking discovery is essential to establish one's case, but reports of discovery abuse are rampant. Or would engaging in extensive motion practice potentially subject a party to fee-shifting? Would refusing to settle be considered litigating in an unreasonable manner? And, again, such actions (no matter how reprehensible) must "stand-out" before making the case exceptional.

This leaves a lot of question for the trial courts to sort out when asked for an award of fees by the prevailing party. Looking at the Octane case itself might be instructive, as that case was vacated and remanded for further proceeding consistent with the opinion. In its briefing to the Court, Octane appeared to tap into the public sentiment regarding "trolls" by devoting an entire section of its brief to the public policies related to curbing abusive patent litigation. Nevertheless, even Octane admitted that "[t]his case does not involve a classic 'troll,' but does involve a larger competitor asserting a non-practiced patent against a smaller competitor in a troll-like manner." Even though ICON asserted a patent against Octane (which is presumed valid) which ICON did not practice, ICON was otherwise an operating company. Nevertheless, there would appear to be nothing in the articulated standard that would inherently subject a non-practicing entity to fee shifting. There were some questionable internal correspondence in this case, such as ICON's Vice President of Global Sales, who stated in an e-mail that ICON was "'[n]ot only coming out with a great product to go after [Octane], but throwing a lawsuit on top of that,' and that I[CON] was asserting a defunct patent because it was 'just looking for royalties.'" The Supreme Court, however, noted that the District Court found these to be stray comments by employees with no real connection to the suit. ICON did receive an unfavorable claim construction ruling, apparently destroying its literal infringement argument. But instead of conceding, ICON pursued a doctrine of equivalents theory (which it presumably had a right to do). As the Federal Circuit reported the record, the only thing that potentially could have made this case "stand out" was that the big company was going after a smaller competitor. But a patent holder should have the right to assert its intellectual property rights, regardless of the size of the accused infringer. It will be interesting to see the outcome of this case, and the other cases that will apply the new standard, to just see how it gets applied.

One final aspect of the opinion that is worth noting is that the Supreme Court altered the evidentiary burden related to fee-shifting to patent holders. The Federal Circuit had articulated that because patents are presumed valid, an alleged infringer would be required to establish an exceptional case by clear and convincing evidence. However, the Supreme Court disagreed, finding that § 285 imposed no evidentiary burden, much less a heightened one. This should alleviate the perceived inequities experienced by accused infringers, who appeared to have a harder time successfully requesting attorney fees than their patent-holding counterparts.

Octane Fitness, LLC v. ICON Health & Fitness, Inc. (2014)
Opinion by Justice Stotomayor

Highmark Inc. v. Allcare Health Mgmt. Sys., Inc. (2014)
Opinion by Justice Sotomayor
Patent Trolls Beware — Supreme Court Issues Decisions in Octane Fitness and Highmark

April 29, 2014

By Andrew Williams —

In two closely watched cases, the Supreme Court today issued its opinions in Octane Fitness, LLC v. ICON Health & Fitness, Inc. (Supreme Court docket number 12-1184) and Highmark Inc. v. Allcare Health Mgmt. Sys., Inc. (Supreme Court docket number 12-1163). The issue in both cases centered on the attorney fee-shifting provision of 35 U.S.C. § 285, which simply reads: "The court in exceptional cases may award reasonable attorney fees to the prevailing party." In Octane, a mostly unanimous court (Justice Scalia did not join footnotes 1-3) held that "an 'exceptional' case is simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated." Octane, slip op. at 7-8. Of course, it should come as no surprise that the Court required such a determination to be made "considering the totality of the circumstances." Id. at 8. Finally, the Court left the determination of whether a case is "exceptional" to the discretion of the district court judge. Therefore, the outcome of Highmark necessarily followed (this time unanimously): "We therefore hold that an appellate court should apply an abuse-of-discretion standard in reviewing all aspects of a district court's §285 determination." Highmark, slip op. at 5. This is true, even though "questions of law may in some cases be relevant to the §285 inquiry." Id. Both cases were vacated and remanded.

These cases have been watched closely because of their potential impact on so-called "patent trolls." The outcome will make it much easier for trial courts to shift the fees to the non-prevailing party if it believes that the litigation was brought or conducted in an abusive manner. It will also make it more difficult for an appeals court to overturn such a determination. These decisions also come as the Senate is working out a compromise on a new fee-shifting provision to the patent statute. It might be prudent, therefore, to put legislative reform efforts on hold (especially with regard to § 285), until the impact of these decisions can be ascertained.

Patent Docs will provide additional analysis of these opinions in a subsequent post.
Gilead Sciences, Inc. v. Natco Pharma Ltd. (Fed. Cir. 2014)

April 28, 2014

By Kevin E. Noonan —

The Federal Circuit extended the scope of the judicially created doctrine of obviousness-type double patenting (OTDP) in a split decision rendered in Gilead Sciences Inc. v. Natco Pharma Ltd. In doing so, the panel majority applied what it viewed as the important policy motivations for the doctrine, a rationale unpersuasive to the Chief Judge in dissent.

The case involved antiviral drugs and methods directed to influenza virus as claimed in U.S. Patent Nos. 5,763,483 and 5,952,375. These patents were commonly owned, named the same inventors, and were directed to related subject matter (interference with viruses by "selective interference with certain enzymes"), but did not share any priority relationship and had different filing and expiration dates set forth by the Court as follows:

As shown, the later-filed application expires after the earlier-filed application.

The lawsuit arose under the provisions of 35 U.S.C. § 271(e)(2) upon filing of Natco's Abbreviated New Drug Application (ANDA). Gilead sued, the parties stipulated infringement, and the issue before the District Court was whether Gilead's '483 patent was invalid for OTDP in view of the earlier-filed '375 patent. Gilead filed a terminal disclaimer in the '375 patent with regard to the '483 patent (something that the Court noted was unnecessary because "the '375 patent's expiration date is before the '483 patent's expiration date" absent abandonment), but no terminal disclaimer was filed in the '483 patent, and separate examiners were not informed of the existence of the other application otherwise. According to the opinion, Gilead "crafted a separate 'chain' of applications having a later priority date than the '375 patent family," which provides a hint early in the opinion that the panel majority was attempting to prevent Gilead from strategucally avoiding OTDP. The District Court determined that the extensions in patent term were "not a result of gamesmanship, but instead were a result of changes to [the] patent laws" attendant upon ratification of the GATT treaty.

The Federal Circuit vacated the District Court's judgment of infringement and remanded for reconsideration of Natco's invalidity contentions; notably, the opinion states that "[f]or purposes of this appeal, we assume that the '483 patent claims a mere obvious variant of the invention claimed in the '375 patent" because the District Court did not reach the merits. The decision for the majority was penned by Judge Chen joined by Judge Prost, with Chief Judge Rader dissenting.

The question the majority considered was before it was:

Can a patent that issues after but expires before another patent qualify as a double patenting reference for that other patent?

The majority answered this question "yes" under the circumstances of this case. In a nutshell:

Because the obviousness-type double patenting doctrine prohibits an inventor from extending his right to exclude through claims in a later-expiring patent that are not patentably distinct from the claims of the inventor's earlier-expiring patent, we agree with Natco that the '375 patent qualifies as an obviousness-type double patenting reference for the '483 patent.

The panel majority began its analysis by citing several Supreme Court cases (Miller v. Eagle Mfg. Co., 151 U.S. 186, 197-98, 202 (1894); Suffolk Co. v. Hayden, 70 U.S. 315, 317 (1865), and particularly Justice Story riding the First Circuit at Odiorne v. Amesbury Nail Factory, 18 Fed. Cas. 578, 579 (C.C.D. Mass. 1819)) for the proposition that the patent grant is balanced by the invention falling into the public domain once the patent expires, which implicates judicial prohibitions against extending the patent term that the OTDP prohibition is intended to impose. This included not only serial patents on the same invention but also a prohibition on patents reciting patentably indistinct inventions, i.e., ones that claimed only an "obvious modification[]" of a patented invention. The majority cited 35 U.S.C. § 253 as changing the scope of the OTDP doctrine, permitting separate patents provided that the patentee disclaimed later term, citing Application of Robeson, 331 F.2d 610, 614 (CCPA 1964), which is "tantamount for all practical purposes to having all the claims in one patent." Application of Braithwaite, 379 F.2d 594, 601 (CCPA 1967).

The majority bases its decision that OTDP applies in this situation on the "bedrock principle" that "when a patent expires, the public is free to use not only the same invention claimed in the expired patent but also obvious or patentably indistinct modifications of that invention." However:

[T]hat principle is violated when a patent expires and the public is nevertheless barred from practicing obvious modifications of the invention claimed in that patent because the inventor holds another later-expiring patent with claims for obvious modifications of the invention. Such is the case here.

Because the panel majority believes that the claims of the '483 patent are mere obvious variants of the claims in the '375 patent, they held that, if the claims of the '483 patent are patentably indistinct from the claims of the '375 patent, then the term of the '483 patent should end on the same date as the '375 patent expires (keeping in mind that neither the District Court nor the majority have yet made that determination).

The panel majority rejected Gilead's argument that extending the term of the '483 patent was not the issue, because that patent issued earlier than the '375 patent. This argument garnered no traction with the panel majority in view of the policy reasons underlying their decision. The panel acknowledged disruptions caused by the GATT treaty in the traditional term relationships between patents, stating that "the focus on controlling the patent term of later issued patents in those [earlier] cases [cited by Gilead] makes perfect sense: before the URAA [GATT}, later issued patents expired later" (emphasis in opinion). Patent issue dates under the prior regime "served as a reliable stand-in for the date that really mattered" to the panel: the patent expiration date at which time the invention fell into the public domain. Doing otherwise would encourage "significant gamesmanship" during prosecution, according to the panel majority, setting out the scenario that:

[I]f the double patenting inquiry was limited by issuance date, inventors could routinely orchestrate patent term extensions by (1) filing serial applications on obvious modifications of an invention, (2) claiming priority to different applications in each, and then (3) arranging for the application claiming the latest filing date to issue first. If that were to occur, inventors could potentially obtain additional patent term exclusivity for obvious variants of their inventions while also exploring the value of an earlier priority date during prosecution.

Such gamesmanship is illustrated by the change in whether or not OTDP applies based on whether the first filed application granted as a patent one day before or one day after the later-filed application:

versus

These differences are "simply too arbitrary, uncertain, and prone to gamesmanship" in the panel majority's view, and the majority opined that "Congress could not have intended to inject the potential to disturb the consistent application of the doctrine of double patenting by passing the URAA."

Thus, the majority fashioned a rule that "the earliest expiration date of all the patents an inventor has on his invention and its obvious variants" should be used for the District Court's OTDP analysis, saying that "[p]ermitting any earlier expiring patent to serve as a double patenting reference for a patent subject to the URAA guarantees a stable benchmark that preserves the public's right to use the invention (and its obvious variants) that are claimed in a patent when that patent expires."

Chief Judge Rader dissented in an opinion where he characterized the majority's decision as unnecessarily "expand[ing] the judicially-created doctrine of OTDP." While agreeing with the majority that "the doctrine has served a useful purpose over the years" under U.S. patent law prescribing a patent term of 17 years from patent grant date, under current law the Chief does not apprehend that the rationale behind the OTDP doctrine still exists. In his view, "a primary motivation behind the doctrine — preventing the effective extension of patent term — is largely no longer applicable." The Chief Judge does recognize what he terms "a second underlying policy concern — preventing multiple infringement suits by different assignees asserting essentially the same patented invention." But he does not believe this concern is implicated in this case, either.

In his dissent the Chief Judge notes a logical inconsistency in the majority's argument, that if the '375 patent had never issued, Gilead would have been entitled to the full extent of the '483 patent term. Thus, the issue can be considered not as the majority has, that the term of the '483 patent is improperly extended past the expiration date of the earlier-filed '375 patent, but rather whether an earlier-issued patent's term can be cut short by later grant of an earlier-filed application (which the majority sanctioned here). And he noted that Gilead conformed to the statutory regime regarding priority and did not claim priority in the later-filed '483 patent to the related disclosure (and priority date) of the earlier-filed '375 patent. In doing so, Gilead "forfeit[ed] its earlier claim to priority and subject[ed] any new patent to intervening prior art," perhaps the antithesis of gamesmanship (giving up about 10 months of priority according to the Chief).

With regard to the majority's stated view, he recited what he believes to be "the flawed assumption that upon the expiration of a patent, the public obtains an absolute right to use the previously-claimed subject matter." The Chief Judge noted that "even a patentee [does not] have the affirmative right to use its claimed subject matter," citing Spindelfabrik Suessen-Schurr, Stahlecker & Grill GmbH v. Schubert & Salzer Maschinefabrik Aktiengesellschaft, 829 F.2d 1075, 1081 (Fed. Cir. 1987). In addition, he argued, this assumption "ignores the possible existence of overlapping patents" (such as a first patent to a genus and a later patent to a species; this argument ignores the requirement that said later species be patentably distinct from the genus). In addition to generally counseling his brethren that judicial restraint in extending judicially created patent doctrines is the more prudent path, the Chief Judge also noted the potential for unforeseen effects of the majority's decision on filing behavior under the "first-inventor-to-file" provisions of the America Invents Act.

Gilead Sciences, Inc. v. Natco Pharma Ltd. (Fed. Cir. 2014)
Panel: Chief Judge Rader and Circuit Judges Prost and Chen
Opinion by Circuit Judge Chen; dissenting opinion by Chief Judge Rader
Court Report

April 27, 2014

By Sherri Oslick —

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

Amarin Pharma, Inc. et al. v. Apotex, Inc. et al.
1:14-cv-02958; filed April 24, 2014 in the Northern District of Illinois

• Plaintiffs: Amarin Pharma, Inc.; Amarin Pharmaceuticals Ireland Ltd.
• Defendants: Apotex, Inc.; Apotex Corp.

Amarin Pharma, Inc. et al. v. Apotex, Inc. et al.
3:14-cv-02550; filed April 21, 2014 in the District Court of New Jersey

• Plaintiffs: Amarin Pharma, Inc.; Amarin Pharmaceuticals Ireland Ltd.
• Defendants: Apotex, Inc.; Apotex Corp.

Amarin Pharma, Inc. et al. v. Roxane Laboratories, Inc.
3:14-cv-02551; filed April 21, 2014 in the District Court of New Jersey

• Plaintiffs: Amarin Pharma, Inc.; Amarin Pharmaceuticals Ireland Ltd.
• Defendant: Roxane Laboratories, Inc.

The complaints in these cases are substantially identical. Infringement of U.S. Patent Nos. 8,293,728 ("Methods of Treating Hypertriglyceridemia," issued October 23, 2012), 8,318,715 (same title, issued November 27, 2012), 8,357,677 (same title, issued January 22, 2013), 8,367,652 (same title, issued February 5, 2013), 8,377,920 (same title, issued February 19, 2013), 8,399,446 (same title, issued March 19, 2013), 8,415,335 (same title, issued April 9, 2013), 8,426,399 (same title, issued April 23, 2013), 8,431,560 (same title, issued April 30, 2013), 8,440,650 (same title, issued May 14, 2013), 8,501,225 ("Stable Pharmaceutical Composition and Methods of Using Same," issued August 6, 2013), 8,518,929 ("Methods of Treating Hypertriglyceridemia," issued August 27, 2013), 8,524,698 (same title, issued September 3, 2013), 8,546,372 (same title, issued October 1, 2013), 8,551,521 ("Stable Pharmaceutical Composition and Methods of Using Same," issued October 8, 2013), and 8,617,594 (same title, issued December 31, 2013) following a Paragraph IV certification as part of defendants' filing of an ANDA to manufacture a generic version of Amarin's Vascepa® (icosapent ethyl, used as an adjunct to diet to reduce triglyceride levels in adult patients with severe hypertriglyceridemia). View the New Jersey Apotex complaint here.

Kowa Co. et al. v. Zydus Pharmaceuticals (USA) Inc. et al.
3:14-cv-02552; filed April 22, 2014 in the District Court of New Jersey

• Plaintiffs: Kowa Co.; Kowa Pharmaceuticals America, Inc.; Nissan Chemical Industries, Ltd.
• Defendants: Zydus Pharmaceuticals (USA) Inc.; Cadila Healthcare Ltd.

Kowa Co. et al. v. Orient Pharma Co., Ltd.
1:14-cv-02759; filed April 17, 2014 in the Southern District of New York

• Plaintiffs: Kowa Co.; Kowa Pharmaceuticals America, Inc.; Nissan Chemical Industries, Ltd.
• Defendant: Orient Pharma Co., Ltd.

Kowa Co. et al. v. Zydus Pharmaceuticals (USA) Inc. et al.
1:14-cv-02760; filed April 17, 2014 in the Southern District of New York

• Plaintiffs: Kowa Co.; Kowa Pharmaceuticals America, Inc.; Nissan Chemical Industries, Ltd.
• Defendants: Zydus Pharmaceuticals (USA) Inc.; Cadila Healthcare Ltd.

Kowa Co. et al. v. Mylan, Inc. et al.
2:14-cv-00504; filed April 17, 2014 in the Western District of Pennsylvania

• Plaintiffs: Kowa Co.; Kowa Pharmaceuticals America, Inc.; Nissan Chemical Industries, Ltd.
• Defendants: Mylan, Inc.; Mylan Pharmaceuticals, Inc.

The complaints in these cases are substantially identical. Infringement of U.S. Patent Nos. 5,856,336 ("Quinoline Type Mevalonolactones," issued January 5, 1999), 6,465,477 ("Stable Pharmaceutical Composition," issued October 15, 2002), and 8,557,993 ("Crystalline Forms of Pitavastatin Calcium," issued October 15, 2013) following a Paragraph IV certification as part of defendants' filing of an ANDA to manufacture a generic version of Kowa's Livalo® (pitavastatin, used as an adjunctive therapy to diet to reduce elevated total cholesterol, lowdensity lipoprotein cholesterol, apolipoprotein B, triglycerides, and to increase high-density lipoprotein cholesterol). View the Mylan complaint here.

Forest Laboratories Inc. et al. v. Amneal Pharmaceuticals LLC et al.
1:14-cv-00508; filed April 21, 2014 in the District Court of Delaware

• Plaintiffs: Forest Laboratories Inc.; Forest Laboratories Holdings Ltd.; Merz Pharma GmbH & Co. KGaA; Merz Pharmaceuticals GmbH; Adamas Pharmaceuticals Inc.
• Defendants: Amneal Pharmaceuticals LLC; Amneal Pharmaceuticals of New York LLC; Amerigen Pharmaceuticals Inc.; Amerigen Pharmaceuticals Ltd.; Mylan Pharmaceuticals Inc.

Infringement of U.S. Patent Nos. 5,061,703 ("Adamantane Derivatives in the Prevention and Treatment of Cerebral Ischemia," issued on October 29, 1991), 8,039,009 ("Modified Release Formulations of Memantine Oral dosage Forms," issued October 18, 2011), 8,168,209 ("Method and Composition for Administering an NMDA Receptor Antagonist to a Subject," issued May 1, 2012), 8,173,708 (same title, issued May 8, 2012), 8,283,379 ("Method and Compositions for the Treatment of CNS-Related Conditions," issued October 9, 2012), 8,329,752 ("Composition for Administering an NMDA Receptor Antagonist to a Subject," issued December 11, 2012), 8,362,085 ("Method for Administering an NMDA Receptor Antagonist to a Subject," issued January 29, 2013), and 8,598,233 (same title, issued December 3, 2013) following a Paragraph IV certification as part of Amneal's filing of an ANDA to manufacture a generic version of Forest's Namenda XR® (memantine hydrochloride extended release, used for the treatment of moderate to severe dementia of the Alzheimer's type). View the complaint here.

Hospira Inc. et al. v. Aurobindo Pharma Ltd. et al.
1:14-cv-00486; filed April 18, 2014 in the District Court of Delaware

• Plaintiffs: Hospira Inc.; Orion Corp.
• Defendants: Aurobindo Pharma Ltd.; Aurobindo Pharma USA Inc.

Hospira Inc. et al. v. Ben Venue Laboratories Inc.
1:14-cv-00487; filed April 18, 2014 in the District Court of Delaware

• Plaintiffs: Hospira Inc.; Orion Corp.
• Defendant: Ben Venue Laboratories Inc.

Hospira Inc. et al. v. Actavis LLC et al.
1:14-cv-00488; filed April 18, 2014 in the District Court of Delaware

• Plaintiffs: Hospira Inc.; Orion Corp.
• Defendants: Actavis US Holding LLC; Actavis LLC

Hospira Inc. et al. v. Akorn, Inc.
1:14-cv-02811; filed April 18, 2014 in the Northern District of Illinois

• Plaintiffs: Hospira Inc.; Orion Corp.
• Defendant: Akorn, Inc.

Hospira, Inc. et al. v. Intas Pharmaceuticals Ltd. et al.
1:14-cv-00336; filed April 18, 2014 in the Middle District of North Carolina

• Plaintiffs: Hospira Inc.; Orion Corp.
• Defendants: Intas Pharmaceuticals Ltd.; Accord Healthcare, Inc. USA

The complaints in these cases are substantially identical. Infringement of U.S. Patent No. 6,716,867 ("Use of Dexmedetomidine for ICU Sedation," issued April 6, 2004) following a Paragraph IV certification as part of defendats' filing of an ANDA to manufacture a generic version of Hospira's Precedex® (dexmedetomidine hydrochloride injection, used for the sedation of initially intubated and mechanically ventilated patients during treatment in an intensive care setting). View the Aurobindo complaint here.

Westport Pharmaceuticals, LLC et al. v Acura Pharmaceuticals, Inc.
4:14-cv-00770; filed April 18, 2014 in the Eastern District of Missouri

• Plaintiffs: Westport Pharmaceuticals, LLC; Highland Pharmaceuticals, LLC
• Defendant: Acura Pharmaceuticals, Inc.

Declaratory judgment of non-infringement of U. S. Patent No. 8,409,616 ("Extended Release Opioid Abuse Deterrent Compositions and Methods of Making Same," issued April 2, 2013) based on Westport's manufacture and sale of its Zephrex-D® product (tamper-resistant pseudoephedrine, used to provide congestion relief for allergy, cold and sinus sufferers). View the complaint here.

Kowa Co. et al. v. Amneal Pharmaceuticals, LLC
3:14-cv-02488; filed April 18, 2014 in the District Court of New Jersey

• Plaintiffs: Kowa Co.; Kowa Pharmaceuticals America, Inc.; Nissan Chemical Industries, Ltd.
• Defendant: Amneal Pharmaceuticals, LLC

Kowa Co. et al. v. Amneal Pharamceuticals, L.L.C.
1:14-cv-02758; filed April 17, 2014 in the Southern District of New York

• Plaintiffs: Kowa Co.; Kowa Pharmaceuticals America, Inc.; Nissan Chemical Industries, Ltd.
• Defendant: Amneal Pharmaceuticals, L.L.C.

The complaints in these cases are substantially identical. Infringement of U.S. Patent Nos. 5,856,336 ("Quinoline Type Mevalonolactones," issued January 5, 1999) and 8,557,993 ("Crystalline Forms of Pitavastatin Calcium," issued October 15, 2013) following a Paragraph IV certification as part of Amneal's filing of an ANDA to manufacture a generic version of Kowa's Livalo® (pitavastatin, used as an adjunctive therapy to diet to reduce elevated total cholesterol, lowdensity lipoprotein cholesterol, apolipoprotein B, triglycerides, and to increase high-density lipoprotein cholesterol). View the SDNY complaint here.

Mallinckrodt LLC et al. v. Metrics, Inc.
2:14-cv-02219; filed April 7, 2014 in the District Court of New Jersey

• Plaintiffs: Mallinckrodt LLC; Mallinckrodt Inc.; Nuvo Research Inc.
• Defendant: Metrics, Inc. d/b/a/ Coastal Pharmaceuticals

Infringement of U.S. Patent Nos. 8,217,078 ("Treatment of Pain with Topical Diclofenac," issued July 10, 2012), 8,546,450 (same title, issued October 1, 2013), and 8,618,164 (same title, issued December 31, 2013) following a Paragraph IV certification as part of Coastal's filing of an ANDA to manufacture a generic version of Mallinckrodt's Pennsaid® (diclofenac sodium topical solution, used for the treatment of signs and symptoms of osteoarthritis of the knee(s)). View the complaint here.
Conference & CLE Calendar

April 27, 2014

April 28, 2014 – Nautilus Inc. v. Biosig Instruments Inc. Post Argument Discussion (American University Washington College of Law Program on Information Justice & Intellectual Property) – 4:15 to 5:45 pm (Eastern)

April 28-29, 2014 – Paragraph IV Disputes*** (American Conference Institute) – New York, NY

May 2, 2014 – IP on the Edge (John Marshall Law School Center for Intellectual Property, Information & Privacy Law) – Chicago, IL

May 6, 2014 – GW Law Symposium on Intellectual Property (George Washington University Law School, Mayer Brown, and Pillsbury) – George Washington University Law School

May 13-15, 2014 – Fundamentals of Patent Prosecution 2014: A Boot Camp for Claim Drafting & Amendment Writing (Practising Law Institute) – Chicago, IL

May 14-15, 2014 – EU Pharmaceutical Law Forum*** (Informa Life Sciences) – Brussels, Belgium

May 15, 2014 – "Patent Subject Matter Eligibility: Navigating the New 'Myriad' Guidelines — Analyzing Subject Matter and Avoiding Rejection Under the USPTO's Detailed Framework" (Strafford) – 1:00 to 2:30 pm (EDT)

May 22, 2014 – "Patent Infringement: Structuring Opinions of Counsel: Leveraging Opinion Letters to Reduce the Risks of Liability and Enhanced Damages" (Strafford) – 1:00 to 2:30 pm (EDT)

June 4-6, 2014 – Biosimilars*** (American Conference Institute) – New York, NY

June 11-13, 2014 – Fundamentals of Patent Prosecution 2014: A Boot Camp for Claim Drafting & Amendment Writing (Practising Law Institute) – New York, NY

July 9-11, 2014 – Fundamentals of Patent Prosecution 2014: A Boot Camp for Claim Drafting & Amendment Writing (Practising Law Institute) – San Francisco, CA

August 13-15, 2014 – Advanced Patent Law Seminars (Chisum Patent Academy) - Seattle, WA

August 18-20, 2014 – Advanced Patent Law Seminars (Chisum Patent Academy) - Seattle, WA

***Patent Docs is a media partner of this conference or CLE
IP on the Edge

April 27, 2014

The John Marshall Law School Center for Intellectual Property, Information & Privacy Law will be holding a program entitled "IP on the Edge" on May 2, 2014 in Chicago, IL. The conference will consist of the following sessions:

• Patents on the Edge — Panel discussion featuring The Honorable Richard Linn, Judge, U.S. Circuit Court for the Federal Circuit; The Honorable James Holderman, Judge, U.S. District Court for the Northern District of Illinois; Robert Stoll of Drinker Biddle and former Commissioner of Patents for the U.S. Patent and Trademark Office; and Patent Docs author Kevin Noonan of McDonnell Boehnan Hulbert & Berghoff LLP

• Trademarks on the Edge

• Luncheon Speaker — The Honorable Randall Rader, Chief Judge, U.S. Circuit Court of Appeals for the Federal Circuit

• Copyrights on the Edge

• Future Directions on the Edge

Additional information about the program can be found here. Those interested in registering for the conference online can do so here; the registration fee is $75 (general registration); JMLS Students, Faculty, Staff, and IP Advisory Board Members can register for free.
Washington College of Law Post Argument Discussion of Nautilus Inc. v. Biosig Instruments Inc.

April 27, 2014

As part of its ongoing Supreme Court series, the American University Washington College of Law Program on Information Justice & Intellectual Property will be hosting a post argument discussion on the Nautilus Inc. v. Biosig Instruments Inc. case from 4:15 to 5:45 pm (Eastern) on April 28, 2014 at the American University Washington College of Law in Washington, DC. The Nautilus Inc. panel discussion will be moderated by Prof. Michael Carroll, American University Washington College of Law, with a panel consisting of James E. Geringer of Klarquist Sparkman LLP, Counsel for Petitioner, Nautilus, Inc.; Charles Duan, Director, Patent Reform Project, Public Knowledge, Counsel for Amici Curiae Supporting Petitioner, Electronic Frontier Foundation and Public Knowledge; and Gregory Dolin, Associate Professor and Co-Director of the Center for Medicine and Law, University of Baltimore.

Additional information about the post argument discussion, including registration/CLE information and information about the live and archived webcast, can be found here.

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