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  • Panel on Multidistrict Litigation Consolidates Myriad Cases in Utah District Court

    By Kevin E. Noonan —

    MyriadThe old adage "Be careful what you wish for" comes to mind regarding Myriad Genetics' motion to the Judicial Panel on Multidistrict Litigation under 28 U.S.C. § 1407, that cases relating to the company's BRCA gene patents be consolidated in the District of Utah.  By year-end 2013, the litigation scorecard stood at six patent infringement lawsuits pending in the District of Utah, against Ambry Genetics, Gene-by-Gene, Quest, GeneDx, Invitae, and LabCorp, and three declaratory judgment actions by Quest, Invitae, and Counsyl, pending in various California district courts.  Last month, the MDL Panel granted Myriad's motion, joining five of these cases under the caption In Re: BRCA1- and BRCA2-Based Hereditary Cancer Test Patent Litigation.  These cases include the ones pending against Ambry Genetics (C.A. No. 2:13-00640); GeneDx (C.A. No. 2:13-00954); and Quest Diagnostics (C.A. No. 2:13-00967), already pending in the District of Utah, and the declaratory judgment litigations by Quest (C.A. No. 8:13-01587, in the Central District of California) and Counsyl (C.A. No. 5:13-04391, in the Northern District of California).  (The Panel decision notes that another infringement lawsuit, originally filed by Myriad in Utah, against Gene-by-Gene Ltd. had settled.)  The Panel also noted other cases, such as the ones involving Invitae Corp. and Labcorp., could be consolidated as "potential tag-along actions."

    The Judicial panel rejected Respondents arguments that the factual differences between the different companies' genetic testing, the differences in claims Myriad has asserted against each, the lack of extensive discovery on defendants' invalidity contentions in view of the Supreme Court's decision in Association for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013) (which defendants argued "ha[d] already addressed the validity of certain claims of the BRCA patents") and "alternatives" made consolidation of the cases unnecessary.  The panel opined that the Supreme Court's AMP decision, which held that "genes and the information they encode are not patent eligible under [35 U.S.C.] § 101 simply because they have been isolated from the surrounding genetic material," primarily addressed claims of the BRCA patents that are not asserted in the motion.  Accordingly, the Panel recognized that "[d]etermining whether the claims (and the patents) not at issue in AMP are likewise invalid as pertaining to non-patentable subject-matter may require a substantial amount of pretrial motion practice and parsing of the language of the patents."  The resulting complexity of these tasks favored consolidation as a way to conserve judicial resources (as well as the parties' resources, which may have been of lesser concerns to defendants).  Among the advantages perceived by the Judicial Panel was that "as only a single judge will have to become familiar with the patented technology."

    Moreover, the Panel opined that, although there were some differences in different defendant's products and in the patents and claims Myriad had asserted against the various defendants (and differences in the claims challenged by the declaratory judgment plaintiffs), "the core factual and legal inquiries in each action will be similar, if not identical," so that consolidation would again conserve judicial resources by "allow[ing] a single judge to preside over the discovery relating to these patents and to consistently rule on challenges to the validity thereof."

    Whatever ruefulness Myriad may now be experiencing will be due to the choice of Judge Robert J. Shelby to hear the consolidated cases.  Judge Shelby was the logical choice, seeing as he was already presiding over the Utah cases and had "invested considerable time and effort to familiarize himself with the complex technology and the complicated patent issues at the heart of this litigation," including "a technology 'tutorial.'"  The Panel also considered that Judge Shelby also had presided over the preliminary injunction hearing in the Ambry case, where he heard fact and expert testimony and attorney argument on issues "likely to be common to all the actions."

    This is the rub, of course, in view of Judge Shelby's 106-page opinion denying Myriad's preliminary injunction motion.  The Judge had heard testimony and argument and seems to have come to the preliminary conclusion that Myriad's asserted claims are invalid under the Supreme Court's Myriad opinion as well as from its Mayo v. Prometheus Labs. opinion.  While Myriad will have its "day in court" to persuade the Judge otherwise, what the company has gained in economy it may have lost in being before a judge who believes their patents are invalid (and could be further persuaded that all or some of the defendants' genetic testing does not infringe any of the asserted claims).

    The District Court has set a preliminary hearing with the parties for Friday, April 25, 2014.  This date is within the time period for Myriad to appeal the District Court's denial of its preliminary injunction motion, but it is unlikely that the Court will grant a stay on those grounds (which directly involve only one of the parties to the consolidated action).  Unless, of course, Myriad quits its Quixotic quest for vindication, moves to dismiss the pending actions and decides to rely on its market leadership, efficiency, reliability, reputation in the ob/gyn and genetic diagnostic communities and, of course, its proprietary database of BRCA gene mutations instead of its patents of now-questionable validity.

  • Thoughts on the USPTO’s Patent Eligibility Guidelines (and What to Do About Them)

    By Kevin E. Noonan —

    USPTO SealThe U.S. Patent and Trademark Office recently issued (without public notice or opportunity to comment) its interpretation of the standards for subject matter eligibility in view of the Supreme Court's recent decisions in Mayo v. Prometheus and AMP v. Myriad.  The framework of the Office's issued Guidelines has been discussed previously (see "USPTO Issues Guidance for Analyzing Subject Matter Eligibility of Claims Reciting Laws of Nature/Natural Principles, Natural Phenomena or Natural Products").  Stripped of the Guidelines' flow charts, factors, and factual inquiries, the Guidelines in large part mandate the following exclusion from patent eligibility:

    [C]hemicals derived from natural sources (e.g., antibiotics, fats, oils, petroleum derivatives, resins, toxins, etc.); foods (e.g., fruits, grains, meats and vegetables); metals and metallic compounds that exist in nature; minerals; natural materials (e.g., rocks, sands, soils); nucleic acids; organisms (e.g., bacteria, plants and multicellular animals); proteins and peptides; and other substances found in or derived from nature . . . regardless of whether particular words (e.g., "isolated", "recombinant", or "synthetic") are recited in the claim.

    The response from the patenting and biotech communities has been appropriately Apocalyptic; however, when considering the impact of these Guidelines there are a few considerations that should be kept in mind.

    The first is that these Guidelines have no force of law; they are merely administrative tools for how the Office will administer the law under its (mis)understanding of the Supreme Court's rubrics.  Such Guidelines have been issued before — involving how the Office would apply the law relating the utility and written description (in 2001), for example.  While the Federal Circuit has occasionally referenced such Guidelines (see, for example, the first, vacated decision in Enzo v. GenProbe), courts have consistently recognized that they are not bound by the Office's understanding of how to apply the law.  Thus, bemoaning the loss of thousands of granted patents is at best premature; until this interpretation of subject matter eligibility gets judicial imprimatur these Guidelines have no effect on existing patents.

    It is also important to recognize that the Office made a categorical, per se distinction between the types of inventions enumerated above and other types of inventions.  The last time the Office made such a distinction was when it decided that patents would not be granted on "living things" in the Bergy and Chakrabarty cases.  The CCPA (and Judge Rich) made short work of this distinction (for many reasons the Judge's opinion in the In re Bergy case is delightful reading), and the Supreme Court also found that whether something is alive is not a categorical distinction supporting patent ineligibility.  The Supreme Court has spent over a decade reversing the Federal Circuit's bright line, per se rules on everything from the standards for granting an injunction to those for non-obviousness, and the window dressing of flow charts and the other parts of the Office's analytical framework does not disguise the per se nature of the Office's Guidelines for determining patent ineligibility.  While it is possible the Supreme Court (or certain members thereof) might welcome this PTO action, if this is what the Court wanted to mandate it would have done so.

    It is also important to understand how far the Office's Guidelines have gone beyond what the Supreme Court actually ruled in the recent spate of patent eligibility cases.  The Court has tried to be parsimonious in these decisions (even in the Mayo case, although it is more difficult to recognize the Court's restraint in view of Justice Breyer's tendency to include copious dicta).  But in Bilski v. Kappos, Bowman v. Monsanto, and even Myriad, the Court has been direct in limiting the scope of its decisions to the cases at hand, and to caution against over-interpreting its holdings.  By crafting the absolute, categorical prohibitions contained in the Guidelines, the Office has seriously overreacted to these decisions in ways both unnecessary and inconsistent with the Supreme Court's more measured approach.

    This inconsistency is evident by a cursory perusal of the Office's prior practices and behavior, specifically with regard to isolated species in the chemical and biochemical arts.  In the Bergy case itself, Judge Rich noted that no one, including the Office, disputed the patent eligibility of lincomycin, the antibiotic produced by the bacterial species (Streptomyces vellosus) whose patent eligibility was at issue.  Mere inspection of Patent Office records will reveal numerous patents on isolated enzymes, chemicals, and other "products of nature" whose distinction was that they had been isolated from nature by the hand of man into a form not found in nature and thus that were patent eligible.  And the cases to the contrary — of vanadium, lithium and other minerals, for example — were the exceptions perhaps because of their more fundamental nature as elements as opposed to complex molecules having beneficial utilities.  It is nothing more than pedantic absolutism to ignore these distinctions just because antibiotics and other important molecules come from "nature"; as Chief Judge Rader has noted, all we have is nature and the Office's Guidelines ignore these well-established distinctions.

    It is perhaps not a surprise that the Office issued these Guidelines, in view of the hostility to patents evinced almost weekly by the Obama administration.  Whether the result of undue influence from companies themselves hostile to patenting due to the impact patents can have on their industries, or from academics having their own reasons for taking an anti-patent stance, or simply because administration officials believe that patents make drugs and other products more expensive, it has consistently been the case that in its public statements and policy initiatives the Executive Branch has acted in ways not supportive of patenting and frequently seemingly naïve about the issues and the effects of the positions that have been taken (recall the "magic microscope," for example).  Former Director Kappos seemed to be a buffer between the Office and the rest of the administration in this regard, consistent with his broad experience.  His absence (and the consequences of not naming a permanent Director since Mr. Kappos left) is evident in the substance of these Guidelines.

    The Guidelines also remind us of the foolishness of the idea that courts should give greater deference to Patent Office determinations, or worse, that the Office should be given substantive rulemaking authority.  The Guidelines illustrate a policy heavily influenced by politics, and politics change from administration to administration.  This is the case even without direct influence on the Office by higher ups in the Executive; there is no evidence that the infamous "claims and continuation" rule changes under Director Dudas were part of a patent-unfriendly effort by the Bush administration rather than the Office's response to criticism from agencies like the Federal Trade Commission, bodies like the National Academies of Science, and (again) academic critics making specious arguments about an applicant's ability to "wear down" an examiner to grant a patent improperly.  But such politicking does not benefit innovation or promote progress.

    That the Guidelines do not implement the Supreme Court's decisions in a reasonable and workable way to promote American innovation can be appreciated readily by noting that none of the inventions in the following list are now patent eligible:

    • Isolated chemical compound from crude oil useful as a lubricant
    • Isolated chemical compound from a plant useful as a drug
    • Isolated antibiotic produced by bacteria
    • Isolated protein from an animal useful to cure/ameliorate human disease
    • Isolated cucumber gene that extends freshness
    • Isolated human gene (erythropoietin)

    (unless, of course, either of the two genes are claimed as cDNA, or as part of a recombinant expression construct, for example).

    These Guidelines will work their mischief until they are appealed to the Federal Circuit, or until the Supreme Court has the opportunity to clarify its thinking on subject matter eligibility.  Perhaps the extent of this mischief will convince those companies and professional organizations that have sat on the sidelines to get involved in informing Members of Congress, their friends in the administration, and the popular press about the outcome we can expect if these broad prohibitions stand against patenting subject matter that has been responsible for most progress in the life sciences over the past century (and that have fueled one of the drivers of the American economy since the 1980's).  If life, health, better nutrition, and independence from conventional sources of fossil fuels aren't enough to be convincing, then maybe stressing the effects on jobs and the economy will be.

  • Court Report

            By Sherri Oslick —

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

    Eli Lilly and Company et al. v. Accord Healthcare Inc., USA et al.
    1:14-cv-00389; filed March 12, 2014 in the Southern District of Indiana

    • Plaintiffs:  Eli Lilly and Company; Daiichi Sankyo Co., Ltd.; Daiichi Sankyo Co., Ltd.; Ube Industries, Ltd.
    • Defendants:  Accord Healthcare Inc., USA; Accord Healthcare, Inc.; Intas Pharmaceuticals Ltd.; Amneal Pharmaceuticals LLC; Amneal Pharmaceuticals of New York, LLC; Amneal Pharmaceuticals Co. India Pvt. Ltd.; Aurobindo Pharma Limited; Aurobindo Pharma USA Inc.; Dr. Reddy's Laboratories, Ltd.; Dr. Reddy's Laboratories, Inc.; Glenmark Generics Inc., USA; Glenmark Generics Ltd.; Glenmark Pharmaceuticals Ltd.; Hetero USA Inc.; Hetero Labs Limited; Hetero Labs Limited Unit V; Hetero Drugs Ltd.; Mylan Pharmaceuticals Inc.; Mylan Inc.; Mylan Laboratories Limited; Par Pharmaceutical Companies, Inc.; Par Pharmaceutical, Inc.; Sun Pharma Global FZE; Caraco Pharmaceutical Laboratories, Ltd.; Sun Pharma Global, Inc.; Sun Pharmaceutical Industries Ltd.; Teva Pharmaceuticals USA, Inc.; Teva Pharmaceutical Industries Ltd.; Watson Laboratories, Inc.; Actavis PLC; Zydus Pharmaceuticals USA, Inc.; Cadila Healthcare Ltd.; Actavis Inc.; Actavis Pharma, Inc.

    Infringement of certain of U.S. Patent Nos. 5,288,726 ("Tetrahydrothienopyridine Derivatives, Furo and Pyrrolo Analogs Thereof and Their Preparation and Uses for Inhibiting Blood Platelet Aggregation," issued February 22, 1994), 8,404,703 ("Medicinal Compositions Containing Aspirin," issued March 26, 2013) and 8,569,325 ("Method of Treatment with Coadministration of Aspirin and Prasugrel," issued October 29, 2013) following a Paragraph IV certification as part of defendants' filing of an ANDA to manufacture a generic version of Lilly's Effient® (prasugrel hydrochloride, to be used in combination with aspirin for the reduction of thrombotic cardiovascular events in certain patients with acute coronary syndrome (ACS) who are to be managed with percutaneous coronary intervention).  View the complaint here.


    Medac Pharma, Inc. et al. v. Antares Pharma, Inc. et al.
    1:14-cv-01498; filed March 7, 2014 in the District Court of New Jersey

    • Plaintiffs:  Medac Pharma, Inc.; Medac Gesellschaft fur klinische Spezialpraparate GmbH
    • Defendants:  Antares Pharma, Inc.; Leo Pharma A/S; Leo Pharma Inc.

    Infringement of U.S. Patent No. 8,664,231 ("Concentrated Methotrexate Solutions," issued March 4, 2014) based on defendants' manufacture, sale, and offer for sale of its OTREXUP product ((methotrexate) injection, used in the management of patients with severe, active rheumatoid arthritis and polyarticular juvenile idiopathic arthritis, who are intolerant of or had an inadequate response to first-line therapy and in the symptomatic control of severe, recalcitrant, disabling psoriasis in adults who are not adequately responsive to other forms of therapy).  View the complaint here.

    Sanofi et al. v. Alkem Laboratories Ltd. et al.
    1:14-cv-00292; filed March 6, 2014 in the District Court of Delaware

    • Plaintiffs:  Sanofi; Sanofi-Aventis US LLC
    • Defendants:  Alkem Laboratories Ltd.; Ascend Laboratories LLC

    Sanofi et al. v. Sun Pharma Global FZE et al.
    1:14-cv-00294; filed March 6, 2014 in the District Court of Delaware

    • Plaintiffs:  Sanofi; Sanofi-Aventis US LLC
    • Defendants:  Sun Pharma Global FZE; Sun Pharmaceutical Industries Ltd.; Caraco Pharmaceutical Laboratories Ltd.

    The complaints in these cases are substantially identical.  Infringement of U.S. Patent Nos. 7,323,493 ("Solid Pharmaceutical Composition Containing Benzofuran Derivatives," issued January 29, 2008), 8,318,800 ("Solid Pharmaceutical Compositions Containing Benzofuran Derivatives," issued November 27, 2012), 8,410,167 ("Use of Dronedarone for the Preparation of a Medicament for Use in the Prevention of Cardiovascular Hospitalization or of Mortality," issued April 2, 2013), and 8,602,215 ("Methods for Reducing the Risk of an Adverse Dronedarone/Beta-Blockers Interaction in a Patient Suffering from Atrial Fibrillation," issued December 10, 2013) following a Paragraph IV certification as part of defendants' filing of an ANDA to manufacture a generic version of Sanofi's Multaq® (dronedarone, used to reduce the risk of hospitalization for atrial fibrillation in patients in sinus rhythm with a history of paroxysmal or persistent atrial fibrillation).  View the Alkem complaint here.

    Sanofi et al. v. First Time US Generics LLC
    1:14-cv-00293; filed March 6, 2014 in the District Court of Delaware

    • Plaintiffs:  Sanofi; Sanofi-Aventis US LLC
    • Defendant:  First Time US Generics LLC

    Infringement of U.S. Patent Nos. 8,318,800 ("Solid Pharmaceutical Compositions Containing Benzofuran Derivatives," issued November 27, 2012), 8,410,167 ("Use of Dronedarone for the Preparation of a Medicament for Use in the Prevention of Cardiovascular Hospitalization or of Mortality," issued April 2, 2013), and 8,602,215 ("Methods for Reducing the Risk of an Adverse Dronedarone/Beta-Blockers Interaction in a Patient Suffering from Atrial Fibrillation," issued December 10, 2013) following a Paragraph IV certification as part of defendants' filing of an ANDA to manufacture a generic version of Sanofi's Multaq® (dronedarone, used to reduce the risk of hospitalization for atrial fibrillation in patients in sinus rhythm with a history of paroxysmal or persistent atrial fibrillation).  View the complaint here.

    Janssen Products, L.P. et al. v. Lupin Ltd. et al.
    2:14-cv-01370; filed March 4, 2014 in the District Court of New Jersey

    • Plaintiffs:  Janssen Products, L.P.; Janssen R&D Ireland
    • Defendants:  Lupin Ltd.; Lupin Pharmaceuticals Inc.

    Infringement of U.S. Patent No. 8,518,987 ("Pseudopolymorphic Forms of a HIV Protease Inhibitor," issued August 27, 2013) following a Paragraph IV certification as part of Lupin's filing of an ANDA to manufacture a generic version of Janssen's Prezista® (darunavir, used to treat human immunodeficiency virus (HIV-1) infection).  View the complaint here.

  • Inter Partes Review — A Look Back

    By Andrew Williams —

    USPTO Building FacadeToday, March 16, 2014, marks the eighteen-month anniversary of the inter partes review ("IPR") system of challenging issued patents at the Patent Office.  We thought that this would be an appropriate time to look back at the last year and a half and reflect on the system thus far.  In that time, the Office has seen close to 1,000 petitions filed.  Looking back only six months ago, no final decisions had issued by the one-year anniversary.  But to date, more than 20 final written decisions have been issued by the Patent Trial and Appeal Board ("PTAB" or "Board").  This number will should increase at even a faster rate, considering petition filings have only increased since September 16, 2012.  Initially, there was a question whether the Board would essentially "rubber-stamp" the original decisions of the patent examiners, or whether this system would be a viable alternative to tackle the perceived patent-troll problem.  There remains little doubt today which way the Board is leaning — the overwhelming majority of cases have seen all of the reviewed claims canceled.  Of the questions that remain, some of the more interesting include why the challengers have been so successful, whether this trend of claim cancellation will continue, and what will the Federal Circuit do when it starts hearing appeals from all of these proceedings.

    The first decision rendered set the tone for most that followed.  As we reported at the time, the first inter partes review opinion was released last November in a case related to speed limit indicators on GPS devices.  The outcome of IPR2012-00001 (Garmin USA, Inc. (Petitioner) v. Cuozzo Speed Technologies LLC (Patent Owner)) was considered good news for parties wishing to challenge the validity of patents at the Office.  Since that time, of the more than twenty Final Written Decisions based on the merits of the case, the large majority went against the patent holder.  In fact, it was not until February 19, 2014 that the PTAB upheld any claim that it had reviewed.  On that date, the Court issued two such decisions.  The first, Microsoft Corp. (Petitioner) v. Proxyconn, Inc. (Patent Owner) (IPR2012-00026 and IPR2013-00109), involved U.S. Patent No. 6,757,717, which was directed to systems for data access in a packet switched network.  Microsoft was able to show that all reviewed claims except claim 24 were either anticipated or obvious in view of the prior art.  Nevertheless, because it was unable to establish by a preponderance of the evidence that the final claim was unpatentable, that claim was spared.  On the same day, in Synopsys, Inc. (Petitioner) v. Mentor Graphics Corp. (Patent Owner) (IPR2012-00042), the Board upheld the validity of several claims in a patent related to the fields of simulation and prototyping of integrated circuits.  Even with these few successes by the patent holders, it is interesting that the requestors have been so successful in cancelling all of the reviewed claims of the patent at issue.

    Of course, this raises the issue of whether the PTAB is predisposed to "correct" any perceived mistakes previously made by the Patent Office, or whether the Office has just issued that many flawed patents.  On the one hand, it is possible that the PTAB is cancelling so many claims because it is mainly reviewing patents that qualify as the worst of the worst.  After all, filing a petition is not cheap, so it would stand to reason that a party would only file one if they believed they had a reasonable chance at success.  The counter to this argument is that most petitions are directed to patents that are already involved in litigation.  In such cases, the accused infringer has every incentive to seek relief from the Board (regardless of the actual merits of the case).  Not only is the standard for invalidating the claims lower (preponderance of the evidence versus clear and convincing evidence), but claims are given their broadest reasonable interpretation by the Board, as opposed to the narrower standard used by Federal Courts.  Another reason that the Board may appear predisposed to cancel claims is because it must first determine that there is a reasonable likelihood that the petitioner will prevail before a trial is instituted.  Therefore, when looking at the success rate of petitioners, it is probably more useful to look at the number of cases that make it past this initial hurdle.  We will look at these figures in a future post.

    Nevertheless, there is at least one outspoken critic of the PTAB's actions.  According to a report in the Wall Street Journal, Chief Judge Rader appears to be alarmed by the rate at which claims are being canceled by the Board.  In fact, as reported in that article, he equated the Board's panels with "death squads," at least with regard to intellectual property rights.  He expressed concern that the Board's actions would decrease the incentives necessary for human progress.  These comments might be considered good news for patent holders, because they have the ability to appeal the Board's decision to the Federal Circuit.  In fact, the patent holder in the first decided case, Cuozzo Speed Technologies, has already filed an appeal with the appellate court.  As of March 12, 2014, counsel for Garmin had not yet filed an appearance or any of the other requisite preliminary information with the Federal Circuit.  We will also continue to monitor this case.

    Based on a review of the cases with Final Written Decisions as mentioned above, and the conventional wisdom regarding the IPR system, the majority of patents reviewed have been related to computer technology and the like.  However, on March 6, 2014, the Board issued three Final Decisions in cases involving Illumina as the petitioner and the Trustees of Columbia University in the City of New York as the patent holder.  These cases involved patents related to "sequencing DNA by synthesis" or "SBS."  In all three reviews (IPR2012-00006, IPR2012-00007, and IPR2013-00011), the Board invalidated all of the reviewed claims as obvious in view of the prior art.  We will report on those three cases in more detail in a future post.  Moreover, there have been a significant number of petitions filed related to the biotech and pharmaceutical industry, and we can only expect this number to increase in the coming months.

    It is interesting looking back at the trends at the Board in the past 18 months.  However, considering that IPRs are to be concluded within a 12-to-18-month period, we should continue to see a lot more decisions rendered by the two-year anniversary next September.  A review at that time should help clarify whether the current trends are based on a sample size that is too small, or whether they will be the status quo for the foreseeable future.

  • Conference & CLE Calendar

    CalendarMarch 20, 2014 – "Parallel Patent Proceedings Before the PTAB and Federal Court Post-AIA — Navigating Litigation Stays, Discovery and Settlements Concurrent with PTAB Review" (Strafford) – 1:00 to 2:30 pm (EST)

    March 20, 2014 – "New USPTO Examination Guidelines for Myriad and Mayo" (Intellectual Property Owners Association) – 2:00 to 3:00 pm (ET)

    March 24-26, 2014 – Medical Device Patents*** (American Conference Institute) – Chicago, IL

    March 25, 2014 – 24th Annual Conference on USPTO Law and Practice (PTO Day) (Intellectual Property Owners Association and U.S. Patent and Trademark Office) – Washington, DC

    March 25, 2014 – "Big Data Litigation in an Era of Big Data Privacy Concerns: Recent Developments in International Data Privacy Law and Their Impact on U.S. Litigation" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

    March 26, 2014 – "Trade Secret vs. Patent Protection After AIA: Making the Choice — Understanding AIA's Impact on Trade Secrets, Evaluating the Protection Options, Weighing the Benefits and Risks" (Strafford) – 1:00 to 2:30 pm (EDT)

    March 26-27, 2014 – Biotech Patenting*** (C5) – Munich, Germany

    March 31 to April 2, 2014 - Life Sciences Collaborative Agreements and Acquisitions*** (American Conference Institute) - New York, NY

    April 23, 2014 – European biotech patent law update (D Young & Co) – 4:00 am, 7:00 am, and 12:00 pm (ET)

    April 23-25, 2014 – 2014 Spring Intellectual Property Counsels Committee (IPCC) Conference (Biotechnology Industry Organization) – Palm Springs, CA

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

    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

  • IPO Webinar on Myriad/Mayo Guidance

    IPO #2The Intellectual Property Owners Association (IPO) will offer a one-hour webinar on the "New USPTO Examination Guidelines for Myriad and Mayo" on March 20, 2014 beginning at 2:00 pm (ET).  A panel consisting of Courtenay Brinckerhoff of Foley & Lardner; Duane Marks of Roche; and Raul Tamayo, senior legal advisor in the U.S. Patent and Trademark Office's Office of Patent Legal Administration (OPLA) will discuss the impact of the USPTO's Guidance For Determining Subject Matter Eligibility Of Claims Reciting Or Involving Laws of Nature, Natural Phenomena, & Natural Products on the patenting of drugs and of diagnostic methods, and consider how the guidelines will work in practice.

    The registration fee for the webinar is $130 (government and academic rates are available upon request).  Those interested in registering for the webinar can do so here.

  • A Rebuttal to The Economist’s “Stalking Trolls”

    By Michael Borella and Andrew Williams —

    EconomistOn March 8th, The Economist published an article deriding both so-called "patent trolls" and "software patents" as being impediments to innovation in the United States.  Unfortunately, as we have seen all too often when the mainstream media discusses the patent system, the article contains unsupported assertions, draws questionable conclusions, and displays a profoundly flawed understanding of patent law.  Such commentary is particularly troublesome in this case because of the wide circulation of this periodical.

    At the outset, the article contains a proclamation that the United States' patent system is "dysfunctional," suggesting this fact is a forgone conclusion to the uninformed reader.  Nevertheless, in explaining how the reported developments are meant to "solve" this supposed crisis, the author reveals his unfamiliarity with the philosophical basis of the patent system in this country.  For example, the article equates non-practicing entities ("NPE") with "trolls."  The term "NPE," however, encompasses all entities that do not manufacture products, including most universities, research institutions, and individual inventors.  Even the reviled "patent assertion entities" have been acknowledged by most to serve an important role as mediator between such NPEs and operating companies often necessary to commercialize inventions.  In fact, the United States' system purposefully encourages such actions by making patent property rights freely assignable and eschewing a "working" requirement.  This is thought to help make the system accessible to everyone, not just those with abundant resources.

    Certainly, no one is denying that there are actors that abuse the litigation system in this country, both with regard to intellectual property rights and otherwise.  However, elevating this minority of cases to be representative of the norm is simply unproductive.  So is the dissemination of questionable statistics.  For example, the article states as fact that patent "trolls" cost U.S. companies $29 billion in 2011.  It is presumed that the author is referring to the research of James Bessen and Michael J. Meurer, which has come under recent scrutiny because of the particular methodology used.  See, e.g., Schwartz & Kesan, Analyzing the Role of Non-Practicing Entities in the Patent System, Cornell Law Review, Vol. 99:2, pp. 425-56 (2014).  As a result, the implications that can be drawn from the data with regard to the impact of "trolls" on the system are questionable at best.

    Moreover, the article's description of the patentability requirements in the United States also betrays the author's lack of understanding of the topic.  With regard to patentable subject matter, the article uses "boiling water to make tea" as an example of a "common idea" which certainly must be a law of nature, natural phenomenon, or abstract idea.  However, not only is this example not apropos, but it actually supports the counterpoint.  Heating water itself might occur in nature, but the application of that "natural" process to "make tea" does not.  And, even though people were certainly brewing tea before the United States' patent system was formed, does this mean Keurig was undeserving of a patent to its K-cups, which were essentially a new way to make tea?

    Even worse, to support the allegation that the United States is issuing non-novel and obvious patents, the article mentions a single patent directed to "upgrading computer software over the internet."  Noticeably missing, however, was the patent number, title, inventor(s), and date of filing, without which it is impossible to determine just what would qualify as prior art.  The article appears to be referencing U.S Patent No. 5,771,354, which was the subject of a This American Life episode in 2013 ("When Patents Attack . . . Part Two!").  If so, contrary to the suggestion in the article, the invention claimed in that patent dated back to the early 1990s, and was ultimately found to be invalid by a jury not because the invention was being practiced in the prior art, but because the correct inventors were not listed on the patent.

    Nonetheless, the reference to the "computer software upgrade" patent is yet another example of how the media mistakenly characterizes a patented invention in a few short words, rather than by the patent's allowed claims.  While gospel to patent attorneys, the well-established principle that "the claims define the invention" gets little attention elsewhere.  Instead, it is easy for a commentator to read the patent's title, abstract, part of its summary, or a few of its drawings, and then provide an over-simplified synopsis of what the patent allegedly covers.  Such an interpretation is not in accordance with U.S. patent law, where special court hearings are used during litigation for the sole purpose of defining the scope of asserted claims.  Simply put, one cannot determine what a patent actually protects by attempting to determine the "gist" of the invention from the specification — a careful evaluation of the claims is required.

    This type of fundamentally flawed analysis is often directed to software and business method patents.  Never mind that neither type of patent is actually defined by the author, or that many patents purportedly directed to either of these technologies explicitly claim computer hardware or other types of physical devices carrying out, or being impacted by, the steps of a method claim.  Perhaps software in particular is an easy target for such bullying, because it is less tangible than say, a cotton gin or a light bulb, and often operates invisibly.

    However, the implication that software is too abstract to warrant patent protection unfairly singles out one of the greatest drivers of the U.S. economy over the last forty years.  A major aspect of innovation is to make products and services faster, cheaper, and better.  The patent system is intended to incentivize individuals and organizations to publicly disclose such inventions, and as a result receive a limited property right thereover.  Despite contentions of the deleterious impact of a "broken" patent system on the software industry, the computer and information industry as a whole continues to grow, as evidenced by recent record-breaking stock values, billion-dollar acquisitions, and successful initial public offerings.  A broad exclusion of computer-implemented inventions is illogical and disregards the fundamental tradeoff on which the system is based.  A ban on software patents would make as much sense as, for example, barring any invention that uses plastic from being patented.

    To the extent that criticism of the patent system might be warranted, the notion that software and business methods should be unpatentable per se is gross overreaction.  In addition to having to meet the patent-eligibility bar for subject matter, a claimed invention must also be novel, non-obvious, and described in such a way that it can be practiced by one of ordinary skill in the art.  The inventions of Bilski v. Kappos, Mayo v. Prometheus, and Alice v. CLS Bank have only been analyzed for validity under the subject matter rubric.  In these cases, the Supreme Court has applied (or in the case of CLS Bank, is being asked to apply) the blunt knife of subject matter eligibility rather than the more incisive tools of novelty and obviousness.

    As noted by the Court in 1980's Diamond v. Diehr, "[t]he 'novelty' of any element or steps in a process, or even of the process itself, is of no relevance in determining whether the subject matter of a claim falls within [patentable subject matter]."  This understanding was in accordance with that of Judge Giles Rich, coauthor of the 1952 Patent Statute, who wrote "[a]chieving the ultimate goal of a patent [requires] having the separate keys to open in succession the three doors of [patentable subject matter, novelty, and non-obviousness]."

    The Court's recent Mayo decision has been roundly criticized for combining considerations of novelty and obviousness into the patent-eligibility inquiry in a way that requires determining the "gist" of the invention.  Consequently, Mayo runs counter to the statute, the Court's own precedent, and well-established practices of claim interpretation.  And yet, Mayo may be the standard under which CLS Bank is decided.  The problem lies not in the topic of these patents, but in the inherent subjectivity of the Mayo analysis.  The fractured, six-opinion Federal Circuit ruling in CLS Bank demonstrates that ten federal judges, who are experts in patent law, could not agree how Mayo should be applied.

    Surely, not all patent applications that claim software or business methods should be allowed.  Some will be too broad, obvious, or vague.  But this analysis is best carried out on a case-by-case basis by well-educated USPTO examiners who apply workable and reasonably objective standards.

    The article ends with yet another oft-asserted falsehood — that copyright would be a "perfectly adequate means of protecting and rewarding software developers for their ingenuity."  Copyright does not protect inventions — it protects expressions of ideas.  In the case of software, this would be the source or object code itself.  If software innovators were required to rely on the weak protection that copyright provides, the computer industry would become rife with clean-room copyists who misappropriate the ideas behind innovative software by developing cloned applications.  And the so-called "trolls" are supposed to be a drain on the economy?

  • USPTO to Permit Delay in Meeting Certain Prioritized Examination Requirements

    By Donald Zuhn —

    USPTO SealIn an interim rule published in the Federal Register last week (79 Fed. Reg. 12386), the U.S. Patent and Trademark Office indicated that the time periods for meeting certain requirements for filing a request for Track I prioritized examination could be expanded while maintaining the Office's ability to timely examine the patent application.  The Office notes that the rules changes are intended to simplify prioritized examination ("Track I") practice by reducing the number of requests that must be dismissed and improving access to prioritized examination.

    The requirements for which the time periods are being expanded are: the submission, upon filing, of an inventor's oath or declaration and all required fees, as well as an application containing no more than four independent claims, thirty total claims, and no multiple dependent claims.  In particular, the rules changes would (1) postpone the requirement to file an inventor's oath or declaration if an application data sheet meeting the conditions specified in 37 CFR 1.53(f)(3)(i) is present upon filing, (2) provide a non-extendable one-month period (following notification of noncompliance from the Office) to file an amendment to cancel any independent claims in excess of four, any total claims in excess of thirty, or any multiple dependent claim, and (3) no longer require the payment of excess claims fees or the application size fee upon filing.  The notice indicates that the rules changes, which have an effective date of March 5, 2014, apply to applications filed under 35 U.S.C. 111(a) on or after September 16, 2012, in which a first action has not been mailed.

    The Office is seeking comments regarding the interim rule, which must be submitted by May 5, 2014.  Comments can be sent by e-mail to AC93.comments@uspto.gov; by regular mail to Mail Stop Comments — Patents, Commissioner for Patents, P.O. Box 1450, Alexandria, VA 22313–1450, marked to the attention of John R. Cottingham, Director, Office of Petitions, Office of the Deputy Commissioner for Patent Examination Policy; or by using the Federal eRulemaking Portal.

  • Utah Judge Denies Myriad’s Preliminary Injunction Motion

    By Kevin E. Noonan —

    MyriadIn a 106-page opinion, U.S. District Court Judge Robert J. Shelby on Monday denied Myriad Genetics motion for preliminary injunction in Myriad Genetics v. Ambry Genetics.  Characteristic of its aggressive defense of its patent rights, the motion was, as the District Court noted, for "extraordinary" relief and thus not routine nor was the Court expected to grant the motion.  The Court's detailed explication of the history of the Myriad case and the contentions of the parties will be set forth in a later post.  This post is concerned with the outcome, and the grounds that the District Court relied upon in denying the motion.

    The standards for a preliminary injunction are four:  the patentee has to establish a likelihood of success on the merits, that she will be irreparably harmed should the injunction not issue, that the balance of the hardships is in the patentee's favor, and that the public interest is not harmed if the court grants the injunction.  The District Court found in Myriad's favor on only one of these grounds, that of irreparable harm.  This finding was based on expert testimony from Myriad's damages expert, whose testimony the Court credited with regard to the effects on market entry by Ambry (and others) on determining the amount of damages owed should Myriad prevail, particularly with regard to the likelihood that Myriad would be undercompensated in view of the "complex pricing and sales factors in the case."  The Court also cited the unlikelihood that Myriad would be able to reverse the price erosion expected to occur with market entry of Ambry and other competitors.

    Ambry GeneticsThe rest of the prongs of the test were in Ambry's favor according to the District Court's opinion.  With regard to the balance of the hardships, the Court was not persuaded by Ambry's argument that its loss of its "head start" offset any harm to Myriad's franchise, the Court stating that "[the fact t]hat Myriad is a large company and can survive an injunction does not compel the Court to conclude that Defendant's loss of a head start outweighs Plaintiffs' loss of return on its years of work and substantial investment commercializing BRCA testing."  The Court was persuaded the argument that Ambry might go out of business if the injunction should be imposed, rejecting as inapposite cases from the Federal Circuit discounting this risk to the defendant.  "Notwithstanding the court's conclusion that Plaintiffs will suffer irreparable harm without an injunction," the District Court found that the balance of the hardships tilted in favor of Ambry, which could lose its business against the harm to Myriad, which is merely economic for a company "has enjoyed an exclusive monopoly in the BRCA1 and BRCA2 testing market for nearly two decades, and its own financial forecasts show that it expects to see increased revenue growth this year."  The Court further stated that "[e]ven without an injunction, Plaintiffs will undoubtedly continue to benefit from Myriad's expertise, market strength, and brand name recognition" as reasons supporting its finding that the hardships balanced in Ambry's favor.

    As for the public interest, the District Court stated that "both sides make compelling arguments that the public interest favors them."  Accordingly, the Court found that neither side "has shown that the public interest mandates either the imposition or denial of Plaintiffs' requested injunction."

    The most significant portion of the opinion is the District Court's finding that Myriad had not only failed to show a likelihood of success on the merits but that Ambry had introduced sufficient evidence to convince the Court that Myriad was unlikely to prevail and that the claims were invalid for reciting patent-ineligible subject matter.  Portions of the Court's opinion should come as no surprise:  the Court found that the primer and probe claims asserted by Myriad and argued to be patent-eligible subject matter because they were synthetic were not patent-eligible because they had the same sequence found in genomic DNA (a truer reading of the Supreme Court's AMP v. Myriad Genetics opinion than Myriad's interpretation of that opinion).  More troubling is the District Court's determination that the asserted method claims are also patent-ineligible, relying in large part on the reasoning by Judge Illson of the Northern District of California in Ariosa Diagnostics v. Sequenom, Inc. (currently in the briefing stage before the Federal Circuit).  That exercise in patent illogic has been discussed earlier; that the Utah District Court finds this reasoning persuasive is unhappy news for Myriad (as well as many other genetic diagnostic companies).

    There is one other interesting quotation from the District Court's opinion that deserves comment; according to the Court:

    The practical result of Myriad's patents has been to hinder or halt follow-up research, data sharing, patient testing, and the creation of additional and more affordable technologies for BRCA1 and BRCA2 testing.  For example, since about 2005, Myriad has declined to publicly share critical information regarding its classification of variants, including with its own patients.  Instead, Myriad retains that information in a private database.

    In so doing, Myriad distorts rather than serves the patent system's goal of public disclosure in exchange for exclusive rights.  In this way, Myriad has chosen a commercial path that turns much of our patent system policy on its head.

    Once again, Myriad's competitors have stolen the march in the public relations arena, even with a Utah judge, who makes these statements while acknowledging elsewhere in the brief Myriad's efforts to provide testing for women who cannot afford it and to arrange insurance reimbursement for those having health insurance.  Perhaps Myriad invited this outcome by asking for a preliminary injunction, which with its considerations of the public interest invite "expert" witness statements supporting this negative view.  But it does raise the question (stated somewhat differently by a prominent biotech patent attorney), "Since when does a patentee lose the right to assert her patent just because she acts like a jerk."  Appearances have been a motivating factor and a persuasive influence throughout the Myriad saga, and it is about time that Myriad acts to counter the perception that the company, and its patents, have been a hindrance rather than a help in bringing BRCA testing, and the accompanying health, social and economic benefits to U.S. women.

    Hat tip to Joe Allen for pointing out the quoted portions of the brief.

  • Alice Corp. v. CLS Bank Int’l: CLS Bank’s Supreme Court Brief

    By Michael Borella —

    Supreme Court Building #1In a previous article, we discussed the background of this case, and provided an overview of the Petitioner Brief of patentee Alice Corp.  In this article, we continue by covering the brief of the Respondent, CLS Bank.

    The Supreme Court is scheduled to hear oral arguments for this case on March 31st.

    CLS Bank's Brief

    CLS began its trek through the dark forest of § 101 by setting the tone of the conversation.  It noted that Alice is a patent assertion entity, rather than a company that practices its inventions.  Perhaps CLS Bank intended to leverage recent critical remarks made by members of Congress, as well as President Obama, about such entities.  CLS Bank also suggested that Alice's patents were issued under a "permissive standard for patent-eligibility" that pre-dates the Court's recent Bilski v. Kappos and Mayo v. Prometheus cases.

    CLSMoving on, CLS Bank asserted that Bilski is controlling law for this dispute, and that Alice's claims should suffer the same fate as Bilski's.  CLS Bank drew parallels between the method claims of Alice and Bilski.  Both are disembodied processes drawn to ways of managing risk that were well known in systems of commerce.  Holding Alice's patent valid would, in CLS Bank's view, foreclose the use of basic building blocks of scientific and technologic work in a way that goes beyond the contribution provided by Alice.

    Along the way, CLS Bank rejected Alice's attempt to differentiate between abstract ideas drawn to a fundamental scientific or mathematical principle and disembodied concepts that underlie all inventions.  However, CLS Bank downplayed this point by briefly addressing it in a footnote, and later providing an indirect rebuttal.  Particularly, CLS Bank noted that Bilski, as well as post-Bilski guidelines from the U.S. Patent and Trademark Office (USPTO), both provide examples of abstract ideas that are non-mathematical, human actions.

    One of Alice's more interesting arguments was its attempt to explain why its patents were valid under § 101, whereas Bilski's were not.  In essence, Alice argued that one of Bilski's dependent claims demonstrated that the invention of the independent claims could be expressed as a simple mathematical formula, and thus Bilski's entire invention was an abstract mathematical concept.  CLS Bank disputed this reading, pointing out that the dependent claim "provided only one way of calculating certain inputs for the method of hedging described in independent claim 1."  CLS Bank further argued that Bilski's dependent claims were "were ineligible not because they included a formula, but because they added mere 'token' limitations to the abstract idea" of the independent claim.  Surprisingly, CLS Bank did not bring up the doctrine of claim differentiation, which may have also supported its position.

    Instead, CLS Bank asserted that "[m]athematical formulas neither secure nor preclude eligibility, for a mathematical formula may describe a law of nature, a scientific truth, or an abstract idea.  As courts have recognized, mathematics may also be used to describe steps of a statutory method or elements of a statutory apparatus."  Thus, CLS Bank argued, claims that do not directly invoke mathematics, such as Alice's claim, can be patent-ineligible as abstract ideas.

    CLS Bank then undertook what essentially was an extended prior art analysis to establish that the "inventive concept" of Alice's claims, as well as its additional features, have long been known in the fields of economics and accounting.  Along the way, CLS Bank contended that the concept of preemption that plays so strongly in Gottschalk v, Benson and Parker v. Flook does not require that a claim "foreclose every conceivable application of an abstract idea to be ineligible."  Instead, quoting Mayo, CLS Bank asserted that "the underlying functional concern here is a relative one: how much future innovation is foreclosed relative to the contribution of the inventor," and that a patent that "forecloses more future invention than the underlying discovery could reasonably justify impedes progress, rather than promotes it."  Nevertheless, neither Mayo nor CLS Bank proposed a workable, objective method for weighing the contribution of an inventor versus foreclosed future innovation.

    This expression of concern, as well as CLS Bank's unease regarding the "breathtaking sweep of the asserted claims" cuts to the heart of the matter — is it appropriate to consider whether a claim element is known when performing a § 101 analysis, or should such deliberations be reserved for those of §§ 102 and 103?  Diehr and 1952 patent statute coauthor Judge Rich would require the separation of these three inquiries.

    CLS Bank, however, waved its hands at Diehr, burying this issue in a footnote.  In its fleeting discussion of the holding of Diehr, CLS Bank wrote that that case actually "prohibits dissecting the claims into old and new elements and then ignoring claim elements upon determining that they are non-novel."  CLS Bank attempted to align Mayo and Diehr by contending that Mayo "focuses attention on all claim elements, asking whether individually or 'as a whole' they are sufficient to transform the nature of the claim."  CLS Bank went on to shrewdly characterize Alice's disagreement with Judge Lourie's plurality opinion as actually a disagreement "with Justice Breyer's opinion for nine Members of this Court" when applying Mayo and Diehr.

    With respect to Alice's system and media claims, CLS Bank took the position that the issue "is not whether computer is tangible, but whether . . . computer implementation adds enough to confer eligibility."  Cast in this light, adding general purpose computer hardware to an unpatentable abstract idea would have the practical effect of granting a patent that preempts a broad range of uses of the abstract idea itself.  In essence, the contribution of the system and media claims is no greater than the contribution of method claims with the same elements.  CLS Bank also noted that before the USPTO, Alice conceded that "its later-issued system and media claims were no different in terms of patentability from the method claims in the first-issued '479 patent."

    CLS wrapped up with a parade of horribles that would occur should the Court hold that Alice's patents were valid.  Particularly, CLS Bank believes that allowing patents such as Alice's to be asserted would impede innovation in the information economy, permit inventors to claim more than they are entitled to, and invigorate patent assertion entities.

    Analysis

    The elephant in the room for CLS Bank is that it never directly addresses the propriety of a prior art analysis under § 101.  While not perfect, the principle that "each and every element as set forth in the claim [must be] found . . . in a single prior art reference" for a claim to be anticipated, as well as the Graham v. John Deere obviousness framework, are both workable standards.  Adding a similar "inventive analysis" as part of § 101 would allow patent examiners and litigation defendants to bring alleged prior art in through the back door in order to invalidate claims.  The danger of ignoring Diehr in this regard is illustrated by CLS Bank's subjective and conclusory analysis of the so-called additional elements contributed by Alice's claims.  It is unlikely that the more traditionalist Justices would agree to such a disruption in the stare decisis of patent law.

    CLS Bank's strongest position is based on the high-level similarity of Alice's and Bilski's method claims, and the fact that the Court struck down Bilski's claims only four years ago.  The Court is unlikely to walk back Bilski so soon, or to engage in the logical contortions required to differentiate the claims of these two cases.  However, it may be too much to ask the Justices to preclude all claims to tangible computing hardware that invoke abstract ideas.

    CLS Bank also set forth the concern that the patent law is slanted towards those who contribute only ideas over those who actually build products and services.  However, this point is at odds with the bedrock principle that, in the United States, an inventor is one who conceives of an idea, not one who only reduces that idea to practice.  Further, the current computer and Internet technology boom that is coincident with a ramp up of patents in related areas seems to belie the notion that the incentive to develop products is destroyed by the grant of patents.

    As many commentators have noted, and as Judge Newman eloquently explained in the Federal Circuit en banc decision, many if not all of the problems that CLS Bank has with Alice's claims would be addressed by proper § 102 and § 103 review of the claims.  If Alice's claims are truly directed to accounting techniques that date back to antiquity, then they should be anticipated or obvious.  If Alice's claims are too broad, or if their scope outweighs the inventor's contribution, they can be invalidated under § 102 or § 103.  Reducing the role of  subject matter eligibility to focus on whether claims truly fit into one of the four statutory classes would slice through the Gordian Knot that § 101 has become, and only serve to simplify and clarify proceedings in the USPTO and lower courts.