Patent Docs

Court Report Supplement

May 16, 2013

By Ann Palma —

About
Court Report Supplement: Periodically, we will
report on biotech and pharma cases that were inadvertently omitted from
our Court Report column.

Tawnsaura
Group, LLC v. Direct Digital, LLC
8:13-cv-00004;
filed January 2, 2013 in the Central District of California

Infringement
of U.S. Patent Nos. 5,874,471 ("Orthomolecular medical use of L-Citrulline for
vasoprotection, relaxative smooth muscle tone and cell protection," issued
February 23, 1999) and 6,028,107 (same title, February 22, 2000) based on
Defendant's manufacture, use, offers for sale, and sales of nutritional
supplements containing L-Citrulline and/or L-Citrulline Malate used to boost
testosterone levels, including Defendant's Nugenix products. View the complaint here.

Tawnsaura
Group, LLC v. M.D. Science Lab, LLC
8:13-cv-00051;
filed January 11, 2013 in the Central District of California

Infringement
of U.S. Patent Nos. 5,874,471 ("Orthomolecular medical use of L-Citrulline for
vasoprotection, relaxative smooth muscle tone and cell protection," issued
February 23, 1999) and 6,028,107 (same title, February 22, 2000) based on
Defendant's manufacture, use, offers for sale, and sales of nutritional
supplements containing L-Citrulline and/or L-Citrulline Malate used to activate
the nitric oxide pathways for vasodilation, including Defendant's "Herbal Viva
Super Sex Booster" product. View the complaint here.

Tawnsaura
Group, LLC v. Tribravus Enterprises, LLC (d/b/a iForce Nutrition)
8:13-cv-00080;
filed January 16, 2013 in the Central District of California

Infringement
of U.S. Patent Nos. 5,874,471 ("Orthomolecular medical use of L-Citrulline for
vasoprotection, relaxative smooth muscle tone and cell protection," issued
February 23, 1999) and 6,028,107 (same title, February 22, 2000) based on Defendant's
manufacture, use, offers for sale, and sales of nutritional supplements
containing L-Citrulline and/or L-Citrulline Malate used to increase the plasma
concentration of arginine, including Defendant's "Hemavol"-branded
products. View the complaint here.

Tawnsaura
Group, LLC v. Muscle Warfare, Inc.
8:13-cv-00143;
filed January 29, 2013 in the Central District of California

Infringement
of U.S. Patent Nos. 5,874,471 ("Orthomolecular medical use of L-Citrulline for
vasoprotection, relaxative smooth muscle tone and cell protection," issued
February 23, 1999) and 6,028,107 (same title, February 22, 2000) based on
Defendant's manufacture, use, offers for sale, and sales of nutritional
supplements containing L-Citrulline and/or L-Citrulline Malate used to increase
the plasma concentration of arginine, including Defendant's "Napalm"-branded
products. View the complaint here.

Massachusetts
Institute of Technology, et al. v. Shire PLC, et al.
1:13-cv-10020;
filed January 4, 2013 in the District of Massachusetts

• Plaintiffs:
Massachusetts Institute of Technology; Children's Medical Center Corp.
• Defendants:
Shire PLC; Shire Pharmaceuticals, Inc.; Shire Regenerative Medicine, Inc.

Infringement
of U.S. Patent Nos. 5,759,830 ("Three-dimensional fibrous scaffold
containing attached cells for producing vascularized tissue in vivo,"
issued June 2, 1998), 5,770,417 (same title, June 23, 1998), and 5,770,193 ("Preparation
of three-dimensional fibrous scaffold for attaching cells to produce
vascularized tissue in vivo," June 23, 1998) based on Defendants'
manufacture, marketing, and sales of products for a human fibroblast-derived
dermal substitute indicated for use in treatment of full-thickness diabetic
foot ulcers, including Defendants' Dermagraft.
View the complaint here.

Biologix
Research Company, LLC v. Max Scientific, LLC
1:13-cv-2021;
filed March 26, 2012 in the District of Delaware

Suit
brought against Defendant for alleged breach of contract, fraud and misrepresentation,
and conversion, among others, based on the Defendant's infringement of the
rights and interests of Biologix Research Company, LLC concerning U.S. Patent
No. 6,946,258 ("Rapid, immunochemical process for measuring thiopurine methyltransferase,"
September 20, 2005) and the sale of products containing at least Thiopurine Methyltransferase
(TPMT) — TPMT-1501-08 (8-patient TPMT kit); the TMPT-1501-24 (24- patient TPMT
kit); and the TPMT-1501-40 (40-patient TPMT kit). View the complaint here.
CLS Bank Int’l v. Alice Corp. (Fed. Cir. 2013) (en banc) — Judge Lourie’s Concurrence

May 15, 2013

By Michael Borella —

On May 10, the Federal Circuit handed down a much anticipated en banc ruling regarding the patent
eligibility of computer-implemented inventions under 35 U.S.C. § 101. In a per
curiam opinion that is perhaps the most important § 101 jurisprudence since
the Supreme Court's Bilski v. Kappos
and Mayo v. Prometheus decisions, a
plurality of judges set forth procedures for determining whether claims that
recite an abstract idea or a law of nature meet the requirements of this
section. While the overall effect of
this case remains to be seen and is likely to be a subject of heated debate, this
decision has the potential to impact both patent litigation and prosecution.

In 2007, CLS Bank filed a declaratory judgment action against Alice Corp.,
contending that, among other things, Alice's U.S. Patents Nos. 5,970,479,
6,912,510, and 7,149,720 were invalid under § 101. Alice filed counterclaims alleging
infringement of these three patents. Later, Alice's U.S. Patent No. 7,725,375 was added to the mix, and the
parties respectively asserted invalidity and infringement contentions for this
patent as well.

All four patents are from the same family and "share
substantially the same specification." The plurality described the claimed subject matter as:

[A]
computerized trading platform used for conducting financial transactions in
which a third party settles obligations between a first and a second party so
as to eliminate "counterparty" or "settlement" risk . . .
. Settlement risk refers to the risk to each party in an exchange that only one
of the two parties will actually pay its obligation, leaving the paying party
without its principal or the benefit of the counterparty's performance. Alice's
patents address that risk by relying on a trusted third party to ensure the
exchange of either both parties' obligations or neither obligation.

Between the four patents, method, computer-readable medium
(CRM), and system claims were asserted. The
parties stipulated that all claims, including the method claims, require "a
computer including at least a processor and memory" and electronic
implementation, even though the representative method claim analyzed by the
Federal Circuit did not literally recite such a requirement.

The District Court held that all asserted claims failed to meet
the requirements of § 101, and thus were invalid. Particularly, the District Court concluded
that the method claims were directed to an unpatentable abstract idea, and that
the CRM and system claims would similarly preempt all practical applications of
this idea, despite those claims falling under a different statutory category.

On appeal, a Federal Circuit panel reversed the District Court
on all counts, holding that all claims, including the method claims, were patent
eligible under § 101. CLS petitioned the
full Federal Circuit for review, which was granted. Sitting en
banc, seven of the ten judges overruled the panel and affirmed the District Court's ruling regarding the method and CRM claims. However, this majority did not agree on the
rationale for their conclusion. Further,
five of the judges found that the system claims were unpatentable, while the
other five concluded that these claims passed muster under § 101. Additionally, eight of the judges indicated
that the method, CRM, and system claims must rise or fall together. Consequently, the precedential value of his
decision, especially with respect to the system claims, may be limited.

Below, Judge Lourie's plurality concurrence is discussed. Joining him were Judges Dyk, Prost, Reyna,
and Wallach. The other concurrences and dissents
will be examined in subsequent posts.

Judge Lourie admitted the difficulty of analyzing patentability
under § 101, and acknowledged the need for a more practical approach to this
analysis:

While simple
enough to state, the patent-eligibility test has proven quite difficult to
apply. The difficulty lies in
consistently and predictably differentiating between, on the one hand, claims
that would tie up laws of nature, natural phenomena, or abstract ideas, and, on
the other, claims that merely embody, use, reflect, rest upon, or apply those
fundamental tools. For example, deciding
whether or not a particular claim is abstract can feel subjective and
unsystematic, and the debate often trends toward the metaphysical, littered
with unhelpful analogies and generalizations.
What is needed is a consistent, cohesive, and accessible approach to the
§ 101 analysis — a framework that will provide guidance and predictability for
patent applicants and examiners, litigants, and the courts. (Citation omitted.)

Judge Lourie then turned to the inevitable overview of Supreme
Court decisions impacting § 101 as guideposts for this analysis. In an example of judicial foreshadowing, he
viewed Benson, Flook, Deihr, and Bilski through the lens of Prometheus. In particular, he focused on the judicial
exception to patentable subject matter when the claims at issue incorporate
abstract ideas or laws of nature. Then,
he applied Prometheus's approach for
analyzing such claims, with special concern for whether a claimed invention
would effectively preempt other uses of any potentially abstract idea recited
therein.

Particularly, Judge Lourie set forth a four-step analysis for
patent eligibility under § 101 based heavily on Prometheus. These steps are
as follows:

1) Determine "whether the claimed invention
fits within one of the four statutory classes set out in § 101." In other words, is the invention directed to
a process, machine, manufacture, or composition of matter?

2) Determine whether "the
claim pose[s] any risk of preempting an abstract idea." Or, does the claim incorporate an abstract
idea?

3) If an abstract idea
is implicated by the claim, then "identify and define whatever fundamental
concept appears wrapped up in the claim so that the subsequent analytical steps
can proceed on a consistent footing."
Judge Lourie indicates that carrying out claim construction activities
prior to this step may be helpful, but is not required.

4) Finally, "[w]ith
the pertinent abstract idea identified, the balance of the claim can be
evaluated to determine whether it contains additional substantive limitations
that narrow, confine, or otherwise tie down the claim so that, in practical
terms, it does not cover the full abstract idea itself."

Judge Lourie refers to this final step as "inventive
concept" analysis. He explicitly
states that this "balance of the claim" — the human contribution — need
not require inventiveness in the same sense that claims must be novel and
non-obvious under sections 102 and 103, respectively. However, he does not clearly differentiate
how this inventive concept analysis would differ in practice from, say, an
obviousness analysis. Instead he asserts
that:

An "inventive
concept" in the § 101 context refers to a genuine human contribution to
the claimed subject matter . . . . [A] person cannot truly "invent" an
abstract idea or scientific truth. He or she can discover it, but not invent
it. Accordingly, an "inventive concept" under § 101 — in contrast to
whatever fundamental concept is also represented in the claim — must be a product
of human ingenuity.

Compared to novelty and non-obviousness analyses "which
consider whether particular steps or physical components together constitute a
new or nonobvious invention," Judge Lourie states that the inventive
concept analysis "considers whether steps combined with a natural law or
abstract idea are so insignificant, conventional, or routine as to yield a
claim that effectively covers the natural law or abstract idea itself." But, in practice, this distinction may easily
become blurred, and seems to advocate that claims be considered piecemeal under
§ 101 rather than as a whole.

Furthermore, at first blush, Judge Lourie's differentiation
between discovery and invention seems like an aesthetically pleasing dichotomy — after all, one could say that Pythagoras didn't invent the Pythagorean Theorem, but he did discover it. However, Judge
Lourie went on to point to four potentially subjective factors that would weigh
against whether the human contribution to the claimed invention rises to such a
level that the claim as a whole meets § 101 requirements:

1) Is the human contribution necessary to every
practical use of the abstract idea and therefore is not truly limiting.

2) Does the human
contribution "amount to more than well-understood, routine, conventional
activity previously engaged in by researchers in the field?"

3) Does the human
contribution consist of token or trivial limitations, such as insignificant
post-solution activity?

4) Is the human
contribution a "field-of-use limitation . . . where the claim as written
still effectively preempts all uses of a fundamental concept within the stated
field?"

Applying this approach to the patents in suit, Judge Lourie
found that all claims failed under § 101. The representative method claim was found to be directed to the
reduction of settlement risk using a third-party intermediary. As such, Judge Lourie concluded that this
claim recited an abstract idea — a "disembodied concept, a basic building
block of human ingenuity, untethered from any real-world application." Therefore, he turned to whether the remaining
aspects of the claim added anything of substance. He concluded that they did not.

Notably, this method claim did not recite any required physical
structure. It did not include a memory,
a processor, transmitters or receivers, or any other computer component or
peripheral. Despite the parties'
stipulation that the claim was computer implemented, Judge Lourie indicated
that such a limitation was "insignificant post-solution activity" and
that "simply appending generic computer functionality to lend speed or efficiency
to the performance of an otherwise abstract concept does not meaningfully limit
claim scope for purposes of patent eligibility." Thus, he concluded that "[a]s in Bilski, upholding Alice's claims to
methods of financial intermediation would pre-empt use of this approach in all
fields, and would effectively grant a monopoly over an abstract idea."

Judge Lourie similarly found the representative CRM claim
unpatentable as well, despite its recitation of a tangible article of
manufacture, which would ostensibly be a physical device. This claim essentially recited the invention
of the method claim, but in CRM form.
Judge Lourie asserted that "under § 101 we must look past drafting
formalities and let the true substance of the claim guide our analysis." Applying this analysis he concluded that the
CRM claim was actually drawn to "the underlying method of reducing
settlement risk using a third-party intermediary," and that it was merely
a method claim in the guise of a device claim. He further warned that one should not allow a competent draftsman to "endow
abstract claims with patent-eligible status."

The representative system claim also fell under Judge Lourie's
analysis. This claim recites ample
structure — including a data storage unit and a computer that receives data,
performs operations on the data, and generates an instruction to an "exchange
institution." Nonetheless, Judge
Lourie found that the similarity between the method and system claims required
application of the same abstract idea analysis for both. In this case, the question was whether "the
limitations of the claim, including any computer-based limitations, add enough
beyond the abstract idea itself to limit the claim to a narrower,
patent-eligible application of that idea."
Viewing the "generic" computer structure recited by the claim
sufficient to "encompass any device capable of performing the same
ubiquitous calculation, storage, and connectivity functions required by the
method claims," Judge Lourie found that they did not because this
structure did not provide a significant "inventive concept." Summing up, he wrote that:

We are not
here faced with a computer per se. Such
are surely patent-eligible machines. We
are faced with abstract methods coupled with computers adapted to perform those
methods . . . . Abstract methods do not become patent-eligible machines by being
clothed in computer language.

In order to properly seek protection of their inventions,
Applicants need to understand the requirements of § 101. Despite the plurality's cry for "a
consistent, cohesive, and accessible approach to the § 101 analysis," at
best, a handful of dirt has been tossed into already muddied waters. Judge Lourie's procedures for § 101 analysis
allow significant opportunities for subjectivity on the part of the fact
finder. As a result, an Applicant's best
practice for obtaining suitable protection of its computer-implemented
technologies remains unclear. A more
detailed discussion of the open questions coming out of this decision will be
the subject of future posts.

CLS
Bank Int'l v. Alice Corp. (Fed.
Cir. 2013) (en banc)
Opinion for the court per
curiam; concurring opinion by Circuit Judge Lourie, joined by Circuit
Judges Dyk, Prost, Reyna, and Wallach; concurring-in-part and
dissenting-in-part opinion by Chief Judge Rader, joined by Circuit Judge Moore,
and by Circuit Judges Linn and O'Malley as to all but part VI of that opinion;
dissenting-in-part opinion by Circuit Judge Moore, joined by Chief Judge Rader
and Circuit Judges Linn and O'Malley; concurring-in-part and dissenting-in-part
opinion by Circuit Judge Newman; dissenting opinion by Circuit Judges Linn and
O'Malley; additional reflections by Chief Judge Rader.
The Myriad Case and “Gene” Patents: Much Ado about Nothing?

May 14, 2013

By
Kevin E. Noonan —

The
biggest concern of the biotechnology industry caused by the impending Supreme
Court decision in the AMP v. Myriad
Genetics case is the threat to existing patents having claims to isolated
human DNA (and the DNA from other species) that a negative decision from the
Court could raise. Patent protection has
been an important component of the success of companies from Genentech to
Myriad and many others, and the prospect of a categorical ban (ironic, in view
of the Court's anathema for "bright line" rules promulgated by the
Federal Circuit) threatens the success paradigm developed over the past 30
years. While the extent of whatever
deleterious effects on the progress of the biotechnology arts that the Court
may impose by its Myriad decision is
still to come, an article in the May edition of Nature Biotechnology suggests that those effects may be ameliorated
by the anachronistic aspects of the Myriad case: in many ways this argument is
coming 30 years to late, and the future of biotechnology is less dependent on
so-called "gene patents" than at any other time in the history of the
biotechnology industry.

The
article, "Not quite a myriad of gene patents," by Gregory Graff,
Devon Phillips, Zhen Lei, Sooyoung Oh, Carol Nottenburg, and Philip Pardey,
provides a survey of existing patents claiming isolated human DNA. After providing a brief history of the Myriad case, the paper provides data on
the number of U.S. patents containing different types and extents of isolated
human DNA:

• Patents that identify DNA or RNA "anywhere"
in the patent document
• Patents
that identify DNA or RNA in the claims (providing upper and lower estimates)
• Patents
with at least one composition of matter claim directed to isolated DNA or RNA
(numbering 15,359 patents according to these authors)

Previously
published estimates of the number of such patents claiming human DNA vary
widely, with a high of 40,000 from a National Research Council report to a
emerging consensus of ~4,000 – 5,000 patents that claims isolated human
DNA. The paper also addresses the
philosophical and practical consequences that could arise if the Court narrowly
answered the Question Presented in a decision limited to human DNA, in contrast
to DNA from other species.

The
quantitative aspects of the paper involve an analysis of claim language in
claims reciting isolated human DNA, thereby identifying 72,052 U.S. patents
that "in some way identify or make reference to nucleotide sequences." Of these, the authors report that from 30-39%
of these patents (21,870 – 28,410 patents) were "likely to contain or
refer to nucleotide sequences in at least one of the claims of the patent." Finally, the paper identifies from this
population patents that contain at least one composition of matter claim to an
isolated human nucleic acid, which are reported to be 15,359 patents. (As an interesting aside, there were 82,952
method claims in the 72,052 patents that recited human DNA or RNA.) Of these 15,359 patents, 5,936 (39%) "primarily
involve" isolated human DNA, with the remainder being directed to isolated
DNA molecules from other animals (1,056; 7%); plants (1,847; 12%); microbes (3,228; 21); and synthetic or
artificial sequences (3,292; 21%). (Methodologically, the authors considered
claims to artificial or synthetic sequences to be "markedly different"
from naturally occurring DNA and omitted these patents from further analysis.)

Looking
at the timing of patents granted on isolated DNA, the authors report that the
number of patents containing such claims peaked in 1999 and has been declining
since 2005 (no doubt due to a combination of the more stringent utility
requirements imposed by the U.S. PTO in 2001 and the change from isolating DNA
encoding a particular protein and isolating human DNA containing an open
reading frame as identified by genome sequencing efforts, predominantly related
to the Human Genome Project). The
proportion of patents claiming isolated human DNA peaked in 2000, where 58% of "gene"
patents recited human DNA, and by 2010 this percentage had fallen to 19%.

Of
the patents containing claims to isolated DNA that could encompass "naturally
occurring" molecules, the authors identified 8,703 that remain in force,
with 3,535 (41%) of these patents claiming isolated human DNA and less than
half of these patents being related to human medicine (an area about which at
least Justice Breyer has evinced a particular concern on the possibility of
negative effects of patenting on patient care). The assignee data the authors report are a little surprising, with 65%
of the 15,359 patents containing composition of matter claims reciting isolated
DNA molecules being owned by private-sector commercial assignees, and only 24%
being owned by public-sector (identified as "government, university,
nonprofit") assignees (the remainder being owned by some combination of
public- and private-sector assignees). The "Top Twenty-five" assignees (and the number of patents
assigned to them) are reported to be:

The
authors speculate on the reason for the decline in patents claiming isolated
nucleic acids, providing some clear correlations (the crash of the tech bubble
at the turn of the century, the availability on public databases of human
genomic DNA sequences and the prior art effect, and the more stringent utility
requirements). The authors also
recognized that the 1999-2000 timeframe also marked a change from claims to
isolated human DNA molecules per se to claims reciting "complex genetic
constructs" (presumably including expression constructs). The authors also note the trend over the past
decade towards claims to molecules comprising artificial or synthetic sequences
(from 14% to 40%) rather than "naturally occurring" DNA molecules
(from 58% to 19%). Nevertheless, the
3,535 patents claiming isolated human DNA remain at risk for invalidation to
some extent by the Supreme Court's Myriad
decision (and, the authors note, the remaining 4,538 patents claiming isolated
DNA from other species might also be at risk if the Court rules more broadly). Consequently:

[A]n overturn by the Supreme Court will affect claims of patents not only on
human genetic diagnostics and therapeutics but also on a wide range of other
genetic technologies in other industries, particularly in agriculture, based
upon our analysis of top assignee portfolios.

The
authors attempt to find a silver lining in their analyses, particularly with
regard to sequence variants and genetically engineered constructs, which may
have a greater likelihood to evince "the hand of man" and to be "markedly
different" from naturally occurring DNA. They perceive a trend towards this type of innovation that a "product
of nature" exception from the Court would "accelerate," and more
recent events (the PTO's decision to examine one sequence per invention and the
Federal Circuit's expansion of obviousness towards isolated DNA in In re Kubin) are not accounted for in
the data. Thus:

The outcome of the Myriad case, regardless, is thus likely to be less
profound than either abolitionists or advocates seem to expect. In the end, any
policy effects resulting from the Myriad case may prove to have been
largely preempted by a combination of less dramatic changes in examination
practices and patent law.

While
outside the scope of the data presented in their paper, the authors also
neglect to consider the effects of a broad "product of nature" ban by
the Court on biotechnology more generally (a concern voiced by Judge Moore in
oral argument and her concurring opinions in the Federal Circuit's review of
the Myriad decision). It is possible, as the authors posit, that
the negative effects of whatever decision is handed down by the Court will be
ameliorated by advances in DNA technology (and the capacity of competent patent
draftsmen to adapt claiming strategies to accommodate their clients' needs in
view of the Court's proscriptions). But
it is equally likely that the Court will seriously harm the economic incentives
for commercializing genetic technology and inhibit disclosure of new
correlations between disease and genetic variation, all to the detriment of
progress in this industry. And it is a
near certainty that the purported purpose behind the controversy, better access
to genetic testing for patients, will not be one of the outcomes of any
decision that impairs the ability to commercializing genetic testing. In the end, the question is not how many
patents are at risk from the Court's consideration of the question before it,
but rather why do the Justices not realize that now is not the time to wade
unnecessarily into these particular philosophical waters. It is ultimately a political, not a legal,
question, and one better suited for consideration by the (expressly) political
branches of the government.
Bowman v. Monsanto Co. (2013)

May 13, 2013

By
Donald Zuhn —

Today,
in Bowman v. Monsanto Co., the Supreme
Court determined that the doctrine of patent exhaustion did not permit a farmer
who buys patented seeds to reproduce them through planting and harvesting
without the patent holder's permission, affirming the Federal Circuit's decision that such activities amount to the creation of a newly infringing article.
Writing for a unanimous Court, Justice Kagan begins a concise 10-page
opinion by noting that "[u]nder the doctrine of patent exhaustion, the
authorized sale of a patented article gives the purchaser, or any subsequent
owner, a right to use or resell that article," but that such sale "does
not allow the purchaser to make new copies of the patented invention."

The case arose as the result of a farmer (Mr.
Bowman) replanting Monsanto's patented Roundup Ready® seed. Mr.
Bowman had purchased the seed from one of Monsanto's licensed seed producers,
with the sale being subject to a Technology Agreement that permitted Mr. Bowman
to, inter alia, "use the seed containing Monsanto gene technologies
for planting a commercial crop only in a single season" and "not save
any crop produced from this seed for replanting, or supply saved seed to anyone
for replanting." While Mr. Bowman complied with these provisions
with respect to a first planting, Mr. Bowman used cheaper "commodity
seed" (i.e., seed obtained from local grain elevators) in a second
planting. After planting the commodity seed, Mr. Bowman tested the second
crop for Roundup® resistance, and found that substantial amounts of the
seed were resistant. He then used Roundup® on these plantings and
replanted this seed. The District Court granted summary judgment of
patent infringement and entered judgment against Mr. Bowman, and the Federal
Circuit affirmed (see "Monsanto
Co. v. Bowman (Fed. Cir.
2011)").

With
regard to Mr. Bowman's argument that the doctrine of patent exhaustion prevented Monsanto from controlling
his use of soybeans he obtained from the grain elevator because they were
the subject of a prior authorized sale (i.e.,
from local farmers to the grain elevator), Justice Kagan counters that "the
exhaustion doctrine does not enable Bowman to make additional patented
soybeans without Monsanto's permission" (emphasis in opinion). Noting that the exhaustion doctrine restricts
a patentee's rights only as to the particular article sold, the
opinion indicates that the doctrine "leaves untouched the patentee's ability
to prevent a buyer from making new copies of the patented item." Justice Kagan explains that:

[This]
is because the patent holder has "received his reward" only for
the actual article sold, and not for subsequent recreations of it. . . . If
the purchaser of that article could make and sell endless copies, the patent would
effectively protect the invention for just a single sale. Bowman himself disputes none of this analysis
as a general matter: He forthrightly acknowledges
the "well settled" principle "that the exhaustion doctrine does
not extend to the right to 'make' a new product."

"Unfortunately
for Bowman," the opinion continues, "that principle decides this case
against him." As Justice Kagan
notes, Mr. Bowman "took the soybeans he purchased home; planted them in his
fields at the time he thought best; applied glyphosate to kill weeds (as well as
any soy plants lacking the Roundup Ready trait); and finally harvested more
(many more) beans than he started with."
Therefore, because Mr. Bowman reproduced Monsanto's patented invention, the
opinion concludes that the exhaustion doctrine does not protect him.

The
opinion demonstrates an appreciation of the impact Mr. Bowman's activities
would have on Monsanto if such activities were found to be protected under the exhaustion doctrine:

[I]n short order, other seed companies could reproduce
the product and market it to growers, thus depriving Monsanto of its monopoly. And farmers themselves need only buy the seed
once, whether from Monsanto, a competitor, or (as here) a grain elevator. The grower could multiply his initial purchase,
and then multiply that new creation, ad infinitum — each time profiting
from the patented seed without compensating its inventor.

With
regard to Mr. Bowman's argument that he was merely using the Roundup Ready®
seeds in the normal way that farmers do — by planting them — and that by interfering
with that use, Monsanto was creating an impermissible exception to the exhaustion
doctrine for patented seeds and other self-replicating technologies, Justice
Kagan notes that "it is really Bowman who is asking for an unprecedented
exception — to what he concedes is the 'well settled' rule that 'the
exhaustion doctrine does not extend to the right to 'make' a new product." Returning to the impact of Mr. Bowman's activities on Monsanto, the opinion states that:

[O]nce again, if simple copying were a protected use, a patent would plummet in
value after the first sale of the first item containing the invention. The undiluted patent monopoly, it might be
said, would extend not for 20 years (as the Patent Act promises), but for only
one transaction. And that would result
in less incentive for innovation than Congress wanted. Hence our repeated insistence that exhaustion
applies only to the particular item sold, and not to reproductions.

Justice
Kagan concludes the opinion, however, by noting that the Court's holding "is limited
— addressing the situation before us, rather than every one involving a self-replicating
product." She adds that:

We recognize that such inventions are becoming
ever more prevalent, complex, and diverse.
In another case, the article's self-replication might occur outside the purchaser's
control. Or it might be a necessary but incidental
step in using the item for another purpose.
. . . We need not address here whether
or how the doctrine of patent exhaustion would apply in such circumstances.

Bowman v. Monsanto Co. (2013)
Opinion
of the Court by Justice Kagan
Court Report

May 12, 2013

By Sherri Oslick —

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

Bristol-Myers
Squibb Co. v. Genentech, Inc. et al.
3:13-cv-02045;
filed May 3, 2013 in the Northern District of California

• Plaintiff:
Bristol-Myers Squibb Co.
• Defendants:
Genentech, Inc.; City of Hope

Declaratory
judgment of invalidity, unenforceability, and noninfringement of of U.S. Patent
Nos. 6,331,415 ("Methods of Immunoglobulins, Vectors, and Transformed Host
Cells for Use Therein," issued December 18, 2001) and 7,923,221 ("Methods
of Making Antibody Heavy and Light Chains Having Specificity for a Desired
Antigen," issued April 12, 2011) in conjunction with BMS's manufacture and
sale of its Erbitux® product (cetuximab, used for the treatment of head and
neck cancer and colorectral cancer; sold pursuant to an agreement with Eli
Lilly) and its Yervoy® product (ipilimumab, used for the treatment of
unresectable or metastatic melanoma). View
the complaint here.

Genentech,
Inc. v. Rea
1:13-cv-00556;
filed May 3, 2013 in the Eastern District of Virginia

Review and
correction of the patent term adjustment calculation made by the U.S. Patent
and Trademark Office for U.S. Patent No. 8,303,955 ("Humanized Anti-CD40 Antibodies and Their Methods of Use,"
issued November 6, 2012). View the
complaint here.
Conference & CLE Calendar

May 12, 2013

May 13-14, 2013 – Generics and Patent Strategies (SMi) – London, UK

May 14, 2013 – Forum on Pharma & Biotech Collaborations (C5 (UK)) – Frankfurt, Germany

May
14-16, 2013 – Fundamentals of Patent Prosecution
2013: A Boot Camp for Claim Drafting & Amendment Writing (Practising
Law Institute) – Chicago, IL

May 15-16, 2013 – Forum on Freedom to Operate (C5 (UK)) – Frankfurt, Germany

May 21-23,
2013 – Pharma Legal Affairs (IBC Life Sciences) – Shanghai, China

May 27, 2013 – A Harmonized Patent World — Are
We Getting There? (Intellectual Property Owners Association) – Brussels, Belgium

May 29, 2013 – AIA and Patent Due Diligence Understanding the AIA Impact and Best Practices for
the Due Diligence Process (Strafford) – 1:00 – 2:30 pm
(ET)

May 30, 2013 – Harmonization of USPTO Ethical Standards in
the Post-AIA Era (McDonnell
Boehnen Hulbert & Berghoff LLP) – 10:00 – 11:15 am (CT)

June
5-7, 2013 – Advanced Forum on Biosimilars (American Conference
Institute) – New York, NY

June 9-11, 2013 – IP Business Congress (Intellectual Asset
Management) – Boston, MA

June 12-14, 2013 – Fundamentals of Patent Prosecution
2013: A Boot Camp for Claim Drafting & Amendment Writing (Practising
Law Institute) – New York, NY

July 15-19, 2013 – Patent Law Summer
Intensive (Benjamin N. Cardozo School of Law) – New York, NY

June 25-26, 2013 – Maximising
Pharma Patents (C5 (UK)) – London, England

July
10-12, 2013 – Fundamentals of Patent Prosecution
2013: A Boot Camp for Claim Drafting & Amendment Writing (Practising
Law Institute) – San Francisco, CA

***Patent Docs is a media partner of this conference or CLE
Webinar on New USPTO Rules of Professional Conduct

May 12, 2013

McDonnell
Boehnen Hulbert & Berghoff LLP will be offering a live webinar entitled "Harmonization of USPTO Ethical Standards in
the Post-AIA Era" on May 30, 2013 from 10:00 am to 11:15 am (CT). MBHB attorney and Patent Docs contributor Dr. Andrew Williams will moderate a
presentation by Director William R.
Covey, Deputy General Counsel and Director for Office of Enrollment and
Discipline at the U.S. Patent and Trademark Office, on the new USPTO Rules of
Professional Conduct. Director Covey's
presentation will address the new rules, and focus on present day ethical
issues affecting attorneys and agents who practice before the USPTO and are
therefore subject to the jurisdiction of the OED. Topics/issues to be covered include:

•
Ethical standards under the New USPTO Rules of Professional Conduct, modeled on
the ABA's Model Rules of Professional Conduct.
•
Mechanics of OED's complaint and investigative process.
•
Ethical impact of the AIA on practitioners and OED.
•
Practical examples and statistics relating to OED enforcement.

While
there is no fee to participate, attendees must register in advance. Those wishing to register can do so here. CLE credit is pending for the states of California,
Georgia, Illinois, North Carolina, New Jersey, New York and Virginia.
Cardozo School of Law Patent Law Summer Intensive

May 10, 2013

The
Benjamin N. Cardozo School of Law will host its first Patent Law Summer
Intensive for students and practitioners on July 15-19, 2013. The week-long program will have two
components — participants may enroll in one or both components. The morning component will be an intensive
15-hour course called Introduction to Patent Law which will focus on the law of
patent validity and infringement in the United States. The afternoon component, also 15 hours, will
feature lectures, panels, and exercises on current topics in patent law and
practice. The afternoon course will be
keyed to, but independent from, the morning course.

The
Patent Law Summer Intensive will be co-taught by Professor Michael Burstein and
Professor Daniel Ravicher. The registration
fee for the course is $3,000 ($1,800 for morning or afternoon only), excluding
a $75 application fee (note: discounted prices for students currently enrolled
in J.D. or LL.M. programs). Those interested
in registering for the course can do so here
(note: the application deadline is May 15, 2013). Additional information regarding the Patent
Law Summer Intensive, including a list of the topics being covered in the
course, can be obtained here
or by e-mailing nysummer@yu.edu.
IP Business Congress 2013

May 10, 2013

Intellectual Asset
Management (IAM) magazine will be hosting its 6th annual IP Business Congress
on June 9-11, 2013 in Boston, MA. The IP
Business Congress brings together senior thought leaders who specialize in the
business of IP to come together to discuss cutting-edge issues around IP value
creation. Among the plenary and breakout
sessions being offered are:

• The changing face
of the IP market
• Strategic
insights
• IPBC Debate 1 — Patent reform in the US
• Measuring success
• Opportunities beyond the US
• A new value creation framework for biotech
and pharma
• Evolving monetisation models
• Tomorrow's IP
• CIPO masterclass
• IPBC Debate 2 – CIPO issues
• Investment and deal making
• Using your IC to enhance your IP
• On the shoulders of giants
• Strategic priorities

The programme for
the IP Business Congress can be found here.

The registration
fee for the IP Business Congress is $1,650 (rate available until June 8, 2013). Those interested in registering for the
conference can do so here. More information about the IP Business
Congress can be found here.
Senators Back 12-Year Data Exclusivity Period for Biosimilars and President Obama (Once Again) Does Not

May 9, 2013

By Donald Zuhn —

On March 22, Senators Max Baucus (D-MT) and Orrin Hatch (R-UT), the Chairman and Ranking Member, respectively, of the Senate Committee on Finance, sent a letter to Ambassador Demetrios Marantis, the Acting United States Trade Representative, "to emphasize the importance of achieving a comprehensive, high-standard intellectual property chapter" as negotiations on the Trans-Pacific Partnership Agreement enter a "crucial phase." The Trans-Pacific Partnership Agreement, or TPP, is a multilateral free trade agreement currently being negotiated by Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the United States, and Vietnam (Canada, Japan, the Philippines, South Korea, and Taiwan have also expressed interest in participating in the agreement). The 17th round of TPP negotiations will be held in Lima, Peru on May 15-24.

While expressing their "strong[] support" for the Acting U.S. Trade Representative's "commitment to 'aggressively protect' intellectual property through international trade negotiations," Senators Baucus and Hatch specifically urged the Acting U.S. Trade Representative "to seek commitments from our trading partners that reflect the level of protection under U.S. law, for example 12 years of regulatory data protection for biologic pharmaceuticals and strong remedies, including civil and criminal penalties, for trade secret theft." The Senators concluded their letter by noting that "[g]iven the significance of the TPP, and with countries like China and India watching closely, the United States cannot afford to get this wrong."

In urging the Acting U.S. Trade Representative to include a 12-year data exclusivity period in the TPP, Senator Hatch reaffirmed his support for this provision of the Biologics Price Competition and Innovation Act (BPCIA), the portion of the Patient Protection and Affordable Care Act that provides an approval pathway for biosimilar biological products. Senator Hatch and two other members of the Senate Health, Education, Labor and Pensions Committee proposed an amendment to the Senate biosimilar bill in July 2009 that provided the 12-year data exclusivity period (see "Senators Champion 12-Year Data Exclusivity in Senate"). In the fall of 2011, 37 Senators, led by Senators Hatch and John Kerry, sent a letter to the U.S. Trade Representative Ron Kirk, stating that "[w]hile the views of individual members of Congress may differ as to the desirability of [the TPP] negotiations, we are united in urging you to propose a strong minimum term of regulatory data protection for biologics consistent with U.S. law" (see "Senators Support Inclusion of 12-Year Exclusivity Period in Free Trade Agreement"). In that letter, the Senators noted that "U.S. law provides for a 12-year term of regulatory data protection for biologics," and declared that this 12-year period "should serve as the baseline for the administration's objectives for this aspect of the negotiation."

Chances are that the Acting U.S. Trade Representative, a Cabinet member who serves as the president's principal trade advisor, negotiator, and spokesperson on trade issues, may the views of Senators Baucus and Hatch when it comes to the 12-year data exclusivity period. That is, if the President's FY 2014 budget proposal is any indication. The President's latest budget proposal, which was unveiled last month, looks a lot like his 2013 and 2012 proposals with respect to provisions that would impact the data exclusivity period (see "President's Latest Budget Proposal Seeks Decrease of Data Exclusivity Period and Elimination of Pay-for-Delay Agreements" and "President's Budget Proposal Increases Funding for Basic Research But Seeks to 'Trim' Data Exclusivity Period and Pay-for-Delay Agreements"). In particular, the President's budget proposal states:

Lower Drug Costs. The Budget includes a number of policies to lower drug costs to taxpayers and consumers. . . . The Budget also proposes to accelerate access to affordable generic biologics by modifying the length of exclusivity on brand name biologics. Beginning in 2014, this proposal would award brand biologic manufacturers seven years of exclusivity, rather than 12 years under current law, and prohibit additional periods of exclusivity for brand biologics due to minor changes in product formulations, a practice often referred to as "evergreening." The proposal will result in $3 billion in savings over 10 years to Federal health programs including Medicare and Medicaid.

As in his last two budget proposals, the President's FY 2014 budget would also put an end to pay-for-delay, or reverse payment, agreements. Specifically, the President's budget proposal states that:

[B]eginning in 2014, the Budget proposes to increase the availability of generic drugs and biologics by authorizing the Federal Trade Commission to stop companies from entering into anti-competitive deals, known also as "pay for delay" agreements, intended to block consumer access to safe and effective generics. Such deals can cost consumers billions of dollars because generic drugs are typically priced significantly less than their branded counterparts. The Administration's proposal will generate $11 billion over 10 years in savings to Federal health programs including Medicare and Medicaid.

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