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  • Mayor and City Council of Baltimore v. AbbVie Inc. (7th Cir. 2022)

    By Kevin E. Noonan —

    A little over two years ago, U.S. District Court Judge Manish Shah sitting in the Northern District of Illinois held that AbbVie did not violate Sections 1 or 2 of the Sherman Antitrust Act by amassing a large number (132) of patents to protect its best-selling drug, Humira® (adalimumab) (see "An Analysis of a Failed Biosimilar Antitrust Class Action").  Yesterday, in Mayor and City Council of Baltimore v. AbbVie Inc., the Seventh Circuit Court of Appeals affirmed the District Court's decision to dismiss the complaint in a unanimous verdict that took the Court sixteen months to hand down.

    To recap, the issue arose in a class action lawsuit against AbbVie and AbbVie Biotechnology Ltd. by consumer groups, drug wholesalers, and unions (including the City of Baltimore, Miami Police Department insurance trust fund, and a Minnesota-based employee welfare benefits plan for workers in the pipe trade industries), as well as corresponding state law causes of action for Alaska, California, District of Columbia, Georgia, Illinois, Nevada, New Hampshire, North Carolina, Utah, and West Virginia.  The basis of the complaint was AbbVie's actions in seeking and obtaining additional patents when the patent on the adalimumab molecule itself (U.S. Patent No. 6,090,382) was set to expire on December 31, 2016.  AbbVie filed 247 patent applications, resulting in 132 patents, and this behavior was sufficiently anticompetitive, plaintiffs argued, that it rose to the level of an antitrust violation under the Sherman Act.

    The District Court discerned the following allegations in the class action Plaintiffs' complaint:

    • that AbbVie "cornered the market" on Humira (and other, unnamed biosimilar drugs) by "anticompetitive conduct";

    • that AbbVie obtained and asserted patents "to gain the power it needed to elbow its competitors" out of the Humira market;

    • that AbbVie then entered into agreements with those competitors "to keep their competing drugs off the market" (and then, paradoxically, "gave those competitors permission to market their drugs in Europe"; unremarked is that AbbVie gave those same competitors permission to enter the U.S. market a few years thereafter, without having to face those dastardly and profuse patents).

    The District Court dismissed the complaint under the rationale that:

    Plaintiffs say that AbbVie's plan to extend its power over Humira amounts to a scheme to violate federal and state antitrust laws.  But what plaintiffs describe is not an antitrust violation.  AbbVie has exploited advantages conferred on it through lawful practices and to the extent this has kept prices high for Humira, existing antitrust doctrine does not prohibit it.  Much of AbbVie's petitioning was protected by the Noerr Pennington doctrine, and plaintiffs' theory of antitrust injury is too speculative.

    The District Court agreed with AbbVie that "there is nothing illegal about amassing a broad portfolio of legitimate patents" under Sherman Act § 2 and, to the extent that some of these patents may turn out to be improvidently granted, "the Noerr–Pennington doctrine immunizes them from liability."  Regarding the Section 1 allegations, the District Court agreed with Defendants that these settlement agreements don't violate the Sherman Act because "they[] allow AbbVie's competitors to enter the market before the expiration of AbbVie's patents, do not involve any reverse payments from AbbVie (the patentee) to Amgen, Samsung Bioepis, and Sandoz (the alleged infringers), and only divvy up the market in ways consistent with AbbVie's patent rights."  And while the District Court agreed that even if a single one of AbbVie's patents are not invalid and infringed that would have been sufficient to keep the biosimilar applicants from marketing Humira biosimilars until that patent expired (a date that would have been very much later than January 2023), for Plaintiffs' antitrust allegations to create liability against Defendants, Plaintiffs would need to show that AbbVie had obtained each and every one of its patents "unlawfully," which the Court found was unlikely, as a "but-for" cause of Plaintiffs' alleged injury.

    The 7th Circuit affirmed, in an opinion by Judge Easterbrook joined by Judge Wood and Judge Kirsch.  The opinion begins with a litany of precedent that the parties did not rely on (for AbbVie, Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) on jurisdictional grounds, and for plaintiffs, Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965) for inequitable conduct or "fraud on the Patent Office").  But the heart of the Court's opinion can be found in almost its first legally substantive sentence, where the Court asks plainly "what's wrong with having lots of patents"?  And further, the Court states that "[t]he patent laws do not set a cap on the number of patents any one person can hold—in general, or pertaining to a single subject," citing In re Brand Name Prescription Drugs Antitrust Litigation, 186 F.3d 781 (7th Cir. 1999).  Tellingly the opinion goes on to note that "[t]ech companies such as Cisco, Qualcomm, Intel, Microsoft, and Apple have much larger portfolios of patents" and "Thomas Edison alone held 1,093 U.S. patents."  Finally in this regard the Court notes that the Federal Trade Commission tried, and failed, to establish antitrust liability against Qualcomm based on the sheer number of patents that company had amassed.  FTC v. Qualcomm Inc., 969 F.3d 974 (9th Cir. 2020).

    The Court recognizes the distinction between valid and invalid patents, but notes that Plaintiffs did not allege that they will invalidate all 132 of AbbVie's patents.  Nor was the Court persuaded by the fact that "the 132 patents can be traced to continuation applications from 20 root patents" (which "seem neither here not there" to the panel).  As for the argument that these patents are "weak" the Court says this "leaves us cold" because a weak patent is just one having limited scope not one that is "illegitimate."  Those arguments are appropriate in proceedings like inter partes review the opinion states, for which the Patent Trial and Appeal Board have found more consistently that challengers have failed (13 instances) to satisfy the statutory requirements for challenge than it has found a challenged patent invalid (3) (and noting that in still other instances AbbVie has prevailed before the Board).

    The Court also recognizes the disjointed nature of Plaintiffs' argument that, while eschewing Walker Process-based allegations maintained its Section 2 challenge merely because AbbVie obtained the (presumptively) valid patents and asserted them against competitors.  While the law recognizes that "objectively baseless petitions" to the government can be an antitrust violation, Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49 (1993), like the District Court the panel noted that AbbVie had a "batting average" of .534 for patent procurement (a 53.4% allowance rate), which "cannot be called baseless."  But without this ground "[t]rying to conjure liability out of successful petitions for governmental aid in blocking competition runs into the Noerr-Pennington doctrine according to the opinion, Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961); Mine Workers v. Pennington, 381 U.S. 657 (1965).  Other grounds for finding antitrust liability (unsuccessful petitioning that increases competitors' costs, such as filing frivolous lawsuits, citing BE&K Construction Co. v. NLRB, 536 U.S. 516 (2002)) did not exist under the circumstances before the Court (although the panel recognized there may be ways for AbbVie to assert their patents that the Noerr-Pennington doctrine would not protect).

    Turning to the Section 1-based allegations arising from the settlement agreements, the opinion first notes that those settlement agreements permitted biosimilar entry much earlier than the expiration date of at least some of AbbVie's patents.  The Court views these agreements as "compromises" and the agreements do not violate the Sherman Act under Supreme Court precedent in favor of settlements in litigation.  But the opinion states that the basis of one such possible antitrust violation, falling under the Court's FTC. v. Actavis decision, cannot arise here because there is no exclusivity period for the first biosimilar filer as there was in Actavis for the first ANDA filer.  "The payors do not contend that there is anything fishy or anticompetitive about the settlements allowing entry in 2023 without any payment from AbbVie to the potential entrants," the opinion asserts, and acknowledges Plaintiffs' argument that the differential entry date of Humira biosimilars in Europe (2018) and the U.S. (2023) could produce a similar "reverse-payment deal" here.  Neither the District Court nor this panel were persuaded because there was no "pay-for-delay" ("0+0=0") in these settlements.  There were also factual distinctions between the settling parties and the legal and regulatory conditions in the European countries that were contrary to Plaintiffs' arguments that somehow somewhere someone had or could make money they should not have been able to make under these agreements.  And to the extent Plaintiffs' argument sounded in the economic theory of "opportunity costs" the panel understood the Supreme Court's Actavis decision to have "considered, and rejected, the argument that an opportunity cost is the same as a reverse-payment settlement."

    The District Court characterized Plaintiffs' arguments as "a new kind of antitrust claim" that "brings together a disparate set of aggressive but mostly protected actions to allege a scheme to harm competition and maintain high prices."  Attorneys making novel legal theories of course is how the law progresses.  Indeed, the current Chair of the Federal Trade Commission became something of an enfant terrible based on her law review article on antitrust in the technological age (Khan, Lina M. (January 2017), "Amazon's Antitrust Paradox", Yale Law Journal, 126 (3): 710–805).  But a risk of some legal theories arises when they are outcome oriented to the extent that they ignore traditional legal principles in search of the desired outcome.  (The dissent by Chief Justice Roberts in Actavis is illustrative of the dangers attendant thereupon.)  And the mantra of the undesirability if not illegality per se of so-called patent thickets for blockbuster drugs can appear politically expedient but is not supported by the facts, as shown inter alia by Mossoff, Unreliable Data Have Infected the Policy debates over Drug Patents, Policy Memo, Hudson Institute, January 2022.  For now, this latest flight of legal fancy has crashed on the rocks of antitrust jurisprudence reality but it would be imprudent not to expect other attempts prompted by patent protection of blockbuster drugs (and their related costs) to arise.

  • Realtime Adaptive Streaming LLC v. Netflix, Inc. (Fed. Cir. 2022)

    By Michael Borella —

    Federal Circuit SealBad law often gives rise to creative legal arguments.  But the application of such creative lawyering is necessarily bounded by ethical rules and notions of fair dealing.  Patent eligibility, in its current incarnation, has been argued to be bad law by many.  The current judicial interpretation of 35 U.S.C. § 101 is at best vague and at worst a subjective inquiry in which the proclivities of the reviewer (whether patent examiner, administrative judge, or federal judge) often matter as much or more than the claims under review.  Such a situation is inexcusable, but still does not give a party license to engage in monkey business.

    Case in point, Realtime asserted six patents against Netflix in the District of Delaware.  Netflix responded by filing seven petitions for inter partes review (IPR) of these patents, and moving to dismiss four of the patents from the Delaware proceeding on grounds of ineligibility under § 101.  All seven IPRs were instituted and a magistrate judge in Delaware recommended that Neflix's motion be granted.

    But before the District Court judge could rule on the magistrate judge's eligibility report, Realtime voluntarily dismissed the Delaware case.  The next day, Realtime filed suit in the Central District of California asserting all six patents against Netflix again.  Realtime did this "despite having previously informed the Delaware court that transferring the Delaware action across the country to the Northern District of California would be inconvenient and an unfair burden on Realtime."  The California court had previously found some of Reatime's claims to be patent-eligible.

    Netflix moved to transfer the new assertions back to Delaware and also requested attorney's fees for the California and Delaware cases, as well as the IPRs.  Again, Realtime voluntarily dismissed the case before the California judge had a chance to rule on the transfer.  Nonetheless, the judge had seen enough and awarded attorney's fees to Netflix for the California cases based on equitable considerations.  The judge did not, however, award attorney's fees for the Delaware cases or the IPRs.  Both parties cross-appealed to the Federal Circuit.

    On review, that Court quickly concluded that the California court "reasonably found Realtime's conduct in the California actions 'improper,' 'exceptional,' and 'totally unjustified.'"  Given that the Delaware court was likely to rule against Realtime on the § 101 motions and that the California court was a more favorable forum for such issues, the Court found that "Realtime undoubtedly realized that by refiling in California, it could effectively erase the Delaware magistrate judge's fulsome and compelling patent-ineligibility analysis and findings."

    The Court was further convinced by Realtime's behavior when it "resisted transfer back to the forum it originally chose."  Thus it affirmed the California court's finding that Realtime engaged in "impermissible forum shopping."

    Combined, this was enough for the Federal Circuit to agree that Realtime acted in bad faith and that these acts were "sanctionable under a court's inherent power in view of the Ninth Circuit's standard."  Accordingly, "the district court did not abuse its discretion in awarding fees pursuant to its inherent equitable powers."

    Moving on to Netflix's request for attorney's fees from the Delaware proceeding and the IPRs, the Federal Circuit agreed with the California court that there was no evidence of bad faith in the initial filing of the Delaware action.  Further, institution of the IPRs was insufficient to make Realtime's ongoing litigation efforts futile.  Thus, the Federal Circuit declined to reverse the California court with respect to the Delaware action and the IPR.

    In sum, patent-eligibility is a mess.  But that still does not give one a second bite at the apple or support taking contrary positions at different points in litigation.  There is no reset button to press after an adverse ruling, just the appeals process.  Realtime should have known better and it paid the price.

    Realtime Adaptive Streaming LLC v. Netflix, Inc. (Fed. Cir. 2022)
    Panel: Circuit Judges Newman, Reyna, and Chen
    Opinion by Circuit Judge Chen; opinion concurring-in-part and dissenting-in-part by Circuit Judge Reyna

  • USPTO Director’s Blog Post Extolling Certainty in § 101 Determinations Paradoxically Increases Uncertainty

    By Kevin E. Noonan —

    Vidal KathiKathi Vidal, Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office (at right) released a blog post on the USPTO's Director's Blog on Monday addressing the fraught subject of subject matter eligibility under 35 U.S.C. § 101 as interpreted over the past decade by the U.S. Supreme Court and implemented by the Office in light of those decisions.

    As with much of Director's public pronouncements the tone of the post is mostly upbeat, extoling the Office's efforts in accommodating sometimes confusing if not contradictory instructions from the courts (particularly the Federal Circuit, which is somewhat understandable in view of the occasionally Delphic language on the issue by the High Court).  Director Vidal references the Office's 2022 report to Congress on "Patent eligible subject matter: Public views on the current jurisprudence in the United States" and the message therein that "across the spectrum, stakeholders generally agreed that the law on patent eligibility—like other areas of patent law—needs to be clear, predictable, and consistently applied."  The Director also recites innovation canon in saying that "[t]his clarity and consistency will allow innovators to attract the investment and collaborations that bring more innovation to impact, in turn creating more jobs and solving world problems."

    While the sentiments voiced by the Director are admirable (and it would be hard for her to be credible if she didn't subscribe to them) the devil in this instance is not just in the details but in the process of effectuating eligibility determinations within the strictures of recent case law.  To this end, the post mentions the Deferred Subject Matter Eligibility Response (DSMER) pilot program (crediting the impetus for this initiative to Senators Thom Tillis (R-NC) and Tom Cotton (R-AK)) and describing the program as being "designed to evaluate whether examination efficiency and patent quality can be improved by delaying the complete evaluation of subject matter eligibility until other patentability criteria are evaluated as opposed to addressing all requirements for patentability at the same time" and reminding stakeholders that it will expire on July 30, 2022 although patent applications involved in the program will persist during the course of their prosecution.  Regarding its adoption, the Director's statistics state that about one-third of the 600 invitations the Office has sent have been accepted, the Director drawing no conclusions nor making any statements regarding whether this frequency was expected or consistent with the Office being able to draw any conclusions regarding its effectiveness.

    Next the Director notes the series of Guidances, including the 2019 Revised Patent Subject Matter Eligibility Guidance, the October 2019 Patent Eligibility Guidance Update, and the Berkheimer Memo, all of which can be found in Section 2106 of the latest version of the Manual of Patent Examining Procedure.  In association with these assertions, the Director provides the encouraging statistic that "the corps-wide eligibility rejection rate [has dropped] from about 25% in 2018 to about 8% today," although it is certainly likely that at least a portion of this improvement is due to applicants adapting to PTO and Federal Circuit standards that have evolved since the Supreme Court began its subject matter eligibility crusade in 2012 with its decision in Mayo Collaborative Services v. Prometheus Laboratories.  The Director also references the Office's October 2020 Report on "Public Views on Artificial Intelligence and Intellectual Property Policy" and its "Adjusting to Alice" report on patent examination outcomes released in April 2020.  These Reports support the conclusions of the Chief Economist that the 2019 revisions to the Office's eligibility guidance produced a 25% decrease in the frequency of Alice-affected technologies to receive a first Office Action asserting a Section 101 rejection, and that "uncertainty about determinations of patent subject matter eligibility for the relevant technologies decreased by a remarkable 44% as compared to the previous year."

    This is all well and good as far as it goes, the Director giving credit to prior Directors, administrators, and the examining corps in reducing somewhat the uncertainties caused by judicially created changes in subject matter eligibility law.  But the next sentences undo much of the good feelings produced by these achievements, the Director stating "[d]espite this progress to achieve a more consistent examination under Section 101, there is more work to be done.  Accordingly, we are revisiting our subject matter eligibility guidance."  To this end, the Director asks the public to provide comments on subject matter eligibility by September 15, 2022 to 101@uspto.gov and by participating in stakeholder listening sessions.  While it is certainly the case that subject matter eligibility law remains unsettled, to once again poll stakeholders seems a fool's errand (besides being completely redundant).  It is well-established that there are two generic species of applicant:  those who believe that the status quo is optimal for them and their business goals and are thus completely satisfied, and those who have been negatively affected by frank preclusion of certain innovative technologies (medical diagnostics being a principal example) and thus are completely dissatisfied (and have been forced to use trade secret and other means to protect their technologies, albeit imperfectly).  It is hard to see how another round of these efforts will be more successful than the ones that inauguration of this latest iteration indicates have been inadequate.

    Some rays of hope may be found in the concluding statements in the blog post, regarding efforts to consult with counterpart offices in foreign countries, with regard to how those countries have largely avoided the confusion that has arisen in the U.S. (although it is likely that the simple reason for the clarity existing abroad on subject matter eligibility is due entirely to the absence of a Supreme Court in those countries that is involved in making patent policy).  To the extent that foreign counterparts can raise any issues current U.S. law or the interpretation thereof on subject matter eligibility that runs afoul of international obligations under the TRIPS agreement such discussions may be helpful.  The blog also notes cooperation between the PTO and the DOJ Solicitor General regarding efforts towards identifying "good vehicles" to achieve the goal of "creating more certain and predictable rights that foster innovation."

    The simple fact is that the Supreme Court has shown no recognition that its subject matter eligibility jurisprudence needs to be revisited (even when encouraged to do so by the Solicitor General as in the American Axle case), the Federal Circuit has been unwilling to provide a useful counterbalance to the Court's dicta regarding eligibility, and the PTO does not have the authority under the law to bind judicial decision-making.  Congress is the answer, as frightening as that reality may be in the current political climate, and despite some efforts has not been able to enact legislation that would improve matters.  For the moment, only by taking up Justice Breyer's challenge to the clever draftsman (see "Mayo Collaborative Services v. Prometheus Laboratories — What Should We Do? (or Can These Claims Be Saved?)") to craft claims sufficient to provide the maximum possible protection with the least risk of invalidation can the situation be ameliorated if not entirely remedied.

  • American National Manufacturing v. Sleep Number Corp. (Fed. Cir. 2022)

    By Kevin E. Noonan —

    Federal Circuit SealThe Federal Circuit today affirmed determinations by the Patent Trial and Appeal Board (PTAB) in an inter partes review in American National Manufacturing v. Sleep Number Corp., in an opinion by Judge Cunningham.  The opinion was not Judge Cunningham's first Federal Circuit opinion but it is likely to be her shortest, coming in at 862 words (including footnotes).*

    The patent, U.S. Patent No. 5,904,172, was challenged over claims 2, 4, 6, 12, 16, 20, 22, and 24.  The opinion sets forth no representative claim but claim 2 will suffice to understand the Court's decision here:

    2.  An improved valve enclosure assembly for use with an air inflatable mattress having at least one air bladder inflated by compressed air, a pump fluidly coupled to the at least one air bladder for providing compressed air thereto, and a processor for providing commands to the improved valve enclosure assembly during an inflate/deflate cycle, the improved valve enclosure assembly being fluidly coupled intermediate the pump and the at least one air bladder for controlling the inflation of the at least one air bladder, comprising:
        an enclosure defining a substantially fluidly sealed air chamber and having at least one air inlet to the air chamber being fluidly coupled to the pump, a plurality of guides and stops being disposed within the enclosure for correctly positioning components within the enclosure; and
        pressure monitor means being operably coupled to the processor and being in fluid communication with the at least one bladder for continuously monitoring the pressure in the at least one bladder.

    The Board found in favor of ANM's challenge that claim 16** was anticipated but held ANM had not shown by a preponderance of the evidence that the cited art rendered the other claims obvious.  Without much preamble or any recitation of the PTAB's reasoning, the opinion, in which Judges Stoll and Schall joined, begins by rejecting ANM's claim construction arguments, specifically with regard to the term "substantially fluidly sealed" to mean "largely but not wholly sealed," saying that the alternative constructions proposed by the parties (presumably, both of them) were not supported by the intrinsic evidence.  The opinion also rejected ANM's arguments concerning the Board's construction of the term "guides" to mean "structures that position a component, prior to fastening, by directing the component into place," and the term "stops" to mean "structures that position a component, prior to fastening, by arresting travel into the enclosure" on the same basis, that the proposed alternative constructions would add additional, unsupported temporal limitations or enforce an "order of the steps."  The panel found the Board's claim construction to be supported by substantial evidence, referring to specific interpretations of the claims in view of certain specific prior art and reciting with approval the distinctions that convinced the Board that the claims were non-obvious.  The Federal Circuit similarly rejected SNC's challenges to the Board's decision finding claim 16 anticipated by U.S. Patent No. 5,044,029 (the basis for this determination being left to the reader).

    The panel "decline[d] to reach" SNC's arguments challenging the Board's construction of the term "pressure monitor means . . . for monitoring" as recited in claims 12 and 16, because SNC had prevailed before the Board for claim 12 and SNC had not asserted its construction before the Board for claim 16.

    And with that, the Federal Circuit affirmed, with the coda that each party would bear its own costs.

    This case, which is non-precedential, could have been disposed of under Rule 36 but having the Court set out its reasoning parsimoniously has the advantage that the parties and the patent bar and community can better understand the arguments and reasoning the Court found persuasive.

    *For comparison, this post which aims for pithy exposition of the Court's decisions is 861 words in length.

    **Claim 16:

    16.  An improved valve enclosure assembly for use with an air inflatable mattress having at least one air bladder inflated by compressed air, a pump fluidly coupled to the at least one air bladder for providing compressed air thereto, and a processor for providing commands to the improved valve enclosure assembly during an inflate/deflate cycle, the improved valve enclosure assembly being fluidly coupled intermediate the pump and the at least one air bladder for controlling the inflation of the at least one air bladder, comprising:
        an enclosure defining a substantially fluidly sealed air chamber and having at least one air inlet to the air chamber being fluidly coupled to the pump, the enclosure being formed of an enclosure portion and a rear cover portion, a flexible seal being compressively interposed between the enclosure portion and a rear cover portion to effect a substantially fluid tight seal therebetween;
        at least one valve operably coupled to the enclosure being in selective fluid communication with the air chamber and being in fluid communication with the at least one air bladder for selectively fluidly coupling the air chamber to at least one air bladder; and
        pressure monitor means being operably coupled to the processor and being in fluid communication with the at least one valve for monitoring the pressure in the at least one bladder.

    American National Manufacturing v. Sleep Number Corp. (Fed. Cir. 2022)
    Nonprecedential disposition
    Panel: Circuit Judges Stoll, Schall, and Cunningham
    Opinion by Circuit Judge Cunningham

  • FDA Releases Draft Guidance on Evaluation of Therapeutic Equivalence of Small Molecule Drugs

    By Kevin E. Noonan —

    Draft GuidanceOn July 20th, the FDA released draft Guidance regarding its standards on therapeutic equivalence (TE) between different versions of small molecule drugs.  The definition of "therapeutic equivalence" in the Guidance is:

    [A]pproved drug products that FDA has determined are pharmaceutical equivalents for which bioequivalence has been demonstrated, and that can be expected to have the same clinical effect and safety profile when administered to patients under the conditions specified in the labeling.

    The purported purpose of the Guidance and the standards set forth therein is to provide states, formularies, pharmacies, and the like in situations where there are multiple sources of the same drug (e.g., branded and generic).  The asserted policy goal of the Guidance is to give the public easier access to more inexpensive drugs.  However, the Guidance emphasizes that economics is to be a beneficial consequence and not the determinant of TE, by stating that "[t]herapeutic equivalence evaluations are a scientific judgment based upon evidence" (as opposed to "social and economic policies").  Interestingly, in the context of this Guidance the word should means "suggested or recommended, but not required," which is certainly a departure from how words of command are interpreted.

    The Guidance sets forth three types of equivalence:  pharmaceutical, bioequivalence, and the state of having the "same clinical effect and safety profile" for conditions of use set forth on the drug label.  TE is limited to drugs having multiple sources because there needs to be a comparator (such as a drug approved under an NDA).  The Guidance also set as a goal that drugs deemed to have TE can be substituted "with the full expectation that the substituted product will produce the same clinical effect and safety profile as the prescribed product when administered to patients under the conditions specified in the labeling."

    The Guidance then sets forth the standards for each of the equivalency requirements.  Pharmaceutical equivalence, defined at 21 C.F.R. § 314.3(b), has four criteria:

    • in identical dosage form and route(s) of administration;

    • contain identical amounts of the identical active drug ingredient, i.e., the same salt or ester of the same therapeutic moiety, or, in the case of modified-release dosage forms that require a reservoir or overage or such forms as prefilled syringes where residual volume may vary, that deliver identical amounts of the active drug ingredient over the identical dosing period;

    • do not necessarily contain the same inactive ingredients; and

    • meet the identical compendial or other applicable standard of identity, strength, quality, and purity, including potency and, where applicable, content uniformity, disintegration times, and/or dissolution rates.

    The requirements for bioequivalence, defined as:

    [T]he absence of a significant difference in the rate and extent to which the active ingredient or active moiety in pharmaceutical equivalents or pharmaceutical alternatives becomes available at the site of drug action when administered at the same molar dose under similar conditions in an appropriately designed study.

    As set forth in FDA Regulations at 21 C.F.R. § 314.94(a)(7) and 21 C.F.R. part 320, supplemented by further Guidances, the Guidance makes a distinction for drugs not intended to be absorbed into bloodstream, wherein bioequivalence is determined at the site of action.

    For the requirement of having the "same clinical effect and safety profile" the Guidance states that labeling is a critical criteria:  "pharmaceutically equivalent products with differences in labeling may not be considered therapeutically equivalent to one another."  This determination is (particularly) product-specific.

    Regarding coverage and applicability, the Guidance asserts that only certain drug products evaluated for TE.  FDA does not evaluate TE for NDA-approved drugs because they are not pharmaceutically equivalent (and thus not TE) to any other drug.  With regard to drugs filed under § 505(b)(1) and approved under 505(c), the FDA will not accept filing for a drug that is a duplicate of one eligible under § 505(j) (ANDA), wherein while duplicate is defined as a "drug product that has the same active ingredient(s), dosage form, strength, route of administration, and conditions of use as a listed drug," it doesn't mean "identical in all aspects."  TE for drugs approved under § 505(b)(2) can be obtained by Citizen's Petition.  Drugs approved under an ANDA (§ 505(j) approval pathway) satisfy the TE requirements "generally" so there's no need for an applicant to request a TE determination by the agency.  "Petitioned" ANDAs on the other hand differ from the reference product in some way ("dosage form, route of administration, strength, or active ingredient (in a product with more than one active ingredient)") and approval can be obtained on petition under § 505(j)(2)(C).

    The Orange Book reflects these TE determinations using a multi-letter coding system.  The Guidance sets forth the following specific code types:

    • first letter A codes, which indicate FDA considers the drug to be TE to "other pharmaceutically equivalent products";

    • first letter B codes, which indicate whether there were any bioequivalence problems upon filing and how they have been resolved.

    • three-letter codes for instances e.g. where there are "more than one RLD of the same strength has been designated under the same product heading (i.e., same active ingredient(s), dosage form, route(s) of administration, and strength)."

    These codes can be revised by the FDA as deemed warranted by evidence.

    The Guidance also contains a set of FAQs in the Guidance, including an assertion that so-called "skinny label" ANDAs can be eligible for TE determinations and that differences in inactive ingredients generally don't negatively affect TE determinations for ANDA products, among other questions.

    As with all draft Guidances, this one contains prominently set out in a black-lined box the qualification that that:

    This draft guidance, when finalized, will represent the current thinking of the Food and Drug Administration (FDA or Agency) on this topic.  It does not establish any rights for any person and is not binding on FDA or the public.  You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.  To discuss an alternative approach, contact the FDA staff responsible for this guidance as listed on the title page.

  • USPTO China IP Legislation and Case Law Update

    China_WebinarAs part of its series of quarterly updates on IP developments in China, the U.S. Patent and Trademark Office will offer a webinar entitled "China IP: Quarterly Legislation and Case Law Update" on July 28, 2022 from 1:00 pm to 2:00 pm (ET).  The webinar will feature presentations by senior U.S. Patent and Trademark Office IP attorneys with extensive China IP experience.

    Those interested in registering for the webinar can do so here. 

  • ClearOne, Inc. v. Shure Acquisition Holdings, Inc. (Fed. Cir. 2022)

    By Michael Borella —

    Federal Circuit SealSelf-similarity is a characteristic found in many physical, natural, and human-made systems.  In short, it describes a class of structures or behaviors that are at least partially-invariant to time or scale.  Thus, these structures or behaviors appear similar in various mathematical ways whether viewed in small or large samples.  A well-known class of self-similar objects are fractals, but self-similarity is a broader concept and can be found in clouds, waves, certain types of plants, snowflakes, coastlines, and Internet traffic and latency measurements, as well as numerous other areas.

    Shure's U.S. Patent No. 9,565,493 describes various types of "self-similar" microphone arrangements for drop ceilings.  The specification of the '493 patent states that such arrangements "include a plurality of microphone transducers selectively positioned in a self-similar or fractal-like configuration, or constellation" and that "this physical configuration can be achieved by arranging the microphones in concentric rings, which allows the array microphone to have equivalent beamwidth performance at any given look angle in a three-dimensional (e.g., X-Y-Z space)."

    ClearOne filed a petition for inter partes review (IPR) of the '493 patent.  It was instituted and during the proceeding Shure moved to amend one of the claims to recite:

    A microphone assembly comprising:
        an array microphone comprising a plurality of microphones arranged in a self-similar configuration . . .

    The Patent Trial and Appeal Board (PTAB) panel granted the motion and noted that "a skilled artisan would understand 'self-similar' to have had a well-known meaning and include the specification's disclosure of fractal-like configurations or constellations, which does not create an ambiguity."  The PTAB's decision was based on the specification, extrinsic dictionary definitions, and expert testimony.  ClearOne appealed, contending (among other issues) that the claim as amended was indefinite.

    On review, the Federal Circuit set forth the principles of definiteness as being that "claims, viewed in light of the specification and prosecution history, [must] inform those skilled in the art about the scope of the invention with reasonable certainty."  Further, "[e]xtrinsic evidence may help identify the scope of the claims."

    The Court rapidly agreed with the PTAB.  It observed that the specification "discloses an embodiment having a plurality of MEMS microphones . . . arranged in a self-similar or repeating configuration comprising concentric, nested rings of microphones . . . surrounding a central microphone."  The Court also looked to examples of such a configuration in the figures that show "repeating or fractal-like configurations, such as concentric rings, ovals, or other shapes."  Thus, the Court found that "the term self-similar informs skilled artisans, with reasonable certainty, about the scope of the invention."

    ClearOne argued that "the written description's disclosure of fractals, concentric circles, and repeating patterns confuses, rather than clarifies, what arrangements are self-similar because those examples must be understood as distinct from self-similar configurations."  The Court disagreed, finding that the terms "self-similar or fractal-like" and "self-similar or repeating" equate self-similar to fractal-like or repeating.

    The Court also looked to a dictionary definition of self-similar as "the quality or state of having an appearance that is invariant upon being scaled larger or smaller" as well as a similar definition provided by ClearOne's own expert.  ClearOne also attempted to convince the Court to focus separately on the terms "self" and "similar", as well as different possible interpretations of the term.  But the Court noted that "[j]ust because a term is susceptible to more than one meaning does not render it indefinite," because "[s]uch a test would render nearly every claim term indefinite so long as a party could manufacture a plausible construction."

    Accordingly, the Court affirmed the PTAB, and held that the amended claim was not indefinite.

    While on its face this case might seem properly decided, there are a few considerations worth noting.  The term "self-similar" is incredible broad.  Famously, Benoit Mandelbrot, one of the pioneers of self-similarity, once wrote that even a straight line is self-similar.  Further, the specification of the '493 patent never formally defines what it means by "self-similar", nor does it explain how the disclosed concentric geometric patterns of microphones exhibit the scale-invariance of the relied on dictionary definition and expert testimony.  The specification does not define the arrangements mathematically — or in any other particular fashion — except with a few examples in the figures.

    Ultimately, claims should provide a notice function and be able provide a reasonably certain answer to the question "Am I infringing or not?"  It is not clear that this question has a precise answer with respect to Shure's claim.

    This goes to show how high the bar can be to establish that even a broadly-defined claim term is indefinite.  Further, this apparent breadth and lack of specificity in the claim language certainly opens up the claim to being vulnerable to more prior art that meets the eye — notably, Mandelbrot's straight line.

    ClearOne, Inc. v. Shure Acquisition Holdings, Inc. (Fed. Cir. 2022)
    Panel: Chief Judge Moore and Circuit Judges Newman and Hughes
    Opinion by Chief Judge Moore

  • CareDx, Inc. v. Natera, Inc. (Fed. Cir. 2022)

    Plus ça change, plus c'est la même chose

    By Kevin E. Noonan —

    Federal Circuit SealJudge Moore, in Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC stated the obvious when she said in her dissent:

    My colleagues' refusal deflates the Amici's hopeful suggestion that our precedent leaves the eligibility of a diagnostic claim in front of the Federal Circuit "uncertain."  It is no longer uncertain.  Since Mayo, every diagnostic claim to come before this court has been held ineligible.  While we believe that such claims should be eligible for patent protection, the majority of this court has definitively concluded that the Supreme Court prevents us from so holding.  No need to waste resources with additional en banc requests.

    In the interim it has become clear that even asking the Court to provide any answer other than an affirmance of a district court decision below invalidating claims to diagnostic methods is too much to ask, a reality made evident once again by the Court's recent decision in CareDx, Inc. v. Natera, Inc.

    To recap proceedings below, the case arose over the claims in U.S. Patent Nos. 8,703,652, 9,845,497, and 10,329,607 directed to "methods to help predict the status or outcomes of transplant recipients through sequencing of cell-free nucleic acids ("cfDNA") found in the bodily fluids of a recipient."  The rationale behind the invention is rejection of a transplanted organ in a recipient is accompanied by cell death, which releases donor-specific DNA into the recipient's bodily fluids.  Claim 1 of the '652 patent, claim 1 of the '497 patent, and claim 1 of the '607 patent were illustrative:

    Claim 1 of the '652 patent recites:

    1.  A method for detecting transplant rejection, graft dysfunction, or organ failure, the method comprising:
        (a) providing a sample comprising cell-free nucleic acids from a subject who has received a transplant from a donor;
        (b) obtaining a genotype of donor-specific polymorphisms or a genotype of subject-specific polymorphisms, or obtaining both a genotype of donor-specific polymorphisms and subject-specific polymorphisms, to establish a polymorphism profile for detecting donor cell-free nucleic acids, wherein at least one single nucleotide polymorphism (SNP) is homozygous for the subject if the genotype comprises subject-specific polymorphisms comprising SNPs;
        (c) multiplex sequencing of the cell-free nucleic acids in the sample followed by analysis of the sequencing results using the polymorphism profile to detect donor cell-free nucleic acids and subject cell-free nucleic acids; and
        (d) diagnosing, predicting, or monitoring a transplant status or outcome of the subject who has received the transplant by determining a quantity of the donor cell-free nucleic acids based on the detection of the donor cell-free nucleic acids and subject cell-free nucleic acids by the multiplexed sequencing,
        wherein an increase in the quantity of the donor cell-free nucleic acids over time is indicative of transplant rejection, graft dysfunction or organ failure, and wherein sensitivity of the method is greater than 56% compared to sensitivity of current surveillance methods for cardiac allograft vasculopathy (CAV).

    Claim 1 of the '497 patent recites:

    1.  A method of detecting donor-specific circulating cell-free nucleic acids in a solid organ transplant recipient, the method comprising:
        (a) genotyping a solid organ transplant donor to obtain a single nucleotide polymorphism (SNP) profile of the solid organ transplant donor;
        (b) genotyping a solid organ transplant recipient to obtain a SNP profile of the solid organ transplant recipient, wherein the solid organ transplant recipient is selected from the group consisting of: a kidney transplant, a heart transplant, a liver transplant, a pancreas transplant, a lung transplant, a skin transplant, and any combination thereof;
        (c) obtaining a biological sample from the solid organ transplant recipient after the solid organ transplant recipient has received the solid organ transplant from the solid organ transplant donor, wherein the biological sample is selected from the group consisting of blood, serum and plasma, and wherein the biological sample comprises circulating cell-free nucleic acids from the solid organ transplant; and
        (d) determining an amount of donor-specific circulating cell-free nucleic acids from the solid organ transplant in the biological sample by detecting a homozygous or a heterozygous SNP within the donor-specific circulating cell-free nucleic acids from the solid organ transplant in at least one assay,
        wherein the at least one assay comprises high-throughput sequencing or digital polymerase chain reaction (dPCR), and
        wherein the at least one assay detects the donor-specific circulating cell-free nucleic acids from the solid organ transplant when the donor-specific circulating cell-free nucleic acids make up at least 0.03% of the total circulating cell-free nucleic acids in the biological sample.

    Claim 1 of the '607 patent recites:

    1.  A method of quantifying kidney transplant-derived circulating [cfDNA] in a human kidney transplant recipient, said method comprising:
        (a) providing a plasma sample from said human kidney transplant recipient, wherein said human kidney transplant recipient has received a kidney transplant from a kidney transplant donor, wherein said plasma sample from said human kidney transplant recipient comprises kidney transplant-derived circulating [cfDNA] and human kidney transplant recipient-derived circulating [cfDNA];
        (b) extracting circulating [cfDNA] from said plasma sample from said human kidney transplant recipient in order to obtain extracted circulating [cfDNA], wherein said extracted circulating [cfDNA] comprises said kidney transplant-derived circulating [cfDNA] and human kidney transplant recipient-derived circulating [cfDNA];
        (c) performing a selective amplification of target [DNA] sequences, wherein said selective amplification of said target [DNA] sequences is of said extracted circulating [cfDNA], wherein said selective amplification of said target [DNA] sequences amplifies a plurality of genomic regions comprising at least 1,000 single nucleotide polymorphisms, wherein said at least 1,000 single nucleotide polymorphisms comprise homozygous single nucleotide polymorphisms, heterozygous single nucleotide polymorphisms, or both homozygous single nucleotide polymorphisms and heterozygous single nucleotide polymorphisms, and wherein said selective amplification of said target deoxyribonucleic acid sequences is by polymerase chain reaction (PCR);
        (d) performing a high throughput sequencing reaction, wherein said high throughput sequencing reaction comprises performing a sequencing-by-synthesis reaction on said selectively-amplified target [DNA] sequences from said extracted circulating [cfDNA], wherein said sequencing-by-synthesis reaction has a sequencing error rate of less than 1.5%;
        (e) providing sequences from said high throughput sequencing reaction, wherein said provided sequences from said high throughput sequencing reaction comprise said at least 1,000 single nucleotide polymorphisms; and
        (f) quantifying an amount of said kidney transplant-derived circulating [cfDNA] in said plasma sample from said human kidney transplant recipient to obtain a quantified amount, wherein said quantifying said amount of said kidney transplant-derived circulating [cfDNA] in said plasma sample from said human kidney transplant recipient comprises using markers distinguishable between said human kidney transplant recipient and said kidney transplant donor, wherein said markers distinguishable between said human kidney transplant recipient and said kidney transplant donor comprises single nucleotide polymorphisms selected from said at least 1,000 single nucleotide polymorphisms identified in said provided sequences from said high throughput sequencing reaction, and wherein said quantified amount of said kidney transplant-derived circulating [cfDNA] in said plasma sample from said human kidney transplant recipient comprises at least 0.03% of the total circulating [cfDNA] from said plasma sample from said human kidney transplant recipient.

    The Magistrate Judge resolved the issue of whether these claims were ineligible for patenting under 35 U.S.C. § 101 under the first step of the Supreme Court's test enunciated in Mayo and Alice Corp. v. CLS Bank Int'l.  Defendants argued (as they must) that the claims in the patents-in-suit were directed to one of the judicial exceptions (a natural phenomenon, specifically "the correlation between transplant rejection and the presence of naturally occurring [cfDNA] in the bodily fluids of transplant recipients").  The Magistrate, relying on Federal Circuit precedent permitting a court to consider the patent specification in determining "what a patent claim is really directed to at step one [of the Mayo/Alice test]" (Enfish LLC v. Microsoft Corp.) found that:

    [T]he patents' [related] specification repeatedly and consistently states that this basic "correlation" between the presence of increased levels of donor-specific cfDNA and transplant rejection . . . — i.e., the thing that, according to Defendants, the asserted claims were purportedly "directed to" — had already been well-known in the art for quite a long time.

    The District Court, while granting parties the opportunity for discovery and expert testimony, ultimately granted Natera's motion for summary judgment that the claims were invalid under Section 101 for lack of subject matter eligibility, and this appeal followed.

    The Federal Circuit affirmed, in an opinion by Judge Lourie joined by Judges Bryson and Hughes.  The reasoning is depressingly predictable:  that the claims fail the first prong of the Alice eligibility test for being directed to a natural phenomenon and fail the second prong of the test by reciting only conventional, well-understood, and routine methods that did not rise to the ineluctable "something more" required for eligibility.  In this, patentees fell into the trap that was sprung on unwary applicants ever since Ariosa v Sequenom.  As in that case, the particular petard upon which patentees' eligibility hopes were hoisted was disclosure in the specification regarding this conventionality, the opinion setting out in a footnote in detail the extent of what the Court found was an admission:

    See, e.g., '652 patent at col. 9 ll. 8–14 (stating that "[d]etection, identification and/or quantitation of the donor-specific markers (e.g.[,] polymorphic markers such as SNPs) can be performed using real-time PCR, chips (e.g., SNP chips), high throughput shotgun sequencing of circulating nucleic acids (e.g.[,] [cfDNA]), as well as other methods known in the art"); id. at col. 10 ll. 11–12 (stating that, to obtain cfDNA samples, "any technique known in the art may be used, e.g. a syringe or other vacuum suction device"); id. at col. 13 ll. 51–53 (stating that step 2 of claimed methods can be performed "using existing genotyping platforms know[n] in the art"); id. at col. 15 ll. 6–8 (stating that techniques recited in step 2 of claimed methods "can be accomplished through classic Sanger sequencing methods which are well known in the art"); id. at col. 13 ll. 58–61 (stating that "[c]ompanies (such as Applied Biosystems, Inc.) currently offer both standard and custom designed TaqMan probe sets for SNP genotyping that can in principle target any desired SNP position for a PCR based assay"); id. at col. 20 ll. 31–34 (stating that genotyping recited in claimed methods "may be performed by any suitable method known in the art including those described herein such as sequencing, nucleic acid array or PCR"); id. at col. 15 ll. 22–65 (discussing commercial high throughput sequencing products); id. at col. 14 ll. 58–67 (citing articles from 2006 and 2007 as supporting the statement that "digital PCR is a much more accurate and reliable method to quantitate nucleic acid species"); id. at col. 18 l. 55–col. 19 l. 2 (stating that "[m]ethods for quantifying nucleic acids," including high throughput genotyping, "are known in the art"); id. at col. 21 ll. 5–9 (stating that "[t]he presence or absence of one or more nucleic acids from the transplant donor in the transplant recipient may be determined by any suitable method known in the art including those described herein such as sequencing, nucleic acid arrays or PCR").

    The opinion states summarily that "[t]he claimed methods are indistinguishable from other diagnostic method claims the Supreme Court found ineligible in Mayo and that we found ineligible on multiple occasions."  Natera recites and the panel agrees with the familiar litany of cases coming to the same conclusion, i.e., Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC, 915 F.3d 743 (Fed. Cir. 2019); Genetic Veterinary Scis., Inc. v. LABOKLIN GmbH & Co. KG, 933 F.3d 1302 (Fed. Cir. 2018); Roche Molecular Sys., Inc. v. Cepheid, 905 F.3d 1363 (Fed. Cir. 2018); Cleveland Clinic Found. v. True Health Diagnostics LLC, 859 F.3d 1352 (Fed. Cir. 2017); Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015).  The similarity to the Ariosa decision (which in some ways propelled the Court down this path of per se ineligibility) is express:

    Here, as in Ariosa, the claims boil down to collecting a bodily sample, analyzing the cfDNA using conventional techniques, including PCR, identifying naturally occurring DNA from the donor organ, and then using the natural correlation between heightened cfDNA levels and transplant health to identify a potential rejection, none of which was inventive.  The claims here are equally as ineligible as those in Ariosa.

    To the extent there is anything remotely new in this opinion it is the acknowledgement that conventionality is an element of step one of the Alice eligibility test, citing Athena and Cleveland Clinic decisions for the principle.

    With regard to that conventionality, the opinion illuminates the logical error of its treatment of this part of the equation.  The opinion asserts that the methods are conventional because "CareDx does not actually claim any improvements in laboratory techniques—rather, as previously discussed, the actual claims of the patent merely recite the conventional use of existing techniques to detect naturally occurring cfDNA.  Furthermore, the specification admits that the laboratory techniques disclosed in the claims require only conventional techniques and off-the-shelf technology" and "the asserted claims add nothing inventive because they merely recite standard, well-known techniques in a logical combination to detect natural phenomena."  The case also contains a convenient mantra for this rationale:  "We have repeatedly held that applying standard techniques in a standard way to observe natural phenomena does not provide an inventive concept," citing Ariosa, Athena, and Roche.  According to the Court, a conclusion of ineligibility is justified because the claimed combination of steps adds nothing inventive, analogous to the factual circumstances in Mayo v. Prometheus.

    But what the Court has consistently ignored is the difference between the claims in Mayo and the ones in Ariosa and the Court's other diagnostic method cases.  And that difference is that the detection methods reciting in the Prometheus claims were conventional because they were actually being performed in the art on the subject matter and for the purpose (assessing the amount of drug in a patient's blood after administration) recited in the claims.  The only distinction from these conventional methods in those claims was the recognition that there were boundary levels of detected drug concentrations that indicated whether the dosage should be increased or decreased.  In contrast, in all the diagnostic method cases that have fallen under the Court's ineligibility ax since Mayo there had not been any recognition, much less practice, in the prior art of these methods on this subject matter to detect the natural phenomenon that has been used to satisfy step one of the Alice test.  The inventiveness resides there, and refusal to recognize that distinction is the principal reason for the Court's continuing invalidity jurisprudence.

    In her dissent in Athena, Judge O'Malley noted that:

    Since Mayo, every diagnostic claim to come before this court has been held ineligible.  While we believe that such claims should be eligible for patent protection, the majority of this court has definitively concluded that the Supreme Court prevents us from so holding.  No need to waste resources with additional en banc requests.  Your only hope lies with the Supreme Court or Congress.  I hope that they recognize the importance of these technologies, the benefits to society, and the market incentives for American business.  And, oh yes, that the statute clearly permits the eligibility of such inventions and that no judicially-created exception should have such a vast embrace.  It is neither a good idea, nor warranted by the statute.

    In view of the Supreme Court's denial of certiorari in American Axle v. Neapco it appears Congress (other than reliance on trade secret protection) remains the only source of any respite from the scourge of ineligibility for diagnostic methods claims.

    CareDx, Inc. v. Natera, Inc. (Fed. Cir. 2022)
    Panel: Circuit Judges Lourie, Bryson, and Hughes
    Opinion by Circuit Judge Lourie

  • LG Electronics v. Immervision, Inc. (Fed. Cir. 2022)

    By Michael Borella —

    Federal Circuit SealCan a prior art reference with an error be considered to be a disclosure of the erroneous teaching?  A Federal Circuit panel split over this issue, with their disagreement largely based on how apparent the error would be to one skilled in the art.

    LG filed two Inter Partes Reviews (IPRs) against U.S. Patent No. 6,844,990, challenging claims 5 and 21, respectively.  Both Patent Trial and Appeal Board (PTAB) panels sided with Immervision, finding that a critical section of the prior art used in LG's obviousness contentions contained an error that "would have been disregarded or corrected by a person of ordinary skill in the art."

    The invention is described by the Court as follows:

    The '990 patent relates to capturing and displaying digital panoramic images.  Panoramic (e.g., super-wide angle) objective lenses typically have linear image point distribution functions.  This means there is a linear relationship between the distance of an image point from the image's center and the corresponding relative angle of the object point to the image's center.  While this linearity allows digital panoramic images to be easily rotated, shifted, and enlarged or shrunk, it also limits image quality to the resolution of the image sensor used when taking the initial image.

    * * *

    The '990 patent purports to improve the resolution of particular sectors of a digital panoramic image [by] capturing an initial digital panoramic image using an objective lens having a non-linear image point distribution function that expands certain zones of the image and compresses other zones of the image.

    Along these lines, representative claim 5 recites:

    5.  The method according to claim 1, wherein the objective lens compresses the center of the image and the edges of the image and expands an intermediate zone of the image located between the center and the edges of the image.

    LG's arguments that claims 5 and 21 are obvious relied on disclosure from U.S. Patent No. 5,861,999 ("Tada"), which described four embodiments "relating to the aspheric characteristics of various lens elements."  Embodiment 3 of Tada described a set of optical parameters in Table 5.

    LG contended that Embodiment 3 disclosed the features of claim 5.  As noted by the Court, "Tada, however, does not explicitly discuss the image point distribution functions of its lenses" and "[i]nstead LG relied on its expert Dr. Russell Chipman's declaration for the proposition that Tada's third embodiment has a distribution function" as claimed.  Indeed, Dr. Chipman used Table 5 of Tada to model the lens of Embodiment 3 and calculated that this embodiment produces the compression and expansion of claim 5.  On this basis, the PTAB instituted both IPRs.

    Immervision hired its own expert, Mr. David Aikens, who independently modeled the lens of Embodiment 3 using the parameters from Table 5.  Mr. Aikens, however, found that the lens did not match the corresponding example in one of Tada's figures.  After some investigation, Mr. Aikens concluded that the lens would provide an image that was "distorted with precisely the kind of uncorrected field curvature that Tada was explicitly trying to prevent."  Thus, Mr. Aiken's wrote that "a person of ordinary skill in the art would be convinced that there was an error in the model and that the error was significant."

    Looking into the matter further, Mr. Aikens found that "the aspheric coefficients from Table 3, which corresponds to Tada's Embodiment 2, were exactly the same as in Table 5, which corresponds to Embodiment 3.  Further, Tada claimed priority to a Japanese patent application.  Mr. Aikens also reviewed this application and found that the parameters in its version of Table 5 were different from those of the '999 patent.  Using the different parameters from the Japanese application, Mr. Aikens confirmed that they produced a lens surface that perfectly matched the other disclosure in Tada.  In other words, Table 5 of Tada, which was relied on by LG, was the product of a copy and paste error and thus contained incorrect values.

    In both IPRs, the PTAB concluded that the "disclosure of aspheric coefficients in Table 5 of Tada is an obvious error that a person of ordinary skill in the art would have recognized and corrected."  Thus, the PTAB ruled that LG had failed to prove claims 5 and 21 obvious.  LG appealed.

    Judge Stoll, writing in majority for herself and Judge Cunningham, rapidly determined that "[i]t is undisputed that the aspheric coefficients in Tada's Table 5 were erroneous" and that "there is no dispute that if a lens were constructed using the (correct) aspherical data from Tada's Japanese priority application, the lens would not satisfy the compression and expansion zone limitation of claims 5 and 21."  The question to the Court, then, was "whether substantial evidence supports the Board's fact finding that the error would have been apparent to a person of ordinary skill in the art such that the person would have disregarded the disclosure or corrected the error."

    In making this determination, the majority relied on In re Yale, a Court of Customs and Patent Appeals case from 1970.  Therein, a similar fact pattern was present — a claim was rejected over a reference that erroneously disclosed a chemical compound that was not discovered until several years after the reference was published.  Notably, the reference's description of this compound was inconsistent, and later an author of the reference admitted that disclosure of the compound was erroneous.

    The holding from Yale, and described by the majority, was:

    [W]here a prior art reference includes an obvious error of a typographical or similar nature that would be apparent to one of ordinary skill in the art who would mentally disregard the errant information as a misprint or mentally substitute it for the correct information, the errant information cannot be said to disclose subject matter.  The remainder of the reference would remain pertinent prior art disclosure.  This standard for reviewing errors in disclosures has been undisturbed for half a century and we are bound to apply it.

    Applying this law to the facts of this case, the majority found that "[t]he Board correctly identified several aspects of the disclosure in Table 5 that would alert the ordinarily skilled artisan that the disclosure was an obvious error of a typographical or similar nature."  The first of these aspects was that Table 5 in the Japanese priority application had different parameters than the equivalent Table 5 in Tada.  Second, Tada's Table 5 was inconsistent with other disclosure in Tada.  Third, the fact that the parameters from Tables 3 and 5 were identical "is incongruous with the differences in the values of other data for the lens systems."

    LG made two arguments against the PTAB's conclusion.  The first was that "Mr. Aikens' convoluted process that took ten to twelve hours to complete clearly weighed against the obviousness of the error."  The majority disagreed, noting that Yale does not impose a temporal requirement regarding how long it would take one to determine that a reference contains an error.  The second was that Yale should be limited to just typographical errors.  Again, the majority disagreed, finding that the distinction between the typographical error of Yale and the copy-and-paste error of Tada was not significant enough to overrule the PTAB.

    Thus, the majority affirmed the PTAB's final written decisions that LG had not established the obviousness of claims 5 and 21.

    Judge Newman wrote in dissent.  The crux of her disagreement with the majority was that the error in Tada was not found "until an expert witness conducted a dozen hours of experimentation and calculation."  Thus, she did not believe that the error to be merely typographical.

    Judge Newman observed that the error in Table 5 was not noticed by prosecuting patent attorneys, the patent examiner, or in a certificate of correction that was obtained to address other errors in Tada.  The error was also not noticed by two PTAB panels that instituted the IPRs.[1]  Judge Newman also noted that Mr. Aikens only noticed the error after creating a model for the lens and hours of subsequent investigation.  In Judge Newman's view, this distinguished the situation surrounding Tada from that of Yale, mainly because "Yale did not require calculations or experimentation" and "the correct information is not readily evident."[2]

    Thus, Judge Newman would reduce the scope of Yale to typographical errors that are readily recognized as such by a quick review of the prior art reference.

    [1] In modest disagreement with Judge Newman, once an error like this is in a patent application, it would be unlikely to be noticed during prosecution and subsequent proceedings that are largely focused on the language of the claims.  In contrast, the hypothetical person of ordinary skill in the art is presumed to review the patent in its totality.

    [2] Judge Newman admitted that by looking to the Japanese priority application, one could readily identify the error.  She wrote that "[i]t should not be necessary to search for a foreign document in a foreign language to determine whether there is an inconsistency in a United States patent."  But such an activity is certainly within the ambit of one of ordinary skill in the art, especially as this individual is presumed to be aware of all relevant prior art.

    LG Electronics v. Immervision, Inc. (Fed. Cir. 2022)
    Panel: Circuit Judges Newman, Stoll, and Cunningham
    Opinion by Circuit Judge Stoll; opinion dissenting in part by Circuit Judge Newman

  • Conference & CLE Calendar

    CalendarJuly 18, 2022 – Southeast Asia intellectual property roadshow (U.S. Patent and Trademark Office, U.S.-ASEAN Business Council, the U.S. Department of Commerce's International Trade Administration, and the U.S. Commercial Service) – 7:00 pm to 9:00 pm (ET)

    July 21 2022 – "AI Is Coming to an Invention Near You" (Fitch Even) – 12:00 pm (ET)

    July 21, 2022 – "Boosting the Bottom Line Strategies for Managing Patents During a Recession" (IPWatchdog and UnitedLex) – 12:00 pm (ET)