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  • Professor Sarnoff Provides His Perspective on Tillis Bill

    Patent Docs has always ascribed to the notion that respectful debate is good for most issues, and with the adage that if you are dumb, it's best to surround yourself with smart people and if you are smart surround yourself with smart people who disagree with you.  In that spirit we give our readers the thoughts of Professor Joshua Sarnoff on our recent post discussing Senator Thom Tillis' bill for reforming 35 U.S.C. § 101 (see "Senator Tillis' Patent Eligibility Reform Proposal: A Biopharma Perspective").

    A brief response to Kevin Noonan's "Senator Tillis' Patent Eligibility Reform Proposal: A Biopharma Perspective"

    By Joshua Sarnoff —
    DePaul University

    image from law.depaul.eduProfessor Sarnoff:  Kevin and I disagree with two assertions he makes his blog post, and in the underlying premise of his argument I believe the evidence argues against a fundamental assumption.

    The first of these is that Myriad decision was limited to claims to products as they occur in nature.  Kevin states that:  "There are several subsections in proposed revised Section 101 that specifically and frankly address not only the concerns of the biopharma patent community but also its critics and discontents.  The frankest example is Subsection (b)(1)(C), which codifies the Court's decision in Myriad that human genes in nature are not patent eligible per se.  Subsection (b)(1)(D) further codifies the extension of this principle that has arisen in practice, that any naturally occurring product is ineligible as it occurs in nature.  The genesis of this distinction, and one that the proposal attempts to constrain, is that 'mere' isolation of a natural product may not be (although in practice often has been found not to be) patent eligible."

    I agree with the last emphasized sentence but disagree with the preceding emphasized sentence.  In my view, Myriad held that isolated genetic sequences (without some further, and insufficiently specified requisite changes) are not eligible, despite the fact that isolated genetic sequences do not occur in nature.  Justice Thomas stated that "In this case, by contrast, Myriad did not create anything.  To be sure, it found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention . . . .  Nor are Myriad's claims saved by the fact that isolating DNA from the human genome severs chemical bonds and thereby creates a non-naturally occurring molecule."  Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 591, 593 (2013).

    In my view there is a question of whether the Myriad precedent is limited to human genes, and until SCOTUS takes a case on claims to things derived from natural products again we won't know.  But Myriad was clear that for human genes "mere" isolation from natural conditions, even with chemical changes resulting therefrom, is not enough for eligibility.  Proposed Tillis Bill subsections 101(b)(1)(C) & (D) would exclude from eligibility only "[a]n unmodified human gene, as that gene exists in the body" and "[a]n unmodified natural material, as that material exists in nature."  Proposed subsection 101(b)(2)(B) makes ever clearer that mere isolation now would provide eligibility (if not necessarily patentability):  ''(B) HUMAN GENES AND NATURAL MATERIALS.—For the purposes of subparagraphs (C) and (D) of paragraph (1), a human gene or natural material that is isolated, purified, enriched, or otherwise altered by human activity, or that is otherwise employed in a useful invention or discovery, shall not be considered to be unmodified."

    Hence, the Myriad precedent goes well beyond what Kevin suggests (as least as to genes), and it is precisely that precedent that the Tillis Bill would overturn.  And it is precisely why "the American Civil Liberties Union . . . a vocal critic of Senator Tillis' attempts to remedy patent eligibility issues . . . [has argued that] 'mere' isolation is not enough to confer patent eligibility."

    Kevin Noonan's response:  My understanding of the Myriad precedent differs somewhat from Professor Sarnoff's.  Justice Thomas was clear that the decision was based on the fact that mere isolation was not enough, because doing so changed the gene in no patent-relevant way.  Complementary DNA (cDNA) was different, and the Court was careful not to address instances where genes were altered (changed nucleotides, etc.).  Professor Sarnoff reads the bill differently than I do, to the extent that taken together the provisions indicate to me that on the one hand genes are sui generis in this regard, and on the other any natural product existing as it does in nature is not patent eligible.  Section (b)(2)(B) as I read it requires something more than what was proscribed by the Myriad decision and makes explicit what should be the case presently.  For example, should an inventor isolate a genomic DNA sequence and insert it into a recombinant expression construct and thereby permit production of the encoded protein, the basis for Justice Thomas' distinction — that "mere" isolation is not enough — no longer holds, because such a construct does not occur in nature and evokes a change consistent with the rationale in Diamond v Chakrabarty (which the Court did not overturn in its Myriad decision):

    Judged in this light, respondent's micro-organism plainly qualifies as patentable subject matter.  His claim is not to a hitherto unknown natural phenomenon, but to a nonnaturally occurring manufacture or composition of matter — a product of human ingenuity "having a distinctive name, character [and] use."  Hartranft v. Wiegmann, 121 U. S. 609, 121 U. S. 615 (1887).  The point is underscored dramatically by comparison of the invention here with that in Funk.  There, the patentee had discovered that there existed in nature certain species of root nodule bacteria which did not exert a mutually inhibitive effect on each other.  He used that discovery to produce a mixed culture capable of inoculating the seeds of leguminous plants.  . . .  Here, by contrast, the patentee has produced a new bacterium with markedly different characteristics from any found in nature, and one having the potential for significant utility. His discovery is not nature's handiwork, but his own; accordingly it is patentable subject matter under § 101.

    I will concede that the language could be interpreted as Professor Sarnoff does, but that would (in my view) require ignoring the context.

    Professor Sarnoff's reply:  I agree with Kevin that the Myriad decision treated cDNA differently, by adopting a simple "novelty" standard rather than the "markedly different" standard it applied to isolated DNA.

    Professor Sarnoff:  Second, in my view nothing in these subsections actually "address[es] . . . the . . . concerns of the . . . critics" of the biopharma patent community, although it would codify a much more restrictive concept of the limits of patent eligibility.  In fact, those "critics" have been directly opposed to overturning both the Myriad and Mayo decisions.  And for good reason (as discussed next).  So in my opinion the Tillis Bill does not "giv[e] something to everyone."  I don't consider this to be a "compromise," but only something less than a total repudiation of any and all eligibility limits while still eliminating any meaningful limits.  No doubt, Kevin and many in the "biopharma patent community" think that is a good idea.  But as I see it many in the "biopharma community," including "critics" of the subset of that community that are the "biopharma patent community," think that expanding eligibility in this was and is a very bad idea.

    Kevin Noonan's response:  The reason I used the taxol example is that it strikes at the heart of why eligibility law needs clarification.  DNA is, to be frank, a very 20th Century concern, particularly human genes.  But there are countless numbers of natural products that can be made into drugs and other important compounds as a consequence of their being "mere" isolated.  In my view, the rather loose language in Myriad has led to the concept that anything that can be "merely" isolated should be ineligible.  The proposed statute addresses this problem without rendering human genes patent eligible as I understand the language taken as a whole to mean.

    Professor Sarnoff's reply:  Again, I agree that this is the intent of the bill (except that the language would also render eligible merely isolated human genes, and I believe that was also the intent).  As to whether that is a good idea, we will just have to beg to differ.

    Professor Sarnoff:  As Kevin notes, "[w]ith regard to diagnostic method claims reconsideration under proposed Section 101 is less directly addressed; indeed, changes in the definition of 'process' carries much of the water supporting such claims.  But the provisions of Subsection (c)(1)(A) and (B)(ii) are important because they would proscribe the habit, used by district courts and affirmed by the Federal Circuit . . . of parsing claims into their component parts and then cherrypicking claim elements to arrive at a Mayo/Alice-sanctioned ineligibility conclusion . . . .

    But as with semiconductors and artificial intelligence, there may be a window for convincing other Members that the current eligibility regime is inimical to innovation in the biopharmaceutical arts and that foreign competitors will be all too willing to step into the breach to charge American consumers whatever the traffic will bear for diagnostic methods and therapeutic drugs produced abroad."

    Thus, Kevin posits that Mayo (and implicitly Myriad) have adversely affected innovation in diagnostic methods.  Perhaps Kevin is right in regard to venture and other capital investments in developing such methods (but see the evidence below that such investment has not been diminished in regard to diagnostics).  But my understanding of the data is inconsistent with Kevin's position that restrictions on eligibility have been bad for innovation, at least in the diagnostics space.  To make the point, I quote from the submission of the Association for Molecular Pathology (a trade association for diagnostics developers, which is also part of the "biopharma . . . community") on the 2021 PTO Jurisprudence Study request for comments, see https://www.regulations.gov/comment/PTO-P-2021-0032-0066, explaining why innovation and access have expanded, not contracted, for diagnostic tests post-Myriad and Mayo.  (Additional analysis of the innovation effects can be found in the testimony of molecular geneticist Dr. Sean George of Invitae Corporation on the prior draft legislation from Senator Tillis, see https://www.judiciary.senate.gov/download/george-testimony.)  This is the only significant natural experiment that has been conducted in recent memory on U.S. eligibility, so simply stating that investment has declined is not a meaningful response to the argument that innovation has nevertheless increased.  Hopefully, Kevin can respond with actual data to show that the AMP is wrong; if not, hopefully he will revise his views and accept that Myriad and Mayo should be preserved (at least for diagnostics).

    Kevin Noonan's response:  To be fair this section of Professor Sarnoff's submission is too detailed and too important for a quick response in this post.  AMP's contentions can be found on the record linked above.  It does not surprise me that AMP would think diagnostics innovation has improved but there would appear to be two costs.  The first is access:  while I am sure that in the rarefied precincts in Boston, New York, Chicago, etc., the existence of teaching hospitals has had the effect AMP asserts.  But I'm not so sure the same is true in Appalachia, the Four Corners area of the Southwest, or other, particularly rural parts of the country.  Second, as noted in my post "The ACLU, Working for the Man," the prime beneficiaries of the Mayo/Myriad decision has been the big diagnostics companies, who can take advantage of academic research for free.  This was the situation forty-plus years ago that was the impetus for the Bayh-Dole Act, which has provided a return on investment (of time, effort, and intellect) expended by university researchers.

    Professor Sarnoff's reply:  Here we are getting to truly meaningful discussions, with evidence.  I'll look forward to Kevin's analysis of the AMP's (and possibly to Dr. George's) conclusions, and to any other data that he can supply (particularly if it is industry-wide) on innovation effects of Myriad and Mayo.  Thanks as always for engaging, Kevin.  It is truly my pleasure to do so.

    Patent Docs thanks Professor Sarnoff for his thoughts and comments on Senator Tillis' bill.  The AMP's position, and comments regarding it, will be the subject of a later post.

  • California Lawyers Association Present Virtual Conference Celebrating California Regional Office

    The IP Law Section of the California Lawyers Association will be presenting a virtual conference on Tuesday August 30th entitled "The Patent Office Comes to California."  The program will run from 8:15 am until 5:15 pm PDT.  Sessions will include:

    • The Interplay Between EPO Proceedings, The Unitary Patent, and the Unified Patent Court
    • Tips and Tricks For Successfully Prosecuting Before the EPO — An Inside Perspective
    • Hot Button Issues in the BioPharma Industry
    • Tips and Strategies for Winning at the PTAB
    • Patent Eligible Subject Matter — Where Have We Been, Where Are We Going?
    • Artificial Intelligence in Life Sciences Patent Applications — Perspectives on the JPO's Approach

    There will also be a keynote address from Steven Koziol, Acting Director of the Silicon Valley Regional Office.

    The cost of the conference is $175 for IP Section members, $275 for non-members, and $175 for members of the judiciary Academia, NLS members, and law students. Registration information can be obtained by e-mail to ProgramRegistrations@calawyers.org and parties can register here.

  • Oral Arguments Scheduled in CRISPR Interferences

    By Kevin E. Noonan —

    USPTO SealOn July 18th, the Patent Trial and Appeal Board scheduled back-to-back oral hearings interferences between ToolGen Inc. (Senior Party) and Junior Party The Broad Institute, Massachusetts Institute of Technology, and The President and Fellows of Harvard College (collectively, "Broad," Interference No. 106,126) and Junior Party The Regents of the University of California, University of Vienna, and Emmanuelle Charpentier (collectively, "CVC," Interference No. 106,127).  In the '126 Interference, the hearing will commence at 1:00 pm EDT on August 18th, and for the '127 interference, the hearing will start at 3:00 pm EDT that day.  The hearings will be conducted by telephone.

    Interested members of the public may be granted access by request sent to PTABHearings@uspto.gov at least five business days prior to the hearing date.

    The issues to be discussed can be found on the PTAB website and in several prior Patent Docs posts.

  • Senator Tillis’ Patent Eligibility Reform Proposal: A Biopharma Perspective

    By Kevin E. Noonan —

    Senate FloorSenator Thom Tillis (R-NC) introduced S. 4734, entitled "A Bill to amend Title 35, U.S. Code, to address matters relating to patent subject matter eligibility, and for other purposes" last night, as was discussed in an earlier Patent Docs post (see "Senator Tillis Proposes Patent Eligibility Reform (Again)").  Even a cursory read of the bill reveals that portions of it have been specifically crafted to address issues that have arisen in the inferior courts' applications of the Supreme Court's recent subject matter eligibility jurisprudence (particularly, and chronologically, Mayo Collaborative Services v. Prometheus Laboratories, Inc., Association for Molecular Pathology v. Myriad Genetics, Inc., and Alice Corp. v. CLS Bank Int'l), that have made patenting diagnostic methods and natural products difficult or impossible (see, e.g., "Athena Diagnostics v. Mayo Collaborative Services — The Dissents").  This post addresses the Senator's attempt to remedy the current situation by legislation.

    The Bill contains the following provisions, amending and adding certain definitions to Section 100 and entirely revamping Section 101:

    § 100. Definitions

                                                                *  *  *              

    (b) The term "process" means process, art or method, and includes a new use of a known process, includes a use, application, or method of manufacture of a known or naturally-occurring process, machine, manufacture, composition of matter, or material.

                                                                *  *  *

    (k) The term 'useful' means, with respect to an invention or discovery, that the invention or discovery has a specific and practical utility from the perspective of a person of ordinary skill in the art to which the invention or discovery pertains.

    § 101. Patent eligibility

    (a) IN GENERAL.—Whoever invents or discovers any useful process, machine, manufacture, or composition of matter, or any useful improvement thereof, may obtain a patent therefor, subject only to the exclusions in section (b) and to the further conditions and requirements of this title.

    (b) ELIGIBILITY EXCLUSIONS.—

    (1) IN GENERAL.—Subject to paragraph (2), a person may not obtain a patent for any of the following, if claimed as such:

    (A) A mathematical formula, apart from a useful invention or discovery.

    (B) A process that—

    (i) is a non-technological economic, financial, business, social, cultural, or artistic process;

    (ii) is a mental process performed solely in the human mind; or

    (iii) occurs in nature wholly independent of, and prior to, any human activity.

    (C) An unmodified human gene, as that gene exists in the human body.

    (D) An unmodified natural material, as that material exists in nature.

    (2) CONDITIONS.—

    (A) CERTAIN PROCESSES.—Notwithstanding paragraph (1)(B)(i), a person may obtain a patent for a claimed invention that is a process described in such provision if that process is embodied in a machine or manufacture, unless that machine or manufacture is recited in a patent claim without integrating, beyond merely storing and executing, the steps of the process that the machine or manufacture perform.

    (B) HUMAN GENES AND NATURAL MATERIALS.—For the purposes of subparagraphs (C) and (D) of paragraph (1), a human gene or natural material that is isolated, purified, enriched, or otherwise altered by human activity, or that is otherwise employed in a useful invention or discovery, shall not be considered to be unmodified.

    (c) ELIGIBILITY.—

    (1) IN GENERAL.—In determining whether, under this section, a claimed invention is eligible for a patent, eligibility shall be determined—

    (A) by considering the claimed invention as a whole and without discounting or disregarding any claim element; and

    (B) without regard to—

    (i) the manner in which the claimed invention was made;

    (ii) whether a claim element is known, conventional, routine, or naturally occurring;

    (iii) the state of the applicable art, as of the date on which the claimed invention is invented; or

    (iv) any other consideration in section 102, 103, or 112.

    (2) INFRINGEMENT ACTION.—

    (A) IN GENERAL.—In an action brought for infringement under this title, the court, at any time, may determine whether an invention or discovery that is a subject of the action is eligible for a patent under this section, including on motion of a party when there are no genuine issues of material fact.

    (B) LIMITED DISCOVERY.—With respect to a determination described in subparagraph (A), the court may consider limited discovery relevant only to the eligibility described in that subparagraph before ruling on a motion described in that subparagraph.

    (where the italicized language in the bill is directed to concerns raised by the biopharma patenting community).

    The effect of the amendments to Section 100 would be to expressly include use of a naturally occurring process (for example, a biological process of cause and effect) within the definition of a "process" that can be patent eligible, wherein the mere fact that the process is naturally occurring would not by itself make the process per se ineligible.  New subsection (k) defines "usefulness" by cabining it to utilities that are "specific" and "practical" as understood by the person of ordinary skill in the art.  The advantage of these definitions is akin to restricting obviousness in Section 103 to what was known in the prior art by the ordinarily skilled artisan, and in so doing remove the subjectiveness that can (and has) crept into such determinations when made by judges rather those in the art that understand the technology at issue.

    There are several subsections in proposed revised Section 101 that specifically and frankly address not only the concerns of the biopharma patent community but also its critics and discontents.  The frankest example is Subsection (b)(1)(C), which codifies the Court's decision in Myriad that human genes in nature are not patent eligible per se.  Subsection (b)(1)(D) further codifies the extension of this principle that has arisen in practice, that any naturally occurring product is ineligible as it occurs in nature.  The genesis of this distinction, and one that the proposal attempts to constrain, is that "mere" isolation of a natural product may not be (although in practice often has been found not to be) patent eligible.  These concessions are realistic, insofar as the American Civil Liberties Union was a vocal critic of Senator Tillis' attempts to remedy patent eligibility issues in 2019 (the ACLU appears to be gearing up its opposition again; see "ACLU Opposes Legislation to Enable Patents on Human Genes," which is equally frank (and wrong) in its position that "mere" isolation is not enough to confer patent eligibility).

    But the Bill also contains several provisions that are directly aimed at limiting the harm that the current eligibility regime has effected on the biopharma industry.  Regarding natural products, Subsection (b)(2)(B) limits the scope of Subsections (b)(1)(C) and (D) by defining as patent eligible human genes or natural material "that is isolated, purified, enriched, or otherwise altered by human activity."  This language is consistent with the provisions of the Supreme Court's Myriad decision that rendered cDNA patent eligible because it did not occur in nature and was the product of "the hand of man," distinctions also consistent with Diamond v. Chakrabarty, a decision the Court expressly did not overturn in Myriad.  The bill expands this distinction in favor of patent eligibility to include all natural products, not just cDNA, and in addition to being consistent with Myriad is consistent with traditional patent eligibility standards that have had changes effected in kind by isolation (e.g., wherein active compounds present in small amounts naturally have been changed to be effective drugs, additives, sweeteners, etc. by the process of their isolation).  Under the current eligibility regime, excluding isolated compositions of such compounds based solely on their isolation negates the inventive contribution that produced them.  For example, while it may be true that taxol, a product of the yew tree, inherently has anticancer activity against inter alia breast cancer, deciding that therapeutically effective amounts of isolated taxol are not patent eligible on that basis requires that the fact that trees don't get cancer be disregarded (and the human inventive activity identifying this anticancer activity also be disregarded).  Under Senator Tillis' proposed legislation there is ample opportunity in the other sections of the Patent Act (Section 102, 103, and 112) to preclude patentability outside the black-and-white strictures of patent eligibility under Section 101 as it now exists.

    With regard to diagnostic method claims reconsideration under proposed Section 101 is less directly addressed; indeed, changes in the definition of "process" carries much of the water supporting such claims.  But the provisions of Subsection (c)(1)(A) and (B)(ii) are important because they would proscribe the habit, used by district courts and affirmed by the Federal Circuit (see, e.g., "Ariosa Diagnostics, Inc. v. Sequenom, Inc. (Fed. Cir. 2015)"; "Is It Time for Federal Circuit to Rethink Its Subject Matter Eligibility Jurisprudence?") of parsing claims into their component parts and then cherry-picking claim elements to arrive at a Mayo/Alice-sanctioned ineligibility conclusion.  Subsection (c)(1)(A) requires that the claims be considered "as a whole," consistent with Diamond v. Diehr (1981) (another Supreme Court decision not overturned, here in Mayo) and Subsection (c)(1)(B)(ii) which disengages from the eligibility calculus the "known, conventional, [and] routine" and adds "or naturally occurring" considerations that have been used to find claims ineligible without considering the claims as a whole.  This is particularly important in cases where courts have looked at the existence inter alia of a detection method in the prior art without assessing whether it was "known, conventional, [and] routine" to apply that method to detect the biomarker or other biological product (such as cell free DNA in Ariosa v Sequenom) recited in the claim (it was not, because the marker or correlation with specific disease was not appreciated in the prior art).  Statutory prohibitions against such analytical sloth are necessary to prevent subject matter eligibility to swallow all of patent law, which the Supreme Court has itself counseled against.

    Prospects for passage of Senator Tillis' bill are uncertain; it will be noted that, not surprisingly, Senator Leahy is not a co-sponsor, while he was a co-sponsor of another bill proposed by Senator Tillis (S. 4704, A bill to require the Comptroller General of the United States to submit a report regarding ways to improve the patent examination process at the United States Patent and Trademark Office, and for other purposes).  This is not unexpected, in view of Senator Leahy's predilection to align himself with those who espouse the rhetorical idea that "bad patents" are exacting a rent or drain on American innovation (without any actual evidence for the proposition; see, Mossoff, "Unreliable Data Have Infected the Policy debates over Drug Patents," Policy Memo, Hudson Institute, January 2022).  Politics is the art of the possible, and the political headwinds are certainly blowing against any legislation that would bolster patent protection for pharmaceuticals.  But as with semiconductors and artificial intelligence, there may be a window for convincing other Members that the current eligibility regime is inimical to innovation in the biopharmaceutical arts and that foreign competitors will be all too willing to step into the breach to charge American consumers whatever the traffic will bear for diagnostic methods and therapeutic drugs produced abroad.  Whether that is enough remains to be seen, but Senator Tillis has provided a beachhead for attempting to stem the tide against patent protection for these important technologies.

  • Senator Tillis Proposes Patent Eligibility Reform (Again)

    By Michael Borella —

    Tillis ThomRepublican Senator Thom Tillis of North Carolina has released a new proposal to reform the text of 35 U.S.C. § 101.  The Senator's last effort in doing so died on the vine in 2019, purportedly due to stakeholders being too far apart in their visions of what patent eligibility should be all about.

    But with growing concern regarding China possibly eclipsing the U.S. in R&D of emerging technologies, there is a renewed impetus to fix at least some of the ambiguities introduced by the Supreme Court in Alice Corp. v. CLS Bank Int'l and Mayo Collaborative Services v. Prometheus Laboratories, Inc.  Those decisions, which came down in 2014 and 2012, respectively, led to the current state of affairs in which diagnostic methods are effectively unpatentable and software patents can be invalidated based on fuzzy, conclusory reasoning.

    The Proposal

    § 101. Patent eligibility

    (a) IN GENERAL.—Whoever invents or discovers any useful process, machine, manufacture, or composition of matter, or any useful improvement thereof, may obtain a patent therefor, subject only to the exclusions in section (b) and to the further conditions and requirements of this title.

    (b) ELIGIBILITY EXCLUSIONS.—

    (1) IN GENERAL.—Subject to paragraph (2), a person may not obtain a patent for any of the following, if claimed as such:

    (A) A mathematical formula, apart from a useful invention or discovery.

    (B) A process that—

    (i) is a non-technological economic, financial, business, social, cultural, or artistic process;

    (ii) is a mental process performed solely in the human mind; or

    (iii) occurs in nature wholly independent of, and prior to, any human activity.

    (C) An unmodified human gene, as that gene exists in the human body.

    (D) An unmodified natural material, as that material exists in nature.

    (2) CONDITIONS.—

    (A) CERTAIN PROCESSES.—Notwithstanding paragraph (1)(B)(i), a person may obtain a patent for a claimed invention that is a process described in such provision if that process is embodied in a machine or manufacture, unless that machine or manufacture is recited in a patent claim without integrating, beyond merely storing and executing, the steps of the process that the machine or manufacture perform.

    (B) HUMAN GENES AND NATURAL MATERIALS.—For the purposes of subparagraphs (C) and (D) of paragraph (1), a human gene or natural material that is isolated, purified, enriched, or otherwise altered by human activity, or that is otherwise employed in a useful invention or discovery, shall not be considered to be unmodified.

    (c) ELIGIBILITY.—

    (1) IN GENERAL.—In determining whether, under this section, a claimed invention is eligible for a patent, eligibility shall be determined—

    (A) by considering the claimed invention as a whole and without discounting or disregarding any claim element; and

    (B) without regard to—

    (i) the manner in which the claimed invention was made;

    (ii) whether a claim element is known, conventional, routine, or naturally occurring;

    (iii) the state of the applicable art, as of the date on which the claimed invention is invented; or

    (iv) any other consideration in section 102, 103, or 112.

    (2) INFRINGEMENT ACTION.—

    (A) IN GENERAL.—In an action brought for infringement under this title, the court, at any time, may determine whether an invention or discovery that is a subject of the action is eligible for a patent under this section, including on motion of a party when there are no genuine issues of material fact.

    (B) LIMITED DISCOVERY.—With respect to a determination described in subparagraph (A), the court may consider limited discovery relevant only to the eligibility described in that subparagraph before ruling on a motion described in that subparagraph.

    This text is a mouthful, having over an order of magnitude more words than the 36 of the current section.  So let's break it down.

    The Exclusions

    Section (b)(1) states that mathematical formulas, mental processes, and naturally occurring processes are not eligible for patenting.  But there are limits the scope of these exclusions.  Specifically, mathematical formulas that are an element of a useful invention or discovery presumably would not doom the entire invention.  Likewise, mental processes as notions of abstract thought are not patentable, but a mental process implemented on a computer ostensibly could qualify.  Similarly, naturally occurring processes outside of the human experience are not patentable while human-made processes involving some aspects of natural processes could also qualify.

    Along the same lines, unmodified natural material and unmodified human genes are not patent eligible, though such material "that is isolated, purified, enriched, or otherwise altered by human activity, or that is otherwise employed in a useful invention or discovery" could qualify.  This provision appears to codify and expand upon the holding of Association for Molecular Pathology v. Myriad Genetics, Inc.

    But things get sticky in Section (b)(i)(B)(i), which states that a "non-technological economic, financial, business, social, cultural, or artistic process" would also be an exclusion.  The problem with this language is that these terms are not defined and potentially quite broad.  Alice, as interpreted by the Federal Circuit, provides an exception for "methods of organizing human activity."  This current exclusion is a gotcha for patentees.  As someone who has spent too many hours arguing with patent examiners over whether inventions implemented solely on computers are "organizing human activity," I can only imagine how the courts and the USPTO might misuse the exclusion of Section (b)(i)(B)(i).

    Moreover, Section (b)(2)(A) does little to rein in the scope of this exclusion.  The language "if that process is embodied in a machine or manufacture, unless that machine or manufacture is recited in a patent claim without integrating, beyond merely storing and executing, the steps of the process that the machine or manufacture perform" suggests that a machine or manufacture must "integrate" the process . . . into what exactly?  The proposal is silent.

    Eligibility Procedure

    Section (c)(1) addresses what should and should not be considered while carrying out the eligibility inquiry.  Notably, one must take into account "the claimed invention as a whole and without discounting or disregarding any claim element."  This is a welcome provision, as there is a long track record of judges and patent examiners conveniently ignoring claim elements on their way to declaring claims ineligible.

    Further, one must not consider "whether a claim element is known, conventional, routine, or naturally occurring . . . the state of the applicable art, as of the date on which the claimed invention is invented [or] any other consideration in section 102, 103, or 112."  This is also a welcome provision, as it overrules the problematic prong two of Alice while bringing back the more logical pre-Mayo separation between §§ 101, 102, 103, and 112 of the statute.

    One point is unclear, however, in that Section (c)(1)(B)(ii) tells us that eligibility shall be determined without regard to whether a claim element is naturally occurring.  On the other hand, Section (b)(1)(D), excludes naturally occurring inventions from patentability.  One possible interpretation of these sections is that individual claim elements being naturally occurring does not impact the eligibility analysis unless the entire invention (i.e., all elements) is naturally occurring.

    Litigation

    Section (c)(2) codifies the "quick kill" under § 101 (the main reason why some parties will tell you that Alice is just fine) by stating that a court "at any time, may determine whether an invention or discovery that is a subject of the action is eligible for a patent under this section."  Thus, invalidation of patents during the pleading stage would still be possible, but only "when there are no genuine issues of material fact."  To this latter point, "the court may consider limited discovery relevant only to the eligibility" of the claims when ruling on such a motion.

    Conclusion

    In sum, Senator Tillis' proposed revisions to § 101 seem to be two steps forward and one step back.  It is an attempt to find a middle ground between varying stakeholder concerns by overruling some aspects of the Supreme Court's recent eligibility jurisprudence and codifying other aspects.  It is unlikely that any one stakeholder will be entirely satisfied with this proposal, but as a starting point we could do much worse.

    The main substantive problem with the proposal is use of unclear terminology and a lack of recognition of how broadly courts and the USPTO have viewed the exclusions to patent eligibility in the past (and how the courts have expanded the exclusions over the years since Alice).  If these issues could be buttoned up, this legislation has the potential to be a modest course correction for American innovation.

  • 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.