Patent Docs

Sanofi-Aventis v. Sandoz, Inc. (Fed. Cir. 2010)

December 26, 2010

By Donald Zuhn —

Last week, in Sanofi-Aventis v. Sandoz, Inc., the Federal Circuit vacated the entry of a consent judgment and an injunction by the District Court for the District of New Jersey, which enjoined Defendants-Appellants Sun Pharmaceutical Industries, Ltd. and Caraco Pharmaceutical Laboratories, Ltd. ("Sun") from manufacturing and selling a generic version of the colorectal cancer drug oxaliplatin. The appeal arose from a dispute between Sun and Plaintiffs-Appellees Sanofi-Aventis, Sanofi-Aventis U.S. LLC, and Debiopharm, S.A. ("Sanofi") following Sun's filing of an Abbreviated New Drug Application (ANDA) for generic oxaliplatin and Sanofi's filing of suit against Sun in response to Sun's ANDA filing. Sanofi also filed suit against other generic drug manufacturers who filed ANDAs for generic oxaliplatin.

After Sanofi filed suit against Sun, the parties entered into settlement negotiations, eventually agreeing to a license that contained the following provision (i.e., Section 3.5, with emphasis added by the Federal Circuit):

At-Risk-Launch. In the event that, during the term of the Licensed Patents and without Sanofi's permission, any defendant in the Consolidated Eloxatin Patent Litigation sells a generic version of a Sanofi NDA Product in the Territory prior to a Final Court Decision ("At-Risk-Launch"), [Sun] will have the option of selling its Generic Equivalent prior to the Launch Date. Should Sun exercise such an option and a Court subsequently enters a decision(s) enjoining each such At-Risk Launch product(s), Sun agrees that Sun will not sell its Generic Equivalent from the time the Court enters an injunction(s) against each such At-Risk Launch Product(s) until the Launch Date.

The license agreement was submitted by the parties to the District Court with a proposed consent judgment and order. Pursuant to the consent judgment and order, which incorporated Section 3.5 of the license agreement, Sun could market its version of generic oxaliplatin if other generic drug manufacturers were marketing their generic version of the drug, but if a "Court subsequently enter[ed] a decision(s) enjoining" other generic manufacturers from marketing a generic version of oxaliplatin, Sun would also be enjoined.

Two days after Sanofi and Sun reached the settlement agreement, the District Court denied summary judgment of invalidity and granted summary judgment of noninfringement of Sanofi's U.S. Patent No. 5,338,874. A series of challenges to the original license agreement followed.

While the parties attempted to resolve the enforceability of the original agreement, the other generic drug manufacturers launched at-risk versions of generic oxaliplatin. Sanofi responded by negotiating settlement agreements with the other defendants that included a proposed consent order with a provision requiring that Sun be enjoined from marketing a generic equivalent of oxaliplatin by a certain date, and allowing the other defendants to reenter the market if Sun was not enjoined. Sanofi then sought entry by the District Court of a revised version of the original consent judgment, with the revised version containing a provision stating that "[u]nder the License Agreement, if an injunction [was] entered preventing the other defendants from selling their Eloxatin product at risk, then Sun [was] obligated to stop selling its generic Eloxatin product at risk." In response, Sun argued that the revised consent judgment was not the same as the original and that Sun had not agreed to the revised version. Notwithstanding Sun's objections, the District Court entered the consent judgment and order proposed by Sanofi.

On appeal, Sun argued that the District Court had erred by entering a consent judgment to which it did not agree. Sanofi countered that the revised consent judgment was correctly entered because it was consistent with the license agreement. The dispute centered on the meaning of Section 3.5 of the license agreement. Sanofi contended that under Section 3.5, Sun was required to cease sales of generic oxaliplatin after entry of an injunction against the other defendants — even if the injunction is the result of a consent judgment agreed to by any of the other defendants. Thus, the term "decision(s) enjoining" in Section 3.5 is synonymous with "orders enjoining" or "judgments enjoining." Sun, however, argued that it had a right to continue selling generic oxaliplatin, even if other defendants settle and consent to an injunction, because an injunction entered by consent is not the result of a court decision.

Looking at the disputed section, the Federal Circuit determined that "[t]he language 'decision(s) enjoining' in Section 3.5 is ambiguous as to whether a 'decision' includes a consent judgment and injunction resulting from a settlement between parties or whether it requires an injunction issued by a court following a decision on the merits." The panel noted that while Sanofi argued that the language of the section clearly includes consent judgments, "Sanofi now represents to this court that the license agreement is clear and unambiguous, despite its earlier need to 'clarif[y] Sun’s obligations [via the revised consent judgment],'" adding that "Sanofi's own recognition that the agreement required clarification is itself powerful evidence of ambiguity." As a result of this ambiguity, the panel found that the District Court had erred by not affording Sun "a full and fair hearing as to material disputed language of the agreement." The panel noted that "[m]aterial terms of a consent judgment that are objectively ambiguous and clearly contested prior to entry of the consent judgment require a determination by the court as to the parties' obligations under those terms before entry of that revised consent judgment." The Federal Circuit therefore vacated the consent judgment and remanded the case with instructions to provide the parties an opportunity to conduct discovery and present their evidence as to the proper resolution of the ambiguous language in the license agreement that is incorporated into the parties' original proposed consent judgment.

Sanofi-Aventis v. Sandoz, Inc. (Fed. Cir. 2010)
Nonprecedential disposition
Panel: Circuit Judges Dyk, Prost, and Moore
Opinion by Circuit Judge Prost
Happy Holidays from Patent Docs

December 24, 2010

The authors and contributors of Patent Docs wish their readers and families a Happy Holidays. Publication of Patent Docs will resume on December 26th.
Biotech/Pharma Docket

December 23, 2010

By James DeGiulio —

Roche Dodges Cobalt Invalidity Contention in Boniva Patent Suit

In a decision handed down earlier this week, the U.S. District Court for the District of New Jersey rejected Cobalt Pharmaceuticals' attempt to invalidate Roche's patent covering Boniva for incorrect inventorship. After Apotex and Cobalt filed Abbreviated New Drug Applications (ANDAs) for generic ibandronate, the active ingredient in Boniva, Roche filed suit against the generic drug manufacturers in September of 2007 for infringement of U.S. Patent Nos. 6,143,326, 6,294,196, 7,192,938, 4,927,814, and 7,410,957 (see "Court Report," September 30, 2007). Eventually, a total of six lawsuits were consolidated into two pretrial proceedings, and the claims relating to the '326, '196, and '938 patents were settled. In August, the District Court granted summary judgment in favor of Roche, finding that Apotex's ANDA literally infringes the '814 patent. The defendants maintain that the '814 patent is unenforceable due to inequitable conduct. On September 30, summary judgment was denied to both sides, and the case was sent to the jury. Roche successfully secured a preliminary injunction against Cobalt in November.

Cobalt asserted an affirmative defense for invalidity, arguing that one of the patents is invalid since the inventors listed are incorrect. However, on December 20, Judge Stanley Chesler found Cobalt's claim to be insufficient, and granted summary judgment for Roche. Citing Stark v. Advanced Magnetics Inc., Judge Chesler ruled that the law allows a patent filer to correct errors on a list of inventors, in some cases even when those errors were intentionally deceptive. However, Cobalt offered no evidence that Roche incorrectly listed inventors as a result of deceptive intent. Judge Chesler noted that there might be a better case for invalidation if deceptive intent had been established.

Novo Nordisk and Sandoz Settle Infringement Claims in Prandin Dispute

Novo Nordisk and Sandoz have reached a settlement in their dispute involving the patent covering Prandin, with Novo agreeing to drop two claims in exchange for Sandoz's admission that it infringed three other claims. The suit began in October 2009, when Novo sued Actavis for infringement of U.S. Patent No. 6,677,358 following Actavis' filing of an ANDA seeking approval to manufacture a generic version of Prandin (see "Court Report," November 8, 2009). The infringement suit over Sandoz's ANDA was filed in November 2009 (see "Court Report," November 15, 2009). In Actavis' and Sandoz's answer, filed on July 1 in the U.S. District Court for the Southern District of New York, the defendants sought declaratory judgments of invalidity, noninfringement, and unenforceability due to inequitable conduct. They also sought injunctive relief and an award of treble damages for Novo's alleged Sherman Act violations arising from its patent misuse.

On December 16, Judge Paul G. Gardephe signed off on the settlement agreement, which stipulates resolution on all five claims of the '358 patent. Sandoz admitted its ANDA infringed claims 1, 2, and 4, and that any manufacture or sale of the generic drug would infringe claims 1 and 2. Novo agreed to drop allegations of infringement of claims 3 and 5, but reserved its right to pursue those infringement claims again if Sandoz amends its ANDA whereas infringement might be possible. The agreement can be found here.

Jury Finds That RyMed Infringes ICU Medical Valve Patents

After a jury found that RyMed had infringed two of ICU Medical's medical valve patents, RyMed Technologies vowed to challenge the verdict at an upcoming January bench trial. In a suit originally launched in July 2007 in the U.S. District Court for the District of Delaware, ICU Medical asserted that RyMed directly infringed U.S. Patent Nos. 5,685,866, 5,873,862, 5,928,204, and 6,572,592. ICU also alleged that RyMed induced others to infringe these patents through its medical valve products, which ICU asserted had no substantial noninfringing use. ICU further argued that all of RyMed's infringement had been willful. ICU sought an injunction, compensatory and treble damages with prejudgment interest, as well as costs and attorneys' fees. RyMed countered ICU's assertions, alleging that the patents are invalid and unenforceable for a number of reasons, including patent misuse and inequitable conduct. The '204 patent was eventually dropped from the suit.

On December 17, a jury concluded that two of the three patents asserted by ICU had been infringed. However, the jury was not persuaded that RyMed's infringement was willful. RyMed intends to file post-trial motions on the issue of literal infringement of the two patents, and will look to overturn the infringement findings at a bench trial set for January. The jury verdict form can be found here.
BIO Sends Letter to DOJ on “Clear and Convincing Evidence” Question Raised in Microsoft v. i4i

December 22, 2010

By Kevin E. Noonan —

The Biotechnology Industry Organization (BIO) sent a letter today to Attorney General Eric H. Holder, Jr. and Acting Solicitor General Neal K. Kaytal regarding the Supreme Court's request for the government's views on the questions presented by petitioners in Microsoft v. i4i (the Court granted Microsoft's petition for writ of certiorari on November 29, 2010). BIO and the letter's 171 signatories write to voice their concerns over the government being unduly influenced by industries (most notably the information technology and computer industries) that have spent the past decade attempting to limit patent rights and the ability of patent holders to challenge (in some cases alleged) infringement by companies in that industry.

The letter expresses "great[] concern" over the prospect of the Court reversing the decisions below affirming that Microsoft failed to prove that the patent-in-suit (U.S. Patent No. 5,787,449, having survived reexamination under Control No. 90/010,347) was invalid. Such an outcome "could seriously weaken the presumption of validity that attaches to millions of [U.S.] patents." This would "undermin[e] longstanding investment-backed reliance interests . . . critical for domestic job creation and economic growth" considerations that should resonate in view of the lingering downturn in the economy. The letter expresses the opinion (supported by empirical evidence for the pharmaceutical and biotechnology industries even acknowledged by the most diehard patenting opponents) that patents promote innovation by "facilitating . . . investment necessary for small businesses to form and grow," as well as permitting "more established businesses to continue [to] compet[e] and thriv[e] in an increasingly competitive global environment." The public reaps the benefits of such innovation by promoting job creation and opportunities for growth "in every state and every sector of our economy," according to BIO's letter.

These benefits only exist, BIO asserts, if businesses can "rely on the strength and presumed validity of issued patents," which is necessary for "product development, partnering and licensing decisions." Because patent applications are examined and patents granted by an agency (the U.S. Patent and Trademark Office) but validity challenges thereto are heard by a "lay jury or generalist judge," "since long before enactment of the 1952 Patent Act . . . those that seek to challenge a patent . . . must carry a heightened burden of proof," namely "clear and convincing evidence." Should the Court permit validity challenges to be won under a lower evidentiary standard (such as a preponderance, as petitioners argue) this "could thus frustrate decades of settled expectations under which large investments [have been] made in reliance on patents . . . believed to carry a strong presumption of validity." Such a result could "profoundly change the behavior of patent applicants and litigants" as well as affecting (negatively) investment and product development decisions regarding these (most) innovative businesses, as well as affecting (negatively) "public-private technology transfer" such as commercialization of university scientific research under the Bayh-Dole Act.

BIO and its signatories favor none of these outcomes, and warn that the issue is "of critical importance for domestic innovation, job creation and the Nation's [international] technological leadership." Accordingly, BIO requests ("respectfully") not only that the government "carefully consider these implications" but also "seek input from a wade range of stakeholders" both inside and outside the administration before deciding to take a position on this issue (an entreaty made more poignant in view of the recent amicus brief filed by the Department of Justice in AMP v. ACLU (the Myriad case; see "DOJ Tries to Be All Things to All Constituencies in Myriad Amicus Brief").

The issue (as alluded to in BIO's letter) stems from a decision by the District Court and affirmed by the Federal Circuit that Microsoft did not establish, by clear and convincing evidence, that i4i's patent-in-suit was invalid under the statutory bar contained in 35 U.S.C. § 102(b), failure to file an application within one year of the date that the patented invention was "on-sale." While this is a basis for invalidation unlikely to come before the Patent Office, the District Court and the Federal Circuit required, under prevailing and long-standing precedent, that Microsoft establish the factual basis for invalidating i4i's patents by clear and convincing evidence. The stakes are high: the damages assessed against Microsoft amounted to $240 million, and the Federal Circuit affirmed a permanent injunction against Microsoft over its Word program (causing the company to disable certain features (involving XML editing) in order to stay on the market). Etan Chatlynne has recently published on Patently-O the results of a study showing that in 119 recent Federal Circuit decisions the lower standard would not have changed the outcome in 88 cases (74%) but could have made a difference in the remaining 30 cases.

BIO's letter was signed by 171 companies, including biotechnology companies (Amgen, Genentech, Gen-Probe, Genzyme, Human Genome Sciences, Life Technologies, Tessera), pharmaceutical companies (Eli Lilly & Co., GlaxoSmithKline, Hoffman-La Roche, Johnson & Johnson, Merck, Pfizer, Sanofi-Aventis), bio-agricultural companies (Bayer CropScience, Cargill, Monsanto, Pioneer Hi-Bred) and universities and technology transfer organizations (Regents of the University of California, Research Corporation Technologies, University of Kentucky, WARF), as well as several perhaps unexpected firms, such as 3M Company, BASF, BP America, Dolby Labs, Illinois Tool Works, Proctor & Gamble, and Uniloc, illustrating the range of corporate concern over the potential for the Supreme Court to (once again) "upset settled expectations" should it foray once more into patent law's waters.
USPTO News Briefs

December 21, 2010

By Donald Zuhn —

USPTO Implements New Peer Review Pilot Program

In a notice published earlier this month, the U.S. Patent and Trademark Office announced the launch of a new one-year pilot program intended to test the scalability of its peer review program, in which the public can submit documents and comments that might be useful in the examination of participating applications. Under the new pilot program, the pool of candidate applications will be expanded to include applications in the life sciences, telecommunications, business methods, and computer hardware and software technology areas, and the total number of applications that may be accepted into the program will be significantly increased.

The first peer review pilot program was announced in June of 2007, and then expanded one year later to extend the program's duration, increase the maximum number of participating applications, and expand the scope of applications eligible for the program. During the initial pilot, 189 applications were accepted into the pilot program, 603 pieces of prior art were submitted by more than 500 unique reviewers, and over 2,700 people registered on the Peer To Patent Web site.

The public aspects of the new pilot program will be administered by Peer To Patent, organized by the New York Law School Center for Patent Innovations. Additional information about the pilot can be found at the Peer To Patent website.

Under the pilot, a limited number of participating applications will be placed onto the Peer To Patent website for the purposes of collaborative review. These applications will be analyzed by members of the public, who will determine the (up to) six most pertinent documents, which will then be submitted to the Office. The new pilot will accept requests for participation between October 25, 2010 and September 30, 2011, or until 1,000 participating applications have been accepted, whichever occurs first. The pilot will be restricted to applications in classes and subclasses designated here. Applicants wishing to participate in the pilot must submit a certification and request to participate in the program (Form PTO/SB/422); the request must also be submitted no later than one month after the application publication date for the application to be considered for participation. In addition, applications participating in the Accelerated Examination, Patent Prosecution Highway, First Action Interview Pilot Program, Patent Application Backlog Reduction Stimulus Plan, or Pilot Program for Green Technologies will be ineligible for the new peer review pilot program.

USPTO to Open Satellite Office in Detroit

Last week, U.S. Commerce Secretary Gary Locke and USPTO Director David Kappos announced that the USPTO plans to open its first satellite office in Detroit sometime next year. According to a press release issued by the Patent Office, the satellite office is expected to create 100 new jobs in its first year of operations. In selecting Detroit as the site of its first satellite office, the USPTO said it considered a broad range of factors, including having a high percentage of scientists and engineers in the workforce; providing access to major research institutions, particularly leading universities; and supporting a high volume of patenting activity and significant numbers of patent agents and attorneys in the area. The USPTO will consider opening additional offices following an evaluation of the Detroit office.

Deputy Director to Depart

The USPTO announced last week that Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the USPTO Sharon Barner (at right) will be leaving the Office effective January 14, 2011. Deputy Director Barner was appointed to the post in October 2009. During her tenure, the Deputy Director participated in the development of the 2010-2015 USPTO Strategic Plan, and led fifteen foreign missions to countries including Brazil, China, India, Mexico and Russia to meet with representatives of government, academia, and industry in order to raise awareness of the importance of intellectual property and its critical role in economic, social, and cultural development. Deputy Director Barner noted that "[t]he Agency has made great progress under the leadership of Director Kappos in the areas of reducing the patent backlog, increasing operational efficiency, and exerting leadership in IP policy domestically and internationally." Prior to her appointment, Ms. Barner had been a partner with Foley & Lardner LLP in Chicago where she chaired the firm's Intellectual Property Department.

USPTO Creates Online Subscription Center

Earlier this week, the USPTO announced the launch of its online Subscription Center, where applicants and practitioners can easily subscribe via e-mail to an array of USPTO newsletters and alerts. Among the subscription options are the following:

• USPTO Press Releases – announcements of USPTO initiatives, programs and policies — the same announcements that are provided to the media.
• USPTO Director's Forum Blog — a weekly interactive blog by USPTO Director David Kappos discussing the latest topics of interest to the USPTO and the intellectual property community.
• USPTO Monthly Activity Reports — a monthly at-a-glance summary of new initiatives, events and significant media coverage during the previous month.
• Inventor's Eye — online publication for and about America’s independent and small entity inventor community. Inventor's Eye comes out every other month. Each issue will feature information you can use, tips on working with the USPTO; events; organizations and meetings of interest to the community; issues that impact independent and small entity inventors; and stories about people like you who have become successful inventors.
• Patents Alerts — receive news, featured stories, event announcements, and tips for using Patents EFS-Web, e-Office Action, PDX and other e-commerce initiatives.
Prometheus Laboratories, Inc. v. Mayo Collaborative Services (Fed. Cir. 2010)

December 20, 2010

By Kevin E. Noonan —

On Friday, the Federal Circuit continued its explication of the metes and bounds of patent-eligible subject matter after the Supreme Court's Bilski v. Kappos decision by revisiting (and reconsidering) its decision in Prometheus Laboratories, Inc. v. Mayo Collaborative Services. The Court in its earlier decision had reversed a District Court determination that the claims of the patents-in-suit (U.S. Patent Nos. 6,355,623 and 6,680,302) were invalid as being outside the scope of patent-eligible subject matter under 35 U.S.C. § 101, based on its application of the "machine or transformation" test enunciated in In re Bilski. The Supreme Court granted Mayo's petition for certiorari, vacated the Federal Circuit's earlier decision, and remanded to the appellate court for reconsideration under the patent-eligibility standard(s) the Court announced in its Bilski decision. A relevant part of that decision was the Court's direction that the Federal Circuit develop its case law on what would constitute an "abstract idea" for purposes of patent eligibility. (And the importance of this case, if only as a stalking-horse for the upcoming AMP v. USPTO (Myriad) case, is illustrated by the lineup of amici filing briefs in this case, including Novartis, Myriad, the AIPLA, the American College of Medical Geneticists, Arup Labs, the Biotechnology Industry Organization (BIO), and biotech patent-knowledgeable academic Christopher Holman).

The panel opinion, by Judge Lourie joined by Chief Judge Rader and Judge Bryson, noted that there were two general types of claims at issue: those that affirmatively recited an "administrative" step, exemplified by Claim 1 of the '623 patent:

1. A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:
    (a) administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and
    (b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder,
    wherein the level of 6-thioguanine less than about 230 pmol per 8×10⁸ red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and
    wherein the level of 6-thioguanine greater than about 400 pmol per 8×10⁸ red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.

and claims that did not recite such a step, exemplified by Claim 46 of the '302 patent:

46. A method of optimizing therapeutic efficacy and reducing toxicity associated with treatment of an immune-mediated gastrointestinal disorder, comprising:
    (a) determining the level of 6-thioguanine or 6-methylmercaptopurine in a subject administered a drug selected from the group consisting of 6-mercaptopurine, azathiop[u]rine, 6-thioguanine, and 6-methyl-mercaptoriboside, said subject having said immune-mediated gastrointestinal disorder,
    wherein the level of 6-thioguanine less than about 230 pmol per 8×10⁸ red blood cells indicates a need to increase the[] amount of said drug subsequently administered to said subject, and
    wherein the level of 6-thioguanine greater than about 400 pmol per 8×10⁸ red blood cells or a level of 6-methylmercaptopurine greater than about 7000 pmol per 8×10⁸ red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.

(Relevant to the Federal Circuit's assessment of the claims was the District Court's construction of the claim term "indicates a need" to mean "a warning that an adjustment in dosage may be required." "This construction did not require doctors to adjust drug dosage if the metabolite level reached the specified levels; rather, the court found the two 'wherein' phrases to mean 'that when the identified metabolites reach the specified level, the doctor is warned or notified that a dosage adjustment may be required, if the doctor believes that is the proper procedure.'")

Both types of claims were patent-eligible, according to the panel opinion.

The Court rejected the District Court's characterization that the claims consisted of three steps: (1) administering the drug to a subject, (2) determining metabolite levels, and (3) being warned that an adjustment in dosage may be required, wherein the first two steps were "data-gathering," leaving the third step as merely an unpatentable mental step, comprising the correlation, because no step requiring a change in administered dose. The Court agreed that the last (comparison) step was a mental step, but maintained (as it had in the original opinion) that this by itself cannot provide legitimate grounds for invalidating the claims (because the claims must be considered in their entirety). Here, the Court again determined that the claims at issue satisfied the "machine or transformation" test and that this was sufficient; the Federal Circuit specifically rejected Mayo's contention that the Supreme Court had abrogated this test in favor of a "complete preemption" test. In this regard, Mayo argued on remand that "'[b]ecause the claims cover the correlations themselves, it follows that the claims 'wholly pre-empt' the correlations.'"

The panel characterized the Supreme Court's opinion in Bilski to have rejected the machine-or-transformation test as the "sole, definitive test" (but did not reject it per se), and "declined to adopt any categorical rules outside the well-established exceptions for laws of nature, physical phenomena, and abstract ideas, and resolved the case based on its decisions in Gottschalk v. Benson, 409 U.S. 63 (1972), Parker v. Flook, 437 U.S. 584 (1978), and Diamond v. Diehr, 450 U.S. 175 (1981)." According to the Federal Circuit, the Supreme Court has historically construed patent-eligibility broadly, limiting eligibility to exclude only laws of nature, physical phenomena, and abstract idea (based, the panel suggested, on historical precedent extending back to the 19th century; Le Roy v. Tatham, 55 U.S. (14 How.) 156, 174-75 (1853), and continued in the Court's most recent opinion on this issue (Bilski). The panel also stated that while laws of nature, physical phenomena, and abstract ideas are ineligible for patenting, applications thereof can be patented, citing Bilski and Diehr. Using this standard, the opinion recited its rationale expressly: do the Prometheus claims recite and preempt a natural phenomenon, alá Benson and Flook, or are they merely a particular application thereof, alá Diehr? Mayo argued that satisfaction of the machine or transformation (MOT) test was not "outcome determinative" under the Supreme Court's Bilski test. Prometheus, on the other hand, argued that the Supreme Court's Bilski opinion mandated that claims that fail the MOT test are not necessarily unpatentable unless they totally preempt an abstract idea or natural law; thus its claims, which satisfied the MOT test, are patent-eligible. Importantly, Prometheus also argued that these claims did not totally preempt an abstract idea or natural law, since they are a particular application of the natural phenomenon ("specific means of treating specific diseases using specific drugs"). This argument was persuasive to the panel, which held that application of the machine or transformation test "leads to a clear and compelling conclusion" in favor of patent-eligibility (being directed to "the treatment of a specific disease by administering specific drugs and measuring specific metabolites"):

The inventive nature of the claimed methods stems not from preemption of all use of these natural processes, but from the application of a natural phenomenon in a series of steps comprising particular methods of treatment.

While the Court recognized that some of the claims recited an administering step while others did not, the Court found both types of claims to be patent-eligible. With regard to claims that recited an administering step, the Court found (as it had in its original decision) that treatment steps are "always transformative when one of a defined group of drugs is administered to the body to ameliorate the effects of an undesired condition." The Court cited with approval the Prometheus argument that "quite literally every transformation of physical matter can be described as occurring according to natural processes and natural law [because] [t]ransformations operate by natural principles." What is transformative in these claimed methods is administration of drugs (treatment) which is not a natural process; what is transformed is the human to whom the drugs are administered. The panel also cited its Bilski opinion that "[i]t is virtually self-evident that a process for a chemical or physical transformation of physical objects or substances is patent-eligible subject matter.'" Bilski, 545 F.3d at 962.

Turning to the claims that do not recite an administering step, the Court found that they are also patent-eligible because the determining step is also transformative as well as being "central" to the claimed methods. (The "central" characterization is in contrast to the argument that this is "mere" data-gathering.) The Court's rationale was that at the end of the procedures used to determine metabolite levels, whatever was assayed has been transformed. "The determining step, by working a chemical and physical transformation on physical substances, likewise sufficiently confines the patent monopoly, as required by the machine-or-transformation test."

The panel distinguished two earlier cases: In re Grams, 888 F.2d 835 (Fed. Cir. 1989), which the Court called the "closest comparison," and In re Abele, 684 F.2d 902 (C.C.P.A. 1982). The Grams case, according to the panel, involved a combination of data-gathering steps plus a fundamental principle. In Grams, the method recited steps of performing a clinical test and then using an algorithm to determine whether an abnormality existed and possible causes thereof. The Grams court found that this was "merely" an algorithm coupled with a data-gathering step, because the tests were not "transformative." Here, the Court distinguished Grams by finding the administering and determining steps to be transformative. This is in contrast to a method claim that does not contain administering or determining steps: "a physician who only evaluates the result of the claimed methods, without carrying out the administering and/or determining steps that are present in all the claims, cannot infringe any claim that requires such steps."

The other case, In re Abele, involved claims related to X-ray attenuation data, which the Court said required the "production, detection and display [using] a CAT scan," and also involved an algorithm. The Abele court found these claims to be patentable, according to this panel, because even without the algorithm step the claim contained all the CAT scan steps, which that court found was "manifestly statutory subject matter" despite the presence of the algorithm step. The panel opinion cited its Bilski decision to again emphasize the proposition that a claim must be considered as a whole in making this determination (something that is directly contrary to Justice Breyer's manner of analysis in Laboratory Corp. v. Metabolite Labs., Inc. ("LabCorp")):

[I]t is inappropriate to determine the patent eligibility of a claim as a whole based on whether selected limitations constitute patent-eligible subject matter. After all, even though a fundamental principle itself is not patent-eligible, processes incorporating a fundamental principle may be patent-eligible. Thus, it is irrelevant that any individual step or limitation of such processes by itself would be unpatentable under § 101.

The implications of this decision may be significantly limited by the Court's emphasis on the "treatment" steps as being transformative and thus almost by-definition patent-eligible:

The crucial error the district court made in reaching the opposite conclusion was failing to recognize that the first two steps of the asserted claims are not merely data-gathering steps. See Invalidity Opinion, 2008 WL 878910, at *6 (finding that "the 'administering' and 'determining' steps are merely necessary data-gathering steps for any use of the correlations"). While it is true that the administering and determining steps gather useful data, it is also clear that the presence of those two steps in the claimed processes is not "merely" for the purpose of gathering data. Instead, the administering and determining steps are part of a treatment protocol, and they are transformative. As explained above, the administering step provides thiopurine drugs for the purpose of treating disease, and the determining step measures the drugs' metabolite levels for the purpose of assessing the drugs' dosage during the course of treatment.

Ultimately, the Court seems to make a policy argument, which can be dangerously subjective ("we know it when we see it"):

Viewing the treatment methods as a whole, Prometheus has claimed therapeutic methods that determine the optimal dosage level for a course of treatment. In other words, when asked the critical question, "What did the applicant invent?," Grams, 888 F.2d at 839 (citation omitted), the answer is a series of transformative steps that optimizes efficacy and reduces toxicity of a method of treatment for particular diseases using particular drugs.

This is a frankly utilitarian analysis, basing what is patent-eligible on whether it is useful, provided that what is claimed does not wholly preempt an abstract idea or natural law.

Finally (and according to some commentators, provocatively), the panel disagreed with Mayo's contention that the Supreme Court's Bilski decision somehow affirmed Justice Breyer's dissent in Metabolite:

Mayo, as did the district court, points to the opinion of three Justices dissenting from the dismissal of the grant of certiorari in Lab. Corp., 548 U.S. 124 (Breyer, J., dissenting from dismissal of certiorari as improvidently granted). See Invalidity Opinion, 2008 WL 878910, at *8 (discussing the dissent in Lab. Corp. at length and finding Justice Breyer's reasoning persuasive). Again, with respect, we decline to discuss a dissent; it is not controlling law, and it involved different claims from the ones at issue here. Mayo further claims that five Justices in two concurrences cited Lab. Corp. with approval in Bilski, but such citations fail to transform a dissent into controlling law. Moreover, one concurrence cites Lab. Corp. for the proposition that "too much patent protection can impede rather than 'promote the Progress of . . . useful Arts,'" in arguing for a categorical rule that business method patents do not qualify as patent-eligible processes under § 101. Bilski, 130 S. Ct. at 3255 (Stevens, J., concurring). But this case does not involve business method patents.

That such sentiments will be sufficient to motivate the Supreme Court to revisit the question of the patent-eligibility of diagnostic method claims is at odds with the Court's mandate that the Federal Circuit in the first instance test the proper scope of patent-eligibility on a case-by-case basis. Such an approach has the potential to adequately (or at least sufficiently) illuminate the relevant principles in the fire of litigation, to provide a collection of decisions that might assist the Court when (and if) it decides to reenter the patent-eligibility waters. The Court in Bilski was properly prudent in its approach with regard to "new technologies" ("there are reasons to doubt whether the [machine or transformation] test should be the sole criterion for determining the patentability of inventions in the Information Age . . . the machine-or-transformation test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals"), suggesting that the Court can only benefit from the Federal Circuit's exercise of "its sound judgment in this area of its special expertise."

Prometheus Laboratories, Inc. v. Mayo Collaborative Services (Fed. Cir. 2010)
Panel: Chief Judge Rader and Circuit Judges Lourie and Bryson
Opinion by Circuit Judge Lourie
News from Abroad: Canada’s Data Protection Regime Upheld

December 20, 2010

By Catherine Lemay —

Canada's Data Protection regime was upheld by the Federal Court of Appeal on December 9, 2010 (see Apotex Inc. v. Canada (Health), 2010 FCA 334). In a unanimous decision penned by Justice Nadon, the Court found the regime was a proper delegation by the Canadian Parliament to the Governor in Council and intra vires pursuant to subsection 30(3) of the Food and Drugs Act. Moreover, the Court also found the regime intra vires the Federal government's jurisdiction under the criminal law head of the Canadian Constitution.

The case involved two challenges filed by the appellants, Apotex Inc. and Canada's Generic Pharmaceutical Association, seeking a declaration that subsection 30(3) of the Food and Drugs Act (R.S., 1985, c. F-27) and section C.08.004.1 of the Food and Drug Regulations (C.R.C., c. 870) — the provision in the Food and Drugs Regulations providing for Data Protection — were ultra vires and without legal force and effect. The challenge was dismissed by the Federal Court of Canada at first instance on July 17, 2009 (2009 FC 725).

Since October 2006 (see Regulations Amending the Food and Drug Regulations (Data Protection), SOR/2006-241), Canada's Data Protection regime has provided innovative drug companies with a marketing exclusivity period of 8 years from the date of approval of their "innovative drugs" (with a possibility of 8.5 years, under certain circumstances, if pediatric studies are filed with Health Canada). Within this market exclusivity period, there is a 6 year "no file" period during which generic manufacturers are prohibited from filing a drug submission directly or indirectly comparing their drug with an innovative drug. This new regulatory regime was adopted by Health Canada pursuant to its regulatory authority under subsection 30(3) of the Food and Drugs Act to "make such regulations as the Governor in Council deems necessary" so as to implement Article 1711 of the North America Free Trade Agreement (NAFTA) or Article 39(3) of the Trade-Related Aspects of Intellectual Property Rights (TRIPS).

In finding that the new Data Protection regime was in line with the Canadian Constitution and a proper delegation of the Canadian government's authority under the Food and Drugs Act, Justice Nadon noted that the test for application of the regime is not reliance on the innovator's data, either by the Minister of Health or by the generic manufacturer, but rather whether there has been a direct or indirect comparison between the generic manufacturer's drug and the innovative drug. Although Justice Nadon found in the instant case that reliance was not the test, in his view, in filing an Abbreviated New Drug Submission ("ANDS"), generic manufacturers "at the very least" indirectly rely on the safety and efficacy information filed in the innovators' NDSs:

While it is true that the Minister does not usually examine the information provided by innovators in granting a NOC to a generic manufacturer following the filing of an ANDS on the basis of bio-equivalence, there cannot be much doubt that the ANDS process involves, at the very least, indirect reliance on the safety and efficacy information derived from innovators' NDS. In other words, a generic manufacturer relies on the information found in an innovator's NDS in that: (i) that information provides the actual knowledge about the safety and efficacy of the drug and its conditions of use; (ii) without that knowledge, it would not be possible for a generic manufacturer to produce its new drug without conducting extensive non-clinical and clinical studies […]. It is in that sense that a generic manufacturer relies upon the data provided by an innovator in its NDS.

(Para. 91.)

With regard to the constitutional challenge specifically, Justice Nadon rejected the appellants' argument that the pith and substance of the regime concerned commercial considerations, not public safety, and that the protection of trade secrets and confidential information is a matter of property and civil rights, thereby failing under the provincial jurisdiction of the Constitution. In the view of Justice Nadon, the Data Protection regime is a mechanism deemed necessary to balance the effects of the ANDS regulatory scheme which may provide a disincentive for innovative manufacturers to develop new and innovative drugs. By granting innovators a period of market protection for eight years, the Canadian government sought to put in place a regime which provides incentives for innovators to continue their search for "innovative drugs." Ultimately, according to Justice Nadon, Data Protection "exists to encourage the development of new drugs which constitutes a valid public health and safety purpose," a matter clearly falling within the federal government's legislative criminal law power.

This decision will provide comfort to innovative manufacturers which expend heavy investment in pre-clinical development and clinical trials on new drugs. Given the importance of this matter to the generic industry, however, it may well be anticipated that an application for leave to appeal the Federal Court of Appeal's decision to the Supreme Court of Canada will be forthcoming.

Ms. Lemay is an associate with MBM Intellectual Property Law LLP in Ottawa, Ontario. She can be contacted at clemay@mbm.com.
Court Report

December 19, 2010

By Sherri Oslick —

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

Medicis Pharmaceutical Corp. v. Nycomed US Inc.
1:10-cv-01099; filed December 15, 2010 in the District Court of Delaware

Infringement of U.S. Patent Nos. 6,765,001 ("Compositions and Methods for Enhancing Corticosteroid Delivery," issued July 20, 2004), 7,220,424 (same title, issued May 22, 2007), 7,217,422 (same title, issued May 15, 2007), and 7,794,738 (same title, issued September 14, 2010) following a Paragraph IV certification as part of Nycomed's filing of an ANDA to manufacture a generic version of plaintiff's Vanos® (fluocinonide cream, used to relieve inflammation and itching caused by certain skin conditions that respond to corticosteroids). View the complaint here.

Somaxon Pharmaceuticals Inc. et al. v. Actavis Elizabeth LLC et al.
1:10-cv-01100; filed December 15, 2010 in the District Court of Delaware

• Plaintiffs: Somaxon Pharmaceuticals Inc.; Procom One Inc.
• Defendants: Actavis Elizabeth LLC; Actavis Inc.; Mylan Inc.; Mylan Pharmaceuticals Inc.

Infringement of U.S. Patent No. 6,211,229 ("Treatment of Transient and Short Term Insomnia," issued April 3, 2001) following a Paragraph IV certification as part of defendants' filing of an ANDA to manufacture a generic version of Somaxon's Silenor® (doxepin, used to treat insomnia). View the complaint here.

Warner Chilcott Co. LLC et al. v. Sun Pharma Global Inc.
1:10-cv-01085; filed December 10, 2010 in the District Court of Delaware

Infringement of U.S. Patent No. 7,718,634 ("Method of Treatment Using Bisphosphonic Acid," issued May 18, 2010), licensed to Warner Chilcott, following a Paragraph IV certification as part of Sun's filing of an ANDA to manufacture a generic version of Warner Chilcott's Once-a-Month Actonel® (risedronate sodium, used to treat and prevent postmenopausal osteoporosis). View the complaint here.

Mallinckrodt Inc. v. Watson Laboratories, Inc.-Florida
2:10-cv-06424; filed December 10, 2010 in the District Court of New Jersey

• Plaintiff: Mallinckrodt Inc.
• Defendant: Watson Laboratories, Inc.-Florida; Watson Pharma, Inc.; Watson Pharmaceuticals, Inc.; Alza Corporation

Infringement of U.S. Patent No. 5,914,131 ("Hydromorphone Therapy," issued June 22, 1999) following a Paragraph IV certification as part of Watson's filing of an ANDA to manufacture a generic version of Mallinckrodt's Exalgo® (hydromorphone hydrochloride, used for the management of moderate to severe pain in opioid tolerant patients requiring continuous, around-the-clock opioid analgesia for an extended period of time). View the complaint here.

San Francisco Technology Inc. v. Pfizer Inc.
3:10-cv-05597; filed December 9, 2010 in the Northern District of California

False marking based on Pfizer's marking of its Advil Ibuprofen Caplets with U.S. Patent No. 5,087,454 ("Ibuprofen Tablet," issued February 11, 1992), which is expired. View the complaint here.

Shionogi Pharma Inc. et al. v. Mylan Inc. et al.
1:10-cv-01077; filed December 9, 2010 in the District Court of Delaware

• Plaintiffs: Shionogi Pharma Inc.; CIMA Labs Inc.
• Defendants: Mylan Inc.; Mylan Pharmaceuticals Inc.

Infringement of U.S. Patent No. 6,740,341 ("Taste Masking Rapid Release Coating System," issued May 25, 2004), licensed to Shionogi Pharma, following a Paragraph IV certification as part of Mylan's filing of an ANDA to manufacture a generic version of Shionogi's Orapred ODT® (prednisolone sodium phosphate orally disintegrating tablets, used for the control of severe or incapacitating allergic conditions intractable to adequate trials of conventional treatment in adult and pediatric populations with asthma or asthma caused by respiratory disorders). View the complaint here.
Conference & CLE Calendar

December 19, 2010

January 1-5, 2011 – 28th Annual National CLE Conference (Law Education Institute, Inc.) – Vail, CO

January 5, 2011 – Patent Infringement Claims, Opinions of Counsel and Attorney-Client Privilege (Technology Transfer Tactics and Strafford) – 1:00 – 2:30 PM (EST)

January 12, 2011 – New USPTO Guidelines and the Obviousness Standard for Patents (Strafford) – 1:00 – 2:30 PM (EST)

January 25, 2011 – Understanding Obviousness in a Post-KSR World: Practical Applications for Compliance with the Recent USPTO Guidelines (Technology Transfer Tactics) – 1:00 – 2:30 PM (EST)

January 26-27, 2011 – The Life Sciences Lawyer's Guide to Patent Term Adjustment and Patent Term Extensions*** (American Conference Institute) – New York, NY

February 16-17, 2011 – Life Sciences Collaborative Agreements and Acquisitions*** (American Conference Institute) – New York, NY

***Patent Docs is a media partner of this conference or CLE
ACI Life Sciences Collaborative Agreements and Acquisitions Conference

December 17, 2010

American Conference Institute (ACI) will be holding its 14th Advanced Forum on Structuring, Negotiating, and Managing Life Sciences Collaborative Agreements and Acquisitions from February 16-17, 2011 in New York, NY. The conference will allow attendees to:

• Incorporate the right takeaways from recent deals into optimal business development strategies;
• Negotiate agreements that provide entry into key emerging markets;
• Anticipate when a partnership might lead to a full M&A and incorporate appropriate terms;
• Avoid traps that can undermine collaborative efforts and lead to alliance failures;
• Evaluate viable compensation structures;
• Minimize risks through more effective partner selection and due diligence;
• Structure option deals that meet both parties' potential objectives;
• Resolve hotly contested issues with universities; and
• Develop appropriate strategies for new technologies.

In particular, ACI's faculty will offer presentations on the following topics:

• Going beyond the basics to understand the driving forces and changing dynamics impacting the current deal-making landscape;
• Ensuring that increasing M&A is integrated into your business development strategy;
• Interactive discussion: Dos and don'ts for negotiating and drafting your next collaborative agreement;
• Spotlight industry remarks: "Building strategic partnerships as a core business strategy at Merck";
• Facilitating entry into emerging markets via strategic partnering;
• Why good deals go bad: Avoiding missteps in life sciences alliances;
• Negotiating options, staged acquisitions, hybrid transactions and straight-forward M&As;|• Entering into collaborative research agreements with academic institutions;
• Improving decision-making with practical methods for placing a value on products, patents, and licenses;
• Preparing for the exit: Drafting critical termination provisions;
• Case study: Analyzing a successful collaborative agreement; and
• Winning patent licensing strategies for the new biosimilars regime.

A post-conference workshop on "Life Sciences IP Due Diligence Boot Camp:Conducting Effective & Strategic Due Diligence for Life Science Partnering and M&A," will be offered February 18, 2011. In this workshop, ACI faculty will offer presentations on the following topics:

• Leading red flags that impact the value and success of a life sciences transaction;
• Factoring recent relevant IP case law and follow-on biologics legislation into your due diligence analysis;
• Creating a practical and useful checklist that incorporates both the business objectives of the deal and a comprehensive IP assessment;
• Evaluating the scope, breadth, validity and enforceability of the target's patents under evolving patent standards and regulatory protocols;
• Resolving ownership rights and inventorship issues arising under the target's prior contractual, third party and licensing obligations which could impact your deal; and
• Ensuring that the purchaser/licensee has the right to commercialize the IP at issue.

The agenda for the Pharma/Biotech Collaborative Agreements conference can be found here. A complete brochure for this conference, including an agenda, detailed descriptions of conference sessions, list of speakers, and registration form can be obtained here.

The registration fee for the conference is $2,295 (conference alone), $3,095 (conference and post-conference workshop), or $1,395 (post-conference workshop alone). Those registering by January 24, 2011 will receive a $200 discount. Those interested in registering for the conference can do so here, by calling 1-888-224-2480, or by faxing a registration form to 1-877-927-1563.

Patent Docs is a media partner of ACI's Life Sciences Collaborative Agreements and Acquisitions conference.

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