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District Court Holds False Marking Statute is Constitutional

March 28, 2011

A New York district court judge has explicitly disagreed with the Ohio judge who last month ruled that the Patent Act’s false marking statute is unconstitutional as violating the Take Care Clause that reserves the power to enforce laws to the Executive Branch of the government.

Specifically, the New York court ruled that the statute is civil in nature and not a criminal statute as the Ohio court had held.  Therefore, the law does not give private entities and individuals the ability to exercise power that is properly reserved to the Department of Justice.  The statute provides the Executive Branch with sufficient ability to assert its interests and to control such cases.

In the Ohio case, the government moved to intervene to defend the constitutionality of the law after the court’s initial ruling.  The court reluctantly permitted the government’s motion while stating that the Justice Department had received sufficient notice of the constitutional challenge in the case at an earlier date and failed to intervene at that time.  Nevertheless, the court permitted the motion, but maintained the statute’s unconstitutionality.  The government had also argued that the statute is civil and not criminal in nature.

The government filed a notice of appeal in the Ohio case last week.  This issue will need to be addressed by the Federal Circuit.

Posted in Court Decisions, District Court | 1 Comment »

Federal Court Holds False Marking Statute Unconstitutional

February 25, 2011

In the ongoing saga against the Patent Act’s False Marking Statute, Judge Dan Aaron Polster of the Northern District of Ohio has ruled the law unconstitutional as violating the Take Care Clause of the Constitution.  Unique Product Solutions, Ltd. v. Hy-Grade Valve, Inc.   The arguments in a similar case were previously reported.

In Hy-Grade, unlike in the GSK case reported earlier, the court noted that it had provided a great deal of notice and opportunity for the Justice Department to intervene and to file a brief regarding the statute’s constitutionality.  Despite indicating an intent to defend the statute and intervene in the case, the Justice Department did not do so. 

The court also noted that the Federal Circuit has yet to decide this question, but does have a pending case where the constitutionality of the False Marking Statute is now before it.  United States ex rel. FLFMC, LLC v. Wham-O, Inc., No. 2011-1067.

The court in Hy-Grade stated that application by the Sixth Circuit of an earlier Supreme Court decision requires that for such actions to be constitutional, the government must be given notice and the opportunity to control the action such as by intervening and even dismissing the case.

Although the Hy-Grade court claimed that it did not matter whether the False Marking Statute is deemed to be civil or criminal in nature, it seemed to rely on the Federal Circuit statement in Pequignot that the statute is a criminal one.  Criminal statutes are enforced by prosecutors who are supposed to be objective rather than by individuals who would experience a pecuniary benefit on the outcome of the case.  The doctrine of prosecutorial discretion permits government prosecutors to dismiss or settle cases through plea bargains.  No such similar provision exists in the False Marking Statute.

This case and similar ones will undoubtedly end up being decided by the Federal Circuit.  While most people believe that this statute is not well written and is subject to abuse, this does not make it unconstitutional.  It is the purview of Congress to fix bad statutes, not the courts.

Thanks to Gray on Claims for keeping track of the large number of false marking cases being filed and decided.

Posted in Court Decisions, District Court | 3 Comments »

Another Argument That the False Marking Statute is Unconstitutional

January 26, 2011

While patent owners wait for Congress to amend the false marking statute, plaintiffs continue to file cases seeking damages for falsely marked products, such as with patent numbers that do not cover the product or with patents that have expired.

In one case filed last year, Alchemy Asset Services alleges that GlaxoSmithKline has marked its Fiber Choice product with expired patent numbers.  GSK responded with a motion to dismiss based on the fact that false marking cases are required to be pled with particularity, meaning the complaint requires a specific recitation of the facts that set forth the cause of action, similar to the requirement for cases alleging fraud.  The magistrate judge in the case recommended that the court grant GSK’s motion to dismiss on this basis.

GSK also argued that the false marking statute is unconstitutional under Article II, Section 3 of the Constitution.  For those not familiar with this provision, it sets forth the authority of the Executive Branch of the Government.  Specifically, the provision of this section at issue is the requirement that the president “shall take Care that the Laws be faithfully executed.”  This is known as the “Take Care” Clause.  By delegating enforcement of the false marking statute to private citizens, so the argument goes, Congress has delegated an executive function.  This it cannot do under the Constitution.

These types of actions, where enforcement of a law is permitted by a private citizen who then shares in the penalty enforced by the law, are called qui tam actions.  Most qui tam actions have been repealed or amended by Congress; the Patent Act’s false marking statute is one of the few that remain. 

The constitutionality of many of these statutes has been challenged in the past and upheld.  Many courts have used an “executive control” test in upholding the constitutionality of such statutes.  If the Executive Branch, usually the Attorney General, has the right to be notified, to intervene, and to take over such cases, they pass constitutional muster.

In this case, GSK argues that the false marking statute does not contain any such “executive control” protections.  Without these protections, the Executive Branch does not have any control or say in the cases.  Thus, the statute is unconstitutional under the Take Care clause.  The Federal Circuit specifically declined to address this question last year in Stauffer v. Brooks Brothers, Inc. because it was raised in an amicus brief.  It was not argued by either party or decided by the district court.

Law360 (subscription service) reports that the court in the GSK case has granted the government’s motion to intervene to submit a brief on the constitutionality of the false marking statute.  The plaintiff in that case has stated that it welcomes the intervention and believes that the government will support the contitutionality of the statute.

Gray on Claims and the law firm of McDonnell Boehnen have sites devoted to false marking cases.

Posted in District Court | 1 Comment »

Gene Patents Declared Invalid, For Now

March 30, 2010

Well, Judge Sweet has done what many had feared (hoped?) and teed up the gene patenting case for the Federal Circuit.  In a 156 page opinion issued yesterday, he ruled that, as a matter of law, the patents directed to “isolated DNA” are directed to non-patentable subject matter and are invalid under 35 U.S.C. § 101.  Similarly, claims related to methods of “comparing” or “analyzing” DNA sequences are abstract ideas and are likewise unpatentable under § 101.

Regarding the “isolated DNA” claims, the court ruled as follows:

[T]he clear line of Supreme Court precedent and accompanying lower court authorities . . . establishes that purification of a product of nature, without more, cannot transform it into patentable subject matter.  Rather, the purified product must possess “markedly different characteristics” in order to satisfy the requirement of § 101.

The court rejected all of Myriad’s arguments that isolated DNA is indeed markedly different from native DNA in the body and thus invalidated the isolated DNA claims.

For the method claims, the court relied on Bilski‘s machine-or-transformation test to invalidate the claims.  The court dismissed many of Myriad’s arguments regarding the transformative nature of the claims by holding that they were merely data gathering steps. 

The court did struggle a bit more with the claim directed to comparing the growth rate of cells in the presence or absence of a potential cancer therapeutic, but ultimately concluded that it was likewise invalid.

The court did dismiss the plaintiffs’ constitutional claims against the PTO and also did not rule on the constitutional claims against Myriad, citing the doctrine of constitutional avoidance.  When a court can rule on a statutory issue to provide the desired relief, it should refrain from ruling on a related constitutional issue.

The court recognizes that this decision will not stop the PTO from issuing claims of similar ilk to isolated DNA and methods of analyzing and comparing the DNA.  It seems to believe, however, that it will be affirmed by the Federal Circuit and perhaps the Supreme Court thus putting an end to these “evil” patents.

Make no mistake about it.  The ACLU only got involved in this case because it expects to take it to the Supreme Court.  The first step, however, is the Federal Circuit.  I agree with Patently-O and others that suggest the case will be reversed by the Federal Circuit and set up a potentially epic battle at the Supreme Court that could have enormous consequences to the biotechnology industry in the US.  As far as Federal Circuit review, this decision flies in the face of too many of that court’s and its predecessor’s precendents.  The Supreme Court is a bit more of a wild card.

Posted in Court Decisions, District Court | 4 Comments »

PTO Responds in Gene Patent Saga

January 6, 2010

In the ongoing saga by the ACLU seeking to invalidate certain gene patents and hold that such patents are unconstitutional, the PTO has filed its brief in opposition to the plaintiffs’ motion for summary judgment.  Instead, the PTO asks the court to enter judgment in its favor.

The PTO’s argument is summarized as follows.

First, the only claims alleged against the PTO are constitutional claims, that the patents were issued in violation of the IP Clause and the First Amendment of the Constitution.  The PTO argues that in order to adjudicate these claims, the court must first determine whether the patents were issued in violation of the patent statute.  If the patents are invalid as not being directed to patentable subject matter, not being novel, being obvious, or violating the enablement or written description requirement of 35 U.S.C. §§ 101, 102, 103, or 112, the court should not adjudicate the constitutional claims unnecessarily.  Only if the court determines that the patents were issued in compliance with the statute should the court determine whether the statutory provisions violate the IP Clause or the First Amendment of the Constitution.

IP Clause

The PTO argues that the statute clearly does not violate the IP Clause of the Constitution.  Initially, the PTO argues that it is unlikely that the IP Clause imposes any limitation on Congress’ power to enact the patent laws. 

Even if there is a limit on Congress’ power, the court would review the patent system to determine whether Congress had a rational basis to enact the patent laws under this provision.  Such a review would be limited to whether Congress used a rational exercise of legislative authority granted by the IP Clause.  Clearly, it did.  The power to issue patents for broad categories of inventions “adds to the general store of knowledge.”  Thus, Congress had a rational basis for enacting the patent laws.

Contrary to plaintiffs’ assertions that patents in the biotechnology field are unnecessary, the PTO argues that the high costs of bringing biotechnology products to market is another reason to permit strong patent protection in this area.  The disclosure requirement of the patent system adds to the knowledge of other researchers in the field.  Thus, Congress had multiple rational bases for permitting gene-based patents.

First Amendment

The PTO also makes a number of arguments against the the plaintiffs’ First Amendment claims.  First, the PTO argues that the First Amendment does not provide a substantive limitation on Congress’ authority to enact the patent laws.  If there is such a limitation, the courts have already interpreted the patent laws to accomodate First Amendment concerns.  Finally, the plaintiffs’ arguments are premised on the incorrect notion that patents on isolated and purified genes are patents on “information.”

The Patent Act promotes rather than inhibits free speech.  The patent laws require disclosure of an invention in order to be granted a limited monopoly.  Without the patent laws, the invention might otherwise be kept secret.  Contrary to the plaintiffs’ assertions regarding the high cost of obtaining rights in patents, the First Amendment does not require that its exercise be cost-free.

Patents might be deemed to be limitations on conduct–the ability to practice someone else’s patent without permission–but they are not limitations on speech.  Thus, the First Amendment should not be implicated.  Patent owners are not able to control knowledge with respect to their discoveries, they may only keep others from infringing their patents.  The plaintiffs’ arguments that patenting “abstract ideas” and “mental processes” are already dealt with by § 101 of the Patent Act.  Congress clearly did not violate the First Amendment by enacting the Patent Act.

The plaintiffs also argue that the patents were issued in violation of the First Amendment because they cannot be designed around.  The PTO argues that no court has ever recognized an absolute right to design around a patent.  Furthermore, the patents in this case would “normally be expected to spur competitors to seek and invent additional ways of determining predispositions to cancer, including by conducting research on other genes.”  The scope of patent protection for inventions that are difficult to design around should be left to Congress.

The isolated, purified genes claimed in the patents are chemicals that can convey information, they are not themselves information.  Because they are chemicals, they would be eligible to be patented, provided they meet the other requirements for patentability.

Conclusion

The PTO’s brief is well-reasoned and provides a solid legal argument.  It should be persuasive if this were a rational argument.  Unfortunately, given that the ACLU is using the media to inflame the debate, it has been emotional, rather than rational.  And given Judge Sweet’s earlier opinion in the case, it is difficult to predict how he will rule.

Patent Docs provides frequent updates on this case and the gene patenting debate in general.

Posted in District Court, US Patent & Trademark Office | 1 Comment »

District Court Denies Motions to Dismiss in Gene Patent Case

November 3, 2009

In the continuing saga in the lawsuit seeking invalidation of gene patents, Patently-O is reporting that Senior Judge Robert W. Sweet has denied the defendants’ motions to dismiss the case in its entirety.  The court issued an 85 page opinion on the issues.

Initially, the court recognized that:

[t]his action is unique in the identity of the parties, the scope and significance of the issues presented, and the consequences of the remedies sought.  . . .  The challenges to the patents-in-suit raise questions of difficult legal dimensions.

The PTO argued that the “comprehensive statutory scheme” set forth in the Patent Act precludes suits of this type against it, as well as that the suit was precluded by sovereign immunity.  The court rejected the PTO’s arguments and held that the Patent Act did not preclude constitutional challenges to PTO actions and that the PTO does not enjoy sovereign immunity from such constitutional challenges.

Next, the defendants argued that the plaintiffs lacked standing to bring this action because there is no case or controversy between the parties.  In effect, the plaintiffs have no reason to believe they will be sued for infringing the patents.  Again, the court rejected this argument because the argument did not address the alleged unconstitutional practices and policies of the PTO, but instead was only addressed to statutory violations. 

The court also cited MedImmune in holding that the particular facts of this case warrant a finding of jurisdiction.  The court analyzed the actions of defendant Myriad in enforcing the patents and threatening or suing others to determine that there was an actual case or controversy between the parties.

Finally, the court held that the plaintiffs’ allegations of constitutional violations are adequate.  The plaintiffs challenge specific examination guidelines that were published in the Federal Register in 2001.

Other Issues

The court had stayed proceedings dealing with the plaintiffs’ motion for summary judgment while it considered the motions to dismiss.  Now that it has ruled on these motions, the summary judgment proceedings and arguments will take place in December.

It is important to note while the plaintiffs did overcome a major hurdle in the motions to dismiss, they still have a long way to go to proving their claims and winning the case.  When a court considers a motion to dismiss, it considers the case in the light most favorable to the non-moving party.  Thus, it considers the facts alleged in the complaint to be true.

Judge Sweet

Judge Sweet was born in 1922 and was appointed to the federal bench by President Carter in 1978.  He became a senior district court judge in 1991.  Judge Sweet is a member of and serves on the advisory board for Law Enforcement Against Prohibition (LEAP), a group of police officers, government agents, and other law enforcement officers who oppose the War on Drugs and seek to legalize drugs.

Posted in Court Decisions, District Court | 1 Comment »

Amicus Briefs Supporting Plaintiffs in Gene Patent Case

September 3, 2009

As a follow up to yesterday’s post on the ACLU’s gene patent case, several organizations have filed amicus briefs in support of the plaintiffs’ position.

March of Dimes Brief

The March of Dimes and several other organizations filed a brief where they argue that the patents improperly remove natural phenomena and laws of nature from the public domain, and that the patents upset the balance struck by Congress and the courts as to what constitutes patentable subject matter.  They also argue that the patents harm research and innovation, as well as patients who require genetic testing.   Although it is difficult to tell from the brief, it appears that this argument is that the patents are invalid under § 101 of the Patent Act and Supreme Court precedent intrepreting this section.

American Medical Association Brief

The American Medical Assocation (AMA) and several other organizations filed a brief where they argue that gene sequences and correlation claims are not patentable subject matter under the Intellectual Property Clause of the Constitution and § 101 of the Patent Act.  They also argue that such patents violate medical and scientific ethical tenets and are not necessary to encourage innovation in the field of genetics.  The AMA is opposed to patents and trade secrets on medical and surgical techniques generally.

National Women’s Health Network Brief

The National Women’s Health Network (NWHN) and several other organizations filed a brief where they argue that genes, genetic sequences, and their correlations to various diseases are exceptions to patentable subject matter under the Patent Act.  They are products of nature or scientific truths or principles.  They also argue that the patents harm patients, particularly women, by stifling access to health care, innovation, and competition.

Finally, they argue that genes are part of the common heritage of humanity.  International treaties and the Public Trust Doctrine prohibit their removal from the public domain.  The NWHN argues that the human genome is a part of the common heritage of humanity, similar to agreements regarding deep sea beds, Antarctica, the moon, and other celestial bodies.  They cannot be exploited by a particular private entity or nation because they belong to all of humanity.  Interestingly, despite the argument, the brief does not point to any international treaty that would prohibit the patents at issue in this case.

Conclusion

Many of the plaintiffs’ arguments are policy arguments that are better resolved on the legislative level than by unelected judges.  Since they are unlikely to get the resolution they desire from Congress, they fight in the judicial battlefield.

Whatever the outcome, the case has, and will continue to, gain a great deal of press.  It may take several years to resolve at the district court and it is unlikely to end there.  The Federal Circuit and perhaps the Supreme Court will weigh in before it is resolved.

Posted in District Court | 1 Comment »

ACLU Moves for Summary Judgment in Gene Patent Case

September 2, 2009

In May, the ACLU filed a lawsuit seeking to invalidate patents relating to genes linked to breast and ovarian cancers.  Last week, the plaintiffs filed a motion for summary judgment in the district court.

The plaintiffs argue that the claims are invalid for at least three reasons:  (1) the patented genes and genetic mutations are naturally occurring and thus are not patentable subject matter under § 101 of the Patent Act; (2) the patents cover thought, knowledge, and ideas in violation of the First Amendment; and (3) the patents cover basic scientific principles thereby impeding, rather than advancing science, in violation of the Intellectual Property Clause of the Constitution (Art. 1, Sec. 8, Cl. 8).

Patentable Subject Matter

First, the plaintiffs argue that the patenting of human genes and the concept of looking at or comparing genes and genetic mutations violates Supreme Court precedent that prohibits patenting laws of nature, physical phenomena, and abstract ideas.  The composition claims at issue in the case refer to purified, extracted, or isolated genes.  “Isolating” a gene refers to the removal of the gene from the body and separating it from surrounding cellular material.  The plaintiffs argue that PTO policy to grant such patents on isolated and purified genes violates Supreme Court precedent against patenting naturally occurring products. 

The plaintiffs rashly disregard a number of cases where courts have upheld patents to isolated genes and DNA sequences.  They argue that the courts erroneously focused on other issues, like novelty and utility, instead of the patentable subject matter question.

The plaintiffs also argue that the claims to methods of detecting genetic alterations specify the only step as analyzing various genetic sequences without specifying how this analysis would be conducted.  The argument is that the claims cover the mere thought process of looking at the genes, thus the claims are not directed to patentable subject matter.  Likewise, claims to methods of comparing two genes cover laws of nature and abstract ideas.

First Amendment

Next, the plaintiffs argue that the patenting of abstract ideas or thought or an entire body of knowledge violates the First Amendment.  Several of the claims-at-issue relate to looking at genes and reaching a conclusion and others involve abstract mental processes.  If a person looked at the genes and mentally reached a conclusion, he would infringe these claims.  It is impossible for a competitor to design around or build upon a patent on a law of nature, such as a gene.  These points seem to be a repitition of the subject matter arguments.

Intellectual Property Clause of the Constitution

The plaintiffs argue that the patents impede, rather than promote, the progress of science as required by the Intellectual Property Clause of the Constitution.  To support this argument, the plaintiffs cite to the nature and range of the plaintiffs in the case, including pathologists, clinical laboratory scientists, researchers, geneticists, genetic counselors, women’s health advocacy organizations, and individual women.  The plaintiffs also argue that the patents were not necessary to have the genes identified and sequenced.

Analysis

The majority of the ACLU’s brief is focused on its strongest argument (which is NOT that the patents violate the Constitution).  The arguments that the isolated genes are naturally occurring and that the methods do not involve a machine or transformation of matter are going to have to be addressed by the patent owners. 

As is usually the case in patentable subject matter cases, the arguments could be better formulated around novelty, non-obviousness, or enablement.  The argument that simple isolation and purification of a naturally occurring gene should not qualify for patentability sounds like a lack of novelty or obviousness argument.  The point that the method claims do not include sufficient detail on how to accomplish the patented methods sounds like an enablement argument.

The First Amendment argument is ridiculous.  To a certain extent, all intellectual property protection laws restrain speech:  they permit the owner to exclude another from certain action or speech.  This does not mean they violate the First Amendment.  This argument again is really directed to other sections of the Patent Act, rather than free speech.  If the claims are not enabled, they are invalid under § 112, not the First Amendment of the Constitution.

The Intellectual Property Protection Clause argument is equally specious.  First of all, it’s simply a matter of opinion.  Just because they got together a large number of parties to serve as plaintiffs does not mean that the patents are invalid simply because the plaintiffs wish it so.  IBM’s competitors probably wish IBM’s patents would all be invalidated.  Simply because they all band together doesn’t mean the patents should be tossed out.

Other Issues

The patent owners have filed a motion for the court to dismiss the case based on lack of case or controversy and lack of personal jurisdiction by the court.

In addition to suing the patent owners, the plaintiffs have also sued the PTO.  The plaintiffs argument against the PTO is that its policy of issuing patents such as those in this case violates the Consitution.  The PTO has filed a motion to dismiss based on lack of subject matter jurisdiction and sovereign immunity.  The PTO argues that the plaintiffs lack standing to bring the suit and that there is no redress available to them under the law.

Posted in District Court | 1 Comment »

Another Court Invalidates Computer-Aided Method Claims

July 13, 2009

Another district court has used In re Bilski‘s machine-or-transformation test to invalidate a method claim that included the aid of a computer.  In Dealertrack, Inc. v. Huber, et al., Doc. No. 06-2335 (C.D. Cal. 2009), the plaintiff asserted that U.S. Patent No. 7,181,427 was infringed by the defendant.

Claim 1 of the ’427 patent states:

1. A computer aided method of managing a credit application, the method comprising the steps of:

receiving credit application data from a remote application entry and display device;

selectively forwarding the credit application data to remote funding source terminal devices;

forwarding funding decision data from at least one of the remote funding source terminal devices to the remote application entry and display device;

wherein the selectively forwarding the credit application data step further comprises:

sending at least a portion of a credit application to more than one of said remote funding sources substantially at the same time;

sending at least a portion of a credit application to more than one of said remote funding sources sequentially until a finding source returns a positive funding decision; sending at least a portion of a credit application to a first one of said remote funding sources, and then, after a predetermined time, sending to at least one other remote funding source, until one of the finding sources returns a positive funding decision or until all funding sources have been exhausted; or;

sending the credit application from a first remote funding source to a second remote finding source if the first funding source declines to approve the credit application.

The claim is a “computer-aided method.”  The court ruled that the computer does not include hardware or a database that is specially programmed to perform the claimed method, but instead described the claim-related machines as “any device, e.g., personal computer or dumb terminal.”  This was a part of the court’s claim construction ruling issued over a year before.  The court cited a growing number of district courts and Board of Patent Appeals and Interferences (BPAI) decisions that are ruling against patent owners and applicants on this issue.

Thus, we wait with hopeful anticipation that the Supreme Court will fix the Federal Circuit’s mess yet again.

Posted in Court Decisions, District Court | Leave a Comment »

Court Dismisses Patent Marking Lawsuit

July 13, 2009

I previously did a guest post at Huliq.com on the false marking lawsuit Pequignot v. Solo Cup Co. that was pending in the Eastern District of Virginia.  The plaintiff alleged that Solo Cup falsely marked its products with expired patent numbers.

The court had denied several motions to dismiss filed by Solo Cup based on the fact that Solo Cup marked that the products “may be covered” by patents and that the plaintiff did not have standing to sue for false marking.  The court noted that the statute permits any person to sue on behalf of the government.

As I noted in the Huliq.com article, the higher burden that the plaintiff faced was to prove that Solo Cup marked its products falsely with “an intent to deceive.”  Judge Leonie Brinkema has now dismissed the case because Pequignot has not provided any evidence of the intent to deceive. 

Patently-O is reporting that during oral argument the judge indicated that the ruling would “get [the] case teed up for the Federal Circuit” on appeal.  Because there is little caselaw in this area, she does not know the standard that should be used to judge the intent to deceive and hopes the Federal Circuit will provide guidance.

Posted in Court Decisions, District Court | 2 Comments »

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