Archive for the ‘Supreme Court’ Category

Supreme Court to Review Claim Construction

April 2, 2014

The Supreme Court has agreed to hear another patent case, Teva Pharms. USA, Inc. v. Sandoz, Inc.  In this case, the Court will determine whether factual findings underpinning claim construction rulings should be reviewed de novo or only for clear error.

You will recall that the Federal Circuit recently considered this issue in Lightning Ballast v. Phillips and decided by a vote of 6-4 to continue its current practice of de novo review.  In that case, Judge O’Malley issued a scathing dissent of the majority opinion by Judge Newman where she called out judges for changing their long held positions.

In July, the Federal Circuit issued an extensive opinion in Teva v. Sandoz that included a number of rulings on various issues in the case.  The one that Teva decided to pursue to the Supreme Court was the ruling on the definiteness of various claims at issue.  A number of claims were held to be invalid as being indefinite, while another set of claims was held to be sufficiently definite to withstand an invalidity charge on that basis.  To determine whether the claims met the legal standard of definiteness, the Federal Circuit had to construe a number of claim terms.  Following its precedent, it did so de novo.

The Supreme Court will now determine whether the de novo standard is correct.

This case adds yet another to the Supreme Court’s growing list of patent cases that it has been reviewing in recent years.  The Court’s argument calendar for the current term is full, so this case will be argued during the October 2014 term, with a decision expected by early 2015.

Supreme Court to Hear Several Patent Cases

January 10, 2014

USSupremeCourtWestFacadeThe Supreme Court has agreed to hear two patent cases before the end of the current term.

Limelight Networks, Inc. v. Akamai Techs., Inc.

In 2012, a divided en banc Federal Circuit permitted divided infringement, where it takes more than one party to perform all of the steps of a claimed process, but only for induced infringement.  The court held that infringement can be found in cases where (1) a party performs some of the steps of a patented method and induces another party to perform the remaining steps; and (2) where a party induces multiple third parties to collectively perform the steps of a patented method, but no single party has performed all of the steps itself.   The knowledge requirement for inducement to infringe a patent claim means that collaborating parties cannot “accidentally” infringe.  A significant minority of the court argued that the statute requires a single entity to perform all of the steps for there to be infringement.

Nautilus, Inc. v. Biosig Instruments, Inc.

This case relates to the statutory requirement that applicants particularly point out and distinctly claim their invention.  This is referred to as the “definiteness” requirement of claims.

Sometimes the words used in a patent claim can be subject to multiple reasonable interpretations.  The Federal Circuit has ruled that such claims are only indefinite under the statute if they are “not amenable to construction” or are “insolubly ambiguous.”  This means that a patent claim is only ambiguous if one of skill in the art would read the claim and not know what the boundaries of the claim are based on review of the specification and prosecution history.

In Nautilus, the question is whether one of skill in the art can determine the meaning of the claim requirement that electrodes be in a “spaced relationship”.  The Federal Circuit, applying its standard, ruled that the term can be sufficiently understood and the claim is not indefinite.

The Supreme Court will address whether the Federal Circuit is using the correct standard for this determination.

The cases will probably be argued in April with decisions expected by the end of the term in June.

Supreme Court to Review CLS Bank

December 9, 2013

Last week, the Supreme Court granted certiorari in CLS Bank v. Alice Corp.  This was the case where the 10 member en banc Federal Circuit could not garner sufficient votes for any kind of precedential opinion on whether certain computer-related claims constituted patentable subject matter.  The Supreme Court will review the two sentence per curiam opinion of the court, as well as the numerous concurring and dissenting opinions of the judges.

The question presented for the appeal:

Whether claims to computer-implemented inventions-including claims to systems and machines, processes, and items of manufacture-are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court?

Unfortunately, the Supreme Court’s recent forays into patentable subject matter have not added clarity to this area of law.  Bilski didn’t really change anything or give any real guidance for business method patents.  In Prometheus, the Court seriously confused patentable subject matter with obviousness and patentability.  They did do a bit better with isolated DNA in Myriad.

The Court should probably choose which cases to review a bit more wisely.

Oral argument in CLS Bank will take place in the spring with a decision expected by the end of the current term in June.

Supreme Court to Hear Two More Patent Cases

October 1, 2013

USSupremeCourtWestFacadeThis morning, the Supreme Court issued orders granting certiorari in two more patent cases that it will hear during the October 2013 Term.

Highmark, Inc. v. Allcare Health Management Systems, Inc.

Section 285 of the Patent Act permits a trial court to award attorneys’ fees to the prevailing party in “exceptional” cases.  What exactly constitutes an exceptional case?  Typically, these would be cases where a party engages in misconduct, cases involving inequitable conduct, or cases where the party’s allegations or defenses are “objectively baseless.”  As you might expect, these determinations are highly fact specific.

What is the standard of review on appeal?  Factual determinations by a trial court are typically reviewed for “substantial evidence” or clear error.  This means that, when reviewing the record, is there sufficient evidence to support the trial court’s decision (usually for jury verdicts) or did the trial court commit clear error?  If there is substantial evidence or the trial court did not commit clear error, the appellate court should affirm the judgment even if the appellate judges might have decided the issue differently.

In Highmark, a divided Federal Circuit panel held that these determinations should be subject to de novo review; that is, the appellate court should give no deference to the trial court’s factual findings and simply rule on the issue itself anew.  The court denied en banc review by a vote of 6-5.  Judge Moore filed a lengthy dissent from that denial.

The question the Supreme Court will decide is whether determinations of objective reasonableness by a trial court under § 285 are entitled to deference.

Octane Fitness, LLC v. Icon Health & Fitness, Inc.

In this case, the petitioner seeks to challenge the Federal Circuit’s standard for determining whether a case is exceptional under § 285.  The petitioner argues that it is more difficult for a defendant to be awarded attorneys’ fees than for a plaintiff bringing an infringement suit.  The standard is higher and encourages companies to bring spurious lawsuits alleging infringement.

The Federal Circuit dismissed this cross-appeal in a single paragraph in its opinion in the case.

The Court will hear arguments in these cases in the coming months with decisions expected by the spring.

HT:  Hal Wegner.

Patent News Update

September 27, 2013

There have been a number of patent-related news items making their rounds recently.

PTO to Stay Open in Event of Government Shut Down

Hal Wegner shared a memo from Acting PTO Director Teresa Rae to PTO employees that the agency will use its reserve funds to remain open for at least several weeks in the event of a government shut-down on Tuesday.

Dear Colleagues,

As you know, the Obama administration is working diligently with Congress to try to ensure that the federal government remains open and continues to do its work on behalf of the American people. However, I wanted to inform you that even in the event of a government shutdown on October 1, 2013, the United States Patent and Trademark Office will remain open, using prior year reserve fee collections to operate as usual for at least a few weeks. We continue to assess our fee collections compared to our operating requirements to determine how long we would be able to operate during a government shutdown; we will update you as more definitive information becomes available.

Because the USPTO maintains sufficient carryover funding from prior fiscal years, our agency can and will stay open for business for a period of time using these available reserves. During that time we will all continue to conduct our duties and serve our Nation, by processing the patent and trademark applications that drive our country’s innovative economy. Should we exhaust these reserve funds before the government shutdown comes to an end, USPTO would have to shut down at that time, although a very small staff would continue to work to accept new applications and maintain IT infrastructure, among other functions.

I realize you likely have many more questions. As new information becomes available, we will inform you promptly and thoroughly. Your respective business unit managers will also be reaching out to you to provide further clarification, as needed.

I thank you for your hard work, and the continuing dedication you demonstrate to the American people.

Sincerely,

Terry Rea

Congress Continues to Seek More Patent Reform

Patently-O has provided analysis and review of a patent reform bill discussion draft introduced by House Judiciary Chair Bob Goodlatte (R-VA).  The purpose of the bill, according to Rep. Goodlatte is to end “[a]busive patent litigation” specifically by “patent trolls.”

The bill would repeal the right of a civil action against the PTO to obtain a patent, substantially narrow the estoppel provisions of post-grant review, require the PTO to construe patent claims as a court would during post-grant and inter partes proceedings, codify obviousness-type double patenting, expand the scope of covered business methods for review, eliminate patent term extension after the filing of an RCE, and overturn the Supreme Court decision that patent malpractice suits belong in state court.

Other provisions in Rep. Goodlatte’s bill are similar to other bills seeking to reduce patent litigation abuse and patent troll tactics.  The bill would raise patent infringement pleading requirements, require the award of attorneys’ fees to prevailing parties (and against all interested parties), limit discovery prior to a court’s claim construction ruling, require companies asserting patents to disclose all interested parties, require courts to stay infringement suits against customers until suits against manufacturers are resolved, and protect creditor-licensees from foreign bankruptcies by IP owners.

Supreme Court Patent Cases

The Supreme Court’s October 2013 Term begins Monday, October 7.  The Court is scheduled to hear oral arguments in Medtronic v. Boston Scientific Corp. on November 5.  The question that Court will consider in that case is whether a declaratory judgment plaintiff has the burden to prove non-infringement against a patent owner.  The Federal Circuit ruled that the DJ plaintiff does bear the burden of proof.

The Court is considering or will consider petitions in a number of other patent cases as well.

Akamai v. Limelight.  The Court issued a CVSG order in this case in June where it asked for the views of the Solicitor General as to whether it should hear this case.  Akamai concerns multi-party infringement where more than one party completes all of the steps required in a patent claim.  The issues relate to both direct infringement and indirect infringement (inducement or contributory infringement).

Alice v. CLS Bank.  An en banc Federal Circuit could not garner a majority to determine whether the computer-related claims in this case were patent eligible subject matter.  A plurality of the court affirmed the district court’s holding that they were not.

WildTangent v. Ultramercial.  The Federal Circuit has twice held that the internet monetization claims in this case do constitute patent eligible subject matter.  The Supreme Court had earlier asked the Federal Circuit to reconsider its opinion in light of the Mayo v. Prometheus decision.

Supreme Court Strikes Down Isolated DNA Claims; Permits cDNA Claims

June 17, 2013

USSupremeCourtWestFacadeLast week, the Supreme Court issued its decision in Association for Molecular Pathology v. Myriad Genetics, Inc.  Justice Thomas, writing for a unanimous Court, ruled that isolated DNA sequences are not patent eligible.  The Court did permit the patent claims to isolated cDNA to stand.

The gene patent saga filed by the ACLU on behalf of a large number of plaintiffs has finally come to an end.  After 4 years of litigation and 2 trips to the Supreme Court, the law is that isolated DNA is no longer eligible for patent protection.  cDNA, however, remains patentable.

Given the recent Supreme Court decisions on patent eligibility under § 101, the only surprising thing about the opinion was that they did not strike down all of the claims.  Myriad retains its claims to methods of screening patients for the genetic mutation that indicates a higher propensity for breast and ovarian cancers, and it retains its claims to complementary DNA (cDNA).

The opinion did not seem to conflate patent eligibility with novelty or obviousness as in Mayo v. Prometheus.  The opinion in Myriad started with the statutory language and then turned to the judicial exceptions for “laws of nature, natural phenomena, and abstract ideas.”  The Court then quoted extensively from Mayo to expound on these exceptions:

without [these] exception[s], there would be considerable danger that the grant of patents would “tie up” the use of [basic tools of scientific and technological work] and thereby “inhibit future innovation premised upon them.”

This idea from Mayo is that patents inhibit research and development instead of encouraging it.  It has been thought for years that one of the purposes of patents is to provide an incentive to innovate.  These statements bring that premise into question.

And, of course, by definition a patent will “tie up” the claimed subject matter.  That’s the whole point:  to be able to exclude others from copying the claimed invention.

In the analysis of the isolated DNA, the Court held that Myriad’s principal contribution was uncovering the precise location and genetic sequence of the BRCA1 and BRCA2 genes.  “Myriad did not create anything,” according to the Court.  “[S]eparating [the] gene[s] from [the] surrounding genetic material is not an act of invention.”  The PTO apparently thought otherwise for about 30 years.  The Supreme Court whisks it all away without providing support for the contention that is does not constitute an act of invention.

The Court did recognize that cDNA is not naturally occurring.  It may retain some characteristics of the isolated DNA, but it is generally created in the lab and does not exist in the human body.  Therefore, cDNA is still patent eligible.

Finally, the Court seemed to try to give some hope and encouragement to the biotechnology industry:

  1. The Court noted that no method claims were included in its opinion.  Innovative methods of manipulating the genes would still be patent eligible.
  2. The Court noted that new applications of knowledge about particular genes may still remain patent eligible.
  3. The Court noted that it provided no opinion on the patent eligibility of DNA in which the order of the naturally occurring nucleotide sequences has been altered.

On the third point, the Court did not provide guidance.  How much alteration is required for patent eligibility?

Justice Scalia wrote a rather bizarre opinion concurring in part and concurring in the judgment.

I join the judgment of the Court, and all of its opinion except Part I–A and some portions of the rest of the opinion going into fine details of molecular biology. I am unable to affirm those details on my own knowledge or even my own belief. It suffices for me to affirm, having studied the opinions below and the expert briefs presented here, that the portion of DNA isolated from its natural state sought to be patented is identical to that portion of the DNA in its natural state; and that complementary DNA (cDNA) is a synthetic creation not normally present in nature.

This is something to keep in mind regarding these cases.  The judges and juries who must ultimately rule on them will very rarely understand the science behind them.  They are usually not this candid in admitting their lack of understanding.

Implications

How will this opinion affect the biotechnology industry? Given this and other recent Supreme Court opinions on patentable subject matter, it seems that patents in the area of personalized medicine will be difficult to obtain and enforce. Many biotechnology companies are working on ways to grow organs that can be transplanted into the human body to replace defective organs. The goal is for these organs to be as similar to the natural organs as possible. This opinion seems to indicate that such organs could not be patented.  HT:  IPWatchdog.

Given the extensive costs of research in these areas, will companies continue to make large scale investments? The Supreme Court seems to be arguing, somewhat contrary to historical understandings, that patent inhibit rather than encourage research. Monopoly profits for the limited term of the patent are set to encourage companies to make large initial upfront investments.

Supreme Court to Review Burden of Proof in Declaratory Judgment Actions

May 21, 2013

Yesterday, the Supreme Court agreed to hear the appeal of the declaratory judgment plaintiff in Medtronic Inc. v. Boston Scientific Corp.  The question presented in the case is as follows:

In MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 137 (2007), this Court ruled that a patent licensee that believes that its products do not infringe the patent and accordingly are not subject to royalty payments is “not required … to break or terminate its … license agreement before seeking a declaratory judgment in federal court that the underlying patent is … not infringed.”

The question presented is whether, in such a declaratory judgment action brought by a licensee under MedImmune, the licensee has the burden to prove that its products do not infringe the patent, or whether (as is the case in all other patent litigation, including other declaratory judgment actions), the patentee must prove infringement.

Federal Circuit Decision

Medtronic licensed patented technology related to cardiac resynchronization therapy (CST) from Mirowski Family Ventures (MFV).  Nearly from the start of the relationship, the parties disagreed as to which products were covered by the patents and whether the patents were valid.  In 2003, Medtronic challenged the validity of a licensed patent while paying royalties into an escrow account.  The parties ultimately settled the case.  The settlement agreement indicated that MFV would inform Medtronic as to which products were covered by the patents.  If Medtronic disagreed, it could retain the license while bringing a declaratory judgment action to have the court decide the issue.

In late 2007, Medtronic filed just such a declaratory judgment action of non-infringement and invalidity of the patents.  Because it continued in the license agreement, MFV could not counterclaim for infringement.  The parties disputed whether the burden to prove infringement rested on MFV, as is typically the case for the patent owner, or if, given the stature of the case, Medtronic bore the burden to prove non-infringement.  The district court sided with Medtronic and found the MFV did not meet its burden of proving infringement of the Medtronic products.

On appeal, the Federal Circuit recognized that the case is not the typical patent infringement situation where the patent owner files the initial complaint, nor is it the typical declaratory judgment case where the patent owner files the compulsory infringement counterclaim.  In those situations, the patent owner quite clearly bears the burden of proving infringement.

Now that the Supreme Court has indicated that counterclaims can be filed in the absence of ceasing royalty payments, patent owners cannot always file infringement counterclaims in the face of a declaratory judgment action.  Does the patent owner still bear the burden of proving infringement or has it shifted to the declaratory judgment plaintiff?

The Federal Circuit reversed the district court and allocated the burden of proof to the declaratory judgment plaintiff.  The court clearly struggled with how to handle the burden in light of MedImmune.  The court ultimately reasoned that MedImmune would become not simply a shield to keep licensees from large damage awards from non-payment of the license, but also a sword to haul the patent owner into court where the patent owner must prove infringement.  It is the licensee and not the patent owner who seeks relief from the court and a change in the status quo.  If neither party presented evidence, the court should not upset the status quo of the license agreement.  Thus, fairness requires them to bear the burden of proof.

The Supreme Court has now agreed to resolve this dilemma of its own making during its October 2013 term.

Supreme Court Affirms Federal Circuit in Seed Patent Exhaustion Case

May 13, 2013

In a rare affirmance of the Federal Circuit, the Supreme Court found no exhaustion in the seed patent case.  Bowman v. Monsanto Co.

Justice Kagan, writing for a unanimous Court, held that the doctrine of patent exhaustion only restricts a patent owner’s rights to a particular article sold.  It does not limit the patent owner’s right to keep others from making additional copies of the patented invention.

Exhaustion protected Bowman as to his ability to use the patented seeds as he saw fit.  It does not, however, protect him from charges of infringement should he decide to “make” new seeds.  This is what the Court said he did.  He planted the original seeds and harvested new ones from the resulting plants.  The act of making the new seeds was an act of infringement not protected by patent exhaustion.

More details are available in my preview post for the Supreme Court’s current term.

International IP Exhaustion Reprised

March 27, 2013

As an update to my earlier post on the case, the Supreme Court recently issued its decision on international copyright exhaustion.

Kirtsaeng v. John Wiley & Sons

The Supreme Court reversed the decision of the Second Circuit and held that John Wiley’s copyright was exhausted by the authorized sale of the textbooks in Thailand.  Kirtsaeng was free to do whatever he wanted with the books once he lawfully acquired them, including importing them into the United States and reselling them.

Professor Kristen Osenga of the University of Richmond Law School (my wife) provided a podcast for the Federalist Society about the Supreme Court’s decision.  http://www.fed-soc.org/publications/detail/kirtsaeng-v-john-wiley-sons-inc-post-decision-scotuscast.

The question of what, if any, impact this decision will have on patent law remains unanswered.  The Supreme Court refused to consider an appeal in a patent case on this same issue and left the Federal Circuit’s patent exhaustion opinion in place, even though the decision is contrary to the decision in Kirtsaeng.  Ninestar v. ITC.

Patent Malpractice Cases Belong in State Court

February 21, 2013

Yesterday, a unanimous Supreme Court has overturned the Federal Circuit practice of keeping malpractice cases against patent attorneys in Federal court with appeals to the Federal Circuit.  Gunn v. Minton.

In this case, the Texas Supreme Court had followed the Federal Circuit’s rule and dismissed the case for lack of subject matter jurisdiction.  The Federal Circuit’s rule was that such cases required resolution of significant issues of patent law, including whether the complainant would have prevailed if not for the alleged malpractice.  Would the complainant have received its patent in prosecution or prevailed on infringement claims in litigation?  The Federal Circuit was concerned that state courts are not adequately experienced in deciding patent cases which have exclusive Federal jurisdiction.  There could also be cases with conflicting results.

Judge O’Malley had recently been dissenting from the court’s prevailing view on this issue.

The Supreme Court held that although the state courts must answer questions of patent law to resolve the malpractice claims, the answer has no broader effects.  It is not binding precedent on future patent claims and will not effect the validity of the patent.  Therefore, state courts may retain jurisdiction over such malpractice claims.

The question next becomes whether the resolution of this case will effect other cases.  For example, is a dispute over a license or other contract whose subject matter is a patent belong exclusively in Federal court?  Contract disputes are typically decided under state law.  This question is presented in another case where a petition is pending before the Supreme Court.  Regents of Univ. of California v. Caldera Pharm., Inc.

As noted by Patently-O, however, the AIA changed the jurisdictional requirement from whether the dispute “arises under” the patent laws to whether it involves “any claim for relief arising under any Act of Congress relating to patents.”


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