Posts in Courts

Last Tuesday evening Chief Judge Rader was on a panel with U.S. District Court Judge Lucy Koh of the United States Federal District Court for the Northern District of California. Law.com reports that Jude Koh took a shot at Chief Judge Rader’s NY Times op-ed article, calling it “a little bit unfair.” Koh took issue with the articles suggestion that District Court Judges have the ability to shift fees in frivolous patent cases. According to Law.com, Judge Koh went on to explain that attorneys fees can only be awarded in “exceptional cases,” which she explained was “a really high bar.” Her final dig at the Chief was saying: “We can’t cite a New York Times editorial as authority.”

After years of debate and controversy, the US Supreme Court ruled that drugmakers can face lawsuits over so-called pay-to-delay patent settlements, but that such deals should not necessarily be assumed to be illegal. The decision largely vindicates the position held by the Federal Trade Commission, which argued the deals are anti-competitive because generic drugmakers are given incentive to file lawsuits against brand-name rivals and then settle for a quick profit, rather than challenge a patent in court. The FTC calculated the reverse settlments, as some call them, cost consumers $3.5 billion annually.

Widely divergent views have formed in the wake of the Supreme Court’s decision in Association of Molecular Pathology v. Myriad Genetics, Inc., No. 12-398, slip. op. (U.S. Jun. 13, 2013). Some commentators have reacted with dire predictions for the biotech industry, suggesting that the Court’s holding has unduly narrowed patent protection traditionally granted to DNA technology and has disincentivized researchers in the field, particularly those from small start-ups. Other commentators suggest that the Supreme Court’s decision in Myriad will actually benefit genetic research, particularly researchers at the start-up level. The authors of this post tend to agree with this latter view.

In this case, the Supreme Court considered an arrangement by which brand firm Solvay paid generics Watson (now Actavis) and Paddock roughly $30 to $40 million to delay entering the market with generic versions of testosterone gel. The Eleventh Circuit upheld the activity, concluding that “absent sham litigation or fraud in obtaining the patent, a reverse payment settlement is immune from antitrust attack so long as its anticompetitive effects fall within the scope of the exclusionary potential of the patent.” The court explained that “[p]atent holders have a ‘lawful right to exclude others from the market’” and that a patent “conveys the right to cripple competition.”

The Supreme Court reversed the Eleventh Circuit, concluding that, while a valid patent allows a patentee to charge “higher-than-competitive” prices, “an invalidated patent carries with it no such right.” The Court recognized the policy encouraging settlements. But for five reasons, it found that that policy did not dictate immunity for pay-for-delay settlements.

The baffling aspect of the opinion is that the Court seems to agree that both the DNA of claim 1 and the DNA of claim 2 are man-made and do not occur in nature. Of claim 1, the Court states that “isolating DNA from the human genome severs chemical bonds and thereby creates a nonnaturally occurring molecule”. Page 14 (emphasis added). Of claim 2, the Court states that “the lab technician unquestionably creates something new when cDNA is made.” Page 17 (emphasis added). According to the way many patent attorneys (and Judge Rader) think, that should be sufficient to comply with §101. But the Court does not see things this way.

USPTO to Examiners: “As of today, naturally occurring nucleic acids are not patent eligible merely because they have been isolated. Examiners should now reject product claims drawn solely to naturally occurring nucleic acids or fragments thereof, whether isolated or not, as being ineligible subject matter under 35 U.S.C. § 101.”

You can expect a near complete cessation in many areas of personalized medicine. If creating something in a lab, such as a composite cDNA, does not make the underlying claims patent eligible because what results is indistinguishable from what appears in nature that means that the fledgling and potentially promising technologies to grow organs for transplantation will shrivel up and die. The whole point is to create an organ that is indistinguishable from what appears in nature so that it can be transplanted into a human body to prolong life. Given the breadth of this opinion and the uncertainty it will cause funding will dry up in the U.S.

Cypress intends to vigorously pursue its two pending district court lawsuits against GSI, which include three of the patents asserted in the ITC investigation and seven additional patents. Those cases are No. 11-cv-00789, filed March 30, 2011, before Judge Patrick J. Schiltz in the United States District Court for the District of Minnesota, and No. 13-cv-02013, filed May 1, 2013, before Judge Jon. S. Tigar in the United States District Court for the Northern District of California. Cypress has asserted that GSI’s SigmaQuad-II™, SigmaQuad-III™, SigmaDDR™, standard Synchronous, and NBT SRAMs infringe multiple Cypress patents.

Alexsam, Inc. v. IDT Corporation is a non-remarkable patent infringement decision with a remarkable dissent. What is noteworthy about the case is not the majority opinion, but the dissent by Judge Haldane Robert Mayer. Mayer’s dissent discusses why the patent is invalid under 35 U.S.C. § 101, which is curious because the 101 issue was not raised by the defendants during the appeal nor even mentioned during oral arguments. While Mayer’s dissent is not a binding opinion, if another judge on the panel signed on to Mayer’s reasoning then the patent would have been held invalid based on an issue not raised during the appeal.

From an end-user’s perspective, it shouldn’t matter whether the normalization is done in hardware, in software or in a combination of hardware and software. And from the perspective of an interface designer, one would expect to be able to protect an invention that takes raw data from human input and causes a computer to scroll “intuitively” irrespective of whether implemented in hardware, software or a combination thereof. But therein lies our current §101 case law predicament.

The Supreme Court on May 20, 2013, agreed to review a Federal Circuit decision that a patent licensee bears the burden of proof in its action for a declaratory judgment of noninfringement where the license remains in effect to preclude the defendant patentee’s infringement counterclaim. 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.

n the case of Bowman v. Monsanto Co., Farmer Bowman may have believed that the “third time” would be “charm.” In two prior cases, Monsanto Co. v. Scruggs[1] and Monsanto Co. v. McFarling,[2] the Federal Circuit had ruled in favor of Monsanto, the owner of the patented Roundup Ready® soybeans, and against Farmer Scruggs and Farmer McFarling. Even so, Farmer Bowman, as probably did his legal counsel, may have believed that the Supreme Court’s 2008 decision in Quanta Computer, Inc. v. LG Electronics, Inc.[3] would undermine the Federal Circuit’s view that patent exhaustion didn’t apply to Monsanto’s patented Roundup Ready® soybeans. But in a unanimous decision, the Supreme Court affirmed the Federal Circuit’s 2011 ruling[4] that Farmer Bowman’s unlicensed planting of these patented Roundup Ready® soybeans (sold for commodity use only) was an infringing use that was not subject to the doctrine of patent exhaustion. Alas, Farmer Bowman found no solace in Quanta.

Some had hoped that the Court would use Bowman as an opportunity to address the extent of a patent owner’s monopoly over other self-replicating technologies in the areas of biotechnology and information technology, such as human cell lines or computer programs. Certainly, the Court hinted at the possibility of situations where the patented article’s self-replication is truly outside the purchaser’s control, or where the self-replication is an essential step in using the patented article for another authorized purpose. The Court, however, cautiously declined to extend its holding in Bowman to those situations. The decision in Monsanto is intended to be fact-specific and carry slight ramification. Indeed, the Court’s unanimous decision ended with a significant caveat that the holding is limited, “addressing the situation before [the Court], rather than every one involving a self-replicating product.”