Source: https://patentlyo.com/patent/2013/06
Timestamp: 2019-04-25 06:03:22+00:00

Document:
With the sequester, the USPTO has slowed its operation somewhat over the past two months. As a result, fewer patents issued per week in May/June 2013 than in prior months. However, the Office is still on track to issue a record number of patents in 2013 — an approximate 5% increase over 2012. The recent spate of subject matter eligibility cases is not expected to have any discernible impact on this result. The following chart is updated through June 27, 2013 and shows the number of utility patents granted per calendar year with a projection for the second half of 2013 based upon the first-half returns.
1. A method of treating restenosis in a mammal resulting from said mammal undergoing a percutaneous transluminal coronary angioplasty procedure which comprises administering an antirestenosis effective amount of rapamycin to said mammal orally, parenterally, intravascularly, intranasally, intrabronchially, transdermally, rectally, or via a vascular stent impregnated with rapamycin.
One requirement of patent law is that the patent application (at the time of its filing) must sufficiently enable a person skilled in the relevant art to make and use the full scope of the claimed invention without undue experimentation. This “enablement requirement” is codified in Section 112(a) of the Patent Act (Formerly known as Section 112¶1).
Here, it is the “full scope” requirement that kills the patent. In particular, Wyeth requested and received a broad construction of the claim term rapamycin to in a way that includes a large number of molecules that are structurally analogous to one another. However, the specification only discloses a single species along with a number of assays that could be useful to ascertain whether potential compounds exhibit the requisite effect.
In the appeal, the Federal Circuit aligned itself to the rule that broad claim scope requires broad disclosure. Here, the court noted that the rapamycin definition includes “tens of thousands” of candidate molecules and the specification “is silent about how to structurally modify sirolimus.
Undue experimentation: For its part, Wyeth argued that a lab tech with the usual skill and little creativity could systematically work through the various potential candidates to find which ones actually work. Citing to Johns Hopkins Univ. v. CellPro, Inc., 152 F.3d 1342, 1360–61 (Fed. Cir. 1998), Wyeth argued that a large pile of merely routine experimentation does rise to the level of impermissible undue experimentation.
The Federal Circuit disagreed – finding that the trial-and-error process of tens-of-thousands of candidates moves the project well into the range of undue experimentation.
[T]here is no genuine dispute that it would be necessary to first synthesize and then screen each candidate compound using the assays disclosed in the specification to determine whether it has immunosuppressive and antirestenotic effects. There is no evidence in the record that any particular substitutions outside of the macrocyclic ring are preferable. Indeed, a Wyeth scientist confirmed the unpredictability of the art and the ensuing need to assay each candidate by testifying that, “until you test [compounds], you really can’t tell whether they work or not [i.e., have antirestenotic effects].” J.A. 6929. In sum, there is no genuine dispute that practicing the full scope of the claims would require synthesizing and screening each of at least tens of thousands of compounds. . . .
Even putting the challenges of synthesis aside, one of ordinary skill would need to assay each of at least tens of thousands of candidates. Wyeth’s expert conceded that it would take technicians weeks to complete each of these assays. The specification offers no guidance or predictions about particular substitutions that might preserve the immunosuppressive and antirestenotic effects observed in sirolimus. The resulting need to engage in a systematic screening process for each of the many rapamycin candidate compounds is excessive experimentation. We thus hold that there is no genuine dispute that practicing the full scope of the claims, measured at the filing date, required undue experimentation.
The case is also interesting because it comes at a time where policymakers are looking to tighten the requirements of Section 112. As it did during the debate over the AIA, the Federal Circuit appears poised to make its mark on the current debate over patent scope and clarity.
Did the Federal Circuit Just Adopt Functional Claiming Through the Back Door?
Guest Post by Mark Lemley. Professor Lemley is the William H. Neukom Professor at Stanford Law School and a founding partner of the successful law firm of Durie Tangri where he litigates intellectual property cases.
In Ultramercial v. Hulu, decided on Friday, the Federal Circuit held that a series of steps for serving ads to customers over the Internet, phrased at a high level of abstraction, was patent-eligible subject matter under section 101. Chief Judge Rader wrote the opinion, which Judge O'Malley joined. Perhaps more surprising, Judge Lourie, who wrote the plurality opinion in CLS Bank, found the requirements of that test satisfied by these claims despite the lack of evident tie to any particular hardware device or limitation to any particular software algorithm.
Part of the explanation for the result in Ultramercial stems from the procedural posture of the case. The district court had granted a motion to dismiss, reasoning that patentable subject matter is a pure question of law and so not dependent on factual conclusions. The district court's position was defensible, given that every prior Federal Circuit opinion has called patentable subject matter a pure question of law. But the majority goes out of its way to suggest that factual questions are likely to predominate in a section 101 inquiry, though the court is a bit vague on just what those factual disputes might be. The court also suggests that claim construction will normally be required before resolving a 101 issue, but that here, the court was opting to construe the patent in the way most favorable to the patentee (that is, in the narrowest way possible) to evaluate 101 on a motion to dismiss. Curiously, however, the court never explicitly tells us what that narrow construction is.
Then the majority does something very odd: it proceeds to discuss in great detail the technology disclosed in the specification but not mentioned in the claims. The court clearly viewed Ultramercial's claims as patent-eligible because the specification contained detailed technical implementations and a complex flow-chart, even though none of those were included as limitations in the claim.
What is going on here? One possibility is that three of the most experienced patent judges in the country have forgotten the single most fundamental rule of patent law — that as Judge Rich put it, the name of the game is the claim. But I doubt it. If a lawyer arguing before the court tried to read in limitations from the specification in claim construction or for infringement or validity, these judges would (quite properly) tear that lawyer apart for violating this fundamental rule and ignoring the language of the claim. It seems unlikely that each of them simply forgot that it is the claims that define the invention.
A second possibility is that the court thinks that the rule that the claims define the invention simply doesn't apply to patentable subject matter: that as long as you have a specific idea somewhere in your specification we don't care what you claim. But that seems equally unlikely. To begin, it directly contradicts controlling Supreme Court precedent such as O'Reilly v. Morse, where the court held narrow claims patent-eligible but a broader claim ineligible. Beyond that, it simply makes no sense. The patentable subject matter rule is against patenting abstract ideas. A claim that covers only an abstract idea doesn't somehow become less abstract simply because the patentee could have claimed a narrower, more tangible invention.
There is a third possibility: that the court is implicitly construing the broad, functional elements of Ultramercial's method claim as means-plus-function claims under section 112(f), with the result that they are accordingly limited to the particular implementations in the specification. Doing so would be consistent with approach I suggested in my article "Software Patents and the Return of Functional Claiming". It would explain why the court said it was adopting the narrowest construction of Ultramercial's claims but then never told us what that narrow construction was. And it is the only reasonable explanation for why the Federal Circuit would suddenly drop its focus on the language of the claims and start to talk about whether the algorithms in the specification were patent-eligible subject matter.
The court didn't explicitly say what it was doing. I hope that its focus on the specification signals a narrowing construction that saved the claim from ineligibility. That would be a major step forward for both patentable subject matter law and for reining in overbroad software patents. And the alternative — that the court has decided that the scope of the claim doesn't matter anymore — would represent a major step backward.
By Jason Rantanen (note that you can now follow me on Twitter @PatentlyO_Jason). For the sake of disclosure: while I was in practice I represented Cisco in an unrelated patent infringement litigation involving wireless technology.
Cisco appealed from a jury finding that it induced infringement of Commil's patent. The primary issues addressed by the court were a pre-Global-Tech jury instruction and the appropriateness of considering validity when determining whether the accused party posessed the requisite state of mind for inducement of infringement. All three judges on the panel agreed that the jury instruction was both erroneous and prejudicial while Judges Prost and O'Malley agreed that issues of validity may be considered in the intent inquiry.
then Commil must prove by a preponderance of the evidence that Cisco actively and knowingly aided and abetted that direct infringement.
Furthermore, Commil must show that Cisco actually intended to cause the acts that constitute direct infringement and that Cisco knew or should have known that its actions would induce actual infringement. Inducing third-party infringement cannot occur unintentionally. This is different from direct infringement, which can occur unintentionally. Cisco also cannot be liable for inducing infringement if it was not aware of the existence of the patent.
and that Cisco knew or should have known that its actions would induce direct infringement, you may find that Cisco induced another to infringe Commil's patent if it provided instructions and directions to perform the infringing act through labels, advertising, or other sales methods.
(Emphasis added). Note that the court's opinion contains only bits and pieces of these instructions. In order to obtain them in their entirety, I pulled the April 8, 2011 trial transcript via Lex Machina.
The jury found in Commil's favor and award it $63,791,153 in damages. Approximately two months later, the Supreme Court issued its opinion in Global-Tech v. SEB, in which it held that induced infringement "requires knowledge that the induced acts constitute patent infringement," a requirement that can be satisfied either through actual knowledge or willful blindness. 131 S.Ct. 2060, 2068, 2072 (2011). Based on Global-Tech, Cisco argued that the "should have known" language in the above jury instruction erroneously permitted the jury to find that it liable based on a negligence standard.
On appeal, the Federal Circuit agreed with Cisco that the instruction was legally erroneous under Global-Tech and that the error was prejudicial to Cisco. "With respect to whether the induced acts constitute patent infringement, it is clear that the jury was permitted to find induced infringement based on mere negligence where knowledge is required. This erroneous instruction certainly could have changed the result. Facts sufficient to support a negligence finding are not necessarily sufficient to support a finding of knowledge." Slip Op. at 8.
It is axiomatic that one cannot infringe an invalid patent.  Accordingly, one could be aware of a patent and induce another to perform the steps of the patent claim, but have a good-faith belief that the patent is not valid. Under those circumstances, it can hardly be said that the alleged inducer intended to induce infringement. Thus, a good-faith belief of invalidity is evidence that may negate the specific intent to encourage another’s infringement, which is required for induced infringement. Several district courts have considered this question and come to the same conclusion.
Slip Op. at 10-11 (internal citations omitted).
A defendant’s ultimate liability for induced infringement, as for direct infringement, is subject to various defenses including patent invalidity and unenforceability. However, whether there is infringement in fact does not depend on the belief of the accused infringer that it might succeed in invalidating the patent. Such a belief, even if held in good faith, does not negate infringement of a valid and enforceable patent. This rule applies, whether the infringement is direct or indirect. My colleagues err in holding that “evidence of an accused inducer’s good-faith belief of invalidity may negate the requisite intent for induced infringement.” Maj. op. at 11.
Slip Op. at 22. One difficulty with Judge Newman's position is that she bases it on the principle that "A mistake of law, even if made in good faith, does not absolve a tortfeasor." Slip Op. at 21. This principle, however, would seem to apply as much to mistakes about infringement – which Judge Newman agrees are relevant to the question of inducement – as it would to mistakes about validity. Both can involve mistakes about fundamentally legal questions or the application of law to fact. (I've also argued in the past that this tort principle does not translate well to patent law [p. 1617-1620]).
The New Trial Issue and Judge O'Malley's Dissent: During the initial trial, according to the district court, "Cisco's trial counsel attempted to play upon religious prejudices and other ethnic stereotypes." Slip Op. at 12. After Commil lost on indirect infringement, the district court granted it a partial new trial on the issues of infringement and damages (that's the trial discussed above). All three judges agreed that the district court did not abuse its discretion in granting Commil a new trial. However, the district court also declined to include issues of validity in the new trial, a decision affirmed by Judge Prost joined by Judge Newman.
Writing in dissent, Judge O'Malley disagreed that the district court's decision to grant Commil a new trial on the issue of infringement while not allowing Cisco a new trial on the issue of validity survived Seventh Amendment scrutiny. Judge O'Malley also would have addressed "Cisco's potentially dispositive arguments regarding whether Commil did or ever could prove the third party direct infringement which is a necessary predicate to Commil’s induced infringement claim." Slip Op. at 26.
Limelight and Akamai have proposed dueling questions to the Supreme Court. Limelight, the accused infringer, asks: “Whether the Federal Circuit erred in holding that a defendant may be held liable for inducing patent infringement under 35 U.S.C. § 271(b) even though no one has committed direct infringement under § 271(a).” The patentees Akamai and MIT ask: “Whether a party may be liable for infringement under either section of the patent infringement statute, 35 U.S.C. §271(a) or § 271(b), where two or more entities join together to perform all of the steps of a process claim.” These questions involving the fundamental definitions of patent infringement have been stewing for a number of years, and this case stems directly from the Federal Circuit’s fractured en banc decision in 2012.
The Supreme Court today has indicated some interest in the case by calling for the views of the US Solicitor General. The Supreme Court may see the case as an extension of its decision in Global-Tech Appliances, Inc. v. SEB, S.A, 2011 U.S. LEXIS 4022 (U.S. May 31, 2011). That case focused on the intent requirements infringement-by-inducement.
Apparently in practice, the “tagging” step is performed by Limelight’s customers and limelight therefore argues that there cannot be infringement because no single entity practices each and every step of the claimed invention.
Thus, the basic setup is that Limelight performs all-but-one of the elements of the claimed invention and then encourages its customers to perform the missing stem. Limelight wins this case with a holding of non-infringement under the BMC/MuniAuction line of cases because infringement under 271(a) requires a single entity that causes performance of each and every element of the claimed invention and since Limelight did not cause its customers to perform the missing step. Likewise, under those cases inducement under 271(b) fails because the cause-of-action requires proof of underlying direct (271(a)) infringement. On the other hand Akamai argues that the BMC/MuniAuction rules are too restrictive. Rather, Akamai argues that the single-entity requirement of 271(a) direct infringement is too narrow and that inducement under 271(b) should not require underlying direct infringement. For its part, the Federal Circuit took a somewhat middle-ground and only held that inducement does not require underlying direct infringement so long as a single entity induced all of claimed elements.
I just received my copy of Patent Attorney Jeffrey Sheldon‘s book “How to Write a Patent Application – Second Edition.” Sheldon has been regularly updating the book since its original release 21 years ago. I have the ring-bound edition from PLI, but the somewhat cheaper Kindle Edition is also available from Amazon ($329.41).
One nice aspect of the tome is that each section includes numerous examples of how patent attorneys normally operate. The book is likely to be most helpful for new patent law professionals although the up-to-date information on case law makes it valuable for experienced attorneys who don’t want to delve into the depths of Chisum-on-Patents.
A key element of the Federal Circuit’s decision is that the result flows from the findings-of-fact and findings-of-fact are reviewed for clear error on appeal. Thus, although Novo provided credible evidence that a skilled artisan would have been surprised by the synergistic effect of the proposed combination of drugs, that evidence was insufficient to overcome the clear-error standard.
Of course, this lawsuit is occurring long after the patent issued. However, one quirky element of the case is that the examiner stated in the prosecution history that the evidence of synergy presented during prosecution was the basis of the decision on allowance. In the later lawsuit, Novo argued that the examiner’s factual findings (based upon the same studies presented in court) should be given administrative deference. On appeal, the Federal Circuit rejected that argument and flatly concluded that the PTO findings should be given no deference during later litigation.
The initial determinations by the PTO in determining to grant the application are entitled to no deference as they would be in an appeal to this court under 28 U.S.C. § 1295(4)(A) or (absent new evidence) in a district court proceeding under 35 U.S.C. § 145. Rather, we treat the issued patent as having a presumption of validity that must be overcome by clear and convincing evidence. No decision of the Supreme Court or this court has ever suggested that there is an added burden to overcome PTO findings in district court infringement proceedings, and we reject Novo’s contrary assertion. Neither are we persuaded that the presence or absence of PTO findings on particular issues affects the basic presumption of validity.
This administrative deference issue is one that is ripening for further Supreme Court review and follows in the wake of the Supreme Court’s decision in Kappos v. Hyatt, 132 S. Ct. 1690 (2012).
The majority opinion was written by Judge Prost and signed by Judge Dyk.
The combination described and claimed in the patent in suit, U.S. Patent No. 6,677,358 (“the ‘358 patent”), is eight-fold more effective than the additive properties, and is now apparently a treatment of choice for persons whose Type II diabetes had previously been untreatable. It is a lifesaving combination for such persons, and is valuable to other diabetics, for it permits a more flexible treatment regimen than prior products. The Novo inventors pursued this combination despite the advice of other “experts” that they were wasting time and money. Nonetheless the district court, and now my colleagues on this panel, find the combination obvious to them, and invalidate the patent. I respectfully dissent.
One of Judge Newman’s major points here is that – if anything – patents should offer legal protection for practical advances in science and medicine that actually save lives. That patent guarantee in turn would serve to encourage investment in achieving those advances.
The case is interesting to read for the legal-technical arguments made by the patentee against a finding of obviousness. After KSR and the fall of the teaching-suggestion-motivation test it appeared that obviousness had moved to a much more flexible analysis guided by common sense rather than bright line rules. Although unsuccessful here, the patentees arguments are interesting because they show ways in which that flexibility can be corralled.
In a 5-3 Decision authored by Justice Breyer, the US Supreme Court has held that a rule-of-reason analysis applies to determine whether a reverse-payment patent settlement violates federal antitrust laws. The FTC had asked the court to go further and rule that reverse payments are presumptively unlawful. A major factual question going forward in patent-settlement antitrust cases will be whether the patentee settled its lawsuit in order to avoid testing a patent’s weakness. Without additional pro-competitive benefits, such a settlement can be deemed anticompetitive under a rule-of-reason.
The conservative dissent written by Chief Justice Roberts argued that patent rights should be seen as an exception to the antitrust laws and that a patentee should have the right to enforce its patents and to settle its patents without regard to the anti-competitive nature of any settlement.
The result here is that the antitrust implications should be considered for any major patent settlement. In addition, the decision opens the door further for antitrust action against patent enforcement entities willing to settle cases at rates below the likely litigation costs of the accused infringers.
Guest Post by Paul Cole: ASSOCIATION FOR MOLECULAR PATHOLOGY v MYRIAD GENETICS – an isolated decision?
Guest Commentary by Paul Cole,Professor of Intellectual Property Law, Bournemouth University, and European Patent Attorney, Lucas & Co, Warlingham, Surrey, UK.
ASSOCIATION FOR MOLECULAR PATHOLOGY v MYRIAD GENETICS – an isolated decision?
How does the Supreme Court decision of 13 June 2013 match international opinion on the patentability of biological material? From a European and indeed from an Australian standpoint it can be said with some confidence: not so well.
105 In my opinion the patentability of the isolated nucleic acids referred to in the disputed claims does not turn upon what changes have been made to the chemical composition of such substances as a result of them having been isolated. In particular, the question of whether these substances constitute patentable subject matter does not depend upon the type of chemical bond that may have been broken in the process of isolating them. It is inevitable that some bonds will be broken in the course of isolating nucleic acids, but it is not apparent from the evidence that these will necessarily include covalent bonds. As I have already explained, the disputed claims do not require that the isolated nucleic acids they describe differ from those found in the cell in this or any other respect so far as their chemical composition is concerned.
109 Thirdly, as Dann’s Patent demonstrates, the isolation of a particular micro-organism may require immense research and intellectual effort. In that case, it was only as a result of an intensive research effort that the isolated micro-organism in question could be made available for use in the manufacture of the new antibiotic. It was fortuitous for the patentee that it was its employees who were first to isolate the new micro-organism and first to deploy it in the manufacture of the new drug. That will not always be so. It would lead to very odd results if a person whose skill and effort culminated in the isolation of a micro-organism (a fortiori, an isolated DNA sequence) could not be independently rewarded by the grant of a patent because the isolated micro-organism, no matter how practically useful or economically significant, was held to be inherently non-patentable. In my view it would be a mistake, and inconsistent with the purposes of the Act, not to give full effect in such situations to the broad language used by the High Court in NRDC.
The Court went on to explain that its findings were consistent inter alia with a report of the Australian Law Reform Commission of June 2004 entitled Genes and Ingenuity: Gene Patenting and Human Health (ALRC 99, 2004). That report concluded that it would be difficult, on any rational basis, to confine reform to genetic materials and technologies, and that the extension of the reform to other fields – where the patenting of pure and isolated chemicals that occur in nature was uncontroversial – could have unknown consequences.
What a shame that nobody told the Supreme Court of this body of opinion and legislation in Europe and Australia, which is believed consistent with the opinions and legislation existing in most other countries of the industrialised world, or that if it was aware of this position elsewhere the Court decided to ignore it in favour of a judge-made exception to the express provisions of 35 USC 101!
European equivalents of the patents in issue have been considered by the EPO Appeal Board. For example, T 1213/05 UNIVERSITY OF UTAH/Breast and ovarian cancer concerns the BRCA 1 gene. T 666/05 UNIVERSITY OF UTAH/Mutations relates to the use of the same gene in diagnosis.
In case T 1213/05, opponents argued that the socio-economic consequences of patenting the claimed subject-matter should be considered under a.53(a) EPC because these consequences touched ethical issues. Patenting of the claimed subject-matter would not only result in increased costs for patients, but would also influence the way in which diagnosis and research would be organized in Europe, which would be clearly to the detriment of patients and doctors. The fact that a particular group of patients, i.e. patients suspected to carry a predisposition to breast cancer, would be faced with severe disadvantages and would become dependent on the patent proprietor was contrary to human dignity so that the claimed subject-matter constituted an exception to patentability under a.53(a) EPC. In rejecting this argument the Appeal Board held that the possible consequences of the exploitation of the patent were are the result of the exclusionary nature of the rights granted by a patent, i.e. the right to stop competitors from using the invention. Logically such an objection applied to the exploitation of any patent and was the same for all patents. A resolution of the European Parliament, P6_TA(2005)0407 of 26 October 2005 "Patents on biotechnological inventions" did not vest the EPO with the task of taking into account the socio-economic effects of the grant of patents in specific areas and of restricting the field of patentable subject-matter accordingly. Similar arguments were rejected by the Board, in a different composition, in Case T 666/05.
In the US litigation it was argued that patents for isolated genomic DNA inhibited more innovation than they incentivised. However, even if that proposition is accepted it appears arguable that this is also the result of the exclusionary nature of the rights granted by a patent and is the same for all patents.
It is submitted that the decision is based on a narrow and short-term view of the public interest. The drug amoxicillin was invented in 1959, became available in 1972 and was the subject of much litigation in the 1960’s and 1970’s in which this author personally participated. The relevant patents have now expired and the drug which continues in widespread use is now a generic in a competitive marketplace. In addition to the US and the UK, the drug is now made in, for example, Brazil, Canada, Italy, Mexico, New Zealand Singapore, Spain, Thailand and South Africa. The well-known Indian generic company Ranbaxy was approved a supplier for the US market by the FDA in 2003. An invention can enrich the inventor or an employer for a limited period provided by the patent system: mankind is enriched forever.
Majority opinion written by Judge Prost, joined by judges Rader, Newman, Lourie, and Dyk. Judges Moore and Reyna concurred and dissented-in-part in separate opinions. Judges O'Malley and Wallach dissented.
This case deals with the question of whether the Federal Circuit has jurisdiction to entertain appeals from patent infringement liability determinations when damages and willfulness issues remain outstanding. The court held that 28 U.S.C. § 1292(c)(2) confers jurisdiction in both situations.
Does 28 U.S.C. § 1292(c)(2) confer jurisdiction on this Court to entertain appeals from patent infringement liability determinations when a trial on damages has not yet occurred?
Does 28 U.S.C. § 1292(c)(2) confer jurisdiction on this Court to entertain appeals from patent infringement liability determinations when willfulness issues are outstanding and remain undecided.
Section 1292(c) states that "The United States Court of Appeals for the Federal Circuit shall have exclusive jurisdiction— (2) of an appeal from a judgment in a civil action for patent infringement which would otherwise be appealable to the United States Court of Appeals for the Federal Circuit and is final except for an accounting." At issue was whether a trial on damages and willfulness is an "accounting" for purposes of this section.
An "accounting" includes the determination of a patentee's damages (7-2): The majority, joined by Judge Moore (and in its conclusion by Judge Reyna), first held that an accounting includes the determination of a patentee's damages. This approach was consistent with both the historical meaning of an "accounting" and the legislative history for the predecessor statute to § 1292. "The statute’s interpretation through history is clear. An “accounting” in the context of § 1292(c)(2) includes the determination of damages and cannot be limited to a traditional equitable accounting of an infringer’s profits." Slip Op. at 13.
We base our conclusion on four points. First, in 1948, Congress expanded jurisdiction over interlocutory appeals from cases in equity to “civil actions for patent infringement which are final except for accounting.” Second, the issues which were historically decided in accountings are the same as those decided during damages trials today. Third, the reasons articulated by Congress for allowing interlocutory appellate jurisdiction over patent cases that are final except for an accounting apply with equal force to a modern damages trial. Finally, stare decisis militates in favor of allowing interlocutory appeals where liability has been established and a damages trial remains.
Slip Op. at 12-13. The last point in particular caught my eye. The majority's argument is that the principle of stare decisis should be given weight by the court sitting en banc even when the precedent consists of panel decisions, particularly when dealing with issues of statutory interpretation.
Nonetheless, “because [our precedent] represents the established law of the circuit, a due regard for the value of stability in the law requires that we have good and sufficient reason to reject it at this late date.” Bailey, 36 F.3d at 110. [D.C. Cir sitting en banc] Indeed, panel opinions, like en banc opinions, invoke the principle of stare decisis. Panel opinions are, of course, opinions of the court and may only be changed by the court sitting en banc. It has been the law of this court for at least twenty-five years that an “accounting” under § 1292 includes a trial for the determination of damages under § 284.
An "accounting" includes willfulness determinations (5-4): The majority, this time without Judges Moore or Reyna, also concluded that Section 1292(c)(2) confers jurisdiction on the Federal Circuit to hear appeals from patent infringement liability determinations while willfulness issues are still outstanding. As with damages, the court held that an "accounting" includes willful infringement determinations. This, the majority wrote, was also consistent with the historical understanding of an "accounting." "Long before the enactment of § 1292(c)(2)’s predecessor statute in 1927, accounting proceedings included the determination of willfulness by a special master." Slip Op. at 23. Post-1927 cases confirmed this view. "Indeed, after the enactment of § 1292(c)(2)’s predecessor statute in 1927, courts continued to determine willfulness as part of an accounting, which occurred after the finding of liability." Id. at 24.
Finally, we wish to make clear that district courts, in their discretion, may bifurcate willfulness and damages issues from liability issues in any given case. District courts have the authority to try these issues together or separately just as they have the authority to try all issues together at the liability stage. They may decide, for example, for reasons of efficiency due to the commonality of witnesses or issues in any particular case, that bifurcation is not warranted. District court judges, of course, are best positioned to make that determination on a case-by-case basis. Today, we answer only the question of whether § 1292(c)(2) grants this court jurisdiction over appeals where the district court has exercised its discretion to bifurcate the issues of damages and willfulness from those of liability.
Judge O'Malley's Dissent: Writing in dissent, and joined by Judge Reyna, Judge O'Malley disagreed with the broad interpretation of Section 1292(c)(2) adopted by the majority. "As an exception to the final judgment rule, § 1292(c)(2) is to be interpreted narrowly…Because I believe the term “accounting” only applies to a limited class of proceedings before special masters or to those instances in which the trier of fact has decided all matters relevant to a damages determination save the application of those decisions to an undisputed set of numbers, I do not believe § 1292(c)(2) justifies the exercise of jurisdiction over this appeal." Slip Op. at 54-55.
The majority’s only attempt at a statutory analysis to support its holding is its claim that, by substituting the phrase “civil actions” for “suit[s] in equity” in the jurisdictional grant of § 1292, Congress somehow intended to expand the concept of an accounting to include jury trials on damages. The disregard for the importance of the right to a jury trial and misunderstanding of what a jury trial entails which is evident in this proposition is stunning.
Id. at 57. Even less defensible, in the dissent's opinion, was the majority's conclusion as to willfulness. Indeed, even requiring infringement and willfulness determinations to take place before separate juries may be impermissible in itself. "A bifurcation order which requires that two different juries visit the interwoven issues and overlapping facts involving infringement and validity on the one hand and willfulness on the other would violate the defendant’s Seventh Amendment right to a jury trial." Id. at 79.
Judges Moore and Reyna: Judges Moore and Reyna wrote separate opinions expressing their views that an "accounting" does not include a willfulness determination but can include the damages enhancement step that occurs following a willfulness determination. The result is a court in relative agreement on the question of whether Section 1292(c)(2) confers jurisdiction while damages issues remain pending but sharply decided on the question of whether it confers jurisdiction when a willful infringement determination has yet to be made.
What are your thoughts? Is the level of detail in the Court's opinion too great, too little, or just right?
In an unanimous opinion, this morning the Supreme Court drew a sharp line between isolated DNA (not patentable subject matter) and cDNA [synthetic versions of DNA that omit non-coding portions] (patentable). There is a curious concurrence by Justice Scalia that I'll post about separately.
The Court's basic rationale is similar to Judge Bryson's dissent in the Federal Circuit opinion. DNA is really about information, Myriad's patent claim treats it as if it's about information, and that's how the Court treats it as well. Because the minor chemical differences between naturally occurring DNA and isolated DNA don't change the informational component of DNA relative to its naturally ocurring state, isolated DNA is not patentable. However, the creation of cDNA in the laboratory does affect this informational component by removing the non-expressing portion of the DNA sequence, thus producing a non-naturally ocurring DNA sequence. This change in the informational content is sufficient to render the cDNA sequence patentable.
Isolated DNA: Simlar to its approach in other patentable subject matter cases, the Court first looked to the essence of what Myriad had done. "Myriad’s principal contribution was uncovering the precise location and genetic sequence of the BRCA1 and BRCA2 genes within chromosomes 17 and 13. The question is whether this renders the genes patentable….In this case,  Myriad did not create anything. To be sure, it found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention." Slip Op. at 12.
Nor are Myriad’s claims saved by the fact that isolating DNA from the human genome severs chemical bonds and thereby creates a nonnaturally occurring molecule. Myriad’s claims are simply not expressed in terms of chemical composition, nor do they rely in any way on the chemical changes that result from the isolation of a particular section of DNA. Instead, the claims understandably focuson the genetic information encoded in the BRCA1 and BRCA2 genes. If the patents depended upon the creation of a unique molecule, then a would-be infringer could arguably avoid at least Myriad’s patent claims on entire genes (such as claims 1 and 2 of the ’282 patent) by isolating a DNA sequence that included both the BRCA1 or BRCA2 gene and one additional nucleotide pair. Such a molecule would not be chemically identical to the molecule “invented” by Myriad. But Myriad obviously would resist that outcome because its claim is concerned primarily withthe information contained in the genetic sequence, not with the specific chemical composition of a particular molecule.
cDNA does not present the same obstacles to patentability as naturally occurring, isolated DNA segments. As already explained, creation of a cDNA sequence from mRNA results in an exons-only molecule that is not naturally occurring. Petitioners concede that cDNA differs from natural DNA in that “the non-coding regions have been removed.” Brief for Petitioners 49. They nevertheless argue that cDNA is not patent eligible because “[t]he nucleotide sequence of cDNA is dictated by nature, not by the lab technician.” Id., at 51. That may be so, but the lab technician unquestionably creates something new when cDNA is made. cDNA retains the naturally occurring exons of DNA, but it is distinct from the DNA from which it was derived. As a result, cDNA is not a “product of nature” and is patent eligible under §101, except insofar as very short series of DNA may have no intervening introns to remove when creating cDNA. In that situation, a short strand of cDNA may be indistinguishable from natural DNA.
Slip Op. at 16-17 (emphasis added). Note that under the last bit, a cDNA sequence may not be patent eligible subject matter in some circumstances.
What are the consequences? My immediate reaction is that for most practical applications, the Court's holding means that even though the broadest possible biotechnology product claims (to the isolated DNA itself) aren't going to be patentable, the key elements in making and using a biotechnology-based invention are still going to be protectable via patents (Part III of the Court's opinion makes this especially clear). This will allow researchers and competitors a little bit of wiggle room to design around biotechnology patents because they can use the basic isolated sequence but there will still be substantial limitations on what they can do with that isolated sequence. For this reason, I'm skeptical that the Court's opinion will have a negative effect on the incentives for creating biotechnology-based applications. To the contrary: by affirming that cDNA can be patented, it may strengthen the incentives for investing in research in this area.
In terms of the effects on my friends here at the University, I can see at least two consequences. First, it may allow researchers more freedom to engage in whole-genome sequencing because they won't need to deal with a multitude of isolated DNA patents for individual sequences. On the other hand, because early-stage research on newly discovered DNA sequences cannot be patented, it may encourage companies – and perhaps universities – to pursue greater secrecy over those early stage discoveries. Social research norms may cut against this – particularly in universities – but there may be some increased pressure, particularly at the margins, towards secrecy of potentially valuable inventions.
Update: In the short term, this case may have an immediate impact on BRCA testing. Via Brian Love at Santa Clara, Hank Greely just tweeted that: "Ambry announces its own BRCA 1/2 sequence test. $2200, a 30%+ cut from Myriad. They'll do deletes/dups for $500. Price hemorrhaging begins!"
In a recent NYTimes op-ed, Chief Judge Randall Rader joined professors David Hricik and Colleen Chien in calling for judicial action in awarding attorney fees under Section 285 of the Patent Act as well as Rule 11 of the Federal Rules of Civil Procedure. See “Make Patent Trolls Pay in Court.” The Op-Ed’s focus is on the problem of nuisance suits brought by patent licensing companies against a large number of entities – many of which include small companies.
One sign of potential abuse is when a single patent holder sues hundreds or thousands of users of a technology (who know little about the patent) rather than those who make it — or when a patent holder sues a slew of companies with a demand for a quick settlement at a fraction of the cost of defense, or refuses to stop pursuing settlements from product users even after a court has ruled against the patentee.
Other indications of potential bullying include litigants who assert a patent claim when the rights to it have already been granted through license, or distort a patent claim far beyond its plain meaning and precedent for the apparent purpose of raising the legal costs of the defense.
It is often true that the marginal cost of filing a thirty first lawsuit on the same patent can be quite small – especially when the new defendant is using the invention in the same way that other defendants are using the invention. However, the Op-Ed fails to mention the great risk of preclusion associated with each lawsuit. Under the law, each and every defendant has the opportunity to fully challenge the patent before either a judge or jury and, if the patent is ever found invalid then that ruling will preclude the patentee from ever enforcing the same patent rights again against any party. Even apart from preclusion, the organization of a patent enforcement campaign is not a simple endeavor, but rather an expensive process that involves extensive analysis of potential patent rights, an exhaustive search for financial backing and litigation counsel, and a one-business-at-a-time analysis to ensure that the patentee has a reasonable basis to believe that any accused infringers actually is infringing. In a typical case, the would-be troll follows thousands of dead leads and failed negotiations before ever filing a single infringement lawsuit. The point here is one that every patent litigator understands – enforcing patents is an expensive proposition and the notion that a patentee only risks $350 to file a lawsuit is ridiculous. Now, we can debate whether all this expense is a waste of resources that should be avoided as a matter of public policy. On that point I will only note the reality that the rise of patent enforcement and patent licensing companies has revived the market for buying and selling of patents from small companies and individuals in a way that allows those entities to actually monetize their innovations.
All this is a bit of an aside because I agree completely that courts should exercise their discretion to deal harshly with litigation misconduct both through Rule 11 and Section 285.
There has been a lot of talk about the new Unitary Patent system in Europe. As there are so many unknowns at the moment, it is sometimes difficult to work out what the practical implications now are. This brief post highlights the main points.
Firstly, for patents issued by the EPO, patentees will be able to choose between a) the existing system of multiple national validations from a European Patent, wherein separate renewal fees are paid for each national validation nationally or b) designating the Unitary Patent covering multiple EU countries, wherein a single renewal fee will be payable to the EPO and a single translation required.
Secondly, and separately, a Unified Patent Court will be established, alongside existing national courts, allowing a single action to cover multiple jurisdictions providing wider injunctive and damages type relief than the current fragmented system.
1. The system isn’t here yet. The most optimistic predictions are for early 2015.
2. Any European patent or application (whether or not it designates a “Unitary Patent”) will then be under Unified Patent Court jurisdiction by default. Although details are not known yet, it will however be possible to opt patents back out for at least seven years from entry into force of the new system. This may well be attractive, given that it will then be possible to opt back in. Fees to opt out and to opt back in will be applicable but are not yet known.
There is one key thing that not everyone is understanding: if you designate a Unitary Patent then you are tying yourself into the Unified Patent Court system, but possibly making a saving on translation and renewals. However, the Court will have jurisdiction over both types of patents that are issued by the EPO. Even if you do not designate a Unitary Patent, the Unified Patent Court will still apply to your patent unless you opt out.
Action now: Monitor for further details of the opt out process and consider opting -out.
3. As the Unified Patent Court system will apply to all European patents and applications, whether or not a Unitary Patent has been designated, then there is an opportunity to target competitor patents in Europe for multi jurisdiction revocation in a single action, even if the 9 month post grant opposition period has expired. However, you will need to do this before the patentee opts out and there may therefore be a race on day one.
Action now: Monitor updates on how opt out timing will work, if you see revocation opportunities.
4. A lot of the uncertainty arises because we don’t know how good the Unified Patent Court itself will be. But given that the judges are likely to be the same people who are already operating in Europe – and some of these judges are fantastic – let’s assume that the courts are going to work. That makes the question much simpler – do I want to enforce a patent in multiple jurisdictions in a single action, balanced against the risk of central revocation?
Action now: Start thinking about the tactical pros and cons of multi jurisdiction enforcement and revocation – assume the courts will be good!
5. If you like the idea of the Unified Patent Court and wish to obtain coverage for multiple EU countries, then the Unitary Patent designation may be attractive to you. You cannot request it now, but it will be available for European patents that are granted after the new system enters into force. Given the backlog in prosecution at the EPO at the moment, you may well have applications which are pending now which could grant after the new system comes into force.
Action now: Consider whether it is worth delaying any key patent applications, if you definitely want Unitary Patent protection.
There has been nothing here about costs, languages, translations, procedure etc. – these are important details, but shouldn’t affect your basic decisions. There is not a lot to do now; consider delaying, keep watching and start thinking.
Kevin Noonan at PatentDocs reviews the recent Special 301 report by the U.S. Trade Representative focusing on the protection and enforcement of Intellectual Property Rights. "The Priority Watch List in the Report lists Algeria, Argentina, Chile, Chine, India, Indonesia, Pakistan, Russia, Thailand, and Venezuela."
Eric Goldman review's Vermont's "First Anti-Patent Trolling Law." Prof. Goldman highlights a key problem for all nuanced anti-abusive-litigation statutes. He writes: "I'm skeptical of this attempt to distinguish legitimate from illegitimate patent assertions."
Michael C. Smith writes on a recent court ruling that allows expert testimony that applies the "entire market value rule" in calculating damages.
Bill Vobach highlights the fact that Raymond Chen's nomination to the Federal Circuit has been voted out of the Judiciary Committee and now moves to the full Senate for Consideration.
The ELS Blog calls for papers on Trademark Data.
Chisum Patent Academy (Featuring Professors Don Chisum and Janice Mueller). July 31 – August 2, 2013 in Seattle.

References: v. 
 v. 
 v. 
 v. 
 § 271
 § 271
 §271
 § 271
 v. 
 § 1295
 § 145
 v. 
 § 1292
 § 1292
 § 1292
 § 1292
 § 1292
 § 1292
 § 284
 § 1292
 § 1292
 § 1292
 § 1292
 § 1292
 § 1292
 §101