Source: https://www.orangebookblog.com/2013/06/index.html
Timestamp: 2019-04-20 06:30:17+00:00

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The law regarding what proofs are necessary to establish inducement of infringement and what defenses are available to those accused of inducement has been hotly debated. In Commil v. Cisco, decided on Tuesday, a unanimous Federal Circuit panel reaffirmed the rule that proof of specific intent to induce infringement (and not just knowledge of the acts that constitute infringement) is necessary to establish inducement of infringement. Moreover, in a case of first impression, a majority of the panel held that the fact finder should consider whether an accused inducer had a good-faith belief of invalidity in determining whether the accused inducer had the requisite intent. This ruling will likely affect how inducement claims are presented and defended in a wide variety of cases, including Hatch-Waxman cases involving method-of-use patents.
In Commil, the patentee accused Cisco of inducing infringement of its patent, which claimed an improved method of handoffs of mobile devices between base stations in a network area. After two jury trials (a new trial was granted on a few issues due to prejudicial statements made by Cisco's trial counsel at the first trial), the juries ultimately found that Cisco induced infringement and the patent was not invalid. On appeal, Cisco objected to a jury instruction that instructed the jury that it could find inducement if "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." Cisco also objected to the district court's in limine ruling that precluded Cisco from presenting evidence during the second trial of its good-faith belief of invalidity to rebut the patentee's inducement allegations. In an opinion by Judge Prost (with separate opinions authored by Judges O'Malley and Newman), the Federal Circuit held in favor of Cisco on both issues.
A finding of inducement requires both knowledge of the existence of the patent and "knowledge that the induced acts constitute patent infringement." Global Tech, 131 S. Ct. at 2068; see also DSU Med. Corp., 471 F.3d at 1306 (explaining that an "alleged infringer must be shown . . . to have knowingly induced infringement," not merely knowingly induced the acts that constitute direct infringement" (citation omitted)). . . . The jury was . . . instructed that Cisco must have actively and knowingly aided and abetted direct infringement. The jury, however, was not instructed that in order to be liable for induced infringement, Cisco must have had knowledge that the induced acts constitute patent infringement.
The Federal Circuit thus held that it was "clear that the jury instruction in this case was erroneous as a matter of law." The court vacated the induced infringement verdict and remanded for a new trial.
Next, a majority of the panel (Judges Prost and O'Malley) found that the district court erred in preventing Cisco from presenting evidence on its good-faith belief of invalidity to rebut the patentee's inducement allegations. Citing several cases as authority, the majority demonstrated how existing Federal Circuit precedent already recognized that an accused inducer may rely on its good-faith belief of non-infringement as evidence that it lacked the requisite level of intent needed for indirect infringement. But the majority noted that the issue of whether a good-faith belief of invalidity may serve as evidence of lack of intent had not yet been decided by the Court. The majority could "see no principled distinction between a good-faith belief of invalidity and a good faith belief of non-infringement for the purpose of whether a defendant possessed the specific intent to induce infringement of a patent." Thus, the majority held "that evidence of an accused inducer's good-faith belief of invalidity may negate the requisite intent for induced infringement" and such evidence should be considered in determining whether the accused inducer knew that the induced acts constitute infringement.
In a dissent that the majority characterized as "little more than construc[ing] a straw man and set[ting] him ablaze," Judge Newman contended that the majority's view of the law was contrary to principles of tort liability. Judge Newman wrote that "[a] mistake of law, even if made in good faith, does not absolve a tortfeasor" and thus "a 'good-faith belief' in invalidity does not avoid liability for infringement when the patent is valid."
While we will continue to watch how the Federal Circuit resolves the issue of indirect infringement in Hatch-Waxman cases, a few things remain clear. Litigants should continue to consider what evidence is needed to establish (or refute) that an accused indirect infringer is, in fact, an infringer and patent prosecutors should avoid writing claims that require lawsuits against indirect infringers (where possible).
American Conference Institute will be holding its first "Global Patenting Strategy & Practice" conference July 15-16 in New York. McAndrews, Held & Malloy Partner Scott McBride will be speaking on strategies for protecting trade secrets in multiple jurisdictions.
In addition, two post-conference workshops will be held on July 17: "Mastering the Foreign Patent Law and Regulatory Requirements for Life Sciences Companies in a Global Context" and "Negotiating the Obstacles and Challenges Associated with Patenting a Product in Multiple Jurisdictions."
Orange Book Blog readers receive discounted registration by using code OBB 200. For more information or to register, please visit the conference website.
In its third trip to the Federal Circuit, the court on Tuesday affirmed a decision holding claim 4 of Novo's U.S. Patent No. 6,677,358 invalid as obvious. Claim 4 of the '358 patent, listed in the Orange Book for PRANDIN (repaglinide) tablets, is directed to "[a] method for treating non-insulin dependent diabetes mellitus (NIDDM) comprising administering to a patient in need of such treatment repaglinide in combination with metformin." This is the same case in which the Supreme Court decided last year that a "delisting counterclaim" may be used to force amendment of an Orange Book use code.
The Federal Circuit's opinion on Tuesday was authored by Judge Prost and joined by Judge Dyk. Judge Newman dissented in a pointed opinion. The court also unanimously reversed the district court's finding that the '358 patent is unenforceable due to inequitable conduct.
The case revolved around the three bases that Novo advanced for reversal of the district court's finding of obviousness--two of which (incorrect burden shifting to the patentee and lack of deferral to fact-finding by the USPTO) were quickly dispatched by the court. But on the third basis for reversal--that Caraco's evidence insufficiently supported the district court's ultimate obviousness finding, the judges divided sharply on their interpretation of the record.
3. repaglinide was known as an insulin secretagogue having a similar mechanism of action to the sulfonylurea class of secretagogues.
These findings outweighed Novo's evidence, both before the USPTO and during litigation, that the combination of repaglinide and metformin is, unexpectedly, eight times more effective in reducing fasting plasma glucose ("FPG") levels than metformin alone and despite repaglinide having no impact on FPG.
The majority explained away the allegedly unexpected effect of repaglinide/metformin on FPG by noting that "[r]epaglinide and sulfonylureas are both insulin secretagogues, and they therefore have a 'similar mechanism of action'" and that "the prior art taught that metformin could be combined with certain sulfonylureas which were, like repaglinide, short-acting secretagogues." In particular, the court noted that prior art proffered by Caraco "report[ed] that metformin/sulfonylurea combinations yielded an 'apparent synergistic effect' and 'appear[ed] to have a synergistic effect'."
The court further picked apart Novo's evidence of unexpected results by noting that (1) the same study that found the reduction in FPG (the "Moses Study"), also showed that the near-term and long-term benefits of repaglinide/metformin "were generally inferior to the results found by prior art studies involving metformin combined with sulfonylureas"; (2) Novo's expert, Dr. Sturis, felt that the Moses Study had not mathematically or scientifically proven the existence of synergy; (3) Dr Sturis' own repaglinide/metformin study only "strongly suggest[ed]" synergy; (4) Novo's final study (Pfeiffer), showing a 35% improvement in insulin sensitivity in repaglinide/metformin combination therapy over metformin alone, had questionable reliability due to its small sample size, or results that were "explained away" by Pfeiffer in a contemporaneous report as predictable in view of the prior art; and (5) certain other tests on drug-naïve patients either did not "consistently" show a synergistic effect on FPG or did not "show statistically better results than the drugs used in monotherapy."
On these bases, the court concluded that "it is reasonable that an artisan seeking to combine a known insulin sensitizer (like metformin) with a new insulin secretagogue (like repaglinide) would base his expectations upon prior art sensitizer/secretagogue combinations." In fact, the Court found that it was "not erroneous . . . to conclud that the prior art predicted the results" of the combination of repaglinide and metformin on FPG.
Judge Newman begged to differ from her colleagues' "erroneous view of the evidence and incorrect application of the law of obviousness." In her view, the panel majority's generalization that "earlier metformin/sulfonylurea combinations were generally understood to yield synergy," was inaccurate. Rather, only some sulfonylureas formed synergistic combinations, but "synergism was not a general property of the combinations." According to Judge Newman, "it was well-known that not all insulin stimulants form synergistic combinations with metformin."
Focusing on the district court's selection of the combination of metformin-glyburide to invalidate the '358 patent, Judge Newman noted the substantial differences between repaglinide and glyburide, including the substantial structural differences between the two and the fact that the latter is a long-lasting insulin secretagogue while repaglinide is a short-lasting secretagogue. In order to provide a more equal comparison from which to draw reasonable expectations, Judge Newman suggested that "a more reasonable analysis would consider metformin in combination with nateglinide, which is structurally similar to repaglinide, or a shorter-acting sulfonylurea such as glipizide." That is, "the 'closest prior art' is the reference having the most 'in common' with the claimed invention, not the reference that happens to describe the most impressive results."
Reacting to the majority's dissection of Novo's evidence of unexpected results, Judge Newman reminded the majority that, "[t]o be patentable, a compound need not excel over prior art compounds in all common properties." Rather, one must look to whether the claimed combination "would produce results superior to the additive effect of the components separately." On a record where it was not shown that glyburide was an effective synergist in combination with metformin, Judge Newman could not conclude that repaglinide would be expected to be an effective synergist. Ultimately, for Judge Newman, "[t]he synergy demonstrated by Novo for the metformin-repaglinide combination therapy was not predicted or predictable, and was not obvious."
The U.S. Supreme Court, in a 5-3 opinion, decided today that "reverse payment" settlements of ANDA litigation shall be analyzed according to the "rule of reason." Thus, the Court compromised between the positions urged by the parties: that such settlements are presumptively illegal (FTC) or that they are virtually immune from antitrust scrutiny (Actavis).
The case arose from ANDA litigation between Solvay and Actavis over a generic version of Solvay's AndroGel product. The parties settled the case in 2006, agreeing that Solvay would pay Actavis $19-30 million annually until 2015, when Actavis would be permitted to market its generic product (5+ years before Solvay's patent expired). In addition, Actavis agreed to promote AndroGel to urologists.
The FTC sued the parties in 2009, alleging that they unlawfully agreed "to share in Solvay's monopoly profits, abandon their patent challenges, and refrain from launching their low-cost generic products to compete with AndroGel for nine years." The U.S. District Court for the Northern District of Georgia dismissed the FTC's complaint, holding that the allegations did not set forth an antitrust violation. The 11th Circuit affirmed the dismissal, writing 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."
In affirming the dismissal of the FTC's complaint, the 11th Circuit applied the so-called "scope of the patent test," which looks primarily at whether the agreed-upon generic entry date is later than the expiration date of the patent. Under this test, according to critics, reverse payment settlements are virtually immune to the antitrust laws. Other circuits applying the "scope of the patent" test include the Federal Circuit (Ciprofloxacin) and 2nd Circuit (Tamoxifen). The 3rd Circuit, on the other hand, held in the K-Dur case last year that the appropriate test is the "quick look," under which reverse payment settlements are presumptively illegal. The Supreme Court took this case to resolve the circuit split.
Where a reverse payment reflects traditional settlement considerations, such as avoided litigation costs or fair value for services, there is not the same concern that a patentee is using its monopoly profits to avoid the risk of patent invalidation or a finding of noninfringement. In such cases, the parties may have provided for a reverse payment without having sought or brought about the anticompetitive consequences we mentioned above. But that possibility does not justify dismissing the FTC's complaint. An antitrust defendant may show in the antitrust proceeding that legitimate justifications are present, thereby explaining the presence of the challenged term and showing the lawfulness of that term under the rule of reason.
The majority points to no case where a patent settlement was subject to antitrust scrutiny merely because the validity of the patent was uncertain. Not one. It is remarkable, and surely worth something, that in the 123 years since the Sherman Act was passed, we have never let antitrust law cross that Rubicon.
Also today, the Court scheduled a June 20 conference to discuss the cert petition in K-Dur. Presumably, the Court will issue a "GVR," granting the petition, vacating the 3rd Circuit opinion, and remanding the case to the 3rd Circuit for analysis under the rule of reason.
"We merely hold that genes and the information they encode are not patent eligible under § 101 simply because they have been isolated from the surrounding genetic material." --Thomas, J.
On June 13, 2013, the U.S. Supreme Court handed down its decision in Association for Molecular Pathology v. Myriad Genetics. In the opinion, authored by Justice Thomas, the Court unanimously held that "[a] naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated." The Court also held that because cDNA is not a product of nature and does not face the same patent eligibility hurdles as naturally occuring isolated DNA, typically it is eligible for patenting.
Myriad owns the patents containing the claims at issue in this case, which are directed to isolated DNAs and cDNAs covering the human genes BRCA1 and BRCA2, as well as certain mutations in those genes that are indicative of an increased risk of developing breast or ovarian cancer. Much of the opinion focuses on why the "mere isolation" of DNA from the genome is not adequate to make even newly formed and non-naturally occurring DNA molecules patent eligible. Though the Court acknowledges that the identification and discovery of the precise location of the BRCA1 and BRCA2 genes was important and useful, it swiftly concludes that the subsequent isolation of that genetic material failed to create something that constitutes an act of invention. It states that "[t]he location and order of the nucleotides existed in nature before Myriad found them" and that Myriad did not "create or alter the genetic structure of DNA." The Court then relies on its prior decisions in Diamond v. Chakrabarty, 447 U.S. 303 (1980), and Funk Brothers Seed Co. v. Kalo Inoculant Co., 33 U.S. 127 (1948), to conclude that Myriad's "discovery, by itself, does not render the BRCA genes 'new . . . composition[s] of matter,' . . . that are patent eligible." (Slip Op. at 12-13).
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 focus on the genetic information encoded in the BRCA1 and BRCA2 genes.
The beginning of the passage is a bit puzzling--because DNA is a chemical composition regardless of whether it is described as "GATC" or "a polymer comprising a series of alternating phosphate groups and deoxyguanosine, deoxyadenosine, deoxythymidine, or deoxycytidine monomers having the sequence . . . ." But the end of the passage clarifies that the Court considers the significance of the claimed DNA to relate to the information it contains, and that the differences in chemical structure between isolated and genomic DNA is inconsequential to patentability under § 101.
The Court also dismissed the notion that it should give any deference to the 30+ years of USPTO practice granting patents directed to isolated genes, particularly because the U.S. Solicitor General argued that the Patent Office should not grant patents directed to genes.
In its relatively brief analysis of the patent eligibility of cDNA molecules, the Court explains the difference it perceives between isolated genomic DNA and cDNA, stating that "creation of a cDNA sequence from mRNA results in an exons-only molecule that is not naturally occurring." Thus, a DNA sequence that is created in a lab and contains only the protein coding portion of the genomic sequence is adequate to meet the eligibility requirements of § 101. The Court addressed AMP's argument that cDNA should be held ineligible because the sequence of cDNA is determined by portions of the underlying gene sequence--not by an inventor. The Court rejected that argument, stating that even though cDNA retains naturally occurring exons, it is distinct from the genomic DNA from which it was derived and therefore not a product of nature.
Do Genetically Engineered DNA Molecules Provide a Path Forward?
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 17, emphasis added).
This seems to indicate that the Court views cDNA as patent eligible only if it includes at least two exons that are not directly adjacent to each other in the genomic sequence. However, if the claimed cDNA sequence--or any engineered DNA sequence for that matter--can be mapped directly to a naturally occurring DNA sequence, the claim will fail to satisfy § 101. While this test has almost the exact flavor of a novelty and nonobviousness analysis under 35 U.S.C. §§ 102 and 103, this type of § 101 analytical framework would not be surprising, considering that these statutory provisions have crept into the Court’s recent § 101 decisions (e.g., Mayo v. Prometheus).
The Patent Office has already issued a memorandum to the examining corps that directs examiners to begin issuing rejections under § 101 for claims to any naturally occurring nucleic acid sequences or fragments thereof. In some ways, however, this procedure may not place much additional burden upon the examiners, as the Office already performs sequence database searches for claims directed to defined biological sequences (albeit for purposes of examination under § 102 and § 103). The question may turn on whether examiners or applicants bear the burden of demonstrating that the claimed sequence is actually "naturally occurring" (barred by § 101) or simply just present in the prior art (eligible under § 101, but allegedly obvious under § 103). It will be interesting to see how the Patent Office develops additional guidelines and guidance documents in the wake of this decision.
The impact of this decision may not become apparent for some time. Certainly, it does mark a significant change to the examination of claims directed to nucleic acid sequences; however, many diagnostics and biotechnology companies do not rely exclusively on patents to isolated nucleic acid sequences. As long as claims to nucleic acid sequences are sufficiently tailored to avoid reading on a naturally occurring sequence, the Court’s decision provides room to continue to pursue patents directed to compositions of matter that include expression vectors, therapeutic nucleic acids, enzymatic nucleic acids, and chemically modified probes.

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