Source: https://rosenbaumip.wordpress.com/2014/12/
Timestamp: 2019-04-23 22:37:01+00:00

Document:
In Sandoz Inc. v. Amgen Inc., the Federal Circuit upheld the district court decision dismissing Sandoz’s declaratory judgment action for lack of jurisdiction. This is the first Federal Circuit decision relating to a possible “biosimilar” product and the Biologics Price Competition and Innovation Act of 2009 (BPCIA) (codified principally at 42 U.S.C. § 262), and the court was careful to steer clear of the biosimilars statute.
The patents at issue are U.S. Patent Nos. 8,063,182 and 8,163,522, which are exclusively licensed to Amgen. The patents cover Amgen’s Enbrel® (etanercept) product. Enbrel® (etanercept) is used to treat moderate to severe rheumatoid arthritis. Enbrel® (etanercept) was approved as a “biological product” under 42 USC § 262(i) for the treatment of rheumatoid arthritis. Sandoz is developing its own etanercept product for which it plans to seek approval under the “biosimilars” provisions of the Biologics Price Competition and Innovation Act of 2009 (BPCIA). The BPCIA creates a biosimilars scheme akin to what Hatch-Waxman does with small molecule generics. In particular – like Hatch-Waxman – BPCIA creates a paper-cause-of-action such that filing an FDA biosimilarity application is considered a form of patent infringement. Important to this decision, Sandoz had not filed a biosimilars application with the FDA when it brought this declaratory judgment action. Thus, while the BPCIA includes a statutory framework, or “Patent Dance,” for resolving patent disputes between a biosimilar applicant and reference product sponsor, this case was not brought under that statute, 42 USC § 262(l).
The Federal Circuit focused on the “immediacy” aspect of the “case or controversy” requirement for declaratory judgment jurisdiction under 28 USC § 2201, citing the Supreme Court’s 2007 decision in MedImmune, Inc. v. Genentech, Inc.: An event that is several years in the future may be an appropriate subject for a declaratory judgment. The immediacy requirement is concerned with whether there is an immediate impact on the plaintiff and whether the lapse of time creates uncertainty.
The Federal Circuit found no case or controversy, stating: Although not adopting “a categorical rule,” the court noted that “[i]n the pre-application context presented here, we conclude that the events exposing Sandoz to infringement liability ‘may not occur as anticipated, or indeed may not occur at all,’” such that there was no declaratory judgment jurisdiction.
The Federal Circuit made clear that it was not deciding whether Sandoz was obligated to avail itself of the patent dispute provisions of the BPCIA: We also do not decide whether, once an application is filed under the BPCIA, that statute forecloses a declaratory judgment action concerning whether the ultimate marketing of the application-defined product would infringe under 35 USC § 271(a).
Several companies are interested in obtaining approval of the first biosimilar product, and it appears that no company wants to be involved in the first biosimilars litigation. Earlier this year, Celltrion Healthcare Co., Ltd. and Celltrion, Inc. (collectively “Celltrion”) filed a complaint for declaratory judgment against Kennedy Trust for Rheumatology Research (“Kennedy Trust”) in the U.S. District Court for the Southern District of New York seeking to invalidate three of Kennedy Trust’s patents covering Remicade® (infliximab), a biologic approved to treat Crohn’s disease, ulcerative colitis, rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis and plaque psoriasis. Celltrion filed its action prior to filing its application for Remsima®, a biosimilar of Remicade®, under the BPCIA, and, therefore, also prior to engaging in the “patent dance” under the BPCIA. The “patent dance” is a procedure set forth in section 351(l) of the BPCIA that requires the holder of a branded biologic and the biosimilar applicant to engage in a series of timed exchanges of information to determine which, if any, of the brand holder’s patents will be litigated by the parties. The impact of BPCIA has yet to be determined and only time will tell on whether the courts will hear a § 262(l) complaint.
The Supreme Court ruled on Alice Corp. v. CLS Bank Int’l, 573 U.S. __, 134 S. Ct. 2347 (2014) on June 19, 2014. Since then, the Court of Appeals for the Federal Circuit has cited to Alice v. CLS Bank in deciding 4 cases and district courts have cited to Alice v. CLS Bank in 21 cases involving software patents. In all four Federal Circuit cases, the claims at issue were found to recite ineligible subject matter. In three of the district court cases, the claims at issue survived the § 101 challenge and were found to be eligible subject matter. Two of the district court cases involved motions on the pleadings in which the court found that discovery and/or a claim construction was required in order to assess eligibility under § 101, and the motions were dismissed without prejudice.
It has only been a little more than five months since the Supreme Court ruled on Alice v. CLS Bank. The post-Alice jurisprudence will continue to evolve. Still, the numbers do not look good for software patents. The courts in several of these cases made it clear that software is, in general, patentable subject matter. However, the numbers so far suggest that software will always have a hard time proving itself eligible for patents.
It would help to see what we’ve learned so far. What do these cases say about what constitutes an abstract idea, an issue left unclear by Alice v. CLS Bank? What sets claims that survived the § 101 challenge apart from the majority that did not? And, what can practitioners do to improve the odds of surviving a § 101 challenge when drafting claims?
Step 1 of the analysis set forth in Alice v. CLS Bank requires that the court determine if the claim at issue is drawn to an abstract idea. One criticism of the Supreme Court’s opinion in Alice v. CLS Bank is the lack of clarity as to when a claim is directed to an “abstract idea.” It was hoped clarification would come as courts interpret Alice v. CLS Bank.
Organizing information through mathematical correlations or algorithms.
Human Activity. Claims directed to processes, activities, or practices that can be, or are known to be performed by humans.
Subject matter comparable to the claims at issue in Alice v. CLS Bank and Bilski.
Claims directed to abstract ideas recite processes, activities, or practices, such as, business practices, advertising, marketing, or any other field involving human activity having meaning independent of a structural, physical or technological form. The subject matter recited in claims directed to abstract ideas may not be “abstract” in a real, or non-patent eligibility, sense. It can be argued that a bingo game, or transaction verification information, or charitable giving, or meal-planning are not abstract outside of a subject matter eligibility context. These activities are considered abstract in the context of patent eligibility when presented in a claim with no meaningful structure or physical form.
For those who draft claims, it may help to consider the term “abstract” in a § 101 context to simply mean a lack of recitation of, or lack of any tie to, any meaningful structure or machinery. In some of the claims in the cases so far, no structure or machine is recited and that fact is used to support the conclusion that the claim is directed to an abstract idea. In other cases, the use of a computer is either recited, mentioned in the specification, or implied by the functional language of the claims. If such use merely involved generic computers or conventional computer functionality, claims were deemed drawn to an abstract idea under Step 1 of the analysis.
What did the subject matter eligible claims have that the ineligible claims didn’t?
In Cal. Inst. Of Tech. v. Hughes Communs., Inc. (“Caltech”), the court found that the claims at issue were drawn to abstract ideas in Step 1 of the Alice v. CLS Bank inquiry. The claims in the Caltech case were found to recite the fundamental concepts of encoding and decoding data, which have existed long before the patents and were well known in the field. In the Court’s Step 2 analysis, the claims were found to recite “meaningful limitations that represent sufficiently inventive concepts.” Examples of such limitations include irregular repetition of bits and the use of linear transform operations. The Court noted that these limitations are mathematical algorithms, but that they were narrowly defined and tied to a specific error correction process. These limitations were deemed to be not necessary or obvious tools for achieving error correction, and were found to ensure that the claims do not preempt the field of error correction. The Court concluded that “Caltech’s patents improve a computer’s functionality by applying concepts unique to computing (like using a linear transform operation to encode data) to solve a problem unique to computing (data corruption due to noise).” The software patent claims in the Caltech case are examples of claims that were found to be directed to an abstract idea, but also to recite “something more” so that the claims recite patent eligible subject matter.
In AutoForm Engineering GmbH v. Engineering Technology Associates, 2-10-cv-14141 (E.D. MI. September 5, 2014), the Court found patents pertaining to computer software that is used to create a tool, which is used to form sheet metal into different objects were drawn to eligible subject matter because they were not drawn to an abstract idea under Step 1. The claims were found to contain “numerous limitations that narrow the scope of the patent.” Examples of the types of limitations found to narrow the scope of the patent include “(1) smoothing an irregular component edge; (2) filling in a fill surface; (3) forming a smooth component edge; (4) where the fill surface runs into the predefined component geometry by a continuous tangent; and (5) arranging sectional profiles along the smooth component edge … .” Despite the fact that these steps were performed using generic computer automation, the Court found the patent at issue covers more than a mere abstract idea. The software patent claims in the Autoform Engineering case are examples of software claims that do not recite an abstract idea under Step 1.
In Ameranth, Inc. v. Genesis Gaming Solutions, Inc., 11-00189 (C.D. Cal. November 12, 2014), the Court found system claims directed to a computer system/computerized method for monitoring a physical casino poker game were not drawn to an abstract idea in Step 1 of the Alice v. CLS Bank test. The Court’s discussion focuses on the defendant’s arguments and provides little actual analysis of the claim language. The claims at issue in Ameranth v. Genesis Gaming Solutions include many computer-related elements and functions, such as “Computer system for monitoring … poker game,” “software enabled to …,” “a database …,” etc. The Court noted that the many different player reward systems could be implemented without infringing the claims, thereby ensuring that the abstract idea is not preempted. The software patent claims in the Ameranth case are examples of software claims that do not recite an abstract idea under Step 1.
A common theme evident in the three cases that survived the § 101 challenge is a narrow claim scope. All three cases involved claims that recite computer-implemented applications that performed data transformations using algorithms, and conventional computer functions such as storing, retrieving and comparing data. However, the courts in these three cases found the claims to be sufficiently narrow to ensure concepts and abstract ideas are not preempted.
These cases in which the patents at issue survived the Alice v. CLS Bank test are district court cases likely headed to the Federal Circuit. It will be interesting to see how they fare on appeal.
What can practitioners drafting claims do to stay clear of § 101 challenges?
Shortly after the Supreme Court issued its ruling in Alice v. CLS Bank, the USPTO issued preliminary examination instructions to examiners in view of the Alice v. CLS Bank decision. See http://http://www.uspto.gov/patents/announce/alice_pec_25jun2014.pdf. These instructions to examiners essentially break down the Supreme Court’s opinion in a manner that would permit examiners to more easily apply the two-step process, which of course, can be helpful to practitioners as well. As far as the case law is concerned, any guidance that can be gleaned so far on surviving subject matter eligibility challenges is rather troublesome.
The post-Alice case law thus far suggests that patent eligible software claims should (1) recite meaningful structural limitations or ties to structure or machinery, and (2) have a narrow scope so as to preclude preemption of an idea, concept or field. Of course, reciting meaningful structural limitations, or ties to structure, is only possible if the invention includes such features. Many software inventions are implemented using a generic computer and involve no other structure, hardware, or other physical element. Nevertheless, it may help to recite the computer-based elements as structural limitations. The claims at issue in Ameranth v. Genesis Gaming Solutions are examples of claims reciting as much structure as possible for an invention implemented as software.
Drafting claims with a narrow scope seems to be the best strategy for surviving subject matter eligibility challenges. The courts in the three cases in which software claims were deemed eligible subject matter found the narrow scope of the claims to be an important factor in finding subject matter eligibility. The narrow scope appealed to the courts because it helped preclude preemption of any fields, concepts or ideas. However, the cases only noted that the claims had limitations that narrowed the scope of the claims, or allowed for non-infringing implementations. No distinction was made between narrowing the scope to preclude preemption and broadening the scope in the context of novelty or infringement. This is the troubling part.
Drafting narrow claims to ensure software is patent-eligible presents a challenge for patent practitioners. Patent practitioners are trained to draft claims with the broadest possible scope in order to ensnare as many infringers as possible. Claims are narrowed as required by the prior art. Practitioners must now ensure claims are sufficiently narrow to be patent eligible. The problem is claims have a scope regardless of the context. A claim that is narrowed for purposes of subject matter eligibility is also narrowed in the context of an infringement analysis. How narrow must a claim be to be patent eligible and still have a sufficient scope to ensnare as many infringers as possible?
Perhaps this is a question practitioners will have to consider on a case-by-case basis. The case law so far does not suggest any answer and it likely never will. Some guidance may come as post-Alice jurisprudence evolves. However, it would be far better if courts moved away from considering the scope of a claim in determining subject matter eligibility.
 Digitech Image Technologies, LLC v. Electronics for Imaging, Inc., 758 F.3d 1344 (Fed. Cir. 2014); Planet Bingo, LLC v.VKGS LLC, 576 Fed. App’x 1005 (Fed. Cir. 2014) (non-precedential); buySafe, Inc. v. Google, Inc., 765 F.3d 1350 (Fed. Cir. 2014); Ultramerical v. Hulu, 10-1544 (Fed. Cir. 2014).
 Hemopet v. Hill’s Pet Nutrition Inc., 8-12-cv-01908 (C.D. Cal. November 24, 2014); Ameranth, Inc. v. Genesis Gaming Solutions, Inc., 11-00189 (C.D. Cal. November 12, 2014); Enfish, LLC v. Microsoft Corp, 2-12-cv-07360 (C.D. Cal. Nov. 3, 2014); Cal. Inst. Of Tech. v. Hughes Communs., Inc., 2-13-cv-07245 (C.D. Cal. November 3, 2014); Peter H. Wolf v. Capstone Photography, 2-13-cv-09573 (C.D. Cal. October 28, 2014); Amdocs (Israel) Limited v. Openet Telecom, Inc. et al., 1-10-cv-00910 (E.D. Va. October 24, 2014); DietGoal Innovations LLC v. Chipotle Mexican Grill, Inc., 2-12-cv-00764 (E.D. Tx. October 3, 2014); Cogrent Medicine Inc. v. Elsevier Inc., 5-13-cv-04479 (N.D. Cal. September 30, 2014); Card Verification Solutions, LLC v. Citigroup, Inc., 1-13-cv-06339 (N.D. Ill. September 29, 2014); McRo, Inc. v. Namco Bandai Games America, Inc., 2-12-cv-10322 (C.D. Cal. September 22, 2014); Open Text S.A. v. Alfresco Software LTD et al., 3-13-cv-04843 (N.D. Cal. September 19, 2014); Every Penny Counts, Inc. v. Wells Fargo Bank N.A., 8-11-cv-02826 (M.D. Fla. September 11, 2014); AutoForm Engineering GmbH v. Engineering Technology Associates, 2-10-cv-14141 (E.D. Mi. September 5, 2014); Eclipse IP LLC v. McKinley Equipment Corporation, 8-14-cv-00742 (C.D. Cal. September 4, 2014); Loyalty Conversion Systems Corporation v. American Airlines, Inc.,k 2-13-cv-00655 (E.D. Tx. September 3, 2014); Tuxis Technologies LLC v. Amazon.com Inc., 1-13-cv-01771 (D. Del. September 3, 2014); Walker Digital LLC v. Google Inc., 1-11-cv-00318 (D. Del. September 3, 2014); CMG Financial Services Inc. v. Pacific Trust Bank FSB et al., 2-11-cv-10344 (C.D. Cal. August 29, 2014); Data Distribution Technologies LLC v. BRER Affiliates Inc. et al., 1-12-cv-04878 (D. NJ. August 19, 2014); Comcast IP Holdings I LLC v. Sprint Communications Company LP et al., 1-12-cv-00205 (D. Del. July 16, 2014); DietGoal Innovations LLC v. Bravo Media LLC, 1-13-cv-08391 (S.D. NY July 8, 2014).
 Ameranth, Inc. v. Genesis Gaming Solutions, Inc., 11-00189 (C.D. Cal. November 12, 2014); Cal. Inst. Of Tech. v. Hughes Communs., Inc., 2-13-cv-07245 (C.D. Cal. November 3, 2014); AutoForm Engineering GmbH v. Engineering Technology Associates, 2-10-cv-14141 (E.D. Mi. September 5, 2014).
 Card Verification Solutions, LLC v. Citigroup, Inc., 1-13-cv-06339 (N.D. Ill. September 29, 2014); Distribution Technologies LLC v. BRER Affiliates Inc. et al., 1-12-cv-04878 (D. NJ August 19, 2014).
 See e.g. Cal. Inst. Of Tech. v. Hughes Communs., Inc., 2-13-cv-07245, pg. 12-13 (C.D. Cal. Nov. 3, 2014); Enfish, LLC v. Microsoft Corp, 2-12-cv-07360, pg. 4-5 (C.D. Cal. Nov. 3, 2014).
 See Ultramerical v. Hulu, 10-1544, pg. 9-10 (Fed. Cir. 2014), Digitech Image Technologies, LLC v. Electronics for Imaging, Inc., 758 F.3d 1344 (Fed. Cir. 2014).
 See e.g. Digitech Image Technologies, LLC v. Electronics for Imaging, Inc. at 11 (organizing information through mathematical correlations); Enfish, LLC v. Microsoft Corp, 2-12-cv-07360, pg. 11-12 (Concept of organizing information using tabular formats); Cogrent Medicine Inc. v. Elsevier Inc., 5-13-cv-04479 (N.D. Cal. September 30, 2014) (Maintaining and searching a library of information); Every Penny Counts, Inc. v. Wells Fargo Bank N.A., 8-11-cv-02826 (M.D. FL. September 11, 2014) (Modifying transaction amounts and depositing designated differences into a recipient account).
 See e.g. Planet Bingo, LLC v.VKGS LLC, 576 Fed. App’x 1005 (Fed. Cir. 2014) (non-precedential) (Computer-aided management of a bingo game); buySafe, Inc. v. Google, Inc., 765 F.3d 1350 (Fed. Cir. 2014) (creating a contractual relationship); Card Verification Solutions, LLC v. Citigroup, Inc., 1-13-cv-06339 (N.D. Ill. September 29, 2014) (Verifying transaction information); Every Penny Counts, Inc. v. Wells Fargo Bank N.A., at 9 (concept of routinely modifying transaction amounts and depositing designated, incremental differences into a recipient account is “basic concept” and a “fundamental economic practice long prevalent in our system of commerce.”); CMG Financial Services Inc. v. Pacific Trust Bank FSB et al., 2-11-cv-10344 (C.D. Cal. August 29, 2014) (Mortgagee paying down a mortgage early when funds are available and borrowing funds as needed to reduce the overall interest charged by the mortgage); DietGoal Innovations LLC v. Bravo Media LLC, 1-13-cv-08391 (S.D. NY July 8, 2014) (Computerized meal-planning).
 See Planet Bingo, LLC v.VKGS LLC, 576 Fed. App’x 1005; Card Verification Solutions, LLC v. Citigroup, Inc., 1-13-cv-06339.
 See Digitech Image Technologies, LLC v. Electronics for Imaging, Inc. at 11 (abstract idea of organizing information through mathematical correlations and not tied to a structure or machine); Ultramerical v. Hulu, 10-1544, pg. 9 (The claim’s “ordered combination of steps recites an abstraction-an idea, having no particular concrete or tangible form”); Card Verification Solutions, LLC v. Citigroup, Inc., 1-13-cv-06339, pg. 6-8 (Claims are drawn to concept of verifying transaction information … and silent regarding machinery.”); CMG Financial Services Inc. v. Pacific Trust Bank FSB et al., 2-11-cv-10344, pg. 27 (Abstract idea … not tied to a specific structure.).
 See Planet Bingo, LLC v.VKGS LLC, 576 Fed. App’x 1005, pg. 4 (steps of selecting, storing, and retrieving … can be carried out in existing computers long in use.); Enfish, LLC v. Microsoft Corp, 2-12-cv-07360, pg. 12 (When a claim recites a computer generically, the Court should ignore this element in defining the claim’s purpose); Eclipse IP LLC v. McKinley Equipment Corporation, 8-14-cv-00742, pg. 10-11 (C.D. Cal. September 4, 2014) (using “generic communication devices” is insufficient).
 Cal. Inst. Of Tech. v. Hughes Communs., Inc., 2-13-cv-07245, pg. 27.
 AutoForm Engineering GmbH v. Engineering Technology Associates, 2-10-cv-14141, pg. 6-8 (E.D. MI. September 5, 2014).
 Ameranth, Inc. v. Genesis Gaming Solutions, Inc., 11-00189, pg. 7-10 (C.D. Cal. November 12, 2014).

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