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Patent Law Update for Tech Transfer Professionals:

What’s Now, What’s Next and What You Need to Do

Lee C. Heiman, Esq.Of Counsel

The Nath Law Group

Alexandria, VA

Robert MacWright, Ph.D., Esq.

Executive Director

Univ of Virginia Patent Foundation

Charlottesville, VA

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Prepared for Technology Transfer TacticsOctober 14, 2008

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Changes in what is patentable: “Anything Under the Sun that is

Made By Man…” ?

Are Non-Machine-Implemented “Mental Process” Inventions Patentable?

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In re Comisky Claims were directed to a methods and

apparatus for mandatory arbitration dispute resolution

Some claims required use of computer hardware, most did not

At USPTO, art rejections made over a combination of references were affirmed by BPAI

Claims fall within business method category of patents

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In re Comisky CAFC raised Section 101 issues sua

sponte CAFC held that mental processes,

standing alone, are not patentable Even if they have practical application Must be tied to some category of statutory

subject matter (e.g., a computer) Claims which did recite computer

hardware satisfy Section 101 remanded for determination of obviousness

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In re Bilski Claims were directed to a method for taking

into account relevant factors and managing the consumption risks of a commodity sold by a commodity broker

At USPTO and BPAI, claims found unpatentable as not directed to the “technological arts.” Did not involve: Physical transformation such as electrical,

mechanical, or chemical acts or results, Data transformation using an algorithm

Method could be performed entirely in the mind of a human being alone

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In re Bilski Argument by the USPTO: the prior cases

require that the invention produce a “useful, concrete, and tangible result” and are limited to claims to “machines and machine-implemented processes”

Oral argument conducted in the CAFC in May, 2008

Decision pending and probably imminent

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TakeawaysAbstract ideas and problem solving

alone are still not patentable, unless Bilski holds otherwise

Scrutinize disclosures from: Business School Law School Mathematics Dept. Theoretical Physics Dept.

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Post-KSR: the test for obviousness, now made [too] easy?

Review of KSR v. Teleflex: The U.S. Supreme Court held the Federal Circuit’s “TSM” (teaching/suggestion/motivation) test “too rigid” and permitted “common sense” to be used by Examiners

It is indeed easy for an Examiner’s common sense to lean toward “it is because I say it is”

In predictable arts, we are not likely to see very many “combination patents” issue

Some good news? It is still possible that in chemical and biotech arts, research results are unpredictable… and patentable

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Obviousness and Motivation, Post-KSR: The Legal Nitty-Gritty

Cannot focus solely on the problem as identified by the applicant In re Translogic Tech., Inc., 504 F.3d 1249 (Fed. Cir. 2007): prior art which is

addressed to a different problem can be used to show the "common knowledge of a person of ordinary skill in the art“

Universe of references cannot be limited only to those solving the same problem

In re Icon Health and Fitness, Inc., 496 F.3d 1374 (Fed. Cir. 2007): Effective prior art must be “reasonably pertinent to the problem addressed” by the patent applicant; i.e. usually references in the same field of technology or that address the same problem

“Obvious to try” may sometimes support obviousness, if there is a reason to combine shown and the art field is predictable

Takeda Chem. Industries v. Alphapharm, Ltd., 492 F.3d 1350 (Fed. Cir. 2007): “Routine optimization procedures” do not support an obvious to try argument if the nature of the genus is unpredictable

Ortho-McNeil Pharm. v. Mylan Lab., Inc., 520 F.3d 1358 (Fed. Cir. 2008): From the prior art anti-diabetic development program, there was no reason shown to select any particular starting material, synthetic pathway, or reaction intermediate, and test it for the patented anti-convulsive use

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Obviousness and Motivation, Post-KSR: The Legal Nitty-Gritty

TSM test must apply “common sense” PharmaStem Therapeutics, Inc. v. Viacell, Inc. (Fed. Cir. 2007):

Merely proving an existing theory is likely not inventive Lexion Medical, LLC v. Northgate Tech. Inc. (Fed. Cir. August

2008): Adding a recharge port to a humidifier was known, and the results of the combination were predictable

Icon: A skilled artisan would look at other solutions to similar problems

“When there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp” Takeda: A chemical genus containing millions of compounds is

neither well-identified nor predictable Ortho-McNeil: what constitutes a “finite and small number of

options” is determined in the context of the particular art at issue (Note that the Courts and USPTO have always espoused technology neutrality in the past!)

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Takeaways:In the chemical and biotech arts at the

CAFC, evidence of unpredictability and related secondary considerations (i.e. unexpectedly superior results, teaching away, long felt but unresolved need, and the failure of others) are still very relevant to a showing of non-obviousness

On the other hand, a known, well-developed theory for solving a problem, although unproved, can be sufficient to make an invention obvious to try, and thus unpatentable

Scrutinize inventions in crowded and competitive art fields to determine if the course of innovation might make the solution to the problem inevitableUnpredictability and Unexpected Results will

still support a patent grant

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More Takeaways: Easy calls, such as the recent mechanical

arts cases, make oversimplified cases and bad law

The recent cases did not completely open up what is valid prior art… but the range is expanded References directed toward solving a different

problem than the Applicant may be considered to the extent they are pertinent to the problem to be solved or illustrate “common knowledge” for a skilled artisan

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Last Takeaways on Obviousness What really is “the problem to solved”?

Applicant: whatever I am claiming now (but see KSR) Examiner: read as broadly as one can possibly

conceive This can be extended to an apparent absurdity: in Ex

parte Kubin (B.P.A.I. 2007), the Board, based on its reading of KSR, held a novel nucleic acid sequence (a composition) to be obvious because the method for making it was known; this is directly contrary to In re Duell and is currently under CAFC review

Should the “problem to be solved” be well defined in your US patent applications? Pro: makes it easier to avoid a runaway Examiner Con: may reduce or eliminate license value because it

may exclude secondary applications of the technology

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Observations on Obviousness at the USPTO

Examiners seem to be using the USPTO Guidelines and the holding in Icon to reject applications based on “obvious to try”

Little attention given to reasons to combine Cynically, this may be perceived as a

chance to clear their dockets Question: will the number of Appeals, and

reversals, rise? Will it take an Appeal to get an allowance? Will it do any good to threaten to appeal?

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Changes in the enforcement of patents and patent licensing

Injunctions Is the patent owner practicing the invention?

Declaratory judgment jurisdiction Too easy to trigger and too hard to avoid?

Exhaustion doctrine and licensing 35 USC §271(e)(1) Safe Harbor for

research uses and research tools

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Licensing, Post-MedImmune and SanDisk

MedImmune heralded the death of “reasonable apprehension of suit”, and birth of the “all-circumstances” standard Is there a substantial controversy between parties having

adverse legal interests of sufficient immediacy and reality to warrant the issuance of a declaratory judgment

SanDisk permitted a DJ action where a patentee asserts rights under a patent based on

identified ongoing or planned activity of another party, and where that party contends that it has the right engage in the

accused activity without a license Concept: a party may seek a declaratory judgment

without first engaging in activity that would risk an infringement suit

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Micron Technology, Inc. v. MOSAID Technologies, Inc. (Fed. Cir. 2008)

Micron’s filed a DJ action; MOSAID requested dismissal based on: No evidence of any private threats of litigation from MOSAID

to Micron for the last four years; No threats from MOSAID to Micron’s customers; and No public statements by MOSAID that it intended to sue

Micron Applying the ‘all-circumstances’ standard, the Federal

Circuit held that all evidence was sufficient, based on: A series of “invitation to license” letters from MOSAID to

Micron Previous suits by MOSAID against three other

manufacturers MOSAID’s public statements of its intent to aggressively

pursue litigation against remaining manufacturers which had not taken a license

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Caraco Pharm. Lab. v. Forest Lab., Inc., 527 F.3d 1278 (Fed. Cir. 2008)

Forest had an injunction against the marketing of a generic product by Ivax, which was the first ANDA-filer and had exclusivity

Caraco filed an ANDA and a DJ action against Forest Labs

Forest granted Caraco a covenant not to sue for infringement

The district court dismissed the DJ action based on existence of the covenant not to sue, as meaning that there was no threat of suit and there could be no loss to Caraco

CAFC held that Caraco had a judicially cognizable injury-in-fact: "it is being excluded from selling a non-infringing product because Forest has taken actions [the Ivax action] that delay the FDA from approving Caraco's ANDA”

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Takeaways “Invitation to license” letters remain

problematic: if too specific as to the patent and the infringing

activity, a DJ action is available if not so detailed, may be ineffective in getting the

attention of the prospective licensee Caraco addresses the "bottleneck problem"

created when an innovator settles litigation with a first ANDA applicant, which has exclusivity for 180 days over other ANDA applicants, and then denies market access to any subsequent applicant by refusing to sue

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Injunctive Relief after e-Bay Review: eBay disapproved CAFC general rule to “issue

permanent injunction against patent infringement absent exceptional circumstances”

Permanent injunction based on analysis applying the “general rule” rejected in:

Monsanto Co. v. Scruggs, 459 F.3d 1328 (Fed. Cir. 2006) Acumed LLC v. Stryker Corp., 483 F.3d 800 (Fed. Circ. 2007) Innogenetics, N.V. v. Abbott Labs, 512 F.3d 1363 (Fed. Cir. 2008)

24 Technologies, Inc. v. Microsoft Corp. (E.D. Tex 2006): Injunction denied to a non-competitor

TiVo, Inc. v. Echostar Com. Corp. (E.D. Tex. 2006): Injunction granted to a direct competitor

CSIRO v. Buffalo Tech, Inc. (E.D. Tex. 2007): Injunction denied because patentee was not practicing its patent

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Patent Exhaustion: Quanta Computer, Inc. v. LG Electronics,

Inc., 128 S.Ct. 2109 (2008) Background: patent exhaustion doctrine, aka “first sale”

doctrine, provides that the first authorized sale of a patented product terminates all patent rights to that product

LG Electronics licensed computer technology patents to Intel; in a separate agreement, Intel was required to give written notice to its customers that Intel’s license does not extend to a third party making a product by combining an Intel product with a non-Intel product

Claims relate to methods of use Result: Patent exhaustion is triggered by a sale of a

product where the product’s only reasonable and intended use was to practice a patented method

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TakeawayLicense terms can prevent the

triggering of patent exhaustion. A license agreement can be drafted to expressly limit or condition a licensee’s ability to sell, as opposed to use, a product embodying a patented process

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FDA Safe Harborand Research Tools

“It’s too expensive to buy,

so I’ll beg/borrow/make

my own”

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Integra Lifesciences I, Ltd. V. Merck KgaA, 496 F.3d 1334 (Fed. Cir. 2007)

Supreme Court held that 271(e)(1) exempts from infringement all uses of patented compounds reasonably related to the process of developing information for submission to the FDA

On remand, CAFC held that “reasonably related” means uses of patented compounds (1) That occur after the biological mechanism and

physiological effect of a candidate drug is reasonably recognized, and

(2) Would be appropriately included in a submission to the FDA

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Takeaways Would testing a composition for FDA approval

using a patented process infringe the process patent? Apparently no; see Classen Immuno. v. King

Pharma., 466 F.Supp.2d 621 (D. Md. 2006), in which Elan used Classen’s patented process to screen for side effects of its (Elan’s) drug, then submitted the data to FDA

Question: Would testing a patented composition for a secondary indication infringe the composition patent? What does this do to competition and the value of patents?

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Proveris Scientific Corp. v. Innovasystems, Inc.

(Fed. Cir. August 2008) Claims were drawn to a patented apparatus for

characterizing aerosol sprays commonly used in drug delivery (i.e. a testing system)

Innova copied and sold Proveris’ apparatus to others engaged in making products (drugs) which would require FDA approval

The safe harbor provision under 35 U.S.C. §271(e)(1) does not apply to research instruments and research tools which are used in the development of FDA regulatory submissions, but are not themselves subject to the FDA premarket approval process

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Takeaways:This raises the danger of suit for

infringement when the product is a research instrument, laboratory reagent, or, arguably, a “research tool” such as an antibody, vector, growth medium, or delivery system

If it’s patented, make sure your people honor the IP system: don’t steal it; buy it

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The USPTO Can’t Keep Up with the Number of Filings:

Time to Change the Rules? Time to FOAOM is increasing Total pendency is increasing USPTO cannot hire and retain enough qualified

Examiners Numerous pending and planned Rules

packages address procedures and substance for streamlining patent procurement and improving quality… and arguably shifting Examiners’ workloads to Applicants

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Pending USPTO Rules Changes Pre-First Action Interview Pilot Programs: Phase I

completed, broader Phase II underway “Claims and continuations” rules still on appeal

Limited the number of claims per application, and would have required an Examination Support Document (“ESD”) in some instances

Limited the number of continuing applications allowed Information Disclosure Statement rules pending

Would require an ESD in many instances, based on number of references cited, or cause Applicants to risk more allegations of inequitable conduct

Appeal Rules pending Requires an ESD-like document in all appeals and adds more

formal hurdles What’s all the hoopla about ESDs? The time and added

expense of doing the Examiner’s search and analysis, and assuming some additional risk to boot

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Recent USPTO Rules Changes Pre-Appeal Conference Procedure now available in

all Art Units; useful, but only in egregious cases Most (all?) Art Units now require an Allowance

Conference, giving an Examiner unfamiliar with your case the chance to undo all of the work involved in getting to an allowance

Prosecution Highway Programs: AU, CA, KR, JP, and UK have joint agreements with the US to expedite examination in all member countries, once there is one allowable claim in one country TIP: for quick action now try Korea, which has no backlog! News Flash: Europe plans to join the PH Program this year

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Patent Reform Legislation Has been proposed in each of the past several

sessions of Congress Almost certainly will be proposed in the new

Congress Topics covered include changing to “first to file”

system; giving the USPTO substantive rulemaking authority; modifying venue and damage calculation rules in litigation; creating post-grant review proceedings; and requiring “Applicant Quality Submissions” (very similar in effect to ESDs described above)

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How to get involved If these legislative matters concern you,

get involved!Contact your institution’s Government

Relations Office and coordinate efforts with your Administration

Contact AUTM’s VP for Public Policy (currently Janna Tom) to learn more

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AcknowledgementsLee Heiman gratefully acknowledges the assistance of the

following individuals in preparing the materials for this program:Nath Law Group Attorneys:

Derek RichmondJoshua GoldbergSusanne HopkinsCharles NiebylskiTanya HarkinsSheldon McGee

AUTM Colleagues:Janna Tom, University of California; AUTM VP for Public PolicyKristyne A. Bullock, J.D., Flaster Greenberg PCSanjiv M. Chokshi, J.D., McCarter & English LLPAngela Foster, Ph.D., J.D., The Foster FirmMark E. Nikolsky, J.D., McCarter & English LLP

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© 2008 Lee C. Heiman

112 S. West Street

Alexandria, Virginia

703-548-6284

www.nathlaw.com

Thank You