Publications / McDermott Newsletters / IP Update, Vol. 8, No. 12, December 2005

IP Update, Vol. 8, No. 12, December 2005

December 2005

Patents / Claim Construction / Indefiniteness

Hybrid Claims Found Invalid
By Amanda E. Koenig

Addressing for the first time the validity of a single claim covering both an apparatus and a method of using that apparatus, the U.S. Court of Appeals for the Federal Circuit followed Ex parte Lyell, a Board of Patent Appeals and Interferences (Board) case, which held such claims invalid.  IPXL Holdings, L.L.C. v. Amazon.com, Inc., Case Nos. 05-0119, -1487 (Fed. Cir. Nov. 21, 2005) (Clevenger, J.).

IPXL alleged that Amazon’s “1-click system” infringed certain claims of its patent.  The district court held that one of the asserted claims, which claimed both an apparatus and its method of use, was invalid due to indefiniteness.  IPXL appealed, and the Federal Circuit affirmed. 

The claim in issue was directed to an ATM system and to a method for using it.  The Federal Circuit held the claim invalid under § 112 ¶2 because it did not “apprise a person of ordinary skill in the art of its scope.”  The Court focused on the fact that the combination of the two statutory classes of invention rendered a manufacturer or seller of the claimed apparatus unable to determine, based on the claim, whether it could be found liable for contributory infringement if a buyer or user of the apparatus were to carry out the claimed method of using the apparatus. 

The Court cited MPEP § 2173.05(p)(II)(1999), a section that follows the Board’s Ex parte Lyell decision.The cited MPEP section states that where a single claim claims both an apparatus and the method of using that apparatus, it is indefinite under § 112: 

Such claims should also be rejected under 35 U.S.C. 101 based on the theory that the claim is directed to neither a “process” nor a “machine,” but rather embraces or overlaps two different statutory classes of invention set forth in 35 U.S.C. 101 which is drafted so as to set forth the statutory classes of invention in the alternative only.

Practice Note
In Ex parte Lyell the Board held a claim directed to a “transmission repair tool in the form of a workstand and…the method of using same in repairing automatic transmissions” to be invalid.  The Board's concern was whether a manufacturer or seller would be able to determine if it was infringing such a claim.  Given the Court's now-demonstrated aversion toward claims that combine both apparatus and method language, practitioners are cautioned not to offer any claim that could be so construed.  The relevant query appears to be whether a manufacturer or seller would be able to determine, based on the claim language alone, whether it would be liable for contributory infringement if a buyer or user of the apparatus were to carry out the claimed method of using the apparatus.

Patents / Conception

“Inherent Conception” Not Sufficient to Defeat Novelty
By Astrid R. Spain

The U.S. Court of Appeals for the Federal Circuit vacated a judgment of invalidity under § 102(g) based on the district court's misapprehension of the law governing conception, but it affirmed partial summary judgments that claims-in-suit were enabled and satisfied the written description requirement.  The Court also affirmed the district court's partial summary judgment of literal infringement.  Invitrogen Corp. v. Clontech Labs., Inc., Case Nos. 04-1039, -1040 (Fed. Cir. Nov. 18, 2005) (Gajarsa, J.).

Invitrogen owns three patents that disclose a genetically modified enzyme, reverse transcriptase, involved in DNA replication.  Reverse transcriptase (RT) is a naturally occurring enzyme produced by retroviruses, and Invitrogen’s genetic modifications affect how the modified RT participates in DNA replication.  Invitrogen reduced the invention to practice on January 27, 1987.  Independently, two researchers at Columbia University had isolated mutant RT in 1984 but did not confirm that the mutants lacked Rnase H activity until March 1987, when a more sensitive test became available.  The district court held that one of the Columbia researchers had conceived the invention first and diligently reduced it to practice, invalidating more than two hundred claims in the three Invitrogen patents under § 102(g).  Invitrogen appealed only the determination that the Columbia researcher conceived the invention before the critical date.

Holding that the district court misapplied the law of appreciation when dating conception, the Court explained that conception requires “more than unrecognized accidental creation,” and the inventor must appreciate that the invention “has the features that comprise the inventive subject matter at bar.”  The Court noted that conception requires an objective basis for appreciation or corroboration and found the record was inconsistent with the district court's notion that the Columbia researcher recognized his invention prior to the critical date, and it determined the district court failed to assess an objective basis for appreciation.  The Court also concluded that, in this case, a correct application of the law requiring an appreciation of the invention (to support conception) would dictate the same result (i.e., reversal) since Clontech's objective evidence failed to support its burden on summary judgment.

As to enablement, the Federal Circuit found the claims to be enabled since Invitrogen described an operable method for achieving the claimed mutation stating that “[e]nablement does not require the inventor to foresee every means of implementing an invention at pains of losing his patent franchise.”  The Court also rejected Clontech's argument that Invitrogen's claims lacked the written description requirement because the RT polypeptide was claimed in terms of its functional characteristics and not limited to the sequences recited in the specification.  The Court disagreed because, in addition to the sequences in the specification, the sequences of members of the RT gene family were known in the art at the time of the invention.

The Federal Circuit also rejected Clontech’s challenge of the district court's construction of two claim terms, holding that although the specification did not expressly define either term, it clearly taught one of skill in the art to determine whether the claimed mutants had the recited activity using the disclosed gel assay.  As to infringement, the Federal Circuit found nothing in Clontech’s proffered expert declaration lacking in foundation or basis and stated “a party does not manufacture more than a merely colorable dispute simply by submitting an expert declaration asserting that something is black when the moving party’s expert says it is white.”

Patents / Equitable Remedies

Irreparable Harm Presumed on Strong Showing of Likely Infringement
By David A. Gay, Ph.D.

The U.S. Court of Appeals for the Federal Circuit upheld a preliminary injunction finding that infringement is likely and that the harm and public interest favors enjoining a generic drug maker.  Pfizer, Inc. v. Teva Pharmaceuticals, Case No. 05-1331 (Fed. Cir. Nov. 22, 2005) (Prost, J.).

Accupril is an angiotensin converting enzyme (ACE) inhibitor composed of the active ingredient quinapril and is used to treat hypertension or high blood pressure.  Pfizer owned a patent containing claims to stabilized ACE inhibitor compositions such as quinapril and their methods of manufacture.  (A metal-containing stabilizer and saccharide are used to reduce cyclization and degradation of the ACE inhibitors.)

Pfizer sued the generic drug makers of Accupril for infringing its patent claims.  Rejecting a stipulated claim construction entered in a related case, the district court found Pfizer was likely to prove infringement under its construction, Pfizer would likely suffer irreparable harm, the harm to Teva did not outweigh the harm to Pfizer, and the issuance of an injunction was consistent with the public policy of enforcing the patent laws.

The Federal Circuit, agreeing with the district court's claim construction, affirmed.  The Court found that the term “saccharide” encompassed both the polysaccharide microcrystalline cellulose found in the accused infringing product as well as sugars when read in context of the entire patent.  It reasoned that a narrow construction was not supported by the claim language and would be inconsistent with the definition and use of the term as found in the specification.  Based on this construction, the Court concluded Pfizer was likely to prevail on a literal infringement charge.

Addressing the tension between the disclosure/dedication rule and infringement under the doctrine of equivalents, the Court found that microcrystalline cellulose was a substantial equivalent of the claimed saccharide because unrefuted expert testimony showed it likely functioned in the same way.  In clarifying the disclosure-dedication rule, the Court rejected Teva’s assertion that microcrystalline cellulose was dedicated to the public, stating “the public notice function of patents suggests that before unclaimed subject matter is deemed to have been dedicated to the public, that unclaimed subject matter must have been identified by the patentee as an alternative to a claim limitation.”  Microcrystalline cellulose was disclosed in the `450 patent as an optional excipient rather than as an alternative to the claimed saccharide.

The Court concluded Pfizer established a high likelihood of success on the merits and reaffirmed that a patentee is entitled to a presumption of irreparable harm upon a strong showing of likely infringement of a valid and enforceable patent.  The Court noted that licensing the patent or delay in bringing suit could rebut this presumption, but it also reasoned that Pfizer’s activities in these areas were insufficient to warrant a finding that it was willing to forgo exclusivity.  While Pfizer granted a narrow exclusive license in a product area other than Accupril, it did not engage in a pattern of licensing that would destroy its market exclusivity.  Teva's argument on loss of market share that would be incurred by an injunction was summarily rejected for failure to outweigh the harm caused by Pfizer's loss of exclusivity.  Also, the Court rejected Teva's argument on the availability of low cost drugs as a public policy excuse for infringement.

Patents / Claim Construction

“A” Means “One-and-Only-One”
By Peter J. Gimino III

Applying well-settled principles of claim construction, the U.S. Court of Appeals for the Federal Circuit has held that the use of the term “a” in connection with the restrictive clause “consisting of” describes a singular claim element.  Norian Corp. v. Stryker Corp., Case No. 05-1172 (Fed Cir. Dec. 6, 2005) (Bryson, J.).

Norian Corp.’s patent describes a kit for preparing rapid-setting calcium phosphate compositions for use in medical and dental procedures.  The claim in issue describes “[a] kit for preparing a calcium phosphate mineral, said kit consisting of: at least one calcium source and at least one phosphoric acid source free of uncombined water as dry ingredients; and a solution consisting of water and a sodium phosphate ….” 

Norian argued the claim term “a sodium phosphate” should be construed to mean a “mixture of multiple types of sodium phosphates as well as a single sodium phosphate” (pointing out that multiple sodium phosphates break down into the same ions once they are placed in water).  The district court held the term required the subject solution be made from only a single type of sodium phosphate and granted summary judgment of noninfringement.  Norian appealed. 

The Federal Circuit affirmed.  It agreed with the district court that the term “a,” when used with the restrictive term “consisting of,” refers to one-and-only-one of the substance recited in the limitation.  The Court noted the first portion of the claim used the language “at least one” to describe calcium and phosphoric acid sources.  It also noted the same language could have been used in place of the term “a” in the second portion of the same claim if the applicant had been meant to contemplate multiple sodium phosphate types.  The Court also found support for its restrictive construction in case law that interpreted the term “a” in a singular manner when used with “consisting of,” as well as in the specification of the patent-in-suit, which referenced the use of only a single solute.  Finally, the Court also relied on the prosecution history, which showed that Norian narrowed the claim at issue by switching the claim’s preamble from “comprising” to “consisting essentially of” to “consisting of.” 

Patents / USPTO

U.S. Patent & Trademark Office Pending-Patent-Application Backlog at Historic Proportions
By Kenneth L. Cage

In the Performance and Accountability Report for Fiscal Year 2005, the U.S. Patent and Trademark Office (USPTO) reported 406,302 patent applications were filed in fiscal 2005, while only 165,485 patents were granted.  Even when considering the disposals, (e.g., abandonments) the total number of pending applications has now reached 885,002.  According to Under Secretary of Commerce for Intellectual Property Jon Dudas, “In 2005, the number of patent application we received continued to grow at a rapid pace.  Our office now receives many patent applications on CD-ROM, containing millions of pages of data.  In short, the volume and complexity of patent applications continues to outpace current capacity to examine them.  The result is a pending—and growing—application backlog of historic proportions.  Patent pendency—the amount of time a patent application is waiting before a patent is issued—now averages more than two years.  In more complex art areas, such as data-processing, average pendency stands at more than three years.” 

While the USPTO met its 2005 goal of 31 months for all Patent Examining Technology Centers, Technology Center 2100 (architecture, software and information security) and Technology Center 2600(communications) each had a patent pendency above 42 months.  The report also reflects that, based on internal USPTO statistics from the Office of Patent Quality Review, the USPTO failed to meet its 2005 quality goal of a 4 percent error rate and instead reported an error rate of 4.6 percent.

To address the patent application backlog, the USPTO hired a record 978 examiners in 2005 and plans to hire another 1,000 examiners in 2006. 

In July of 2005, The USPTO also created a new Central Reexamination Unit to handle all new ex parte and inter partes reexamination requests.  In 2005, 524 ex parte reexamination requests were filed with 176 known to have related litigation, and 59 inter partes reexamination requests were filed with 20 known to have related litigation.

Practice Note
In order to reduce patent pendency, petitions for special status to advance examination may be filed in appropriate cases, such as when infringement is present, a prior art search can be or has been conducted, or where the inventor is of advanced age. 

Trademarks / Willful Infringement

Showing of Intent to Appropriate Goodwill Required to Recover Profits or Attorneys’ Fees
By Farah Bhatti

The U.S. Court of Appeals for the Tenth Circuit held that the willfulness required to support an award of profits or attorneys’ fees includes showing the defendant intended to benefit from the goodwill of the trademark owner.  Western Diversified Services, Inc. v. Hyundai Motor America, Inc., Case No. 03-2448 (10th Cir. Nov. 1, 2005) (Ebel, J.).

Western owns two trademark registrations for the marks THE ADVANTAGE and THE ADVANTAGE PLUS for extended and aftermarket automobile warranties.  Hyundai first cleared and later adopted the mark THE HYUNDAI ADVANTAGE for its manufacturer’s warranty.  A month later, Hyundai adopted the marks ADVANTAGE and ADVANTAGE PLUS for its extended warranties.

Western filed suit against Hyundai for its use of the mark HYUNDAI ADVANTAGE (used in connection with the manufacturer’s warranty) and later amended its complaint to include Hyundai's extended warranty plan marks, ADVANTAGE and ADVANTAGE PLUS.  In its complaint, Western sought monetary and injunctive relief as well as lost profits and attorneys’ fees.  Hyundai filed and was granted motions for summary judgment stating its HYUNDAI ADVANTAGE mark did not infringe and Western was not entitled to recover either the profits or the fees.  Western appealed but only as to the ADVANTAGE and ADVANTAGE PLUS marks.  The Tenth Circuit reversed.

The court held that in the absence of actual damages, any award of profits must be based on a showing of willfulness and is contained by principles of equity to prevent a windfall in favor of a trademark holder.  Even in those instances where willfulness is found, a court may reduce the profits award based on consideration of the equities.  Therefore, the court found the grant of the motion to be in error.

With regard to attorneys’ fees, the court noted that such awards are only given in exceptional cases where infringement was found to be “malicious, fraudulent, deliberate or willful.”  Separating itself from the more lenient stands adopted by other circuits, the court held that, absent a showing of actual damages, willfulness in this type of case required showing the defendant’s intent to benefit from the goodwill or reputation of the trademark holder or that the defendant committed litigation misconduct. 

The court also noted that the lower court erroneously evaluated Western’s claims based on facts germane to the selection of the HYUNDAI ADVANTAGE mark, not the ADVANTAGE and ADVANTAGE PLUS marks.  Second, it determined Western was not obligated to establish Hyundai’s intent to get its claim to a jury.  Rather, to defeat summary judgment, Western was only obligated to raise a genuine factual issue as to Hyundai's intent in selecting the marks for its extended warranty programs.

Lastly, the court held Western should benefit from the usual presumption in trademark cases that the deliberate adoption of a similar mark may lead to an inference that Hyundai intended to benefit from the trademark owner's goodwill, i.e., willfulness.  However,  Hyundai should be given a chance to rebut such an inference before a jury.

Copyright / Work for Hire

Subsequent Assignment Does Not Negate “Work-for-Hire” Status
By Arlyn L. Alonzo

The U.S. Court of Appeals for the Ninth Circuit has affirmed a finding that Dwight Eisenhower’s 1948 account of World War II, Crusade in Europe, was a “work-for-hire” even though Eisenhower signed a contract transferring title in the work after it had been completed.  20th Century Fox Film Corp. v. Entertainment Distributing, Case Nos. 03-57052, 04-55410 and 03-57234 (9th Cir. Nov. 18, 2005) (Tallman, J.).

20th Century Fox alleged that Dastar’s 1995 video documentary, Campaigns in Europe, infringed its copyright in Eisenhower’s 1948 book.  Fox claimed to have acquired the television rights from Doubleday (Eisenhower’s publisher).  Dastar argued Doubleday had nothing to assign because its 1995 attempt to renew the copyright was ineffective.  According to Dastar, the book was not a work-for-hire, and, therefore, Eisenhower’s heirs, not Doubleday, had the author’s right to renew. 

The Copyright Act of 1909 made “employers” the legal authors of “works made for hire” but did not define either term.  While Eisenhower was clearly not an “employee” of Doubleday, the district court ruled his book was still a work-for-hire under cases that expanded the concept to include works by independent contractors created at the “instance and expense” of the commissioning party. 

The Ninth Circuit reiterated that the “instance” test (that is, whether a work was created at someone else’s request) turns on whether “the motivating factor in producing the work was the employer who induced the creation.”  Here, the district court cited a number of facts to support its conclusion that Eisenhower had produced the work at Doubleday’s request: he had spurned other book offers until approached by Doubleday,he did not begin writing the book until after reaching a “gentlemen’s agreement” on terms and Doubleday had supervisory and editorial power. 

While there was no dispute Doubleday paid the expenses of writing the book, Dastar pointed out that Eisenhower had formally agreed to transfer title of the book to Doubleday only after it had been written.  It argued this fact rebutted any suggestion the book had been a work-for-hire.  The district court disagreed, reasoning Eisenhower entered into the later agreement for reasons relating to capital gains tax rules and not because either party thought there was a need to legally transfer the title to the copyright.  In view of these facts, the Ninth Circuit found no clear error in the district court’s finding that Crusade in Europe was written at the “instance and expense” of Doubleday.

Trade Secrets / Scope

More Than Mere Access and Similarity Necessary to Establish Use of Trade Secrets
By Irina A. Kushner

In an eagerly anticipated trade secret case, the U.S. Court of Appeals for the Sixth Circuit affirmed the district court’s grant of summary judgment to the defendant and agreed the plaintiff, a doctor, “failed to proffer sufficient evidence of similarity between his trade secret and [defendant's device] to create a genuine issue of material fact.”  Stratienko v. Cordis Corp., Case No. 04-6349, (6th Cir. Nov.18, 2005) (Cole, J.).

Dr. Stratienko, a physician, created a modified catheter device on which he subsequently filed a patent application for a “sheath catheter.”  The crux of Dr. Stratienko's design was the unitary combination of the sheath and the catheter, which required a smaller puncture for entry into the body.  Catheters are used by interventional cardiologists as a mechanism to gain access to blood vessels. 

Dr. Stratienko contacted Cordis to introduce his development, sending a letter and nondisclosure agreement regarding his then patent-pending catheter design.  The agreement was executed in November 1999.  In January 2000, Cordis advised Dr. Stratienko that it was not interested in his proposal.  By mid-February, Cordis returned to Dr. Stratienko all documents relating to his catheter design.  A few months later Cordis submitted an application to the U.S. Food and Drug Administration for a combined sheath and guide catheter, and approval was granted the same month.  Believing that Cordis’ catheter was the result of the intellectual property he shared with Cordis, Dr. Stratienko filed suit alleging misappropriation of trade secrets, wrongful benefit, conversion and breach of contract.  Cordis moved for summary judgment on all of Dr. Stratienko’s claims based on testimony that those receiving the information did not share it with anyone else (including the designers of the Cordis device).  Despite expert testimony that Dr. Stratienko’s proposal “shared all the ‘salient features’ of the Cordis’ catheter,” the district court granted Cordis summary judgment, reasoning that “because this circuit requires direct evidence of use in trade-secret cases and because Dr. Stratienko offered only circumstantial evidence of use, Dr. Stratienko was unable to demonstrate that Cordis used his idea.”  Dr. Stratienko appealed.

Dr. Stratienko challenged the district court’s reliance on self-interested declarations of Cordis employees, the court’s finding that circumstantial evidence can never create a genuine issue of material fact in trade-secret cases, and the court’s determination that the Tennessee tort of conversion does not extend to trade secrets.  The appellate court, contrary to the district court, found that courts may consider circumstantial evidence of access and similarity to imply use of a trade secret.  Notwithstanding this determination, the appellate court found Dr. Stratienko’s evidence lacking because he never identified the innovative aspects of his design that were allegedly misappropriated:  “[i]dentifying the secret that provides Dr. Stratienko with an advantage in the market is necessary for determining whether the pertinent similarity implies that Cordis used his secret.  The analysis of similarity evaluates only relevant, innovative features, not all possible congruence. Without evidence of the advantage of Dr. Stratienko’s device over prior art, there is not a sufficient basis for a reasonable jury to make the circumstantial inference of use.”

Special Report

McDermott's 2005 Top 10 Life Science Decisions
By Astrid R. Spain

The United States’ most influential courts have made 2005 a vintage year for decisions affecting the life science and pharmaceutical sectors.  As the year draws to a close, the time is ripe to review the most significant decisions and evaluate the current state and trends of the living, ever-changing patent jurisprudence.

The court decisions that garnered a spot among McDermott’s 2005 Life Science Top 10 will broadly impact the practices of patent litigators and prosecutors alike and address topics including, the Hatch-Waxman Act, claim construction and the constantly evolving application of various patentability requirements.  From claim drafting to litigating validity and enforceability, the patent law decisions of 2005 hold important lessons for patent holders and anyone charged with procuring and defending patent rights.  The subject matter addressed in the top three decisions illustrates this point. 

The resolution of multi-million dollar patent infringement cases often depends on the meaning of a single word in a patent claim.  Similarly, patent applications are routinely allowed or rejected based on the meaning of a claim term.  Earlier this year in an en banc decision, Phillips v. AWH Corp., the U.S. Court of Appeals for the Federal Circuit addressed claim construction questions of fundamental importance to the resolution of virtually every patent case, including which evidence/sources should be accorded primacy in a court’s interpretation of a patent’s claims. 

In Merck KGaA v. Integra Lifesciences I, Ltd., the U.S. Supreme Court gave pharmaceutical companies protection from patent infringement liability and wide latitude to study and experiment with drugs covered by other companies' patents. 

In SmithKline Beecham Corp. v. Apotex Corp., the Federal Circuit broadened the doctrine of inherent anticipation, which can be applied to invalidate a patent even though the claimed substance was not formed in detectable quantities and possibly even if the claimed substance never existed—as long as it could have been made by methods disclosed in the prior art.  This broadening of the inherent anticipation doctrine has significant implications for owners of chemical inventions with respect to both claim drafting strategy as well as to anticipating and countering challenges by generic companies. 

The remaining cases that round out the Top 10 were selected because each established or clarified a significant point of patent law.

A word about methodology:  the candidate cases were selected from a group of twenty cases selected by Astrid Spain.  They were then subject to a screening process that included members of the McDermott Life Sciences Group from both our U.S. and international offices.  The panel included:

Cathryn Campbell – Washington, D.C.
Lawrence Cohen – London
Paul Devinsky – Washington, D.C.
William Gaede – Silicon Valley
Dennis Mondolino – New York
Astrid Spain – San Diego
Krista Vink-Venegas – Chicago

Without further ado and with a nod to the Hollywood tradition of reverse order presentation, the McDermott 2005 Top 10 Life Sciences Decisions:

10) Rasmusson v. Smithkline Beecham Corp., 413 F.3d 1318 (Fed. Cir. 2005)

Rasmusson is significant enough to be included in the year's top 10 decisions because the Federal Circuit clarified that the standard for enablement of a prior art reference for purposes of anticipation under § 102 differs from the enablement standard applied to patent applications under § 112.

The case arose out of an interference declared between an application by Rasmusson and one filed on behalf of SmithKline.  The interference count was directed to a method of treating prostrate cancer.  Rasmusson sought the benefit of earlier-filed applications disclosing a chemical compound (finasteride) known to inhibit an enzyme that converts testosterone into an androgen (DHT).  The Federal Circuit found the later-drafted claims were not enabled because, at that the time of filing, it was not clear whether DHT or testosterone caused prostate cancer.  The Federal Circuit held that the enablement requirement under § 112 required more than “an unproved hypothesis,” namely, it required disclosure of a practical utility of the invention.  Declining to apply the same enablement standard to a prior art reference, the Court concluded SmithKline’s patent claims were anticipated by a reference that disclosed the claimed method of administering finasteride but failed to demonstrate its efficacy in treating prostrate cancer.  According to the Court, “a prior art reference need not demonstrate utility in order to serve as an anticipating reference under section 102.”

9) Purdue Pharma LP v. Endo Pharmaceuticals, 410 F.3d 690 (Fed. Cir. 2005)

In this decision, the Federal Circuit lowered the bar for those charging patent invalidity due to inequitable conduct by effectively equating a “misrepresentation” by implication with explicit misstatements to the U.S. Patent and Trademark Office (USPTO).  Despite public pressure to limit the applicability of the inequitable conduct defense and corresponding legislation pending in the last Congress to change the patent law, Purdue slightly broadens the conduct to which an infringement defendant can cite in support of an inequitable conduct defense.

On the following facts, the Federal Circuit held Purdue's Oxycontin patents-in-suit unenforceable due to inequitable conduct.  During prosecution, Purdue repeatedly implied the key feature used to distinguish the patents at issue over the prior art was experimentally discovered when, in reality, the distinguishing feature was based on the inventor's insight rather than on clinical data.  Although a patent application for a pharmaceutical discovery does not need to be supported by clinical results, the Court found Purdue's repeated representations to the USPTO claiming it had made a “surprising medical discovery” without disclosing the lack of empirical basis amounted to a material misrepresentation.  The Court also reiterated that the showing of intent required to establish inequitable conduct is proportionately less when balanced against high materiality.  Here, intent was inferred from the context in which Purdue's statements were made.  According to the Court, Purdue's statements betrayed a clear pattern of misdirection throughout prosecution of the applications for the patents-in-suit. 

To avoid the risk of having a patent held invalid down the road, all relevant information must be disclosed during prosecution, particularly if it could be viewed as material to patentability.  Applicants are advised to avoid overly aggressive statements during prosecution concerning the basis for the invention and should ensure all statements to the USPTO (and the logical inferences to be drawn from them) are well grounded in fact, i.e., avoid overly clever or misleading locutions.


8) MedImmune, Inc. v. Centocor, Inc., 409 F.3d 1376 (Fed. Cir. 2005)

This Federal Circuit decision clarified that a patent licensee in good standing has no standing to seek declaratory relief.

The Federal Circuit affirmed dismissal of a declaratory judgment action for lack of subject matter jurisdiction.  MedImmune, a patent licensee, sought a declaration that it owed no royalties under its license agreement with Centocor and that the patent was invalid and/or unenforceable.  The Federal Circuit found no actual case or controversy under the Declaratory Judgment Act because MedImmune had continued to pay timely royalties under the license and was not otherwise in breach of the agreement.  The Federal Circuit explained that a license, unless materially breached, negates any reasonable apprehension of a lawsuit.  After MedImmune filed its declaratory judgment action, Centocor filed a “mirror-image” declaratory judgment action against MedImmune in another jurisdiction seeking a declaration that the patent was valid, enforceable and infringed by MedImmune.  The Federal Circuit noted Centocor's subsequent lawsuit did not alter its decision to dismiss MedImmune's declaratory judgment action since the presence or absence of a case or controversy is based on facts that exist at the time the complaint is filed.

7) Teva Pharmaceuticals USA, Inc. v. Pfizer Inc., 405 F.3d 990 (Fed. Cir. 2005)

In this decision, the Court held that listing a patent in the Orange Book did not establish a reasonable apprehension of suit, and it limited Abbreviated New Drug Application (ANDA) applicants’ ability to challenge patents listed in the Orange Book but not asserted by research pharmaceutical companies.

The Federal Circuit affirmed a district court’s holding that an Orange Book listing does not create a legal controversy sufficient to trigger federal jurisdiction.  Teva filed an ANDA pursuant to the Hatch-Waxman Amendments to the Federal Food, Drug and Cosmetic Act, seeking approval to market its generic version of the drug sertraline hydrochloride.  Sertraline hydrochloride is sold by Pfizer under the name ZOLOFT, for which Pfizer holds two patents.  Teva’s ANDA filing contained a paragraph IV certification, which stated that its generic drug did not infringe the patent or, alternatively, that the patent was invalid.  After Pfizer failed to sue Teva within the 45-day period of Pfizer’s receipt of notice of the paragraph IV certification, Teva filed a declaratory judgment action against Pfizer seeking a declaration that its generic drug did not infringe Pfizer’s `699 patent or that the claims of the `699 patent were invalid. Teva relied primarily on Pfizer’s listing of the patent in the Orange Book to argue Pfizer had created a reasonable apprehension as is required to establish an actual controversy under the Declaratory Judgment Act.  The Court found Teva’s reliance on Pfizer’s Orange Book listing misplaced and pointed out that the listing of a patent in the Orange Book is a statutory requirement for an ANDA filer.  According to the Court, Pfizer’s compliance with the Hatch-Waxman Act listing requirement should not be construed as a blanket threat of Pfizer’s patent enforcement intentions to potential infringers.  The Federal Circuit noted it was not prepared to hold that an Orange Book listing, by itself, evinces an intent to sue any ANDA filer who submits a paragraph IV certification with respect to the patent; more is required for an actual controversy than the existence of an adversely held patent.

6) Enzo Biochem, Inc. v. Gen-Probe, Inc., 424 F.3d 1276 (Fed. Cir. 2005)

This decision, much like the movie A Christmas Carol, is a cautionary tale (albeit one about drafting joint research agreements).  The take-home lesson is that a provision that can be interpreted to create a contractual obligation that might constitute a commercial offer for sale will trigger the start of the § 102(b) one-year on-sale bar period for filing a patent application.

In Enzo Biochem the Federal Circuit, invoking the on-sale bar to novelty, affirmed a summary judgment holding a patent owned by Enzo Biochem invalid under § 102(b).  Enzo’s patent related to nucleic acid probes as well as methods for using those probes.  In June 1982, Enzo and Ortho Diagnostic Systems (Ortho) entered into an agreement involving joint funding of research and development on “any human diagnostic product resulting from the program of research, … whether or not invented or developed by Enzo prior to the effective date of this agreement.”  However, it was not until 1986 that Enzo filed its patent application.  Following the two-pronged test established by the U.S. Supreme Court in Pfaff v. Wells Electronics for the application of the on-sale bar, the Federal Circuit commenced its analysis focusing on whether the 1982 Enzo-Ortho agreement constituted a commercial offer for sale (the first part of the test).  The Court honed in on a particular provision that encompassed an offer to supply Ortho’s worldwide requirements for commercial purposes at reasonable times and prices.  According to the Court, this provision constituted an offer for sale and had been accepted.  With regard to the second prong, i.e., whether the invention was ready for patenting at the time of the on-sale act, the Court determined the invention was in fact “ready for patenting,” noting the invention had been reduced to practice, and its utility as a probe had been recognized.  The Court concluded that because Enzo offered for sale an embodiment of its claimed invention more than one year before the critical date, the patent-in-suit was invalid.

5) In re Fisher, 421 F.3d 1365 (Fed. Cir. 2005)

In this decision, the Federal Circuit settled an unresolved issue when it held that expressed sequence tags (ESTs), short nucleotide sequences representing a cloned DNA fragment, are not patentable absent identification of a function for the underlying protein-encoding genes.

The Federal Circuit affirmed the decision of the Board of Patent Appeals and Interferences and denied a patent to ESTs for failure to meet the statutory requirements of utility and enablement.  Both citing and further interpreting the Supreme Court decision in Brenner v. Manson, the Court provided a “definition” for the terms “specific” and “substantial” (as found in the Brenner v. Manson), and further took the opportunity to clarify the two prongs of the utility requirement as dictated by that precedent.  The Court indicated that in order to satisfy the “substantial” utility requirement, an asserted use must show that the claimed invention has a significant and presently available public benefit.  Turning to the “specific” utility requirement, the Court explained an application must disclose a use which is not so vague as to be meaningless.  Thus, in addition to providing a “substantial” utility, an asserted use must also show the claimed invention can provide a well-defined and particular benefit to the public.  Applying these principles, the Court found the asserted utilities met neither the substantial nor the specific test and found the ESTs to be merely a starting point for further research as they provided no presently available benefit.  With regard to the “specific” utility requirement, the Court found Fisher had failed to assert any utility distinguishing the claimed ESTs from the 32,000 plus ESTs disclosed in the application or any EST derived from any organism.  The Court held that, absent identification of a function for the underlying protein-encoding genes, the claimed ESTs had not been researched and understood to the point of providing an immediate, well-defined, real-world benefit to the public meriting the grant of a patent. 

4) Capon et al. v. Eshhar et al., 418 F.3d 1349 (Fed. Cir. 2005)

This decision represents another chapter in the Federal Circuit's evolving jurisprudence relating to the written description requirement for biotechnology inventions.

The Federal Circuit vacated the decision of the U.S. Patent and Trademark Office's Board of Patent Appeals and Interferences when it decided neither party to the underlying interference had adequate written description for its claimed invention.  Both inventors were claiming “chimeric” genes, part antibody and part signaling molecule.  The interference was dissolved for lack of adequate written description in both applications.  Neither application disclosed any nucleic acid sequences, but sequences of the chimeric segments were known in the prior art.  Both parties presented expert testimony supporting the proposition that their chimeric genes were produced “using known DNA-linking procedures.”  However, the Board concluded, without addressing each claim separately, neither party's specification satisfied the written description requirement because the complete nucleotide sequence of at least one chimeric gene was not included.  On appeal, the Federal Circuit indicated that application of a per se rule requiring recitation in the specification of a claimed nucleotide sequence is incorrect when the sequence is already known in the field.  The Court stated the required description “varies with the nature and scope of the invention at issue, and with the scientific and technologic knowledge already in existence.”  The Court held the Board erred in requiring the inclusion of a complete nucleotide sequence as such a disclosure did not add descriptive substance.

3) SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331 (Fed. Cir. 2005)

This significant decision represents a continuation of the recent Federal Circuit decisions that have revitalized the doctrine of inherent anticipation, whereby a patent can be deemed invalid based on the existence of prior art that inherently contains all the characteristics of the claimed invention even though the prior art may not affirmatively disclose those characteristics.

The en banc Federal Circuit vacated a panel decision with regard to the issue of experimental use on the same day the original panel issued a new decision in which it found SmithKline’s patent claim for crystalline paroxetine hydrochloride hemihydrate (PHC hemihydrate) invalid based on inherent anticipation.  The Court held that an earlier patent inherently disclosed PHC hemihydrate even though it did not do so literally, thereby rendering SmithKline's claim invalid as inherently anticipated.  Citing one of its prior decisions, the Court ruled “inherent anticipation does not require a person of ordinary skill in the art to recognize the inherent disclosure in the prior art at the time the prior art is created.”  It was enough, the court reasoned, that skilled practitioners using the prior art's methodology would eventually produce some quantity of PHC hemihydrate. 

This ruling is consistent with recent Federal Circuit decisions that used the inherent anticipation doctrine to invalidate a patent based on the existence of prior art in which all the characteristics of the claimed invention may not affirmatively disclosed but are found to be inherently present (also see Schering Corp. v. Geneva Pharmaceuticals, Inc.).

2) Merck KGaA v. Integra Lifesciences I, Ltd., 125 S. Ct. 2372 (2005)

In this decision, the Supreme Court gave pharmaceutical companies broad latitude to study and experiment with compounds covered by other companies' patents

The Merck decision turns on the interpretation of § 271(e)(1) of the Patent Act, which carves out an exception to infringement where use of a patented invention is “solely for uses reasonably related to the development and submission of information under a Federal law which regulates the…use…of drugs.”  Alternatively, courts have focused on the “solely for” part of the statutory phrase when they wanted to narrow the reach of the safe harbor and the “reasonably related” part of the statutory phrase when they wished to expand the safe harbor.  Integra held patents directed to a class of compounds (RGD peptides) that Merck tested (in vitro and in vivo) for use as angiogenesis inhibitors.  Integra filed a patent infringement suit against Merck, alleging the use of its patented compounds in preclinical testing constituted patent infringement. 

The case squarely raised the question of whether use of a patented product for drug discovery purposes is infringement before a lead compound has been discovered, taken to the clinic and tested in human beings.  The Supreme Court decided such use in preclinical studies is protected as long as there is a reasonable basis to believe that the experiments will produce types of information relevant to an Investigational New Drug Application (IND) or New Drug Application (NDA) filed with the Food and Drug Administration (FDA).  Writing for a unanimous Court, Justice Scalia noted that “scientific testing is a process of trial and error” and thus, the exemption must also extend to research for which an IND is not ultimately filed.  The Supreme Court ruled the exemption applies when researchers seek out new compounds having pharmaceutical safety and efficacy; further, it is not limited to situations in which a pharmaceutical candidate has already been identified and is being tested in order to obtain FDA approval.  Relying heavily on the language of the statute, Justice Scalia stated “there is simply no room in the statute for excluding certain information from the exemption on the basis of the phase of research in which it is developed or the particular submission in which it could be included.”  Critical to triggering the exemption is that experiments be “reasonably related” to FDA submissions, which according to the Supreme Court means that a drug company has to have a reasonable basis for believing that a patented compound may work through a particular biological process to produce a particular physiological effect.  The company must also use the compound in research that, if successful, would be appropriate to include in a submission to the FDA. 

However, the Court did not answer a number of other questions.  It expressly declined to answer what its ruling means for “patented research tools,” a multi-billion dollar industry.  In addition, it also left unanswered what remains of the common law exemption from infringement liability for experimental uses in drug and other types of research. 

1) Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc)

This is the one; the decision we regard as the most important decision of this year.  Phillips goes to the heart of every infringement and validity analysis:  the protocols governing claim construction that are of universal importance to anyone drafting, prosecuting, licensing, evaluating or litigating a patent.

In this long-awaited en banc decision, the Federal Circuit provided significant guidance on claim construction protocols and canons of construction but skipped the tough question of whether the appeals court should abandon de novo claim construction review and defer more to the trial court, at least on factual issues.  The Court began its analysis with the “bedrock principle” that the claims define the invention and should be given their ordinary and customary meaning—the “meaning that the term would have to a person of ordinary skill in the art in question at the time of the invention.”  Further, because “the person of ordinary skill in the art is deemed to read the claim term not only in the context of the particular claim in which the disputed term appears, but in the context of the entire patent, including the specification,” it is this context that must inform and, indeed, control claim construction.  The Court thus reaffirmed the rule of Vitronics v. Conceptronic (an en banc 1996 Federal Circuit decision) and its progeny and held that the claims themselves, the specification and, to a lesser extent, the prosecution history form the primary tools of claim construction.  First, the claims themselves can provide meaning to the terms, both with respect to the context in which a term is used in the claim-at-issue and with respect to how the term is used in other claims (asserted or unasserted) in the patent.  Second, the Court focused on the specification as the “single best guide to the meaning of a disputed term.” Third, the Court explained the value of the prosecution history in informing the meaning of the claims by “demonstrating how the inventor understood the invention and whether the inventor limited the invention in the course of prosecution.” 

Despite the Court's expressed emphasis on the claims, specification and prosecution history as the primary tools of claim construction, the Court nevertheless noted it was not delineating a “rigid algorithm” for claim construction and did not disqualify the use of extrinsic evidence, such as dictionaries or expert testimony, to “shed useful light on the relevant art” and to help the court “to better understand the underlying technology.”  However, the Court viewed extrinsic evidence “in general as less reliable than the patent and its prosecution history in determining how to read claim terms.”  The Court emphasized that “extrinsic evidence may be useful to the court, but it is unlikely to result in a reliable interpretation of patent claim scope unless considered in the context of the intrinsic evidence.”  It relegated dictionaries to essentially the same status as other extrinsic evidence as a tool to “better understand the underlying technology.”  In so doing, the Court retreated from the “dictionary first” standard set forth by a Federal Circuit panel in Texas Digital and its progeny, which held that dictionaries should be given primacy in determining the ordinary meaning of the claims (based on the rationale that a court might be tempted to unduly limit the claim by importing limitations from the specification), the specification governs only where it clearly defines a claim term in a way different from its dictionary meaning or explicitly disavows claim scope. 

McDermott Will & Emery

McDermott Will and Emery