IP Law Alert

IP Law Alert

Practical Perspectives on Intellectual Property Legal Developments

PTAB Decides First Pharma IPR

Posted in Patent

Last week, in what appeared to be one of the first pharmaceutical based cases brought to a decision under the IPR regime, the Patent Trial and Appeals Board (PTAB) of the US Patent and Trademark Office held that the majority of claims in a series of vitamin supplement patents were invalid. This decision turns the welcoming lights on for the generic drug industry to utilize the inter partes review (IPR) procedures under the America Invents Act to challenge proprietary pharmaceutical patents. In this matter, the challenger Gnosis, a defendant in an infringement action brought by Merck & Cie, South Alabama Medical Science Foundation and Parmlab, which was stayed pending the IPR decision, successfully defended against the four patents in issue: United States Patent Nos. 5,997,915, 6,011,040, 6,673,381 and 7,172,778 which are directed to compositions and methods of use involving chiral reduced natural folate compounds used as food supplements to prevent or treat folate deficiency diseases.

The successful defense was based on an obvious attack on the patentability of the claims in issue based on US and foreign patent prior art. An attempt to overcome the obviousness challenge by asserting secondary considerations of nonobviousness, such as commercial success of the patentee’s licensing program, was denied by the PTAB as having an insufficient nexus to the claimed invention.

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USPTO Implements Test for Patent Eligible Subject Matter Under §101 Following the Supreme Court’s Alice Decision

Posted in Patent

We recently discussed the Supreme Court’s test for patentable subject matter under section 101 in Alice Corp. Pty v. CLS Bank Int’l, 573 U.S. ___ (2014). In its opinion, the Court applied the two-step process set forth in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. __ (2102); (i) whether the claims are directed to patent-ineligible matter (e.g., abstract idea) and (ii) whether the claims contain an inventive concept (e.g., “additional features to ensure that the claim is more than a drafting effort designed to monopolize the abstract idea.”).

Following the Alice Corp. decision, the United States Patent and Trademark Office on June 25, 2014, issued a memorandum identifying the preliminary instructions for analyzing claims with abstract ideas. The basic inquiries to determine subject matter eligibility are:

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Aereo “Performs Publicly” and Therefore Illegally

Posted in Copyright

We have previously posted our analysis of the oral arguments held before the Supreme Court in American Broadcasting Companies, Inc., et al., v. Aereo, Inc., No. 12-451, this past April. On June 25, 2014, the Supreme Court announced its decision in the case, holding that Aereo performs the television broadcasting companies’ copyrighted works publicly through the function of their service/system within the meaning of the Transmit Clause of the Copyright Act of 1976. The Court tried to carefully limit its holding to only the facts particular to Aereo’s system in order to avoid precluding the development of “cloud computing,” a still burgeoning field of technological and economical promise.

Aereo offers its customers use of remotely stored dime-sized antennas and cloud storage of recorded programming to permit customers to stream and store on demand television. The case was mainly focused on the customers’ ability to watch television programming in near real time viewing. Aereo has consistently presented its business model as, in essence, permitting customers to remotely store miniaturized, personal rabbit ears and a hard drive, which are accessible through cloud computing and therefore do not violate copyright laws. This technologically oriented focus on the precise mechanism won over both the district and circuit courts below.

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Carving Out State Protections in Patent Enforcement

Posted in Patent

We have previously posted on proposed federal and state legislation aimed at addressing the toll of patent troll litigation on the U.S. economy. To date, twenty-five states have passed or are considering legislation aimed at curbing bad-faith patent assertion through state law, either based in consumer protection or through laws directed at bad business practices. From Vermont, one of the first states to adopt such legislation, MPHJ Technology Investments LLC (“MPHJ”), an alleged patent troll, seeks the opinion of the Court of Appeals for the Federal Circuit on the issue of federal patent law preemption.

The majority of the state legislation passed or considered provides for dual public and private efforts to curb bad-faith assertion of patents, as either the attorney general or an individual who received the demand letter may bring suit against the patent owner: Alabama, Connecticut, Georgia, Kansas, Maine, Maryland, Missouri, New Hampshire, New Jersey, Pennsylvania, South Carolina, South Dakota, Tennessee, Vermont, and Wisconsin. Some states, such as Mississippi  and Utah, only provide for private actions, while others, such as Virginia, provide for only state enforcement by the attorney general. Most states also provide various other remedies, including the requirement that patent owners post bonds, permitting attorney generals to seek an injunction against further bad faith letters, or costs, fees, or punitive damages.

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AIA Post-Issuance Proceedings – Patent Owner’s Preliminary Response Persuades PTAB Denial of IPR

Posted in Patent

In accordance with the statutory provisions of the America Invents Act, a patent owner may at his/her option file a preliminary response to a third-party petition requesting inter partes review (IPR) of a patent. Through the first quarter of 2014, about 55 percent of patent owners opted to file preliminary responses to IPR petitions, while 45 percent of patent owners opted instead either to expressly waive or file no preliminary response.

There are a number of factors that weigh against filing of preliminary responses. Like IPR petitions, preliminary responses are generally limited to 60 pages in length, and must be filed no later than three months after receiving notice that the IPR petition has been granted a filing date. In addition, preliminary responses may include no new testimonial evidence or claim amendments.

Whether or not opting to file a preliminary response, the patent owner will be provided with a subsequent opportunity to present a response three months after a decision on the petition. While subject to the same page limits as the preliminary response, the later-filed response is not subject to the same testimony restrictions and provides the patent owner with about six months of additional preparation time. As a result of this time difference, the filing of a preliminary response has been soundly criticized by some as disadvantageously conceding a patent owner’s “element of surprise.”

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Alice is Not in Wonderland: Generic Computers and Abstract Ideas Don’t Mix

Posted in Patent

District courts have been abuzz with accused infringers asserting invalidity based on ineligible subject matter under section 101. This is a result of evolving jurisprudence developed by the Federal Circuit and Supreme Court over the last few years. Today, that continued with the Supreme Court unanimously holding in Alice Corp. Pty v. CLS Bank Int’l, 573 U.S. ___ (2014) that, for claims drawn to an abstract idea, “merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention.”

This case originates from CLS Bank’s complaint seeking a declaratory judgment that Alice’s patent claims were invalid. Alice counterclaimed for patent infringement. The patent claims at issue are directed to using a third party (or “supervisory institution”) to mitigate financial risk of two parties (or “stakeholders”) to a transaction by creating account ledgers (or “shadow” credit and debit records) to ensure the parties have sufficient resources for the proposed transaction. The court held that the claims were an abstract idea and thus invalid under 35 U.S.C. §101. The Federal Circuit initially reversed, but an en banc court affirmed the District Court.

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USPTO Cancels Washington Redskins’ Trademark Registrations

Posted in Trademark

Earlier today, six trademark registrations for the Washington Redskins football team were cancelled on the basis that they are disparaging. In the long-awaited decision of Blackhorse v. Pro-Football, Inc., the Trademark Trial and Appeal Board (“TTAB”) found that the petitioners had shown “by a preponderance of the evidence that a substantial composite of Native Americans found the term REDSKINS to be disparaging in connection with [the football team’s] services” during the time period when registration was sought.

This is the second action before the TTAB that has challenged the validity of the REDSKINS trademarks. In the first, Harjo v. Pro-Football, Inc., the TTAB also found the marks to be disparaging, as well as scandalous. However, the U.S. District Court for the District of Columbia reversed that decision on the basis that the petitioners’ claims were barred by the doctrine of laches (i.e., because the petitioners waited too long to file their complaint). The U.S. Court of Appeals for the District of Columbia then affirmed that decision. Ultimately, the Supreme Court denied certiorari in Harjo, and the Blackhorse action was permitted to move forward before the TTAB.

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NJ District Courts Bar Defendants’ Indefiniteness Argument During Claim Construction Because Not Alleged in Invalidity Contentions

Posted in Patent

We previously reported that New Jersey District Court Judges will limit a patent infringement defendant’s discovery to the claims and defenses identified in its Invalidity Contentions served under Local Patent Rule 3.3.  For the same reasons, a defendant may be barred from taking certain positions during claim construction. In an opinion issued last week, Judge Jose L. Linares held in Auxilium Pharmaceuticals, Inc. & FCB I LLC v. Watson Laboratories, Inc., No. 12-3084 (JLL) that a defendant that does “not raise an indefiniteness defense in its invalidity contentions . . . cannot seek a determination that the patents-at-issue are invalid for indefiniteness through claim construction.”

Watson’s Invalidity Contentions did not allege indefiniteness. However, in the parties’ Joint Claim Construction and Prehearing Statement, the only claim construction position proffered by Watson was that certain terms were indefinite. Watson had sought leave to amend its Invalidity contentions to add allegations of obviousness and indefiniteness prior to the joint claim construction statement, but Magistrate Judge Michael A. Hammer denied Watson’s motion as to indefiniteness. 

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Two Wrongs Don’t Make a Right: Supreme Court Declines to Expand the Scope of Indirect Infringement Liability in View of Federal Circuit’s Muniauction Ruling

Posted in Patent

The United Supreme Court has been a “hot bench” for patent cases. On the same day, it issued two unanimous decisions reversing the Federal Circuit relating to claim definiteness and inducement infringement, the former of which we previously discussed. In the latter, Limelight Networks v. Akamai Tech. No. 12-786, 572 U.S. ___ (2014), the U.S. Supreme Court held that a party cannot be liable for inducing infringement under 35 U.S.C. §271(b) unless there is direct infringement in 35 U.S.C. §271(a). The Court in dicta also suggested that the Federal Circuit may wish to reconsider its prior decision, Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (2008), which held that a party–who does not perform all the method steps–cannot be liable for direct infringement in §271(a) unless it controls or directs another party to complete the other steps.

The Limelight case dates back to 2006, when Akamai accused Limelight of infringing its patent directed to tagging a website’s components (e.g., video and audio files) to be stored on a server for access by Internet users. Limelight, though, required that its customers perform the tagging step and thus escaped liability at the district court level under §271(a) based on the Muniauction standard. A Federal Circuit panel affirmed the §271(a) analysis, but an en banc court reversed under §271(b), reasoning that a party can be liable for inducement when a party practices certain steps and encourages another to practice the remaining steps. Limelight petitioned the Supreme Court, and it reversed.

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USPTO Adopts Final Rules of Practice for Recalculation of PTA

Posted in Patent

On May 15, 2014, The United States Patent and Trademark Office (USPTO) published a Federal Register notice regarding the final changes to the rules of practice that relate to the patent term adjustment (PTA) provisions of section 1(h) of the Leahy-Smith America Invents Act (AIA) Technical Corrections Act. The previously published information was in guideline form only and did not encompass issues addressed by the presently provided rules.

Among other changes, the final rules set forth updated procedures for how the USPTO will handle requests for reconsideration or recalculation of PTA.

Most important is a time sensitive opportunity for applicants to recalculate PTA under section 154(b)(1)(A)(ii), for patents issued between January 14, 2013 and May 20, 2014, without the need to file a petition for recalculating PTA. The patentee must satisfy the following three requirements in order to take advantage of this opportunity: 1) the patent must have directly resulted from an international application filed under 35 U.S.C. § 371; 2) the recalculation request must only be based on errors “identified in this final rule”; 3) and the request must be filed no later than July 31, 2014. As this option is not a request for reconsideration, the applicant need not comply with its timing and fee requirements. Further, if the limited option is pursued and the result is unsatisfactory, the applicant must file a request for reconsideration within two months (or up to an additional five months upon filing and fee payment for extensions) from the date of the recalculation and cannot file a civil suit against the Director. The USPTO has provided a form for applicants seeking to request Recalculation of Patent Term Adjustment form (PTO/SB/132), which is available on the USPTO’s website. Continue Reading

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