Saturday, 24 December 2011

Portugal redefines scope of patent infringement, dispute resolution with new medicines law

The following information concerning the new Portuguese law on the settlement of disputes involving reference medicines and generic medicines comes from a fellow blogger, the excellent Pedro Malaquias (PLMJ, Portugal), who prefaces it with two disclaimers. First, he is a trainee lawyer whose firm represents several generic companies in litigation procedures against originators. Secondly, the views he expresses are his own and do not necessarily represent the views of any other people or organizations.
"On 12 December 2011, Portuguese Law 62/2011 was finally published. Approved by Parliament without any vote against (the leading opposition MP group abstained in the final vote), the law clarifies that an industrial property right cannot be infringed by acts that grant Market Authorisations (MA), establish Recommended Sale Prices (RSP) or Reimbursement values. It also creates a system for settlement of disputes relating to industrial property rights when reference medicines and generic medicines are at issue.

This article analyses the implications of the new law. For an analysis on the established legal regime, please refer to this PLMJ information note.

Non-infringement of industrial property rights by the grant of MAs, RSPs or reimbursements 
The new Law seeks to draw a line under the controversy that has been raging in the academic community and in the courts for many years. 
For the past few years, further to the regular infringement procedures initiated in the Commercial Courts, Originators have filled injunctions and main actions against INFARMED (the Portuguese Medicine Authority) and DGAE (the Directorate General for Economic Activities) in the administrative courts, in order to obtain the suspension or revocation of the MAs, RSPs and reimbursement acts (generic companies were part of the judicial procedures as interested parties). 
Although we consider that there was no legal basis for such requests (these acts are “paper acts” ,incapable of infringing any right, and the grant of MAs should only depend of an analysis regarding the quality, safety and efficacy of a medicine), the fact is that the administrative courts (with a special focus on the 2nd instance courts) have frequently suspended or revoked the MAs, RSPs and reimbursements. 
As a result, and despite the European Commission's recommendations over this matter, patent linkage was a serious issue in Portugal and originations frequently managed to extend
artificially the duration of the patents or SPCs, since the completion of the administrative procedures to introduce a medicine in the market took at last two years and could only be initiated after the expiry of the right.
The new law clarifies that the acts of granting the MA, RSP or reimbursement of the price of the medicine are not contrary to the rights relating to the patents or supplementary certificates and, as a result, an application for an MA, an RSP and reimbursement of the price of the medicine cannot be rejected on the grounds of the possible existence of industrial property rights and cannot be used as a basis to alter, suspend or revoke the grant, authorisation or registration of MAs, RSPs or reimbursements. As a result, generic medicines will be able to be launched in the market in the first day after the expiry of the patent or SPC. 
In our view, this is a very positive development that prevents further recourse to administrative courts; however, APIFARMA (the body that represent several pharmaceutical companies) has already claimed that this solution violates the Portuguese Constitution, since it violates the property right of the patent owners, a solution that we strongly oppose.
We have no information regarding any new litigation procedure initiated after the entry into force of the law, but we would not be surprised if this argument is to be used by originators. If that is the case, all depends on the court interpretation of the conformity of the law with the Portuguese Constitution, but we do consider that no constitutional problems arise from this solution.

Creation of a compulsory arbitration system 
Further to the positive solution described above, the Law provides that conflicts arising from disputes over innovation in industrial property rights, including interim injunctions, related to reference medicines and generic medicines, are subject to compulsory arbitration, whether institutionalised or not. As a result, the Commercial Court (Tribunal de Comércio) no longer has jurisdiction to hear disputes over industrial property rights related to reference medicines and generic medicines, and the parties are obliged to settle any disputes through arbitration.
The strangest question in this solution is that no one asked for it. In fact, once it was announced, it faced strong criticism from all the sectors evolved in the current litigation procedures.

First, there is no tradition of arbitration in intellectual property in Portugal (Arbitrare, the Portuguese institutionalized arbitration center in industrial property is far from a success) and a clear lack of arbitrators exists. As a result, criticism over (at least, the initial) awards resulting from this system is expected.

This solution seems to be in conflict with the previously announced creation of the Intellectual Property Court (regarding this matter, see my posts in the MARQUES Class 46 blog here and hereinstallation of the court is currently on hold and no new developments have occurred), which would be the most capable place for the analysis of these processes and that will see one of the most pressing problems of Property industrial outside its jurisdiction. In our opinion, the compulsory arbitration regime should be clearly reanalyzed once the IP court is installed: as APIFARMA has proposed, it seems that this should be no more than a transitory solution, until installation is finalized.

In any case, despite these problems, a positive point may be noted: celerity. A final decision in a main action regarding infringement and validity of patents in the Commercial Court usually takes more than three years to be issued. Such delays result in useless decisions taken after the expiry of the right: meanwhile, time and money are wasted.

With the new solution, timely decisions are expected; if quality is allied to celerity, the new regime might yet be praised. However, all depends on its practical application and on the behaviour of all the involved parties".

Tuesday, 20 December 2011

FRAND Defense Requires Accepting Damages for the Past

The Mannheim District Court had to decide on an infringement action brought against Apple by Motorola Mobility. Apple had raised an "Orange Book" defense, which is the german version a FRAND defense by unconditionally offering a license agreement under FRAND terms for the future but without accepting damages beyond the FRAND license fees for the past.

The hitherto unresolved question whether the FRAND offer has to be made before using the patent has been answered in the negative. However, the court decided that in the case where the patent had been used in the past, the FRAND offer has to include an unconditional acknowledgement of the damages for this past use.

First of all, the patentee behaves contradictory when he admits, in the license agreement, that certain acts in the future use the patent while disputing that the same acts in the past have been infringing the patent. According to the Mannheim Court, antitrust regulations do not require any limitation of damages for the past to amounts corresponding to FRAND-License fees.

Further reasons for the latter decision depend on details of the German jurisdiction and the specific circumstances of the case. It might therefore be difficult to use the arguments in other jurisdictions.

In the case at issue, a nullity suit was co-pending at the Federal German Patent Court and the Mannheim court had decided not to stay the infringement procedure until the decision in the nullity suit was made. In the event that the patent will be revoked, any damages paid would be refunded, whereas this is not the case for license fees. The party raising the FRAND defense would therefore achieve an economical advantage over the diligent licensee asking for a license before using the patent.

Further, the case-law unambiguously accepts the right of the patentee to terminate a license agreement for good cause if the licensee files a nullity action against the patent. In the case of a co-pending nullity suit, the principle of dolo agit, qui petit, quod statim redditurus est therefore forecloses the licensee from forcing the patentee into an agreement which could then be terminated by the patentee immediately.

As a consequence, the unconditional withdrawal of the nullity action as well as the acceptance of damages for the past appear to be mandatory prerequisites for raising a FRAND-defense in Germany.
Further points discussed but not decided include the question whether the unconditional FRAND offer by the licensee has to encompass all of the standard-essential patents of the patentee (or of the patentee’s parent company?) in all countries so as to terminate all the ongoing litigations between the party and the question whether the FRAND defense may not be raised at all in cases of willful infringement.

The full text of the decision has been published under "Justiz in Baden-Württemberg"  here.

Tuesday, 13 December 2011

Russian IP Court

At the end of November, the Russian Federation Council approved the creation of an IP specialised Court

As we read in The Voice of Russia:

“This new judicial body will settle legal argument related to intellectual property and patent rights and will be staffed with 30 judges experiences in the relevant field as well as a number of specialists in specific fields, who will give expert opinions to help judges make a fair ruling.

Currently due to the understaffed field of intellectual property rights jurisprudence, vague knowledge of its specifics and not always present objectivity of those involved, intellectual property cases generally take up to several years to process, which is much longer than, for example, family or labor law disputes. Experts believe that the creation of such a judicial body will help offload regular courts that already have their hands full, and help process legal disputes much faster.”

Igor Sokolov, Maxim Gubanov and Leonid Zubarev report in Lexology that:

"The jurisdiction of the IP Court will include the following categories of disputes:

1. Challenges to the regulatory and legal acts of the federal executive authorities in the area of the protection of intellectual property rights, and concerning the rights and lawful interests of the applicant in the mentioned area;

2. Cases concerning the grant or termination of legal protection of intellectual property (except for copyright, neighbouring rights, and topologies of integrated microcircuits), including:

> challenges to non-normative acts, decisions and actions (including omissions) of Rospatent, federal executive body responsible for patenting genetic modifications in plants and animals2, as well as the federal executive bodies authorized to consider an application for a patent for a secret invention3 ;
> challenges to the decisions of the antimonopoly authority, recognising the acquisition of the exclusive right to the commercial branding of the legal entity, trademarks or service marks, as an act of unfair competition;
> the determination of patent holders;
> the invalidation of a patent for invention, utility model, industrial design or genetic innovations in plant varieties and animal breeds, a decision to grant legal protection to a trademark, appellation of origin and granting exclusive rights to this appellation, unless otherwise provided by law; and
> the early termination of legal protection for a trademark on the grounds of its non-use."

According to Rapsi Agency, this Court could start working on February 1, 2012.

Monday, 12 December 2011

Experiments in the Patents County Court: when are they allowed?

Sitting in the Patents County Court for England and Wales, Judge Birss QC laid down some helpful guidance late last month on the use of experimental evidence in patent litigation in that court.  This guidance can be found in Liversedge v Owen Mumford Ltd and another [2011] EWPCC 34, in which the judge allowed limited experimental evidence to be used in a dispute which concerned a patent for the Humira Pen, an auto-injector device for delivering a drug, where that evidence went directly to the issue of infringement and thus satisfied the cost-benefit test which was now applied in proceedings litigated before that court. At paragraphs 25 to 26 he said:
"The decisive factor to my mind is that the experiments go directly to the question of how the product alleged to infringe actually works. It may be that the correct construction of the claim means that the product infringes either way, regardless of the dispute about how it works. However when I raised the question of whether I should direct a preliminary issue on the question of construction there was no enthusiasm for that course from either side. In my judgment the functioning of the Humira Pen is likely to be a crucial issue in this case.

Ms May submitted that a party is entitled to prove its case in the best way it can so long as it is reasonable and proportionate in the context of the case as a whole. In my judgment that formulation is capable of leading to trouble in relation to the Patents County Court procedure. To say that a party is entitled to prove its case the best way it can subject to caveats puts the matter the wrong way round. The purpose of the Patents County Court procedure is to facilitate access to justice, in part by streamlining and controlling what is admitted into the proceedings. Experiments are capable of becoming an expensive distraction in patent litigation unless they are kept under control. What is reasonable and proportionate is always important. Seeking to justify potentially complex evidence on the basis that it is the best evidence is a path which leads to increases in cost and time. In my judgment in this case the experiments are not complex at all. The claimant may succeed in showing they are entirely worthless but that is different from saying that they are complex or costly. They will be admitted because they satisfy the cost-benefit test".

Wednesday, 7 December 2011

PCC Page 44: The Maze Before Trial

Thanks to the support of the Chartered Institute of Patent Attorneys (CIPA), the PCC Pages seek to explain how litigation works in the recently-revamped Patents County Court (PCC) for England and Wales, taking as its theme a dispute between Cautious Co and IPOff Ltd as to whether IPOff has infringed the IP rights of Cautious in its robotic octopus. In this episode, the 44th, former CIPA President Alasdair Poore (ably aided by some outstanding proof-reading by Vicki Salmon) brings us further complications -- and a message of brotherly love for all small litigants:
"Readers will recollect that when the robot octopus became invisible – because Cautious's patent attorney was so working hard on the case for his client, the claimant – and we had got as far as a spat about disclosure and privilege.
 Cautious’s dispute centres on a claim that IPOff has infringed Cautious's patent and unregistered design right by making and supplying a robot octopus which could be used to predict football results.  At the Case Management Conference (CMC) there was an order for specific disclosure, limited expert evidence (on patent issues only) and exchange of witness statements.  In addition the Court ordered provision of a process description (to be limited by agreement at that stage to the expert), that Cautious can rely on the sample IPOff Robot Octopus, Cautious's original design of an octopus toy, and a sample of the current Cautious octopus.  
A useful sample of this sort of order can be seen in the Annex to the judgment on Ifejika v Ifejika [2011] EWPCC 28, previously mentioned here, which helpfully suggests how the issues may be identified as well as the elements for proof of the issues.  It's worth keeping at hand as a guide to preparing for a CMC. Readers will recollect previous reference to this case, and may also be interested in reading what is almost the conclusion to the sorry saga, reported on 23 November 2011, at [2011] EWPCC 31.  In that judgment, Judge Birss QC ordered that the damages in respect of one of the infringements be assessed at £10 (para 191), although the other was to be referred to an inquiry (para 192).  He concluded with the observation: 
I cannot end without expressing the hope that the parties now take the time and effort to settle what remains of this bitter dispute once and for all. In the biblical story of Esau and Jacob, Jacob steals his brother's birthright. It leads to a bitter dispute which lasts for many years but even then the brothers are finally reconciled (Genesis 33:1-20). Victor and Charles Ifejika should now strive to do the same.”  
This is an opportune moment to mention the upcoming small claims jurisdiction of the PCC again: I have been told that small claims cases will come before district judges and recorders, rather than before Judge Birss QC.
Cautious would not be caught in a case which progressed in such a manner (described by Judge Birss as “a fraternal dispute ranging over many years”).  However, as preparations are clearly underway, Cautious’s patent attorney expects some more turbulence in the proceedings; and has received just the sort of letter that he knew would start arriving as detailed preparations were being made.  
IPOff’s solicitor has been doing a little bit more homework, and has realized that the independent design argument was not going very far on the material his client had provided.  Now IPOff has dug up some “prior art” in the form of pictures in a text book on octopuses.  I can now reveal that the design of the octopus is indeed based on the rare “tiger octopus” – characteristics of which will be revealed in due course.  This text book details key features of the tiger octopus and IPOff’s solicitor has provided some photographs from the book, as well as live photographs of tiger octopuses.  Cautious's patent attorney suspects that these were taken on his holiday last Christmas and is not at all clear why it should have taken so long for these to have emerged into the proceedings.  
IPOff has asked that Cautious consent to amendment of the statements of case to reflect this new angle that he has discovered, saying that it is really necessary to involve an expert now in order to explain why this is material which would, at the relevant time, have been known to interested circles and why Cautious's designs do not create a different overall impression from these pictures. 
At the same time, Cautious’s expert has been doing his work.  He has now spoken to Cautious’s patent attorney to explain some problems.  As instructed he has not prepared a report on this aspect at this stage. He has been provided with the process description and the source code of the IPOff Robot Octopus engine.  This is confidential and was not provided to Cautious’s patent attorney, by agreement at the CMC.  On reviewing this and comparing it with the operation of the robot octopus, he finds that the robot octopus does not operate as he would expect, based on these descriptions.  The descriptions would indeed mean that the robot octopus was not infringing, but they do not, in his view, correspond with reality. 
Cautious's patent attorney is considering what steps should be taken, and also whether this is deliberate or accidental.  In order to demonstrate the position, Cautious may have to carry out experiments nothing in the CMC order about that, and it looks as though it could start racking up the costs.  
Cautious’s patent attorney is pondering each of these issues, and will be reporting on them shortly. 
In the meantime, he has also heard sad news.  The excitement of a proposed European Unified Patent Court is overshadowed by the fact that this may make the PCC irrelevant in patent cases.  The CIPA Briefing paper is here.  Readers should know that it is proposed that the Court will have exclusive jurisdiction not only in relation to the proposed European Unitary Patent but also, after a transitional period of only five years, in relation to patents granted under the existing EPC.  This appears to mean that all this effort Cautious’s patent attorney has gone to, to learn about the PCC and to persuade SME clients that the PCC will transform the value of their patents, will go to waste.  This is something which is made all the more frustrating by the complete absence of public information on the debates over the subject (see IPKat, Further work is still needed)".

Apple Loses Bid for U.S. Injunction Against Samsung Galaxy Tab, Smartphones

In the latest installment of Apple, Inc.’s global patent war against Samsung over smartphone and tablet computer designs, a federal district court in California recently denied Apple’s request for a preliminary injunction. On December 2, the U.S. District Court for the Northern District of California ruled that Apple failed to prove that it faced irreparable harm from Samsung’s alleged infringement of its design patents for mobile phones and its utility patent covering touch screen display scrolling. The court also ruled that Apple’s design patent covering its iPad tablet computer was likely invalid. The full 65-page opinion is available here . Here are the high points:

Background. In April 2011, Apple filed suit against Samsung alleging three basic infringement claims: (1) Samsung infringed Apple’s U.S. Design Patents D618,677 and D593,087 by selling its Galaxy S 4G and Infuse 4G smart phones, (2) Samsung infringed U.S. Design Patent No. D504,889 by selling its Galaxy Tab 10.1 tablet computer, and (3) Samsung infringed U.S. Patent No. 7,469,381, entitled “List scrolling and document translation, scaling and rotation on a touch-screen display,” by selling all three devices and the Samsung 4G LTE smart phone. Apple moved for a preliminary injunction to bar the four accused Samsung products from the U.S. market pending a full trial on the merits (perhaps not coincidentally, during the holiday shopping season).

Injunction Standard. The court noted that in order to obtain interlocutory injunction relief, a patentee must establish (1) a likelihood of success on the merits of its infringement claim, (2) immediate irreparable harm if the injunction is not granted, (2) that a balancing of the hardships suffered by the parties weighs in favor of an injunction, and (4) that an injunction best serves the public interest. Abbott Labs. v. Andrx Pharms., Inc., 452 F.3d 1331, 1334 (Fed. Cir. 2006). Based on its review of the limited record assembled for the injunction hearing, the court ruled that Apple failed to establish all four grounds for an injunction against any of the products.

Smart Phone Design Patents. Although the court noted that an ordinary observed was likely to find that the Galaxy S 4G and Infuse 4G smartphones designs were substantially the same as the D’677 patented design, it ruled that Apple failed to prove that it faced irreparable harm without an injunction. Apple advanced the creative argument that Samsung’s sale of infringing phones in the U.S. market would result in irreparable erosion of the distinctiveness of Apple’s brand. It argued that product design was an important factor in consumer decisions to purchase phones, and the design features of its products were “closely entwined with the Apple brand[.]” Thus, it argued that Samsung’s infringement would erode Apple’s design and brand distinctiveness, and lead to the loss of goodwill. The district court rejected the argument, however. It noted that Apple offered no case authority for its theory, and --- if applied in this case – virtually any infringing product design would result in erosion of distinctiveness. The court also noted that Apple’s theory borrowed heavily from dilution in the trademark sense, but there was no legal support for applying that theory to injuries in a design patent claim. Ultimately, however, the court ruled that even if the theory was viable, Apple offered no evidence that Samsung’s products would result in confusion or loss of distinctiveness.

The court also rejected Apple’s argument that the Samsung infringing sales would directly result in loss of customers and market share. Apple and Samsung introduced conflicting evidence concerning the role design plays in customer selection of products in the crowded phone market. Much of that evidence was designated confidential by Apple and redacted from the public opinion. [Note that the court initially issued the opinion in a pdf version that revealed the redacted supposedly confidential information.] Ultimately, the court ruled that Apple failed to prove that design was the primary factor in customer purchases. In addition, the court noted that since 2007 Apple was aware that Samsung was copying the design of its products, yet delayed in seeking an injunction. The court concluded that this delay tipped the scale in Samsung’s favor.

Tablet Design Patent Likely Invalid. The district court then turned to Apple’s D’889 patent. Samsung argued that the patent was invalid for obviousness based on prior art tablet-type devices featuring framed displays. In particular, Samsung pointed to a 1994 Fidler/Knight Ridder tablet, which created the same overall visual impression as the D’889 patent. [See figures comparing D'889 patent with prior art].

Apple argued that secondary considerations of nonobviousness, such as commercial success and initial skepticism in the industry, supported a conclusion that the design was not invalid. However, Apple was unable to demonstrate a link between the secondary evidence and the protected tablet design. Thus, the court ruled that a substantial question existed as to the patent’s validity, and thus Apple had not proven a likelihood of success on the merits.

‘381 Utility Patent. Finally, the court considered Apple’s ‘381 patent. The patent claims methods for scrolling using a touch-screen display, a technology critical to Apple’s iOS. The court noted, however, that the claimed invention constituted only a small portion of the overall functionality of the accused products. Noting that Supreme Court Justice Anthony M. Kennedy commented in eBay Inc. v. MercExchange LLC that injunctions to protect patents covering only small components of a product may not be appropriate because “damages may well be sufficient to compensate the infringement and an injunction may not serve the public interest[,]” 547 U.S. 388, 397 (2006), the district stated:

The Court finds this argument persuasive. While Apple undoubtedly uses the patent and produces goods in the same market, Apple has neither alleged, nor established, that the ‘381 patent is either necessary to, or a core functionality of, the products that it seeks to enjoin. Nor has Apple shown that consumers’ purchasing decisions are based on the existence of a snap back feature protected by the ‘381 patent. Accordingly, the fact that the ‘381 patent is but one patent utilized in the accused products, and does not appear to be either necessary for the product to function, or a core technology of the product, weighs against a finding of irreparable harm.

Apple, at 63-64 (citations omitted). That reasoning may set a high standard for patentees seeking to enjoin the use of their patented inventions in complex electronic devices, which generally involve a myriad of technologies.

Monday, 5 December 2011

Unified patent court: latest news

Since by no means all PatLit readers of this weblog also read the IPKat, I am taking the liberty of drawing the attention of PatLit readers to this morning's Katpost by Annsley Merelle Ward on the latest developments regarding the Unified Patent Court and the proposed new regime for European patent litigation.  I'm afraid it makes rather depressing reading,

Sunday, 4 December 2011

Christmas: not so sad for Nokia?

On Tuesday, in "Failure to reach FRAND terms may make it a sad Christmas for HTC", PatLit posted this upbeat piece from IPCom which observed, among other things, that the company was in dispute with Nokia, which had so far declined to take licences to use its patents. This weblog has since received a 'corrective' from Nokia which seeks to set out its own position.  Nokia comments thus:
"Though Nokia does not normally comment on legal proceedings which we are not involved in, comments made by IPCom in its press release about patent #100 (EP 1 186 189 B1) and Nokia require correction.

IPCom claims that the algorithm described in patent #100 has been “adopted as a standard by equipment makers worldwide”. What it does not say is that the functionality is not used by any network in Germany or elsewhere. IPCom also fails to mention that, subsequent to the finding of infringement against HTC, the Federal Patent Court in Germany found the patent invalid as granted but allowed amendments which narrowed the scope of the patent in such a way that nobody implementing the standard could infringe what remains.

IPCom states that it is “seeking similar injunctions against Nokia with regard to this and a number of other standard-essential patents”. By doing so, IPCom is explicitly failing to meet its obligations as an owner of alleged standards-essential patents, which include commitments not to seek injunctions against willing licensees. Following a Nokia complaint to the European Commission, IPCom declared in December 2009 its intent to honour these commitments but its behaviour continues to fall short of these commitments.

IPCom states its hope “that Nokia will swiftly recognize that it … needs to come to terms with IPCom”. Nokia was prepared to take a licence to the portfolio on fair, reasonable and non-discriminatory terms before IPCom began legal actions against us in December 2007. However, IPCom has continually failed to make any offer of terms that could be considered FRAND. Instead, IPCom has chosen to pursue an aggressive strategy of legal actions against Nokia. During the past four years, of all of the 54 IPCom patents which have come to judgment in the UK, Germany and elsewhere, none has been found valid as granted, suggesting that its claims for the value of its portfolio have been grossly overstated.

Nokia had two further EPO hearings last week.

In decisions in the Hague and Munich, the European Patent Office has ruled two further IPCom patents (EP 1 258 110, #116 and EP 1 085 716, #070) as invalid as granted. This brings to 56 the total number of patents found invalid as granted or conceded as invalid by IPCom.

“These two decisions, together with those on the previous 54 IPCom patents which have come to judgment, show that the value of IPCom’s portfolio has been grossly overestimated,” says Paul Melin, VP intellectual property at Nokia. “Rather than continuing its aggressive attempts to extract unrealistic licensing terms and mislead the public, it’s time for IPCom to come to terms with reality"".

Friday, 2 December 2011

SCOTUS Readies For Oral Argument In Three Patent Cases

It’s autumn in Washington, DC and time for patent litigators’ thoughts to turn to Washington Redskins football and U.S. Supreme Court oral arguments. Following its recent practice of granting certiorari in a relatively large number of patent-related cases (by historical standards, at least), the SCOTUS has accepted three patent cases this term. Two cases will be argued next week. The third will be argued in early January. Here's a preview of all three cases:

Patent Eligibility. The most closely-watched case is Mayo Collaborative Services (d/b/a Mayo Medical Laboratories) v. Prometheus Laboratories, Inc. (No. 10-1153), an appeal from the U.S. Court of Appeals for the Federal Circuit considering the patent eligibility of medical processes. Prometheus Laboratories, Inc. owns U.S. Patent No. 6,355,623, entitled “Method of treating IBD/Crohn’s Disease and related conditions wherein drug metabolite levels in host blood cells determine subsequent dosage,” and a subsequent continuation patent, U.S. Patent No. 6,680,302. The patents claim methods for treating gastrointestinal diseases by optimizing dosages of thiopurine drugs. The drugs are effective in carefully controlled doses, but have toxic side effects at incorrect levels. The patents generally claim a process of optimizing the dosage level by “administering” a thiopurine drug, “determining” the level of resulting drug metabolites in the patient’s blood, and then increasing or decreasing the drug dosage where the metabolite level “indicates a need” to do so.

Prometheus sued Mayo Collaborative Services, a unit of the Mayo Clinic, for infringement of the patents. Mayo moved for summary judgment on the grounds that the claimed invention was not eligible subject matter under 35 U.S.C. § 101, because it attempts to cover a natural phenomenon – the correlation between thiopurine metabolite levels in a patient’s blood and drug effectiveness or toxicity.

The Mayo case already has been to the Supreme Court once, but was remanded without a decision on the merits. The Federal Circuit originally reversed the district court’s grant of summary judgment in favor of Mayo, holding that the claims satisfied the then-dispositive “machine or transformation test.” Prometheus Labs., Inv. v. Mayo Collaborative Services, 581 F.3d 1336 (Fed. Cir. 2009). That decision was on appeal to the Supreme Court when the Court decided Bilski v. Kappos, 561 U.S. ___, 130 S.Ct. 3218 (2010), broadening the eligibility of method inventions. As a result, the Supreme Court remanded the Mayo case for reconsideration. The Federal Circuit decided once again that the claims were patent-eligible. Prometheus Labs., Inv. v. Mayo Collaborative Services, 628 F.3d 1347 (Fed. Cir. 2010). The CAFC reasoned that Prometheus’ steps of “administering” and “determining” were transformative, because the thiopurine drug chemically reacted in the bloodstream to form the detectible metabolites. Thus, the claims did not cover the a naturally-occurring correlation per se, but a specific application of that phenomenon that resulted in drug dosage optimization.

Mayo will be the Supreme Court’s first opportunity to consider the limits of patent eligibility since its Bilski decision. Interest in the case is particularly keen because one Justice, Stephen Breyer, has been critical of a patent involving a step suggesting physician thought processes quite similar to the steps recited in the Prometheus patents. In a 2006 case, Laboratory Corp. of America Holdings v. Metabolite Labs., Inc., the Court heard argument on the patentability of claims directed to a method of diagnosing vitamin deficiencies in patients by “assaying” their blood for high levels of homocysteine (known to be associated with vitamin deficiencies) and then “correlating” a high level of homocysteine with vitamin deficiency in the patient. 126 S.Ct. 2921 (2006). The Court subsequently dismissed the writ of certiorari as improvidently granted, because the patent eligibility issue was not briefed or argued in the lower court. But Justice Breyer, joined by Justices Souter and Stevens (both now retired), dissented from the dismissal. He argued that the claimed method amounted to nothing more than “an instruction to read some numbers in light of medical knowledge.” Thus, he argued, the claims were directed to natural phenomena, per se, and were not patent-eligible. The same reasoning may cause Breyer to be skeptical of Prometheus’ claims.

The Mayo case will be argued on December 7.

Counterclaims Under Hatch-Waxman Act. In addition to Mayo, two other patent-related appeals will be argued this term. In Caraco Pharmaceutical Labs. Ltd. v. Novo Nordisk A/S, No. 10-844, the Supreme Court considers when a generic drug company may bring a counterclaim against a pioneer drug manufacturer under the Drug Price Competition and Patent Term Restoration Act of 1984, more commonly known as the Hatch-Waxman Act. Under that Act, a drug manufacturer lists patents which cover its drug or FDA-approved uses of the drug in the FDA’s Orange Book. If a generic company files an Abbreviated New Drug Application (“ANDA”) seeking approval to market a generic equivalent before the patents expire, it must deliver a “Paragraph IV” certification asserting that each patent is not infringed, invalid, or unenforceable. 21 U.S.C. § 355(j)(2)(A)(vii). Such a certification is an act of infringement, 35 U.S.C. § 271(e)(2), permitting the pioneer drug company to file suit in federal district court. In order to prevent pioneer drug companies from deterring generic applications by listing patent information that is too broad in light of the patents’ claimed subject matter, the Act permits a generic drug company to assert a counterclaim if a patent listed in the Orange Book does not claim either “(aa) the drug for which the [FDA] application was approved; or (bb) an approved method of using the drug[.]” 21 U.S.C. § 355(j)(5)(C)(ii)(I).

In this case, the pioneer drug company, Novo Nordisk, owns a patent covering the brand drug Prandin®, which is approved for three methods for treating diabetes mellitus. Novo Nordisk listed the patent in the Orange Book as covering one method. In fact, the patent claims covered one of the other approved methods. Novo Nordisk asserted that Caraco infringed the patent by filing an ANDA for the listed, but not patented, method. Caraco filed a counterclaim seeking correction of the Orange Book information, and the district court granted summary judgment directing Novo Nordisk to amend the listing. In a 2-1 split decision, however, the Federal Circuit reversed. It ruled that Caraco could not assert a counterclaim because the Orange Book did list “an approved method of using” Prandin (just not the one that was covered by the patent). The dissenting judge argued that the majority’s construction of the law was too “crabbed” and deviated from Congress’ intent to prevent manipulation of the Orange Book listings.

The Supreme Court will hear argument in Caraco on December 5, 2011.

Scope Of Evidence In District Court BPAI Challenge. On January 9, 2012, the Supreme Court is scheduled to hear oral argument in Kappos v. Hyatt, No. 10-1219, considering the availability of evidence in appeals from the U.S. Patent and Trademark Office’s Board of Patent Appeals and Interferences (“BPAI”) to federal district courts. Under the Patent Act, a patent applicant that loses its administrative appeal to the BPAI has two options for appellate review. First, it can appeal directly to the Federal Circuit. Second, it can file a civil action in federal district court under 35 U.S.C. §145, seeking an order requiring the USPTO to issue a patent on the application. The applicant choosing the district court option subsequently may appeal an adverse court result to the Federal Circuit. This district court option has a long history, dating back to the 1836 Patent Act. Section 145 states that in the civil action, the district court “may adjudge that such application is entitled to receive a patent for his invention . . . as the facts in the case may appear[.]”

In Hyatt, the examiner rejected the applicant’s pending claims for obviousness. During the ensuing administrative appeal, the BPAI reversed the obviousness rejection, but rejected several claims based on lack of written description. 35 U.S.C. § 112 par. 1. Evidence to rebut that rejection was available to Hyatt, but he did not submit it to the BPAI. After the BPAI’s final ruling, Hyatt filed a civil action under Section 145 and, in that action, attempted to introduce the evidence he failed to submit during the administrative appeal. The district court excluded the evidence.

Hyatt then appealed to the Federal Circuit. In an en banc ruling, the appeals court ruled that a plaintiff in a Section 145 action may introduce any evidence in support of its request for issuance, even though the evidence was not before the BPAI. Hyatt v. Kappos, 625 F.3d 1320 (Fed. Cir. 2010)(en banc). The USPTO argued for a different rule that would preclude admission of new evidence in the district court action unless the applicant could not reasonably have provided the evidence to the USPTO in the first instance. Supreme Court will be tasked with determining the correct standard for admitting new evidence.

You don’t have to understand why your invention works

Last year we made reference to Teva vs AstraZeneca action (Crestor) and the negative impact of plaintiff’s own words (here). Yesterday Teva’s appeal has been dismissed by the Court of Appeals for the Federal Circuit.

We read in the decission (here):

"Because AstraZeneca conceded infringement for the limited purpose of its summary judgment motion, and because Teva maintains the allegation of infringement upon which its suit is based, it is undisputed for the purpose of this appeal that AstraZeneca's drug is an embodiment within the scope of the asserted claims. See Evans Cooling Sys., Inc. v. Gen. Motors Corp., 125 F.3d 1448, 1451 (Fed. Cir. 1997) ("Although [defendant] bore the burden of proving that the [asserted prior art/accused product] embodied the patented invention or rendered it obvious for purposes of the summary judgment motion, this burden is met by [plaintiff's] allegation, forming the sole basis for the complaint, that the [asserted prior art/accused product] infringes."). It is undisputed that AstraZeneca conceived and reduced its drug to practice before Teva's first conception of the claimed subject matter."

Teva based the appeal in the fact that AstraZeneca “did not understand that crospovidone acted as a stabilizer in its drug prior to Teva's conception, if at all”. The Court of Appeal states that defendant didn’t have to understand it, arguing that:

"Conception occurs "when the inventor has a specific, settled idea, a particular solution to the problem at hand ...." Creative Compounds, LLC v. Starmark Labs., No. 2010-1445, Slip Op. 13 (Fed. Cir. Jun. 24, 2011) quoting Burroughs Wellcome Co. v. Barr Labs., Inc., 40 F.3d 1223, 1228 (Fed. Cir. 1994). But "[a]n inventor need not understand precisely why his invention works in order to achieve an actual reduction to practice." Parker v. Frilette, 462 F.2d 544, 547 (CCPA 1972). In order to establish reduction to practice, the prior inventor must have (1) constructed an embodiment or performed a process that met all the claim limitations and (2) determined that the invention would work for its intended purpose. Mycogen Plant Sci., 243 F.3d at 1332."

Customs warehousing and external transit of goods

Yesterday the CJEU ruled in Nokia & Philips cases. Although questions made reference to Trademarks, the conclusions would also apply to every IP right.

According to the decision (here):

– goods coming from a non-member State which are imitations of goods protected in the European Union by a trade mark right or copies of goods protected in the European Union by copyright, a related right or a design cannot be classified as ‘counterfeit goods’ or ‘pirated goods’ within the meaning of those regulations merely on the basis of the fact that they are brought into the customs territory of the European Union under a suspensive procedure;

– those goods may, on the other hand, infringe the right in question and therefore be classified as ‘counterfeit goods’ or ‘pirated goods’ where it is proven that they are intended to be put on sale in the European Union, such proof being provided, inter alia, where it turns out that the goods have been sold to a customer in the European Union or offered for sale or advertised to consumers in the European Union, or where it is apparent from documents or correspondence concerning the goods that their diversion to European Union consumers is envisaged;

– in order that the authority competent to take a substantive decision may profitably examine whether such proof and the other elements constituting an infringement of the intellectual property right relied upon exist, the customs authority to which an application for action is made must, as soon as there are indications before it giving grounds for suspecting that such an infringement exists, suspend the release of or detain those goods; and

– those indications may include, inter alia, the fact that the destination of the goods is not declared whereas the suspensive procedure requested requires such a declaration, the lack of precise or reliable information as to the identity or address of the manufacturer or consignor of the goods, a lack of cooperation with the customs authorities or the discovery of documents or correspondence concerning the goods in question suggesting that there is liable to be a diversion of those goods to European Union consumers.