Chief Justice Roberts and Justice Kagan, August 7, 2010. Justice Kagan delivered the opinion for a unanimous Court in Monsanto v. Bowman.
In the case of Bowman v. Monsanto Co., Farmer Bowman may have believed that the “third time” would be “charm.” In two prior cases, Monsanto Co. v. Scruggs and Monsanto Co. v. McFarling, the Federal Circuit had ruled in favor of Monsanto, the owner of the patented Roundup Ready® soybeans, and against Farmer Scruggs and Farmer McFarling. Even so, Farmer Bowman, as probably did his legal counsel, may have believed that the Supreme Court’s 2008 decision in Quanta Computer, Inc. v. LG Electronics, Inc. would undermine the Federal Circuit’s view that patent exhaustion didn’t apply to Monsanto’s patented Roundup Ready® soybeans. But in a unanimous decision, the Supreme Court affirmed the Federal Circuit’s 2011 ruling that Farmer Bowman’s unlicensed planting of these patented Roundup Ready® soybeans (sold for commodity use only) was an infringing use that was not subject to the doctrine of patent exhaustion. Alas, Farmer Bowman found no solace in Quanta.
To understand the ruling in Bowman, you must first understand Monsanto’s patented Roundup Ready® soybean technology, its Technology Agreement with purchaser’s of those soybeans delineating the licensed use thereof, as well as the fairly complex fact situation of Farmer Bowman’s use (or more appropriately wily misuse) of the “commodity” soybeans he purchased from a local grain elevator and subsequently planted for the express purpose of harvesting the resulting seed. Monsanto’s patented technology involved genetically modified soybeans that exhibited resistance to N-phosphonomethylglycine-based herbicides (commonly known as “glyphosate” or “glyphos”), such as Monsanto’s Roundup® herbicide product. These genetically modified soybeans were known as Roundup Ready® soybeans because of their resistance to such herbicides.
In my first installment on Paragraph IV Certifications under Hatch-Waxman, I explored the basics of this “beast.” See A Primer on Paragraph IV Certifications: Into the Belly of the Hatch-Waxman Beast Part 1. In my second installment on Paragraph IV Certifications under Hatch-Waxman, I discussed one of the more litigated “trouble spots” for Paragraph IV Certifications, namely the “carve out” cases. See Carve Outs: Into The Belly of the Hatch-Waxman Beast Part 2. In my third and final installment, I’ll focus on probably the most contentious “trouble spot,” namely Hatch-Waxman “reverse payment” cases, now before the Supreme Court in FTC v. Watson Pharmaceuticals(renamed as FTC v. Actavis, Inc.) for which oral argument was recently heard. So let’s strap on our safety belts one last time, and dive back into the “belly” of this Hatch-Waxman “beast” to look at “reverse payment” cases.
“Reverse payment” cases are an outgrowth of a key feature I noted in my first article on the basics of Paragraph IV Certifications: the filing of an Abbreviated New Drug Application (ANDA) by the generic drug maker with a Paragraph IV Certification is treated as a technical act of patent infringement. After receiving notice of the Paragraph IV Certification, the patent owner/NDA holder has 45 days to bring suit, otherwise the FDA can move forward on approving the ANDA. Conversely, if the patent owner/NDA holder does bring an infringement suit within the prescribed 45 day period, the FDA cannot approve that ANDA for 30 months, unless the patent(s) that are the subject of the Paragraph IV Certification are earlier deemed invalid or not infringed in that suit.
In my first installment on Paragraph IV Certifications under Hatch-Waxman, I explored the basics of this “beast.” See A Primer on Paragraph IV Certifications: Into the Belly of the Hatch-Waxman Beast Part 1 . And as promised, in this second installment, I’ll now focus on one of the more litigated “trouble spots” for Paragraph IV Certifications, namely the “carve out” cases. (In my third and final installment, I’ll talk about the other “trouble spot,” namely Hatch-Waxman “reverse payment” cases, which is now before the Supreme Court in the 11th Circuit case of FTC v. Watson Pharmaceuticals, renamed as FTC v. Actavis, and for which oral argument was recently heard.) So strap on your safety belts again, and let’s dive back into the “belly” of Hatch-Waxman Paragraph IV Certification “beast” to look at “carve outs.”
“Carve outs” essentially involve a situation where there is an FDA approved drug for which the generic drug maker seeks to market that drug, again through an Abbreviated New Drug Application (ANDA), but instead for an FDA approved use, where also that FDA approved use is unpatented. While these “carve outs” also involve the filing of a Paragraph IV Certification, there is a slight but important twist in that Certification: inclusion of what is called a “section viii statement” that the generic drug maker “is not seeking approval for a method of use that is claimed in the patent.” When submitting the “section viii statement,” the generic drug maker must also provide a proposed label that removes or “carves out” the claimed method of use. The FDA will then approve this “carve out” statement only if: (1) there is no overlap between the proposed label submitted by the generic drug maker and a use described in the Orange Book; and (2) removing the information about the claimed method of use from the label doesn’t render the drug less safe or effective.
In a moment of extreme weakness, I agreed to Gene’s request to doing a primer on Paragraph IV Certifications under the Drug Price Competition and Patent Term Restoration Act, commonly referred to as Hatch-Waxman. I don’t know if you would call me an expert, but I’ve studied many, many cases involving Paragraph IV Certifications under Hatch-Waxman. The courts have found Hatch-Waxman to be a hydra-like monster with a labyrinth of sections that are frequently confusing (or worse yet, conflicting). Paragraph IV Certifications are a particular trouble spot in Hatch-Waxman. So if you’re up to diving into the “belly of this beast,” let’s examine the characteristics of this most infamous of the Hatch-Waxman monsters.
To understand Paragraph IV Certifications, you must first address what an Abbreviated New Drug Application (ANDA) is. ANDAs are how generic drug manufactures expedite the approval of their generic drugs. To use the language of the Federal Circuit, “[g]eneric drug companies are not required to conduct their own independent clinical trials to prove safety and efficacy, but can instead rely on the research of the pioneer pharmaceutical companies.” See the 2008 Federal Circuit case of Janssen Pharmaceutica, N.V. v. Apotex, Inc. which provides an excellent explanation of what the ANDA and Paragraph IV certification process is all about. Instead, in the ANDA process, the generic drug company may rely upon this clinical safety and efficacy of the “pioneer pharmaceutical company” if it can “show show bioequivalence of its generic drug to the NDA drug.” “Bioequivalence” is defined by the FDA as “the absence of a significant difference in the rate and extent to which the active ingredient or active moiety in pharmaceutical equivalents or pharmaceutical alternatives becomes available at the site of drug action when administered at the same molar dose under similar conditions in an appropriately designed study.” I’ll get to where those “pioneer pharmaceutical companies” and “NDA drugs” enter the ANDA approval process next.
EDITORIAL NOTE: The decisiondenying Apple’s permanent injunctionwas recently followed by theCAFC decision in Presidiothat tilts the pendulum back toward the awarding of permanent injunctions when competitors are involved. Eric Guttag and I have communicated via e-mail about permanent injunctions. Guttag wrote the following article in 2006. I asked if I could republish it here and he agreed. Here is Guttag’s take on eBay v. MerchExchange.
Justice Clarence Thomas delivered the opinion of a unanimous Supreme Court in eBay v. MerchExchange in 2006.
Once upon a time, the view was that “methods of doing business” could not be patented. That view changed forever with the 1998 case of State Street Bank & Trust Company v. Signature Financial Group Inc. [i] In State Street, the Court of Appeals for the Federal Circuit (Federal Circuit) held there was no “business method” exception to patentability: “Whether the [patent] claims are directed to subject matter within § 101 [ii] should not turn on whether the claimed subject matter does “business” instead of something else. [iii]
In certain quarters, the grant of patents on “business methods” has been increasingly viewed with alarm and concern. One concern is that the holder of such patents could permanently enjoin such infringement, thus potentially increasing the bargaining position of the “business method” patent holder. That concern is very real. For example, in the “non-business method” patent context, the Federal Circuit held in the 1989 case of Richardson v. Suzuki Motor Company that, in view of the recognized “right to exclude” under the patent, “the general rule [is] that an injunction will issue when infringement has been adjudged, absent a sound reason for denying it.” [iv]
This may be the hardest article ever for me to write. As Gene can tell you, writing about a parent who has had a tremendous impact and influence on your life, and who has just passed way isn’t easy. In my case, it’s Alvin Guttag, former patent examiner, former patent attorney, son, brother to two sisters, husband to my Mom, grandfather to five grandsons (two of which are my sons), and most importantly to me, my Dad.
Dad left this mortal world this past Thursday, December 27, at the age of 94, having experienced a full life and after a final year and a half of fairly steady (and occasionally precipitous) physical and mental decline. But what I’ll remember most about Dad is how he shaped me in so many important ways. As I’ve told many others, I truly sat at the knee of a master, both professionally and personally. What I’m going to focus on here is the professional part of Dad’s life.
For about 11 years, Dad was a patent examiner at the USPTO in one of the chemical art units. Dad then spent another 30 years or so as a patent attorney with the former IP law firm of Cushman, Darby, and Cushman, first as an associate, and later as a partner. In all, Dad prosecuted and obtained several thousand patents for his clients, mostly in the chemical arts. (That’s correct, several thousand patents.) Dad often wrote patent applications the old fashioned way, by hand, usually starting with the abstract, and going forward from there. (Dad was a converted left hander whose right-handed scrawl describing chemicals and chemical formulas looked something like a jumbled oscilloscope wave; his secretaries often needed a chemical dictionary to follow what he had written.) Litigators sometimes view patent prosecutors as not being that good as “putting money on the books” (as my Dad referred to billing). But the litigators at Cushman, Darby, and Cushman always respected Dad because Dad could bill out more than all but the top litigators in his firm. That’s because Dad worked hard (and long) at his patent prosecution craft.
Given the remand of the Federal Circuit’s original panel decision for reconsideration in view of Mayo Collaborative Services v. Prometheus Laboratories, Inc., I’m not surprised that the Supreme Court granted the ACLU’s/Pubpat’s petition for certiorari in AMP v. Myriad. What is somewhat surprising is that the Supreme Court granted certiorari only as to the first question (“Are Human Genes Patentable”) posed by the ACLU/PubPat. The patent-eligibility under 35 U.S.C. § 101 of Myriad’s claimed method of screening potential cancer therapeutics that was (again) unanimously upheld by the Federal Circuit panel, but will not be before the Supreme Court. Nor will the issue of “lack of standing” with respect to but one of the plaintiffs be considered.
I’ve been following the various meanderings and wanderings of the Myriad case for almost three years now. One unfortunate aspect of this case is that, from the beginning, the ACLU/PubPat has manipulated and fabricated what this case is about in terms of the applicable “science,” as well as the applicable “patent law.” In fact, in distorting what this case is really about (i.e., the patent-eligibility of Myriad’s claimed “isolated” DNA sequences under 35 U.S.C. § 101), the ACLU/PubPat has also tried to hide the fact that the real plaintiffs in the Myriad case are none other than the ACLU/PubPat themselves; that has become readily apparent, given that all but one of the “alleged” plaintiffs have been knocked out of this case on “lack of standing” grounds.
Before the Myriad case becomes further obscured by the “pseudoscientific” nonsense foisted by the “real plaintiffs,” as well as the PR smokescreen of “politics, policy and philosophy” that the ACLU/PubPat has used to manipulate the applicable “patent law,” the Supreme Court needs to understand, to use Judge Lourie’s words, what this case “is not about.”
In 2009, I wrote for IPWatchdog about the case of In re Lister where the patent applicant barely avoided a potentially fatal “printed publication” bar based on his own copyrighted manuscript that was searchable in two commercial databases, but only after the critical “bar date.” See CAFC Rules Patent Applicant’s Own Copyrighted Manuscript Not Publicly Accessible. That was followed by a much more comprehensive article that I wrote which was published in 2011 on applying the “printed publication” bar to electronically posted documents. See Guttag, Applying the Printed Publication Bar in the Internet Age: Is It as Simple as Googling for Prior Art. That 2011 article included a discussion of the Lister case, but focused primarily on the 2008 case of SRI International, Inc. v. Internet Security Systems, Inc. where a majority of the Federal Circuit panel ruled that there were “genuine issues of material fact” sufficient to preclude a grant of summary judgment that an electronic document temporarily posted (but freely accessible) on the FTP server of the patentee (SRI International) was a “printed publication” bar.
One of the “revelations” I discovered in researching and writing that 2011 article is that the “printed publication” bar is really two distinct and parallel doctrines that the Federal Circuit has all too often unfortunately commingled together. The first, more active form is the “dissemination” doctrine. The second, more passive form is the “publicly accessible” doctrine (sometimes referred to as “constructive publication”).
The recent case of Voter Verified, Inc. v. Premier Election Solutions, Inc. (Nov. 5, 2012) is the latest example of the Federal Circuit being oblivious to the parallel existence of these two doctrines (and especially the requirements for each of these distinct doctrines) for applying the “printed publication” bar.
Litigation involving incorrect claims of small entity status is very rare. In the 1998 case of DH Technology, Inc. v. Synergystex International, Inc., the small entity issue fee was paid for the asserted patent, even though it was later discovered that the patentee had over 500 employees (i.e., was now a “large entity”) at the time this issue fee was paid. Even so, the Federal Circuit overturned a district court ruling that the asserted patent had lapsed and was therefore unenforceable because the patentee had “incorrectly paid the small entity issue fee and because the statutorily-permitted time for correcting the error had passed.” Instead, the Federal Circuit held that 37 CFR § 1.28(c) (allowing an erroneous claim of small entity status and the erroneous payment of the small entity issue fee to be excused by paying the deficiency owed) controlled so that the patentee could still rectify this error (and underpayment of the issue fee), even though well outside the 1 year and 3 month “after the date of the notice of allowance” period specified in 37 CFR § 1.317(c) for correcting a good-faith error in claiming small entity status, as well as making up the deficiency for incorrectly paying the small entity issue fee.
DH Technology is the “easy case” where small entity status is lost due to a change in size of the patentee. But small entity status under 37 CFR §§ 1.27(a)(1) (person) or 1.27(a)(2) (small business concern) may also be lost if the rights in the invention are assigned, granted, conveyed, or licensed (or are subject to an obligation under contract or law to assign, grant, convey, or license, any rights in the invention) to someone other than a small entity (e.g., an entity having more than 500 employees). That was the situation in the recent case of Outside The Box Innovations. L.L.C. v. Travel Caddy, Inc. where an agreement between the patentee (Travel Caddy) and its distributor/seller (The Rooster Group, a large entity of greater than 500 employees) of the patented tool cases was deemed by the district court to contain a patent license clause for the purposes of 37 CFR § 1.27(a)(2). Even worse, the district court held that Travel Caddy had “committed inequitable conduct by claiming small entity status and paying reduced PTO fees, and that this conduct rendered both the ‘992 and ‘104 patents permanently unenforceable.”
The America Invents Act (my how I hate that title!) has caused much change and rethinking about how patent law will be practiced in the future, especially patent prosecution in the USPTO. A slew of new (and in some cases, recast) procedures will be instituted to permit validity challenges, both pre-grant and post-grant. One of those new procedures is post-grant review which permits (under new 35 U.S.C. § 321(b)) a “request to cancel as unpatentable 1 or more claims of a patent on any ground that could be raised under paragraphs (2) or (3) of section 282 (relating to invalidity of the patent or any claim).” As those familiar with patent infringement litigation recognize, section 282 (aka, 35 U.S.C. § 282) referred to by new 35 U.S.C. § 321(b) also defines what defenses in may be raised in patent litigation “involving the validity or infringement of a patent”:
(1) Noninfringement, absence of liability for infringement, or unenforceability,
(2) Invalidity of the patent or any claim in suit on any ground specified in part II of this title as a condition for patentability,
(3) Invalidity of the patent or any claim in suit for failure to comply with any requirement of sections 112 or 251 of this title,
(4) Any other fact or act made a defense by this title.
In step with these new procedures authorized by the AIA, the USPTO has promulgated corresponding rule packages at a “fast and furious” pace. As part of the post-grant review rules package, the USPTO has interpreted what new 35 U.S.C. § 321(b) means in terms “grounds” that may be raised. See Ken Nigon’s Post Grant Review, Inter Partes Review and Transitional Program for Covered Business Method Patents. Interestingly, the USPTO post-grant review rules package has interpreted new 35 U.S.C. § 321(b), and more specifically 35 U.S.C. § 282(2), to mean that not only are 35 U.S.C. § 102 (novelty) and 35 U.S.C. § 102 (obviousness) proper grounds for a post-grant review request, but so is 35 U.S.C. § 101 (inventions patentable).
Although Judge Newman’s dissenting opinion came next in the en banc decision, I’m going to discuss Judge Linn’s dissenting opinion first. That Judge Linn was the author of this dissenting opinion is unsurprising, given that he had authored the now overruled BMC Resources opinion, as well as the panel opinion in McKesson Technologies. What is somewhat surprising is the strident tone that Judge Linn used to characterize the per curiam majority opinion: “this court assumes the mantle of policy maker.” Not satisfied with applying that moniker alone, Judge Linn also accused the per curiam majority of “effectively rewrite[ing]” 35 U.S.C § 271(a) and 35 U.S.C § 271(b). (In that regard, I think Judge Linn’s accusation goes a bit overboard).
In challenging the correctness of the per curiam majority ruling, Judge Linn’s dissenting opinion makes four points. Point No. 1 is that the per curiam majority’s approach “is contrary to both the Patent Act and the Supreme Court’s longstanding precedent that “if there is no direct infringement of a patent there can be no contributory infringement,” citing Aro Manufacturing and Deepsouth Packing, as well as the Federal Circuit’s Joy Technologies. But as discussed above, none these cases specifically holds that direct infringement of the claimed method for the purposes of liability for indirect infringement requires that all steps of the claimed method must be performed by a single actor. Judge Linn’s further assertion that, in enacting 35 U.S.C §§ 271(e)(2), (f), and (g), “Congress did not give the courts blanket authority to take it upon themselves to make further policy choices or to define ‘infringement’” still doesn’t address why direct infringement for the purposes of indirect infringement liability requires all infringing acts to be performed by a single actor. (As I discuss below, enactment of 35 U.S.C §§ 271 (f) and (g) also reflects Congress’ intent to close “loopholes” in the primary infringement statute, 35 U.S.C §§ 271 (a)). Judge Linn also makes the comment that Congress “removed joint-actor patent infringement liability from the discretion of the courts” in 1952, but cites to absolutely no legislative history to support this comment.
I’ve already commented on the conundrum created by the Federal Circuit’s joint infringement doctrine, and especially its impact on protecting interactive computer-based technologies. See The Impact of the CAFC’s Joint Infringement Conundrum on Protecting Interactive Technologies. Two cases involving such joint infringement (sometimes referred to as “divided infringement”) issues were accepted by the Federal Circuit for en banc review. The first was the 2010 case ofAkamai Technologies, Inc. v. Limelight Networks, Inc., which held there was no joint infringement of a patented method for content delivery service where the customer and the provider of the service each performed some but not all steps. The other was the 2011 case of McKesson Technologies, Inc. v. Epic Systems Corp., which held there was no joint infringement of a patented interactive electronic method for communicating between healthcare providers and patients about personalized web pages for doctors because the initial step of the patented method was performed by the patient while the remaining steps were performed by the software provided by the healthcare provider.
In a collective decision of almost 100 pages total, the en banc Federal Circuit has now spoken with an extremely discordant and fragmented voice on this joint infringement issue (or as an exasperated dissenting Judge Newman characterized the majority opinion, dodged this issue) in Akamai Technologies and McKesson Technologies(August 31, 2012). In an opinion over 30 pages long, a bare six judge per curiam majority (Chief Judge Rader and Judges Lourie, Bryson, Moore, Reyna, and Wallach) found it unnecessary to resolve the joint infringement issue. Instead, the per curiam majority ruled that the Akamai Technologies and McKesson Technologies cases should be resolved by applying the doctrine of inducing (indirect) infringement under 35 U.S.C § 271(b). The majority also ruled that such indirect infringement could occur as long as all steps of the a claimed method are performed, but didn’t requiring that all steps be performed by a single actor, expressly overruling the 2007 case of BMC Resources v. Paymentech, and at least implicitly overruling the 2008 case of Muniauction, Inc. v. Thomson Corp. (no joint infringement of patented electronic method for conducting auctions of financial instruments where auctioneer and bidder each perform some but not all of the steps).
When the Supreme Court remanded the Federal Circuit’s original panel decision in AMP v. USPTO for reconsideration in view of Mayo Collaborative Services v. Prometheus Laboratories, Inc., I said that nothing would change in that remand. In particular, I predicted that the same two-to-one majority from that Federal Circuit panel (Judges Lourie and Moore in the majority, Judge Bryson in dissent) would again rule that the claimed isolated DNA sequences were patent-eligible under 35 U.S.C. § 101. My primary reason for my confidence in that prediction was that the Supreme Court’s 1980 decision in Diamond v. Chakrabarty (man-made living organism is patent-eligible) would control on that claimed subject matter, not Mayo Collaborative Services. See Chakrabarty Controls on Isolated DNA Sequences, not Mayo*.
So guess what happened in the AMP remand of? As I predicted, simply “déjà vu”: the same two-to-one majority ruling for essentially the same reasons, as well as confirming that Chakrabarty (not Mayo Collaborative Services) controlled on the patent-eligibility of the claimed isolated DNA sequences. For the full decision see AMP v. USPTO II (August 16, 2012).
A key provision of the Hatch-Waxman Act resides in 35 U.S.C. § 271(e)(1) which provides immunity from a patent infringement suit where the testing of the patented invention is for the purpose of securing regulatory approval from the FDA. Or to use the specific language of 35 U.S.C. § 271(e)(1), there is no patent infringement if the use of the patented invention is “solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs.”
This Hatch-Waxman provision, commonly known as the “safe harbor,” has been construed twice by the Supreme Court, and in an expansive manner to immunize alleged infringing activity. First, in the 1990 case of Eli Lilly & Co. v. Medtronic, Inc., the Supreme Court ruled that this “safe harbor” applied to medical devices, not just drugs as was originally believed (including by the respective House and Senate floor managers for the Hatch-Waxman Act). In fact, the basis for the holding in the Medtronic case makes this “safe harbor” essentially applicable to the testing of any patented invention that is for the purpose of securing regulatory approval from the FDA (e.g., food additives, cosmetics, etc.). See Guttag, “The Ever Expanding ‘Safe Harbor’ of Hatch-Waxman: The Merck v. Integra Lifesciences Case,” Cincinnati Bar Association Report, page 16 (August 2005).
The Bancorp Services case involved two patents, U.S. Pat No. 5,926,792 (the ‘792 patent) and U.S. Pat No. 7,249,037 (the ‘037 patent), relating to methods, systems, and computer-readable media for administering and tracking the value of life insurance policies in separate accounts. Both the ‘792 patent and ‘037 patent share a common patent specification having a priority date going back almost 16 years (September , 1996). Also, this is not the first time the Federal Circuit has grappled with ‘792 patent. There was an earlier 2004 Federal Circuit decision which reversed a grant of summary judgment of invalidity of the ‘792 patent based on “indefiniteness,” as well as a 2008 Federal Circuit decision which vacated a judgment of noninfringement of the ‘792 patent.
How to Write a Patent Application is a must own for patent attorneys, patent agents and law students alike. A crucial hands-on resource that walks you through every aspect of preparing and filing a patent application, from working with an inventor to patent searches, preparing the patent application, drafting claims and more. The treatise is continuously updated to address relevant Federal Circuit and Supreme Court decision impacting patent drafting.
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