Before I finally waded through the 135-page monstrosity called the en banc decision in CLS Bank International v. Alice Corp. (seven opinions, one a brief per curiam opinion, and six full opinions, including Chief Judge Rader at the end “waxing lyrically” about the “good old days” when he first joined the Federal Circuit), out came last Friday the remand decision in Ultramercial, LLC v. Hulu, LLC (Ultramercial II). I’ve already observed that Rader had “thrown down the gauntlet” at his Federal Circuit colleagues in Ultramercial I by stating that “breadth and lack of specificity does not render the claimed subject matter impermissibly abstract.” See Throwing Down the Gauntlet: Rader Rules in Utramercial that Breadth and Lack Specificity Does Not Make Claimed Method Impermissibly Abstract*. In Ultramercial II, Rader (again joined by Judge O’Malley but not completely by Judge Lourie) has squarely “thrown down the gauntlet” again, now before the Supreme Court to either clarify their “fuzzy” Bilski ruling, or “get out of the way” and let the Federal Circuit do the job it was created by Congress to do in 1982, namely be the primary arbiter of patent law jurisprudence, including patent eligibility under 35 U.S.C. § 101.
In Ultramercial I and II, the patentee (Ultramercial) asserted that U.S. Pat. No. 7,346,545 (the ‘545 patent) was infringed by Hulu, LLC (“Hulu”), YouTube, LLC (“YouTube”), and WildTangent, Inc. (“WildTangent”). The ‘545 patent relates to a method for distributing copyrighted products (e.g., songs, movies, books, etc.) over the Internet for free in exchange for viewing an advertisement with the advertiser paying for the copyrighted content. WildTangent’s motion to dismiss for failure to state a claim was granted by the district court based on the claimed method being patent-ineligible under 35 U.S.C. § 101. (Hulu and YouTube were dismissed from the case apparently for other reasons.)
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.
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.
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).