Justice Stephen Breyer wrote for the majority in FTC v. Actavis.
On Monday, June 17, 2013, the United States Supreme Court issued its much-anticipated decision on so-called “reverse payments” in FTC v. Actavis, Inc. This decision will impact how brand name drug companies and generics enter into patent settlements to resolve pending patent litigation. In a nutshell, speaking for the majority, Justice Breyer wrote that there is no valid reason for the FTC to be denied the opportunity to pursue reverse payments as an antitrust violation. Breyer, who was joined by Justices Kennedy, Ginsberg, Kagan, and Sotomayor, determined that reviewing courts should apply the rule of reason when determining whether reverse payments violate antitrust law.
While the ruling will likely come as no shock to casual observers, or even to those who have long believed that these agreements were anticompetitive, it is a bit of a shock in that the decision seems to present an unrealistic utopian view of how challenges to reverse payments will be litigated. For reasons hardly explained, Breyer thinks that it will be largely unnecessary for reviewing courts to engage in complicated review of the patent or to engage patent issues, but at the heart of these cases is the underlying patent and associated patent laws that give brand name manufacturers significant and uncompromised rights to exclude.
Chief Justice Roberts explained in his dissent, who was joined by Justices Scalia and Thomas, that it was his view the decision of the majority “weakens the protections afforded to innovators by patents, frustrates the public policy in favor of settling, and likely undermines the very policy it seeks to promote by forcing generics who step into the litigation ring to do so without the prospect of cash settlements.”
Yesterday, the United States Supreme Court heard oral arguments in the matter of Bowman v. Monsanto. SeeTranscript. The case presents the Court a question of patent infringement by farmers planting the progeny of genetically altered seeds covered by U.S. patents.
Monsanto Company and Monsanto Technology LLC (collectively “Monsanto”), sued Vernon Hugh Bowman (“Bowman”), in the United States District Court for the Southern District of Indiana alleging infringement of U.S. Patent Nos. 5,352,605 (“’605 Patent”) and RE39,247E (“’247E Patent”). The district court granted summary judgment of infringement in favor of Monsanto. Bowman appealed to the United States Court of Appeals for the Federal Circuit, which affirmed the district court judgment in favor of Monsanto. See Monsanto v. Bowman (CAFC, Sept. 21, 2011).
Bowman then appealed to the United States Supreme Court, with oral argument in the matter being held on February 19, 2013. While one can never know for certain how the Supreme Court will rule, even a casual observer has to conclude that the Supreme Court seems poised rule in favor of Monsanto. Seconds after Bowman’s attorney started Chief Justice Roberts interrupted asking why anyone would ever patent anything if Bowman were to prevail. Shortly thereafter Justice Breyer openly concluded that Bowman infringed in a matter of fact way. It later may have seemed Breyer was probing for a response he didn’t get more so than announcing his view of the case. Nevertheless, if Bowman loses Breyer he has no chance.
Earlier today, at 10:05 am precisely, the United States Supreme Court heard oral arguments in the case styled Mayo Collaborative Services v. Prometheus Laboratories. A press release issued by the AIPLA sums the cautious optimism of many: the Supreme Court “appeared to move closer to the Federal Circuit’s understanding of patent eligible subject matter.” Of course, no one will really know for some time, and there is certainly enough reason to worry after the oral argument. Predictably Justice Breyer seems ready to rule virtually all process claims unpatentable, and surprisingly Chief Justice Roberts seemed more in agreement with Breyer than anyone else.
In all likelihood it will be at least a couple months before we know the outcome of this case, which holds in the balance the future of medical treatment claims. In fact, the average length of time for the Supreme Court to decide patent cases since Markman in 1996 is about 3 months. The most recent Supreme Court cases have lingered on average over 5 months. How the Supreme Court operates is one of the better mysteries in our form of government, and there will be absolutely no signaling of when to expect a decision. The Supreme Court will just one day announce a decision. Notwithstanding, I’m going to hazard a guess that we will have a decision between the end of March 2012 and the end of May 2012. I don’t see this as an end of the term opinion.
In my earlier article addressing the Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., I suggested the Federal Circuit “still doesn’t get it” on how title to “subject inventions” works under Bayh-Dole. See CAFC Continues to Struggle with How Title to Subject Inventions Works under Bayh-Dole. My original view was that the title to the “subject inventions” (i.e., those resulting from federally sponsored research) initially resided with the organization (e.g., Stanford University) which carried out the sponsored research. I now confess that I, like Stanford University, overstated how Bayh-Dole works with regard to title to “subject inventions.” In affirming the Federal Circuit, a majority of the Supreme Court (6 Justices) later ruled that Bayh-Dole “does not automatically vest title to federally funded inventions in federal contractors or authorize contractors to unilaterally take title to such inventions.” See head notes to the Supreme Court’s slip opinion.
Earlier today the United States Supreme Court issued its decision in Microsoft v. i4i. At stake in this closely watched case was whether a patent would continue to carry a strong presumption of validity during litigation or whether that presumption of validity would be significantly weakened. More specifically, since the inception of the Federal Circuit the law has always been that to overturn the presumption of validity required by 35 U.S.C. 282 and invalidate a patent claim there needs to be clear and convincing evidence presented at trial, regardless of whether the prior art offered at trial was considered by the Patent Office.
Microsoft (NASDAQ:MSFT) wanted to see that changed, with prior art not considered by the Patent Office requiring a lower evidentiary threshold to invalidate. To rule in Microsoft’s favor would have required the Supreme Court to throw away 30 years of well-settled Federal Circuit law, as well as overruling Supreme Court precedent in effect since at least 1934, but which traces back in some form from that date a further 100 years. That was a bridge too far for the Supreme Court, who ruled today 8-0 (with concurring opinions but no dissents, and with Chief Justice Roberts taking no part in the decision) that in order to invalidate patent claims 35 U.S.C. 282 requires clear and convincing evidence regardless of whether the prior art was known by the Patent Office during prosecution of the patent application.
This morning the United States Supreme Court issued its decision in Stanford v. Roche, a decision that has been much anticipated in the technology transfer world. Technology transfer is the front line for the interfacing of University research and private sector commercialization, so it is no great wonder that this case captured the attention of academia and the private sector alike. At issue in the case was whether the Bayh-Dole Act automatically vested ownership of patent rights in Universities when the underlying research was federally funded.
Chief Justice Roberts delivered the opinion in a 7-2 decision.
It is not at all an exaggeration to say that Bayh-Dole is one of the most successful pieces of domestic legislation ever enacted into law. The Bayh-Dole Act, which was enacted on December 12, 1980, was revolutionary in its outside-the-box thinking, creating an entirely new way to conceptualize the innovation to marketplace cycle. It has lead to the creation of 7,000 new businesses based on the research conducted at U.S. Universities. Prior to the enactment of Bayh-Dole there was virtually no federally funded University technology licensed to the private sector, no new businesses and virtually no revolutionary University innovations making it to the public. Bayh-Dole set out to remedy this situation, and as a direct result of the passage of Bayh-Dole countless technologies have been commercialized, including many life saving cures and treatments for a variety of diseases and afflictions. In fact, the Economist in 2002 called Bayh-Dole the most inspired and successful legislation over the previous half-century. Nevertheless, the question remained, at least until this morning, whether ownership of patent rights immediately vested in the University as the result of federal funding.
Justice Scalia, who presided over the Court in Microsoft v. i4i
At 11:03 am this morning Justice Scalia, sitting in for the recused Chief Justice John Roberts, called the most recent Supreme Court foray into patent law saying: “We’ll hear argument now in… Microsoft Corporation v. i4i Limited Partnership.” The Chief Justice recuses himself from any and all Microsoft cases before the Supreme Court, so eight Justices are left to decide whether it is appropriate to require clear and convincing evidence to find an issued patent claim invalid during litigation. In a nutshell, Microsoft and the amici supporting Microsoft would rather have a lower threshold (i.e., preponderance of the evidence) at least with respect to prior art that was not considered by the patent examiner during prosecution of the patent application at the United States Patent and Trademark Office. On the other side of the case, i4i, along with its amici and the Solicitor General, argue that the current standard should not be changed.
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