Posts Tagged: "Oil States"

Before proceeding it is worth noting two things. First, that my list focuses on specific and identifiable events. Second, there are a number of stories worth mentioning, but which just missed the cut for one reason or another. The two that will probably be most glaring omissions are the Federal Circuit’s decision in Vanda Pharmaceuticals v. Westward Pharmaceuticals, 887 F.3d 1117 (Fed. Cir. 2018), and the final rules implementing the Phillips claim construction standard. With respect to Vanda, while it is a pro-patent decision, the claims found eligible are virtually indistinguishable from those held ineligible in Mayo, so it seems virtually certain a different panel of the Federal Circuit would have ruled differently. Thus, all Vanda did was seem to create uncertainty, which may be good for settlements, but likely not a repeatable decision. As for the Phillips standard, while it makes perfect sense for the PTAB to be using the same claim construction standard as used in federal district courts, many have questioned whether it will make any real difference in outcomes. Still, it is a big event and would have been 11th on my list. Had a chance to Phillips been accompanied by patent claims being presumed valid and requiring clear and convincing evidence to be declared invalid at the PTAB, that would certainly be worthy of top 10 inclusion. Alas, that would require an amendment to the statute and beyond the powers of Director Iancu. Thus, the banishment of BRI, while important, finds itself on the outside looking just in at this year’s top 10.

Despite potentially relevant Supreme Court precedent in Thomas and Granfinanciera, the better view under the weight of Supreme Court precedent with respect to patent validity, absent the recent decision by the Court in Oil States, is that determination of the validity of issued patents does not include the government as a party and, therefore, only private rights are involved.  Jurisdiction should, therefore, be solely within Article III, and preclude final determinations of patent validity as they currently exist under the AIA, as well as other post-issuance adjudication, such as interference proceedings and ex parte reexamination.  Statutory provisions for post-grant examination at the Patent Office should be limited to an advisory capacity as an adjunct to a federal district court and address only issues of fact.  Such factual determinations coming from the Patent Office should be subject to review for substantial evidence by a district court in order to pass constitutional muster under Article III. However, given that issued patents are deemed to be “public rights” and that IPRs have been upheld as constitutionally valid under Oil States, there may be no limit to the power Congress can grant to the Patent Office over the validity of patents, potentially usurping any role for the judiciary in this regard under Article III.

Since the Federal Circuit’s decision in Aqua Products, Inc. v. Matal confirmed that the burden of persuasion on a the patentability of amended claims in a motion to amend in an inter partes review proceeding (and presumably other post issuance PTAB proceedings) is placed on the petitioner, the theoretical rationale for Section 282(a)’s presumption of validity is no longer present for such amended claims.  872 F.3d 1290 (Fed. Cir. 2017) (en banc).  In particular, there is no government agency that is tasked with performing the inquisitorial examination that gave rise to the original presumption.  How can there be a presumption that the government agent charged with examining the patent claims did his or her job, when there is no such person assigned to perform that job?

Out of the 230 Orange Book patents challenged in IPR proceedings, 90.4% (208) of these patents were also challenged in Hatch-Waxman litigation perhaps due to the lucrative 180-day exclusivity incentive available to the first generic manufacturer to file a paragraph IV challenge when the Orange Book drug patent is successfully invalidated in a subsequent district court proceeding. Therefore, the IPR process has provided generic manufacturers a dual track option for challenging Orange Book patents by initiating Hatch-Waxman litigation and also pursuing IPRs. Overall, because the rate of settlement in IPRs is much lower than in Hatch-Waxman litigation, both generic manufacturers and patent owners obtain more favorable final decisions in IPRs as compared to their Hatch-Waxman litigation outcomes.

JTEKT Corp. v. GKN Automotive Ltd., No. 2017-1828 (Fed. Cir. 2018) raises the important question of whether the Court of Appeals for the Federal Circuit can refuse to hear an appeal by a non-defendant petitioner from an adverse final written decision in an inter partes review (“IPR”) proceeding, on the basis of a lack of a patent-inflicted injury-in-fact, when Congress has statutorily created the right for “dissatisfied” parties to appeal to the Federal Circuit.

Advanced Audio’s petition for writ of certiorari notes, all five patents were filed with the U.S. Patent and Trademark Office prior to the enactment of the America Invents Act (AIA), which established the PTAB. Prior to Congressional passage of the AIA, Advanced Audioe didn’t need much litigation of its patent rights to license its patents and achieve most of its revenue. After the AIA passed, Advanced Audio began having to again file suits against those who were practicing its patented technology without a license. The patents invalidated by the PTAB were asserted by Advanced Audio in cases against Amazon, HTC and Pantech Wireless all filed in the Northern District of Illinois. Those cases are stayed in district court pending the resolution of this case, which has created significant costs through attorney fees and significant loss of royalty revenue.

On Monday, June 4th, the Court of Appeals for the Federal Circuit heard oral arguments in St. Regis Mohawk Tribe v. Mylan Pharmaceuticals, a case appealed from the Patent Trial and Appeal Board (PTAB) which asks the appeals court to determine whether tribal sovereign immunity can be asserted to terminate inter partes review (IPR) proceedings at the PTAB. The Federal Circuit panel consisting of Circuit Judges Kimberley Moore, Timothy Dyk and Jimmie Reyna lobbed tough questions at counsel representing appellants St. Regis and Allergan, appellees Mylan and Teva as well as the respondent for the U.S. federal government, without giving much clue as to whether the panel favored the argument offered by any particular side.

In 2011, as part of the American Invents Act (“AIA”), Congress significantly restructured the way in which previously issued patents could be challenged.   In some cases, existing post-issuance proceedings, like ex parte reexamination and reissue proceedings, were kept intact as such proceedings existed prior to the AIA.  In other cases, existing post-issuance proceedings, like inter partes reexamination, were replaced with new proceedings, such as the inter partes review proceedings (“IPRs”).    In addition, brand new proceedings were created, such as post-grant review proceedings (“PGRs”), covered business method patent review proceedings (“CBMs”), and supplemental examination proceedings.  In each instance, Congress made policy choices as to who could (or could not) bring and/or participate in such proceedings, and who could (or could not) raise challenges to decisions made by the government in such proceedings. 

The word franchise is defined as an authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities… A patent is an exclusive right by nature. A patent does not give anyone the right to do anything other than to exclude someone else from doing something… So how then can a patent be a grant from the government to carry out specified commercial activities? That is simply not what a patent is, it is not what the statute says, it is not the grant provided to the patentee. To put it point blank, the Supreme Court has fundamentally altered the nature of the patent grant without reason or authority.

One week ago, the United States Supreme Court issued two decisions pertaining to inter partes review (IPR) challenges at the Patent Trial and Appeal Board (PTAB). Meanwhile, the United States Patent and Trademark Office has issued fresh patent eligibility guidance thanks to the Federal Circuit’s recent decision in Berkheimer v. HP. Join Gene Quinn and Todd Dickinson, former USPTO Director and current Senior Partner at Polsinelli, on Thursday, May 3, 2018, at 12pm EST, for a free webinar.

That being said, and following up on the feeling of “doom and gloom” many of us had upon initial issuance of the Oil States decision, there is some reason for hope here in at least reigning in some of the impact of IPRs. The majority opinion concludes by “emphasiz[ing] the narrowness of [its] holding,” i.e., it only addresses the 7th Amendment and Article III challenges. Or as I’ve characterized this portion of the majority opinion, it suggests the wrong questions were asked by Oil States. Instead, it suggests Oil States should have asked the following questions: (1) was retroactive application of IPRs proper, even though that procedure was not in place when Oil States’ patent issued?; and (2) may IPRs be challenged on “due process” and “takings clause” grounds (stating that “our decision should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause”). With reference to the second question, note in particular that the majority cited the Florida Prepaid case which relates to 11th Amendment sovereign immunity of the states and their institutions. That citation has direct implications in the University of Minnesota’s appeal to the Federal Circuit of PTAB’s ruling (wrong in my view and others) in the Ericsson decision that state institutions (such as state universities) waive their 11th Amendment sovereign immunity in IPRs if they have brought a separate patent infringement suit in federal district court.

Contingency representation is monetarily feasible for attorneys and law firms if and only if there is a high likelihood of success. Even in the best case scenario attorneys will sometimes make bad judgment calls when taking a contingency case, but when the underlying asset is under attack — as patents have been — it makes it all the more difficult to justify the risk of putting in all that work and ultimately receiving nothing in return.

A group of 16 leaders from politically conservative institutions sent a letter addressed to President Donald Trump lauding the Trump Administration’s decision last summer to initiate an investigation into Chinese trade practices regarding intellectual property. The investigation, authorized under Section 301 of the Trade Act of 1974, was aimed at identifying instances where U.S. technologies have been forcibly transferred to Chinese entities as a cost of entering the Chinese domestic market as a foreign entity… The recent letter to President Trump from conservative leaders is the latest indication that right-leaning institutions and think tanks have been more engaged with the debate surrounding the current U.S. intellectual property system.

Q4 2017 saw a total of 981 patent infringement cases filed in district courts, the second-lowest total for any quarter in 2017 and the third-lowest total for any quarter dating to the third quarter of 2011. The 4,057 patent suits filed in district court through 2017 was the lowest total for an entire year since 2011… A week-by-week graph of patent filings shows that, while Eastern Texas saw a much greater share of patent filings than Delaware in the months leading up to the TC Heartland decision, Delaware filings have topped Eastern Texas filings in almost every week since the SCOTUS decision.