Vernon Bowman is a 75-year-old, recently bankrupt small farmer in Indiana. Monsanto is a multinational corporation that is revered in the industry for its innovations in the field of genetically modified seed technologies, but equally reviled in the American heartland for its staunch protection and ruthless enforcement of its patent rights against small farmers. In a unanimous decision, the Supreme Court sided with Monsanto in finding that Bowman had infringed Monsanto’s patents on genetically altered soybean seeds. This would translate into tens of thousands of dollars in liability for the small farmer. Those reacting purely emotionally to the story will be inclined to sympathize with the small farmer. And recalling Steinbeck’s Grapes of Wrath, they would lament, “The small farmer was weary and frightened because he had gone against a system he did not understand and it had beaten him.” However, the Court’s decision is merely a classical application of basic patent principles.

For years, Vernon Bowman purchased Roundup Ready® soybean seeds from a Monsanto affiliate each year for his main crop of the season. The purchase required Bowman’s assent to a licensing agreement, which prohibited Bowman from saving any of the seeds for replanting. For his late-season second crop, however, Bowman would attempt to skirt Monsanto’s licensing agreement and instead purchase commodity soybean seeds from a grain elevator. The commodity soybean seeds are normally tagged for human or animal consumption only. Anticipating that a batch of commodity soybean seeds would surely contain some Roundup Ready® seeds, Bowman planted the seeds, applied Roundup herbicide to his fields, selectively recovered soybeans exhibiting the Roundup Ready® trait, and saved those seeds for further plantings. Bowman harvested eight late-season crops in this way.

Since my last article here on IPWatchdog.com, the pharmaceutical industry has been simply overflowing with interesting developments, including the US Supreme Court hearing arguments concerning three significant cases.

The first case argued at the Supreme Court will determine whether generic drugmakers can be sued for alleged flaws in the design of their medications. At issue is whether federal law preempts such claims from proceeding in state court and if drugmakers can be held liable if they decline to withdraw their medicines from the marketplace.

Of course, the same concept could be applied to brand-name drugmakers, which is why the entire pharmaceutical industry is on edge. In fact, the Obama administration filed a brief in support of drugmakers over concerns the FDA regulatory review process could be undermine if medicines deemd safe and effective could later by considered ‘unreasonably dangerous.’

The court reviewed an appeal by Mutual Pharmaceutical to overturn a $21 million jury award to a New Hampshire woman who in 2004 had taken a generic painkiller called sulindac, but developed Stevens-Johnson Syndrome and toxic epidermal necrolysis. She’s nearly permnanetly blind and suffered burn-like lesions over most of her body, underwent numerous surgeries, and is now unable to read, drive or work, and must use a feeding tube, her lawsuit says.

Yesterday the United States Supreme Court heard oral arguments in Association for Molecular Pathology v. Myriad Genetics, Inc. While the Association for Molecular Pathology (AMP) is the named party in the case, it is really a case brought and forwarded by the American Civil Liberties Union (ACLU).

Myriad Genetics is the patent holder on various innovations relating to isolated DNA comprising an altered BRCA1 DNA and various methods of screening for cancer built upon various observations of the altered BRCA1 DNA. Essentially, AMP and the ACLU, along with researchers, competitors of Myriad Genetics and consumers filed a lawsuit challenging the constitutionality of a number of gene patents owned by Myriad and argued that gene patents should not be granted because patenting a gene is the same as patenting something that exists in nature.

This argument succeeded at the district court, but has twice failed at the Federal Circuit. The Federal Circuit initially reversed the district court, but appeal was made to the Supreme Court by AMP/ACLU. See As Predicted, Federal Circuit Rules Isolated DNA Patentable. In the meantime the Supreme Court issued a decision in Mayo v. Prometheus and remanded this case to the Federal Circuit for further consideration in light of the Court’s decision in Mayo v. Prometheus. The Federal Circuit again sided with Myriad Genetics. See AMP v. USPTO Remand Déjà Vu. Appeal was taken to the Supreme Court, which accepted certiorari. See Supreme Court Grants Cert in Amp v. Myriad. The only issue accepted by the Supreme Court was the broadest issue: are human genes patent eligible?

Today the Supreme Court will hear oral arguments in Association for Molecular Pathology v. Myriad Genetics, Inc. Myriad Genetics was founded in 1991, and licensed, exclusively in the field of diagnostics, and also invented a group of patents associated with the five to ten percent of breast cancers known to have a strong hereditary component. The biomarkers disclosed, discussed, and claimed in these patents are also associated with an increased lifetime risk of ovarian and other cancers. See this U.S. Government website Genetics of Breast and Ovarian Cancer, updated 3/04/2013, and accessed April 14, 2013, for timely information on the significance of these biomarkers.

Social policy concerns have influenced the AMP v Myriad debate.  This article is intended to address certain misstatements of fact and draw attention to other facts not generally considered.

Atmosphere.

Petitioners have cast the case as “patients versus patents”. Petitioners comprise primarily molecular pathologists and women who assert they had to provide, and receive, respectively, inferior medical care because of Respondent’s patents. In part, because the SACGHS found that so called “genetic” diagnostic tests which were covered by patents cost no more than such tests which were not covered by patents, alleged negative impacts on future medical research have been more forcefully added into the mix of policy concerns creating a biased context for the debate.

Yesterday, the United States Supreme Court heard oral arguments in the matter of Bowman v. Monsanto. See Transcript. 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.

On January 23, 2013, CropLife International (CLI) filed an amicus brief in the U.S. Supreme Court in Bowman v. Monsanto (no. 11-796), supporting the view that the authorized sale of a patented seed does not extinguish the patentee’s right with regard to the use of next generation of seeds for planting.  Therefore persons who plant progeny seeds, without the consent of the patentee, and, in turn, produce a next-generation of seeds are liable for engaging in an unauthorized making under 35 U.S.C. §271(a).

Background

Monsanto has developed and patented a genetically-modified soybean that bears the trait of resistance to the herbicidal compound glyphosate.  Seeds bearing such herbicide resistance are sold by Monsanto and its licensees under the trade name Roundup Ready®.  By virtue of that trait, a farmer can plant the patented soybean, and treat a resulting crop with a glyphosate-based herbicide, such as Roundup®, so as to selectively kill off any undesired weeds that have infested the crop, without damaging the crop itself.

In Kirtsaeng v. John W. Wiley and Sons, Inc., the Supreme Court is set to decide whether the right of an owner of lawfully-made copies under Section 109(a) of the Copyright Act to “sell or otherwise dispose of”  those copies  trumps a copyright owner’s right under Section 602(a)(1) to bar importation of those copies when they were made and sold outside the United States.

The parties and amici have filed over 25 briefs in this case, almost none of which address or even consider whether the actual right granted under Section 109(a)—to “sell or otherwise dispose of” copies—applies outside the United States; instead, they have focused almost exclusively on Section 109(a)’s “lawfully made under this title” preamble, resulting in unsatisfactory readings of the Copyright Act as a whole.  As the American Intellectual Property Law Association has urged the Supreme Court in its amicus filing, applying long-standing extra-territoriality principles to the actual right created by Section 109(a) handily harmonizes both Sections 109(a) and 602(a)(1).  It also avoids damage to the rest of the Act caused by undue emphasis on the prefatory “lawfully made under this title” language.

Last week, theåç Supreme Court handed down its ruling in Nike v. Already, dba YUMS, 568 U.S. — (2013).  While this case is set against the backdrop of trademark infringement, the big issue here is tied up in the way the Constitution grants federal courts the power to hear cases.  For those who haven’t survived a Constitutional Law class, this can be a bit confusing.  The Nike case was “mooted out”, which is a phrase lawyers like to throw around when we want to sound like we know something.  Mootness is part of the larger doctrine of justiciability and requires a bit of an explanation before we can discuss what was really going on in Nike.  Bear with me-things are going to get a bit technical.

Article III of the United States Constitution establishes the judicial branch of our government and creates the Supreme Court (lower federal courts are created by Congress).   Section 2, Clause 1 has what’s known as the “Case or Controversy Clause”, which the Supreme Court has interpreted to tell us what limitations must be put on judicial review, e.g., what cases courts can or cannot decide.  There are several different limitations on a court’s power to hear a case, but for our purposes in discussing Nike, the justiciability concepts of standing and mootness are what we need to focus on.

Patent exhaustion is one of the most fundamental restrictions on patent rights.[i]  Under this doctrine, an authorized sale of a patented article moves it outside the scope of the U.S. patent monopoly.[ii]  With respect to the vended article, the patent right is extinguished and the patentee can no longer sue for infringement.

One question that remains unsettled, however, is the role of territoriality.  That is, where must the authorized sale take place?  For well over a century courts have struggled to answer whether extraterritorial sales qualify for purposes of patent exhaustion.[iii]

While the question was briefly settled in 2001 when the Federal Circuit adopted a national exhaustion standard—requiring that the authorized sale occur in the United States—little support exists for this territoriality requirement.[iv]  The lack of Supreme Court precedent has bred uncertainty and challenges.[v]

For the past decade, appellate courts have wrestled with the issue of drug patent settlements. The question can be stated simply: Is it an antitrust violation for a brand-name drug company to pay a generic firm to drop its patent challenge and delay entering the market? But the answer is complex, straddling the intersection of patent law, antitrust law, and the Hatch Waxman Act.

In the past several years, the Second, Eleventh, and Federal Circuits have upheld these settlements (known as “reverse payment” agreements since the money flows from the patentee to the alleged infringer rather than the other way around). These courts have focused on the benefits of settling cases and the presumption of patent validity, and they have explained that payments fall within the “scope of the patent.” In contrast, the Third Circuit recently applied more aggressive scrutiny, rejecting the scope test and finding that payments for delay were “prima facie evidence of an unreasonable restraint of trade.” See Reverse Payment Home Run for Pharma Antitrust Enforcement.

The issue is pressing. The Federal Trade Commission has estimated that reverse-payment settlements cost consumers $3.5 billion each year. And the Third Circuit’s ruling teed up an unavoidable circuit split. It comes as no surprise then that on Friday, December 7, 2012, the Supreme Court (with Justice Alito recused) granted certiorari in the case of FTC v. Watson, which was decided by the Eleventh Circuit in April of 2012.

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.”

This month I have been running a series of articles on the United States Supreme Court, which is now back in session as they open ever October with a new term.  So far we have looked at Supreme Court Copyright Fair Use Cases and Supreme Court Trademark Cases.  Today we switch things up a little and talk patents, focusing on one of the most important decisions the Supreme Court has made over the last generation — i4i v. Microsoft.

Some would argue that i4i v. Microsoft was not such an important case, and I suppose that is one way to look at this.  The Supreme Court got the decision correct, so it just managed to keep the status quo in place.  But if the Supreme Court had chipped away at the presumption of validity of a patent the way the Microsoft and many amici asked the patent system would be far worse off today.  In fact, patents would almost not be worth the effort if they could so easily be challenged.

With this in mind I recently chatted with Michael Cannata, who is a Partner with NW Patent Funding Corporation. Through a joint venture with NW Patent Funding Corporation, Michael is an advisor and manager to the Northwater Intellectual Property Fund, which was established in 2005 as one of the 1st funds involved in patent litigation financing.

Today’s Supreme Court ruling on Obamacare is historic.  This issue has dominated political and private discourse for the past several years in America and, therefore, it is unrealistic to believe any legal commentator could resist the temptation to comment or opine.  While Obamacare and the Supreme Court decision have nothing to do with intellectual property, I will, to the best of my abilities, turn this into a tongue in cheek patent commentary.  Of course that is after I bash the Supreme Court.  So liberals and others who believe the Supreme Court knows anything about anything should probably skip Part 1 and jump right to Part 2 of the article.  I had a blast writing it.  Hopefully you will have as much fun reading.

Part 1: Not Intended for Liberal / Supreme Court Consumption

A majority of the Supreme Court finally placed a meaningful limitation on the rampant, intellectually dishonest and terribly troubling use of the Commerce Clause to justify everything Congress ever wants to do.  Unfortunately (at least in my opinion), Chief Justice John Roberts got in touch with his inner liberal and decided that the individual mandate is constitutional under the taxing power granted to Congress in the Constitution.  Rather peculiar given that during the rancorous debates and ultimate passage of the bill the Obama Administration and Democrats in Congress repeatedly proclaimed this was not a tax on the American people.  To be fair, the Obama Administration did seem to argue it both ways on the tax issue depending upon the forum.  I guess arguing in the alternative paid off even if Congress and the President were dishonest with the American people in public.

Maybe it is the result of the case being of such little importance to the patent system as a whole (See Jump the Shark Patent Style), or maybe it is just evidence that even a blind squirrel finds a nut every once in a while.  Whatever the case may be, the United States Supreme Court yesterday did get it right in a patent case.  Now if they can only build on this momentum and go back and reconsider all the truly awful, illogical and silly rulings of the past.  [INSERT CHUCKLE AND YOUR OWN JOKE HERE].  Right… I’m not holding my breath either!

From a procedural standpoint, Kappos v. Hyatt came to the Supreme Court after an en banc decision by the United States Court of Appeals for the Federal Circuit. The question presented and considered by the full Federal Circuit was whether new evidence (i.e., evidence not previously presented to the USPTO) can be presented to the District Court when challenging a decision of the BPAI. The short answer was — YES. However, the Federal Circuit said that without new evidence at the District Court the Federal Circuit must continue to give deference to the USPTO on further appeal. See CAFC Rules New Evidence OK in BPAI Appeal to District Court.

As Alice once said things are growing “curioser and curioser.”  I just opined about the “fuzzy” looking glass called Bilski v. Kappos for determining what is (or remains) patent-eligible subject matter under 35 U.S.C. § 101.  See Through the Fuzzy Bilski Looking Glass: The Meaning of Patent-Eligible under 35 U.S.C. § 101 .  After reading King Pharmaceuticals, Inc. v. Eon Labs, Inc., I’m now ready to throw my Ouija board though that Bilski looking glass.  With an opportunity to render some order out of the Bilski chaos, the Federal Circuit instead completely ducked the patent-eligibility issue clearly presented in King Pharmaceuticals.  The Federal Circuit then created (and I do mean “created”) the new “an anticipated method claim doesn’t become patentable if it simply includes an informing step about an inherent property of that method” doctrine.  With this new “doctrine,” we have now “jumped down the rabbit hole” into a surreal “Bilski in Patentland” world.