Great Expectations: An Expectation of Success is Needed to Make Invention Obvious

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In Gruenthal GmbH v Alkem Laboratories Limited, [2017-1153, 2017-2048, 2017-2049, 2017-2050] (March 28, 2019), the Federal Circuit affirmed the district court’s judgment that U.S. Patent No. 7,994,364 is not invalid for obviousness or lack of utility, and that U.S. Patent No. 8,536,130 is not infringed.

With respect to infringement, because neither Hikma’s nor Actavis’s proposed label is indicated to treat polyneuropathic pain, and the case made by Grünenthal and Depomed for indirect infringement depended on the proposed label indications, the Federal Circuit agreed with the trial court that Hikma and Actavis do not induce infringement of or contributorily infringe claims 1 and 2 of the ’130 patent. The Federal Circuit said that the pertinent question is whether the proposed label instructs users to perform the patented method, and the Federal Circuit agreed that it did not.

On the obviousness question, the Federal Circuit found that defendants failed to show a reasonable expectation of success. The Federal Circuit said that the court did not clearly err in finding that a POSA would not have had a reasonable expectation of successfully producing Form A, as claimed in the ’364 patent, by using the methods outlined in Byrn on the compound disclosed in the ’737 patent (Form B). The Federal Circuit noted that because the record indicates that there was (1) no known or expected polymorphism of tapentadol; (2) no evidence that the synthesis of Example 25 results in any Form A; and (3) no guidance as to what particular solvents, temperatures, agitation rates, etc., were likely to result in Form A, Alkem failed to prove that a POSA would have reasonably expected a polymorph screening of the Form B disclosed in the ’737 patent to result in Form A.

The Federal Circuit also rejected the “obvious to try” arguments, noting that the patent owner identified many variables for screening, i.e., a “huge number of possible choices,” as opposed to a “finite number,” contemplated in KSR. The Federal Circuit reiterated that a conclusion of obviousness does not follow from merely varying all parameters or trying each of numerous possible choices until one possibly arrived at a successful result, where the prior art gave either no indication of which parameters were critical or no direction as to which of many possible choices is likely to be successful.

Finally, on the issue of utility, the Federal Circuit noted that a patent must have specific and substantial utility. The substantial requirement, also known as “practical utility,” is satisfied when the claimed invention has a significant and presently available benefit to the public. The specific requirement is satisfied when the invention is shown to provide a well-defined and particular benefit to the public. In other words, the Federal Circuit said, a patent has utility if the alleged invention is capable of providing some identifiable benefit presently available to the public.

For pharmaceutical patents, practical utility may be shown by evidence of “any pharmacological activity.” The Federal Circuit found the disclosure sufficient. The patent stated that the crystalline Form A according to the invention is used for the treatment of pain or the treatment of urinary incontinence. This was confirmed by the prior art and by expert testimony. The Federal Circuit concluded that the ’364 patent concretely discloses the practical benefit of Form A of tapentadol hydrochloride as an analgesic.

The Federal Circuit also rejected the argument that substantial utility must be shown by test results. While test results often support claims of utility in patents concerning pharmacological arts, such testing is not always required. All that is required is that the tests be reasonably indicative of the desired pharmacological response. The Federal Circuit said that the patent owner need not prove that Form A has superior stability over Form B for purposes of determining utility — the patent statute does not require that a patentable invention be superior to all prior devices, it is sufficient that Form A is shown to be stable at room temperature and useful for pain relief.

Networking Charging Stations is an Abstract Idea; Even an Apparatus Can be Abstract

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In Chargepoint, Inc. v. Semaconnect, Inc., [2018-1739] (March 28, 2019), the Federal Circuit affirmed the 12(b)(6) dismissal of a claim of infringement of U.S. Patent Nos. 8,138,715; 8,432,131, 8,450,967, and 7,956,570 because the claims charging stations for electric vehicles were ineligible for patenting.

ChargePoint contended that its inventors created improved charging stations that address the various needs inherent in electric vehicle charging by creating networked charging stations.

At step one of the Mayo/Alice inquiry, the court must first determine whether the claims at issue are directed to a patent-ineligible concept. Because at some level, all inventions embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas, it is not enough to merely identify a patent-ineligible concept underlying the claim; the court must determine whether that patent-ineligible concept is what the claim is “directed to.”

With respect to claims 1 and 2 of the ‘715 patent, the Federal Circuit found that looking at the problem identified in the patent, as well as the way the patent describes the invention, the specification suggests that the invention of the patent is nothing more than the abstract idea of communication over a network for interacting with a device, applied to the context of electric vehicle charging stations. In short, the inventors here had the good idea to add networking capabilities to existing charging stations to facilitate various business interactions, but that is where they stopped, and that is all they patented. The Federal Circuit thus concluded that the claims were directed to an abstract idea.

With respect to claims 1 and 8 of the ‘131 patent. The Federal Circuit noted that claim 1 of the ‘131 patent was similar to claim 1 of the ‘715 patent. ChargePoint argued that the electricity flow is modified based on demand response principles, but the Federal Circuit found that this does nothing to make this claim directed to something other than the abstract idea. The Court noted that demand response is itself an abstract concept—a familiar business choice to alter terms of dealing to help match supply and demand. The Federal Circuit said that adding one abstract idea to another abstract idea does not render the claim non-abstract. Thus the Federal Circuit concluded that claims were also directed to the abstract idea of communicating over a network.

Claims 1 and 2 of the ‘967 patent are method claims that are similar to the apparatus claims the Federal Circuit had already analyzed. ChargePoint focused its arguments on the ability to modify an electric vehicle charging station’s operation based on a demand response business policy, but the Federal Circuit pointed out that the patent never discusses any technical details regarding how to modify electricity flow, and the fact that any modifications are made in response to a demand response policy merely adds one abstract concept to another. The Federal Circuit concluded that We thus conclude that claims 1 and 2 of the ʼ967 patent are directed to the abstract idea of communicating over a network.

Lastly, with respect to claims 31 and 32 of the ‘570 patent, while the Federal Circuit noted that these claims were in a different form than claim 1 of the ʼ715 patent, it found the analysis of that claim applicable. The Federal Circuit said that the only improvement alleged is use of the concept of network communication to interact with the particular devices. This remains the focus of these two claims, thus making both directed to an abstract idea.

The Federal Circuit concluded that while the eight claims on appeal vary in some respects, they are all directed to the abstract idea of communicating over a network for device interaction. The Court said that communication over a network for that purpose has been and continues to be a “building block of the modern economy.”

At Step II of the Alice inquiry, the Federal Circuit noted that the alleged “inventive concept” that solves problems identified in the field is that the charging stations are network-controlled. But network control is the abstract idea itself, and a claimed invention’s use of the ineligible concept to which it is directed cannot supply the inventive concept that renders the invention ‘significantly more’ than that ineligible concept. The Federal Circuit analyzed the asserted technical improvements of each claim, but concluded that they were insufficient to make the claimed inventions not abstract.

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Precedent Leaves No Room for Different Outcome; Method of Treating Specific Disease is Patent Eligible

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In Endo Pharmaceuticals Inc., v. Teva Pharmaceuticals USA, Inc., [ 2017-1240, 2017-1455, 2017-1887](March 28, 2019), the Federal Circuit reversed the district court’s determination that the claims of U.S. Patent No. 8,808,737 ineligible under 35 U.S.C. § 101.

The ’737 patent, entitled “Method of treating pain utilizing controlled release oxymorphone pharmaceutical compositions and instruction on dosing for renal impairment” covers a method of using oxymorphone to treat pain in patients with impaired kidney function. The method adjusted the level of oxymorphone administered based upon the severity of the renal impairment.

The magistrate judge first analyzed step 1 of the Alice/Mayo test, reasoning that the claims are directed to the natural law that the bioavailability of oxymorphone is increased in people with severe renal impairment. The district court adopted the magistrate judge’s recommendation, finding the patent claims ineligible.

At step one of the Alice/Mayo, the Federal Circuit said “it is not enough to merely identify a patent-ineligible concept underlying the claim; we must determine whether that patent-ineligible concept is what the claim is ‘directed to.’” Applying this law, the Federal Circuit concluded that the asserted claims are not directed to patent-ineligible subject matter. On the contrary, the Federal Circuit found that the claims were directed to a patent-eligible method of using oxymorphone or a pharmaceutically acceptable salt thereof to treat pain in a renally impaired patient. This conclusion was supported by the claim language itself and confirmed by the specification, the claims, the abstract, patent title, and summary of the invention all describe the invention as a “method of treating pain” in patients with renal impairment.

The claims at issue here are legally indistinguishable from the representative claim in Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals International Ltd, 887 F.3d 1117 (Fed. Cir. 2018). Both claims recite a method for treating a patient. The Vanda patent claims recite the steps of carrying out a dosage regimen based on the results of genetic testing, while in the instant case the claims similarly recite the steps of carrying out a dosage regimen, though the steps are based on the results of kidney function testing. Additionally, the claims in both cases require specific treatment steps.

The Federal Circuit distinguished Mayo in part because the claims as a whole were not directed to the application of a drug to treat a particular disease. The Federal Circuit noted that the inventor here recognized the relationship between oxymorphone and patients with renal impairment, but that is not what he claimed. Rather, he claimed an application of that relationship—specifically, a method of treatment including specific steps to adjust or lower the oxymorphone dose for patients with renal impairment. The claims are thus directed to more than just reciting the natural relationship.

The Federal Circuit concluded that the ’737 patent claims are like those in Vanda. They are eligible because they are “directed to a specific method of treatment for specific patients using a specific compound at specific doses to achieve a specific outcome.” Finding “[o]ur precedent leaves no room for a different outcome.”

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Inventor Diligence Removed 102(e) Prior Art

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In Arctic Cat Inc. v. GEP Power Products, Inc., [2018-1520, 2018-1521] (March 26, 2019), the Federal Circuit affirmed the PTAB’s invalidity determination as to U.S. Patent No. 7,420,822, but reversed as to U.S. Patent No. 7,072,188 because the Board improperly considered Boyd, U.S. Patent No. 6,850,421 as prior art.

The Board concluded that Boyd, whose filing date of April 1, 2002, is about seven months before the October 2002 filing date of the ’188 patent, was prior art to the ‘188 patent under 35 U.S.C. § 102(e). The Board rejected Arctic Cat’s argument of prior conception and diligence in reduction to practice. The Board also rejected the argument that the allegedly anticipatory portions of Boyd are not actually “by another,” as required by 35 U.S.C. § 102(e), even though the only named inventor on Boyd is Mr. Boyd himself, not Mr. Janisch, the inventor of the ‘188 patent.

The Federal Circuit agreed that Janisch had shown prior invention, in particular that the record established that Mr. Janisch was reasonably diligent during the critical period so as not to have abandoned his invention or unreasonably delayed its reduction to practice. While the Board concluded that the evidence did not establish diligence throughout the period from April 1, 2002, to October 29, 2002, the Board’s analysis rested on too rigid a standard, and the record establishes diligence under the correct standard.

The Federal Circuit found that the gaps in activity relied upon by the Board could be explained by third party testing activity and that lack of diligence cannot be inferred from putting the invention into someone else’s hands for needed testing and awaiting test results for a short period commensurate with the testing need, at least where oversight was diligent. That course of action, as a way of reducing an invention to practice, does not give rise to an inference of unreasonable delay or abandonment of the invention.

Infringement Prior to Notice of Patent Could Not be Willful

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In SRI International, Inc., v. Cisco Systems, Inc., [2017-2223] (March 20, 2019), the Federal Circuit affirmed the district court’s denial of summary judgment of ineligibility, adopt its construction of “network traffic data,” and affirmed its summary judgment of no anticipation. The Federal Circuit vacated and remanded the district court’s denial of judgment as a matter of law of no willful infringement, and therefore vacate the district court’s enhancement of damages. The Federal Circuit also vacated the district court’s award of attorneys’ fees and remanded for recalculation. Finally, the Federal Circuit affirmed the district court’s award of ongoing royalties on postverdict sales of products that were actually found to infringe or are not colorably different.

The litigation involved U.S. Patent Nos. 6,484,203 and 6,711,615 directed to network intrusion detection. The Federal Circuit rejected Cisco’s assertion that the claims are just directed to analyzing data from multiple sources to detect suspicious activity. The Federal Circuit found that instead, the claims are directed to an improvement in computer network technology. The focus of the claims is on the specific asserted improvement in computer capabilities—that is, providing a network defense system that monitors network traffic in real-time to automatically detect large-scale attacks. The Federal Circuit concluded that the claims are not directed to an abstract idea under step one of the Alice analysis, and thus did not reach step two.

On claim construction, the Federal Circuit held that SRI’s statements in the prosecution history do not invoke a clear and unmistakable surrender of all preprocessing, including decryption, decoding, and parsing. Accordingly, the Federal Circuit agreed with the district court’s construction of “network traffic data” to mean “data obtained from direct examination of network packets.”

On the issue of anticipation, the Federal Circuit held that SRI’s statements in the prosecution history did not invoke a clear and unmistakable surrender of all preprocessing, including decryption, decoding, and parsing. Accordingly, the Federal Circuit agreed with the district court’s construction of “network traffic data” to mean “data obtained from direct examination of network packets.” On this record, the Federal Circuit concluded that summary judgment was appropriate. The prior art did not expressly disclose directly examining network packets as required by the claims—especially not to obtain data about network connection requests.

On the denial of JMOL on the issue of willfulness, the Federal Circuit agreed that the jury’s finding that Cisco willfully infringed the patents-in-suit prior to receiving notice thereof is not supported by substantial evidence and therefore vacated and remanded them. Among other things, SRI argued that Cisco employeees did not read the patent before their depositions, but the Federal Circuit noted that it is undisputed that these Cisco employees were engineers without legal training. Given Cisco’s size and resources, the Federal Circuit said it was unremarkable that the engineers—as opposed to Cisco’s in-house or outside counsel—did not analyze the patents-in-suit themselves. The Federal Circuit also noted that it was undisputed that Cisco did not know of SRI’s patent until SRI sent its notice letter to Cisco, and that this notice letter was sent years after Cisco independently developed the accused systems and first sold them. Under these circumstances the Federal Circuit vacated the finding of willfulness prior to the Notice letter, and remanded for the district court to determine whether the finding of willfulness after the Notice letter was supported by substantial evidence. The Federal Circuit also vacated the award of enhanced damages and remanded for further consideration along with willfulness.

The Federal Circuit vacated the district court’s award of attorneys’ fees under § 285, remanding solely for recalculation. The Federal Circuit found no error in the district court’s determination that the case was exceptional, agreeing that Cisto had “crossed the line in several regards.” However, there were several entries included by mistake, and the Federal Circuit remanded only for removal of attorney hours clearly included by mistake and consequent recalculation of reasonable attorneys’ fees.

Finally, on the issue of on-going royalty, the Federal Circuit found that the district court did not abuse its discretion in awarding a 3.5% compulsory license for all post-verdict sales. Cisco complained that the court was obligated to consider its design-arounds. The Federal Circuit agreed that Cisco was untimely, finding Cisco did not redesign its products until after trial, and Cisco did not file its motion to supplement until after completion of post-trial briefing.

Products and Methods Employing Naturally Occurring Substances are not Necessarily Ineligible

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In Natural Alternatives International, Inc. v. Creative Compounds, LLC, [2018-1295](March 15, 2019), the Federal Circuit reversed and remanded judgment on the pleadings that the asserted claims of U.S. Patent Nos. 5,965,596, 7,825,084, 7,504,376, 8,993,610, 8,470,865, and RE45,947
relating to dietary supplements containing beta-alanine, are not patent eligible.

The district purported accepted Natural Alternatives’ proposed claim constructions, in finding that the subject matter ineligible. However, the Federal Circuit found that the proposed claim constructions, we hold that the complaint’s factual allegations, together with all reasonable inferences, plausibly establish the eligibility of the representative claims. While the Method Claims have similarities to the claims found ineligible in Mayo, as they utilize an underlying natural law, this is not sufficient to establish that they are directed to that law. Under Natural Alternatives’ constructions, the Method Claims require specific steps be taken in order to bring about a change in a subject, altering the subject’s natural state.

The Federal Circuit said that like the claims in Vanda, the Method Claims contain specific elements that clearly establish they are doing more than simply reciting a natural law. Like the Vanda claims, which specify a patient population to be treated, the Method Claims specify particular results to be obtained by practicing the method. The Federal Circuit also noted that while beta-alanine may exist in nature, Natural Alternatives has argued that the quantities being administered do not, and that the claimed consumption greatly exceeds natural levels.

The Federal Circuit concluded that the Method Claims at issue are treatment claims. They cover using a natural product in unnatural quantities to alter a patient’s natural state, to treat a patient with specific dosages outlined in the patents. The Federal Circuit held that the Method Claims are not directed to ineligible subject matter.

The Federal Circuit further noted that at step two, factual impediments exist to resolving the case at this stage.

As to the product claims, the Federal Circuit noted that although beta-alanine is a natural product, the Product Claims are not directed to beta-alanine. The Federal Circuit said that a claim to a manufacture or composition of matter made from a natural product is not directed to the natural product where it has different characteristics and “the potential for significant utility.” At this stage in the litigation, the Federal Circuit found that it has been sufficiently alleged that these characteristics provide significant utility, as the claimed dosage forms can be used to increase athletic performance in a way that naturally occurring beta-alanine cannot. Accordingly, neither claim is directed to ineligible subject matter.

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Obviousness Requires a Reason, Suggestion, or Motivation

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In Forest Laboratories, LLC v, Sigmapharm Laboratories LLC, [2017-2369, 2017-2370, 2017-2372, 2017-2373, 2017-2374, 2017-2375, 2017-2376, 2017-2389, 2017-2412, 2017-2436, 2017-2438, 2017-2440, 2017-2441]( March 14, 2019) the Federal Circuit vacated and remanded the district court’s validity determination, and we vacated and remanded the question of infringement under a corrected claim construction.

The district court construed claim 1 to be limited to buccal and sublingual formulations. Although claim 1 does not expressly refer to buccal or sublingual administration, the Federal Circuit noted that claims “must be read in view of the specification, of which they are a part.” The Federal Circuit held the district court properly construed claim 1 to be limited to buccal and sublingual formulations.

As to obviousness, the district court found Appellants had not established that there was a motivation to combine asenapine maleate into a sublingual or buccal form, and even if there were a motivation to combine, a skilled artisan would not have had a reasonable expectation that it would work. The Federal Circuit noted that an invention is not obvious simply because all of the claimed limitations were known in the prior art at the time of the invention. Instead, the question is whether there is a reason, suggestion, or motivation in the prior art that would lead one of ordinary skill in the art to combine the references, and that would also suggest a reasonable likelihood of success. The motivation can be found explicitly or implicitly in the prior art references themselves, in market forces, in design incentives, or in any need or problem known in the field of endeavor at the time of invention and addressed by the patent.

The Federal Circuit noted that the district court failed to make an express finding as to whether compliance concerns for patients with trouble swallowing would provide a motivation to combine, and remanded for the district court to address this question.

As to secondary considerations, the Federal Circuit found that the district court did not err in finding long felt need weighs in favor or non-obviousness. However, the Federal Circuit found that the district court did err in finding unexpected results, finding that the results were not surprising and unexpected, since one of ordinary skill in the art would not have expected differently.

On the issue of written description, the Federal Circuit held that the district court’s finding that the specification contains sufficient written description support for the claims was not clearly erroneous.

On the issue of infringement, the district court construed claim 4 to not cover the treatment of bipolar disorders. Because the district court erred in treating “excitation” as being limited to “excitation disorders,” we vacate its finding of non-infringement. We construe “excitation” to refer to a symptom and remand for the district court to assess infringement in light of this construction.

Element that is not Necessarily Present is not Inherent

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In Personal Web Technologies, LLC v. Apple, Inc., [2018-1599] (March 8, 2019), the Federal Circuit reversed the PTAB determination that claims 24, 32, 81, 82, and 86 of U.S. Patent No. 7,802,310 are unpatentable.

The ’310 patent explains that in conventional data processing systems, data items such as files are typically identified by their user-created alphanumeric name and/or pathname or location. If one device transfers a data item to a second device using just the name associated with the data item, it is possible that the data item already exists on the second device, and a duplicate of the data item will be created.

The Board found the claims obvious relying on Woodhill inherently disclosing a claim element. The Federal Circuit found that because the element does not necessarily exist in Woodhill, the Board’s reliance on inherency for that element in its obviousness analysis was improper.

Fact that Invention can “result in life altering consequences,” is Laudable, but it Does not Render it any Less Abstract

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In University of Florida Research Foundation, Inc., v. General Electric Company, [2018-1284] (February 26, 2019), the Federal Circuit affirmed the determination that the claims of U.S. Patent No. 7,062,251 are directed to ineligible subject matter under 35 U.S.C. § 101.

At the outset, the Federal Circuit determined that the University of Florida Research Foundation waived its sovereign immunity claims by suing General Electric in the first place.

The ’251 patent describes a method and system for integrating physiologic data from at least one bedside machine. At Alice step one, the district court determined the claims are directed to the abstract idea of “collecting, analyzing, manipulating, and displaying data.” At Alice step two, the district court found that the claims did not recite an inventive concept.

The Federal Circuit agreed that the claims were ineligible, noting the ’251 patent seeks to automate “pen and paper methodologies” to conserve human resources and minimize errors. The Federal Circuit said that it was a quintessential “do it on a computer” patent: it acknowledges that data from bedside machines was previously collected, analyzed, manipulated, and displayed manually, and it simply proposes doing so with a computer. We have held such claims are directed to abstract ideas.

The Federal Circuit noted that the fact that the automation can “result in life altering consequences,” is laudable, but it does not render it any less abstract. The Federal Circuit noted that neither the ’251 patent, nor its claims, explains how the drivers do the conversion that UFRF points to. The drivers are described in purely functional terms: they “facilitate data exchanges,” “convert received data streams to a format independent of any particular bedside machine,” “translate the data stream,” “interpret data streams,” “facilitate communications with the bedside machine,” and “interpret [discrete] segments” in a “data stream for the machine.” The Federal Circuit said that the ’251 patent “fails to provide any technical details for the tangible components, . . . instead predominately describ[ing] the system and methods in purely functional terms.” The Federal Circuit concluded that at Alice step one that representative claim 1 is directed to the abstract idea of “collecting, analyzing, manipulating, and displaying data,” and observing the claims fare no better at Alice step two.

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Complaint Established Sufficient Facts to Support Claim for Inventorship

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In Coda Development S.R.O. v. Goodyear Tire & Rubber Company, [2018-1028](February 22, 2019), the Federal Circuit vacated the dismissal of Coda’s complaint, seeking correction of inventorship of patents on self-inflating tires and alleging misappropriation of its trade secrets.

The district court dismissed the complaint under 12(b)(6) for failing to state a claim, and denying Coda the opportunity to amend its complaint. However the Federal Circuit, accepting the complaint’s well-pleaded factual allegations as true and drawing all reasonable inferences in Plaintiffs’ favor, concluded that Plaintiffs’ claims for correction of inventorship are plausible. The Federal Circuit noted that the complaint described Goodyear’s prior failures with inflation technology; and that it described two meetings with Goodyear representatives—both arranged at Goodyear’s initiative and attended by Goodyear’s point-person on SIT technology. The Federal Circuit further noted that Goodyear sought technical information from Coda at both meetings, and Goodyear’s point person requested that he and his team be allowed to spend some time alone with Coda’s functional prototype, during which he photographed it without permission. The Federal Circuit noted that a month, Goodyear applied for the first in a series of patents covering assemblies and methods concerning self-inflating tires, with claims covering the allegedly novel, proprietary, and confidential information Coda disclosed to Goodyear.

The Federal Circuit said that construing the complaint in the light most favorable to Plaintiffs and taking these and other highly specific facts together—including, but not limited to, Goodyear’s prior failure, its eagerness to meet with Coda, its unauthorized photography of Coda’s functional prototype, the timing of its distancing itself from Coda and its filing for the ’586 patent, and a pointed accusation from one of its former employees—we conclude that Plaintiffs’ correction-of-inventorship claims are plausible.

The Federal Circuit also found that the district court also erred in dismissing Plaintiffs’ trade-secret-misappropriation claim as time-barred. The statute-of-limitations inquiry was when Plaintiffs discovered or by the exercise of reasonable diligence should have discovered their claim. The Federal Circuit rejected Goodyear’s argument that based upon the facts alleged in the complaint, plaintiff should have begun investing earlier, observing that plaintiff might have simply assumed Goodyear lost interest, or that Goodyear would honor is nondisclosure agreement. Considering only the complaint, and drawing all reasonable inferences in Plaintiffs’ favor, the Federal Circuit concluded that the district court erred in dismissing Plaintiffs’ trade-secret misappropriation claim as time-barred.