Wait Your Turn: No Exception to Final Judgment Rule for Appeal of Denial of Motions to Compel

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In Amgen Inc. v. Hospira, Inc., [2016-2179] (August 10,. 2017), the Federal Circuit dismissed Amgen’s appeal of the district court’s denial of its motion to compel for lack of jurisiction, and rejected Amgen’s petition for mandamus to compel the discovery.

The parties’ dispute arises from the disclosure requirements
of the BPCIA, which the Supreme Court recently explained:

The BPCIA sets forth a carefully calibrated scheme for preparing to adjudicate, and then adjudicating, claims of [patent]  infringement resulting from the approval of “biological products” by the federal Food and Drug Administration (“FDA”).

Hospira is attempting to market a biosimilar to Amgen’s EPOGEN® product, and was resisting disclosure of the cell culture medium used in the manufacture of its product, while Amgen was arguing that this was part of the “the process . . .used to manufacture the biological product” that the BPCIA required disclosure.

The Federal Circuit noted that ordinarily, an appeal must be from a “final” judgment that ends the litigation on the merits and leaves nothing for
the court to do but execute the judgment. The collateral order doctrine provides a narrow exception to this general rule, but the Federal Circuit found that the denial of Amgen’s motion to compel did not fall within this narrow exception because it was not “effectively unreviewable on appeal from a final judgment.

Amgen alternatively sought mandamus under the All Writs Act ordering the district court to compel discovery. The Federal Circuit observed that mandamus is a drastic remedy reserved for the most “extraordinary causes.” Amgen would have to show that it has no other adequate
means to attain the desired relief, and must demonstrate that its right to the writ’s issuance is “clear and indisputable.”

The Federal Circuit agreed with the district court that Hospira’s
cell-culture media is not relevant to any claim of infringement
of the patents asserted by Amgen or any of Hospira’s defenses or counterclaims.  The Federal Circuit rejected Amgen’s arguments that it could not have identified its cell culture patents pursuant to the BPCIA procedures and obtain Hospira’s cell culture information pursuant to the BPCIA, and thus needed the discovery.

The Federal Circuit found that the district court correctly denied Amgen’s motion to compel on the ground that the composition of Hospira’s cell-culture media was of “no relevance to the patents that are asserted,” and that Amgen has not established a clear and indisputable right to discovery of the information it seeks. It therefore has not established the prerequisites for this court to issue a writ of mandamus.

 

 

The Sport of Kings: Federal Circuit Affirms $3.9 Million Fee Award for Two Week Trial on Patent Ownership

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In AIA America, Inc. v. Avid Radiopharamaceuticals, [2016-2647] (August 10, 2017), the Federal Circuit affirmed the award of attorneys fees because (1) the Seventh Amendment right to a jury trial does not apply to
requests for attorney’s fees under § 285 of the Patent Act, (2) the district court did not err by making factual findings not foreclosed by the jury’s verdict on standing, and (3) AIA’s due process rights were not violated.

The Federal Circuit recounted an elaborate scheme perpetrated by plaintiff AIA and the purported sole inventor Mullan to appropriate for themselves inventions from Imperial College (Imperial) in London and the University of South Florida (USF).  The jury determined that USF did not knowingly and intentionally waive its ownership rights to the invention and that Hardy was a co-inventor. Based on the jury’s verdict, the district court found AIA lacked standing to assert the U.S. Patent Nos. 5,455,169 and 7,538,258, and entered judgment in favor of Avid.  Avid then sought attorneys fees for the case (in which in which twelve witnesses testified and over 200 exhibits were introduced) of $6,508,687.00, and was awarded of $3,943,317.70.

The most interesting aspect of the case is the Special Master’s Report which trimmed the attorneys fees ask from $6.5 to $3.9 million.  Highlights of which include:

  • Reducing by more than half non-attorney time of more than 900 hours at an average rate of $227/hour for docketing and updating case files.
  • Eliminating 300 hours of attorney time ($67,000) for collecting documents, which the Special Master found to be a clerical task.
  • Cutting in half the $35,000 charged by the firms Case Manager/Training Coordinator for communications with the litigation team
  • Cutting by 66% the $470,000 in attorney time for assisting with the preparation of documents.
  • Cutting by 2/3 the $730,000 for preparing three witnesses for their trial testimony, in view of what the Special Master thought was “piling on”
  • Cutting by 2/3 the $633,000 spent on a motion for summary judgement on which more than 12 attorneys billed time
  • Cutting in half the $308,000 spent on motions in limine
  • Cutting in half the $240,000 spent on preparing the pretrial memorandum and preparation for the pretrial hearing
  • Cutting the 654 hours spent preparing the Exhibit List and Witness list by $100,000
  • Cutting by 2/3 the $414,400.50 (846 hours) for preparing an expert witness who was not called at trial
  • Cutting by half the $1,098,654.50 billed for attendance at trial, finding that it difficult to understand the contribution of eight lawyers to the trial.
  • Cutting local counsels fees for merely attending the trial.

All in all, the Special Master reduced the fees requested by $2.9 million. This still resulted in the $3.9 million award affirmed by the Federal Circuit, proving once again that patent litigation is the sport of kings, and that if you have to ask “how much,” you probably can’t afford it.

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You Need Standing to Appeal and IPR Decision, But Not to Participate in the Appeal

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In Personal Audio, LLC v. Electronic Frontier Foundation, [2016-1123] (August 7, 2017), the Federal Circuit affirmed the PTAB’s determination in an IPR that claims 31-35 of U.S. Patent No. 8,112,504, related to a system and apparatus for storing and distributing episodic media files, were unpatentable.

The Federal Circuit first addressed whether the Electronic Frontier Foundation had standing to participate in the appeal after  Consumer Watchdog v. Wisconsin Alumni Research Foundation, 753 F.3d 1258 (Fed. Cir. 2014), where the Federal Circuit held that a challenger who was not a competitor did not have Article III standing to appeal a PTAB determination of patentability.

However the Federal Circuit concluded that because Personal Audio had standing to appeal the invalidation of its patent claims, the Electronic Frontier Foundation did not need Article III standing to merely participate in the proceeding in which the appellant had standing.

On the merits, the Federal Circuit rejected Personal Audio’s objections to the Board’s claim construction, and affirmed the Board’s decision that the claims were anticipated or obvious.

Where in the World . . .

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For most US patent practitioners deciding where to file the first patent application used to be simple: If the invention was made in the US, applications could not be filed outside the US without a foreign filing license, so the typical filing plan was to file the application first in the United States, and then file abroad when the foreign filing license was granted.  However invention these days is not always a single country activity.  Citizens or residents of multiple countries often collaborate, and this can complicate where the first application can/must be filed and whether foreign filing licenses from one or more countries need to be obtained.

WIPO has a helpful web page on international applications and national security considerations. The follow chart based on the WIPO web page can help identify potential foreign filing issues.  If you end up checking one of the boxes on the right hand side of the chart, you should consult the laws (or better yet the lawyers) of that country before proceeding.

Board Was Mixed Up Over Blender Patent

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In Homeland Housewares, LLC v. Whirlpool Corp., [2016-1511](August 4, 2017), the Federal Circuit reversed the PTAB’s determination that Whirlpool’s U.S. Patent No. 7,581,688 relating to household blender was not anticipated by U.S. Patent No. 6,609,821.

The patent claims a pre-programmed, automated blending cycle designed to blend items “by repeatedly dropping to a speed slow enough to allow the blender contents to settle around the cutter assembly, and then returning to a [higher] speed suitable for processing the contents.”  It was it was well known that a user could manually pulse between a high speed and a low speed to achieve efficient mixing.  Thus, in the words of the Federal Circuit “the claimed automatic blending routine was, in the prior art, done manually.”

Claim 1 provided that during pulsing, “the speed of the cutter assembly is reduced from the operating speed to a predetermined settling speed.” The Federal Circuit noted that the Board failed to explicitly construe “settling speed,” even though the parties disagreed about its meaning.  Whirlpool urged a construction the essentially required an empirical determination of the settling speed, while Homeland urged a construction that that “settling speed” means any comparative low speed less than the operating speed.  The Federal Circuit found that both parties were wrong, and that the broadest reasonable construction of “a predetermined settling speed” is a speed that is slower than the operating speed and permits settling of the blender contents.

With this construction the Federal Circuit found that the Wulf reference’s teaching of  alternating between high and low speeds “permits the material being blended to fall back to the region of the cutting knives” met the claim language.  While the Board credited Whirlpool’s exert testimony because it was unrebutted, the  Federal Circuit said that expert testimony should be disregarded when it is plainly inconsistent with the record.

The Federal Circuit found all of the claims anticipated, and vacated the decision of the Board.

Can Unexpected Results Make the Obvious Non-Obvious?

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In Honeywell, Int’l Inc. v. Mexichem Amanco Holdings S.A., [16-1996] (August 1, 2017). the Federal Circuit vacated the USTPO’s reexamination decision invalidating claims 1–26, 31–37, 46–49, 58, 59, 61–68, 70–75, 80, and 81 of U.S. Patent 7,534,366 on a refrigerant and lubricant composition for air conditioning systems.  The Federal Circuit found that the Board erred by improperly relying on inherency to find obviousness and in its analysis of motivation to combine the references.

First, the Board erred in relying on inherency to dismiss evidence showing unpredictability in the art.   The use of inherency in the context of obviousness must be carefully circumscribed because that which may be inherent is not necessarily known and that which is unknown cannot be obvious.  What is important regarding properties that may be inherent, but unknown, is whether they are unexpected. All properties of a composition are inherent in that composition, but unexpected properties may cause what may appear to be an obvious composition to be nonobvious.  The Board, in dismissing properties of the claimed invention as merely inherent, without further consideration as to unpredictability and unexpectedness, erred as a matter of law.

Second, the Board erred in dismissing evidence of unpredictability in the art when it stated that one of ordinary skill would no more have expected failure than success in combining the references, and thus concluded that the person of ordinary skill would be led to routine testing, which would have eventually led to the claimed combination.  The Federal Circuit found that this put the burden on the patent owner to show that a person of ordinary skill in the art would have expected failure.  The Federal Circuit said that instead the the burden is on the Office to show that one of ordinary skill would have had a motivation to combine the references with a reasonable expectation of success.

The use of unexpected results to show non-obviousness is a curious aspect of patent law.  If it truly is obvious to modify a reference, or combine two or more references, then the fact that the obvious modification or obvious combination results in something unexpected, should not change the determination of obviousness, While we might feel like rewarding someone who provides unexpected results, by giving them a patent for doing what is obvious is not what the patent laws prescribe.  In Honeywell, however, the non-obviousness did not hinge on unexpected results, but on the unpredictability of the art.

The Federal Circuit also agreed that the Board improperly relied upon a new ground of rejection, resurrecting a reference cited by the requesters, but not relied upon by the Examiner.

Celebrity Endorsement Provokes Patent Infringement Claim

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Snap Light LLC has sued Kim Kardashian, though her company Kimsaprincess, Inc., and her collaborator Urban Outfitters, Inc., for patent infringement.  As improbable as that sounds, it is illuminating U.S. Patent No. 8,428,644 covers a phone case with a light source for taking improved selfies.

It seems Snap Light’s real complaint is the candle power of Kim Kardashian’s endorsement, rather than the LuMee product that Kim is endorsing.  Snap Light’s comparison of the  patent with the LuMee device shows at least one significant difference between the claims and the accused device:

The patent claims require an “integrated right of Light Emitting Diode (LED) lights,” while the LuMee case has two parallel rows of lights (like a conventional make-up mirror.”  Another issue the patent owner may have to address is whether the claim mixes a method step (“provide”) in a apparatus claim.

The complaint seems more focused on Kim Kardashian’s marketing activities than whether the product infringes.

 

Karma’s a ^$#*! – Sanction for Litigation Misconduct Results in Finding of Intent to Deceive the USPTO

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In Regeneron Pharmaceuticals, Inc. v. Merus N.V., [2016-1346] (July 27, 2017), the Federal Circuit affirmed final judgment that  U.S. Patent No. 8,502,018 (which related to using large DNA vectors to target and modify endogenous genes and chromosomal loci in eukaryotic cells) unenforceable because of Regeneron’s inequitable conduct during prosecution.

Merus argued that Regeneron’s patent prosecutors withheld four references from the USPTO during prosecution.  The references were cited in a third-party submission in related U.S. patent prosecution and in
European opposition briefs, were but-for material, and were withheld by Regeneron with the specific intent to deceive the PTO.  Regeneron argues, however, that the references were not but-for material, that they were cumulative of references the PTO actually relied on during prosecution, and that Regeneron did not have any specific intent to deceive the PTO.

During prosecution, Regeneron asserted that it had developed a commercial embodiment of the claimed mouse with surprising
results.  However, it was undisputed that that assertion was false; Regeneron had not developed any such mouse at the time.  Regeneron’s application was allowed.  However, just before allowance, a third party made a submission of prior art in the parent case. This prior art was not disclosed in the ‘018 patent, but once the ’018 patent had been allowed, the art was disclosed in every related application having the same specification and similar claims.

The Federal Circuit acknowledged that the materiality required to establish inequitable conduct is but-for materiality, and said that In determining the materiality of a reference, the court applies the preponderance of the evidence standard and gives claims their broadest reasonable construction.  The Federal Circuit added that a reference is not but-for material, however, if it is merely cumulative, i.e., when it “teaches no more than what a reasonable examiner would consider to be taught by the prior art already before the PTO.”

In addition to proving the materiality of the withheld references, a challenger must prove that the patentee acted with the specific intent to deceive the PTO.  Evidence of intent to deceive should be weighed independently of the materiality analysis. Proving that the applicant knew of a reference, should have known of its materiality, and decided not to submit it to the PTO does not prove specific intent to deceive, rather clear and convincing evidence must show that the applicant made a deliberate decision to withhold a known material reference.

Direct evidence of intent is not required, and an inference of intent to deceive can be made where the applicant engages in “a pattern of lack of candor,” such as repeatedly makes factual representations “contrary to the true information he had in his possession.”

Applying the broadest reasonable interpretation to the claims, the Federal Circuit concluded that the district court properly found that the withheld references were but-for material separately and in combination.  As to specific intent to withhold, the Federal Circuit approved the district court’s drawing an adverse inference of specific intent from Regeneron’s litigation conduct, which the Federal Circuit described as “beset with troubling misconduct.”  This misconduct included:

  • Failure to provide adequate infringement contentions
  • Failure to product conception and reduction to practice documents in discovery
  • Taking the position that no claim terms required construction
  • Arguing that a disclosure of a memo from outside counsel did not work a waiver of attorney-client privilege and failure to identify relevant documents for the Court’s in camera review
  • Failure to recall in a deposition communications with the patent examiner
  • Maintaining claims of privilege regarding the knowledge and thoughts about the withheld references.

The Federal Circuit was careful to point out that this was not a case of punishing a party’s post prosecution misconduct by declaring the patent unenforceable, because Regeneron was accused of misconduct during prosecution as well.  Regeneron’s litigation misconduct, however, obfuscated its prosecution misconduct.

The Federal Circuit concluded that In light of Regeneron’s widespread litigation misconduct, including the use of sword and shield tactics
to protect its deliberations over the disclosure of the withheld references to the PTO, that the district court did not abuse its discretion by drawing an adverse inference of specific intent to deceive the PTO.

 

 

 

Reasonable Expectation of Success, Not Absolute Predictability, is All that is Required for Obviousness

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In Soft Gel Techs., Inc. v. Jarrow Formulas, Inc., [16-1814](July 26, 2017), the Federal Circuit affirmed the PTAB decision review inter partes reexamination, that claims in U.S. Patent Nos. 8,124,072, 8,105,583, and 8,147,826, directed to CoQ10 in solvents known as monoterpenes, were invalid for obviousness.

In trying to resurrect its claims, Soft Gel pointed to a later article reflecting follow up research, the necessity of which, it argued showed that earlier references did not make the claimed invention obvious.  The Federal Circuit called Soft Gel out, stating that  that it argued showed that Soft Gel was applying an incorrect legal standard for obviousness, requiring “absolute predictability” rather than simply “a reasonable expectation of
success.”  The Federal Circuit said:

A supplemental study does not imply lack of awareness of the likely result; rather, studies are frequently conducted to confirm what is suspected to be true. An incentive to conduct a confirmatory study frequently exists even when one has every reason to expect success.

 

Unexpected Results of an Obvious Process are Non-obvious

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In Millennium Pharmaceuticals, Inc., v. Sandoz Inc., [2015-2066, 2016-1008, 2016-1009, 2016-1010, 2016-1109, 2016-1110, 2016-1283, 2016-1762] (July 17, 2017), the Federal Circuit reversed the district court, finding that invalidity was not established.

 At issue was the validity of U.S. Patent No. 6,713,446 for treatment
of oncology disease, sold under the name Velcade®.    The district court held that the claims were obvious because they were the inherent result of an allegedly obvious process, namely lyophilizing bortezomib in the presence of the bulking agent mannitol, even though nothing the prior art
taught or suggested that the claimed new compound would be formed, or taught or suggested making the claimed new compound by any method, or taught or suggested that this new compound would have the properties of stability, solubility, and dissociability that it exhibited.

The Federal Circuit framed the issue as “whether a person of ordinary skill, seeking to remedy the known instability and insolubility
and to produce an efficacious formulation of bortezomib,
would obviously produce the D-mannitol ester of bortezomib,
a previously unknown compound.”  Finding that the prior art contains no teaching or suggestion of this new compound, or that it would form during lyophilization, the Federal Circuit concluded that the invention was not obvious.

While conceding the truth of Sandoz’ argument that (1) lyophilization was generally known in formulating pharmaceutical products; (2) bulking agents were known for use in lyophilization; and (3) that mannitol was a known bulking agent, the Federal Circuit nonetheless found that the prior art does not teach or suggest that lyophilization of bortezomib in the presence of mannitol  would produce a chemical reaction and form a new chemical compound, or provide a reason to make this specific
new chemical compound, or that this new compound would solve the previously intractable problems of bortezomib formulation.

In the end, this is a triumph of “unexpected results” over what it technically obvious, or at least what is the inherent result of what is technically obvious.  The Federal Circuit suggested otherwise, noting that “[a] result is obvious when it is ‘the natural result flowing from the operation as taught,’ or a ‘property that is necessarily present’ when applying a process disclosed in the prior art,” and finding that Sandoz “failed to show that it was obvious to use mannitol to make an ester during lyophilization, or that the ester would solve the problems experienced with bortezomib.  The Federal Circuit’s analysis seems to put more weight on the obviousness of the unexpected results, than the obviousness of the process that resulted in unexpected results.

While it seems right to reward someone who solves a “previously intractable problem,”  it throws a kink into the obvious analysis to evaluate the obviousness of the unexpected results of an obvious process (which by definition are not obvious), rather than the obviousness of the process itself.