IP Update - June 2010 - Part 1

Patents

• False Marking Qui Tam Action Requires Intent
• No Inequitable Conduct Absent Evidence of Specific Intent
• Knowledge of Person of Ordinary Skill in the Art No Substitute for Enabling Disclosure
• Federal Circuit Overturns Jury Verdict of No Anticipation
• Licensor Who Retained a Secondary Right to Sue and Imposed Restrictions on Exclusive Licensee Still Has Standing
• Attendance at Industry Trade Shows Could Constitute Minimum Contacts for Purposes of Establishing Personal Jurisdiction
• 2nd Circuit Urges En Banc Rehearing on Pay-for-Delay
• Faster Approval Means Shorter Patent Term Extension
• Patent Term Extension for Biological Drugs with Similar Chemical Structures
• *WEB ONLY* Jet Engine Fan Blades Do Not Interfere
• *WEB ONLY* Judge Plager on § 112, ¶ 2
• USPTO Expands Project Exchange Program to All Applicants

Trademarks

• Small Trademark Licensee Scores a Touchdown Against the NFL
• Post-Purchase Confusion Trumps First Sale Doctrine
• One More Round with "Victor's Little Secret"
• *WEB ONLY* Are the Relevant People Confused?
• "Would You Rather . . . ?" May Be Distinctive
• *WEB ONLY* No Restitution in Integrum Due to Lack of Vigilance in Delegated Renewal Process

Copyright

• Circuit Split on Whether Copyright Registration Must Be Obtained Before Filing an Infringement Action
• The Sneaky Chef Cookbook Gets "Thin" Copyright Protection
• Creating a Circuit Split, the Second Circuit Rejects "Independent Economic Value" Test
• No Honor Among "Insatiable" Porn Purveyors
• *WEB ONLY* First Amendment Does Not Protect Anonymity of Alleged Copyright Infringers
• Searching for Photos? Go Ahead, Google Those Thumbnails

Trade Secrets

• Use of Executable Machine Code Does Not Constitute Misappropriation
• Unprotected Information Can Not Become a Trade Secret Simply by Changing the Storage Medium

Patents

False Marking Qui Tam Action Requires Intent
Megan Heller and Paul Devinsky

In a much-anticipated ruling, the U.S. Court of Appeals for the Federal Circuit unanimously upheld the award of summary judgment to defendant-appellee Solo Cup, holding that plaintiff-appellant Matthew Pequignot raised no issue of material fact as to Solo Cup's lacking the requisite intent under the false marking statute, 35 U.S.C. § 292. The Federal Circuit vacated the district court's determination concerning the meaning of "offense" in the statute as moot. Matthew A. Pequignot v. Solo Cup Company, Case. No. 09-1547 (Fed. Cir., June 10, 2010) (Lourie, J.). The Federal Circuit vacated the district court's determination concerning the meaning of "offense" in the statute as moot.

The underlying case involved Solo Cup products and packaging. The two products at issue bore expired patent markings owing to older molds used to make the product, which were being replaced with unmarked molds as they were needed. The packaging at issue bore the language, "This product may be covered by one or more U.S. or foreign pending or issued patents." It directed the consumer to the Solo Cup website for inquiries; some of the products bearing this message were not covered by patents at any time.

The Federal Circuit agreed that a now-expired patent marking is "unpatented" within the meaning of § 292. However, the Federal Circuit took issue with the district court's dicta, noting that expired patents "have less potential for harm" because "any person with basic knowledge of the patent system" can determine the expiration date, "reducing the potential for being deceived." The distinction is not nearly so clear-cut, said the Court, and determining a patent's expiration date can be difficult, particularly in light of the 1994 changes to the patent law.

Most importantly, the Federal Circuit agreed with the district court's determination that Solo Cup successfully rebutted the presumption of intent created by the combination of false statement and knowledge of its falsity. The Court noted that the bar for deceptive intent is high since, even though a § 292 violation results in only a civil fine, the statute is criminal. The Court concurred with the district court's evaluation that an expired patent marking, without "anything else," is "weak."

In this case, Solo Cup's counsel had told Solo Cup that the expired patent markings should be fine, as long as Solo Cup made all future molds without the numbers. Thus, the packaging was used on all products at counsel's suggestion. The Court determined that identifying and associating, on a product-by-product basis, particular patents and products would be impractical and cost-prohibitive. Solo Cup's decisions were made in good faith, and with the intent of controlling costs, not deceiving the public.

Finally, the Court vacated as moot the district court holding that "offense" in the § 292 language "for every such offense" did not refer to individual articles.

Practice Note: The district court's summary judgment regarding the meaning of "offense" was issued prior to the Federal Circuit's Forest Group opinion (see IP Update, Vol. 13, No.1 ), which held that every falsely marked article is a separate offense.

A decision in the other closely-watched false marking case pending at the Federal Circuit, Stauffer v. Brooks Brothers, is expected later this year; that case is expected to resolve certain questions of standing in the qui tam suits.

No Inequitable Conduct Absent Evidence of Specific Intent
Ulrika E. Mattsson

The U.S. Court of Appeals for the Federal Circuit, in a case that speaks to some of the same issues presented in the pending en banc Therasense case (see IP Update, Vol. 13, No. 4 ) recently affirmed a district court's grant of summary judgment finding that an applicant's failure to disclose a "highly material" prior art reference to the U.S. Patent and Trademark Office (USPTO) during prosecution was not sufficient to establish inequitable conduct absent evidence of specific intent to deceive. Optium Corp. v. Emcore Corp., Case No. 09-1265 (Fed. Cir., May 5, 2010) (Newman, J.)

Optium sued Emcore, asserting that Emcore's patents were unenforceable because of inequitable conduct. Optium argued that Emcore failed to disclose a highly relevant article published in Electronics Letters (referred to as Willems in the decision)to the patent examiner during prosecution. Emcore did not dispute that the inventors knew about the Willems article; it had in fact been cited in an internal search report they had prepared.

Inequitable conduct resides in failure to disclose material information or submission of false material information with intent to mislead or deceive the examiner. Materiality and intent must be proven by clear and convincing evidence. If both materiality and intent have been established, the court must balance the equities and determine whether the applicant's conduct in prosecuting the patent application was egregious enough to warrant holding the entire patent unenforceable.

The district court ruled that Optium made a sufficient showing of materiality to survive summary judgment, but concluded that the facts could not support a finding of intent under the relevant standard. Optium appealed.

On appeal, Optium argued that, because Willems was such a highly material reference, deceptive intent should be presumed, absent evidence to the contrary. Emcore argued that, even if the reference was highly material, no presumption or inference of deceptive intent is permissible in the absence of evidence that a person involved in obtaining the patent acted with specific intent to mislead or deceive the patent examiner. Emcore further argued that Optium improperly sought to shift the burden to the applicants to explain why the reference was not submitted, in the absence of any evidence of deceptive intent.

The Federal Circuit noted that the great weight of Federal Circuit authority has applied the Kingsdown rule that the intent element of inequitable conduct is not simply intent to take the action or omission complained of, but intent to deceive or mislead the patent examiner into granting the patent. The Court held that Optium's proposed shift in burdens is contrary to precedent and that, absent evidence of intent, Optium could not succeed in proving deceptive intent. Therefore, the Court affirmed the district court's judgment of no inequitable conduct because Optium had offered no evidence that could succeed in proving deceptive intent by clear and convincing evidence.

Practice Note: Two of the issues presented in the en banc order in Therasense (see IP Update, Vol. 13, No. 4 ) are as follows "Under what circumstances is it proper to infer intent from materiality?" and "Should the balancing inquiry (balancing materiality and intent) be abandoned?" The decision in Optium v. Emcore seems to herald the Court's position in those two issues, assuming the materiality-intent balancing frame work for inequitable conduct survives after Therasense.

Knowledge of Person of Ordinary Skill in the Art No Substitute for Enabling Disclosure
Heather Morehouse Ettinger, Ph.D.

Affirming a district court's holding, the U.S. Court of Appeals for the Federal Circuit concluded that neither knowledge of a person of ordinary skill in the art nor a disclosure that "provides ۆonly a starting point, a direction for further research'" can provide an enabling disclosure. Alza Corp. v. Andrx Pharmaceuticals, LLC, Case No. 09-1350 (Fed. Cir. Apr. 26, 2010) (Prost, J.).

The Alza (J&J) patent at issue claims methods for treating attention deficit disorders by administering a methylphenidate dosage form having an ascending release rate over an extended period of time. This patent is listed in the Orange Book for CONCERTA®, an extended-release methylphenidate tablet and was asserted against Andrx pursuant to an Abbreviated New Drug Application (ANDA) litigation. The district court's Markman order construed the claims to cover both osmotic and non-osmotic forms (i.e., tablets and capsules). Further, in district court the parties agreed that the osmotic form was enabled, and the court found both non-infringement by Andrx's product and non-enablement of the non-osmotic dosage forms. The Federal Circuit decision, which does not consider the infringement issue, centers on whether non-osmotic dosage forms were enabled.

The Federal Circuit was not persuaded by Alza's argument that the 10 lines of the specification discussing non-osmotic dosage forms, which referenced a textbook discussing how to make and use such sustained-release dosage forms, enabled the non-osmotic dosage forms. The Court found this disclosure failed to provide any specific starting material or any condition under which the process could be carried out without undue experimentation. The Court found this disclosure insufficient because it provided "ۆonly a starting point, a direction for further research.'" This lack of sufficient guidance by the specification, paired with the absence of working embodiments and the breadth of the claims, led the Court to find non-enablement of non-osmotic dosage forms with ascending release rates.

The lack of an enabling disclosure could not be compensated for by knowledge of the person of ordinary skill in the art. Specifically, Alza's argument that non-osmotic dosage forms could be created by a person of ordinary skill in the art without undue experimentation was rejected by the Federal Circuit , in part, because of testimony showing that the production of non-osmotic ascending release dosage forms required months of trial and error by Alza. The Court concluded that Alza could not "simply rely on knowledge of a person of ordinary skill to serve as a substitute for the missing information in the specification."

Federal Circuit Overturns Jury Verdict of No Anticipation
Melody Wirz

Reversing a jury verdict of no anticipation, the U.S. Court of Appeals for the Federal Circuit found that a district court's denial of judgment as a mater of law (JMOL) on validity was reversible error. Orion I.P., L.L.C. v. Hyundai Motor America, Case No. 09-1130 (Fed. Cir., May 17, 2010) (Gajarsa, J.).

Orion, a non-practicing entity, brought a patent infringement suit against Hyundai based on a patent directed to technology that assists customers in selecting automotive parts. During the jury trial, Hyundai presented evidence of anticipation in the form of a catalog, as well as corroborating testimony regarding a system used by automotive companies for inventory. Orion challenged the evidence because the system did not generate a customer "proposal" as enumerated in the claims, which recite "compiling the parts-related information into a proposal meeting the customer's requirements." The district court construed the term "proposal" to mean "information intended for conveyance to a potential customer." Based on this interpretation, Orion asserted that the parts-related information of the system was not intended or suitable for presentation to a customer because it included both wholesale and retail pricing. The jury, having weighed the evidence, found that the catalog showing the system did not anticipate the patent and awarded Orion $34 million in damages for infringement. The district court augmented the damages with pre-judgment interest, post-judgment interest and an ongoing royalty on post-verdict sales. The district court also denied Hyundai's motion for JMOL on the issue of anticipation.

Hyundai appealed the district court's denial of Hyundai's JMOL, along with a ruling of no unenforceability for inequitable conduct. The Federal Circuit upheld, with minimal discussion, the ruling on inequitable conduct and reversed the denial of JMOL because it found insufficient evidence to support the jury's verdict of no anticipation. The Federal Circuit acknowledged that "anticipation is a question of fact that we review for substantial evidence when tried to a jury" and considered whether the catalog met the "proposal" element of the claims. The Federal Circuit noted that Hyundai had presented testimony from experts and third-party fact witnesses, as well as documentary evidence, all showing that the system was designed to be used by sales personnel to convey parts-related information directly to customers. Orion's rebuttal of this testimony that the system displayed both wholesale and retail prices, and that inclusion of markup information could not have been "intended to be conveyed to a potential customer," was unconvincing to the Federal Circuit.

The Federal Circuit determined that the fact that the system could display information not intended for the consumer (i.e., wholesale pricing) did not prevent the catalog from anticipating the "proposal" element because the catalog taught the communication of retail price and other parts-related information intended for conveyance to the customer. Thus, the Federal Circuit held that "no reasonable fact-finder could reach a conclusion other than that the IDB2000 system, as described in the [catalog], discloses the proposal element, in an enabling manner."

Practice Note: While it is unusual for the Federal Circuit to overturn a jury verdict on anticipation, defendants should consider entry of expert and third-party testimony to bolster prior art references, and plaintiffs should consider similar testimony to attack references.

Licensor Who Retained a Secondary Right to Sue and Imposed Restrictions on Exclusive Licensee Still Has Standing
Brock Wilson

The U.S. Court of Appeals for the Federal Circuit held that a licensor who did not virtually assign ownership of its patents to a licensee because it retained a secondary right to sue and its licensee could not grant a royalty-fee sublicense had standing to sue an accused infringer. Alfred E. Mann Foundation for Scientific Research v. Cochlear Corp., et al., Case No. 09-1447 (Fed. Cir., May 14, 2010) (Michel, J.).

The Alfred E. Mann Foundation for Scientific Research (AMF) exclusively licensed two patents to Advanced Bionics (AB). After entering into the license agreement, AMF notified AB that it believed Cochlear Corp. (Cochlear) was infringing, but AB declined to file suit. In turn, AMF sued Cochlear, exercising, under the license agreement, a retained secondary right to sue, conditional on AB first declining to sue. The district court, however, dismissed for lack of standing, finding that AMF had transferred to AB "all substantial rights under the patents" and ruled that AB should be "considered the owner of those patents" with the sole right to sue for infringement. AMF appealed.

At issue on appeal was whether the license agreement transferred sufficient rights to exclusive licensee, AB, to make AB the owner of the patents, i.e., whether the license was a virtual assignment. If so, AB may sue, but AMF may not. In its opinion, the Federal Circuit discussed a number of factors for consideration in making such a determination, including exclusivity, reversion of rights after breach, the right to receive a portion of recovery, the right to supervise and control licensee's activities, the obligation of licensor to pay patent maintenance fees, limitations on the right to sublicense and the license's duration. Ultimately the Court ruled that "the nature and scope of the exclusive licensee's purported right to bring suit, together with the nature and scope of any right to sue purportedly retained by the licensor, is the most important consideration."

Although AMF's right to sue did not vest until AB choose not to sue, the Court found that it was otherwise unfettered. The Court stated, "[o]nce its right to sue an infringer activates, AMF can decide whether or not to bring suit, when to bring suit, where to bring suit, what claims to assert, what damages to seek, whether to seek injunctive relief, whether to settle the litigation, and the terms on which the litigation will be settled." The Court continued, "AMF is required to inform AB of the status of the litigation while it is ongoing, but AMF has complete discretion to decide what trial strategy and tactics to employ." Based on the findings, the Court held that the agreement did not confer sufficient rights to AB, stating "AMF's retained right to sue is significant, and so we hold that the license agreement was not a virtual assignment of the patents-in-suit to AB." Further, in response to Cochlear's argument that AB could simply grant a royalty-free license to a potential infringer, thus making AMF's right to sue illusory, the Court found that the AB was limited to sublicensing to its own affiliates and that such a sublicense could not be royalty-free because the agreement requires pass-through royalties to be paid to AMF.

Reversing the district court's decision, the Federal Circuit remanded the case for a determination of whether AB is a necessary party.

Practice Note: If a licensor does not wish to convey substantial patent rights to a licensee such that the licensee is considered the owner of the patent by way of a virtual assignment, then the licensor should retain a right sue in the license agreement and should not allow the licensee to subvert the retained right to sue by including language in the agreement that prevents the licensee from unilaterally granting a royalty-fee sublicense to a potential infringer.

Attendance at Industry Trade Shows Could Constitute Minimum Contacts for Purposes of Establishing Personal Jurisdiction
David A. Chase

Addressing a district court's exercise of jurisdiction over an out-of-state defendant, the U.S. Court of Appeals for the Federal Circuit held that courts cannot decline to exercise jurisdiction over a defendant "solely on the ground that to do so [is] unreasonable." Patent Rights Protection Group, LLC v. Video Gaming Technologies, Inc., Case No. 09-1391 (Fed. Cir., May 10, 2010) (Linn, J.).

Patent Rights Protection Group (PRPG) filed suit in the U.S. District Court for the District of Nevada against Video Gaming Technologies (VGT) and SPEC International, Inc. (SPEC). PRPG alleged that VGT and SPEC infringed its patents by displaying, using and offering for sale gaming machine cabinets at a trade show in Las Vegas, Nevada. Both VGT and SPEC moved to dismiss PRPG's complaint for lack of personal jurisdiction.

VGT and SPEC argued that they do not have the necessary "minimum contacts" with Nevada for the district court to exercise jurisdiction over them. Neither VGT nor SPEC is a Nevada corporation, neither is registered to do business in Nevada and neither has sales agents, employees, facilities, bank accounts or telephone listings in Nevada. However, both SPEC and VGT have attended gaming trade shows in Nevada.

The district court granted the defendants' motions and dismissed the action without prejudice, concluding that exercising personal jurisdiction over the defendants would be unreasonable under Ninth Circuit precedent. The district court also denied PRPG's request for jurisdictional discovery because the court found that jurisdictional discovery would not affect its reasonableness analysis. Notably, the district court did not analyze the defendants' contacts with Nevada.

On appeal, the Federal Circuit applied Federal Circuit (not 9th Circuit) precedent and held that the district court erred in declining to exercising jurisdiction over the defendants "solely on the ground that do so was unreasonable." The Court explained that a district court may exercise jurisdiction over an out-of-state defendant if the defendant is amenable to service of process and if exercising jurisdiction over the defendant comports with due process (i.e., whether the defendant "purposefully established minimum contacts in the forum State"). But even if a party has minimum contacts with the forum state, a court can decline to exercise jurisdiction if exercising jurisdiction would not comport with "fair play and substantial justice" (i.e., if exercising jurisdiction would be unreasonable). The Court explained, however, that if a defendant has purposefully directed its activities at forum residents, exercising jurisdiction is unreasonable only in the "rare situation in which the plaintiff's interest and the state's interest in adjudicating the dispute in the forum are so attenuated that they are clearly outweighed by the burden of subjecting the defendant to litigation within the forum."

The Court found that PRPG's and Nevada's interests in adjudicating the action in Nevada, where PRPG is located, were not clearly outweighed by any burden on the defendants in litigating in Nevada. The Court noted that the defendants' presence at several trade shows in Nevada indicated that "neither [defendant] faces a particularly onerous burden in defending itself in Nevada.: The defendants' presence at trade shows in Nevada also suggested that additional discovery might unearth facts sufficient to support the exercise of jurisdiction over them. The Court concluded that it is "simply unrealistic" to contend that the defendants exhibited their products at a gaming trade show in Nevada "without some prospect of commercial benefit." It was therefore an abuse of discretion under 9th Circuit (not Federal Circuit) precedent for the district court to deny PRPG's request for jurisdictional discovery.

2nd Circuit Urges En Banc Rehearing on Pay-for-Delay
Carla A. R. Hine

The U.S. Court of Appeals for the Second Circuit found that reverse payment settlements of patent infringement lawsuits that keep generic drug manufacturers out of the marketplace do not violate federal antitrust laws. Arkansas Carpenters Health and Welfare Fund v. Bayer AG (In re Ciprofloxacin Hydrochloride Antitrust Litig.), Case Nos. 05-2851, 05-2852 (2nd Cir., Apr. 29, 2010) (per curiam).

In deciding the case, the 2nd Circuit invited the plaintiff-appellants to petition for a rehearing en banc.

In 1991, Barr Laboratories (Barr) filed an Abbreviated New Drug Application (ANDA) under the Hatch-Waxman Act for a generic version of Bayer AG's antibiotic drug ciprofloxacin (Cipro). After Barr submitted its ANDA, Bayer sued Barr for patent infringement. The parties settled the patent infringement litigation in 1997. Under the settlement, Barr agreed to not enter the marketplace during the term of the patent, and, in return, Bayer agreed to pay Barr a total of $398 million.

In 2000, purchasers of Cipro filed more than 30 antitrust lawsuits against Bayer alleging that the "reverse payment" guaranteeing Barr's absence from the marketplace exceeded the scope of the patent and violated federal and state antitrust laws. The lawsuits were consolidated into the current case. In 2005, the U.S. District Court for the Eastern District of New York dismissed the case, ruling that under the circuit's controlling case law, namely In re Tamoxifen Citrate Antitrust Litigation, reverse payment settlements that do not exceed the scope of the patent at issue do not violate federal antitrust laws. The plaintiffs appealed the district court's decision to the 2nd Circuit, which affirmed the decision, noting that plaintiffs did not demonstrate that the settlement between Bayer and Barr exceeded the scope of the Cipro patent.

Despite finding against the plaintiffs, the 2nd Circuit observed that "absent a change in law by higher authority or by way of an en banc proceeding," it was bound by Tamoxifen. However, the court laid out four reasons why an en banc rehearing of this case would be appropriate. First, major governmental agencies, including the U.S. Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ), have come out against the current Tamoxifen case law. Second, there has been a significant increase in reverse payments in connection with Hatch-Waxman lawsuits in the wake of Tamoxifen. Third, Senator Orrin Hatch, a principal drafter of the Hatch-Waxman Act—which was intended to ease entry of generic drugs into the market, is on record denouncing reverse payments. Fourth, the court noted that, in deciding Tamoxifen, it erroneously relied on the misunderstanding that later ANDA filers could take advantage of the 180-day exclusivity period provided under the Hatch-Waxman Act for generic drug manufacturers. In closing, the 2nd Circuit "believe[d] there are compelling reasons to revisit Tamoxifen with the benefit of the full Court's consideration."

Practice Note: The 2nd Circuit's opinion suggests a turning tide against reverse payments. To date, the 2nd, Eleventh and Federal Circuits have found that reverse payments do not violate antitrust laws. However, the DOJ and FTC have criticized these settlements as anti-competitive, and there is pending legislation to make pay-for-delay settlements illegal. In light of these condemnations, the 2nd Circuit is inviting plaintiffs to request an en banc rehearing to revisit its prior decision. In the future, pharmaceutical companies may not be able to take comfort in the favorable case law that has protected pay-for-delay settlements from antitrust treble damages.

Faster Approval Means Shorter Patent Term Extension
Kristin Connarn

Addressing for the first time the issue of patent term extensions available for drugs processed under the U.S. Food and Drug Administration's (FDA's) "phased review" procedure, the U.S. Court of Appeals for the Federal Circuit decided makers of new animal drugs must accept a trade-off between faster approval and shorter patent term extensions. Wyeth Holdings Corp. v. Sebelius, Case No. 09-1368 (May 3, 2010) (Moore, J.).

Wyeth sought and received FDA approval to market Cydectin, a new animal drug. Wyeth first established an Investigational New Animal Drug (INAD) file and then opted for phased review. After submission of technical sections and receipt of all of its "complete letters," Wyeth submitted an administrative New Animal Drug Application (NADA). The FDA approved Wyeth's NADA 16 days after submission.

The regulatory review process proceeds in two phases: testing and approval. Patent term extension is determined by calculating half of the testing phase plus the entire approval phase. In a "phased review," the sponsor submits technical sections as they are completed directly to the FDA's Center for Veterinary Medicine. As the FDA completes review of each technical section, it sends the sponsor a "complete letter." Once the sponsor has compiled all its letters, it may submit an administrative NADA, which incorporates by reference all of the complete letters and contains additional administrative information.

The FDA determined the regulatory review period to include 1,434 days, representing one half of the testing phase plus the 16 days of the approval phase. Wyeth disagreed and asked the FDA to reconsider. The FDA denied the request, setting forth its position that the technical sections are submitted to the INAD file, not to the NADA file, and thus these components are part of the testing phase. The FDA concluded that the approval phase in phased review begins with the submission of an administrative NADA.

Wyeth initiated an action in district court, claiming the FDA did not properly interpret 35 U.S.C. § 156(g). The district court rejected Wyeth's challenge to the FDA's determination of when the approval phase of its phased review begins for purposes of calculating patent term extension. Wyeth appealed to the Federal Circuit.

The Federal Circuit agreed with the district court that the plain language does not clearly indicate when an application is initially submitted under 35 U.S.C. § 156(g) and found that both parties advanced plausible interpretations. The Court then determined whether the FDA's interpretation was based on a permissible construction of the statutory language at issue. Prior to the submission of an administrative NADA, no application has been submitted, initially or otherwise. Because the administrative NADA is the first application submitted, the Court decided it is reasonable to interpret the date that it is submitted as the "initially submitted" date.

Practice Note: Before deciding between traditional or phased review, consider which is more important to your drug, a quicker route to marketing or a longer patent term extension.

Patent Term Extension for Biological Drugs with Similar Chemical Structures
Shilpa V. Patel, Ph.D.

In two decisions, the U.S. Court of Appeals for the Federal Circuit addressed patent term extension under 35 U.S.C. § 156. In each case, the issue was whether the drug claimed in the respective patent, for which term extension had been received or sought, was the first permitted commercial marketing or use of the drug. The drugs at issue are similar in chemical structure to drugs that had previously been approved and marketed. Ortho-McNeil Pharmaceutical, Inc. v. Lupin Pharmaceuticals, Inc., Case No. 09-1362 (Fed. Cir., May 10, 2010) (Newman, J.); Photocure ASA v. David J. Kappos, Case No. 09-1393 (Fed. Cir., May 10, 2010) (Newman, J.).

Patent term extensions compensate patent holders for delays incurred in obtaining U.S. Food and Drug Administration (FDA) approval for a product that is claimed in a patent prior to the product's entrance to the market. However, the regulatory approval must be the first commercial marketing or use of the product under 35 U.S.C. § 156 (a)(5)A). The statute also defines "product" as a drug product, which means the active ingredient of, for example, a new drug including any salt or ester of the active ingredient. (See35 U.S.C. § 156(f).) Under this statute, an active ingredient of an approved drug should not be entitled to term extension.

In Ortho-McNeil Pharmaceutical v. Lupin Pharmaceuticals., the Federal Circuit affirmed a district court's summary judgment for term extension for a patent finding separate enantiomers to be different products even if the racemic mixtures of the enantiomers exist in a product that was previously granted market approval. The patent at issue claims levofloxicin (marketed as Levaquin® for treating bacterial sinus or bronchial infections caused by Streptococcus pneumoniae, Haemophilus influenzae, and Moraxella catarrhalis), which is the levorotatory enantiomer of the racemate ofloxacin, which had previously been marketed as an antimicrobial product. A racemate is an equimolecular mixture of dextrorotary and levorotary enantiomers of a molecule.

In response to Lupin's Abbreviated New Drug Application (ANDA) filing, Daiichi Sankyo, the patent owner, and its licensee, Ortho-McNeil, filed suit against Lupin. Lupin stipulated to the validity, enforceability and infringement of the patent, but contested to the patent term extension granted. Lupin argued that levofloxacin was the active ingredient of ofloxacin since levofloxacin was present in the racemate and that the patent should not be entitled to term extension. Lupin pointed to a 2007 legislative amendment that changed the status of enantiomers with respect to eligibility for term extension because it permitted an application for a non-racemic drug containing an enantiomer that is included in a different racemic drug that was separately approved. Based upon this, Lupin argued that Congress expressed its understanding that enantiomers were the same active ingredient as the racemate for all purposes including patent term extension.

Ortho-McNeil argued that the U.S. Patent and Trademark Office (USPTO) has consistently treated separate enantiomers as patentably distinct from the racemate and that the FDA has treated each enantiomer as a single active ingredient distinct from the racemate. The district court and the Federal Circuit agreed with Ortho-McNeil, stating that levofloxacin was the first commercial marketing or use even though it was a component of previously approved and marketed ofloxacin. Deference was accorded to Glaxo Operations UK, an earlier decision in which the Court found that product as used in 35 U.S.C. § 156(a) is the active ingredient present in the drug. The Federal Circuit rejected Lupin's argument that the 2007 legislative amendment changed the status of enantiomers with respect to eligibility for term extension and stated that there is no support in the legislative record for Lupin's theory, which would change the long-standing term-extension policy of the FDA and USPTO.

In Photocure ASA v. Kappos, the Federal Circuit affirmed the district court's ruling for term extension finding that an ester of an approved drug can be considered a new drug under 35 U.S.C. § 156. The patent at issue claims methyl aminolevulinate hydrochloride (MAL) (marketed as Metvixia® for use in photochemistry or photodynamic therapy to treat actinic keratoses). MAL is the methyl ester of aminolevulinic acid hydrochloride (ALA). Photocure applied for term extension. MAL was patented based upon its improved therapeutic properties compared to ALA, which was known and had previously been approved for the same therapeutic use. The FDA pointed out how the two compounds are related. The USPTO then denied term extension because it reasoned that each product contained the same underlying active ingredient that was formulated differently. Photocure sought review of the decision.

The USPTO argued that the statutory term "active ingredient" specifies the active moiety of the product, not the product that is present in the approved drug. According to the USPTO, the active moiety imparts pharmacological properties to the drug. However, both the district court and the Federal Circuit rejected the USPTO's interpretation of the statute, finding that based upon 35 U.S.C. § 156, MAL and ALA are different products with different active ingredients. Deference was accorded to Glaxo Operations UK, in which the Court had explained that a compound can only qualify as the active ingredient of a drug if that compound itself is present in the drug. The district court found, and that Federal Circuit agreed, that MAL meets the criteria for term extension because its biological properties differ from ALA warranting separate patent protection and separate regulatory approval, despite the similarity in chemical structure. The Court stated that the patent at issue is subject to term extension because MAL is the active ingredient of a new and improved drug product.

Jet Engine Fan Blades Do Not Interfere
Paul Devinsky

In yet another case involving the Agilent line of Federal Circuit case law regarding the different methodologies to be used for construing claims depending on the issue involved, the U.S. Court of Appeals for the Federal Circuit, in the context of a patent interference count, found that United Technologies' earlier patent did not render Rolls-Royce later aircraft fan patent claims obvious. Rolls-Royce PLC v. United Technologies Corp., (Fed. Cir., Case No. 09-1307) (May 5, 2010) (Rader, J.).

United Technologies (UTC) is the assignee of a patent directed to swept fan blades used on turbofan jet engines. UTC's application for patent was filed in November 1995.

Rolls-Royce filed an application directed to jet engine fan blades in the United Kingdom in April 1996; it filed a corresponding U.S. application less than a year later. In 1998, it filed a continuation-in-part application that matured into a patent.

In 2010, UTC filed an application for reissue, inserting claims based on claims in the Rolls-Royce patent. The U.S. Patent and Trademark Office (USPTO) declared an interference between Rolls-Royce's patent and UTC's application, naming UTC as the senior party based on its original 1995 filing date. An interference count, corresponding to a claim of the UTC reissue application that was a modified version of a claim in the Rolls-Royce patent, was used to define the interfering subject matter.

The interference count recited an outer region of the fan blade as "being translated forward relative to a leading edge with the same sweep angle as an outward boundary of the intermediate region to provide a sweep angle that causes the blade to intercept the shock." The corresponding claim of the Rolls Royce patent recited an outer region of the blade only as "defining a forward sweep angle."

After the Board of Patent Appeals and Interferences (the Board) denied Rolls-Royce's preliminary motion for judgment of no interference-in-fact and entered a final judgment in favor of UTC, Rolls-Royce appealed to the district court under §146. The district court, after construing the terms "translated forward" and "sweep angle that causes the blade to intercept the shock" in UTC's application claim such that it did not render the corresponding claim of Rolls-Royce's patent invalid for obviousness, reversed the Board's decision, finding the inventions patentably distinct. UTC appealed.

Citing its Agilent decision (see IP Update, Vol. 12, No. 6 ), the Federal Circuit construed the terms in dispute with reference to the UTC application specification and concluded that "translated forward" meant "moved forward toward the axial direction."

Similarly, the Court construed the "sweep angle" limitation in light of the UTC application specification and concluded that "[a] person of ordinary skill in the art would not understand [the] claim €¦ to cover forward sweep."

Turning to the issue of whether the involved claim of the Rolls-Royce patent was invalid for obviousness in light of the UTC claim as properly construed, the Court found no support for the argument that, under KSR, the forward sweep of the Rolls Royce claim was an "easily predictable and achievable variation" of the rearward sweep of the UTC application.

In terms of UTC's "obvious to try" argument, i.e., that forward sweep claimed by Rolls-Royce would have been obvious to try, the Court explained there was a broad selection of choices that would allow any degree of sweep and there was no good reason to pursue forward sweep, finding, "Rolls-Royce's invention would not have presented itself as an option at all, let alone an option that would have been obvious to try."

Finally, the Court found that secondary considerations, in the form of commercial success, favored a finding of non-obviousness. After Rolls-Royce demonstrated an engine featuring its invention, "the rest of the industry quickly came out with similar versions" and the design became "the industry standard for large civil aircraft engines."

Practice Note: Per the Federal Circuit the Agilent line of case law (see IP Update, Vol. 12, No. 6 and Vol. 13, No. 5 ) the construction of copied claims in interferences depends on whether the challenge based on validity or the written description. In the case of a validity challenge, the copied claim is construed in light of the specification into which it is copied; for written description purposes, the claim is construed in light of the specification from which it was copied.

Judge Plager on § 112, ¶ 2
Paul Devinsky

In a dissent from the denial of an en banc petition, Judge Plager of the U.S. Court of Appeals for the Federal Circuit presented his views on the issue of indefiniteness in a sharply worded dissent likely to influence both the U.S. Patent and Trademark Office (USPTO) Board of Appeals and district courts going forward. Enzo Biochem, Inc. v. Applera Corp., Case No. 09-1281 (Fed. Cir., May 26, 2010) (per curiam) (Plager, J., dissenting from denial of panel rehearing).

The case involved use of the claim term "not interfering substantially." The Federal Circuit panel, in the original decision, overturned the district court's finding of indefiniteness, noting that "[b]ecause the intrinsic evidence here provides €Üa general guideline and examples sufficient to enable a person of ordinary skill in the art to determine [the scope of the claims],' €¦ the claims are not indefinite even though the construction of the term €Ünot interfering substantially' defines the term without reference to a precise numerical measurement."

Applera filed a petition for en banc review or panel rehearing. The Federal Circuit denied the petition but, in dissent, Judge Plager voiced his argument for evolving the Federal Circuit's jurisprudence on this issue:

Despite the varying formulations that this court has used over the years in describing its "indefiniteness" jurisprudence to which the petitioner in this case points, the general conclusion from our law seems to be this: if a person of ordinary skill in the art can come up with a plausible meaning for a disputed claim term in a patent, that term, and therefore the claim, is not indefinite. At least not so indefinite as to run afoul of the statutory requirement that claims shall "particularly point[ ] out and distinctly claim[ ] the subject matter which the applicant regards as his invention." 35 U.S.C. § 112, second paragraph.

The corollary derived from this understanding is that if several persons of ordinary skill come up with competing but plausible interpretations of a disputed term—as is typically the case with competing "expert witnesses" in patent infringement litigation—the problem is not one of an inherently ambiguous and potentially indefinite claim term, but rather the problem becomes simply one of picking the "right" interpretation for that term. Since picking the "right" interpretation—claim construction—is a matter of law over which this court rules, and since the view of the trial judge hearing the case is given little weight, so that the trial judge's view on appeal becomes just a part of the cacophony before this court, it is not until three court of appeals judges randomly selected for that purpose pick the "right" interpretation that the public, not to mention the patentee and its competitors, know what the patent actually claims. The inefficiencies of this system, and its potential inequities, are well known in the trade.

After noting that USPTO, in its 2008 instruction to examiners on indefiniteness rejections and in the precedential Board opinion in Ex parte Miyazaki, had viewed § 112, ¶ 2 as having a more substantive role, Judge Plager continued:

The Board is clearly right in recognizing that the circumstances are different between pre-issuance and post-issuance application of the definiteness standard with regard to claim terms. At the same time, the PTO and the Board are clearly right in insisting that, if the public notice function of the patent law is to be honored, claim terms must particularly point out and distinctly claim the subject matter of the invention. In my view, this court's definiteness doctrine could go considerably further in promoting that objective than it currently does, with the not inconsequential benefit of shifting the focus from litigation over claim construction to clarity in claim drafting.

In support of a panel rehearing, Judge Plager argued, "[t]he court now spends a substantial amount of judicial resources trying to make sense of unclear, over-broad, and sometimes incoherent claim terms. It is time for us to move beyond sticking our fingers in the never-ending leaks in the dike that supposedly defines and figuratively surrounds a claimed invention. Instead, we might spend some time figuring out how to support the PTO in requiring that the walls surrounding the claimed invention be made of something other than quicksand."

USPTO Expands Project Exchange Program to All Applicants
Babak Akhlaghi

On May 17, 2010, the United States Patent and Trademark Office (USPTO) announced the expansion of its "Project Exchange" program to all applicants. (See USPTO Press Release, 10-17 at http://www.uspto.gov/news/pr/2010/10_17.jsp). The Project Exchange program, which was previously available only to small-entity applicants, provides a procedure under which an application can be examined out of turn if the applicant expressly abandons another co-pending and unexamined application.

To take advantage of the Project Exchange program, the applicant must: (i) file a special petition for a non-provisional application having a filing date earlier than October 1, 2009; (ii) have another co-pending and non-examined application having a filing date earlier than October 1, 2009; (iii) own both applications in (i) and (ii) as of October 1, 2009 (or applications must have at least one common inventor); and (iv) file a notice of express abandonment in the co-pending application. (See 74 Fed. Reg. 62,285.) The Project Exchange program is limited to 15 applications and is set to expire on December 31, 2010.

This procedure is designed to provide an applicant with a greater control over the priority with which his/her applications are examined. At the same time it aims to reduce the backlog at the USPTO. The USPTO mentioned in the press statement that, "[t]his week marks the 50th anniversary of the invention of the laser—a transformational invention that has spawned many other critical inventions, created new industries and generated jobs. €¦ Inventions like the laser remind us of the need for the USPTO to do everything we can to enable the next great innovation to come to market. Project Exchange will help us reduce the backlog and enable us to process applications more quickly."

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