IP Update, Volume 5, No. 8, August 2002
August 2002
IN THIS ISSUE
- Patents / Infringement - Federal Circuit Court of Appeals Clarifies Experimental Use Exception
- Trademarks / Registration - The Seventh Circuit Court Holds that an Incontestable Federal Trademark that Is Merely Descriptive Is Enforceable
- Trademarks / Infringement - Ninth Circuit Court Finds Trademark Registration Alone Not Sufficient to Raise Material Issue to Defeat Summary Judgment on Issue of Functionality
- Patents / Infringement - English Courts Accept Temporary Entry to United Kingdom as Defence to Infringement
- Patents / Hatch-Waxman Act - FDA Has No Duty to Ensure the Correctness of Patent Listings in the Orange Book
Federal Circuit Court of Appeals Clarifies Experimental Use Exception
By Peter Huang
A split U.S. Court of Appeals for the Federal Circuit has upheld a decision invalidating a patent because the patented invention was in public use more than a year before the patent was filed. New Railhead Mfg., L.C.C. v. Vermeer Mfg. Co., Case No. 02-1028 (July 30, 2002).
New Railhead involved two patents. The `283 patent describes a drill bit used for horizontal directional drilling of rock formations; the `743 patent describes a method for such horizontal directional drilling. The district court granted a motion for summary judgment invalidating the `743 patent because of prior public use. The evidence presented established that the inventor allowed an acquaintance to test the durability of drill bits that were the physical embodiment of the `283 patent at a public job site, and that the acquaintance repeatedly used the method described in the `743 patent to help perform those tests.
The Federal Circuit affirmed. The court rejected the plaintiff’s argument that the public testing of the drill bits constituted an experimental use that should not invalidate the `743 patent. The court found that it was of "crowning importance" that the inventor’s acquaintance was testing the drill bit claimed in the `283 patent but not the method described in the `743 patent. Deposition testimony indicated that the method described in the `743 patent had already been successfully tested. As the method of the `743 patent had already been reduced to practice,
as a matter of law, no subsequent uses of the method could be experimental.The court also rejected the argument that the testing of the drill bits was not a public use because it occurred underneath public land and was thus confidential. The court held that "secrecy alone is an ineffective gauge of experimentation."
Judge Dyk dissented, in his view, the testing of drill bits was not public because it occurred "under public land, hidden from view, and there has been no showing whatsoever that the use was anything but confidential." In addition, Judge Dyk viewed the use as experimental, finding the design of the drill bit and its method of use as so inextricably intertwined that testing of one necessarily implicates testing of the other.
The Seventh Circuit Court Holds that an Incontestable Federal Trademark that Is Merely Descriptive Is Enforceable
By John DabneyThe U.S. Court of Appeals for the Seventh Circuit has held that an incontestable federal trademark that is merely descriptive may be enforced against a third party. Te-Ta-Ta Truth Found. v. World Church of the Creator, 2002 U.S. App. LEXIS 14890 (7th Cir. July 25, 2002).
The plaintiff owned an incontestable federal trademark registration for CHURCH OF THE CREATOR, and the defendant was using the mark WORLD CHURCH OF THE CREATOR. The district court awarded summary judgment in favor of the defendant on the plaintiff’s trademark infringement claim on the ground that the plaintiff’s mark was generic.
The Seventh Circuit reversed and remanded with instructions to enter judgment in favor of the plaintiff. The court reversed the district court’s determination that the plaintiff’s mark was generic, instead holding that the mark was merely descriptive of the plaintiff’s services. The court explained that a mark is generic (and thus unenforceable) when, according to contemporary usage, it has become the name of a product or class of products. The only evidence that the defendant offered that illustrated the plaintiff’s mark was generic was dictionary definitions of the individual words in the plaintiff’s mark. But as the court put it, "That won’t cut the mustard, because dictionaries reveal a range of historical meanings rather than how people use a particular phrase in contemporary culture." Contemporary usage did not demonstrate that the plaintiff’s mark was the name of a single religion or a class of religions. Further, the court reasoned that affording protection to the plaintiff’s mark would not hinder available options for other sects to distinguish themselves. Thus, the court awarded judgment in favor of the plaintiff as a matter of law.
Ninth Circuit Court Finds Trademark Registration Alone Not Sufficient to Raise Material Issue to Defeat Summary Judgment on Issue of Functionality
By Daniel FosterIn Tie Tech, Inc. v. Kinedyne Corp., 2002 U.S. App. LEXIS 13911 (9th Cir. July 11, 2002), the U.S. Court of Appeals for the Ninth Circuit Court affirmed that product configurations that are wholly functional are not entitled to trademark protection. The registration of a trademark, by itself, is not sufficient to create a factual issue to survive summary judgment.
Tie Tech manufactures a product that is designed for emergency use in cutting through wheelchair webbing systems used in vehicles. The U.S. Patent and Trademark Office (PTO) registered the entire configuration and arbitrary embellishment of the product as a trademark. Kinedyne, a competitor of Tie Tech, redesigned its own "web-cutter" so that the resulting product is virtually indistinguishable from Tie Tech’s product. Tie Tech sued Kinedyne for trademark infringement.
The district court entered summary judgment in favor of Kinedyne, holding that Tie Tech’s product configuration is functional and, thus, not protected by trademark. On appeal, Tie Tech argued, first, that the mere fact of trademark registration alone should have been sufficient to create a material issue of fact to defeat summary judgment; and, second, that it presented sufficient evidence of non-functionality beyond the registration to warrant reversal. The Ninth Circuit rejected both of Tie Tech’s contentions.
An essential element in an infringement action is the validity of the mark. Although the registration of the mark gave Tie Tech a presumptive advantage on the issue of validity, when Kinedyne rebutted the presumption of validity through undisputed facts proving functionality, the registration lost its evidentiary significance. Likewise, Tie Tech failed to point to any evidence of distinctiveness of its design other than those elements essential to its effective use. The Ninth Circuit likewise rejected Tie Tech’s argument that, while the individual parts making up the product are functional, the overall appearance of the product was non-functional and deserving of protection.
English Courts Accept Temporary Entry to United Kingdom as Defence to Infringement
By Justin HillUnder U.K. patent law, there is a defence to patent infringement in respect of acts that consist of the use, exclusively for the needs of a relevant ship (or plane or lorry), of a product or process in the body of the vehicle or in its machinery or other accessories, where the alleged infringement has temporarily or accidentally entered U.K. territories. This case held that Irish Ferries Limited did not infringe Stena’s patent despite the fact that the Irish ship entered U.K. waters frequently and periodically, staying berthed in the United Kingdom when weather conditions demanded.
Two Stena companies brought a claim, under a European patent entitled "Superstructure for Multi-hull Vessels." The dispute concerned the frequent use of a high-speed catamaran owned by Irish Ferries for their ferry service between Dublin in Ireland and Hollyhead in the United Kingdom. Irish Ferries denied infringement and based their defence upon a relatively obscure section of the U.K. Patents Act 1977, which provides that there is no infringement where a ship has temporarily or accidentally entered U.K. territorial waters. The ferry’s homeport was Dublin in Ireland and, where possible, it berthed there overnight. On each trip it would spend several hours in U.K. territorial waters and, if weather conditions were poor, might stay in U.K. territorial waters overnight. Stena argued that the juxtaposition of the terms "temporarily" and "accidentally" within the relevant section of the U.K. Patents Act was of significance in that the former took meaning from the latter. That is, they argued that "temporarily" did not mean the reverse of "permanently," but it instead meant "on isolated occasions or casually." Clearly on this basis, the defence would not apply to the Irish Ferry, which was regularly, frequently and persistently entering U.K. territorial waters.
In arriving at his decision, the judge examined the travaux preparatoires for the Paris Convention for the Protection of Industrial Property from which the defence derived, and a judgement of the District Court of Hamburg in Rolltraller (GRUR Int. 1973), which indicated that regular and periodic entries into a country were covered by the defence, the purpose of which was to ensure that trade and the carriage of persons between countries was not hindered by patent rights applied to means of transport. The word "temporarily" should be construed in the context of "inter-state passage," its primary purpose being to distinguish between vehicles engaged essentially in internal operations and those travelling between countries. For these reasons questions of regularity, frequency and persistency had little to do with determining whether a vessel was temporarily within U.K. territories. Put simply, "temporarily" meant "for a limited period of time" and nothing more. Accordingly, the judge upheld the defence and Irish Ferries did not infringe.
The decision in this case has implications for any alleged infringer whose business concerns modes of transport between countries, particularly in Europe. Such a transport provider has an option to invoke this defence if the circumstances of the case permit.
FDA Has No Duty to Ensure the Correctness of Patent Listings in the Orange Book
By John PrinceThe U.S. Food and Drug Administration (FDA) did not fail to perform its responsibilities under the Hatch-Waxman Act when it refused to list a third party’s patent for an active ingredient of Prozac in the Orange Book. aaiPharma v. Thompson, No. 01-2113 (4th Cir. May 10, 2002).
This case is a follow on to the recent Prozac litigation. Last year, in Eli Lilly and Co. v. Barr Laboratories Inc. (IP Update, Vol. 4, No. 6), the U.S. Court of Appeals for the Federal Circuit held that an Eli Lilly patent for administering Prozac (fluoxetine) was invalid for obviousness-type double patenting. aaiPharma, as the first Abbreviated New Drug Application (ANDA) filer for FDA approval for generic fluoxetine, was involved in that litigation with Eli Lilly, the New Drug Application (NDA) holder and patentee, and against Barr Laboratories, the second ANDA filer. Then, less than a month before the expected date for the marketing of generic fluoxetine by Barr Laboratories, aaiPharma received a patent for a polymorphic variant of the active ingredient in Prozac.
Under the U.S. law known as the Federal Food, Drug, and Cosmetic Act (FFDCA), as amended by the Hatch-Waxman Act, an NDA holder is required to provide the FDA with a listing of all patents that claim the approved drug or a method of using the drug. 21 U.S.C. §355(b)(1) and (c)(2). The FDA publishes these patent listings in the "Orange Book." Patent listings are important, because several kinds of drug exclusivity depend upon a relevant patent being listed in the Orange Book. Only the NDA holder can submit a patent for listing, so aaiPharma asked Eli Lilly to submit its new patent. Eli Lilly refused. (The U.S. Court of Appeals for the Fourth Circuit decision noted this as a strange situation. aaiPharma, with no capability to market fluoxetine, did not stand to benefit from reduced competition by generic fluoxetine, while Eli Lilly, the manufacturer of Prozac, did.) aaiPharma asked the FDA to intervene, but the FDA restated its consistent position that it lacked both the resources and the expertise to review patent information for accuracy and relevance. aaiPharma could not sue Eli Lilly to force listing of the patent, since it is settled law that there is no private right of action under the FFDCA to compel patent listing.
Only hours before the FDA was set to approve the marketing of generic fluoxetine, aaiPharma sued the U.S. Department of Health and Human Services, Secretary Thompson and the FDA in district court under the Administrative Procedure Act (APA) for its failure to require Eli Lilly to list the new patent and moved for preliminary relief to prevent the FDA from approving any ANDAs for generic fluoxetine. The Federal Circuit had already held that "a generic drug manufacturer cannot bring a declaratory judgment action or an injunctive action against a NDA holder under either the FFDCA or the patent laws requiring it to take steps to remove a patent from the Orange Book." Andrx Pharm., Inc. v. Biovail Corp. However, the Andrx court also noted that the manufacturer could sue the FDA under the APA for "refusing to inquire into the correctness of a listing."
The district court very quickly denied the motion as having "no likelihood of success on the merits, because the FDA’s interpretation of the relevant statutes was not only reasonable, but also correct." aaiPharma appealed on the APA issue. The Fourth Circuit affirmed.
The issue presented was whether the district court correctly deferred to the FDA’s interpretation of the statute. The FDA interpreted the FFDCA, 21 U.S.C. §§355(c)(2), (d)(6) and (e)(4) to mean that the NDA holder bears the sole responsibility for filing the proper information on all the patents that claim its approved drug. Using a two-step Chevron analysis, the Fourth Circuit found that the FDA’s interpretation was reasonable. The court found that the requirements that the FDA "shall" withdraw an NDA application if the application fails "to contain" patent listings ((d)(6)) or where an applicant fails "to file" patent information ((e)(4)) makes sense only if these provisions require the FDA to ensure that patent lists are submitted in a timely fashion and to police improper refusals to list patents in the Orange Book. The court found that the FDA’s interpretation was more reasonable than aaiPharma’s view that the word "shall" mandated that the FDA must "make a substantive determination about eligibility" and "take remedial measures" when "it determines that the patent should be listed."
The Fourth Circuit was sympathetic to aaiPharma’s claim "that if NDA holders have a statutory obligation to submit the correct list of patents for publication in the Orange Book and the failure to comply with that obligation deprives third parties of benefits conferred by Congress, there [should] be some mechanism to enforce this obligation." However, "until Congress takes further action to address the enforcement gap in Hatch-Waxman’s patent listing provisions,
the [FDA] may persist in its purely ministerial approach."Practice Note: The Fourth Circuit noted that generic drug manufacturers, state agencies, consumer groups and the U. S. Federal Trade Commission have begun various antitrust and similar actions against those who use allegedly improper Orange Book listings. The court cited the class action case of In re Buspirone Patent Litigation, a case where the plaintiffs are seeking damages under federal and state antitrust law and redress for Bristol-Myers Squibb’s alleged unjust enrichment due to an improper listing of a patent in the Orange Book. (Mylan Pharms. Inc. v. Thompson). Earlier this year, the Buspirone court denied Bristol-Myers Squibb’s motion to dismiss.
However, more must be shown in an antitrust action than the improper listing of patents in the Orange Book, as shown in two lawsuits related to the multi-district omeprazole (Prilosec) litigation. In the case of In re Omeprazole Patent Litigation, the district court dismissed the suits with prejudice, ruling that the plaintiffs (a consumers group and a union funds group) failed to show that AstraZeneca’s attempts to block generic versions of the heartburn drug Prilosec were unlawful. In Twin City Bakery Workers v. Astra Aktiebolag) the court held that the plaintiffs failed to show that the Prilosec patent infringement litigation brought by AstraZeneca against several generic manufacturers was "sham" litigation (under the Noerr-Pennington doctrine) or an unlawful attempt to prevent generic competitors from entering the market. In the Prilosec patent infringement litigation, the allegation was that AstraZeneca listed patents in the Orange Book that it knew to be invalid and unenforceable.
Finally, in Astra Aktiebolag v. Kremers Urban Development Co., another omeprazole Orange Book patent case, the court dismissed some of the defendants’ patent misuse claims, holding that the defendants failed to plead the requisite bad faith by merely alleging that the patentee committed misuse by listing the patents in the Orange Book. By contrast, a fourth misuse claim, alleging that the patentee falsely certified to FDA that a particular patent covered Prilosec thereby forcing the defendants to certify as to that patent in their ANDAs, was not dismissed.
