IP Update, Vol. 9, No. 12, December 2006
December 2006
Patents / Obviousness - U.S. Supreme Court Hears Argument on Test for Obviousness
Patents / Claim Construction - A Fractured Federal Circuit Ready to Change Cybor Rule
Patents / Anticipation - Prior Art Need Not Be “Effective” to Be Enabling and Thus Anticipating
Patents / Obviousness - “Death Rays” and the Demise of Arguments Waived (Web Only)
Patents / USPTO E-Filing / Document Disclosure - New Version of EFS-Web Released (Web Only)
U. S. Supreme Court Hears Argument on Test for Obviousness
By Paul Devinsky
On Tuesday, November 28, 2006, the U.S. Supreme Court heard oral arguments regarding the Federal Circuit’s “teaching-suggestion-motivation” (TSM) test for obviousness. Several justices voiced concern over the Federal Circuit's obviousness test; Justice Scalia calling it “legal gobbledygook,” Justice Roberts terming it “jargon” and Justice Breyer wondering what “motivation” meant in terms of the applicable statute. KSR International v. Teleflex, Case No. 04-1350 (Supr. Ct., Nov. 28, 2006).
The patent at issue relates to an adjustable gas (throttle) pedal assembly in combination with an electronic control. Neither is individually novel. Instead of mounting certain electronic sensors for engine control on the gas pedal, the invention in issue locates the sensors adjacent to the pedal but mounted on the vehicle body. The issue was whether a claim to such an invention would have been obvious to one of skill in the art under 35 U.S.C. § 103.
The Supreme Court granted cert to decide whether the Federal Circuit erred in holding that a claimed invention cannot be held “obvious” absent a particular “‘teaching-suggestion-motivation’ that would have led a person of ordinary skill in the art to combine the relevant prior art teachings in the manner claimed.”
KSR argued that the Federal Circuit’s TSM test has no support in the language of § 103 and is contrary to Supreme Court precedent, such as the 1976 Sakraida case. In Sakraida, the Supreme Court held that combining (also known as aggregating) known elements that only perform the same functions they performed before they were combined does not give rise to a patentable invention.
The U.S. Solicitor General submitted a brief in support of KSR, arguing that the TSM test “inappropriately broadens the category of non-obvious and therefore patentable inventions,” and should not be the sole test for guarding against hindsight; the latter being a requirement when adjudicating obviousness in view of the Supreme Court’s admonition in Graham v. John Deere.
Teleflex, the patent-holder, argued that KSR (as well as the numerous amicus briefs) mischaracterized the Federal Circuit’s TSM test. The company argued that the test properly and flexibly balances the competing interests of the patent owner and others in the field wishing to compete with similar technology. Teleflex (and its amicus) also argued that to do away with the TSM test, which has been the Federal Circuit standard for 20 years, would “introduce considerable uncertainty and inconsistency into patent determinations.”
By all eyewitness reports, the justices appeared fully engaged and at least three (Scalia, Roberts and Breyer) seemed to think that there was need for a change. Justice Roberts characterized the TSM test as “less than meaningless;” Justice Scalia termed the “teaching-suggestion-motivation test” as “the three imponderable nouns” and echoed Justice Roberts in calling the test “meaningless;” and Justice Breyer, also voicing concern about the meaning of “motivation” as a test, noted his approval of the late Judge Rich’s imagery (in his Winslow decision) of a person of skill in the art having all of the prior art on the walls of a room and determining what would or would not have been obvious considering their teachings. Justice Breyer wondered aloud about a need to return to what “the statute says” about whether an invention “would have been obvious” to one “who is familiar with the subject, [one] of ordinary skill in the art.”
A decision is likely to be issued next spring. Case notes reporting on a series of Federal Circuit cases on this issue can be found in McDermott’s IP Update, Vol. 9 Nos. 9 and 10.
Non-Infringement Opinion Negates Intent and Precludes Finding of Induced Infringement
By John Fuisz
The U.S. Court of Appeals for the Federal Circuit, in an en banc decision, clarified the required intent needed to induce infringement, explaining that mere knowledge of acts alleged to constitute infringement is not enough. The Court held that the mere knowledge that others may directly infringe does not amount to inducement. Rather, the inducer must have an affirmative and specific intent to cause another’s direct infringement. DSU Medical Corp. vs. JMS Co. Ltd., Case Nos. 04-1620, 05-1048, 1052 (Fed. Cir., Dec. 13, 2006) (Radar, J.) (en banc).
DSU sued JMS for patent infringement, inducement and contributory infringement of two patents generally directed to a needle guard. The needle guard could be operated in two modes: an open-shell configuration and a closed-shell configuration. JMS purchases a product from a third party, ITL, and generally closes the needle guard around a needle set before distributing them to customers. DSU alleged that JMS and ITL induced each other’s infringement. JMS was found to directly infringe, but ITL was found not liable for induced infringement or contributory infringement. The court’s en banc decision only applies to the intent element of induced infringement.
The jury was presented with evidence that ITL was informed in January 1997 that its needle guard infringed DSU’s patent. ITL, however, contacted an Australian patent attorney who concluded that the product did not infringe. JMS and ITL then also obtained letters from U.S. patent counsel that the product did not infringe DSU’s patents. Evidence was also presented that the owner of ITL had no intent to infringe. The Court noted that ITL did not believe that it infringed DSU’s patent and, therefore, ITL had no intent to infringe.
The trial court instructed the jury that “the defendants must have intended to cause the acts that constitute the direct infringement and must have known or should have known than [sic] its actions would cause the direct infringement.” DSU challenged the jury instruction.
In upholding the jury instruction, the en banc panel noted that the alleged infringer must knowingly induce the infringement. “The plaintiff has the burden of showing the alleged infringer’s actions induced infringing acts and that he knew or should have known his actions would induce actual infringements,” the Court ruled, citing Manville Sales. This includes the requirement that the alleged inducer knew of the patent at the time of the acts alleged. Moreover, the en banc panel noted that mere knowledge (by the alleged inducer) of the acts that constitute the direct infringement is insufficient. Rather, the inducer “must have an affirmative intent to cause direct infringement.” The Court looked for support to the Supreme Court decision in the Grokster copyright infringement case, noting that “[i]nducement requires evidence of culpable conduct, directed to encouraging another’s infringement, not merely that the inducer had knowledge of the direct infringer’s activities.”
Based on the above en banc holding, the panel concluded that having obtained an initial non-infringement letter from an Australian attorney and later a letter from U.S. attorney voicing a similar conclusion, as well as evidence that ITL did not intend to infringe, there was sufficient evidence for the jury to conclude that there was no culpable inducement to infringe.
A Fractured Federal Circuit Ready to Change Cybor Rule
By Paul Devinsky
In denying a petition for rehearing en banc, a fractured U.S. Court of Appeals for the Federal Circuit made it clear that the eight-year-old rule of Cybor, mandating de novo review of district court claim construction rulings, is now ripe for change. Amgen Inc., v. Hoechst Marion Roussel, Inc., Case No. 05-1157 (Fed. Cir., Nov. 22, 2006) (en banc).
Chief Judge Michel (joined by Judge Radar) dissented from the denial of the petition, noting that “[r]ehearing this case en banc would have enabled us to reconsider Cybor’s rule of de novo review for claim construction in light of eight years of experience with its application.”
Chief Judge Michel lamented the “steadily high reversal rate,” the “lack of predictability about appellate outcomes” and failure to take advantage of the knowledge of the district judge who heard or read all of the evidence and likely may have spent “more time on the claim constructions that we ever could on appeal,” as well as “inundation” of the Federal Circuit with “the minutia of construing numerous disputed claim terms.”
Chief Judge Michel openly questioned the basic premise of Cybor; “that claim construction is always a purely legal exercise, devoid of factual content” concluding that “I believe the time has come for us to re-examine Cybor’s no deference rule.”
Judge Newman also dissented from denial of the petition noting that “[t]he district court had correctly applied this court’s [Phillips v. AWH] precedent, requiring affirmance.” Judge Newman echoed Chief Judge Michel’s time for a change sentiment noting, “[t]he Federal Circuit’s position that patent interpretation requires more rigorous appellate review than other fact/law issues has not well withstood the test of experience. It is time to reopen the question and to rethink, en banc, the optimum approach to accuracy, consistency, and predictability in the resolution of patent disputes, with due attention to judicial structure, litigants’ needs, and the national interest in invention and innovation.”
Judge Lourie concurred in the denial of en banc review on the basis that (even though he disagreed with the panel decision), “I do not believe that every error by a panel is enbancable. A panel is entitled to err without the full court descending upon it.”
Judge Rader filed a separate dissent, urging the Court do away with the de novo review mandated by Cybor and “accord deference to the factual components of the lower court’s claim construction.”
Judges Gajarsa, Linn and Dyk concurred in the denial of rehearing en banc but indicated a willingness to “reconsider limited aspects of the Cybor decision” in a case where “the district court found it necessary to resolve conflicting expert evidence to interpret particular claim terms in the field of the art,” adding “[t]his is not such a case.”
The newest member of the Court, Judge Moore, also dissented from the denial of the petition on the basis that the court “should have taken this case en banc to reconsider its position on deference to district court claim construction articulated in Cybor.”
Judge Moore commended the district court “for its thorough, detailed, thoughtful, and competent efforts in construing this claim limitation. The district court did everything we have asked it to do, and in my opinion, did it correctly. While this may not be a basis for taking the case en banc, reconsideration of the deference accorded to the district court in this case would have been.”
Patents / Preliminary Injunction
Federal Circuit Affirms Preliminary Injunction to Halt Generic Launch of Sanofi's Plavix®
By Astrid Spain
After hearing the appeal on an expedited schedule, a unanimous panel of the U.S. Court of Appeals for the Federal Circuit affirmed a district court decision that granted a preliminary injunction against Apotex. Sanofi-Synthelabo v. Apotex, Inc., Case No. 06-1613 (Fed. Cir., Nov. 8, 2006) (Lourie, J.).
Sanofi markets Plavix®, a platelet aggregation inhibiting agent used to reduce thrombotic events such as heart attacks and strokes. The active ingredient in Plavix® is the bisulfate salt of the d-enantiomer of a free base referred to by the parties as MATTPCA, and is specifically recited in claim 3 of Sanofi’s U.S. Pat. No. 4,847,265.
Apotex filed an Abbreviated New Drug Application (ANDA) pursuant to the Hatch-Waxman Act, seeking FDA approval to manufacture and sell a generic version of clopidogrel bisulfate. Apotex filed a Paragraph IV certification with its ANDA asserting that the ’265 patent is invalid. Sanofi sued Apotex on the ’265 patent and Apotex counterclaimed, asserting that the patent is invalid and unenforceable.
Several days before the ANDA was approved, Sanofi and Apotex began settlement negotiations in an effort to resolve the litigation. The settlement agreement provided for actions in the event that the settlement failed to receive regulatory approval. In July 2006, the state attorneys general informed the parties that they would not approve the settlement. Nevertheless, pursuant to the agreement, Apotex launched its generic clopidogrel bisulfate product. Sanofi responded by filing for a preliminary injunction and requesting a recall of Apotex’s products that were already distributed. The district court granted the motion for injunctive relief but denied the request for recall. In the 21 days between the generic launch and the entry of the preliminary injunction, Apotex had shipped a six-month supply of its product to distributors in the United States. Apotex appealed.
The Federal Circuit began its analysis by reminding us that a preliminary injunction is granted only if a party establishes four factors; “(1) a reasonable likelihood of its success on the merits; (2) irreparable harm if an injunction is not granted; (3) a balance of hardships tipping in its favor; and (4) the injunction’s . . . impact on the public interest.”
The Federal Circuit found no clear error with the district court’s analysis that concluded that Sanofi had satisfied the first of the four factors: likelihood of success on the merits. Apotex’s lead argument was that Sanofi’s own U.S. Patent No. 4,529,596 anticipated the ’265 patent and rendered it obvious. As a preliminary matter, the panel noted that the ’596 patent was before the examiner during prosecution, which makes Apotex’s burden of proving invalidity at trial “especially difficult.” The Court rejected the anticipation argument, inter alia, by noting that the principal, obvious distinction is that the generic formula of claim 2 does not include a salt. On this basis alone, the Court found that clopidogrel bisulfate is not a species of any genus comprised by claim 2 of the ’596 patent. As for obviousness, the panel confirmed that nothing existed in the prior art that would make pursuing the enantiomer of MATTPCA an obvious choice, particularly in light of the unpredictability of the pharmaceutical properties of the enantiomers. The panel further agreed with the district court’s determination that the extensive time and money Sanofi spent developing the racemate before redirecting its efforts toward the enantiomer, as well as the unpredictability of salt formation, were indicators of non-obviousness. Finally, the Court found no error in either the district court’s omission of a separate double patenting analysis and rejected Apotex’s inequitable conduct analysis based on the observation that virtually none of Apotex’s briefing on the issue was devoted to identifying any evidence that would support a finding of deceptive intent.
With regard to the second factor, irreparable harm, Apotex asserted that Sanofi contracted away its right to prove irreparable harm by entering into the settlement agreement, which included a provision that capped damages for infringement by Apotex. The panel noted that other provisions in the agreement make clear that the parties contemplated the possibility of a preliminary injunction in the event of regulatory denial. In addition the Court reasoned that merely because a patentee is able to identify a monetary amount that it deems sufficient to avoid or end litigation does not necessarily mean that it automatically foregoes its right to seek a preliminary injunction or that any potential irreparable injury ceases to exist if infringement resumes. The Court rejected Apotex’s argument that price erosion had already occurred, and thus an injunction was not necessary because it cannot ameliorate Sanofi’s position. The Court also concluded that Apotex failed to demonstrate clear error in the district court’s findings with respect to the additional factors that established irreparable harm, including loss of goodwill, the potential reduction in work force and the discontinuation of clinical trials.
The Court found the third factor, balance of hardships, tipped entirely in Sanofi’s favor because Apotex chose to launch its product under threat of injunctive relief.
With regard to the forth and last prong, the public interest, Apotex argued that the district court erred in failing to consider certain public harms that would result if an injunction was issued, stating that if the generic products were removed from the market, consumers would be inclined not to purchase their medication because of the accompanying price increase for the brand name drug, leading to possible deaths. The Court noted that the patent system provides incentive to the innovative drug companies to continue costly development efforts and found that the district court did not clearly err in concluding that the significant “public interest in encouraging investment in drug development and protecting the exclusionary rights conveyed in valid pharmaceutical patents” tips the scales in favor of Sanofi. Overall, the panel sided with Sanofi that the interest in encouraging pharmaceutical research and development outweighed the public interest advanced by Apotex.
FDA Policy Allowing NDA Holder to Delist Patents from Orange Book Unlawfully Denies Generic Applicant Market Exclusivity
By Astrid Spain
The Court of Appeals for the D.C. Circuit recently affirmed a district court decision finding that the Food and Drug Administration (FDA) wrongly delisted two Merck patents, thereby unlawfully depriving Teva and Ranbaxy of 180 days of marketing exclusivity on generic simvastatin. Ranbaxy Laboratories Ltd. v. Leavitt, Case No. 06-5154 (D.C. Cir., Nov. 14, 2006) (Ginsburg, J.).
In 2000 and 2001, Ivax and Ranbaxy filed Abbreviated New Drug Applications (ANDAs) for generic versions of Zocor, a blockbuster statin drug, certifying under Paragraph IV that two of Merck’s patents then listed in the FDA’s Orange Book were invalid, unenforceable or not infringed. Merck did not sue the generic drug companies for patent infringement, but sent a letter to the FDA requesting that the two patents be removed from the Orange Book. The FDA delisted the two patents. In 2005, Ivax and Ranbaxy submitted citizen petitions asking the FDA to relist the patents, and for confirmation that, as the first ANDA filers, they were still entitled to 180 days of marketing exclusivity for generic Zocor. The FDA denied the petitions, stating that it would not relist the patents and that no generic applicant would be entitled to a 180-day exclusivity period. The district court subsequently held that the FDA improperly denied Ivax’s and Ranbaxy’s citizen petitions to relist the two Merck patents on Zocor. The FDA appealed the district court decision but did not request a stay. The FDA then granted final approval of the ANDAs from Teva (the owner of Ivax) and Ranbaxy in June, after which the two companies launched their generic simvastatin products.
On appeal the U.S. Court of Appeals for the D.C. Circuit unanimously affirmed the district court’s finding that FDA’s interpretation of the statue was contrary to the clear intent of Congress. The FDA’s policy was to allow delisting when a generic drug maker had filed an ANDA containing a paragraph IV certification and the NDA holder had not filed a lawsuit to contest the certification, as occurred in the Zocor case. The court framed the issue as “whether the FDA may delist a patent upon the request of the NDA holder after a generic manufacturer has filed an ANDA containing a paragraph IV certification so that the effect of delisting is to deprive the applicant of a period of marketing exclusivity.” In striking down the FDA’s policy, the court reasoned that the FDA’s policy conditioning a generic applicant’s period of marketing exclusivity upon the generic applicant being sued for patent infringement by the NDA holder is inconsistent with the text and structure of the Act because it diminishes the incentive the Congress gave manufacturers of generic drugs. Therefore, the court concluded that the FDA improperly denied Ranbaxy and Teva a period of marketing exclusivity by delisting Merck’s patents. The court admonished the FDA that it may not change the incentive structure adopted by Congress.
Identification of Specific Equivalent Elements in Accused Device Avoids Finding of Vitiation
By Kori Anne Bagrowski
Applying the doctrine of equivalents with the “all elements rule,” the U.S. Court of Appeals for the Federal Circuit, inter alia, found that a district court had erroneously concluded that there was no question of fact as to whether a cylindrical-conical shape could be equivalent to a spherically-shaped element claimed in a patent for surgical screws and reversed a grant of summary judgment that had found no infringement. DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., Case Nos. 05-1311, -1335 (Fed. Cir., Nov.20, 2006) (Linn, J.).
Depuy’s U.S. Patent No. 5,207,678 (the ’578 patent) relates to pedicle screws and receiver members used in spinal surgeries. To stabilize the spinal column, the pedicle screws are implanted in the spine, the head of each pedicle screw is connected to a receiver portion and a threaded rod connects the receiver portions of several screws. At issue was whether Medtronic’s products infringed Depuy’s patent for pedicle screws, used to stabilize spinal column segments during surgery.
Relying on Federal Circuit precedent in Tronzo, the district court adopted Medtronic’s argument that a conically-shaped portion of Medtronic’s spinal implant screws could not infringe a “spherically-shaped” limitation without reading the limitation out of the claims.
The Federal Circuit disagreed with the lower court’s application of the “all elements” rule. The Court explained that “the all elements rule generally is not met” if the theory or evidence of equivalence is insufficient to establish that the differences between the limitation in the claim and the accused device are insubstantial. The Court noted that “[a] holding that the doctrine of equivalents cannot be applied to an accused device because it ‘vitiates’ a claim limitation is nothing more than a conclusion that the evidence is such that no reasonable jury could conclude that an element of an accused device is equivalent to an element called for in the claim, or that the theory of equivalence ... otherwise lacks legal sufficiency.” The Court distinguished its finding of vitiation in Tronzo based on the type of argument made by the patent holder. In Tronzo decision, the patentee’s theory of equivalence was that any shape would be equivalent to the conical limitation (contrary to clear indications in the written description). DePuy’s experts, on the other hand, had identified shapes that would not have been equivalent and presented particularized declarations demonstrating that a specific element of Medtronic’s device was insubstantially different from the corresponding limitation. Finding that a reasonable jury could therefore find the devices equivalent, the Federal Circuit found DePuy’s theories to be legally sufficient and reversed the district court’s summary judgment of non-infringement under the doctrine of equivalents. Other issues addressed in this decision include the construction of particular claim limitations and a negative means-plus-function argument.
Prior Art Need Not Be “Effective” to Be Enabling and Thus Anticipating
By Deborah Cadena, Ph.D. and Astrid Spain
The U.S. Court of Appeals for the Federal Circuit affirmed a district court’s holding that omission during prosecution of comparative data relating to compounds not at issue in a prior art rejection did not constitute inequitable conduct, but remanded the case for reconsideration of the proper legal standard for enablement of a prior art reference. Impax Laboratories Inc. v. Aventis Pharmaceuticals Inc., Case No. 05-1313 (Fed. Cir., Nov. 20, 2006) (Rader, J.).
Riluzole is the chemical compound 6-trifluoromethoxy-2-benzothiazolamine, which is sold by Aventis under the trade name Rilutek® for treatment of amyotrophic lateral sclerosis (ALS). ALS, also known as Lou Gehrig’s disease, is a disease of the central nervous system that involves progressive degeneration of the nerves that control motor function and carry impulses to muscles. In the 12 months preceding August 2006, domestic sales of Rilutek®, the only FDA-approved treatment for ALS, approached $37 million dollars. Aventis owns U.S. Patent No. 5,527,814 (the ’814 patent), with claims directed to the use of riluzole to treat ALS.
Impax filed an ANDA to market a generic version of Rilutek® and, during the course of the approval process, became aware of Aventis’ ’814 patent). At the time, the ’814 patent was not listed in the Orange Book, and thus Impax filed a declaratory judgment action, seeking a declaration that it had not infringed the patent and asserting that the patent was invalid and unenforceable. Under 35 U.S.C. § 271(e)(2), it is an act of infringement to submit an ANDA for a drug claimed in a patent before the patent’s expiration. Impax asserted that the claims of the ’814 patent were invalid over the prior art and made allegations of inequitable conduct.
Regarding the assertion of inequitable conduct, Impax’s main contention was that, during prosecution of the ’814 patent and its priority application, Aventis presented comparative data related to certain compounds, which were the basis for arguing the distinction of a prior art reference, while withholding from the examiner test results of other compounds not at issue in the rejection. The Court agreed with the district court’s ruling that Aventis’ omission of certain data was insufficient to establish an intent to deceive, as required for inequitable conduct.
Turning to the allegation of invalidity over the prior art, Impax asserted that claims 1 through 5 of the ’814 patent were anticipated by Aventis’ U.S. Patent No. 5,236,940 (the ’940 patent). The district court agreed with Impax that formula I disclosed in the ’940 patent included riluzole. Nevertheless, based on the reasoning that the ’940 patent was not enabling because formula I encompassed such a large number of compounds that a skilled artisan would not have recognized that riluzole was effective in treating ALS, the district court concluded that the ’814 patent was not anticipated. Citing its 2005 Rasmusson v. SmithKline Beecham Corp. decision (IP Update, Vol. 8, No. 7), the Court reiterated that the enablement standard for an anticipatory prior art reference differs from the enablement standard under 35 U.S.C. § 112 and that proof of efficacy is not required for a prior art reference to be sufficiently enabling for the purposes of anticipation. The Court thus remanded the case to the district court to determine whether the ’940 patent is enabling using the proper legal standard.
Patents / Attorneys’ Fees Award
Attorney Fees Award Properly Entertained After Dismissal with Prejudice
By Astrid Spain
The U.S. Court of Appeals for the Federal Circuit affirmed a district court’s judgment denying a motion for attorneys’ fees and expenses under 35 U.S.C. § 285 following a dismissal with prejudice, based on the filing of a covenant not to sue. Highway Equip. Co. v. FECO, Ltd., Case Nos. 05-1547, -1578 (Fed. Cir., Nov. 21, 2006) (Linn, J.).
On the day of a scheduled pretrial conference in a suit involving claims of patent infringement and violations of state law, Highway Equipment filed a covenant not to assert any claim of patent infringement under its patent, thus withdrawing the patent infringement controversy. FECO subsequently filed its motion for attorneys’ fees, the district court dismissed the motion and FECO appealed.
Under § 285, courts have discretion to award reasonable attorneys’ fees in patent infringement cases that are deemed “exceptional.” Section 285 is an equitable exception to the practice that parties bear their own costs in litigation and is intended to address cases where litigation is brought or maintained in bad faith. The “exceptional case” requirement has been interpreted to limit recovery of attorneys’ fees to those cases where there is clear and convincing evidence of bad faith or at least gross negligence by the losing party in bringing or maintaining the suit. Even in exceptional cases, awarding attorneys’ fees is within the court’s discretion. Attorneys’ fees under § 285 are available only to the prevailing party. According to the Federal Circuit’s decisions in Inland Steel Co. and Brooks Furniture, the prevailing party is one that has achieved at least some relief on the merits of the litigation “which alters the legal relationship of the parties.”
Commencing its review jurisdiction, the Federal Circuit decided that, even after Highway Equipment gave FECO a pre-verdict covenant not to sue on the patent infringement issues, the lower court properly retained Article III subject-matter jurisdiction over the patent-based fee request. According to the Court, where a case ends before a judgment on the merits, the issue of which party prevailed will depend on whether there is a decision from the court affecting the legal relationship between the parties. The Court noted that a defendant’s voluntary change in conduct, even if it accomplishes what the plaintiff sought to achieve, lacks the necessary “judicial imprimatur on the change.” The dispositive issue, according to the panel, was thus whether the dismissal with prejudice had sufficient judicial imprimatur to constitute a “judicially sanctioned change in the legal relationship of the parties” The Court concluded that the dismissal with prejudice, based on the covenant and granted pursuant to the district court’s discretion under Rule 41(a)(2), has the necessary judicial imprimatur to constitute a judicially sanctioned change in the legal relationship of the parties, such that the district court could properly could entertain FECO’s fee claim. However, the panel agreed with the district court that FECO did not prove that this case is exceptional by clear and convincing evidence, and affirmed the district court’s determination of no inequitable conduct and no litigation misconduct.
“Death Rays” and the Demise of Arguments Waived (WEB ONLY)
By Firasat Ali and Arturo Sandoval
The U.S. Court of Appeals for the Federal Circuit recently affirmed a district court’s summary judgment holding that Ion Beam Applications did not infringe two patents relating to cancer therapy because the patents are invalid for obviousness. Optivus Tech., Inc. v. Ion Beam Applications S.A., Case Nos. 05-1518, -1534, -1575 (Fed. Cir., Nov. 16, 2006) (Linn, J.).
U.S. Patents Nos. 4,870,287 (the ’287 patent) and 5,260,581 (the ’581 patent), assigned to co-plaintiff Loma Linda University Medical Center, relate to the use of proton beams in cancer therapy. The ’287 patent is directed to a proton beam facility that generated a proton beam and delivered it to one of multiple treatment rooms. The rooms are equipped with moveable gantries allowing the operator to direct the beam to a patient at a specific angle. The ’581 patent is directed to a safety system for a multi-room proton beam therapy facility that verifies a treatment room selection before the proton beam is sent.
On summary judgment, the district court held the ’287 patent obvious in light of prior art consisting of a University of Washington facility in combination with a Conceptual Design Report (CDR). The University of Washington facility uses neutrons rather than protons to treat cancer by directing a proton beam at a beryllium plate, causing nuclear reactions that produce neutrons that then travel towards the patient for treatment. The CDR provides an overview of proton beam cancer therapy (since 1946) and notes that “recent technological developments in diagnostic and alignment devices had reawakened interest in proton beam therapy.” Loma Linda argued that the proton beam used in the University of Washington facility is of such high intensity that, if it were modified by removing the beryllium plate, it would kill patients rather than cure them. Loma Linda also argued that because the modification would create a “death ray” such a reference may be said to teach away from an invention designed to treat patients. The Court found the argument “unpersuasive,” noting that “[n]othing about the [reference] can be said to discourage a person having ordinary skill in the art from modifying it to enable proton therapy… .” With regard to the requisite motivation to combine, the panel concluded that there is no question that the CDR establishes that a person having a working familiarity with beam technology as it relates to cancer treatment, motivated by the need for more effective and efficient proton therapy facilities, would have been led to combine the University of Washington’s neutron therapy facility with the proton beam therapy design outlined in the CDR.
Turning to appellate procedure, the Court refused to consider an argument that a combination of references fails to disclose every limitation of a claim because the plaintiff-appellant did not argue the issue in its opening brief. Raising the argument in a reply brief was insufficient to cure the omission, the Court noted, writing that “[w]e consider this argument waived because it was not raised in Loma Linda’s opening brief.” The Court also refused to consider an argument that contested the prior art status of a reference because it had not been raised in the proceeding below. Holding that a federal appellate court cannot consider an issue that the district court did not review, the Court dismissed the argument because Loma Linda’s submissions to the district court did not identify a genuine issue of fact regarding the publication status of the prior art reference.
Patents / Design Infringement / Preliminary Injunction
The Federal Circuit Vacates a Preliminary Injunction for Alleged Design Patent Infringement
By Kenneth Cage
The U.S. Court of Appeals for the Federal Circuit vacated a preliminary injunction based on two design patents, finding a lack of a “likelihood of patentee’s success on the merits” due to a concern that the designs were a by-product of functional considerations. PHG Technologies, LLC, v. St. John Companies, Case No. 06-1169 (Fed. Cir., Nov. 17, 2006) (Prost, J.).
PHG obtained two design patents, D496,405 and D503,197, each of which covered the ornamental design for a medical label sheet. Each medical label sheet included eleven rows of labels, with each row having three labels. The tenth and eleventh row contained different size labels to correspond to pediatric and adult sizes. A border on the medical label sheet was part of the ’405 patent, but was not a part of the ’197 patent. In issuing a preliminary injunction, the district court found that all four factors for a preliminary injunction — (1) likelihood of success on the merits; (2) irreparable harm if the injunction is not granted; (3) balance of hardships favoring movant; and (4) public interest — were met.
The Federal Circuit found that under the four-part test, an injunction would be inappropriate. In addressing St. John’s argument that the designs were dictated primarily by functional rather than ornamental considerations, the Court noted that if there are several ways to achieve the function of an article, the design is more likely to achieve an ornamental purpose. While the lower court found alternative designs had been considered by the designers, it did not make any specific findings about whether the alternative designs would adversely affect the utility of the medical label sheet. Further, the Court found that an affidavit presented by St. John’s CEO demonstrated that alternative designs did affect the utility of the medical label sheet, as did the statements that PHG made during the prosecution of its corresponding utility application for a medical label sheet. This evidence was not refuted by PHG on the record before the district court.
Based on this record, the Federal Circuit concluded that the district court erred in holding that PHG met its burden of proving the first factor: likelihood of success on the merits.
Practice Note: When seeking a preliminary injunction, all of the four factors for a preliminary injunction need to be fully addressed by the patentee and sufficient rebuttal evidence needs to marshaled to refute any of the infringer’s contentions that the four factors are not met.
Copyrights / Transformative Use
Celebrities Beware: Transformative Use Is Protected by the First Amendment
By Irina Kushner
In a highly anticipated right-of-publicity case, the California Court of Appeals ruled that the First Amendment provides a complete defense for misappropriation of a celebrity’s likeness and visual image where the defendant’s use is transformative. To suffice as transformative, a work merely must add “new expression,” but the work need not convey any “meaning or message.” Kirby v. Sega of America, Inc., Case No. B183820 (Cal. Ct. App., Oct. 25, 2006) (Boland, J.).
Appellant Kierin Kirby, who also goes by the moniker “Lady Kier,” is best known for her role as the lead singer of the early 1990’s “retro-funk-dance” musical group Deee-Lite. The band’s single Groove Is In The Heart and its music video received extensive play on the radio and MTV. Kirby claimed that as Lady Kier she developed a “unique public identity,” resulting from her “signature costumes and lyrical expressions.”
Sega is the distributor of a video game entitled “Space Channel 5” or SC5. The main character in the game is a female reporter in the 25th century named Ulala. The Ulala character appeared to look and dress similar to Lady Kier, and allegedly even used the same “ooh la la” catch phrase. In July 2000, Kirby was contacted about the use of Groove Is In The Heart in connection with the launch of SC5 in England. Kirby declined the request.
In April 2003, Kirby filed suit against Sega, alleging common law infringement of the right of publicity, misappropriation of likeness, violation of the Lanham Act, unfair competition, interference with prospective business advantage and unjust enrichment. Sega moved for summary judgment, asserting that the “First Amendment provided a complete defense” to Kirby’s claims. The trial court applied the “transformative test,” which evaluates whether the “celebrity likeness is one the ‘raw materials’ from which an original work is synthesized, or whether the depiction or imitation of the celebrity is the very sum and substance of the work in question.” Thus, although material issues of fact existed as to whether Kirby’s likeness or identity was appropriated, the trial court granted Sega’s motion, finding “all claims constitutionally foreclosed.” Kirby appealed.
On appeal, Sega again argued that the First Amendment and the California Constitution afforded a complete defense to misappropriation. The Court agreed and upheld the trial court’s application of the First Amendment defense to Kirby’s claims, reasoning that Ulala contained “sufficient [new] expressive content to constitute a ‘transformative work’ under the test articulated by the [California] Supreme Court.” In short, Ulala was not a mere imitation of Kirby. Notwithstanding the added expression, Kirby argued that the game should not be afforded protection because it lacked any “element of caricature, lampoon, or parody.” In rejecting Kirby’s argument, the Court found that the pivotal issue is whether the public figure’s likeness is transformed through new expression, not the “form of the literary expression.” Because the Court found the video game to be protected speech, Kirby’s state common law and statutory claims and her Lanham Act claim also failed.
Patents / USPTO E-Filing / Document Disclosure
New Version of EFS-Web Released (WEB ONLY)
By Cameron Weiffenbach
The U.S. Patent and Trademark Office released EFS-Web 1.1 which adds new features and functionality for e-filing documents. 1311 TMOG 155 (Oct. 24, 2006).
In October 2000, the USPTO implemented an electronic filing system for patent applications (EFS/ABX) and form generation, validation and submission (ePAVE) of the patent application. However, the system was viewed as not user friendly and not widely accepted by the patent community.
In March 2006, the USPTO introduced EFS-Web, a web-based electronic filing system for transmitting patent application documents in a pdf format. The EFS-Web system has been widely accepted by the patent community. The USPTO is hoping that the system will be as successful as TEAS, the Trademark Electronic Application Filing System. While the new system has been widely accepted, it is limited to filing national phase U.S. patent applications and to documents that can be submitted in pdf format.
On October 14, 2006, the Office introduced EFS-Web 1.1 to accommodate the filing of PCT international patent applications at the U. S. Receiving Office; petitions to accept unintentionally delayed payment of maintenance fees; requests for amended publication, redacted publication, and early publication, voluntary publication or replication of a patent application; and documents related to accelerated examination.
Even more importantly, EFS-Web 1.1 also accepts documents written as text files (txt) for electronic submissions. Thus, the new version allows e-filers to submit files such as sequence listings, computer program listings and mega tables in a txt format. This change eliminates the need to submit such materials on computer readable disk media. Further, the USPTO has indicated that it has relaxed its rules for sequence listings to accommodate the filing of such listings/tables through EFS-Web. The Office is expected to publish rule changes shortly.
Support for the EFS/ABX and ePAVE systems was discontinued on November 11, 2006.
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In an unrelated development, the USPTO announced termination of its Document Disclosure Program, effective as of February 1, 2007, because provisional patent applications afford far more benefits and protections and because some independent inventors who used the program apparently thought (incorrectly) that they were actually filing an application for patent. Changes to Eliminate the Document Disclosure Program, 71 FR 64636 (November 3, 2006).
The Document Disclosure Program was implemented in 1969 in order to provide a form of evidence of conception of an invention only. Under the program, an inventor submits to the USPTO a signed written description of the invention to enable a person of ordinary skill in the art to make and use the invention in the United States. No oath or claim is required. After two years, the disclosure document is destroyed unless it is referred to in a separate letter in a related provisional or non-provisional patent application. A disclosure document cannot be relied upon as a priority document (domestic or foreign).
According to USPTO, a provisional application provides the following benefits over the Document Disclosure Program:
1. A provisional patent application (which is retained for five years) is regarded as a patent application;
2. A provisional patent application is evidence of both conception and constructive (assuming it complies with the requirements of 35 U.S.C. § 112, ¶1); and
3. A provisional patent application can be used to claim priority under 35 U.S.C. § 119.
The USPTO found that since 1976, only 0.04 percent of patent applicants have relied on disclosure documents. The Office did not find the $100 fee for a provisional application (verses the $10 fee for filing a Document Disclosure) to be a significant financial burden on independent inventors or small entities.
