IN THIS ISSUE
Importation of Information Derived From Patented Process Does Not Constitute Infringement Under 35 U.S.C. § 271(g)
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In a case of first impression, the U.S. Court of Appeals for the Federal Circuit affirmed a lower court’s order dismissing a counterclaim alleging infringement under 35 U.S.C. § 271(g) of four U.S. patents relating to processes of screening for substances that inhibit or activate a protein, because the accused drug products were not "manufactured" by a process claimed in the asserted patents. Bayer AG v. Housey Pharmaceuticals, Inc., Case No. 02-1598 (Fed. Cir. Aug. 22, 2003).
In 1988 Congress passed the Process Patents Amendments Act, enacting §271(g), which made it an act of infringement to perform a process in another country that would infringe a process claim of a U.S. patent and then import the product into the United States.
At issue before the Federal Circuit in this case was the meaning of the phrase "a product which is made by a process" as found in §271(g). Housey argued that the information generated by the patented method fit within the statutory meaning of §271(g), which should be interpreted broadly to cover any patented method, whether or not the method produces a physical product. Bayer argued that §271(g) applies only to manufacturing processes which result in a physical product. Since Bayer had imported only information, there could be no infringement of the Housey patent claims.
After analyzing the words of the statute as well as the extensive legislative history of the Process Patents Amendments Act, the Federal Circuit concluded that §271(g) applied only to importation of physical objects derived from manufacturing processes. The Court also found that processes of identification and data generation are not steps in the manufacture of a product because they are not directly used in the synthesis of the product. Consequently, the Federal Circuit held that Bayer’s importation of information derived from its screening activities was not an infringement of the Housey patents.
PRACTICE NOTE: In light of Bayer, patentees and practitioners should be mindful that importation of a physical product appears to be a requirement for establishing infringement under §271(g). As a result, inventions directed to screening methods and the like should be drafted to include a manufacturing step, e.g., reciting the preparation of the identified physical compound or, at a minimum, a hardcopy memorializing the compounds identified by the method.Patents / Claim Construction
Claim Terms Are Not Limited by Industry Standard Meaning
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The Federal Circuit recently overturned a grant of summary judgment in favor of 3Com, holding that the district court erroneously restricted a claim limitation to the industry standard meaning of a term rather than giving the term its plain, every day meaning. E-Pass Technologies, Inc. v. 3Com Corp., Case No. 02-1593 (Fed. Cir. Aug. 20, 2003).
The case involves 3Com’s popular "Palm Pilot" personal digital assistants and accusations that it infringes patent claims drawn to the use of an "electronic multi-function card." Based in part on a discussion in the specification, and also on the industry standard usage of the term "card" at the time the patent was issued, the district court interpreted the term "card" to mean a component having the dimensions of a standard credit card. Observing that the district court had given too much weight to the specification’s discussion of the "objects of the invention" and too little weight to the strong presumption in favor of giving terms their "ordinary and customary meaning," the Federal Circuit found this to be an error of construction and held that the ordinary meaning of the term "card" should apply (that is, a flat, rectangular piece of material).
According to the Court, there was nothing in the claim language or the steps of the method that suggest a size limitation, and the Court found nothing in the industry standards to suggest that they "apply outside the limited area of credit cards, i.e., to cards generally or to electronic multifunction cards, or that either was intended to define the term ‘card’ or ‘electronic multifunction card.’" Absent a clear statement of intent by the inventor to narrow the meaning of a claim, the Court determined, the claim should be given the broadest meaning consistent with customary usage.
Personal Jurisdiction over Out of State Corporation Based in Part on Hiring of Local Attorney
By Daniel Foster
The U.S. Court of Appeals for the Federal Circuit reversed a district court dismissal of an action filed in California, holding that the district court incorrectly found that it did not have personal jurisdiction over a Nevada patent owner in a declaratory judgment suit filed by a California company. Electronics for Imaging, Inc. v. Coyle, 2003 U.S. App. LEXIS 16884 (Fed. Cir. Aug. 18, 2003).
In the case, Electronics for Imaging (EFI), a California company, sued Kolbet Labs, a Nevada company, and its alleged alter ego, Coyle, for declaratory and injunctive relief of non-infringement, as well as for state law claims of non-breach of contract and non-misappropriation of trade secrets. The district court (ND CA) granted the defendants’ motion to dismiss for lack of personal jurisdiction. EFI appealed.
Applying Federal Circuit law to the issue of personal jurisdiction for purposes of claims arising out of the patent laws (such as a claim for declaratory judgment of patent invalidity) and regional (Ninth Circuit) law for personal jurisdiction for claims arising under state law (such as tradesearch and contract) the Federal Circuit reversed. Thus, applying Federal Circuit law to the declaratory judgment claim, the Court analyzed whether Coyle had "purposefully directed" contacts at California and noted that defendants made telephone calls to EFI regarding the technology covered by the defendants’ patent application; sent two representatives to visit EFI’s facility to demonstrate defendants’ technology; and hired two California attorneys who contacted EFI to report on the progress of the defendants’ pending patent application and another to prosecute the application that matured into the patent now in dispute. The Court found those contacts were not "random, fortuitous or attenuated" but rather "the totality of these contacts sufficiently" made out EFI’s prima facie case that Coyle "by ‘emerging in significant activities’ in California… purposefully directed" its activities to California.
PRACTICE NOTE: This case appears to be the first instance in which a court has considered the act of retaining counsel in a jurisdiction as a factor in establishing the "minimum contacts" necessary for the exercise of specific jurisdiction.
It Happens Once in a Blue Moon; Beer Not Related to Restaurant Services
By Paul Devinsky
The U.S. Court of Appeals for the Federal Circuit overturned a U.S. Patent and Trademark Office (USPTO) refusal to register Coors’ trademark, "Blue Moon," and associated design to identify a brand of beer concluding that the USPTO erred in deciding restaurant services and beer are related. In Re Coors Brewing Company, Case No. 03-1050 (Fed. Cir. Sept. 8, 2003).
Coors sought to register the words "Blue Moon" and associated design for beer. The Trademark Trial and Appeal Board (Board) sustained the examining attorney’s rejection of the application on the ground that the mark is likely to be confused with the registered mark "Blue Moon and design" for restaurant services, finding that the two marks are similar and that restaurant services and beer are related goods and services. Coors appealed.
Coors argues that the Board improperly disregarded evidence of third-party commercial use of the words "Blue Moon" in connection with restaurants, foods and beverages, and that the reference mark is a weak mark.
The Federal Circuit agreed. "As with the issue of similarity, … we note that the strength of a mark is not a binary factor, but varies along a spectrum from very strong to very weak. The evidence before the Board showed that the term ‘Blue Moon’ has been used on numerous occasions for restaurant services and has also been used in numerous registered marks for food and beverages. That evidence establishes that, even though the Board permissibly declined to characterize the registered mark as weak, [it] also cannot be regarded as a particularly strong mark that is entitled to broad protections."
However, the Court concluded that the Board’s decision "turned on its conclusion that beer and restaurant services are sufficiently related that the use of a similar mark for each would suggest to consumers that the two had a common source."
Here, the Federal Circuit disagreed, concluding that "[t]he Board’s finding that beer and restaurant services are related is not supported by substantial evidence." Rather, the Court noted that "[t]he evidence of overlap between beer and restaurant services is so limited that to uphold the Board’s finding of relatedness would effectively overturn the requirement of Jacobs that a finding of relatedness between food and restaurant services requires ‘something more’ than the fact that restaurants serve food."
Use of Manufacturer’s Trademark on Refurbished Golf Ball Is Par for the Course
By John Dabney
The U.S. Court of Appeals for the Federal Circuit affirmed the denial of a preliminary injunction, and held that a golf ball refurbisher’s use of the original manufacturer’s mark on the refurbished golf balls is lawful. Nitro Leisure Products, L.L.C. v. Acushnet Company, Case No., 2003 U.S. App. LEXIS 17822 (Fed. Cir. Aug. 26, 2003).
Acushnet Company manufactures and sells golf balls under the mark TITLEIST. Nitro refurbishes golf balls, including Titleist golf balls, by removing the paint and clear coat and repainting them. Acushnet filed suit against Nitro seeking a preliminary injunction and arguing that Nitro’s refurbishing process altered the characteristics of the original product such that the ball could no longer fairly be called a Titleist. The district court denied the motion, finding that Acushnet failed to show a likelihood of success on the merits of its trademark infringement claim. Acushnet appealed.
The Federal Court affirmed. The Court reasoned that consumers do not expect refurbished products to perform the same as new products, and that Nitro’s changes to the golf balls do not materially alter it. Moreover, the Court noted that Nitro stamped the term USED & REFURBISHED on each ball thus clearly indicating the balls were reconditioned. Under these circumstances, the Court held that Acushnet failed to show that consumers are likely to be confused as to the source or condition of the balls.
Third Circuit Extends Misuse Doctrine to Copyright
By Paul Devinsky
The U.S. Court of Appeals for the Third Circuit, in upholding a preliminary injunction in a suit brought to prevent display of two-minute movie clip previews, declined to find that the copyright holder had misused its copyrights by licensing them only if licensee web sites were not "derogatory to or critical of" the copyright owner (Disney), but did extend the patent misuse doctrine to copyright. Video Pipeline, Inc. v. Buena Vista Home Entertainment, Inc., Case No. 02-2497 (3rd Cir., Aug. 26, 2003).
Video Pipeline compiles movie trailers. To obtain the right to distribute the trailers, Video Pipeline enters into agreements with various entertainment companies. It entered into such an agreement with Disney. In 1997, Video Pipeline took its business to the web, where it maintained a database which contained movie trailers. Site visitors access trailers by clicking on a button labeled "preview" for a particular motion picture. The requested trailer is then "streamed" for the visitor to view.
Video Pipeline included in its online database the trailers it received under the license agreement from Disney. Because the license agreement did not permit this use, Disney requested that Video Pipeline remove the trailers from the database. Video Pipeline complied with that request, but filed a complaint seeking a declaratory judgment that its online use of the trailers did not violate federal copyright law. In response, Disney terminated the license agreement.
Video Pipeline then decided to replace some of the trailers it had removed from its database at Disney’s request with its own trailers of Disney movies (called "clip previews") and amended its complaint to seek a declaratory judgment allowing it to use the clip previews. Disney filed a counterclaim alleging copyright infringement. The district court entered a preliminary injunction, prohibiting Video Pipeline from displaying clip previews of Disney films on the internet. Video Pipeline appealed.
The Third Circuit rejected Video Pipeline’s fair use defense, noting that the clips were being used commercially and found that the clips were not transformative of the Disney work (thus, distinguishing the clips from the thumbnail size pictures in the database at issue in the recent Ninth Circuit case of Kelly v. Arviba Soft Corp.).
Video Pipeline further contended that Disney has misused its copyright in connection with its licensing agreements, which use copyright law to suppress criticism of Disney, alleging that such agreements trigger the copyright misuse doctrine.
The Third Circuit noted that "[n]either the Supreme Court nor this court has affirmatively recognized the copyright misuse doctrine," but acknowledged that other courts of appeals have extended the patent misuse doctrine to the copyright context.
The Third Circuit held that while the "licensing agreements in this case do seek to restrict expression by licensing the Disney trailers for use on the internet only so long as the websites on which the trailers will appear do not derogate Disney, the entertainment industry, etc….we nonetheless cannot conclude on this record that the agreements are likely to interfere with creative expression to such a degree that they affect in any significant way the policy interest in increasing the public store of creative activity."
However, the Third Circuit took the opportunity to "extend the patent misuse doctrine to copyright, and recognize that it might operate beyond its traditional anti-competition context," thereby joining the Fourth and Ninth Circuits.
Ninth Circuit Considers Damages Awards in Copyright Cases
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The U.S. Court of Appeals for the Ninth Circuit has issued two rulings addressing the scope of damages and attorney’s fees awardable in copyright infringement cases. L.A. News Service v. Reuters Television International Limited, Case No. 02-56956, 2003 U.S. App. LEXIS 17177 (9th Cir. Aug. 21, 2003); Traditional Cat Association v. Gilbreath, Case No. 01-56595, 2003 U.S. App. LEXIS 16906 (9th Cir. Aug. 19, 2003).
In L.A. News Service, the Ninth Circuit held that where acts of copyright infringement occur mostly was outside the United States, a copyright holder is entitled to recovery of the infringer’s profits attributable to the extraterritorial infringement, but not actual damages for injuries the infringements caused overseas. The court reasoned that no rational deterrent function, consistent with the enforceable scope of U.S. copyright, would be served by making an infringer, whose de minimus domestic act of infringement leads to widespread extraterritorial infringement, liable for the copyright owner’s entire loss of value or profit from the non-actionable overseas activities. The court further recognized that the resulting over-deterrence might chill the fair use of copyrighted works in close cases. Accordingly, the court carved out a narrow exception to the general rule against extraterritorial application by allowing recovery of the infringer’s extraterritorial profits, but disallowing recovery of actual damages resulting from the infringement.
In Traditional Cat Association, the Ninth Circuit held that under the Copyright Act, a prevailing defendant is entitled to recover attorney’s fees incurred in defending against copyright claims and any other "related" claims. The Ninth Circuit explained that the first step in calculating a reasonable attorney’s fee award should be to decide if the copyright and non-copyright claims are related. If the claims are not related, the defendant is entitled to recover only those fees attributable to the copyright claims, and a fair apportionment between the copyright and non-copyright claims must be determined. The Ninth Circuit reversed the district court’s order denying the defendants’ fee request and remanded the case for further proceedings, finding that the district court’s failure to make any attempt to apportion the fees or to otherwise calculate a reasonable fee award based on the information in the district court’s possession was an abuse of discretion.
PRACTICE NOTE: Traditional Cat Association provides guidance as to the types of documentation that must be submitted in support of a request for an award of attorney’s fees and apportionment. In Traditional Cat Association, the defendants submitted billing records showing the total number of billable hours per attorney and the rates charged, as well as declarations from the attorneys who worked on the case attesting to the reasonableness of the rates charged, identifying more specifically the tasks completed and stating that 80% would be a fair apportionment for their work attributable to the copyright infringement claim. The Ninth Circuit noted that this evidence "provided the court with a significant amount of information" and was sufficient to make the district court’s summary denial of a request for apportionment inappropriate.
DVD Hacking Is Not Protected Speech
By Matthew Weil
The California Supreme Court has held that an injunction against disseminating software for illicit copying of encrypted DVD movies does not violate First Amendment guaranties of freedom of speech. DVD Copy Control Assoc. v. Bunner, Case No. S102588, 2003 DJDAR 9602 Cal. LEXIS 6295, (Cal. August 25, 2003). The Court did, however, remand the case back to the appeals court to determine if the injunction was warranted under California trade secret law.
In December of 1999, the DVD Copy Control Association (DVD CCA) brought an action under California’s Uniform Trade Secrets Act (UTSA) against Andrew Bunner, a Norwegian teenager, and numerous other internet website operators to prevent future use of DVD decryption software (DeCSS) that had been reverse engineered in violation of applicable licenses and published on the internet. The trial court held that the DVD CCA was likely to prevail on its trade secret claim and issued a preliminary injunction against publishing the offending program or "linking" to webpages containing it. The Court of Appeals, finding that the DeCSS was protected speech, reversed on First Amendment grounds, holding that even if the DeCSS contained DVD CCA’s trade secrets, that would not override the First Amendment. DVD CCA appealed to the California Supreme Court.
The California Supreme Court agreed with the appeals court that computer code is protected speech but went on to note that the original trial court injunction issued under the UTSA was content neutral. In other words, the injunction was not based on the particular content of the "speech" or any disagreement with its message or viewpoint. Rather, the injunction was justified by the reasonable efforts of DVD CCA to protect its information and by the fact that the information gave DVD CCA a competitive advantage. As a result, the court determined that it was not required to apply any heightened scrutiny to its review. Instead, it need only determine whether the challenged law "burdened no more speech than necessary to serve a significant government interest."
The California Supreme Court described its opinion as "quite limited." Given the posture of the case, the Court assumed, but did not decide, that the injunction had been properly issued under the UTSA. The linchpin of the opinion, therefore, is that Bunner knew, or had reason to know, that the decryption program was obtained by improper means and that Bunner’s dissemination of it was unlawful. The Court had only to identify a significant government interest served by the protection of trade secrets (it identified several) to hold that the injunction did not unnecessarily burden speech.
TRIPS: How Far Did the WTO Go?
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On August 30, 2003, the General Council of the World Trade Organization (WTO) adopted a landmark interpretation of the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement regulating the compulsory licensing patents covering pharmaceutical products destined for countries lacking the ability to make their own.
The genesis of this development is the WTOs Declaration on the TRIPS Agreement and Public Health issued in November 2001. Paragraph 6 of the declaration specifically recognized that members with "insufficient or no manufacturing capacities in the pharmaceutical sector," would not be able to make effective use of the compulsory licensing provision of TRIPS, which requires that countries who manufacture goods under a compulsory license ensure that such goods are supplied "predominantly" to their "domestic market[s]."
The concern was that a drug producing country, such as India, would not be able issue a compulsory license to make a patented drug to address a public health issue in a second country lacking the ability to make its own supply, such as the Sudan. In other words, under the existing protocol, any patented drugs produced in, e.g., India, would need to be "predominantly" for the Indian market and not for export to a target market, e.g., the Sudan. However, notwithstanding the Sudan’s right to grant its own TRIPS-compliant compulsory license for the production of a patented drug within its borders, it would not have the physical ability carry out drug production.
This conundrum potentially left countries lacking a pharmaceutical manufacturing capability without an economically rational mechanism to procure needed drugs from countries having the ability to make them. The TRIPS Council was directed to find an expeditious solution and to report to the General Council before the end of 2002.
A bit late and following months of political wrangling, on August 30, 2003, the General Council finally issued its solution.
Article 31 Compulsory Licensing
Intellectual property rights are valuable only insofar as they are enforceable. As such, Article 31 is a critical provision of TRIPS because it provides a detailed mechanism for governing the circumstances under which a member state may grant use of the patented subject matter without authorization of the right holder, i.e. a compulsory license. Article 31 requires that decisions on compulsory licensing be made on a case-by-case basis. Except in cases of national emergency, urgent circumstance, or of government noncommercial use, the potential licensee must first attempt to negotiate a voluntary license with the patentee. Furthermore, the compulsory license must be non-exclusive and clearly spell out its terms and conditions. Additionally, when conditions justifying a compulsory license cease, the license must expire and the patentee be paid "adequate remuneration."
To prevent the importation of goods produced under compulsory license in one country from importation to an alternate market where the conditions warranting that license do not exist, Article 31(f) specifically protects patentees against parallel importation of patented items, i.e., by those holding a compulsory license. It is unclear, however, as to what quantity of goods might slip into an export stream without running afoul of TRIPS.
The Article 31(f) safeguards balance the patentee’s need for the legal security required to mitigate the financial risk of developing new drugs with the flexibility a member state might need to access potentially life-saving technology. Were a member state able to capriciously grant a compulsory licenses on an ad hoc basis, the global intellectual property system set up under TRIPS would be substantially disabled.
The New "System" for Compulsory Licensing of Pharmaceutical Products
The new system is intended to overcome the Paragraph 6 problem discussed above, yet maintain an adequate degree of legal certainty for patentees. Consistent with the statement by the General Council that the August 30 decision must only be used in good faith for public health purposes and not as "an instrument to pursue industrial or commercial policy objectives," all members are obliged to ensure that their internal, i.e., national, systems provide means to prevent the re-importation of drugs produced under the system into markets other than the target market.
The General Council assistance to developing countries to establish and maintain an administrative infrastructure to comply with the export/import obligations and has indicated its intention to amend the TRIPS Agreement by sometime in mid-2004 to textually incorporate the new system.
Mechanistically, the system explicitly waives members’ obligations under the export restriction of Article 31(f), if and only if, certain criteria are fulfilled by importing and exporting members.
The System is Limited to "Pharmaceutical Products"
Pharmaceutical products are defined as those needed to address the public health problems recognized in the November 2001 Declaration, i.e. "the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics." Of primary concern to patentees is the scope of the Declaration’s recitation "public health problems" in defining "pharmaceutical products"
in the context of this system. Although, the United States Trade Representative argued strenuously that the new system be limited to medications for "HIV/AIDS, tuberculosis, malaria and other epidemics," it ultimately dropped this demand. Therefore it remains to be seen whether drugs treating chronic ailments such as diabetes, obesity, mental illness, or even allergies and impotence, could be considered "pharmaceutical products" under the new system.
Eligible Importing Members
An "eligible importing member" is defined in the system as any least developed member country or any other member that notifies the TRIPS Council of its intention to make use of the system as an importer. If the pharmaceutical product is patented in its territory, the eligible importer must notify the TRIPS Council of its intention to grant a compulsory license in accordance with Article 31. Eligible importing members must certify to the TRIPS Council that they lack sufficient pharmaceutical manufacturing capabilities for the product they are interested in importing. Least developed countries are presumed to lack such an infrastructure. However, those members having at least some capacity may, upon self-examination, certify the insufficiency of their means to the TRIPS Council. However, the system states that "[w]hen it is established that such capacity has become sufficient to meet the member’s needs, the system shall no longer apply," i.e., the importing member is no longer eligible to be a target market. However, the system provides no guidance as to how such a determination is to be made, nor does it provide any incentive for an importing member to regularly self-examine its production capacity.
The system defines an "exporting member" as one using the system to produce pharmaceutical products. In order to avoid the consequences of violating Article 31(f) and avail itself of the safe-harbor embodied in this system, an exporting member issuing a compulsory license must fulfill several requirements. First, the exporting member may only produce the amount needed by an eligible importer’s market and must export the entirety of the production run to that target market.
Secondly, the exporting member must take measures to ensure that the exported pharmaceutical product is labeled or marked in such a way as to distinguish it from the same pharmaceutical product produced and sold on the open market under the patentee’s authority. The General Council chairman’s statement provides examples of altered pharmaceutical packaging and labeling that distinguishes products donated to aid programs for the developing world from their counterparts on the open market.
Finally, exporting members must make certain reports to the TRIPS Council and the public. They must notify the TRIPS Council of the granting of a compulsory license as well as the scope of production foreseen and the target market. This information, as well as differential product labeling information, must be made publicly available on the internet.
Article 31(h) requires that patentees be paid adequate remuneration for goods produced and sold under a compulsory license, taking into account the economic value of the products to the importing member. In other words, something akin to a reasonable royalty will be calculated based on sales of the drug in the importing, and presumably less developed, member. It is safe to assume that remuneration will be substantially less than if it were to be calculated based on the patented drug’s price as sold in the exporting member’s market or in other markets where the patented drug is sold under terms set by the patentee.
When a given pharmaceutical product is patented in both the importing and exporting countries, a compulsory licenses must be issued in each. As such, the Paragraph 6 problem was ambiguous with respect to the country from whom the patentee could demand adequate remuneration. The new system waives the importing members’ obligations to pay the patentee in lieu of the exporting members’ duty to pay based on a reasonable royalty, calculated based on sales
of the drug in the importing country.
What About Article 30-Based Compulsory Licensing?
One of the most striking results of the General Council’s decision is the lack of attention paid to the proponents of an Article 30-based solution of the Paragraph 6 problem and the affirmation of Article 31 as the only legitimate mechanism for compulsory licensing.
It was suggested that the Paragraph 6 problem was merely a symptom of the underlying fact that Article 31 as a whole lacked the flexibility to adequately address public health needs. Using the Paragraph 6 problem as a pretext, those critical of the global intellectual property regime argued for a mechanism by which governments could grant sweeping industry-wide compulsory licenses.
Proponents of an Article 30-based solution see it as a more efficient vehicle for compulsory licensing because it does not contain the strict requirements and limitations of Article 31. Under TRIPS, Article 30-based exceptions to patent rights must be limited, not unreasonably conflict with the normal exploitation of the patent, and not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties. However, Article 30 was drafted to constitute an exception to infringement in a manner similar to the fair-use of copyrighted material. Moreover, TRIPS explicitly indicates that Article 30 exceptions are for situations mutually exclusive from those requiring a compulsory license under Article 31, e.g., academic research. Therefore, with respect to statutory construction alone, the use of Article 30 as an alternate compulsory licensing mechanism appears to be legally tenuous.
Article 30 was interpreted with respect to pharmaceutical compulsory licensing
in a recent non-binding opinion wherein the Dispute Settlement Body of the WTO very narrowly construed the applicability of Article 30. As a result, the Panel Report did not find Article 30 to be an additional mechanism for the granting of compulsory licenses on public health grounds.
The system as adopted by the General Council, affirms the primacy of Article 31 as the sole mechanism for compulsory patent licensing. By providing a system to specifically address compulsory licensing of politically sensitive pharmaceutical products in the context of Article 31, the decision attenuates the need for further debate as to whether Article 30 constitutes an alternate mechanism for the granting of compulsory licenses on public health grounds.
PRACTICE NOTE: The General Council has adopted a pragmatic system to address the needs of countries lacking pharmaceutical manufacturing base to efficiently import needed medications. Whether the system can be translated into practice in a way that provides adequate protection to patentees against parallel importation remains to be seen. Moreover, it is still not clear which drugs will fall under the system’s definition of "pharmaceutical products," and which drugs are found to treat conditions not deemed urgent enough to be considered a "public health problem."
The compulsory licensing solutions advocated by the developing countries and those critical of the global intellectual property regime would have led to the over issuance of licenses and provided patentees with little or no legal security, thus, drastically devaluing their intellectual property. However, the consensus reflected in the decision should put to rest any concerns that a sweeping Article 30-based mechanism will supplant Article 31 for compulsory licensing.
User Intent Required to Infringe Claim Reciting Administering a Nutraceutical to a "Human is in Need Thereof"
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The U.S. Court of Appeals for the Federal Circuit upheld the construction of a claim to a method of treating a specific disease by administrating an over-the-counter formulation to a "human in need of thereof" to require that those consuming the claimed formulation do so specifically intending to treat the claimed disease. Christian J. Jansen, JR., v. Rexall Sundown, Inc., Case No. 03-1069 (Fed. Cir. September 8, 2003).
The asserted claims relate to a method of treating macrocytic megaloblastic (i.e., pernicious anemia). This condition is caused by either vitamin B12 or folic acid deficiency. Jansen tried but failed to obtain claims to a method of treating any anemia with a formulation of both compounds. After 20 stubborn years of prosecution, spanning seven generations of continuation applications, Jansen finally obtained U.S. Pat. No. 4,945,083 (the `083 patent) by a showing of commercial success for vitamin B12 and folic acid formulations in treating and preventing pernicious anemia. However, in order to obtain allowance, Jansen was forced to restrict his claims to a "method of treating or prevention macrocytic megaloblastic anemia" limited to a "human in need thereof."
Rexall markets a non-prescription supplement having vitamin B12 and folic acid in proportions claimed by the `083 patent. However, Rexall expressly markets the product only for the maintenance of blood homocysteine levels. Jansen sued Rexall for the inducement of and the contributory infringement of the `083 patent.
The district court did not adopt Jansen’s position that all people are "humans in need" of treatment or prevention of macrocytic megaloblastic anemia. It construed the claim phrase, "treating or preventing macrocytic megaloblastic anemia" to require that the human taking the claimed composition do so with the specific intent of treating macrocytic megaloblastic anemia. The court noted that there was no evidence on record that Rexall’s customer had the required state of mind and, as such, granted its motion for summary judgment of non-infringement. Jansen appealed.
The Federal Court affirmed, finding that the lower court did not add any limitation not compelled by the language of the claims themselves. First, the Court held that particular emphasis should be placed on the limitations "treating or preventing macrocytic megaloblastic anemia" and "a human in need thereof" because their addition to the claims made them allowable. Second, because these limitations were simultaneously added, the Court noted that the limitations should be read together and, therefore, the term "thereof" refers only to the treatment of macrocytic megaloblastic anemia. Third, the court construed the term "need" to require a need that is "recognized and appreciated," because "otherwise the added phrases do not carry the meaning that the circumstances of their addition suggest they carry." Any other interpretation would result in the claims covering almost any physical condition and would, therefore, amount to a recapture of subject matter disclaimed during prosecution.
Jansen argued that even under Rexall’s claim construction, their labeling and advertising information were sufficient circumstantial evidence of customer-direct infringement to defeat a motion for summary judgment. The Court disagreed, indicating that the theoretical possibility that customers were using Rexall’s formulation for treating macrocytic megaloblastic anemia is insufficient to create a genuine issue of fact.
Practice Note: This decision should be of particular interest to those holding patents relating to methods of using "nutraceuticals." Patentees should be aware that because such products do not require a prescription from a physician, it is difficult to ascertain and document the intent of the consumer purchases them over-the-counter. As such, enforcement of method of use claims against manufacturers marketing their products for other purposes is likely to be difficult.