IP Update, Volume 6, No. 1

Copyright

Copyright Term Extension Act of 1998 Upheld by U.S. Supreme Court
Contact Paul Devinsky

In a 7-2 decision, the U.S. Supreme Court affirmed the decision of the U.S. Court of Appeals for the District of Colombia upholding the 1998 Copyright Term Extension Act (CTEA). Eldred v. Ashcroft, Case No. 01-618 (Jan. 15, 2003).

The CTEA extended copyright protection for future and existing works by an additional 20 years, preventing these works from entering the public domain until 70 years after the creator’s death. Copyright protection for works owned by corporations was extended by 20 years to a 95-year term. Eldred, the named petitioner, along with several others who primarily deal in goods and services related to previously copyrighted works that passed into the public domain, challenged the CTEA under the “limited times” requirement of the Copyright Clause of the Constitution, Art. I, §8, cl. 8 and the free speech guarantee under the First Amendment.

Justice Ginsberg, writing for the majority, rejected Eldred’s assertions that Congress exceeded its authority under the Copyright Clause by extending copyright protection for existing works in an attempt to create “perpetual copyrights.” Specifically, the Supreme Court held that the “limited time” restriction of the Copyright Clause is not violated since the copyright terms under the CTEA are “still limited, not perpetual, and, therefore, fit within Congress discretion.”

The Supreme Court found that the term extensions reflect a typical type of congressional judgment. The Court explained that “[b]y extending the baseline United States copyright term to life plus 70 years, Congress sought to ensure that American authors would receive the same copyright protection in Europe as their European counterparts,” possibly enticing more U.S. and international authors to produce and distribute their works in the United States. Finding the CTEA “rational,” the Court explained “we are not at liberty to second guess congressional determinations and policy judgments of this order, however debatable or arguably unwise they may be.”

The Supreme Court also found no impediment to extending the term of an existing copyright by another limited term, noting the amendment applied equally to existing and future copyrights: “‘[J]ustice, policy, and equity alike forb[id]’ that
an ‘author who had sold his [work] a week ago, be placed in a worse situation than the author who should sell his work the day after the passing of the [act].’”

The Court also rejected Eldred’s First Amendment challenge that the CTEA is
a content-neutral regulation on free speech and, therefore, subject to strict scrutiny: “In addition to spurring the creation and publication of new expression, copyright law contains built-in First Amendment accommodations.” First, the Court noted, copyright protection is restricted to creative expression, not the ideas themselves. Second, the “fair use” defense even allows the public to use copyrighted expressions under certain circumstances, such as scholarship and comment.

Practice Note: The Supreme Court’s ruling was not surprising as the U.S. Court of Appeals for the District of Columbia had unanimously ruled against Eldred. Nonetheless, the decision is already being hailed as a victory for media and entertainment interests such as AOL Time Warner Inc. and the Walt Disney Co. and a defeat for internet publishers.

Patents/Biotech

Federal Circuit Rules on Enablement and Written Description in Two Biotech Cases
By Paul Devinsky and Krista Vink Venegas

In the first of two recently decided biotech cases where the U.S. Court of Appeals for the Federal Circuit had an opportunity to discuss written description and enablement issues, it upheld a district court’s finding that a written description of a particular embodiment was sufficient to support broad patent claims to a pharmaceutical composition. Amgen v. Hoechst Marion Roussel, Inc., Case No. 01-1191 (Fed. Cir. Jan. 6, 2003).

The Amgen patent related to the production of erythropietin, an endogenous hormone that regulates red blood cell formation. In part, Hoechst argued the patent specification failed to satisfy the written description requirement in support of a claim to a “pharmaceutical composition…of erythropietin…purified from mammalian cells grown in culture” because the patent failed to sufficiently describe “all vertebrate and mammalian cells as engineered in the claimed invention.” The Federal Circuit upheld the district court’s finding of validity stating “…the descriptions adequately described to those of ordinary skill in the art in 1984 [the filing date of the application for the patent] the use of the broad class of available mammalian and vertebrate cells to produce the claimed high levels of human erythropoietin in culture.”

The Federal Circuit distinguished its Eli Lilly (1997) and Enzo Biochem(2002) discussions regarding the written description of claims encompassing genetic material (DNA). In Eli Lilly, claims to a human cDNA sequence of an insulin gene were held invalid where only the insulin gene of a rat cDNA sequence was disclosed. In Enzo Biochem, the Court clarified that the written description requirement may be satisfied where one of skill in the art would have knowledge that a functional description of genetic material is correlated to a particular, known structure. Here, the Court found the claim terms at issue are not directed to “new or unknown biologic materials that ordinarily skilled artisans would easily miscomprehend.” Rather, the claims simply recite “types of cells that can be used to produce recombinant human EPO.” Therefore, according to the majority of the panel, while Hoechst might have been justified in challenging the adequacy of disclosure of the vertebrate or mammalian host cell, the Court found it was not warranted in challenging the adequacy of the disclosure of the DNA itself.

Hoechst also challenged the district court finding that a skilled artisan could have used various cultured vertebrate and mammalian cells to produce EPO. Here, the district court credited Amgen’s witnesses stating “any challenge which one of ordinary skill in 1984 may have encountered in attempting to make and use the claimed invention using other than cultured mammalian cells could be resolved by experimentation falling short of undue.”

The majority found no “clear error” in this finding as a factual determination and affirmed. However, there was a vigorous dissent on this point. Judge Clevenger, citing Federal Circuit precedent, including Eli Lilly, called into question the written description holding “disclosure of a species may not suffice to describe a genus” and citing In re Vaeck,“claims failing to recite a necessary element of the invention fail for lack of an enabling disclosure,” called into question the enablement holding “[a]t the very least, the absence of structural limitations in the patent [claims] raises questions of its enablemen. …”

In the second case, much to the patentee’s chagrin, the Federal Circuit did not apply such deference to the predictability of cell transformations in the plant kingdom. In Plant Genetic Systems, N.V. (now Aventis Crop Science, N.V.) v. DeKalb Genetics Corp., Case No. 02-1011 (Fed. Cir., Jan. 13, 2003), the Federal Circuit affirmed the district court’s holding that the asserted patent claims were invalid for lack of enablement.

Aventis’ claims were drawn to genetically engineered, herbicide-resistant plant cells, which Aventis contended applied broadly to dicot and monocot plants. The Federal Circuit concluded that the full scope of the invention as claimed by Aventis was not enabled. While the specification disclosed transformation of dicots, the Court found that DeKalb proved by clear and convincing evidence that “practicing stable gene transformation for monocot cells [at the time of patent filing] in 1987 required undue experimentation.” Based on In re Hogan (1977) (enablement is determined as of the effective filing date of the patent) the Court held that if “an inventor [claims] what was specifically desired but difficult to obtain at the time the application was filed,” the claims are enabled only “[if] the patent discloses how to make and use it.” While transformed monocots were desired, as of the filing date “stable transformed monocot cells were difficult to produce and the … patent gave no instruction how.” Further, the Court found that the district court properly used a post-filing date report, indicating the first transformation of corn cells, to support its holding.

The Court also rejected Aventis’ argument that the district court erred in not making any finding regarding the pioneering nature of the invention. The Court explained that “pioneer inventions” are not deserving of a lower standard of enablement and that any statement in Hogan to the contrary was dicta.

Patents/Obiousness

Claimed Range Encompassed by Prior Art Is Prima Facie Obvious
By Bernard P. Codd

The U.S. Court of Appeals for the Federal Circuit held that a prior art reference that discloses a brand range, which encompasses narrower claimed range, is sufficient to establish prima facie obviousness. In re Peterson, Case No. 02-1129 (Fed. Cir. Jan. 8, 2003).

Peterson’s application included the claims directed to a nickel-base alloy. The claims required about 1 to 3 percent rhenium, about 14 percent chromium and other specified ranges of specific elements. The U.S. Patent and Trademark Office (PTO) Board of Patent Appeals and Interferences affirmed the examiner’s rejection of the claims as obvious in view of a prior art reference that disclosed a similar alloy but taught broader ranges. Specifically, the ranges taught in the prior art reference were rhenium (as an optional ingredient) in the range of 0 to
7 percent, chromium 3 to 18 percent. The prior art also disclosed a preferred alloy containing no rhenium. Peterson appealed.

On appeal, Peterson argued that the prior art taught broad ranges and that the Board failed to appreciate the criticality of and the unexpected results achieved by the combination of 1 to 3 percent rhenium with, among other elements, about 14 percent chromium.

The Federal Circuit, affirming the Board’s decision, made a direct comparison of each component of Peterson’s claim and the prior art disclosure, showing that each claimed range lay within a corresponding range disclosed in the prior art. The Court, noting its consistent line of decisions holding that in cases involving overlapping ranges even a slight overlap establishes a prima facie case of obviousness, affirmed. The Court reasoned “[s]electing a narrow range from within a somewhat broader range disclosed in a prior art reference is no less obvious than identifying a range that simply overlaps a disclosed range. In fact, when, as here, the claimed ranges are completely encompassed by the prior art, the conclusion is even more compelling than in cases of mere overlap.”

The Court also addressed the issue of motivation to select the claimed ranges by noting that “[t]he normal desire of scientists or artisans to improve upon what is already generally known provides the motivation to determine where in a disclosed set of percentage ranges is the optimum combination of percentages.”

The Court also affirmed the Board’s finding that Peterson’s evidence of unexpected results was not commensurate in scope with the claimed range of rhenium content.

Patents/Litigation

Standing Must Be There from the Get Go or Plaintiff Has No Leg to Stand On
By Cynthia A. Lock

The U.S. Court of Appeals for the Federal Circuit refused to recognize standing to bring a lawsuit based solely on a state corporate revival statute that purported to confer standing retroactively where it did not exist at the time that the complaint for patent infringement was filed. Paradise Creations, Inc. v. UV Sales, Inc., Case No. 02-1283, 2003 U.S. App. LEXIS 44. (Fed. Cir. Jan. 3, 2003).

Paradise Creations, Inc. was incorporated under Florida law on March 13, 1985. On August 23, 1996, Paradise Creations was administratively dissolved. It remained administratively dissolved until June 29, 2001. During the period of dissolution, Paradise purportedly obtained “the exclusive, unlimited, irrevocable, worldwide right and license” to U.S. Pat. No. 4,681,471 (the `471 patent) and filed a complaint for patent infringement against UV Sales, Inc.

UV filed a summary judgment motion, arguing that Paradise did not have capacity to sue under Florida law or standing to invoke the court’s jurisdiction. After obtaining reinstatement as a corporation, Paradise filed its opposition, arguing that under Florida law, when an administratively dissolved corporation is reinstated, the reinstatement relates back to the date of dissolution and the corporation resumes its business as if the dissolution never occurred.

The district court rejected Paradise’s argument, finding that standing must exist at the time the action is brought and the Florida law cannot retroactively create jurisdiction that was lacking at the time the action was filed. Paradise appealed. The Federal Circuit affirmed, applying the rule in Enzo APA & Son, Inc. v. Geapag A.G., for example, that a contract could not retroactively confer standing on an exclusive licensee who did not have all substantial rights to the patent at the time that it brought suit. In applying Enzo to the facts of this case, the Federal Circuit “saw no meaningful distinction between a contract provision that purports to vest title retroactively, in the plaintiff and a state law that is alleged to vest enforceable title retroactively.”

The Federal Circuit distinguished the facts in Paradise from its holding in Mentor H/S, Inc. v. Med. Device Alliance, Inc., where it had held that a defect standing was curable where an exclusive licensee with less than all substantial rights in the patent (i.e., no right to sue at the time the lawsuit was brought) filed a motion to join the patentee as a plaintiff, reasoning that as an exclusive licensee, Mentor had a cognizable injury at the time of the inception of the suit. In contrast, Paradise held no enforceable rights whatsoever in the patent at the time
it filed suit and, therefore, lacked the cognizable injury necessary to assert standing under Article III.

Patents/Germany

German Federal Supreme Court: Patent Protection for Computer Programs and Their Storage Media
By Boris Uphoff

In a long expected decision, the German Federal Supreme Court ruled patent claims regarding a storage medium (such as a diskette) with a computer program stored thereon are allowable as long as the program itself is patentable. With its decision, the Federal Supreme Court overruled a previous decision by the German Federal Patent Court, which had rejected the patent application for the storage medium. Decision of the German Federal Supreme Court, Case No. X ZB 16/00 (BPatG).

The case related to a patent application for a computer system for computer-aided spell checking in word processing software. The German Patent and Trademark Office had allowed the patent claim for the computer system as such but refused to grant the patent for the storage medium where the computer program was stored on. The German Federal Patent Court had confirmed this decision on the grounds that claims for a storage medium did not comprise the essential means for a technical solution and were exempted from patent protection pursuant to Section 1(2)(iii) of the German Patent Act. In accordance to Section 52(2)(c) of the European Patent Convention, this provision of the German Patent Act excludes computer programs as such from patent protection.

In its decision, the German Federal Supreme Court held that the patent court’s interpretation of the exclusion for computer programs had been too narrow. Despite the exemption relating to computer programs, the Federal Supreme Court found that claims directed to computer programs are patentable if the claimed invention contributes to the solution of a specific technical problem. The Federal Supreme Court also offered an answer to the obvious question “when does a computer program contribute to the solution of a specific technical problem?” The court explained that a program may be patentable if it is involved in a technical process, for example, in measuring the results or monitoring the operation of some technical device. Claims may also be patentable if they related to data processing equipment that checks and compares data and, thus, operates as an intermediate step within the framework of manufacturing technical objects, provided that such a solution is based on technical considerations and the realisation or implementation of the solution. The same standard applies if the subject matter relates to the functioning of data processing equipment and enables immediate interaction of the elements of the data processing equipment.

Having outlined the prerequisites for patent protection for computer programs, the German Federal Supreme Court concluded that the applicant’s claim for a storage medium was also patentable subject matter, reasoning that if the program stored thereon was patentable, a patent claim relating to the storage medium as a physical object is nothing more than a special embodiment of the inventive idea as already claimed in the process claim relating to the computer program.

Practice Note: The German Federal Supreme Court’s decision is a fundamental ruling for companies involved in software development. It outlines the prerequisites under which computer programs can be subject to patent protection, despite the exemption for computer programs pursuant to the German Patent Act. Secondly, it reminds software developers to include in their patent application a claim for the storage medium. Covering the storage medium will make it easier for the patentee to claim infringement when diskettes or other media with the program are distributed.

Patents/Reexamination

Only Prior Art from a Completed Proceeding Is Prohibited from Being Relied Upon in Subsequent Reexams
please contact Paul Devinsky

The U.S. Court of Appeals for the Federal Circuit, in affirming a rejection by the U.S. Patent and Trademark Office (PTO) Board of Appeals and Interferences, clarified that for any reexamination proceeding declared prior to enactment of the amended reexamination statute (November 2, 2002), only prior art from a prior completed reexamination proceeding is prohibited from being relied upon to establish a “substantial new question of patentability” in the subsequent reexamination proceeding. In re Bass, Case No. 02-1046 (Fed. Cir. Dec. 17, 2002).

A third party requested reexamination of U.S. Pat. No. 4,473,026 owned by Bass (the `026 patent). During the reexamination, the examiner found the patent to be allowable over the cited prior art. Before the PTO issued a reexamination certificate, the third party submitted a second reexamination request citing the same prior art. The PTO granted the second request and subsequently rejected the claims, using the twice-cited prior art. The Board affirmed the examiner’s rejection and Bass appealed.

Relying on In re Portola Packaging and MPEP §2242(A)(2), Bass argued that the PTO could not consider the prior art references considered in the first reexamination either in granting the second reexamination request or in determining the validity of the claims. In Portola Packaging, the Federal Court determined that prior art from a prior proceeding could not be relied on to raise the statutorily required “substantial new question of patentability” in a later reexamination. The Federal Circuit explained, however, that until a reexamination proceeding has been completed, the PTO may reconsider an earlier action and a proceeding is only complete upon the issuance of the statutorily mandated reexamination certificate. The Federal Circuit held that because the prior art had not been considered in a prior completedreexamination proceeding, Portola Packaging did not apply and the PTO was free to reconsider the same prior art.

Practice Note: The decision in Bass comes on the heels of amendments to the reexamination statute, 35 U.S.C. §§303(a) and 312(a), which effectively overrule In re Portola Packaging for any reexamination declared after November 2, 2002, by codifying that “a substantial new question of patentability is not precluded by the fact that a patent or printed publication was previously cited by or to the Office or considered by the Office.” Thus, the holding in Bass only applies to reexaminations that were declared prior to November 2, 2002.

Trademarks

Fame and Actual Confusion Are Not Prerequisites to Proving a Likelihood of Confusion Under the Lanham Act
By John J. Dabney

The U.S. Court of Appeals for the Federal Circuit has now held that fame and actual confusion are not necessary in order for a trademark examiner to refuse registration of a mark on the ground that it is confusingly similar to a previously registered mark. In re Majestic Distilling Co., Inc., 2003 U.S. App. LEXIS 5 (Fed. Cir. Jan. 2, 2003).

An applicant applied for the mark RED BULL for tequila. The U.S. Trademark Trial and Appeal Board (TTAB) affirmed the trademark examiner’s refusal to register based on prior registrations, all owned by a third party (Stroh’s) for RED BULL for malt liquor.

The Federal Circuit held that tequila (a distilled spirit) and malt liquor (a brewed product) are related goods for trademark purposes because they are both alcoholic beverages that are marketed in many of the same channels of trade to many of the same consumers, and many consumers are not even aware of the different ways each is made.

The Court also rejected the applicant’s contention that there was no likelihood of confusion because the mark RED BULL for malt liquor was not famous. “Although we have previously held that the fame of a registered mark is relevant to likelihood of confusion, we decline to establish the converse rule that likelihood of confusion is precluded by a registered mark’s not being famous.” Further, the Court discounted the fact that there was no evidence of actual confusion. “A showing of actual confusion would of course be highly probative, if not conclusive, of a high likelihood of confusion. The opposite is not true, however. The lack of evidence of actual confusion carries little weight, especially in an ex parte context.”