2012 patent update for medical device companies

Paul Conover

Curtis Huffmire

Karen Vogel Weil

2012 Patent Update

for Medical Device Companies

The recipient may only view this work. No other right or license is granted.

Review of Recent Changes to Patent Law

• Leahy-Smith American Invents Act – Sept. 2011

• Three phrases of implementation

• Significantly affects how patents are obtained and how patents can be challenged:

– Patent Prosecution Changes

– First Inventor to File

– Third-Party Submissions

– Post-Grant Proceedings

• Post-Grant and Inter Partes Review

• Derivation Proceedings

– Supplemental Examination

September 2011 Prosecution-Focused Provisions

• Prioritized examination

– $4800 fee for request (half for small entity)

– Any new, non-national phase application

– < 10,000 apps/year

• Patentable subject matter

– No tax strategies

– No human organisms

• Marking

– False marking claims more difficult

– Website marking

First Inventor To File

First Inventor to File

• “A person shall be entitled to a patent unless the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention”

• Limited 1 year grace period for “disclosure” by inventor and disclosure by others after a “public disclosure” by the inventor

• Applies to any claim with an “effective date” after March 16, 2013

• But do not forget foreign rights!

First Inventor to File – March 16, 2013

• Should our company change its patent filing practices?

– File more/faster provisional apps?

– How to remain cost effective and minimize distraction?

• Should we rush to file applications before March 16?

– Any particular circumstances in which we should beat the deadline?

• How will continuation and continuation-in-part applications be treated?

Take Home Points

• File before March 16, 2013 if possible

• File more often and more quickly after March 16, 2013

– File before public disclosure/sale

– File many provisional applications

• Implement internal infrastructure to promote disclosures

• Don’t throw away lab notebooks

Third Party Submissions

Third Party Submissions in Pending Applications

• Can submit printed publications: patents, published patent applications, articles, etc.

• Can submit anonymously

• Must be accompanied by concise description of asserted relevance of each submitted document

• Must be filed prior to the earlier of:

– (1) a notice of allowance; or

– (2) the later of:

(a) 6 months after the date of first publication; or

(b) the date the first rejection of any claim

Third Party Submissions, Questions

• Should I use this process to challenge competitor patent applications?

– Should I use the third-party submission process or wait until my competitor’s patent issues and challenge it via post-grant review or in litigation?

• What is the downside risk?

• How should I decide which of my competitors’ applications to challenge?

Take Home Points

• Inexpensive way to potentially narrow a competitor’s claims ($180 fee for up to 10 prior art references)

• No estoppel (but presumption of validity)

• Risk = patent examiner considers submitted prior art and allows broad claims anyway

• Discuss with your patent attorney the pros and cons of holding back “best” prior art for potential post-grant challenges

Post-Grant and Inter Partes Review

Changes to Post-Issuance Disputes

Before AIA

• Inter Partes Reexam

• Ex Parte Reexam

• Interferences

After AIA

• Post-Grant Review

• Inter Partes Review

• Derivation Proceedings

• Ex Parte Reexam

• Interferences (Legacy)

• Transitional Program for Covered Business Method Patents

Summary of Post Issuance Review

Post-Grant Review Inter Partes Review

Basis Any basis used in litigation Only patents and printed publications

When Within 9 months of grant

+ before civil action filed

After 9 months from grant or end of Post Grant review or within 12 month of civil action

Targets Priority on/after 3/16/2013 Any

Effective 3/16/2013 9/16/2012

Discovery Yes Yes – including depositions

Bar Yes Yes

Estoppel Yes Yes

Advantages of Inter Partes Review vs. Litigation

• Lower Burden of Proof (preponderance of the evidence)

• Lower Cost (FRCP do not apply)

– Limited discovery

– Professionalism strictly enforced

– Fewer “ancillary” battles (venue, jurisdiction, discovery, etc.)

• Quicker (1-2 years)

• Better informed decision maker (both technical & legal)

Advantages of Litigation vs. Inter Partes Review

• Infringement can be adjudicated

• Full scope of claims and defenses

• Full discovery opportunities

• Estoppel effect of USPTO Inter Partes proceedings

• More expensive to opponent

• Jury presents potentially more risk to opponent

Derivation Proceedings

• Address “stolen” inventions

– Eventually will replace interferences

• Requires petition to explain facts surrounding “theft”

• Two options

– Civil action b/w 2 patents

• Filed w/in 1 year of issuance of derived patent

– Derivation proceeding at PTO b/w 2 pending apps

• Filed w/in 1 year of publication of the derived application

• Remedy

– Cancelation of claims

– Inventor name corrections

Take Home Points

• Invention documentation is still important (lab notebooks, etc.)

• Important to monitor IP of competitors and potential competitors

• Keep good records of what you disclose to

collaborators

Supplemental Exam

Benefit and Exceptions

• Patent cannot be held unenforceable on information considered

• Benefit does not apply to:

– Allegations pled in a civil action prior to date of supplemental examination request

– Notice (for abbreviated drug application) received by patentee prior to date of supplemental examination request

– Defenses to patent infringement, unless supplemental examination and any resulting ex parte reexamination are completed before civil action is brought

Costs – Proposed Sept. 10, 2012

• PTO Filing Fees

• Refund if ex parte reexamination not ordered

Large Small Micro

$18,000 $9,000 $4,500

Large Small Micro

$13,600 $6,800 $3,400

Infringement Defenses

Defenses to Infringement

• Expanded prior commercial use defense

– One year before earlier of (1) effective filing date of asserted patent or (2) public disclosure

– In the United States

– Process, machine, manufacture, composition of matter used in manufacturing/commercial process

• Advice of counsel – codifies Knorr-Bremse

– Failure to obtain irrelevant to willfulness/inducement

– No adverse inference to be drawn

Formalities

• Changes to requirements for declarations, assignments, other filing documents

• Uncooperative/unavailable inventors not as much work

Significant Cases Impacting Medical Devices

Induced Infringement: Medical Method Patents

Akamai v. Limelight McKesson v. Epic

AKAMAI V. LIMELIGHT & MCKESSON V. EPIC

How many people does it take to infringe a method patent?

Technology

McKesson Patent:

Method of electronic communication

between healthcare providers

and their patients

MyChart software licensed to

healthcare providers for use with patients

Multistep Method Claims

Method Claims:

Multiple steps where the steps were performed by different entities

Types of Entities:

A: Healthcare Providers

B: Patients

EXAMPLE

Method Claim

Entity A Entity B

Step 1

Step 2

Step 3

Direct Infringement

One Infringer performs ALL of the steps

Agency relationship between the entities

Example:

NO direct infringement by Entity A

NO direct infringement by Entity B

EXAMPLE

Method Claim

Entity A Entity B

Step 1

Step 2

Step 3

Induced Infringement

Knowledge of the patent

Induced the performance of the steps

All steps must be performed (but not necessarily by a single entity)

Example:

Infringement by Entity A if it induced Entity B to perform Step 2

EXAMPLE

Method Claim

Entity A Entity B

Step 1

Step 2

Step 3

• A party can show induced infringement where

both the inducer and the induced party each

perform some of the steps of a method claim.

• It is enough that the inducer causes, urges,

encourages, or aids the infringing conduct and

that the induced conduct is carried out.

NEW Law on Divided Infringement

Take Home Points

• Consider all possible infringers

– Draft different sets of patent claims

– Focus on both direct and induced infringement

– Consider single party and multi-party claims

• Consider your own potential infringement liability

– Instructions for Use

– Training methods

Claim Construction

Retractable Technologies v. Becton, Dickinson

RETRACTABLE TECHNOLOGIES V. BECTON,

DICKINSON

Unrest at the Federal Circuit as to how patent claims should be construed

Claim Term In Dispute

• Retractable Syringe Assembly Designed For One Use

“a hollow syringe body comprising a barrel and having a front end portion and a back end portion, the back end portion further comprising at least one radially extending member providing finger grips for the syringe body;”

District Court Construction of “Body”

• “a hollow outer structure that houses the syringe components”

• not limited to a one-piece body

District Court

• Patents infringed

• Patents not invalid

Federal Circuit Reverses – No Infringement

• “Body” is limited to one-piece structure

– None of claims expressly recite body that contains multiple pieces

– Specification characterizes “invention” as one-piece body

– Each figure shows one-piece body

– Specification doesn’t disclose body consisting of multiple pieces

– Claim differentiation not controlling

Federal Circuit’s “Rule” of Claim Construction

“In reviewing the intrinsic record to construe the claims, we strive to capture the scope of the actual invention, rather than strictly limit the scope of claims to disclosed embodiments or allow the claim language to become divorced from what the specification conveys is the invention . . .

[A] construction of “body” that limits the term to a one-piece body is required to tether the claims to what the specifications indicate the inventor actually invented.”

Lack of Consensus At Federal Circuit Role of Specification in Construing Claims

“Claim construction is the single most important event in the course of a patent litigation. It defines the scope of the property right being enforced and is often the difference between infringement and non-infringement, or validity and invalidity. Despite the crucial role that claim construction plays in patent litigation, our rules are still ill-defined and inconsistently applied, even by us. Commentators have observed that claim construction appeals are “panel dependent” which leads to frustrating and unpredictable results for both the litigants and the trial court . . . Nowhere is the conflict more apparent then in our jurisprudence on the use of the specification in the interpretation of claim language.”

Moore, Rader Dissent from denial of rehearing en banc

Lack of Consensus At Federal Circuit

• Claim language to be given ordinary and customary meaning

• “Body” doesn’t have special meaning

• Ordinary meaning not limited to one piece

• Dependent claims claim one-piece body

• References in specification to one-piece body “do not rise to the level of an expression of manifest exclusion or an express disclaimer of claim scope.”

Rader Dissent

“Body” Should Not Be Limited To One Piece

• Specification may shed light on plain and ordinary meaning

• But specification can’t narrow claim term from ordinary meaning unless inventor acted as his own lexicographer or intentionally disclaimed or disavowed claim scope

• Here, inventor did not act as lexicographer or disclaim or disavow claim scope

• Court cannot rewrite claims to better conform to what it discerns is “invention”, not even to save their validity

Moore, Rader Dissent from denial of rehearing en banc.

Role of Specification in Construing Claims

“It is time we stop talking about whether we should reconsider the standard of review we employ when reviewing claim construction decisions from district courts; it is time we do so.”

O’Malley Dissent from denial of rehearing en banc. Similar views expressed by Moore, Rader

Whether Deference Should Be Given to District Court

Disputed Inventorship & Willful Infringement

Bard Peripheral Vascular v. Gore

BARD PERIPHERAL VASCULAR V. GORE

Makers of Gore-Tex® Arterial prosthesis

Who is the inventor? What constitutes willfulness?

The Technology

• Expanded PTFE as a Vascular Graft

The Case that Never Dies

1974 – (April) Gore Patent Application Filed

1974 – (October) Bard Patent Application Filed

1983 – PTO Declares Interference

2001 – CAFC Affirms BPAI Award of Priority to Bard

2002 – Bard Patent Issues (28 years after filing)

2003 – Bard Sues Gore for Infringement

2007 – Jury Finds Patent Valid and Infringed

2009 – Judge Enhances Damages

2012 – CAFC Affirms Validity and Remands Willfulness

Huge Damages

• Bard asserted patent against Gore

• Jury found patent valid and infringed • $102M in lost profits

• $84M in reasonable royalties

• $19M in costs and attorney fees

• D. Arizona denied Gore’s post-verdict JMOL on

joint inventorship

D. Ariz. doubled to

(willfulness + bad faith)

Joint Inventorship: Four factors

1. Inventors must have some open line of communication during or in temporal proximity to their inventive efforts; and

2. Contribute in some significant manner to the conception or reduction to practice

3. Make a contribution to the claimed invention that is not insignificant in quality, when that contribution is measured against the dimension of the full invention, and

4. Do more than merely explain to the real inventors well-known concepts and/or the current state of the art.

Insufficient communication

“Although Gore argues that [Gore] “conveyed [the

internodal distance] physically by making and sending

the invention embodiment to [Bard],” it admits that

“[Gore] did not verbally convey the internodal distance.”

“[Gore] conceived of the invention only after sending the

tubes to [Bard] and never communicated that conception

to [Bard].”

Practice Tips: Provider and tester

• Carefully worded agreements between provider of materials and tester of materials

– Establish who does what

– NDA

– Assignment

• For joint inventorship, communication is a two-way street

– Tester sends status reports to provider

– Consider if provider should continue to interact w/ tester, but risk losing sole inventorship

Take Home Points

• Carefully worded agreements in joint development

– Establish who does what

– NDA

– Assignment

• Level of communication

– Working alone v. Collaboration

Reconsideration of Willful Infringement

• Gore Petitioned for Rehearing En Banc

• Google, Verizon, Intel Filed Amicus Brief

• Seagate’s Objective Prong Should Be Question of

February 2012 Panel Decision: “Determining whether

or not infringement is willful is a question of fact that

must be established by clear and convincing evidence

and is reviewed for substantial evidence.”

SEAGATE Test

• Clear and convincing evidence infringer acted despite an objectively high likelihood of infringing a valid patent

– Question of Law – Remand!

• Objective risk was known or so obvious it would have been known

– Question of Fact

Willfulness Standard

• Inquiry: Whether a reasonable person would have considered there to be a high likelihood of infringement of a valid patent

• Objective Prong of Seagate is a Question of Law

– Subject to De Novo Review

– Judge is Final Arbiter of Whether Defense is Reasonable

• Factual Issues Can Be Sent to Jury

Employee Agreements & Invention Assignment

Abbott Point of Care v. Epocal

ABBOTT POINT OF CARE v. EPOCAL

Do your employment agreements effectively vest patent ownership in the company?

Abbott Claims Ownership Based On

Employment Agreements

Holding

• Abbott doesn’t own the patents

• Can’t sue

• Case Dismissed

1984 Agreement Assigned Inventions To

Abbott’s Predecessor

1999 Consulting Agreement Did Not

Continue Assignment Provisions

• Lauks resigns, terminating employment

• Employment agreements ended

• 1999 Agreement

– Defines consulting services

– Only carried forward confidentiality, non-solicitation and non-competition provisions

– Does not address invention assignments or obligations from employment agreements

– Does not contain obligation to assign inventions made during consultation period

• Automatic assignment would be inconsistent with allowing Lauks to pursue non-conflicting interests

Lesson Learned

• If you want your current or former inventors to assign their inventions, make automatic assignment explicit

Medical Diagnostics - Eligible for Patents?

Mayo v. Prometheus

MAYO V. PROMETHEUS

Is a medical diagnostic method patentable?

Patentable Subject Matter

• §101: “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor…”

• Congress intended statutory subject matter to “include anything under the sun that is made by man.”

– Diamond v. Chakrabarty, 447 U.S. 303 (1980)

Exceptions to §101

• Judge made exceptions to patentable subject matter

– Natural Products

– Natural Laws / Natural Phenomena

– Abstract Ideas / Mental Processes

Prometheus Representative Claim

1. A method, comprising:

(a) administering a drug X; and

(b) determining the level of metabolite Y,

wherein the level of metabolite Y less than about 230 units indicates a need to increase the amount of said drug subsequently administered to said subject and

wherein the level of metabolite Y greater than about 400 units indicates a need to decrease the amount of said drug subsequently administered.

Prometheus Opinion

• The administering and detecting steps aren’t sufficient

– Routine and conventional

– “[T]he steps are not sufficient to transform unpatentable natural correlations into patentable applications of those regularities.”

Exceptions for Specific Applications

• Specific applications of natural laws are patentable, however:

– The “application” must amount to an “inventive concept” in addition to the natural law

Take Home Points

• Consider Claim Strategies:

– Less focus on the natural law

– Multiple perspectives: Doctor, patient, hospital, lab

– Cover devices, systems, and methods

– Multiple levels of specificity in dependent claims

• Consider Subject Matter Eligibility:

– Invalidity defenses if only directed to natural law

Deciding Obviousness

Kinetic Concepts v. Smith & Nephew

KINETIC CONCEPTS V. SMITH & NEPHEW

What is the role of the jury in determining obviousness?

Parties

Plaintiffs

• Wake Forest – Patent Assignee

• Kinetic Concepts – Exclusive Licensee

Defendant

• Smith & Nephew – Accused Infringer

Technology

Negative Pressure Wound Treatment

Method and Apparatus Claims

Legal Standard - Obviousness

Question of law based on underlying findings of fact.

Legal Standard - Obviousness

Underlying factual determinations (Graham factors)

1. The scope and content of the prior art

2. Differences between the prior art and the claims at issue

3. The level of ordinary skill in the pertinent art

4. Evidence of secondary considerations

Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 15-17 (1966)

Stipulated Jury Verdict Form

1) A series of questions as to whether certain enumerated differences between the prior art and the asserted claims were the only differences that existed

2) Whether certain objective indicia of nonobviousness were present

3) Whether the claims were obvious

Jury Verdict on Obviousness

• Factual Questions: Graham factor findings generally favoring Plaintiffs

• Advisory Verdict: Not invalid

S&N: JMOL of Obviousness

Smith & Nephew:

Jury verdict only “advisory” (i.e. non-binding). No deference to “implicit” jury findings.

Substantial evidence did not support express findings

Plaintiffs:

Cannot upset the jury’s verdict unless the jury’s explicit and implicit findings are not supported by substantial evidence

S&N: JMOL of Obviousness

District Court

• Review underlying factual findings for substantial evidence

• Review jury’s ultimate conclusion without deference

• JMOL Granted: patents invalid

– “the differences between the claimed invention and the prior art, if any, are minimal”

• Wake Forest appealed.

Federal Circuit

• Because district court included ultimate question of obviousness on verdict form, all underlying factual questions were implicitly put to jury for resolution

• District court required to accept all implicit factual findings supporting verdict that were supported by substantial evidence

Federal Circuit - Legal Standard

• “Because obviousness is a mixed question of law

and fact, we first presume that the jury resolved the underlying factual disputes in favor of the verdict and leave those presumed findings undisturbed if they are supported by substantial evidence. Then we examine the ultimate legal conclusion of obviousness de novo to see whether it is correct in light of the presumed jury fact findings.”

Federal Circuit – Obviousness Analysis

Substantial evidence supports jury’s implied findings that:

– None of prior art disclosed treatment of wounds using negative pressure, as claimed

– Prior art teaches away from claimed invention

– There was no reason to combine prior art references

– Numerous objective indicia of nonobviousness existed

Thank you!

Paul Conover

Orange County Office

Paul.Conover@knobbe.com

Curtis Huffmire

Orange County Office

Curtis.Huffmire@knobbe.com

Karen Vogel Weil

Los Angeles Office

Karen.Weil@knobbe.com

2012 patent update for medical device companies

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