Finnegan, Henderson, Farabow, Garrett & Dunner, LLP

Case Law Update - 2016 in the U.S.

A th T idi Ph DAnthony Tridico, Ph.D.

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Agenda

• 2016 Year-to-date U.S. Supreme Court patent cases

• 2016 Year-to-date U.S. Court of Appeals for the Federal Circuit highlights

• Interesting decisions and news from the USPTO Patent Trial and Appeal Board

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U.S. Supreme Court Patent Cases

• Halo Elecs., Inc. v. Pulse Elecs., Inc.and Stryker Corp. v. Zimmer, Inc. –and Stryker Corp. v. Zimmer, Inc.linked cases regarding enhanced damages for willful infringement

• Cuozzo Speed Techs., LLC v. Lee –claim construction standards in IPRproceedings and judicial reviewability of IPR institutions

• Medtronic v. NuVasive – direct request for a grant/vacate/remand

d di i d t torder regarding inducement; sets up important Federal Circuit remand

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The Enhanced Damages Cases (June 13, 2016)

• Stryker, a medical device manufacturer, andStryker, a medical device manufacturer, and Halo, circuit board transformer manufacturer, were denied enhanced damages by the Federal Circuit after winning patent infringementCircuit after winning patent infringement lawsuits against competitors

• 35 U S C § 284 recites that after finding for the• 35 U.S.C. § 284 recites that after finding for the patentee, the courts “may increase the damages up to three times the amount found or

d ”assessed.”

• The Federal Circuit had applied its two-part Seagate test, which held that enhanced damages were only available if a patentee could prove willful infringement under a “clear p gand convincing standard”

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The Enhanced Damages Cases

• In a 8-0 unanimous decision, Chief Justice John Roberts wrote for the majority reversing the Federal Circuitfor the majority reversing the Federal Circuit

Statutory construction contains “no explicit limit or condition on• Statutory construction contains “no explicit limit or condition on when enhanced damages are appropriate”

• The Seagate test is “unduly rigid, and ... impermissibly encumbers the statutory grant of discretion to district courts” andencumbers the statutory grant of discretion to district courts and inconsistent with § 284

• Courts should exercise discretion in light of the totality of circumstances, and award enhanced damages as a sanction for egregious infringement behavior, rather than requiring an objective recklessness finding in every case

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Cuozzo Speed Techs., LLC v. Lee (June 20, 2016)

• In a 8-0 unanimous decision with respect to Parts I and III, Justice Stephen Breyer o a s a d , Jus ce S ep e eyewrote for the majority affirming the Federal Circuit. J. Breyer also wrote for the majority with respect to Part II, in a 6-2 decision.

• 35 U.S.C. § 316(a)(4): “The Director shall prescribe regulations establishing andprescribe regulations…establishing and governing inter partes review under this chapter and the relationship of such review p pto other proceedings under this title.”

• Where there is ambiguity in the statute, the Patent Office is to issue governing rules.

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Cuozzo v. Lee

• The Court honored the rule-making authority granted to the PTO and upheld the “broadest reasonable interpretation (BRI)” standardand upheld the broadest reasonable interpretation (BRI) standard in claim construction during an IPR

• The Court rejected the argument that the Philips standard used inThe Court rejected the argument that the Philips standard used in district courts should be implemented at the PTO, stating that the purpose of an IPR is much broader than merely resolving disputes– “Construing a patent claim according to its broadest reasonable

construction helps to protect the public…This helps ensure precision while avoiding overly broad claims and thereby helpsprecision while avoiding overly broad claims, and thereby helps prevent a patent from tying up too much knowledge, while helping members of the public draw useful information from the p g pdisclosed invention and better understand the lawful limits of the claim.”

• The Court also affirmed that IPR institution decisions cannot be appealed

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Medtronic v. NuVasive (Jan. 19, 2016)

• The Supreme Court issued agrant/vacate/remand and ordered thegrant/vacate/remand and ordered the Federal Circuit to consider how the Commildecision impacts this case

• Commil held that a belief of patent invalidity is not a defense to allegations ofinvalidity is not a defense to allegations of inducement, and that inducement requires proof that the accused inducer knew that the actions being induced constitutedthe actions being induced constituted patent infringement

• On remand, the Federal Circuit ruled that Medtronic induced infringement of a NuVasive patent based on sufficientNuVasive patent based on sufficient evidence that Medtronic must have known that its devices infringed

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Court of Appeals for the Federal Circuit

1. Lexmark Int’l v. Impression Prods., Inc. En banc CAFC re-affirms differences between patent and copyrightEn banc CAFC re affirms differences between patent and copyright

exhaustion

2. The Ohio Willow Wood Co. v. Alps Southp Rare inequitable conduct case post-Therasense

3. In re Queen’s Univ. at Kingston3 e Quee s U a gs o Patent agent privilege

4. Acorda Therapeutics v. Mylan Pharm. Inc.4. Acorda Therapeutics v. Mylan Pharm. Inc. Personal jurisdiction in ANDA cases

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Court of Appeals for the Federal Circuit

5. Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc. No reviewability of an IPR institution on fewer than all groundsNo reviewability of an IPR institution on fewer than all grounds

6. Genetic Techs. Ltd. v. Merial LLC Biotech patentable subject matter Biotech patentable subject matter

7. Enfish, LLC v. Microsoft Corp. Software patent held to be patentable under § 101 Software patent held to be patentable under § 101

8. TLI Comms., LLC v. AV Automotive, LLC Further § 101 analysis; forms basis of new PTO guidelines along with Further § 101 analysis; forms basis of new PTO guidelines along with

Enfish

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Lexmark Int’l, Inc. v. Impression Prods., Inc.,No. 2014-1617 (Fed. Cir. 2016) (en banc)( ) ( )

• Lexmark engages in a “Return Program” which contractually binds Lexmark’s authorized resellers and its customers

• Return Program prohibits sale and use of cartridges that are not subject to the single-use restrictionuse restriction

• Doctrine of patent exhaustion limits a patentee’s ability to control the use ofpatentee s ability to control the use of patented articles after an authorized sale of those article

P t l li it d l• Post-sale limits on use and resale• Foreign Sales and exhaustion of a

patentee’s U.S. rights

• District Court entered a judgment of non-infringement

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Lexmark v. Impression Prods.• A majority of the en banc Federal Circuit reaffirmed its prior decision on both

issues of patent exhaustion

• Post-sale limits on use and resaleThe Court reaffirmed Mallinckrodt holding that a patentee may preserve its right to– The Court reaffirmed Mallinckrodt, holding that a patentee may preserve its right to allege infringement when selling a patented article through “clearly communicated, otherwise-lawful restrictions,” if the article is subject to a single-use/no-resale restrictionrestriction

• Foreign Sales and exhaustion a patentee’s U.S. rights– The Court reaffirmed Jazz Photo, holding that imported patented articles sold

abroad constitute infringement, unless the patentee has authorized the importation, because foreign sales do “not authorize the buyer to import the article and sell and

it i th U it d St t ”use it in the United States.”

• Impression filed a petition for writ of certiorari to the U.S. Supreme Court on March 21, 2016– The Court asked for the views of the U.S. Solicitor General on June 20, 2016;

appeal could be heard in 2017

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The Ohio Willow Wood Co. v. Alps South, LLC, No. 2015-1132 (Fed. Cir. 2016)( )

• Ohio Willow Wood (“OWW”), a manufacturer of prosthetic limbmanufacturer of prosthetic limb accessories, asserted patents against Alps South (“Alps”)

• District Court granted Alps’smotion for summary judgment onmotion for summary judgment on issues of invalidity, finding the asserted claims of one OWWasserted claims of one OWWpatent invalid due to collateral estoppel effect of litigation involving a second

• District Court found no• District Court found no inequitable conduct by OWW

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Ohio Willow Wood v. Alps South

• Federal Circuit affirmed the grant of SJ that OWW was collaterally estopped from challenging the invalidity of the ‘237 patent– The asserted ‘237 claims and the invalidated ‘182 claims were

substantially similar and OWW failed to explain how any alleged difference in claim scope altered the invalidity determinationdifference in claim scope altered the invalidity determination

• Federal Circuit held that the existence of genuine issues of material fact gregarding OWW’s conduct during the second reexamination proceeding precluded summary judgment of no inequitable conduct

Court held that OWW had withheld material evidence regarding expert– Court held that OWW had withheld material evidence regarding expert testimony

– Court also held that OWW misrepresented the expert to the Board p plead, satisfying the materiality prong of inequitable conduct

– Genuine issues of material fact exist as to whether there was deceptive intent by OWW’s counselintent by OWW s counsel

• Grant of SJ of no inequitable conduct reversed and remanded for trial1414

Grant of SJ of no inequitable conduct reversed and remanded for trial

In re Queen’s University at Kingston, No. 2015-0145 (Fed. Cir. 2016)( )

• Queen’s University is engaged in a patent infringement action against Samsung

• The district court granted Samsung’s motion to compel documents regarding

i ti b t Q ’communication between Queen’s University and its patent agents

• Petitioner seeks a writ of mandamus directing the district court to withdraw its order compelling the production oforder compelling the production of Queen’s University’s communication with its non-attorney patent agents on grounds that the communications are privileged

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In re Queen’s University

• The Federal Circuit acknowledged a patent agent-client privilege covering client communication with non attorney patent agents incovering client communication with non-attorney patent agents in the course of agents’ authorized practice

• The Court reasoned that the privilege should be recognized despite not being covered under attorney-client privilegedespite not being covered under attorney client privilege

• Patent agents hold a unique role whose activities the SupremePatent agents hold a unique role whose activities the Supreme Court has construed as constituting the practice of law

• This privilege only extends to communications reasonably necessary and incident to prosecuting patents before the USPTO

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Acorda Therapeutics Inc. v. Mylan Pharms. Inc., No. 2015-1456 (Fed. Cir. 2016)( )

• Mylan filed two separate ANDAsith th FDA ki i i twith the FDA seeking permission to

market generic versions of pharmaceutical products marketedpharmaceutical products marketed by Acorda

• Acorda filed a patent infringement suit in Delaware against Mylan

d th H t h W A tunder the Hatch-Waxman Act

• Mylan moved to dismiss arguing itMylan moved to dismiss, arguing it was not subject to either general or specific personal jurisdiction in Delaware

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Acorda v. Mylan• The majority opinion of the Federal Circuit panel affirmed the

district court’s finding that specific jurisdiction existed, without addressing general jurisdiction

• The ANDA filing was a “formal act that reliably indicates plans to engage in marketing of the proposed generic drugs”

• Mylan’s distribution channels in Delaware make it clear that f t k ti ti iti ld “ ti bl t k l ifuture marketing activities would “unquestionably take place in Delaware (at least)”. Planned sales were “close enough” to the subject of the lawsuits to satisfy the minimum contactssubject of the lawsuits to satisfy the minimum contacts requirement and justify specific personal jurisdiction in Delaware

• For now, means generics can be sued anywhere they sell products

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Shaw Indus. Grp. v. Automated Creel Sys., No. 2015-1116 (Fed. Cir. 2016)( )

• Shaw filed two IPR petitions against Automated Creel Systems’ patents, y p ,proposing a total of twenty-one grounds of rejection

• The Board instituted both IPRs on some but not all of the proposed

I P R

some, but not all, of the proposed grounds

• The Board denied to institute on grounds alleging anticipation by a

t t i d t P d i thpatent issued to Payne, deeming the Payne-based ground redundant

• Shaw appealed the Board’s decision not to institute on this ground

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Shaw Industries v. Automated Creel Systems

• The Federal Circuit stated it lacks jurisdiction to review the Board’s decisions instituting or denying IPR regardless ofBoard s decisions instituting or denying IPR, regardless of whether the Board has issued a final written decision

• The Court interpreted the Board’s redundancy denial to be a decision denying institution for efficiency purposesdecision denying institution for efficiency purposes

• 35 U S C § 315(e) does not prevent a petitioner from later raising35 U.S.C. § 315(e) does not prevent a petitioner from later raising such denied grounds before the USPTO or a district court

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Genetic Techs. Ltd. v. Merial LLC, No. 2015-1202 (Fed. Cir. 2016)( )

• Genetic Technologies Limited (“GTG”) brought suit against Merial, alleging infringement of the ‘179 patent, which relates to methods of detecting geneticrelates to methods of detecting genetic variations

• The district court granted Merial’s motion to dismiss for failure to state a claim and entered final judgment that the asserted claims are patent-ineligible subject matter under 35 U S C § 101under 35 U.S.C. § 101

• The Supreme Court has previously held p p ythat laws of nature, natural phenomena, and abstract ideas are not patentable

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Genetic Technologies v. Merial

• The Federal Circuit affirmed the district court’s decision granting the motion to dismiss for failure to state a claim

• The claim at issue was directed to the discovery that amplification of intron DNA sequences exhibiting linkage disequilibrium with specific loci can beDNA sequences exhibiting linkage disequilibrium with specific loci can be used to detect alleles of those loci

• The Federal Circuit applied the two-step Alice test for patent eligibility1. “The correlation between variations in non-coding regions and allele

i h di i i f h llpresence in the coding regions is a consequence of the naturally occurring linkages in the DNA sequence”

2 The physical steps implemented in the claim to analyze that natural2. The physical steps implemented in the claim to analyze that natural relationship were “‘well-understood, routine, conventional activity’ already engaged in by those in the field.”

• Subject matter of the ‘179 patent is therefore not patent eligible under § 101

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§ 101

Enfish, LLC v. Microsoft Corp., No. 2015-1244 (Fed. Cir. 2016)( )

• Enfish sued Microsoft for patent infringement, alleging that

t i Mi ft ftcertain Microsoft software infringed two of Enfish’s patents

• District court entered summary judgment in favor of Microsoft, finding the claims invalid under § 101

• Enfish appealed

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Enfish v. Microsoft

• Federal Circuit reversed the district court, clarifying the first step of the Alice test

• Whether the claims are directed to an abstract idea “is a meaningful ” “one” and one “cannot simply ask whether the claims involve a patent-

ineligible concept.”

• The inquiry considers whether the claims’ “character as a whole is directed to excluded subject matter.”j

• Software claims are not “inherently abstract” because software can “make non-abstract improvements to computer technology”

B th l i it ifi i l t ti f l ti t• Because the claims recite a specific implementation of a solution to a problem in the software arts, the court held that the claims are patent-eligible

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TLI Comms. LLC v. AV Automotive, LLC, No. 2015-1372 (Fed. Cir. 2016)( )

• TLI sued defendants for infringing its patent covering a method and system for taking, transmitting and organizingtransmitting, and organizing digital images

• Defendants moved to dismiss for failure to state a claim, arguing the patent is drawn to patent-ineligible subject matter

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TLI Comms. v. AV Automotive

• Federal Circuit affirmed the district court’s dismissal of the complaint, finding that the claims were directed to an abstract ideathat the claims were directed to an abstract idea

• Claims were directed to the use of conventional or generic technology in a well-known environment without indicating that the claims solved a problem presented by combining the two– “patent-in-suit claims no more than the abstract idea of classifying andpatent in suit claims no more than the abstract idea of classifying and

storing digital images in an organized manner”

G f• Generic steps for applying the abstract idea on a telephone network do not confer patent eligibility to the abstract idea

• Patent ineligible subject matter under 35 U.S.C. § 101

• Recent USPTO Examination Guidelines urge Examiners to use Enfish and TLIdecisions in evaluating the Alice test

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Patent Trial and Appeal Board (PTAB)1. American Simmental Assoc. v. Leachman Cattle of Colorado,

LLC First PGR final written decisions

2 Shinn Fu Co of America v The Tire Hanger Corp2. Shinn Fu Co. of America v. The Tire Hanger Corp. Granting a motion to amend

3. New Precedential Opinion Designations Providing authority on PTAB procedure

Plus updated PTAB statistics, compiled by Finnegan

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American Simmental Assoc. v. Leachman Cattle of Colorado, Nos. PGR2015-00003, PGR2015-00005 (PTAB Jun. 13, 2016)( )

• First ever post-grant review decisionPGR f l t l f i lid ti t t• PGRs are a powerful tool for invalidating patents– Can be used to raise § 101, 102, 103, and 112 issues

• Only patents filed on or after March 16, 2013 can be reviewed under PGRE t l i i b titi f l t i i i liti ti• Estoppel provision bars petitioners from later raising in litigation "any ground that the petitioner raised or reasonably could have raised during that post-grant review "raised during that post grant review.

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American Simmental v. Leachman Cattle

• American Simmental Association, a cattle breeding industry d th t L h ’ t t l i l thgroup, argued that Leachman’s patents claim only the

abstract idea of determining an animal's relative economic valuevalue

Th PTAB d ith A i Si t l d h ld th t• The PTAB agreed with American Simmental and held that the patents claimed patent-ineligible subject matter under§ 101§ 101

Thi lt ld t h b ibl i IPR• This result would not have been possible in an IPR

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Shinn Fu Co. of America v. The Tire Hanger Corp.No. IPR2015-00208 (PTAB Apr. 22, 2016)( p )

• The PTAB granted its sixth-ever motion to amend allowing substitute claims (compared to thousands of cancelled claims)( p )

• The Board approved a tool that would allow patent owner to pp p“group prior art references together according to their particular teachings” to show that the substitute claims are patentable over the prior art within the allotted pages

• There is no requirement that the patent owner expressly analyze every individual reference cited during prosecution of the challenged patentchallenged patent

• This approach may translate into more grants of motions to• This approach may translate into more grants of motions to amend, helping tip the balance of favorable results towards patent owners

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Designation of New Precedential Opinions (May 10, 2016)

1. Garmin Int’l v. Cuozzo Speed Techs LLC, IPR2012-00001, Paper 26 (Mar. 5, 2013)• Criteria for additional discovery

2. Bloomberg, Inc. v. Markets-Alert Pty, Ltd., CBM2013-00005, Paper 32 (May g, y, , , p ( y29, 2013)• Criteria for additional discovery

3. Oracle Corp. v. Click-to-Call Techs, LP, IPR2013-00312, Paper 26 (October 30, 2013) (precedential only as to Section III.A.)• Nature of service triggering the one year time bar• Nature of service triggering the one-year time bar

4. MasterImage 3D, Inc. v. RealD Inc., IPR2015-00040, Paper 42 (July 15, 2015)2015)• Patentee’s burden to demonstrate the patentability of substitute claims

5. Lumentum Holdings, Inc. v. Capella Photonics, Inc., IPR2015-00739, Paper 38 (March 4, 2016)• Interpretation of § 312(a)(2)

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Questions?

Anthony C. Tridico, Ph.D.(anthony.tridico@finnegan.com/+44 7500 864 501)

• Managing Partner of the firm’s European office in London.

• Experience in all aspects of U.S. and European patent law including prosecution, post-grant proceedings, and g p , p g p g ,litigation.

P ti f li t li IP tf li• Practice focuses on client counseling, IP portfolio management and patent office procedures (appeals, post-grant proceedings) in the chemical (organic, polymer), pharmaceutical, and biotechnological arts.

• Frequent lecturer on various aspects of on patent law issues• Frequent lecturer on various aspects of on patent law issues affecting the chemical, pharmaceutical, and biotech industries.

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Disclaimer

These materials have been prepared solely for educational and entertainment purposes to contribute to the understanding of U S andentertainment purposes to contribute to the understanding of U.S. and European intellectual property law. These materials reflect only the personal views of the authors and are not individualized legal advice. It is understood that each case is fact specific, and that the appropriate solution in any case will vary. Therefore, these materials may or may not be relevant to any particular situation Thus the authors Finneganbe relevant to any particular situation. Thus, the authors, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP (including Finnegan Europe LLP, and Fei Han Foreign Legal Affairs Law Firm) cannot be bound either

hil hi ll t ti f th i i t d f tphilosophically or as representatives of their various present and future clients to the comments expressed in these materials. The presentation of these materials does not establish any form of attorney-client relationship y y pwith these authors. While every attempt was made to ensure that these materials are accurate, errors or omissions may be contained therein, for which any liability is disclaimedwhich any liability is disclaimed.

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