Barry v. Medtronic – Be Careful What You Use and Sell!

In my last post, I discussed the Supreme Court’s opinion in Helsinn Healthcare v. Teva Pharms., holding Helsinn’s patent on a drug was invalid on the basis that Helsinn’s semi-secret sale of the drug to a marketing partner triggered the AIA s. 102 on-sale bar. I use the term, semi-secret, because Helsinn issued a press release announcing the deal more than a year before they filed their patent application, but the press release did not disclose the dose of the drug that was sold, and the deal involved an NDA between Helsinn and the marketer. The Supreme Court considered this to be a “secret sale” that violated the policy against an inventor’s commercializing the invention for an indefinite period, while keeping features of the invention secret, and then filing an application to protect it after competition was threatened.

Barry v. Medtronic, Inc., Appeal no. 2017-2463 (Fed. Cir., January 24, 2019), in a split decision that addressed both the “public use” and “on-sale” bars of s. 102(b) in a case involving much more factual detail than Helsinn. Dr. Barry is a surgeon who obtained patents on methods and systems for correcting spinal column anomalies, such as those due to scoliosis, by conducting a surgical procedure with a surgical device that applied force to multiple vertebrae at once. He based his applications on the results of three surgeries that he conducted outside the one-year grace period of s. 102 (the “critical date”). The patients all had follow-up visits – two were outside the grace period, but the third was within it. After the third follow-up showed the procedure had been successful, Barry submitted an abstract to a professional meeting.

Multiple personnel were present in the operating room, and Dr. Barry charged his usual fee for performing the operation. The patients were not told that they were test subjects for the new device. He testified that all three follow-ups were necessary to determine whether or not the surgery was successful, but apparently testified that he could determine the likely outcome while the patient was still undergoing the procedure. Medtronic began its alleged infringement in 2004.

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Supreme Court Rules That “Secret Sales” Can Qualify as Prior Art

United States Supreme Court Building, Washington, DCPre-AIA, 35 USC 102(b) stated that a person is entitled to a patent unless “the invention was patented or described in a printed publication… or in public use or on sale in the country, more than one year prior to the date of the application for patent in the United States.” The AIA altered this section, now 102(a) (1) to read “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….” This opened the door for patentees to argue that a “sale” had to be available to the public in order to trigger the “on-sale bar” of the statute. Since the “use” of the invention had to be public, they argued, “otherwise” must modify “sale” and exempt secret sales from the scope of the on-sale bar.

The Federal Circuit had disagreed and invalidated the patent in question on the basis that public knowledge of the existence of the sale was enough trigger the AIA on-sale bar. The facts were somewhat similar to those at issue in MedCo. v. Hospira, a 2016 en banc pre-AIA Fed. Cir. decision in which the court ruled that “a contract manufacturer’s sale to the inventor of manufacturing services [to prepare a drug] where neither title to the embodiments nor the right to market the same passes to the supplier does not constitute an invalidating sale.” However, the court cautioned that there was no blanket “supplier exception” to the on-sale bar, and noted, inter alia, that where the supplier “receives blanket authority to market the product” … even the transfer of product to the inventor may constitute a commercial sale under s. 102(b). About three years later, Helsinn, in Helsinn Healthcare S.A. v. Teva Pharms. USA, Inc. No. 17-1299 (January 22, 2019), found out that its semi-secret sales to a distributor also fell within the on-sale bar.

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Knowles and Prosser Posit that the Expansion of s. 101 by the Supreme Court is Unconstitutional

Sherry Knowles (Knowles Intellectual Strategies, LLC) and Anthony Prosser, one of Knowles’ agents have written an engrossing article (18 J. Marshall Rev; Intell. Prop. L. 144 (2018) arguing that the Supreme Court has meandered so far from the statutory language of 35 USC s. 101 and its application in Le Roy v. Taitam (1832) that the Court’s reliance on its own questionable precedent, beginning with Funk Brothers, has led the Court to effectively delete the patent-eligibility of “discoveries” from s. 101. Because diagnostic methods are only rationally characterized as “discoveries”, I read their paper with interest. Ms. Knowles has been in the thick of the s. 101 debate since 2014, when the first PTO Guidelines on patent eligibility were issued. Dr. Prosser has a PhD in chemistry.

The once oft-quoted dictum from the Court in Le Roy – which reversed on novelty grounds – was: “A new property discovered in matter, when practically applied, in the construction of a useful article of commerce or manufacture, is patentable….” The authors argue that Funk Bros. would have been decided differently if the Court had followed Le Roy’s instructions, or even its own logic:

“He who discovers a hitherto unknown phenomenon of nature has no claim to a monopoly of it which the law recognizes. If there is to be invention from such a discovery, it must come from the application of the law of nature to a new and useful end.” Funk Bros., 333 US at 129.

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USTPO Releases Proposed Revised Section 101 Eligibility Guidelines

On January 7th, the Patent Office released proposed revised s. 101 eligibility examination guidelines for public comment. The proposed Guidelines would supersede MPEP 2016.04(II), the section that controls the analysis conducted at step 2A of the Mayo/Alice test  “to the extent it equates claims ‘reciting’ a judicial exception with claims ‘directed to’ a judicial exception….”I describe these exceptions as “PAIN”: Phenomena of Nature, Abstract Ideas and Natural Products, and they have visited much confusion and dismay to the examination of claims that incorporate them. These proposed Guidelines focus on the “Abstract Idea” exception and barely mention how they should be applied to Phenomena of Nation or Natural Products. This may be because Director Iancu is more comfortable with software/computer system technology, or it may be because the Director, being a California-based litigator more strongly relates to the cries for reform arising from the software industry. Nonetheless, the Guidelines represent an important step at clarifying application of the Mayo/Alice test, and all practitioners should read them and adjust their claim drafting approaches to reflect these revisions.

The Guidance begins by summarizing the well-known subgroups of abstract ideas: Mathematical concepts, Certain methods of organizing human activity and Mental processes. The lengthy footnotes that summarize the case law in these subgroups do not cite a single life sciences decision, except for Mayo – quoting Benson – and the Fed. Cir. “Ambry” decision (774 Fed. Cir. 755).  In the latter case, the court invalidated Myriad’s method-for-screening claims as merely requiring comparing the sequence of the patient’s gene to the wild type gene and identifying any differences that arise. The Fed. Cir. noted that these were found to be abstract mental steps in its earlier Myriad decision. The isolation, hybridizing, amplifying and sequencing steps were dismissed as well-understood, routine and conventional. Thus, the subdivided claims failed Step 2B of the Mayo/Alice test. Continue reading

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