Just Medium Rare

Posted on July 2, 2010 by Warren Woessner

This Post was written by Ronald Schutz of Robins, Kaplan, Miller & Ciresi and published with his permission.

Slip that inequitable conduct claim back on the summary judgment “barbie”-the standard for establishing such claims as a matter of law is not quite done. In Leviton Manufacturing Co., Inc. v. Universal Security Instruments, Inc. a majority of the Federal Circuit vacated the district court’s award of summary judgment for inequitable conduct and vexatious litigation as well as the court’s one million dollar award for attorney’s fees and costs. The Leviton court found that the district court should have held an evidentiary hearing before entering its judgment because material questions of fact regarding intent to deceive continued to exist. In a searing dissent, Judge Prost recognized that Federal Circuit precedent reserves summary disposition for the “rare case” of inequitable conduct, but argued that the facts in Leviton looked raw enough to her to more than meet precedential standards.  The result? When it comes to summary judgment for inequitable conduct claims, both sides of the patent law bar are in for a grilling.

The inequitable conduct claims in Leviton arose from the behavior of an individual attorney representing the patent holder. Within a six month period, that attorney submitted two different patent applications on Leviton’s behalf with nearly identical claims but attributed the inventions to different inventors. The attorney failed to disclose the first invention (the “Germain application”) as prior art in the second application (the “‘766 patent”), claiming that parent patents in the ‘766 patent gave it an earlier priority date. However, the ‘766 patent application failed to disclose the involvement of its parent patents in twelve separate litigation actions involving allegations of patent invalidity, unenforceability and inequitable conduct. The attorney also was responsible for other factual omissions which occurred during reexamination of the ‘766 patent at the PTO. The attorney’s conduct came to light as part of an action for infringement of the ‘766 patent brought by Leviton.

Following contentious discovery in that infringement action, Leviton sought to dismiss its infringement claims. The district court dismissed the case in chief with prejudice and granted leave for one of the alleged infringers to file a motion for fees and costs. Adopting the magistrate’s recommendation on the issue, the district court found that Leviton had committed inequitable conduct as a matter of law and had engaged in a strategy of vexatious litigation, justifying the million dollar award of fees and costs.

On appeal, the Federal Circuit agreed with the district court that both the failure to disclose the Germain application and the litigation pending against the parent patents of the ‘766 patent were material omissions as a matter of law. However, in order to prove inequitable conduct, an alleged infringer must show intent to deceive along with the showing of materiality and the Federal Circuit found that the district court erred when it made its summary judgment on the issue of intent. Specifically, the Federal Circuit found that it was improper for the district court to infer intent without an evidentiary hearing because the explanation that Levtion’s attorney gave for not disclosing the Germain application was not unreasonable as a matter of law. Judge Prost disagreed and explained that “the circumstances surrounding Leviton’s withholding of the Germain application are as egregious as possible short of an explicit admission of intent to deceive the PTO.”

The Federal Circuit also refused to infer intent from the material omission regarding pending litigation, especially because the Leviton attorney ultimately did submit information to the PTO regarding pending claims. The court said that while that information did not demonstrate good faith, it might be evidence of it. Again, Prost disagreed and said that because of certain critical admissions made during the attorney’s deposition, there was “simply no other inference to be drawn from the evidence.”

It’s going to be a long hot summer no matter which side of an inequitable conduct claim you’re on. In addition to awaiting the Federal Circuit’s en banc opinion in Therasense, Leviton’s outcome means there’s still no clear instructions on how to prepare (or defend against) such claims at summary judgment so that they are both satisfactorily rare and well done. Certainly, proving intent to deceive is one key ingredient and we anticipate that both plaintiffs and defendants will use the opinion in their favor to argue what should constitute the necessary intent. In Leviton’s wake, pre-disposition evidentiary hearings may be the new medium well.

Whether affirmatively moving for summary judgment on inequitable conduct or defending against a claim alleging it, courts will most likely look to the outcome or non-existence of such a hearing on a motion for summary judgment to determine just exactly which side’s goose has been properly cooked.

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Prometheus v. Mayo and Classen v. Biogen Sent Back to Federal Circuit

Posted on June 29, 2010 by Warren Woessner

 

Not unexpectedly, today the Supreme Court granted cert. in Prometheus v. Mayo, (09-490) vacated, and remanded to the Fed. Cir. for reconsideration in view of Bilski v. Kappos, decided yesterday. While this clears the Court’s collective desk, I don’t see anything in Bilski that would either cause the Fed. Cir. to reverse its original decision or cause the Supreme Court to reverse an affirmance.  As you will recall, the claims in Prometheus were directed to a method of administering an immunosuppressive drug and monitoring the level of its metabolites to determine the appropriate dosage. While the Fed. Cir. found that certain of the steps were “mental steps,” the panel both found the administration steps and the sampling steps to be transformative, and strongly reaffirmed that methods of medical treatment were patentable methods or processes under s. 101. Given that the M or T test is still viable and given that even the Justices who sided with Justice Stevens should find that these claims are not directed to a business method and involve more than simply organizing human activity, it is hard to envision what circumstances would cause any of the Justices to reverse a decision below that the claims are patentable subject matter.

The Supreme Court also granted cert., vacated and remanded Classen Immunotherapeutics Inc. v. Biogen IDEC (08-1509) for reconsideration in view of Bilski. The Fed. Cir. summary affirmance of the district court’s holding that the claims of US Pat No 5,723,283 are invalid as failing the M or T test was the subject of one of my first posts on this blog in March 2009. The claims were directed to determining whether or not an immunization schedule is effective in treating a chronic immune-related disorder. Claim 1 contains the steps of immunizing mammals with dose(s) of immunogens according to the schedule and comparing the results with that of a control group. The district court found that the claims were invalid; an attempt to patent a natural phenomenon. The Fed. Cir. affirmed on the basis that the claims fail the M or T test. I argued at the time that immunization transforms the immune system. The immunization schedule can, in some cases, ameliorate the symptoms of the disorder. Regardless of whether or not the Fed. Cir. reapplies the M or T test, this claim is not directed to an abstract idea or a law of nature. The Fed. Cir. got it wrong the first time, even if it were proper to use the M or T test as the sole test to evaluate whether this method is patentable subject matter (which we now know it is not). The Bilski decision gives the court a rare opportunity to change its mind.

As I have noted in earlier posts, more problematic are certain of the diagnostic or “screening” method claims the Fed. Cir. will be required to consider after the Ass’n of Molecular Pathology (read “ACLU”) vs. USPTO and Myriad district court decision crosses their threshold.  The ultimate decision in this case will not turn on whether or not a diagnostic method is a business method, since none of the parties ever urged that it is. (Query: Is a surgical method a business method? What about a chiropractic technique?)

“Abstract idea” was also not defined by the Court’s opinion, and since this exception to patentable subject matter sealed Bilski’s fate, should we now be asking: “Can diagnostic methods be so technologically disembodied that they are ‘abstract ideas’”?  Judge Sweet found that the “analyzing” and “comparing” steps in Myriad’s screening claims were abstract mental processes that failed the M or T test.  Of course, post-Bilski, the Fed. Cir. has more to work with than just the M or T test – too bad we don’t know how much more!

Appeal Summary Disposition

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Bilski Claims Fail As Attempt To Claim “Abstract Idea” – Future Of Business Method Patents Cloudy

Posted on June 28, 2010 by Warren Woessner

Today, the Supreme Court affirmed the rejection of Bilski’s claims. (Attached at end of posting.)  The 16 page Opinion of the Court was authored by Justice Kennedy, joined in full by Justices Thomas, Roberts, and Alito.  The opinion held that the Bilski claims were directed to an abstract idea, and thus were not directed to a method or process within the scope of the statute. However, in dicta, Kennedy et al. stated that the Fed. Cir.’s “machine or transformation” test was too restrictive, and that some business methods might be patentable subject matter.

Justice Stevens, joined by Ginsberg, Breyer, and Sotomayor, authored a 47 page concurrence arguing that s. 101 should be interpreted to categorically exclude patenting business methods. Justice Breyer wrote a brief concurrence, joined by Scalia, in an attempt to summarize points of agreement among the Justices: (a) Patentable subject matter does not include natural phenomena, mental processes, and abstract intellectual concepts, (b) The M or T test may not be the sole test but it is still of great value in resolving the patentability of processes, and (3) the Fed. Cir. should not revert to  the “useful, concrete and tangible” standard of State Street Bank.

Justice Scalia concurred but did not join in parts II-B-2 and II-C-2 of the Opinion of the Court. These sections are dicta, and posit that flexibility is necessary to consider proper application of the patent laws to new technologies (and both approving of Judge Bader’s dissent in Bilski and criticizing Justice Stevens opinion that software should have been ruled unpatentable), and that some business methods may well be  patentable processes under s. 101.

Given its complexity, it is not surprising that it was released at the very end of the session. Justice Stevens clearly came close to assembling a majority that would ban business method patents outright (whatever a business method IS) but Justice Kennedy had three other votes that would not absolutely shut the door on this type of invention. When Justice Scalia concurred, Justice Kennedy had five votes to sink the Bilski claims as completely (and traditionally) outside of s. 101: “These claims attempt to patent the use of the abstract idea of hedging risk in the energy market and then instruct the use of well-known random analysis techniques to help establish some of the inputs into the equation.” Kennedy saw this as an easier case than Flook.

This is supposed to be a pharma/biotech blog, but there is little in the Court’s opinion referencing these areas of invention. In Section II-B-2, the section Scalia would not join, Kennedy wrote:

“Section 101 is a dynamic provision designed to encompass new and unforeseen inventions. [citing JEM Ag Supply v. Pioneer Hi-Bred, which held that plants can be the subject of utility patents.]…As numerous amicus briefs argue, the [M or T] test would create uncertainty as to the patentability of software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression and the manipulation of digital signals [citing BIO’s amicus brief].”

This is hopeful, but remember, Stevens, Breyer, and Souter dissented from the dismissal  of cert. in Metabolite Labs., and would have ruled that diagnostic methods that involve measuring levels of an analyte and then making a diagnosis are unpatentable laws of nature. So, while Bilski provides little guidance as to what business method claims would be within the ambit of patentable subject matter, we have even less guidance as to biotechnological inventions.  The Court will need to decide Prometheus v. Mayo to blaze a path toward patentability of “new and unforeseen inventions” in that area.

Bilski SC opinion 6-28-2010

For BIO’s response to this decision, click here.

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Collins On Human Genome Project – “We’ve Only Just Begun”

Posted on June 25, 2010 by Warren Woessner

In a Reuters story posted yesterday, Francis Collins, one of the directors of the Human Genome Project, was asked if the Project had lived up to the hype that accompanied the sequencing of the entire human genome ten years ago. Sensibly, he pointed to the value of simply having such an immense amount of data about the biocircuits that run our homeostasis (or disrupt it) to mine, and predicted the rise of personalized medicine in the next ten to twenty years. That may sound like a long time in the 21st century which has already brought us 3D TV, the iPhone and satellite radio. However, this year also marked the 30th anniversary of the Supreme Court’s decision in Diamond v. Chakrabarty, 447 U.S. 303 (1980), holding that man-made, or “genetically-engineered” microorganisms were patentable subject matter. (Chakrabarty got his patent in 1981, ironically directed to a bacterium modified to digest petroleum.) This decision founded the biotechnology industry, and led to the success of companies like Genentech, Biogen, and Genzyme. So those impatient with the pace of the development of customized biomarkers and  personalized medicine should take a deep breath and consider what the last thirty years have wrought.  Human growth hormone,  insulin, recombinant vaccines, recombinant enzymes, and cytokines that can treat truly horrible genetic diseases and, like it or not, corn, cotton, and soybeans that can resist pests or can tolerate relatively user-friendly pesticides. Dr. Collins’ guesstimate for the gestation period of the next plateau of progress in biomedicine may well prove to be prescient. That is, if the courts, and Congress and “public interest groups” don’t succeed in convincing society that the patent system needs to be reigned in before you have to get a license to breathe.

The fragility of the relatively thin framework of case law and regulations that permitted and fostered the growth of this new way of thinking about our physiological destinies was brought home the other day when a reporter wanted to talk to me about a Biogen patent (Fiers, U.S. Pat. No. 7588755). This patent surfaced like a WWII submarine, in 2009, from a series of applications first filed in 1980, the same year that Chakrabarty was decided. The patent claims a method of treating various conditions, including “cancers” by administering  to a patient a recombinant polypeptide [human fibroblast interferon] produced by a “non-human host” transformed with certain recombinant DNA sequences. Of course, it is now in litigation, since interferons can treat a wide variety of pathologies, including MS.

For an biotech patent attorney who began to practice in 1981, as did I, reading this patent would be like finding a mint 1966 Mustang in your grandfather’s garage, but the reporter did not want to talk about sequence listings, hybridization or pBR322. She wanted to talk about whether or not the claims were valid in view of all the attacks on “gene patents” she had been reading about.  I wanted to ask her to mentally step back to 1980 and imagine how exciting it must have been to be able to produce a human protein, or cytokine, in a bioreactor, without having to extract it from human tissues. But if she took that step back, she would probably find herself in pre-school, so I didn’t bother to try, and instead rambled on for a while about how claims to methods of medical treatment were found to meet the Bilski M or T test, and said good-by.

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