Federal Circuit Review | September 2012

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The Federal Circuit Review is a monthly newsletter featuring the latest case summaries handed down from the U.S. Court of Appeals for the Federal Circuit.

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Federal Circuit Review | September 2012

  1. 1. Federal Circuit Review VOLUME 2 | ISSUE 9 SEPTEMBER 2012Hatch-Waxman Safe Harbor Extends to Information-GatheringActivitiesIn Momenta Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc. (Docket No. 2012-1062), the Federal Circuit vacated apreliminary injunction for applying an “unduly narrow interpretation” of the Hatch-Waxman safe harbor, 35 U.S.C. § 271(e)(1).Momenta, assignee of a patent relating to methods for analyzing enoxaparin, brought suit alleging that Amphastar infringed theclaimed methods during quality control batch testing of its commercial enoxaparin product. Amphastar argued that its activity fellwithin the § 271(e)(1) safe harbor, as the testing was required by the FDA for continued approval and sale of its product. The districtcourt disagreed, and issued a preliminary injunction.The Federal Circuit reversed, holding that the safe harbor of § 271(e)(1) is not limited to ANDA filings, but rather applies to both pre-approval and post-approval information-gathering activities “[a]s long as the allegedly infringing use is ‘for uses reasonably related’to the development and submission of that information . . . .” Amphastar’s post-approval quality testing was in accordance withFDA regulations requiring the maintenance of batch records that “shall be readily available” for inspection by the FDA. The FederalCircuit held that the possibility of FDA inspection was sufficient to constitute “submission” of the records to the FDA under § 271(e)(1). The availability of non-infringing methods to meet the FDA’s requirements was not relevant.Judge Rader dissented, arguing that the statute was ambiguous, and based on the legislative history and precedent such asClassen Immunotherapies, Inc. v. Biogen IDEC, 659 F.3d 1057 (Fed. Cir. 2011), Eli Lilly & Co. v. Medtronic Inc., 496 U.S. 661 (1990),and Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193 (2005), Judge Rader concluded that § 271(e)(1) only applies to pre-marketing approval activities.Patent Invalid for Lack of Enablement in Light of “At Least 10%”LimitationIn Magsil Corp. v. Hitachi Global Storage Technologies, Inc. (Docket No. 2011-1221), the Federal Circuit affirmed the districtcourt’s grant of summary judgment of invalidity for lack of enablement. In This Issue • Hatch-Waxman Safe Harbor Extends to • Recapture Rule Clarified Information-Gathering Activities • Liability for Induced Infringement Can Occur • Patent Invalid for Lack of Enablement in Light of Even if No Single Actor Is a Direct Infringer “At Least 10%” Limitation • Isolated DNA Is Patent Eligible Subject Matter
  2. 2. MagSil filed suit against Hitachi alleging that Hitachi’s disk drive products infringe MagSil’s patent. After claim construction, thedistrict court granted summary judgment of invalidity for lack of enablement.The Federal Circuit affirmed, concluding that Hitachi had provided clear and convincing evidence that one of skill in the art couldnot have taken the disclosure in the specification and achieved the full scope of the claims. The asserted claims broadly claim atunnel junction that “causes a change in the resistance by at least 10% at room temperature.” The Federal Circuit determined thatthe open ended claim language of “at least 10%” covered all changes from 10% to infinity and that the specification could not enablesuch broad claim language. The Federal Circuit found that the specification only disclosed enough information to achieve an 11.8%resistance change and that, during prosecution, MagSil believed the highest possible resistive change to be 100%. The FederalCircuit concluded that the specification only enabled a person of ordinary skill in the art to achieve a small subset of the claimedrange and that the record contained no evidence that a skilled artisan could use the specification to achieve the modern values of600% change in resistance without undue experimentation.Isolated DNA Is Patent Eligible Subject MatterIn Association For Molecular Pathology v. U.S. Patent And Trademark Office (“MYRIAD”) (Docket No. 2010-1406), the FederalCircuit maintained its previous holding that composition claims to isolated DNA molecules cover patent-eligible subject matter.Plaintiffs sought declaratory judgment of invalidity of certain claims of Myriad’s patents. The district court found that compositionclaims to isolated DNA molecules were patent-ineligible subject matter under 35 U.S.C. § 101. The Federal Circuit reversed thisholding in an earlier decision. The Supreme Court remanded the case to the Federal Circuit for reconsideration in light of MayoCollaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012).The Federal Circuit maintained its previous decision with regard to the patent-eligibility of isolated DNA molecules. Like the priordecision, the Federal Circuit found that “the distinctive nature of DNA molecules as isolated compositions of matter” renders thempatent eligible subject matter. Specifically, the Federal Circuit found that the chemical structure of the isolated DNA in questionrenders it “markedly different” from naturally occurring DNA. The Federal Circuit rejected the argument that the physiological useor benefit of the DNA is necessarily relevant to patent eligibility analysis. In reaching its decision, the Federal Circuit stated that,“[w]hile Mayo . . . provide[s] valuable insights and illumate[s] broad, foundational principles, the Supreme Court’s decisions in[Diamond v. Chakrabarty, 447 U.S. 303 (1979)] and Funk Brothers [Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948)] set out theprimary framework for deciding the patent eligibility of compositions of matter, including isolated DNA molecules.”In addition, in line with its prior decision, the Federal Circuit affirmed the district court’s holding that jurisdiction existed under theDeclaratory Judgment Act, reversed the district court’s holding that method claims to screening via cell growth rates is patent-ineligiblesubject matter and affirmed the district court’s holding that method claims directed to comparing or analyzing gene sequences ispatent-ineligible subject matter.Judge Bryson dissented with respect to the composition claims to isolated DNA molecules, arguing that the altered chemicalstructure of the isolated DNA was a result of the isolation process, and did not render the compositions patent eligible. Rather, heargued that, under Chakrabarty, the similarity in structure as well as in utility between the claimed isolated DNA and the naturallyoccurring DNA rendered the claimed composition patent-ineligible as a naturally occurring substance.Recapture Rule ClarifiedIn Greenliant Systems, Inc. v. Xicor LLC (Docket No. 2011-1514), the Federal Circuit affirmed the grant of a declaratory judgmentholding reissue claims invalid under the rule against recapture.Greenliant filed a declaratory judgment seeking a declaration that Xicor’s reissue claims are invalid and not infringed. The districtcourt entered a judgment in favor of Greenliant that certain claims of the patent are invalid under the recapture rule.The Federal Circuit affirmed. In addressing whether a patentee surrendered subject matter in the original prosecution which isencompassed by broadened reissue claims, the focus is on arguments actually made by the patentee: “It does not matter whetherthe examiner or the Board adopted a certain argument for allowance; the sole question is whether the argument was made [bythe applicant].” Thus, the Federal Circuit rejected Xicor’s argument that there was no disclaimer of the subject matter because itsarguments were not persuasive to the Examiner or the Board. Rather, the Federal Circuit found that Xicor clearly and unmistakablyrepresented to the Examiner and the BPAI that the relevant subject matter was a necessary component that imparted featuresdistinguishing the claimed subject matter over prior art during the original prosecution. Thus, the patentee was not allowed torecapture the broader subject matter that it had given up. 2 knobbe.com
  3. 3. Liability for Induced Infringement Can Occur Even if No SingleActor Is a Direct InfringerIn Akamai Technologies, Inc. v. Limelight Networks, Inc. (Docket No. 2009-1372), the Federal Circuit reversed two district courts’granting of summary judgment and JMOL for defendants.In reviewing two district court decisions, Akamai Technologies, Inc. v. Limelight Networks, Inc. and McKesson Technologies, Inc.v. Epic Systems Corp., the Federal Circuit examined whether a defendant may be held liable for induced infringement if no singleparty has performed all of the steps of a patented method, but the defendant has induced others to act such that all method stepshave been performed.In Akamai, Limelight performed all steps of Akamai’s patented method of efficient delivery of web content, except a step of modifyinga content provider’s web page to reference particular servers. Limelight provided instructions on how to perform that step to itscustomers, some of which elected to perform the step. In McKesson, Epic Systems sold software to healthcare providers, whichused the software to communicate electronically with patients. Epic Systems did not perform any steps of McKesson’s patentedmethod, but those steps were practiced by a combination of the healthcare providers and the patients when Epic’s product was usedas intended. In both cases, the lower court found that no single entity directly infringed, and thus there could be no inducement ofinfringement.The en banc Federal Circuit expressly overruled BMC Resources, 498 F.3d 1373 (Fed. Cir. 2007), which required that, in order fora party to be liable for induced infringement, some other single entity must be liable for direct infringement. The Federal Circuit heldthat, while all the steps of a claimed method must be performed to find induced infringement, “it is not necessary to prove that all thesteps were committed by a single entity.” Thus, the requirement that inducement gives rise to liability only if the inducement leads toactual infringement remains. However, the Federal Circuit distinguished between the concept of direct infringement, and liability fordirect infringement: “Requiring proof that there has been direct infringement as a predicate for induced infringement is not the sameas requiring proof that a single party would be liable as a direct infringer.” “If a party has knowingly induced others to commit theacts necessary to infringe the plaintiff’s patent and those others commit those acts, there is no reason to immunize the inducer fromliability for indirect infringement” simply because no single defendant is liable for direct infringement. A party that induces severalactors to collectively practice the patented method should be treated the same as a party that induces a single actor to practice thepatented method. The impact on the patentee is the same. Thus, “infringement” in the context of 35 U.S.C. § 271(b) refers to “theacts necessary to infringe a patent, not to whether those acts are performed by one entity or several.” The Federal Circuit foundthis reasoning consistent with the legislative history of the 1952 Patent Act, and liability principles in other areas of law such as tortand criminal law. In so holding, the Federal Circuit expressly declined to revisit any of the principles regarding the law of dividedinfringement as it applies to liability for direct infringement under 35 U.S.C. § 271(a).In remanding McKesson and Akamai, the Federal Circuit advised that Epic and Limelight may be liable for induced infringement byshowing (1) they knew of the patent; (2) they either induced the performance of all of the method steps, or performed some stepsand induced performance of the remaining steps; and (3) all the steps were performed.Judge Newman filed a dissent, arguing that inducement under § 271(b) should require an underlying act of infringement for which aparty is liable under § 271(a), but would have overturned earlier opinions requiring a single infringer for direct infringement, insteadlooking to apportionment of damages in cases of divided infringement.Judge Linn filed a dissent joined by Judges Dyk, Prost, and O’Malley, arguing that liability under § 271(b) requires an act ofinfringement under § 271(a) by a single entity or joint enterprise. 3 knobbe.com
  4. 4. Knobbe Martens Offices Orange County San Diego San Francisco Silicon Valley Los Angeles Riverside Seattle Washington DC© 2012 Knobbe Martens Olson & Bear LLP, a Limited Liability Partnership including Professional Corporations. All rights reserved. The information contained in thisnewsletter has been prepared by Knobbe, Martens, Olson & Bear, LLP and is for general informational purposes only. It does not constitute legal advice. While every efforthas been made to ensure the accuracy of the information contained in this newsletter, Knobbe Martens Olson & Bear LLP does not guarantee such accuracy and cannot beheld liable for any errors in or any reliance upon this information. Transmission of this newsletter is neither intended nor provided to create an attorney-client relationship,and receipt does not constitute an attorney-client relationship. You should seek professional counsel before acting upon any of the information contained in this newsletter. Who We Are Over 95% of our litigators hold technical degrees, including electrical engineering, computer science, mechanical engineering, chemistry, chemical engineering, biochemistry, biology, and physics. Many of our litigators are former Federal Circuit or district court clerks. With eight offices, Knobbe Martens represents clients in all areas of intellectual property law. • Exclusive practice in the area of intellectual property since 1962 • M ore than 250 lawyers, many of whom have advanced degrees in various technologies • I nternationally recognized leaders in IP across a vast spectrum of technology areas knobbe.com 4

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