MVS Filewrapper® Blog: USPTO Releases New Guidelines on Patent Subject Matter Eligibility

Post by Dan Lorentzen

The USPTO today released new Guidance on Patent Subject Matter Eligibility.  The new guidance comes nearly 9 months after the first set of "2014 Procedure For Subject Matter Eligibility Analysis Of Claims Reciting Or Involving Laws Of Nature/Natural Principles, Natural Phenomena, And/Or Natural Products"  were released in March 2014.  The March guidelines sought to implement new procedures to address changes in the laws relating to patent subject matter eligibility under 35 U.S.C. § 101 in light of the Supreme Court's decisions in Association for Molecular Pathology v. Myriad Genetics, Inc. and Mayo Collaborative Services v. Prometheus Laboratories, Inc. However, a new set of guidelines have been expected based on the more recent Supreme Court decision in Alice Corporation Pty. Ltd. V. CLS Bank International, and based on numerous comments and criticisms of the original guidelines. 

 

The new guidance presents a number of changes in relation to the March guidelines.

The new guidance also includes a new set of examples for "Nature-Based Products."  These examples replace the set of examples that were included with the March guidelines.  Additional explanatory example sets relating to claims that do and do not amount to significantly more than a judicial exception are apparently being developed to be issued at a future date.

 

A more detailed discussion of the new guidelines is forthcoming.

 

 

 

 

MVS Filewrapper® Blog: Shifting Pre-Trial Strategy in the Wake of Alice and Ultramercial

Post by Paul S. Mazzola

 

Four recent Supreme Court cases involving patentable subject matter under 35 U.S.C. § 101 (Bilski v. Kappos, Mayo Collaborative Services v. Prometheus Laboratories, Inc., Ass'n for Molecular Pathology v. Myriad Genetics, Inc., and Alice Corp. v. CLS Bank International ) have had the practical effect of heightening the standard for patentability.  However, these cases may also be altering the way patent cases are handled in their early stages.

 

The Federal Circuit recently decided the case of Ultramercial, Inc. v. Hulu, LLC for a third time.  The case was originally filed in the Central District of California in 2009. Initially, the district court granted the defendant's pre-answer motion to dismiss under Rule 12(b)(6), finding the patent at issue did not claim patent-eligible subject matter.  In the first appeal, the Federal Circuit reversed the district court, and the Supreme Court vacated the decision of the Federal Circuit for further consideration in light of Mayo. On remand, the Federal Circuit again reversed the district court, finding it was improper to dismiss the suit by granting a Rule 12(b)(6) motion.  To that end, the court made several compelling statements regarding the interplay between such motions and the § 101 analysis.  The court stated, "[I]t will be rare that a patent infringement suit can be dismissed at the pleading stage for lack of patentable subject matter."  The court reasoned that issued patents are presumed to be valid, and "the analysis under § 101, while ultimately a legal determination, is rife with underlying factual issues." Adding that claim construction should be required if there are factual disputes, the court succinctly stated, "Rule 12(b)(6) dismissal for lack of eligible subject matter will be the exception, not the rule."

 

After a second petition for certiorari was filed with the Supreme Court, the Court decided Alice.  The holding in Alice—that an abstract idea is not patent eligible subject matter if "merely requires generic computer implementation"—was squarely relevant to the patent at issue in Ultramericial, leading the Supreme Court to again vacate the decision of the Federal Circuit for further consideration in light of Alice.

 

In applying Alice to the patent at issue in Ultramericial, the Federal Circuit held that the claims do not recite patent-eligible subject matter under § 101, but affirmed the motion to dismiss under Rule 12(b)(6).  In doing so, the court deviated sharply from the decisive language from its previous decision, but dedicated no discussion to reconcile why a motion to dismiss is the appropriate mechanism to dispose of a suit involving an issued patent in an infringement suit presumably "rife with underlying factual issues."  However, the concurring opinion of Judge Mayer was almost entirely devoted to this issue.  "First, whether claims meet the demands of 35 U.S.C. § 101 is a threshold question, one that must be addressed at the outset of litigation.  Second, no presumption of eligibility attends to the section 101 inquiry."  Describing section 101 as a "gateway" and a "sentinel" akin to establishing jurisdiction, Judge Mayer forwarded three benefits of resolving any issue of patentable subject matter at the outset of litigation: conserving judicial resources, thwarting vexatious infringement suits, and protecting the public. In addressing the district court opinion, Judge Mayer stated, "No formal claim construction was required because . . . no 'reasonable construction would bring the claims within patentable subject matter.'"  Regarding the presumption of validity for issued patents requiring clear and convincing evidence to the contrary, Judge Mayer noted "the PTO has for many years applied an insufficiently rigorous subject matter eligibility standard." Thus, Judge Mayer found, "[T]he district court properly invoked section 101 to dismiss Ultramercial's infringement suit on the pleadings."

 

Given the apparent shift by the Federal Circuit toward resolving issues of patent-eligible subject matter at the pleadings stage, defendants of infringement suits involving uncertain subject matter eligibility are more likely to use a motion to dismiss to try to avoid costly discovery and claim construction.  The opportunity for an alleged infringer to undercut an infringement suit at the pleadings phase may also impact litigation strategy, including whether such a motion should be pursued in conjunction with other mechanisms such as post-grant proceedings before the Patent Trial and Appeal Board.

 

 

 

MVS Filewrapper® Blog: Federal Circuit Invalidates Patent Claims As Non-Patentable Subject Matter

The U.S. Court of Appeals for the Federal Circuit's recent decision in Digitech Image Technologies v. Electronics for Imaging, Inc., upheld a decision that patent claims directed to a collection of numerical data that lacks a physical component or manifestation as well as an abstract idea of organizing data through mathematical correlations are invalid.

 The plaintiff, Digitech Image Technologies, filed infringement suits against 32 defendants in the U.S. District Court for the Central District of California, asserting claims of U.S. Patent No. 6,128,415 ("the '415 patent"). The '415 patent disclosed an "improved device profile" that describes spatial and color properties of a device within a digital image processing system and "includes both chromatic characteristic information and spatial characteristic information." The district court concluded that the "device profile" claims were directed to a collection of numerical data that lacks a physical component or physical manifestation and that a "device profile" is nothing more than information, thus not falling into one of the categories of eligible subject matter under 35 U.S.C § 101. Furthermore, the district court concluded that the asserted method claims for generating a device profile encompass the abstract idea of organizing data through mathematical correlations were also ineligible under § 101.

On appeal, Digitech asserted that the district court erred in its findings that both the "device profile" and method claims were invalid. With regard to the "device profile" claims, the Court of Appeals stated that for under § 101, for all categories except process claims, the eligible subject matter must exist in some physical or tangible form. Here the "device profile" is comprised of two sets of data that describe a device dependent transformation—one set of data for color information and the other set of data for spatial information. Though Digitech argued that the "device profile" is hardware or software within a digital image processing system, the Court of Appeals concluded that the claims' only description of the device profile relates to the two sets of data and that data in its non-physical form simply does not fall under § 101.

Additionally, the Federal Circuit concluded that the '415 patent's method claims were drawn to an abstract idea because it describes a process of organizing information through mathematical correlations and is not tied to a specific structure or machine. The Court reasoned that without additional limitations, the employment of a mathematical algorithm to manipulate existing information in order to generate additional information is not eligible for patent protection.  Specifically, the claim stated a process of combining two data sets into the "device profile" and was "so abstract and sweeping" as to cover any and all uses of a "device profile."

 The full opinion is available here: http://www.cafc.uscourts.gov/images/stories/opinions-orders/13-1600.Opinion.7-9-2014.1.PDF

MVS Filewrapper® Blog: USPTO Issues Preliminary Guidance on Patentability Based on Alice Corp.

On June 25, 2014 the USPTO Deputy Commissioner for Patent Examination Policy released a Memorandum to the Patent Examining Corps that provides examiners with preliminary instructions related to subject matter eligibility of claims involving abstract ideas under 35 U.S.C. § 101 in view of the Supreme Court Decision in Alice Corporation Pty. Ltd. v. CLS Bank International.  The memo provides the following guidance with respect to the application of the Mayo framework to the examination of claims involving abstract ideas in light of the Alice decision:

 

(1)  Alice Corp. establishes that the same analysis should be used for all types of judicial exceptions, whereas prior USPTO guidance applied a different analysis to claims with abstract ideas (Bilski guidance in MPEP 2106(II)(B)) than to claims with laws of nature (Mayo guidance in MPEP 2106.01).

 

(2)  Alice Corp. also establishes that the same analysis should be used for all categories of claims (e.g., product and process claims), whereas prior guidance applied a different analysis to product claims involving abstract ideas (relying on tangibility in MPEP 2106(II)(A)) than to process claims (Bilski guidance).

 

The memo then explains that, despite these changes, the basic inquiries and examination procedures as to subject matter eligibility remain the same after the Alice decision. 

 

The instructions also set out a "Two-Part Analysis for Abstract Ideas."  First, the examiner is to determine whether the claim is directed to an abstract idea such as "fundamental economic practices," "certain methods of organizing human activities," "an idea of itself," or "mathematical relationships/formulas."   If the examiner concludes that the claim is directed to an abstract idea, the examiner must then determine "whether any element, or combination of elements, in the claim is sufficient to ensure that the claim amounts to significantly more than the abstract idea itself."  The instructions provide examples of what would qualify and what would not qualify as "significantly more" as referenced in the Alice decision: 

 

Would qualify: Improvement to technology or technical field, improvements to functioning of computer itself, and "meaningful limitations."

 

Would not qualify:  Adding the words "apply it," and requiring no more than a generic computer to perform generic computer functions.

 

The instructions direct examiners to reject claims under 35 U.S.C. § 101 as being directed to non-statutory subject matter if they do not amount to "significantly more" than the abstract idea. 

 

These examination instructions are only initial guidelines, and will be updated and modified as needed after additional consideration of the decision and public feedback.  Accordingly, the USPTO has issued a Request for Comments and Extension of Comment Period on Examination Instruction and Guidance Pertaining to Patent-Eligible Subject Matter that is open through July 31, 2014. 

MVS Filewrapper® Blog: Generic Computer Implementation Cannot Save Patent-Ineligible Abstract Idea

On June 19, 2014, the Supreme Court issued its much-anticipated opinion in Alice Corp. v. CLS Bank Int'l.  The Petitioner, Alice Corporation ("Alice Corp.") is the assignee of the four patents at issue which disclose method, system, and media claims related to a computerized scheme for mitigating "settlement risk."  Respondents CLS Bank International and CLS Services Ltd. ("CLS") operate a network that facilitates currency transactions.  In 2007, CLS filed claims against Alice Corp. seeking a declaratory judgment that the claims at issue were invalid, unenforceable, and not infringed.  The parties filed cross-motions for summary judgment as to whether the asserted claims were patent-eligible subject matter under 35 U.S.C. § 101.  The District Court held that the claims were patent ineligible for failing to meet the requirements of section 101.  On appeal, a divided panel of the Court of Appeals for the Federal Circuit originally reversed the decision of the District Court however, after a rehearing en banc, the Federal Circuit affirmed the opinion of the District Court.

 

Alice Corp. appealed the decision of the en banc panel of the Federal Circuit to the Supreme Court.  The Supreme Court utilized the two-step framework set forth in Mayo Collaborative Servs. v. Prometheus Laboratories, Inc. in order to determine whether (1) the claims at issue are directed to a law of nature, natural phenomenon, abstract idea, or otherwise patent ineligible concept and (2) if so, the elements of the claim both individually and "as an ordered combination" add elements such that the patent ineligible concept was "transformed" into a patent-eligible application.

 

At the first step, the Supreme Court cited its precedent in Bilski v. Kappos in analyzing the claims at issue.  The Court wrote, "Petitioner's claims involve a method of exchanging financial obligations between two parties using a third-party intermediary to mitigate settlement risk. . . . On their face, the claims before us are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk."  The Court then compared these claims to the "risk hedging" in Bilski in determining that "intermediated settlement, like hedging, is an 'abstract idea' beyond the scope of § 101."   Citing Bilski, the Court rejected Alice Corp.'s argument that the abstract idea category is confined to "'preexisting, fundamental truth[s]' that '"exis[t] in principle apart from any human action.'"  As such, the Court held that the claims are "squarely within" the realm of abstract ideas and, thus, directed at patent-ineligible subject matter.

 

At the second step of the Mayo analysis, the Court reviewed its decisions in Gottschalk v. Benson, Diamond v. Diehr, Parker v. Flook, and Mayo in once again confirming that the "mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention."  The Court found the use of the computer in the claim elements was "purely conventional" and amounted to nothing more than "an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer." The Court further found that neither the system nor the media claims were different in substance and simply "recite a handful of generic computer components configured to implement the same idea."

 

Accordingly, the Supreme Court affirmed the decision of the Federal Circuit, finding the method claims to be patent ineligible and "[b]ecause petitioner's system and media claims add nothing of substance to the underlying abstract idea, we hold they too are patent ineligible under § 101."

MVS Filewrapper® Blog: Federal Circuit Finds Clones Unpatentable

The Federal Circuit issued its opinion in In re Roslin Institute, a case involving cloned animals.  The Roslin Institute (Roslin) owns a patent for methods of cloning animals, based on the work that created Dolly the Sheep.  The inventors of that patent also assigned to Roslin an application claiming protection for the clones themselves.  During prosecution, the USPTO deemed the claims to the clones contained in that application to be directed to non-statutory subject matter under 35 U.S.C. § 101 because the clones constituted a natural phenomenon that did not possess markedly different characteristics than any found in nature.  The USPTO decision was appealed to the Patent Trial and Appeal Board, which upheld the rejection. 

 

On appeal to the Federal Circuit, the appellate court affirmed the PTAB decision, concluding that genetic identity of a clone to a progenitor/donor animal precludes it from patent protection, despite the fact that such a clone itself does not exist in nature.  The court held that "clones are exact genetic copies of patent ineligible subject matter, [and as a result] they are not eligible for patent protection."

 

Interestingly, the court dismissed Roslin's arguments that environmental factors lead to phenotypic differences between its clones and their donor mammals that render their claimed subject matter patentable, stating that any such differences were not claimed.  In contrast, the court focused on the genetic aspect of the clones—which although similarly unclaimed—the court determined was implicit in the use of the term "clones".  The court further discounted any phenotypic differences as being the result of "environmental factors" uninfluenced by Roslin's efforts. 

 

The court ultimately qualified it's holding, stating that "having the same nuclear DNA as the donor . . . may not necessarily result in patent ineligibility in every case," but that in this case "the claims do not describe clones that have markedly different characteristics from the donor animals of which they are copies."

 

The full opinion is available here

MVS Filewrapper® Blog: USPTO Issues New Examination Guidelines for Patent Subject Matter Eligibility

The basic requirements for filing a U.S. utility patent are rather straightforward. Patents are granted for new, useful and non-obvious processes, products or compositions of matter. Similarly, any new, useful and non-obvious improvement to these categories of inventions may be granted a patent. Although seemingly straightforward, the three basic requirements for patentability are impacted by an evolving legal landscape which is largely dictated by court-created case law. 

 

For much of the last thirty years, the case law addressing patent eligibility has had some consistency.  However, a series of court decisions in recent years has changed the understanding of what is considered patent-eligible.  As a result, the USPTO released guidelines last month providing an analytical framework to evaluate whether a patent claim meets these patent subject matter eligibility requirements (as set forth in 35 USC § 101). These guidelines titled "Guidance for Determining Subject Matter Eligibility of Claims Reciting or Involving Laws of Nature, Natural Phenomena, & Natural Products" are particularly relevant for those dealing with patent applications (and portfolios) in the fields of biotechnology, chemistry and/or life sciences. Although subject matter eligibility is applicable for all fields of patenting, the guidelines were provided to patent examiners to specifically address examination of claims “reciting or involving laws of nature/natural principles, natural phenomena, and/or natural products” (i.e. applying the legal principles set forth in the Myriad and Prometheus decisions, see earlier FileWrapper postings for further detail).

 

A few key points to consider in light of the USPTO guidelines (available at http://www.uspto.gov/patents/law/exam/myriad-mayo_guidance.pdf) include the following:

 

1.      The guidelines apply to all claims (excluding "abstract ideas")

Any claims that “recite or involve laws of nature/natural principles, natural phenomena, and/or natural products” are to be examined using the new guidelines. The only exclusion is a claim which is alleged to recite an “abstract idea,” which will not be examined using the new guidelines.

 

2.      Natural products are very broadly defined

The guidelines define natural products broadly, including “substances found in or derived from nature.” The take-home for patent Examiners is that claimed subject matter for a product must be non-naturally occurring to be subject matter eligible. In addition, to meet requirements of non-obviousness, the non-naturally occurring product must be “markedly different in structure from naturally occurring products.”

 

3.      There is a 3-part eligibility test to be applied by Examiners

The guidelines provide Examiners with a decision tree for determining patent subject matter eligibility (reproduced at the beginning of this post).  The first question asked by an examiner when evaluating a patent claim will be whether the claimed invention is directed to a statutory patent-eligible subject matter category (process, machine, manufacture, or composition of matter).

If the first threshold is met, the examiner will next question whether the claim recites or involves a judicial exception, which therefore precludes patentability. Examples of these exceptions include abstract ideas, laws of nature (i.e. natural principles), natural phenomena, and natural products.

Finally, the third question to be assessed by an examiner under the guidelines is whether the claim as a whole recites something "significantly different" than the mentioned judicial exception. The guidelines provide more extensive analysis of what constitutes a "significant" difference. Generally, there must be a showing that the product claimed has a marked difference from what exists in nature, or also recites a meaningful limitation to add something of significance to the patent claim.



We note that the guidelines were created by the USPTO for the USPTO examiners. Therefore, they are an interpretation of case law relating to subject matter eligibility. They are not binding law, and they are subject to change and/or judicial challenge. However, they can be helpful in navigating the area between patentable and unpatentable subject matter. 

 

MVS Filewrapper® Blog: Bring on the New Year—What is in Store for IP in 2014?

Happy New Year to all of our FilewrapperÒ followers! We hope 2013 was a productive year and wish you the best in 2014. As the New Year quickly approaches we would like to share with you a few predictions for 2014 for you to look forward to and for which to prepare!

·         Increased opportunities for quasi-litigation under AIA.  Various new mechanisms are available to challenge patents under the America Inventors Act (also referred to as “AIA” or “Patent Reform”) many provisions of which took effect in 2013. New strategies are available to challenge patents at the USPTO instead of challenging in court, providing distinct advantages—and some disadvantages.  Inter Partes Review, Post-Grant Review and transitional programs specific for business method patents are quasi-litigation proceedings which are heard by a panel of USTPO administrative law judges.  Ex Parte Reexamination—which has been available since 1981—also remains to allow a patent challenge to be heard by a patent examiner, requiring little from the challenger other than filing required papers with some evidence of patent invalidity.  The cost for ex-parte reexamination has significantly increased, although it remains a far less expensive option than litigation with the courts.

·         (Finally) an international design patent application is available!  Design patents protect a product’s new, original and ornamental design.  Design patents present a smart option for investment in protecting a product, since they cost significantly less than utility patents and are generally granted at a much faster rate.  In addition to these benefits of filing design patents, changes in international design registration under the Hague Agreement may facilitate more effective international protection for your design inventions.  Effective December 18, 2013 a single international application designating a variety of countries for protection can be filed through the International Bureau of WIPO.  This is beneficially a single international application to be filed at one location, which will ultimately be examined by many different Offices thereafter to provide more prompt and cost effective options for design protection.  Over 60 countries and territories—including the European Union—are members of the Hague Agreement.  However, there are various countries that are excluded from this treaty (e.g. Australia, Canada, China, Mexico, Japan, India, and Brazil), which would require a separate application as has been done in the past for foreign design patents.  Nonetheless, the Hague Agreement provides significant improvements for international design protection.

·         (Some USPTO) Fees Decrease January 1, 2014.  In addition to the new classification of “micro-entity” status for Applicants to receive 75% reduction of some USPTO fees that took effect in 2013, the New Year also brings certain fee reductions.  Notably, Issue Fee payments for granted patents are substantially reduced (from $1,780 to $960 for large entity), along with the removal of publication fees and assignment recordation fees.  Reissue patent, design patent and plant patent issue fees are also decreasing.  In addition, in 2014 certain PCT fees will be eligible for payment under small and micro entity status.

·         The search continues for a test to determine patentable subject matter under §101.  The Supreme Court will hear CLS Bank v. Alice in 2014 after the Federal Circuit’s en banc decision in 2013 found many software patents to be ineligible.  The Supreme Court will again try to define an abstract idea in considering whether claims to a computerized method (using a computer-readable medium and a computer to implement instructions) is patentable subject matter.  Both the Federal Circuit and patentees are still searching for a test under §101 that is “consistent, cohesive, and accessible [to provide] guidance and predictability for patent applicants and examiners, litigants, and the courts.”

·         We may receive further guidance on Claim Indefiniteness.  The Supreme Court is expected to grant certiorari on Nautilus v. Biosig Instruments involving indefiniteness under §112, second paragraph to determine whether claims having multiple reasonable interpretations are too ambiguous and would render a patent unenforceable for lack of written description.

·         Protecting American from “Patent Trolls.”  As previously reported on FilewrapperÒ, there is legislative movement in the House and Senate to limit lawsuits which can be filed by non-practicing entities (NPEs or Patent Trolls).  There seems to be great energy around limiting “frivolous” lawsuits in our court system.  In early 2014, the Senate will consider a companion bill to Senate 1720 ("Patent Transparency and Improvements Act of 2013"), which is said to already have support from the White House.  If legislation passes the Senate, then the House and Senate bills will need to be reconciled before being sent to the President.

·         New Patent Director.  Stay tuned for further administrative changes at the USPTO as the new Director, Michelle Lee, takes office January 13, 2014. The former Google executive has been made deputy director of the USPTO, and in that capacity will take on the duties of acting director.  Lee has issued statements planning to “attack” the backlog of unexamined patents (remains at more than 500,000) and improve patent quality with improved inter partes review.

MVS Filewrapper® Blog: New and Useful - July 8, 2013

·         The Federal Circuit in Ultramercial, Inc. v. Hulu, LLC held that the district court erred in holding that the subject matter of U.S. Patent No. 7,346,545 ('545) is not a "process" within the language and meaning of 35 U.S.C. § 101.  The Federal Circuit reversed and remanded this case stating the claims were not abstract and were patent eligible.

The '545 patent claims a method for distribution of copyrighted products over the Internet where the consumer receive the product for free in exchange for viewing an advertisement, and the advertiser pays for the copyrighted content.  In other words, it is a method for monetizing and distributing copyrighted products over the Internet.

Ultramercial originally sued Hulu, LLC ("Hulu"), YouTube, LLC ("YouTube"), and WildTangent, Inc. ("WildTangent"), alleging infringement of the '545 patent.  Hulu and YouTube were later dismissed from the case.  WildTangent then moved to dismiss for failure to state a claim under Rule 12(b)(6).  The United States District Court for the Central District of California granted the dismissal holding that patent '545 did not claim patent-eligible subject matter.  The Federal Circuit had previously reversed the district court's holding and remanded the case, but that earlier decision was vacated by the United States Supreme Court. 

The district court’s grant of the motion to dismiss was based on its conclusion that there was no reasonable construction that would render the subject matter patent-eligible.  The Federal Circuit took issue with this approach, and explained that inquiries into patent-eligibility under § 101 would often involve factual questions, and that claim construction would often be necessary.   In this case, the Federal Circuit determined that the factual determinations were key to deciding eligibility, and that a construction most favorable to the patentee should be applied. 

In its analysis, the Federal Circuit reiterated that under the “abstract ideas” limitation to patent-eligibility of 35 U.S.C. § 101, a claim is not patent eligible only if, instead of claiming an application of an abstract idea, the claim is instead to the abstract idea itself.  A claim may be premised on an abstract idea and, indeed, the abstract idea may be of central importance to the invention—the question for patent eligibility is whether the claim contains limitations that meaningfully tie that abstract idea to an actual application of that idea through meaningful limitations.  In determining if the claim is abstract or not, the court must look at the claim as a whole and "cannot go hunting for abstractions by ignoring the concrete, palpable, tangible limitations of the invention the patentee actually claims."

The Federal Circuit looked to the Supreme Court for guidance on discerning whether or not a claim is an abstraction.  First, the Supreme court in Prometheus stated that a claim is not meaningfully limited if it merely describes an abstract idea or in essence simply adds the words "apply it."  Second, a claim is invalid if the subject matter preempts all practical uses of an abstract idea.  In other words, a claim is invalid if it covers every practical application of that abstract idea.  Finally, the Supreme Court in Prometheus stated "that a claim is not meaningfully limited if its purported limitations provided no real direction, cover all possible ways to achieve the provided result, or are overly-generalized."

With this guidance in mind, the Federal Court held that the claims of '545 were patent eligible and not invalid under § 101.  The court noted that by its terms, patent '545 invokes computers and applications of computer technology.  Even without claim construction, several of the steps require that the method be performed though computers, on the internet, and in a cyber-market environment.  Further, if the products are offered for sale on the internet, they must be restricted by complex computer programming as well.  Viewing the subject matter as a whole, the invention recites a process, it does not pre-empt all use of the abstract idea, the recited steps are not all pre- or post-solution steps, and the claim is not overly generalized.  The claims also do not involve a mathematical algorithm, a series of purely mental steps, or any similarly abstract idea.  Thus the claims of patent '545 were found to be patent-eligible.  

  

·         In Authors Guild v. Google Inc., the Second Circuit vacated a class certification by the United States District Court for the Southern District of New York, and remanded the case back for further consideration, without prejudice to any renewal of the motion for class certification.

The suit commenced in 2005 when The Authors Guild, an association of authors, and several individual authors sued Google alleging copyright infringement by Google Books.  Google Books would scan and index books and make short snippets of the books available for public viewing without payment to the authors.

Following a course of discovery and settlement agreements, both parties moved for an approval of an amended proposed class settlement agreement.  After the court refused the motion, the plaintiff moved to certify a proposed class of "[a]ll persons residing in the United States who hold a United States copyright interest in one or more books reproduced by Google."  The district court allowed the certification.  Google opposed the motion for class certification and appealed the District Court's grant of class certification to the Second Circuit.  In its appeal, Google stated they intended to raise a "fair use" defense, which might moot the litigation.  Google also raised the defense that the class representatives do not adequately protect the interests of the class as a whole.

The appellate court set aside Google's second defense and chose to just focus on the fair use argument, stating "the resolution of Google's fair use defense in the first instance will necessarily inform and perhaps moot our analysis of many class certification issues."  The court believed that Google's fair use defense should be fully resolved before questions regarding class certification are decided on.  The court vacated the District Court's decision to allow certification of the proposed class and remanded the case back for consideration of the fair use issues, without prejudice to any renewal of the motion for class certification.

·         In Fresenius USA v. Baxter Inter'l, the Federal Circuit decided whether the cancellation of the asserted claims by the United States Patent and Trademark Office ("PTO"), pursuant to the agency's statutory reexamination authority, must be given effect in pending infringement litigation.  The Federal Circuit held that it did, and dismissed the district court's decision and remanded with instructions to dismiss.

The case commenced when Fresenius USA and Fresenius Medical Care Holdings (collectively, "Fresenius") brought a declaratory judgment action against Baxter International and Baxter Healthcare Corporation (collectively "Baxter") alleging that claims of U.S. Patent No. 5, 247, 434 ('434) were invalid and not infringed.  Baxter counterclaimed for infringement.  The district court found in favor of Baxter that Fresenius infringed the claims and that the claims were not invalid.  The Federal Circuit affirmed the district court's ruling, but remanded to reconsider its injunction and post-verdict damages.

While the litigation was pending on remand to the District Court, the PTO completed a reexamination of the patent and determined that all asserted claims were invalid.  After the PTO made its determination, the district court entered judgment against Fresenius in the pending infringement proceeding.  On appeal, Fresenius argued that Baxter no longer had a cause of action because the PTO gave its ruling before the district court gave theirs.

The reexamination statute of 1928 authorized the PTO to reconsider patents of "doubtful" validity, and to cancel "defectively examined and therefore erroneously granted patents."  Looking at the language and legislative history, the court noted that reexamination is supposed to occur concurrently with litigation, and that cancellation of claims during reexamination would be binding on concurrent infringement litigation.  After looking at all applicable precedent, the court concluded that if the PTO confirms the original claim in identical form, a suit based on that claim may continue, but if the original claim is cancelled or amended to cure invalidity, the patentee's cause of action is extinguished and the suit would fail.

Baxter contends that this rule does not apply to the present case because their case was conclusively decided before PTO gave their decision.  The Federal Circuit disagreed. The court stated that their original decision was not sufficiently final as to immunize it from the PTO's decision.  The court's original decision left open many aspects that still needed to be decided upon by the lower court.  The court explained "it is well-established that where the scope of relief remains to be determined, there is no final judgment binding the parties or the court."  For the PTO's decision to have no effect, a final decree must have been given, leaving nothing further to be done except the execution of it.  Since the PTO invalidated the claims before the lower court decided the injunction and post-verdict damages issues, Baxter no longer had a cause of action and the suit would fail.

MVS Filewrapper® Blog: Supreme Court Addresses Product of Nature Doctrine Relating to Gene Patents

The Supreme Court today handed down its decision in Association for Molecular Pathology v. Myriad Genetics, Inc.  The Court held that isolated DNA is a product of nature and not patent eligible merely because it has been isolated, but that complementary DNA (cDNA) is patent eligible because it is not naturally occurring. 

The Court limited its holding to the patentability of isolated genes and cDNA, concluding that DNA sequences that do not exist in nature (i.e. cDNA) are patent eligible under § 101, but that merely isolating a naturally occurring gene from the surrounding genetic material in not sufficient to render the gene patent-eligible.  The Court also took care not to further limit patent-eligibility for innovative methods for manipulating genes, uses of newly discovered genes, or DNA molecules with altered sequences. 

            Myriad discovered the location and sequence of two genes—BRCA1 and 2.  Mutations in these genes are linked to increased risk of developing breast and ovarian cancer.  Myriad obtained several patents, which include numerous composition claims that cover the BRCA1 and BRCA2 genes, both as isolated DNA (i.e. the genetic sequence as it otherwise exists in the cell, but excised from the rest of the genome) and as cDNA (i.e. only the coding regions of the genomic DNA sequence; all non-coding regions have been removed).  After the patents were granted, Myriad filed suit against a number entities that performed BRCA testing alleging infringement of the patents. 

The case was originally filed in the Southern District of New York by a group of researcher, physicians, advocacy groups, and patients seeking a declaratory judgment that the Myriad patents were invalid under 35 U.S.C. § 101 because the claimed subject matter was ineligible for patent protection.  The district court granted summary judgment to the declaratory judgment plaintiffs, holding the composition claims of the Myriad patents invalid because they covered products of nature.  Myriad appealed to the Federal Circuit, which reversed the district court.  The Supreme Court granted certiorari, but vacated the Federal Circuit decision and remanded the case to the Federal Circuit–without opinion–in light of the Supreme Court’s decision in Mayo Collaborative Services v. Prometheus Laboratories.  On remand, the Federal Circuit held that Myriad’s claims to both isolated DNA and cDNA were patent-eligible, and the Supreme Court again granted certiorari. 

In its decision, the Supreme Court affirmed in part and reversed in part the Federal Circuit. The Court separately addressed the patentability of isolated, naturally occurring DNA molecules and synthetically created cDNA.  The Court framed its decision in terms of the “important implicit exception[s]” to patentability under § 101—laws of nature, natural phenomena, and abstract ideas.  With respect to the claimed isolated DNA molecules, the Court concluded that Myriad did not create anything, but rather merely separated an important and useful gene from its surrounding genetic material, which did not constitute an act of invention.  Because the location and order of the nucleotides existed in nature before Myriad found and separated them, and Myriad had not created or altered the genetic structure of the DNA, the claims to the compositions did not meet the requirements for patent-eligibility under § 101. 

With respect to cDNA, the Court concluded that it did not present the same obstacles patentability as naturally occurring, isolated DNA.  Because cDNA molecules do not exist in nature—due to the absence of non-coding intron regions, compared to the genetic DNA sequence—they are not products of nature, and constitute patent-eligible subject matter under § 101. 

Ultimately, the Court concluded that Myriad is entitled to the exclusive right to synthetically create BRCA cDNA, but not the exclusive right to isolate an individual’s BRCA genes.  However, the Court took special care to point out the limits of its decision.  First, the Court emphasized that its decision did not reach any method claims, since those were not before the Court on appeal, but stated that the processes used by Myriad to isolate and generate the claimed DNA were well understood by geneticists at the time.  Presumably, this would run afoul of the Court’s holding in Mayo Collaborative Services v. Prometheus Laboratories.  However, the Court did note that Myriad “could possibly have sought a method patent” for some innovative method of manipulating genes, had it created any. 

The Court also called attention to the fact that its decision in this case did not involve the patent-eligibility of new applications of genes, leaving open the possibility of protection for various uses of newly discovered genes or other DNA sequences, such as those claimed in the unchallenged claims of Myriad’s patents.  These claims include kits for detecting mutations, methods for screening, and nucleic acid probes specifically hybridizable to mutated BRCA.  Finally, the Court stated that its opinion did not address “DNA in which the order of the naturally occurring nucleotides has been altered,” concluding that this type of alteration constitutes a different inquiry. 

The Court held “that genes and the information they encode are not patent eligible under §101 simply because they have been isolated from the surrounding genetic material,” but that DNA sequences that do not exist in nature (i.e. cDNA) are patent eligible under § 101, and left open the possibility of patent-eligibility for innovative methods for manipulating genes, uses of newly discovered genes, and DNA molecules with altered sequences.  This case helps to define the boundaries of the Product of Nature doctrine after Mayo Collaborative Services v. Prometheus Laboratories, and in particular with respect to gene patents, but leaves many issues regarding the scope of the Product of Nature doctrine unresolved. 

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