Transcript Document

MATTO Technology Transfer Seminar
June 21, 2006
RECENT SUPREME COURT CASES
I. eBay v. MercExchange
Is Property Really Property?
J. Peter Fasse
The Issue
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A Disconnect by the District Court
District Judge Friedman:
“Plaintiff [MercExchange] exists solely to
license its patents or sue to enforce its patents,
and not to develop or commercialize them.”
Since when did commercialization exclude
licensing?
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The Question Presented
Whether the Federal Circuit erred in setting
forth a general rule in patent cases that a
district court must, absent exceptional
circumstances, issue a permanent injunction
after a finding of infringement.
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The Petition for Certiorari
Supreme Court of the United States
eBAY INC., ET AL. v. MERCEXCHANGE, L.L.C.
The petition for a writ of certiorari is granted. In
addition to the Question presented by the petition, the
parties are directed to brief and argue the following
Question: ‘Whether this Court should reconsider its
precedents, including Continental Paper Bag Co. v.
Eastern Paper Bag Co., 210 U.S. 405 (1908), on when
it is appropriate to grant an injunction against a patent
infringer.’
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The Constitution
“The Congress shall have power . . . To
promote the progress of science and useful
arts, by securing for limited times to
authors and inventors the exclusive right to
their respective writings and discoveries.”
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The Decision
EBAY INC. ET AL. v.
MERCEXCHANGE, L.L.C.
Argued March 29, 2006
Decided May 15, 2006
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“Unanimous Opinion” – The Result
The appellate court’s decision
against eBay is vacated.
There is no “general rule” that a
permanent injunction follows a
finding of infringement of a
valid patent.
Justice Thomas
delivered the opinion
for a unanimous court
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“Unanimous Opinion” – The Test
“A plaintiff seeking a permanent injunction must satisfy a
four-factor test before a court may grant such relief.” (1)
irreparable injury? (2) $ sufficient? (3) balance of
hardships favor patent owner? (4) public interest?
“These familiar principles apply with equal force to
disputes arising under the Patent Act.”
“The decision to grant or deny permanent injunctive relief
is an act of equitable discretion.”
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“Unanimous Opinion” – IP Marketers
“[S]ome patent holders, such as university researchers or self-made
inventors, might reasonably prefer to license their patents, rather
than undertake efforts to secure the financing necessary to bring
their works to market themselves.”
“Such patent holders may be able to satisfy the traditional fourfactor test, and we see no basis for categorically denying them the
opportunity to do so.”
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Chief Justice Roberts concurred
(joined by Justices Scalia and Ginsburg)
“From at least the early 19th century,
courts have granted injunctive relief
upon a finding of infringement in the
vast majority of patent cases.”
“[T]here is a difference between
exercising equitable discretion
pursuant to the established fourfactor test and writing on an entirely
clean slate. Discretion is not whim,
and limiting discretion according to
legal standards helps promote the
basic principle of justice that like
cases should be decided alike.”
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Take Aways
Probably no different result in majority of cases injunction will still issue.
For business method patents and patents covering only a
part of an apparatus - what will the Federal Circuit do if
district courts deny injunctions here?
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RECENT SUPREME COURT CASES
II. LAB. CORP. V. METABOLITE
Everything Under the Sun?
J. Peter Fasse
The Set-Up
The Supreme Court on March 1, 2005, issued the following
order in Laboratory Corp. of America v. Metabolite
Laboratories, U.S., No. 04-607, 2/28/05:
Question: Respondent’s patent claims a method for detecting a form of vitamin
B deficiency, which focuses upon a correlation in the human body between
elevated levels of certain amino acids and deficient levels of vitamin B. The
method consists of the following: First, measure the level of the relevant amino
acids using any device, whether the device is, or is not, patented; second, notice
whether the amino acid level is elevated and, if so, conclude that a vitamin B
deficiency exists. Is the patent invalid because one cannot patent “laws of
nature, natural phenomena, and abstract ideas”? Diamond v. Diehr, 450
U.S. 175, 185 (1981).
Acting Solicitor General responds in September of 2005, by urging Court to
deny certiorari because claim is more than a recital of a natural relationship but
also claims a diagnostic method.
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The Loaded Question
The Supreme Court of the United States grants
certiorari on Question No. 3 in the petitioner Lab.
Corp.’s brief, which reads as follows:
Whether a method patent setting forth an indefinite,
undescribed and non-enabling step directing a party
simply to “correlate” test results can validly claim a
monopoly over a basic scientific relationship used in
medical treatment such that any doctor necessarily infringes
the patent by thinking about the relationship after looking at
a test result.
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Background: The Patent
The patent in suit, U.S. Patent No. 4,940,658 (“the ‘658
patent”) is directed to methods for detecting deficiencies of
cobalamin (vitamin B12) and folate (folic acid). The
inventors discovered a relationship between elevated levels
of total homocysteine and a deficiency in either cobalamin
or folate. See Metabolite Labs., Inc. v. Lab. Corp. of Am.
Holdings, 370 F.3d 1354, 1358 (Fed. Cir. 2004). They then
claimed a diagnostic method that applied this discovery by
first assaying for total homocysteine and then correlating
the result with the vitamin deficiency.
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Background: Claim 13
Claim 13 of the ‘658 patent reads as follows:

A method for detecting a deficiency of cobalamin or
folate in warm-blooded animals comprising the steps of:
assaying a body fluid for an elevated
level of total homocysteine;
and
correlating an elevated level of total
homocysteine in said body fluid
with a deficiency of cobalamin or
folate.
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Background: The Infringement
Lab. Corp. began running a series of assays, on which
Metabolite did not own patents, for the purpose of
measuring homocysteine to be used by physicians to
diagnose B-12 and B-9 deficiencies.
Lab. Corp. did not tender a royalty to Metabolite and
was sued for inducing infringement of claim 13 of the
‘658 patent.
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Background: The Trial
The jury found claim 13 to be valid and willfully infringed. At trial,
petitioner Lab. Corp. argued that the claim was invalid because it was
anticipated by prior art under Section 102; was obvious in light of the prior
art under Section 103; did not “distinctly claim” the invention under Section
112,¶2; and did not satisfy the written description requirement of section
112,¶1. 370 F.3d at 1359, 1366-67.
The patent holders argued at trial that doctors were direct infringers because
they had the assaying done for them and then they performed the
‘correlating step,” and that LabCorp induced doctors to infringe by
performing a test for total homocysteine and publishing information to the
effect that an elevated level of total homocysteine correlates with cobalamin
or folate deficiency. Id. At 1365. The record suggests that any competent
doctor will necessarily perform the second “correlating step” when he
receives the results of any total homocysteine assay because it would be
malpractice for a doctor to receive a total homocysteine assay without
determining cobalamin/folate deficiency. Id. At 1364
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What is a Court to do?
It may have been too late for the issue to be raised in
the petition for certiorari. If so, the Supreme
Court may:



Dismiss the petition as improvidently granted, or
Remand the case to the Federal Circuit for its views on
whether the issue was properly raised, or
Remand the case to the Federal Circuit for its views on the
merits of the issue and possibly for development of the
issue at the trial court level
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Statutory Background
U.S. Constitution, Article 1, Section 8:

grants Congress the power to pass laws that “promote the
Progress of Science and the useful Arts”
35 U.S.C. § 101:

“whoever invents or discovers any new and useful process,
machine, manufacture, or composition of matter, or any
new and useful improvement thereof, may obtain a
patent therefore, subject to the conditions and requirements
of this title.”
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Prior Supreme Court Cases
Funk Brothers Seed Company v. Kalo., 333 U.S. 127 (1948) - “If there
is to be invention from [the discovery of a phenomena of nature], it must
come from the application of the law of nature to a new and useful end.”
Justice Douglas stated the proper rule of law, but did not apply that rule
to the facts in the case and thus reached the wrong conclusion.
Diamond v. Chakrabarty 447 U.S. 303 (1980) - After over 30 years of
silence, the Supreme Court revisits the issue in Funk Brothers. Statutory
subject matter is intended to include “anything under the sun that is
made by man.”
Diamond v. Diehr, 450 US 175 (1981) “When a claim containing a
mathematical formula implements or applies that formula in a structure
or process which, when considered as a whole, is performing a function
which the patent laws were designed to protect … then the claim
satisfies the requirements of § 101.” In effect Diehr overrules Funk, sub
silentio.
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The Wished For Proper Merits Result In
Lab. Corp.
Apply the rule announced in Funk Brothers and Diehr,
Explicitly overrule the holding in Funk Brothers, and
Affirm the validity of claim 13
But what will eight justices do?
(Chief Justice Roberts recused himself)?
Slides based on work by Frank Porcelli, John Dragseth,
Kyle Wagner Compton, and Michael Kallus in F&R’s
Appellate Practice Group
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PROPOSED RULE CHANGES
Faustino A. Lichauco
I: Continuation Practice Change
PRESENT CONTINUATION PRACTICE
* unlimited progeny, no questions asked
* “progeny” = CN/RCE/DV/CIP
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Advantages For TTO
Can accept allowed claims and pursue
broader ones later
Claims can evolve to more accurately
articulate invention
Iron in the fire; adjust to competition, tailor
to licensee’s demands
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One Leaf In A Patent Tree
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The Entire Tree
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PTO Family Planning (71 Fed. Reg. 48)
One child as of right per founding parent.
“child” = CN, DV, RCE, or CIP
For more children: petition (with $400 fee)
Reason for extra children could not have been presented earlier
“Reason” = argument/amendment/evidence
File petition within four months of continuation filing date
Result: ZPG
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Proposed Prosecution Cycle For CN, RCE, CIP
Patent-1
Founder
Patent-2
CN
Founder
Patent
CN-1
Final
Rejection
SHOWING
CN-2
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Special Rules For Divisionals
Only if there has been a restriction
requirement in the founding parent
Divisional may have one free child claiming
priority from founding parent
Additional child of divisional requires
petition
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Proposed Front-Loaded Cycle
For Divisional Applications
Founder
Patent
Con
Div1
Div2
Div3
P
P
Con
P
P
Con
P
P
Con
P
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Special Rules For CIPs
Must identify which claims are supported by
original filing date
Must identify which claims are supported by new
matter
Unidentified claims are entitled to later date by
default
Additional free child, but with priority only one
generation back
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Statutory Basis For Rule Changes
35 USC 2(b)
“The Office...may establish regulations, not
inconsistent with law, which
(A) shall govern the conduct of proceedings in
the Office;
(B) shall be made in accordance with section
553 of title 5 [Administrative Procedures Act]”
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Legal Issues Raised By Proposed Rule
Changes
Inconsistent with 35 USC 120
“An application…disclosed in the manner provided by (sec. 112
para. 1) in an application previously filed in the United
States…shall have the same effect, as to such invention, as
though filed on the date of the prior application…or on an
application similarly entitled to the benefit of the filing date of the
first application” [emphasis added]
PTO says its petition for another child makes rule consistent with
35 USC 120.
Text of Title 35 refers to Director's power in certain places, but
not in others.
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Status Of Rule Making
Rule proposed in January 2006
Comment period closed in May 2006
Now awaiting final rule
Final rule takes effect ≥ 30-days after
publication
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What Can We Expect?
More appeals to Board
More use of pre-appeal conference procedure
Avoid omnibus specifications
Delay publication in journals
No more filing continuation without already
including new claims.
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Sibling Applications
Common inventor, and
Common owner, and
Filed within two months of each other
“Owner” includes CREATE “owner”
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Twin Applications
Are sibling applications that:
Have substantial overlapping disclosure
Have same filing date
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Special Rules For Siblings And Twins
Siblings must be cross-cited
Twins spawn an automatic obviousness-type
double-patenting rejection
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Rebutting The Double Patenting Presumption
Argue that claims are patentably distinct, OR
Explain why you filed twins and submit a
terminal disclaimer
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II: Present Examination Procedure
Unlimited claims, but with excess claim fees
Examiner examines all claims
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Proposed Examination Procedure (71 Fed.
Reg. 61)
Unlimited claims, with fees
Examiner examines only ten claims
The ten include all independent claims
Balance chosen by Applicant
Applications having more than ten claims are examined
on a self-service basis.
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Self-Service Examination
First, prepare your own office action
* identify classes and subclasses searched
* IDS with closest references
* Map each independent claim to each reference
Then, respond to your own office action
* Discuss why each independent claim is patentable
over each cited reference.
* Map each claim to your own specification
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Adaptations: Pre-Filing
File only when prepared to prosecute
Carry out and fully document more extensive prior art
searching
Control schedule using PCT and provisional
applications
Disclosure no broader than claims
Although not possible for universities and hospitals, try
to avoid scientific publication until patent is published
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Adaptations: Early In Prosecution
Preliminary amendment in view of newly published
applications
Interview early, and often.
File any Rule 131 declaration promptly
Actively prosecute PCT for early resolution of issues.
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Adaptation: Later In Prosecution
Appeal often, save free continuation for new and final
claim set.
Petition often to remove finality.
File continuing applications with “the showing” before
deploying your free continuation.
Having an unused free continuation is a marketable
asset.
Review petitions in Federal Court
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