Contributors: Knobbe Martens
A Post-URAA Patent that Issues After but Expires Before a Related Pre-URAA Patent Is Not a Double-Patenting Reference Against the Pre-URAA Patent
In Novartis Pharmaceuticals Corp. v. Breckenridge Pharmaceutical Inc., Appeal Nos. 2017-2173, -2175, -2176, -2178, -2179, -2180, -2182, -2183, -2184, the Federal Circuit held that a post-URAA patent that issues after but expires before a related pre-URAA patent is not a double-patenting reference against the pre-URAA patent.
This case relates to two patents and an intervening change in the law affecting patent term. A patent filed before June 8, 1995—the effective date of the Uruguay Round Agreements Act (URAA)—expires 17 years after the patent’s issuance date. A patent filed after the URAA’s effective date expires 20 years after the patent’s earliest effective filing date.
Here, Novartis owned an earlier-filed pre-URAA patent (“Patent A”) and a later-filed post-URAA patent (“Patent B”). By virtue of the URAA’s effect on patent term, earlier-filed Patent A expired after later-filed Patent B.
The district court held that Patent B was a double-patenting reference against Patent A in view of the Federal Circuit’s decision in Gilead, which held that a later filed but earlier-expiring post-URAA patent was a double-patenting reference against an earlier-filed and later-expiring post-URAA patent, and that the expiration date was the benchmark of obviousness-type double-patenting. Gilead Sciences, Inc. v. Natco Pharma Ltd., 753 F.3d 1208, 1212 (Fed. Cir. 2014).
On appeal, the Federal Circuit reversed the district court’s decision. The Federal Circuit distinguished the present case from Gilead, since both patents at issue in that case were post‑URAA patents. Here, where one patent was filed pre-URAA and the other patent was filed post-URAA, the Federal Circuit held that the issuance dates of the patents control whether one patent is a double-patenting reference over the other. The Federal Circuit reasoned that its holding in this case was consistent with the URAA transition statute, which gives pre-URAA patents the longest term possible under either the pre- or post-URAA rules. It also reasoned that its holding was consistent with the purposes of the double-patenting doctrine, which is to limit a patent owner to one full term of patent rights. As a result of the Federal Circuit’s ruling, Novartis will enjoy one 17-year term of exclusive rights arising from Patent A.
Insufficient Pleadings Do Not Provide a Basis for the U.S. International Trade Commission to Deny Relief Without Opposition After Institution
In Laerdal Medical Corp. v. ITC, Appeal No. 2017-2445, the Federal Circuit held that after institution, the U.S. International Trade Commission cannot assert insufficient pleadings as a basis for denying relief without opposition or appearance from respondents under 19 U.S.C. § 1337(g)(1).
Laerdal filed a complaint at the Commission asserting respondents violated 19 U.S.C. § 1337 by importing, selling for importation, or selling within the U.S. certain medical devices and accompanying product literature, thereby infringing Laerdal’s patent, trademark, trade dress, and copyrights. The Commission instituted an investigation on some, but not all of Laerdal’s claims. Despite being served with the complaint and a notice of investigation, no respondent submitted any response, appeared, or otherwise participated in any way in any of the proceedings. The Administrative Law Judge (“ALJ”) thereby issued an initial determination finding all respondents in default, and the Commission did not review the ALJ’s initial determination finding all respondents in default. The Commission issued its final determination granting relief based on Laerdal’s patent and trademark infringement claims, but the Commission denied relief on Laerdal’s trade dress and copyright infringement claims because it found that Laerdal’s allegations in its complaint relating to those claims were inadequate. Specifically, the Commission held that if a complaint does not adequately plead a § 1337 violation, then no relief is warranted even if the allegations are unopposed. Laerdal appealed the ITC’s finding as to its trade dress infringement claims.
The Federal Circuit reversed the Commission’s determination that Laerdal failed to adequately plead its trade dress infringement claims and vacated and remanded for the Commission to determine the proper remedy. Reviewing the statutory language of § 1337(g), the Federal Circuit concluded that the statute “unambiguously requires the Commission to grant relief against defaulting respondents, subject only to public interest concerns, if all prerequisites of § 1337(g)(1) are satisfied.” The Federal Circuit noted that the inclusion of the word “shall” means “must,” and it imposes a nondiscretionary duty. Since it was undisputed that Laerdal had satisfied all of the prerequisites under § 1337(g)(1), the Commission was mandated to grant Laerdal’s requested relief. In addition, the Federal Circuit ruled that the adequacy of the pleadings is no longer a live issue after institution unless there is a challenge by a responding party. The Federal Circuit noted that, under the § 1337(g)(1), relief is only possible if the Commission has already determined, pre-institution, that the complaint was pleaded adequately and instituted an investigation thereof.
Obviousness-Type Double Patenting Does Not Prevent Patent Term Extensions Under Section 35 U.S.C. § 156
In Novartis AG v. Ezra Ventures LLC, Appeal No. 2017-2284, the Federal Circuit held that obviousness-type double patenting did not invalidate an otherwise validly obtained patent term extension under 35 U.S.C. § 156.
Novartis owned multiple patents covering the multiple sclerosis drug Gilenya®, including the ’229 patent and the ’565 patent. The ’229 patent, a pre-URAA patent, is set to expire on February 18, 2019, due to five years of patent term extension (“PTE”) granted pursuant to 35 U.S.C. § 156, which allows for extension of the term of one patent of a product that has been subject to regulatory review. The ’565 patent, a post-URAA patent, expired on September 23, 2017.
Ezra filed an Abbreviated New Drug Application (“ANDA”) relating to a generic version of Gilenya®. Novartis filed an infringement suit, asserting claims of the ‘229 patent.
In a motion for judgment on the pleadings, Ezra argued that the ‘229 patent should be ruled invalid, or otherwise terminally disclaimed for the portion of the patent term past the expiration date of the unasserted ‘565 patent. Ezra argued that the granted extension of the ‘229 patent’s term beyond the life of the ‘565 is impermissible because it violates 35 U.S.C. § 156(c)(4)’s requirement that only “one patent be extended.” Further, Ezra argued that the ‘229 patent is invalid for statutory- and obviousness-type double patenting because Novartis’s ‘229 patent claims are not patentably distinct from the ‘565 patent. The district court denied Ezra’s motion, concluding that Ezra’s argument required reading “effectively” as a modifier of “extended” into 35 U.S.C. § 156(c)(4), which states, “in no event shall more than one patent be extended … for the same regulatory review period for any product.” After the district court denied Ezra’s motion for judgment on the pleadings that the ’229 patent is invalid or be terminally disclaimed, Ezra did not present any further evidence on the issue of double-patenting and stipulated to infringement if the asserted claims are not invalid, expired, or unenforceable. The district court entered judgment that Ezra infringed the ‘229 patent, and Ezra appealed.
On de novo review, the Federal Circuit affirmed the finding of the district court. The Federal Circuit agreed that there is no reason to read “effectively” into the language of 35 U.S.C. § 156(c)(4). The Federal Circuit stated, “[t]hat the method of the ’565 patent cannot be practiced during the ’229 patent’s extended term is a permissible consequence of the legal status conferred upon the ’229 patent by § 156.”
The Federal Circuit also addressed the issue of whether the ’229 patent was invalid due to obviousness-type double patenting because the ’229 patent expired after the indistinct ’564 patent as result of the term extension. The Federal Circuit held, as an extension of its holding in Merck & Co. v. Hi-Tech Pharmacal Co., that obviousness-type double patenting does not invalidate a validly obtained PTE. In Merck, the Court concluded that a terminally disclaimed patent could still have its term extended with a PTE. The Federal Circuit noted that “if a patent is terminally disclaimed to another patent to overcome an obviousness-type double patenting rejection and then term-extended under § 156, it necessarily will expire after the patent to which it had been subject to an obviousness-type double patenting rejection.” This situation, which was already found acceptable by the Federal Circuit in Merck, was similar to the present case in which the extension of the ‘229 patent’s term effectively extends the life of the related ‘565 patent.
Avocent Did Not Create a Unique Rule for Patent Cases That Letters Threatening Patent Infringement Suits Do Not Create Personal Jurisdiction
In Jack Henry & Associates, Inc. v. Plano Encryption Technologies, Appeal No. 2016-2700, the Federal Circuit held the defendant is subject to personal jurisdiction in the Northern District of Texas
Plano Encryption Technologies (“PET”), registered to do business in the Eastern District of Texas, sent letters alleging patent infringement, inviting a license, and otherwise threatening litigation to eleven banks located in the Northern District of Texas. Jack Henry, who provides software systems for the banks’ mobile applications and had agreed to indemnify the banks, along with the banks, filed an action for declaratory judgment against PET in the Northern District of Texas. PET moved to dismiss on the grounds that its contacts with the Northern District of Texas did not subject it to personal jurisdiction and thus venue was improper. The district court agreed with PET and dismissed the case. Jack Henry and the banks appealed.
Under 28 U.S.C. § 1391(d), a corporation who is a resident of a multi-district state “shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State . . . .” The district court interpreted the Federal Circuit decision in Avocent Huntsville Corp v. Aten Int’l, 552 F.3d 1324, 1444 (Fed. Cir. 2008) as establishing a “unique” rule for patent cases that letters threatening patent infringement suits by themselves do not create personal jurisdiction.
The Federal Circuit reversed dismissal and disagreed with the district court’s interpretation of Avocent as creating such a generalized rule. In doing so, the Federal Circuit looked to Texas’ long-arm statute. The Federal Circuit concluded that Texas’s long-arm statute extends to the limits of federal constitutional due process, and thus, a due process inquiry was required.
In analyzing due process, the Federal Circuit reviewed the following three factors: (1) whether the defendant “purposefully directed” its activities at residents of forum; (2) whether the claim “arises out of or relates to” defendant’s activities in the forum; and (3) whether the exercise of personal jurisdiction is reasonable and fair. On appeal, PET agreed that under New World International, a case in which the Federal Circuit held that sending a letter that forms the basis for the claim may be sufficient to establish minimum contacts, the first two minimum contacts factors were met. New World International, Inc. v. Ford Global Technologies, LLC, 859 F.3d 1032, 1037-38 (Fed. Cir. 2017). As for the “reasonable and fair” factor, the Federal Circuit found compelling that PET had undertaken a licensing program with threat of litigation directed to banks conducting business in the Northern District of Texas, and that the forum had an obligation to resolve disputes involving its residents and businesses. Since PET had minimum contacts with the Northern District of Texas, the burden fell on PET to make a “compelling case” that the exercise of jurisdiction would be unreasonable and unfair. PET merely cited Red Wing Shoe Co. v. Hockerson-Hablerstadt, Inc., 148 F.3d 1355, 1361 (Fed. Cir. 1998) and Avocent, and argued that these cases created a rule that patent enforcement letters can never provide the basis for jurisdiction in declaratory judgment actions. The Federal Circuit found that these cases did not create such a rule and doing so would contradict the Supreme Court’s requirement that courts “consider a variety of interests” in assessing whether jurisdiction is fair. Judge Stoll, joined by Judge Wallach, included an additional view that the Court needs to revisit the statement in Red Wing that “principles of fair play and substantial justice afford a patentee sufficient latitude to inform others of its patent rights without subjecting itself to jurisdiction in a foreign forum” and the interpretation of this statement that “sending of infringement letters would satisfy the minimum contacts requirement of due process except for policy considerations unique to the patent context.” Judge Stoll stated that Red Wing and its progeny need to be reconsidered as directly contrary to established Supreme Court precedent. The Federal Circuit reversed the finding that venue was improper.
Patent Owner May Be Collaterally Estopped by a Rule 36 Judgment from Relitigating Whether a Prior Art Reference Is a Printed Publication
In VirnetX Inc. v. Apple, Inc., Appeal Nos. 2017-2490, 2017-2494, the Federal Circuit held that Patent Owner VirnetX Inc. (“VirnetX”) was collaterally estopped from arguing that a reference was not a printed publication because the Federal Circuit had already determined the reference was a printed publication in a Rule 36 judgement in a separate but related appeal.
Apple, Inc. (“Apple”) filed multiple IPR petitions against VirnetX’s patents. Many of Apple’s petitions relied on the same reference, known as RFC 2401. In each of the cases, VirnetX argued that RFC 2401 was not a printed publication. During the pendency of this case, the Federal Circuit affirmed, via a Rule 36 judgment, the Board’s decision in a related case that the RFC 2401 reference was a printed publication as of the relevant priority date.
The Federal Circuit found that VirnetX was collaterally estopped from arguing the printed publication issue because the issue was necessary or essential to the prior judgment. The Federal Circuit found that each ground of unpatentability in the prior appeal relied on RFC 2401, and found that VirnetX even conceded during oral argument that the printed publication issue was a threshold issue in the prior case.
VirnetX, in the alternative, pointed to a “single, generic paragraph” and argued that it preserved in its opening brief the separate issue of whether IPR procedures apply retroactively to patents that were filed before Congress enacted the AIA. The Federal Circuit found that VirnetX conceded in oral argument that it “didn’t specifically brief” the retroactivity issue, and that VirnetX’s actions to preserve this issue suggested that VirnetX’s actions were likely less than sincere. The Federal Circuit concluded that VirnetX did not preserve this issue for appeal, and thus affirmed the PTAB’s decision without addressing the issue.
District Courts Need Not Resolve Every Issue Mooted by Summary Judgment to Rule on a Motion for Attorney’s Fees
In Spineology, Inc. v. Wright Medical Technology Inc., Appeal No. 2018-1276, the Federal Circuit held that a party’s continued, but ultimately unsuccessful, pursuit of a claim construction may not warrant attorneys’ fees. In addition, district courts are not required to resolve every issue mooted by summary judgment to rule on a motion for attorneys’ fees.
After prevailing on the merits on summary judgment, Wright appealed the district court’s determination that attorneys’ fees were not warranted under 35 U.S.C. § 285. The dispositive summary judgment motion largely depended on the construction of “body”—a term for which the parties had previously proposed constructions, but that the district court had declined to construe prior to summary judgment. On appeal, Wright argued that the district court abused its discretion in denying the motion for attorneys’ fees because Spineology advocated a meritless claim construction, misled the court with a cropped and annotated patent figure, and ignored evidence that undermined its preferred construction. In addition, Wright argued that Spineology advocated a meritless damages theory and that the district court did not do enough to analyze the merits of the theory, even though the damages issue had been mooted by the summary judgment determination.
The Federal Circuit rejected each of Wright’s arguments. First, the Federal Circuit reasoned that because the district court had declined to adopt any construction of the term “body” earlier in the case, Spineology could reasonably continue to pursue its proposed construction at the summary judgment stage. Regarding Spineology’s conduct during litigation, the Federal Circuit reasoned that the district court was better positioned to evaluate whether the case was “exceptional” enough to award attorneys’ fees. Finally, the Federal Circuit refused to force the district court to evaluate the merits of Spineology’s damages theory, reasoning that the district court need not resolve every issue mooted by summary judgment in order to rule on a motion for attorneys’ fees. Accordingly, the Federal Circuit found no abuse of discretion and affirmed the district court’s denial of the motion for attorneys’ fees.
Claims Directed to Rules for a Dice Game Not Patent-Eligible Under Section 101
In In Re: Marco Guldenaar Holdings B.V., Appeal No. 2017-2465, the Federal Circuit held that claims directed to the abstract idea of rules for playing a dice game were not transformed into patent eligible subject matter by the addition of printed matter.
The patent examiner rejected the application at issue under 35 U.S.C. § 101, because the claims were directed to the abstract idea of rules for playing a dice game. The PTAB and then the Federal Circuit affirmed. The Federal Circuit previously held, in In re Smith, 815 F.3d 816 (Fed. Cir. 2016), that a “method of conducting a wagering game” using a deck of playing cards was an abstract idea. Similarly, the claims here were directed towards the abstract idea of a wagering game, but with dice. The Applicant argued that the claimed dice markings were novel and not abstract. The Federal Circuit rejected that argument because the dice markings constituted “printed matter,” which is not patent eligible subject matter and is outside the scope of § 101. Without an “inventive concept” the claimed subject matter was not patent eligible.
Judge Mayer concurred in the judgment but wrote separately to state that: (1) the § 101 analysis is a pure question of law; and (2) claims directed to dice, card, and board games are not patent eligible because they endeavor to influence human behavior rather than effect technological change.