U.S. Supreme Court grants writ of certiorari in Helsinn Healthcare S.A., Teva Pharmaceuticals USA, Inc.Written by David Roncayolo
Last month, the United States Supreme Court granted a petition for a writ of certiorari in Helsinn Healthcare S.A., Teva Pharmaceuticals USA, Inc. In 2017, the U.S. Court of Appeals for the Federal Circuit held that a publicly disclosed commercial sale amounts to an invalidating act, even when the details of the invention are not publicly disclosed.
The United States Supreme Court will decide whether under the Leahy-Smith America Invents Act, an inventor’s sale of an invention to a third party that is obligated to keep the invention confidential qualifies as prior art for purposes of determining the patentability of the invention.
The outcome will be interesting, as sometime in 2019 the Supreme Court should provide some guidance on the scope of the on-sale bar (i.e., those acts and/or disclosures that occur prior to the filing date of a patent application, which could affect the validity of a patent). A different issue, which will not be in front of the U.S. Supreme Court for review, at least for a while, is whether a secret commercial sale amounts to an invalidating act.
Following our previous report, the U.S. Supreme Court held in WesternGeco LLC v. ION Geophysical Corp. that WesternGeco, the patent owner, can recover lost foreign profits as a result of ION's infringement under §271(f)(2) of the Patent Act. WesternGeco LLC v. Ion Geophysical Corp., U.S., No. 16-1011, 6/22/18. Justice Thomas delivered the majority opinion in the 7-2 decision.
Over ION's objection that the lost-profits damages occurred outside of the United States and the foreign conduct after ION's infringement was necessary to give rise to the infringement, Justice Thomas wrote that awarding lost-profits damages under the circumstances was a domestic application, and therefore, consistent with the presumption against extraterritoriality that presumes federal statutes apply within the U.S.
The United States Patent and Trademark Office celebrates a milestone today as it issues United States Patent No. 10,000,000 to the Raytheon Company for "Coherent LADAR Using Intra-Pixel Quadrature Detection." The patent is due to be signed by President Trump and will be the first patent to bear the USPTO's new patent cover design.
In Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, et al., the Supreme Court ruled that an inter partes review (IPR) proceeding does not violate the Constitutional right to be heard in court. But that decision did not consider whether an IPR—a procedure in effect only since September 16, 2012—could be applied to patents filed prior to that date. In fact, the Supreme Court expressly reserved that issue of “retroactive application” for a future case. That is, the Court acknowledged there is a potential controversy regarding the application of IPR to patents filed before the effective date of the IPR procedure.
So, are patents that were filed prior to September 16, 2012, subject to IPR? If not, does that mean those patents are not subject to any inter partes challenge at the PTO? Or does that mean those patents may still be subject to an inter partes reexamination, as that proceeding existed prior to September 16, 2012?
Since the Supreme Court expressly reserved this issue for future cases, and since the IPR procedure remains a popular option, it is likely the Federal Circuit will weigh in on the issue before too long. Which aspects will the Federal Circuit find compelling?
-The reliance on the pre-IPR patent system by inventors who chose not to protect their invention through trade secrets?
-Statistical data that illustrates different substantive results between inter partes reexaminations and inter partes reviews?
-The strength or weakness of the particular patents before the court?
The statute that created the IPR defines that proceeding to apply to “any patent issued before, on, or after that effective date.” Pub. L. 112-29, § 6(c)(2). But with the express reservation by the Supreme Court, will the statute—or at least the retroactive application of it—survive?
While many federal agencies are currently furloughed, the U.S. Patent and Trademark Office (“USPTO”) has announced that it will be able to maintain regular operations for a few weeks due to excess revenue from last year’s fee collections. Should the USPTO exhaust its reserve funds, the agency will officially shut down but maintain a small staff to accept new applications and maintain information-technology (“IT”) infrastructure. There is no comment at this time on whether outstanding USPTO deadlines would be extended in the event of a closure, but the Firm will continue to monitor the USPTO’s status and advise clients accordingly.
One measure of damages for patent infringement is compensation for lost profits of the patent owner. Additionally, a patent owner may enjoin the export of parts of a patented invention from the United States, if the parts will be assembled or used for an infringing purpose. However, the Supreme Court is set to answer the question of whether lost profits may be awarded to the patent owner for service contracts, performed outside the U.S., making use of those parts exported from the U.S. in the case of WesternGeco LLC v. ION Geophysical Corp. If the answer is affirmative, then the scope of damages available to a patent owner may be drastically expanded -- up to USD $93 Million in WesternGeco's case.
On January 8, 2018, the Federal Circuit ruled en banc that judicial review is available for a patent owner to challenge the Patent Trial and Appeal Board’s determination that a petitioner satisfied the timeliness requirement governing petitions for Inter Partes Review (“IPR”) codified in 35 U.S.C. § 315(b). At its core, the opinion provides that if the Director of the PTO initiates an IPR ruling in contravention of the statute of limitations, an Article III court has the power to review that initiating decision.
By way of background, Broadcom Corp. filed three separate petitions for IPR in 2013 pertaining to certain patents owned by Ericsson. During the pendency of the IPR, Ericsson transferred ownership of the patents to Wi-Fi One, LLC ("Wi-Fi"). In opposition to Broadcom’s petitions, Wi-Fi contended that the Director lacked authority under Section 315(b) and was precluded from initiating review on any of the three petitions because Broadcom was in privity with certain defendants that were found to have infringed the asserted claims in a jury trial in the Eastern District of Texas. Accordingly, Wi-Fi asserted that the petitions were time-barred under 315(b) because Ericsson (the prior patent owner) had already brought infringement claims against defendants that were in privity with Broadcom more than a year prior to its petitions. Ultimately, the Board instituted IPR on the subject claims, and issued final decisions holding that the claims were unpatentable. In those decisions, the Board held that Wi-Fi had not demonstrated privity between Broadcom on the one hand, and the defendants in the Eastern District of Texas litigation on the other hand, and as a result, the petitions were not time-barred under 315(b). Wi-Fi appealed those final decisions, contending that the Federal Circuit should reverse the Board's time-bar determinations. A panel of the Federal Circuit disagreed, holding that Section 315(b)’s time-bar rulings are non-appealable and unreviewable.
On Wi-Fi’s petition for rehearing en banc, the Federal Circuit granted Wi-Fi’s request and considered whether judicial review is available for a patent owner to challenge the Board’s determination that the petitioner satisfied the timeliness requirement of 35 U.S.C. 315(b). Section
35 U.S.C. 315(b) provides that: "an inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”
After analyzing the Leahy-Smith America Invents Act (which created IPR proceedings), the Administrative Procedures Act (codifying the governing standards applicable to final decisions of the PTO), and the pertinent statutes, the Federal Circuit held that it will “abdicate judicial review only when Congress provides a ‘clear and convincing’ indication that it intends to prohibit review.” In Wi-Fi One, however, the Court held that there was no clear and convincing indication of such congressional intent to overcome the presumption in favor of judicial review of agency actions. Accordingly, the Federal Circuit remanded the case to the merits panel, affording Wi-Fi with an opportunity to have its arguments heard on the merits, to wit, whether Broadcom’s challenge to the subject patents were time-barred.
In the inter partes review (IPR) proceeding between Mylan Pharmaceuticals, Inc. v. Allergan, Inc., before the Patent Trial and Appeal Board (PTAB), counsel representing the Patent Owner raised a defense that, if successful, could circumvent IPR proceedings and shield patents from post-grant review. Allergan, whose patents for the drug Restasis which are the subject of the IPR proceeding challenging their validity, recently struck a deal with the St. Regis Mohawk Tribe, transferring its patent rights in exchange for a license. Last week, counsel representing the Tribe, a sovereign nation, raised the defense of sovereign immunity, arguing its immunity places the patents at issue beyond the PTAB’s authority. The Tribe has until September 22 to file its brief on the immunity defense.
In 2014, the Wisconsin Alumni Research Foundation (WARF) sued apple for infringement of U.S. Patent No 5,781,752 (the ‘752 Patent). In a related proceeding, the USPTO declined to institute an Inter Partes Review (IPR) brought by Apple to invalidate the ‘752 Patent. The ‘752 Patent is directed to computer architecture technology that can optimize processor performance. Specifically, a “predictor circuit” may anticipate user instructions based on previously stored data. WARF had alleged that its patented technology was being used on several products made by Apple, including the iPhone. In July of 2017, a U.S. District Judge in Wisconsin, William M. Conley, ordered Apple to pay over $506 million for infringement of several claims of the ‘752 Patent.
In October of 2015, following a two-week trial, a jury issued an award of over $234 million against Apple. Judge Conley’s order adds another $282 million in supplemental damages, ongoing royalties, interests, and costs. The order specified supplemental damages at the rate of $1.61 per infringing unit sold after October 26, 2015, and ongoing royalties at the rate of $2,74 per infringing unit thereafter and until December 26, 2016, the date expiration of the ‘752 Patent. The $282 million stem from Apple’s alleged continued infringement of the ‘752 Patent after the Jury's award in October of 2015.
Federal Circuit Clarifies Scope Of On Sale Bar In Helsinn Healthcare, S.A. v. Teva Pharmaceuticals, USA, Inc.Written by David Roncayolo
In May of 2017, the U.S. Court of Appeals of the Federal Circuit in Helsinn Healthcare, S.A. v. Teva Pharmaceuticals USA, Inc., 855 F.3d 1356, clarified, to some extent, the scope of the on sale bar under the America Invents Act (AIA). The on sale bar invalidates a patent and is triggered if the invention is sold or otherwise offered for sale more than one year prior to the date of the filing of a patent application.
Helsinn owned four related patents (three pre-AIA and one post-AIA) covering a formulation of palonosetron, a drug for cancer patients that treats nausea. Approximately two years before filing a patent application at the USPTO, Helsinn entered into two different agreements for the purchase of the drug with MGI Pharma, Inc. The agreements did not specify whether the drug's dosage would be 25 mg or 75 mg. Further, the agreements were contingent upon obtaining FDA approval for the drug.
Subsequently, Teva filed an Abbreviated New Drug Application (ANDA) for a generic equivalent of palonosetron. Helsinn sued Teva for patent infringement under the Hatch-Waxman Act. The trial court found that under the AIA, a secret sale does not invalidate patent, and that the disclosure of the patent needs to be made public to trigger the on sale bar.
On appeal, the Federal Circuit found that all four patents were invalid both under the pre-AIA and post-AIA versions of the one sale bar. The Federal Circuit held that a sale of the patented goods had occurred and that the fact the agreements were contingent upon obtaining FDA approval did not alter this result. Under Pfaff v. Wells Electronics, Inc., 525 US 55 (1988), the on sale bar is triggered if an invention is the subject of a “commercial sale” and is also “ready for patenting.” Traditionally, courts have looked to the UCC to determine if there has been a commercial sale. With regard to the second prong of Pfaff, an invention is ready for patenting when there is actual reduction to practice or when there are appropriate disclosure for an ordinary person skilled in the art to practice the invention.
Following the Pfaff analysis, the Federal Circuit held that post-AIA, the details of an invention need not be revealed to the public to trigger the on sale bar. It is sufficient that there be a public sale. Here, the Federal Circuit also found that the present invention was ready for patenting notwithstanding the fact that further testing was being conducted. The Federal Circuit did not, however, address whether a private sale implicates the on sale bar under the AIA. This decision has significant repercussions because public transactions for the commercialization of an invention can trigger the on sale bar, even if the transaction itself does not disclose the details of the product or invention.