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.
On May 22, 2017, the United States Supreme Court in TC Heartland LLC v. Kraft Foods Group Brands LLC, 581 U.S. ___ (2017) narrowed the scope of where a corporate defendant “resides” for venue purposes under the patent venue statute (28 U.S.C. § 1400(b)). Previously, patent plaintiffs could sue corporate defendants in any district court where the corporation was subject to personal jurisdiction, essentially where a defendant sold products. However, and as a result of TC Heartland’s unanimous (8-0) decision reversing the Federal Circuit, 28 U.S.C. § 1400(b) remains the only applicable patent venue statute, and as applied to domestic corporations in patent cases, a “defendant resides only in the state of its incorporation.”
A number of results are likely in the wake of this dramatic shift in venue law. First, TC Heartland presents a significant roadblock to patentees filing lawsuits in a particular forum – which critics label “forum shopping” -- simply because a corporate defendant placed a product into the stream of commerce. The inevitable outcome will steer the filing of patent cases to Delaware, the state where many U.S. companies are incorporated. Second, and where litigation is already pending, corporate defendants are likely to file motions to change venue (assuming the waivable defense of venue has been properly preserved).
Third, and as alternative to filing suit in the defendant’s state of incorporation, plaintiffs’ attorneys may file suit in a forum that instead satisfies the second prong of 28 U.S.C. § 1400(b), “where the defendant has committed acts of infringement and has a regular and established place of business.” While the Federal Circuit has interpreted this phrase to mean doing business “through a permanent and continuous presence,” parties will surely battle over the confines of the pertinent statutory language, and litigate factors such as physical stores of the business, where key personnel are located, and the business’ online presence. Fourth, situations may arise where there is no district court in which venue would be proper for all named defendants. To avoid risking inconsistent rulings from litigating cases in separate districts, expect to see an increase in multi-jurisdiction litigation (“MDL”), which can serve as a useful vehicle in litigating overlapping issues in pretrial proceedings, with the individual cases referring back to the original court for trial.
Many issues in the field of patent law will arise in the aftermath of TC Heartland. Malloy and Malloy, P.L’s knowledgeable and experienced intellectual property lawyers are ready to advise you and guide your case as these issues come to the forefront.
In the case of TC Heartland LLC v. Kraft Foods Group Brands LLC, the United States Supreme Court issued an opinion that is likely to limit the universe of available venues in which a patent holder can bring an action for infringement. Under the particular patent venue statute, the appropriate venue for patent infringement is anywhere infringement has occured, as long as the accused infringer has a regular and established place of business, or where the accused infringer "resides." In the context of a corporation, the definition of residing had been open to interpretation, but the TC Heartland opinion made explicit that residence under the patent venue statute refers only to the state of incorporation.
The Supreme Court recently held in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC that the defense of laches cannot be invoked against a claim for damages brought within the statutory six-year limit. The decision comes at little surprise given the Court's ruling in Petrella v. Metro-Goldwyn-Mayer, which considered a similar provision of the Copyright Act. The Court reasoned that Congress set forth an express limitations period in the patent laws, and giving effect to laches within the statutory period would amount to judicial overriding. In his lone dissent, Justice Breyer noted that the decision ignores the application of laches to reign in abusive pre-litigation conduct by a patent holder who unreasonably delays suit, knowing he can collect damages for the previous six years of infringement.
In a recent opinion narrowing the international reach of U.S. patent laws, the United States Supreme Court overturned the Federal Circuit’s determination that shipping a single part of a patented invention, to be joined with other components overseas, can constitute infringement.
In Life Techs. Corp. v. Promega Corp., No. 14-1538, Life Technologies manufactured an enzyme to be used in a DNA analysis kit, and shipped the enzyme to London where the company proceeded to manufacture the remaining components of the toolkit. Promega Corp. filed suit, alleging patent infringement due to Life Technologies’ supplying the single component for genetic testing from the United States to the United Kingdom. In reversing the district court’s order granting Life Technologies’ motion for judgment as a matter of law, the Federal Circuit held that certain circumstances can impose liability on a party under 35 §271(f)(1) for “supplying or causing to be supplied a single component for combination outside the United States.”
The Supreme Court reversed the Federal Circuit, and after engaging in a statutory construction of the plural term “components,” held that merely supplying a single component does not constitute infringement under Section 271(f)(1). In the decision for the high court, Justice Sotomayor wrote that the governing statute does not apply to the quality of components, rather the quantity: “We hold that the phrase ‘substantial portion’ in 35 U. S. C. §271(f )(1) has a quantitative, not a qualitative, meaning. We hold further that §271(f )(1) does not cover the supply of a single component of a multicomponent invention.”
While the scope of 35 §271(f)(1) remains subject to further litigation, specifically vis-à-vis how many components would constitute “a substantial portion,” Life Technologies makes clear that a party cannot be liable under 35 §271(f)(1) due to the extraterritorial supply of a single component.
Inter Partes Review is a proceeding that the USPTO adopted in 2012 that allows a challenge to an issued patent based on obviousness or lack of novelty. Inter Partes Review has become an increasingly common tool to invalidate a patent as an alternative to litigation in Federal Court. In Covidien LP v. University of Florida Research Foundation Inc., the US Patent Trial and Appeal Board addressed the issue of whether sovereign immunity would extend to a state actor who owns rights to a patent being challenged in an administrative forum such as an Inter Partes Review. Under the 11th Amendment of the U.S. Constitution, the 50 States of the Union and their branches, have immunity from a lawsuit instituted by a private party. Court decisions interpreting the 11th Amendment have construed it broadly to extend this immunity not only to lawsuits in a court of law, but also to other adjudicative proceedings such as those of administrative agencies.
An Inter Partes Review in many way parallels a lawsuit in a court of law. For example, there is discovery, depositions, motions, and oral argument. Further, a panel of judges decide not only the outcome of the proceeding, but also whether the proceeding may even be instituted. In Covidien LP v. University of Florida Research Foundation Inc., the U.S. Patent Trial and Appeal Board ruled in favor of the University of Florida Research Foundation. The U.S. Patent Trial and Appeal Board decided that due to the similarities between civil litigation and an InterPartes Review, the University of Florida Research Foundation, being an arm of the State of Florida, was entitled to assert sovereign immunity as a defense to the institution of an Inter Partes Review. This decision may have an effect on the number of Inter Partes Reviews that are instituted against public research institutions, such as state universities.
The latest chapter in the Apple v. Samsung litigation, previously blogged about here, involves a determination by the Supreme Court of the United States that damages for design patent infringement can be calculated based on only a component of a product, rather than the entire product, if only that component is found to infringe. This is significant because Apple's $400M damages award was based on Samsung's total profit for sales of the infringing phones. However, Apple's design patent only covered certain features of Samsung's phones, and according to the language of the patent statute, as Samsung argued, it should only have to pay damages on the infringing components, not the entire product.