Top 10 Points from Patent Developments and Case Law in the US in 2013

These points are from a talk held at CIPA on 27 November 2013 given to UK Patent Attorneys.

1.  There are currently 8 proposed bills pending in the US Congress directed at abusive patent litigation, i.e. non-practising entities.  They include provisions for loser pays, disclosing the real party in interest, staying litigation against end user customers, heightened pleading standards for infringement, eliminating Post Grant Review estoppel, expanding the CBM (Covered Business Method) program, shifting the discovery fee and the concept of bankruptcy not terminating some licenses.

2. The Supreme Court decided in Bowman v Monsanto that patent exhaustion permits re-sale of a patented item, but does not allow new copies to be made. That includes the situation where the item is a self-replicating product, in this case a GM bean.

3. The Supreme Court decided in Association for Molecular Pathology v Myriad that isolated naturally occurring DNA molecules were not patentable subject matter, though cDNA is patentable.  Also comparing or analysing DNA sequences is not patentable.

4.  In Aristocrat Techs v International Game Tech the Federal Circuit reversed the summary judgment for indirect infringement at first instance which relied on the fact direct infringement did not occur, citing Akamai v Limelight which had held that indirect infringement does not require direct infringement to occur as long as there is inducement to others to collectively practice the steps of the patented method.

5. In CLS Bank V Alice Corp. (en banc) the Federal Circuit had the intention of providing guidance on patentability of software. Instead 7 different opinions were issued by 10 different judges, with none getting a majority.  It is likely that the Supreme Court will intervene in the next few years to clarify this once and for all.

6.  In Wyeth v Abbott  the Federal Circuit decided that the term ‘rapamycin’ lacked enablement in as far as it covered tens of thousands of analogues, even though routine assays could identify them.

7.  The Federal Circuit started to be influenced by secondary considerations of nonobviousness, such as long felt need, commercial success, failure of others, teaching away from the prior art, industry praise, etc.  Three cases in which this happened: Apple v International Trade Commission, Leo Pharm v Rea and Rambus v Rea.

8.  Inequitable conduct became less important as the Therasense v Becton Dickinson guidance of ‘specific intent to deceive the PTO’ was implemented by the Courts.  Allegations of inequitable conduct have fallen more than 50% since 2008 (from 41% of all cases to 20%).

9. In Fresenius v Baxter the Federal Circuit decided that where the PTO rejected claims in reexamination before an infringement case final decision, then the PTO decision overrode the Court decision on the validity of the claims.

10.  The US Patent Trial and Appeal Board is proving very popular, with 514 Inter Partes Reviews, 8 Covered Business Methods and 1 Derivation Proceedings in 2013.  They can be strict about opportunities to amend the claims, can cope with complex arguments, will only grant additional discovery if you can show what you expect to find.

You may also be interested in the related articles 10 Observations on US Restriction Requirements and 10 Observations on European Patent Litigation.

Top 10 Points from UK Court Decisions from 2013

These decisions were discussed at a CIPA event on 27 November 2013, and the following points are based on the cases selected by the speakers.

1.  UK Patent cases in 2013: there were 32 High Court cases, 13 Court of Appeal, 2 Supreme Court and 12 PCC (now Intellectual Property Enterprise Court).  Of these Birss handled 15 (9 at the PCC, 6 at the High Court), Arnold handled 8, Floyd handled 7 and Mann handled 4.

2.  Virgin v Zodiac concerned res judicata and the end of the Unilin principles.  Previous case law based on Unilin was that estoppel protects damages findings even if the patent is subsequently revoked.  The Supreme Court decided in Virgin v Zodiac that action estoppel was not ‘absolute generally’, and though Zodiac could not challenge the Court of Appeal’s findings on validity it was able to rely on the fact that subsequent amendments at the EPO meant that infringement did not occur.  Therefore the damages were not now payable.  This case changed res judicata principles.

3.  In IPCom v HTC the Court of Appeal revised the Glaxo guidelines for whether UK proceedings should be stayed if EPO proceedings are continuing, bringing commercial impact and certainty into the decision.

4. In Schutz v Werit the Supreme Court disagreed with the Court of Appeal on the test for ‘making’ in a repair context, and provided a new test which focused on replacing a subsidiary part.

5. In Nestec v Dualit the High Court had to decide on ‘making’ in the case of capsules for a coffee machine.  However more seriously Arnold decided that one’s own published priority case could be section 2(3) prior art and held that claim 1 was not novel over the priority application.  Claim 1 was held to not have clearly defined alternatives as discussed in G2/98.  Loss of priority has been a key issue in at least 5 cases in the last year and so it becoming important in UK proceedings.

6. In HTC v Apple the Court of Appeal overturned the High Court and found that multi-touch control on a screen did have technical effect and was patentable.  The fact the device was improved as result was key point.

7. In Novartis v Generics the Court of Appeal agreed that an enantiomer was obvious, dismissing analysing inventive step ‘by chopping it up into a series of sub-questions’ and not allowing unpredictability to contribute.

8. In Generics v Yeda and Teva the Court of Appeal disagreed with the High Court which had found that when looking at whether the specification makes it plausible that the invention solves the technical problem it is not possible to rely on post-dated evidence.  The Court of Appeal felt there could be no objection to admission of evidence on the true nature of the advance by the invention.

9.  In Sudarshan v Clariant the Court of Appeal held that a threat to sue customers was an actionable action.

10.  The change of name of the Patents County Court to the Intellectual Property Enterprise Court was noted. Richard David Hacon is the new judge.  Case breakdown is: 40% trade marks and passing off, 25% copyright, 20% patents and 13% designs.

You may also like the see the related posts on The Disadvantages of Having a Specialist Patent Court and Tips for Attorneys on How to Report Patent Decisions.

Top 10 Signs of a Well-Drafted Patent Application

This is drafted from the perspective of a European Patent Attorney working in the biotech/pharma areas.  However clearly many of the points listed below apply generally.

1.  The Inventions is Well-Presented

The overall impression from the patent application should be of a distinct well-presented invention, where it is relatively easy to see why it is clever and/or impressive.  When drafting a case it is easy to lose sight of the overall impression which it gives to the reader. For example claim 1 can describe the invention as a list of features, but that will sound less impressive than if you are also able to reflect the problem which is solved and the advantages which are provided (An X ray machine which provides higher definition pictures…).

2. Be Consistent

Be careful about being consistent.  For example the degree of extrapolation from the Examples to the claims should be consistent with the contribution over the prior art.  For example if you have identified specific mutations which are difficult to find then you should be wary of trying to claim equivalent mutations that have not yet been identified.

3. Avoid Repetition

Everything in the application should contribute something.  Clearly there should be counterparts of the claims in the description, but apart from this repetition will serve no purpose other than increasing page fees and translation costs.

4. The Summary Should Show the Contribution

The Examiner will try to assess what the contribution is over the prior art.  He/she is more likely to come to a favourable view of this if an actual contribution is provided in the ‘Summary of the Invention’.  The Summary should reflect the extrapolation which the Applicant is making from the Examples, and if necessary should justify the extrapolation.  However the Summary clearly also needs to be written in a way which accommodates the problem being solved changing during examination.

5. Reasonable Claims which are Prima Facie Clear

The claims should give the impression of having a reasonable scope and if possible unclear terms should be avoided in claim 1.  The Examiner is more likely to be persuaded if the patent application comes across as being reasonable, even if it is ambitious in the claim scope which is being pursued.

6.  Provide the Correct Perspective with which to See the Invention

The entire patent application should be drafted from a perspective which directs the Examiner to see it in the way you wish it to be seen.  Therefore the ‘Background to the Invention’, the ‘Summary of the Invention’ and the claims should together allow the Examiner to see how the invention happened in an objective way.  Giving that overall perspective will make it more likely that the Examiner will view the invention favourably when he/she first reads it.

7. Don’t Lose Credibility

Make sure everything in the patent application is credible. It is pointless to present something as novel if it is not.  Having discovered that a supposedly novel product is not novel, the Examiner might then assume there is nothing else in the application which makes a contribution to the art.

8.  Show the Significance of Modest Contributions

You must recognise when the invention is modest and make sure in that situation that the patent application shows the significance of the contribution that is made by the invention.  It is better to avoid an inventive step objection being raised than having to deal with it once it is.

9.  All the Claims Should Contribute Something

Whilst the independent claims are the most important, the dependent claims should be thought about carefully.  Dependent claims can be directed to commercial embodiments, be drafted to cover additional infringers or reflect additional technical effects.

10.  Pay Attention to Detail

Make sure there are no errors in claim 1 and try to ensure there are no spelling mistakes or grammatical errors in the application.  Making corrections after filing will add to costs.  In addition it should be remembered that a published patent application could be used to showcase the invention to potential investors.

You may also be interested in the related articles 10 Top Tips for Patent Drafting and Top 10 Reasons For Filing A Biotech Patent Application.

Top 10 Points from the UK IPO’s report ‘Banking on IP?’

This report has been issued from the UK IPO and essentially relates to the situation in the UK.  The ten points given below are simply what caught our attention and do not fully do justice to this 221 page report.

1.  Knowledge assets are not appreciated in mainstream UK lending.  Recent banking initiatives have found that traditional fixed assets no longer exist for many companies, and so it seems that change will be needed to allow knowledge assets to become bankable. 70-80% of company value may now come from intangible assets.

2.  Other countries are already making the necessary changes.  Malaysia and Singapore are introducing guarantees to facilitate IP-backed lending. Denmark and India are developing IP marketplaces.  Brazil is experimenting with IP audits.

3.  The infrastructure for IP markets and IP financing needs to be improved.  However a key question remains over how much is the IP worth when the business fails. If the technology turns out not to work then a patent can be worth nothing.

4.  Venture debt and mezzanine-style finance does exist in the UK, for example from Silicon Valley Bank which participates alongside venture capital.  In this patents are regarded as very important.

5.  At the moment there are 3 FCA-regulated crowdfunding platforms that can be used to raise money on the internet; Crowdcube, Seedrs and Abundance.

6.  Very few companies have tried to assess the worth of their IP, and so clearly would not have had knowledge of the worth of their IP when approaching a lender.

7.  Offensive patent aggregators are mentioned as a (controversial) option for monetising patent rights.  Defensive patent aggregators are also mentioned, the costs of which are met by investors such as IBM, Cisco and HP.

8.  The Intellectual Property Exchange International is a recently opened public exchange that allows IP rights to be traded as commodity.  However it is too early to assess whether it will be a success.

9.  There are IP auctions and brokerages. This is mostly a US activity, though.  In addition the UK IP insurance market is also immature.

10.  Ultimately IP is seen as too complex to finance with the usual lending means due to the difficulties in understanding what it is, how it relates to cash and where its values can be realised independently of the business.  Banks cannot carry out the appropriate due diligence.

The report is available here.

Top 10 Points from the ICC’s Report on Enhancing Intellectual Property Management and Appropriation by Innovative SMEs

1.  SMEs have flexibility and respond more nimbly to the market.  However they lack resources and expertise and often face early stage financial stress.  They struggle to find investors who can adequately assess their R&D.  A strong IP position will be helpful in showing the value of their invention to investors and the market in general.

2.  SMEs should look to collaborate with larger companies to gain resources, expertise, complementary technologies and access to markets.  Sound IP strategies are crucial in establishing partnerships.  Networking with other SMEs can achieve economies of scale and gives access to other competences.  Suppliers and clients can also be a source of know-how and information.

3.  Export orientation is a key factor in the success of innovation SMEs. Exposure to international competition can stimulate innovation.  However internationalisation introduces challenges and costs, including protecting IP in foreign territories.

4.  IP strategy has four key objectives:

– capturing the value of the company’s ideas

– protecting the company’s interests in collaborations

– ensuring there is freedom to operate

– demonstrating value to investors, potential partners and customers.

5.  Patents are filed to capture the values of in-house R&D.  However strategic considerations must be taken into account, and the value of patents as bargaining chips in negotiations must be appreciated.  A strong IP position is a way of communicating to competitors that the technology is valuable.

6. Licensing should be an option which SMEs should consider for technology they are not manufacturing or developing themselves.

7.  In certain technology areas patents might not be the best option.  Complementary or alternative strategies include secrecy, first mover advantage, innovating faster than competitors, defensive publishing, focusing on niche markets, creating a strong brand and creating strong relationships with customers.

8.  Government needs to help with outreach and training programs for SMEs and assist with providing affordable high quality IP systems.

9.  Government should consider providing insurance for companies to offset the cost of defending an IP position in litigation which represents a significant risk for smaller firms.

10.  Government should provide subsidies for technologies that have been protected using sound IP strategy, so that its funds are used to develop technologies which are well placed for commercialisation.  Further governments should continue to support the development of clusters, provide frameworks for accessing publically funded research and support the creation of incubators.

The report is available here.

Top 10 Topical Issues in Commercial Biotech/Pharma

Here is a list of topical issues in biotech/pharma that we believe are interesting and which are likely to have a major impact.  The list is written by a UK-based observer, but clearly the US lead in biotech/pharma issues is acknowledged.

1. Scientific Reproducibility

Perhaps more than 50% of academic science is not reproducible.  That includes work published in top journals such as Science, Nature and Cell.  Many startups have found to their cost that the foundational science on which the company is based does not work.

2. Biosimilars

With biologics drugs becoming increasingly important biosimilars represent a huge opportunity.  However the FDA has yet to set up a system for biosimilar approval, and clearly there is a lot of lobbying around the issue.

3. Governments Negotiating Hard Over Drug Prices/Spending

The UK government and the pharmaceutical industry have agreed a 5 year deal which limits spending by the National Health Service on branded medicines to $19.25bn (£12bn) annually.  It illustrates the tougher line governments are taking on drug prices and spending.

4. Big Data

Biotech is gradually learning how to use big data.  Many data sets are unstructured and it is not always clear how to interrogate them.  However slowly researchers are learning how best to glean results and conclusions from huge amounts of data on gene expression, imaging results, disease progression, etc.

5. Capturing Value

The biotech industry has to realise that it operates within an ecosystem in which payers are becoming increasingly demanding and sophisticated.  In healthcare in particular payers are acting more and more like consumers with choices and so the economic and health advantages of a new biotech product has to be clear in comparison to existing competing products.  That means that even small biotech companies must have a sophisticated understanding of the market in which they operate and which products the market will accept.

6.  The Present US IPO Window

At least 39 US life science companies have successfully completed IPO’s this year, compared to 11 in the whole of 2012.  For some reason the investment community as whole thinks that biotech is worth investing in again.

7.  Early Stage Funding in Biotech is Still Low

Despite the IPO boom early stage funding for biotech is still low.  In the US there were only 102 first-time financings of life science companies, the lowest amount since 1996.  That is despite crowdfunding, corporate venture capital and the new businesslike philanthropies.

8.  Will Crowdfunding be Big in Biotech?

Crowdfunding has the potential to attract $1 trn or more and the US authorities are making it possible for biotech companies to use this source of revenue.  The company Poliwogg is setting up an accreditation system with defined targets for biotech companies that want to use crowdsourcing for raising funds.

9.  The Big Pharma Situation

Big pharma is restructuring its R&D, laying people off, working with academia in new ways, adopting more cooperative models and starting to venture into open innovation.  Clearly still major players in the biotech ecosystem despite their present troubles.

10. Transparency of Clinical Trial Data

Pharma is making huge strides to become more transparent about its clinical trials. It’s an issue that shows the complexity of their relationship with the public and government. They need to retain trust whilst at the same time protecting their commercial interests.

Top 10 Points on the Trans-Pacific Partnership (TPP)

1.  The TPP is a controversial free trade agreement which is presently being negotiated between Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.

2.  The TPP is ostensibly about emerging trade issues, but the negotiations have been criticised for their secrecy and the expansive scope of the agreement.  Anti-globalisation advocates accuse the TPP of going far beyond tariff reduction and trade promotion, giving unprecedented power to corporations.

3. The present draft of the TPP was recently leaked.  It is clear that the TPP builds on many of the principles of the TRIPS agreement, and thus has provisions for creating and enforcing IP rights.

4.  There are concerns that the IP provisions of the TPP are particularly restrictive, particularly in regard to internet freedom and access to medicines.

5.  The US and Japan are opposing articles relating to preventing abuse of IP rights which leads to restraint of either trade or technology transfer.

6. The US and Japan also oppose proposals to take into account the different levels of economic development and capacity in different countries when considering enforcement of IP rights.

7.  Public health is also a controversial area with the US opposing measures that assist in promoting access to medicines.

8.  There are proposals for establishing international exhaustion of rights which are being opposed by Australia, Japan, Mexico and the US.

9. The TPP also proposes to establish a normative ground for the public domain, recognising the importance of a rich and accessible public domain.

10.  Many of the criticisms of the TPP have also been levelled at the Transatlantic Free Trade Area (TAFTA) which is a proposed agreement between the European Union and the US.

When is a Device Not a Device? EPO Decision T2003/08

In a recent decision of the EPO Boards of Appeal, T2003/08 the following claim was held to be a legitimate medical use claim despite the fact that it seems to refer to a device.

1. Use of a specific ligand for human immunoglobulin

in the manufacture of a column having said ligand

coupled thereto for the treatment of a patient

suffering from dilated cardiomyopathy, said treatment

comprising passing plasma of the patient over the

column under conditions which effect the binding of

said specific ligand to immunoglobulin in the patient’s

plasma, thereby removing a significant portion of the

immunoglobulin from the patient’s plasma, and

reinfusing the plasma to the patient.

This is a significant decision because under EPO case law medical use claims must refer to medicaments which are ‘substances’ and this term has been judged to not include devices.  In general therefore medical use claims cannot be used to obtain protection for devices at the EPO.  However the present case demonstrates there is a lot of leeway in judging whether or not the invention concerns a ‘substance’.  Here a ligand attached to a column was still judged to be a substance.  That means that there is going to continue to be uncertainty in this area.  Another implication is that when drafting cases which concern devices careful consideration should be given to way the way the claim is worded bearing in mind that it needs to refer to a substance.

How is Biotech Patenting Different from Patenting Other Inventions?

This is written from the perspective of a European Patent Attorney.

1.  Biotech Inventions are Complex

That inevitably means that the relationship with the prior art will often be complex with many different features contributing to patentability.  One must therefore be able to see the invention in ‘holistic’ way to understand the contribution properly, and during examination it is important to ensure that the contribution is appreciated to the full extent.  It is usually not as simple as adding feature X to the teachings of D1 because there will generally have been many different ways of proceeding, making motivation complex to analyse.

2.  Different Perspectives on Patentability

Given the complex nature of biotech inventions one must appreciate that different perspectives are possible on patentability.  That may lead to different Patent Offices taking different approaches to patentability, perhaps even relying on different prior art documents.  It is important to recognise the way the Examiner is looking at patentability and to be consistent with that or to correct it when appropriate.

3. Many Different Technical Effects

A biotech invention may involve more than one technical effect.  For example the drug may be more stable, cheaper to manufacture and be less toxic. Clearly all technical effects and problems which are solved must be recognised when drafting a specification.

4.  The Research Might Not be Complete

Often when a biotech patent application is filed the research is still ongoing.  For example in vitro work may be the basis of the claimed invention, in vivo work may be done after filing.  One of the implications of this is that Examiners may raise objections based on whether there is enough data in the application, in the form of support, sufficiency or inventive step objections (problem not solved or the specification does not plausibly show the problem has been solved).

5. When to File

As mentioned in (4) above whether the application has enough data can be important in determining patentability.  Therefore one should always be aware of the need to assess when to file, and filing at the earliest opportunity may not be the best strategy.  Biotech inventions rely very much on analysis of data, and so there needs to be a critical analysis of what the available data shows and what data will become available in foreseeable time frames.  There also needs to be an appreciation that additional data can be filed during examination.

6.  Ethical Issues and Novelty over Nature

Ethical issues sometimes impact directly on patentability (e.g. Harvard oncomouse or embryo stem cell inventions).  However they can also impact in unusual ways where an Examiner may object that a cell claim of an invention unrelated to embryos could theoretically cover an embryo stem cell.  In addition there may occasionally be issues over claims that cover substances in nature.  In this case the feature of being ‘isolated’ will usually overcome the invention.

7.  Many Independent Claims Possible

If one properly thinks through all of the implications of a biotech discovery many independent claims could be possible.  For example where a specific mutation is found to cause a condition then claims to a diagnostic test, nucleic acid probes/antibodies  to detect the mutation and nucleic acids with the mutation could be possible.  In addition thought could be given to transgenic animals with the mutation, screening assays to identify therapeutic compounds and possibly also therapeutic nucleic acids.

8.  Reasonable Expectation of Success

The complexity of biological systems means that often assessing reasonable expectation of success is an important part of the determination of patentability.  This approach opens up many different issues to consider in addition to the usual problem solution test.

9.  Boundary of the Invention

It is not always straightforward to determine what scope of invention should be claimed.  For example where a drug has been found to alleviate a particular condition thought should be given to whether or not its use to alleviate related conditions should also be claimed.  It may instead be more appropriate to file a separate subsequent application for that.  Clearly this needs to be decided on a case by case basis and will depend on the budget available, the commercial value of the additional claim scope and the strength of arguments to support the broader claim.

10. Inherency

Often in biotech invention inherency issues are relevant to patentability.  For example compound X may have been used for a certain purpose (e.g. as an antioxidant) in the prior art, but is now being claimed for a different purpose (e.g. as an antibacterial).  That can lead to novelty objections where the second activity would inherently occur in the prior art process.  Such inherency issues can occur in surprising ways and one needs to be mindful of the possibility when drafting.

Top 10 Observations on US Restriction Requirements on Biotech/Pharma Cases

This is written from the perspective of a European Patent Attorney to assist European clients in understanding US restriction requirements that issue on biotech/pharma cases.

1.  US restriction requirements are often compared to lack of unity objections.  They are not, but lack of unity can contribute to the defining of the restriction groups identified by the Examiner.  It is an aspect of the US system that must be accepted, and often there does not seem to be a clear rationale for the groups that are identified.  In theory subject matter in different restriction groups is patentably distinct from each other, but this is not a straightforward concept.

2.  One way of trying to make sense of restriction groups is to see them as dividing the claimed subject matter based on ‘structural’ considerations, so for example proteins and the nucleic acids that encode them may be placed in different restriction groups.  Products and methods of making them can be placed in different restriction groups.

3.  On biotech/pharma cases it is not unusual for around 8 to 10 groups to be identified, and sometimes up to 20.

4.  The option of arguing against the restriction finding is available.  This can be successful, and so should be considered.  However whether or not to argue is a complex decision because often it requires commenting on patentability before substantive examination has begun.  Clearly in cases where the Examiner has made assumptions which are not correct arguments are more likely to succeed.

5.  Reasons for not arguing against a restriction requirement include the short term given for responding to the restriction requirement, wanting to defer costs and wanting to defer filing complex arguments until substantive examination.

6.  Whether or not arguments will be filed in response to the restriction requirement a group must be elected.  It is important to carefully consider which group to elect.  Normally one chooses a group based on its commercial importance and how likely those claims are to be allowed.  Clearly this is an important decision given the potential loss of claim scope that could occur.

7. Once a group has been elected, one must assume that the claims cannot be amended in a way where they would fall into another identified restriction group.  That can sometimes cause problems in examination where for example conversion of a product claim to a method claim would be desirable to overcome objections, but which is not possible given the way the subject matter was divided into restriction groups.

8. As part of the restriction requirement there may also be a requirement to elect a species.  This is to assist in searching and focussing examination and does not result in loss of claim scope.  However there is a possibility that in examination restricting to the elected species may be suggested by the Examiner, and therefore careful thought should be given to which species are elected.

9.  Bear in mind the possibility of a rejoinder at the end of examination, where the Examiner may join to the allowed claims non-elected claims if they have the features which result in patentability.  Therefore non-elected claims should not be ignored during examination, and consideration should be given to amending them as examination proceeds to increase the possibility of rejoinder being considered.

10.  Divisional applications can be filed to unelected subject matter.  So in theory loss of claim scope can be avoided.  However in practice cost considerations will limit the number of divisional applications that can be filed.