Nyemaster on IP

By Wendy Marsh

On June 13, in a rare 9-0 opinion authored by Justice Thomas, the Supreme Court of the United States held in Association of Molecular Pathology v. Myriad Genetics that naturally occurring DNA was not eligible for patent protection.  In doing so, the Court invalidated some of Myriad Genetic’s patents directed to isolated portions of the breast cancer genes, BRCA1 and BRCA2, while also effectively ending the company’s two-decade monopoly on testing for these genes linked to breast and ovarian cancer.  This decision will allow other companies to manufacture and offer competing tests without fear of being prosecuted by Myriad for patent infringement.  This should make the tests both less expensive and available to more women.  Hours after the decision, one company, DNATraits, said it would offer BRCA gene testing in the United States for $995, less than one third of the current price. 

Even though the Court’s decision was highly technical, the basic reasoning was fairly straightforward, noting that since Myriad did not alter any of the genetic information encoded in the BRCA1 and BRCA2 genes, its claims directed to portions of the genes themselves were unpatentable “products of nature.”  While the decision means companies cannot patent parts of naturally occurring human genes, the Court specifically noted that its ruling did not prohibit the patenting of synthetically created or cloned DNA.

By Wendy Marsh

In a statement released by the White House on Tuesday, President Obama issued five executive actions he will be taking against companies that collect patents for the sole purpose of licensing them and suing other companies that may or may not be violating them.  These so-called “patent trolls” have been filing an increasing number of patent infringement law suits and, in 2012, were estimated to be responsible for over 60% of all patent litigation. 

In an effort to deter questionable lawsuits, the Obama administration announced it would direct the U.S. Patent and Trademark Office (USPTO) to start a rule-making process aimed at requiring patent holders to disclose the owner of a patent.  Patent trolls have frequently been forming shell companies as a means of hiding the identities of the actual owners of the patents claimed to have been infringed.  In addition, the administration will ask Congress to pass legislation to allow sanctions on litigants who filed patent infringement lawsuits deemed abusive by courts.  Further, President Obama said he would direct the USPTO to train examiners to scrutinize applications for overly broad patent claims as a means of preventing improper patents from issuing in the first place.  The other announced actions revolved around improved education and training for citizens, entrepreneurs, and USPTO workers, and ensuring that the U.S. International Trade Commission’s power to bar the importation of goods to the U.S. is proper and the process behind that action is “transparent, effective, and efficient.” 

The technology industry has consistently voiced its dislike for patent trolls, noting that the trolls generate revenue through the use of overly broad patents, while also stifling innovation.  The Internet Association applauded the announcement by the White House, echoing the president’s call for legislation, “to put patent trolls out of business for good.”  In a written statement, The Internet Association noted, “As the president said, patent trolls are nothing more than extortionists, abusing the court system to shake down innocent inventors, entrepreneurs and end users.”

By Wendy Marsh

On November 8th, in Exelixis, Inc. v. Kappos, Judge Ellis of the United States District Court, Eastern District of Virginia, sided with the patentee, ruling that the U.S. Patent and Trademark Office (USPTO) has been undercalculating patent term adjustments (PTAs) to which applicants are entitled due to delays in examination that are the fault of the USPTO.  35 U.S.C. Section 154(b) controls PTAs by the USPTO, and 35 U.S.C. Section 154(b)(1)(B)(i) states as follows:

                 (B)          GUARANTEE OF NO MORE THAN 3-YEAR APPLICATION PENDENCY…..if the issue of an original patent is delayed due to the failure of the United States Patent and Trademark Office to issue a patent within 3 years after the actual filing date of the application in the United States, not including –

(i)                  any time consumed by continued examination of the application requested by the application under section 132(b).

The USPTO had been interpreting this statute to mean that a Request for Continued Examination (RCE) ends the term adjustment for delay by the USPTO under subparagraph (B), regardless of when that RCE was filed.

Judge Ellis disagreed, stating that the plain and unambiguous language of subparagraph (B) requires that the time devoted to an RCE tolls the running of the three year clock only if the RCE is filed within the 3 year time period after filing.  Put simply, the court held that RCEs have no impact on patent term adjustments if they are filed after the three year deadline has passed.

While this decision is bound to be appealed, in the meantime its impact on the terms of some patents could be significant.  In the Exelixis case, the result of the judge’s ruling was an additional 114 days of term added to the patent.  Many other long-pending patents would likely receive equally large if not greater patent term adjustments.  Patent owners may request a recalculation of the amount of their patent term extensions up to two months after a patent issues.  For older patents, the patentee has up to six months to appeal the determination to the United State District Court, Eastern District of Virginia.

By Wendy Marsh

In a unanimous decision, the Supreme Court affirmed the decision of the Federal Circuit in Kappos v. Hyatt in holding that a patent applicant has no evidentiary restrictions beyond those imposed by the Federal Rules of Evidence and the Federal Rules of Civil Procedure, and therefore could present new evidence in a district court proceeding in support of patentability in a Section 145 action.  The Court further held that when a patent applicant presents evidence on a disputed question of fact, the district court must “make a de novo finding.”  While the Court agreed with the Federal Circuit that the district court may consider whether the patent applicant had an opportunity to present the evidence to the United States Patent and Trademark Office (PTO) when determining the weight the evidence should be given, a finding that the evidence could have been previously presented did not affect the admissibility of the evidence, contrary to the PTO’s asserted position.

When a patent applicant is denied a patent from the PTO, the applicant has the choice of either appealing the PTO’s position to the Federal Circuit Court of Appeals under 35 USC § 141, or challenging the decision in district court under 35 USC § 145.  While an appeal to the Federal Circuit requires the applicant to rely only upon the record created before the PTO, the applicant can introduce new evidence in the § 145 district court proceeding.  In the Hyatt case, the PTO argued that the patent applicant was limited in the district court proceeding to introducing only that new evidence which could not have previously been introduced to the PTO during the agency proceeding and, further, that the PTO decision should be granted deference by the district court.

In its review, the Supreme Court considered the statutory language, general principles of administrative law, and the “evidentiary and procedural rules that were in effect when Congress enacted § 145 in 1952.”  Following its review, the Supreme Court concluded that the district court in a § 145 proceeding may consider, “all competent evidence adduced…and is not limited to considering only new evidence that could not have been presented to the PTO.”  The Supreme Court therefore agreed with the Federal Circuit that Congress intended patent applicants to have the right to introduce new evidence in § 145 proceedings, “subject only to the rules applicable to all civil actions, the Federal Rules of Evidence and the Federal Rules of Civil Procedure.”

In addressing the standard of review, Judge Thomas, who wrote the opinion on behalf of the Court, noted that while some consideration must be given to the PTO’s role as the agency that grants patents, “the district court cannot meaningfully defer to the PTO’s factual findings if the PTO considered a different set of facts.”  The Court thus concluded that, “the proper means for the district court to accord respect to the decisions of the PTO is through the court’s broad discretion over the weight to be given to evidence newly adduced in the § 145 proceedings.”

Arguably, the PTO’s position on the evidentiary issues in this case would have severely diminished any benefit that patent applicants could garner from the use of a § 145 proceeding in the patentability determination.  More particularly, a primary benefit of applicants using the § 145 option is their ability to introduce new evidence to the court which, for any number of reasons, was not presented to the PTO during the agency proceeding.  The Supreme Court’s decision has arguably preserved patent applicants’ ability to fully develop the patentability issues pertaining to their inventions, which are often not completely fleshed out at the time the case reaches the Patent Board of Appeals and Interferences, in which proceedings the applicants’ ability to submit new evidence is  severely limited if not prohibited.

By Wendy Marsh

As you may be aware, the America Invents Act (“Act”) was signed into law by President Obama on September 16, 2011.  This Act has created and will continue to create sweeping changes in U.S. patent laws.  We have prepared a summary below to inform you of some of the most significant provisions of this law.