Juhasz Law cites U.S. Supreme Court precedent in Diehr for the “physical links” assertion and the century-old Morse decision for its “virtual links” contention. The firm argues in its 35-page brief that the way out of the Bilski conundrum may be found by determining whether a step central to the Prometheus claim has either a “physical” or a “virtual” link to a specific physical or tangible object.

Juhasz Law argues in the Supreme Court brief that the Prometheus claims contain both a “physical” and also a “virtual” link and thus should be found “subject matter patentable under 35 U.S.C. §101.”

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The U.S. Supreme Court is scheduled to hear oral arguments on December 7, 2011 in this highly anticipated decision that may significantly affect approaches to diagnostic methods including methods critical to the development of personalized medicine.  For a copy of the Juhasz Law amicus filing with the U.S. Supreme Court go to Publications Page.

The Juhasz Law Firm has filed an amicus brief in Mayo Collaborative Services v. Prometheus Laboratories, Inc. The filing brings before the Supreme Court for the first time the argument of “physical” and “virtual” links, a framework for considering the subject matter patentability of an invention. In Prometheus, this determination will be made in connection with diagnostic method patents involving “observed correlations.”

The amicus brief was filed on Tuesday, November 1, 2011 and the U.S. Supreme Court is scheduled to hear oral arguments on December 7. A highly anticipated decision, Prometheus is likely to have significant affect on how the courts approach diagnostic methods patents, including methods critical to the development of personalized medicine.

The “physical link” and “virtual link” patent claim approach was developed by Juhasz Law to help patent holders find a way out of the Bilski conundrum by defining the boundary line beyond which a claim preempts a fundamental principle (i.e., a law of nature, natural phenomenon, or an abstract idea) and within which the claim does not.

Under this approach, the clue to 35 U.S.C. §101 subject matter patentability lies in whether steps that are central to the claim (i.e., not token extra-solution activity) have a “physical” or “virtual” link to a specific physical or tangible object. In support, Juhasz Law cites U.S. Supreme Court precedent in Diamond v. Diehr for the “physical links” assertion and the century-old O’Reilly v. Morse decision for its “virtual links” contention, two of the bedrock cases decided by the Supreme Court in this area of the law. Amicus Juhasz Law argues that the Prometheus claims have both a “physical” and a “virtual” link and so should be subject matter patentable under 35 U.S.C. §101.

While prior considerations of Bilski have referenced the fifth claim of Morse, this argument breaks new ground by focusing on data that is a representation of a physical or tangible object and its manipulation, thus creating a “virtual” link. There is also a symmetry that exists between a “virtual” link (e.g., data manipulating data representing a physical or tangible object) and a “physical” link (e.g., data manipulating a physical or tangible object), such as of the kind that existed in Diehr (e.g., data signaling a device when to open the molding press and remove the cured rubber product) that adds further weight to the argument.

For a copy of Juhasz Law’s amicus filing with the U.S. Supreme Court go to Publications Page.
The Juhasz Law Firm helps patent holders better understand the value of their intellectual property. For more information about “physical” and “virtual” links and how this approach can help patents withstand a post-Bilski challenge, read Virtual Links.

On September 15, 2011, the Federal Circuit rendered its decision in Ultramercial v. Hula, which provides further needed guidance on how to determine whether software claims are subject matter patentable under 35 U.S.C. 101.  In Ultramercial, the Federal Circuit was asked to decide whether a method for distributing copyrighted products over the Internet was subject matter patentable.  In a unanimous decision written by Chief Judge Rader, the Court reversed the lower court in finding the 7,346,545 patent “process” claims to be patent-eligible subject matter within the meaning of 35 U.S.C. 101.

As the Court opined, these claims were subject matter patentable because they required “complex programming” to implement and they recited a “specific application to the Internet and a cyber-market environment”.  Slip Op. 11  The Court explained that “one clear example is the third step, “providing said media products for sale on an Internet website,” and another is that “they must be “restricted” – step four – by complex computer programming as well.”  Id.  The Court was careful to point out that the limitation of a software claim to a “specific application to the Internet” is not a measure of subject matter patentability in all cases; even though this factor is one that contributed to the finding of the Court that the ‘545 patent contains patent-eligible subject matter.  “Complex computer programming”, on the other hand, provides that measure of subject matter patentability the Court impliedly explained when stating that “[t]his court does not define the level of programming complexity required before a computer-implemented method can be patent-eligible.”  Id.  (“Viewing the subject matter as a whole, the invention involves an extensive computer interface.” Id.)

Still, the Court appears reluctant to expressly pronounce “complex computer programming” as the measure for gauging subject matter patentability of software, perhaps wary that limiting the measure to any one test might be viewed as a “bright-line rule” that recent history has shown to find disfavor with the Supreme Court.

Ultramercial is also significant in the absence of any discussion of the “functional and palpable test”, which was articulated by Chief Judge Rader in Research Tech last December for use in determining subject matter patentability questions.  This may indicate a growing realization of the Court about the subjectivity of the “functional and palpable test” for use as a yardstick for measuring subject matter patentability questions; a concern that we voiced as well in our Juhasz Law Blog on Research Tech.  While more subjective than the “functional and palpable test”, the “complex computer programming test” of Ultramercial still begs the question of just what amount of programming is required before the computer programming may be deemed to be “complex computer programming” sufficient to allow the software claims to pass through the subject matter patentability filter.  In our Juhasz Blog on Cybersource, we voiced the same concern with the “performed in the human mind, or by a human using a pen and paper” test espoused by the Court in Cybersource (i.e., just how many calculations must the claim perform before a software claim satisfies that test).  Thus, Ultramercial, like its predecessor Cybersource, is likely to go down only as an important next step in the evolution of jurisprudence in this area toward a test that can be more objectively applied and lead to more consistent results.

At Juhasz Law, we have suggested in the past that the test for accurately defining the boundary line beyond which a business, software, or diagnostic method preempts a fundamental idea may lie in whether the method steps recite a physical or virtual link to something real. There must be a physical or virtual link of data manipulated by the software, for instance, to a physical or tangible object.  That is, a real or tangible object must be manipulated by data as in Diehr.  Or data representing a real or tangible object must be manipulated as in the Fifth claim of Morse. Both Ultramercial and Cybersource cases appear to support this view that the link of data to, that is, the manipulation of, something “real” may provide the clue to the patent eligibility of a business, software, or diagnostic method.  For more on “virtual links” and “physical links” and their use, go to Physical and Virtual Links.

As yet another sign that the Court may be stepping away from the use of “bright-line” rules in Federal Circuit jurisprudence is Chief Judge’s discussion in Ultramercial of the role of claim construction in determining subject matter patentability questions.  As Chief Judge Rader explained, “[t]his court has never set forth a bright line rule requiring district courts to construe claims before determining subject matter eligibility” (Slip Op. 4, 5), before the Court went on to deciding that the subject matter of the ‘545 patent does not require claim construction.  Id.  At Juhasz Law, we believe that claim construction helps to clearly frame the Bilski subject matter patentability question.  For that reason, we draft claims for our clients with this in mind; specifically building into the claims the physical and virtual links that we believe minimize the exposure of the claims to a Bilski challenge.

The Juhasz Law Firm can help you to better understand the effect of Ultramercial on your software patents.  For more information regarding these cases and advice on how these decisions may affect your patents, please contact The Juhasz Law Firm. Your patents may be your most important asset. To help you protect your patents contact Juhasz Law, the firm committed to Guiding Your Patent Beyond The Horizon℠.

On August 31, 2011, the Federal Circuit rendered its decision in Classen v. Biogen Idec. which may become the gold standard for making subject matter patentability determinations in cases involving transformative steps; squarely addressing the issue of “insignificant or token activity” (e.g., “insignificant post solution activity”) raised by the Supreme Court in Bilski  but now in connection with subject matter involving transformations.  

In Classen, the Federal Circuit was asked to decide whether three patents on a method for improving an immunization schedule involving method claims directed to identifying a safe vaccine regimen and involving a step of immunizing mammals is patentable subject matter.  The patents before the Court were U.S. Pat. Nos.  6,638,739; 6,420,139; and 5,723,283.

In a 2-1 majority, the Court reversed the lower court in finding the ‘139 and ‘739 patents to contain subject matter patentable under 35 U.S.C. 101 while affirming the lower court finding that the ‘283 patent is not patentable subject matter.  Following an unremarkable analysis of the case under its “functional and palpable test” (“If the specified method is “functional and palpable,” the court stated, the claims are drawn to statutory subject matter.” Slip Op. 17), the Classen court went on to analyze the claims in what may be the real take-away from this decision – namely, the implied replacement of the traditional notion that generally all transformative steps are patentable subject matter with a “subject matter patentability filter” through which all transformation steps in a claim must pass. Slip Op. 19  In Classen, claims of one of the three patents before the court, the ‘283 patent, failed to pass the “subject matter patentability filter” impliedly because they amounted to an insignificant or token activity.  Id.  As the court explained, “[t]he “immunizing” in the ’283 patent refers [only] to the gathering of published data, while the immunizing of the ’139 and ’739 patent claims is the physical implementation of the mental step claimed in the ’283 patent.”  Id.

The different treatment given by the Court to the two sets of patents turned on how the immunization step was construed by the Court.  In the ‘139 and ‘739 patents the recitation occurred after a screening step was performed to derive an immunization schedule for use in the immunization step and in the ‘283 the immunization step was recited before a comparing step to generate data for use in the comparison step.  While facially both sets of patents recited “immunization steps” that were transformative, the court opined that the “immunizing step” of the ‘283 patent failed to pass through the “subject matter patentability filter”   Slip Op. 19, 20.  A transformation for data gathering purposes to develop a body of knowledge as was recited in the ‘283 is not patentable the court held while a transformation that “puts this knowledge to practical use” as was recited in the ‘139 and ‘739 patents comports with 35 U.S.C. 101. Slip Op. 21  As explained by the court, “The principles applied in Prometheus support the patent eligibility of the Classen claims that include such transformative steps, but are not relevant to claims that require no more than referring to known information but do not include immunization in light of that information.” Slip Op. 22

In her dissent, Judge Moore found disfavor with the court’s use of the “functional and palpable” test pointedly questioning: “How do we determine whether any given method or claim is “functional” or “palpable?”  Dissent 12.  In our Juhasz Blog on Research Tech, we too posed the same question.  There we said that this “functional and pulpable” standard in defining whether a claim preempts a fundamental idea (“palpable” is defined by Merriam-Webster dictionary to mean “capable of being touched or felt”) provides little guidance on determining the preemption issue and is reminiscent of the phrase made famous by Justice Potter Stewart in the obscenity case of Jacobellis v. Ohio that “I know it when I see it”. 

The Classen court provides further useful insight as to what the “functional and palpable test” means when it predicated its analysis under the test using phrases like “specific, tangible application” (Slip Op. 18) and “concrete, physical step (Slip Op. 20).   In her dissent, again critical of such reasoning, Judge Moore pointedly questioned: “Is this a return to the rejected notions of “useful, concrete, and tangible?”  We too find the Court’s use of  “concrete, physical step” and the “specific, tangible application” type of analytical framework in its analysis to be eerily reminiscent of the “useful, concrete, and tangible result” test that the court used in deciding State Street and AT&T, a decision that the dicta of the Supreme Court in Bilski made clear that “nothing in today’s opinion should be read as endorsing interpretations of §101 that the Court of Appeals for the Federal Circuit has used in the past. See, e.g., State Street, 149 F. 3d, at 1373; AT&T Corp., 172 F. 3d, at 1357.”  For more go to Juhasz Law Blog on State Street Bank and AT&T Lessons.

The Classen decision showcases the continuing struggle of the Court to define the boundary line beyond which a claim preempts a fundamental principle.  The problem, as the Court explained is that “[t[he Court in Bilski v. Kappos did not define “abstract,” and Justice Stevens observed in concurrence that “[t]he Court, in sum, never provides a satisfying account of what constitutes an unpatentable abstract idea,” 130 S. Ct. at 3236.”  Slip. Op. 16.  The solution in the eyes of the Federal Circuit is the “functional and palpable” test which provides that definition. Slip Op. 17.

Still, Classen is likely to become the gold standard for making subject matter patentability determinations in cases involving transformative steps; squarely addressing the issue of “insignificant or token activity” (e.g., “insignificant post solution activity”) raised by the Supreme Court in Bilski  but now in connection with subject matter involving transformations. Classen impliedly may have signaled the end to the general presumptive patentability of transformation claims.  Transformative steps that are mere data gathering steps may now be treated no differently than a general computer is treated in a software patent, that is, as an insignificant post-solution activity.  Classen also points to the wisdom of the Supreme Court in striking down the Federal Circuit’s “machine-or-transformation” test as the exclusive test for determining subject matter patentability.  The transformative step that was deemed to be unpatentable subject matter under Classen could likely have been found to be patentable subject matter under the MOT test. 

In reforming the treatment of transformation steps, Classen is likely to have a big impact on diagnostic methods and chemical process patents by extension. Classen Immuno v. Biogen Idec is a must read for practitioners dealing with Bilski issues.  For a more comprehensive discussion of Classen Immuno v. Biogen Idec and take-aways including suggested tips for use in drafting diagnostic and chemical method claims, go to the September 2011 Juhasz Law Advisory.

The Juhasz Law Firm can help you to better understand the effect of Classen Immuno v. Biogen Idec on your biotechnology, diagnostic, and chemical patents.  For more information regarding these cases and advice on how these decisions may affect your patents, please contact The Juhasz Law Firm. Your patents may be your most important asset. To help you protect your patents contact Juhasz Law, the firm committed to Guiding Your Patent Beyond The Horizon℠.

On August 16, 2011, the Federal Circuit rendered its decision in Cybersource v. Retail Decisions which provides needed guidance on how to determine whether claims are subject matter patentable under 35 U.S.C. 101.  In Cybersource, the Federal Circuit was asked to decide whether a method and a Beauregard claim directed to detecting credit card fraud which utilizes information relating credit card transactions to particular “Internet addresses” was subject matter patentable.  In a unanimous decision, the Court affirmed the lower court in finding claims 2 and 3 of the 6,029,154 patent invalid under 35 USC 101 for failing to recite patent-eligible subject matter. 

Following an unremarkable machine-or-transformation test analysis, the Cybersource  Court went on to analyze the claims in what may be the real take-away from this decision – namely, an analysis of claims for subject matter patentability using the model provided by the Bilski  Supreme Court.  That model involves defining the patentability boundary line for these claims beyond which claims of this type preempt a fundamental principle and within which these claims may be patentable subject matter.  The court defined that boundary line with these claims by the question “Can it be performed in the human mind, or by a human using a pen and paper?” 

In holding claim 3 to fall outside the patentability boundary line and so to preempt an abstract idea, the Court explained that “[a]ll of claim 3’s method steps can be performed in the human mind, or by a human using a pen and paper. Claim 3 does not limit its scope to any particular fraud detection algorithm, and no algorithms are disclosed in the ’154 patent’s specification. Rather, the broad scope of claim 3 extends to essentially any method of detecting credit card fraud based on information relating past transactions to a particular “Internet address,” even methods that can be performed in the human mind.” Slip Op. 12.

In holding the Beauregard claim 2 to be unpatentable, the court explained that the claim recites nothing more than a computer readable medium containing program instructions for executing the method of claim 3.  Slip Op. 16  The method underlying claim 2 being clearly the same method of fraud detection recited in claim 3, the Court held claim 2 to be likewise invalid as unpatentable subject matter.

The court was unpersuaded by the argument that the Beauregard claim was a 35 U.S.C. §101 “machine” and not a “process” on which Bilski was decided.  The court deemed the Beauregard claim ultimately to be a claim on a process and the recited computer readable medium an insignificant post-solution activity. Slip Op. 17, 18.  “Here, the incidental use of a computer to perform the mental process of claim 3 does not impose a sufficiently meaningful limit on the claim’s scope. Slip 19  In so holding, the court appears to be heeding the Bilski Supreme Court caveat that “[t]o hold otherwise would allow a competent draftsman to evade the recognized limitations on the type of subject matter eligible for patent protection”.  For more on the likely spill-over effects of Bilski into categories of subject matter other than a “process”, read Juhasz White Paper - Bilski and Software.

The Federal Circuit seems intent on adhering to its “functional and palpable test”, a test that was articulated in Research Tech for use in determining subject matter patentability questions.  The Court in a contemporaneous case Classen made this crystal clear when it stated that “[i]f the specified method is “functional and palpable, the claims are drawn to statutory subject matter.” Classen, Slip Op. 17  But by deciding the software claims based on whether the steps of the software can be performed in the human mind, or by a human using a pen and paper and not on whether the software method was “functional and palpable”, the Cybersource Court may be indicating its own concern about the subjectivity of the “functional and palpable test” for use as a yardstick for measuring subject matter patentability questions.  In our Juhasz Law Blog on Research Tech, we voiced the same concern.  There we said that that the “functional and palpable” standard in defining whether a claim preempts a fundamental idea (“palpable” is defined by Merriam-Webster dictionary to mean “capable of being touched or felt”) provides little guidance on determining the preemption issue and is reminiscent of the phrase made famous by Justice Potter Stewart in the obscenity case of Jacobellis v. Ohio that “I know it when I see it”.  By analyzing these software claims in this way, Cybersource may be signaling the morphing of the very subjective “functional and palpable test” into arguably a more objective standard of “can it be performed in the human mind, or by a human using a pen and paper test”.

Still, Cybersource begs the question of just how many calculations must the claim perform before it is deemed to contain patentable subject matter because it cannot be “performed in the human mind, or by a human using a pen and paper”.  Thus, Cybersource is likely to go down only as an important next step in the evolution of jurisprudence in this area toward a test that can be more objectively applied and lead to more consistent results.

At Juhasz Law, we have suggested in the past that the test for accurately defining the boundary line beyond which a business, software, or diagnostic method preempts a fundamental idea may lie in whether the method provides a physical or virtual link to something real. There must be a physical or virtual link to a physical or tangible object.  That is, a real or tangible object must be manipulated by data as in Diehr.  Or data representing a real or tangible object must be manipulated as in the Fifth claim of Morse. Both Cybersource and Classen cases appear to support this view that the link of data to, that is, the manipulation of, something “real” may provide the clue to the patent eligibility of a business, software, or diagnostic method.  For more on “virtual links” and “physical links” and their use, go to Physical and Virtual Links.

Cybersource is a must read for practitioners dealing with Bilski issues.  For a more comprehensive discussion of Cybersource and take-aways including suggested tips for use in drafting diagnostic method claims, go to the September 2011 Juhasz Law Advisory.

The Juhasz Law Firm can help you to better understand the effect of Cybersource on your software patents.  For more information regarding these cases and advice on how these decisions may affect your patents, please contact The Juhasz Law Firm. Your patents may be your most important asset. To help you protect your patents contact Juhasz Law, the firm committed to Guiding Your Patent Beyond The Horizon℠.

In Association for Molecular Pathology[1], a decision rendered on July 29, 2011, the Federal Circuit was asked to decide whether isolated DNA containing naturally-occurring human BRCA1/2 gene sequences linked to breast and ovarian cancer, on which the USPTO issued a patent in accordance with its nearly 30 year practice of granting patents on DNA sequences so long as those sequences are claimed in the form of “isolated DNA”[2], constitutes patentable subject matter under 35 U.S.C. §101.  In a 2-1 majority, the Court decided that isolated DNA indeed is subject matter patentable but the majority was unable to agree on the reason why – if new, is it per se patentable? Or does it also require a demonstration of “new usefulness” to be patentable.

Writing for the majority decision, Judge Lourie concluded that the challenged claims are drawn to patentable subject matter because the claims cover molecules that are markedly different—have a distinctive chemical identity and nature—from molecules that exist in nature.  Slip Op. 41  What made isolated DNA markedly different, according to Judge Lourie, is that “[i]solated DNA has been cleaved (i.e., had covalent bonds in its backbone chemically severed) or synthesized to consist of just a fraction of a naturally occurring DNA molecule. (emphasis added)  Slip Op. 42   Once cleaved, an isolated DNA molecule is no longer a purified form of a natural material, but a distinct chemical entity.  Slip Op.  43, 44  (emphasis added)

In so deciding, Judge Lourie seems to be implying that if a chemical structure is “markedly different” than it per se satisfies both “new” and “useful” prongs of 35 U.S.C. 101; although he never seems to address how the marked differences in chemical structure of the different sequences claimed satisfy the “useful” prong of 35 U.S.C. 101 other than by stating that “isolating genes to provide useful diagnostic tools and medicines is surely what the patent laws are intended to encourage and protect”. Slip Op. 47

In Judge Moore’s opinion, the different chemical structure does not alone as Judge Lourie opined make isolated DNA markedly different. (“[A]lthough the different chemical structure does suggest that claimed DNA is not a product of nature, I do not think this difference alone necessarily makes isolated DNA so “markedly different,” Chakrabarty, 447 U.S. at 310, from chromosomal DNA so as to be per se patentable subject matter. Cf. Funk Bros., 333 U.S. at 130-31 (Creation of “a new and different composition” of bacterial strains was nevertheless not patentable subject matter).) (emphasis added) Slip Op. Moore, 14, 15.

According to Judge Moore, “markedly different” also requires the isolated DNA to have the potential for “significant utility”.  Citing the teaching that “[i]n Chakrabarty the intervention of man resulted in bacteria with “markedly different characteristics” from nature and “the potential for significant utility,” resulting in patentable subject matter,” (447 U.S. at 309-310; Funk Bros., 333 U.S. at 131)(emphasis added), Judge Moore explained that, “I analyze the isolated DNA claims to determine whether they have markedly different characteristics with the potential for significant utility, e.g., an “enlargement of the range of . . . utility” as compared to nature”. (emphasis added)  Moore 7    Given these structural differences, the Court must, in the words of Judge Moore, “as precedent instructs, consider whether these differences impart a new utility which makes the molecules markedly different from nature.” (emphasis added) Id. 

The shorter isolated DNA sequences imparted such a “new utility”, opined Judge Moore, since shorter isolated DNA sequences have a variety of applications and uses in isolation that are new and distinct as compared to the sequence as it occurs in nature and so are subject matter patentable.  Moore  15, 16  On the other hand, long isolated DNA have no such clear new utility as compared to nature, Judge Moore explained, and so should be unpatentable.  Id.  Nonetheless, Judge Moore decided that they too are patentable since they have become immunized from subject matter patentability challenge given the settled expectations and extensive property rights. Moore 17-19  (“The patents in this case might well deserve to be excluded from the patent system, but that is a debate for Congress to resolve.”  Moore 31)

In his dissent, Judge Bryson found the structural differences between isolated and natural DNA to be irrelevant and opined that “[t]he use to which the genetic material can be put, i.e., determining its sequence in a clinical setting, is not a new use; it is only a consequence of possession”  (emphasis added)  Dissent 13.  

As to diagnostic method claims, the Court held the method claims reciting “comparing” and “analyzing” two gene sequences to fall outside the scope of 35 USC 101 because they claim only abstract mental processes.  Slip Op. 49, 50 As the Federal Circuit observed,   “[t]his claim thus recites nothing more than the abstract mental steps necessary to compare two different nucleotide sequences: look at the first position in a first sequence; determine the nucleotide sequence at that first position; look at the first position in a second sequence; determine the nucleotide sequence at that first position; determine if the nucleotide at the first position in the first sequence and the first position in the second sequence are the same or different, wherein the latter indicates an alternation; and repeat for the next position.”  Slip Op. 50  The Court distinguished the recited “determining step” in Prometheus on the basis that here, the claims called for nothing more than a visual inspection of the results unlike in Prometheus where the metabolite levels could not be determined by mere inspection alone, the determining step requiring a transformation.  Slip Op. 52.  (e.g., such as by a high pressure liquid chromatography method or some other modification of the substances to be measured.)

The Court did reverse the lower court, however, on the method claims directed to screening potential cancer therapeutics via changes in cell growth rates, holding them to be patentable subject matter. Slip Op. 53   The Court found the steps of “growing”, “determining”, “comparing” to be central to the invention and ruled out these steps as being abstract mental steps because each was “transformative” in nature; which the Court stated was an “important clue” that it is drawn to patent-eligible process citing Bilski.  Slip Op. 53

Finally, on the threshold issue of declaratory judgment jurisdiction, the Court unanimously affirmed the district court’s decision to exercise declaratory judgment jurisdiction; but only as to Dr. Ostrer with jurisdiction as to the others reversed.  Myriad’s ten-year silence on enforcement of a patent Myriad had asserted but never took off the table did not extinguish the declaratory judgment right under the totality of circumstances.  Slip Op. 31

For a more comprehensive discussion of Association for Molecular Pathology and take-aways including suggested tips for use in drafting diagnostic method claims, go to the August 2011 Juhasz Law Advisory.

The Juhasz Law Firm can help you to better understand the effect of Association for Molecular Pathology on your biotechnology and diagnostic patents.  For more information regarding these cases and advice on how these decisions may affect your patents, please contact The Juhasz Law Firm. Your patents may be your most important asset. To help you protect your patents contact Juhasz Law, the firm committed to Positioning Your Patent Beyond The Horizon℠.

For more on Association for Molecular Pathology go to the August 2011 Juhasz Law Advisory.

Stanford v. Roche

In Stanford v. Roche, Cetus developed methods for quantifying blood-borne levels of human immunodeficiency virus (HIV), the virus that causes AIDS.  Cetus began to collaborate with Stanford.  Dr. Holodniy joined Stanford and signed an agreement with Stanford to assign his “right, title, and interest in” inventions resulting from his employment at Stanford.  In collaborating with Cetus, to gain access to Cetus, Dr. Holodniy signed an agreement stating that he “will assign and do(es) hereby assign” to Cetus his “right, title, and interest in . . . the ideas, inventions, and improvements” made “as a consequence of [his] access” to Cetus.  Together with Cetus, Dr. Holodniy devised a PCR-based procedure for measuring the amount of HIV in a patient’s blood which the successor company to Cetus through acquisition, Roche, commercialized.  Stanford filed for patents on the inventions and sued Roche.  Roche countered that its agreement with Dr. Holodniy gave it co-ownership of the patents, and thus Stanford had no standing to sue.  Stanford responded that Dr. Holodniy had no rights to assign because the University had superior rights under the Bayh-Dole Act.

The District Court held that the Bayh-Dole Act trumped the employer agreements.  The Federal Circuit disagreed, concluding that the Bayh-Dole Act did not divest an inventor of his rights in federally funded inventions.  Because as between Stanford and Cetus, Stanford only had an agreement to assign whereas Cetus had an actual assignment, the Federal Circuit held that Dr. Holodniy assigned his rights to Cetus and thus to Roche.

The only question before the Court in Stanford was whether the Bayh-Dole Act displaces the norm and automatically vests title to federally funded inventions in federal contractors.  The Supreme Court held that it did not.

The Court began its analysis with the fundamental tenet that under US patent law, the rights in an invention belong to the inventor.  The Court explained that while an invention may be assigned, employment alone does not give rise to assignment. Since the first Patent Act, the basic idea that inventors have the right to patent their invention has not changed.  Mere employment is insufficient to vest title to an employee’s invention in the employer.  An employee agreement is required.   Slip Op. 10.

The Bayh-Dole Act applied here because the invention flowed from federally funded research.  However, the Court held that the Bayh-Dole Act does not reorder this priority of inventors by moving the inventor from the front of the line to the back by vesting title to federally funded inventions in the inventor’s employer – the federal contractor.  Slip op. 8. There is no unambiguous language in the Bayh-Dole Act of the kind that Congress uses to divest inventors of their rights in inventions by specifying that inventions created pursuant to federal contracts becomes the property of the contractors or United States or anyone else .  Slip Op. 8.  Indeed, the Act reinforces that title vests in the inventor by providing that contractors may “elect to retain title”. Slip Op. 11.  In other words, they may keep title to whatever they may already have.  Slip Op. 11.  Here, Stanford never had the patent that it could “elect to retain” because Stanford never got an assignment of the invention from Dr. Holodniy. 

In short, only when an invention belongs to the contractor does the Act come into play.  Slip Op. 12  As the Court explained, “[t]he Act clarifies the order of priority of rights between the Federal Government and a federal contractor in a federally funded invention that already belongs to the contractor.  Nothing more.” (emphasis added) Slip op. 12

It is for this reason, the Court maintained, that universities typically enter into agreements with their employees requiring the assignment to the university of rights in inventions.  With an effective assignment, those inventions – if federally funded – become “subject inventions” under the Act, and the statute works the way Stanford says it should.  Slip op. 15.  It does so without violence to the basic principle of patent law that inventors own their inventions.  Slip Op. 15.

Here, Stanford did not have such an assignment in place and so the Bayh-Dole Act does not apply.

The Juhasz Law Firm can help you to better understand the effect of Stanford on your patents. For more information regarding Stanford and advice on how this decision may affect your patents, please contact The Juhasz Law Firm.

Your patents may be your most important asset. To help you protect your patents contact Juhasz Law, the firm committed to Positioning Your Patent Beyond The Horizon℠.

For an analysis on Prometheus v. Mayo go to Supreme Court Round-up – Part 1 of 3:  Certiorari Granted in Prometheus.

For an analysis on Global-Tech Appliance v. SEB go to Supreme Court Round-up – Part 2 of 3:  “Willful Blindness” Induced Infringement as Culpable as Actual Knowledge in Global-Tech.

In Global-Tech Appliances v. SEB, the Court affirmed the decision of the Federal Circuit finding induced infringement but on different reasoning.  The Court set aside the Federal Circuit’s “knew or should have known” standard for establishing induced infringement and articulated a new standard in its place based on “knowledge or willful blindness”.  In invoking this so called “willful blindness” doctrine to bring those who lack knowledge within the §271 prohibition, the Court turned first to deciding whether “knowledge” is indeed required for induced infringement. 

In finding that §271(b) requires “knowledge”, the Court noted that what the 1952 Patent Act treated as two separate actions – namely, §271(b) induced infringement and 271(c) contributory infringement – was, before the 1952 Patent Act was enacted, treated under the one action of contributory infringement.  Slip Op. 5.  Hence, §271(b) and §271(c) have the same origin and so the scienter element for each should be similarly interpreted.  Finding the 271(b) language short, simple, and in connection with the issue of knowledge inconclusive (Slip Op. 4), the Court looked to its 1965 decision in Aro II for guidance where a narrow majority held that a violator of §271(c) must know “that the combination for which his component was especially designed was both patented and infringing”.  Slip Op. 7-8.  The Court found that conclusion requires the same knowledge for liability under §271(b).

Turning then to the question of the knowledge scienter required to establish induced infringement, the Court observed that in criminal cases “actual knowledge” is not always capable of being established.  And yet, under criminal law precedent, defendants who are without the requisite knowledge cannot escape the reach of these statutes by deliberately shielding themselves from clear evidence of critical facts that are strongly suggested by the circumstances.  Slip Op. 10.  “Defendants who behave in this manner are just as culpable as those who have actual knowledge,” the Court observed.  Slip Op. 10.  The Court found no reason not to apply this so called “willful blindness” doctrine to effectively constructively impute a scienter almost commensurate with knowledge to civil lawsuits for induced infringement under 35 U.S.C. §271(b).  Slip op. 12.  Under this doctrine of willful blindness, the scienter required by §271(b) can be met if two basic requirements are satisfied: “(1) the defendant subjectively believes that there is a high probability that a fact exists, and (2) the defendant takes deliberate actions to avoid learning of that fact.  Slip Op. 13. 

Applying the “willful blindness” doctrine to the facts in the case, the Court found that Pentalpha (a Hong Kong manufacturer and subsidiary of Global-Tech) willfully blinded itself to the infringing nature of the sales it encouraged its customer Sunbeam to make in the U.S. since “Pentalpha subjectively believed there was a high probability that SEB’s [patentholder’s] fryer product was patented, that Pentalpha took deliberate steps to avoid knowing that fact, and that it therefore willfully blinded itself to the infringing nature of Sunbeam’s sales.”  Slip Op. 16  Particularly probative was the fact that Pentalpha designed its product based upon reverse engineering a product of the patent holder’s that was bought in Hong Kong and not in the U.S. which is without U.S. patent marking requirements and Pentalpha’s decision not to inform its patent attorney from whom Pentalpha sought a right-to-use opinion that the product to be evaluated was simply a knock-off of the patent holder’s product.  Slip Op. 15.  As stated by the Court “[o]n the facts of this case, we cannot fathom what motive [Pentalpha] could have had for withholding this information other than to manufacture a claim of plausible deniability in the event that this company was later accused of patent infringement.  Slip Op. 15.

In a lone dissent, Justice Kennedy took issue with the Majority’s invocation of willful blindness to bring those who lack knowledge within the §271(b) prohibition.  “Willfull blindness is not knowledge; and judges should not broaden a legislative proscription by analogy,” Justice posited.  Slip Op., Kennedy Dissent, at 1.

Global-Tech has ushered in a new standard for meeting the scienter required to establish induced infringement under §271(b) – namely, one based on “knowledge” or “willfull blindness” involving manufactured claims of plausible deniability where a company subjectively believes there to be a high probability of a patent, the company takes deliberate steps to avoid knowing that fact, and therefore willfully blinds itself to the infringing nature of the induced sales.  Given the familial relationship of §271(b) with §271(c) contributory infringement, the same willful blindness doctrine is likely to apply to §271(c) by extension.

The Juhasz Law Firm can help you to better understand the effect of Global-Tech on your patents. For more information regarding Global-Tech and advice on how this decision may affect your patents, please contact The Juhasz Law Firm.

Your patents may be your most important asset.  To help you protect your patents contact Juhasz Law, the firm committed to Positioning Your Patent Beyond The Horizon℠.

For an analysis on Prometheus v. Mayo go to Supreme Court Round-up – Part 1 of 3:  Certiorari Granted in Prometheus.

For an analysis on Stanford v. Roche go to Supreme Court Round-up – Part 3 of 3:  Only If There is an Assignment, Only Then If the Employer is a Federal Contractor Does Bayh-Dole Apply in Stanford v. Roche.

Prometheus v. Mayo

For the second time, on June 20, 2011, the Supreme Court granted certiorari in Prometheus v. Mayo.  The previous certiorari was granted last June in which the Court remanded the case to the Federal Circuit for a rehearing consistent with the Court’s Bilski decision.  On rehearing last December, the Federal Circuit affirmed its pre-Bilski decision (based on the machine-or-transformation test) but this time using the reasoning articulated by the Court in Bilski.  Nonetheless, included in that reasoning was the particular persuasiveness of the transformative nature of the claims under the machine-or-transformation test, a test the Bilski Court held to be “a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under Section 101” albeit not the sole test for making that determination.

The granted writ of certiorari poses the following question:

• Whether 35 U.S.C. § 101 is satisfied by a patent claim that covers observed correlations between patient test results and patient health, so that the claim effectively preempts all uses of these naturally occurring correlations.

As framed, Mayo may have stacked the deck in its favor by incorporating into the question the very highly charged term “observed correlations” language that has been before the Court once before in 2006 in Laboratory Corp, a certiorari that the Court dismissed as improvidently granted but not without Justice Breyer first weighing in on the issue, by way of a strongly worded dissent of the dismissal, in which he effectively viewed diagnostic “observed correlations” to be unpatentable subject matter.  Lab Corp. of Am. Holdings (LabCorp) v. Metabolite Labs, Inc., 126 S. Ct. 2921, 2922–2923 (2006) (Breyer, J., dissenting). 

In Prometheus, the claims involve more than simply the “observed correlations” that arbuably form a part of the “wherein” recitations.  Claim 1, for example,  recites “administering a drug providing 6-thioguanine . . . “ and “determining the level of 6-thioguanine in said subject . . . .”  Hence, lumping all of the claims under the “observed correlations” language propounded by Mayo may be inapropos for Prometheus if, as the Federal Circuit stated in its post-Bilski decision, for example, “[d]etermining the levels of 6-TG or 6-MMP in a subject necessarily involves a transformation, for those levels cannot be determined by mere inspection. Some form of manipulation, such as the high pressure liquid chromatography method specified in several of the asserted dependent claims or other modification of the substances to be measured, is necessary to extract the metabolites from a bodily sample and determine their concentration.”  Prometheus v. Mayo, 2008-1403, at 18 (Fed. Cir. 2010) 

Nonetheless, the question as posed by Mayo is the question upon which the certiorari was granted and which will define the debate.

It remains to be seen whether this time around, these arguments lead to a sea change in the patenting of diagnostic method patents or become yet another example of good lawyering, this time done on the part of Mayo, which like Microsoft lawyers in the i4i case, presented facially convincing arguments that fall apart after the Court does its own analysis.  The hearing on Prometheus is expected to be scheduled for this Fall 2011 Term of the Court with a decision likely next year.  What the Court does with this case will echo through the medical diagnostic industry.

The Juhasz Law Firm can help you to better understand the effect of Prometheus on your patents. For more information regarding Prometheus and advice on how this decision may affect your patents, please contact The Juhasz Law Firm.

Your patents may be your most important asset.  To help you protect your patents contact Juhasz Law, the firm committed to Positioning Your Patent Beyond The Horizon℠.

For an analysis on Global-Tech Appliances v. SEB  go to Supreme Court Round-up – Part 2 of 3:  “Willful Blindness” Induced Infringement as Culpable as Actual Knowledge in Global-Tech.

For an analysis on Stanford v. Roche go to Supreme Court Round-up – Part 3 of 3:  Only if There is an Assignment, Only Then If the Employer is a Federal Contractor Does Bayh-Dole Apply in Stanford v. Roche.

The Microsoft v. i4i decision comes as no big surprise.  The Court unanimously held that invalidity of a patent must be shown by clear and convincing evidence.  There is some language dicta in the decision that defendants will undoubtedly use to try to decrease the showing with respect to prior art not considered by the PTO.  But at the end of the day the clear and convincing standard for invalidating a patent was upheld.

In Microsoft v. i4i, a decision rendered by the Supreme Court on June 9, 2011, the Supreme Court unanimously affirmed (with Chief Justice Roberts taking no part) the decision of the Court of Appeals for the Federal Circuit in holding that invalidity of a patent must be shown by clear and convincing evidence.

This action involved prior art S4 software that was never presented to the PTO examiner because the software’s source code had been destroyed years before the commencement of the litigation and hence the factual dispute turned largely on trial testimony by S4’s two inventors. Microsoft objected to i4i’s proposed jury instruction that it was required to prove its invalidity defense by clear and convincing evidence and requested an instruction that would require the clear and convincing burden to apply only with respect to prior art examined by the PTO.  In all other cases, the burden of proof would be by a preponderance of the evidence.  The district court rejected Microsoft’s hybrid standard of proof and instructed the jury to use the clear and convincing standard.  The jury found Microsoft to willfully infringe the i4i patent and that Microsoft had not proven invalidity by clear and convincing evidence.  The federal circuit affirmed.

The Supreme Court upheld the federal circuit decision applying a strict statutory construction to 35 U.S.C. 282, which provides that “[a] patent shall be presumed valid” and “[t]he burden of establishing invalidity . . . rest[s] on the party asserting such invalidity”.  As the Court made clear there was a statute pretty much on point.  It didn’t use the word “clear and convincing” in the statute on proving a patent to be invalid but it did use the words that a patent is “presumed valid”.   Under statutory construction, what does “presumed valid” mean if not a heightened standard to invalidate a patent.  As the Court explained “basic principles of statutory construction require us to assume that Congress meant to incorporate “the cluster of ideas” attached to the common law term it adopted. Beck, 529 U. S., at 501 (internal quotation marks omitted). And RCA leaves no doubt that attached to the common-law presumption of patent validity was an expression as to its “force,” 293 U. S., at 7—that is, the standard of proof required to overcome it. Slip. Op. pp. 9-10.  In this regard, the Court observed that a fixture of the common law has been that “. . .  a defendant raising an invalidity defense bore “a heavy burden of persuasion,” requiring proof of the defense by clear and convincing evidence.” Slip Op. p. 8.

Had the Supreme Court ruled the other way and “cut the baby in half” to allow prior art not considered by the PTO to be used to invalidate a patent under a lower “by a preponderance of the evidence” standard, the Court would have effectively eviscerated the clear and convincing standard.  A two standard approach to proving patent invalidity would have effectively opened the door to a host of difficult issues such as which of the two standards would apply to a piece of prior art that was not considered by the PTO but arguably cumulative?  For that matter, who would decide what is “cumulative” for purposes of deciding which standard to apply?  In addition, a contrary holding could even be viewed as the Court not giving credit to the PTO as an administrative body since the courts would effectively have free reign to second guess PTO examiners.

And so the big news in Microsoft v. i4i is that there is no big news.  But if there is any news in the i4i decision, it is that Microsoft v. i4i is the first major patent decision decided by the Supreme Court in the past 5 years in which the Supreme Court affirmed the jurisprudence of the Court of Appeals for the Federal Circuit.  In Bilski v. Kappos, 561 US __ (2010), for example, the Court affirmed but on different reasoning.  In each of eBay Inc. v. MercExchange LL7, 547 U.S. 388 (2006) (vacating Federal Circuit judgment); KSR v. Teleflex, 550 U.S. 398 (2007) (reversing Federal Circuit); MedImmune v. Genentech, 549 U.S. 118 (2007) (reversing Federal Circuit); Microsoft v. AT&T, 550 U.S. 437 (2007) reversing Federal Circuit); Quanta Computer v. LG Electronics (2008) (reversing Federal Circuit), the federal circuit was reversed.  Which raises the question why the Court even granted certiorari in the Microsoft v. i4i case at all?  Maybe some of it has to do with the good lawyering done on the part of Microsoft that presented facially convincing arguments that fell apart after the Court did its own analysis.  But rather than dismissing the certiorari as improvidently granted as was done in Lab Corp.v. Am. Holdings (LabCorp) v. Metabolite Labs, Inc., 126 S. Ct. 2921 (2006), perhaps the Court saw Microsoft v. i4i as an opportunity to make clear that this is not an activist court and will not be legislating from the bench.  As the Court explained, “Congress specified the applicable standard of proof in 1952 when it codified the common-law presumption of patent validity. Since then, it has allowed the Federal Circuit’s correct interpretation of §282 to stand. Any recalibration of the standard of proof remains in its hands.” Slip Op. at 20.  Hence, the real news in the i4i decision may be that if the governing statute on the burden of proving invalidity is to be changed in the way Microsoft argued, that change would need to come from Congress.  That, and that Microsoft must now pay i4i $290 Million.

The Juhasz Law Firm can help you to better understand the effect of Microsoft v. i4i on your patents. For more information regarding Microsoft v. i4i, please contact The Juhasz Law Firm.

Your patents may be your most important asset. To help you protect your patents contact Juhasz Law, the firm committed to Positioning Your Patent Beyond The Horizon℠.