Federal Circuit Spotlight – Wafers Curing Nasal Grapes?

grapes-judge-gavel

The Federal Circuit did a lot of work last week in a pretty eclectic mix of cases. We have patents dealing with detecting defects in wafers used to make computer chips, tobacco curing, a protein for treating hemophilia, a nasal spray for treating osteoporosis, and even plant patents for table grapes! Lots of stories and lots of questions raised, so let’s get to it…

August Technology Corp. v. Camtek, Ltd., No. 2010-1458 (Fed. Cir. Aug. 22, 2011) (Judges Dyk, Moore, and O’Malley)

One of the ways you can invalidate a patent is by showing that the invention was already on sale in the U.S. at least a year before the patent was filed. But what does that mean? Does the invention have to be complete when you offer it for sale, or can you offer a product that’s not done and finish it later? We used to think the invention had to be complete (the term of art is “ready for patenting”) when it was offered for sale, or the offer didn’t count. Well, times change…

August Technology Corp. and Rudolph Techologies, Inc. (we’ll call them “August” for short) sued Camtek for infringing their patent on detecting defects in wafers. In this context, a wafer is that thin, circular material that (among other things) computer chips are built on.

A jury found that Camtek infringed and that August’s patent is not invalid. Although Camtek appealed both findings, the most interesting issue is whether an earlier machine from August, the NSX-80, should have qualified as being “on sale” more than a year before August’s patent was filed. The jury said it wasn’t, but there was a problem with the judge’s instruction on this question.

The judge instructed the jury that to be prior art (that is, to potentially invalidate the patent), the NSX-80 had to be offered for sale more than a year before the patent was filed, and the NSX-80 had to be ready for patenting when the offer was made.

Why does this matter? The idea behind the on-sale bar is that if an invention has already been offered to the public, then it’s out there. You can’t pull it back from the public domain. But if the offer has to be after the invention was made, we can end up with situations where a company offered something before it was really done in order to gauge market interest or maybe to get funding to finish it. Then, even if the invention is done early enough to be prior art, because the offer was technically too early to count, a patent that really should be invalid squeaks through.

The Federal Circuit said that there’s no such timing requirement. All that matters is that there’s an offer for sale and the invention was ready for patenting. It doesn’t matter which happens first.

That might have made a difference in this case, because August actually offered the NSX-80 before building it, and used the down payments to develop the hardware.

Unfortunately for Camtek, the court said that the NSX-80 didn’t have all the features of the patent, so it couldn’t invalidate. The court affirmed the jury’s verdict that August’s patent is not invalid.

Camtek didn’t come away empty-handed, though. The court did find that the district court had misinterpreted an important term in the patent, so it sent the case back for a new trial on infringement.

Read the original opinion here.

Genetics Institute, LLC v. Novartis Vaccines and Diagnostics, Inc., No. 2010-1264 (Fed. Cir. Aug. 23, 2011) (Judges Lourie, Plager, and Dyk)

This case is a battle over who invented a particular treatment for hemophilia first. One key protein in treating hemophilia is a blood-clotting protein called Factor VIII. It used to be that patients with hemophilia A were given a purified form of Factor VIII made from either pig or human plasma. But in the 1980s, the human plasma supply became contaminated by things like HIV and hepatitis, and scientists worked to be able to clone Factor VIII.

The Factor VIII protein looks like this:

Factor VIII

(Image from Peter J. Lenting, Jan A. van Mourik, and Koen Mertens, The Life Cycle of Coagulation Factor VIII in View of Its Structure and Function, 92 Blood 3983 (Dec. 1, 1998), available here).

Scientists first learned to clone the whole protein and then learned that they didn’t need to clone the whole thing. For example, it seems that amino acids in the region marked B can be deleted and the truncated protein will still work. But it turned out that the region labeled a3 is very important in the clotting mechanism in the body.

Genetics has a patent for a version of a truncated Factor VIII protein that deletes some of the amino acids from the sections labeled B and a3. Novartis has two patents that claim versions of truncated Factor VIII that only delete amino acids from section B (they leave a3 intact).

Genetics sued Novartis in what’s called an interference action, asking the court to declare that it invented first, and therefore its patent should win and Novartis’s patents should be invalid. An interference is a special kind of suit that doesn’t come up often. It’s basically a contest between patents. (There are also interferences at the U.S. Patent & Trademark Office between a pending patent application and either another application or an unexpired patent.)

To win an interference, you have to show two things: 1) the patents are actually for the same invention (this is called showing that there’s an “interference in fact”), and 2) you invented first.

Novartis really didn’t want this interference action to happen, and it made a couple of different arguments that the court shouldn’t hear the case at all. It argued that because Genetics’s patent was expired, the whole case was moot. And it argued that even though Genetics’s patent was given additional life under a special section of patent law (35 U.S.C. § 156), that extra life didn’t apply to the patent claims at issue. The court didn’t buy either of these arguments, based on the language of the statute.

The real battle was whether there was an interference in fact, which is determined by a “two-way test.” Essentially, you treat this as if you’re deciding whether the patents are valid. You first see if the first patent would invalidate the second, and then you see if the second patent would invalidate the first. If the patents would invalidate each other, they are close enough for there to be an interference in fact.

What turns out to be critical is region a3 in the above picture. At the time all the patents were filed, no one knew just how important it is. Researchers learned later that you really need everything in a3 to make the truncated Factor VIII effective. Well, Novartis’s patent claims always have a3, but Genetics’s patent claims don’t.

Genetics argued that modifying its patent to leave a3 alone was obvious. The court didn’t agree. Judge Dyk, however, dissented on this.

The majority found that there was no reason in the record showing why it would have been obvious to leave a3 in the truncated Factor VIII. In fact, given that researchers wanted to make the shortest molecule they could, they would have wanted to delete as much as they could get away with. The court affirmed the district court’s decision that there is no interference in fact between the patents.

Judge Dyk was concerned that the majority was emphasizing how important the a3 region is, which wasn’t known when any of the patents were filed. He felt that the only reason the majority found this small variation to be so significant was because of research done later, which shouldn’t be the basis for deciding that something isn’t obvious.

Read the original opinion here.

Delano Farms Co. v. The California Table Grape Comm’n, No. 2010-1546 (Fed. Cir. Aug. 24, 2011) (Judges Bryson, Schall, and Prost)

Generally, it’s good to be the king. For example the Eleventh Amendment to the U.S. Constitution says that the government can’t be sued without its consent. But what if the U.S. government owns patents, and you think they’re invalid? Can you sue for a declaration that the government’s patents are invalid or unenforceable?

The United States Department of Agriculture (USDA) owns three plant patents for grapevines that produce table grapes. The USDA licensed the patents to the California Table Grape Commission, which helped fund the development of the patented varieties. The Commission, in exchange for a cut, was allowed to sublicense the patents. The Commission licensed three nurseries to sell the patented grapevines, and every grower that purchased them had to sign a license agreement that forbade them from propagating the plants.

A group of California grape growers sued for a declaration that the plant patents are invalid, as well as that one (the Sweet Scarlet) was unenforceable because of alleged inequitable conduct. The growers also sued for an antitrust violation based on the way the grapevines were licensed.

The USDA claimed sovereign immunity, and the district court agreed, dismissing the case. (The antitrust claim was dismissed because the growers didn’t identify a market, which you need to do.) The growers appealed.

This is the first time the Federal Circuit has addressed whether the government can be sued like this. The U.S. can be sued for patent infringement (28 U.S.C. § 1498), but there’s no statute that expressly deals with this situation.

But, the growers pointed to one section of the Administrative Procedures Act, 5 U.S.C. § 702:

A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof. An action in a court of the United States seeking relief other than money damages and stating a claim that an agency or an officer or employee thereof acted or failed to act in an official capacity or under color of legal authority shall not be dismissed nor relief therein be denied on the ground that it is against the United States or that the United States is an indispensable party. . .

What does this mean? Well, basically, it means that if you’re suing the government for something other than money, you can do it.

The government and the Commission argued that this section only applies in much more limited circumstances, but the Federal Circuit disagreed. In a pretty lengthy and detailed discussion of the legislative history and other cases, the court concluded that the law means what it says.

So, it’s back to the district court to resolve this case of sour grapes. (You didn’t think I’d avoid that pun, did you?)

Read the original opinion here.

Unigene Laboratories, Inc. v. Apotex, Inc., No. 2010-1006 (Fed. Cir. Aug. 25, 2011) (Chief Judge Rader, Judges Moore and O’Malley)

Looks like Apotex, a generic drug manufacturer, may have to pay through the nose for this one. Unigene makes a patented nasal spray, Fortical®, used to treat osteoporosis. Apotex wants to make a generic version, so it filed an Abbreviated New Drug Application (ANDA) with the Food and Drug Administration. Unigene then sued Apotex for patent infringement, which is what normally happens when a generic drug maker files an ANDA.

The main question in this appeal is whether Unigene’s patented compound is obvious. The district court held that it wasn’t, and Apotex appealed.

Unigene developed Fortical® as an alternative to another nasal spray, Miacalcin®. Both drugs have salmon calcitonin (that is, calcitonin from salmon) as their active ingredients. Calcitonin is a hormone found in humans and other animals, and it seems to have a positive effect on patients with osteoporosis. Apparently, it’s not easy to get calcitonin into the bloodstream, which is why these drugs are nasal sprays.

Unigene used the compound in Miacalcin® as the reference point in developing its own compound. (There’s nothing wrong with this—it’s a common way to develop new chemical compounds that have the same pharmaceutical properties. Drugs that are so-called “bioequivalents” to drugs that have already been approved by the FDA can get much faster approval, but they need to be different enough that they don’t infringe someone else’s patent.)

The court explained that when you have a “reference composition” like this, you need to look at the differences to see if the changes would be obvious to someone with ordinary skill in the technical field. The main change that Unigene made was to use 20 mM citric acid (mM stands for millimolar and describes the concentration of the acid) to help with absorption and dissolving the salmon calcitonin into the liquid spray. This replaced another chemical, called BZK, used in Miacalcin®.

The court looked at a couple of references offered by Apotex, but it agreed with the district court that those references didn’t suggest using 20 mM citric acid the way Unigene did. So, it affirmed the district court’s ruling that Unigene’s patent is not invalid.

Read the original opinion here.

Star Scientific, Inc. v. R.J. Reynolds Co., No. 2010-1183 (Fed. Cir. Aug. 26, 2011) (Chief Judge Rader, Judges Linn and Dyk)

Somebody was smoking, er, curing something in this case. These two parties have come to the Federal Circuit before. The last time, the panel (which included Judge Dyk) reversed the district court’s finding that Star Scientific’s patents were invalid and unenforceable. This time around, a jury found that R.J. Reynolds does not infringe Star’s patents for curing tobacco and found that the patents are invalid. Star Scientific appealed, naturally and with a smooth flavor.

Chief Judge Rader, writing for the majority, went through the evidence in some detail. He strongly disagreed with the jury’s conclusions, finding that no reasonable juror could have found that the prior art invalidated Star’s patents. (He also disagreed with the U.S. Patent & Trademark Office, which invalidated several of the main claims of Star’s patents after reexamining them.) He also found that the claim term “controlled environment” (which was used for curing the tobacco leaves) was definite, even though the patents do not explain how to control the environment. He believed that a person of ordinary skill in the industry would know what to do.

Judge Dyk disagreed on this last point. He pointed out that the “controlled environment” that patents use is actually part of the invention (that is, it’s a different way of doing things from the conventional method), so you can’t expect someone with ordinary skill in the technical field to know what it means. How can something be worth a patent if an ordinary person knows how to do it? Judge Dyk didn’t address the prior art, because this was enough for him to invalidate the patents.

Judge Dyk’s point is a good one, and it comes up frequently. An accused infringer will point out that a patent doesn’t explain how to implement one of its main features, and the patent owner will have an expert testify that someone with ordinary skill in the art would know how to do it. But that’s a contradiction, isn’t it? How can a feature simultaneously be not obvious to one of ordinary skill, but known to one of ordinary skill?

All three judges agreed that RJR didn’t infringe.

Read the original opinion here.

Close Menu