The following is a summary of the precedential patent-related opinions issued by the Court of Appeals for the Federal Circuit for the week ending June 21, 2013. Byron Holz and Kirk Bradley prepared this edition.
Novo Nordisk A/S, et al. v. Caraco Pharmaceutical Laboratories, Ltd., et al., No. 11-1223 (Fed. Cir. (E.D. Mich.) June 18, 2013). Opinion by Prost, joined by Dyk. Concurring and dissenting opinion by Newman.
The Federal Circuit affirmed the trial court’s ruling that a claim directed to treating Type II diabetes with a combination of known drugs was obvious, but reversed its conclusion that the patent was unenforceable due to inequitable conduct.
Novo Nordisk A/S and Novo Nordisk Inc. (collectively “Novo”) sued Caraco Pharmaceutical Laboratories, Ltd. and Sun Pharmaceutical Industries, Ltd. (collectively “Caraco”), following Caraco’s filing of an Abbreviated New Drug Application for a generic version of repaglinide. Novo alleged infringement of Claim 4 of U.S. Patent No. 6,677,358. Claim 4 recites a method for treating Type II diabetes using a combination of repaglinide and metformin. Treating Type II diabetes with each individual drug was known in the prior art. Novo filed its application after an investigation allegedly showing unexpected, synergistic effects from the combination. To overcome a PTO obviousness rejection based on the known individual treatments, Novo submitted tests that, according to its scientist, “strongly suggest[ed]” a synergistic effect.
Following a bench trial, the district court held that Claim 4 was obvious in light of the prior art, including a known combination treatment using metformin and a sulfonylurea. The trial court also held the patent unenforceable, concluding that Novo’s scientist and prosecution counsel committed inequitable conduct by failing to disclose information unfavorable to its synergy argument, including a deviation from the scientist’s original test protocol.
In affirming the judgment of obviousness, the Federal Circuit rejected three challenges by Novo. First, it determined that the district court properly allocated the burden of persuasion to Caraco, explaining that the trial court’s comments about Novo having to “overcome” Caraco’s prima facie case of obviousness were consistent with proper handling of the burden of production. Second, the court determined that there was adequate support for the obviousness conclusion based on prior art treatments using metformin in combination with a sulfonylurea—drugs known to have a synergistic effect, and with similar mechanisms of operation to those claimed. Finally, the court rejected Novo’s argument that deference to the PTO was required under Kappos v. Hyatt, 132 S. Ct. 1690 (2012). The court explained that Hyatt applies to appeals under 35 U.S.C. § 145, and not challenges to issued patents in district court.
Finally, the Federal Circuit reversed the trial court’s inequitable conduct determination, concluding that although certain statements and omissions by certain individuals were troubling, they did not meet the Therasense “but for” materiality standard.
Judge Newman concurred regarding inequitable conduct, but would have reversed on obviousness. In her view, “real world considerations” regarding obstacles to discovering the claimed combination therapy, including structural and functional differences between repaglinide and sulfonylureas, required a different result.
Patentable Invention: Statutory Subject Matter
Litigation Practice and Procedure: Procedure: Burden of Proof
Ultramercial, Inc., et al. v. Hulu, LLC, et al., No. 10-1544 (Fed. Cir. (C.D. Cal.) June 21, 2013). Opinion by Rader, joined by O’Malley. Concurring opinion by Lourie.
On remand from the Supreme Court for consideration of subject matter eligibility in light of Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012), the Federal Circuit again reversed the district court, concluding that a claim directed to a method of using advertising as a currency in online transactions was patent-eligible subject matter.
Ultramercial, LLC and Ultramercial, Inc. asserted U.S. Patent No. 7,246,545 (“the ’545 patent”) against multiple defendants, of which only WildTangent, Inc. (“WildTangent”) remained on this appeal. The district court granted WildTangent’s Rule 12(b)(6) motion to dismiss, without a claim construction, on the ground that the ’545 patent did not claim patent-eligible subject matter.
The Federal Circuit identified two errors in reversing the district court’s conclusion. First, the court held that it was error to require the patentee, in the context of a pre-answer Rule 12(b)(6) motion, to come forward with a construction under which the claims were patent-eligible. The court observed that “it will be rare that a patent infringement suit can be dismissed at the pleading stage for lack of patentable subject matter,” as a patent is presumed to have been issued properly. To succeed on such a motion, the defendant bears the burden to show that, accepting the well-pleaded factual allegations in the complaint as true, “the only plausible reading of the patent must be that there is clear and convincing evidence of ineligibility.” The Federal Circuit concluded that formal claim construction was not necessary in this case, but noted that “claim construction normally will be required,” particularly if there are factual disputes.
Second, the Federal Circuit analyzed whether the ’545 patent is directed to patent-eligible subject matter, stating that it would apply a construction most favorable to the patentee without needing to articulate the precise construction. The court observed that the claimed invention is a “method for monetizing and distributing copyrighted products over the Internet,” and thus determined that it satisfies the enumerated statutory category of a “process.” Next, the court analyzed whether the patent was nevertheless ineligible under the abstract idea exception, using a two-step analysis of: (i) deciding whether the claim involves an abstract idea (which neither party disputed), and (ii) determining whether meaningful limitations in the claim make clear that the patent does not claim that abstract idea itself. Under this second step, the court determined that there were meaningful claim limitations sufficient to avoid the abstract-idea problem. The primary independent claim under review recited an eleven-step process that did not, the court explained, “cover the use of advertising as currency disassociated with any specific application of that activity.” The subject matter, viewed as a whole, involved “an extensive computer interface” and did not preempt all forms of advertising, even on the Internet. The court cautioned, however, that it was not defining a general standard for the level of programming complexity required for eligibility.
Judge Lourie concurred, but criticized the majority for using its independent views instead of following the Supreme Court’s Mayo decision. He would have reached the same result, applying Mayo and the plurality opinion of CLS Bank International.
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