Patent Case Summaries November 5, 2019

Patent Case Summaries | Week Ending November 1, 2019

 A weekly summary of the precedential patent-related opinions issued by the Court of Appeals for the Federal Circuit and the opinions designated precedential or informative by the Patent Trial and Appeal Board.

Arthrex, Inc. v. Smith & Nephew, Inc., et al., No. 2018-2140 (Fed. Cir. (PTAB) Oct. 31, 2019). Opinion by Moore, joined by Reyna and Chen.

The Federal Circuit ruled that the appointment of the Patent Trial and Appeal Board’s Administrative Patent Judges (APJs) violates the Appointments Clause of the U.S. Constitution. The court therefore vacated and remanded the Board’s final written decision.

In appealing the Board’s final written decision holding certain claims unpatentable, Arthrex challenged whether the appointment of APJs by the Secretary of Commerce violates the Appointments Clause. Smith & Nephew argued that Arthrex waived the challenge on appeal by not having first presented it to the Board. The Federal Circuit ruled, however, that “this is an issue of exceptional importance,” and therefore “it is an appropriate use of our discretion to decide the issue over a challenge of waiver.” The Federal Circuit also explained, though, that Appointments Clause challenges “are ‘nonjurisdictional structural constitutional objections’ that can be waived when not presented” on appeal, and therefore “we see the impact of this case as limited to those cases where final written decisions were issued and where litigants presented an Appointments Clause challenge on appeal.”

Addressing Arthrex’s challenge on the merits, the question turned on whether APJs are inferior officers, which may be appointed by the Secretary of Commerce, or principal officers, which require appointment by the President. The Federal Circuit ruled that “the statute as currently constructed makes the APJs principal officers.” The court determined that neither the Secretary of Commerce nor the Director of the Patent Office “individually nor combined exercises sufficient direction and supervision over APJs to render them inferior officers.”

To remedy the violation, the court concluded that “severing the portion of the Patent Act restricting removal of the APJs is sufficient to render the APJs inferior officers and remedy the constitutional appointment problem.” Because, however, the Board’s final written decision issued while there was an Appointments Clause violation, the Federal Circuit vacated and remanded. The court ruled that “a new panel of APJs must be designated and a new hearing granted.” The court also explained that, “to be clear, on remand the decision to institute is not suspect; we see no constitutional infirmity in the institution decision as the statute clearly bestows such authority on the Director.” The court further explained that “we see no error in the new panel proceeding on the existing written record but leave it to the Board’s sound discretion whether it should allow additional briefing or reopen the record in any individual case.”

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Idenix Pharmaceuticals LLC, et al. v. Gilead Sciences Inc., No. 2018-1691 (Fed. Cir. (D. Del.) Oct. 30, 2019). Opinion by Prost, joined by Wallach. Dissenting opinion by Newman.

The Federal Circuit affirmed the district court’s grant of judgment as a matter of law (JMOL) that Idenix’s patent is invalid for lack of enablement, and the Federal Circuit further held that the patent is invalid for lack of written description.

Idenix’s patent is directed to a method of treating the hepatitis C virus (HCV) by administering nucleoside compounds having a specific chemical and stereochemical structure. Gilead argued that the patent provides no guidance in determining which of billions of potential 2ʹ-methyl-up nucleosides are effective in treating HCV. The Federal Circuit ruled that, in this unpredictable art, a person of ordinary skill in the art would not have known, without undue experimentation, which of these nucleosides would be effective for treating HCV. The Federal Circuit therefore affirmed the award of JMOL for lack of enablement.

The Federal Circuit next turned to the sufficiency of the patent’s written description. The court addressed whether the patent demonstrates “that the inventor was in possession of those 2ʹ-methyl-up nucleosides that fall within the boundaries of the claim (i.e., are effective against HCV), but are not encompassed by the explicit formulas or examples provided in the specification.” The Federal Circuit ruled that “the specification provides no indication that any nucleosides outside of those disclosed in its formulas could be effective to treat HCV—much less any indication as to which of those undisclosed nucleosides would be effective.” Therefore, the Federal Circuit ruled that the patent is invalid for lack of written description.

Judge Newman dissented, asserting that “the court errs in holding that the specific narrow claims of the ’597 patent are invalid.” In her view, the patent claims do not cover the large number of chemical variants in the specification that “are not described, not synthesized, and not tested for antiviral activity.” She therefore believes that “it is incorrect to include these variants in the claims and then to invalidate the claims because these variants are not described and not enabled.”

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Liqwd, Inc. v. L’Oreal USA, Inc., No. 2018-2152 (Fed. Cir. (PTAB) Oct. 30, 2019). Opinion by Reyna, joined by Hughes and Stoll.

L’Oreal sought post-grant review of certain claims in Liqwd’s patent relating to formulations and methods of keratin treatment. The Patent Trial and Appeal Board found the challenged claims obvious in view of the asserted prior art. As part of its analysis, the Board considered arguments and evidence related to objective indicia of nonobviousness, including copying. Specifically, the Board found that L’Oreal had access to confidential information from Liqwd and used that information to develop its products. Despite that factual finding, the Board determined that the evidence of copying was irrelevant as a matter of law because Liqwd had not shown that L’Oreal copied a specific product. Liqwd appealed.

Addressing the evidence of copying, L’Oreal argued to the Federal Circuit that the court’s precedent states that “copying requires the replication of a specific product.” The Federal Circuit explained that the cited case “emphasized that a ‘competing product that arguably falls within the scope of a patent’ is not necessarily evidence of copying.” “This is to avoid collapsing the separate infringement and copying inquiries into a single analysis.” The Federal Circuit further explained that the proponent of evidence of copying must show that a nexus exists between the evidence and the claimed invention. “But where there is evidence of actual copying efforts, that evidence is always relevant.” Because the Board in this case, when analyzing obviousness, disregarding its finding that L’Oreal copied Liqwd’s patented method, the Federal Circuit ruled that the Board erred in its analysis. The court therefore vacated and remanded with instructions that “the Board should consider this finding and weigh it appropriately in its obviousness analysis.”

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