Patent Case Summaries April 19, 2023

Patent Case Summaries | Week Ending April 14, 2023

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.

Arbutus Biopharma Corp. v. ModernaTX, Inc., No. 2020-1183 (Fed. Cir. (PTAB) Apr. 11, 2023). Opinion by Reyna, joined by Schall and Chen.

Moderna filed an IPR petition challenging the claims of a patent owned by Arbutus. The patent is directed to providing stable nucleic acid-lipid particles that have a non-lamellar structure. The patent identifies five formulations that can be prepared by either a Stepwise Dilution Method (SDM) or Direct Dilution Method (DDM).

Moderna argued that a prior-art patent anticipated every claim, and the Patent Trial and Appeal Board agreed. As part of its analysis, the Board determined that the prior art inherently disclosed a “morphology” limitation of the claims. Arbutus appealed, challenging the Board’s finding of inherent anticipation and the Board’s finding of both inherent and express anticipation for certain dependent claims.

The Federal Circuit affirmed. The court explained that inherent anticipation requires “merely that the disclosure of the prior art is sufficient to show that the natural result flowing from the operation as taught in the prior art would result in the claimed product.” Here, substantial evidence supported the Board’s finding that the formulations “are the same or essentially the same” across the prior-art patent and Arbutus’s patent. Also, the patents “disclose and describe DDM the same way,” and they teach “the same formulations and the same DDM.”

In particular, the court noted that “this is a case where there are a ‘limited number of tools’—five formulations and two processes—that a person skilled in the art would have to follow.” The court concluded that “the Board reasonably found that a person skilled in the art would follow these disclosures resulting in a composition with the inherent morphological property.”

Next, the Federal Circuit addressed anticipation of the challenged dependent claims. Addressing a claim that requires an inverse hexagonal structure, the Federal Circuit determined that substantial evidence supported the Board’s finding of inherent anticipation based on “three-dimensional structures for nucleic acid-lipid particles.” Addressing certain other claims that require ranges for a lipid component, the Federal Circuit explained that where “a patent claims a chemical composition in terms of ranges and a single prior art reference discloses a composition that falls within each of the ranges,” the ranges are anticipated. Here, substantial evidence supported the Board’s finding of inherent anticipation because the prior art disclosed compositions that fell within the ranges.

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Healthier Choices Management Corp. v. Philip Morris USA, Inc., et al., No. 2022-1268 (Fed. Cir. (N.D. Ga.) Apr. 12, 2023). Opinion by Stoll, joined by Taranto and Cunningham.

HCM sued Philip Morris for infringement of a patent directed to an electronic nicotine-delivery device. The asserted claims require “initiating a combustion reaction.” The accused electronic nicotine-delivery system heats tobacco at a low enough temperature that the tobacco does not burn, therefore, according to Philip Morris, preventing combustion. In contrast, HCM alleged in the complaint that, notwithstanding Philips Morris’s assertion that the accused system is combustion-less, the system does in fact initiate a combustion reaction.

Philip Morris filed a motion to dismiss for failure to state a claim, arguing that an exhibit HCM attached to its complaint conclusively demonstrated that the product does not initiate a combustion reaction. The district court granted the motion, denied HCM’s motion for leave to file an amended complaint, and awarded attorneys’ fees to Philip Morris. HCM appealed.

The Federal Circuit reversed the district court’s dismissal of the complaint and denial of leave to amend, vacated the award of attorneys’ fees, and remanded. The Federal Circuit explained that, under applicable Eleventh Circuit law, “if a plaintiff’s complaint contains only a conclusory allegation that is directly contradicted by more concrete statements in an attachment to the complaint, the statements in the attachment will control.” However, as pertinent here, “a plaintiff can sufficiently disavow statements in attachments to a complaint where the complaint makes a specific contention contradicting those statements.”

Here, the Federal Circuit determined that HCM’s original complaint and proposed amended complaint specifically rejected the notion that the accused product does not initiate a combustion reaction. The court deemed the allegations “specific enough, under Eleventh Circuit law, to disavow the [document’s] statements that the [accused] system does not initiate a combustion reaction.” The original complaint thus stated a valid claim for patent infringement, and the amended complaint presented “an even stronger case in favor of HCM.”

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UCB, Inc., et al. v. Actavis Laboratories UT, Inc., No. 2021-1924 (Fed. Cir. (D. Del.) Apr. 12, 2023). Opinion by Stoll, joined by Moore and Chen.

UCB sued Actavis in district court for infringement of a patent directed to transdermal rotigotine patches for treating Parkinson’s disease. Actavis challenged the validity of the asserted claims, relying on prior art that disclosed a range of weight ratios that overlaps with the claimed range. The district court found the asserted claims invalid for anticipation and obviousness. UCB appealed.

Regarding anticipation, UCB argued that the district court erred in its analysis by applying the “at once envisage” framework articulated in Kennametal to an overlapping ranges case. The Federal Circuit agreed with UCB. Under established law, “if the prior art discloses a point within the claimed range, the prior art anticipates the claim.” On the other hand, “if the prior art discloses an overlapping range, the prior art anticipates the claimed range only if it describes the claimed range with sufficient specificity such that a reasonable fact finder could conclude that there is no reasonable difference in how the invention operates over the ranges.” If there is a prima facie case of anticipation established through overlapping ranges, “the court must evaluate whether the patentee has established that the claimed range is critical to the operability of the claimed invention.”

Instead of applying that framework, the district court “relied on the Kennametal ‘immediately envisage’ line of cases to identify discrete points in [the Federal Circuit’s] range and analyzed those discrete points as a point-within-a-range case.” The district court also “erred by ignoring [the court’s] case law regarding overlapping ranges, which requires considering the criticality of the claimed range.” Thus, the Federal Circuit ruled that the district court legally erred.

Nevertheless, the Federal Circuit affirmed the district court’s judgment on grounds of obviousness. The claimed range of weight ratios overlap with the ratios disclosed in the prior art, and UCB failed to rebut UCB’s prima facie case of obviousness. Because the claimed range overlapped with the ranges taught by the prior art, Actavis established a prima facie case of obviousness. UCB failed to overcome the presumption of obviousness based on either the prior art teaching away from the claimed range or new and unexpected results that are “different in kind and not merely in degree.” Also, the district court did not clearly err in finding UCB’s evidence of commercial success weak.

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Sanderling Management Ltd. v. Snap Inc., No. 2021-2173 (Fed. Cir. (C.D. Cal.) Apr. 12, 2023). Opinion by Stark, joined by Chen and Cunningham.

Sanderling sued Snap in district court for infringement of three patents directed to computerized methods of distributing a digital image processing function. Snap moved to dismiss the lawsuit due to the asserted claims’ lack of patent-eligible subject matter under 35 U.S.C. § 101. The district court granted Snap’s motion, and Sanderling appealed.

The Federal Circuit affirmed. At Alice step one, the Federal Circuit determined that “the claims are directed to an abstract idea.” The Federal Circuit explained that “the claims of the asserted patents are not directed to a specific improvement in computer functionality but, instead, to the use of computers as a tool; here, a tool to identify when a condition is met and then to distribute information based on satisfaction of that condition.” The Federal Circuit noted that “even though the information being distributed is of a particular variety … distribution of information is an abstract idea.”

Sanderling argued that the district court erred at step one by not construing claim terms, but the Federal Circuit disagreed. The Federal Circuit explained that “if claims are directed to ineligible (or eligible) subject matter under all plausible constructions, then the court need not engage in claim construction before resolving a Section 101 motion.” Here, Sanderling identified terms for construction but “failed to provide proposed constructions for those terms” and “failed to explain why any proposed constructions were not frivolous or how its constructions would make any difference to the Alice analysis.”

At Alice step two, the Federal Circuit agreed with the district court that the claim elements, individually and as an ordered combination, “do not constitute an inventive concept.” The “distribution rule” recited in the claims is merely “the application of the abstract idea using common computer components.” Although Sanderling argued that the claims improve “scalability and speed,” the Federal Circuit explained that, even if true, “claiming the improved speed or efficiency inherent with applying the abstract idea on a computer does not provide a sufficient inventive concept.”

Lastly, the Federal Circuit agreed with the district court that Sanderling’s proposed amended complaint would have been futile. The court explained that “no amendment to a complaint can alter what a patent itself states,” and adding conclusory statements that the claimed steps were not well known, routine, and conventional does not save the claims from ineligibility.

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Sequoia Technology, LLC v. Dell, Inc., et al., Nos. 2021-2263, -2264, -2265, -2266, -2267 (Fed. Cir. (D. Del.) Apr. 12, 2023). Opinion by Stoll, joined by Lourie and Dyk.

Sequoia sued certain entities for infringement of a patent related to digital storage and directed to “a method for managing a logical volume for minimizing a size of metadata and supporting dynamic online resizing.” Central to the dispute was the construction of several claim terms, including “computer-readable recording medium,” “disk partition,” and “logical volume.” After the district court construed these terms, the parties stipulated to a final judgment of noninfringement and invalidity. Sequoia appealed.

First, the Federal Circuit disagreed with the district court’s construction of “computer-readable recording medium” to include transitory media (i.e., signals or waves), which was the basis for the judgment of invalidity. The district court had relied on the specification, which discusses “computer readable medium” as “including” a list of items—none of which are transitory—and “interpreted that language as leaving the door open for media that could be transitory.”

The Federal Circuit explained that the claim language more narrowly recites “computer-readable recording medium storing instructions.” According to the Federal Circuit, “a person of ordinary skill would not understand transitory signals, such as carrier waves, to record or store instructions in memory systems” since “transitory signals, by their very nature, are fleeting and do not persist over time.” The Federal Circuit ruled that, in addition to the claim language itself, the specification supported the view that the term cannot encompass transitory media. Accordingly, the court overturned the claim construction and reversed the judgment of invalidity.

Turning to the claim terms “disk partition” and “logical volume,” the Federal Circuit considered “whether the claimed invention can allocate less than an entire disk partition to a logical volume.” Agreeing with the district court, the Federal Circuit determined that it cannot.

The Federal Circuit started with the claim language, explaining that the claims recite “creating the logical volume by gathering disk partitions,” which suggests “that the logical volume is constructed by disk partitions, not portions of disk partitions.” The specification and prosecution history both supported that view. Thus, because the district court correctly construed the “disk partition” and “logical volume” terms, the Federal Circuit affirmed the judgment of noninfringement.

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