J. Peter Fasse

1. MATTO Technology TransferSeminarJune 21, 2006RECENT SUPREME COURT CASESI. eBay v. MercExchange J. Peter Fasse Is Property Really Property?

2. The Issue

3. A Disconnect by the District Court District Judge Friedman: “Plaintiff [MercExchange] exists solely to license its patents or sue to enforce its patents, and not to develop or commercialize them.” Since when did commercialization exclude licensing?

4. The Question Presented Whether the Federal Circuit erred in setting forth a general rule in patent cases that a district court must, absent exceptional circumstances, issue a permanent injunction after a finding of infringement.

5. The Petition for Certiorari Supreme Court of the United States eBAY INC., ET AL. v. MERCEXCHANGE, L.L.C. The petition for a writ of certiorari is granted. In addition to the Question presented by the petition, the parties are directed to brief and argue the following Question: ‘Whether this Court should reconsider its precedents, including Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405 (1908), on when it is appropriate to grant an injunction against a patent infringer.’

6. The Constitution “The Congress shall have power . . . To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”

7. The Decision EBAY INC. ET AL.v. MERCEXCHANGE, L.L.C. Argued March 29, 2006 Decided May 15, 2006

8. “Unanimous Opinion” – The Result • The appellate court’s decision against eBay is vacated. • There is no “general rule” that a permanent injunction follows a finding of infringement of a valid patent. Justice Thomas delivered the opinion for a unanimous court

9. “Unanimous Opinion” – The Test • “A plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief.” (1) irreparable injury? (2) $ sufficient? (3) balance of hardships favor patent owner? (4) public interest? • “These familiar principles apply with equal force to disputes arising under the Patent Act.” • “The decision to grant or deny permanent injunctive relief is an act of equitable discretion.”

10. “Unanimous Opinion” – IP Marketers • “[S]ome patent holders, such as university researchers or self-made inventors, might reasonably prefer to license their patents, rather than undertake efforts to secure the financing necessary to bring their works to market themselves.” • “Such patent holders may be able to satisfy the traditional four-factor test, and we see no basis for categorically denying them the opportunity to do so.”

11. Chief Justice Roberts concurred(joined by Justices Scalia and Ginsburg) • “From at least the early 19th century, courts have granted injunctive relief upon a finding of infringement in the vast majority of patent cases.” • “[T]here is a difference between exercising equitable discretion pursuant to the established four-factor test and writing on an entirely clean slate. Discretion is not whim, and limiting discretion according to legal standards helps promote the basic principle of justice that like cases should be decided alike.”

12. Take Aways • Probably no different result in majority of cases -injunction will still issue. • For business method patents and patents covering only a part of an apparatus - what will the Federal Circuit do if district courts deny injunctions here?

13. RECENT SUPREME COURT CASES II. LAB. CORP. V. METABOLITE Everything Under the Sun? J. Peter Fasse

14. The Set-Up • The Supreme Court on March 1, 2005, issued the following order in Laboratory Corp. of America v. Metabolite Laboratories, U.S., No. 04-607, 2/28/05: • Question: Respondent’s patent claims a method for detecting a form of vitamin B deficiency, which focuses upon a correlation in the human body between elevated levels of certain amino acids and deficient levels of vitamin B. The method consists of the following: First, measure the level of the relevant amino acids using any device, whether the device is, or is not, patented; second, notice whether the amino acid level is elevated and, if so, conclude that a vitamin B deficiency exists. Is the patent invalid because one cannot patent “laws of nature, natural phenomena, and abstract ideas”? Diamond v. Diehr, 450 U.S. 175, 185 (1981). • Acting Solicitor General responds in September of 2005, by urging Court to deny certiorari because claim is more than a recital of a natural relationship but also claims a diagnostic method.

15. The Loaded Question The Supreme Court of the United States grants certiorari on Question No. 3 in the petitioner Lab. Corp.’s brief, which reads as follows: Whether a method patent setting forth an indefinite, undescribed and non-enabling step directing a party simply to “correlate” test results can validly claim a monopoly over a basic scientific relationship used in medical treatment such that any doctor necessarily infringes the patent by thinking about the relationship after looking at a test result.

16. Background: The Patent • The patent in suit, U.S. Patent No. 4,940,658 (“the ‘658 patent”) is directed to methods for detecting deficiencies of cobalamin (vitamin B12) and folate (folic acid). The inventors discovered a relationship between elevated levels of total homocysteine and a deficiency in either cobalamin or folate. See Metabolite Labs., Inc. v. Lab. Corp. of Am. Holdings, 370 F.3d 1354, 1358 (Fed. Cir. 2004). They then claimed a diagnostic method that applied this discovery by first assaying for total homocysteine and then correlating the result with the vitamin deficiency.

17. Background: Claim 13 • Claim 13 of the ‘658 patent reads as follows: • A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of: assaying a body fluid for an elevated level of total homocysteine; and correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.

18. Background: The Infringement • Lab. Corp. began running a series of assays, on which Metabolite did not own patents, for the purpose of measuring homocysteine to be used by physicians to diagnose B-12 and B-9 deficiencies. • Lab. Corp. did not tender a royalty to Metabolite and was sued for inducing infringement of claim 13 of the ‘658 patent.

19. Background: The Trial • The jury found claim 13 to be valid and willfully infringed. At trial, petitioner Lab. Corp. argued that the claim was invalid because it was anticipated by prior art under Section 102; was obvious in light of the prior art under Section 103; did not “distinctly claim” the invention under Section 112,¶2; and did not satisfy the written description requirement of section 112,¶1. 370 F.3d at 1359, 1366-67. • The patent holders argued at trial that doctors were direct infringers because they had the assaying done for them and then they performed the ‘correlating step,” and that LabCorp induced doctors to infringe by performing a test for total homocysteine and publishing information to the effect that an elevated level of total homocysteine correlates with cobalamin or folate deficiency. Id. At 1365. The record suggests that any competent doctor will necessarily perform the second “correlating step” when he receives the results of any total homocysteine assay because it would be malpractice for a doctor to receive a total homocysteine assay without determining cobalamin/folate deficiency. Id. At 1364

20. What is a Court to do? • It may have been too late for the issue to be raised in the petition for certiorari. If so, the Supreme Court may: • Dismiss the petition as improvidently granted, or • Remand the case to the Federal Circuit for its views on whether the issue was properly raised, or • Remand the case to the Federal Circuit for its views on the merits of the issue and possibly for development of the issue at the trial court level

21. Statutory Background • U.S. Constitution, Article 1, Section 8: • grants Congress the power to pass laws that “promote the Progress of Science and the useful Arts” • 35 U.S.C. § 101: • “whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title.”

22. Prior Supreme Court Cases • Funk Brothers Seed Company v. Kalo., 333 U.S. 127 (1948) - “If there is to be invention from [the discovery of a phenomena of nature], it must come from the application of the law of nature to a new and useful end.” Justice Douglas stated the proper rule of law, but did not apply that rule to the facts in the case and thus reached the wrong conclusion. • Diamond v. Chakrabarty 447 U.S. 303(1980) - After over 30 years of silence, the Supreme Court revisits the issue in Funk Brothers. Statutory subject matter is intended to include “anything under the sun that is made by man.” • Diamond v. Diehr, 450 US 175 (1981)“When a claim containing a mathematical formula implements or applies that formula in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect … then the claim satisfies the requirements of § 101.” In effect Diehr overrules Funk, sub silentio.

23. The Wished For Proper Merits Result In Lab. Corp. • Apply the rule announced in Funk Brothers and Diehr, • Explicitly overrule the holding in Funk Brothers, and • Affirm the validity of claim 13 But what will eight justices do? (Chief Justice Roberts recused himself)? • Slides based on work by Frank Porcelli, John Dragseth, Kyle Wagner Compton, and Michael Kallus in F&R’s Appellate Practice Group

24. PROPOSED RULE CHANGES Faustino A. Lichauco

25. I: Continuation Practice Change • PRESENT CONTINUATION PRACTICE * unlimited progeny, no questions asked * “progeny” = CN/RCE/DV/CIP

26. Advantages For TTO • Can accept allowed claims and pursue broader ones later • Claims can evolve to more accurately articulate invention • Iron in the fire; adjust to competition, tailor to licensee’s demands

27. One Leaf In A Patent Tree

28. The Entire Tree

29. PTO Family Planning (71 Fed. Reg. 48) • One child as of right per founding parent. • “child” = CN, DV, RCE, or CIP • For more children: petition (with $400 fee) • Reason for extra children could not have been presented earlier • “Reason” = argument/amendment/evidence • File petition within four months of continuation filing date • Result: ZPG

30. Proposed Prosecution Cycle For CN, RCE, CIP Founder Patent-1 CN Patent-2 Founder Patent CN-1 Final Rejection CN-2 SHOWING

31. Special Rules For Divisionals • Only if there has been a restriction requirement in the founding parent • Divisional may have one free child claiming priority from founding parent • Additional child of divisional requires petition

32. P P P Con Con Con P P P Proposed Front-Loaded Cycle For Divisional Applications Founder Patent Con P Div1 Div2 Div3

33. Special Rules For CIPs • Must identify which claims are supported by original filing date • Must identify which claims are supported by new matter • Unidentified claims are entitled to later date by default • Additional free child, but with priority only one generation back

34. Statutory Basis For Rule Changes 35 USC 2(b) “The Office...may establish regulations, not inconsistent with law, which (A) shall govern the conduct of proceedings in the Office; (B) shall be made in accordance with section 553 of title 5 [Administrative Procedures Act]”

35. Legal Issues Raised By Proposed Rule Changes • Inconsistent with 35 USC 120 • “An application…disclosed in the manner provided by (sec. 112 para. 1) in an application previously filed in the United States…shall have the same effect, as to such invention, as though filed on the date of the prior application…or on an application similarly entitled to the benefit of the filing date of the first application” [emphasis added] • PTO says its petition for another child makes rule consistent with 35 USC 120. • Text of Title 35 refers to Director's power in certain places, but not in others.

36. Status Of Rule Making • Rule proposed in January 2006 • Comment period closed in May 2006 • Now awaiting final rule • Final rule takes effect ≥ 30-days after publication

37. What Can We Expect? • More appeals to Board • More use of pre-appeal conference procedure • Avoid omnibus specifications • Delay publication in journals • No more filing continuation without already including new claims.

38. Sibling Applications • Common inventor, and • Common owner, and • Filed within two months of each other • “Owner” includes CREATE “owner”

39. Twin Applications • Are sibling applications that: • Have substantial overlapping disclosure • Have same filing date

40. Special Rules For Siblings And Twins • Siblings must be cross-cited • Twins spawn an automatic obviousness-type double-patenting rejection

41. Rebutting The Double Patenting Presumption • Argue that claims are patentably distinct, OR • Explain why you filed twins and submit a terminal disclaimer

42. II: Present Examination Procedure • Unlimited claims, but with excess claim fees • Examiner examines all claims

43. Proposed Examination Procedure (71 Fed. Reg. 61) • Unlimited claims, with fees • Examiner examines only ten claims • The ten include all independent claims • Balance chosen by Applicant • Applications having more than ten claims are examined on a self-service basis.

44. Self-Service Examination • First, prepare your own office action * identify classes and subclasses searched * IDS with closest references * Map each independent claim to each reference • Then, respond to your own office action * Discuss why each independent claim is patentable over each cited reference. * Map each claim to your own specification

45. Adaptations: Pre-Filing • File only when prepared to prosecute • Carry out and fully document more extensive prior art searching • Control schedule using PCT and provisional applications • Disclosure no broader than claims • Although not possible for universities and hospitals, try to avoid scientific publication until patent is published

46. Adaptations: Early In Prosecution • Preliminary amendment in view of newly published applications • Interview early, and often. • File any Rule 131 declaration promptly • Actively prosecute PCT for early resolution of issues.

47. Adaptation: Later In Prosecution • Appeal often, save free continuation for new and final claim set. • Petition often to remove finality. • File continuing applications with “the showing” before deploying your free continuation. • Having an unused free continuation is a marketable asset. • Review petitions in Federal Court