US Federal Circuit Cases of 2012-13 March 2013

1. US Federal Circuit Cases of 2012-13March 2013 Laura C. Brutman Schiff Hardin LLP New York NY Anthony Venturino Novak Druce Connolly Bove + Quigg LLP Washington, DC

2. Prometheus - Patentable Subject Matter Mayo v. Prometheus, 132 S.Ct. 1289 (2012) • Involved a number of patents for a method of optimizing therapeutic efficacy. • At the time the discoveries embodied in the patents were made, scientists understood the levels in a patent’s blood of certain metabolites of thiopurine drugs correlated with the likelihood of a particular drug dose being harmful or ineffective. • But those in the field did not know the precise correlations between metabolite levels and likely harm or ineffectiveness. • The claims at issue define processes embodying researchers’ findings that identified those correlations with some precision. 2

3. Prometheus - Patentable Subject Matter • 35 USC 101 permits a patent to whoever invents or discovers any new and useful: Process (process, art, or method); Machine; Manufacture; or Composition of matter • However, a law of nature is not-patentable. • Laws of Nature are the basic tools of scientific work. • Patents that tie up their use may inhibit future innovation. • Issue –Do the patent claims add enough to their statements of natural correlations to qualify as patent-eligible processes that APPLY natural laws? • Holding-No 3

4. Prometheus - Patentable Subject Matter • The 3 additional steps add nothing specific to the law of nature other than what was well-understood, routine, conventional activity, previously engaged in by those in the field; and considering them in order adds nothing. 1. Administering a thiopurine drug to a subject – - Identifies people, namely doctors, interested in the correlation. 2. Determining the resulting metabolite level in the blood – - Tells doctors to engage in well understood, routine, conventional activity previously engaged in by scientists in the field. Determining methods were well known. 3. Wherein a metabolite level:< X indicates a need to increase the dosage and >Y indicates a need to decrease the dosage – - Tells the doctor the natural law and at most suggests considering test results when making treatment decisions. 4

5. Prometheus - Patentable Subject Matter • The claimed processes are not patentable unless they have additional features that provide practical assurance the processes are genuine applications of those laws rather than drafting efforts designed to monopolize the correlation. • The claim must include an inventive concept beyond the natural law. • Appending conventional steps, specified at a high level of generality, to laws of nature, natural phenomena, and abstract ideas cannot make those laws, natural phenomena, or abstract ideas patentable. 5

6. Myriad - Patentable Subject Matter Association for Molecular Pathology v. USPTO and Myriad Genetics, Inc., 689 F.3d 1303 (Fed. Cir. 2012) • Claims were for isolated DNA sequences related to the BRCA1 and BRCA2 genes and diagnostic methods for identifying mutations in those DNA sequences. Certain alterations or mutations of those genes indicated a predisposition to breast and ovarian cancers. • The case was before the Federal Circuit for the 2d time following remand from the US Supreme Court for consideration in light of its decision in Mayo v. Prometheus. 6

7. Myriad - Patentable Subject Matter • CAFC held: • Composition claims covering isolated DNA sequences associated with predisposition to breast and ovarian cancers were eligible for patent. It was removed from its native environment and manipulated to be significantly different from that in the body. • Claims for complementary DNA which lacked non-coding introns in naturally occurring chromosonal DNA, were eligible for patent. They were the result of human intervention into nature. • Method claims for “comparing” or “analyzing” isolated DNA sequences were not eligible for patent. Directed to abstract mental process, no transformative steps such as isolating genes from blood. • Method claim to screening potential cancer therapeutics via changes in growth rates of a transformed host cell was eligible for patent. Claim applied steps to man-made non-naturally occurring transformed cells. 7

8. Myriad - Patentable Subject Matter • The Federal Circuit stated compositions of matter claims are governed not by Mayo but by Chakrabarty, which suggest a composition of matter patent is patent eligible if it is markedly different than a natural product, or if the transformation of the natural product yields a distinctive name, character, and use. The structural differences between the natural genes and the isolated products were the key to patent eligibility. • Now it goes back to the US Supreme Court. 8

9. Myriad - Patentable Subject Matter • The Supreme Court granted certiorari on the following question: • Are human genes patentable? • Some issues could be: • Do the claims include an inventive concept beyond natural law? • Does the information in the DNA represent a law of nature? • Is the isolation of the DNA simply an isolation process already well known and expected at the time of the invention? • Supreme Court set oral arguments for April 15, 2013 9

10. Aventis- Inequitable Conduct Aventis PharmaS.A.v. Hospira, Inc., 675 F.3d 1324 (Fed Cir. 2012) • The decision shows losing a claim construction argument can lead to losing on validity, which in turn can lead to losing on inequitable conduct. • The district court found the '512 and ‘561 patents were invalid based on deliberately withheld references. • The district court found the '512 and ‘561 patents were unenforceable for inequitable conduct. 10

11. Aventis- Inequitable Conduct • Claim 5 of the '561 patent recites: A “perfusion”, which contains approximately 1 mg/ml or less of [docetaxel], and which contains less than 35 ml/l of ethanol and less than 35 ml/l of polysorbate, wherein said perfusion is capable of being injected without anaphylactic or alcohol intoxication manifestations being associated therewith. • Sanofi's counsel at oral argument conceded under the district court's construction of "perfusion," claim 5 was obvious over the prior art (the "GV reference" and the "Vidal reference"). • The Federal Circuit affirmed the district court's claim construction and held claim 5 obvious. • Also, regarding another claim interpretation issue, the Federal Circuit affirmed the district court's claim construction for claim 7 of the ‘512 patent and held this claim obvious. 11

12. Aventis- Inequitable Conduct • Inequitable conduct requires materiality of the withheld reference and applicant’s intent to deceive the PTO • CitingTherasense, a withheld prior art reference is required to be “but for” material and the standard for proving “but for” materiality is a preponderance of the evidence. • A prior art reference is “but for” material if the PTO would not have allowed the claims had it been aware of the references. • When a claim is properly invalidated in district court based on the deliberately withheld reference, then that reference is necessarily “but for material” for purposes of the inequitable conduct inquiry. • The Federal Circuit affirmed the district court’s invalidity decision in view of withheld references so they were “but for material”. • Even if the withheld reference is not sufficient to invalidate the claim in district court, it may be but for material if it would have blocked patent issuance under the PTO’s different evidentiary standard. 12

13. Aventis- Inequitable Conduct • CitingTherasense, the Federal Circuit said intent is shown by proving "by clear and convincing evidence that the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it.“ • In this case, “Intent to deceive was the single most reasonable inference able to be drawn from the reference ....” • Inventor disclosed prior art references discussing problem he was trying to solve, yet withheld prior art reference revealing the solution he chose for patents, and • Inventor withheld another prior art reference authored by his colleague, even though (1) he was the project leader and had to approve the reference for publication and (2) he took steps to ensure the reference was included in the drug’s clinical brochure six months before signing the patent declaration. 13

14. Momenta-271(e)(1) safe harbor Momenta Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc., 686 F. 3d 1348 (Fed. Cir. 2012) • Where the scope of the 271(e)(1) safe harbor ends is significant. • Biologics are complex molecules. Thus, analytical-method patents may be in the patent portfolios protecting them. • Momenta is the assignee of US 7,575,886, which relates to methods for analyzing sulfated polysaccharides, e.g. heparin and LMWH [low molecular weight heparin, e.g., enoxaparin]." Enoxaprin is a generic for the brand name drug LOVENOX for preventing blood clots. • Momental asserted Amphastar infringed by testing enoxaprin manufactured for sale after approval. • Momenta asserted Amphastar was "manufacturing generic enoxaparin for commercial sale" and performing "in their process for manufacturing batches of enoxaparin" an analytical method that infringes the '886 patent.

15. Momenta-271(e)(1) safe harbor • 35 USC 271(e)(1) states: • (e)(1) It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention ... solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products. • Due to the molecular complexity of enoxaprin, the FDA required generic drug makers to submit results of specific testing to obtain approval and to conduct tests and maintain records after approcval. • The Federal Circuit held 35 USC 271(e)(1) safe harbor applies to certain post-approval activities and shields Amphastar from infringement. • Amphastar’s post-approval drug testing was required by the FDA. Thus, it was reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs.

16. Momenta-271(e)(1) safe harbor • To arrive at his decision the panel had to distinguish over Classen v. Biogen IDEC, 659 F.3d 1057 (Fed. Cir. 2011). • Classen alleged the defendants' post-approval studies of vaccines infringed. The defendants argued participation in the vaccine studies was reasonably related to the FDA requirement to report adverse events to FDA, and thus within the safe harbor. • In a 2-1 decision, the Federal Circuit found in favor of Classen, holding 271(e)(1) "does not apply to information that may be routinely reported to the FDA, long after marketing approval has been obtained." • The Momenta majority distinguished Classen: • Here, the submissions are not "routine submissions" to the FDA, but instead are submissions that are required to maintain FDA approval.... Unlike Classen, where the allegedly infringing activity "may" have eventually led to an FDA submission, there is no dispute in this case that Amphastar's allegedly infringing activities are carried out to "satisfy FDA's requirements.”

17. Thank you for your attention! Questions? Anthony Venturino Partner Novak Druce Connolly Bove + Quigg LLP 1875 Eye Street Washington, DC 20006 +1-202-659-0100 (phone) anthony.venturino@novakdruce.com 17

18. Intervening Rights Marine Polymer Tech. v. Hemcon, 672 F.3d 1350 (Fed. Cir. 2012) • Doctrine of Intervening Rights forecloses recovery of pre-reexamination infringement if the resulting claims were in “amended form” and not “substantially identical” to the original claims. 35 U.S.C. §§252 and 307(b) • In this case, the claim scope had been arguably changed based upon arguments made during a reexamination, but the text of the claims had not been amended. 18

19. Intervening Rights • Federal Circuit held that pursuant to the plain language of the statute, intervening rights defense arises following reexamination only when the patent holder has amended claims or added new claims. • Practice Tips for Patent Holder • During reexamination, only when arguments alone will fail should claim amendments be made to overcome prior art. • During original prosecution, embodiments of different scope should be covered by separate independent claims (rather than by an independent and dependent claim). During reexamination, patent holder can simply cancel the broader independent claim to overcome prior art. Amendments are therefore not made to the less broad independent claim and would not provide third party intervening rights. 19

20. Different Results: Reexamination and Litigation In re Baxter International Inc., 673 F.3d 1357 (Fed. Cir. 2012) • Federal Circuit held that a prior decision in a patent infringement suit did not preclude a different outcome on reexamination. • Federal Circuit upheld the USPTO’s Ex Parte Reexamination decision that Baxter’s claims were unpatentable as obvious. In re Baxter International, Inc., No. 11-1073 (Fed. Cir. May 17, 2012). • In contrast, in a previous patent infringement suit, Federal Circuit upheld a District Court decision that Baxter’s claims were not invalid as obvious. Fresenius USA, Inc. v. Baxter Int'l, Inc., 582 F.3d 1288 (Fed. Cir. 2009). 20

21. Different Results: Reexamination and Litigation • USPTO and District Courts “take different approaches in determining validity and on the same evidence could quite correctly come to different conclusions.” • A challenger that attacks the validity of a patent in civil litigation has a statutory burden to prove invalidity by clear and convincing evidence. • In contrast, in USPTO reexaminations, the standard of proof is preponderance of evidence, which is substantially lower than in a civil litigation. Also, in USPTO reexaminations there is no presumption of validity. • Future of parallel litigation and reexamination • Decrease due to AIA replacing Inter Partes Reexamination with Inter Partes Review, which has restrictions on parallel proceedings. • Could still arise from Ex Parte Reexamination proceedings, which are not subject to the same restrictions. 21

22. Preliminary Injunction Requires Causal Nexus Apple Inc. v. Samsung Electronics Co., 695 F.3d 1370 (Fed. Cir. 2012) • Federal Circuit overturned district court’s Preliminary Injunction against Samsung that would have prevented Samsung from selling its Galaxy Nexus smartphone in the US. • Facts • Apple’s patent claim was for a “unified search” apparatus that allowed a user to search a device’s memory and the Internet with a single search query. • Apple alleged that the “Quick Search Box” (QSB), a unified search feature embodied in the Galaxy Nexus, infringed the claim. 22

23. Preliminary Injunction Requires Causal Nexus • Federal Circuit held that to show irreparable harm necessary to support a preliminary injunction, patentee must establish a “sufficiently strong casual nexus” between the alleged infringement and the alleged harm (e.g., loss of sales). • In applying the sufficient causal nexus doctrine, the patent holder must show that “the infringing feature drives consumer demand for the accused product.” • Apple presented no evidence that consumers bought the Galaxy Nexus because it was equipped with the QSB.

24. Preliminary Injunction Requires Causal Nexus • Practice Tips for Patent Holder • In establishing irreparable harm necessary to support a preliminary injunction, the evidence should: • show that the patented feature is THE driver of consumer demand for a product (merely establishing that sales or market share would be lost is not sufficient); • show how the patented feature drives demand for the defendant’sproduct (as opposed to the patent holder’s product); and • pertain to the exact feature claimed in the patent.

25. Patent Eligibility for Computer-Implemented Claims? CLS Bank International v. Alice Corp. Pty Ltd. No. 11-1301 (Fed. Cir. 2012) • Federal Circuit vacated its panel decision that Alice claimed patent-eligible subject matter, and ordered rehearing en banc. • Alice’s patent claims were directed to a computerized trading platform that enables a trusted third party to settle obligations between two parties in a manner that eliminates “settlement risk.” 25

26. Patent Eligibility for Computer-Implemented Claims? • For the rehearing en banc, the court requested the parties address the following: • (1) what test should be adopted to determine whether a computer-implemented invention is an “abstract idea”; • (2) when, if ever, does the presence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea; • (3) should it matter to patent eligibility that the computer-implemented invention is claimed as a method, system, or storage medium; and • (4) should such claims be considered equivalent for determining patent-eligibility? • Oral argument held February 8, 2013. Decision not expected for months. • Stay tuned!

27. Thank you for your attention! Questions? Laura C. Brutman Schiff Hardin LLP 666 Fifth Avenue Suite 1700 New York, NY 10103 +1-212-745-0848 lbrutman@schiffhardin.com 27