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Federal Circuit Review Provided by Patterson, Belknap, Webb & Tyler LLP

 

The following is a review of Federal Circuit intellectual property cases decided the week ending August 1, 2003.

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OBVIOUSNESS, ATTORNEY FEES

McNeil-PPC, Inc v. L.Perrigo Co., No. 02-1516 (August 1, 2003).

 

Opinion by Michel, Archer, and Lourie

The district court held certain claims of four of McNeil's patents invalid and awarded attorney fees to Perrigo. The Federal Circuit upheld the holding of invalidity but overturned the awarding of attorney fees.

 

At issue were four of McNeil's patents covering methods and a combination of compounds for treating flatulence and diarrhea. The lower court determined that the claims of two of the patents were obvious over three references that taught the combination of compounds for relieving diarrhea. It also held that the claims of the other two patents were obvious over a patent application that taught making tablets having separate layers. In addition, the lower court discounted the secondary evidence of nonobviousness because the massive marketing and advertising campaign obscured the nexus that might have existed between the merits of the product and its commercial success. The Federal Circuit upheld these determinations.

The Federal Circuit overturned the lower court's awarding of attorney fees. Because the district court did not find egregious conduct during litigation or that McNeil's patent prosecution rose to the level of inequitable conduct, a party cannot be punished for enforcing a presumptively valid patent.

 

 

http://www.fedcir.gov/opinions/02-1516.doc

 

 

INHERENCY

Schering Corp. v. Geneva Pharms., Inc. et al., No. 02-1540 (Aug. 1, 2003).

 

Opinion by Rader, joined by Plager and Bryson.

The district court held that the '233 patent inherently anticipates claims 1 and 3 of U.S. Patent No. 4,659,716 (the "'716 patent"). The Federal Circuit affirmed.

 

The now-expired '233 patent covers the antihistamine loratadine, the active ingredient in Schering's Claritin™ product. The '716 patent covers the loratadine metabolite known as descarboethoxyloratadine ("DCL"), a compound created inside a patient's body when loratadine is digested. Upon the expiration of the '233 patent, the defendants-appellees submitted applications to the FDA seeking regulatory approval to market generic versions of loratadine. Because Schering had included the '716 patent in its Orange Book listing for loratadine, each FDA application contained a certification that the '716 patent was invalid. Once notified of these applications, Schering sued for infringement.

 

The district court construed claims 1 and 3 of the '716 patent to cover DCL in all its forms. As such, the district court found that although the '233 patent did not expressly disclose DCL, DCL was necessarily formed as a metabolite when loratadine was administered to a patient – a process disclosed in the '233 patent. Having determined that the '233 patent inherently anticipated claims 1 and 3 of the '716 patent, the district court granted summary judgment for the defendants-appellees on the issue of invalidity.

On appeal, Schering argued that inherent anticipation required that a person skilled in the art recognize the inherent disclosure of the prior art patent before the critical date for the later patent. The Federal Circuit rejected this interpretation, distinguishing inherent anticipation from accidental anticipation. Inherent anticipation does not require that the disclosure be appreciated at the time of the earlier patent as long as the disclosure is a necessary and inevitable consequence of what was intended by the prior art.

 

The Federal Circuit pointed out that this decision does not preclude patent protection for metabolites of known drugs, so long as such patents are properly drafted. Broad compound claims will be inherently anticipated by prior art disclosures of drugs that metabolize into the claimed compound, but other claims to the metabolite, such as isolation of the compound, might still be valid. For example, claims 5-13 of the '716 patent, covering pharmaceutical compositions, and claims 14-16 of the '716 patent, covering methods of treating allergic reactions using compounds containing DCL, were not anticipated by the '233 patent. http://www.fedcir.gov/opinions/02-1540.doc

 

APPELLATE JURISDICTION

Ultra Precision Mfg., Ltd. v. Ford Motor Co., No. 02-1622 (July 28, 2003)

 

Opinion by Gajarsa, joined by Newman and Prost.

 

The Federal Circuit dismissed an appeal for lack of jurisdiction because it determined that the district court had improperly certified a judgment on in limine rulings as final under Fed. R. Civ. P. 54(b).

 

Although the district court had previously denied a summary judgment motion on the issue of whether plaintiff’s state law unjust enrichment claim was preempted by the federal patent law, it later granted defendant’s in limine motions to preclude any evidence of damages on that claim at trial. On defendant’s motion, the district court certified its decision on the in limine motions as final, and therefore appealable, under Rule 54. Although not briefed by the parties, the Federal Circuit determined that the district court’s certification order was improperly granted and dismissed the appeal for lack of jurisdiction. The Federal Circuit found that the district court’s order was not a determination of the issue of legal liability, but only precluded evidence of the quantum of damage that the plaintiff could recapture. Accordingly, the Circuit found that the district court’s decision on the in limine motions were not an ultimate decision on the merits of a claim, as required by Rule 54. Because it concluded that the district’s court’s order was not final, the Circuit dismissed the appeal for lack of jurisdiction under 28 U.S.C. § 1295. http://www.fedcir.gov/opinions/02-1622.doc

 

 

ON-SALE BAR

Minton v. National Assoc. of Securities Dealers, Inc., No. 02-1560 (July 29, 2003).

 

Opinion by Lourie, joined by Linn. Concurring opinion filed by Gajarsa.

 

Minton appealed the decision of the district court granting summary judgment that Minton's U.S. Patent No. 6,014,643 (the "'643 patent”), directed to a computerized securities trading system, is invalid by virtue of the on-sale bar of 35 U.S.C. § 102(b). The Federal Circuit affirmed.

 

Prior to the critical date of Minton's patent application, Minton leased a computer program and telecommunications network called "TEXCEN" to a brokerage firm. The TEXCEN technology differed only slightly from the invention disclosed in Minton's patent application – instead of automatically completing each trade, a broker needed to intervene between the buyer and seller in the TEXCEN system. The district court held that the lease of TEXCEN was an anticipatory on-sale bar under § 102(b), rendering the '643 patent invalid. On reconsideration, the lower court also rejected Minton's argument that TEXCEN was "experimental" and therefore not "on sale."

 

On appeal, Minton did not challenge the finding that TEXCEN was "ready for patenting." However, he did argue that: (1) under Federal Circuit precedent (In re Kollar), the lease agreement did not constitute an offer for sale, and (2) the lease of TEXCEN was for experimental use. The Federal Circuit distinguished its decision in Kollar, in which it held that the transfer of technical know-how and a license under any future patents did not constitute an offer for sale. By leasing TEXCEN, the court found, Minton conveyed his entire product, not mere information. Next, the Federal Circuit agreed that Minton had waived his experimental-use argument by not raising it before moving for reconsideration in the lower court. The court also dismissed Minton's argument that a new development in the law occurred with the case EZ Dock, Inc. v. Schafer Sys., Inc., finding that EZ Dock simply applied settled experimental use law to the facts of the case.

 

In his concurring opinion, Judge Gajarsa approved the majority's ruling but disagreed with its view of Kollar. He stated that "nothing in § 102(b) compels differential treatment between a sale of invention that is a tangible item and an invention that is a series of steps in a process." Rather, he said, for an on-sale bar to operate, there need only be a commercial sale of the invention itself, no matter whether the invention is tangible or intangible. The majority responded to Gajarsa's views in its opinion, agreeing that § 102(b) makes no distinction between tangible and intangible inventions, but also pointing out that the sale of a tangible item is "a straightforward event," whereas the sale of a process – a series of acts – may be ambiguous. http://www.fedcir.gov/opinions/02-1560.doc

 

Federal Circuit Review is intended to be informative only and not to give legal advice or opinions.  Any views expressed or implied are not necessarily those of Patterson, Belknap, Webb and Tyler LLP, its attorneys or clients.

  Patterson, Belknap, Webb & Tyler LLP 2003 All rights reserved.  This document may be copied and distributed, so long as this in not done for profit, no text is changed and all pages are included.  Patterson, Belknap, Webb & Tyler LLP, 1133 Avenue of the Americas, New York, NY 10036-6710, 212-336-2000, Fax:  212-336-2222, E-mail: patentan@pbwt.com