Patent Law (by Naira Matevosyan)

INTRODUCTION TO PATENTS & TRADE SECRETS

Laws, Cases, Essays, Discussions

Includes Intellectual Property Disputes in Reproductive Health CareIncludes Intellectual Property Disputes in Reproductive Health Care

Naira R. Matevosyan, MD, PhD, JSMNaira R. Matevosyan, MD, PhD, JSMMedical Doctor, Jurist, Scientist, Author, Musician, MotherMedical Doctor, Jurist, Scientist, Author, Musician, Mother

August 08, 2016August 08, 2016

CONTENTSCONTENTSSlides 3-6 Claiming an inventionSlide 7 Disparity amid the patent, copyright, and trademark lawsSlides 8-12 Overview of the U.S. Patent LawSlides 13-14 Patentability: Utility, Novelty, Non-obviousness, Specification

Slides 15-17 Patentability of a business processSlides 18-19 Statutory subject matter: Judiciary extensions, exceptionsSlide 20 Establishing a Prima Facie case on the recordSlides 21-27 From Checkers to Chakrabarty: Abstract v. Nature's wisdomSlides 28-31 Enablement v. Utility; Novelty v. NonobviousnessSlides 33-46 Third-party prior art; P-H-O-S-I-T-A; Statutory barsSlides 47-55 Utility patent protection; Doctrine of Equivalents; Reversed D.Slides 57-61 Design & plant patent protection: Gorham & Imazio standards

Slides 62-76 Five defense strategies; Estoppel types; Measuring a damageSlides 77-85 The law of undeveloped ideas; Trade secrets; Antitrust law

Slide 86 Biotechnology patents: Bayh-Dole & Stevenson-Wydler Acts

Slides 87-98 Essay on a patent dispute in reproductive health

Claiming an Invention

3

What did Archimedes claim while screaming “Eureka!” upon his mighty discovery in the 16th century?Was it about a: - patent ?- copyright ?- trade secret ?- theory ?- trophy ?- or... something else?

Invention Type v. Commercial VigorWith a prompt glimpse on the two patents below, which one you would find

more “useful”? Mind, that the market price of a product under the patent -1 ranges between USD $ 60-100, and under the patent-2 USD $ 1,200 – 5,800.

1) Animal Ear Protectors US 4233942

Developed in the late 70-s,this device avails protection of the ears

of long eared animals, especially dogs, from coming into contact

with food or drink while they eat.

2) Fireplace Waterfall US 6901925

An upgrade from the conventional fireplace, this 2002's patent calls for a trough to be installed in front of a firebox for a pool of

water. The water circulates through special plumbing and funnels out of the fireplace front

to create a fountain-like effect. Just add fire! 4

Moral v. Commercial Impact of an Invention

5

In 1895, the German physicist Wilhelm C. Röntgen invented the X-ray (also known as Röntgen Ray), the worldwide use of which improves diagnostic accuracy and saves innumerable lives since ever.

Röntgen deliberately did not claim a patent for this cogent invention. However, for the discovery of electromagnetic radiation in a wavelength range of X-ray, he earned the first Nobel Prize in Physics in 1901. (Note, the 1901's fiscal fund for all five Nobel Prize laureates was 32,00 SEK, i.e. today's 1.7 million USD). Many streets were named after him. In 2004 the radioactive element-111, Röentgenium, was named after him.

Ask yourselves. Had Röntgen patented his invention: (1) Would X-ray be adopted worldwide at an extraordinary pace? (2) Would scientists freely create X-rays using cathode-ray? (3) Would today's prices for an X-ray exam jump to record highs? (4) When would Röntgen's ownership expire?

To the Nature's CreditWhat if a patentable subject matter carries the Nature's wisdom as being a seed, phenomenon, process, association, product or law of Nature?

Is there a precise line between the Nature's and human ingenuity?

Is there a far-term guarantee that human interventions or modification would improve a natural subject (matter, process, phenomenon, association), as such the latter's impact on human lives and the environment (biotic, abiotic, celestial)?

What does “improvement” mean? Is it time - or consumer - sensitive?

Are hybrids patentable? If so, which (sexual, asexual) reproduction deems fit?

All these questions are discussed and addressed in

the next slides. 6

Very Briefly: Overlaps & Differences [1 -32]

LAWS INCLUSIONS EXCLUSIONS

Patent

- 35 USC

A patentable subject matter (process, machine, manufacture, composition of matter) must show function or functionality (utility), be novel, non-obvious, and specific.

Is a federal law.

Abstract ideas or algorithms Products of nature A human per se A datum per se A computer program per se Transitory forms of signal transmission Legal contractual agreement A company A mere arrangement of printed matter.

Copyright

- 17 USC

Is a federal law May refer to expressive works (literary,

musical, dramatic, pantomime and choreographic, pictorial, graphic, sculptural, audio, visual, derivative, compilational, architectural)

Protects creation of inventiveness.

Facts Works created by the U.S. Government Works not fixed in a tangible form of

expression Ideas, concepts, principles, or discoveries Words, phrases, or familiar symbols Works in the public domain.

Trademark

- 15 USC

Is both federal and state law TM is registered at the state level TM refers to the commerce only TM identifies goods or services and

sources of those good or services TM may refer to expressive works Can be acquired with non innovative input

from the owner whatsoever.

TM does not show a function or functionality of a business, good, or service

TM does not protect creation or inventiveness.

Trade-name (not TM) registration is non-mandatory.

A Brief History of the U.S. Patent Law History of the U.S. patent jurisprudence has been moving at a steady pace.

The importance of granting monopolies for new inventions has been recognized since the adoption of the U.S. Constitution (1787). Article I, Section 8 vests, “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.”

Then followed the first federal statute, the Patent Act of 1790, titled as “An Act to promote the Progress of Useful Arts.” In 1793, it was repealed by the Patent Act of 1793, the subject-matter definition of which remains unchanged until now: “... any new and useful art, machine, manufacture or composition of matter and any new and useful improvement on any art, machine, manufacture or composition of matter.”

The Patent Act of 1836 improved the former act, created a Patent Office freeing the Secretary of State from the patent-oversight, made all granted patents publicly accessible at libraries throughout the country for the efficient detection and prevention of fraud, allowed a possible extension of 7 years of ownership in addition to the original 14-year term, and removed the US nationality and residency requirements, making it possible for foreigners to file for U.S. patents.

8

History (continued)In 1849, the Patent Office was transferred to the Department of the Interior. Resultant from depression from the unfavorable review of patents based

on the Sherman Antitrust Act provisions, in 1925 the Patent Office was transferred to the Department of Commerce where it stays today.

The basic structure of the current patent law is stemmed of the Patent Act of 1952, which amended the review criteria so the inventor had to describe not only the invention but also the basis for its infringement; plus, the invention needed to be new, useful, and “non- obvious” - to keep individuals from taking ownership or taking away from the base pool of knowledge in a peculiar field.

After the regained enthusiasm for the intellectual monopoly, in 1982 the Court of Customs & Patent Appeals was abolished and patent cases were heard in the newly established Court of Appeals for the Federal Circuit that provided more protection to patent owners.

In 2011, the Leahy-Smith America Invents Act (AIA) significantly changed the patent system from 1952. Choosing between the "first-to-invent" and "first-to-file" systems, the AIA adopted the "first inventor to file" requirement. Such provisions went into effect in 2013.

9

Current JurisprudencePatents are governed by the U.S. Patent Act, 35 U.S.C. §§ 1 et seq., which

provides: “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 therefor, subject to the conditions and requirements of this title” (35 U.S.C. §101).

This language remains essentially unchanged from the Patent Act of 1793, except for replacing the word art with the term process - as in a “process, art or method, including a new use of a known process, machine, manufacture, composition of matter, or material” (35 U.S.C. §100(b)).

“Whoever invents” means that patents are granted to inventors, not to the companies that employ them. In the contrary to the Copyright Act, there is no automatic “work for hire” provision in the Patent Act, although under common-law the employer may have a “shop right” to use an invention that was developed using its resources. In cases where a person was employed specifically to invent, a court may find that there is an implied contract to assign the inventor's rights to the employer.

“Invents or discovers” sees the patentee as the actual creator and not just the discoverer of something that already existed, including the laws of nature or natural phenomena. 10

How Does It Work ?The word PATENT is referred in two different ways: (1) Branch of federal law; (2) Official document in which an invention is described.Patents are classified in the United States Patent & Trademark Office (USPTO), and

published 18 years after the patent application.Patent protection is afforded to inventions, industrial designs, and plants. A patent

grants the inventor a legal right to keep others from making, using, selling, offering to sell, and importing the claimed invention for a period of up to twenty years. Different patents have different terms:

• Utility patents (including plant patents) have a 20-year term.• Design patents have a 14-year term.

Each patent claim must be of one sentence and must have five parts:

(1) preamble - general terms what the invention is

(2) elements of the claim

(3) specifics (35 U.S.C. §112a)

(4) a drawing (35 U.S.C. §113)

(5) an oath or declaration (35 U.S.C. §115).11

At th

e hear

t of a

paten

t is

specifi

cation

.

Patent Oversight in the United States

USC: 35 US Code CFR: Code of Federal Regulations

12

USPTO: United States Patent and Trademark Office MPEP: Manual of Patent Examining Procedure

Patentability“A patent is not a hunting license. It's not a reward for research, but rather a

compensation for its successful conclusion.” [1]

Patentability has five parts: (1) Patentable subject matter (35 U.S.C. §101) (2) Utility (35 U.S.C. §102)

(3) Novelty (ibid) (4) Nonobviousness (35 U.S.C. §103) (5) Enablement (PTO 2164.01).

Some countries disallow patents on certain businesses, like software or pharmaceuticals. There are also regional limits: the 35 U.S.C. §104 (invention made abroad) was repealed as of July 2015.

Under the U.S. Patent Act (35USC), the statutory subject must be: - Process - Machine - Manufacture - Composition of matter.(1) Brennerv.Manson, 383 US 519 - 1966

13

Patentability (continued)Patent (process, machine, manufacture, or composition of matter) is pretty

much everything objective under the Sun. Ideas, theories, canons, products of human imagination, expressions or perceptions (songs, paintings, sculptures, embroidery, culinary art) are not patentable but can be copyrighted.

The PTO grants three types of patents:(1) Utility patents - inventions or discoveries of any new and useful process,

machine, article of manufacture, or composition of matter, or any new and useful improvement thereof;

(2) Design patents - inventions of a new, original, and ornamental design for an article of manufacture;

(3) Plant patents -inventions , discoveries, or asexually reproducing of any distinct and new variety of plant.

The patentable invention must be “useful.” Under “utility” (35 U.S.C. §102), usefulness is not a hard test; it simply means that the invention does benefit something. The PTO invariably rejects applications for inventions that appear to be perpetual motion machines and requires an operative model for the examiner to review. Presumably, if the model does in fact run forever without additional energy, a patent would be granted. 14

Patentability of a Business ProcessBilski v. Kappos [2]

A patent claimed on a method (mathematical algorithm) of hedging against price changes.

The issues were, whether a process:

- is tied to a particular machine or apparatus;

- transforms a particular article into a different state or thing.

Four justices held that business methods are never patentable.

Justice Kennedy distinguished the "threshold" §101 analysis from the other "conditions and requirements" for patentability found in §102 (novelty), §103 (nonobviousness), and §112 (particular description). Focusing on the “ordinary, contemporary, common meaning" of the term “process” as defined in 35 U.S.C. § 100(b), he concluded that neither the text of the Patent Act nor Supreme Court precedents supported the "machine-or-transformation" test as the sole prong for deciding a processes-patentability. (continued)

(2) Bilski v. Kappos, 130 S. Ct. 3218 - 2010

15

In re Bilski (continued)

Justice Kennedy next explained that there is no "ordinary, contemporary, [or] common meaning" of the term 'method' that excludes business methods as patentable processes;” he cited 35 U.S.C. §273 which provides a prior user defense to infringement claims for "method[s] of doing or conducting business," and reasoned that "federal law explicitly contemplates the existence of at least some business method patents.” [2]

As such, Justice Kennedy reasoned that the Court should not interpret the Patent Act so as to "render another provision superfluous," and concluded that business methods cannot be categorically excluded from patent eligibility.

Despite upholding the patentability of business methods, the majority nonetheless rejected petitioners' application for "falling outside” of §101 because it claimed an abstract idea.

With that, the Bilski court [2] was opportunistic to Chakrabarty's [13] (see further).

Post-BilskiFollowing Bilski [2], the Supreme Court:

denied certiorari in Ferguson v. USPTO [3], where the Federal Circuit had rejected claims for a "marketing paradigm,"

rejected Digital Image Technologies V. Electronics, [4]

rejected In re Nuijten, [5]

granted certiorari, then vacated and remanded -

Classen Immunotherapies, Inc. v. Biogen IDEC,[6] and

Mayo Collaborative Svcs. v. Prometheus Labs. [7]

(3) In re Ferguson (ex patre), 558 F.3d 1359, 90 U.S.P.Q.2d 1035(4) Digitech Image Technologies, LLC v. Electronics for Imaging, Inc et al al., 758 F.

3d 1344, 111 U.S.P.Q.2d 1717 (Fed. Cir. 2014) (5) In re Nuijten, 500 F.3d 1346, 84 U.S.P.Q.2d 1495 (Fed. Cir. 2007)(6) Classen Immunotherapies, Inc. v. Biogen IDEC, 130 S.Ct. 3541 (2010)(7) Mayo v. Prometheus, 566 U.S. (2012)

17

Four Categories of Statutory Subject MatterAs of July 2015, the PTO recognizes two criteria in determining subject matter

eligibility under 35 USC § 101. Both must be satisfied. The claim must:

1) be directed to one of the four statutory categories, and

2) not be wholly directed to subject matter encompassing a judicially recognized exception (see in the next slide).

The first step in claiming an invention should be directed to one of the four eligible subject matter categories: process, machine, manufacture, or composition of matter. If it's not, the claim is rejected under § 101.

Claims that are not directed to one of the statutory categories include: transitory forms of signal transmission (for example, a propagating electrical or electromagnetic signal, In re Nuijten [5]), a human per se (Leahy-Smith America Invents Act (AIA), Public Law 112-29, sec. 33); a legal contractual agreement (In re Ferguson, [3]); a computer program per se, Gottschalk v. Benson [8]); a company [3], a mere arrangement of printed matter (In re Miller [9]); and data per se (Digitech Image v. Electronics, [10]).

(8) Gottschalk v. Benson, 409 U.S. at 72, 175 USPQ at 676-77(9) In re Miller, 418 F.2d 1392, 1396, 164 USPQ 46, 49, CCPA 1969(10) Digitech Image Tech., LLC v. Electronics for Imaging, Inc., 758 F.3d 1344, Fed. Cir. 2014

Judiciary Extensions & ExceptionsNext step is to determine whether the claim wholly embraces a judicially

recognized exceptions or extension.

(11) Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 573 U.S. (2014) (12) Association for Molecular Pathology v. Myriad Genetics, Inc. 569 U.S. (2013)(13) Diamond v. Chakrabarty, 447 U.S. (1980)(14) Mayo Collaborative Serv. v. Prometheus Labs., Inc., 566 U.S. (2012)(15) Parker v. Flook, 437 US 584 - Supreme Court (1978)(16) Le Roy et al v. Tathem et al., 55 US 156 - Supreme Court (1852)(17) Ultramercial v. Hulu, 657 F.3d (Fed. Cir. 2011)

What is not patentable? What is patentable?

Laws of nature [16] Methods and products employing abstract ideas [17]

Natural phenomena [12] Methods and products employing natural phenomena [13]

Abstract ideas [2, 3, 11, 15]

Diagnostic tests [14]

Laws of nature to perform a real-world function [17]

19

A Prima Facie Showing on the RecordUnder the principles of compact prosecution, regardless of whether a rejection

under 35 USC §101 is made based on lack of subject matter eligibility, a complete examination should be made for every claim under each of the other patentability requirements: utility (35 USC §102), novelty (35 USC §102), non-obviousness (35 USC §103), specification (35 USC §112),and non-statutory double patenting (35 USC §121). [18]

If two or more independent and distinct inventions are claimed in one application, the examiner may require the application to be restricted to one of the inventions. If the other invention is made the subject of a divisional application which complies with the requirements of §120 (benefit of earlier filing date in the USA), it shall be entitled to the benefit.

“The examiner bears the initial burden … of presenting a prima facie case of unpatentability.” [18] If the record as a whole suggests that it's more likely that the claimed invention would be considered significantly more than an abstract idea, natural phenomenon, or law of nature, then USPTO personnel should not reject the claim.

(18) USPTO: Patent Subject Matter Eligibility [R-07.2015]

(19) In re Oetiker, 977 F.2d (Fed. Cir. 1992)20

From Checkers to ChakrabartyWhile the US3767201 A is a game-patent of a multi-level board structure for

three-dimensional chess and checker, a question raises whether the similar human creativity, that may change or improve a natural process or product, is patentable?

In the former slides (15-19) we discussed that the laws of nature, natural phenomena, diagnostic methods, and abstract ideas are NOT patentable under the federal statute.

The commonlaw however, is instructive with respects to which arguments have not been advanced. The patent law is anything but simple. It's like a piecemeal doctrinal construction, each part more readily explained by the circumstances of its addition than by its relation to a coherent whole. The success mostly depends on how thorough is the patent application with compelling specification and enablement .

Diamond v. Chakrabarty [13] was a landmark, mind-changing decision. Ananda Chakrabarty, a microbiologist, had invented a man-made, genetically engineered bacterium capable of breaking down crude oil - a property which is possessed by no naturally occurring bacteria (continued).

21

Sidney Diamond v. Ananda Chakrabarty

22

Chakrabarty had filed three types of patent claims:(1) process claim for the method (process) of producing the bacteria;(2) claim for an inoculum (media) comprised of a carrier material floating on water (like straw) and the new bacteria; and(3) claim to bacteria (matter) themselves. [13]

The claims were tried under 35 USC §101 (Utility), §112 (Specification), and 7USC 2402(a).

Pursuant to the 35 USC §101, the patent examiner allowed the claim falling into the first and second categories, but rejected the third claim for bacteria on two grounds: (1) micro-organisms are "products of nature" and (2) as living things they are not qualified as a subject matter under §101.

(13) Sidney A. Diamond v. Ananda M. Chakrabarty, 447 U.S. (1980)

Chakrabarty (continued)The Court of Customs & Patent Appeals reversed, reasoning that “the fact that

micro-organisms are alive is without legal significance for purposes of the law.” [13]

By the majority of votes, the Supreme Court held that the “bacterium was a non-naturally occurring manufacture or composition of matter, a product of human ingenuity having distinctive name, character and use and thus, Chakrabarty had produced a new bacterium with markedly different characteristics from any found in nature and one having for significant utility.” [13]

Under the specification doctrine (§ 112), the Court reasoned that although the bacteria are classified under the Plant Patent category which is barred under the 35 USC § 112 and 28 USC 2181, it was not necessary to leave the resolution of the claim to Congress to modify the patent specificity clause.

Relying on on TVA v. Hill, [20] and Parker v. Flook [21], the Court held: “Congress is free to amend §101 so as to exclude from patent protection organisms produced by genetic engineering, exempting from patent protection inventions useful solely in the utilization of special nuclear material or atomic energy in an atomic weapon.”

(20) TVA v. Hill, 437 U.S., at 194, 98 S.Ct., at 2302(21) Parker v. Flook, 437 U.S. 584, 98 S.Ct. 2522, 57 L.Ed.2d 451 (1978) 23

Post-Chakrabarty

24

Docket Year Issue(s) HoldingDiamond v. Diehr 1981

Do patentable claims become invalid because they include

mathematical formulas?

No. Patentable claims do not become invalid because they

include mathematical formulas.[22]

Bilski v. Kappos 2010

Whether the process (mathematical algorithm) is tied

to a particular machine or apparatus, or whether it

transforms a particular article into a different state or thing.

The process is related to an abstract idea with no relationship to a

specific apparatus, and therefore it is not patentable.[2]

Mayo v. Prometheus

2012

Whethera method of treating Crohn's disease, where dosage of

drug was adjusted based on results of metabolic tests, is

patentable as a subject matter.

The subject matter is not inpatentable. A correlation

between metabolites and dosage levels is not patentable because it is

a "law of nature.” [14]

Association for Molecular Pathology v. Myriad

2012

Whether a method of diagnosing propensity to cancer by looking

for mutated DNA sequences, and methods to identify drugs using isolated DNA sequences qualify

as subject matter .

cDNA claims are patent eligible under section 101, because the

cDNA is "distinct" from the original DNA from which it is derived.[12]

(With that Myriad's court overruled Chakrabaty's decision).

(22) 450 US 175- Supreme Court, 1981

Patentability of a Process or a SoftwareMENTAL PROCESS: Some cases (In re Abrams,[23]) raise a question of whether the

mental process is a statutory subject matter under §101. The term “process” is vague in itself. In Cochrane v. Deener [24] the Supreme Court held: “A process is a mode of treatment of certain materials to produce a given result. It's an act, or series of acts, performed upon the subject matter to be transformed or reduced to a different state or thing.”

Which definition of “process” did the Cochrane's court provide: exclusive or inclusive ? Exclusive commonly is, “ only acts that transform something are processes” and inclusive is, “there may be other types of processes in addition to those that transform something.” While definitions remain unsettled, in AT&T v. Excel Communications [25] the Court used the inclusive definition: “When a claimed invention is performing a function which the patent laws were designed to protect (transforming or reducing an article to a different state or thing), then the claim satisfies the requirements of §101.” Thus, a signal denotes a non- exclusive process.

Lessons learned: The mental flow is a process that involves steps that require a subjective or aesthetic judgment on the part of the person; therefore it is not patentable. This is not because the process is too subjective for §101, but because the disclosure requirement ( §112) has not been met (see Disclosure in further slides).

(23) In re Abrams, 188 F.2d 165 (1951); (24) Cochrane v. Deener, 94 U.S. 780 (1876)

(25) AT&T v. Excel Communications, 172 F.3d 1352, (Fed. Cir. 1999) 25

26

PRINTED MATERIAL: Courts have held that printed matter is not patentable because it's not a proper manufacture [26, 27].

In simpler terms, something that includes stored information, such as printed matter, is a manufacture. This approach gets complicated under §103 which requires that claims be considered “as a whole” when determining the obviousness of an invention. Consider J.K Rowling's “invention” of Harry Potter. While the book is a manufacture, that manufacture differs from prior art books only in the writing in the book. The book would be statutory subject matter (§101) but would not be novel (§102) or nonobvious in light of other books. Therefore, it is governed by the copyright law.

COMPUTER SOFTWARE: In Alice Corp. v. CLS Bank Intern.[11] the Court held,that “implementing abstract ideas on a computer is not enough to transform that idea into patentable subject matter.” In WMS Gaming, Inc. v. International Game Technology [28] the Federal Circuit held, "for a means-plus-function limitation to read on a device, the device must employ means identical to or the equivalent of the structures, material, or acts described in the patent specification -§112.”

Lessons learned: A computer program per se is not deemed as patentable. Yet, virtually any technique that can be embodied in a computer program that produces a useful result is patentable if properly disclosed to the examiner.

(26) In re Miller, 418 F.2d 1392, (CCPA 1969)(27) In re Gulack, 15: 703 F.2d 1381, (Fed. Cir. 1983) (28) WMS Gaming, Inc. v. Int. Game Technology; 184 F. 3d 1339 , Fed. Circuit, 1999

METHODS OF DOING BUSINESS: A number of cases have held that methods of doing business are not patentable. Yet, what constitutes a method of doing business is a fuzzy concept.

Justice Newman, dissenting In re Schrader [29], described method-of-doing-business exception as “an unwarranted encumbrance to the definition of statutory subject matter” that should be “discarded as error-prone, redundant, and obsolete. It merits retirement from the glossary of § 101.” Yet, the Federal Circuit’s decision in State Street Bank v. Signature Financial [30] cites her remarks with strong approval:

“Since its inception, the business method exception has merely represented the application of some general, but no longer applicable legal principle, perhaps arising out of the “requirement for invention” – which was eliminated by § 103. Since the 1952 Patent Act, business methods have been, and should have been, subject to the same legal requirements for patentability as applied to any other process or method.

Business method patents are generally just a particular type of software patent, since the business method often relies on involved calculations that require the use of a computer in any practical application of the method, or involves doing something that enhances electronic commerce on the Internet.” [30]

(29) In re Schrader; 22 F.3d 290, 30 USPQ2d 1455 (Fed. Cir. 1994)

(30) State Street Bank v. Signature Financial; 149 F.3d 1368, 47 USPQ2d 1596 (Fed.Cir.1998)

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Enablement v. Utility

How the utility requirement differs from the enablement requirement?

Pursuant to the Patent Act § 102 (Utility), the invention in question must be capable of doing something. It must not be theoretical and should entail an identifiable application of scientific concepts of laws.

In Brenner v. Manson [31], for example, the applicant identified a new chemical compound but could not explain what it did. The PTO rejected the application, but the Federal Circuit disagreed, holding that “utility requirement was satisfied as long as invention was not alleged to be detrimental to the public interest." Supreme Court reversed, holding that “invention must show a use that is both (1) substantial and (2) specific.”[31]

Lessons learned: Put simply, enablement is about the invention's potential to be replicated, and utility is its potential to be used.

(31) Brenner v. Manson, 383 US 519 - 1966 28

Novelty v. Nonobviousness At the Crux: § 102 goes on to define novelty, and § 103 imposes a third required

element, nonobviousness. §102(e) bars patents on inventions for which a patent application had been filed under §122(b), or for which a patent had been granted prior to the invention at issue. §102(g) bars patents on inventions by previous inventors when the prior invention was not abandoned, suppressed, or concealed.

NOVELTY: §102(a) bars patents on inventions “known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent.”

Novelty is defined by the date of patent application and the absence of prior art. There are three types of third-party prior art: - Invention is known or used in the United States. - Invention was disclosed in patent anywhere in the world. - Invention disclosed was in a publication anywhere in the world (inclusive for a printed article, chapter, magazine, power point presentation, conference abstract, poster, even a record of sell ofan invention for the commercial inquiry). If there are overlaps in applications, the examiner looks for two requirements: Conception - the inventor had elements of invention worked out in her mind; Reduction to practice - the purported inventor had worked out the application

is some way. 29

Novelty v. Nonobviousness (continued)

30

NONOBVIOUSNESS: Under §103(a), no patent will issue if “the subject matter as a whole would

have been obvious at the time the invention was made to a person having ordinary skill in the art.” In other words, if the invention would be obvious to anyone involved in the same area as the inventor, there can be no statutory monopoly granted in the form of a patent.

The § 103 test for nonobviousness requires a four-part factual analysis:

(1) the scope and content of the prior art;

(2) the differences between the claimed invention and the prior art;

(3) the level of ordinary skill in the art; and

(4) objective evidence of non-obviousness, such as commercial success, long-felt but unsolved need, failure of others, copying, and unexpected results.

Nonobviousness: Graham v. John DeereFACTS: The patented invention was a new shock-absorber doo-dad, additive to the

tractors. It was later improved and repatented. Defendant was using similarly improved device on his tractor. At the infringement trial, defendant contended that the patent on improvement was invalid because it failed the test for non- obviousness. The Trial Court found for defendant and the Appellate Court reversed. The Supreme Court reviewed the case.ISSUE: Whether the improved invention was nonobvious enough to be patentable.HOLDING: The invention was obvious as it served the same purpose as that in the

prior art.JUDGMENT: The patent was invalidated.REASONING: Pursuant to the Intellectual Property Clause (Art. I, § 8, Cl. 8) of the U.S.

Constitution, patents are only intended for inventions that are new, useful, and which further human knowledge rather than for small details and obvious improvements. The Court also used the 35 USC §103 factors for determining nonobiousness, also known as Graham Factors: (1) The scope and content of the prior art; (2) The differences between the claimed invention and the prior art; (3) The level of ordinary skill in the prior art; and (4) Secondary considerations (commercial success, long felt but unsolved needs, and failure of others). Thus, Graham's own patent was used as prior art against his new patent.

(32) Graham v. John Deere Co. of Kansas City, 383 US 1 - Supreme Court 1966 3131

Undue ExperimentationWhat is “undue experimentation” and how does it relate to enablement?The test of enablement “is not whether any experimentation is necessary, but whether,

if experimentation is necessary, it is undue.” [33]The following factors determine whether there is sufficient evidence that a disclosure

does not satisfy the enablement requirement and whether any necessary experimentation is undue :

(1) The breadth of the claim; (2) The nature of the invention; (3) The state of the prior art; (4) The level of one of ordinary skill; (5) The level of predictability in the art; (6) The amount of direction provided by the inventor; (7) The existence of working examples; and (8) The quantity of experimentation needed to make or use the invention based on the content of the disclosure. [34]

The determination of the need of “undue experimentation” must be reached by weighing all the above factual considerations. [35] A conclusion of lack of enablement means that, based on the evidence regarding each of the above factors, the specification, at the time the application is filed, “will not have taught one skilled in the art how to make or use the full scope of claimed invention without undue experimentation.” [36]

(33) In re Angstadt, 537 F.2d 498, 504, 190 USPQ 214, 219 (CCPA 1976)(34) MPEP 2164.01(a) Undue Experimentation Factor(35) In re Wands, 858 F.2d at 737, 8 USPQ2d at 1404 (36) In re Wright, 999 F.2d 1557,1562, 27 USPQ2d 1510, 1513 (Fed. Cir. 1993) 32

Third-Party Prior ArtIn order to understand prior art, one must first define invention. Patent Law

identifies an invention for showing both components below: Conception – inventor had innovative elements worked out in his mind. Reduction to practice - the purported inventor had worked out the

application is some way.Prior art (background art) constitutes all information that has been made

available to the public in any form before a given date that might be relevant to a patent's claims of originality. If an invention has been described in the prior art, a patent on that invention is invalid.

A trade secret, for example, is not a prior art as the employees and others with access to the information are under a non-disclosure obligation. With such an obligation, the information is typically not regarded as prior art. In order to succeed on the prior art , the applicant must show that the invention was:

- reduced to the practice (inventor had exercised due diligence in reducing to practice and had not abandon the invention)

- public exposure (invention was in public demand either altruistically [the corsage case] or commercially).

33

Prior Art (continued)Examples:

In Jungersen v. Baden [37], the work of Benvenuto Cellini (an Italian artist of the 16th century) was cited in the judicial opinion as part of prior art, invalidating a patent for the lost-wax casting of jewelry.

In KSR Intern. Co. v. Teleflex Inc.[38], the Engelgau patent (car engines without computer-controlled throttles) was approved based on this concept.

In Schering Corp. v. Geneva Pharmaceuticals [39], an anti-histamine drug, loratadine, was found inherent to the prior art, and the patent application was denied.

(37) Jungersen v. Baden, 69 F. Supp. 922 (S.D.N.Y. 1947)

(38) KSR Intern. Co. v. Teleflex Inc., 127 S. Ct. 1727 - Supreme Court (2007)

(39) Schering Corp. v. Geneva Pharmaceuticals, 339 F. 3d 1373 - Court of Appeals, Federal Circuit (2003)

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Types of Prior-ArtThere are three types of the 3-rd party prior art:

- Invention known or used in the U.S.;

- Invention disclosed in patent anywhere in the world;

- Invention disclosed in a publication anywhere in the world.

The last type (prior publication) concerns to the geographical restriction. There are three reason for this restriction:

1) Discovery failure: It was impossible or troublesome to discover for was invented outside the United States. Rosaire v. Baroid Sales Division [40] falls under this type , where patent was challenged based on use of identical process before the date of invention.

2) Timing: Earlier use sufficient to serve as prior art, even though it was not known by the publication.

3) Secrecy: A “ secret prior art” was locked for discovery.

(40) Rosaire v. Baroid Sales Division; 218 F.2d 72 (5th Circ., 1955)

35

Reason 2: TimingThe date of invention must be earlier of the date of conception and the date of

reduction to practice. The date of application serves as reduction of base. There are two scenarios between two or more inventors.

Scenario 1: One who conceived and reduced to practice (Ficher-Kalla case) [41]. Inventor-2 gets the patent unless Inventor- 1 can show that she exercised due diligence in reducing to practice and did not abandon the invention. It shows that the inventor conceived the idea but could not reduce to practice due to bad luck or test failure. Per statutory bar, it must be one year before the application.

Scenario 2: Public use, which permits the use of invention that takes it outside the control of the inventor ('corsage case'). In City of Elizabeth v. American Nicholson Pavement [42], the Court held that experimental public use will not bar patenting (testing the viability of the invention). In this case, evidence of experimentation was found not in commercial use. Prior art based on invention being on “sale” must be one year before the sale. The Supreme Court identified two requirements for an “invention to be on sale”:

Invention must be subject of commercial offer for sale; Invention must be sufficiently developed to be described in a patent application.

(41) Leapfrog Enterprises, Inc. v. Fisher-Price, Inc., 485 F. 3d 1157 - Court of Appeals, Federal Circuit 2007

(42) City of Elizabeth v. American Nicholson Pavement Co., 97 U.S. 126 (1878)36

Timing: Under the AIA Update In 2014, the America Invents Act (AIA) updated the definition of prior art. The

new definition is broader in some respects, and narrower in others. Since then, practitioners are operating under multiple versions of 35 USC § 102 at least until March 15, 2034.

The pre-AIA patent law included seven separate conditions for patentability under §§ 102(a)-(g). Under AIA §§ 102(a)(1) and (2), these seven conditions have been replaced by two conditions - along with exceptions to each - that dramatically increase the scope of what constitutes prior art.

Under AIA § 102(a)(1), the prior art includes not only prior publications, but any public disclosure, something in public use, on sale, or otherwise available to public anywhere in the world in any language prior to the effective filing date of the claimed invention. The phrase “otherwise available to the public” is a broad “catch-all” provision that expands the definition of prior art beyond the prior use, sale, and publication of the claimed invention.

Under AIA § 102(a)(2), the prior art is limited to the U.S. patents, published U.S. patent applications, and published Patent Cooperation Treaty (PCT) applications designating the United States, which become available as prior art as of the date that they were “effectively filed.” 37

AIA - Definition (continued) Additionally, according to AIA § 102(d), the U.S. patents, published patent

applications, and published PCT applications are “effectively filed” as of a foreign priority date, even if the foreign priority application was in a foreign language. Thus, AIA § 102(d) abolishes the well-established “Hilmer doctrine” [43] (which referred to the situations where the foreign priority date of a U.S. patent could not be used as a prior art date), and expands the scope of prior art that can be applied to applications.

The AIA distinguishes between the terms “Effective Filing Date” (Entitled to Priority) and “Effectively Filed Date” (Entitled to Claim Priority) as they appear in AIA §§ 102(a)(1) and (2).

“Effective filing date” is the actual filing date of the patent or the application for the patent containing a claim to the invention or “the filing date of the earliest application” for which the patent or application is entitled, as to such invention, to a right of [foreign] priority under section 119, 365 (a), or 365 (b) or to the [domestic] benefit of an earlier filing date under section 120, 121, or 365 (c).

“Effectively filed” applies when a U.S. patent, a patent application publication, or a published PCT application designating the United States, whether or not that PCT application ever enters into the U.S. national stage, is being considered as prior art against a claimed invention.

(43) In re Hilmer, 359 F.2d 859, 879 (C.C.P.A. 1966)38

Summary of AIA's New Provision

Date of invention no longer matters, as patent goes to the first inventor to file.

Prior art no longer is restricted by geography (knowledge, public use or sale outside the U.S. do count as prior arts).

One year grace-period for public disclosures prior to filling applies to disclosures by the inventor OR disclosure by third parties made after disclosure by the invention.

Prior art includes printed publication or sale. [44]

(44) AIA §§ 102(a)(1), 102(a)(2), 102(d), 119-121

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Reason 3: Secrecy Are the secret use and sales activities considered as prior art?The AIA goes a long way towards eliminating “secret prior art,” by requiring that

certain disclosures be publically available to qualify as prior art. A prior public use or sale activity may occur anywhere in the world and qualify as prior art under AIA §102(a)(1).

If such public use or sale activity were by the inventor (directly, indirectly), and no more than one year before the effective filing date of the invention, then the public use/sale activity would fall into a prior art exception under AIA §102(b)(1)(a).

Secret use of a process not coupled to public use of a product resulting from the process would not constitute prior art under the AIA because of the public accessibility requirement. Before AIA (2014), in Metalizing Engineering Co. v. Kenyon Bearing & AutoParts Co. [45] the 2n Circuit found that a patent on a process was invalid because, “although the process was kept secret by the inventor, the product of the process had been in commercial use for more than a year before the patent application was filed.” Under AIA law, this scenario could constitute public use for public policy reasons. Yet, the Federal Circuit later held in W.L. Gore & Associates, Inc. v. Garlock, Inc.[46] that “a process kept secret by one inventor will not constitute prior art as to another inventor who subsequently and independently makes the inventive process.” Whether Gore remains applicable under AIA law remains obscure.

(45) 153 F.2d 516 (2d. Cir. 1946); (46) 721 F.2d 1540 (Fed. Cir. 1983) 40

P-H-O-S-I-T-AIn Slide-32 we mentioned about PHOSITA requirement in determination of the

undue experimentation.“PHOSITA” stands for a “person having ordinary skill in the art.”

Pursuant to the MPEP 2141.03, the PHOSITA is:(1) a hypothetical person who is presumed to have known the relevant art at the

time of the invention. Factors that may be considered in determining the level of ordinary skill in the art may include:

(A) type of problems encountered in the art; (B) prior art solutions to those problems; (C) rapidity with which innovations are made; (D) sophistication of the technology; and (E) educational level of active workers in the field. (2) a person of ordinary creativity, not an automaton;(3) a person who is capable to understand scientific and engineering principles.

[38, 46].

(46) Ex parte Hiyamizu, 10 USPQ2d 1393, 1394 (1988)41

PHOSITA's Central Role

The importance of resolving the level of ordinary skill in the arts lies in the necessity of maintaining objectivity in the obviousness inquiry. [47] Nonobviousness complements to novelty, because nonobviousness

looks for differences and novelty looks for similarities. While it's relatively easier for a lay or non-technical person to establish

novelty, it is uneasy, however, for such a person to establish nonobviousness.

In order to count on differences, the person must be at least a PHOSITA to understand parametric properties of the patent application for running a comparative analysis for singularities and undue experimentation.

(47) Ryko Mfg. Co. v. Nu-Star, Inc.,950 F.2d 714, 718, 21 USPQ2d 1053, 1057 (Fed. Cir. 1991)

42

PHOSITA => EnablementEnablement requirement is coded in 35USC §112 (Specification).

Specification (sufficient disclosure) is essential to enablement, because too broad claim causes problems for enablement, and too narrow claim causes problems for the patentee [33].

Enablement may be insufficient when the applicant claims an invention broadly with a dearth of supporting data or examples. This is problematic in unpredictable fields, like chemistry, cosmetics and drugs, because a PHOSITA often needs a specific and detailed teaching in order to practice the full scope of the claimed invention. PHOSITA, who is familiar with the specific field of the patent - would know what dimensions are being referred to, what is taught or motivated, therefore could compare with the prior art to establish non-obviousness.

In Graham v. Deere [33, p. 31] the Supreme Court adopted a three-step approach for the non-obviousness analysis, providing that “the differences between the prior art and the claimed invention have to be gauged from the perspective of a PHOSITA.”

43

PHOSITA => “Teaching Away”The patent is a teaching document. There are situations, like the patent bargain,

requiring to teach the world an invention in exchange for an exclusive right to practice it. Also, a patentee has several arguments s/he can make to counter a finding or allegation of obviousness, or simply to bolster the likelihood a court or examiner will find the claimed invention non-obvious.

In KSR Int'l Co. v. Teleflex, [48] the Supreme Court identified a number of rationales to support a conclusion of obviousness which are consistent with the proper “functional approach” (teaching, suggestion, motivation) to the determination of obviousness as laid down in Graham. [33] The Court noted that the analysis supporting a rejection under 35 U.S.C.§ 103 should be made explicit.

In Ball Aerosol v. Ltd. Brands [49], the Federal Circuit offered additional instruction as to the need for explicit analysis, explaining that the Supreme Court's requirement for an explicit analysis does not require record evidence of an explicit teaching of a motivation to combine in the prior art.

“The analysis that should be made explicit refers not to the teachings in the prior art of a motivation to combine, but to the court's analysis.” [49]

(48) KSR Int'l Co. v. Teleflex Inc.,550 U.S. 398, 415-421, 82 USPQ2d 1385, 1395-97 (2007) (49) Ball Aerosol v. Ltd. Brands, 555 F.3d 984, 89 USPQ2d 1870 (Fed. Cir. 2009)

44

Statutory BarsUnder §102 (b), an inventor would be barred from obtaining a patent if,

more than one year before filling date of his patent application, he or a third party sells, offers for sale, or publicly uses the claimed invention (or an obvious variation thereof) in the U.S., or patents or describes in a printed publication the claimed invention anywhere in the world.

The one-year time-frame for statutory bars is known as the critical date. The one-year period between the triggering event (public use) and the filing date is referred as the grace period.

Statutory bars operate independently of the novelty, and may imply even if an inventor satisfies the novelty requirement. Statutory bars and novelty differ in two important ways:

(1) statutory bars focus on activity of both the inventor and third parties; the critical date for statutory bars is one year before the application was filed;

(2) novelty focuses on activity before the date of invention.

(50) Nard CA (2010). The Law of Patents.Wolters Kluwer.45

On-Sale BarUnder §102 (b), an inventor will be barred from obtaining patent rights if he or a third party

sold or offered for sale the claimed invention more than one year before the patent application is filled. This is known as the “on-sale” bar, limitation on patentability under the Utility doctrine [51, 52].

In Merck & CIE v. Watson Laboratories, Inc. [53], the Federal Circuit found that communications between Merck and a potential joint venture amounted to a commercial offer to sell, and thus invalidated the folate patent at issue.

The patent was on a crystalline calcium salt of 5-methyl-(6S)-tetrahydrofolic acid , a folate component (MTHF) of the combination birth control products sold by Bayer under the trademarks Safyral® and Beyaz®. The patent had a priority date of April 17, 2000, making April 17, 1999 its “critical date” under the pre-AIA version of §102(b). It was as early as 1997 when Merck began “exploring a strategic partnership with Weider Nutrition International, to introduce dietary supplements with Merck ingredients into the United States.”

The Court determined that Merck’s detailed faxmail from Sept. 9, 1998 —providing essential price, delivery, payment terms—contained all the required elements to qualify as a commercial offer for sale.” It reasoned: “Regardless of whether the communications between Merck and Weider in the fall of 1998 were sufficient to establish a binding contract for the sale of MTHF, they confirm that, at a minimum, both parties understood that Martin’s September 9, 1998, fax was an offer to sell the product.” [53]

(51) 35 U.S.C. 102 Conditions for patentability; novelty and loss of right to patent.(52) MPEP 2133.03(b) "On Sale" [R-2- 2100 Patentability](53) Merck & Cie v. Watson Labs., Inc., Nos. 15-2063, -2064 (Fed. Cir. May 13, 2016)

46

Showing Patent Infringement We can't use, make, sell, offer to sell, or import a patent without a permission of the

patent owner. Exclusively, the patent owner may decide to make, use, sell, offer to sell, or import the invention himself and thereby have exclusive ability to commercialize the invention. Through the license, the patent owner can obtain compensation from the third party.

The Prima facie showing of a patent infringement consists of two broad elements:

- Ownership of a valid patent;

- Infringement of the patented invention.

Proving the ownership of a valid patent requires grant of the valid patent by the USPTO. Without grant, there can be no patent infringement lawsuit. Grant gives the patent owner a presumption of validity. The alleged infringer can challenge this presumption by showing that the patent is not valid for not meeting the five validity requirements.

In order to show infringement of the patented invention the patent owner has to show that the alleged infringer made, used, sold, offered to sell, or imported the patented invention as described in the patent claims. [54]

(54) Ghosh et al., Intellectual Property: Private Rights, The Public Interest, and the Regulation of Creative Activity (Thomson West 2nd Ed. 2010) 47

Suits of Utility Patent InfringementsSuits to enforce a patent or to challenge its validity may be brought in any

U.S. District Court with a proper venue. Appeals from the District Courts must be brought to the U.S. Courts of Appeals for the Federal Circuit (since 1982). From there, review may be sought in the U.S. Supreme Court.

Claims that infringing goods are being imported into the United States may be taken to the International Trade Commission (ITC). Appeals from the ITC are also taken to the Federal Circuit, and from there to the Supreme Court.

What constitutes infringement?

Persons may be liable for: (1) directly infringing a patent; (2) inducing another to infringe a patent; (3) contributory infringement; (4) importing, selling, offering to sell, or using a product made through a process protected by a U.S. process patent; or (5) manufacturing or selling certain components of a patented invention to be assembled abroad. [55]

(55) Barret M, Louden RB (2004). Intellectual Property. Emanuel Law Outlines (Aspen)

48

Types of Infringement(1) Direct or literal infringement (§102 [a]) - where the alleged infringer has made,

used, sold, offered to sell, or imported the material component of the patented invention as claimed. The infringement of combination patents constitutes in:

- entering into a contract to sell the patented invention;

- manufacturing all the components;

- subassembling the components;

- testing the operation of various parts in subassembled form;

- delivering the subassembled components to its customer in the U.S. during the patent term.

(2) Contributory infringement (§271 [c]) - where the alleged infringer has facilitated direct infringement by:

- ordering the act of infringement or selling the material to a known infringer;

- providing the tools and resources that enabled infringement;

- materially changing the patented invention through subsequent processes.(3) Indirect or nonliteral infringement (§271 [b], [f], [g]) - where the alleged

infringer has made, used, sold, offered to sell, or imported an invention that is similar to the claimed invention, but not within the literal language of the claim(s). 49

Doctrine of EquivalentsDoctrine of equivalents (DOE) allows the patent owner to claim liability if the alleged

infringer practices an invention that performs "substantially the same function in substantially the same way to obtain substantially the same result.” [56] Put differently, the DOE prevents from avoiding liability through unsubstantial changes that take the device (or process or design) outside the literal language of the patent claims.

In determining equivalence, the DOE [56] analyzes the role played by each element in the context of specific patent claim, to address the inquiry as to whether a substitute element matches the function, way, and result of the claimed element, or whether the substitute plays a role substantially different from the claimed element.

In order to find infringement under this doctrine, it must be determined that the defendant's device (or process or design) contains an element that corresponds (either identically or equivalently) to each elements described in the patent claim(s).

Equivalency is an objective determination made on an element-by-element basis from the perspective of a PHOSITA as of the time of infringement. The inquiry must be framed as:

(1) whether defendant's differing element performs substantially the same function in substantially the same way to obtain the same results as claimed; and

(2) whether the difference amid defendant's and claimed element is “insubstantial.” Judgment must consider: (a) whether persons reasonably skilled in the art would have known

that the differing elements were interchangeable at the time of infringement; (b) whether finding defendant's invention equivalent, and thus infringing, would give the patentee rights that s/he would not have been able to obtain initially through the broader claim language; and (c) how great is the departure of the patentee's invention from the prior art.

(56) USPTO 2186: Relationship to the Doctrine of Equivalents [R-11.2013] 50

Warner-Jenkinson, Inc. v. Hilton Davis Chemical Co. [57]

FACTS: Plaintiff Hilton Davis Chemical, was a dye-making business that had developed an "ultrafiltration" process to purify dyes. An amendment to its patent specified that a solution used in the dye-making process might confer to the pH of 6.0 - 9.0. The amendment was filed in order to clarify that this patent did not overlap with a previously patented process that used a solution with a pH level > 9.0. Defendant had developed a process using a solution with pH of 5.0, which was outside the range of plaintiff's patent.

PROSEDURAL HISTORY: Plaintiff filed for infringement, conceding that defendant's process did not literally infringe, but breached the doctrine of equivalents (DOE). Defendant contended that the DOE was no longer judicially applicable as Congress had made some changes to the patent statute after the Supreme Court's 1950 decision establishing the propriety of using the DOE.

ISSUE: Whether the Patent Act of 1952 overruled the doctrine of equivalents.HOLDING:The DOE had not been eliminated by changes to the patent statute.

Instead, the Court determined that Congress would have explicitly stated that they were eliminating the doctrine if that was their intent. The Supreme Court enunciated a test for amendments, finding that if plaintiff could prove a reason that the amendment was not to limit the patent, then infringement theory would prevail.

(57) Warner-Jenkinson Company, Inc. v. Hilton Davis Chemical Co., 520 U.S. 17 (1997)

Warner-Jenkinson, Inc. (continued)Lessons learned: The troubling aspect of this case was that the patent owner did not initially have a limitation on the pH level of the claims:

Limitations were added during the patent prosecution.Defendant (Warner -Jenkinson) argued that since the patent owner imposed limitations, it could not avoid the consequences by relying on the DOE.This argument is known as "prosecution history estoppel." (see the next slides)The court also recognized that a patent owner cannot recover based on the estoppel on elements that were limited during the patent prosecution;However, these limitations were only lost if they were imposed because of patentability. It did not seem herein, that the lower pH level of 6.0 was imposed because of the prior art. Therefore, the prosecution history estoppel would not apply in this case.Patent owner could use the doctrine of equivalents.

OUTCOME: The case was remanded to the Trial Court to determine if plaintiff could explain his lower pH limit.

52

Doctrine of Prosecution History EstoppelAlso known as the “file wrapper estoppel,” the doctrine of prosecution history estoppel

(DOPHE) requires that the scope of the patent claims be interpreted in light of what happened in the application process at the PTO. If the applicant took a position with regard to the scope of coverage of the claim, s/he will not be allowed in a later infringement action to take an inconsistent position.

For example, plaintiff may not use the DOE to bring an element relinquished in the course of prosecution back within the scope of the patent's protection.

The U.S. Supreme Court has held, that “any narrowing amendment that the applicant made to satisfy any statutory requirement of the 35 USC §102 will give rise to prosecution history estoppel. When the purpose of the amendment is unclear, it shall be presumed to have been made to satisfy a statutory requirement unless the applicant can bear the burden of proving otherwise.” [58]

Grounds for the DOPHE limitations:The patentee may rebut the presumption by showing that:

(1) the equivalent at issue was unforeseeable at the time the narrowing amendment was made;

(2) the rationale underlying the amendment bears no more than a tangential relation to the equivalent in question;

(3) there is some other reason suggesting that the patentee could not reasonably be expected to have described the insubstantial substitute in question in the amended claim language.

(58) Festo Corp. v Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722 (2002)53

DOPHE - continued

The ultimate question is whether, at the time of the amendment, one skilled in the art (PHOSITA) could reasonably be expected to have drafted a claim that would have literally encompassed the alleged equivalent. If so, then the equivalent would be barred.

Additional grounds for limiting the DOE:

The Court of Appeals for a Federal Circuit has held that, “when a patent applicant discloses subject matter in the patent specification (§112), but does not include it in his claim(s), then he dedicates it to the public; as such, he may not rely on the DOE to hold the defendant liable for incorporating that subject matter in the place of the claimed elements.” [59]

(59) Jane DOE, et al., Plaintiffs–Appellants, v. Drummond Company, Inc., et al; United States Court of Appeals, 11th Circuit (2015)

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Reverse Doctrine of Equivalents- Defense is raised by the alleged patent infringer.- An alleged infringer has engaged in literal infringement but has found an

improvement in how to practice the patent literally.- Because of this improvement, the alleged infringer is found not liable for patent

infringement.- If someone can practice the patent in a better and imrpoving way, there is not

infringement.

Scripps Clinic and Research Found. v. Genentech Inc. [60]Defendant (Genentech) was accused of infringing Scripp's patent on purifying blood

clotting factor. Defendant argued that it had improved on Scripp's invention.The Court granted plaintiff's motion for partial summary judgment for both,

infringement of claims and inducement to infringe those claims. Plaintiff's motion for preliminary injunction was denied. Defendant's motions under 35 USC § 271(e) as well for summary judgment of unenforceability were denied. Plaintiff's motion for partial summary judgment on the defense of inequitable conduct was granted.

Lessons learned:The reverse doctrine of equivalents is consistent with the goal of patent law to promote progress in technology and applied science. Some-once, the defense strategy is that some infringement is even allowed for the counter-balancing policy reasons.

(60) Scripps Clinic and Research Found. v. Genentech Inc., 927 F.2d 1565 (Fed . Cir. 1991)55

How is the Reverse Doctrine of Equivalents different from the Doctrine of Equivalents?

The reverse doctrine of equivalents is a way for courts to find that an invention does not actually infringe on a patent, even if it technically does. While the doctrine of equivalents expands the scope of the patent claims, the reverse doctrine of equivalents narrows it so that a new invention does not infringe even if it is substantially similar.

The reverse doctrine of equivalents is used only in cases where the new invention has significantly changed in principle, but still falls under the literal claims of the patented invention.

The courts use the reverse doctrine of equivalents to avoid finding infringement only if it would be very unfair or very detrimental to bar the new inventor from making his invention.

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Design Patent Protection Standard: To qualify for a patent, the design of an article of manufacture must

be novel, non-obvious, and ornamental (35 USC §171).

The legal term “article of manufacture” is construed broadly and includes most tangible, man-made objects.

The design patent protects the article's appearance, not its function.

Duration: Design patent protection commences when the patent is issued and lasts 14 years.

Novelty and Statutory Bars: All provisions of Patent Act §102 apply to design patents.

The Non-obviousness: A PHOSITA makes this determination based on the:

Scope and content of the prior art;

Differences between the prior art and the design at issue;

Level of skill in pertinent art.

The question is whether the applicable prior art suggests making the variation. If so, then the claimed design is obvious [61].

(61) Hupp v. Siroflex of America, Inc., 122 F.3d 1456 (fed. Circ. 1997)

57

Design Patents (continued)The Ornamentality Standard: A design must beprimarily ornamental. For example, the upper portionof an athletic shoe can be designed in a vast variation:in different colors, with different styles of stitches, and yet perform the shoe's basic function effectively. Such design choices are primarily ornamental – not dedicated by function – and thus are protectable under design patents.

Such determination is made with the help of several factors set-forth in Berry Sterling [62]:

(1) existence of alternative designs;(2) whether the protected design represents the best design;(3) whether alternative designs would adversely affect the utility of the special article;(4) whether there are any concomitant utility patents;(5) whether the advertising touts particular features of the design as having specific utility; and (6) whether there are any elements in the design or overall appearance clearly not dictated by function.(62) Berry Sterling Corp. v. Pescor Plastics, Inc., 122 F.3d 1452 (Fed. Circ. 1997) 58

Infringement of Design Patents35 USC § 271 provisions for utility patents also apply to design patents. The

Supreme Court has held in Gorham [63], “If, in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is such as to deceive an observer, inducing him to purchase one supposing it to be the other, the first one patented is infringed by the other.” [63]

Federal Circuit's Additional Requirements: In addition to the Gorham standard, the allegedly infringing design must appropriate the novelty in the patented design (“points of novelty requirement”). Also, where the design is comprised of both functional and ornamental features, the ordinary observed may be deceived by reason of the ornamental (opposed to functional) features (“common ornamental feature requirement”).

The Gorham standard does not apply to the utility patents.

Double Patenting: One article may contain two separate inventions (one conferring to the utility patent standards). It is possible to obtain both utility and design patent in the same article.

Defense and Remedies: Same as for the utility patents. In addition § 289 provides a remedy for design patent infringement that utility patents do not convey. The monetary compensation is the total profit, and not less than $250.

(63) Gorham Manufacturing Co. v. White, 81 U.S. (14 Wall.) 511 (1872) 59

Plant Patent ProtectionStandard: Plant patents are available to persons who discover or invent a distinct

and new variety of plant and asexually reproduce it.

Duration: The plant monopoly lasts for the same term as that for utility patents (up to 20 years).

Novelty and Statutory Bars: 35 USC §102 applies to the plant patents, though a printed publication describing a new variety of plant is fairly unlikely to defeat patentability under §102 (a) or (b). The clue: the description in a printed publication is unlikely to enable others reproduce the plant.

Prior “Art” (existence): To be novel, the new variety of plant must not have existed before in nature. If a “mutation” per se is being patented, it will be seen as novel, if the earlier mutation would have been passed down naturally to subsequent generations. My personal prediction is that decades after, the Global Seed Vault of Svalbard, Norway, will become a role player in this provision.

Distinctiveness standard: The ability of the plant in question to grow in a different type of soil, the different color -shape-size -flavor of the plant.

Infringement: A plant patent gives the owner the right to exclude others from asexually reproducing the patented plant, selling, using, importing a plant (or any of its parts) so reproduced. 60

Plant Patent InfringementIndependent Discovery: Plant patents differ from utility and design patents which

prohibit not just the copies, but independently conceived designs and inventions as well – when they are essentially the same as the patented invention.[64]

Taking Seeds: Growing a plant from seeds taken from the patented plant will not infringe the plant patent. This is sexual, rather than asexual reproduction, which is not prohibited by Patent Act.

Plant Parts: In 1998, Congress amended 35 USC §163 to include the protection of the plant parts (cut flowers, fruit, harvested timber, illegally exported from the USA).

Utility Patents for Plants: Chakrabarty's decision [13] made it apparent that the new varieties of plants are eligible for utility patents – either as articles of manufacture or compositions of matter.

Plant Variety Protection Act: Coded as 7 USC §2321, the Act gives patent-like protection to persons who breed new varieties of plants through use of seeds (sexual reproduction). There is no non-obviousness requirement, though there are statutory bar provisions similar to 35USC §102(b).

(64) Imazio Nursery, Inc. v. Dania Greenhouses, 69 F.3d 1560 (Fed. Circ. 1995).61

Defense StrategiesDefense is designed to protect either party from disposition of liability. It is

raised by the alleged person to state why the other party is liable or to prove a contribution or an inequitable conduct.

Patent Infringement Case + No Defenses = Remedy

If defendant can show that the patent owner engaged in inequitable conduct in obtaining or enforcing the patent, the court will find the patent unenforceable until the inequitable conduct is cured.

There are five common defense strategies in patent infringment cause of actions:

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1) Invaildity

2) Patent misuse

3) Laches

4) Equitable estoppel

5) Term limit.

Strategy 1: Invalidity DefenseA patent is presumed valid. However, to prevail on this strategy, the alleged

infringer must show that: (I) the patent in question did not fully hold one or more out the five requirements

for the subject matter (35 USC §§ 101-103), - Novelty - Nonobviousness - Subject matter - Utility - Enablement, (II) or the invention was not fully disclosed under 35 USC § 112. Estoppel: Under Lear, Inc. v. Adkins [65], patent licenses are not estopped from

challenging the validity of the patent, notwithstanding the fact that their license agreement implicitly acknowledges the patent's validity. The Federal Circuit, however,has held that in such cases the license may be liable for royalties under the licensing agreement up until the time that it asserts its claim that the patent is invalid. Further, the patent owner who subsequently assigns the patent to another, will be estopped from later challenging of the patent's validity.[66]

(65) Lear, Inc. v. Adkins, 395 U.S. 653 (1969)(66) 35 USC § 154 63

Strategy 2: Patent MisuseSome courts [67, 68] have found that enforcing patent rights can constitute misuse.

The patentee may be deemed to have misused his patent if he used it as leverage to obtain more market power than Congress intended to convey through the grant of a patent. This doctrine works somewhat like the DOE of unclean hands. It requires from the licensee to purchase additional items as a condition of licensing the patented technology. Defendant escapes liability for infringement, regardless of whether s/he actually infringed the patent, and regardless of whether s/he himself was injured by plaintiff's or his misuse.

The following activities are examples of patent misuse:

(I) Relationship to Antitrust Law: Use of a patent in a manner that violates the antitrust laws. Yet, the patent misuse doctrine has not been expressly limited to antitrust violations.

(II) Tying Arrangements: Arises when the patentee conditions a license to make, use, sell, or import the patented invention on the licensee's agreement to purchase goods or another license from the patentee. As such, the patentee may have using the market power conveyed by the patent to gain an advantage in a market of goods falling outside the scope of the patent monopoly.

(67) Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28 (2006)(68) Morton Salt Co. v. GS Suppiger Co., 314 US 488 - Supreme Court (1942)

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Misuse (continued)

Patent Act § 271 expressly authorizes some tying arrangements.

Example: The owner has a process patent for killing fungi from the growing crops. The chemical (used for that process) itself is not patented. The patent owner may condition a license to use the patented process or purchase of the chemical from it, refusing to grant a license to persons who buy the chemical from someone else. This tying arrangement will not constitute as patent misuse.

Under 35 USC § 271 (d), however, if the patent owner has a market power, than the tying arrangement will have an anti-competitive effect and should be found as misuse. For example, Tom has a patent for a new type of cigarette lighter. He grants a license to Bob only if the latter buys lighter fluid wholesale from him. Tom will be posed a misuse defense only if he has market power as to his patented lighter.

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Misuse (continued)Tie-in to another license (or “package licensing”): When the owner conditions

license for a second patented invention, it is deemed patent misuse if: (1) the first invention cannot be practiced without infringing the patent on the second invention; (2) the patentee lacks market power for the first patented invention (35 USC § 271 (d)).

Example: Tom has a patent on a new type of electric cigarette. He also owns a patent on a new type of keychain-camera. The “Dupont, Inc.” (a fictitious name) seeks a license to manufacture and sell the electric cigarette, but Tom grants it to the express condition that the “Dupont, Inc.” has also to purchase a license to manufacture and sell the keychain-camera. Tom will be found liable of misuse if he has market power in the electric cigarette market.

Actions that do not constitute patent misuse under § 271 (d): Derive revenue from acts that constitute contributory infringement if performed

by another without the consent of the patentee. License or authorize others to perform acts that, if performed without the

patentee's consent, would constitute contributory infringement. Seek to enforce his rights against infringement or contributory infringement. Refuse to license or use any rights in the patent. (This last exception for misuse

defense may have allowing the patentee to “corner the market” in a non-patented item [69] ).

(69) Dawson Chemical Co. v. Rohm & Haas Co., 448 U.S. 176 (1980) 66

Strategy 3: LachesLaches means an equitable defense, or defense to a claim for an equitable remedy.

Elements of the laches include: - unreasonable delay in filing suit, and - material prejudice to the defendant.(I) Delay of more than 6 years gives rise to rebuttable presumption of laches. It bars

recovery for conduct engaged in prior suit, but it does not bar injunctive relief or recovery for activities conducted subsequent to filing suit.

(II) Prejudice may be evidentiary or economic.1. Evidentiary prejudice – defendant's inability to present adequate defense due to

loss of records, death of witnesses, unreliability of memories of long past events; 2. Economic prejudice - loss of monetary investments or financial damage which

likely would have been prevented by earlier suit [70].In 2015, the Court of Appeals for the Federal Circuit ruled -en banc - in SCA Hygiene

Products [71] that laches remains a viable defense in patent or intellectual property infringement suits, even after the Supreme Court's “Raging Bull” decision ( in Petrella v. Metro-Goldwyn-Mayer, Inc.) which held that “laches does not apply to copyright cases.” [72]

(70) Wanlass v. General Electric Co., 46 U.S.P.Q.2d 1915 (Fed. Cir. 1998)(71) SCA Hygiene Products AB et al. v. First Quality Baby Products LLC (Fed. Circ. 2015)(72) Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 67

Strategy 4: Equitable EstoppelEquitable estoppel, in general, is a bar to a party from asserting a legal claim or

defense that is contrary or inconsistent with his/ her prior action of conduct. In context of the patent law, equitable estoppel belongs to the Doctrine of Equivalents. Its elements include: misleading statements or conduct, action in reliance, and resulting prejudice. Unlike laches (slide 63), equitable estoppel does not involve a six-year presumption.

The inequitable conduct defense, often called as “Fraud on the Patent Office,” is related to the patent misuse. It renders the patent unenforceable when defendant proves, with preponderance of the convincing evidence, that the patentee intentionally made a misrepresentation of withheld material information about the patentability of the invention during patent prosecution.

The Court of Appeals for the Federal Circuit has held in 1st Media v. Electronic Arts [73], that a defendant claiming that a patentee failed to disclose material information must show with clear and convincing evidence a:

(1) prior art or information that is material to patentability;(2) knowledge chargeable to the applicant of that art or information and of its

patentability;(3) failure of the applicant to disclose the art or information resulting from an

intent to mislead the PTO.(73) 1st Media v. Electronic Arts (Fed. Cir. 2012) 68

Strategy 5: Term LimitIn the United States, the limited-time term of patent is 20 years from the earliest

patent application filing date. After the patent term expires, the new technology enters the public domain and is free for anyone to use. This can be used in infringement defense.

This strategy also may include the Exhaustion of the Rights on the Method Patent doctrine.

The Patent Act provides: when a person entitled to the 35 USC §273 defense, sells a product of a patented business method, the sale exhausts the patentee's rights in the product. Thus, the prior user's purchasers have the same rights to resell or repair the product that they would had if they had purchased it from the patentee.

The Drug Price Competition and Patent Term Restoration Act of 1984 [74], informally known as the Hatch-Waxman Act, enables a generic pharmaceutical manufacturer to develop copy of a patented innovator drug without duplicating the clinical and non-clinical studies or risking liability for patent infringement damages. The generic manufacturer must only demonstrate bioequivalence to the innovator. Sec. 505(j)(2)(A)(vii)(IV), known as Paragraph IV, gives the first company to file an Abbreviated New Drug Application (ANDA) for a particular drug 180 days of exclusive rights to market the drug as the generic alternative to the branded drug.

(74) Public Law 98-417 69

RemediesThere are two types of remedies for patent infringement: - Damage repay - Injunction.The patent owner can obtain both.Injunctions are preventive, whereas damage-compensation is retrospective.

Is an injunction relief mandatory or discretionary?The courts have seen the patent injunctions as discretionary, depending on the

policies or effects. In eBay case [75], the concern was whether the injunction can drive products

out of the market and have a negative effect on companies and consumers. It was established by the majority that in determining whether to grant an injunction, judges have to consider four factors:

1) whether the patent owner has suffered irreparable injury;2) whether damages are inadequate to remedy the patent owner;3) whether a balancing of the hardships weigh in favor of the patent owner;4) whether the public interest would be damaged by the injunction.

(75) eBay Inc. v. MercExchange,L.L.C., 547 U.S. 388 (2006) 70

Remedies (continued)Infringement of Method Claims:The law distinguishes between method claims, and product or apparatus

claims. [76]

For infringement of a method claim, the patentee (plaintiff) must prove that the accused party performs each day and every step of the claimed method. [77].The “sale of equipment to perform a process is not a sale of the process within the meaning of §271 (a).” [77, 78]

The courts find no direct infringement by the manufacturer who performed the first step of a process claim even where its customer performer the other step of the claim. In Cross Med. Products [79], the court rejected patentee's efforts to combine the acts of surgeons with those of a medical device manufacturer to find direct infringement of an apparatus claim.

Nevertheless, a party who performs fewer than the claimed steps may be liable for direct infringement if the party exercises “control and discretion.” [80]

(76) NTP Inc. v. Research in Motion Ltd., 418 F.3d 1281, 1317 (Fed. Circ. 2005)(77) Joy Technologies, Inc. v. Flakt, Inc., 6 F.3d 770, 773 (Fed. Circ. 1993)(78) Fromson v. Advance Offset Plate, Inc., 720 F.2d 1565, 1568 (Fed. Circ. 1983)(79) Cross Med. Prods. v. Medtronic Sofamor Danek, 424 F.3d 1311 (Fed. Circ. 2007)(80) BMC Resources, Inc. v. Paymentech L.P., 498 F.3d, 1381 (Fed. Circ. 2007)

Remedies (Injunction)Remedies for infringement through performance of “medical activities”:In 1996, Congress amended Patent Act §287 to prohibit infringement remedies

against medical practitioners and related healthcare entities (HMOs and hospitals) who directly infringe or induce infringement of a patent through performance of a “medical activity.” Remedies are not precluded if the medical practitioner:

(1) makes unauthorized use of a patented machine, manufacture, or composition of matter;

(2) practices a patented use of a composition of matter without authorization;(3) practices a patented biotechnology process without authorization.Therefore, the defense under the §287's exception refers only to the performance of

patented medical or surgical procedures without involving drugs or patented devices, such as the internal cephalic version, manual detachment of placenta, CPR, or Heimlich maneuver. However, this general rule is subject to a caveat.

The caveat: §287 will preclude infringement remedies even though a composition of matter (a drug, commonly) is cited in the patent if the use of it does not directly contribute to the achievement of the objective of the claimed procedure. For example, if administering anesthesia entails a novel anesthetic or dosing schedule, the use of composition of matter (the drug) should be deemed directly to contribute to achievement of the goal (anesthesia), and remedies for infringement should be available against a medical practitioner and related healthcare entities.

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Remedies (Damage repay)

For the defendant, a judicial finding of inequitable conduct is the legal equivalent of a jackpot at the nickel slot machine in a grand casino.

Damages are the alternatives, sought after the court finds that injunction is not appropriate [81].

In Kingstown [82], the Court held that in order to establish inequitable conduct:

- The infringer must show intent to deceive (high standard);

- Mere negligence is not sufficient;

- Reckless or grossly negligent behavior is not enough;

- There must be a conscious purpose to deceive;

- The material misrepresentation must be shown.

(81) Rite-Hite Corp. v. Kelley Co., 56 F. 3d 1538 (Fed. Cir. 1995) (en banc)(82) Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 876 (Fed.

1988)73

Measuring Damages Patent Act §284 directs courts to award prevailing patentees damages “adequate

to compensate for the infringement.” Infringement-damages are calculated on the patentee's lost profits attributable to the infringement or by calculating a reasonable royalty for the defendant's use of the patented invention, but in any event, the patenteee should receive no less than a reasonable royalty, together with interest and costs.

1) The reasonable royalty measure is the default measure of damages, and is appropriate when the lost profits are too speculative to estimate, or the patent owner does not himself sell the invention. The fact of infringement itself is a compensable injury because the infringement violates the patent owner's rights of exclusivity. Considerations of the reasonable royalty amount include:

The amount that other licenses have agreed to pay for comparable licenses;

The royalties paid or methods used to calculate royalties used by other parties in comparable situations;

The patentee's own manufacturing and marketing capacity, and his general willingness to grant licenses in regard to the invention;

The amount of profit or cost saving that the license may obtain from making, selling, using, or importing the patented invention.

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Measuring Damages (continued)2) The lost-profits measure is preferred only when it can be determined,

because it may more fully compensate the plaintiff. It needs demonstration of a reasonably probability that but for the defendant's infringement, the plaintiff would have made the sales that the defendant made. The following factors require a demonstration: Sufficient demand for the patented product; An absence of acceptable non-infringing substitutes; Manufacturing and marketing capacity to fill the demand; The amount of profit the patentee would have made.

Lost profits on units that do not embody the patented invention: In an en-banc decision upon Rite-Hite v. Kelley [83], the Supreme Court held that in addition to recovering lost profits from an infringer on sales of the patented device, the patent owner may recover lost profits on sales of devices that do not incorporate the patented invention if s/he demonstrates: (1) that s/he would have sold the patented device but for the infringement; (2) the lost sales were reasonably foreseeable by the infringing competitor; and (3) the unpatented device directly competes with defendant's infringing product.

(83) Rite-Hite Corp. v. Kelley Co., Inc., 516 U.S. 867 (1995) 75

Measuring Damages (continued)Entire market value rule: Under Patent Act § 284, the patentee may be entitled

to recover lost profits on unpatented components sold with a patented apparatus. This rule applies when patented and unpatented components are together considered as parts of a single assembly, or a functional unit, operating together to achieve one result (for example, a weaving apparatus which consists of a frame, an arm, and a weaving device, and where only the last components is patented).

3) Attorney fees: This falls under § 285, which authorizes the courts to award reasonable attorney fees to the prevailing party in exceptional cases. Courts interpret “exceptional cases” as cases of willful or deliberate infringement by the defendant when the plaintiff is the prevailing party, and bad faith conduct by the patentee in obtaining his patent or in suing for infringement when the alleged infringer is the prevailing party.

4) Double or treble damages: § 284 authorizes the courts to increase the damages awarded to a patentee up to three times the actual damages found or assessed. These enhanced damages may only be awarded upon a showing of willful infringement or bad faith on the part of the defendant.

5) Prejudgment interest: Under § 284, the Supreme Court directs the lower courts to award prevailing plaintiffs prejudgment interest - calculated as of the date of infringement - as a routine matter. 76

The Law of Undeveloped IdeasProtection of the undeveloped ideas is based on the following theories:

(A) Miscellaneous accumulation

(B) The express contract theory

(C) The contract-implied-in-fact theory

(D) The contract-implied-in-law theory

(E) The confidential relationship theory

(F) The property theory.

(A) The law of undeveloped ideas is a miscellaneous accumulation of state common law decisions addressing a claimed right to compensation for a defendant's unauthorized use of the plaintiff's idea. Examples:

An employee discloses an idea for a cost-saving measure to his employer, who implements the idea but refuses to pay the employee for it.

An independent person submits an idea for an advertising slogan to a department store, expecting compensation upon use and popularity, but gets none. 77

The Law of Undeveloped Ideas (continued)(B) Express contracts to pay for an idea are enforceable. But the idea in question

must be “concrete,” and the promise must be supported by a consideration [84].Two problems with this theory: (1) people may be willing to pay for not novel, not

concrete ideas because such are useful to them; and (2) enforcing contracts to pay for ideas does not really remove the ideas from the marketplace, since the only parties affected by enforcement are the immediate parties to the contract.

(C) Court found and enforce contracts based on implied-in-fact theory to pay for the ideas based on the parties' actions and surrounding circumstances showing bilateral intent. To determine whether parties have entered into an implied contractual obligation, the following factors or inter alia are considered: Specific words or actions of the parties; Whether the defendant has paid for similar ideas in the past; Whether the plaintiff customarily has been paid for his ideas; Whether there is an industry custom of paying for such ideas.

(D) A contract-implied-in-law or a “quasi-contract” is not based on the intentions of the parties, but on court's finding of unjust enrichment - that the defendant received a benefit for which equity and justice require him to pay.

(E) When the parties are in a confidential relationship during the flow of the idea based on trust and good faith, some courts can find a right for recovery.

(F) Some courts see the novel, concrete idea as a form of personal property.(84) Masline v. New York, New Haven and Hartford Railroad Co., 95 Conn. 702, 112 A.

639 (1920)

Trade SecretsPatent protection is expensive: it requires time and investment. It takes 3-4 years

from the patent application to a successful grant. Meantime, the applicant remains concerned that her invention may be appropriated by others before the patient would be approved. Therefore, there are laws to protect Trade Secrets.

Before 1974, in the United States, Trade Secrets law was mainly common-law. In 1974, the U.S. Supreme Court issued a landmark decision in Kewanee Oil Co. v. Bicron Corp., allowing the states to develop their own trade secret laws.[85]

In 1979 several U.S. states adopted the Uniform Trade Secrets Act (UTSA) - amended in 1985, with approximately 47 states having adopted it. Also, the Economic Espionage Act (EEA) of 1996 (18 U.S.C. §§ 1831–1839), made the theft or misappropriation of a trade secret a federal crime. The EEA was extended in 2016 to allow companies to file civil suits in federal court.

Misappropriation doctrine: Companies often try to disclose each other's trade secrets through lawful methods (reverse engineering) or unlawful methods, such as breaching of the non-compete covenant by the ex employee in the new job setting (except in state California where the covenants not-to-compete are illegal), or through industrial espionage. If a trade secret is acquired by improper means, then the secret is deemed to have been misappropriated.

(85) Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 94 S.Ct. 1879, 40 L.Ed.2d 315 (1974) 79

Trade Secrets v. PatentsBriefly, the differences between Patent Law and Trade Secret Law

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TRADE SECRET LAW PATENT LAW

Protects patentable inventions AND data not covered by patents such as customer lists, pricing information, undeveloped ideas, and more.

Protects only patentable subject matter (process, machine, manufacture, composition of matter) that shows function or functionality (utility), is novel, non-obvious, and specific.

Invention is kept secret. Invention is disclosed to public once the patent is issued

Protection lasts until patent is issued or while invention is kept secret.

Protection is for limited time only.

Protection only from unauthorized disclosure or use of secret by third parties.

Protection is for limited time only (14- 20 years).

Risk for reverse engineering. Has strong legal foundation to exclude others from use of invention.

Is a state law. Is a federal law.

Trade Secrets v. Patents (continued)Imagine, if Coca-Cola company would patent its invention in 1886 under the

name of John Pemberton. The patient would last for 20 years, and today it would be nullified. By contrast, trade secrets are timeless; they however, carry the risk of reverse engineering.

In some cases, an invention may qualify for both patent and trade secret protection – giving the proprietor of choice. Yet, it's impossible to have both forms of protection simultaneously for the same invention, because most patent applications (including disclosure) are published 18 months after they are filed. Even if not published yet, the invention will be fully disclosed to the public when the patent is granted. Further, secret commercial use of an invention for a certain time prior to filing for a patent may foreclose patent protection under 35 USC §§ 102 (a) or (c).

When such a dilemma exists, which form of protection (patent v. trade secret) is most advantageous?

Several factors are considered: (1) duration of protection; (2) breadth of protection; (3) cost; (4) risk of losing protection, and (5) licensing. The weight of these factors may differ depending on the circumstances and the very goals or needs of the proprietor.

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Antitrust LawAntitrust Law governs anti-competitive conduct by a business or a group of

businesses. Market power is essential to Antitrust Law. A question: since Patent Law allows a company to exclude a competitor from making, selling or offering to sell a product that incorporates an invention, then is the Patent Law consistent with the Antitrust Law?

Antitrust Law makes illegal two types of conducts:

(1) Collusive agreements among competitors; and

(2) Unilateral conduct by a single dominant player that reduces competition in the marketplace.

Collusive agreements are illegal, because the firms suppose to compete with each other. However, in some situations, cooperation among competitors becomes necessary (example, setting industry standards). As a result, some collusive agreements are treated as illegal per se, and other agreements are illegal only if they are unreasonable (pro-competitive benefits).

Unilateral conduct (monopolistic) is illegal, if the firm has market power and acts in a way that predates on consumers, excludes new competitors, or leverages the market power into related markets.

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Antitrust Law (continued)Can patent rights give rise to violations of Antitrust Law, and how?

A patent license might give rise to collusive conduct if the competing owners agree on how to split-up the market.A patent law can give rise to monopolistic conduct, if the patent owner forces a licensee to buy a non-patented product as a condition of licensing the patented one.

Overlapping: Antitrust law enforces polices that are consistent with patent law. Antitrust law is about competition in the market to provide goods to consumers at a competitive price and with desirable quality. Patent law too, is about competition through creation of a new technology (function) that provides better quality to consumers. These two can cross- conflict; still, there is nothing inherently inconsistent between the patent law and antitrust law.

Complementing: Patent law gives the inventor an exclusive right, but this right cannot be exercised in an anti-competitive way. The latter means: (1) unilateral refusal to license a technology; (2) standard setting (where patents on critical technologies are owned by different companies and the firms enter into a cross-license or a patent pool so that the disparate components can be used together to practice the new product; this collusive behavior is not anti-competitive if reasonable); (3) compulsory licensing (antitrust law favors the opposite, i.e. voluntary negotiation); (4) patent litigation (injunctive relief can reduce the anticompetitive effects of patent enforcement); (5) market power (the patent owner's conduct is monopolistic).

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Can a patent owner license his invention on whatever terms he may choose?

The notion of tying arrangement is at the heart of Motion Picture case [86].When the patent owner, Motion Picture Patents Company (MPPC), granted the right and license to manufacture and sell machines embodying a mechanism for feeding film through a projector, it attached a notice to each machine limiting their use by the purchaser or by the sub-lessee to terms not stated in the notice but which were to be fixed after sale at MPPC's discretion. Universal Film Manufacturing Company (defendant) claimed that the owner’s rights to control the materials to be used in operating the machine could not be used and the notice was invalid.

The issue was whether the exclusive right granted in every patent must be limited to the filed invention and it is not competent for the owner to extend the scope of its patent monopoly by restricting the use of it to materials necessary in its operation that are not part of the patented invention.

The Court held that this condition expanded the scope of the patent owner's rights beyond the patent at issue. Therefore, it was impermissible and rendered the patent unenforceable under the doctrine of patent misuse. From the antitrust perspective, a tying arrangement is anti-competitive if there is market power in the tying product (the movie projector) and the arrangement has a tendency to have anticompetitive effects in the market for the tied product (the film).

(86) Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502 (1917) 84

International Patent Treaties to which the United States Adheres

A) The Paris Convention: Signed into law in 1883, and having over 125 adherents (including the USA), Paris Convention is administered by the World Intellectual Property Organization (WIPO). The members are free to determine the nature and extent of substantive patent protection they will provide for inventions, as long as they provide uniformly to domestic and foreign applicants.

B) The Patent Cooperation Treaty (PCT): Since 1978, the PCT has 100 members , including the USA. It is too, administered by the WIPO.

C) The Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPs) is administered by the World Trade Organization (WTO), and incorporates the principles of Paris Convention.

D) The Patent Law Treaty (PLT) is administered by the WIPO, and eliminates some unduly complex and expensive formalities imposed on the patent applicants.

E) Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure: Entered entered into force in 1980, and administered by the WIPO, it allows deposits of microorganisms at an international depository authority to be recognized for the purposes of patent procedure.

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Biotechnology Patent OversightCoded as Pub. L. 96-517, Bayh-Dole Act (or Patent and Trademark Law of 1980)

is a legislation dealing with intellectual property arising from federal government-funded research.

Together with Stevenson-Wydler Act (or Technology Innovation Act of 1979), these laws regulate the flow of the funds (or transfer) to research institutions and protection of the innovative-outcome patents. Formerly, if the government funded the research that led to invention, the government owned the invention. The authority belonged to the U.S. Patent and Trademark Office, at Department of Commerce.

The Necessity of the Acts: In 1978, the U.S. Government had amassed over 28,000 patents, but less that the 5% of those were commercially viable. Only the 4% of patents funded by government were actually used in any fashion. In addition, medical and healthcare inventions that could have been very beneficial, were stalled or stymied by poor development efforts.

Bayh-Dole Act secures mechanism for issuing patent title to federally-funded academic institutions. Stevensen-Wydler Act secures mechanism to foster cooperative efforts between the federal government laboratories and private entities.

March-in Rights: In some circumstances, the federal government may issue "March-in" rights, under which it may: (1) assert legal title to an invention; (2) stall the invention where there is no need or effort to commercialize it within a designated time-frame; (3) impede an invention for public health and safety reasons. 86

Essay: This essay conveys a complex scenario, involving patent , conversion, healthcare compliance, and informed consent related issues.

State California: The year is 2009. Dr. Rosewell, an obstetrician-gynecologist, performs a bilateral salpingectomy (removing ovaries and tubes of both sides) on a 41-year old patient with ovarian teratoma dextra.

Also known as dermoid cyst, ovarian teratoma is mostly a benign tumor and contains a diversity of tissues including hair, teeth, bone, thyroid, eyes, torso, hands, feet, limbs, and all types of ectoderm remnants. Teratomas belong to the class of non-seminomatous germ cell tumors (N.S.G.C.T.).

All tumors of this class result from the abnormal development of pluripotent cells: germ cells and embryonal cells. Embryonic-cell teratomas are congenital and occur on the midline projection in brain, nose, tongue, neck (cervical), mediastinum, retroperitoneum, or attached to the coccyx. Germ-cell teratomas may also be acquired and occur in the testes (in men) and the ovaries (in women).

A mature teratoma is a Grade-zero teratoma. It may contain abundant hair, muscles, bones, or teeth. Fetus in fetu (parasitic twin) is a rare form of mature teratoma and

87

Essay (continued)includes parts resembling a malformed fetus. A struma ovarii is a rare form of mature teratoma that contains thyroid tissue. The Grade-1 immature teratoma is still benign, but the teratoma with malignant transformation (TMT) is a rare form that contains elements of somatic (non germ cell) malignant tumors, such as leukemia, carcinoma, glioma, or sarcoma.

Preliminary diagnoses is based on the findings of ultrasound, Sestabimi, MRI and other imaging techniques; however, the final determination of the tumor, its subtypes and grades, is ultimately based on histology. Hence, nothing can be properly determined about this tumor unless its surgical removal and histochemical exams are performed.

Prior the surgical procedure Ms. Moore (the patient and plaintiff) signed an informed consent form where the surgical indications, anesthesia method, presurgical order, surgery and post-surgical risk and complications were meticulously described. Yet, the form contained no word about the possibility of utilizing tissues removed from Ms. Moore's body for further research at Rosewell's laboratory.

Research activities were not intended to have any relation to Ms. Moore's medical care or recovery. Dr. Rosewell and regents did not inform Ms. Moore, not even verbally, of their plans to conduct a research on the tissues contained in her mature teratoma. 88

Essay (continued)Having the final determination of struma

ovarii, the rarest form of mature teratoma, Rosewell et al commenced to an extremely profitable research from the thyroid cells extracted from the patient's ovary.

During a 6-month period following surgery, Ms. Moore was assigned “follow-up” visits to Rosewell's laboratory for a blood-work. Moore was asserted by Rosewell et al that “such visits were necessary for her health and recovery.” On each of these visits Moore withdrew additional samples of blood, remaining unaware that her serum samples where used in a synthetic biology experiment intended to utilize the thyroid

89

tissue extracted from Moore's removed ovarian tumor to create an entire thyroid gland through a method called organ harvesting, because the traditional organ harvesting approach that utilizes regular thyroid tissue of adult, would cost about $10-30 million per organ.

Specifically, by conducting research on Moore's cells Dr. Rosewell planned to benefit commercially, by exploiting the patient's cells by virtue of the ongoing physician-patient relationship.

Essay (continued)Ten months after, Rosewell et al applied for a patent at the USPTO on the cell line

and bio-scaffold model, listing Rosewell and two other regents as inventors. By the virtue of the established policy, the doctors would share any royalties or profits arising from the patent.

Dr. Rosewell also negotiated agreements for commercial development of the cell line and scaffold production with Synthetic Biology and Genetics Institute (SBGI). Under an agreement with the SBGI, Dr. Rosewell became a paid consultant and acquired the rights to 85,000 shares of common stock. The SGBI also agreed to pay Rosewell et al $12,500,000.00 over two years, including a pro-rata share of Rosewell's salary and fringe benefits, in exchange for exclusive access to the materials and research performed on the cell line, scaffold and all other products derived from it.

Ms. Moore became aware of the ongoing research and its evident success from Dr. Rosewell's published article in a scientific journal. She immediately consulted an attorney who then served Dr. Rosewell a concern-letter demanding to cease utilizing or sharing Ms. Moore's cells within or outside Rosewell laboratory.

Having no response from Dr. Rosewell for the following five months, Ms. Moore (plaintiff) brought a lawsuit before the CA Superior Court against Dr. Rosewell and regents (defendant). Plaintiff alleged that defendants have been

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Essay (continued)using her teratoma cells in potentially lucrative medical research without her permission, that her physician failed to disclose preexisting research and economic interests in the cells before obtaining consent to the medical procedures by which they were extracted. The California Superior Court sustained all defendants' demurrers to the complaints. Reviewing the demurrers, the Court of Appeals reversed.

Plaintiff then filed a multi-cause action to the Supreme Court on three counts: (1) Breach of fiduciary duty and physician's disclosure obligations; (2) Conversion. (3) Patent fraud (inequitable conduct).

Analyze and predict the outcomes of this dispute covering the following issues:I) Whether defendants' failure to disclose the extent of research and economic

interests in plaintiff's cells before obtaining consent to medical procedures amounted battery and invasion of plaintiff's legally protected interest?

II) Whether using cells extracted from plaintiff's surgically removed organ amounted an interference with ownership interests in personal property (i.e. conversion)?

III) Should the conversion liability be extended?IV) Was the extracted cell culture patentable under the utility (matter, medium,

method) jurisdiction?Compare and contrast your responses with the answers provided in the next slides.91

Essay Answer

Scenario: Moore v. Rosewell et al

I) Breach of fiduciary duty and disclosure:

Plaintiff (Ms. Moore) alleges that prior signing a consent for medical procedures by which selective cells were extracted from her body, she wasn't informed about defendants' (Dr.Rosewell et al) commercial interest and intent of further scientific experiments on her cells. The Supreme Court is likely to view these allegations as a a cause of action against Dr. Rosewell for invading a legally protected interest of his patient. This action will have two components: (1) breach of a fiduciary duty to disclose facts material to the patient's consent, and (2) performance of medical procedures without first having obtained the patient's informed consent.

The Court will rely on an established principle, “a person of adult years and in sound mind has the right - in the exercise of control over his own body - to determine whether or not to submit to lawful medical treatment.” [87, 88] Further, "the patient's consent to treatment, to be effective, must be an informed consent.” [87]

(87) Cobbs v. Grant, 8 Cal.3d 229, 242 (1972)(88) Schloendorff v. New York Hospital, 211 N.Y. 125 (1914)

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Essay Answer (Disclosure)Next,in soliciting the patient's consent, a physician has a fiduciary duty to disclose

all information material to the patient's decision. [89-91]

Accordingly, the principles outlined above will lead to the following conclusions:

(1) a physician must disclose personal interests unrelated to the patient's health, whether research or economic, that may affect the physician's professional judgment; and

(2) a physician's failure to disclose such interests may give rise to a cause of action for performing medical procedures without informed consent or breach of fiduciary duty.

The Court will likely hold defendants liable on this established cause of action.

(89) Nelsonv v. Gaunt, 125 Cal. App.3d 623, 635 (1981)

(90) Berkey v. Anderson, 1 Cal. App.3d 790, 805 (1969)

(91) Bowman v. McPheeters, 77 Cal. App.2d 795, 800 (1947)

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Essay Answer (Conversion)II) Conversion:

Ms. Moore characterizes the “invasion” of her rights as a conversion — an intentional tort that evolves to protect against interference with ownership interests in personal property. She reasons that she continued to own her cells following their removal from her body - at least for the purpose of directing their use, and that she never consented to their further use in potentially lucrative medical research. Thus, defendants' unauthorized use of her cells constitutes a conversion.

As a result, Moore claims a proprietary interest in each of the products that any of the defendants might ever create from her cells or the patented cell line. However, to impose such a duty would affect medical research of importance to all of society, and would implicate policy concerns far removed from the traditional, two-party ownership disputes in which the law of conversion arises [92] . Invoking a tort theory originally used to determine whether “the loser or the finder of a horse had the better title,” Moore instead claims ownership of the results of socially important medical research, including the genetic code for chemicals that regulate the immune system.

The Court is unlikely to support that the tort of conversion clearly gives Ms. Moore a cause of action under existing laws.

(92) Nally v. Grace Community Church, 763 P. 2d 948 - Cal: Supreme Court (1988) 94

Essay Answer (Conversion)Should the conversion liability be extended?There are three reasons why the Court will refuse to impose liability for conversion

based upon the allegations of Moore's complaint:(1) A fair balancing of the relevant policy considerations counsels against extending

the tort. (2) Problems in this area are better suited to legislative resolution. (3) The tort of conversion is not necessary to protect patients' rights. For such reasons, the Court will probably conclude that the use of excised human

cells in medical research does not amount to a conversion.Reasoning: It is crucial to reach a balance between the patient's autonomy rights

and Congressional rights of promoting efficient researchers. By either sense, the threat of liability for conversion might help to enforce patients' rights indirectly. Since conversion is a strict liability tort, it would impose liability on all those involved in some degree of the cell processing, whether or not the particular defendant knew about the inadequate disclosures that violated the patient's autonomy right (see 93]. In contrast to the conversion theory, the fiduciary-duty and informed-consent theories protect the patient directly, without punishing innocent parties or creating disincentives to the conduct of socially beneficial research. The Court will probably conclude on this count, that the extension of conversion law into this area will hinder research by restricting access to necessary raw materials that unarguably benefit the mankind.

(93) Moore v. Regents of University of California, 793 P. 2d 479 - Cal: Supreme Court (1990) 95

Essay Answer (Patent)

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III) Patent Fraud ( Inequitable Conduct):

1) Plaintiff asserts that defendants' actions constitute “inequitable conduct” or violation of duty of disclosure, thus rendering the future claims of any patent as invalid under MPEP R-08.2012 and under common-law [94]. She notes, that once this Court concludes that inequitable conduct occurred, all patent claims (not just the one in which the inequitable conduct was directly connected) are unenforceable [95].

In a seminal case - Diamond v. Chakrabarty [13], the U.S. Supreme Court was asked to resolve whether “genetically modified organisms could be patented”? Therein, the process/media/matter claims where tried under the 35USC § 101 (Utility),§112 (Specification), and 7 USC 2402(a) (Plant varieties). Pursuant to §101 (Inventions Patentable), the patent examiner had allowed the claim falling into the first two categories (process and media), but had rejected the claim for the bacteria (matter) on two grounds: (1) micro-organisms are "products of nature," and (2) as living things they are not patentable subject matter under §101.(continued)

(94) J. P. Stevens & Co. v. Lex Tex Ltd., 747 F.2d 1553, 1561, 223 USPQ 1089, 1093-94 (Fed. Cir. 1984)

(95) In re Clark 522 F.2d 623, 626, 187 USPQ 209, 212 (CCPA).

Essay Answer (Patent)

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The Court of Customs & Patent Appeals reversed, holding that Chakrabarty's micro-organisms constituted a "manufacture" or "composition of matter." The Court reasoned that although the bacteria were classified under the Plant Patent type which was barred under 28 USC § 2181, it was not necessary to leave the resolution of this claim to Congress to modify the patent specificity clause (35 USC § 112).

The Supreme Court held: “Congress is free to amend 35 USC § 101 so as to exclude from patent protection organisms produced by genetic engineering, exempting from patent protection inventions useful solely in the utilization of special nuclear material or atomic energy in an atomic weapon.”[13]

Yet, in the current case, Moore v. Rosewell et al, the ownership theory remains problematic as California's law drastically limits a patient's control over excised cells. Pursuant to California's Health & Safety Code, "notwithstanding any other provision of law, recognizable anatomical parts, human tissues, anatomical human remains, or infectious waste following conclusion of scientific use shall be disposed of by interment, incineration, or any other method determined by the state department of health services to protect the public health and safety” [96, 97].

(96) California Health & Safety Code, §§ 7001, 7054.4(97) Moore v. Regents of University of California, 793 P.2d 479 - Cal: Supreme Court

(1990)

Essay Answer (Patent)Thus, the Legislature does not specifically intend this statute to resolve the

question of whether a patient is entitled to compensation for the non-consensual use of excised cells. A primary object of the statute is to ensure the safe handling of potentially hazardous biological waste materials.

Further, the subject matter (the thyroid cell line obtained from the removed teratoma and the filled scaffold) can no longer be Moore's property, because the patented cell line is factually and legally distinct from the cells taken from Moore's teratoma.

Federal law permits the patenting of organisms that represent the product of "human ingenuity," but not naturally occurring organisms (see Chakrabarty, 1980). [13]

Although in Chakrabarty [13] the scientist prevailed on three claims (process, media, matter) because the bacteria (despite of being the product of nature) where genetically modified, Moore cannot rely on Chakrabarty, as the ovarian teratoma is an embryonic tumor. Even if it were not, it still was grown and differentiated in vivo, without an “inventor's intervention.”

In summary, the Supreme Court is likely to (1) overrule demurrers for breach of fiduciary duty and lack of informed consent; (2) sustain - with leave to amend - defendants' demurrers for conversion and on extension of conversion liability.

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ClosingSo: what was Archimedes claiming in slide-3?

Let's begin with the story: Hiero -the tyrant hired the polymath Archimedes to detect fraud in the manufacture of a golden crown. Hiero suspectedhis goldsmith of lifting some measure of gold and replacing it with silver in a wreath dedicated to the Gods. Archimedes accepted the challenge. Per his subsequent trip to the public baths, he realized that the more his body sunk into the water, the more

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water was displaced--making the displaced liquid an exact measure of his volume. Because gold is denser than silver, he reasoned that a crown mixed with silver would have to be bulkier to reach the same weight as one composed only of gold; therefore it would displace more water than its pure gold counterpart. Realizing he had hit upon a solution, the math-whiz leaped out of the bath and rushed home naked, crying Eureka! ( "I've got it! “). The next slide determines the law governing and protecting Archimedes' Eureka - a method of measuring the volume of an irregularly-shaped objects.

“Eureka” as an Intellectual Property

Patent

Copyright

Trademark

Trade Secret

Disclosure of

a method

Eureka referred to a law of Nature. Therefore, 35 USC does not apply.

Eureka referred to a physics (hydrodynamics) theory: 35 USC does not apply. It wasn't an expressive work. It was a discovery of a principle: thus, 17 USC does not apply.

Eureka did not show functionality of a business, good, or service and it was irrelevant to the commerce (the crown was meant to be a gift to Gods). Therefore, 15 USC does not apply.

Eureka wasn't an undeveloped idea. Hence, the Uniform Trade Secrets Act doesn't apply. Archimedes wasn't Hiero's employee. He was a contractor. The parties had confidential relationships; however, it was neither an express nor an implied-in-fact contract, as their bound wasn't stemmed on consideration. Archimedes had no intentions to keep the discovery in secret. There was no risk of reverse engineering. Thus, the Misappropriation Doctrine does not apply.

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