Federal Circuit Review - March 2019

| Irfan LateefDaniel Kiang

Federal Circuit Determines Time-Barred Petitioner Joined to an IPR Has Appellate Standing

In Mylan Pharmaceuticals Inc. v. Research Corporation Tech., Appeal Nos. 2017-2088, -2089, -2091, the Federal Circuit held that a party joined to an inter partes review has the right to appeal the Board’s final written decision even if the initial petitioner does not appeal.

Research Corp. Technologies (“RCT”) sued Mylan Pharmaceuticals, Breckenridge Pharmaceuticals, and Alembic Pharmaceuticals (collectively, “Appellants”) for patent infringement in 2013.  In 2015, another entity, Argentum Pharmaceuticals, petitioned for inter partes review of RCT’s patent.  The Board instituted Argentum’s petition on two of the eight petitioned grounds.  Three days after institution, Appellants each filed their own petitions for IPR with concurrent motions for joinder, which is permitted because Section 315(b) states that the one year time bar for IPRs does not apply to requests for joinder.  The Board instituted Appellants’ petitions and joined each proceeding with the Argentum proceeding.  The Board concluded that none of the challenged claims had been shown to be unpatentable.  Appellants appealed, but Argentum did not.  The Federal Circuit affirmed the Board’s decision.

RCT challenged whether Appellants had
standing to appeal.  The Federal Circuit looked to the plain text of Section 315(c), which provides that the Board may join as a party any person who properly files a petition.  Next, the Court looked to Section 319, which provides that “[a]ny party to the inter partes review shall have the right to be a party to the appeal.”   Thus, the Board had discretion to join Appellants as parties.  Once they were joined as parties, they had a statutory right to appeal under 35 U.S.C. § 319.

Additionally, during the rebuttal phase of oral argument, Appellants requested that the court remand in view of the Supreme Court’s decision in SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018).  Even though briefing was complete before SAS issued, the Federal Circuit held that Appellants had waived the issue by waiting six months and presenting it in the rebuttal phase of oral argument.  



 Federal Circuit Declines to Consider En Banc Whether Venue Can Be Established by Servers in Third-Party Facilities

In In Re: Google LLC, Appeal No. 2018-152, the Federal Circuit elected not to review en banc the issue of whether servers or similar equipment in third-party facilities constitute a regular and established place of business for purposes of determining whether venue is proper under 28 U.S.C. § 1400(b).  

SEVEN Networks, LLC sued Google for patent infringement in the Eastern District of Texas.  The district court denied Google’s motion to dismiss for improper venue.  SEVEN alleged that venue was proper because Google committed acts of infringement in the district, and that Google’s servers, stored in a third-party ISP’s facility, constituted a regular and established place of business.  Google petitioned the Federal Circuit for a writ of mandamus directing the district court to dismiss or transfer the case for improper venue.  In an unpublished decision, the Federal Circuit found mandamus inappropriate because “it is not known if the district court's ruling involves the kind of broad and fundamental legal questions relevant to § 1400(b)," and "it would be appropriate to allow the issue to percolate in the district courts so as to more clearly define the importance, scope, and nature of the issue for us to review."  Google unsuccessfully petitioned for a rehearing en banc.

In dissenting from the denial of rehearing, Judge Reyna asserted that mandamus review is part of an appellate court’s “bedrock supervisory duty,” which includes a duty to further the goals of uniformity and predictability – “the cornerstones of a well-functioning patent system.”  The dissent analogized this case to In re Cray Inc., 871 F.3d 1355 (Fed. Cir. 2017), where the Federal Circuit granted mandamus to ensure § 1400(b) was not given an expansive construction after TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017).  The dissent also pointed to other district court decisions which evidenced growing uncertainty and disagreement among the district court judges as to whether conducting business virtually through servers and similar equipment satisfied the requirements for venue under § 1400(b).  The dissent cautioned that the district court’s holding could potentially reestablish nationwide venue for many companies that own and control computer hardware nationwide.  Thus, the dissent viewed it as more prudent to answer this venue question now, rather than wait and allow dozens of cases to proceed through motion practice, discovery, claim construction, or even trial before potentially being thrown out by a reversal of a ruling on a motion to dismiss for improper venue.



 Federal Circuit Affirms Dismissal, Finds Diagnostic Claims Are Not Patent-Eligible Under § 101

In Athena Diagnostics, Inc. v. Mayo Collaborative Services, Appeal No. 2017-2508, the Federal Circuit ruled that claims reciting only conventional steps to detect a natural law are patent-ineligible under § 101. 

Athena Diagnostics (“Athena”) sued Mayo Collaborative Services (“Mayo”) for infringing a patent related to methods for diagnosing neurological disorders by detecting antibodies to MuSK, a membrane protein.  The inventors of the patent discovered the association between MuSK antibodies and neurological disorders, and the asserted claims recited steps to detect the antibodies to MuSK.  Mayo moved to dismiss, arguing that the asserted claims of the patent are invalid under § 101.  The district court granted Mayo’s motion, concluding that the claims were invalid under § 101 for claiming ineligible subject matter.  

The Federal Circuit affirmed. The Federal Circuit followed the two-part test set forth by the Supreme Court.  First, the Federal Circuit held that the claims were directed to a law of nature, which is the correlation between the presence of naturally-occurring MuSK autoantibodies in bodily fluid and MuSK-related neurological diseases.  The Federal Circuit stated that the claimed advance was only in the discovery of a natural law and that the additional recited steps only apply conventional techniques to detect that natural-law correlation.  The Federal Circuit also pointed out that the specification of the patent described the claimed steps for observing the natural law as conventional.  For the second step, the Federal Circuit held that the claims did not provide an inventive concept sufficient to transform an unpatentable law of nature into a patent-eligible application of the law.  The Federal Circuit stated that the steps of the claims not drawn to the law of nature only required standard techniques to be applied in a standard way, as described in the specification.  Thus, the Federal Circuit held that the district court correctly concluded that the claims at issue were directed to a natural law and lacked an inventive concept.  

Judge Newman dissented, writing that the decision improperly “enlarge[s] the inconsistencies and exacerbate[s] the judge-made disincentives to development of new diagnostic methods.”  Judge Newman stated that eligibility should be determined for the claim considered as a whole, and considered as a whole, the claims were directed to new multi-step methods of diagnosing a neurological disorder, not a law of nature.   



 A State Entity Waives Sovereign Immunity Against Counterclaims and Defenses to Patent Infringement by Filing a Patent Infringement Suit

In University of Florida Research Foundation, Inc. v. General Electric Co. et al., Appeal No. 2018-1284, the Federal Circuit held that when Plaintiff, a state entity, sued for patent infringement, it waived sovereign immunity as to all defenses, including subject-matter eligibility under Section 101.

The University of Florida Research Foundation (“UFRF”) sued General Electric (“GE”) for patent infringement.  GE asserted the claims were directed towards ineligible subject matter under Section 101.  UFRF argued that it had not waived sovereign immunity and that the claims were patent eligible under Section 101.  The district court ruled for GE on both issues.  UFRF appealed to the Federal Circuit.

The Federal Circuit held that suing for patent infringement waived sovereign immunity for all relevant defenses and counterclaims.  The only issue was whether a Section 101 challenge is a defense to patent infringement.  UFRF argued that Section 282(b) sets forth all defenses to patent infringement and does not include a Section 101 challenge.  The Federal Circuit has previously held otherwise, but UFRF argued that the Supreme Court’s holding in SCA Hygiene effectively overruled those cases.  The Federal Circuit disagreed because SCA Hygiene concerned laches and did not affect a Section 101 defense.  Regardless, both the Federal Circuit and the Supreme Court have long treated Section 101 challenges as a defense to patent infringement.  Thus, UFRF waived sovereign immunity as to the Section 101 challenge by suing for patent infringement.

On the merits, the Federal Circuit determined that the claims were directed to an abstract idea of “collecting, analyzing, manipulating, and displaying data.”  The court characterized the patent as “a quintessential ‘do it on a computer’ patent” that acknowledged each of the claimed steps had previously been performed manually.  The court also determined the claims did no more than “simply instruct the practitioner to implement the abstract idea . . . on a generic computer.”  Thus, the Federal Circuit held the claims ineligible under Section 101.