Federal Circuit Review - July 2019
Metadata could help independently corroborate inventor testimony of prior conception
In Kolcraft Enterprises, Inc. v. Graco Children’s Products, Inc., Appeal Nos. 2018-1259, 2018-1260, inventor testimony of prior conception must be independently corroborated.
Kolcraft owns two design patents directed to children’s play equipment. Graco petitioned for inter partes review challenging both patents on several grounds, including obviousness based on a design patent. Following institution, Kolcraft filed a Patent Owner Response that included a partially redacted inventor declaration and exhibits. Seeking to establish prior conception, Kolcraft argued that at least one exhibit showed the relevant features. But neither the declaration nor the exhibits included specific dates of conception. Subsequently, Kolcraft provided Graco with an unredacted declaration that included the alleged conception dates. During depositions, one inventor testified that the dates in the declaration were based on metadata from the computer files associated with the declaration exhibits. Kolcraft did not submit the computer files to the Board and they were not part of the administrative record. The Board determined the inventor testimony of prior invention was not corroborated and that Graco’s obviousness reference was prior art.
The Federal Circuit affirmed. It held that inventor testimony of prior conception was not sufficiently corroborated because all supporting evidence depended solely on the inventors.
Federal Circuit Denies En Banc Review Regarding Eligibility of Medical Diagnostic Patents
In Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC, Appeal No. 2017-2508, the Federal Circuit voted 7-5 not to review en banc the issue of whether diagnostic claims are eligible for patent protection under § 101. The Federal Circuit’s denial of en banc review included eight different opinions, all of which indicate that the Supreme Court and/or Congress should intervene to clarify or modify the patent eligibility standards for medical diagnostic claims. Each of these opinions is summarized below:
Concurring Opinions
Lourie (Joined by Reyna and Chen)
While expressing concerns with the current precedent, Judge Lourie concurred in the court’s decision not to rehear the case en banc because the Federal Circuit is bound by the Supreme Court’s decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc. (“Mayo”), which held that claims focused on detecting new and useful natural laws with conventional steps were patent ineligible. Judge Lourie suggested only claims directed to a natural law itself, not uses or detection of natural laws, should be excluded from patent eligibility.
Hughes (Joined by Prost and Taranto)
Judge Hughes indicated that Mayo prevents the Federal Circuit from reaching a different result from the panel’s majority, but describes the “bottom line for diagnostics patents” as “problematic” and invited the Supreme Court or Congress to further explicate the eligibility standards for diagnostics patents.
Dyk (Joined by Hughes, Joined in Part by Chen)
Judge Dyk stated that “[a]lthough Mayo’s framework is sound overall. . . the Mayo test for patent eligibility should leave room for sufficiently specific diagnostic patents” and called on the Supreme Court to reconsider the breadth of Mayo.
Chen
Judge Chen stated that the claims at issue do not appear to withstand Mayo’s scrutiny but would likely have been found patent eligible under the framework outlined by the Supreme Court in 1981 in Diamond v. Diehr (“Diehr”), where the claims are read “as a whole.” Judge Chen noted, however, that there is a serious question as to whether Diehr remains good law in view of Mayo, and encouraged the Supreme Court to resolve the question.
Dissenting Opinions
Moore (Joined by O’Malley, Wallach, and Stoll)
Judge Moore found that the claims at issue are distinguishable from Mayo and should be held eligible. Judge Moore noted that unlike in Mayo, where the claims recited nothing more than the natural law, the claims at issue here recite concrete steps that “specifically confine their reach to a specific application[.] “ Judge Moore discouraged additional en banc requests regarding diagnostic claims and encouraged parties to seek relief from the Supreme Court or Congress.
Newman (Joined by Wallach)
Judge Newman emphasized “the critical role of the patent system in achieving new diagnostic methods” and stated that “en banc review is needed to provide consistent and correct application of statute and precedent to methods of medical diagnosis.”
Stoll (Joined by Wallach)
Judge Stoll noted that every diagnostic claim before the Federal Circuit since Mayo has been found ineligible. According to Judge Stoll, Mayo’s principles “are not applicable to every individual diagnostic claim.” “Certain diagnostic claims, such as the ones at issue in this case, are so narrowly tailored that preemption is not a reasonable concern.” Judge Stoll wrote that the Federal Circuit was abdicating its responsibility by “consistently bypassing en banc review of a critical issue[.]”
O’Malley
Judge O’Malley stated that Federal Circuit precedent applies the Supreme Court’s holding in Mayo too broadly. Judge O’Malley further suggested that confusion regarding patent eligibility has been caused by the Supreme Court ignoring Congress’s direction to apply § 101 as written, and stated that “claims directed to uses of natural laws rather than the natural laws themselves would be eligible under § 101[.]” Judge O’Malley encouraged Congress to clarify that there should be no invention requirement read into § 101.
Standing to Appeal IPR Denied Where Petitioner Failed to Provide Evidence of Competitive Harm and Economic Loss
In General Electric Co. v. United Technologies Corp., Appeal No. 2017-2497, a petitioner who loses an IPR must proffer specific evidence of competitive injury or economic loss to establish Article III standing to appeal to the Federal Circuit.
General Electric (“GE”) petitioned for inter partes review (“IPR”) of a patent on geared-fan airplane engines owned by United Technologies Corporation (“UTC”). The Board rejected GE’s arguments and found the claims not obvious in view of the prior art. GE appealed.
At the Federal Circuit, UTC moved to dismiss GE’s appeal because GE lacked Article III standing. The Federal Circuit ordered UTC to brief the issue in its responsive appellate brief. The Federal Circuit allowed both sides to submit new evidence regarding GE’s alleged injury-in-fact caused by the challenged patent.
The Federal Circuit held GE lacked standing because it failed to establish injury-in-fact. GE argued that it was injured because the patent caused GE (1) competitive harm, (2) economic loss, and (3) the Board’s decision would estop GE from challenging the patent in the future. In support of its competitive harm and economic loss arguments, GE submitted an employee declaration that the patent prevented GE from using its 1970’s engine technology as a model for developing new engines. GE also submitted evidence that Boeing had once asked GE to bid on a contract, causing GE to conduct research that “would potentially implicate” UTC’s patent. The Federal Circuit held this evidence was insufficient to establish injury-in-fact because GE did not assert that it practiced the patent, that it had actually refrained from developing technology because of the patent, or lost bids because of the patent. The competitor standing doctrine did not separately establish standing because the Board’s decision did not alter the status quo in the commercial airplane industry. The Federal Circuit rejected GE’s estoppel argument because it previously held that estoppel is not an injury-in-fact.
Patent Claims Reordering Conventional Steps May Be Ineligible Under § 101
In Solutran, Inc v. Elavon, Inc., Appeal Nos. 2019-1345, -1460, method claims directed to performing conventional steps in a new order may be insufficient to render claims patent eligible under § 101.
Solutran sued Elavon for patent infringement. The patent claims covered a method for processing paper checks, which comprised the following steps in sequence: a) receiving a data file with information from the checks, but not including images of the checks; b) crediting a merchant’s account; c) creating digital images of the checks; and d) using a computer to match the digital images to the data file. Elavon moved for summary judgment, claiming that the patent was directed to an abstract idea under § 101. The district court denied Elavon’s motion, and affirmatively held the claims to be patent eligible, finding that the claims focused on the physical processing and transporting of paper checks. After entry of final judgment of infringement, Elavon appealed.
The Federal Circuit reversed, finding under Alice step one that the claims were directed to the abstract idea of “crediting a merchant’s account as early as possible while electronically processing a check.” The Federal Circuit explained that the physicality of the paper checks being processed and transported is not enough to exempt the claims from being directed to an abstract idea, since the claims recite conventional actions in a generic way and do not improve any underlying technology. Under Alice step two, the Federal Circuit did not find an inventive concept sufficient to render the claims patent eligible. The Federal Circuit noted that the patent specification described each individual step of the claims as conventional and explained that reordering conventional steps was insufficient to constitute an inventive concept.
IPRs of Pre-AIA Patents are not Unconstitutional Takings
In Celgene Corporation v. Peter, Appeal Nos. 2018-1167, -1168, -1169, the Federal Circuit determined that retroactive application of IPR proceedings to pre-AIA patents is not an unconstitutional taking under the Fifth Amendment.
The Coalition for Affordable Drugs VI LLC (“CFAD”) requested Inter Partes Review of two patents owned by Celgene Corporation (“Celgene”). The patents at issue described and claimed methods for delivering a drug to patients in a way that prevents the occurrence of adverse side effects. The Board held that all challenged claims were unpatentable as obvious. Celgene appealed the Board’s decisions, arguing that the Board erred in its obviousness findings. Additionally, although it did not raise the argument before the Board, Celgene argued on appeal that the retroactive application of IPRs to patents filed pre-AIA is an unconstitutional taking.
The Federal Circuit affirmed the Board’s decisions regarding obviousness for both patents. In deciding to reach the constitutional issue, the Federal Circuit used its discretion to reach issues raised for the first time on appeal in exceptional cases. The Federal Circuit then held that the retroactive application of IPR proceedings to pre-AIA patents is not an unconstitutional taking. The Federal Circuit explained that IPRs do not differ significantly enough from the pre-AIA review mechanisms for reevaluating the validity of issued patents to effectuate a taking. Specifically, the Federal Circuit explained that there are more significant similarities than differences between pre-AIA review mechanisms and IPRs, namely: the substantive grounds for review, the standard of proof, and the broad claim construction standard. The Federal Circuit also noted these procedures shared the same purpose of reexamining an earlier agency decision. While the Federal Circuit acknowledged some procedural differences between IPRs and pre-AIA reexaminations, it explained that there is no vested right in any given mode of procedure. Thus, because patent owners have had the expectation that the PTO could reconsider the validity of issued patents for nearly forty years, it held that IPRs do not constitute an unconstitutional taking.
