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Fresh From the Bench: Recent Patent Cases From the Federal Circuit (and this week, from the Supreme Court)

January 29, 2014

Overview

Every week or so we will continue to provide summaries of cases we think clients and others might find of interest. If you have any questions about the information provided in these case summaries or wish to discuss them further, please contact Peter Heuser at 503-796-2424 or pheuser@schwabe.com.

Medtronic, Inc. v. Mirowski Family Ventures, LLC, Supreme Court Case No. 12- 1128 (1/22/2014)

This case deals with a dispute over whether certain implantable heart simulators sold by Medtronic are within the scope of a patent that had been licensed from Mirowski to Medtronic. The ultimate issue for the Court was which party had the burden of proving infringement - the licensee/declaratory judgment plaintiff or the patentee/declaratory judgment defendant. The Federal Circuit acknowledged that the patentee normally bears the burden of proof, but held that where the patentee is the declaratory judgment defendant and is foreclosed from asserting infringement by the continued existence of a licensing agreement, the declaratory judgment plaintiff bears the burden of persuasion.

The Supreme Court felt this was an arbitrary distinction, and one that did not justify making such a definitive change in the way declaratory judgment cases are tried. Citing Medimmune v. Genentech, Inc., 549 U.S. 118, 128 (2007), the Court found that there was no convincing reason why burden of proof case law should favor the patentee. Here, Medtronic followed the procedure set forth in Medimmune, which held that a patentee does not need to stop paying royalties, and thereby subject itself to the risk of a patent infringement suit, in order to file a declaratory judgment action. Even though Mirowski was barred from filing an infringement suit due to the license agreement and Medtronic's continued payment of royalties into an escrow account, the Court felt that the public interest in maintaining a well-functioning patent system should not favor changing the ordinary burden of proof rule in patent cases.

The Court spoke at length about the public interest, noting that the public has a paramount interest in seeing that patent monopolies are kept within their legitimate scope. See Precision Instrument Mfg., Co. v. Automotive Maintenance Machinery Co., 324 U.S. 806 (1945). Then, citing Lear v. Adkins, 395 U.S. 653, 670 (1969), the Court reminded us that licensees are often the only ones with the economic incentive to litigate questions about a patent's validity and scope. Given that the patentee is in far better position to be able to point out why a product or process infringes, it would be unfair to force a licensee to try to negate every conceivable infringement theory in a declaratory judgment action. Given that the Declaratory Judgment Act is only procedural, the Court held that it would be unfair to shift the normal burden of proof and force the licensee to prove non-infringement.

This decision will provide the clarity that was not present previously. The Federal Circuit's ruling would have made it more difficult for licensees to mount an effective attack and would have discouraged precisely what Lear and Medimmune attempted to encourage - validity and infringement challenges by licensees.

Medtronic CoreValve, LLC v. Edwards Lifesciences Corp., Fed. Cir. No, 2013- 1117 (1/22/2014)

January 22 started out well for Medtronic but didn't end so well. In this case the Circuit affirmed a district court's summary judgment ruling of invalidity against Medtronic based upon the failure to comply with the priority claiming requirements of 35 USC 119 and 120. Here the Circuit determined that the patent was not entitled to the priority date it claimed, and therefore the patent was invalid.

The Federal Circuit first looked to the language of Section 120, which allows a later-filed application to claim the benefit of an earlier filing date if "it contains … a specific reference to the earlier filed application …." The Circuit had previously held that the "specific reference" requirement mandates that each intermediate application in the chain of priority must refer to the prior applications. Here, intermediate applications, but not the actual patent in suit, failed to specifically reference each of the earlier-filed applications in the priority chain. Therefore, the patent in suit was not entitled to claim priority back to the priority date of the first international application, which thus became invalidating prior art. Medtronic contended that anyone reading the application chain could have seen what was intended, but the Circuit noted that the patentee is the person best suited to understand the genealogy and relationship of her applications, and a requirement for her to clearly disclose this information presents no hardship.

This underscores the importance of closely reading the priority claim information prior to filing. While this patent was not examined under the first-to-file priority system, priority claims will have more importance than ever in our new first-to-file priority world.

Smartgene, Inc. v. Advanced Biological Laboratories, SA, Fed. Cir. No. 2013-1186 (1/24/2014)

A Federal Circuit panel of Judges Lourie, Dyk and Taranto affirmed the district court's summary judgment of invalidity of computer-related medical diagnosis claims under 35 USC 101 as being directed to unpatentable subject matter. The identification of the judges is important because, not surprisingly, they ruled just the way they did in the en banc ruling in CLS Bank Int'l. v. Alice Corp., 717 F. 3d 1269 (Fed. Cir. 2013). Actually, Judge Taranto had only recently joined the court at the time of CLS and did not participate in the CLS decision. He did, however, author this opinion. While non-precedential, the case is interesting because from it, we can see that Judge Taranto would have sided with Judges Lourie and Dyk in CLS, thereby resulting in what would have been a 6-5 majority. Judge Lourie had written the plurality opinion in CLS, and Judge Dyk wrote the opinion in CyberSource Corp. v. Retail Decisions Inc., 654 F. 3d 1366 (Fed. Cir. 2011), an opinion that is often cited in finding computer-related claims unpatentable.

The patent claims can be summarized as follows: a method for guiding the selection of a therapeutic treatment regimen for a patient with a known medical condition, including the steps of (a) providing patient information to a computing device having a first knowledge base comprising a plurality of therapeutic treatment regimens for the medical condition, a second knowledge base comprising a plurality of expert rules for evaluating a regimen, and a third knowledge base comprising advisory information for treating a patient with the regimens, (b) generating in the computing device a ranked listing of available regimens, and (c) generating in the computing device advisory information for the regimens in the ranked listing based on the patient information and the expert rules.

The panel found that the district court's ruling properly followed CyberSource, where the court held that section 101 did not embrace a process defined simply as using a computer to perform a series of mental steps. CyberSource and earlier precedents rest on the Supreme Court's decisions indicating that section 101 covers neither "mental processes" associated with or as part of a category of "abstract ideas," nor processes that merely invoke a computer and its basic functionality for implementing such mental processes without specifying new physical components or specifying processes defined other that by the mentally performable steps. In support, the panel cited Gottschalk v. Benson, 409 U.S. 63, 67-68 (1972) and Parker v. Flook, 437 U.S. 584, 589 (Fed. Cir. 1978).

With a decision coming in Alice Corp. v. CLS Bank (Supreme Court oral argument scheduled for March 31) later this year, we'll see if the Supreme Court's thinking is more in line with this panel or with Chief Judge Rader and others who feel that section 101 should be a very course strainer on patentability.

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