Fresh From the Bench: Recent Patent Cases From the Federal Circuit
Teva – Without waiting for the cert petition in Lighting Ballast, the Supreme Court accepts Teva to decide whether de novo review of claim construction is the appropriate standard of review.
Senju - A split panel affirms dismissal based on claim preclusion where the patents in suit that had been ruled invalid in a prior litigation had been reexamined and narrowed to avoid the prior art.
Endo – A majority of the panel reverses and remands the district court's determination that defendants had implied licenses under the terms of a settlement agreement involving related patents.
MRC – In determining obviousness in design patent cases, district courts may forgo an explicit verbal description of the claimed design if their reasoning in identifying the primary reference is clear. Also, mere similarity between a primary and secondary reference may itself provide the requisite suggestion to combine.
Teva Pharmaceuticals USA, Inc., et al. v. Sandoz, Inc., et al., Supreme Court Doc No. 13-854 (3/31/2014)
The Supreme Court has accepted Teva v. Sandoz for certiorari, showing its eagerness to examine the Federal Circuit's insistence in this case and in Lighting Ballast that claim construction appeals are to be reviewed de novo. Teva is further along than Lighting Ballast, which hasn't even had its petition for cert filed. The Federal Circuit's 6-4 en banc Lighting Ballast decision was based largely on deference to its prior Federal Circuit decisions and stare decisis, which the Supreme Court does not have to respect.
The Teva case involves an appeal of a ruling invalidating patents covering Teva's multiple sclerosis drug Copazone, which had sales of over $4 billion last year. A more deferential review of claim construction could lead to a reversal, facilitating Teva's attempts to block the introduction of a generic version of the drug.
Senju Pharmaceutical Co., Ltd. et al. v. Apotex Inc., Fed. Cir. Case 2013-1027 (3/31/2014)
In the second claim preclusion case in the past week (see Brain Life, decided 3/24), a divided panel affirmed the dismissal of Senju's patent infringement case based on claim preclusion. Apotex had filed an Abbreviated New Drug Application (ANDA) with the FDA, asking for permission to sell a generic version of Gatifloxacin eye solution. In response, Senju filed suit for patent infringement. The district court found the asserted claims to be invalid as obvious. Senju filed for and received a reexamination certificate amending claims that had been invalidated, and then filed a second action based upon the reexamined claims. The district court granted Apotex's motion to dismiss the second case based on claim preclusion. Senju appealed, contending this was not the same cause of action litigated in the first case since the claims were substantially different.
The majority of the panel disagreed with Senju that differences in the claims were critical to claim preclusion. According to the opinion, the claims that emerge from reexamination do not in and of themselves create a new cause of action. A "reexamined patent" is the original patent; it has just been examined another time. Reexamination does not involve neither the filing of a new patent application nor the issuance of a new patent. For example, amendments to the disclosure cannot introduce new matter, and no proposed claim is permitted to enlarge the scope of claim coverage. As a result, a reexamined patent cannot contain within its scope any product or process which would not have infringed the original claims.
The district court ascertained that the reexamined claims were essentially the original claims with the addition of limitations designed to avoid prior art. In the absence of a clear showing that such a material difference in fact exists in a disputed patentable reexamination claim, according to the majority, it can be assumed that the reexamined claims will be a subset of the original claims and that no new cause of action will be created. Because the majority concluded that the facts of Senju's first and second actions overlap and the reexamination of the patent did not create a new cause of action, Senju's suit against Apotex was determined to be barred on the principles of claim preclusion.
In dissent, Judge O'Malley couched the issue to be decided as whether new rights were obtained through reexamination. Because the original claims were found invalid, the original patent provided Senju with no rights. Only if the reexamined claims are substantially the same as Senju's original claims can the court conclude that the reexamined claims cover rights that could have been asserted in the first action against Apotex. Because the district court failed to conduct this necessary comparison between the original and the reexamined claims, Judge O'Malley would vacate its judgment and remand for further analysis.
Endo Pharmaceuticals Inc. v Actavis, Inc. and Roxane Laboratories, Inc., Fed. Cir. Case 2013-1658 (3/31/2014)
The district court's denial of Endo's motion for preliminary injunction based upon its ruling that Actavis and Roxane had implied licenses under a settlement agreement was vacated and remanded.
Prior to this litigation, Endo sued Appellees for patent infringement based on their ANDA filing, which sought to market generic versions of Opana® ER, the same products as those at issue in these appeals. The earlier lawsuits settled when Endo granted licenses and covenants not to sue. The settlement and license agreements define "Licensed Patents" in pertinent part:
(a) any U.S. patents that are both (i) now owned by Endo and (ii) issued as of the Effective Date, including the Opana® ER Patents,
(b) any U.S. patent applications that claim priority to the Opana® ER Patents, including any continuation, continuation-in-part and divisional patent applications.
Endo granted Appellees a covenant that it would not assert the Licensed Patents against those products. The agreements also included a "No Implied Rights" provision stating that Endo does not grant any license or right "whether by implication, estoppel or otherwise, other than as expressly granted herein."
The patents in this litigation issued after settlement of the first case. Upon filing suit Endo moved for a preliminary injunction to prevent the marketing and sales of the generic formulations. The district court accepted the argument that Appellees had implied licenses so denied the motion. On appeal, after quickly dismissing the express license argument because the patents in suit were not continuations of the Licensed Patents, the panel addressed the implied license argument. The majority held that the district court erred in concluding that Appellees were impliedly licensed to practice the asserted patents. While the asserted patents claim priority to the same provisional applications as the patents that were the subject of the settlement agreement, the specifications of the asserted patents are different, and that the claims cover different subject matter.
The majority determined that Endo was not estopped from asserting the patents at issue in these appeals because the only familial relationship between the asserted and licensed patents is that two of the patents claim priority to the same provisional application as one of the Licensed Patents. That, however, does not make these patents continuations. The lack of a continuation relationship between any of the asserted and licensed patents and the explicit disclaimer of any other licenses not within the literal terms of the contract are dispositive.
Here, rather than grant a license to an "idea," Endo granted to Appellees a license and covenant not to sue limited to specific patents and patent applications. If Appellees wanted to market and sell their accused generic products free from a threat of being sued for patent infringement, they could have negotiated for the appropriate language in the settlement agreements. Having agreed to licenses that do not cover the patents at issue in these appeals, Appellees will not now be heard to complain.
In his dissent, Judge Dyk agreed there is no implied license as to the patents that matured from applications of which Appellees were aware at the time of the settlement. He also agreed that there is no license as to the patent Endo did not own at the time of settlement. However, he dissents as to the patents that matured from unpublished patent applications that Endo owned at the time of settlement. Endo did not disclose those applications, but rather licensed Appellees to produce the product at issue.
Since the patents claim priority to the same provisional application and, thus, must cover the same inventive subject matter, the agreements confer an implied license to the two new patents absent contrary evidence. Nevertheless, in the course of its negotiations with Endo, Roxane became aware of two of the patent applications, and unsuccessfully sought to have those applications included in the agreement. That history is, according to Judge Dyk, sufficient to negate an implied license. But the Actavis negotiations contained no indication that Actavis was aware of Endo's applications.
Moreover, while the majority states that the language of the Actavis and Roxane agreements is "similar," clause (c) of the agreements is different. The agreements provide, in pertinent part:
(c) the License and Covenant Not to Sue do not grant Actavis any rights or immunities with respect to any products other than the Opana® ER Generic Products.
(c) the License and Covenant Not to Sue does not grant to Roxane any rights or immunities with respect to any products other than the Roxane Products or with respect to any patents other than the Licensed Patents.
A comparison of the two license agreements and the different negotiation histories suggests that Actavis could reasonably conclude it had negotiated a right to sell all Opana® ER generic products despite the interim issuance of the additional patents, not merely practice the patents expressly licensed, while the Roxane agreement is expressly limited to the Licensed Patents. For this reason Judge Dyk dissents, feeling that Actavis should have an implied license under the patent that matured from the unpublished applications Endo owned during the settlement negotiations.
MRC Innovations, Inc. v. Hunter Mfg., LLP, Fed. Cir. Case 2013-1433 (4/2/2014)
In a design patent case, the Circuit affirmed a finding of invalidity where the lower court properly followed the test for obviousness articulated in Durling v. Spectrum Furniture Co., 101 F.3d 100 (Fed. Cir. 1996). The Circuit restated the 2-step test as follows:
First, the court must identify "a single reference, ‘a something in existence, the design characteristics of which are basically the same as the claimed design.'" The "basically the same" test requires consideration of the "visual impression created by the patented design as a whole." We have noted that "the trial court judge may determine almost instinctively whether the two designs create basically the same visual impression," but "must communicate the reasoning behind that decision."
Once the primary reference is found, other "secondary" references "may be used to modify it to create a design that has the same overall visual appearance as the claimed design." These secondary references must be "‘so related [to the primary reference] that the appearance of certain ornamental features in one would suggest the application of those features to the other.'"
On appeal, MRC, the owner of two design patents directed at pet jerseys (an example of which is shown on the left, below), argued that the district court erred in concluding that the primary reference, an Eagles pet jersey (shown below, on the right), is "basically the same" as the claimed design.
In particular, MRC complained that the lower court failed to translate the claimed design into a verbal description as required by the Circuit in High Point Design LLC v. Buyers Direct, Inc., 730 F.3d 1301, 1314 (Fed. Cir. 2013). The Circuit conceded that the district court did not expressly translate the claimed design into a verbal description, but reiterated that "the purpose of requiring district courts to describe the claimed design in words is so that the parties and appellate courts can discern the trial court's reasoning in identifying the primary reference." Because the Circuit found it "entirely clear from the district court's opinion what it considered to be the relevant design characteristics of the ‘488 patented design" and agreed with the lower court that the Eagles reference and the claimed design created "basically the same" overall impression, MRC's argument with respect to the first step of the Durling test was dismissed.
With respect to the second step of the Durling test, MRC argued that the district court erred in failing to explain why a skilled artisan would have chosen to incorporate the features of another reference known as the "Sports K9" jersey with the Eagles jersey. The court again dismissed MRC's argument, explaining that while there must be some suggestion in the prior art to modify a primary design with features from a secondary design, two designs may be "so related that the appearance of certain ornamental features in one would suggest the application of those features in the other." Indeed, in the instant case where both references are designs for pet jerseys, the Circuit found: "it is the mere similarity in appearance that itself provides the suggestion that one should apply certain features to another design."