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Fresh From the Bench: Recent Patent Cases From the Federal Circuit

August 12, 2014

Overview

ScriptPro– The Circuit reverses summary judgment of invalidity under § 112, ¶ 1, holding that issues of fact remain as to whether the claims of the patent that do not recite "sensors" are broad enough to include sensor-less systems even though the invention is described in the specification as including sensors.

Tyco– The Circuit vacates ‎summary judgment that Tyco's infringement claims were ‎not a sham, therefore remanding for a determination of whether the sham exception to Noerr-Pennington immunity is applicable. The panel also vacates the summary ‎judgment that Tyco's citizen petition to the FDA was not a ‎sham.‎

ScriptPro, LLC, et al. v. Innovation Associates, Inc., Fed. Cir. Case 2013-1561 (August 6, 2014)

ScriptPro sued Innovation for infringement but the ‎district court granted summary judgment in favor of Innovation based on the failure ‎of the asserted claims to satisfy the written description requirement of 35 U.S.C. § 112, ¶ 1 (now ‎‎§ 112(a)).   In granting summary judgment, the court found that while the specification of ‎the patent-in-suit described a machine having "sensors," the asserted claims lacked recitations of ‎‎"sensors" and, therefore, "no reasonable jury could find that the inventors were in possession of a ‎‎machine that operated without sensors."

ScriptPro appealed and the panel reviewed the district court's grant of summary ‎judgment to resolve whether the absence of sensors from the asserted claims means that those ‎claims are unsupported by the written description as a matter of law.

The patent describes a collating unit that is to work in concert with an automatic ‎dispensing system to automatically fill and label prescription containers.   The collating unit has a ‎plurality of storage positions into which containers are placed as they emerge from the dispensing ‎system. The unit stores prescription containers according to a storage algorithm that is ‎dependent on a patient name for whom a container is intended and an availability of an open ‎storage position in the collating unit.‎

The panel finds that the specification's description of embodiments having sensors for ‎providing information about storage positions does not necessarily mean that the only described ‎invention is a collating unit with such sensors.   In so finding, the panel notes that the patent ‎does not include any dispositive language describing sensors as essential elements of the collating ‎unit.   In particular, the panel states that the specification creates a genuine issue of material fact ‎as to whether a skilled artisan would understand the specification to disclose a system that relies ‎on other means (e.g., storage in computer memory) without sensors to fulfill the central purpose ‎of keeping track of the use of storage positions.

The panel points to various sections of the patent to support a finding that ScriptPro could ‎establish that the written description conveys to the relevant skilled artisan that the inventors ‎were actually in possession of the invention without sensors, citing to various portions of the specification that suggest the sensors are optional.   Finally, the panel finds it important to note that the application that matured into ‎the patent included original claims that did not recite sensors.‎

Consequently, the panel holds that the asserted claims to a sensor-less collating unit cannot be ‎said on summary judgment to be too broad, given the disclosure of the patent; a skilled ‎artisan may well be able reasonably to read the specification as teaching a specific means of ‎achieving a central stated purpose of the asserted invention without the sensors.   Therefore, the panel holds that specification of the patent, apart from the asserted claims, ‎precludes summary judgment as to the inadequacy of the written description in support of claims ‎not requiring sensors.

Tyco Healthcare Group LP, et al. v. Mutual Pharmaceutical Company, Inc., et al.,Fed. Cir. Case 2013-1386 (August 6, 2014)

Tyco is the owner of several patents directed to formulations or methods of treatment with temazepam, sold under the brand name Restoril, a drug ‎used to treat insomnia.   Mutual filed an ANDA seeking FDA approval to market a generic version of Restoril. In its ANDA, Mutual sought approval of a temazepam product having "a specific surface area of not less than 2.2 m2/g," outside of the 0.65-1.1 m2/g range recited in the Tyco patent claims. In response to Mutual's ANDA filing, ‎Tyco filed an infringement action. In the litigation that followed, Mutual raised antitrust counterclaims, ‎which the district court temporarily stayed pending the ‎resolution of Tyco's infringement claims. The district court granted judgment of noninfringement because a product having a specific surface area of not less than 2.2 m2/g, could not literally infringe the ‎claims. The district court litigation continued on the issue of invalidity.

The day after the district court entered its judgment of noninfringement, Tyco filed a citizen ‎petition with the FDA that urged the ‎FDA to change its criteria for evaluating the bio-equivalence of proposed generic temazepam products in ‎order to "help ensure therapeutic equivalence" of generic ‎temazepam to Restoril. Tyco proposed guidelines that ‎would require generic temazepam manufacturers to ‎demonstrate bioequivalence to Restoril through a series of ‎pharmacokinetic parameters considerably more extensive ‎and complex than the parameters traditionally required ‎by the FDA for a bioequivalence determination. Tyco ‎reasoned that the safety and efficacy of Restoril was likely ‎linked to its pharmacokinetic profile, and that changes to ‎parameters such as specific surface area in a generic ‎version could alter that profile and thereby affect the safety ‎and efficacy of the generic version as compared to Restoril.‎

While the citizen petition ‎was still pending, the FDA approved Mutual‘s ANDA, ‎allowing Mutual to bring its generic product to market. The FDA subsequently denied ‎Tyco's citizen petition, concluding that Tyco had not provided adequate evidence to support ‎any of the actions requested in the petition and that ‎there was no basis for adopting Tyco's proposed bio-‎equivalence criteria. ‎

The district court granted summary ‎judgment of invalidity, and the Circuit affirmed. After the Circuit's disposition of that appeal, the district ‎court granted summary judgment to Tyco on Mutual‘s antitrust counterclaims, holding that Tyco did not violate the antitrust laws by ‎filing suit against Mutual or by filing a citizen petition ‎with the FDA. Mutual appealed.

Infringement

Mutual ‘s counterclaims included a claim that ‎Tyco's patent infringement claim constituted ‎sham litigation, subjecting Tyco to antitrust liability ‎for using illegitimate means to keep a competitive product off the market. The panel notes that a party is ordinarily exempt from antitrust liability for bringing a lawsuit against a competitor, based   on Noerr-Pennington immunity, but the sham litigation exception provides that there may be liability as to litigation that (1) is "objectively baseless in the sense ‎that no reasonable litigant could realistically expect ‎success on the merits" (the objective element), and (2) is ‎motivated by a desire "to interfere directly with the business relationships of a competitor" (the subjective element). Prof'l Real Estate Investors, Inc. v. Columbia ‎Pictures Indus., Inc., 508 U.S. 49, 60-61 (1993) (" PRE").‎

On appeal, Mutual asserts that there is a disputed issue of fact concerning whether Tyco's infringement suit ‎was "objectively baseless" so as to fall within the exception to Noerr-Pennington immunity. ‎The panel notes that ‎the dispute over infringement turned on the specific surface ‎area limitation, and that it was reasonable for Tyco to have proceeded with its infringement action because the Mutual product could still infringe because ‎Mutual ‘s ANDA filing may have been based on ‎faulty testing or screening procedures.‎

Therefore, the panel agrees with Tyco that it is not unreasonable for a patent owner to allege patent infringement if the patent owner has evidence that ‎the commercial ANDA product will infringe, ‎even though the hypothetical product specified in the ‎ANDA could not infringe.‎ The panel remands to the district court ‎to determine whether Tyco's factual theory of ‎infringement is objectively baseless.

Validity

Mutual argued that Tyco ‎should have known it would not succeed in defending ‎the validity of its patents, but the panel notes that the presumption of validity of a patent ‎negates ruling that the routine defense of a patent's ‎validity constitutes sham litigation.‎

The Citizen Petition

Mutual argued that the district court erred by ‎granting summary judgment for Tyco with respect to ‎Mutual‘s claim that Tyco's citizen petition to the FDA was a sham that stripped Tyco of its Noerr-Pennington immunity. The panel notes that because the district court applied the wrong ‎legal standard and because disputed issues of material ‎fact remain, that portion of the district court's ‎judgment is vacated.‎

The district court concluded that the sham exception ‎to Noerr-Pennington immunity and the test set forth in ‎ PRE are "expressly limited to litigation" and that Mutual ‎had therefore failed to set forth a legal standard applicable to sham administrative petitions. The panel notes that PRE's two-part test, ‎however, is not limited to court litigation; it has been ‎applied to administrative petitions, including FDA citizen ‎petitions.

The panel notes that particularly probative of whether the citizen petition ‎was reasonable is the FDA's holding that the petition ‎was wholly without merit. The FDA found that Tyco had "provided no evidence from clinical trials, pharmacokinet‎ic studies, bioequivalence testing, or any other source…. ‎Instead, the petition relies entirely on uncorroborated ‎generalities and theoretical speculation to support its ‎critical point." Furthermore, the panel notes that Mutual's expert reviewed the citizen petition and concluded that "Tyco did not have a scientific basis to conclude that Mutual's product would not be bioequivalent to ‎Restoril." The panel holds that the testimony of Mutual's expert ‎and the FDA's response to the citizen petition are sufficient evidence from which a reasonable finder of fact could ‎conclude that Tyco's citizen petition was objectively ‎baseless.‎

With respect to the subjective element of the PRE ‎test, the district court found that Mutual did not produce ‎any evidence "to support an inference that [the citizen ‎petition] was an attempt to interfere directly with the ‎business relationships of a competitor." Mutual, however, ‎produced evidence that the citizen petition was filed just ‎one day after the district court granted Mutual summary ‎judgment of noninfringement—an event that results in ‎lifting the automatic stay of the FDA's approval of the ‎ANDA, and just one week before the end of the 30-month stay period. According to ‎Mutual, filing the citizen petition at that late date caused ‎the FDA to delay the approval of Mutual's ANDA, and ‎thus resulted in a further period of market exclusivity for ‎Tyco.‎

Mutual also points to an email from Tyco's research ‎and development department to Tyco's vice president of ‎intellectual property that could support a finding that ‎Tyco knew the theory in its citizen petition lacked merit.‎ The panel notes that the timing of the citizen petition and the email are ‎sufficient evidence from which a reasonable finder of fact ‎could determine that Mutual had satisfied the subjective ‎element necessary to show that Tyco's citizen petition was a ‎sham, and concludes that the district court erred in ‎granting summary judgment against Mutual on the citizen ‎petition issue.

Judge Newman dissents in part, disagreeing that a citizen petition can give rise to antitrust liability, and stating there can be no doubt as to a citizen's right to communicate with the government on matters of concern.

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