Fresh From the Bench: Precedential Patent Cases From the Federal Circuit
The Circuit issued three precedential decisions last week. Mentor Graphics prevailed in a § 101 challenge to patents owned by Synopsys. In the Efthymiopoulos case, a split panel affirms the rejection of claims directed to GlaxoSmithKline’s popular flu drug Relenza. Finally, the Circuit rules in Medtronic v. Bosch that, pursuant to Cuozzo, a decision to discontinue IPR proceedings is not reviewable on appeal under 35 U.S.C. § 314(d).
Thanks to my Seattle colleague Martin Garthwaite for his help with this week’s report.
Synopsys v. Mentor Graphics – The panel affirms that the patents in suit are directed to the abstract idea of translating a functional description of a logic circuit into a hardware component description of the logic circuit, and therefore the patents are invalid under § 101. The patents claim detailed techniques for translating a functional description of a logic circuit into a hardware component description of the logic circuit. Though Synopsys argued the method was intended to be used in a computer-based design tool, the claims included no computer. The Circuit distinguishes this case from more typical 101 cases, noting that the patents include neither an abstract idea executed by a general purpose computer nor a concrete improvement in how a computer functions. The panel also notes that Synopsys admitted that idea could be and was performed mentally or by pencil and paper.
Synopsys did not argue that the claims must be construed as requiring a computer to perform the recited steps, so the panel did not have to decide whether a computer-implemented version of the invention would not be directed to an abstract idea. And, for the same reasons, the panel notes that Synopsys cannot rely on Enfish and McRO to support patentability.
With respect to the second part of the Alice analysis, in contrast to DDR Holdings and BASCOM, the claims contain no technical solution. To the extent they add anything to the abstract idea, it is the use of assignment conditions as an intermediate step in the translation process. But, given that the claims are for a mental process, assignment conditions, which merely aid in mental translation as opposed to computer efficacy, are not an inventive concept that takes the claims beyond their abstract idea.
In re Efthymiopoulos – In a split decision, a majority of the panel affirms the rejection of the claims of a GlaxoSmithKline patent application directed to a method for treating influenza comprising administering an effective amount of zanamivir by inhalation, covering GSK’s flu drug Relenza.
The majority holds that Von Itzstein I discloses the use of zanamivir to treat and prevent influenza. Von Itzstein II discloses different administration methods for an adjacent homologue of zanamivir to achieve the same result—treating or preventing influenza. In particular, Von Itzstein II expressly discloses administration through “oral,” “nasal,” or other forms “suitable for administration by inhalation,” among other methodologies. The Board’s finding that a skilled artisan would be motivated to use zanamivir in the methods disclosed by Von Itzstein II, is therefore, according to the majority, supported by substantial evidence.
The majority also holds that there is substantial evidence that Von Itzstein II’s disclosure of administration through “inhalation” includes oral inhalation. Inhalation can only be carried out via the nose or the mouth. Since Von Itzstein II does not limit its disclosure to nasal inhalation, it is reasonably understood to disclose inhalation by either the nose alone, the mouth alone, or both.
Finally, the majority holds that the Board’s conclusion is further supported by the fact that both Von Itzstein references teach that the compounds may be administered in many forms, including as a dry powder through an inhaler. The state of the art at the time of invention established that dry-powder compositions were often used specifically for oral inhalation. Moreover, substantial evidence supports the determination that a skilled artisan would have a reasonable expectation of success in combining the Von Itzstein references. There is also substantial evidence that Efthymiopoulos’s evidence of unexpected results is lacking.
Judge Newman dissents, arguing that the Board and the majority relies only on evidence in the application itself to find that oral inhalation would be effective.
Medtronic v. Bosch – Medtronic petitioned the Circuit for rehearing of a panel decision which ruled that a determination by the Board to discontinue IPR proceedings was not reviewable on appeal under 35 U.S.C. § 314(d). The question presented on this petition is whether that decision is correct in light of the Supreme Court’s Cuozzo decision, which issued after the original panel decision. Here the panel reaffirms its earlier order, ruling that nothing in Cuozzo is to the contrary, and the Board’s vacatur of its institution decisions and termination of the proceedings constitute decisions whether to institute IPR and are therefore “final and nonappealable” under § 314(d).
This case started with Bosch bringing suit against Cardiocom, a subsidiary of Medtronic, alleging infringement of two Bosch patents. Cardiocom’s petitions for IPR were denied because Cardiocom failed to show a reasonable likelihood that any of the challenged claims was unpatentable. Medtronic then filed petitions seeking IPR of the same two patents, listing Medtronic as the sole real party in interest. Bosch argued that the petitions should be denied because Medtronic had failed to name Cardiocom as a real party in interest as required by 35 U.S.C. § 312(a)(2). The Board instituted IPR, but permitted Bosch to take discovery regarding Cardiocom’s status as a real party in interest. Based on that discovery, the Board granted Bosch’s motion to terminate the proceedingsbecause of Medtronic’s failure to comply with the requirement that all real parties in interest be disclosed, persuaded by the collective evidence that Medtronic was acting as a proxy for Cardiocom.
Medtronic appealed, and Bosch moved to dismiss for lack of jurisdiction, asserting that the Board’s decisions were not appealable under § 314(d). The panel dismissed Medtronic’s appeals for lack of jurisdiction and denied mandamus relief. Cuozzo was then decided, leading to the present request for reconsideration.
Synopsys, Inc. v. Mentor Graphics Corporation, Fed. Cir. 2015-1599 (October 17, 2016)
Synopsys argues that the Gregory Patents are not directed to ineligible subject matter because they relate to complex algorithms used in computer-based synthesis of logic circuits.
A method for converting a hardware independent user description of a logic circuit, that includes flow control statements including an IF statement and a GOTO statement, and directive statements that define levels of logic signals, into logic circuit hardware components comprising: converting the flow control statements and directive statements in the user description for a logic signal Q into an assignment condition AL(Q) for an asynchronous load function AL( ) and an assignment condition AD(Q) for an asynchronous data function AD( ); and generating a level sensitive latch when both said assignment condition AL(Q) and said assignment condition AD(Q) are nonconstant; wherein said assignment condition AD(Q) is a signal on a data input line of said flow through latch; said assignment condition AL(Q) is a signal on a latch gate line of said flow through latch; and an output signal of said flow through latch is said logic signal Q.
A review of the actual claims at issue shows that they are directed to the abstract idea of translating a functional description of a logic circuit into a hardware component description of the logic circuit. This idea of reviewing a description of certain functions and turning it into a representation of the logic component that performs those functions can be—and, indeed, was—performed mentally or by pencil and paper by one of ordinary skill in the art. Moreover, the claims do not call for the involvement of a computer. They therefore cannot be characterized as an improvement in a computer as a tool. The claims add nothing to the abstract idea that rises to the level of an “inventive concept” as required by precedent.
Notably, the district court did not construe any claim of the Gregory Patents to require the use of a computer—general purpose or otherwise—or any other type of hardware. Neither party challenged the district court’s claim constructions on appeal.
The Claims Are Not Limited to Computer-Based Design Tools, and Could Be Performed Mentally
With respect to the first part of the Alice analysis, we reiterate Gottschalk: “computational methods which can be performed entirely in the human mind are the types of methods that embody the ‘basic tools of scientific and technological work’ that are free to all men and reserved exclusively to none.” Although an understanding of logic circuit design is certainly required to perform the steps, the limited, straightforward nature of the steps involved in the claimed method make evident that a skilled artisan could perform the steps mentally. The inventors of the Gregory Patents confirmed this point when they admitted to performing the steps mentally themselves. While Synopsys may be correct that the inventions of the Gregory Patents were intended to be used in conjunction with computer-based design tools, the Asserted Claims are not confined to that conception. The § 101 inquiry must focus on the language of the Asserted Claims themselves.
Synopsys stops short of arguing that the Asserted Claims must be construed as requiring a computer to perform the recited steps. Synopsys never sought such a construction before the district court and it does not press for such a construction here. For this reason, we need not decide whether a computer-implemented version of the invention would not be “directed to” an abstract idea. And, for the same reasons, Synopsys cannot rely on our decisions in Enfish and McRO to support the patentability of the Asserted Claims. In Enfish, we held that claims “directed to a specific improvement to the way computers operate” to store and retrieve data were not unpatentably abstract. In McRO, we similarly held that claims that recited “a specific asserted improvement in computer animation” were not directed to an unpatentable abstract idea.
Conditions that Merely Aid in Mental Translation Do Not Take the Asserted Claims Beyond Their Abstract Idea
With respect to the second part of the Alice analysis, the Asserted Claims, in contrast to those at issue in DDR Holdings and BASCOM, contain no technical solution. To the extent the Asserted Claims add anything to the abstract idea (i.e., translating a functional description of a logic circuit into a hardware component description of the logic circuit), it is the use of assignment conditions as an intermediate step in the translation process. But, given that the claims are for a mental process, assignment conditions, which merely aid in mental translation as opposed to computer efficacy, are not an inventive concept that takes the Asserted Claims beyond their abstract idea.
In re Constantin Efthymiopoulos, Fed. Cir. 2016-1003 (October 18, 2016)
The ’141 application relates to methods of treating or preventing influenza by administering the drug zanamivir by oral inhalation. On appeal, Efthymiopoulos challenges the rejection of claims 14-30, 32, 34-38, and 43-65. Independent claim 14 is representative:
14. A method for treating a human suffering from an infection by an influenza virus, wherein the method comprises administering to the human an effective amount of [zanamivir], wherein the [zanamivir] is administered by inhalation through the mouth alone.
The examiner rejected the pending claims as obvious over Von Itzstein II, in view of Von Itzstein I and a number of other references. Like the ’141 application, Von Itzstein I discloses that zanamivir can be administered to treat and prevent infections by the influenza virus. Von Itzstein I only discloses intranasal administration (and not oral inhalation) of zanamivir. Von Itzstein II discloses the administration of a compound similar to zanamivir by “inhalation” for the treatment and prevention of influenza. The examiner concluded that Von Itzstein II disclosed all of the limitations of the challenged claims except that it did not teach zanamivir specifically and did not expressly teach inhalation only by mouth of its compounds. The examiner found, however, that Von Itzstein I taught zanamivir and suggested administering that compound to the respiratory tract to treat or prevent influenza. The examiner further determined that zanamivir and the compound disclosed in Von Itzstein II are “adjacent homologues” (meaning they are part of a series of compounds that differ in structure only by a single substituent) and thus concluded that using zanamivir in the method disclosed in Von Itzstein II would have been obvious.
Finally, the examiner noted that, with respect to administration, there are only two possible inhalation methods: through the mouth (oral) or through the nose (nasal). In view of the other prior art references that taught the well-known availability of inhalers, that oral inhalation delivers more drug to the lungs than nasal inhalation, and the fact that influenza infects the lungs, the examiner concluded that treating influenza by oral inhalation of zanamivir would have been obvious. The Board agreed with and extensively cited the examiner and affirmed all of the rejections. Efthymiopoulos sought rehearing, but the Board denied its request.
Efthymiopoulos argues that the Board erred in rejecting the pending claims as obvious. Efthymiopoulos contends that none of the prior art references, alone or in combination, teach administration of zanamivir by inhalation through the mouth. Moreover, Efthymiopoulos says that a person of ordinary skill would not have expected that the administration of zanamivir through inhalation by mouth only would be effective. That is because oral inhalation delivers more drugs to the lower respiratory tract, and, at the time of the invention, it was thought that delivery of anti-influenza drugs to the upper respiratory tract was required to be effective. Finally, Efthymiopoulos faults the Board for failing to consider its evidence of unexpected results.
We conclude that the Board did not err in its obviousness determination. There is no dispute that Von Itzstein I discloses the use of zanamivir to treat and prevent influenza. There is also no dispute that Von Itzstein II discloses several pages of different administration methods for an adjacent homologue of zanamivir to achieve the same result—treating or preventing influenza. In particular, Von Itzstein II expressly discloses administration through “oral,” “nasal,” or other forms “suitable for administration by inhalation,” among other methodologies. The Board’s finding then, that a skilled artisan would be motivated to use zanamivir in the methods disclosed by Von Itzstein II, is supported by substantial evidence.
The Board also agreed with the examiner’s conclusion that Von Itzstein II’s disclosure of administration through “inhalation” includes oral inhalation. That finding is supported by substantial evidence. As the Board noted, “[I]nhalation can only be carried out via the nose or the mouth. Since Von Itzstein II does not limit its disclosure to nasal inhalation, it is reasonably understood to disclose inhalation by either the nose alone, the mouth alone, or both.”
The Board’s conclusion is further supported by the fact that both Von Itzstein references teach that the compounds may be administered in many forms, including as a dry powder through an inhaler. And, as the Board noted, the state of the art at the time of invention established that dry-powder compositions were often used specifically for oral inhalation. Moreover, substantial evidence supports the determination that a skilled artisan would have a reasonable expectation of success in combining the Von Itzstein references.
Finally, Efthymiopoulos contends that the Board disregarded its evidence of unexpected results, namely the testimony of Dr. Hayden. We disagree. The record shows that the Board thoroughly considered and discussed Dr. Hayden’s declaration in its decision and found Dr. Hayden’s testimony insufficient to overcome the prima facie case of obviousness. Dr. Hayden also cited the Kaiser study which involved preventing influenza and showed that the rate of influenza was “substantially although not statistically significantly reduced” in patients treated with orally inhaled zanamivir compared to those treated with intranasal zanamivir. But, as the Board found, the Kaiser study is also unpersuasive because it did not disclose superior results, its findings were admittedly not statistically significant, and it dealt only with prevention of influenza, while the claims are directed to the treatment of influenza.
The Board therefore properly considered Efthymiopoulos’s evidence of unexpected results and simply found it lacking. That finding is supported by substantial evidence. We thus conclude that the Board correctly affirmed the examiner’s rejection of all pending claims as obvious.
Judge Newman’s Dissent
This litigation concerns the influenza drug zanamivir, marketed under the trademark Relenza®. The PTAB and now this court rule that it was obvious to administer this drug by oral inhalation, although there is no reference, no prior art, no suggestion, proposing that this mode of application might succeed, or that it should be tried. There was evidence of skepticism even as oral inhalation was evaluated. There was no contrary evidence. The evidence on which the Board and now this court rely is the evidence in the patent application itself, describing oral inhalation, its benefits, and its effectiveness. Upon learning this information from this inventor’s disclosure, the Board found that it was obvious, and my colleagues agree that it is obvious to them. There was not substantial evidence to support the Board’s ruling of obviousness. From the court’s flawed analysis and unsupported conclusion, I respectfully dissent.
Medtronic, Inc. v. Robert Bosch Healthcare Systems, Inc., Fed. Cir. 2015-1977, -1986, -1987 (October 20, 2016)
Medtronic has filed a petition for rehearing. The original panel decision, following our decision in GTNX, Inc. v. INTTRA, Inc., 789 F.3d 1309 (Fed. Cir. 2015), held that a determination by the Board to discontinue IPR proceedings was not reviewable on appeal under 35 U.S.C. § 314(d). The question is whether that decision is correct in light of the Supreme Court’s decision in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016), which issued after our panel decision.
We now reaffirm our earlier order. The Board’s vacatur of its institution decisions and termination of the proceedings constitute decisions whether to institute IPR and are therefore “final and nonappealable.” Nothing in Cuozzo is to the contrary.
In 2013, Bosch brought suit in the Eastern District of Texas against Cardiocom, a subsidiary of Medtronic, alleging infringement of two Bosch patents. Cardiocom’s petitions for IPR were denied because Cardiocom failed to show a reasonable likelihood that any of the challenged claims was unpatentable on the grounds asserted. Medtronic then filed three petitions seeking IPR of the same two patents and listed Medtronic as the sole real party in interest. Bosch argued that the petitions should be denied because Medtronic had failed to name Cardiocom as a real party in interest as required by 35 U.S.C. § 312(a)(2). The Board instituted IPR, holding that Bosch had not established that Cardiocom was a real party in interest.
Thereafter the Board granted-in-part Bosch’s motions seeking additional discovery regarding Cardiocom’s status as a real party in interest. Based on that discovery, Bosch moved to terminate the proceedings because Medtronic had failed to name all real parties in interest. The Board granted Bosch’s motions, “persuaded by the collective evidence that Medtronic was acting as a proxy for Cardiocom,” including evidence that Cardiocom was the defendant in district court infringement suits concerning the two patents, that Cardiocom had previously filed its own petitions for IPR, that Cardiocom’s senior executives communicated with Medtronic while Medtronic’s petitions were being prepared, and that Cardiocom paid a portion of the fees for preparing Medtronic’s petitions. The Board vacated the institution decisions and terminated the proceedings because of Medtronic’s failure to comply with the requirement that all real parties in interest be disclosed.
Medtronic appealed. Bosch moved to dismiss for lack of jurisdiction, asserting that the Board’s decisions were not appealable under § 314(d). We dismissed Medtronic’s appeals for lack of jurisdiction and denied mandamus relief. The mandate issued that same day. Medtronic then petitioned for rehearing. We recalled the mandate and requested briefing to address the question of what action this court should take on the issue of appealability in view of the Supreme Court’s decision in Cuozzo.
The Decision Whether to Institute IPR Is “Final and Nonappealable” Under 35 U.S.C. § 314(d)
The Supreme Court addressed the scope of § 314(d) in Cuozzo. Specifically, the Court considered whether § 314(d) “bars a court from considering whether the Patent Office wrongly determined . . . to institute an inter partes review when it did so on grounds not specifically mentioned in a third party’s review request.” There, the patentee argued that the petition had only “implicitly” challenged two claims for which the Board instituted inter partes review proceedings, and the petition failed to comply with the requirement of 35 U.S.C. § 312(a)(3) that it “identify, in writing and with particularity, each claim challenged . . .” While recognizing the “strong presumption” favoring judicial review on questions of statutory interpretation, the Court held that § 314(d) operates to bar review in cases where the challenge “consists of questions that are closely tied” or “closely related” to “the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.”
We conclude that under Cuozzo, a decision whether to institute inter partes review proceedings pursuant to § 314(a) (the issue in Cuozzo) and a reconsideration of that decision (the situation here) are both barred from review by § 314(d). Interpreting the “closely related” language in Cuozzo, we recently concluded that questions regarding the application and interpretation of “statutes ‘closely related’ to the decision whether to institute are necessarily, and at least, those that define the metes and bounds of the inter partes review process.” Husky Injection Molding Sys. Ltd. v. Athena Automation Ltd., No. 151726, 2016 WL 5335500, at *6 (Fed. Cir. Sept. 23, 2016). It is difficult to conceive of a case more “closely related” to a decision to institute proceedings than a reconsideration of that very decision. It would be strange to hold that a decision to institute review would not be reviewable but a reconsideration of that decision would be reviewable. This is especially so when, as here, the Board’s reconsideration was predicated on a failure to meet the statutory requirements for filing a petition under § 312(a), a provision that “defines the metes and bounds of the inter partes review process.” Husky. The Board’s reconsideration in this case is fairly characterized as a decision whether to institute proceedings, the review of which is barred by § 314(d). This conclusion is supported by our own cases after Cuozzo, holding § 314(d) to bar review of questions “closely related” to the institution decision such as assignor estoppel or the time-bar of § 315(b). See Husky; Wi-Fi One, LLC v. Broadcom Corp., No. 15-1944, 2016 WL 4933298, at *4 (Fed. Cir. Sept. 16, 2016).
For instance, in Wi-Fi One, we recently considered the application of § 314(d) to the time-bar of § 315(b) in light of the Cuozzo decision. There, the patentee asserted that the party seeking inter partes review was barred “because it was in privity with a time-barred district court litigant.” It argued that Cuozzo implicitly overruled our prior decision in Achates holding that § 314(d) barred review. See Achates Reference Publ’g, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015). We rejected the same argument, now advanced by Medtronic, that the “under this section” language of § 314(d) limits the bar on reviewability only to questions arising under § 314. Wi-Fi One. Rather, we concluded that “nothing in Cuozzo casts doubt on that interpretation of the statute, especially in light of the fact that the Supreme Court held that the particularity requirement, which is contained in section 312, is nonappealable.”
Finally, the statute contemplates how appeals from final decisions will generally be limited to a “decision with respect to . . . patentability.” 35 U.S.C. § 318(a). There was no such decision here. See GTNX.
The Board Did Not Lack Authority to Reconsider Its Earlier Decisions, and Its Decision Did Not Involve Constitutional Issues Permitting Appeal
Medtronic argues that Cuozzo reserved the question of § 314(d)’s effect on “appeals that implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond ‘this section.’” Thus, § 314(d) would not categorically bar review of a due process challenge based on insufficient notice that affects an entire proceeding. Id. Similarly, it would not “enable the agency to act outside its statutory limits by, for example, canceling a patent claim for indefiniteness under § 112 in inter partes review.”
Medtronic asserts that its particular challenge is reviewable because the Board “exceeded its statutory authority when it terminated Medtronic’s petitions after institution on a non-merits issue . . . .” In other words, Medtronic argues that the Board lacked authority to reconsider its earlier decisions. But § 318(a) contemplates that a proceeding can be “dismissed” after it is instituted, and, as our prior cases have held, “administrative agencies possess inherent authority to reconsider their decisions, subject to certain limitations, regardless of whether they possess explicit statutory authority to do so.” Tokyo Kikai Seisakusho, Ltd. v. United States, 529 F.3d 1352 (Fed. Cir. 2008). In GTNX we considered the application of this principle to the Patent Office. There the Board similarly vacated its initial institution decisions because a prior civil action barred the party from seeking review under 35 U.S.C. § 325(a)(1). We held that the Board has inherent authority to reconsider its decisions, noting that “nothing in the statute or regulations applicable here . . . clearly deprives the Board of that default authority.” We also explained that “[i]t is strained to describe this as anything but a ‘determination . . . whether to institute’ proceedings—statutory language that is not limited to an initial determination to the exclusion of a determination on reconsideration” and that such a decision is “final and nonappealable.” The Board did not exceed its authority in reconsidering its institution decisions.
Medtronic also argues that this case involves a constitutional issue because the Board “deprived Medtronic of due process” given its inconsistent application of the real party in interest requirement. But there is no colorable constitutional issue. In sum, as we previously held in GTNX, § 314(d) operates to bar review of the Board’s reconsideration of its decision to institute inter partes review proceedings.
Medtronic Has Not Demonstrated Entitlement to Mandamus Relief
In the alternative, Medtronic requests that we treat this appeal as a petition for a writ of mandamus. In In re Dominion Dealer Solutions, LLC, 749 F.3d 1379 (Fed. Cir. 2014), which also involved a requested inter partes review, we denied mandamus based on the absence of a “clear and indisputable” right to relief in view of the statutory scheme precluding review of noninstitution decisions. Given that the same statutory provisions preclude Medtronic from appealing the Board’s decision, here too it cannot be said that Medtronic has a clear and indisputable right to have this court hear its challenges to the Board’s decision.
- Martin GarthwaiteSenior Counsel
- Peter HeuserShareholder