Fresh From the Bench: Recent Patent Cases From the Federal Circuit
Roslin – A cloned animal is not patentable because it is a natural phenomenon that does not possess different characteristics than an animal found in nature.
Monsanto – The CAFC upheld the district court's finding of fraud upon the court and award of sanctions against a party whose discovery documents were found by the district court to contradict statements made in the party's pleadings.
Packard – The CAFC upheld the "unclear meaning" standard of indefiniteness applied by the USPTO during patent proceedings.
GE – When determining whether a putative inventor has met his burden of providing "clear and convincing evidence" of inventorship, the CAFC determined that a court should assess whether credible testimony has been given, and if so, whether corroborative evidence has also been provided.
In re Roslin Institute, Fed. Cir. Case 2013-1407 (May 8, 2014)
This case arises out of the first ever cloned mammal, Dolly the Sheep. A clone is an identical genetic copy. The inventors created Dolly through somatic cell nuclear transfer, which involves removing the nucleus of a somatic cell and implanting that nucleus into an enucleated (i.e., without a nucleus) oocyte. Because the oocyte has only the nucleus removed, it retains the mitochondrial DNA from the oocyte (this becomes relevant later).
Dolly was made through fusion of the nucleus of an adult mammary cell with an enucleated oocyte. The inventors permitted the oocyte to develop into an embryo and implanted the embryo into a surrogate mammal for gestation and delivery. The resulting cloned animal is an exact genetic replica of the adult sheep from which the cell nucleus was taken. The inventors obtained a patent on the somatic method of cloning mammals, and assigned the patent to Roslin. The dispute here concerned the PTO's rejection of the inventors' claims in a separate application (the ‘233 application) to the clones themselves. These claims sought to patent the products of the inventors' cloning method as limited to embodiments of cattle, sheep, pigs, and goats.
The examiner rejected the patent claims under 35 U.S.C. §§ 101, 102 and 103. The Board affirmed, concluding that the claimed subject matter was ineligible for patent protection under § 101 because it constituted a natural phenomenon that did not possess "markedly different characteristics than any found in nature." The Board also affirmed the examiner's findings under 35 U.S.C. §§ 102 and 103. The Board noted the claimed clones were anticipated and obvious because they were indistinguishable from clones produced through prior art cloning methods, such as embryotic nuclear transfer and in vitro fertilization.
Roslin appealed the Board's final decision and the CAFC reviewed the patentability issue de novo. The Court cited its own precedent in Chakabarty and Funk Bros. for the concept that where the qualities of the invention sought to be patented "are the work of nature" and are unaltered by the hand of man, there is no patentable subject matter. Here, the methods of creating the clone were not at issue as they were separately patented in another application. Instead, just the animal clones themselves were at issue. Roslin argued that clones like Dolly are patentable because they are not created via nature, but instead by human handiwork. The CAFC
disagreed, noting "Dolly's genetic identity to her donor parent renders her unpatentable" under Chakabarty because she possesses no "markedly different characteristics from any [farm animals] found in nature." The CAFC next examined Dolly under the more recent Myriad doctrine but found Roslin had not created or altered any of the genetic information of its claimed clones, or the genetic structures of the DNA used to make them. Indeed, the goal of the invention was the direct copying of the original animal.
Roslin argued that phenotypic differences arising as a result of environmental influences on the clones lead to natural differences that would make the clones different from their predecessor organisms. The CAFC rejected this argument because the phenotypic differences are unclaimed. Instead, the claims focus on "clones" meaning genetic identity. Roslin next argued that mitochondrial DNA, which comes from the donor oocyte rather than the nucleus, would render the clones slightly genetically different. Again, the CAFC rejected this argument on the basis that this feature was unclaimed and is essentially undefined in the applications. Finally, Roslin argued that clones are patentable because they are time-delayed versions of their donor mammals that are therefore distinct. The CAFC upheld the Board's rejection on the basis that any copy is naturally time-delayed, and that feature alone is not a patentable distinction. In sum, the rejection on the basis of § 101 was upheld and the CAFC did not reach the 102 or 103 issues.
Monsanto Company v. E.I. DuPont Nemours, Fed. Cir. Case 2013-1349 (May 9, 2014)
Monsanto developed and patented (U.S. Patent No. RE 39,247E Patent) a genetic modification in soybean seeds, known as the "RR trait" (Roundup Ready), which enables soybean plants to tolerate the application of glyphosate herbicide weed killer. In 1992, Monsanto granted Pioneer Hi-Bred International, Inc. ("Pioneer") a nonexclusive license to produce and sell soybean seeds containing Monsanto's glyphosate-tolerant traits. After Pioneer became a subsidiary of DuPont, Monsanto and Pioneer entered into an Amended and Restated Roundup Ready® Soybean License Agreement (the "License"), which superseded the prior license. Under the License, DuPont produced and sold soybean seeds that were glyphosate-tolerant due to the RR trait.
The License provides in section 3.01 that:
(a) Subject to the terms of this Agreement, Monsanto hereby grants to Licensee, and Licensee, hereby accepts, a non-exclusive license within the Licensed Field . . . to develop, use, produce, have produced, offer to sell, sell and import Licensed Commercial Seed . . . .
(e) The parties agree that except for applicable patents, Licensee shall be free to introduce any gene and/or trait into, and commercialize as set forth in subparagraph 3.01(a), Licensed Commercial Seed . . . without the prior con- sent of Monsanto, except as specifically provided in subparagraph 3.01(g) and 3.01(h). . . .
(g) Licensee shall not be entitled to . . . (iv) use Biological Materials outside the Licensed Field. . . .
(I) Licensee agrees not to commercialize a variety of Licensed Commercial Seed which carries a gene or genes not supplied by Monsanto and which results in increased tolerance to a non- glyphosate herbicide without the prior written consent of Monsanto which consent shall not be withheld if Licensee reasonably demonstrates . . . that the introduction of such non- glyphosate herbicide tolerance gene(s) does not increase the injury . . . from glyphosate application to the crop . . . .
In 2006, DuPont announced that it had developed its own glyphosate-tolerant trait, Optimum GAT® ("OGAT"), which was expected to confer tolerance to both glyphosate-based (Roundup) and acetolactate synthase inhibitor-based weed killers. DuPont intended to commercialize the OGAT trait, but subsequent testing indicated that OGAT alone did not work well enough for commercial use. DuPont therefore "stacked," or combined, its OGAT trait with Monsanto's RR trait and discovered that the OGAT/RR stack provided increased yields of soybean over RR trait alone in field trials. DuPont did not sell any OGAT/RR soybean product, however, and discontinued its development in 2011 or 2012.
Monsanto sued DuPont for breach of the License and infringement of the '247 Patent. Monsanto claimed the License did not allow DuPont to stack the RR trait with another glyphosate-tolerant trait, such as OGAT, or to commercialize the stacked product. DuPont answered and counterclaimed that the License permitted it to stack OGAT with RR and that if the License were interpreted to restrict or preclude the OGAT/RR stack, then the License should be reformed. DuPont also asserted antitrust counterclaims.
The district court granted partial judgment on the pleadings to Monsanto, holding that the License was "unambiguous and [did] not grant [DuPont] the right to stack non-RR glyphosate-tolerant trait technologies with the licensed" trait. The court interpreted the primary license grant provision, section 3.01(a), to limit DuPont's licensed used of the product ‘within the Licensed Field.'". In view of the Licensed Field definition in section 2.09, the court concluded that "Licensed Commercial Seed may only exhibit glyphosate resistance that is solely due to" the RR trait," and thus found the OGAT/RR stack outside the Licensed Field because it generated glyphosate resistance that was not solely due to the RR trait. The court dismissed DuPont's contract-based counterclaim on this basis. DuPont moved for reconsideration and for permission to file a second amended answer adding three new contract reformation counterclaims. The court declined to reconsider its dismissal, but granted DuPont leave to file a new pleading to assert reformation counterclaims and defenses.
DuPont's new pleading acknowledged that it intended to commercialize the OGAT/RR stack and asserted that the License should be reformed to reflect the parties' understanding that it would not restrict DuPont from developing the OGAT/RR stack. DuPont based the amended reformation counterclaims on three alternative grounds: (1) mutual mistake, (2) DuPont's unilateral mistake and Monsanto's knowing silence, and (3) Monsanto's fraud. DuPont claimed both parties understood the contractual terms to not exclude stacking traits or genes.
DuPont's newly added claims led it to have to disclose internal attorney-client communications on the issue of interpretation of DuPont's rights under the relevant contract along with emails from high-level executives who were directly involved in negotiating the License. Those e-mails showed, for example, that DuPont's negotiators were aware in March 2002 that the contractual language at issue could be a stacking restriction and problematic if used in combination with a glyphosate resistance gene. In addition, DuPont in-house counsel advised against commercializing the OGAT/RR stack with specific reference to the License's field of use limitation in section 3.01(a).
In response to the discovery, Monsanto moved for sanctions, asserting that DuPont had misrepresented its subjective belief regarding its rights to stack traits or genes under the license and thereby perpetrated a fraud on the court. DuPont opposed, claiming that it had always understood that the License authorized it to make and sell the OGAT/RR stack. The district court granted the motion and imposed sanctions, stating that DuPont's factual allegations in its pleadings were not "rooted in fact." The court found the produced documents supported a finding of factual misrepresentations concerning DuPont's subjective belief in support of its reformation claims. The court held that DuPont had perpetrated a fraud on the court and abused the judicial process, which warranted sanctions. Accordingly, the district court struck DuPont's reformation defense and counterclaims, and awarded attorney fees to Monsanto incurred in defending against DuPont's reformation counterclaims beginning on January 29, 2010, the date on which DuPont moved to restore those claims, as well as fees incurred for the sanctions motions.
Monsanto prevailed at the patent infringement trial and received nominal damages. DuPont's antitrust claim was scheduled for later trial when the parties agreed to dismiss all claims with prejudice, with the exception of the sanctions orders and rulings, which were appealed to the CAFC. The CAFC applied the Eighth Circuit's law under an abuse of discretion standard.
DuPont argued: 1) the issue was one of law as a matter of contractual interpretation and DuPont should not be sanctioned for making viable legal arguments; 2) the court improperly found DuPont misrepresented its position after considering a few documents created by a limited number of individuals and dated years after the contract negotiations were conducted, including DuPont's conservative attorney advice; and 3) DuPont had not impacted the court's ability to decide the case and therefore had not risen to the level of perpetuating fraud on the court, but was merely zealous advocacy. Monsanto reiterated numerous reasons it believed the court's findings were proper and not overly broad.
The CAFC upheld the district court's decision and found the sanctions award was narrowly tailored to respond to the factual allegations the court found were made. The CAFC pointed to the fact that the district court had performed its own interpretation of the license upon hearing Monsanto's first motion to dismiss, and had sided with Monsanto on the interpretation issue, and that DuPont's problematic allegations were an attempted end-run around that dismissal. The CAFC reviewed the path of discovery, found the documents fairly discovered in relation to the factual issues being determined, and gave deference to the court's factual findings in relation to DuPont's material misrepresentations.
In re Thomas Packard, Fed. Cir. Case 2013-1204 (May 6, 2014)
Here, the CAFC upheld the validity of different standards for claim indefiniteness during prosecution proceedings at the USPTO and during post-issuance proceedings before a court.
In 2007, Thomas G. Packard filed a patent application pro se, with claims directed to a coin holder for storing different types of coins. During prosecution, the pending claims were repeatedly rejected under 35 USC §112 as being indefinite for failing to "particularly point out and distinctly claim" the subject matter for which protection was sought. These indefiniteness rejections referred to numerous instances of "vague" language, lack of antecedent basis for claim terms, inconsistencies, and unclear relationships between different components of the claims. In response to each round of rejections, Mr. Packard canceled the pending claims, provided new claims, and did not provide remarks specifically responding to any of the indefiniteness rejections.
In his pro se appeal to the Board of Patent Appeals and Interferences (BPAI), Mr. Packard stated that "the claims do very clearly, specifically do point out and describe the claimed invention," that "an artisan can clearly understand the claims in light of the disclosure and drawings," and that the claims are "very clear, very simple, very explicit." The BPAI affirmed the examiner's indefiniteness rejections, pointing to a number of specific examples of recitations in Mr. Packard's claims that it considered "inconsistent," "confusing" or "uncertain." In doing so, the BPAI applied the indefiniteness standard codified by the USPTO in MPEP §2173.05(e): "a claim is indefinite when it contains words or phrases whose meaning is unclear." A petition for rehearing filed by Mr. Packard, in which his views were reiterated, was denied, with the BPAI stating that these arguments "do not set forth reasons why each of the instances of indefiniteness should not stand."
Mr. Packard, assisted by Wilmer Hale, appealed the BPAI decision. In the appeal brief, Mr. Packard argued that the proper standard for determining indefiniteness during prosecution at the USPTO should be the same as the standard applied by the CAFC, and that the standard is whether the term in a claim is "insolubly ambiguous." According to Mr. Packard, a claim is not "insolubly ambiguous" if "a court can give any meaning to the disputed term in the context of the claim." Mr. Packard argued that this standard would be more favorable to his case that the "unclear meaning" standard applied by the USPTO.
The court disagreed. Judges O'Malley, Plager and Taranto concluded that "when the USPTO has initially issued a well-grounded rejection that identifies ways in which language in a claim is ambiguous, vague, incoherent, opaque, or otherwise unclear in describing and defining the claimed invention, and thereafter the applicant fails to provide a satisfactory response, the USPTO can properly reject the claim." The judges grounded this conclusion in the procedural mechanism of the "prima facie case"; namely, when an examiner provides a "well-grounded identification of clarity problems," the burden shifts to the applicant to overcome it. Adequate responses may include "clarifying changes or [a] show[ing] of why, on close scrutiny, the existing claim language really was as reasonably precise as the circumstances permitted." If the applicant fails to adequately respond, the USPTO can properly confirm the rejection. The court distinguished between pre-issuance proceedings at the USPTO, and deferred assessment of the proper formulation of post-issuance judicial indefiniteness determinations, and upheld the USPTO standard.
In a concurring opinion, Judge Plager cited previous Federal Circuit cases that indicate that the "insolubly ambiguous" standard advocated by Mr. Packard is only one of several formulations (see, e.g., Datamise, LLC v. Plumtree Software, Inc., 417 F.3d. 1342 (Fed. Cir. 2005)), and noted that the Supreme Court recently agreed to address the proper judicial standard for indefiniteness (referring to Nautilus Inc. v. Biosig Instruments, Inc.).
General Electric Company and GE Wind Energy, LLC v. Thomas Wilkins, Mitsubishi Heavy Industries, Ltd., and Mitsubishi Power Systems Americas, Inc., Fed. Cir. Case 2013-1170 (May 8, 2014)
In this case, the CAFC confirmed that an individual asserting that he should be added as an inventor to an issued patent must provide clear and convincing, corroborated evidence to support his case. In the early 2000s, a group of German engineers at GE developed a technology to allow wind turbines to continue to operate during droops in voltage on the power grid (referred to as "low voltage ride through," or "LVRT," technology). A patent (the "'985 patent") naming the German engineers as inventors was issued on the technology, with claims reciting various arrangements of a blade pitch controller, a converter controller, a turbine controller, and an uninterruptable power supply ("UPS").
In 2002, Thomas Wilkins was employed by a company later acquired by GE, working on adapting wind turbines to meet LVRT requirements. That summer, Mr. Wilkins was contacted by the German engineers to seek confirmation that their system would work with US power grid requirements. Mr. Wilkins also prepared an analysis document that year summarizing some of his ideas for using a UPS in wind turbine control circuitry, and left GE by the end of 2002.
GE later asserted the '985 patent against Mitsubishi before the ITC. As part of their defense strategy, Mitsubishi hired Mr. Wilkins to search for prior art to invalidate the '985 patent, and paid Mr. Wilkins approximately $200,000. Mitsubishi also asserted that the '985 patent was unenforceable because GE had failed to name Mr. Wilkins as a co-inventor. The ALJ agreed that Mr. Wilkins was a co-inventor, but rejected the assertion that GE had intended to deceive the USPTO.
After the ITC proceedings, Mr. Wilkins averred that he had ownership rights in the '985 patent, and entered into a license option and consulting agreement with Mitsubishi for a total of $300,000. When Mitsubishi exercised its option, Mr. Wilkins' counsel demanded additional funds for Mr. Wilkins to "stay in the game" against GE, and assured Mitsubishi that the company would have "every ability to coordinate and manage Mr. Wilkins' involvement to maximize [Mitsubishi's] position in the litigation." Mitsubishi subsequently paid Mr. Wilkins a licensing fee of $1.5M.
GE sued to quiet title to the '985 patent in the Eastern District of California, and Mr. Wilkins and Mitsubishi countersued for a declaration that Mr. Wilkins was an inventor. After dismissing GE's suit on statute of limitations grounds, and after Mr. Wilkins "refus[ed] four times to take an unqualified oath to tell the truth at his deposition" and "filed a declaration calling the district court 'obtuse,' 'overly assumptive,' and 'ignorant'," the court concluded that Mr. Wilkins and Mitsubishi had failed to establish Mr. Wilkins' inventorship. The court noted Mitsubishi's payments to Mr. Wilkins to "stay in the game," Mr. Wilkins' "purposefully evasive" responses to questions, and the fact that Mr. Wilkins was "repeatedly impeached" during examination. Putting this together with Mr. Wilkins' correspondence with the German engineers and Mr. Wilkins' analysis document from his time at GE, the court concluded that the "clear and convincing" standard had not been met because "[s]imply put, there [we]re no reliable documents that verify what, if anything, Mr. Wilkins contributed to any of the claims of the '985 patent."
On appeal, Judges Lourie, Taranto and Chen affirmed the district court's decision. The judges observed that, to meet the "rule of reason" standard for a finding of inventorship, a putative inventor must first provide credible testimony, and that provide corroboration of that testimony. The court did not give weight to the ALJ's determination that Mr. Wilkins was an inventor because the ALJ did not have access to evidence of the relationship between Mr. Wilkins and Mitsubishi, nor did the ALJ witness Mr. Wilkins' "shifting and inconsistent" district court testimony. Without credible testimony, the district court had no need to proceed to the second step of analysis and evaluate corroborating evidence. However, the court noted that the district court had done so anyway, and found no factual findings in the documentary record that Mr. Wilkins contributed to the LVRT arrangement recited in the claims. Instead, Mr. Wilkins description of a UPS in his analysis document served a different purpose than the UPS in the claims of the '985 patent. The court concluded that Mr. Wilkins had failed to meet the "heavy burden of proof" by clear and convincing evidence, and thus should not be named as a co-inventor.