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

November 3, 2017

Overview

In Bayer v. Watson, the panel throws out Bayer’s patent to its Staxyn erectile dysfunction drug as being obvious, noting that the district court focused too heavily on the commercial availability of the prior art. The panel also noted that potential drawbacks with the claimed formulation do not amount to “teaching away.” In Two-Way Media v. Comcast, the panel concedes that the specification may describe an innovative “scalable architecture,” but the claims use result-based functional language that do not describe how to achieve these results in a non-abstract way. Therefore, the district court’s determination of invalidity under § 101 is affirmed as to an early internet patent directed to a system for streaming audio/visual data. In MasterMine Software v. Microsoft, the Circuit reverses a ruling of indefiniteness as to software claims the district court held were invalid as attempting to cover both methods and systems. In the claims at issue, the functional language focuses on capabilities of the system rather than a specific action that must be performed (e.g., by a user) for infringement to occur, and therefore do not fail as being directed to both a method and a system.

Thanks to my colleague Mike Moore for his help with this week’s report.

Pete Heuser

Bayer Pharma AG. v. Watson Laboratories, Inc., Fed. Cir. Case 2016-2169 (November 1, 2017)

The Circuit reverses a determination by the district court, ruling on appeal that Bayer’s patent covering an erectile dysfunction drug is invalid as being obvious. The effect of this is that Bayer’s patent coverage on its Staxyn drug will expire in 2018 instead of 2028, opening the door for the generics sooner than Bayer had hoped.

In 2005, Bayer developed a new drug, which it eventually named Staxyn, that is somewhat different from its predecessors Viagra, Cialis and Bayer’s own Levitra, in that it is an uncoated tablet that disintegrates rapidly in the mouth, commonly referred to as an oral disintegrating tablet (“ODT”). Watson filed an ANDA seeking approval to market a generic version, and Bayer filed the instant case asserting infringement of its ’950 patent. Claims 9 and 11, both of which depend from claim 8, are the only claims at issue:

8. A drug formulation in the form of an uncoated tablet which disintegrates rapidly in the mouth and releases the drug in the mouth without swallowing the tablet comprising vardenafil hydrochloride trihydrate, and at least two sugar alcohols.

9. The drug formulation according to claim 8, wherein said sugar alcohols are a mixture of sorbitol and mannitol.

11. The drug formulation of claim 8, wherein at least one sugar alcohol is sorbitol.

In a bench trial, the district court ruled that Watson had not proven by clear and convincing evidence that a skilled artisan would not have been motivated to use the claimed elements. But according to the Circuit panel, the district court’s finding is contradicted by the references cited by Watson’s expert Dr. Jacobs that the court failed to consider. All six references identify ED drugs as ODT formulations. Several of these references indicate a person of ordinary skill in the art would have considered ODT formulations to be applicable to vardenafil, the active ingredient in Staxyn.

Bayer argued that Watson flooded the district court with references without adequately addressing them, but the panel disagrees. Watson produced these nine references to support a narrow point: they each disclosed formulating vardenafil and other approved ED drugs into ODTs. Watson addressed each of these nine references at trial through its expert and in its post-trial briefing. In light of these references, the district court clearly erred in determining that one of skill would not have been motivated to make ODT formulations of ED drugs.

The remainder of the district court’s findings underlying the motivation to formulate vardenafil ODT focused too heavily on the FDA approval and commercial availability of ODT formulations as of the priority date. Similarly, when considering the limitations in claim 9 as to sorbitol and mannitol, the district court’s analysis focused on the commercial availability, while failing to address the teachings that were available in the prior art.

The district court found that even if a skilled artisan would have been motivated to make an ODT formulation of vardenafil, the prior art taught away from formulating vardenafil ODT as immediate release. The district court found that a person of ordinary skill in the art would have expected vardenafil ODT to have a bitter taste, and that using an immediate-release formulation could increase vardenafil blood levels too quickly, which might be a problem for older men.

According to the opinion, a reference teaches away when it suggests that the line of development flowing from the reference’s disclosure is unlikely to be productive of the result sought by the applicant. The “teaching away” inquiry does not focus on whether a person of ordinary skill in the art would have merely favored one disclosed option over another disclosed option. The district court’s finding that a person of ordinary skill in the art would have first pursued a delayed-release formulation over an immediate-release formulation is insufficient to support a finding of teaching away.

With respect to the objective indicia, the district court found that Watson’s copying of the claimed invention and Staxyn’s unexpected increased duration of action compared to Levitra supported its conclusion of nonobviousness. The panel agrees with Bayer that these two objective indicia are probative of nonobviousness.

As to the final legal conclusion, weighing a showing of clear motivation, concerns but no teaching away as to bitter taste and bioavailability, and evidence of copying and unexpected results, the panel rules that claims 9 and 11 of the ’950 patent would have been obvious.

Read the full opinion

Two-Way Media Ltd. v. Comcast Cable Communications, LLC, Fed. Cir. Case 2016-2531, -2532 (November 1, 2017)

The panel affirms the grant of judgment on the pleadings as to claims directed to a system for streaming audio/visual data over the internet because, much like many early internet patents, the claims merely recite result-based functional language. The opinion notes that the claims use terms like “converting,” “routing,” “controlling,” “monitoring,” and “accumulating records,” instead of describing how to achieve these results in a non-abstract way.

In applying step one of Alice, the panel notes that claim 1 of the ’187 patent recites a method for routing information using result-based functional language, but does not sufficiently describe how to achieve these results in a non-abstract way. The claims are thus similar to those in the Circuit’s 2016 Electric Power Group case. In that case, the Circuit held that the challenged claims were directed to the abstract idea of “gathering and analyzing information of a specified content, then displaying the results, and not any inventive technology for performing those functions.” In the same way, claim 1 manipulates data but fails to do so in a non-abstract way.

In applying Alice step two, the district court acknowledged that the specification of the ’187 patent describes a system architecture as a technological innovation, but concluded that the claim does not recite this architecture, even taking into account Two-Way Media’s proposed constructions. The panel agrees. The main problem that Two-Way Media cannot overcome is that the claim—as opposed to something purportedly described in the specification—is missing an inventive concept. While the specification may describe a purported innovative “scalable architecture,” claim 1 of the ’187 patent does not. The panel thus concludes that claim 1 fails to transform the abstract idea into something more.

In a most interesting part of the case, the panel sees no error in the district court’s refusal to consider evidence relating to the “purported technological innovations of its invention … as the court correctly concluded that the material was relevant to a novelty and obviousness analysis, and not whether the claims were directed to eligible subject matter.”

The ’622 and ’686 patents suffer from the same Aliceinfirmities. Two-Way Media admits that the representative claims are broader in several respects than claim 1 of the ’187 patent. The panel agrees with the district court that the claims here—directed to monitoring the delivery of real-time information to user(s) or measuring such delivery for commercial purposes—are similar to other concepts found to be abstract in the Circuit’s Bascom, Electric Power Grid andUltramercial cases. For these reasons, the panel concludes that the representative claims of the ’622 patent and ’686 patent are directed to abstract ideas.

The district court found that the claims of the ’622 patent and ’686 patent did not contain an inventive concept under Alicestep two. Two-Way Media argued that the district court erred by failing to account for a central aspect of Two-Way Media’s invention, the system architecture, and failing to credit Two-Way Media’s nonconventional arrangement of components. But the panel disagrees, noting that nothing in these claims requires anything other than conventional computer and network components operating according to their ordinary functions. The claims thus fail to describe a “specific, discrete implementation of the abstract idea” sufficient to qualify for eligibility under § 101.

Comment:  The panel’s refusal to consider evidence relating to “the purported technological innovations of its invention” is somewhat surprising because the opinion notes the district court’s acknowledgement of “the system architecture as a technological innovation.” The opinion then states that that technological innovation was not recited in the claims. So wouldn’t evidence relating to the novelty of what is claimed be relevant? The opinion notes that this argument was previously rejected by the Circuit in 2016'S Affinity Labs case.

Read the full opinion

MasterMine Software, Inc. v. Microsoft Corporation, Fed. Cir. Case 2016-2465 (October 30, 2017)

The Circuit affirms a ruling that Microsoft’s software does not infringe two patents of MasterMine that are directed to exporting data to spreadsheets. However, the panel reverses a lower court ruling that the patents are invalid as being indefinite. The indefiniteness part of the case was the most interesting, so that is the focus of our discussion.

The panel explains the criteria for indefiniteness based on mixed claim forms. Specifically, the opinion notes that the use of functional language in a system claim does not necessarily create a mixed-class type claim that is invalid under 35 U.S.C. § 112.

The primary language at issue is related to MasterMine’s ’850 patent, which was asserted against Microsoft. Claim 8 of the patent includes language such as:

“wherein the reporting module installed within the CRM software application presents a set of user-selectable database fields as a function of the selected report template, receives from the user a selection of one or more of the user-selectable database fields, and generates a database query as a function of the user selected database fields.”

In defending itself before the district court, Microsoft argued that the claim language was invalid under § 112, para. 2. Microsoft asserted that because the claim language defined a system module using functional terms, the claim was improperly claiming two different subject-matter classes and was therefore indefinite.

The Circuit distinguishes the claim at issue from previous cases that resulted in findings of indefiniteness. For example, the panel notes that in its previous cases such as IPXL Holdings, decided in 2005, the Circuit found indefiniteness based on large part on the claim reciting: “the user uses the input means.” Such language resulted in indefiniteness because it caused lack of clarity regarding whether the claim was infringed by the system itself, or whether infringement required user action. The panel also discusses the Circuit’s 2011 Rembrandt Data case, which includes a claim that recites a system generally using means plus function language. However, the last element of the claim recites: “transmitting the trellis encoded frames.” The claim in Rembrandt was indefinite because the initial elements are properly recited apparatus elements, but the final “transmitting” element is a method element, thereby resulting in an indefinite mixed-class claim.

In the present case, the functional language italicized in the claim above focuses on capabilities of the system rather than a specific action that must be performed (e.g., by a user) for infringement to occur. In other words, the functional language relates to things that a properly recited apparatus element may perform, rather than the undertaking of a specific action. Based on this logic, the panel rules that the claim language at issue is not indefinite.

The panel affirms the district court’s construction of the term “pivot table” and under that construction, MasterMine had conceded there was no infringement.

Read the full opinion

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