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Alice Corporation Pty. Ltd. v. CLS Bank International

Issues

Are claims to computer-implemented inventions—including claims to systems and machines, processes, and items of manufacture—patent-eligible subject matter?

Alice Corporation was granted patents on several processes and systems relating to the use of computer software to facilitate securities trading and reduce risks of parties not fulfilling contractual obligations. CLS Bank developed software for its own use in similar transactions. CLS brought an action for declaratory judgment, asserting that Alice’s patents were subject-matter ineligible because they did no more than recite abstract ideas regarding fundamental economic concepts. Alice counterclaimed, asserting that CLS infringed Alice’s patents. The district court found the Alice patents invalid, but the Federal Circuit reversed, holding that Alice’s patents fell within the “abstract ideas” exception to the generally broad policy of patent eligibility. Alice argues that the abstract ideas exception is meant to be read narrowly and apply to fundamental truths such as facts of nature. CLS counters that Alice’s patents merely cover fundamental economic concepts and that these should fall within the exception. At issue is a basic question about the scope of patent-eligible subject matter, and the breadth of the abstract ideas exception. The Court’s decision could fundamentally alter the scope of what is patentable.  The decision may encourage innovation in the software and other industries by rewarding those who expend resources to bring about a useful product to the public.

Questions as Framed for the Court by the Parties

Whether claims to computer-implemented inventions—including claims to systems and machines, processes, and items of manufacture—are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court? 

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Facts

In securities trading, when two parties agree to a trade there is often a time lapse between when the parties enter into the agreement and when the actual trade is performed. See CLS Bank Int’l v. Alice Corp., 717 F.3d 1269, 1274 (Fed Cir. 2013).

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Association for Molecular Pathology v. Myriad Genetics, Inc.

Myriad Genetics first identified and isolated the BRCA1 and BRCA2 genes responsible for diagnosing an elevated risk of breast and ovarian cancer. Myriad claims patents on the isolated BRCA genes along with cDNA, which is a synthetic product that mirrors the coding sections of the BRCA genes, and "primers" used in diagnostics. The Patent Act defines the scope of patentable subject-matter in 35 U.S.C. § 101; however, the Supreme Court has consistently held that laws of nature, abstract ideas, and natural phenomenon cannot be patented. Myriad claims that the isolated and modified genes that they hold patents for never occur in nature, and subsequently are patentable subject-matter. Conversely, the Association for Molecular Pathologists contends that Myriad only isolated, and did not modify, a gene already existing in nature and that this isolated gene performs a similar function as the gene in natural form. The district court held that naturally-occurring genes were not patentable subject-matter, but the Federal Circuit court reversed. How the Supreme Court decides this case will greatly impact the scope of patentable subject-matter. A narrowing or a broadening of current subject-matter eligibility will have significant effects on the incentives for inventors as well as what information is available for and usable by the general public.

Questions as Framed for the Court by the Parties

Many patients seek genetic testing to see if they have mutations in their genes that are associated with a significantly increased risk of breast or ovarian cancer. Respondent Myriad Genetics obtained patents on two human genes that correlate to this risk, known as BRCA1 and BRCA2. These patents claim every naturally-occurring version of those genes, including mutations, on the theory that Myriad invented something patent-eligible simply by removing ("isolating") the genes from the body. Petitioners are primarily medical professionals who regularly use routine, conventional genetic testing methods to examine genes, but are prohibited from examining the human genes that Myriad claims to own. This case therefore presents the following questions:

  1. Are human genes patentable?
  2. Did the court of appeals err in upholding a method claim by Myriad that is irreconcilable with this Court's ruling in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012)?
  3. Did the court of appeals err in adopting a new and inflexible rule, contrary to normal standing rules and this Court's decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), that petitioners who have been indisputably deterred by Myriad's "active enforcement" of its patent rights nonetheless lack standing to challenge those patents absent evidence that they have been personally threatened with an infringement action?

LIMITED TO QUESTION 1 PRESENTED BY THE PETITION.

Issue

Whether Myriad’s claimed invention, the sequence of certain human genes in both isolated and purified forms, falls within the scope of inventions for which a patent may be granted.

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Acknowledgments

The authors would like to thank Professor Oskar Liivak for his insight into this case.

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Bowman v. Monsanto Company

Monsanto Company, a producer of herbicide resistant soybean seeds and technology, sued Vernon Hugh Bowman, a soybean farmer, for patent infringement.  Bowman replanted second-generation seeds, which were the product of seeds purchased from a licensed Monsanto technology distributor.  Monsanto argued that by planting the product of Monsanto’s herbicide resistant seeds instead of purchasing new ones, Bowman was in violation of the Technology Agreement for the seeds.  The Federal Circuit upheld a district court decision awarding Monsanto damages for violation of their patented technology, reasoning that Monsanto's herbicide resistant technology was covered by patent regardless of whether it was the original seed or a product of the original seeds. Bowman contends that Monsanto’s patent rights were exhausted once he bought the seeds and that use of progeny seeds is an expected use of the product.  Monsanto responds that in the case of self-replicating technologies the patent extends to the technology, here, the trait of herbicide resistance, rather than the seed itself. 

Questions as Framed for the Court by the Parties

Patent exhaustion delimits rights of patent holders by eliminating the right
 to control or prohibit use of the invention after an authorized sale. In this case, the Federal Circuit refused to find exhaustion where a farmer used seeds purchased in an authorized sale for their natural and foreseeable purpose--namely, for planting.                                      

The question presented is: Whether the Federal Circuit erred by (1) refusing to find patent exhaustion in patented seeds even after an authorized sale and by (2) creating an exception to the doctrine of patent exhaustion for self-replicating technologies?

Issue

May patent holders enforce their rights on the products of self-replicating technologies, such as replicating seeds, after an authorized sale or does the patent only apply to the original article?

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Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S

Issues

Does the counterclaim provision of the Hatch-Waxman Act authorize a generic drug manufacturer in a patent infringement suit to assert a counterclaim compelling the patent holder to modify an overly broad description of its patent?

 

Petitioner Caraco Pharmaceutical Laboratories, a generic drug manufacturer, sought FDA approval to market the diabetes drug repaglinide. Pursuant to the Hatch-Waxman Act's expedited FDA application process for generic drugs, Caraco certified that its drug label would not conflict with Respondent Novo Nordisk’s patented repaglinide-metformin use combination. Relying on Novo’s description of its patent, the FDA denied the certification. Caraco invoked the Act’s counterclaim provision to compel Novo to revert to a narrower patent description. The United States Court of Appeals for the Federal Circuit found that Caraco could not assert the counterclaim. Caraco argues that the Federal Circuit’s reading of the counterclaim provision is incorrect and that the purpose of the counterclaim provision—to “correct” misleading patent descriptions—supports reversal. Novo asserts that the statute plainly permits a counterclaim only if Novo’s patent does not claim any approved method of use. The Supreme Court’s reading of the counterclaim provision may affect healthcare costs and the generic drug manufacturing industry.

Questions as Framed for the Court by the Parties

When the Food & Drug Administration (FDA) approves a drug for multiple uses, the Hatch-Waxman Act allows generic drug makers to avoid contested patent litigation by marketing generic versions of the drug solely for non-patented uses. The FDA lacks the authority and expertise needed to verify the patent information submitted by name-brand drug companies, however, so it defers to their descriptions of the scope of their patents. Such companies can therefore block the approval of generic drugs by submitting overbroad patent descriptions to the FDA, effectively extending their patents to cover non-infringing uses.

To combat this problem, the Act allows a “counterclaim seeking an order requiring the [patent] holder to correct or delete the patent information submitted by the holder . . . on the ground that the patent does not claim . . . an approved method of using the drug.” 21 U.S.C. §  355(j)(5)(C)(ii)(I). In a 2-1 decision that conflicts with this Court's precedents and recent D.C. Circuit authority, the Federal Circuit held that the counterclaim provision effectively authorizes only “delet[ing]” improperly listed patents, but not “correct[ing]” information that misrepresents the scope of the approved uses claimed by a patent. That ruling expressly invalidates longstanding FDA regulations defining “patent information,” which the FDA deems “essential” to administering the Act, without seeking the agency's views. The question presented is:

Whether this counterclaim provision applies where (1) there is “an approved method of using the drug” that “the patent does not claim,” and (2) the brand submits “patent information” to the FDA that misstates the patent's scope, requiring “correct[ion].”

The Hatch-Waxman Act expedites the process by which generic drug manufacturers can obtain approval from the Food and Drug Administration (“FDA”) to market generic drugs, and allows generic drug manufacturers to produce and market brand-name drugs for FDA-approved uses that are not covered by existing patents. See 21 U.S.C.

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Commil USA, LLC v. Cisco Systems, Inc.

Issues

Is a defendant’s reasonable, good-faith belief that a patent is invalid a viable defense to patent infringement by inducement under 35 U.S.C. § 271(b)?

The Supreme Court will determine whether a defendant with a good-faith belief that a patent is invalid can be found liable for induced infringement. Commil argues that a good-faith belief defense of a patent’s invalidity is irrelevant to the intent requirement to establish infringement by inducement under § 271(b). In opposition, Cisco argues that a good-faith belief defense of a patent’s invalidity is crucial to determining culpability and thus, relevant in establishing infringement by inducement. The ruling in this case will impact the scope of a patent owner’s rights and the availability of a new defense to patent infringement by inducement. Additionally, the decision in this case could have important consequences for the sale and marketing of generic-drug counterparts. 

Questions as Framed for the Court by the Parties

Commil holds a patent teaching a method to implement short-range wireless networks. At trial, the jury returned a verdict that Commil's patent was valid, that Cisco directly infringed but did not induce infringement, and awarded damages. Because Cisco's counsel invoked stereotypes about Commil's Jewish owner and inventors during trial, the district court found the verdict "inconsistent with substantial justice" and ordered a new trial on inducement and damages only. At the second trial, the jury returned a verdict that Cisco induced infringement and awarded damages. The Federal Circuit reversed and remanded for a third trial on two grounds. First, although Commil's patent is valid, the Federal Circuit held that Cisco's "good faith belief” that the patent was invalid is a defense to induced infringement. Second, although Cisco had actual knowledge of Commil's patent, the Federal Circuit held that this Court's opinion in Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011) rendered erroneous and prejudicial the jury instruction based on DSU Medical Corp. v. JMS Co., 471 F.3d 1293 (Fed. Cir. 2006). 

Did the Federal Circuit err in holding that a defendant's belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b)?

Petitioner Commil USA, LLC (“Commil”) owns a patent, U.S. Patent No. 6,430,395 (“the ’395 patent”), relating to wireless local area networks (“WLANs”).

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Cuozzo Speed Technologies, LLC v. Lee

Issues

May the Patent Trial and Appeal Board (“PTAB”) in an inter partes review (“IPR”) use a  broadest-reasonable  interpretation when construing the claims of a patent, or is the PTAB required to construe claims to their plain and ordinary meaning? May courts review the PTAB’s decision to institute an IPR proceeding?

The Supreme Court will decide the standard that the United States Patent Trial and Appeal Board (“PTAB”) should use when construing claims in an issued patent and whether the PTAB’s decision to institute an inter partes review (“IPR”) proceeding is judicially reviewable. Cuozzo Speed Technologies argues that claims should be given their ordinary meaning and that the PTAB’s decision to institute an IPR should be judicially reviewable. Meanwhile, the Patent and Trademark Office (“PTO”) argues that when the PTAB institutes an IPR, the PTAB should construe claims with their broadest-reasonable construction standard. Furthermore, the PTO argues that the PTAB’s decision to institute an IPR is final and non-reviewable by the courts. The Supreme Court’s decision may help resolve inconsistent standards used between district courts and IPR proceedings while affecting innovator’s rights. 

Questions as Framed for the Court by the Parties

  1. Did the court of appeals err in holding that, in IPR proceedings, the Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning?
  2. Did the court of appeals err in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board’s decision whether to institute an IPR proceeding is judicially unreviewable?

On August 17, 2004, Cuozzo Speed Technologies, LLC (“Cuozzo”) was issued U.S. Patent No.

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Global-Tech Appliances, Inc. v. SEB S.A.

Issues

To prove that a defendant induced patent infringement, is it necessary to show that the defendant intended or actually knew of the infringement, or is evidence of the defendant’s deliberate indifference sufficient?

 

PATENT, INFRINGEMENT, INDUCEMENT, STATE OF MIND

Respondent SEB S.A. owns a patent for a deep fryer featuring an inexpensive, insulated plastic outer shell. In 1997, Petitioner Pentalpha Enterprises, LTD, a subsidiary of petitioner Global-Tech Appliances, Inc. (collectively, “Global-Tech”), developed and manufactured a deep fryer that copied features of SEB's deep fryer. On August 27, 1999, SEB sued Global-Tech for patent infringement in the United States District Court for the Southern District of New York. The jury found Global-Tech liable for direct and active inducement of patent infringement, and Global-Tech appealed to the Court of Appeals for the Federal Circuit. That court affirmed, holding that Global-Tech acted with deliberate indifference to the risk of infringing SEB's patent. Global-Tech appealed, arguing that the Federal Circuit applied the wrong standard for the mental-state element of actively inducing patent infringement under 35 U.S.C. § 271(b). Global-Tech asserts that the proper standard is “purposeful, culpable expression and conduct to encourage an infringement,” the standard the Supreme Court articulated in MGM Studios, Inc. v. Grokster, Ltd. On the other hand, SEB argues that a patent infringer does not need to have actual knowledge of a patent to be liable for actively inducing patent infringement. The Supreme Court’s decision will affect patent litigation, the extent and cost of patent searches, and market competition and innovation.

Questions as Framed for the Court by the Parties

Whether the legal standard for the state of mind element of a claim for actively inducing infringement under 35 U.S.C. § 271(b) is “deliberate indifference of a known risk” that an infringement may occur, as the Court of Appeals for the Federal Circuit held, or “purposeful, culpable expression and conduct” to encourage an infringement, as this Court taught in MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 937, 125 S. Ct. 2764, 2780, 162 L. Ed. 2d 781, 801 (2005)?

SEB S.A. specializes in the design and manufacture of home cooking appliances. See SEB S.A. v. Montgomery Ward & Co, Inc., 594 F.3d 1360, 1365 (Fed. Cir. 2010). SEB owns a patent for a deep fryer featuring an inexpensive, insulated plastic outer shell, or skirt. See id. at 1365–66. In 1997, Sunbeam Products, Inc. requested that Pentalpha Enterprises, a subsidiary of Global-Tech Appliances Inc. (collectively “Global-Tech”) develop and manufacture a deep fryer. See Brief for Petitioners, Global-Tech Appliances Inc. and Pentalpha Enterprises, Ltd. at 3.

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Acknowledgments

The authors would like to thank former Supreme Court Reporter of Decisions Frank Wagner for his assistance in editing this preview.

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Gunn v. Minton

The Respondent, Vernon F. Minton ("Minton"), leased a software that he developed to the National Association of Securities Dealers, Inc. ("NASD") and NASDAQ Stock Market, Inc. ("NASDAQ") and later applied for and was granted a patent for the software. Subsequently, Respondent Minton filed a patent infringement lawsuit against NASD and NASDAQ, but the trial court dismissed the lawsuit due to the "on-sale bar" rule, codified in § 102(b) of the United States Patent Act. The rule invalidates patents that apply to inventions sold more than a year prior to the application date of the patent. Minton then filed a legal malpractice lawsuit against his attorneys, Petitioner Jerry W. Gunn, et al., who represented Minton in the patent infringement case and argued that if not for Gunn's failure to raise at trial the experimental use exception to the on-sale bar, he would have won the patent infringement lawsuit. The issue in this case concerns whether the federal courts should have exclusive jurisdiction over legal malpractice claims that arise from patent litigation. Gunn argues that the federal issue in the case is too insubstantial to be heard in federal court and, furthermore, that significant state interests and Congressional intent require that the case be heard in state court. Minton claims, however, that the federal issue is substantial and that based on the federal interests and Congressional intent, this case should be decided in federal court. The Supreme Court's decision will affect the efficiency and uniformity of this country's patent law and patent-related malpractice litigation. Such effects would impact the growth and development of the technology and science industries. 

Questions as Framed for the Court by the Parties

Did the Federal Circuit depart from the standard this Court articulated in Grable & Sons Metal Products, Inc. v. Darue Eng'g & Mfg., 545 U.S. 308 (2005), for "arising under" jurisdiction of the federal courts under 28 U.S.C. § 1338, when it held that state law legal malpractice claims against trial lawyers for their handling of underlying patent matters come within the exclusive jurisdiction of the federal courts? Because the Federal Circuit has exclusive jurisdiction over appeals involving patents, are state courts and federal courts strictly following the Federal Circuit's mistaken standard, thereby magnifying its jurisdictional error and sweeping broad swaths of state law claims - which involve no actual patents and have no impact on actual patent rights - into the federal courts?

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Issue(s)

Do the federal courts have exclusive jurisdiction over a legal malpractice claim arising from patent infringement litigation? 

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Halo Electronics Inc. v. Pulse Electronics Inc.; Stryker Corporation, et al. v. Zimmer, Inc.

Issues

Should patentees have to show that defendants willfully infringed their patents to receive enhanced damages?

 

In this consolidated case, the Supreme Court must determine the correct interpretation of 35 U.S.C. § 284, which provides enhanced damages in patent infringement cases. Currently, plaintiffs must show that defendants “willfully infringed” to obtain enhanced damages. Courts employ a two-prong test, with subjective and objective elements. The objective element requires plaintiffs to show “by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted” patent infringement. In separate actions, petitioners Halo Electronics Inc. and Stryker Corp. sued respondents Pulse Electronics Inc. and Zimmer Inc. respectively for patent infringement. In each case, the U.S. Court of Appeals for the Federal Circuit found that Halo and Stryker failed to satisfy the objective prong of the willfulness test. But Halo and Stryker argue that the Federal Circuit’s interpretation of objective willfulness is unfairly burdensome and should be replaced by a totality-of-the-circumstances standard. Pulse and Zimmer contend that the objective willfulness standard properly allows only culpable infringers to pay punitive damages, in accord with the historical purpose of punitive damages. The Court’s decision may affect how plaintiffs prove infringement, and whether culpable infringers escape liability.

 

Questions as Framed for the Court by the Parties

Did the Federal Circuit err by applying a rigid, two-part test for enhancing patent infringement damages under 35 U.S.C. § 284, that is the same as the rigid, two-part test this Court rejected last term in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014) for imposing attorney fees under the similarly-worded 35 U.S.C. § 285? 

Halo Electronics Inc. (“Halo”) and Pulse Electronics Inc. (“Pulse”) make surface mount transformers, a component in electronic devices such as internet routers.  See Halo Electronics Inc. v. Pulse Electronics Inc., 769 F.3d 1371, 1374–75 (Fed. Cir. 2014).  Prior to the 1990s, surface mount transformers would often overheat and crack, causing the device to fail.

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Impression Products v. Lexmark International

Issues

Does a “conditional sale” transferring title with post-sale restrictions on the use or resale of the item avoid the patent exhaustion doctrine, thus permitting a suit for infringement as a means of enforcing the post-sale restriction; and, does a foreign sale of a patented article exhaust the U.S. patent rights in that article?

The Supreme Court must decide whether Lexmark International, Inc., a company that manufactures toner cartridges for use in its printers, can use post-sale restrictions to prevent remanufacturers such as Impression Products, Inc., the defendant in this case, from refurbishing and reselling the cartridges. Petitioner Impression Products argues that under the patent exhaustion doctrine, all of a patent holder’s rights to a patented item are exhausted by the initial authorized sale of the item. Accordingly, Impression Products argues that the patent holder cannot place restrictions on how the patented article is used after its sale. Respondent Lexmark International, however, contends that Section 154(a) gives a patent holder authority to impose restrictions on the post-sale use of a patented item and allows a patent holder to transfer less than the complete patent rights to the buyer. Thus, a patent holder need not completely exhaust the patent after the sale. The ultimate decision by the Supreme Court may have an impact on the judicial doctrine of patent exhaustion and may potentially hinder the market for remanufactured patented goods. 

Questions as Framed for the Court by the Parties

The “patent exhaustion doctrine”—also known as the “first sale doctrine”—holds that “the initial authorized sale of a patented item terminates all patent rights to that item.” Quanta Computer, Inc. v. LG Elecs., Inc., 553 U.S. 617, 625 (2008).

The questions presented are:

  1. Whether a sale that transfers title to the patented item while specifying post-sale restrictions on the article’s use or resale avoids application of the patent exhaustion doctrine and therefore permits the enforcement of such post-sale restrictions through the patent law’s infringement remedy.
  2. Whether, in light of this Court’s holding in Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351, 1363 (2013), that the common law doctrine barring restraints on alienation that is the basis of exhaustion doctrine “makes no geographical distinctions,” a sale of a patented article—authorized by the U.S. patentee—that takes place outside of the United States exhausts the U.S. patent rights in that article.

Lexmark International, Inc. is a company that makes and sells toner cartridges compatible with its printers. Lexmark International, Inc., v. Impression Products, Inc., No. 14-1617 (Fed. Circuit Feb. 12, 2016) at 9. Lexmark owns several patents on the cartridges it produces.

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