IP News

Foreign Outsourcing for Domestic Patent Prosecution

The U.S. Patent and Trademark Office (“USPTO”) issued a warning advising against outsourcing patent prosecution to foreign countries for patents intended for U.S. filing. Scope of Foreign Filing Licenses, 73 Fed. Reg. 42,781 (July 23, 2008). The USPTO issued the warning in response to solicitations from foreign law firms and service providers to U.S. patent practitioners. The USPTO reminded practitioners that exporting patent prosecution is subject to a foreign filing license (“FFL”). U.S. patent practitioners may apply for an FFL at the Bureau of Industry and Security. Regardless of whether an FFL is granted, it does not authorize exporting U.S. patent prosecution for patents intended for U.S. filing, and an FFL is strictly limited to services related to foreign patent applications.

The USPTO also advised that an FFL's scope limits exportation to the material that was specifically submitted to the USPTO as a U.S. patent application or as a request for an FFL.

“For example, the USPTO has received short abstracts, PowerPoint' slides and even titles of inventions as the disclosure for which a foreign filing license is requested.” The USPTO will typically grant an FFL in these circumstances, but the applicant may limit its rights because an insufficient license application may not support “the ultimate resulting patent applications and may not authorize any additional material added after the initial foreign filing license request.” If additional material is included in an ultimate patent application that was not included in an FFL application, the invention's general nature may be altered and require inspection pursuant to 35 U.S.C. ”181, 184.

USPTO Publishes Notice Clarifying Non-Retroactivity

On Aug. 7, the USPTO published a notice that its new rules relating to applications containing patentably indistinct claims, currently enjoined pursuant to Tafas v. Dudas, 530 F. Supp. 2d 786 (E.D. Va. 2008), will not apply retroactively should the injunction be lifted. The USPTO stated that “[s]hould the injunction be lifted, those regulations will apply only to applications filed on or after any new effective date that would be published by the USPTO in the future.”

Order Advising Parties That Future Damages Question May Go to Jury

On July 9, Judge Ron Clark of the Eastern District of Texas issued an order in Seoul Semiconductor Co. Ltd. v. Nichia Corp., 07-cv-273 (E.D. Tex. July 9, 2008) advising the parties that the “court is considering submitting to the jury a damages question regarding future damages, such as an ongoing royalty rate.” Judge Clark further stated that an example of such a jury question might be, “What rate or sum of money, if any, do you find is adequate as a reasonable royalty to compensate Plaintiff for the conduct you found to infringe that occurs in the future? Answer in a percentage or in dollars and cents.” Judge Clark noted that several recent Federal Circuit decisions had approved of the award of an ongoing royalty for patent infringement in lieu of injunctive relief, and that submission of the issue to the jury may avoid the need for a later bench trial on the issue. Judge Clark allowed the parties 10 days to notify the court of any objections to the proposed procedure, and told the parties that in the absence of objections, the parties should instruct their damages experts to consider the ongoing royalty issue in their expert reports.

Federal Circuit Narrowly Interprets Hatch-Waxman Act Safe Harbor Provision

In Proveris Scientific Corp. v. InnovaSystems, Inc., No. 2007-1428 (Fed. Cir. Aug. 5, 2008) the Federal Circuit held that a device used in connection with FDA regulatory submissions, but not itself subject to FDA approval, did not come within the safe harbor provision of 35 U.S.C. '271(e)(1).

Defendant appellee Innova appealed from a district court judgment that it infringed four claims of U.S. Patent No. 6,785,400 (the '400 patent) owned by plaintiff Proveris. The '400 patent is directed to a system and apparatus for characterizing aerosol sprays commonly used in various drug delivery devices. According to the '400 patent, spray characterization measurements are frequently used to calibrate drug delivery devices during drug research and development and such spray characterization plays an important role in the regulatory approval process. Proveris' suit alleged that Innova's Optical Spray Analyzer product (“OSA”) infringed several claims of the '400 patent. Innova argued, in part, that the OSA did not infringe the '400 patent because it fell within the safe harbor provision of 35 U.S.C. '271(e)(1), which reads in relevant part, “It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention ' solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.” The OSA itself is not subject to FDA approval, but is used in connection with regulatory submissions.

Shortly before trial, the district court ruled as a matter of law that '271(e)(1) does not immunize Innova's OSA devices from infringement of the '400 patent and subsequently granted JMOL in favor of Proveris with respect to infringement. The Federal Circuit affirmed the district court's JMOL ruling, holding that '271(e)(1) does not immunize the OSA from infringement. The court reasoned that '271(e)(1) was enacted to eliminate two unintended distortions of the effective patent term resulting from the premarket approval required for certain products by the Federal Food, Drug, and Cosmetic Act. The court noted that the first distortion was the reduction of effective patent life caused by the FDA premarket approval process, while the second distortion was the de facto extension of effective patent life at the end of the patent term ' also caused by the FDA premarket approval process. In other words, prior to the enactment of '271(e)(1), competitors' activities involving a patented invention during the patent term constituted an act of infringement, even if undertaken for the sole purpose of obtaining regulatory approval.

The Proveris court held that while the OSA device is used to measure the characteristics of FDA regulated aerosol drug delivery products, the OSA itself is not subject to FDA premarket approval and therefore is not immune under '271(e)(1). The court reasoned that because the OSA faces no regulatory barriers to market entry upon patent expiration, “Innova is not a party who, prior to enactment of the Hatch-Waxman Act, could be said to have been adversely affected by the second distortion.” As further support for its holding, the Proveris court noted that Proveris was not a party adversely affected by the first distortion because the invention claimed in the '400 patent is not subject to premarket approval. The court therefore determined that the device claimed in the '400 patent was not a “patented invention” within the meaning of '271(e)(1) and that the provision therefore did not apply.

Matthew Berkowitz is an associate in the New York office of Kenyon & Kenyon LLP.

Foreign Outsourcing for Domestic Patent Prosecution

The U.S. Patent and Trademark Office (“USPTO”) issued a warning advising against outsourcing patent prosecution to foreign countries for patents intended for U.S. filing. Scope of Foreign Filing Licenses, 73 Fed. Reg. 42,781 (July 23, 2008). The USPTO issued the warning in response to solicitations from foreign law firms and service providers to U.S. patent practitioners. The USPTO reminded practitioners that exporting patent prosecution is subject to a foreign filing license (“FFL”). U.S. patent practitioners may apply for an FFL at the Bureau of Industry and Security. Regardless of whether an FFL is granted, it does not authorize exporting U.S. patent prosecution for patents intended for U.S. filing, and an FFL is strictly limited to services related to foreign patent applications.

The USPTO also advised that an FFL's scope limits exportation to the material that was specifically submitted to the USPTO as a U.S. patent application or as a request for an FFL.

“For example, the USPTO has received short abstracts, PowerPoint' slides and even titles of inventions as the disclosure for which a foreign filing license is requested.” The USPTO will typically grant an FFL in these circumstances, but the applicant may limit its rights because an insufficient license application may not support “the ultimate resulting patent applications and may not authorize any additional material added after the initial foreign filing license request.” If additional material is included in an ultimate patent application that was not included in an FFL application, the invention's general nature may be altered and require inspection pursuant to 35 U.S.C. ”181, 184.

USPTO Publishes Notice Clarifying Non-Retroactivity

On Aug. 7, the USPTO published a notice that its new rules relating to applications containing patentably indistinct claims, currently enjoined pursuant to Tafas v. Dudas , 530 F. Supp. 2d 786 (E.D. Va. 2008), will not apply retroactively should the injunction be lifted. The USPTO stated that “[s]hould the injunction be lifted, those regulations will apply only to applications filed on or after any new effective date that would be published by the USPTO in the future.”

Order Advising Parties That Future Damages Question May Go to Jury

On July 9, Judge Ron Clark of the Eastern District of Texas issued an order in Seoul Semiconductor Co. Ltd. v. Nichia Corp., 07-cv-273 (E.D. Tex. July 9, 2008) advising the parties that the “court is considering submitting to the jury a damages question regarding future damages, such as an ongoing royalty rate.” Judge Clark further stated that an example of such a jury question might be, “What rate or sum of money, if any, do you find is adequate as a reasonable royalty to compensate Plaintiff for the conduct you found to infringe that occurs in the future? Answer in a percentage or in dollars and cents.” Judge Clark noted that several recent Federal Circuit decisions had approved of the award of an ongoing royalty for patent infringement in lieu of injunctive relief, and that submission of the issue to the jury may avoid the need for a later bench trial on the issue. Judge Clark allowed the parties 10 days to notify the court of any objections to the proposed procedure, and told the parties that in the absence of objections, the parties should instruct their damages experts to consider the ongoing royalty issue in their expert reports.

Federal Circuit Narrowly Interprets Hatch-Waxman Act Safe Harbor Provision

In Proveris Scientific Corp. v. InnovaSystems, Inc., No. 2007-1428 (Fed. Cir. Aug. 5, 2008) the Federal Circuit held that a device used in connection with FDA regulatory submissions, but not itself subject to FDA approval, did not come within the safe harbor provision of 35 U.S.C. '271(e)(1).

Defendant appellee Innova appealed from a district court judgment that it infringed four claims of U.S. Patent No. 6,785,400 (the '400 patent) owned by plaintiff Proveris. The '400 patent is directed to a system and apparatus for characterizing aerosol sprays commonly used in various drug delivery devices. According to the '400 patent, spray characterization measurements are frequently used to calibrate drug delivery devices during drug research and development and such spray characterization plays an important role in the regulatory approval process. Proveris' suit alleged that Innova's Optical Spray Analyzer product (“OSA”) infringed several claims of the '400 patent. Innova argued, in part, that the OSA did not infringe the '400 patent because it fell within the safe harbor provision of 35 U.S.C. '271(e)(1), which reads in relevant part, “It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention ' solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.” The OSA itself is not subject to FDA approval, but is used in connection with regulatory submissions.

Shortly before trial, the district court ruled as a matter of law that '271(e)(1) does not immunize Innova's OSA devices from infringement of the '400 patent and subsequently granted JMOL in favor of Proveris with respect to infringement. The Federal Circuit affirmed the district court's JMOL ruling, holding that '271(e)(1) does not immunize the OSA from infringement. The court reasoned that '271(e)(1) was enacted to eliminate two unintended distortions of the effective patent term resulting from the premarket approval required for certain products by the Federal Food, Drug, and Cosmetic Act. The court noted that the first distortion was the reduction of effective patent life caused by the FDA premarket approval process, while the second distortion was the de facto extension of effective patent life at the end of the patent term ' also caused by the FDA premarket approval process. In other words, prior to the enactment of '271(e)(1), competitors' activities involving a patented invention during the patent term constituted an act of infringement, even if undertaken for the sole purpose of obtaining regulatory approval.

The Proveris court held that while the OSA device is used to measure the characteristics of FDA regulated aerosol drug delivery products, the OSA itself is not subject to FDA premarket approval and therefore is not immune under '271(e)(1). The court reasoned that because the OSA faces no regulatory barriers to market entry upon patent expiration, “Innova is not a party who, prior to enactment of the Hatch-Waxman Act, could be said to have been adversely affected by the second distortion.” As further support for its holding, the Proveris court noted that Proveris was not a party adversely affected by the first distortion because the invention claimed in the '400 patent is not subject to premarket approval. The court therefore determined that the device claimed in the '400 patent was not a “patented invention” within the meaning of '271(e)(1) and that the provision therefore did not apply.

Matthew Berkowitz is an associate in the New York office of Kenyon & Kenyon LLP.