Federal Circuit Puts Teeth in the 'Process' of Product-By-Process Claims

Is a “product by process” claim infringed by products that are made by other processes? After 17 years of waiting, the Federal Circuit emphatically answered the question: No; product-by-process claims are only infringed by products made using the claimed process. Abbott Laboratories v. Sandoz, Inc., 2009 WL 1371410 (Fed. Cir. 2009) (“Abbott“). Tasked at its creation with harmonizing the nation's patent laws and strengthening the patent system, the Federal Circuit has had few internal conflicts with such a high level of visible acrimony. Although the law now appears to be clear, the strongly worded dissent questions the soundness of the ruling and warns of potentially far-reaching implications for the pharmaceutical and biotech industries.

Product-By-Process Claims

Product-by-process claims are unique in that the claimed invention is defined, at least in part, by the process used to make the inventive product. Such claims are particularly useful when the invention is not readily describable in structural terms, as is the case for many new pharmaceutical and biotech products. Although product-by-process claims are accepted today, in the past this format was subject to a “rule of necessity” that required patent applicants to show that the claimed product could not be adequately defined in structural terms.

During patent examination, the U.S. Patent and Trademark Office (“USPTO”) interprets product-by-process claims as product claims, i.e., the examiner gives little weight to the process steps in the claim. Manual of Patent Examining Procedure ' 2113 (8th ed., Rev. 7, 2008). If the USPTO finds the claimed product in the prior art, made by any methodology, the product-by-process claim will be rejected. Id. The burden is then on the applicant to demonstrate patentable differences between the prior art product and the claimed product. Id. Practically speaking, this means that an applicant must establish patentability of the “product” over all similar products, without regard to the “process” recited in the claims.

When enforcing the patent claims in litigation, however, it has not always been clear whether process limitations in product-by-process claims were material to a finding of infringement. The Federal Circuit first examined the question in Scripps Clinic v. Genentech, 927 F.2d 1565 (Fed. Cir. 1991). In an opinion by Judge Pauline Newman, the court held that product-by-process claims literally protected not only claimed products made by the described process, but also products made by other processes. In other words, the specific process steps in the claim do not have to be followed as a prerequisite to a finding of infringement. This rule arose from the long-standing principle that claims must be construed the same way for both validity and infringement. Because the process recited in a product-by-process claim is not material to the patentability analysis, it followed that the recited process should not be material to infringement either.

Just one year after Scripps, a Federal Circuit panel composed of different judges was presented with the same question. In Atlantic Thermoplastics v. Faytex Corp., 970 F.2d 834 (Fed. Cir. 1992), the court held that product-by-process claims only protect products made by the recited process. The Atlantic Thermoplastics panel stated that process steps within product-by-process claims are limitations that must be taken into account in the infringement analysis. The panel relied on Supreme Court precedent from the 19th century and on the long-recognized principle that infringement requires the presence of each claim element. Atlantic Thermoplastics, 970 F.2d at 838-43, 846. The Atlantic Thermoplastics panel justified its decision not to follow Scripps on the basis that the Scripps panel did not consider Supreme Court authority.

The Atlantic Thermoplastics opinion drew heavy fire from other judges within the Federal Circuit. A divided Federal Circuit voted against reviewing Atlantic Thermoplastics in an en banc setting. Judges Helen Wilson Nies, Giles Sutherland Rich, Newman, and Alan David Lourie dissented from the denial of the rehearing en banc and Judge Rich characterized the Atlantic Thermoplastics decision as “mutiny,” “heresy,” and “illegal” for disregarding the Scripps decision. Atlantic Thermoplastics v. Faytex Corp., 974 F.2d 1279, 1281 (Fed. Cir. 1992).

The conflicting Federal Circuit panel decisions led to a split among the district courts until the Federal Circuit finally addressed the issue squarely in the Abbott case. Abbott involves Astellas Pharma Inc.'s and Abbott Laboratories' rights in U.S. Patent No. 4,935,507 (the '507 patent). The '507 patent claims crystalline cefdinir, an antibiotic that Abbott markets under the trade name OMNICEF'. Two independent claims of the '507 patent are product-by-process claims.

In 2006, Lupin Ltd. received approval from the FDA to market a generic version of OMNICEF'. Shortly afterward, Lupin filed a declaratory judgment action against Abbott and Astellas in the Eastern District of Virginia arguing that its drug does not infringe the '507 patent, in part, because its product is not made by the claimed process (“Lupin“). Relying upon Atlantic Thermoplastics, the court granted Lupin's motion for summary judgment of non-infringement.

A number of other generic manufacturers also sought FDA approval to market generic versions of OMNICEF'. While the Lupin case was pending, Abbott and Astellas asserted the '507 patent in the Northern District of Illinois and sought a preliminary injunction against Sandoz, Inc., Sandoz GmbH, Teva Pharmaceuticals USA, Inc., Teva Pharmaceuticals Industries, Ltd., Ranbaxy Laboratories, Ltd., Ranbaxy Inc., Par Pharmaceutical Companies, Inc., and Par Pharmaceutical (collectively, “Sandoz“). For purposes of the preliminary injunction motion, the parties in the Northern District of Illinois action agreed to be bound by the claim construction from the earlier filed Lupin case. Based upon the Lupin court's claim construction, the Northern District of Illinois court denied Abbott's motion.

In Abbott, the Federal Circuit consolidated the appeals in the Lupin and Sandoz cases. Leaving several claim construction issues to the panel, the Federal Circuit sat en banc sua sponte to address the limited issue of the proper interpretation of product-by-process claims. The court adopted the holding in Atlantic Thermoplastics and expressly overruled Scripps. Judge Randall Ray Rader, who authored Atlantic Thermoplastics, wrote for the majority in the Abbott case. As in Atlantic Thermoplastics, the court's reasoning tracks Supreme Court precedent to reach the conclusion that process limitations in product-by-process claims are material to infringement. In addition, the majority relied on the broad principle of claim construction that each claim element is material to defining the scope of the claim. The majority rejected any suggestion to recognize an exception for products that are difficult to describe in structural terms and characterized such an exception as “unnecessary and unsound” and contrary to an inventor's statutory obligation to “particularly point out and claim” the invention.

In a 39-page dissenting opinion, Judge Newman, joined by Judges Haldane Robert Mayer and Lourie, criticized the majority opinion on both procedural and substantive grounds. Consistent with the reasoning in her dissent to the denial of rehearing en banc in Atlantic Thermoplastics, Judge Newman's opinion called for treating product-by-process claims on a case-by-case basis, particularly where the claimed product is new and where its structure is not completely determined. The dissent noted that this is also consistent with the “rule of necessity,” which recognized that, in some instances, a novel product may only be capable of description by referring to the process used to make it. The dissent also relied on a broad principle of claim construction, which requires that claims be construed the same way for validity and infringement.

The court's decision to take the issue en banc without providing other interested parties an opportunity to submit amici curiae briefs was particularly troublesome for the dissent. Judge Newman warned that the court's ruling has implications for long-standing patent practices and claimed inventions that may be vulnerable in view of the ruling. Only with the passage of time will we begin to understand the implications of this ruling with respect to inventions where processes indeed result in new products that cannot be structurally defined with the desired accuracy. These products pervade the chemical, pharmaceutical, and biotechnology space, where process and structure often coexist simultaneously.

Conclusion

The Abbott decision comports with the Federal Circuit's focus on clarity and notice to the public of the exact bounds of patent protection. Predictably, the court continues to place the burden on the patentee to better define her invention. In this case, Judge Rader stated that the inventor chose to claim the invention in product-by-process terms and should bear the consequences of that choice. Taking a similar approach in 2007, Judge Rader sent waves through the patent community by placing a heavy burden on patentees to prove infringement of method claims and stating that the “patentee can usually structure a claim to capture infringement by a single party.” BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007). While this approach has the laudable goal of clarifying certain metes and bounds of patent protection, it comes at a high cost to inventors who have relied upon the wrong side of a conflicting and ambiguous precedent. With changing paradigms emanating from the Federal Circuit at an accelerating pace, special care should be taken to optimally protect inventions for new small molecules, formulations, drug delivery compositions, proteins, bioconjugates, and genetic material.

Timothy C. Bickham is a partner and Houda Morad is an associate at Steptoe & Johnson LLP. The views expressed in this article are exclusively those of the authors and should not be ascribed to Steptoe & Johnson LLP or its clients.

Is a “product by process” claim infringed by products that are made by other processes? After 17 years of waiting, the Federal Circuit emphatically answered the question: No; product-by-process claims are only infringed by products made using the claimed process. Abbott Laboratories v. Sandoz, Inc., 2009 WL 1371410 (Fed. Cir. 2009) (“Abbott“). Tasked at its creation with harmonizing the nation's patent laws and strengthening the patent system, the Federal Circuit has had few internal conflicts with such a high level of visible acrimony. Although the law now appears to be clear, the strongly worded dissent questions the soundness of the ruling and warns of potentially far-reaching implications for the pharmaceutical and biotech industries.

Product-By-Process Claims

Product-by-process claims are unique in that the claimed invention is defined, at least in part, by the process used to make the inventive product. Such claims are particularly useful when the invention is not readily describable in structural terms, as is the case for many new pharmaceutical and biotech products. Although product-by-process claims are accepted today, in the past this format was subject to a “rule of necessity” that required patent applicants to show that the claimed product could not be adequately defined in structural terms.

During patent examination, the U.S. Patent and Trademark Office (“USPTO”) interprets product-by-process claims as product claims, i.e., the examiner gives little weight to the process steps in the claim. Manual of Patent Examining Procedure ' 2113 (8th ed., Rev. 7, 2008). If the USPTO finds the claimed product in the prior art, made by any methodology, the product-by-process claim will be rejected. Id. The burden is then on the applicant to demonstrate patentable differences between the prior art product and the claimed product. Id. Practically speaking, this means that an applicant must establish patentability of the “product” over all similar products, without regard to the “process” recited in the claims.

When enforcing the patent claims in litigation, however, it has not always been clear whether process limitations in product-by-process claims were material to a finding of infringement. The Federal Circuit first examined the question in Scripps Clinic v. Genentech, 927 F.2d 1565 (Fed. Cir. 1991). In an opinion by Judge Pauline Newman, the court held that product-by-process claims literally protected not only claimed products made by the described process, but also products made by other processes. In other words, the specific process steps in the claim do not have to be followed as a prerequisite to a finding of infringement. This rule arose from the long-standing principle that claims must be construed the same way for both validity and infringement. Because the process recited in a product-by-process claim is not material to the patentability analysis, it followed that the recited process should not be material to infringement either.

Just one year after Scripps, a Federal Circuit panel composed of different judges was presented with the same question. In Atlantic Thermoplastics v. Faytex Corp. , 970 F.2d 834 (Fed. Cir. 1992), the court held that product-by-process claims only protect products made by the recited process. The Atlantic Thermoplastics panel stated that process steps within product-by-process claims are limitations that must be taken into account in the infringement analysis. The panel relied on Supreme Court precedent from the 19th century and on the long-recognized principle that infringement requires the presence of each claim element. Atlantic Thermoplastics, 970 F.2d at 838-43, 846. The Atlantic Thermoplastics panel justified its decision not to follow Scripps on the basis that the Scripps panel did not consider Supreme Court authority.

The Atlantic Thermoplastics opinion drew heavy fire from other judges within the Federal Circuit. A divided Federal Circuit voted against reviewing Atlantic Thermoplastics in an en banc setting. Judges Helen Wilson Nies, Giles Sutherland Rich, Newman, and Alan David Lourie dissented from the denial of the rehearing en banc and Judge Rich characterized the Atlantic Thermoplastics decision as “mutiny,” “heresy,” and “illegal” for disregarding the Scripps decision. Atlantic Thermoplastics v. Faytex Corp. , 974 F.2d 1279, 1281 (Fed. Cir. 1992).

The conflicting Federal Circuit panel decisions led to a split among the district courts until the Federal Circuit finally addressed the issue squarely in the Abbott case. Abbott involves Astellas Pharma Inc.'s and Abbott Laboratories' rights in U.S. Patent No. 4,935,507 (the '507 patent). The '507 patent claims crystalline cefdinir, an antibiotic that Abbott markets under the trade name OMNICEF'. Two independent claims of the '507 patent are product-by-process claims.

In 2006, Lupin Ltd. received approval from the FDA to market a generic version of OMNICEF'. Shortly afterward, Lupin filed a declaratory judgment action against Abbott and Astellas in the Eastern District of Virginia arguing that its drug does not infringe the '507 patent, in part, because its product is not made by the claimed process (“Lupin“). Relying upon Atlantic Thermoplastics, the court granted Lupin's motion for summary judgment of non-infringement.

A number of other generic manufacturers also sought FDA approval to market generic versions of OMNICEF'. While the Lupin case was pending, Abbott and Astellas asserted the '507 patent in the Northern District of Illinois and sought a preliminary injunction against Sandoz, Inc., Sandoz GmbH, Teva Pharmaceuticals USA, Inc., Teva Pharmaceuticals Industries, Ltd., Ranbaxy Laboratories, Ltd., Ranbaxy Inc., Par Pharmaceutical Companies, Inc., and Par Pharmaceutical (collectively, “Sandoz“). For purposes of the preliminary injunction motion, the parties in the Northern District of Illinois action agreed to be bound by the claim construction from the earlier filed Lupin case. Based upon the Lupin court's claim construction, the Northern District of Illinois court denied Abbott's motion.

In Abbott, the Federal Circuit consolidated the appeals in the Lupin and Sandoz cases. Leaving several claim construction issues to the panel, the Federal Circuit sat en banc sua sponte to address the limited issue of the proper interpretation of product-by-process claims. The court adopted the holding in Atlantic Thermoplastics and expressly overruled Scripps. Judge Randall Ray Rader, who authored Atlantic Thermoplastics, wrote for the majority in the Abbott case. As in Atlantic Thermoplastics, the court's reasoning tracks Supreme Court precedent to reach the conclusion that process limitations in product-by-process claims are material to infringement. In addition, the majority relied on the broad principle of claim construction that each claim element is material to defining the scope of the claim. The majority rejected any suggestion to recognize an exception for products that are difficult to describe in structural terms and characterized such an exception as “unnecessary and unsound” and contrary to an inventor's statutory obligation to “particularly point out and claim” the invention.

In a 39-page dissenting opinion, Judge Newman, joined by Judges Haldane Robert Mayer and Lourie, criticized the majority opinion on both procedural and substantive grounds. Consistent with the reasoning in her dissent to the denial of rehearing en banc in Atlantic Thermoplastics, Judge Newman's opinion called for treating product-by-process claims on a case-by-case basis, particularly where the claimed product is new and where its structure is not completely determined. The dissent noted that this is also consistent with the “rule of necessity,” which recognized that, in some instances, a novel product may only be capable of description by referring to the process used to make it. The dissent also relied on a broad principle of claim construction, which requires that claims be construed the same way for validity and infringement.

The court's decision to take the issue en banc without providing other interested parties an opportunity to submit amici curiae briefs was particularly troublesome for the dissent. Judge Newman warned that the court's ruling has implications for long-standing patent practices and claimed inventions that may be vulnerable in view of the ruling. Only with the passage of time will we begin to understand the implications of this ruling with respect to inventions where processes indeed result in new products that cannot be structurally defined with the desired accuracy. These products pervade the chemical, pharmaceutical, and biotechnology space, where process and structure often coexist simultaneously.

Conclusion

The Abbott decision comports with the Federal Circuit's focus on clarity and notice to the public of the exact bounds of patent protection. Predictably, the court continues to place the burden on the patentee to better define her invention. In this case, Judge Rader stated that the inventor chose to claim the invention in product-by-process terms and should bear the consequences of that choice. Taking a similar approach in 2007, Judge Rader sent waves through the patent community by placing a heavy burden on patentees to prove infringement of method claims and stating that the “patentee can usually structure a claim to capture infringement by a single party.” BMC Resources, Inc. v. Paymentech, L.P. , 498 F.3d 1373 (Fed. Cir. 2007). While this approach has the laudable goal of clarifying certain metes and bounds of patent protection, it comes at a high cost to inventors who have relied upon the wrong side of a conflicting and ambiguous precedent. With changing paradigms emanating from the Federal Circuit at an accelerating pace, special care should be taken to optimally protect inventions for new small molecules, formulations, drug delivery compositions, proteins, bioconjugates, and genetic material.

Timothy C. Bickham is a partner and Houda Morad is an associate at Steptoe & Johnson LLP. The views expressed in this article are exclusively those of the authors and should not be ascribed to Steptoe & Johnson LLP or its clients.