IP News

Summary Judgment of Nonobviousness Inappropriate When Prior Art Not Considered As a Whole

On March 25, 2011, the Federal Circuit panel of Judges Alan D. Lourie, Richard Linn, and Timothy B. Dyk reversed a Nevada district court's grant of summary judgment holding a patent not invalid for obviousness. In Duramed Pharmaceuticals, Inc. v. Watson Laboratories, Inc., Case No. 2010-1331, the Federal Circuit held that the district court committed several reversible errors in its analysis of the patent in suit.

Duramed filed suit over Watson's alleged infringement of U.S. Patent No. 7,320,969, because Watson filed an Abbreviated New Drug Application with a Paragraph IV certification. The '969 patent covers an extended-cycle combined oral contraceptive (“COC”) regimen commercialized as Seasonique'. The extended-cycle regimens increase the menstrual cycle's natural length by administering hormone-containing pills for greater than 21 days, which postpones estrogen-withdrawal symptoms that many women experience during the hormone-free period. Seasonique also combats this withdrawal by administering a low-dose unopposed estrogen during the hormone-free period.

The district court held on summary judgment that Duramed's patent was not obvious over three pieces of prior art: 1) a 1994 article by Kovacs, which described an extended-cycle COC regimen followed by seven daily hormone-free pills; 2) U.S. Patent No. 6,027,749, disclosing a shorter regimen followed by seven daily low-dose hormone pills; and 3) two articles by Sulak which describe the problem of headaches resulting from estrogen withdrawal as well as the use of unopposed estrogen during the hormone-free period as a way to alleviate these headaches. The district court held that this prior art did not render the '969 patent obvious because the Sulak articles mentioned the use of unopposed estrogen only as a “theoretical, untested solution” to the problem of headaches from estrogen withdrawal.

The Federal Circuit held that the district court erred in assessing the content and scope of the prior art by analyzing each prior art reference individually rather than as a whole. The district court also erred by applying an incorrect evidentiary standard on summary judgment and failing to make an explicit finding on the level of ordinary skill in the art.

The Federal Circuit held that the “theoretical” use mentioned in the Sulak articles should not have been discounted by the district court, as “a reference ' is prior art for all that it discloses, and there is no requirement that a teaching in the prior art be scientifically tested.” The Federal Circuit also held that the district court failed to properly consider the Kovacs article in light of the '749 patent and the Sulak articles, thus not considering the collective teaching of the prior art.

Further, the district court incorrectly placed the burden of proof on Watson to show invalidity as a matter of law by clear and convincing evidence. Because the plaintiff moved for summary judgment, the burden rested on the plaintiff to show that Watson had failed to come forth with clear and convincing evidence of an essential element of a prima facie case of obviousness.

The district court also never made an explicit finding regarding the level of ordinary skill in the art. Instead, the district court simply rejected Watson's expert testimony, finding that its expert was not a person of ordinary skill. However, the district court erred by not creating a hypothetical person having ordinary skill in the pertinent art. Interestingly, the Federal Circuit noted that, on remand, if “credit is given to Duramed's lower level of skill in the art” then the district court may conclude that the claimed extended-cycle COC regimen would have been obvious as a matter of law.

Mandamus Used for Another Transfer Out of Eastern District of Texas

The Federal Circuit again granted a writ of mandamus directing the Eastern District of Texas to grant a motion to transfer in In re Verizon Business Network Services, Inc., Misc. No. 956. The plaintiff-respondent, Red River Fiber Optic Corporation, is a Texas corporation with its principal place of business in the Eastern District, namely Marshall, TX.

The Magistrate Judge noted that because the court had previously handled a lawsuit involving the same patent and had construed 25 of the patent's terms, judicial economy favored keeping the case in the Eastern District of Texas, even though he agreed with the petitioners that the Northern District of Texas would likely be more convenient for the parties and the witnesses.

But the Federal Circuit stated that convenience of the parties trumps judicial economy, and also further noted that five years had passed since the prior litigation. Given this, the Eastern District of Texas would need to familiarize itself with re-examination materials that were not part of the original lawsuit. Absent an additional pending lawsuit over the same patent and technology, the Federal Circuit held that the Eastern District's previous claim construction was too tenuous a reason to support a denial of transfer.

Federal Circuit: Virtual/Real-World Distinction Does Not Make Prior Art Non-analogous

In Innovention Toys, LLC v. MGA Entertainment, Inc., Case No. 2010-1290, the Federal Circuit vacated a district court's grant of summary judgment of nonobviousness and remanded. The panel of Chief Judge Randall R. Rader and Judges Alan D. Lourie and Ronald Whyte (sitting by designation) held that the district court erred in refusing to consider certain prior art as analogous art.

Innovention brought suit for infringement of U.S. Patent No. 7,264,242, which covers a board game laser-based chess type game. The district court granted Innovention's motion for summary judgment of nonobviousness, noting that the prior art that defendants alleged rendered the '242 patent obvious described electronic, rather than real-world games.

The Federal Circuit held that the district court erred in finding that the prior art was not analogous art. Innovention argued, and the district court agreed, that the prior art articles were non-analagous because the inventors of the '242 patent were concerned with making a non-virtual board game involving mechanical engineering and optics, not computer programming. The Federal Circuit noted that the district court failed to consider the possibility that an electronic game could have been “reasonably pertinent to the problem facing an inventor of a new, physical, laser-based strategy game.” (emphasis in original). The Federal Circuit held that, because the '242 patent and the prior art articles are directed to the same purpose and relate to the same goal (“designing a winnable yet entertaining strategy game”), it was reversible error for the district court to conclude that the prior art articles were non-analagous art.

Assignment of Existing Patents Remains Under Federal Common Law

Judge Kathleen M. O'Malley of the Federal Circuit issued her first patent opinion as a full member of the court, a dissent from an order denying a rehearing en banc of Abraxis Bioscience, Inc. v. Navinta LLC, Case No. 2009-1539, which was joined by Judge Pauline Newman. Abraxis sued Navinta when Navinta filed an Abbreviated New Drug Application with a Paragraph IV certification. After a full trial before Judge Pisano in the District of New Jersey, the district court found that Navinta's proposed product would directly infringe certain claims of the asserted patents and would contribute to and induce infringement of other claims.

On appeal, a Federal Circuit panel of Judges Arthur J. Gajarsa, Richard Linn, and Newman found that Abraxis did not have standing to sue because at the time the complaint was filed it did not own the patents. An asset assignment agreement had been signed, but Abraxis did not obtain title to the patents from its subsidiaries, and the interpretation of this asset assignment agreement turned on matters of New York state law.

In dissenting from the denial of rehearing en banc, Judge O'Malley argues that the original Federal Circuit panel created federal common law to govern patent assignments, creating a conflict with the Supreme Court's precedent regarding judicial pre-emption of state law. She further argues that the creation of a specialized federal common law ' applicable only in the Federal Circuit ' will “disrupt substantial expectations with respect to the ownership of existing patents and impose unnecessary burdens on future transfers thereof.”

The district court had found that, under New York law, the asset assignment agreement vested Abraxis with title. According to Judge O'Malley, the original Federal Circuit panel ignored New York law and instead created a new federal common law rule regarding patent transfers, relying on dicta in DDB Technologies v. MLB Advanced Media, 517 F.3d 1284 (Fed. Cir. 2008). She concluded by stating “[b]ecause the majority ' decided this case by expanding the coverage of DDB Technologies's exception for agreements assigning rights to future inventions to the exponentially larger class of agreements assigning existing patents, however, I do not believe we can ignore the profound impact of this decision.”

Howard Shire is a partner and Joseph Mercadante is an associate in the New York office of Kenyon & Kenyon LLP.

Summary Judgment of Nonobviousness Inappropriate When Prior Art Not Considered As a Whole

On March 25, 2011, the Federal Circuit panel of Judges Alan D. Lourie, Richard Linn, and Timothy B. Dyk reversed a Nevada district court's grant of summary judgment holding a patent not invalid for obviousness. In Duramed Pharmaceuticals, Inc. v. Watson Laboratories, Inc., Case No. 2010-1331, the Federal Circuit held that the district court committed several reversible errors in its analysis of the patent in suit.

Duramed filed suit over Watson's alleged infringement of U.S. Patent No. 7,320,969, because Watson filed an Abbreviated New Drug Application with a Paragraph IV certification. The '969 patent covers an extended-cycle combined oral contraceptive (“COC”) regimen commercialized as Seasonique'. The extended-cycle regimens increase the menstrual cycle's natural length by administering hormone-containing pills for greater than 21 days, which postpones estrogen-withdrawal symptoms that many women experience during the hormone-free period. Seasonique also combats this withdrawal by administering a low-dose unopposed estrogen during the hormone-free period.

The district court held on summary judgment that Duramed's patent was not obvious over three pieces of prior art: 1) a 1994 article by Kovacs, which described an extended-cycle COC regimen followed by seven daily hormone-free pills; 2) U.S. Patent No. 6,027,749, disclosing a shorter regimen followed by seven daily low-dose hormone pills; and 3) two articles by Sulak which describe the problem of headaches resulting from estrogen withdrawal as well as the use of unopposed estrogen during the hormone-free period as a way to alleviate these headaches. The district court held that this prior art did not render the '969 patent obvious because the Sulak articles mentioned the use of unopposed estrogen only as a “theoretical, untested solution” to the problem of headaches from estrogen withdrawal.

The Federal Circuit held that the district court erred in assessing the content and scope of the prior art by analyzing each prior art reference individually rather than as a whole. The district court also erred by applying an incorrect evidentiary standard on summary judgment and failing to make an explicit finding on the level of ordinary skill in the art.

The Federal Circuit held that the “theoretical” use mentioned in the Sulak articles should not have been discounted by the district court, as “a reference ' is prior art for all that it discloses, and there is no requirement that a teaching in the prior art be scientifically tested.” The Federal Circuit also held that the district court failed to properly consider the Kovacs article in light of the '749 patent and the Sulak articles, thus not considering the collective teaching of the prior art.

Further, the district court incorrectly placed the burden of proof on Watson to show invalidity as a matter of law by clear and convincing evidence. Because the plaintiff moved for summary judgment, the burden rested on the plaintiff to show that Watson had failed to come forth with clear and convincing evidence of an essential element of a prima facie case of obviousness.

The district court also never made an explicit finding regarding the level of ordinary skill in the art. Instead, the district court simply rejected Watson's expert testimony, finding that its expert was not a person of ordinary skill. However, the district court erred by not creating a hypothetical person having ordinary skill in the pertinent art. Interestingly, the Federal Circuit noted that, on remand, if “credit is given to Duramed's lower level of skill in the art” then the district court may conclude that the claimed extended-cycle COC regimen would have been obvious as a matter of law.

Mandamus Used for Another Transfer Out of Eastern District of Texas

The Federal Circuit again granted a writ of mandamus directing the Eastern District of Texas to grant a motion to transfer in In re Verizon Business Network Services, Inc., Misc. No. 956. The plaintiff-respondent, Red River Fiber Optic Corporation, is a Texas corporation with its principal place of business in the Eastern District, namely Marshall, TX.

The Magistrate Judge noted that because the court had previously handled a lawsuit involving the same patent and had construed 25 of the patent's terms, judicial economy favored keeping the case in the Eastern District of Texas, even though he agreed with the petitioners that the Northern District of Texas would likely be more convenient for the parties and the witnesses.

But the Federal Circuit stated that convenience of the parties trumps judicial economy, and also further noted that five years had passed since the prior litigation. Given this, the Eastern District of Texas would need to familiarize itself with re-examination materials that were not part of the original lawsuit. Absent an additional pending lawsuit over the same patent and technology, the Federal Circuit held that the Eastern District's previous claim construction was too tenuous a reason to support a denial of transfer.

Federal Circuit: Virtual/Real-World Distinction Does Not Make Prior Art Non-analogous

In Innovention Toys, LLC v. MGA Entertainment, Inc., Case No. 2010-1290, the Federal Circuit vacated a district court's grant of summary judgment of nonobviousness and remanded. The panel of Chief Judge Randall R. Rader and Judges Alan D. Lourie and Ronald Whyte (sitting by designation) held that the district court erred in refusing to consider certain prior art as analogous art.

Innovention brought suit for infringement of U.S. Patent No. 7,264,242, which covers a board game laser-based chess type game. The district court granted Innovention's motion for summary judgment of nonobviousness, noting that the prior art that defendants alleged rendered the '242 patent obvious described electronic, rather than real-world games.

The Federal Circuit held that the district court erred in finding that the prior art was not analogous art. Innovention argued, and the district court agreed, that the prior art articles were non-analagous because the inventors of the '242 patent were concerned with making a non-virtual board game involving mechanical engineering and optics, not computer programming. The Federal Circuit noted that the district court failed to consider the possibility that an electronic game could have been “reasonably pertinent to the problem facing an inventor of a new, physical, laser-based strategy game.” (emphasis in original). The Federal Circuit held that, because the '242 patent and the prior art articles are directed to the same purpose and relate to the same goal (“designing a winnable yet entertaining strategy game”), it was reversible error for the district court to conclude that the prior art articles were non-analagous art.

Assignment of Existing Patents Remains Under Federal Common Law

Judge Kathleen M. O'Malley of the Federal Circuit issued her first patent opinion as a full member of the court, a dissent from an order denying a rehearing en banc of Abraxis Bioscience, Inc. v. Navinta LLC, Case No. 2009-1539, which was joined by Judge Pauline Newman. Abraxis sued Navinta when Navinta filed an Abbreviated New Drug Application with a Paragraph IV certification. After a full trial before Judge Pisano in the District of New Jersey, the district court found that Navinta's proposed product would directly infringe certain claims of the asserted patents and would contribute to and induce infringement of other claims.

On appeal, a Federal Circuit panel of Judges Arthur J. Gajarsa, Richard Linn, and Newman found that Abraxis did not have standing to sue because at the time the complaint was filed it did not own the patents. An asset assignment agreement had been signed, but Abraxis did not obtain title to the patents from its subsidiaries, and the interpretation of this asset assignment agreement turned on matters of New York state law.

In dissenting from the denial of rehearing en banc, Judge O'Malley argues that the original Federal Circuit panel created federal common law to govern patent assignments, creating a conflict with the Supreme Court's precedent regarding judicial pre-emption of state law. She further argues that the creation of a specialized federal common law ' applicable only in the Federal Circuit ' will “disrupt substantial expectations with respect to the ownership of existing patents and impose unnecessary burdens on future transfers thereof.”

The district court had found that, under New York law, the asset assignment agreement vested Abraxis with title. According to Judge O'Malley, the original Federal Circuit panel ignored New York law and instead created a new federal common law rule regarding patent transfers, relying on dicta in DDB Technologies v. MLB Advanced Media , 517 F.3d 1284 (Fed. Cir. 2008). She concluded by stating “[b]ecause the majority ' decided this case by expanding the coverage of DDB Technologies's exception for agreements assigning rights to future inventions to the exponentially larger class of agreements assigning existing patents, however, I do not believe we can ignore the profound impact of this decision.”

Howard Shire is a partner and Joseph Mercadante is an associate in the New York office of Kenyon & Kenyon LLP.