IP News

On appeal, the Federal Circuit reversed, ruling that where, as here, a patentee is foreclosed from asserting an infringement counterclaim because of the existence of a license, the burden of persuasion falls on the declaratory judgment plaintiff to prove non-infringement. 695 F. 3d 1266, 1274 (2012). Medtronic sought certiorari, and the Supreme Court granted it.

The Court based its ruling on three legal propositions: First, the burden of proving infringement generally rests on the patentee; second, the operation of the Declaratory Judgment Act is only procedural, not substantive; and third, burdens of proof are a substantive aspect of a claim. Slip Op. at 6-7. The Court also noted that under the Federal Circuit's rule, the situation could arise where a declaratory judgment plaintiff fails to prove non-infringement, but in the subsequent infringement action, the patentee could fail to meet its burden, leading to uncertainty for the parties involved and others who would seek to know the patent's status. Id. at 7-8. The Court was unpersuaded by the argument that the burden shifting would apply only in limited cases, pointing out that such cases are likely to occur anytime a licensee faces an ordinary, but disputed, claim of infringement. Further, the Court noted that the situation was virtually identical to the circumstances in MedImmune, Inc. v. Genentech, Inc., 549 U. S. 118 (2007), where the Supreme Court ruled that a declaratory judgment action was appropriate. Slip Op. at 10. For those reasons, the Court reversed and remanded.

Federal Circuit Clarifies Rules for Patent Term Extension

On Jan. 15, 2014, a unanimous Federal Circuit panel of Judges Newman, Dyk, and Taranto, issued an opinion, authored by Judge Taranto, in Novartis AG v. Lee, No. 2013-1160. Novartis had filed suit challenging the Patent and Trademark Office's (PTO's) determination of patent term extension for 18 Novartis patents. At trial, the district court dismissed claims regarding 15 patents as untimely asserted. Novartis AG v. Kappos, 904 F. Supp. 2d 58, 69 (D.D.C. 2012). For the remaining three patents, Novartis argued that the PTO erred in not counting time spent in continued examination and between allowance and issuance towards the patent term extension, and the trial court agreed. Id. at 73. The panel affirmed the district court's ruling that claims regarding 15 of the patents were untimely asserted; as to the remaining three patents, the panel reversed.

Novartis asserted that the district court had improperly dismissed its claims relating to 15 patents as untimely, for failing to file the claims within 180 days of the PTO denying Novartis' request for reconsideration. Novartis argued that the 180-day deadline specified by 35 U.S.C. '154(b)(4)(A) applies only to “a determination made by the Director under paragraph (3)” ' which addresses only the provisional adjustments announced when claims are first allowed. The panel was unpersuaded, stating that Novartis' interpretation would lead to the nonsensical result that the 180-day rule would apply to review of provisional, but not final, adjustment determinations. Slip Op. at 10-11. The panel affirmed the district courts holding that the claims relating to those 15 patents were not timely filed. Id. at 11.

The panel next turned to Novartis' claims challenging the patent term adjustment of three remaining patents. Novartis argued that once three years had passed from the application-filing date, any time the application spent in the PTO must be added to the patent term, even if the time is spent on a continued examination requested by the applicant after the three year pendency. Id. at 13. The PTO, on the other hand, argued that time spent in continued examination is ineligible for adjustment time, regardless of when the continued examination was initiated. Id. The panel agreed with the PTO's interpretation, stating that “[t]he better reading of the language is that the patent term adjustment time should be calculated by determining the length of time between application and patent issuance, then subtracting any continued examination time ' and determining the extent to which the result exceeds three years.” Id. at 14.

Federal Circuit Confirms That All Members of a Priority Chain Must Recite Full Lineage

On Jan. 22, 2014, a unanimous Federal Circuit panel, made up of Judges Prost, Plager, and Taranto, issued an opinion, authored by Judge Prost, in Medtronic CoreValve, LLC v. Edwards Lifesciences Corp. LLC, No. 2013-1117. The panel denied Medtronic's priority claim and affirmed summary judgment of invalidity of Medtronic's patent.

Medtronic is the assignee of a patent covering prosthetic heart valves which are inserted through a catheter into the patient's heart. On its face, the patent claims priority through a complicated lineage to a French application filed in 2000. Medtronic filed suit against Edwards for infringing several claims of the patent, and Edwards filed a motion for summary judgment that the patent failed to properly claim priority under 35 U.S.C. '119 to the French Application, or under 35 U.S.C. '120 its International Application counterpart, and was therefore anticipated by those applications under 35 U.S.C. '102(a) and (d). The court granted Edwards' motion, and Medtronic appealed.

The Federal Circuit first examined the district court's ruling under '120, which allows a later filed application to claim the benefit of an earlier filing date, if it contains a specific reference to the earlier filed application. Slip Op. at 7. The specific reference requirement has been interpreted to mandate that each application in the chain of priority refer to all of the prior applications. Id. at 7-8, citing Encyclopaedia Britannica, Inc. v. Alpine Electronics of America, Inc., 609 F.3d 1345, 1352 (Fed. Cir. 2010). The panel affirmed the district court's ruling that two applications in Medtronic's priority chain do not comply with the specific reference requirement, because they list only the ultimate French application to which priority is claimed, leaving out intermediate applications. Slip Op. at 9. Thus, Medtronic's patent was only entitled to a priority date of 2003, and the applications to which it had claimed priority were available as anticipatory prior art.

Howard Shire is a Partner and Wyatt Delfino is an Associate in the New York office of Kenyon & Kenyon LLP.

Supreme Court Overturns Burden-Shift in Non-Infringement Judgment

On Jan. 22, 2014, the Supreme Court issued a unanimous opinion, authored by Justice Breyer, in Medtronic, Inc. v. Mirowski Family Ventures, LLC, No. 2012-1128. The Court held that even in a declaratory judgment action, the patentee retains the burden of proving infringement.

Mirowski owned several patents for implantable heart stimulators. Medtronic, a medical device manufacturer, entered into a license agreement with Mirowski. The license stated that if Mirowski gave Medtronic notice that one of its products infringed a Mirowski patent, Medtronic, at its option, could pay royalties, or place the royalties in escrow and challenge the patent through a Declaratory Judgment action. If Medtronic did neither, Mirowski could terminate the license and sue for infringement. The parties subsequently found themselves in a dispute over whether seven new Medtronic products infringed two of Mirowski's patents. Medtronic brought a declaratory judgment action for non-infringement and invalidity, while continuing to pay it's royalties to Mirowski into an escrow account. At trial, the district court ruled in favor of Medtronic, finding that Mirowski had failed to prove infringement.

On appeal, the Federal Circuit reversed, ruling that where, as here, a patentee is foreclosed from asserting an infringement counterclaim because of the existence of a license, the burden of persuasion falls on the declaratory judgment plaintiff to prove non-infringement. 695 F. 3d 1266, 1274 (2012). Medtronic sought certiorari, and the Supreme Court granted it.

The Court based its ruling on three legal propositions: First, the burden of proving infringement generally rests on the patentee; second, the operation of the Declaratory Judgment Act is only procedural, not substantive; and third, burdens of proof are a substantive aspect of a claim. Slip Op. at 6-7. The Court also noted that under the Federal Circuit's rule, the situation could arise where a declaratory judgment plaintiff fails to prove non-infringement, but in the subsequent infringement action, the patentee could fail to meet its burden, leading to uncertainty for the parties involved and others who would seek to know the patent's status. Id. at 7-8. The Court was unpersuaded by the argument that the burden shifting would apply only in limited cases, pointing out that such cases are likely to occur anytime a licensee faces an ordinary, but disputed, claim of infringement. Further, the Court noted that the situation was virtually identical to the circumstances in MedImmune, Inc. v. Genentech, Inc., 549 U. S. 118 (2007), where the Supreme Court ruled that a declaratory judgment action was appropriate. Slip Op. at 10. For those reasons, the Court reversed and remanded.

Federal Circuit Clarifies Rules for Patent Term Extension

On Jan. 15, 2014, a unanimous Federal Circuit panel of Judges Newman, Dyk, and Taranto, issued an opinion, authored by Judge Taranto, in Novartis AG v. Lee, No. 2013-1160. Novartis had filed suit challenging the Patent and Trademark Office's (PTO's) determination of patent term extension for 18 Novartis patents. At trial, the district court dismissed claims regarding 15 patents as untimely asserted. Novartis AG v. Kappos, 904 F. Supp. 2d 58, 69 (D.D.C. 2012). For the remaining three patents, Novartis argued that the PTO erred in not counting time spent in continued examination and between allowance and issuance towards the patent term extension, and the trial court agreed. Id. at 73. The panel affirmed the district court's ruling that claims regarding 15 of the patents were untimely asserted; as to the remaining three patents, the panel reversed.

Novartis asserted that the district court had improperly dismissed its claims relating to 15 patents as untimely, for failing to file the claims within 180 days of the PTO denying Novartis' request for reconsideration. Novartis argued that the 180-day deadline specified by 35 U.S.C. '154(b)(4)(A) applies only to “a determination made by the Director under paragraph (3)” ' which addresses only the provisional adjustments announced when claims are first allowed. The panel was unpersuaded, stating that Novartis' interpretation would lead to the nonsensical result that the 180-day rule would apply to review of provisional, but not final, adjustment determinations. Slip Op. at 10-11. The panel affirmed the district courts holding that the claims relating to those 15 patents were not timely filed. Id. at 11.

The panel next turned to Novartis' claims challenging the patent term adjustment of three remaining patents. Novartis argued that once three years had passed from the application-filing date, any time the application spent in the PTO must be added to the patent term, even if the time is spent on a continued examination requested by the applicant after the three year pendency. Id. at 13. The PTO, on the other hand, argued that time spent in continued examination is ineligible for adjustment time, regardless of when the continued examination was initiated. Id. The panel agreed with the PTO's interpretation, stating that “[t]he better reading of the language is that the patent term adjustment time should be calculated by determining the length of time between application and patent issuance, then subtracting any continued examination time ' and determining the extent to which the result exceeds three years.” Id. at 14.

Federal Circuit Confirms That All Members of a Priority Chain Must Recite Full Lineage

On Jan. 22, 2014, a unanimous Federal Circuit panel, made up of Judges Prost, Plager, and Taranto, issued an opinion, authored by Judge Prost, in Medtronic CoreValve, LLC v. Edwards Lifesciences Corp. LLC, No. 2013-1117. The panel denied Medtronic's priority claim and affirmed summary judgment of invalidity of Medtronic's patent.

Medtronic is the assignee of a patent covering prosthetic heart valves which are inserted through a catheter into the patient's heart. On its face, the patent claims priority through a complicated lineage to a French application filed in 2000. Medtronic filed suit against Edwards for infringing several claims of the patent, and Edwards filed a motion for summary judgment that the patent failed to properly claim priority under 35 U.S.C. '119 to the French Application, or under 35 U.S.C. '120 its International Application counterpart, and was therefore anticipated by those applications under 35 U.S.C. '102(a) and (d). The court granted Edwards' motion, and Medtronic appealed.

The Federal Circuit first examined the district court's ruling under '120, which allows a later filed application to claim the benefit of an earlier filing date, if it contains a specific reference to the earlier filed application. Slip Op. at 7. The specific reference requirement has been interpreted to mandate that each application in the chain of priority refer to all of the prior applications. Id. at 7-8, citing Encyclopaedia Britannica, Inc. v. Alpine Electronics of America, Inc., 609 F.3d 1345, 1352 (Fed. Cir. 2010). The panel affirmed the district court's ruling that two applications in Medtronic's priority chain do not comply with the specific reference requirement, because they list only the ultimate French application to which priority is claimed, leaving out intermediate applications. Slip Op. at 9. Thus, Medtronic's patent was only entitled to a priority date of 2003, and the applications to which it had claimed priority were available as anticipatory prior art.

Howard Shire is a Partner and Wyatt Delfino is an Associate in the New York office of Kenyon & Kenyon LLP.