IP News

In its opinion, the Federal Circuit first noted that it reviews de novo the dismissal for failure to state a claim by a district court. Slip Op. at 6. The Federal Circuit observed that in many cases: 1) it is possible and proper to determine patent eligibility under 35 U.S.C. '101 on a motion to dismiss; and 2) a patent eligibility analysis may proceed even before a formal claim construction is conducted. Id. at 7.

On the test for patent eligibility, the Federal Circuit briefly reviewed the well-established two-step test articulated by the Supreme Court in its Mayo and Alice decisions. The first step involves a determination whether the claim at issue is directed to a patent-ineligible concept, such as a law of nature, natural phenomenon, or abstract idea. Id. at 8 (citing Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134 S. Ct. 2347, 2355 (2014)). If the answer is yes, the court proceeds to the second step, and examines whether the claim possesses an inventive concept, i.e., an element or combination of elements that is sufficient to ensure that it amounts to significantly more than a claim on the ineligible concept itself. A finding of “yes” at the first step coupled with a finding of “no” at the second step would render a claim ineligible for patenting under 35 U.S.C. '101.

To simplify the case on appeal, the parties stipulated that claim 1 of the '179 patent is representative of the asserted claims and, as a result, claim 1 was the only claim before the Federal Circuit. Claim 1 recites:

A method for detection of at least one coding region allele of a multi-allelic genetic locus comprising:

a) amplifying genomic DNA with a primer pair that spans a non-coding region sequence, said primer pair defining a DNA sequence which is in genetic linkage with said genetic locus and contains a sufficient number of non-coding region sequence nucleotides to produce an amplified DNA sequence characteristic of said allele; and

b) analyzing the amplified DNA sequence to detect the allele.

On the first step of the Mayo/Alice test, the Federal Circuit found that claim 1 is directed to a patent ineligible concept. The Federal Circuit characterized claim 1 as being “directed to the relationship between non-coding and coding sequences in [genetic] linkage [] and the tendency of such non-coding DNA sequences to be representative of the linked coding sequences ' a law of nature.” Slip Op. at 8. The Federal Circuit found this relationship to be similar in nature, for purpose of a patent eligibility determination, with the patent ineligible discoveries of laws of nature in the Mayo and Ariosa cases, i.e., the discovery concerning “the likelihood that a patient could suffer toxic side effects from particular doses of a drug” in Mayo, and the discovery that “paternally inherited [cell'free fetal] DNA is to be found in maternal blood (using established detection techniques)” in Ariosa. Id. at 9-11. The Federal Circuit concluded that claim 1 meets the requirement for patent ineligibility insofar as the first step of the Mayo/Alice test is concerned. Id. at 11-12.

Moving onto the second step, the Federal Circuit conducted a two-part analysis and concluded that the additional elements of claim 1 are insufficient to provide the inventive concept necessary to render the claim patent eligible. Id. at 13.

The Federal Circuit first examined the physical steps by which claim 1 implements the natural law, and determined that the physical steps fail to provide more than “well-understood, routine, conventional activity” already engaged by those in the field. Id. In this regard, the Federal Circuit observed that the steps of “amplifying” and “analyzing” were well-known, routine and conventional at the time of the patent was filed, and this observation was supported by the specification, prosecution history and GTG's submissions on appeal. Id. at 13-15. The Federal Circuit concluded that these physical steps fail to provide sufficient inventive concept to render claim 1 patent eligible. Id. at 14-15.

The Federal Circuit then evaluated a claim term alleged by GTG to provide sufficient inventive concept and found it fails to do so. Id. at 15-16. GTG argued that the term “to detect the allele” is sufficiently inventive because “no one had before analyzed man-made non-coding DNA in order to detect a coding region allele.” Id. at 16. The Federal Circuit disagreed, finding the term to recite a mental process step, to provide a purpose, but not to create the requisite inventive concept. Id. Again, the Federal Circuit drew parallel to the facts in Mayo and Ariosa. Id. at 16-18. In particular, the Federal Circuit found the mental process of “performing a prenatal diagnosis” in Ariosa directly comparable to claim 1's mental process of detecting the allele. Id. at 18. Relying on the principle that coupling a simple mental process step to a routine and conventional physical implementation of a law of nature does not make a claim patent eligible, the Federal Circuit held that the simple mental process step as pointed out by GTG, either alone or in combination with the physical steps recited in claim 1, does not provide sufficient inventive concept to render claim 1 patent eligible. Id. at 18-19.

Having found claim 1 to meet the requirements for patent ineligibility at both steps of the test under the Mayo/Alice framework, the Federal Circuit held claim 1 invalid under 35 U.S.C. '101 and affirmed the district court's grant of appellees' motions to dismiss.

Federal Circuit: Estoppel Provision Does Not Apply To Any Grounds Raised in a Petition for IPR Where Such Grounds Are Denied and the IPR Has Proceeded To a Final Written Decision

On March 23, 2016, a Federal Circuit panel of Judges Moore, Reyna, and Wallach issued a majority opinion, authored by Judge Moore, in Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., Case Nos. 2015-1116 and 2015-1119. The majority denied a petition for writ of mandamus filed by Appellant Shaw Industries (Shaw) based on the conclusion that the statutory estoppel provision of 35 U.S.C. '315(e) does not apply to any grounds of unpatentability raised in a petition for Inter Partes Review (IPR) where such grounds have been denied in the Board's institution decision, and the IPR has progressed to a final written decision on other grounds.

Appellee Automated Creel Systems (ACS) sued Shaw for infringement of U.S. Patent No. 7,806,360 (the '360 patent). Slip Op. at 4. The '360 patent contains 21 claims, which could be divided into two groups: Group 1 (the “non-interposing claims”) and Group 2 (“interposing claims”). Id. at 2-4. Shaw filed two petitions for IPR of the claims of the '360 patent. Id. at 4-5.

The issue of estoppel solely concerns the first petition and the Group 2 claims. In the first petition, Shaw alleged three grounds of unpatentability against the Group 2 claims: 1) obviousness over Munnekehoff in view of Ligon; 2) obviousness over Barmag in view of Ligon; and 3) anticipation by Payne. The Board instituted IPR on the first two grounds, but not on the Payne-based anticipation ground. Id. at 5. The Board explained that the Payne-based ground was “denied as redundant in light of [its] determination that there is a reasonable likelihood that the challenged claims are unpatentable based on the grounds of unpatentability on which we institute an [IPR]” but provided “ no substantive determinations of the Payne-based ground in [its] decision.” Id. In its final written decision, the Board found, among other things, that Shaw failed to show by a preponderance of evidence that the Group 2 claims were unpatentable based on the instituted grounds. Id . at 5-6. Shaw appealed to the Federal Circuit as to the Group 2 claims and ACS cross-appealed as to another claim unrelated to the issue of estoppel. Id. at 6.

With respect to the Group 2 claims, the majority first examined whether it had jurisdiction to review the Board's decision to institute IPR on some but not all grounds, and concluded that it does not. The majority recognized that, pursuant to its holding in In re Cuzzo Speed Techs, LLC, the Federal Circuit lacks jurisdiction to review the Board's decisions instituting or denying IPR even after the Board has issued a final written decision. Id. at 6. Apparently in an effort to circumvent Cuozzo, Shaw argued that “it is not seeking review of the Board's institution decision, but rather asking [the Federal Circuit] to review the Board's authority, and correctness in exercising the same, in deeming a subset of asserted grounds redundant of instituted grounds.” Id. at 7. The majority disagreed. Id. Citing 37 C.F.R. '42.108(b), the Federal Circuit characterized “[d]enial of a ground [as] a Board decision not to institute [IPR] on that ground.” Id. at 9. Consistent with the Federal Circuit's decision in Cuozzo, the majority held that it lacks “jurisdiction to review the Board's decision not to institute IPR on the Payne-based ground, which includes its decision not to consider the Payne-based ground in its final written decision.” Id.

On appeal, Shaw alternatively petitioned for a writ of mandamus instructing the PTO to reevaluate its redundancy decision and to institute IPR based on the Payne-based ground, which the majority denied based on the finding that Shaw is not estopped from raising the Payne-based ground in future proceedings. Id. at 11.

In determining whether Shaw is entitled to a writ, the Federal Circuit first reviewed the requirements a petition for a writ has to meet before the “drastic and extraordinary remedy” in the form of a writ is appropriate. Among the requirements are a showing “(1) that the petitioner ha[s] no other adequate means to attain the desired relief, [and] (2) that the petitioner ha[s] a 'clear and indisputable' right to the writ.” Id. at 10. Shaw's key argument for satisfying these two requirements was “predicated on its concern that the statutory estoppel provisions would prevent it from raising the Payne-based ground in future proceedings.” Id.

The statutory estoppel provision at issue is 35 U.S.C. '315(e), which provides:

1. Proceedings before the office. The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a) ' may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review.
2. Civil actions and other proceedings. The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a) ' may not assert either in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.

The PTO argued that Shaw misinterpreted '315(e) because “the denied ground never became part of the IPR.” Id. at 11. The majority agreed with the PTO's conclusion that “'315(e) would not estop Shaw from bringing its Payne-based arguments in either the PTO or the district courts.” Id. The majority construed '315(e) to mean that the estoppel would only apply if the petitioner “raised or reasonably could have raised [the ground of unpatentability at issue] during that inter partes review.” Id. (emphasis in original). The majority reasoned that because the PTO denied the petition as to Shaw's Payne-based ground, “no IPR was instituted on that ground.” Id. Because the “IPR does not begin until it is instituted,” the majority concluded that “Shaw did not raise ' nor could it have reasonably raised ' the Payne-based ground during the IPR.” Id. (emphasis in original). As a result, the majority found that the estoppel under '315(e) does not apply as to the Payne-based ground. Id. Based on its finding of no estoppel, the Federal Circuit found that Shaw did not meet the stringent requirements for a writ of mandamus and denied Shaw's petition. Id.

Jeffrey S. Ginsberg is the Assistant Editor of this newsletter and a partner with Patterson Belknap Webb & Tyler LLP. Zhiqiang Liu is an associate at the firm.