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IP News
Obviousness-Type Double Patenting Does Not Invalidate Section 156 Patent Term Extension
|On Dec. 7, 2018, a Federal Circuit panel consisting of Judges Moore, Chen and Hughes affirmed the District of Delaware decision upholding the validity of Novartis's patent term extension (PTE) in Novartis AG et al. v. Ezra Ventures LLC, No. 2017-2284. Novartis AG (Novartis) filed suit against Ezra Ventures LLC (Ezra), alleging infringement of claims 9, 10, 35, 36, 46 and 48 of U.S. Patent No. 5,604,229 (the '229 patent), in response to Ezra's Abbreviated New Drug Application (ANDA) for a generic of Novartis's Gilenya® multiple sclerosis drug. On Sept. 22, 2016, the district court denied Ezra's motion for judgment on the pleadings. Ezra subsequently stipulated to infringement of the asserted claims to the extent such claims are not invalid, expired or unenforceable. The district court issued judgment on June 9, 2017, finding the '229 patent valid, enforceable and infringed, and imposed an injunction on the Ezra generic until the '229 patent expires in 2019. Ezra appealed.
Novartis' '229 patent and unasserted U.S. Patent No. 6,004,565 (the '565 patent”) cover Gilenya®. The '229 patent was filed in 1993, issued in 1997, and received a patent term of 17 years from issuance. The '565 patent, which was filed after the effective date of the Uruguay Round Agreements Act of 1994 (URAA), received a patent term of 20 years from the earliest effective filing date, and expired in 2017. Novartis obtained a five-year PTE for the '229 patent under 35 U.S.C. §156, a part of the Hatch-Waxman Act. Section 156 allows patent owners to obtain a term extension of up to five years for patents that require regulatory approval prior to marketing products covered by those patents. Subsection 156(c)(4) further limits the patent owner to a PTE grant for only one patent for any particular product.
On appeal, Ezra argued that Novartis's PTE for the '229 patent violated §156(c)(4) because it “effectively” extended the patent term for the '565 patent beyond its expiration in 2017, as the '229 patent covers a compound necessary for practicing the methods claimed in the '565 patent. The Federal Circuit disagreed, noting that such argument would insert the word “effectively” into the statutory language when the word appears nowhere in the provision, a practice that courts are disinclined to do. In finding that the '229 patent did not violate §156(c)(4), the panel observed that “Congress chose not to limit the availability of a patent term extension to a specific patent and instead chose 'a flexible approach which gave the patentee the choice.'” Slip Op. at 9 (quoting Merck & Co. v. Hi-Tech Pharmacal Co., 482 F.3d 1317, 1323 (Fed. Cir. 2007))
The Federal Circuit then moved on to the relationship between obviousness-type double patenting and PTE. Citing Merck, the panel found that where a PTE was validly obtained, obviousness-type double patenting does not invalidate it. The panel observed that the statutory language of §156 does not exclude patents subject to a terminal disclaimer from obtaining a §156 PTE. Instead, §156 grants PTE's for patents if all of the statutory requirements are met.
Ezra also argued that a PTE is invalid if it would violate other legal provisions, including obviousness-type double patenting. The Federal Circuit was equally unconvinced, and observed that if a patent's pre-PTE expiration date was “valid under all other provisions of law, then it is entitled to the full term of its PTE.” Slip Op. at 12.
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|Federal Circuit Holds Assignor Estoppel Does Not Apply in IPR Context
On Nov. 9, 2018, a Federal Circuit panel of judges Prost, Schall and Chen held that assignor estoppel is not applicable in the inter parties review (IPR) process in Aristarchus Networks, Inc. v. Cisco Systems, Inc., Nos. 2017-1525 and 2017-1577, on appeal from the United States Patent and Trademark Office's Patent Trial and Appeal Board (PTAB). In its analysis on the issue of assignor estoppel, the Federal Circuit first found reviewable the PTAB's decision regarding whether based on 35 U.S.C. §311(a), assignor estoppel applies in the IPR context. The court then turned to the merits of the arguments regarding applicability of assignor estoppel.
Aristarchus Networks, Inc. (Arista) petitioned for IPR of certain claims of Cisco's U.S. Patent No. 7,340,597 (the '597 patent) directed to network device security. The PTAB instituted review and upheld five of the challenged claims while invalidating the others as anticipated or obvious. The named inventor of the '597 patent is David Cheriton, who was a Cisco employee at the time, but who subsequently left to found Arista. The PTAB did not apply the doctrine of assignor estoppel, observing that: 1) pursuant to §311(a), the grant of the ability to challenge patent through IPR is broad; and 2) unlike in other contexts, Congress did not expressly provide for assignor estoppel in IPRs. Arista appealed the finding regarding the upheld claims, and Cisco cross-appealed regarding the PTAB's refusal to apply assignor estoppel.
Section 311(a) states that “a person who is not the owner of a patent may file with the Office a petition” for IPR. Slip Op. at 21. Arista argued, and the court agreed, that §311(a) is unambiguous and does not provide for the applicability of assignor estoppel in IPRs. The panel observed that the statutory language of §311(a) “delineates who may file an IPR petition,” and found that anyone, including an assignor, who is not a patent owner may petition for IPR. Slip Op. at 22.
The Federal Circuit was unconvinced by Cisco's primary argument that assignor estoppel is a well-established doctrine that should be presumed to apply unless the statutory text indicates otherwise. The panel first observed that there was uncertainty in Federal Circuit case law regarding the “continued vitality of the doctrine.” Slip Op. at 19 (quoting Diamond Sci.Co. v. Ambico, Inc., 848 F.2d 1220, 1223 (Fed. Cir. 1988) (internal quotation marks omitted). Second, the panel noted that even if the doctrine was well-established, §311(a) shows “a statutory purpose to the contrary.” Slip Op. at 20 (quoting Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 108 (1991)) (internal quotation marks omitted).
Cisco also argued that a holding that assignor estoppel does not apply in the IPR context leads to an inconsistency that creates forum shopping. The Federal Circuit, however, saw this not as an inconsistency but as “an intentional congressional choice” that “is consistent with the overarching goals of the IPR process that extend beyond the particular parties in a given patent dispute.” Slip Op. at 22.
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|Federal Circuit Reverses District Court Holding of Patent Ineligibility of Computer Security Patent
On Nov. 16, 2018, a Federal Circuit panel consisting of Judges Dyk, Wallach and Taranto in Ancora Technologies, Inc. v. HTC America, Inc., et al., No. 2018-1404, reversed the Western District of Washington's grant of HTC America and HTC Corporation's (HTC) motion to dismiss on grounds of patent ineligibility. Ancora Technologies, Inc. (Ancora) sued HTC over U.S. Patent No. 6,411,941. HTC moved to dismiss in the district court, and petitioned for IPR. The district court granted the motion, but the PTAB rejected the IPR petition. Ancora appealed the district court decision.
The '941 patent claims a method for restricting a computer's software operation. The method makes use of a key, which is a unique identification code, and a record, which is a license record that contains information regarding the author name, program name and number of licensed users. The key is stored in the non-modifiable read-only memory (ROM) of the computer's Basic Input Output System (BIOS). The record, however, is stored in a modifiable part of the BIOS memory, a location that is not typically used for program verification. When the computer checks for permission to run a program, it retrieves the program's license record, encrypts it using the key, and compares it to the record stored in the modifiable BIOS memory. If there is no match, the computer halts the program.
The asserted improvement over previous computer security techniques, as reinforced by the prosecution history, is the location of the storage for the record in the modifiable part of the BIOS memory and the interaction of this memory location with other computer memory during a program permission check. Using BIOS memory, according to the patent, improves computer security because it is much more difficult to hack.
The district court granted the motion to dismiss on the ground that the claims are directed to patent ineligible subject matter-an abstract idea. In reversing, the Federal Circuit noted that “[c]omputers are improved not only through changes in hardware; '[s]oftware can make non-abstract improvements to computer technology.” Slip Op. at 8 (citing Finjan, Inc. v. Blue Coat System, Inc., 879 F.3d 1299, 1304 (Fed. Cir. 2018). Improvements to computer security, as claimed in the '941 patent, can be non-abstract if the technique is different from previous techniques. Claim 1 of '941 patent claimed an “unexpected” method of security improvement and addressed the computer technological problem of the “vulnerability of license-authorization software to hacking.” Slip Op. at 10-11. Since the Federal Circuit concluded that claim 1 is not directed to an abstract idea, there was no need for it to proceed to step two of the two-step process set forth in Alice Corp. v. CLS Bank International, 575 U.S. 208 (2014), for determining patent eligibility.
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Jeffrey S. Ginsberg is the Assistant Editor of this newsletter and a partner with Patterson Belknap Webb & Tyler LLP. Hui Li is an associate at the firm.
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