US Launches Investigation into China’s Technology Transfer & IP Practices

United States Trade Representative (“USTR”) Robert E. Lighthizer launched an investigation under Section 301 of the Trade Act of 1974 (“Section 301”) into acts, policies, and practices of the Chinese government as they relate to “technology transfer, intellectual property [IP], and innovation.” The August 18 announcement of the investigation came just days after President Donald Trump signed a memorandum directing the USTR to consider whether to launch an investigation of China’s IP laws and practices that “may inhibit United States exports, deprive United States citizens of fair remuneration for their innovations, divert American jobs to workers in China, contribute to our trade deficit with China, and otherwise undermine American manufacturing, services, and innovation.”

While Section 301 was a frequently used tool between the 1970s and 1990s (including when Ambassador Lighthizer was Deputy USTR during the 198os), the number of such investigations declined significantly after the World Trade Organization (WTO) dispute settlement system was established. Use of Section 301, however, is consistent with this Administration’s apparent willingness to use a broader range of trade tools to more aggressively combat potential unfair trade practices.

Section 301 allows—and, in certain circumstances, requires—the USTR to investigate and take unilateral retaliatory action in response to certain trade-related harms. The USTR must take appropriate action if the rights or benefits of the United States under any trade agreement are denied, violated, or otherwise harmed, or if its international legal rights are infringed in a way that burdens or restricts U.S. commerce. The USTR may take action at his or her discretion if an act, policy, or practice is unreasonable or discriminatory and burdens or restricts U.S. commerce. Among other things, a Section 301 action may be taken if a foreign country denies adequate and effective intellectual property protection or fair and equitable market opportunities, even if its behavior is consistent with its obligations under the World Trade Organization’s (“WTO”) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).

The Federal Register notice launching the investigation highlights concerns that the Chinese government uses the transfer of foreign technology and intellectual property to advance its industrial policy goals. The USTR investigation will first examine acts, policies, and practices of the Chinese government that fall into the following four categories:

  1. The use of “a variety of tools, including opaque and discretionary administrative approval processes, joint venture requirements, foreign equity limitations, procurements, and other mechanisms to regulate or intervene in U.S. companies’ operations in China, in order to require or pressure the transfer of technologies and intellectual property to Chinese companies;”

  2. Acts, policies, and practices that “reportedly deprive U.S. companies of the ability to set market-based terms in licensing and other technology-related negotiations with Chinese companies and undermine U.S. companies’ control over their technology in China;”

  3. Direction and/or unfair facilitation of “systematic investment in, and/or acquisition of, U.S. companies and assets by Chinese companies to obtain cutting-edge technologies and intellectual property and generate large-scale technology transfer in industries deemed important by Chinese government industrial plans;” and

  4. Conduct or support of “unauthorized intrusions into U.S. commercial computer networks or cyber-enabled theft of intellectual property, trade secrets, or confidential business information” (as well as the harm they may cause to U.S. companies and the competitive advantages they may bring to Chinese companies).

Beyond the categories enumerated above, which are focused on technology/IP transfer and cyber-theft, the USTR notice also invites submissions of “information on other acts, policies and practices of China relating to technology transfer, intellectual property, and innovation described in the President’s Memorandum,” leaving open the possibility for the investigation to widen. The announced scope of the investigation highlights the discretionary factors to be considered under the statute, indicating that USTR is not focused solely on actual violations of China’s obligations under international trade law.

Consistent with the statute, the notice provides that USTR has 12 months to make a determination as to whether action is warranted. If it is determined that action is warranted, USTR may consider a broad range of retaliatory tools, including the withdrawal of trade concessions, the imposition of duties or other import duties, and “all other appropriate and feasible action within the power of the President that the President may direct the Trade Representative to take…to enforce such rights or to obtain the elimination of such act, policy, or practice…[with actions that may be taken being] within the power of the President with respect to trade in any goods or services, or with respect to any other area of pertinent relations with the foreign country.” Retaliatory actions may be targeted at industries other than those directly linked to the identified harm. USTR also has the discretion to come to an agreement with the foreign country’s government to eliminate or obtain compensation for the identified harm. As required by law, USTR has requested formal consultations with the Chinese government regarding the issues under investigation.

The behavior targeted by this Section 301 investigation reflects concerns of the international business community in China. For instance, 43 percent of companies responding to AmCham China’s annual Business Climate Survey in 2017 reported that reducing the need to engage in technology transfer would have at least a somewhat significant impact on increasing their investment levels in China. These companies may find this investigation to be an opportunity to advance their specific concerns. Meanwhile, Chinese companies that may be at risk for retaliatory action under Section 301, and U.S. companies potentially vulnerable to counter-retaliation by Chinese authorities, should carefully monitor the situation.

The Chinese government has expressed its concerns about the investigation. Suggesting that the United States is sending the wrong signal to the international community, a statement from the Ministry of Commerce asserts, “The United States’ disregard of World Trade Organization rules and use of domestic law to initiate a trade investigation against China is irresponsible, and its criticism of China is not objective.” While launching an investigation of China’s unfair trade practices is not, in and of itself, inconsistent with U.S. WTO obligations, imposition of some—though not all—of the retaliatory measures authorized under U.S. law could potentially violate WTO rules. China’s statements indicate that should the U.S. investigation lead to unilateral retaliatory action, China will respond in various ways, including by considering a challenge to such measures at the WTO.

The USTR notice calls for written comments by interested persons to be submitted by September 28. The interagency Section 301 Committee, which is chaired by the USTR, is scheduled to hold a hearing in Washington, D.C., on October 10. Requests to appear at the hearing are also due on September 28.

Zhijing Yu  contributed to the preparation of this article.

 This post was written by Ashwin Kaja, Gina M. Vetere and Timothy P. Stratford of  Covington & Burling LLP © 2017
For more legal analysis go to The National Law Review

Brewers & Blades: Avoiding Exhaustion in Products with Consumable Parts

A product with consumable or replaceable parts can be complicated to patent. These kinds of products have a reusable base component and replaceable widgets that work with it. Think razor handles with disposable razor blades, coffee brewers with coffee pods, or table saws with replaceable blades. Sales of the widgets may create a substantial revenue stream, but what’s to stop an interloper from copying the widgets and undercutting these continuing sales? Patents! Right? Maybe; as long as you’ve been careful to patent the right aspects of your products and to avoid running afoul of the patent exhaustion doctrine. This doctrine “exhausts” a patentee’s patent rights in a product after it has been sold. The exhaustion is expansive. Courts have held a method claim automatically exhausted by the exhaustion of an apparatus claim in the same patent.[1] Very recently, the Supreme Court may have expanded the doctrine about as far as it can go: now all patent rights are exhausted regardless of any attempt at post-sale restriction, and regardless of the location of the sale.[2] In other words any sale, anywhere, exhausts all patent rights in the sold product.

Suppose you run a prolific company that makes coffee brewers that use single-serve disposable pods and also makes table saws with replaceable blades. For each product your business model might depend on controlling the pods or blades used with your product. For instance, if you take a loss on your coffee brewer intending to make up for it in sales of coffee pods, a patent covering the pods may be more valuable than one covering the brewer. If you intend to develop a licensing program for third-party saw blades, a patent covering a saw blade’s interface with your table saw may be crucial. So how might one breathe more easily despite the patent exhaustion doctrine to keep infringement claims viable? Here are some suggestions.

Patent your widgets separately. If patented together with the base component you may not be able to escape exhaustion of your patent claim, since your sale of the base component may “exhaust” your rights in the claim with respect to that sale. By patenting the widget separately—and in a separate patent—there is less chance of its claims being exhausted by sale of the base component. Keeping your widgets separate also minimizes your exposure to other pitfalls, such as being limited to contributory infringement claims.

Patent with your design strategy in mind. A robust design patent strategy can be a great tool to prevent knock-off widgets from cutting into market share. Strategic claim drafting in a design patent can in many cases provide claim scope broad enough to cover unauthorized widgets of varying configurations that may work with the base component. This is accomplished through the creative use of solid and broken lines in the drawings to claim particular aspects of the widget design, so long as the design of these aspects is not dictated by their function. This strategy can be especially helpful where it may be difficult or time-consuming to get a utility patent claim broad enough to stop knockoff widgets. And because your design patents will be directed to the widgets themselves, they are unlikely to fall victim to exhaustion due to sale of the base component.

Design with your patent strategy in mind. Designers may find it useful to over-design the parts of the base component and the widget that interact, with two additional goals in mind: (1) at least the widget side of the interaction should include a standalone novel feature, whether functional, ornamental, or both; (2) the interaction should only properly work with a widget including the novel feature. This may provide the opportunity for strong and specific utility or design patent claims directed to the widget that can be used to prevent unauthorized knockoff widgets.

Make your widgets disappear. Now that the Supreme Court has in some ways sanctioned unauthorized re-use of spent widgets, patents may not stop a competitor from re-filling and re-selling them. But what if there’s nothing left to re-fill? If possible, consider making your entire widget consumable by the base component or making it only survive a single use intact, so that it is not re-fillable and a customer will be left to simply recycle the remainder.

These suggestions can augment a careful patenting strategy to help combat crafty interlopers and circumvent courts’ hostile stance toward downstream control of products after their sale. A strategic combination of product design and intellectual property law can be a key tool in protecting investments in developing such products. A bold, full-bodied patent prosecution strategy can help cut through the unique difficulties in protecting investment in products that use consumable parts. Involving your patent counsel in the early stages of product design can be the difference between a sale that exhausts your patent rights, and one that leaves the company buzzing with viable patent protection that rips through the competition.

[1] See Keurig Inc. v. Sturm Foods, Inc., 732 F.3d 1370 (Fed. Cir. 2013).

[2] See Impression Products, Inc. v. Lexmark International, Inc., 15-1189 (May 30, 2017).

This post was written by Daniel A. Gajewski and Mark W. Rygiel of Sterne, Kessler, Goldstein & Fox P.L.L.C.

More legal analysis is available at The National Law Review.

Stanford University’s Loss in Interferences of Three Patents Covering Testing Methods for Fetal Aneuploidies for Lack of Written Description is Vacated

The Board of Trustees of the Leland Stanford Junior University v. The Chinese University of Hong Kong, Jun. 27, 2017, Before O’Malley, Reyna, and Chen.


  • The Federal Circuit declined to reconsider its decision in Biogen MA, Inc. v. Japanese Found. for Cancer Research, 785 F.3d 648 (Fed. Cir. 2015) that parties cannot bring civil actions in district court under 35 U.S.C. § 146 for review of the PTAB’s decisions in interferences declared on or after September 16, 2012.

  • In evaluating whether a claim satisfies the written description requirement, the fact finder may consider what a person of ordinary skill in the art would understand from a description of a product or technique in the specification as of the filing date of the application. Post-filing date publications may only be used as evidence of the state of the art existing on the filing date.

Procedural Posture:

Stanford University (“Stanford”) appealed from orders of the PTAB in three interference proceedings between Stanford and Chinese University of Hong Kong (“CUHK”), which found the claims of three Stanford patents directed to testing methods for fetal aneuploidies unpatenable for lack of written description.  The appeal was initially filed pursuant to 35 U.S.C. § 146 in the District Court for the Northern District of California, and the parties engaged in discovery there.  On May 7, 2015, the Federal Circuit affirmed the lower court’s decision in Biogen MA, Inc. v. Japanese Found. for Cancer Research, 785 F.3d 648 (Fed. Cir. 2015), holding that under the AIA, for interferences declared after September 15, 2012, an appeal from an interference decision has to be made to the Federal Circuit.  The parties then jointly requested transfer from the Northern District of California to the Federal Circuit, which was granted.  The Federal Circuit considered the case on the merits, vacated and remanded.


  • The Federal Circuit declined to revisit its holding in Biogen, noting that although Stanford briefed this issue in its opening brief, Stanford did not raise this issue again in its reply brief or in oral argument. Rehearing en banc and a petition for certiorari in the Biogen case were denied; thus, in the Federal Circuit’s view, “Biogen is the law in this circuit and we, as a panel, will not revisit it.”

  • The Federal Circuit declined to consider the record developed during discovery in the district court. Because the district court lacked subject matter jurisdiction to review the interference decisions, the Federal Circuit agreed with CUHK’s position that the activities in the district court were a nullity and should not be considered by the Federal Circuit or remanded to the Board for consideration.

Written Description:

  • Sufficiency of written description is evaluated from the perspective of one of ordinary skill in the art at the time of the invention, “by examining the record evidence as to pre-filing date art-related facts.” The post-filing date publications may be considered to the extent they “contain art-related facts … existing on the filing date,” but may not be used as a source for the knowledge about art-related facts that did not exist on the filing date.

  • The Board awarded patents in interferences to CUHK because it found that the Stanford patents’ specification disclosed “targeted” rather than “random” sequencing, and the specification would not have indicated to one of ordinary skill in the art that Stanford’s inventor Dr. Quake was in possession of the claimed random massively parallel sequencing (“MPS”) method. The Federal Circuit held that the PTAB erred because it did not adequately explain why the Illumina platform for sequencing DNA, referenced and described in Stanford’s original application, did not provide sufficient written description support for random sequencing.  The Board improperly relied on the testimony of CUHK’s expert, who only described that an earlier sequencing technique, Roche 454, was used for targeted sequencing, and “failed to cite to the Roche 454 references with specificity.”  The Board also erred in finding that, because Stanford’s application did not preclude targeted MPS sequencing, it did not disclose to a person of ordinary skill in the art random MPS sequencing.

This post was written by Georg C. Reitboeck  Ksenia Takhistova Christopher Gresalfi of Andrews Kurth Kenyon.

Google Tries “Pretty Woman” Tactic in Oracle Copyright Suit

I’m not sure Julia Roberts’ use of that blonde wig and eighties cut-out dress when she Google versus Oracleleaned against Richard Gere’s car in Pretty Woman should be considered “fair use,” but perhaps a court might say otherwise. How does Julia’s transformation from wayward to womanly in that iconic 1990 film come into play in a fight between tech giants Google and Oracle over the use of copyrighted java? Because they both hinge on “transformative use.”

Google’s going to trial again? Say it isn’t so. I have to wonder how many lawyers Google, alone, employs. But, if you’re going to stand as one of the front-runners in today’s fast-paced, internet-driven services market, you have to be prepared for lawsuits. Google has been fending off some serious claims by Oracle in a copyright suit filed in San Francisco since 2010, but when the focus of the debate turned to expert witness testimony, we wanted to highlight the matter for discussion and debate. Oracle initially sued Google claiming improper use of copyrighted Java, particularly Google’s use of its application programming interfaces (“APIs”) on its Android platform, to allow developers who are familiar with Java to quickly convert their web apps to Android.  Oracle is now reportedly seeking royalty damages in excess of $8 billion.

Initially Google argued, and the trial court agreed, that APIs were not subject to copyright. That ruling, however, was overturned by the Federal Circuit on appeal, which means Google’s remaining defense is whether its use of the APIs was “transformative,” which would make it acceptable under the Fair Use Doctrine. What standard of “transformative use” are the parties looking to?  2 Live Crew and their ripping parody of “Pretty Woman” in their 1989 album, “As Clean As They Wanna Be.” Please tell me you’re envisioning that iconic cover right now. Apparently the Supreme Court in a 1994 ruling, Campbell v. Acuff-Rose Music, Inc., found 2 Live Crew’s version of “Pretty Woman” so creative and original that it qualified as “fair use,” not copyright infringement. Oracle is arguing the opposite by claiming Google’s use of the Java APIs did nothing to transform the code. Google simply plugged it into to a larger body of work, but in no way altered it, which does not qualify, according to Oracle, as transformative.

Oracle has sought to exclude the testimony of Google’s computer science expert from opining that Google’s use of the Java code altered it sufficiently to qualify as a transformative use, claiming his opinion “flies in the face” of the Federal Circuit’s finding that Google was wrong in claiming its use was transformative simply because it incorporated other elements in the Android system. Google has fought back, stating the Federal Circuit never decided whether the work was transformative and specifically remanded the case so that issue could be decided by a jury. Are you finding both of those arguments a bit rambling and repetitive? Apparently so did the trial court judge when he lamented his role as the gatekeeper who has to “excise every detail of expert testimony on a granular level.” With reams of lawyers on either side fighting over every detail and every dollar, however, that is probably precisely what he will have to do.

If you feel it may be hard, not being a computer science guru, to make a determination as to whether Google’s use of the Java at issue was “transformative,” imagine how the jury is going to feel. In May, 2012, a jury found Google had infringed Oracle’s copyrights but they could not decide whether use of the code in question was “fair.” This will be the second trial and second jury that attempts to answer this question. It will require an expert with exceptional communication skills, who is as persuasive as Julia, to effectively break this Java jumble down and win over the potentially tech-savvy, but stubborn “Richards” in the jury box. That’s the expert we would find for them, anyway, if Google gave us a call.

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Trade Secrets Bill with Controversial Civil Seizure Provision Passes Senate

Recently, Congress and the courts in the United States have been active in reining in what many have seen as patent system that has run amuck. In the process, they have placed a number of limits on patent holders’ ability to effectively and successfully enforce patents. But as opportunities to enforce intellectual property through patent suits have been narrowed, another IP door appears to be opening.

For several years, Congress has been working on legislation that would, in effect, federalize what until now has been a state-by-state system of trade secret law. The current version, the Defend Trade Secrets Act of 2016 (S. 1890) (“DTSA”), was approved by the Senate on April 4, 2016 with bipartisan support.

The DTSA would operate to expand the existing Economic Espionage Act by, among other things, adopting much of the framework of the Uniform Trade Secrets Act (“UTSA”) and permitting private parties to bring civil trade secret misappropriation actions. UTSA-derived provisions are already in effect in 48 of the 50 states. Thus, while there are some differences between the DTSA and the UTSA, it is unclear whether the DTSA would represent a meaningful departure from existing trade secrets law, at least substantively. There are differing views.

The DTSA’s Civil Seizure Provision

What would almost certainly represent a significant new development is the DTSA’s civil seizure procedure, which is not contemplated under the UTSA. Under the proposed law, upon application by a party asserting theft of trade secrets, a federal court would have the authority to order law enforcement officials to enter land and seize property “necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.” Most strikingly, the bill envisions an ex parteprocess under which seizures would be authorized and executed without any notice to the relevant property owner(s), including third parties—a process that naturally raises due process and Fourth Amendment concerns.

Supporters of the bill point to analogous ex parte seizure provisions contained in the Lanham Act1 (authorizing ex parteseizures of counterfeit goods) and the Copyright Act2 (authorizing ex parte impoundments of documents and things related to copyright infringement)—provisions that have survived constitutional scrutiny.

Moreover, Rule 64 of the Federal Rules of Civil Procedure authorizes prejudgment seizures of property under applicable state law (e.g., writs of replevin or sequestration remedies), and ex parte seizures under such state law provisions have likewise been upheld under many circumstances. Courts have also justified ex parte seizures under the All Writs Act.3 Thus, there is precedent for these types of procedures.

It is also worth noting that ex parte seizure procedures are used in intellectual property cases in numerous jurisdictions outside of the United States. For example, in the United Kingdom, so-called “Anton Piller” orders have been utilized for many years to secure documents and things on an ex parte basis, in exceptional circumstances.

Significant Controversy

Nevertheless, the prospect of ex parte seizures in the trade secrets context has generated significant controversy in the United States. One major source of concern is the fact-intensive nature and overall complexity of trade secrets disputes. What exactly is the information at issue and does it qualify as a trade secret? How, if at all, has it been maintained in secrecy? Does the target of the seizure really have the information in his or her possession, and if so, how was the information obtained? Was reverse engineering involved? And so on.

Even on a preliminary basis, the complex factual issues involved in trade secret disputes may not lend themselves to fair resolution through expedited and non-adversarial ex parte procedures. Indeed, it does not take much imagination to conceive how, in the wrong hands, one-sided ex parte seizure proceedings might be used for improper purposes.

For example, in one Lanham Act counterfeit goods case, the plaintiff’s attorney “ran roughshod over the applicable statutes and rules,” submitting an inaccurate and misleading affidavit and convincing the lower court to authorize a private investigator to conduct the seizure and hand the seized property to the attorney.4 In another, the district court described a scheme in which the plaintiffs obtained seizure orders in a succession of counterfeiting cases, only to dismiss each case approximately one year after seizing the goods, without having ever established that the goods were, in fact, counterfeit.5

Rigorous Procedural Safeguards

In an effort to eliminate potential mischief, and to ensure that the new DTSA scheme passes constitutional muster, the bill’s sponsors have included a number of key procedural safeguards:

  • Ex parte seizures would be reserved for “extraordinary circumstances” only;

  • A seizure order would only issue upon the plaintiff’s filing of an affidavit or verified complaint that sets forth “specific facts” establishing, among other things: (1) immediate and irreparable injury if seizure is not ordered; (2) a likelihood of success on the merits of the trade secret claim; (3) the balance of harms favors the applicant; (4) the identity and location of the material to be seized, with reasonable particularity; and (5) more ordinary procedures (such as a TRO motion under Rule 65) would be ineffective because the seizure target would evade the order or destroy the evidence;

  • The applicant would be required to post a bond sufficient to cover damages should the seizure turn out to be wrongful or excessive;

  • Any seizure order would “provide for the narrowest seizure of property necessary” and would be executed by law enforcement officials;

  • The court would be required to provide specific guidance to the officials executing the seizure that “clearly delineates” the scope of their authority and details how the seizure must be conducted;

  • The court would also be required to schedule an adversarial hearing for the earliest possible time after the seizure was executed, at which hearing the applicant would bear the burden of proof of establishing that the seizure order was proper; and

  • The bill provides for a civil action for damages based on a wrongful or excessive seizure.

Taken together, these safeguards are significant and may reduce the likelihood of erroneous seizure orders and/or abuse of the system. In fact, it is possible that the obstacles to securing a seizure order would be so significant that, as a practical matter, they would eliminate the seizure remedy as an alternative in all but the most egregious scenarios. That appears to be an intended result.

In any event, having navigated the Senate, the DTSA will now pass to the House of Representatives for further consideration. A companion bill to S. 1890, H.R. 3326, was introduced in July 2015 and has enjoyed broad bipartisan support. In an era of partisan rancor, the DTSA may yet be one instance—the ex parte seizure provision notwithstanding—in which legislators find ways to work together across the aisle to achieve results.

1See 15 U.S.C. § 1116(d).
2See 17 U.S.C. § 503(a).
328 U.S.C. § 1651.
4Warner Brothers v. Dae Rim Trading, Inc., 877 F.2d 1120 (2d Cir. 1989).
5NASCAR v. Doe, 584 F. Supp. 2d 824 (W.D.N.C. 2008).

Target Wins Rehearing of IPR Joinder Decision with Expanded Panel

Schwegman Lundberg Woessner

Last fall, the Patent Trial and Appeal Board (PTAB or Board) interpreted the IPR joinder provision, 35 U.S.C. § 315(c), to require joinder requests by a non-party to an ongoing proceeding.  (Target Corp. v. Destination Maternity Corp., IPR2014-00508 and IPR2014-00509.)  Prior to that decision,  the Board had interpreted § 315(c) to allow for issue joinder by the petitioner of the original proceeding (see, for example Microsoft v. Proxyconn, IPR2013- 00109).  Of course, joinder was decided on a case-by-case basis, but had not previously been denied because the request was made by the petitioner of the original proceeding.

Target Corp. filed rehearing requests in both affected IPR proceedings in an effort to have the Board reconsider its interpretation of  35 U.S.C. § 315(c) with an expanded panel.  Target’s arguments are quite clearly stated in its Motion for Rehearing.  The Board granted Target’s rehearing request.  In a 4:3 decision,  the majority agreed that § 315(c) had been overly narrowly interpreted in the prior decision:

Turning now to the merits of the Request for Rehearing, the contention at the heart of Petitioner’s request for rehearing is that the denial of its Motion for Joinder was “based on an erroneously narrow interpretation of 35 U.S.C. § 315(c).” Paper 22, 1. We agree with Petitioner.

The majority read § 315(c)’s reference to “any person who properly files a petition under section 311” in conjunction with § 311′s requirement that the petition filer not be the patent owner, to broadly interpret § 315(c) to include any person except the patent owner.  This interpretation is at odds with the dissent’s analysis, which reads § 315(c)’s reference to “may join as a party” to literally require a new party for joinder:

The statute under which Petitioner seeks relief provides:

(c) JOINDER.—If the Director institutes an inter partes review, the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under section 311 that the Director, after receiving a preliminary response under section 313 or the expiration of the time for filing such a response, determines warrants the institution of an inter partes review under section 314.

35 U.S.C. § 315(c) (emphasis added). The statute does not refer to the joining of a petition or new patentability challenges presented therein. Rather, it refers to the joining of a petitioner (i.e., “any person who properly files a petition”). Id. Further, it refers to the joining of that petitioner “as a party to [the instituted] inter partes review.” Id. Because Target is already a party to the proceeding in IPR2013-00531, Target cannot be joinedto IPR2013-00531.

While the majority decision does align with panel decisions on joinder prior to Target, one must ask whether this issue is finally resolved by this expanded panel decision.  For example, what happens if another panel does not follow this interpretation § 315(c)?  Or suppose this decision is appealed; would the Federal Circuit reverse a Board decision on joinder as it relates to institution given its recent interpretation of 35 U.S.C. § 314(d) in In re Cuozzo Speed Technologies? (“We conclude that § 314(d) prohibits review of the decision to institute IPR even after a final decision. . . . Section 314(d) provides that the decision is both ‘nonappealable’ and ‘final,’ i.e., not subject to further review. 35 U.S.C. § 314(d).”)  Would a Federal Circuit appeal have to be in the form of a petition for writ of mandamus?  If so, how would that square with the mandamus decisions in In re Dominion Dealer Solutions, LLC, 749 F.3d 1379, 1381 (Fed. Cir. 2014)(mandamus relief not available to challenge the denial of a petition for IPR) and in In re Proctor & Gamble Co., 749 F.3d 1376, 1378–79 (Fed. Cir. 2014)(mandamus relief not available to provide immediate review of a decision to institute IPR)?



The “Top Ten” Intellectual Property Stories of 2014 (Most “Definitely”)

Schwegman Lundberg Woessner

I don’t think I can recall a more action-packed year for intellectual property law in my career, much less during the almost six years that I have been writing this blog. I am trying to write this while in transit, so there will be few footnotes or cites, but they are easy enough to find in my past posts, or online. I am not even sure that I outlined ten stories before I started typing, but here goes — in no particular order.

1,2,3 and 4. Mayo meet Alice meet Myriad – The Tortuous Path of s.101.

Although only Alice was decided in 2014, the excitement really started with the unexpected release of the PTO “Life Sciences” Guidelines in March (No. 1 Story). The draft Guidelines directed Examiners to reject claims to products of nature unless they were significantly different in structure from the products in their natural states, and declared that simple “If A, then B” diagnostic claims were patent-ineligible as attempts to patent natural phenomena.

The Guidelines were continuously criticized as based on a misreading of the earlier Mayo and Myriad S.Ct. decisions and were released in a revised form in December (No. 2 Story) via publication for comment in the Fed. Reg. The revised Guidelines recognized that the standards for claiming diagnostic tests were in flux but permitted consideration of functional differences in resolving the PE of natural products.

However, only a few days later, in U. of Utah Res. Fndn v. Ambry, (No. 3 Story) the Fed. Cir. held that primers could not be patented if not structurally changed from their natural sequence. Judge Dyk, writing for the panel, simply misread Myriad as holding that no isolated product of nature — as opposed to no naturally occurring DNA — could be patented unless it was markedly different than in its natural state. This decision followed the earlier invalidation of the claims to Dolly the cloned sheep in In re Roslin in which Judge Dyk, declared that no naturally-occurring living organism is patentable. The Utah panel also held that claims to comparing a subject’s DNA sequence to a reference sequence, wherein the claim also recited PCR amplification or probing, did not escape the Mayo requirement for an additional inventive concept in additional to the abstract idea of comparing sequences. This decision is ripe for rehearing en banc, if only to correct Judge Dyk’s manifest misreading of Myriad (and to keep the PTO Guidelines under some judicial control).

The title of this “news story” is meant to point up the tsunami-like “abstract idea” judicial exception to s. 101 patent-eligibility (PE). The Mayo v. Prometheus decision only mentions “abstract idea” once, and it is to cite to an earlier decision. The S. Ct. in Mayo reversed the Fed. Cir., holding that a claim reciting a natural phenomenon was required to recite some further inventive concept in order to be “significantly more” than a claim preempting use of the phenomenon. In Bilski, the Fed. Cir. fashioned the “machine or transformation test”. Judge Rader’s dissenting argument that a claim to hedging commodity risk was no more than an attempt to claim an abstract idea. The S. Ct. agreed with Judge Rader.

In Alice Bank, (No. 4 Story) the S. Ct. managed to marry the Mayo “test” for PE to the abstract idea exception of Bilski. The Court applied a two-step test. First, decide if a claim involves an abstract idea and then examine the claim to see if it contains significantly more than elements that are conventional and routine in the relevant art. Now, enter Utah Res. Foundation (Myriad) v. Ambry. While Ambry argued that the diagnostic claims were no more than an attempt to claim a natural phenomenon (mutations in DNA), the Fed. Cir. took a different tack and looked to itsMyriad decision for guidance.

And, lo and behold, at the Fed. Cir. level, Judge Lourie wrote that the DNA comparison claims were not PE, since they were directed to an abstract idea(!) So the Fed. Cir., simply applied the Mayo test as articulated in Alice and invalidated the method claims asserted by Myriad as attempts to claim an abstract idea, albeit with a bit of window dressing (PCR and probing). In the coming year, I can only hope that the PE of a simple “If A, then B” diagnostic claim will be resolved. And I also hope that Judge Breyer is not writing for the majority.

5. Kimble v. Marvel. The S. Ct. granted cert. to revisit the question of whether or not a requirement that a licensee pay post-expiration date royalties for a patent license is per se illegal (as it is presently).

6. Nautilus v. Biosig. While the S. Ct. tried to raise the bar for meeting s. 112(b) by requiring that claim elements be defined with “reasonable certainty,” rather than by the Fed. Cir.’s requirement that the meaning of the element not be “insolubly ambiguous” or “amenable to construction.” It is not at all clear where the new bar has been set.

7. Teva v. Sandoz. The S. Ct. granted cert. to resolve the question of whether or not it is proper for the Fed. Cir. to conduct de novo review of the district courts’ factual findings during claim construction. By the way, what is a mixed question of law and fact and how is a court to review them separately? Appeal to the Fed. Cir. and find out!

8. American Calcar v. American Honda Motors. This convoluted case stands for the observation that the inequitable conduct defense has risen from the grave of legal doctrines, to which it had been consigned by many commentators. Still, to prevail on this defense, a defendant is greatly assisted by the presence of a single (or perhaps two) “bad actors” who do things like try to patent a competitor’s drug — which, remarkably was the factual posture of two cases before the Fed. Cir. last year. You can advocate with vigor; just don’t lie.

9. Commil v. Cisco. Although the question present in the granted petition for cert. seems narrow (To what extent can evidence of a good faith belief in non-infringement negate the element of intent required to induce infringement?), this appeal is evidence that the S. Ct. is not yet tired of the challenges posed by Title 35.

10. Progress in Regulations Affecting Bringing Biosimilars to Market. In August, the FDA released its “Purple Book” listing approved reference products and actually accepted an application for a biosimilar “generic”. While some commentators feel that it will be more effective to re-conduct phase III trials than to try to navigate the hostile regulatory hurdles thrown up by the agency, the availability of biosimilar drugs seems inevitable.