Category: Intellectual Property

FDA Finalizes Guidance Documents on Biosimilarity

On Tuesday, and over three years after the initial guidance documents were released, the US Food and Drug Administration released final versions of three guidance documents discussing how FDA will evaluate applications for regulatory approval of biosimilar products:

•Scientific Considerations in Demonstrating Biosimilarity to a Reference Product

•Quality Considerations in Demonstrating Biosimilarity of a Therapeutic Protein

•Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of 2009

Draft versions of the guidance documents were originally released by FDA for public comment in February 2012. In general, the final versions released Tuesday track the draft versions fairly closely, with a few noteworthy differences.

The guidance documents reiterate that the FDA will use a totality of the evidence approach to review applications for biosimilar products, and encourages a stepwise approach to demonstrating biosimilarity which with rare exceptions will include a comparison of the proposed biosimilar product with the reference product in terms of structure, function, animal toxicity, human pharmacokinetics (PK) and pharmacodynamics (PD), clinical immunogenicity, and clinical safety and effectiveness. This stepwise approach is intended to better address residual uncertainty about biosimilarity that might remain at each step of the approval process.

The final guidance documents contain a few changes from the draft versions that are noteworthy:

•Most of the discussion of issues related to demonstrating the heightened standard for interchangeability was removed from the guidances with a note that it will be the subject of a separate guidance document that is forthcoming.

•The final guidances reiterate that, in most instances, a sponsor will need to provide information to demonstrate biosimilarity based on data directly comparing the proposed biosimilar product to FDA-approved reference product. However, they elaborate on the type of bridging data needed when a biosimilar applicant seeks to use a non-US licensed comparator product to support a demonstration of biosimilarity.

•Specific comments have been provided for biosimilar developers considering manufacturing/process changes after completing the initial analytical similarity assessment including a requirement to demonstrate comparability between the pre- and post-change proposed product.

•More detailed comments regarding animal toxicity studies were added.

•Previous Q and As relating to what constitutes the “publicly-available information” that should be included in a 351(k) application and whether an applicant can include a request for reference product exclusivity in its 351(a) application were deleted – an indication that the FDA is still considering its position on these points.

Authored by: Paul A. Calvo, Ph.D. and Timothy J. Shea, Jr., PhD. by Sterne Kessler

© 2015 Sterne Kessler

Last Week Tonight’ Host John Oliver Ignores the Last Three Years of Patent Reform

Have you seen John Oliver’s piece about abuses in the patent system? The ‘Last Week Tonight’ host has quite a bit of fun at the expense of the patent system.  He tossed out three primary complaints:

(A) patent owners that don’t practice their patents shouldn’t be able to assert them;

(B) patent owners enforcing their patents are extorting parties, including small businesses and end users, that lack the funds or capability to litigate; and

(C) patents, especially software patents, are too vague, resulting in uncertainty as to what products or actions are encompassed.

John Oliver is witty, dry, and often downright silly – and it is for those reasons that millions of people are drawn to his humor and his show.  For those of us inclined to think that America’s tradition of strong patent protection has led us to be the most innovative country in the world, this particular story drew our attention for different reasons. His reporting posited the idea that the Innovation Act, H.R. 9, working its way through the House of Representatives, would solve most of the problems he identified in our patent system.  Far from providing the solutions its proponents claim, that legislation would do little or nothing to limit the sending of bogus demand letters to unsophisticated targets in hopes of extracting nuisance value settlements – a practice that many decry as the most egregious example of patent abuse.  Further, Mr. Oliver seems unaware that the last several years have seen judicial action and legislation that address the costs of patent litigation and the vagueness of software patents.  Whether these measures are sufficient without additional legislation is up for debate, but John Oliver’s hypothesis is weakened by his reliance on outdated and largely irrelevant facts and data.

In the interest of making sure truth isn’t sacrificed for the sake of a few good laughs, there are several points we would like to raise.

  • Not every patent owner that licenses its patents rather than practicing them is a “patent troll” deserving of punishment or deterrence.

  • Patent litigation is decreasing, and its costs are overstated.

  • With the America Invents Act of 2011, Congress has already taken steps to reduce the cost of patent litigation.

  • The Supreme Court has also recently addressed the costs of litigation.

  • The Supreme Court addressed vague software patents as well.

Authored by: Michael T. Renaud, Robert J. Moore and Jack C. Schecter of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

©1994-2015 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

Amicus Briefs On Biosimilar Patent Litigation

Foley and Lardner LLP

Amgen has appealed the district court decision denying its motion for a preliminary injunction to keep Sandoz’ biosimilar version of Neupogen® off the market. The appeal is on an expedited briefing schedule at the Federal Circuit, and three amicus briefs have been filed. All of the amicus briefs argue for reversal of at least some of the district court’s decision regarding the biosimilar patent litigation framework of the BPCIA.

The Biotechnology Industry Organization

The Biotechnology Industry Organization filed an amicus brief arguing that the BPCIA should be interpreted as requiring “notice to the reference product sponsor of the initial submission of the biosimilar application” and “notice of potential commercial marketing upon approval.” BIO argues that these procedures must be mandatory in order for the patent dispute resolution provisions of the law to achieve their purpose of “provid[ing] a significant and real opportunity to resolve patent issues prior to the launch of the biosimilar.”

Abbvie Inc.

AbbVie Inc. filed an amicus brief arguing that “the notice-and-exchange provisions are mandatory” and that a biosimilar applicant’s “failure to comply with the statute is unlawful.” According to AbbVie, if the district court decision is upheld “the entire biosimilar litigation process would become a free-for-all, where biosimilar companies would utilize the data and work of innovator companies but refuse to provide basic information about their products … leaving innovators to blindly guess as to which patents they should sue on and when.”

AbbVie also argues that the BPCIA does not preempt Amgen’s state law claims of unfair competition.

Janssen Biotech, Inc.

Janssen Biotech, Inc. filed an amicus brief asking the Federal Circuit to “clarify that the statutory patent dispute resolution procedures are intended to be followed as written, and are not merely optional choices or empty formalities.” Janssen criticizes the district court decision for “transforming [the BPCIA’s patent provisions] from a carefully orchestrated dispute resolution process into a series of strategic options existing for the sole benefit of the biosimilar applicant.”

Janssen also urges the Federal Circuit to decide that the notice of commercial marketing required by the BPCIA may not be provided before a biosimilar product is licensed by the FDA. One argument Janssen makes on this point is that the notice of commercial marketing gives the reference product sponsor the right to seek a preliminary injunction based on alleged patent infringement, but a preliminary injunction cannot be granted unless commercial launch is imminent, and commercial launch is not possible until the biosimilar has been licensed by the FDA.

The Expedited Appeal Schedule 

Amgen filed its opening brief on April 3. Sandoz filed its brief on April 21. Oral arguments are scheduled for June 3.

ARTICLE BY

Courtenay C. Brinckerhoff
Foley & Lardner LLP

.CASINO gTLD Launches Sunrise

Lewis Roca Rothgerber LLP

The new gTLD .casino opens to the public on June 3. Trademark owners may be able to register their trademark as a .casino domain name ahead of the public launch. The “sunrise” early registration period for trademark owners opened March 24 and ends May 23. .casino domain name registrations are available now for trademark owners that have already recorded their marks with the trademark clearinghouse (TMCH). As explained below, there is still time for mark owners that have not yet recorded marks with the TMCH to participate in the sunrise registration period.

Gaming enterprises should do what they can to protect their trademarks in the .casino gTLD prior to June 3. Given the proliferation of online gaming, the new gTLD .casino poses a particularly high risk to trademark owners in the gaming industry. The .casino gTLD is a regulated gTLD, meaning registrants must represent that they have the appropriate licenses and credentials and must report any material changes to the registry. However, in many jurisdictions, the licensing process is far less strict than it is in the U.S. and it is not clear how the registry plans to verify such representations.

Risks Associated with .CASINO

The gTLD .casino is one of hundreds of new gTLDs launched as part of the first phase of the Internet Corporation for Assigned Names and Numbers (ICANN’s) new gTLD program. The new gTLDs offer more registration options to the public than existing “traditional” gTLDs such as .com, .net, .org, .biz and .info. But with hundreds of new gTLDs comes an increase in risk for trademark owners. For gaming enterprises, the highest risk posed by the new gTLDs is the new gTLD .casino. Third party registration of your mark or brand as a .casino domain name could cause immense damage to your brand and company. Imagine third party operation of the domainwww.YOURBRAND.casino for an offshore gaming site, a site that redirects consumers to your legitimate or illegitimate competitors, or a site that otherwise tarnishes your brand.

Mark owners can prevent this scenario by recording their marks with the TMCH and participating in the .casino sunrise and/or landrush domain registration periods. Although there are options for enforcement “after the fact” of a third party registration for your brand, these may face difficult proof problems (especially as to the necessary showing of “bad faith”) and can be expensive.

The Trademark Clearinghouse (TMCH)

Generally, only trademarks registered with a national trademark office, such as the U.S. Patent and Trademark Office (USPTO), are eligible for registration with the TMCH. Recordation with the TMCH offers several benefits, but the critical benefit of TMCH recordation is eligibility to register the recorded mark as a domain name during the sunrise registration period for any new gTLD, including .casino. Trademark owners may not participate in the sunrise registration period for .casino without first recording their trademark(s) with the TMCH.

In our experience, it takes up to three weeks for the TMCH to complete the recordal process. Accordingly, for companies planning on participating in the .casino sunrise period, we recommend filing TMCH recordal(s) by no later than April 30. Please contact us to discuss the recordal of marks with the TMCH.

Sunrise Registration

Mark owners who have recorded trademark(s) with the TMCH are eligible to participate in the sunrise registration period for .casino. We expect the sunrise registration fees for a .casino domain name to fall between $200 and $300. The sunrise period is open until May 23 but validation of your trademark registration and specimen of use may take two to three weeks. During the sunrise period, mark owners may only register a domain name consisting of the identical mark recorded with the TMCH. For example, the owner of the TMCH recorded mark MYMARK is eligible to register the domain www.mymark.casino during the sunrise period, but is not eligible to register the domain www.mymarkslots.casino absent a separate TMCH recordation for the mark MYMARK SLOTS. In the latter case, we would recommend that the owner of the HOUSE mark consider the landrush registration period if it believes there is a high risk associated with the domain www.mymarkslots.casino. Further, please note that USPTO Supplemental Register registrations are not eligible for recording in the TMCH.

Landrush Period

Another advance registration period, known as the “landrush period” or “early access phase,” opens May 27. The landrush period is open to anyone willing to pay the fees associated with obtaining a landrush registration. Trademark registrations and TMCH recordation are not required for eligibility to participate in the landrush period.

Landrush registration fees depend on the date of registration. The registration fees start at $12,500 per domain on the first day of landrush, when demand for .casino domain names is presumably highest. The fees decrease to $4,500 on the second day, $1,500 on day three, $950 on day four, and $250.00 on days five through seven. These fees are in addition to the general registration fees for a .casino domain name.

The landrush period may be a good option for mark owners seeking to register domain strings that are not eligible for recordal with the TMCH. Such strings may consist of common law marks, or of a registered mark plus a generic term such as “slots.” The decision of whether and when to register domains during the landrush period is a business decision, weighing the potential risk of third party ownership of a given domain against the registration fees for a given day of the period.

Summary of .CASINO Deadlines

The .casino sunrise registration period is open now and closes May 23. TMCH recordals for marks intended for .casino sunrise registration should be filed by no later than April 30. The landrush period opens May 7 and closes June 2, with landrush fees decreasing daily over the period. .casino opens for general registration on June 3.

ARTICLE BY

Nathaniel W. Edwards
Lewis Roca Rothgerber LLP

B&B Hardware, Inc. v. Hargis Industries, Inc.: Trademark Litigation Might Get Simpler

Vedder Price

Trademark litigation includes two similar types of proceedings. First, and most common, issues of trademark infringement and cancellation of a mark may be raised in a trial (i.e., a traditional fight in either State Court or Federal District Court before a judge or jury involving oral testimony). Second, and less common, issues of trademark registration may be raised in a trademark opposition or cancellation proceeding before the Trademark Office. These proceedings are primarily conducted in writing and are governed by administrative rules published in the Federal Register based on the Federal Rules of Civil Procedure. While a trial may result in monetary damages or an injunction preventing a party from using a mark, the Trademark Office merely has the authority to grant or cancel federal trademark registrations.

Since the Trademark Office’s process does not allow for litigants to receive monetary awards, injunctions, or even a determination of infringement, entering the Trademark Office for a cancellation or opposition simplifies the proceedings to focus on a limited number of key issues, such as whether a likelihood of confusion exists between a registered mark and another mark. Along with their limited focus and less formal nature, litigants often found comfort in a the lower costs involved in proceedings before the Trademark Office. Generally, once a trademark registration was cancelled, the owner of the mark that was cancelled would understand that a claim for infringement in court was not likely to succeed and would stop using the mark.

In B&B Hardware, Inc. v. Hargis Industries, Inc., the United States Supreme Court was faced with the question of “[w]hether the Trademark Trial and Appeal Board’s (the “TTAB” or the “Board”) finding of a likelihood of confusion precludes Hargis from relitigating that issue in infringement litigation, in which likelihood of confusion is an element.” The long-standing dispute (almost 20 years) between the parties involved in the decision regarded the trademarks SEALTIGHT and SEALTITE. In 1996, Hargis applied for registration of its mark, SEALTITE. B&B opposed the registration based on an alleged likelihood of confusion of Hargis’s trademark with B&B’s own federally registered mark, SEALTIGHT. After applying the standard multi-factor likelihood of confusion test, the TTAB decided in favor of B&B and held that a likelihood of confusion existed between the marks.

At the same time as the proceedings before the TTAB, B&B sued Hargis for trademark infringement in Federal District Court. After receiving a favorable outcome in the proceeding before the TTAB, B&B argued in District Court that Hargis could not contest the TTAB’s determination that a likelihood of confusion existed due to the preclusive effect of the TTAB’s decision. The District Court disagreed with B&B and allowed the jury to hear the evidence and decide on the issue of confusion. The jury returned a verdict for Hargis, finding that there was no likelihood of confusion between the marks. The parties appealed the verdict, including the issue of the preclusive effect of the TTAB decision. The Eighth Circuit affirmed the decision of the District Court. The parties then petitioned for, and were granted, certiorari on the issue by the U.S. Supreme Court.

The Supreme Court reversed the decision of the Eighth Circuit and remanded the case for further proceedings, holding that as long as the ordinary elements of issue preclusion are met and the usages of the marks are materially the same, a finding that a likelihood of confusion exists by the TTAB should have preclusive effect in District Court proceedings.

The doctrine of “res judicata” or “issue preclusion” states that litigants should not get two bites at the same apple, or two chances to argue over the same issue. Thus, if the Trademark Trial and Appeal Board found overlap (i.e., likelihood of confusion) between two marks (despite using the simplified tools involved in proceedings before the Trademark Office), then a District Court should honor the TTAB’s determination and not force the parties to relitigate the issue.

Prior to this decision, if a case was simultaneously pending in District Court and before the TTAB, the TTAB would readily stay its determination until the litigation in District Court was resolved. Because of this, any time one of the parties to an opposition or cancellation proceeding became agitated, they would file a concurrent action before a District Court. Following the Supreme Court’s decision, it is unclear if the TTAB will continue to grant this courtesy.

Trademark oppositions and cancellations must now be taken very seriously. While the TTAB cannot award damages or find infringement, its decisions could now be used as grounds for finding infringement in District Court. For example, a party who defaults in a cancellation proceeding may well lose the right to defend itself properly in District Court if a subsequent action is filed. Going forward, mark owners with proceedings before the TTAB must consider whether to intentionally abandon a trademark application or registration in order to avoid an adverse decision that could have far-reaching effects.

ARTICLE BY

John E. Munro
Alain Villeneuve
Vedder Price

B&B Hardware, Inc. v. Hargis Industries, Inc.: Trademark Litigation Might Get Simpler

Vedder Price

Trademark litigation includes two similar types of proceedings. First, and most common, issues of trademark infringement and cancellation of a mark may be raised in a trial (i.e., a traditional fight in either State Court or Federal District Court before a judge or jury involving oral testimony). Second, and less common, issues of trademark registration may be raised in a trademark opposition or cancellation proceeding before the Trademark Office. These proceedings are primarily conducted in writing and are governed by administrative rules published in the Federal Register based on the Federal Rules of Civil Procedure. While a trial may result in monetary damages or an injunction preventing a party from using a mark, the Trademark Office merely has the authority to grant or cancel federal trademark registrations.

Since the Trademark Office’s process does not allow for litigants to receive monetary awards, injunctions, or even a determination of infringement, entering the Trademark Office for a cancellation or opposition simplifies the proceedings to focus on a limited number of key issues, such as whether a likelihood of confusion exists between a registered mark and another mark. Along with their limited focus and less formal nature, litigants often found comfort in a the lower costs involved in proceedings before the Trademark Office. Generally, once a trademark registration was cancelled, the owner of the mark that was cancelled would understand that a claim for infringement in court was not likely to succeed and would stop using the mark.

In B&B Hardware, Inc. v. Hargis Industries, Inc., the United States Supreme Court was faced with the question of “[w]hether the Trademark Trial and Appeal Board’s (the “TTAB” or the “Board”) finding of a likelihood of confusion precludes Hargis from relitigating that issue in infringement litigation, in which likelihood of confusion is an element.” The long-standing dispute (almost 20 years) between the parties involved in the decision regarded the trademarks SEALTIGHT and SEALTITE. In 1996, Hargis applied for registration of its mark, SEALTITE. B&B opposed the registration based on an alleged likelihood of confusion of Hargis’s trademark with B&B’s own federally registered mark, SEALTIGHT. After applying the standard multi-factor likelihood of confusion test, the TTAB decided in favor of B&B and held that a likelihood of confusion existed between the marks.

At the same time as the proceedings before the TTAB, B&B sued Hargis for trademark infringement in Federal District Court. After receiving a favorable outcome in the proceeding before the TTAB, B&B argued in District Court that Hargis could not contest the TTAB’s determination that a likelihood of confusion existed due to the preclusive effect of the TTAB’s decision. The District Court disagreed with B&B and allowed the jury to hear the evidence and decide on the issue of confusion. The jury returned a verdict for Hargis, finding that there was no likelihood of confusion between the marks. The parties appealed the verdict, including the issue of the preclusive effect of the TTAB decision. The Eighth Circuit affirmed the decision of the District Court. The parties then petitioned for, and were granted, certiorari on the issue by the U.S. Supreme Court.

The Supreme Court reversed the decision of the Eighth Circuit and remanded the case for further proceedings, holding that as long as the ordinary elements of issue preclusion are met and the usages of the marks are materially the same, a finding that a likelihood of confusion exists by the TTAB should have preclusive effect in District Court proceedings.

The doctrine of “res judicata” or “issue preclusion” states that litigants should not get two bites at the same apple, or two chances to argue over the same issue. Thus, if the Trademark Trial and Appeal Board found overlap (i.e., likelihood of confusion) between two marks (despite using the simplified tools involved in proceedings before the Trademark Office), then a District Court should honor the TTAB’s determination and not force the parties to relitigate the issue.

Prior to this decision, if a case was simultaneously pending in District Court and before the TTAB, the TTAB would readily stay its determination until the litigation in District Court was resolved. Because of this, any time one of the parties to an opposition or cancellation proceeding became agitated, they would file a concurrent action before a District Court. Following the Supreme Court’s decision, it is unclear if the TTAB will continue to grant this courtesy.

Trademark oppositions and cancellations must now be taken very seriously. While the TTAB cannot award damages or find infringement, its decisions could now be used as grounds for finding infringement in District Court. For example, a party who defaults in a cancellation proceeding may well lose the right to defend itself properly in District Court if a subsequent action is filed. Going forward, mark owners with proceedings before the TTAB must consider whether to intentionally abandon a trademark application or registration in order to avoid an adverse decision that could have far-reaching effects.

ARTICLE BY

John E. Munro
Alain Villeneuve
Vedder Price

Supreme Court Holds That TTAB Decisions on Likelihood of Confusion May Bind Courts in Infringement Litigation

Foley and Lardner LLP

In a 7 – 2 decision issued March 24, 2015, the U.S. Supreme Court held that decisions of the Trademark Trial and Appeal Board (TTAB) on the issue of likelihood of confusion, made in registration cases, can be binding on courts in deciding the same issue in subsequent infringement cases. Such “issue preclusion” will likely arise if the uses of the marks before the court are materially the same as the uses considered by the TTAB. The decision in B&B Hardware, Inc. v. Hargis Industries, Inc. is likely trigger more hotly contested — and more expensive — TTAB litigation.

In this case, B&B owned a registration for “Sealtight” for metal fasteners used in the aerospace industry. Hargis sought to register “Sealtite” for metal screws used in the manufacture of buildings. B&B opposed registration, claiming that use of the marks on the respective goods would create a likelihood of confusion. The TTAB agreed and sustained the opposition. In a parallel infringement action, the district court refused to be bound by the TTAB decision, reasoning that the TTAB is not an Article III court. The jury went on to find that confusion was not likely.

The Eighth Circuit affirmed. It held that while an administrative agency’s decision can be a basis for applying collateral estoppel, the doctrine was not appropriate in this context, primarily because the TTAB and the Eighth Circuit use different factors to evaluate likelihood of confusion.

In an opinion by Judge Alito, the U.S. Supreme Court reversed. It held first that “issue preclusion is not limited to those situations in which the same issue is between two courts” (emphasis in original). Rather, under Astoria Fed. Sav. & Loan Assn. v. Solomino, 501 U.S. 104 (1991), “courts may take it as a given” that Congress intends issue preclusion to apply to administrative proceedings where appropriate, except when a statutory purpose to the contrary is evident. The court held that no such purpose was evident in the Lanham Act of 1946.

The court acknowledged that the TTAB considers different factors than do courts in determining likelihood of confusion. In particular, the TTAB compares marks and goods as they are set forth in prior registrations and pending applications, whereas a court will consider all elements of the parties’ uses, including the context in which the marks appear on packaging. But the court held that the same legal standard of “likelihood of confusion” always applies, even if different usages are considered. Therefore, the possibility of applying collateral estoppel cannot be categorically ruled out.

Importantly, however, the court did not hold that issue preclusion always applies. The question depends primarily on whether the actual usages of the respective marks are “materially different” from the usages specified in the applications or registrations at issue. “If the TTAB does not consider the marketplace usage of the parties’ marks, the TTAB’s decision should have no later preclusive effect in a suit where actual usage in the marketplace is the paramount issue,” it said.

Justice Ginsburg separately concurred to emphasize this point. Quoting the authoritative McCarthy on Trademarks and Unfair Competition treatise, she noted that contested registrations are often decided upon “a comparison of the marks in the abstract and apart from their marketplace usage.” When the registration proceeding is of that character, she said, there will be no preclusion in a later infringement suit.

As a result, the preclusive effect of a prior TTAB decision will be a point of contention in a subsequent infringement action. The court will have to look closely at what the TTAB decided, and the evidence it relied upon. For example, in some cases the opposer relies on a registration which is unrestricted as to trade channels or likely purchasers, even though the opposer’s actual business may be restricted to a narrow area. This can sometimes lead to anomalous results, if the applicant seeks to register the same or similar mark for the same or similar goods, but uses its mark in entirely different fields of endeavor, such that the prospects for confusion in the “real world” are remote. Nevertheless, the TTAB will likely refuse registration in that scenario. It would appear that the B&B decision would permit the court, in a subsequent infringement case, to disregard the TTAB decision and decide “likelihood of confusion” based on the parties’ actual use.

In many cases, however, the question of preclusive effect will not be so clear cut. For this reason, parties litigating in the TTAB must consider that the TTAB decision will compel an identical result if infringement litigation ensues later. Typically, TTAB cases have been litigated in a more leisurely and less expensive manner than a court case. After B&B, some may choose to develop a fuller record to help assure preclusion in the event of a future infringement action against the applicant. This would lead to TTAB cases being litigated even more aggressively (and expensively) than they are now.

The decision may also encourage opposers, who fail to prevent registration at the TTAB, to seek review not by appeal to the federal circuit, but by the alternative means of filing a civil action in U.S. District Court under Section 21 of the Lanham Act. In such a case, the opposer would be entitled to de novo review of the TTAB decision and would be able to include infringement claims. The TTAB decision would have no preclusive effect in that case.

The B&B decision finally answers the question of which different circuits have taken different approaches. It does not, however, provide an answer to the question of whether a TTAB decision on likelihood of confusion will or will not have a preclusive effect on a court in a particular infringement litigation. That question will be determined on a case-by-case basis, under normal principles of issue preclusion.

ARTICLE BY

Andrew Baum
Foley & Lardner LLP

Understanding Post-AIA Power of Attorney Procedures –America Invents Act

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Applicants identified upon a U.S. patent application’s filing can impact the ownership rights to the patent application throughout prosecution.  Prior to implementation of relevant aspects of the America Invents Act (AIA) on September 16, 2012, patent application Applicants could only be Inventors.  Conversely, applications filed on or after September 16, 2012 can have Inventors or Assignees as Applicants.  The choice of Applicant – Inventors or Assignees – upon filing in post-AIA applications affects how Power of Attorney can be properly established before the U.S. Patent and Trademark Office (USPTO).

Pre-AIA patent applications filed before September 16, 2012 can have Power of Attorney granted by Inventors or Assignees under Rule 32, provided that the requirements of Rule 3.73 are satisfied.  In contrast, post-AIA applications filed on or after September 16, 2012 can be filed with Inventors or Assignees as the Applicant, with Rule 32 requiring a Power of Attorney to be signed by either the “Applicant” or “Patent Owner.”  However, an Assignee only becomes the patent owner after the application issues as a patent.  Thus, in order to take over prosecution in a post-AIA application, the Assignee must either initially be listed as or later formally established to be the Applicant for Power of Attorney to be granted on behalf of the Assignee.

In circumstances where a post-AIA application’s Applicant is identified upon filing as the Assignee, the Assignee may execute a Power of Attorney, and it can be filed without the need to file any separate papers to satisfy Rule 3.71 or Rule 3.73.

When a post-AIA patent application is filed without listing the Assignee as the Applicant (i.e., because the Inventors are listed as the Applicant) or when the Assignee changes during the course of prosecution, Rule 3.71 or Rule 3.73 must be satisfied for the Assignee to establish a Power of Attorney before the USPTO.  Namely, a statement under Rule 3.73(c) and a Power of Attorney must be filed.  However, the Assignee must first be identified as an Applicant.  Currently there are two ways for an Assignee to become an Applicant when not so listed upon initial application filing.  First, an Applicant can be added to the existing list of Applicants.  Alternately, all Inventors can be removed as the Applicant and be replaced with the Assignee as the Applicant.

A change in an Applicant can be accomplished by filing a supplemental Application Data Sheet (ADS), fulfilling the Rule 3.73(c) requirements including a showing of ownership.  A chain of title can be demonstrated through executed assignment(s) and a statement specifying where documents verifying the chain of title from the original owner to the assignee are recorded in the assignment records of the USPTO by reel and frame number.  After adding the Applicant, Rule 3.71 or Rule 3.73 can be satisfied by filing a statement under Rule 3.73(c) and filing a properly executed Power of Attorney, thereby appointing the designated patent practitioner.

Accordingly, administrative burdens on the USPTO, on Assignees, and on Assignee representatives can generally be reduced by filing post-AIA applications listing the Assignee as the Applicant, should the Assignee be known at the time of filing.

Colleen Witherell also contributed content for this article.

ARTICLE BY

Christina Sperry
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Target Corp. v. Destination Maternity Corp., Final Written Decision IPR2013-00532

Drinker Biddle & Reath LLP a leading law firm with a national footprint

Takeaway: Where neither party provides an interpretation of a term that provides additional clarity, the Board will give the term its plain and ordinary meaning.

In its Final Written Decision, the Board found that Petitioner had shown by a preponderance of the evidence that all challenged claims (claims 1, 2, 5, 6, 10, 11, and 15-17) of the ’531 patent are unpatentable. The ’531 patent “relates to a garment worn during different stages of pregnancy and different stages of postpartum body changes.”

The Board addressed claim construction, stating that claims in an unexpired patent are given their broadest reasonable construction in light of the specification of the patent. The Board first analyzed the term “just beneath the wearer’s breast area.” Patent Owner argued that the term means “beneath the location of the breasts by a very small margin.” However, the term “very small margin” does not provide any further clarity. The Board determined that because neither party offered a construction that provides additional clarity, the plain and ordinary meaning will be given. Also, the Board determined that the term is a term of approximation and that a garment may satisfy claim 1 for one wearer but not another because of differences in the wearers’ body types.

The Board then analyzed the term “different body types” used in claims 2 and 17. Although Patent Owner did not propose constructions for this limitation, its patentability arguments advance an implicit construction of “different body types” that requires an unspecified amount of difference between said body types. The Board determined that the broadest reasonable construction of “different body types” means “two or more body types that are not identical.”

The Board then analyzed the term “an elastic fabric that is contractible elastically to cover an abdomen during different stages of postpartum body changes” from claim 5. Although Patent Owner did not propose constructions for this limitation, the Board determined that its patentability arguments advanced an implicit construction that claim 5 requires a specific, yet unspecified, minimum amount of contractability. However, the specification does not specify any minimum amount of contractability and does not describe or identify any stages of postpartum body changes. Accordingly, the Board determined that the broadest reasonable construction of “during different stages of postpartum body changes” means “during any postpartum body change of any wearer,” which means that the fabric does not have to contract to cover postpartum body changes of every potential wearer or to cover all postpartum body changes of any wearer.

The Board next addressed the asserted grounds of unpatentability. Addressing anticipation based on a JC Penney catalog for fold-over panel jeans, the Board disagreed with Patent Owner’s assertion that the product shown in the catalog did not disclose a panel extending “high enough on the wearer’s body.” The Board found that the JC Penney catalog disclosed a panel substantially covering the belly region and noted that it was the belly region, and not the panel, that the claims require to extend to just beneath the wearer’s breast area. Thus, the Board was persuaded that claim 1 was anticipated by the JC Penney reference. Also, the Board disagreed with Patent Owner’s assertion that Petitioner has failed to prove that the panel of the JCP fold-over panel jeans stretches or expands enough to conform to different body types, because the claims do not require any quantified amount of stretching or expansion and the term “different body types” includes any two or more body types that are not identical. The Board was also not persuaded by Patent Owner’s argument that the panel of the JCP fold-over panel jeans is not described as being contractible as allegedly recited in claim 5. The Board indicated that contraction is always present where there is contraction, and the claims did not require any specific amount of contraction.

With respect to dependent claims 6, 11, 15, and 16, Petitioner asserted obviousness based on the JC Penney catalog applied to claim 1 in view of JC Penney Bootcut jeans. Patent Owner alleged nonobviousness based on the secondary consideration of commercial success. However, Patent Owner failed to link the alleged commercial success of the products to the inventions of claims 6, 11, 15, and 16. Specifically, Patent Owner’s witness conceded that the commercial success of Patent Owner’s products had nothing to do with the unique characteristics of claims 6 and 11, which add limitations directed exclusively to features of the garment lower portion.

Target Corp. v. Destination Maternity Corp., IPR2013-00532
Paper 76: Final Written Decision
Dated: February 12, 2015
Patent: RE43,531 E
Before: Jennifer S. Bisk, Michael J. Fitzpatrick, and Mitchell G. Weatherly
Written by: Fitzpatrick
Related Proceedings: Destination Maternity Corp. v. Target Corp., Case No. 2:12-cv-05680-AB (E.D. Pa.); IPR2013-00531; IPR2014-00508; IPR2013-00530; IPR2013-00533; IPR2014-00509

ARTICLE BY

Carrie A. Beyer
OF
Drinker Biddle & Reath LLP

Life Sciences: Protecting the Crown Jewels

Sills Cummis & Gross P.C

An innovator or owner of patent rights or other technology in the life sciences arena is often unable, because of lack of financial or other resources, to develop or commercialize a pharmaceutical product covered by such intellectual property rights. In these cases, the innovator/owner (the licensor) will frequently out-license the invention to a third party (the licensee) for development and commercialization by such licensee. The resulting license agreement can be a complicated document. In this article, I will address some of the important licensing considerations that a licensor should take into account before executing a license agreement.

Consider the Exclusivity v. Non-exclusivity of the License Grant

An initial consideration in a license agreement is whether the license grant will be exclusive or non-exclusive to the licensee. If the license grant is exclusive, then the licensor typically agrees not to grant a license to any third party. If the license grant is non-exclusive, then the licensor typically is permitted to grant further licenses to third parties. Even in an exclusive license, however, the licensor may want to retain certain rights for itself. For instance, the licensor may want to preserve for itself the right to enter into certain geographical markets or fields of use. The parties should be very clear in the license agreement as to whether or not the licensor is permitted to exercise any R&D, commercialization or other rights during the term of the license agreement.

Whether a license is exclusive or nonexclusive will set the tone for the associated rights and obligations of the parties set forth in the remainder of the license agreement. For example, an exclusive licensee is usually subject to “diligence” obligations, requiring it to exploit the licensed technology in order to maintain the license grant; a non-exclusive licensee is usually subject to limited or no such obligations. Also, an exclusive licensee usually has more rights than a non-exclusive licensee with respect to the prosecution, maintenance, defense and enforcement of patent rights.

Also Consider the Scope of the “Field of Use” and “Territory”

Other important initial considerations in the license agreement are the scope of the licensed field of use and the scope of the licensed territory. A “field of use” defines the field in which the licensee may exercise the licensed rights and may take one of many forms. For example, the field of use may be all encompassing (“any and all fields and applications”), may be limited to only therapeutic or only diagnostic products, may be limited to only biologics or only small molecule products, or may be limited to a specific medical indication (e.g., cardiac indications). Especially in the case of an exclusive license (and based on the nature of the licensee), it is sometimes better for the licensor to limit the field of use. Then the licensor would be permitted to grant subsequent rights to other parties in the non-licensed fields. Alternatively, if the field of use is broad, the licensor should require that the licensee actually exercise its rights in certain specified fields in order to maintain such rights. If the licensee fails to exercise its rights in a specified field of use within a certain period of time, the licensor’s remedies could include the right to terminate the license agreement in its entirety, the right to terminate the license agreement with respect to one or more specific fields and/or the right to convert an exclusive license grant in such field to a non-exclusive grant.

Considerations regarding the “territory” are very similar to the considerations regarding the field of use. Often, in order to maintain an exclusive worldwide territory grant, the licensee is required to exploit the licensed technology in specified countries. For example, the licensee may be required to develop and commercialize a product covered by the licensed technology (licensed products) in the United States and at least one other “major market country” (e.g., Japan, France, Germany, Italy, Spain and the United Kingdom). Again, the licensor’s remedies for the licensee’s failure to satisfy this obligation could be similar to the remedies set forth above for field of use.

Maximize the Royalty Payments

Pursuant to the terms of the license agreement, the licensee will most likely be required to pay to the licensor a royalty based on sales of licensed products. Although the determination of the amount of royalty is in large part a business decision and takes into consideration, among other things, the scope and strength of the licensed patent and other intellectual property rights, the breadth of the field of use and territory, whether the licensed product is a therapeutic product (typically a higher royalty rate) or a diagnostic product, and whether the license grant is exclusive or non-exclusive, there are many important legal nuances that the licensee could and should consider. One such nuance is the calculation of “net sales.”

The amount of royalty owed by the licensee is normally calculated by multiplying the royalty rate by the amount of sales of the licensed products. The royalty rate does not need to be a flat rate and could be graduated, for example, with a rate change as sales increase. In determining the “sales” portion of the royalty calculation, it is more advantageous to the licensor that sales be based on amounts invoiced (as opposed to amounts received) by the licensee, thus keeping the risk of bad debt (i.e., a sales amount is invoiced but not actually received by the licensee) with the licensee. Also, although “net sales” (as opposed to “gross sales”) is the usual royalty base, the licensor should restrict the deductions taken into account to determine such net sales. For example, although the “net sales” calculation frequently includes deductions from gross sales for governmental taxes and charges, customer credits and rebates, and transportation, storage and insurance expenses, the licensor should avoid less typical deductions such as sales commissions owed by the licensee or a catch-all deduction for “other reasonable deductions.”

Ensure That the Inventions Are Fully Exploited

Once a licensor licenses its invention to a third party in an exclusive license arrangement, the licensor will lose much control over the day-to-day use of the technology. It is imperative that the licensor requires the licensee to actually exploit the technology in a timely manner and devote sufficient time, money and resource to such exploitation. Almost all exclusive patent or technology license agreements contain a “diligence” provision requiring the licensee to employ certain efforts with respect to the research, development and commercialization of licensed products. Generally, the diligence requirement provides that the licensee must use “commercially reasonable efforts” to advance the product through the pipeline and sale process. However, the meaning of “commercially reasonable efforts” is not precise and the two parties to the contract could interpret the phrase, and the corresponding diligence requirement, quite differently.

A prudent licensor defines the diligence requirement more exactly. Ideally, the diligence requirement would be accompanied by diligence milestones, contractually obligating the licensee to reach certain developmental, regulatory or sales milestones by certain target dates or to spend a certain dollar amount on the licensed product in a given time period. Additionally, different diligence standards could apply with respect to different jurisdictions. If the licensee fails to meet its target, the licensor would be entitled to one or more remedies such as a financial payment from the licensee or a right of termination.

Maintain Control over Patent Prosecution

In an exclusive patent license arrangement, the licensee usually pays for the costs associated with patent prosecution and maintenance. Even in a non-exclusive arrangement, the licensee could be required to pay for a portion of such amounts. Though the licensor bears some or all of the patent prosecution and maintenance expenses, the licensor should ensure that it ultimately has control. Ideally, the license agreement should provide that the licensor controls the prosecution and maintenance, perhaps with counsel reasonably acceptable to the licensee. The licensor could allow the licensee to provide input into where (which jurisdictions) the licensor will prosecute and maintain the patents. However, the licensor should have the final say as to the scope and jurisdiction of the patent filings. In order to address a licensee’s concern that it would be required to pay for expenses in jurisdictions where the licensee does not deem patent coverage to be necessary or desirable, the license agreement could provide that the licensee may notify the licensor that the licensee will not pay the patent costs in a particular jurisdiction – in which case the licensee would probably lose its license rights (or at least its exclusivity, in the case of an exclusive license grant) with respect to such jurisdiction.

Carefully Consider Termination Provisions

A license agreement includes customary termination provisions. For example, each party usually has the right to terminate the agreement in the case of an uncured material breach by the other party. Additionally, the licensee typically has the right to terminate the license agreement for convenience (without cause) following some notice period (e.g., 90 days). Following termination of the license agreement, the licensor may want to either resume R&D or commercialization efforts on its own or re-license the technology to another suitable third party. In order to avoid the need to duplicate efforts (and expenditures) of the first licensee, the licensor should give careful consideration to the termination provisions in the license agreement. Ideally, if the licensee terminates the license agreement for convenience (i.e., the licensee walks away from the technology) or the licensor terminates the license agreement because of an uncured material breach by the licensee, the licensee would be required to automatically assign to the licensor, for no additional consideration or for some agreed upon payment, all of the results, know-how and intellectual property generated by or on behalf of the licensee under the license agreement and all regulatory files, regulatory approvals and other rights related to the licensed product. Thus, the licensor or its new licensee would be able to capitalize on the past work performed by the licensee, expedite timelines and reduce expense.

All or some of the points described above could be very important to a licensor. Although the interrelation of these and various other provisions in a license agreement are complex, by understanding the unique issues and concerns that arise when analyzing and negotiating a license agreement, the licensor is better able to protect its invention and ultimately increase its profit.

ARTICLE BY

Lori M. Waldron
OF
Sills Cummis & Gross P.C.

This article appeared in the February 2015 issue of The Metropolitan Corporate Counsel.  The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect those of Sills Cummis & Gross P.C.   Copyright © 2015 Sills Cummis & Gross P.C.  All rights reserved.”