Intellectual Property Archives - Page 5 of 58

Supreme People’s Court Upholds China’s First Patent Linkage Ruling – Decision Released

On August 28, 2022, 知识产权那点事 published the first patent linkage decision from the Supreme People’s Court (SPC). The SPC upheld the Beijing IP Court ruling that Wenzhou Haihe Pharmaceutical Co., Ltd.’s application for marketing authorization for a generic form of “Aidecalcidol Soft Capsule” did not fall within scope of protection of the relevant patent. China’s patent linkage system prevents marketing authorization for a generic prior to the expiration of the patent term on the branded equivalent unless the Beijing IP Court or the China National Intellectual Property Administration (CNIPA) rules that the generic does not fall within the scope of the relevant patent rights or is invalid.

On November 10, 2021, the Beijing IP Court announced that the plaintiff of the case, Chugai Pharmaceutical Co., Ltd., a subsidiary of Roche, claimed that it was the patentee as well as the holder of the marketing license for the patented drug “Aidecalcidol Soft Capsule”, and the patent involved in the drug was CN 2005800098777.6 entitled “ED-71 preparation.” The plaintiff discovered that the defendant Wenzhou Haihe Pharmaceutical Co., Ltd. had applied to the National Medical Products Administration (NMPA) for a generic drug marketing license application named “Aidecalcidol Soft Capsule”. The public information on the Chinese listed drug patent information registration platform showed that the defendant had made a 4.2 category statement regarding the generic drug (the generic drugs do not fall into the scope of protection of the related patents). Therefore, the plaintiff filed a drug patent linkage lawsuit with the Beijing Intellectual Property Court in accordance with the provisions of Article 76 of the Amended Patent Law, requesting the court to confirm that the generic drug “Aidecalcidol Soft Capsule” that the defendant applied for registration fell into the scope the rights of Patent No. 2005800098777.6 enjoyed by the plaintiff.

The Beijing IP Court held:

The technical solution used by the generic drug involved is neither the same nor equivalent to the technical solution of claim 1 of the involved patent, so the technical solution does not fall within the protection scope of claim 1 of the involved patent. Since claims 2-6 are dependent claims of claim 1, if the technical solution of the generic drug involved does not fall within the protection scope of claim 1, it also does not fall within the protection scope of claims 2-6. Accordingly, the plaintiff’s claim that the involved generic drug falls within the protection scope of claims 1-6 of the involved patent cannot be established, and the court will not support it.

In the decision, the Supreme People’s Court stated there were two key points:

1. In the process of drug marketing review and approval, disputes arising from the patent rights related to the drug to be registered between the drug marketing license applicant and the relevant patentee or interested parties are only one type of the related patent rights between the two parties – often referred to as drug patent link disputes. For chemical generic drugs, the drug regulatory department of the State Council conducts drug marketing review and approval based on the application materials of the generic drug applicant, and decides whether to suspend the approval of the relevant drugs according to the effective judgment made by the people’s court [or the China National Intellectual Property Administration] on such disputes within the prescribed time limit. Therefore, when judging whether the technical solution of a generic drug falls within the scope of patent protection, in principle, it should be compared and judged on the basis of the application materials of the generic drug applicant. If the technical solution actually implemented by the generic drug applicant is inconsistent with the declared technical solution, it shall bear legal responsibility in accordance with the relevant laws and regulations on drug supervision and administration; if the patentee or interested party believes that the technical solution actually implemented by the generic drug applicant constitutes infringement, a separate lawsuit for patent infringement may also be filed. Therefore, whether the technical solution actually implemented by a generic drug applicant is the same as the application materials is generally not within the scope of examination to confirm that the dispute falls within the scope of patent protection.

2. The court of second instance held that both the donation [to the public] rule and the estoppel rule can constitute a restriction on the application of the principle of equivalence, both of which aim to achieve a reasonable balance between equitably protecting the interests of the patentee and safeguarding the interests of the public. If the conditions for limiting the application of the principle of equivalence are met, there is usually no need to judge whether the two features constitute similar means, functions, and effects, and whether those skilled in the art can conceptualize them without creative work. In this case, since Haihe Company claimed the application of the estoppel rule by virtue of the amendment of the claims by Chugai Pharmaceutical Co., Ltd., and claimed the application of the donation rule by the patent text as the result of the amendment, the court of second instance first rendered a judgment on whether the rules on estoppel should be applied on the basis of the amendment of the claims by the patentee.

The case numbers are:

北京知识产权法院（2021）京73民初1438号民事判决书

最高人民法院（2022）最高法知民终905号民事判决书

The full text of the decision courtesy of 知识产权那点事 is available here (Chinese only).

Article By Aaron Wininger of Schwegman, Lundberg & Woessner, P.A.

For more intellectual property legal news, click here to visit the National Law Review.

Unfashionably Late: Seventh Circuit Rejects Misappropriation Claim Premised On Prototype Created Eleven Years Prior

The Seventh Circuit recently affirmed summary judgment in favor of a former employee and his new employer on claims for misappropriation of trade secrets relating to a prototype of an actuator created eleven years prior, holding that the inference that the defendant used his knowledge of the prototype more than a decade later was “barely conceivable” and “exceptionally unreasonable.” REXA, Inc. v. Chester, — F.4th —, 2022 WL 2981167, at *6 (7th Cir. 2022) (internal quotation marks omitted).

In 2002, Mark Chester, an engineer at Koso America, Inc. (“Koso”), participated in a project to create a new valve for a hydraulic actuator. An actuator is a component of a machine that produces motion. While the project was unsuccessful, it did produce an experimental prototype of another actuator. Koso shelved the experimental prototype due to the improbability of commercial success. The following year, Chester left Koso.

After more than a decade had passed since Chester worked on the 2002 project for Koso, Chester and his new employer, MEA Inc. (“MEA”), built a new actuator prototype, later known as the Hawk. Chester and MEA filed a related patent application, which was approved in part. REXA, Inc. (“REXA”), a company affiliated with Koso, brought suit against Chester and MEA for misappropriation of trade secrets under the Illinois Trade Secrets Act (“ITSA”), among other claims. REXA argued that Chester and MEA’s actuator incorporated and disclosed confidential designs contained within the prototype Koso developed in 2002. The district court granted summary judgment in favor of Chester and MEA. REXA appealed.

On appeal, the Seventh Circuit affirmed summary judgment in favor of defendants on the misappropriation claims. First, the Seventh Circuit agreed that REXA failed to identify a concrete trade secret, as the Court was unable to determine which aspects of the 2002 designs are known to the trade, and which are not. The Court explained that several aspects of the 2002 actuator prototype are widely known in the industry, which by definition, is not sufficiently secret to qualify for protection under the ITSA.

Second, the Seventh Circuit held that even if REXA had identified a trade secret, REXA had not established that defendants misappropriated trade secrets when MEA filed its patent application or developed the Hawk actuator. With respect to MEA’s patent application, the Court explained that REXA’s allegations “rest on a series of untenable inferences.” Id. Indeed, eleven years had passed since Chester worked on the actuator prototype, and it was undisputed that he never saw or took any documents with him when he left Koso. Additionally, REXA did not cite any case where a court “inferred” a misappropriation of trade secrets despite a lack of evidence that the defendant seized or possessed documents, nor could the Seventh Circuit find any such case. As such, the Court found the lack of evidence, coupled with the eleven-year gap, “renders the inferences that REXA asks us to draw exceptionally unreasonable.” Id.

Regarding the design of MEA’s Hawk actuator, the Seventh Circuit held that the 2002 prototype did not include features of the patent application that made the Hawk both a non-obvious improvement over prior art and commercially valuable. Thus, Chester and MEA could not have misappropriated trade secrets contained within the 2002 prototype.

REXA serves as an important reminder that trade secret claimants must identify with specificity the elements that distinguish the alleged trade secret from general knowledge in the field or public domain. Additionally, REXA confirms that, at least in the Seventh Circuit, courts are hesitant to draw inferences supporting misappropriation claims without any evidence the defendant seized or possessed documents from the plaintiff, particularly if a significant period of time passes before the alleged misappropriation occurs.

Article By Mikela T. Sutrina and Jenna G. Crawford of Sheppard, Mullin, Richter & Hampton LLP

For more intellectual property legal news, click here to visit the National Law Review.

Tillis Bill Tries to Fix Section 101

This recently introduced bill would replace section 101 with a lot of text. The commentators are all commentating, but I have yet to read whether or not the “outlaw” status of claims to diagnostic methods—led by varying interpretations of Mayo v. Prometheus—has been clearly lifted by this bill. Here are the relevant parts, at least setting up the discussion on this point.

Section 101. Patent Eligibility

(a) IN GENERAL—Whoever [post- Thaler v. Vidal, we know that this must be a human being] invents or discovers any useful process, machine, manufacture, or composition of matter, or any useful improvement thereof, may obtain a patent therefore, subject only to the exclusions in section (b) and to the further conditions and requirements of this title.

(b) ELIGIBILITY EXCLUSIONS.—

(1) IN GENERAL.—Subject to paragraph (2), a person may not obtain a patent for any of the following, if claimed as such:

***

(B) A process that—

***

(iii) occurs in nature wholly independent of, and prior to, any human activity.

(D) An unmodified natural material, as that material exists in nature.

(2) CONDITIONS.—

***

(B) HUMAN GENES AND NATURAL MATERIALS.—For the purposes of subparagraphs (C) and (D) of paragraph (1), a human gene or natural material that is isolated, purified, enriched, or otherwise altered by human activity, or that is otherwise employed in a useful invention or discovery, shall not be considered to be unmodified.

(1) IN GENERAL.—In determining whether, under this section, a claimed invention is eligible for a patent, eligibility shall be determined

(A) By considering the claimed invention as a whole and without discounting or disregarding any claim element; and

(B) Without regard to—

***

(ii) whether a claim element is known, conventional, routine, or naturally occurring

***

Well now, does this bill abrogate Mayo v. Prometheus and permit patents on diagnostic assays as simple as “If A, then B” (If assay indicates high homocysteine then diagnostic conclusion is low cobalamin)? Let’s start with a simple “If A, then B” claim, like the one in Athena (If autoantibodies to MuSK are detected, subject may be afflicted with MG). The presence of antibodies that bind to MuSK occurs in nature wholly independently and prior to any human activity. See, section I (B) (iii). So to be patentable, a process comprising the detection of the antibodies or of a MuSK-antibody complex in order to diagnose MG must fall within one of the “conditions” of the statute as set forth in 2(B).

The problem, and I hope it is not a big one, is that 2(B) does not mention “processes” employing “natural materials.” Applicants are left to argue that the anti-MuSK antibodies per se are altered by human activity, e.g., by binding to MuSK, and so are “modified.” They can also argue that the antibodies are employed in a useful discovery since they are the biomarker for MG. But, of course, the applicants wanted to claim a process, not just the biomarker detected by the assay.

Regarding diagnostics, is the key phrase “otherwise employed in a useful invention or discovery”? Of course, the argument is that the useful invention or discovery is the diagnostic process, from initial sampling to drawing a diagnostic conclusion. For years I have proposed that s. 101 bills on diagnostic clams need a sentence like, “A process includes recognition of the utility of a naturally occurring correlation.” In other words, you are not trying to patent the correlation itself, like “blood containing antibodies that bind to MuSK”. The necessary steps include both isolation and detection of the antibodies and recognition that their presence indicates something about the patient. (Note that Mayo did not invent the correlation between the level of the metabolites of the administered drug and the need to adjust the dose of the drug. Mayo took a known correlation and refined the optimal range of metabolite concentration that arose after administration of the “parent drug”. One could call this the recognition that an improved correlation could be reached, but nothing in the Tillis bill says that, apart from novelty, the invention needs to be improved over any earlier version or alternative. This draft of the bill needs some work but it is a valuable start to ending the s. 101 nightmare.

Article By Warren Woessner of Schwegman, Lundberg & Woessner, P.A.

For more intellectual property legal news, click here to visit the National Law Review.

In the Weeds? Humira “Patent Thicket” Isn’t an Antitrust Violation

The US Court of Appeals for the Seventh Circuit affirmed that welfare benefit plans that bought the drug Humira did not have valid antitrust claims against the patent owner. The Court found that amassing patents by itself is not enough to give rise to an antitrust claim, and that the welfare benefit plans would need to prove that the patents were invalid. Mayor and City Council of Baltimore, et al. v. AbbVie Inc., et al., Case No. 20-2402 (7th Cir. Aug. 1, 2022) (Easterbrook, Wood, Kirsch, JJ.)

AbbVie owns a patent covering Humira, which is a drug used to treat arthritic and inflammatory diseases. Humira is not covered by the Hatch-Waxman Act because it is a biologic drug, rather than a synthetic drug. Biologics are covered by the Biologics Price Competition and Innovation Act (BPCIA), under which a competitor must ask the US Food and Drug Administration for permission to sell a “biosimilar” drug based on certain guidelines. From the first sale of the original drug, the competitor must wait 12 years to enter the market. If the original drug seller believes that a patent blocks competition and initiates litigation, the competitor is still free to sell its biosimilar drug. The competitor sells at risk of an adverse outcome in the litigation.

The original Humira patent expired in 2016, but AbbVie obtained 132 additional patents related to the drug. After the 12-year BPCIA requirement passed, none of AbbVie’s competitors chose to launch a biosimilar. Instead, competitors settled with AbbVie on terms to enter the US market in 2023. In exchange, AbbVie agreed that enforcement of all 132 of its patents would end in 2023 even if they were not set to expire.

Welfare benefit plans that pay for Humira on behalf of covered beneficiaries accused AbbVie of violating Sections 1 and 2 of the Sherman Antitrust Act. The payors argued that AbbVie’s settlements with potential competitors established a conspiracy that restrained competition in violation of Section 1, and that AbbVie’s “patent thicket” allowed AbbVie to reap unlawful monopoly profits from Humira after expiration of the original patent in violation of Section 2. The district court dismissed the complaint. The payors appealed.

The issue on appeal with respect to Section 2 was whether the payors had to prove that all of AbbVie’s Humira-related patents were invalid. Under the Walker Process antitrust doctrine, a party may be liable for an antitrust violation if it knowingly asserts a fraudulently procured patent in an attempt to monopolize a market. The payors did not argue that all 132 of AbbVie’s patents were fraudulent. The Seventh Circuit reasoned that because the patent laws do not set a cap on the number of patents a person (or company) can hold, the payors would need to prove that each of AbbVie’s 132 Humira-related patents were invalid to succeed in showing a violation under Section 2. Not only did the payors fail to prove that all 132 patents were invalid, but they did not even offer to do so. The Court thus agreed with the district court that AbbVie did not amass a patent thicket to maintain monopoly profits from Humira.

The issue on appeal with respect to Section 1 was whether AbbVie’s settlements with potential biosimilar competitors were anticompetitive. The Seventh Circuit found that the payors could have a Section 1 claim if they were injured by the terms of AbbVie’s settlements with its competitors (for example, by showing that AbbVie overpaid a competitor to defer entry). The terms of AbbVie’s settlements allowed the competitors immediate entry to the European market, and AbbVie agreed to US market entry before its last Humira-related patents expired. The Court found that those terms, as well as the payors’ failure to show that AbbVie overpaid the competitors to delay their entry, rendered the settlements lawful.

The Seventh Circuit therefore affirmed the district court’s dismissal.

Article By Alexandra Lewis of McDermott Will & Emery

For more intellectual property legal news, click here to visit the National Law Review.

War and Peace at Rospatent: Protecting Trademarks in Russia

Yes, we shall live, Uncle Vanya. Could Anton Chekhov ever have imagined that his literary work would be used to sell hamburgers? In March, a controversial application for an “Uncle Vanya” mark in connection with “snack bars, cafes, cafeterias, restaurants, bar services, canteens, cooking and home delivery services,” incorporated the red-and-yellow golden arches logo of McDonald’s. It was just one in a series of recent applications in Russia that have caused serious pearl-clutching among intellectual property lawyers.

Since Russia invaded Ukraine on February 24, the country has faced numerous financial, trade and travel sanctions. It’s also been snubbed by major intellectual property partners. In a February 28 letter, a group of whistleblowers and staff representatives at the World Intellectual Property Organization (WIPO) called for the entity’s public condemnation of Russia’s invasion of Ukraine and the rapid closure of its Russia Office. The European Patent Office severed ties with Russia on March 1, and shortly thereafter the United States Patent and Trademark Office (USPTO) confirmed that it had “terminated engagement” with officials from Russia’s agency in charge of intellectual property, the Federal Service for Intellectual Property (Rospatent), and with the Eurasian Patent Organization.

In response, Russia has adopted an aggressive posture in the intellectual property realm where it once sought to peacefully engage with the world, an effort that began well before the collapse of the Union of Soviet Socialist Republics. When the USSR joined the Paris Convention in 1965, it eagerly sought to develop Soviet intellectual property. Yet in March, Russia issued Decree No. 299, which effectively nullifies the enforcement value of Russian patents owned by entities and individuals in “unfriendly” countries including the United States, European Union member states, the United Kingdom, Ukraine, Japan, South Korea, Australia and New Zealand.

Russian Prime Minister Mikhail Mishustin also greenlighted the importation of branded products without the brands’ permission, creating gray market headaches. As Boris Edidin, deputy chairman of the Commission for Legal Support of the Digital Economy of the Moscow Branch of the Russian Bar Association, clarified in a recent legal commentary published by Moscow-based RBC Group: “entrepreneurs have the opportunity to import goods of well-known brands, regardless of the presence or absence of an official representative on the Russian market.”

Russia, like the EU, had traditionally adopted a tougher stance than the United States on parallel imports. Now, however, “both by ‘anti-crisis’ measures and by cloak-and-dagger methods” Russia is sure to do all it can to keep its planes flying and its factories running, said Peter B. Maggs, research professor of law at the University of Illinois at Urbana-Champaign and noted expert on Russian and Soviet law and intellectual property.’

The increase in parallel imports makes trademark prosecution and maintenance more important than ever in Russia, but it’s not the only cause for concern. In March, as political tensions reached a crescendo, a Russian court declined to enforce the trademark rights for Peppa Pig, the famous British cartoon character, due to “unfriendly actions of the United States of America and affiliated foreign countries.” (See case No. A28- 11930/2021 in the Arbitration Court of the Kirov Region; an appeals court later overturned this holding, in a win for the porcine star.) RBC Group reported in March that it had tracked more than 50 trademark applications by Russian entrepreneurs and businesses for the marks of famous foreign brands, many in the fashion and tech sector. While most trademark applications were explicit copies of existing brands, in other cases applicants were content to imitate well-known trademarks and trade dress.

For example, a Russian entrepreneur from a design studio called Luxorta applied to register an IDEA brand that mimics the style and yellow-and-blue color schemes of famous Swedish brand IKEA. He told RBC that his business had suffered after IKEA suspended its Russian operations, and that he aspired to develop his own line of furniture and work with IKEA’s former suppliers. Other applicants RBC interviewed indicated they hoped to sell the marks back to foreign companies once those companies return.

On April 1, Rospatent published a press statement clarifying that “in case an identical or similar trademark has already been registered in the Russian Federation, it would be the ground for refusal in such registration.” More recently, the head of Rospatent, Yury Zubov, has responded with frustration to news coverage of trademark woes in Russia, noting that intellectual property legislation is unchanged and the “Uncle Vanya” hamburger mark had been withdrawn.

Prof. Maggs agreed that those trying to register or use close copies of foreign marks in Russia will likely fail. He cited a June 2 decision by the Court of Intellectual Property Rights to uphold lower court findings that the mark “FANT” for a carbonated orange soft drink violated unfair competition laws, because it was confusingly similar to the “FANTA” brand owned and licensed to third parties by Coca-Cola HBC Limited Liability Company. Russia’s consumer protection agency had originally brought the case.

The Court reasoned that “confusion in relation to two products can lead not only to a reduction in sales of the FANTA drink and a redistribution of consumer demand, but can also harm the business reputation of a third party, since the consumer, having been misled by the confusion between the two products, in the end receives a different product with different quality, taste and other characteristics.”

In addition, Prof. Maggs said, “the Putin Regime is and will be promoting Russian products as ‘just as good’ as foreign products. An example, obviously approved at high levels is the adoption of a totally different trademark for the sold McDonald’s chain,” he said, referring to the June 12 reopening of former McDonald’s restaurants in Moscow under the name “Vkusno & tochka” (“Tasty and that’s it”).

Brands should be wary of inadvertently jeopardizing their Russian marks by suspending local operations; a trademark may be cancelled in Russia after three years of uninterrupted non-use. While Article 1486 of the Russian Civil Code states that “evidence presented by the rightholder of the fact that the trademark was not used due to circumstances beyond his control [emphasis added] may be taken into account,” brands claiming infringement still risk being ineligible for damages or injunctive relief, because technically they are not losing sales while pausing business in Russia.

Moreover, if a company has suspended sales in Russia to show solidarity with Ukraine but seeks to stop sales in Russia by others, it may be accused of violating the good faith requirement of Article 10 of the Russian Civil Code, which states that exercising “rights for the purpose of limiting competition and also abuse of a dominant position in a market are not allowed.”

Russia remains a party to numerous intellectual property treaties, including the Paris Convention, the Agreement on TradeRelated Aspects of Intellectual Property Rights and the Hague Agreement. But as the Peppa Pig case illustrates, court decisions on intellectual property are not immune to political heat.

The question looming on the horizon is whether, if the current crisis escalates, the Russian government would outright cancel trademarks from hostile countries. It would not be the first time a state denied intellectual property rights during political conflicts. In the aftermath of the First World War, for example, the US government advocated for the “expropriation” of property, including intellectual property, of German nationals, perceived as responsible for the militarism of their government1. And in the 1930s, the German patent office removed Jewish patent-holders from its roster as part of its notorious “Aryanization” process. However, because Russia is not officially at war with the countries it has deemed “unfriendly,” these precedents are not directly on point.

Brands that have suspended business operations in Russia should monitor their trademark portfolios closely for infringement and consider how they can prove use of each mark during a prolonged absence from the Russian market. In other words: keep your eyes on Uncle Vanya.

FOOTNOTES

¹Caglioti DL. Property Rights in Time of War: Sequestration and Liquidation of Enemy Aliens’ Assets in Western Europe during the First World War. Journal of Modern European History. 2014;12(4):523-545. doi:10.17104/1611-8944_2014_4_523.

Article By Cynthia Martens of Katten

For more intellectual property legal news, click here to visit the National Law Review.

CareDx v. Natera – The Broad Road to Patent Ineligibility

In CareDx v Natera, Appeal No. 2022-1027, (Fed. Cir., July 18, 2022), a three judge panel of Judges Lourie, Bryson and Hughes, affirmed the district court’s finding that the claims of U. S. patent nos. 8703652, 9845497 and 10329607 are invalid for failing to survive the Alice/Mayo test for patent eligibility. I subtitled this post using Mathew 7:13-14: “Enter through the narrow gate. For wide is the gate and broad is the road, that leads to destruction.” The appeal to the Federal Circuit, which I wrote about on October 15, 2021, never got on the narrow road that leads to viable diagnostic claims. It may not have been possible to overcome the obstacles that blocked the road, but CareDx managed to hit them all, and ended up with three invalid patents on natural phenomena.

The claims were directed to a method for detecting transplant rejection or organ failure by isolating and genotyping a sample from the subject who received the donation, quantifying the cfDNA, and diagnosing the transplant status for an increase in donor cfDNA over time. An increase indicates possible transplant failure.

Judge Lourie summarized the claims, some of which are more than a page long, this way:

“Here, as in Ariosa, the claims boil down to collecting a bodily sample, analyzing the cfDNA using conventional techniques, including PCR, identifying naturally occurring DNA from the donor organ, and then using the natural correlation between heightened cfDNA levels and transplant health, to identify a potential rejection, none of which was inventive. The claims here are equally as ineligible as those in Ariosa.”

Let’s take a quick look at how CareDx got onto the broad road. CareRx hoped to avoid Ariosa by arguing that it was doing more than just measuring a biomarker correlated to an existing phenomenon. Problem 1 is that CareDx did not discover the correlation; it just improved on it (or did it?). Louie writes:

“CareDx argues that the patents’ claims are directed not to natural phenomena, but to improved laboratory techniques. CareDx contends that the ‘claimed advance’ is an ‘improved, human-designed method for measuring increases in donor cfDNA in a recipient’s body to identify organ rejection.’ … In particular, CareDx identifies the use of digital PCR, NGS, and selective amplification to more accurately measure the donor SNPs of cfDNA transplant recipients. However, CareDx does not actually claim any improvements in laboratory techniques … Furthermore the specification admits that the laboratory techniques disclosed in the claims require only conventional techniques and off-the-shelf technology.”

In fact, CareDx had at least one claim in the ‘497 patent that recites that the assay detects the donor-specific circulating cfDNA from the organ transplant when the donor-specific circulating cfDNA [makes] up at least 0.3% of the total circulating cfDNA in the biological sample. I presume that this claim limitation was put into the claim so that “improvement” could be argued, but the limitation is not mentioned in the opinion.

Let’s look at a few other things CareDx encountered on its broad road to legal destruction. The panel looked at every step of the method in isolation. In other words, once CareDx argued “improvement” it was forced to admit that the specification disclosed that all those analytical techniques, such as PCR, NGS and “selective amplification”, would be considered as conventional in the art. CareDx might have relied on some of the decisions finding patent eligibility where physical equipment was necessarily involved, such as XL LLC v. Trans Ova Genetics or Illumina v Ariosa.

The finding of conventionality of individual steps permitted the court and the panel to effectively rule that the method was directed to a natural product, since the devices used to carry it out were given no weight. Therefore, the patents failed to pass Step 1 of Mayo/Alice. Could it have been argued, if that was the case, that the equipment used to carry out the method was arranged in a novel sequence? (Also, is someone going to argue that PCR involves replicating small amounts of DNA to afford useful amounts? – This is accomplished by the hand of man.)

These are minor thoughts, CareDX should left the word “diagnostic” out of the claims and the specification. This is certainly no more of a diagnostic test than the Mayo range-finding step was. It is presently clear that in the life sciences, recognition of the utility of a naturally occurring correlation is not enough to avoid patent ineligibility. Of course, and this is cold comfort to CareDx, would it have helped to get this method into the safe harbor of methods of medical treatment? In other words, the first step could recite the actual transplantation step and/or the final step of the process could recite some sort of medical intervention. Narrower claims might have returned CareDx to the narrow path of patent life.

Article By Warren Woessner of Schwegman, Lundberg & Woessner, P.A.

For more intellectual property legal news, click here to visit the National Law Review.

Patent Infringement Verdict Nixed over Judge’s Stock Ownership

The US Court of Appeals for the Federal Circuit reversed a district court’s opinions and orders and remanded the case for further proceedings before a different district court judge because the original judge had failed to divest all financial interests in the case. Centripetal Networks, Inc. v. Cisco Systems, Inc., Case No. 21-1888 (Fed. Cir. June 23, 2022) (Dyk, Taranto, Cunningham, JJ.)

Centripetal sued Cisco for patent infringement. The original district court judge presided over a 22-day bench trial, which included a more than 3,500-page record, 26 witnesses and more than 300 exhibits. The court heard final arguments on June 25, 2020. While the case was still pending before the district court, the judge learned that his wife owned Cisco stock, valued at $4,687.99. The district court judge notified the parties on August 12, 2020, that he had discovered that his wife owned 100 shares of Cisco stock. He stated that his wife purchased the stock in October 2019 and had no independent recollection of the purchase. He explained that at the time he learned of the stock, he had already drafted a 130-page draft of his opinion on the bench trial, and virtually every issue had been decided. He further stated that the stock did not—and could not have—influenced his opinion on any of the issues in the case. Instead of selling the stock, which might have implied insider trading given his knowledge of the forthcoming order, the judge placed it in a blind trust. Under the terms of the trust, the judge was to be notified when the trust assets had been completely disposed of or when their value became less than $1,000.

Centripetal had no objections. Cisco, however, filed a motion for recusal under 28 U.S.C. § 455(a) and (b)(4). The judge ordered Centripetal to file a response. On October 2, 2020, the court denied Cisco’s motion for recusal. On October 5, 2020, the court issued a 167-page opinion and order containing the judge’s findings that Cisco willfully infringed the asserted claims of the patents-at-issue and awarded Centripetal damages of more than $755 million, pre-judgment interest of more than $13 million and a running royalty of 10%. Cisco moved for amended findings and judgment under Rule 52(b) or a new trial under Rule 59(a)(2). The court denied both motions. Cisco appealed the district court’s findings and asserted that the judge was required to recuse himself under 28 U.S.C. § 455(b) absent divestiture under § 455(f) (the only exception to the bright line rule that a federal judge is disqualified based on a known financial interest in a party).

On appeal, the Federal Circuit addressed two issues: whether the district court judge was relieved of his duty to recuse under § 455(b)(4) because his wife had divested herself of her interest in Cisco under § 455(f), and, if the requirements of § 455(f) were not satisfied, a determination as to the proper remedy.

The Federal Circuit analyzed whether placement of the stock in a blind trust satisfied the divesture requirement of § 455(f). The Court explained that a blind trust is “an arrangement whereby a person, in an effort to avoid conflicts of interest, places certain personal assets under the control of an independent trustee with the provision that the person is to have no knowledge of how those assets are managed.” Centripetal admitted that there are no cases holding that placement of stock in a blind trust constitutes divestment. The Court next turned to the intent of Congress when it drafted the statute. The Court reasoned that to “divest” was understood at the time to mean “dispossess or deprive,” which is only possible when an interest is sold or given away. The Court also noted that Congress used the present tense—that a judge should not sit when he or she has a financial interest in a party. The Court concluded that while placing the stock in a blind trust removed the judge’s wife from control over the stock, it did not eliminate her beneficial interest in Cisco. The Court also found that the Judicial Conference’s Committee on Codes of Conduct had previously ruled that a judge’s use of a blind trust does not obviate the judge’s recusal obligations. Accordingly, the Court found that placing assets in a blind trust is not divestment under § 455(f) and, thus, the district court judge was disqualified from further proceedings in the case.

As for the appropriate remedy, the Federal Circuit considered whether rulings made after August 11, 2020, when the district court judge became aware of his wife’s financial interest in Cisco, should be vacated as a remedy for his failure to recuse. The Court determined that the risk of injustice to the parties weighed against a finding of harmless error and in favor of vacatur. The Court reversed the district court’s opinion and order denying Cisco’s motion for recusal; vacated the opinion and order regarding infringement, damages and post-judgment motions and remanded for further proceedings before a new judge.

Article By Jodi Benassi of McDermott Will & Emery

For more intellectual property legal news, click here to visit the National Law Review.

A Primer on Practice at the Trademark Trial & Appeal Board

In a precedential decision rendered in an opposition proceeding, the Trademark Trial & Appeal Board (Board) took the lawyers for each side to task for ignoring Board rules in presentation of their case, but ultimately decided the case on a likelihood of confusion analysis. The Board found that the parties’ marks and goods were “highly similar” and sustained the opposition. Made in Nature, LLC v. Pharmavite LLC, Opposition Nos. 91223352; 91223683; 91227387 (June 15, 2022, TTAB) (Wellington, Heasley and Hudis, ALJs) (precedential).

Pharmavite sought registration of the standard character mark NATURE MADE for various foods and beverages based on allegations of bone fide intent to use in commerce. Made in Nature (MIN) opposed on the ground that Pharmavite’s mark so resembled MIN’s registered and common law “Made In Nature” marks as to cause a likelihood of confusion when used on the goods for which registration was sought.

In its brief to the Board, Pharmavite raised, for the first time, the Morehouse (or prior registration) defense. MIN objected to the Morehouse defense as untimely. The Board agreed, noting that defense is “an equitable defense, to the effect that if the opposer cannot be further injured because there already exists an injurious registration, the opposer cannot object to an additional registration that does not add to the injury.” The party asserting a Morehouse defense must show that it “has an existing registration [or registrations] of the same mark[s] for the same goods” (emphasis in original).

Here, the Board found that this defense was not tried by the parties’ express consent and that implied consent “can be found only where the non-offering party (1) raised no objection to the introduction of evidence on the issue, and (2) was fairly apprised that the evidence was being offered in support of the issue.” In this case, Pharmavite did introduce into the record its prior NATURE MADE registrations but only for the purpose of supporting Pharmavite’s “[r]ight to exclude; use and strength of Applicant’s mark.” The Board found that this inclusion did not provide notice of reliance on the Morehouse or prior registration defense at trial.

In sustaining the opposition, the Board commented extensively on the record and how it was used, “[s]o that the parties, their counsel and perhaps other parties in future proceedings can benefit and possibly reduce their litigation costs.”

Over-Designation of the Record as Confidential

The Board criticized the parties for over-designating as confidential large portions of the record, warning that only the specific “exhibits, declaration passages or deposition transcript pages that truly disclosed confidential information should have been filed under seal under a protective order.” If a party over-designates material as confidential, “the Board will not be bound by the party’s designation.”

Duplicative Evidence

The Board criticized the parties for filing “duplicative evidence by different methods of introduction; for example, once by Notice of Reliance and again by way of an exhibit to a testimony declaration or testimony deposition.” The Board noted that such practice is viewed “with disfavor.”

Overuse of Deposition Designations

The Board criticized both parties for over-designating extensive excerpts of discovery deposition testimony of their own witnesses under Trademark Rule 2.120(k)(4), which provides:

If only part of a discovery deposition is submitted and made part of the record by a party, an adverse party may introduce under a notice of reliance any other part of the deposition which should in fairness be considered so as to make not misleading what was offered by the submitting party. A notice of reliance filed by an adverse party must be supported by a written statement explaining why the adverse party needs to rely upon each additional part listed in the adverse party’s notice, failing which the Board, in its discretion, may refuse to consider the additional parts.

As the Board explained, “[i]t is not an appropriate use of Trademark Rule 2.120(k)(4) to introduce unrelated testimony, rather than just the additional necessary portions of discovery deposition excerpts that clarify the passages originally submitted.” In this case, the Board stated that both parties “are equally guilty of abusing Trademark Rule 2.120(k)(4), and [we] trust that the parties and their counsel will not repeat this practice in future matters before the Board.”

Limiting the Record to Pertinent Evidence

The Board noted that “sizeable portions of each party’s evidentiary materials were not pertinent to the issues involved in this rather straightforward priority and likelihood of confusion opposition proceeding, such that the Board was forced to spend needless time sifting through an inappropriately large record in search of germane proofs.” The Board pointedly noted that “[t]his is not productive. ‘Judges are not like pigs, hunting for truffles buried in [the record].’”

Record Citations

The Board advised the parties to adhere to its Manual of Procedure at § 801.03. As to how evidence should be cited:

For each significant fact recited, the recitation of facts should include a citation to the portion of the evidentiary record where supporting evidence may be found. When referring to the record in an inter partes proceeding before the Board, parties should include a citation to the TTABVUE entry and page number (e.g., 1 TTABVUE 2) to allow the reader to easily locate the cited materials.

In this case, the Board criticized the parties for using their own exhibit numbering system rather than the TTABVUE docket number and, for testimony submitted by deposition transcripts, using the page and line numbers provided by the court reporters rather than the TTABVUE citations. As the Board noted, this encumbered the Board in its efforts “to provide evidentiary references for use in this opinion; lengthening the time for review of the record, drafting of the decision and ultimately for issuance of this opinion.”

Likelihood of Confusion

After its chapter and verse critique of the presentation by the parties, the Board embarked on an exhaustive Trademark Act § 2(d) analysis, considering and balancing each of the DuPont factors, and ultimately concluded that MIN had sustained its opposition.

Article By Paul Devinsky of McDermott Will & Emery

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The Way to Protect Your Business? What You Need to Know About Trade Secrets

What do Coca-Cola’s secret formula, McDonalds’ special sauce, and Google’s search algorithm have in common? Each is a protected trade secret. In other words, they are proprietary information vital to these companies’ survival and are among their most valuable corporate secrets.

A trade secret can be anything of value to your company that is unique and not known to persons outside the company. For example, a trade secret can be a recipe, process, formula, strategy, technique, or device that your competitors do not know, do not have, and cannot use.

Trade secret law can be less risky in some respects than other forms of intellectual property like patents, copyrights, and trademarks. The application process for a patent requires that a company disclose the secret itself. With that comes an inherent risk—should the application be denied, the secret is no longer a secret. While the protection afforded by trade secret law may be considered fragile, meaning constant vigilance is required to maintain secrecy, the secret remains a secret; while a patent, even after issuance, carries some risk of post-grant invalidation. By contrast, a trade secret owner may ultimately enjoy greater certainty by maintaining protection, potentially forever. However, a trade secret is entitled to protection only for as long as it is kept a secret. If the information is lawfully disclosed to the public, it is no longer confidential and loses its trade secret protection forever.

Governing Law: Both federal and state law recognize the time and money invested to gain competitive advantages like trade secrets and protect those advantages. Federal Law: Under the controlling federal legislation passed by Congress in 2016, the Defend Trade Secrets Act (“DTSA”) defines a trade secret as something used in a company’s business that (a) is not known or readily accessible by competitors, (b) has commercial value or that provides a competitive advantage in the marketplace, and (c) the owner of the information protects from disclosure through reasonable efforts to maintain its secrecy. Prior to the DTSA’s enactment in 2016, no federal statute promulgated a federal trade secret private right of action.

In addition to the DTSA’s rules regarding trade secrets, additional federal rules apply. The Economic Espionage Act of 1996 makes the theft of trade secrets a federal crime. The Act prohibits the theft of a trade secret by a person intending or knowing that the offense will injure a trade secret owner. The Act also makes it a federal crime to receive, buy, or possess trade secret information knowing it to have been stolen. The Act allows the government to punish thefts of trade secrets by imprisonment up to 15 years and/or fines up to $5 million, depending on whether the defendant is an individual or a corporation. A private party can still sue for trade secret theft even if the federal government files a criminal case under the Economic Espionage Act.

New York State Law: Prior to federal law, most states had some form of trade secret law that varied state to state. The Uniform Trade Secrets Act (“UTSA”) was published in 1979 and amended in 1985 to provide a uniform trade secret law. Many states, including Pennsylvania in 2004 and New Jersey in 2012, adopted the UTSA. Notably, New York did not adopt the UTSA and does not have its own state trade secret statute, and thus relies on the common law.

Under New York common law, “misappropriation” refers to the acquisition of a trade secret by someone who knows that the trade secret was acquired by improper means—theft, bribery, misrepresentation, breach, or inducement of a breach of duty to maintain secrecy. The New York statute of limitations requires that any action for misappropriation be filed three years from the date the misappropriation is discovered. Further, New York law requires that the use of the trade secret be continuous in the operation of a business, rather than one-time use.

Cartier v. Tiffany: Cartier recently filed suit against its luxury rival Tiffany & Co. in New York state court. Cartier v. Tiffany & Co., et al.,650925/2022 (N.Y. Sup.). Richemont-owned Cartier sets out claims against LVMH’s Tiffany & Co. for various contractual and tort claims and trade secret misappropriation against both defendants [Who is the other defendant?]. Cartier seeks preliminary and permanent injunctive relief to require defendants to refrain from using the allegedly misappropriated information and return it to Cartier, as well as a judgment for any “compensatory damages that may be caused by [Tiffany’s] wrongful conduct.”

The complaint states that Tiffany & Co. lured former Cartier employee Megan Marino away from her role as its Assistant Manager for Jewelry Merchandising to learn more about Cartier’s “High Jewelry” collection, where pieces typically cost $50,000 to $10 million.

Cartier claims Marino was bound by non-disclosure and non-solicitation agreements she had signed as part of her role at Cartier and that she breached those agreements by using Cartier’s confidential business information to benefit Tiffany. This information includes Cartier’s “very sensitive and valuable” internal company documents that Marino forwarded to her personal email. Specifically, Marino “referenced a [Cartier] Excel spreadsheet” that “detailed Cartier’s confidential, High Jewelry assortment information.” Based on that spreadsheet, Cartier alleges, Marino “created a new Excel document, derived entirely from Cartier’s confidential information,” including “the total number of High Jewelry pieces at various Cartier locations in the U.S.” Cartier maintains this information is “only accessible by a limited number of Cartier employees [and] not known outside of Cartier” and “allow[s] a sophisticated competitor to replicate key strategies and, with relative ease, to reverse engineer how Cartier allocates, merchandises, and prices its High Jewelry stock.” Cartier claims the proprietary and confidential nature of this information amounts to a trade secret-protected asset.

Cartier further claims Tiffany has a history of poaching employees and maintains a “disturbing culture of misappropriating competitive information.” Given the alleged pattern, Cartier asserts that Tiffany now possesses “a substantial amount of [its] confidential and trade secret information that it obtained from Marino and other former Cartier employees” as a result of their “unlawful taking of Cartier’s valuable confidential information and trade secrets.”

Even if Cartier successfully establishes that it maintains trade secret information that Tiffany misappropriated, the case is hardly straightforward. Establishing damages in cases like this is particularly challenging, as it is difficult to assign a dollar value to trade secret information that will compensate the plaintiff for the economic loss caused by the defendant’s misappropriation. As a result, courts generally have quite a bit of discretion in fashioning damages awards.

Article By David H. Siegel of Norris McLaughlin P.A.

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Green Innovation Being Fast Tracked by USPTO

The USPTO now fast tracks applications involving greenhouse gas reduction technologies. The new Climate Change Mitigation Pilot Program targets impact on the climate by accelerating examination of patent applications for innovations that reduce greenhouse gas emissions. Qualifying applications may be advanced out of turn for examination (granted special status) until a first action on the merits—typically the first substantive examination—is complete. Advantageously, qualifying applications do not incur the petition to make special fee and is not required to satisfy the other requirements of the accelerated examination program.

The United States Patent and Trademark Office (USPTO) accept petitions to make special under this program until June 5, 2023, or the date when 1,000 applications have been granted special status under this program, whichever occurs earlier. “This program aligns with and supports Executive Order 14008, dated January 27, 2021, and supports the USPTO’s efforts to secure an equitable economic future, reduce greenhouse gas emissions, and mitigate the effects of climate change.” The new program takes steps toward working to incentivize and expedite clean energy technologies that will help reduce greenhouse gas emissions and mitigate the effects of climate change.

To qualify for the Program:

Patent Applications must contain one or more claims to a product or process that mitigates climate change by reducing greenhouse gas emissions, and be: (a) a non-continuing original utility non-provisional application; and (b) an original utility non-provisional application that claims the benefit of the filing date under 35 U.S.C. 120, 121, 365(c), or 386(c) of only one prior application that is either a non-provisional application or an international application designating the United States. Note: Claiming the benefit under 35 U.S.C. 119(e) of one or more prior provisional applications or claiming a right of foreign priority under 35 U.S.C. 119(a)-(d) or (f) to one or more foreign applications will not affect eligibility for this pilot program.
The application or national stage entry and the requisite petition form must be electronically filed by use of the Patent Center of the USPTO, and the specification, claims, and abstract must be submitted in DOCX format.
Applicants must file the petition to make special with the application or entry into the national stage under 35 U.S.C. 371 or within 30 days of the filing date or entry date of the application. The fee for the petition to make special under 37 CFR 1.102(d) has been waived for this program.
Applicants must use Form PTO/SB/457—which contains the petition and requisite certifications—to request participation in this program.
Petition filing limitations: Applicants may not file a petition to participate in this pilot program if the inventor or any joint inventor has been named as the inventor or a joint inventor on more than four other non-provisional applications in which a petition to make special under this program has been filed.

In a recent blog post announcing the Climate Change Mitigation Pilot Program, USPTO Director Kathi Vidal said, “It’s essential to protect these transformative energy innovations with intellectual property (IP). Innovation is a primary driver of the U.S. economy, and IP is the bridge between an idea and bringing that innovation to market. Industries based on innovation and the protection of intellectual property generate almost $8 trillion ($7.8 trillion) in GDP, and account for 44% of all U.S. jobs. Workers in patent-intensive industries earn almost $1,900 per week. That is 97% higher than the average weekly wage of workers in non-IP intensive industries.”

Vidal also said, “Startup companies that have a patent are far more likely to be successful in raising funding than those that have not secured intellectual property protection. When used as collateral, a patent increases venture capital funding by 76% over three years, and increases funding from an initial public offering by 128%, the approval of a startup’s first patent application increases its employee growth by 36% over the next five years, and after five years, a new company with a patent increase its sales by a cumulative 80% more than companies that do not have a patent.”

Moving forward to protect essential green energy transition technology can be helpful for future corporate and strategic goals. This new Climate Change Mitigation Pilot Program opens the door to accelerating potential patent protection for many of these developing technological fields.

Article By Jeffrey S. Whittle, Karthika Perumal, Ph.D., Christopher Kent, Kevin J. Davis, Ph.D., and Samuel A. Savanich of Womble Bond Dickinson (US) LLP

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Category: Intellectual Property

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