Iancu Nominated for USPTO Director

Maier & Maier

It was announced on Friday, August 25, 2017, that Andrei Iancu has been nominated for Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO).   Iancu will replace Joseph Matal, who has been serving as interim Director since Michelle Lee’s resignation in June.

Andrei Iancu comes from a successful career in private practice, where he currently serves as managing partner of Irell & Manella LLP.  Iancu is also currently an adjunct professor at UCLA School of Law. He has handled all aspects of intellectual property, including prosecution and litigation.  His primary focus has been intellectual property litigation, where he has extensive experience representing both patent owners and alleged infringers in Federal Courts and in post-grant proceedings at the USPTO.  In addition to his representative matters, Iancu has been recognized for his publications, including several on the patent eligibility of software.

Some members of the IP community are touting his experience representing patent owners against large technology companies as reflecting a pro-patent ideology.  Some of his more notable casework includes the successful representation of TiVO Corporation enforcing patent rights against tech giants including AT&T, Motorola, Microsoft, Cisco, and EchoStar.  The cases led to over $1.5 billion in payments to TiVo.  Iancu has also successfully represented defendants of patent infringement claims, such as Ariosa Diagnostics, Inc. in Ariosa Diagnostics, Inc. v. Sequenom, Inc, resulting in cancellation of Sequenom’s patent as an ineligible natural phenomenon under 35 U.S.C. 101.

The nomination of Andrei Iancu, ends a long period of speculation over the new Administration’s plans for the USPTO, which were amplified by Michelle Lee’s resignation as Director in June.  However, the confirmation process is likely to endure for several months to come.

USTR Makes IP a Focus of NAFTA Renegotiation

Maier & Maier

Earlier this month, the US Trade Representative (USTR), Robert Lighthizer, released a detailed and comprehensive summary of the negotiating objectives for the US’s forthcoming renegotiation of the North American Free Trade Agreement (NAFTA). The text of these objectives are available in a press release here.

In particular, the USTR seeks to add a substantive section on intellectual property, aimed at “ensur[ing] provisions governing intellectual property rights reflect a standard of protection similar to that found in U.S. law.” Listed objectives include securing greater compliance with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), particularly with respect to meeting enforcement obligations under TRIPS; eliminating government involvement in the violation of intellectual property rights, such as through cybertheft and piracy; and “prevent[ing] the undermining of market access for U.S. products through the improper use of a country’s system for protecting or recognizing geographical indications, including failing to ensure transparency and procedural fairness and protecting generic terms.” The last objective appears to be aimed at the increasing levels of protection that have been offered by some countries to products with geographical indications, such as champagne or Parmesan cheese.

Federal Circuit Rules Trial Court Abused Discretion by Not Awarding Attorney Fees

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In AdjustaCam v. Newegg, No. 2016-1882 (Fed. Cir. July 5, 2017), the Federal Circuit reversed the denial of attorney fees based on the Octane Fitness standard, determining that the trial court had abused its discretion by not awarding fees.

AdjustaCam (a subsidiary of NPE Acacia Research) had sued Newegg for infringement of U.S. Patent No. 5,855,343 (“the ’343 patent”), which issued in 1999 and is entitled “Camera Clip.” The Markman hearing interpreting the claims in this case had interpreted a limitation of the claims, “rotatably attached,” to mean that each of the camera and support frame would have to rotate around a single axis. Newegg’s allegedly infringing product made use of a ball-and-socket joint, and as such the interpretation necessarily excluded Newegg’s product. AdjustaCam continued to pursue the case.

Newegg moved to dismiss the case with prejudice on the grounds that AdjustaCam’s infringement allegations were objectively baseless, and also demanded attorney’s fees. The court denied the motion and Newegg appealed. While the appeal was pending, the Supreme Court decided Octane Fitness, which clarified the standard for obtaining fees. The Federal Circuit remanded the case in order for the trial court to determine whether it was an “exceptional case” under the new standard.

The trial court reassigned the case to a new judge, who determined that the case was not “exceptional.” The Federal Circuit reversed this, finding that the District Court abused its discretion by failing to evaluate whether the case was exceptional based on the totality of the circumstances. Specifically, the Federal Circuit found that the evidence submitted by AdjustaCam showed that its lawsuit was baseless, that AdjustaCam failed to advance any arguments as to why Newegg’s products could be considered to infringe the claims as interpreted by the Markman order, and that AdjustaCam litigated the case in an “unreasonable manner.” Specifically, AdjustaCam had made “repeated use of after-the-fact declarations,” served a new expert report on Newegg the day of that expert’s deposition, filed a supplemental declaration without disclosing it as new on appeal, and had a pattern of filing cases against multiple defendants in order to settle for less than the cost of litigation.

Bipartisan Group of Senators Introduce “STRONGER Patents Act of 2017”

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In late June, three Democratic senators (Chris Coons (D-DE), Dick Durbin (D-IL), and Mazie Hirono (D-HI)) and one Republican senator (Tom Cotton (R-AR)) introduced the “STRONGER Patents Act of 2017.” This bill appears to have been motivated by a recent report from the U.S. Chamber of Commerce that had been heavily critical of the U.S. patent system, ranking it tenth in the world, down from a rank of first in their previous report. The legislators have claimed, in a one-pager released by Senator Coons’s office, that the bill would “enact balanced reforms to restore the U.S. patent system to the world’s gold standard.”

The bill includes a number of significant revisions to the inter partes review (IPR) and post-grant review (PGR) procedures set forth by the America Invents Act, as well as several attempts to legislatively overturn Supreme Court decisions. Four of the most significant are as follows:

  • First, the bill would significantly narrow the scope of who can institute an IPR or PGR and introduce greater estoppel rules. The proposed legislation states that “the Director shall not authorize an inter partes review to be instituted on a claim challenged in a petition if the Director has previously instituted an inter partes review or post-grant review with respect to that claim.’’ IPRs and PGRs would also only be able to be petitioned for by entities that have been sued for infringement or that have been threatened with such a suit. This would bring post-grant actions into greater conformity with the rules for filing a declaratory judgment in federal district court.

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Supreme Court Clarifies Biosimilar Legislation in Sandoz

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On June 12, the Supreme Court also handed down another patent-related opinion in Amgen Inc. v. Sandoz Inc., a case dealing with the Biologics Price Competition and Innovation Act, a small 17-page subchapter contained within the Affordable Care Act (“Obamacare”). This subchapter deals with generic “biologics,” very-large-molecule drugs typically synthesized from biological sources such as recombinant DNA technology. The biologic at issue in this case is filgrastim, a G-CSF glycoprotein.

Typically, when patent protection on a drug expires, the producer of a generic drug can enter the market with an exact copy of the formerly-patented drug, which greatly simplifies the process of FDA approval. However, in the case of biologics, the generic drugs are not always exact copies, and may instead be “biosimilars” that are slight variations on the original drug, and which originally required separate FDA approval. The law at issue here (the BPCIA) was intended to streamline the FDA approval process for biosimilars.

This case dealt with certain regulatory requirements set forth in the BPCIA for new biosimilars. Subsection (l) of the law establishes a process by which an applicant for a biosimilar license can exchange information with the company that originally obtained FDA approval for the drug. One of the first requirements of this process is that the new applicant “shall provide” to the original company “a copy of the application submitted [to the agency],” so that the original company can evaluate the biosimilar for possible infringement of any of its unexpired patents.

In the present case, the new applicant, Sandoz, did not provide a copy of the application it had filed to the original company or “sponsor,” Amgen. This created a question of whether the sponsor was entitled to obtain a copy of the application filed by the applicant.

The Supreme Court, like the Federal Circuit before it, determined that Amgen was not entitled to a federal injunction to force Sandoz to turn over the application (though the two courts used different reasoning). The BPCIA establishes that the filing of a biosimilar application allows the sponsor to immediately bring an action for “a declaration of infringement, validity, or enforceability of any patent that claims the biological product or a use of the biological product.” On this basis, other injunctive relief is foreclosed, and Amgen would need to sue Sandoz for patent infringement and seek discovery on the application in order to obtain it.

A separate requirement of the BPCIA requires the applicant to provide notice to the sponsor that it is going to market a generic biosimilar, no later than 180 days before it plans to do so. In this case, Sandoz had provided notice before the FDA approved the biosimilar, so that it would be able to market the biosimilar immediately after approval. This created a question of whether Sandoz needed to wait until after the biosimilar had actually been approved before providing this notice.

The Supreme Court determined that there was no requirement for Sandoz to wait for the FDA to approve the biosimilar, and that the statute only set forth a single timing requirement (i.e. marketing can be made 180 days after notice) and not two timing requirements (i.e. marketing can be made 180 days after notice and after FDA approval). The Federal Circuit had come to the opposite conclusion.

The main effect of this case is to accelerate the marketing of biosimilars. Generic drug manufacturers may be able to market biosimilars immediately, or very soon after, FDA approval (provided FDA approval takes more than 180 days) rather than needing to wait an extra half-year to market the drug. This can often bring in hundreds of millions of dollars in extra revenue for the generic manufacturer.

The different reasoning used by the Supreme Court as to the question of injunctive relief also means that sponsoring drug companies may be able to seek injunctive relief in state court. While the Federal Circuit had ruled that the Patent Act, 35 U.S.C. § 271(e)(4), prevented Amgen from obtaining an injunction, the Supreme Court instead ruled that a section of the BPCIA did so, and determined that this did not cut off state law remedies.

 

Supreme Court to Review Constitutionality of Post-Grant Proceedings in Oil States

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On June 12, the Supreme Court granted certiorari in Oil States vs. Greene’s Energy Group, et al., a case dealing with the constitutionality of the post-grant challenge procedures established by the America Invents Act (AIA). The Federal Circuit, below, had upheld the constitutionality of these procedures.

The petition for writ of certiorari submitted by Oil States presented three questions:

  1. Whether inter partes review – an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents – violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.
  2. Whether the amendment process implemented by the PTO in inter partes review conflicts with Court’s decision in Cuozzo Speed Technologies, LLC v. Lee, 136 S.Ct. 2131 (2016), and congressional direction.
  3. Whether the “broadest reasonable interpretation” of patent claims – upheld in Cuozzo for use in inter partes review – requires the application of traditional claim construction principles, including disclaimer by disparagement of prior art and reading claims in light of the patent’s specification.

The Supreme Court granted certiorari only as to the first question.

The petitioner, Oil States, has based much of their argument on an 1898 decision from the Supreme Court, McCormick Harvesting Mach. Co. v. Aultman & Co., 169 U.S. 606 (1898). This decision held that “the Patent Office had no power to revoke, cancel, or annul” an issued patent, because once the patent has issued, “[i]t has become the property of the patentee, and as such is entitled to the same legal protection as other property.” Oil States charges that the USPTO has acted contrary to McCormick and has unconstitutionally revoked patents through the post-grant challenges made available under the AIA, such as inter partes review.

It is unclear how the Supreme Court will rule on this case. Several commentators have noted that the Supreme Court has, in the recent past, typically granted certiorari to Federal Circuit patent cases in order to overrule them; as the Federal Circuit upheld the constitutionality of these procedures, the Supreme Court may intend to strike them down. It is also noted that a majority of the Justices of the Supreme Court have adopted “private property” interpretations of patents in other cases, and as such they may find McCormick to be persuasive.

However, the constitutionality of post-grant procedures has been challenged in a number of cases, and the Supreme Court may have wished to take this case just to settle the issue. It is also noted that the facts of McCormick could be limited to the narrow facts of the case. When McCormick was decided, the USPTO did not have a revocation power expressly granted to them by Congress, and the USPTO now has such a power. The Supreme Court may decide that Congress can grant the USPTO jurisdiction over an issued patent and has properly done so.

Supreme Court Narrows Patent Venue Law in TC Heartland, Likely Limiting Future Suits in the Eastern District of Texas

Maier & Maier

In TC Heartland LLC v. Kraft Foods Group Brands, LLC., 581 U. S. ____ (2017), the Supreme Court substantially narrowed the law of patent venue, preventing a patent owner from filing an infringement suit against a defendant in any district court where the defendant is subject to personal jurisdiction. Instead, patent owners will only be able to bring suit in districts in states where a defendant is incorporated, or in districts where there has been an act of infringement and the defendant has a regular and established place of business.

The ruling required the Supreme Court to reconcile two venue statutes: 28 U.S.C. § 1391, which sets forth the requirements for venue generally, and 28 U.S.C. § 1400(b), which sets forth venue requirements specific to patent infringement. The patent venue statute, 28 U.S.C. § 1400(b), stipulates that “Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” However, the general venue statute, 28 U.S.C. § 1391, allows a patent owner to file suit in any judicial district where the defendant “resides;” under 28 U.S.C. § 1391(c)(2), a corporate defendant is deemed to “reside” in any district in which the corporation would be subject to personal jurisdiction.

Past Supreme Court precedent, Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), had established that §1400(b) is not supplemented by §1391. However, in 1988, Congress amended §1391, to state that  “[f]or purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.” The Federal Circuit found, in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F. 2d 1574 (1990), that this amendment had made §1391 applicable to patent infringement actions. Congress again amended §1391 in 2011, to state that “[e]xcept as otherwise provided by law… this section shall govern the venue of all civil actions brought in district courts of the United States.”

In this case, Kraft sued TC Heartland in the District of Delaware, where TC has no meaningful presence but does have the minimum contacts necessary for personal jurisdiction.  TC moved to dismiss or transfer the case based on improper venue, citing §1400(b). The District Court rejected these arguments based on Federal Circuit precedent and the Federal Circuit denied a writ of mandamus.

The Supreme Court decided, in a unanimous opinion, that Fourco was still good law and that §1400(b) is not supplemented or replaced by §1391. The Supreme Court based this decision on the fact that Congress never indicated that it had intended to overrule Fourco when it amended §1391 to apply to “all venue purposes” in 1988. Further, if Congress had overruled Fourco by amending §1391 to apply to “all venue purposes,” then, by essentially the same reasoning, Congress had reestablished Fourco by clarifying that §1391 applied “except as otherwise provided by law.”

The most significant effect of this case is expected to be a substantial reduction in the number of patent lawsuits filed in the Eastern District of Texas, which is often chosen for patent litigation because it is perceived to be friendlier to patent owners. Approximately 35% of all patent litigations currently pending have been filed in the Eastern District of Texas, and this case is likely to create a flood of motions to dismiss for improper venue or motions to transfer to a new district.

However, the District of Delaware, also a patent-owner-friendly district, is expected to take up the mantle of the Eastern District of Texas as the patent forum of choice. The District of Delaware is already a very popular patent forum (often the second most active for patent litigation), and as many corporations are incorporated in Delaware there are likely to be few questions of improper venue even under §1400(b).

Supreme Court Grants Certiorari in Oil States to Review Constitutionality of IPRs

Maier & Maier

On June 12, the Supreme Court granted certiorari in Oil States vs. Greene’s Energy Group, et al., a case dealing with the constitutionality of the post-grant challenge procedures established by the America Invents Act (AIA). The Federal Circuit, below, had upheld the constitutionality of these procedures.

The petition for writ of certiorari submitted by Oil States presented three questions:

  1. Whether inter partes review – an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents – violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.
  2. Whether the amendment process implemented by the PTO in inter partes review conflicts with Court’s decision in Cuozzo Speed Technologies, LLC v. Lee, 136 S.Ct. 2131 (2016), and congressional direction.
  3. Whether the “broadest reasonable interpretation” of patent claims – upheld in Cuozzo for use in inter partes review – requires the application of traditional claim construction principles, including disclaimer by disparagement of prior art and reading claims in light of the patent’s specification.

The Supreme Court granted certiorari only as to the first question.

The petitioner, Oil States, has based much of their argument on an 1898 decision from the Supreme Court, McCormick Harvesting Mach. Co. v. Aultman & Co., 169 U.S. 606 (1898). This decision held that “the Patent Office had no power to revoke, cancel, or annul” an issued patent, because once the patent has issued, “[i]t has become the property of the patentee, and as such is entitled to the same legal protection as other property.” Oil States charges that the USPTO has acted contrary to McCormick and has unconstitutionally revoked patents through the post-grant challenges made available under the AIA, such as inter partes review.

It is unclear how the Supreme Court will rule on this case. Several commentators have noted that the Supreme Court has, in the recent past, typically granted certiorari to Federal Circuit patent cases in order to overrule them; as the Federal Circuit upheld the constitutionality of these procedures, the Supreme Court may intend to strike them down. It is also noted that a majority of the Justices of the Supreme Court have adopted “private property” interpretations of patents in other cases, and as such they may find McCormick to be persuasive.

However, the constitutionality of post-grant procedures has been challenged in a number of cases, and the Supreme Court may have wished to take this case just to settle the issue. It is also noted that the facts of McCormick could be limited to the narrow facts of the case. When McCormick was decided, the USPTO did not have a revocation power expressly granted to them by Congress, and the USPTO now has such a power. The Supreme Court may decide that Congress can grant the USPTO jurisdiction over an issued patent and has properly done so.

USPTO Director Michelle Lee Resigns

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The Director of the United States Patent and Trademark Office (USPTO), Michelle Lee, announced her resignation from that office on June 6th. Lee announced this action by an e-mail to the employees of the USPTO, sent with the subject “Farewell,” and reading as follows:

Dearest Colleagues:

This afternoon, I submitted my letter of resignation from my position as the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.

It has been a tremendous honor to serve our country for the past several years, first as Director of the Silicon Valley office, then as Deputy Director of the USPTO, and finally as Director of the USPTO. I am tremendously proud of all that we have accomplished together, and appreciate all of your support and dedication during my tenure.

It is no exaggeration to say that the employees of the USPTO rival the best employees of any government agency or private company. The USPTO truly is a “best place to work”– because of you.

I am confident that the leadership team in place will serve you well during this transition.  In the meantime, I wish you all the best in your future endeavors at the USPTO.

With affection and deep gratitude,

    —Michelle

The transition between the Obama and Trump administrations had raised some questions about the employment status of former Director Lee. Lee had previously submitted a letter of resignation to President Obama, but in the days just prior to Trump’s inauguration, apparently attempted to revoke this letter of resignation. The USPTO and Department of Commerce declined to provide official comment as to Director Lee’s status until March 10th, at which point it was finally confirmed that she would remain on as Director. However, in late March, Commerce Secretary Wilbur Ross began interviewing candidates to replace Lee as USPTO Director.

Lee had long been considered to be a favorite of Silicon Valley tech companies, which had encouraged the federal government to retain Lee as Director. A number of tech companies, such as Google and Facebook, as well as a number of lobbying firms, such as Engine and the Internet Association, submitted a letter dated April 25th to President Trump and Secretary Ross encouraging them to retain Lee.

Associate Solicitor Joe Matal has been named Acting Director of the USPTO, and will serve in this capacity during the nomination and confirmation process for a new Director. Matal recently served as acting Chief of Staff for the agency, and previously served as General Counsel of the Senate Judiciary Committee and as a Judiciary Committee Counsel to former Senator Jon Kyl (R-AZ). Matal was also the principal staff drafter and negotiator of the Leahy-Smith America Invents Act (AIA), a recent comprehensive patent reform bill.

Supreme Court Limits Laches Defense

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In SCA Hygiene Products Aktiebolag et al. v. Quality Baby Products, LLC, et al., No. 15-927, 580 U.S. ___ (2017), the Supreme Court held that the defense of laches is not appropriate when suit is brought within the six year limitations period for patent infringement.
Laches is an equitable doctrine used to limit the recoverability of damages when a suit is filed after unreasonable delay.  In patent law, damages are already limited by a “statute of limitations” set forth in 35 U.S.C. § 286, which limits damages to only cover infringement that occurred within the six year period prior to the filing of the complaint. Contrary to typical limitations periods, the limitations period of 35 U.S.C. § 286 is counted backward from the filing of a complaint, not forward from the time of infringement.  However, this existing limitation on damages weighed heavily in the Court’s ruling.  The Court found that a laches defense would override the statutory damages period set forth by Congress.
The highly-anticipated ruling mirrored that of Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. ___ (2014), which addressed the defense of laches in copyright law.  On its face, the ruling looks to be favorable for patent owners by eliminating a defense in infringement proceedings and allowing plaintiffs to bring suit at a time of their choosing, which will likely be after a favorable six years of damages have accrued.