STANDING FOR A SUBSTITUTED PARTY IS NOT A CROCK
| April 26, 2021
MOJAVE DESERT HOLDINGS, LLC, v. CROCS, INC.
Decided February 11, 2021
NEWMAN, DYK, and O’MALLEY (Opinion by Dyk)
This precedential decision further clarifies that article III standing exists for a successor in interest. Article III standing had also been an issue in another recent decision from the CAFC in General Electric Company v. Raytheon Technologies Corporation decided on December 23, 2020 as reported by Miki Motohashi. The issue arises in the present case due to a change in the real party in interest while an appeal was pending in an inter partes reexamination.
The following timeline illustrates how this issue arose.
August 6, 2012 – Crocs sued U.S.A. Dawgs, Inc. for patent infringement of U.S. Design No. D517,789. Many should be familiar with this design:
August 24, 2012 – U.S.A. Dawgs filed a third-party request for inter partes reexamination.
November 19, 2012 – The USPTO orders reexamination. The district court stays the infringement proceedings in light of the reexamination.
2012 – 2018 – Reexamination proceeds with an anticipation rejection under 35 U.S.C. 102(b), which is appealed by Crocs.
January 31, 2018 – U.S.A. Dawgs files for Chapter 11 bankruptcy.
July 20, 2018 – The bankruptcy court approves the sale of all of U.S.A. Dawgs’s assets to Dawgs Holdings. The bankruptcy court stated that the sale was not free and clear of any claims Crocs may hold for patent infringement post-closing date.
August 15, 2018 – Dawgs Holdings assigns all rights, including explicitly the claims asserted by U.S.A. Dawgs in the infringement action and the inter partes reexamination, to Mojave Desert Holdings.
October 23, 2018 – U.S.A. Dawgs dissolves but continues to exist for limited purposes including “prosecuting and defending suits.”
July 18, 2019 – Mojave files a petition with the Board to change the real party in interest from U.S.A. Dawgs to Mojave.
August 19, 2019 – The Board dismisses and expunges the petition based on three reasons: (1) the initial transfer of assets from U.S.A. Dawgs to U.S.A. Dawgs Holdings appears to be silent about rights to the reexamination, (2) based on its interpretation of the transfer of assets, Mojave was not a party to the reexamination and did not have standing to update the real party in interest[1], and (3) Mojave did not file its submission within 20 days of any change of the real party-in-interest as required by 37 C.F.R. § 41.8(a), making it untimely.
September 10, 2019 – The Board reverses the Examiner’s rejection; U.S.A. Dawgs appeals to the CAFC sometime after.
December 13, 2019 – U.S.A. Dawgs and Mojave file a motion to substitute (under Federal Rule of Appellate Procedure 43(b)).
The CAFC addresses the motion to substitute in its decision. Although Crocs asserts that the motion should be denied for several reasons, the CAFC disagrees. The decision addresses why five different reasons for denial fail.
I. Crocs asserts the bankruptcy sale did not transfer U.S.A. Dawgs interest as a requester to Dawgs Holdings. This argument fails because the assignment was comprehensive in transferring all the “right, title and interest in, to and under all of the assets, properties and rights of every kind and nature, whether real, personal or mixed, tangible or intangible …”. Crocs had argued that this case was like Agilent Technologies, Inc. v. Waters Technology Corp., 811 F.3d 1326 (Fed. Cir. 2016). In Agilent, however, “substantially all” of the assets were transferred such that it was unclear whether Agilent was the successor in interest, unlike the present case which clearly conveyed all.
II. Crocs asserts that the substitution was not timely in that Mojave did not seek substitution for almost a year after it acquired the interest, well beyond the 20 days required by 37 C.F.R. § 41.8(a). In addressing this issue, the CAFC did not read 37 C.F.R. § 41.8(a) as permitting the Board to ignore a transfer of interest, pointing out that the rule is intended to detect conflicts of interest and to enable enforcement of estoppel provisions. The CAFC also pointed out that the rule is not directly related to substitution where in federal courts there is no time limit for a party moving for substitution. In addition, the CAFC pointed out that the Board has permitted parties to continue appeals after a change in the real party-in-interest despite the parties not filing the notices. Thus, the Board erred by not substituting Mojave as the third-party requester while the inter partes reexamination was pending before the Board.
III. Crocs argues that the interest of a requester cannot be assigned under 35 U.S.C § 141. The CAFC pointed out that it has previously concluded that “mere privies” cannot appeal a reexamination due to lacking a cause of action. Furthermore, the CAFC had observed in Agilent that “[w]hile the language of the statute does not explicitly forbid a change in the identity of the third-party requester over the course of the proceeding or on appeal, … it similarly does not appear to address whether and under what circumstances a change of the identity of the third-party requester can occur.” The CAFC noted two lines of Supreme Court cases related to assigning causes of action. Both lines of cases rely on a policy against separating the right to exclude from the right to sue for infringement. Notably, the CAFC states:
But we are aware of no case that suggests that a federal claim is lost when it is transferred together with the assignor’s entire business. Where, as here, the requester’s right has been transferred together with all other assets, there is no reason that the requester’s right to challenge the Board’s decision cannot be effectively transferred. To refuse to recognize such a transfer where the other assets remain subject to infringement liability would create a situation in which the assets remained potentially liable for infringement, but the transferee would have lost the right to challenge patent validity.
Thus, the requester’s right (including its right to appeal) may be transferred at least when it occurs as part of the transfer of the requester’s entire business or assets.
The CAFC also noted that Vaillancourt v. Becton Dickenson & Co., 749 F.3d 1368 (Fed. Cir. 2014) is not contrary. In that case, the inventor had assigned his rights to a company while an inter partes reexamination was pending and before a decision on appeal. When the Board affirmed the examiner’s rejection, the individual could not appeal as the assignee was indisputably the owner when the individual had filed the appeal.
IV. Crocs argues that Mojave lacks standing because it does not face a potential suit for infringement. The CAFC pointed out that Article III of the Constitution limits judicial power to cases and controversies. Standing has three elements of injury in fact, causation and redressability, and these requirements apply on appeal, and with equal force to appeals from administrative agencies to the federal courts.
To establish an Article III injury on appeal from an inter partes reexamination, we have previously held that it is sufficient for an appellant to show that it has engaged in “activity that would give rise to a possible infringement suit.”
The sale agreement specifically provided that the transferred assets were not free and clear of any claims made by Crocs, so that the acquired assets face potential patent infringement claims, and Mojave could also face potential infringement liability because of activities after the bankruptcy sale. In addition, Mojave’s injury is traceable to the challenged patent and would be redressed by a favorable ruling by the CAFC reversing the patentability of the patent, meeting all elements of standing. In a footnote, the CAFC also noted that Mojave may also suffer an Article III injury as a result of false advertising counterclaims.
V. Lastly, Crocs argues that Mojave failed to file a notice of appeal from the Board’s decision. Mojave could not file a notice of appeal because it had not been added as a party. Under Nevada law, however, U.S.A. Dawgs had retained the ability to file a protective notice of appeal which was sufficient to confer jurisdiction to the CAFC.
Since the CAFC held that Mojave is the successor-in-interest, it has standing, and the Board had erred in not substituting Mojave as the third-party requester. Furthermore, the CAFC thought that there is no useful purpose served by remanding such that the appropriate course is to proceed with granting the motion to substitute while also updating the official caption of the decision to reflect Mojave.
Takeaways
Standing to continue as a successor-in-interest is established if it is clear all assets are transferred (a federal claim is not lost when it is transferred together with the assignor’s entire business).
Notice of a change in a real party in interest under 37 C.F.R. 41.8(a) differs from a motion to substitute under Federal Rule of Appellate Procedure 43(b) in that the former has a time limit (20 days) whereas the latter does not have a time limit. There is no apparent penalty for failure to comply with 37 C.F.R. 41.8(a) although this section is entitled “Mandatory notices.”
[1] For patent owners, an assignment is recorded to show that a party is the real party in interest. In this case, since Mojave was not a patent owner but instead a third-party requester.
Who has Standing to Appeal of IPR Decision? And What is Teaching Away?
| April 21, 2021
General Electric Company v. Raytheon Technologies Corporation, No. 2019-1319.
Decided on December 23, 2020
Before Lourie, Reyna and Hughes (Opinion by Hughes).
Summary
Raytheon had ’920 patent which was related to a gas turbine engine. GE filed IPR and PTAB reviewed the claim and found the patent is non-obvious. GE filed a request for rehearing challenging the PTAB’s application of the legal standard for both teaching away and motivation to combine. The PTAB denied the request for rehearing and GE appealed to the CAFC. Raytheon claimed that GE does not have standing to appeal because GE did not have the injury in fact. At the appeal, GE showed a concrete business plan as evidence of injury in fact, and the CAFC found that GE has a substantial risk of future infringement and has standing. Then, the CAFC reviewed the PTAB’s decision on obviousness issue. Upon review, the CAFC found that the PTAB correctly set forth the standard for teaching away, however, applied it erroneously. The CAFC also found that the PTAB lacked substantial evidence for its conclusion that GE did not establish a motivation to combine the prior arts. Therefore, the CAFC vacated the PTAB’s decision and remanded the case to the PTAB.
Details
Background
Raytheon Technologies Corporation (“Raytheon”[1]) filed US Patent No.8,695,920 (“’920 patent”) in 2011 and the patent was issued in April 2014.
In December 2016, General Electric Company (“GE”), a competitor of Raytheon in the industry of commercial aviation, petitioned to the Patent Trial and Appeal Board (“PTAB”) for reviewing the 920 patent’s claims 1-4, 7-14, and 19. GE explained that the claims were obvious based on two prior art references, Wendus and Moxon.
Before the IPR institution Raytheon disclaimed claims 1-4, 7, 8, 17, and 19. The PTAB reviewed only claims 9 -14. After the IPR institution, Raytheon disclaimed 9 and the PTAB only ruled on claims 10-14.
The disputed claims 10-14 were depended on independent claim 9.
9. A method of designing a gas turbine engine comprising:
providing a core nacelle defined about an engine centerline axis;
providing a fan nacelle mounted at least partially around said core nacelle to define a fan bypass flow path for a fan bypass air-flow;
providing a gear train within said core nacelle;
providing a first spool along said engine centerline axis within said core nacelle to
drive said gear train, said first spool includes a first turbine section including be-tween three–six (3–6) stages, and a first compressor section;
providing a second spool along said engine centerline axis within said core nacelle, said second spool includes a second turbine section including at least two (2) stages and a second compressor section;
providing a fan including a plurality of fan blades to be driven through the gear train by the first spool, wherein the bypass flow path is configured to provide a bypass ratio of airflow through the bypass flow path di-vided by airflow through the core nacelle that is greater than about six (6) during engine operation.
10. The method as recited in claim 9, wherein said first turbine section defines a pressure ratio that is greater than about five (5.0).
11. The method as recited in claim 10, wherein a fan pressure ratio across the plurality of fan blades is less than about 1.45.
12. The method as recited in claim 11, wherein the gear train is configured to provide a speed reduction ratio greater than about 2.5:1.
13. The method as recited in claim 12, wherein the plurality of fan blades are configured to rotate at a fan tip speed of less than about 1150 feet/second during engine operation.
14. The method as recited in claim 13, wherein the second turbine section includes two (2) stages.
The PTAB concluded that Wendus taught away from combination with Moxon and GE did not establish the obviousness of claim 10 when considered as a whole. Therefore, the PTAB found claims 10-14 are nonobvious. GE filed a request for rehearing challenging the PTAB’s application of the legal standard for both teaching away and motivation to combine. The PTAB denied the request for rehearing and GE timely appealed to the Federal Circuit (“CAFC”).
Standing
Raytheon moved to dismiss this appeal for lack of standing because GE has never “sued or threatened to sue” for infringing the ’920 patent. Raytheon also mentioned that GE “had never alleged that an engine exists that presents a concrete and substantial risk of infringing the ’920 patent,”
In JTEKT[2], the CAFC found that when the appellant does not currently engage in infringing activity and “relies on potential infringement liability as a basis for injury in fact”, the appellant must show that “it has concrete plans for future activity that creates a substantial risk of future infringement or would likely cause the patentee to assert a claim of infringement.”
In prior lawsuit between the same parties GE v. UTC[3], GE failed to show the evidence. However, the CAFC shows some guideline of what kind of evidence do we need to have a standing to appeal IPR decision to CAFC. GE responds that it has alleged facts that show it “is currently undertaking activities” likely to lead Raytheon to sue it for infringement.
Here, GE has shown concrete plans for future activities:
- GE spent $10–12 million in 2019 developing a geared turbofan architecture and design;
- GE intends to keep developing its geared turbofan engine design;
- The design is GE’s technologically preferred design for the next-generation narrow body market;
- GE has offered this preferred geared turbofan design to Airbus;
- GE has also established that such a sale would raise a substantial risk of an infringement suit; and
- GE believes its preferred design raises a substantial risk of infringement.
GE explicitly stated that “this preferred geared turbofan design includes a gear train driven by the low-pressure spool and a two-stage high-pressure turbine.” The CAFC found that this GE’s declaration “plausibly establish that its preferred next-generation engine design substantially risks infringing the ’920 patent.” With these concrete plans, the CAFC found that GE has shown concrete plans raising a substantial risk of future infringement.
Obviousness
The CAFC reviewed the PTAB’s decision on Obviousness. The patent at issue is related to “turbofan gas turbine engines used to propel commercial airliners.” Typically, a turbofan engine has four main components, (1) the fan, (2) compressor, (3) combustor, and (4) turbine[4]. In a turbofan engine, there are two ways airflow, “bypass flow” and “core flow.” The bypass ratio is a ratio of bypass flow to core flow and it was known that a “higher bypass ratio increases fuel efficiency.”
In the industry, the high-pressure compressor and high-pressure turbine are referred to as the “high spool” and the low-pressure compressor and low-pressure turbine are referred to as the “low spool.” Ordinary, “direct-drive” turbofan engine has a low spool and all connected to the same shaft and rotate at the same speed. On the other hand, a high bypass ratio (fuel-efficient) turbofan, the difference of the diameter of the fan and the engine creates the difference of the rotational speed and the rotational speed is ideal compared to the low-pressure turbine.
Contrary to the ordinary “low spool” turbofan, Raytheon’s patent was a “‘geared’ turbofan which uses a gearbox mounted between the low-pressure compressor and the fan to reduce the rotational speed of the fan compared to the” low spool turbine. When the gearbox is used, “the fan to rotate more slowly than the rest of the low spool.” Therefore, each part can rotate at an optimal speed and create many benefits. Such as reducing engine fuel consumption, improving aerodynamic efficiency with less costly design, reducing the mechanical stress on the fan and improving safety, reducing torque on the low spool shaft and allowing to design smaller diameter shaft, and reducing engine noise.
During the IPR, GE explained that “Wendus discloses all elements of claims 9–14 except that it teaches a one-stage high-pressure turbine instead of the “at-least-two-stage” high-pressure turbine taught in claim 9 and narrowed to two stages in claim 14” and “Moxon concludes that because of increased performance demands on the high-pressure turbine required to improve fuel efficiency, “a move to one instead of two high pressure turbine stages is thought unlikely, although designs have been carried out and demonstrations have been run.”
However, the PTAB found that Wendus taught away from combination with Moxon “despite the PTAB’s prior findings of the benefits of the two-stage high-pressure turbine” and concluded “GE did “not establish the obviousness of claim 10 when considered as a whole.” Therefore, the PTAB found claims 10-14 are nonobvious.
Therefore, GE pointed the errors of the Board’s decision on three issues before the CAFC. As to the first issue, teaching away, GE asserted that “the PTAB errored by misreading Wendus to find that it disparages or discourages the use of a two-stage high pressure turbine, and therefore erred in finding that Wendus taught away from a two-stage high-pressure turbine.” For the second issue, artisan’s motivation to combine references, GE also argues that the PTAB “applied an overly rigorous requirement for motivation to combine the Wendus and Moxon references.” Lastly, GE argues that the PTAB also erred by requiring GE to show that an artisan would be motivated to retain the claimed performance parameters taught in Wendus in combining Wendus and Moxon.
Raytheon counter-argued that the CAFC must affirm the PTAB’s decision if there is substantial evidence of “(1) Wendus teaches away from modifying its advanced engine to add a two-stage high-pressure turbine; (2) no matter if Wendus teaches away, Wendus discloses a strong preference for a one-stage high-pressure turbine, undermining GE’s motivation-to-combine arguments; or (3) GE failed to establish a motivation for modifying the Wendus advanced engine to achieve the invention of claim 10, ‘as a whole.’”
CAFC stated that the PTAB correctly set forth the standard for teaching away.
“[a] reference does not teach away ‘if it merely expresses a general preference for an alternative invention but does not “criticize, discredit, or otherwise discourage” investigation into the invention claimed.’”
The PTAB found that criticism of the use of a two-stage high-pressure turbine in the prior art suggests a general preference for a one-stage high-pressure turbine.
By referencing Table 16 of Wendus[5], the PTAB concluded that “Wendus discourages the useof a two-stage high-pressure turbine rather than merely suggesting a general preference for a one-stage high-pressure turbine because…A person of ordinary skill in the art would have known that modifying the Wendus [advanced] engine to include a two-stage turbine would have increased the weight and cost of the engine which Wendus criticizes, discredits, or otherwise discourages.”
However, the CAFC found that the PTAB misleads Table 16 in the full context of Wendus because “Wendus itself only weakly supports that a one-stage high-pressure turbine has weight and cost advantages over a two-stage high pressure turbine.” Also, the CAFC mentioned that “Wendus itself does not criticize the use of a two-stage turbine for weight or cost reasons” and “Wendus references neither efficiency nor number of parts in comparison to any other high-pressure turbine design.”
The CAFC also explained that “even if an artisan recognized that a one-stage turbine would have led to reduced engine weight and lower engine cost than a two-stage turbine, Wendus is hardly consistent in indicating that weight and cost concerns alone mandate the correct design choices of an improved engine, compared to other factors like fuel efficiency or reliability.”
“Wendus ‘expressly weigh[ed] the tradeoffs [between a one-stage and two-stage turbine] and cho[se] the one-stage option’ cannot withstand scrutiny.” Therefore, the CAFC conclude that “Wendus does not criticize, credit, or discourage the use of a two-stage high-pressure turbine” and there is no substantial evidence to support the PTAB’s conclusion of teaching away.
Secondly, the CAFC concluded that the PTAB lacks substantial evidence for its conclusion that GE did not establish a motivation to combine Wendus and Moxon. By referring the PharmaStem Therapeutics[6], the CAFC confirmed the standard of obviousness is that “a person of ordinary skill in the art would have had reason to attempt to make the composition or device, or carry out the claimed process, and would have had a reasonable expectation of success in doing so.”
The CAFC found that the PTAB again misread Wendus and applied “its faulty findings that Wendus described ‘the one-stage turbine as a critical and enabling technology providing significant advantages over a prior art engine having a two-stage turbine,’ and that ‘other [Wendus] engine components [being] specifically designed to accommodate the [one-stage] turbine[7].”
Finally, the CAFC concluded that the PTAB’s holding that GE did not establish the obviousness of claim 10 “as a whole” lacks substantial evidence. The CAFC pointed that “Wendus meets all the elements of claim 10 except for the two-stage high-pressure turbine, which Moxon discloses” and “GE does not merely identify each claim element as present in Wendus and Moxon. Instead, GE’s obviousness theory combines the elements disclosed in Wendus’s advanced engine with Moxon’s teaching of a two-stage high-pressure turbine to attain better turbine reliability and efficiency.”
Therefore, the CAFC vacated the PTAB’s decision and remand the case to the PTAB.
Takeaway
- As to the standing requirement “injury in fact”, this case shows what degree the appellee needs to prove the concrete plans in the future and what type of evidence is appropriate. 35 U.S.C §319 states that “Any party to the inter partes review shall have the right to be a party to the appeal.” The law did not specifically state the minimum standing requirement to appeal of IPR decision.
- An appellant’s declaration that it believes the preferred design raises a substantial risk of infringement is also plausible only if the declaration was supported by the other evidence.
- When determining the obviousness by teaching away from the prior art references, the meaning must be interpreted by the entire reference, not the partial words in the reference.
- Teaching away argument needs “criticize” more than “preference.”
[1] During the appeal, Raytheon was known as United Technologies Corporation.
[2] JTEKT Corp. v. GKN Auto. LTD., 898 F.3d 1217, 1221 (Fed. Cir. 2018), cert. denied, 139 S. Ct. 2713 (2019).
[3] Gen. Elec. Co. v. United Techs. Corp., 928 F.3d 1349 (Fed. Cir. 2019).
[4] The compressor pressurized the air come into the core flow. Then, the combustor mixed the compressed air and fuel and ignite and generates hot gas. The hot gas expands in the turbine and create power to rotate the blades in turbine.
[5] Wendus, See page 52 of https://ntrs.nasa.gov/api/citations/20030067946/downloads/20030067946.pdf
[6] PharmaStem Therapeutics, Inc. v. ViaCell, Inc., 491 F.3d 1342, 1360 (Fed. Cir. 2007).
[7] Final Written Decision at *13 (citations omitted).
Broad functional limitations in claims “raise the bar for enablement”
| April 13, 2021
Amgen Inc. v. Sanofi
February 11, 2021
Before Prost, Lourie, and Hughes (Opinion by Lourie).
Summary
The Federal Circuit invalidates genus claims with functional limitations for lacking enablement. The Federal Circuit focuses the enablement analysis on the broad scope of structures covered by the claims and the lack of guidance in the specification on how to identify those structures that exhibit the claimed functionalities.
Details
Low-density lipoprotein (LDL) cholesterol is often called the “bad” cholesterol. An elevated LDL level leads to fatty buildups (or plaques) in arteries and contributes to heart disease. LDL receptors remove LDL cholesterol from the bloodstream and regulates the amount of LDL cholesterol in circulation.
The proprotein convertase subtilisin/kexin type 9 (PCSK9) enzyme has for years been an important cholesterol-lowering target. The PCSK9 enzyme degrades LDL receptors and can interfere with the regulation of circulating LDL cholesterol levels. It has been found that loss-of-function mutations in the PCSK9 enzyme lead to higher levels of the LDL receptor, lower circulating LDL cholesterol levels, and protection from heart disease.
U.S. Patent Nos. 8,829,165 and 8,859,741, owned by Amgen Inc., relate to antibodies that bind to and block PCSK9 to inhibit PCSK9-LDL receptor interactions.
The relevant claims in the 165 and 741 are all directed to an antibody, and all define the antibody in terms of two specific functions: first, the antibody “binds to” a combination of amino acid residues on the PCSK9 protein, and second, the antibody “blocks” binding of PCSK9 to LDL receptor.
For example, independent claim 1 of the 165 patent recites:
1. An isolated monoclonal antibody, wherein, when bound to PCSK9, the monoclonal antibody binds to at least one of the following residues: S153, I154, P155, R194, D238, A239, I369, S372, D374, C375, T377, C378, F379, V380, or S381 of SEQ ID NO:3, and wherein the monoclonal antibody blocks binding of PCSK9 to LDLR.
Independent claim 29 of the 165 patent specifically requires that the antibody blocks the binding of PCSK9 to LDL receptor by at least 80%.
Independent claim 1 of the 741 patent recites:
1. An isolated monoclonal antibody that binds to PCSK9, wherein the isolated monoclonal antibody binds an epitope on PCSK9 comprising at least one of residues 237 or 238 of SEQ ID NO: 3, and wherein the monoclonal antibody blocks binding of PCSK9 to LDLR.
The 165 and 741 patents share a common written description. The specifications disclose 26 specific antibodies, including their production, screening, and amino acid sequences. For only 2 of those antibodies, the specifications disclose the 3D structures showing the binding of the antibodies to specific PCSK9 residues. The examples test the binding of only 3 antibodies to PCSK9.
Another one of Amgen’s patents, not at issue in this case, claims Repatha®, which is a PCSK9 inhibitor that Amgen currently markets as a prescription injection therapy for treating adults with high cholesterol. Amgen used to sell Repatha® for $14,520, but to stay “competitive” with other drug makers’ PCSK9 inhibitors, Amgen lowered the price tag to $5,850 in 2020. Amgen still made nearly $900 million from Repatha® in 2020.
Repatha® is exemplified in the 165 and 741 patents, but not claimed. And whereas Amgen’s Repatha patent claims the amino acid sequence of the antibody, the 165 and 741 patents at issue in this case do not define the antibodies in terms of their amino acid sequences. Rather, the 165 and 741 patent claims use functional language to recite an entire genus of antibodies that bind to specific amino acid residues on PCSK9 and block PCSK9 from binding to LDL receptors.
The use of functional limitations is central to the Federal Circuit’s affirmance of the district court’s determination that the 165 and 741 patent claims lack enablement.
The Federal Circuit begins with the usual reiteration of the Wands factor for evaluating enablement:
- the quantity of experimentation necessary;
- the amount of direction or guidance presented;
- the presence or absence of working examples;
- the nature of the invention;
- the state of the prior art;
- the relative skill of those in the art;
- the predictability or unpredictability of the art; and
- the breadth of the claims.
The Federal Circuit then compares the facts of the case to several precedents:
- Wyeth & Cordis Corp. v. Abbott Laboratories, 720 F.3d 1380 (Fed. Cir. 2013);
- Enzo Life Sciences, Inc. v. Roche Molecular Systems, Inc., 928 F.3d 1340 (Fed. Cir. 2019); and
- Idenix Pharmaceuticals LLC v. Gilead Sciences Inc., 941 F.3d 1149 (Fed. Cir. 2019).
In each of those precedents, the claims required both a particular structure and functionality. And in each case, the Federal Circuit found that the claims were not enabled, because the large number of embodiments within the scope of the claims and the specification’s lack of guidance on the structure/function correlation would have required undue experimentation to determine which embodiments would exhibit the required functionality.
None of these precedents are favorable to Amgen. The precedents, together with Sanofi’s argument that the binding limitation in Amgen’s claims alone encompasses “millions” of antibodies, effectively focuses the Federal Circuit’s attention on the breadth of Amgen’s patent claims:
While functional claim limitations are not necessarily precluded in claims that meet the enablement requirement, such limitations pose high hurdles in fulfilling the enablement requirements for claims with broad functional language…
Turning to the specific Wands factors, we agree with the district court that the scope of the claims is broad. While in and of itself this does not close the analysis, the district court properly considered that these claims were indisputably broad… However, we are not concerned simply with the number of embodiments but also with their functional breadth. Regardless of the exact number of embodiments, it is clear that the claims are far broader in functional diversity than the disclosed examples. If the genus is analogized to a plot of land, the disclosed species and guidance “only abide in a corner of the genus.” Further, the use of broad functional claim limitations raises the bar for enablement, a bar that the district court found was not met.
Amgen argues that the specifications provide “roadmap” for making the claimed antibodies, but the problem, as the Federal Circuit sees it, is that even after the antibodies are made, identifying those specific antibodies that exhibit the claimed functionalities of binding and blocking PCSK9 is only possible through laborious “trial and error” requiring “substantial time and effort”.
Amgen is not helped by seemingly undisputed expert testimony on the unpredictability of the art. There appears to be agreement between the two sides’ experts that a small modification in an antibody’s sequence can result in big changes in structure and functions. Further, there is evidence that translating an antibody’s amino acid sequence into a known 3D structure is still not possible, so that it is difficult to visualize and evaluate the binding of an antibody to PCSK9. As the Federal Circuit articulates, “the enablement inquiry for claims that include functional requirements can be particularly focused on the breadth of those requirements, especially where predictability and guidance fall short.”
There are some interesting observations.
First, while the patents at issue clearly claim a biotech invention, the Federal Circuit’s decision cites frequently to McRO, Inc. v. Bandai Namco Games Am. Inc., 959 F.3d 1091 (Fed. Cir. 2020)—a computer case—for its discussion on the enablement of a claimed range. However, in McRO, the Federal Circuit did not even address the question of whether the disputed claims were enabled. The Federal Circuit held only that the enablement analysis required first delineating the precise scope of the claimed invention, and having failed to make that delineation, the district court’s summary determination of non-enablement must be vacated.
Second, at first glance, the Federal Circuit appears to have articulated a “heightened” standard of enablement for claims reciting functional limitations. But really, the “heightened” bar seems to be no more than a proposition that the broader the claim, the more guidance the specification may need to provide to satisfy the enablement requirement.
Third, during prosecution of the 165 patent, the Examiner rejected the claims as lacking enablement. However, Amgen overcame the rejection by arguing, without any Rule 132 declarations, that “various antibodies” and “crystal structures” provided in the specification explained how antibodies bound to PCSK9 to achieve the claimed functionalities.
Takeaway
- The use of functional limitations, while desirable for imparting breadth to a claim, remains rife with pitfalls. For certain types of claims, such as claims directed to biologics, functional limitations are almost unavoidable because claiming the invention strictly in structural terms would be unduly narrow. For those claims, details in the specification are especially important.
- Where a claim requires both a particular structure and functionality, the specification should preferably describe some correlation between the structure and the claimed functionality.
- Where a claim recites a broad genus of structures for achieving a specific function, it is important for the specification to exemplify more than one species within that genus. Ideally the specification should also describe structural characteristics common to the species of the genus.
THE PTAB’S IPR INSTITUTION DECISION IS FINAL AND NONAPPEALABLE
| April 6, 2021
CyWee Group LTD. v. Google LLC
Summary:
CyWee appealed the PTAB’s final decision on three grounds. First, CyWee argued that the PTAB erred in concluding that Google disclosed all real parties in interest. However, the CAFC noted that the CAFC is precluded from reviewing this challenge because the PTAB’s determination on this issue is final and nonappealable. Second, CyWee argued that the CAFC should terminate and dismiss the IPR proceedings because the APJs were appointed in violation of the Appointments Clause. The CAFC rejected this challenge because the APJs were constitutionally appointed as of the date that the Arthrex decision was issued. Finally, a prior cited by Google (Bachmann) is not an analogous art. However, the CAFC held that Bachmann is reasonably pertinent to the particular problem with which the inventor is involved, and that this reference does not have to be reasonably pertinent to every problem facing a field to be analogous prior art. Therefore, the CAFC affirmed that the PTAB’s determination that the challenged claims would have been obvious in view of Bachmann.
Details:
Google LLC (“Google”) petitioned for IPR of claims 1 and 3-5 of U.S. Patent No. 8,441,438 and claims 10 and 12 of U.S. Patent No. 8,552,978, asserting that those claims are unpatentable as obvious in view of U.S. Patent No. 7,089,148 (“Bachmann”).
The PTAB instituted IPR and found that those claims would have been obvious. CyWee appeals.
CyWee’s first argument
CyWee argues that the PTAB erred in concluding that Google disclosed all real parties in interest, as required by 35 U.S.C. §312(a)(2)[1].
The CAFC found that the CAFC is precluded from reviewing this challenge because the PTAB’s determination on this issue is final and nonappealable under 35 U.S.C. §314(d)[2] because this issue “raises an ordinary dispute about the application of an institution-related statute.”
CyWee argued that CyWee attempts to challenge the PTAB’s denial of CyWee’s post-institution motion to terminate the proceedings in view of newly found evidence.
However, the CAFC found that CyWee’s request is nothing more than a request for the PTAB to reconsider its institution decision, which is final and nonappealable.
CyWee’s second argument
CyWee argues that the CAFC should terminate and dismiss the IPR proceedings because the APJs were appointed in violation of the Appointments Clause.
However, the CAFC rejected this challenge because the APJs were constitutionally appointed as of the date that the Arthrex decision[3] was issued, and because the Arthrex decision was issued before the final decisions in this case. Therefore, the CAFC found that those final decisions were rendered by constitutional panels.
CyWee’s third argument
CyWee argues that Bachmann is not an analogous art.
However, the CAFC found that the PTAB’s conclusion is supported by substantial evidence because the PTAB determined that (1) “improving error compensation with an enhanced comparison method” was of “central importance” to the inventors, and that (2) Bachmann was reasonably pertinent to this problem because Bachmann “illustrates collection of data from the same kinds of sensors” and “correct[s] for the same kinds of errors that were of concern to the inventor[s].”
Therefore, the CAFC found that Bachmann is reasonably pertinent to the particular problem with which the inventor is involved.
Furthermore, the CAFC noted that a reference need not be reasonably pertinent to every problem facing a field to be analogous prior art, but rather need only be “reasonably pertinent to one or more of the particular problems to which the claimed inventions relate.” Donner Tech., LLC v. Pro Stage Gear, LLC, 979 F.3d 1353, 1361 (Fed. Cir. 2020).
Finally, the CAFC noted that “a reference can be analogous art with respect to a patent even if there are significant differences between the two references.” Donner, 979 F.3d at 1361.
Takeaway:
- The PTAB’s decision on whether to institute an IPR proceeding is final and nonappealable.
- The Supreme Court heard the oral argument in the Arthrex case on March 1, 2021. Two questions before the Court are (1) whether APJs are properly appointed, and (2) if they are not properly appointed, whether removing employment protections corrects the defect.
- A reference need not be reasonably pertinent to every problem facing a field to be analogous prior art, but rather need only be “reasonably pertinent to one or more of the particular problems to which the claimed inventions relate.” A reference can be analogous art with respect to a patent even if there are significant differences between the two references.
[1] 35 U.S. Code § 312 – Petitions
(a) Requirements of Petition. – A petition filed under section 311 may be considered only if –
(2) the petition identifies all real parties in interest;
[2] 35 U.S. Code § 314 – Institution of inter partes review
(d) No Appeal. – The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.
[3] Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019): “The APJs were actually “principal officers” under the Appointments Clause, and that the APJ appointment provisions of the AIA creating the PTAB were unconstitutional because the APJs were not appointed by the President and confirmed by the Senate, as is required for “principal officers.””
Tags: administrative patent judge > Analogous Art > appointment clause > inter partes review > real party in interest
