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Scattered Disclosures May Not Lead to Inference of Fraud in FCA Claim

by | Feb 1, 2024 |

The US Court of Appeals for the Ninth Circuit denied a petition for panel rehearing and rehearing en banc and issued an amended opinion that reversed a district court’s decision regarding the False Claims Act’s (FCA) public disclosure bar. Silbersher v. Valeant Pharm. Int’l, Inc., Case No. 20-16176 (9th Cir. Aug. 3, 2023; amended Jan. 5, 2024) (Schroeder, Sanchez, Antoon, JJ.)

The FCA imposes civil liability on those who knowingly present a fraudulent claim for payment to the federal government and allows “relators” to bring fraud claims on behalf of the government.

Valeant owns a set of patents that cover a delayed-release formula for a medication prescribed to treat ulcerative colitis. In 2015, a generic drug manufacturer, GeneriCo, challenged one of Valeant’s patents in an inter partes review (IPR) proceeding. Ultimately, the Patent Trial & Appeal Board found Valeant’s patent unpatentable based on two articles co-authored by Valeant’s head of research.

Silbersher was GeneriCo’s lawyer in the IPR proceeding. He discovered that three years before applying for the challenged patent, Valeant had applied for another patent that disclosed the exact opposite of what Valeant would claim in the challenged patent. Silbersher brought an FCA action alleging that Valeant failed to disclose this information in the IPR proceeding. In response, Valeant argued that the public disclosure bar applied. The district court decided that an IPR qualified as an “other Federal hearing” under channel (ii) of the public disclosure bar and dismissed Silbersher’s action. Silbersher appealed.

On appeal, the Ninth Circuit reversed the district court. Valeant filed a petition for panel rehearing and rehearing en banc. The Court issued an amended decision that refocused on its analysis under its 2016 decision in Mateski v. Raytheon. Under Mateski, the public disclosure bar applies when “the disclosure at issue occurred through one of the channels specified in the statute; the disclosure was ‘public;’ and the relator’s actions are ‘based upon’ the allegations or transactions publicly disclosed.”

The Ninth Circuit discussed whether Valeant’s disclosures revealed “substantially the same allegations or transactions” as Silbersher’s qui tam action. As discussed in the original decision, this was a first for this court, which had not yet “interpreted substantially the same prong of the public disclosure bar” under the 2010 Congress amendments. Mateski explained that to disclose a public fraudulent transaction according to the formulation X+Y=Z (where Z is the fraud allegation and X and Y are the essential elements), “the combination of X and Y must be revealed from which readers or listeners may infer Z, the conclusion that fraud has been committed.”

The Ninth Circuit then applied the Mateski framework to conclude that the qualifying public disclosures here did not collectively disclose a combination of facts sufficient to permit a reasonable inference of fraud. It explained that although “scattered disclosures when viewed together possibly reveal some of these true and misrepresented facts,” fraud could not reasonably be inferred from the combinations. Neither Valeant’s patent prosecutions nor disclosures revealed the critical information necessary to support [...]

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R&D Expenditures Need Only Relate to Subset of Domestic Industry Product

by | Feb 1, 2024 |

Addressing a decision by the US International Trade Commission finding a violation of Section 337 based on importation of certain TV products, the US Court of Appeals for the Federal Circuit agreed that the patent holder had established a domestic industry based on research and development (R&D) relating to only a subset of the domestic industry products. Roku, Inc. v. ITC, Case No. 22-1386 (Fed. Cir. Jan. 19, 2024) (Dyk, Hughes, Stoll, JJ.)

In 2020, Universal Electronics filed a complaint at the Commission seeking a Section 337 investigation of certain streaming devices, TVs, set top boxes and remote controls sold by Roku and others that allegedly infringed six of Universal Electronics’ patents. During the investigation, the administrative law judge (ALJ) granted Roku’s summary determination motion that Universal Electronics lacked ownership of one of the patents, but the Commission promptly reversed that decision. Prior to the hearing, Universal Electronics terminated the investigation as to the three other patents and all respondents other than Roku. The ALJ subsequently issued an initial determination finding infringement and domestic industry for all three patents but held that two of the patents were invalid. The Commission agreed and issued a limited exclusion order barring Roku’s importation. Roku appealed.

Roku raised three challenges to the Commission’s decision on appeal. Roku renewed its ownership argument, disputed the domestic industry finding, and contested the holding of nonobviousness. The Federal Circuit affirmed on all issues.

On ownership, the Federal Circuit faced the question of whether an inventor had executed an automatic assignment or merely a promise to assign. The Court noted that Roku only addressed a 2004 agreement cited by the ALJ and disregarded a later 2012 agreement relied on by the Commission where the inventor agreed to “hereby sell and assign” the patent.

The Federal Circuit rebuffed Roku’s argument that the domestic industry prong was not satisfied on the basis that Universal Electronics failed to allocate expenses to specific domestic industry products. Instead, the Court noted that Section 337 requires investment in the exploitation of the intellectual property and explained that the expenditures can relate to only a subset of a product if the patent only involves that subset.

Finally, regarding obviousness, the Federal Circuit noted that Roku’s arguments regarding secondary considerations ignored the Commission’s finding that the prior art combination failed to satisfy the key claim limitation. As to secondary considerations, the Court dismissed Roku’s lack of nexus argument by finding that it did not matter that the news articles showing a long-felt but unmet need also discussed features other than what was claimed by the patent.



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First Amendment Bowled Over by Lanham Act – Again

by | Jan 25, 2024 |

In response to the Supreme Court of the United States’ ruling in Jack Daniel’s, the US Court of Appeals for the Ninth Circuit reconsidered its 2022 decision in Punchbowl v. AJ Press and determined that Jack Daniel’s reset prior Ninth Circuit precedents regarding the interaction of First Amendment rights and the Lanham Act. The Ninth Circuit reversed its original decision and remanded the case to the district court to conduct a likelihood of confusion analysis under Lanham Act precedent. Punchbowl, Inc. v. AJ Press, LLC, Case No. 21-55881 (9th Cir. Jan. 12, 2024) (Owens, Bress, Fitzwater, JJ.)

The Ninth Circuit had previously held that despite use of the PUNCHBOWL trademark for a news service covering politics, AJ Press was not subject to liability under the Lanham Act. The PUNCHBOWL mark was registered by Punchbowl, Inc., a website specializing in online communications “with a focus on celebrations, holidays, events and memory making.” The Ninth Circuit’s original decision was based on the Court’s understanding of the Rogers test, which protected creative use of trademarks if the defendant could “make a threshold legal showing that its allegedly infringing use is part of an expressive work protected by the First Amendment.” This test was easily met if the artistic relevance of the trademark’s use was “above zero.” Shortly after the Ninth Circuit issued its initial decision, the Supreme Court granted certiorari in Jack Daniel’s Properties v. VIP Products, a case that addressed the same basic underlying precedent.

In its Jack Daniel’s decision, the Supreme Court held that the Rogers test exception to the Lanham Act did not apply when the expressive mark was used as a mark. The Supreme Court therefore drew a line between VIP’s use of “Bad Spaniels,” a direct play on “Jack Daniel’s” that was an expressive use of a mark as a mark, and use of a mark that was expressive but not used as a trademark. The Supreme Court’s ruling prompted the Ninth Circuit to reconsider its original decision in Punchbowl.

In its new decision, the Ninth Circuit, applying the rule of Jack Daniel’s, held that the Rogers test did not apply and that AJ Press’s use of the mark “Punchbowl” was not excepted from the Lanham Act as protected First Amendment expression. Rather, AJ Press’s use of “Punchbowl” was as a mark identifying its news service.

The Ninth Circuit stressed that this was not an automatic victory for Punchbowl, however. The Ninth Circuit instructed the district court on remand to proceed with a likelihood-of-confusion analysis test under the Lanham Act – an analysis that would consider many of the factors (such as the expressive nature of the trademark’s use) that had been relevant to the application of the Rogers test.



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Keep Calm and Party On: New Issue Prohibition Doesn’t Apply to Motions to Amend

by | Jan 25, 2024 |

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board obviousness determination, explaining that inter partes review (IPR) statutory provisions that prohibit an otherwise time-barred party from introducing new issues into the proceeding do not apply to motions to amend. CyWee Group Ltd. v. ZTE (USA), Inc. et al., Case No. 21-1855 (Fed. Cir. Jan. 18, 2024) (Prost, Hughes, Stoll JJ.)

CyWee owns a patent directed to a “three-dimensional (3D) pointing device capable of accurately outputting a deviation including yaw, pitch and roll angles in a 3D reference frame and preferably in an absolute manner.” ZTE filed a petition for IPR of the patent asserting that certain claims were unpatentable. The Board instituted the IPR. LG later filed an IPR petition challenging the patent and moved to join ZTE’s ongoing IPR, stating that it would “act as a passive ‘understudy’ and [would] not assume an active role unless [ZTE] ceases to participate in the instituted IPR.”

While LG’s motion was pending, CyWee moved to amend its patent claims, contingent on cancellation of the original claims. ZTE opposed the motion to amend. The Board gave preliminary guidance that the proposed claims lacked written description support and introduced new matter, and also that one of the proposed claims was invalid over the asserted prior art.

The Board granted LG’s motion to join ZTE’s IPR proceeding but placed restrictions on LG’s participation that required LG to consolidate filings with ZTE, rely on ZTE to take and defend depositions, refrain from requesting or reserving additional deposition or oral hearing time, and agree to other procedural concessions to minimize delay to the IPR proceeding.

After LG’s joinder, CyWee filed a revised motion to amend. ZTE indicated that it did not oppose the motion. LG, arguing that ZTE was no longer actively participating in the IPR, moved for leave to oppose CyWee’s motion to amend. Ultimately, the Board permitted LG to present argument and evidence independent from ZTE. LG filed an opposition arguing that CyWee’s proposed revised claims were obvious over Withanawasam, Bachmann and Bachmann2. Notably, ZTE had not cited Withanawasam in its opposition to CyWee’s initial motion to amend.

After the Board issued its final decision finding that the proposed revised claims were obvious over Withanawasam, Bachmann and Bachmann2, CyWee appealed.

CyWee argued that the Board erred by allowing LG to oppose CyWee’s motion to amend in a manner that violated the terms of LG’s joinder and by allowing LG to raise Withanawasam in opposition to the motion to amend. The Federal Circuit rejected both arguments. The Court explained that the Board concluded that although ZTE still participated in the IPR, the proceeding “no longer appear[ed] to be meaningfully adversarial” as to the revised motion to amend. The Court found no error in the Board’s conclusion that ZTE was no longer an active participant in the IPR proceeding, and thus there was no violation of the joinder terms.

The Federal Circuit also concluded that the Board did not err [...]

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Don’t Cut, Paste, Copyright: Bonding over Borrowed Words

by | Jan 25, 2024 |

The US Court of Appeals for the Seventh Circuit affirmed a district court’s award of attorneys’ fees and its determination that trivial additions to existing documents were not copyrightable. UIRC-GSA Holdings, LLC v. William Blair & Company, L.L.C., and Michael Kalt, Case Nos. 23-1527; -2566 (7th Cir. Jan. 12, 2024) (Brennan, Flaum, Kirsch. JJ.)

UIRC, a property management company overseeing leases for the US General Services Administration, sought copyright protection for two documents it produced related to a bond offering: a private placement memorandum (PPM) and an indenture of trust. UIRC did not create these documents from scratch but instead borrowed most of the language from the Idaho Housing and Finance Association. Nevertheless, UIRC secured copyright registrations by explicitly focusing on the “additional and revised text” it contributed, not the “standard legal language.”

While aiding UIRC in transactions utilizing its copyrighted documents, William Blair concurrently assisted a third party in a similar transaction. During that transaction, William Blair used UIRC’s copyrighted PPM and indenture of trust documents. In response, UIRC filed a copyright infringement suit against William Blair. The district court granted William Blair’s summary judgment motion, finding that UIRC’s documents lacked valid copyright protection because of the trivial nature of the language added to the bond documents, such as “facts, short phrases, and functional elements.” The district court also awarded attorneys’ fees to William Blair under 17 U.S.C. § 505, finding that three of the four factors from the 1994 Supreme Court of the United States decision in Fogerty v. Fantasy favored an award. UIRC appealed.

The Seventh Circuit affirmed, stressing that UIRC was not the original author of the copyrighted works since it did not independently create the PPM and indenture of trust documents. The Court explained that copyright protection requires original works with a minimal degree of creativity, a criterion UIRC failed to meet because its contributions resembled facts, fragmented phrases or language driven by functional considerations.

The Seventh Circuit heavily relied on the Supreme Court’s 1991 Feist Publ’ns v. Rural Tel. Serv. decision, drawing parallels to emphasize that UIRC’s bond documents, being “incredibly similar” to the Idaho Housing and Finance Association documents, lacked the necessary creative expression for copyright protection. The Seventh Circuit deemed trivial additions made by UIRC, which the Court categorized as “facts, short phrases, and functional language” ineligible for copyright protection. The Court highlighted the importance of independent creation using examples where even photographs of familiar characters were copyrightable due to the photographer’s “unique angle, perspective, lighting, and dimension.” In the present case, the Court found that UIRC’s contributions lacked the necessary creative expression. Accordingly, the Court concluded that UIRC’s bond documents were not protected by valid copyrights.

In addressing the attorneys’ fees award to William Blair, the Seventh Circuit applied the Fogerty factors:

  • Frivolousness of the Suit: The Court found that UIRC’s suit lacked merit, emphasizing the frivolousness factor in favor of William Blair.
  • Losing Party’s Motivation: UIRC’s lack of disclosure about the Idaho Housing and Finance Association documents was deemed [...]

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SHAZAM! CAPTAIN CANNABIS Registration Defeated by Prior Analogous Trademark Use

by | Jan 18, 2024 |

Addressing the issue of analogous trademark use, the Trademark Trial & Appeal Board designated precedential a September 6, 2022, decision in which the Board cancelled a registration for CAPTAIN CANNABIS based on the petitioner’s evidence of prior use that was “analogous to trademark use.” Laverne John Andrusiek v. Cosmic Crusaders LLC and Lewis J. Davidson, Cancellation No. 92064830 (TTAB Jan. 3, 2024) (Wolfson, Lynch, Larkin, ATJs).

Laverne John Andrusiek claimed to have first created a comic book featuring the title character, Captain Cannabis, during the 1970s. Although Laverne’s sales of comic books under the CAPTAIN CANNABIS mark did not begin until 2017, he promoted his Captain Cannabis character much earlier. For example, Laverne stated that he attended a trade show in New Orleans in 1999 where he distributed flyers describing an adult animated series “in development” featuring the character Captain Cannabis. That same year, Laverne registered the captaincannabis.com domain name, where he alleges he operated a website promoting and selling Captain Cannabis products. In 2006, Laverne claims to have printed 5,000 copies of a comic book that included a Captain Cannabis character and to have first sold those comic books via an online retailer, where sales continued through 2017.

Cosmic Crusaders registered CAPTAIN CANNABIS for “comic books” in Class 16. The subject application was filed on April 2, 2014, and issued on July 28, 2015. Laverne petitioned to cancel this registration in 2016 under Section 2(d) of the Trademark Act, claiming that use of this mark was likely to cause confusion with his prior common-law use of the identical mark in connection with identical goods. Cosmic Crusaders did not contest that contemporaneous use of both marks would be likely to cause confusion, and there was no dispute that the marks were not distinctive. Therefore, the only issue for the Board to determine was priority.

To establish priority, Laverne had to show (by a preponderance of the evidence) that he owns a trademark previously used in the United States that has not been abandoned. Because priority was based on common-law use in this case, Laverne was also required to establish prior actual trademark use or prior use analogous to trademark use, “such as use in advertising brochures, trade publications, catalogues, newspaper advertisements and Internet websites that created a public awareness of the designation as a trademark identifying Petitioner as the source of the relevant goods.”

Analogous use does not require “survey evidence or other direct evidence of the consuming public’s identification of the CAPTAIN CANNABIS mark with [Andrusiek] as the source of comic books or related goods such as DVDs and animated videos.” Rather, Laverne had to show that he had used the CAPTAIN CANNABIS mark in the US in a way that was “sufficient to create an association in the mind of the relevant consumers between the mark and the goods, followed by actual trademark use of the mark within a ‘commercially reasonable time.’”

The Board found that Laverne’s CAPTAIN CANNABIS mark was reasonably well known within the niche [...]

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Struggling to Master the Alice Two-Step: Search Result Display Ineligible for Patent Protection

by | Jan 18, 2024 |

The US Court of Appeals for the Federal Circuit affirmed a district court’s dismissal of a lawsuit involving two software patents directed toward enhancements to search result displays, finding that both patents claimed subject matter that is ineligible under 35 U.S.C. § 101. IBM v. Zillow Group, Inc., Case No. 22-1861 (Fed. Cir. Jan. 9, 2024) (nonprecedential) (Prost, Hughes, JJ.) (Stoll, J., dissenting).

IBM sued Zillow for infringing five patents. Claims from two of the patents were dismissed. For the remaining three patents, Zillow filed a motion to dismiss, arguing that all three patents were ineligible under § 101. The district court granted Zillow’s motion to dismiss, finding the asserted claims ineligible. IBM appealed.

Only two of the patents were subject to the appeal. The first patent was directed to a graphical user interface that improves search and selection based on user input to produce better results, and the second patent was directed to improvements in how to display search results to users.

IBM raised two arguments on appeal:

  • The district court erred in dismissing both patents, because the complaint and IBM’s inventor declaration were enough to show patent eligibility and—at minimum—survive the pleading stage.
  • The district court failed to resolve a claim construction dispute over a term in the second patent.

The Federal Circuit began by providing a primer on the Alice two-step process for evaluating patent eligibility. For step one, courts must “determine whether a patent claim is directed to an unpatentable law of nature, natural phenomena, or abstract idea.” When the patent involves software, claims are ineligible where they merely describe a process or system that uses a computer as a tool applied to an otherwise abstract idea. For step two, courts must analyze whether the claims simply describe an abstract method. If the claims instead go further and transform an otherwise abstract idea into something new via an “inventive concept,” then the subject matter may be patentable.

Turning to the appeal, the Federal Circuit first addressed whether IBM’s complaint and inventor declaration should have been enough to establish subject matter eligibility at the pleading stage for either patent. Applying the Alice two-step test, the Court found that they were not and upheld the district court’s dismissal.

For the first patent directed to a graphical user interface, the Federal Circuit agreed with the district court’s conclusion that the patent had three clear indicia of abstractness. First, the process could be done with pen and paper. Second, the claim language was result-oriented. Third, the patent focused on intangible information. The Court also found that the claims did “not disclose any technical improvement” to computer software. Thus, the claims failed at Alice step one. The Court found that IBM fared no better at step two, explaining that IBM’s argument for an inventive process hinged on the inventor declaration, which made no reference to the patent’s actual claim language. The Court explained that “[s]imply including allegations of inventiveness in a complaint, detached from what is claimed or discussed in [...]

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PTO Continues to Wave Wands in Assessing Enablement

by | Jan 18, 2024 |

In light of the 2023 Supreme Court of the United States decision in Amgen Inc. v. Sanofi, the US Patent & Trademark Office (PTO) published guidelines for PTO employees to use, regardless of technology, to ascertain compliance with the enablement requirement under 35 U.S.C. § 112. (89 Fed. Reg. 1563 (Jan. 10, 2024).) Unsurprising to those familiar with the Amgen decision, the PTO hewed closely to existing practice.

The PTO collected the Supreme Court’s clarifications regarding the relationship between the enablement requirement and an amount of experimentation, namely that although particular disclosure of all embodiments is not required, claims are not enabled if they require more than reasonable experimentation. Regarding the “reasonable experimentation” requirement, the PTO explained that consistent with several post-Amgen US Court of Appeals for the Federal Circuit opinions, it would continue to apply the factors that the Federal Circuit announced in its 1988 In re Wands decision.

Although the PTO intends to continue to rely on pre-Amgen Federal Circuit Wands analyses as instructive, it found particular persuasive force since the Federal Circuit’s decision was affirmed by the Supreme Court in Amgen. There, according to the guidance, the Federal Circuit concluded that the genus claims were not enabled because of the amount of experimentation required to test whether antibodies satisfied certain functional limitations. Thus, because “the scope of the claims was far broader in functional diversity than the disclosed examples, … [and] the invention was in an unpredictable field of science with respect to satisfying the full scope of the functional limitations, … there was not adequate guidance in the specification.”

The PTO also noted that the Federal Circuit’s 2023 Baxalta v. Genentech decision, like Amgen, found claims directed to antibodies that contained certain functional limitations to be invalid. There, the Court, like the PTO, detected no appreciable difference between the reasonable experimentation standard as articulated in Wands and the standard as set forth in Amgen. The guidance canvassed other post-Amgen enablement decisions, all of which the PTO read to support continued reliance on Wands.

Practice Note: Although the PTO says that it will continue to apply the Wands factors as it has before, the Amgen decision may, as a practical matter, make establishing enablement of functional limitations more difficult. Whether examiners—especially those in life sciences technology areas—change the course of their review post-Amgen remains to be seen.



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Ordinary Meaning: “Identifying” Doesn’t Mean Detecting; It Means Identifying

by | Jan 18, 2024 |

The US Court of Appeals for the Federal Circuit affirmed the Patent Trial & Appeal Board’s decisions finding one set of challenged claims patentable and another set of challenged claims in the same patent unpatentable. The Court determined that the Board properly construed a disputed claim term and made factual findings regarding prior art that were supported by substantial evidence. Pacific Biosciences of California, Inc. v. Personal Genomics Taiwan, Inc., Case Nos. 22-1410; -1554 (Fed. Cir. Jan. 9, 2024) (Prost, Taranto, Hughes, JJ.)

Pacific Biosciences of California (PacBio) filed two petitions seeking inter partes review (IPR) of different claim groups in a patent owned by Personal Genomics Taiwan (PGI). The challenged patent is directed to an apparatus for “identifying a single biomolecule” and methods of using or making that apparatus. The petitions overlapped in terms of the challenged claims but differed in terms of the invoked prior art. PacBio’s challenge (on both anticipation and obviousness) was based principally on the Hassibi reference in one IPR and on the Choumane reference in the other.

The Board rejected PacBio’s challenge to certain claims of the patent in its decision on the first IPR, but it agreed with PacBio’s challenge to certain claims of the patent in its decision in the other. In reaching its decisions, the Board construed the term “identifying a single biomolecule” as requiring an apparatus capable of ascertaining the identity of one single individual biomolecule by examining only that biomolecule. In the first decision, the Board found that this limitation was not taught by the Hassibi reference. In contrast, in the other IPR, the Board found that this limitation was taught by the Choumane reference. Both parties appealed.

The Federal Circuit affirmed both Board decisions. First, the Court agreed with the Board’s construction that the disputed claim term (“single biomolecule”) was the ordinary meaning of the phrase in context, namely that there was no apparent reason for the inclusion of the word “single” in the claim term unless to indicate that the capability required was identification of a molecule with just that one molecule in view. The Court explained that the specification supported this understanding by repeatedly stressing that this “single biomolecule” capability was critical to the invention and by differentiating the examination of individual biomolecules from examination of an ensemble of copied biomolecules. The Court also pointed to dependent claims of the patent to provide support for the Board’s construction (in terms of claim differentiation), noting that those claims recited using the claimed apparatus for expressly described multiple-molecule examinations.

Regarding the prior issues on appeal, the Federal Circuit concluded that the Board’s factual findings were supported by substantial evidence. Turning to the Hassibi reference, the Court stated that the Board reasonably credited the testimony of PGI’s expert and the Hassibi reference itself in finding that Hassibi only disclosed the capability to ascertain the identity of a single biomolecule using a BRC assay or different assay. With respect to the Choumane reference, the Court found that the Board reasonably [...]

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Don’t Assume Sweet Success: Forum Selection Clause Doesn’t Preclude IPR

by | Jan 11, 2024 |

The US Court of Appeals for the Federal Circuit affirmed a district court’s denial of a preliminary injunction seeking to bar a petitioner from challenging certain patents at the US Patent & Trademark Office (PTO) because of a forum selection clause in a settlement agreement. The Court found that the patent owner was unlikely to succeed on the merits based on the likelihood of success factor. DexCom, Inc. v. Abbott Diabetes Care, Inc., Case No. 23-1795 (Fed. Cir. Jan. 3, 2024) (Dyk, Hughes, Stoll, JJ.)

DexCom and Abbott are competing manufacturers of continuous glucose monitoring systems. In 2014, the parties entered into a settlement agreement that included a cross-license to certain patents, covenants not to sue or challenge the patents for a “Covenant Period,” and a forum selection clause identifying the US District Court for the District of Delaware as the exclusive jurisdiction “over any dispute arising from or under or relating to [the] Agreement, to the extent permitted by law.” After expiration of the Covenant Period, DexCom sued Abbott in the Western District of Texas. Abbott moved to transfer the case to the District of Delaware and added a breach of contract counterclaim, citing the settlement agreement’s forum selection clause. The case was transferred to Delaware, after which Abbott filed eight petitions for inter partes review (IPR) at the PTO. DexCom responded to the breach of contract counterclaim by alleging that Abbott had breached the forum selection clause by filing the IPR petitions. Until this point, DexCom had consistently taken the position that the asserted claims were not subject to the cross-license, rendering the forum selection clause inapplicable.

Six months after Abbott filed the IPR petitions, DexCom moved for a preliminary injunction prohibiting the IPRs from proceeding. The district court denied the preliminary injunction. In evaluating the four injunctive relief factors (i.e., likelihood of success on the merits, irreparable harm, balance of hardships and public interest), the district court simply assumed the likelihood of success in favor of DexCom. It nevertheless denied the injunction because DexCom waited six months to file the motion (suggesting there was no irreparable harm) and because DexCom had taken inconsistent legal positions with respect to whether the challenged patents were licensed, thus weighing against DexCom in the balance of hardships factor. DexCom sought interlocutory appeal of the district court’s order.

The Federal Circuit focused on the first factor, likelihood of success on the merits. While the district court assumed that this factor favored DexCom, the Federal Circuit disagreed. The Court noted that the agreement required that DexCom and Abbott “shall not Challenge” each other’s patents during the Covenant Period, with the exception that “each Party reserves its rights and is permitted to Challenge any of the patents of the other Party if there is a statute, regulation, or rule that sets a deadline to make the Challenge,” assuming certain conditions were met. The Court first explained that “challenge” includes IPRs of the patents and that nothing in the forum selection clause differentiated between the [...]

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