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EU Unified Patent Court Announces Intent to Launch on April 1, 2023

by and | Oct 20, 2022 | ,

The EU Unified Patent Court (UPC) announced a launch date of April 1, 2023, however, the announced date should be regarded as a statement of intent for it could change. The launch timing has been the subject of various delays and setbacks, several due to unresolved legal issues. The UPC has also published an almost final list of judges. German Federal Court of Justice Judge Klaus Grabinski, who played a key role in drafting the UPC Rules of Procedure, will head the UPC. The majority of UPC judges will only be engaged with their UPC activities part-time (about 50% or 20% of their total work commitment).

The UPC judges are set to receive special training starting in March 2023, only one month prior to the announced launch date of the UPC, leading many to doubt that the April 1 date will be met. Once the new court is operational, owners of European patents will be able to litigate patent disputes across most EU Member States in a single proceeding, eliminating the need to proceed on a country-by-country basis.

Assuming the announced launch date is maintained, the “sunrise period” before the UPC becomes fully operational will commence on January 1, 2023. This sunrise period will last for three months, during which patent owners that do not wish for their existing European patents to be subject to UPC jurisdiction may opt out of such jurisdiction by filing a formal notification to that effect. The European Patent Office has also announced that during the sunrise period, European patent applicants whose applications are ready for grant will, if they wish, be able to delay the formal grant of the application until the UPC becomes operational so that unitary patent protection can be obtained.

The UPC has issued an implementation roadmap for events leading up to the entry into force of the UPC Agreement, with the court opening its doors and starting to receive cases as of April 1, 2023.



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When Are Compulsory Copyright Licenses Compulsory?

by | Oct 20, 2022 |

The US Court of Appeals for the Second Circuit partially affirmed a district court’s summary judgment order holding that audiovisual recordings of live concerts do not fall within the scope of the Copyright Act’s compulsory license provision while purchasers of audio-only recordings obtain a compulsory license in the copyright of the work fixed by their predecessors/sellers. ABKCO Music, Inc. et al. v. Sagan et al., Case No. 20-3816 (2d Cir. Oct. 6, 2022) (Jacobs, Wesley, Menashi, JJ.)

In 2002, William Sagan purchased, through Norton, a collection of audio and audiovisual live concert recordings from Bill Graham Archives. All three parties are named defendants in this case. The agreement conveyed all intellectual property that the Archives held (from a transaction with Sagan) and included a disclaimer stating that record company and artist approval was required to exploit the recordings. The defendants’ subsequent purchases of other recordings contained similar limited assurance language regarding intellectual property rights. In 2006, the defendants made the entire collection publicly available online for a streaming and downloading fee. A year later, the defendants began using a third-party licensing agent to obtain compulsory licenses under 17 USC § 115 and negotiated licenses from plaintiff music publishers in the audio and audiovisual live concert recordings.

Section 115 of the Copyright Act requires persons seeking to make and distribute phonorecords of a previously published musical work to obtain a compulsory license by providing notice to the copyright owner before distribution and paying government-prescribed royalties. (§ 115(a)(1), (b), (c).) The Copyright Act defines phonorecords as “[m]aterial objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed.” (§ 101.) Section 115’s substantive requirements for duplications of audio/sound recordings fixed by another include requirements that the sound be fixed lawfully, and that duplication be authorized by the copyright owner. (§ 115(a)(1).)

In 2015, the music publishers sued defendants for copyright infringement of 197 musical works posted online without valid compulsory licenses. The music publishers alleged that the defendants did not obtain compulsory licenses for audiovisual works as required by § 115 and that the defendants failed to comply with § 115 substantive compulsory licensing requirements for audio-only works. Defendants argued implied license and equitable estoppel as affirmative defenses. The publishers sought damages and a permanent injunction pursuant to the Copyright Act.

The district court, on summary judgment, ruled that the defendants had no valid license authorizing the reproduction and distribution of the musical works in either audio or audiovisual format, that the defendants had neither an implied license nor any basis for estoppel, and that Sagan (a principal in several of the defendant streaming services) was liable for direct infringement. The district court denied the publishers’ request for an injunction but granted the publishers an award of attorneys’ fees. The defendants appealed from the summary judgment order and the order granting fees and costs. The plaintiffs cross-appealed denial of an injunction.

The Second Circuit affirmed the district court’s holding that the defendants infringed each musical work [...]

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Long Live the Kingpin: No Abandonment Based on Nonuse During Drug Sanctions Period

by | Oct 13, 2022 |

In a precedential decision, the Trademark Trial & Appeal Board (Board) dismissed an opposition, finding that the trademark applicant’s long period of nonuse due to government sanctions was excusable nonuse and not abandonment. ARSA Distributing, Inc. v. Salud Natural Mexicana S.A. de C.V., Opposition No. 91240240, 91243700 (TTAB Sept. 28, 2022) (Taylor, Greenbaum, English, ATJ)

Salud sought a trademark registration of the standard character mark EUCALIN for “pharmaceutical products, namely, vitamin supplements, nutritional supplement made with a syrup with jelly base, honey base, and with a mixture of plants with propolis base, and herbal remedies in the nature of herbal supplements,” and the composite mark set forth below for “herbal supplements; nutritional supplements; vitamin supplements.”

ARSA opposed the registration, alleging prior common law use of the mark EUCALIN for “dietary and nutritional supplements.” ARSA argued that its sales and advertising of its EUCALIN product from 2008 to October 6, 2015, and October 9, 2017, established that ARSA had used its EUCALIN mark long before the constructive use filing dates of Salud’s application. Thus, ARSA had priority of use of the EUCALIN mark on nutritional and dietary supplements.

In response, Salud asserted it had priority in the EUCALIN mark based on use since 1999. Salud argued that between 1999 and October 2008, ARSA was Salud’s US distributor and, therefore, all goodwill for any EUCALIN-labeled product went to Salud as the supplier of the goods and products.

ARSA asserted that there was no distribution agreement between the parties, but even if Salud “could have reasonably claimed rights based on some alleged distribution agreement before 2008,” Salud “has long since abandoned any rights it would have had.” ARSA asserted that Salud was legally banned from conducting business in the United States between October 2, 2008, and May 2015 because it was declared a Specially Designated Narcotics Trafficker (SDNT). ARSA argued that Salud failed to produce any evidence establishing that it had concrete plans or intent to resume use between 2008 and 2015.

The Board found that there was no clear manufacturing-distribution agreement between the parties, and therefore there was a rebuttable presumption that the manufacturer (Salud) owned the mark. The Board explained that the following six factors are considered in determining which party has superior rights:

  1. Which party created and first affixed the mark to the product
  2. Which party’s name appeared with the trademark on packaging and promotional materials
  3. Which party maintained the quality and uniformity of the product, including technical changes
  4. Which party the consuming public believes stands behind the product (g., the party to which customers direct complaints and contact for correction of defective products)
  5. Which party paid for advertising
  6. What a party represents to others about the source or origin of the product.

The Board concluded that, on the balance, the factors favor Salud. The Board explained that the first, second, third and sixth factors favored Salud because it created the mark and product, maintained quality control over [...]

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Remote Employees Support Patent Venue

by | Oct 13, 2022 |

In a per curiam opinion, the US Court of Appeals for the Federal Circuit denied a petition for a writ of mandamus seeking to direct the district court to dismiss or transfer the underlying case based on improper venue. In doing so, the Court pointed to remote workers residing in the district to find satisfaction in the venue statute. In re Monolithic Power Systems, Inc., Case No. 22-153 (Fed. Cir. Sept. 30, 2022) (Lourie, Chen, Stark, JJ.) (per curiam) (Lourie, J., dissenting)

Bel Power brought suit in the Western District of Texas alleging that Monolithic infringed Bel Power’s patents by selling power modules used in electronic devices. Monolithic had four remote employees working from home in the district. Monolithic moved to dismiss or transfer to the Northern District of California, arguing that because it was a Delaware corporation without property in the district, venue was not proper under § 1400(b). The district court denied both requests, finding that Monolithic maintained a business presence in the district as contemplated by § 1400(b) by soliciting employment in the district and providing employees with equipment used at or distributed from their homes as part of their employment responsibilities.

In denying the motion to transfer, the district court found that Monolithic had not established that the Northern District of California was clearly more convenient. Monolithic filed for mandamus seeking to overturn either ruling.

The Federal Circuit denied relief. With regard to venue, the Court reasoned that “the district court’s ruling does not involve the type of broad, fundamental, and recurring legal question or usurpation of judicial power that might warrant immediate mandamus review.” Instead, the Court credited the factual findings regarding the amount of equipment Monolithic provided to one of its employees in the district for “the sole purpose” of allowing him “to conduct testing and validation as part of his job,” and ruled that post-judgment appeal would be an adequate alternative means for attaining relief. On the issue of transfer (reviewed under regional circuit law), the Court denied for failure to establish a clear abuse of discretion, noting that this “is not a case in which there is only one correct outcome.”

Judge Lourie dissented, arguing that “[m]ost basically, Monolithic lacks a regular and established place of business in the Western District of Texas, as the statute requires in order for it to be sued there.” In his view, “we should not stand back and let the requirements of the statute be eroded by the details of what an employee stores in his or her home.” He noted that judicial efficiency counsels against allowing cases to be tried in venues not permitted by the statute only to be retried in a proper venue. Judge Lourie reasoned that the circumstances relied on by the district court, including job advertisement and storage of product and equipment in the venue, were not meaningfully different from those of Celgene v. Mylan Pharms (Fed. Cir, 2021), where venue was deemed improper. He noted that “[t]he [...]

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For Inherent Anticipation, How Many Is Too Many?

by | Oct 13, 2022 |

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board (Board) decision that prior art disclosing a class of 957 salts could not inherently anticipate claims to a salt within the class because a skilled artisan could not “at once envisage” every class member. Mylan Pharms. Inc. v. Merck Sharp & Dohme Corp., Case No. 21-2121 (Fed. Cir. Sept. 29, 2022) (Lourie, Reyna, Stoll, JJ.)

In the underlying inter partes review, Mylan alleged that Merck’s patent claims to sitagliptin dihydrogen phosphate (DHP) with 1:1 stoichiometry were anticipated by two similar Merck publications (collectively, Edmondson). Edmondson listed 33 enzyme inhibitors (including sitagliptin) and eight preferred acids for forming salts with the inhibitors. Mylan argued that the 1:1 stoichiometry between sitagliptin and DHP (which was required by the claims) was the only possible result when sitagliptin and phosphate were reacted.

In response, Merck experts declared that Edmondson did not expressly disclose any 1:1 sitagliptin DHP salts. They also declared that non-1:1 sitagliptin phosphate salts existed and had been created using conventional protocols, and that Edmondson encompassed approximately 957 predicted salts of DP-IV inhibitors.

The Board held that Edmondson did not expressly anticipate because it did not literally disclose the 1:1 sitagliptin DHP salt and Mylan could not attempt to fill in the missing claim limitation by arguing that a person of ordinary skill in the art (POSA) could “at once envisage” the “950+” salts. Merck’s evidence convinced the Board that non-1:1 sitagliptin phosphate salts “do exist and can form.”

Mylan tried to circumvent Merck’s antedation of Edmondson by asserting that it disclosed hydrates of 1:1 sitagliptin DHP, which Merck had not synthesized until months after Edmondson was published. The Board rejected this argument, noting that Edmondson only generically referred to hydrates. Since Mylan had not contested Merck’s common ownership of Edmondson’s subject matter, § 103(c)(1) applied and Edmondson became unavailable as an obviousness reference. The remaining claims to specific enantiomers and hydrates of sitagliptin DHP were deemed nonobvious because Mylan had not presented sufficient evidence to show motivation to make or reasonable expectation of success.

On appeal, the Federal Circuit found that substantial evidence supported the Board’s determinations with respect to explicit and inherent anticipation and obviousness. Mylan’s own expert had admitted that nothing in Edmondson directed a POSA to sitagliptin or to any phosphate salt. Edmondson’s disclosure of 957 potential salts was “a far cry” from the facts in the 1962 Court of Customs and Patents Appeals case In re Peterson, where a reference disclosing only 20 compounds was deemed inherently anticipatory. The Federal Circuit rejected Mylan’s antedation argument, noting that if Edmondson did not explicitly disclose 1:1 sitagliptin DHP, it could not disclose any hydrates of that compound either.

Finally, the Federal Circuit agreed with the Board that the claims to specific enantiomers or hydrates of sitagliptin DHP were nonobvious because Mylan had not shown any expected benefit to making the specific enantiomers claimed, the literature and experts for both sides reported many downsides [...]

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Cloudy Skies: PTO Director Finds Abuse and Sanctionable Conduct

by | Oct 13, 2022 |

The US Patent & Trademark Office (PTO) Director issued a precedential opinion finding that filing an inter partes review (IPR) solely to extract payment in a settlement—without the intent to prosecute the IPR to completion—is a sanctionable abuse of process. OpenSky Indus., LLC v. VLSI Tech. LLC, IPR2021-01064 (Oct. 4, 2022) (Vidal, Dir.)

In 2019, VLSI asserted two patents against Intel. In response, Intel filed two IPRs against the allegedly infringed patents, but both IPRs were discretionally denied by the Patent Trial & Appeal Board (Board) based on the advanced stage of the underlying litigation and overlapping issues. The suit proceeded, and a jury awarded VLSI more than $600 million in damages in 2021.

OpenSky Industries was founded two months after the judgment. OpenSky filed a “copycat” IPR petition based on Intel’s previous petitions (including refiling the declarations of Intel’s expert without his knowledge) targeting VLSI’s two allegedly infringed patents. The Board instituted over VLSI’s argument, noting that patentability issues were raised that had not been resolved in the district court case. Initially, OpenSky attempted to settle the IPRs with VLSI, but VLSI refused. OpenSky then reached out to Intel, offering to let Intel collaborate if it agreed to pay a success fee. Intel refused and later filed its own IPR petition and joinder motion. After Intel’s refusal, OpenSky pivoted back to VLSI, offering to “refuse[] to pay [the] expert for time at deposition so [the] expert does not appear at deposition” in return for payment. VLSI reported the scheme to the Board.

Intel was joined as a party to the OpenSky IPR proceeding in June 2022 based on its later-filed petition. Once Intel joined, OpenSky threatened to forego both deposing VLSI’s expert and filing its reply brief unless Intel paid it for its “prior work in the IPR” plus “additional remuneration.” Intel refused. While OpenSky did notice VLSI’s expert, it declined to file a Petitioner Reply brief, forcing Intel to draft the reply. Later, at VLSI’s request (OpenSky missed the request date), oral argument in the proceeding took place before the Board. OpenSky did not meaningfully participate.

While all this was unfolding, the Director sua sponte initiated an investigation to determine “[w]hat actions the Director . . . should take when faced with evidence of an abuse of process or conduct that otherwise thwarts . . . the goals of the Office and/or the AIA.” To begin the investigation, the Director sent discovery requests to each of the three parties. VLSI and Intel complied. OpenSky, by comparison, either incompletely complied with or directly refused each request. Based on those evasions, the Director sanctioned OpenSky for discovery misconduct, applying adverse inferences against OpenSky on each request.

Discovery sanctions in place, the Director moved to the central question: Did OpenSky abuse the IPR process? The Director answered yes.

First, the Director found that OpenSky’s conduct violated its duty of candor and good faith to the Board. In its negotiations with VLSI, OpenSky offered to deliberately sabotage its own petition to hinder Intel. In its negotiations with Intel, OpenSky did [...]

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PTO Requests Comments on Initiatives to Ensure Patent Robustness, Reliability

by | Oct 13, 2022 |

The US Patent & Trademark Office (PTO) is seeking public input and guidance on proposed initiatives directed at bolstering the robustness and reliability of patents. The request for comments was spurred in part by US President Joe Biden’s July 9, 2021, executive order on Promoting Competition in the American Economy, and a June 8, 2022, letter from Senators Leahy, Blumenthal, Klobuchar, Cornyn, Collins and Braun raising concerns about patent thickets.

The PTO identified four broad topics and initiatives that it is considering:

  • Prior Art Searching
  • Support for Patent Claims
  • Request for Continued Examination (RCE) Practice
  • Restriction, Divisional, Rejoinder and Non-Statutory Double Patenting Practice.

The PTO seeks comments on 11 main questions and several sub-questions. The first five questions are directed to the PTO initiatives while questions six through 11 address concerns raised by the senators.

PTO Initiatives

  1. How should the PTO facilitate an applicant’s submission of prior art that is not accessible in the Patents End-to-End Search system (e.g., “on sale” or prior public use)?
  1. How, if at all, should the PTO change claim support requirements and/or continuation practice?
  1. How, if at all, should the PTO change RCE practice?
  1. How, if at all, should the PTO limit or change restriction, divisional, rejoinder and/or non-statutory double patenting practice?
  1. Provide any other input on any of the proposals listed under the PTO initiatives.

Senator Inquiries

  1. How would eliminating terminal disclaimers, thus prohibiting patents that are obvious variants of one another, affect patent prosecution strategies and overall patent quality?
  1. Should patents that are tied together by a terminal disclaimer because of an obviousness-type double patenting rejection stand or fall together if their validity is subsequently challenged?
  1. Should the PTO require a second look by a team of patent quality specialists before issuing a continuation patent on a first office action?
  1. Should there be heightened examination requirements for continuation patents?
  1. Should the PTO implement a rule change that requires any continuation application to be filed within a set timeframe of the ultimate parent application?
  1. If filing fees were increased to cover the actual cost of obtaining a patent, would this increase patent quality? And if the fees for continuation applications were increased, would applicants be less likely to file continuations for obvious variants?

Among the proposals under consideration are whether to require applicants to identify corresponding support in the original disclosure for each claim in a continuation application, whether applications should be reassigned to a different examiner after a set number of RCEs are filed, whether the PTO should adopt the unity of invention standard, and whether divisionals should be filed within a set time period.

Click here for further details on the PTO initiatives.

Comments must be received by January 3, 2023, to ensure consideration.



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Webinar Series | McDermott IP Focus

by | Oct 11, 2022 |

McDermott Will & Emery is committed to providing insightful commentary on IP developments from around the world to our Japanese clients. In light of that effort, we launched a monthly webinar series: McDermott IP Focus. During these sessions, we will explore global developments in the IP space, including disputes, transactions and procurement, with a significant focus on what Japanese companies need to know during this post-pandemic era.

Over the course of the series, we will feature a variety of speakers from McDermott’s offices around the world. We hope you can join us!

Click here for session details and to register.



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The Saddest Hour? Closing Time for Trademark Cancellation Petition

by | Oct 6, 2022 |

In a precedential decision, the Trademark Trial & Appeal Board (Board) denied a petition to cancel a trademark registration based on priority. The Board explained that the petitioner bears a higher burden of proof to show prior use when it has amended its trademark application during prosecution to allege an earlier use date. JNF LLC v. Harwood Int’l Inc., Cancellation No. 92070634 (TTAB Sept. 21, 2022) (Wellington, Greenbaum, Heasley, ATJ)

On October 6, 2014, Harwood International applied to register the standard character mark HAPPIEST HOUR on the Principal Register for “bar and restaurant services.” The application matured into a registration on July 26, 2016. Almost two years later, on May 1, 2018, JNF applied to register the mark THE HAPPIEST HOUR in standard characters on the Principal Register for “restaurant and bar services.” In its application, JNF claimed to have first used the mark anywhere and in commerce “at least as early as 10/00/2014.” The examining attorney assigned to JNF’s application issued an office action citing Harwood’s HAPPIEST HOUR registration as a bar to registration. JNF then amended its claimed date of first use to September 7, 2014. JNF subsequently filed a petition to cancel Harwood’s registration and further requested suspension of its application pending disposition of the cancellation proceeding. Harwood answered the petition and admitted that its registered mark HAPPIEST HOUR was cited as confusingly similar to JNF’s THE HAPPIEST HOUR application but denied that JNF had established prior rights to the mark.

The Board explained that for priority purposes, Harwood may rely on the filing date of the underlying application that matured into its involved registration. The Board further explained that JNF bears the burden of proving that its mark was “previously used in the United States,” before Harwood’s constructive filing date of October 6, 2014. The Board also noted that while a petitioner must ordinarily prove its priority entitlement by a preponderance of the evidence, in the circumstances of this case, the burden was heavier. Because JNF alleged a first use date of “at least as early as 10/00/2014” when it filed its application to register THE HAPPIEST HOUR, the date presumed for purposes of examination was the last day of the month, October 31, 2014—several weeks after Harwood’s constructive use date of October 6, 2014.

As the Board explained, although JNF subsequently amended its date of earliest use, that amendment came with a cost. The Board explained that where an applicant has stated an earliest use date under oath but then amends the oath and attempts to show an earlier date, the applicant is under a heavier burden of proof: clear and convincing evidence. Citing to Federal Circuit precedent, the Board further explained that the original allegation of first use date may be considered to have been made against interest at the time of filing. The Board found that this rationale applied with even greater force in the current situation because the alleged dates were very close to Harwood’s constructive use date and because JNF only [...]

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Hold That Generic, Please: Supreme Court Grants Emergency Request to Stay Federal Circuit’s Mandate

by | Oct 6, 2022 |

In a rare action by the Supreme Court of the United States, Chief Justice Roberts granted Novartis’s emergency request for a stay of a mandate from the US Court of Appeals for the Federal Circuit, which had found a Novartis patent invalid for lack of adequate written description and would have permitted generic versions of Novartis’s multibillion-dollar blockbuster drug Gilenya to enter the market. For more information on the Federal Circuit’s prior decisions, click here and here. Novartis Pharms. v. HEC Pharm. Co., Misc. Docket 21A272 (Supr. Ct. Sept. 29, 2022) (Roberts, Chief Justice).

Novartis sued HEC and several other generic companies for infringement of a patent directed to methods of treating remitting multiple sclerosis with fingolimod or a fingolimod salt at a daily dose of 0.5 mg without an immediately preceding loading dose. In a split panel decision issued in January 2022 and authored by former Judge O’Malley with current Chief Judge Moore dissenting, the Federal Circuit affirmed the district court’s ruling that the patent was not invalid for insufficient written description of the claimed 0.5 mg daily dose or the no-loading dose negative limitation. HEC petitioned for panel rehearing. Judge O’Malley retired in March 2022, and a new panel granted HEC’s petition. The new panel now included Judge Hughes, who joined with Chief Judge Moore in the majority opinion. Judge Linn (who had joined with now retired Judge O’Malley in the original panel majority) was now the dissenter. The split panel vacated its prior decision and reversed the district court’s judgment. The new majority held that silence cannot support a later-added claim limitation that precludes loading doses. In dissent, Judge Linn argued that the majority applied a heightened written description standard requiring, not only a “reason to exclude,” but also a showing that the negative limitation was “necessarily excluded.”

On September 27, 2022, the Federal Circuit denied Novartis’s motion to stay the mandate pending a forthcoming decision on a petition for certiorari. Novartis filed an emergency application directed to Chief Justice Roberts, and two days later Justice Roberts issued an Order staying issuance of the Federal Circuit mandate (which would have issued on October 4, 2022) and ordered HEC to respond to Novartis’s emergency application.

Practice Note: The Supreme Court is currently considering another petition for certiorari resulting from a divided Federal Circuit decision on the question of whether a patent specification must expressly disclose a claim limitation to satisfy the written description requirement. Juno Therapeutics, Inc. v. Kite Pharma., Inc., Case No. 21-1566.



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