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Multiple Purchasing Options Overpower Use of “Quotation” in Finding Offer for Sale

by Joshua Revilla | Feb 24, 2022 | Patents

The US Court of Appeals for the Federal Circuit reversed a district court’s summary judgment of no invalidity under the on-sale bar, finding that the completeness of relevant commercial sale terms, including multiple purchase options, was not an invitation to further negotiate but rather was multiple offers for sale. Junker v. Medical Components, Inc., Case No. 21-1649 (Fed. Cir. Feb. 10, 2022) (Dyk, Reyna, Stoll, JJ.)

Larry Junker designed a sheath that makes it easier for doctors to grasp the sheath during catheter insertion. After designing the sheath, Junker inquired about manufacturing and eventually began a business relationship with James Eddings and his company, Galt Medical, to manufacture the product. Eddings also started a new company, Xentek Medical, to help with the development, manufacture and sale of the product. In January 1999, Eddings, through Xentek, communicated with Boston Scientific Corporation about the sheath products and sent a letter detailing bulk pricing information for the products. The letter concluded by noting Eddings’ appreciation for “the opportunity to provide this quotation.” In February 2000, Junker filed a design patent directed to an “ornamental design for a handle for introducer sheath.”

Junker sued MedComp in 2013 for infringement of the claimed design. In response, MedComp asserted invalidity, unenforceability and noninfringement defenses, as well as counterclaims. The parties filed cross-motions for summary judgment for several issues, including invalidity under the on-sale bar. The primary dispute regarding the on-sale bar was whether the January 1999 letter to Boston Scientific was considered an offer for sale of a product embodying the claimed design. The district court found that it was not an offer for sale because it was a preliminary negotiation and not a definite offer. The district court reasoned that although the letter included many specific commercial terms, the repeated use of the word “quotation” and the invitation to discuss specifics rendered the letter a preliminary negotiation. The district court proceeded with a bench trial, ultimately finding in favor of Junker and awarding damages. MedComp appealed.

A patent claim is invalid under § 102(b) if the invention was on sale more than a year before the application date and the claimed invention was the subject of a commercial offer for sale and was ready for patenting. There was no dispute that the January 1999 letter was sent more than one year before the patent’s filing and that the claimed design was also ready for patenting. As a result, the only issue on appeal was whether the letter was a commercial offer for sale of the claimed design.

The Federal Circuit determined that the letter was a commercial offer for sale. The Court found that the statement that Xentek was responding to a “request for quotation” signaled that the letter was more than just an unsolicited price quote and was instead a specific offer to take further action. The Court found that the letter contained many necessary terms typical in a commercial contract, including prices for bulk shipments, specific delivery conditions and payment terms. The Court [...]

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Too Much to Say? Word Limits Don’t Prevent Estoppel

by Paul Devinsky | Feb 24, 2022 | Patents

The US Court of Appeals for the Federal Circuit found that the Patent Trial & Appeal Board (Board) did not err in finding that a petitioner was estopped from maintaining a third inter partes review (IPR) of a patent claim after a final determination of two other IPRs challenging the same claim on different grounds. The Federal Circuit also found that it did not have jurisdiction to review the merits decision of the third IPR because the petitioner lacked statutory authorization to appeal as of the issuance of the prior two final written decisions. Intuitive Surgical, Inc. v. Ethicon LLC, Case No. 20-1481 (Fed. Cir. Feb 11, 2022) (O’Malley, Clevenger, Stoll, JJ.)

Intuitive Surgical concurrently filed three separate IPR petitions for a patent owned by Ethicon relating to a robotically controlled endoscopic surgical instrument. All three petitions challenged a single claim of the patent, relying on different combinations of prior art references. The Board instituted on two of the petitions at the same time and on the third petition one month later. The Board issued simultaneous final written decisions in the first two IPRs, upholding the patentability of the challenged claim. As the third IPR remained ongoing, Ethicon filed a motion to terminate Intuitive as a party to the IPR, arguing that it was estopped from proceeding under 35 U.S.C. § 315(e)(1). The Board agreed, terminating Intuitive as a party and issuing a decision upholding the patentability of the challenged claim. Intuitive appealed.

Intuitive argued that § 315(e)(1) should not apply to simultaneously filed petitions. Section § 315(e)(1) precludes a petitioner from maintaining a proceeding before the Board on any ground that it “raised or reasonably could have raised during that inter partes review.” Intuitive argued that it could not have reasonably raised all of its grounds in one petition because of the 14,000-word limit, and that simultaneously filed petitions do not conflict with the purpose of § 315(e)(1)—to prevent abusive IPR conduct. The Federal Circuit disagreed, finding that § 315(e)(1) estops a petitioner as to grounds it reasonably could have raised in another IPR, even if the petitions are filed on the same day. The Court went on to note multiple ways around the word limit issue, none of which Intuitive attempted. Intuitive could have sought to consolidate the proceedings or divided its petitions on a claim-by-claim basis instead of by grounds (something which the Court noted is not prohibited by § 315(e)(1)). Intuitive also argued that, under the Court’s decision in Shaw, it was only estopped from raising instituted grounds, but the Court cited its recent decision in California Institute of Technology v. Broadcom Limited, which overruled Shaw, explaining that estoppel applies to all grounds that could have been reasonably included in the petition.

The Federal Circuit also considered whether Intuitive was authorized to pursue an appeal given the termination. Intuitive argued that it had the right to appeal the Board’s decision in the third IPR because it was once a party to the IPR. [...]

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Federal Circuit Divided on Whether Skinny Labeling Compliance Precludes Inducement or Supports Equitable Estoppel

by Paul Devinsky | Feb 24, 2022 | Patents

The US Court of Appeals for the Federal Circuit denied a generic drug manufacturer’s petition for en banc review of a panel opinion finding induced infringement liability despite the manufacturer’s adherence to skinny labeling rules, and suggested that equitable estoppel was the appropriate vehicle for considering whether the branded drug manufacturer’s representations to the US Food & Drug Administration (FDA) should prevent it from recovering. GlaxoSmithKline LLC v. Teva Pharms. USA, Inc., Case Nos. 18-1976, -2023 (Fed. Cir. Feb. 11, 2022) (per curiam) (Moore, C.J., concurring) (Prost, J., dissenting) (Dyk, J., dissenting) (Reyna, J., dissenting).

GlaxoSmithKline (GSK) developed a drug called carvedilol, which it markets (with FDA approval) for three indications: hypertension, left ventricular dysfunction following myocardial infarction (post-MI LVD) and congestive heart failure (CHF). GSK indicated to the FDA that only the CHF indication was under patent. Teva developed a generic version of carvedilol. Commensurate with skinny labeling regulations, Teva carved out from its label the language that GSK indicated was related to the protected CHF indication. Nonetheless, GSK alleged that Teva’s label induced infringement of patents covering the CHF indication. After trial, the jury agreed that the remaining language on Teva’s label would encourage physicians to practice the patented method of treating CHF. Notwithstanding the jury’s verdict, the district court granted judgment as a matter of law that Teva did not induce infringement. GSK appealed, and a divided panel reinstated the verdict (GSK v. Teva). Teva sought panel rehearing, which was denied, and then sought en banc review.

Out of the nine judges who considered the petition for en banc review, six voted to deny it and three would have granted it. All nine judges expressed concern that Teva should be held liable for induced infringement notwithstanding its compliance with the skinny labeling regulations and GSK’s representation to the FDA that the carved-out language was the only language in the label that would implicate its patents on the CHF indication. The judges differed, however, as to why Teva should not be held liable.

Chief Judge Moore’s concurrence, in which Judges Newman, O’Malley, Taranto, Chen and Stoll joined, affirmed the panel majority’s opinion and endorsed its approach of considering all the evidence. According to Judge Moore, any concerns that the result was unfair to Teva, which had complied with the skinny labeling requirements, should be addressed in the district court’s resolution of the still-pending equitable estoppel defense. In Judge Moore’s view, the facts fit squarely within the doctrine of equitable estoppel: GSK’s representations to the FDA could be seen as misleading Teva into believing that GSK would not seek to enforce its patents against the skinny label (which would omit the language GSK identified as relating to the infringing use); Teva could be seen as having relied on GSK’s representations in obtaining its skinny label and bringing its generic carvedilol product to market; and Teva could be seen as having been greatly prejudiced by later being found liable for GSK’s lost profits, which were greatly in [...]

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Long-Felt Need Not Felt Long Enough to Overcome Obviousness

by Tessa Kroll | Feb 24, 2022 | Patents

The US Court of Appeals for the Federal Circuit upheld a finding that patents covering Narcan, a naloxone-based intranasal opioid overdose treatment, were obvious despite evidence of long-felt need. Adapt Pharma Operations Ltd. v. Teva Pharms. USA, Inc., Case No. 20-2106 (Fed. Cir. Feb. 10, 2022) (Prost, Stoll, JJ.) (Newman, J., dissenting).

In 2012, during the growing opioid crisis, the US Food & Drug Administration (FDA) identified a need for an improved intranasal naloxone treatment that could be FDA-approved and deliver the same amount of naloxone to the blood as an injectable formulation. In 2015, Adapt filed a patent application for Narcan, a method of nasally administering naloxone using about 4 mg of naloxone, benzalkonium chloride (BZK) and three other excipients. After Teva submitted an abbreviated new drug application (ANDA) to sell a generic version of Narcan, Adapt sued Teva for infringement. After a two-week bench trial, the district court determined that Adapt’s patents were obvious in view of prior art. Adapt appealed.

The Federal Circuit found no error in the district court’s conclusions that a skilled artisan would have been motivated to combine the prior art, that the prior art did not teach away from the claimed combination and that Adapt’s evidence regarding unexpected results, copying and industry skepticism was not probative of nonobviousness. The Court noted that a skilled artisan would have been motivated to improve on existing treatments because their shortcomings were well known, and the FDA had explicitly identified a need for an improved intranasal product. The claimed excipients also were separately taught in the prior art within the claimed concentration ranges. The Court agreed that a skilled artisan would have been motivated to combine these components to achieve the tonicity and pH required for a drug to be tolerable in the nose and to preserve and stabilize the formulation. While the prior art suggested that BZK causes naloxone degradation, the Court found that this did not teach away from its use because BZK was commonly used in intranasal formulations.

Turning to secondary considerations of nonobviousness, the Federal Circuit affirmed the following:

Narcan’s 56% increase in bioavailability was not “evidence of unexpected results” because BZK was a known permeation enhancer expected to increase bioavailability.
“[C]opying in the ANDA context is not probative of nonobviousness because . . . bioequivalence is required for FDA approval.”
The FDA’s recommendation to increase naloxone dosage in intranasal formulations negated any alleged industry skepticism regarding the higher dosage.

While the Federal Circuit found that the district court erred in finding there was no long-felt but unmet need for an effective intranasal naloxone product, the Court concluded that this error was harmless because the long-felt need began just three years before the patents’ priority date, which was not long enough to overcome the “strong case of obviousness . . . in view of the plethora of prior art.” The Court further agreed that competitors’ alleged failure to obtain FDA approval was not probative of nonobviousness and ultimately affirmed the district [...]

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2022 IP Outlook Report: The Developments Shaping Copyright Law

by Christina (Tina) L. Martini, Jodi Benassi and Anisa Noorassa | Feb 22, 2022 | Copyrights

Key Takeaways and Outlook for 2022

Like so many things in 2021, a few long-awaited copyright developments have spilled into 2022, with anticipated amendments to key provisions in the Digital Millennium Copyright Act topping the list of legislation to watch.

The key issues we are tracking include the following:

Read the full report.

2022 IP Outlook Report: The Developments Shaping Patent Law

by Amol Parikh, Dr. Henrik Holzapfel, Thomas DaMario, Tim Dunker and Dr. Maximilian Kiemle, LLM | Feb 17, 2022 | Patents

Key Takeaways and Outlook for 2022

Tracking with this era’s continuation and uncertainty trends―global supply chain disruption, innovation outpacing legislation, the unstoppable internet of [all the] things (IoT)―2022 is expected to be another busy year in the world of patent litigation.

We fully expect persistence in these spaces:

Read the full report.

Specification Sheds Light on Broadest Reasonable Interpretation

by Yoshiko Ito | Feb 17, 2022 | Patents

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board (Board) obviousness decision, finding that the Board did not err in restricting the broadest reasonable interpretation of a claim term based on its use in the specification. Quanergy Systems, Inc. v. Velodyne Lidar USA, Inc., Case Nos. 20-2070; -2072 (Fed. Cir. Feb. 4, 2022) (Newman, Lourie, O’Malley, JJ.)

Velodyne owns a patent directed to a lidar-based 3D point cloud measuring system that can be used in self-driving vehicles to sense their surroundings. Quanergy petitioned for inter partes review of Velodyne’s patent, challenging the claims as obvious over a Japanese patent application (Mizuno). During the proceedings, the Board construed the broadest reasonable interpretation of the term “lidar (light detection and ranging)” to mean “pulsed time-of-flight (ToF) lidar” based on the written description of Velodyne’s patent and found that Mizuno’s system was not a ToF lidar system. The Board also presumed a nexus between the claimed pulsed ToF lidar system and Velodyne’s evidence of commercial success, relying on mapping the features of the claimed ToF lidar system to Velodyne’s commercial products. Based on its obviousness analysis and presumption of nexus, the Board issued final written decisions, finding that Velodyne’s patent was not unpatentable as obvious. Quanergy appealed.

Quanergy raised two arguments on appeal: The Board erred in its construction of the term “lidar,” and the Board erred in its obviousness analysis. Addressing claim construction, Quanergy argued that the Board did not use the broadest reasonable interpretation of “lidar” since “lidar” merely requires the use of laser light for detection and ranging, and thus “lidar” includes not only “pulsed ToF lidar” but also triangulation and other detection techniques described in Mizuno. The Federal Circuit rejected Quanergy’s argument, finding that the Board did not err in construing the term “lidar” according to its broadest reasonable interpretation because the written description focuses exclusively on “pulsed ToF lidar.”

Turning to obviousness, Quanergy argued that the Board erred in concluding that Velodyne’s claims were nonobvious over Mizuno because the expert testimony that the Board relied upon focused only on one particular embodiment of Mizuno’s device, which was not directed to a pulsed ToF lidar system. The Federal Circuit rejected this argument, finding that the Board did not err because Mizuno described “detect[ing] light reflected at an angle using position or image sensors, neither of which are used in pulsed time-of-flight lidar systems.” Based on this description, the Court found that Mizuno’s device was not a ToF lidar system.

Quanergy also argued that the Board failed to consider the issue of unclaimed features before presuming nexus. Quanergy argued that Velodyne’s evidence of commercial success related to those unclaimed features, such as a 360-degree horizontal field of view, a wide vertical field of view, a dense 3D point cloud and software, all of which were critical and materially impacted the functionality of Velodyne’s products. The Federal Circuit rejected this argument, finding that the Board did not err in finding a presumption of nexus [...]

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Precision Is Paramount: Court Enforces Terms of Email Agreement in Settlement

by Paul Devinsky | Feb 17, 2022 | Patents

The US Court of Appeals for the Federal Circuit reversed a district court order enforcing one party’s version of a settlement agreement, finding that version unsupported by the record. The Court found that the other party’s version accurately reflected the parties’ understanding. PlasmaCam, Inc. v. CNCElectronics, LLC, Case No. 21-1689 (Fed. Cir. Feb. 3, 2022) (Dyk, Reyna, JJ.) (Newman, J., dissenting).

PlasmaCam and CNCElectronics (CNC) both operate in the precision cutting industry. PlasmaCam is the exclusive licensee of a patent related to precision cutting equipment, and it sued CNC for allegedly infringing the patent. In December 2019, the parties notified the district court that they had settled the case but disputes arose in the process of drafting a formal agreement, particularly with respect to the scope of “covered products” under the settlement license and the scope of a “mutual release.” Although the parties eventually advised the district court that they had reached a complete agreement, disputes remained as to the scope of covered products. On PlasmaCam’s motion, the district court ordered CNC to execute PlasmaCam’s version of the agreement, execute a promissory note contemplated by the agreement and pay any unpaid settlement funds. CNC appealed.

The Federal Circuit first evaluated whether it had jurisdiction. The Court found that it had jurisdiction because the district court’s order was an injunction (since it ordered CNC to specifically perform an action, i.e., execute an agreement and promissory note, and not merely to pay money) and a final judgment (because it resolved all substantial issues between the parties).

The Federal Circuit next considered the negotiations between the parties with regards to the settlement agreement. As to the scope of covered products, the Court found that the parties had reached agreement regarding a definition of “covered products” in an email, even though the scope of the mutual release was still being negotiated. However, the Court found that the agreed definition of “covered products” was different from the one PlasmaCam provided to the Court and the one which the Court had subsequently ordered CNC to adopt. The Court also recognized the parties’ subsequent agreement regarding the mutual release, which both parties had confirmed to the district court. Because the district court had clearly erred by adopting a definition of “covered products” different from the one that was agreed by the parties, the Court reversed the district court’s order and remanded for further proceedings consistent with the parties’ actual agreement.

Judge Newman dissented. In her view, no agreement had been reached at all, as the parties had apparently continued to disagree as to the scope of key terms.

Practice Note: In this case, the parties’ statements to the district court that they had reached an agreement played a large role in establishing that an agreement had been formed even though there was no single signed document that reflected the agreement and, in some views, there continued to be disputes about important terms. Litigants should be careful not to represent to a court that an agreement has been [...]

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SEP Regulation: European Union Calls for Stakeholders’ Views

by Dr. Henrik Holzapfel and Dr. Maximilian Kiemle, LLM | Feb 17, 2022 | EU Update, Patents

Following public consultation rounds on the regulation of standard-essential patents (SEPs) in the United States and the United Kingdom, the European Union followed suit and published a “Call for Evidence” concerning an impact assessment on the European Union’s new framework for SEPs on 14 February 2022.

The Call for Evidence is part of the European Commission’s proposal for new EU legislation and non-legislative actions, which is expected to be adopted in the fourth quarter of 2022. While the European Union remains open on how exactly a system for licensing SEPs can be made more balanced, fair, transparent, predictable and efficient, there are already signs of a stricter approach in European competition policy towards dominant positions, including SEP holders, in high-tech markets. The European Commission stresses that the expected entry into force of the European unitary patent system requires an initiative at EU level, as initiatives at national level will not apply to unitary patents. Key elements of discussion include:

Enhancing transparency of SEPs by: (1) requiring the disclosure and update of certain information to improve publicly available information and (2) introducing a system for independent third-party assessments of essentiality under the management and control of an independent body
Providing clarity on various aspects of obligating SEP holders to offer licenses on fair, reasonable and non-discriminatory terms (F/RAND terms) by developing guiding principles and/or processes for clarifying the concept of F/RAND, negotiating F/RAND terms and conditions and determining appropriate level(s) of licensing in a value chain
Improving the effectiveness and efficiency of enforcement by incentivizing mediation, conciliation and/or arbitration.

The European Commission is accepting feedback in all 24 EU languages until 9 May 2022 (midnight Brussels time), and is particularly interested to hear opinions of SEP holders, SEP implementers, patent lawyers, legal practitioners, academics, patent-pool administrators, industry associations, start-ups, small and medium-sized enterprises (SMEs), standard development organizations (SDOs), consultants, policy makers and any other stakeholders that have experience with SEPs. All feedback will be published online.

Practice Note: Stakeholders should consider participating in the consultation, irrespective of whether they are more in the SEP holders’ or implementers’ camp, and even if their EU business may be limited. In times of global licensing campaigns, dialogues between the European Union and the United States on competition policy in the technology sector, and EU courts assuming jurisdiction in global SEP disputes, a future EU SEP policy will have an impact also elsewhere around the globe.

Seeing Eye to Eye: Preliminary Injunction Affirmed for Patent Filed After Accused Product Was Sold

by Katherine Pappas | Feb 17, 2022 | Patents

The US Court of Appeals for the Federal Circuit affirmed the grant of a preliminary injunction, finding that the district court did not abuse its discretion, clearly err in its underlying factual findings or abuse its discretion in setting the scope of the preliminary injunction. BlephEx, LLC v. Myco Indus., Inc., Case Nos. 2021-1149; -1365 (Fed. Cir. Feb. 3, 2022) (Moore, Schall, O’Malley, JJ.)

Myco sells AB Max, a mechanical device with an attached swab used for treating an eye condition known as blepharitis. Myco began marketing AB Max at a trade show in February 2019. One month later, BlephEx filed an application that later issued as a patent. The patent is directed toward cleaning debris from an eye during treatment of ocular disorders, including blepharitis. According to the patent, prior art treatment for blepharitis included at-home treatment where the patient would use a cotton swab, fingertip or scrubbing pad to scrub the eyelid margin in order to remove debris. Patients would often fail to adequately cleanse the eyelid margin, however. The patent’s solution is an electromechanical device with an attached swab for use by an eyecare professional to clean the patient’s eyelid margins.

The day the patent issued, BlephEx sued Myco and its chairman, John R. Choate, alleging that Myco’s AB Max infringed BlephEx’s newly issued patent. BlephEx moved the district court for a preliminary injunction prohibiting Myco from selling, distributing or offering the AB Max for sale. Myco opposed, arguing that a prior art reference (Nichamin) raised a substantial question of invalidity. The district court disagreed with Myco and granted the injunction. The district court noted that to anticipate, a prior art reference must disclose all elements of a claim arranged as in the claim, and Nichamin did not disclose combining the electromechanical applicator device depicted in one embodiment with a swab disclosed in another. The district court also rejected Myco’s argument that the patent examiner failed to consider Nichamin because he did not substantively discuss it during prosecution. The district court further rejected Myco’s obviousness argument as unsupported by expert evidence, finding Myco failed to overcome “the safety concerns of attaching a swab that is soaked in an abrasive to the Nichamin hand-held device.”

After the district court granted the preliminary injunction, Myco moved for reconsideration and argued that the preliminary injunction was overbroad because the AB Max had noninfringing uses. The district court rejected Myco’s argument, finding it was untimely and presented hypothetical noninfringing uses that were “outweighed by evidence that the only actual use of the AB Max was to treat anterior blepharitis,” which would likely infringe the asserted patent. Myco appealed.

The Federal Circuit affirmed the preliminary injunction grant. With respect to Myco’s anticipation argument, the Court found “Myco offers nothing other than attorney argument as to what the highly skilled artisan would do,” and this was insufficient to raise a substantial question of validity. The Court also noted that Myco had “put all of its eggs in the anticipation basket” and fatally failed [...]

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