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De Minimis Defense Doesn’t Protect Minimal Use of Concededly Infringing Material

by | Sep 23, 2021 |

The US Court of Appeals for the Ninth Circuit reversed a district court’s grant of summary judgment in favor of the defendant in a copyright case based on a “minimal usage” or de minimis use defense. Richard N. Bell v. Wilmott Storage Services, LLC, et al., Case Nos. 19-55882, -56181 (9th Cir. July 26, 2021) (Wardlaw, J.) (Clifton, J., and Choe-Groves, J., concurring).

Richard Bell took a photo of the Indianapolis skyline and published it on various websites. Eleven years later, he registered the photo with the US Copyright Office. Bell later conducted an online reverse image search of his photo to identify potential infringers and subsequently filed more than 100 copyright infringement lawsuits. One of the sites on which Bell found the photo was VisitUSA.com. The image was only available to those who had conducted a reverse image search or knew the precise web address to the photo. Wilmott Storage Services purchased VisitUSA.com in 2012. In 2018, Bell notified Wilmott that it was displaying the photo without his permission. Wilmott removed the photo in response to Bell’s request. In 2019, Wilmott continued to display a copy of the photo, but at a slightly different address than before. Wilmott explained that its webmaster was supposed to remove the photo but instead only changed the file name. Wilmott subsequently removed the photo.

Bell sued Wilmott for copyright infringement in 2018, asserting that Wilmott infringed his right to “display the copyrighted work publicly” by making it accessible to the public on Wilmott’s server. Assuming infringement, Wilmott filed for summary judgment based on the affirmative defenses of de minimis use, fair use and the statute of limitations. The district court granted summary judgment to Wilmott on the de minimis use defense. Although Wilmott conceded that an identical copy of the photo was hosted on its server, the district court found no infringement. Bell appealed.

The Ninth Circuit noted that it had not previously addressed the issue of whether one “publicly displays” a work where it is accessible only to members of the public who either possess the specific pinpoint address or who perform a particular type of online search—here, a reverse image search. Applying Ninth Circuit precedent from Perfect 10, the Court concluded that Wilmott publicly displayed the photo.

The Ninth Circuit also found that there was no place for an inquiry into whether there was de minimis copying because the “degree of copying” was total since the infringing work was an identical copy of the copyrighted photo. The Court explained that it and a majority of other circuits do not view the de minimis doctrine as a defense to infringement but rather as an answer to the inquiry whether an infringing work and copyrighted work are substantially similar so as to make the copying actionable. The Court reiterated that the de minimis defense applies to the amount of copying, not to the extent of the defendant’s use of the infringing work. The Court also explained that the de minimis copying defense is [...]

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NDA Sunset Provision Means Trade Secret Use May Not Be Misappropriation

by | Sep 16, 2021 |

The US Court of Appeals for the Ninth Circuit reversed a district court ruling in a trade secret misappropriation case based on a non-disclosure agreement (NDA) that resulted in an award of more than $60 million, ruling that any disclosures that occurred after the termination date of the NDA were not subject to misappropriation claims. BladeRoom Group Ltd. v. Emerson Electric Co., Case No. 19-16583 (9th Cir. Aug. 30, 2021) (Murphy, J.) (Rawlinson, J., concurring).

BladeRoom and Emerson compete for contracts to design and build data centers. In August 2011, the companies explored a potential sale of BladeRoom to Emerson. BladeRoom drafted an NDA governed by English law, and the parties signed it. Critically, the 12th paragraph of the NDA provided that “this agreement shall terminate on the date 2 years from the date hereof.” The potential acquisition ultimately fell through.

Not long after, Facebook began plans to build a data center in northern Sweden. BladeRoom pitched a design in July 2012, and Emerson pitched a design several months later. In October 2012, Facebook verbally approved Emerson’s design although it was only 10% complete. Almost a year later, Facebook contacted BladeRoom asking about updates to its proposal. In November 2013, Facebook selected Emerson’s proposal. Facebook and Emerson signed a design-build contract in March 2014, at which point BladeRoom learned about the design Emerson had pitched. BladeRoom sued Facebook and Emerson, alleging that Emerson had breached the NDA and misappropriated BladeRoom’s trade secrets.

The case was tried to a jury. During trial, BladeRoom settled with Facebook but not Emerson. Before closing arguments, Emerson proposed a jury instruction excluding information disclosed or used after August 2013 (i.e., after the NDA allegedly expired). The district court denied the instruction. BladeRoom then moved in limine to prohibit Emerson from arguing that the NDA permitted it to use BladeRoom’s information after August 2013. The district court granted the motion. The jury found Emerson liable and awarded $10 million in lost profits and $20 million in unjust enrichment damages but did not distinguish between the breach and misappropriation claims in making its award. The district court awarded $30 million in punitive damages and further awarded pre-judgment interest beginning on October 30, 2012, and $18 million in attorney’s and expert witness’ fees. Emerson appealed.

The Ninth Circuit first considered whether the NDA expired after two years. Applying English law, the Court held that it did based on a primarily textual analysis. However, the Court could not determine from the record the date on which the alleged breach/misappropriation had occurred. Accordingly, it vacated the judgment and remanded for a new trial.

The Ninth Circuit also discussed several issues in the appeal that would be relevant if Emerson was found liable on remand. The Court stated that the punitive damages award was not supported by the record where the jury did not distinguish between the breach and misappropriation claims because punitive damages are not available for breach of contract under California law. The Court also discussed prejudgment interest, observing [...]

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TTAB Judicial Appointments are Determined Constitutionally Sound

by | Sep 16, 2021 |

Addressing for the first time whether the Supreme Court of the United States’ recent decision in United States v. Arthrex, Inc. also applied to the Trademark Trial and Appeal Board (TTAB), the US Court of Appeals for the Federal Circuit held that it did not, upholding the constitutionality of TTAB judicial appointments and affirming the TTAB’s cancellation of the SCHIEDMAYER trademark. Piano Factory Group, Inc. v Schiedmayer Celesta GMBH, Case No. 20-1196 (Fed. Cir. Sept. 1, 2021) (Bryson, J.)

Schiedmayer Celesta is the remaining corporate entity from a centuries-old line of German keyboard instrument manufacturers that uses the SCHIEDMAYER trademark in connection with the sale of its products. Sweet 16 Musical Properties and Piano Factory Group (collectively, Piano Factory) operated Hollywood Piano retail outlets where it sold “no-name” pianos purchased from China that were affixed with “Schiedmayer” labels. The owner of Piano Factory, believing the SCHIEDMAYER mark had been abandoned, applied to register the SCHIEDMAYER mark, and the registration issued in 2007.

In 2015, Schiedmayer filed a petition to cancel Piano Factory’s registration, alleging that it falsely suggested a connection with Schiedmayer and, thus, violated Section 2(a) of the Lanham Act. After the TTAB granted the petition to cancel, Piano Factory appealed.

Between the time that the parties filed their appeal briefs and the Federal Circuit issued its decision, the Supreme Court issued its decision in United States v. Arthrex, holding that the appointment of Patent Trial & Appeal Board (PTAB) administrative judges violated the Appointments Clause of Article II of the Constitution. On appeal, Piano Factory argued that the appointment of TTAB administrative judges (specifically, the administrative judges who issued the decision Piano Factory was appealing) was likewise unconstitutional. However, the Court disagreed, citing language from the Arthrex decision that “effectively confirmed that . . . the statutory scheme governing TTAB decision-making is not subject to the Appointments Clause problem the Court identified with regard to the PTAB.”

Additionally, Piano Factory cited the Trademark Modernization Act of 2020 (TMA)—which explicitly addressed this issue—for support. Piano Factory argued that since the TMA was not enacted until after the TTAB’s decision to cancel the SCHIEDMAYER registration, its enactment indicated that the TTAB was previously flawed. Again, the Federal Circuit disagreed, stating “the 2020 legislation itself makes clear that it merely confirmed, and did not alter” the framework that was in place prior to the TMA.

Piano Factory also challenged the merits of the TTAB’s decision, including its application of the four-factor test for false association, which considers:

  1. Whether the challenged mark is identical or nearly identical to a name previously used by another person;
  2. Whether the mark would be understood as a unique and unmistakable reference to that person;
  3. Whether the person referenced by the challenged mark was connected with the applicant’s activities and
  4. Whether the earlier user’s name has sufficient fame such that a connection with applicant would be presumed when the contested mark was used to identify the applicant’s goods.

Piano Factory disputed the [...]

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Federal Circuit: Contractual Arbitration Agreements Don’t Bind PTAB Institution Decisions

by | Sep 16, 2021 |

The US Court of Appeals for the Federal Circuit issued an order declining to intervene in inter partes review (IPR) institution decisions by the Patent Trial & Appeal Board (PTAB) and further denied a writ of mandamus to stay the PTAB’s IPR institution pending contractually required arbitration of the dispute between MaxPower and ROHM Japan. In re: MAXPOWER SEMICONDUCTOR, INC., Case No. 21-146 (Fed. Cir. Sept. 8, 2021) (Reyna, J.) (O’Malley, J., concurring in part and dissenting in part).

MaxPower owned patents directed to silicon transistor technology and licensed the patents to ROHM Japan. The license agreement contained an arbitration clause that applied to any disputes arising from or related to it—including patent validity. A dispute arose between the parties as to whether the patents covered certain silicon carbide transistor ROHM products. After MaxPower notified ROHM that it was initiating arbitration under the terms of their license agreement, ROHM challenged the validity of four MaxPower patents at the PTAB, which granted ROHM’s petitions to institute IPRs for the four challenged patents.

MaxPower appealed the PTAB’s institution decision to the Federal Circuit and sought a writ of mandamus to stay or terminate the IPR proceedings without prejudice to later institution if an arbitrator decided that IPR proceedings were appropriate.

The Federal Circuit held that the PTAB’s decision to institute IPR is non-appealable under 35 U.S.C. §314(d), which plainly “confirms the unavailability of jurisdiction” for the Court to hear direct appeals. The Court also found that MaxPower failed to meet the criteria necessary to invoke the collateral order doctrine, which allows appeals from interlocutory rulings if they decide an issue “separate from the merits of the case” that would not be reviewable after final judgment. The Court noted that MaxPower could still raise its arbitration-related challenges after the PTAB issued its final written decisions in these cases.

The Federal Circuit also rejected arguments that the appeals were authorized under 9 U.S.C. § 16(a)(1) and that MaxPower failed to show that its mandamus petition was not “merely a ‘means of avoiding the statutory prohibition on appellate review of agency institution decisions,’” citing the Court’s 2018 decision in In re Power Integrations.

Since the PTAB is not bound by private contracts enforcing arbitration agreements between parties, the Federal Circuit ruled that MaxPower had failed to show that the PTAB’s institution decisions in this case “clearly and indisputably exceeded its authority,” also stating that 35 U.S.C. § 294 does not authorize the PTAB to enforce private arbitration agreements.

In a partial dissent, Judge Kathleen O’Malley argued that the majority decision casts “a shadow over all agreements to arbitrate patent validity” and goes against strong federal policy in favor of enforcing arbitration agreements. While concurring with the majority that the PTAB’s IPR institution decisions are not appealable, Judge O’Malley stated that the case “provides exactly the sort of extraordinary circumstances under which mandamus review is appropriate” in what she called an important issue of first impression. The Supreme Court of the United States has held that [...]

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Notice Under § 287 Means Knowledge of Infringement, Not Knowledge of Patent

by | Sep 16, 2021 |

The US Court of Appeals for the Federal Circuit reversed a district court’s finding of liability for infringement that occurred prior to the filing of the action, explaining that notwithstanding the defendant’ admission that it was aware of the asserted patent, the actual notice requirement of § 287(a) is only satisfied when the recipient is informed of the identity of the patent and the activity that is believed to be an infringement. Lubby Holdings LLC v. Chung, Case No. 19-2286 (Fed. Cir. Sept. 1, 2021) (Dyk, J.) (Newman, J., dissenting in part).

Lubby Holdings sued Henry Chung for infringement of its patent relating to leak-resistant vaping products. Lubby sought damages for alleged pre-filing sales based on alleged compliance with the marking requirement of § 287. Chung raised the issue of whether Lubby’s products were properly marked as required by § 287(a), pointing to one of Lubby’s products as an example. At trial, Chung moved for judgment as a matter of law (JMOL) under Fed. R. Civ. Pro. 50(a), arguing that Lubby did not meet its burden to show that it complied with the § 287 marking requirement. The jury ultimately found Chung liable for direct infringement and awarded Lubby almost $900,000. Chung renewed his motion for JMOL under Rule 50(b) and moved for a new trial under Rule 59(a). After both motions were denied, Chung appealed.

Chung argued that there was no evidence that Lubby complied with the marking or notice requirements of § 287. Lubby argued that Chung did not meet his initial burden to point to products that were sold unmarked.

The Federal Circuit explained that under § 287(a), a patentee must properly mark its articles that practice its own invention, or the patentee is not entitled to damages for patent infringement that occurred before “actual notice” was given to an alleged infringer. The Court noted that once Chung met the “low bar” burden bar under Artic Cat to “articulate the products he believed were unmarked patented articles, the burden of proving compliance with the marking requirement is on the patentee.” The Court explained that Chung met this burden by specifically pointing to Lubby’s J-Pen Starter Kit. The Court continued that the burden shifted to Lubby, and Lubby failed to present any evidence that its products were properly marked or that its products did not practice its invention. As a result, Lubby could only recover damages for the period after Chung was provided with “actual notice.”

The Federal Circuit explained that actual notice under § 287(a) requires that the recipient be informed “of the identity of the patent and the activity that is believe to be an infringement, accompanied by a proposal to abate the infringement.” The Court further explained that it is irrelevant whether the defendant knew of the patent or knew of its own infringement. As applied to this case, the Court found that it was not relevant that Lubby told Chung that he could not use the patented technology, or that Chung [...]

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Material Information Submitted to FDA but Withheld from PTO Gives Rise to Inequitable Conduct

by | Sep 16, 2021 |

The US Court of Appeals for the Federal Circuit found prior art submitted to the US Food and Drug Administration (FDA), yet withheld from the US Patent & Trademark Office (PTO) during prosecution of an asserted patent, sufficient evidence for a finding of inequitable conduct. Belcher Pharmaceuticals, LLC v. Hospira, Inc., Case No. 20-1799 (Fed. Cir. Sept. 1, 2021) (Reyna, J.)

The patent in issue relates to injectable formulations of l-epinephrine. Epinephrine is a hormone that has been on the market since approximately 1938 and is used for a variety of medical purposes. It is also known that l-epinephrine degrades into a more potent isomer known as d-epinephrine. L-epinephrine also degrades into an impurity known as adrenalone through a process called oxidation.

In 2012, Belcher first submitted a New Drug Application (NDA) for a 1 mg/mL injectable l-epinephrine formulation. The NDA was literature-based, meaning that Belcher did not perform any clinical or non-clinical studies on its epinephrine formulation to support its application. Among the materials submitted to the FDA was an article by Stepensky et al to support its statement that “racemization of the enantiomerically pure L-Epinephrine isomer in injectable formulations of epinephrine is a well-known process.” It also submitted data from Swiss pharmaceutical company Sintetica SA’s formulation that had a pH range of 3.1 – 3.3 and undetectable levels of adrenalone. Ultimately, Belcher pursued a formulation with a similar pH range of 2.8 – 3.3.

In 2014, Belcher filed a patent application that was ultimately issued as the asserted patent. The patent taught that increasing the in-process pH to 2.8 – 3.3 unexpectedly reduced the racemization of l-epinephrine to d-epinephrine at release by approximately two thirds. The asserted claims covered pharmaceutical epinephrine formulations having a pH between 2.8 – 3.3 and certain concentrations of l-epinephrine, d-epinephrine and adrenalone at the time of release and 12 months later.

The prosecution of the application involved a single office action in which the pending claims were rejected in view of Helenek. The examiner explained that Helenek taught 1 mg/ml of epinephrine injection that, among other things, had a pH range of 2.2 – 5.0. Belcher overcame this rejection by arguing that Helenek did not render obvious the claimed range of 2.8 – 3.3 because the claimed range was unexpectedly found to be critical to reduce racemization of l-epinephrine.

Hospiria also submitted an NDA seeking approval of an injectable l-epinephrine formulation, which included a certification under 21 U.S.C. § 355(b)(2)(A)(iv)(Paragraph IV) that the asserted patent’s claims were invalid, unenforceable and/or not infringed by Hospira’s NDA product. Belcher subsequently sued Hospira for patent infringement.

During trial, Darren Rubin, Belcher’s Chief Science Officer, testified that in his role at Belcher, he was involved in the drafting and development of the NDA and in the prosecution of the asserted patent—including drafting the claims and specification and responding to the examiner’s office action. Darren admitted he knew of Stepensky before the application was filed and that he possessed a label for a 1 mg/mL epinephrine product marked [...]

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Sixth Circuit: It’s a Go on Plaintiff’s Claims Despite Arbitration Clause

by | Sep 16, 2021 |

The US Court of Appeals for the Sixth Circuit affirmed in part a district court’s grant of a stay pending arbitration, finding that as non-parties to the underlying arbitration agreement, defendants could not stay the plaintiff’s action against them by arguing that they were beneficiaries of the arbitration agreement. AtriCure, Inc. v. Meng, Case No. 19-4067 (6th Cir. Aug. 27, 2021) (Murphy, J.) (Guy, J., dissenting).

AtriCure invested millions into developing medical devices that treat a serious degenerative heart condition known as atrial fibrillation. The company sells these products to hospitals throughout the world. In the mid-2000s, AtriCure sought to enter the Chinese market. In order to do so, it needed a Chinese agent. Dr. Jian Meng approached AtriCure about partnering with one of his companies to serve as AtriCure’s Chinese distributor. AtriCure eventually entered into a relationship with Meng’s company, ZenoMed.

In 2015, AtriCure discovered that another of Meng’s companies, Med-Zenith, was attempting to market a knockoff version of one of AtriCure’s medical devices. AtriCure opted to continue the relationship with ZenoMed, and in 2016, AtriCure and ZenoMed entered into a distribution agreement. However, in 2017, AtriCure learned that Med-Zenith was attempting to develop more counterfeit versions of AtriCure’s devices. As a result, AtriCure allowed the distribution agreement to expire and demanded that ZenoMed return its inventory.

AtriCure then sued Meng and Med-Zenith in the Southern District of Ohio, alleging improper manufacturing and selling of dangerous counterfeit productions, as well as various state law claims. AtriCure also brought an arbitration demand under the distribution agreement against ZenoMed. Meng and Med-Zenith sought to stay the federal lawsuit, arguing that they were beneficiaries of the arbitration clause in the distribution agreement under equitable estoppel and agency theories. After the district court denied the motion, Meng appealed.

The Sixth Circuit explained that after the Supreme Court of the United States’ 2009 ruling in Arthur Andersen LLP v. Carlisle, circuit courts are obligated to look to relevant state common law to decide when nonparties may enforce or be bound by an arbitration agreement. As a result, the blanket federal presumption favoring arbitration even against nonparties was no longer applicable. Now, courts must examine state law to determine whether nonparties may enforce or be bound by an arbitration agreement. The Court examined Ohio contract law to determine that a nonparty cannot enforce an arbitration clause unless it is an intended third-party beneficiary. The Court rejected Meng and Med-Zenith’s equitable estoppel arguments, finding that under Ohio law, AtriCure’s state law claims did not seek to enforce the distribution agreement against Meng and Med-Zenith, or rely on any theory that they owed contractual duties to AtriCure notwithstanding their nonparty status. Finally, the Court remanded the question of whether Meng’s agency argument could prevail by determining if he was acting as an agent of ZenoMed when he engaged in the conduct AtriCure complained about in the separate arbitration.

In dissent, Judge Ralph B. Guy Jr. argued that Meng “unambiguously sought a ‘stay under Section 3 of the [...]

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Bascom Cannot Save Your Claims if Your Own Patent Says You Used Known Technology

by | Sep 9, 2021 |

The US Court of Appeals for the Federal Circuit affirmed a district court determination that claims of several patents were patent ineligible under 35 U.S.C. § 101 because they did not recite an innovation with sufficient specificity to constitute an improvement to computer functionality. Universal Secure Registry LLC v. Apple Inc., Case No. 20-2044 (Fed. Cir. Aug. 26, 2021) (Stoll, J.)

Universal Secure Registry (USR) sued Apple, Visa and Visa U.S.A. (collectively, Apple), asserting four patents directed to securing electronic payment transactions, which USR alleged allowed for making credit card transactions “without a magnetic-stripe reader and with a high degree of security” (e.g., allegedly Apple Pay or Visa Checkout). Apple moved to dismiss the complaint under Fed. R. Civ. Pro. 12(b)(6), arguing that the asserted patents claimed patent-ineligible subject matter under 35 U.S.C. § 101. The Delaware magistrate judge, quoting Visual Memory v. NVIDIA (Fed. Cir. 2017), determined that all the representative claims were directed to a non-abstract idea because “the plain focus of the claims is on an improvement to computer functionality itself, not on economic or other tasks for which a computer is used in its ordinary capacity.”

The district court judge disagreed, concluding that the representative claims failed at both Alice steps, and granted Apple’s motion to dismiss. The district court found that the claimed invention was directed to the abstract idea of “the secure verification of a person’s identity,” and that the patents did not disclose an inventive concept—including an improvement in computer functionality—that transformed the abstract idea into a patent-eligible application. USR appealed.

In assessing the claims under the Alice two-part test, the Federal Circuit noted that in cases involving authentication technology, patent eligibility often turns on whether the claims provide sufficient specificity to constitute an improvement to computer functionality itself. For example, in its 2017 decision in Secured Mail Solutions v. Universal Wilde, the Court (at Alice step one), held that claims directed to using a conventional marking barcode on the outside of a mail object to communicate authentication information were abstract because they were not directed to specific details of the barcode, how it was processed or generated or how it was different from long-standing identification practices. Similarly, in its 2020 decision in Prism Technologies v. T-Mobile, where the claims broadly recited “receiving” identity data of a client computer, “authenticating” the identity of the data, “authorizing” the client computer and “permitting access” to the client computer, the Court held at Alice step one that the claims were directed to the abstract idea of “providing restricted access to resources,” not to a “concrete, specific solution.” At step two, the Court determined that the asserted claims recited conventional generic computer components employed in a customary manner such that they were insufficient to transform the abstract idea into a patent-eligible invention.

The claims in issue fared similarly. The district court held that the representative claim was not materially different from the Prism claims, and the Federal Circuit agreed. Although the [...]

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Damage Expert Testimony Excluded for Failure to Disclose Evidence and to Apportion

by | Sep 9, 2021 |

The US Court of Appeals for the Federal Circuit affirmed a district court’s decision to preclude a damage expert from characterizing license agreements and opining on a reasonable royalty rate where the sponsoring party failed to produce key documents and to apportion for non-patented features. MLC Intellectual Property, LLC v. Micron Technology, Inc., Case No. 20-1413 (Fed. Cir. Aug. 26, 2021) (Stoll, J.)

MLC sued Micron for infringing claims of a patent relating to programing multi-level memory cells. In his expert report, MLC’s damage expert, Michael Milani, attempted to reconstruct the hypothetical negotiation. Milani opined on two separate approaches to determining the royalty base: A comparable license and the smallest saleable patent practicing unit.

Milani considered each of the Georgia-Pacific factors to determine a reasonable royalty rate. He determined that a Hynix Semiconductor license agreement was relevant, notwithstanding that it required a lump sum payment for a non-exclusive license to a patent portfolio containing the asserted patent rather than a royalty rate. Milani relied on a most favored customer provision that contemplated Hynix paying less for the patents if the licensor granted a license at a royalty rate of less than 0.25% to any new licensee to arrive at his royalty rate. Milani applied this rate to another lump sum agreement MLC had with Toshiba Corporation. To support his opinion, Milani relied on extrinsic evidence, including summaries of negotiations involving the asserted patent and another alleged infringer and letters and memorandums with other licensees—all contemplating a 0.25% royalty rate. Micron moved to exclude Milani’s testimony.

Micron filed a motion in limine to preclude Milani from mischaracterizing the license agreements as reflecting a 0.25% royalty rate. Micron moved to strike portions of Milani’s expert report under Fed. R. Civ. Pro. 37 as based on facts, evidence and theories that MLC disclosed for the first time in its damage expert report. Micron further filed a Daubert motion, seeking to exclude Milani’s reasonable royalty opinion for failure to apportion out the value of non-patented features. The district court granted all three motions.

The district court rejected Milani’s reliance on the most favored customer provision in the Hynix agreement for the 0.25% royalty rate, finding that the provision did not apply the rate to the lump sum nor did it provide any insight into how the lump sum was calculated. The district court also determined that Milani did not base his testimony on sufficient facts or data, and his opinion was not the product of reliable principles and methods. Finally, the district court found that MLC did not disclose the extrinsic evidence relied on by Milani to reflect the 0.25% rate, and therefore MLC could not rely on that evidence. Lastly, the district court determined that there was no evidence supporting Milani’s opinion that the 0.25% rate apportioned non-patented features of the accused products. MLC filed an interlocutory appeal.

The Federal Circuit found that Milani’s testimony relating to the 0.25% royalty rate rested on an inference from the most favored customer clause that went [...]

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Another Genus Claim Bites the Dust for Lack of Written Description

by | Sep 9, 2021 |

Addressing the issue of written description in the context of antibody-related genus claims, the US Court of Appeals for the Federal Circuit reversed a $1.2 billion jury verdict and found genus claims using functional language invalid for lack of written description. Juno Therapeutics, Inc. v. Kite Pharma, Inc., Case No. 20-1758 (Fed. Cir. Aug. 26, 2021) (Moore, J.)

Kite’s YESCARTA® is a therapy in which a patient’s T cells are engineered to express a chimeric antigen receptor (CAR) to target the antigen CD19. Juno sued Kite, alleging infringement of a patent relating to a nucleic acid polymer encoding a three-part CAR for a T cell. The three-part CAR comprises:

  1. An intracellular domain of the CD3 ζ (zeta) chain, a signaling domain that is activated to create an initial immune response
  2. A costimulatory region comprising of a specific amino acid sequence (here, a specific CD28 sequence) that, when activated, directs the T cells to multiply
  3. A binding element that determines what target molecule or antigen the CAR can bind to, such as a single-chain antibody variable fragment (scFV).

Juno’s patent disclosed two scFVs (one that binds CD19 and another that binds PSMA) but did not disclose the amino acid sequence of either scFV.

After a two-week trial, the jury reached a verdict in Juno’s favor, finding in relevant part that Kite failed to prove that any of the asserted claims were invalid for lack of written description or enablement. The jury awarded damages amounting to a $585 million upfront payment and an almost 28% running royalty. The district court denied Kite’s motions for judgment as a matter of law and enhanced the total award to approximately $1.2 billion in addition to the 28% running royalty. Kite appealed.

The Federal Circuit reversed, concluding that no reasonable jury could find adequate written description because the patent disclosed neither representative species nor common structural features of the claimed scFV genus to identify which of the millions of billions of scFVs would function as claimed. Turning first to lack of representative species, the Court explained that the broadest asserted claims cover any scFV that binds to any target of clinical interest but fails to provide a representative sample of species within, or defining characteristics for, that expansive genus. The Court also disagreed that the two working embodiments in the patent were representative of the entire genus of vast number of possible scFVs that bind to an undetermined number of targets without more in the disclosure (such as the characteristics of the exemplary scFVs that allow them to bind to particular targets or nucleotide sequences). The Court stated that even if such scFVs were known as Juno argued, the specification provided no means of distinguishing which scFVs would bind to which targets.

Turning next to lack of structural features common to the claimed genus, the Federal Circuit held that general assertions that scFVs generally have a common structure in the context of the technology in this case were insufficient because an scFV with the [...]

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