IP UPDATE
Exploring the Latest in Intellectual Property Law
IP UPDATE
Exploring the Latest in Intellectual Property Law
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Free Speech Shines Bright, Illuminates Patent Owner’s Right to Allege Infringement

by | Mar 2, 2023 |

The US Court of Appeals for the Federal Circuit reversed a district court’s preliminary injunction prohibiting a patent owner from communicating its view that a competitor infringed, finding that the speech restriction was improper because the infringement assertions were not objectively baseless. Lite-Netics, LLC v. Nu Tsai Capital LLC, Case No. 23-1146 (Fed. Cir. Feb. 17, 2023) (Lourie, Taranto, Stark, JJ.)

Lite-Netics and Nu Tsai Capital d/b/a Holiday Bright Lights (HBL) compete in the market for holiday string lights. Both companies use similar magnetic mechanisms that allow users to secure the end of the lights. Lite-Netics owns several patents that describe and claim magnetically secured decorative lights. In June 2017, Lite-Netics sent a cease-and-desist letter to HBL demanding that it stop selling lights alleged to infringe Lite-Netics’s patents. After remaining silent for five years, Lite-Netics sent another cease-and-desist letter in April 2022 demanding that HBL either explain why its products did not infringe the Lite-Netics patents or stop selling the products.

When HBL refused to stop selling the allegedly infringing products, Lite-Netics sent communications to HBL’s customers notifying them of their infringement claim and threatening “all legal rights and remedies” to stop the sale of HBL’s products. Lite-Netics then filed a lawsuit against HBL for infringement of the patents. HBL asserted counterclaims, including tortious interference with business relationships, defamation under Nebraska law and bad faith patent-infringement communications. HBL also sought a preliminary injunction to prevent Lite-Netics from publishing further accusatory statements. Finding that HBL would likely succeed on its tortious interference and defamation claims and that Lite-Netics’ infringement allegations were “objectively baseless,” the district court granted the preliminary injunction. Lite-Netics appealed.

The Federal Circuit reversed the district court, finding that in cases where an injunction restricts a party’s rights to First Amendment protected speech about its federal patent rights, federal law preempts state tort law. The Court explained that federal law requires a higher “bad faith” standard of proof for a preliminary injunction that would impinge on those federal rights. The Court found that HBL had failed to show that Lite-Netics’s allegations and the publication of its allegations were made in bad faith or that those allegations were objectively baseless. The Court therefore reversed and remanded to the district court for further proceedings.



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The Alice Eligibility Two-Step Dance Continues

by | Mar 2, 2023 |

The US Court of Appeals for the Federal Circuit affirmed a district court’s dismissal of a Fed. R. Civ. P. 12(b)(6) motion, holding that patent claims directed to abstract ideas and lacking inventive steps that transform abstract ideas into patent-eligible inventions fail the Alice two-step test and are not patent eligible under 35 U.S.C. § 101. Hawk Tech. Sys., LLC v. Castle Retail, LLC, Case No. 22-1222 (Fed. Cir. Feb. 17, 2023) (Reyna, Hughes, Cunningham, JJ.)

35 U.S.C. § 101 states that laws of nature, natural phenomena and abstract ideas are not patentable. The Supreme Court of the United States in Alice v. CLS Bank Int’l (2014) articulated a two-step test for examining patent eligibility: a patent claim falls outside § 101 if it is directed to a patent-ineligible concept such as an abstract idea and lacks elements sufficient to transform the claim into a patent-eligible application.

Hawk Technology sued Castle Retail alleging infringement of its patent directed to security surveillance video operations in Castle Retail’s grocery stores. The patent relates to a method of viewing multiple simultaneously displayed and stored video images on a remote viewing device of a video surveillance system using result-based functional language. Castle Retail moved to dismiss on the basis that the claims were not patent eligible under § 101. After conducting a technology briefing, the district court granted the motion. The district court ruled that the claims were abstract because surveillance monitoring is a common business practice and the claims recited little more than taking video surveillance and digitizing it for display and storage in a conventional computer system, and the claims did not limit the abstract idea to a new technological improvement in video storage/display that could transform the abstract idea into a patent-eligible invention. Hawk Technology appealed.

The Federal Circuit, reviewing de novo, affirmed. Addressing Alice step one, the Court found that the patent’s required functional results of receiving/digitizing video images, converting images to selected format and storing/displaying/transmitting the images were similar to claims that the Court previously ruled as abstract. The results-oriented claim language failed to concretely recite how the claimed invention improved the functionality of video surveillance systems and was therefore abstract. Regarding Alice step two, the Court analyzed the claim elements, both individually and as an ordered combination in light of the specification, for transformative elements. The Court explained that although the claims recited the purported inventive solution and referenced specific tools/parameters, they neither showed how monitoring and storage was improved nor required anything other than off-the-shelf, conventional computer, network and display technology for gathering, sending and presenting the specified information.

Procedurally, the Federal Circuit found that the motion to dismiss was not decided prematurely because the technology briefing was purely a procedural step conducted in each patent case and there was no evidence that the district court’s decision hinged on new facts constituting matters beyond the pleadings. Hawk had argued that because the district court considered Castle’s testimony and evidence, it was required to convert the [...]

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All the Benefits of a Reverse Triangular Merger, None of the IP Merger Mess

by | Mar 2, 2023 |

The US Court of Appeals for the Eleventh Circuit affirmed a district court’s summary judgment dismissal of plaintiff’s claim that the defendant failed to provide a payment conditioned on the sale, merger or transfer of certain intellectual property since ownership was not transferred via the merger. GSE Consulting, Inc. v. L3Harris Techs., Inc., Case No. 22-10647 (11th Cir. Feb. 8, 2023) (Rosenbaum, Lagoa, Wetherell, JJ.)

L3Harris specializes in defense and information technology and until recently was known as Harris Corporation. The name change from Harris to L3Harris was the result of a reverse triangular merger it executed over 2018 and 2019 whereby its subsidiary, Leopard Merger Sub, merged with its target, L3 Technologies.

In 2008, Harris and GSE combined forces to develop an oil sands heavy oil recovery process. In addition to yielding intellectual property relating to the process’s corresponding radio frequency heating technology, the collaboration resulted in a consulting agreement that would have extended through December 31, 2022. Under the consulting agreement, GSE provided its specialized infrastructure and energy consulting services on call and assigned all its rights to intellectual property developed under the agreement to Harris. In return, GSE received base pay and the right of first refusal for 10% of the direct labor workshare of Harris’s radio frequency heating projects.

The consulting agreement also included several payment conditions to benefit GSE or mitigate its risk. GSE believed that the Harris-L3 merger triggered the following condition to the tune of $4 million:

6.b. Payments calculation for the following to be 3% of market capitalization, capped at $4M:

 

  1. in the event the IP is sold, merged or transferred and the primary basis of the sale is not the IP.

GSE argued that the intellectual property relevant to the consulting agreement had “merged” because the Harris-L3 plan of merger addressed that intellectual property and included it in the merger. GSE therefore issued a $4 million invoice to L3Harris.

L3Harris rejected the invoice, arguing that while the plan of merger addressed the relevant intellectual property, the relevant language declared that the merger would have no effect on Harris and L3’s respective ownership interests: “all such rights will survive unchanged after the consummation of the [merger].” According to L3Harris, ownership of the relevant intellectual property did not change through the merger. Not long after rejecting GSE’s invoice, L3Harris also shut down its radio frequency heating program.

GSE subsequently filed a lawsuit alleging breach of contract, and the parties filed competing summary judgment motions. GSE maintained its position that it was owed $4 million but also argued that if the district court found the payment provision ambiguous then it should consider testimony from those who brokered the agreement demonstrating that a corporate merger was sufficient to trigger payment. L3Harris argued that the provision was unambiguous and thus Florida law prohibited considering extrinsic evidence. L3Harris also argued that its merger didn’t involve anything that triggered payment (i.e., the relevant intellectual property was not sold, merged or transferred).

The district court granted [...]

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DC Circuit to Disputes Ancillary to Patent Matters: “You Can’t Sit with Us”

by | Mar 2, 2023 |

For the first time, the US Court of Appeals for the District of Columbia Circuit addressed whether appeals of discovery orders ancillary to a patent suit are within the exclusive jurisdiction of the US Court of Appeals for the Federal Circuit. The DC Circuit joined its sister circuits and held in the affirmative. Fraunhofer-Gesellschaft Zur Förderung Der Angewandten Forschung E.V. v. Sirius XM Radio Inc., Case No. 22-7001 (DC Cir. Feb. 17, 2023) (Srinivasan, Henderson, JJ., Edwards, Sr. J.)

In February 2017, Fraunhofer-Gesellschaft Zur Förderung commenced a civil action for patent infringement against Sirius XM Radio in the District of Delaware. During discovery, Fraunhofer subpoenaed for deposition Sirius XM’s former Chief of Marketing Officer, My-Chau Nguyen, a resident of Washington, DC.

After Nguyen failed to appear for her deposition, she filed a motion in the US District Court for the District of Columbia to quash the subpoena. Fraunhofer responded with a cross-motion to compel Nguyen’s deposition and a motion for sanctions. The DC district court denied Nguyen’s motion to quash, ordered her to sit for deposition, found her in contempt for failing to appear for deposition in the first instance, and expressed an intent to award sanctions upon Fraunhofer’s submission of documentation reflecting fees and costs. Fraunhofer appealed to the DC Circuit.

The DC Circuit first addressed whether it had jurisdiction to consider Nguyen’s challenge to the district court’s order compelling her deposition in light of the fact that Nguyen’s deposition had already been taken at the time of appeal. The Court held that Nguyen’s challenge was moot because “[n]umerous courts have held that an appeal from enforcement of a subpoena becomes moot once the party has complied with the subpoena.” Therefore, the Court reasoned that it lacked jurisdiction to consider Nguyen’s subpoena challenge because she had already complied with the subpoena at the time of the appeal.

Next, the Court addressed whether it had jurisdiction to assess the merits of Nguyen’s challenge to the district court’s finding of contempt and intent to award sanctions. The Court determined that it did not have subject matter jurisdiction to consider these issues.  The Court explained that because “the underlying litigation between Fraunhofer and Sirius XM in the District of Delaware arises under an Act of Congress relating to patents[,]” Nguyen’s discovery dispute in the DC district court was “ancillary to a patent suit.” The DC Circuit reasoned that only the Federal Circuit is vested with jurisdiction over appeals “arising under . . . any Act of Congress related to patents[.]” (28 U.S.C. § 1295(a)(1).) Holding similarly to other circuits, the Court concluded that because Nguyen’s discovery dispute was ancillary to a patent matter, the ability to decide the merits of her appeal was solely within the province of the Federal Circuit.

The DC Circuit found that it did not have the authority to transfer Nguyen’s challenges to the Federal Circuit, however. The DC Circuit concluded that it was forced to dismiss rather than transfer because “this appeal could not have been brought [...]

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When It Comes to Claim Construction, Prosecution History and Specification Rule

by | Feb 23, 2023 |

Addressing claim constructions across two patents that ultimately led to noninfringement findings by a district court, the US Court of Appeals for the Federal Circuit affirmed one construction because it was supported by the prosecution history but reversed another because it was unsupported by the specification. SSI Techs., LLC v. Dongguan Zhengyang Elec. Mech. Ltd., Case Nos. 21-2345, 22-1039 (Fed. Cir. Feb. 13, 2023) (Reyna, Bryson, Cunningham, JJ.)

SSI owns two patents directed to sensors for determining the characteristics of fluid in a container such as a fuel tank. One patent, referred to as the transducer patent, describes an exemplary sensor system containing a “level” transducer and a “quality” transducer. The two transducers use ultrasonic sound waves and time of flight to determine both a level of fluid in a given tank and a quality (i.e., concentration of diesel exhaust fluid). The other patent, referred to as the filter patent, describes a similar system but attempts to address the problem of erratic measurement results that may occur because of air bubbles embedded in the fluid. This patent claims a “filter” covering the sensing area that substantially prohibits gas bubbles from entering the sensing area.

Dongguan Zhengyang Electronic Mechanical (DZEM) produces systems that determine the quality and volume of diesel exhaust fluid that are used in emission-reduction systems for diesel truck engines. SSI accused DZEM of infringing both patents. In the district court action, DZEM brought a motion for summary judgment of noninfringement based on the court’s construction of certain terms that appear in the asserted claims. With reference to the transducer patent, the claims recite the need to “determine whether a contaminant exists in the fluid based on . . . a dilution of the fluid [] detected while the measured volume of the fluid decreases.” The district court determined that this claim element required that the contaminant determination actually consider the measured volume of the fluid. The district court predicated its determination on the prosecution history, having found that this term was amended to include the disputed term and that the applicant’s intention was to incorporate the specific error-detection capability recited in the specification. The parties had previously agreed that the DZEM products did not base the contamination determination on any consideration of the measured volume. As a result, the district court granted DZEM’s motion for summary judgment of noninfringement on the transducer patent.

Regarding the filter patent, the district court adopted DZEM’s construction of the term “filter,” which was “a porous structure defining openings, and configured to remove impurities larger than said openings from a liquid or gas passing through the structure.” DZEM’s accused sensors includes a rubber cover with four apertures. The district court found that the rubber cover was not “porous” because the apertures were “relatively large” when compared with the disclosed embodiments in the specification. As a result, the court granted DZEM’s motion for summary judgment of noninfringement on the filter patent. SSI appealed.

SSI challenged both constructions. Regarding the transducer patent, SSI argued that [...]

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No Standing to Invalidate Trademark without Threat of Infringement Suit

by | Feb 23, 2023 |

The US Court of Appeals for the Ninth Circuit concluded that when a party obtains a declaratory relief finding that it does not infringe a trademark, it no longer has Article III standing to pursue invalidation of the mark. San Diego County Credit Union v. Citizens Equity First Credit Union, Case Nos. 21-55642; -55662; -56095; -56389 (9th Cir. Feb. 10, 2023) (Bea, Ikuta, Christen, JJ.)

Citizens Equity First Credit Union (CEFCU) registered a trademark for the term “CEFCU. NOT A BANK. BETTER,” and further claimed to own a nearly identical common-law trademark for “NOT A BANK. BETTER.” In 2014, San Diego County Credit Union (SDCCU) obtained a registration for “IT’S NOT BIG BANK BANKING. IT’S BETTER.” CEFCU petitioned the Trademark Trial & Appeal Board to cancel SDCCU’s registration, claiming that it covered a mark that was confusingly similar to CEFCU’s registered and alleged common-law marks.

SDCCU sought declaratory relief in the district court seeking a noninfringement finding of CEFCU’s registered and common-law marks, an invalidity finding of CEFCU’s registered and common-law marks, and a finding that CEFCU falsely or fraudulently registered its mark. CEFCU unsuccessfully filed motions to dismiss for lack of personal and subject matter jurisdiction. SDCCU persuaded the district court that during the course of the cancellation proceedings, it became apprehensive that CEFCU would sue SDCCU for trademark infringement. The district court granted SDCCU’s motion for summary judgment on noninfringement and CEFCU’s motion for summary judgment on SDCCU’s fraudulent registration claim. The parties agreed to dismiss the claim that CEFCU’s registered mark was invalid. The only issue remaining was SDCCU’s count seeking declaratory relief to invalidate CEFCU’s common-law mark. After a bench trial, the district court determined that CEFCU’s common-law mark was invalid, entered final judgment and awarded SDCCU attorneys’ fees. CEFCU appealed.

In an appeal that raised a “bevy of issues,” the Ninth Circuit concluded that the district court lacked Article III jurisdiction to invalidate CEFCU’s common-law mark following the grant of summary judgment in favor of SDCCU on its noninfringement claims. Citing the Supreme Court’s 2007 decision in MedImmune v. Genentech and Ninth Circuit precedent, the Ninth Circuit applied the “reasonable apprehension” test to determine whether a controversy exists in a declaratory judgment action regarding trademark infringement. Under this test, a party has standing to seek declaratory relief of noninfringement if the party demonstrates “a real and reasonable apprehension that [the party] will be subject to liability” if the party’s course of conduct continues. Concrete threats of a trademark infringement suit are not required to create live controversy to provide standing to seek declaratory relief action.

The Ninth Circuit concluded that justiciable controversy existed at the pleading stage, pointing to CEFCU’s cancellation petition, CEFCU’s testimony that it was just a “matter of time” before actual confusion occurred in California, and CEFCU’s affirmative refusal to stipulate that SDCCU was not infringing CEFCU’s marks. However, once the district court rendered its declaratory judgment of noninfringement, the record lacked any evidence that an ongoing threat of liability was causing [...]

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No First Place Trophy Here: Public Demo at Trade Show Found Invalidating

by | Feb 23, 2023 | ,

Addressing the public use bar of pre-America-Invents-Act (AIA) 35 U.S.C. § 102(b), the US Court of Appeals for the Federal Circuit affirmed a district court’s decision to invalidate a patent because the patent owner’s disclosure of a prior art device at a trade show more than one year before the patent’s priority date was an invalidating prior public use. Minerva Surgical, Inc. v. Hologic, Inc., Case No. 21-2246 (Fed. Cir. Feb. 15, 2023) (Prost, Reyna, Stoll, JJ.)

Minerva sued Hologic for infringement of a patent directed to surgical devices for a procedure called endometrial ablation, which stops or reduces abnormal uterine bleeding. The patent had a priority date of November 7, 2011, and the asserted claim included the term “the inner and outer elements have substantially dissimilar material properties” (SDMP term). The district court construed the SDMP term to mean that the “inner and outer frame elements have different thickness and different composition.”

On completion of discovery, Hologic moved for summary judgment of invalidity, arguing that the asserted patent claims were anticipated under the public use bar of pre-AIA § 102(b). According to Hologic, more than a year before the patent’s priority date, Minerva brought a device called Aurora to the 38th Global Congress of Minimally Invasive Gynecology sponsored by the American Association of Gynecologic Laparoscopists (AAGL 2009)—an event dubbed the “Super Bowl of the industry.” During the AAGL 2009 conference, Minerva had a booth with 15 fully functional Aurora devices, gave a presentation discussing the Aurora devices and distributed brochures. In light of the record, the district court granted summary judgment that the asserted claims were anticipated under the public use bar. Minerva appealed.

Minerva raised three arguments on appeal. First, Minerva argued that disclosure of the Aurora device at AAGL 2009 was not a “public use” because Minerva “merely displayed” the device. Second, Minerva argued that there was no disclosure of the “invention” of the asserted claim because the Aurora device disclosed at AAGL 2009 lacked the SDMP term. Third, Minerva argued that the invention was not “ready for patenting” because Minerva was still improving the SDMP technology at the time of AAGL 2009, so the device did not function for its intended purpose of ablating “live human” tissue. The Federal Circuit addressed each argument in turn.

The Federal Circuit found that the district court had correctly determined that the Aurora device at AAGL 2009 was a “public use” since it was shown to individuals other than the inventor under no limitation, restriction or obligation of confidentiality. The undisputed record showed that Minerva pitched the Aurora device to various sophisticated industry members, who were allowed, without confidentiality obligations, to scrutinize the Aurora device closely enough to recognize and understand the SDMP technology Minerva later sought to patent.

The Federal Circuit also concluded that the Aurora device disclosed the SDMP term. The Court found that the inventors conceived of the SDMP technology before AAGL 2009 and that documentation about the Aurora device from before and shortly after the event [...]

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Nothing Lasts for Everly, Not Even Copyright Co-Authorship Rights

by | Feb 23, 2023 |

Addressing a novel issue, the US Court of Appeals for the Sixth Circuit ruled that a statute of limitations can time-bar a defense in narrow circumstances where a defendant uses it to seek affirmative relief. Garza v. Everly, Case No. 21-5530 (6th Cir. Feb. 10, 2023) (Bush, Guy, JJ.) (Murphy, J., concurring).

After successful careers writing and recording music as the Everly Brothers, Don and Phil Everly disputed copyright ownership of certain songs. Don sued Phil’s estate, seeking declaratory judgment that Don was the sole author of “Cathy’s Clown.” After a bench trial, the district court held that Don repudiated Phil’s co-authorship of “Cathy’s Clown” and Phil failed to reassert his co-authorship rights within the three-year timeframe provided by the Copyright Act. The trial court also ruled that Phil’s estate was “time-barred from asserting he was a co-author as a defense,” since the Copyright Act time-barred him from asserting the same as a claim. Don died in the interim, and Phil’s estate appealed.

There were three issues on appeal:

  • Whether the lower court improperly applied the Copyright Act’s scheme for authorship claims
  • Whether the finding of Don’s repudiation was erroneous
  • Whether the court erred in applying the statute of limitation to Phil’s defense.

Regarding the authorship issue, the Sixth Circuit explained that the Copyright Act allows authors to transfer ownership of works while retaining certain rights, including a termination right that lets authors later reclaim copyright ownership. Phil’s estate argued that because termination rights are inalienable, the trial court erred in finding that Phil was not a co-author since he should have had the opportunity to reclaim his rights. The estate also argued that any statute of limitations regarding Phil reclaiming co-authorship should not have started tolling until all of Phil’s descendants learned of these rights. The Sixth Circuit disagreed, explaining that the lower court properly applied the Copyright Act. Because Phil did not dispute repudiation within the statutory period, the trial court correctly denied his co-ownership. Furthermore, the statute of limitations does not “refresh itself” when an owner dies, because descendants cannot obtain rights a decedent had forfeit.

Addressing the repudiation issue, the Sixth Circuit found ample trial evidence supporting the trial court’s conclusion. The evidence included 1980s vintage letters, phone calls, and a “Release and Assignment” Phil signed containing language relinquishing his co-authorship rights in “Cathy’s Clown.” There was also credible testimony that Don “plainly and expressly repudiated Phil’s authorship” decades prior.

Finally, addressing the statute of limitations defense, the Sixth Circuit affirmed the trial court. In doing so, it noted that Phil’s estate originally argued that Phil remained a co-author of “Cathy’s Clown” as a counterclaim to Don’s suit. It was only after Don successfully argued that the claim was time-barred that Phil’s estate “reframed the counterclaim into a defense.” The Court explained the general policies underpinning statutes of limitation and noted that they typically do not bear on defenses because plaintiffs could otherwise wait out the statutory periods for defenses before suing. However, this [...]

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Message Received: US Courts Are Appropriate, More Convenient Venue to Adjudicate US IP Disputes

by | Feb 23, 2023 | , ,

Addressing personal jurisdiction and forum non conveniens in a software licensing dispute, the US Court of Appeals for the Fourth Circuit upheld a district court’s exercise of personal jurisdiction over a Dutch entity and the court’s decision to not dismiss the case for forum non conveniens. dmarcian, Inc. v. dmarcian Europe BV, Case Nos. 21-1721; -2005 (4th Cir. Feb. 14, 2023) (Wilkinson, Heytens, Hudson, JJ.)

dmarcian is a North Carolina-based software company that developed software to help email users authenticate incoming emails. A Dutch businessman who owned Mailmerk contacted dmarcian to offer to market the software in Europe. While dmarcian was initially unreceptive to the offer, the two parties eventually reached an oral agreement for Mailmerk to rebrand as dmarcian Europe BV (dmarcian BV) and sell the dmarcian software in Europe and Africa.

A dispute arose when dmarcian BV claimed ownership of portions of the dmarcian source code. dmarcian BV filed suit in the Netherlands, eventually filing for and winning injunctive relief in the Netherlands when dmarcian terminated dmarcian BV’s license. dmarcian then filed suit in the Western District of North Carolina asking for a preliminary injunction against dmarcian BV, which dmarcian BV opposed with a motion to dismiss for forum non conveniens. The district court denied the motion to dismiss and entered a preliminary injunction that precluded dmarcian BV from operating outside of Europe and Africa and required dmarcian BV to stop using the registered “dmarcian” trademark without a disclaimer. The district court later found dmarcian BV in contempt for violating the preliminary injunction and ordered dmarcian BV to pay $335,000 in sanctions. dmarcian BV appealed the injunction and the sanctions.

dmarcian BV argued that the district court did not have personal jurisdiction. The Fourth Circuit rejected that argument, finding that the North Carolina long-arm statute authorized jurisdiction over dmarcian BV. The Court found that the application of the long-arm statute to dmarcian BV complied with due process because dmarcian BV worked closely with the dmarcian team in North Carolina (e.g., receiving sales leads, attending virtual meetings, coordinating software development), dmarcian BV sought out dmarcian to initiate business, and there was a strong interest in protecting intellectual property rights in North Carolina.

The Fourth Circuit also upheld the denial of the dismissal for forum non conveniens because the Dutch court was not an adequate alternative forum since Dutch courts cannot effectively adjudicate US trademark claims. The Fourth Circuit found that any judgment by the Dutch court would have little effect in the United States and would deny relief to dmarcian for the infringement of its rights.

The Fourth Circuit upheld the preliminary injunction grant, finding that the district court properly applied US and North Carolina law extraterritorially and that dmarcian was likely to succeed on all claims. The Court found that US laws properly applied and that dmarcian was likely to succeed on the following claims:

  • Copyright infringement, because there was a registered copyright, dmarcian BV reproduced elements of the source code outside of the licensing agreement, and [...]

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Patenting a Nice Cool Glass of Nicotinamide Riboside? Claims Covering Milk Invalid under § 101

by | Feb 23, 2023 |

The US Court of Appeals for the Federal Circuit found that claims covering a naturally occurring composition were not patent eligible under 35 U.S.C. § 101 merely because one component of the composition had been “isolated.” ChromaDex, Inc. v. Elysium Health, Inc., Case No. 2022-1116 (Fed. Cir. Feb. 13, 2023) (Chen, Prost, Stoll, JJ.)

ChromaDex sued Elysium (a former ChromaDex customer) for infringement of its patent directed to dietary supplements containing nicotinamide riboside (NR). Elysium moved for summary judgment, arguing that the asserted claims were invalid under the § 101 prohibition against patenting natural phenomena. After the district court granted summary judgment, ChromaDex appealed.

The asserted claims were directed to a composition comprising:

  • Isolated NR
  • One or more of tryptophan, nicotinic acid or nicotinamide
  • One of 22 carriers
  • Increased NAD+ biosynthesis after eating.

Both parties conceded that milk satisfies every element of the asserted claims with the exception that its NR is not “isolated.” Both parties also conceded that milk is a naturally occurring material and thus not patent eligible under § 101.

On these facts, the issue presented was whether the claim limitation that the NR must be “isolated” (which does not occur in nature) was sufficient to make the claims patent eligible. The Federal Circuit responded “no.”

The Federal Circuit analyzed the asserted claims under two tests: the “markedly different characteristics” test set out in Chakrabarty, and the Alice two-step test (unsure whether Chakrabarty remains controlling precedent).

Under the Chakrabarty test, a claimed composition is not a natural phenomenon if it has “markedly different characteristics” from what occurs in nature. The Federal Circuit found that ChromaDex’s claimed composition had no markedly different characteristics from natural milk. While ChromaDex argued that isolation potentially allowed for unnaturally high concentrations of NR, the claims did not require such concentrations. The claims included compositions structurally and functionally identical to milk and therefore failed the “markedly different characteristics” Chakrabarty test.

Proceeding to the two-part Alice test, under step 1 the Federal Circuit found that the claims were directed to a product of nature because there were no structural differences between the claimed composition and natural milk. Under step two, the Court found that there was no “inventive step” because the claims were merely directed to increasing NAD+ biosynthesis, which was a natural principle that resulted from drinking milk.

Practice Note: During claim drafting, care should be taken to avoid claims that encompass all structural and functional components of a naturally occurring material.



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