Inventions using publicly available stem cell lines involving destruction of human embryos found unpatentable under the EPC

In a decision of 4 February 2014, the Board of Appeal of the European Patent Office examined the patentability of inventions which make use of publicly available human embryonic stem (HES) cell lines, initially derived by a process resulting in the destruction of the human embryos. The Board ruled that, under the framework of Article 53(a) and Rule 28(c) of the European Patent Convention, it is necessary to evaluate all the steps which constitute a necessary precondition for carrying out the claimed inventions. Therefore, the panel found such inventions to be unpatentable, even if they do not directly involve the destruction of human embryos, which instead takes place at a preceding, but necessary, stage. The decision shares the same perspective adopted by the EU Court of Justice in case C-34/10 (Brüstle v Greenpeace).

The appeal concerned the rejection decision taken by the examining division against the European patent application No. 03751238.1. The invention essentially claimed methods of maintaining human embryonic stem cells in an undifferentiated state through the use, inter alia, of human foreskin cells. The examining division, noting that the human embryonic stem cell lines referred to in the application were not publicly available at the date of filing, had concluded that the only possibility of putting the claimed methods into practice implied the destruction of human embryos. Therefore, it had found the invention to be unpatentable under Article 53(a) and Rule 28(c) EPC. Challenging the decision of the examining division, the appellant had argued that, while the claimed methods did not refer to any specific deposited cell line, several suitable cell lines were indeed publicly available before the priority date.

The Board first looked at the technical teaching of the patent application, following the interpretation of Rule 28(c) given by the Enlarged Board of Appeal in decision G 2/06. According to this decision, ‘[w]hat needs to be looked at is not just the explicit wording of the claims but the technical teaching of the application as a whole as to how the invention is to be performed’. The Board found that the patent application disclosed several ways of obtaining HES cells: a first embodiment described their isolation from human blastocysts, a procedure requiring the destruction of human embryos and thus unpatentable; a second method consisted in the use of commercially available HES cells.

Evaluating this second embodiment, the Board noted that, despite the additional documents submitted by the inventor with the appeal, ‘there remain serious doubts with regard to the public availability of HES cell lines at the claimed priority date’. At the same time, however, the Board observed that all the cell lines mentioned by the appellant were initially derived from the inner cell mass of blastocyst stage human embryos, through methods that resulted in the destruction of the embryos. Thus, the panel focused on a more fundamental issue, which it described as follows:

[W]hether or not the accomplishment of the invention by relying on the use of an established HES cell line, thus without de novo production of HES cells by destroying a human embryo, would nevertheless be in conflict with the requirements of Article 53(a) EPC if said HES cell line has been originally produced by a method involving the destruction of an human embryo.

To find the answer to this question, the Board turned again to decision G 2/06. In that case, the appellant had argued that an interpretation of Rule 28(c) requiring consideration of all the steps preceding an invention would ‘go much too far’. The Enlarged Board of Appeal, however, had dismissed the argument as not relevant, without distinguishing between steps carried out by the inventor or by a third party, nor between steps directly or remotely related to the invention. The Board took the view that decision G 2/06 should be interpreted ‘as meaning that for the purpose of Rule 28(c) EPC, all steps preceding the claimed use of HES cells which are a necessary precondition for carrying out the claimed invention, have to be considered’.

Applying this perspective to the present case, the panel found that it had to take into account all the steps necessary to establish the commercially available HES cell lines described by the second embodiment, including the step resulting in the destruction of human embryos. Therefore, it concluded that the second embodiment of the patent application was excluded from patentability, even if the cell lines therein described were not created de novo, but at a point in time preceding their use for the claimed invention.

The final part of the decision examined the judgment of the Court of Justice in case C-34/10. The CJEU had clarified that ‘an invention must be regarded as unpatentable, even if the claims of the patent do not concern the use of human embryos, where the implementation of the invention requires the destruction of human embryos’. Further, the court had expressly acknowledged that ‘[t]he fact that destruction may occur at a stage long before the implementation of the invention, as in the case of the production of embryonic stem cells from a lineage of stem cells the mere reproduction of which implied the destruction of human embryos is, in that regard, irrelevant’. The Board thus concluded that its considerations fell in line with the principles enucleated by the Court of Justice.

The decision of the Board of Appeal is certainly not surprising, as it relies heavily on the reasoning of the Enlarged Board of Appeal in case G 2/06. Its rationale is clearly explained in the prior decision:

Article 53(a) EPC excludes inventions from patentability if their commercial exploitation is against ordre public or morality. Reference is made to points 25 to 27 where it has been explained why this Board considers the performing of this invention as commercial exploitation. In this context, it is important to point out that it is not the fact of the patenting itself that is considered to be against ordre public or morality, but it is the performing of the invention, which includes a step (the use involving its destruction of a human embryo) that has to be considered to contravene those concepts.

In this perspective, the decision of the Board merely highlights the necessity of evaluating, under Article 53(a) and Rule 28(c), all the steps that, while not being claimed in the patent application, still constitute a necessary precondition for the performing of the invention. In the context of HES cell related inventions, applicants thus face the challenge of (i) identifying a method of obtaining the cell lines used by the invention that does not involve the destruction of human embryos, and (ii) verifying whether the alternative method involves the destruction of human embryos at any stage preceding the isolation of the HES cell lines directly employed in the invention. 

When paper-only proceedings may not provide the swiftest solution

Monkey Tower Ltd v Ability International Ltd [2014] EWHC 18 (Pat), a 24 January decision of Henry Carr QC, sitting as a Deputy Judge of the Patents Court, England and Wales, came across this blogger's desk. It is unlikely to get on to BAILII, though it will be of interest to anyone who wants to save costs in Patent Office hearings by opting for submissions in writing only, but who may not be happy with one or more of the possible outcomes.

In Monkey Tower's application to revoke a UK patent held by Ability, the parties consented to a decision without an oral hearing. Before the Patents Office, the Hearing Officer held that some of the claims were anticipated by existing patents, but allowed Ability a further opportunity to propose amendments to the patent within six weeks of the date of his decision. Monkey Tower appealed on the ground that the hearing officer had erred, either in law or in principle, in letting Ability have a further opportunity to propose making amendments. Though Monkey Tower conceded that, under section 75 of the Patents Act 1977, the Comptroller of Patents did have a discretion, the company argued that the hearing officer did not exercise that discretion in accordance with fundamental principles of law, in particular the principle of procedural fairness.

Henry Carr QC dismissed the appeal. In his view,

* where the Patents Office had developed a procedural practice, the courts could still scrutinise it on appeal. The Office needed to ensure that its practice was procedurally fair and accorded with the overriding objective in rule 74 of the Patent Rules 2007, that of dealing with cases justly.

* it was no longer correct that, where there was any scope for a claim-validating amendment, the patentee should autotomatically be given the chance to amend after an interim decision had been handed down. In this respect there was no difference between revocation and infringement actions, and there should not be a more generous attitude to post-decision amendments in revocation actions.

* a patent was a right in rem and, unless revoked, deterred the public from working within its claims -- and revocation proceedings were normally commenced by parties who were concerned about being sued for infringement. This being so, the exercise of discretion under section 75(1) of the Act, post-hearing, had to take regard of all circumstances which were relevant to the question of procedural fairness to the parties.

* depending on the facts, those relevant circumstances were likely to include

(i) the resources already devoted by the parties to the proceedings;

(ii) the extent of any re-litigation as a result of the amendment;

(iii) the likelihood that a valid amendment could be proposed; and

(iv) whether there was evidence that prejudice would be caused to applicant for revocation by the delay that would be occasioned by a post-decision amendment application.

Thus, while an opportunity to amend after an interim decision would not be accorded to the patentee as a matter of course, it might well be fair to give such an opportunity in appropriate cases.

* on the facts, the Hearing Officer was right go give Ability the chance to seek amendments within six weeks of the date of the decision under appeal, for three reasons. First, the parties had consented to a decision without an oral hearing. That had saved time and costs, but had meant that the parties had been unable to explore their submissions with the tribunal and answer questions from the tribunal. Secondly, the decision under appeal had been reached on the basis of only short written submissions from the parties. Thirdly, the opportunity for re-litigation was limited and any further proceedings were likely to take the form of short written submissions.

France commits to UPC

From our friend Bertrand Sautier comes the information that, following Austria and Malta, France passed a law yesterday to approved the Unified Patent Court package which was signed on February 2013. Says Bertrand: "That is another step completed!"

The text of law can be found here

Keeping evidence secret post-trial: a common-sense ruling in Convatec case

Smith & Nephew plc v Convatec Technologies Inc; TJ Smith & Nephew Ltd and Smith & Nephew Medical Ltd (third parties) [2014] EWHC 146 (Pat) is the latest in a series of rulings in fairly acrimonious litigation that has occupied the courts of England and Wales for the past few years. Discussion of much of this earlier litigation can be found on the IPKat, here.

So what was the latest round of litigation all about? Smith & Nephew (S&N), in the course of earlier proceedings in which it sought a declaration of non-infringement in relation to Convatec's  patent, disclosed numerous documents that set out in full the details of its manufacturing processes. A confidentiality scheme existed between the parties to deal with this confidential disclosure and an interim order was made under the Civil Procedure Rules, CPR r.31.22(2).

Once the declaration proceedings were over, with Birss J ruling that Convatec's patent was valid and partially infringed, S&N sought a permanent r.31.22(2) order in relation to various documents which, it said, contained commercially sensitive information relating to its manufacturing processes and equipment, its dealings with regulatory authorities and/or its commercial strategy. According to a witness for S&N, those documents, taken together, painted a very detailed picture of the development of the company's product, providing a window into its internal workings and know-how which it had built up over years of experience in new product development.

Mr Justice Birss granted the order, but only in part.  In his view,

* the parties well understood that sitting in private should only occur when it is strictly necessary and should be kept to a minimum: "That is what happens in the Patents Court".

* It was first necessary to explore both the nature and details of S&N's secret processes, since justice could not be done without it. The Court of Appeal had already recognised in Lilly ICOS Ltd v Pfizer Ltd (No.2) [2002] EWCA Civ 2 that patent cases presented particular problems because parties might feel constrained to hold back from disclosing relevant or potentially relevant documents if they were afraid of the consequences of their information seeing the light of day.

* On the facts, a permanent order was appropriate in relation to the documents relating to S&N's manufacturing processes and equipment and its commercial strategy.  While some of those documents played a crucial role at trial, its outcome could still be understood without them.

* In contrast, apart from some regulatory documents which referred to S&N's manufacturing or development testing work or commercial strategy, no further permanent r.31.22(2) order would be made. While S&N had built up substantial experience and know-how in dealing with regulatory authorities, disclosure of those documents would not reveal that know-how or damage S&N at all. Accordingly, the only documents to be covered by the order were those that made reference to manufacturing or process information or commercial strategy.

Convatec did not object to the order sought by Smith & Nephew and did not attend for the majority of the discussion on this issue.

Revocation strawman: a new player in the patent litigation field

I have recently heard from Sharaz Gill, who was formerly head of patent litigation at HTC but has since gone on to found Skepsis Telecom. Explains Sharaz:

"We are basically a strawman patent revocation company specializing in UK and German revocation actions of (principally) telecoms patents. Skepsis isn’t an EPO opposition strawman, of which there are already several, but rather brings the revocation actions in the UK and German courts. As far as I am aware, this is unique in the telecoms patent litigation sector, although I gather that similar companies have been set up ad hoc in the pharma sector in the past. As a result, I thought that you and your readers might be interested in hearing about Skepsis.

I was motivated to set the company up by experiences at HTC. HTC was involved in the mobile phone wars from the outset and we successfully defended actions against IPCom, Apple and Nokia, to name but a few. Most of our disputes involved HTC being confronted with often large numbers of patents of dubious validity, which were nevertheless still dangerous because of the bifurcated litigation system in Germany. More recently, we also noticed an increase in the number of NPEs bringing infringement claims in Germany, which greatly increases the risk for handset manufacturers because Germany is the biggest European market for the majority of them. It isn’t yet clear what stance the UPC will take on NPEs and the high invalidity rates of hi-tech patents in Europe more generally, so there is clearly concern in the industry. Hopefully, Skepsis can help to tip the balance back in favour bona fide manufacturers.

Skepsis is now up and running and we are already advising clients on invalidity actions. Your readers should expect to see the first invalidity actions filed fairly soon".

This blogger is curious to see how this business model works and what its impact might be, both on patent litigation in Europe and in the negotiation of settlements. He also wonders whether reader have come across any equivalent companies in other commercial or industrial sectors.  If you have, please let us know.

India's IPAB highlights importance of due process when reviewing patent applications

A friend from Kerala, the state with the highest literacy rate and life expectancy in India, reported news of two recent orders issued by the Intellectual Property Appellate Board (IPAB), which set aside a couple of decisions of the Assistant Controller of Patents & Designs. Interestingly, the IPAB found that, in both cases, the Assistant Controller failed to provide the patent applicant with a fair review of its application, either issuing a cryptic, non-speaking, and vague response, or violating the 'Principle of Natural Justice'.

In the first decision (no. 8/2014), the IPAB reviewed the Assistant Controller's rejection of a patent application filed in 2006 by Schering Co. The application claimed the crystalline polymorph of a bisulfate salt of a thrombin receptor antagonist (Vorapaxar), used for the treatment of acute coronary syndrome chest pain caused by coronary artery disease (for more information, see this post at SpicyIP). The Assistant Controller rejected the application for lack of inventive step, under Section 2(1)(ja) of the Patents Act, adding that the applicant had failed to provide evidence of enhanced therapeutic efficacy, as required by Section 3(d) of the Patents Act (widely discussed after the Novartis judgment, and also commented on a previous PatLit post). Schering appealed the rejection, alleging that the Assistant Controller failed (i) to take into account the arguments raised by the applicant, and (ii) to state the reasons for the contested decision.

The IPAB observed that, under Section 15 of the Patents Act, 'the learned Controller ought not to have mechanically refused the application and on the other hand he could have exercised discretion to give opportunity to the applicant/appellant by making amendments in the application' (and later deciding whether to accept or reject the amended application). According to the board, the Assistant Controller issued a 'cryptic and non-speaking order', which failed to take into account all the arguments raised by the patent applicant. Similarly, when assessing the lack of inventive step, 'the Controller has given a very bald and vague reason without going into the details of the entire document'. Setting aside the contested decision, the IPAB remanded the matter to the Assistant Controller, bound to 'consider the matter afresh by affording sufficient reasonable opportunity to the applicant/appellant to substantiate their claims'.

In the second decision (no. 9/2014), the IPAB examined the Assistant Controller's rejection (see also here) of the application filed by Abraxis BioScience LLC in 2005 (no. 2899/DELNP/2005 - here), which claimed a pharmaceutical composition consisting of (i) a pharmaceutical agent (including, in particular, propofol, paclitaxel, or docetaxel), and (ii) a pharmaceutically acceptable carrier, comprising deferoxamine, to inhibit microbial growth, and a protein such as albumin, to reduce side effects. The applicant challenged the rejection, maintaining that the Assistant Controller unlawfully refused to provide Abraxis with an opportunity to be heard before taking a final decision, violating Section 14 of the Patents Act. Such violation, according to the applicant, determined a violation of the Principle of Natural Justice, as Abraxis was deprived of its right to immediately appeal a decision issued under Sections 14 and 15 of the Patents Act. A further argument concerned the conduct of the Assistant Controller in the pre-grant opposition proceeding initiated by a third party: the patent applicant submitted that the Assistant Controller unlawfully examined an additional ground of opposition ('insufficiency', under Section 25(1)(g) of the Patents Act) which had not been raised by any of the parties involved in the proceeding, thus committing a serious error of law.

The Intellectual Property Appellate Board held that '[t]he reading of the [...] provision [of Section 14] makes it crystal clear that the above said provision contemplates of an opportunity of hearing and as such the said provision is mandatory but unfortunately in the instant case such a mandatory requirement of affording opportunity to be heard was denied to the appellant'. According to a previous judgment of the High Court of Delhi, which the board considered to be 'squarely applicable to the facts of the instant case', the provision at issue 'casts a duty on the controller to give a hearing to an applicant, before exercising any discretionary power, which was likely to affect an applicant for a patent adversely'. The IPAB added that, as an order under Sections 14 and 15 is indeed appealable (while a decision rendered in a pre-grant opposition proceeding, under Section 25, may not be equally appealable, or may force the applicant to defer its appeal), Abraxis was deprived of its right to appeal the adverse order. For these reasons, the board concluded that the Assistant Controller passed the contested decision 'in flagrant violation of the Principle of Natural Justice'.

The second argument raised by Abraxis was also upheld. Reciting previous case law, the IPAB noted that '[w]hen the facts necessary to make out a particular claim, or to seek a particular relief, are not found in the plaint, the Court cannot focus the attention of the parties, or its own attention on that claim or relief, by framing an appropriate issue'. Thus, the Assistant Controller erred in extending the perimeter of its review to an argument which had not been raised by any of the parties.

International Patent Forum 2014: what's in it for patent litigators?

This year's International Patent Forum 2014, masterminded by Managing Intellectual Property magazine, takes place in the congenial yet businesslike surroundings of London's Waldorf Hilton Hotel -- which is not so very far from the courts that decide so many important patent-related disputes at trial and appeal levels.  The Forum is to be held on 18 and 19 March, which is not so very far away.  PatLit is delighted to say that readers of this weblog are entitled to a £300 discount on their registration fee if they register via this link.  In-house counsel have an even better deal: they will be admitted free of all registration charges.

So what's in the programme for patent litigators? On Day One the afternoon programme looks like this, in relevant part:

Enforcement practice in China
• Trends in China’s increasing enforcement practice
• How protected is your IP in China?
• Best practices for patent-monetisation in China 

Litigation planning and forum shopping in Europe
• Implications of the Spanish legal challenge outcome
• Game over? Litigation planning and strategy under the new UPC
• Risks and opportunities of forum shopping in Europe 

Antitrust and IP litigation
• Why antitrust laws threaten your IP pool
• A guide to future trends in antitrust legislation, and to how this will impact on your IP portfolio

Day Two offers the following topics too:

NPEs and patent trolls roundtable: A global comparison
• Will there be a global rise of patent trolls?
• Measures to counter trolls without compromising on the strengths of patents in general
• Whose problem is it? New legislation versus sector self-defence

Russia focus

• Patent protection and enforcement in Russia
• Challenges in protecting your intangible assets in Russia
• How new legislation is about to further strengthen IP protection

There's a strong cast of speakers and commentators, so the event won't be short of instructive content, tempered by well-informed and experienced contributions from people in the "been there, done that" category.

Slightly frustratingly, this blogger will be out of the country on 18/19 March, so will be hearing about the proceedings only at second hand.  If any readers of this blog are planning on attending and would like to write up any of their thoughts and comments for publication on this weblog, can they please get in touch by emailing jjip@btinternet.com.

Homemade solutions against patent trolls - part 2: New York Advocate General reaches settlement with MPHJ

In July 2013, the Nebraska Attorney General chose a peculiar solution to prevent the spread of 'patent trolling' phenomena. Rather than directly targeting the patent holder, the AG filed a cease and desist order against the Farney Daniels law firm, which had sent demand letters on behalf of MPHJ, one of the companies most commonly associated with the allegedly deceptive behaviors which prompted the US House of Representatives to pass the Innovation Act in early December. The order issued by the Nebraska AG enjoined the law firm from initiating new patent infringement enforcement efforts within Nebraska, pending an investigation on the alleged violation of the Nebraska Consumer Protection Act, § 59-1601 seq., and the Uniform Deceptive Trade Practices Act, § 87-301 seq.

As I reported in mid December, Nebraska's homemade solution did not withstand the scrutiny of courts. The District Court for the District of Nebraska ruled that the cease and desist order, issued before the conclusion (and review) of a formal investigation into the conducts of MPHJ and Farney Daniels, was akin to a forbidden prior restraint of speech and association. Thus, the District Court granted a preliminary injunction which prevented the Nebraska Attorney General from enforcing the cease and desist order against the law firm. In a decision of 14 January, the same judge reiterated this conclusion, granting a motion for preliminary relief filed by MPHJ itself, allowing Farney Daniels to keep representing the patent assertion entity in Nebraska.

AG Eric T. Schneiderman

Possibly inspired by the failure of Nebraska's solution, the Attorney General of the State of New York took a different path. On 14 January, the AG announced that he was able to reach a 'groundbreaking settlement' with MPHJ. The agreement essentially requires the patent assertion entity (i) to make a serious effort to determine the validity of its allegations of infringement, before making an accusation, either directly or through an attorney, (ii) to provide the alleged infringer with detailed information on the patents at issue, as well as on the basis on which the infringement allegation is made, (iii) to disclose information about the patents' likely invalidity, or to refrain from trying to collect revenues if the patents have been held invalid, (iv) to state the factual basis for a proposed licensing fee, and (v) to disclose its true identity. The Attorney General, Eric T. Schneiderman, noted that the agreement is meant to serve as a blueprint for other AGs dealing with patent trolling phenomena:

So-called ‘patent trolls’ exploit loopholes in the patent system and have become a scourge on the business community [.] They drain critical resources from small and medium-sized businesses that would otherwise be available for reinvestment and job creation, which are sorely needed across New York. State law enforcement can’t cure all the ills of the federal patent system, but the guidelines established in today’s settlement will put an end to some of the most abusive tactics by placing the industry on notice that these deceptive practices will not be tolerated in New York.

The following is a summary of the main obligations imposed to MPHJ under the settlement agreement, properly known as 'Assurance of Discontinuance'. The patent assertion entity, in relation to infringement allegations concerning New York individuals or companies, agreed:

• to provide a written notice to any company which has already concluded a licensing agreement with MPHJ, informing the licensee that it has the right to void the license agreement, in return for a full refund;
• to refrain from asserting its patents against any individual or small business (with fewer than 50 employees) which previously received a demand letter from MPHJ or its attorneys;
• if making allegations of infringement, to make reasonable efforts to evaluate (i) the scope of the asserted patents, (ii) the specific product used or sold by the targeted company, which allegedly infringes the asserted patents, according to MPHJ's good faith assessment;
• if merely intending to inquire as to whether a company infringes one of its patents, to make reasonable efforts to identify reasonably available facts about the targeted business, the allegedly infringing products, and the likelihood of infringement;
• to describe with reasonable specificity the basis for the infringement allegation;
• to provide information on the existence of (i) relevant pending or completed litigation in which a court found the asserted patents to be invalid or non-infringed, or (ii) relevant findings by the USPTO which raise issues of invalidity, or (iii) a terminal disclaimer which terminates before the end of the proposed license term;
• on request, to provide a claim chart or equivalent document that explains the basis of MPHJ's good faith infringement allegations;
• when proposing a licensing fee, to provide factual support for any reason or justification adduced for the proposed fee;
• when asserting a patent through a licensing agent, to disclose MPHJ's relationship with the agent;
• when asserting a patent in which another person has a financial interest (5% or more), to disclose the identity of such person;
• to refrain from providing misleading information on license agreements reached with third parties;
• to refrain from requiring the alleged infringer to enter into a non-disclosure agreement which would restrict communications between the targeted company and other companies against whom MPHJ is asserting the same patents (unless the non-disclosure merely protects MPHJ's proprietary business information, trade secrets, or attorney work product);
• to refrain from making fraudulent statements, or from referring to previous communications, unless it includes copies of such communications or has documentation verifying that MPHJ actually sent them;
• to refrain from asserting its patents through a legal counsel, unless the above mentioned requirements are also met by the counsel (good faith basis, reasonable efforts to identify the scope of the patents, as well as the allegedly infringing products);
• to refrain from asserting any patents which has been held invalid in a final judicial decision.

The settlement also contains provisions which require MPHJ to disclose the partial or comprehensive nature of the proposed agreement, and the existence of a licensing agreement or covenant not to sue with the originator or manufacturer of the allegedly infringing products. Further, the agreement establishes fines for any violation of its provisions. The solution endorsed by the New York Advocate General positively addresses most of the issues raised by vague demand letters. It may not be a miraculous cure for the underlying issues that feed patent trolling, but, at least in the State of New York, it could restore fair play rules.

Overview of appeals: the world according to the EPC

Overview of the appeal proceedings according to the EPC is the title of a new book by Hugo Meinders, Ingo Beckedorf and Gérard Weiss, published by the Dutch Publishers H. Tel, from Haarlem. Actually, it's the same book three times over: if you enjoyed reading Hugo Meinders' bit in English, you can check it out in the more businesslike-sounding German version by Ingo Beckedorf and then slip effortlessly into the romantic lilt of Gérard Weiss's French.

What do the publishers have to say about it?

"About the book

The book Overview of the Appeal proceedings according to the EPC is the first concise overview of the procedures before the Boards of Appeal of the EPO written by members of the boards. It is published in English, German and French in a single volume. It is available in paperback form. A discount of 5% will be given on orders for 5 or more copies [not wishing to suggest that this is ungenerous, the book only costs € 55. A 5% discount on five copies is only € 13.75 -- and there's not much you can buy for that these days ... ].

About the content

The Rules of Procedure of the Boards of Appeal of the European Patent Office were substantially revised in 2003. These Rules make it clear that the function of the Boards of Appeal is a judicial one, namely the review of the appealed decision. Thereto, the proceedings are essentially in writing and the case must as complete as possible at the early stages. They are more a judicial review of the decision than a continuation of the administrative first instance proceedings, particularly in opposition-appeal. Hence, the appeal proceedings are substantially different from the first instance proceedings, a fact not generally appreciated by parties attending appeal proceedings.

The book provides an easily readable overview of the appeal proceedings, in the three official languages of the European Patent Office, which helps in understanding the nature of the appeal proceedings before the Boards of Appeal.

The book also contains the complete text of the Rules of Procedure of the Boards of Appeal in the three official languages and an alphabetic index for each language.

Who is it for?

The Overview of the Appeal proceedings according to the EPC is indispensable for patent attorneys and lawyers involved in appeal proceedings before the EPO. It is a reference book both for the practitioner and the trainee.".

It's certainly quite an easy read (at least the English text is -- this reviewer isn't competent to weigh up the French and German versions) and it is extremely well equipped with marginal references that enable the reader to discover the source of what the authors say without making the text look fussy.  The relative brevity of the text, its clarity of lay-out and the appearance of a handy index all combine to make the reading experience quite a pleasant one.

If you're thinking of ordering this book, the ISBN is 978-90-78310-09-9. It's 275 pages in length and not at all bulky. The fold-over flaps in the front and back covers make excellent bookmarks. You can order it from H. Tel's website here.

First Austria and now, it seems, Malta. Who's next?

Thanks to Ingve Stjerna I've had a chance to take note of this short piece on Keltie LLP's IPCopy weblog, "Has Malta ratified the Unified Patent Court Agreement?" by Emily Weal. According to Emily's dexterous use of Google Translate,

"Malta has now passed the ratification process , to be carried out in accordance with article 3 of the Act on Ratification Treaties (Cap 304) Authorizing the Maltese Parliament to ratify the Agreement (Patent Court Industrial unified) Unified Patent Court (UPC) which was signed on 19 February 2013".

Has anyone heard more about this event, or as to whether any other country (apart from Austria, which has already ratified) is also in the middle of committing itself?

USPTO Reports Continued Popularity of Inter Partes Review Proceedings

The America Invents Act ("AIA") created several new administrative procedures for members of the public seeking to challenge issued patents. These include Inter Partes Review (“IPR”), Post Grant Review (“PGR”), and the transitional program for Covered Business Method Patents (“CBM”). IPR and CBM proceedings first became available in September 2012.

One unknown at the outset of these programs was whether they would prove attractive to parties who previously may have sought reexamination or challenged a patent in court. Although an administrative challenge in the Patent Office may be less costly and time consuming that federal court litigation, a party pursuing administrative review will be estopped from raising additional invalidity issues in subsequent proceedings. In addition, the USPTO’s experience with inter partes reexamination proceedings in the early 2000’s indicated that practitioners and clients initially tend to be cautious about new proceedings.

Data released this week by the USPTO’s Patent Trial and Appeal Board ("PTAB") shows a remarkable jump in the number of IPR filings. In the first full year of operation (fiscal year 2013), 514 IPR proceedings were filed with the PTAB. In just the first four months of fiscal year 2014, by contrast, 305 IPRs have been filed. If IPRs are filed at the same rate for the remainder of FY2014, total filings may exceed 900 cases. 

In addition, the PTAB data shows that a disproportionate share of IPR proceedings are in the computer and electrical field, representing over 70 percent of IPR and CBM proceedings filed. Mechanical patents made up another 16 percent of filings.

Based on this data, one has to wonder whether AIA administrative challenges before the PTAB will soon displace federal court litigation (such as the declaratory judgment actions Stefano describes below) as the weapon of choice for taking down a patent, at least in some arts. The full PTAB data, as of January 23, 2014, is posted HERE.

How much are drugs worth in the January Sales?

Astrazeneca AB & Another v KRKA, DD Novo Mesto & Another [2014] EWHC 84 (Pat), a judgment delivered last Friday by Mr Justice Sales in the Patents Court, England and Wales, has some big repercussions for anyone -- or at any rate any pharmaceutical originator company -- calculating the value of a cross-undertaking in damages.  This post is kindly furnished by Aaron Wood (Swindell & Pearson Ltd):

A Bitter Pill to Swallow

How does one calculate the value of a cross-undertaking in damages in relation to launch of a pharmaceutical where the effect is to deprive the defendant of “first-mover” advantage? The decision in Astrazeneca goes a very long way to helping one assess this, and provides a number of comments which may chill those who seek to use injunctions strategically.

The facts of the case were that Astrazeneca marketed a protein pump inhibitor (PPI) under the name NEXIUM, for which they held a patent for the active ingredient esomeprazole. The patent was set to expire in 2014. While most protein pump inhibitors were of moderate cost, a proportion of patients only reacted favourably to NEXIUM’s active ingredient and so could not be switched from other PPIs. KRKA had developed a product which contained esomeprazole which, it believed, did not infringe Astrazeneca’s patent and was to be a branded generic (bearing the name EMOZUL rather than just esomezole). 

KRKA launched their product in Denmark in the face of objection from Astrazeneca, and then sought to launch in the UK. Astrazeneca successfully obtained an injunction to prevent the launch of the product in the UK in October 2010. At the time the injunction was obtained, Astrazeneca’s patent was under challenge by Ranbaxy who were seeking to launch a generic esomeprazole product. On 15 July 2011 Ranbaxy’s product was ruled not to infringe the Astrazeneca patent – Ranbaxy (UK) Limited v Astrazeneca AB [2011] EWHC 1831 (Pat) [noted by the IPKat here].

The outcome of the decisions was that KRKA’s product would not infringe and the injunction was lifted. This allowed KRKA to launch in September 2011, but into a very different commercial environment. By this point Ranbaxy had launched its generic in early September. In November another generic was launched, this time by Mylan. In December, Teva launched their generic. What's more, on 17 July 2011 (just 2 days after the Ranbaxy decision), Astrazeneca launched a generic with Arrow (a generics company) which was packaged as an equivalent to a branded generic tablet. The entry of all these generics onto the horizon had a significant effect on the launch of KRKA’s product.

Mr Justice Sales accepted the evidence of KRKA regarding the state of the market for pharmaceuticals and preferred the explanations of KRKA's witnesses pertaining to the workings of the market for the purchase of pharmaceuticals in the UK and the likelihood of consumers switching from Astrazeneca’s drug to KRKA’s drug if it had launched in 2010. In 2010 there was significant pressure on primary care trusts (PCTs) in the UK to reduce the spending on pharmaceuticals. Briefly explained, the UK National Health Service (NHS) reimburses local pharmacies and dispensing doctors according to a set of tariffs. Drugs which are on patent are reimbursed at the rate agreed with the pharmaceutical company; where there are generics the amount reimbursed is based upon market averages which are re-set as the market changes. A generic manufacturer can increase its market share in the short term by selling to the pharmacist or dispensing doctor below the tariff, since the pharmacist or dispensing doctor keeps the difference and is incentivised to prescribe the lower-priced generic. A generic up against a patented product has relative freedom on price; where there are multiple generics, the price is largely dictated by the other generics.

The PCTs employ Medicine Managers whose job it is to watch for cost savings that can be made by switching patients from one drug to another; where there are significant savings to be made, the Managers promote the switch to GPs in order to reduce the overall drugs bill. Sometimes switching can be difficult for medical reasons, while at other times it is straightforward. In the present case there seemed to be no obvious medical reasons not to switch patients. It was accepted that Managers scan the horizon for products and so, where generics were in the pipeline, a switch to a branded generic may not be promoted as a greater saving might be made by awaiting the greater competition ahead and it would be troublesome to switch a second time in short succession. Sales J also accepted that the evidence was clear that KRKA had engaged with groups of Medicine Managers and that a great many had shown an interest in switching once the KRKA product came on the market. KRKA in fact had a number of Medicine Managers as witnesses: these were credible witnesses of fact as to the likely success of KRKA’s product.

In 2011 there was a major reorganisation in the NHS system and the judge found that this had a major negative effect on the Medicine Managers, meaning that the likelihood of switching was lower. This reduced the ability of KRKA to have effective entry into the market. Further, the market conditions in 2011 were such that KRKA’s product was far less attractive to Medicine Managers and it was less likely that PCTs would switch to it. KRKA argued, and it was accepted, that if the injunction had not been granted and the other generics had come onto the market almost a year later (after the Ranbaxy decision), the likelihood is that KRKA would have lowered its prices and retained the market share since, while it was more expensive than the other generics, it was not so much greater that the Medicine Managers would have promoted switching from its products to the other generics. Moreover, having switched to KRKA there would have been resistance to switching again.

Sales J rejected two lines of argument from Astrazeneca. The first was that the level of switching would have been lower than KRKA claimed, citing evidence of the introduction of generics to the market for an antidepressant. In his view, there were differences due to the tendency to stay with existing antidepressants that were working due to (among other things) the placebo effect amongst patients. The second was an argument that Astrazeneca would have dropped its prices in the UK to compete with KRKA and so less (or no) switching would have occurred. Sales J rejected this on the basis that there was evidence that, in order to drop the cost, Astrazeneca would have needed Europe-wide approval from the business as the UK price is a “reference price” for the price in other countries. There was a clear possibility that Astrazeneca would have decided that there was a benefit in “sacrificing” the UK market to maintain price levels elsewhere and, since Astrazeneca did not adduce evidence in relation to this relevant matter, the judge drew the negative inference that they would not have dropped their prices.

As a result, Sales J concluded that a substantial percentage of the PCTs and dispensing doctors would have switched, accepting the switching figures given by KRKA subject to a drag factor of 20% for exaggeration by Medicine Managers in how successful they would have been in promoting the switching, and with a simple cut-off to the damages in 2015. Since the number of prescriptions made is published, the judge held that the calculation can be easily assessed (and will be subject to agreement by the parties).

Sales J also made a number of points regarding the legal framework, reminding us of a number of points from Les Laboratoires Servier v Apotex [2008] EWHC 2347 [noted on PatLit here]:

· The approach is compensatory and not punitive

· The existence of contingencies makes calculation difficult, but not impossible

· The profits that [KRKA] would have made depend on the actions of third parties and how [Astrazeneca] would have responded

· The award is one of equitable compensation and not damages strictly so called

· It may be appropriate to consider the compensation according to common law rules applying to contract or those applying to tort

· If those applying to tort apply, there may be a difference in the case of aggrevated or exemplary damages for blatent or cynical interference

· Restitutionary damages may be appropriate where the benefit to the patent holder outstrips the loss to the generic company

· One should not be overeager in scrutiny of evidence of loss or overcritical of the methodology as the patent owner will have had to argue that [KRKA’s] losses were easy to calculate whilst their own were not in order to obtain the injunction; and that the concept of “liberal assessment” is carried over from the context of calculating damages for patent infringement, ie. the claimant has the burden of proving loss, but (subject to the proviso that damages should compensate not punish) the damages should be liberally assessed.

In the present case, one wonders whether restitutionary damages might have been allowed. Astrazeneca’s behaviour seems to suggest that it had knowledge of the weakness of its patent (ie. launching the generic two days after the finding in the Ranbaxy case) and the subsequent drop in the price of their NEXIUM product may well have led them to retain much of the business which otherwise might have switched. Pre-empting a decision to switch to a generic after the Ranbaxy decision, Astrazeneca seemed to have established first mover advantage by launching with Arrow two days after the decision and so will have obtained/retained a proportion of the generic market. I also wonder whether as a strategy it may have urged Medicine Managers to consider switching to the Arrow product immediately following the Ranbaxy decision - if they chose to switch then they would switch to Arrow and were then unlikely to switch to Teva or the other generics which subsequently launched, and if they decided not to then they would stay with NEXIUM. If they immediately dropped the price of NEXIUM to make the differential less then this might have decided the matter immediately for Medicine Managers.

Thanks so much, Aaron, for your note -- and for your comments.

Who bears the burden of proof in declaratory judgments of non-infringement? The patentee, answers the US Supreme Court

On Wednesday, the US Supreme Court published its decision in the case of Medtronic Inc. v Mirowski Family Ventures LLC, ruling that, when a licensee brings an action for declaratory judgment of non-infringement of a licensed patent, the patentee bears the burden of persuasion on the issue of infringement. The Supreme Court unanimously reversed the judgment of the Federal Circuit, as suggested by the briefs submitted by the Solicitor General (here), and by a number of law professors (here).

In 1991, Medtronic and Mirowski concluded a licensing agreement, which allowed the former to implement, in its products, patented technologies held by the latter, in exchange for royalty payments (the facts of the case are described in detail here). A supplementary agreement (Litigation Tolling Agreement), signed in 2006, established that, if Mirowski believed that one of the products manufactured by Medtronic infringed one of its patents, the licensee could either (i) pay the additional royalties due, or (ii) seek a declaratory judgment of non-infringement, continuing to pay royalties into an escrow account (upon conclusion of the declaratory judgment action, these royalties were to be assigned to the prevailing party). These provisions essentially prevented the licensor from filing a counterclaim for infringement, as, even in case of alleged infringement, the agreement would remain in force.

In 2007, Mirowski gave Medtronic notice of infringement, in relation to two patents allegedly violated by several Medtronic products. As established under the agreement, the licensee filed a declaratory judgment action of non-infringement, paying all the relevant royalties into an escrow account. The District Court found that the patentee had failed to prove infringement, noting that the burden of proof of infringement fell upon Mirowski, even if it was the defendant in the action. The Court of Appeals for the Federal Circuit disagreed, acknowledging that the patentee normally bears the burden of proving infringement, but carving an exception for cases in which the patentee (i) is a defendant in a declaratory judgment action, and (ii) cannot file a counterclaim for infringement due to the continued existence of a license. The Federal Circuit essentially considered that, in such exceptional cases, the patentee is merely assuming a passive position, as the licensee is the only party seeking to disturb the status quo ante:

The contract at issue here required MFV to identify products it believed were covered by the contract. After MFV identified those products, Medtronic was required to either pay royalties on them, or sue for declaratory judgment that the products were not covered. Medtronic is unquestionably the party now requesting relief from the court: it already has a license; it cannot be sued for infringement; it is paying money into escrow; and it wants to stop. In contrast [...] MFV seeks nothing more than to be discharged from the suit and be permitted to continue the quiet enjoyment of its contract. In other words, it is Medtronic and not MFV that is asking the court to disturb the status quo ante and to relieve it from a royalty obligation it believes it does not bear. Consistent with the above, for the court to disturb the status quo ante, Medtronic must present evidence showing that it is entitled to such relief. 

The Supreme Court reversed the Federal Circuit's decision (for a discussion of the first part of the court's decision, which dealt with issues of jurisdiction, see here). The court observed that, according to settled case law, the Declaratory Judgment Act has merely limited procedural purpose (Skelly Oil Co. v. Phillips Petroleum Co.), and leaves substantive rights unchanged (Beacon Theatres Inc. v Westover). Therefore, as the burden of proof is a substantive aspect of a claim (Raleigh v Illionois Department of Revenue), the Declaratory Judgment Act cannot alter the general rule valid in patent infringement actions, under which the burden of proving infringement rests upon the patentee (Under Sea Industries Inc. v Dacor Corp.).

The judges noted that 'shift[ing] the burden depending upon the form of the action could create postlitigation uncertainty about the scope of the patent', highlighting that the Restatement (Second) of Judgments expressly acknowledges the possibility of relitigating an issue in a subsequent suit, when the burden of persuasion has shifted. The infringement issue could thus potentially remain unresolved, if the alleged infringer loses the declaratory judgment action, and the patentee similarly loses a subsequent infringement action brought against the former:

Suppose the evidence is inconclusive, and an alleged infringer loses his declaratory judgment action because he failed to prove noninfringement. The alleged infringer, or others, might continue to engage in the same allegedly infringing behavior, leaving it to the patentee to bring an infringement action. If the burden shifts, the patentee might lose that action because, the evidence being inconclusive, he failed to prove infringement. So, both sides might lose as to infringement, leaving the infringement question undecided, creating uncertainty among the parties and others who seek to know just what products and processes they are free to use.

The court also argued that the patentee is 'in a better position than an alleged infringer to know, and to be able to point out, just where, how, and why a product (or process) infringes a claim of that patent'; shifting the burden of persuasion would force the licensee to negate 'every conceivable infringement theory'. Reciting MedImmune Inc. v Genentech Inc., the Supreme Court further noted that imposing the burden on the licensee would create a significant obstacle to the use of declaratory judgments actions in similar cases:

In [MedImmune], we wrote that the "very purpose" of that Act is to "ameliorate" the "dilemma" posed by "putting" one who challenges a patent’s scope "to the choice between abandoning his rights or risking" suit. [...]. In the absence of the declaratory judgment procedure, Medtronic would face the precise dilemma that MedImmune describes. Either Medtronic would have to abandon its right to challenge the scope of Mirowski’s patents, or it would have to stop paying royalties, risk losing an ordinary patent infringement lawsuit, and thereby risk liability for treble damages and attorney’s fees as well as injunctive relief. [...] As in MedImmune, the declaratory judgment action rescues Medtronic from this dilemma.

These reasons were deemed sufficient to justify an exception to the basic rule described in Schaffer v Weast, where the court had ruled that plaintiffs normally bear 'the risk of failing to prove their claims'. The judges also explained that the public interest favors the maintenance of a well-functioning patent system, but requires, at the same time, that 'patent monopolies [be] kept within their legitimate scope' (Precision Instrument Manufacturing Co. v Automotive Maintenance Machinery Co.). The latter objective would be hindered, if the rules on the burden of proof effectively discouraged licensees from filing declaratory judgment actions. Thus, '[t]he general public interest considerations are, at most, in balance', and suggest retaining the general rule imposing the burden of proving infringement upon the patentee.

In reversing the Federal Circuit's decision, the Supreme Court rightfully took into consideration a series of theoretical (e.g. the nature of the declaratory judgment action and its objectives) and practical issues (e.g. the difficulty, for the licensee, to prove non-infringement under any conceivable infringement theory, and the risk of an unresolved dispute in case of relitigation), which undoubtedly support its conclusion. The court did not discuss other controversial aspects of the case, for example the risk of an abusive use of non-infringement declaratory judgment actions by licensees (the judges merely commented that 'litigation can occur only in the presence of a genuine dispute, "of sufficient immediacy and reality", about the patent's validity or its application'), or the possibility, for the patentee, to bring a counterclaim seeking a declaratory judgment of future infringement under T. Lang et al. v Pacific Marine and Supply Co. (in which the Federal Circuit taught that '[i]f the controversy requirement is met by a sufficient allegation of immediacy and reality, we see no reason why a patentee should be unable to seek a declaratory judgment of infringement against a future infringer when a future infringer is able to maintain a declaratory judgment action for noninfringement under the same circumstances').

It is interesting to note, as observed by Professor Cotter here, that the path taken by the Supreme Court mirrors the approach employed by German courts ('the patentee always has the burden of proof with regard to the infringement issue, even in negative declaratory actions' - for a similar principle applied by Italian courts, see this case), but differs from the ruling of the Court of Appeal for England and Wales in the recent case of Generics [UK] Ltd v Yeda Research and Development Co Ltd & Anor ('the burden of establishing non-infringement fell on [the plaintiff that brought the declaratory judgment action'). The latter case, however, should probably be read in conjunction with Baxter Healthcare Corporation et al. v Abbott Laboratories, where the patentee was required to plead its case, even if the burden of proof remained on the plaintiff (see IPKat post here). From this point of view, even jurisdictions which provide for a shifting of the burden of proof are likely to introduce additional requirements, in order to identify the perimeter of the underlying infringement dispute that prompted the licensee to file the declaratory judgment action.

Top Japanese IP judge comes to town

On Wednesday 19 February our friends at IBIL, the Institute of Brand and Innovation Law at University College London, are offering a fascinating insight into how patent litigation -- and indeed all IP litigation --works in practice in Japan, a jurisdiction that is positively bristling with patents.   The programme looks like this:

UCL Institute of Brand and Innovation Law (IBIL) Lecture

How Japanese IP Litigation Really Works

with Chief Judge Toshiaki Iimura of the IP High Court, Tokyo

Chaired by The Rt Hon Professor Sir Robin Jacob, Sir Hugh Laddie Chair of Intellectual Property Law, UCL Faculty of Laws

Wednesday 19 February 2014 from 6.00- 7.30pm
Followed by a reception 

About the eventThe Chief Judge will cover all the following topics, answer questions and entering into debate: 

• General: the court structure, numbers, speed and trends, who the judges are and how they are selected;
• Interim injunctions;
• Procedures on the way to trial including discovery, party and court experts, what happens when the defendant attacks validity and the Japanese approach to bifurcation;
• Remedies, injunctions (mandatory or discretionary) damages, account of profits, legal costs, international jurisdiction
• Invalidation actions
• Post-trial procedure and the active involvement of judges in settlement discussions.

Programme:

17:30	Registration Bentham House Foyer
18:00	Welcome Professor Sir Robin Jacob
	The Lecture
19:15	Reception in the Keeton Room

If you'd like to register, or even if you'd just like to browse through the names of those who have already registered, just click here.

You can read an interview from 2012 with Chief Judge Iimura in Managing Intellectual Property, here

Slipping on (olive) oil: key patents on olive-derived phenolic supplements declared invalid

Ever since studies suggested that the lower incidence of heart disease associated with the Mediterranean diet could be linked to the consumption of olive oil (for an overview of the health effects of other fats, see here), researchers have focused on the phenolic compounds contained in olives, which include oleuropein, tyrosol and hydroxytyrosol. Among the companies that first sought to commercialize olive extracts containing phenolic compounds, CreAgri was quick to seek patent protection, filing two patent applications in the US, in 2001 and 2003, subsequently granted as US Patents No. 6,416,808 and 8,216,599.

In 2011, CreAgri filed a lawsuit against Pinnaclife, a competitor selling olive-derived supplements, alleging infringement of both the '808 and '599 patent. The defendant sought declaratory judgments of non-infringement and invalidity of the asserted patents. In a judgment rendered on 18 December 2013, the District Court for the Northern District of California found both patents to be invalid. The decision examines several interesting issues (ranging from claim interpretation, overlaps between reexamination proceedings and litigation, prophetic claims, written description requirement, etc.), and deserves an in-depth look. Before reviewing it, let me add that a great write-up of the case by Virginia Brown Keyder provided inspiration for this post. Virginia also wrote a nice article on olive oil legislation in the US and EU here.

The court first turned its attention to the '808 patent, which essentially claims dietary supplements comprising an aqueous extract of olives containing hydroxytyrosol and oleuropein, or hydroxytyrosol and tyrosol, at certain weight ratios. The defendant alleged, inter alia, invalidity due to anticipation, under 35 USC § 102, in light of two prior art references, the US Patent No. 6,358,542 ('Cuomo') and an article ('Romani') that disclosed the polyphenolic content of five different cultivars of olive fruits from Tuscany. Pinnaclife also observed that the US Patent and Trademark Office, in a recent ex parte reexamination, had rejected all the claims of the '808 patent, as anticipated by Cuomo and Romani, or obvious in light of these references. The court, however, refused to take into account the findings of the USPTO, noting that (i) while a patent is presumed valid in litigation, ex 35 USC § 282, there is no such presumption in reexamination actions, to the effect that '[t]he difference in standard of proof significantly reduces the relevance of the PTO's conclusions', and (ii) the PTO's decision was still potentially subject to substantial review before the Patent Trial and Appeal Board and the Federal Circuit.

Judge Koh highlighted that the plaintiff had not disputed that the references disclosed the weight-ratio changes indicated in the asserted patent. Thus, the only issue concerned the disclosure, in prior art, of an 'aqueous extract of olive'. The claim construction order, previously issued by the court, had defined the aqueous extract as 'an aqueous solution containing a water-soluble preparation from an olive plant', with no restriction on the process by which the solution is obtained. In this perspective, the judge noted that CreAgri's late attempt to restrict the notion of 'aqueous extract' to pure water contrasted with the arguments raised during claim construction, and failed on the merits, as the specification of the '808 patent clearly refer to an 'aqueous or aqueous-alcoholic extract', when describing the invention 'as a whole'. The court held that 'the specification's use of the disjunctive is ambiguous at best', and is insufficient to exclude aqueous-alcoholic extracts from the scope of the invention. A different conclusion, added the court, would improperly import a purported limitation from the specification into the claims.

Analysing the references, the judge held that the 'aqueous extract' was clearly disclosed by Cuomo's Examples 4 and 11, which jointly described a method for obtaining an aqueous methanol solution, in which a composition, obtained from olive pulp, is dissolved. The same conclusion was reached with regard to the Romani reference, which disclosed the use of an 'aqueous extract', as an intermediate step of the extraction process. Thus, the court found all the claims of the '808 patent to be invalid due to anticipation.

The second part of Judge Koh's decision examined the validity of the '599 patent, which claims methods of treating a number of inflammatory conditions, through the use of various forms of hydroxytyrosol, solely or in conjunction with oleuropein. Pinnaclife maintained that the specification of the contested patent did not provide any relevant data to support the anti-inflammatory effects of the olive-derived preparations, thus failing to meet the requirements of written description, enablement, and utility.

As taught by the Federal Circuit in Ariad Pharmaceutical et al. v Eli Lilly & Co., the written description test describes 'an objective inquiry into the four corners of the specification from the perspective of a person of ordinary skill in the art', to determine whether the specification shows that 'the inventor actually invented the invention claimed'. Judge Koh added that claims that have a chemical nature, or whose scope is broad, as in the case of the '599 patent, frequently require more supporting details to meet the written description requirement. She argued that the specification of the contested patent 'conclusively reveals that the inventor sought to claim a method of treating inflammation based on no more than a hope that olive-derived compositions would one day be used effectively to treat inflammation caused by a wide variety of factors'. The court also recited the testimony of the inventor:

(A) I learned early in my career that you can file patents, they are prophetic...
(Q) You anticipate that this would work?
(A) Right.
(Q) But you don’t actually have the data yet showing that it would work?
(A) Yeah...

Commenting these words, Judge Koh pointed again to Ariad, observing that 'the prophetic approach to patenting is not proper absent some indication that the named inventor has [...] performed the difficult work of invention', as a mere wish or plan is insufficient to meet the written description requirement. Similarly, while substantial prophetic examples can be sufficient to that aim, under Ariad, 'mere mentions of a desired outcome' are not. Evaluating the studies cited in the specification, the court found that they failed to provide any statistically significant results, realized or predicted, capable of supporting the claims of the '599 patent.

CreAgri argued that the anti-inflammatory properties of olive phenols were already known by others skilled in the art, pointing to an inherent disclosure, but the court dismissed this argument. Judge Koh noted that the written description requirement can only be satisfied by an inherent disclosure if 'the missing descriptive matter [is] present in the application's specification such that one skilled in the art would recognize such a disclosure' (PowerOasis v T-Mobile USA). Examining the specification of the contested patent, she concluded that the disclosure of a number of biomarkers, employed to determine whether the treatment has a therapeutic effect, is insufficient to create an inherent disclosure of the full scope of the invention: 'the ’599 Patent inherently discloses how to measure whether the treatment works as claimed, not that the treatment does work as claimed'. Further, none of the prior art references cited in the specification demonstrated the efficacy of the claimed olive-derived phenols for treating the inflammatory conditions described in the patent. Accordingly, the judge found all the claims of the '599 patent to be invalid for failure to meet the written description requirement of 35 USC § 112.

Assessing enablement and utility, the court concluded that, at the time of the patent filing, there was no scientific evidence demonstrating the link between olive-derived phenols and the claimed health benefits, to the effect that a person of ordinary skill in the art would have questioned the utility of the invention. The judge refused to consider post-filing articles submitted by CreAgri (but observed that, even when taken into account, said articles would not alter the court's findings on utility), discussing the Federal Circuit's holding in In re Brana:

[T]he Court cannot consider CreAgri’s post-filing test results as evidence of the utility of the claimed methods of treating inflammation. "Enablement is determined as of the effective filing date of the patent's application." [In re ’318 Patent Infringement Litigation]. Where results "were not available at the time of the application," they cannot be used to establish utility or enablement. [Id.]. The Federal Circuit has created a narrow exception to the rule that post-filing data cannot support utility. In In re Brana, the Federal Circuit allowed such evidence "to substantiate any doubts as to the asserted utility" where those test results "pertain [...] to the accuracy of a statement already in the specification." [Id.]. Read too broadly, however, the Brana exception would swallow the rule that "[e]nablement, or utility, is determined as of the application filing date." [Id.]. Where actual results, garnered post-filing, mirror or otherwise substantiate predicted results, it is plain that those results will pertain to the accuracy of a statement in the specification within the meaning of Brana. Here, however, the ’599 Patent makes no assertions whatsoever regarding the outcomes of the proposed studies [...], so the study designs provided in the specification are not sufficiently prophetic such that later-achieved results can support the utility of the claimed invention.

Finally, the court evaluated the existence of any data or reasoning capable of supporting the inventor's claims on the therapeutic efficacy of the olive-derived phenols, looking for a 'reasonable correlation' between the activity in question and the asserted utility. Judge Koh noted that, when 'the inventor did not know at the time of filing whether the invention was in fact operable and instead rests the invention’s asserted operability on [...] prophe[cy]', analytic reasoning may come to aid, but only if it is sufficient to demonstrate how and why the invention is expected to work. However, she could not identify, in the specification of the '599 patent, any valid argument or analytic reasoning establishing utility. Observing that the patent merely claims a research hypothesis, the court confirmed its invalidity, for failure to satisfy the enablement and utility requirements.