Friday, 2 December 2011

SCOTUS Readies For Oral Argument In Three Patent Cases

It’s autumn in Washington, DC and time for patent litigators’ thoughts to turn to Washington Redskins football and U.S. Supreme Court oral arguments. Following its recent practice of granting certiorari in a relatively large number of patent-related cases (by historical standards, at least), the SCOTUS has accepted three patent cases this term. Two cases will be argued next week. The third will be argued in early January. Here's a preview of all three cases:

Patent Eligibility. The most closely-watched case is Mayo Collaborative Services (d/b/a Mayo Medical Laboratories) v. Prometheus Laboratories, Inc. (No. 10-1153), an appeal from the U.S. Court of Appeals for the Federal Circuit considering the patent eligibility of medical processes. Prometheus Laboratories, Inc. owns U.S. Patent No. 6,355,623, entitled “Method of treating IBD/Crohn’s Disease and related conditions wherein drug metabolite levels in host blood cells determine subsequent dosage,” and a subsequent continuation patent, U.S. Patent No. 6,680,302. The patents claim methods for treating gastrointestinal diseases by optimizing dosages of thiopurine drugs. The drugs are effective in carefully controlled doses, but have toxic side effects at incorrect levels. The patents generally claim a process of optimizing the dosage level by “administering” a thiopurine drug, “determining” the level of resulting drug metabolites in the patient’s blood, and then increasing or decreasing the drug dosage where the metabolite level “indicates a need” to do so.

Prometheus sued Mayo Collaborative Services, a unit of the Mayo Clinic, for infringement of the patents. Mayo moved for summary judgment on the grounds that the claimed invention was not eligible subject matter under 35 U.S.C. § 101, because it attempts to cover a natural phenomenon – the correlation between thiopurine metabolite levels in a patient’s blood and drug effectiveness or toxicity.

The Mayo case already has been to the Supreme Court once, but was remanded without a decision on the merits. The Federal Circuit originally reversed the district court’s grant of summary judgment in favor of Mayo, holding that the claims satisfied the then-dispositive “machine or transformation test.” Prometheus Labs., Inv. v. Mayo Collaborative Services, 581 F.3d 1336 (Fed. Cir. 2009). That decision was on appeal to the Supreme Court when the Court decided Bilski v. Kappos, 561 U.S. ___, 130 S.Ct. 3218 (2010), broadening the eligibility of method inventions. As a result, the Supreme Court remanded the Mayo case for reconsideration. The Federal Circuit decided once again that the claims were patent-eligible. Prometheus Labs., Inv. v. Mayo Collaborative Services, 628 F.3d 1347 (Fed. Cir. 2010). The CAFC reasoned that Prometheus’ steps of “administering” and “determining” were transformative, because the thiopurine drug chemically reacted in the bloodstream to form the detectible metabolites. Thus, the claims did not cover the a naturally-occurring correlation per se, but a specific application of that phenomenon that resulted in drug dosage optimization.

Mayo will be the Supreme Court’s first opportunity to consider the limits of patent eligibility since its Bilski decision. Interest in the case is particularly keen because one Justice, Stephen Breyer, has been critical of a patent involving a step suggesting physician thought processes quite similar to the steps recited in the Prometheus patents. In a 2006 case, Laboratory Corp. of America Holdings v. Metabolite Labs., Inc., the Court heard argument on the patentability of claims directed to a method of diagnosing vitamin deficiencies in patients by “assaying” their blood for high levels of homocysteine (known to be associated with vitamin deficiencies) and then “correlating” a high level of homocysteine with vitamin deficiency in the patient. 126 S.Ct. 2921 (2006). The Court subsequently dismissed the writ of certiorari as improvidently granted, because the patent eligibility issue was not briefed or argued in the lower court. But Justice Breyer, joined by Justices Souter and Stevens (both now retired), dissented from the dismissal. He argued that the claimed method amounted to nothing more than “an instruction to read some numbers in light of medical knowledge.” Thus, he argued, the claims were directed to natural phenomena, per se, and were not patent-eligible. The same reasoning may cause Breyer to be skeptical of Prometheus’ claims.

The Mayo case will be argued on December 7.

Counterclaims Under Hatch-Waxman Act. In addition to Mayo, two other patent-related appeals will be argued this term. In Caraco Pharmaceutical Labs. Ltd. v. Novo Nordisk A/S, No. 10-844, the Supreme Court considers when a generic drug company may bring a counterclaim against a pioneer drug manufacturer under the Drug Price Competition and Patent Term Restoration Act of 1984, more commonly known as the Hatch-Waxman Act. Under that Act, a drug manufacturer lists patents which cover its drug or FDA-approved uses of the drug in the FDA’s Orange Book. If a generic company files an Abbreviated New Drug Application (“ANDA”) seeking approval to market a generic equivalent before the patents expire, it must deliver a “Paragraph IV” certification asserting that each patent is not infringed, invalid, or unenforceable. 21 U.S.C. § 355(j)(2)(A)(vii). Such a certification is an act of infringement, 35 U.S.C. § 271(e)(2), permitting the pioneer drug company to file suit in federal district court. In order to prevent pioneer drug companies from deterring generic applications by listing patent information that is too broad in light of the patents’ claimed subject matter, the Act permits a generic drug company to assert a counterclaim if a patent listed in the Orange Book does not claim either “(aa) the drug for which the [FDA] application was approved; or (bb) an approved method of using the drug[.]” 21 U.S.C. § 355(j)(5)(C)(ii)(I).

In this case, the pioneer drug company, Novo Nordisk, owns a patent covering the brand drug Prandin®, which is approved for three methods for treating diabetes mellitus. Novo Nordisk listed the patent in the Orange Book as covering one method. In fact, the patent claims covered one of the other approved methods. Novo Nordisk asserted that Caraco infringed the patent by filing an ANDA for the listed, but not patented, method. Caraco filed a counterclaim seeking correction of the Orange Book information, and the district court granted summary judgment directing Novo Nordisk to amend the listing. In a 2-1 split decision, however, the Federal Circuit reversed. It ruled that Caraco could not assert a counterclaim because the Orange Book did list “an approved method of using” Prandin (just not the one that was covered by the patent). The dissenting judge argued that the majority’s construction of the law was too “crabbed” and deviated from Congress’ intent to prevent manipulation of the Orange Book listings.

The Supreme Court will hear argument in Caraco on December 5, 2011.

Scope Of Evidence In District Court BPAI Challenge. On January 9, 2012, the Supreme Court is scheduled to hear oral argument in Kappos v. Hyatt, No. 10-1219, considering the availability of evidence in appeals from the U.S. Patent and Trademark Office’s Board of Patent Appeals and Interferences (“BPAI”) to federal district courts. Under the Patent Act, a patent applicant that loses its administrative appeal to the BPAI has two options for appellate review. First, it can appeal directly to the Federal Circuit. Second, it can file a civil action in federal district court under 35 U.S.C. §145, seeking an order requiring the USPTO to issue a patent on the application. The applicant choosing the district court option subsequently may appeal an adverse court result to the Federal Circuit. This district court option has a long history, dating back to the 1836 Patent Act. Section 145 states that in the civil action, the district court “may adjudge that such application is entitled to receive a patent for his invention . . . as the facts in the case may appear[.]”

In Hyatt, the examiner rejected the applicant’s pending claims for obviousness. During the ensuing administrative appeal, the BPAI reversed the obviousness rejection, but rejected several claims based on lack of written description. 35 U.S.C. § 112 par. 1. Evidence to rebut that rejection was available to Hyatt, but he did not submit it to the BPAI. After the BPAI’s final ruling, Hyatt filed a civil action under Section 145 and, in that action, attempted to introduce the evidence he failed to submit during the administrative appeal. The district court excluded the evidence.

Hyatt then appealed to the Federal Circuit. In an en banc ruling, the appeals court ruled that a plaintiff in a Section 145 action may introduce any evidence in support of its request for issuance, even though the evidence was not before the BPAI. Hyatt v. Kappos, 625 F.3d 1320 (Fed. Cir. 2010)(en banc). The USPTO argued for a different rule that would preclude admission of new evidence in the district court action unless the applicant could not reasonably have provided the evidence to the USPTO in the first instance. Supreme Court will be tasked with determining the correct standard for admitting new evidence.

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