American Intellectual Property Law Association
Biotechnology Committee
Biotechnology in the Courts Subcommittee
Report
Summaries of Recent Decisions of Interest to the Biotechnology Community
Prepared for the AIPLA Biotechnology Committee
July 15, 2011
Edited By:
Melanie Szweras
Subcommittee Chair
Bereskin & Parr LLP
E-mail: mszweras@bereskinparr.com
CONTRIBUTORS
Eric P. Mirabel
The AIPLA Biotechnology in the Courts Subcommittee Report is a forum for members of the
subcommittee to present summaries and commentary on recent judicial decisions of interest to
the biotechnology community. Any view of a contributor expressed in a summary should be
understood to reflect only the present consideration and views of the contributor, and should not
be attributed to the AIPLA or any of its committees, the contributor’s firm, employer, or past or
present clients, to other contributors, or to the editor. To request an electronic copy of the
Report, or if you are interested in summarizing a case for a future edition, please contact Melanie
Szweras at mszweras@bereskinparr.com.
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CONTRIBUTORS:
Eric P. Mirabel, JD, LLM, (current editor of Biotech Buzz) specializes in intellectual
property and biotechnology-related matters, including advanced procedural practice
(appeals, interferences, reexaminations, oppositions). He holds an LLM in Patent &
Trade Regulation Law from the National Law Center at George Washington University.
Further information about him and his practice is available at www.emirabel.com.
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TABLE OF CONTENTS
I.
Microsoft Corp. v. i4i Limited Partnership, U.S., No. 10-290, (June 9, 2011)………4
31
Case Summaries
I.
Microsoft Corp. v. i4i Limited Partnership, U.S., No. 10-290, (June 9,
2011)
Reported by: Eric P. Mirabel, JD, LLM
Summary and Decision
Briefly, in Microsoft, Respondents (collectively, i4i) held a patent claiming an improved
method for editing computer documents. The parties agreed that, more than a year before
filing its patent application, i4i had sold a software program known as S4 in the United
States, but they disagreed over whether that software embodied the invention claimed in
i4i's patent. Relying on the undisputed fact that the S4 software was never presented to
the Patent and Trademark Office (PTO) during its examination of the patent application,
Microsoft objected to i4i's proposed jury instruction that the invalidity defense must be
proved by clear and convincing evidence. The District Court nevertheless gave that
instruction, rejecting Microsoft's alternative instruction proposing a preponderance of the
evidence standard. The jury found that Microsoft willfully infringed the i4i patent and
had failed to prove the patent's invalidity. The Federal Circuit affirmed, relying on its
settled interpretation that under 35 USC §282, invalidity must be proved by clear and
convincing evidence. The Supreme Court affirmed, with Justice Sotomayer, writing for
the majority, noting:
In asserting an invalidity defense, an alleged infringer must contend with the first
paragraph of §282, which provides that "[a] patent shall be presumed valid" and
"[t]he burden of establishing invalidity . . . rest[s] on the party asserting such
invalidity." Under the Federal Circuit's reading of §282, a defendant seeking to
overcome this presumption must persuade the factfinder of its invalidity defense
by clear and convincing evidence. Judge Rich, a principal drafter of the 1952 Act,
articulated this view for the court American Hoist & Derrick Co. v. Sowa & Sons,
Inc., 725 F. 2d 1350 (CA Fed. 1984). There, the Federal Circuit held that §282
codified "the existing presumption of validity of patents," id., at 1359 (internal
quotation marks omitted)—what, until that point, had been a common-law
presumption based on "the basic proposition that a government agency such as the
[PTO] was presumed to do its job," ibid. Relying on this Court's pre-1952
precedent as to the "force of the presumption," ibid. (citing Radio Corp. of
America v. Radio Engineering Laboratories, Inc., 293 U. S. 1 (1934) (RCA)),
Judge Rich concluded:
"[Section] 282 creates a presumption that a patent is valid and imposes the burden
of proving invalidity on the attacker. That burden is constant and never changes
and is to convince the court of invalidity by clear evidence." 725 F. 2d, at 1360.
41
The Court also rejected Microsoft's argument that a preponderance standard must at least
apply where the evidence before the factfinder was not before the PTO during the
examination process. The Court acknowledged that, in these circumstances, "the
rationale underlying the presumption—that the PTO, in its expertise, has approved the
claim—seems much diminished," KSR Int'l Co. v. Teleflex Inc., 550 U. S. 398, 426,
though other rationales may still animate the presumption.
Commentary:
Does Microsoft Corp. v. i4i Limited Partnership, U.S., No. 10-290, 6/9/2011, Reflect a
Trend for or Against Strong Patent Protection?
The majority view in the biotechnology industry was that the Microsoft decision,
affirming that patent invalidity must be proved by clear and convincing evidence, “was
maybe the most important patent case to go to the Supreme Court in a decade…. because
biotech more than most industries depends on patents as strong and enduring legal
instruments … "i
Several Supreme Court decisions over the last decade have left some with the impression
that the Court is opposed to such “strong and enduring” patents, and that perhaps the
opposition has been influenced by the computer and information technology sector, and
their attempts to hinder patent infringement lawsuits by non-practicing entities.ii These
decisions include notably, Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.
S. 722 (2002) (Prosecution history estoppel may apply to any claim amendment made to
satisfy the Patent Act's requirements, not just to amendments made to avoid the prior art);
eBay, Inc., v. MercExchange, LLC, 547 U.S. 388 (2006) (rejecting the Federal Circuit’s
general rule that courts will issue permanent injunctions against patent infringement
absent exceptional circumstances); KSR Int'l Co. v. Teleflex Inc., 550 U. S. 398 (2007)
(rejecting the Federal Circuit’s "teaching, suggestion, or motivation" test, under which a
patent claim’s subject matter is only deemed obvious if the prior art, the problem's nature,
or the knowledge of a person having ordinary skill in the art reveals some motivation or
suggestion to combine the prior art teachings).
While each of these decisions (Festo, eBay and KSR) were characterized by
commentators as having potential to profoundly weaken patents, profound effects are not
borne out by the available litigation statistics. While it would seem that Festo would
likely cause a noticeable decline in successful assertions of infringement under the
doctrine of equivalents, as nearly all patents are amended during prosecution in response
to a variety of PTO rejections, tracking of litigated matters (by PatStats.Org) from 2000
through 2010, does not show a serious decline in successful assertion of the doctrine of
equivalents.iii
Prior to the Ebay decision, in Hybritech Inc. v. Abbott Laboratories, 849 F.2d 1446
(Fed.Cir.1988)iv, the Federal Circuit ruled that no preliminary injunction would be
51
entered against certain Abbott products, using an essentially equivalent standard to that
applied by the Supreme Court in Ebay to determine whether a permanent injunction
should issue, namely:
[F]our factors: (1) reasonable likelihood of success on the merits; (2) irreparable
harm; (3) the balance of hardships tipping in its favor; and (4) the impact of the
injunction on the public interest. v
The Court in eBay applied a slightly different (and ostensibly more easily satisfied)
standard for the public interest (factor 4) than in Abbott, requiring only: “(4) that the
public interest would not be disserved by a permanent injunction.”vi Thus, the Supreme
Court’s eBay standard would not make permanent injunctions as difficult to obtain
against medically-related technologies (where the public interest would seem to weigh
against them) as might be expected if the Court had adopted the standard for preliminary
injunctions from Hybritech, and applied it to permanent injunctions. PatStats Org.’s
tracking of permanent injunction grants and denials, post-Ebay, indicates that the eBay
ruling, in fact, did not make permanent injunctions significantly more difficult to obtainvii
(though their statistics are not broken out to reflect injunctions against medical or healthrelated products and services).
Unlike the limited effects of eBay and Festo, some have reported that the change in the
obviousness standard following KSR made it more difficult to win appeals to the Board of
Patent Appeals and Interferences in ex parte cases, following an Examiner’s
determination of obviousness.viii But KSR does not seem to be an attempt by the Court to
weaken or make patents more difficult to obtain, even if that is the effect. Rather, it
seems to reflect that the Court was focused on correct statutory interpretation and that its
own precedents were followed.ix
The Court’s focus on correct statutory interpretation can also be seen in Bilski v. Kappos,
130 S.Ct. 3218 (2010), its landmark decision on the scope of patentable subject matter
under 35 USC 101. The majority in Bilski held that Petitioners' claims to "how buyers
and sellers of commodities in the energy market can protect, or hedge, against the risk of
price changes" are not patent-eligible, because the claims represent an "abstract idea."x
But notwithstanding wide concern about business method patents being used by patent
trolls, and the potentially negative resulting effects, the Court also recognized the
continuing validity of business method patents, noting the provisions of 35 U. S. C. §273
(b)(1) where Congress expressly acknowledged them. xi
To the extent the foregoing decisions are capable of such categorization, Bilski, compared
with Festo, eBay and KSR, can be viewed as more “pro-patent.” Microsoft seems to
confirm definitively that there is no “anti-patent” trend at the Court. In Microsoft,
Petitioner had the benefit of being able to rely on an economic impact study by the FTC,
which concluded that the clear and convincing evidence leads to distortions.xii
Nevertheless, the Court rejected any change in the standard of proof: “Congress specified
the applicable standard of proof in 1952 when it codified the common-law presumption
of patent validity. Since then, it has allowed the Federal Circuit's correct interpretation of
§282 to stand. Any re-calibration of the standard of proof remains in its hands.”xiii
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In conclusion, it seems that the Court is consistently unswayed by arguments for or
against increased patent protection, and the impact of either course. Instead, the Court
focuses on providing a correct interpretation of Congressional intent in the Patent Laws,
and of precedent. In addition, it appears the Court’s “anti-patent” decisions were often
viewed as having a greater negative impact on patent strength or validity, than was
actually borne out in practice, to the
i
Quoting Hans Sauer, Deputy General Counsel for intellectual property at the Biotechnology
Industry Organization (BIO). See Chemical & Engineering News, June 20, 2011.
ii
For Example, Patent Barristas, Nov. 29, 2006, noted:
The Coalition for Patent Fairness is a lobbying group backed by a number of
high-tech companies in support of S. 3818, the Patent Reform Act of 2006….
Coalition members include Intel, Cisco Systems and Hewlett-Packard [also
Apple, Autodesk, Business Software Alliance, Comcast, Dell, Electrolux,
Financial Services Roundtable, Information Technology Industry Council, Intuit,
Micron Technology, Microsoft, Oracle, TechNet, Time Warner, and Visa]. The
Coalition is concerned about the so-called patent trolls - companies that exist
primarily to make money from patents through litigation instead of
commercialization.
Also, Patently-O Blog, Aug. 26, 2010, summarized written testimony by Intels’ Chief
Patent Counsel in support of the 2009 Patent Reform legislation, as follows: ”patents are
meant to allow manufacturing companies to fight each other – not for non-manufacturing
inventors or their assigns to slow-down manufacturers.”
iii
PatStats.org does not break down the successful assertion of the doctrine of equivalents
before and after Festo, and shows statistics on successful assertion from 2000-2004, from
2005-2009 and for 2010.
Although the District Court’s preliminary injunction against most of the Abbott
products-in-suit was upheld, the District Court had stated that the public interest was best
served by not enjoining sale of Abbott cancer test kits and hepatitis test kits, and this
ruling was affirmed by the Federal Circuit. Hybritech at 1458. At the time of the
application for preliminary injunction, Hybritech had previously had the validity of its
patent-in-suit upheld following a finding of infringement against another party. See
Hybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367 (Fed. Cir. 1986)
iv
v
Hybritech at 1451.
vi
eBay at 1391.
vii
Pat Stats.org. tracking through 4/11/2011 show that post-Ebay, injunctions granted
over denied are at an approximately 3:1 ratio.
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viii
See JPO/US Bar Liason Council, Jan. 16, 2009, Remarks by Jonathon Osha, noting the
PTO Board of Appeals & Interferences reversal rate in ex parte cases declined from 35%
in 2006 to near 20% in 2008, and the number of appeals pending increased rapidly. [Ed.
Note] For my employers in the biotech industry over a 20 year span, I had an overall
reversal rate was about 90% for obtaining a patent following appeal, before KSR. This
rate dropped to about 80% following KSR (mostly because of affirmance of obviousness
determinations, rather than reversals on other basis, by the Board of Patent Appeals &
Interferences).
The KSR Court’s statements reflect that its primary concern is adherence to correct
statutory and precedential interpretation in deciding patent issues, e.g.,: “We build and
create by bringing to the tangible and palpable reality around us new works based on
instinct, simple logic, ordinary inferences, extraordinary ideas, and sometimes even
genius. These advances, once part of our shared knowledge, define a new threshold from
which innovation starts once more. And as progress beginning from higher levels of
achievement is expected in the normal course, the results of ordinary innovation are not
the subject of exclusive rights under the patent laws. Were it otherwise patents might
stifle, rather than promote, the progress of useful arts. See U. S. Const., Art. I, §8, cl. 8.
These premises led to the bar on patents claiming obvious subject matter established in
Hotchkiss and codified in §103. Application of the bar must not be confined within a test
or formulation too constrained to serve its purpose.” KSR at 410.
ix
x
Id. at 3219.
The Bilski Court noted: “Under 35 U. S. C. §273 (b)(1), if a patent-holder claims
infringement based on ‘a method in [a] patent,’ the alleged infringer can assert a defense
of prior use. For purposes of this defense alone, ‘method’ is defined as ‘a method of
doing or conducting business.’ §273(a)(3).
xi
By “distort[ing] the litigation process,” the clear-and convincing-evidence standard
creates “serious potential for judicially confirming unnecessary, potentially competitionthreatening rights to exclude.” Microsoft petition for writ of cert., page 22, citing the report
xii
by the U.S. Fed. Trade Comm’n, To Promote Innovation: The Proper Balance of Competition
and Patent Law and Policy, ch. 5, at 28 (2003) (“FTC Report”) (noting that “there is no
persuasive reason why the level of th[e] burden should be clear and convincing evidence”).Id. at
22.
xiii
Id. at 24.
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