Boston Scientific Stent Patent Obvious in Light of KSR

Posted on January 18, 2009 by duncanlaw71

The new obviousness standard set forth in KSR v. Teleflex, 550 U.S. 398 (U.S. 2007), has put to rest yet another patent into the invalidity graveyard. After a district court found a Boston Scientific stent patent valid and infringed, the Federal Circuit applied the KSR standard and reversed the district court ruling, finding the patent invalid.

The reason for this is simple: after Boston Scientific won the jury trial, a new standard was put in place as to what renders a patent obvious.  Before KSR, a patent was non-obvious if one reference contained some of the elements of a patent claim, and a second reference contained the remaining elements, but there was no explicit statement suggesting that the two references should be combined to result in the resulting patent claim. In other words, there must have been some motivation to combine the two references in order to render a patent claim obvious. Typically, rendering a patent obvious requires two references. After KSR, there is no longer a requirement of an explicit motivation to combine references.  Now, two references may be combined if common sense would lead one skilled in the field of science in question to combine the references. The Federal Circuit has taken this rule one step further, and has found that a patent can be rendered invalid for obviousness with only one reference.

In Boston Scientific v. Cordis Corp. (Fed. Cir. 2009), the Federal Circuit applied the KSR standard to Boston Scientific’s patent, U.S. Patent 6,120,536 (“the ’536 patent”), using only one reference, namely U.S. Pat. No. 5,545,208 (“Wolff”). Wolff described every element of the ’536 patent, but they were described in separate embodiments within the patent. Figure 3B (along with its corresponding description in the specification in Wolff), described some of the elements, and Figure 4 (along with its corresponding description in the specification) described the remaining elements. It is common practice to insert a catch-all statement at the end of a specification stating that “each embodiment, or any combination of the embodiments, are contemplated in the invention.” This allows the patentee to later change the patent claims to include a mixture of the embodiments because there is an explicit reference that a combination of the embodiments were contemplated by the inventor.

Wolff, however, had no such catch-all statement. Thus, the district court rejected Cordis’ argument that the two embodiments described in Wolff render the ’536 patent obvious because there was no explicit motivation to combine them. Unfortunately for Boston Scientific, KSR was issued after the district court’s ruling, loosening the strict requirements for rendering a patent obvious.

The Federal Circuit explained that “all the limitations of claim 8 were found in two separate embodiments in Wolff pictured side by side… Combining two embodiments disclosed adjacent to each other in a prior art patent does not require a leap of inventiveness.” In so stating, the Federal Circuit has opened the door to holding patents invalid for obviousness using only one reference.

What about Anticipation?

It is unclear as to how this ruling with affect how a reference anticipates a patent. A reference anticipates a patent, and thus renders it invalid, when all of the elements of a patent are found in one reference. But even though all the elements of the patent claim were found in Wolff, the Federal Circuit found the patent obvious, not anticipated. Case law regarding this issue should be closely watched in order to further clarify the difference between anticipation and obviousness with regards to one prior art reference.

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JPO to Study Patentability of Software and Business Patents

Posted on January 14, 2009 by duncanlaw71

Japanese newspapers are reporting that the Japanese Patent Office (JPO) will begin a study in January of 2009 in an attempt to dramatically change the current patent laws there.  Some of the possible areas of change include:

  1. Changing the definition of “invention” to include business methods and software
  2. Revising employee’s patent rights when working for an employer
  3. Disallowing injunctions in order to promote innovation
  4. Decrease the amount of time it takes to issue a patent

Currently, applicants must wait an average of 5-6 years after filing before the patent is issued in Japan.  The costs associated with the maintenance fees in Japan, as well as the cost of patent prosecution, is the highest of any other country in the world.  Also, the Japanese definition of what is obvious is much narrower than most other countries.  For example, a patent may be deemed as non-obvious in the USPTO, but could still be rejected as obvious in the JPO.

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The Influence of Past Licenses on Permanent Injunctions

Posted on January 11, 2009 by duncanlaw71

Once a competitor has been found to infringe by a court, the next step in enforcing your patent right is to prevent that same party from infringing again.  In addition to being awarded monetary damages, the patentee can ask the court to prevent future damages by issuing a permanent injunction barring the infringing product from being sold in the market.  But this is not automatic.  The infringer will undoubtedly point to any license the patentee has entered into and argue that if a licensing fee was good enough for the patentee then, a monetary damage award should be enough for the patentee now.  But as a recent Federal Circuit case highlights, the amount of weight given to those licenses is proportional to the similarity of the facts surrounding the licenses and the current infringement.

In Acumed v. Stryker, Acumed is the assignee of U.S. Pat. No. 5,472,444 directed to a metal pin that secures pieces of a broken upper arm bone.  Finding Stryker to have willfully infringed, the district court awarded Acumed damages based on lost profits and a reasonable royalty.  In addition, the district court issued a permanent injunction against Stryker that prohibited it from selling its infringing device.  Stryker appealed the permanent injunction to the Federal Circuit.

The Federal Circuit reaffirmed that for a permanent injunction to be issued in a patent case, as with any case, four factors must be considered: (1) the irreparable harm suffered by the patentee; (2) whether or not monetary damages are adequate to compensate for the harm; (3) whether balancing the patentee’s hardship against the infringer’s hardship weighs in favor of patentee; and (4) whether the public interest will be disserved by a permanent injunction.

The Federal Circuit explained that a permanent injunction is in accordance with the well-established right of the patentee to exclude its competitors from infringing its patent.  Since monetary damages resulting from past acts do not compensate the patentee for any infringement in the future, it may be that infringement may cause a patentee irreparable harm not remediable by a monetary award (the first two factors).  While the fact that a patentee has chosen to license the patent may indicate that a reasonable royalty does compensate for an infringement, it is only one factor for the courts to consider.  In addition to this factor, the court should also consider: (1) the identity of the past licensees: (2) the experience in the market since the licenses were granted; and (3) the identity of the new infringer.

In this case, infringer Stryker argued that the large sum awarded to Acumed for Stryker’s willful infringement was more than enough to remedy Acumed and that no permanent injunction was necessary.  In addition, Stryker pointed to past licenses of Acumed to show that there would be no irreparable harm if Stryker paid Acumed a reasonable royalty for its future infringement, allowing Acumed to continue selling the infringing devices.

The Federal Circuit agreed with the district court that the two instances of Acumed licenses were distinguishable from the facts here.  In one instance a license arose as part of a settlement agreement in a court action.  In the other instance the licensee was not a direct competitor to Acumed.  Since Stryker was a direct competitor, and since the district court found that Acumed successfully established lost profits, the Federal Circuit found that the district court did not abuse its discretion in issuing a permanent injunction.

This case highlights the importance of the context of previous licenses when a permanent injunction is at issue.  Licenses that were negotiated between two parties that are not involved in a court action are more relevant than a license arising out of a settlement agreement.  This is due to the many strategic factors that may be at play in the licensing fee during a settlement.  Also, a license agreement between two direct competitors is more relevant than between non-competitors.  This is so because the license fee between two direct competitors more accurately gauges the market share of each company.

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EPO Rejects Patent for Manipulating Embryonic Stem Cells

Posted on January 2, 2009 by duncanlaw71

The European Patent Office (EPO) has refused to grant a patent claim covering the manipulation of embryonic stem cells.

Claim 1, the claim under examination, reads:

A cell culture comprising primate embryonic stem cells which

(i) are capable of proliferation in vitro culture for over one year,

(ii) maintain a karyotype in which all chromosomes normally characteristic of the primate species are present and are not noticeably altered through culture for over one year,

(iii) maintain the potential to differentiate to derivatives of endoderm, mesoderm, and ectoderm tissues throughout the culture, and

(iv) are prevented from differentiating when cultured on a fibroblast feeder layer.

Rule 28 of the European Patent Convention (EPC) prohibits the granting of a patent relating to: (a) processes for cloning human beings; (b) processes for modifying the germ line genetic identity of human beings; (c) uses of human embryos for industrial or commercial purposes; and (d) processes for modifying the genetic identity of animals which are likely to cause them suffering without any substantial medical benefit to man or animal, and also animals resulting from such processes.

Here, the patent claim requires the destruction of human embryos.  The EPC held that the use of human embryos for industrial or commercial purposes are excluded from patentability, while inventions for therapeutic or diagnostic purposes applied to the human embryo and useful to it is patentable.

Although the claim was not allowed, the EPC stated that this ruling does not relate to the patentability in general of inventions relating to human stem cells or human stem cells cultures.    Instead this decisions holds unpatentable inventions concerning products (here: human stem cell cultures) which can only be obtained by destroying human embryos.

This decision is in direct contrast to American patent law which would likely allow such patent claims.

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The Federal Circuit Limits the ITC’s Exclusion Order Authority

Posted on January 2, 2009 by duncanlaw71

Titc-imagehe International Trade Commission (ITC) is an independent federal agency whose purpose is to protect American companies from foreign companies that attempt to import goods in an anti-competitive manner. For example, an American company can file a complaint with the ITC if a foreign company is importing goods they fear violate their patents. Pursuant to Section 337 of the Traffic Act of 1930, once a complaint is filed the ITC has 30 days to decide whether an investigation (a.k.a. “337 investigation”) should be instituted. On only rare occasions will the ITC decline to investigate.

Vested with authority from 35 U.S.C. 1337(d), the ITC can issue two types of exclusionary orders prohibiting the importation of goods if the foreign company is found to be culpable: general exclusionary orders (GEO), and limited exclusion orders (LEO). An LEO prohibits only the parties involved in the investigation from importing infringing goods. By contrast, a GEO prohibits the goods from being imported from any party, even parties that are not included in the investigation. However, two exceptional circumstances must apply for the ITC to issue a GEO. The first circumstance is when a previously issued LEO is being circumvented (e.g., a named party simply pays a third party to import the goods). The second circumstance is when several complaints are filed regarding the same imported product, but the source is difficult to identify. Since it is much harder to show these two circumstances, most of the orders issued are LEOs.

Previously, the ITC has issued LEOs where the respondent manufactures an infringing component that is made and sold abroad and then assembled into a downstream product before finally being imported to America. Recently, the ITC has been issuing LEOs that not only exclude the component from importation, but also excludes the downstream product containing the component from importation. This allowed US patent holders to file a complaint against component manufacturers, even if they themselves didn’t import the component. Such was the case in Kyocera Wireless Corp v ITC.

In Kyocera Wireless Corp. v. ITC, the ITC issued an LEO to all downstream cell phone manufacturers that contained the Qualcomm chip found to infringe. This angered cell phone manufacturers who joined in on the remedy phase of the suit. The Federal Circuit, which has appellate review of the ITC, held that the ITC did in fact overstep its authority by issuing an LEO that excluded the downstream cell phone manufacturers from importing cell phones. The statute only allows an LEO to be issued against named respondents, so the cell phone manufacturers could not be affected by the LEO.

The Federal Circuit’s decision currently affects several other cases where a downstream manufacturer has been included in an LEO. In light of Kyocera, these manufacturers will likely seek a modification of those orders. As for the US patent holders, it’s likely that more complaints filed with the ITC will have more named respondents. Of course, it‘s also possible that the current economic downturn can spark legislative reform which could institute protectionist measures and broaden the leverage once held by US patent holders.

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ACTA Negotiations are still ongoing

Posted on January 1, 2009 by duncanlaw71

The Anti-Counterfeiting Trade Agreement (ACTA) is a proposed treaty that would significantly increase anti-piracy enforcement powers. The sweeping changes contained in the treaty are currently being discussed in a series of secret meetings between the United States, the European Community, Switzerland, Japan, Australia, the Republic of Korea, New Zealand, Mexico, Jordan, Morocco, Singapore, the United Arab Emirates and Canada. The Act was previously unknown until a draft unintentionally began surfacing at media outlets in May of 2008. The European Commission indicates that three rounds of negotiations have already taken place, and the fourth round was to start in mid-December.

From the information that has leaked, it seems that the ambitious goal of ACTA is to create a new international legal framework outside of the authority of the World Trade Organization (WTO), the World Intellectual Property Organization (WIPO) and even the United Nations. The premise is that the existing enforcement standard in the TRIPS Agreement has largely failed to prevent counterfeiting and international piracy. By increasing the penalties for not just the piracy of CDs, but for information distributed over the internet, the parties hope to discourage existing international piracy operations. The most controversial issue raised by the Act is a provision that forces ISP holders to divulge information regarding an alleged copyright infringer without a warrant. In this respect, the treaty is simply an extension of the Patriot Act.

The European Commission indicates that a final version of ACTA should be completed early in 2009. However, adoption of the treaty by the United States is far from likely. Several rights groups vehemently oppose the treaty claiming it violates privacy rights. This will likely be a big issue in 2009.

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