Patent Baristas

In an appeal by Apotex, the Court of Appeals for the Federal Circuit affirmed a summary judgment in favor of Merck that Merck had been using a process before it was patented by Apotex. Apotex v. Merck & Co. (06-1405)

Apotex Corp. appeals the decision of the United States District Court for the Northern District of Illinois1 granting summary judgment in favor of Merck & Co. in an action by Apotex to set aside a judgment on charges of fraud.  Apotex also asserted state law claims against Merck for common law fraud and tortious interference with prospective economic advantage, and sought to compel discovery pursuant to the crime fraud exception to the attorney-client privilege. The judgment of the district court is affirmed.

Apotex sued Merck alleging that its process for formulating and producing tablets of the pharmaceutical compound enalapril (Vasotec) used to treat high blood pressure) infringed Apotex’s U.S. Pat. No. 5,573,780 and No. 5,690,962.

The Apotex process involves the following steps, as set forth in claim 1 of the ‘780 patent:

1. A process of manufacture of a pharmaceutical solid composition comprising enalapril sodium, which process comprises the steps of:

(i) (a) mixing enalapril maleate with an alkaline sodium compound and at least one other excipient, adding water sufficient to moisten, and mixing to achieve a wet mass, or (b) mixing enalapril maleate with at least one excipient other than an alkaline sodium compound, adding a solution of alkaline sodium compound in water, sufficient to moisten and mixing to achieve a wet mass; thereby to achieve a reaction without converting the enalapril maleate to a clear solution of enalapril sodium and maleic acid sodium salt in water;

(ii) drying the wet mass, and;

(iii) further processing the dried material into tablets.

The district court ruled that the Apotex patents were invalid because the process had been invented and used by Merck before Apotex made the invention.

35 U.S.C. ‘102(g) provides that an applicant is not entitled to a patent if “before such person’s invention thereof, the invention was made in this country by another, who had not abandoned, suppressed, or concealed it.”

In earlier cases, it was shown that Merck had invented and practiced the accused process well before Apotex had but Apotex argued that it was entitled to a patent because Merck had suppressed or concealed the invention and practiced it in secret, and therefore that Merck infringed the Apotex patents.

The district court rejected the Apotex argument, finding that the process as practiced by Merck was not suppressed, concealed, or secret. The court found that Merck had widely distributed a list of the ingredients in its product

Then, Apotex tried again charging that the earlier rulings were obtained by fraud. Apotex charged that Merck had falsely stated that “the entire process was publicly discussed and falsely stated that “[t]his process has not been abandoned, suppressed, or concealed.” Apotex also charged that Merck misrepresented facts in its summary judgment brief submitted to the district court and in its appellate brief submitted to the Federal Circuit, and made false statements.

The district court did not agree with Apotex stating that whether Merck had fully disclosed all of its own manufacturing details was irrelevant to the validity of the Apotex patents covering the process broadly.

Fraud upon the court requires that there was a material subversion of the legal process such as could not have been exposed within the one-year window. Fraud upon the court is typically limited to egregious events such as bribery of a judge or juror or improper influence exerted on the court, affecting the integrity of the court and its ability to function impartially.

The Federal Circuit found no error had been shown in the district court’s analysis and conclusions. Upon review, the Federal Circuit held :

To obtain this exception to the privilege, Apotex must make a prima facie showing of some foundation for the asserted fraud. See Clark v. United States, 289 U.S. 1, 15 (1993) (loss of attorney-client privilege requires prima facie evidence that the charge of fraud has “some foundation in fact”). Apotex states that Merck’s counsel made fraudulent statements during the litigation, as discussed ante. The district court found that the accused statements were simply attorney argument as to the inferences to be drawn from the evidence, and that falsity was not shown. We agree that Apotex has not made a prima facie showing that fraud was committed, and that the district court did not abuse its discretion in refusing to compel discovery of material protected by the attorney-client privilege.

The summary judgment was affirmed.

In a nonprecedential opinion, the United States Court of Appeals for the Federal Circuit held that extrinsic evidence is great when it’s being used against you, bad if you try to use it to help your patent. The court stated that although extrinsic evidence cannot be used to supplement a non-enabling specification, such evidence can be used to show whether the specification is itself enabling. Pharmaceutical Resources and Par Pharmaceuticals v. Roxane Labs (07-1093).

Pharmaceutical Resources and Par Pharma appealed a summary judgment of invalidity of U.S. Patent Nos. 6,593,318 and 6,593,320 for lack of enablement. The patents relate to stable flocculated suspensions of megestrol acetate and methods for making such suspensions.

Bristol-Myers Squibb was the first company to develop and patent a liquid pharmaceutical composition of megestrol acetate and had a patent that taught that stable suspensions of megestrol acetate can be created but that the type and concentration of the surfactant in solution is critical to creating a stable flocculated suspension. The BMS patent disclosed only one stable flocculated suspension composition, combining megestrol acetate with polyethylene glycol as a wetting agent and polysorbate 80 as a surfactant.

When Par formulated a generic version of BMS’s patented product, it tried to design around the BMS patent by utilizing other surfactants and wetting agents. In developing its own product, Par discovered that flocculated suspensions of megestrol acetate could be formed using a much wider range of ingredients and concentrations, including other surfactants and wetting agents.

After Par sued Roxane, Roxane argued that the patents were invalid and unenforceable and moved for summary judgment of invalidity.

Claim 19 recites:

An oral pharmaceutical composition in the form of a stable flocculated suspension in water comprising: (a) megestrol acetate; (b) at least two compounds selected from the group consisting of polyethylene glycol, propylene glycol, glycerol, and sorbitol; and (c) a surfactant.

In reviewing the summary judgment, the court looked at eight factors relevant to the enablement analysis:

(1) the quantity of experimentation necessary, (2) the amount of direction or guidance presented, (3) the presence or absence of working examples, (4) the nature of the invention, (5) the state of the prior art, (6) the relative skill of those in the art, (7) the predictability or unpredictability of the art, and (8) the breadth of the claims.

Unfortunately, in this case the court started with the premise that Par sought extremely broad claims in a field of art that it acknowledged was highly unpredictable and therefore, Par had set a high burden that its patent disclosure must meet to satisfy enablement.

While the district court concluded that the claims “have an extraordinarily broad scope,” Par argued that the claims were not as broad as suggested because the hypothetical pharmaceutical formulator would start experimenting with the twenty-two surfactants that the United States Pharmacopoeia and National Formulary (USP-NF) has recognized and approved for use in oral pharmaceuticals in order to practice the invention. In addition, Par argues that the district court erred in assuming that the claims covered use of a surfactant in any concentration.

The Federal Circuit stated flat out:

The claims allow the choice of any surfactant in any concentration (with the exception that claim 1 of the ‘320 patent does not permit polysorbate as the surfactant if polyethylene glycol is the chosen wetting agent). The language of the claims and the specification both suggest that the claims encompass hundreds of possible surfactants. Further, the disclosure of the ‘318 and ‘320 patents list dozens of “suitable” surfactant genera beyond those listed by the USP-NF.

Moreover, nothing in the language of the claims limits the concentration of surfactant. The specification gives a preferred concentration range for only one surfactant, docusate sodium. To the extent that Par now suggests that an ordinarily skilled artisan would know that surfactant concentrations over 0.030% weight-per-volume would not work, it follows that a large part of the asserted claims’ scope is directed toward inoperative embodiments. The number of inoperative combinations is significant when assessing the experimentation that an ordinarily skilled artisan would need to practice the claimed invention

We thus conclude that the district court properly determined that the claims at issue “have an extraordinarily broad scope.” The district court also correctly noted in its analysis that our case law requires that the full scope of the claims be enabled.

In determining that the cited claims were not enabled, the court held:

Taking into account the broad scope of the claims and the highly unpredictable nature of the art, Par’s evidence regarding enablement fails to establish a genuine issue of material fact as to whether or not the claims are enabled and therefore fails to defeat summary judgment.

Par’s specification discloses only three working examples, utilizing only one new surfactant. Given the highly unpredictable nature of the invention and the extremely broad scope of the claims, these three working examples do not provide an enabling disclosure commensurate with the entire scope of the claims.

Thus, the court concluded that the patents are invalid under 35 U.S.C. 112, first paragraph, for lack of enablement.

I like coffee and keep up on coffee-related items.  While a frequent patron of Starbucks, I think small, individual coffee shops bring a fresh perspective to the coffee experience.  And so we watch with sadness as many small operators are shut out by the coffee juggernaut.

Now a federal judge has declared that coffee shop owner Penny Stafford can go to trial in an attempt to prove that Starbucks “cluster-bombs” neighborhoods — the practice of adding more and more stores to compete against each other and drive off competition.

The court concluded that Stafford has offered plausible evidence that the company’s leasing deals in Seattle and Bellevue may violate antitrust law and illegally blocked her from opening competing stores in those buildings. Stafford claims the15,000-store empire cannibalizes its own stores by adding other company outlets nearby, keeping competitors out.

Stafford contends she was repeatedly told by leasing agents for Class A buildings in Seattle and Bellevue where Starbucks operates that she couldn’t rent available space because, “if any space opened up, Starbucks would get the lease” under an exclusivity agreement.  One major U.S. office-property firm told her it has a nationwide arrangement to rent only to Starbucks, she claims.  Stafford has already collected almost 44,000 pages of Starbucks’ internal papers.

Starbucks is now opening new stores at the average rate of seven a day, or one every 3.4 hours. 

Trial has been tentatively set to begin Nov. 20, 2008.

More here.

Editors of the ABA Journal today announced they have selected Patent Baristas as one of the top 100 best websites by lawyers, for lawyers, as selected from their directory of more than 1,500 blawgs in dozens of categories.

The Journal is now asking lawyers to vote on their favorites in each of the Blawg 100’s 12 categories ranging from best Black Letter blawg and best Ivory Tower blawg to best Gossip blawg.

Included in the Blawg 100 are perennial favorites like May It Please the Court (with trusts for pets) and Patently-O (with gifts for patent attorneys).

We hope you’ll make your voice heard.

Vote for Patent Baristas here.

Read what the ABA Journal has to say about Patent Baristas here.

The Journal’s complete Blawg 100 list is located here.

Voting ends Jan. 2, 2008. Vote Early. Vote Often.

In Biomedical Patent Management Corporation v. State Of California, Department Of Health Services (06-1515), the U.S. Court of Appeals for the Federal Circuit held that a state’s initial waiver of Eleventh Amendment sovereign immunity – when it intervened in an earlier, related action that was dismissed for improper venue — doesn’t mean that it waived sovereign immunity under the Eleventh Amendment in a later case.

Biomedical Patent Management Corp. sued the state’s Department of Health Services claiming the state was infringing U.S. Pat. No. 4,874,693, which claims a method for screening birth defects in pregnant women. BPMC alleges that DHS performs laboratory services, and induces others to perform services, that infringe the ‘693 patent. At the district court, Judge Marilyn Hall Patel dismissed the lawsuit but expressed concern over the fact that California could sue for patent infringement on one hand while using sovereign immunity to keep from being sued for patent infringement itself:

“The court is indeed troubled by the University of California’s ability to reap the benefits of a patent system without being exposed to liability for infringement,” she wrote. “Similarly situated private universities enjoy no such advantage.”

The suits that led up to this whole mess:

• In 1997, Kaiser Foundation Health Plan, a subcontractor of DHS, filed a declaratory judgment action against BPMC in U.S. District Court for the Northern District of California, seeking a declaratory judgment that the DHS screening program does not infringe the ‘693 patent and that the ‘693 patent is invalid. DHS moved to intervene. BPMC asserted a compulsory counterclaim against DHS for infringement of the ‘693 patent, including money damages. BPMC was granted a motion to dismiss the action for improper venue pursuant.
• In 1998, five days later, BPMC filed a new action against DHS for infringement of the ‘693 patent in the United States District Court for the Southern District of California. DHS then asserted the defense of sovereign immunity but did not assert a counterclaim.
• Afterwards, the Supreme Court granted a petition for a writ of certiorari to review this court’s decision in Coll. Sav. Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., which held that Congress validly abrogated the sovereign immunity of the States to suit for patent infringement. Because of the potential impact of the Supreme Court’s pending decision in Florida Prepaid, BPMC sought to voluntarily dismiss the 1998 lawsuit.
• In 1999, the Supreme Court issued its decision in Florida Prepaid, reversing the decision of this court and concluding that Congress’ abrogation of State sovereign immunity from patent infringement claims was invalid. As a result of Florida Prepaid, States retained their sovereign immunity to suit for patent infringement.
• In 2006, BMPC filed the present lawsuit against DHS in the United States District Court for the Northern District of California (Yes, the Northern District again!).
• DHS again moved to dismiss this case on the ground that sovereign immunity under the Eleventh Amendment barred BPMC’s claims. The district court granted the motion and dismissed the case.

The Federal Circuit noted that:

It has long been recognized, however, that a State’s sovereign immunity is “a personal privilege which it may waiver at its pleasure.” As the Supreme Court has explained, “[w]hile this immunity from suit is not absolute, we have recognized only two circumstances in which an individual may sue a state.” Those circumstances occur where Congress validly authorizes such a suit “in the exercise of its power to enforce the Fourteenth Amendment,” or where a State has waived its sovereign immunity by consenting to suit. In the present case, only the latter circumstance is at issue. “Generally, we will find a waiver either if the State voluntarily invokes our jurisdiction, or else if the State makes a clear declaration that it intends to submit itself to our jurisdiction.” (citations omitted).

Having found that DHS’s intervention in the 1997 lawsuit constituted a waiver of its sovereign immunity in that suit, the question left in this case is when, if ever, a waiver of immunity in an earlier lawsuit prevents a State from asserting sovereign immunity in a later lawsuit between the same parties.

BPMC argued that DHS’s waiver in the 1997 lawsuit extends or carries over to the instant lawsuit because this action involves the same subject matter and the same parties. This court applies Federal Circuit law, rather than regional circuit law, to the issue of Eleventh Amendment waiver

The district court in this case found that, like a dismissal under Rule 41(a)(1), a dismissal for improper venue “leaves the situation as if the action had never been filed.”

The Federal Circuit held that, where a waiver of immunity occurs in an earlier action that is dismissed, or an entirely separate action, the waiver does not extend to the separate lawsuit:

By distinguishing Lapides, Gunter, Vas-Cath, and Ramsey, on one hand, and City of S. Pasadena and Tegic, on the other, we do not mean to draw a bright-line rule whereby a State’s waiver of sovereign immunity can never extend to a re-filed or separate lawsuit. We note only that the case law relied upon by BPMC does not support its contention that waiver of immunity in one suit should extend to a separate action simply because the action involves the same parties and same subject matter. Indeed, two relevant principles we can extract from these cases are that a State’s waiver of immunity generally does not extend to a separate or re-filed suit, and that, as we reaffirmed in Tegic, even a waiver by litigation conduct must nonetheless be “clear.” These principles, of course, are related, as a waiver that does not “clearly” extend to a separate lawsuit generally would not preclude a State from asserting immunity in that separate action. With those principles in mind, we address BPMC’s arguments that the policy behind the rule governing waiver by litigation conduct — the need to avoid unfairness and inconsistency — should prevent DHS from asserting sovereign immunity in this case.

After considering the general unfairness of the issue, the Federal Circuit held:

In sum, we conclude that any unfairness or inconsistency that would arise from permitting DHS to assert sovereign immunity in the present case is not so substantial as to cause us to diverge from the general principles of waiver that we have laid out in this opinion: that a waiver generally does not extend to a separate lawsuit, and that any waiver, including one effected by litigation conduct, must be “clear.”

Read more on what Mark Lemley calls “a travesty of justice” at the Wall Street Journal’s Blog: http://blogs.wsj.com/law/2007/10/26/lets-take-a-trip-to-patent-land/

In a nonprecedential opinion, the U.S. Court Of Appeals For The Federal Circuit held that just because a case involves patents doesn’t mean that you get federal jurisdiction.  Wisconsin Alumni Research Foundation (WARF) v. Xenon Pharmaceuticals (07-1026-33).

The court ruled that it has no jurisdiction over the case because it does not present a claim arising under the patent laws. Xenon Pharmaceutical looked to the mention of the Bayh-Dole Act 35 U.S.C. 200 et seq.) in WARF’s complaint to get jurisdiction.

The court noted that the Bayh-Dole Act concerns government funding agreements and contracts in the language of 35 U.S.C.  201, an area that is outside our section 1295(a) jurisdiction. See Bonzel v. Pfizer, Inc., 439 F.3d 1358, 1362-63 (Fed. Cir. 2006) (noting that contract obligations do not “arise under” the patent laws merely because the contract is a patent license).

Therefore, the case was transferred to the United States Court of Appeals for the Seventh Circuit.

Earlier, WARF won a $1 million jury award against Xenon Pharmaceuticals, a Canadian biotechnology company in a dispute of licensing of WARF’s stem cell patent.  The award was based on the amounts that Xenon Pharmaceuticals failed to pay in fees related to a licensing agreement with WARF, the patenting and licensing arm for the University of Wisconsin-Madison.

In 2001, WARF licensed technology to Xenon, a privately held company that pulled in $31 million of private financing last month. The technology was based on four UW-Madison researchers’ discoveries of a compound related to the control of cholesterol, obesity and diabetes. Xenon announced in September 2004 that it had an agreement with Novartis Pharma AG to commercialize related compounds. WARF filed the lawsuit against Xenon last spring in Madison.

The Foundation for Taxpayer and Consumer Rights has argued that WARF’s stem cell patent is overly broad and is impeding stem cell research. They hope the earlier Supreme Court ruling in eBay v. Merc Exchange will limit what the foundation calls “dubious patent claims to control all human embryonic stem cells in the United States.”

Another partying eyeing this case is the California’s Proposition 71 stem cell research program and should be challenged. The California Institute of Regenerative Medicine (CIRM), the state’s stem cell institute, will finance $3 billion in stem cell research. When bond financing is factored in, a total of $6 billion in California taxpayer funds are at stake.

After PUBPAT filed formal reexamination requests, the U.S. Patent and Trademark Office (PTO) rejected the claims of three key patents (US 5,843,780, US 6,200,806 and US 7,029,913) that cover research using human embryonic stem cells.

In reaching the preliminary decision, the examiners stated that the stem cells described in the patents appeared to be either the same or obvious variations of stem cells described in earlier patents and literature references.

The USPTO granted each of the requests in September 2006 and rejected all claims of each of the patents on March 30, 2007. In June 2007, PUBPAT submitted comments to the Patent Office supporting the rejections. The proceedings are currently ongoing.

IP Biz had a few things to note about the dust-up and the award process of early-stage stem cell research grant applications.

Managing patents is often a time consuming and disjointed effort, especially for small companies (or even larger ones running lean).  Fortunately, a number of companies have been mixing things up on the internet in an attempt to provide order to the chaos.

One new effort is WizPatent, a patent management solution offering to “Extract the Juice from your Patents” with downloadable WizPatent Manager and WizPatent Express.WizPatent Express is a patent search and management system integrated with Internet Explorer that abstracts search results directly from USPTO, Espacenet, FreePatentsOnline and Google Patent Search. 

WizPatent Express uses Google Patent Search to search for keywords within the text images and has the ability to batch download and save patents from Google.Some highlights include: 

• Batch PDF download capabilities and drag-and-drop features. 
• Store collections locally on your harddrive. 
• View the INPADOC status of EP patents as well as the PAIR status of US patents. 
• Copy a block of text into your clipboard and WizPatent Express automatically abstracts out the relevant patent numbers immediately. 

Granted, it would be nice if the USPTO would offer these types of functionality on their own but it does help that third parties are eager to fill any niche.

You can download WizPatent Express here.

Note to Apple users, this requires Windows XP or 2000 so I couldn’t try it out on my iMac Intel.

According to a report from the Government Accountability Office, the time it takes to examine and allow patent applications has increased due to “increases in the volume and complexity of patent applications.”

In FY 2007, USPTO’s patent examiners:

• Examined 362,227 applications – the highest number in history.
• Quality compliance was 96.5 percent – equaling last year’s results, the best in a quarter century.
• Patent examiner decisions were upheld by the USPTO’s patent appeals board 69 percent of the time, up from 51 percent in 2005.

The government also issued more than 184,000 patents, up slightly from more than 183,000 last year. But the backlog of applications just collecting dust waiting to be acted on hit 761,924 in 2007, up from 701,147 in 2006, bringing the whole pile to a whopping 1,112,517 applications. That’s some serious reading material.

Of particular note is how proud the USPTO is that they granted far fewer patents. In 2000, a record high of 72 percent of all patent applications became patents. In contrast, 51 percent of patent applications were granted in FY 2007.

It took an average of more than 25.3 months for applicants to get a first response with total pendency at 31.9 months (the highest was Unit 2600, Communications, now at 43.1 months).

While the Office likes to blame the applicants for the backlog, its not hard to find the cause. Since the USPTO cannot run a budget deficit in maintaining the Office, the USPTO sets its hiring based on the availability of funding and not on the expected workload or the (growing) backlog.

The GAO found that from 2002 through 2006, one patent examiner left for nearly every two the agency hired. Not only that, “70 percent of those who left had been at the agency for less than 5 years and new patent examiners are primarily responsible for the actions that remove applications from the backlog.” The office currently has between 5,400 and 5,500 examiners.

So why do new hires leave at a greater rate than experienced staff? The answer depends on who you ask. When the GAO asked the management of the USPTO, the answer was that examiners leave “primarily for personal reasons, such as the job not being a good fit or family reasons.” But, when the GAO asked the examiners themselves, they found that 67% of patent examiners identified the agency’s production goals as “one of the primary reasons examiners may choose to leave USPTO.”

“These production goals are based on the number of applications patent examiners must complete biweekly and have not been adjusted to reflect the complexity of patent applications since 1976,” the GAO reported.

Management says it has tried “a variety of retention flexibilities such as a special pay rate, performance bonuses, flexible work schedules, and a telework program to encourage patent examiners to stay with the agency.” Let’s hope they can find something that works.

See the whole report here.