Obviousness Inquiry May Be Based on "Obvious to Try" Reasoning
Prior Art Reference Need Not Disclose Claimed Invention's Utility
Marking Not Required for Method Claim Past Damages—Case Closed
Use Requirement Not Met Without Actual Offering of Services to the Public
"Bare Corporate Receipt" Not Enough to Prove Access in Copyright Infringement Cases
Preliminary Injunction Removed Citing Lack of Potential Dissemination of Trade Secret
Know the Court's Limits in Zealous Advocacy
Pyrrhic Victory Over Discovery Misconduct
Obviousness Inquiry May Be Based on
"Obvious to Try" Reasoning
By Astrid R. Spain
In a decision focusing on claims to a classic biotechnology invention, the U.S. Court of Appeals for the Federal Circuit held that claims to a specific DNA sequence were obvious in light of KSR due to the fact that it was "obvious to try" known methods to obtain the sequence. In re Kubin, Case No. 08-1184 (Fed. Cir., April 3, 2009) (Rader, J.).
The isolation and sequencing of a human gene that encodes a particular domain of a protein is the basis for many inventions in the field of biotechnology. In this case, the invention focuses on DNA molecules (polynucleotides) encoding a protein (polypeptide) known as the natural killer cell activation inducing ligand (NAIL). NAIL is a specific receptor protein on the cell surface that plays a role in activating the natural killer (NK) cells. The Kubin specification recites an amino acid sequence of a NAIL polypeptide. The specification also discloses the isolation and sequencing of a polynucleotide that encodes a NAIL polypeptide and discovery of a binding relationship between NAIL and a protein known as CD48. The claims recite, inter alia, a genus of isolated polynucleotides encoding a protein that binds CD48 and is at least 80 percent identical to amino acids 22-221 of SEQ ID NO:2—the disclosed amino acid sequence for the CD48-binding region of NAIL. The specification discloses nucleotide sequences for two polynucleotides falling within the scope of the claimed genus, one corresponding to the specific coding sequence of NAIL, the other corresponding to the full NAIL gene.
The Board of Patent Appeals and Interferences (Board) rejected the claims over the combined prior art teachings of a patent and a laboratory manual. The prior art patent discloses a receptor protein called p38 that is the same protein as NAIL and further discloses that "[t]he DNA and protein sequences for the receptor p38 may be obtained by resort to conventional methodologies known to one of skill in the art." The patent discloses neither the amino acid sequence of p38 nor the polynucleotide sequence that encodes p38. The laboratory manual does not discuss how to clone any particular gene, but provides detailed instructions on cloning materials and techniques. Because of NAIL's important role in the human immune response, the Board concluded that one of ordinary skill in the art would have recognized the value of isolating NAIL cDNA and would have been motivated to apply conventional methodologies, such as those disclosed in the laboratory manual and utilized in the patent.
The Federal Circuit affirmed the Board's determination that the claims were unpatentable as obvious over the prior art. The Court held that the record supported the Board's factual determination that a person of ordinary skill in the art would have been motivated by the prior art to make a cDNA encoding the protein at issue given the prior art's teaching that the protein played a role in the immune response. The Court further sided with the Board that there would have been a reasonable expectation of success given the prior art's teaching of how to use a monoclonal antibody specific to a protein to clone the corresponding gene. The Court rejected Kubin's argument that the prior art did not teach the claim's requirement that the "polypeptide binds CD48," noting that this property is "necessarily present" in a polypeptide having the claimed sequence.
The Federal Circuit effectively overruled, at least in part, its 1995 holding of In re Deuel, that claims to a genus of polynucleotide sequences coding for a known protein are not necessarily obvious. The Court concluded that "[i]nsofar as Deuel implies the obviousness inquiry cannot consider that the combination of the claim's constituent elements was 'obvious to try,' the Supreme Court in KSR unambiguously discredited that holding." The Court went on to discuss its 1988 decision In re O'Farrell, which the Court believed more accurately addressed the "obvious to try" analysis. In particular, the Court explained there were two situations in which "obvious to try" could be "erroneously equated with obviousness under § 103." First, "where a defendant merely throws metaphorical darts at a board filled with combinatorial prior art possibilities, courts should not succumb to hindsight claims of obviousness." Second, where what was 'obvious to try' was to explore a new technology or general approach that seemed to be a promising field of experimentation and the prior art gave only general guidance regarding the particular form of the claimed invention or how to achieve it.
The Court also rejected any distinction between allegedly predictable and unpredictable fields of endeavor with respect to judging obviousness under KSR, noting that in this case one of skill in the "advanced art" of biotechnology would find the claimed results "profoundly predictable."
Practice Note: This decision, along with In re Gleave (also reported in this issue), represents an ongoing trend reflected in the Federal Circuit's jurisprudence that makes patenting of classic biotechnology inventions more challenging. More than ever, successful patenting strategies require careful planning and taking into account nuanced legal standards to ensure creation of a strong specification and prosecution record.
Prior Art Reference Need Not Disclose Claimed
Invention's Utility
By Kristin Connarn
Addressing the issue of whether a comprehensive reference listing of every relevant antisense oligodeoxynucleotide in a known nucleic acid sequence anticipates claims to specific antisense sequences, the U.S. Court of Appeals for the Federal Circuit held that anticipation merely requires that the oligonucleotide sequence was in the prior art, not that its usefulness was previously disclosed. In re Gleave, Case No. 08-1453 (Fed. Cir., March 26, 2009) (Prost, J.).
Martin Gleave and Maxim Signaevsky (collectively Gleave) filed U.S. Patent Application No. 10/346,493 ('493 application). The examiner rejected claims 1, 4, 15 and 18-21 as anticipated or obvious under 35 U.S.C. § 102(b)/103(a). Gleave appealed the prior art rejection to the United States Patent and Trademark Office's Board of Patent Appeals and Interferences (the Board), which upheld the rejection. Gleave next appealed to the Federal Circuit.
The claims at issue are directed to an antisense oligodeoxynucleotide designed to bind two different types of insulin-dependent growth factor binding protein (IGFBP). The cited prior art reference listed every 15-base-long sense oligodeoxynucleotide in the IGFBP-2 gene, which amounted to more than 1,400 sequences. Also disclosed in the cited prior art were the general concepts that antisense oligonucleotides are preferably between 15 and 25 bases in length, as well as that some antisense oligonucleotides may be bispecific (i.e., capable of inhibiting "an IGFBP such as IGFBP-2 and/or IGFBP-3"). Finally, the prior art reference stated that "[a]ntisense oligonucleotides to IGFBP-2 may be selected from molecules capable of interacting with one or more" of the sense oligonucleotides described in the long list.
Gleave argued that the reference merely disclosed a list comprising "ink," not disclosure of any functional antisense oligonucleotide. The Court initially reiterated that, if a reference discloses all of the claim limitations and enables the "subject matter that falls within the scope of the claims at issue," the reference anticipates. The Court explained that, in the past, it has framed issue of enablement under § 102 as a question of whether one of ordinary skill in the art would know how to "make and use" the invention based on the reference's disclosure. The Court conceded that, taken out of context, these formulations of the § 102 enablement standard arguably support a use or utility requirement divorced from any "make" requirement. However, the Court pointed out that a closer reading of the relevant precedent makes clear that a reference need disclose no independent use or utility to anticipate a claim under § 102. The Court explained that the confusion stems from the fact that if a method claim is at issue, it is a largely meaningless formulation of the standard to require a reference to disclose how to "make" that method in order to anticipate such that the "make" requirement becomes, in effect, a "use" requirement. The Court noted that, although the only way one can show that a reference enables the method is to show that a person of ordinary skill would know how to use—in other words, to practice or to carry out—the method in light of the reference, this does not mean that the prior art reference must demonstrate the invention's utility. The Court noted that for Gleave's composition claims, the prior art reference satisfied the enablement requirement of § 102(b) by showing that one of skill in the art would know how to make the relevant sequences. The Court deemed as irrelevant the fact that the cited reference provided "no understanding of which of the targets would be useful," because Gleave admits that it is well within the skill of an ordinary person in the art to make any oligodeoxynucleotide sequence. The Court also noted that Gleave's claims did not contain any limitation restricting their scope to functional antisense oligonucleotides. The Court emphasized that "where the claims themselves do not require a particular activity, we have no call to require something more from the anticipating reference."
Practice Note: In its opinion, the Court noted that, "if the use Gleave discovered is new, he will be able to patent that method of use." Accordingly, this case points out the importance of including support for methods of using a disclosed composition.
Marking Not Required for Method Claim Past
Damages—Case Closed
By Leigh J. Martinson
The Court of Appeals for the Federal Circuit stated, yet again, that patent marking is not required to recover past damages when asserting only method claims. Crown Park Packing Technology Inc. and Crown Cork & Seal, Inc. v. Rexam Beverage Can Co., Case Nos. 08-1284, -1340 (Fed. Cir., March 17, 2009) (Moore, J.).
Crown Packaging Technology Inc. and Crown Cork & Seal USA, Inc. (collectively, Crown) sued Rexam Beverage Can Co. (Rexam) for infringement. Rexam counterclaimed, also for infringement. The technology at issue in Rexam's patent related to reducing the diameter of the top of a can body using a process known as "necking." The patent claimed an apparatus and a process for smooth die necking that uses dies of successively decreasing internal diameter to reduce the diameter of the top of a can body.
Crown purchased twenty-six machines allegedly covered by claims of Rexam's patent over a six-year period from Belvac Production Machinery (Belvac). A license between Rexam and Belvac required Belvac, which was only licensed to make the machines, to notify its customers that they would require a separate license from Rexam to perform the smooth die necking method. Crown supposedly made over 17 billion cans per year using the unlicensed method. Rexam's infringement theory stemmed from use of the "necking" machines sold to Crown. Notably, Rexam only asserted method claims.
Crown moved for partial summary judgment to dismiss Rexam's counterclaim based on a failure to mark under 35 U.S.C. § 287(a). The district court issued an amended order granting Crown's motion for summary judgment and dismissed Rexam's counterclaim. Although Rexam had only asserted method claims, the district court dismissed Rexam's counterclaim because the patent "also included unasserted apparatus claims."
In reviewing the marking requirements of 35 U.S.C. § 287(a), the Court said that the "law is clear that the notice provisions of § 287 do not apply if the patent is directed to a process or method." The Court relied on Hanson, which held that 35 U.S.C. § 287(a) did not apply if the patentee only asserted the method claims of a patent that included both method and apparatus claims. The Court concluded that Hanson is factually identical to this case and therefore considered itself bound by the precedential rule of Hanson. Consequently, the Court reversed the district court's grant of Crown's motion for summary judgment.
Practice Note: Even in a post-Bilski world, method claims are valuable and should be considered for any infringement action where marking might be an issue.
Use Requirement Not Met Without Actual
Offering of Services to the Public
By Han Yu
Holding that the registrant never used the mark, a split panel of the U.S. Court of Appeals for the Federal Circuit recently upheld a Trademark Trial and Appeal Board (TTAB) decision to cancel a 35-year-old registration for the mark AIRFLITE for the service of "arranging for individual reservations for flights on airplanes." Aycock Engineering, Inc. v. Airflite, Inc., Case No. 08-1154 (Cancellation No. 92/032,520) (Fed. Cir., March 30, 2009) (O'Grady, J.; Newman, J., dissenting).
In the late 1940s, William Aycock conceived of an idea for offering a service that would connect individuals desiring to charter flights with air taxi operators. Aycock intended to serve as a middleman between customers and air taxi operators. From the mid-1960s and onward, Aycock took steps to carry out his plan, including forming Aycock Engineering, Inc. as the corporate entity to operate the service; obtaining toll-free telephone numbers that the public could use to schedule reservations; inviting virtually all certified air taxi operators to join his operation, including actually entering into contracts with some of them; and filing and registering AIRFLITE as the mark for his service, which was the term he had used in advertising to air taxi operators. However, Aycock's operation never got off the ground, largely due to the lack of participation by an enough number of air taxi operators. His toll-free numbers were never used to book flights and not a single flight was ever arranged. Aycock never marketed his service to the general public.
In 2001, Airflite, Inc. initiated a cancellation proceeding against the AIRFLITE registration on the basis that Aycock never used the mark in connection with the service identified in the registration. The cancellation proceeding lasted six years, with the TTAB ultimately granting the cancellation petition in favor of Airflite, Inc. Aycock appealed.
The central issue on appeal was whether the steps taken by Aycock to carry out his plan satisfied the use requirement for federal registration. In resolving this issue, the Court first defined what the service of "arranging for individual reservations for flights on airplanes" should entail. The TTAB construed it to mean operating a system to book flights and not just setting up a network of air taxi operators. Aycock argued that the mere arranging of a network of air taxi operators should suffice. In siding with the TTAB, the Court found Aycock's interpretation to be contradicted by the prosecution records of his application, including his own representations.
The Court next addressed whether Aycock made sufficient use of the mark for federal registration purposes. Given that Aycock's application was filed in 1970, the Court looked to the use requirement that appeared in the Lanham Act in 1970, which stated that a service mark was in use in commerce "when it is used or displayed in the sale or advertising of services, and the services are rendered in commerce, or the services are rendered in more than one State or in this and a foreign country and the person rendering the services is engaged in commerce in connection therewith." Citing TTAB precedent, the Court described the statutory use requirement as requiring more than mere adoption (selection) of a mark accompanied by preparations to begin its use or mere advertising or publicizing of a service that the applicant intends to perform in the future. Rather, the Court observed, there must at least be an open and notorious public offering of the services to those for whom the services are intended. It was the lack of such a public offering or rendering of his service that proved to be fatal to Aycock's claim. According to the Court, Aycock engaged in merely preparatory activities toward his plan to operate a flight-arranging service, which were not sufficient to support registration.
In her dissent, Judge Newman questioned the propriety of invalidating a registration based on a flawed service description when the registration was unchallenged for decades.
Practice Note: This decision demonstrates the importance of fully understanding and complying with the statutory use requirement relating to trademark and/or service mark applications. It also demonstrates the importance of accurately describing one's products or services in a trademark and/or service mark registration. An inaccurate description can render the resulting registration vulnerable to attacks by others.
In a recent copyright infringement case, the Sixth Circuit refused to apply the "bare corporate receipt" doctrine to show sufficient proof of access. In affirming the district court's grant of summary judgment, the Court acknowledged that it can be "difficult for plaintiffs to establish access where the chain of possession of a work within a corporation is difficult to prove." "Bare corporate receipt," however, is not enough. A plaintiff must show that the defendant had a "reasonable possibility" to have viewed the work in question. Jones v. Blige, Case Nos. 07-1051, 07-1566 (6th Cir., Mar. 9, 2009) (Cole, J.).
Plaintiffs-Appellants Leonard Jones and James E. White sued, among others, Mary J. Blige, Andre Young (Dr. Dre) and Universal-Music Publishing for copyright infringement. The plaintiffs claimed that a song by Blige, "Family Affair," infringed "Party Ain't Crunk," a song recorded by Tim Acker, an aspiring rap artist. The plaintiffs had allegedly submitted a demo CD with "Party Ain't Crunk" to Universal prior to the release of Blige's song. "Family Affair" was released in August 2001 as the second song on Blige's album, No More Drama. The district court granted summary judgment to defendants, finding that the plaintiffs had conceded that the lyrics of the two songs were not substantially similar, that the defendants had no access to the lyrics by failing to respond to requests for admission and that no reasonable juror could have found the lyrics of the two songs substantially similar. The plaintiffs appealed. Blige and Universal cross-appealed the district court's denial of their motion for attorneys' fees.
In the instant case, because there was no direct evidence of copying, the plaintiffs had to "establish an inference of copying by showing (1) access to the allegedly–infringed work by the defendant(s) and (2) a substantial similarity between the two works at issue." On appeal, the plaintiffs asserted that Blige and Universal had access based on the "corporate receipt doctrine." The doctrine states that "possession of a work by one employee of a corporation implies possession by another corporate employee who allegedly infringed the work." The plaintiffs argued that because they had delivered a demo CD of "Party Ain't Crunk" to a senior vice president at Universal Music Enterprises prior to the release of Blige's song, it could be inferred, under the doctrine, that defendants had access to their work. The Court rejected this argument, stating that "[a]s far the record shows, [defendants] were affiliated with [the senior VP] only through an attenuated corporate connection, and to find a reasonable possibility of access, a jury would be required to make an implausible leap, unsupported by evidence other than bare corporate receipt." The Sixth Circuit noted that the failure to offer proof of access can be excused when the two works are so strikingly similar that there is no possibility of independent creation. However, because the melodies and beats bore only "passing resemblance" to each other and the lyrics of the songs were "dissimilar," the Court found the failure to offer proof of access cannot be excused. Furthermore, even if the plaintiffs had established an inference of copying, the defendants provided unrefuted evidence that "Family Affair" was independently created before "Party Ain't Crunk."
The Court of Appeals for the Second Circuit removed a preliminary injunction issued against an alleged misappropriator of a trade secret based on their finding that the misappropriator was unlikely to disseminate the information. Faiveley Transport Malmo AB v. Wabtec Corp., Case No. 08-5126 (2nd Cir., March 9, 2009) (Cabranes, J.).
Faiveley manufactures "Brake Friction Cylinder Tread Break Units" (BFC TBU) for use on subway cars. Faiveley acquired the know how for these BFC TBUs from SAB Wabco through acquisition in 2004. As part of the acquisition, Faiveley assumed the rights and obligations under a license agreement between SAB Wabco and its then sister company Wabco, which ultimately became the defendant Wabtec. The agreement was executed in 1993.
According the license agreement, Wabco was authorized to use SAB Wabco "know-how," including "manufacturing data, specifications, designs, plans, trade secrets" and other information, as well as "Patents, Patent Applications, and New Technology," to produce and market BFC TBU. The agreement ran for 10 years, but could be extended for one-year terms by agreement of the parties. Upon expiration of the agreement, Wabco was to "cease manufacture" of the licensed products.
In December 2004, Faiveley notified Wabtec that the 1993 agreement would not be renewed; the 1993 agreement terminated on December 31, 2005. Wabtec immediately began to develop its own BFC TBUs through "reverse engineering." As part of that process, Wabtec used information obtained from a former Faiveley employee who had "frequent contact" with engineering drawings related to Faiveley's BFC TBU during the course of the agreement.
In 2007, the New York City Transit Authority awarded a "sole source" contract for BFC TBUs to Wabtec. Faiveley filed for arbitration according to the terms of the agreement and also filed suit in the United States District Court for the Southern District of New York seeking a preliminary injunction.
The district court granted Faiveley a preliminary injunction that enjoined Wabtec from disclosing "manufacturing drawings" (among other things) to the Transit Authority or any third party. Wabtec appealed.
The Second Circuit found that Faiveley was likely to succeed on the merits relying on the fact that Wabtec was unable to reverse engineer the BFC TBU without the aid of Faiveley's former employee. Working against Wabtec was the fact that it had tried to reverse engineer the BFC TBU before hiring the Faiveley employee and failed.
However, the Court disagreed with the district's court finding of irreparable harm. The Court reasoned Wabtec was likely not going to disseminate the drawings created using the misappropriated trade secrets. The Court relied on the 12 years of operation under the agreement and Wabtec's treatment of the tainted drawings with the same confidentiality that it gave to its own proprietary information. Further, the Court noted that neither Faiveley nor Wabtec passed on manufacturing drawings in their ordinary course of business. These facts indicated to the Court that there was little or no risk that Wabtec would disclose or otherwise irreparably impair Faiveley's trade secrets. Thus, the Court removed the preliminary injunction against Wabtec.
Know the Court's Limits in Zealous
Advocacy
By Dov Greenbaum
Following precedent, the U.S. Court of Appeals for the Federal Circuit recently granted sanctions against both E-Pass and its attorneys for a frivolously filed and frivolously argued appeal. E-Pass Techs., Inc. v. 3Com Corp., 2009 U.S. App. LEXIS 6062 (Fed. Cir., March 20, 2009) (Linn, J.; Bryson, J., dissenting).
E-Pass is the assignee of a patent directed to a "method and device for simplifying the use of a plurality of credit cards, or the like." E-Pass filed suit against 3Com and PalmSource alleging infringement. The district court granted summary judgment of non-infringement. In a previous appeal, the Federal Circuit reversed this finding based on a revised claim construction. E-Pass subsequently filed additional infringement suits, one against Visa International and Visa U.S.A. and a second suit against PalmSource. After grouping the cases together as related, the district court granted summary judgment of non-infringement as to all defendants based on the Federal Circuit's claim construction from the first appeal. The Federal Circuit affirmed in a second appeal. While the second appeal was pending, a district court deemed each of the cases exceptional under 35 U.S.C. § 285 and awarded attorneys' fees. The lower court's finding was based on the inadequacy of E-Pass's pre-filing investigation and "repeated misconduct throughout the litigation." E-Pass appealed.
The Federal Circuit agreed that E-Pass's appeal was frivolous. First, the Court explained that an appeal can be frivolous as filed and/or frivolous as argued. The Court held that the appeal as to PalmSource was frivolous on both grounds. E-Pass did not "explain how the trial court erred or to present cogent or clear arguments for reversal" and "made significant misrepresentations of the record and the law to the court." The Federal Circuit showed particular distaste for E-Pass's strategy of grouping all the defendants within the brief, notwithstanding the general inapplicability of the bulk of the arguments against PalmSource. E-Pass further upset the Court when it misstated the standard for finding an exceptional case: "The standard for an exceptional case finding is whether the case was brought in subjective bad faith and the litigation was objectively baseless," egregiously leaving out the most relevant clause, "absent misconduct in the litigation or in securing the patent." Given that the district court's exceptional case finding was based in part on litigation misconduct, the Court noted that "[i]t is difficult to view E-Pass's omission of the critical portion of the legal standard applicable to it as anything other than an attempt to mislead the court." The Federal Circuit found that even if E-Pass did "make a non-frivolous (yet ultimately unmeritorious) argument, it would not change our determination that the appeal as a whole is frivolous." The Court therefore imposed a sanction equal to fees for defending the appeal, including the motion for sanctions. Further, the Court held E-Pass and its counsel jointly and severally liable because the conclusion of frivolity was based on both filing and advocacy.
In dissent, Judge Bryson conceded that the "briefs on appeal fell short of the standards we expect of counsel in this court," but opined that the appeal was "not so egregious" and it did have at least one redeeming argument.
Pyrrhic Victory Over Discovery
Misconduct
By Ricky Chun
Addressing whether the imposition of more than $2.7 million in sanctions was appropriate in a case of discovery misconduct, the U.S. Court of Appeals for the Federal Circuit overturned a majority of the sanctions, finding them to be excessive. ClearValue, Inc. v. Pearl River Polymers, Inc., Case Nos. 07-1487, 08-1176 (March 24, 2009) (Fed. Cir., Schall, J.; Newman, J. concurring-in-part, dissenting-in-part).
ClearValue sued Pearl River alleging, among other things, infringement of its patent directed to a method for treating water with an aluminum polymer. A key issue in the case was whether the chemical used by Pearl River in its water treatment has a similar molecular weight to the chemical used by ClearValue. In the early stages of litigation, an expert for ClearValue tested Pearl River's treatment chemical and found its molecular weight to be much lower than ClearValue's. Despite discovery requests for these test results, ClearValue failed to disclose them or list them on a privilege log.
More than 18 months later, the omission finally came to light, and Pearl River moved for sanctions. The district court granted the motion, striking all of ClearValue's pleadings and entered judgment on all the claims and counterclaims in favor of Pearl River, including a judgment of invalidity of the patent. ClearValue appealed, arguing that the sanctions were excessive in response to discovery misconduct.
The Federal Circuit mostly agreed with ClearValue, reasoning that the district court should impose the least severe sanction that will serve as a deterrent from violating the discovery rules and that dismissal is a remedy of last resort. Consequently, the Court reversed the dismissal of the case as well as a large amount of the monetary sanctions awarded to Pearl River for costs and attorneys' fees because the relevant statute, 35 U.S.C. § 285, requires a "prevailing party." Because the case was remanded to the district court to be decided on the merits, Pearl River was no longer a prevailing party entitled to the monetary sanctions. The Court did, however, uphold a smaller monetary sanction of roughly $121,000 to cover Pearl River's costs related to the discovery dispute.
Practice Note: Defendants in patent infringement suits should request any test results related to the alleged infringement of the patented technology, as any of this information connected with an expert's testimony is discoverable by the opposing party, whether or not the expert relies on the information in preparing his report.
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