Cadwalader intellectual property attorneys Dorothy Auth, Howard Wizenfeld, and Dov Hirsch look at the potential impact of some recent and pending IP court decisions. Trends to watch include potential guidance in the areas of patent eligibility, whether AI can be an "inventor," and protections for Covid-19 vaccines.
Practitioners are eagerly watching the court dockets for several IP-related cases in the second half of 2021 that promise to be impactful. These decisions are expected to provide guidance in several areas of IP law including patent eligibility, inventorship of AI-generated inventions, and pharmaceutical labeling.
Indeed, a most-recent U.S. Supreme Court decision ruled on the constitutionality of administrative patent judges. Besides these cases, further implementation of the Supreme Court's fair use ruling concerning copyright protections for computer code will be forthcoming, while we await the fate of patent protections for Covid-19 vaccines which hangs in the balance in the WHO.
This article gives a thumbnail sketch of the current cases to
watch and issues to consider.
Another Supreme Court Shot at Clarifying Patent Eligibility
Patent eligibility jurisprudence continues to be a challenging area of patent law, and one that provides a potent first defensive attack in patent infringement litigations. This litigation tool may be broadened further depending on how the Supreme Court responds to the certification request.
While much of the current §101 caselaw revolves around general purpose computers or diagnostic methods, the technology in American Axle & Manufacturing, Inc. v. Neapco Holdings LLC is different. American Axle asserted claims directed to a physical driveshaft assembly, which at first glance seems to falls outside the scope of an abstract idea. However, the Federal Circuit held the claims invalid under § 101 with a divided 6-6 Federal Circuit denying en banc review.
The petition to the Supreme Court (No. 20-891) presents two important questions: 1) What is the appropriate standard for determining whether a patent claim is "directed to" a patent-ineligible concept under Alice step 1? and 2) Is patent eligibility a question of law for the court based on the scope of the claims or a question of fact for the jury based on the state of art at the time of the patent?
Can Computer Systems Using AI Patent Their Own Inventions?
Increasingly, companies are using AI to invent new methods and products. But can such inventions be patented given the requirement that each patent application must identify at least one "inventor" which is defined as an "individual," not a machine? (In re Application of Application No. 16/524,350).
The USPTO rejected a recent attempt to name an AI system as the inventor in two patent applications, holding that an "inventor" is limited to a natural person. Other major patent offices have also found that an AI cannot be named as a patent "inventor," including the European, Japanese, Canadian, and Australian patent offices.
These decisions leave open the question of what, if any, legal protections are available for inventions and other works created solely by AI systems.
Skinny Label Flip-Flops in the Federal Circuit
Skinny labeling allows generic drugs to be approved and sold for non-patented indications, even while other indications still have patent protection. For a moment it looked like this would change when the Federal Circuit held that a generic pharmaceutical's materials promoting its drug as an approved generic version can prove patent inducement despite the skinny label (GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. No. 18-1976).
The decision caused an uproar in the pharmaceutical industry because the decision effectively precluded a common strategy generic pharmaceutical companies had used to get their products into the market. But recently, the Federal Circuit vacated its decision and reheard the case. We await its new ruling.
Unreviewable Authority Wielded by PTAB Judges Found Unconstitutional
Administrative patent judges (APJs) are considered "inferior officers" because they are not Senate-confirmed presidential appointees (i.e., principal officers). APJs render decisions on behalf of the executive branch but those decisions were unreviewable by any executive branch principal officer.
The Supreme Court in U.S. v. Arthrex Inc. held the unreviewable nature of APJ's decision-making power violates the law requiring the exercise of executive power by inferior officers be subject to the "direction and supervision" of a principal officer, in this case the director of the PTO. The court struck down the statutory provisions insulating APJ decisions from the director's supervision and instead required a director's discretionary review power. In this way, presidents and their direct appointees remain responsible for the exercise of executive power.
It is likely the PTO will now promulgate regulations clarifying
when and how a director will review APJ decisions. The system may
be similar to that used in the International Trade Commission,
another Article I court adjudicating patents. Similar to APJs, the
ITC employs administrative law judges (ALJs) to adjudicate the
validity of patents but such decisions are only preliminary until
reviewed by presidentially-appointed ITC commissioners.
Google v. Oracle Leaves Questions but Promotes Software Development
Although the Supreme Court's recent Google LLC v. Oracle Am., Inc. decision settled one question regarding copyright protection in computer software, a host of questions remain unanswered. Google used the Java API to develop a mobile phone interface, but it remains unclear how or if this case may affect software developers using the same platforms as originally targeted by Java, e.g., desktop computers and laptops.
It is also unclear whether the use of original implementing code is essential to the fair use analysis. For example, because Java code is so widely used, is it permissible to use Java declaring code and implementing code if together their use is for a different purpose? If not, how much of the implementing code must be changed to be considered a fair use? Is there any type of declaring code that could be considered sufficiently nonfunctional or creative to be afforded a larger scope of copyright protection?
One thing is clear, though: Software engineers will more freely utilize Java (and potentially other computer languages).
Will Covid-19 Patents Be Able to Be Monetized?
The World Health Organization and President Biden have indicated they may waive certain Covid-19 patent rights through the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) treaty. Although America is reopening, the assertion and monetization of Covid-19 patent rights will mostly occur in the future when the pandemic's urgency has passed but further booster vaccinations are required.
Waiving these rights now may impact how companies plan for the future, and presents a constitutional "takings" issue.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Originally published by Bloomberg Law (2 July 2021)
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