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IP Bulletin, September 2012

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09.18.2012 | Legal Update

Lighting the Path to More Valuable Method Claims: Inducement with Divided Infringement
As diagnostics, end-user sophistication, and mobile and web-based technologies grow, so does the likelihood that potential infringement is carried out across multiple users or entities, i.e., divided infringement. Divided infringement scenarios exist where a single entity does not perform every element of a claim, but rather different entities perform the different claim steps. This is particularly relevant where companies have been able to strategically avoid claims by performing less than all steps of a method claim and having their customers or other entities perform remaining elements of the claim. The Federal Circuit has recently abated the divided infringement defense by enabling patent holders to advance claims against divided infringers based on an inducement theory. In the combined decisions of Akamai Tech. v. Limelight Networks and McKesson Tech. v. Epic Systems Co. (Fed. Cir. 2012) (En Banc), the court ruled that inducement as defined by 35 U.S.C. §271(b) does not require a single, direct infringer—that merely knowingly inducing the performance of each claim limitation, regardless of who is performing that limitation, is inducement under §271(b). It is still best practice to draft method claims where a single infringer would practice every claim step and thus be strictly liable as a direct infringer. However, the Akamai decision may provide a viable avenue for protecting previously unpatentable methods or correcting previously untenable claim language by adding a transformative step that would be performed by a different entity. This decision should also be taken into account when evaluating competitor method claims. Prior non-infringement determinations based on the fact that there was not a single party who infringed every step of the claim should be revisited by counsel in light of Akamai and McKesson.

For a discussion of Akamai, McKesson, and how divided infringement affects inducement to infringe, click here.

New Post Grant Proceedings Under the AIA
On September 16, 2012, post allowance proceedings as defined by the American Invents Act (AIA) begin. These proceedings include Post Grant Review, transitional Post Grant Review for business methods, and Inter Partes Review. Additionally, Inter Partes Reexamination requests are no longer being accepted. The new proceedings allow the opportunity to request review of any U.S. patent over a broad range of reasons and engage in limited discovery. Some of the most distinguishing features of these proceedings compared to reexamination are the ability to obtain some discovery, a decision within one year, and estoppel. Third parties can use Inter Partes Review (IPR) to request review of any U.S. patent for anticipation, or obviousness, and if approved, the third party can participate in the proceedings as an opponent. Third parties can use Post Grant Review (PGR) to request review of any U.S. patent within the first nine months of issuance to challenge the patent for unpatentable subject matter, double patenting, lack of written description, and indefiniteness, as well as anticipation and obviousness based on art that is not limited to patents and printed publications. If approved, the third party can participate in the proceedings as an opponent. However, unlike IPR, PGR will only be available under the new first-to-file rules, which are scheduled to come online on March 16, 2013. A transitional post grant program, which is eligible for use now, also exists for challenging business method patents. Ex Parte Reexamination remains substantially unchanged except for an increased cost.

The post-grant review procedure will offer more opportunities to challenge U.S. patents without resorting to litigation, but will come with the risk of estoppel. The whole process is intentionally streamlined to focus the proceedings on the major issues. Thus, considering the right path to follow and preparing the petition/response will require careful planning and forethought.

For a discussion of the final rules and a table comparing the post grant proceedings, click here.

Implementing Inventor’s Oath or Declaration Provisions of the America Invents Act
On September 16, 2012, changes to the Inventor’s Oath or Declaration provisions of the AIA take effect with respect to any application filed on or after this date, regardless of any claim for priority.

For a brief summary of significant changes implemented by the final Oath/Declaration rules, click here.

Federal Circuit Reaffirms Gene Patents in Myriad
While some biotechnology patent owners breathed a short sigh of relief recently as the Federal Circuit found that DNA sequences are indeed eligible for patent protection in the highly anticipated decision Association for Molecular Pathology v. Myriad Genetics, not all biotech innovators will be happy with the Myriad decision because certain diagnostic method claims were again struck down as ineligible for patent protection. The Federal Circuit’s application of the Mayo case to Myriad’s claims on diagnostic methods provides little guidance on how to draft such diagnostic claims to secure allowance and survive future patentability challenges. While it is clear that the claims must recite something "transformative," what constitutes a transformation in a diagnostic method remains to be clarified. Moreover, the discussion of patentability for DNA sequences is far from over, as applying for certiorari at the Supreme Court and requesting rehearing at the full Federal Circuit both remain options.

For a discussion of Myriad, and practical tips about gene patenting as detailed in a Nutter client alert distributed on August 20, click here.

The Perils of Claiming Open-Ended Ranges – A Reminder Courtesy of the Federal Circuit
Patent prosecutors drafting claims that recite open-ended ranges (e.g., at least 10%, greater than 5 units) were again warned of the perils of claiming more than has been disclosed. In a recent decision by the Federal Circuit, MagSil Corp. v. Hitachi Global Storage Tech., Inc., the Court affirmed the trial court’s determination that the asserted claims were invalid as a matter of law for lack of enablement. The Court found that the open-ended range recited in the independent claim was not enabled because the disclosure provided support for only a small portion of the claimed open-ended range, citing to the dual function of enablement for both ensuring there is adequate disclosure to support a claimed invention and preventing claims broader than the disclosed invention. Patent practitioners reciting open-ended ranges should consider taking one or more steps to better ensure validity of their claims, including reciting the structure that enables the recited range in the claim, adding dependent claims that close the open-ended range, and providing examples in the specification that support a wide spectrum of values, and in particular values that fall within the high end of the open-ended range.

For a discussion of this case’s effect on claiming open-ended ranges, and practical tips related to claim drafting in view of the same, click here.

Who Owns My Invention?
In a July 12, 2012 order, Suffolk Superior Court Justice Lauriat dismissed a lawsuit by urologist Dr. Grocela, asserting that his employer’s Intellectual Property (IP) policy as applied to him was an unfair restraint on trade because his employer claimed ownership of an invention to a voice box that was not related to urology and was invented during his own time and at his own expense. The IP policy included ownership of inventions “that arise out of or relate to the clinical, research, educational or other activities of the Inventor at [the employer].” The Court found that the IP policy was reasonably limited and that Dr. Grocela must be bound by the its terms because he had voluntarily agreed to the policy as part of his employment and because the invention was conceived using knowledge he acquired in the course of his employment.

For a discussion of this case and its effect on the scope of an employer’s IP policy, click here.

Damages for Research and Development
In an August 6, 2012 order, Judge Webber of the Eastern District of Missouri confirmed the jury verdict, including the reasonable royalty damage award of $1 billion in Monsanto Co. v. E.I. DuPont de Nemours & Co., Civil Action No. 09-CV-686 (E.D. Missouri August 6, 2012) (Webber, D.J.). The award is the fourth largest jury award in a patent trial in U.S. history, and is especially surprising given that DuPont’s accused product had never been made available to the public.

DuPont’s use of Monsanto’s patent was for research purposes to develop DuPont’s own commercial product. Thus, Monsanto did not seek lost profits, but instead demanded a reasonable royalty for the unlicensed research. While 35 U.S.C. §271(e) provides a limited research exemption to patent infringement, the exemption was not applicable because DuPont’s research was not solely for uses reasonably related to the development and submission of information under Federal regulatory law.

The reasoning leading to this unprecedented award in a research situation seems important, but is unfortunately part of a sealed record. DuPont has stated that they will appeal this verdict, and perhaps the appeal will shed more light. In the meantime, researchers should review the §271 exemption to ensure that their research either falls within those bounds or ensure that all the necessary licenses are in order. Simply because an infringing use would not involve selling, offering to sell, or importing a patented invention, it cannot be assumed that damages would be minimal.

Nutter's IP Bulletin is a bi-monthly publication of the Intellectual Property Practice at Nutter McClennen & Fish LLP in Boston. Assistance in the preparation of this issue was provided by Rory P. Pheiffer and Derek P. Roller. For further information, please contact your Nutter attorney at 617-439-2000.

Recognized as a “Go-To” patent firm by IP Law & Business and Corporate Counsel, Nutter is dedicated to making its clients’ strategic goals a reality and to maximizing the protection and value of their intellectual property. The firm has a long track record as the trusted IP advisor to innovative public and private companies, medical institutions and research universities, investors, entrepreneurs and inventors.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.

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