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Nov. 17 — Recent Supreme Court decisions on claim construction and indirect infringement may have swung the pendulum back in favor of biotech patent holders, panelists said Nov. 17 at a biotech intellectual property conference.
Another high court decision is likely to help biotech defendants fight frivolous litigation by increasing the chances a court will rule that a case is “exceptional,” allowing them to recover attorneys' fees and litigation costs, they said.
But the panelists also acknowledged that the negative impact of earlier Supreme Court decisions on patent eligibility under 35 U.S.C. §101 continues.
The session reviewing recent, important court decisions, sponsored by Choate Hall & Stewart LLP, was held at the BIO Intellectual Property Counsels Committee meeting in Cary, N.C.
The Supreme Court's decision in Teva v. Sandoz on claim construction review by the Federal Circuit may result in changes in litigation strategies, Eric J. Marandett of Choate Hall & Stewart said (9 LSLR 717, 6/26/15). The district court's claim construction in the Teva case turned on the meaning of “molecular weight.”
The high court held that the Federal Circuit must review the “subsidiary factual findings” underlying a district court's claim construction judgments using a clear error standard—which means the district court's finding won't be disturbed unless there is a clear error—rather than starting over from scratch using a de novo standard.
In claim construction, “intrinsic” evidence would consist of the words of the claims themselves, the specification for the claim and the prosecution history before the Patent and Trademark Office; “extrinsic” evidence would concern relevant scientific principles, the meaning of technical terms and the state of the art, which can be obtained from expert witnesses and dictionaries.
Justin P. Huddleston, deputy director of IP legal affairs for Sanofi-Pasteur, said that as a result of the Supreme Court's ruling, when district courts review only intrinsic evidence, appeal of claim construction to the Federal Circuit is still subject to de novo review. But when district courts receive extrinsic evidence, the Federal Circuit now must use a clear error review. This distinction recognizes the fact that the district court has judged the entire trial, reading depositions and listening to witness testimony.
Discussing the potential impact of the ruling on biotechnology litigation strategy, Marandett said, “District courts may be motivated to rely more heavily on extrinsic evidence, including credibility determinations, knowing that the Federal Circuit must let its claim construction stand. There could be potential forum shopping based on a district court's willingness to consider and rely on extrinsic evidence.”
Panelists then discussed two non-life sciences Supreme Court decisions related to induced infringement that have implications for the life sciences industry.
In Commil v. Cisco, the court reversed the Federal Circuit and held that Cisco Systems Inc. couldn't overturn a $63.8 million jury award with the argument that it believed Commil USA LLC's Wi-Fi related patent was invalid (9 LSLR 592, 5/29/15). The high court, however, confirmed that while a good faith belief that a patent is invalid isn't a defense to induced infringement, a belief that the allegedly induced party doesn't infringe a patent can be a defense.
In Akamai v. Limelight, the court reversed and remanded the Federal Circuit's ruling, saying, “[W]here there has been no direct infringement [under 35 U.S.C. §271(b)], there can be no inducement of infringement under [35 U.S.C.] §271(a)” (8 LSLR 553, 6/13/14). On remand, the Federal Circuit ruled that direct infringement under Section 271(a) occurs only when all steps of a method are performed by or attributed to a single entity (9 LSLR 593, 5/29/15). An entity is responsible for others' performance of method steps where there is direct control or a joint enterprise exists.
“The implications of new standards for the biotech industry are that direction to perform a patented method of treatment on a Food and Drug Administration-approved product label will be enough to establish inducement,” Marandett said. “A question remains, when is there ‘direction and control' or ‘joint enterprise' where steps of a method are performed by a doctor and a patient?”
Finally, in Octane Fitness v. ICON Health (8 LSLR 390, 5/2/14), the Supreme Court rejected the Federal Circuit's old standard for determining which cases were exceptional, a designation that results in an award of attorneys' fees. It ruled that an exceptional case “is simply one that stands out from others with respect to the substantial strength of a party's litigating position [or] the unreasonable manner in which the case was litigated.”
“It's a better weapon for biotech defendants now,” Marandett said.
The panel noted in passing that, in the aftermath of the Supreme Court's patent eligibility rulings in Mayo v. Prometheus (6 LSLR 404, 4/6/12); Ass'n for Molecular Pathology v. Myriad Genetics; and Alice Corp. Pty Ltd. v. CLS Bank Int'l (8 LSLR 605, 6/27/14), biotechnology patent claims have been invalidated in seven of eight district court patent eligibility decisions.
The courts—and the industry—are still struggling with this,” Marandett said.
Daniel C. Winston of Choate Hall & Stewart and James Harrington, senior vice president and chief IP counsel for Shire Pharmaceuticals, also were on the panel.
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