Federal Circuit Review - January 2019

Knobbe Martens

Knobbe Martens

A Post-URAA Patent that Issues After but Expires Before a Related Pre-URAA Patent Is Not a Double-Patenting Reference Against the Pre-URAA Patent  

In Novartis Pharmaceuticals Corp. v. Breckenridge Pharmaceutical Inc., Appeal Nos. 2017-2173, -2175, -2176, -2178, -2179, -2180, -2182, -2183, -2184, the Federal Circuit held that a post-URAA patent that issues after but expires before a related pre-URAA patent is not a double-patenting reference against the pre-URAA patent.

This case relates to two patents and an intervening change in the law affecting patent term.  A patent filed before June 8, 1995—the effective date of the Uruguay Round Agreements Act (URAA)—expires 17 years after the patent’s issuance date.  A patent filed after the URAA’s effective date expires 20 years after the patent’s earliest effective filing date.

Here, Novartis owned an earlier-filed pre-URAA patent (“Patent A”) and a later-filed post-URAA patent (“Patent B”).  By virtue of the URAA’s effect on patent term, earlier-filed Patent A expired after later-filed Patent B.  The district court held that Patent B was a double-patenting reference against Patent A in view of the Federal Circuit’s decision in Gilead, which held that a later filed but earlier-expiring post-URAA patent was a double-patenting reference against an earlier-filed and later-expiring post-URAApatent, and that the expiration date was the benchmark of obviousness-type double-patenting.  Gilead Sciences, Inc. v. Natco Pharma Ltd., 753 F.3d 1208, 1212 (Fed. Cir. 2014).

On appeal, the Federal Circuit reversed the district court’s decision.  The Federal Circuit distinguished the present case from Gilead, since both patents at issue in that case were post‑URAA patents.  Here, where one patent was filed pre-URAA and the other patent was filed post-URAA, the Federal Circuit held that the issuance dates of the patents control whether one patent is a double-patenting reference over the other.  The Federal Circuit reasoned that its holding in this case was consistent with the URAA transition statute, which gives pre-URAA patents the longest term possible under either the pre- or post-URAA rules.  It also reasoned that its holding was consistent with the purposes of the double-patenting doctrine, which is to limit a patent owner to one full term of patent rights.  As a result of the Federal Circuit’s ruling, Novartis will enjoy one 17-year term of exclusive rights arising from Patent A. 

 Obviousness-Type Double Patenting Does Not Prevent Patent Term Extensions Under Section 35 U.S.C. § 156

In Novartis AG v. Ezra Ventures LLC, Appeal No. 2017-2284, the Federal Circuit held that obviousness-type double patenting did not invalidate an otherwise validly obtained patent term extension under 35 U.S.C. § 156.

Novartis owned multiple patents covering the multiple sclerosis drug Gilenya®, including the ’229 patent and the ’565 patent.  The ’229 patent, a pre-URAA patent, is set to expire on February 18, 2019, due to five years of patent term extension (“PTE”) granted pursuant to 35 U.S.C. § 156, which allows forextension of the term of one patent of a product that has been subject to regulatory review.  The ’565 patent, a post-URAA patent, expired on September 23, 2017.

Ezra filed an Abbreviated New Drug Application (“ANDA”) relating to a generic version of Gilenya®.  Novartis filed an infringement suit, asserting claims of the ‘229 patent.

In a motion for judgment on the pleadings, Ezra argued that the ‘229 patent should be ruled invalid, or otherwise terminally disclaimed for the portion of the patent term past the expiration date of the unasserted ‘565 patent.  Ezra argued that the granted extension of the ‘229 patent’s term beyond the life of the ‘565 is impermissible because it violates 35 U.S.C. § 156(c)(4)’s requirement that only “one patent be extended.”  Further, Ezra argued that the ‘229 patent is invalid for statutory- and obviousness-type double patenting because Novartis’s ‘229 patent claims are not patentably distinct from the ‘565 patent.  The district court denied Ezra’s motion, concluding that Ezra’s argument required reading “effectively” as a modifier of “extended” into 35 U.S.C. § 156(c)(4), which states, “in no event shall more than one patent be extended … for the same regulatory review period for any product.”  After the district court denied Ezra’s motion for judgment on the pleadings that the ’229 patent is invalid or be terminally disclaimed, Ezra did not present any further evidence on the issue of double-patenting and stipulated to infringement if the asserted claims are not invalid, expired, or unenforceable.  The district court entered judgment that Ezra infringed the ‘229 patent, and Ezra appealed.

On de novo review, the Federal Circuit affirmed the finding of the district court.  The Federal Circuit agreed that there is no reason to read “effectively” into the language of 35 U.S.C. § 156(c)(4).  The Federal Circuit stated, “[t]hat the method of the ’565 patent cannot be practiced during the ’229 patent’s extended term is a permissible consequence of the legal status conferred upon the ’229 patent by § 156.”

The Federal Circuit also addressed the issue of whether the ’229 patent was invalid due to obviousness-type double patenting because the ’229 patent expired after the indistinct ’564 patent as result of the term extension.   The Federal Circuit held, as an extension of its holding in Merck & Co. v. Hi-Tech Pharmacal Co., that obviousness-type double patenting does not invalidate a validly obtained PTE.  In Merck, the Court concluded that a terminally disclaimed patent could still have its term extended with a PTE.   The Federal Circuit noted that “if a patent is terminally disclaimed to another patent to overcome an obviousness-type double patenting rejection and then term-extended under § 156, it necessarily will expire after the patent to which it had been subject to an obviousness-type double patenting rejection.”  This situation, which was already found acceptable by the Federal Circuit in Merck, was similar to the present case in which the extension of the ‘229 patent’s term effectively extends the life of the related ‘565 patent. 

 Avocent Did Not Create a Unique Rule for Patent Cases That Letters Threatening Patent Infringement Suits Do Not Create Personal Jurisdiction

In Jack Henry & Associates, Inc. v. Plano Encryption Technologies, Appeal No. 2016-2700, the Federal Circuit held the defendant is subject to personal jurisdiction in the Northern District of Texas

Plano Encryption Technologies ("PET"), registered to do business in the Eastern District of Texas, sent letters alleging patent infringement, inviting a license, and otherwise threatening litigation to eleven banks located in the Northern District of Texas.  Jack Henry, who provides software systems for the banks' mobile applications and had agreed to indemnify the banks, along with the banks, filed an action for declaratory judgment against PET in the Northern District of Texas.  PET moved to dismiss on the grounds that its contacts with the Northern District of Texas did not subject it to personal jurisdiction and thus venue was improper.  The district court agreed with PET and dismissed the case.  Jack Henry and the banks appealed.

Under 28 U.S.C. § 1391(d), a corporation who is a resident of a multi-district state "shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State . . . ."   The district court interpreted the Federal Circuit decision in Avocent Huntsville Corp v. Aten Int'l, 552 F.3d 1324, 1444 (Fed. Cir. 2008) as establishing a "unique" rule for patent cases that letters threatening patent infringement suits by themselves do not create personal jurisdiction.

The Federal Circuit reversed dismissal and disagreed with the district court's interpretation of Avocent as creating such a generalized rule. In doing so, the Federal Circuit looked to Texas’ long-arm statute. The Federal Circuit concluded that Texas’s long-arm statute extends to the limits of federal constitutional due process, and thus, a due process inquiry was required.

In analyzing due process, the Federal Circuit reviewed the following three factors: (1) whether the defendant "purposefully directed" its activities at residents of forum; (2) whether the claim "arises out of or relates to" defendant's activities in the forum; and (3) whether the exercise of personal jurisdiction is reasonable and fair. On appeal, PET agreed that under New World International, a case in which the Federal Circuit held that sending a letter that forms the basis for the claim may be sufficient to establish minimum contacts, the first two minimum contacts factors were met.  New World International, Inc. v. Ford Global Technologies, LLC, 859 F.3d 1032, 1037-38 (Fed. Cir. 2017).  As for the “reasonable and fair” factor, the Federal Circuit found compelling that PET had undertaken a licensing program withthreat of litigation directed to banks conducting business in the Northern District of Texas, and that the forum had an obligation to resolve disputes involving its residents and businesses.  Since PET had minimum contacts with the Northern District of Texas, the burden fell on PET to make a "compelling case" that the exercise of jurisdiction would be unreasonable and unfair.  PET merely cited Red Wing Shoe Co. v. Hockerson-Hablerstadt, Inc., 148 F.3d 1355, 1361 (Fed. Cir. 1998) and Avocent, and argued that these cases created a rule that patent enforcement letters can never provide the basis for jurisdiction in declaratory judgment actions.  The Federal Circuit found that these cases did not create such a rule and doing so would contradict the Supreme Court’s requirement that courts “consider a variety of interests” in assessing whether jurisdiction is fair.  Judge Stoll, joined by Judge Wallach, included an additional view that the Court needs to revisit the statement in Red Wing that “principles of fair play and substantial justice afford a patentee sufficient latitude to inform others of its patent rights without subjecting itself to jurisdiction in a foreign forum” and the interpretation of this statement that “sending of infringement letters would satisfy the minimum contacts requirement of due process except for policy considerations unique to the patent context.”  Judge Stoll stated that Red Wing and its progeny need to be reconsidered as directly contrary to established Supreme Court precedent.  The Federal Circuit reversed the finding that venue was improper.

Claims Directed to Rules for a Dice Game Not Patent-Eligible Under Section 101

In In Re: Marco Guldenaar Holdings B.V., Appeal No. 2017-2465, the Federal Circuit held that claims directed to the abstract idea of rules for playing a dice game were not transformed into patent eligible subject matter by the addition of printed matter.

The patent examiner rejected the application at issue under 35 U.S.C. § 101, because the claims were directed to the abstract idea of rules for playing a dice game.  The PTAB and then the Federal Circuit affirmed.  The Federal Circuit previously held, in In re Smith, 815 F.3d 816 (Fed. Cir. 2016), that a “method of conducting a wagering game” using a deck of playing cards was an abstract idea.  Similarly, the claims here were directed towards the abstract idea of a wagering game, but with dice.  The Applicant argued that the claimed dice markings were novel and not abstract.  The Federal Circuit rejected that argument because the dice markings constituted “printed matter,” which is not patent eligible subject matter and is outside the scope of § 101.  Without an “inventive concept” the claimed subject matter was not patent eligible.

Judge Mayer concurred in the judgment but wrote separately to state that: (1) the § 101 analysis is a pure question of law; and (2) claims directed to dice, card, and board games are not patent eligible because they endeavor to influence human behavior rather than effect technological change.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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