Rapid Litigation Management Ltd. v. Cellzdirect, Inc. (Fed. Cir. 2016)

McDonnell Boehnen Hulbert & Berghoff LLP

As we have had the occasion to say before regarding subject matter eligibility, "[o]ne swallow does not a summer make, nor one fine day . . . ," but the Federal Circuit may have engendered a glimmer of hope that it will once again take up its mantle of patent law expertise regarding the proper judicial interpretation of Section 101, in its decision in Rapid Litigation Management Ltd. (formerly, Celsis Holdings, Inc.) v. Cellzdirect, Inc.

The case arose following summary judgment in the District Court that the claims were invalid under Section 101.  The invention was directed to methods for producing pure cultures of mature hepatocytes to be used "for testing, diagnostic, and treating purposes."  Hepatocytes in the prior art were disadvantageous for these purposes because they "can only be obtained from liver resections or non-transplantable livers of organ donors, and their lifespan is short" and consequently "[s]upply is thus erratic, making availability limited and unpredictable."  Cryopreservation was a known technique in the art that enabled hepatocytes to be preserved for later use, but the method had limitations.  These included damaging the hepatocytes and thus lowering yield as well as being "unsuitable for preparing multidonor hepatocyte pools" (which were desirable, inter alia, because "hepatocytes from different donors generally have different metabolic properties, [and] researchers desired to pool hepatocytes from various source livers to create a hepatocyte preparation approximating average liver cells").  The "conventional wisdom" was that "hepatocytes could be frozen only once and then had to be either used or discarded."

The inventors found, contrary to the art, that certain hepatocytes in a hepatocyte population could be thawed multiple times and retain viability.  This was the basis for the U.S. Patent No. 7,604,929 claiming methods for producing populations of multiply frozen hepatocytes; claim 1 is representative:

1.  A method of producing a desired preparation of multi-cryopreserved hepatocytes, said hepatocytes being capable of being frozen and thawed at least two times, and in which greater than 70% of the hepatocytes of said preparation are viable after the final thaw, said method comprising:
    (A) subjecting hepatocytes that have been frozen and thawed to density gradient fractionation to separate viable hepatocytes from non- viable hepatocytes,
    (B) recovering the separated viable hepatocytes, and
    (C) cryopreserving the recovered viable hepatocytes to thereby form said desired preparation of hepatocytes without requiring a density gradient step after thawing the hepatocytes for the second time, wherein the hepatocytes are not plated between the first and second cryopreservations, and wherein greater than 70% of the hepatocytes of said preparation are viable after the final thaw.

The commercial product produced by these methods, LiverPoolTM, comprises "multi-cryopreserved, pooled hepatocyte preparations" useful for "a variety" of research uses.

Original plaintiff Celsis In Vitro sued original defendant Life Technologies, Inc., which filed a summary judgment motion of invalidity under Sections 101 and 112.  The District Court granted summary judgment on Section 101 grounds (and did not reach the Section 112 issues), using the Supreme Court's Mayo/Alice "two-step" analysis.  According to the District Court, the claim was "directed to an ineligible law of nature" (the "discovery" that hepatocytes could be subjected to multiple freeze/thaw cycles) under step 1.  The District Court found the claim failed to recite an "inventive concept" because it simply "reapplied a well-understood freezing process").

(It may be by now past mentioning that the application of the Supreme Court's Mayo/Alice precedent would have more clarity and more predictability if the inferior courts (and the PTO) took the Supreme Court at its word and determined whether the "something more" in step 2 was novel and non-obvious.  For example, in this case subjecting hepatocytes to additional freeze/thaw cycles was novel because the prior art taught it could not be done, and for similar reasons the method was non-obvious (and certainly yielded unexpected results sufficient to overcome prima facie obviousness in any event).  Similar considerations would have produced similar results contrary to the District Court's decision in Ariosa v. Sequenom.)

Plaintiff appealed.

The Federal Circuit vacated and remanded, in an opinion by Chief Judge Prost joined by Judges Moore and Stoll.  In the Court's opinion, the inquiry need not extend past step 1 of the Mayo/Alice test, because according to its opinion, the District Court erred in finding that the claims were directed to a law of nature.  On the contrary, according to the opinion "the claims are simply not directed to the ability of hepatocytes to survive multiple freeze-thaw cycles[; r]ather, the claims of the '929 patent are directed to a new and useful laboratory technique for preserving hepatocytes."  Viewed in this way, (being a "constructive process," directed to achieving "a new and useful end") "is precisely the type of claim that is eligible for patenting" according to the panel.  The opinion acknowledges that the inventors "discovered" the capacity for hepatocytes to undergo multiple cycles of freezing and thawing, "but that is not where they stopped, nor is it what they patented."  Quoting Judge Bryson's opinion in Myriad, this opinion states that "as the first party with knowledge of" the cells' ability, they were "in an excellent position to claim applications of that knowledge."

The panel then distinguishes these claims from the claims recently at issue before the court in In re BRACA1- & BRCA2-Based Hereditary Cancer Test Patent Litigation ("Myriad III"), Sequenom, and Genetic Technologies, Ltd.  v. Merial.  The opinion characterizes each of these cases as ones where the natural law is used to "identify" genetic information (Genetic Technologies) or cffDNA (Sequenom) or genetic mutation (Myriad III), in the latter case expressly characterizing the claim as comprising an "abstract mental process."  In contrast, according to the opinion, "[t]he end result of the '929 patent claims is not simply an observation or detection of the ability of hepatocytes to survive multiple freeze-thaw cycles"; rather, the claims result in "a better way of preserving hepatocytes."  These claims are like "thousands of others" reciting methods to produce a desired outcome, such as "to produc[e] things or . . . treat[] diseases."  The panel recognizes that interpreting claims as the District Court was persuaded to do (wherein the claim "describe[s] the natural ability of the subject matter to undergo the process") does not mean the claim is "'directed to' that natural ability."  Otherwise, according to the panel:

[W]e would find patent-ineligible methods of, say, producing a new compound (as directed to the individual components' ability to combine to form the new compound), treating cancer with chemotherapy (as directed to cancer cells' inability to survive chemotherapy), or treating headaches with aspirin (as directed to the human body's natural response to aspirin).

Turning to claim 5, which further recites pooling hepatocytes from multiple donors (which was deemed to not be possible in the prior art) the panel is even more vigorous in defending its eligibility, because it "results in a preparation that is both new and vastly more useful for research than hepatocyte preparations made by conventional methods" (thus incorporating elements of utility into the subject matter eligibility calculus).  The panel rejects defendants' reliance on the Supreme Court's Funk Bros. v. Kalo Inoculant precedent on the basis that the Court ruled on product claims, and expressly stated that "it was not "presented [with] the question whether the methods of selecting and testing the non-inhibitive strains are patentable," and the panel avoids the question of whether claims to the composition would be patent eligible under Funk Bros. (regardless of the differences between mixing to strains of bacteria in a bag (as in Funk Bros.) and manipulating hepatocytes to that do not occur in such a state in nature to produce a mixture that would appear to satisfy the requirement in Diamond v. Chakrabarty of being "a product of human ingenuity 'having a distinctive name, character [and] use.'")

The panel relies on firmer limitations on subject matter eligibility precedent by citing the portions of the Supreme Court's opinion in Myriad that expressly stated that "[i]t is important to note what is not implicated by [the] decision," specifically methods as before the panel in this case.  The panel draws the analogy directly, stating that "[h]ere, the inventors developed an innovative method of manipulating hepatocytes, a particular kind of liver cell which, prior to this invention, had been very difficult to preserve for future use. [] The claims are thus distinguishable from those held unpatentable in Myriad."  Similarly the panel distinguished the claims in Sequenom, because the panel in that case held the claims were "directed to" the cffDNA itself despite reciting a method for detecting such DNA and making a diagnosis on the basis of that detection.

The panel then considers the claims' satisfaction of step 2 of the Mayo/Alice test, and relying on Diamond v. Diehr (as cited in Mayo and Alice) finds that the claims "'improve[] an existing technological process,' [and thus] are sufficient to 'transform[] the process into an inventive application' of the patent-ineligible concept":  "The claimed method is patent eligible because it applies the discovery that hepatocytes can be twice frozen to achieve a new and useful preservation process" says the panel, citing Mayo's reliance on Diehr that "an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection."

Finally, the opinion addresses the argument that the steps of the method were "well-understood, conventional and routine" by stating that it is not the case that "all process claims that employ only independently known steps will be unpatentable" but that the claims must be considered "as a whole," i.e., "both individually and as a 'ordered combination.'"  Again relying on Diehr, the opinion states that "a new combination of steps in a process may be patentable even though all the constituents of the combination were well known and in common use before the combination was made."  Here, subjecting hepatocytes to multiple freeze-thaw cycles was not "routine and conventional" according to the Court (a conclusion supported by the prosecution history of the '929 patent (and reexamination) and the Examiners' conclusions to that effect therein).

In a coda the panel reassured that it was uncontested that the claims did not preempt the natural law (noting that defendants had already "engineered around the patent") and thus this Supreme Court concern was not implicated in its decision.

In addition to the aforesaid glimmer, it should be noted that the patent-eligible claims here share another similarity to the claims in Diehr not shared by the claims in Mayo or Sequenom or Genetic Technologies or in Myriad III (at least for some of the claims):  these claims are related to methods for producing a tangible thing (hepatocyte cultures), not diagnostic information.  This distinction remains the one constant between those claims invalidated under Section 101 under recent Supreme Court precedent.  Only cases like Funk Bros. and American Fruit Growers v. Brogdex involve patent ineligible tangible products, and in these cases the products were pre-existing (and as noted by the panel did not include method claims).  The question remains unanswered whether the tangible/intangible distinction is at the root of the Supreme Court's disaffection with diagnostic methods claims, and perhaps it will take a case that squarely puts this distinction before the Court before we will ever find out.

Rapid Litigation Management Ltd. v. Cellzdirect, Inc. (Fed. Cir. 2016)
Panel:  Chief Judge Prost and Circuit Judges Moore and Stoll
Opinion by Chief Judge Prost

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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