Supreme Court corner - Q3 2013

by DLA Piper


Federal Trade Commission v. Actavis

Decided: 6/17/2013
Patent Holding: (5-3) reverse payment settlement agreements should be reviewed based on a “rule of reason.

In a split decision, the Court found the proper judicial review of reverse settlement payments is a “rule of reason” in light of the pro-competition nature of the Hatch-Waxman Act. Justice Breyer, writing for the majority, listed factors that may help to determine whether such a settlement is anticompetitive: size, scale in relation to future litigation costs, independence from other services for which it might represent payment, the industry, and the lack of other justification. The Court’s adopted “rule of reason” analysis finds a middle ground between the Second, Eleventh and Federal Circuits (deferential scrutiny), and the Third Circuit (presumptively invalid). This middle ground requires courts to conduct a more thorough anti-competition analysis. Such analysis need not be onerous, and the trial court is not required to reach the validity of the underlying patent(s) in every case.

This decision is likely a win for generic drug consumers, who may now benefit when some generics enter the marketplace sooner. The decision also provides some upside for drug manufacturers: the decision declined to find the settlements in question presumptively invalid, and added clarity for judicial review of such settlements.

Assoc. for Molecular Pathology v. Myriad Genetics, Inc.

Decided: 6/13/2013
Patent Holding: (9-0) cDNA is patentable; DNA is not.

Myriad Genetics’ patent claimed two DNA sequences, BRCA1 and BRCA2, that indicate one’s susceptibility to breast cancer. Justice Thomas, writing for the Court, found that a naturally-occurring DNA sequence, even if it never occurs in isolation, is unpatentable. The Court found that isolated DNA is not patentable because the isolation process does not change the actual gene sequence or the chemical structure. On the other hand, complementary DNA (“cDNA”) – which is synthesized from mRNA and not found in nature, is patentable.

Some may consider this decision a victory for the availability and cost of breast cancer treatments; some may consider this a blow to investment in biopharmaceutical research. The effect, though, may not be so far-reaching, as DLA Piper’s Dr. Lisa Haile points out in her June 14, 2013 article, “What Supreme Court’s Myriad Decision Means for Biopharma Companies.”*

For patent prosecutors, this decision provides clarity on the patentability of isolated DNA. But uncertainty remains as to the patentability of other isolated biomolecules, such as carbohydrates, lipids, proteins and non-DNA nucleotide structures.

Bowman v. Monsanto Co.

Decided: 5/13/2013
Patent Holding: (9-0) Patent rights are exhausted for original seed sold but not for its progeny.

Since we last covered Bowman,** difficult practice questions have emerged about self-replicating technologies. For example, where the technology self-replicates “outside the purchaser’s control,” or where the self-replication is a “necessary but incidental step in using the item for another purpose,” are the patentee’s rights in that progeny exhausted upon sale of the parent? The short answer: maybe. However, where the purchaser is not a “passive observer” – or actively cultivates the progeny to avoid paying for additional patented goods – the patentee’s rights will most likely pass to the progeny. These are still open issues in the wake of Bowman.


Pom Wonderful LLC v. The Coca-Cola Co. (12-761)
Status: cert. pending, Solicitor General invited to brief.
Issue: whether a private party can bring a Lanham Act claim challenging a product label regulated under the Food, Drug, and Cosmetic Act.

Limelight Networks, Inc. v. Akamai Techs., Inc. (12-786, 12-960)
Status: cert. pending, Solicitor General invited to brief.
Issue: whether a party may be liable for direct and/or induced infringement when two or more entities together perform each step of a method claim.

Medtronic, Inc. v. Boston Scientific, Inc. (12-1128)
Status: cert. granted.
Issue: whether a patent licensee seeking declaratory judgment bears the burden to prove non-infringement.

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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