Top Five Stories of 2018

by McDonnell Boehnen Hulbert & Berghoff LLP

After reflecting upon the events of the past twelve months, Patent Docs presents its 12th annual list of top patent stories.  For 2018, we identified fifteen stories that were covered on Patent Docs last year that we believe had (or are likely to have) a significant impact on patent practitioners and applicants.  In previous posts, we counted down stories #15 to #11 and stories #10 to #6, and today we count down the top five stories of 2018.  As with our other lists (2017, 2016, 2015, 2014, 2013, 2012, 2011, 2010, 2009, 2008, and 2007), links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look.  As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with anything we included, please let us know.  In addition, we will be offering a live webinar on the "Top Patent Law Stories of 2018" on January 16, 2019 from 10:00 am to 11:15 am (CT).  Details regarding the webinar, which will focus on a handful of the most important stories on this year's list, can be found here.

5.  Supreme Court Denies Certiorari in Regeneron Pharmaceuticals v. Merus

In October, the Supreme Court denied certiorari to Regeneron Pharmaceuticals in its appeal of the Federal Circuit's decision in Regeneron Pharmaceuticals v. Merus that affirmed the District Court's decision that the claims of Regeneron's patent-in-suit were unenforceable due to inequitable conduct.  In so doing, the Court passed up the opportunity to consider whether the Federal Circuit's split panel decision was consistent with its inequitable conduct jurisprudence, most recently handed down en banc in Therasense, Inc. v. Becton, Dickinson and Co.  The case arose over Regeneron's infringement suit against Merus involving U.S. Patent No. 8,502,018, which is directed to transgenic mice expressing human variable domain immunoglobulin (Ig) genes.  During prosecution of the '018 patent, four references were known to Regeneron and its counsel, but were not cited to the U.S. Patent and Trademark Office.  Although neither the District Court nor the Federal Circuit found these references, alone or in combination, satisfied the requirements in the statute for invalidating the '018 patent claims, the District Court found that these references were "but for" material and this satisfied the first prong of the Therasense test for finding inequitable conduct.  With regard to the second prong of the Therasense test, intent to deceive, the Federal Circuit found the District Court's drawing of an adverse inference based on the litigation misconduct catalogued by the District Court in its opinion was not an abuse of discretion.  Because intent to deceive is personal (insofar as it applies only to those individuals who have a Rule 56 duty to disclose), it seems inequitable to draw such an inference against the attorneys who prosecuted the '018 patent based on the conduct of litigation counsel who did not have a Rule 56 duty of candor and were not involved in prosecuting the '018 patent to allowance.  The decision also perhaps raises questions of whether improperly rendering a patent unenforceable for inequitable conduct by a misapplication of the Therasense standard may amount to a 14th Amendment violation for taking property rights without due process.  These issues, however, were not enough for the Supreme Court to consider them worthy of its review.

For information regarding this and other related topics, please see:

• "Supreme Court Denies Certiorari in Regeneron Pharmaceuticals v. Merus," October 7, 2018

4.  Federal Circuit Rejects Use of Tribal Sovereign Immunity to Shield Patents in Inter Partes Review Proceedings

In July, in St. Regis Mohawk Tribe v. Mylan Pharmaceuticals, the Federal Circuit affirmed the decision by the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office that denied the Tribe's motion to terminate Mylan's inter partes review proceedings as being barred by tribal sovereign immunity.  The issue arose over six IPRs (and parallel IPRs filed by Petitioners Teva Pharmaceuticals USA, Inc. and Akorn, Inc., which had been joined with Mylan's IPRs) instituted against six U.S. patents.  After the PTAB instituted IPRs against the six patents owned by Allergan and directed to its Restasis® product, Allergan assigned its rights in the patents to the Tribe in return for a license.  The Tribe argued unsuccessfully before the Board that as rightful owner of the patents the Board lost jurisdiction based on tribal sovereign immunity.  The Board held that, as an issue of first impression, the Tribe had not borne its burden of showing it was entitled to the requested relief, and that the nature of the license left all substantive patent rights with Allergan, and thus that the company could amply represent the Tribe's rights even in its absence.  The Federal Circuit affirmed, with Fed. Maritime Comm'n v. S.C. State Ports Auth., 535 U.S. 743 (2002), forming the basis of the panel's opinion.  In particular, the panel found IPRs to be more akin to federal administrative proceedings (in which the Federal government is the "superior sovereign" and tribal immunity does not apply) than to a dispute between private parties, in which a government agency plays an adjudicatory role (as in the FMC precedent).  It is very likely that the Tribe will file a petition for certiorari to the Supreme Court.  In view of the importance of the issue of the proper scope of tribal sovereign immunity (and the Court's recent penchant for patent law cases), there is a good chance that the final decision on this matter has not been rendered.  So, it is likely that tribal sovereign immunity will be back on our Top Stories list again next year.

For information regarding this and other related topics, please see:

• "St. Regis Mohawk Tribe Petitions Federal Circuit for En Banc Review of Panel Decision Voiding Sovereign Immunity in Inter Partes Review," August 21, 2018
• "Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2018)," July 22, 2018
• "Federal Circuit Issues Stay in St. Regis Mohawk Tribe Sovereign Immunity Appeal," March 28, 2018
• "Senators Introduce Bill to Abrogate Tribal Sovereign Immunity," March 14, 2018
• "St. Regis Mohawk Tribe (and Allergan) File Motion to Preclude PTAB Final Written Decision in IPR," March 12, 2018
• "St. Regis Mohawk Tribe and Allergan Appeal Denial of Motion to Dismiss on Sovereign Immunity Grounds," March 1, 2018
• "PTAB Denies St. Regis Mohawk Tribe's Motion to Terminate IPRs based on Sovereign Immunity," February 25, 2018
• "Amicus Briefs Filed in Mohawk Tribe's Motion to Dismiss IPRs," January 28, 2018
• "The PTAB Strikes Back -- Issues Order Prohibiting St. Regis Mohawk Tribe from Filing Any Additional Papers in IPR," January 8, 2018
• "Skeptical St. Regis Mohawk Tribe Requests Discovery Regarding Panel Selection Circumstances," January 3, 2018

3.  PTAB to Adopt Same Claim Construction Standard Used in Litigation

In May, the U.S. Patent and Trademark Office published a notice of proposed Rulemaking in the Federal Register to change the claim construction standard used in inter partes reviews, post-grant proceedings, and covered business method reviews.  Instead of the broadest reasonable interpretation standard, the Office proposed adopting the same standard used by district courts and the ITC.  In October, the Office published a new rule specifying that the PTAB apply the same claim construction standards in IPRs, PGRs, and CBMs filed on November 13, 2018 or later as would apply in litigation.  Under the new rule, the PTAB will also consider claim construction decisions from litigation (whether from courts or the U.S. International Trade Commission) in construing claims in AIA proceedings.  The new rule abandons the PTO's former approach of using the broadest reasonable interpretation in claim construction, and thereby reflects a continuing move from considering AIA proceedings analogous to prosecution to considering them analogous -- or part of -- the litigation process.  Notably, the new rule recognizes -- and adopts -- the canon of construction that claims will be construed, if possible, to preserve their validity.  The wholesale adoption of the Phillips standard for claim construction provides a clear benefit:  court and ITC claim constructions will be directly relevant to AIA proceedings, and vice versa.  While the outcome of the claim construction process was previously generally the same under either standard, it technically involved different legal standards.  Now, the decisions in the two types of fora will be directly relevant to one another, increasing efficiency and decreasing cost.  And because the rule specifically indicates that "[a]ny prior claim construction determination concerning a term of the claim in a civil action, or a proceeding before the [ITC], that is timely made of record in the . . . proceeding will be considered," the chance of inconsistent decisions will be greatly lessened.

For information regarding this and other related topics, please see:

• "PTAB Adopts Litigation Standards for Claim Construction in AIA Proceedings," October 11, 2018
• "USPTO Proposes Harmonizing Claim Construction Standard In PTAB Proceedings," May 9, 2018

2.  Federal Circuit Holds That Patent Eligibility is Question of Law That May Contain Underlying Facts

In February, the Federal Circuit provided a degree of clarity as to the evidentiary standard applicable to a § 101 challenge on summary judgment in Berkheimer v. HP Inc.  In that case, Steven E. Berkheimer brought an action against HP in the Northern District of Illinois, alleging infringement of U.S. Patent No. 7,447,713, which is directed to "digitally processing and archiving files in a digital asset management system."  After a Markman hearing in which the District Court construed several claim terms, HP moved for summary judgment under § 101.  The District Court granted the motion and Berkheimer appealed.  On appeal, Berkheimer argued that summary judgment was improper because whether the claimed invention is well-understood, routine, and conventional is an underlying fact question for which HP offered no evidence.  The Federal Circuit concluded that "[w]hether claims 4-7 perform well-understood, routine, and conventional activities to a skilled artisan is a genuine issue of material fact making summary judgment inappropriate with respect to these claims."  The Federal Circuit's holding and supportive reasoning appear to be the first time that the Court has explicitly required that a district court make findings of fact in order to justify a § 101 decision.  In April, the U.S. Patent and Trademark Office issued a memorandum on the Berkheimer decision to the patent examining corps, noting that when applying the second part of the Alice test, an Examiner should not find that an additional element is well-understood, routine or conventional unless the Examiner can expressly support (in writing) that finding using one of four rationales:  a citation to an express statement in the specification or to a statement made by an applicant during prosecution, a citation to one or more court decisions, a citation to a publication (provided that the publication demonstrates that the additional elements are widely prevalent or in common use in the relevant field), or a statement that the Examiner is taking official notice (provided that the Examiner follows the procedures of MPEP § 2144.03 for taking official notice).  In May, the Federal Circuit denied en banc review of Berkheimer (and of the related case, Aatrix Software, Inc. v. Green Shades Software, Inc.).  However, in September HP filed a petition for writ of certiorari with the Supreme Court, and the case was distributed for conference on January 4, 2019.  So, it is likely that the Berkheimer case will be back on our Top Stories list again next year.

For information regarding this and other related topics, please see:

• "In re Marco Guldenaar Holding B.V. (Fed. Cir. 2018)," December 30, 2018
• "Deadline to Submit Comments to USPTO on Berkheimer Memo Approaching," August 5, 2018
• "Will Alice Become the New Markman?" July 19, 2018
• "Federal Circuit Denies En Banc Review of Berkheimer and Aatrix," June 3, 2018
• "USPTO Updates Patent Eligibility Guidance in View of Berkheimer," April 23, 2018
• "Berkheimer Files Response to HP's Petition for En Banc Review," April 1, 2018
• "Whether Facts Matter in the Patent Eligibility Analysis: HP Files Petition for En Banc Rehearing," March 20, 2018
• "Aatrix Software, Inc. v. Green Shades Software, Inc. (Fed. Cir. 2018)," February 18, 2018
• "Berkheimer v. HP Inc. (Fed. Cir. 2018)," February 8, 2018

1.  Supreme Court Finds Inter Partes Review Proceedings Constitutional

In April, the Supreme Court held in Oil States Energy Services, LLC v. Greene's Energy Group, LLC that inter partes review proceedings do not violate Article III or the Seventh Amendment of the Constitution.  Justice Thomas, writing for the 7-2 majority, explained that a grant of a patent is a matter involving a public right.  Moreover, because IPR proceedings involve the same basic matter as the grant of a patent, they also fall within the public rights doctrine.  As a result, the Constitution does not prohibit the Patent Office from resolving issues of validity post issuance outside of an Article III Court.  Important to the Court's analysis was the lack of distinction between IPR proceedings and the initial grant of the patent because "[p]atent claims are granted subject to the qualifications that the PTO has 'the authority to reexamine – and perhaps cancel – a patent claim' in an inter partes review."  Justice Gorsuch dissented, and was joined by Chief Justice Roberts.  In his dissent, Justice Gorsuch explained that the history of the patent system and the prior case law required the finding that patents are private rights, and therefore must be adjudicated in Article III courts.  Both the majority and dissent cited to the 1898 Supreme Court decision in McCormick Harvesting Machine v. Aultman in support of their opinions.  Justice Gorsuch pointed to the broad sweeping language from that case that stated "[t]he only authority competent to set a patent aside, or to annul it, or to correct it for any reason whatever, is vested in the courts of the United States, and not in the department which issued the patent."  The majority, however, pointed out that this language is "best read as a description of the statutory scheme that existed at that time," and did not address whether Congress had authority to establish an entirely different scheme.  In fact, before the 1870 change to the patent statute discussed in McCormick Harvesting, Congress had provided examiners with absolute discretion to cancel any reintroduced original claim in a reissue proceeding.  It was the fact that Congress withdrew this grant of authority before McCormick Harvesting that made the Patent Office's cancellation of original claims in reissue proceedings a violation of due process and an invasion on the then-exclusive jurisdiction of the judicial branch by the executive.

For information regarding this and other related topics, please see:

• "Oil States Energy Services, LLC. v. Greene's Energy Group, LLC (2018)," April 24, 2018

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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