Guest Post by Kristen Osenga
In any given year, the Federal Circuit covers a wide spectrum of issues in patent law, and 2020 was no different. Of course, a lot about 2020 was different — including seeing the Court hold (and now livestream) telephonic arguments — but most of the patent cases decided were similar in type to other years . . . a little patent-eligible subject matter, a little jurisdiction and venue, a case about infringement of standard essential patents, and a bit of deciding what the Patent Trial and Appeal Board can and cannot do. There were no real blockbuster cases in 2020 (other than maybe the Arthrex denial of rehearing, more on that later). This could be due to the pandemic, or maybe it is a sign that patent law is settling in for a bit. Of course, that does not mean the law has settled in the right place, but that is a different issue for a different day.
For today, a few cases are worth highlighting from the Federal Circuit’s 2020 patent opinions. To be clear, this is not an exhaustive review, but rather simply a short selection noting some of the more important patent cases decided last year.
Patent-Eligible Subject Matter
Patent-eligible subject matter is always on the Federal Circuit’s docket – and probably will be until the Supreme Court or Congress definitively clarify what can be patented. In the meantime, the Federal Circuit continues to try to flesh out the Alice/Mayo framework for the patent bar. One helpful case from 2020 is Illumina, Inc. v. Ariosa Diagnostics, Inc. In this case, the claims were directed towards a method of preparing DNA to use in diagnostics. The Court distinguished this from a method of diagnosis, which may implicate a law of nature or natural phenomenon. The court held that the claimed method — to prepare cell-free DNA using size discrimination and selectively removing certain fragments via physical steps — is directed to “more than merely the natural phenomenon” and was thus patent-eligible. On this front, the Federal Circuit has provided some direction towards eligibility in the medical and biotech fields.
In the category of less-than-helpful, in 2020, the Federal Circuit continued to eschew the practical guidelines the Patent Office had provided for determining patent-eligible subject matter. In the In re Rudy case, the Court yet again reminded everyone that it was not bound by Patent Office guidance. In the absence of clear logic from the Supreme Court or the Federal Circuit itself, it is admirable that the Patent Office tried to bridge the gap — except the Federal Circuit continues to refuse to accept the help.
Jurisdiction & Venue
This past year saw two interesting jurisdiction and venue issues involving patents at the Federal Circuit — one affecting the technology field and the other rooted in pharma.
In In re Google, Google filed a petition for a writ of mandamus due to lack of venue. Super Interconnect Technologies LLC (SIT) had sued Google for patent infringement in the U.S. District Court for the Eastern District of Texas. SIT had alleged that venue in that jurisdiction was proper based on acts of infringement in the district (providing residents with video and ad services) and an established place of business in the district (the presence of several Google Global Cache servers). The Federal Circuit concluded mandamus was an available remedy, in part due to the confusion over whether the presence of servers or the like was sufficient to prove an established place of business and whether the regular presence of an employee or agent was required to show the same. While the presence of servers, especially physically-present servers, was sufficient to establish a presence in the district, the Court found that there were no Google employees present or conducting business in the district, nor were the internet service providers whom Google contracted to maintain the Google Global Cache servers sufficiently involved in Google’s business to be considered agents. While the Court cautioned that the decision should be read narrowly, it still provides some useful tips about what constitutes a business presence in today’s digital world.
In Valeant Pharmaceuticals v. Mylan Pharmaceuticals, the Federal Circuit clarified jurisdiction in Hatch-Waxman cases. Mylan — a generic pharmaceutical company located in West Virginia — executed an ANDA application, seeking approval to market a generic version of a drug including a paragraph IV certification that the patents covering that drug were invalid, unenforceable, or not infringed. Mylan notified Valeant of the ANDA filing shortly thereafter. Valeant then filed suit against Mylan in New Jersey, alleging infringement pursuant to the Hatch-Waxman Act. Valeant argued that New Jersey was proper venue because Mylan does business in New Jersey and the generic drugs, once approved, would be advertised to and sold in New Jersey. Mylan moved to dismiss the New Jersey case arguing that venue is improper because Mylan is not a resident in New Jersey, does not have a regular place of business in New Jersey, and the alleged act of infringement — filing the ANDA application — did not occur in New Jersey. The district court granted the motion to dismiss and Valeant appealed. The Federal Circuit, following its logic from TC Heartland and applying venue narrowly, concluded that venue in Hatch-Waxman cases must be predicated on past acts (not potential future acts) of infringement and thus occurs only where actions related to the ANDA submission occur.
Standard Essential Patents
Most of the patent infringement decisions in 2020 were rather run-of-the-mill. And after the Federal Circuit’s decision about fair, reasonable, and non-discriminatory (FRAND) licensing determinations in 2019 in TCL v. Ericsson, the Court didn’t have much new to say about standard essential patents (SEP) or FRAND in 2020. Internationally, there was a lot of action on the SEP and FRAND front — maybe the Federal Circuit will see more of this in 2021. One case involving SEPs, however, is a bit interesting.
In Godo Kaisha IP Bridge 1 v. TCL Communication Technology Holding, the Court clarified that whether a patent is essential to a standard is a question of fact for a jury, rather than a question of claim construction for the judge. Patent owner IP Bridge sued TCL for patent infringement and provided evidence that a) its patents were essential to the LTE standard and b) TCL’s products were LTE-compatible. Federal Circuit precedent allows infringement to be shown this way, and a jury found TCL infringing. TCL moved for judgment as a matter of law (JMOL), claiming that this method of showing infringement was inappropriate and that the district court should have assessed standard-essentiality during claim construction. The district court denied the JMOL, and TCL appealed. The Federal Circuit reaffirmed its endorsement of allowing standards compliance as a means to prove infringement and concluded that essentiality is a question of fact and not claim construction.
Although the Constitutionality of PTAB judges may still be up in the air (see the discussion of Arthrex below), the Federal Circuit issued a number of opinions related to PTAB practice in 2020. Here are a few of the more interesting ones.
In Nike Inc. v. Adidas AG, the Federal Circuit clarified what the Board may do when looking at substitute claims during an inter partes review (IPR). Specifically, the Court held that the Board may sua sponte identify issues of patentability with respect to proposed substitute claims based on the prior art of record, but that it must provide notice and opportunity for the parties to respond before issuing a final decision. Adidas petitioned for IPR, alleging claims 1-46 of Nike’s patents were invalid. After the PTAB granted the petition, Nike filed a motion to cancel claims 1-46 and enter substitute claims 47-50. Adidas opposed, arguing that claims 47-50 were obvious over three pieces of prior art. After a trip up and back to the Federal Circuit on other issues, the Board ultimately concluded that substitute claim 49 was invalid based on another piece of prior art in the record. While the Board is not constrained to the arguments made by the parties, the notice provisions of the Administrative Procedure Act (APA) and Federal Circuit precedent require that the parties be notified and able to respond to novel grounds of invalidity raised by the Board.
In another case about substitute claims during IPR, Uniloc 2017 LLC v. Hulu, the Federal Circuit decided that substitute claims are subject to patent-eligibility scrutiny under § 101 (as well as definite requirements under § 112, per dicta), even though those issues cannot support an IPR challenge. The Court noted that the statute requires the PTAB to assess the “patentability” of proposed substitute claims, without limitation to novelty and nonobviousness, as compared to the grounds for cancelling claims during an IPR, which are limited. Moreover, as these were substitute claims, all grounds of patentability were substantial new questions that had not been previously considered by the Patent Office. Finally, the Court noted, to find otherwise would allow a patentee to make an end-run around important issues like patent-eligibility by using substitute claims.
In Samsung Electronics v. Prisua Engineering Corp., Prisua sued Samsung for patent infringement. Samsung petitioned for IPR of a number of claims of Prisua’s patent. Initially, the PTAB had declined to institute review on a portion of the claims because the independent claim was indefinite, and the dependent claims were thus also indefinite. Unable to construe the claim, the PTAB determined it could not conclude that Samsung had established a reasonable likelihood of prevailing. After SAS Institute was decided, the PTAB modified its institution decision to include all of the petitioned-for claims. On supplemental briefing, Samsung urged the Board to cancel the indefinite claims; Prisua disagreed with the determination of indefiniteness during the institution determination and argued the Board had no authority to cancel claims for indefiniteness during an IPR. The PTAB ultimately determined that, because certain claims were indefinite, it was unable to compare those claims to the prior art and that Samsung had failed to establish that those claims were unpatentable. Samsung appealed to the Federal Circuit, which held that the PTAB cannot cancel claims for indefiniteness in an IPR. However, the Federal Circuit also noted that indefiniteness does not necessarily preclude the board from addressing patentability on other grounds.
One last interesting PTAB note — in Amneal Pharmaceuticals v. Almirall, the Federal Circuit ordered that attorney fees under § 285 were not permitted for fees incurred for work on an IPR, but instead relates only to fees incurred during a judicial proceeding.
And now to the elephant in the room . . . . possibly the “blockbuster” case of 2020 at the Federal Circuit, the Arthrex order, is not a case at all. In fact, on its face, it is simply a denial for rehearing and rehearing en banc that technically did nothing beyond letting stand an earlier panel decision that had a significant impact on the PTAB.
In October 2019, a Federal Circuit panel held in Arthrex Inc. v. Smith & Nephew Inc. that administrative patent judges (or APJs) at the PTAB were principal officers and thus had been appointed in violation of the Constitution; as a remedy, the panel eliminated the protection that limited the APJs’ removal for cause.
In March 2020, the Federal Circuit let the panel opinion stand via a lengthy order with a variety of concurrences and dissents denying petitions for the case to be reheard or reheard en banc. Judges Moore and O’Malley authored concurrences in the denial of the en banc petition, while Judges Dyk, Hughes, and Wallach authored dissents from the en banc denial. While this order did not change anything from the law as it stood in late 2019, the perspectives and arguments made in the Federal Circuit concurrences and dissents certainly teed the case up nicely for the Supreme Court, which heard arguments on March 1, 2021.
Kristen Jakobsen Osenga is the Austin E. Owen Research Scholar and Professor of Law at the University of Richmond School of Law. She teaches and writes in the areas of intellectual property, patent law, law and language, and legislation and regulation. Prior to becoming a professor, she practiced at the law firm of Finnegan, Henderson, Farabow, Garrett, & Dunner LLP in the field of patent prosecution and litigation. She also clerked for the Honorable Richard Linn of the U.S. Court of Appeals for the Federal Circuit.