H&R Block Tax Servs., Inc. v. Jackson Hewitt Tax Service, Inc., No. 6:08-cv-37 (E.D. Tex. Nov. 10, 2009)
Slip Opinion (hosted by Patently O)

Magistrate Judge Love, sitting in the United States District Court for the Eastern District of Texas, found several of H&R Block’s financial instrument patents invalid, and recommended that Jackson Hewitt’s motion for summary judgment be granted-in-part.

The court applied the machine-or-transformation test from In re Bilski, 545 F.3d 943 (Fed. Cir. 2008), cert. granted 77 U.S.L.W. 3656 (U.S. Jun. 1, 2009) (No. 08-964), to H&R Block’s computerized systems patents as well as to its methods patents. In so doing, the court extended Bilski beyond process patents. Only one of the patents survived the machine-or-transformation test and the remaining patents were held invalid under 35 U.S.C. § 101.

The original complaint is available here. Patent Storm has a helpful explanation of one of the patents. Patently O and the 271 Patent Blog both provide brief summaries of the case.

There were essentially four patent claims at issue in this case, each of which involved using rights to future government payments to acquire present purchasing power. The ‘862 patent concerned a computerized system that assigned an individual’s right to a government payment to a third party sponsor in exchange for a spending vehicle offered by that third party (e.g., a debit card or coupons). The ‘829 patent, a methods claim, involved preparing tax returns and enabling taxpayers to assign a portion of their estimated income tax refund in exchange for a spending vehicle from a third party. The ‘425 patent included both systems claims and method claims, and involved estimating a person’s income tax refund in a future year, providing a loan on the basis of the estimated amount, and assigning the income tax refund to the lender.

H&R Block filed suit against Jackson Hewitt, alleging infringement of its patents. Jackson Hewitt filed a motion for summary judgment, claiming that all asserted patent claims were invalid.

The case is significant for its treatment and use of Bilski. In Bilski, the Federal Circuit held that the machine-or-transformation test is the governing test for determining patent eligibility of a process claim under § 101. That is, the process must either be tied to a particular machine or it must transform an “article.” An “article” can be electronic data so long as the data represents physical and tangible objects. However, the transformation of public or private legal obligations or relationships cannot meet the test because they are neither physical objects nor representative of physical objects. The machine or transformation must impose meaningful limits on the claim’s scope, and must not merely be insignificant extra-solution activity. JOLT Digest further discusses Bilski here and here.

In dealing with the systems claims, the district court was prepared to assume that the claims in fact described systems rather than processes. However, the court nevertheless applied the machine-or-transformation test, warning against pigeonholing subject matter. The court noted that the ‘862 patent “system” consisted of a computer and certain financial relationships between entities. Because financial relationships are abstract intellectual concepts and not patentable, the court found that, without the computer component, the ‘862 claims would certainly be unpatentable. The court held that the computer component was merely an insignificant, extra-solution component of the claimed system. Reasoning by analogy with Bilski, the court concluded that if an extra-solution step is insufficient to render an otherwise unpatentable process claim valid, an extra-solution component is insufficient to render an otherwise unpatentable system claim valid. The court applied essentially the same reasoning to the ‘425 patent system claims.

When it came to the process or method claims, the district court found that none passed the transformation prong of Bilski. The court found that the manipulated data represented legal obligations and relationships, and that money is simply a representation of a legal obligation or abstract concept. The ‘425 patent method claims failed the machine prong because the computer was used only for data-gathering, which Bilski had held was insufficient to make a process patent-eligible. However, H&R Block successfully defended its ‘829 patent on the machine prong. The court held that the use of a computer to execute an agreement between a taxpayer and a third party was not insignificant extra-solution activity, and imposed meaningful limits on the claim. Accordingly, those claims were directed to patentable subject matter.

Although the district court described the machine-or-transformation test as merely “helpful” for “illuminating” issues in systems claims, it applied the test as though it governed the outcome. This case demonstrates the potential reach of Bilski, currently being considered by the Supreme Court (oral argument heard on Nov. 10, 2009; WSJ.com provides commentary on the oral argument). It also illustrates the uncertainty of the Bilski test: given that agreements were involved in all the financial instruments, it is far from obvious that ‘829 should have survived.

By Abby Lauer – Edited by Ian C. Wildgoose Brown

On Thursday, Intel announced that it will pay $1.25 billion to Advanced Micro Devices (AMD) to settle AMD’s antitrust complaints in the U.S., Europe, Japan and South Korea. According to the terms of the settlement, Intel agreed to refrain from engaging in tactics involving computer manufacturers that would exclude AMD from the microprocessor market. The companies also resolved to drop their patent dispute and enter into a five-year cross licensing agreement.

The NY Times provides an overview of the settlement and other information about Intel and AMD. Ars Technica provides strategic analysis; the WSJ Law Blog provides opinions of antitrust experts and PCWorld provides additional commentary.

The settlement is the latest development in a dispute between Intel and AMD that has spanned more than two decades and has involved 200 million documents and 2,200 hours of witness depositions. AMD had accused Intel of rewarding computer manufacturers that use Intel chips exclusively while penalizing those who buy products from AMD, a violation of the Clayton Antitrust Act, 15 USC 14. Intel refuted these accusations and has repeatedly denied that it engaged in illegal tactics to exclude AMD from the microprocessor market. Market leader Intel supplies 70-80% of all PC microprocessors; AMD is a distant second and supplies the remaining 20-30%.

News of the settlement was met with some surprise in the business world, although the companies claim to have been conducting dispute resolution meetings since April. The substantial amount of money that Intel has agreed to pay AMD may indicate the company’s unwillingness to risk a loss at trial. Such a loss could have required Intel to pay treble damages under 15 USC §§ 12–27; this amount plus the additional legal fees accumulated at trial could have cost Intel much more than the settlement amount.

The chance of an FTC suit against Intel is somewhat diminished in light of the settlement agreement, as AMD historically has been a significant agitator for government antitrust action. However, the settlement does not cover many of Intel’s business practices, including Intel’s broad pricing policies and its marketing payments to PC makers. The FTC has been investigating Intel business practices for the past year, though it has not yet filed a complaint against the company. Intel is currently appealing a $1.45 billion fine that was imposed by the European Union last May. Betanews reports that a spokesman for the European Commission has recognized the AMD settlement but has made clear that the Commission is going forward with its antitrust investigations. In addition, New York Attorney General Andrew Cuomo recently filed a wide-ranging antitrust suit against Intel. The AMD settlement therefore is not the end of Intel’s antitrust battles.

The settlement will help AMD address $5 billion of debt resulting from recent business acquisitions and reorganizations. Intel needs AMD to stay competitive to balance its market domination and to counter further antitrust and monopoly concerns. This settlement may represent a win-win resolution to one of the computer industry’s most bitter legal battles.

By Davis Doherty – Edited by Jad Mills
Assn. for Molecular Pathology, et al. v. USPTO, et al., Case no. 09-CV-4514 (S.D.N.Y. Nov. 2, 2009)
Slip Opinion (hosted by Patent Baristas)

The United States District Court for the Southern District of New York denied defendants’ motion to dismiss plaintiffs’ claim that patents on a human gene violate the First Amendment and Article I of the Constitution for jurisdictional issues, lack of standing, and failure to state a claim.

District Judge Sweet found that the plaintiffs’ constitutional claims challenging the validity of Myriad Genetics’ gene patents provided subject matter jurisdiction and standing to sue the United States Patent and Trademark Office because of the lack of available statutory remedies.  The plaintiffs claim that Myriad’s patents are inappropriate because they cover “products of nature”, and seek invalidation of the patents under the Constitution of the United States. Judge Sweet held that these claims met the stricter pleading standards recently announced in Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009).  In so holding, the court noted the “novel circumstances presented by this action against the USPTO”: The Patent and Trade Office is generally immune from suit due to the availability of statutory remedies for claims arising from patents. Such remedies do not provide for constitutional claims.

Ars Technica provides a brief overview of the case.  The ACLU, who represents the plaintiffs, writes in support of the decision.  Patent Baristas put forward a more skeptical view of the plaintiffs’ prospects. Patent Docs features a longer analysis of the decision.

Defendant Myriad Genetics owns interests in several patents on the human genes BRCA1 and BRCA2, both of which can indicate an increased risk of breast or ovarian cancer.  Myriad can thus control the availability of genetic testing for the BRCA1 and BRCA2 sequences, a process that can cost as much as $3000.  The patents also allow Myriad to restrict other laboratories’ research on the BRCA sequences.  The numerous plaintiffs include researchers, testing laboratories, medical societies, advocacy organizations, and cancer patients with various interests in seeing the invalidation of the patents-at-issue.

Arguing on behalf of the plaintiffs, the ACLU and the Public Patent Foundation claim that the patents violate the First Amendment’s protection of freedom of thought and Article I, section 8, clause 8’s instruction that Congress “promote the Progress of Science and useful Arts”.  In holding that the plaintiffs have standing to sue and that subject matter jurisdiction exists, the court relied on the fact that these constitutional claims fall outside the remedies provided by the Patent Act.  In holding the pleading sufficient, the court reasoned that the First Amendment claim is supported by the plaintiffs’ argument that the BRCA patents cover a product of nature, and the Article I claim is supported by the contention that the patent has inhibited research on the genes.

This suit is significant for both procedural and public policy reasons.  Using constitutional claims in an attempt to invalidate patents is a novel approach, and is probably the only approach that would allow the plaintiffs to include the USPTO as a defendant. A victory for the plaintiffs could result in an increased availability of genetic testing for breast cancer risks.  More broadly, if the plaintiffs present a successful challenge to the USPTO’s general policy of granting gene patents, the validity of patents on an estimated 20% of the human genome would be called into question.

Nokia Sues Apple for Patent Infringement Related to iPhone

On October 22, Nokia filed a suit against Apple in Delaware federal court, alleging that the iPhone infringes patents held by Nokia. The New York Times reports that the specific patents deal with the GSM and UMTS wireless standards utilized by the iPhone for voice and data communication, both of which were developed in part by Nokia. The Wall Street Journal notes that the suit might be a strategic response to the iPhone’s increasing momentum in Europe and Asia. Nokia could gain a two-percent royalty on each iPhone sold if the suit succeeds.

Tennessee Couple Is Entitled to Unmask Anonymous Blogger

On October 8, a Tennessee state court held in Swartz v. Does that a couple is entitled to know the identity of the individual who posted critical statements about them in an online blog. Ars Technica notes that the blogger’s claim to protection under Section 230 of the Communications Decency Act likely failed because the blog induced readers to spy on the Swartzes and report back on the blog. The Citizen Media Law Project points out that the legal standard used by the judge in this case was “highly protective of anonymous online speech,” but that the Swartzes provided “sufficient evidence in support of their claims of wrongdoing to outweigh the anonymous blogger’s right to anonymity.”

Freedom of Speech Prevails in UK Thanks to Twitter

On October 12, the UK-based newspaper The Guardian reported it was unable to report on a question asked of a minister during Parliamentary proceedings due to “legal obstacles, which cannot be identified.” Political bloggers and tweeters quickly responded, reporting the question was related to the oil-trading company Trafigura, which is under investigation for allegedly dumping toxic waste in the Ivory Coast. Within hours, Trafigura rose to the top of the Twitter “trending topics.” The resulting publicity led the company to relax the terms of its court-ordered gag rule. On October 13, the Guardian reported the details of Trafigura’s “super-injunction,” a gag order so broad that it prevented the newspaper from revealing the injunction’s existence.

Copyright Treaty a Secret, Unless You’ve Got Connections

The next round of negotiations for the multinational Anti-Counterfeiting Trade Agreement (ACTA) is scheduled to run November 4 through November 6 in Korea, but the United States Trade Representative is being coy about its contents. Wired reports that although the language of the treaty is classified, forty-two individuals from the private sector are allowed access to its contents under a nondisclosure agreement. Their names, including both industry and public interest organization representatives, were revealed after Knowledge Ecology International requested the information under the Freedom of Information Act.

Winner of Patent Suit Against Microsoft Sues Internet Giants

Eolas, an internet technology company that won a patent-infringement suit against Microsoft in 2003, is now taking action against the rest of the high-tech world. Ars Technica and CNET reported on October 6 that Eolas, which holds two patents related to web browser plug-in technology, is suing twenty-three other companies for infringement in the U.S. District Court for the Eastern District of Texas. After withstanding Microsoft’s legal challenges to its patent in the 2003 case, Eolas is looking to repeat its success against the likes of Apple, Amazon, Google, Yahoo, and YouTube. However, a Supreme Court decision in the upcoming case Bilski v. Doll may reduce Eolas’ chances at court if software patents are weakened.

Bd. of Trs. v. Roche Molecular Sys., Inc., 2008-1509, -1510 (CAFC Sept. 30, 2009) Opinion

On September 30, the Court of Appeals for the Federal Circuit (“CAFC”) affirmed in part, vacated in part, and remanded with instructions the District Court for the Northern District of California decision. The lower court’s decision held several Stanford University patents invalid for obviousness, dismissed Roche’s counterclaim for judgment on ownership, and declined to consider Roche’s affirmative defense based on ownership.  The CAFC vacated the lower court’s decision that Stanford’s patents were invalid and ruled that the University did not have standing to sue, because of contract language indicating that the patent rights belong to an outside corporation. Additionally, the CAFC affirmed the lower court’s decision that Roche’s counterclaim for judgment on ownership was barred due to a four-year statute of limitations.  However, unlike the lower court, the CAFC held that statute of limitations does not preclude a party from raising affirmative defenses.

PatentlyO provides an overview of the case.  Inside Higher Ed expressed surprise that the case turns on the language of Stanford’s assignment agreement and not on other substantive issues, such as the interplay with federal Bayh-Dole Act and the bona fide purchaser arguments.

Stanford University received funding from the National Institute of Health to develop a new biochemical technique called polymerase chain reaction (PCR), as part of its efforts to measure the effectiveness of antiretroviral drugs that are used to treat Human Immunodeficiency Virus (HIV).  Stanford filed three patents related to the PCR method.  The Stanford-affiliated scientists signed a copyright and patent agreement (CPA).  The CPA included a provision in which the scientists “agree to assign” the right, title, and interest in the inventions created.  However, one scientist later signed a Visitor’s Confidentiality Agreement (VCA) with Cetus (a company later purchased by Roche) in order to consult with the outside corporation and refine the PCR technique.  The VCA included “do hereby assign” language.

In holding as it did, the CAFC reasoned that the “do hereby assign” language in the VCA “effected a present assignment of …future inventions” to the company.  In contrast, Stanford’s “agree to assign” language in its CPA “reflect[ed] a mere promise to assign rights in the future, not an immediate transfer of expectant interests.”  Consequently, the outside corporation’s title in the PCR-related patents vested first, thus leaving Stanford with a defective title.  Because Stanford could not establish ownership of the patents, the university did not have standing to sue for patent infringement.

The CAFC decision will likely force colleges and universities to review their intellectual property agreements with faculty and affiliated staff to ensure assignment of rights is immediately effective once the invention is created.  Additionally, the decision will prompt schools to implement a system to review collaborative agreements faculty and staff have with outside companies.

Uniloc v. Microsoft, No. 03-440 S (D. R.I. Sept. 29, 2009)
Opinion

The United States District Court for the District of Rhode Island vacated one of the largest patent verdicts in history, in which a jury held that Microsoft’s “Product Activation System” (“PA”) infringed on Uniloc’s patented “System for Software Registration” (the “‘216 patent”). In holding that Microsoft did not infringe as a matter of law, the District Court found that Uniloc had not shown the presence of each element of the patent claim or its substantial equivalent in the accused device as required by Lemelson v. United States, 752 F.2d 1538 (Fed. Cir. 1985). The Court, while noting that the jury’s finding deserved deference, expressed its “firm belief” that the jury failed to grasp the complex issues in the case and lacked a legally sufficient basis for the finding.

The Microsoft Blog provides an overview of the case. Betanews provides a thorough analysis of the main legal issues. Evidence Prof Blog provides a look at the admissibility of expert damages testimony.  Current Events in IP Law questions the jurors’ ability to understand the issues.

Uniloc’s ’216 patent software deters unauthorized copying of software by locking the software to one user and allowing it to run only after a licensing procedure is completed. The accused technology, PA, was developed to limit the number of computers on which a single copy of software could be installed. Uniloc sued Microsoft in September 2003, contending that PA infringed five independent claims of the ‘216 patent. The Court granted summary judgment in Microsoft’s favor on non-infringement, and Uniloc appealed. The Federal Circuit remanded the case to determine whether PA uses an identical (or substantially equivalent) process to generate licensee unique IDs. On remand, the jury found that Microsoft infringed one of the claims (Claim 19) and awarded Uniloc $388,000,000 in damages. Microsoft raised a Rule 50 motion seeking a reversal.

In evaluating Microsoft’s motion the Court cited the Lemelson rule on infringement, which states that  “each element of a claim is material and essential, and that in order for a court to find infringement, the plaintiff must show the presence of every element or its substantial equivalent in the accused device.” The first element was the “Licensee Unique ID” (“LUID”) identified in Claim 19, construed as a “unique identifier associated with a licensee.” Uniloc argued that PA used this identifier to represent a software license holder, and Microsoft  challenged the notion that the value is “associated” with an individual licensee. The Court found that a reasonable jury could conclude that an association is created between the license digest and the licensee, based on Uniloc’s theory that the uniqueness of the license digest could in fact create an individual association.

However, the Court did not find sufficient similarities between the products in the other two elements of Claim 19. With regard to the second element, the issue was whether sufficient evidence supported the jury’s conclusion that the algorithms used by the PA system qualified as a “summation algorithm or a summer and equivalents thereof.” The Court concluded that they did not, because Uniloc did not prove that the systems were similar enough in this regard. The Court found “significant (and undisputed) differences between MD5 and the summation algorithm in the ‘216 patent, which cannot be overstated.”

The third element was the “registration system” using “mode switching means,” construed in the ‘216 patent as “a system that allows digital data or software to run in a use mode on a platform if and only if an appropriate licensing procedure has been followed.” Microsoft argued that PA is a verification technology, not a licensing procedure. Users of Microsoft products become legally licensed upon installing the software, and the PA system does nothing by itself to authorize users. The Court agreed with Microsoft and found that PA is not a registration system with mode switching means as that term has been construed. Because PA does not utilize these elements from the ‘216 patent, the Court concluded that there is no infringement as a matter of law.

This decision is the most recent development in a six-year-long dispute. The case has attracted much attention for its magnitude and implications. The reversal may support the argument for a patent-focused court, as the Court found that jury members were not able to sufficiently understand the technical details and legal issues to reach a reliable verdict. There is also concern over the obstacles presented by increasing patent litigation to high-technology entrepreneurs and companies, which may inhibit innovation.

The final resolution of the case is yet to come: Uniloc has expressed its intent to appeal the Court’s decision.

In re Lister, No. 2009-1060 (Fed. Cir. Sept. 22, 2009)
Slip Op.

The United States Court of Appeals for the Federal Circuit, siding with Dr. Lister, vacated and remanded the Board of Patent Appeals and Interferences decision, which had affirmed an examiner’s rejection of Dr. Lister’s patent application under 35 U.S.C. § 102(b).

The Federal Circuit held that the Board of Patent Appeals and Interferences erred in affirming the patent examiner’s rejection under 35 U.S.C. § 102(b). In so holding, the court determined that “persons interested and ordinarily skilled in the subject matter or art exercising reasonable diligence” could have located the disputed reference by using either the Westlaw or Dialog commercial databases, which permit keyword searches of reference titles. The court found that this provided sufficient support for a finding of public accessibility under § 102(b).  However, the court also found insufficient evidence that the reference “was in fact included in either Westlaw or Dialog prior to the critical date” of one year before application for patent, as required under § 102(b).

Patentcastle, Patently-O, and Patent Prospector provide overviews of the case, including some historical background.

Dr. Richard Lister is an avid golfer who identified a difficulty that casual golfers have with the rule that a tee may only be used on the first shot of each hole. He then created a method of play in which golfers were allowed “to tee up their balls on every shot except for those taken from designated hazard areas or the putting green.” Dr. Lister, acting pro se, submitted a manuscript entitled “Advanced Handicap Alternatives to Golf” to the U.S. Copyright Office. The Copyright Office issued a certificate of registration on July 18, 1994. Dr. Lister later learned he needed a patent for his invention and applied for one on August 5, 1996. According to 35 U.S.C. § 102(b), a person shall not be entitled to a patent if the invention was publicly accessible “more than one year prior to the date of the application for patent.” After review and appeals, the Board of Patent Appeals and Interferences affirmed an earlier § 102(b) rejection of the patent due to its prior public accessibility at the Copyright Office. The court rejected Lister’s claim that the manuscript was not accessible to the general public by virtue of its location at the Copyright Office. In so holding, the court stated that “a reference can be considered publicly accessible even if gaining access to it might require a significant amount of travel.” The court also noted that once accessibility is shown, it is not required to show that anyone actually accessed it.

Dr. Lister also argued that the catalogs and databases were not sufficiently searchable to enable a reasonable, interested researcher to discover the manuscript. The court concluded that, given these facts, the Copyright Office’s catalog alone would not be sufficient to support a finding of public accessibility, as it allowed searching by author or first title word only. However, the court did hold that Dr. Lister’s manuscript was “publicly accessible” through either Westlaw or Dialog databases, which permitted keyword searches of titles. The court then turned to the question of timing. It held that the § 102(b) rejection was incorrect. It found that the evidence failed to show that the manuscript was made publicly accessible “as of the critical date [of one year before patent application] nor suffices to prove a prima facie case of accessibility that would shift the burden to Dr. Lister.” The court thus vacated and remanded the prior rejection, calling for proceedings consistent with the opinion.

No dissent was included in the opinion.

This ruling suggests that Westlaw and Dialog searches of title keywords provide a much higher level of “public accessibility” for § 102(b) purposes than the Copyright Office’s capacity to search by author name or title first word only. However, this conclusion is fact dependant; thus, an article located only within the Copyright Office database with a unique and readily guessable first word in the title might provide sufficient “public accessibility.” The court also maintained a firm position on the evidence required to show the date of accessibility, and was unwilling to accept an inference of timing based on limited evidence.

Prometheus Labs., Inc. v. Mayo Collaborative Servs., Case No. 2008-1403 (Fed. Cir. Sept. 16, 2009)

The United States Court of Appeals for the Federal Circuit (”Federal Circuit”) reversed the ruling of the United States District Court for the Southern District of California granting summary judgment of invalidity of U.S. Patents 6,355,623 (”the ‘623 patent”) and 6,680,302 (”the ‘302 patent”) under 35 U.S.C. § 101.

Circuit Judge Lourie delivered the opinion of the court, holding that patents claiming a method of treatment were drawn to patentable subject matter based on transformative administering and determining steps of the process. In so holding, the court noted that the “key issue for patentability” is “whether a claim is drawn to a fundamental principle or an application of a fundamental principle.” Prometheus Labs., Inc. v. Mayo Collaborative Servs., No. 2008-1403, slip op. at 8 (Fed. Cir. Sept. 16, 2009).

Patently O provides an overview of the case. Patent Docs features a thorough analysis of the decision.

The ‘623 and ‘302 patents claim “methods for calibrating the proper dosage of thiopurine drugs” by measuring certain metabolites. Prometheus Labs., No. 2008-1403, slip op. at 2. Prometheus Laboratories, Inc. (”Prometheus”), the exclusive licensee of the ‘623 and ‘302 patents, marketed a test that used the technology claimed in the patents. Mayo Collaborative Services and Mayo Clinic Rochester (collectively, “Mayo”) began using and selling a test that measured the same metabolites as the Prometheus test. On June 15, 2004, Prometheus sued Mayo for infringement of various claims of the ‘623 and ‘302 patents. On January 29, 2007, Mayo filed a motion for summary judgment of invalidity, asserting that the patents were invalid for claiming unpatentable subject matter under 35 U.S.C. § 101. Finding the correlations measured by the claimed method to be natural phenomena resulting from a natural body process, the district court granted Mayo’s motion for summary judgment and held the patents invalid under § 101. Prometheus appealed the district court’s grant of summary judgment of invalidity.

In reversing the district court’s ruling, the Federal Circuit applied the test for patentability articulated in In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), cert. granted, 129 S. Ct. 2735 (2009). Under the Bilski test, a claimed process is directed to patentable subject matter if (1) “it is tied to a particular machine or apparatus,” or (2) “it transforms a particular article into a different state or thing.” Id. at 953. Furthermore, under the Bilski “machine or transformation” test, “the use of a specific machine or transformation of an article must impose meaningful limits on the claim’s scope to impart patent-eligibility,” and “the involvement of the machine or transformation in the claimed process must not merely be insignificant extra-solution activity.” Id. at 961-62. Applying Bilski, the court concluded that the claimed methods of treatment “transform an article into a different state or thing,” and that such a transformation is “central to the purpose of the claimed process.” Prometheus Labs., No. 2008-1403, slip op. at 14. The court reasoned that the transformation takes place within the human body following the administration of the drug, and the various physical and chemical changes allow the concentrations of the metabolites to be determined. The court emphasized that when a drug is administered, “the human body necessarily undergoes a transformation,” as “[t]he drugs do not pass through the body untouched without affecting it.” Id. at 16.

Furthermore, the Federal Circuit held that the transformation in the claimed process is “not merely insignificant extra-solution activity.” Id. at 18. The court reasoned that the administering step, which provides the drugs, and the determining step, which measures the drugs’ metabolite levels to assess the drugs’ dosage during treatment, are both a part of a “treatment protocol” and that those steps were both transformative. Id. Finally, the court noted that a subsequent mental step in the process does not undermine the transformative nature of the prior steps. Id. at 20.

The Federal Circuit’s successful application of the Bilski “machine-or-transformation” test to the treatment method in Prometheus secures patent protection for the medical diagnostics industry. This security may be temporary however as the diagnostics industry anxiously awaits the Supreme Court’s review of Bilski later this year.

By Debbie Rosenbaum – Edited by Stephanie Young
Martek Biosciences Corp. v. Nutrinova Inc., 2008-1459, -1476 (CAFC Sept. 3, 2009)
Opinion

On September 3, 2009, the Court of Appeals for the Federal Circuit affirmed the U.S. District Court for the District of Delaware’s jury verdict finding that Martek’s patents were valid and infringed, but reversed the points of error Martek asserted on cross appeal. The Federal Circuit (”CAFC”), sitting as an expanded five-member panel: 1) upheld the district court’s denial of Lonza’s motions for judgment as a matter of law (”JMOL”); 2) found that the district court’s exclusion of Lonza’s prior inventorship evidence was appropriate; 3) upheld the district court’s construction of the term “non-chloride sodium salt”; 4) reversed the district court’s finding that two claims of the ‘567 patent were invalid as a matter of law; and 5) expanded the district court’s limited construction of the claim term “animal” in the ‘244 patent to include humans.

Briefs and relevant court documents are available here. The District Court’s 2007 decision may be found here. Patently-o and Patent Hawk both provide a discussion of merits. Patently-o and IP Watchdog discuss the significance of the five-judge panel.

Martek and Lonza make and sell products containing docosahexaenoic acid (DHA), an essential omega-3 fatty acid that plays an important role in the development of organs such as the heart, brain, and eyes, and is reported to have many additional health benefits. DHA is manufactured by extracting lipids from fermented microalgae.

Martek Biosciences sued Nutrinova Nutrition Specialties and Food Ingredients GmbH and Lonza, Ltd. for the infringement of a variety of patents. The patents at issue relate to specified processes for growing a mixture of microorganisms that produce high concentrations of DHA. The microorganisms are used in commercial production of human and animal food additives. In 2005, Lonza purchased the DHA-business from Nutrinova. The district court found that Nutrinova and Lonza had infringed certain claims of Martek Biosciences’ patents.

Based on a mixed culture limitation and a food product limitation analysis, the CAFC ruled that the district court did not err when it denied Lonza’s JMOL motion because substantial evidence supported the jury’s finding that the ‘594 patent claims are entitled to the priority date of the 1988 application.

As to the ‘281 patent claim infringement, the CAFC ruled that because Martek presented substantial evidence supporting the jury’s infringement verdict, the district court did not err when it denied Lonza’s JMOL motion.  Lonza tried to argue prior invention, though it could not corroborate its claim. Lonza sought to introduce the testimony of an alleged prior inventor, Dr. Long, under §102(g) for the purpose of invalidating a patent, but Lonza was required to produce evidence corroborating Dr. Long’s testimony.  The CAFC agreed with the district court that an abandoned patent application without more was insufficient to corroborate Dr. Long’s testimony.

The CAFC also upheld the district court’s claim construction on the term “non-chloride sodium salt,” as used in the ‘281 patent, by allowing that term to encompass sodium hydroxide (NaOH).  Additionally, the CAFC found that the ‘567 provisions were valid

Finally, the CAFC decided the issue of whether a human is an “animal” within the purview of these patents. The CAFC found that Martek had explicitly defined the term “animal” in the ‘244 patent in a way that would include humans: “The term ‘animal’ means any organism belonging to the kingdom Animalia.” ‘244 Patent col.5 ll.11-12. On remand, the district court will need to consider whether the patent has been infringed under this broader definition.

Circuit Judge Lourie and Rader, dissenting, focused on statements in the patent that allegedly show that the term “animal” refers to an organism intended for human consumption, therefore flatly excluding humans. The dissent does not disagree with the patentee’s right to define terms, but argues that the other statements limit the term in such a way that it could not reasonably be construed to include humans.  The claim discusses raising animals for human consumption, and methods of increasing DHA concentrations in said animals.

The case is also unusual procedurally since the Federal Circuit heard the case as a five-judge panel. However, this fact does not seem to have much legal significance beyond whether such a panel is actually acceptable under 28 U.S.C. 46(b).  The court did not give any reasons for expanding the panel.