Thus far 2019 has been an eventful year for patent law in the United States. Over the past seven months, the U.S. Supreme Court and the Court of Appeals for the Federal Circuit (the U.S. appellate court tasked with reviewing all district court patent decisions) have issued several significant rulings that may affect the rights of patent owners. This article reviews the most important of these rulings.
1. Helsinn Healthcare SA v. Teva Pharmaceuticals USA Inc., 139 S. Ct. 628 (2019)
The "on-sale bar" is a legal doctrine that prevents an inventor from patenting an invention that was commercially sold or offered for sale before a patent application for the invention was filed. The policy rationale for the on-sale bar is that an inventor should not be able to commercially exploit his or her invention by offering it to others, only to later exclude others from the invention by obtaining a patent on it.
U.S. courts have long applied the on-sale bar to invalidate patents where the patented invention had been sold or offered for sale in secret. However, the 2011 America Invents Act (AIA) changed the language of the U.S. statute governing application of the on-sale bar – 35 U.S.C. § 102. Under the AIA's version of § 102, patents are prohibited for inventions that were "on sale, or otherwise available to the public before the effective filing date of the invention" (emphasis added). The word "otherwise" did not appear in the previous version of § 102.
In Helsinn, the patent owner argued that this change to the statutory language of § 102 in the AIA meant that the on-sale bar could no longer be used to invalidate patents in circumstances where the sale of the patented invention had occurred before the patent application was filed, but the details of the patented invention were kept secret, and therefore were not available to the public. On January 22, 2019, the Supreme Court rejected that argument, holding that the word "otherwise" in the AIA was insufficient to overturn "settled pre-AIA precedent," in which the on-sale bar has been applied to secret sales.
The Supreme Court's Helsinn ruling extinguishes the hope that the AIA would prevent application of the on-sale bar to secret sales. Under Helsinn, inventors must continue to exercise caution when conducting transactions involving their patented inventions prior to filing patent applications for those inventions.
2. Return Mail v. U.S. Postal Service, 139 S. Ct. 1853 (2019)
The passage of the AIA in 2011 created three new types of administrative proceedings by which a "person" could challenge the validity of issued patent claims at the U.S. Patent and Trademark Office (USPTO): inter partes reviews (IPRs), post-grant reviews (PGRs), and covered business method reviews (CBM reviews). The question raised in Return Mail was whether an agency of the U.S. government—the U.S. Postal Service—was a "person" that could utilize these AIA proceedings to challenge a patent owned by a private party. On June 10, 2019, the Supreme Court in a 6-3 decision answered that question in the negative: according to the Supreme Court, a U.S. government agency cannot challenge patents using IPRs, PGRs, or CBMs, because the word "person" has long been presumed to exclude the government or an agency thereof, and nothing in the AIA justifies displacing that presumption.
The Supreme Court's Return Mail decision immunizes issued patents from IPR, PGR, or CBM proceedings brought by the U.S. government. Moreover, because patent infringement lawsuits against the U.S. government can be brought only in one specialized court—the Court of Federal Claims—it appears that, after Return Mail, the sole setting in which the U.S. government unambiguously can challenge the validity of an issued patent owned by a private party is in response to an infringement lawsuit brought by that party in the Court of Federal Claims.
3. Regents of the Univ. of Minn. v. LSI Corp., No. 2018-1559, 2019 U.S. App. LEXIS 17887 (Fed. Cir. Jun. 14, 2019)
In the United States, individual states and state organizations—including state universities—typically enjoy immunity from lawsuits brought by private parties under the doctrine of "state sovereign immunity." In Regents of the Univ. of Minn., the University of Minnesota argued that state sovereign immunity prevented its patents from being challenged in an IPR proceeding initiated by LSI Corp. On June 14, 2019, the Federal Circuit rejected that argument, and concluded that IPRs—although they resemble private-party lawsuits in certain respects—ultimately are not lawsuits, but "agency enforcement actions" (that is, actions conducted by the USPTO) to which state sovereign immunity does not apply.
The Univ. of Minn. decision harmonizes the Federal Circuit's treatment of state sovereign immunity with its prior treatment of Native American tribal sovereign immunity in the IPR context. In 2018, the Federal Circuit in Saint Regis Mohawk Tribe v. Mylan Pharms, Inc. held that the transfer of patents to the Saint Regis Mohawk Tribe did not suffice to shield those patents from IPR challenges. Under Univ. of Minn., it is apparent that state ownership will not shield patents from IPR challenges, either.
4. AVX Corp. v. Presidio Components Inc., 923 F.3d 1357 (Fed. Cir. 2019)
The AIA states that a party that is dissatisfied with the USPTO's decision in an IPR proceeding may appeal the USPTO's decision to the Federal Circuit. That right to appeal, however, is not guaranteed. Because the Federal Circuit—unlike the USPTO—is a federal court established under Article III of the U.S. Constitution, the Federal Circuit has held that in order to appeal an IPR decision a party must have "Article III standing." To demonstrate Article III standing, a party must show that it has suffered some form of non-speculative harm.
Under the doctrine of "competitor standing," a party generally may demonstrate Article III standing by alleging that the U.S. government has undertaken some action that results in economic injury to that party. For example, Article III standing based on economic injury has been found where the government takes an action that has a natural price-lowering or sales-limiting effect on the party's sales. In AVX Corp., however, the Federal Circuit rejected the argument the doctrine of "competitor standing" applied to unsuccessful IPR petitioners. According to the Federal Circuit, the fact that the USPTO has upheld the validity of certain patent claims in an IPR proceeding "does not, by the operation of ordinary economic forces, naturally harm a firm just because it is a competitor in the same market as the beneficiary of the government action (the patentee)."
AVX is just one of several decisions that hold that a party that is dissatisfied with the USPTO's decision in an IPR must first demonstrate Article III standing to appeal the decision. In an even more recent case, General Electric Co. ("GE") v. United Technologies Corp., the Federal Circuit on July 10, 2019 held that GE had failed to meet its burden to show Article III standing—even where GE had submitted declarations by its counsel alleging that the patent claims that were upheld by the USPTO in the IPR had forced General Electric to limit the scope of its airplane engine designs vis-à-vis its competitors. According to the Federal Circuit, "GE's purported competitive injuries are too speculative to support constitutional standing." Thus, companies planning to file an IPR against a competitor's patent should consider whether a competitive injury can be shown and should consider additional options for challenging the validity of a patent, in the event of an unsuccessful IPR.
5. Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC, 915 F.3d 743 (Fed. Cir. 2019)
In 2012, the Supreme Court in Mayo Collective Servs. v. Prometheus Labs, Inc. invalidated patent claims reciting a "method of optimizing therapeutic efficacy" of a drug treatment regimen based upon the correlation between the administration of a drug to a patient and the concentration of the drug's metabolites in the patient's blood. According to the Supreme Court, those claims were directed to a "law of nature," which are patent-ineligible under 35 U.S.C. § 101 of the U.S. patent statute.
Since 2012, the Federal Circuit repeatedly has relied upon the Supreme Court's Mayo decision to invalidate patent claims directed to methods of diagnosing disease that involve "routine" or "conventional" technology—even if the correlation permitting the diagnosis has been newly discovered. One of the latest examples of this trend is the Federal Circuit's February 6, 2019 decision in Athena Diagnostics. There, the Federal Circuit invalidated under § 101 Athena's patent claims for detecting antibodies in mammals using labeled epitopes of MuSK, a protein associated with the neurological disorder myasthenia gravis. The Federal Circuit acknowledged that, "prior to the [inventors'] discovery, no disease had been associated with MuSK," but concluded that "the claimed advance was only in the discovery of a natural law, and [] the additional recited steps only apply conventional techniques to detect that natural law."
The most remarkable development in this case, however, arose after the February 6 decision. On July 3, 2019, the Federal Circuit issued an order denying Athena's request to have the case reheard by all Federal Circuit judges. Accompanying the July 3 order were more than 80 pages of commentary by individual Federal Circuit judges criticizing both the Supreme Court's 2012 Mayo decision and the Federal Circuit's application of it. Several Federal Circuit judges expressed the view that the Supreme Court's 2012 Mayo decision had jeopardized the patentability of diagnostic methods in the U.S. and had harmed incentives for the U.S. biotechnology sector to develop new diagnostic tools. Several others indicated that legislative reform of § 101 would be necessary to address those problems. Pharmaceutical and medical device companies should continue to monitor developments in the law relating to 35 U.S.C. § 101, as both the USPTO and the U.S. Congress are also undertaking efforts to clarify the law in this area.