Articles Posted in U.S. Supreme Court

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The Patent Act authorizes district courts to award attorney’s fees to prevailing parties in “exceptional cases,” 35 U.S.C. 285. In Brooks Furniture, the Federal Circuit defined an “exceptional case” as one which either involves “material inappropriate conduct” or is both “objectively baseless” and “brought in subjective bad faith” as shown by clear and convincing evidence. ICON sued Octane for patent infringement. The district court granted summary judgment to Octane, but denied attorney’s fees under section 285. The Federal Circuit affirmed. The Supreme Court reversed, finding the Brooks Furniture framework “unduly rigid’ in light of the statutory grant of discretion to district courts. Section 285 imposes only one constraint on the award of attorney’s fees, limiting it to “exceptional” cases. Because the Patent Act does not define “exceptional,” the term should be given it ordinary meaning: “uncommon,” “rare,” or “not ordinary.” An “exceptional” case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both governing law and the facts) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances. The Brooks Furniture standard was so demanding that it appeared to render section 285 superfluous of the courts’ inherent power to award fees in cases involving misconduct or bad faith. Section 285 imposes no specific evidentiary burden. View "Octane Fitness, LLC v. ICON Health & Fitness, Inc." on Justia Law

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The Patent Act provides: “The court in exceptional cases may award reasonable attorney fees to the prevailing party,” 35 U.S.C. 285. The Federal Circuit has interpreted section 285 as authorizing fee awards only “when there has been some material inappropriate conduct,” or when it is both “brought in subjective bad faith” and “objectively baseless.” A health insurance company obtained a declaratory judgment that a patent was invalid and not infringed. The district court found the case “exceptional” and awarded attorney fees of $4,694,727.40, $209,626.56 in expenses, and $375,400.05 in expert fees. The court found a pattern of “vexatious” and “deceitful” conduct by the defendant in attempting to force other companies to purchase licenses, even after its own experts determined that its claims lacked merit. The Federal Circuit reviewed the determination de novo and reversed in part. A unanimous Supreme Court vacated. All aspects of a district court’s exceptional-case determination should be reviewed for abuse of discretion. That determination is based on statutory text that emphasizes that the district court is better positioned to make the “multifarious and novel” determination, which is not susceptible to “useful generalization” of the sort that de novo review provides, and is “likely to profit from the experience that an abuse-of discretion rule will permit to develop.” The word “exceptional” should be given its ordinary meaning: “one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated,” considering the totality of the circumstances. View "Highmark Inc. v. Allcare Health Mgmt. Sys., Inc." on Justia Law

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Medtronic designs, makes, and sells medical devices. Mirowski owns patents relating to implantable heart stimulators. Under a licensing agreement, Medtronic practices certain Mirowski patents in exchange for royalty payments. Mirowski notified Medtronic of its belief that several Medtronic products infringed the licensed patents. Medtronic challenged that assertion in a declaratory judgment action, while accumulating disputed royalties in escrow for distribution to the prevailing party. The district court concluded that Mirowski had not met its burden of proving infringement. The Federal Circuit reversed, reasoning that where the patentee is a declaratory judgment defendant and, like Mirowski, is foreclosed from asserting an infringement counterclaim by the continued existence of a licensing agreement, the party seeking the declaratory judgment (Medtronic) bears the burden of persuasion. The Supreme Court reversed, first holding that the Federal Circuit did not lack subject-matter jurisdiction. Citing 28 U. S. C. 1338(a) and 1295(a)(1), the Court stated that if Medtronic had acted consistent with the understanding of its rights that it sought to establish in the declaratory judgment suit (by ceasing to pay royalties), Mirowski could have terminated the license and sued for infringement. The declaratory judgment action, which avoided that hypothetical threatened action, also “arises under” federal patent law. Operation of the Declaratory Judgment Act is only procedural, leaving substantive rights unchanged, and the burden of proof is a substantive aspect of a claim. When a licensee seeks a declaratory judgment against a patentee that its products do not infringe the licensed patent, the patentee bears the burden of persuasion. Mirowski set this dispute in motion by accusing Medtronic of infringement. There is no convincing reason why burden of proof law should favor the patentee. View "Medtronic, Inc. v. Mirowski Family Ventures, LLC" on Justia Law

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The Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Act), 21 U.S.C. 355(j)(2)(A)(vii)(IV) established procedures for identifying and resolving patent disputes between brand-name and generic drug manufacturers. One procedure requires a prospective generic manufacturer to certify to the FDA that any listed, relevant patent is invalid or will not be infringed by the manufacture, use, or sale of the generic drug (paragraph IV). Generic manufacturers filed paragraph IV applications for generic drugs modeled after Solvay’s FDA-approved, patented drug AndroGel. Solvay claimed patent infringement, 35 U.S.C. 271(e)(2)(A). The FDA approved the generic product, but the generic companies entered into “reverse payment” settlements, agreeing not to bring the generic to market for a number of years and to promote AndroGel to doctors in exchange for millions of dollars. The FTC sued, alleging violation of section 5 of the Federal Trade Commission Act by agreeing to abandon patent challenges, to refrain from launching low-cost generic drugs, and to share in Solvay’s monopoly profits. The district court dismissed. The Eleventh Circuit affirmed. The Supreme Court reversed and remanded, calling for application of a “rule of reason” approach rather than a “quick look.” Although the anti-competitive effects of the reverse settlement might fall within the exclusionary potential of Solvay’s patent, the agreement is not immune from antitrust attack. It would be incongruous to determine antitrust legality by looking only at patent law policy, and not at antitrust policies. The Court noted the Hatch-Waxman Act’s general pro-competitive thrust, facilitating challenges to a patent’s validity and requiring parties to a paragraph IV dispute to report settlement terms to antitrust regulators. Payment for staying out of the market keeps prices at patentee-set levels and divides the benefit between the patentee and the challenger, while the consumer loses. That a large, unjustified reverse payment risks antitrust liability does not prevent parties from settling their lawsuits; they may settle in other ways, e.g., by allowing the generic to enter the market before the patent expires without payment to stay out prior to that point. View "Fed. Trade Comm'n v. Actavis, Inc." on Justia Law

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Myriad obtained patents after discovering the precise location and sequence of the BRCA1 and BRCA2 genes, mutations of which can dramatically increase the risk of breast and ovarian cancer. The discovery enabled Myriad to develop medical tests for detecting mutations for assessing cancer risk. Myriad’s patents would give it the exclusive rights to isolate an individual’s BRCA1 and BRCA2 genes and to synthetically create BRCA composite DNA. The district court entered summary judgment, finding the patents invalid under 35 U.S.C. 101 because they covered products of nature. On remand following the Supreme Court’s decision, Mayo Collaborative Servs. v. Prometheus Labs, Inc., the Federal Circuit found both isolated DNA and composite DNA patent-eligible. The Supreme Court affirmed in part and reversed in part, noting that the case did not involve “method claims” for new applications of knowledge about the genes or the patentability of DNA in which the order of the naturally occurring nucleotides has been altered. A naturally-occurring DNA segment is not patent-eligible merely because it has been isolated, but composite DNA is patent-eligible because it is not naturally-occurring. Myriad did not create or alter the genetic information encoded in the genes or the genetic structure of the DNA. Even brilliant discovery does not alone satisfy the section 101 inquiry. Myriad’s claims are not saved by the fact that isolating DNA from the human genome severs chemical bonds that bind gene molecules together. The claims are not expressed in terms of chemical composition, nor do they rely on the chemical changes resulting from the isolation of a particular DNA section. Composite DNA, however, is not a “product of nature;” a lab technician unquestionably creates something new when introns are removed from a DNA sequence to make composite DNA. View "Assoc. for Molecular Pathology v. Myriad Genetics, Inc." on Justia Law

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Monsanto invented and patented Roundup Ready soybean seeds, which contain a genetic alteration that allows them to survive exposure to the herbicide glyphosate. It sells the seeds subject to a licensing agreement that permits farmers to plant the purchased seed in only one growing season. Growers may consume or sell the resulting crops, but may not save any of the harvested soybeans for replanting. Bowman purchased Roundup Ready soybean seed for his first crop of each growing season. To reduce costs for his riskier late-season planting, Bowman purchased soybeans intended for consumption; planted them; treated the plants with glyphosate, killing all plants without the Roundup Ready trait; harvested the resulting soybeans that contained that trait; and saved some of these harvested seeds to use in his late-season planting the next season. After discovering this practice, Monsanto sued for patent infringement. Bowman raised the defense of patent exhaustion, which gives the purchaser of a patented article, or any subsequent owner, the right to use or resell that article. The district court rejected Bowman’s defense; the Federal Circuit affirmed. In a unanimous decision, the Supreme Court affirmed. Patent exhaustion does not permit a farmer to reproduce patented seeds through planting and harvesting without permission. Under the patent exhaustion doctrine, the initial authorized sale terminates all patent rights to the patented item and confers on the purchaser, or any subsequent owner, the right to use or sell the thing, but the doctrine restricts the patentee’s rights only as to the “particular article” sold. It leaves untouched the patentee’s ability to prevent a buyer from making new copies. By planting and harvesting patented seeds, Bowman made additional copies of Monsanto’s patented invention, which falls outside the protections of patent exhaustion. If Bowman were granted an exception, patents on seeds would retain little value. View "Bowman v. Monsanto Co." on Justia Law

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In an infringement suit, the district court declared Minton’s patent invalid under the “on sale” bar since he had leased his interactive securities trading system to a brokerage more than one year before the patent application, 35 U. S. C. 102(b). Seeking reconsideration, Minton argued for the first time that the lease was part of testing and fell within the “experimental use” exception to the bar. The Federal Circuit affirmed denial of the motion, concluding that the argument was waived. Minton sued for legal malpractice in Texas state court. His former attorneys argued that Minton’s claims would have failed even if the experimental-use argument had been timely raised. The trial court agreed. Minton then claimed that the court lacked jurisdiction under 28 U. S. C. 1338(a), which provides for exclusive federal jurisdiction over any case “arising under any Act of Congress relating to patents.” The Texas Court of Appeals rejected Minton’s argument and determined that Minton failed to establish experimental use. The state’s highest court reversed. The Supreme Court reversed, holding that Section 338(a) does not deprive state courts of subject matter jurisdiction over Minton’s malpractice claim. Federal law does not create that claim, so it can arise under federal patent law only if it necessarily raises a stated federal issue, actually disputed and substantial, which may be entertained without disturbing an approved balance of federal and state judicial responsibilities. Resolution of a federal patent question is “necessary” to Minton’s case and the issue is “actually disputed,” but it does not carry the necessary significance. No matter the resolution of the hypothetical “case within a case,” the result of the prior patent litigation will not change. Nor will allowing state courts to resolve these cases undermine development of a uniform body of patent law. View "Gunn v. Minton" on Justia Law

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In 1995, respondent filed a patent application covering 117 claims under the Patent Act of 1952, 35 U.S.C. 112. The patent examiner denied all of the claims for lack of an adequate written description. Respondent appealed to the Board of Patent Appeals and Interferences, pursuant to section 134 of the Act, which approved some claims but denied others. Pursuant to section 145 of the Act, respondent filed a civil action against the Director, but the district court declined to consider respondent's newly proffered written declaration in support of the adequacy of his description, thus limiting its review to the administrative record. On appeal, the Federal Circuit vacated the judgment. The Court held that there are no limitations on a patent applicant's ability to introduce new evidence in a section 145 proceeding beyond those already present in the Federal Rules of Evidence and the Federal Rules of Civil Procedure. If new evidence was presented on a disputed question of fact, the district court must make de novo factual findings that take account of both the new evidence and the administrative record before the Patent and Trade Office. Therefore, the Court affirmed the judgment of the Federal Circuit. View "Kappos v. Hyatt" on Justia Law

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Once the FDA has approved a brand manufacturer's drug, another company could seek permission to market a generic version pursuant to legislation known as the Hatch-Waxman Amendments. See Drug Price Competition and Patent Term Restoration Act of 1984, 98 Stat. 1585. The relevant statute at issue in this case provided that a generic company "may assert a counterclaim seeking an order requiring the [brand manufacturer] to correct or delete the patent information [it] submitted... under [two statutory subsections] on the ground that the patent does not claim... an approved method of using the drug." 117 Stat. 2452, 21 U.S.C. 355(j)(5)(C)(ii)(I). At issue in this case was whether Congress had authorized a generic company to challenge a use code's accuracy by bringing a counterclaim against the brand manufacturer in a patent infringement suit. The Court held that a generic manufacturer could employ this provision to force correction of a use code that inaccurately described the brand's patent as covering a particular method of using the drug in question. Therefore, the Court reversed the judgment of the Federal Circuit. View "Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S" on Justia Law

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The patent claims at issue covered processes that help doctors who use thiopurine drugs to treat patients with autoimmune diseases determine whether a given dosage level was too low or too high. The claims purported to apply natural laws describing the relationships between the concentration in the blood of certain thiopurine metabolites and the likelihood that the drug dosage would be ineffective or induce harmful side-effects. At issue was whether the claimed processes have transformed these unpatentable natural laws into patent-eligible applications of those laws. The Court concluded that they have not done so and that therefore the processes were not patentable. The steps in the claimed processes involved well-understood, routine, conventional activity previously engaged in by researchers in the field. At the same time, upholding the patents would risk disproportionately tying up the use of the underlying natural laws, inhibiting their use in the making of further discoveries. Therefore, the Court reversed the judgment of the Federal Circuit. View "Mayo Collaborative Services v. Prometheus Laboratories, Inc." on Justia Law