2012 Patent Update for Medical Device Companies

2012 Patent Update Paul Conover
for Medical Device Companies Curtis Huffmire
Karen Vogel Weil

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Review of Recent Changes to Patent Law
• Leahy-Smith American Invents Act – Sept. 2011
• Three phrases of implementation
• Significantly affects how patents are obtained and
how patents can be challenged:
– Patent Prosecution Changes
– First Inventor to File
– Third-Party Submissions
– Post-Grant Proceedings
• Post-Grant and Inter Partes Review
• Derivation Proceedings
– Supplemental Examination

© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 2

September 2011 Prosecution-Focused Provisions

• Prioritized examination
– $4800 fee for request (half for small entity)
– Any new, non-national phase application
– < 10,000 apps/year
• Patentable subject matter
– No tax strategies
– No human organisms

• Marking
– False marking claims more difficult
– Website marking


First Inventor To File

©2012 Knobbe, Martens, Olson & all rights reserved.
©2012 Knobbe Martens, Olson & Bear, LLPBear, LLP all rights reserved. 4

First Inventor to File
• “A person shall be entitled to a patent unless the claimed
invention was patented, described in a printed publication, or in
public use, on sale, or otherwise available to the public before
the effective filing date of the claimed invention”

• Limited 1 year grace period for “disclosure” by inventor and
disclosure by others after a “public disclosure” by the inventor

• Applies to any claim with an “effective date” after March 16, 2013

• But do not forget foreign rights!


First Inventor to File – March 16, 2013

• Should our company change its patent filing practices?
– File more/faster provisional apps?
– How to remain cost effective and minimize distraction?
• Should we rush to file applications before March 16?
– Any particular circumstances in which we should beat the
deadline?
• How will continuation and continuation-in-part
applications be treated?


Take Home Points

• File before March 16, 2013 if possible
• File more often and more quickly after March 16, 2013
– File before public disclosure/sale
– File many provisional applications
• Implement internal infrastructure to promote disclosures
• Don’t throw away lab notebooks


Third Party
Submissions


Third Party Submissions in Pending Applications

• Can submit printed publications: patents, published
patent applications, articles, etc.
• Can submit anonymously
• Must be accompanied by concise description of
asserted relevance of each submitted document
• Must be filed prior to the earlier of:
– (1) a notice of allowance; or
– (2) the later of:
(a) 6 months after the date of first publication; or
(b) the date the first rejection of any claim


Third Party Submissions, Questions
• Should I use this process to challenge competitor
patent applications?
– Should I use the third-party submission process or wait until
my competitor’s patent issues and challenge it via post-grant
review or in litigation?
• What is the downside risk?
• How should I decide which of my competitors’
applications to challenge?


Take Home Points

• Inexpensive way to potentially narrow a competitor’s claims
($180 fee for up to 10 prior art references)
• No estoppel (but presumption of validity)
• Risk = patent examiner considers submitted prior art and allows
broad claims anyway
• Discuss with your patent attorney the pros and cons of holding
back “best” prior art for potential post-grant challenges


Post-Grant and Inter
Partes Review


Changes to Post-Issuance Disputes

Before AIA After AIA
• Inter Partes Reexam • Post-Grant Review
• Ex Parte Reexam • Inter Partes Review
• Interferences • Derivation Proceedings
• Ex Parte Reexam
• Interferences (Legacy)
• Transitional Program for
Covered Business
Method Patents


Summary of Post Issuance Review

Post-Grant Review Inter Partes Review
Basis Any basis used in litigation Only patents and printed
publications
When Within 9 months of grant After 9 months from grant or end
of Post Grant review or within 12
+ before civil action filed month of civil action
Targets Priority on/after 3/16/2013 Any
Effective 3/16/2013 9/16/2012
Discovery Yes Yes – including depositions
Bar Yes Yes
Estoppel Yes Yes


Advantages of Inter Partes Review vs. Litigation

• Lower Burden of Proof (preponderance of the evidence)
• Lower Cost (FRCP do not apply)
– Limited discovery
– Professionalism strictly enforced
– Fewer “ancillary” battles (venue, jurisdiction, discovery, etc.)
• Quicker (1-2 years)
• Better informed decision maker (both technical & legal)


Advantages of Litigation vs. Inter Partes Review

• Infringement can be adjudicated
• Full scope of claims and defenses
• Full discovery opportunities
• Estoppel effect of USPTO Inter Partes proceedings
• More expensive to opponent
• Jury presents potentially more risk to opponent


Derivation
Proceedings


Derivation Proceedings
• Address “stolen” inventions
– Eventually will replace interferences
• Requires petition to explain facts surrounding “theft”
• Two options
– Civil action b/w 2 patents
• Filed w/in 1 year of issuance of derived patent
– Derivation proceeding at PTO b/w 2 pending apps
• Filed w/in 1 year of publication of the derived application

• Remedy
– Cancelation of claims
– Inventor name corrections


Take Home Points

• Invention documentation is still important
(lab notebooks, etc.)
• Important to monitor IP of competitors and potential
competitors
• Keep good records of what you disclose to
collaborators


Supplemental Exam


Benefit and Exceptions
• Patent cannot be held unenforceable on information
considered
• Benefit does not apply to:
– Allegations pled in a civil action prior to date of supplemental
examination request
– Notice (for abbreviated drug application) received by
patentee prior to date of supplemental examination request
– Defenses to patent infringement, unless supplemental
examination and any resulting ex parte reexamination are
completed before civil action is brought


Costs – Proposed Sept. 10, 2012
• PTO Filing Fees

Large Small Micro
$18,000 $9,000 $4,500

• Refund if ex parte reexamination not ordered
Large Small Micro
$13,600 $6,800 $3,400


Infringement
Defenses


Defenses to Infringement
• Expanded prior commercial use defense
– One year before earlier of (1) effective filing date of asserted
patent or (2) public disclosure
– In the United States
– Process, machine, manufacture, composition of matter used in
manufacturing/commercial process
• Advice of counsel – codifies Knorr-Bremse
– Failure to obtain irrelevant to willfulness/inducement
– No adverse inference to be drawn


Formalities
• Changes to requirements for declarations,
assignments, other filing documents
• Uncooperative/unavailable inventors not as much work


Significant Cases Impacting
Medical Devices


Induced Infringement:
Medical Method Patents


Akamai v. Limelight
McKesson v. Epic


AKAMAI V. LIMELIGHT & MCKESSON V. EPIC

v.

How many people does it take to infringe a method patent?


Technology

McKesson Patent:
Method of electronic communication
between healthcare providers
and their patients

Epic:
MyChart software licensed to
healthcare providers for use with patients


Multistep Method Claims

Method Claims: EXAMPLE
Multiple steps where Method Claim
the steps were
performed by different Entity A Entity B
entities Step 1
Types of Entities: Step 2
A: Healthcare Providers Step 3
B: Patients


Direct Infringement

One Infringer performs EXAMPLE
ALL of the steps
Method Claim
OR
Entity A Entity B
Agency relationship
between the entities Step 1

Example: Step 2

NO direct infringement Step 3
by Entity A
NO direct infringement
by Entity B


Induced Infringement
Knowledge of the EXAMPLE
patent
Method Claim
Induced the
performance of the Entity A Entity B
steps
Step 1
All steps must be
performed (but not Step 2
necessarily by a single
entity) Step 3
Example:
Infringement by Entity
A if it induced Entity B
to perform Step 2

NEW Law on Divided Infringement

• A party can show induced infringement where
both the inducer and the induced party each
perform some of the steps of a method claim.

• It is enough that the inducer causes, urges,
encourages, or aids the infringing conduct and
that the induced conduct is carried out.


Take Home Points

• Consider all possible infringers
– Draft different sets of patent claims
– Focus on both direct and induced infringement
– Consider single party and multi-party claims
• Consider your own potential infringement liability
– Instructions for Use
– Training methods


Claim Construction


Retractable Technologies
v. Becton, Dickinson


RETRACTABLE TECHNOLOGIES V. BECTON,
DICKINSON

v.

Unrest at the Federal Circuit as to how
patent claims should be construed


Claim Term In Dispute

• Retractable Syringe
Assembly Designed For
One Use “a hollow syringe body
comprising a barrel and
having a front end portion
and a back end portion, the
back end portion further
comprising at least one
radially extending member
providing finger grips for
the syringe body;”


District Court Construction of “Body”

• “a hollow outer structure
that houses the syringe
components”
• not limited to a one-piece
body


District Court

• Patents infringed

• Patents not invalid


Federal Circuit Reverses – No Infringement

• “Body” is limited to one-piece structure
– None of claims expressly recite body that contains
multiple pieces
– Specification characterizes “invention” as one-
piece body
– Each figure shows one-piece body
– Specification doesn’t disclose body consisting of
multiple pieces
– Claim differentiation not controlling


Federal Circuit’s “Rule” of Claim Construction

“In reviewing the intrinsic record to construe the claims,
we strive to capture the scope of the actual invention,
rather than strictly limit the scope of claims to disclosed
embodiments or allow the claim language to become
divorced from what the specification conveys is the
invention . . .
[A] construction of “body” that limits the term to a one-
piece body is required to tether the claims to what the
specifications indicate the inventor actually invented.”


Lack of Consensus At Federal Circuit
Role of Specification in Construing Claims
“Claim construction is the single most important
event in the course of a patent litigation. It defines the
scope of the property right being enforced and is often
the difference between infringement and non-
infringement, or validity and invalidity. Despite the
crucial role that claim construction plays in patent
litigation, our rules are still ill-defined and inconsistently
applied, even by us. Commentators have observed that
claim construction appeals are “panel dependent” which
leads to frustrating and unpredictable results for both the
litigants and the trial court . . . Nowhere is the conflict
more apparent then in our jurisprudence on the use of
the specification in the interpretation of claim language.”
Moore, Rader Dissent from denial of rehearing en banc

“Body” Should Not Be Limited To One Piece

• Claim language to be given ordinary and customary
meaning
• “Body” doesn’t have special meaning
• Ordinary meaning not limited to one piece
• Dependent claims claim one-piece body
• References in specification to one-piece body “do not
rise to the level of an expression of manifest exclusion
or an express disclaimer of claim scope.”
Rader Dissent


Role of Specification in Construing Claims
• Specification may shed light on plain and ordinary
meaning
• But specification can’t narrow claim term from
ordinary meaning unless inventor acted as his own
lexicographer or intentionally disclaimed or
disavowed claim scope
• Here, inventor did not act as lexicographer or
disclaim or disavow claim scope
• Court cannot rewrite claims to better conform to what
it discerns is “invention”, not even to save their
validity
Moore, Rader Dissent from denial of rehearing en banc.


Whether Deference Should Be Given to District Court

“It is time we stop talking about whether we should
reconsider the standard of review we employ when
reviewing claim construction decisions from district
courts; it is time we do so.”
O’Malley Dissent from denial of rehearing en banc. Similar views expressed
by Moore, Rader


Disputed Inventorship
& Willful Infringement


Bard Peripheral Vascular
v. Gore


BARD PERIPHERAL VASCULAR V. GORE

v.

Arterial prosthesis Makers of Gore-Tex®

Who is the inventor? What constitutes willfulness?


The Technology

• Expanded PTFE as a Vascular Graft


The Case that Never Dies
1974 – (April) Gore Patent Application Filed
1974 – (October) Bard Patent Application Filed
1983 – PTO Declares Interference
2001 – CAFC Affirms BPAI Award of Priority to Bard
2002 – Bard Patent Issues (28 years after filing)
2003 – Bard Sues Gore for Infringement
2007 – Jury Finds Patent Valid and Infringed
2009 – Judge Enhances Damages
2012 – CAFC Affirms Validity and Remands Willfulness


Huge Damages

• Bard asserted patent against Gore

• Jury found patent valid and infringed
• $102M in lost profits D. Ariz. doubled to
• $84M in reasonable royalties
$371M
(willfulness + bad faith)
• $19M in costs and attorney fees

• D. Arizona denied Gore’s post-verdict JMOL on
joint inventorship

Joint Inventorship: Four factors
1. Inventors must have some open line of
communication during or in temporal proximity to
their inventive efforts; and
2. Contribute in some significant manner to the
conception or reduction to practice
3. Make a contribution to the claimed invention that is
not insignificant in quality, when that contribution is
measured against the dimension of the full invention,
and
4. Do more than merely explain to the real inventors
well-known concepts and/or the current state of the
art.

Insufficient communication

“Although Gore argues that [Gore] “conveyed [the
internodal distance] physically by making and sending
the invention embodiment to [Bard],” it admits that
“[Gore] did not verbally convey the internodal distance.”

“[Gore] conceived of the invention only after sending the
tubes to [Bard] and never communicated that conception
to [Bard].”


Practice Tips: Provider and tester

• Carefully worded agreements between provider of
materials and tester of materials
– Establish who does what
– NDA
– Assignment

• For joint inventorship, communication is a two-way
street
– Tester sends status reports to provider
– Consider if provider should continue to interact w/
tester, but risk losing sole inventorship

Take Home Points

• Carefully worded agreements in joint development
– Establish who does what
– NDA
– Assignment

• Level of communication
– Working alone v. Collaboration


Reconsideration of Willful Infringement

February 2012 Panel Decision: “Determining whether
or not infringement is willful is a question of fact that
must be established by clear and convincing evidence
and is reviewed for substantial evidence.”

• Gore Petitioned for Rehearing En Banc

• Google, Verizon, Intel Filed Amicus Brief

• Seagate’s Objective Prong Should Be Question of
Law


SEAGATE Test

• Clear and convincing evidence infringer acted
despite an objectively high likelihood of infringing
a valid patent
– Question of Law – Remand!

• Objective risk was known or so obvious it would
have been known
– Question of Fact


Willfulness Standard

• Inquiry: Whether a reasonable person would have
considered there to be a high likelihood of
infringement of a valid patent

• Objective Prong of Seagate is a Question of Law
– Subject to De Novo Review
– Judge is Final Arbiter of Whether Defense is
Reasonable
• Factual Issues Can Be Sent to Jury


Employee Agreements
& Invention Assignment


Abbott Point of Care
v. Epocal


ABBOTT POINT OF CARE v. EPOCAL

v.

Do your employment agreements effectively
vest patent ownership in the company?


Abbott Claims Ownership Based On
Employment Agreements


Holding

• Abbott doesn’t own the patents

• Can’t sue

• Case Dismissed


1984 Agreement Assigned Inventions To
Abbott’s Predecessor


1999 Consulting Agreement Did Not
Continue Assignment Provisions
• Lauks resigns, terminating employment
• Employment agreements ended
• 1999 Agreement
– Defines consulting services
– Only carried forward confidentiality, non-solicitation and
non-competition provisions
– Does not address invention assignments or obligations
from employment agreements
– Does not contain obligation to assign inventions made
during consultation period
• Automatic assignment would be inconsistent with allowing
Lauks to pursue non-conflicting interests

Lesson Learned

• If you want your current or former inventors to assign
their inventions, make automatic assignment explicit


Medical Diagnostics -
Eligible for Patents?


Mayo v. Prometheus


MAYO V. PROMETHEUS

v.

Is a medical diagnostic method patentable?


Patentable Subject Matter

• §101: “Whoever invents or discovers any new
and useful process, machine, manufacture, or
composition of matter, or any new and useful
improvement thereof, may obtain a patent
therefor…”
• Congress intended statutory subject matter to
“include anything under the sun that is made
by man.”
– Diamond v. Chakrabarty, 447 U.S. 303 (1980)


Exceptions to §101

• Judge made exceptions to patentable subject
matter
– Natural Products
– Natural Laws / Natural Phenomena
– Abstract Ideas / Mental Processes


Prometheus Representative Claim

1. A method, comprising:
(a) administering a drug X; and
(b) determining the level of metabolite Y,
wherein the level of metabolite Y less than about
230 units indicates a need to increase the amount
of said drug subsequently administered to said
subject and
wherein the level of metabolite Y greater than
about 400 units indicates a need to decrease the
amount of said drug subsequently administered.

Prometheus Opinion

• The administering and detecting steps aren’t
sufficient
– Routine and conventional
– “[T]he steps are not sufficient to transform
unpatentable natural correlations into
patentable applications of those
regularities.”


Exceptions for Specific Applications
• Specific applications of natural laws are
patentable, however:
– The “application” must amount to an “inventive
concept” in addition to the natural law


Take Home Points

• Consider Claim Strategies:
– Less focus on the natural law
– Multiple perspectives: Doctor, patient, hospital, lab
– Cover devices, systems, and methods
– Multiple levels of specificity in dependent claims
• Consider Subject Matter Eligibility:
– Invalidity defenses
if only directed to natural law


Deciding Obviousness


Kinetic Concepts
v. Smith & Nephew


KINETIC CONCEPTS V. SMITH & NEPHEW

v.

What is the role of the jury in determining obviousness?


Parties

Plaintiffs
• Wake Forest – Patent Assignee
• Kinetic Concepts – Exclusive Licensee

Defendant
• Smith & Nephew – Accused Infringer


Technology

Negative Pressure Wound Treatment
Method and Apparatus Claims


Legal Standard - Obviousness

Question of law based on underlying findings of fact.


Legal Standard - Obviousness

Underlying factual determinations (Graham factors)
1. The scope and content of the prior art
2. Differences between the prior art and the claims at
issue
3. The level of ordinary skill in the pertinent art
4. Evidence of secondary considerations

Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 15-17 (1966)


Stipulated Jury Verdict Form

1) A series of questions as to whether certain
enumerated differences between the prior art and
the asserted claims were the only differences that
existed
2) Whether certain objective indicia of
nonobviousness were present
3) Whether the claims were obvious


Jury Verdict on Obviousness

• Factual Questions: Graham factor findings generally
favoring Plaintiffs
• Advisory Verdict: Not invalid


S&N: JMOL of Obviousness

Smith & Nephew:
Jury verdict only “advisory” (i.e. non-binding).
No deference to “implicit” jury findings.
Substantial evidence did not support express
findings

Plaintiffs:
Cannot upset the jury’s verdict unless the jury’s
explicit and implicit findings are not
supported by substantial evidence


S&N: JMOL of Obviousness

District Court
• Review underlying factual findings for substantial
evidence
• Review jury’s ultimate conclusion without deference
• JMOL Granted: patents invalid
– “the differences between the claimed invention and
the prior art, if any, are minimal”
• Wake Forest appealed.


Federal Circuit

• Because district court included ultimate question of
obviousness on verdict form, all underlying factual
questions were implicitly put to jury for resolution

• District court required to accept all implicit factual
findings supporting verdict that were supported by
substantial evidence


Federal Circuit - Legal Standard

• “Because obviousness is a mixed question of law
and fact, we first presume that the jury resolved the
underlying factual disputes in favor of the verdict
and leave those presumed findings undisturbed if
they are supported by substantial evidence. Then
we examine the ultimate legal conclusion of
obviousness de novo to see whether it is correct in
light of the presumed jury fact findings.”


Federal Circuit – Obviousness Analysis

Substantial evidence supports jury’s implied findings
that:
– None of prior art disclosed treatment of wounds
using negative pressure, as claimed
– Prior art teaches away from claimed invention
– There was no reason to combine prior art
references
– Numerous objective indicia of nonobviousness
existed


Paul Conover
Orange County Office
Paul.Conover@knobbe.com

Curtis Huffmire
Orange County Office
Curtis.Huffmire@knobbe.com

Karen Vogel Weil
Los Angeles Office
Karen.Weil@knobbe.com

Thank you!

2012 Patent Update for Medical Device Companies

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2012 Patent Update for Medical Device Companies