Key 2019 Decisions Impacting Patent Law

January 24, 2020

In 2019, both the Supreme Court and the Court of Appeals for the Federal Circuit issued decisions that will significantly affect patent law practice.

Supreme Court Cases

Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA Inc. – On Sale Bar Still Includes Secret Sales

At issue before the Supreme Court was the effect of the 2011 America Invents Act (AIA) on the scope of the on-sale bar to patentability, 35 USC Sec. 102. Pre AIA, inventors lost their right to a patent if their invention was “on sale in this country” more than one year before the patent application was filed. Post AIA, the statute reads “on sale or otherwise available to the public” before filing (emphasis added).

Based on the added phrase, Helsinn contended its confidential distribution agreement was not an invalidating sale as, post-AIA, sales not available to the public (i.e. confidential sales or offers for sale) were no longer a bar to patentability. Rejecting Helsinn’s interpretation, the Supreme Court held the AIA did not change the meaning of “on sale,” and the bar encompassed, and continues to encompass, confidential sales.

Notably, after the AIA effective date (March 15, 2013), the on-sale bar also applies to foreign sales and certain sales made up to the time the application is filed. Accordingly, any sale or offer for sale of the invention, whether public or confidential, anywhere in the world, may result in forfeiture. What constitutes a “sale” is a fact-intensive inquiry, so the structure of prefiling transactions should be carefully considered. For example, because the transfer of title to an invention suggests the transaction is a sale, one option might be to enter into a manufacturing agreement rather than a title shifting distribution agreement.

Return Mail Inc. v. U.S. Postal Service – Limiting Federal Agency Patent Challenges

With the passage of the AIA, a “person” can now challenge a granted patent in three new patent office proceedings before the Patent Office Trial and Appeal Board (PTAB): inter partes proceedings, post grant review and covered business methods (IPRs, PGRs and CBMs). Before the AIA, third parties were limited to ex parte and inter parte reexaminations.

When the U.S. Postal Service was sued by Return Mail for infringing its mail processing patent, the Postal Service filed a PGR to invalidate Return Mail’s patent. Deciding that federal agencies are not statutory “persons,” the Supreme Court dismissed the PGR.

Since 1981, federal agencies have been “persons” able to cite arguably invalidating prior art in an ex parte reexamination. In its decision, the Supreme Court noted that the propriety of that Patent Office practice was beyond the scope of the question before it.

Federal Circuit Cases

Arthrex Inc. v. Smith & Nephew Inc. – Voiding PTAB Decisions

According to the Appointments Clause of the U.S. Constitution, principal officers of the government are appointed by the President with Senate confirmation and inferior officers are appointed by heads of departments. Under the AIA’s statutory scheme, decisions in post grant review proceedings are made by three PTAB judges, “APJs,” appointed by the Secretary of Commerce. On appeal of a PTAB decision on an IPR, the Federal Circuit held that APJs were principal officers and their appointment was therefore unconstitutional. Rather than void the entire statutory scheme, the Federal Circuit “fixed” the violation by making APJs easier to remove and thus reducing them to inferior officers. The Court vacated the decision and remanded the case back to the PTAB to be reheard by a different panel of APJs.

The parties and the Patent Office have all asked for rehearing by the full court. If the decision stands, many prior PTAB decisions are potentially vulnerable. In a subsequent case, the Federal Circuit limited its effect to those cases in which the Appointments Clause was raised on appeal in the opening brief. In addition, Congress is now considering a legislative fix to the statute.

Patent Eligibility

The Federal Circuit continued to expand the scope of what constitutes an unpatentable claim to the laws of nature and abstract idea, bound by application of the Supreme Court’s two-part test for ineligible subject matter under 35 USC Sec. 101. Under that test, the Court must first determine if the claims are directed to ineligible laws of nature, natural phenomena or abstract ideas. If so, the Court then determines whether the claim elements supply an “inventive concept,” something more than conventional or obvious post-solution activity.

Finding they claimed unpatentable subject matter, patent claims directed to methods of diagnosing disease, controlling electronic charging stations through a network and methods of manufacturing vehicle drive shaft assemblies were all held invalid in 2019.

Athena Diagnostics Inc. v. Mayo Collaborative Services LLC – Patent Ineligible Laws of Nature

After discovering that antibodies to a protein MuSK was the cause of myasthenia gravis in twenty percent of patients with the disease, Athena obtained a patent claiming a method of detecting these antibodies using radioactive compounds (labeled epitopes of MuSK). Applying the Supreme Court test for patent eligibility under section 101 in Mayo Collaborative Services v. Prometheus Labs Inc. (2012), the Federal Circuit concluded the claims in Athena’s patent were directed to a law of nature and therefore patent ineligible. Although the correlation between the antibodies and the disease was newly discovered and the epitopes are man-made, not naturally occurring, the Federal Circuit held that the “advance was only the discovery of natural law” and “the additional recited steps only apply conventional techniques to detect that natural law.”

When Athena’s request for rehearing en banc was denied seven to five, the judges issued eight separate concurring and dissenting opinions including harsh criticism of Mayo and the need for the law to be clarified. Judge Moore noted in her dissent that since Mayo, every single diagnostic claim has been held patent ineligible. Despite universal hope for clarification of the Mayo ruling, the Supreme Court denied Athena’s cert petition.

Chargepoint Inc. v. Semaconnect Inc. and American Axle & Mfg. Inc. v. Neapco Holdings LLC – Patent Ineligible Abstract Ideas and Natural Laws

In Chargepoint, claims directed to electric vehicle charging stations connected by a network were patent-ineligible, claiming the abstract idea of communicating over a network for interacting with a device applied in the context of charging stations. The Federal Circuit found the demand response communications were conventional and the underlying “inventive concept” was the same as the abstract idea.

In American Axle, claims to a method of manufacturing a shaft assembly of a driveline system with liners designed to attenuate vibrations transmitted through the draft assembly were ineligible as applying laws of nature including Hooke’s law and possibly other natural laws.

Recently, the Supreme Court denied not only the certiorari petition in Athena, but also each of the other pending petitions before it relating to patent eligibility under Section 101. During the summer of 2019, Congress held hearings in an effort to craft a legislative fix to Section 101. At the hearings, former Chief Judge of the Federal Circuit, Judge Michel, testified that the state of the law is “chaotic” and “massive uncertainty pervades” all determinations. Neither he (nor anyone else) can predict the outcomes in individual cases with any confidence.

Until either Congress or the Supreme Court act, Section 101 remains a minefield. Evaluation of existing patent portfolios and new patent applications with Section 101 uncertainty in mind is critical in this new patent landscape.

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