AbbVie – The Circuit affirms a ruling that AbbVie’s patents are invalid for lack of adequate written description, permitting defendants to continue to market their Stelara® psoriasis treatment. In doing so the panel rejects AbbVie’s argument that defendants were precluded by collateral estoppel from challenging validity based upon a ruling by the PTO in a related interference proceeding.
MadStad – The Circuit determines that an inventor and his company lack standing to challenge the constitutionality of the first-to-file provision of the AIA because plaintiffs fail to show actual or imminent injury, fairly traceable to the challenged action.
AbbVie Deutschland GmbH et al. v. Janssen Biotech, Inc. and Centocor Biologics, LLC, Fed. Cir. Case 2013-1338, 1346 (July 1, 2014)
This dispute was initiated by Johnson & Johnson’s Janssen unit and Centocor (“Centocor”) when they copied claims from an AbbVie patent to provoke an interference. AbbVie prevailed in the interference when the PTO determined that AbbVie was the first inventor and that the AbbVie patent was not invalid based upon obviousness. Centocor appealed that decision to the district court under 35 U.S.C. § 146. AbbVie also sued Centocor for infringement of its two related patents, and the cases were consolidated. The district court first tried the infringement case and found the patents infringed. The case then proceeded to a jury trial and the jury determined that the patents were invalid for lack of adequate written description, lack of enablement and obviousness. The district court denied AbbVie’s post-trial motions in both the infringement and the interference actions.
The panel first addressed AbbVie’s argument that Centocor was barred by collateral estoppel from challenging validity, and then turned to the issue of whether the asserted claims lacked adequate written description.
According to the panel, a party seeking to invoke the doctrine of collateral estoppel must establish: (1) the issue sought to be precluded in the later action is the same as that involved in the earlier action; (2) the issue was actually litigated; (3) the issue was determined by a valid and binding final judgment; and (4) the determination of the issue was essential to the judgment.
Section 146 provides that a party to an interference dissatisfied with the decision of the Board may file a civil action, without prejudice to the right of the parties to take further testimony. When additional evidence is presented, the district court makes a de novo finding of facts in light of the new evidence, while treating the record before the Board as if it was originally produced in the district court.”
According to the panel, because a district court can make a de novo determination of facts upon the submission of new evidence, a Board decision that is reviewed under § 146 is not a “binding final judgment” to preclude a losing party from litigating the same or related issues in a parallel proceeding. Consequently, the Board’s priority and nonobviousness decisions lacked the requisite finality for purposes of collateral estoppel.
According to the panel, the essence of the written description requirement under 35 U.S.C. § 112, ¶ 1 is that a patent applicant, as part of the bargain with the public, must describe the invention so that the public will know what it is and that the inventor has truly made the claimed invention. The purpose of the written description requirement is to “ensure that the scope of the right to exclude, as set forth in the claims, does not overreach the scope of the inventor’s contribution to the field of art as described in the patent specification.”
For generic claims, when a patent claims a genus using functional language to define a desired result, “the specification must demonstrate that the applicant has made a generic invention that achieves the claimed result and do so by showing that the applicant has invented species sufficient to support a claim to the functionally-defined genus.” The Circuit has held that a sufficient description of a genus requires the disclosure of either a representative number of species falling within the scope of the genus or structural features common to the members of the genus so that one of skill in the art can visualize or recognize the members of the genus. AbbVie’s expert conceded that the patents do not disclose structural features common to the members of the claimed genus. The question therefore is whether the patents sufficiently otherwise describe representative species to support the entire genus.
Here, the jury heard ample evidence that AbbVie’s patents only describe one type of structurally similar antibodies and that those antibodies are not representative of the full variety or scope of the genus. All of the antibodies described in AbbVie’s patents were derived from Joe-9 and have VH3 type heavy chains and Lambda type light chains. In contrast, Centocor’s Stelara®, which falls within the scope of the claimed genus, differs considerably from the Joe-9 antibodies described in AbbVie’s patents. The panel therefore concludes that substantial evidence supports the jury verdict of invalidity for lack of an adequate written description.
The panel further determines that the district court did not abuse its discretion in denying AbbVie’s motion for a new trial with respect to the jury’s written description verdict, and refuses to look at evidentiary rulings and jury instructions as to enablement and obviousness, since the panel was not ruling on those decisions by the district court.
In concurring, Judge O’Malley agrees that Centocor was not collaterally estopped from raising invalidity defenses and that the Circuit should affirm the trial court’s judgment invalidating the asserted claims. However, Judge O’Malley would premise the latter judgment on the lower court’s obviousness finding from which AbbVie did not appeal. AbbVie conceded at oral argument that validity rests entirely on whether the jury was properly instructed as to the parties’ burdens of proof. Having concluded that, taken as a whole, the jury instructions reasonably apprised the jury on weighing evidence relevant to” both the written description and obviousness findings, Judge O’Malley agrees that the lower court judgment should be affirmed.
MadStad Engineering , Inc. and Mark Stadnyk v. USPTO and Michelle K. Lee, Fed. Cir. Case 2013-1511, 1512 (July 1, 2014)
This case involves a constitutional challenge, seeking a declaratory judgment that the first to file provision of the Leahy-Smith American Invents Act is unconstitutional. The district court granted the Government’s motion to dismiss for lack of standing, and plaintiffs (collectively “MadStad”) appealed.
Jurisdiction to Hear this Appeal
As a court of limited jurisdiction, the panel first addressed whether the Circuit has jurisdiction to hear this appeal. The Federal Circuit has exclusive jurisdiction over appeals “from a final decision of a district court . . . in any civil action arising under, or in any civil action in which a party has asserted a compulsory counterclaim arising under, any Act of Congress relating to patents.” 28 U.S.C. § 1295(a)(1). Because MadStad does not assert a claim under the AIA and, instead asserts a claim directly under the constitution challenging the AIA’s constitutionality, the panel noted that it must determine whether MadStad’s claims “arise under” an Act of Congress relating to patents as that jurisdictional principle has been interpreted by the United States Supreme Court.
The Supreme Court’s “arising under” jurisprudence has developed in cases assessing whether a case sufficiently arises under federal law to authorize federal courts to exercise jurisdiction over the claims asserted. Thus, the Court has on a number of occasions assessed whether a claim arises only under state law or, alternatively, involves a sufficiently substantial federal issue to justify federal jurisdiction or—where patent-related issues are involved—even preempt state court jurisdiction over a matter. While resolution of these questions has, at times, resulted in a conclusion that a regional circuit Court of Appeals, rather than this Circuit, properly would have jurisdiction over the appeal at issue, that conclusion still turned on whether the question presented was one of state law cognizable in federal court only by virtue of its diversity jurisdiction, or one arising under the patent laws.
As the Supreme Court has made clear in other contexts, a matter can still “arise under” an Act of Congress even when the claim “finds its origin” in other legal predicates. When assessing when a state law claim can be said to arise under federal law, the Supreme Court considers “if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.” Finding each of these elements present in a challenge to the first-to-file provision of the AIA, the panel determines that this appeal does “arise under” an Act of Congress relating to patents within the meaning of both 28 U.S.C. §§ 1338 and 1295(a)(1), and that the Circuit may thus properly exercise jurisdiction over this appeal.
To satisfy the standing requirements of Article III, a party must demonstrate an injury in fact that is: (1) “concrete, particularized, and actual or imminent”; (2) “fairly traceable to the challenged action”; and (3) “re-dressable by a favorable ruling.” Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, 149 (2010). The Supreme Court has twice recently addressed when a party has standing to challenge, pre-enforcement, the constitutionality of governmental regulation. In the 2013 term, the Supreme Court decided Clapper v. Amnesty International USA, 133 S. Ct. 1138 (2013) and, at the end of its current term, the Court decided Susan B. Anthony List v. Driehaus, No. 13-193, 2014 WL 2675871, at *5 (June 16, 2014).
Relying on Clapper, the district court rejected MadStad’s assertion of standing. On appeal, MadStad contends that the district court’s reliance on Clapper was misplaced because the threats of harm upon which it relies are far less speculative than those asserted in Clapper. It also asserts that it faces a sufficient “substantial risk” of suffering the injuries it identifies to satisfy Article III standing under traditional standing principles, which the Clapper Court did not expressly reject.
The panel reviewed each of MadStad’s alleged injuries in turn to determine whether they are sufficient to support the minimum requirements for Article III standing, individually or collectively.
a. Increased risk of computer hacking
MadStad alleges that it has been forced to increase its computer security because the AIA has made it more attractive and profitable for computer hackers to steal IP and file their own patents. The panel concludes that the mere fact that MadStad, like all other people and companies, faces cyber threats is not “fairly traceable to the challenged action” and does not therefore create standing. In fact, hacking was a growing threat well before the AIA was even enacted.
b. Increased time and effort to file additional patent applications
MadStad next argues that it is injured by the AIA because the Act forces it “to divert business resources to prepare more patent applications and file them sooner, in order to compete in the race to the PTO.” MadStad contends that, although large companies can easily absorb the additional cost, small companies do not have the resources necessary to file additional patent applications to prevent another from filing for the same patent first.
MadStad argues that Mr. Stadnyk is an inventor who has patented inventions in the past and that he intends to continue—and is, in fact continuing—researching and developing new inventions, which he would then patent. Because he is now operating under the first-to-file system of the AIA, MadStad asserts that Mr. Stadnyk will be forced to move that process more quickly and file applications for patents on his inventions at an earlier point in the process than he might otherwise desire to do.
The panel concludes that MadStad has not established standing based on the record. The panel does not define exactly what steps a would-be patent applicant would need to undertake to establish standing. However, there is no evidence that Mr. Stadnyk has an invention for which an application could be filed, so MadStad has failed to establish standing based on its fear of the increased effort and costs involved in filing a patent application.
c. Competitive disadvantage relative to competitors
MadStad asserts that the AIA puts it at competitive disadvantages relative to larger competitors from having to operate in a first-inventor-to-file environment, which puts a premium on the ability to file numerous expensive patent applications. The panel finds that MadStad’s argument fails for many of the same reasons its argument that it is injured by having to file additional applications fails. MadStad has not asserted that it has, in fact, set up in- house research facilities which it did not have in place before the AIA and has not even alleged that it is engaged in a research project that would employ or make use of any such new facilities. Again, the panel finds MadStad’s concerns too speculative and generalized to meet the “concrete, particularized, and actual or imminent” injury requirement.
d. Lost business and investment opportunities
MadStad also alleges standing because the AIA inhibits it from sharing ideas with potential partners and investors, causing lost business and investment opportunities. Mr. Stadnyk declared that, because of the AIA, he already has been deterred from disclosing secret information to one potential investor who refused to sign a non-disclosure agreement.
Under Clapper, the injury claimed by MadStad is neither fairly attributable to the AIA nor sufficiently imminent. While MadStad may have a subjective belief that it needs a non-disclosure agreement to dissuade any incentive to “scoop” its IP which the AIA creates, the panel finds the threat of such injury too attenuated to create standing here. MadStad seems to believe that the threat of a civil breach of contract suit will dissuade a potential investor—who is otherwise willing to commit at least two criminal actions—from stealing its idea. And, that it is the AIA, and only the AIA, which convinced the potential investor to resist a non-disclosure agreement. In the panel’s words, that is a rabbit hole which the immanency requirement prohibits us from going down.
For all of these reasons, the panel determines that the district court was correct in relying on Clapper and concluding that MadStad lacked standing to assert the constitutional claims in its complaint.
While it is unlikely that standing can be created based upon increased computer hacking or the likelihood of misappropriation of secret inventions, the opinion leaves open the possibility of standing being created by others who might be able to establish actual or imminent injury, fairly traceable to the challenged action. For example, what of the small company that can show that it has invested time and money in filing additional patent applications earlier than it otherwise would have? Or what if a company can show that since AIA was enacted, it established in-house research facilities that it did not have in place prior to AIA? How about the entity that can show its patent application was rejected based upon an earlier-filed application that would not have been prior art under the first-to-invent test? It would appear that such companies might be able to establish standing. While we might wonder whether anyone would have the financial incentive to challenge a statutory revision recognized by most to be an improvement in our patent system, there always seems to be someone ready to challenge statutes perceived to be unfair to them.