211-1. Mandamus Relief Denied—Whether Servers May Constitute an Established Place of Business for Venue Purposes Unanswered by the Federal Circuit

The Federal Circuit recently elected not to decide en banc “whether servers are a regular and established place of business, such that venue is proper under 35 U.S.C. § 1400(b). In re: Google LLC, No. 2018-152 (Fed. Cir. Feb. 5, 2019) (Before Prost, Chief Judge, Newman, Lourie, Dyk, Moore, O’Malley, Reyna, Wallach, Taranto, Chen, Hughes, and Stoll, Circuit Judges) (Dissent by Reyna, Circuit Judge, joined by Newman and Lourie, Circuit Judges).

SEVEN Networks, LLC’s (“SEVEN”) patent infringement suit against Google arose in the Eastern District of Texas. SEVEN alleged Google’s servers, stored in a third-party ISP’s facility, where the allegedly infringing activities occurred, were a regular and established place of business, such that venue is proper under 35 U.S.C. § 1400(b).

The district court denied Google’s motion to dismiss for improper venue. As a result, Google petitioned the Federal Circuit for a writ of mandamus directing the district court to dismiss or transfer the case for improper venue. On appeal, the panel majority found mandamus relief inappropriate because “it is not known if the district court's ruling involves the kind of broad and fundamental legal questions relevant to § 1400(b),” and “it would be appropriate to allow the issue to percolate in the district courts so as to more clearly define the importance, scope, and nature of the issue for us to review.”

Google petitioned for panel rehearing and for rehearing en banc. The panel denied the petition for panel rehearing, and, after a poll of the full Federal Circuit was taken, the petition for rehearing en banc was also denied. Judge Reyna, joined by Judges Newman and Lourie, authored a dissenting opinion to the majority’s denial of Google’s petition for rehearing en banc.

The dissent began by noting “[m]andamus review is part of our bedrock supervisory duty as an appellate court to ensure proper judicial administration.” The dissent further noted, “[g]iven the nature of our exclusive subject-matter jurisdiction over federal questions involving patent law, this court in particular has a vital supervisory and instructional duty to further the goals of uniformity and predictability that are ‘the cornerstones of a well-functioning patent system’ and part of the reason for this court’s very existence.”

To demonstrate mandamus relief was appropriate on this issue, the dissent compared this case to In re Cray Inc., where the Federal Circuit granted mandamus relief to ensure § 1400(b) was not given an expansive construction after TC Heartland. Moreover, because of inconsistent case law in the district courts on this question, the dissent felt mandamus relief was appropriate. The dissent was also troubled by the fact that the panel’s original denial of mandamus relief had led to many more subsequent suits:

“The bar apparently already views the denial of the petition at the panel stage as a signal that it is safe to file more cases against Google and similar defendants in the same district. At the time of filing of the petition for rehearing, Google had been sued thirteen more times in the same district under the same venue theory since October 29, 2018, the date that we denied the petition for mandamus. [] That number now stands at thirty-four. I count that as trending.”

The dissent further explained that the district court’s holding could be read as another expansion of § 1400(b) and “essentially reestablish nationwide venue, in conflict with TC Heartland, by standing for the proposition that owning and controlling computer hardware involved in some aspect of company business (e.g., transmitting data) alone is sufficient.”

Finally, the dissent reasoned that the question would eventually be taken up by the Federal Circuit and that, by denying the question now, judicial and party resources would be wasted:

“By the time we eventually decide these questions, it is possible that dozens of cases will proceed through motion practice, discovery, claim construction, or trial before potentially getting thrown out by a reversal of a ruling on a motion to dismiss for improper venue.”

Infringing acts committed on servers stored in a third-party ISP’s facility may constitute a regular and established place of business, sufficient to satisfy venue.

211-2. Federal Circuit Holds Injury-in-Fact is not “Relaxed” by 35 U.S.C. § 315(e), Momenta Pharmaceuticals Loses Standing after Ceasing Development of a Biosimilar

The Federal Circuit dismissed an appeal from the Patent Trial and Appeal Board (“Board”) where the Board upheld the patentability of a biologics patent. After Momenta Pharmaceuticals petitioned the Board for an inter partes review (IPR) of the patentability of Orencia® (abatacept), the Board sustained patentability and Momenta appealed. During the course of the appeal, Momenta ceased development of an abatacept biosimilar. The Federal Circuit held that the cessation of potential infringement mooted the injury and removed Momenta’s standing to maintain the appeal. Momenta Pharm., Inc. v. Bristol-Myers Squibb Co., No. 2017-1694, 2019 U.S. App. LEXIS 3786 (Fed. Cir. Feb. 7, 2019) (Before Newman, Dyk, and Chen, Circuit Judges) (Opinion for the Court, Newman, Circuit Judge).

The case began in July 2015 when Momenta petitioned the USPTO for IPR of Bristol-Myers Squibb’s (BMS) patent on the biologic abatacept. At the time of the petition, Momenta was pursuing a biosimilar counterpart to the innovator drug. After the Board found Momenta failed to establish the abatacept patent is unpatentable, Momenta appealed under 35 U.S.C. § 319.

BMS first challenged Momenta’s Article III standing to appeal by stating Momenta failed its Phase 1 clinical trials for the biosimilar, and the biosimilar had been withdrawn from FDA review. Momenta responded by asserting (i) “it had not abandoned its intent to produce” a biosimilar, (ii) the abatacept patent is an obstacle to produce a biosimilar, and (iii) it was “injured by the estoppel provision, 35 U.S.C. § 315(e).” Momenta cited a “‘relaxed’ standard for Article III compliance when the right of appeal is established by statute.”

In October 2018, Momenta filed a Letter to the Court citing a press release stating, “The company has initiated discussions with its collaboration partner, Mylan, to exit its participation in the development of” the abatacept biosimilar. Momenta informed the Court it would update the Court as to any outcome of those discussions.

The Court issued an Order to Show Cause why the appeal should not be dismissed. Momenta argued that it was still jointly responsible for the development of the biosimilar, and that Momenta and its partner, Mylan, still face the “same fork in the road about the commercial formulation for their biosimilar product.” A declaration from Momenta’s Chief Business Officer also stated Momenta had yet to reach an understanding about withdrawing from the development of the biosimilar, and that Momenta may still potentially have the right to receive royalties from Mylan should Mylan continue development. BMS responded stating “the possible future royalty . . . is too speculative to support standing.”

In December of 2018, BMS filed a Letter and enclosed Momenta’s submission to the SEC stating Momenta had “elected to terminate [its] collaboration with Mylan with respect to the development” of an abatacept biosimilar. Momenta did not respond, nor did it withdraw the appeal.

The Court began its analysis of Momenta’s standing by stating, although immediacy and redressability may be “relaxed” by statute, “the requirement of injury in fact is a hard floor of Article III jurisdiction that cannot be removed by statute.” Citing Summers v. Earth Island Institute, 555 U.S. 488 (2009). The Court stated that, despite Momenta’s arguments about spending millions of dollars on development of the biosimilar, Momenta had not shown “‘an invasion of a legally protected interest’ … that is ‘actual or imminent, not conjectural or hypothetical.’” Quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).

Momenta first argued that the America Invents Act provided an alternative to district court litigation, and “appeal should be available from the PTAB as it would be from a district court decision.” Momenta cited the estoppel provision in 35 U.S.C. § 315(e). The Court disagreed, stating it now has “exited” any potential infringing activity by ceasing development of the biosimilar.

Momenta next argued that it may receive a royalty from Mylan should Mylan produce an abatacept biosimilar. The Court held that this was too speculative of the “choices made by independent actors not before the court.” Quoting Clapper v. Amnesty Int’l USA, 568 U.S. 398, 415 n.5 (2013).

Finally, Momenta argued that, because it was engaged in infringing activities when it petitioned for IPR, it has not lost standing in this appeal. The Court reiterated that “jurisdiction must exist throughout the judicial review, and an intervening abandonment of the controversy produces loss of jurisdiction.” Citing Arizonans for Official English v. Arizona, 520 U.S. 43, 67 (1997).

In rejecting Momenta’s arguments that it maintained standing, the court held “momenta no longer has the potential for injury, thereby mooting the injury.” The Court subsequently dismissed Momenta’s appeal of the Board’s decision upholding the validity of BMS’s abatacept patent.

The estoppel provision of 35 U.S.C. § 315(e) does not “relax” the injury-in-fact standard required to establish standing under Article III of the US Constitution.

211-3. Federal Circuit Corrects District Court’s Claim Construction

The United States Court of Appeals for the Federal Circuit recently held that a district court erred in its claim construction and vacated the district court’s judgment of noninfringement, which the parties stipulated to based on the erroneous construction. See Continental Circuits LLC v. Intel Corp., No. 2018-1076, 2019 U.S. App. LEXIS 3920, 2019 WL 489069 (Fed. Cir. Feb. 8, 2019) (Before Lourie, Linn, and Taranto, J.) (Opinion for the court, Lourie, J.).

Continental Circuits LLC (Continental) owns four patents, which are directed to a “multilayer electrical device . . . having a tooth structure,” as well as methods for making the device. The four patents are continuations of one another and share substantially the same specification, which describes methods for “forming a unique surface structure . . . comprised of teeth that are preferably angled or hooked like fangs or canine teeth to enable one layer to mechanically grip a second layer.” The patents explain this surface structure is useful for overcoming the tendency of multilayer electrical devices to undergo “delamination, blistering, and other reliability problems,” particularly after being “subjected to thermal stress.” The patents also explain that “the best methods for producing the teeth [are] to use non-homogenous materials and/or techniques . . . such that slowed and/or repeated etched will form teeth instead of a uniform etch.”

Continental sued Intel Corp., Ibiden U.S.A. Corp., and Ibiden Co. Ltd. (collectively “Intel”) for patent infringement, asserting several claims from all four patents. All of the asserted claims include claim limitations regarding the “surface,” “removal,” or “etching” of the “a dielectric material” or “epoxy,” which the district court construed together as the “Category 1 Terms.” The collective construction of the Category 1 Terms depends on determining whether the claims should be limited to a repeated desmear process or should be more broadly construed to include a single desmear process.

The district court construed the Category 1 Terms to require “a repeated desmear process.” The district court found that the specification “repeatedly distinguishe[d] the process covered by the patent from the prior art and its use of a ‘single desmear process’” and “characterized ‘the present invention’ as using a repeated desmear process.” The district court also found that the prosecution history supported this construction. During prosecution of one of the patents, the examiner made indefiniteness and written description rejections “concerning the claim limitation ‘etching of the epoxy uses non-homogeneity with the solid content,’” which refers to facilitating the formation of the non-uniformly roughened surface. In response, Continental submitted an expert declaration explaining that the etching process disclosed in the specification uses a “known Probelec XB[ ]7081 resin” and “two separate swell and etch steps” as “a technique which forms teeth.” The district court interpreted the submission of this expert declaration as “clearly describ[ing] the patented method as involving two etching processes,” i.e., a repeated desmear process. Finally, the district court found that extrinsic documents authored by the inventors concede they “use a double pass desmear to achieve the tooth structure.” And while acknowledging that those extrinsic statements were “not reliable enough to be dispositive,” the district court found them to “provide helpful corroboration.” The district court then entered a judgment of noninfringement based the parties’ stipulation to noninfringement in view of the district court’s construction, and Continental appealed the claim construction.

On appeal, the Court explained that courts should give claims their ordinary and customary meaning, and looking at the claim language itself, the Court found that, “at least based on the plain language, the claims are not limited to a repeated desmear process” because “none of the asserted claims actually recite a ‘repeated desmear process.’”

The Court then “read[] the claims in view of the specification, of which they are a part.” (citation and internal quotation marks omitted). Noting that “the specification may reveal a special definition given to a claim term by the patentee that differs from the meaning it would otherwise possess,” the Court pointed out that for the patentee to act as its own lexicographer, the “patentee must clearly set forth a definition of the disputed term other than its plain and ordinary meaning.” (citation and internal quotation marks omitted). Similarly, for a specification to include a disclaimer or disavowal of claim scope, “the specification must contain expressions of manifest exclusion or restriction, representing a clear disavowal of claim scope.” (citation and internal quotation marks omitted). The Court acknowledged that it can be difficult to navigate construing the claims in light of the specification without improperly importing a limitation from the specification into the claims. To avoid improper importation, “it is important to keep in mind that the purposes of the specification are to teach and enable those of skill in the art to make and use the invention and to provide a best mode for doing so.” (citation and internal quotation marks omitted).

Here, the Court found that “none of the statements relied upon by the district court rises to the level of ‘a clear and unmistakable disclaimer.’” “Overall, [the patents] simply describe how to make the claims invention using the preferred Probelec XB 7081 in a “new” way that is different from the prior art process” such as when they state:

  • [o]ne technique for forming the teeth,” which is “contrary to all known teachings in the prior art,” is the double desmear process;
  • “the present invention can be carried out by a new use” of a dielectric material called Probelec XB 7081;
  • [f]or example, the present invention differs from the common desmear process in that sub-steps in the desmear process are repeated as a way of forming the teeth,” and this process is “[i]n stark contrast with the etch and swell process of the known prior art”; and
  • the peel strength produced by the new use of Probelec XB 7081 is greater than that of “the prior art, i.e., a single pass desmear process.” (emphases in decision).

The Court reiterated that it has “expressly rejected the contention that if a patent describes only a single embodiment, the claims of the patent must be construed as being limited to that embodiment.” Thus, while the patents disclose only the Probelec XB 7081 embodiment, that “does not result in a clear disavowal of claim scope,” “without more.” Further, the Court interpreted the patents’ “distinguishing the double desmear process as ‘contrary to’ or ‘in stark contrast’ with the single desmear process” as merely comparing and contrasting the present technique to that of the prior art does not ‘rise to the level of [a] clear disavowal of claim scope.’”

And “[w]hile descriptions of the ‘present invention’ as a whole could limit the scope of the invention, “use of the phrase “present invention’ or ‘this invention is not always so limiting, such as where the references . . . are not uniform, or where other portions of the intrinsic evidence do not support applying the limitation to the entire patent.” (citation and internal quotation marks omitted). In view of this proposition, the Court found that the statements relied on by the district court “do not characterize the present invention ‘as a whole,’” but instead “disclose one way to carry out the present invention using Probelec XB 7081.” To that end, the Court found that portions of the patents describe the invention’s “‘unique surface structure’ . . . without any requirement that the invention must encompass the repeated smear process.”

Turning to the expert declaration, the Court found that “[t]he expert declaration . . . explained that the written description disclosed ‘a technique which forms the teeth’ by ‘performing two separate swell and etch steps.’” (emphasis in decision). Thus, the Court found the expert declaration to merely explain one technique for forming teeth and not to amount to clear statements of disavowal.

Finally, the Court evaluated the extrinsic documents, in which the inventors stated that they “used ‘two passes through desmear’ and a ‘double pass desmear’ to achieve the tooth structure.” The Court found that these statements also merely “reflect use of the preferred embodiment” and fail to indicate any limiting effect.

Accordingly, the Court found that the Category 1 Terms are not limited to requiring a repeated desmear process and should instead be given their plain and ordinary meaning. And because the parties stipulated to noninfringement based on the district court’s erroneous claim construction, the Court vacated the judgment of noninfringement and remanded for further proceedings.

The Court highlighted that the first step in claim construction should always be to determine the plain and ordinary meaning of the claims. Further, the specification should serve to limit the plain and ordinary meaning only when it includes a definition for a claim term or a clear disclaimer or disavowal of claim scope. A disclaimer or disavowal occurs only when the specification sets forth a “manifest exclusion or restriction” of subject matter. To avoid such issues, drafters should strive to describe aspects of an invention without limiting “the invention” to any one embodiment.

211-4. Federal Circuit Affirms District Court Opinion Holding Diagnostic Method Claims Patent Ineligible as Directed to a Law of Nature

The Federal Circuit recently issued an opinion affirming the decision of the United States District Court for the District of Massachusetts holding that Athena’s medical diagnostic methods were directed toward laws of nature and patent ineligible under 35 U.S.C. § 101. Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC, No. 17-2508, 2019 U.S. App. LEXIS 3645 (Fed Cir. Feb. 6, 2019) (Before Newman, Lourie, and Stoll, Circuit Judges) (Opinion for the Court, Lourie, Circuit Judge) (Dissenting Opinion, Newman, Circuit Judge).

The inventors of U.S. Patent 7,267,820 (the “’820 Patent”) discovered that about 20% of patients with the neurological disorder myasthenia gravis (“MG”) generate autoantibodies to a membrane protein called MuSK. Until their discovery, no disease had ever been associated with the protein. The ‘820 patent disclosed and claimed methods for diagnosing neurological disorders by detecting antibodies that bind to MuSK.

Athena Diagnostics (“Athena”), the ‘820 Patent’s exclusive licensee, sued Mayo Collaborative Services (“Mayo”) for infringement. Mayo moved to dismiss, and the district court granted Mayo’s motion, concluding that the patent claimed ineligible subject matter and was invalid under 35 U.S.C. § 101. Athena appealed, and the Federal Circuit affirmed.

The asserted claims recite steps to detect autoantibodies that bind to MuSK. Claim 1, which is not at issue in the case, recites:

  1. A method for diagnosing neurotransmission or developmental disorders related to muscle specific tyrosine kinase (MuSK) in a mammal comprising the step of detecting in a bodily fluid of said mammal autoantibodies to an epitope of muscle specific tyrosine kinase (MuSK).

Claim 7, one of the claims at issue, further recites:

  1. A method according to claim 1, comprising contacting MuSK or an epitope or antigenic determinant thereof having a suitable label thereon, with said bodily fluid, immunoprecipitating any antibody/MuSK complex or antibody/MuSK epitope or antigenic determinant complex from said bodily fluid and monitoring for said label on any of said antibody/MuSK complex or antibody/MuSK epitope or antigen determinant complex, wherein the presence of said label is indicative of said mammal is suffering from said neurotransmission or developmental disorder related to muscle specific tyrosine kinase (MuSK).

Claim 8 depends from claim 7 and recites that the label is a radioactive label. Claim 9 further depends from claim 8 and requires “1) contacting MuSK or an epitope thereof having a 125I label, with bodily fluid; (2) immunoprecipitating any antibody/MuSK complex; and (3) monitoring for the label on the complex, wherein the presence of the label indicates the presence of a MuSK-related disorder.” The specification of the ‘820 Patent explains what iodination and immunoprecipitation entail and specifically discloses that “[i]odination and immunoprecipitation are standard techniques in the art.”

The Court applied the two-part test set forth by the Supreme Court in Mayo v. Prometheus and Alice v. CLS, examining: (1) whether the claims are “directed to” a law of nature, and, if so, (2) “whether the limitations of the claim apart from the law of nature, considered individually and as an ordered combination, transform the nature of the claim into a patent-eligible application.”

Regarding the first prong of the test, the Court addressed whether the claims were directed to a law of nature. To determine whether the claim is directed to an ineligible concept, the Court considers “whether the claimed advance improves upon a technological process or merely an ineligible concept.” Thus, where “[t]he claimed advance harness[es] a natural law to produce a technological improvement,” the invention may be patent eligible. Claims that “merely recite observing naturally occurring biological correlations with no meaningful non-routine steps in between” are, however, not.

The Court ultimately found the claims were directed to a law of nature, specifically the correlation between the presence of naturally-occurring MuSK autoantibodies in bodily fluid and MuSK-related neurological diseases. The Court reasoned that the claims recited only the discovery of a natural law together with concrete, standard steps for observing its operation. The specification itself described the invention as the discovery of a natural law and described the claimed steps for observing the natural law as conventional. The additional recited steps applied conventional techniques to detect the natural law – that they were described with specificity was irrelevant.

Regarding the second prong, the Court found the claims lacked an inventive concept sufficient to transform a law of nature into a patent-eligible application of the law. As step two of the Mayo/Alice test, the Court considered “the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application.” Here, the specification defined the individual immunoprecipitation and iodination steps and the overall radioimmunoassay recited in the claims as conventional techniques. Because the recited steps only required standard techniques to be applied in a standard way, the claims failed to provide an inventive concept.

For these reasons, the majority upheld the district court’s finding of invalidity.

Judge Newman issued a dissenting opinion. There, she stated that, considered as a whole, the claims were not directed to a law of nature but rather to multi-step method of diagnosing neurological disorders by detecting autoantibodies using a series of chemical and biological steps. According to Judge Newman, the majority ignored specific claimed steps by which the diagnosis is performed and thereby improperly discarded claim limitations and failed to consider each claim as a whole.

Judge Newman also pointed out that prior to the discovery of the diagnostic method, 20% of patients suffering from MG were not capable of being diagnosed. The inventors applied their discovery of the autoantibodies that bind to MuSK to create a new method of diagnosing a condition that was previous undiagnosable. Rather than “claiming the scientific fact of a newly described autoantibody[,] they are claiming a new multi-step diagnostic method.” According to Judge Newman, “[t]his new and improved technique, for producing a tangible and useful result, falls squarely outside those categories of inventions that are ‘directed to’ patent-ineligible concepts.” Judge Newman warned against exacerbating “the judge-made disincentives to development of new diagnostic methods. … The loser is the afflicted public, for diagnostic methods that are not developed benefit no one.”

Where the claims recite only conventional steps for discovering a natural law without meaningful non-routine steps in between, the claims are patent-ineligible under § 101. Furthermore, where the recited steps apply conventional techniques to detect a natural law, it is irrelevant that the steps are recited with specificity.