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2 Quarterly Federal Circuit and Supreme Court Review - Impacts on Intellectual Property February 17, 2016 Presented By: Frank A. Angileri Co-Chair Post-Grant Proceedings FAngileri@BrooksKushman.com David C. Berry Of Counsel DBerry@BrooksKushman.com

3 Agenda Inventorship: Federal Circuit rules that reputational injury is sufficient for standing in inventorship actions, and declines to reexamine Filmtec Corp. v. Allied Signal Patent Eligibility: Federal Circuit applies Supreme Court s Mayo eligibility analysis to invalidate diagnostic technology patent, but expresses dissatisfaction with result. Ariosa Diagnostics, Inc. v. Sequenom, Inc.

4 Inventorship

5 Inventorship: Assignment and Challenges Shukh v. Seagate Technology, LLC, 803 F.3d 659 (Fed. Cir. 2016) Key Points Inventorship and assignments of rights in patents Standing to challenge inventorship Correction of inventorship (35 U.S.C. 256).

6 Inventorship Inventors are the persons who conceived the claimed invention Contribution must be inventive Other material assistance is insufficient: Assistance in reducing invention to practice Financial contribution Providing information or products known in the art

7 Joint Inventorship Joint inventors do not have to work in same place, or at same time, or contribute the same amount But must Make an inventive contribution to at least one claim (even one feature of invention) Must be part of a collaboration Inventor s own testimony must be corroborated

8 Inventorship = Ownership In first instance, named inventors own an equal, undivided interest in the entire patent. 35 U.S.C. 154(a). Each joint inventor may practice, license, and/or assign his/her interest: Without consent of the other joint inventors Without accounting for profits realized. 35 U.S.C. 262

9 Assignment An inventor s intangible rights in patent generally are governed by state law. However, Federal Circuit has recognized federal common law rules re: assignments

10 Filmtec Corp. v. Allied-Signal, Inc., 939 F.2d 1568 (Fed. Cir. 1991) Court rules that assignment of interest in an invention before the invention is conceived or reduced to practice is valid, and immediately vests title in assignee when invention is made. If an assignment of rights in an invention is made prior to the existence of the invention, this may be viewed as an assignment of an expectant interest. An assignment of an expectant interest can be a valid assignment. [citing cases] In such a situation, the assignee holds at most an equitable title. Once the invention is made and an application for patent is filed, however, legal title to the rights accruing thereunder would be in the assignee.... [N]o further act would be required once an invention came into being; the transfer of title would occur by operation of law. 939 F.2d at

11 Post-Filmtec Cases Trust. Stanford Univ. v. Roche Molecular Sys., Inc., 583 F.3d 832, 838 (Fed. Cir. 2009) aff'd, 563 U.S. 776 (2011) DDB Techs., L.L.C. v. MLB Advanced Media, L.P., 517 F.3d 1284 (Fed. Cir. 2008) Preston v. Marathon Oil Co., 684 F.3d 1276 (Fed. Cir. 2012)

12 Stanford v. Roche

13 Preston v. Marathon Oil Co., No additional consideration required for assignment agreement added to at-will employment offer Assignment Agreement covered inventions made or conceived during employment Held: Agreement covered an invention conceived before, but reduced to practice during, employment

14 Shukh v. Seagate Technology LLC, 803 F.3d 659 (Fed. Cir. 2015) Shukh is prominent semiconductor physicist Difficult relationship with co-employees Complained that his contributions not recognized Asserted that others plagiarized his work Laid off in 2009 Unable to find employment in part based on his bad reputation at Seagate Claims Seagate did not name him as inventor on 6 patents and 4 pending applications.

15 Shukh: District Court Shukh filed suit for correction of inventorship ( 256) and other claims District Court grants summary judgment based on standing: Shukh signed assignment agreement stating that he hereby assign[ed] his interest in any future inventions to Seagate. Thus, district court found no standing to pursue correction claim

16 Shukh: Federal Circuit Assignment Bound by Filmtec (petition for rehearing en banc pending) Under Wyoming law, no additional consideration was required for at-will employment relationship Standing an omitted inventor s concrete and particularized reputational injury can give rise to Article III standing.

17 Shukh: Federal Circuit Omission could affect reputation as inventor in semiconductor field. Evidence that patents were prized and contributed to reputation of researchers in field. Even though Shukh had several patents, more patents could have increased his reputation Correction could affect his bad reputation Might validate his complaints that he was omitted Could rehabilitate his reputation as a researcher

18 Shukh: Federal Circuit Shukh s claim of injury also had an economic component Bad reputation had contributed to his inability to find employment Rehabilitation could have a direct financial benefit CAFC remanded for further proceedings on inventorship

19 Inventorship and AIA AIA altered standard for correction: 35 U.S.C CORRECTION OF NAMED INVENTOR. (a) CORRECTION.--Whenever through error a person is named in an issued patent as the inventor, or through error an inventor is not named in an issued patent and such error arose without any deceptive intention on his part, the Director may, on application of all the parties and assignees, with proof of the facts and such other requirements as may be imposed, issue a certificate correcting such error. (b) PATENT VALID IF ERROR CORRECTED.--The error of omitting inventors or naming persons who are not inventors shall not invalidate the patent in which such error occurred if it can be corrected as provided in this section. The court before which such matter is called in question may order correction of the patent on notice and hearing of all parties concerned and the Director shall issue a certificate accordingly.

20 Patent Eligibility - 101

21 Patent Eligibility Applying Mayo Test to Natural Phenomena Ariosa Diagnostics, Inc. v. Sequenom, 809 F.3d 1282 (Fed. Cir. 2015) Key Points Applying Mayo test, Federal Circuit affirmed 101- invalidity for patent covering a significant human contribution Three separate opinions expressed frustration with Supreme Court s Mayo test. Possible clues for avoiding eligibility issues

22 Ariosa Diagnostics, Inc. v. Sequenom, Inc. l l l l Inventors discovered cell-free fetal DNA (cffdna) in maternal blood. Inventors claimed a method of analyzing the cffdna for genetic characteristics; this analysis previously required invasive techniques. Panel agreed that the method reflects a significant human contribution in that [the inventors] combined and utilized man-made tools of biotechnology in a new way that revolutionized prenatal care. Federal Circuit affirmed invalidity under Mayo test

23 Patent Eligibility 35 U.S.C. 101 Inventions patentable. 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, subject to the conditions and requirements of this title.

24 Basic Approach to 101 Eligibility 101 Should be read broadly Congressional intent that patentable subject matter should include everything under the sun made by man But, eligibility is subject to long-recognized judicial exceptions: Laws/Products of Nature Natural Phenomena Abstract Ideas

25 Basic Approach to 101 Eligibility One cannot patent law of nature/phenomema per se, but can patent an application of discovery Two key themes: Does the claim recite something significant other than just the discovery itself? Does the claim effectively preempt all other applications of the discovery?

26 Eligibility Concerns for Medical/Biotech Diagnostic methods (Mayo) Based on isolation and analysis of biological molecules Eligibility of natural macromolecules (Myriad) Polypeptides DNA sequences Peptides and other small molecules

27 Method Claims Based On Natural Phenomena Mayo Collaborative Services v. Prometheus Labs., Inc. 566 U.S. (2012). Invention: Method of treating patients with autoimmune disease by administering thiopurine drug, assaying metabolite concentration in blood, and determining dose adjustment to maintain recited concentration Held ineligible as merely a law of nature

28 Mayo v. Prometheus (2012) Law of Nature identified as the relationships between concentrations of certain metabolites in the blood and the likelihood that a dosage of a thiopurine drug will prove ineffective or cause harm. Must contain an inventive concept sufficient to ensure that the patented invention is "significantly more than a patent upon the natural law itself." Claims at issue added nothing specific to the laws of nature other than what is well-understood, routine, conventional activity in the art.

29 Two-Part Subject Matter Eligibility Test 35 U.S.C. 101 / Statutory Requirements Two-Part Test / Judicial Exceptions

30 Biological Material: Assoc. for Molecular Pathology v. Myriad BRCA1/BRCA2 Genes. Claims covered: Isolated Native DNA Sequence cdna Methods of Using Known Mutations to Determine Susceptibility to Cancer

31 AMP v. Myriad Genetics, Inc., 569 U.S. (2013) Isolated genomic DNA not patentable, since it is identical to DNA found in nature Chemical changes resulting from isolation irrelevant, because genetic information preserved cdna sequences eligible because they are synthetic molecules that exclude introns (unlike native DNA) Court notes that new applications or knowledge about the BRCA 1 and BRCA 2 genes could be the basis of eligible claims

32 In re Roslin Institute (Edinburgh), 750 F.3d 1333 (CAFC 2014) Claims to cloned sheep obtained by somatic cell nuclear transfer ineligible under 101 Clone lacks markedly different characteristics from that found in nature an exact genetic replica You couldn't patent donor sheep, so you can't patent an exact genetic duplicate Myriad found that merely isolated genomic DNA was not eligible. Here invention does not create or alter genetic structure of DNA in resulting whole organism

33 Ariosa - Why is a significant human contribution unpatentable? Claim 1. A method for detecting a paternally inherited nucleic acid of fetal origin performed on a maternal serum or plasma sample from a pregnant female, which method comprises amplifying a paternally inherited nucleic acid from the serum or plasma sample and detecting the presence of a paternally inherited nucleic acid of fetal origin in the sample. [Mayo part 1] cffdna itself is ineligible as natural phenomenon (undisputed) [Mayo part 2] Spec admitted that method used known/old techniques to analyze the cffdna

34 Linn Concurrence Mayo part 2 I concur only because I am bound by the sweeping language of the test set out in Mayo Mayo part 2 discounts any method steps that are conventional or obvious regardless of context. Sequenom s invention is nothing like the invention at issue in Mayo. Sequenom effectuate[d] a practical result and benefit not previously attained, so its patent would traditionally have been valid.

35 Judge Lourie (and Moore); en banc denial Mayo requires result, but invention should be eligible. Mayo part 2 (novelty of steps) should be analyzed in context Use of existing techniques on cffdna was not routine or conventional. But applying Mayo, we are unfortunately obliged to divorce the additional steps from the asserted natural phenomenon to arrive at a conclusion that they add nothing innovative to the process.

36 Judge Lourie (and Moore); en banc denial [A] crisis of patent law and medical innovation may be on us Law of Nature should mean exact statements of physical relationships (i.e., equations) All physical steps of human ingenuity utilize natural laws or involve natural phenomena. Thus, those steps cannot be patent-ineligible solely on that basis because, under that reasoning, nothing in the physical universe would be patent-eligible.

37 Judge Dyk; en banc denial Mayo part 1 Mayo works well with abstract ideas well known and longstanding (e.g. hedging strategies) But Mayo did not fully take into account the fact that an inventive concept can come not just from creative, unconventional application of a natural law, but also from the creativity and novelty of the discovery of the law itself. This is especially true in the life sciences, where development of useful new diagnostic and therapeutic methods is driven by investigation of complex biological systems.

38 Judge Dyk inviting Supreme Court? Mayo is at odds with Myriad, since court suggested that claims directed to an application of BRCA1/BRCA2 would be eligible. If BRCA1/BRCA2 used with conventional laboratory procedures, would be ineligible under Mayo. However, if the breadth of the claim is sufficiently limited to a specific application of the new law of nature discovered by the patent applicant and reduced to practice, I think that the novelty of the discovery should be enough to supply the necessary inventive concept.

39 Judge Newman; dissent from en banc denial Argued that panel decision was incorrect because invention is eligible even under Mayo. Unlike Mayo, the claimed method was not previously known, nor the diagnostic knowledge and benefit implemented by the method

40 Two-Part Subject Matter Eligibility Test 35 U.S.C. 101 / Statutory Requirements Two-Part Test / Judicial Exceptions

41 USPTO Guidance on What is Significantly More Improvements to another technology. Improvements to the functioning of a computer itself. Transformation or reduction of an article to a different state or thing. Adding unconventional steps that confine the claim to a particular useful application. Other meaningful limitations beyond generally linking the use of the judicial exception to a particular technological environment. 41

42 Possible Strategies Do not emphasize success with routine or conventional techniques of equipment If necessary, consider Jepson format claims to isolate the improvement. E.g. : In a method of performing a prenatal diagnosis using techniques of fractionation and amplification, the improvement consisting of using the non-cellular fraction of a maternal blood sample. Limit claims to applications actually reduced to practice, with embodiments described in specification.