Friday, May 18, 2012

SUPREME COURT AGAIN TACKLES PATENTABLE SUBJECT MATTER AND AGAIN CORRECTS THE FEDERAL CIRCUIT COURT OF APPEALS ON THE APPLICABLE SUBJECT MATTER TESTS; BUT WHO IS MORE CORRECT



By
MICHAEL RISCH, ESQ.
JACK RUSSO
ANSEL HALLIBURTON**
 
There has been an ongoing “struggle” between the Federal Circuit Court of Appeal, where all patent appeals are decided, and the U.S. Supreme Court, where a very select few patent appeals are further reviewed, over the proper interpretation of federal policy in the field of patents.   Yet, again, the U.S. Supreme Court took review of an important policy question regarding patentable subject matter and earlier this year, in March of 2012, the Supreme Court issued its patentable subject matter opinion in Mayo Clinic v. Prometheus Labs reversing the Federal Circuit’s decision While the case is nominally about medical diagnostics, its opinion has a direct bearing on broader subject matter like computer software. However, a little background about medical diagnostics might help explain the link.

Background: Are “Law of Nature” Methods Patentable Subject Matter?

The types of patents at issue in Prometheus were methods, not things (in patent jargon, not “apparatus”). For example, assume someone discovers that pregnant women have measurable levels of the hCG hormone, while non-pregnant women do not. Having discovered this, the inventor might try to claim the following:

A method for diagnosing pregnancy in a human female, comprising:

a) testing for the presence of a certain level of hCG in blood; and

b) diagnosing pregnancy if such hCG level is present.

          This is not a patent on any particular test – it is a patent on every use of every test that measures for the hCG hormone. Of course, one can measure for hCG without trying to diagnose pregnancy, and that would not be infringing. That said – and this was the problem for labs – if there is no other purpose for the test, or if the test is ordered for a particular purpose, then one may be liable for administering the test even if one is not doing the last step – the diagnosing.  Could every doctor in America face liability?  Should any medical doctor ever face patent infringement liability?

          Among others, there are three primary complaints about these types of claims.

          First, some worry that such claims bar “pure thought” (the diagnosing). However, the claim is for more than thought – it is for the ordering of a particular test to diagnose a particular condition, and doctors are generally immune from infringement. Also, it should make little difference that the diagnosing step is in the mind – imagine a machine that reads the number and a light goes off (or a stick that shows a plus sign if you are pregnant). Whether one thinks that these types of methods should be patented or not, the reason to allow a patent or not should not depend on the happenstance of form.

          Second, some worry that such claims are simply a patent on the prior art with “thought” added to the end. For example, if there were pre-existing hCG tests, then one should not be able to patent practicing the prior art with the added “correlative” step of diagnosing a pregnancy. This concern cuts both ways. On the one hand, if the solution is obvious, then we should not allow any patents on any obvious solutions. On the other hand, we have long granted new patents for new uses of old inventions. This includes new treatments using known medicines: Viagra, for example, was developed to treat blood pressure but it was patented for an entirely different use. The US patentsystem grants such patents because American society prefers inventive activity to find these new uses, and it is not clear why new uses of old tests should be any different. Of course, people may develop better tests, or use existing tests for other purposes. Why not incentivize all of these “innovative” activities?

          Third, some worry that this type of patent claim covers “laws of nature.” This was the primary issue in Prometheus, and the Supreme Court made that clear. Courts have long said that laws of nature are not patentable. But what exactly is an unpatentable law of nature? And what is a patentable application of a law of nature? Even if laws of nature are unpatentable, the natural law in the pregnancy example appears to be the production of hCG by pregnant women. So, if an inventor tried to claim production of hCG by pregnant women, he or she could not patent that.

          Viewed this way, of course laws of nature are not patentable – they aren’t new, they aren’t invented by the patentee, and they lack practical utility because they don’t do anything – they just are. Furthermore, they aren’t processes at all because they are not a series of steps that achieve some end. Again, they just are.  But when an inventor discovers that when combined with a series of steps (the inventor’s method) the law of nature provides some new public benefit, such application of a law of nature should be patentable.  The inventor has gone beyond what exists; the inventor has created an invention and the tests for novelty and for non-obviousness should be sufficient to determine patentability.  In effect, the “patentable subject matter” test becomes entirely irrelevant and unnecessary.

          But does it?  Many disagree with the logic described above. Their argument is that allowing the application of the law of nature would preempt all uses of the law of nature itself, and that is a bad thing. This counter-argument faces three hurdles. One: everything boils down to something natural, and deciding when naturalness ends is too difficult an inquiry. Two: except in very rare cases, a diagnostic test does not bar the natural principle; it just rewards those who figure out why the principle is important. Concerns about the inability to perform medical tests should be handled with compulsory licenses rather than removing the incentive to invest in invention. Three: there is nothing naturally occurring about the test in the Prometheus case. The drug administered is human-made, and the metabolite measured in the claim does not exist in nature. Thus, testing for the metabolite is something that only happens if you change nature with something unnatural. But it would make little sense for that to be the dividing line on diagnostics – whatever concerns one has about them, they don’t go away just because they are measuring something that doesn’t happen naturally.

The Prometheus Claim

           The patent claim in Prometheus was problematic, even beyond the laws of nature:

(1) A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:

(a) administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and

(b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder,

wherein the level of 6-thioguanine less than about 230 pmol per 8×10^8 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and
wherein the level of 6-thioguanine greater than about 400 pmol per 8×10^8 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.

          Here are some of the problems:

  1. There is no diagnosing and dosage adjustment step. It is a minor point, but an important one. If there is no diagnosing step, then one can infringe the patent by merely performing the test – a test that was already known. It may be a small point to add an element of actually adjusting the dosage, but doing so takes the claim out of the realm of exactly the prior art and into the realm of diagnosing. Bear in mind that Mayo was sued in part because it developed a new test for the metabolite.

  2. This is not really a diagnostic patent. It is not measuring something to determine some condition. Instead, it is a dosage adjustment patent. This, too, should be patentable on general principles, but it seems obvious. If there’s too little, then give more. If there’s too much, then give less. Granted, the patent claims specific numbers, but finding the right range is something that would be obvious to try once you have a test in the first place. Anyone with a thyroid disease knows this – the patient starts with the lowest dosage of Synthroid and then increases dosage until the TSH test falls within a range.  The patent here is claiming such a range, but finding the range seems obvious: when people get sicker or have side effects, you are outside the range, and when people get better, you are inside the range. The real invention is discovering how to measure the metabolite of the drug, but the test for finding the metabolite is not a subject of this patent.
          These two problems mean that the patent should probably have been rejected outright, and that the patent did not claim a natural principle. Instead, it claimed the use of a pre-existing test and some obvious thought about one might do about the test (but holding people liable even if they don’t do it).

           Thus, there are many reasons to reject this patent without speaking to the core question of what to do about patenting medical diagnostics. A better test case for the Supreme Court would have been a really great, inventive diagnostic test that relies on a natural principle. The Court had such a case in the past (the Lab Corp. case), but procedural failures by the defendant precluded real consideration of the issue.

The Prometheus Decision

           It is against this backdrop that the Supreme Court ruled in the case. Prometheus lost and the patent was struck down. After the Court’s decision in Bilski v. Kappos that abstract ideas were unpatentable, the decision was not terribly surprising. In short, the Supreme Court reaffirmed that abstract ideas and laws of nature are not patentable subject matter, and they don’t become patentable subject matter by simply adding insignificant aspects to the claim.

          As discussed below, there are continuing problems with this formulation, but there were some bright spots in the opinion. First, it is minimalist: it does not strike down large chunks of subject matter, but instead applies an old rule to a particular patent. Many medical diagnostics and even personalized medicine patents may survive this opinion. Second, the Court rejects the Federal Circuit’s application of the machine or transformation test (again) as to this case.  Third, as discussed below, the Court adds a little more detail about how inventors might determine whether something is a natural law (or an abstract idea). Fourth, in doing so, it cites and adopts (in part at least) a Stanford Law Review article written by Mark Lemley, Ted Sichelman, Polk Wagner, and  Computerlaw Group’s own Michael Risch, called Life After Bilski. That article argues that one should look to the application of abstract ideas to determine whether a claim’s scope is too broad.

          But the Court does not adopt the “application” view entirely. This opinion instead embraces a long line of Supreme Court jurisprudence that says one may disregard “insignificant post-solution activity” when deciding whether a claim simply covers a natural law.

           Here, the High Court makes it a bit more explicit: “To put the matter more precisely, do the patent claims add enough to their statements of the correlations to allow the processes they describe to qualify as patent-eligible pro­cesses that apply natural laws?” (emphasis in original)

           The uncertainty for the future is determining how much is enough. The Court gives some indication, saying that, “Purely ‘conventional or obvious’ ‘[pre]-solution activity’ is normally not sufficient to transform an unpatentable law of nature into a patent-eligible application of such a law” and “Unlike, say, a typical patent on a new drug or a new way of using an existing drug, the patent claims do not confine their reach to particular applications of those laws.” It appears, then, that a key way to tell whether a claim is unpatentable subject matter is to see how novel and nonobvious it is in its application of the natural principle. The Court held that simple testing and comparing is not enough, and this is hardly assailable once you accept the notion that we should ignore parts of the claim we deem to be insignificant (the firm does not necessarily agree with that view, but it is the law at present).

           The problem with the High Court’s ruling is that, yet again, this is a subject matter decision that was easily decided, but the rule cannot be so easily applied to future patents. Of course, the Court need only rule on the case before it, but history has shown that the historic subject matter exclusions are very difficult to apply to all but the most simple claims.

          For example, the Court approvingly cites to Mackay Radio for the proposition that application of a natural law is patentable. The problem with reliance on that case is that the patent in that case would surely be considered ineligible subject matter under the Prometheus opinion. In that case, the patentee claimed an antenna that identically followed a known formula for antenna wire lengths. The antenna would probably be a “routine” addition to the natural law after today’s opinion, but the Court did not invalidate on that basis back in 1939.

           In issuing its ruling, the Court explicitly rejects proposals that the other patent criteria were sufficient to weed out improper subject matter. Professor Risch made this very argument in an article published four years ago. The Supreme Court cited the article in Prometheus, and then rejected the proposal.
          The Court states, in no uncertain terms,  that the historic exclusions should apply:

This approach [relying on other sections], however, would make the “law of nature” exception to §101 patentability a dead letter. The ap­proach is therefore not consistent with prior law. The relevant cases rest their holdings upon section 101, not later sections.

          In short, as against the Federal Circuit’s attempt at “modernizing” the patent subject matter test, the High Court appears to firmly entrench itself (and thus the Federal Circuit and all District Courts) in the historic exclusions. The Court goes on to explain how the other sections might not answer the concerns about natural laws and blocking future inventors that the Court has expressed.

           Indeed, some have argued that the particular patent claims could have been saved if redrafted; indeed, one can imagine that by focusing on the failures noted above that left off the dosage administration step, one might have redrafted the claim language accordingly and allowed survival at least under the previous Federal Circuit test. This is unlikely, however, under the Supreme Court’s decision becausethe Court was clear to note that its methodology should not be based on patent drafting skills, and instead should look to the core substance of the claim.

Application to Computer Software

           The Prometheus case gives some guidance about how one should determine whether computer software, business methods, and other technology patents should be examined. In short, Promtheus adds some analytical tests to the bare “abstract idea” test of Bilski v. Kappos. According to the High Court’s opinion, the Federal Circuit, Federal District Courts (as well as the International Trade Commision and the PTO) should consider whether enough has been added to abstract ideas to render them patentable applications. One should look to whether applications are “conventional” or “routine.” This inquiry seems to overlap significantly with Section 102 (novelty) and Section 103 (nonobviousness), but the Court believes that it is a separate inquiry and indeed the High Court is indeed breathing new life into the Section 101 (subject matter) test.

          Indeed, it is a separate inquiry, because courts no longer need to follow the rules associated with novelty and obviousness to decide conventionality and routine. Thus, Prometheus could make it hard to patent software or, at minimum, it could set up for District Courts (and for the Federal Circuit) more summary judgment cases where questions of law on subject matter are determined through summary adjudication. On the other hand, it may allow inventors to better focus their claims to show why the applications of ideas are unconventional and certainly not routine.   For sure, we will likely see a volume of motions for summary judgment brought on issued patents for subject matters that patent defendants and the patent defense bar believes should never have survived the first (subject matter) hurdle for patentability.

CONCLUSION AND RECOMMENDATIONS

            What does all this mean for inventors, entrepreneurs and growing companies who have relied upon patents (over trade secret law and other forms of intellectual property protections)?  It means that potential patent applications have to be viewed for whether they survive a first hurdle: is there patentable subject matter? And, the fact that as a category certain subject matter has been submitted to the PTO and resulted in a patent does not means that the same approach will be accepted by the PTO or by the Federal Courts given the High Court’s ruling. 
  
           More importantly, as to issued patents, in the case of any potential infringement, it will be important to determine whether a summary judgment motion on a subject matter (Section 101) defense can be overcome or whether the resulting jurisprudence under Prometheus will result in many District Court decisions (upheld by the Federal Circuit) throwing out patents or certain patent claims on summary judgment. 
  
           Finally, it can be expected that we will continue to see some “continuing tension” between the Federal Circuit and the Supreme Court on the continuing question of whether the United States policy should favor incentives for incremental innovations as patents or whether our patent system should only reward more major innovations – with the result that other forms of intellectual property protections are used to protect the former to the possible detriment of the overall publishing of the state of the art that provides the underlying foundation for the more substantial disruptive innovations which entirely change the course of further inventive activities.  None of these policy questions are directly addressed in any of part of the High Court’s decision but all of them are implicitly at work in the continuing struggle between the Federal Circuit and the U.S. Supreme Court over the proper policy for our U.S. patent system.

COPYRIGHT © 2012 COMPUTERLAW GROUP LLP


**Mr. Jack Russo is the Managing Partner of Computerlaw Group LLP, a Palo Alto, California law firm providing legal services including litigation, arbitration, mediation and other dispute resolution services to Silicon Valley and elsewhere throughout the United States. More information about Mr. Russo, his firm, and is practice is at  www.computerlaw.com, Mr. Michael Risch is Of Counsel and Ansel Halliburton is an Associate there.

Wednesday, October 26, 2011

PROTECTION OF TRADEMARKS INCLUDES PLANNING AND PROTECTION AGAINST ADVERSE DOMAIN NAME USAGE

Deadline Nears for Federal Trademark Owners to Opt Out of New .XXX Top-Level Domain To Avoid Confusion and Dilution

By


Ansel Halliburton*
Christopher Sargent**
COMPUTERLAW GROUP LLP
Palo Alto, California

October 28, 2011 is the last day for federal trademark owners to place a block on their registered marks from being used in the upcoming .xxx top-level internet domain (“TLD”) by others who may wish to do so. For example, an owner of a registered mark for computers (such as Apple) may wish, for example, to prevent an “Adam & Eve” women’s lingerie provider from obtaining www.apple.xxx for such goods (and then argue that the reference to “Apple” has nothing to do with computers or with any of Apple’s products or services).

Owners of federally registered trademarks can block others, most importantly cyber-squatters, from registering their marks as domains in the .xxx TLD. Trademark holders wishing to obtain a block can do so through several participating domain registrars, including popular ones such as GoDaddy, Network Solutions, and Register.com. These registrars charge approximately $200 for the registration, which must be supported with documentation of ownership of a valid federal trademark.

The block lasts for 10 years and it can be renewed thereafter. The TLD itself will be administered by ICM Registry LLC, a Florida company. The window for trademark holders to secure a block is currently open, but closes on October 28.

Staring December 6, 2011, .xxx domains will be available for anyone to register; thus, it is expected that domain squatting will begin immediately thereafter. Although trademark holders will still have various ways to take back infringing .xxx domains, those processes will be far more expensive and time-consuming than the current opt-out mechanism, which can be done in a matter of minutes through any of the registrars listed at http://icmregistry.com/registrars/. Accordingly, we recommend that federal trademark holders, especially those concerned about dilution of their marks, use this opt-out mechanism for the .xxx TLD before October 28.

The new .xxx TLD is only the tip of the iceberg, however. ICANN, the authority responsible for the overall domain name system, has approved a number of similar "sponsored" TLDs, such as .travel, .aero, .asia, .mobi, etc. (One proposed new TLD, .eco, has drawn interest from Al Gore and Mikhail Gorbachev.) This June, ICANN also approved a more comprehensive plan to allow many more TLDs. ICANN's plan includes a new "trademark clearinghouse," which will facilitate opt-out programs similar to the "Sunrise B" program for the .xxx TLD. ICANN expects to announce its selection of a vendor to run the trademark clearinghouse in February 2012.
Trademark holders should stay up-to-date on these developments to ensure they protect their marks as the availability of domain names expands dramatically in the coming months.


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