PATENT

Alice Corporation Pty. Ltd. v. CLS Bank International

Issues: 

Are claims to computer-implemented inventions—including claims to systems and machines, processes, and items of manufacture—patent-eligible subject matter?

Alice Corporation was granted patents on several processes and systems relating to the use of computer software to facilitate securities trading and reduce risks of parties not fulfilling contractual obligations. CLS Bank developed software for its own use in similar transactions. CLS brought an action for declaratory judgment, asserting that Alice’s patents were subject-matter ineligible because they did no more than recite abstract ideas regarding fundamental economic concepts. Alice counterclaimed, asserting that CLS infringed Alice’s patents. The district court found the Alice patents invalid, but the Federal Circuit reversed, holding that Alice’s patents fell within the “abstract ideas” exception to the generally broad policy of patent eligibility. Alice argues that the abstract ideas exception is meant to be read narrowly and apply to fundamental truths such as facts of nature. CLS counters that Alice’s patents merely cover fundamental economic concepts and that these should fall within the exception. At issue is a basic question about the scope of patent-eligible subject matter, and the breadth of the abstract ideas exception. The Court’s decision could fundamentally alter the scope of what is patentable.  The decision may encourage innovation in the software and other industries by rewarding those who expend resources to bring about a useful product to the public.

Questions as Framed for the Court by the Parties: 

Whether claims to computer-implemented inventions—including claims to systems and machines, processes, and items of manufacture—are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court? 

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Facts

In securities trading, when two parties agree to a trade there is often a time lapse between when the parties enter into the agreement and when the actual trade is performed. See CLS Bank Int’l v. Alice Corp., 717 F.3d 1269, 1274 (Fed Cir. 2013).

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Octane Fitness v. Icon Health and Fitness

Issues: 

How much discretion should a district court have in determining whether a case is “exceptional,” thereby entitling the prevailing accused infringer to an award of attorney fees?

Icon Health & Fitness sued Octane Health, alleging patent infringement over an elliptical exercise machine. After Octane won in federal district court on summary judgment, it moved for an award of attorney’s fees, arguing that the suit was an “exceptional case” under 35 U.S.C § 285. The district court denied the motion, and the Federal Circuit affirmed. In this case, the Supreme Court may determine the scope of a district court’s discretion in granting fees under § 285. Although affirming the Federal Circuit’s standard would prevent attorney fees in most instances, it would follow the usual American rule that each party generally bears its own costs of litigation. However, if the Supreme Court decides to broaden the lower courts’ discretion, this may limit frivolous or predatory patent suits. Icon argues that the Supreme Court should affirm the Federal Circuit’s two-part test because it comports with the legislative intent behind § 285 and prior judicial interpretation of that provision. Octane argues that the Supreme Court should overturn the Federal Circuit’s test because the test is not party neutral and violates principles of statutory construction.

Questions as Framed for the Court by the Parties: 

Does the Federal Circuit’s promulgation of a rigid and exclusive two-part test for determining whether a case is “exceptional” under 35 U.S.C § 285 improperly appropriate a district court’s discretionary authority to award attorney fees to prevailing accused infringers in contravention of statutory intent and this Court’s precedent, thereby raising the standard for accused infringers (but not patentees) to recoup fees and encouraging patent plaintiffs to bring spurious patent cases to cause competitive harm or coerce unwarranted settlements from defendants?

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Facts

This case began as a patent infringement lawsuit filed by Respondent Icon Health & Fitness, Inc. (“Icon”). See Icon Health & Fitness, Inc. v. Octane Fitness, LLC, No. 09-319, 2011 WL 2457914, at *1 (D. Minn. June 17, 2011).

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Medtronic, Inc. v. Boston Scientific Corp.

Issues: 

Does the burden of proving patent infringement in a declaratory judgment action fall upon the licensee or licensor?

In a traditional patent infringement suit, the patent owner has the burden of proving infringement. In MedImmune, Inc. v. Genentech, Inc., the Supreme Court held that a patent licensee could bring a declaratory judgment action against a licensor without violating the agreement. Here, Petitioner Medtronic entered a license agreement with Respondent Mirowski Family Ventures (“MFV”) that allowed Medtronic to challenge the validity, enforceability, and scope of a medical device patent in a declaratory judgment action. The Supreme Court will decide who—the patent owner or the licensee—has the burden of proving infringement in such an action. Medtronic argues that the traditional burden of proof (i.e., burden on the owner) should apply in the declaratory judgment context, as this would promote fairness and consistency in judgments, further the public interest in determining the scope of a patent, and avoid reaching issues of substantive law in declaratory judgment actions. MFV argues that the burden of proving noninfringement should be on the licensee because it is the party seeking relief and because this would incentivize patent owners to enter into license agreements. The Court’s ruling in this case will reshape the incentives for entering into and litigating license agreements, and thereby impact the litigation practices in declaratory judgment actions involving patent licenses.

Questions as Framed for the Court by the Parties: 

In MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 137 (2007), this Court ruled that a patent licensee that believes that its products do not infringe the patent and accordingly are not subject to royalty payments is "not required ... to break or terminate its ... license agreement before seeking a declaratory judgment in federal court that the underlying patent is ... not infringed."

The question presented is whether, in such a declaratory judgment action brought by a licensee under MedImmune, the licensee has the burden to prove that its products do not infringe the patent, or whether (as is the case in all other patent litigation, including other declaratory judgment actions), the patentee must prove infringement.

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Association for Molecular Pathology, et al. v. Myriad Genetics, Inc.

Myriad Genetics first identified and isolated the BRCA1 and BRCA2 genes responsible for diagnosing an elevated risk of breast and ovarian cancer. Myriad claims patents on the isolated BRCA genes along with cDNA, which is a synthetic product that mirrors the coding sections of the BRCA genes, and "primers" used in diagnostics. The Patent Act defines the scope of patentable subject-matter in 35 U.S.C. § 101; however, the Supreme Court has consistently held that laws of nature, abstract ideas, and natural phenomenon cannot be patented. Myriad claims that the isolated and modified genes that they hold patents for never occur in nature, and subsequently are patentable subject-matter. Conversely, the Association for Molecular Pathologists contends that Myriad only isolated, and did not modify, a gene already existing in nature and that this isolated gene performs a similar function as the gene in natural form. The district court held that naturally-occurring genes were not patentable subject-matter, but the Federal Circuit court reversed. How the Supreme Court decides this case will greatly impact the scope of patentable subject-matter. A narrowing or a broadening of current subject-matter eligibility will have significant effects on the incentives for inventors as well as what information is available for and usable by the general public.

Questions as Framed for the Court by the Parties: 

Many patients seek genetic testing to see if they have mutations in their genes that are associated with a significantly increased risk of breast or ovarian cancer. Respondent Myriad Genetics obtained patents on two human genes that correlate to this risk, known as BRCA1 and BRCA2. These patents claim every naturally-occurring version of those genes, including mutations, on the theory that Myriad invented something patent-eligible simply by removing ("isolating") the genes from the body. Petitioners are primarily medical professionals who regularly use routine, conventional genetic testing methods to examine genes, but are prohibited from examining the human genes that Myriad claims to own. This case therefore presents the following questions:

  1. Are human genes patentable?
  2. Did the court of appeals err in upholding a method claim by Myriad that is irreconcilable with this Court's ruling in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012)?
  3. Did the court of appeals err in adopting a new and inflexible rule, contrary to normal standing rules and this Court's decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), that petitioners who have been indisputably deterred by Myriad's "active enforcement" of its patent rights nonetheless lack standing to challenge those patents absent evidence that they have been personally threatened with an infringement action?

LIMITED TO QUESTION 1 PRESENTED BY THE PETITION.

Issue

Whether Myriad’s claimed invention, the sequence of certain human genes in both isolated and purified forms, falls within the scope of inventions for which a patent may be granted.

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Acknowledgments: 

The authors would like to thank Professor Oskar Liivak for his insight into this case.

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Vernon Hugh Bowman v. Monsanto Company

Monsanto Company, a producer of herbicide resistant soybean seeds and technology, sued Vernon Hugh Bowman, a soybean farmer, for patent infringement.  Bowman replanted second-generation seeds, which were the product of seeds purchased from a licensed Monsanto technology distributor.  Monsanto argued that by planting the product of Monsanto’s herbicide resistant seeds instead of purchasing new ones, Bowman was in violation of the Technology Agreement for the seeds.  The Federal Circuit upheld a district court decision awarding Monsanto damages for violation of their patented technology, reasoning that Monsanto's herbicide resistant technology was covered by patent regardless of whether it was the original seed or a product of the original seeds. Bowman contends that Monsanto’s patent rights were exhausted once he bought the seeds and that use of progeny seeds is an expected use of the product.  Monsanto responds that in the case of self-replicating technologies the patent extends to the technology, here, the trait of herbicide resistance, rather than the seed itself. 

Questions as Framed for the Court by the Parties: 

Patent exhaustion delimits rights of patent holders by eliminating the right
 to control or prohibit use of the invention after an authorized sale. In this case, the Federal Circuit refused to find exhaustion where a farmer used seeds purchased in an authorized sale for their natural and foreseeable purpose--namely, for planting.                                      

The question presented is: Whether the Federal Circuit erred by (1) refusing to find patent exhaustion in patented seeds even after an authorized sale and by (2) creating an exception to the doctrine of patent exhaustion for self-replicating technologies?

Issue

May patent holders enforce their rights on the products of self-replicating technologies, such as replicating seeds, after an authorized sale or does the patent only apply to the original article?

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Jerry W. Gunn, et al., v. Vernon F. Minton

The Respondent, Vernon F. Minton ("Minton"), leased a software that he developed to the National Association of Securities Dealers, Inc. ("NASD") and NASDAQ Stock Market, Inc. ("NASDAQ") and later applied for and was granted a patent for the software. Subsequently, Respondent Minton filed a patent infringement lawsuit against NASD and NASDAQ, but the trial court dismissed the lawsuit due to the "on-sale bar" rule, codified in § 102(b) of the United States Patent Act. The rule invalidates patents that apply to inventions sold more than a year prior to the application date of the patent. Minton then filed a legal malpractice lawsuit against his attorneys, Petitioner Jerry W. Gunn, et al., who represented Minton in the patent infringement case and argued that if not for Gunn's failure to raise at trial the experimental use exception to the on-sale bar, he would have won the patent infringement lawsuit. The issue in this case concerns whether the federal courts should have exclusive jurisdiction over legal malpractice claims that arise from patent litigation. Gunn argues that the federal issue in the case is too insubstantial to be heard in federal court and, furthermore, that significant state interests and Congressional intent require that the case be heard in state court. Minton claims, however, that the federal issue is substantial and that based on the federal interests and Congressional intent, this case should be decided in federal court. The Supreme Court's decision will affect the efficiency and uniformity of this country's patent law and patent-related malpractice litigation. Such effects would impact the growth and development of the technology and science industries. 

Questions as Framed for the Court by the Parties: 

Did the Federal Circuit depart from the standard this Court articulated in Grable & Sons Metal Products, Inc. v. Darue Eng'g & Mfg., 545 U.S. 308 (2005), for "arising under" jurisdiction of the federal courts under 28 U.S.C. § 1338, when it held that state law legal malpractice claims against trial lawyers for their handling of underlying patent matters come within the exclusive jurisdiction of the federal courts? Because the Federal Circuit has exclusive jurisdiction over appeals involving patents, are state courts and federal courts strictly following the Federal Circuit's mistaken standard, thereby magnifying its jurisdictional error and sweeping broad swaths of state law claims - which involve no actual patents and have no impact on actual patent rights - into the federal courts?

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