Federal Circuit Review - Issue 265
265-1. Federal Circuit Declines a Petitioner’s APJ Appointments Clause Challenge Because the Petitioner Requested That the Board Adjudicate the Petition
The United States Court of Appeals for the Federal Circuit recently denied a motion to vacate and remand a case brought in light of the Court’s recent decision in Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019), where the Court discussed appointment of Administrative Patent Judges (APJs) under the Appointments Clause. The Court distinguishes this case in that the party wishing to challenge the appointment of the APJs was the party that petitioned the Patent Trial and Appeal Board (Board) for inter partes review. The Court also discusses how the petitioner waived its Appointments Clause challenge. See Ciena Corp. v. Oyster Optics, LLC, No. 2019-2117, 2020 U.S. App. LEXIS 14318 (Fed. Cir. May 5, 2020) (Before Moore, O’Malley, and Stoll, Circuit Judges) (Opinion for the Court, O’Malley, Circuit Judge) (reissue of nonprecedential order in Ciena Corp. v. Oyster Optics, LLC, No. 2019-2117, 2020 U.S. App. LEXIS 14252 (Fed. Cir. Jan. 28, 2020)).
Oyster Optics, LLC (Oyster) sued Ciena Corporation (Ciena) in district court in 2016, alleging infringement of U.S. Patent No. 8,913,898 (’898 patent). Ciena petitioned the Board for IPR of the ’898 patent, and the district court stayed litigation. In May 2019, the Board issued its final written decision finding that Ciena did not “demonstrate by a preponderance of the evidence that any of the challenged claims were unpatentable.” Ciena then appealed, arguing to the Court that the decision must be vacated and remanded for a new Board hearing because the appointment of the APJs in that written opinion was not proper under the Appointments Clause, citing Arthrex.
The Court immediately noted that there is a significant difference in this case as opposed to Arthrex, Inc. Here, and unlike in Arthrex, the party that is challenging the APJs’ appointment is the party that petitioned for IPR. In other words, Ciena “was content to have the assigned Board judges adjudicate its invalidity challenges until the Board ruled against it.”
The Court briefly discussed the Supreme Court cases cited by Ciena to support its case. In Commodity Futures Trading Commission v. Schor, 478 U.S. 833 (1986), which Ciena relied heavily upon, the Supreme Court similarly found that the petitioning party “was content to have the entire dispute settled in the forum he had selected until the [administrative law judge] ruled against him on all counts; it was only after the ALJ rendered a decision to which he objected that [the petitioner] raised any challenge....” Commodity, 478 U.S. at 838. The Supreme Court of the United States also discussed waiver, concluding that the party in that case waived his right to challenge and that his consent to the forum was “sufficient to allow the Court to find that no structural concern regarding the integrity of the judiciary was actually implicated.” Id.
The Federal Circuit also discussed the waiver in the case Freytag v. Commissioner, 501 U.S. 868 (1991). The United States Court of Appeals for the Fifth Circuit in that case held that a challenge against a decision made by the U.S. Tax Court had been waived, in similar circumstances as the cases above. The Supreme Court agreed, but also took up the Appointments Clause question. Since Appointments Clause challenges are non-jurisdictional, they are waivable. A court can exercise its discretion as to whether it will hear these challenges.
Ciena argues that the “structural interests justify forgiving Ciena’s clear waiver.” The Court held that it is not bound to forgive a waiver and again discussed the cases above and how they support its decision that whether to hear a non-jurisdictional challenge is discretionary. The Court concluded its opinion by discussing, again, that “[w]here the decision to invoke a forum ‘is left entirely to the parties,’ ‘separation of powers concerns are diminished.’” Schor, 478 U.S. at 855.
In so holding, the Federal Circuit declined to take up the Appointment Clause challenge and denied the motion for remand and rehearing.
Prior IPR written decisions by APJs can still be scrutinized under the Federal Circuit’s Arthrex, Inc. v. Smith & Nephew, Inc. decision. However, if the party challenging the APJs appointment is the party that petitioned for IPR, the challenge is waived. It is within the courts’ discretion to forgive that waiver.
265-2. Federal Circuit Finds Patent Trial and Appeal Board Incorrectly Applied Principles of Obviousness
The Federal Circuit recently reversed a decision by the Board, finding that the Board incorrectly had applied principles of obviousness to conclude that claims 1, 2, 5, 9, and 19 of U.S. Patent No. 8,798,593 (’593 patent) were non-obvious in view of the prior art. See Uber Techs., Inc v. X One, Inc., No. 2019-1164, 2020 U.S. App. LEXIS 14253 (Fed. Cir. May 5, 2020) (Before Prost, Chief Judge, Dyk and Wallach, Circuit Judges) (Opinion for the Court, Prost, Chief Judge).
The ’593 patent, owned by X One, Inc. (X One), is directed towards exchanging location information between mobile devices to allow users to share their locations with each other and view each other’s location on a map. For example, a stranded motorist can use the technology to share his or her location with a tow truck driver for the driver to find the user and for the user to know where the tow truck driver is at any time. See Uber Techs. Inc. v. X One, Inc., No. IPR2017-01255, Paper No. 41 at col. 15 ll. 26–38 (PTAB Oct. 12, 2018) (“Final Written Decision”).
Uber Technologies, Inc. (Uber) filed a petition for IPR asserting that claims 1, 2, 5, 9, and 19 of the ’593 patent were obvious in view of Japanese Unexamined Patent Application Publication No. 2002-10321 (Okubo) in combination with Japanese Unexamined Patent Application Publication No. 2002-352388 (Konishi). Uber further asserted that claims 1, 2, 5, 6, and 9 of the ’593 patent were obvious in view of Okubo, Konishi, and U.S. Patent No. 6,636,803 (Hartz). Like the ’593 patent, the asserted art relates generally to technology that allows users to transmit location information between mobile devices, including embodiments that can be used to show the locations of friends or vehicles. The Board instituted IPR but concluded that Uber had failed to demonstrate that independent claim 1 was unpatentable as obvious.
On appeal, Uber argued that the Board had misapplied principles of obviousness as explained in KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007), because the Board incorrectly had determined that one of ordinary skill in the art would not seek out a design choice to make the map plotting function to be a server-side, rather than a terminal-side, function. Uber argued that server-side and terminal-side plotting were both well-known design choices in the prior art and, therefore, it would have been obvious to substitute one for the other. As pointed out by Uber, Konishi expressly discloses server-side plotting while Okubo discloses terminal-side plotting.
Upon review of the Board’s decision, the Federal Circuit found that the Board improperly had concluded that the challenged claims of the ’593 patent were nonobvious in view of the prior art. As the Federal Circuit noted, under the rationales of KSR, because terminal-side plotting and server-side plotting would have been two of a finite number of known predictable solutions at the time of the ’593 patent, a person of ordinary skill in the art would have faced a simple design choice, and therefore would have been motivated to combine the teachings of the prior art to achieve the limitations of the ’593 patent. Accordingly, the Federal Circuit reversed and remanded the Board’s decision for further proceedings.
When there is a design need to solve a problem and there are a finite number of identified, predictable solutions, a combination that is obvious to try might show that the invention was obvious under Section 103.
265-3. Dedicated-Disclosure Doctrine Bars Patent Owner from Asserting Infringement Under Doctrine of Equivalents
The Federal Circuit recently issued a ruling affirming the U.S. District Court for the District of Delaware’s finding that Slayback Pharma did not infringe patents owned by Eagle Pharmaceuticals. See Eagle Pharms. Inc. v. Slayback Pharma LLC, No. 2019-1924, 2020 U.S. App. LEXIS 14696 (Fed. Cir. May 8, 2020) (Before O’Malley, Reyna, and Chen, Circuit Judges) (Opinion for the Court, Reyna, Circuit Judge).
Eagle Pharmaceuticals, LLC (Eagle) is the owner of four substantially similar patents directed to its brand-name drug, BELRAPZO®, used to treat chronic lymphocytic leukemia and indolent B-cell non-Hodgkin lymphoma. Upon Slayback Pharma LLC (Slayback) submitting a new drug application (NDA) for a generic version of BELRAPZO®, Eagle filed suit against Slayback alleging patent infringement.
Claim 1 of U.S. Patent No. 9,572,796 to Eagle recites:
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A non-aqueous liquid composition comprising:
bendamustine, or a pharmaceutically acceptable salt thereof;
a pharmaceutically acceptable fluid comprising a mixture of polyethylene glycol and propylene glycol, wherein the ratio of polyethylene glycol to propylene glycol in the pharmaceutically acceptable fluid is from about 95:5 to about 50:50; and a stabilizing amount of an antioxidant.
Slayback agreed that it literally infringed all of the limitations of Claim 1 except for the “pharmaceutically acceptable fluid” limitation, as Slayback’s generic drug contains ethanol instead of propylene glycol as a solvent. In response, Eagle asserted that Slayback infringed this limitation under the doctrine of equivalents because the ethanol in Slayback’s generic drug is “insubstantially different from the propylene glycol (PG) in the claimed composition.”
Upon the filing of the suit, Slayback moved for a judgement of non-infringement on the pleadings. Slayback claimed that the disclosure-dedication doctrine prevented Eagle from asserting infringement under the doctrine of equivalents because Eagle’s patents disclose in the specification ethanol as an alternative solvent to PG but do not claim ethanol as an alternative solvent to PG. In response, Eagle asserted that the patents do not associate the use of ethanol as an alternative to PG for the claimed embodiment, which includes an antioxidant and, instead, discloses only ethanol as an alternative for unclaimed embodiments which contain chloride salt. Thus, Eagle argued that a person having ordinary skill in the art would not understand that the specification discloses how ethanol could be used as an alternative to PG in the formulation recited in Claim 1. Ultimately, the District Court granted Slayback’s motion reasoning that “[t]he parties have not identified claim construction dispute, and the written description of the asserted patents unambiguously and repeatedly identifies [ethanol] as an alternative to propylene glycol.” Accordingly, the District Court held that the disclosure-dedication doctrine barred Eagle for asserting infringement under the doctrine of equivalents. Eagle subsequently appealed.
The doctrine of equivalents states that “a product or process that does not literally infringe upon the express terms of a patent claim may nonetheless be found to infringe if there is ‘equivalence’ between the elements of the accused product or process and the claimed elements of the patented invention. Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 21, 29 (1997). The disclosure-dedication doctrine can be used to bar a party from asserting infringement under the doctrine of equivalents. Under the disclosure-dedication doctrine “when a patent drafter discloses but declines to claim subject matter, . . . this action dedicates the unclaimed subject matter to the public.” Johnson & Johnson Assoc. v. R.E. Servs., 285 F.3d 1046, 1054 (Fed. Cir. 2002) (en banc). To conclude whether the disclosure-dedication doctrine is applicable, it is determined whether the specification discloses the unclaimed subject matter with sufficient “specificity that one or ordinary skill could identify the subject matter that had been disclosed and not claimed.” PSC Comput. Prods., Inc. v. Foxconn Int’l, Inc., 355 F.3d 1353, 1360 (Fed. Cir. 2004).
On appeal, Eagle first asserted that the district court improperly determined that the disclosure-dedication doctrine applied to the instant case. Eagle asserted a person having ordinary skill in the art would not understand that ethanol can be an alternative to PG in the antioxidant formulation of Claim 1 since ethanol was not described as an alternative specifically for the Claim 1 formulation. The Federal Circuit explained that, under the disclosure-dedication doctrine, it is not necessary for the specification to disclose the dedicated subject matter in an embodiment that is identical to the claimed embodiment. Rather, the dedicated subject matter can be disclosed “as an alternative to the relevant claim limitation.” Pfizer, Inc. v. Teva Pharm. USA, Inc., 429 F.3d 1364, 1378 (Fed. Cir. 2005). In this case, the Federal Circuit noted that the specification repeatedly disclosed ethanol as an alternative acceptable fluid and there was nothing in the specification limiting the use of ethanol to particular formulations. Additionally, the only purpose of the contested limitation is that the fluid be “pharmaceutically acceptable” and the specification repeatedly discloses that ethanol can serve that purpose. Accordingly, the Federal Circuit concluded that the district court properly determined that the “patents dedicated ethanol to the public by disclosing, but not claiming ethanol as an alternative to PG in the ‘pharmaceutically acceptable solvent’ claim limitation.”
Eagle next asserted that a factual dispute existed when the District Court granted Slayback’s motion of non-infringement on the pleadings, and thus, it was improper for the District Court to grant such motion without drawing all inferences in Eagle’s favor. In particular, Eagle claims that the district court should have inferred that “a skilled artisan would not have understood that ethanol was an alternative to PG in the claimed ‘PEG/PG/Antioxidant’ category of formulations” and should have provided sufficient weight to Eagle’s submitted expert declaration claiming such conclusion.
When ruling on a motion on the pleadings under Rule 12(c), a district court has “discretion to consider evidence outside the complaint for the purposes of deciding whether to accept that evidence and convert the motion into one for summary judgment.” Kulwicki v. Dawson, 969 F. 2d 1454, 1462 (3d Cir. 1992). Thus, the Federal Circuit explained that the district court did not err by ignoring Eagle’s submitted expert declaration, noting that “expert testimony is not always required for a district court to determine how a skilled artisan would understand a patent’s disclosure and claimed invention.” Union Carbide Corp. v. Am. Can Co., 724 F.2d 1567, 1573 (Fed. Cir. 1984). Further, the Federal Circuit explained that the asserted patents provided the necessary support for the district court to determine the application of the disclosure-dedication doctrine, such that “the only reasonable inference that [could] be made from the patent disclosures [was] that a skilled artisan would understand the patents to disclose ethanol as an alternative to the claimed PG.”
Accordingly, the Federal Circuit affirmed the district court’s judgment of non-infringement on the pleadings.
The disclosure-dedication doctrine does not require the specification to disclose the allegedly dedicated subject matter in an embodiment that is identical to the claimed embodiment. Thus, a patent owner can be barred from asserting infringement under the doctrine of equivalents even when the patent owner discloses subject matter as an alternative to an unclaimed embodiment.