IP Law Bulletin

Before the Supreme Court’s 2006 decision in eBay Inc. v. MercExchange, L.L.C., it was axiomatic that, upon a showing of a likelihood of success on the merits, a trademark owner was entitled to a presumption of irreparable harm when moving for preliminary injunctive relief. But after eBay, there was no such presumption in patent cases, leaving the question open whether the presumption would apply in trademark cases. Just a few weeks ago, on October 6, 2014, the Supreme Court denied certiorari in Herb Reed Enters., LLC v. Florida Entm. Mgmt., Inc., in which the Ninth Circuit held that trademark owners are not entitled to a presumption of irreparable harm simply by making a preliminary showing of a good case on the merits. Accordingly, the Supreme Court has left it to the circuits to resolve the presumption question in trademark cases, at least for now, causing litigants to query what evidence will suffice to establish irreparable harm without the presumption and to consider the prevailing law in the various circuits when choosing a forum.

Despite being dismissed by the Federal Circuit before reaching its highly anticipated substantive issues regarding patent eligibility, the ruling in Consumer Watchdog v. Wisconsin Alumni Research Foundation nonetheless significantly alters the patent litigation landscape. Consumer Watchdog (CW), a nonprofit waging a seven-year campaign to invalidate the Wisconsin Alumni Research Foundation (WARF) stem cell patent, saw its battle come to an abrupt end when the Federal Circuit held that it did not have an injury in fact sufficient to confer Article III standing to appeal a United States Patent and Trademark Office (USPTO) decision in federal court. The ruling limits the reach of the statute permitting appeals of USPTO rulings to the constitutional boundaries set by Article III, leaving some third-party challengers stuck with the USPTO as their only available forum.

In late June, the United States Supreme Court issued a long-awaited decision in Alice Corporation Pty. Ltd. v. CLS Bank International that may have broad-reaching implications on patenting software. At issue in the case was whether claims to a computer-implemented system and method for mitigating “settlement risk” in financial transactions are eligible for patenting under 35 U.S.C. § 101. In a unanimous decision, the Court held that the claims were directed to an abstract idea and, although implemented on a computer, were not patentable.

The U.S. Supreme Court issued two landmark decisions reversing existing Federal Circuit precedent on the fees that can be awarded to the prevailing party in exceptional patent infringement cases. Both cases involved the interpretation 35 U.S.C. § 285, which is the patent statute for awarding attorney fees to the prevailing party “in exceptional cases.” In Octane Fitness, LLC v. Icon Health & Fitness, the Supreme Court was asked to review the substantive standard for awarding attorney fees pursuant to Section 285. In Highmark Inc. v. Allcare Health Management System, Inc., the litigants asked the Supreme Court to review the standard of review of Section 285 on appeal. Both cases were argued in February.

In the recent case of Medtronic v. Mirowski, the Supreme Court held that “when a licensee seeks a declaratory judgment against a patentee to establish that there is no infringement, the burden of proving infringement remains with the patentee.” This decision extends the Court’s MedImmune ruling, which allows licensees to challenge the validity and/or infringement of a patent without repudiating the underlying license.

Six months ago, the United States Supreme Court shook up the biotechnology industry by ruling that genetic sequences are not patent eligible “simply because they have been isolated.” AMP v. Myriad Genetics, 569 U.S. 12-398 (June 13, 2013). While providing little practical guidance, the Court succeeded in raising many new questions at the core of biotechnology patenting. For example, what characteristics are required to make natural nucleic acids patent eligible? What about other natural products, such as stem cells, polypeptides, antibodies, purified enzymes, and hormones?

The U.S. Supreme Court recently agreed to hear two patent-related cases, as well as a copyright case. The copyright case, Petrella v. Metro-Goldwyn-Mayer, Inc., involves the doctrine of laches, and in particular whether a copyright holder can sue for a new act of infringement, such as distributing another copy of a movie, when the copyright holder failed to assert infringement claims during previous distributions. The two patent-related cases, Octane Fitness, LLC v. ICON Health & Fitness, Inc. and Highmark Inc. v. Allcare Health Management Systems, involve challenges to the Federal Circuit’s high standard for awarding attorneys’ fees to the prevailing party in patent infringement cases. It is anticipated that the two patent cases may impact litigation by non-practicing entities (NPEs), sometimes referred to as “patent trolls,” because a decision that makes it easier to shift attorneys’ fees to the non-prevailing party may serve as a deterrent to NPEs suing established companies. Congress is also considering action that may negatively impact NPEs. Virginia Representative Bob Goodlatte has introduced a bipartisan bill, dubbed the Innovation Act, which aims to encourage innovation by creating a number of procedural safeguards against frivolous patent infringement lawsuits, including heightening the pleading requirement, limiting discovery, and shifting fees to the prevailing party. Of course, given that patent reform took center stage just two years ago in the form of the Leahy-Smith America Invents Act (AIA), it seems more likely that Congress will take-up other issues before it opens debate on the Innovation Act, if it does so at all. Stay tuned to the IP Bulletin for further developments on the Supreme Court cases and for pertinent legislative updates.

The Federal Circuit rendered a decision in Novo Nordisk A/S v. Caraco Pharmaceutical Laboratories, Ltd. on June 18, 2013, finding that a Novo Nordisk diabetes treatment patent involving the combination of the drugs metformin and repaglinide was an obvious combination of known diabetes treatment drugs, despite certain factual findings of the combination’s unexpected results. Combination drugs, such as Novo Nordisk’s metformin-repaglinide treatment for diabetes, have been increasingly found to be effective for treating a variety of ailments, but their development is typically incredibly expensive and time-consuming. This Federal Circuit decision could adversely affect investment in developing combination drugs, which in turn would affect the availability of these often very effective treatments. The decision also highlights the deference (or lack thereof) given to patent examiner findings during prosecution.

In June, the Federal Circuit decided Ultramercial, Inc. v. Hulu, LLC, where a three judge panel held that a claim for an internet and computer-based method was patent eligible subject matter. Chief Judge Rader authored the majority opinion, which provides valuable insight into his approach to patent eligible subject matter and highlights key factors considered for computer-implemented inventions. Judge Rader’s opinion makes clear that he views 35 U.S.C. § 101 as a “course filter” meant to provide only rare exceptions to patentable subject matter. Judge Rader’s analysis focused on the question of whether a claim is directed to a particular application of an idea (patentable) or the idea itself (not patentable). Despite this decision’s insight, questions remain regarding where the line is drawn between claiming an idea or an application thereof, and uncertainty still exists regarding the rest of the court, especially given the fractured nature of the recent CLS Bank Int’l v. Alice Corp. ruling.

In a highly anticipated decision issued on June 13, 2013 in Ass’n for Molecular Pathology v. Myriad, the U.S. Supreme Court unanimously ruled that isolated DNA sequences are not eligible for patent protection. The Court simultaneously held that cDNA can be patent eligible subject matter – as long as it is distinguishable from natural DNA. Justice Thomas, writing for the Court, clarified that the mixed ruling did not implicate methods, applications of knowledge about genes or alteration of sequences. The Court’s holding affects composition claims for patent owners and applicants, but both patent owners and applicants can take various actions to best protect their interests in view of Myriad.