IP Law Bulletin

In the second U.S. Supreme Court opinion this term to address the “exhaustion” of intellectual property rights, the Court unanimously held that the doctrine of patent exhaustion does not permit purchasers of certain types of patented, self-reproducing articles to reproduce the patented articles without the patent owner’s permission. The case, Bowman v. Monsanto Co., involved a farmer, Bowman, who planted and harvested soybeans that were the progeny of first generation soybeans embodying Monsanto’s patented technology. Justice Kagan, writing for the majority, explained that Monsanto’s sale of the first generation soybeans only exhausted its rights in that generation, not in subsequent generations.

When Justices Sonia Sotomayor and Elena Kagan joined the U.S. Supreme Court in 2009 and 2010, respectively, relatively little was known about their positions on intellectual property (“IP”) law. Nutter’s IP Bulletin provided IP records for both Justices prior to their Court appointments in November 2009 (Sotomayor) and September 2010 (Kagan). In the past few years, both Justices have taken part in several decisions involving intellectual property law. Their decisions have generally broadened patent rights post issuance, but the Justices have hesitated to extend patent rights too broadly.

On May 10, 2013, the Federal Circuit issued a decision in its en banc rehearing of CLS Bank International v. Alice Corp. In a 5-5 split, the Federal Circuit affirmed a district court decision that Alice Corp’s. computer method patent claims, as well as similar claims directed to systems and computer-readable media, are not directed to eligible subject matter under 35 U.S.C. § 101. A total of six opinions were written, showing a deep divide among the judges over the patentability of computer method claims. Certain judges called for Supreme Court guidance, and Chief Judge Randall Rader even included “additional reflections” on the Court’s struggle with this issue. The divided decision once more throws computer method patent claims into uncertainty, but the multitude of opinions from the various judges does provide insight into their thinking that may be valuable to litigants and applicants dealing with computer method patent claims. At this time, however, any consideration of computer method patent claims should occur on a case-by-case basis with the assistance of a patent attorney, as the various analyses from this decision will have to be compared with prior precedent and the particular claims at issue to determine subject matter eligibility.

The recent Supreme Court decision in Kirtsaeng v. John Wiley & Sons represents a significant victory for college students in their struggle with media companies over copyrighted media. In a 6-3 decision, the Supreme Court assented to college student Supap Kirtsaeng’s resale of textbooks in the United States that were bought in Thailand at low cost, reasoning that the Copyright Act does not create a right to divide foreign markets from domestic markets. Effectively, this decision establishes international copyright exhaustion, i.e., that the first sale of a copyrighted article, whether manufactured domestically or abroad, is sufficient to “exhaust” the copyright owner’s rights to that article.

Claiming an apparatus in terms of what it does, referred to as “functional claim language,” rather than the structure of the apparatus itself, is a common and useful claim drafting technique. The way the functional language is recited, however, can determine whether the claim covers any device capable of performing the function, or only devices designed or made to perform the function.

In Deere and Co. v. Bush Hog, LLC, the Federal Circuit recently revisited a district court's claim construction and reviewed the court's failure to apply the doctrine of equivalents. In doing so, the Federal Circuit provided additional guidance on how courts should apply the doctrine of equivalents and claim vitiation. Some have opined that decisions like those in Deere potentially breathe new life into the doctrine of equivalents.

The Supreme Court unanimously affirmed the dismissal of a challenge to the validity of a trademark in view of the mark owner's unilaterally issued "Covenant Not to Sue." In Already, L.L.C. v. Nike, Inc., Nike accused Already of infringing a trademark on its Air Force 1 sneakers, to which Already responded by alleging Nike's mark was invalid. Nike decided to drop its claims in conjunction with unilaterally issuing a "Covenant Not to Sue," promising not to raise any trademark or unfair competition claims against Already or any affiliated entity based on any of Already's existing footwear designs, or any future Already designs that constituted a "colorable imitation" of Already's current products. Nike relied on its "Covenant Not to Sue" to request that Already’s validity counterclaim also be dismissed because the covenant extinguished any case or controversy; Already desired to maintain its counterclaim of invalidity. The Supreme Court agreed with Nike, affirming the lower court's decision to dismiss Already's counterclaim. The Court ruled that there was no reasonable chance a dispute could ever arise related to the rights at issue between the parties in view of Nike's issued covenant. As a result, the Court concluded that Already lacked standing to challenge the validity of Nike's mark. Practitioners and clients should look to the text of Nike's covenant not to sue for guidance in crafting similar covenants to prevent later attacks against their intellectual property rights.

The Eastern District of Virginia recently determined in Exelixis, Inc. v. Kappos that the USPTO has been miscalculating Patent Term Adjustment (PTA) in cases where a Request for Continued Examination (RCE) was filed after three or more years of pendency. The USPTO has for many years interpreted the statute governing PTA as immediately tolling the three year statutory period for the calculation of PTA upon the filing of an RCE, regardless of whether the RCE is filed before or after the three year mark. But, in Exelixis, the USPTO was ordered to calculate the PTA on a day-for-day basis when an RCE is filed after three years from filing regardless of what else occurs during the continued prosecution, i.e., the filing of an RCE after the three year mark has “no impact on PTA.” It is unclear at this time whether the USPTO will adjust their PTA calculation rules to adhere to the order generally, whether the USPTO will appeal to the Federal Circuit, or whether the USPTO will simply maintain the current practice. But, patent owners should consider auditing their portfolio with eyes for cases where an RCE was filed three or more years after the filing date. If the patent is within two months of issuance, the PTA can be challenged within the USPTO by filing a request for reconsideration under 37 C.F.R. 1.705(d). If the patent issued within the past 180 days, the owner can choose to challenge the ruling in the Eastern District of Virginia, under the precedent of Exelixis.

In an August 6, 2012 order, Judge Webber of the Eastern District of Missouri confirmed the jury verdict, including the reasonable royalty damage award of $1 billion in Monsanto Co. v. E.I. DuPont de Nemours & Co., Civil Action No. 09-CV-686 (E.D. Missouri August 6, 2012) (Webber, D.J.). The award is the fourth largest jury award in a patent trial in U.S. history, and is especially surprising given that DuPont’s accused product had never been made available to the public.

While some biotechnology patent owners breathed a short sigh of relief on August 16, 2012, as the US Court of Appeals for the Federal Circuit issued the highly anticipated decision Association for Molecular Pathology v. Myriad Genetics, finding that DNA sequences are indeed eligible for patent protection, not all biotech innovators will be happy with the Myriad decision since certain diagnostic method claims were again struck down as ineligible for patent protection. The Federal Circuit’s application of the Mayo case to Myriad’s claims on diagnostic methods provides little guidance on how to draft such diagnostic claims to secure allowance and survive future patentability challenges. While it is clear that the claims must recite something "transformative," what constitutes a transformation in a diagnostic method remains to be elucidated. The final word on this subject may need to come from the Supreme Court.