Federal Circuit Update (May 2016)

May 26, 2016

Included in this May 2016 edition of Gibson Dunn’s Federal Circuit Update is a brief summary of last month’s Federal Circuit Judicial Conference, a summary of the pending en banc case (Medicines Co.), and a practice update regarding a clerical change to one of the Federal Circuit’s rules of practice.  Also included are summaries of a number of key recent decisions related to venue and forum shopping in patent cases and a trio of decisions on patent eligibility under section 101, including the Federal Circuit’s second post-Alice decision reversing a district court’s determination that claims were not subject matter eligible.

Federal Circuit News

The Federal Circuit held its annual Judicial Conference on April 11, 2016.  Over 700 attorneys, judges, and federal officials were in attendance. In addition to remarks made by Chief Justice John Roberts, Federal Circuit Chief Judge Sharon Prost, and Solicitor General Donald B. Verrilli, Jr., there were a number of panels addressing various issues affecting the Court.   

All twelve active judges and most of the senior judges on the Federal Circuit participated in a panel answering questions about the state of the Court and the ways in which attorneys can improve their advocacy there.  Judge Bryson urged attorneys to refrain from "nasty" attacks on opponents in court filings, in favor of giving the court "a nice, clean legal argument."  Judge Moore suggested keeping amicus briefs regarding patent issues focused on how the outcome will impact particular issues.  Judge Dyk discussed the difficulties raised when large swaths of briefs are marked confidential, as well as the new rule that will now "tightly limit" confidential material.  Finally, Judge Wallach hinted that when he asks a question about an issue, he is likely opposed to agreeing with the questioned counsel on that issue.

David Kappos, former Director of the U.S. Patent & Trademark Office, and Michelle Lee, who was recently confirmed as the Office’s new Director, also sat on panels during the conference.  Notably, Mr. Kappos called for the abolition of 35 U.S.C. § 101, saying that the Supreme Court’s jurisprudence on § 101 and the way district courts have interpreted it make it too difficult to secure patents on biotechnology and software. 

Upcoming En Banc Federal Circuit Cases

Medicines Co. v. Hospira, Inc., Nos. 14-1469, 14-1504 (Fed. Cir.):  The on-sale bar’s application to third-party manufacturing.

Medicines hired a third party to manufacture a drug on its behalf over a year before filing for patents that allegedly covered that drug in product-by-process claims.  The panel held the patents were invalid as being offered for sale before the critical date (decision available here).  Nine amicus briefs have been filed:  two in support of neither party (American Intellectual Property Law Association and the Intellectual Property Owners Association) and seven in support of Medicines Co. (the United States, Houston Intellectual Property Association, Biotechnology Innovation Organization, Gilead Sciences, Inc., Pharmaceutical Research and Manufacturers of America, Dr. Roberta Jean Morris, and Miller, Patti, Pershern PLLC).  Oral argument was heard on May 5th, 2016.  In addition to the parties, the Court granted leave for amicus curiae United States to participate in oral argument. 

Questions Presented:

  1. Do the circumstances presented here constitute a commercial sale under the on-sale bar of 35 U.S.C. § 102(b)?
  1.  Was there a sale for the purposes of § 102(b) despite the absence of a transfer of title?

  2.  Was the sale commercial in nature for the purposes of § 102(b) or an experimental use?

  1. Should this court overrule or revise the principle in Special Devices, Inc. v. OEA, Inc., 270 F.3d 1353 (Fed. Cir. 2001), that there is no "supplier exception" to the on-sale bar of 35 U.S.C. § 102(b)?

Federal Circuit Practice Update

The latest amendments to the Federal Circuit Rules became effective for all appeals docketed on or after April 1, 2016.  There are numerous amendments and revisions—be sure to consult the summary of changes and the complete rules prior to your next filing.

The Court also corrected misnumbering of Federal Circuit Rule 30.  A redline of the changes is available here.  Of note, Rule 30(h) limits the material that may be marked confidential.  Rule 30(h)(1)(A) now provides:  "Material that retains its status as covered by a protective order may be marked confidential in appendices (and addenda to briefs).  Material that has lost its coverage under a protective order under Federal Circuit Rule 11(c) or 17(e)—based on Federal Circuit Rules 30(h)(1)(B), 27(m)(1), or 28(d)(1)—may not be marked confidential in appendices (or addenda)."

Key Case Summaries (Apr. – May 2016)

Genetic Techs. Ltd. v. Merial L.L.C., No. 2016-105 (Fed. Cir. Apr. 8, 2016): Eligibility under § 101 of a patent on detecting genetic variations.

Genetic Technologies Limited brought suit against multiple defendants for infringement of a patent directed to methods of detecting genetic variations.  The claims recited a method of amplifying a non-coding region sequence of genomic DNA and then "analyzing the amplified DNA" to detect a coding region allele.  The district court granted the defendants’ motion to dismiss for failure to state a claim, holding that the claims did not cover eligible subject matter under 35 U.S.C § 101 because they claimed a law of nature.

On appeal, the Federal Circuit (Dyk, J.) affirmed the district court’s decision.  On the first step of the Mayo/Alice framework, the court held that the claims covered essentially all applications of the law of linkage disequilibrium (or the tendency of certain coding and non-coding regions of DNA to be linked) to detecting coding sequences of DNA, and thus were directed to a law of nature.  With respect to the second step of the analysis, the court emphasized that "[t]he inventive concept necessary [at this step] cannot be furnished by the unpatentable law of nature (or natural phenomenon or abstract idea) itself.  That is . . . a claim directed to a newly discovered law of nature (or natural phenomenon or abstract idea) cannot rely on the novelty of that discovery for the inventive concept necessary for patent eligibility; instead, the application must provide something inventive, beyond mere ‘well-understood, routine, conventional activity.’"  Applying these concepts, the court determined that the additional elements in the claims ("amplifying" and "analyzing" DNA) were routine and conventional at the time the patent was filed, and thus not sufficient to provide the inventive concept necessary to render the claim patent eligible.

In re TC Heartland LLC, No. 2016-105 (Fed. Cir. Apr. 29, 2016): Personal jurisdiction and venue for patent infringement cases.

Kraft sued TC Heartland for patent infringement in the District of Delaware.  TC Heartland sought to dismiss for lack of personal jurisdiction or, in the alternative, to transfer venue.  TC Heartland contended that the court did not have personal jurisdiction over it because it was not registered to do business in Delaware, has not entered into any supply contracts in Delaware, and has not called on any accounts in Delaware to solicit sales.  TC Heartland admitted, however, that it had shipped orders of the accused product into Delaware pursuant to contracts with two national accounts.  TC Heartland further contended that venue was improper because it does not "reside" in Delaware for venue purposes according to 28 U.S.C. § 1400(b).  The district court denied TC Heartland’s motions.  TC Heartland petitioned for a writ of mandamus to the Federal Circuit directing the District of Delaware to either dismiss or transfer the patent infringement suit filed against it by Kraft.

The Federal Circuit (Moore, J.) denied TC Heartland’s petition based on settled Federal Circuit precedent.  TC Heartland argued first that the District of Delaware had specific personal jurisdiction over the allegedly infringing acts that occurred in Delaware only, not those occurring in other states.  The court held that this argument was rejected in Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558 (Fed. Cir. 1994), which held that the due process requirement that a defendant have sufficient minimum contacts with the forum was met where a non-resident defendant purposefully shipped accused products into the forum through an established distribution channel and the cause of action for patent infringement was alleged to arise out of those activities.  With respect to venue, TC Heartland argued that Congress’s 2011 amendments to 28 U.S.C. § 1391 effectively overruled VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), which held that the definition of corporate residence in the general venue statute, § 1391(c), applied to the patent venue statute, 28 U.S.C. § 1400.  The Federal Circuit, however, held that VE Holding was still the prevailing law.  It explained that the 2011 amendments to the general venue statute were minor and that there was no evidence that the Congress intended to render § 1391(c)’s definition of corporate residence inapplicable to venue for patent cases. 

Enfish, LLC v. Microsoft Corp., No. 2015-1244 (Fed. Cir. May 12, 2016):  Eligibility under § 101 of patents directed to self-referential databases.

Enfish sued Microsoft for infringement of several patents relating to "self-referential" databases.  The claims were directed to "[a] data storage and retrieval system for computer memory" where the memory is configured according to a particular type of self-referential logical table, as set forth in the claims.  Microsoft moved for summary judgment that the asserted patents were directed to abstract ideas and thus patent ineligible under 35 U.S.C. § 101.  The district court granted Microsoft’s motion, concluding that the claims were directed to the abstract idea of "storing, organizing, and retrieving memory in a logical table" or, more simply, "the concept of organizing information using tabular formats."

The Federal Circuit (Hughes, J.) reversed the district court’s decision.  The court focused its analysis on the first step of the Alice framework, that is, "whether the claims at issue are directed to a patent-ineligible concept."  The court emphasized that this step "is a meaningful one" and "cannot simply ask whether the claims involve a patent-ineligible concept, because essentially every routinely patent-eligible claim involving physical products and actions involves a law of nature and/or natural phenomenon."  Rather, as the court explains, this inquiry asks whether "their character as a whole is directed to excluded subject matter."  With respect to the specific claims on appeal, the court explained that they are patent eligible because "they are directed to a specific improvement in the way computers operate, embodied in the self-referential table."  The panel disagreed with the lower court’s description of the claims, finding that it "oversimplified the self-referential component of the claims and downplayed the invention’s benefits."  The court cautioned that "describing the claims at such a high level of abstraction and untethered from the language of the claims all but ensures that the exceptions to § 101 swallow the rule."  Because the claims were not directed to an abstract idea under the first step of the Alice analysis, it concluded that the claims are patent eligible and did not consider the second step.

In re TLI Communications LLC Patent Litigation, No. 15-1372 (Fed. Cir. May 17, 2016):  Ineligibility under § 101 of patent claims directed to the taking, transmission, and organization of digital images.

TLI sued several defendants for infringement of a patent relating to the taking, transmission, and organization of digital images.  The defendants filed a motion to dismiss, arguing that the asserted claims were patent ineligible under 35 U.S.C. § 101.  The district court granted the defendants’ motion, holding that the claims were directed to the abstract idea of "taking, organizing, classifying, and storing photographs."

The Federal Circuit (Hughes, J.) affirmed the district court’s decision.  Applying the first step of the Alice framework, the court held that the claims were directed to the abstract idea of "classifying an image and storing the image based on its classification."  The court explained that the claims "are not directed to a specific improvement to computer functionality," but rather "the use of conventional or generic technology in a nascent but well-known environment."  The court further noted that the claims "are not directed to a solution to ‘technological problem’" or "a challenge particular to the Internet."  Applying the second step of the Alice analysis, the court held that the claims lacked an inventive concept sufficient to confer patent eligibility.  The court found that the recited components, such as a "telephone unit" and "server," "behave exactly as expected according to their ordinary use." 

Upcoming Oral Argument Calendar

For a list of upcoming arguments at the Federal Circuit, please click here.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Federal Circuit.  Please contact the Gibson Dunn lawyer with whom you usually work or the authors of this alert:

Mark A. Perry – Washington, D.C. (202-887-3667, [email protected])
Blaine H. Evanson – Los Angeles (213-229-7228, [email protected])
Blair A. Silver – Washington, D.C. (202-955-8690, [email protected])

Please also feel free to contact any of the following practice group co-chairs or any member of the firm’s Appellate and Constitutional Law or Intellectual Property practice groups: 

Appellate and Constitutional Law Group:
Thomas G. Hungar - Washington, D.C. (202-955-8500, [email protected])
Caitlin J. Halligan – New York (212-351-4000, [email protected])

Intellectual Property Group:
Josh Krevitt – New York (212-351-4000, [email protected])
Wayne Barsky - Los Angeles (310-552-8500, [email protected])
Mark Reiter – Dallas (214-698-3100, [email protected])

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