Reciprocal Education and Respect Through Open Debate

China is one of the world’s largest and fastest growing economic powers. In 2017, the World Bank reported that Chinese patent filings outnumbered those from any other country in the world. Chinese residential patent filings (i.e., filings by a resident owner or a resident applicant) accounted for 58 percent of worldwide residential patent filings. China has tripled its intellectual property (IP) revenues over the last two years, but this still only accounts for around 1.5 percent of global receipts [1]. The low revenue reflects the lack of confidence that U.S. and European firms have in the fairness of the Chinese legal system, which they accuse of bribery and political influence. Chinese firms are also mistrustful of the U.S. legal system and often decide not to file for patent protection outside of China. Whether due to the vastly different legal systems or cultural differences, there is a persistent mutual mistrust between China and much of the Western world when it comes to IP protection.

As our economy becomes increasingly global, businesses face challenges as they try to protect their intellectual property assets in different countries. Two universities, Berkeley in the U.S. and Tsinghua in China, have tried to mitigate these difficulties by organizing a joint conference between China, the U.S., and other countries. On October 22, 2019, The Berkeley Center for Law and Technology hosted the 2nd Annual Berkeley-Tsinghua Transnational IP Litigation Conference. At the conference, the U.S. and Chinese judges openly debated the pros and the cons of their own and others’ litigation systems.

Chinese judges expressed distrust in the U.S. system of jury trials. Besides viewing the jury selection process as cumbersome and inefficient, they viewed juries as unsophisticated laypeople who are poorly suited to understanding complex technologies. Chinese judges fear that the quality of lawyering unduly influences the jurors: jurors are easily swayed by presentation quality, likability of experts, and general trial theatrics. “If we compare, [Chinese judges] are the directors in court, but in a jury system, lawyers and parties are directors of the system,” said Hsiung Sung-Mei of Taiwan’s IP court. The U.S. judges defended our system suggesting that the juries are capable of weighing evidence and rendering meaningful verdicts. They also suggested that the use of common people on the juries increases confidence in the legal system where common people often mistrust the lawyers.

The U.S. judges expressed concerns with the amount of influence a single person or a single report has on the outcome of a case in China. In contrast to jury trials, Chinese judges appoint and rely on a Technology Investigative Officer (TIO). An appointed TIO hears both sides and prepares a report for the court. While the U.S. rules of civil procedure allow the use of a court appointed expert, this device is rarely used. The Chinese judges believe an impartial third-party expert would be much more qualified to understand the nuances of each particular case rather than a group of jurors.

U.S. judges also questioned ex parte communications between parties and judges that are common under the Chinese system2. China’s 2001 PRC Judges Law allows non-secret, “authorized” ex parte communications in their courts. Chinese judges feel that ex parte communications expedite proceedings and that judges are sophisticated jurists that are not unduly influenced by one party’s arguments. U.S. judges tend to look at this skeptically because U.S. rules explicitly prohibit most ex parte communication on the grounds that to allow one party to try to influence the judge without giving the other party the opportunity to respond undermines the fairness of judicial proceedings.

Another concern about the Chinese system is the perception that domestic bias and bribery are common. In rebuttal, Judge Hsiung pointed out that the Chinese patent system provides automatic appeals to the court of last resort. In addition, the cost of litigation in China is much cheaper than in the U.S., making it much more accessible. China views the high costs of U.S. litigation as a major obstacle to efficient dispute resolution. In contrast, the U.S. judges highlighted the transparency and impartiality of their own system. The International Trade Commission (ITC) is a common forum to litigate patent infringement against importers, and its proceedings are public and transparent. The fact that U.S. patent owners win only 58 percent of the cases in front of the ITC is used to indicate the lack of domestic bias.

Although the Berkeley-Tsinghua Transnational IP Litigation Conference did not solve any disputes or change legal systems, the debates did provide a platform to air grievances and genuinely learn the rationale behind other legal systems. The hope is that sincere debate and increased understanding will help alleviate the persistent mistrust between China and the Western world when it comes to IP protection.

[1] Calculated from the authorized use of the proprietary rights associated with patents, trademarks, copyrights, industrial processes and designs including trade secrets, and franchises. Brian Cassidy, ANALYSIS: Chinese IP Filing Surge Clouds U.S. Receipt Prospects, Bloomberg Law News (Oct. 27, 2019).


Legal Analytics for Counsel Selection

When a company enters litigation, it must select litigation counsel. The management of the company would usually call its peers and ask about past experiences, review counsels’ fields of technical expertise, evaluate their success rates, and then invite a handful of law firms to make a pitch. The invited attorneys would propose a case strategy and predict their probability of success. The management would then select a counsel based on the presentations given and their personal impressions.

Ex Parte is a start-up formed about two years ago that is trying to change appellate counsel selection for patent cases.[1] The company collects data for every appellate case since 2004 and combines it with a database of all practicing lawyers. It then uses a proprietary algorithm to identify a lawyer with the highest probability of success for a specific case. When Ex Parte analyzed the recent appeal by 10X Genomics, the company predicted that an average lawyer would have a nine percent probability of winning the case but hiring one particular litigator would increase the probability of success to 25 percent.

The attorney recommended to 10X Genomics by Ex Parte expressed concerns over the ethical implications of this analysis. For one, the lawyer no longer did patent appeals. Also, according to the American Bar Association’s model rules for professional responsibility, lawyers should not create an “unjustified expectation” of a future result based on their part performance.[2] But this is what Ex Parte may be doing – creating expectations of future performance based on past statistics.

In the U.S., the work of Ex Parte is protected by First Amendment rights and companies are not restricted in using its predictions to choose a litigation counsel. However, if a lawyer were to project his own probability of success based on his past record, that would be considered unethical. France has a law completely banning software companies from providing legal and judicial analytics.[3]

Additional concerns revolve over the ability of the software to account for specific facts of the case and the quality of data available from law firm websites. In the case with 10X Genomics, Ex Parte recommended a lawyer who no longer practiced patent appeals because the law firm website had not been updated with his current status. Ex Parte’s information may also interfere with the client’s relationship with counsel, where the software analysis of the probability of success in a case contradicts the counsel’s.

Also, “the law of small numbers” cautions that percentages may appear greatly superior or inferior based on small data sets – the appellate practice is so small that most lawyers only get a few cases in their lifetime. In the example of 10X Genomics, the counsel recommended by Ex Parte had litigated 34 cases, of which 20 were identified as patent appeal cases. The Court of Appeals for the Federal Circuit, which is the sole appellate court for patent appeals, has heard more than 4,000 patent cases since 2004.

With computers infiltrating almost every aspect of our lives, the use of computer-assisted legal analytics is only expected to increase with time. With new technology comes the need to evaluate new ethical considerations. On one hand, making predictions about future success based on past legal achievements may be considered borderline unethical by the legal community. On the other hand, it can be argued that a company such as Ex Parte merely provides additional information and another viewpoint for clients with which to make informed decisions. Litigations are sometimes driven by unfounded beliefs in the strengths of a company’s position, and data from Ex Parte may inject rationality into corporate decision-making and facilitate settlements.

In addition to companies that are entering litigation, Ex Parte’s services are also retained by law firms seeking better marketing positions and financial firms that fund litigation. With litigation being a $100 billion a year industry, any attempt to help quantify outcomes is an understandable goal. The question is whether and where the lines should be drawn for an ethical balancing act.

[1] Roy Strom, “The algorithm will hire your patent lawyer now,” Bloomberg Law, 8/1/2019.

[2] ABA’s Model Rules of Professional Conduct, Rule 7.1.

[3] Sam Skolnik, “France’s judicial analytics ban unlikely to catch on in the U.S.,” Bloomberg Law, 6/5/2019.

Does Artificial Intelligence Dream Of Collecting Royalties?

English mathematician Alan Turing introduced the concept of a thinking computer in a paper in 1950, and American computer scientist John McCarthy coined the term “artificial intelligence” (or AI) during the Dartmouth Conference in 1956[1]. For a while, the idea of thinking machines was confined to the realms of science fiction, but recent gains in computational power and data access have made AI the most disruptive technology of the 21 century. The influence of AI has permeated numerous historically human activities, including farming, manufacturing, commerce, transport, medical care, rescue, and education[2]. AI is capable of analyzing ever-growing volumes of data in ever-shortening times, and has also become capable of generating creative ideas. The Creativity Machine, developed by Stephen Thaler in 1994, was the first known machine that generated an invention resulting in the US Patent No. 5,852,815[3]. The Invention Machine created by John Koza in 1995 created an invention described in US Patent No. 6,847,851. Thaler and Koza named themselves the inventors and did not disclose the involvement of AI to the Patent Office.

The American patent law system was praised by Abraham Lincoln as one of the three great advances in world history[4].However, the system is facing significant conceptual challenges with the advancement of artificial intelligence. Under current legal system, patents are granted to inventors who contributed to the conception of the invention. Conception is defined as a “formation in the mind of the inventor, of a definite and permanent idea of the complete and operative invention,” a clearly human-centric concept[5]. The Federal Circuit has repeatedly ruled that to be deemed to “perform this mental act, inventors must be natural persons and cannot be corporations or sovereigns”[6].

So, who is the inventor when the creative idea is produced by artificial intelligence? Under the current legal framework, it is not the programmer because (s)he did not conceive the creative idea produced by the computer and may not even know the problem posed to the computer by the user. It is not the user, who also did not personally come up with a solution. Accordingly, under the current legal framework there can be no patent for an invention generated by AI because no “natural persons” conceived the invention.

In some fields, expensive developments do not happen without patent protection. The prospects of obtaining lucrative license agreements or a competitive advantage provide strong economic incentives to innovate and to patent inventions. The goal of the patent system is to provide these economic incentives, and there is ample evidence that the U.S. patent system has been working as intended. The rise of AI will force us to reevaluate our definitions and criteria for patentability in the near future.

Despite the uncertain future of patentability of AI-generated inventions, many firms are invested heavily in the development of AI systems. As of March 3, 2019, there were at least 127 start-up companies focused on application of AI in drug discovery[7]. Sanofi signed a $300 million dollar deal with Exscientia. The VC firm Andreessen Horowitz launched a $450 million dollar fund focused on applications of AI in drug discovery. Recognizing the insufficiency of the current legal system in addressing AI, the United States Patent and Trademark Office held a meeting on “Artificial Intelligence: Intellectual Property Policy Considerations” on January 31, 2019. Possible considerations include changing the law to allow listing AI as the inventor or listing no inventors on the face of the patent, or changes to the law of obviousness. While no solutions were developed at the meeting, the growing recognition of the issue is the first step to developing new laws to meet the challenges created by advances in technology.

[1]   Exec. Office of the President Nat’l Sci. and Tech. Council Comm. on Tech., Preparing for the Future of Artificial Intelligence (2016.)

[2]   European Parliament resolution of 16 February 2017

[3]   Ryan Abbott, “I Think, Therefore I Invent: Creative Computers and the Future of Patent Law”, B.C.L. Rev. 57(4), 1079 (2016)

[4]   Abraham Lincoln, “Second Lecture on Discoveries and Inventions” at the Phi Alpha Society of Illinois College at Jacksonville (February 11, 1859),

[5]   Hybritech Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1376 (1986).

[6]   University of Utah v. Max-Planck-Gesellschaft Zur Forderung Der Wissenschaften EV, 734 F.3d 1315, 1323 (Fed. Cir. 2013); see also Beech Aircraft Corp. V. Edo Crop., 990 F.2d 1237, 1248 (Fed. Cir. 1993) (“[O]nly natural persons can be ‘inventors.’”); New Idea Farm. Equip. Corp. v. Sperry Corp., 916 F.2d 1561, 1566 n.4 (Fed. Cir. 1990) (“people conceive, not companies”).


Deerfield Institute Report – Key insights into technology transfer offices

Translation of academic innovation has matured since the passage of the Bayh-Dole Act, 28 years ago. Universities and research institutes have contributed towards this to the tune of 380,000 disclosures, 206,000 new patent applications and 84,000 issued US patents.1 The market has responded in turn, generating 11,000 startups and 10,000 products that have yielded more than $1 billion in equity for the institutions.2 Deerfield Management has joined in this effort by entering into significant collaborations with leading academic institutions. In conjunction with these investments, the Deerfield Institute, the research division of Deerfield Management, surveyed 35 university technology transfer offices to endeavor to understand current trends impacting their organizations. The survey revealed insights that can shed light on the operations of these groups, provide guidance to those seeking to collaborate with academia and serve as a guide for continuous improvement in the practice of academic commercialization.

The Diagnostics Industry Hopes For A Clearer Future

An invention is entitled to a patent if it satisfies several distinct requirements for patentability:

  • The invention must be a “useful process, machine, manufacture, or composition of matter” (35 USC 101)
  • It must be novel (35 USC 102)
  • It must be not obvious (35 USC 103)
  • It must be disclosed in sufficient detail to allow others to use the invention after the patent expires (35 USC 112)

Discoveries that are deemed to be abstract ideas or laws of nature are excluded from eligibility. 

The distinction between a discovery and an invention is not easy to draw, especially after a series of the recent Supreme Court and Federal Circuit decisions have comingled the distinct requirements for patentability.  The diagnostics industry particularly suffers from the muddled state of patent law.  In Mayo v. Prometheus, the Supreme Court invalidated a patent directed at dosing a patient, measuring a metabolite, and then titrating the dose of the medication.  The previously unknown correlation between the level of a metabolite and the required dose was viewed as an unpatentable law of nature combined with a known method for metabolite measurement.  In Association for Molecular Pathology v. Myriad Genetics, the Supreme Court invalidated patents for isolated pieces of DNA coding for previously unknown polypeptide sequences that determined the risk for developing breast cancer.  The correlation of the particular DNA sequence to cancer risk was again viewed as an unpatentable law of nature.  Then, in Ariosa Diagnostics v. Sequenom, the Federal Circuit invalidated a patent for testing fetal DNA using a sample of maternal blood.  The test eliminated the high risks associated with amniocentesis.  The court acknowledged that the test in its entirety was novel and useful.  However, the presence of the fetal DNA in maternal blood was deemed to be a law of nature combined with a routine detection technique.  The court felt bound by the Supreme Court’s earlier decisions and invalidated the patent.

In contrast, the Federal Circuit upheld the patent claim in Vanda Pharmaceuticals v. West-Ward Pharmaceuticals Int’l. The patent involved personalizing a patient’s dosing regimen based on the patient’s genotype.  The court deemed that a treatment based on diagnostics is eligible for protection, unlike the diagnostics themselves.  Many diagnostic companies now add a treatment step to diagnostic patent claims in an attempt to secure protection.  However, the reliance on this case is unfortunately misplaced.  Patent infringement requires proof that the infringer performed all the steps of the patented method.  Unlike pharmaceutical companies, diagnostic companies usually do not perform a treatment step, so proving infringement would be unlikely.

Some diagnostic companies such as those developing novel diagnostic hardware or sample processing protocols are not affected by these rulings.  However, many diagnostic companies rely on the discoveries of novel predictive correlations.  With no ability to patent correlations, the industry relies on trade secret protection.  The secrecy makes it more difficult to secure funding, validate discoveries, and gain broad acceptance.

In a series of public speeches last month, U.S. Patent and Trademark Office director Andrei Iancu recognized that the current law is difficult to interpret and apply because it mixes distinct legal concepts.  In his speech, Iancu asked, “How can a claim be novel enough to pass 102 and nonobvious enough to pass 103, yet lack an “inventive concept” and therefore fail 101? Or, how can a claim be concrete enough so that one of skill in the art can make it without undue experimentation, and pass 112, yet abstract enough to fail 101? How can something concrete be abstract?” “Overall, the key for our IP systems is for [patentability principles] to be reliable and predictable.”  “We must be clear, lest we perpetuate the current state. People should know up front. If nothing else, for the sake of a predictable ecosystem, let’s be transparent.”  Iancu recognized that a patent owner can attract investment capital only when the defensibility of the patent is clear.

Iancu has directed the USPTO to clarify and revise the guidelines for patent eligibility. However, the Patent Office cannot overrule the courts and will have to act within the margins of case interpretation.  Fortunately, these problems are being noticed by Congress.  On December 12, 2018, Sens. Chris Coons, D-Del., and Thom Tillis, R-N.C., sent invitations to companies, industry groups and intellectual property experts to discuss the need for legislative reform of patent eligibility standards.  These recent events offer the diagnostics industry hope for a clearer future.

2018 Patents For Humanity Awards

Patents for Humanity is a United States Patent and Trademark Office (USPTO) awards program that was started in 2012 to recognize and encourage the application of innovative technologies to solve problems in underserved or impoverished communities. These struggling communities are unable to attract as much commercial interest for a variety of reasons, including the lack of capital, lack of infrastructure, low education levels, or insufficient legal protections. The awards seek to offset the diminished commercial incentives as well as recognize innovators who prevailed against these challenges to bring life-changing technologies to those in need. On August 9, 2018, the USPTO announced this year’s winners of the Patents for Humanity awards. 

From nine winners selected this year, four were in the field of healthcare:

  1. Medtronic won the award for its creation of a portable low-water use kidney dialysis machine. The machine uses only about 20 liters of water per treatment, roughly a quarter of the amount required by current systems. It weighs 50 pounds and is the size of a small suitcase. Approximately 700 million people in the world today are in need of dialysis. This new dialysis machine can bring these life-saving treatments to many patients in the developing countries that lack the infrastructure to provide stationary machines that demand huge quantities of water.
  2. The U.S. National Institutes of Health won the award for creating a low-cost rotavirus vaccine that remains stable for two years without refrigeration. Rotaviruses cause severe diarrhea that results in more than 200,000 child deaths worldwide each year. The award-winning vaccine addresses six of the most common rotaviruses. The government of India has already ordered 3.8 million doses for its Universal Vaccination Program.
  3. Little Sparrow Technologies won the award for developing a low-cost device for treating jaundice in infants. Jaundice causes approximately 100,000 infant deaths annually in developing countries. These deaths are fully preventable, but the current devices were too expensive for most developing countries. Little Sparrow’s machine runs on battery power, collapses for easy transportation, and is built from off-the-shelf parts. The World Health Organization included this device in its Compendium of Medical Devices for Global Health.
  4. Kinnos Inc. won the award for creating a color-changing chemical additive for chlorine which helps to indicate proper surface disinfection with chlorine in Ebola treatment centers. The additive turns the surface blue to indicate that it has been properly disinfected. The color fades with time so healthcare workers can easily see if a surface needs additional treatment. The additive has already been used in Liberia, Guinea, Haiti, Uganda, and Democratic Republic of Congo. The Hazmat team of New York Fire Department has also been using this additive.

The USPTO also named six honorable mentions.  We would like to recognize that one of our partners,[1] Vanderbilt University, was awarded an honorable mention for developing and distributing antibodies for the Zika virus to other researchers.[2]  The antibodies enable further work to develop vaccines and treatments.

Congratulations to all the winners!  As stated by Edward Elliott, the program manager of Patents for Humanity, “Patents for Humanity seeks to recognize innovators of all types by celebrating their varied contributions to our common goal: bringing prosperity to every corner of the globe.”[3]  These recipients show how even a small group of dedicated people can impact lives around the world.




What Makes A Good Patent?

Patents are filed for various strategic reasons and sometimes observers have difficulty discerning patent quality. What makes a good patent? There is no universal answer or formula. Reasonable people can look at the same patent and disagree on whether the patent is good or not. However, in the case of therapeutic patents, experimental data is vital to patent quality.

Unlike other types of patents, patents on therapeutics should have some experimental data in order to withstand challenges. In one case, Dr. Bonnie Davis invented a treatment for Alzheimer’s disease solely while reviewing the literature. The literature described that galanthamine had anticholinesterase properties. The literature also described an increase in short-term memory in dogs after administering galanthamine and a correlation between Alzheimer’s disease symptoms and a reduced level of acetylcholine in the brain. Dr. Davis deduced that galanthamine can be used to treat Alzheimer’s patients, and she was correct. She filed for a patent using prophetic examples, and the patent was granted on May 5, 1987. The experimental proof of her theory was completed two months later in July of 1987. In 1995, Dr. Davis licensed the invention to Janssen. Generic pharmaceutical companies seeking to market generic versions of Janssen’s drug successfully challenged the validity of this patent. The Federal Circuit affirmed the invalidity determination by the district court because relevant animal testing experiments were “not finished…by the time the ‘318 patent was allowed”. Judge Dyk wrote that “[t]ypically, patent applications claiming new methods of treatment are supported by test results,” and “under appropriate circumstances, . . . the first link in the screening chain, in vitro testing, may establish a practical utility for the [pharmaceutical] compound in question.” This case highlights the crucial importance of data to the validity of therapeutic patents. In re ‘318 Patent Infringement Litigation (Fed. Cir. 2009).  

The next consideration is how much data should be included in the patent application. Generally, broader coverage requires more data. In any case, more data is better, but this creates a dilemma. On one hand, the U.S. has a “first inventor to file system” – the first to file gets the patent. Wait too long to accumulate data and somebody else may get the patent first. File before you have sufficient data and the application may get rejected, or a weak patent may get issued that cannot withstand subsequent challenges. The latter comes with the wasted costs of the developing a therapeutic product only to see the benefits go to generics. A fact finder may find that there was insufficient proof that the invention would work for the intended purpose. For Star Trek fans, a patent application may describe a tricorder, but without more – it is still only science fiction. Even when credible, the details must be thorough enough to allow others to copy the invention after the patent expires. Finally, when very little data appears sufficient, a fact finder may view the invention as obvious. The decision on the quantity and quality of data needed is a balancing act usually decided with the help of counsel who is up-to-date on industry standards.

A patent applicant is required to submit enough data to show the inventor is in possession of the invention, the invention will work for the intended purpose, and that others will be able to practice the invention without undue experimentation. The level of data required in the patent application depends on the nature of the invention, but all therapeutic patents should have some data. A patent attorney helps to determine the sufficiency of the data by reviewing court cases where similar patents were upheld or invalidated. In many cases, it is still an educated guess. However, based on the current interpretation of the law, it is prudent to err on the side of having more data, especially in the case of therapeutic patents.

Patent Musings In Numbers And Figures

In 2017, 352,585 new patents were granted and 374,731 patent applications were published by the US Patent and Trademark Office. The publication number represents a roughly 5% decline from the previous year. One trade publication comments that one reason for the decline is “patent owners are getting smarter and doing a better job of filing patent applications that are more useful.[1]” Regardless of the decline, there are still on average over 1,000 new patent applications published daily. Patent owners and inventors continue to see high value in obtaining patent exclusivity and are willing to pay the costs. Despite all the criticism of the US patent system and all the uncertainty, patent owners continue to trust that the system is reasonable and useful.

While the pro-patent mentality has a long history in the U.S., originating in the U.S. Constitution, it is also interesting to look at IP activity from other parts of the world. US patentees continued to dominate patent grants at the US Patent Office with 179,522 patents last year (patent owners from the rest of the world received 173,063 patent grants). South Korea came in second with 23,525 patents followed by Germany (17,545), China (13,120) and a tie between Japan and Taiwan (12,622 each). European countries, such as the UK, France, an Italy produced significantly fewer patents. The worldwide patenting activity, however, is different. According to the World Intellectual Property Organization Report for 2016[2], that year Asia produced just over 2 million patent applications or 64.6% of all patent applications filed world-wide, three times more than North America.

The same report shows China emerging as one of the lead innovators, with over 1.2 million patent applications filed at its home office in 2016, predominantly from residents of China, followed by ~600,000 applications filed in the US, split roughly evenly between residents and non-residents. Rounding out the top 3 is Japan, which also had roughly 300,000 domestic applications, and a smaller proportion of applications from non-residents.

Looking more closely at China’s patent office, Chinese entities filed four times more patents in China than U.S. entities did in the U.S. However, numbers alone may be misleading, as some commentators suggest that Chinese companies are required to file a certain number of patents and the pressure from this requirement produces low quality patent filings. On the other hand, the increased patent activity from China and other countries in Asia may indicate a drastic change in the IP enforcement attitudes from anti- to pro-patent. The numbers may reflect a genuine boom of the Chinese IP economy.

In the U.S., two areas remain as pillars in the U.S. intellectual property system – innovative activity at academic institutions, and IP enforcement by the U.S. Federal courts. In 2016, 9 of the top 10 most innovative universities by the number of issued patents are in the U.S, led by the University of California system, MIT, and Stanford. The lone OUS academic institution to crack the top 10 is Tsinghua University[3].

In 2017, 4,072 new patent cases were filed in district courts, down from a peak of 5,874 in 2015, but up from the low of 2,582 in 2005. Last year patent cases also saw renewed interest by the US Supreme Court. The highest court reviewed and clarified several memorable issues. In Life Technologies. Corp. v Promega Corp., infringement by a single component of a multi-component system assembled abroad was reviewed. The topic of laches, or unreasonable delay in bringing a suit was revisited in SCA Hygiene Products v First Quality Baby Products, LLC. Patent exhaustion (Impression Products Inc. v Lexmark International Inc.) and proper litigation venue (TC Heartland LLC v Kraft Food Group Brands LLC) were also revisited. Even the constitutionality of IPR proceedings was taken up by the Supreme Court in Oil States v Greene’s Energy Group for review.

The rate of innovation in the U.S. appears robust and healthy and there is hope that the renewed interest from the Supreme Court will inject even greater predictability into U.S. patent litigation.



[3] National Academy of Inventors, “Top 100 Worldwide Universities Granted U.S. Utility Patents” 2016

Oil States Energy Services, LLC v. Greene’s Energy Group, LLC

On November 27, 2017, the Supreme Court heard oral arguments in the Oil States Energy Services, LLC v. Greene’s Energy Group, LLC case.  The parties argued whether the inter partes review (IPR) process violates the Constitution by permitting a non-Article III court to invalidate patents. If the Court rules that the IPR procedure is unconstitutional, this popular form of adjudication will be eliminated and all patents previously invalidated in IPR proceedings will be restored. Many pharmaceutical products may be affected by this decision.

IPRs are trial-like adjudication proceedings introduced by the America Invents Act on September 16, 2012.  Congress was concerned with low quality patents and created IPRs to provide a rapid low-cost alternative to litigation.  They allow any party to challenge the validity of an issued patent based on published prior art.  The Patent Trials and Appeals Board (PTAB) of the U.S. Patent and Trademark Office conducts the proceedings between the patent owner and the petitioner who challenges the patent’s validity.  The PTAB is an “Article I” tribunal within the executive branch, not an “Article III” court within the judicial branch.

Oil States argued that IPRs are unconstitutional because patents are private property rights historically adjudicated by Article III courts.  Therefore, IPRs are an improper exercise of judicial power by an executive agency.  Oil States also argued that the IPR is not an adjudication of a public right because it is a proceeding between two private parties and not an action against a government agency.

Greene’s Energy argued that IPRs are constitutional because patents are public rights, rights that exist exclusively by an act of Congress to promote the progress of useful arts.  As such, these proceedings are rightfully conducted by the executive branch, merely with the assistance of a third party. IPR proceedings correct mistakes made by the USPTO in issuing “bad” patents.  Justice Sotomayor questioned whether there is really any constitutionality issue because IPR decisions are still under the purvey of the Article III court: IPR decisions can be appealed to the Article III appellate court.

The views on IPR proceedings are mixed.  Large technology firms like Alphabet’s Google and Intel Corp filed briefs in support of Greene’s Energy.  High tech industries are besieged by nuisance litigation from non-practicing entities known as “patent trolls” and so largely welcome the proceedings.  The reaction from the life science industry was far more mixed.  While the intent of IPRs was to provide an alternative to litigation, they have in practice provided alleged infringers with an additional chance to invalidate a patent, often resulting in duplicative adjudication.  The Pharmaceutical Research and Manufacturers of America (PhRMA), the Biotechnology Innovation Organization (BIO) and the Association of University Technology Managers (AUTM) have filed briefs in support of Oil States.

The U.S. Supreme Court justices appeared divided during the hearing.  The Court’s liberal justices appeared to support the constitutionality of the review process.  The conservative justices appeared concerned with non-judicial review.  The Court will likely issue a decision in the first half of 2018.

Uk Supreme Court Broadens The Scope Of Patent Protection

Historically, British courts had ruled that patent infringement was to be determined by a strictly literal reading of the patent claims. Patent claims are numbered paragraphs at the end of the patent that define the scope of the rights granted by the patent and specify technological solutions that should not be used without prior authorization. However, words are often imprecise and inadequate to describe complex technologies. For example, a minor change to the product could be deemed non-infringing as long as it fell outside the specific words of the claims. In recognition of the unfairness of this scenario, the courts created a doctrine of equivalents, which made it possible to hold a party liable for patent infringement even though the infringing product or process did not fall within the literal scope of a patent claim but nevertheless was equivalent to the claimed invention.

The doctrine of equivalents was generally recognized in the UK, but the test of equivalence established in 2005 was so stringent that it rendered the doctrine practically meaningless. The test required the courts to look at “what the person skilled in the art would have understood the patentee to be claiming.” Kirin-Amgen Inc v Hoechst Marion Roussel Ltd, 2005 RPC 9. A person of ordinary skill in the art looking at the words of the patent claims would usually interpret the words narrowly in a way that leaves little room for equivalents.

In July of 2017, the UK highest court revitalized the application of the doctrine of equivalents. Actavis UK Limited & Ors v Eli Lilly and Company, 2017 UKSC 48 (12 July 2017). To correct for the shortcomings of the prior test, Lord Neuberger, writing for the court in Actavis, established a two-prong test for patent infringement under the doctrine of equivalents: “… (i) does the variant infringe any of the claims as a matter of normal interpretation; and, if not, (ii) does the variant nonetheless infringe because it varies from the invention in a way or ways which is or are immaterial?” While the first prong of the test requires interpretation similar to the analysis under prior test, the second prong expands a court’s ability to analyze the materiality of the changes based on the facts and expert evidence.

The expansion of patent rights brings the UK law closer to the US law. U.S. Judge Learned Hand has described the purpose of the doctrine as to “prevent an infringer from stealing the benefit of the invention.” Royal Typewriter Co. v. Remington Rand, Inc., 168 F.2d 691, 692 (2d Cir. 1948). In the U.S., the courts consider whether “the accused product performs substantially the same function in substantially the same way with substantially the same result as each claim limitation of the patented product.” Warner-Jenkinson Company, Inc. v. Hilton Davis Chemical Co., 520 U.S. 17 (1997). While not perfect for chemical cases (for example, aspirin and ibuprofen are equivalent under this test as discussed by the Federal Circuit), the test strives to promote fairness and innovation. This test has restored power to the doctrine of equivalents in the UK and is a welcome development for patent owners.