Federal Circuit Review - Issue 48
USPTO’s Refusal to Terminate an Inter Partes Reexamination is Not a “Final Action” for Which the Agency Can Be Sued
Automated Merchandising Systems, Inc. v. Michelle K. Lee, Director, USPTO, No. 2014-1728, 2015 U.S. App. LEXIS 5801 (Fed. Cir. Apr. 10, 2015) (Taranto, J.). Click Here for a copy of the opinion.
On April 10, 2015, the Federal Circuit affirmed an Eastern District of Virginia summary judgment decision, finding that Automated Merchandising Systems Inc. (“AMS”) could not sue the USPTO over its decision not to stop a reexamination following settlement of an underlying infringement suit.
Following a consent judgment in an infringement suit between AMS and Crane Co., AMS requested that the USPTO terminate four related inter partes reexaminations (which had been requested by Crane). AMS argued the district court consent judgment was a final decision that Crane failed to meet its burden of proving invalidity of the patents under reexamination. The USPTO disagreed, because it did not consider the consent judgment a failure to prove invalidity. AMS filed suit against the USPTO in the Eastern District of Virginia, where the court granted summary judgment in favor of the USPTO. The district court held that prohibitions against maintaining a reexamination only apply where there has been an “actual adjudication on the merits.”
AMS appealed to the Federal Circuit, where the USPTO argued for the first time that its refusal to terminate reexaminations was not a “final agency action” for which a federal agency may be sued. In its decision, the Federal Circuit noted that the Patent Office may only be sued under the Administrative Procedure Act (APA) when a final decision has been rendered. Because the only consequence flowing from the refusal to terminate a reexamination is that the party must continue to defend its interests, such a decision is not considered “final.” The Court further held that a decision would not be “final” unless it marked the end of the administrative decision-making process and was a decision from which "legal consequences will flow." In light of the foregoing, the Federal Circuit held that the District Court’s grant of summary judgment in favor of the USPTO was not in error.
Factual Findings Support the District Court’s “Framing” of Obviousness Question
Insite Vision Inc. and Inspire Pharmaceuticals, Inc. v. Sandoz, Inc., No. 2014-1065, 2015 U.S. App. LEXIS 5717 (Fed. Cir. Apr. 9, 2015) (Linn, J.). Click Here for a copy of the opinion.
Pfizer owns U.S. Pat. No. 6,861,411, which claims a method of treating an ocular infection by administering topical azithromycin. Insite owns three patents (US. Pat. Nos. 6,239,113; 6,569,443 and 7,056,893), which claim a topical ophthalmic composition and a process for treating an eye with an azalide antibiotic. Inspire is licensed under all of these patents, which are listed in the FDA Orange Book as covering Insite’s topical azithromycin solution (Azasite). Sandoz sought to market a generic version of Azasite and filed an Abbreviated New Drug Application (ANDA) with a Paragraph IV certification alleging that Orange Book patents for Azasite were invalid and/or not infringed. Plaintiffs in turn sued Sandoz for infringement.
Before trial, the district court denied Sandoz’s motion to amend the pre-trial order to include the file history of the ‘411 patent’s European counterpart as evidence. After the trial, the court ruled that Sandoz failed to show “by clear and convincing evidence that the asserted claims would have been obvious to a person of ordinary skill in the art.” On appeal, Sandoz argued that the district court “misframed” the inquiry facing a person of ordinary skill in the art at the time of the invention. Sandoz also appealed the court’s refusal to admit the European file history into evidence.
The district court framed the obviousness inquiry as “whether it would have been obvious to a person of ordinary skill in the art at the time of the invention to develop a topical ophthalmic formulation containing azithromycin.” Sandoz argued for a more specific question: “whether it would have been obvious that topical azithromycin could be used to treat conjunctivitis.”
The Federal Circuit found that factual findings support the district court’s decision. Azithromycin and its class of molecules were “known to be bacteriostatic, to have a limited spectrum of activity, and to require multiple doses per day to penetrate tissue.” Furthermore, “the unique balance of log P, molecular weight, solubility, and charge” made the compound a poor candidate for treating ocular infections. The district court’s broader question did not foreclose Sandoz from proving that it would have been obvious to use topical azithromycin to treat one infection. The issue, according to the Court, was Sandoz’s failure to carry its burden of proof on a properly framed question.
Sandoz relied on two references: one disclosing a topical formulation of erythromycin and the other disclosing an oral azithromycin formulation used to treat conjunctivitis. Sandoz argued that azithromycin is a “newer iteration” of erythromycin, and it would have been common sense to replace an old antibiotic with a new one. Also, a person skilled in the art would have been motivated to use azithromycin topically, because it was well known that topical treatments for the eye are more effective than oral treatments.
The Federal Circuit agreed with district court and found that there were “innumerable” options for ophthalmic treatments, and some were known to be better than azithromycin. It would have been a legitimate concern for those skilled in the art that azithromycin might not penetrate the ocular tissue given its high molecular weight, charge and insolubility in water. In addition, oral azithromycin was delivered to the eye through phagocytosis, a bloodstream dependent process, which is a different process than for topical administration.
With respect to the exclusion of the late-proffered European file history, the Court considered five factors: (1) “the prejudice or surprise in fact of the party against whom the excluded witnesses would have testified” or the excluded evidence would have been offered; (2) “the ability of that party to cure the prejudice”; (3) the extent to which the new evidence would “disrupt the orderly and efficient trial of the case or of other cases in the court”; (4) any “bad faith or willfulness in failing to comply with the court’s order”; and (5) the importance of the excluded evidence. Pennypack Woods Home Ownership Ass’n, 559 F.2d 894, 904-05 (3 rd Cir. 1977). The first two factors favored the Plaintiffs. They would have to explain the differences between the EP and US patent law and the significance of comparing the US and EP file histories on the eve of trial. The third and fourth factors were found to be neutral. The fifth factor did not favor Sandoz, because the district court properly questioned the relevance and probative value of the EPO file history under U.S. law.
Because there was no error in the district court’s factual findings, the Federal Circuit affirmed.
A Claimed Range Must Be Critical to Avoid Anticipation By Overlapping Ranges in the Prior Art
Ineos USA LLC v. Berry Plastics Corp., No. 2014-1540, 2015 U.S. App. LEXIS 6175 (Fed. Cir. Apr. 16, 2015) (Moore, J.). Click Here for a copy of the opinion.
Ineos sued Berry Plastics for infringement of U.S. Patent No. 6,846,863 (’863 Patent), which claimed a polyethylene-based composition for manufacturing screw caps for bottles. The broadest asserted claim of the ’863 Patent recited a composition comprising four elements: (1) 94.5% by weight of polyethylene, (2) 0.05 to 0.5% by weight of at least one saturated fatty acid amide, (3) 0 to 0.15% by weight of a subsidiary lubricant selected from a fatty acids and other enumerated materials, and (4) 0 to 5% by weight of one or more additives selected from antioxidants, antacids, UV stabilizers, colorants, and antistatic agents.
Berry argued that the ’863 Patent was anticipated by U.S. Patent No. 5,948,846 (’846 Reference), which disclosed a composition comprising 94.5% by weight of polyethylene, and 0.1 to 5 parts per hundred by weight of stearamide, a saturated fatty acid amide. The reference further disclosed at least 0.1, 0.2, and 0.4 parts of stearamide. The district court held on summary judgment that the ’846 Reference anticipated the ’863 Patent, because the same amount of polyethylene was disclosed and the disclosure of 0.1, 0.2 and 0.4 parts stearamide were specific points within the claimed range for the fatty acid. The other ingredients were optional, because the claimed ranges encompassed 0%. Ineos appealed, and the Federal Circuit affirmed.
Patents that claim ranges are anticipated when a reference discloses a point within the claimed range. When the prior art discloses an overlapping range, rather than a specifically covered point, the claim is anticipated only if a reasonable fact finder could conclude that there is no reasonable difference in how the invention operates over the claimed range. On summary judgment, there must be a genuine issue of material fact that a narrower range in the patent is critical to how the invention operates.
Here, the Federal Circuit found that the disclosure of 0.1, 0.2, and 0.4 parts of stearamide did not disclose specific points with a range; they were beginning points for different ranges. To avoid a summary judgment of anticipation, Ineos had to show a genuine issue of fact that the specific range it claimed was critical to how the invention operates. Ineos failed to do so.
Ineos could only point to inventor testimony that the claimed range is critical to avoid unnecessary manufacturing costs and the appearance of undesirable blemishes on the bottle caps. The Federal Circuit held that these features have nothing to do with operability or function, because the specification describes the invention as providing slip properties, while avoiding odor and taste problems. Thus, Ineos could not show a genuine issue of fact with respect to the criticality of the claimed range.
The Federal Circuit also reviewed claim 3, which recited that the primary lubricant was benhenamide. The ’846 Reference did not disclose benhenamide, but did disclose the use of saturated fatty acid amides. Ineos argued that benhenamide was not a common lubricating agent, and thus was not a part of the genus described in the ’846 Reference. Berry argued that benhnamide was a common lubricating agent, and offered an expert declaration that it was a common fatty acid used in packaging. The Federal Circuit concluding it could find no error in finding that the ’846 reference implicitly disclosed benhenamide. A verbatim disclosure of a particular species is not required when a genus of limited scope effectively discloses each species therein.
Court Affirms “THE SLANTS” Mark Is Disparaging
In re Simon Shiao Tam, No. 2014-1203, 2015 U.S. App. LEXIS 6430 (Fed. Cir. Apr. 20, 2015) (Moore, J.). Click Here for a copy of the opinion.
Simon Shiao Tam (“Mr. Tam”), who founded the Asian-American band The Slants, filed an application to register THE SLANTS for “Entertainment, namely, live performances by a musical band.” The examining attorney found the mark disparaging to people of Asian descent under 15 U. S. C. § 1052(a) (“§ 2(a)”), and rejected the application. Mr. Tam filed a second application to register the same mark for essentially identical services. Unlike the specimens attached to the first application, the new specimens did not contain Asian motifs. The examining attorney again found the mark disparaging. The TTAB affirmed the examining attorney’s refusal to register the mark. Mr. Tam appealed, arguing that the TTAB erred in finding the mark disparaging under § 2(a), and challenging the constitutionality of § 2(a).
The Federal Circuit affirmed. Following In re Geller, 751 F.3d 1355 (Fed. Cir. 2014), the Court applied a two-part test to determine that the mark is disparaging. First, the likely meaning of THE SLANTS mark was found to refer to people of Asian descent. The fact that the term “slants” has some innocuous meanings – and that some trademarks have issued with those innocuous meanings – does not foreclose the possibility that the term may also be used in an offensive manner, even when the non-disparaging meanings are more common. Second, the definitions in evidence universally characterized the word “slant” as disparaging, offensive, or an ethnic slur when used to refer to a person of Asian descent. There was substantial evidence to support the TTAB’s finding, even without a marketing survey or other quantitative measure of the term’s offensiveness. Further, the TTAB lacks the resources to conduct a marketing survey.
Mr. Tam argued that the Lanham Act’s restrictions on disparaging trademarks are unconstitutional under the First Amendment both facially and as applied in this case because § 2(a) conditions a benefit (e.g., trademark registration) on relinquishing free speech. The Court disagreed, finding that the PTO’s refusal to register Mr. Tam’s mark does not affect his right to use it. The “scandalous” and “disparage” terms in § 2(a) are not unconstitutionally vague, as the TTAB follows a well-established two-part test to determine if a mark is disparaging. Further, there was no due process violation in this case because Mr. Tam “was provided a full opportunity to prosecute his applications and to appeal the examining attorney’s final rejections to the Board.” Lastly, the TTAB denied Mr. Tam the registration because he used the mark THE SLANTS in a disparaging manner, not on account of his race. Accordingly, there was no violation of the equal protection clause.
NOPALEA Is Not Registerable for Nutritional Supplements Containing Nopal Juice
In re TriVita, Inc., No. 2014-1383, 2015 U.S. App. LEXIS 6301 (Fed. Cir. Apr. 17, 2015) (Newman, J.). Click Here for a copy of the opinion.
TriVita filed a trademark application to register the mark NOPALEA for dietary and nutritional supplements “containing, in whole or in substantial part, nopal juice.” The examiner rejected the application as “descriptive of a feature of applicant’s goods on the grounds that applicant’s products contain nopal which is derived from an [ex]tract of the nopalea plant.” TriVita appealed to the Board, arguing that the term “nopalea plant” is not used in the food industry and that TriVita’s products contain extracts from the Opunti genus of the nopal cactus, not the Nopalea genus.
The Board acknowledged that both Opuntia and Nopalea cacti may be referred to as nopal cacti but concluded that there was “no doubt that a consumer would understand the term ‘nopalea’ used in connection with [TriVita’s] goods as conveying information about them.” The Board pointed to several websites, including those of TriVita’s affiliates, showing Nopalea genus as the cactus used in food and supplements. In addition, some websites also explicitly stated that TriVita’s products were derived from the Nopalea cactus. Furthermore, TriVita’s registration application did not mention the genus from which its “nopal juice” derived. Based on these findings, the Board affirmed the rejection.
The Federal Circuit affirmed. Section 2(e)(1) of the Lanham Act provides that a term is not registerable if it “consists of a mark which (1) when used on or in connection with the goods of the applicant is merely descriptive or deceptively misdescriptive of them.” TriVita first argued for the distinction between the words “NOPALEA” and “nopal” and that the letters “EA” made NOPALEA substantially different in sight and sound. However, “nopalea” is not a made-up word; it is a genus of cacti from which nopal juice is derived. Even if TriVita’s products derived from Opunti and not Nopalea cacti, “substantial evidence supports a finding that consumers are likely to assume that the NOPALEA mark denotes that TriVita’s products contain ingredients from the Nopalea cactus.”
TriVita next argued that “the ordinary purchaser of its products will be of low botanical sophistication and will not immediately recognize the botanical meaning of the word ‘nopalea.’” However, substantial scientific and non-scientific evidence indicated that the words “nopalea” and “nopal” were used interchangeably. TriVita also suggested that it could take measures to “ensure NOPALEA is used non-descriptively in conjunction with the goods in question at the point of sale.” However, the Court found no factual showing of such non-descriptive use. Furthermore, the records showed that TriVita’s distributors stated that the products contain juice from Nopalea cactus.
Based on the Board’s factual findings, the Federal Circuit affirmed the Board’s conclusion that “nopalea” is merely descriptive of TriVita’s goods.
The following opinion is not reported in this newsletter:
Oplus Tech. Ltd., v. Vizio, Inc. and Sears Holdings Corp., No. 2014-1297, 2015 U.S. App. LEXIS 5800 (Fed. Cir. April 10, 2015) (the case was exceptional due to the egregious pattern of litigation misconduct and therefore the district court erred by denying the award of fees). Click Here for a copy of the opinion.
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