US Patent Law: A 20-Year Retrospective

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The past 20 years have been extraordinary for intellectual property law. Most of the transformations can be attributed to changes in the statute, US Supreme Court jurisprudence, almost complete turnover in judges in the Court of Appeals for the Federal Circuit (“Federal Circuit,” below), and advances in technology that could not have been anticipated in 2002.

An understanding of those changes requires a retrospective of patent law over those 20 years. At that time, the Federal Circuit was 20 years old and had achieved what many believed was Congress’s purpose in instituting the court: patent law harmonization. While on the court, former Chief Judge Randall R. Rader wanted to enable business professionals to assess (with a patent attorney) the scope of a competitor’s patent to achieve a reasonable understanding of the risks that the patent posed to their commercial intentions. Claim construction had been determined to be a matter for the US Supreme Court, with de novo review by the Federal Circuit. That permitted the Federal Circuit to provide well-understood rubrics that lessened uncertainty in the scope of patent rights.

The doctrine of equivalents — a potential source of lingering uncertainty, although still part of patent law — had been left by the US Supreme Court for the Federal Circuit to exercise its special expertise for further delineation. Issues of claim scope under the written description requirement of 35 USC 112 and utility under 35 USC 101 (and 112) had been given doctrinal coherence (or the beginnings thereof) by guidances from the US Patent and Trademark Office in response to Federal Circuit authority. Although perhaps not halcyon, the state of US patent law was stable and predictable in ways that it had taken the Federal Circuit 20 years to produce.

The Supreme Court Strikes Back
The first inklings of change arose when the US Supreme Court — induced by the rise of the “patent troll” meme in the high-technology industry — had concerns about patenting human genes and medical procedures and believed that the Federal Circuit’s rulings were too rigid and produced too many bright-line rules. A former US solicitor general characterized the first 20 years of Federal Circuit jurisprudence as “quietly walking away from” Supreme Court decisions that seemed out of date or improperly issued. For a court prone to assess issues under the totality of the circumstances, the combination of those factors produced 20 years of upheaval in patent law that is no longer settled in many respects.

The first of such precedent-shattering decisions was eBay v. MercExchange. The US Supreme Court held that injunctions for a prevailing patentee under 35 USC 284 were not to be awarded automatically, but were subject to traditional requirements: that the infringement was an irreparable injury; that there was no adequate remedy at law (e.g., money damages were insufficient); that the balance of the hardships weighed in favor of the patentee (e.g., to the extent that the harm from competition was greater than the harm to the infringer); and that the injunction was in the public interest (that the interest in preserving the patent system was greater than the benefits, typically economic, from infringement). It was evident from the opinion that the Court was motivated by the patent-troll narrative. Having automatic injunctions was seen as an incentive for the trolls and a threat to American industry that could be and was being abused. (The reality of the situation was at best more complex.) As a consequence of that decision, the concept of efficient infringement arose, in which larger companies became willing to infringe smaller, more inventive ones. That is because the damages — even enhanced for willful infringement — were worth the price to expropriate their smaller competitors’ intellectual property and innovation.

The other precedent-shattering decision was KSR v. Teleflex. The US Supreme Court weakened without abrogating the Federal Circuit’s calculus for determining obviousness under 35 USC 103. Under the Federal Circuit’s rules, the question to ask was whether the prior art provided a person of ordinary skill in the relevant art with teaching, suggestion, or motivation to combine prior art references and would have given that person a reasonable expectation of success in achieving the claimed invention. The Supreme Court held that this test was not the only one and that the Federal Circuit had been applying it too rigidly. In the process, the Court also weakened the concept of nonanalogous art, wherein technology applied in one area was not generally applicable in another that was sufficiently distinct (e.g., components of jet engines were not analogous to components in countertop blenders just because they both spun at high speed). For the Supreme Court, the problem that a skilled artisan was addressing made the difference, thus opening up a much wider scope of art that needed to be considered.

The Supreme Court also believed that a skilled worker was not an automaton but had a modicum of creativity that had not been recognized traditionally as a characteristic. Consequently, it became easier for claims to be rejected at the US Patent Office for obviousness and for accused infringers to invalidate claims granted under earlier criteria based on application of this looser obviousness standard.

Notable Decisions: In 2010, the Supreme Court embarked on a series of decisions that have had the most disruptive effects on US patent law regarding subject matter eligibility under 35 USC 101. The first of these cases, Bilski v. Kappos (1), involved business-method patents that had become common after the Federal Circuit’s decision in State Street Bank & Trust Co. v. Signature Financial Group (2) in 1998. The impetus for the Court’s decision was again the patent troll meme, and the idea that the Federal Circuit had expanded the scope of patent eligibility beyond its traditional boundaries. In a plurality opinion, the Court decided that Bilski’s claims were not eligible but also decided (five justices to four) not to declare business method claims unpatentable per se.

Patentees whose technology was affected by the Court’s next decision, Mayo Collaborative Services v. Prometheus Laboratories Inc. (3) were not so lucky. That case involved patent claims to medical diagnostic methods. In a decision Justice Breyer had waited to write since the Court declared certiorari (a writ by which a higher court reviews a lower court’s decision) to have been improvidently granted in Labcorp v. Metabolite, Inc., (4) the Court held that patent subject matter eligibility required claims involving natural law, phenomena, or abstract ideas to include “something more” in their application, and that this requirement could not be satisfied if that “something more” was routine, well-understood, or conventional.

Consequently, subject matter eligibility became the motion du jour in patent-infringement litigation. That eligibility standard served the purposes of infringers to have cases dismissed before expensive discovery or motion practice began, which cleared district court dockets even before claim construction because the courts made such determinations a matter of law. The Federal Circuit (perhaps institutionally cowed somewhat from a decade of Supreme Court opinions almost uniformly overturning their decisions and decimating their precedents) took in many cases the stance that although the outcome may be incorrect, their hands were tied by the Court.

The Supreme Court followed up the Mayo decision by its opinion in Alice Corp. v. CLS Bank International (5), which — while refining the rubrics for applying the Court’s decision in Mayo — did nothing to change it or its effects. Because of that decision, the Supreme Court has refused to grant certiorari in more than 50 cases. Although the solicitor general has urged the Court to grant certiorari in American Axle & Manufacturing Inc v. Neapco Holdings LLC (6), the Court earlier this year again refused to grant certiorari.

One final case of note is the Supreme Court’s decision in Association of Molecular Pathology v. Myriad Genetics Inc. (7), where the Court held that human genes were not patent eligible. Although its holding was crafted narrowly, the Court’s rationale was that genes were “merely” isolated. Intended or not, that rationale has been extended by the district courts and the Federal Circuit (8) to render ineligible all products isolated from nature, regardless of their value, unless they have been structurally modified — something that frequently destroys or deleteriously modifies their activity and value.

Congress Has Not Been Idle
Leahy–Smith America Invents Act: The changes occasioned by those Supreme Court decisions have been equaled (and perhaps surpassed in their consequences) by the enactment of the Leahy–Smith America Invents Act of 2012. Although it revised many sections of US patent law, the act led to two significant changes. The first of those was to convert the United States from a “first to invent” to a “first inventor to file” jurisdiction. That harmonized most US priority law with that of almost every other patent-granting country. Under these revisions priority of invention is now granted to the first inventor to file an application. Thus, interferences are no longer available for determining priority — although the law has provisions to settle disputes in which one claimant alleges derivation of an invention by another.

The second significant change has been the establishment of a series of postgrant review proceedings (a proceeding for covered business methods that is intended to resolve disputes arising from the Supreme Court’s Bilski decision that sunset in 2020). One of those proceedings, fashioned loosely after European opposition practice, permits a challenger to assert allegations of unpatentability under any section of the statute and must be filed within nine months of patent grant.

Inter Partes Review (IPR) is another more controversial AIA proceeding. It can be brought throughout the lifetime of a patent but can be only brought for unpatentability under sections 102 and 103 of the US Patent Act by any number of challengers provided that the art asserted by each challenger has not been considered before. IPRs were intended to address allegations of a spate of “bad” patents being granted by the US Patent Office. From their inception, IPRs have been extremely popular, particularly with accused infringers. Overseen by the Patent Trial and Appeal Board (PTAB, a revised version of the Board of Patent Appeals and Interferences), IPRs are notable for having a decided propensity to invalidate all or most claims challenged in those proceedings.

IPRs have been the subject of extensive Supreme Court review in the relatively short time since they were established (9–14). The Court generally has supported Congress’s authority to establish the proceedings and affirm how the US Patent Office has effected the provisions of the statute. Although the frequency with which the PTAB invalidates granted patents has abated somewhat, IPRs remain a focus of criticism from those both pro and con on the proceedings and undoubtedly will occasion further Supreme Court review in the future.

The Biologics Price Competition and Innovation Act (BPCIA), part of the Affordable Care Act of 2010, consists of two parts. The first part establishes a pathway for US Food and Drug Administration (FDA) approval of biosimilar drugs, defined as

a biological product that is highly similar to a reference biological product, notwithstanding minor differences in clinically inactive components and wherein there are no clinically meaningful differences between the biosimilar and reference product in terms of safety, purity, and potency. (15)

Provisions of that portion of the statute leave to the FDA most details regarding standards for satisfying the statutory requirements (16). The FDA has issued several guidances for industry providing such standards in detail. The statute mandates several important provisions, for example, that biologic drugs receive 12 years of regulatory exclusivity against biosimilar competition (17), and that biosimilar applications cannot be filed until four years after first approval of the reference product against which biosimilarity is compared (18). Since enactment of the statute, the FDA has approved 34 biosimilar drugs (19, 20).

The second part of the BPCIA specifies how disputes among reference-product sponsors and biosimilar applicants will adjudicate patent rights (21). Those procedures, colloquially termed the patent dance, provide for an exchange of information between a reference-product sponsor and a biosimilar applicant, beginning with disclosure of the biosimilar application (as enacted; not an absolute requirement) (21). The parties then exchange lists of relevant patents and reasons why marketing of a biosimilar product will or will not infringe and why or why not the asserted patents are invalid or unenforceable. Such negotiations were intended to permit an initial stage of patent infringement litigation to begin during pendency of the biosimilar application approval process during the 12-year exclusivity term. The statute also requires a biosimilar applicant to give the reference-product sponsor notice at least six months before biosimilar launch, which under the statute gives the sponsor the right to obtain an injunction against the biosimilar applicant.

In the first adjudicated biosimilar lawsuit, Sandoz effectively circumvented that complicated regime when it refused to disclose its biosimilar application for the Zarzio product, a biosimilar to Amgen’s Neupogen (filgrastim) drug. Ultimately, the US Supreme Court held that although the statute stated the applicant “shall” disclose, that provision was not mandatory because the reference-product sponsor had remedies under the statute against a noncompliant biosimilar applicant to bring suit. In addition, the Court held that a biosimilar applicant could satisfy the marketing-notice provisions by giving that notice at the same time it informed the reference-product sponsor of its biosimilar application filing, thus eliminating any effective notice of when the sponsor could expect the biosimilar to be marketed. As a consequence, the extent to which biosimilar applicants have complied with the disclosure provisions of the law has differed. Although infringement litigations under the BPCIA have ensued many if not most of those cases have been settled, with negotiated biosimilar entry dates, which (like for small-molecule drug settlements) are subject to Federal Trade Commission antitrust scrutiny (22).

An Evolving Patent Landscape
The COVID-19 pandemic has produced widespread challenges and changes in many aspects of patent law. The tendency has been to lay blame for perceived high drug prices at the pharmaceutical patent owners’ doorsteps (ironic in that many of the most egregious cases have involved off-patent drugs). But the concept that patent “thickets” are to blame has raised calls for patent and regulatory reform. That could restrict further the ability for biopharmaceutical companies to have sufficient confidence in necessary return on investments to justify the uncertain and expensive pursuit of new therapeutic agents.

Following proposals established in Brazil and South Africa, the World Trade Organization has developed a patent “waiver” protocol by which member countries will be able to waive patent rights for vaccines (and possibly therapeutic and diagnostic agents) for up to five years. That enables those nations to manufacture patented products for domestic use and for export under certain circumstances.

Patent law will continue to evolve, perhaps in unexpected and not necessarily productive ways, in response to political exigencies and competitive needs. The patent landscape looks dramatically different today from how it did in 2002, and there is no doubt that it will be equally unrecognizable 20 years hence.

References
1 Bilski v. Kappos. 561 US 593, 28 June 2010; https://www.supremecourt.gov/opinions/09pdf/08-964.pdf.

2 State Street Bank & Trust Co. v. Signature Financial Group. 149 F.3d 1368, Federal Circuit, 23 July 1998; https://law.resource.org/pub/us/case/reporter/F3/149/149.F3d.1368.96-1327.html.

3 Mayo Collaborative Services v. Prometheus Laboratories, Inc. 566 US 66, 20 March 2012; https://supreme.justia.com/cases/federal/us/566/66.

4 Laboratory Corp. of America Holdings v. Metabolite Laboratories, Inc. 548 US 124, 22 June 2006; https://supreme.justia.com/cases/federal/us/548/124.

5 Alice Corporation Pty. Ltd. v. CLS Bank International. 573 US 208, 19 June 2014; https://supreme.justia.com/cases/federal/us/573/208.

6 American Axle & Manufacturing, Inc. v. Neapco Holdings. 977 F.3d 1379, Federal Circuit, 28 December 2020; https://www.supremecourt.gov/DocketPDF/20/20-891/20201228135349598_ _Petition.pdf.

7 Association for Molecular Pathology v. Myriad Genetics, Inc. 569 US 576, 13 June 2013; https://supreme.justia.com/cases/federal/us/569/576.

8 BRCA1- and BRCA2-Based Hereditary Cancer Test Patent Litigation. 774 F.3d 755, Federal Circuit, 17 December 2014; https://caselaw.findlaw.com/us-federal-circuit/1686988.html.

9 US v. Arthrex. Supreme Court of the United States: 21 June 2021; https://www.supremecourt.gov/opinions/20pdf/19-1434_ancf.pdf.

10 Thryv, Inc. v. Click-to-Call Technologies, LP. Supreme Court of the United States: 20 April 2020; https://www.supremecourt.gov/opinions/19pdf/18-916_f2ah.pdf.

11 Return Mail., Inc. v. US Postal Service. Supreme Court of the United States: 10 June 2019; https://www.supremecourt.gov/opinions/18pdf/17-1594_1an2.pdf.

12 Oil States Energy Services, LLC. v. Greene’s Energy Group, LLC. Supreme Court of the United States: 24 April 2018; https://www.supremecourt.gov/opinions/17pdf/16-712_87ad.pdf.

13 SAS Institute Inc. v. Iancu. Supreme Court of the United States: 24 April 2018; https://www.supremecourt.gov/opinions/17pdf/16-969_f2qg.pdf.

14 Cuozzo Speed Technologies LLC v. Lee. Supreme Court of the United States: 20 June 2016; https://www.supremecourt.gov/opinions/15pdf/15-446_ihdk.pdf.

15 ‘‘Biological Product’’ Defined. US Code Title 42: The Public Health and Welfare, Section 262(i), 2012; https://www.govinfo.gov/content/pkg/USCODE-2020-title42/pdf/USCODE-2020-title42-chap6A-subchapII-partF-subpart1-sec262.pdf.

16 Licensure of Biological Products as Biosimilar or Interchangeable. US Code Title 42: The Public Health and Welfare, Section 262(k), 2012.

17 Effective Date of Biosimilar Application Approval. US Code Title 42: Public Health and Welfare, Section 262(k)(7)(A), 2012.

18 Filing Period. US Code Title 42: Public Health and Welfare, Section 262(k)(7)(B), 2012.

19 Noonan KE. FDA Biosimilar Approval Recap – 2021. Patent Docs 5 January 2022; https://www.patentdocs.org/2022/01/fda-biosimilar-approval-recap-2021.html.

20 Noonan KE. FDA Approves Generic Restatis. Patent Docs 3 February 2022; https://www.patentdocs.org/2022/02/fda-approves-generic-restasis.html.

21 Patents. US Code Title 42: Public Health and Welfare, Section 262(l) 2012.

22 Sandoz Inc. v. Amgen Inc. 137 S.Ct. 1664, Supreme Court of the United States: 12 June 2017; https://foiadocuments.uspto.gov/supreme/15-1039_1.pdf.

23 Federal Trade Commission v. Actavis. 570 US 138, Supreme Court of the United States: 17 June 2013; https://www.supremecourt.gov/opinions/12pdf/12-416_m5n0.pdf.

Kevin E. Noonan, PhD, is a partner with McDonnell Boehnen Hulbert & Berghoff LLP, 300 South Wacker Drive 32nd Floor, Chicago, IL 60606; [email protected].