America-Israel Patent Law

New York Times Gets It Wrong, But What’s New?

Once upon a time the New York Times was a respected publication. These days it’s overpriced toilet paper (and not very soft at that, let alone perforated for easy use). Case in point: a piece it ran at the end of January under the heading, “Colombians Ask: Who Would Dare Patent Panela?”.

The impetus for the article was the issuance in April 2020 of US patent no. 10632167, entitled “System and method for processing raw sugarcane maximizing the preservation of policosanols during production of a shelf stable potable cholesterol-reducing product”.  The premise of the NYT piece is that this patent covers a long-known method to make a long-known product (panela), and thus the issuance of this patent, and related patents in Colombia and other parts of the world, will preclude Colombians from practicing a process, and producing the resulting product, that they’ve been practicing, producing and consuming for generations, and that they will be closed out of the market for export of panela to the USA and Europe. 

In what has become typical fashion for its hit pieces on patents and other disfavored subjects, the piece weaves in select facts and select omissions of facts to imply that the End of World is Nigh. Had the “reporter” done her homework, she would have asked pertinent questions, like, “Does this US patent have effect in Colombia? Does it actually cover the traditional product or the traditional way of making that product? Will it preclude importation of the product into the USA?”  But God forbid that the Times engage in actual reportage.  (Hey, if you can spend eight years doing nothing but deifying an incompetent president, and then more than four years doing nothing but smearing his successor who actually did many things right, not to mention assert, repeatedly and loudly, the canard that the USA was founded in order to perpetuate slavery of black Africans, what’s a hit piece on a single patent, right?)  So let’s delve into those questions ourselves.

First, some history: the US patent mentioned in the piece, 10632167, while constituting the maturation of USSN 15/803,037, filed in October 2017 and the first application in a chain, is not the first US patent to issue from that chain.  That distinction goes to US 10,493,121, granted in December 2019, which was filed as USSN 16/163,365, a continuation-in-part of the ‘037 application.  Those two applications served as the priority applications for PCT/US2018/058537, filed in October 2018.  It is the PCT that gave rise to related applications in Australia, Cuba, the EPO, China, Ecuador, Nicaragua, Peru and Mexico.  A third US application, 16/702,238, was filed in December 2019 on the day that the ‘121 patent issued.

Second, neither of the US patents, nor the pending US application, nor the published PCT application, nor the claims pending in Europe or Australia, claim a product per se.  All of them claim a method to produce a juice, not to produce panela, which is a solid.  Taking US 10632167 as an example, this patent has a single independent claim, which reads:

“A method for processing a quantity of unwashed raw sugarcane sticks to produce a policosanol-rich sugarcane juice product via a sugarcane juice product processing system, the unwashed raw sugarcane sticks each including a sugarcane stalk outer cortex containing natural policosanol-rich waxes and minerals, the method comprising steps of:

shredding the unwashed sugarcane sticks and conveying the shredded and unwashed sugarcane sticks toward a first one of a series of mechanical roller mills;

extracting sugarcane juice from the unwashed shredded sugarcane sticks via the series of roller mills, the shredded sugarcane sticks, while being conveyed through the series of roller mills, macerated with water having a temperature maintained within a temperature range that prevents dissolution of said policosanol-rich natural waxes and minerals in the sugarcane stalk outer cortex, to produce a volume of water-diluted extracted policosanol-rich sugarcane juice product;

filtering the diluted extracted policosanol-rich sugarcane juice product through at least one filter;

stabilizing the pH of the extracted and filtered policosanol-rich sugarcane juice product in a non-acidic solution of calcium hydroxide to a stabilized pH level within a pH range of 7.0 to 7.6;

heating the pH-stabilized sugarcane juice to a temperature maintained within a temperature range precluding evaporation of policosanols from said extracted policosanol-rich sugarcane juice product;

clarifying the heated and pH-stabilized sugarcane juice, wherein the heated and pH-stabilized sugarcane juice is flocculated using a mixture of water and at least one flocculate product, the flocculated sugarcane juice forming a glutinous froth, the glutinous froth retained and subjected to further processing in order to preserve a rich concentration of policosanols contained therein, the policosanol-rich processed froth subsequently reintroduced into the sugarcane juice product being processed;

evaporating the clarified sugarcane juice product via an evaporation apparatus including a series of evaporators, thereby incrementally increasing a sugar and policosanol concentration of the sugarcane juice product to create a post-evaporation, policosanol-rich concentrated sugarcane juice syrup having a desired post-evaporation Brix value, wherein the Brix value of the sugarcane juice product is maintained at or below 70° Bx during the entire evaporation step; and

extracting the evaporated sugarcane juice concentrate from the evaporation apparatus at said desired post-evaporation Brix value,

wherein, the sugarcane processing method maintains a juice product temperature within a temperature range precluding evaporation of policosanols from said extracted policosanol-rich sugarcane juice product throughout said process.”

That’s a method claim with a lot of steps, and the independent claims in the other US patent and pending applications are similar.  Under US law, in order to infringe, the infringer would need to practice every single one of those steps - leave out a step and there’s no infringement.  Or if some of the steps are practiced by one entity, and the other steps are practiced by another entity, and those entities aren’t acting in concert, there’s no infringement.  In this particular case, there also seems to be an easy and inexpensive out: since the starting material is unwashed sugarcane, rinsing the sugarcane with water before beginning the process would apparently result in non-infringement.  (Presumably the law is similar in this regard in the other countries where patent applications were filed.)

And of course, a US patent has no force outside the USA against actors who are acting entirely outside the USA. Patents are territorial.

Those are all facts the “reporter” could easily have ascertained, had she troubled herself to talk to a patent attorney…or, in the case of the requirements for infringement of a method claim, even to an L1 taking a patent law course. 

Similarly, she could easily have learned that in the USA, a claim on a method does not prevent others from making, using or selling the product resulting from practice of that method, unless they actually practice the claimed method to produce the product.    

And if the “reporter” had a friend who’s a more experienced patent attorney – or if she had just spoken with a patent attorney looking for some free publicity – she would have learned that 35 USC §271(g) ostensibly makes it an act of infringement to import into the USA the product of a process that is protected by a US patent, but that the case law has taken most of the teeth out of §271(g), so that if the product can be produced commercially by a non-infringing process, the imported product won’t infringe under §271(g), even if produced by the infringing process.

Why is all that relevant? Because at one point, she notes that (a) Colombia exported about 9000 tons of panela to the USA and Europe in 2019, (b) in Colombia, producers of refined sugar are precluded by law from producing panela, but (c) those same producers are not precluded from producing panela outside Colombia, so (d) if a Colombian sugar producer could control the production (and importation) of panela in (and into) the USA, such a producer could foreclose the market to the (much smaller) Colombian panela producers.  Had she done her homework as outlined above, she would have found that that’s an unlikely outcome, since, as noted, panela can produced by non-infringing methods, so §271(g) can’t be used to enjoin the importation of panela, even if produced by the patented method. 

Moreover, if indeed the process for producing panela is in the public domain (see below), then there’s nothing NOW to stop someone from producing panela in the USA and competing with the Colombian producers. Well, nothing but economics, which would seem to require a good local supply of sugarcane, and expertise in production, which the article states is difficult to find, even in Colombia.

All that, of course, is before we get to the most glaring issue, which is that if any of the claimed processes were known or were obvious before the patent applications were filed, then the claims on those processes are invalid.  This is evident from the prosecution of the European case, in which the Examining Division in its search opinion both took note of third party observations that were filed by the Federacion Nacional de Productores de Panela – FEDEPANELA (an organization mentioned in the article as trying to stymie the grant of the patents), requiring the applicant to respond to the issues raised therein, and raised its own bases for prior art rejection of the claims (in addition to raising other grounds of rejection).  To the extent the applicant admits that its own processes differ from prior art processes, that will provide others with a blueprint for how to avoid infringement.

The “reporter” has a point in that, if indeed the process claimed in the issued US patent was anticipated or obvious in view of what was known, then that’s a defect in the examination process.  What she neglects to mention in that regard is that there are now several mechanisms in place to put a check on poorly-examined US patents. 

If what she’s really lamenting is the fact that someone might seek to obtain a competitive advantage by securing the issuance of a patent, then all I can say is, Welcome to the world, honey. But it goes beyond that, because the unstated implication of her piece is that because the USPTO makes mistakes, there shouldn’t be patents.  

Hmm.  I wonder if the author has been vaccinated against the Wuhan virus. Because if she has, then among the many things and people she can thank are the patent system and President Trump, for providing the incentives to get those vaccines developed and into people’s arms in record time.  Now THAT’S a story worth covering.

One final note: the patent specification explains that panela contains alcohols collectively called policosanols, and asserts that these reduce cholesterol levels.  The method alleged maximizes the concentration of policosanols in the final product.  If indeed the product of the claimed process is novel and non-obvious, then the applicant could have tried to claim it.  For example, it could have written a claim such as, “A solid food product comprising between n-m% glucose, o-p% fructose, q-r% sucrose, and s-t% policosanols.”  Such a claim, if granted, would be much more effective than a claim on a process (at least in the USA), as it would be easy to ascertain whether or not a product infringes.  And if there’s no written analysis of old samples of panela, it would be hard to invalidate such a claim.  Whether the failure to include such a claim was deliberate or merely the result of poor lawyering, the lack of such a claim would have been worth mentioning.

PTO Doubling Its Work: USPTO Re-Publishes Patent Application After Patent Has Already Issued

Once upon a time, patents only became public upon issuance. Then someone realized that it might be good if patent applications were published earlier in the patenting process.  Among other things, early publication allows companies to see what their competitors are up to, and to decide whether or not to divert resources away from a project that might be blocked from commercialization by a competitor's patent, or to focus on a different aspect of an already-underway project in order to avoid potential infringement. Nowadays most regimes publish patent applications, or make them available for public inspection, 18 months after the earliest filing date.

The US and Israel were both relatively late adopters of the 18-month publication system.  The US only began 18 month publication in March 2001, and to this day it maintains the old no-publication-until-grant system, which applicants who only file in the US can avail themselves of.  Israel only went to 18-month publication in 2012, although prior to that (and until today) it published minimal details of patent application shortly after filing: title of the application, applicant, filing date and, if relevant, priority claims and relevant PCT information.

In the US, a patentee can in principle collected damages for infringement of a claim of a published application, provided that (a) the invention claimed in the patent is "substantially the same" as the invention claimed in the published application (see 35 USC 154(d)), and (b) the infringer has actual notice of the pendency of the claim (and the issuance of the patent).  Although I have heard of cases in which damages for such infringement were claimed, I have yet to see case in which such damages were actually awarded.

Both the US and Israel also have mechanisms for expediting the prosecution of certain patent applications, e.g. based on the inventor's age, subject matter (e.g. so-called "green" applications in Israel), applicant's commercial situation (imminent infringement, in Israel) or just by paying additional money to have the application fast-tracked ("Track 1" in the USA). 

In one of Carl Oppedahl's listservs, US Patent Agent Louise Sheriker recently reported about US patent no. 10,850,674. The application was filed on June 24, 2019, as the first filing worldwide, and the patent granted on December 1, 2020 - less than 18 months after the application.  You would think that would be the end of the story, since the early grant of the patent obviates the benefits of early publication, but no: on December 24, 2020 - exactly 18 months after filing - the USPTO again published the application, as publication no. 20200398762.  There were eight claims, with one independent claim, claim 21; the only difference from the claims granted in the patent 23 days earlier was that the patent claims were re-ordered and re-numbered 1-8.  

So why did the USPTO re-publish the application after grant? Presumably, since the situation in which the patent issues before 18 months from the earliest priority have passed, the USPTO's computer system isn't set up to detect cases in which the patent issue first and thus to stop the 18-month publication of the application.  This is reflected in the PAIR entry, which lists the December 24 date as "earliest publication date". It's true that having both publications facilitates easier comparison of the application and the granted patent, but the 18-month publication includes claim amendments made prior to publication (as was the case here), so the later publication of the application isn't necessarily so useful, and in an event, on can (and should) look at the Image File Wrapper to see all changes (along with arguments) that were made during prosecution.

The USPTO's database does not readily facilitate searches that would allow one to catch similar instances of patent-grant-before-application-publication; one would need to pull data into a separate database and then construct a search query that would detect, e.g., a patent date before the publication date. The same is true of the Israel PTO database. 

Free Speech, The Right to Petition, and Patent Infringement: A Thought on Hatch-Waxman and ANDA Filings

This is longish post, prompted by a comment made by Dennis Crouch at his PatentlyO blog.  Since much of it deals with the background of the Hatch-Waxman amendment, with which some readers are familiar, I’ll cut to the chase: in discussing the recent CAFC decision in Valeant v Mylan, Dennis suggested that there may be a first amendment issue lurking in the fact that 35 USC §271(e) says it’s an act of patent infringement to submit a paragraph IV ANDA to the FDA. He thinks this might be an infringement of the constitutional right to petition the government and the right to free speech, both enshrined in the First Amendment of the US Constitution. I think that suggestion is baloney.

By way of background: Hatch-Waxman is the 1984 US law (which amended both the Food, Drug & Cosmetic Act and the Patent statute) that was a boon for both drug innovation and for the generic drug industry.  Until that time, a generic drug manufacturer (“GDM”) had to wait until a patent (or patents) expired before even undertaking experiments to begin manufacturing a patented drug, including experiment to obtain data to be submitting to the FDA in support of the request for approval of the generic drug. Under H-W, prior to patent expiration those generic drug manufacturers can do almost everything necessary to bring the product to market.  GDMs can thus seek FDA approval for their drugs prior to patent expiration, so that they can be ready to go to market as soon as the patents expire.  (H-W also instituted a tightly circumscribed mechanism for limited patent term extension for drug patents, but that’s not germane to the present discussion.)

Additionally, instead of replicating all of the (time consuming and expensive) clinical work of the originator, it’s sufficient for a GDM to show that its generic drug is bioequivalent to an approved drug.  The GDM can thus submit an “abbreviated new drug application”, aka an ANDA, to the FDA.

Under H-W, patentees submit to the FDA lists of patents that cover their approved drugs; the FDA compiles these in a publication commonly referred to as “the Orange Book”.  When filing an ANDA, a GDM must make a certification with respect to the patent status of the drug.  The GDM may certify that there are no relevant patents in the Orange Book, or that there are patents but the GDM will not market the drug until after those patent expire. 

But H-W includes a provision to encourage challenges to patents, or to encourage companies to work around patents, in order to get generics to market earlier (and thus reduce drug prices): the ANDA filer may certify that there are patents, but that those patents are invalid and/or not infringed.  Under H-W, the submission of an ANDA containing such a certification, known as a “paragraph IV” certification, constitutes an act of infringement (as codified at 35 USC §271(e)), and if the patentee sues the ANDA filer for infringement within 45 of being notified of the ANDA filing, the FDA is precluded from examining the ANDA submission for 30 months.  But the first ANDA filer that is successful in its challenge gets 180 days of exclusivity vis-à-vis other GDMs.

ANDA litigation is somewhat anomalous, in that it’s only the submission of the ANDA with the paragraph IV certification that constitutes infringement – no actual infringement has taken place, because, in the absence of FDA approval, no product has yet been sold or put on the market.  So in the case of ANDA litigation, the patent infringement/validity question is normally resolved before any traditional infringement has taken place, the GDM is thus not potentially on the hook for a large damage award since the patentee hasn’t suffered an actual injury, and usually the public gets lower-cost generic drugs at an earlier stage than it would have in the pre-H-W era.

So much for a run-down of the Hatch-Waxman regime.  If you’ve hung with me for this long, you’re surely asking, “What does all of this have to do with free speech?”  In my view, nothing, but last week, in discussing the CAFC’s, Valeant v Mylan decision, Dennis Crouch suggested it does.

The Valeant decision actually focused on something completely different, namely the question of the proper venue for entertaining an ANDA infringement suit, following the Supreme Court’s 2017 TC Heartland decision.  That question boils down to where the act of infringement occurred or where the defedant’s place of business is located.  The court held that in this case, since the ANDA was submitted from Mylan’s headquarters in West Virginia, that’s where the act of infringement occurred, and so venue was proper in WV, not in New Jersey where the suit had been filed.  But in discussing the case, Dennis Crouch, a law professor and blogger, suggested that by defining a paragraph IV ANDA submission as constituting infringement, 271(e) might run afoul of the First Amendment, stating

“There has been some debate about the how to think about §271(e).  It seems odd that “to petition the Government” constitutes an act of infringement. (Quoting the First Amendment, U.S. Const.).”

and then going on to write,

“Although I have not developed this argument, the court’s straight-read of the statute here places the provision on rocky First Amendment grounds regarding both speech and gov’t petitions.  The court considered some of these issues in the personal-jurisdiction context in Zeneca Ltd. v. Mylan Pharm., Inc., 173 F.3d 829 (Fed. Cir. 1999)”

I find both assertions puzzling, and the first one to be misleading.  The First amendment reads,

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

As an initial matter, the FA guarantees the right to petition for the redress of grievances.  An ANDA filing can probably reasonably be construed as a petition, but it is not a petition for a redress of a grievance.  It is a petition that is entirely the result of federal legislation. The FDCA creates something called an ANDA, and 35 USC §271(e) doesn’t curtail the ability to do that. Indeed, as I explained above, the relevant provisions of both the FDCA and the Patent Statute were enacted simultaneously, as part of a single package, with the passage of the Hatch-Waxman amendment.  To paraphrase, all that 35 USC §271(e) says is, “The FDCA allows GDMs to try to piggyback on the work done by others, by filing something called an ANDA; but understand that such a filing, under certain circumstances, may constitute patent infringement.” Indeed, H-W was designed to encourage paragraph IV challenges and the ensuing litigation, as a means of getting generic drugs to market more quickly.  So no right to petition is curtailed by 35 USC §271(e), let alone a right to petition “for redress of grievances”.  That aspect of the First Amendment is not implicated by the H-W scheme. 

Additionally, no speech is being prohibited or curtailed by 35 USC §271(e).  GDMs can file their ANDAs, and say whatever they want.  It might be imprudent for them to say something like, “We actually think the patents we’re challenging are valid and infringed” in a shareholder report, but a GDM is still free to say so, even as it files its ANDA asserting that those patents invalid and/or not infringed.

As noted, the filing of an ANDA is only defined as an act of infringement if it includes a paragraph IV certification. The ANDA filer can choose not to go to market until after the patents expire, in which case the ANDA filing doesn’t constitute infringement. If the ANDA filer makes a paragraph IV certification, the patentee may choose not to sue for infringement, in which case the FDA will process the ANDA, without the 30-month stay.  And in the worst case scenario, there’s litigation and the ANDA submission is found to constitute infringement, in which case, as noted, there are no damages (since there’s no FDA approval and nothing has been sold), and the ANDA filer merely needs to wait until the patents have expired.

Of course, the GDM has the option of foregoing the ANDA route and instead developing its own data and submitting that as a regular NDA rather than an ANDA, in which 35 USC §271(e) wouldn’t come into play.

Moreover, the ANDA filer has benefited from the safe harbor of Hatch-Waxman, which says that doing the acts necessary to compile the data for the ANDA submission (e.g. synthesizing the active molecule) *doesn’t* constitute infringement, even though those acts normally *would* constitute infringement.

Finally, there’s no criminal penalty attached to a paragraph IV ANDA filing – the remedies for patent infringement are civil.

In short, I don’t see where there are any first amendment issues here – neither from the free speech aspect, nor from the right to petition aspect.

The sheer inanity of the suggestion that 35 USC §271(e) might not pass constitutional muster is brought into sharp relief when one consider the alternatives to the present arrangement under H-W. One alternative is the pre-Hatch-Waxman arrangement, under which the acts necessary to prepare an FDA submission constitute infringement, and thus competitors need to wait until the patents expire before even beginning to prepare generics – or they need to send such work offshore, to a country where such acts don’t constitute infringement. This is where we would be if the Supreme Court were to strike down the entirety of Hatch-Waxman as unconstitutional.

Another alternative is to provide the safe harbor of H-W, but without stipulating that submitting an ANDA to the FDA constitutes infringement. Then the ANDA filer may get FDA approval, but then will have to decide whether or not to launch “at risk”. And if, as is likely an, infringement suit follows, the patentee’s ability to obtain an injunction is uncertain, and the ANDA filer may be subject to a damage award if it does launch at risk.  This would be the situation that would result were the Supreme Court to decide that the provisions of Hatch-Waxman are severable (severability being on many lawyers’ minds this week in the wake of arguments about Obamacare before the Supreme Court in California v Texas), and that §271(e) specifically is unconstitutional.

It doesn’t appear to me that either of those alternatives is better than the present system under H-W.  Indeed, I think Hatch-Waxman is one of the few pieces of federal legislation that actually accomplished what it set out to accomplish and serves the public well.  Would it be worth it to the public to jettison the present H-W system on the basis of a specious First Amendment argument? In this connection, see Judge Gajarsa’s discussion in Zeneca v Mylan that Dennis mentioned on this point.

Bottom line: there’s no First Amendment issue with 35 USC §271(e), and it’s pity that this suggestion was made by Dennis in his blog.

Patents and Technological Obsolescence (with thanks to Tom Lehrer)

Yesterday I wrote about Tom Lehrer dedicating his songs to the public.  Turns out that his output includes a song that’s a wonderful illustration of technological obsolescence.  But a word of background.

The idea behind patents is that by disclosing technological innovations in a manner that enables others to copy those innovations, and by providing the disclosers with a limited period of exclusivity in exchange for that disclosure (viz. a patent), competitors will both be able to implement the technology when the patent expires, and, if the technology is of sufficient commercial interest, be spurred to get around the patent(s), either by developing completely new technology, or by identifying limitations of the patents (in the extreme case, determining that the patents are invalid) and designing around those limitations.  In the end, competition in the field often leads to lower prices for end users, and improvements in technology.  Either way, it’s a variation on the idea that the Talmud expresses as קינת סופרים תרבה חכמה.

In retrospect, Tom Lehrer’s “Polaroid Photography Song” in its 1980 version illustrates this.  In the unlikely event that there are readers who aren’t familiar with Polaroid photography, Polaroid was a big deal in the 1960’s and 1970’s, and even through much of the 1980’s.  Photography until that point had required taking film to a laboratory to be developed (or to one’s own darkroom), which generally meant waiting a few days for the lab to develop the picture, and that was only after the roll of film was used up.  So it could be weeks or months before one saw his pictures.  Edmund Land and his company Polaroid came out with fast, self-developing film, allowing photographers to see their photos on-the-spot, within minutes of taking them. 

The Lehrer Song lists some of the many uses to which this could be put to use (sung to the tune of “The Major General’s Song”, the same G&S tune that Lehrer used for The Elements Song):

Of uses for our photographs you'll find a multiplicity,

From quality control to advertising and publicity,

Computer graphics, diagnostics, also radiometry,

Endoscopy and dentistry and microdensitometry,

And micrometalography and paper chromatography,

Spectrography, thermography, and color scintillography,

For studies biomedical and studies anatomical,

[soft] For bodies microscopic and

[loud] For bodies astronomical!

CHORUS: For bodies microscopic and for bodies astronomical,

For bodies microscopic and for bodies astronomical,

For bodies microscopic and for bodies astronomic-omical!

Geology, oncology, pathology, myology,

Astrology ---astrology? ---forget it , my apology ---

With spectroscopes, oscilloscopes, and cam'ras ultrasonical,

There's hardly any science that is missing from this chronicle.

CHORUS: With spectroscopes, oscilloscopes, and cam'ras ultrasonical,

There's hardly any science that is missing from this chronicle.

Acoustical holography, computerized tomography,

Diffraction crystallography and autoradiography.

In short, in ev'ry field from cosmic rays to choreography

There's bound to be a way of using Polaroid photography.

CHORUS: In short, in every field from cosmic rays to choreography

There's bound to be a way of using Polaroid photography.

[Getting faster and faster:]

In short, in ev'ry field from cosmic rays to choreography

There's bound to be a way of using Polaroid photography.

CHORUS: In short, in every field from cosmic rays to choreography

There's bound to be a way of using Polaroid photography.

Eastman Kodak, at the time a giant in the photography field, decided it could make its own line of fast-developing film and cameras, without infringing Polaroid’s patents.  Oops.  Polaroid sued, and Kodak lost, big time, ultimately settling to pay Polaroid upward of nine hundred million dollars.

But where are Polaroid and Kodak today?  They’ve both been usurped by digital photography (and Kodak, ironically, was one of the innovators of digital photography but didn’t realize how this would upend its film business).  You can read the story in Ronald Fierstein’s “A Triumph of Genius”.

So yes, a good patent portfolio can protect your product line from copyists. But it can’t stop others from coming up with something better…and if it’s a really good portfolio, that’s exactly what it’s supposed to do.

Israel Makes First Use of Statutory Provision Allowing Patent Infringement By State

The Israel Patent Statute was enacted in 1967.  Despite being amended several times since then, most recently in 2012, it has always contained two provisions to enable third parties to exploit a patent against the patentee’s wishes. 

One way, set forth in sections 116-128 of the statute, is via compulsory license, which is when a competitor of the patentee tells the Patents Commissioner that the patentee is being unreasonable about licensing terms and that this is hurting the public, and the Commissioner grants the competitor a license to practice the patent.  Until early 1995, this modus operandi was commonly used by local drug manufacturers. Then, in the space of about a month, the Tel-Aviv District Court ruled that the ILPTO shouldn’t have issued compulsory licenses for acyclovir (Zovirax) and fluoxetine (Prozac) and found the licensees to have infringed the patents.  That pretty much ended compulsory licenses in Israel, but for good measure, a few years later, Israel amended the statute to comply with GATT-TRIPs, tightening up the requirements for a compulsory license.  I don’t think any have been granted in the past 25 years.

The second way is when the state itself wishes to exploit the patented invention for the sake of national security or for the maintenance of the supply of essential goods and services.  That’s codified in sections 104-106, and hitherto had never been used.  That changed this week, when the Health Minister signed an order allowing the importation of a drug that combines two anti-retroviral active ingredients, lopinavir and ritonavir.  The drug is sold by Abbvie under the name Kaletra, and is presently approved for use in combination with other retroviral drugs to keep AIDS under control in infected patients. 

There are presently nine patents listed in the FDA Orange Book for Kaletra, although one of them lists the expiration date as January 19, 2020, and so should probably be removed.  These patents claim solid pharmaceutical dosage forms as well as methods of treating AIDS.  The order lists three Israel patents still in force that ostensibly cover the product, namely IL 173939, 185930 and 207260. Inasmuch as the prescribing information says that the drug was first approved by the FDA in 2000, whatever patents there are in Israel that cover the current product are unlikely to have too much more life to them.  (IL 173939 and its child 207260 will expire at the latest in August 2024; 183930 will expire at the latest in February 2026, but for reasons I'll discuss in another post, it's not clear this patent needed to be included in the order.)

There’s some hope that Kaletra will also be useful in treating COVID-19 (novel coronavirus), and a Korean hospital announced in February that it had successfully treated a patient with a combination of lopinavir and ritonavir, so there’s suddenly a demand for the drug, and not only in Israel, where there as of this writing still fewer than 500 reported coronavirus infections (and no deaths).  But Abbvie can’t meet that demand.  So the authorities are exercising their right under sections 104-106 of the statute to import generic Kaletra from countries in which there is no patent protection, most notably India.

The MOH (or rather, the team of lawyers in the Justice Ministry, MOH and ILPTO behind the Order) was careful to couch the order as applying only to importation of a particular version of the drug (containing 200 mg liponavir and 50 mg ritonavir), from a particular manufacturer, and for treating coronavirus only ; the state is not allowing itself to import for treating AIDS.  And per the statute, Abbvie will be entitled to compensation for the importation, though just how much will be determined at a later date, either by agreement between the state and Abbvie, or in the absence of such an agreement by the Compensation and Royalties Committee that is established by the ILPTO on an ad hoc basis.

Life’s A Cabaret (Or Maybe Not) – Gilead/Kite Renege on Royalty Payments to Cabaret Biotech

In late 2017 we wrote about how a deal involving technology developed at the Weizmann Institute resulted in litigation between two former friends and scientific collaborators, and how the case illustrates the difference between conceiving an idea and commercializing that idea. 

Now it turns out that the underlying deal, between Gilead Sciences and Kite Pharma, on the one hand, and Cabaret Biotech on the other, is itself at risk.  In a complaint filed yesterday in the US District Court for the District of Delaware (hat tip, again, to Aaron Feigelson for catching this), Cabaret revealed that Gilead/Kite, which under the deal have a license to Cabaret’s US patent no. 7,741,465, haven’t made royalty payments to Cabaret in nearly a year, and have threatened to obtain a declaratory judgment of invalidity of the patent, despite the fact that a drug covered by the patent, sold under the brand name YESCARTA, had $216 million in sales in the first half of 2019.  Cabaret has now filed for a declaration that the patent is not invalid.

Prior to 2007, a licensee that believed the licensed patent was invalid had only one recourse in the US to challenge the patent and thus get out of royalty payments: to stop paying royalties and thus be in breach of the license, and then to wait to be sued for infringement by the licensor.  The licensee could then assert invalidity as an affirmative defense, but at the risk of being found to have willfully infringed the patent.  The mere threat of being sued if the licensee were to cease making royalty payments in the future was considered insufficient to establish a “case or controversy” that would give federal courts jurisdiction to entertain a declaratory judgment action.

That situation changed with the Supreme Court’s decision in Medimmune, in which the Court ruled that licensees shouldn’t have to face such a harsh choice, and could seek a declaratory judgment of patent invalidity even while continuing to make royalty payments.

The present case is a bit unusual, in that typically it would be a reluctant licensee (i.e. one that was threatened with an infringement suit and subsequently agreed to a license) that wishes to bring a DJ action.  Here, according to the complaint, (a) Gilead/Kite sought an exclusive field-of-use license from Cabaret, (b) represented to shareholders and potential shareholders that the ‘465 patent protects the YESCARTA franchise (although the complaint doesn’t say in what context such representation was made), and (c) encouraged Cabaret to seek a patent term extension.  And it is of course unusual in that the patentee merely seeks a declaration of non-invalidity.

We’re not going to speculate about what calculations drove Gilead’s decision to stop making royalty payments and to threaten DJ action.  But seeing as how the patent survived two ex parte reexaminations, it’s not a stretch to speculate that Gilead’s validity challenge – which it will now be forced to make – will be based not on prior art, but will come in the guise of the currently fashionable routes to challenge validity: ineligible subject matter under §101; and lack of written description/lack of enablement under §112.  We’ll know soon enough, when Gilead/Kite file their response.  Note that if Gilead/Kite do have a prior art challenge, they can bring it in the context of an Inter Partes Review before the USPTO.  Indeed, because Cabaret does not allege infringement, the one-year deadline for bringing such a challenge under 35 U.S.C. §315(b) does not apply in this case.

Angiomax Patents: They’re Dead, Jim

It’s been a while since we wrote about Angiomax (the API of which is bivalirudin).  The hiatus was because, in the wake of the “Dog Ate My Homework Act” which was part of the so-called America Invents Act in 2011, The Medicines Company was given a reprieve from its attorneys’ mistake (they missed the deadline for filing for a patent term extension because the person docketing the action listed the deadline as two months from FDA approval instead of 60 days) and its basic patent covering the active ingredient of this drug, US 5196404, was extended from July 2010 until December 2014.   

TMO actually had some additional protection: it obtained two additional US patents, 7582727 and 7598343 (discussed here and here), prior to the nominal expiration of the ‘404 patent, and listed these in the FDA Orange Book.  Unlike the ‘404 patent, the ‘727 and ‘343 patents were involved in ANDA litigation.  Now the Federal Circuit has laid those two patents to rest, apparently clearing the road for generic bivalirudin.  In a decision issued last Thursday (The Medicines Company v Hospira, Inc.), the CAFC reversed the District Court and said that the asserted claims were invalid because of the on-sale bar: more than a year before the patent application was filed, TMO had purchased the product having the requisite purity from a supplier which had used the recited process to make the product. 

Distinguishing from cases where the experimental use exception to the on-sale bar applies, the CAFC noted that these were commercially usable batches worth about $10 million apiece, and that there is no “supplier” exception to the on-sale bar, so the fact that the sale was made to TMO itself was of no avail.  Thus, said the CAFC, the claimed product was on sale more than one year before the patent applications were filed.  As Dr. McCoy would say, “He’s dead, Jim.” 

Of more interest to this reader, but not elaborated on by the court, was the characterization of the claims as product-by-process claims.  One usually thinks of product-by-process claims as being worded, “A product X which is prepared by the process of mixing A with B and heating at temperature C.”  Claim 1 of the ‘343 patent, the only independent claim of that patent at issue, certainly qualifies a p-b-p claim:

1. Pharmaceutical batches of a drug product comprising bivalirudin (SEQ ID NO: 1) and a pharmaceutically acceptable carrier, for use as an anticoagulant in a subject in need thereof, said batches prepared by a compounding process comprising:

(i) dissolving bivalirudin in a solvent to form a first solution;

(ii) efficiently mixing a pH-adjusting solution with the first solution to form a second solution, wherein the pH-adjusting solution comprises a pH-adjusting solution solvent; and

(iii) removing the solvent and pH-adjusting solution solvent from the second solution;

wherein the batches have a pH adjusted by a base, said pH is about 5-6 when reconstituted in an aqueous solution for injection, and wherein the batches have a maximum impurity level of Asp⁹-bivalirudin that does not exceed about 0.6% as measured by HPLC. [emphasis added]

Claim 1 of the ‘727 patent, however, reads:

1. Pharmaceutical batches of a drug product comprising bivalirudin (SEQ ID NO: 1) and a pharmaceutically acceptable carrier for use as an anticoagulant in a subject in need thereof, wherein the batches have a pH adjusted by a base, said pH is about 5-6 when reconstituted in an aqueous solution for injection, and wherein the batches have a maximum impurity level of Asp⁹-bivalirudin that does not exceed about 0.6% as measured by HPLC.

Where's the process?  Initially the court stated that the two patents “include product-by-process claims describing” the discovery of the process that led to the claimed invention.  But later in the decision the court seems not to distinguish between the two patents in this regard:

“We find no principled distinction between the commercial sale of products prepared by the patented method at issue in D.L. Auld Co. and the commercial sale of services that result in the patented product-by-process here. The Medicines Company paid Ben Venue for performing services that resulted in the patented product-by-process, and thus a “sale” of services occurred.” 

“Accordingly, we find that the district court clearly erred in finding the Ben Venue sale of services did not constitute a commercial sale. To find otherwise would allow The Medicines Company to circumvent the on-sale bar simply because its contracts happened to only cover the processes that produced the patented product-by-process.”

Was the CAFC construing the statement “wherein the batches have a pH adjusted by a base” in the claim 1 of the ‘727 patent as evincing a p-b-p claim?  Or was characterizing this claim as a p-b-p claim just an oversight?  The court didn’t say, and it doesn’t appear that the question is germane for the on-sale bar determination – i.e., it’s dictum.  But today’s dictum sometimes has a way of becoming tomorrow’s holding...

Does Mercedes Really Have 80,000 Patents?

When I was growing up, a Mercedes was considered to be a well-made status symbol.  When I was in college, my experience at a summer job stocking spare parts at an auto dealer who sold Mercedes and another make of German car seemed to bear this out.  Other than hood ornaments, for which we placed several orders a week (no doubt due to the predilection of 12-year-old-boys to help themselves to those items), there wasn’t much call for new Mercedes parts, presumably attesting to the quality of the vehicles.  The same was not true of the other make of car.

So I was somewhat surprised when I saw one of those annoying internet advertisements that run on our screens when we’re trying to watch something else. This one is for Mercedes, and pitches its products from the angle that since the company has a lot of patents – eighty thousand, according to the advertisement – the company must be a true innovator.

First, I’m surprised that Mercedes feels it needs to advertise at all, but far be it for me to second-guess the company’s market research. 

Second, I’m surprised about the number mentioned.  The bland statement that the company has 80,000 patents, without more clarification, is apparently meant to imply that the company has devised 80,000 separate, patentable inventions.  But the advertisement, which is in English and presumably ran in the USA, doesn’t explain if 80K represents only US patents or all patents worldwide, nor does it explain if the reference is to all patents granted over the years or only the company’s currently active portofolio.  It doesn’t mention if that number includes industrial designs, which in the USA are called “design patents” and which outside the USA merely need to be novel (no inventive step requirement); or if the figure includes utility models, which are granted in Germany but not the USA.  And it doesn’t mention if those “patents” are all assigned to Mercedes-Benz or also to Daimler-Benz or Daimler-Chyrsler. 

As of this morning, a quick check of the USPTO database for patents assigned to “Mercedes” or “Daimler” lists 4,238 patents, including design patents, issued since 1976; if one looks only for patents assigned to Mercedes that number drops to 969.  Presumably there aren’t another 75,000+ pre-1976 US patents lurking about, so the eighty-thousand number mentioned in the commercial apparently refers to all patents issued everywhere since the company’s inception, to all predecessors and successors interest of the Mercedes name.   

This makes the “we have 80K patents” pitch sound lame: why should the company try imply that has developed 80,000 patentable inventions, when in fact it’s really talking about a far smaller number of different inventions, plus merely novel designs, registered in a number of different countries over the past 100+ years?  And why imply that all those patents are current, when many of those inventions are now passe?  Even if it only has a few hundred patentable inventions to its credit over the years, that’s still a considerable number and shows a commitment to improving its products.  In this case the puffery merely detracts from the company’s name.

Finally, in this day and age, I’m surprised that anyone would launch a commercial that implies that lots of patents necessarily means lots of innovation, and I’m particularly surprised that Mercedes of all companies would do so, given the demographic sector to which it’s marketing itself.  If you can afford a Mercedes, there’s a good chance you work in high-tech; and if you work in high-tech, you know that at least since the State Street Bank decision in 1997 and up until recently, in certain technology sectors it was easy to obtain US patents on obvious or even known inventions.  I suspect that’s not the case with most of the work that automobile companies do, and that most of their patents are granted for real, patentable inventions.  But there are a lot of crappy patents out there, and they (or more properly, the enforcement of them) has given the whole patent system a bad name.  I'm amazed that Mercedes has chosen to associate itself with that.

For what it’s worth, the running of the ad has neither increased nor decreased the likelihood of my buying a Mercedes the next time I buy a car.

Do I Smell A Lemon (Coke)? A Twist on Parallel Importation

Coca-Cola has been sold in Israel for a long time; while its main competitor was still complying with the Arab boycott, Coke was not only marketing its product here, but even set up a bottling plant (via a local bottler) in Bnei Brak, today home to many meticulously religiously observant Jews.  Needless to say that Coke products sold in Israel are under rabbinical supervision to ensure that they are kosher.  And that Coke has many trademarks registered in Israel.

Fast forward to 2013.  Coke, like any successful business enterprise, wants to expand its markets.  So it should come as no surprise that Coke has a bottling operation in Bitounia in the PA (via an authorized partner*).  It should also not come as a surprise that some of the PA-produced Coke product makes its way into Israel. 

I don’t know how long Coke has been produced in the PA, and I don’t know how long some of that Coke has been finding its way onto the shelves of Israeli stores.  What is clear is that the PA-produced product costs less to consumers than the brown gold made in Israel, the price of which is tightly controlled by the bottler.  This makes the PA stuff attractive to Israelis who can get their hands on it – and at least an annoyance to the local bottler, although probably not a threat.  

The bad news for the Israeli bottler is that it doesn’t really have legal recourse against the PA-produced Coke.  That’s because it’s been long established in Israel that trademark law provides no relief against parallel importation of genuine goods.  In the particular case that set that precedent, the local authorized importer of Parker pens, who had an exclusive contract with Parker, sued a third party who purchased Parker pens elsewhere, imported them into Israel and sold them.  The court held that since the pens in question were genuine Parker pens, there was no infringement of Parker’s mark.  In the present situation, the PA drink is genuine Coke, authorized by HQ in Atlanta and legitimately bearing the Coca-Cola mark.

So what do you do when you want to protect monopoly rents but IP law isn’t on your side?  You could try to tell the public that the imported Coke is inferior, like the Israeli importer of Huggies did two years ago when someone started importing Huggies from Turkey and selling them for less.  But people can easily decide for themselves about the quality of the PA Coke, and you’d probably annoy the Mother Ship if you started bad-mouthing one of her other colonization teams.  

Personally, I suspect that if I were the bottler, my reaction would be to go to the Coca-Cola Company and ask it to tell the PA bottler to put a cap on his production, or to tell him that he’s not authorized to sell outside the PA, since I’m assuming that the larger mark-up on Coke in Israel means greater profits for the Coca-Cola Company. But since I'm not privy to the details, and there may be other variables at play in CCC’s calculus, I don’t know if that approach would work.

What other options are open?  Here’s where things take an Israeli twist.  The PA Coke is not under rabbinical supervision.   So recently the Chief Rabbinate (a state institution) issued a statement warning people against buying the PA-produced Coke because it lacked such supervision (see English-language article here).  It refrained from explicitly saying that the Coke wasn’t kosher – after all, the same concentrate is used in Coke around the world, sugar is sugar is water is water, so chances are the PA Coke is kosher – but noted the importance of educating kashrut-observing people to only buy rabbincally-supervised products.

I’ve no idea if the Chief Rabbinate discovered this “problem” on its own or if it was informed of the matter by someone else, like the Israeli bottler or one of the outfits that certifies the kashrut of the Coke from Bnei Brak.  But since Bitounia is close to Jerusalem, it seems to me that some enterprising kashrut agency could come to the rescue and explain to the PA bottler the benefits of kosher certification.  And then maybe the Israeli bottler would have to drop its prices.  Or not.  It's hard to believe that the PA bottler has access to a distribution system in Israel as good as the Israeli bottler's; one suspects the competition would be limited to the Jerusalem area. 

*From http://www.coca-colacompany.com/contact-us/coca-cola-rumors-facts (statement undated): “For example, in the Palestinian Authority, The National Beverage Company, our Company's authorized local bottling partner, is an independent, privately held company, managed by local Palestinian businesspeople, who operate a Coca-Cola bottling facility located in Ramallah and distribution centers in Gaza, Hebron and Nablus. The National Beverage Company employs 200 local people and generates employment for hundreds of others in related industries.”  Also look here.

Jumping the Gun in Texas – It’s not Just for Patent Trolls Anymore

Fans of patent blogs will recall the now-defunct Troll Tracker blog.  That blog, which was written anonymously, unmasked the various shell corporations behind which the ownership of many asserted patents was hidden.  Along the way, the blog attracted the attention – and scorn – of several attorneys who represented those non-practicing owners.  One of those attorneys offered a bounty for revealing the identity of the Troll Tracker, and eventually, when threatened with being outed, the author revealed himself: he was Rick Frenkel, who at the time worked for Cisco. 

This in turn led to the filing of a lawsuit against Mr. Frenkel by two irate lawyers from the Eastern District of Texas.  They had filed a patent infringement suit that was stamped by the court as being received a day before the patent issued; the date stamp was then later changed to the following date, without the court records indicating that the change had been made, let alone why. In his blog Mr. Frenkel was none-too-sympathetic in his characterization of the lawyers’ behavior, leading to the filing of the suit against him.  I won’t go into the rest of the details; interested readers can Google the story or read this paper by Jake Ward of the Anticipate This! blog that tells the tale.  (The case against Mr. Frenkel ultimately settled; under the terms of the settlement he’s not allowed to discuss it.)

Turns out that patent trolls (or non-practicing entities, or whatever you want to call them) aren’t the only ones who jump the gun in trigger-happy Texas (where, I’m told, but haven’t confirmed, it’s legal to carry open liquor, firearms and ammunition in the cab of one’s pick-up truck).  According to court records, yesterday (June 6) Hydro-Quebec – hardly a patent troll – filed suit in the Northern District of Texas (Civil Action No. 3:11-cv-01216-B , the Hon. Jane J Boyle presiding), asserting a patent relating to the very non-troll-like subject of materials for lithium batteries (US 7,955,733) that only issued today (June 7).  Apparently someone realized what had happened, but, learning from the mistakes of their brethren in the bar in EDTX, had the good sense to re-file the same complaint shortly after midnight today (Civil Action No. 3:11-cv-01217-K , the Hon. Ed Kinkeade presiding), rather than contact the court clerk and have that person change the filing date.  A notice of related case has already been filed and presumably the plaintiff will move to dismiss the earlier-filed case without prejudice.

(Hat tip to PriorSmart for reporting both filings.)

 

From The Mouths of Babes (or, Does It Take One to Know One?)

In 2004 my wife and I decided to do a crazy thing: take off six weeks from work and take a long vacation in the USA with our kids.  OK, it wasn’t all fun and games – I did a fair amount of work on the trip – but we had plenty of vacation time, and in total drove about 4000 miles traversing much of the country and seeing all 5 Great Lakes.  

One of the interesting things for me was just how many IP-related things we saw.  Like the 19th-century lifeboat that we saw at Whitefish Point on Lake Superior, which bore a U.S. patent number.  Or the exhibit on glass inventions at the Museum of Glass in Corning, New York, which included a display about the use various combinations of lenses to reduce what are known as chromatic aberrations.  That particular technology was prior art in an opposition I was working on at the time.   At the Smithsonian, we saw the Wright brothers' original airplane - a patentable invention if ever there was one - as well as examples of crystalline polymorphs, something that's occupied no small part of my professional life.

Then there was our visit to Niagra falls, where I delivered a letter to the U.S. and Canadian park authorities, telling them to cease and desist use of the term “Niagra” which was confusingly similar to my client’s mark for a well-known erectile dysfunction drug.  Ok, I didn’t really deliver the letter.  But the firm I worked for at the time did represent Pfizer in many seizures of counterfeit Viagra^®. 

Without a doubt, though, the best IP-related part of the trip was our visit to the Utz potato chip factory in Hanover, Pennsylvania.  There’s an enclosed walkway over the production floor that enables visitors to take a self-guided tour and observe the manufacturing process.  It’s pretty clear that considerable thought went into the machinery used to transport the chips during production and to package them, and no doubt over the years more than a few patents were issued for those devices.  And we got free samples at the end of the tour, with OU kosher certification.  Not bad.  I highly recommend it for anyone traveling through Lancaster County.  If you time it right, you can tour the Snyder’s of Hanover Pretzel factory on the same day for a clean sweep of the snack industry.  

Near the entrance/exit of the Utz visitors’ gallery, there’s a display of vintage Utz products (or at least old-style packaging).  So as we were leaving the premises, I took a picture of our kids next to the display.  At which point our then-8-year-old son protested, “Daddy, the sign says no picture taking!”  I explained that the sign meant you can’t take pictures of the production area, but there was nothing wrong with taking pictures by the display of old products.  “Why don’t they want you to take pictures inside the factory?”, he asked.  Well, I explained, they’re afraid that another potato chip company might send spies and find out how they make their chips.  It’s called industrial espionage, I explained.  

Without losing a beat, our son said, “Hey, I have an idea!  Maybe I’ll go and work for Utz for a few years, then open my own potato chip factory!”  

“You know,” I said to him, after I stopped laughing, “we help defend people like you.  Sometimes we go after people like you!”  

I mentioned that story because of this complaint filed yesterday in the Eastern District of Ohio.  Snack Alliance and Shearer’s Foods allege that another company is infringing US 7,189,424 and US 7,416,755, which claim fried, crisp rice snack chips and processes for making them.  Shearer’s markets rice snacks under the name “riceworks”, in several flavors; according to the plaintiffs, in making a competing product the defendant not only infringes the patents, but also uses the same names for several of the flavors and uses similarly colored packaging.   Hence in addition to patent infringement the plaintiffs also allege unjust enrichment, federal false designation and unfair competition, and state deceptive trade practices and unfair competition claims.  And who would that defendant be?  None other than…Utz. 

Below are pictures of Shearer’s products and Utz’s products, taken from the complaint.  Whaddaya think?

 
   

I also want to take this opportunity to say for the record my son did NOT advise Utz in any way and received no compensation from Utz for consulting with regard to product development or any other matters. :-)