Archive for September 2009

The Bilski Effect: Not Just Business Methods

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In Diamond v. Diehr, the Supreme Court held that a process claim is not patent-eligible under 35 U.S.C. § 101 if the claim preempts a “fundamental principle,” such as a law of nature, a natural phenomenon, or an abstract idea.  On the other hand, a claim is patent-eligible if it recites a specific application of the “fundamental principle.”  In its much-discussed In re Bilski decision, the Federal Circuit clarified the test to be used by the Patent and Trademark Office (PTO) and by the courts to determine whether a given process claim is patent-eligible.  Under the Federal Circuit’s test, a process claim satisfies the § 101 patent-eligibility requirements only if (1) the process is tied to a particular machine or apparatus, or (2) the process transforms a particular article into a different state or thing.

In Bilski, the Federal Circuit applied this “machine-or-transformation” test to reject a process claim reciting a business method of hedging risk in the field of commodities trading.  However, while the Bilski court articulated the “machine-or-transformation” test in the context of a business method case, the test apparently applies to all process claims.  The court derived the test from the Supreme Court’s language in Gottschalk v. Benson, Parker v. Flook, and Diehr, none of which involved a business method claim.  Furthermore, the court implied that the test applies generally, saying that the “machine-or-transformation” test “is the governing test for determining patent eligibility of a process under § 101.”  If the Federal Circuit’s “machine-or-transformation” test does apply generally, then Bilski calls into question the validity of numerous medical diagnostic method claims.

Medical diagnostic method claims generally recite a two-step process.  The first step involves the performance of an assay or measurement on a patient.  The second step involves the “correlation” or “comparison” of the assay or measurement result with the result expected for a given disease state, medical condition, prognosis, or potential for treatment.  This correlation or comparison generates information useful for the patient’s diagnosis and treatment.

Prior to Bilski, the patent-eligibility of a medical diagnostic method claim turned on a generalized analysis of whether the claim preempted a “fundamental principle.”  Under this regime, the PTO allowed numerous diagnostic method claims.  For example, U.S. Patent No. 7,163,801 (the ‘801 patent) issued on January 16, 2007, and describes several methods for determining the prognosis for cancer patients.  Claim 1 of the ‘801 patent reads as follows:

1.  A method for determining the prognosis for survival for a colon cancer patient having stage II colon carcinoma, comprising:
(a) measuring a level of TUCAN polypeptide in a colon cancer cell-containing sample from said colon cancer patient, and
(b) comparing the level of TUCAN polypeptide in said sample to a reference level of TUCAN polypeptide from normal colon tissue, wherein a lower level of TUCAN polypeptide relative to said reference level correlates with increased survival of said patient.

The examiner did not raise any § 101 rejections during the prosecution of the ‘801 patent, and the validity of the patent has not been challenged in court.

A similarly structured medical diagnostic method claim had previously issued in U.S. Patent No. 4,940,658 (the ‘658 patent) on July 10, 1990.  Claim 13 of the ‘658 patent reads as follows:

13. A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of:
assaying a body fluid for an elevated level of total homocysteine; and
correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.

In 2001, Metabolite Laboratories sued Laboratory Corporation of America (LabCorp), alleging the LabCorp had infringed the ‘658 patent, including claim 13.  On appeal from a jury verdict finding the claim valid and infringed, the Federal Circuit affirmed without discussing the § 101 patent-eligibility of claim 13.

The Supreme Court granted certiorari on the question of whether a method patent directing a party to “correlate” test results validly claims patent-eligible subject matter.  In other words, does such a claim preempt a “fundamental principle” or “basic scientific relationship?”  The Supreme Court ultimately dismissed its grant of certiorari on procedural grounds, but the LabCorp case is notable for Justice Breyer’s impassioned dissent from the dismissal.  Justice Breyer argued that claim 13 is not patent-eligible because the correlation between elevated homocysteine levels and vitamin deficiency is an unpatentable “natural phenomenon.”  Furthermore, he rejected Metabolite’s argument that the inclusion of the “assaying” step transformed this “natural phenomenon” into a patentable process.  Rather, Justice Breyer argued, the claim amounts to “no more than an instruction to read some numbers in light of medical knowledge.”

Two years after Justice Breyer penned his dissent in LabCorp, the Federal Circuit decided Bilski.  Since that time, both the PTO and the federal courts have embraced the “machine-or-transformation” test as the exclusive patent-eligibility criterion for medical diagnostic method claims.  At a December 3, 2008, meeting of the Biotechnology/Chemical/Pharmaceutical Customer Partnership, PTO Quality Assurance Specialist Kathleen Bragdon discussed the patent-eligibility of several hypothetical diagnostic method claims.  One hypothetical claim recited a method for determining whether a breast cancer patient will respond to a particular drug by (1) identifying the nucleotide at a given position in the patient’s genome, and (2) correlating the identity of that nucleotide with the likelihood that the patient will respond to the drug.  Ms. Bragdon asserted that this claim would fail the “machine-or-transformation” test.

The PTO applied the “machine-or-transformation” test when it rejected numerous claims in U.S. Patent Application No. 10/888,180 (the ‘180 application).  Each of these claims recited a method of detecting endometrial pathology in a patient.  For example, amended claim 1 of the ‘180 application read as follows:

1.  A method for detecting endometrial pathology in a patient comprising:
obtaining a patient’s biological test sample;
detecting a plurality of polypeptides in the biological test sample to yield a test protein profile;
comparing the test profile with a reference protein profile; and
determining that said patient is at risk of endometrial pathology when there is a difference between the test protein profile and the reference protein profile, wherein the difference between the test protein profile and the reference protein profile comprises a difference in the amount of at least one [of several specified biomarker polypeptides.]

On July 7, 2009, Patent Examiner Pablo S. Whaley rejected claim 1, finding that the claim fails the “machine-or-transformation” test.  The claim does not limit the patented method to a particular machine for either the “obtaining” step or the “detecting” step.  Furthermore, the claim does not require the sample to undergo any “transformation,” such as a “physical assay.”

In its first opportunity to apply the “machine-or-transformation” test to a medical diagnostic method claim, the Federal Circuit also found the claim at issue patent-ineligible.  Claim 1 of U.S. Patent No. 6,420,139 patent recites “a method of immunizing a mammalian subject while reducing the risk of said subject thereby developing at least one chronic immune-mediated disorder” by (1) screening several immunization schedules on test groups of mammalian subjects, (2) comparing the effectiveness of the various schedules, and (3) immunizing mammalian subjects according to the immunization schedule determined to pose the smallest risk.  In Classen Immunotherapies v. Biogen IDEC, the Federal Circuit found the claim invalid under § 101, flatly declaring without further analysis that the claim fails the “machine-or-transformation” test.

On August 5, 2009, the Federal Circuit heard oral arguments in a second case involving the § 101 patent-eligibility of a medical diagnostic method claim.  In Prometheus Labs. v. Mayo Collaborative Servs., the Federal Circuit is considering the patent-eligibility of U.S. Patent No. 6,355,623 (the ‘623 patent).  Claim 7 of the ‘623 patent recites “[a] method of reducing toxicity associated with treatment of an immune-mediated gastrointestinal disorder” by (1) administering a pro-drug to a subject, and (2) determining the levels of two metabolites in the subject, wherein sufficiently high levels indicate a need to decrease the dosage of the pro-drug.  In other words, the second part of the claim recites a correlation between elevated metabolite levels and the need to decrease dosage.  Prior to Bilski, a district court in California, citing liberally to Justice Breyer’s LabCorp dissent, held claim 7 patent-ineligible on the ground that it wholly preempts a natural phenomenon.

In its Federal Circuit brief, filed after Bilski, Prometheus argued that the method recited in claim 7 of the ‘623 patent passes the “machine-or-transformation” test “with flying colors.”  According to Prometheus, the claimed method effects several transformations.  First, the administration of the pro-drug transforms the patient’s body through the production of metabolites unknown in nature.  Second, the samples removed from the patient’s body undergo various chemical and physical transformations in the various assays designed to measure the level of the active metabolite.  Third, the data from the assay is transformed into a warning regarding the possible need to decrease the patient’s dosage.

Prometheus also argued that the claimed method is tied to machines in two ways.  First, Prometheus argued that the method relies on certain machines and analytical instruments to process the patient’s bodily samples and to determine the metabolite levels.  Second, Prometheus urged the court to understand the “machine” prong of the “machine-or-transformation” test as a shorthand reference to the other classes of patentable subject matter referenced in § 101 (i.e., machines, manufactures, and compositions of matter).  In this light, the claimed method would satisfy the “machine” prong of the test because it is tied to a particular composition of matter—the pro-drug.

Curiously, the Federal Circuit oral arguments (part 1 and part 2) paid short shrift to the “machine-or-transformation” test.  Rather, the panel’s questioning focused heavily on traditional, pre-Bilski patent-eligibility considerations—whether the disputed claims wholly preempt a natural phenomenon or merely recite an application of that phenomenon.  Specifically, the panel asked the parties whether the disputed claims preempt the correlation between elevated metabolite levels and toxicity.  For example, do the claim preambles and other claim limitations restrict the scope of the disputed claims to particular applications of the correlation?  Furthermore, are the “administration” and “determination” steps of the claimed methods essential to all conceivable uses of the correlation?

These questions, posed by the Federal Circuit panelists, suggest that the court has not necessarily adopted the bright-line “machine-or-transformation” test as “the governing test for determining patent eligibility of a process under § 101.”  Instead, the panelists’ questions imply that the court will still inquire whether the claimed process wholly preempts a fundamental principle.  The court’s ultimate decision in Prometheus will likely clarify the test for patent-eligibility of medical diagnostic method claims.

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September 14th, 2009 at 3:09 pm

The law (firm) is your friend: Is social networking changing legal culture?

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Law firms have empirically been a pretty conservative group, and they are not usually known for embracing technological fads very quickly, if at all.

This is why it is all the more surprising that Bloomberg reported yesterday that social networking sites, including Facebook and Linkedin, are becoming crucial to firms in drumming up new business and ultimately helping attorneys becoming better lawyers.

“Many lawyers believe that social networks are no more than the playthings of their teenage offspring,” Richard Susskind, the author of numerous books on legal technology, said in an interview. “I disagree. The business-oriented versions will fundamentally change the way law firms are chosen and the way lawyers work with their clients.”

Susskind’s predictions have already started to come true.  Sites like LinkedIn, which are geared toward business in general and other, legal-community specific sites, such as Legal OnRamp, are providing opportunities for lawyers never before imagined.  Legal OnRamp, founded in 2007, is an invitation-only networking site that offers legal blogs, guest commentaries, and private discussion spaces for members to seek advice from lawyers in other jurisdictions about everything from billing rates to local judge preferences.  The site boasts almost 10,000 members, among them Latham and Watkins, the Los Angeles Angels baseball team, and the Royal Bank of Canada.  The site even provides members a workspace where lawyers can have their work reviewed by other site members.  One in-house counsel publicly announced last month that he now drafts his own patent applications before submitting them to the pricier lawyers down the street at the outside counsel for final review.

Sites like these are helping firms connect with expert witnesses too, as one lawyer observed.

“Online networks are a fantastic tool for identifying expertise in the fields in which general counsel are looking to rein in outside counsel,” Eugene Weitz, an in-house attorney at Paris-based Alcatel Lucent, said in an interview. “Experts bubble up who have the ability to show their knowledge online.

Certainly, the explosion of social networking is a double-edged sword.  When cash-strapped in-house counsels can now get many of their questions answered online for free, rather than paying hundreds of dollars per hour, this has the potential to cut in to law firm bottom lines.  Also, will be harder for firms to hide behind their reputations.  “Increasingly the key piece of information a general counsel uses to assess an outside lawyer’s reputation is not the renown of his or her firm, but the review by a trusted peer,” noted Lippe, the CEO of Legal OnRamp.

A recent LexisNexis practitioner survey reported that 40% of lawyers surveyed think that online networking sites will alter the legal business and practice of law in the next five years.  Frankly, this number seems shockingly low, perhaps attributable to the significant generation gap also reported by Lexis.  The survey found that older practitioners are much less likely to be using a social network in their practice than their younger associates.

In any case, it will be fascinating to watch how firms’ internal operations adjust and respond to these new social networks.  At the very least, these social networks have the capacity to foster collaboration and communication, both within firms as well as between them, which ultimately should go a long way toward providing better legal services to clients.

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September 11th, 2009 at 3:42 pm

Gawronski v. Amazon Update

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The New York Times reported today that Amazon has changed its mind yet again about deleting Kindle copies of Orwell works, due to it lacking the rights to them. Amazon is now offering affected customers a free upload of a different, legally authorized edition–and with any annotations the customers made on their old versions. This solution may make the Gawronski lawsuit moot. But more importantly, it’s turned the Kindle Orwell debacle into yet another question about who really “owns” data. Those annotations may or may not have value quantifiable as damages, but at the end of the day, it still appears to be Amazon who decides when and where you get access to them.

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September 4th, 2009 at 4:38 pm