The MTTLR Blog

I posted a few weeks ago about the Supreme Court’s decision to temporarily stay YouTube streaming in the Proposition 8 trial.  As expected, the Supreme Court later extended its temporary stay into a permanent block of the proposed stream.  The Northern District of California had to change its rules to allow for the streamed video, and the Supreme Court held that it did not properly followed the guidelines for changing its rules.

Instead of taking the ruling lying down, filmmaker and journalist John Ireland decided to take the law into his own hands by creating a re-enactment of the trial.  Ireland is filming the project with professional actors who are volunteering their time.  The episodes can be found at MarriageTrial.com or YouTube.  MarriageTrial.com also contains a wealth of other information related to the case, such as a link to the day-by-day trial transcripts.  Currently, the first episode is complete and ready for viewing.

In May 2008, the California Supreme Court held that the Equal Protection Clause of the California Constitution required same-sex marriages be recognized. However, the voters passed Proposition 8 just a few months later, redefining marriage as only between a man and woman. Last May, after a second round in the state courts, the California Supreme Court upheld the state constitutionality of Proposition 8. The court’s ruling eliminated the right of same-sex couples to marry, but the court rejected the nullification of the marriages of couples that had already received marriage licenses.

Today marked the next phase of the battle, a challenge to Proposition 8 under the United States Constitution. The plaintiffs are attempting to show that the sponsors of Proposition 8 unconstitutionally proposed the amendment with discriminatory intent.  The plaintiffs hope to make such a showing by placing the sponsors on the witness stand.

Last Wednesday, Chief U.S. District Judge Vaughn Walker in San Francisco ordered a delayed YouTube stream of the trial. However, the Supreme Court has issued a stay for the YouTube streaming (streaming to other rooms within the courthouse will continue).  According to the stay, it will expire on Wednesday at 4PM unless extended. The stay contained no reasoning as to why it was ordered, however, one would think that the court worried about witness harassment. Justice Breyer, while pleased at the limited duration of the stay, dissented by cursorily arguing that delayed video streaming would not cause irreparable harm.

The topic of music royalties has come up time and again in 2009, from the introduction of the Performance Rights Act, currently making its way through Congress, to various digital performance royalty rate disputes, from Internet broadcasts to satellite radio.

To end the year in music royalties and law, and to help open up 2010, on the week of December 21, 2009 the owners of about 1,200 “local” television stations filed a lawsuit against performing rights organization Broadcast Music, Inc. (BMI) seeking “lower broadcast fees to reflect declining television viewership and advertising revenue,” according to a report from music industry news publication Billboard.  The suit, WPIX v. BMI, was filed in U.S. District Court, Southern District of New York.

The plaintiffs, who have periodically renegotiated the rates with BMI, now state that a federal judge should “set reasonable fees and terms” because of a decline in television viewership and advertising revenue, according to Businessweek.  According to the Businessweek article, the “television industry will end the year with lower-than- expected revenue of $15.6 billion, a 22.4 percent decline from 2008.”

The Supreme Court granted certiorari to City of Ontario v. Quon on December 14, 2009 (No. 08-1332).

Quon was a SWAT member who had sent and received text messages on his work-issued pager. While the city’s written policy was that employees should have no expectation of privacy when using their work network, the supervising lieutenant who had issued the pagers had an informal policy that employees could use them for personal communications and their messages would not be inspected as long as they personally paid for any overage fees. However, when the higher-ups decided to audit the texts to determine if they should increase the texting allotments with the outside service provider, they read transcripts of Quon’s sexually explicit messages to his wife and someone it appeared he was having an affair with.

Quon, his wife, his alleged girlfriend, and another employee sued the city, claiming Fourth Amendment violations. The Ninth Circuit found that the employees had a reasonable expectation of privacy in the content of their text messages because the formal policy was in effect overridden by the supervisor’s informal one. It also determined that the search was unreasonable because there were less intrusive ways to investigate the employees’ personal usage levels.

The main issue is whether Quon, as a public employee operating under this informal policy, is protected by the Fourth Amendment against warrantless searches of the content of his text messages because of a reasonable expectation of privacy. The other issue is whether the sender of a message to a government employee on the employee’s work device (i.e., Quon’s wife) has an a reasonable expectation of privacy from employer review.

In O’Connor v. Ortega, 480 U.S. 709 (1987), the Supreme Court dealt with similar issues of employees’ right to privacy in the workplace. The plurality opinion, written by Justice O’Connor, found that there was a reasonable expectation of privacy in the public workplace, but also that a balancing test of “the employee’s legitimate expectation of privacy again the government’s need for supervision, control, and the efficient operation of the workplace” should be applied to determine whether a search is reasonable. Scalia concurred with a broader take on privacy. While the justices couldn’t all agree on whether the employee had a reasonable expectation of privacy in his office, all of them agreed that he had a reasonable expectation of privacy in his desk and file cabinets.

How to apply O’Connor’s holding to electronic communications is one of many questions courts face with our evolving use of technology in the Internet age. Some courts still try to analogize this to wire-taps on phones; anyone with a BlackBerry would disagree. Laptops, cellphones, pagers, and other digital devices are used so ubiquitously that today the line between personal and non-personal communications is blurred.

Will the Court be as divided as in O’Connor? The Court has changed since then, and of the five for public employee right to privacy, only Scalia remains. It’s expected that Sotomayor will side with the employer in Quon. She previously ruled in a 2001 case that a workplace search of an employee’s computer was reasonable, balancing the “modest intrusion” with the “need to investigate allegations of improper conduct.”

While whatever the Court decides here will only be binding on government employers (who would be subject to Fourth Amendment restrictions), it is very likely that lower courts will be applying this to private employers as well.

[ Washington Post: Supreme Court will decide whether employees' text messages are private ]

[ Wall Street Journal: Supreme Court to Review Employer Access to Text Messages ]

[ Double X: No more Sexting with Sotomayor on the Court ]

[ Oyez case summary of O'Connor v. Ortega ]

When AT&T sued Verizon Wireless for its “There’s A Map for That” advertising campaign,

AT&T could have brought a dilution claim against Verizon’s use of the slogan, “There’s a map for that,” which is very similar to AT&T’s slogan, “There’s an app for that,” featured in its own iPhone commercials.

In bringing a dilution claim, AT&T could have argued that Verizon’s use of “There’s a map for that” weakened the effect of AT&T’s slogan because consumers would no longer think exclusively of AT&T when hearing the phrase. It seems like AT&T would have had a good argument for dilution, but instead, it sued Verizon for false advertisement under the Lanham Act, federal trademark law.

The ads themselves feature two maps comparing AT&T’s 3G network coverage area to Verizon’s superior 3G coverage area. AT&T asked the court to stop Verizon from running the ads because they could mislead customers into thinking AT&T doesn’t offer any coverage in areas where its 3G network isn’t available. (In reality, customers can still make calls and access the Internet using AT&T’s slower EDGE or GPR networks, even where there isn’t 3G network coverage.) Verizon, on the other hand, argued that the ads simply point out that AT&T hasn’t invested enough in upgrading its network to handle new smartphone activity from the popular Apple iPhone.

In its response to AT&T’s complaint, Verizon wrote: “AT&T did not file this lawsuit because Verizon’s ‘There’s a Map for That’ advertisements are untrue; AT&T sued because Verizon’s ads are true and the truth hurts.” Verizon also pointed out that the Lanham Act requires AT&T to show actual proof that the ads are misleading consumers because First Amendment free speech is at stake in the suit. Verizon continues:

As to four of the five challenged ads, AT&T has presented no evidence of consumer deception. This alone is a sufficient basis to deny AT&T’s motion as to these ads. As to the one ad . . . AT&T commissioned a consumer survey . . . . But this survey is riddled with errors.

Apparently the court agreed. Judge Timothy C. Batton, a federal judge in Atlanta, declined to grant AT&T a preliminary inunction that would temporarily stop Verizon from running the ads. He stated that he didn’t believe AT&T would succeed in its claim based on the evidence submitted. The judge said:

I think that a person with a skeptical bent of mind might call Verizon’s ads sneaky . . . . I think a more sanguine view is that they are simply clever. Either way, however, they are literally true. And the Court holds that AT&T has failed to carry its burden of showing that they are nevertheless misleading.

Immediately following the court’s ruling, AT&T indicated that it would continue with the suit despite the initial loss, but it has since decided to drop the claim.

Perhaps AT&T realized that after its own expansive advertising campaign touting its network as the “fastest 3G network” (implicitly comparing it to Verizon’s coverage and other secondary competitors’ — such as Sprint and T-Mobile), it isn’t likely to garner much sympathy in its claims against Verizon. The bottom line is that Verizon’s maps of AT&T’s 3G network are accurate. If AT&T wants to say its 3G network is faster than Verizon’s, why shouldn’t Verizon be able to say its own coverage is more expansive than AT&T’s? Maybe AT&T realized that it should stop sinking its money into law suits and instead use it to fill those gaps in its coverage. Federal trademark law is meant to protect against false advertising, but this should promote fair competition, not hinder it. Therefore, Verizon’s ads, if accurate, should encourage AT&T to improve its service. This type of competition, in a free market, will hopefully produce the best quality products at the lowest prices for consumers.

A three judge panel of the Court of Appeals for the Federal Circuit recently upheld the injunction against Microsoft that goes into effect January 11, 2010.  The panel also upheld the nearly $300 million in damages from the U.S. District Court for the Eastern District of Texas.  The injunction will bar Microsoft from selling versions of Word that contain the ability to open documents with “custom XML.”  The injunction does not affect any versions of Word sold before January 11, 2010, but does prevent Microsoft from “instructing or assisting new customers in the custom XML editor’s use.”  Technical support can still be offered by Microsoft from versions of Word sold before January 11.  Regardless, Microsoft has said that it is ready to remove the infringing feature from copies of Word and Office that will be sold after January 11.  The upcoming 2010 versions of Word and Office should not have the infringing feature, and thus should be unaffected by the injunction.

The only changes to the injunction by the panel were a modification of the effective date of the injunction, from the original 60 days (stayed during appeal) to 5 months from the original issue date of the injunction.  This was because the panel determined that the district court erred in setting a time frame of 60 days, when the only evidence concerning time to remove the infringing XML functions from Word was “at least” 5 months.  As Microsoft has said, it initiated steps in August to remove the infringing feature, so the change in the effective date of the injunction should have little practical impact.

In regard to the damages, most significant is the $200 million damages for royalties.  The panel even admitted that, “Given the opportunity to review the sufficiency of the evidence, we could have considered whether the $ 200 million damages award was “grossly excessive or monstrous” in light of Word’s retail price and the licensing fees Microsoft paid for other patents.”  The opinion makes it sound as if the panel, if able to review sufficiency, would have significantly reduced the royalty damages.  This is because the baseline royalty rate used by i4i’s expert witness to calculate damages was $98, when certain Word products could sell for as low as $97.  On a sufficiency review, it seems entirely possible that the baseline royalty used was grossly excessive and monstrous, since it could be greater than the entire selling price of a single copy of Word.  Further, Microsoft told the court the typical license it paid to use a patent was in the $1 – $5 million range, something completely out of line with the i4i calculations of $200 million.  But the panel stated it was unable to review the sufficiency of the evidence, as Microsoft had failed to file a pre-verdict judgment as a matter of law motion, restraining the panel’s review to the standard of a clear showing of excessiveness.  The panel even seemed to question Microsoft’s failure to file a pre-verdict JMOL motion as to the sufficiency of the evidence for the damages, stating, “Had Microsoft filed a pre-verdict JMOL, it is true that the outcome might have been different” because then the panel could decide “whether there was a sufficient evidentiary basis for the jury’s damages award.”  Given the panel’s statements, Microsoft might have blown its chance to have the damages significantly reduced on appeal by deciding not to file a JMOL motion for sufficiency of the evidence as to damages.

It also seems as if i4i’s decision to file in Texas has paid off, after gaining some measure of approval from the panel of the Court of Appeals for the Federal Circuit.  I don’t know if I would go so far as to call the panel’s opinion “a complete and utter vindication of the judgment,” given the statements of the panel regarding the royalty calculation and the limited level of review available for the findings of the jury, but it does give some credence to the inability of an appeal to alter the jury verdict.  While Microsoft’s loss on appeal may not make the district court’s decision completely right, it may well signal the verdict’s irreversibility.  The Federal Circuit may well refuse a request for a full hearing, as the decision clearly sets out the limits of appellate review in this case.

The size of the verdict against Microsoft makes you wonder why they didn’t just license the patent from i4i back in 2000, when Microsoft was aware of i4i’s presence in the market, or even at the start of litigation in 2007.  At this point, there appear to be very few reasons for i4i to consider talking with Microsoft about licenses or settlement, as i4i looks to have a winning case and a firm hold on nearly $300 million from Microsoft.

On May 12, 2009, the ACLU and the Public Patent Foundation filed a lawsuit on behalf of four scientific organizations – the Association for Medical Pathology, the American College of Medical Genetics, the American Society for Clinical Pathology and the College of American Pathologists challenging the constitutionality of USPTO’s grant of gene patents of the BRCA 1 and BRCA 2 gene sequences. The defendants include the US Patent and Trademark Office, directors of the University of Utah Research  Foundation and Myriad Genetics and Laboratories, a for-profit organization which is a co-owner of one of the patents-in-suit and holds exclusive licenses for the remaining ones.

The lawsuit, Association for Molecular Pathology, et al. v. United States Patent and Trademark Office, et al. reopens the age old debate on patentability of human genetic material, but unlike other federal circuit cases which attacked the breadth and vast scope of rights granted to the holders of these patents, it challenges the very right to even hold such patents.

This ‘frontal attack‘ approach of ACLU is especially daring considering that almost 20% of the human genome is currently patented. But as far as choosing a candidate and the timing of this lawsuit, the raging debate over healthcare costs combined with a high visibility disease such as breast cancer definitely work in the plaintiff’s favor.

The National Cancer Institute reports that women in the general population have about a 12% lifetime risk of developing breast cancer, whereas women carrying the mutated BRCA gene face a five times larger risk – almost 60%. Their chances of developing ovarian cancer is more than ten times that of the average population. The cancers these women develop are also more aggressive and likely to metastisize rapidly. Prevention, therefore, is vital for survival odds and options such as prophylactic surgery or chemoprevention are exercised by patients. Of course, before preventative treatment can begin, a genetic test must be conducted to confirm that the patient is indeed a carrier of the mutation. This is where Myriad comes in – as the holder of the exclusive licenses, it is the sole clinical provider of the full sequencing of the BRCA genes in the US. These tests, which run upwards of $3000 may not be covered by insurance. Perhaps more than this, what has really gotten the medical and scientific communities’ back up has been Myriad’s insistence that ONLY Myriad’s labs have the right to conduct any ‘commercial’ tests but Myriad’s definition of “commercial” has included sending cease-and-desist orders to University laboratories (researchers at UPenn, Yale and Georgetown being a few).

And it is perhaps this denying of information to researchers that could potentially lead to the development of newer, better tests which has lead to ACLU’s bold strategy. The defendants moved to dismiss the case based on three grounds – (1) that the court lacked subject matter jurisdiction over the Plaintiff’s claims; (2) that the court lacked personal jurisdiction over the UURF and (3) that the plaintiff’s failed to sufficiently plead a claim. In his opinion, District Judge Robert Sweet allowed the Plaintiff’s claim against the USPTO to meet the ‘redressability requirement saying that,

Included in this prayer for relief is a request that the Court declare unconstitutional the USPTO’s policies and practices with respect to the challenged claims and similar classes of claims. Granting Plaintiff’s request for relief would serve to render the claims-at-issue definitionally [sic] invalid. As a result, the Plaintiffs would be allowed to engage in conduct currently prohibited by Myriad’s patents, and the alleged injuries would be redressed.

Considering that the USPTO’s policies regarding the grant of patents related to human genes have been upheld in court long enough to generate thousands of patents covering 20% of the human genome, it is hard to decide which is more more surprising: that an unconstitutionality claim against these policies has been filed so late in the day or that it has survived dismissal on grounds of failure to state a claim.

Does the lawsuit’s survival in court despite a long history of patentability of biological material hail the end of theDiamond v. Chakraborty era? Are the public policy concerns and the crushing weight of sky-rocketing healthcare costs making it imperative that the proliferation of commercialization of healthcare related innovation be curbed? If so, what of other such gene patents in existence and the businesses built around them? A sweeping judgment against the policies of the USPTO as applied to gene patents might well prove economically detrimental to the biotechnology industry as investors would scramble to withdraw support from these risky ventures which are entirely reliant on their patent portfolios to provide any measure of economic return. Broad availability of research could well lead to a ‘problem of the commons’ that because everyone has access to the technology, no one would want to invest further to develop clinical applications of the same. On the other hand there are tests which have been commodified (such as X-Rays and MRIs) and still companies continue to build equipment to conduct these tests and seem to make adequate profit to boot. Whether a long due overhaul of inadvisable patent policy or an improper flaunting of precedent, this case raises critical questions which need addressing in order for the biotech industry to stand on solid ground

One of the most prominent copyright/fair use cases over the last year has been artist Shepard Fairey’s dispute with the Associated Press (AP) over his famous poster of now-President Obama during the 2008 Presidential Campaign. The poster, which featured a stylized portrait of Obama with the word “Hope” underneath, was supposedly based off of an AP photograph taken of Obama at a 2006 event organized by George Clooney on Darfur, which Fairey then modified to create the now-iconic HOPE poster. The AP claimed that because Fairey’s work for based off an AP photograph to which the AP owned the copyright, Fairey was required under copyright law to apply for permission for use of the photograph. Fairey consistently claimed that he did not profit from the poster, but instead used the proceeds to produce additional prints, and disputed the AP’s identification of the original photo as a closeup of Obama rather than a photo of both Obama and Clooney.

Fairey, who was then represented by Anthony Falzone, Executive Director of Stanford Law School’s Fair Use Project, claimed that his use of the photograph came under the “fair use” exception and thus permission was not required. Fair use hasn’t often been applied to photographs, so the issue seemed likely to become a fascinating test case, especially after Fairey filed for declaratory judgment against the AP in February 2009 seeking a determination that his use came under the doctrine of fair use.

The case was further complicated by the claims of the original photographer, Mannie Garcia, who was working under contract for the AP when he took the photograph; Garcia claimed that the copyright for the photo belonged to him, not to the AP. Garcia’s latest position in the legal skirmish is as a defendant, counterclaim plaintiff, and cross-claim plaintiff/defendant.

At the time, it seemed that Fairey had a chance of winning. Fair use disputes are resolved by a four-factor test; the four factors are:

1. the purpose and character of the use
2. the nature of the copyrighted work
3. the amount and substantiality of the portion taken, and
4. the effect of the use upon the potential market.

The first factor relates to the use of the original material; by cropping, colorizing, and reorienting Obama’s posture from the original photograph, as Fairey claimed he’d done, it’s probable that a court would have deemed Fairey’s use sufficiently transformative to satisfy that factor.

The second factor concerns the distinction between fiction and fact; since Fairey copied from something factual (a photograph from a news event) rather than something fictional (for example, a novel), it’s possible that he would have succeeded on this factor as well, since only fictional works can be copyrighted. However, the Supreme Court ruled in Feist Publications, Inc. v. Rural Telephone Service, Co., 499 U.S. 340 (1991), that only a “spark” of originality was required in order for something to come under copyright protection, it seems probable that the original photograph would have been protected by copyright. Fairey would thus have faced a tougher battle on the second factor compared to the first.

The third factor presents one of the most interesting elements of the case. The less someone uses of the original work, the better case they have for fair use. For example, if a musician copies only a few seconds from six minute song into a remix, she’ll have a stronger basis for fair use than if she uses five minutes. Since Fairey supposedly cropped out George Clooney from the original photograph, he had a fairly good position on this factor. As the LA Times noted, how often does George Clooney get cropped out of a photograph? The fourth and final factor also seemed to weigh in Fairey’s favor. Fairey’s poster did not impede the AP from selling the rights to the original photograph to newspapers and other media outlets, especially given that the photograph was over two years old by the time Fairey began selling prints of it.

Last month, the entire case took on a dramatic twist when it came to light that Fairey had lied about which photograph he’d used for the HOPE poster. Instead of using a photo of Clooney and Obama, Fairey admitted that he had used the photograph that the AP had always claimed he’d used (a closeup of Obama) and that he had deleted images and submitted false ones in connection with the lawsuit. As a result, Falzone and the Fair Use Project declared their intention to withdraw from the case, as they couldn’t ethically represent Fairey after his lies came to light. Falzone noted that he still believed in the merits of Fairey’s case; the AP, however, countered that Fairey’s admission undermined his fair use argument and that they would block the withdrawal of Falzone and the Fair Use Project. The Fair Use Project’s proposed replacements are Geoffrey Stewart, a partner at Jones Day, and William Fisher and John Palfrey of Harvard’s Berkman Center for Law and Society.

Crucially, Fairey’s admission impedes his claims under the third factor of fair use, as he did not modify the original photograph as much as he claimed and took a larger proportion of the original work. Still, Falzone’s support of Fairey’s claims even after exiting the case doesn’t seem naive; it’s conceivable that a court could still find fair use. But as many have noted, it’s hard to seek a defense that uses the word “fair” when you’ve lied about the case. The case is still going forward, but Fairey’s position is far weaker than it was a few weeks ago, though the LA Times ran an editorial this week that supports Fairey’s claims on the merits. But what could have been a fascinating test case for the status of fair use in copyright law has been muddled as a result of Fairey’s deception, and it remains unclear what this could mean for other artists working in similar ways.

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.

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.