Archive for the ‘patent’ tag

Appellate Review of Markman Hearings

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In Markman, the Supreme Court declared that determining the meaning of patent claims, i.e. “claim construction,” is a question to be decided by the court; the Seventh Amendment right to a jury trial does not apply. Markman v. Westview Instruments, Inc., 517 U.S. 370, 372 (1996). Shortly thereafter, in Cybor, the Court of Appeals for the Federal Circuit held that de novo review applied when results from these newly-created ‘Markman hearings’ are appealed. Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448, 1451 (Fed. Cir. 1998) (en banc).   Earlier this year, the Federal Circuit granted a rehearing en banc to determine if Cybor should be overruled, and what, if any, deference should be given to a District Court’s claim construction. Lighting Ballast Control LLC v. Philips Electronics N. Am. Corp., ___F.3d___, WL 667499 (Fed. Cir. Feb. 21, 2014) (en banc). The court considered three options: (1) reaffirm Cybor and maintain de novo review, (2) overrule Cybor and declare claim construction a question of fact, or (3) adopt a “hybrid” standard of review that affords deference to the District Court’s factual determinations but preserves de novo review of the “ultimate” conclusion. Amici from industrial and technological companies advocated reaffirming Cybor. Academics and practitioners generally favored either the hybrid approach or the overruling of Cybor. Relying on stare decisis, a 6-4 majority reaffirmed Cybor.   The majority pointed out that since Cybor was decided, Congress has not acted to overturn it while enacting other patent legislation during that time. They further explained that predictability and consistency favor maintaining the status quo. Consistency is a concern particularly relevant in patent law – a concern which led to the creation of the Federal Circuit over thirty years ago. The majority feared a return of “forum shopping” because the same patent could be subject to conflicting interpretations in different District Courts. Parties would be incentivized to choose a forum with judges likely to interpret patent claims in their favor knowing that reversal on appeal is unlikely.   The dissent, appearing to favor the hybrid approach, pointed out that the parties in the present case, almost all amici, and the Supreme Court recognize that claim construction involves some questions of fact. Thus, they vehemently argued that under Rule 52(a)(6), courts of appeal can set aside only those findings of fact that are “clearly erroneous.” Rejecting stare decisis, the dissent argued that “informal deference” is already given to District Courts because they spend “hundreds of hours” learning the relevant technology, so overruling Cybor would “not upset settled expectations.” The dissent also stated that de novo review incentivizes the losing party to appeal, decreases the likelihood of settlement, and increases litigation costs.   But Lighting Ballast may not stand for long. In April, the Supreme Court granted certiorari in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., which presents a nearly identical question as that in Lighting Ballast. In Teva, the District Court held a Markman hearing and construed the claims in Teva’s favor, avoiding invalidity for indefiniteness. The trial judge relied heavily on Teva’s expert witness to determine the level of ordinary skill in the art at the time of invention. Teva Pharm. USA, Inc. v. Sandoz Inc., 810 F. Supp. 2d 578, 596 (S.D.N.Y. 2011). On appeal, the Federal Circuit explicitly applied de novo review, compared the testimony of the competing expert witnesses, reversed the District Court, and held the claims indefinite. Teva Pharm. USA, Inc. v. Sandoz, Inc., 723 F.3d 1363, 1369 (Fed. Cir. 2013), reh’g en banc denied. Similar to the dissent in Lighting Ballast, Teva claims that Rule 52(a)(6) should have governed the Federal Circuit’s standard of review because determining the level of ordinary skill in the art is a question of fact. Unfortunately, Teva will not be heard until the Supreme Court’s October 2014 term. Until then, Lighting Ballast remains good law; de novo review of claim construction still applies.   Guest Post Written by Brian Apel

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July 13th, 2014 at 1:05 pm

Supreme Court to Rule on Patent Eligibility for Process Claims

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Last month, the Supreme Court heard oral argument in Alice Corporation v. CLS Bank. Many hope the Court’s decision in this case will help clarify the patent eligibly standard for process claims – particularly those process claims that are computer implemented and/or involve business method patents. Patent eligibility is based on 35 U.S.C. § 101 which allows any “process, machine, manufacture, or composition of matter” to be eligible for patent protection. However, laws of nature, natural phenomena, and abstract ideas are not eligible for patent protection. It is important to note that patent eligibility is distinct from patentability (novel, useful, definite, non-obvious, etc.). For example, a chemist who discovers a previously unknown element cannot patent that element because it is a natural phenomenon. It is ineligible for patent protection regardless of how new and useful it is. Traditionally, process claims were evaluated under the “machine-or-transformation test” which conferred patent eligibility on the process if (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. In the 1970s, broad claims to computer-implemented processes that utilized a mathematical algorithm or formula without meaningful limitations were held ineligible for patent protection under the abstract ideas exception despite requiring a computer in order to be performed. See Gottschalk v. Benson and Parker v. Flook. Four years ago, in Bilski v. Kappos, the Court affirmed the Federal Circuit’s ruling that the process of “hedging risk” in the commodities trading industry is also an abstract idea not eligible for patent protection. However, the Court went on to declare that the machine-or-transformation test is not dispositive of patent eligibility for claimed processes, especially in business method patents, but rather that the test is a “useful and important clue” in determining patent eligibility. Now, in CLS Bank, the Supreme Court is faced with the patent eligibility of certain method, media, and system claims of particular business method patents that utilize escrow to protect against financial risk. Although the Federal Circuit sitting en banc decided 7-3 that both the method and media claims were not directed to patent eligible subject matter, the 7-member majority was split 5-2 on the justification. On the question of patent eligibility of the system claims, the court evenly split 5-5. By its own admission, the Federal Circuit is “irreconcilably fractured” on the complex issue of patent eligibility for process claims – particularly those that are computer-implemented and those in business method patents. Without destroying the software or finance industries, the Court could strike a balance by simply holding that business method patents tied only to a computer do not receive the benefit of the “clue” that the traditional “machine-or-transformation” test provides; the “abstract ideas” exception is controlling. This would allow business methods to remain generally patent eligible, preserve the utility of the “machine-or-transformation” test, and prevent software patents from becoming wholesale ineligible. Perhaps later this summer, the Supreme Court will provide clearer guidance for the Federal Circuit and the District Courts.

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April 26th, 2014 at 5:17 pm

Keurig Walls Off the Garden by Shutting Out Third Party K-cups

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Keurig, the single serve coffee machine produced by Green Mountain, is nearly ubiquitous in offices, homes, and schools around the country. The device rose to popularity on the back of the K-cup, the single serve pods produced by Green Mountain that allowed a single cup of hundreds of different coffee, tea, and chocolate drinks to be brewed in a matter of seconds. Green Mountain made $3.9 billion in sales in 2012, with 2.7 billion coming from K-cup sales. Keurig was able to maintain strong sales of its K-cups because of several patents on the design and features of the K-cup. However, in September 2012, U.S. Patent Nos. 5,353,765 and 5,840,189 expired. These two patents covered the original K-cup design. Their expiry has opened the door for generic knockoff K-cups to flood the market. Green Mountain claims that the design covered by these patents is outdated and has been superseded by new and improved designs covered under patents that are still in force, including, U.S. Patent Nos. 6,645,537 and the still pending Application No. 20050051478. However, many generic K-cups are already on the market and work in Keurig’s brewing machines. While Keurig claims that generic K-cups will continue to make up less than 15% of the total K-cup market and stress that their current design is superior to any competing product, Green Mountain is clearly worried about the generic threat. In early March of this year Green Mountain announced “Keurig 2.0,” an improved brewing device that would be launching as early as the fall of 2014. Among other changes over previous models, the new Keurig brewer will contain technology that prevents generic K-cups from being used. Green Mountain is the latest to introduce protections for their propriety technology, following in the footsteps of Hewlett-Packard and other printer manufacturers who have added technology to their printers preventing generic printer cartridges from being used, or software companies that have added Digital Rights Management (DRM) to their software to prevent piracy. It is unclear exactly what sort of form this proprietary protection will take, but past forms used in printers include RFID tags. In any case, Green Mountain has made clear that they will still allow third parties to produce K-cups so long as they obtain a license from Green Mountain. Already, a legal fight is brewing over Green Mountain’s proposed move. TreeHouse Foods and Rogers Family are already suing Green Mountain on antitrust grounds. Besides the antitrust concerns, Green Mountain may have difficulty stopping third parties that circumvent their protections. In 2012, Lexmark installed technology to prohibit generic printer ink refills in their printers and lost an appeal in the 6th Circuit for a copyright and DMCA claim against a company that developed a work around for the protection technology for their generic ink refills. In the near future, the legal precedents set by these cases could have far-reaching effects on DRM and physical proprietary protections across the market.

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April 2nd, 2014 at 4:22 pm

Patents for Humanity

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The Obama administration recently announced a renewal of Patents for Humanity, a USPTO program promoting the use of patented technologies to address worldwide humanitarian needs.  Patents for Humanity is part of the President’s program to strengthen the patent system and to promote innovation by recognizing patent owners and licensees who using their patented technology to improve global health and living standards for the less fortunate.  In addition to public recognition for their contribution to humanitarian needs, the winners will receive an acceleration certificate that gives expedited processing of select matters (e.g. moving patent re-examination proceedings to the front of the queue) before the USPTO. The first Patents for Humanity was implemented in February 2012 as part of an initiative to solve long-standing development challenges.  Participants described in their applications how they've used their patented technology or product to address humanitarian issues (defined as issues “significantly affecting the public health or quality of life of an impoverished population”) in one of the four categories: medical technology, food and nutrition, clean technology and information technology.  The first 1,000 applications that met the competition requirements were considered, and the applications were independently reviewed by three judges selected from academia for their expertise in medicine, law, science, engineering, public policy, or a related field.  The judging process applied three neutrality principles – technology-neutral, geographically-neutral, and financially-neutral.  The program considered inventions from any field of technology that met the competition criteria. The targeted impoverished population may be located anywhere in the world.  And any means of getting technology to those in need may qualify without regard to financial consideration.  Lastly, the program considered the diversity of contributions in order to highlight global humanitarian contributions across all types of technology, organizations, and practices. The 2012-2013 program recognized 10 winners and 6 honorable mentions.  The medical technology category was divided into a category for medicine & vaccines and a category for diagnostics & devices.  The winners of the pilot program include research institutions like University of California, Berkeley and industry leaders, such as Microsoft and Proctor & Gamble.  USPTO expects to open applications for the 2014 Patents for Humanity program in April.  The latest USPTO announcement states that the 2014 program will be structured similarly to the pilot program that was introduced in 2012, with a few changes based on the feedback from the pilot program.

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March 11th, 2014 at 9:33 am

As Patent Litigation Reaches “DEFCON 1,” Tech Companies Look for Alternatives

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Non-practicing entities (NPEs) are nothing new in the world of patent litigation, but this past October, NPE litigation reached a new level when the Rockstar Consortium filed an infringement suit in the Eastern District of TexasRockstar Consortium (not to be confused with Rockstar Games, a videogame developer) is not a well-known name to the public: the company doesn’t actually make anything. Instead, Rockstar makes money by licensing its large (approximately 4,000 strong) portfolio of patents and enforcing its intellectual property through legal action. Rockstar employs a small cadre of engineers and technicians to reverse-engineer consumer electronics products to determine whether they might infringe one of its patents. When an engineer identifies a potentially infringing product, Rockstar’s attorneys approach the alleged infringer, likely threatening legal action if a settlement isn’t reached. However, what distinguishes Rockstar from a run-of-the-mill NPE is the support that it has received from traditional technology giants. Rockstar was formed shortly after the bankruptcy of the former Canadian telecommunications giant Nortel Networks. Nortel auctioned off its stash of patents, and “Rockstar Bidco,” backed by the unliely alliance of Apple and Microsoft (among others), won the auction with a bid of $4.5 billion, beating Google after many rounds of bidding. After distributing approximately 2,000 patents directly to its sponsors, a newly minted “Rockstar Consortium” remained with a cache of 4,000 patents to enforce. Two years of anticipated litigation was finally realized when Rockstar asserted patent infringement contentions against Google, Samsung, and a number of other companies who manufacture Android smartphones. Technology industry commentators called the act “DEFCON 1” in the patent wars. Google now faces a well-funded opponent, supported by Google’s direct competitors, with a large cache of high-quality patents. While the exact implications of this litigation have yet to be determined, Google is certainly facing potential disruptions to the distribution of its Android mobile operating system, possible licensing deals that could seriously damage its future profitability, and the near-certainty of spending many millions of dollars in legal costs. Google’s recent cross-licensing agreement with Samsung suggests that it may be looking for alternatives to litigation, and it would probably make good business sense for Google to explore options for resolving this dispute out of court.
 

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February 18th, 2014 at 11:24 am

Google And Samsung Announce Long-Term Cross-Licensing Deal

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Google and Samsung have announced a substantial and long-term cross-licensing agreement. This agreement will allow the companies to use each other’s existing patents, and any new patents filed, for the next 10 years. [1] Cross-licensing is a contract between two parties in which each party grants their intellectual property rights to the other. As such, the parties are free to use one another’s technology. This licensing agreement follows a trend of several other high profile cross licensing agreements in the last few years. Samsung also has a cross-licensing agreement with Microsoft, and both Apple and Microsoft have cross-licensing agreements with the Taiwanese cell phone manufacturer HTC. [2] Both Google and Samsung have expressed a desire to avoid the court room. Allen Lo, Deputy General Counsel for Patents at Google said: “By working together on agreements like this, companies can reduce the potential for litigation and focus instead on innovation.” [3] Google and Samsung have been seen as allies for some time, working together on the Android operating system; thus this agreement isn't surprising.  However, in recent years, Google has been changing their focus to mobile hardware. Google Glass is soon expected to become available at lower prices, Chromecast has been a hot seller, and rumors of a Nexus set-top persist. [4] This deal will likely give Google access to many valuable Samsung hardware patents. Samsung will also receive significant of benefits, gaining access to patents associated with the Android operating system, which may be useful for its developing Android-free Tizen operating system. Whether this deal will prove wise for  Samsung and Google remains to be seen; for now, they both seem to be content taking pot shots at Apple.  Dr. Seungho Ahn, the Head of Samsung’s Intellectual Property Center, has said, “Samsung and Google are showing the rest of the industry that there is more to gain from cooperating than engaging in unnecessary patent disputes.” [5]

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February 4th, 2014 at 12:26 pm

Patent Litigation Integrity Act – Raising The Stakes

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Patent trolls had an especially scary Halloween this year as Senator Orrin Hatch (R-UT) introduced Senate Bill 1612 – the Patent Litigation Integrity Act. The short and succinct bill has one purpose – “To deter abusive patent litigation by targeting the economic incentives that fuel frivolous lawsuits.”[1] The bill would shift litigation costs by granting the prevailing party “reasonable fees and other expenses, including attorney fees.”[2] On defendant’s motion, it would also require plaintiffs to “post a bond sufficient to ensure payment of the accused infringer’s reasonable fees and other expenses, including attorney fees.”[3] With the high cost of litigation today,[4] many businesses find it easier and cheaper to settle claims of patent infringement, even if a plaintiff’s claims are weak or unsubstantiated. Senator Hatch aims to prevent this practice by requiring plaintiffs to essentially "put their money where their mouth is."[5] By raising the stakes to litigate patent claims and instituting a default rule of winner-takes-all, bill supporters are hoping “those facing troll threats [will now have] the tools necessary to fight back while also giving trolls a disincentive to bring harassment suits.”[6] The senator has received general kudos from companies and organizations seeking patent litigation reform.[7] However, if eventually passed, is fee-shifting the best means to deter patent trolls? While the bill allows courts to consider “special circumstances [that would] make an award unjust,”[8] and also consider the “position and conduct of the nonprevailing party or parties,”[9] could the bill also prevent merited claims? As with all obscure legislative phrases, judges will inevitably jump at the chance to define what constitutes “substantially justified [conduct of the nonprevailing party].”[10] However, should the exemption be too narrowly defined, the bill could broadly deter both “abusive patent litigation”[11] and potentially justified but financially weak plaintiff patent infringement claims.

[1] Patent Litigation Integrity Act of 2013, S. 1612, 113th Cong. (1st Sess. 2013).
[2] Id.
[3] Id.
[4] In 2009 the American Intellectual Property Law Association (AIPLA) reported that the median cost per party in patent cases with stakes exceeding $25 million cost over $6.25 million to take the case to trial. In cases where the stakes were between $1-25 million, the median costs were $3.1 million. AMERICAN INTELLECTUAL PROPERTY LAW ASSOCIATION, REPORT OF THE ECONOMIC SURVEY 2009, at I-129.
[5] Senator Hatch, although in different context. Press Release, Senator Orrin Hatch, Hatch to Senate Democrats: Put Your Money Where Your Mouth Is (Dec. 19, 2012) (on file with author), available at http://www.hatch.senate.gov/public/index.cfm/releases?ID=51ba83f0-c04e-492d-bedb-519f4370d587.
[6] Julie Samuels, Trolls, Watch Out: Senator Hatch Introduces New Patent Legislation, Electronic Frontier Foundation (Oct. 30, 2013), https://www.eff.org/deeplinks/2013/10/trolls-watch-out-senator-hatch-introduces-new-patent-legislation.
[7] Id.; Keith Kupferschmid, SIIA Praises Senator Hatch’s New Patent Troll Bill, Software & Information Industry Association (Nov. 1, 2013), http://www.siia.net/blog/index.php/2013/11/siia-praises-senator-hatchs-new-patent-troll-bill/; Press Release, Overstock.com, Inc, Overstock.com Commends Senator Hatch for Introducing Patent Litigation Integrity Act (Oct. 31, 2013) (on file with author), available at http://finance.yahoo.com/news/overstock-com-commends-senator-hatch-190000119.html.
[8] S.R. 1612.
[9] Id.
[10] Id.
[11] Id.

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December 4th, 2013 at 10:44 am

Nortel Patent Failure Returns to Haunt Google

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Last week on October 31st, a nightmare scenario that Google hoped to avoid came to pass. Attorneys for Rockstar Consortium filed suit in the Eastern District of Texas against Google and seven handheld device makers that employ Google's Android operating system on their devices. The suit alleges infringement of seven patents all titled “Associative Search Engine.” The patents, 6,098,065; 7,236,969; 7,469,245; 7,672,970; 7,895,178; 7,895,183; and 7,933,883, were filed from 1997 to 2007. Rockstar Consortium was founded in 2011 and is jointly owned by Apple, Microsoft, Blackberry, Sony, and Ericsson. The consortium was founded to bid on the patent portfolio of Canadian telecom company Nortel, which was liquidated at auction in 2011 when the company went bankrupt. At the time, Google attempted to purchase the patents, likely to avoid just such a lawsuit, but their top bid of $4.4 billion was exceeded by Rockstar, which purchased the patents for $4.5 billion. Google’s failure to land the patents may now be costly for them as well as Android device makers. Rockstar is part of an emerging new trend in the “patent troll” movement where large corporations assign or give their patents to small companies, for the purpose of reverse engineering existing products and for extracting licensing fees and damages from alleged patent infringers. This model allows a company with few employees–Rockstar has only about two dozen employees, including ten reverse engineering experts–to obtain license fees from potentially hundreds of tech companies. A small consortium like Rockstar has another advantage in a fight against a tech company like Google, they have no products or business of their own. They cannot be counter sued for infringement because they have no business that would infringe. The crux of the situation is that companies like Apple and Microsoft can inject capital into a Rockstar type partnership, which will then purchase patents and use them to attack Apple and Microsoft competitors while leaving Microsoft and Apple above the fray. The companies backing Rockstar are likely seeking to put a damper on the rabid growth of the Android platform. However, with the talk of legislation to control patent trolls, the Obama administration’s concern over standards essential patents, and the Justice Department’s comments on Rockstar committing to fair terms for standards essential patent licenses, it will be difficult to predict the outcome of this suit. If Rockstar sees success here, this may become the new battlefront between tech companies in the aftermath of the monstrously expensive Apple v. Samsung case.

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November 8th, 2013 at 2:25 pm

FTC sets sights on Patent Trolls

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On September 28 of this year the Federal Trade Commission voted to seek public comments on proposed information requests to better understand patent troll practices. This move by the FTC marks the first step on the road to possibly regulating patent trolls. Patent trolls are firms that buy patents with the sole purpose of suing others whose goods infringe the patent. Patent trolls do not attempt to produce the invention disclosed by the patent, but rather sue those firms that do. With the FTC’s latest focus on patent trolls, it is clear that patent trolls are becoming problematic for businesses. In 2011 alone, according to a Financial Times article, litigation by trolls accounted for sixty percent of all patent lawsuits filed in the US. Trolls create IP minefields for businesses, whereby businesses must exert resources to carefully act to not infringe a patent troll’s patent. Sometimes companies decide to not undergo innovation because doing so might put the company at risk of being sued by a troll. This action also antagonizes the ultimate purpose of patents - to further scientific and technological progress - by slowing the pace of innovation. It, therefore, makes sense that the FTC has decided to fight back against trolls - especially in light of the agency’s key mission “to examine cutting-edge competition and consumer protection topics that may have a significant effect on the U.S. economy.” In spite of the FTC effort, it is unclear what regulations could effect in greater transparency of patent troll activities. One viewpoint is that if patents were bought and sold on an exchange, such centralization and transparency could make it easier for businesses to protect against patent trolls - by buying the patents first or through other financial incentives - and for regulators to prevent against behavior that thwarts competition and innovation. Creating a patent exchange would require better patent valuation techniques as well as a shift in thinking. While some firms, such as Ocean Tomo, have tried to popularize the idea of a patent exchange (e.g. Ocean Tomo's IPXI product), this reality has not become widely accepted. Might this be the future?

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October 10th, 2013 at 2:17 pm

Supreme Court to Revisit Question of Patentable Subject Matter

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Since the establishment of the Federal Circuit three decades ago, the Supreme Court has tended to distance itself from the development of patent law. As the Federal Circuit holds exclusive jurisdictions over appeals arising from disputes involving patents, circuit splits are unlikely to arise, and its judges are deeply familiar with the subject area. Thus it is not entirely surprising that as a general matter it is rare for the Supreme Court to review its judgments.

 However, in recent years the Supreme Court has reviewed several high profile Federal Circuit high-profile decisions, perhaps most notably in the area of the scope of patentable subject matter under 35 U.S.C. § 101. In Bilski v. Kappos, the Court agreed that an investment strategy was unpatentable subject matter, but indicated ambivalence towards the Federal Circuit’s chosen analysis. This year, in Mayo Collaborative Services v. Prometheus Laboratories, Inc, the Court held that claims over a medical diagnostic test were unpatentable “products of nature,” reversing the Federal Circuit. On November 30, 2012, the Supreme Court granted review in Assoc. for Molecular Pathology v. Myriad Genetics, a case involving the patentability of human genes. The case has had a long journey through the federal courts. In 2011, the Federal Circuit found that claims over “isolated” DNA molecules are patentable subject matter, as well as certain associated method claims. This judgment was vacated and remanded to the Federal Circuit for further consideration in light of Mayo. On remand, the Federal Circuit once again held these patents to be directed towards patentable subject matter. Now before the Supreme Court again, it is likely that the Court will be directly addressing the question of whether human genes are patentable. Petitioner argues that the patents at issue are invalid because they claim subject matter directed to a law or product of nature. They claim that these patents, which cover “isolated” forms of the BRCA1 and BRCA2 genes linked hereditary breast and ovarian cancer, have prohibited clinical testing, scientific research, and patients’ access to their genetic information. The respondent, Myriad Genetics, claims that the patents cover subject matter that was human-made and does not occur in nature. Myriad stresses the “enormous amount of human judgment” involved in their research and development of this area, and the importance of patent protection to support their industry. This case is likely to be closely followed by many. Patentable subject matter is an area that the Supreme Court has shown a close interest in recently, lending much uncertainty to the state of the doctrine. Patent lawyers and scholars will wait to see whether the Supreme Court clarifies this area of law. The decision is likely to have a major impact on the biotechnology industry, who for many years has successfully obtained patents such as the ones at issue here with relatively little questioning of their validity. The public will be watching as well, as the question of whether human genes are patentable is a topic likely to generate excitement and intrigue from many.  

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December 6th, 2012 at 8:34 pm

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