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CAFC Weekly: November 12, 2010

by Orlando Lopez

The CAFC’s opinions for this week include one opinion relating to prosecution laches and inequitable conduct, and four opinions relating to procedural issues (personal jurisdiction, standing, sovereign immunity and new evidence) when reviewing a Board of Appeals and Interferences (BPAI) decision using 35 USC 145.  The CAFC opinion relating to standing serves as a reminder of the importance of the language in an assignment.

In Cancer Research Technology Ltd. v. Barr Laboratories, Inc., Cancer Research is the assignee of a patent application for a family of compounds and for methods of treating some cancers using some of the compounds.  A British company had filed the original application, which included animal test data for the use of some of the compounds.  The application was first rejected for lack of utility, since the examiner wanted clinical data or FDA approval for utility.  The British company filed a continuation and abandoned the first application.  This process was repeated eight times.  The British company then assigned the application to Cancer Research.   Cancer Research (CR) repeated the process of continuation and abandonment one more time.  Then, facing a new examiner, the applicants argued that the animal trials proved utility, and finally, ten years after the first office action on the first application, the patent was issued in November 1993.  In 2007, Barr Laboratories (Barr) filed an ANDA for a generic version of one of the compounds in the CR patent, and CR then filed for infringement.  During prosecution of the CR patent, one of the inventors published a paper showing that one of the compounds had toxic side effects and reduced effectiveness for treating many cancers.  The paper was not provided to the USPTO.  Barr claimed unenforceability due to prosecution laches, where a patent  is held unenforceable due to unreasonable and unexplained delays in prosecution, and due to inequitable conduct.  The District court agreed with Barr.  On appeal, the CAFC reversed the holdings of unenforceability.  In regards to prosecution laches, the CAFC reversed since Barr did not suffer material prejudice attributable to the delay.” The dissent disagrees with the fact that material prejudice is required for laches.  Regarding inequitable conduct, the CAFC reversed the holding since the only justification for intent was the materiality of the article withheld.  This opinion, including the dissent, previews the issues facing the CAFC in the enbanc rehearing of Theresense.

My professor in administrative law said, “if you remember one thing from this course, remember the deference.” In view of Hyatt v. Kappos, reviewed en banc by the CAFC, he should have said “deference unless there is new evidence in a 35 USC 145 action.” A patent applicant who disagrees with a decision of the Board of Patent Appeals and Interferences (BPAI) can appeal the decision to the CAFC, or under 35 USC 145, can file a civil action against the Director of the USPTO at the US District Court for the District of Columbia. Mr. Hyatt, questioning the decision by the BPAI to uphold the examiner’s rejection due to lack of written description and enablement, took his case to the US District Court for the District of Columbia.  At the District Court, Hyatt attempted to introduce a new declaration supporting written description and enablement, and the declaration was not considered.  Hyatt appealed to the CAFC, which decided to hear the case en banc.  The CAFC ruled that, in a proceeding under 35 USC 145, the applicant can introduce new evidence, but not new issues.  This enbanc decision treats the proceeding under 35 USC 145 different from a review of an administrative board decision, for which the review is on the record without any new evidence.  We will monitor whether this decision will stand or be taken up at the Supreme Court, which already has two patent cases on its docket for this year.

In Abraxis Bioscience, Inc. v. Navinta LLC., Abraxis is the owner of a patent for ropivacaine (trade name Naropin) and a number of patents for the method of using the drug in the treatment of pain.  The patents were acquired through a number of transactions.  The inventor of one patent assigned his rights to Astra Lakedemel (Astra L), and the inventor of the patent on the method of using the drug assigned his rights to AB Astra.  AB Astra merged with Astra Zeneca AB (AZ-AB) and the patents were assigned to AZ-AB.  Abraxis entered into an asset purchase agreement with Astra Zeneca UK (AZ-UK), which included an IP assignment agreement; however, there was a break in the chain of title, because Astra L and AZ-AB has not assigned the patents to AZ-UK.  Navinta filed an ANDA for a generic version of Naropin.  On March 15, 2007, Abraxis filed an action against Navinta alleging infringement.  On the same day, Astra L  and AZ-AB filed assignments of the respective patents to AZ-UK.  On November 12, 2007, AZ-UK confirmed the sale and assignment of the patents to Abraxis. Navinta alleged that Abraxis did not have standing to sue, since Abraxis did not own the patents at the time when it filed the lawsuit.  The District Court disagreed and found that Navinta infringed the patents.  Navinta appealed to the CAFC, and the CAFC reversed the District Court’s decision based on the language of the assignment.  This opinion reinforces the fact that whether an assignment of patent rights is automatic or whether it is a promise to assign, depends on the language of the assignment.

In Nuance Communications, Inc. v. Abbyy Software House, Nuance owns a number of patents on optical character recognition, for recognizing and managing documents, and for developing software products using optical character recognition (OCR).  Nuance filed suit against Abbyy Software and its two subsidiaries.  Abbyy Software is an international company organized under the laws of Cyprus and has two wholly owned subsidiaries, Abbyy USA and Abbyy Productions, a corporation organized under the laws of the Russian Federation.  Nuance served the complaint on the manager of Abbyy Productions using a local process server.  The District Court dismissed the suit against Abbyy Software and Abbyy Productions for lack of personal jurisdiction, and in the case of Abbyy Productions, for improper service of process.  Nuance appealed to the CAFC.  The CAFC, basing their decision on Supreme Court cases that  have established the basis for personal jurisdiction, reversed the District Court’s decision of dismissal due to lack of personal jurisdiction.  Based on an analysis of the proper procedure to serve process on an individual in a foreign country, and specifically in the Russian Federation, the CAFC also reversed the decision of dismissal due to improper service of process.

In A123 Systems v. Hydro-Quebec, Hydro-Quebec (HQ) is the exclusive licensee in a given field of use of two patents assigned to the University of Texas (UT) for a class of lithium-based cathode materials for batteries.  A123 filed the suit in the District of Massachusetts on April 7, 2006, seeking declaratory judgment of non-infringement and invalidity for those two patents.  HQ had moved to dismiss since UT was a necessary and indispensable party, and UT could not be joined based on sovereign immunity.  On September 11, 2006, HQ and UT filed an infringement suit against A123 in the Northern District of Texas.  A123 started re-examination proceedings on both patents, the Texas action was stayed and the Massachusetts action was dismissed without prejudice.  After the USPTO affirmed the patents through re-examination, A123 moved to reopen the Massachusetts proceedings.  The Massachusetts District Court denied the motion to reopen and yielded  jurisdiction over the summary judgment to the later filed suit in Texas, since the Massachusetts A123 action would be subject to dismissal due to a necessary indispensable party not being joined.  A123 appealed to the CAFC, and the CAFC upheld the Massachusetts District Court’s denial of the motion to reopen.  The CAFC opinion includes a discussion of sovereign immunity based on the 11th amendment, and whether or not it is waived by certain actions.

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3 Responses to “CAFC Weekly: November 12, 2010”

  1. John says:

    Speaking of OCR, here is a good article which compares the various OCR software: http://ocrworld.com/software/5-in-depth/149-top-ocr-software.html

  2. I just sent this post to a bunch of my friends as I agree with most of what you’re saying here and the way you’ve presented it is awesome.:)

  3. Orlando Lopez says:

    Thank you for your kind words. We will continue to strive for useful reporting.

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