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CAFC Weekly: November 5, 2010

by Orlando Lopez

After two weeks of not handing down precedential opinions, this week the CAFC provided us with a split decision on denial of en banc review, an opinion affirming a grant of a preliminary injunction, as well as an opinion presenting an example of the usefulness of “Beauregard” claims, which are claims in which software is claimed by claiming the storage medium having the computer code embodied therein.

The CAFC action that many found to be of most interest was not an opinion but an order, the order denying en banc review of Sun Pharmaceutical Industries, Ltd. v. Eli Lilly and Company. As the dissent states, the opinion for which rehearing was denied, if applied to other cases, could expand the doctrine of obviousness doubled patenting. Some would like to see the opposite happen, a reigning in of the doctrine.

In AstraZeneca LP v. Apotex, Inc., the CAFC reviewed the grant of a preliminary injunction. AstraZeneca is the owner of two patents having method and kit claims for the once daily use of budesonide inhalation suspension for respiratory ailments (such as asthma). Apotex had filed an ANDA (Abbreviated NewDrug Application) for a twice-daily use of a generic version of budesonide inhalation suspension. Apotex stated that AstraZeneca’s patents did not claim such a use and the ANDA was granted. AstraZeneca filed for declaratory judgment at District Court and was granted a preliminary injunction. This is noteworthy because preliminary injunctions in patent cases are not common in the present practice. As with other preliminary injunctions, the requester must show likelihood of success on the merits, irreparable harm, that the balance of equities is in its favor and that the injunction is in the public interest. For the likelihood of success, AstraZeneca had to show that it was likely that Apotex would be found to be infringing, and that it was likely that the patent would be found valid. The District Court found the method claims to be valid, although the kit claims were found to be invalid, and found that Apotex would likely induce infringement. The inducement of infringement was caused by a label required by the FDA, which would cause a user to take a once-daily dose (“The FDA made me do it” is not a valid defense). As to irreparable harm, AstraZeneca presented data that the generic drug would cause layoffs (a hot-button issue these days) and a loss of consumer goodwill. The District Court did not find that the public interest favored either party and the CAFC affirmed the District Court decision. This opinion is of interest as it shows that preliminary injunctions can still be obtained, as well as being an example of the variable standard in establishing a “substantial question of invalidity,” as exemplified by the dissent.

In Finjan, Inc. v. Secure ComputingCorp., Finjan owns three patents for relate to-techniques, directed to detecting and defeating previously unknown internet-based viruses. Finjan sued Secure Computing and two other defendants for infringement. The Finjan patents have system claims, storage claims and method claims. The District Court found the patents to be valid and infringed. The defendants based their appeal for non-infringement on the fact that the software as sold, is not operable. The defendants’ customers have to buy a “software key” if they want to operate the allegedly infringing modules. The CAFC restated the fact that to directly infringe a system or data storage claim, the alleged infringer only has to provide all the elements of the claim, actually using the elements is not required. The CAFC affirmed the District Court decision for infringement of the system and data storage claims. To directly infringe a method claim, the alleged infringer must perform the steps of the method claim. In this case, the steps had only been performed during testing, and the testing occurred in Germany on software that was also “built” in Germany. Since the allegedly infringing act happened outside the United States, on a product also built outside of the United States, the CAFC reversed the holding of infringement of the method claims. This opinion is of interest to some because it shows the usefulness of the data storage or “Beauregard” claim, a claim in which software is claimed by claiming the storage medium having the computer code embodied therein.

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