On February 12, 2014, the Federal Circuit issued its decision in Solvay S.A. v. Honeywell International. In this case, Solvay S.A. appealed to the United States Court of Appeals for the Federal Circuit from a judgment of the United States District Court for the District of Delaware in favor of defendant Honeywell International. The district court held that asserted claim 1 of Solvay’s U.S. Patent No. 6,730,817 was invalid under pre-AIA 35 U.S.C. § 102(g)(2). The question at the heart of this appeal, as dictated by the specific factual scenario, was whether an invention conceived by a foreign inventor and reduced to practice in the United States qualifies as prior art under § 102(g)(2). This was the operative question because engineers working at the Russian Scientific Center for Applied Chemistry (“RSCAC”) first conceived the invention, which was reduced to practice in this country by Honeywell personnel pursuant to the RSCAC’s instructions, and they did not abandon, suppress, or conceal it.
At trial, Honeywell argued that the invention was conceived by Russian inventors outside the United States and reduced to practice in the United States by Honeywell personnel following the Russian inventors’ instructions before the ’817 patent’s priority date. As a result, Honeywell argued, the invention qualifies as §102(g)(2) prior art. A jury ultimately determined that, as required by § 102(g)(2), the Russian Scientific Center for Applied Chemistry did disclose the invention of claim 1 in the 1994 Russian patent application, which means that they did not abandon, suppress, or conceal the invention. Based on the jury verdict, the district court entered judgment for Honeywell, finding asserted claim 1 invalid under § 102(g)(2).
Obviousness is where the rubber meets the road in terms of patentability, and it seems that the state of the law of obviousness is anything but clear. It has always been difficult to explain the law of obviousness to inventors, business executives and law students alike. Since the United States Supreme Court issued its decision in KSR v. Teleflex, it has become even more difficult to provide a simple, coherent articulation of the law of obviousness that is at all intellectually satisfying. That is in no small part due to the fact that the determination about whether an invention is obvious is now completely subjective.
If you look at the Federal Circuit cases, it seems that there is a lot of post hoc reasoning that simply justifies a conclusion already formed. De novo review of all the facts allows the Federal Circuit to be a super-panel that can simply supplant its own beliefs for the considered beliefs of patent examiners, the Board, a District Court Judge or even a jury. While conceptually it may seem like a good idea to have a fresh look by a reviewing court, this fresh look at all things leads to no predictability, and obviousness law in utter disarray.
On December 19, 2013, Hanmi Pharmaceuticals received good news in the form of a decision by the U.S. Court of Appeals for the Federal Circuit (CAFC). Invoking 35 U.S.C. §271(e)(2), AstraZeneca had alleged that a drug Hanmi proposed to market falls within claims of U.S. Patent Nos. 5,714,504 and 5,877,192. After the district court construed the claim terms “alkaline salt” in the ’504 patent and “pharmaceutically acceptable salt” in the ’192 patent, the parties consented to the entry of a final judgment of non-infringement based on the constructions. This case is of particular interest to the industry because omeprazole is the active ingredient in the popular over-the-counter heartburn medication know as Prilosec.
Creating a salt out of omeprazole can enhance stability during storage and transportation, a useful property in pharmaceutical compounds. AstraZeneca discovered that certain salts of an omeprazole enantiomer have improved pharmacokinetic and metabolic properties which will give an improved therapeutic profile such as a lower degree of interindividual variation. During prosecution, AstraZeneca conducted experiments that led it to conclude that one of the two enantiomers gave particularly good results. The preferred enantiomer became known as “esomeprazole.”
To many, Soverain v. Newegg is just another obviousness dispute; so why would the Supreme Court get involved? It is really more than your typical obviousness dispute, though. Increasingly, patent claims are held valid in a variety of different forums — they are initially granted, they are litigated in district court and at the ITC, and litigated again and again at the USPTO. In some instances, after all that litigation, and even after multiple successful reexaminations in favor of the patentee, the Federal Circuit will find the claims invalid as being obvious.
How is this the case? That is a good question. It stems from the fact that obviousness, which is supposed to be a mixed question of fact and law, is reviewed de novo by the Federal Circuit. It seems the Federal Circuit, which as an appellate court is not well-equipped to deal with determining facts, reviews the underlying facts de novo as well.
In a non-precedential opinion issued October 18, 2013, the Federal Circuit issued a decision that calls into question the overall utility of forum selection clauses in contractual relationships. In fact, Eli Lilly lost its bid to have its dispute with Genentech and City of Hope heard in the Northern District of California despite a forum selection clause in the governing contract that stated the parties would litigate any dispute in the Northern District of California. See In re Eli Lilly and Co.
Eli Lilly petitioned for a writ of mandamus directing the United States District Court for the Northern District of California to vacate its order transferring this case to the United States District Court for the Central District of California. In its order granting Genentech’s motion to transfer, the district court noted that the trial judge in the Central District of California had presided over four cases involving the same family of patents at issue. The district court further noted that another trial judge in the Northern District of California had recently transferred a case brought by one of Eli Lilly’s business partners that involves the same patent and product to the Central District of California, citing the expertise the trial judge had gained through these prior lawsuits.