Welcome to Winston & Strawn’s Federal Circuit Patent Decision Summaries. This bulletin provides a short summary of, and a link to, the precedential patent cases decided by the Federal Circuit last week. We hope that these summaries are useful in keeping you updated on the Federal Circuit’s patent decisions.

If a defendant, which seeks to defeat jurisdiction, has purposefully directed its activities at a particular forum, it must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.

Patent Rights Protection Group LLC v. Video Gaming Technologies Inc. et al., No. 2009-1391 (Fed. Cir. May 10, 2010).

The patents at issue in this case relate to various types of casino-style gaming machines. The district court dismissed the case for lack of jurisdiction and improper venue, ruling that exercising personal jurisdiction over the accused infringers would be unreasonable under Ninth Circuit precedent. The district court found that the relevant factors either weighed in favor of a finding of unreasonableness or were neutral. The district court also denied the patentee’s request for jurisdiction discovery. On appeal, the Federal Circuit vacated the decision and remanded.

For a federal district court to exercise personal jurisdiction over a non-consenting out of state defendant, two requirements must be met: the defendant must be amenable to service of process, and exercising jurisdiction over the defendant must comport with due process. The Federal Circuit stated that “[t]he constitutional touchstone of the due process inquiry remains whether the defendant purposefully established minimum contacts in the forum State.”

The accused infringers argued that they lacked the “minimum contacts” to support a case in the state of Nevada. However, the accused infringers’ admitted presence at numerous trade shows in Nevada. The Federal Circuit held that “[m]odern transportation and communications have made it much less burdensome for a party sued to defend itself outside its home state,” and in view of the accused infringers admitted presence at numerous trade shows in the forum, “neither company faces a particularly onerous burden in defending itself” in the forum. Furthermore, the Federal Circuit stated that neither accused infringer “has presented a compelling case that the presence of some other consideration would render jurisdiction unreasonable.”

The Federal Circuit also stated that “discovery should ordinarily be granted where pertinent facts bearing on the question of jurisdiction are controverted or where a more satisfactory showing of the facts is necessary.” Because a question as to the motives of the accused infringers’ exhibition of its products at trade shows in Nevada was in doubt, the Federal Circuit believed that “additional discovery may unearth facts sufficient to support the exercise of personal jurisdiction over one or both of the [accused infringers].”

A copy of the opinion can be found here.

For purposes of determining patent term extension under 35 U.S.C §156, an enantiomer has consistently been recognized, by the FDA and the PTO, as a different “drug product” from its racemate.

Ortho-McNeil Pharmaceutical, Inc. v. Lupin Pharmaceuticals, Inc., 2009-1362 (Fed. Cir. May 10, 2010).

The patent-in-suit covered an antimicrobial compound having the common name levofloxacin, and is the levorotatory enantiomer of the racemate ofloxacin, which is a known antimicrobial product. After the FDA approved levofloxacin for commercial marketing and use, the patentee applied for an extension of the patent term in accordance with 35 U.S.C. §156. The PTO concluded that extension of the patent term was warranted, and the PTO and FDA collaborated in calculation of the applicable extension of 810 days. The district court held that the extension was properly granted.

The Federal Circuit affirmed. The issue was whether the patent constituted the first permitted commercial marketing or use of levofloxacin, as required by 35 U.S.C. §156, because the racemate had previously been marketed. There was no discernable basis to challenge the FDA’s and PTO’s practices that consistently recognized an enantiomer as a different “drug product” from its racemate. Moreover, the FDA and PTO practices are in accordance with Federal Circuit precedent in Glaxo Operations UK Ltd. v. Quigg, where the court held that “product” as used in §156 is the active ingredient present in the drug. The Federal Circuit also rejected the claim that the status of enantiomers with respect to eligibility for term extension was changed in 2007 in the statute that changed the FDA policy concerning data exclusivity for new enantiomer products. Nothing in the legislative record indicated that Congress expressed an understanding that enantiomers were the same active ingredient as the racemate, and changing the long-standing term-extension policy of the FDA and the PTO is not achieved by legislative silence.

Last, the Federal Circuit affirmed the district court’s decision to enjoin the accused infringer from making, using, offering to sell, selling, or importing levofloxacin in bulk or tablet form during the extended term of the patent. It rejected the argument that the extension of a patent term under 35 U.S.C. §156(b) applies only to sale and use of the patented product, but does not encompass any other exclusionary patent rights, such as making or importing the patented product. While an extended patent term does not apply to unrelated uses of an FDA-approved product, the accused infringer did not assert that levofloxacin had any non-pharmaceutical uses.

A copy of the opinion can be found here.

In determining patent term extensions under 35 U.S.C. §156, the statutory term “active ingredient” means the product, not the active moiety of the product, that is present in the approved drug.

Photocure ASA v. Kappos, No. 2009-1393 (Fed. Cir. May 10, 2010).

The patentee owned a patent to a chemical compound MAL hydrochloride (“MAL”), which was patented and received FDA approval to treat precancerous cell growths on the skin. Previously, FDA had approved ALA hydrochloride (“ALA”), which is the methyl esther of MAL, for the same therepautic use. The patentee applied for a patent term extension for MAL, and the PTO denied the extension asserting that “MAL hydrochloride is the same ‘product’ as ALA hydrochloride because the ‘underlying molecule’ of MAL is ALA.” Thus, according to the PTO, the FDA’s approval of MAL was not the first commercial marketing of the “product.” The district court disagreed with the PTO and found that the FDA approval of MAL was the first commercial marketing and the requirements for an extension were met.

The Federal Circuit affirmed. A “product in §156(a) means the product that is present in the drug for which federal approval was obtained.” MAL and ALA are different products having different pharmacological properties, are protected by different patents, and required separate regualtory approvals. Hence, MAL and ALA were separate products, and MAL was entitled to an extension.

The court also rejected the PTO’s arguement that the PTO’s interpretation of the statute was entitled to deference. In this case, the statute was unambiguous, and further, the PTO’s interpretation was not persuasive or consistent. Consequently, the PTO’s interpretation was not entitled to any deference.

A copy of the opinion can be found here.

The most important factor in determining whether an exclusive license transfers sufficient rights to render the licensee the owner of the patent is the nature and scope of the licensor’s retained right to sue accused infringers.

Alfred E. Mann Foundation v. Cochlear Corp., No. 2009-1447 (Fed. Cir. May 14, 2010).

The patents-in-suit disclosed and claimed cochlear implants and related technologies used to improve hearing. Pursuant to an exclusive license agreement, the patentee retained the secondary right to sue to enforce the patents when the exclusive licensee declined to exercise its first right to sue. Having received assurance that the exclusive licensee did not plan to sue an accused infringer, the patentee filed an infringement lawsuit. The district court granted the accused infringer’s motion to dismiss for lack of standing to sue, finding that because the patentee had transferred all substantial rights under the patents to the exclusive licensee, the exclusive licensee should be considered the owner of those patents.

The Federal Circuit reversed, finding that the patentee remained the owner of the patents under the exclusive license agreement. A patentee may transfer all substantial rights to its patents, in which case the transfer is tantamount to an assignment of those patents to the exclusive licensee, conferring standing to sue solely on the licensee. The most important factor in determining whether an exclusive license transfers sufficient rights to render the licensee the owner of the patent is the nature and scope of the licensor’s retained right to sue accused infringers. The licensor’s retention of such right often precludes a finding that all substantial rights were transferred. Here, once the exclusive licensee declined to exercise its right to sue, the patentee’s right to sue and to control the litigation was otherwise unfettered.

The exclusive licensee’s right to grant sublicenses did not render the patentee’s right to sue illusory because any sublicenses granted by the exclusive licensee included a requirement to pay royalties. In addition, it made no difference that the license agreement failed to specify a time within which the exclusive licensee had to decide whether to sue because governing state law provided that where no time was specified only a reasonable amount of time would be allowed.

The Federal Circuit remanded with instructions for the district court to consider whether the exclusive licensee is an indispensable party to the litigation, expressing no opinion as to the proper disposal of that issue.

A copy of the opinion can be found here.

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