Category: Law School Notes

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Citation – 537 F.2d 4 (2nd Cir. 1976).

This case brought in the concept of ‘Spectrum of Distinctiveness’ in trademark law in US.
§ Generic
§ Descriptive
§ Suggestive
§ Arbitrary
§ Fanciful

Facts and Procedural History:A complaint was filed in 1970 by Abercrombie & Fitch Company (A&F), owner of well-known stores at Madison Avenue and 45th Street in New York City and seven places in other states against Hunting World Incorporation (HW). A&F had 7 trademarks on different product for the word- Safari.
It was alleged by A&F that HW has infringed some of its registered trademarks using the word ‘Safari’. On this appeal from a judgment which not only dismissed the complaint but cancelled all of A&F’s ‘Safari’ registrations, including several that were not in suit, we relieve A&F of some of its unhappiness but not of all.

Issues:
1)Whether any secondary meaning of the word “Safari” was created by A&F, which would result in its trademark protection?
2) Whether HW is infringing trademark rights of A&F by using the word Safari in their products?

Rule and Law Applicable:It was one of the very first cases which divided the trademarks into classes which are accorded differing degrees of protection.
§ A generic mark cannot get trademark protection in any condition.
§ Descriptive mark can get trademark protection only when the word itself gets its secondary meaning. § 2(e) of the Lanham Act, 15 U.S.C. § 1052, forbids the registration of a mark which, when applied to the goods of the applicant, is “merely descriptive.” (US Law)

The Lanham Act makes an important exception with respect to those merely descriptive terms which have acquired secondary meaning, it offers no such exception for generic marks. The Act provides for the cancellation of a registered mark if at any time it “becomes the common descriptive name of an article or substance”. (Indian Law: S.9(1), exception under Proviso)

Arguments by A&F: A & F alleged –
§ That many years A&F has used the mark ‘Safari’ on articles “exclusively offered and sold by it.” Since 1936 it has used the mark on a variety of men’s and women’s outer garments.
§ That A&F has spent large sums of money in advertising and promoting products identified with its mark ‘Safari’ and in policing its right in the mark, including the successful conduct of trademark infringement suits.
§ That HW has engaged in the retail marketing of sporting apparel including hats and shoes, some identified by use of ‘Safari’ alone or by expressions such as ‘Minisafari’ and ‘Safariland’.
§ That HW’s acts would confuse and deceive the public and impair “the distinct and unique quality of the plaintiff’s trademark.” A&F sought an injunction against infringement and an accounting for damages and profits.
HW filed an answer and counterclaim –
§ The word ‘safari’ is an ordinary, common, descriptive, geographic, and generic word” which “is commonly used and understood by the public to mean and refer to a journey or expedition, especially for hunting or exploring in East Africa, and to the hunters, guides, men, animals, and equipment forming such an expedition” and is not subject to exclusive appropriation as a trademark.
§ That A&F’s registrations using the word ‘Safari’ be cancelled on the ground that A&F had fraudulently failed to disclose the true nature of the term to the Patent Office.

Analysis:The Court held –
§ Although “safari” is a generic word, a genuine issue of fact exists as to whether the plaintiff has created a secondary meaning in its use of the word “identifying the source” and showing that “purchasers are moved to buy it because of its source.”
§ On the other hand, he concluded that A&F had no right to prevent HW from using the word ‘Safari’ to describe its business as distinguished from use in the sale of a particular product a conclusion we do not understand to be disputed;
§ That HW had not infringed A&F’s registered mark using the word ‘Safari’ under its brand name on a “classical safari hat” or in advertising this as “The Hat for Safari” since such use was purely descriptive;
§ That HW had also not infringed by using the term ‘Minisafari’ as a name for its narrower brimmed safari hats, and that HW was entitled to use the word ‘Safariland’ as the description of an area within its shop and as the name of a corporation engaged in the wholesale distribution of products imported from East Africa by an affiliate, Lee Expeditions, Ltd., and in the “Safariland News,” a newsletter issued by HW and Lee Expeditions, With respect to shoes he concluded that both parties had used the word ‘Safari’ in a fanciful rather than a descriptive sense and hence that plaintiff might have a valid infringement claim it could establish a secondary meaning;
§ With respect to shoes he concluded that both parties had used the word ‘Safari’ in a fanciful rather than a descriptive sense and hence that plaintiff might have a valid infringement claim it could establish a secondary meaning;
§ The pervasiveness of the principle is illustrated by a series of well-known cases holding that when a suggestive or fanciful term has become generic as a result of a manufacturer’s own advertising efforts, trademark protection will be denied save for those markets where the term still has not become generic and a secondary meaning has been shown to continue.

Conclusion and Ratio:
§ Applied to specific types of clothing ‘safari’ has become a generic term and ‘minisafari’ may be used for a smaller brim hat;
§ ‘Safari’ has not, however, become a generic term for boots or shoes; it is either “suggestive” or “merely descriptive” and is a valid trademark even if ” merely descriptive” since it has become incontestable under the Lanham Act;
§ In light of the justified finding below that ‘Camel Safari,’ ‘Hippo Safari’ and ‘Safari Chukka’ were devoted by HW to a purely descriptive use on its boots, HW has a defence against a charge of infringement with respect to these on the basis of “fair use.” We now discuss how we have reached these conclusions.
There is no evidence that ‘Safari’ has become a generic term for boots. Since, as will appear, A&F’s registration of ‘Safari’ for use on its shoes has become incontestable, it is immaterial (save for HW’s contention of fraud which is later rejected) whether A&F’s use of ‘Safari’ for boots was suggestive or “merely descriptive.”

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Facts:  Both the plaintiff and the defendant were manufacturers of tamper proof locks and seals that had industrial application. The Plaintiff apart from claiming an infringement of his patent also claimed that Defendant No. 3, who used to work for The Plaintiff, conspired with Defendant No. 1 in the manufacturing of the locks and the seals. Both the products used near identical material i.e. Spring Steel with a slight difference in quality of the material used in the two. A difference between the two products also existed in respect to the shape of the product. While the Plaintiff’s product was in the shape of a “V”, that of the Defendant was rectangular in shape with 4 walls. The last difference between the two prod its was also in the number of “vanes” used in the two products.

Issue:Whether the product of the Defendant is an infringement of the product of the Plaintiff thus constituting a breach of the patent that was held by the Plaintiff.

Analysis:
§ The Plaintiff and its counsel wanted the Courts to apply the Doctrine of Equivalence which is mainly used in the United States of America. The Doctrine of Equivalence states that in order for a device to infringe a claim it needs to perform substantially the same function in substantially the same way to obtain the same result. The main test is whether the defendant’s product has taken the pith and marrow or sometimes what is called the essence of the invention. The Court was of the view that in order to establish the Doctrine of Equivalence they will have to observe the built, structure, functionality and shape of the products.
§ When it came to the material that had been used in the manufacturing process the Court was of the view that both the products used the same material i.e. Spring Steel. The Court further observed that the marginal difference in the quality of the two products will not amount to any difference between the two inventions.
§ The next aspect of the products that was considered by the Courts was the shape of the Products. The shape of the Defendant’s Product was in the shape of a rectangle while that of the Plaintiff was in the shape of a “V”. The learned judge stated that in no way did the rectangular shape of the products of the Defendant contribute to the Functional Novelty of the product. There was in no way that the shape of the product contributed to the any change or improvement in the functionality of the product.
§ The last thing that the Courts looked into was whether an additional number of “Vanes” in the product of the Defendant would lead to a substantial difference in the two products. The Court held in the negative stating that the constructional and functional aspect of the products remained the same.

Conclusion:  The Court was of the view that the product of the defendant did infringe the patent of the Plaintiff. The ulterior reasoning was that there was no substantial difference between the two products. The slight additions made to the product of the Defendant would not constitute a new product. If it was recognised as a new product then the potential for misuse would be very high as people would just change trivial aspects of patented products and would claim a new patent on it.

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Citation –  [2004] UKHL 46

Facts:
§ Kirin Amgen Inc a pharmaceutical company, invented a process of producing erythropoietin (EPO) by recombinant DNA technology and for its invention it was granted a European Patent (EP0148605B2). Amgen’s invention of EPO was an advance in the treatment of anaemia and marketed the EPO under the name of Epogen.
§ Transkaryotic Therapies Inc (TKT) another corporation also developed a method of making EPO, and markets it under the name Dynepo. It uses a process called gene activation and the product was named as GA-EPO. Thus it used a different method as compared to that of Amgen. Hoechst Marion Roussel Ltd (“Hoechst”) another pharmaceutical company proposed to import GA-EPO into the United Kingdom.
§ The essential difference between both the drugs namely Epogen and GA-EPO is that the former is made by an exogenous DNA sequence coding for EPO which has been introduced into an host cell and the latter is made by an endogenous DNA sequence coding for EPO in a human cell into which an exogenous upstream control sequence has been inserted.

Procedural History: Amgen’s claims were the following:
(1) DNA sequence for use in securing the expression of EPO in a host cell, (19) EPO which is characterized by being the product of eucaryotic expression of an exogenous DNA sequence with further characteristics that made it different from pre-existing EPO, and (26) EPO, which is the product of the expression in a host cell of a DNA, sequence according to claim 1.
The trial judge held that claim 19 was invalid for insufficiency but that claim 26 was valid and infringed. The Court of Appeal held that both claims were valid but that neither was infringed. Both sides appealed, Amgen against the decision that, as a matter of construction, the TKT process is not within the claims and TKT against the rejection of its attack on the claims for insufficiency and anticipation

Issue: Whether TKT’s EPO fell outside the claims of Amgen’s patent suit because of the difference in the way it was made?

Rationale:
§ Until the Patents Act 1977, which gave effect to the European Patent Convention (“EPC”) the patent protection under UK law was limited to what was written or stated in the claim. Article 69 of the EPC states that “ The extent of the protection conferred by a European patent or a European patent application shall be determined by the terms of the claims. Nevertheless, the description and drawings shall be used to interpret the claims.”
§ As an invention is protected only if a reference is made in the claim it becomes important in determining what falls within the scope of the claims.
§ As this was leading to injustice, the court in this case considered interpretation of Article 69 and came up with the Protocol on the Interpretation of Article 69 (the “Protocol”) which requires that Article 69 should not be read as to mean that the claims are given a literal meaning nor should the claims be treated a mere guidelines. Rather the correct treatment is a position between the two extremes, which provides a fair protection for the patentee with a reasonable degree of certainty for third parties.
§ The Protocol is intended to give the patentee the full extent, but not more than the full extent, of the monopoly, which a reasonable person skilled in the art, reading the claims in context, would think, he was intending to claim.
§ In interpreting the claims, another approach is to take the objective test or the purposive interpretation. The purposive interpretation laid down three questions, does the variant have a material effect upon the way the invention works, if no, does the variant that did not have material effect had been obvious at the time of filing the patent to a reader skilled in the art and thirdly whether a reader skilled in art would have understood through the language of the claim whether the patentee intended strict compliance of the claim or not.
§ The method used by both the companies was different to arrive to the same production of drug. Thus there was no material effect on the result, but it was not obvious for the person skilled in art to think that there was an obvious alternative method at the time of filing of the claim. Thus the endogenous method introduced by TKT did not infringe Amgen’s claim.
§ In relation to the purposive construction, the doctrine of equivalents was also laid down in the case. Doctrine of equivalents is a legal rule that allows a court to hold a party liable for patent infringement even though the infringing device or process does not fall within the literal scope of a patent claim, but nevertheless is equivalent to the claimed invention.
§ The effect of the doctrine of equivalents is to extend protection to something outside the claims that performs substantially the same function in substantially the same way to obtain the same result.
§ Amgen’s claims are concerned with the expression of EPO by a gene, which is exogenous to the cell. But the genes, which express EPO in cells by the TKT process, are not exogenous.
§ The court concluded that TKT did not infringe any of Amgen’s claims and dismissed the
appeal.

Rule:  Doctrine of equivalent and purposive construction which states that a claim should not be limited to literal interpretation and a party can be held liable for patent infringement even though the infringing device or process does not fall within the literal scope of the claim. Thus the doctrine of equivalent allows the patentee to extend his monopoly beyond the claims.

Holding: It was held by the court that TKT did not infringe any of the claims of Amgen. As the method used by TKT was different from the method used by Amgen in the production of the same drug. The person skilled in the art would also not come to the conclusion that the production of GA-EPO is same as that of EPO.

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Citation –  339 U.S. 605 (1950)

Facts:
§ There are two electric wielding compositions or fluxes: the patented composition (Unionmelt Grade 20) and the accused composition (Lincolnweld 660).
§ The patent under which Unionmelt has made a claim is essentially a combination of alkaline earth metal silicate and calcium fluoride (silicates of calcium and magnesium)
§ Licolnweld’s composition is similar to Unionmelt’s, except that it substitutes silicates of calcium and manganese-the latter not an alkaline earth metal – for silicates of calcium and magnesium. In all other respects, the two compositions are alike.
§ The mechanical methods in which these compositions are employed are similar. They are identical in operation and produce the same kind and quality of weld.

Procedural History:
§ The plaintiff (Linde Air Products Co.) owned a patent for an electronic welding process, and sued defendants including the Graver Company for infringing the patent.
§ The defendants asserted that they were not infringing the patent because the patented welding process used a welding composition made of alkaline earth metal silicate and calcium fluoride (usually expressed as silicates of calcium and magnesium), while the purported infringers substituted a similar element, manganese, for the patentee’s magnesium.
The United States district court found infringement, and the Court of Appeals affirmed the infringement claim.

Issue: Whether the substitution of the manganese, which is not an alkaline earth metal, for magnesium, which is, under the circumstances of this case, and in view of the technology and the prior art, is a change of such substance as to make the doctrine of equivalents inapplicable; or, conversely whether, under the circumstances, the change was so insubstantial that the trial court’s invocation of doctrine of equivalents was justified?

Holding:
§ Court raised the doctrine of equivalents. It noted that if another party could use a process exactly the same as one that is patented, but escape infringement by making some obvious substitution of materials, it would deprive the patentee of the exclusive control meant to come with a patent. This would undermine the profitability of the patent, which would go against the policy of encouraging inventors to invent by giving the opportunity to profit from the labor of invention.
§ Court also outlined how the doctrine should be used, noting that “what constitutes equivalency must be determined against the context of the patent, the prior art, and the particular circumstances of the case.”

Rationale: Court laid out two possible tests to determine equivalency. Under the first of these (“triple identity” test), something is deemed equivalent if:
– It performs substantially the same function
– in substantially the same way
– to yield substantially the same result.
Under the second test, something is deemed equivalent if there is only an “insubstantial change” between each of the features of the accused device or process and the patent claim.
In this case, the Court gave particular weight to the determination of “whether persons reasonably skilled in the art would have known of the interchangeability of an ingredient not contained in the patent with one that was.” Finding that the substitution of magnesium for manganese was both obvious to anyone working in the field, and was an insubstantial change, the Court upheld the finding of patent infringement.
In the current case, disclosures of prior art made it clear that manganese silicate was a useful ingredient in welding compositions. Also specialists familiar with the problems of welding compositions understood that manganese was equivalent to, and could be substituted for magnesium in the composition of the patented flux and their observations were confirmed by the literature of chemistry. Hence the substitution in the accused composition of manganese silicate for magnesium silicate, where the two compositions were substantially identical in operation and result was so insubstantial in view of technology and prior art, that the patent was infringed under the doctrine of equivalents.

Rule: Doctrine of Equivalence.

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Citation – 2013 Indlaw IP AB 20

Facts:  The petitioner (Bayer) is a corporation incorporated under the laws of United State of America (U.S.A.). Subsequent to its research and development (R & D) activities, the petitioner invented and developed its patented drug to enable its administration to human beings. The patented drug is used in the treatment of patients suffering from Kidney cancer i.e. Renal Cell Carcinoma (RCC) and liver cancer i.e. Hepatocellular Carcinoma (HCC). The aforesaid patented drug acts more as a palliative i.e. relieves patients from pain and to an extent also slows down the spread of cancer by restricting the speed with which the cancer cells grow. Bayer Corp. had acquired the patent for the salt/compound Sorafenib Tosylate in 2008 in India. The market name of the medicine/drug was Nexavar.
Natco, a drug manufacturer in India, approached the petitioner for grant of voluntary license for the purpose of manufacturing and selling the patented drug in India. The respondent (Natco) sought a voluntary license to manufacture and sell in India the patented drug under its brand name at a price of less than Rs. 10,000 per month of therapy as against the price of Rs. 2,80,428 per month of therapy charged by the petitioner. The purpose behind obtaining the voluntary licence by Natco was to make the patented drug accessible to the public at an affordable price. When applying for the voluntary license, Natco also stated the fact that the petitioner had neither met the reasonable requirement of public nor was it reasonably priced nor had it worked in the territory of India. Eventually, the petitioner rejected Natco’s application for grant of voluntary license.
Thereafter, on 29 July, 2011 i.e. after the expiry of three years from 3 March, 2008, Natco applied to the Controller for a grant of Compulsory License under Section 84 (1) of the Act. In its application, Natco pointed out that all the three conditions for the grant of Compulsory License were fulfilled/satisfied. It was also set down that they proposed to sell the patented drug under their brand name (Nexavar) at Rs. 8,800 per month of therapy. On 9 March, 2012 the Controller via his order gave authorization to Natco to manufacture and sell the patented drug and directed to pay to the petitioner royalty at 6% of its net sales of the patented drug under its brand name which was allowed to be sold at the price of Rs. 8,800 for 120 tablets for a month of treatment. Besides, the grant of Compulsory License to Natco was non-exclusive, non-assignable and for the balance term of the patent.

Issue: Whether a compulsory license can be granted in favour of Natco for the production of the patented drug?

Law Involved: What is a compulsory License?
Section 84(1) of the Patents Act allows any interested person to make an application to the Controller for the grant of Compulsory License after the expiry of three years from the date of grant of patent on any of the following grounds:
a) That the reasonable requirements of public with respect to the patented invention have not been satisfied
b) That the patented invention is not available to the public at reasonably affordable price
c) That the patented invention is not worked in India.

Discussion/Rationale:
a) Did the applicant (Natco) make efforts to obtain voluntary licence from the patent holder (Bayer)?
The first condition precedent to consider an application for compulsory license is that three years should have elapsed from the grant of the patent. The petitioner urges that the second condition precedent to entertain the application viz making efforts to obtain voluntary license from the patent holder on reasonable terms and conditions as mandated by Section 84 (6) of the Act has not been satisfied i.e. the applicant has not made efforts. On the basis of examination of evidence i.e. exchange of letters between the parties in the context of Section 84 (6) of the Act, both the authorities concluded that effort was made by Natco to obtain the voluntary license. The Court said that it found no reason to interfere with the findings of the authorities under the Act and held that the second condition precedent for consideration of application for compulsory license namely an effort to obtain a voluntary license has been satisfied by Natco.

b) Have the reasonable requirements of the public been satisfied?
The Court held that in the scheme of the Act it for the applicant while filing an application for Compulsory License in terms of Section 87 of the Act to make out a prima facie case that one or all the grounds stated in Section 84 (1) of the Act are prima facie attracted/applicable in respect of a patent for which the Compulsory License is sought. The petitioner then submitted that the reasonable requirement of the public has to be considered by the authorities in the context of number of patients requiring the patented drug. It is submitted by the petitioner that it is not in every case that a person suffering from HCC or RCC Cancer is required to be administered the patented drug. The occasion to administer the patented drug arises only during the last stages of a patient’s illness and even in that case the Doctor may opt for a line of treatment requiring measures other than the intake of the patented drug. The Court held that the aforesaid exercise can never be carried out on a mathematical basis. It has to be on a broad basis and this broad exercise has been done on the basis of the evidence produced by the parties. In fact, authorities under the Act have considered the rival statistics of the patients before it and on that basis determined the reasonable requirement of the public.

c) Whether the supplies by infringers of the patented drug is to be considered/taken into account to determine the satisfaction of the reasonable requirement test?
It was contended by the petitioner that while determining the satisfaction of the reasonable requirement of the public for the patented drug, the supplies made by the infringers i.e. Cipla have to be taken into account. The authorities have held that the supplies by infringers of the patented drug cannot be taken into account as the supply of the patented drug by the infringer is uncertain. The Court noticed from the record that the petitioner had filed an infringement suit against the infringer viz Cipla. It was the petitioner’s contention before the Court that the suit filed before the Delhi High Court against Cipla, the alleged infringer for injunction should be ignored as no injunction has yet been granted. The Court declined to accept this argument as an injunction could be granted at any time as the suit continues to be pending. Therefore, the infringer’s quantity of goods cannot be taken into account only because it could stop on any day. It is only where the patent holder accepts the infringer’s participation in the market and in fact grants him defacto licence could the infringer’s supplies be taken into account. The meaning to be given to the words “adequate extent”.
Section 84 (7) of the Act provides a deeming fiction which deems that reasonable requirement of the public is not satisfied if the demand for patented article is not met to an adequate extent. The aspect of adequate extent would vary from article to article. So far as luxury articles are concerned, the meeting of adequate extent test would be completely different from the meeting of adequate extent test so far as medicines are concerned. In respect of medicines, the adequate extent test has to be 100% i.e. to the fullest extent. Medicine has to be made available to every patient and this cannot be deprived/scarified at the altar of rights of patent holder.

d) Was the patented drug available to the general public at a reasonably affordable price?
It is mandated by Section 90 (1) (iii) of the Act that the Controller should ensure that the patented drug is available at reasonably affordable price. This reasonably affordable price has to be determined on the basis of the relative price being offered by the patent holder and the applicant. In the present case, the price at which the petitioner is selling the patented drug is at about Rs. 2,84,000 per month of therapy and the applicant was offering the same at Rs. 8,800 per month of therapy. Noticeably, the petitioner’s price of sale did not look reasonable.
The petitioner asserts that the price of the patented drug is to be arrived at taking into account not only the research and development costs for the patented drug but also the costs incurred in respect of research and development on failed drugs thereby making the price at which it is selling the patented drug a reasonably affordable price. Before the Controller, the petitioner had protested at the calling for the Balance Sheet. The figures enclosed therein would establish the total costs incurred by the petitioner on research and development of the patented drug which could have formed the basis to decide the reasonable price at which the petitioner could make the drug available to the public in India. Hence, no fault can be found with the impugned order holding that the patented drug is not available to the public at a reasonably affordable price.

e) Has the patented drug been working in the territory of India?
The petitioner submits that the patented drug had worked in the territory of India by importation of the same. Article 27 of the TRIPS agreement inter alia provides that there would be no discrimination in respect of patented product whether legally manufactured or imported. In Form 27, the patent holder while giving details of patented drug in India, has to make a declaration of the patented product having worked in India under two classifications namely manufacture in India and imported from other countries. The petitioner maintains that there is no requirement in the Act that for the purpose of patented drug being worked in the territory of India, it should necessarily be manufactured in India. The Union of India alleges to the contrary.
The Court looked through the prism of Section 83 of the Act which contains the legislative guidelines to govern the meaning of the words ‘worked in the territory of India’. The guidelines pronounce that the patent is not conferred upon the patent holder so as to enable him to enjoy a monopoly with respect to the importation of the patented article. On that account, it is safe to presuppose that some efforts to manufacture in India should also be made by the patent holder. Section 83 (f) of the Act provides that patent holder should not abuse his patent so as to inter alia adversely affect international trade. It would, therefore, follow that when a patent holder is faced with an application for Compulsory License, it is for the patent holder to show that the patented invention/drug has worked in the territory of India by manufacture or otherwise. Where a patent holder satisfies the authorities, the reason why the patented invention could not be manufactured in India then the patented invention can be considered as having been worked in the territory in India even by import.

f) Whether the application for compulsory license ought to have been adjourned by the Controller?
It was contended that in any view of the matter the Controller ought to have adjourned the consideration of the application for compulsory licence filed by Natco. This would have given petitioner time to work the patented drug on commercial scale in India. The Court found no merit in the aforesaid submission. Two conditions must be satisfied so as to adjourn the application for a compulsory license:

• The time which has lapsed since the patent was granted and when an application for compulsory license was made was insufficient to enable the patent holder to work the patented drug in India on a commercial scale; and
• Patent holder should have taken steps towards working the patented drug in India on a commercial scale with promptitude. The petitioner was granted the patent in India in 2008. The petitioner also has manufacturing facilities available in India. The petitioner has led no evidence before the authorities to indicate what steps they have taken and with what promptitude the same have been taken for the purposes of working the patent in India after 2008.

In these circumstances, the Court found no fault with the order of the Controller refusing to
adjourn the application for compulsory license.

Holding:  The Court saw no reason to interfere with the orders dated 9 March, 2012 and 4 March, 2013 of the Controller and the Tribunal respectively granting compulsory license under Section 84 of the Patent Act to Natco. Accordingly, the petition was dismissed. Petitioner must be paid royalty raised from 6% to 7% of the net sale of Natco as remuneration for the compulsory license granted to Natco. This royalty was fixed keeping in view the fact that the petitioner had led no evidence to show the expenses incurred by it to invent the patented drug.

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Citation – Corp. 3 F. Supp. 3d 1213

Facts:  The plaintiffs are the University of Utah Research Foundation, The Trustees of the University of Pennsylvania, HSC Research and Development Limited Partnership, Endorecherche, Inc., and Myriad Genetics, proclaimed encroachment of three of their patents. The University of Utah is the co-owner of three of the patents issued Patents. The patents cover the BRCA1 and the BRCA2 genes. The respondents, Ambry Genetics are a clinical diagnostic and genomic services company, they offer medical tests which claim to possibly detect genes that show breast and ovarian cancer related risks.

Procedural History:  Myriad appealed from a decision of the District Court for the District of Utah denying Myriad’s motion for preliminary injunction, which was requested with a view to stop Ambry’s sale of the cancer test kits. The District Court denied the said Preliminary injunction because it stated that the subject matter in question was patent ineligible.

Issue: Whether the subject matter is patent eligible and therefore, whether Plaintiffs can prevent Ambry Genetics from selling the kits on the basis of infringement of patent?

Reasoning and Judgment: In the case Association for Molecular Pathology v. Myriad Genetics (2013), it was established that Myriad and its partners discovered the precise locations and sequences of the BRCA1 and BRCA2 genes, mutations of which are linked to hereditary breast and ovarian cancers. The Supreme Court held that “genes and the information they encode are not patent eligible simply because they have been isolated from the surrounding genetic material.” The court stated that the subject matter is ineligible because they are isolated DNA strands, which are naturally occurring and distinguished from the rest of the human genome, and thus, are natural phenomena.
Primers do not alter the underlying, naturally occurring DNA sequence that is being read. Therefore, they do not alter the underlying DNA’s functional properties or identity for the purposes of genetic testing. The primers in question, in this case, were not found to be very different from the isolated DNA found to be patent ineligible in the Association for Molecular Pathology v. Myriad Genetics case.
In the present case, the Court first observed that Myriad did not “create or alter”: 1) “any of the genetic information encoded in the BRCA1 and BRCA2 genes,” as the “location and order of the nucleotides existed in nature before Myriad found them”. Hence, the Court held that the subject matter in question is patent ineligible because it is not ‘inventive’ in nature. Thus, all the asserted claims were held to be patent-ineligible.
In regards to the methods claims, the Court cited Mayo Collaborative Services v. Prometheus Laboratories Inc. case, ‘a that a process focusing on a law of nature, natural phenomenon, or an abstract idea may be patent eligible, but only if it incorporates another “inventive concept”’. In the present case, the Court held that the method claims were ineligible – because they encompassed the detection of any BRCA1/BRCA2 mutation for any purpose did not recite significantly more than a patent-ineligible “abstract idea’. The two method claims involved comparisons between the wild-type BRCA sequences with the patient’s BRCA sequences. The court reasoned that these method claims were ineligible because “the only ‘inventive concepts’ in the method claims are the patent ineligible naturally occurring BRCA1 and BRCA2 sequences themselves.”
The Court also cited the case Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014), laws of nature are not the only implicit exception to patentable subject matter identified by 35 U.S.C. § 101. Natural phenomena and abstract ideas are also not patentable.

Conclusion: The claims on appeal are directed to ineligible subject matter in violation of 35 U.S.C. § 101. Therefore, the district court properly denied Myriad’s motion for preliminary injunction. We remand to the district court for an entry of an order consistent with this opinion;
Affirmed and remanded.

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Citation – 134 S. Ct. 2347

Facts: Alice Corporation was the assignee of several patents that contain a scheme for mitigating “settlement risk”. This risk means that only one party to a financial exchange will satisfy its obligation. The computer acts as a third party in this transaction. The computer creates shadow debit and credit records for each stakeholder party. It obtains a start of the day balance and only allows for transactions according to the amount available as shown on the shadow records. In this way, it mitigates settlement risk by only allowing for transactions which both party have funds for.

Issues: Alice Corporation, as assignee of several patents, seeks infringement on three grounds:
1) Methods Claims (the foregoing method for exchanging obligations).
2) System Claims (a computer system configured to carry out the method for exchanging obligations)
3) The media claims (a computer readable medium containing program code for performing the method of exchanging obligations).
Or
Whether the claims were patent eligible under 35 U.S.C.S. § 101, or were instead drawn to a patent ineligible abstract idea?

Procedural History:  CLS bank filed a suit against Alice Corporation, arguing that the patent claims at issue are unenforceable and invalid. Alice Corporation counterclaims, stating that CLS bank had infringed those copyrights. The district court affirmed that the patents were ineligible because they were related to an abstract idea. The United States Court of Appeals reversed it stating that it is not evident that the patent is tied to an abstract idea. The en blanc federal Court affirmed the decision of the District Court.

Laws involved: 35 U.S.C. § 101- “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”

Analysis: The Court held that the patents are ineligible and then discusses the first claim of method claims. The Court begins by stating that there are three exceptions to patent protection which is Laws of Nature, Natural Phenomena and abstract ideas. These cannot be patented. This is an implicit exception to Section 101 which provides for patent protection.

The Court then derives the framework to decide how to reach the conclusion if anything falls within the exception by using Mayo Services v. Prometheus Laboratory. First, the patentable concept has to be directed to one of the three patent ineligible concepts. Second, it is necessary to check if anything has been added to the concept. The second step is to search for an “inventive concept” to see if the concept has transformed the patent ineligible idea into something that can be protected.
In the first step, the claims at issue are directed to the patent ineligible concept of an “abstract idea”. The court used Parker v. Flook, which stated that a mathematical formula for computing alarm limits in a catalytic conversion process was an abstract idea. In Bilski v. Kappos, the claims at issue related to hedging which is an abstract idea and cannot be patented. The courts agreed that hedging was a fundamental economic practice and long prevalent in the system of commerce and finance. Drawing from this, the court held that using a third party intermediary, like the concept of hedging, is a fundamental economic practice and has long been used in commerce. They discuss the use of “clearing house” as an intermediary to reduce such risk and use literature to substantiate. The Petitioners argued that abstract idea have to be “pre-existing fundamental truth that exist in apart from human action” but the court dismissed this stating no such requirement is necessary.
The Court then stated that the patent failed to transform the concept into something patentable, thereby failing the second step of “inventive concept”. The Court again uses the Mayo Case to further its analysis. It states that additional features are required to transform the concept and simply adding conventional steps, which are highly generic, is not enough to be inventive. In the Flook case, the use of a computer for automatic alarm controlling was highly conventional and did not add to the abstract idea. Thus, limiting the use to a particular technological environment is not enough. In contrast, the Diehr Case 450 U.S. 175, which required the use of a computer for curing rubber was considered to be patent eligible. This was not because it used a computer but because the use of a thermocouple to record temperature measurements was not available beforehand. This improved an existing technological process and not just because a computer was used. In this case, the use of a computer is conventional as this is mere electronic bookkeeping. All these uses of obtaining data, adjusting balances are conventional uses of a computer. They do not add anything significant and merely apply an abstract idea of intermediated settlement using a generic computer.
The Petitioners concede that the third claim (media) rises or falls with the first claim (method). The court does not look into it. Whereas the second claim, system claim, is concerned the court says it is similar to the first claim of media claim. The specific hardware is concerned, for example a data storage unit, are generic.
Thus, the Court affirms the decision of the federal Court.

Rule:  While applying the §101 exception, it is important to distinguish between patents that claim the ‘building blocks’ of human ingenuity and those that integrate the building blocks into something more, thereby “transforming” them into a patent-eligible invention. The former “would risk disproportionately tying up the use of the underlying” ideas and are therefore ineligible for patent protection. The latter pose no comparable risk of pre-emption, and therefore remain eligible for the monopoly granted under our patent laws.
First, the courts determine whether the claims at issue are directed to one of those patent ineligible concepts. If so, then the courts ask, “what else is there in the claims before us?” To answer that question, we consider the elements of each claim both individually and “as an ordered (as in, step-wise) combination” to determine whether the additional elements “transform the nature of the claim” into a patent-eligible application. This step two of this analysis is a search for an “‘inventive concept'” i. e., an element ‘or combination of elements that is “sufficient” to ensure that the patent in practice amounts to significantly more” than a patent upon the ineligible concept itself.

Holding:  The claims at issue are drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent eligible invention.
Specifically, the concept of intermediated settlement was a fundamental economic practice, and the use of a third party intermediary was a building block of the modern economy. The method claims, which merely required generic computer implementation, failed to transform the abstract idea into a patent eligible invention. The computer components of the patent’s method added nothing that was not already present when the steps were considered separately. The assignee’s claims to a computer system and a computer readable medium failed for substantially the same reasons.

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