'; October 2017 Newsletter

October 2017 Newsletter

October 1, 2017

Supreme Court rules on BPCIA; ‘patent dance’ optional, earlier marketing notice allowed

The Supreme Court issued its first ruling on the patent provisions of the Biologics Price Competition and Innovation Act (BPCIA). The Court unanimously held that the law’s “patent dance” information exchange is optional. Additionally, the Court concluded that biosimilar applicants do not have to wait for Food and Drug Administration (FDA) approval to provide the 180-day notice of commercial marketing that is required before a product can be sold to the public.

The Court’s decision in Amgen v. Sandoz is a victory for biosimilar applicants, says John Kilyk, Jr., a member in Leydig’s Chicago office. “Biosimilar developers should be pleased by this decision on both counts,” Kilyk says. “Biosimilar applicants can make the strategic choice to opt out of the ‘patent dance’ and now have the ability, if they take timely action, to launch their products at a significantly earlier time.”

Patent dance optional

Affirming one aspect of the U.S. Court of Appeals for the Federal Circuit’s decision, the Supreme Court concluded that failure to participate in the “patent dance’s” information exchange is not itself actionable insofar as it does not allow a reference product sponsor to compel the biosimilar applicant under the BPCIA to participate in the “patent dance.” Kilyk cautions that there remains the chance that such relief may be available under state law.

“The Supreme Court, in remanding this case to the Federal Circuit, left open the possibility that there still may be relief available under state-based unfair competition laws against a biosimilar applicant that doesn’t participate in the ‘patent dance,’” Kilyk says. “However, most attorneys believe this is an unlikely possibility.”

Notice of commercial marketing before FDA approval

The BPCIA requires biosimilar applicants to provide the reference product sponsor with a notice of commercial marketing 180 days before they can begin marketing a product. The Federal Circuit held that Sandoz’s notice, provided before the FDA issued its license, was ineffective because a biosimilar applicant “may only give effective notice of commercial marketing after the FDA has licensed its product.” Since no FDA license can become effective until the end of the 12-year exclusivity period, the Federal Circuit’s decision effectively added six more months of waiting before an applicant could launch a product.

In an opinion written by Justice Thomas, the Supreme Court reversed this portion of the Federal Circuit’s decision, relying on the plain language of § 262(l)(8)(A) of the BPCIA, which contains no mention of FDA licensing. Since the only timing requirement is the 180-day notice period, the Supreme Court concluded that FDA approval is not a prerequisite for a valid notice.

“A biosimilar applicant should consider issuing the notice at the same time it files its FDA application so it can, if desired, commence marketing immediately upon approval, since the FDA typically takes more than 180 days to approve applications,” advises Michael J. Schubert, an associate in Leydig’s Chicago office. “However, there are other strategic considerations beyond the scope of this discussion that may inform when notice should be provided,” Schubert notes.

“The Supreme Court’s ruling provides biosimilar applicants with additional options regarding the lead-up to, and framing of, patent litigation and the timing of biosimilar product market launch,” Schubert adds.

“More choices are now available to a biosimilar applicant regarding the launch of a biosimilar product,” Kilyk says. “I don’t know of a biosimilar applicant who is complaining about the Supreme Court’s decision.”

Supreme Court says ban on ‘disparaging’ trademarks violates First Amendment

In a unanimous decision, the Supreme Court held that the Lanham Act’s prohibition on “disparaging” trademark registrations was unconstitutional because “it offends a bedrock First Amendment principle: Speech may not be banned on the ground that it expresses ideas that offend.”

The Court’s decision in Matal v. Tam, which involved an Asian-American rock band’s attempted registration of its moniker, “The Slants,” means that the U.S. Patent and Trademark Office (PTO) will no longer decide whether a proposed mark may be offensive to individuals or groups, says Anne E. Naffziger, a member in Leydig’s San Francisco Bay Area office.

“Applicants used to have to consider how a trademark examiner might react to a proposed mark or worry that it could be rejected based on an examiner’s subjective determination of offensiveness,” Naffziger says. “Now, the Court has removed that determination from examiners by invalidating the portion of the rule that afforded the ability to make such judgments.”

In 2013, the PTO refused to register “THE SLANTS” as a word mark on the basis that it violated Section 2(a) of the Lanham Act, which provides that registration of a mark may be refused if it “consists of or comprises … matter which may disparage … persons, living or dead, institutions, beliefs, or national symbols.”

The applicant and founding member of The Slants, Simon Shiao Tam, appealed the denial to the Trademark Trial and Appeal Board, which upheld the PTO’s decision. A U.S. Court of Appeals for the Federal Circuit panel affirmed. Upon rehearing by the Federal Circuit sitting en banc, however, the court held that Section 2(a)’s prohibition on the registration of “disparaging” marks was an unconstitutional violation of the First Amendment.

The Supreme Court agreed. Writing for the Court, Justice Alito rejected the argument that the issuance of a trademark registration constituted “government speech” that could be regulated with less scrutiny than private speech: “If private speech could be passed off as government speech by simply affixing a government seal of approval, government could silence or muffle the expression of disfavored viewpoints.”

The implications of the Court’s decision go beyond trademark registrations. As Justice Alito asked rhetorically, “If federal registration makes a trademark government speech and thus eliminates all First Amendment protection, would the registration of the copyright for a book produce a similar transformation?”

Naffziger agrees that the broader issue is what role the government can have in regulating commercial speech.

“This case suggests that the Court will be looking very carefully to ensure that the government is not overreaching in any registration-based regimes that may involve restrictions on substantive speech,” she says.

For trademark applicants, the doors have swung wide open in terms of the substance of what can be registered, says Stella M. Brown, an associate in Leydig’s Chicago office.

“It’s kind of a free-for-all now,” Brown says. “Legally, it no longer matters how others feel about a mark, no matter how hurtful or offensive it may be.”

Naffziger further notes that even with the elimination of Section 2(a), what is legally permissible and what constitutes smart business remain two different things.

“Just because you can register an offensive mark from a legal perspective does not mean you should register that mark from a business or moral perspective,” she cautions.

Supreme Court will decide whether IPRs are constitutional

After granting certiorari in Oil States v. Greene’s Energy Group, the Supreme Court could cause an earthquake in the patent litigation landscape if it decides that inter partes review (IPR) proceedings, and potentially the whole patent review regime established by the America Invents Act (AIA), is unconstitutional.

Such a decision would put an end to what has been a controversial system and change the way patent disputes are resolved, says Erik R. Swanson, a member in Leydig’s Frankfurt am Main, Germany office.

“The initial ramification of the Court declaring IPRs unconstitutional is that the Patent and Trademark Office (PTO) stops doing those reviews, shifting disputes back to district court litigation,” Swanson says. “Since IPRs are a potent weapon for challengers, it could give them more of an incentive to settle if that weapon is taken away.”

A holding of unconstitutionality would not only change patent litigation going forward, but also could affect previous PTO decisions, Swanson adds.

“What happens to patents that were invalidated under an unconstitutional process?” Swanson says. “Can they come back to life and be relitigated? This decision may not answer those questions, but it will certainly raise them if the Court strikes down IPRs.”

In its petition, Oil States asserts that a patent constitutes a private property right, and therefore, the Constitution requires that patentees be allowed to avail themselves of a jury trial in an Article III court when their claims are challenged.

The U.S. Court of Appeals for the Federal Circuit has consistently held that post-grant proceedings before the PTO are constitutional

and do not violate the Seventh Amendment because patent rights are “public rights” that do not need to be adjudicated before a jury. The Supreme Court had rejected previous petitions that raised this issue before granting certiorari in this case.

The Court’s decision to grant certiorari is curious, given its previous refusals to address the question, Swanson says.

“It would run contrary to that history to upend the status quo and reject IPRs entirely,” Swanson says. “Perhaps a more likely outcome is that the Court’s review prompts some adjustment by the Patent Office in its current procedural rules for IPRs, for example, to enhance patentees’ ability to amend their claims in response to the patent challenge.”

Supreme Court to decide whether IPR proceedings must resolve all challenged claims

In its upcoming term, the Supreme Court will decide whether the Patent Trial and Appeal Board (PTAB) must issue a final written decision on every claim challenged by a petitioner in an inter partes review (IPR) proceeding or only on those claims as to which trial has been instituted.

The U.S. Court of Appeals for the Federal Circuit held in SAS Institute, Inc. v. ComplementSoft, LLC that the America Invents Act (AIA) only requires that the PTAB issue a decision on claims as to which IPR was instituted – not all claims challenged in a petition. The Federal Circuit decision essentially affirmed the status quo, in which the PTAB regularly institutes a trial and issues a decision on less than all challenged claims.

35 USC § 318(a) states: “If an inter partes review is instituted and not dismissed under this chapter, the Patent Trial and Appeal Board shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner and any new claim added under section 316(d).”

In its petition for certiorari in SAS Institute, Inc. v Lee, SAS argued that allowing the PTAB to leave claims unresolved not only runs contrary to the statutory language, but also “destroys the efficiencies that Congress designed into the AIA through the application of estoppel from a final decision.”

In its response to the petition, the Patent and Trademark Office (PTO) argued on procedural grounds that review of this issue is unwarranted because the determination as to whether to institute an IPR is final and non-appealable per 35 U.S.C. § 314(d). The PTO also argued that it was within its discretion to issue decisions on fewer than all challenged claims since, among other reasons, the AIA provisions that address the petitioner’s challenges, the PTO’s decision to institute review, and the PTAB’s final decision are all claim-specific provisions.

The Supreme Court recently granted the petition for certiorari to address this issue. The Court’s decision could have a profound effect on how patent holders and challengers can expect their disputes to be resolved under the AIA, says Arthur J. Bobel, a member in Leydig’s San Francisco Bay Area office.

“If the Court upends the current practice and reverses the Federal Circuit, patent owners will reap the benefits of the AIA’s estoppel provisions as to any challenged claim found patentable,” Bobel says. “As it stands now, challengers get a second bite of the apple in district court as to any claims for which the PTAB does not institute trial and issue a final written decision.”

Chinese patent law changes reflect country’s growing influence

The Chinese government has made several changes to its patent laws that will affect patent holders and applicants around the globe. These amendments reflect and should strengthen China’s growing influence in patent circles, says Kristen J. Harrell, a senior patent agent in Leydig’s Chicago office.

“China is becoming a much bigger player in the patent world and is an increasingly popular forum for patent applicants,” Harrell says. “These changes appear designed to encourage those trends.”

The new guidelines issued by China’s State Intellectual Property Office became effective March 1, 2017. Significant changes include:

  • Post-filing data allowed. The amended guidelines state that patent examiners can now consider post-filing experimental data submitted by applicants. This change brings China in line with most of the rest of the world and should help applicants broaden their claims, Harrell says.
  • “China was one of the last holdouts prohibiting post-filing data, making it difficult to get broader claims in China,” Harrell says. “Now, applicants have better potential to overcome enablement issues and expand the breadth and scope of patent claims.”
  • Business method claims now patentable. Business method claims were previously excluded from patentability in China. Now, a business-oriented innovation may qualify for patent protection if it includes technical features.
  • Expanded claim amendments in invalidation proceedings. The revised guidelines allow applicants to incorporate one or more limitations from other claims
  • and allow patentees to correct obvious errors in their claims.
  • Publicly available file histories. File histories for Chinese patent applications will be made publicly available before an application is granted and will include access to office actions, replies, priority documents, and search reports. The availability of these records can help with patent applications elsewhere, Harrell says.

“What is said about an invention elsewhere in the world can have an impact on applications here in the U.S. and other jurisdictions,” she says. “Access to these documents and the substantive back-and-forth between the examiner and the applicant can provide useful support for validity opinions and in litigation.”

Leydig Announces

Leydig welcomes the following to its Chicago office:

  • Counsel Mark Croll holds a law degree from DePaul University College of Law and an undergraduate degree in mechanical engineering from Bucknell University. Previously, he was Vice President, Intellectual Property, at Illinois Tool Works.
  • Associate James Sanner holds a law degree from the University of Illinois College of Law. He also holds a master’s degree in microbiology and molecular genetics from Rutgers University, as well as a bachelor’s degree in molecular and cellular biology from the University of Illinois Urbana-Champaign.
  • Associate Catherine Taylor holds a law degree from the Chicago-Kent College of Law and a bachelor’s degree in molecular and cellular biology from the University of Illinois Urbana-Champaign.

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