Law Enforcement in the Cloud; The U.S. Storms in and Europe Follows

By Amelia Pennington. A legal intern at Sunstein

In United States v. Microsoft Corporation, the question that made its way through the Southern District of New York, the Second Circuit Court of Appeals, and then to the Supreme Court is: Under what circumstances may federal law enforcement issue a warrant for digital information that is stored abroad?  On March 23, 2018, President Trump signed the Clarifying Lawful Overseas Use of Data Act (“CLOUD Act”), rendering the case moot.

The United States served Microsoft with a warrant pursuant to the Stored Communications Act (“SCA”) on December 4, 2013. The warrant directed Microsoft to seize and subsequently deliver to federal investigators the contents of a customer’s email account. The government believed that the account was being used in connection with narcotics trafficking. Microsoft delivered the information that was stored in the United States but refused to comply with the warrant as to information that was stored in Dublin, Ireland.

The District Court held Microsoft in contempt for failing to comply with the warrant. On appeal, the Second Circuit reversed that decision, concluding that “Congress did not intend the SCA’s warrant provision to apply extraterritorially.”  On October 16, 2017, the Supreme Court granted the government’s petition for certiorari.

The CLOUD Act amended the SCA by explicitly extending disclosure requirements to information stored in or outside of the United States. Section 2703 of the SCA provides that a government entity, pursuant to a proper warrant, may “require the disclosure by a provider of electronic communication service of the contents of a wire or electronic communication.”[1] Section 2713, created by the CLOUD Act, now adds that “a provider of electronic communication service or remote computing service shall comply with the obligations of this chapter. . . regardless of whether such communication, record, or other information is located within or outside of the United States.” The CLOUD Act has thus settled the question of whether a warrant issued under the SCA is applicable to information stored outside of the United States.

In response to the new legislation, both the Solicitor General and Microsoft agreed that the suit against Microsoft be dismissed as moot, given that the CLOUD Act had resolved the question that was before the court. In addition, the government has withdrawn its original warrant and served a fresh warrant pursuant to the CLOUD Act.

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The Supreme Court Changes the Rules for IPRs: The Implications for Partial Denials, Indefinite Claims and Redundant Grounds Robert M. Asher

By Robert Asher. Chair of our Patent Office Litigation Group

Last week’s Supreme Court decision in SAS Institute Inc. v. Iancu is a game-changer, rewriting the procedures applicable to an inter partes review (“IPR”) before the Patent Trial and Appeal Board (“PTAB”). Let’s take a brief look at the decision and then explore its implications. In a nutshell, the Supreme Court’s holding requires the PTAB to institute an IPR against all challenged claims or, otherwise, to deny institution. The PTAB now has an all-or-nothing choice to make in response to a petition requesting an IPR.

The Supreme Court’s decision is based entirely on statutory analysis. The statute gives the Director of the USPTO (who has delegated that responsibility to the PTAB) the authority to “determine whether to institute an inter partes review” §314(b). The five-justice majority agreed with Justice Gorsuch’s conclusion that the discretion is with respect to whether to institute, not which claims that review will encompass.

Further, the statute requires the PTAB to “issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.” §318(a). The majority finds it unmistakable that “any” means every claim the petitioner has presented for review. So they conclude that the final written decision in an IPR must address every challenged claim.

The dissenting justices sided with the government’s reading of the statute, which allows institution of an IPR on fewer than all the challenged claims. The dissenters find the statute ambiguous as to whether all claims need to be addressed in the final written decision and so would apply deference to the administrative agency’s interpretation in accordance with Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-843 (1984).

As a result of the 5-4 decision, all claims challenged in a petition must be addressed in the PTAB’s final written decision for any IPR that is instituted. As a result, all of the challenges raised in the petition will be subject to appellate review. Now that the PTAB will be instituting on claim challenges it previously excluded from an IPR, strategies will undergo dramatic changes for all concerned.

Petitioners Should Take Care in Challenging All Claims

Under prior practice, the PTAB was free to institute challenges to some claims, while excluding challenges to other of the patent claims from the instituted IPR trial proceeding. Because institution decisions are not appealable, such a partial denial was depriving petitioners of an opportunity to dispute partial denials on appeal to a court of law. On the other hand, challenges denied institution were not subject to an estoppel and the petitioner could try them again in a litigation in district court.

Now that the PTAB no longer has the authority to exclude some of the challenges to a patent’s claims from an IPR trial proceeding, petitioners should take great care before challenging all claims, especially those for which it has yet to uncover adequate prior art. A couple of problems may now arise from an inadequate challenge as to one or more claims:

1. Now that all challenged claims will be addressed in the final written decision, any losing challenge will result in estoppel against the petitioner. In other words, petitioners will not get a second chance to assert a prior art defense against those claims in a later court proceeding.
2. Given the burdens on the PTAB of needing to address all claims in an IPR proceeding, the PTAB may choose instead to simply deny the petition in its entirety to relieve itself from the burden of working on non-meritorious challenges.

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Lessons for BioPharma from Recent Federal Circuit Decisions on Patent Eligibility

By Bruce Sunstein. A member of our Patent Practice Group

Although these pages have frequently discussed recent Federal Circuit decisions concerning the eligibility of software inventions for patenting, there is less to discuss concerning the eligibility of biotechnology and pharmaceutical inventions for patenting, because there have been fewer Federal Circuit decisions in this area. Nevertheless, the first decision to trigger a new round of concern about patent eligibility was the Supreme Court’s 2012 decision in Mayo v. Prometheus, concerning a diagnostic relating to dosage of a pharmaceutical, which, in turn, paved the way for the equally important decision, in 2014, relating to computer software, Alice v. CLS Bank.

Together, in patent prosecution, these two decisions have created similar barriers to obtaining patents in their respective fields of biopharmaceutical and computer-related inventions. In this article we show how recent decisions of the Federal Circuit concerning patent eligibility of computer-related inventions also portend parallel grounds for asserting patent eligibility of biopharmaceutical inventions.

We begin our discussion by first explaining the barriers created by the Supreme Court in Mayo and Alice. What we might well call the “Mayo-Alice” dogma provides the rationale for the barriers:

1. Patent protection should not extend to claims in a patent that monopolize the “building blocks of human ingenuity.”
2. “Therefore” patent claims directed to laws of nature, natural phenomena, and abstract ideas are not eligible to be included in the patent and are invalid.

In Part B, the word “therefore” is in quotation marks because claims in issued patents are not really directed to laws of nature, natural phenomena, or abstract ideas.  Instead, claims in issued patents are directed to practical applications, and not to these concepts per se.  In other words, the Mayo-Alice dogma is precisely that–dogma.

Nevertheless, the Mayo-Alice dogma gives rise to a two-step rule, which we here call the Mayo-Alice rule.

Under step 1:  First, we determine whether the claims at issue are directed to a patent-ineligible concept.

Under step 2:  If so, in a search for an “inventive concept”, “we consider the elements of each claim both individually and ‘as an ordered combination’ to determine whether the additional elements ‘transform the nature of the claim’ into a patent-eligible application.”

Although this two-step procedure is hopelessly subjective, it is prescribed by the Supreme Court in both Mayo and Alice.  Decisions of the Federal Circuit in the wake of those decisions have done some good in clarifying the Mayo-Alice rule, including two biopharmaceutical decisions that have interpreted step one of the Mayo-Alice rule.

In Rapid Litigation Management Ltd. v. CellzDirect, Inc., discussed here, the technology involved a method of providing hepatocytes having greater viability after freezing. The court held that the technology was patent eligible and not directed to a natural law. The court held that the patent claims were not directed simply to the ability of hepatocytes to survive multiple freeze-thaw cycles (which would be a natural law), but instead are directed to “a new and useful technique for preserving hepatocytes.”

The court explained that “[t]he inventors certainly discovered the cells’ ability to survive multiple freeze-thaw cycles, but that is not where they stopped.” The claims are directed to a method of producing a desired preparation of multi-cryopreserved hepatocytes.  In this case, claim drafting played an important role, for the court found that the inventors “employed their natural discovery to create a new and improved way of preserving hepatocyte cells for later use.”

The decision in CellzDirect has something in common with the Federal Circuit’s decision in Enfish v. Microsoft (discussed here), a computer software case, because both decisions found the claimed subject matter to be patent eligible, and the finding of eligibility occurred in step 1 of the Mayo-Alice rule. In each case, the language of the claims was specific enough to avoid a finding that the subject matter was “directed to” ineligible subject matter.

Ironically, the Supreme Court in Mayo argues that its decision is a backstop against merely clever claim drafting. In referencing its prior decisions, the Court admonishes:

Those cases warn us against interpreting patent statutes in ways that make patent eligibility “depend simply on the draftsman’s art” without reference to the “principles underlying the prohibition against patents for [natural laws].”

Nevertheless, claim drafting may well make a difference in dealing with step 1 of the Mayo-Alice rule.  As an example, let us consider one of the most famous (or infamous) of Federal Circuit decisions involving biotechnology, Ariosa Diagnostics, Inc. v. Sequenom, Inc. The inventors in this case discovered cell-free fetal DNA (“cffDNA”) in blood of the mother. The inventors developed ways of using this fetal DNA obtained from blood of the mother to gain diagnostic information about the fetus.  In characterizing the invention in this case, the inventors included the following language in the patent (reproduced by the Federal Circuit in its decision): “we have demonstrated the feasibility of performing non-invasive foetal RhD genotyping from maternal plasma. . . . These observations indicate that maternal plasma/serum DNA may be a useful source of material for the non-invasive prenatal diagnosis of certain genetic disorders.”

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