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2G or Not 2G: Patent License Applies to Future Generation Wireless Networks

In interpreting a patent license agreement originally drafted in the era of third generation (3G) cellular networks, the US Court of Appeals for the Federal Circuit found that the license agreement covered subsequent wireless network generations, affirming a district court decision that infringement claims were barred by the license agreement and the doctrine of patent exhaustion. Evolved Wireless, LLC v. HTC Corp., Case Nos. 20-1335, -1337, -1339, -1340, -1363 (Fed. Cir. Jan. 26, 2021) (Dyk, J.) However, the Court vacated-in-part the district court’s decision and remanded for findings based on supplemental evidence of the license’s termination.

In order for cellular wireless networks to work properly, each component within the network must operate according to a shared set of standards. Early generation wireless networks were specific to a particular geographic location. Subsequent “generations” became harmonized according to global standards set by international organizations. Despite some harmonization, two separate 3G standards existed, known as WCDMA and CDMA2000. The fourth generation (4G) addressed this dichotomy by harmonizing newer technologies into a single standard known as Long Term Evolution (LTE). Nonetheless, devices exist that may be compatible with one or more 3G or 4G standards. These are referred to as “single-mode” or “multi-mode” devices depending on their compatibility characteristic. Patents that cover one or more technologies necessary for standards harmonization are referred to as standard-essential patents (SEPs) and must be licensed on fair, reasonable and non-discriminatory terms.

LG Electronics developed a patent that describes a method for handing over a mobile device from one cell tower to another under the LTE standard. LG subsequently declared the patent to be essential to the LTE standard and granted a license to Qualcomm, a developer and supplier of wireless components. LG then sold the patent to TQ Lambda, which sold it to Evolved Wireless. Evolved filed infringement lawsuits against various mobile device manufacturers, all of which incorporated Qualcomm components in their accused products. Because the patent remained subject to the LG-Qualcomm license, the central question was whether the accused products fell within the scope of the license agreement.

The license agreement did not identify specific patents, but granted Qualcomm and its customers the right to use LG’s patents that are “technically or commercially necessary to make, sell, or use a ‘subscriber unit,'” defined in the license as “a Complete CDMA Telephone or a CDMA Modem Card, and any subsequent generation products.” The district court found that the accused products were covered by the license agreement and granted summary judgment in favor of the defendants under the theory that the license agreement authorized Qualcomm’s use of the patent and that the doctrine of patent exhaustion precluded an infringement action against Qualcomm’s customers (i.e., the defendants). Evolved appealed.

On appeal, Evolved argued that the accused products did not meet the definition of “subscriber units” and that it had submitted supplemental evidence that the license had been terminated that the district court had ignored. Evolved argued that that term “subsequent generation products” in the license did not include products that [...]

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Patent Extension Requires Board or Court Reversal, Multiple Examiner Actions Not Enough

The US Court of Appeals for the Federal Circuit affirmed a grant of summary judgment for the Director of the US Patent and Trademark Office (PTO), holding that the statutory language authorizing so-called “C-delay” patent term adjustment requires an adverse patentability finding that is reversed by a court or the Patent Trial & Appeal Board. Chudik v. Hirshfeld, Case No. 20-1833 (Fed. Cir. Feb. 8, 2021) (Taranto, J.) C-delay adds to a patent’s term to account for delay experienced during appellate review of an adverse patentability finding. C-delay does not apply when the examiner reopens examination after final rejection (in this case, four times over an 11-year period) because appellate review is not triggered when an examiner, and not the Board or a court, undoes a final unpatentability decision by reopening examination.

Chudik filed a patent application, and the examiner rejected all pending claims as unpatentable. Chudik declined to appeal, instead filing a request for continued examination. Over the next eight years, the examiner issued four more final rejections. After each rejection, Chudik filed a notice of appeal and opening brief, and after each notice of appeal, the examiner reopened prosecution rather than answering the appeal. The patent finally issued more than 11 years after Chudik filed the application. The PTO added time to the term of the patent for A-delay (where the PTO fails to meet certain prescribed deadlines) and B-delay (each day that the patent application’s pendency extends beyond three years), but not C-delay.

The C-delay provision of the Patent Act provides for a patent term adjustment where the delay is due to “appellate review by the [Board] or by a Federal Court in a case in which the patent was issued under a decision in the review reversing an adverse determination of patentability.” Chudik challenged the PTO’s calculation of the patent extension, arguing that he was entitled to C-delay patent term adjustment for the time his four notices of appeal were pending in the PTO. Chudik argued that the C-delay provision’s “appellate review” included the examiner’s decision to undo her final action through a reopening of prosecution. The PTO rejected that argument, concluding that the C-delay provision did not apply because the Board’s jurisdiction over the appeals never attached and no Board or reviewing court reversed an adverse determination of patentability.

Chudik then sued the PTO director in federal district court, again arguing that “appellate review” referred to the Board’s entire review process, starting when the notice of appeal is filed. Chudik also argued that “a decision in the review reversing an adverse determination of patentability” covered an examiner’s own decision, through a reopening of prosecution. Although characterizing it as “based on a reasonable construction of statutory text,” the court rejected Chudik’s challenge. Applying Chevron, the district court held that the PTO’s position must be affirmed because that position was reasonable. Chudik appealed to the Federal Circuit.

The Federal Circuit affirmed the district court’s decision, finding that the PTO’s interpretation of the C-delay provision’s statutory language was [...]

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2020 IP Law Year in Review: Patents

Executive Summary

In 2020, the US Supreme Court and Court of Appeals for the Federal Circuit continued to refine key aspects of intellectual property law on issues that will have an impact on litigation, patent prosecution and business strategy. This Special Report discusses some of the most important decisions.

The Federal Circuit issued several panel decisions clarifying the bounds of patent-eligible subject matter in the area of life sciences and computer technology. In the life sciences space, the court found several patents satisfied the conditions for patent eligibility. For example, the Federal Circuit found patent-eligible claims directed to preparing a fraction of cell-free DNA enriched in fetal DNA, claims directed to a method of operating a flow cytometry apparatus with a number of detectors to analyze at least two populations of particles in the same sample to be patent eligible, and claims directed to a method of treating type 2 diabetes mellitus using a DPP-IV inhibitor. In the area of computer technology, the court clarified that claims directed to an improvement to computer networks were patent eligible, but that claims directed to applying longstanding commercial practices to generic computer components remain ineligible. Given the uncertainty of patent eligibility law, questions surrounding life sciences and computer-related technology will continue to be raised in cases.

The Supreme Court issued one decision in 2020, in which it found that the Patent Trial and Appeal Board’s application of the time bar for filing a petition for inter partes review (IPR) is not appealable. The Federal Circuit issued two en banc decisions, including one decision confirming discussing the use of the phrase “consisting essentially of” in patent claims and patent eligibility of mechanical inventions.

Following on the heels of the Supreme Court’s 2017 TC Heartland v. Kraft Foods decision addressing patent venue, the Federal Circuit addressed patent venue in Hatch-Waxman litigation. The court explained that for the purposes of determining venue, infringement occurs only in judicial districts where actions related to the submission of an abbreviated new drug application (ANDA) occur, and not in all locations where future distribution of the generic products specified in the ANDA is contemplated. This ruling may have far-reaching consequences, including the ability for ANDA defendants to effectively control venue for litigation.

Patents

  1. § 101 Decisions in 2020
  2. 2020 at the Supreme Court
  3. Arthrex Decision
  4. En Banc at the Federal Circuit – Two Contentious Denials
  5. The Federal Circuit Limits Venue for Hatch-Waxman Litigation

2021 Outlook

The Supreme Court is set to hear at least two patent cases and one copyright case this term. In The United States of America v. Arthrex, Inc., the Court will consider whether PTAB judges are unconstitutionally appointed and the other addressing whether assignor estoppel and in Minerva Surgical, Inc. v. Hologic, Inc., et al., the Court will consider whether the doctrine of assignor estoppel bars an assignor from asserting invalidity of an assigned patent in district court. [...]

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Patent Owner’s Disavowal of Appeal from District Court’s Noninfringement Judgment Moots IPR Appeal

Addressing the standard for mootness in inter partes review (IPR) proceedings following a district court noninfringement judgment, the US Court of Appeals for the Federal Circuit held that a petitioner’s IPR appeal was moot after the patent owner decided not to appeal the final judgment of noninfringement. ABS Global, Inc. v. Cytonome/ST, LLC, Case No. 19-2051 (Fed. Cir., Jan. 6, 2021) (Stoll, J.) (Prost, C.J., dissenting in part).

In June 2017, Cytonome/ST filed a complaint against ABS asserting infringement of six patents, including the patent of interest in this case. ABS filed a petition for IPR of all claims of the patent. In April 2019, the Patent Trial and Appeal Board (PTAB, the Board) issued its final written decision invalidating certain claims of the patent. Two weeks later, the district court granted ABS partial summary judgment, holding that the accused products did not infringe any of the asserted patent’s claims. In June 2019, ABS appealed the PTAB’s final written decision. In a briefing before the Federal Circuit, Cytonome/ST’s counsel filed an affidavit stating that Cytonome/ST “has elected not to pursue an appeal of the district court’s finding of non-infringement as to the patent and hereby disclaims such an appeal.” In June 2020, the district court entered final judgment, including as to non-infringement of the patent.

The Federal Circuit dismissed ABS’ appeal of the PTAB’s final written decision on the ground that the appeal was moot in view of the district court’s non-infringement judgment. The Court characterized the question as one under the voluntary-cessation doctrine. In the context of intellectual property infringement cases, the voluntary-cessation doctrine requires the property owner claiming mootness to prove that the “allegedly wrongful behavior could not reasonably be expected to recur,” i.e., that it will not assert the intellectual property right against the same accused products again. If it does, the burden shifts to the accused infringer to show that it “engages in or has sufficiently concrete plans to engage in activities” that would not be covered by the property owner’s non-assertion decision.

Applying the doctrine, the Federal Circuit concluded that Cytonome/ST could not reasonably be expected to assert infringement of the patent against ABS because ABS had already secured a district court judgment that the accused products do not infringe and Cytonome/ST disclaimed any appeal of the non-infringement judgment. In effect, ABS was insulated from liability for infringement, including for future infringement for products that are “essentially the same” as ABS’ currently accused products pursuant to the Kessler doctrine. Further, the Court found that ABS had not demonstrated it could reasonably expect Cytonome/ST to sue it for infringement of the patent in the future as ABS had not shown it had current or concrete future plans to engage in activities not covered by Cytonome/ST’s disavowal: “Cytonome’s disavowal of its right to appeal the summary judgment of noninfringement ‘estops Cytonome from asserting liability against ABS for infringement of the…patent claims in connection with the accused products, thereby allowing ABS to make, use, and sell those products [...]

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Supreme Court to Consider Doctrine of Assignor Estoppel in Patent Cases

The Supreme Court of the United States agreed to review assignor estoppel in patent cases. Minerva Surgical, Inc. v. Hologic, Inc., et al., Case No. 20-440 (Supr. Ct. Jan. 8, 2021) (certiorari granted). The question presented is:

Whether a defendant in a patent infringement action who assigned the patent, or is in privity with an assignor of the patent, may have a defense of invalidity heard on the merits.

Csaba Truckai is the inventor of two patents relating to endometrial ablation that were ultimately acquired by Hologic. Truckai later founded Minerva and developed a system that competed with Hologic’s system. The district court ruled that Minerva could not challenge the validity of the patents because Truckai was barred by assignor estoppel from attacking his own patents. A jury found that Minerva infringed both patents and awarded Hologic more than $4.7 million. On appeal, the US Court of Appeals for the Federal Circuit affirmed, confirming that assignor estoppel bars an assignor from asserting invalidity of an assigned patent in district court, and “declined Minerva’s invitation to ‘abandon the doctrine’ of assignor estoppel entirely.”




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New or Not, Object-Oriented Simulation Patent Ineligible Under § 101

The US Court of Appeals for the Federal Circuit affirmed a district court’s pleadings-stage determination that patent claims directed to an object-oriented simulation were subject matter ineligible under 35 USC § 101. Simio, LLC v. FlexSim Software Prod., Inc., Case No. 20-1171 (Fed. Cir. Dec 29, 2020) (Prost, C.J.).

Simio filed suit against FlexSim for infringement of patent claims directed to object-oriented simulations in which one instance of an object may have behaviors assigned to it without changing the generic object’s definition. FlexSim moved to dismiss the complaint under Fed. R. of Civ. P.12(b)(6), arguing that the patent was invalid under 35 USC § 101. The district court granted FlexSim’s motion to dismiss, finding that the asserted claims were directed to the ineligible abstract idea of substituting text-based coding with graphical processing and that FlexSim properly showed there was no inventive concept or alteration sufficient to make the system patent-eligible. Simio appealed.

The Federal Circuit reviewed the dismissal order and its underlying patent eligibility conclusions de novo. Under the two-step Alice/Mayo framework, the Court affirmed. Considering the first step of the Alice/Mayo framework, the Court agreed that the asserted claims were “directed to the abstract idea of using graphics instead of programming to create object-oriented simulations.” The Court rejected Simio’s argument that the “executable process to add a new behavior to an object instance” improved the functionality of the computer on which it ran, concluding that no improvement was made to the computer and that the claim limitation did not change the claim’s “character as a whole.” As to step two of the Alice/Mayo framework, whether the claim limited the abstract idea to an inventive concept, the Federal Circuit concluded that, while the claim may be directed to a new idea, it is still an abstract one lacking any inventive concept or application of the idea. The Court affirmed the district court’s dismissal.

The Federal Circuit next addressed whether the district court erred in denying Simio’s motion for leave to amend its complaint. The Court concluded that, after disregarding conclusory statements, Simio’s amended complaint just repackaged the same assertions of non-abstractness as the original complaint. Citing its holding in ShoppersChoice.com (IP Update, May 2020), the Court also rejected Simio’s argument that the district court should have conducted claim construction before determining eligibility. In ShoppersChoice.com, the Court held that pleadings-stage patent eligibility decisions may be proper when the patentee does not explain how a term’s construction could affect the analysis.

Finally, the Federal Circuit raised its own independent reasoning for denying Simio’s motion for leave to amend, explaining that it “may affirm on any grounds for which there is a record sufficient to permit conclusions of law, even grounds not relied upon by the district court.” The Court found that Simio failed to show good cause for seeking leave to amend after the scheduling order’s deadline. Namely, Simio’s amended complaint contained no facts that could not have been alleged before the deadline. Nor did Simio demonstrate any relevant [...]

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US Courts Can Compel Parties to Transfer Ownership of Foreign Patents

Addressing a district court decision agreeing to transfer ownership of certain US patents, but declining to do likewise for the related foreign patents, the US Court of Appeals for the Federal Circuit explained that US courts have authority to compel litigants before them to transfer ownership of their patents and held that ownership of the foreign patents should have been transferred as well. SiOnyx LLC v. Hamamatsu Photonics K.K., Case Nos. 19-2359, 20-1217 (Fed. Cir. Dec. 7, 2020) (Lourie, J.).

In 1998, a professor at Harvard discovered a process for creating black silicon with unique properties and launched a company, SiOnyx, to commercialize the invention. SiOnyx eventually met with Hamamatsu, a manufacturer of silicon-based photodetector devices, and entered into a nondisclosure agreement (NDA) to share confidential information to explore a potential joint venture. SiOnyx provided information to Hamamatsu under the NDA, but the joint venture plans never came to fruition, and Hamamatsu allowed the agreement to lapse. A short time later, Hamamatsu began marketing photodetector devices using black silicon and applied for foreign patents covering its products, along with related US patents. SiOnyx sued Hamamatsu for breach of contract, infringement of a SiOnyx patent and for ownership of Hamamatsu’s patents.

The case ultimately went to trial and led to a jury verdict in SiOnyx’s favor on breach of contract and infringement. The jury also found that one of SiOnyx’s employees had contributed to the inventions claimed by Hamamatsu’s patents. Based on that inventorship finding, the district court transferred sole ownership of the US patents to SiOnyx pursuant to an NDA provision retaining intellectual property rights for confidential information shared under the agreement. The district court also treated the ownership transfer as an equitable remedy in view of Hamamatsu’s breach of the agreement. However, the district court declined to transfer ownership of the foreign patents because it questioned its authority to do so. Both parties appealed.

On appeal, the Federal Circuit first disposed of most of the appellate issues as being resolved by the jury verdict. Regarding ownership of the patents, Hamamatsu argued that the jury finding of co-inventorship by SiOnyx’s employee, rather than sole inventorship, implied that Hamamatsu employees also contributed to the invention and thus warranted partial ownership. The Court rejected this argument because it found that Hamamatsu had not shown that its contribution was derived from confidential information shared under the NDA and thus did not trigger any ownership rights under the agreement. The Federal Circuit also reasoned that Hamamatsu’s inventive contribution would not bar the equitable relief imposed by the district court. As for the foreign patents, the Court agreed with SiOnyx that the same grounds that led to transfer of the US patents also warranted transfer of the foreign patents, and reiterated that US courts have authority to compel the parties properly before them to transfer ownership of their patents.




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Printed Matter Is Patentable If It’s Functional, Not Just Communicative

In a tour de force of issues related to the printed matter doctrine, the US Court of Appeals for the Federal Circuit reversed various rulings that the patents-in-suit were not infringed, not willfully infringed and invalid as directed to printed matter. Instead, the Court held that there was substantial evidence in the record to support a jury finding of infringement and willfulness, and that the asserted claims were not directed solely to printed matter and thus were patent eligible under 35 USC § 101 (thereby raising a genuine dispute of material fact that precludes summary judgment as to anticipation). C R Bard Inc. v. AngioDynamics, Inc., Case Nos. 19-1756, -1934 (Fed. Cir. Nov. 10, 2020) (Reyna, J.)

This dispute began when Bard sued AngioDynamics for infringing three patents directed to identifying a vascular access port that is suitable for power injection, which is a medical procedure requiring injecting fluids into a patient at a high pressure and flow rate. Generally, the identification was accomplished by certain markings on the vascular access port that can be detected during an x-ray scan.

Prior to trial, AngioDynamics moved for summary judgment on patent eligibility, novelty and enablement. This summary judgment motion was initially denied, but the district court sought a report and recommendation prior to trial regarding whether certain limitations relating to radiographic marker images were entitled to patentable weight under the printed matter doctrine. The magistrate judge concluded that the limitations were not entitled to patentable weight, and the district court adopted the recommendation. At trial and at the end of Bard’s case-in-chief, AngioDynamics moved for judgment as a matter of law (JMOL) on non-infringement and no willfulness. Ultimately, the district court terminated the trial and granted AngioDynamics’ JMOL motion for non-infringement and no willfulness. The district court further held that the claims were invalid because they were directed to printed matter and were not inventive. Bard appealed, challenging each of the district court’s findings.

In reversing the summary judgment of no infringement, the Federal Circuit explained that Bard’s expert’s reliance on an incorrect understanding of the district court’s claim construction was alone insufficient to grant judgment as a matter of law. Instead, the expert’s misunderstanding went to credibility, and the Court found the record reflected that the expert properly testified that the various claim elements were met under the proper claim constructions. The Court further explained that Bard did not have an affirmative duty to test AngioDynamics products, but rather was entitled to rely on AngioDynamics’ representations to the US Food and Drug Administration and to its customers. With regard to induced infringement, the Court explained that if an alleged infringer instructs its users to use the product in an infringing way, there is sufficient evidence for a jury to find infringement. Because the district count found no inducement based on its erroneous summary judgment of no infringement, that ruling was similarly reversed.

The Federal Circuit also reversed the district court on its summary judgment of no willfulness, concluding that Bard [...]

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PTO Seeks Comments on Proposed Rulemaking for Denying Patent Reviews

The US Patent and Trademark Office (PTO) requested public comments on considerations for instituting trials under the Leahy-Smith America Invents Act (AIA). Comments are due by November 19, 2020.

Patent practitioners have grown accustomed to reviewing the PTO Patent Trial and Appeal Board (Board) administrative guide, precedential or informative opinions, and other published filings and decisions to discern best practices for filing petitions for and defending against inter partes review, post-grant review, covered business method and derivation proceedings before the Board. For example, the latest Board Consolidated Trial Practice Guide (Nov. 2019) (CTPG) is available here. The PTO is considering codifying or modifying its current policies and practices through formal rulemaking and wishes to gather public comments on its current approach and other approaches suggested by stakeholders.

PTO policies and Board decisions such as General Plastic, Valve Corp. I, Valve Corp. II, NHK Spring and Fintiv set forth factors for analyzing whether to institute an AIA proceeding (and particularly a follow-on or serial petition) or issue a discretionary denial due to the timeline for parallel district court proceedings. Many of these policies and cases are also discussed in the CTPG. The PTO already has received input from stakeholders on these policies that expand on the PTO director’s discretionary authority to institute an AIA trial. Most stakeholder comments suggested that the case-specific analysis outlined in precedential opinions and the CTPG achieves the appropriate balance and reduces gamesmanship—for example, by ensuring that AIA proceedings do not create excessive costs and uncertainty for the patent owner or the system, while allowing meritorious challenges to patents to be heard. However, some stakeholders have proposed that the PTO adopt brightline rules, regardless of the case-specific circumstances, to:

  • Use its discretion to preclude claims from being subject to more than one AIA proceeding
  • Permit more than one AIA proceeding only if the follow-on petitioner is unrelated to the prior petitioner
  • Place no limits on the number of petitions that can be filed or the number of AIA trials that can be instituted against the claims of a patent, so long as the petition complies with statutory timing requirements and the institution threshold of showing that at least one claim of the patent is unpatentable
  • Preclude institution of an AIA trial against challenged claims if the patent owner opposes institution and a related district court or US International Trade Commission (ITC) action (in which any of the challenged claims are or have been asserted against the petitioner, the petitioner’s real-party-in-interest or a privy of the petitioner) is unlikely to be stayed
  • Eliminate any consideration of the status of any district court or ITC actions involving the challenged patent, so long as the petition complies with statutory timing requirements and the institution threshold.

These contrasting views prompted the PTO to issue a request for comments on the factors that should be considered as part of a balanced assessment of the relevant circumstances when exercising its discretion to institute an AIA trial. The PTO [...]

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Only Human: Broadest Reasonable Interpretation Standard Applies to Intentionally Expired Patent

Affirming an invalidity finding by the Patent and Trial Appeal Board (PTAB), the US Court of Appeals for the Federal Circuit found that the claims of the now-expired patent should be construed under the broadest reasonable interpretation (BRI) standard, and not under the Phillips standard, because the patent owner intentionally gave up the remainder of the patent term only after the appeal was fully briefed. Immunex Corp. v. Sanofi-Aventis U.S. LLC, Case Nos. 19-1749, -1777 (Fed. Cir. Oct. 13, 2020) (Prost, C.J.).

Immunex owns a patent directed to human antibodies that inhabit certain receptors to treat inflammatory diseases such as arthritis. After being sued for infringement, Sanofi and Regeneron (collectively, Sanofi) requested inter partes review (IPR) of the patent, which the PTAB instituted. Based on the IPR filing date and because the patent was unexpired during the pendency of the IPR proceeding, the PTAB used the BRI standard to construe various claim terms. Had the patent been expired, the PTAB would have used the more stringent Phillips standard to construe the claims. Ultimately, the PTAB found all of the challenged claims unpatentable. Immunex appealed.

After appellate briefing was complete, Immunex filed a terminal disclaimer of its patent. The US Patent and Trademark Office accepted the terminal disclaimer, and as a result the patent term expired approximately two months before oral argument. Immunex then filed a citation of supplemental authority informing the Federal Circuit of the terminal disclaimer and asking the Court to change the applicable claim construction standard from BRI to Phillips.

The Federal Circuit found that the application of the BRI standard to Immunex’s patent was appropriate. Although the PTAB currently applies the Phillips claim construction standard in all newly filed IPRs, at the time that Sanofi filed its IPRs, the PTAB applied the Phillips standard only to expired patents. For unexpired patents, it applied the BRI standard. The Court noted that the use of the Phillips standard in cases where the patent expired during the appellate process should not be an absolute, particularly when the patent term expired at an unexpected early date, such as through the filing of a terminal disclaimer.

The Federal Circuit further affirmed the PTAB’s claim construction under the BRI standard and the invalidity finding predicated on that claim construction. The issue on appeal was whether a “human antibody” must be entirely human (as asserted by Immunex) or whether it may also be “partially human,” including “humanized” (as asserted by Sanofi and construed by the PTAB). The Court agreed with the PTAB and found that the patent’s specification supported the conclusion that the BRI of “human antibody” “includes both fully human and partially human antibodies.” The Court also found that “human antibodies” in the context of the patent-in-suit is a broad category that encompasses both partially and completely human antibodies. The Court therefore affirmed the PTAB’s finding.

The Federal Circuit also commented on the PTAB’s departure from an earlier claim construction ruling by a district court in which “human” was construed to mean “fully [...]

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