IP UPDATE
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Exploring the latest in intellectual property law
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If the Label Is Skinny Enough – No Inducement Under Hatch-Waxman

by | Dec 14, 2023 |

The US Court of Appeals for the Federal Circuit made explicit what has long been considered implicit based on Warner-Lambert and its progeny, namely, that plaintiffs asserting an induced infringement theory to bar the entry of generic drugs in a Hatch-Waxman suit are subject to higher scrutiny than plaintiffs asserting the same theories outside of the Hatch-Waxman context. H. Lundbeck A/S v. Lupin Ltd., Case No. 22-1194 (Fed. Cir. Dec. 7, 2023) (Dyk, Prost, Hughes, JJ.)

Lundbeck owns the approved new drug application (NDA) for Trintellix®, a drug indicated for the treatment of major depressive disorder (MDD), as well as an expired compound patent for the associated active ingredient vortioxetine. Lundbeck also owns a patent that claims the use of vortioxetine as an antidepressant that can be prescribed in place of a traditional antidepressant to alleviate a patient’s negative sexual side effects, and another patent that claims the use of vortioxetine to treat cognitive impairment symptoms in patients with MDD.

Generic pharmaceutical companies filed abbreviated new drug applications (ANDAs) seeking approval to market generic versions of Trintellix® and asserting that Lundbeck’s unexpired patents listed in its NDA were invalid and would not be infringed by the generic companies. As required by the Hatch-Waxman Act (to prevent the entry of a generic on the market), Lundbeck sued the generic companies. At the district court, the defendants prevailed on the finding of noninfringement but lost on invalidity. Lundbeck appealed.

Lundbeck pressed its induced infringement and contributory infringement theories on appeal. Lundbeck argued that the generics infringed under the plain text of Hatch-Waxman (35 USC 271(e)(2)(A)) because they filed ANDAs seeking approval to market vortioxetine, and that “some uses of vortioxetine—for the treatment of patients that have previously taken other drugs but had to cease or reduce use due to sexually related adverse events and for the treatment of cognitive impairment—are covered by [Lundbeck’s listed] patents; and the labels do not prohibit prescribing vortioxetine for those uses, even though the defendants do not propose to market the drug for those patented uses.” In other words, Lundbeck argued that in terms of its inducement allegation, it made no difference whether a drug would be sold for a use not covered by Lundberg’s NDA-listed patents because the drug could be prescribed for those patented uses.

The Federal Circuit disagreed, explaining that “‘the use’ in § 271(e)(2)(A) refers to the use for which the FDA has granted an NDA” and for which the ANDA was submitted.” The Court emphasized that it is not “an act of infringement under . . . § 271(e)(2)(A) to submit an ANDA for a drug if just any use of that drug were claimed in a patent.” If it were, a brand could “maintain its exclusivity merely by regularly filing a new patent application claiming a narrow method of use not covered by its NDA,” which “would confer substantial additional rights on pioneer drug patent owners that Congress quite clearly did not intend to confer.” As the Court then held, “actions for [...]

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Sound the Alarm: Reasonable Royalty Apportionment Analysis Overlooks “Sleep State”

by | Dec 14, 2023 |

After a jury found infringement of two patents and awarded almost $2.2 billion in damages, the US Court of Appeals for the Federal Circuit reversed the infringement finding for one asserted patent, vacated the damages award for the other asserted patent, and reversed the district court’s refusal to allow the alleged infringer to add a licensing defense. VLSI Technology LLC v. Intel Corporation, Case No. 22-1906 (Fed. Cir. Dec. 4, 2023) (Lourie, Dyk, Taranto, JJ.)

VLSI sued Intel for infringement of two patents. During the litigation, third party Finjan underwent a change in control after which it was controlled by the same parent entity as VLSI. Intel sought to amend its answer to add a licensing defense based on the broad definition of “affiliates” in its license agreement with Finjan, arguing that as a consequence of the change in control Intel was licensed to patents owned by VLSI. The district court denied the motion to amend.

At trial, the jury found literal infringement of one patent and infringement under the doctrine of equivalents (DoE) for the other patent. The jury awarded $2.2 billion in damages. Intel appealed.

The patent that the jury found infringed under the DoE was directed to devices, such as computer processors, having the ability to operate at a variety of frequencies. Depending on the operating conditions, a master device can provide a trigger input to a controller in response to a desired increase in device performance, and the controller can then adjust the clock frequency accordingly. Intel argued that the evidence of equivalents presented to the jury was legally insufficient to support a finding of infringement.

The Federal Circuit agreed and reversed the jury’s finding under the DoE. The Court stressed that for a patent owner to prevail under a DoE assertion, it must provide “particularized testimony and linking argument as to the insubstantiality of the differences between the claimed invention and the accused device.” While VLSI’s proof of equivalence was limitation specific, the testimony provided during the trial was insufficient to explain the “insubstantiality” of the differences between the claims and the Intel products. The Court specifically cited trial testimony by VLSI’s expert, who characterized the differences as “a difference of where an engineer draws the line . . . it’s a design choice.” In its explanation of why the analysis and testimony was insufficient, the Court explained that “[i]t is not enough [] to say that the different functionality-location placements were a ‘design choice.’ . . . VLSI had to prove—with particularized testimony and linking argument—that the elements of the Intel arrangement were substantially the same as the elements of the claimed arrangement. But VLSI offered no meaningful testimony doing so.”

Intel also appealed the damages award based on the patent that was found to be literally infringed. That patent was directed to certain features that provide separate scalable (as opposed to fixed) power supply voltages for both processors and memory devices, depending on the need of the device. VLSI’s expert presented a calculation of damages based [...]

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Delay Is Okay: Final Written Decisions Can Be Issued After Statutory Deadline

by | Nov 30, 2023 | ,

In a matter of first impression, the US Court of Appeals for the Federal Circuit concluded that the Patent Trial & Appeal Board has the authority to issue a final written decision (FWD) in a post-grant review (PGR) proceeding after the statutory deadline has passed. Purdue Pharma L.P. v. Collegium Pharm., Inc., Case No. 22-1482 (Fed. Cir. Nov. 21, 2023) (Dyk, Hughes, Stoll, JJ.)

Purdue owns a patent directed to a pharmaceutical formulation meant to prevent or deter the abuse of opioid analgesics through the use of an aversive agent. On March 13, 2018, Collegium filed a PGR petition asserting that the patent claims were invalid. On September 24, 2019, Purdue filed a notice of bankruptcy and imposition of automatic stay, after which the Board stayed the PGR proceeding. The Board’s one-year deadline to issue an FWD under 35 U.S.C. § 326(a)(11) and 37 C.F.R. § 42.200(c) expired on October 4, 2019. After the bankruptcy court lifted the stay on the PGR proceeding on September 1, 2020, Purdue argued that the Board no longer had the authority to issue an FWD because the 18-month statutory deadline to do so had passed. The Board disagreed and issued an FWD finding the challenged claims unpatentable. Purdue appealed.

Purdue argued that the Board did not have authority to issue an FWD after the deadline established by 35 U.S.C. § 326(a)(11) and 37 C.F.R. § 42.200(c) had passed. Purdue advanced four arguments in favor of its proposed interpretation of § 326(a)(11):

  1. The use of “shall” and “requiring” deprives the Board of the authority to issue an FWD.
  2. The “negative words” of “not later than 1 year” and “by not more than 6 months” indicate a loss of authority.
  3. The statutory language in § 326(a)(11) requires PGR proceedings to be conducted “in accordance with” the Board’s jurisdictional grant in 35 U.S.C. § 6, and therefore the Board’s jurisdiction expires when the deadline in § 326(a)(11) expires.
  4. The exceptions in § 326(a)(11) for “good cause” and “joinder” demonstrate that those are the only limited instances where the Board may issue an FWD after the statutory deadline.

None of Purdue’s arguments persuaded the Federal Circuit. The Court reasoned that § 328(a) plainly requires the issuance of an FWD and that “[h]ad Congress meant to deprive the agency of power in § 326(a)(11), it knew how to do it” vis-à-vis the use of specific language, like the language it used in other sections of the America Invents Act (AIA), such as 35 U.S.C. § 315(b) and 35 U.S.C. § 321(c), both of which specifically deny agency power after a temporal deadline.

The Federal Circuit also considered the legislative history of § 316(a)(11), recognizing that Congress created PGR and inter partes review (IPR) proceedings when enacting the AIA to, among other things, replace the “lengthy and inefficient” reexamination proceeding. The Court reasoned that prohibiting an FWD after the statutory deadline would “force” parties to commence district court litigation—an act contrary to the purpose of the AIA, which [...]

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Wave Goodbye: Arguments Incorporated by Reference Are Waived

by | Nov 30, 2023 |

The US Court of Appeals for the Federal Circuit affirmed the Patent Trial & Appeal Board’s patentability determination, finding that the patent challenger waived an argument it attempted to incorporate by reference to another brief. Medtronic, Inc. v. Teleflex Life Scis. Ltd., Case No. 2022-1721 (Fed. Cir. Nov. 16, 2023) (Lourie, Prost, Chen, JJ.)

Teleflex owns a patent directed to a method for using a guide extension catheter with a guide catheter. Medtronic challenged the patent in two inter partes review (IPR) proceedings, arguing that certain claims were obvious in light of Ressemann and Itou and that another claim was obvious in light of Ressemann, Itou and Kataishi. Teleflex argued that Itou was not prior art because the claimed invention was conceived prior to Itou’s filing date and was either actually reduced to practice before the critical date or diligently pursued until its constructive reduction to practice date. Medtronic did not contest Teleflex’s demonstration of conception but instead challenged Teleflex’s alleged showings of both actual reduction to practice and diligence until constructive reduction to practice.

The Board ultimately found that Itou did not qualify as prior art and that Medtronic therefore had not shown that the challenged claims were unpatentable. One of the issues before the Board was whether in vivo testing was required for actual reduction to practice because the claims at issue were method claims reciting “advancing . . . a guide catheter . . . through a main blood vessel to an ostium of a coronary artery.” The Board ultimately found that no such testing was required, explaining that Medtronic “was unable to identify any legal precedent requiring in vivo performance of a claimed in vivo method to show actual reduction to practice.” According to the Board, actual reduction to practice could “be verified using a physical model that replicates the anatomy in which the method would likewise be performed in vivo.” Medtronic appealed.

Medtronic challenged the Board’s determination regarding constructive reduction to practice, arguing as follows:

In addressing diligence, the Board simply adopted its earlier erroneous diligence analysis in IPR2020-00132. Appx61–62. Therefore, if this Court vacates the Board’s diligence holding in No. 21-2356, it should likewise vacate the Board’s decision here. Appellant’s Br. at 41.

The Federal Circuit explained that it did not vacate the diligence holding in the prior decision, so Medtronic’s condition precedent had not been met. Medtronic nevertheless urged the Court to decide the diligence question. The Court refused, finding that Medtronic improperly incorporated by reference an argument from another brief. The Court explained that it would be fundamentally unfair to allow Medtronic to use incorporation by reference to exceed the word limit on briefs. The Court observed that parties pursuing appeals must make certain strategic decisions concerning what material to include in their opening briefs, and here, Medtronic affirmatively chose not to include developed arguments on diligence. The Court therefore found that Medtronic waived its challenge to the Board’s diligence finding. With the diligence issue waived and conception stipulated, the Court affirmed [...]

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TikTok Makes It Out of West Texas to Sunny Northern California

by | Nov 16, 2023 |

The US Court of Appeals for the Fifth Circuit granted a writ of mandamus ordering the transfer of a case, finding that the district court’s denial of the motion to transfer “was so patently erroneous” that the extreme measure was appropriate. In re TikTok, Inc., Case No. 23-50575 (5th Cir. Oct. 31, 2023) (Smith, Southwick, Wilson, JJ.)

In the underlying case, Beijing Meishe Network Technology Co. sued TikTok in the US District Court for the Western District of Texas, alleging infringement, trade secret misappropriation and false advertising. All claims stemmed from the theory that a former Meishe employee disclosed copyrighted source code for video and audio editing software to TikTok, which TikTok then implemented into its app. Meishe and TikTok are Chinese companies, and both the alleged disclosure and TikTok’s alleged code implementation occurred in China, assisted by TikTok engineers in California. TikTok has no engineers in Texas but does maintain a business office there, although not within the Western District.

TikTok moved under 28 U.S.C. § 1404 to transfer the case to the Northern District of California. The district court took 11 months to rule on the motion, and in the meantime the case continued through discovery. After the district court denied the motion, TikTok petitioned the Fifth Circuit for a writ of mandamus.

The sole issue on mandamus was the propriety of the district court’s refusal to transfer venue. To succeed on a writ of mandamus, a petitioner must satisfy the reviewing court regarding the following questions:

  1. Are there other ways to obtain the desired relief?
  2. Is the reviewing court’s right to issue the writ “clear and indisputable”?
  3. Is the writ appropriate, given the circumstances?

The Fifth Circuit focused on the second question, its right to issue the writ. In the Fifth Circuit, the 2008 en banc In re Volkswagen case mandates an eight-factor test that a district court must consider in deciding a § 1404 transfer motion. No one factor is dispositive, and the Fifth Circuit has cautioned against tallying the yes/no results or denying transfer just because most factors are neutral. Unsurprisingly, in the 15 years since Volkswagen, district courts applying these factors have reached inconsistent results. Even the Fifth Circuit has reached “conflicting outcomes” when reviewing these cases. The Fifth Circuit therefore took the opportunity to address each factor.

The Fifth Circuit found that two factors weighed in favor of transfer:

  • The relative ease of access to sources of proof
  • The cost of attendance of willing witnesses

Regarding ease of access to proof, the Fifth Circuit clarified that factfinders analyze “relative ease of access, not absolute ease of access” to documents and other physical evidence. The district court had determined that this factor was neutral, given that most documentation was electronic. The Fifth Circuit disagreed, explaining that while the source code was electronically stored, it was protected by a high level of security clearance. Only certain TikTok employees based in California and China were able to access the code. Using the relative metric, [...]

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Resorting to Extrinsic Evidence Is Necessary When Intrinsic Evidence Is Muddied

by | Nov 16, 2023 |

The US Court of Appeals for the Federal Circuit determined that the limitation “a pH of 13 or higher” could not be construed using the asserted patents’ intrinsic evidence and therefore remanded to the district court with instructions to consider the extrinsic evidence and its impact on claim construction. Actelion Pharms. Ltd v. Mylan Pharms. Inc., Case No. 22-1889 (Fed. Cir. Nov. 6, 2023) (Reyna, Stoll, Stark, JJ.)

Mylan Pharmaceuticals sought market entry for its generic epoprostenol—a small molecule hypertension drug—via an abbreviated new drug application (ANDA). Mylan certified under Paragraph IV with respect to two Orange Book-listed patents that Actelion Pharmaceuticals owned. Actelion timely asserted both patents and achieved a favorable claim construction for the term “a pH of 13 or higher.” This limitation is central to the pharmaceutical breakthrough that the asserted patents disclose, which is stably solubilizing the otherwise unstable epoprostenol. The asserted patents teach that epoprostenol bulk solutions’ pH should preferably be adjusted to about 12.5 to 13.5. Mylan contended that this language meant the claim should not encompass anything below pH 13 (i.e., leaving only a fraction of the disclosure’s preferred range within the scope of the issued claims). The district court disagreed, adopting Actelion’s position that the limitation encompassed values that “rounded” to pH 13 (i.e., pH 12.5 and above). This prompted a stipulated infringement judgment. Mylan appealed.

The Federal Circuit reviewed the district court’s construction de novo, explaining that the district court’s construction was a ruling as a matter of law because no extrinsic evidence was considered. The Court then examined the claim language, specifications and prosecution histories in turn.

Regarding the claim language, the Federal Circuit rejected the parties’ invitations to acknowledge certain prior decisions as articulating bright-line rules. Instead, the Court appeared to endorse analyzing the intrinsic evidence on a case-by-case basis when construing similar range limitations. For example, the Court explained that “there is no blanket rule that ranges, or specifically open-ended ranges, must foreclose rounding.” The Court also rejected the following rules concerning range precision:

  • Avoiding rounding requires terms of precision, such as “precisely” or “exactly.”
  • The absence of approximation language dictates a precise value.

In contrast, the Federal Circuit signaled that district courts should properly account for a range’s technical implications (or at least ranges concerning the pH scale) even if that means looking to extrinsic evidence.

Regarding the specifications and prosecution histories, the Federal Circuit disagreed with the district court’s finding that both were inconsistent with Mylan’s position that the disputed limitation reflected a higher degree of precision. The Court concluded that there was little to glean from either, finding that the specifications were as clear as “muddied water” and the prosecution histories provided no insight into the relevant pH range—between pH 12 and pH 13.

The Federal Circuit ultimately concluded that this was an instance in which properly construing a claim limitation required the aid of extrinsic evidence, invoking the Supreme Court of the United States’ guidance from Teva v. Sandoz that extrinsic evidence [...]

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Still Exceptional: Fee-Shift Appropriate in View of Noninfringement Stipulation

by | Nov 16, 2023 |

In a split decision, the US Court of Appeals for the Federal Circuit affirmed a district court’s award of more than $5 million in attorneys’ fees, finding that the district court did not abuse its discretion in finding the underlying case “exceptional” under 35 U.S.C. § 285 or in calculating the total fees awarded. In re PersonalWeb Tech., Case No. 21-1858 (Fed. Cir. Nov. 3, 2023) (Reyna, Lourie, JJ.) (Dyk, J., dissenting).

Under 35 U.S.C. § 285, a “court in exceptional cases may award reasonable attorney fees to the prevailing party.” In Octane Fitness (2014), the Supreme Court of the United States held that an exceptional case is “simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated,” and the court considers the totality of the circumstances in making this determination.

PersonalWeb’s litigation positions at issue date back to 2011, when PersonalWeb first asserted five patents against an e-commerce company. After an unfavorable claim construction ruling, PersonalWeb stipulated to dismiss the action, and the district court entered the dismissal with prejudice.

In 2018, PersonalWeb asserted the patents against customers of the e-commerce company. The e-commerce company intervened and filed a new action against PersonalWeb seeking a declaratory judgment to bar the infringement actions against the customers based on the 2011 dismissal. Some of the cases proceeded while others were stayed. The district court granted summary judgment against PersonalWeb on claims directed to two allegedly infringing products for two separate reasons: because of the Kessler doctrine and claim preclusion, and because PersonalWeb conceded that it could not prevail after an unfavorable claim construction order.

The district court also entered an award of attorneys’ fees and costs against PersonalWeb, finding the case to be “exceptional” for the following reasons:

  • The infringement claims were “objectively baseless and not reasonable when brought because they were barred due to a final judgment in the [2011 action].”
  • PersonalWeb frequently changed its infringement positions to overcome the hurdle of the day.
  • PersonalWeb unnecessarily prolonged this litigation after claim construction foreclosed its infringement theories.
  • PersonalWeb’s conduct and positions regarding the customer cases were unreasonable.
  • PersonalWeb submitted declarations that it should have known were inaccurate.

The district court calculated the attorneys’ fees to be more than $5 million and costs to be more than $200,000. PersonalWeb appealed.

PersonalWeb argued that the district court erred in awarding fees and, even if fees were warranted, the court erred in assessing almost $2 million of the $5 million award. The Federal Circuit found that the district court did not abuse its discretion in any of its findings related to the fee grant, agreeing with the district court’s application of the Kessler doctrine. In Kessler, the Supreme Court ruled that after a final judgment of noninfringement, follow-up suits by the same patentee over the same non-infringing product against customers of the party [...]

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See Here: No Standing Based on Vague Future Plans or Adverse Priority Findings

by | Nov 16, 2023 |

The US Court of Appeals for the Federal Circuit dismissed an appeal from a final written decision in an inter partes review (IPR) proceeding, finding that the petitioner lacked standing because it suffered no injury in fact. Allgenesis Biotherapeutics Inc. v. Cloudbreak Therapeutics, LLC, Case No. 22-1706 (Fed. Cir. Nov. 7, 2023) (Moore, Stoll, Cunningham, JJ.)

Allgenesis Biotherapeutics filed an IPR petition challenging a patent owned by Cloudbreak Therapeutics. The challenged patent discloses compositions and methods for treating the eye condition pterygium. During the IPR proceeding, Cloudbreak disclaimed all but two of the claims. The Patent Trial & Appeal Board issued a final written decision finding that Allgenesis failed to show that the remaining two claims were unpatentable. As part of its decision, the Board made a priority decision that a Patent Cooperation Treaty (PCT) application belonging to Allgenesis was not prior art to Cloudbreak’s patent. Allgenesis appealed.

Article III of the US Constitution limits the Federal Circuit’s jurisdiction to adjudication of “cases” or “controversies,” which means the appellant must have (1) suffered an injury in fact (2) that is fairly traceable to the challenged conduct of the defendant and (3) likely to be redressed by a favorable judicial decision.

Allgenesis attempted to establish Article III standing based on two separate arguments. First, Allgenesis argued that it had standing based on potential infringement liability. To support that argument, Allgenesis offered a declaration by its vice president of finance that included information about a Phase II trial completed three years prior and a related 2020 publication. That declaration, however, did not identify any specific plan to conduct a Phase III trial or to seek US Food and Drug Administration (FDA) approval, and instead only contained generic statements that the project was not abandoned. While Allgenesis’s briefing and oral argument included statements that it planned to engage in a Phase III trial, the Federal Circuit determined that there was no record support for this claim. The Court found that the evidence before it did not constitute the necessary concrete plans to convey standing to appeal the final written decision. Allgenesis also attempted to rely on its own failed attempts at seeking a settlement from Cloudbreak, but the Court concluded that this was insufficient to show a substantial risk of infringement.

Allgenesis’s second argument was that the Board’s priority decision created an injury in fact. Allgenesis argued that the Board’s determination about the priority date of Cloudbreak’s patent affected Allgenesis’s patent rights because it would have a preclusive effect on Allgenesis’s pending applications. The Federal Circuit was unpersuaded and explained that collateral estoppel does not attach to a non-appeal priority decision from an IPR decision. To the extent that an examiner did reach the same conclusion as the Board, Allgenesis would be free to appeal that decision.

Practice Note: For Board petitioners seeking to establish standing to appeal unfavorable final written decisions, it is necessary to develop sufficient support to show standing in fact. For life sciences companies working in drug development, declarations [...]

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Status Quo Has Few Defenders at PREVAIL Act Senate Subcommittee Hearing

by and | Nov 16, 2023 | ,

On November 8, 2023, the US Senate Judiciary Subcommittee on Intellectual Property heard testimony from four witnesses on the proposed Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act. Although the PREVAIL Act includes several provisions regarding transparency and independence, its thrust is its dramatic alteration of Patent Trial & Appeal Board post-grant review (PGR) and inter partes review (IPR) proceedings, including their relationship to co-pending district court litigation, with the goal of incentivizing innovation by reducing costs and making such challenges less likely to be successful.

We previously reported on the provisions of the proposed PREVAIL Act when it was introduced. The biggest changes under consideration include the introduction of a standing requirement, a heightened burden of proof from preponderance-of-the-evidence to clear-and-convincing evidence, a stronger estoppel to thwart costly and unnecessary co-pending actions in court and at the Board, and the separation of the Board’s institution and decision-making functions.

Three witnesses spoke in favor of the PREVAIL Act before the subcommittee, emphasizing that the Board failed to live up to the purposes and intentions of the America Invents Act (AIA). These witnesses were Representative Lamar Smith, a co-sponsor of the AIA; Michelle Armond, co-founder of the law firm Armond Wilson LLP and a practitioner before the Board; and Joseph Kiani, founder of Masimo Industries.

Smith testified that Congress enacted the AIA because it recognized the potential for Board proceedings to be abused, and according to Smith, that is exactly what has happened. Each of the three witnesses testified that well-funded litigants have exploited Board procedures to overwhelm small businesses by forcing them into expensive duplicative proceedings in multiple forums. For example, Kiani posited that the Board posed an existential threat to startups, attributing findings of invalidity against his company’s patents to the AIA’s invalidation-friendly procedures.

Armond explained to the subcommittee how the PREVAIL Act would streamline Board proceedings and harmonize them with district court and International Trade Commission (ITC) litigation. According to Armond, in the wake of the AIA, both the Board and district courts have failed to offer uniform standards for deciding whether to stay a proceeding in their forum pending resolution of a parallel proceeding in the other. The PREVAIL Act would resolve this problem by requiring litigants to select only one forum in which they may raise their invalidity arguments. Armond argued that using the same clear-and-convincing-evidence standard in Board review proceedings and other litigation would harmonize the Board with district courts and the ITC by ensuring that different forums reach the same invalidity decision.

Joseph Matal, former US Patent & Trademark Office interim director and acting solicitor, and current principal of Clear IP, LLC, was the lone dissenting witness at the hearing. According to Matal, the PREVAIL Act’s proposal to require a clear-and-convincing-evidence standard in Board review proceedings is misguided because Board judges possess the requisite agency expertise to second-guess patent examination decisions. Additionally, Board judges often have more time to evaluate the patents and more information than the examiner. According to Matal, [...]

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Sorry—No Finality, No Injunction, No Appellate Jurisdiction

by | Nov 9, 2023 |

The US Court of Appeals for the Third Circuit dismissed an appeal from the denial of a motion under the Defend Trade Secrets Act (DTSA) for an ex parte seizure order, explaining that such orders are not final, not effectively injunctive and that the DTSA does not independently provide appellate jurisdiction to review such orders. Janssen Prod., L.P. v. eVenus Pharms. Lab’ys Inc., Case No. 22-2426 (3d Cir. Oct. 17, 2023) (Porter, Freeman, Fisher, JJ.)

In 2015, the US Food & Drug Administration (FDA) approved Janssen’s drug Yondelis—a stable, injectable version of the cancer drug trabectedin—for use in certain cancer patients. Janssen asserts that its data, specifications and methods for manufacturing Yondelis are trade secrets. After Janssen received FDA approval for Yondelis, eVenus sought FDA approval for a generic version of Yondelis. Janssen filed a lawsuit against eVenus (under the Hatch-Waxman Act) for patent infringement. During discovery, Janssen obtained documents that allegedly demonstrated that eVenus misappropriated Janssen’s trade secrets. Janssen then filed the current lawsuit against eVenus seeking relief for eVenus’s alleged trade secret misappropriation under the DTSA.

During discovery, Janssen found that eVenus spoliated evidence. In response, Janssen filed a motion for an ex parte seizure under the DTSA, requesting that the district court order the seizure of eVenus’ network servers and stored data, and the laptops and cell phones of certain eVenus employees and ex-employees. The district court denied Janssen’s ex parte seizure motion. Janssen appealed.

The Third Circuit dismissed the appeal, concluding that it lacked jurisdiction over Janssen’s appeal for two reasons.

First, the Third Circuit found that it lacked appellate jurisdiction because the district court’s denial of Janssen’s ex parte seizure motion was not a final judgment and did not meet any of the limited exceptions to the final judgment rule.

One limited exception to appellate jurisdiction under the final judgment rule is review of a lower court’s refusal to order injunctive relief. However, as the Third Circuit explained, an ex parte seizure order under the DTSA is not effectively injunctive and therefore does not fall under the injunction exception. The Court explained that refusal to grant an ex parte seizure order does not satisfy the first two prongs of the Court’s three-part functional injunction test, which require that an order be “directed to a party” and may be enforced by contempt. Regarding the first prong, the Court noted that DTSA seizure orders are not “directed to a party” because the DTSA requires law enforcement officials—and not a party—to execute any ex parte seizure order. Regarding the second prong, no party can be held in contempt for failing to comply with an order that does not direct it to do anything. Therefore, the district court’s order did not effectively deny an injunction.

Second, the Third Circuit analogized DTSA seizure orders with seizure orders under the Lanham Act in terms of statutory construction. As the Court explained, in the Lanham Act, ex parte seizure provisions are part of its “injunctive relief” section. In contradistinction, Congress did not [...]

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