Summer 2013

The U.S. Supreme Court Holds that Synthetic DNA Is Eligible for Patenting (Under the Right Circumstances), but Naturally Occurring DNA Is Not

In, Association for Molecular Pathology v. Myriad Genetics, 569 U.S. ___, Myriad Genetics had discovered two genes (generally speaking, a portion of a DNA strand in a human chromosome) that are effective indicators of heightened risk of cancer. It consequently obtained several patents covering many aspects of this discovery and the way it found to exploit this discovery. In these patents, there were patent claims on the segments of DNA that encode the genes themselves, synthetic replicas of these DNA sequences, and new applications of the information discovered about these genes.

On June 13, 2013, the Supreme Court reviewed some of these patent claims and held that a segment from a strand of naturally occurring DNA is not patent eligible because it is a product of nature and is not made patent eligible merely because it has been isolated. By contrast, complementary DNA (or cDNA for short), which is man-made even though it is constructed from the natural bonding properties of nucleotides using the cell’s naturally occurring mRNA, is patent eligible because it is synthetic.

The Court noted that AMP had not challenged Myriad Genetics patent claims that covered new applications of its information about the two Myriad-discovered genes and that these patent claims were therefore not affected by the Court’s decision.

Law Still Fuzzy on Patentability of Business Methods, By: David B. Sandelands (Originally published in the Los Angeles Daily Journal on June 14, 2013, simultaneously published in the San Francisco Daily Journal on June 14, 2013)

In CLS Bank v. Alice Corp, No. 2011-1301 (2013), the Federal Circuit brought a degree of clarity to the question of when, if ever, methods of doing business are patent eligible subject matter. In order to appreciate the import of CLS Bank, it is useful to review the history of business method patents.

In 1998, the Court of Appeals for the Federal Circuit issued its then landmark State Street Bank v. Signature Financial Group, 149 F.3d 1368 (1998), decision which held that methods of doing business were patent eligible subject matter. Prior to State Street, methods of doing business were deemed abstract ideas—long unpatentable under Federal law. State Street established the principle that a method, implemented on a computer, was eligible for patent protection so long as the method was directed to a practical application (i.e. method of doing business) and produced “a useful, concrete and tangible result.” With the issuance of State Street, the era of business method patents was born. Thousands were applied for—many issued, and are now hotly disputed subjects of litigation.

In the eyes of many however, State Street improperly “opened” the door to the patenting of formerly unpatentable abstract ideas, so long as those ideas could be implemented on a computer and shown to produce a useful result. Implicitly recognizing this fact, the Federal Circuit “shut” the door in its In re Bilski decision of 2008. In In re Bilski, the Federal Circuit dispensed with the “useful, concrete and tangible result test” of State Street in favor of the “machine-or-transformation” test which the Federal Circuit held to be the “sole” test for determining patent subject matter eligibility. The State Street era was over.
For a method to be patent eligible subject matter under the machine-or-transformation test, the method must be: (1) tied to a particular machine specifically devised to carry out the method; or, (2) transform a particular article into a different state or thing. The machine-or-transformation test essentially excludes business methods from being patent eligible subject matter because they typically satisfy neither requirement of the test. Business methods generally don’t satisfy the “particular machine” requirement because they are typically implemented as software that runs on a general purpose computer. Similarly, they don’t satisfy the alternative “transformation” requirement because they don’t transform a particular article into a different state or thing.

In Bilski v. Kappos, 130 S.Ct. 3218 (2010), the Supreme Court reviewed the Federal Circuit’s In re Bilski decision and held that the machine-or-transformation test, while a useful tool to determine whether a particular method is patent eligible subject matter, is not to be the sole test for determining patent eligibility. Per the Supreme Court, methods that do not satisfy the machine-or-transformation test may nevertheless still be patentable. The Supreme Court failed to elaborate on its thinking, however. In holding that the machine-or-transformation test was not the sole test for determining whether subject matter is patent eligible, the Court once again opened the door to at least the possibility of patenting business methods.
After the Supreme Court’s decision in Bilski v. Kappos, the Patent Office and the district courts have struggled with the question of when, if ever, computer-implemented methods may be patent eligible subject matter—rather than merely unpatentable abstract ideas.

In CLS Bank, it was hoped that the Federal Circuit would bring clarity to the present situation. This wish was only partially granted. CLS Bank regarded the validity of an issued patent directed to a computer implemented method of doing business. The district court found the claims of the patent-in-suit to be invalid because they were directed to abstract ideas which could not be converted to patent eligible subject matter merely because they were implemented on a computer. Initially, a three-member panel of the Federal Circuit reversed the district court. Subsequently, the Court, sitting en banc, affirmed the district court’s ruling.
Unfortunately, while ultimately upholding the district court’s finding that all claims of the patent-in-suit were invalid because they were not drawn to patent eligible subject matter, the Federal Circuit’s ten-member en banc panel released seven different decisions in support of their conclusion—none of which garnered majority support. Nevertheless, two general principles appear to run through the justices thinking in CLS Bank. The first is that methods which can be performed mentally, or which are the equivalent of human mental work, are patent ineligible. The second is that using a computer to speed up a method that can be performed in the human mind or with pencil and paper, does not make the method patent eligible. These general principles are likely sufficient to call into question the validity of the bulk of the business method patents issued during the State Street era, many of which are presently the subject of hotly contested

Justices Hit Farmers Hard with Monsanto By: Kelly W. Cunningham (Originally published in the Los Angeles Daily Journal on May 17, 2013, simultaneously published in the San Francisco Daily Journal on May 17, 2013)

The U.S. Supreme Court in Bowman v. Monsanto, No. 11-796 (May 13, 2013) held that patent exhaustion does not permit a farmer (Bowman) to reproduce patented seeds through planting and harvesting without getting permission from the patent holder (Monsanto) and that Bowman “makes” the seeds he harvests.

The Court held that patent exhaustion is no defense for Bowman. The defense of patent exhaustion is limited to the purchased article. The second-generation Roundup-Ready seeds are not covered by the defense because they are not the very seeds/soybeans Bowman had actually purchased.

Then, the court found that Bowman had made, created or constructed the second-generation seeds.
Bowman argued that this created a disconnect between Bowman’s actions and the acts that the patent infringement statute, 35 U.S.C. Section 271(a), prohibits. Specifically, Section 271(a) provides that, “whoever without authority [makes, uses, offers to sell, or sells … or imports] into the United States any patented invention during the term of the patent therefor, infringes the patent.” (Emphasis added). The Supreme Court did not buy Bowman’s so-called “blame the bean” defense, in which Bowman attempted to blame the beans’ ability to self-replicate. According to the court, Bowman [planted] the Roundup-Ready seeds, [tended] and [treated] them ([exploiting] their patented glyphosate resistance), [culled], [harvested], and [saved] them and, as a result, “[controlled] the reproduction” of Monsanto’s patented invention. None of these acts are specifically prohibited by Section 271(a), but the court nevertheless held that these actions constitute patent infringement.

Federal Circuit Rules that Barebones Patent Infringement Complaints are Ok—Form 18 Trumps Iqbal and Twombly

In K-Tech Telecommunications, Inc. v. Time Warner Cable, Inc., (Federal Circuit, April 2013), the Federal Circuit held that the district court applied the incorrect legal standard in granting the defendant’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). The district court, applying the legal standards set forth by the Supreme Court in its Twombly and Iqbal decisions of 2007 and 2009, dismissed plaintiff’s initial complaint for failing to have sufficient factual content. The district court granted Plaintiff leave to file an amended complaint. Plaintiff amended its complaint and defendant again moved to dismiss. The district court again dismissed the complaint, this time with prejudice. The district court dismissed the amended complaint on the same grounds as the initial complaint, i.e. that the complaint failed to state sufficient factual content to comply with the pleading requirements of Twombly and Iqbal. Plaintiff appealed.

On appeal, plaintiff argued that its amended complaint complied with Form 18 (the model form complaint for patent infringement contained in the appendix to the Federal Rules of Civil Procedure) and was therefore a sufficient pleading, immune from attack on the grounds that it contained insufficient facts. Plaintiff argued that the district court erred by focusing on the Supreme Court’s decisions in Twombly, (2007), and Iqbal, (2009), rather than on Form 18.

Few, including the Federal Circuit, would argue that Form 18, which was added to the appendix to Federal Rules long before the Supreme Court’s Twombly and Iqbal decisions, complies with those decisions. The Federal Circuit nevertheless held that Form 18 sets forth the applicable pleading standard for patent infringement cases. According to the Federal Circuit, Form 18 is controlling over Twombly and Iqbal.

For reference Form 18, the model complaint for patent infringement, is remarkably bare-bones and requires only the following:
2. On , United States Letters Patent No. were issued to the plaintiff for an invention in an electric motor. The plaintiff owned the patent throughout the period of the defendant’s infringing acts and still owns the patent.
3. The defendant has infringed and is still infringing the Letters Patent by making, selling, and using electric motors that embody the patented invention, and the defendant will continue to do so unless enjoined by this court.
4. The plaintiff has complied with the statutory requirement of placing a notice of the Letters Patent on all electric motors it manufactures and sells and has given the defendant written notice of the infringement.
Therefore, the plaintiff demands:
(a) a preliminary and final injunction against the continuing infringement;
(b) an accounting for damages; and
(c) interest and costs.

The Federal Circuit’s ruling in K-Tech appears to be squarely at odds with the Supreme Court’s intent to raise the pleading standards for federal court complaints. Therefore, we may expect to see a future decision by the Court or an act by Congress to resolve the conflict between Form 18 and Twombly and Iqbal.

Central District’s Patent Pilot Program Now 18 Months Old

Public Law No. 111-349 established the National Patent Pilot Program and directed the Administrative Office of the U.S. Courts to designate district courts to participate. The Central District of California was one of the designated courts. Six of the court’s 29 justices volunteered to participate in the program, which is now approximately 18 months old. The goal of the pilot program is to develop expertise in patent infringement cases among a core group of judges in each participating district.

Under the Central District’s implementation of the program, new patent cases are still assigned randomly to the district’s judges, just like any other new case. However, all non-program judges now have the option of transferring a patent case to the program within 30 days of filing. Transferred cases are then randomly assigned to the six participating judges according to normal assignment procedures.

From September 2011 through January 2013, approximately 670 patent cases were filed in the Central District. Of those 308, or approximately 45%, were assigned, either directly or by transfer, to the six judges participating in the program. This has resulted in a substantial concentration of cases before the six program judges. Per the justices, this concentration has allowed them to “develop a better understanding of the breadth and nature of patent litigation in the district and to observe the effects of various case management strategies.”

At this time, the Central District has not yet promulgated a set of patent local rules. However, several of the program judges have adopted the Northern District of California’s local patent rules in their standing orders. (In 2001, the Northern District of California became the first district court to promulgate a set of patent local rules. Since that time, approximately 24 other district courts have adopted patent local rules.)
At a recent conference, the participating program judges expressed a belief that the pilot program was proving effective in developing case management procedures to more efficiently handle patent cases. The program judges were quick to note however, that the court remains one of general jurisdiction. At any given time, each program judge, in addition to its patent cases, is handling approximately 300 other civil and criminal cases. Thus, the time that can be allotted to any one case is limited. The justices expressed a belief that attorneys best serve their clients by presenting only their strongest claims or defenses, conducting the litigation in an orderly step-by-step basis, and by avoiding unreasonable claims for damages.

Design Patents — Trap for the Unaware

Cislo & Thomas LLP has been in the vanguard of design patent protection for over 30 years. A design patent protects the outer appearance of an article – and of course it can protect the outer appearance of an internal feature or mechanism of a larger article as well under the right circumstances. Although a design patent is directed to the ornamental outer appearance, it can offer valuable protection when form merges with function. Unless the entire design is dictated by its function, as well as its every design feature, the design may be patented.

On the other hand, the scope of design patents is notoriously narrow, limited to that particular design, and another infringes a patented design only if the patent design and the accused design are so similar that the similarity could induce a purchaser to buy one thinking it is the other. As a result, we sometimes obtain a series of design patents for a client to cover many alternative designs and a diverse assortment of patent scope of protection against potential competitors.

Recently, the Federal Circuit Court of Appeals, in In re Owens, 106 U.S.P.Q. 2d 1248 (Fed. Cir. 2013), shows how careful the patent attorney must be when obtaining this degree of protection for their clients. The Federal Circuit in Owens invalidated a design patent because its priority claim to a parent design patent application was improper. The parent patent claimed the design of a squeeze bottle, disclosing among other features, a flattened surface on two sides in the shape of a oblong pentagon. The continuation design patent sought broader scope of protection, just the flat surface of the upper portion of the pentagon, but the Federal Circuit held that the parent patent had not distinguished this upper portion from the pentagon as a whole.
The moral of the story is that you will want to consult knowledgeable patent attorneys for your design patent needs.

Central District of California—the Largest Federal District—Disposes of Civil Cases the Most Quickly

Statistics compiled by the United States Administrative Office of the Court ( show that the Central District of California remains the nation’s largest district court by most measures. The Central District spans Los Angeles, Orange, Riverside, San Bernardino, Ventura, San Louis Obispo and Santa Barbara counties which are home to approximately 19 million people, which makes the Central District of California the largest judicial district in the country by population. Not surprisingly, the Central District is also the largest district in terms of case filings accounting for 15,739 civil filings in 2012, or 5.6% of the total civil cases filed in the country last year.

The Central District of California, despite its size, appears to be one of the more efficient judicial districts. For 2012, the Central District had a 5.2 month interval (for civil cases) from case filing to disposition, the shortest in the Ninth Circuit, and well below the national average of 7.8 months. Of the cases filed in the Central district only .9% actually progress to trial which is somewhat less than the national average of 1.1%. For those few cases that do make it to trial, the mean time to trial is 18.6 months which compares favorably with the national average of 23.5 months.

Litigation is time-consuming and costly in any judicial district. The statistics suggest however, that lawsuits in the Central District are likely to be less time consuming and less costly than elsewhere.

Cislo & Thomas LLP at INTA 2013

The International Trademark Association Conference (INTA) is an annual conference drawing Trademark professionals from all over the world. The Conference gives us the chance to connect face to face to our international associates, maintaining as well as making connections that help us to provide the best global intellectual property protection to our clients. Daniel M. Cislo, Esq., Tara Richen, and Tara Doran, (pictured above) attend the INTA conference annually on behalf of Cislo & Thomas LLP. It is always so great to meet the people you email on a daily basis and establish that personal relationship. The INTA Conferences always leaves me with a better understanding of Intellectual Property laws and processes worldwide.

Heal The Bay Beach Cleanup
This past Spring, in an effort to demonstrate good stewardship of our beautiful office location, Cislo & Thomas LLP became a member of the ‘Adopt-A-Beach’ program through Heal the Bay. Our first cleanup (pictured above) took place on April 27, 2013 and we will continue cleaning up Santa Monica Beach throughout the year.

David B. Sandelands, Newsletter Editor