Monthly Archives: December 2010

U.S. Supreme Court Affirms Ninth Circuit Ruling Regarding “First Sale Doctrine” and Foreign Manufactured Products

by: Kelly A. Williams, a partner at Picadio Sneath Miller & Norton, P.C.

In Costco Wholesale Corp. v. Omega, S.A., the U.S. Supreme Court was asked to decide the following question presented:

Under the Copyright Act’s first-sale doctrine, 17 U.S.C. § l09(a), the owner of any particular copy “lawfully made under this title” may resell that good without the authority of the copyright holder. In Quality King Distribs., Inc. v. L’Anza Research Int’l, Inc., 523 U.S. 135, 138 (1998), this Court posed the question presented as “whether the ‘first sale’ doctrine endorsed in § 109(a) is applicable to imported copies.” In the decision below, the Ninth Circuit held that Quality King (which answered that question affirmatively) is limited to its facts, which involved goods manufactured in the United States, sold abroad, and then re-imported. The question presented here is: Whether the Ninth Circuit correctly held that the first-sale doctrine does not apply to imported goods manufactured abroad.

On December 13, 2010, the U.S. Supreme Court affirmed the judgment of the Ninth Circuit by an equally divided Court.  Costco Wholesale Corp. v. Omega, S.A., No. 08-1423, 562 U.S. _____ (Dec. 13, 2010).

Briefly, the evidence below showed that Omega manufactured watches in Switzerland, bearing a design registered in the U.S. Copyright office.  Omega first sold the watches to authorized distributors overseas.  Unidentified third parties eventually purchased the watches and sold them to a New York company, ENE Limited, which in turn sold them to Costco.  Costco then sold the watches to consumers in California.  Omega did not authorize the importation of the watches into the U.S. or the sales made by Costco.

Omega filed a lawsuit alleging that Costco’s acquisition and sale constituted copyright infringement under 17 U.S.C. §§ 106(3) and 602(a).  Costco defended the suit based upon the “first sale doctrine” which provides that once a copyright owner consents to the sale of particular copies of his work, he may not thereafter exercise the distribution right with respect to those copies.  Omega countered that the first sale doctrine did not apply because the watches bearing the copyrighted design were manufactured and first sold oversees.  Costco conceded that Omega’s position was consistent with Ninth Circuit precedent but argued that this precedence had been overruled by the U.S. Supreme Court in Quality King Distribs., Inc. v. L’anza Res. Int’l, Inc., 523 U.S. 135, 118 S. Ct. 1125 (1998).  The Ninth Circuit disagreed with Costco on the grounds that Quality King was factually distinguishable.  Moreover, the Ninth Circuit concluded that to permit the application of the first sale doctrine to foreign manufactured items would result in the extraterritorial application of U.S. laws, which is prohibited unless the contrary is clearly indicated by statute, which it was not here.  Further, the extraterritorial application of U.S. laws in the area of intellectual property is especially limited.  Consequently, the Ninth Circuit reversed the trial court that had found in favor of Costco on summary judgment and remanded for further proceedings.  The Ninth Circuit’s entire opinion can be found at Omega S.A. v. Costco Wholesale Corp., 541 F.3d 982 (9th Cir. Sept. 3, 2008).

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Federal Courts to Move to PDF/A for CM/ECF Filings

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

Federal court practitioner are now well-familiar with the CM/ECF, which allows parties to file documents in a PDF format on-line rather than hand-filing them with the Clerk of Court. In an effort to improve its archiving and preservation of its records and to address concerns over new features that have been incorporated into the PDF format, federal courts will require filers to submit documents in the PDF/A format. The courts have not all set a timeline for implementing these changes, but the Western District of Pennsylvania will require all uploads to be in this format after January 1, 2012.

PDF/A is an International Standards Organization (ISO) approved version of the popular Adobe PDF format designed for archival purposes. It is a self-contained file, which means that it does not rely on external media players or hyperlinks outside of the documents. In addition, it embeds all of the fonts used in the document inside the file, so the recipient need not have any of the fonts installed on his or her computer. It also prevents security measures of any kind (such as passwords).  It appears that the federal courts will be using the minimal PDF/A-1b “flavor” of PDF/A, rather than the full PDF/A-1a “flavor,” which is more exacting.

As the PDF format has evolved, it has incorporated some new features that raised concerns, such as the ability to monitor when a document is read and the ability to incorporate active software inside the file. In theory, by moving to the PDF/A format, electronically-filed documents will be more accessible in the future and less dependent on technologies or features that may become unsupported.

Federal courts currently will accept PDF/A files, but do not yet require them. As practitioners are preparing for the transition to only PDF/A files, they should be aware of a number of changes that will result from this shift:

  1. Because all of the fonts will be embedded into the file, file sizes will be larger. In addition, some specialized fonts will not allow programs to embed them in the PDF/A file or require an additional license to do so. Use of these fonts will be problematic and may have to be avoided.
  2. Hyperlinking to webpages, judicial decisions, and other hypermedia is not possible because the file must be self-contained. Content rich briefs and exhibits will be more difficult to create, and, in particular, one will have to be careful in creating exhibits that contain these items (such as copies of webpages or electronically-downloaded caselaw). While some courts may allow exceptions to this limitation, one should not count on regularly being able to obtain these.
  3. Passwords and other security features are not permitted. The purpose of switching to PDF/A is to make the files as accessible as possible for as long as possible. Passwords and other security measures interfere with that goal.
  4. PDF/A requires the presence of certain meta-data to verify conformance with the standard. For firms with systems that automatically strip meta-data, care will have to be taken so as not to render PDF/A files non-conforming in the process.

For further information, you can see:

  • Federal Court announcement of the change
  • Adobe Acrobat for Legal Professionals blog posts on this topic 1, 2, 3, 4
  • ISO 19005-1:2005 FAQ describing the standard (downloads FAQ)
  • PDF/A compliance organization FAQ

Update: See this later post for additional information on the PDF/A transition.

Teva Pharm. Indus. Ltd. v. AstraZeneca Pharm. LP — Court Grants Motion for Summary Judgment Invalidating Claims of Patent

by: Joseph Carnicella, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

In Teva Pharmaceutical Industries Ltd. v. AstraZeneca Pharmaceuticals LP, et al., No. 08cv4786, 2010 U.S. Dist. LEXIS 112597 (E.D. Pa. Oct. 20, 2010) (opinion by J. Yohn), Plaintiff Teva Pharmaceutical Industries Ltd. (“Teva”) filed a patent infringement suit against AstraZeneca Pharmaceuticals LP and IPR Pharmaceuticals, Inc. (collectively “AstraZeneca”), alleging that AstraZeneca’s CRESTOR® prescription drug products infringed certain claims of U.S. Patent No. RE39,502 (“the ‘502 Patent”).  AstraZeneca moved for summary judgment on the ground that the ‘502 Patent was invalid due to prior invention pursuant to 35 U.S.C. § 102(g)(2).

CRESTOR® is a prescription drug belonging to a group of drugs called statins that are used to treat high cholesterol.  AstraZeneca began selling the drug after the FDA approved a New Drug Application in August 2003.  However, in early 1999, the researchers developed the formulations for all dosage strengths of the drug and began development of the commercial products (referred to internally as rosuvastatin sales formulations).  In mid 1999, AstraZeneca manufactured numerous batches of 2.5 mg and 5.0 mg sales formulation tablets, which contained the same ingredients as the commercial CRESTOR® tablet cores.  In the late summer of 1999, a researcher gave a presentation on the sales formulation tablet cores, which consisted then of the same ingredients and amounts that exist in the current commercial products.  In the fall of 1999, AstraZeneca manufactured a batch of coated tablets and later submitted the records from the batch to the FDA as part of the New Drug Application.  On January 26, 2000, a patent application was filed in Great Britain on behalf of AstraZeneca, but eventually the application was terminated.  On August 4, 2000, AstraZeneca filed a patent application in the United States, which issued as U.S. Patent No. 6,316,460 (“the ‘460 Patent”).

Prior to December 1, 1999, Teva began researching certain stabilizing formulations that contained a certain statin drug called pravastatin.  On December 1, 1999, Teva performed stability tests on a pharmaceutical formulation containing pravastatin and confirmed that the formulation was exceptionally stable despite other traditional stabilizers being used in the formulation.  On April 10, 2000, Teva filed a provisional patent application disclosing the invention.  On April 9, 2001, Teva filed a patent application regarding this invention, which issued as U.S. Patent No. 6,558,659 (“the ‘659 Patent”) on May 6, 2003.  Teva filed an application for reissue of the ‘659 Patent on March 17, 2005, which reissued as the ‘502 Patent on March 6, 2007.

Pursuant to 35 U.S.C. § 102(g)(2), a person shall be entitled to a patent unless . . . before such person’s invention thereof, the invention was made in this country by another inventor who had not abandoned, suppressed, or concealed it.  In determining priority of invention under this subsection, there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other.  The courts have held that conception is the formation, in the mind of the inventor, of a definite and permanent idea of the complete and operative invention and must encompass all limitations of the claimed invention, and is complete only when the idea is so clearly defined in the inventor’s mind that only ordinary skill would be necessary to reduce the invention to practice without extensive research or experimentation.  Furthermore, the courts have held that an actual reduction to practice is established when the inventor demonstrates that s/he constructed an embodiment or performed a process that met all the limitations of the allegedly infringed patent, and s/he determined that the invention would work for its intended purpose.

AstraZeneca argued that, if the accused products infringe as alleged by Teva, then the asserted claims of the ‘502 Patent were invalid because AstraZeneca conceived of and reduced to practice the accused products prior to when Teva invented its subject matter covered by the ‘502 Patent.  As a threshold matter, the court determined that there was no genuine issue of material fact that AstraZeneca arrived at and manufactured the product formulations before Teva conceived of and reduced to practice the subject matter of the ‘502 Patent.  Also, the court agreed that AstraZeneca was able to concede Teva’s allegations of infringement, for purposes of summary judgment, in order to satisfy its burden that its earlier-made CRESTOR® products met all the limitations of the asserted claims of the ‘502 Patent.

Teva challenged AstraZeneca’s argument by claiming that AstraZeneca failed to show prior invention of the subject matter because there was no evidence that AstraZeneca appreciated that a certain compound in CRESTOR® contributed to the overall stability of the formulation.  Teva’s expert stated that the use of certain compounds to stabilize the overall formulations was not disclosed in the patent application filed in Great Britain, the ’460 Patent or the New Drug Application; however, he acknowledged that the compounds were disclosed in these documents for uses other than stabilization.  AstraZeneca argued that it was not necessary to appreciate how exactly the allegedly infringing formulations achieved stability in order to establish priority of invention under 35 U.S.C. § 102(g)(2) and relied on Federal Circuit cases that have held that a reference may anticipate even when the relevant properties of the thing disclosed were not appreciated at the time.  The court concluded that the contribution of the compound to the stability of the formulations as discovered by Teva was an inherent property and that such an appreciation was not required by AstraZeneca.

Finally, the court concluded that AstraZeneca did not abandon, suppress or conceal its earlier-developed CRESTOR® formulations.  AstraZeneca avoided the disqualifying effects of § 102(g) by filing the patent applications, submitting the New Drug Application and marketing CRESTOR® commercially in the United States after receiving FDA approval all in a timely manner.

Medical Mutual of Ohio v. GlaxoSmithKline PLC — Court Denies Renewed Motion for Summary Judgment

by: Joseph Carnicella, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.

In Wellbutrin SR Antitrust Litigation; Medical Mutual of Ohio, Inc. v. GlaxoSmithKline PLC, et al., Nos. 04-5525, 05-396, 2010 U.S. Dist. LEXIS 90156 (E.D. Pa. Aug. 31, 2010) (opinion by J. Stengel), GlaxoSmithKline PLC, et al. (“GSK”) filed a renewed motion for summary judgment arguing that an entire lawsuit cannot be objectively baseless if a “non-sham” claim is asserted with a “sham” claim together in the same lawsuit.  The filing of the renewed motion was prompted by a decision from the court on March 31, 2010, when the court found that GSK had probable cause to file suit alleging infringement of the ‘994 Patent (the “non-sham” claim) but that a genuine issue of material fact precluded a finding that GSK also had probable cause to file suit alleging infringement of the ‘798 Patent (the “sham” claim).

By way of background, the issues relating to this case began in July 2000, when Eon, a generic drug manufacturer, submitted an abbreviated new drug application for generic Wellbutrin SR, and in the application, Eon stated that it had not infringed the ‘798 Patent.  On November 29, 2000, GSK filed suit against Eon alleging infringement of the ‘798 and ‘994 Patents, which triggered a 30-month stay precluding Eon from marketing its generic version of Wellbutrin.  On January 24, 2002, the FDA granted tentative approval to the generic Wellbutrin, which meant that the FDA would have granted approval for marketing the drug but for the 30-month stay.  On August 13, 2002, the court denied Eon’s motion for summary judgment on the ‘798 Patent and granted Eon’s motion for summary judgment on the ‘994 Patent.  GSK eventually settled its ‘798 infringement claim against Eon.  In November 2003, after the 30-month stay expired, Eon received FDA approval for the generic Wellbutrin; however, GSK obtained a temporary restraining order and preliminary injunction preventing Eon from marketing the drug before the trial on the ‘798 claim.  In January 2004, the Federal Circuit stayed the injunction, and Eon began marketing its generic drug.

As part of its argument to support the renewed motion, GSK asserted that, because the court found previously that GSK had a reasonable basis for filing the ‘994 claim and because the ‘994 claim and the ‘798 claim were both included in one lawsuit, the court must find that GSK had a reasonable basis to file the lawsuit.  GSK relied on only a few cases in an attempt to support its overall position.  GSK then directed the court to its own language in the summary judgment opinion and attempted to craft the issue as whether the facts and the law as they were when GSK filed suit against Eon would have given GSK a reasonable expectation of success.  Specifically, GSK argued that because the court already found that GSK had a reasonable expectation of success as to the ‘994 claim at the time the lawsuit was filed, the court must find that any lack of reasonable expectation of success on the ‘798 claims had no bearing on the sham litigation claim.

The court acknowledged that GSK’s argument was novel and creative but ultimately disagreed with GSK.  The court concluded that an argument that the language in the opinion indicated that success on one claim would end Plaintiffs’ suit ignored the underlying facts relating to the opinion.  The summary judgment opinion included language about the facts and the law that was directed to each patent claim, the court issued two separate judgments and the court analyzed GSK’s reasonable expectations of success on each claim, which resulted in two separate conclusions.  In the end, the court agreed with Plaintiffs that a dismissal of the claims would have ignored the fact that the ‘798 claim, in and of itself, was sufficient to cause antitrust damage because that claim resulted in the continuation of GSK’s 30-month protection stay after the ‘994 claim was dismissed on summary judgment.

As an alternative argument, GSK asserted that the damage period should not have included any time prior to the date when the court dismissed the ‘994 Patent claim that was filed against Eon.  The court denied GSK’s motion to limit the damages period and agreed with Plaintiffs that the issue was an issue to be submitted to the jury.