Month: March 2018

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Legislation Patent Law

The STRONGER Patents Act: The House Receives Its Own Legislation to Protect Our Innovation Economy

U.S. Capitol buildingToday, Representatives Steve Stivers (R-OH) and Bill Foster (D-IL) introduced the Support Technology & Research for Our Nation’s Growth and Economic Resilience (STRONGER) Patents Act of 2018. This important piece of legislation will protect our innovation economy by restoring stable and effective property rights for inventors. This legislation mirrors a bill already introduced in the Senate, which I have previously discussed.

The STRONGER Patents Act accomplishes three key goals to protect innovators. First, the Act will make substantial improvements to post-issuance proceedings in the USPTO to protect patent owners from administrative proceedings run amok. Second, it will confirm the status of patents as property rights, including restoring the ability of patent owners to obtain injunctions as a matter of course. Third, it will eliminate fee diversion from the USPTO, assuring that innovators are obtaining the quality services they are paying for.

First and foremost, the STRONGER Patents Act aims to restore balance to post-issuance review of patents administered by the USPTO’s Patent Trial and Appeal Board (PTAB). The creation of the PTAB was a massive regulatory overreach to correct a perceived problem that could have been better addressed by providing more resources towards initial examination. While the USPTO has long been responsible for issuing patents after a detailed examination, it has recently taken on the role of killing patents the same USPTO previously issued. What the USPTO gives with the one hand, it takes with the other.

Data analyzing PTAB outcomes demonstrates just how dire the situation has become. Coordinated and repetitive challenges to patent validity have made it impossible for patent owners to ever feel confident in the value and enforceability of their property rights. In some cases, more than 20 petitions have been filed on a single patent. Although recent headway has been made to address this issue in the administrative context, it only listed factors to be used when evaluating serial petitions. A more complete statutory solution that prohibits serial petitions except in limited circumstances is necessary to fully protect innovators and provide certainty that these protections will continue.

The kill rate of patents by the PTAB is remarkable. In only 16% of final written decisions at the PTAB does the patent survive unscathed. The actual impact on patent owners is far worse. Disclaimer and settlement are alternate ways a patent owner can lose at the PTAB prior to a final written decision. Thus, the fact that only 4% of petitions result in a final written decision of patentability is more reflective of the burden patent owners faced when dragged into PTAB proceedings.

For these reasons, the PTAB has been known as a “death squad.” This sentiment has been expressed not only by those who are disturbed by the PTAB’s behavior, but also those—such as a former chief judge of the PTAB—who are perpetuating it. The list of specific patents that have been invalidated at the PTAB is mind-boggling, such as an advanced detector for detecting leaks in gas lines.

There are even examples where the PTAB has invalidated a patent that had previously been upheld by the Federal Circuit Court of Appeals. One recent examination further found that there have been at least 58 patents that were upheld in federal district courts that were invalidated in the PTAB on the same statutory grounds. The different results are not mere happenstance but are the result of strategic behavior by petitioners to strategically abuse the procedures of PTAB proceedings.

It has been well known that the procedures have been stacked against patent owners from day one. We and others have noted how broadly construing claims, multiple filings against the same patent by the same challengers, and the inability to amend claims, among other abuses, severely disadvantage patent owners in PTAB proceedings.

With the STRONGER Patents Act, these proceedings will move closer to a fair fight to truly examine patent validity. There are many aspects to this legislation that will improve the PTAB, such as:

  • Harmonizing the claim construction standard with litigation, focusing on the “ordinary and customary meaning” instead of the broadest interpretation a bureaucrat can conceive. This will promote consistent results when patents are challenged, regardless of the forum, by assuring that a patent does not mean different things to different people. Sections 102(a) and 103(a).
  • Confirming the presumption of validity of an issued patent will apply to the PTAB just as it does in litigation. This will allow patent owners to make investments with reasonable security in the validity of the patent. Sections 102(b) and 103(b).
  • Adding a standing requirement, by permitting only those who are “charged with infringement” of the patent to challenge that patent. This will prevent the abusive and extortionate practice of challenging a patent to extract a settlement or short a company’s stock. Sections 102(c) and 103(c).
  • Limiting abusive repetitive and serial challenges to a patent. This will prevent one of the most common abuses, by preventing multiple bites at the apple. Sections 102(d), (f) and 103(d), (f).
  • Authorizing interlocutory review of institution decisions when “mere institution presents a risk of immediate, irreparable injury” to the patent owner as well as in other important circumstances. This change will allow early correction of important mistakes as well as provide for appellate review of issues that currently may evade correction. Sections 102(e) and 103(e).
  • Prohibiting manipulation of the identification of the real-party-in-interest rules to evade estoppel or other procedural rules and providing for discovery to determine the real-party-in-interest. Because many procedural protections depend on identifying the real party-in-interest, this change will assure that determining who that real party is can occur in a fair manner. Sections 102(g) and 103(g).
  • Giving priority to federal court determinations on the validity of a patent. Although discrepancies will be minimized by other changes in this Act, this section assures that the federal court determination will prevail. Sections 102(h) and 103(h).
  • Improving the procedure for amending a challenged patent, including a new expedited examination pathway. This section goes further than Aqua Products, prescribing detailed procedures for adjudicating the patentability of proposed substitute claims and placing the burden of proof on the challenger. Sections 102(i) and 103(i).
  • Prohibiting the same administrative patent judges from both determining whether a challenge is likely to succeed and whether the patent is invalid. This section will confirm the original design of the PTAB by assuring that the decision to institute and final decision are separate. Section 104.
  • Aligning timing requirements for ex parte reexamination with inter partes review by prohibiting requests for reexamination more than one year after being sued for infringement. This section will prevent abuses from the multiple post-grant procedures available in the USPTO. Section 105.

Second, the STRONGER Patents Act will make other necessary corrections to allow patents to promote innovation. For example, as Section 101 of the Act confirms, patents are property rights and deserve the same remedies applicable to other kinds of property. In eBay v. MercExchange, the Supreme Court ignored this fundamental premise by holding that patent owners do not have the presumptive right to keep others from using their property. Section 106 of the STRONGER Patents Act will undo the disastrous eBay decision and confirm the importance of patents as property.

Third, the STRONGER Patents Act will once and for all eliminate USPTO fee diversion. Many people do not realize that the USPTO is funded entirely through user fees and that no taxpayer money goes to the office. Despite promises that the America Invents Act of 2011 would end fee diversion, the federal government continues to redirect USPTO funds to other government programs. This misguided tax on innovation is long overdue to be shut down.

Each of the steps in the STRONGER Patents Act will help bring balance back to our patent system. In addition to the major changes described above, there are also smaller changes that will be important to ensuring a vibrant and efficient patent system. CPIP co-founder Adam Mossoff testified to Congress about the harms being done to innovation through weakened patent protection. It is great news to now see Congress taking steps in the right direction.

Categories
Innovate4Health Innovation

Innovate4Health: SaTo Pan Delivers a Sustainable Solution to the Sanitation Crisis in Developing Nations

This post is one of a series in the #Innovate4Health policy research initiative.

Innovate4HealthBy Michael O’Keefe

Poor sanitation poses an ongoing threat to the health and well-being of people in the developing world. Severe health problems, death, and disease can be directly linked to unsafe hygiene practices that continue to plague many countries. A UN Fact Sheet notes that 2.3 billion people lack access to improved sanitation. Open-air defecation in particular is a widespread concern, as it leads to the spread of communicable diseases. According to the WHO: “Poor sanitation is linked to transmission of diseases such as cholera, diarrhoea, dysentery, hepatitis A, typhoid and polio.”

One way in which these diseases spread is through the lack of proper toilet or latrine facilities. The WHO claims that 2.4 billion people do not have access to such facilities, with 946 million instead practicing open-air defecation.

SaTo panIn 2012, with support from the Bill and Melinda Gates Foundation’s Water, Sanitation and Hygiene Strategy, and International Development Enterprises (iDE), American Standard Brands developed a potential solution to the hygiene problems stemming from the lack of proper toilet facilities. The SaTo pan – deriving its name from “Safe Toilet” – is an attempt to limit the transmission of disease by ensuring that the toilets being used are closed off from the open air, thus preventing insects or other vectors from communicating those diseases. The basic design is a plastic mold that fits into a concrete base over a pit, which means it can be used even when basic plumbing or sewer infrastructure is absent.

Smell-free, eliminates flies, easy cleanAccess to proper sanitation and clean water is vital for the health and safety of growing populations in both urban and rural areas. When human feces are not disposed of effectively, it can cause a number of health problems. Chronic illnesses spread by feces, such as enteropathy, encephalitis, and diarrhea, can weaken adults as well as children and prevent them from retaining nutrients, potentially causing health problems for their offspring as well. Even when human waste is disposed of in a pit, rather than left out in the open, disease vectors such as flies can potentially still access it, turning latrines into persistent sources of disease for whole communities.

Patent diagrams for SaTo panInvented by Jim McHale, Daigo Ishiyama and Greg Gatarz, the SaTo pan operates much like a trap door, using a counterweight to stay closed except for allowing the passage of waste. The plastic design is cheap and acts as an effective seal over the toilet. In addition to the sanitary benefits, the SaTo pan also acts as a basic safety measure. Because of the nature of some open-pit latrines, young children face the risk of falling inside. When installing SaTo pans in Uganda, one organization reported this as a notable benefit to the communities due to the particular design of latrines in the areas they worked in.

The research team at American Standard settled on the SaTo pan concept after observing the open-pit style latrines commonly used in Bangladesh. Before the pans were installed, such latrines remained open to the air at all times, which meant that not only was the smell free to travel, but flies and other insects could enter and exit the pit, carrying a host of diseases with them. As demonstrated in this video, the pan can be “flushed” after use with a pot of water, but otherwise blocks any unwanted traffic such as insects.

Diagram of SaTo pan (Self-sealing trap door; seal shuts out flies, other insects, and odors)Crucially, the design of the pan allows for potential variations according to local customs and demands, such as using the facilities by squatting or sitting or adapting to the shape of the pit for the latrine. The core concept around which the pan is based is the counterweighted “flapper” itself. The counterweight is specifically set so that the flap remains closed until the additional force of water – not just the waste itself – is poured into the pan. The pour-flush mechanic also creates a liquid seal, with a minimal amount of water remaining on top of the flap after use to help ensure prevention of transmission of insects or gases. This approach, utilizing a basic mechanism while leaving room for responsive adjustments in design, allows the SaTo pan to be adapted globally while maintaining a simple but effective means of providing basic health benefits.

In 2015, American Standard received the Patents for Humanity award from the USPTO for its design of the (then-pending patent application) SaTo pan toilet. The counterweighted trapdoor is significantly more effective than standard squat-hole covers and avoids the risk of blockage that comes with more complex, alternative designs. Utilizing the patented design also allows American Standard to fully gauge the needs of the market, providing the basis for ongoing production and development.

Although American Standard is more generally known as a plumbing manufacturer, the SaTo pan has become a key part of their business structure. American Standard was purchased by the LIXIL Corporation in 2013, and brought within the LIXIL Water Technology (LWT) business unit in 2015. In 2016, LIXIL announced that it was establishing a special unit within LWT devoted to supporting continued development of the SaTo. Currently, three new alternative models of the SaTo pan are in development to meet the varying need of different regions. Although the initial design functions well in areas such as Bangladesh, bringing it to Sub-Saharan Africa presents new challenges, primarily that there is significantly less access to water. As the counterweight system relies on water for its operation, this poses a hurdle to its effectiveness in such regions.

American Standard has been able to use the SaTo pan design as the basis for a broad-ranging business strategy. From 2013-2014, American Standard implemented a donation program, Flush for Good, with each sale of one of its Champion toilets funding the donation of a SaTo pan. 500,000 have been donated to Bangladesh alone. Other donation programs include sending SaTo pans to Nepal after the recent earthquakes and partnerships with NGOs such as UNICEF and Save the Children. By the middle of 2016, SaTo pans had been installed in 14 countries, including Uganda, Haiti, Malawi, Nigeria and the Philippines.

#Innovate4Health is a joint research project by the Center for the Protection of Intellectual Property (CPIP) and the Information Technology & Innovation Foundation (ITIF). This project highlights how intellectual property-driven innovation can address global health challenges. If you have questions, comments, or a suggestion for a story we should highlight, we’d love to hear from you. Please contact Devlin Hartline at jhartli2@gmu.edu.

Categories
Innovate4Health Innovation

Innovate4Health: Daktari Diagnostics Takes on Africa’s Healthcare Challenges One Diagnostic Device at a Time

This post is one of a series in the #Innovate4Health policy research initiative.

Innovate4HealthBy Alex Summerton & Nick Churchill

Africa’s predominantly rural characteristic and limited medical infrastructure are among the region’s greatest challenges to implementing effective healthcare programs and policies for its residents. The high costs for patients associated with diagnosis and treatment in terms of money, time, and travel, along with cultural barriers, often result in individuals failing to seek treatment or only making initial consultations before abandoning the matter. Coupled with poor infrastructure, inadequate facilities, substandard equipment, and insufficient personnel, it is not difficult to see why Africa is still recognized as the setting for the world’s most difficult health crises by the World Health Organization (WHO).

hands taking a blood testOne solution to these problems is to effectively move clinics to the patients through point-of-care technologies. Daktari Diagnostics, located in Cambridge, Massachusetts, is an innovator in this field focusing on microfluidic techniques. These techniques allow the company to develop products that do not require large scale manipulation of high volumes of blood or other biological products. Thus, diagnostic technologies can be made smaller and used anywhere they are needed. Its slogan “Anywhere. Care.” underscores its commitment to developing a cheap, and lightweight, portable diagnostic device to detect HIV, Hepatitis C Virus (HCV), and sickle cell disease.

Efforts eradicating disease are two-part, regardless of where it occurs: diagnosis and treatment. No matter how much time, effort, money, and technology are spent on improving the treatment phase, failures to accurately and affordably diagnose can undermine even the greatest plans. For a rural populace, diagnosis can be frustrated by a number of factors. Many rural clinics do not have the facilities and equipment to conduct diagnostic tests. Reaching a medical clinic with laboratory services may require hours of travel by foot, and many patients fail to return for their results.

Africa is particularly susceptible to these problems. There exists a need for low cost, portable, and durable systems that can be used to facilitate immediate and accurate diagnosis of diseases that commonly affect the population. Lightweight point-of-care diagnostic platforms aim to meet WHO’s “ASSURED” criteria, a set of aspirational guidelines for creating diagnostics tools to meet the socioeconomic challenges of developing regions such as Africa.

However, developing point-of-care technology is costly, and attracting investors requires a reasonable expectation of return on their investments. The developing world is not often considered a lucrative market for the development of medical products. Developing technology that can meet the need of an effective point-of-care testing system and securing funding for the endeavor is a significant challenge.

Daktari Diagnostics machineDaktari (Swahili for “Doctor”) Diagnostics is working on the development of a point-of-care testing platform that meets the ASSURED standards. Daktari’s portable point-of-care platform, Daktari Virology, uses microfluidic techniques to test for both HIV and HCV. Microfluidic devices offer a number of advantages that directly address Africa’s challenges, including small sample sizes, low production costs, fast sampling and processing, and low power consumption. Using a single drop of blood, a microfluidic testing chip prepares the raw sample and performs the tests in one compact system.

For HIV testing, the technology uses a novel microfluidic technique to capture a key cellular indicator for the management of antiretroviral therapy in a patient’s blood. The device then uses nonoptical detection to count them. The effect is rapid testing that can give an accurate assessment of a patient’s HIV viral load in approximately half an hour.

To secure rights in its microfluidics technology, Daktari has been diligently working to assemble a patent portfolio around its innovations. Its website lists over 20 patents already granted internationally and even more applications pending. Leveraging these rights has helped Daktari overcome the challenges associated with conducting expensive R&D for the developing world by securing several rounds of funding. Daktari is using this capital to develop its microfluidics assaying technology for other diseases. In January, Daktari met a funding milestone in a partnership with Merck by completing the design of a prototype HCV point-of-care system suitable for commercial production. Recently, Daktari licensed its technology for integration into a connectivity platform that enables healthcare providers to assist global health officials by monitoring and reporting disease data in real time.

Point-of-care testing is a realistic approach to overcoming challenges in improving diagnostic and monitoring technologies in developing countries, where space, money, time, and training are often limited. Utilizing its intellectual property rights, Daktari continues to develop the technologies that can address some of the world’s most pressing health needs and connect its innovations with the communities that need them.

CPIP has previously discussed the benefits of point-of-care testing in its profile of Fydor Biotechnologies’ Urine Malaria Test, a device enabled by patented technology licensed from John Hopkins University, and ITIF has highlighted a public-private partnership that created the Visitect CD4 point-of-care HIV test.

#Innovate4Health is a joint research project by the Center for the Protection of Intellectual Property (CPIP) and the Information Technology & Innovation Foundation (ITIF). This project highlights how intellectual property-driven innovation can address global health challenges. If you have questions, comments, or a suggestion for a story we should highlight, we’d love to hear from you. Please contact Devlin Hartline at jhartli2@gmu.edu.

Categories
Patents Supreme Court

CPIP Scholars Ask Federal Circuit to Fix Patent Eligibility Doctrine in Cleveland Clinic Appeal

files labeled as "patents"Last week, a group of CPIP scholars filed an amicus brief in Cleveland Clinic Foundation v. True Health Diagnostics, a case currently on appeal to the U.S. Court of Appeals for the Federal Circuit. The patents at issue cover diagnostic tests used to assess a person’s risk of developing cardiovascular disease. The U.S. Patent & Trademark Office initially found the claims to be unpatentable subject matter under Section 101; however, the claims were eventually allowed as new and unconventional applications of known laboratory techniques. Nevertheless, the district court held the claims unpatentable under Section 101, reasoning that they were ineligible under the Alice-Mayo test.

The amicus brief filed last week, written by CPIP’s David Lund and Adam Mossoff, points out that the diagnostic methods at issue are the very sort of innovations the patent system is meant to encourage. Moreover, given the factual conclusions that must be made in order to determine whether the claims are directed to a natural law or whether the laboratory techniques are routine and conventional, they argue that the procedural posture of the case—a motion to dismiss—precludes proper application of the Alice-Mayo test. They note that misapplication of the patent eligibility test continues to lead courts to reject patent protection for many meritorious inventions—as demonstrated in this very case. The amici urge the Federal Circuit to bring clarity and predictability to Section 101 doctrine by rejecting the district court’s conclusory assertions that were made without proper factual support.

The Summary of Argument from the amicus brief is copied below:

SUMMARY OF ARGUMENT

The district court’s decision in The Cleveland Clinic Foundation v. True Health Diagnostics, LLC, No. 17-cv-198, 2017 WL 3381976 (E.D. Va. Aug. 4, 2017), represents an improper application of 35 U.S.C. § 101. The parties address the relevant innovation covered by Cleveland Clinic’s patents, as well as the application of the Supreme Court’s and the Court of Appeals for the Federal Circuit’s § 101 jurisprudence; accordingly, amici offer additional insight concerning the legal and policy problems with the trial court’s decision: innovation in improving the assessment of a patient’s risk of developing cardiovascular disease is an invention that the patent system is designed to promote, and thus it should be eligible for patent protection. Barring a properly reasoned, factually-based determination that either a claimed method-of-treatment invention covers a law of nature or, under step two of the Alice-Mayo test, that it would be considered routine or ordinary by a person having skill in the art, a district court should not find claims to be ineligible subject matter under § 101 on a motion to dismiss. See Berkheimer v. HP Inc., __ F.3d at ___, No. 2017-1437 (Fed. Cir. 2018). The district court’s decision in this case conflicts with the Patent Act as an integrated statutory framework for promoting and securing innovation in the life sciences, as construed by both the Supreme Court and this court.

The Supreme Court has recognized that the plain meaning of the language of § 101 indicates that the scope of patentable subject matter is broad. See Diamond v. Chakrabarty, 447 U.S. 303, 315 (1980). This is why the Supreme Court consistently has held that “[t]he § 101 patent-eligibility inquiry is only a threshold test.” Bilski v. Kappos, 561 U.S. 593, 602 (2010). Accordingly, this “threshold test” is necessarily followed by the more exacting statutory requirements of assessing a claim as a whole according to the standard of a person having skill in the art as to whether it is novel, nonobvious, and fully disclosed as required by the quid pro quo offered to inventors by the patent system. Id.

Unfortunately, courts have been focusing on out-of-context statements in the Supreme Court’s recent § 101 cases that have led those courts to inexorably apply the two-step “Alice-Mayo test” in an unbalanced and legally improper manner. See Alice Corp. Pty. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014); Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012). Courts are dissecting claims into particular elements and then construing these elements in highly generalized terms with no evidentiary support. Thus, as happened in this case, a district court all too often merely asserts a conclusory finding that the claim— actually, specific elements dissected out of the claim as a whole—covers ineligible laws of nature or abstract ideas.

This has led lower courts to create an unduly stringent and restrictive patent eligibility test under the Alice-Mayo test, as evidenced by the district court’s decision in this case. This contradicts the Supreme Court’s decisions in Chakrabarty and Bilski that § 101 is only a threshold inquiry identifying broad statutory categories of patent-eligible inventions. This improper application of the Alice-Mayo test inevitably leads to § 101 rejections of patentable method inventions, as the district court in this case rejected an innovative invention in the bio-pharmaceutical sector that the patent system is designed to promote.

Furthermore, the improper treatment of the § 101 inquiry as a pure question of law requiring no evidentiary findings whatsoever, especially when the parties expressly dispute as to what a person having skill in the art would consider routine or ordinary, conflicts with the Supreme Court’s and this Court’s decisions that the application of the patentability requirements in the Patent Act present questions of law with underlying questions of fact. See Teva Pharm. USA Inc. v. Sandoz, Inc., 135 S.Ct. 831, 838 (2015) (claim construction); KSR v. Teleflex, 550 U.S. 398 (2007) (nonobviousness under § 103); Berkheimer, __ F.3d at ___, No. 2017-1437 (Fed. Cir. 2018) (patentable subject matter under § 101); Akzo Nobel Coatings, Inc. v. Dow Chem. Co., 811 F.3d 1334, 1343 (Fed. Cir. 2016) (indefiniteness under § 112); Alcon Research Ltd. v. Barr Labs., Inc., 745 F.3d 1180, 1188 (Fed. Cir. 2014) (enablement under § 112). This has sowed indeterminacy in patent eligibility doctrine, as inventors and companies in the innovation industries are left with little predictability concerning when or how courts will dissect claims and make conclusory assertions that they are patent ineligible under § 101.

To read the amicus brief, please click here.