BILSKI V. KAPPOS, US SUPREME COURT RULING AGAINST PATENTING OF A MERE BUSINESS METHOD

FACTS: The appellant Bernard L. Bilski and Rand A. Warsaw had filed a patent application for a 'method of hedging risk in the commodities trading' in 1997. Petitioners' seeks protection for a number of claims which are capable of explaining how commodities buyers and sellers in the energy market can protect, or hedge, against the risk of price changes. The Examiner of USPTO repudiated it as an invention because it is not implemented on a specific apparatus and merely manipulates an abstract idea and solves a purely mathematical problem without any limitation to a practical application, therefore, the invention is not directed to the technological arts. In appeal before Board of Patent Appeals and Interface (BPAI), USPTO affirmed the rejection and held that 'if there is a transformation of physical subject matter from one state to another' is a patent-eligible subject matter and non-physical financial risks and legal liabilities of the commodity provider, the consumer, and the market participants is not patent-eligible subject matter. Further, in an appeal before the US Court of Appeals for the Federal Circuit (CAFC), the Court held two test that a claimed process is surely patent-eligible under 35 USC 101, if (a) It is tied to a Particular machine or apparatus, or (b) It transforms particular article into a different state or thing ('Machine-Transformation Test (the test)'-quoted from State Street Bank & Trust Co. v. Signature Financial Group Inc.). Thereafter, this case came before the US Supreme Court.

ISSUES: Whether the CAFC erred by creating the so-called "machine or transformation" test, which requires a process to be tied to a particular machine or apparatus, or transform an article into a different state or thing, in order to be patentable subject matter? and Whether the machine or transformation test contradicts Congressional intent that Patent protect 'method of doing or conducting business' (35 USC 273)?

JUDGMENT: The Court held that-Firstly, "although the test of §101 is broad, it is not without limit," citing Chakrabarty, Benson, and Diehr case; Secondly, the "machine-or-transformation" test “has repeatedly helped the Court to determine what is a patentable process”; Thirdly, while the test "has always been a 'useful and important clue,' it has never been the 'sole test' for determining patentability." It is rather 'an important example of how a Court can determine patentability under §101'; the CAFC's mistake was in treating it as the 'exclusive test'; and Fourthly, 'although the machine-or-transformation test is not the only test for patentability, this by no means indicates that anything which produces a 'useful, concrete and tangible result' . . . is patentable. In addition to these, the Court denied the petition.

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FUJI FILM WON $16 MILLION IN LENS-FITTED FILM PACKAGES PATENT INFRINGEMENT CASE

FACTS: This case relates to single-use cameras or Lens-Fitted Film Packages (LFFPs). Fuji Film Corp. owns U.S patents related to LFFP. Once the LFFP is used by a consumer, the film processor opens the LFFP and processes the film and does not return the empty LFFP (shell) to the consumer. The defendant Jazz Products used to refurbish the empty LFFPs and sell it as new LFFP in the market.

In 2005 Fuji sued Benun, Jazz and others for patent infringement. After Bankruptcy Court for the District of New Jersey shut down Jazz, PE supplied Jazz with LFFPs that were refurbished by PE's Subsidiary company PC from China. Later on Jazz purchased the Jazz Photo Corp's inventory about LFFPs made by PE and PC (collectively polytech). The District Court made preliminary injunction against Jazz from selling in or to the US. Later on Jazz again started re-importation of the LFFPs which was in question and the District Court found defendants liable for contempt of the preliminary injunction based on the evidence that the re-imported LFFPs were infringing as determined by the sampling process. In 2009 the defendants moved in limine to bar reference to prior litigations and administrative actions and to collaterally stop Fuji from litigation.

ISSUE: Whether the Defendants are liable for patent infringement?

JUDGMENT: At the close of Fuji's case, defendants moved for judgment as a matter of law (JMOL) under Fed. R. Civ. P. 50(a) on Fuji's infringement claim based on defendants refurbishing Achiever-brand LFFPs. Defendants' JMOL motion was denied. The jury found willful infringement of Fuji's patents by the defendants and awarded $16 million in favor of Fuji Film Corp.

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BAKER AWARDED $25 MILLION OVER A TRADE SECRET SUIT RELATING TO OILFIELD DRILL BIT (BAKER HUGHES INC. V. VAREL INTERNATIONAL INC.):

FACTS: Baker Hughes one of the world’s largest oilfield equipment suppliers sued its rival, Varel International (world's largest independent drill bit supplier) claiming that the smaller company cloned one of Baker Hughes’ best-selling drill bits (7-7/8 inch tri-cone drill bit). Baker Hughes requested an injunction banning the sale of Varel’s cloned bits. It is alleged that Varel managers who used to work at Baker Hughes allegedly obtained stolen internal design specifications from Baker, some with the word “confidential” and used them to copy a proprietary oilfield drilling bit for Varel’s product line. It is specifically contended by Baker Hughes that a Varel engineer, Tze Liang Lee allegedly provided copies of Baker Hughes documents containing design specifications and training manuals created at the Hughes Christensen technology division in the Woodlands, north of Houston. The same documents bear the digital footprint of a fax machine registered to Varel’s Oklahoma City office, according to the lawsuit.

ISSUE: Whether Varel and its employee can be held liable for stealing Baker's trade secret?

JUDGMENT: While pronouncing the judgment awarding $25 Million, the Jury of the Texas State Court considered the fact that Varel earned $5.9 million in profits from the trade secrets and avoided $1.5 million in R&D costs by copying the drill bit in 2004. Jurors also awarded exemplary damages of $17.8 million, or triple the profit figure, after finding that Varel acted with malice.

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EUROPEAN UNION COURT INVALIDATES PEPSI POG DESIGN REGISTRATION

Facts: In 2003 a Spanish manufacturer named Grupo Promer Mon-Graphic (Promer) pitched its tazos to Frito Lay, a PepsiCo subsidiary Company. Tazos also known as rappers or pogs are small promotional toys included with food products aimed at children. The pitch was a confidential matter. On 4th February 2004, PepsiCo applied for the design registration for "promotional item[s]" for games. Subsequently, Promer applied for invalidity of the design arguing that PepsiCo's design lacks novelty and individual character according to Article 25(1)(b) of Community Design Law and Regulation, as Promer had earlier filed for Registered Community Design (RCD) for "metal plate[s] for games" and that PepsiCo's design was in conflict with Promer's prior design (Article 25(1)(d)).

Later on the Invalidity Division invalidated PepsiCo's RCD on the basis of that it was "in conflict" with the prior design, but as Promer's RCD had not been published at the time of PepsiCo's RCD application, it could not be taken into account as a prior design for the purposes of Article 25(1)(b).

Issue: Whether PepsiCo's RCD was in conflict with Promer's earlier design and reversed the Invalidity Division on the facts?

Judgment: The Board of Appeal envisaged that the design freedom of a designer of tazos is extremely limited and therefore the minor differences in PepsiCo's design were enough to create an overall different impression on the user. Promer had alleged that PepsiCo's application was made in bad faith - the Board had no hesitation in finding that bad faith is not a ground of invalidity. The General Court, in a closely argued decision, has affirmed the Board on several points, but overturned the overall finding in relation to invalidity.

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INVALIDITY OF GENE PATENTING-RULED BY THE UK COURT (ELI LILLY & CO. V. HUMAN GENOME SCIENCES INC.)

FACTS: The case relates to a protein called Neutrokine Alpha, its antibodies and the polynucleotide sequence which was first discovered by Human Genome Science (HGS) and filed for a patent (EP 0,939,804 (UK)) in 1996. HGS and GlaxoSmithKline started clinical trials to develop an antibody for Neutrokine Alpha for the treatment of Lupus. At the same time Eli Lilly also had initiated its R&D to develop another antibody for a different condition. Eli Lilly moved to the Chancery Division (Patent Court) and subsequently in 2008 the trial Court held the patent invalid. Later on in 2009 this case moved to the Technical Board of Appeal (TBA) of EPO that allowed HGS's appeal based on some more restricted claims. This appeal has accordingly been conducted on the basis of the TBA's allowance for some claims in favor of HGS. Eli Lilly moved to the High Court of Justice Court of Appeal (Civil Division) and argued that the patent is invalid, since it did not satisfy the criteria of industrial application under Article-57 of the European Patent Convention, 1973 as well as under EC Biotech Directive 99/44.

ISSUES:
Whether the Patent was obvious and not susceptible of industrial application?

JUDGMENT: The Court held that if an invention does not comply with Article-57 of the EPC then it is not a patentable invention and it may be revoked under Section-72(1) of the UK's Patent Act 1977. The Court also opined that allowing patenting of chemicals whose use is unknown will subvert the patent system and would diminish research by others rather than encourage it. Therefore, the Court held that the patent is invalid as it has failed to show its commercial application.

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ABBOTT LAB LOOSES BLOOD GLUCOSE TEST STRIP AND SENSOR PATENT BATTLE (ABBOTT LABORATORIES V. DICKINSON & CO. AND NOVA BIOMEDICAL CORPORATION)

FACTS: Previously in 2008, Therasense Inc. (Known as Abott Diabetes Care Inc.) and Abbott Laboratories (together called as the plaintiffs') filed a suit for infringement of its U.S. Patent No. 5,628,890 ("the '890 Patent") against the Dickinson & Co. and Nova Biomedical Corporation ("together called as the defendants'). The '890 patent was related to an electrochemical sensors for measuring glucose levels in blood and the sensor comprising two electrodes 'the working electrode (claim 11)' and 'the counter electrode (claim 12)'. The plaintiffs' filed patent infringement suit before the U.S. District Court for the Northern District of California accusing that the defendants' involved in infringing claims 11 and 12 of the said '890 patent by making, using, and selling a product called BD-Test Strips . The defendants' denied the infringement and asserted that the claims 11 and 12 of the patent are invalid under 35 U.S.C §§ 102, 103 and 112. Defendants' also asserted that the said claims are obvious or anticipated by two prior patents (U.S. Patent No. 5,120,420 ("Nankai") and U.S. Patent No. 5,582,697 ("Ikeda"). The Jury found that the Defendants' infringed claims 11 and 12 under the Doctrine of Equivalents and also found that claims 11 and 12 were invalid. After the Jury verdict the District Court pronounced judgment in favor of the Defendants'. Hence, the Plaintiffs' made an appeals against the District Court's Judgment before the U.S. Court of Appeals for the Federal Circuit (CAFC).

ISSUE: Whether claims 11 and 12 of the '890 patent are invalid?

JUDGMENT: While pronouncing the judgment in favor of defendants the Court opined that "in sum, we hold that claims 11 and 12 would have been obvious over Nankai as a matter of law. The erroneous jury instruction on the law of anticipation could not have changed the verdict of "anticipation or obviousness," and obviousness based on Nankai alone is sufficient to support that verdict as a matter of law". Therefore the U.S. CAFC affirmed the invalidity of claims 11 and 12 of the '890 patent and held that the Court does not have jurisdiction over defendants' cross-appeal.