Jon Dudas, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO), testified in an oversight hearing held by the House Judiciary Committee’s Subcommittee on Courts, the Internet and Intellectual Property.

Among the topics addressed in the testimony were patent and trademark quality and timeliness; hiring, retention and work-life offerings such as the USPTO’s telework program; global policy and enforcement initiatives; and the pending patent modernization legislation. The testimony was to address developments and successes since the last USPTO House oversight hearing in 2005.

Dudas’ testimony was meant to highlight the USPTO’s “record-breaking performance” for the last two years. Oh, really?

Granted, this is a large corporate entity given it has 8,500 employees and almost $2.1 billion in fee revenues.  Dudas said the USPTO hired 1,215 patent examiners in FY 2007 and intends to hire an additional 1,200 patent examiners each year through 2013 and expand the telework program (we’re all for these efforts).

On the downside, Dudas (proudly?) highlighted the fact that the allowance rate for patents is currently 44%.  This is in contrast to allowance rates in excess of 70% just eight years ago. Bear in mind that patent examiners reviewed over 362,000 patent applications in 2007, the largest number ever.

So, does this mean quality is up or frivolous rejections are souring?  Did patent applications really get that much worse in just a few years?

Also, the percentage of Board of Patent Appeals decisions in which the examiner is affirmed or affirmed in part has increased from 51% to 69%. Finally, since the pre-appeal brief program was established in midyear 2005, the percentage of applications reviewed under the program in which the examiners action is deemed correct has increased from 45% to 56%.

Dudas mentions that the Office of Patent Quality Assurance (OPQA) has “implemented targeted reviews of examination processes or functions that are perceived to potentially be problematic trends” whatever that means — the areas of final rejection practice, Request for Continued Examination (RCE) practice, search quality and restriction practice were identified for review during FY 07.

Not surprising, Dudas is tickled pink that the current version of the patent reform bill include provisions pertaining to applicant quality submissions (AQS) basically shifting the burden of the USPTO’s job onto the applicants themselves.

The USPTO is touting its many initiatives to lessen their workload, which include:

1. Accelerated Examination

The USPTO has established procedures setting forth requirements for patent applicants who want, within 12 months, a final decision by the examiner on whether their application for a patent will be granted or denied. To be eligible for “accelerated examination,” applicants who file under this procedure are required to provide specific information so that invalidity of any ultimately issued patent can be completed rapidly and accurately by any attacking competitor crying inequitable conduct.

2. Peer Review Pilot

The USPTO is still trying to push its Peer Review Pilot project that gives so-called technical experts in computer technology the opportunity to submit annoying and irrelevant technical references before an examiner reviews it.

3. Markush Claims

Earlier, USPTO proposed new rules in the Federal Register that will allow an examiner to split one Markush claim into lots and lots of individual claims as distinct inventions so that one application can be turned into dozens, thereby lending credence to the claim that the USPTO gets too many applications.

4. Information Disclosure Statements

We’ve already discussed the stupid USPTO proposed rule changes to information disclosure statement (IDS) requirements and other related matters to improve the quality and efficiency of the examination process. The proposed changes will enable the examiner to require that the applicant make damning statements against themselves so that any ultimately issued patent can be completed rapidly and accurately by any attacking competitor crying inequitable conduct (also see No. 1 above).

5. Open Source as Prior Art

The USPTO is consulting with the Open Source community regarding the potential development of a tagging process and interface to enable examiners access to open source software repositories as a source of prior art.

6. Electronic Filing and Processing

The USPTO continues to promote electronic filing and processing of patent applications as a means of reducing paper-based inefficiencies. Now, if someone could just explain to me why a $2.1 billion dollar entity trying to move to a web-based system still gives me an error message so often.

7. Central Reexamination Unit (CRU)

Reexamination cases are now assigned to a Central Reexamination Unit (CRU). The goal of the CRU is to close prosecution on all ex-parte reexaminations within two years of filing.

8. Pre-Appeal Conferences

The USPTO announced that patent applicants can request a pre-appeal brief conference and learn its results before nothing happens and the applicant has to go ahead with incurring the costs of drafting and filing an appeal brief. This change is expected to cause more work for applicants.

9. Pre-First Office Action Interview and First Action Interview

The pre-first Office action interview with the applicant or his/her designated legal representative is designed to discuss potential prior art rejections and possibly resolve many or all issues with respect to patentability. Under a pilot program, the first action interview, upon request, prior to the first Office action on the merits where the examiner will conduct a prior art search and provide applicant with a condensed pre-interview Office action. If done fairly, this has a lot of potential to streamline prosecution, a system whereby applicants would otherwise be forced into a final office action.

Not surprising, Dudas is tickled pink that the current version of the patent reform bill include provisions pertaining to applicant quality submissions (AQS), basically shifting the burden of the USPTO’s job onto the applicants themselves.

Anticipate This! wonders what ever happened to an inventors right to a patent.

See all the fun here.

Posted February 29th, 2008 by Stephen Albainy-Jenei in Patent Reform, USPTO
| | 6 Comments »

IP Newsflash, an IP meta-information portal that browses your information channels for you and presents only relevant, recent and customizable IP information on a single page, just got better.  IP Newsflash is touted as being for “patent professionals who want to stay up to date but dislike the tedious task of browsing through countless sources of information.”  See other reviews at the Invent Blog, IP Menu, Patently-O and Securing Innovation. We really like the new look.  We love the free price.

Filed under Your Tax Dollars at Work, the Congressional Budget Office has released its cost estimate on the patent reform bill. Note that this includes an estimated $1 billion in compensation for DataTreasury’s check processing patents (5,910,988 and 6,032,137). Why Congress is wanting to give free immunity to one industry from infringement of a private company’s patent can probably be spelled c-a-m-p-a-i-g-n-d-o-n-a-t-i-o-n-s. More at the Patent Prospector.

Listed as the “first worldwide Web 2.0 pharmaceutical news portal,” World Pharma News.com now has World Pharma News.net –  a web application that allows you to submit pharmaceutical news articles or other related web resources that will be reviewed by our registered users and will be promoted, based on popularity, to the main page. When a registered user submits a news article it will be placed in the “unpublished” area until it gains sufficient votes to be promoted to the main page.

A Denver judge showed trial attorneys how to lose $51 million  for “cavalier and abusive” misconduct and for having a “what can I get away with?” attitude during a patent infringement trial.  Meanwhile, New Mexico has been finding new uses for lasers.

Also, Legal Andrew has an update on lawyer advertising.

Posted February 29th, 2008 by Stephen Albainy-Jenei in Friday Round-Up
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Robert Shapiro, chairman of Sonecon, LLC, and former advisor to U.S. President Bill Clinton and British Prime Minister Tony Blair, has published a study on the potential savings when generic biologic treatments (biogenerics) find a pathway in the U.S.   I say when and not if since the government is the largest consumer of medical care via medicare and medicaid and given the fact that sales of biotech drugs were $40.3 billion last year.

With such enormous amounts of money involved, Congress is seriously interested in creating a new regulatory pathway for the approval and marketing of generic or follow-on versions of biological treatments that no longer have patent protection. This is purely an economic (and political) issue, not one of health and safety.  Today, more than 150 biopharmaceuticals are available in the United States, including therapeutic serums, antitoxins, vaccines and biological therapeutics that induce immunity in infectious diseases, and the number of new biologics is growing at twice the rate of new small molecule pharmaceuticals.

Under the Hatch-Waxman Act, a pharmaceutical producer can secure FDA approval to market a generic version of an original drug no longer under patent protection without having to conduct lengthy and expensive safety and effectiveness studies and clinical trials, by demonstrating that the generic is the bioequivalent of the original drug. The process involves the approval of an Abbreviated New Drug Application (ANDA), which rests on a certification that the original patent has expired or is invalid, and that the dosage and active ingredients of a generic are identical to those in the original treatment.

However, the law covers only traditional, small-molecule pharmaceuticals. There is no mechanism for generic-drug makers to gain approval for generic biotech drugs or so-called follow-on biologics, sometimes called biosimilars or biogenerics.  The FDA evaluates and approves biologics mainly under the Public Health Safety Act, although a small number have been approved under the Food, Drugs and Cosmetic Act. The Center for Biologics Evaluation and Research (CBER) regulates biological products for safety. For the FDA to approve follow-on biologics, many difficult issues have to first be addressed such as safety, effectiveness and intellectual property rights have to be resolved.

The reason for the lack of a regulatory pathway for approval of biogenerics lies in the complexity of the biological products themselves. Biologics are large, complex, heterogeneous molecules for which the manufacturing process can be a determinant of the end product. Demonstrating that a generic version of the product is as safe and effective as the brand name product would be a difficult at best since, for example, establishing that immunogenicity had not been altered and that any undetected differences in the product would not impact safety and efficacy would be problematic without conducting extensive clinical trials.

Currently, the cost of conducting clinical studies from scratch keeps competitors out of the market. Biogeneric companies need an abbreviated approval pathway to avoid undertaking the same large scale clinical development process as the originator companies, and thus allow them to market their product at a discount to the brand while maintaining a profit margin.

It is likely that any follow-on biologic applicant would be required to demonstrate that there are no clinically meaningful differences in safety, purity and potency between its product and the brand product. An applicant would need to provide evidence that its product has profound similarity — it is impractical to show identical biological products — and that these will produce the same clinical result as the brand product in any given patient and that it presents no additional safety risks or diminished efficacy if a patient alternates or is switched between products.

During a conference call this morning, Shapiro noted that the conventional wisdom held that the high cost of building the manufacturing infrastructure would be so high as to result in very little savings even if biogenerics are allowed. He argues that this is not the case given that there are plenty of other options in the marketplace. Shapiro pointed out the facilities currently available in Europe and Asia and the potential for partnerships.

According to the present study, the potential savings likely to follow from the introduction of these follow-on biologics over the next 10 and 20 years would be quite large. The study found that generic versions of the top 12 categories of biologic treatments with patent protections that have expired or are due to expire in the near future could save Americans, in net present value, $67 billion to $108 billion over the first 10 years and $236 billion to $378 billion over 20 years. Moreover, these estimates almost certainly understate the savings, because they could not take full account of a number of factors likely to reduce the price of biogenerics and further expand their use in the United States.

Currently, biogenerics are used in the European Union and the major countries of Asia. The study concludes that the United States has led the world in developing biologics, and when the U.S. Congress approves a regulatory pathway for biogenerics, the United States very likely will quickly become the world’s largest market for follow-on biologics.

See the entire report here.

See also:  Why are biogenerics so hard to regulate?

More from the Orange Book Blog and the BioJobBlog.

Posted February 19th, 2008 by Stephen Albainy-Jenei in Biogenerics, FDA, Biotech News
| | 3 Comments »

Securing Innovation has a piece on the Eco-Patent Commons, an initiative to create a collection of patents on technology that directly or indirectly protects the environment. The patents will be pledged by companies and other intellectual property rights holders and made available to anyone free of charge. Eco-Patent info in pdf here.

Biotechnology Industry Organization (BIO) posted a new study, entitled “The Economic Implications of Patent Reform,” on the potential economic impact of the pending patent reform legislation.  The study, available here, concludes that the following provisions would greatly increase costs:

• Changing the rules for apportioning damages would increase the cost of patent litigation.
• A new post-grant opposition system would increase the cost of adjudicating patents.
• Changes to the inequitable conduct doctrine would increase litigation and patent transaction costs.

Consumers, generic drug manufacturers, insurers and others sent letters to the U.S. Senate leaders on the issue of on the importance of maintaining the inequitable conduct defense in patent disputes. Senate Letters.

Although, it now looks like the Senate vote on the Patent Reform Act is going to be delayed, probably until April.

Insmed has just launched a campaign to increase awareness of the need for Congress to pass the follow-on biologics (FOB) approval pathway. In trendy fashion, Insmed has posted a video on YouTube called Follow-On Biologics – Tell your Story.

e-IP announced new features that simplify the process of posting your IP, as well as more pricing options. These enhancements have been developed in response to requests from research institutions with large portfolios of IP (i.e. over 100), and are now available to anyone.

Posted February 15th, 2008 by Stephen Albainy-Jenei in Friday Round-Up
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Drug developers often search for new leads in the biodiversity often found in developing countries. Often, a new theraputic or genetically engineered product is developed and patented.

Depending upon your view, this is either the free market at play in creating new and better products (so-called bioprospecting) or exploitation of developing nations (so-called biopiracy).

However, a lot of tension has arisen from such patents, such as the Enola patent derived from Mexican traditional crop mayocoba bean and the patent on Ayahuasca, a sacred plant. These disputes show that some genetic engineering exploitation and patents based on certain species may be offensive to certain indigenous people’s spiritual, religious, or cultural traditions.

Our Associates at Dannemann Siemsen, a law firm with offices in Rio de Janeiro, São Paulo and Brasília, have alerted us to a new proposed legislative bill that has recently published by the Brazilian Government. Currently, access to genetic resources and associated traditional knowledge, as well as benefit sharing in Brazil are regulated by Provisional Measure 2.186-16 of August 23, 2001.

The new bill, which is open to public consultation until February 28, 2008, is available in Portuguese at the website here. Although the proposed bill is somewhat long, some of its highlights are set forth below:

Genetic Resources And By-Products

The proposed bill makes it clear that access and benefit sharing rules will also cover activities involving the by-products of genetic resources and not only involving information of genetic origin, as provided for in the current Provisional Measure.

Records and Databases

The proposed bill provides for a number of databases and most of the activities involving access to genetic resources and traditional knowledge must be recorded.

No Need of Access Authorizations in Some Cases, in Special Research Without Commercial Purpose

Access to genetic resource for scientific and/or technological research without commercial purposes in some cases will not need previous authorization.

Benefit Sharing Agreement

According to article 86 of the proposed bill, a benefit sharing agreement may be executed after the access, provided that certain conditions are met.

Federal Sales/Royalty Tax

The proposed bill creates a sales/royalty tax (CIDE) directed to governmental funds aimed at financing R&D, supporting traditional communities, conserving biodiversity and benefit sharing.

Agricultural Biodiversity

A new category of biodiversity is created and the corresponding access and benefit sharing are regulated under more flexible rules.

Prison and Administrative Penalties

A number of penalties, such as fines and product seizure, are provided for in case of irregular access to genetic resources and traditional knowledge. Prison terms are defined, e.g., in case of the illegal remittance abroad of biological material.

Patent Disclosure

The corresponding access license must be attached to patent applications covering subject-matter obtained via access to genetic resources and to its by-products and associated traditional knowledge.

Please feel free to contact Dannemann Siemsen should you require further details on the current rules and on the provisional bill concerning biodiversity access and benefit sharing.

See also:

India Fights Back Against Biopiracy

Bioprospecting Discussed at the UN

Article on the Convention on Biological Diversity (“CBD”), the first international agreement aiming at the protection of biodiversity, sustainable use of biological resources and the sharing of benefits of its exploitation.

Posted February 15th, 2008 by Stephen Albainy-Jenei in BioAg, Biotech News
| | 2 Comments »

The Ohio Supreme Court has ruled that a company’s confidential customer list is a protected trade secret even if a former employee retains the information purely from memory.

This doesn’t change the law, a trade secret is a trade secret regardless of whether it is memorized or in a more tangible form, just clarifies that even the Amazing Kreskin will still have to abide by trade secret laws. Al Minor & Assoc., Inc. v. Martin,  Slip Opinion No. 2008-Ohio-292.

The court was asked to opine on the question: “Whether customer lists compiled by former employees strictly from memory can be the basis for a statutory trade secret violation.”  Unfortunately, the better question was: “Whether customer lists compiled by former employees from publicly available sources nullify a statutory trade secret violation for the same information held in memory.” 

In the unanimous decision, the court ruled that:

1. Information that constitutes a trade secret pursuant to R.C. 1333.61(D) does not lose its character as a trade secret if it has been memorized.
2. The Uniform Trade Secrets Act does not apply to the use of memorized information that is not a trade secret pursuant to R.C. 1333.61(D).

Robert Martin worked as a pension analysts at Al Minor & Associates, Inc. (AMA), an actuarial firm that designs and administers retirement plans and had approximately 500 clients. AMA hired Martin but did not require him to sign either an employment contract or noncompete agreement. (Practice tip: If you are going to be hiring specialized employees with access to sensitive information, put in place a proper employment contract with confidentiality and noncompete clauses)

It probably didn’t help Martin’s case that he started his own company, Martin Consultants, L.L.C., while still employed at AMA. In 2003, he resigned from AMA and, without taking any documents containing confidential client information, successfully solicited 15 AMA clients with information from his memory.

Spurned, AMA filed suit claiming that he had violated Ohio’s Trade Secrets Act by using confidential client information to solicit those clients. The trial court sided with AMA to the tune of $25,973, specifically noting that the fact that Martin had solicited AMA’s clients from memory did not prevent the finding of a trade secret violation.

The Franklin County Court of Appeals affirmed the trial court stating that because “a client list such as the one at issue fits the statutory definition of a trade secret under R.C. 1333.61(D), AMA’s memorized client list warrants trade secret status.”

Being tenacious, if nothing else, Martin filed a discretionary appeal with the Ohio Supreme Court.

The issue here was whether the use of a memorized client list can be the basis of a trade secret violation pursuant to Ohio’s Uniform Trade Secrets Act (UTSA), which defines trade secret to mean:

[I]nformation, including the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, pattern, compilation, program, device, method, technique, or improvement, or any business information or plans, financial information, or listing of names, addresses, or telephone numbers, that satisfies both of the following:

(1) It derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.

(2) It is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Martin argued that a client list memorized by a former employee cannot be the basis of a trade secret violation and that the appellate court’s decision in this case overly restricts his right to compete in business against AMA. He also argues that AMA should not have the right to control the use of his memory and that AMA had the opportunity to protect its confidential information by way of an employment contract, which it did not do.

(It’s worth noting that Martin also briefed a second proposition of law asserting that AMA’s client list does not satisfy the definition of a trade secret because it contained information that is available to the public via the internet. However, because Martin never raised this issue in his memorandum in support of jurisdiction, the court didn’t consider it. We’re left to wonder how that would have effected the outcome.)

The court noted that Ohio’s protection of trade secrets arose at common law:

In one of the earliest appellate decisions concerning trade secrets, an Ohio circuit court defined a trade secret as “a plan or process, tool, mechanism, or compound, known only to its owner and those of his employees to whom it is necessary to confide it, in order to apply it to the uses for which it is intended.

Furthermore, in Plain Dealer, the court established a six-factor test for determining whether information constitutes a trade secret pursuant to R.C. 1333.61(D):

1. The extent to which the information is known outside the business;
2. the extent to which it is known to those inside the business, i.e., by the employees;
3. the precautions taken by the holder of the trade secret to guard the secrecy of the information;
4. the savings effected and the value to the holder in having the information as against competitors;
5. the amount of effort or money expended in obtaining and developing the information; and
6. the amount of time and expense it would take for others to acquire and duplicate the information.

The court held that neither R.C. 1333.61(D) nor any other provision of the UTSA suggests that, for purposes of trade secret protection, the General Assembly intended to distinguish between information that has been reduced to some tangible form and information that has been memorized:

R.C. 1333.61(D) refers only to “information,” including “any business information or plans, financial information, or listing of names, addresses, or telephone numbers,” and the statute makes no mention of writings or other physical forms that such information might take. Furthermore, nothing in our six-factor test adopted in Plain Dealer, 80 Ohio St.3d at 524-525, 687 N.E.2d 661, indicates that the determination of whether a client list constitutes a trade secret depends on whether it was capable of being memorized or had been memorized.

In addition, more than 40 other states have adopted the Uniform Trade Secrets Act in substantially similar form, and the majority position is that memorized information can be the basis for a trade secret violation. There are, however, some outliers in some states that have decided to exclude memorized information.

Treatises on the subject of trade secrets also support the position that the determination of whether a client list is a protected trade secret does not depend on whether a former employee has memorized it. For example, in 2 Louis Altman, Callmann on Unfair Competition, Trademarks and Monopolies (5th Ed.2005) 14-192-14-195, Section 14.25, the text states that, “[a]s to customer lists, the older rule in some jurisdictions permits taking by memorization. In principle, however, the distinction between written and memorized information should not be encouraged. The form of the information and the manner in which it is obtained are unimportant; the nature of the relationship and the defendant’s conduct should be the determinative factors. The distinction places a premium upon good memory and a penalty upon forgetfulness, and it cannot be justified either from a logical or pragmatic point of view.”

Summing up, the court concluded that:

We recognize that the protection of trade secrets involves a balancing of public policies, and as stated in E.I. duPont de Nemours & Co. v. Am. Potash & Chem. Corp. (1964), 41 Del.Ch. 533, 548, 200 A.2d 428, “Among the substantial and conflicting policies at play * * * are the protection of employers’ rights in their trade secrets * * * versus the right of the individual to exploit his talents.” However, by adopting the Uniform Trade Secrets Act, with the express purpose “to make uniform the law with respect to their subject among states,” the General Assembly has determined that public policy in Ohio, as in the majority of other jurisdictions, favors the protection of trade secrets, whether memorized or reduced to some tangible form. And, as we stated in Johnson v. Microsoft Corp., 106 Ohio St.3d 278, 2005-Ohio-4985, 834 N.E.2d 791, “The Ohio General Assembly, and not this court, is the proper body to resolve public policy issues.” Id. at 14, citing State v. Smorgala (1990), 50 Ohio St.3d 222, 223, 553 N.E.2d 672 (”the General Assembly should be the final arbiter of public policy”).

The court concluded that information that constitutes a trade secret pursuant to R.C. 1333.61(D) does not lose its character as a trade secret if it has been memorized. It is the information that is protected by the UTSA, regardless of the manner, mode, or form in which it is stored - whether on paper, in a computer, in one’s memory, or in any other medium.

This ruling does not, however, remove unprotected information from the public domain:

Every employee will of course have memories casually retained from the ordinary course of employment. The Uniform Trade Secrets Act does not apply to the use of memorized information that is not a trade secret pursuant to R.C. 1333.61(D).

Left unsaid is what would happen if Martin had just searched the internet for the information and came up with the same results? Employees cannot be asked — absent some type of enforceable noncompete agreement — to erase their knowledge about their previous employer, like names of clients.

So, could Martin have looked up the information in a directory and been free to use the information or would his very knowledge of some client names nullify any attempt at independent creation?

This case seems to have raised more questions than it answered.

Posted February 14th, 2008 by Stephen Albainy-Jenei in Trade Secrets, IP Laws
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The Ohio Valley Affiliates for Life Sciences Group (OVALS) will host it’s 6th Annual regional conference  “Transformational Research: A Bridge to Building Economies” on April 14-15, 2008, at the Historic Brown Hotel in Louisville, KY. 

Topics Include:

Future trends in the biotech industry and factors that will shape it
A close-up view of NC: key elements, impact and lessons
Partnering with foundations
Changing landscape of universities and industry working together
OVALS regional assets: what do we have - how can they be used
Congressionally mandated programs as a source of funding

Register here.

An optional program this year is the Business Bootcamp for Scientists and Engineers.  This includes sessions on IP, marketing, start-up and funding.  (Note: Advanced registration required)

Posted February 14th, 2008 by Stephen Albainy-Jenei in Bioventures
| | No Comments Yet »

To paraphrase Ronald Reagan, “Well, There You Go Again!” The Court of Appeals for the Federal Circuit again affirmed that, while the practice of savings seeds after a harvest to plant the next season is as old as farming itself, you can’t save patented seeds.

After the district court held that Loren David knowingly infringed Monsanto’s seed patent, it awarded Monsanto damages, attorney fees, prejudgment interest, and costs of $786,989.43. On appeal, the CAFC affirmed that the patent was infringed but that some of the damages awarded were wrong. See Monsanto v. Loren David (07-1104).

Monsanto went after the farmer for breaching a technology agreement over genetically modified crops that resist glyphosphate herbicide. After planting these crops, farmers can spray glyphosphate herbicide over their fields to kill weeds while leaving the resistant crops intact. Monsanto sells seeds of the genetically modified crops, in this case soybeans, under the trade name Roundup Ready.

Monsanto’s U.S. Patent No. 5,352,605 claims a plant seed containing a genetic promoter sequence that facilitates a plant’s production of the modified enzyme that allows plants to survive exposure to glyphosphate herbicide. Monsanto distributes the patented seeds by authorizing various companies to produce the seeds and sell them to farmers. Monsanto required those seed companies to obtain a signed “Technology Agreement” from purchasers.

The Technology Agreement stipulates that buyers may use the seeds for the planting of only a single commercial crop, but that no seeds from that crop may be saved for future harvests. The Technology Agreement assures Monsanto that farmers must purchase new Roundup Ready® seeds each harvesting season, rather than simply saving seeds from the prior year’s harvest, as they normally would with conventional soybean seeds. Monsanto also charges a Technology Fee for each unit of Roundup Ready® soybean seeds sold. The Technology Agreement also contains a clause granting Monsanto the full amount of its legal fees and other costs that may have to be expended in enforcing the agreement.

Along comes Farmer David, a commercial farmer who owns soybean fields in North and South Dakota. He signs a Monsanto Technology Agreement in 1999 and plants some of the magic soybeans again in 2003. Monsanto claims that the seeds that David planted were Roundup Ready® soybeans improperly saved from the previous year’s harvest but David claims he did not save any seed.

Earlier, David purchased 645 units of Roundup Ready® soybean seeds, an amount of seeds that could not have covered David’s soybean fields in 2003. David also bought over 1,000 gallons of glyphosate-based herbicides in 2003, herbicide. Monsanto, ever vigilant for seed savers, tested David’s crops and found that they were from patented seeds.

David cleverly tried to show he purchased 993 units of Roundup Ready® soybean seed on May 31, 2003, but that was nearly a month after he claimed to have planted the majority of his soybean crop for the year. The court said “Nice try but no dice!”

Furthermore, the court found David’s testimony regarding his claimed purchase of conventional herbicides “not believable” and that David was unreliable as a witness. Hence, it ordered David to pay up.

It is important to note that the ‘605 patent claims a gene sequence, not a plant variety or a seed. David tried pleading that the ’605 patent cannot be infringed merely by saving seeds from plants containing the patented gene sequence. He argued that the written description of the ’605 patent lacks the specificity that would be required of a patented plant variety under the utility patent statute; thus, the ’605 patent is limited to the gene sequence and does not cover the plant containing such a gene.

David tried to fly under the premise that under J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred International, plants can only receive patent protection under the Plant Patent Act of 1930, the Plant Variety Protection Act of 1970, or under a utility patent on a plant variety. Thus, a utility patent on a gene sequence does not entitle the holder of that patent to enforce its grant of exclusivity against growers of plant varieties that contain the gene sequence.

Monsanto responded by showing that the holding of J.E.M. is just the opposite of what David claims it to be; patentable subject matter remains unmodified by the existence of the P.V.P.A. and the P.P.A. Moreover, Monsanto points to various decisions of this court that have read the ’605 patent onto plants and seeds containing the patented gene and holding those who save seeds liable for infringement.

The Supreme Court’s decision in J.E.M. stated that the existence of statutes specifically authorizing the patenting of plants (the P.P.A. and the P.V.P.A.) did not eliminate the availability of utility patent protection covering plants.

In smacking David down, the CAFC scolded him saying:

David’s real complaint seems to be that he should be able to save seed from his harvest, regardless of Monsanto’s patent. We have dealt with this complaint before. See e.g. Monsanto Co. v. McFarling, 302 F.3d 1291 (Fed. Cir. 2002). In McFarling, we held that a farmer who saved seed containing a patented gene was liable for patent infringement. Id. at 1299 (citing J.E.M., 534 U.S. at 604). McFarling further established that “the right to save seed of plants registered under the PVPA does not impart the right to save seed of plants patented under the Patent Act.” Id. We note that McFarling dealt with the very patent at issue in this case—the ’605 patent. We may not disregard a prior decision of this court regarding the same matter.

…

Due to his continually changing testimony, the court disregarded much of David’s testimony. See id. Given David’s unreliability as a witness, and a complete lack of other evidence supporting his claims, we conclude that the district court did not clearly err in determining that David planted saved seed.

David also tried to get the seed report tests conducted by Monsanto and the testimony of Monsanto’s expert Koppatschek, which relied on those seed report tests, thrown out.

Rule 702 of the Federal Rules of Evidence allows expert testimony if “(1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.”

This didn’t work since the Federal Rules of Evidence establish that an expert need not have obtained the basis for his opinion from personal perception. Reliance on scientific test results prepared by others may constitute the type of evidence that is reasonably relied upon by experts for purposes of Rule of Evidence 703.

See also:

Monsanto Planted By Patent Office Re-Exam
Re-Planting Biotech Crops A No-No

Posted February 13th, 2008 by Stephen Albainy-Jenei in BioAg, IP Litigation
| | 7 Comments »