The Federal Circuit Review is a monthly newsletter featuring the latest case summaries handed down from the U.S. Court of Appeals for the Federal Circuit. In this Issue: "Presumption of Validity Extends to Erroneously Issue Claims" "Federal Circuit Finds Computer-Implemented Trading Method Patent-Eligible" "Priority Claim Determines Filing Date when applying One-Year Time Bar for Copying Claim" "Fairness Balancing Test Applies to Pre-Litigation Waiver of Attorney-Client Privilege" "Using Computer Merely to Speed-Up Calculations Cannot Save Patent-Ineligible Method" "Presumption of Enablement for Prior Art Extended to Non-Patent Publications"

1. Federal Circuit Review
VOLUME 2 | ISSUE 8 AUGUST 2012
Presumption of Validity Extends to Erroneously Issued Claims
In Sciele Pharma Inc. v. Lupin Ltd. (Docket No. 2012-1228), the Federal Circuit vacated and remanded the district court’s grant
of a preliminary injunction.
Shionogi owns a patent covering sustained release metformin and markets the drug under the name Fortamet. During prosecution
of the patent, the U.S. Patent and Trademark Office (PTO) rejected several claims as obvious over prior art, and the applicant
canceled the rejected claims. Nevertheless, the issued patent erroneously included the canceled claims. Shionogi sued Lupin for
infringing the patent — including the erroneously issued claims — based on Lupin’s request to the FDA to allow it to make and sell
a generic version of Fortamet. After expiration of the 30-month waiting period required under FDA regulations, Lupin attempted to
launch its generic version without first obtaining a final judgment on the merits in the infringement suit, and Shionogi moved in the
suit for a preliminary injunction to prevent Lupin’s attempt to launch. Lupin countered by asserting that the Shionogi patent was
invalid, basing its arguments on references that had previously been considered by the PTO. The district court disagreed with Lupin
and considered these arguments insufficient to raise a substantial question of invalidity. In spite of the errors in the issued patent,
the district court concluded it was required to show deference to the PTO as a qualified agency and reasoned that, because the
prior art at issue was considered by the PTO, the case was fundamentally different from KSR (a recent supreme court case finding a
patent invalid for obviousness). Accordingly, the court granted the preliminary injunction preventing Lupin from launching its generic
version.
On appeal, Lupin argued against any presumption of validity because the canceled claims issued erroneously, and Shionogi
argued that there should be a heightened presumption of validity because the cited references were considered by the PTO during
examination. The Federal Circuit held that both parties were wrong. The presumption of validity and burden of proof, clear and
convincing evidence, is not altered based on facts from the file history. Instead, quirks from the prosecution history or the fact that
a reference was previously before the PTO simply affect the weight that should be assigned to the evidence. Here, the prior art
provided a motivation to make a composition with the claimed pharmacokinetic profile, and the applicant had argued that it was
routine for one of skill in the art to obtain a desired pharmacokinetic profile. Because Lupin raised a substantial question of validity,
the Federal Circuit vacated the preliminary injunction and remanded.
In This Issue
• Presumption of Validity Extends to Erroneously • Fairness Balancing Test Applies to Pre-
Issued Claims Litigation Waiver of Attorney-Client Privilege
• Federal Circuit Finds Computer-Implemented • Using Computer Merely to Speed-Up
Trading Method Patent-Eligible Calculations Cannot Save Patent-Ineligible
Method
• Priority Claim Determines Filing Date when
applying One-Year Time Bar for Copying Claim • Presumption of Enablement for Prior Art
Extended to Non-Patent Publications

2. Federal Circuit Finds Computer-Implemented Trading Method
Patent-Eligible
In CLS Bank International v. Alice Corp. (Docket No. 2011-1301), the Federal Circuit reversed the district court’s finding of
invalidity based on ineligible subject matter.
The asserted claims included system, method, and computer program product claims that covered a computerized trading platform
for exchanging obligations. The district court held that each claim asserted by Alice was invalid for failure to claim patent eligible
subject matter. Specifically, the district court held that each claim fell within the “abstract ideas” exception to patent eligibility.
The Federal Circuit reversed, finding that each asserted claim covered a practical application of a business concept in a specific way
that required computer-implemented steps. The majority found that the computer-implemented claim limitations played a significant
part in permitting the method to be performed and were not token, post-solution activity. The majority also found that the claim
limitations left room for other methods of exchanging obligations and so did not appear to preempt much in the way of innovation.
The majority noted that, “[w]hile the use of a machine in these limitations is less substantial or limiting than the industrial uses
examined in [Diamond v. Diehr, 450 U.S. 175 (1981)] (curing rubber) or [In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994)] (a rasterizer),
the presence of these limitations prevents us from finding it manifestly evident that the claims are patent ineligible under [35 U.S.C.]
§ 101.”
Judge Prost dissented, arguing that the majority resisted the Supreme Court’s directive—e.g., in Bilski v. Kappos, 130 S.Ct. 3218
(2010)—to apply the patentable subject matter test with more vigor and, in fact, created an entirely new framework that allows courts
to “avoid deciding a § 101 case unless unpatentability is ‘manifestly evident.’” The dissent argued that the majority did not follow
the Supreme Court’s instructions in inquiring whether the asserted claims include an inventive concept and instead focused on the
fact that the claims require “computer implementation,” while failing to explain why the specific computer implementation brings the
claims within the scope of 35 U.S.C. § 101.
Priority Claim Determines Filing Date when applying One-Year
Time Bar for Copying Claim
In Loughlin v. Ling (Docket No. 2011-1432), the Federal Circuit affirmed a decision of the Board of Patent Appeals and Interferences
canceling an issued claim in view of an interfering claim.
An interference, or dispute over inventorship, arose between Loughlin’s patent and Ling’s application. Loughlin’s patent issued from
an application that published on November 18, 2004. Ling’s application was filed February 5, 2007, claiming priority under 35 U.S.C.
§ 120 to an application filed on January 16, 2004. Following the procedure for alerting the patent office to an inventorship dispute,
Ling copied claims from Loughlin’s application on February 21, 2007, and the PTO declared an interference.
Loughlin attempted to end the interference using an alleged procedural defect under 35 U.S.C. § 135(b)(2), which provides that a
copied claim “may be made in an application filed after the application is published only if the claim is made before 1 year after the
date on which the application is published.” The Board denied Loughlin’s motion, holding that § 135(b)(2) did not apply to Ling’s
application because it claimed priority to January 16, 2004, which was before Loughlin’s application published. Loughlin appealed.
The Federal Circuit agreed with the Board that § 135(b)(2) did not apply to Ling’s application, given that application’s effective filing
date in 2004. The Federal Circuit noted that, “[p]rovided the criteria in § 120 are met, applications ‘shall,’ without exception, receive
the benefit of the earlier filing date” and that § 120 “does not limit its effect to only certain provisions under the patent laws.” Thus,
the Federal Circuit affirmed the Board’s judgment canceling Claim 1 of Loughlin’s patent.
Fairness Balancing Test Applies to Pre-Litigation Waiver of
Attorney-Client Privilege
In Wi-LAN, Inc. v. LG Electronics, Inc. (Docket No. 2011-1626), the Federal Circuit vacated and remanded the district court’s
production order and contempt sanctions, holding that in analyzing the scope of waiver of attorney-client privilege, the court should
have applied a fairness balancing analysis when assessing pre-litigation disclosures between the parties.
Prior to suit, Wi-LAN sent a letter to LG requesting that LG pay a license under Wi-LAN’s patent. Wi-LAN attached a confidential
opinion letter from Wi-LAN’s outside counsel analyzing infringement of Wi-LAN’s intellectual property by LG’s technology. LG
refused to pay, and Wi-LAN sued for patent infringement. During discovery, LG demanded that Wi-LAN divulge documents and
make Wi-LAN’s outside counsel available to testify broadly regarding the subject matter of the opinion letter, under the theory
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3. that Wi-LAN had waived the attorney client privilege by showing the opinion letter to LG. Wi-LAN’s outside counsel resisted LG’s
demand, claiming that any waiver of the attorney-client privilege should be limited to the letter itself. The district court agreed with
LG and ordered Wi-LAN to produce the documents, eventually finding Wi-LAN’s counsel in contempt and entering sanctions for
failing to comply. Wi-LAN appealed.
The Federal Circuit found that regional circuit law applied and that the district court erred by rejecting considerations of fairness in
determining the scope of the waiver. The Federal Circuit analyzed Federal Rule of Evidence 502(a) (which applies to disclosures
made in a court proceeding), Ninth Circuit law, and other circuits’ law to hold that fairness balancing in analyzing the scope of
waiver of attorney-client privilege applies to pre-litigation disclosures. The Federal Circuit vacated and remanded for the district
court to take into consideration fairness, that is, “whether LG would be unfairly prejudiced by Wi-LAN’s assertion of privilege against
discovery into attorney-client communications beyond the four corners of the [ ] letter.”
Using Computer Merely to Speed-Up Calculations Cannot Save
Patent-Ineligible Method
In Bancorp Services, LLC v. Sun Life Assurance Co. of Canada (U.S.) (Docket No. 2011-1467), the Federal Circuit affirmed the
district court’s finding of invalidity based on ineligible subject matter.
The asserted claims included method, system, and computer-readable medium claims that covered a computerized program for
managing life insurance policies. The district court held, on summary judgment, that the claims (whether formed as method, system,
or apparatus claims) were invalid under 35 U.S.C. § 101 as directed to patent-ineligible “abstract ideas.”
The Federal Circuit affirmed, distinguishing its previous CLS Bank decision that had held claims relating to computerized stock
trading platform eligible under 35 U.S.C. § 101, and explaining that “using a computer to accelerate an ineligible mental process
does not make the process patent-eligible.” In this case, the Federal Circuit found that “the computer limitations did not play a
‘significant part’ in the performance of the claimed invention” and “unlike CLS, the claims here are not directed to a ‘very specific
application’ of the inventive concept.” Thus, despite the CLS precedent, the Federal Circuit rebuffed what it saw as Bancorp’s
attempt to “broadly claim the unpatentable abstract concept of managing a stable value protected life insurance policy.”
Presumption of Enablement for Prior Art Extended to Non-Patent
Publications
In In re Antor Media Corp. (Docket No. 2011-1465), the Federal Circuit affirmed a decision by the Board of Patent Appeals and
Interferences rejecting claims in an ex parte reexamination as invalid for anticipation and obviousness.
The Board found the claims of a patent related to data networks to be anticipated and obvious during ex parte reexamination. Antor
appealed, arguing that two of the references cited by the Board to reach its conclusions were not “enabled”—that is, neither the
Examiner nor the Board had provided any evidence that these references were sufficient to enable anyone to practice the Antor
invention.
The Federal Circuit agreed with Antor that cited reference must provide enabling disclosure for anticipation, but the Federal Circuit
nevertheless affirmed the Board’s rejection, holding that even non-patent publications are presumed to be enabled. Thus, an
examiner need not conduct an enablement inquiry prior to relying on a reference. The Federal Circuit noted that a prior art reference
need not enable its full disclosure, but only the portion of the disclosure alleged to anticipate. The Federal Circuit concluded that
once the Examiner presented a prima facie case of anticipation, the burden shifts to the patent applicant to present rebuttal evidence
of nonenablement. In this case, Antor failed to rebut the presumption that the cited reference was enabled because he failed to
show that undue experimentation was needed to practice the claimed invention based on the cited reference.
The Federal Circuit also affirmed the obviousness rejections, reiterating that a reference need not be enabled to qualify as an
obviousness reference.
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