Federal Circuit Inventorship Decision Literally Saves the Appellant’s Bacon – and Reiterates the Framework for Assigning and Analyzing Inventorship

Pile of Sizzling Bacon Isolated on Black

In HIP, Inc. v. Hormel Foods Corporation (May 5, 2023), Judges Lourie, Clevenger and Taranto of the U.S. Court of Appeals for the Federal Circuit addressed a claim of joint ownership and – in a unanimous precedential decision – reaffirmed the framework for determining the degree of contribution that an individual must make in order to qualify as an inventor.

United States patent no. 9,980,498 (Hybrid Bacon Cooking System) is owned by Hormel and relates to methods of precooking bacon and other pieces of meat that improve the flavor and overall quality. Independent claim 5 of the ’498 patent provides the following:

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The Judicial Response to Eligibility Post-Hantz

Ideas Concepts Light Bulb and Gears on Virtual Screen

On March 20, the United States Court of Appeals for the Federal Circuit issued a short non-precedential opinion that, among other things, found that a motion to dismiss based on patent ineligibility under 35 U.S.C. § 101 extended only to claims explicitly addressed in the operative complaint. See Hantz Software, LLC v. Sage Intacct, Inc., No. 2022-1390, 2023 WL 2569956, at *1 (Fed. Cir. Mar. 20, 2023). My esteemed colleague already addressed this seemingly minor but practically important opinion. See Alaina J. Lakawicz, The Scope of Eligibility, IP Intelligence (Mar. 28, 2023).

But how have district courts responded to this opinion? And what, if any, strategies can parties use going forward?

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World IP Day

We celebrate World IP Day this year on April 26, commemorating 53 years of the World Intellectual Property Organization (WIPO) Convention’s implementation. This year’s theme is “Women and IP: Accelerating Innovation and Creativity.” Women inventors and creators have shaped our world, developing new drugs, medical devices, industrial chemicals and technology. While women make up nearly half of the world’s population, WIPO estimates that in 2022, only 16 percent of international patent application inventors were women. That innovation gender gap is closing, and companies having at least one woman founder were involved in over 3,000 deals, valued at about $35 billion, last year.[1]

On World IP Day this year, the U.S. Patent and Trademark Office (USPTO) is hosting “The Value of Her IP.” The program will feature women inventors, creators and business owners who will discuss the difficulties and rewards associated with creating, protecting and defending their intellectual property. ChIPs (Chiefs in Intellectual Property is hosting a webinar featuring Kathi Vidal, director of the USPTO. WIPO sponsors several programs, including mentoring programs and online courses, to assist women in successfully implementing an IP strategy.

BakerHostetler has the privilege of advising countless women inventors and entrepreneurs whose ingenuity continues to inspire us. We are proud to celebrate them on this year’s World IP Day.

[1] https://pitchbook.com/news/articles/2022-female-founders-year-in-review; https://pitchbook.com/news/articles/the-vc-female-founders-dashboard.

The Other ‘Maybe’ Authors: Copyright Ownership for AI Trainers

Discussions held over the past several months regarding authorship of AI-generated works have suffered from at least two things—1) an outsized focus on whether the users of commercially available generative AI (GAI) can own the content returned to them by the AI software, and 2) an outsized focus by the Copyright Office on a need to predict the results of AI and purposely control every detail of the output. This creates a major problem. There are other types of AI beside GAI, and corporations and other stakeholders throughout multiple industries have been using them for years.

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Incorporated References Can Be Used in an Anticipation Rejection

Patent concept with man using tablet

A claim is said to be anticipated when a single prior art reference discloses, either expressly or inherently, each and every limitation of the claim. But what happens when a prior art reference discloses some aspects of the claimed invention and incorporates by reference additional prior art references that disclose other aspects of the claimed invention? According to the Federal Circuit, the prior art reference together with its incorporated references can anticipate the claims. Arbutus Biopharma Corp. v. ModernaTX, Inc., No. 2020-1183, 2023 WL 2876820 (Fed. Cir. Apr. 11, 2023).

Arbutus Biopharma Corporation (Arbutus) is the owner of U.S. Patent No. 9,404,127 (the ’127 patent), which is said to provide “novel, stable lipid particles having a non-lamellar structure and comprising one or more active agents or therapeutic agents.” ’127 patent at abstract. The ’127 patent states that “[t]he present invention is based, in part, upon the surprising discovery that by controlling the lipid composition of a [stable nucleic acid-lipid particles (SNALP)] formulation as well as the formation process used to prepare the SNALP formulation, a novel non-lamellar lipid nanoparticle (i.e., SNALP) can be produced.” Id. at col. 8, lines 51-55. Claim 1 of the ’127 patent is as follows:

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No, the Federal Circuit Did Not Just Kill Off Software Copyrights – Knock It Off

A yellow copyright symbol on a digital background

Many people were disappointed when the most-watched copyright case of the past 10 years, Oracle’s lawsuit against Google over Google’s copying Java application programming interface (API) code, failed to yield better guidance on the scope of copyright protection for computer programs. The case was probably a bad test case anyway, as it involved some very functional aspects of some very functional code – the declaring code (which acts as a set of signposts pointing the software to where certain computing assets are located) for an API (which enables interoperability between different computer programs). This rather prosaic aspect of rather prosaic code lacked the dazzle of even, say, a bookkeeping program, where the arrangement of screens and user experience might involve some obvious and welcome creativity. So when the Federal Circuit found that the declaring code was protectable because there was more than one way to word the signposts (and revived interest in the notion of code protecting nonliteral elements like sequence, structure or organization), stakeholders throughout the software industry were waiting for a Supreme Court epiphany either endorsing this rather aggressive interpretation of expressiveness in code or reeling it in.

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PTAB Rulings Highlight the Importance of a Claimed Agent’s Stated Function

The PTAB recently handed down two consequential inter partes review decisions that emphasize the importance of the stated function for an agent specified in the claims. In particular, the PTAB held that glucose, which is a component of an anticoagulant used in the prior art, is not “an agent that inhibits cells lysis” simply because it can maintain isotonicity and provide a nutrient source to cells.

Illumina (“Petitioner”) filed two petitions to institute inter partes review[1] of claims of U.S. Patent Nos. 7,332,277 (’277 patent) and 7,727,720 (’720 patent) granted to Ravgen Inc. (“Patent Owner”). The ’277 patent is directed to, e.g., noninvasive methods for sampling cell-free fetal DNA (cffDNA) and detecting genetic disorders in a fetus. The disputed claims relate to analyzing cffDNA, which is present in maternal plasma and serum together with maternal DNA, through the use of cell lysis inhibitors in the isolation procedure. According to the patents, maternal blood contains vastly more maternal cells than fetal cells, and by reducing the lysis of maternal cells, there is a relative increase in the percentage of cffDNA relative to maternal DNA in the sample. Independent claim 55 of the ’277 patent is illustrative:

55. A method comprising determining the sequence of a locus of interest on free fetal DNA isolated from a sample obtained from a pregnant female, wherein said sample comprises free fetal DNA and an agent that inhibits lysis of cells, if cells are present, wherein said agent is selected from the group consisting of membrane stabilizer, cross-linker, and cell lysis inhibitor.

Petitioner asserted that the claims reciting an agent that inhibits lysis of cells were unpatentable as anticipated by the Landes reference.[2] According to Petitioner, Landes discloses collecting maternal blood in tubes containing acid citrate dextrose (ACD), which necessarily exposes the blood to dextrose (aka glucose), an agent that inhibits cell lysis. Patent Owner responded, arguing that Landes uses ACD only as an anticoagulant and that the reference does not disclose the functionality of the glucose.

Based on the ’277 and ’720 patents and their prosecution history, the PTAB construed the term “an agent that inhibits lysis of cells” to exclude anticoagulant chelators such as ACD. However, the Board noted that ACD also includes a pH buffer (citric acid), glucose (for isotonicity) and a chelator (sodium citrate). Thus, the issues presented to the PTAB were 1) whether the exclusion of anticoagulant chelators from the meaning of an “agent that inhibits lysis of cells” operates to exclude the glucose introduced through ACD and 2) whether Petitioner established, by a preponderance of the evidence, that the glucose in ACD actually inhibits lysis of cells in Landes’ method.

Regarding the first issue, the PTAB stated that “it would seem incongruous that a blood sample to which is added a substance listed as an ‘agent’ in the Specification would be excluded from meeting the claims simply because that substance (glucose) was introduced to the sample as one component of a solution also comprising an anticoagulant chelator (sodium citrate).”[3] For this reason, the PTAB found that Patent Owner’s disavowal of the anticoagulant component of ACD as an agent that inhibits cell lysis did not extend to the glucose component of ACD.

Regarding the second issue, while the PTAB found that the glucose component in ACD can maintain isotonicity within cells – which can inhibit cell lysis – failure to maintain isotonicity does not necessarily result in lysis. Thus, the PTAB found that “Petitioner has shown, at best, that it is possible for glucose to help inhibit cell lysis by reason of isotonicity and providing a nutrient source. But such possibilities are not enough for Petitioner to prevail on its challenge to the claims as anticipated by Landes.”[4] As a result, the PTAB found that Petitioner did not meet its burden to show that the glucose component of ACD in the Landes method is “an agent that inhibits cell lysis,” and thus, the Petitioner could not establish that the claims were anticipated by Landes.

An agent within a biological or chemical mixture may be capable of exerting multiple, albeit secondary, effects. However, these PTAB decisions make clear that the mere possibility that an agent could have a particular effect as a corollary will not necessarily be conclusive in a determination of whether such an agent would have actually produced the stated effect. When evaluating a prior art reference’s disclosure, applicants should evaluate the effects that a disclosed agent will necessarily bring about when determining whether an agent will be deemed to produce a stated effect.

[1] Illumina, Inc. v. Ravgen, Inc., IPR2021-01272 (Jan. 25, 2023); Illumina, Inc. v. Ravgen, Inc., IPR2021-01271 (Jan. 25, 2023).

[2] WO2003062441.

[3] Illumina, Inc. v. Ravgen, Inc., IPR2021-01272, 35 (Jan. 25, 2023).

[4] Id. at 45.

The Scope of Eligibility

Close up of dice on Infringement of patents

Following the Supreme Court’s Alice Corp. Pty. v. CLS Bank Int’l decision in 2014, patent eligibility under Section 101 of the Patent Act has been increasingly invoked in early motion practice. In Hantz Software, LLC v. Sage Intacct, Inc., however, the Federal Circuit made a ruling that should give parties pause before moving, particularly in cases where the operative pleading only contains a subset of patent claims. 

In the Hantz case, Hantz Software LLC (Hantz) sued Sage Intacct Inc. (Sage) in the U.S. District Court for the Northern District of California, alleging that Sage infringed two of its patents. Sage moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), arguing that the complaint asserted patent-ineligible claims under 35 U.S.C. § 101. The district court agreed with Sage and held that the asserted patents were ineligible. Hantz appealed.

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Generative AI Tools Can Present IP Risks, But They’re Manageable

Internet law on Dark Blue blurred background.

The sudden increase in news coverage of generative artificial intelligence (AI) tools like ChatGPT and Midjourney has employees excited to discover how these accessible tools can make their jobs easier. Employers are concerned about the legal implications of using such tools, and they are exploring different approaches for their own AI usage policies.

However, blanket policies that try to account for the risks that can come from using any AI technology can be overly restrictive or so generic that they do not properly address the legal considerations for AI usage. The rules for using AI technology under an enterprise license are likely more permissive than those for consumer-facing AI tools, as the former will likely have broader confidentiality and indemnity protections than the latter. For this reason, employee guidance on AI usage should specifically identify the AI tools subject to particular guidance and specifically differentiate between AI tools that may be offered under both a personal and an enterprise license, like ChatGPT. Those interested in a more general conversation about current AI frameworks can see our article here.

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How the National Cybersecurity Strategy Could Impact Your Business 

Cyber security and data protection. Businesswoman using modern screen computer protecting business and financial data with virtual network connection. Innovation technology develop smart solution.

On March 1, the White House released its National Cybersecurity Strategy (NCS), providing a road map to address cyber threats and secure the U.S.’s digital ecosystem for the future.[1] Specifically, the White House aims to enhance the digital ecosystem’s defensibility, resilience and alignment with U.S. values.

Importantly, the NCS adopts two fundamental shifts in how the U.S. allocates roles, responsibilities and resources in cyberspace.[2] The first fundamental shift involves the “most capable and best-positioned actors” – instead of individuals, small businesses, state and local governments, and infrastructure operators – shouldering the responsibilities of defending cyberspace and improving cybersecurity. These actors may include owners/operators of systems holding data that make our society function and technology providers that build and service these systems.

The second fundamental shift incentivizes long-term investments over short-term interests. This involves more attention toward ensuring market forces and public programs at least reward security and resilience and on coordinating research and development investments in cybersecurity.

Overall, the NCS seeks to build and enhance collaboration across the digital system based on five pillars: (1) defend critical infrastructure, (2) disrupt and dismantle threat actors, (3) shape market forces to drive security and resilience, (4) invest in a resilient future, and (5) forge international partnerships to pursue shared goals. Of the five pillars mentioned above, pillar 3 appears to most heavily impact the private sector in terms of liability.

One of pillar 3’s strategic objectives is to (i) hold stewards of personal data accountable via legislative efforts that impose clear limits on their ability to collect, use, transfer and maintain personal data, and (ii) provide strong protection for sensitive data like geolocation and health information.[3] Another strategic objective of pillar 3 is to accelerate the development of Internet of Things (IoT) security labeling programs previously set forth under Executive Order 14028.[4] In doing so, consumers may be armed with crucial information necessary to compare cybersecurity protections of IoT products (e.g., control systems, fitness monitors, etc.) thereby creating market incentives to help improve security across the entire IoT ecosystem. A further strategic objective of pillar 3 is to shift liability for insecure software products and services to software developers.[5] The White House seeks to work with Congress and the private sector to develop legislation establishing liability for software products and services.

This may be an opportune time for entities impacted by the NCS to review, forecast and potentially rebalance their intellectual property (IP) portfolio strategy and spend allocation. For example, entities planning to improve their cybersecurity features for software and IoT product offerings may benefit from early consideration, appropriation of necessary resources and coordinated IP protection. BakerHostetler routinely helps clients navigate evolving U.S. policies and customize effective IP strategies aligned with their strategic business objectives.

[1] See National-Cybersecurity-Strategy-2023.pdf (whitehouse.gov).

[2] Id. at 4-5

[3] Id. at 19-20

[4] Id.

[5] Id. at 20-21