Supreme Court agrees to hear two IP cases

On Friday, the Supreme Court agreed to hear two IP cases regarding issues that can have large ripple effects in the patent and trademark worlds.  In Amgen Inc. v. Sanofi, the Court will decide when a patent’s disclosure is sufficient, an issue it hasn’t visited in over a century.  And in Abitron Austria GmbH v. Hetronic Int’l, Inc., at issue is to what extent a trademark infringer must pay damages based on foreign sales, which was last considered by the Court over 70 years ago.

Amgen Inc., et al. v. Sanofi, et al.: How much disclosure in a patent is enough?

Amgen invented monoclonal antibodies that reduce the levels of “bad” cholesterol in the blood and markets one version of these antibodies as Repatha®.  It patented its invention in U.S. Patent Nos. 8,829,165 and 8,859,741.  While the patents specifically identify only 26 antibodies, they also contain a “step-by-step roadmap” describing how to create the claimed antibodies.  Thus, the claims of the patents are worded to encompass all the possible antibodies (of which there are potentially millions), not only the 26 specifically identified.  These types of “genus” claims—where invention of a particular structure that achieves a desired effect can be implemented in many similar ways—are central in the chemical, biotech, and pharmaceutical industries.

In October 2014, Amgen sued Sanofi, claiming that Sanofi’s Praluent® drug infringed Amgen’s patents.  In its defense, Sanofi argued that Amgen’s patent didn’t “enable” a person of ordinary skill in the art (“POSITA”) to make the invention, as required by U.S. patent laws. 

The “enablement” requirement is contained in 35 U.S.C. § 112(a): a patent must “contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art . . . to make and use the” invention. There was no dispute that Amgen’s patent enabled a POSITA to make the 26 antibodies specifically identified in the patent.  But was the “roadmap” sufficient to satisfy the enablement requirement as to the millions of unidentified antibodies?

The Federal Circuit has long held that for a claim to be enabled, the patent must teach a POSITA how to make/use the invention without undue experimentation.  For genus claims like Amgen’s, the Federal Circuit asks how much experimentation would be required for POSITAs “to reach the full scope of claimed embodiments.”  If it would require “substantial time and effort,” the patent is not enabled—even if individual versions of the invention can be made easily.

In this case, the Federal Circuit held that millions of antibodies might be encompassed by the claims, that the antibody arts are “unpredictable,” and that the patents lack “adequate guidance” beyond the 26 specific examples.  Thus, to reach the full scope of the claim, a POSITA would have to “to first generate and then screen” every theoretical candidate to determine whether it falls within the claims—which is asking too much of the enablement requirement.

In its petition for certiorari, Amgen argued that the Federal Circuit’s enablement test for genus claims goes far beyond the law’s requirements.  Rather than recognizing that some experimentation is allowed for a genus claim to be enabled, the Federal Circuit, Amgen argued, improperly demanded disclosures about each of the variations within the genus.

This case is being closely watched by the biotech and pharma industries.  A win for Sanofi will likely mean that patents in these areas could be substantially narrowed, and for a genus claim to be properly enabled, the written description would have to go into much more detail regarding potential variations.

Abitron Austria GmbH, et al. v. Hetronic Int’l, Inc.: To what extent does U.S. trademark law apply abroad?

The Lanham Act allows a trademark owner to recover from anyone who uses a mark that is likely to cause confusion with the owner’s mark.  15 U.S.C. § 1114(1)(a) (registered marks), 15 U.S.C. § 1125(a)(1) (unregistered marks).  Importantly, the owner’s mark must be used “in commerce,” and the infringer’s activity must also be “in commerce.”  This phrase is defined as “all commerce which may lawfully be regulated by Congress,” 15 U.S.C. § 1127, i.e., interstate and international commerce, and commerce with Native American tribes.  But to what extent is purely foreign commercial activity—activity that neither targets nor confuses U.S. consumers—“in commerce” with the U.S.?

Hetronic sued Abitron for trademark infringement in 2014 and won nearly $90 million.  Notably, nearly all the sales with the infringing marks were made in foreign countries, to foreign customers, for use in foreign countries.  Of the $90 million of infringing, worldwide sales, only about 3% ever ended up in the U.S.; even fewer were directly to U.S. buyers.

The law regarding the application of the Lanham Act to foreign conduct is all over the place.  There were five different tests applied by the various appellate courts to determine whether a plaintiff can recover damages for foreign sales.  In this case, the 10th Circuit Court of Appeals created a sixth: if the defendant is a U.S. citizen, then the Lanham Act applies to foreign conduct and the analysis stops there.  If it’s not a U.S. citizen, the court asks whether the defendant’s conduct had a substantial effect on U.S. commerce.  If so, courts consider whether foreign application of the Lanham Act would create a conflict with foreign trademark rights.  In applying that test to this case, the 10th Circuit held that it was appropriate to capture purely foreign sales–even though none of these sales were found to cause confusion in the U.S.—because those sales nonetheless stole sales from the plaintiff abroad, which in turn affected the plaintiff’s U.S. cash flows (which, the court recognized, conflicts with the Fourth Circuit’s approach).

Abitron asked the Supreme Court to take the case to resolve the split amongst the appellate courts and clarify that the Lanham Act’s extraterritorial reach does not apply to purely foreign sales. This could be a blockbuster case for firms like Costco, Amazon, eBay, and other companies that sell, or allow third parties to sell, products internationally. A win for Abitron would mean that infringing sales that occur completely abroad would be out-of-reach for a trademark plaintiff. On the other hand, a win for Hetronic would greatly expand the potential damages when a multinational firm is a defendant. In a world that is vastly more interconnected than 71 years ago (the last time the Supreme Court considered this issue), many large companies are undoubtedly keeping a close eye on the outcome of this case.

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