1. U.S. Supreme Court Patent Cases Harold C. Wegner * Harold C. Wegner * Costa Rican Bar Association Auditorio Pablo Casafont San Jose, Costa Rica June 8, 2010 * Biographical information at the end of this presentation. 1hwegner@foley.com

2. Supreme Court Decisions eligible nonobviousness patentability The two major Supreme Court battleground areas for obtaining valid patents deal with patent-eligible subject matter (35 USC § 101) and nonobviousness as a condition for patentability(35 USC § 103)(a)). 2hwegner@foley.com

3. Supreme Court Decisions eligibleable Most tangible objects as well as processes are patent- eligible(§ 101), whether or not they are patentableas being nonobvious (§ 103). also patentable E.g., a laboratory-crafted microorganism may be “eligible” (§ 101), and it is also patentable if new and nonobvious (§ 103). But, a second microrgansim may be unpatentableif it is “obvious” versus previously known microorganisms. 3hwegner@foley.com

4. Supreme Court Decisions Leading Cases on Patent-Eligibility (35 USC § 101) Bilski v. Kappos: Supreme Court decision expected June 7 or 14 or 21 or 28. Diamond v. Chakrabarty, 447 U.S. 303 (1980)(Rehnquist, C.J.)(patent-eligibility under 35 USC § 101 for “living” inventions). 4hwegner@foley.com

5. Supreme Court Decisions Leading Cases on Patentability (35 USC § 103)(a) Is the invention which is patent-eligible under 35 USC 101 also patentable under the nonobviousness test of the leading cases: Graham v. John Deere Co. 383 U.S. 1 (1966) KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 426 (2007). 5hwegner@foley.com

6. Supreme Court Decisions The “Obviousness” Inquiry of Graham and KSR “The underlying factual inquiries [for an obviousness determination] are: (1) the scope and content of the prior art, (2) the differences between the prior art and the claims at issue, (3) the level of ordinary skill in the pertinent art, and (4) secondary considerations of nonobviousness.” Perfect Web Techs., Inc. v. InfoUSA, Inc., 587 F.3d 1324, 1327 (Fed. Cir. 2009)(Linn, J.) (citing KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 406 (2007), citing Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966)). 6hwegner@foley.com

7. Supreme Court Decisions common sense “[T]he Supreme Court observed that common sense can be a source of reasons to combine or modify prior art references to achieve the patented invention.” Perfect Web, 587 F.3d at 1328. 7hwegner@foley.com

8. Supreme Court Decisions common sense When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue the known options within his or her technical grasp. If this leads to the anticipated success, it is likely the product not of innovation but of ordinary skill and common sense. In that instance the fact that a combination was obvious to try might show that it was obvious under § 103.” Perfect Web, 587 F.3d at 1328 (quoting KSR, 550 U.S. at 421(emphasis added). 8hwegner@foley.com

9. Supreme Court Decisions “Common sense teaches... that familiar items may have obvious uses beyond their primary purposes, and in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle.” Perfect Web, 587 F.3d at 1328 (quoting KSR, 550 U.S. at 420-21. 9hwegner@foley.com

10. Supreme Court Decisions Mayo v. Prometheus: Diagnostic Method Patent-Eligibility InMayo Collaborative Services v. Prometheus Laboratories, Inc., Supreme Court No. 09-490, opinion below, Prometheus Laboratories, Inc. v. Mayo Collaborative Services, 581 F.3d 1336 (Fed. Cir. 2009)(Lourie, J.), the Supreme Court is given the opportunity to grant certiorari concerning the patent-eligibility under 35 USC § 101 of a medical diagnostic method. 10hwegner@foley.com

11. Supreme Court Decisions Claim: A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising: administering a drug determining the level “(a) administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and “(b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder “wherein the level of 6-thioguanine less than about 230 pmol per 8x108 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and “wherein the level of 6-thioguanine greater than about 400 pmol per 8x108 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.” 11hwegner@foley.com

12. Supreme Court Decisions Question Presented in Mayo v. Prometheus at the Supreme Court: “Whether 35 U.S.C. § 101 is satisfied by a patent claim that covers observed correlations between patient test results and patient health, so that the claim effectively preempts all uses of these naturally occurring correlations.” 12hwegner@foley.com

13. Supreme Court Decisions International Patent Exhaustion the patentee A patent right is “exhausted” when the patentee sells his patented product to a purchaser. Then, the purchaser is free to resell (or otherwise transfer) the thus- purchased product. 13

14. Supreme Court: Exhaustion same country Does the patentee’s sale have to be in the same country to create “exhaustion”?, is the United States patent right “exhausted” when the patentee sells in the other country Thus, if a patentee has parallel patents in the United States and another country, is the United States patent right “exhausted” when the patentee sells in the other country? If “yes”, this would be “international patent exhaustion”. 14

15. Supreme Court: Exhaustion the Executive Branch “International patent exhaustion” was strongly opposed by the Executive Branch of the United States in negotiations leading up to the TRIPS, while developing countries were equally adamant that there is (or should be) international patent exhaustion. 15

16. Supreme Court: Exhaustion The TRIPS treaty failed to reach any agreement on whether there is or should be international exhaustion. Instead, the TRIPS expressly states: nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights “[S]ubject to the provisions of [TRIPS] Articles 3 [providing for national treatment] and 4 [providing most-favored-nation treatment,] nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights.” TRIPS, Article 6. 16

17. Supreme Court: Exhaustion The Supreme Court in has never yet considered the case of international patent exhaustion. Boesch v. Graff, 133 U.S. 697 (1890), is incorrectly cited as denying international patent exhaustion. 17

18. Supreme Court: Exhaustion Boesch v. Graff has nothing to do with the patentee’s first sale of a product in a foreign country: The patentee owned parallel patents for his stove component in both the United States and Germany. The patentee’s competitor sold the same stove component in Germany without a license because the competitor was making the stove component independent of the patent right (due to a “prior user right”). 18

19. Supreme Court: Exhaustion In Boesch v. Graff the sale of the stove component purchased from the patentee’s competitor was found to be an infringement of the United States patent. But, this was not “international patent exhaustion” because the patentee never sold the patented stove component that was imported into the United States and sold. 19

20. Supreme Court: Exhaustion Jazz Photo Corp. v. Int'l Trade Comm'n, 264 F.3d 1094 (Fed.Cir.2001)(Newman, J.), is the first and therefore precedential Federal Circuit case on “international patent exhaustion”. Without any reasoning, the Court simply that “[t]o invoke the protection of the first sale doctrine [of exhaustion], the authorized first sale must have occurred under the United States patent.” Jazz Photo, 264 F.3d at 1105. 20

21. Supreme Court: Exhaustion The only support given by the Federal Circuit is a citation to Boesch v. Graff, 133 U.S. at 701-703,with a parenthetical statement of what it viewed as the holding: “[A] lawful foreign purchase does not obviate the need for license from the United States patentee before importation into and sale in the United States.” 21

22. Supreme Court: Exhaustion But, of course, Boesch v. Graff had nothing to do with “international patent exhaustion. FujiFilm Corp. v. Benum, __ F.3d __ (Fed. Cir. 2010)(per curiam)(Michel, C.J., Mayer, Linn, JJ.), is the most recent Federal Circuit case following the Jazz Photo denial of international patent exhaustion because that case is binding precedent (unless overturned en banc). 22

23. Supreme Court: Exhaustion The Supreme Court has never considered international patent exhaustion but has considered other IPR international exhaustion. The October 2010 Term of the Court will consider international copyright exhaustion in Costco Wholesale Corp. v. Omega, S.A., Supreme Court No. 08-1423, opinion below, Omega S.A. v. Costco Wholesale Corp., 541 F.3d 982 (9th Cir. 2008)(Smith, Jr., J.), 23

24. Supreme Court: Exhaustion The Supreme Court in Costco may well provide clues as to its views on international exhaustion generally, i.e., including patents, when it decides the Costco case. 24

25. Supreme Court: Exhaustion In Transcore, the Federal Circuit broadly interpreted the scope of exhaustion: “[T]he Supreme Court [in Quanta] reiterated unequivocally that ‘[t]he longstanding doctrine of patent exhaustion provides that the initial authorized sale of a patented item terminates all patent rights to that item[.]’” TransCore, LP v. Electronic Transaction Consultants Corp., 563 F.3d 1271, 1274 (2009)(Gajarsa, J.) (quoting QuantaComputer, Inc. v. LG Electronics, Inc., 128 S.Ct. 2109, 2115, 2121 (2008))(emphasis added). 25

26. Supreme Court: Exhaustion A second appeal in the same Quanta case is expected which will deal with international patent exhaustion. “Quanta II” is the second part of the Quanta case. The District Court in Quanta II said that “yes”, there is international patent exhaustion. LG Electronics, Inc. v. Hitachi, Ltd., 2009 WL 667232 (N.D.Cal. 2009)(Wilken, J.) 26

27. Supreme Court: Exhaustion The Federal Circuit – and then possibly the Supreme Court as well – will consider international patent exhaustion in a “Quanta II” appeal. 27

28. Supreme Court Decisions Thank you very much for your attention! If you have any questions you may feel free to contact me at hwegner@foley.com. Thank you, again! 28hwegner@foley.com

29. HAROLD C. WEGNER HAROLD C. WEGNER retains his affiliation with the George Washington University Law School where he had been Director of the Intellectual Property Law Program and Professor of Law. His involvement with other academic institutions has included service as a Visiting Professor at Tokyo University. Hecontinues his patent practice as a partner at Foley & Lardner LLP. Prof. Wegner’s patent career commenced with service at the U.S. Department of Commerce as a Patent Examiner. He spent three years at the Max-Planck- InstitutfürGeistigesEigentum in Munich where he was a WissenschaftlicheMitarbeiter. He then became a Kenshuinat the Kyoto University Law Faculty under Dr. Kitagawa. Prof. Wegner is a graduate of Northwestern University (B.A.) and the Georgetown University Law Center (J.D.), where he launched his teaching career as an Adjunct Professor of Law teaching International Licensing. contact: hwegner@foley.com 29hwegner@foley.com