Tickled Pink No More – Federal Circuit Affirms Cancellation of CeramTec’s Trademarks for Pink Ceramic Hip Implants
Color trademarks have traditionally been difficult to obtain. Of the over 4 million trademark registrations, there were less than 1000 color trademarks as of 2019.[1] To be eligible for trademark registration, a color must have acquired distinctiveness and must not be functional. Recently, the Federal Circuit examined the functional component of the analysis and explained why it presents such a hurdle to registration—particularly when a party also obtains patent protection.
On January 3, 2025, the U.S. Court of Appeals for the Federal Circuit upheld the Trademark Trial and Appeal Board (TTAB) decision canceling trademarks claiming protection for the pink color of ceramic hip components.
CeramTec, a manufacturer of ceramic components for artificial hip implants, developed zirconia toughened alumina (ZTA) containing chromia, which imparts pink color and increased hardness. This material was protected under CeramTec’s U.S. Patent No. 5,830,816, which expired in January 2013. In 2012, CeramTec sought trademark protection for the pink color of its ceramic components. CoorsTek, a competitor, successfully petitioned the TTAB to cancel the trademarks, arguing that the pink color was functional.
On appeal, the Federal Circuit affirmed the TTAB decision, emphasizing that trademarks are not registrable or enforceable if the design is functional. The court analyzed the TTAB’s application of the Morton–Norwich factors to determine functionality:
the existence of a utility patent disclosing the utilitarian advantages of the design;
advertising materials in which the originator of the design touts the design’s utilitarian advantages;
the availability to competitors of functionally equivalent designs; and
facts indicating that the design results in a comparatively simple or cheap method of manufacturing the product.
CeramTec GmbH v. Coorstek Bioceramics LLC, No. 2023-1502, 2025 WL 29252 (Fed. Cir. Jan. 3, 2025).
The court also considered TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23 (2001), which establishes that utility patents are strong evidence of functionality. The Federal Circuit noted that the functionality doctrine ensures the public is free to use innovations after a patent expires.
Based on these findings, the court affirmed that CeramTec’s pink trademarks are functional and therefore ineligible for protection.
[1] Wang, Xiaoren, Should We Worry about Color Depletion? An Empirical Study of USPTO Single-color Trademark Registrations (January 18, 2022). Available at SSRN: https://ssrn.com/abstract=4011677 or http://dx.doi.org/10.2139/ssrn.4011677
Expungement and Reexamination Proceedings at the USPTO: Cost-Effective and Efficient Processes for Cancelling Trademarks
Businesses seeking to clear the path for their trademarks can challenge trademarks of others that are not genuinely in use. The U.S. Patent and Trademark Office (USPTO) expungement and reexamination proceedings provide businesses with tools to challenge such existing trademark registrations. The USPTO recently announced that it has successfully used such proceedings to clear more than 25,000 unused goods and services from the trademark register in 2024.
To maintain their registration, trademark owners are required to use their trademark in commerce for all the goods and services listed in the registration. However, when active trademark registrations include goods and services that no longer apply, they can block subsequent legitimate owners from registering the same or a similar mark.
Expungement and reexamination proceedings are two ways a party can challenge a registration due to nonuse in an attempt to cancel that registration. These proceedings are generally less expensive and more efficient than a formal cancellation proceeding before the Trademark Trial and Appeal Board (TTAB). If the request succeeds, the USPTO will delete those goods or services from the registration or cancel the registration altogether.
Expungement versus Reexamination
The type of proceeding depends on the particular facts. A party may institute an expungement proceeding if it can show that the owner never used the trademark in commerce with reference to some or all of the goods or services listed in the registration. Expungement is available for a registration based on use in commerce, a foreign registration, or the Madrid Protocol. Expungement must be requested between three and ten years after the trademark registration date.
On the other hand, a party may institute a reexamination proceeding if it can show that the owner did not use the trademark in commerce with reference to some or all of the goods or services listed in the registration on or before the relevant date required for showing proof of use. The “relevant date” is the date when the underlying application was initially filed based on use in commerce. When the underlying application was filed or amended to an intent-to-use basis, the “relevant date” is the date that an accepted amendment to allege use was filed or the end date of the statement-of-use period for an accepted statement of use. Reexamination must be requested within the first five years after registration.
How to Institute a Proceeding
To institute either an expungement or a reexamination proceeding, a party must submit the relevant form requesting that the USPTO institute a proceeding, including a verified statement, evidence supporting nonuse (such as past and current nonuse, fake or digitally altered specimens of use, or evidence of improper behavior that is relevant to nonuse), and a $400 fee per class of goods or services challenged. The trademark owner is notified and can submit a response. Aside from the original filing, no other documents are required. The USPTO will then consider all the evidence and make a determination. This process can take anywhere from four to twelve months.
For comparison purposes, the cost to institute a formal proceeding at the TTAB is $600 per class and can last up to three years. This does not include any legal fees incurred as a result of engaging in the adversarial proceeding, including motion filings and discovery.
Conclusion
In the past, if a registered mark were cited against an application based on a likelihood of confusion, the applicant could either respond with arguments as to why there was no likelihood of confusion or seek to cancel the registered mark. The expungement and reexamination proceedings give applicants another avenue for overcoming this type of refusal.
Just Compensation Based on Hypothetical Negotiation
In a long-standing copyright dispute on its second visit to the US Court of Appeals for the Federal Circuit, the Court affirmed the modest damages award from the US Court of Federal Claims, ruling that a hypothetical negotiation between the parties would have resulted in a license in the amount awarded by the claims court. Bitmanagement Software GmBH v. United States, Case No. 23-1506 (Fed. Cir. Jan. 7, 2025) (Dyk, Stoll, Stark, JJ.)
In 2016 Bitmanagement sued the US Navy for copyright infringement of its software. The Court of Federal Claims awarded damages based on usage of the software, rather than the number of copies made. In the first appeal, the Federal Circuit agreed with the claims court that the Navy had an implied license to make copies of the software but was limited as to simultaneous users of the software, a condition that the Navy breached. The Federal Circuit remanded the case with the following instruction:
Because Bitmanagement’s action is against the government, it is entitled only to “reasonable and entire compensation as damages . . . , including the minimum statutory damages as set forth in section 504(c) of title 17, United States Code.” 28 U.S.C. § 1498(b).
The Federal Circuit further instructed the claims court that Bitmanagement was:
. . . not entitled to recover the cost of a seat license for each installation. If Bitmanagement chooses not to pursue statutory damages, the proper measure of damages shall be determined by the Navy’s actual usage of BS Contact Geo in excess of the limited usage contemplated by the parties’ implied license. That analysis should take the form of a hypothetical negotiation. . . . As the party who breached the . . . requirement in the implied license, the Navy bears the burden of proving its actual usage of the . . . software and the extent to which any of it fell within the bounds of any existing license.
Following this mandate, the claims court denied Bitmanagement’s damages demand of almost $86 million and awarded $154,000. Bitmanagement appealed, arguing that it was entitled to damages based on each copy of the software made, rather than damages based on use exceeding the implied license.
The Federal Circuit disagreed, explaining that the law does not require that every award of copyright damages be on a per-copy basis:
. . . whenever the copyright in any work protected under the copyright laws of the United States shall be infringed by the United States . . . the exclusive action which may be brought for such infringement shall be an action by the copyright owner against the United States in the Court of Federal Claims for the recovery of his reasonable and entire compensation as damages for such infringement . . .
As the Federal Circuit noted, the methods used to determine recovery of “actual damages” under § 504 are those “appropriate for measuring the copyright owner’s loss.” Therefore, in § 504(b) cases, the copyright owner must prove “the actual damages suffered by him or her as a result of the infringement.”
As the Federal Circuit further explained, the “reasonable and entire compensation” provided for by § 1498(b) “entitles copyright owners to compensatory damages . . . but not to non-compensatory damages.” The focus is on “the copyright owner’s loss,” as opposed to the value obtained by the government.
Since the statutory requirement is to establish actual damages that are the consequence of, and thus caused by, the infringement, the Federal Circuit concluded that Bitmanagement was not entitled to recover per-copy damages.
Citing to its 2012 decision in Gaylord v. United States, the Federal Circuit explained that where a plaintiff cannot show lost sales, lost opportunities to license, or diminution in the value of the copyright (as in this case), an award of actual damages should be “based on the fair market value of a license covering the defendant’s use. The value of this license should be calculated based on a hypothetical, arms-length negotiation between the parties.”
Pink Is Not the New Black: See Functionality Doctrine
The US Court of Appeals for the Federal Circuit affirmed a Trademark Trial & Appeal Board decision canceling trademarks for the color pink for ceramic hip components, stating that substantial evidence supported the Board’s findings that the color pink as used in the ceramic components was functional. CeramTec GmbH v. CoorsTek Bioceramics LLC, Case No. 23-1502 (Fed. Cir. Jan. 3, 2025) (Lourie, Taranto, Stark, JJ.)
Trademarks cannot be functional. The functionality doctrine prevents the registration of useful product features as trademarks. As explained by the Supreme Court (1995) in Qualitex v. Jacobson Prods.:
The functionality doctrine prevents trademark law, which seeks to promote competition by protecting a firm’s reputation, from instead inhibiting legitimate competition by allowing a producer to control a useful product feature. It is the province of patent law, not trademark law, to encourage invention by granting inventors a monopoly over new product designs or functions for a limited time, 35 U.S.C. §§ 154, 173, after which competitors are free to use the innovation. If a product’s functional features could be used as trademarks, however, a monopoly over such features could be obtained without regard to whether they qualify as patents and could be extended forever (because trademarks may be renewed in perpetuity).
CeramTec manufactures ceramic hip components made from zirconia-toughened alumina (ZTA) ceramic containing chromium oxide (chromia). The addition of chromia gives the ceramic a characteristic pink color. CeramTec obtained trademarks for the pink color as used in these components. CoorsTek Bioceramics, a competitor, challenged the trademarks, arguing that the pink color of the ceramic was functional. The Board agreed, finding that the pink color was functional because it resulted from the addition of chromia, which provided material benefits to the ceramic, such as increased hardness. CeramTec appealed.
The Federal Circuit applied the four-factor Morton-Norwich (CCPA 1982) test to determine functionality:
Existence of a utility patent
Advertising materials
Availability of functionally equivalent designs
Comparatively simple or cheap manufacture.
The Federal Circuit found the first and second Morton-Norwich prongs were strongly in CoorsTek’s favor, as CeramTec held multiple patents that disclosed the functional benefits of chromia, such as toughness, hardness, and stability of the ZTA ceramic. Similarly, the Court found that CeramTec had multiple advertising materials that promoted its product’s functional advantages.
The Federal Circuit found that there was no evidence of alternative designs that were functionally equivalent to the pink ZTA ceramic, rendering the third factor neutral. The Court also found the fourth factor neutral because there was conflicting evidence regarding whether chromia reduced manufacturing costs.
Finally, CeramTec argued that CoorsTek should be precluded from challenging the trademarks based on the doctrine of unclean hands. The Federal Circuit acknowledged that the Board spoke too strongly in suggesting that the unclean hands defense is categorically unavailable in functionality proceedings but found any error to be harmless. The Court confirmed that the Board had adequately considered the defense and found it inapplicable in this case.
Hannah Hurley also contributed to this article.
Lager Than Life: $56 Million Verdict in Beer Trademark Dispute Still on Tap
The US Court of Appeals for the Ninth Circuit upheld a $56 million trial verdict in a trademark dispute, finding that the evidence supported the jury’s conclusion that a beer company’s rebranding of one its beers infringed a competitor’s trademark. Stone Brewing Co., LLC v. Molson Coors Beverage Company USA LLC, Case No. 23-3142 (9th Cir. Dec. 30, 2024) (Graber, Friedland, Bumatay, JJ.) (nonprecedential).
Stone Brewing sued Molson Coors in 2018 alleging that Molson changed its packaging of Keystone Light to emphasize the word “stone” in its “Own the Stone” marketing campaign, and that this change infringed Stone Brewing’s trademarks and caused consumer confusion. Molson raised a variety of defenses, all of which were rejected. A jury found infringement and ultimately awarded Stone Brewing $56 million. Molson appealed.
Molson argued that the district court erred in finding that the four-year laches clock did not bar Stone Brewing’s Lanham Act claims. The Ninth Circuit found that the laches clock began running in 2017 when Molson launched the “Own the Stone” campaign, to which all of Stone Brewing’s claims related. The Court noted that prior to 2017, Molson never referred to Keystone as anything other than Keystone in its packaging, marketing, or advertising materials, and specifically never broke up the product name “Keystone” and used the term “Stones” to refer to the number of beers in a case (“30 stones”) or as a catch phrase (e.g., “Hold my Stones”). Thus, the Court found that Stone Brewing brought the suit within the four-year statute of limitations period.
Molson also argued that the district court erred in refusing to set aside the jury verdict on the ground that Molson had a superior interest in the STONE mark. Stone Brewing applied to register the STONE mark in 1996, and the Ninth Circuit found there was substantial evidence that Molson did not approve production of packaging that used “Stone” before that date.
Molson argued that the district court erred in refusing to set aside the jury verdict on likelihood of confusion. The Ninth Circuit disagreed, explaining that Stone Brewing provided evidence from which a jury could plausibly conclude there was “actual confusion” by distributors and customers who thought that Stone Brewing sold Keystone Light. The Court noted that Molson expressly de-emphasized “Keystone” and instead highlighted “Stone” in its 2017 product refresh. The Court also explained that both brands compete in the same beer space, use the same marketing and distribution channels, and are relatively inexpensive products, all of which allowed the jury to plausibly conclude that Molson’s 2017 product refresh of Keystone Light was likely to cause consumer confusion.
Molson also challenged the damages award. At trial, Stone Brewing sought damages in three categories:
$32.7 million for past lost profits
$141.4 million for future lost profits
$41.8 million for corrective advertising.
The jury returned a verdict of $56 million in general damages, which was about one quarter of the requested damages, but did not indicate what amount came from each category. Molson argued that Stone Brewing could not recover future lost profits because no court has awarded speculative future lost profits. The Ninth Circuit disagreed, citing its 2014 decision in Oracle v. SAP in which it upheld a damages calculation that considered a lost future “ongoing stream of revenue from [the infringed upon company’s] former customers.” The Court found that Stone Brewing provided expert testimony that estimated how long it would take Stone Brewing to recover its sales after corrective advertising, and that the jury could reasonably rely on the expert’s calculation to determine that Stone Brewing’s sales would not recover immediately.
Equity Is Neither a “Good” Nor a “Service” Under Lanham Act
The US Court of Appeals for the Ninth Circuit affirmed a district court’s decision that, in terms of trademark use in commerce, corporate equity is not a “good” or “service” under the Lanham Act. LegalForce RAPC Worldwide, PC v. LegalForce, Inc., Case No. 23-2855 (9th Cir. Dec. 27, 2024) (Thomas, Wardlaw, Collins, JJ.) (Collins, J., concurring).
LegalForce RAPC Worldwide is a California corporation that operates legal services websites and owns the US mark LEGALFORCE. LegalForce, Inc., is a Japanese corporation that provides legal software services and owns the Japanese mark LEGALFORCE.
Both parties had discussions with the same group of investors. After those meetings, LegalForce Japan secured $130 million in funding, while LegalForce USA received nothing. Thereafter, LegalForce USA brought several claims against LegalForce Japan, including a trademark infringement claim. To support its case, LegalForce USA cited LegalForce Japan’s expansion plan, a trademark application for the mark LF, website ownership, and the use of LEGALFORCE to sell and advertise equity shares to investors in California.
The district court dismissed claims related to the website for lack of personal jurisdiction and dismissed claims related to the US expansion plan, trademark application, and alleged software sales in the United States as unripe. The district court dismissed the trademark infringement claims related to the efforts to sell equity shares for failure to state a claim. The court found that advertising and selling equity cannot constitute trademark infringement because it is not connected to the sale of goods or services, and the case did not present justification for extraterritorial application of the Lanham Act. LegalForce USA appealed.
To state a claim for trademark infringement under the Lanham Act, plaintiffs must show that:
They have a protectible ownership interest in the mark, or for some claims, a registered mark
The defendant used the mark “in connection with” goods or services
That use is likely to cause confusion. 15 U.S.C. § 1114(1)(a), § 1125(a).
The Ninth Circuit agreed with the district court that LegalForce Japan had not used LegalForce USA’s mark “in connection with” goods or services, and thus LegalForce USA failed to state a claim for which relief could be granted.
The Ninth Circuit concluded that using LEGALFORCE to advertise and sell equity failed to satisfy the requirement that a defendant used the mark in connection with goods or services. Referring to the U.C.C., the Court explained that corporate equity is “not a good for purposes of the Lanham Act, because it is not a movable or tangible thing.” Equity is also not a service because it is not a performance of labor for the benefit of another. There is no “another” involved because those who buy LegalForce Japan equity are owners and so they are not legally separate “others.”
The Ninth Circuit also agreed with the district court that LegalForce Japan’s services in Japan did not satisfy the “in connection with” goods or services requirement under the Lanham Act. To determine when a statute applies extraterritorially, courts invoke the 2023 Supreme Court Abitron Austria two-step test:
“[W]hether Congress has affirmatively and unmistakably instructed that the provision at issue should apply to foreign conduct”
“[W]hether the suit seeks a (permissible) domestic or (impermissible) foreign application of the provision, based on the statute’s focus and whether the conduct relevant to that focus occurred in the [US] territory.”
For the first step, the Supreme Court has held that the Lanham Act does not provide a “clear, affirmative indication” that it applies extraterritorially. As for the second step, the conduct relevant to trademark infringement would be the defendant’s “use [of the mark] in commerce.” The Lanham Act’s “use in commerce” requirement is equivalent to the “in connection with goods and services” requirement. Explaining that the Lanham Act does not apply if the mark is only used in connection with goods and services outside the US, the Ninth Circuit determined that the Lanham Act was inapplicable here because all LegalForce Japan services are outside the US.
In a concurrence, Judge Collins agreed that a company’s own equity or stock shares do not count as goods or services offered to customers in the market under the Lanham Act. At oral argument, LegalForce USA confirmed that the only good or service underlying its Lanham Act claims was LegalForce Japan’s equity. Although the Lanham Act does not define “goods” or “services,” how a company is internally structured under corporate law is distinct from goods and services that the corporation offers in commerce to its customers. However, Judge Collins thought it unnecessary to reach any additional issues to resolve this case or to import specific definitions of goods. Because securities may qualify as movable or tangible, he explained in a footnote that he did not agree with the majority’s limitation as to goods that are “movable” or “tangible” or its explanation as to why securities fail this test.
Bit Swap: Motivation to Modify Prior Art Needn’t Be Inventor’s Motivation
Addressing the issue of obviousness, the US Court of Appeals for the Federal Circuit reversed a Patent Trial & Appeal Board decision, finding that the challenged patent claims were obvious because a person of ordinary skill in the art (POSITA) would have been motivated to switch two specific information bits in a 20-bit codeword to improve performance. Honeywell Int’l Inc. v. 3G Licensing, S.A., Case Nos. 23-1354; -1384; -1407 (Fed. Cir. Jan. 2, 2025) (Dyk, Chen, JJ.) (Stoll, J., dissenting).
3G Licensing owns a patent concerning a coding method for transmitting a channel quality indicator (CQI) in mobile communication systems. The CQI, a five-bit binary integer (0 to 30) is sent from user equipment, such as a cell phone, to a base station to indicate cellular connection quality. Base stations adjust data rates using adaptive modulation and coding, assigning higher rates to strong signals and lower rates to weaker ones. CQI accuracy is critical for maximizing data transmission efficiency and ensuring recovery of the original message despite transmission errors.
The challenged claims of the 3G patent relate to a CQI code designed to maximize protection of the most significant bit (MSB) to reduce the impact of transmission errors. The prior art disclosed a method and a basis sequence table that provided additional protection to the MSB, minimizing root-mean-square error. However, the claimed invention differed in that it required swapping the last two bits of the basis sequence table. The Board found that a skilled artisan would not have been motivated to make this modification to enhance MSB protection, nor would a skilled artisan have deemed it desirable. Honeywell appealed.
The Federal Circuit reversed, finding the claims obvious for four primary reasons. First, the Court determined that the Board incorrectly concluded that a POSITA would not have been motivated to swap the last two bits to improve MSB protection. The Court emphasized that the motivation to modify prior art does not need to align with the inventor’s motivation. As a result, the Board’s reasoning that minimizing root-mean-square error was not the patent’s primary purpose should not have been a primary consideration.
Second, the Federal Circuit found that prior art explicitly taught the importance of protecting the MSB through redundancy. A skilled artisan would have understood that swapping the two bits, as claimed, would add redundancy and enhance protection. Honeywell’s expert testimony further supported the conclusion that the prior art would have provided the requisite motivation to arrive at the claimed invention, and 3G’s expert did not dispute that the swap increased MSB protection.
Third, the Federal Circuit concluded that the Board improperly conflated obviousness with anticipation by requiring that the prior art disclose swapping the two bits. Anticipation requires the prior art to specifically disclose the claimed modification, but obviousness does not. The Court found that the Board erroneously treated the two standards as interchangeable.
Finally, the Federal Circuit found that the Board wrongly required that the claimed basis sequence table represent the preferred or most optimal combination. As the Court explained, obviousness does not depend on whether a claimed invention is the best possible solution, but instead on whether the prior art as a whole suggests its desirability.
Judge Stoll dissented in part, agreeing that the Board conflated obviousness with anticipation but arguing that this error only warranted vacating and remanding the Board’s decision for further analysis. She criticized the majority for engaging in fact finding and deciding arguments not raised by the parties.
Practice Note: The Federal Circuit’s decision underscores the importance of correctly evaluating and applying the relevant obviousness considerations.
Skilled Artisan’s View Is Decisive in Assessing Asserted Claim Drafting Error
The Court of Appeal (CoA) of the Unified Patent Court (UPC) clarified the legal standard for correcting obvious type inaccuracies in patent claims, explaining that the view of a skilled person at the filing date is decisive when assessing whether a patent claim contains an obvious error. Alexion Pharmaceuticals, Inc. v. Samsung Bioepis NL B.V., Case No. UPC_CoA_402/2024; APL_40470/2024 (CoA Luxembourg Dec. 20, 2024) (Grabinski, Blok, Gougé, JJ.; Enderlin, Hedberg, TJJ.)
Alexion owns a European patent directed to a drug comprising an antibody that includes the “SEQ ID NO:4” amino acid sequence and that binds “complement component 5” (C5). The description refers to SEQ ID NO:4 as a sequence of 236 amino acids, and the claims also refer to SEQ ID NO:4. It is known in the state of the art that the entire amino acid sequence is unlikely to bind C5, including amino acids, forming “signal peptides.” Alexion sought provisional measures, arguing that Samsung infringed Alexion’s patent even though Samsung’s drug did not include the first 22 amino acids (i.e., the signal peptide in this case) of SEQ ID NO:4.
Originally, Alexion applied for the patent as granted but later requested to amend the claims to exclude the first 22 amino acids because of an obvious error during prosecution. The Technical Board of Appeal (TBA) of the European Patent Office (EPO) rejected the request and found that the requested amendment was not a correction of an obvious error.
The Court of First Instance similarly rejected Alexion’s request, although it found that Samsung made literal use of the patent. The Court of First Instance argued, contrary to the TBA, that the first 22 amino acids were meant to be excluded from SEQ ID NO:4 in the patent claim, and that this sequence was obviously not correctly reproduced in the view of a skilled person because otherwise the claimed drug would be unsuitable to bind to C5 (as was undisputed by the parties). However, the Court of First Instance rejected Alexion’s request for provisional measures against Samsung. The Court of First Instance clarified that it must consider not only its own claim interpretation but also the TBA’s different interpretation. Its rationale was that because it is the infringement-focused court, the Court of First Instance should, before ordering provisional measures, consider whether the TBA, based on its interpretation, would revoke the patent in parallel proceedings because of insufficient disclosure under Article 83 of the European Patent Convention. Ultimately, considering the TBA’s claim interpretation, the Court of First Instance found that the patent’s validity was not certain to the extent required to provide provisional measures. Alexion appealed.
The CoA rejected Alexion’s appeal, finding that the Court of First Instance’s claim interpretation (i.e., excluding the first 22 amino acids from the claim) was legally flawed. The CoA instead adopted the TBA’s claim interpretation and argued (on this point, not much different from the Court of First Instance) that the EPO was likely to revoke the patent. The CoA clarified that the view of a skilled person at the filing date is decisive for assessing whether a patent claim contains an obvious type error. This view was supported by Alexion’s assertions during prosecution (even if it later abandoned those assertions) and by decisions of the EPO. Such prosecution history can outweigh undisputed pleading before the Court of First Instance that the antibody including the first 22 amino acids of SEQ ID NO:4 (or including the signal peptide) would be unable to bind to C5, as long as this inability was not obvious to the skilled person. Alexion and the TBA argued during prosecution that it is generally possible for an antibody, including signal peptides, to bind to C5. The CoA thus concluded that the patent description and claims did not disclose an exclusion of the first 22 amino acids of SEQ ID NO:4, and that it would not have been obvious to a skilled person at the time of the application to correct the sequence by excluding the first 22 amino acids.
Practice Note: Potentially differing EPO decisions on claim construction should be considered when making a prognosis of patent validity in proceedings for provisional measures. The UPC sets a high bar for correcting any errors in patent claims, and a patentee should be prepared to deal with its own assertions made during prosecution.
CNIPA Press Conference: Over 1 Million Invention Patents Granted in 2024
On January 15, 2025, the China State Council Information Office held a press conference with China’s National Intellectual Property Administration (CNIPA) detailing statistics of 2024. Per Hu Wenhui, deputy director of the CNIPA, in 2024, a total of 1.045 million invention patents were authorized, a year-on-year increase of 13.5%. 67,000 patent reexaminations and invalidation cases were closed. The examination cycle of invention patents was reduced to 15.5 months. 75,000 PCT international patent applications were accepted. Chinese applicants submitted 4,868 international design applications through the Hague Agreement, a year-on-year increase of 29.5%, ranking first in the world. More detailed data should be released before the end of the month including utility model authorizations.
Excerpts from the press conference follow. The full transcript is available here via social media (Chinese only).
Hu Wenhui:
By the end of 2024, my country will have 4.756 million valid invention patents, becoming the first country in the world to exceed 4 million. my country will have 14 high-value invention patents per 10,000 people, completing the expected goals of the country’s 14th Five-Year Plan ahead of schedule.
4.781 million trademarks were registered throughout the year, a year-on-year increase of 9.1%. 383,000 trademark review cases and 103,000 opposition cases were concluded. The average review period for trademark registration remained stable at 4 months, and the average review period for opposition review cases was further shortened. The qualification rate of various trademark services remained above 97%. 7,039 Madrid trademark international registration applications were received from Chinese applicants throughout the year, a year-on-year increase of 13.6%.
As of the end of 2024, the number of valid trademark registrations in my country was 47.62 million.
A total of 36 geographical indication products were recognized throughout the year, 125 geographical indications were approved for registration as collective trademarks and certification trademarks, and 8,680 business entities were approved to use geographical indication special marks.
As of the end of 2024, my country has recognized a total of 2,544 geographical indication products, approved 7,402 registrations of geographical indications as collective trademarks and certification trademarks, the total number of operators of geographical indication special marks is nearly 33,000, and the direct output value of geographical indication products exceeds 960 billion yuan, with stable growth for many consecutive years.
A total of 11,000 integrated circuit layout design registrations and certificates were issued throughout the year.
As of the end of 2024, my country had issued a total of 83,000 integrated circuit layout-design certificates.
…
The number of domestic high-value invention patents reached 1.978 million, an increase of 18.8% year-on-year, and the number of invention patents belonging to strategic emerging industries reached 1.349 million, an increase of 15.7% year-on-year.
…
Among China’s high-value invention patents, 130,000 have been authorized overseas at the same time, nearly doubling from the end of the 13th Five-Year Plan, involving 16,000 innovative entities, an increase of more than 6,700 from the end of the 13th Five-Year Plan. More domestic innovative entities pay more attention to using intellectual property rights to open up international markets and continuously improve their international competitiveness.
…
The Draft Amendment to the Regulations on the Protection of Integrated Circuit Layout Designs mainly revised three aspects:
First, the registration and confirmation procedures for integrated circuit layout designs have been improved to strengthen the protection of intellectual property rights at the source. The application documents submitted by the applicant are required to clearly display and identify the protected content of the layout design, and failure to meet this requirement will be used as grounds for rejection and revocation. Provisions for initiating revocation procedures upon application have been added to better balance the rights and interests of all parties.
Second, we will strengthen the protection of exclusive rights for integrated circuit layout designs and effectively safeguard the legitimate rights and interests of right holders. It is clarified that the scope of exclusive rights protection is based on the submitted copies and drawings, and the originality statement of layout designs is used to explain the copies and drawings. New provisions on the principle of good faith are added, and a punitive compensation system for serious intentional infringements is introduced. Relevant provisions on pre-litigation evidence preservation are added to more effectively protect the legitimate rights and interests of right holders and reduce the cost of rights protection.
Third, promote the implementation and application of layout designs and boost the development of new quality productivity. New regulations on job creation rewards are added, stipulating that legal persons or non-legal persons should reward natural persons who create layout designs after the layout design is registered. After the layout design is implemented, the natural persons who create the layout design should be given reasonable remuneration based on the scope of its promotion and application and the economic benefits obtained. Improve the relevant regulations on the exercise of rights and transfer, licensing and pledge of exclusive rights by co-owners of layout designs to more fully stimulate enthusiasm for innovation and creation.
New FY2025 USPTO Price Increases to Go into Effect Beginning on January 18, 2025
The United States Patent and Trademark Office (“USPTO”) has published a Final Rule[i] setting new patent and trademark fees, which target an overall 7.5 percent increase in the case of patent fees—with certain fees seeing even higher percentage increases. The Final Rule also includes certain new fees that may alter patent and trademark applicants’ typical practices, so it is important for applicants to become familiar with the upcoming fee changes. The patent fee changes will officially take effect on January 19, 2025, along with a set of trademark fee changes that are set to take effect on January 18, 2025.
Patent Filing Fee Increases
The Final Rule implements a roughly 10 percent fee increase for filing, search, and examination fees. As an example, the new total filing fees for an undiscounted entity (e.g., a “Large entity” filer) will increase from $1,820 to $2,000.
New Patent Continuation Fees
The Final Rule outlines new fees owed on continuation applications that claim priority to a patent application having a filing date more than six years earlier (but no more than nine years). (Note: This new fee does include consideration of claims of priority to provisional applications in determining whether the six-year limit is met.) For continuation applications filed more than six years after its earliest priority, an undiscounted entity will pay $2,700, in addition to normal filing fees.
Where a continuation application is filed more than nine years after its earliest priority date to a non-provisional application, an undiscounted entity will pay $4,000, in addition to filing fees. (Note: An applicant will not be charged more than one fee if more than one benefit claim is presented that qualifies the application for both new continuation fees. Instead, they will just pay the greatest fee that applies in their situation.)
Request for Continued Examination (“RCE”) Fees (Patent)
Filing costs for first RCE requests will increase by 10 percent, that is, moving from $1,360 to $1,500 for an undiscounted entity. The filing cost of any second (or subsequent, i.e., third, fourth, etc.) RCE request will increase by a much more substantial amount of 43 percent, moving from $2,000 to $2,860 for an undiscounted entity.
The new fees may make it more financially beneficial in some situations for an applicant to file a new continuation application rather than a second or subsequent RCE after a Final Office Action. However, as always, each situation is fact-specific, and the best strategic decisions should be made in conjunction with advice from counsel.
Excess Patent Claims Fees
Excess Claims fees will also see a sizeable “targeted” fee increase. The fees for each independent claim in an application in excess of three independent claims will go from $480 to $600 for undiscounted entities, and from $192 to $240 for undiscounted entities (i.e., a 25 percent increase). The fees for each claim in an application in excess of 20 total claims will go from $100 to $200 for undiscounted entities, and from $40 to $80 for undiscounted entities (i.e., a 100 percent increase).
New Patent Information Disclosure Statement (“IDS”) Fees for Excessive Citations
Filing an IDS that causes cumulative number of applicant-provided items of information to exceed 50 references but not 100 references: $200
Filing an IDS that causes cumulative number of applicant-provided items of information to exceed 100 references but not 200 references: $500 (less any excess IDS reference amount previously paid)
Filing an IDS that causes cumulative number of applicant-provided items of information to exceed 200 references: $800 (less any excess IDS reference amount previously paid)
Each IDS must also now “contain a clear written assertion” that the IDS is accompanied by the appropriate IDS excessive citation fee or that no IDS excessive citation fee is required. (A blanket “authorization to charge fees to a deposit account” is not considered a compliant written assertion under the new requirements, unless it specifically refers to the particular IDS fee that should be charged.)
Patent Trial and Appeal Board (“PTAB”) fee adjustments
All fees associated with filing and/or initiating an America Invents Act (“AIA”) trial (e.g., an Inter Partes Review (“IPR”) or a Post-Grant Review (“PGR”)) will increase by 25 percent.
Design Patent Fees
Nearly all design patent-related fees will go up by a larger percentage than utility patent fees. For example, for direct US filings, the design filing fees will increase 36 percent (from $220 to $300), search fees will increase by 88 percent (from $160 to $300), examination fees will increase by 9 percent (from $640 to $700), and issue fees will increase by 76 percent (from $740 to $1,300).
Thus, for an undiscounted entity, filing and issuance fees for a typical design patent currently costs $1,760. This amount will increase by 48 percent (to $2,600) when the new fees take effect.
Trademark Fee Adjustments
The Final Rule for Trademark fees sets or adjusts the fees starting January 18, 2025, as highlighted in the Fee Changes table available at https://www.uspto.gov/trademarks/fees-payment-information/summary-2025-trademark-fee-changes, and includes two general types of trademark fee adjustments: targeted fee adjustments and new base application fees.
Note: The USPTO is discontinuing the current Trademark Electronic Application System (“TEAS”) Standard and Plus application filing options and fees.
Sample Trademark fee increases for FY2025 are shown below:
TEAS Standard Application
Current Fee: $350
New Fee: n/a
TEAS Plus Application
Current Fee: $250
New Fee: n/a
Base Application (Sections 1 and 44), per class
Current Fee: n/a
New Fee: $350
Application Fee Filed with WIPO (Section 66(a)), per class
Current Fee: $500
New Fee: $600
Subsequent designation fee filed with WIPO (Section 66(a)), per class
Current Fee: $500
New Fee: $600
In the course of prosecution, an additional fee of $100 for insufficient information (e.g., missing color claim, translation, transliteration, living individual consent).
Section 9 Registration Renewal Application, per class
Current Fee: $300
New Fee: $325
Section 8 Declaration, per class
Current Fee: $225
New Fee: $325
Section 15 Declaration, per class
Current Fee: $200
New Fee: $250
Section 71 Declaration, per class
Current Fee: $225
New Fee: $325
Renewal Fee Filed at WIPO
Current Fee: $300
New Fee: $325
2024 Hatch-Waxman Year in Review
Introduction
In 2024, the Hatch-Waxman Act continued to play a critical role in the U.S. pharmaceutical landscape, driving the dynamics between brand-name drugmakers and generics. This landmark legislation, enacted to encourage innovation while ensuring access to affordable medications, remained a focal point for numerous legal battles and regulatory shifts. Key decisions throughout the year have refined interpretations of its provisions, influencing patent challenges, market exclusivities, and the pathway for generics. As the pharmaceutical sector navigates evolving market pressures, agency action, and possible legislation, the legal contours of the Hatch-Waxman Act continued to impact both the business and legal strategies of pharmaceutical companies in 2024.
The Year By Numbers
In the year 2024, 312 complaints were filed initiating Hatch-Waxman litigation (compared to 259 in 2023)1:
As evident above, the overwhelming majority of ANDA complaints were filed in the District of Delaware and the District of New Jersey. This common trend remains consistent for the same reasons these district courts have always been hubs for ANDA litigation: most pharmaceutical companies are incorporated in Delaware and are commonly headquartered in New Jersey. Furthermore, because these two jurisdictions handle the majority of ANDA litigation, the local patent rules and proclivities of judges within these districts generally account for the unique procedural complexities that large-scale Hatch-Waxman litigation can impose on these dockets.
Given that Hatch-Waxman litigation is statutorily decided at the bench if it goes to trial, it behooves all litigants to have matters handled by judges experienced in the technical subject matter. As shown above, almost 50% of all ANDA complaints filed were assigned to one of five judges, ensuring that those judges have familiarity with common Hatch-Waxman substantive and procedural issues, and usually leading to a rapport between those judges and the attorneys that frequently litigate in front of them.
In 2024, 283 on-going Hatch-Waxman litigations were either resolved or terminated.2 There was a slight decrease in settlements in 2024: 39% of terminated matters in 2024 compared to 50% in 2023.3 Innovator companies (i.e., NDA & patent holders) were considered to have prevailed on issues 20% of the time, whereas generic companies were considered to have prevailed on issues only 2% of the time (i.e., those decisions excluding settlements and procedural resolutions). While these statistics may suggest that innovator companies find favorable resolutions more frequently than generic manufacturers, generics generally may be more inclined to seek settlement when perceiving a likely favorable outcome, rather than continue litigation. This trend existed in 2023 and remained in 2024.
Looking at patent findings from 2024 (below4), evidently very few ANDA cases were decided at summary judgment in 2024, a frequency from which few conclusions can be drawn. When cases went to trial, however, we saw a finding of infringement more frequently than noninfringement, and validity was upheld more frequently than not. Of those that were held invalid at trial, most were decided on obviousness grounds. Granted, however, these numbers don’t consider invalidity positions that were dropped due to case narrowing prior to trial, rather than on the merits.
This contrasts slightly to the results from 2023 (below5):
Namely, judges were seemingly more reticent to find patents invalid at summary judgment in 2024, while they did so three times in 2023 – again, however, a small sample size. In good news for innovator companies, district courts not only held patents invalid at trial far less frequently in 2024 compared to the year prior: 4 of 17 (24%) and 9 of 15 (60%), respectively. District courts also found infringement of valid patents at trial slightly more in 2024 compared to the year prior: 9 of 13 (69%) versus 6 of 10 (60%), respectively.
Federal Circuit Decisions and the Greater Context In Which They Fit
We saw a slight uptick in Hatch-Waxman decisions from the Federal Circuit last year (7 in 2024 compared to 5 in both 2023 and 2022), some of which significantly affect going forward how practitioners and in-house counsel manage and plan their IP strategies, expand their portfolios through prosecution, and preserve existing exclusivities in the federal courts and in front of the Patent Trial and Appeal Board. Some of the decisions we’ve seen from the Federal Circuit in 2024 were also germane to broader agency and legislative proposals that could come to fruition in 2025, as discussed below.
Edwards Lifesciences v. Meril Life Sciences6& the Safe Harbor Provision
Holding: The Hatch-Waxman safe harbor applied to the importation of two demonstration samples to a medical conference for the purpose of recruiting clinical investigators to support FDA approval.
Although not a decision surrounding the filing of an ANDA, the Federal Circuit began their 2024 Hatch-Waxman jurisprudence addressing the safe harbor provision, 35 U.S.C. § 271(e)(1): a valuable mechanism for fostering innovation in the pharmaceutical space. Federal Circuit precedent has interpreted the provision as broad, applying “as long as there is a reasonable basis for believing that the use of the patented invention will produce the types of information that are relevant to an FDA submission,”7 and even extending to activities which may be promotional rather than regulatory, but “where those activities are consistent with the collection of data necessary for filing an application with the FDA.”8 Here, Judges Stoll, Cunningham, and Lourie (dissenting) addressed whether the importation of two demonstration-only transcatheter heart valves for a conference during the process of pre-market approval was protected by the safe harbor, and ultimately affirmed precedent.9 As Judge Stoll put it, the question is not why or how the devices were imported or used, but whether the importation was for a use reasonably related to submitting information to the FDA.10 It was here. On appeal from a grant of summary judgment of no infringement, the Federal Circuit affirmed that there was no genuine dispute of material fact that Meril imported the devices for purposes reasonably related to recruiting investigators during pre-market approval processes and thus was covered by the safe harbor provision.11 For innovator companies, especially those in crowded commercial spaces where the risk of “brand-to-brand” litigation is higher, the safe harbor’s broad applicability to a variety of pre-approval activities under the ”reasonably related” standard offers peace of mind throughout early stages of product development; however, practitioners should advise their clients that the safe harbor is less helpful post-FDA approval, where routine submissions aren’t generally afforded the same protection.12
While courts may view the Hatch-Waxman safe harbor as offering a “wide berth,”13 U.S. patent law generally has a particularly narrow experimental use defense to patent infringement.14 The Edwards decision was followed months later by a request for public commentary by the United States Patent and Trademark Office (USPTO) on the potential legislative codification of the experimental use exception.15 To date, statutory experimental use defenses are confined in the U.S. to the Hatch-Waxman Act16 and the Plant Variety Protection Act,17 but are codified in a much broader fashion in other leading IP countries, such as Germany, China, and India. Feedback to the USPTO’s request was mixed; proponents of further codification suggested the exception was overly narrow, vague, or detrimental to US innovation on the global scale, whereas those with opposing viewpoints generally suggested the status quo was sufficient. At this time, the USPTO has not taken any further public action on the topic, but don’t be surprised if we see legislation promoting American innovation in 2025, such as an expanded codification of the experimental use defense.
Salix Pharmaceuticals v. Norwich Pharmaceuticals,18Post-trial Section VIII Carve-outs, and the Obviousness of Polymorph Patents
Holding: The district court did not err in denying the generic’s motion to modify judgment after amending its ANDA to remove an infringing indication after trial; the district court also did not err in finding that a person of ordinary skill in the art would have a reasonable expectation of success obtaining certain polymorph forms of rifaximin.
One month later, the first ANDA decision came from the Federal Circuit from Judges Lourie, Chen, and Cunningham (dissenting in part), who issued a surprising decision in light of (but not contradictory to) previous rulings on polymorph patents, while also addressing a unique post-trial tactic by the ANDA filer to gain earlier entry into the market. With respect to the former, Federal Circuit precedent has made it clear that finding polymorph claims obvious is a tall task given the unpredictability of chemical polymorphism and therefore the lack of reasonable expectation of success, as discussed in Grunenthal GMBH v. Alkem19 (2019) and Pharmacyclics v. Alvogen20 (2022). However, unique to this case were the “distinct factual predicates” that justified the district court’s obviousness finding.21 The prior art here contained examples which disclosed in detail the process that would produce the claimed polymorph, turn demonstrating a reasonable expectation of success in doing so.22 Therefore, unlike in previous § 103 decision on polymorphs, those at issue here was appropriately found to be obvious. Separately, Norwich’s ANDA sought to market generic Xifaxan for three indications: travelers’ disease, hepatic encephalopathy (HE) and irritable-bowel syndrome with diarrhea (IBS-D).23 However, when the district court ordered that the ANDA would not be approved until the expiry of the HE patents (which were found infringed), Norwich amended its ANDA post-trial to remove the infringing HE indication and sought to modify the judgment and gain earlier market entry.24 Both the district court and Federal Circuit rejected this attempt.25 The latter held that “it [was] not the potential use that of the drug for HE that is the relevant infringement,” but instead “the submission of the ANDA that included an infringing use,” and therefore “[t]hat the ANDA further recited a non-patent-protected indication does not negate the infringement resulting from the ANDA’s submission.”26 Further, allowing amendment of an ANDA at the Rule 60 stage is in the discretion of the district court, and the Federal Circuit’s affirmation of the district court’s decision created strong precedent that determining “whether an ANDA applicant has successfully carved out language from a label to turn infringement into non-infringement” “would essentially be a second litigation,” and is “inequitable and inappropriate.”27
This decision offers two key takeaways for counsel for both innovators and generics: for the former, the nonobviousness of polymorph patents is not a guaranteed, despite the unique, unpredictable nature of the science and the general position of related jurisprudence. While finding polymorph patents obvious is still a significant challenge given their general nature, it is possible for the right facts to line up correctly in a § 103 analysis. For generic companies, future tactical attempts to carve out infringing indications post-trial now must overcome cut-and-dry precedent suggesting the futility of the practice to gain earlier market entry.
Amarin Pharma v. Hikma Pharmaceuticals28 & Skinny Labels
Holding: The complaint plausibly pleaded induced infringement based on the label and public statements made by the generic manufacturer.
The next panel from the Federal Circuit (Moore, Lourie, Albright) next dealt with what seemed like a section viii carve out ANDA case, but was rather a “run-of-the-mill induced infringement case.”29 The generic product, an icosapent ethyl already on the market, was approved for only one of the two indications (treatment of severe hypertriglyceridemia) that the NDA product (Vascepa) had been approved for, but included no limitation of use as to the second indication, and the generic manufacturer had made repeated public statements referring to itself as the “generic Vascepa,” despite being approved for only half the indications.30 Unique to this case was that it was appealed from the motion to dismiss stage, and thus discovery had not occurred.31 Not in dispute however was that the complaint sufficiently alleged direct infringement, knowledge, and intent, and thus the Federal Circuit’s decision focused on whether an “inducing act” was sufficiently alleged – it was.32 Reversing the district court’s dismissal, the Federal Circuit managed to walk along the “careful balance struck by the Hatch-Waxman Act regarding section viii carve-outs,” emphasizing that this decision did not “effectively eviscerate section viii-carveouts,” as argued by Hikma, and was instead “limited to the allegations” and “guided by the standard of review appropriate for this stage of the proceedings.”33 Given those explicitly limiting statements, this decision does little to affect true section viii jurisprudence under the Hatch-Waxman Act, and thus for practitioners, reliance on cases such as GlaxoSmithKline v. Teva (2021)34 is still appropriate for skinny label analyses.
Following the Salix and Amarin decisions in 2024 we saw new related agency action from the FDA and year-end legislation. In July 2024, the FDA rejected a citizen’s petition from Novartis requesting the FDA reject ANDAs for generic Entresto, instead allowing generic manufacturers to add new language to their label, not included in the currently approved indication, that would effectively narrow the subset of patients for which use of the generic product is appropriate.35 In this case, inclusion of the language “patients with…reduced ejection fraction” was permissible as it therefore excluded “patients with…preserved ejection fraction,” which is patent protected.36 This decision was affirmed by the District Court for the District of Columbia.37 To wrap up 2024, we also saw the introduction of a bill titled the “Skinny Labels, Big Savings Act” on December 17, which seeks to provide safe harbor protection to generics and biosimilars using skinny labels in certain contexts.38
Allergan USA v. MSN Laboratories39 & Obviousness-type Double Patenting
Holding: First-filed, first-issued, later-expiring patent claims were not invalid for obviousness-type double patenting over later-filed, later-issued, earlier-expiring reference claims.
In August, the Federal Circuit clarified its 2023 In re Cellect decision40 which, at the time, served to massively upheave the doctrine of obviousness-type double patenting (ODP), patent term adjustments (PTA), and terminal disclaimers. However, Judges Lourie, Dyk, and Reyna reeled the impacts of that decision back in. Although the district court considered itself “bound” by the In re Cellect holding, the Federal Circuit distinguished the two as addressing different questions.41 Here, the question was “can a first-filed, first-issued, later-expiring claim be invalidated by a later-filed, later-issued, earlier-expiring reference claim having a common priority date,” to which the Court decided “no.”42 The Cellect decision, however, was boiled down to establishing the rule that “when it comes to evaluating ODP on a patent that has received PTA, the relevant expiration date is the expiration date including PTA—not the original expiration date measured twenty years from the priority date.”43 Practitioners now know that Cellect does not require a patent to be invalidated by reference patents simply because it expires later. The doctrine of obviousness-type double patent serves to prohibit the extension of a first patent by subsequently filed patently indistinct patents; it does not serve to cut short first-filed patents with duly received PTA, simply because later-filed patents expire first.
This decision also follows a May proposal from the USPTO to implement a new rule on terminal disclaimers, such that a terminal disclaimer would include a provision aiming to reduce the costs associated with challenging patent families under ODP.44 The rule proposed that when filing a terminal disclaimer, a patentee must agree that a patent subject to a terminal disclaimer would only be enforceable if it was not tied through such a disclaimer to a patent which had otherwise been held unpatentable or invalid.45 The rule avoids the issue of having to invalidate multiple related patents separately, and if implemented, may significantly impact how practitioners approach continuation patents and handle large patent families within a portfolio. We may see a decrease in continuation applications, and instead see applications claiming much broader scopes and an increase in divisional applications.
Astellas Pharma v. Sandoz46 & Patent Eligibility
Holding: Courts may not sua sponte consider patent eligibility as grounds for patent invalidity.
In September, the Federal Circuit made clear that issues of patent eligibility under Section 101 cannot be decided sua sponte by district courts. Known as the principle of party presentation, there are circumstances in which a court may take “a modest initiating role” in shaping litigation,47 but addressing patent eligibility when not raised by a party is not one such circumstance. Here, patent eligibility was never raised during the course of the litigation, but the court considered it anyway in its final decision.48 While the district court phrased its decision in such a manner that parties may not “consent around the bounds of patent eligibility,” the Federal Circuit Judges Lourie, Prost, and Reyna made clear that patent eligibility is not a threshold issue akin to subject-matter jurisdiction, but instead is entitled to the presumption of validity, as is the case with other grounds of validity.49 While perhaps this decision offers greater direction to courts than counsel, it serves as a polite reminder to practitioners that any invalidity defense not raised is waived.
The topic of patent eligibility was particularly ripe in 2024, and continuing into 2025, especially with the growth of artificial intelligence (AI). Although not a topic that is overly adjacent to Hatch-Waxman litigation, counsel for both innovator and generic companies should remain cognizant of updated guidance from the USPTO, such as that which issued in July.50 A full summary of the guidance can be found here. Generic companies do appear to be raising § 101 invalidity grounds less frequently in recent years; however, counsel should nonetheless stay informed on both procedural and substantive developments in patent eligibility jurisprudence.
Galderma Laboratories v. Lupin51 & Bioequivalence Data and In Vitro Testing
Holding: The district court did not err in holding that the plaintiff had not proven infringement by relying on its in vitro testing and bioequivalence.
As one of two December ANDA decisions in 2024, the Federal Circuit analyzed whether in vitro testing and bioequivalence were sufficient to establish literal infringement or infringement under the doctrine of equivalence. The result? They aren’t. Although likely not a hard-and-fast rule that in vivo and in vitro results are not comparable, the Federal Circuit found no clear error in the district court’s conclusion as such in this particular case, finding that Galderma improperly drew conclusions about in vivo behavior from in vitro testing.52 Evidently, the issue was a failure of proof, rather than scientific incomparability.53 Further, unique to the facts of this case, although with a slightly broader applicability generally, under a doctrine of equivalents analysis, a showing of bioequivalence, at most, shows substantially the same result, but fails to show substantially the same function or substantially the same way, as is required under the “function, way, result” test.54 This decision highlights the importance of accurate and reliable testing to prove infringement, as well as fulsome expert testimony relaying as such.
Teva v. Amneal Pharmaceuticals55 & Orange-Book Listings
Holding: Patents directed towards inhaler devices were improperly listed in the Orange Book.
Wrapping up 2024, the Federal Circuit addressed a key issue pressing innovator pharmaceutical companies: the propriety of Orange Book listings. In this case, Teva had listed patents directed to inhaler devices in the Orange Book in order to delay the entry of generic products to the market.56 Because such patents “contain no claim for the active ingredient at issue,” Judges Prost, Taranto, and Hughes affirmed the district court’s delisting order.57 In what ultimately came down to issues of statutory interpretation, the Federal Circuit rejected arguments that a patent is properly listed if it “reads on” the approved drug or claims any component of a drug.58 Practitioners now know this is not the case. First, “the fact that an NDA could infringe a patent does not mean that the patent ‘claims’ the underlying drug within the meaning of the listing provision.”59 And second, “[t]o list a patent in the Orange Book, that patent must, among other things, claim the drug for which the applicant submitted the application and for which the application was approved,” i.e., the active ingredient.60 While NDA holders are keen to protect their products from generic entry into the market, this decision from the Federal Circuit affirms that there is a limit to the Orange Book, and NDA holders would be wise to ensure any such listings do in fact claim the active ingredient at issue.
This decision comes in the wake of threats by the Federal Trade Commission and new de-listing policies. For example, in September 2023, the FTC issued a new policy61 stating that improper Orange Book listings may constitute a violation of Section 5 of the FTC Act, and in November 2023, the FTC announced a plan62 to challenge over 100 Orange Book Listings and a further 300 listings in April 202463. Many companies have received warning letters from the FTC, only some of whom have voluntarily delisted at-risk Orange Book patents however. The financial detriment of doing so is clear, and other companies have therefore pushed back, arguing compliance with the listing provisions. The FTC appears to be predominantly targeting medical device patents, such as those in Teva v. Amneal, but for the most part, action by the FTC remains limited to issuing policies and sending letters to NDA holders. Further, it has yet to be determined whether this is an appropriate exercise of agency power, especially in the wake of the Supreme Court’s goodbye to Chevron deference.64
To conclude, many of the Federal Circuit’s Hatch-Waxman decisions in 2024 reshaped how pharmaceutical companies and their counsel address patent prosecution, litigation, and portfolio management, especially in view of the broader regulatory, legislative, agency-based changes that may occur in 2025 and beyond. As patent law continues to evolve, these cases will serve as critical touchstones in understanding the future of pharmaceutical patents and the broader implications for drug pricing and accessibility in the years to come.
1 LexMachina stats showing 312 federal district court cases with “Patent:ANDA” case tag, filed between ”2024-01-01 and 2024-12-31″) (Compare with LexMachina stats showing 259 federal district court cases with ”Patent:ANDA” case tag, filed between ”2023-01-01 and 2023-12-31″.2 LexMachina stats showing 283 federal district court cases with “Patent:ANDA” case tag, terminated between ”2024-01-01 and 2024-12-31″.3 Compare supra with LexMachina stats showing 284 federal district court cases with “Patent:ANDA” case tag, terminated between ”2023-01-01 and 2023-12-31″.4 LexMachina stats showing 91 findings in cases with “Patent:ANDA” case tag, with ”Infringement, Invalidity, No Infringement, No Invalidity, No Unenforceability, or Unenforceability” as patent findings, with findings decided between ”2024-01-01 and 2024-12-31″.5 LexMachina stats showing 91 findings in cases with “Patent:ANDA” case tag, with ”Infringement, Invalidity, No Infringement, No Invalidity, No Unenforceability, or Unenforceability” as patent findings, with findings decided between ”2023-01-01 and 2023-12-31″.6 Edwards Lifesciences Corp. v. Meril Life Scis. Pvt. Ltd., 96 F.4th 1347 (Fed. Cir. 2024).7 Amgen Inc. v. Hospira, Inc., 944 F.3d 1327, 1338 (Fed. Cir. 2019).8 Momenta Pharm., Inc. v. Teva Pharm. USA Inc., 809 F.3d 610, 619 (Fed. Cir. 2015).9 Supra, note 6, at 1351.10 Id. at 135311 Id. at 1355.12 Classen Immunotherapies v. Biogen IDEC, 659 F.3d 1057, 1070 (Fed. Cir. 2011).13 Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 202 (2005).14 See, e.g., Madey v. Duke Univ., 307 F.3d 1351 (Fed. Cir. 2002).15 89 Fed. Reg. 53963.16 35 U.S.C. § 271(e)(1).17 7 U.S.C. § 2544.18 Salix Pharms., Ltd. v. Norwich Pharms. Inc., 98 F.4th 1056 (Fed. Cir. 2024).19 Grunenthal GMBH v. Alkem Lab’ys Ltd., 919 F.3d 1333 (Fed. Cir. 2019).20 Pharmacyclics LLC v. Alvogen, Inc., No. 2021-2270, 2022 WL 16943006 (Fed. Cir. Nov. 15, 2022).21 Supra, note 18, at 1065.22 Id. at 1066-67.23 Id. at 1060.24 Id. at 1068-69.25 Id. at 1069.26 Id. at 1068.27 Id. at 1069.28 Amarin Pharma, Inc. v. Hikma Pharms. USA Inc., 104 F.4th 1370 (Fed. Cir. 2024).29 Id. at 1377.30 Id. at 1372-74.31 Id. at 1377.32 Id. at 1378.33 Id. at 1381.34 GlaxoSmithKline LLC v. Teva Pharms. USA, Inc., 7 F.4th 1320 (Fed. Cir. 2021).35 Final Response Letter from FDA CDER to Novartis Pharmaceuticals Corporation, Docket FDA-2022-P02228 (24 Jul. 2024), https://downloads.regulations.gov/FDA-2022-P-2228-0015/attachment_1.pdf. 36 See id.37 Novartis Pharms. Corp. v. Becerra, No. 24-CV-02234 (DLF), 2024 WL 4492072 (D.D.C. Oct. 15, 2024).38 Sens. Hickenlooper, Welch, Cotton, & Collins, Skinny Labels, Big Savings Act, https://www.hickenlooper.senate.gov/wp-content/uploads/2024/12/Skinny-Labels.pdf.39 Allergan USA, Inc. v. MSN Lab’ys Priv. Ltd., 111 F.4th 1358 (Fed. Cir. 2024).40 In re: Cellect, LLC, 81 F.4th 1216 (Fed. Cir. 2023).41 Supra, note 39, at 1368.42 Id. at 1366.43 Id. at 1369.44 89 Fed.Reg. 4043945 Id.46 Astellas Pharma, Inc. v. Sandoz Inc., 117 F.4th 1371 (Fed. Cir. 2024).47 United States v. Sineneng-Smith, 590 U.S. 371, 376 (2020).48 Supra, note 46, at 1376.49 Id. at 1378.50 89 Fed.Reg. 5812851 Galderma Lab’ys, L.P. v. Lupin Inc., 122 F.4th 902 (Fed. Cir. 2024).52 Id. at 908.53 Id. at 908.54 Id. at 910.55 Teva Branded Pharm. Prods. R&D, Inc. v. Amneal Pharms. of New York, LLC, No. 2024-1936, 2024 WL 5176737 (Fed. Cir. Dec. 20, 2024).56 Id. at *5-*6.57 Id. at *7, *17.58 Id. at *10-*11.59 Id. at *12.60 Id. at *15.61 Federal Trade Commission, “Federal Trade Commission Statement Concerning Brand Drug Manufacturers’ Improper Listing of Patents in the Orange Book,” (14 Sept. 2023), https://www.ftc.gov/system/files/ftc_gov/pdf/p239900orangebookpolicystatement092023.pdf.62 Federal Trade Commission, “FTC Challenges More Than 100 Patents as Improperly Listed in the FDA’s Orange Book,” (November 7, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/11/ftc-challenges-more-100-patents-improperly-listed-fdas-orange-book.63 Federal Trade Commission, “FTC Expands Patent Listing Challenges, Targeting More Than 300 Junk Listings for Diabetes, Weight Loss, Asthma and COPD Drugs,” (April 30, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-expands-patent-listing-challenges-targeting-more-300-junk-listings-diabetes-weight-loss-asthma.64 Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024).
Federal Circuit Clarifies Claim Construction at the Pleading Stage
Many lower courts have interpreted the Federal Circuit’s Nalco decision to hold that claim construction is inappropriate at the motion to dismiss stage. But the Federal Circuit’s recent UTTO decision clarified that claim construction is not categorically forbidden at the motion to dismiss stage.
The Court noted whether claim construction is appropriate at the motion to dismiss stage is case-specific, as sometimes “a claim’s meaning may be so clear . . . that no additional process is needed.” For patent litigants, the UTTO decision provides express support for patent litigants to make claim construction arguments at the motion to dismiss stage.
Prior Understandings From Nalco
Nalco Co. (“Nalco”) was the exclusive licensee of U.S. Patent No. U.S. 6,808,692 (the “’692 Patent), which was directed to “Enhanced mercury control in coal-fired power plants.” Independent claim 1 of the ’692 Patent recites “[a] method of treating coal combustion flue gas containing mercury, comprising . . . injecting a member selected from the group consisting of molecular halogen and a thermolabile molecular halogen precursor into said flue gas.” Chem-Mod, LLC (“Chem-Mod”) is an environmental services company that specializes in pollutant control technologies and licenses its “Chem-Mod Solution.” The Chem-Mod Solution comprises mixing a thermolabile molecular halogen precursor with coal before the coal is fed into a coal combustion process.
Nalco brought an action for patent infringement against Chem-Mod, arguing that the Chem-Mod Solution practices all steps of at least claim 1 of the ’692 Patent. At the district court, Chem-Mod argued that the Chem-Mod Solution did not infringe because mixing thermolabile molecular halogen precursors prior to combustion does not constitute “injecting” such precursors into flue gas post-combustion. The district court ultimately agreed, dismissing Nalco’s complaint and subsequent amended complaints, which Nalco ultimately appealed to the Federal Circuit.
The Federal Circuit reversed and remanded the district court’s dismissal and, in doing so, discussed the inappropriateness of claim construction at the pleading stage in this case. Focusing on the Twombly/Iqbal pleading standards, the Court held that Nalco had plausibly alleged that “injection” of the halogen precursor occurred when treated coal was fed into a furnace for combustion. In discussing this theory of infringement, the Court went on to explain:
Defendants’ objections to this theory of infringement read like classic Markman arguments. Defendants first take issue with Nalco’s allegation that “coal combustion flue gas” is “the gas that is created during the combustion of coal. But Defendants’ arguments boil down to objections to Nalco’s proposed claim construction for “flue gas,” a dispute not suitable for resolution on a motion to dismiss.
Many lower courts have read this passage and others in Nalco to hold that claim construction is categorically forbidden at the motion to dismiss stage.
UTTO’s Clarification of Nalco
UTTO Inc. (“UTTO”) owned U.S. Patent No. U.S. 9,086,441 (the “’441 Patent), which was directed to “Detection of buried assets using current location and known buffer zones.” Independent claim 1 of the ’441 Patent recites “[a] method . . . comprising . . . generating, based on the group of buried asset data points, a two dimensional area comprising the buffer zone . . ..” The core of the process involves using both (1) a GPS to pinpoint a person’s location and (2) previously stored buried assert data to locate and generate a buffer zone around a buried asset.
Metrotech Corp. (“Metrotech”), a competitor of UTTO, sold a device that had a “walk back” feature that performed substantially similar to the claimed method. However, the walk back feature “requires only a single point” to generate a buffer zone, as opposed to a group of buried asset data points.
UTTO brought an action for patent infringement and moved for a preliminary injunction against Metrotech, arguing that the walk back feature infringes on the ’441 Patent. In denying Metrotech’s motion for preliminary injunction, the district court construed the claims in favor of Metrotech.
Specifically with respect to claim 1, the Court noted that “[t]he claim does not mention ‘one or more’ data points, or ‘a’ data point. It describes a ‘group’ of ‘data points,’ plural. The ordinary and customary meaning indicates that more than one data point is necessary to create the buffer zone.” Based on the Court’s construction, Metrotech moved to dismiss UTTO’s complaint, and the dismissal of UTTO’s third amended complaint was ultimately appealed to the Federal Circuit.
The Federal Circuit sided with UTTO and vacated the dismissal of UTTO’s third amended complaint, finding the district court’s claim construction to be incomplete in this case. However, the Court squarely addressed arguments made in UTTO’s briefing that misconstrued Nalco. Specifically directed to the passages of Nalco provided in the previous Section, the Court noted that:
Those passages, we conclude, should not be read as stating a categorical rule against a district court’s adoption of a claim construction in adjudicating a motion to dismiss. The passages do not in terms state such a rule. They are readily understood to be drawing a conclusion about the need for further proceedings to resolve the particular claim-construction issues in that case before a sound determination of the appropriateness of dismissal could be reached. Nalco should be read in that case-specific way.
The Court went on to say that some case-specific circumstances make it improper to resolve a claim construction dispute at the pleading stage, but “sometimes a claim’s meaning may be so clear . . . that no additional process is needed.”
While claim construction is now expressly not forbidden at the pleading stage under UTTO, Nalco is still good law and should be read in a case-specific way. Like the Federal Circuit did in both Nalco and UTTO, cases will still be remanded where “[t]here has been insufficient exploration in the record, both [at the Federal Circuit] and in the district court, of too many questions of apparent relevance to identifying a proper construction of [a] limitation.”