Category: Intellectual Property

Motivation MIA? Federal Circuit Sends IPR Back to the Drawing Board

The US Court of Appeals for the Federal Circuit vacated and remanded a Patent Trial & Appeal Board decision, finding that the Board erred by failing to explain its holding and reasoning regarding a motivation to combine prior art references. Palo Alto Networks, Inc. v. Centripetal Networks, LLC, Case No. 23-1636 (Fed. Cir. Dec. 16, 2024) (Stoll, Dyk, Stark, JJ.)
Centripetal Networks owns a patent directed to correlating packets in communications networks, introducing an innovative system designed to enhance network security. The patent focuses on packets (small data segments that collectively form larger communications) and their correlation across network boundaries.
Palo Alto Networks challenged the patent’s validity in an inter partes review (IPR) and argued its obviousness based on three prior art references. The first reference described a system using hashing techniques to identify packets traversing network address translation boundaries and teaching how to correlate packets across such boundaries to identify hosts transmitting or receiving them. The second reference detailed methods for detecting unauthorized traffic directed to unused IP addresses, notifying administrators of potential threats, and enabling automated responses, such as blocking or filtering malicious traffic. The reference taught notifying administrators how to manage packets involved in malicious activity after they crossed a network boundary.
Palo Alto argued that combining the packet correlation techniques of the first reference with the notification mechanisms of the second addressed a key claim limitation of the challenged patent. Palo Alto contended that transmitting an indication of a malicious host, as taught by the second reference, naturally followed from the correlation system described in the first. However, the Board found that Palo Alto failed to provide sufficient evidence or argument to show that a person of ordinary skill in the art (POSITA) would recognize the claimed responsiveness between the first reference’s packet correlation and the second reference’s notification mechanisms. Palo Alto appealed.
The Federal Circuit vacated and remanded the Board’s decision, finding that the Board erred by failing to clearly articulate its rationale regarding the motivation to combine the prior art references and whether their combination satisfied the critical limitation of the challenged patent claim. The Court emphasized that the proper inquiry in an obviousness analysis is not whether each reference individually discloses all claim elements but whether their combination would have rendered the invention obvious to a POSITA.
Palo Alto maintained that the Board did not dispute the existence of a motivation to combine and improperly searched for a “bridge” solely within the two references. Centripetal countered that Palo Alto had not established a motivation or provided evidence of a necessary connection – or “bridge” – between the prior art and the claimed invention.
The Federal Circuit determined that the Board’s decision lacked a definitive finding on whether a POSITA would have been motivated to combine the first reference’s correlation techniques with the second reference’s notification step. The Court noted that Palo Alto presented logical and evidentiary support as to why such a combination would make sense, arguing that without a notification step, the correlation techniques alone would be ineffective for mitigating malicious activity – a gap that the second reference could address.
The Federal Circuit also rejected Centripetal’s claim that the Board had analyzed the proposed combination. It clarified that Centripetal’s assertion was based solely on the Board’s recital of Centripetal’s arguments, not an independent evaluation. The Court explained that summarizing a party’s position does not constitute a substantive analysis or finding.
Practice Note: The Federal Circuit’s ruling highlights the necessity of thorough and holistic analysis in obviousness inquiries and reinforces that references must be considered together to determine their combined effect on the claimed invention.

Transparency Is the Best Medicine: Device Parts Don’t Justify Orange Book Listing

The US Court of Appeals for the Federal Circuit affirmed a district court’s delisting of patents from the Orange Book because the patent claims did not “claim the drug that was approved” or the active ingredient of the drug that was approved. Teva Branded Pharmaceutical Products R&D, Inc., et al. v. Amneal Pharmaceuticals of New York, LLC, et al., Case No. 24-1936 (Fed. Cir. Dec. 20, 2024) (Prost, Taranto, Hughes, JJ.)
Teva owns the product that Amneal sought to delist, ProAir® HFA Inhalation Aerosol. The ProAir® HFA combines albuterol sulfate (the active ingredient) with a propellant and an inhaler device to administer the drug. Although the US Food and Drug Administration (FDA) approved Teva’s ProAir® HFA as a drug, the ProAir® HFA contains both drug and device components (the device components being the physical machinery of the inhaler). Teva lists nine nonexpired patents in the Orange Book for its ProAir® HFA.
Amneal filed an abbreviated new drug application (ANDA) seeking approval to market a generic version of the ProAir® HFA that uses the same active ingredient. Amneal asserted that it did not infringe Teva’s nine patents listed for the ProAir® HFA. Teva sued for infringement of six of those patents. Amneal filed counterclaims for antitrust and for a declaratory judgment of noninfringement and invalidity and sought an order requiring Teva to delist the five patents that it asserted against Amneal. Amneal moved for judgment on the pleadings on the ground that Teva improperly listed the asserted patents. The district court granted Amneal’s motion, concluding that Teva’s patents “do not claim the drug for which the applicant submitted the application.” The district court ordered Teva to delist its patents from the Orange Book. Teva appealed.
On appeal, Teva argued that a patent can be listed in the Orange Book if the claimed invention is found in any part of its new drug application (NDA) product. Teva argued that a patent “claims the drug” if the claim reads on the approved drug (i.e., if the NDA product infringes that claim). Teva also argued that according to the Federal Food, Drug, and Cosmetic Act’s broad definition of the word “drug,” any component of an article that can treat disease meets the statutory definition of a “drug.” With this interpretation, Teva’s patents “claim the drug” as the claim dose counter and canister components of the ProAir® HFA.
The Federal Circuit rejected Teva’s interpretation as overbroad because it would allow the “listing of far more patents than Congress has indicated.” The Court rejected Teva’s argument that a patent claiming any component of a drug is listable, explaining that Teva cannot list its patents just because they claim the dose counter and canister parts of the ProAir® HFA.
The Federal Circuit also rejected Teva’s argument that even if Teva’s statutory arguments were rejected, the Federal Circuit must remand the case to the district court to construe the claims. In doing so, the Court rejected Teva’s interpretation of the word “claims” in the listing and counterclaim/delisting provisions, explaining that the listing provision identifies “infringing” and “claiming” as two distinct requirements, and that to be listed, a patent must both claim the drug and be infringed by the NDA product.
The Federal Circuit explained that “infringing the claimed invention has several distinct features that differentiate it from claiming the invention.” In contrast to infringement, which is assessed by facts “out in the world,” claims require “examining the intrinsic meaning of the written patent document.” A product can infringe a patent “without meeting all of the claim elements” and often has additional features.
Teva further argued that a claim qualifies as claiming a drug “even if it only claims device parts.” The Federal Circuit rejected this contention, stating that “it is apparent that a product regulatable and approvable as a drug contains an active ingredient” and noting that “devices have a distinct approval pathway.” The presence of distinct drug and device pathways means that even if a product can simultaneously satisfy the linguistic elements of both, it can only be regulated as a drug or a device, and devices are “characterized more by their purely mechanical nature” (as was the case with Teva’s patents). The Court determined that the “active ingredient” ultimately classifies a drug or biological product, and not the “dosage form.”
Teva further argued that since the FDA designated ProAir® HFA as a combination product, the device components were statutorily a drug. In rejecting this contention, the Federal Circuit again noted the statutory focus on a drug’s active ingredient: an “approved drug” is “an active ingredient,” and to be listed it must meet several requirements, “including that it was identified in an NDA and that the FDA considered whether the active ingredient is safe and effective.” The Court concluded that “including a drug in a combination product does not transform each and every component of that combination product into a drug,” and that “a combination product does not become a drug just because it is regulated as a drug.”
Finally, Teva argued that its patents did claim an active ingredient since each patent has one claim that requires “an active drug.” The Federal Circuit explained that the FDA does not approve drugs based on “reference to some vague active ingredient in the abstract” and that the mere presence of those words was far too broad and would permit “any active ingredient in any form.”
Practice Note: In the slip opinion, at pp 4-12, the Federal Circuit delivers extraordinarily detailed treatise on FDA practice, NDA process, the Hatch-Waxman Act (ANDA practice), Paragraph IV certification, the delisting statute (21 U.S.C. § 355(j)(5)(C)(ii)(I)) and the Orange Book Transparency Act of 2020 (21 U.S.C. § 355(b)(1)(A)(viii)).

Preparing for a Restaurant Financing or Sale Transaction: Considerations for 2025

Go-To Guide:

Restaurant Industry Observations for 2025 
The Importance of ‘Transaction Fitness’ 
Corporate/Company Documentation 
Intellectual Property/Trademarks 
Leases/Real Estate

Employees and Labor-Related Matters 
Tax 
Licenses & Permits 
Material Contracts 
Information Privacy and Security Laws 
Franchising Matters

Restaurant leaders and investors enter 2025 with cautious transaction optimism. As expected, 2024 proved a challenging year for many restaurant groups. Inflation, new legislation in parts of the country (i.e., the FAST Act in California and elimination of the tip credit in some markets), cost-conscious consumers, and escalating labor and food costs kept operators scrambling on multiple fronts. 
Although challenges may persist in 2025, the prevailing sentiment among some operators and investors is that the business climate will improve and transaction activity may increase.
This may serve as welcome news for restaurant businesses seeking to engage in a sale or financing process.
As we focus on our New Year’s resolutions, for those restaurant businesses contemplating a transaction in 2025, a commitment to getting your company in “transaction shape” is a worthy goal.  
Continue reading the full GT Advisory.
 
Additional Authors: Alison R. Weinberg-Fahey, Ryan C. Bykerk, Jason B. Jendrewski, Alicia Sienne Voltmer, Ellen M. Bandel, Joseph J. Curran, Jeffrey K. Ekeberg, David A. Zetoony, Kyle C. Lennox, David W. Oppenheim, and Breton H. Permesly

Being First is Important

Every January brings a burden to each of us: New Year’s Resolutions! Many of these resolutions include “firsts” that we try to implement throughout the new year (or typically… just through the first few weeks of the new year). This January, you may notice that this is the first monthly IP column by Z. Peter […]
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Legal Giants: Inside the World’s Top Law Firms – Kirkland & Ellis

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Legal Giants: Inside the World’s Top Law Firms – Baker Botts LLP

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Patents Expose Celebs!!!

They often make it look so easy when celebrities entertain us in their movies, songs and dance routines. What we fail to typically appreciate are the intense production aspects behind what we see and hear. Many celebrities are involved in the production of their own works. On occasion, their involvement has led to unique innovations, […]
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Understanding Intellectual Property Rights for Custom Merchandise

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Samsung Ordered to Pay $118M for Netlist Patents Infringement

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Latham & Watkins Advises Evertec on Acquisition of GranData

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Unlocking Opportunities: How the Unitary Patent System Benefits Life Sciences SMEs 

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