Insights

In a significant decision for generic drug manufacturers, the Federal Circuit recently affirmed that litigation expenses incurred in defending Hatch-Waxman patent lawsuits are deductible as ordinary and necessary business expenses under the Internal Revenue Code (IRC). The ruling in Actavis Laboratories FL, Inc. v. United States, No. 23-1320 (Fed. Cir. Mar. 21, 2025), resolves a key tax dispute, allowing tax deductions for these expenses in the year they are incurred rather than capitalizing them over time. This outcome provides clarity and potential tax benefits for qualifying businesses navigating the interplay of patent litigation and FDA drug approvals.

The Federal Circuit in Sanho Corp. v. Kaijet Technology International Limited, Inc., No. 2023-1336 (Fed. Cir. July 31, 2024) recently addressed the prior art exception of a “public disclosure” under 35 USC § 102(b)(2)(B).  Affirming a decision of the U.S. Patent Trial and Appeals Board (“PTAB”), the court held that “publicly disclosed” is only satisfied if the invention was made available to the public, and a non-confidential but otherwise private sale of an invention is not a sufficient “public disclosure”.  This case provides a cautionary tale that disclosing or selling an invention before filing a patent application is fraught with risk.

The Judgment of the Brussels Court of Appeal is the latest development in the saga in Belgium where a Belgian parallel importer, PI Pharma NV, imported a generic Sandoz product from the Netherlands, repackaged and rebranded them, and placed them on the Belgian market alleging they were a Novartis’ originator product.

The United States Patent and Trademark Office (USPTO) issued a Federal Register Notice on February 13, 2024 explaining how it will analyze patent inventorship issues for inventions that utilize artificial intelligence (AI) systems. Overall, the USPTO concluded that AI-assisted inventions are not categorically unpatentable, but that a human must have made significant contributions in every aspect of the invention, and reminds applicants of their duty of candor to disclose information that could evidence that an individual may not be an inventor where her/his purported contribution was the result of an AI system. 

The Federal Circuit recently denied a petition for rehearing en banc in the much watched In re Cellect matter.  The landmark panel decision determined how obviousness-type double patenting (“ODP”) is impacted when patent term adjustment (“PTA”) is added to the term of one or more patents in a family under 35 U.S.C. § 154(b), resulting in different terms for the family member patents that would otherwise expire on the same day.

A recent Final Initial Determination (“FID”) from newly appointed Administrative Law Judge Hines confirmed the statutory authority of the International Trade Commission (“ITC” or “Commission”) to investigate the alleged importation of goods incorporating misappropriated trade secrets causing injury to a domestic industry, as held by the Federal Circuit in TianRui Grp. Co. Ltd. v. Int’l Trade Comm’n, 661 F.3d 1322 (Fed. Cir. 2011).  The ALJ also held that Complainant had proven its domestic industry had been substantially injured despite the fact that its revenue had increased during the same period.  For Crowell’s previous client alert on TianRui, see here.

The U.S. Supreme Court has granted review of an 11thCircuit ruling in the case of Nealy et al. v. Warner Chappell Music Inc. et al. The issue at hand is whether a copyright plaintiff can recover damages for acts that allegedly occurred more than three years before filing the case. Specifically, the court will examine the application of the discovery accrual rule, which determines when the clock starts ticking for the statute of limitations in copyright infringement cases. Warner Chappell Music argues that a copyright plaintiff should not be able to recover damages for acts that occurred outside the three-year statute of limitations. The company aims to establish a precedent that would limit the timeframe in which copyright plaintiffs can seek additional damages.

Sometimes we think we have an agreement—only to find out that we do not agree about the meaning of the agreement, and therefore have no agreement at all.  This is, of course, a common fact pattern in a contract dispute, but it is also something to look out for in the claim construction process.  An agreed claim construction is a far cry from an agreement as to the meaning of that construction as applied to the accused products.  We therefore have the counter-intuitive situation where an agreed construction becomes hotly disputed.  When this happens, it is a reminder that even when we agree on a construction that we think favors us, we should not assume that the opposing party, court, or jury will see it that way.

A petition for Inter Partes Review (IPR) kicks off an IPR proceeding, and is required to set forth the grounds of invalidity and how the claim terms should be construed. In the precedential opinion Axonics, Inc. v. Medtronic, Inc., the Federal Circuit held that if the patent owner proposes, or the Patent Trial and Appeal Board (PTAB) adopts, a claim construction that is different from the construction proposed by the petitioner, the petitioner should be given an opportunity to present invalidity arguments and evidence under the new construction. In responding to the new claim construction, however, the petitioner is limited to the prior art of record, and it may not rely upon new prior art references. The Federal Circuit left open whether the petitioner may rely upon different embodiments in a previously cited reference.

Pharmaceutical innovators typically seek broad patent protection for their discoveries in order to prevent others from exploiting not only the specific embodiments the innovator wishes to pursue commercially, but also functional equivalents. But what happens when the additional functional equivalents that the innovator seeks to protect are not expressly disclosed in the patent? The Supreme Court recently addressed this issue in Amgen v. Sanofi.

On June 22, 2023, U.S. Senators Thom Tillis (R-NC) and Chris Coons (D-DE) introduced the Patent Eligibility Restoration Act of 2023 (“the Bill”), aiming to restore patent eligibility to important inventions across many fields.  Essentially, the Bill is trying to eliminate judicial exceptions to patent eligibility, and provide clear guidance on determining patent eligibility, especially in areas such as medical diagnostics, biotechnology, personalized medicine, artificial intelligence, 5G, and blockchain.  The U.S. Supreme Court has established several judicial exceptions to subject matter eligible for patenting.  Although these exceptions are not enumerated in the statute, the Supreme Court has interpreted 35 U.S.C. § 101 to exclude subject matter from being patented if it falls within any of three areas:  natural phenomena, laws of nature and abstract ideas.  Alice Corp. v. CLS Bank International, 573 U.S. 208 (2014).  These judicial exceptions frustrate many IP owners around the world, because many inventions that are eligible for patents in other countries cannot be patented in the U.S. or are ruled invalid in U.S. courts.  Moreover, supporters of this bill argue that leading-edge technologies that give U.S. industry competitive advantages over foreign companies have been difficult to patent in the U.S. under the Court’s rulings.  This legislation reportedly has a good chance to pass in this Congressional session, and companies need to be prepared for the dramatic changes if it becomes law.

Unitary Patents are being granted and the Unified Patent Court is up and running as of June 1, 2023.  Since the 1970’s, there have been attempts at establishing a unitary European patent that would cover multiple European countries and would be enforced by a single court system.  This type of system is in contrast to the system known since 1973 of granting European Patents by the European Patent Office (EPO) and validating the European Patent in designated European countries, wherein each validated patent is enforced in the national court associated with the validated patent.

In the April 12, 2023 decision in Sequoia Technology, LLC v. Dell, Inc., No. 21-2263, a case involving infringement and validity of a patent related to digital storage of data in a server, the Federal Circuit reversed the district court, in part, and held that a “computer-readable recording medium storing instructions” does not encompass transitory media. 

In a March 30, 2023 decision in Wash World, Inc. v. Belanger Inc., No. 19-C-1562, a case involving infringement of a patent relating to a vehicle spray car washer with a lighted spray arm, Judge William C. Griesbach of the Eastern District of Wisconsin denied a patentee’s motion for treble damages under 35 U.S.C. § 284 of the $10,060,000 jury award after the jury had found the accused infringer willfully infringed. However, the court granted the patentee’s motion for attorney’s fees under 35 U.S.C. § 285, finding the case to be exceptional. The court’s award of attorney’s fees was based, in part, on a dismissive statement by the infringer’s corporate representative and president overheard in the courtroom shortly after the jury’s verdict.

The PTAB ruled last week that the common law doctrine of claim preclusion only applies at the PTAB in one direction, holding that Congress did not intend for an adverse district court judgment to block a party from pursuing a subsequent inter partes review challenge. 

Since the Supreme Court’s 2017 sea change venue decision in TC Heartland v. Kraft Food Group Brands, the Northern District of West Virginia has seen an uptick in substantive Hatch-Waxman litigation involving local pharmaceutical company, Viatris Inc. (formerly known as Mylan Pharmaceuticals). Viatris is frequently named as a defendant in Hatch-Waxman litigations, each of which is triggered by Viatris’s service of a statutorily-required notice letter stating why the patents that allegedly cover the brand name drug are invalid and/or not infringed by a proposed generic drug. Hatch-Waxman litigants have battled over the requirements for these notice letters in other courts. In Bausch Health Ireland Ltd. et al. v. Mylan Pharms. Inc., the Northern District of West Virginia has now added to that body of law, adopting a holding consistent with other courts that a generic drug company is not foreclosed from asserting additional defenses in litigation even if those defenses were not raised in the generic drug company’s notice letter. See No. 1:22CV20, 2023 WL 2726432, at *3 (N.D.W. Va. Mar. 30, 2023).

In March 2023, the USPTO and its Council for Inclusive Innovation announced the First-Time Filer Expedited Examination Pilot Program.  This new program benefits those individuals or small businesses that are first-time filers for patent rights and qualify as “micro entities.”  Through the program, these micro entities receive an expedited first Office action, which the USPTO hopes will lower time-based barriers for inventors that acted as barriers to commercialization or may have otherwise precluded inventors’ use of the patent system. 

On February 24, 2023, the Director of the United States Patent and Trademark Office (“USPTO”) issued a precedential Director Review Decision in the Inter Partes Review (“IPR”) of Nested Bean, Inc. v. Big Beings Pty Ltd.[1] The decision modified the Patent Trial and Appeal Board’s (PTAB) final written decision that had found all challenged multiple dependent claims fully invalid, notwithstanding the fact that one of the independent claims from which the multiple dependent claims depended was not found to be invalid.[2]

On Monday, March 27, 2023, the Supreme Court held oral argument regarding the proper legal standard for patent enablement in Amgen v. Sanofi. This closely-watched case is of great interest because it is the first time the Court has addressed section 112 of the Patent Act since it addressed indefiniteness in 2014. The case has divided the pharmaceutical industry where some pharmaceutical companies have filed amicus briefs in support of Amgen (AbbVie, Biogen, Bristol Myers Squibb, GSK and Merck Sharp & Dohme), while others have filed amicus briefs in support of Sanofi (AstraZeneca, Bayer, Eli Lilly, Fresenius Kabi, Genentech, Gilead, Johnson & Johnson and Viatris).

New ways to utilize the internet for fun and leisure have skyrocketed recently. ChatGPT allows people to ask everyday questions and draft novels to their liking thorough AI, and the metaverse is constantly developing new ways to interact with each other in virtual worlds. With these new frontiers in the spotlight, it is important for companies to also consider the current remarkable technology being updated and used by millions of consumers that goes hand in hand with these new mediums. Cloud gaming is a technology that allows users to play video games on remote servers and stream the gameplay to their devices, also called gaming-as-a service. This technology, along with AI and the metaverse, has the potential to revolutionize the media industry by making interactive games and live brand collaborations more accessible and convenient for users.