An analysis of how the U.S. Supreme Court’s recent decision in Bilski v. Kappos will impact the patent-eligibility of medical diagnostic and treatment methods, and offering practical insights and best practices on how to defend or challenge medical method patents.

1. The Future Of Medical Diagnostic And Treatment Patents
Newport Beach Corporate Counsel Seminar
September 28, 2010
Presented by:
Brett J. Williamson
Paul Veravanich

2. 2
Bilski v. Kappos
PTO Guidelines
Effect On Medical Treatment and Diagnostics Patents
Background

3. 3
Requirements For PatentabilityRequirements For Patentability
• Utility/Patent-Eligible Subject Matter (35 U.S.C. §
101)
• Novelty (35 U.S.C. § 102)
• Anticipation by prior art
• Loss of right to patent invention
• Non-Obviousness (35 U.S.C. § 103)
• Objective standard
• Secondary considerations
• Sufficiency of Disclosure (35 U.S.C. § 112)
• Written description
• Best mode

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Trend of Narrowing Patent Eligibility?Trend of Narrowing Patent Eligibility?
• Lab Corp. v. Metabolite, 126 S. Ct. 2921 (2006)
• Diagnostic method patent at issue (Measure level of amino acid,
determine whether elevated level)
• Lower courts upheld validity, but Fed. Cir. did not address § 101
• Dismissed because writ of certiorari “improvidently granted” on §
101 issue
• Several amicus briefs argued that Sec. 101 was already clear based
on Supreme Court precedent
• In re Bilski, 545 F.3d 943 (Fed. Cir. 2008)
• Invalidated business method patent
• Machine-or-transformation test
• Association for Molecular Pathology v. USPTO (S.D.N.Y. 2009)
• Invalidated gene patent, relied on In re Bilski

5. 5
Bilski v. Kappos
PTO Guidelines
Effect On Medical Treatment and Diagnostics Patents
Background

6. 6
The Bilski CaseThe Bilski Case
• Methods of hedging risk in the field of commodities trading
• A method for managing the consumption risk costs of a commodity sold
by a commodity provider at a fixed price comprising the steps of:
• initiating a series of transactions between said commodity provider
and consumers of said commodity wherein said consumers
purchase said commodity at a fixed rate based upon historical
averages, said fixed rate corresponding to a risk position of said
consumer;
• identifying market participants for said commodity having a
counter-risk position to said consumers; and
• initiating a series of transactions between said commodity provider
and said market participants at a second fixed rate such that said
series of market participant transactions balances the risk position of
said series of consumer transactions

7. 7
The Bilski CaseThe Bilski Case
• PTO: Abstract idea of hedging is not patent-eligible subject matter
• Focused on lack of implementation on a specific apparatus
• Federal Circuit: Not patent-eligible subject matter
• For method claims, the machine-or-transformation test is the
exclusive test for determining patent eligibility
• Bilski’s claimed method fails the test:
•“Does not limit any process step to any specific machine or
apparatus”
•“Does not transform any article to a different state or thing”

8. 8
The Supreme Court DecisionThe Supreme Court Decision
• Affirmed finding of not patent-eligibility
• Although the Court did not categorically exclude business methods
from patent-eligibility
• But reversed and rejected Federal Circuit’s use of exclusive, bright line
machine-or-transformation test
• There is no exclusive test
• But machine-or-transformation test provides a “useful and important
clue” and “investigative tool”
• Focused on 25-year-old precedent:
• Parker v. Flook
• Gottschalk v. Benson
• Diamond v. Diehr

9. 9
The Supreme Court DecisionThe Supreme Court Decision
• “Guidelines”
• Well-known exceptions to patent-eligibility:
•Abstract ideas
•Laws of nature
•Physical phenomena
•Ex. A math formula that determines the rate of a chemical
reaction
• Practical applications of the above are patent-eligible
•Ex. A procedure for molding uncured rubber into cured products
that includes the use of that math formula for some of the steps

10. 10
The Supreme Court DecisionThe Supreme Court Decision
• Bilski consequences
• Claims can still be rejected based on the machine-or-transformation
test
• Claims can also be rejected if drawn to an abstract idea
• Unlike Federal Circuit’s now-rejected test, there is little guidance

11. 11
Bilski v. Kappos
PTO Guidelines
Effect On Medical Treatment and Diagnostics Patents
Background

12. 12
Recent USPTO GuidanceRecent USPTO Guidance
• July 27, 2010 “Interim Guidance for Determining Subject Matter Eligibility
for Process Claims in View of Bilski v. Kappos”
• For examiners to use when determining patent-eligibility under 35 U.S.C.
§ 101

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FactorsFactors
• Meets machine-or-transformation test?
• Method involves or is executed by a particular machine
• Does the machine implement the method steps
• Extent to which machine imposes meaningful limits

14. 14
FactorsFactors
• Meets machine-or-transformation test?
• Is the article identified with particularity
• Nature of the article being transformed
• Nature of the transformation
• Does transformation impose a meaningful limit

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FactorsFactors
• Application of law of nature
• Particularity of the application
• Subjective determinations
• Application meaningfully limits steps
• The claim is more than a mere statement of a concept (abstract ideas)
• Mere statement of concept, monopoly over concept
• Covers known and unknown uses
• Describes a particular solution to a problem to be solved v. states a
problem to be solved
• Tangible implementation

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““An Abstract Idea Is Not … Patent-Eligible”An Abstract Idea Is Not … Patent-Eligible”
• Basic economic practices or theories (e.g., hedging, insurance, financial
transactions, marketing)
• Basic legal theories (e.g., contracts, dispute resolution, rules of law)
• Mathematical concepts (e.g., algorithms, spatial relationships,
geometry)
• Mental activity (e.g., forming a judgment, observation, evaluation, or
opinion)
• Interpersonal interactions or relationships (e.g., conversing, dating)
• Teaching concepts (e.g., memorization, repetition)
• Human behavior (e.g., exercising, wearing clothing, following rules or
instructions)
• Instructing how business should be conducted

17. 17
Questions For Public CommentQuestions For Public Comment
• Invited public comments by September 27, 2010
• “What are examples of claims that do not meet the machine-or-
transformation test but nevertheless remain patent-eligible because they do
not recite an abstract idea?”
• “What are examples of claims that meet the machine-or-transformation test
but nevertheless are not patent-eligible because they recite an abstract
idea?”
• But PTO did acknowledge that “to date, no court, presented with a subject
matter eligibility issue, has ever ruled that a method claim that lacked a
machine or a transformation was patent-eligible.”

18. 18
Bilski v. Kappos
PTO Guidelines
Effect On Medical Treatment and Diagnostics Patents
Background

19. 19
Medical TreatmentMedical Treatment
• Method of optimizing therapeutic efficacy of a drug X
• Administering a dose of the drug X to the patient
• Determining the amount of drug X in the patient’s blood
• Recalibrating the drug dosage based on the determination step
•If the amount is less than Y, then increase the dosage
•If the amount is greater than Z, then decrease the dosage
• Patent-eligible subject matter?

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Medical TreatmentMedical Treatment
• Prometheus Labs v. Mayo Collaborative Servs., 581 F.3d 1336 (Fed. Cir. 2009)
• Per district court: not patent-eligible subject matter
• Per Federal Circuit: patent-eligible subject matter
• Applied machine-or-transformation test
• “When administering a drug … the human body necessarily undergoes
a transformation. The drugs do not pass through the body untouched
without affecting it.”
• “[T]he determination step … is also transformative and central to the
claimed methods. Determining the levels of [the drug] in a subject
necessarily involves a transformation.”
• After Bilski, Supreme Court vacated and remanded
• Briefing by October 1 on effect of Bilski

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Medical TreatmentMedical Treatment
• Method of determining whether an immunization schedule affects the
incidence or severity of an immune-mediated disorder
• Immunizing mammals in a treatment group according to the
immunization schedule
• Comparing the incidence, prevalence, frequency, or severity of the
immune-mediated disorder in the treatment group with a control
group
• Patent-eligible subject matter?

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Medical TreatmentMedical Treatment
• Classen Immunotherapies v. Biogen Idec,
2008 U.S. App. LEXIS 25661 (Fed. Cir. 2008)
• Per Federal Circuit:
• Not patent-eligible subject matter
• Applied machine-or-transformation test
• No machine-or-transformation
• “Dr. Classen's claims are neither tied to a particular machine or
apparatus nor do they transform a particular article into a different
state or thing.” (this was the entire “opinion”)
• After Bilski, Supreme Court vacated and remanded

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Medical TreatmentMedical Treatment
• Method of using a muscle relaxant to treat a musculoskeletal condition
• Providing the patient with a therapeutically effective amount of the
muscle relaxant (with the “amount” undefined)
• Informing the patient that the administration of the muscle relaxant
with food results in an increase in the absorption of the muscle
relaxant compared to administration without food
• Patent-eligible subject matter?

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Medical TreatmentMedical Treatment
• King Pharmaceuticals v. Eon Labs,
2010 U.S. App. LEXIS 15947 (Fed. Cir. Aug. 2, 2010)
• First post-Bilski Federal Circuit opinion
• Inventors claimed an unexpected finding that administration of
metaxalone with food increases both the rate and extent of absorption
via the oral dosage form in human subjects
• District court invalidated as both anticipated and not patent-eligible
• “Informing” step did not transform the muscle relaxant into a
different state or thing

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Medical TreatmentMedical Treatment
• King Pharmaceuticals v. Eon Labs,
2010 U.S. App. LEXIS 15947 (Fed. Cir. Aug. 2, 2010)
• Federal Circuit:
• Did not reach the specific patent-eligible subject matter issue
because invalid on other grounds
• But, the method would have met the machine-or-transformation
test
• “[W]hile the Supreme Court in Bilski made clear that our machine-or-
transformation test is not the exclusive test for patentability … it also
made clear that the test is a useful and important clue, an investigative
tool, for determining whether some claimed inventions are”
• “We therefore understand the Supreme Court to have rejected the
exclusive nature of our test, but not necessarily the wisdom behind it.”

26. 26
StrategyStrategy
• Patent applicants
• Comply with machine-or-transformation for data analysis
• Practical application of abstract ideas or laws of nature
• Ex. Measure levels of markers v. markers themselves
• Patent owners
• Reissues
• Litigation – accused infringers
• Analyze asserted claims
• Pre-Bilski, district court trend of considering Sec. 101 defenses

27. 27
Thank YouThank You
• For more information, contact:
Brett J. Williamson
(949) 823-7947
bwilliamson@omm.com
Paul Veravanich
(949) 823-6983
pv@omm.com
veravanich@yahoo.com
http://www.linkedin.com/in/veravanich
O’Melveny & Myers LLP
610 Newport Center Drive, 17th
Floor
Newport Beach, CA 92660
(949) 760-9600
www.omm.com
Newport Beach Corporate Counsel Seminar
September 28, 2010