Federal Circuit Decides You Can Patent Those Gains – Dietary Supplements Are Subject Matter Eligible

On March 15, 2019, the Court of Appeals for the Federal Circuit (CAFC) heard an appeal in the matter of Natural Alternatives International, Inc. v. Creative Compounds, LLC regarding the subject matter eligibility of dietary supplements.  At issue in the case were six patents related to the CarnoSyn® beta-alanine athletic performance supplement.

In reversing the lower court’s ruling, the CAFC found that each of the six patents contained patent eligible subject matter under 35 U.S.C. § 101.   In fact, the court found that the patents directed at the beta-alanine product, method of manufacturing the beta-alanine product, and method of using the beta-alanine product for treatment (i.e., improving athletic performance), were are all subject matter eligible, and therefore patentable.

With regards to the patents on the beta-alanine product, the Court noted that, “A claim to a manufacture or composition of matter made from a natural product is not directed to the natural product where it has different characteristics and ‘the potential for significant utility.’”  In the present case, the court found that the combination of a specific form of beta-alanine and glycine, and that the specific dosages of beta-alanine may increase athletic performance in a way that naturally occurring beta-alanine may not.

With respect to the patents on the method of administering beta-alanine, the Court likened the claims to those at issue in Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals International Ltd, noting that, “Claims that are directed to particular methods of treatment are patent eligible[i].”  Here, the claims in the method patents are directed to administering beta-alanine to a human subject in order to overcome homeostasis and increase creatine production, resulting in physiological benefits to the subject.  The Court, in no unclear terms noted, “These are treatment claims, and as such they are patent eligible.[ii]

Finally, with regards to the manufacturing claims, the Court also found that subject matter eligibility under 35 U.S.C. § 101 was met by the fact that the claims were “[D]irected to the manufacture of a human dietary supplement with certain characteristics,[iii]” and that, “The supplement is not a product of nature and the use of the supplement to achieve a given result is not directed to a law of nature.[iv]

It is clear from the Court’s analysis that it is important to take certain precautions when drafting the specification and claims of patents directed to these dietary supplements and related products.  Here, the Court appeared to rely heavily on interpretations pulled from the specification of the patents at issue in order determine the claims were subject matter eligible.  For instance, the court looked to the specification of the patents to find the significance of dosing ranges, how they were calculated based on bodyweight, and how those dosing ranges were required to effectively increase athletic performance.   Applicants would be wise not to submit skimpy disclosures with a bare minimum of detail, as it could mean the difference between validity and invalidity of a patent.

Ultimately, the Court’s findings in the matter provide welcome guidance on the ever-challenging issue of subject matter eligibility under U.S.C. § 101.  The ruling gives clarity on the ability of sports nutrition companies to secure the lucrative rights in their proprietary performance enhancing dietary supplements; the dietary supplement market being valued at $152 billion (USD) as of 2018, and expected to grow to $220 billion (USD) by 2022[v].

 

 

[i] Natural Alternatives International, Inc. v. Creative Compounds, LLC

[ii] Id.

[iii] Id.

[iv] Id.

[v] https://www.statista.com/statistics/828514/total-dietary-supplements-market-size-globally/

Federal Circuit Ruling Cast Shadow Over USPTO Subject Matter Eligibility Guidance

In January of 2019, the United States Patent and Trademark Office (USPTO) issued revised guidance relevant to 35 U.S.C. § 101 (Subject Matter Eligibility) rejections. Entitled, 2019 Revised Patent Subject Matter Eligibility Guidance, the document added a new pathway for patent eligibility, whereby a claim that includes a judicial exception is still subject matter eligible under 35. U.S.C. § 101, if the judicial exception, such as an abstract idea, is “integrated into a practical application” of the judicial exception.

A large portion of the legal community felt that the guidance would cut the number of rejections under 35 U.S.C. § 101.  The guidance provided much needed clarity on how to present claims in an application to avoid such rejections, which had become commonplace in several art units at the USPTO.

This updated guidance has been largely welcomed by the legal community.  In fact, in its comments to the USPTO on the matter, the American Bar Association stated, “[T]he guidelines are a significant improvement in the examination of patent eligibility by providing a greater degree of certainty and increased predictability in subject matter eligibility determinations at the USPTO.[i]”  However, with quite a bit of foreshadowing, the American Bar Association’s letter noted, “We understand that these Guidelines, however, do not constitute substantive rulemaking and thus do not ‘have the force and effect of law.’”

Fast forward to April 1, 2019, the Federal Circuit found two patents owned by Cleveland Clinic invalid for being directed to ineligible subject matter.  The patents in question were related to testing for cardiovascular disease, and in the opinion of the court, “invalid under 35 U.S.C. § 101 as directed to an ineligible natural law.[ii]

Cleveland Clinic had argued that the courts “failed to give the appropriate deference to subject matter eligibility guidelines published by the PTO.”  Relying on Skidmore v. Swift & Co., 323 U.S. 134 (1944), Cleveland Clinic argued that, “Skidmore ‘requires courts to give some deference to informal agency interpretations of ambiguous statutory dictates, with the degree of deference depending on the circumstances.’[iii]”.

However, the Federal Circuit noted, “While we greatly respect the PTO’s expertise on all matters relating to patentability, including patent eligibility, we are not bound by its guidance. And, especially regarding the issue of patent eligibility and the efforts of the courts to determine the distinction between claims directed to natural laws and those directed to patent-eligible applications of those laws, we are mindful of the need for consistent application of our case law.”

So while the USPTO appears to be loosening the reigns on subject matter eligibility, the Federal Circuit does not appear to be following suit.  And while the Cleveland Clinic v. True Health case did not specifically address the 2019 Revised Patent Subject Matter Eligibility Guidance, the courts opinion clearly noted that the USPTO’s guidance was not the ultimate arbiter on subject matter eligibility.

Ultimately, from a prosecution perspective, it may be wise to not solely rely on the broader interpretations of subject matter eligibility provided under the latest USPTO guidance, and include at least some claims that would survive more rigorous scrutiny under the tests outlined and applied by the Federal Circuit and the Supreme Court of the United States.

 

[i] https://www.uspto.gov/sites/default/files/documents/eligibility2019comments_a_abaipl_2019mar07.pdf

[ii] http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/18-1218.Opinion.4-1-2019.pdf

[iii] See, Stephenson v. Office of Pers. Mgmt., 705 F.3d 1323, 1330) (Fed Cir. 2013)

PTAB Finds Subject Matter Eligibility in Hybrid Trading System

The United States Patent and Trademark Office (USPTO), on Tuesday, March 19, 2019, marked as “Informative” the Patent Trial and Appeals Board (PTAB) finding in Ex parte Smith (2018-00064).  The matter involved a panel of judges at the PTAB finding “claims directed to a hybrid trading system for concurrently trading securities or derivatives through both electronic and open-outcry trading mechanisms” patent eligible subject matter under the revised guidance relevant to 35 U.S.C. § 101 (Subject Matter Eligibility) rejections.  While finding the decision “Informative” is below a fully “Precedential” decision, these “Informative” decisions help guide the judges on “recurring issues.”

The examiner had initially determined that the claims were directed to “an abstract idea of trading derivatives in a hybrid exchange system which is a concept within the realm of ‘fundamental economic practices’ because the concept relates to the economy and commerce.” See, Ex parte Smith (2018-00064).  The examiner determined that under the Alice test, since this was an abstract idea, and that under the Alice step 2 analysis, the claims were directed at generic computer components and did not impose any meaningful limits on the scope of the claims, the claims were therefore patent ineligible subject matter under 35 U.S.C. § 101.

The board initially identified the claims as being directed to methods of organizing human activity, a category of inventions under 35 U.S.C. § 101 that constitutes an abstract idea, namely fundamental economic practices.  The board then reviewed the claims under the revised guidance relevant to 35 U.S.C. § 101 (Subject Matter Eligibility) rejections. Using this guidance, the board determined that the claims were “integrated into a practical application” of the abstract idea, and therefore patent eligible subject matter.

Interestingly enough, the board’s determination that the claims were “integrated into a practical application” was based primarily on claim elements directed to the use of timers to delay automatically executing market orders (i.e., electronic) to allow “in-crowd” market orders (i.e., from “in the pits”).  A majority of the panel of judges for the board did note that that felt these timers were not trivial timers, but it was not a unanimous panel.  One judge did dissent, under the idea that these timers, no matter how they were implemented, were not “[T]echnical in nature and do not provide any ‘technical solution to a technical problem’ as contemplated by the Federal Circuit in DDR and Amdocs.” See, Ex parte Smith (2018-00064).

Conclusion

The marking of Ex parte Smith (2018-00064) as “Informative” with respect to patentability is a good sign for applicants in the space of computer implemented inventions of all sorts, but especially for those in the financial services space.  We are seeing more and more positive outcomes from the PTAB with respect to how they plan to leverage the new guidance on subject matter eligibility as it relates to abstract ideas “integrated into a practical application.”

While there have been some interesting developments at the Federal Circuit, which we will post about separately, guidance from the USPTO appears to favor subject matter eligibility for well-tailored claims that involve computer implemented subject matter.