Our weekly SoCal IP Institute meeting on Monday, June 15, 2015 will be a discussion of the following cases:

Ariosa Diagnostics et al. v. Sequenom et al. (Fed. Cir. June 12, 2015) (available here). This is a decision on appeal from a grant of summary judgment of invalidity of the asserted claims of U.S. Patent No. 6,258,540 (“the ’540 patent”). The United States District Court for the Northern District of California found that the asserted claims of the ’540 patent were not directed to patent eligible subject matter and were therefore invalid under 35 U.S.C. § 101. The Federal Circuit, Judge Reyna writing for the unanimous panel, affirmed.

The inventors of the ‘540 patent discovered that some cell-free fetal DNA to determine the sex of a baby and to detect certain genetic defects while in utero.  The ‘540 patent is directed to certain methods of using the cffDNA, for example, by amplifying the cffDNA by creating many copies of the cffDNA to create a detectable volume of cffDNA, then detecting the desired traits using an agarose gel to stain and visualize the paternally inherited cffDNA.

The Federal Circuit here applied the subject matter eligibility test laid out in Mayo wherein the court first determines whether the claims are subject-matter eligible.  Here, the claims are methods, which are, generally speaking, patentable subject matter. Next, a determination is made whether the claims are directed to excluded classes, like naturally occurring phenomena.  Here, they are.  Finally, the court determines whether the claims include an inventive concept sufficient to “transform” the naturally occurring phenomenon into a patent-eligible application.  Because the amplification aspect of the present invention was, apparently, very well-known at least as early as 1997, and the final step was “detecting” (essentially, applying the natural phenomenon), the Federal Circuit here confirmed the district court’s decision that the claims are directed to patent ineligible subject matter under Section 101.

Judge Linn wrote separately to concur, but only, he said, because he was bound by the sweeping scope of Mayo to do so.  He argued strongly that this invention, while applying a natural law, was ground-breaking, widely regarded as a breakthrough, and, unlike Mayo, no one was doing anything like this before it was discovered by the inventors.  There is no doubt in his mind that this invention should be patent eligible.  In short, he felt that the second portion of the Mayo analysis is too sweeping and was unnecessary for the Mayo decision.  The resulting broad-stroke test, in his view, improperly sets fantastic scientific contributions like the one here outside of the scope of patent-eligible subject matter.

FTC v.  Chevalier,  (FTC June 11, 2015)  (stipulation available here, complaint available here, FTC press release available here).  This is a case of the Federal Trade Commission reaching a stipulated settlement with Mr. Chevalier for a failed Kickstarter campaign.  It is the first example of the potential repercussions of a failed Kickstarter.  The results of failure can be dire for the financially insecure.  Here, Mr. Chevalier launched a Kickstarter campaign to create a fantasy board game on or about May 7, 2012.  Mr. Chevalier’s goal was $30,000.  By the end of the Kickstarter, Mr. Chevalier had raised nearly $123,000.

The game was substantially delayed over the course of more than a year and, eventually, cancelled, though Mr. Chevalier continued to post updates of non-existent progress on the game.  Mr. Chevalier instead spent the money received on miscellaneous personal equipment, rent for his personal residence, and licenses for an unrelated product.  On June 10, 2015, the FCT filed a complaint against him based upon numerous complaints received from backers.

The same day, Mr. Chevalier and the FTC reached a stipulated judgment whereby Mr. Chevalier was enjoined from continuing to misrepresent the status of the game and was fined by the FTC in an amount equal to virtually all of the proceeds of the Kickstarter ($111,793.71) with the fine suspended based upon the poor financial condition of Mr. Chevalier (conditioned upon confirmation that he was, in fact, in a dire financial position).  If the suspension is lifted at any point, the proceeds of the fine will be put into a fund for the backers of the Kickstarter campaign to be returned on a pro-rata basis.  Mr. Chevalier is required to provide an accurate customer list and donation amounts to enable this process.  Finally, Mr. Chevalier is required to submit yearly reports of his financial situation for 18 years following entry of the judgment.

All are invited to join us in our discussion during the SoCal IP Institute meeting on Monday, June 15, 2015 at Noon in our Westlake Village office. This activity is approved for 1 hour of MCLE credit. If you will be joining us, please RSVP to Noelle Smith by 9 am Monday morning.