Arbutus Biopharma and Genevant Sciences, having prevailed in district court litigation against Moderna involving infringement of U.S. Patent Nos. 8,058,069, 8,492,359, 8,822,668, 9,364,435, 9,504,651, and 11,141,378 regarding lipid nanoparticle (LNP) technology specifically comprising a particular cationic lipid:

used in making vaccines against SARS-CoV-19 virus (COVID-19), filed its responsive brief in Moderna’s appeal to the Federal Circuit.  At issue was the District Court’s determination on summary judgment that 28 U.S.C. § 1498(a) did not absolve Moderna of infringement liability, which if Moderna was to convince the Court to reverse would compel Arbutus/Genevant to bring the matter to the Court of Federal Claims as to the magnitude of payment by the government to which they were entitled.  The statute reads:

Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner . . . the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.

The amount at issue is not insignificant, the parties having settled (provided that Moderna does not prevail in its appeal) on a $1.3 billion payment.

In its responsive brief, Arbutus based its argument on statutory construction and precedent regarding how Section 1498 has been construed in particular instances.  These arguments are in direct contrast to those in Moderna’s opening brief, which is based on the Executive branch being in best position to determine what is needed to meet emergencies, which is what the statute has always been intended to do (according to Moderna).

Arbutus argues that Section 1498 was crafted to permit the Federal government to obtain patented articles needed by the government during wartime, in what is termed the “direct benefits” test, as well as providing a limited abrogation of sovereign immunity for accepting liability for patent infringement.  This argument relies on statutory language that infringement is by “a contractor” done (1) “for the Government” and (2) with the government’s “authorization or consent” (the parties have not disputed that the agreement involving COVID-19 vaccines satisfies the authorization or consent requirement).

Accordingly, Arbutus’s argument is focused on the “for the Government” language of the statute.  Moderna’s actions were predominantly for the public, the brief maintains, there having been only a small fraction (~6,000,000 out of 500,000,000 vaccine doses provided by Moderna) used by the government directly (“designed and developed by a private party, shipped to private warehouses, and distributed to private companies and states to administer to private citizens,” as characterized in the brief).  The government entered into a contract (termed “C-100”) for Moderna to make the vaccine having express language, wherein the government purchased vaccines to “facilitat[e] the goal of making” vaccine doses “available to the American population,” that were “used by the general public or by nongovernmental entities for purposes other than Governmental purposes”; and that “manufacturing of vaccine doses” was done for two groups—”the United States Government (USG) and the US population.”

Arbutus argues that Section 1498 does not apply to this public use; the “for the government” provisions of the statute mean that the benefit must be for the government directly and emphasizes that Moderna made the product (almost all of it, 98.8%) exclusively for the public.  In addition, Arbutus contends that the government had essentially no involvement with the vaccines outside authorizing their procurement, for example that the government did no testing nor take physical possession nor make decisions as to who received the vaccine doses.  This situation was a consequence of the express terms of the C-100 contract, i.e., for the benefit of both the government and the public.

Arbutus argues that Moderna’s interpretation “reads out” of the statute this direct benefit requirement, and (with the government) relied solely on satisfaction of the “authorize and consent” prong and disregarded the (separate) “for the government” prong.  This, not the District Court’s decision, is error, according to the brief, because both prongs must be satisfied, inter alia because indirect infringement (which would be the case here) is subject to sovereign immunity which was not waived, citing Zoltek Corp. v. United States, 672 F.3d 1309, 1320 (Fed. Cir. 2012) (en banc)), as well as Broome v. Hardie-Tynes Mfg., 92 F.2d 886, 888 (5th Cir. 1937) (“for the government” prong must be satisfied); Hughes Aircraft Co. v. United States, 534 F.2d 889, 895, 897-98 (Ct. Cl. 1976) (per the contract, did the government directly benefit from the infringement); Sevenson Env’t Servs. v. Shaw Env’t, Inc., 477 F.3d 1361 (Fed. Cir. 2007) (“where infringing activity has been performed by a government contractor pursuant to a government contract and for the benefit of the government”); and IRIS Corp. v. Japan Airlines Corp., 769 F.3d 1359, 1362 (Fed. Cir. 2014) (satisfying the “authorization and consent” requirement not enough).  The brief also cites instances where the “for” the government prong failed, including Windsurfing International, Inc. v. Ostermann, 534 F. Supp. 581, 588 (S.D.N.Y. 1982) (involving equipment for the Olympics); Larson v. United States, 26 Cl. Ct. 365 (1992) (involving Medicare payments); Riles v. Amerada Hess Corp., 999 F. Supp. 938, 940 (S.D. Tex. 1998) (related to oil drilling); and Carrier Corp. v. United States, 534 F.2d 244, 247 (Ct. Cl. 1976) (regarding garbage collection).  Finally, with regard to precedent-citing, the brief sets forth decisions related to the “direct benefit test” that must be satisfied, including Advanced Software Design Corp. v. Fed. Rsrv. Bank, 583 F.3d 1371 (Fed. Cir. 2009) (Federal Reserve Bank); IRIS Corp (passport scanning); Riles (oil drilling); Yassin v. United States, 76 F. Supp. 509, 511 (Ct. Cl. 1948) (D-Day bridges); Kaplan v. United States, 153 F. Supp. 787, 789 (Ct. Cl. 1957) (sleeping bags).

Like the District Court, the brief uses a dictionary definition to construe the word “for” specifically, “For, A New Dictionary on Historical Principles 409 (1908),” citing FastShip, LLC v. United States, 892 F.3d 1298, 1303 (Fed. Cir. 2018), and provides a long explication of the proper use of the term in the statute.

The distinction Arbutus makes using these citations is between a contractor who makes a vaccine for the government versus a contractor employed by the government to make vaccines “full stop.”  Arbutus relies for the factual grounds for this argument on Moderna’s own admissions that doses were provided for “the US population”; that their efforts were directed towards “developing a vaccine that’s intended to be administered to the general public, . . . beyond the internal use by the US Government only”; that its “vaccines [were] for the American people” and “for purposes other than Governmental purposes.”  Arbutus also cites the facts regarding to whom the doses went and that the government never took formal title to the vaccines, calling any such title “ethereal.”  To the extent there may be any ambiguity Arbutus argues that the burden is on Moderna regarding any such ambiguity to be cited against the government, relying on FAA v. Cooper, 566 U.S. 284, 290-91 (2012).  The brief also relies on the District Court being in agreement with Arbutus on the need for both of these prongs to be satisfied, and that Moderna’s infringing activity (vaccines) for the benefit of the public was outside the scope of Section 1498, because the government did not directly benefit and thus being outside the scope of Section 1498 the private patent rights of Arbutus and Genevant were violated. 

Arbutus further argues that a ruling in favor of Moderna would “collapse” the Section 1498 statutory structure as well as raise separation of powers issues should the court decide Moderna can benefit from Section 1498 under these circumstances.  Congress in enacting the statutory language has limited the extent to which infringement on behalf of the government can be excused and the Executive Branch cannot expand it unilaterally, calling any such decision to confer “unfettered Executive discretion to intrude on private patent rights.”  Moreover, the statute is itself a waiver of sovereign immunity and “executive officers lack the power to waive the federal government’s sovereign immunity” unilaterally, citing United States v. Horn, 29 F.3d 754, 762 (1st Cir. 1994), and Pacrim Pizza Co. v. Pirie, 304 F.3d 1291, 1294 (Fed. Cir. 2002), whereas Congress has that authority, citing Admiral Fin. Corp. v. United States, 51 Fed. Cl. 366, 368-69 (2002), and asserting that “[h]ad Congress thought it necessary to extinguish third-party patent liability in addressing the pandemic, it could have done so. It did not.”

Arbutus also argues that Moderna’s position is an “unprecedented expansion of the Executive’s power to expropriate constitutionally protected patent rights,” being made by bureaucrats as “a choice that courts (including this one) are powerless to review or “second guess,” according to the Department of Justice’s amicus brief (and contrary to Loper Bright’s overturning Chevron deference as well).

The brief also addresses Moderna’s warning regarding the effects of overruling the District Court on private parties using injunctions to prevent the government from acting in emergencies, noting that “[w]ithout expanding §1498 (which Arbutus argues would be the result of the Federl Circuit ruling in Moderna’s favor), courts ‘refuse” to “enjoin activities [where it] would injure the public health,'” citing  Cordis Corp. v. Bos. Sci. Corp., 99F. App’x 928, 935 (Fed. Cir. 2004), and Bianco v. Globus Med., Inc., 2014 WL 1049067, at *11 (E.D. Tex. Mar. 17, 2014) (collecting cases), and that “[c]ourts [have already] refused injunctions related to COVID-19 for that reason,” citing Intrivo Diagnostics, Inc. v. Access Bio, Inc., 2022 WL 204618, at *2 (C.D. Cal. Jan. 24, 2022).

The brief also briefly considers argument from amici supporting Moderna, and states that “Moderna’s amici argue that the pandemic’s exigency justifies reading §1498 broadly.  . . .  But the pandemic did not transform ultra vires actions into permissible conduct,” citing Ala. Ass’n of Realtors v. HHS, 594 U.S. 758, 766 (2021) (per curiam) (“It is indisputable that the public has a strong interest in combating the spread of [COVID-19] . . . [b]ut our system does not permit agencies to act unlawfully even in pursuit of desirable ends.”).

On the other hand, Arbutus’s argument has resonated with several of the amici filing briefs in support of affirmance (to be discussed in other posts), motivated by the concern that expanding the scope of Section 1498 would, along with (improper) expansion of “march-in” rights provisions of the Bayh-Dole Act, severely impinge on private patent rights based on circumstances not reaching the emergency status of the COVID pandemic but serving seemingly compelling political ends.

One of the beneficial characteristics of the response to the COVID-19 pandemic were pledges from companies involved in developing vaccines (such as Moderna, Pfizer, BioNTech, and others) not to enforce patents on relevant technology during the duration.  That restraint has long-since vanished (as has the global pandemic effects of the virus) and there have been several lawsuits, in the U.S. and abroad, relating to various components of the vaccine.

One of these lawsuits saw Arbutus Biopharma and Genevant Sciences suing Moderna over lipid nanoparticle (LNP) LNP technology specifically comprising a particular cationic lipid claimed in U.S. Patent Nos. 8,058,069, 8,492,359, 8,822,668, 9,364,435, 9,504,651, and 11,141,378:

Arbutus and Genevant Sciences recently settled their lawsuit with Moderna; relevant features of this settlement include an immediate (July 2026) payment by Moderna to plaintiffs of $950 million with an additional $1.3 billion payment being subject to a determination on appeal to the Federal Circuit regarding Moderna’s claim that these sums should be paid by the Federal Government because their COVID-19 vaccine, Spikemax®, was produced under the provisions of 28 U.S.C. § 1498(a). 

The question of who should pay was decided on summary judgement by the District Court (answer: Moderna) subject to appeal to the Federal Circuit regarding whether 28 U.S.C. § 1498(a) controlled, in which case the matter would be decided by the Court of Federal Claims as to the magnitude of payment by the government to which Arbutus was entitled.  The statute reads:

Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner . . . the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.

And the issue for the District Court, Moderna, and Plaintiffs Arbutus Biopharma and Genevant Sciences is the meaning of the term “used or manufactured by or for the United States” as it relates to use of vaccines against COVID-19 by the government itself or as administered to the public (the parties did not dispute that the other statutory requirement, that Moderna acted with the government’s “authorization and consent,” was satisfied).

Moderna’s brief sets out the policy considerations it argues should be persuasive for the Federal Circuit to reverse the District Court’s determinations that Section 1498 is not the proper basis for summary judgment:

A novel coronavirus, SARS-CoV-2, was first detected in Wuhan, China, in December 2019.  Appx3237.  “COVID-19” quickly spread across the globe.  . . .  By January, it reached America’s shores.  Id.  And ordinary life came to a halt.

COVID-19 posed a uniquely destabilizing threat.  It spread easily through respiratory means.  And humans had yet to develop “herd immunity,” which typically slows viral spread, to the novel virus.  This meant that, on average, each person infected with COVID-19 transmitted it to multiple others, causing the virus to rapidly and uncontrollably multiply, before people even showed symptoms.  This was a “‘perfect storm’ for rapid epidemic transmission with widespread infection.”  Severe outbreaks overwhelmed the Nation’s hospitals.  Early responses proved both ineffective and temporary.  Frontline workers risked their lives just to man their posts.  Without an effective vaccine, health authorities attempted to slow transmission through isolation measures, which imposed enormous economic and societal costs.  Work stopped.  Human contact was cut off.  Loved ones were still dying—many alone.

In March 2020, President Trump declared a national emergency and announced “sweeping” government action “to control the spread of the virus in the United States.”  This included entry restrictions and travel-related quarantines.  It also entailed “policies to accelerate the acquisition of personal protective equipment and streamline bringing new diagnostic capabilities to laboratories.”  The President explained that the “spread of COVID-19 within our Nation’s communities threatens to strain our Nation’s healthcare systems.”  He warned hospitals to “be prepared to surge capacity” and confirmed that further measures were “needed to successfully contain and combat the virus in the United States.”

With this as a predicate, Moderna argued in its opening brief on appeal that the government agreed/promised to bear the risk of patent infringement liability under Section 1498 to reimburse Arbutus or any other patent holder for infringement damages.  This portion of the brief contained the colorful analogy that under the District Court’s decision “a government-procured vaccine used to lift the Nation from a pandemic is less eligible for protection than staples sitting in an IRS supply closet.”  Moderna argued that both prongs of the 1498 statute are satisfied in this case, i.e., “[t]he Government hired Moderna to develop a novel vaccine as a government product at the Government’s direction.  The Government owned and controlled each batch produced.  And it explicitly authorized Moderna to use ‘any’ patented invention in performing the ‘C-100’ Contract at issue.”  Moderna’s opening brief further argued that Section 1498 – in its statutory text, legislative history, and history of how the statute has been used and courts passed judgment on the applications thereof – did not in this instance prevent the government from assuming such liability, specifically because the government itself took title to every dose (raising issues of fact on this point between what Moderna asserts and what Arbutus contends – to be discussed in a future post on Arbutus’s responsive brief).  Moderna also challenged Arbutus’s arguments regarding the absence of direct infringement as precluding the government being liable for indirect infringement, stating that “there was no way for the Government to buy and deploy the vaccine without Moderna indirectly infringing: no manufacturing, no distribution, no administration.”  The brief also makes the rational argument that Section 1498 permits the government to shield its contractor Moderna from “using injunctions or threats of massive damages to stop contractors from supplying the Government at all.”  Affirmance of the District Court’s decision in this case, Moderna argues, would prevent the government from using private industry to “protect the Nation from the next pandemic, war, or other national emergency.”

Moderna took the opportunity to rebut Arbutus’s telling of the tale (that Moderna had control over an overwhelming amount of the 500 million vaccine doses it produced), stating that Moderna worked “hand-in-glove” with the government to deliver the vaccine against COVID-19, and emphasizing the degree of cooperation between Moderna and the government (rather than casting Moderna as an independent actor), making factual statements including:

“By late summer 2020, the Government was ready to start making  Moderna’s mRNA vaccine.” – “The Contract called the vaccines ‘OWS products'” – “This was a government operation through-and-through” – “Contract provisions ensured ongoing government control over nearly every aspect of production, including timelines, security, management, maintenance, storage, delivery, packaging, and insurance” – “[G]overnment representatives were guaranteed access to Moderna’s facilities for compliance checks and audits” – “As DOD stressed from the outset, ‘[t]he federal government will own these vaccine doses'” – “Moderna delivered.  The Government accepted—and took title to—half-a billion C-100 vaccine doses and deployed those doses to lift the Nation out of the COVID-19 pandemic.  The Government’s partnership with Moderna and other private-sector innovators proved indispensable to that accomplishment” – “the Government [had] ‘full visibility, control, and ability to shift assets and use data to optimize vaccine uptake,’ which furthered the Government’s objective ‘to achieve maximum uptake of the vaccine across all population groups.'”

Moreover, Moderna’s brief asserts that:

• “The Government oversaw the distribution process.”

• “It signed agreements with each state and territory governing use of government doses, including that they be administered ‘according to the label.'”

• “Each dose was tracked in a government batch tracker”

• “The Government entered into a centralized distributor contract with McKesson to deliver the vaccine to locations throughout the country.”

• “McKesson executed the Government’s instructions to deliver “a specific amount of vaccine to a designated location.”

Moderna further argues that precedent supports its position that “government authorized patent use to fulfill a government procurement contract is manufacture or use ‘for the United States’ . . . [t]hat does not turn on what the Government does with its purchase,” citing Yassin v. United States, 76 F. Supp. 509, 515 (Ct. Cl. 1948), “[e]ven if the Government sends the goods abroad,” citing Kaplan v. United States, 153 F. Supp. 787, 789-90 (Ct. Cl. 1957).  Moderna maintains in its argument that this and other precedent had interpreted the phrase “for the government” as meaning “on behalf of the government” (a position that the District Court rejected).  In its assertions that the District Court erred in this determination, Moderna argues that the facts support the interpretation of the phrase “for the government” to mean “intended for the government” because the government “bought, paid for, and owned every vial it accepted,” and this is the standard applied pre-1498 during World War I wherein qualifying inventions were  “used . . . by” (and only by) the Government.  Moderna further argues that “for the government” is not a limit on what the government can procure but is just meant to ensure that it is the government that is doing the procuring and meant to permit the government to procure “whatever it wished regardless of possible patent infringement,” citing TVI Energy Corp. v. Blane, 806 F.2d 1057, 1060 (Fed. Cir. 1986).

According to Moderna, the cases relied upon by the District Court – Sheridan v. United States, 120 Fed. Cl. 127 (2015), and Larson v. United States, 26 Cl. Ct. 365 (1992) – stand for the principle that “private parties cannot spring liability on the Government by claiming that it incidentally benefited from private conduct.”  Moderna characterizes as “absurd” the District Court’s limitation for the word “benefit” to be “only from doses physically injected into federal employees,” arguing that the true benefits obtained under Section 1498 were “deploying vaccines to thwart a pandemic, reopen the economy, and reduce nationwide dependence on the Government’s own spending.”

Further regarding the decision by the District Court and its reasoning, Moderna reminds the Court that in its statutory exegesis explicated the word “for” by choosing one of 31 different dictionary definitions (that Moderna disputes), and argues that contrary to the District Court’s conclusion “[t]he Government was the ‘intended recipient’ of all vaccine stock that Moderna produced pursuant to the C-100 Contract.  The Government ordered, accepted, paid for, and owned every vial” (emphasis in brief).  Moderna argued further that the District Court erred by turning an “intended recipient” requirement into an “end-user” requirement, so the Section 1498 safe harbor applies only if the vaccines produced by Moderna were used solely by the government (which use can arise long after the product was made for the government, Moderna argues), citing Sheridan v. United States, 629 F. App’x 948, 951 (Fed. Cir. 2015) (§ 1498 only covers infringement by those “acting on behalf of the United States”)

Moderna further argues that the District Court erred in its interpretation of the “for the government” requirement on Section 1498 “not merely because it benefited the public, but because the Government hired Moderna to do it.”

Regarding the issue of indirect infringement, Moderna cites Decca Ltd. v. United States, 640 F.2d 1157(Ct. Cl. 1980) (“section 1498 shields governmental contractors from being held liable for contributory infringement”), and Astronet Technologies Inc. v. BAE Systems, Inc., 802 F.3d 1271 (Fed. Cir. 2015) (“§1498 protects contractors from claims of indirect infringement predicated on direct infringement falling within the statute”), and argues that § 1498 protects use “by” and use “for” the United States so that indirect infringement (by the government eliciting direct infringement by a contractor) is protected by § 1498.

Turning to the consequences to be feared from the District Court’s decision Moderna asserts that:

The district court’s reasoning revives the very harms that Congress adopted §1498 to prevent.  It lets Plaintiffs pursue exactly the same liability against Moderna—especially as Plaintiffs contend any use of the vaccine results in indirect infringement.  Plaintiffs could even have sought an injunction to prevent Moderna from manufacturing or distributing the vaccine, halting the Government’s nationwide vaccination operation.

and that:

Congress did not allow government contractors’ statutory protection to be dodged so easily.

Turning to statutory interpretation as a matter of law, Moderna takes the position that the circumstances here clearly satisfy the requirements of Section 1498 for both authorization and consent and actions for the government (stressing the former):

Where, as here, the Government directly contracts for the manufacture of a product, that manufacture is on the Government’s behalf—and therefore “for the Government.”  Based on regulation 48 C.F.R. §27.201-1(a) (describing §1498 as setting forth “the exclusive remedy for patent . . . infringement by or on behalf of the Government” (emphasis added)) – supported by government’s “Statement of Interest” filed pursuant to 28 U.S.C. § 517.

The Government desperately needed a vaccine to respond to a once-in-a-century pandemic that had brought American life—and the national economy—to a halt.  The Government could not have made that vaccine itself, especially at the scale or speed required.  So the Government hired Moderna to do that work for it.  In a period of immense uncertainty, Moderna agreed to make an innovative vaccine in enormous quantities at record speed.  The Government directed, oversaw, controlled, and approved Moderna’s work.

And:

[N]ot only were the doses manufactured for the Government, they were then used by and for the Government.

Moderna provides the hypothetical that if the government had made the vaccine itself then Section 1498 would certainly apply, and asks the Court why should Section 1498 not apply when “the Government hires a contractor to perform that same work through a procurement contract.”

The Moderna brief also provides a history of Section 1498 and its further statutory modifications, e.g., to extend the government’s protection against infringement to government contractors in response to William Cramp & Sons Ship & Engine Bldg. Co. v. Int’l Curtis Marine Turbine Co., 246 U.S. 28, 42 (1918).  Moderna argues that the change in the statute occasioned by this decision was consistent with its position that by manufacturing COVID-19 vaccines any infringement was protected by Section 1498 as amended, citing Richmond Screw Anchor Co. v. United States, 275 U.S. 331, 342 (1928), for the proper scope of this change (which protection was further expanded to subcontractors during World War II).

Precedential citations supporting Moderna’s positions cited in the brief include Sevenson Env’t Servs. v. Shaw Env’t, Inc., 477 F.3d 1361 (Fed. Cir. 2007) (“A prime contractor that provides the goods or services required by a procurement contract with the Government is acting “for” the Government”), and Crater Corp. v. Lucent Techs., Inc., 255 F.3d 1361, 1368 (Fed. Cir. 2001) (regarding subcontractors); Yassin v. United States, 76 F. Supp. 509, 515 (Ct. Cl. 1948); Broome v. Hardie-Tynes Mfg. Co., 92 F.2d 886, 887-88 (5th Cir. 1937) (local dam works); and In re Mahurkar, 831 F. Supp. 1354, 1393 (N.D. Ill. 1993) (regarding supply of IV catheters).

Moderna’s brief distinguishes Sheridan and Larson as relied upon by the District Court because in Sheridan there was no government contract (“The Government never ordered any pipes or authorized their use” [and] “It did not control their distribution” [and] “It had no demonstrated ‘interest’ in or connection to them, much less a role directing their production as part of a government operation.”)  And Larsen “involved only government reimbursement for private medical care—[there was] no government procurement and no authorization or consent to use patents.”  In both cases the holdings were simply that “[p]rivate parties cannot foist §1498 liability on the Government for conduct the Government never sought, required, or bargained for” according to Moderna.  The distinction Moderna makes here is that Moderna’s infringement was the consequence of the “intended effect of government conduct.”  Moreover, Moderna contends that “[i]f the contractor was providing what the Government ‘sought or required’ in its contract (as Moderna was when making the vaccine), that is sufficient to show the contractor was acting ‘for the Government,'” citing Sevenson and Pieczenik v. United States, 2023 WL 5031507, at *2 (Fed. Cir. Aug. 8, 2023).  This is the basis for Moderna to argue that “[w]here that is the case, the §1498 inquiry ‘reduce[s] to the very simple question’ whether the Government gave authorization or consent” under Sevenson.

Turning to the government benefit, Moderna recites a litany of public health and economic benefits as well as foreign policy advantages, which include those even if limited to benefits for the government per se, and argues that the Astronet and Decca decisions bring indirect infringement under the protective umbrella of Section 1498.

And with regard to the indirect infringement question, the brief cites Leading Tech. Composites, Inc. v. MV2, LLC, 2020 WL 13891409, at *13 (D. Md. Nov. 20, 2020) (“§1498 immunity also extends to claims of indirect infringement”); and Morpho Detection, Inc. v. Smiths Detection Inc., 2013 WL 5701522, at *4-5 (E.D. Va. Oct. 17, 2013) (recognizing §1498’s “clear directive” that the “sole remedy” for use under the statute extends to an indirect-infringement claim) to illustrate how courts have addressed this issue in the context of Section 1498 liability.

Moderna’s brief concludes with its assessment of appropriate public policy arguments regarding consequences of affirmance and urges the Federal Circuit to reverse the District Court’s summary judgment decision against Moderna deserving protection under the provisions of Section 1498.

In a Patent Alert distributed last week, the U.S. Patent and Trademark Office reminded stakeholders that beginning on Monday, July 20, patent applicants and owners who are not domiciled in the U.S. or its territories are now required to be represented by a USPTO-registered patent practitioner.  The requirement was announced earlier this year in a final rule published in the Federal Register (91 Fed. Reg. 13510).

The Office noted that the amendment to the rules of practice to implement the new requirement is “part of the USPTO’s ongoing efforts to improve efficiency, reduce the backlog, improve quality, and deter fraud and misrepresentation in patent matters,” and “also brings USPTO policies in line with most other countries, including in Japan and before the European Patent Office, that require such parties be represented by a licensed or registered person of that country or office for most filings.”  The new requirement applies to all papers received in patent matters on or after July 20, 2026, regardless of the filing date of the application.

In the final rule published in the Federal Register in March, the Office noted that in addition to the benefits described above, the new requirement will “enable the USPTO to more effectively use available mechanisms to enforce compliance by all foreign applicants/inventors and patent owners with U.S. statutory and regulatory requirements in patent matters, and enhance the USPTO’s ability to respond to false certifications, misrepresentations, and fraud.”  The notice also indicates that the new requirement will help increase examination efficiency as the Office spends significant resources assisting pro se applicants with the prosecution of their applications.

In the Federal Register notice, the Office provided responses to nine comments that were received in response to the Office’s notice of proposed rulemaking that was published in December 2025.  In one response, the Office noted that despite the new requirement, when an application with a foreign-domiciled applicant but without the signature of a registered patent practitioner is filed, the application (including provisional applications) will be accorded a filing date under the conditions set forth in 37 C.F.R. § 1.53.  When an application is filed by a foreign inventor or applicant without the signature of a registered patent practitioner, the Office notes that it may mail a notice informing the inventor or applicant of the requirement for obtaining a practitioner, and when necessary, such notice will set a time period for response.  The Office, however, reminds stakeholders that the USPTO will not accept an Application Data Sheet or micro entity certification form that is signed by an inventor or applicant whose domicile is in a foreign country.  As a result of the submission of such an ADS, the Office states that “inventorship will not be set nor will benefit or priority claims be effective.”

The Federal Register notice also states that “[n]otwithstanding the ability to obtain a filing date, the representation requirement for foreign-domiciled applicants is applicable on the original date of filing,” and notes that “[i]n some instances, the failure to comply with the representation requirement on the original filing date may cause a result which cannot be remediated in a particular application.”  The notice provides two examples of such situations:  requests for an application not to publish and requests for prioritized examination.  In these situations, the Office states that “it is not possible to subsequently meet the requirements for the request in that application.”

Finally, the Office notes that the new requirement does not impact the payment of maintenance fees, as the Office will not consider the domicile of a patent owner with respect to acceptance of maintenance fees.

The Office’s Patent Alert notes that tools for selecting a registered patent practitioner can be found here.  Additional information regarding the new requirement can be found in the Federal Register notice discussed above and on the USPTO’s “U.S. Counsel Rule for Patent Applications and Patents” webpage.

Since the institution of inter parte review (IPR) proceedings under the Leahy-Smith America Invents Act in 2012, parallel proceedings before the Patent Trial and Appeals Board and district courts have become somewhat commonplace.  Frequently, the former proceedings arise after a patent infringement defendant is served, as a way to accomplish one of the asserted goals of IPRs: reducing the costs of defending against such lawsuits.  If the outcomes arise as expected, i.e., the PTAB invalidates some or all of the claims asserted before the district court, prevailing defendants can hope to recoup their attorneys’ fees and costs arising from the litigation but with less frequency from the IPR.  However, prevailing in actions to recoup are not routine; indeed, the statute depends on the court finding them to be exceptional under 35 U.S.C. § 285.  In Extremity Medical, LLC v. Nextremity Solutions, Inc. (nonprecedential), the Federal Circuit illustrates the difficulties that can arise in satisfying those statutory requirements for both types of proceedings.

The case arose involving Extremity Medical’s U.S. Patent No. 8,303,589, directed to orthopedic implant devices.  After a series of accusatory letters from Extremity and denials by Nextremity, Extremity brought suit with a complaint alleging that a particular Nextremity product, the InCore Lapidus System, infringed claim 59 of the ‘589 patent.  Within six months of being served, the PTAB instituted an IPR against the ‘589 patent and the District Court entered a stay upon the parties’ stipulation based on institution of the IPR.

Patent Challenger Nextremity asserted prior art references in support of its contentions that the asserted claims were invalid for obviousness, which references included U.S. Patent Nos. 4,622,959 (“Marcus”) and 6,579,293 (“Chandran”).  Extremity for its part submitted motions to amend asserted claim 59 without further submitting arguments in support of its patent claims’ continuing validity, to which the PTAB responded by a determination (in a Final Written Decision) under the preponderance of the evidence that claim 59 was invalid for obviousness using the two asserted references and a third unrecited reference.  Additionally, the PTAB found that Extremities’ proposed amended claims were also invalid for obviousness, the Board faulting IPR counsel for not providing arguments in support of these amendments.  This FWD being issued, the District Court lifted the stay on proceedings before it and dismissed the action with prejudice.  Nextremity then moved for attorneys’ fees and costs relating to actions before both the PTAB and the District Court.  The District Court found that the circumstances surrounding the litigation fulfilled these requirements and awarded Nextremity $52,573 in fees and costs but denied its demand for $343,660.86 for the IPR proceedings.  This appeal arose over Nextremity’s attempt to recoup its fees and costs for these IPR proceedings and Extremity’s cross-appeal challenging the District Court award to Nextremity for the fees and costs for the litigation.

The Federal Circuit affirmed on both decisions, in an opinion by Judge Lourie joined by Chief Judge Moore and Judge Cunningham.  With regard to Nextremity’s appeal, the panel opinion noted that the District Court relied on Dragon Intell. Prop. LLC v. DISH Network L.L.C., 101 F.4th 1366, 1371 (Fed. Cir. 2024) (citing Waner v. Ford Motor Co., 331 F.3d 851, 857 (Fed. Cir. 2003)), which held that a party could not collect attorneys’ fees and costs for a “voluntarily undertaken parallel IPR proceeding[]” under § 285.  That Court’s rationale was that the IPR proceedings were not “part and parcel” of the district court litigation but rather were “strategically pursued . . . in lieu of litigating invalidity before the district court.”  Additional precedent supporting this decision characterized IPRs as not being “cases” under § 285 under Amneal Pharms. LLC v. Almirall, LLC, 960 F.3d 1368, 1371–72 (Fed. Cir. 2020), and further did not have the benefit of district court proceedings wherein the court is “particularly well positioned to determine whether a case before it is exceptional because it ‘lives with the case over a prolonged period of time,'” quoting Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 572 U.S. 559, 564 (2014).  Nothing in the proceedings below compelled Nextremity to pursue its claims before the PTAB in an IPR in the panel’s opinion.

 The panel rejected Nextremity’s argument relying on Sullivan v. Hudson, 490 U.S. 877 (1989), that cases can be deemed exceptional under circumstances “where administrative proceedings are intimately tied to the resolution of the judicial action and necessary to the attainment of the results Congress sought to promote by providing for fees, [wherein] they should be considered part and parcel of the action for which fees may be awarded.”  That is not the case here, according to the opinion, and the quote (according to the panel) has been taken out of context by Nextremity.  In Sullivan, the administrative proceedings at issue were mandatory (and on remand from a district court) and the resolution of the complaint depended on the outcome of the proceedings (although the parallels with the proceedings here are apparent).  But that is not this case, according to the Federal Circuit.  Finally, the Court rejected Nextremity’s argument that the costs from IPR proceedings were part of a “holistic, equitable approach” that requires consideration of the totality of the circumstances regarding exceptionality.

Turning to Extremity’s cross-appeal, the opinion enunciated the proper standard for a district court to apply under § 285 is whether the case “stands out from others with respect to the substantive strength of a party’s litigating position . . . or the unreasonable manner in which the case was litigated,” citing Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014).  This determination is made on a case-by-case basis under the totality of the circumstances and reviewed for an abuse of discretion.  Here, the bases supporting the District Court’s finding this case exceptional in favor of Nextremity included that Extremity “conducted no prelitigation investigation, even though it was on notice of the Marcus and Chandran prior art; (2) did not defend claim 59 before the Board; and (3) put forth no substantive arguments in favor of its litigation position throughout the district court case.”  The Federal Circuit rejected Extremity’s arguments that the District Court had shifted the burden of proof and drew adverse inferences against Extremity, asserting that Extremity failed to rebut Nextremity’s evidence supporting its claim for attorneys’ fees and costs.  The panel also disagreed with Extremity regarding the District Court’s weighing of the evidence, finding that the District Court acted within the scope of its discretion in combining Nextremity’s pre-suit letter and Extremity’s lack of pre-suit investigation (“[d]espite [its] awareness of relevant prior art years before commencing the suit”) and failure to make its validity case before the District Court.  “Viewed together,” the opinion states, “the record reflects more than ordinary litigation weakness; it supports the district court’s conclusion that Extremity’s litigating position ‘stands out’ from typical patent disputes in which parties advance and defend colorable validity theories.”  Accordingly, the Federal Circuit affirmed the District Court finding awarding attorneys’ fees and costs to Nextremity.

Extremity Medical, LLC v. Nextremity Solutions, Inc. (Fed. Cir. 2026)
Nonprecedential disposition
Panel: Chief Judge Moore and Circuit Judges Lourie and Cunningham
Opinion by Circuit Judge Lourie

For the fifth consecutive year, we have surveyed how the Patent Trial and Appeal Board (PTAB) decides appeals of § 101 rejections from examiners.  Readers of the previous installments will know the drill by now.  Applicants who appeal a subject matter eligibility rejection to the PTAB have historically faced odds somewhere between long and laughable.  The affirmance rate was 87.1% in 2021, 88.4% in 2022, 91% in 2023, and 88.6% in 2024.[i]  Against the PTAB’s overall affirmance rate of roughly 60% across all grounds of rejection,[ii] these numbers painted a picture of an institution that, whatever the merits of any individual appeal, treated ineligibility as close to a foregone conclusion.  We attributed this less to the weakness of applicants’ inventions and more to the Alice Corp. v. CLS Bank Int’l framework itself, a test so malleable that decision-makers could reach nearly any result while appearing to follow precedent, and one that the PTAB near-consistently resolved against applicants.

This year, for the first time, we have something resembling good news.  On September 18, 2025, John A. Squires was confirmed as Director of the USPTO, and he wasted no time signaling that the Office’s approach to § 101 would change.  Barely a week into his tenure, Squires wrote an Appeals Review Panel decision vacating a PTAB panel’s sua sponte § 101 rejection of a machine learning application in Ex parte Desjardins, chiding the PTAB for evaluating the claims at too high a level of generality and reminding it that §§ 102, 103, and 112 are the traditional and appropriate tools for limiting patent scope.[iii]  The decision was designated precedential on November 4, 2025, and its reasoning has since been incorporated into the MPEP.[iv]  PTAB panels took notice, with post-Desjardins decisions such as Ex parte Carmody reversing § 101 rejections in a manner that tracks the new guidance.[v]

So, has the fever finally broken?  The answer, based on the 2025 data, is a qualified “somewhat.”  The overall affirmance rate for 2025 was 84.9%, a modest but measurable decline from prior years, with most of the movement concentrated in decisions issued after Squires took office.  Indeed, broken out by quarter, we found that the affirmance rate dropped to 75.4% in Q4 of 2025, after being 88.3% through Q1, Q2, and Q3.

To be clear, an applicant appealing a § 101 rejection still loses far more often than not, and one precedential decision cannot untangle a decade of Alice-induced confusion.  But after four years of reporting that the situation was bad and nothing was changing, we can at least report that something has.  Whether that something amounts to a long-term course correction or a blip remains to be seen.

As was the case in previous years, we applied a strict search methodology on the PTAB’s decision portal to identify qualifying § 101 appeals.  Particularly, we specified the following criteria: decision dates between January 1, 2025 and December 31, 2025, a proceeding type of “appeal”, a decision type of “decision”, and an issue type of “101”.  These search results were overinclusive and thus required filtering and a degree of manual review.

We only included decisions in which the applicant appealed an examiner’s Alice-based § 101 rejection and the PTAB ruled on this basis of appeal.  To simplify the analysis, we considered a decision to be an “affirmance” of the examiner’s § 101 rejection if the PTAB held at least one claim invalid under § 101.  Excluded cases were those in which: (i) the appeal was not of a § 101 issue but the PTAB set forth a new ground of rejection based on § 101, and (ii) the appeal was of a § 101 issue but the PTAB did not decide the case on § 101 grounds (e.g., the examiner withdrew the § 101 rejections after the appeal was filed).  This gave us 977 qualifying appeals, of which 829 resulted in affirmance on § 101 grounds, yielding the aforementioned affirmance rate of 84.9%.[vi]

In order to determine the Squires Effect, we broke this data out by month.

As noted above, until Squires’ appointment, the 2025 data tracked the rates we had found in 2021-2024.  But in October through December of 2025, the rates dropped.  This suggests that the new Director’s policy change had an immediate, if limited, impact.  To keep things in perspective and assuming the Q4 rates hold steady, an applicant appealing a § 101 rejection has about the same chance of success as correctly calling two coin flips in a row.  The house still wins – and wins often.  But for the first time since we began tracking these numbers, the house’s edge has visibly narrowed, and that alone is worth noting.

The data also provided additional insights.  For example, when broken out by technology center, we found a pattern consistent with previous years – that the vast majority of appeals and affirmances come from TC2100, TC3600, and TC3700.

Having said that, the affirmance rates in all three of these technology centers dropped off in comparison to previous years.[vii]  For example, TC3600 and TC3700 had hovered above 95%, while TC2100 had fluctuated between 75% and 86%.  The drops in 2025 are notable, and even more so when considering just the Q4 data – TC2100 was 48.3%, TC3600 was 86.8%, and TC3700 was 73.1%.

We also considered situations in which the PTAB came up with its own grounds of rejection under § 101.  This can occur when the PTAB reverses the examiner’s grounds of rejection and replaces it with their own, or when the examiner did not reject the claims under § 101 but the PTAB issued a sua sponte rejection.  We were curious regarding the Squires Effect on this metric, as Squires wrote in Desjardins: “However, it is with this view that the panel’s sua sponte action is most troubling, as it eschewed the clear teachings of Enfish, and instead substituted only a cursory analysis that ignored this well-settled precedent.  Panels should treat such precedent with more care, especially when acting sua sponte.”

Indeed, we found that this chiding seemed to have the desired result.  While there were relatively few new grounds of rejection under § 101 in the data (at most 9 in any month), the quarterly numbers dropped from 9, 14, and 13 in Q1, Q2, and Q3, respectively, to 5 in Q4.  The data here is too sparse to draw firm conclusions, but the early trend is promising.

Finally, 2025 had 4 utility rejections, more than we have seen in any previous year.  These decisions are not reflected in the data above (as there was no Alice analysis).  One such decision adopted the Examiner’s reasoning of “because the device, as disclosed, would violate Newton’s Laws of motion as well as fundamental Conservation of Momentum principles, the device is incapable of a specific, credible, and substantial utility as required by 35 U.S.C. § 101.”[viii]  We take no position on this matter, aside from noting that the decision serves as a reminder that § 101 was intended to be a coarse filter to reject or invalidate clearly non-statutory inventions.  The Alice overreach is judge-made law incongruously grafted onto the legislation.

So where does this leave us?  After four years of documenting a tribunal that affirmed § 101 rejections with reliability akin to that of a sunrise, we can finally report a wobble in the orbit.  The Squires Effect seems to be measurable, if modest in the grand scheme of things.  An applicant appealing an eligibility rejection in late 2025 still lost three times out of four, which is nobody’s definition of a fair fight.  But in a corner of patent law where the status quo has survived a decade of criticism from judges, scholars, and at least one long series of articles from frustrated practitioners at a certain Chicago-based firm, a ten-point drop in a single quarter qualifies as notable activity.  Whether this is the beginning of a genuine correction or merely a brief administrative mood swing will depend on what the Director does next, what the PTAB internalizes, and whether anyone in Congress remembers that § 101 is their statute to fix.

[1] Walter DeGroft is a 2026 summer associate at MBHB. In the Fall, he will begin his final year of law school at Chicago-Kent.

[i] See https://patentdocs.org/2022/09/13/think-twice-about-appealing-a-101-rejection-to-the-ptab/, https://patentdocs.org/2023/01/31/ptab-remains-hostile-to-section-101-appeals/, https://patentdocs.org/2024/08/12/91-that-is-the-rate-at-which-the-ptab-affirms-examiner-section-101-rejections/, https://patentdocs.org/2025/08/25/ptab-101-appeal-stats-for-2024-the-more-things-stay-the-same-the-worse-they-remain/.

[ii] https://www.uspto.gov/sites/default/files/documents/appeal_stats_may2026.pdf.

[iii] https://www.uspto.gov/sites/default/files/documents/202400567-arp-rehearing-decision-20250926.pdf.

[iv] See https://www.uspto.gov/sites/default/files/documents/memo-desjardins.pdf.

[v] Ex parte Carmody, Appeal 2025-002843 (PTAB Dec. 30, 2025).

[vi] This total of 977 decisions is the highest by far of any of the four previous years in which we have conducted this study.  The previous record was 708 decisions in 2021.

[vii] The table sums to 971, rather than 977, due to intentional omissions of the “experimental” technology centers, such as 3900, RD00, OPQA, OPT, and OPET.  All decisions from these technology centers resulted in affirmance. 

[viii] Ex parte Wood, Appeal 2023-004154 (PTAB Jun. 2, 2025).

In a nonprecedential opinion, the Federal Circuit affirmed a decision by the Patent Trial and Appeal Board that the claim challenged in an ex parte reexamination was invalid for anticipation in In re Magnolia Medical Technologies, Inc.

The appeal involved the ex parte reexamination of U.S. Patent No. 10,039,483, wherein a third party requestor asserted that claim 1 was anticipated by U.S. Patent No. 6,013,037 disclosing a syringe that minimizes contamination or hemolysis in the collection of multiple blood samples.  The challenged claim was directed to a blood sequestration device and a specific configuration thereof; independent claim 1 was set forth in the opinion:

1.  A blood sequestration device, comprising:

a housing having an inlet port configured to be fluidically coupled to a patient and an outlet port configured to be fluidically coupled to a sample reservoir;

a fluid reservoir disposed in the housing and at least partially defined by a seal member, the fluid reservoir configured to receive an initial volume of blood withdrawn from the patient (this limitation was referenced in the opinion as the “fluid reservoir limitation”);  and

a vent disposed in the housing and configured to allow air to exit the housing as blood enters the fluid reservoir,

the blood sequestration device configured to allow the initial volume of blood to flow from the inlet port to the fluid reservoir,

the blood sequestration device further configured to allow a subsequent volume of blood to flow from the inlet port toward the outlet port via a sampling flow path, thereby bypassing the fluid reservoir and the initial volume of blood sequestered therein (this limitation was referenced in the opinion as the “bypass”).

(wherein italicized claim language was relevant to the issues before the Court on appeal).  The advantage of this device was that it reduced contamination from dermally residing microbes in externally administered blood sources.  The Board affirmed on appeal the Examiner’s rejection that the ‘483 patent claim 1 was anticipated.  In so doing, the Board found that the ‘037 patent disclosed “a . . . first [blood] sample is contained within the fluid chamber 30” which tracked the fluid reservoir limitation recited in claim 1 of the ‘483 patent.  Further, the Board found that the ‘037 patent discloses that the “fluid chamber 30 may be substantially separated from the second and any subsequent samples drawn,” which the Board considered to track the bypass limitation in the ‘483 patent claim.  This appeal to the Federal Circuit followed.

In a per curiam opinion by a panel of Circuit Judges Lourie and Prost and Judge Arun Subramanian, District Judge for the Southern District of New York sitting by designation, the PTAB decision was affirmed.  The panel’s decision was straightforward, the per curiam opinion asserted that Magnolia’s arguments on appeal were unpersuasive.

Regarding the fluid reservoir limitation, the panel considered Magnolia’s argument to be “built upon multiple premises,” explaining that:

[T]he phrase “initial volume of blood” as used in the fluid reservoir limitation should be construed to mean “the first volume of blood after venipuncture,” i.e., the insertion of a needle into the vein.  . . .  Magnolia then contends that Brannon’s fluid chamber 30 must be configured to be devoid of any air at the time of venipuncture to avoid the safety risk of introducing an air embolism into the patient [(based on an expert declaration)].  Accordingly, Magnolia asserts that the required configuration of fluid chamber 30 cannot meet the “an initial volume of blood from the patient” requirement of the reservoir limitation because it does not contain blood at the time of venipuncture.

However, the panel found nothing in the text of claim 1 of the ‘483 patent that required the limitation relating to a fluid reservoir be met at the time of venipuncture and that whether or not the limitation is met at the time of venipuncture does not affect its analysis regarding anticipation, citing Net MoneyIN, Inc. v. VeriSign, Inc., 545 F.3d 1359, 1370 (Fed. Cir. 2008).  In addition, the panel did not find persuasive Magnolia’s arguments regarding “purported” safety concerns because one embodiment of the invention claimed in claim 1 of the’438 patent operates “in a materially similar manner” to the supposed unsafe operation of the device disclosed in the ‘037 patent.  In the Court’s opinion “[m]ultiple premises upon which Magnolia’s argument are unsound, and thus the argument fails.”

Magnolia also argued that the ‘037 patent did not meet the bypass limitation because that patent disclosed the operation of the claimed syringe device having an “initial flash” of blood.  This was contrary to the ‘483 patent claims requirement that the initial volume of blood was “sequestered” in the fluid reservoir for which there was no disclosure in the ‘037 patent.  In the Court’s opinion, the ‘483 patent claim does not require that the “full amount” of the blood collected initially be sequestered, only “an initial volume” thereof (emphases in opinion).  This distinction rendered immaterial that the ‘037 patent required the initial portion ends up in the collected blood sample and the panel did not recognize any temporal differences sufficient to provide a distinction between the claimed blood sequestration device and the prior art.

The readiness with which the Board and the Federal Circuit found that that challenged claims of the ‘483 patent were anticipated by the ‘037 patent is perhaps partially explained by recognizing that upon review of the ‘463 patent it can be seen that the ‘037 patent was not cited by the patent Examiner nor disclosed in an information disclosure statement by the applicants.  Thus, the Office did not have a chance to consider the teachings of the ‘037 patent prior to the ex parte review that brought the patent to the Office’s attention for the first time, resulting in invalidation on anticipation grounds.

In re Magnolia Medical Technologies, Inc. (Fed. Cir. 2026)
Nonprecedential disposition
Panel: Circuit Judges Lourie and Prost and District Judge Subramanian
Per curiam opinion

More than a decade after Alice Corp. v. CLS Bank Int’l, the two-step framework for patent eligibility under 35 U.S.C. § 101 remains as contentious as ever.  Courts, commentators, and the U.S. Patent and Trademark Office have all acknowledged the difficulty of applying a test that turns on undefined terms such as “abstract idea,” “directed to,” and “significantly more.”  But within this legal wreckage, a specific and recurring failure mode deserves closer attention than it has received.  Particularly, how a challenger can readily neutralize a patentee’s otherwise strong eligibility argument for a software invention (i.e., a claimed technical improvement described as such in the specification) by asserting in a conclusory fashion that the improvement is to an abstract idea recited by the claim.

The sleight of hand works like this.  The patentee points to Enfish, LLC v. Microsoft Corp. and its progeny, argues that the claims are directed to an improvement in computer functionality, and sets forth the specification’s disclosure of the technical problem and its solution.  The challenger, rather than disputing that the claims recite an improvement at all, responds that whatever improvement exists is merely an improvement an underlying abstract idea.  Invoking SAP America, Inc. v. InvestPic, LLC and BSG Tech LLC v. BuySeasons, Inc., for example, the challenger merely states that an advance an abstract idea cannot confer eligibility no matter how innovative the claimed invention.  With that single unreasoned characterization, the patentee’s entire pro-eligibility argument often evaporates.

In many cases, notably those involving software inventions that reduce computational resource usage, this characterization is analytically improper.  A claimed invention that reduces processor cycles, memory consumption, bandwidth, or latency is directed to a change in the physical operation of a machine.  Calling that change an improvement to an abstract idea does not make it one.  Yet the current § 101 framework allows the assertion to succeed with remarkably little scrutiny, both in the courts and at the USPTO.

The Federal Circuit has repeatedly held that improvements to computer functionality are not abstract.  In Enfish, the Federal Circuit found claims to a self-referential database table eligible because they were “directed to a specific improvement to the way computers operate.”  The Court cautioned against describing claims at “a high level of abstraction and untethered from the language of the claims,” warning that doing so would render the “directed to” inquiry meaningless because “all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.”

McRO, Inc. v. Bandai Namco Games America Inc. extended this reasoning to claimed rules that improved an existing technological process for animating lip synchronization.  Finjan, Inc. v. Blue Coat Systems, Inc. and Ancora Technologies, Inc. v. HTC America, Inc. found improvements to computer security eligible, with Ancora emphasizing the specific placement of a verification structure in a memory location not previously used for that purpose.  Core Wireless Licensing S.A.R.L. v. LG Electronics, Inc. and Data Engine Technologies LLC v. Google LLC held that improved user interfaces can constitute technical improvements.  And in Koninklijke KPN N.V. v. Gemalto M2M GmbH, the Federal Circuit found claims to an improved error-checking technique eligible because they recited a specific implementation that improved the functionality of the error detection process itself.

More recent decisions have characterized the pro-eligibility argument as having two parts – the improvement must be described in the specification, and the claims must reflect it.  In Contour IP Holding, LLC v. GoPro, Inc., the Court reversed a summary judgment of ineligibility where the claims recited a point-of-view camera generating high- and low-quality video streams in parallel, with the lower-quality stream enabling real-time wireless preview on a remote device.  The specification described the technological problem of streaming video from a resource-constrained camera, and the claims recited the specific means of solving it; that combination placed the claims on the Enfish side of the line.  Conversely, in Recentive Analytics, Inc. v. Fox Corp., the Court held claims applying generic machine learning to television scheduling ineligible precisely because neither the claims nor the specification explained how any improvement to the underlying technology was accomplished.  And in U.S. Patent No. 7,679,637 LLC v. Google LLC, No. 24-1520 (Fed. Cir. Jan. 22, 2026), the Court stated that while the eligibility inquiry focuses on the claims, “the claim itself need not explicitly recite the improvement,” and endorsed looking to the written description to understand the problem addressed and whether a technological improvement is embodied in the claims.  Taken together, these decisions confirm that the specification’s technical disclosure is not window dressing, but rather evidence the challenger or tribunal is expected to consult.

The USPTO codified this line of authority in the 2019 Revised Patent Subject Matter Eligibility Guidance, now reflected in M.P.E.P. § 2106.04(d).  Under Step 2A, Prong Two, a claim that integrates a judicial exception into a practical application is not directed to that exception.  The first and most prominent example of such integration is “an improvement in the functioning of a computer, or an improvement to other technology or technical field.”  M.P.E.P. § 2106.04(d)(1) and § 2106.05(a) instruct examiners to evaluate the specification to determine whether it describes a technical problem and explains how the claimed invention solves it.  An August 2025 memorandum to the examining corps reinforced the point, reminding examiners that the claim need not explicitly recite the improvement described in the specification and directing them to consult the specification and confirm that the claim reflects the disclosed improvement.

On paper, then, one with a genuine technical improvement described in the specification and represented in the claim should be well positioned.  In practice, the picture is far murkier.

The countervailing argument used by challengers traces back to two 2018 decisions.  In SAP America, the court held claims to improved statistical analysis of investment data ineligible, stating that even assuming the techniques were “groundbreaking,” a pioneering abstract idea is not enough.  In BSG Tech, the Court held that “a claimed invention’s use of the ineligible concept to which it is directed cannot supply the inventive concept,” and that an alleged advance that lies entirely in the realm of abstract ideas cannot confer eligibility.

Both holdings are defensible on their facts.  The claims in SAP America were directed to mathematical analysis of financial information with the results displayed, and the claims in BSG Tech recited a method of indexing information in a database using conventional structures.  Neither specification credibly described an improvement to the operation of a computer.

The problem is what happened next.  These cases handed challengers and examiners a template that can be deployed against any software claim, regardless of what the specification actually discloses.  In district court briefing, the pattern is now routine.  The defendant frames the abstract idea broadly, characterizes every claimed benefit as flowing from that idea, and cites SAP America and BSG Tech for the proposition that such benefits are irrelevant.  At the USPTO, the corresponding move appears in countless Office actions as a single conclusory sentence, something to the effect of “the alleged improvement is an improvement to the abstract idea itself, not to the functioning of a computer or to another technology.”

Note the asymmetry.  To establish a technical improvement, the patentee must engage with the claim language, the specification, and often expert testimony explaining the state of the art and the nature of the advance.  To defeat that showing, the challenger needs only a characterization.  No claim construction, no engagement with the written description, no explanation of why a reduction in memory usage or processing time is not a change in how the machine operates.  The characterization (often a mischaracterization) does all the work, and decision makers too frequently accept it at face value.

A pronounced flaw in the “improvement to the abstract idea” argument is its circularity, and this flaw is most visible in cases involving computational resource efficiency.  Consider a claim to a data structure, encoding scheme, or scheduling technique that measurably reduces processor load, memory footprint, or network bandwidth.  These are physical, measurable phenomena.  A processor that executes fewer instructions consumes less power and completes tasks sooner.  A memory system that stores a compressed representation of data uses less silicon.  Reducing network utilization increases throughput and reduces delay for all communications carried by that network.

These effects occur in a machine, not in the mind of a mathematician.  The Federal Circuit recognized as much in Enfish, where the claimed self-referential table achieved “increased flexibility, faster search times, and smaller memory requirements,” and in Uniloc USA, Inc. v. LG Electronics USA, Inc., where a reduction in communication latency was held to be a patent-eligible improvement to computer functionality.  Similarly, in Cellspin Soft, Inc. v. Fitbit, Inc., allegations that the claimed arrangement reduced the hardware and power requirements of the capturing device were credited.

Now observe how the challenger’s argument operates against such a claim.  First, the challenger defines the abstract idea at a level of generality high enough to encompass the improvement.  If the claim reduces memory usage through a novel indexing arrangement, the abstract idea becomes “organizing and storing data.”  If the claim reduces bandwidth through a selective transmission protocol, the abstract idea becomes “sending only necessary information.”  Second, having drawn the abstract idea to swallow the technical contribution, the challenger points out that the claimed benefit flows from that contribution, and therefore from the abstract idea.  Third, the challenger concludes that under BSG Tech or similar authority that the improvement “lies entirely in the realm of abstract ideas.”

This reasoning is entirely circular.  The conclusion that the improvement is abstract depends on the premise that the abstract idea includes the improvement, and that premise was constructed by the challenger for exactly that purpose.  Any invention can be dissolved this way.  The claims in Diamond v. Diehr improve upon “the abstract idea of curing rubber at the right time.”  The claims in McRO improve upon “the abstract idea of matching mouth shapes to sounds.”  The claims in Ancora improve upon “the abstract idea of verifying a license.”  The Federal Circuit warned against precisely this maneuver in Enfish and again in Thales Visionix Inc. v. United States, yet the “improvement to the abstract idea” formulation invites decision makers to commit the error while appearing to apply binding precedent.

The tell, in resource-efficiency cases, is that the claimed benefit is verifiable on hardware.  One can run the prior art technique and the claimed technique on the same machine and measure the difference in cycles, watts, bytes, or time.  Where a computer merely executes an unchanged process faster than a human could, as in Bancorp Services, L.L.C. v. Sun Life Assurance Co. of Canada, the improvement is attributable to the computer, not the invention.  In these situations, eligibility is properly denied so long as the process was not reasonably performable by a human in the first place.[1]  When the specification describes, and the claims capture, a change to the physical behavior of a computing system that results in a technical improvement, the SAP America line of cases simply does not fit.  That the improvement can be described in abstract terms proves nothing, because as Enfish reminds us, every invention relies on underlying judicial exceptions.

If the circularity problem is troubling in litigation, where the patentee at least has briefings and oral arguments to expose it, it is worse in prosecution.  Examiners operating under time constraints frequently dispose of an applicant’s eligibility arguments with the conclusory sentence described above, without addressing the specification’s description of the technical problem or explaining why the asserted benefit is not technical.  This practice sits uneasily with M.P.E.P. § 2106.04(d)(1), which directs the examiner to evaluate whether the specification sets forth an improvement and whether the claim reflects it.  A bare assertion that the improvement is to the abstract idea evaluates nothing.

PTAB review of such rejections has been inconsistent, with some panels demanding that examiners engage with the disclosed improvement and others affirming on the same conclusory rationale.  The practical consequence is perverse.  Applicants can respond by overloading claims with hardware recitations and implementation minutiae that add nothing inventive but make the claims look less abstract.  Claim quality degrades, prosecution costs rise, and the resulting patents protect the invention less faithfully than the original claims would have.

Three corrective principles would go a long way.  First, the party asserting that an improvement encompasses the abstract idea should bear the burden of engaging with the specification and articulating, with specificity, why the asserted benefit is not a technical one.  A characterization unsupported by analysis should carry no weight.

Second, measurable reductions in computational resource usage should be treated as presumptively technical.  This is not a radical proposition, as it follows directly from Enfish, Uniloc, KPN, and Cellspin.  A challenger remains free to show that the claims fail to capture the improvement or that the specification’s assertions are implausible, but the physical nature of the benefit should not be in serious dispute.

Third, decision-makers should heed Diehr‘s instruction to consider the claim as a whole, rather than first filtering out the allegedly abstract components and then asking what remains to be improved.  The filtering approach guarantees the circular result, because the improvement is always found among the components that were filtered out.

The Alice framework has always tolerated a certain amount of rhetorical gamesmanship, but the “improvement to the abstract idea” gambit is a particularly corrosive example.  It targets the one doctrine, the Enfish technical-improvement line, that gives software patentees a principled path to eligibility. Until courts and the USPTO require those who invoke SAP America, BSG Tech, and the like to actually demonstrate that a claimed improvement is abstract, rather than merely to assert it, inventors of genuinely technical advances, including those that make computers demonstrably faster, smaller, and more efficient, will remain exposed to a one-sentence dismissal of their strongest argument.

Thus, the irony is complete.  A doctrine allegedly created to weed out patents that claim inventions too abstractly is now enforced through arguments that reason too abstractly.

[1] Put another way, a resource-intensive task like training a large language model is not something that a human ever has performed or even could perform.  Therefore, it is deeply reliant on the computing hardware on which it executes, without which there would be no model.  Alternatively, a computer performing an unchanged human process is almost certainly to fail as obvious under § 103, so why bother using the vague and problematic analysis of § 101 for this purpose?

The Federal Circuit affirmed a District Court determination that method claims reciting administration of a modification of an established antibiotic by adding magnesium to the composition were infringed and not invalid in Melinta Therapeutics, LLC v. Nexus Pharmaceuticals, Inc.

The case arose as ANDA litigation over Nexus Pharma’s generic version of Melinta’s antibiotic formulations comprising magnesium cations used in a claimed method for treating bacterial infections that reduced hemolysis of red blood cells at the injection site, compared with such methods using antibiotics without the addition of magnesium, as claimed in U.S. Patent Nos. 9,084,802 and 9,278,105.  Claim 1 of the ‘805 patent and claim 1 of the ‘105 patent are reproduced in the opinion as being representative:

The ‘802 patent:

1.  A method of treating a bacterial infection in a subject, wherein the method consists of:

administering a therapeutically effective amount of a composition to a subject in need thereof via an intravenous route of administration,

wherein the composition consists of an aqueous solution consisting of minocycline or a salt thereof, a salt that comprises a magnesium cation, and a base,

wherein the molar ratio of magnesium cation to minocycline is greater than about 4:1, and

wherein the composition has a pH that is no less than 4 and no greater than 6,

whereby injection site hemolysis of red blood cells is reduced relative to intravenous administration of a composition that does not include magnesium.

The ‘105 patent:

1.  A method of treating a bacterial infection in a subject, wherein the method comprises administering a therapeutically effective amount of a composition to a subject in need thereof via an intravenous route of administration, wherein the composition comprises an aqueous solution of a 7-dimethylamino-tetracycline antibiotic and a magnesium cation, wherein the molar ratio of magnesium cation to 7-dimethylamino-tetracycline antibiotic is greater than 3:1 and wherein the solution does not comprise a pharmaceutically acceptable oil, has a pH greater than 4 and less than 7, and has an osmolality less than about 500 mOsmol/kg.

Melinta’s product, Minocin, is an aqueous solution of minocycline and magnesium and, as the opinion notes, had been marketed since 1972 but had been reformulated to include magnesium, as well as having an increase pH and a reduced six of the administered dose.

The District Court found that Nexus Pharma’s generic formulation would infringe the patented method claims of the ‘802 and ‘105 patents and issued a permanent injunction.  The District Court also held that Nexus had failed to establish invalidity of the claims on “obviousness, indefiniteness, inadequate description, or lack of enablement” grounds.  This appeal followed.

The Federal Circuit affirmed with regard to the asserted claims of the ‘802 patent and did not reach the issues raised for the ‘105 patent, in an opinion by Judge Bryson, joined by Judges Prost and Reyna.  With regard to the District Court’s findings concerning the ‘802 patent Nexus raised two arguments on appeal.  First, Nexus argued that the District Court erred in construction of the terms “composition” and “administering.”  Regarding the “composition” term, District Court construed the term to mean (as recited in the claim) the combination of minocycline, magnesium, and a base prior to the addition of the diluent needed to produce the formulation (the “admixture” as recited in the claim) actually administered to a patient in need thereof.  The construction of the term “administering” by the District Court referred to the diluted composition given to the patient.

Nexus argued that the phrase as a whole in the claim (“administering . . . a composition”) required the administered composition not to include a diluent, because claim 1 recites that the composition “consists of” the three listed named ingredients and did not include a diluent (“wherein the composition consists of an aqueous solution consisting of minocycline or a salt thereof, a salt that comprises a magnesium cation, and a base”).  Because Nexus Pharma’s composition does contain a diluent administration thereof is not infringing according to their argument.  Melinta argued that the term “composition” should be construed to the “”concentrated, reconstituted solution prior to further dilution” and that what was administered was the composition after the diluent was added.

The District Court construed these terms consistent with Melinta’s argument and the Federal Circuit affirmed based on the intrinsic and extrinsic evidence.  This included a description in the specification that the three-component composition was diluted prior to administration; the testimony of three expert witnesses to the same effect; and the prescribing information that instructs reconstitution and further dilution.  Nexus Pharma’s proposed construction was inconsistent with this evidence, according to the opinion, and a person having ordinary skill in the art would know adding a diluent to the composition was necessary.  The panel affirmed the District Court’s finding that Nexus Pharma’s generic, diluent- and magnesium-containing antibiotic composition would infringe.

The second basis for Nexus Pharma’s challenge to the District Court’s decision was that the specification did not satisfy the disclosure requirements under 35 U.S.C. § 112(a) because the relevant claim limitation (“injection site hemolysis of red blood cells is reduced relative to intravenous administration of a composition that does not include magnesium”) did not make clear that the comparison would be made against compositions that contained no divalent cations or ones containing a different divalent cation (such as calcium, for example).  Nexus contended that to be consistent with satisfaction of the written description requirement the comparison must be between compositions having magnesium and that do not.  The inventors failed to show that they had possession of reduced hemolysis when the comparison was made with compositions having calcium cations.

Melinta first argued that Nexus had waived this argument because it had appeared in only a single sentence of Nexus Pharma’s post-trial brief (which the Court rejected based on, inter alia, expert trial testimony by the parties on this issue).  Melinta also argued that the correct comparison would be between compositions with magnesium and those without.  Regarding this argument the Federal Circuit held that the District Court did not err and considered it to be the most natural comparison” between the same composition with and without magnesium (wherein the latter was Melinta’s prior formulation).  The specification sets forth comparisons between formulations having divalent cations (including those with magnesium or calcium) and those without (i.e., lacking any metal cations).  However, “[n]othing in the specification is directed to comparing the effect of magnesium with that of calcium [but r]ather, the focus of the specification is the reduction of hemolysis resulting from the inclusion of magnesium or calcium, as compared to prior art formulations, which did not include metal cations at all.”

The panel conceded that the District Court’s construction “does not expressly exclude a formulation that lacks magnesium but includes a different cation, such as calcium, in place of the absent magnesium.”  Nevertheless, the panel opined that the construction argued by Nexus Pharma “would be contrary to the overwhelming evidence that the invention of the ‘802 patent was directed to the advantage of adding magnesium to a minocycline formulation lacking divalent cations, and not to any advantage magnesium might have compared to other metal cations.”  It did not escape the panel’s notice that the prior art Minocin product included a warning against administering formulation including a calcium-containing diluent which may form a precipitate.

 Having affirmed the District Court’s decisions on infringement and non-invalidity, the opinion explains that the parties had stipulated that the district court’s infringement finding would be upheld if either the ‘802 or ‘105 patents were found not invalid and thus the Court did not address validity of the ‘105 patent.

The outcome in this case is somewhat in contrast to that in Enanta Pharmaceuticals inc. v. Pfizer Inc.  In that case, the patentee lost priority to its earliest-filed provisional application (U.S. Patent Application No. 63/054,048) for reciting alternatives for a substituent as being “NHC(O)—C₂-C₁₂-alkyl” whereas U.S. Patent No. 11,358,953 at issue before the Court recited “NHC(O)—C₁-C₁₂-alkyl.”  The District Court’s decision was affirmed by the Federal Circuit, but it is just as easy to see that the decision could also have readily rested on a finding that the lack of disclosure in the ‘048 provisional precluded Enanta from a finding that Pfizer infringed by including a species (nirmatrelvir) in its product Paxlovid^Ò) that had a C₁ substituent (-CH₃), and permitting Enanta to retain the scope of the C₂-C₈ alkyl species disclosed in the provisional application to which they were arguably entitled.  Here the District Court and the Federal Circuit somewhat overlooked Nexus Pharma’s distinction that although the specification disclosed the need to add a diluent to the magnesium-containing composition prior to administration that wasn’t what was recited in the asserted claims of either patent-in-suit.  Maybe that is because the asserted claims were method claims and the “invention” was inclusion of magnesium to a well-known antibiotic that reduced an important drawback, injection site hemolysis of red blood cells, rather than the composition of matter claims in Enanta. But it seems prudent to recognize the distinctions.

Melinta Therapeutics, LLC v. Nexus Pharmaceuticals, Inc. (Fed. Cir. 2026)
Nonprecedential disposition
Panel:  Circuit Judges Prost, Bryson, and Reyna
Opinion by Circuit Judge Bryson

The U.S. Patent and Trademark Office has published a final rule in the Federal Register (an unpublished version of the notice, which will be published on June 24, can be found here), in which the Office states that it is “revising its practice of requiring additional information for delays in taking certain actions in patent applications and patents from requiring additional information for delays exceeding two years to requiring additional information for delays exceeding one year.” 

The notice indicates that in a prior Federal Register notice published a little more than six years ago, the Office had clarified its practice with respect to situations requiring additional information about whether a delay in seeking the revival of an abandoned application, acceptance of a delayed maintenance fee payment, or acceptance of a delayed priority or benefit claim was unintentional (see “USPTO Issues Clarification Regarding Petitions Based on Unintentional Delay“).  In particular, the prior notice indicated that the Office would require additional information when a petition to revive an abandoned application was filed more than two years after the date the application became abandoned, or when a petition to accept a delayed maintenance fee payment was filed more than two years after the date the patent expired for nonpayment, or when a petition to accept a delayed priority or benefit claim was filed more than two years after the date the priority or benefit claim was due.

In the final rule published today, the Office notes that it “has decided to shorten the two-year period for requiring additional information to one year,” explaining that “[i]f the period of delay is more than one year, there is a sufficient concern that the entire delay may not be unintentional and thus warrant a requirement for an additional explanation of the circumstances surrounding the delay.”  The Office also notes that the change from a two-year period to a one-year period “aligns with USPTO efforts to reduce application pendency and promote efficient patent operations by encouraging applicants to regularly monitor patent files and promptly take corrective actions when needed.”  The notice states that “[p]rompt, corrective actions are more likely to be associated with unintentional delay and assist in streamlining examination.”

The notice cautions stakeholders that “[n]othing in this notice should be construed as an indication that the USPTO will only require additional information in consideration of a petition” filed more than one year after the date an application became abandoned, the date a patent expired, the due date of a priority or benefit claim, or the expiration of the time limit in connection with the requirements pertaining to an international design application.

The new rule will take effect on August 13, 2026, and will apply to any new petition filed after the effective date.  The notice indicates that the two-year period triggering the fees under 37 C.F.R. §§ 1.17(m)(1) and 1.17(m)(2) will be changed to a one-year period.