Rapid Litigation Management, Inc. v. CellzDirect, Inc., No. 2015-1570 (Fed. Cir. July 5, 2016)
The Federal Circuit recently held that a patent covering a process for producing a preparation of frozen liver cells (specifically, hepatocytes) claimed patent-eligible subject matter. The appeals court applied the Alice/Mayo two-step test for eligibility, but ruled that the claimed invention was not “directed to” a judicially-recognized exception to patent eligibility, even though the process was based on the discovery that certain hepatocyte cells naturally can survive repeated freezing and thawing cycles. The decision is one of a growing number of Federal Circuit decisions finding challenged patents to be eligible.
The plaintiff, Celsis Holdings, Inc., filed suit in the U.S. District Court for the Northern District of Illinois alleging that CellzDirect, Inc. infringed U.S. Patent No. 7,604,929 (entitled “Cellular compositions and methods for their preparation”). The ‘929 patent covers a process for preparing a frozen preparation of liver hepatocytes that can be thawed and reused, with over 70% of the cells retaining their viability. The process is based on the inventors’ discovery that some hepatocyte cells can survive repeated freezing and thawing cycles. The patent claims an improved hepatocyte cryopreservation process generally involving “(A) subjecting previously frozen and thawed cells to density gradient fractionation to separate viable cells from non-viable ones; (B) recovering the viable cells; and (C) refreezing the viable cells.” Slip op. at 3.
The defendant moved for summary judgment that the ‘929 patent claims were invalid as patent-ineligible under 35 U.S.C. §101. The district court granted summary judgment, ruling that the ability of some hepatocytes to survive repeated freeze-thaw cycles was a law of nature, and that the ‘929 patent claims did not recite an “inventive concept” to ensure that the claims covered something substantially more that the law of nature itself.
Federal Circuit Holds Patent Claims Eligible Under § 101
On appeal, the Federal Circuit vacated the district court judgment. Applying the two-step Alice/Mayo test for patent eligibility, the appeals court ruled that the ‘929 patent claims were not ineligible as a matter of law. See Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014); Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012). The court ruled that even if the resilience of certain hepatocyte cells was a “natural law,” the claims were not “directed to” that discovery:
It is enough in this case to recognize that the claims are simply not directed to the ability of hepatocytes to survive multiple freeze-thaw cycles. Rather, the claims of the ’929 patent are directed to a new and useful laboratory technique for preserving hepatocytes. This type of constructive process, carried out by an artisan to achieve a new and useful end, is precisely the type of claim that is eligible for patenting. The inventors certainly discovered the cells’ ability to survive multiple freeze-thaw cycles, but that is not where they stopped, nor is it what they patented. . . . Rather, as the first party with knowledge of the cells’ ability, they were in an excellent position to claim applications of that knowledge. That is precisely what they did. They employed their natural discovery to create a new and improved way of preserving hepatocyte cells for later use.
Slip op. at 8-9 (quotations and citations omitted). The court distinguished the ‘929 patent claims from claims found to be ineligible in several earlier cases, most notably Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015), cert. denied, No. 15-1102 (June 27, 2016). The court noted that unlike Sequenom, where the claims essentially covered identifying and observing newly-discovered cell-free fetal DNA fragments in a pregnant woman’s blood, the ‘929 patent claims were directed to a specific application of the inventors’ discovery. “The end result of the ’929 patent claims is not simply an observation or detection of the ability of hepatocytes to survive multiple freeze-thaw cycles. Rather, the claims are directed to a new and useful method of preserving hepatocyte cells.” Slip op. at 12.
The appeals court also rejected the defendant’s contention that its analysis distorted the Alice/Mayo test by collapsing the two step inquiry into one. Echoing an approach articulated in Enfish, LLC v. Microsoft Corp., No. 2015-1244 (Fed. Cir. May 12, 2016), the court explained that the ‘929 patent claims did not satisfy the first step of Alice/Mayo because they were not “directed to” a judicially-recognized exception to patentability:
At step one, therefore, it is not enough to merely identify a patent-ineligible concept underlying the claim; we must determine whether that patent-ineligible concept is what the claim is “directed to.” Here, the plain claim language shows that it is not. The ’929 patent does not simply claim hepatocytes’ ability to survive multiple freeze-thaw cycles. The ’929 patent instead claims a “method of producing a desired preparation of multi-cryopreserved hepatocytes.” ’929 patent col. 19 l. 56-col. 20 l. 20. This new and improved technique, for producing a tangible and useful result, falls squarely outside those categories of inventions that are “directed to” patent-ineligible concepts.
Slip op. at 13.
The Rapid Litigation decision joins Enfish and two other recent Federal Circuit decisions, DDR Holdings, LLC v. Hotels. Com, LP, 773 F. 3d 1245 (Fed. Cir. 2014), and last month’s Bascom Global Internet Services, Inc. v. AT&T Mobility LLC, No. 2015-1763 (Fed. Cir. June 27, 2016), in upholding the patent-eligibility of patents challenged under Alice/Mayo. These four decisions may provide valuable new approaches to analyzing patent eligibility issues in future cases.