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Federal Appeals Court Cautions Against Overapplication of Alice in Biotechnology

Alert
03.20.2019
By Samir Mehta and Steve Kazmierski

In Natural Alternatives Intl. v. Creative Compounds, LLC, the U.S. Court of Appeals for the Federal Circuit reversed a decision by a lower court finding claims directed to dietary supplements containing beta-alanine subject-matter ineligible under § 101. The claims were found to be subject-matter ineligible in a motion for judgment on the pleadings by Judge Huff of the District of Southern California. The District Court held that, because beta-alanine is a naturally occurring substance, the claims were directed to the natural law that, “ingesting certain levels of beta-alanine, a natural substance, will increase the carnosine concentration in human tissue and, thereby, increase the anaerobic working capacity in a human.”

In reversing the District Court, Judge Moore and Judge Wallach (over a dissent by Judge Reyna) offered some helpful analysis of the Supreme Court's Alice decision (and subject-matter eligibility) in the context of life sciences. For patent applicants in life sciences spaces, this decision provides a great tool for avoiding a rejection under Alice or Mayo as it supports the notion that an application that deals with natural law is not necessarily susceptible to a rejection under § 101. The case is also notable for patent litigants as it reinforces prior decisions (in Berkheimer v. HP Inc. and Aatrix Software, Inc. v. Green Shades Software, Inc.) that make it challenging for defendants to prevail on a motion on the pleadings under § 101, because plaintiffs can create factual disputes through their complaints and claim construction arguments and defeat a motion on the pleadings.

The Federal Circuit Analysis

Writing for the court, Judge Moore observed that although claims “embody [a] discovery” of a natural state and a relationship between beta-alanine and creatine, the claims also “require that an infringer actually administer the dosage form claimed in the manner claimed, altering the athlete’s physiology to provide the described benefits. These are treatment claims and as such they are patent eligible.” Applying Vanda Pharmaceuticals, Inc., Judge Moore noted that, “claims that are directed to particular methods of treatment are patent eligible.” Judge Moore then contrasted the claims at issue (and those in Vanda) from those at issue in Mayo. The court noted that the Mayo claims, “required only the observation of a natural law” while the “Vanda claims required a doctor to affirmatively administer a drug to alter a patient’s condition from their natural state.”

Taking these concepts in together, the court held that the method claims at issue in Natural Alternatives “are directed to patent eligible new ways of using an existing product, beta-alanine” and therefore “fall clearly within the scope of § 101, which allows for patents on ‘any new and useful process,’ including ‘a new use of a known…composition of matter, or material.’” Most helpfully, the court resolved the tension between a claim that merely observes a natural law and one that applies one, stating:

“The Method Claims at issue are treatment claims. They cover using a natural product in unnatural quantities to alter a patient’s natural state, to treat a patient with specific dosages outlined in the patents. We hold, therefore, that the Method Claims are not directed to ineligible subject matter.”

As such, the court held that the method claims at issue were not directed to an exception to § 101, and were therefore not ineligible subject matter under “step one” of Alice. The court also noted that “factual impediments exist” that make a determination regarding “step two” of Alice improper at the pleadings stage because a fact-finder cannot determine whether a dietary supplement limitation was “well-understood, routine, and conventional, absent a clear statement to that effect in the specification, complaint, or other material properly before the court.” On this point, the court’s holding is consistent with prior decisions in Berkheimer and Aatrix.

After analyzing the method claims, the Federal Circuit considered product claims that the District Court found were directed to ineligible subject matter, and again reversed the lower court. Helpfully for applicants, the Court explained, “[a]lthough beta-alanine is a natural product, the Product Claims are not directed to beta-alanine. A claim to a manufacture or composition of matter made from a natural product is not directed to the natural product where it has different characteristics and “the potential for significant utility.” (citing to Diamond v. Chakrabarty). Because the product claims were directed to specific treatment formulations, the court found they had different characteristics than those in nature. Therefore, the court found that the product claims were not directed to a judicial exception of a law of nature and were not ineligible under “step one” of Alice. And, as with the method claims, the court found that a determination regarding “step two” of Alice would be improper in a motion on the pleadings.

The Court's Conclusion

In a very helpful conclusion, the court closed with a warning that courts “must be careful not to overly abstract claims when performing the Alice analysis.” As a result, we believe that this decision is helpful for applicants seeking to overcome rejections under 35 U.S.C. § 101, particularly in biotechnology. Moreover, Judge Moore’s logic pairs well with the new guidance from the USPTO regarding eligibility, as well as Director Iancu’s commentary. It seems likely that Natural Alternatives may be cited in forthcoming guidance.

Finally but notably, Judge Reyna dissented from Judge Moore’s opinion and voiced a concern that the opinion relied on an erroneous claim construction. Judge Reyna’s concern was that the lower court did not construe the claims at issue, nor adopt either party’s proposed claim construction, and instead only considered the motion on the pleadings based on the plaintiff’s proposed claim construction. Judge Reyna wrote that the plaintiff’s proposed construction was flawed and unsupported by the patent’s written description and thus could not be relied upon by the majority. Judge Reyna’s dissent echoes concerns he raised regarding challenges under 35 U.S.C. §101 in the pleading stage, most notably in his prior dissent in Aatrix Software, Inc. Reyna closed by suggesting that the Federal Circuit must more fully address whether a motion on the pleadings based on §101 can be ruled on before claim construction. Particularly in view of Reyna’s dissent, the procedural context of Natural Alternatives bears note and suggests that it may be more difficult for defendants to prevail in a § 101 challenge in a motion on the pleadings—at least until the Federal Circuit expressly revisits that issue.

For more information on the Federal Court decision, please contact Steve Kazmierski, Jeannie Boettler, Samir Mehta, David Kim, or the Stinson LLP contact with whom you regularly work.

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