Recent Supreme Court Decisions on Product-by-Process Claim (The Supreme Court Decisions on June 5, 2015) AIPLA Mid-Winter Institute January 26-27, 2016 Shimako Kato Japan Patent Attorneys Association International Activities Center 1

Case Information 2 Case No. : Heisei24 (Ju) 1204, Heisei24 (Ju) 2658 Appellant: Teva Gogyszergyar Zartkoruen Mukodo Reszvenytarsasag Appellee: Kyowa Hakko Kirin Co.,Ltd (The first case, Heisei24 (Ju) 1204) Tori Co., Ltd (The second case, Heisei24 (Ju) 2658 ) Issue : Claim construction on infringement and evaluation of validity Result: Reversal and remand

The Patent （ JP ） Claim1: Pravastatin sodium manufactured by a process comprising: (a) preparing a condensed organic solution of pravastatin (b) precipitating the pravastatin as ammonium salt (c) purifying the ammonium salt by recrystallization (d) replacing the ammonium salt by pravastatin sodium and isolating the pravastatin sodium, (e) of which contents of pravastatin lactone are less than 5 % by weight, and contents of epiprava are less than 0.2% by weight. 3

The Supreme Court Heisei24 (Ju) 1204 The IP High Court Grand Panel Decision on January 27, 2012 Heisei 22 (Ne)10043 Tokyo District Court Decision on March 31, 2010 Heisei 19 (Wa) Defendant: Kyowa Hakko Kirin ？ The IP High Court Decision on January 27, 2012 Heisei 21 (Gyo-ke) Japan Patent Office Mukou Demandant: Kyowa Hakko Kirin Heisei 21(Gyo-sa)10003 Heisei24(Gyo-tsu)00146 Facts The Supreme Court Heisei24 (Ju) 2658 The IP High Court Decision on August 9, 2012 Heisei 22 (Ne)10057 Tokyo District Court Decision on July 28, 2011 Heisei 20 (Wa) Defendant: Tori Validity :Yes Infringement :No Validity :Yes Issue: Claim construction on infringement Infringement :No Validity :Yes Issue: Claim construction on validity Validity :Yes Infringement :Yes Validity :No 4

The Grand Panel Decision Types of PBP claim (1) Authentic PBP claim : a product is specified by means of a process to manufacture the product because it is impossible or difficult to directly specify the product by means of the structure or feature of the product at the time of filing an application. (2) Inauthentic PBP claim : a process to manufacture the product is stated in addition to a product, though it cannot be said that it is impossible or difficult to directly specify the product by means of the structure or feature of the product at the time of filing an application. Claim construction (on infringement and validity) (1) Authentic PBP claim ： not being limited to products manufactured through the manufacturing process stated in the scope of claims but also covering any "products" that are identical to the products manufactured through said process. (2) Inauthentic PBP claim ： products manufactured through the manufacturing process stated in the scope of claims. 5 The idea of the Grand Panel Decision : Control inauthentic PBP by claim construction on infringement.

Reasoning by the Supreme Court A PBP claim should be construed as product per se, i.e., a product having the same structure and properties as those of the product manufactured by the process recited in the claim, regardless of whether or not it was manufactured by the process. This construction applies both in case of infringement analysis and in case of validity analysis. A PBP claim can satisfy the clarity requirement (Art. 36 (6)(ii)) only when the product was impossible or extremely impractical to be defined by its structure or properties as of the filing date. 6

What does the Supreme Court intend? Examination phase (Clarity of a PBP claim) 7 - Identification with structure or properties is (a) impossible or (b) extremely impractical at the time of filing date. - Others Rejected based on the lack of clarity a product having the same structure and properties as those of the product manufactured by the process recited in the claim Granted Infringement lawsuits (Claim construction) Burden of proof on applicant’s side “Impossible” : The analysis of the structure and properties is technically extremely difficult. “Extremely impractical” : From the view of cost and time, rather than technical aspect, it is heavy burden to define the structure and properties.

Test for legitimacy of PBP Scope of proper (authentic) PBP claim What happens if a PBP is improper (inauthentic)? The Supreme Court Whether identification with structure or properties is (a) impossible or (b) extremely impractical. A product having the same structure and properties as those of the product manufactured by the process. Rejection based on lack of clarity. The Grand Panel Whether it is impossible or difficult to directly specify the product by means of the structure or feature of the product. Any products that are identical to the products manufactured through said process. Limited construction of the claim (products manufactured through the manufacturing process stated in the scope of claims) 8 Comparison between the Supreme Court Decision and the Grand Panel Decision

Concurring Opinion by Justice Chiba PBP should be exceptionally admitted. The product patent should be defined by its structure and properties. (Current criteria in the examination guidelines are not so strict as to the PBP.) According to the construction of the grand panel decision, the scope of a PBP claim is not clear until the courts find that the claim is authentic or not. That puts both an applicant and a third party in an unstable situation. Construction by the majority opinion tries to encourage an applicant to file a patent application as an process invention, if there is a risk that PBP claims can be rejected. 9

Concurring Opinion by Justice Chiba Definition of the “impossible” and “Extremely impractical” “Impossible” : The analysis of the structure and properties is technically extremely difficult. “Extremely impractical” : From the view of cost and time, rather than technical aspect, it is heavy burden to define the structure and properties. 10

Opinion by Justice Yamamoto The finding of this decision deserves acclaim for unifying the claim construction for infringement lawsuits and assessment of validity in the JPO proceedings. However, it is going to far that depriving of granting a patent on the invention described by PBP based on such criteria of clarity of claim, i.e. the impossible/extremely practical test. 11

Still including process and neither “impossible” nor “extremely impractical” JPO’s new practice (Examination handbook) Manufacturing process is included in a claim? Identification with structure or properties is “impossible” or “extremely impractical” ? Yes No Not PBP Examples of description not to be understood as a process - “product obtained by light cured resin” - “isolated cell”, “extracted material”, “distilled liquor” … Yes No Notice of rejection based on lack of clarity Written Explanation and/or amendment Rejection Change into process claim by amendment Not PBP PBP but allowable (No reason for rejection) “Impossible” or “extremely impractical” PBP but allowable (No reason for rejection) Written Explanation of “impossible” or “extremely impractical” is needed (in the specification or written argument) 12

Example of description which deemed as process and its possible amendment Category 1: Product claim with chronological order Possible amendment: Change into product claim without chronological order or process claim with chronological order Category 2 : Product claim including process with limitation of technical conditions Example: “Polymer C obtained by reaction of monomer A with monomer B at a temperature of 50 ℃ ” Possible amendment: “Manufacturing method of Polymer C of reacting monomer A with monomer B at a temperature of 50 ℃ ” Category 3: Product claim depending on process claim Example: “Polymer prepared by the manufacturing process of any one of claims 1 to 4” Example of amendment ： No chance for amendment (Those claims should be eliminated.) 13

How to explain the requirement of “impossible” or “extremely impractical”? A model response prepared by JPO (Announcement on November 25, 2015, simplified) Claim : A semiconductor device, wherein which semiconductor layer is formed by spattering at surface temperature of x to y ℃. Possible explanation of “impossible” or “extremely impractical” Semiconductor device of prior art has following problems. …The present invention aims to solve those problems and for obtaining a device with highly crystallized semiconductor layer. However, it is impossible to identify the structure and features of the obtained crystal, because crystal of thin layer is unstable and …,. Further, degree of crystallization can be theoretically measured by using XRD, it is however time-consuming and costly, because, for obtaining the result, huge statistical analysis of data is needed and …. Therefore the direct identification of the structure and features of the obtained crystal is extremely impractical. 14

Take home points 1 JPO’s new practice on PBP (Basic point) Any product claim including manufacturing process will have a notice of reason for rejection based on lack of clarity. However, by followings, the reason for rejection can be overcome: - Explanation of identification with structure or properties is “impossible” or “extremely impractical” in written argument. - Amendment of the claim. Points of explanation for “impossible” or “extremely impractical” - Logical explanation based on technique (Evidences are not necessarily) - Reasonable length of explanation (including background of invention and problem to be solved of the invention) –make a story! - For safety, it is better to include both explanation for “impossible” or “extremely impractical”. 15

Take home points 2 Recommendation for accelerating examination If you would like to obtain a patent smoothly, without receiving such a notice of rejection about PBP, it would be helpful to submit a written petition including an explanation that the PBP claim is allowable, i.e., limitation of structure or properties is “impossible” or “extremely impractical”. Do not be afraid too much! 16

Thank you! 17 Shimako Kato Patent Attorney Abe, Ikubo & Katayama