Appeals court revives patent lawsuit in ‘significant’ decision for supplement industry

A federal appeals court in March resurrected a lawsuit brought by a dietary supplement manufacturer asserting infringement of its patents.

The decision by the U.S. Court of Appeals for the Federal Circuit sets forth a “bright line rule” concerning patent eligibility and is “significant” to a dietary supplement industry invested in research and innovation, said Kevin Bell, a patent attorney who represented Natural Alternatives International Inc. in the appeal against Creative Compounds LLC.

The patents relate to dietary supplements intended to build muscle and containing the amino acid beta-alanine. Beta-alanine, with another amino acid called histidine, can form dipeptides found in muscles, the appeals court observed.

“I am gratified to see the circuit court of appeals reverse the decision and indicate that there are appropriate subjects that are patent-eligible within our industry,” Mark LeDoux, the CEO of NAI and chairman of the Natural Products Association (NPA), said in a statement. “This bodes well for future research and investment benefiting consumers of natural products.”

Patent-Eligibility

In 2017, a federal district court in San Diego granted motions to dismiss patent infringement lawsuits previously filed by NAI against Creative Compounds and Hi-Tech Pharmaceuticals Inc. The patents claimed “ineligible subject matter” and consequently were invalid under Section 101 of the Patent Act, U.S. District Court Judge Marilyn L. Huff ruled.

However, the Federal Circuit disagreed with Huff that NAI’s claims are directed to “patent-ineligible concepts,” including natural laws. Several of the patent claims, the appeals court determined, are directed to particular methods of treatment using beta-alanine and are patent-eligible.

“Administering certain quantities of beta-alanine to a human subject alters that subject’s natural state,” Circuit Judge Kimberly Ann Moore wrote in the decision on behalf of herself and Circuit Judge Evan Wallach. “Specifically, homeostasis is overcome, and the subject’s body will produce greater levels of creatine. This, in turn, results in specific physiological benefits for athletes engaged in certain intensive exercise.”

Moore added, “The claims not only embody this discovery, they 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.”

The appeals court, based in Washington, also rejected Huff’s determinations that a number of “product” and “manufacturing” claims were directed to ineligible subject matter.

“Just as the method claims are directed to specific methods of treatment that employ a natural law, the product claims are directed to specific treatment formulations that incorporate natural products, but they have different characteristics and can be used in a manner that beta alanine as it appears in nature cannot,” Moore reasoned.

The Federal Circuit remanded the case to the district court for further proceedings. Circuit Judge Jimmie Reyna partially dissented from Moore’s opinion, though he agreed to remand the case for additional proceedings.

If affirmed on appeal, Huff’s ruling would have been “destructive” to the dietary supplement industry, Bell, a principle in Washington with Porzio, Bromberg & Newman P.C., said in an interview.

“Once those patents are found to be patent-ineligible at the district court level, that was the equivalent of saying, ‘You don’t have any valid patents,’” he explained.

Kevin O’Shea, a lawyer in Jackson, Missouri representing Creative Compounds in the appeal, did not respond to a request for comment. According to the district court’s ruling, Creative Compounds is a global distributor, importer and supplier of raw ingredients, including beta-alanine, to manufacturers of nutritional supplements. Hi-Tech Pharmaceuticals, a manufacturer of dietary supplements, was not a party to the appeal.

Outside Interests

The patent case attracted diverse interests. Legal scholars and the biotechnology industry filed “friend-of-the-court” briefs with the Federal Circuit.

“Inventive preparations based on naturally occurring substances have historically been of great importance in biotechnology, and innovation in this area has been spurred, at least in part, by the availability of patent protection,” the Biotechnology Innovation Organization (BIO), a trade group in Washington representing biotechnology companies, advised the Federal Circuit in a 2018 brief.

NAI’s claims, a group of patent scholars from four different law schools argued in a separate 2018 brief, “represent precisely how the patent system should reward discovery of a therapeutic use of a natural compound, and thus their invention should be eligible for patent protection.

“The Supreme Court has repeatedly emphasized that patents claiming new uses of known drugs or new applications of laws of nature are patent-eligible, and these teachings, [when] properly applied, provide patent eligibility for the kinds of claims at issue in this case,” the legal scholars asserted.

Supreme Court Precedent

The U.S. Supreme Court has long held “abstract ideas,” “laws of nature” and “natural phenomenon” are not patentable. Part of the reasoning is that a monopoly on such things could impede rather than foster innovation. However, in a 2012 Supreme Court case, Mayo Collaborative Servs. v. Prometheus Labs. Inc. (Mayo), Associate Justice Stephen Breyer warned an overly broad interpretation of the concept of patent ineligibility “could eviscerate patent law.”

“For all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena or abstract ideas,” he wrote.

NAI’s appeal highlighted the ambiguity and litigation over the exclusions to patent eligibility. In two widely reported cases— Mayo and Alice Corp. Pty. v. CLS Bank Int’l Ltd. (2017)—the Supreme Court has laid out a two-step analysis to determine whether claims are patent-eligible.

“The real issue is that the district courts across the country are taking these few Supreme Court cases, and they’re inconsistently applying them,” Bell said.

In the first step of the analysis, courts look to whether a claim is directed to a patent-ineligible concept, such as a law of nature. Even if a claim is directed to a patent-ineligible concept, “we consider the elements of each claim both individually and ‘as an ordered combination’ to determine whether the additional elements ‘transform the nature of the claim’ into a patent-eligible application,” Associate Justice Clarence Thomas wrote in the Alice decision.

As Huff explained in her 2017 ruling, claims that recite “well-understood, routine, conventional activity” don’t meet the second step of the Supreme Court’s analysis. In addition to finding NAI’s claims were not directed to ineligible subject matter, the Federal Circuit suggested NAI’s lawsuit couldn’t be resolved immediately due to certain factual disputes, such as whether placing beta-alanine into a supplement for human consumption to increase the function of tissues is a conventional activity.

“While a fact-finder may ultimately determine that the dietary supplement limitation was well-understood, routine and conventional,” Huff, the district court judge, wrote, “absent a clear statement to that effect in the specification, complaint or other material properly before the court, when disputed such a determination may not be made on a motion for judgment on the pleadings.”