On March 4, 2025, the Federal Circuit affirmed the Patent Trial and Appeal Board’s (“PTAB”) decision in Restem, LLC v. Jadi Cell, LLC, No. 23-2054, 2025 WL 679195, at *1 (Fed. Cir. Mar. 4, 2025), finding that the patent challenger failed to prove that the claims were unpatenable and offering two key takeaways.
The Parties and the Patent
Jadi Cell, the patent owner, owned U.S. Patent No. 9,803,176 (“the ’176 patent”). The ’176 patent is directed to “stem cells with specific cell markers…obtained from the subepithelial layer (SL) of mammalian umbilical cord tissue through a two-step process[.]” See id. (citing U.S. Patent No. 9,803,176 (filed Dec. 31, 2012)). Claim 1 of the ’176 patent recites:
1. An isolated cell prepared by a process comprising:
placing a subepithelial layer of a mammalian umbilical cord tissue in direct contact with a growth substrate; and
culturing the subepithelial layer such that the isolated cell from the subepithelial layer is capable of self-renewal and culture expansion,
wherein the isolated cell expresses at least three cell markers selected from the group consisting of CD29, CD73, CD90, CD166, SSEA4, CD9, CD44, CD146, or CD105, and
wherein the isolated cell does not express NANOG and at least five cell markers selected from the group consisting of CD45, CD34, CD14, CD79, CD106, CD86, CD80, CD19, CD117, Stro-1, or HLA-DR.
’176 Patent.
Restem, the patent challenger, challenged claims 1-15 of the ’176 patent based on inherent anticipation or, alternatively, obviousness. See Restem, LLC, 2025 WL 679195 at *1.[1]
Claim Construction
Before addressing the inherent anticipation argument, the Federal Circuit first addressed the claim construction of two terms: (1) “placing” step and (2) “isolated cell.” See id. at *1-3.
Regarding the first term, the PTAB did not import additional steps from the specification “because the specification [did] not uniformly require those steps in all disclosed embodiments.” See id. at *1 (citing Joint Appendix). The PTAB consequently determined that the prior art references disclosed the claimed two-step process, but did “not disclose the [specific cell markers] because the prior art processes do not necessarily produce cells with the claimed cell marker expression profile[.]” See id. at *1 (internal citations omitted). Restem argued against this claim construction because it implicitly “require[d] steps beyond the claimed two-step process.” See id. at *2 (citing Appellant’s Brief). However, the Federal Circuit did not agree. See id. Thus, the Federal Circuit found no error in the PTAB’s construction of “placing a subepithelial layer of a mammalian umbilical cord tissue in direct contact with a growth substrate” as “to intentionally place umbilical cord tissue comprising the subepithelial layer so that it touches a growth substrate to permit cell culture.” See id. at *1 (citing Joint Appendix).
Regarding the second term, the PTAB “declined to construe ‘isolated cell,’ but construed ‘expresses/does not express’ to mean ‘the marker is confirmed present/absent relative to a control sample,’ which is ‘consistent with [the PTAB’s] interpretation of ‘isolated cell’ as indicating a cell population[.]’” See id. at *2 (internal citations omitted). Finding the intrinsic evidence unclear, the PTAB used extrinsic evidence and found agreement among the experts. See id. Restem argued that the PTAB should not have construed the second term contrary to its express definition. See id. Although the Federal Circuit agreed with Restem that the PTAB “implicitly construed ‘isolated cell’ as ‘a cell population,’” it determined that this construction was supported by the claim language and prosecution history. See id. at *2-3.
Restem’s Inherent Anticipation Challenge
Relying on precedent, the Federal Circuit clearly stated the law regarding inherent anticipation and product-by-process claims. “Inherent anticipation requires ‘the disclosure of the prior art [be] sufficient to show that the natural result flowing from the operation as taught in the prior art would result in the claimed product.’” Id. at *3 (quoting SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1343-44 (Fed. Cir. 2005) (cleaned up)). A product-by-process claim is defined as “one where the product is defined, at least in part, in terms of the process by which it is made.” Id. (citing SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312, 1315 (Fed. Cir. 2006)). For product-by-process claims, the focus is different in determining invalidity versus infringement. For invalidity, the focus is on the product, not the process. See id. (citing Amgen Inc. v. Hoffman-La Roche Ltd., 580 F.3d 1340, 1369-70 (Fed. Cir. 2009)) (emphasis added). For infringement, the focus is on the process and the product. See id. (citing Amgen Inc., 580 F.3d at 1370) (emphasis added).
Restem’s inherent anticipation argument was that “inherency is automatic for product-by-process claims” because “once the process steps are met, the product is necessarily present.” See id. (citing Appellant’s Brief). However, the Federal Circuit disagreed, explaining that “Restem’s argument conflates the anticipation and infringement analyses for product-by-process claims by improperly shifting the analysis from whether the prior art discloses the claimed product to whether the prior art discloses the claimed process.” Id. (emphasis original).
The PTAB found that the cells claimed in the ’176 patent were distinguished from other stem cells based on the cell marker expression profile. See id. In its review, the Federal Circuit determined this finding was supported by substantial evidence. See id. at *4. Specifically, the Federal Circuit stated that “Restem did not provide any testing evidence to show cells produced by [the prior art’s] process would inevitably, as inherency requires, have the claimed cell marker expression profile.” See id. (citing Joint Appendix and In re Montgomery, 677 F.3d 1375, 1380 (Fed. Cir. 2012)). Thus, the Federal Circuit affirmed the PTAB’s decision that Restem failed to show the claims were unpatentable. See id.
Conclusion
The takeaways from this case are twofold.
First, the analysis for invalidity of product-by-process claims is distinct from the analysis for infringement of product-by-process claims. For invalidity of product-by-process claims, it matters whether the prior art discloses the claimed product, not the claimed process.
Second, this case serves as a helpful reminder to patent practitioners that the prosecution history of a patent can have a significant impact during litigation. Thus, practitioners prosecuting a patent should carefully consider the future impact of arguments set forth during prosecution. Similarly, patent litigators should consider utilizing a patent’s prosecution history to their client’s advantage during litigation.
[1] The PTAB found that claim 9 was not obvious for two reasons, but Restem only challenged the PTAB’s alternative basis. See id. at *4. For this reason, the Federal Circuit held that it “need not reach the [PTAB]’s alternative basis to affirm.” See id.
