Restem v. Jadi Cell: Federal Circuit Finds No Inherent Anticipation in Product-by-Process Claims

The Federal Circuit affirmed a final Written Decision by the USPTO Patent Trial and Appeal Board (PTAB) in an Inter Partes Review (IPR) filed by Restem, LLC against U.S. Patent No. 9,803,176 (“the ‘176 patent”), owned by Jadi Cell, LLC, finding that Restem failed to prove the claims of the ‘176 patent were unpatentable.[1]

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.

At the PTAB, Restem was unsuccessful in challenging the claims of the ‘176 patent as being inherently anticipated by Majore et al., Stem Cell Rev & Rep. 7:17-31 (2011) (“Majore”) or, in the alternative, obvious in view of Majore in combination with five secondary references. Restem appealed to the Federal Circuit, stating that the PTAB erred in its claim construction of the terms “placing” and “isolated cell,” as well as its anticipation and obviousness analyses.

Claim Construction: “Placing”

The PTAB construed the “placing” step of the claims as “to intentionally place umbilical cord tissue comprising the subepithelial layer [SL] so that it touches a growth substrate to permit cell culture.” [2] The PTAB declined to import additional limitations from the specification into its construction, such as isolating the SL from other umbilical cord tissue and placing the isolated SL interior-side down, stating that the specification does not uniformly require those steps in all disclosed embodiments. Restem argued that because the PTAB referred to such limitations in its analysis to distinguish the claims from the prior art, the claims are implicitly construed to require these limitations.

The Federal Circuit disagreed with Restem, stating that the statements made by the PTAB regarding the additional limitations were “factual findings that supported its anticipation analysis” and not an “implicit construction.”[3]

Claim Construction: “Isolated Cell”

Although the PTAB declined to expressly construe the term “isolated cell,” Restem argued that the PTAB implicitly construed the term as a “cell population,” which Restem stated was contrary to the express definition in the ‘176 patent: “As used herein, the term ‘isolated cell’ refers to a cell that has been isolated from the subepithelial layer of a mammalian umbilical cord.”[4]

However, the Federal Circuit did not find error in the PTAB’s construction of “isolated cell” as a “cell population,” referring to the language of the claim itself, the specification, and the prosecution history as supporting the construction. [5]The Federal Circuit stated that when referring to a cell that “expresses” or “does not express” certain markers, it is “undisputed” that a cell population is used when determining cell marker expression. The Federal Circuit also pointed out that throughout the specification, the invention is consistently described as a “cell population.” Lastly, the Federal Circuit noted that during prosecution, the Examiner repeatedly referred to the invention as a “cell population,” including in a Restriction Requirement and in the Statements of Reasons for Allowance, and that the Applicant did not dispute the Examiner’s statements. The Federal Circuit indicated that in this case, the term “isolated cell” was simply narrowed during prosecution to a “cell population,” which is a common occurrence during prosecution, concluding that even though the specification provided an explicit definition for “isolated cell,” intrinsic and extrinsic evidence can provide a different interpretation.[6]

Anticipation Analysis

In its anticipation analysis, the PTAB found that the cell marker expression profile distinguished the claimed cells from other stem cells. Specifically, the PTAB stated that the prior art did not disclose, expressly or inherently, the claimed markers that are not expressed by the cells. Restem argued that the prior art disclosed the same process steps, stating that “once the process steps are met, the product is necessarily present” and that “inherency is automatic for product-by-process claims.”.[7]

The Federal Circuit sided with the PTAB and reminded that analysis for product-by-process claims differs for validity vs. infringement. For validity, the focus is on the product itself, while for infringement, the focus is on the process and the product. The Federal Circuit indicated that Restem was “conflating” the validity and infringement analyses by improperly shifting the analysis from whether the prior art discloses the claimed product to whether the prior art discloses the claimed process.[8]

The Federal Circuit found substantial evidence supporting the PTAB’s finding that the prior art process would not necessarily have the claimed cell marker expression profile and therefore does not meet the requirement for inherent anticipation. First, the ‘176 patent did not address whether the claimed process would always result in the claimed cell marker expression profile. Second, Restem did not provide any testing evidence of the prior art’s process inevitably having the claimed cell marker expression profile. Third, the expert testimony suggested that cell marker expression can depend on a variety of factors, and some of these factors differed between the prior art and the claims. The Federal Circuit concluded by affirming the PTAB’s finding that “Majore did not inherently anticipate claim 1 of the ’176 patent as supported by substantial evidence.”[9]

Obviousness Analysis

The Federal Circuit included a short analysis of Restem’s arguments that the PTAB’s finding of non-obviousness for claim 9 was erroneous. However, because the PTAB’s finding of non-obviousness was based on two reasons, one of which was that claim 9 was non-obvious for the same reason as claim 1, and because Restem did not challenge this reason by the PTAB, the Federal Circuit affirmed the PTAB’s finding of non-obviousness.

Takeaways for Practitioners

In this decision, the Federal Circuit once again clarified the different product-by-process claim analyses for validity vs. infringement. This case is a reminder that structural features of the product in a product-by-process claim can play an important role in distinguishing from the prior art. Further, in this specific instance, the lack of statement in the ‘176 patent that the claimed process will necessarily result in the product was favorable to the Patentee. However, practitioners should be mindful of potential issues under 35 U.S.C. 112 that may arise if an Examiner points out such ambiguity.

Regarding claim construction, practitioners should take care when making statements during prosecution regarding the meaning of claim terms that may differ from definition in specification. When Examiners characterize claim terms during prosecution, it may be advisable to submit a response clarifying the record or even softening such characterization, as statements by the Examiner may be taken in consideration during claim construction.

[1] Restem, LLC v. Jadi Cell, LLC, CAFC No. 2023-2054, Decided March 4, 2025.
[2] Id. at pg. 4.
[3] Id. at pg. 5.
[4] The ‘176 patent at col. 6, ll. 32-34.
[5] Restem v. LLC, opinion at pg. 6.
[6] Id. at pg. 7.
[7] Id. at pg. 8.
[8] Id.
[9] Id. at pg. 9.