Judge Chen and Nonobviousness

By Jason Rantanen

The past two weeks have seen a substantial number of nonobviousness opinions emerge from the Federal Circuit.  These decisions are particularly interesting because they contain pairs of opinions with opposite outcomes.  Judge Lourie, the second longest-tenured active judge on the court, wrote two of them while Judge Chen, the second-newest member of the court, wrote a third and a dissent in the fourth.  Each found (or would have found) the patents in question to be obvious in one opinion and nonobvious in the other.  For those interested in the jurisprudential views of Judge Chen, especially, the pairing may provide some useful insights.

Allergan, Inc. v. Apotex Inc. (Fed. Cir. 2014) Download Allergan v. Apotex
Panel: Prost (author), Reyna, and Chen (dissenting in part)

Allergan and Duke University hold a pair of patents relating to an ophthalmic solution used as a treatment for eyebrow hair loss.  Allergan sells LATISSE a 0.03% bimatoprost ophthalmic solution as a topical treatment for eyebrow hair loss.  After Apotex and other manufacturers submitted Abbreviated New Drug Applications to the FDA seeking to market generic versions of LATISSE, Allergan and Duke sued for infringement.  Following a bench trial, the district court rejected the generic manufacturers’ invalidity arguments, found infringement, and entered an injunction.  The manufacturers appealed.

On appeal, the Federal Circuit addressed claim construction, anticipation and obviousness, affirming the district court’s contested claim construction of “treating hair loss” and its determination that the patents were not anticipated, but reversing the finding of nonobviousness.  I could write a lengthy post on the majority opinion alone, but this passage particularly caught my eye since it relates specifically to the issue of what subjects the Federal Circuit considers to be issues of law versus fact in the nonobviousness inquiry:

In sum, even if the district court did not commit clear error in its findings of fact, failure to consider the appropriate scope of the ’029 patent’s claimed invention in evaluating the reasonable expectation of success and secondary considerations constitutes a legal error that we review without deference.

Slip Op. at 23 (emphasis added).  The substantial breadth of the asserted claims of the ‘029 patent was particularly troubling to the majority, both in assessing the Graham factors and the nexus for secondary considerations.

Writing in dissent, Judge Chen would have found the ‘029 patent to be nonobvious.  In reaching this conclusion, he placed much more weight on the determination of the examiner during prosecution:

To begin with, issued patents enjoy a presumption of validity, which can only be rebutted by clear and convincing evidence. Microsoft Corp. v. i4i Ltd. P’ship, 131 S. Ct. 2238, 2245–46 (2011). A party challenging a patent’s validity must do so with “evidence which produces in the mind of the trier of fact an abiding conviction that the truth of [the] factual contentions are highly probable.” Buildex Inc. v. Kason Indus., Inc., 849 F.2d 1461, 1463 (Fed. Cir. 1988) (citing Colorado v. New Mexico, 467 U.S. 310, 316 (1984)). This is not a burden that is easily satisfied.

Dissent at 2.  Particularly persuasive to Judge Chen was the fact that examiner considered the key reference during examination and allowed the claims over it following an amendment by the patentee:

In light of the particularly heavy burden to show obviousness over a reference disclosed during prosecution and discussed by the examiner, Appellants have
not shown that Johnstone now somehow teaches or suggests the very structural feature that the patentee claimed to distinguish the Johnstone compounds.

Id. at 4.  On his part, Judge Chen found the disclosure Johnstone reference to be meaninglessly broad and generic:

This is not a situation in which there are a finite number of identified, predictable solutions. See KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 421 (2007). Rather, the
single sentence in Johnstone actually proposes hundreds of thousands, or even millions, of variations on the alpha chain. [] The compound in Johnstone
could have a saturated bond at any position on the alpha chain, an unsaturated bond at any position, a triple bond at any position, or even a combination of any of these bonds. As a result, a person of ordinary skill in the art was not faced with a “small or easily traversed” number of options based on Johnstone. [] In this instance, covering everything effectively tells us nothing.

Id. at 5-6 (internal citations omitted).

Bristol-Myers Squibb Company v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2014) Download BMS v Teva
Panel: Prost, Plager, Chen (author)

Bristol-Myers Squibb (BMS) owns Patent No. 5,206,244, which relates to certain antiviral compounds.  At issue was claim 8, which covers entecavir, a treatment for hepatitis B that BMS markets under the name BARACLUDE.  Teva submitted an ANDA seeking to market a generic version of entecavir; BMS sued for infringement.  After trial, the district court held claim 8 to be obvious based on the selection of 2’CDG as a lead compound from the prior and a finding that a skilled artisan would have been motivated to make the necessary modification with a reasonable expectation of success at creating a compound with beneficial antiviral properties.  BMS appealed.

Unlike the Allergan case, the analytic framework presented by the parties for the question of obviousness was the lead-compound approach.  BMS contended that the district court had erred in selecting 2′-CDG as a lead compound, a particular legal framework that is frequently used in chemical compound cases.  The Federal Circuit disagreed, agreeing with the district judge’s conclusion that “those of ordinary skill in the art would have selected 2′-CDG, a carbocyclic analog, as a lead compound for
further development efforts before BMS applied for the 244 patent in October 1990.”  Slip Op. at 10-11.   The appellate court also rejected BMS’s argument on motivation to modify the lead compound to make the patented compound, pointing to detailed evidence and testimony on why the modification would have been obvious.

Nor was the presence of unexpected results sufficient to establish nonobviousness on their own.

Contrary to BMS’s argument, unexpected results do not per se defeat, or prevent, the finding that a modification to a lead compound will yield expected, beneficial
properties. Rather, as secondary considerations of nonobviousness, they come into play in determining “the ultimate question of patentability.”

Secondary considerations of nonobviousness “must always when present be considered,” and can serve as an important check against hindsight bias. See Cyclobenzaprine, 676 F.3d at 1075-76, 1079 (quoting Stratoflex, Inc. v. Aeroquip Corp, 713 F.2d 1530, 1538-39 (Fed. Cir. 1983)). While secondary considerations must be taken into account, they do not necessarily control the obviousness
determination.

Slip Op. at 15-16.  Here, the district court did not commit error in its factual findings that the unexpected properties did not compel a finding of nonobviousness, and the two legal errors that it committed (“(1) comparing entecavir to another hepatitis B drug on the market instead of the closest prior art, 2′-CDG; and (2) inappropriately look[ing] to what the inventor knew at the time of the invention—instead of one of ordinary skill in the art—to determine what was expected.”  Slip Op. at 18) were harmless.

First Impressions: My reading of Judge Chen’s majority opinion is that it reflects a careful, thorough review of the district court’s opinion (which itself is helpfully quite detailed and Magistrate Judge Burke should be commended for his own thoughtful analysis).  Conclusions are supported by detailed discussions and even if one disagrees with the overall conclusion of obviousness here, that disagreement seems less likely due to the carefulness of his approach and more likely due to some of the core difficulties inherent in pharmaceutical innovation such as the challenge of ascertaining marketable in vivo efficacy and the high value our society places on large-scale data-driven safety and efficacy determinations, determinations that can be quite costly yet have little if any direct role in substantive patent law questions.

Another possible reading of these two opinions is that they reflect a fair amount of deference to the decision making of others more familiar withe the specific facts.  In Allergan, in addition expressly referencing the examiner’s decision to allow the patent, Judge Chen’s view would also have affirmed the district court’s ruling of nonobviousness.   And in BMS, Judge Chen drew heavily on the district court’s findings.  (That said, one reason why these opinions aren’t in as much tension as they might be is because the district court’s analysis of obviousness in Allergan was at least an order of magnitude thinner than that of the judge in BMS).  At this point, this is merely an observation, and we’ll have to wait for future opinions from Judge Chen.

26 thoughts on “Judge Chen and Nonobviousness

      1. B-b-b-but your honor, the reference clearly states that you can:

        combine zero, one, or more of:

        combinations comprising:

        zero, one, or more of:

        an electron,
        a proton, and/or
        a neutron.

        (lol, those seeking to use this logic, obviously FAIL to understand that nothing stops the use of the logic and the logic poisons the entire patent well – to channel Chen, “In this instance, covering everything effectively tells us nothing.“)

  1. An examiner can only be reversed on direct appeal for clear error. Why not the same deference on collateral attack?

    I would point out that, during examination, there’s nobody around to directly challenge an examiner’s finding of patentability.

    Instead, during litigation, the opinion of the examiner is subsumed into the heightened standard of evidence during litigation in support of the presumption of validity. If you use the logic that “well, the examiner said it was patentable over this evidence, then it must be so,” then you are double-counting the outcome of examination, by requiring the higher standard of evidence and placing on the other side of the scales the same legal determination that resulted in that higher standard in the first place. Remember also that the defendant does not generally cross-examine the examiner during litigation to impeach the evidence that the examiner presented during examination, whereas they could cross-examine the patentee’s expert witness who presented evidence of nonobviousness at trial.

    1. Yes, a better way to put it is that when the prior art being used to attempt to invalidate a patent in litigation WAS OF RECORD in the original [or reexamination] prosecution of that patent, the CAFC has held in Hewlett-Packard co. v. Bausch & Lomb Inc., 15 USPQ2d 1526, 1527 (Fed. Cir. 1990) that “the burden of showing, by clear and convincing evidence, the invalidity of [patent claims]” . . “is especially difficult when the prior art was before the PTO during the prosecution of the application.”

      1. …as I noted yesterday…

        paul, what does this “especially difficult” actually mean? Is it a material change in the standard? Is the standard now beyond “clear and convincing?” Clear and Convincing Plus? Beyond a Reasonable Doubt?

        What authority does a judge have to attempt such a sua sponte evidentiary change of standard (if such is in fact underway)? Or is it more likely “fluff” or “bluster” or “blowing smoke” with no real legal weight?

      2. Right, and Chen quoted similar case law (Tokai Corp. v. Easton Enterprises) in his dissent. But the corresponding quote from the majority was this:

        The presumption of a patent’s validity under 35 U.S.C. § 282 can be rebutted by clear and convincing evidence. Microsoft Corp. v. i4i Ltd. P’ship, 131 S.Ct. 2238, 2245-46 (2011). The standard of proof does not “rise and fall with the facts of each case.” Id. at 2250. In particular, “[w]hether a reference was previously considered by the PTO, the burden of proof is the same: clear and convincing evidence of invalidity.” Sciele Pharma Inc. v. Lupin Ltd., 684 F.3d 1253, 1259-61 (Fed. Cir. 2012).

        If it’s especially difficult to use prior art that was already before the PTO, to a degree greater than “clear and convincing evidence” requires, then it should only be because the PTO’s vetting of that art, on average, is an indicator to the defense’s attorneys that some blood has already been squeezed from that stone, and there might not be much more to get from it. Not because the PTO is reaching through the courtroom doors and putting an extra thumb on the scales.

        1. Thanks Apotu,

          What I am trying to get at is an actual legal citation for authority to augment the clear and convincing standard to (…_____what exactly?) because the particular art was in front of the PTO.

          I get the psychological aspect that a piece of art so situated would be desired to be to a higher legal standard. But what standard would that even be? Where is the authority to so hold it? The Court in i4i rejected the corollary argument put forth by Microsoft – that a piece of art not in front of the examiner should get a lesser standard. So it appears, that appearing – or not – should not have any effect, right?

          At least one of Ned’s points at 4.2 is correct: “The standard is the standard regardless of whether the reference was before the office.

          I think Ned possibly goes off the rails in thinking that this somehow must impinge law as opposed to a finding of fact. As I pointed out, an examiner is not really a judge – examiners DO NOT get to make up the rule of law. Examiners are also NOT the jury. There is no 7th amendment issue at play here.

          As to your further discussions with Ned, I think you hit the nail on the head: the presumption of validity is the mechanism that properly captures the examiner’s “expert” status and that is a presumption that can be rebutted at trial – not some inviolable edict of law.

    2. APoTU, but the standard of proof itself has nothing to do with examination. The standard is the standard regardless of whether the reference was before the office.

      The standard is clear and convincing. When a reference has been considered by the patent office and the issue decided, the trier of fact, must consider this in making their decision. It is a fact. It is evidence – a contrary opinion of a clearly unbiased, and unpaid for expert.

      Moreover, here, the majority simply substituted their judgment for both the district court (and the patent office) by declaring the district court findings legal error. Do you find anything in their opinion to suggest that the majority’s decision was based upon clear and convincing evidence standard rather than the simply substituting their view de novo?

      1. It is evidence – a contrary opinion of a clearly unbiased, and unpaid for expert.

        And as I mentioned above, an expert also apparently beyond the reach of the court for any purpose where the word “expert” might actually apply.

        It would be one thing if the defense could subpoena the examiner and question them on why they really allowed a case (e.g., “I didn’t think it was allowable, and I was going to write a rejection, but my SPE told me to just let it go,” or, “I needed an extra 0.75 counts that biweek”). But the PTO has rules (37 CFR 104.22 and .23) and supporting case law (In re Mayewsky, 860 F.2d 430, 181 USPQ 329) that strictly govern the ability of employees to testify in patent litigation, and they limit such testimony to facts only, not state of mind or rationale for taking a particular action during prosecution, and that includes not being able to testify as an expert witness.

        Now, if you were a patentee, wouldn’t you love it if you could put your expert witness up on the stand, and defense counsel wasn’t allowed to cross-examine him? That’s why I don’t think it’s a fair comparison to say that the examiner’s legal determination on allowability is the same as expert testimony. It’s strictly a legal determination, and the impact of that determination is already captured in the presumption of validity that is manifested in the heightened evidentiary standard for the evidence that the defense presents in showing invalidity.

        1. The “already captured” bit is where I think we do not agree. I think it highly relevant that the examiner considered the reference and the precise issue. One could argue that to the jury, and I am unaware of any case that holds that one cannot make such an argument. It is evidence, and strong evidence, of non obviousness over the particular reference.

          It is the fact that the majority never even considered this fact that is legal error. The majority opinion does not seem to even apply the clear and convincing evidence standard. They accused the district court judge of legal error and then simply decided the case themselves.

          I can only hope this case is reheard en banc where this issue is discussed just a bit more.

          As we heard in the Nautilus oral argument, the Supreme Court was interested in prior findings by the PTO and what weight to give them. But to ignore them completely? Are we all Scalia’s now — totally ignoring congressional history, the record, in making our determinations?

          1. Ned,

            Maybe you can sway me here. Help me with two things:
            1) Under what authority do you find the legal aspect moving, and 2) To what level do you move it to?

            If not already in there, where then to? under what specific authority?

            As I posted, I “get” that you feel that an item considered should be heightened and treated with, well, more respect. Do you “get” that the converse was explicitly rejected by the Court in i4i? Do you understand why?

            I am just not ready to move “with” a legal error and treating legal and factual on the same playing field. And giving appropriate credence to factual matters sounds in the argument that you want to make for an item of evidence (relevancy has a relation to facts, but one does not view “relevancy” in the same light as law). Even a jury does not make up the law or decide the particular level to be met – we do not have juries saying “well, he was a bad man, so we are going to lower the standard for this murder case from “beyond a doubt” to “preponderance,” do we?

            What makes this case particularly annoying is that the court here does appear to have completely ignored what the examiner put on the record. Worse yet, the majority criticizes the dissent for a lack of taking everything into consideration. While the dissent may have written better to reflect that it did (if that be the case) take everything into consideration, the majority vastly loses its credibility by complaining of something of that which it does (as an aside, a certain regular poster here exhibits that same trait – and suffers the same fatal devastation of credibility).

            That the majority glibly missed the fact that the examiner explicitly noted the reference is the only takeaway that seems plausible.

            If in fact then, the majority missed a material fact, then the application of the law could be in error (the law not being changed).

            Perhaps in that case either a correction (if the majority had not missed that key fact sitting there on the record) or a rehearing (en banc or otherwise) would be in order. But even then, such would not be in order to change the law, but only to apply the correct (still current) law to the facts appropriately.

            Let’s leave changing the law to the law writers.

            1. Thanks Ned – but even classifiying it as a “secondary consideration” won’t sway me – (and you introduce an odd self-referential situation, as secondary references already present support the finding of the examiner, which means that you want the examiner’s finding to support the examiner’s finding…).

              You left my two questions unanswered.

  2. On BMS v. Teva, the presentation of the facts almost compelled in the mind of the reader the view that the claims were obvious. Well done, both district and Federal Circuit, and Chen.

    On Allergen, I think Chen is right that if the same reference and same issues that were before the examiner are presented in court, the result should be the same. An examiner can only be reversed on direct appeal for clear error. Why not the same deference on collateral attack?

    I give an analogy. Suppose the issue is whether a factory has to be shut down because it puts out too much of a certain kind of pollution. The expert agency before which the matter is heard, rules in the factory owner’s favor. A public interest group then the factory owner sues in court based on nuisance, but the issue and facts are the same issue. Should not the court follow the guidance of the expert agency and rule the same way unless the court becomes convinced the agency committed clear error?

    1. lol, or at least discuss what the agency pointed out (the facts and findings at the core of agency decision)?

      1. Well anon, also consider that the infringement defendant would not have been successful in bringing a reexamination request based on substantial new question where the examiner has considered the exact same references and the exact same issue.

        1. Does that have anything to do with the “full faith and credit” that should be shared by workers in the same agency (as opposed to the separate court of law which – as others have also noted – would treat the grant (and attached examination) as a presumption?)

          1. Minor correction: change “would” to “should,” and that “should” should also include an actual discussion (as noted, missing in the immediate case).

  3. It is always interesting to see how each Judge tends to think about claim construction and obviousness. It often helps understand what is the likely result of a case that was recently heard, given how much the composition of Federal Circuit panels determines the outcome of any given case.

  4. From Judge Chen’s dissent in Allergan: The compound in Johnstone could have a saturated bond at any position on the alpha chain, an unsaturated bond at any position, a triple bond at any position, or even a combination of any of these bonds. As a result, a person of ordinary skill in the art was not faced with a “small or easily traversed” number of options based on Johnstone. [] In this instance, covering everything effectively tells us nothing.

    Setting aside any questions of accuracy as to this particular case, Judge Chen making an interesting point Judge Chen here. It’s a point that’s relevant for chem/bio prosecutors, and it highlights both the time-worn strategy of “well poisoning” and a strange aspect of the Federal Circuit’s 103 jurisprudence that’s been touched on before: the submission of post-filing evidence.

    With respect to prosecution, prosecutors should generally avoid defining key claim terms so broadly that they encompass large classes of untested molecules that may end up destroying the nexus between the claimed molecules and the unexpected results that will typically need to be presented to overcome the prima facie obviousness case. In particular, it’s almost always going to be a terrible idea to include within the definition of a term some breadth-“enhancing” language that ends up covering molecules/methods that are demonstrated in the specification itself to lack the desired unexpected properties or (worse) lead to diminished functionality. It’s not unusual for applicants to get excited and lose sight of the ball when the claims are being worked up so it’s often the prosecutor’s job to remind them about how some “too clever” games tend to play out during examination or during the enforcement phase.

    With respect to the strategy of “well-poisoning’, the result here shows how dastardly certain disclosures can (and should) be, even in an “unpredictable” art. If you suspect that a competitor may be working a similar vein but you have no intention of doing so yourself, there’s nothing wrong with disclosing massive classes of related molecules and how to create and test them. It’s best to do so with as much specificity as possible, to be sure, but it’s often possible to do that with a minimum of paper (and you don’t necessarily need to rely on a patent filing for well-poisoning purposes, either — there are cheaper and faster ways of publishing!). The primary focus if one is seeking to obtain a patent, of course, is to avoid poisoning yourself with an unnecessarily broad admission about how easy and quickly one can make and test vast and diverse groups of compounds (especially if that test is an old one!).

    Although it seems that neither the PTO or the courts have caught on yet (but they surely will), well-poisoning should work nearly perfectly in the “more predictable” arts such as the so-called “computer arts” where the “new” functionalies are (apparently) self-enabling and there are no unexpected results to be relied on. The Internet is chock full of skilled artisans stating incontrovertible truths about what computers are capable of (and have long been known to be capable of). The PTO has surely already made such statements itself and those statements should serve as the launching point for every rejection of every computer-implemented claim that the PTO makes.

    But I digress. ;) The last point I wished to make was that the Federal Circuit’s evolving 103 case law still allows applicants to submit post-filing evidence — any evidence — of previously undisclosed unexpected results to challenge a prima facie finding of obviousness. Assuming you have the money, that means that chem/bio applicants can not only poison the well for their competitors by describing endless reams of untested molecules but, as long as you can keep the application pending, applicants can wait for their competitors to provide the data about which molecules actually work, present narrow claims drawn to those specific molecules, and secure the patent for themselves! I can’t guarantee how long this ridiculous state of affairs is going to continue (I’ve been waiting for the plug to be pulled for a few years now) but as of this moment it’s alive and well …

    1. Your “well-poisoning” arrow misses the mark as your “should be careful” advice is aimed at the wrong target. It was not the present patent holder’s “carefulness” at issue.

      Thanks for trying though.

      1. “are capable of” – yup, Malcolm wants to waive his magic wand over “oldbox” again and have “oldbox” have every future invention “already in there.”

        Just like my big box of electrons, protons, and neutrons.

    2. Post-filing evidence has nothing to do with the instant case on the merits and everything to do with your typical nonsensical tirades.

      You seek to change the laws (implicitly) every time you think that there is something in the law that you don’t like.

      In this instance, the fact of inherency defeats your “post-filing” animosity.

      Maybe instead of spending so much time repeating your worn claptrap, you should inform yourself about the reality of planet Earth.

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