Structuring Assignments to Avoid Obviousness-Type-Double-Patenting

Immunex and Roche v. Sandoz (Fed. Cir. 2020) [SandozEnBancPetition]

The court just denied Sandoz’s petition for en banc rehearing in this case, but the issue is pretty interesting and is set-up for a Supreme Court petition. The basic question in the case is whether companies are permitted to work-out an ownership scheme that avoids court scrutiny for obviousness-type-double-patenting.

The basic setup here is that folks at Immunex invented a tumor necrosis factor (TNF) blocker known as etanercept and obtained two patents on the protein and methods of use. U.S. Patent Nos. 5,605,690 and 7,915,225.  Roche separately patented its own fusion protein, and Immunex (Amgen) effectively purchased this third patent.  However, rather than receiving a formal assignment, Immunex “insisted on styling the U.S. agreement as a license.”  Although a license, the grant included sole rights to make, use, sell, import products covered; grant sublicenses; and exclude others (including the patent owner) from commercializing the invention. The license also included a right to sue to enforce the patent and control any litigation including authority to determine any settlement as well as the right to control patent prosecution. En banc petition.   This was a complete assignment – except that Roche continued to hold legal title even though Immunex effectively held all rights.

Why license instead of assign?: One reason is obviousness-type-double-patenting. Without common-ownership, the doctrine has no application. The following excerpt comes from the testimony of Stuart Watt, Immunex’s lead negotiator for the agreement:

After taking control of the patents, Immunex amended the claims to focus on its own activity rather than Roche’s prior approach.  The benefit is that these new patents expire in 2028-2029 — ten years after expiry of Immunex’s other patent. Of importance — the drug at issue here (Enbrel) generated $5 billion in US sales in 2019.

In its decision, the Federal Circuit agreed with Sandoz that a strict common-ownership test for OTDP could allow for “unjustified patent term extensions” and “harassments” of defendants from multiple lawsuits.  In particular, the court focused on transfer of right to control prosecution of the patents as a key feature.  In the end, however, the court found that all-substantial-rights had not been granted since Roche retained a “secondary right to sue” infringers “if Immunex fails to rectify any infringement within 180 days after written request by Roche.”  The distinction here of course is not actually meaningful in any way with regard to Immunex’s attempt to extend its exclusive rights over its product.

In its now failed petition for rehearing Sandoz asks the following:

A party that obtains an exclusive license conveying “all substantial rights” to a patent, including the right to control prosecution, is effectively that patent’s owner for purposes of obviousness-type double patenting.

May a party nonetheless avoid becoming an effective owner under the all-substantial-rights test, and thereby evade double-patenting scrutiny, merely by leaving the nominal owner with a theoretical secondary right to sue, which the licensee can prevent from ever ripening by issuing a royalty-free sublicense?

Petition.  The petition was supported by amicus briefs from Samsung Bioepis (who is being sued on the same patent); the Association for Accessible Medicines; and America’s Health Insurance Plans, Inc.

11 thoughts on “Structuring Assignments to Avoid Obviousness-Type-Double-Patenting

  1. 6

    It seems to me that if the expiration dates of the later patent is so much later than the earlier, then wasn’t the earlier patent available under 102 or 103? If the entire earlier patent didn’t render obvious the later one (alone or in combination with other available art), I don’t understand how obviousness-double patenting, which in theory is only over the claims, could have been an issue.

    1. 6.1

      This post is not very clear at all about what happened.

      After taking control of the patents, Immunex amended the claims to focus on its own activity rather than Roche’s prior approach. The benefit is that these new patents expire in 2028-2029 — ten years after expiry of Immunex’s other patent.

      What does this mean? How do you amend the claims of a patent without a reissue? As you say, it seems like Immunex filed new applications with different claims, which must not have been anticipated or obvious over the claims of the licensed patents, so it isn’t clear what any of this has to do with OTDP or the assignment/license.

    2. 6.2

      Yes, same question as 2 below? Important pharmaceutical inventions are foreign filed and thus publish their contents no later than 18 months from U.S. filing dates. Were both patents claiming the same priority date or filed within 18 months of one another and one application long-delayed and both issued under the old patent term statute?

    3. 6.3

      The later issuing patent was filed in 1995, prior to the effective date of the new patent term provisions. Thus, it would by default be entitled to a term of 17 years from its issue date, which was 2011.

      The extreme discrepancy caused by the old patent term rules is at this point not only uncommon, but there are a finite number of pending applications for which it is even possible, and this number is dwindling all the time.

      The issue, however, could come up in other situations, albeit with smaller discrepancies in patent term.

      1. 6.3.1

        Thanks. Yes, the old fairly common practice was “evergreening” pharmaceutical patent terms under the old patent term law by keeping at least one divisional or continuation pending on the same pharmaceutical as long as possible. Such patents, originally filed more than 24 years ago, are dying off.

      2. 6.3.2

        That is a key fact. Thanks!

  2. 5

    Why license instead of assign?: One reason is obviousness-type-double-patenting. Without common-ownership, the doctrine has no application.

    This statement seems a little over-broad. I think obviousness-type-double-patenting can apply even though the applications/patents are not commonly owned, so long as there is at least one common (joint) inventor. See In re Hubbell, 709 F.2d 1140 (Fed. Cir. 2013).

    Maybe the way to phrase it is “In this case, where the inventions were independently developed and there are no common inventors, without common-ownership, the doctrine has no application.”

  3. 4

    I don’t understand why this is a problem, since Roche could have gone after that same protection had it wanted to.

  4. 3

    Well, one thing’s for sure — there are some pretty creative folks out there.

    Should the CAFC decision stand, look for others to employ the same tactic.

    Don’t see SCOTUS going along with this, however.

  5. 2

    Interesting question this raises – in how many situations is only obviousness-type-double-patenting available for AIA-subject patents? That is, where 102 or 103 is not available?

  6. 1

    A rose by any other name…

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