Federal Circuit: System is Not a Method (and therefore patent must be delisted from Orange Book).

by Dennis Crouch

Jazz Pharms, Inc. v. Avadel CNS Pharms, LLC (Fed. Cir. 2023)

In the pharmaceutical industry, there is a lot of interplay between the patents and FDA regulation.  A party with an approved drug product will often list related patents in the Orange Book.  Jazz’s approved drug is sodium gamma-hydroxybutyrate (“GHB”).  GHB is an infamous date-rape drug and the FDA conditioned its approval on Jazz developing “Risk Evaluation and Mitigation Strategies” (REMS).  Jazz created a set of strategies, and also obtained a patent covering the strategy. US8731963.  The patent basically overs a computer system that keeps track of prescriptions and inventory using a “single-pharmacy system” as well as a focus on whether the drug was purchased by a cash-payer.  Jazz listed this REMS patent in the Orange Book as covering its drug product.   And, although the patents covering the drug use itself expired in 2022, the REMS patent is still in force.  But, the FDA is actually no longer requiring Jazz to use the system.

In my view, this is a pretty weak patent, and a court will probably eventually hold that it is ineligible.  But, the “beauty” of the orange book listing is that patent quality often does not really matter.   As the Federal Circuit explained Orange Book listing “arm[s] the patent owner with the ability to trigger a presumptive, thirty-month suspension of the FDA’s approval of a competitive product.”  In other words, if a competitor wants to enter the market, the mere existence of a listed Orange Book patent creates a 2.5 years delay in approval of their product.  The law also makes it an act of infringement for a third party to submit a NDA alleging that it is either not infringing or that the patent is invalid/unenforceable.

In this case, Avadel is wanting to market its own GHB drug and has its own proposed REMS using multiple pharmacies.  After Avadel filed its NDA, Jazz sued.  Avadel responded with a counterclaim seeking a court order to delist the patent.

Orange Book listing is proper when the patent either (1) covers the approved drug; or (2) covers an approved method of using the drug.  The Federal Circuit appeared ready to allow this type of REMS patent as an Orange Book Listing.  But, here is the rub for Jazz — its patent doesn’t claim a method, but rather claims a computer system.

Each of the ’963 patent’s three independent claims describes a ‘computer-implemented system’ that comprises ‘one or more computer memories’ and a ‘data processor.’ . . . That the claimed systems can be used in the course of treating patients suffering from narcolepsy does not alter the fact that these are system claims.

Slip Op.  Jazz  unsuccessfully argued that the FDA required submission of a “system,” and that should alter the method requirement.  In fact, the FDA does not directly review the submitted patents and has never definitively stated that REMS patents can be listed.

Thus, the Federal Circuit affirmed the lower court order to delist the patent.

= = =

My key struggle with this case is the background law that a “system” claim automatically covers both the system itself and using the system.   This stems from the definition of patent infringement that covers making, using, selling, etc. 35 USC 271(a).

9 thoughts on “Federal Circuit: System is Not a Method (and therefore patent must be delisted from Orange Book).

  1. 5

    “Regardless of what statutory category (“process, machine, manufacture, or composition of matter,” 35 U.S.C. § 101) a claim’s language is crafted to literally invoke, we look to the underlying invention for patent-eligibility purposes. Here, it is clear that the invention underlying both claims 2 and 3 is a method for detecting credit card fraud, not a manufacture for storing computer-readable information.”

    From Judge Dyk in Cybersource.

    1. 5.1

      Regardless of what statutory category… claim’s language is crafted to literally invoke, we look to the underlying invention for patent-eligibility purposes.

      Saying the silent part out loud, this is the notion of the Judicial Branch’s “damm scriveners obeying the words of Congress, we are just going to go ahead and Gist the claim how we want it to be”

      This is of course, ultra vires and does NOT take the claim as a whole — as set forth by the applicant, to whom Congress set out to be the one that defines the claimed invention.

      Congress in the Act of 1952 rebuked a wayward Supreme Court by removing “Gist,” “Gist of the Invention,” and dozens more similar terms and instead carved up a prior single paragraph and — directly on point — opted for nonobviousness INSTEAD OF the “unsettled” term of “invention.”

      That the Justices (and judges) have chosen to 1g n0re this history does not remove this history.

  2. 4

    The decision does emphasize “method of using the drug” as opposed to use of a system for Safety of a drug — with emphasis of “product” (of the wanna-compete generic) ALSO being the drug.

  3. 2

    I do not remember any Orange Book discussion in the recent USPTO/FDA alignment discussions.

    This 30 month preemption is rather a big deal (given the daily profit levels in context).

    1. 2.1

      “This 30 month preemption is rather a big deal (given the daily profit levels in context).”

      Do tell.

      Welcome to the party.

      1. 2.1.2

        Oh, believe you me, I have been at this party for quite some time now.

        Who was the examiner for this REMS patent…?

  4. 1

    The statute only permits listing claims to a “method of using such a drug” which is the subject of the NDA. S355(b)(1)(A)(viii)(II).

    In other words, the method claims eligible for listing are subservient to claims to the drug product, not to product claims to a computerized system. It’s not purely a method vs. product issue.

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