by Dennis Crouch
Incept LLC v. Palette Life Sciences, Inc., No. 21-2063 (Fed. Cir. Aug. 16, 2023) (Majority by Judges Schall and Taranto; Dissent-in-part by Judge Newman)
The most interesting line in the case for appellate attorneys (and legal scholars) is probably the court’s law/fact distinction in the context of obviousness analysis. The majority wrote: “We see no reversible error … whether viewed as a factual one about the level of [commercial] success or a legal one about the weight of any such success in the overall obviousness analysis.” The law/fact divide is important because of the evidentiary requirements in the first instance and the standard for review on appeal. Here, the court makes clear that the weight given to any objective indicia of non-obviousness is a question of law rather than a question of fact. The result then is that its analysis can generally be based upon reason rather than evidence, and that issue is one that will be heard de novo on appeal.
The second issue of importance is as another data point in the forest-trees anticipation analysis in situations where the prior art discloses thousands of potential embodiments. The court has repeatedly held that such a reference is only anticipatory if a person of skill would have immediately envisaged the invention now being claimed. In this case, the court took a relatively broad view of what constitutes anticipation — focusing on the level of specificity in the claims and guideposts such as the purpose of various elements in the claim. In the end, the patentee lost and the claims were found invalid.
Finally, the case includes another dissent from Judge Newman.
= = =
Incept’s patents cover a method for treating cancer that involves injecting a biodegradable filler gel prior to radiation treatment in order to increase space between the the tissue being treated and the closest body organs. Afterwards, the gel biodegrades and so does not need to be removed. U.S. Patent Nos. 8,257,723 and 7,744,913. Palette Life Sciences initiated IPR proceedings and the PTAB eventually found the challenged claims unpatentable as anticipated/obvious. On appeal, the Federal Circuit has affirmed with Judge Newman offering a partial dissent. The dependent claims include various forms of the filler, such as thixotropic polymer, collagen, a polysaccharide, or hyaluronic acid.
Wallace discloses millions of possible compositions, and the patentee argued that the Board engaged in improper retrospective construction of the invention by picking and choosing various elements from the disclosure. The idea then is that one skilled in the art could not have “at once envisaged” the various species claimed by Incept. On appeal, the majority sided with the Board, holding that “Wallace expressly describes compositions that have the claimed characteristics of, and are used for the same displacement purpose as, the compositions referred to in the ’723 patent claims challenged as anticipated.”
Incept cannot use the fact that Wallace describes multiple compositions to evade an anticipation finding where Wallace provides “as complete detail as is contained in the patent claim,” such that a skilled artisan would have understood that Wallace’s compositions had the same generic properties as those in the ’723 patent claims.
In her opinion, Judge Newman took the majority to task for ignoring limitations in narrower dependent claims.
The majority appears to hold that, when the broader claim is anticipated, the dependent claims are automatically anticipated. That is not the law. Each claim must be considered as a whole, including all its limitations. . . . A generic prior disclosure does not anticipate all of its embodiments, including novel specific embodiments, whether or not the facts are such that the generic disclosure may render the embodiment obvious.
The problem with Judge Newman’s arguments here is that the patentee only barely argued the dependent claims, and the majority recognizes this at least to most of the dependent claims – noting that Incept had failed to provide specific arguments directed to those claims.
Other claims were found obvious by the PTAB and the majority again affirmed that holding. The patentee had provided evidence of commercial success — showing that most prostate cancer treatments in the US used an injectable known as “SpaceOar” exclusively licensed from the patentee. The Board refused to give any weight to the commercial success because the sales numbers provided included free and replacement versions, without accounting for those numbers. In addition, the Board found the patentee’s expert testimony not credible and not supported by evidence.
Judge Newman’s dissent noted that “It is undisputed that the Incept product
experienced regular increases in annual commercial sales, and at the time of trial Incept had obtained 55% of the market for comparable products. Palette’s only criticism of Incept’s commercial information was that Incept also gave free samples. The majority now holds that Incept’s commercial sales cannot be considered as a measure of commercial success because some product was provided free of charge.”
= = =
Independent claim 1 of the ’723 patent recites:
1. A method of delivering a therapeutic dose of radiation to a patient comprising
introducing a biocompatible, biodegradable filler between an organ and a nearby tissue to increase a distance between the organ and the tissue, and
treating the tissue with the therapeutic dose of radiation so that the presence of the filler causes the organ to receive less of the dose of radiation compared to the amount of the dose of radiation the organ would receive in the absence of the filler,
wherein the filler is introduced as an injectable material and is a gel in the patient, and
wherein the filler is removable by biodegradation in the patient.
I won on commercial success before the Board. I submitted a substantial amount of evidence tying in the commercial success with the claimed features, and providing evidence that the commercial success occurred with with little advertising, etc. The Examiner and their SPE told me off the record that they were convinced but that the ‘policy’ was to punt secondary considerations issues to the Board, and so I had to file an appeal. The Board bypassed the issue of whether the Examiner demonstrated a prima facie case of obviousness. The Board just jumped to the secondary considerations and pointed out that the Examiner didn’t traverse the commercial success evidence.
“The Examiner and their SPE told me off the record that they were convinced but that the ‘policy’ was to punt secondary considerations issues to the Board, and so I had to file an appeal. The Board bypassed the issue of whether the Examiner demonstrated a prima facie case of obviousness. ”
Major errors by the USPTO on both accounts.
A (single) round of examination must be complete as to all matters. Examiners have no legitimate policy to punt anything down the road.
I would have demanded a copy of this policy and included the assertion and lack of substantiation, as well as a bill for having to jump through the extra hoops as addendums to the Appeal, with a copy to the USPTO Ombudsman.
The Board reaching a secondary conclusion that happens to be in your favor is a small comfort, as they should not have reached their at all. A lack of a prima facie case is a solid indication that the Office has
f
a
i
l
e
d
at its first instance of examination.
ipguy, you and your client deserve a refund.
America deserves proper examination.
The Board’s decision was rife with errors but since they ruled in my client’s favor, what was my client to do? Appeal to the Federal Circuit that the Board got the ultimate decision right but their reasoning was messed up? My client did deserve a refund, and America deserves proper examination.
What you two are discussing is so . . so . . . s0 . . . everyday at the PTO.
What TC was this in, IPGuy?
+1
So, an applicant must go through the expense of an appeal because of some probably unwritten “policy?” Yet, everything is supposed to be in the record?
I once had an examiner claim he could not allow claims because of a policy not to do so. I mentioned this in my next response, and asked for a confirmation of the policy. The examiner then claimed he never said that.
There is also the issue that considerations of “commercial success” occurring years after the alleged invention date are contrary to the plain and express language of section 103 (not to mention that it’s also utterly reasonable to disallow it as evidence). That sort of issue is really really important to people like Judge Newman in other contexts but for some mysterious reason not in this context (and it surely isn’t because of anything the Supreme Court said).
Yeah, the panel majority’s treatment of commercial success seemed odd. I’d suggest that the evidence of commercial success was irrelevant for two reasons.
First, the evidence of commercial success must have a nexus to the feature that distinguishes the claimed invention from the prior art. In this case, the evidence of commercial success was directed to the independent claims, which were held to be anticipated. But such evidence is irrelevant to an anticipation argument. It appears that the patented did not direct any evidence of commercial success to the dependent claims, which were held to be obvious. It’s unclear whether the commercial products even embodied the features of the dependent claims.
Second, as you suggest, such evidence should relate to the time period shortly after the invention was made. When the evidence of commercial success is removed from the date of invention by many years, the commercial success could have occurred for any number of reasons.
Altogether, evidence of commercial success is probably the flimsiest of the kinds of objective indicia upon which a patentee may rely.
In short, it looks like the patentee didn’t take this patent challenge very seriously. The patentee made only cursory arguments against the petitioner’s challenge of the dependent claims, and didn’t offer much in terms of objective indicia of obviousness. The patentee hung everything on the independent claims, which even Judge Newman held to be invalid.
“such [commercial] evidence should relate to the time period shortly after the invention was made.”
Um no; since such evidence does not — and indeed cannot — exist . . . until the invention has become generally known within the market(s) the invention is directed to.
And this is especially true with medical inventions such as these, where the medical field has been relying on other techniques and instruments for some years . . . and even further true when Drs. must be trained to use such techniques and instruments.
Commercial success isn’t like a bomb (or a big new blockbuster drug) that blows up in an instant.
Instead, it takes time. Often years of time.
The statute is clear that obviousness is determined as of the filing date so why should evidence that DID NOT EXIST UNTIL YEARS AFTER FILING be relevant?
Yes, I can see why you cannot grasp the concept of temporal causality…
Sure. But the proffered evidence would need to demonstrate that the eventual commercial success was the result of the features that distinguish the claimed invention from the prior art. A product could be commercially successful for any number of reasons unrelated to the fact that it embodies certain patentable features. In fact, most commercially successful products do not enjoy the benefits of patent protection. Thus, the mere recitation of annual sales figures does not demonstrate a causal nexus to the features that allegedly make the invention nonobvious over the prior art.
Yes, it’s possible that a product’s commercial success could be the result of certain distinguishing features. But it could be due to a number of other factors. If the proffered evidence does nothing to tie that commercial success to certain distinguishing features of the product, then the evidence isn’t worth much.
Never mind that, in this case, the evidence of commercial success was proffered with respect to the independent claims, which were struck down as anticipated. So, the whole discussion of commercial success is something of a red herring. The patentee merely copied something that was already known, and did a better job of marketing it.
“Sure. But the proffered evidence would need to demonstrate that the eventual commercial success was the result of the features that distinguish the claimed invention from the prior art”
ok
“A product could be commercially successful for any number of reasons unrelated to the fact that it embodies certain patentable features”
Also ok
“<I. In fact, most commercially successful products do not enjoy the benefits of patent protection. ”
A logical non sequitur, as other products are not germane here.
“ If the proffered evidence does nothing to tie that commercial success to certain distinguishing features of the product, then the evidence isn’t worth much.”
Sure – but this is not as strong as you might think, as it is indeed a given that whatever the sales are OF, such must be tied to the claims.
If that did not happen, then certainly such assertions are baseless.
“Never mind that, in this case, the evidence of commercial success was proffered with respect to the independent claims, which were struck down as anticipated. So, the whole discussion of commercial success is something of a red herring”
Perhaps – evidence speaks to what it is — on its own. Perhaps the tie to dependent claims was not verbalized, but that would not mean that the evidence on the record cannot speak to elements of the dependent claims.
“The patentee merely copied something that was already known, and did a better job of marketing it.”
Well, that’s simply not true. The patentee did also truly believe that they had invented something and paid the fees and prosecution to obtain a patent.
When does the infringement occur?
That basically makes my point. If commercial success occurs over many years, then it may be due to a number of reasons besides the features that distinguish the claimed invention from the prior art. In the case of FDA-regulated products, such as drugs and medical devices, it’s going to be hard to show a clear nexus between the product’s eventual commercial success and its differences from the prior art. If general evidence of commercial success—years removed from the date of invention—is the only objective evidence of nonobviousness that the patentee can proffer, then I’d conclude that claimed invention is obvious.
I started out my career (two decades ago) doing brand-side ANDA litigation. We never led with arguments about commercial success, as we viewed such arguments as largely superfluous. If we even included arguments directed to commercial success, we did so along with at least a half dozen other more persuasive objective indicators of nonobviousness. If you’re leading with commercial success, then you probably don’t have much…and the invention is probably obvious.
“then it may be due to a number of reasons besides the features that distinguish the claimed invention from the prior art.”
That does NOT prove your point.
All that that does is raise some additional rebuttable presumptions.
You are ever so quick to ding the patent holder, and just as quick to miss items of the accused infringer.
“In the case of FDA-regulated products, such as drugs and medical devices, it’s going to be hard to show a clear nexus between the product’s eventual commercial success and its differences from the prior art.”
I do not see why you think this.
“I started out my career (two decades ago) doing brand-side ANDA litigation”
Well, given (as I am well aware) of how S L I M Y Big Pharma is, I might be able to see why your posts come across so h0sti1e to patent holders.
I’m not trying to prove a point. I’m merely stating a fact. Products can be commercially successful for a litany of reasons. Such evidence is only of relevance to an invention’s nonobviousness of it shows a causal nexus between the features that allegedly make it patentable and the evidence of commercial success.
In several litigation matters, I was responsible for fleshing out the commercial success arguments. I never ran with sales revenue alone. I would also supplement that with evidence that foreclosed other reasonable explanations as to why the product may have been successful.
If the best you can do is show annual sales figures, then the PTAB and CAFC were right to discount the evidence as having little relevance to the inquiry.
“That basically makes my point.”
That does NOT prove your point.
“I’m not trying to prove a point.”
¯\_(ツ)_/¯
Altogether, evidence of commercial success is probably the flimsiest of the kinds of objective indicia upon which a patentee may rely… If you’re leading with commercial success, then you probably don’t have much…and the invention is probably obvious.
+1000
Curious if 35 U.S.C. 287(c) was ever argued as as a defense to collecting damages for the medical method claims in this case?
“the patentee only barely argued the dependent claims,”
Yet another case of time-and-cost-pressured lawyering . . . because the client (like so many these days) continuously beats the drum of: “Keep your fees down! Keep your fees down!”
“Or else we’ll give our business to one of the other law firms hungry (er, um, begging) for our business!”
You want to have the best change to win your cases at the PTAB and in the courts?
Then stop cost-pressuring your counsel/s . . . and choosing the lowest cost law firms to handle your business.
Gold lawyering requires gold costs.
can’t agree more…..
I don’t know why if a company is willing to get into litigation, which is expensive, they want to limit their costs. It is an “all-in” situation. All they are doing is hamstringing their chance of success. This reminds me of people who go the the beach but don’t wear a bathing suit, sit under an umbrella, and never go into the water. What’s the point?
This case appears to be a make-or-break patent issue that is directly related to the company success. They have five products on the market. This gel being one of them. link to palettelifesciences.com TI would love to see how their income is impacted from this decision and if I was an investor, I’d be asking why didn’t they go to the mattresses?
…proving yet again that if Newman dissents, the other should just go home.
So instead they’re trying to kick her off the court. Disgusting.
Hence the need to remove Newman from the bench. Much easier for the 11 to collect a paycheck for rubber stamping “Affirmed – Rule 36”.
Ouch.
The very purpose of dependent claims is to set up “fall-back” positions, should it turn out that claim 1 is untenable. If patentee needs to use one of these fall-back positions, the onus is on the patent owner positively to assert that they exhibit a higher level of patentability than claim 1. Where I am, in Europe, absent such assertions, if the independent claim is found by the court to lack validity, then the claims that depend from the invalid claim will also fall. In the USA, either it is the same, or it is different as it is in my experience in Europe. What else is possible?
Here though, it seems to be that the majority saw no need or obligation to consider the validity of the dependent claims whereas Judge Newman did. How can it be, that on this point of law the judges are not “on the same page” still, after decades of deciding such cases?
> Here though, it seems to be that the majority saw no need or
> obligation to consider the validity of the dependent claims
> whereas Judge Newman did. How can it be, that on this
> point of law the judges are not “on the same page” still,
> after decades of deciding such cases?
Because it’s not really a point of patent law here, it’s a point of appellate procedure. Newman is wrong on this one.
The Federal Circuit is merely an appellate court, it does not rule on patent validity in the first instance. Its job is limited to reviewing decisions of tower tribunals for error (in this case the PTAB). And appellate courts like the Federal Circuit generally cannot review issues for error unless those issues were first presented to the lower tribunal.
The patent challenger in this case made a separate showing to the PTAB of invalidity for each dependent claim, but the patent owner never responded to those arguments. It directed its entire defense at the PTAB at the independent claims. By the time the case reached the Federal Circuit, there was nothing to review with respect to the dependent claims once the independent claim issues were resolved, as the patentee had waived any separate arguments directed at the dependent claims.
Super answer, LR. I should have worked all that out for myself. Almost a “no-brainer”. But great to read your succinct and totally satisfying exposition. Thank you.
LR,
Good point. Pardon the question as I have not read this yet, but did the majority make that point? If not, could this fall to the other points that Prof. Crouch raises (fact/legal, and whether a de novo review arises)?
Yes, the panel did make that point. See Decision, page 13 (“Palette, however, identified disclosures in the prior art that teach each of the elements of these [dependent] claims, and Incept did not separately argue their patentability before the Board.”). Because the patentee did not separately argue the dependent claims at the PTAB, according to the panel majority, the patentee didn’t preserve any arguments about them for appeal.
The panel invoked the principle dating back to In re Kaslow, 707 F.2d 1366 (Fed. Cir. 1983), that when a patentee does not separately argue the dependent claims and only argues the independent claims, then both sets of claims stand or fall together with the fate of the independent claims. In the context of an appeal to the Federal Circuit, this is just an application of the principle that arguments not preserved below are waived on appeal.
Thanks LR
Bingo. Judge Newman appears to be stepping in to proffer arguments on the patentee’s behalf that the patentee failed to make. It was the choice of the patentee not to proffer arguments as to the independent validity of the dependent claims and to hang everything on the validity of the independent claim. It’s not the job of the appellate court to speculate as to what the result would have been if the patentee had chosen otherwise.
Add this to the long line of incoherent and disingenuous opinions by Judge Newman.
“Add this to the long line of incoherent and disingenuous opinions by Judge Newman.”
LOL – long line….?
Are you comparing that to the even longer line of incoherent and disingenuous opinions from quite a majority of the other judges?
I did not read the case. The article states that Judge Newman asserted that the challenger’s only issue with commercial success was that the patentee gave away free samples.
Bobby, above, states that it is unclear if the commercial product includes the distinguishing recitations in the dependent claims.
The article states that the Board refused to give any weight to the commercial success for similar reasons.
Treating the weight to be given to evidence of the level of commercial success as a legal issue, even though the level of commercial success is a factual issue, allows the court to dismiss even a high level of commercial success. So, even if the patentee had provided a nexus to the distinguishing recitations in the dependent claims, it would have been futile.
Why should an appellate court undertake an analysis of the validity of the dependent claims when the patentee chose not to proffer such arguments before the PTAB? In this case, the patentee chose to hang everything on the validity of the independent claims. Its disingenuous to blame the PTAB and the panel majority for failing to analyze the independent patentability of the dependent claims when the patentee chose not to proffer such arguments during the underlying proceedings.
Bobby,
Part of my question to LR has to do with De Novo review. While I certainly grasp the concept of lack of preserving an argument, I am not familiar with the details here to assert that such had happened.
> Its disingenuous to blame the PTAB and the panel majority for
> failing to analyze the independent patentability of the dependent
> claims when the patentee chose not to proffer such arguments
> during the underlying proceedings
This is generally true for the Federal Circuit, because they’re an appellate court and can only review issues that were properly preserved.
For the PTAB, though, the rule is a little different.
The patent challenger has an initial burden of showing unpatentability to the PTAB for each challenged claim, including all challenged dependent claims. This means the PTAB has to be satisfied that the challenger has met its burden for the dependent claims that were challenged, even if the patentee chooses not to separately argue for their validity. In this case, the PTAB did just that and found the dependent claims also unpatentable. (And obviously if the patentee makes no separate arguments about the dependent claims, the likelihood is higher that the PTAB will find that the challenger has met its burden on those claims.)
I note that the panel majority appears to have acknowledged, in a lengthy footnote, that the record at the PTAB was a little ambiguous as to whether the arguments the patentee made to the PTAB about the independent claims had some separate applicability to the dependent claims, although the majority didn’t think so. The majority nevertheless hedged their bets and said they agreed with the PTAB’s decision with respect to those dependent claims, even if the patentee’s arguments at the PTAB could have been construed as being separately directed to them.
Thanks for the clarification. Even so, if the petitioner makes a threshold showing of the dependent claims’ unpatentability and the patentee elects not to expound substantively, then it’s reasonable for the PTAB to adopt the petitioner’s view that the additional elements set forth in the dependent claim are indeed obvious.
By Judge Newman’s bizarre reasoning, the PTAB would need to step into the patentee’s shoes and make arguments on the patentee’s behalf, even in instances where the petitioner has mad a threshold showing of obviousness.
At least this one did not come with another uncanny valley AI generated image.
What? You dont like dromedarys?
I must say that claim is clear and concise and well written. Kudos to the patent attorney who wrote it.
Comments are closed.