The Federal Circuit’s Rigid Approach to Secondary Considerations

Patent

by Dennis Crouch

Purdue Pharma has filed a petition for certiorari asking the Supreme Court to review what it characterizes as the Federal Circuit’s overly rigid application of the “nexus” requirement for objective indicia of non-obviousness. I agree with the petition that the Federal Circuit’s approach contradicts the Supreme Court’s longstanding precedent requiring a flexible and expansive analysis of obviousness factors, exemplified both by the court’s 2007 KSR decision as well as older cases, such as Minerals Separation v. Hyde, 242 U.S. 261 (1916).

The patents at issue in the case cover Purdue’s abuse-deterrent formulation of OxyContin, which was developed to address the growing opioid crisis. The patents claim a specific curing method for tablets containing polyethylene oxide (PEO) and oxycodone, where tablets are first “compression shaped” and then “air cured by heated air, without compression” at specific temperatures. This process creates a harder tablet that resists crushing (to prevent snorting) and forms a gel when mixed with liquid (to prevent injection).

Although there is fairly close prior art, Purdue argues that the fourth Graham factor – objective indicia of non-obviousness – pushes the case across the threshold from obvious to nonobvious.  In its decision, the Federal Circuit affirmed the district court’s finding that Purdue’s patents were obvious, despite evidence that Purdue’s reformulated OxyContin addressed a long-felt but unmet need, received FDA approval for abuse-deterrent labeling (the first for any opioid medication), and preserved OxyContin’s commercial viability when no competitor could develop a viable alternative.

The Federal Circuit disregarded this evidence because it found “no nexus between the claimed invention and the commercial success.” The court’s rigid application of the “nexus” requirement demanded a direct connection between specific claim limitations and the objective indicia evidence. For instance, the court dismissed evidence of FDA skepticism as being “about applying the abuse-deterrent label” rather than about specific claim elements.  To be on point, that skepticism would have needed to be inventive itself.

Purdue’s petition argues that this approach conflicts with the Supreme Court’s flexible and common-sense framework for evaluating obviousness. In KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007), the Court rejected the Federal Circuit’s rigid “teaching, suggestion, motivation” test, emphasizing that “[r]igid preventative rules that deny factfinders recourse to common sense . . . are neither necessary under [this Court’s] case law nor consistent with it.”

Notably, while the Federal Circuit applies a flexible approach to analyzing the technical Graham factors (per KSR), allowing “design incentives and other market forces” to supply a motivation to combine prior art references, it applies a far more stringent standard to objective indicia of non-obviousness, requiring that they be a “direct result” of a specific claim limitation.

Minerals Separation: The petition points to the Supreme Court’s decision in Minerals Separation v. Hyde, 242 U.S. 261 (1916), as an example of the Court’s historically flexible approach to evaluating non-obviousness through practical, real-world evidence. In Minerals Separation, the Court considered the validity of a patent for a process of separating metal from ore using oil flotation. Despite claims that the invention merely represented a modification of prior art processes, the Court found the patent valid based largely on practical, market-based considerations.

The Minerals Separation Court recognized that the patented process was “immediately generally accepted” as a great “advance” and had “largely replaced all earlier processes.” The Court found this to be “persuasive evidence” of the inventiveness of the patent. The Court emphasized that the process was “simpler and more economical, and has proved more successful than the flotation processes relied on as anticipations.” This practical, common-sense assessment of the invention’s impact in the marketplace exemplifies the flexible approach to evaluating non-obviousness that Purdue argues the Federal Circuit has abandoned.

Objective Indicia as a Check on Hindsight Bias: A key point of the objective indicia of non-obviousness is that they can serve as a check against hindsight bias in patent cases. As the Court noted in Graham, these indicia “focus attention on economic and motivational” issues that are “more susceptible of judicial treatment” and help prevent courts from “‘slipping into use of hindsight'” when evaluating patents.

The petition argues that this issue has broad implications for the patent system. The obviousness analysis is “the most important and most litigated of the conditions of patentability,” and the Federal Circuit’s approach risks “over-invalidation of patents,” which will “blunt incentives for innovation, depriving the public of critical pharmaceutical advances.”  Although the issue has potential broad implications for the patent system, my analysis has seen fewer and fewer patentees relying upon secondary considerations because of the difficulties of proving nexus.

Although I have some reserves about generally supporting Purdue in this endeavor because of the opioid problem it helped create, I strongly agree with the legal arguments – that the Supreme Court should take steps to clarify its approach to objective indicia of non-obviousness and restore both flexibility and balance.

Former Solicitor General Gregory Garre filed the petition and ultimately argues that the “Federal Circuit’s ‘nexus’ test has swallowed the holistic, common-sense analysis that Graham requires.”