Tag Archives: reasonable expectation of success

Federal Circuit’s Sleepy Obviousness Decision and Vanda’s En Banc Rehearing Petition

Patent,

by Dennis Crouch

Documents: FedCir Vanda Decision; Vanda EnBanc Brief

The Federal Circuit recently sided with the accused infringers Teva and Apotex, affirming the invalidation claims from four Vanda patents covering methods of using tasimelteon to treat circadian rhythm disorders. However, the patent owner has petitioned the court for en banc rehearing, arguing the panel improperly disregarded evidence of nonobviousness.  Responsive briefing from the generics are due on August 1.

This case provides an interesting look at the application of the obviousness standard to pharmaceutical treatment methods.

Background: Vanda Pharmaceuticals owns patents covering use of the drug tasimelteon to treat Non-24-Hour Sleep-Wake Disorder (Non-24), a condition caused by lack of synchronization between a person’s circadian rhythm and the 24-hour day. Tasimelteon is sold under the brand name Hetlioz and has over $100m in annual sales. Several generic drug makers, including Teva and Apotex, filed Abbreviated New Drug Applications (ANDAs) with the FDA seeking to market generic versions of tasimelteon and with allegations. Vanda sued, alleging infringement of four patents that were listed in the Orange Book. RE46604 (Claim 3); US10149829 (Claim 14); US9730910 (Claim 4); US10376487 (Claim 5). The district court found all asserted claims obvious based on prior art teachings about tasimelteon and related drugs. Vanda appealed.

In a May 2023 decision, the Federal Circuit affirmed the invalidity ruling. The panel found no error in the district court’s determination that the prior art would have provided a reasonable expectation of success for the claimed inventions.

Key Aspects of the Federal Circuit’s Obviousness Analysis

The inventions here involved fairly narrow differences, and the Federal Circuit concluded that a PHOSITA would have seen a reasonable expectation of success:

  • Administering without food: There was a motivation to try and a reasonable expectation of success here since FDA guidance recommended food studies, and there are just two potential options (with or without food).  There result here is close to a per-se obviousness ruling.
  • 20 mg dose to “entrain patients”: The prior art disclosed 20 mg dose and suggested entrainment.  Still obvious even though the prior study results (Rajaratnam) were not statistically significant.  In a different patent application, Vanda had characterized Rajaratnam as showing that an oral dose of 20 mg was effective.  The court also noted that an ongoing clinical trial at the time was testing 20 mg — further contributed to the expectation of success.
  • Avoiding Co-administration with CYP enzyme inhibitors: A similar drug (ramelton) had shown problems with co-administration with these CYP enzyme inhibitors, creating a reasonable expectation that tasimelteon would also show similar results. On this point, the testimony was that PHOSITA would not have “ruled out an interaction.”

The key with all of these is reliance on KSR‘s flexible approach and expanded use of the reasonable expectation of success standard.  Although Vanda argued objective indicia, it was given very little consideration by the appellate panel.

Vanda’s Petition for Rehearing En Banc

Vanda’s en banc brief asks three questions:

  1. With or Without Food: Whether method-of-treatment patents directed to the effect of food on a particular drug are per se obvious because of FDA Guidance acknowledging that food may affect the bioavailability of drugs and should be studied.
  2. Clinical Trial as Evidence of Reasonable Expectation of Success: Whether a disclosure showing existence of an ongoing clinical trial is evidence of a reasonable expectation of success as to the result of the trial.  See OSI Pharms v. Apotex (Fed. Cir. 2019) (clinical trial provides only hope, not expectation of success).
  3. Results from Similar Drug: Whether a drug-drug interaction patent is obvious when a POSA could not “rule out” the interaction because another compound in the same general category has shown such an interaction.

The petition urges the full Federal Circuit court to take the case en banc to maintain uniformity of obviousness precedents. I’m sure that companies in the life sciences sector will be closely watching this case as it continues to unfold.

Stay on Target: Proper Obviousness Analysis Requires Focus on Claimed Invention

Patent, ,

by Dennis Crouch

If you break it down far enough, every invention is simply a combination of known materials or steps. In that frame, the obviousness inquiry fundamentally becomes a question of whether the combination of known elements was within the toolkit of an ordinary artisan. This is a flexible analysis (KSR) with the PTO and courts typically looking for a “motivation to combine” the prior art teachings that would have a “reasonable expectation of success.”

The Federal Circuit’s recent decision in Axonics, Inc. v. Medtronic, Inc., No. 2022-1451 (Fed. Cir. July 10, 2023) zeroes in on the motivation-to-combine analysis. In Axonics, the court ruled that the obviousness analysis must focus on the motivation to combine references to reach the claimed invention, not motivation to combine for some other purpose described in the prior art. The basic outcome is that it will prevent overly narrow framing of the motivation inquiry by the PTAB.

Medtronic has two patents that cover medical leads for nerve stimulation. Importantly for the case, although the claims appear broad enough to cover trigeminal nerve stimulation, they are not limited to that type of stimulation. Axonics IPR challenged the claims as obvious based upon two key prior art references: Young and Gerber. The Young patent relates to a lead for stimulating the trigeminal nerve, while the Gerber patent relates to a lead with a plurality of electrodes. Together, the two references taught all of the limitations found in the Medtronic claims. However, the PTAB concluded that an artisan would not have been motivated to combine the references. The PTAB started with Young’s focus on the trigeminal nerve stimulator, and found that the proposed addition of Gerber would fail to work for trigeminal nerve stimulation based on the anatomy of that area.

On appeal, the Federal Circuit found that the PTAB improperly limited the Young-Gerber combination analysis to what would work in the trigeminal-nerve area, which is a requirement of the Medtronic patents’ claims. The proper inquiry should have been whether the relevant artisan would be motivated to make the combination to arrive at the claims’ actual limitations, which are not limited to the trigeminal-nerve context. The Federal Circuit also found that the PTAB erred in its definition of “the relevant art” as limited to medical leads for sacral-nerve stimulation, as the Medtronic patent claims make no reference to sacral anatomy or sacral neuromodulation, and they cannot be properly construed as so limited.

This holding indicates that the PTAB cannot improperly narrow its view of the relevant art based on specification details not reflected in the claims. Rather, the relevant art must align with the scope of the claimed invention. The decision also underscores that the motivation analysis must focus on combining prior art to reach the claimed invention, not suitability for a specific context described in one reference.

I’ll note here that Judge Taranto justifies the decision with a statement about how the patent is not directed to sacral nerfes:

No claim of the two patents either mentions or is limited to sacral nerves. The same is true of the titles of the two patents.

I’ll note here that the rest of the patent is ripe with a focus on sacral nerves.  As an example, the  following comes from the background section:

This invention relates generally to a method and apparatus that allows for stimulation of body tissue, particularly sacral nerves. More specifically, this invention relates to an implantable medical electrical lead having at least one stimulation electrode adapted to be implanted near the sacral nerves for stimulation of a bundle of sacral nerve fibers and a fixation mechanism for providing chronic stability of the stimulation electrode and lead. Moreover, this invention relates to the method of implantation and anchoring of the medical electrical lead electrodes in operative relation to a selected sacral nerve to allow for stimulation.

Id.

On remand, the Board will need to take a fresh look at the Young-Gerber combination. But, it isn’t clear that the result will be obviousness since we still need to know whether someone of skill in the art would have some reason to believe they could to take the trigeminal nerve stimulator disclosed in Young; and combine it with plurality of electrodes disclosed in Gerber to make a non-trigeminal version covered by the claims.

= = =

What is the invention? Traditionally, an invention requires reduction to practice; an actual embodiment.  And, although we have long permitted patent filings as an alternative, the law sees that as merely a constructive stand-in for the real thing.  At the same time, we have all heard the patent law maxim that an invention is defined be the scope of the claims. And, in 2011 the patent laws were finally amended to reflect that paper-focused framework by focusing attention on “the claimed invention” rather than just “the invention.”   The amended law now requires an analysis of the “the differences between the claimed invention and the prior art” and whether “the claimed invention as a whole would have been obvious.”   This was a subtle change, but one that fundamentally shifted focus from the historic framework of an invention that required reduction to practice toward the paper version that defines the invention in terms of what is claimed.

The difficulty for Medtronic in this case is that they took the original invention that focused on sacral nerves and decided to expand out the scope beyond that reach. (The company holds other patents in the family that do focus on sacral nerve stimulation).

Amgen Scores Partial Victory in Efforts to Maintain OTEZLA Exclusivity

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By Chris Holman

Amgen Inc. v. Sandoz Inc., 2023 WL 2994166, — 4th —   (Fed. Cir. Apr. 19, 2023)

In 2019, Amgen acquired worldwide rights to apremilast (OTEZLA) from Celgene $13.4 billion in cash, in connection with Celgene’s merger with Bristol-Myers Squibb. Apremilast was the only oral, non-biologic treatment for psoriasis and psoriatic arthritis, and in 2020 apremilast generated $2.2 billion for Amgen.

At the time Amgen’s acquired apremilast, Celgene was involved in Hatch-Waxman litigation with numerous generic challengers, including Sandoz. Celgene had asserted three of its 11 Orange Book-listed patents against Sandoz, and in 2020 Amgen was substituted as plaintiff.

The primary patent asserted is U. S. Patent 7,427,638, which is directed to pharmaceutical compositions comprising stereochemically pure apremilast. The original expiration date of this patent was in 2024, but the patent received a patent term extension of more than three years, resulting in an effective patent expiration date of February 16, 2028, according to the Orange Book.

Celgene also asserted U. S. Patent 7,893,101, which is directed to enantiomerically pure solid forms (e.g., crystalline polymorphic forms) of apremilast. This patent is due to expire December 9, 2023.

The third patent asserted by Celgene was U. S. Patent 10,092,541, directed to methods for treating a patient using dose titration of apremilast. According to the Orange Book, this patent was set to expire on May 29, 2034.

The district court found the claims of the ‘638 and ‘101 patents to be infringed and not invalid, and enjoined generic apremilast until the expiration of the ‘638 patent in February 2028. On appeal the Federal Circuit affirmed, an outcome that Amgen characterizes as a win.

On the other hand, the district court found the asserted claims of the ‘541 patent to be invalid for obviousness, which reportedly “pleased” Sandoz because the ruling “enables Sandoz to launch [its] generic apremilast product in the U. S. in 2028, six years prior to the expiry date of the latest-expiring Amgen patent asserted in litigation.”  On appeal, the Federal Circuit affirmed with respect to the obviousness of the ‘541 patent.

Here is a brief overview of the court’s decision regarding the asserted obviousness of these patents.

The ‘638 patent claims apremilast, which is the stereochemically pure (+) enantiomer of a compound falls that within a class of molecules referred to as phosphodiesterase-4 (“PDE4”) inhibitors.  Sandoz’s obviousness argument was based primarily upon a prior art Celgene patent, U. S. Patent 6,020,058, which includes an Example 12 that describes a racemic mixture containing apremilast, but that does not disclose the purified (+) enantiomer. The Federal Circuit found that the district court had not erred in holding that Sandoz had not proven that a skilled artisan would have had sufficient motivation to purify the (+) enantiomer from the racemic mixture disclosed in Example 12, nor that a skilled artisan would have had a reasonable expectation of success in resolving that mixture into its enantiomeric components, given the unpredictable nature of resolving racemic mixtures.

The Federal Circuit further found that the district court had not erred in its finding of strong objective indicia of nonobviousness, particularly given the unexpected potency of apremilast relative to the apremilast-containing racemic mixture disclosed in Example 12. The court credited testimony from a Celgene researcher listed as an inventor on the ‘638 patent, who noted a 20-fold difference in potency between apremilast alone and the racemic mixture, and stated that the inventors “didn’t expect a 20-fold difference in potency… Normally, if a racemate is a 50/50 mixture of two enantiomers, you might expect a two-fold difference in potency, all things being equal.” The district court also did not err in determining that apremilast satisfied a long felt need for an improved psoriasis treatment suitable for oral administration, that others in the field had tried and failed to develop other PDE4 inhibitors as drugs, and that there had been a degree of skepticism about the safety of apremilast because of its structural similarity to thalidomide, a drug notorious for its teratogenic effects in fetuses leading to severe and debilitating birth defects.

The issue with respect to the ‘101 patent was whether it could rely upon the filing date of a provisional application to which it claims priority. The ‘101 patent claims crystalline Form B of apremilast, and the provisional application includes an Example 2 which discloses a synthetic procedure for preparing apremilast. Although Example 2 does not explicitly disclose that the resulting apremilast has the Form B crystalline structure, Amgen provided the court with the results of over a dozen experiments following the procedure of Example 2, all of which resulted in crystalline Form B of apremilast, while Sandoz had provided no evidence to establish that Example 2 was capable of producing a crystalline Form other than Form B. Although the district court had based its holding on its conclusion that the provisional application inherently disclose crystalline Form B of apremilast, the Federal Circuit found that it did not need to reach the issue of inherent disclosure because the evidence established that Example 2 actually disclosed crystalline Form B of apremilast, albeit without specifically disclosing the crystal structure of the resulting product.

The ‘541 patent claimed a method of treating a patient with apremilast that basically involves starting with a relatively low dose and, over a course of days, gradually increasing the dosage to arrive at a full dosage which is significantly higher than the initial dosage, i.e., a dose-titration schedule. The court found this to be an obvious method, in view of prior art disclosing a similar dosage schedule. The Federal Circuit observed that, as a general matter, varying doses in response to the occurrence of side effects is well-known and obvious to the skilled artisan.

Federal Circuit: Software Function Equals Structure

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by Dennis Crouch

KEYnetik, Inc. v. Samsung Electronics Co. (Fed. Cir. 2023)

This short non-precedential opinion authored by Chief Judge Moore affirms a PTAB IPR obviousness finding.  The case has one key sentence:

Normally, once the function to be performed by software has been identified, writing code to achieve that function is within the skill of the art.

Slip Op.  This statement sits well with modernist design principles aptly stated by architect Louis Sullivan: “Form ever follows function.”

The patent challenger had provided expert testimony that software modifications needed to transform the prior art into the claimed invention would be “straightforward” and “simple.”  Those statements were not backed-up with specific analysis showing exactly how the modifications would be done.  However, the Federal Circuit concluded that these general conclusions combined with the implied judicial notice from above were sufficient to support the PTAB’s factual finding that PHOSITA would have “a reasonable expectation of success” in making the transformation.

Going back to the function-equals-structure statement from above: The court does not explain or particularly justify its factual conclusion other than to cite  its own 1997 decision of Fonar Corp. v. Gen. Elec. Co., 107 F.3d 1543, 1549 (Fed. Cir. 1997).  Fonar Corp. did not deal with obviousness, but instead was an appeal on the issue of best-mode disclosure under Section 112.   The patentee had provided functions of the software in its disclosure but had not provided the computer code itself.  On appeal, the Federal Circuit found that disclosure of the functionality was sufficient to satisfy best mode:

As a general rule, where software constitutes part of a best mode of carrying out an invention, description of such a best mode is satisfied by a disclosure of the functions of the software. This is because, normally, writing code for such software is within the skill of the art, not requiring undue experimentation, once its functions have been disclosed. It is well established that what is within the skill of the art need not be disclosed to satisfy the best mode requirement as long as that mode is described. Stating the functions of the best mode software satisfies that description test. We have so held previously and we so hold today.

Id.  The Federal Circuit did not endeavor to work through its Section 112(f) jurisprudence where it has repeatedly held that disclosure of function is insufficient to satisfy the ‘structure’ requirements of that provision.

Reasonable Expectation of Success as the Post-KSR Nonobviousness Hook

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Tris Pharma v. Actavis Labs (Fed. Cir. 2022) (non-precedential opinion)

One quirk of the Patent Act is Section 271(e), which creates infringement liability for simply seeking FDA approval to market a generic version of an already approved drug. 35 USC 271(e).  Here, Actavis filed an Abbreviated New Drug Application (ANDA) seeking FDA approval to market a “liquid methylphenidate (MPH) oral suspension.”  This is the same drug found in Ritalin and used to treat ADHD and other neurological concerns.  This particular formulation is in liquid form and the active ingredient is designed for slow release. (Tris sells under the brand “Quillivant XR”).  Tris responded to the Actavis ANDA by suing under 271(e) and asserting three separate patents.

271(e) actions are seen as a form of declaratory action similar to those taken by courts of equity prior to the merger of law and equity.  As such, there is no Constitutional right to a jury trial in these cases and instead all issues of fact and law are typically determined by a federal district court judge.

The usual jury verdict just requires the ticking of an [X] invalidity box. Likewise, the Federal Circuit regularly decides its cases with by ticking the [X] affirmed without opinion box.  The trick with bench trials though, is that the judge is required to explain its factual and legal conclusions.  Fed. R. Civ. Pro. 52(a).

In an action tried on the facts without a jury or with an advisory jury, the court must find the facts specially and state its conclusions of law separately.

Id.  Here, Judge Connolly (D.Del.) held a bench trial and original sided with the generic manufacturer–finding the asserted claims obvious.  That original decision though was vacated by the Federal Circuit back in 2018 (the also panel slightly amended its decision in a 2019 rehearing order). In its decision, the Federal Circuit found that the district court had failed to explicitly and specifically consider a number of factual disputes and thus remanded for further findings:

[T]he district court failed to make the necessary factual findings and provide sufficient analysis of the parties’ arguments to permit effective appellate review. Specifically, the district court’s opinion merely recites the parties’ arguments but fails to explain or identify which arguments it credits or rejects. We thus cannot reach the merits of whether the Quillivant XR® formulation would have been obvious over the prior art. Rather, we identify gaps in the district court’s opinion and remand for the district court to conduct further factfindings and detailed analysis consistent with this opinion.

Tris Pharma, Inc. v. Actavis Lab’ys FL, Inc., 755 F. App’x 983 (Fed. Cir. 2018) (Tris I).

On remand, the district court accepted further briefing on the merits and then flipped the outcome–this time siding with the patentee.  In particular, the district court held that “Actavis failed to prove by clear and convincing evidence that a person of ordinary skill in the art would have been motivated to combine the prior art references with a reasonable expectation of success.”  On appeal here, the Federal Circuit has affirmed.

Claim 1 of Tris Pharma’s U.S. Patent Nos. 8,465,765 reads as follows:

1. A methylphenidate aqueous extended release oral suspension comprising (1) an immediate release methylphenidate component, (2) a sustained release methylphenidate component, and (3) water, said suspension having a pH of about 3.5 to about 5,

wherein said suspension provides a single mean average plasma concentration peak and a therapeutically effective plasma profile for about 12 hours for methylphenidate, and

wherein the suspension has a pharmacokinetic profile in which the single mean plasma concentration peak for methylphenidate has

  • an area under the curve (AUC)0->∞ of about 114 to about 180 ng-hr/mL,
  • Cmax of about 11 to about 17 ng/mL,
  • Tmax of about 4 to about 5.25 hours, and
  • T1/2 of about 5 to about 7 hours

following a single oral administration of said suspension at a dose equivalent to 60 mg racemic methylphenidate HCl in adults.

By the time Tris filed its patent application, several other methylphenidate oral formulations & extended release versions were already on the market, including Concerta, Daytrana, Focalin XR, Metadate CD, and Ritalin LA. As with most obviousness cases, the prior art taught all the claim limitations in various subsets, but no single reference disclosed an embodiment with all the limitations.  And, the Federal Circuit agreed with the district court that the patent challenger had failed to show that PHOSITA would have a reasonable expectation of success when attempting to make any of the proffered combinations.

Without delving into the merits here, I only want to note the court’s focus on motivation-to-combine that is now regularly coupled with the requirement that the combination be based upon a “reasonable expectation of success.”   The Federal Circuit (as well as lower courts and the USPTO) have increasingly used the “reasonable expectation of success” as a prong in the obviousness analysis.   The chart below shows the number of Precedential Federal Circuit decisions that discuss a the Reasonable Expectation of Success test as part in the context of an Obviousness determination. As you can see, there was a substantial rise in its use beginning in 2006 during the lead-up to KSR (2007).

I’ll note also that this appears to be a case where forcing the tribunal to fully explain its decision ended up shifting the ultimate result.

Obviousness: Ranges and Substitutions

Patent,

by Dennis Crouch

Almirall, LLC v. Amneal Pharmas LLC (Fed. Cir. 2022)

The court here affirms a PTAB conclusion cancelling claims 1-8 of Almirall’s U.S. Patent 9,517,219 as obvious.  The patent claims a method of treating acne/rosacea using a particular formulation:

  • Active Ingredient: about 7.5% dapsone;
  • Solvent: about 30% to about 40% diethylene glycol monoethyl ether;
  • Gelling Agent: about 2% to about 6% of A/SA; and
  • water;

[note – I edited these for compactness]. The claim also indicates that the composition “does not comprise adapalene.”  This concentration of the active ingredient was already known, the idea behind the invention here was to have a product that works well, that customers like, and that has a long shelf life. Thus, the figure submitted to the PTO shows shelf-life:

The prior art includes the commercial product (Aczone) that includes 7.5% dapsone and no adapalene. For the IPR, the PTAB looked at a patent application publication (Garrett) that described the Aczone product in detail.  Garret taught a different gelling agent — Carbopol rather than A/SA as required in the patent.  A different reference (Nadau-Fourcade) taught the use of A/SA agents in roughly the same concentration range for use in acne/rosacea products.  The Board found the combination appropriate and concluded that the claims were invalid.

Presumption of Obviousness: On appeal, the patentee argued that the Board improperly presumed obviousness based upon overlapping ranges. The basic argument is that A/SA was brought from a different reference and there should not be a presumption that its concentration would obviously be the same in the new combination.  On appeal, however, the Federal Circuit affirmed the Board’s ruling — finding that the presumption was appropriate here because the evidence proved similarity between carbomers (disclosed in Garret) and A/SA agents (substituted from Nadau-Fourcade)

The Board also credited expert testimony that a person of ordinary skill in the art
would have been able to immediately appreciate that the carbomers and A/SA agents at issue perform the same function and are interchangeable. Moreover, there was no evidence that A/SA agents would have different interactions with the other ingredients of the compositions relative to carbomer. Indeed, the Board credited expert testimony that a skilled artisan “would not have expected any incompatibilities in substituting” the gelling agents.

It was this close similarity in the substitution that allowed the range disclosures to create a presumption of obviousness.   In its decision, the court also notes that the stated presumption-of-obviousness is not any kind of burden shifting. Rather, it is simply shorthand for the proposition that overlapping ranges in the prior art justify a factfinder in concluding that the claimed range was  known in the art.  The patentee is free to provide evidence showing why its particular range is meaningful and thus non-obvious in the face of a similar disclosure range in the prior art.

Negative Limitation: The claims expressly exclude adapalene from the formulation. “[W]herein the … composition does not comprise adapalene.”  The key prior art reference (Garrett) does not even mention adapalene, and so, according to the patentee, we are left wondering whether Garrett might include the substance.  The Board rejected that argument as did the Federal Circuit.  In particular, the court restated its prior precedent that negative limitations need not be expressly stated in the prior art.  “[A] reference need not state a feature’s absence in order to disclose a negative limitation.” AC Techs., S.A. v. Amazon.com, Inc., 912 F.3d 1358 (Fed. Cir. 2019).

Reasonable Expectation of Success: Finally, the Court found that the Board had properly identified reasons to combine the references.  In particular, the patent challenger provided evidence that gelling compounds were effective and compatible substitutes. As such, the substitution of A/SA was a “predictable design choice.”  This falls within the Supreme Court’s guidance from KSR: “when a patent claims a structure already known in the prior art that is altered by the mere substitution of one element for another known in the field, the combination must do more than yield a predictable result.”

The court also places substantial weight on whether the substitution would have “a reasonable expectation of success.”  Here, though, expert testimony was provided regarding their interchangeability.  Further, [a] finding of a reasonable expectation of success does not require absolute predictability of success.”

 

Patent Law’s Fifth Column: Motivation to Combine with Reasonable Expectation to Success

Patent,

by Dennis Crouch

Apotex Inc. v. Cephalon, Inc. (Supreme Court 2022)

In its petition for writ of certiorari, Apotex asks the Supreme Court to revisit motivation to combine,  obvious to try and whether the non-obvious contribution needs to be an improvement over the prior art.   The petition argues that KSR v. Teleflex (2007) requires a flexible analysis, but that “over the ensuing decade-and-a-half, the Federal Circuit has … reverted to its old rigid ways.”  The petition also complains that the Federal Circuit has again masked its jurisprudence via Summary Affirmance without opinion.

The accused infringers here were seeking to market a drug treatment for chronic lymphocytic leukemia covered by several Cephalon patents and sold as Bendeka.  The defendants challenged the patent claims as obvious, but the district court sided with the patentee — finding a lack of motivation to combine the references with a reasonable expectation of success.  This test has become the sina non quo of post-KSR Federal Circuit obviousness decisions.  See, for example, Accorda Therap. v. Roxane Labs., 903 F.3d 1310 1328 (Fed. Cir. 2018) (“motivation to modify or combine with a reasonable expectation of success”);  In re Stepan, 868 F.3d 1342, 1345-46 (Fed. Cir. 2017) (“requires finding both that a skilled artisan would have been motivated to combine the teachings of the prior art … and that the skilled artisan would have had a reasonable expectation of success in doing so.”), etc. Apotex’s petition explains this as follows:

[T]he Federal Circuit seems to believe that if there is any uncertainty about whether an obvious-to-try approach will succeed, that potentially compromises the motivation to try an obvious solution to a pressing problem, and therefore produces patent monopolies for what is obvious to try. Indeed, so ingrained has the motive-to-try-what-is-likely-to-succeed test now become in the Federal Circuit’s obviousness psyche, that the Federal Circuit now sometimes includes motivation as a fifth Graham factor.

I also write about this same issue in the Federal Circuit’s recent decision in Teva v. Corcept (Fed. Cir. 2021). Cephalon’s response is due in about 2 weeks.

Federal Circuit Draws a Hard Line Against “Obvious to Try” Analysis

 

Federal Circuit Draws a Hard Line Against “Obvious to Try” Analysis

Patent,

by Dennis Crouch

Teva Pharmaceuticals, LLC  v. Corcept Therapeutics, Inc., Dockt No. 21-1360 (Fed. Cir. 2021)

This is an interesting pro-pharma obviousness decision coming out of the PTAB regarding obviousness of particular drug dosages.  Here, the particular drug was known to work well, but there were concerns about drug safety.  And, there were a couple of particular tests that clearly would have been obvious to try.  In fact, the patentee was legally required by the FDA to conduct the tests in order to ensure drug safety.  Still, the outcome of the tests were not predictable. Nobody knew whether the particular dosage being was going to turn out to be “safe.” (Here “safe” is interpreted as having “an acceptable risk-benefit profile.”)  The patentee ran the tests, found the dosage to be safe, and then patented a method of administering that safe-dosage to patients.  Teva challenged the patent, but the PTAB and the Federal Circuit both sided with the patentee. They held that the unpredictable outcome of the test meant that the outcome was not obvious since there was no “reasonable expectation of success.”

I expect that the Supreme Court would reject the hard line drawn in this case in the same way that it rejected the TSM requirement in KSR v. Teleflex.  I.e., obviousness is a flexible, open analysis asking “is there an invention here?”  Former Kennedy clerk J.C. Rozendaal handled the appeal for Teva, and so I won’t be surprised to see a petition for writ of certiorari in 2022.

The rest of the story: Corcept’s patent covers a method of treatment of some Cushing’s syndrome  symptoms with the drugs mifepristone and ketoconazole (a “strong CYP3A4 inhibitor”).  U.S. Patent No. 10,195,214.  The basic problem is that these two drugs can interact in problematic ways, and the patent calls for a reduced dose of mifepristone when being taken alongside ketoconazole.  When taken alone, mifepristone is prescribed in dosages of up to 1,200 mg per day; but when taken with ketoconazole, the patent calls for reduction of down to 600 mg per day.

The prior art all comes from earlier interaction between Corcept and the FDA.  Initially, Corcept filed a New Drug Application (NDA) seeking to market mifepristone in dosages of 300, 600, 900, and 1,200 mg per day.  The FDA gave its approval, but suspected interaction with ketoconazole.  That suspicion led to the two key prior art references:

  1. The Korlym Label: The FDA-approved label for Corcept’s original drug product Korlym allowed for dosage of mifepristone at 300, 600, 900, or 1,200 mg increments and also offered a warning against co-administration with a strong CYP3A.  In particular it limited the “mifepristone dose to 300 mg per day when used with strong CYP3A inhibitors.”  Thus, an easy reading of the label seems to be a strong suggestion that dosages of 600, 900, or 1,200 might be problematic.  This label also appears to totally anticipate a dose of 300 mg when taken along with a strong CYP3A inhibitor.
  2. The FDA Suggestion (“Lee”): The FDA also suggested the possibility of interaction between CYP3A and mifepristone and required Corcepts to study that interaction.

When I think about these two references, I see a strong suggestion of an interaction between the drugs, and also a strong motivation to look into that interaction. In fact, the first two research questions implicitly demanded by the prior art is (1) whether a 300 mg dose interacts with CYP3A and (2) whether a 600 mg dose interacts with CYP3A.  Yet, while the two references expressly call for research, the references do not suggest the outcome of the 600 mg test.  If anything, the original label suggested that 600 mg dose would be a problematic — since the FDA limited dosage to only 300 mg if also taking the other drug.

The PTAB followed these lines of analysis and eventually concluded that the references failed to prove obviousness.  In particular, the Board hung its hat on “reasonable expectation of success” — finding that the references did not suggest that 600 mg would be a safe dosage.

On appeal, the Federal Circuit has affirmed — holding that invalidating the claim would require proof of “a reasonable expectation of success in achieving the specific invention claimed, a 600 mg dosage.”

Because there was no expectation of success for any dosage over 300 mg per day, there was no expectation of success for the specific 600 mg per day dosage.

Slip Op.  Affirmed.

Note – Mifepristone is new name for the drug RU-486.

Guest Post by Prof. Dmitry Karshtedt: Nonobviousness and Time

Patent,

Dmitry Karshtedt is an Associate Professor of Law at GW Law whose work I’ve followed for years.  Below he introduces the core idea underlying his new article on nonobviousness forthcoming in the Iowa Law Review.  -Jason

Nonobviousness and Time
Dmitry Karshtedt

Over the years, courts and commentators have said many thoughtful things about secondary considerations evidence and its role in the law of § 103, and reasonable minds have expressed significant disagreement about the value of this evidence. Consider, for example, the Federal Circuit’s fractured en banc Apple v. Samsung decision in 2016 and the never-ending debate over whether secondary considerations are best treated as rebuttal evidence to a prima facie case of obviousness based on the prior art, or whether all obviousness evidence should be analyzed holistically and at once.

My take is different: the whole primary/secondary categorization is unhelpful, especially in litigation and during post-issuance PTAB review. Let’s take one illustration. Commercial success and the skepticism of experts are both classified as “secondary considerations,” while teaching away is usually considered to be a part of the primary inquiry. However, skepticism has much more in common with teaching away, which directly tells us that the claimed invention would have been challenging to come up with, than with commercial success, which represents a market response to the invention that may indicate nonobviousness only indirectly. So what is the point of these evidentiary silos?

My answer is that there is no point. In Nonobviousness: Before and After, forthcoming in Iowa Law Review, I examine the different types of evidence used in the obviousness analysis and conclude that the primary/secondary framework does not make sense or have a strong precedential basis. The framework comes from throwaway language in Graham v. John Deere, in which the Supreme Court was grasping for some kind of a label for non-prior art evidence in § 103 cases. It has no grounding in established pre-Graham obviousness (and “invention”) precedent—which, for example, repeatedly supported the proposition that evidence like failure of others can be highly probative of validity. And it is inconsistent with KSR v. Teleflex, which sang a veritable paean to non-prior art evidence (e.g., market pressure and design need) in rejecting the Federal Circuit’s “blinkered focus on individual documents”—as the court acknowledged in one post-KSR opinion. Yet despite its lack of a coherent normative or precedential basis, classification as primary or secondary is well-entrenched and matters a lot in practice because the label can lead to arbitrary bolstering or discounting of certain evidence. On the one hand, the “secondary” scarlet letter can lead courts to ignore good evidence like failure of others, harming the patentee’s case. On the other hand, a boost from the “primary” label can sometimes cause courts to overvalue evidence like unexpected results in favor of the patentee.

I propose a better approach to structuring § 103 analysis based on the timing of the evidence. Under my approach, the filing date provides a useful default dividing line between different kinds of obviousness evidence: rather than categorizing obviousness evidence as primary or secondary, we should instead view the evidence as ex ante or ex post. With this framing, we can see precisely why skepticism has more in common with teaching away than with commercial success: skepticism and teaching away reflect the pre-filing state of the art and thus speak directly to a PHOSITA’s lack of motivation or reasonable expectation of success to pursue the invention at issue, while commercial success is (usually) a post-filing response to the invention and thus constitutes only indirect evidence of nonobviousness. The readers of this blog are very familiar with the concept of nexus—in the sense that a proponent of objective indicia evidence must establish a link between that evidence and the technical merit of the invention as claimed.  My article’s proposal extends this concept to timing in that the party relying on ex post evidence must demonstrate a connection between that evidence and the elements of motivation and reasonable expectation of success at the time of filing. With ex ante evidence, however, temporal nexus is not an issue.

In my scheme, commercial success has more in common with evidence like copying or licensing than with the skepticism of experts and failure of others, which is classic ex ante evidence. And unexpected results, which the Federal Circuit has had great trouble fitting into Graham’s silos (some cases characterize that evidence as primary while others, as secondary), are instead divided into ex ante and ex post unexpected results.  As I show in the article, there is (pre-Graham) Supreme Court precedent supporting this general scheme and even some modern cases sometimes (almost) get it right. However, there is too much confusion in the case law to sustain a consistent approach, suggesting the need for an explicit adoption of the proposed ex ante/ex post framework. The tables below illustrate the key moves (indicated in italics), and the article explains why the proposed scheme will help decision-makers determine the relevance and weight of various nonobviousness evidence with greater accuracy.

 

Table 1. Graham’s Primary-Secondary Framework

Primary Evidence Secondary Evidence
Content of the prior art and the differences between it and the claimed invention  

Commercial success
Prior art teachings “toward” or “away” from the claimed invention  

Failure of others
Comparison of the properties of the claimed invention with those of the prior art, including unexpected results (?)[1]  

Long-felt need
Expert skepticism
Copying of the claimed invention, licensing, and other forms of industry acquiescence
Industry praise (or disbelief)
Simultaneous invention
Unexpected results (?)

 

 

Table 2. Proposed Time-Based Scheme

Ex ante evidence
(relating to state of the art facing a PHOSITA at time of filing)		 Ex post evidence
(in reaction to or during further development of the invention)
 

Content of the prior art and the differences between it and the claimed invention

  

Commercial success
Prior art teachings “toward” or away” from the claimed invention, as well as market pressure and design need Copying of the claimed invention, licensing, and other forms of industry acquiescence
Comparison of the properties of the prior art with those of the claimed invention, including unexpected results, if discovered before filing Comparison of the properties of the prior art with those of the claimed invention, including unexpected results, if discovered after filing
Failure of others Industry praise (or disbelief)
Long-felt need
Expert skepticism
Simultaneous invention

        [1].     Question marks next to “unexpected results” reflect their inconsistent classification

Read the draft article here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3820851

Guest Post by Alan Cox: The Damages Testimony in VLSI Technologies v. Intel

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Alan Cox is an economist with over thirty years’ experience testifying in Antitrust and Intellectual Property matters. He holds a Ph.D. in Economic Analysis and Policy from the Haas School of Business at the University of California at Berkeley.  He is an Affiliated Consultant at NERA Economic Consulting.  In this guest post he provides his observations of the damages testimony in VLSI Technologies v. Intel. As noted in the letter from Professor Chao that Dennis posted earlier, key filings in this case are not publicly accessible (nor are the transcripts). – Jason

Introduction

VLSI Technologies sued Intel for the alleged infringement of several patents.  At trial VLSI asserted two patents: 7,523,373 (“the ‘373 Patent”), and 7,725,759 (“the ‘759 Patent”).  VLSI asserted that the technology described in these patents was incorporated into 987 million Intel microprocessors of various models.  On March 2, a jury in the Western District of Texas awarded VLSI $2.18 billion in damages for Intel’s pre-trial use of the patents.

The court allowed the public to listen to public portions of the trial by telephone.  This article describes aspects of the testimony and attorney statements on damages as logged in contemporaneous notes.

The damages testimony in this trial is interesting for several reasons, including Plaintiff’s presentation of a regression analysis as the basis of its damages claim.  Regression analysis is a sophisticated quantitative technique that is widely used in the academic literature, in making business decisions and in many areas of litigation, though it is seldom presented in patent trials.  The data necessary to undertake regression analysis is generally unavailable in patent matters.  As is often the case in the application of complicated statistical methods, the results can vary with inputs, underlying assumptions, data availability and other factors.  While Intel did address possible problems or partiality in the application of the methodology, the defendant’s core attack on the regression analysis was its repeated assertion that the method has never been undertaken in the real-world process of licensing patents.

By way of additional background, it appears that ownership of the patents had changed hands at least twice as the result either of mergers or as part of a sale of the patents themselves, including the sale to VLSI.  These transactions indicated a much lower value for the patents than was claimed by VLSI and awarded by the jury.  The patented technology had been originally assigned to Freescale, an integrated circuit manufacturer spun off from Motorola, later purchased by another semiconductor manufacturer, NXP.  Freescale was the owner of the patents at the time that Intel first allegedly infringed them.  Finally, as Intel pointed out at trial, VLSI is a non-practicing entity that undertakes no research nor production and has two employees.

VLSI’s Regression Analysis

A regression is a statistical analysis that is used to estimate the impact of several variables on another variable.  One use of the method, hedonic regression, measures the impact of product attributes on the price of that product.  For example, hedonic regressions have been used to determine how prices of automobiles vary with changes in horsepower, gas mileage, brand, and other attributes.  Hedonic regressions provide ratios that measure the amount by which prices will change with a change in one of these attributes.  For example, such a ratio may be the percentage by which the price of a car increases with a percentage increase in horsepower.

In this case, VLSI’s affirmative damages case was presented by a Ph.D. economist, Ryan Sullivan.  He applied regression analysis to estimate the impact of different attributes of Intel microprocessors on the price of those microprocessors.  Most important was his estimate of the response of price to changes in microprocessor speed.  His regression result indicated that a one percent increase in microprocessor speed increased the price of an Intel microprocessor by 0.764 percent, holding all other attributes of the microprocessor constant.

There was little discussion of the regression analysis at trial since VLSI clearly wanted to focus on demonstrating how the regression resulted in a large damage number and Intel did little to challenge the implementation of the methodology.  In cross examining Dr. Sullivan, Intel’s attorneys did, however, challenge VLSI’s expert about his inclusion of some potential explanatory variables and the exclusion of others.  Some of VLSI’s expert’s responses indicated that Intel may have had some effective points of attack of VLSI’s implementation of the regression methodology had it chosen to pursue them.

Calculating Damages from Regression Results

Next, VLSI’s damages expert used his regression results to calculate the total value that Intel purportedly received for the use of the two patents.  For this he relied on VLSI’s technical experts who had testified that the ‘373 patent decreased microprocessor power consumption by 5.45 percent and that the ‘759 patent increased microprocessor performance by 1.11 percent.  He also relied on a crucial assertion by VLSI’s technology experts that a one percent improvement in power consumption or a one percent increase in performance could be “valued as” a one percent increase in speed.  Using those asserted equivalencies in the value of microprocessor speed, power consumption and performance, VLSI’s damages expert calculated the value of the benefit of the patented technology by multiplying these percentage improvements in power consumption and performance by the percentage increases in price attributable to increases in speed.  Finally, he multiplied the resulting percentage increase in revenue by the total revenue that Intel had earned on the accused products.

This calculation can be restated concisely in summary mathematical form.  VLSI’s damages expert undertook the following calculations:

Intel’s Increase in Revenue due to its use of the ’373 Patent =

Price-Speed Ratio X % Reduced Power Use X $Accused Product Sales =

0.764 X 5.45% X $Accused Product Sales

 

Intel’s Increase in Revenue due to its use of the ’759 Patent =

Price-Speed Ratio X % Increased Performance X $Accused Product Sales =

0.764 X 1.11% X $Accused Product Sales

VLSI’s damages expert testified that there would be no increase in direct manufacturing costs from utilizing the patented technology and only a very small increase in selling and marketing costs.  Since there were no incremental costs to subtract from the additional revenue allegedly earned from using the patented technology, the increase in profits was equal to the claimed increase in revenues.

The Outcome of the Hypothetical Negotiation

The next step was to determine how Intel and VLSI would share these benefits in a hypothetical negotiation, the fictional event that takes place on the eve of first infringement during which the litigants are imagined to reach agreement on a royalty.  It is often customary to discuss the negotiating process over the sharing of benefits as being shaped by the relative bargaining power of the parties at the hypothetical negotiation.  VLSI’s damages expert instead undertook an unusual calculation.  He first calculated what he claimed was Intel’s contribution to the commercial success of its microprocessors.  He then subtracted the amount of Intel’s contribution from his estimate of Intel’s increase in profits due to its use of VLSI’s patents.

To implement this division, VLSI’s damages expert started by claiming that Intel’s contribution to its success in generating the patent-related additional profit could be measured as the sum of certain costs divided by its total revenue.  The reasoning that justified this approach was that these costs were incurred in the development and marketing of Intel chips.  More specifically, he took the sum of Intel’s Selling and Marketing Costs (S&M); its General and Administrative Costs (G&A); and its Research and Development Costs (R&D) and then divided that sum by Intel’s total revenue.  That is:

Intel’s Proportional Contribution = (S&M + G&A + R&D) / Intel’s Total Revenue

The result, 20.7 percent, was deemed to be Intel’s share of the estimated increase in profits that it earned from incorporating the patented technology into its microprocessors.  The remaining 79.3 percent was, therefore, attributable to VLSI.

The asserted outcome of the hypothetical negotiation was then simply the result of multiplying 79.3 percent by the increase in Intel profits, described above.  VLSI’s damages expert estimated the amount of money that a reasonable royalty would have generated before trial, a figure presumably close to the over $2 billion awarded by the jury.  VLSI’s damages expert claimed that Intel would have been willing to pay such a royalty because it faced strong competition and needed the competitive edge that the patented technology provided to maintain its market position.

The presentation of damages as a single payment for past infringement did create a potential problem for VLSI.  During the trial, Intel asserted that VLSI’s expert had not presented a per unit royalty in his pre-trial disclosure and should not be allowed to present a per unit royalty in court.  A ruling in Intel’s favor may have made future royalties unavailable.  As it happened the court ruled in VLSI’s favor on this point.

VLSI’s Anticipation of Defendant’s Critiques

In its direct testimony on damages, VLSI addressed several additional critiques that had been raised by Intel in pretrial filings, reports or deposition testimony.  First, VLSI’s damages expert was asked in his direct testimony about Intel’s claim that VLSI and its experts had not identified any comparable real-world licenses that resulted in payments as high as those that he was claiming to be reasonable; that is, in the hundreds of millions or billions of dollars.  They also asked him about the much lower patent values implied from the purchase of Freescale and the sale of the patents to VLSI, mentioned above.

VLSI’s damages expert responded that none of those real-world licenses and sales were analogous to the hypothetical license in this case.  He asserted that licensors in real-world licensing negotiations do not have comprehensive knowledge of the importance of the patents that are under negotiation.  Similarly, purchasers of the ‘373 and the ‘759 patents would not have known of the value of the patents to Intel or even the extent of the use of the patented technologies.  Any of the earlier transactions involving the patents would not, he claimed, have incorporated Intel’s expectations and experience of the benefits of using the technology.  VLSI frequently claimed through this and other witnesses that only Intel would have understood the value of the patented technology that it was exploiting.

VLSI’s damages expert characterized the hypothetical negotiation, by contrast, as one in which both side’s “cards were facing up.”   Consequently, the licensor, Freescale, would have been fully informed of everything that Intel knew about the usefulness and value of the licensor’s technology.  VLSI appeared to claim that the information that was available to Freescale in the up-facing cards included information about sales, profits and other outcomes after the date of the hypothetical negotiation.  VLSI’s damages expert indicated that the royalty rates found in Intel’s purported real-world comparable licenses were analogous to what Tom Brady was paid as a rookie before he had demonstrated his abilities as a quarterback in a professional football league.  According to VLSI, what was relevant at the time of the hypothetical negotiation was equivalent to what Tom Brady was paid during the peak of his career, not on what was known about him before his rookie year.  The use of the analogy appears to indicate that VLSI viewed the hypothetical negotiation as being informed by events and outcomes that took place after Intel’s earliest infringement, sometimes rationalized by reference to the “Book of Wisdom.”

He was also asked about the evidence that the technology was not used by any other company other than Intel, not even by Freescale and NXP, the semiconductor manufacturers who had previously owned the patents.  He described that point as merely a “red herring” since use by the patent owner was not the only determinant of the value of the patents.  As a basis for this point, he cited the Georgia-Pacific factors that call for consideration of the extent to which the infringer has made profitable use of the invention.

Damages-Related Testimony from Other VLSI Witnesses

Before the Plaintiff’s damages expert was called, a VLSI technical witness presented the results of a “patent scoring” exercise undertaken by Innography, an IP management firm.  According to Innography’s scoring, the two patents at trial were in the top 10 percent of patent value.  VLSI’s introduction of this result may contradict its key point that only Intel had sufficient information to have some understanding of the value of the technology since Innography could presumably only make such a claim from public data.

Defense Response on Damages

Intel had apparently provided expert reports on damages from at least three expert witnesses.  These included: a Professor of Operations, Information, and Decisions at Wharton with a Ph.D. in Management from MIT; a CPA with extensive experience as an IP damages expert; and an electrical engineer with 20 years of experience as a licensing executive with IBM.  VLSI moved to have the CPA’s “cumulative” opinions excluded as being redundant and “an improper attempt to bolster” the opinions of Intel’s other damages experts.  Whatever the court’s ruling on this and other motions to exclude, Intel called only the former licensing executive, Hanc Huston, to rebut VLSI’s damages expert.

Most of Intel’s damages testimony was not available on the public telephone feed because it involved confidential information primarily related to the comparable licenses that he had identified.  Intel’s damages expert brought up the point that the patented technology had not been used by any of the assignees of the patents and that VLSI had not identified anyone else who had used the technology.  He asserted that, in his experience, such lack of use of a patent was indicative of its low value and would have driven down the royalty paid on a licensed patent.  He also testified that he had never heard of hedonic regression being used in patent licensing negotiations.

He also disagreed with VLSI’s assertion that only Intel had the information necessary to comprehend the extremely high value of the patented technology.  He pointed out that the patent itself was public knowledge and that VLSI and others could have reverse engineered Intel to understand the extent that its technology was being used.

After discussing 18 licenses that he had determined were comparable, VLSI’s damages expert concluded that a reasonable royalty for Intel’s use of the technology described in the two patents totaled $2.2 million.

On cross-examination, Intel’s damages expert was asked about a policy at IBM to license patents for a one percent royalty per patent up to a maximum royalty of five percent.  VLSI pointed out, in cross and in closing, that a one percent per patent royalty was more than the amount that VLSI was asking in damages.  He was also asked about specific licenses and settlements between IBM that involved payments in the hundreds of millions of dollars.

The Testimony of VLSI’s Rebuttal Damages Expert

The final witness on damages was Mark Chandler, the president of another IP management firm, who was called to rebut Intel’s damages testimony.  He criticized Intel’s damages expert as relying on the “indirect evidence” of royalty rates from purportedly comparable licenses as opposed to the evidence of Intel’s success with the accused products.  He also repeated the claim made by VLSI’s affirmative damages expert that none of the previous transactions were indicative of the outcome of the hypothetical negotiation.  Those transactions, he asserted, could not have taken into account the value of the technology to Intel.  He further criticized Intel’s expert’s process for identifying ostensibly comparable licenses, indicating that his method was based on technical considerations without consideration of the commercial value of the licensed patents or any other economic considerations.

This expert also indicated that Intel’s damages expert had calculated per patent royalty rates by merely dividing the reported royalty in his purportedly comparable licenses by the number of patents being licensed.  Such an average, he testified, fails to take into account the range of values of the licensed patents.  He further testified that Intel’s expert had “cherry-picked” from among over 300 licenses that were part of the record in this case, ignoring licenses that resulted in payments of hundreds of millions of dollars with at least one being over a billion dollars.

This expert also claimed that Intel had ignored “direct evidence” of the value of the patents, the value of the use that Intel had made of the patents and the additional profits allegedly derived therefrom.  He repeated the claim that, unlike in the real world, in the hypothetical negotiation the parties would be “playing with their cards up” and have full knowledge of the value of the patents to each other.

Conclusion

The trial in VLSI Technologies provided not only a dramatic outcome but useful insights in the presentation and rebuttal of a damages case.  Interested observers can look forward to further motions, orders and appeals that should provide additional information about the technology and the appropriateness of the award.

Disclosure: I have no involvement with any of the parties or the law firms at this time. I have had no involvement in this litigation. I have never worked with VLSI. I have worked on at least one litigated matter with Wilmer Hale. I have consulted for Intel twice and testified for them once over my entire career but, to repeat, have no involvement with Intel at this time.

Sequencing-by-synthesis: Illumina defeats Columbia’s patents

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Columbia University v. Illumina, Inc. (Fed. Cir. 2021) (nonprecedential opinion)

In this IPR decision, the PTAB cancelled claims from five patents owned by Columbia — finding them obvious. US Patent Nos. 9,718,852 (clm 1); 9,719,139 (clm 1); 9,708,358 (clm 1); 9,725,480 (clm 1); and 9,868,985 (clms 1-2).   The patents are all related to methods of sequencing DNA using “sequencing-by-synthesis.”  Illumina believes that it owns the process. Columbia felt otherwise and sued Illumina for patent infringement in D.Del. That lawsuit has been stayed since July 2018 as the court awaits these IPR decisions. On appeal, the Federal Circuit has affirmed.

Here is a fairly easy to understand video about  how this work:

The likelihood of winning an appeal certainly depends upon the merits of your case.  The second most important factor is the level of deference afforded to the lower-tribunal.   The Federal Circuit gives deference to any factual findings made by the PTAB in its IPR decisions.  In particular, a PTAB finding of fact will be affirmed if it is based upon “substantial evidence.”  The words “substantial evidence” might sound like a lot of evidence, it is actually a quite easy threshold.  A decision is based upon “substantial evidence” if it is supported by “more than an iota” of evidence or if “a reasonable mind might accept the evidence to support the finding.”  On the other hand, questions of law are reviewed without deference — de novo.

Obviousness is a question of law reviewed de novo.  However, the ultimate conclusion of obviousness is always based upon a large number of factual findings, “including the scope and content of the prior art, differences between the prior art and the claims at issue, the level of ordinary skill, and relevant evidence of secondary considerations.”   See my simple tip-of-the-mountain drawing below.

Here, the patentee challenged three factual findings by the Board, and the Federal Circuit found that each finding was supported by enough evidence to pass muster.  The three topics: motivation-to-combine; and two reasonable-expectation-of-success arguments.

The patentee argued someone skilled in the art would not have been motivated to combine an allyl capping group into a sequencing-by-synthesis approach.  Their particular argument, was that a prior art reference indicated some problems with use of the capping group and thus discouraged its use.  As supporting evidence, Columbia pointed to the fact that other researchers ceased related experiments after the reference was published.  On appeal, however, the Federal Circuit noted that this “teaching away” argument requires “clear discouragement” which was not proven. Although the reference did not show the experiment to be a smashing success, it also was not a failure.  Thus, while researchers might have considered better alternatives based upon the reference, it did not actually teach-away.

While it may be true that … scientists ultimately chose to research alternative capping groups, “just because better alternatives exist in the prior art” does not mean that an inferior alternative “is inapt for obviousness purposes.” Quoting In re Mouttet (Fed. Cir. 2012).

Thus, the PTAB’s finding of motivation to combine was supported by substantial evidence.

Obviousness affirmed.

Obviousness: Known Solutions from other Fields of Art

Patent, ,

In re Robert Kross (Fed. Cir. 2020)

In this short decision, the Federal Circuit has affirmed the PTAB’s determination that Kross’s claimed invention would have been obvious. Apn. No. 13/275,400. (Real party-in-interest here is Poly-Gel L.L.C.).

The invention: A method of printing using “non-gelatin viscoelastic gel printing plates.” The gel used here is designed to solve cracking problems that were “a hallmark of gelatin plates.”  The claimed viscoelastic gel was already known in the art for its non-cracking properties. In its decision, the Board concluded that PHOSITA would have been motivated to solve the known cracking problem by using “known properties of a known material.”

The difficulty in this case involves the claimed viscoelastic gel. The prior art (Chen) discloses the gel and its non-cracking and ease-of-manufacture properties.  However, Chen only describes this outside of the printing context. On appeal, the Federal Circuit affirmed that PHOSITA would have been motivated to use Chen’s disclosure:

 [T]he fact that Chen does not teach the use of viscoelastic compositions in any type of printing does not undermine the Board’s finding of a motivation to combine. We agree with the Board that Chen’s silence “as to a particular application is of little or no moment given the teachings of the properties and the resulting general uses of the viscoelastic gel-like materials, which would have suggested those materials as, more likely than not, a successful solution to the problems of gelatin cracking and splitting.”

Slip Op. (Quoting PTAB determination).  Here, the Federal Circuit was guided by its reading of the prior art — which identified the particular problematic parameters (cracking, splitting) to be addressed. That guidance from this prior art brought this case outside of the “obvious to try” world and into one of “reasonable expectation of success.”  I’ll note here that the court was guided by its reading of the prior art — it turns out that there are many many problems with gel-based printing recognized in the prior art. The court skipped over how those additional problems might have guided PHOSITA off of the neat invention pathway offered by the opinion here.

UK Patent Law Primer: Reading through Judge Stone’s New Opinion

Patent

by Dennis Crouch

Geofabrics Ltd. v. Fiberweb Geosynthetic Ltd. [2020] EWHC 444 (Pat) [[2020] EWHC 444]

In the UK, Geofabrics just won a judgment of infringement against Fiberweb for its European Patent No. 2 430 238.  The parallel U.S. Patent 8,978,995 has not yet been enforced.  I thought I would walk through the decision looking at how UK Judge Mr. David Stone handled issues and their parallel US comparison.

The invention here is a fairly expensive multi-layer geo-liner for a railway. The layered product includes two support layers sandwiching a filtration layer — this filtration is the key to the invention.  The filtration layer is “normally impermeable to water” but allows water to pass upward through the layer when under high pressure (rail car).  The inventors called it a filtration layer because it only allows water to pass through and leaves behind silt and clay-fines in order to avoid erosion.

The defense offered several reasons for denying the infringement: lack of novelty, obviousness, and insufficiency of the claims and disclosure.

Novelty: The UK novelty law is substantially parallel to that of the U.S., although with a somewhat heightened enablement requirement. In a 1972 opinion, Lord Justice Sachs provided the following metaphor to the law of (land) discovery:

To anticipate the patentee’s claim the prior publication must contain clear and unmistakable directions to do what the patentee claims to have invented … A signpost, however clear, upon the road to the patentee’s invention will not suffice. The prior inventor must be clearly shown to have planted his flag at the precise destination before the patentees.

General Tire & Rubber Co v Firestone Tyre & Rubber Co Limited [1972] RPC 457.  More recently, UK courts have noted that an anticipatory references must both disclose the claimed invention as and also “enable the ordinary skilled person to perform it.” Synthon BV v SmithKline Beecham plc [2006] RPC 10 (Lord Hoffman).

In the present case, the Judge Stone found that multi-layer fabric in the prior art lacked the precise permeability spectrum claimed in the invention.

Obviousness in the UK similarly parallels the U.S. law’s Graham analysis:

(1) (a) Identify the notional [skilled addressee]; (b) Identify the relevant common general knowledge of that person;

(2) Identify the inventive concept of the claim in question or if that cannot readily be done, construe it;

(3) Identify what, if any, differences exist between the matter cited as forming part of the “state of the art” and the inventive concept of the claim or the claim as construed;

(4) Viewed without any knowledge of the alleged invention as claimed, do those differences constitute steps which would have been obvious to the person skilled in the art or do they require any degree of invention?”

Pozzoli SpA v BDMO SA [2007] EWCA Civ 558 (Jacob LJ).  The UK statute itself is simple asking is the invention “obvious to a person skilled in the art, having regard to any matter which forms part of the state of the art.” The Patents Act 1977 (as amended).  Note here that the UK statute limits obviousness analysis only to publicly-available prior art while secret prior art (such as prior filed applications) are available only for novelty analysis.

The case here focused also on two sub elements:

  • Obvious to try: There must be at least a reasonable expectation of success of a combination.
  • Long-felt want: Something often pleaded but rarely with success.  However, it can turn “apparent technical obviousness” into a judgment of non-obviousness.

In his opinion, Judge Stone again sided with the patentee — finding that although the prior art addressed under-track erosion using a barrier — it’s solution was quite different in practice.

[I]t is by no means clear to me that a skilled addressee equipped with the CGK [Common General Knowledge] would:

(a) replace an impermeable membrane with a permeable one; (b) introduce a filtering element when none is hinted at in Jay; and (c) choose a geomembrane that operated under the load of a train – that is, it would allow water to pass up through it (whilst being filtered) only under the pressure of the load of a train, and not under the pressure of the tracks and ballast in the absence of a train.

In my judgment, the Patent is not obvious over Jay.

Insufficiency: The court examined three defenses under the umbrella of “insufficiency”: Uncertainty (sometimes called ambiguity); Classical insufficiency/lack of enablement; and Lack of plausibility.  The statute provides that the specification must “disclose the invention clearly enough and completely enough for it to be performed by a [skilled addressee]”.  72(1)(c) of the Patents Act 1977.

Insufficiency – Uncertainty is basically the same as claim indefiniteness in the U.S. — requiring undue effort to understand the scope of the claims. Here, the court found that the claim requirement of being “normally impermeable” was not unduly uncertain.

Classical Insufficiency is parallel to enablement in US law — the specification must enable a person killed in the art to perform the invention without undue burden.  Here, the court found that some testing was necessary to create the claimed permeability profile, but that testing was “not unduly burdensome.”

Insufficiency – Plausibility: In the UK, the plausibility doctrine has some flavors of US utility doctrine.  Normally, plausibility will be assumed. However, courts have raised suspicion in situations where an inventor could easily file many patents based upon pure speculation of success.  One example of this might be a new medical use of a known drug (“second medical use claim”).  In that situation, the UK Courts require “some disclosure as to how or why the known product can be expected to work in the new application.”  In rejecting this defense, the court noted that a patent for a new product (as here) is “almost always” plausible.

Infringement: The court found infringement both literally and as equivalence.  For equivalence – the court applies a result-way test: “Substantially the same result in substantially the same way.” Actavis UK Ltd v Eli Lilly and Co [2017] UKSC 48 (Lord Kitchin JSC). Equivalence can be negated based upon evidence that patentee “intended that strict compliance with the literal meaning . . . was an essential requirement of the invention.” Id.  In this case, the question of what “normally” impermeable meant. The court found that the accused product fit that term or was at least the equivalent.  The basic argument on the other side was that the layer might be permeable under the weight of flood-water and in some parts of the UK floods regularly occur.

In the end, the court upheld the patent and found it infringed. The next steps in the case will be to consider remedies. The patentee has requested damages as well as injunctive relief.

En Banc at the Federal Circuit

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The Federal Circuit this week denied two interesting petitions for en banc rehearing:

Kingston Technology Company v. SPEX Technologies, Inc., Docket No. 19-1342 (Fed. Cir. 2019)

Does WiFi One apply only when the patentee is appealing and not when the IPR petitioner appeals an institution denial?

In this case, the PTAB held that § 315(e) estopped Kingston from petitioning for IPR. Had the Board decided in Kingston’s favor, the patent holder (SPEX) could have appealed under Wi-Fi One. However, the panel found that an orthogonal Board decision against the patent owner was not appealable.

Genzyme Corporation v. Zydus Pharmaceuticals (USA), Docket No. 18-02362 (Fed.
Cir. 2019)

Whether a patent-challenger asserting obviousness must prove that a POSA would have had a reasonable expectation of success as to achieving unclaimed features, such as achieving alleged unexpected results that are not recited in the asserted claims.

The patent challenger here argues that “[t]ying the reasonable expectation of success inquiry strictly to the claims as written ensures that courts do not decide obviousness on hypothetical claims that are fundamentally narrower than the actual claims at issue.”

Earlier this month, the Federal circuit also denied a well written petition in Board of Regents v. Boston Scientific Corporation, Docket No. 18-01700 (Fed. Cir 2019)

1. Whether the patent venue statute, 28 U.S.C. § 1400(b), dictates venue in state party patent infringement cases.

2. Whether state sovereignty includes the right to not litigate in a nonresident defendant’s home state (and hence the right to choose any forum with the requisite subject matter and personal jurisdiction).

3. Whether a federal transferee court can acquire jurisdiction over a state without its consent or waiver of any objection to such court’s jurisdiction

En banc petitions are still pending in several cases:

Both the Chamberlain Group and American Axle case have been mentioned to me by PTO/Congressional leaders as examples of how Alice has gone too far.

In American Axle, the patent is at issue, U.S. Patent 7,774,911, relates to “automotive driveshafts used in pickup trucks — claiming “novel and unconventional methods of manufacturing improved driveshafts that include ‘liners’—low cost, hollow tubes made of a fibrous material (such as cardboard).” Petition.  The courts found the claims ineligible as directed to “Hooke’s law, and possibly other natural laws.”

For Drug Treatment Patents: Prior Art Must Show Efficacy

Patent,

OSI Pharma v. Apotex Inc. (Fed. Cir. 2019)

New use of a known compound: This decision focuses on OSI’s U.S. Patent 6,900,221 — a method for treating non small cell lung cancer (NSCLC) with the drug erlotinib (sold by OSI as Tarceva).  In the US dosage is about $200 per day that continues “until disease progression or unacceptable toxicity.”

44. A method for the treatment of NSCLC … comprising administering to [a] mammal a therapeutically effective amount of a pharmaceutical composition comprised of at [erlotinib] and a carrier.

Apotex petitioned the USPTO to cancel several claims, including Claim 44 so that it could begin marketing a generic version.  The PTAB agreed to hear the case and eventually cancelled the claims — finding them obvious when laid next to a prior patent (Schnur) in view either of an academic review article on anticancer drug targets (Gibbs) or OSI’s own 10-K (OSI SEC filing).

Schnur lists Erlotinib as a preferred compound for treating cancer in mammals — and note that the class of drugs (erbB) is good for treating human tumors, including “renal, liver, kidney, bladder, breast, gastric, ovarian, colorectal, prostate, pancreatic, lung, vulval, thyroid, hepatic carcinomas, sarcomas, glioblastomas, various head and
neck tumors.” (Lung emphasized in the court decision, but not in the original prior art). Schnur discloses lung cancer treatment – but does not particularly discuss “non small cell lung cancer.”

Gibbs is a review of prior publications and makes the conclusion that erlotinib (and a parallel compound) “appear to have good anti-cancer activity in preclinical models … particularly in patients with non-small cell lung cancer.”  However, when the Federal Circuit looked-into the articles cited by Gibbs — none of them provided any “data regarding the use of erlotinib to treat NSCLC.”  OSI also hired Gibbs to provide a declaration that he was “not aware of any published abstracts or articles describing the clinical or preclinical response of a NSCLC tumor to [erlotinib] that were available as of the time my article was published, and I reviewed no such abstracts or articles in drafting my article.”

The SEC Filing by the patentee is a prior printed publication from more than 1 year before OSI’s filing date. The Filing states that the company is pursuing research on Erlotinib “which targets a variety of cancers including ovarian, pancreatic, non-small cell lung and head and neck. . . . [The drug] is a potent, selective and orally active inhibitor of . . . a key oncogene in these cancers.”  The SEC Filing also indicates that Phase I safety trials had been completed and Phase II clinical trials were ongoing.  The SEC filing does not include any “DATA.”

For the Board, the combination of these references rendered the broad claim 44 obvious — the claim just requires administration of “a therapeutically effective” of the drug and a carrier.

On appeal, however, the Federal Circuit has reversed — holding that the references did not create a “reasonable expectation of success.”  As such, the Board’s factual conclusion was not supported by substantial evidence.

Over the past several years, the Federal Circuit has been rebuilding its obviousness doctrine post-KSR.  The court now asks two key questions of fact: would a person of ordinary skill in the art (1) have been motivated to combine/modify the prior art teachings in order to make the invention; and (2) have had a reasonable expectation of success in doing so.

The combination of references state rather plainly that erlotinib is believed to has anti-cancer activity against non-small cell lung cancer and that the drug is safe (enough).  On appeal, however, the Federal Circuit rejected the obviousness claim because the prior art did not provide any evidence that the drug would work in humans. “These references thus contain no data or other promising information regarding erlotinib’s efficacy in treating NSCLC.” In its explanation, the court notes that this area is “highly unpredictable” — 99.5% failure rate of NSCLC treatments entering Phase II.

The court concludes with a caveat — attempting to cabin-in this ruling:

To be clear, we do not hold today that efficacy data is always required for a reasonable expectation of success. Nor are we requiring “absolute predictability of success.” We conclude only that, on these particular facts, a reasonable fact finder could not find a reasonable expectation of success. The Board’s finding is thus not supported by substantial evidence, and accordingly we reverse its obviousness determination.

The decision here has a substantial amount of merit.

What gives me a lump in my throat is that the prior art discloses almost exactly what was claimed in these broad claims — with the addition of the functional language “therapeutically effective” amount.

Proving Written Description with Experimental Data

Patent

by Dennis Crouch

Nuvo Pharmaceuticals v. Dr. Reddy’s Laboratories Inc., Docket No. 17-02473 (Fed. Cir. 2019) [Decision][En Banc Petition][Opposition by Dr. Reddy’s]

The asserted patents in this case cover a combination dosing of (1) a pain-relief drug (NSAID) with an enteric coating (released in acidic environment) and (2) an uncoated PPI.  U.S. Patent Nos. 6,926,907 and 8,557,285.

1. A pharmaceutical composition in unit dosage form comprising therapeutically effective amounts of:

(a) esomeprazole, wherein at least a portion of said esomeprazole is not surrounded by an enteric coating; and

(b) naproxen surrounded by a coating that inhibits its release from said unit dosage form unless said dosage form is in a medium with a pH of 3.5 or higher;

wherein said unit dosage form provides for release of said esomeprazole such that upon introduction of said unit dosage form into a medium, at least a portion of said esomeprazole is released regardless of the pH of the medium.

Claim 1 of the ‘285.

The defense raised a written description issue – arguing that the original patent filings did not support the “therapeutically effective” limitation.  The district court sided with the patentee, but the Federal Circuit reversed on appeal and held the claims invalid. In particular, the Federal Circuit found that PHOSITA could not tell from the patent document that the compound was “therapeutically effective” as claimed.

Obviousness – Written Description Interplay: The amount of written description needed varies from patent to patent depending upon a number of factors — including the level of skill in the art.  An invention that far-exceeds the state-of-the-art will need more description in order to show possession of the invention.

In this case, the patentee won its obviousness argument by showing PHOSITA would not have reasonably expected the combination to work.  As such, that means that the claim elements must be fully described in the specification.

The Court also explained that the written description requirement does not always require proof that a claimed drug treatment is effective.  The difficulty for the patentee here, is that the treatment’s effectiveness is particularly claimed.

The Patentee has now petitioned the Federal Circuit for rehearing en banc and explained the holding as follows:

The panel accepted Defendants’ argument that, if the prior art would have led a skilled artisan to be skeptical that uncoated PPI would work, the patents must lack written description because they allegedly lack experimental data or a detailed theory to overcome this teaching away and persuade the skilled artisan the uncoated PPI in the claimed invention would be effective. The panel stated, for example, that the inventor failed to show possession of the claimed invention because a skilled artisan “would not have expected uncoated PPI to raise gastric pH.”

The petition argues that this approach is improper:

The panel improperly enacted a new written description standard requiring either experimental data or a detailed theory of why the invention will work, at least for inventions that overcome obviousness based on skepticism in the field or a lack of reasonable expectation of success. In doing so, the panel’s opinion contradicts the very cases it cites, which hold that written description does not require experimental data, working examples, a detailed theory of why the invention will work, or an actual reduction to practice. . . .

This opinion creates a heightened written description standard that contradicts this Court’s precedents stating that a patent specification must only show that the inventor had possession of the claimed invention and does not need to disclose data

Citing Allergan, Inc. v. Sandoz Inc., 796 F.3d 1293 (Fed. Cir. 2015) and Alcon Research Ltd. v. Barr Labs., Inc., 745 F.3d 1180 (Fed. Cir. 2014).

Following the en banc petition, the Federal Circuit requested a response from Dr. Reddy’s who filed a short brief arguing primarily that Nuvo created a false “parade of horribles” that mischaracterize the Federal Circuit’s opinion.

  • Alan Pollack (Windels Marx) is handing the appeal for Dr. Reddy’s
  • Stephen Hash (Baker Botts) is representing Nuvo Pharma.

 

Using a Technique in a Known Way is Usually Obvious

Patent, ,

Samsung Electroncs v. UUSI (Fed. Cir. 2019)

In the inter partes review (IPR), the PTAB sided with the patentee UUSI — finding that Samsung had failed to prove the obviousness of UUSI’s U.S. Patent No. 5,796,183.  On appeal, however, the Federal Circuit has vacated that decision — holding that the Board’s findings of no motivation-to-combine or reasonable-expectation-of-success were not supported by the evidence.

The patent is directed to multi-point capacitive sensing circuity – the type used for the multi-billion dollar touchscreen market. It’s 1996 priority date situates the invention before a substantial amount of prior art.  However, Samsung identified several key prior art references, including U.S. Patent Nos. 5,565,658 (Gerpheide), 5,087,825 (Ingraham), and 5,594,222 (Caldwell).

Obvious by Combination of References: Most often, obviousness is proven with a combination of references that collectively teach the claimed elements.  In addition to providing the set of prior art references, the patent challenger must also show that a person of skill in the art (POSITA) would have a “motivation to combine” the references in the way claimed and that such a combination would have a “reasonable expectation of success.”

In KSR v. Teleflex, the Supreme Court explained that the motivation to combine analysis is flexible and not bound to rigid limitations or requirements. The High Court explained: “[I]f a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill.” KSR.

Here, the PTAB decided to exclude Gerpheide from the analysis because its approach was directed toward single-point capacitive sensing rather the multi-point approach of the patentee.  On appeal, the Federal Circuit vacated that holding:

The Board’s categorical rejection of the teachings from a single input device to those of a multi input device is not supportable. . . . Samsung presented uncontested evidence that the combination of Ingraham and Caldwell would experience electrical interference, and Gerpheide taught a way to address electrical interference in capacitive touch devices. The fact that Gerpheide and Ingraham/Caldwell involved different types of capacitive touch devices (single versus multi input) does not undermine the motivation to combine the teachings of Gerpheide with Ingraham/Caldwell since
both devices can experience electrical interference. Gerpheide recognized this as a problem and provided a solution to reduce such interference. Thus, a person of skill in the art would have been motivated to include such a feature from analogous prior art in a multi input capacitive touch pad device (i.e., the device of the Ingraham/Caldwell combination). The Board’s contrary conclusion is not supportable.

With regard to reasonable expectation of success, the Federal Circuit also vacated — primarily holding “that the Board’s implicit claim construction was erroneous.”  Here, the Federal Circuit found that the PTAB had unduly narrowed the claim scope and that under the broader scope there may indeed be a reasonable expectation.

Although Motivated to Try; No Reasonable Expectation of Success

Patent,

by Dennis Crouch

Novartis Pharm. v. West-Ward Pharm. (Fed. Cir. 2019)

West-Ward (now known as Hikma) is seeking to make and sell a generic version of the Novartis chemotherapy drug everolimus (Afinitor).  After filing its Abbreviated New Drug Application (ANDA), Novartis sued, alleging infringement of its U.S. Patent 8,410,131.

Following a bench trial, the district court sided with the patentee – finding the claims enforceable – not obvious. Novartis Pharm. Corp. v. West-Ward Pharm. Int’l Ltd., 287 F. Supp. 3d 505 (D. Del. 2017).  On appeal, the Federal Circuit has affirmed.

The claims at issue are method-of-treatment claims with one step — “administering … a therapeutically effective amount” of everolimus.  The preamble of claim 1 indicates that the treatment is for “inhibiting growth of solid excretory system tumors.”  Dependent claims 2 and 3 add limitations that the treatment is for a kidney tumor or “advanced solid excretory tumor.”

At the time of the patent filing, the compound (everolimus) was already known as an mTOR inhibitor; and mTOR inhibiors were known to inhibit tumor growth. Everolimus a derivative of rapamycin and structurally similar to temsirolimus — both of which were already identified as chemotherapy treatments for similar cancer types.

The district court took this evidence and agreed that a person of skill in the art would have been motivated to pursue everolimus as a potential treatment for advanced solid tumors. However, the court’s opinion then seemed to contradict itself by saying that there was no motivation to combine the prior art.   The district court also found that everolimus was one of many different research paths and that the prior art was not sufficient to create “a reasonable expectation of success in using everolimus” to treat advanced kidney tumors.

On appeal, the Federal Circuit rejected the district court’s confusing motivation-to-combine analysis, but agreed ultimately that the claims were not proven invalid (with clear and convincing evidence).  In particular, the appellate panel agreed with the lack of reasonable expectation of success.

Truthfully, this doctrine confuses me.  The claims simply call for administering an effective amount of everolimus to treat a solid tumor; and the courts held that a person of skill in the art would have been motivated to pursue administration of everolimus as a potential treatment. In addition to this motivation, the courts also require clear and convincing evidence of a “reasonable expectation of success.”  You might divide these into “a reason to try” and “reason to believe that the attempt would be successful.”

A party seeking to invalidate a patent based on obviousness must prove “by clear and convincing evidence that a skilled artisan would have been motivated to combine the teachings of the prior art references to achieve the claimed invention, and that the skilled artisan would have had a reasonable expectation of success in doing so.” Procter & Gamble Co. v. Teva Pharm. USA, Inc., 566 F.3d 989 (Fed. Cir. 2009) (quoting Pfizer, Inc. v. Apotex, Inc., 480
F.3d 1348 (Fed. Cir. 2007)).

Another way to think about the doctrine here is that a creation that is “obvious to try” would still be patentable if the attempt was unlikely to succeed.  This situation comes up most often in situations involving many different potential solutions and it would be “obvious” to try each one until the solution is found.

Motivation to Combine: Regarding motivation to combine, the Federal Circuit particularly held that the district court had improperly required the patentee to prove that PHOSITA “would have selected everolimus over other prior art treatment methods.”  That heightened standard does not comport with the law and thus is not required.

I’ll note here that the district court’s approach was appropriate in the setup involving modification of a lead compound.  Precedent asks for an indication that the lead compound would have been selected over other potential lead compounds.  Here, however, the compound was already known and the only “new” element is giving an effective amount to a patient for the purpose of treating a particular illness.

The district court … appeared to apply or conflate the standard for these types of cases by requiring clear and convincing evidence that a person of ordinary skill “would have been motivated to select everolimus.” To the extent the district court required a showing that a person of ordinary skill would have selected everolimus over other prior art compounds, it erred. The proper inquiry is whether a person of ordinary skill would have been motivated to modify the prior art disclosing use of temsirolimus to treat advanced RCC with the prior art disclosing everolimus. This question was answered affirmatively when the district court found that a person of ordinary skill “would have been motivated to pursue everolimus as one of several potential treatment options for advanced solid tumors, including advanced RCC.”

Reasonable Expectation of Success: Despite a motivation to pursue treatment, the district and appellate court found that the claimed treatment would not have been obvious because the prior art did not show a sufficiently high “expectation of success.”

Note here that the requirement is an “expectation” of success — would PHOSITA have expected that the drug would work?  In this case, at the time of the invention, there was no clinical data on everolimus (as an anti cancer agent) and no completed trials for the other similar compounds (only phase I safety-focused data).  And, the district court noted that there had been many many past attempts to find a compound that works — most of them starting with some promise.   On appeal, the Federal Circuit found that the rebuttal evidence and arguments made by the patentee were sufficient to defeat an obviousness finding — giving deference to the district court factual findings.

The district court reviewed the [presented] evidence, determined that the molecular biology of advanced RCC was not fully understood, recognized the limitations in the temsirolimus phase I data, and found that such data did not provide a person of ordinary skill with a reasonable expectation of success. We hold that the district court did not err in its determination and affirm its conclusion that claims 1–3 of the ’131 patent would not have been obvious in view of the asserted prior art.

Non-Obviousness affirmed.

First Steps After SAS Institute

Patent

Guest post by Saurabh Vishnubhakat, Associate Professor at the Texas A&M University School of Law and the Texas A&M College of Engineering.  Although Prof. Vishnubhakat was an advisor at the USPTO until June, 2015, his arguments here should not be imputed to the USPTO or to any other organization.

The Supreme Court’s decision in SAS Institute v. Iancu is likely to prove more immediately impactful to the status quo than the accompanying decision in Oil States Energy Services v. Greene’s Energy Group. The power of partial institution had been an integral part of the Patent Trial and Appeal Board’s decision-making from the start, and the all-or-nothing choice that the PTAB must now make raises four interrelated questions. One is how the agency will proceed in future cases. Another, and more pressing, is how the agency will deal with the crop of currently pending cases that were instituted as to some, but not all, patent claims in the original petition. Still another is how the litigants themselves, particularly would-be petitioners, will frame their challenges going forward. Finally, there is the question of what steps the Patent Office might take given its own altered incentives.

NB: The SAS Institute decision was the subject of a robust discussion at the April 26 Stanford IP Law and the Biosciences Conference panel on “Developments at the PTAB and the Federal Circuit.” I am indebted to my co-panelists Mark Lemley, David O’Brien, and Stefani Shanberg and to our moderator Lisa Larrimore Ouellette for sharpening my thinking on this developing issue.

Parsing the PTAB Guidance—Future Petitions

A helpful place to begin is the PTAB’s prompt and thoughtful Guidance on the Impact of SAS on AIA Trial Proceedings, issued just two days after the SAS Institute decision. As this blog pointed out in its recap of the Guidance, future petitions will be instituted as to all claims or as to none, as SAS Institute directly requires.

The Guidance goes further, however, to indicate that “if the PTAB institutes a trial, the PTAB will institute on all challenges raised in the petition.” This is notable because a “challenge” may be as broad as to refer to the statutory basis asserted for the invalidity of a claim, or to the prior art cited in support, or to both. For example, even if an inter partes review petition sought to invalidate just one patent claim, asserting both statutory grounds (§ 102 and § 103) and citing only two prior art references could conceivably constitute five separate “challenges” for purposes of an institution decision:

  • anticipation in light of Reference A;
  • anticipation in light of Reference B;
  • obviousness in light of Reference A;
  • obviousness in light of Reference B; and
  • obviousness in light of the combination of References A and B.

It is not self-evident that this additional step is required by the opinion in SAS Institute, which focuses on patent claims—claims that the petitioner challenged in its petition and claims as to which 35 U.S.C. § 318(a) requires a final written decision. Nevertheless, it was the same regulation, 37 C.F.R. § 42.108(a), that articulated the authority to proceed both “on all or some of the challenged claims and on all or some or the grounds of unpatentability asserted for each claim.” It is appropriately cautious, then, for the agency to step back from both together. Moreover, the Federal Circuit’s recent string of cases remanding decisions back to the PTAB for further explanation under the Chenery doctrine also makes it sensible for the agency to err on the side of inclusion when it comes to fully exploring the potential grounds for its eventual decision. More on that in a bit.

Parsing the PTAB Guidance—Currently Pending Cases

As for what to do with still-pending cases in which the PTAB has already made partial institutions, the Guidance states a policy that may seem surprising on first impression. In such cases, “the panel may issue an order supplementing the institution decision to institute on all challenges raised in the petition” (emphasis added). In other words, now that the Court has made institution an all-or-nothing proposition, the PTAB may go back and retroactively grant institution as to the rest of the petition.

What makes this policy puzzling is its apparent discretion. After SAS Institute, is the PTAB not required to issue such an order instituting the additional challenged claims?

Not necessarily. For one thing, institution is not even the only retroactive thing that the PTAB can do in this situation. Though the Guidance does not mention it, the PTAB could instead retroactively deny the entire petition (including what had previously been instituted). The reason why both of these approaches are viable is the structure of the institution standard in § 314(a): the Director, it says, may not institute unless there is a reasonable likelihood that at least 1 of the claims challenged in the petition will be canceled. This “may not . . . unless” framing means that a reasonable likelihood of success is a necessary condition, but it may or may not be a sufficient condition. Once the standard is met, whether or not to institute is discretionary. This much even the Court’s opinion accepted:

The text says only that the Director can decide “whether” to institute the requested review—not “whether and to what extent” review should proceed.

Slip op. at 8 (emphasis in original). Along similar lines, the Court also pointed out that “the language anticipates a regime where a reasonable prospect of success on a single claim justifies review of all”—justifies, not compels.

For another thing, the parties themselves may render such a supplemental order unnecessary. A joint request to terminate the case, particularly where the PTAB has yet to decide the merits, has potential benefits. Under § 317(a), the settling petitioner in such a case would escape without estoppel attaching. The patent owner, meanwhile, would likely receive a termination of the IPR altogether. It is true that § 317(a) gives the agency the power to proceed to a final written decision even after all petitioners have exited the case. However, in this of all situations, it would be a poor solution indeed for the PTAB to force itself into a final written decision on claims that it previously denied under the expectation that it would not have to issue final written decisions as to them. The mid-stream disruption that SAS Institute creates for existing cases may make settlement and jointly requested termination attractive not only to the parties but also to the PTAB.

For these reasons, a supplemental order granting institution as to all additional claims in the original petition—while permissible and perhaps even desirable—is not necessary for the PTAB to issue.

Litigant Incentives

While these pending cases are straightened out, of course, new would-be petitioners continually face a choice about whether and how to frame their petitions. For them, the stakes are now undoubtedly higher. Apart from cost constraints (including the PTAB’s recent fee increase before the SAS Institute decision was handed down) and page limits on petitions (which are difficult to circumvent only as a matter of additional cost), petitioners faced little disincentive against being overinclusive in their challenges. The possibility of partial institution meant that, so long as some arguments made it through, the remainder were not necessarily any great loss.

But now, a full denial of institution is a real possibility even for petitions that may contain some meritorious arguments, for the PTAB faces the responsibility of writing a final written decision as to every claim. That responsibility, moreover, requires increasingly through explanations under Chenery. The possibility of full denial is even more stark given that the Guidance promises that, if the PTAB institutes at all, it will institute not only as to all claims but also as to all challenges raised in the petition.

Thus, petitioners have an incentive to focus their petitions even further—when choosing claims to challenge, grounds to assert, and prior art to cite—in order to ensure that the likelihood of full institution is greater than the likelihood of full denial.

Patent Office Incentives

The incentive of the Patent Office, meanwhile, is likely to deny institution relatively more often in the wake of SAS Institute, at least initially. One reason is that the Court’s opinion has no effect on the PTAB’s ability to grant full institutions. Panels could already do so and still can. What panels now confront is the prospect of fully instituting even where some arguments in the petition may lack merit. Rather than dispense with these potentially unavailing arguments at the institution phase, where estoppel would at least arguably not attach, the only alternative left is to try all of these arguments fully, with all the Chenery obligations that such a choice entails, and the specter of estoppel looming larger than before for the petitioner. This represents a potentially significant increase in the PTAB’s workload and is not something that the Patent Office is likely to undertake lightly.

Another reason why the agency’s incentives now point more, if not entirely, toward denial is the workaround proposed in Justice Ginsburg’s dissent. Only a paragraph in length, it expressly contemplates precisely this sort of full denial of a petition, except that the PTAB in its decision to deny institution would also identify which claims were worthy of review and which claims were not. Petitioners could then refile in light of this guidance. Justice Ginsburg described this exercise as the PTAB spending its time “uselessly”—in contrast simply to allowing partial institutions and reaching the same point without the added step of refiling.

But this is actually a reasonable idea. Just as petitioners themselves now have greater incentive than before to focus their challenges in order to make full institution more tenable than full denial, the PTAB can also play a useful complementary role by explaining in its denials of institution just what it finds worthy or unworthy of review, and why. By channeling petitioners to “file new or amended petitions shorn of challenges the Board finds unworthy,” the PTAB may create additional work in the short run. Over time, however, its guidance would conserve the agency’s adjudicatory resources by discouraging the overinclusive petitioning that partial institution fostered because the PTAB had a way to manage its workload without having to discipline extravagant petitioners.

This is no longer the case, and the PTAB’s own workload is now more closely tied to the burdens that it allows petitioners to visit upon patent owners. The opinion of the Court purported not to take a stance on policy arguments about efficiency, directing such arguments to Congress. Nevertheless, the decision in SAS Institute may produce efficiency gains after all.