By Kevin E. Noonan —

Enactment
of the Leahy-Smith America Invents Act in 2011 focused the patenting community
on the changes of U.S. patent law from "first to invent" under the
1952 Patent Act to "first inventor
to file" under the AIA as the basis for deciding priority and defining the
scope of prior art to a claimed invention.  Nevertheless, the provisions of the 1952 Act remain in force for any
application filed prior to March 16, 2013, and the Federal Circuit's recent
decision in Dey, L.P. v. Sunovion
Pharmaceuticals, Inc., illustrates that there remain issues in the "old"
law that will continue to be explicated and addressed.

The
issue in the Dey case is the
patentability bar under 35 U.S.C. § 102(b) that arises from "public
use" of an invention more than one year prior to an applicant's filing
date.  The circumstances surrounding the
assertion of invalidity under this provision of the statute were somewhat
unusual, as recognized by the Court:  typically it is the accused infringer who
asserts a patentee's own prior public use as invalidating, but here defendant
Sunovion asserted its own prior clinical trial as a public use of Dey's claimed
invention.  Specifically, both Sunovion
and Dey developed pharmaceutical formulations of a known drug, formoterol, as a
nebulized formulation for treating chronic obstructive pulmonary disorders
(COPS) such as emphysema.  Both companies
owned patents on their formulations:  No. 6,040,344 to Sunovion (filed in 1998
and issued in March 2000); and Nos. 7,348,362; 7,462,645; 7,465,756; 7,473,710;
and 7,541,385 to Dey (all claiming priority to July 10, 2003).  Sunovion was the first to market in 2007 with
its Brovana product, after what the Court terms a "long" path to
obtaining regulatory approval.  Sunovion's
clinical trials began in 1998, and of interest in the decision is a particular
Phase III clinical trial, Study 50, that began in February 2002, wherein one of
the formulations tested was identical to the Brovana formulation.

Just
prior to launch, Dey sued Sunovion for infringement of its patents, and
Sunovion filed a motion for summary judgment of invalidity for prior public use under § 102(b), based on its own clinical trials.  Under Sunovion's legal theory, the Phase III
clinical trial identified as Study 50 included a formulation (given to 124
clinical trial participants) that was within the scope of Dey's patent claims
and the conditions of the clinical trial constituted a prior public use that
occurred more than one year before Dey's earliest filing date of July 10,
2003.  The conditions Sunovion cited in
support of the prior art status of its clinical trial were:

• Patients were told that they were being
given a formulation of formoterol
• Patients
enrolled in the trial were told they could (and indeed should) inform their
personal physicians about the trial
• Patients
enrolled in the study were under no conditions of confidentiality
• At
least some of the vials ("a fraction of one percent") of the
formulated drug were unaccounted for during and after the clinical trial

The District Court granted summary judgment against Dey, finding that Sunovion had
established by clear and convincing evidence that the asserted claims of Dey's
patents in suit were invalid as being anticipated under the "public use"
prong of § 102(b).

The
Federal Circuit reversed, in an opinion by Judge Bryson, joined by Judge O'Malley
over a dissent by Judge Newman.  The
panel noted that the purpose of the bar was to "discourage[e] the removal,
from the public domain, of inventions that the public reasonably has come to
believe are freely available," citing Tone Bros., Inc. v. Sysco Corp.,
28 F.3d 1192, 1198 (Fed. Cir. 1994).  The
test for deciding whether a prior use was a "public use" under the
statute has two elements:  "'whether the purported use:  (1) was accessible
to the public; or (2) was commercially exploited,'" citing Invitrogen Corp. v. Biocrest Mfg., L.P.,
424 F.3d 1374, 1380 (Fed. Cir. 2005).  Factual issues to be considered when determining whether a prior use
constitutes a "public use" include "'the nature of the activity
that occurred in public; the public access to and knowledge of the public use;
[and] whether there was any confidentiality obligation imposed on persons who
observed the use'" according to the opinion, citing Bernhardt, L.L.C.
v. Collezione Europa USA, Inc., 386 F.3d 1371, 1379 (Fed. Cir. 2004).  In the absence of commercial exploitation a
confidentiality agreement could "negate" the status of a prior use as
a public use.  Invitrogen at 1382.

The
status of a prior use as a public use is not dependent on the public use being
an applicant's use; activities of third parties (such as Sunovion here) can
constitute an invalidating prior public use.  Eolas Techs. Inc. v. Microsoft Corp., 399 F.3d 1325, 1334 (Fed.
Cir. 2005).  But such a third party use
must be a public not a private use (i.e., the fact that there was a prior use
by another does not by itself constitute a public use) according to the Court,
citing Woodland Trust v. Flower- tree Nursery, Inc., 148 F.3d 1368, 1371
(Fed. Cir. 1998), and W.L. Gore & Assocs. v. Gar-
lock, Inc., 721 F.2d 1540, 1549-50 (Fed. Cir. 1983).  The opinion notes that, as with all question
under § 102 this is a question of fact
depending on the circumstances, such as a situation where there is no
confidentiality agreement:  there, "the skill and knowledge of those
observing an invention can shed light on the degree to which it was kept
confidential" and even "limited disclosure" may suffice if it is
to "those who are skilled enough to know, understand, and 'easily
demonstrate the invention to others,'" citing Netscape Commc'ns Corp.
v. Konrad, 295 F.3d 1315, 1321 (Fed. Cir. 2002).

The Federal Circuit reversed the District Court's
summary judgment because it found disputed issues of material fact that made
summary judgment inappropriate.  However
the majority opinion went on to set forth the considerations important for
making the determination and the places where in the majority's opinion the District Court went astray.  The majority
identified two issues important to the District Court's decision that warranted
comment.  The first was the lower court's
determination that the use of the particular "infringing" formulation
during the clinical trial was "open and free," a determination with
which the Court disagreed.  The basis for
this disagreement revolved around the incapacity of the clinical trial
participants to "reverse engineer" the formoterol
formulation even knowing the identity of the drug.  In addition, the panel majority disagreed
that the study participants were provided with a "personal supply" of
the formulations that they could use "however they saw fit" and that
provided them with an "unfettered use of the composition for weeks at a
time."  The panel agreed with Dey
that the use by the study participants was anything but "unfettered,"
citing the restrictions contained in agreements between the clinical trial
administrators and participants, including requirements that the participants
be the only individuals taking the medication and that they keep "accurate
usage logs"; the Court also noted that despite the extremely low level of
the formulation that was unaccounted for the participants and administrators in
the trials were required to return all unused portions of the drug and to
account for all administered and inventory supplies of the formulated drug.  Specifically the opinion states:

The fact that a tiny fraction of the thousands
of vials were lost without penalizing the responsible test subject(s), or that
the practicalities of the study required self-administration at home rather
than physician administration in a closed facility, does not preclude a
reasonable jury from concluding that the use of Batch 3501A was sufficiently
controlled and restricted, rather than unfettered and public.

The majority also disagreed that the
details of the clinical trial were not required to be kept confidential by
trial participants.  The issue for the Court was what information was kept
confidential and here the panel noted that "the particulars of its invention — embodied
in the formulation and stability characteristics of Batch 3501A — were kept
sufficiently confidential to avoid a finding of 'public use.'"  Also important for the panel's decision were
the confidentiality obligations imposed on the clinical investigators (clearly
more knowledgeable than the patients), who were required to sign confidentiality
agreements.  The panel majority found
that the individuals most likely to have sufficient disclosure for the clinical
trial to be a public use were under an obligation not to disclose (thereby negating
the clinical trial as a public use as to those individuals), and that the
individuals (the patients) not under  any
confidentiality obligations had insufficient information to constitute prior
disclosure of the invention.

The panel majority noted that the
circumstances surrounding the clinical trial were common and that prior
precedent "routinely rejected the argument that such an arrangement
necessarily strips the trial of confidentiality protection or renders it
accessible to the public," citing Bayer Schering Pharma AG v. Barr
Labs., Inc., No. 05- CV-2308 (PGS), 2008 WL 628592, at *11-12, *38-42
(D.N.J. Mar. 3, 2008); Eli Lilly & Co. v. Zenith Goldline Pharm., Inc.,
364 F. Supp. 2d 820, 873-75, 912-13 (S.D. Ind. 2005), aff'd, 471 F.3d
1369, 1380-81 (Fed. Cir. 2006); Janssen Pharmaceutica N.V. v. Eon Labs Mfg.,
Inc., 374 F. Supp. 2d 263, 276 (E.D.N.Y. 2004), aff'd, 134 F. App'x
425, 430-31 (Fed. Cir. 2005); and In re Omeprazole Patent Litig., 490 F.
Supp. 2d 381, 508 (S.D.N.Y. 2007), aff'd on other grounds, 536 F.3d 1361
(Fed. Cir. 2008).  Circumstances in
common in such cases and the case at bar noted by the Court is that study
participants were informed as to the identity of the administered drug, that
such patients were entrusted to administer doses themselves not under the
control or supervision of a study administrator or doctor and that these prior
participants were permitted to discuss the trial with their personal
physicians.

Finally, the panel majority identified
several other "misconceptions" underlying the District Court's decision.  These included that lack of any
confidentiality obligations to Dey by
Sunovion's clinical trial
participants, which the panel recognized would require any third party prior
use (even a secret use) to be a patent-invalidating public use.  And the panel rejected Sunovion's attempt, in
their view, to stretch precedent related to "experimental use," such
as New Railhead Mfg., L.L.C. v. Vermeer Mfg. Co., 298 F.3d 1290, 1299
(Fed. Cir. 2002), and City of Elizabeth v. American Nicholson Pavement Co.,
97 U.S. 126, 136 (1877), to apply in this situation.  In those cases the invention was "public"
but was not appreciated by the public under circumstances where the use was
necessary to demonstrate reduction to practice of the invention ("During
experimentation, the public might have knowledge of an invention (because they
see it), but may not be using the invention within the meaning of the statute
(because the inventor is experimenting)").  Accordingly, the Court remanded the case to the District Court for
reconsideration on the merits.

Judge Newman's dissent was not based on
her disagreement with the outcome but rather because she would prefer the Court
remand with instructions to deny the motion on the grounds that the Sunovion
clinical trials did not constitute a "public use."  "No sound reason appears for remanding
for findings or trial, when the matter is readily resolved on undisputed facts.  Nor is there any reason for casting judicial doubt on the standard
confidentiality procedures of clinical trials, at this late date of decades of
established practice," in Judge Newman's view.

Dey, L.P. v. Sunovion Pharmaceuticals, Inc. (Fed. Cir. 2013)
Panel: Circuit Judges Newman, Bryson, and O'Malley
Opinion by Circuit Judge Bryson; dissenting opinion by Circuit Judge Newman