Patent Docs

News from Abroad: UK Court of Appeal Rules on Interim Injunctions

June 26, 2013

The Court of Appeal recently issued a decision concerning
the issues that should be considered when granting an interim injunction. The
proceedings related to Novartis' product zoledronic acid, which was used to
treat osteoporosis. This product was covered by a supplementary protection
certificate (an SPC), as well as two use patents. Hospira, a generics company, started
revocation actions against these two patents and obtained a marketing
authorisation for zoledronic acid to treat a number of conditions, including
osteoporosis.

Soon after becoming aware of the marketing
authorisation, Novartis wrote to Hospira requesting an undertaking that no
product would be sold before the expiry of the SPC, which was duly given by
Hospira. A subsequent letter requested confirmation that if the claims were
found to be valid in revocation proceedings, the product would not be launched
even after the lapse of the SPC. This confirmation was not given. Instead, as both patents were found to be
invalid in the revocation action, Hospira indicated their intention to launch
the product after the lapse of the SPC.

Novartis appealed the revocation decision and started
infringement proceedings concerning the two use patents and applied for an
interim injunction to prevent Hospira's launch. In response to this application, Hospira
argued that once a decision on the merits had been given, a party needs an
arguable case on appeal for an injunction to be granted and that it would not
be right to equate such a case with a good arguable case on the merits at the
start of proceedings. It was argued that
different considerations applied once trial had taken place. The court of first
instance held that the case was plainly arguable and that Novartis was more at
risk of suffering larger losses. However, the appeal on the revocation was not
nugatory and did not have a strong prospect of success. Instead, the appeal was arguable and could
inflict uncompensatable harm on either side. Further, it was said that Novartis should have
started infringement proceedings earlier to allow a conclusion to be reached in
good time. An injunction was therefore
not granted. Novartis subsequently appealed
against the decision on the granting of the injunction.

The Court of Appeal held that there was not a clear
view on the merits, as the appeal had a realistic prospect of success. The
exercise of discretion should therefore not be approached on the basis that the
merits are clear in favour of one side or the other. It was further held that
the previous decision on the merits should not affect the balance of hardships
considered when granting an injunction. This balance fell in Novartis' favour,
based on the damage that would be suffered by Novartis if an injunction was not
granted being more certain and greater in magnitude than the damage to Hospira
if an injunction was granted.

The facts that Hospira was also selling zoledronic
acid for other, less profitable diseases and that the public would be
disadvantaged by an injunction were deemed to be irrelevant. It was held that
an appeal in cases such as this should be expected and that generic companies should
have to disclose their intentions to the innovator in time for an appeal to
take place, or expedite proceedings accordingly. The decision at first instance
could not be expected to determine Hospira's freedom to sell the product. The
Court of Appeal therefore found in Novartis' favour and granted an interim
injunction.

This decision therefore sets a precedent for
interim injunctions pending appeal to be granted even if the relevant patents
were found invalid at first instance.

This
report comes from European Patent Attorneys at WP
Thompson & Co., 55 Drury Lane, London UK. Further details and
commentary can be obtained from Gill Smaggasgale,
a partner at the firm.
Supreme Court Denies Certiorari in Momenta Case

June 25, 2013

By Kevin E. Noonan —

The Supreme Court
on Monday declined to grant certiorari in
Momenta Pharmaceuticals v. Amphastar Pharmaceuticals,
a case involving a split in authority that has arisen among Federal Circuit
judges regarding the scope of the "safe harbor" provisions on 35
U.S.C. § 271(e)(1). Specifically, two
panels of the Court, both consisting of Chief Judge Rader and Judge Moore, have
come to different interpretations of the statute with regard to post-approval
activities. In Classen Immunotherapies, Inc. v. Biogen IDEC, (where the Court earlier
refused to grant certiorari in a case
styled Glaxo Smith Kline v. Classen
Immunotherapeutics), a majority of the merits panel (Chief Judge Rader
joined by Judge Newman) held that post-approval activity did not fall within
the safe harbor (over a vigorous dissent by Judge Moore). In contrast, in the Momenta case, the panel majority (Judge Moore joined by Judge Dyk)
found that such activity does fall
within the scope of the statute (over an equally vigorous dissent by Chief
Judge Rader), giving the statutory language a broad reading compelled,
according to Judge Moore, by the Supreme Court's decision in Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 202 (2005).

To briefly recap,
the Momenta decision arose in the
context of a District Court grant of a preliminary injunction to Momenta in
litigation between two ANDA filers. Momenta
entered the marketplace after ANDA litigation with the patent holder, Aventis,
over Lovenox (enoxaparin), a specific formulation of heparin. As explained in the opinion, heparin (unlike
most drugs) is not "a single defined molecule" but rather a
heterogeneous mixture of molecules that differ in "the length of the
polysaccharide chain" and the "component disaccharide units and the
corresponding distribution of disaccharide unit sequences in the polysaccharide
chains." This affects its molecular
weight distribution as well as the distribution of uronic acid moieties. Enoxaparin is the result of fragmentation of
native heparin into a "diverse set" of oligosaccharides. Accordingly, FDA approval for ANDA filers
required five "criteria" or "standards of identity" to be
met, including "[e]quivalence in disaccharide building blocks, fragment
mapping, and sequence of oligosaccharide species" identified by specific
enzymatic treatment and physical/chemical analyses of the drug product,
including separation and spectroscopy.

Although Amphastar
filed its ANDA first, Momenta was first to market. Perhaps tellingly, the Federal Circuit
described the genesis of this lawsuit as follows:

Being the
only generic version of enoxaparin has it benefits: its sales generated
revenues of $260 million per
quarter. . . . The approval of Amphastar's version of enoxaparin,
and the resultant ruinous competition of another generic version of the drug,
threatened this unique market position. Understandably
unwilling to give up a billion dollars in yearly revenue, Momenta initiated the
present litigation two days after Amphastar received final FDA approval to
market its generic enoxaparin.

The legal basis for
the suit was infringement of U.S. Patent No. 7,575,866, assigned to Momenta, which claimed
methods for analyzing heparin and specifically low molecular weight heparins
such as enoxaparin. The opinion cited
claims 6 and 15 as being "representative" of the '886 patent claims
that Momenta asserted against Amphastar:

6. A method for analyzing an enoxaparin sample
for the presence or amount of a non naturally occurring sugar associated with
peak 9 of FIG. 1 that results from a method of making enoxaparin that included
β-eliminative cleavage with a benzyl ester and depolymerization, comprising:
providing an enoxaparin sample that has been exhaustively digested with two or
more heparin degrading enzymes; using a separation method to determine, in the
enoxaparin sample that has been contacted with two or more heparin degrading
enzymes, the presence of a structural signature associated with the non
naturally occurring sugar associated with peak 9 of FIG. 1 that results from a
method of making enoxaparin that includes .beta.-eliminative cleavage with a
benzyl ester and depolymerization; and making a determination about the
enoxaparin sample based upon a comparison of the determination of the presence
of a structural signature associated with the non naturally occurring sugar
associated with peak 9 to a reference standard for enoxaparin, wherein the
determination based upon the comparison to the reference standard regards the
quality of the sample, to thereby analyze the enoxaparin sample.

15. A method for analyzing an enoxaparin sample
for the presence or amount of a non naturally occurring sugar associated with
peak 9 of FIG. 1 that results from a method of making enoxaparin that included
β-eliminative cleavage with a benzyl ester and depolymerization, comprising:
providing an enoxaparin sample that has been exhaustively digested with two or
more heparin degrading enzymes; using a separation method to determine, in the
enoxaparin sample that has been contacted with two or more heparin degrading
enzymes, the presence of a structural signature associated with the non naturally
occurring sugar associated with peak 9 of FIG. 1 that results from a method of
making enoxaparin that includes .beta.-eliminative cleavage with a benzyl ester
and depolymerization; and making a determination about the enoxaparin sample
based upon a comparison of the determination of the presence of a structural
signature associated with the non naturally occurring sugar associated with
peak 9 to a reference standard for enoxaparin, wherein the level of one or more
structural signatures associated with the non naturally occurring sugar
associated with peak 9 of FIG. 1 is determined, to thereby analyze the
enoxaparin sample.

The Federal
Circuit characterized Momenta's complaint as alleging that Amphastar infringed
the '886 patent by complying with FDA requirements for testing its enoxaparin
product as part of the quality control necessary for making this drug. Judge Moore's opinion vacated the preliminary
injunction and remanded using language that made it very unlikely that the
District Court would be able to grant the injunction (see Patent Docs post). Chief Judge Rader's dissent directed his contrary
analysis not only to the specific matter before the Court but also opined more
broadly (see "Momenta Pharmaceuticals Inc. v. Amphastar Pharmaceuticals, Inc.: 'The Rest of the Story'").

Amphastar's
defense in opposing the injunction was that its activities fell within the "safe
harbor" of 35 U.S.C. § 271(e)(1):

It shall
not be an act of infringement to make, use, offer to sell, or sell within the
United States or import into the United States a patented invention (other than
a new animal drug or veterinary biological product (as those terms are used in
the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) which is
primarily manufactured using recombinant DNA, recombinant RNA, hybridoma
technology, or other processes involving site specific genetic manipulation
techniques) solely for uses reasonably
related to the development and submission of information under a Federal law which regulates the manufacture, use, or
sale of drugs or veterinary biological products.

(emphasis added).

The District Court
rejected this contention because the infringing activity occurred after Amphastar received
regulatory approval, the Court interpreting the statute to be limited to
otherwise infringing acts that were performed in order to obtain approval (while acknowledging
that the information was, ultimately, submitted to the FDA). According to Judge Moore's opinion, the
District Court interpreted the meaning of the statute with reference to its
legislative history. This was the source
of the District Court's error, according to Judge Moore.

Rather than
addressing Momenta's arguments that the answer to the question before the Court
was mandated by the earlier Classen decision,
the majority turned instead to its own independent interpretation of the
statute. In the majority's view, the "plain
meaning" of the statutory language was clear (and did not justify resort
to the statute's legislative history; indeed, the panel majority deemed any such
recourse to the legislative history to be improper, quoting United States v. Ron Pair Enters., Inc.,
489 U.S. 235, 240 (1989), for the proposition that the "inquiry must cease
if the statutory language is unambiguous and 'the statutory scheme is coherent
and consistent.'"). Selectively
quoting from portions of the legislative history, the opinion noted that the
statute was enacted to "balance the need to stimulate innovation against
the goal of furthering the public interest." H.R. Rep. 98-857, pt.
2, at 2714 (Aug. 1, 1984). In citing the
statute, the majority highlighted the clause reading that the safe harbor was "solely for uses reasonably related to the
development and submission of information under a Federal law,"
which was enough to put an end of it: "Congress could not have been
clearer in its choice of words," and thus "any activity"
included acts taken after approval (provided that there was information
submitted under a Federal law). Moreover, for the majority, it was
significant that Congress did not limit (expressly) the scope of the safe
harbor to the Food, Drug and Cosmetic Act but "broadly" included
within the scope of the safe harbor "any federal law" that "regulates
the manufacture, use, or sale of drugs." This interpretation is consistent with the majority's
parsing of the rest of the statute, citing portions of the provision that do specifically reference the
FDCA (referring to animal drug or veterinary biological product[s]" and by
reciting in § 271(e)(2) the specific provisions of the FDCA relating to
submission of an ANDA. For the majority, the fact that Congress included
express reference to provisions of the FDCA relating to obtaining approval
under § 271(e)(2) for infringement made it improper to "import" that
limitation into the safe harbor provisions of § 271(e)(1). Calling their's the "only coherent and
consistent interpretation of" provisions of § 271(e)(1) relating to "a
Federal law which regulates the manufacture, use, or sale of drugs," the
majority declared its analysis of the scope of the safe harbor to be "complete":

When the
intent of Congress is expressed so clearly and consistently throughout the
statute, there is neither the need nor the occasion to refer to the legislative
history. Id. The
scope of the Hatch-Waxman safe harbor does not stop at activities reasonably
related to development of information submitted in an ANDA. Instead, the safe
harbor applies "to the development and submission of information under a
Federal law which regulates the manufacture, use, or sale of drugs or veterinary
biological products." As long as
the allegedly infringing use is "for uses reasonably related" to the
development and submission of that information it is not an act of
infringement, regardless of where that requirement resides in the law.

The panel majority
cited two specific instances where the Supreme Court ruled on the meaning of §
271(e)(1) in a manner consistent with its interpretation: Eli Lilly & Co. v. Medtronic, Inc.,
496 U.S. 661, 666 (1990), and Merck KGaA v. Integra
Lifesciences I, Ltd. In the Lilly case, the Court
interpreted the safe harbor to include testing of medical devices because
(despite the "clear and unambiguous language of the statute" that the
safe harbor was limited to drugs) in the Court's view, regulation of medical
devices fell within the ambit of the FDCA. And in Merck, the Supreme Court "reaffirmed
this expansive view" of the safe harbor, holding that infringement of
patent claims directed towards activities that were not directly related to
obtaining data for submission to the FDA, i.e.,
clinical trials, but extended to basis compound discovery activities, on the
grounds that Congress had used the word "any" in reciting the
activities within the scope of the safe harbor. And the panel majority
also provided a reminder that Merck
held that the phrase "reasonably related to the development and submission
of information" relating to regulatory approval did not require that the
activities actually resulted in information that was submitted for regulatory
approval. Accordingly, the panel
majority concluded that the Court's Merck
decision "explicitly rejected the notion that § 271(e)(1) was
limited 'to the activities necessary to seek approval of a generic drug'"
so long as "the accused infringer 'has a reasonable basis for believing'
that the use of the patented invention might yield information that 'would be
appropriate to include in a submission to the FDA.'"

The panel majority
based its decision that Amphastar's activities fell within the safe harbor
expressly on the Merck
decision, and in the process distinguished the Federal Circuit's earlier Classen decision (as it had to
in order to arrive at its contrary conclusion). Classen,
the panel majority stated, involved voluntary studies "not mandated by the
FDA" and that produced "'information that may be routinely reported
to the FDA, long after marketing approval has been obtained'" (i.e., adverse event information
that is reported as it is obtained). That was not this case according to
the opinion, because the information obtained from infringing Momenta's
patents was necessary for Amphastar to continue to sell enozaparin (and failure
to do so could cause FDA to "suspen[d] or revo[ke] Amphastar's approval").
Accordingly, the opinion stated that "post-approval
studies that are "reasonably related to the development and submission of
information under a Federal law which regulates the manufacture, use, or sale
of drugs" fall within the scope of the § 271(e)(1) safe harbor."
And under this interpretation of the law, the majority further held that
Momenta was not likely to prevail on the merits below.

Judge Rader's dissent focused on the limited scope of the safe harbor, based on his understanding of
the fundamental right to exclude embodied in the patent statute and the limited
exception to that right granted under § 271(e)(1). ("Thus, exceptions to the traditional
property remedy amount to a get-out-of-jail-free card for the trespasser. Accordingly, such exceptions must occur only
sparingly with awareness that this license allows the wrongdoer free reign to
continue trespassing.") That
limited scope is the result of a balance, expressly struck by Congress, between
the recompense to patentees who lost patent term during regulatory review
(comprising the patent term extension provisions of 35 U.S.C. § 156 et seq.) and the benefits to the public
by legislative override of Roche
Products, Inc. v. Bolar Pharmaceutical Co., 733 F.2d 858 (Fed. Cir. 1984)
(preventing any infringing activity prior to patent expiration including
activities required by the FDA or other government agencies for approval of
drugs):

The
purpose of 271(e)(1) and (2) is to establish that experimentation with a
patented drug product, when the purpose is to prepare for commercial activity
which will begin after a valid patent expires, is not a patent
infringement. Since the Committee's
Subcommittee on Health and the Environment began consideration of this bill,
the Court of Appeals for the Federal Circuit held that this type of
experimentation is infringement. In
Roche Products, Inc. v. Bolar Pharmaceutical Co., 733 F.2d 858 (Fed. Cir.
1984), the Court of Appeals for the Federal Circuit held that the expiration
date of a patent claiming that drug product constitutes patent infringement,
even though the only purpose of the experiments is to seek FDA approval for the
commercial sale of the drug after the patent expires. It is the Committee's view that experimental
activity does not have any adverse economic impact on the patent owner's
exclusivity during the life of a patent, but prevention of such activity would
extend the patent owner's commercial exclusivity beyond the patent expiration
date.

H.R.
REP. NO. 98-857, pt. 1, at 45-46 (1984) (emphases added).

In
the Momenta case, Judge Rader discerned
a "strong incentive to invent [around] the patented manufacturing method,"
that Amphastar eschewed in favor of infringing Momenta's patented method:

At
that point, Amphastar stepped in and took Momenta's patented invention without
permission and used it to manufacture each commercial batch it sells on the
market. Indeed Amphastar continues to
trespass and promises to trespass for years to come. In fact, as the court repeatedly
acknowledges, Amphastar is only able to compete with Momenta by taking its
patented invention. Amphastar has not
developed its own method, but instead delights in trespassing and refuses to
pay a reasonable royalty to make the trespass lawful.

In
addition to permitting "this arrogance" to continue, according to the
Chief Judge, the majority erred by "expanding the limited reach of 35
U.S.C. § 271(e)(1)" and "ignor[ing] the binding precedent of Classen Immunotherapies, Inc. v. Biogen IDEC." Those limits, according to Judge Rader, were
limits in time (pre-marketing approval), type (experimentation) and quantity
(in an amount that would have "limited impact on the patentee's
exclusivity during the life of the patent"), none of which limitations
were satisfied by Amphastar's activities.
Importantly, "the authors made clear that section 271(e)(1) would
not apply to commercial sales, i.e.,
the 'infringing' product would not enter the market until after the patent's
life" said the Chief Judge, citing H.R. REP. NO. 98-857, pt. 1, at 45
(1984) ("This section does not
permit the commercial sale of a patented drug by the party using the drug
to develop such information, but it does permit the commercial sale of research
quantities of active ingredients to such party.") (emphasis added). Accordingly:

Nowhere
in the legislative history can this court find any suggestion that § 271(e)(1)
would apply other than in the limited scenario of conducting de minimis
experiments pre-approval (i.e., to obtain FDA approval). Nowhere in the legislative history can this
court find a hint that an "infringer" could continue to use its
competitor's patented method in manufacture of each commercial batch for
contemporaneous sale. Nowhere in the
legislative history can this court find any mention of the post-approval,
continuous, commercial sales allowed by this decision. Nowhere in the legislative history can this
court find any suggestion that the mere maintenance or retention of information
as part of a company's records is considered a submission that would trigger §
271(e)(1). In fact, this court makes no
attempt to examine the legislative history of this section at all — a very
telling silence.

As
a result:

This
new interpretation would allow almost all activity by pharmaceutical companies
to constitute "submission" and therefore justify a free license to trespass. The FDA can inspect records of any drug
manufacturer and seller. See 21 U.S.C. §
374. Thus, the drug manufacturer need
only make a record, which could potentially be inspected by the FDA, and then
any activity could satisfy this new meaning of "submission."

While the Supreme Court does not indicate why it
refused to grant certiorari, consideration
must be given to the views of the Solicitor General which were expressed upon
invitation by the court in the GSK v.
Classen Immunotherapeutics
case.

According to the Solicitor General's CVSG brief, "further
review [of the Classen decision with regard to the safe harbor} was "no
longer warranted" in view of the Federal Circuit's later Momenta decision. The SG expressed the view that the Classen majority erred when the opinion
stated "that Section 271(e)(1)'s
safe harbor encompasses only activities undertaken to obtain the FDA's
pre-marketing approval of generic products" because "Congress not
only contemplated that drug manufacturers would conduct post-approval
scientific studies and clinical trials, but specifically authorized the FDA to
require such studies in a variety of circumstances." Thus, any post-approval studies that involve
the use of patented inventions solely for uses reasonably related to the development
and submission of information to the FDA should fall within the safe harbor by
the statute's plain meaning. The basis
for the SG's arguments came almost exclusively from the Court's reasoning in
the Merck decision, which held that any use of a patented invention for
developing information that could be submitted to the FDA or other regulatory
agency to obtain marketing approval falls within the scope of the safe
harbor. And, according to the SG, there
is no basis in the statutory language to distinguish eligible post-approval
activity from pre-approval activity. The
SG maintained that the Federal Circuit corrected its error in its Momenta decision by applying the law according to the government's
position, thus eliminating the need for the Supreme Court to apply correction
by granting certiorari.

An
unfortunate consequence of the Court's refusal to grant certiorari is that whether a particular activity — pre- or
post-approval — falls within the safe harbor will depend on how a panel is
constituted. In his Momenta dissent, the Chief Judge contended that the Court had "already
decided the meaning of this statute," which if correct would preclude the
later panel from having come to the opposite conclusion. That the majority in the Momenta case did come to
the opposite conclusion was based on Judge Moore being able to distinguish the
facts and activities in Classen from those
in Momenta. However, given the fact-intensive nature of
the question, it is not unlikely that the next case before the next panel that
considers the question would (and depending on the panel's constitution,
perhaps will) make its own distinctions.
Unless the entire Court takes the case en banc there will be no firm precedent (despite the SG's
reassurances to the Supreme Court) upon which litigants will be able to
rely. This situation is antithetical to
Congress's purpose in establishing the Federal Circuit, and provides one more
example of questions arising before the court that have no consistent answers. Although Supreme Court review has its own perils (KSR, Bilski, Mayo, Myriad), this question would appear to be one that will only be
resolved by an unambiguous decision from the Court (which, no matter how it
comes out on the merits will at least confer the benefits of certainty).
IPO Releases List of Top 300 Patent Holders for 2012

June 24, 2013

Life Sciences Top 50

By Donald Zuhn —

Earlier today, the
Intellectual Property Owners Association (IPO) announced the release of its 30th
annual list of the top 300 organizations receiving U.S. patents. Patent
Docs Readers may recall that the U.S. Patent and Trademark Office stopped
releasing its annual list of top patent recipients in 2006 in order to
"discourag[e] any perception that we believe more is better."

The IPO compiled its list
by counting the number of utility patents granted during 2012 that listed an
organization or a subsidiary as the owner on the printed patent. The IPO noted that if an assignment to an
organization or its subsidiary was recorded after the patent was printed, the
patent was not counted, and further, that patents that were granted to two or
more organizations jointly were attributed to the organization listed first on
the patent. The IPO also noted that 253,155
patents were issued in 2012, which was an increase from the 224,505 patents
that issued in 2011. The top fifteen
companies on the IPO Top 300 are listed below (click on table to expand):

Falling out of the Top 15
in 2012 were Hewlett-Packard Co. and AT&T Corp., which dropped to 16th and
18th, respectively.

As in past years, Patent Docs used the IPO's list of top
patent holders to compile a list of the top "life sciences" companies
and organizations receiving U.S. patents in 2012. In the past six years, the number of life
sciences companies and organizations making the list has gone from 51 in 2006
to 47 in 2007, 43 in 2008, 47 in 2009, 56 in 2010, 53 in 2011, and 50 last
year. Each organization's IPO top 300 ranking
for 2012 is indicated in the "2012 IPO Rank" column; the IPO top 300
ranking for 2011 (if available) is indicated in the "2011 IPO Rank"
column; and the change in number of patents from 2011 is indicated in "+/-
from 2011." The Life Sciences Top
50 is listed below (click on table to expand):

Life sciences companies and
organizations that failed to make the IPO top 300 in 2012 after making it in
2011 included Cardiac Pacemakers, Inc. (#90 on the IPO top 300 for 2011), Japan
Science and Technology Agency (256), University of Illinois (274), University
of South Florida (281), Advanced Cardiovascular Systems, Inc. (283), Genentech,
Inc. (296), General Hospital Corp. (298), and National Institute of Advanced
Industrial Science and Technology (299).
Becton, Dickinson and Co. and Vertex Pharmaceuticals, Inc. returned to
the Top 300 after a one year hiatus.

Please note that some of
the companies and organizations listed above may be involved in work outside
the life sciences sector, and therefore, a portion of the patents granted to
these companies and organizations may be directed to other than life sciences-related
inventions. In addition, our list is a
little inclusive in that we included medical device companies.

For additional information regarding this topic, please see:

• "Another Look at IPO Top 300 and Life Sciences Top 53," June 11, 2012
• "IPO Releases List of Top 300 Patent Holders for 2011," June 7, 2012
• "IPO Releases List of Top 300 Patent Holders for 2010," June 30, 2011
• "IPO Releases List of Top 300 Patent Holders for 2009," May 26, 2010
• "IPO Releases List of Top 300 Patent Holders for 2008," May 14, 2009
• "IPO Releases List of Top 300 Patent Holders," May 22, 2008
• "IPO Posts List of Top 300 Patent Holders," April 20, 2007
Court Report

June 23, 2013

By Sherri Oslick —

About Court Report: Each week we will report briefly on recently filed biotech and pharma cases.

Alza
Corp. et al. v. Par Pharmaceutical Inc. et al.
1:13-cv-01104;
filed June 19, 2013 in the District Court of Delaware

• Plaintiffs:
Alza Corp.; Janssen Pharmaceuticals Inc.
• Defendants:
Par Pharmaceutical Inc.; Actavis Elizabeth LLC; Actavis Inc.

Infringement
of U.S. Patent No. 8,163,798 ("Methods and Devices for Providing Prolonged
Drug Therapy," issued April 24, 2012) following a Paragraph IV
certification as part of Par's filing of an ANDA to manufacture a generic
version of Alza's Concerta® (methylphenidate hydrochloride, used to treat
attention deficit hyperactivity disorder).
View the complaint here.

Kissei
Pharmaceutical Co. Ltd. et al. v. Hetero USA Inc., et al.
1:13-cv-01091;
filed June 17, 2013 in the District Court of Delaware

• Plaintiffs:
Kissei Pharmaceutical Co. Ltd.; Watson Laboratories Inc.; Actavis Inc.
• Defendant: Sandoz
Inc.

Kissei
Pharmaceutical Co. Ltd. et al. v. Sandoz Inc.
1:13-cv-01092;
filed June 17, 2013 in the District Court of Delaware

• Plaintiffs:
Kissei Pharmaceutical Co. Ltd.; Watson Laboratories Inc.; Actavis Inc.
• Defendants:
Hetero USA Inc.; Hetero Labs Limited; Hetero Labs Ltd., Unit III

The
complaints in these cases are substantially identical. Infringement of U.S. Patent No. 5,387,603 ("1,5,7-Trisubstituted
Indoline Compounds and Salts Thereof," issued February 7, 1995) following
a Paragraph IV certification as part of Hetero's filing of an ANDA to
manufacture a generic version of Watson's Rapaflo® (silodosin, used to treat benign
prostatic hyperplasia). View the Hetero complaint here.

AbbVie Inc.
v. Mylan Pharmaceuticals Inc.
1:13-cv-01072;
filed June 14, 2013 in the District Court of Delaware

Infringement
of U.S. Patent Nos. 6,232,333 ("Pharmaceutical Composition," issued
May 15, 2001), 7,141,593 ("Pharmaceutical Formulations," issued
November 28, 2006), and 7,432,294 (same title, issued October 7, 2008)
following a Paragraph IV certification as part of Mylan's filing of an ANDA to
manufacture a generic version of AbbVie's Norvir® (ritonavir, used to treat
human immunodeficiency virus (HIV) infection).
View the complaint here.

Insite Vision
Inc. et al. v. Mylan Pharmaceuticals Inc. et al.
3:13-cv-03720;
filed June 14, 2013 in the District Court of New Jersey

• Plaintiffs:
Insite Vision Inc.; Merck Sharp & Dohme Corp.; Inspire
Pharmaceuticals, Inc.; Pfizer Inc.
• Defendants:
Mylan Pharmaceuticals Inc.; Mylan Inc.

Infringement
of U.S. Patent Nos. 6,861,411 ("Method of Treating Eye Infections with
Azithromycin," issued March 1, 2001), 6,239,113 ("Topical Treatment
or Prevention of Ocular Infections," issued May 29, 2001), 6,569,443 (same
title, issued May 27, 2003), and 7,056,893 (same title, issued June 6, 2006),
licensed to Inspire (now Merck), following a Paragraph IV certification as part
of Mylan's filing of an ANDA to manufacture a generic version of Merck's
AzaSite® (azithromycin, used to treat bacterial conjunctivitis). View the complaint here.

Senju
Pharmaceutical Co., Ltd v. Apotex Inc. et al.
1:13-cv-04132;
filed June 14, 2013 in the Southern District of New York

• Plaintiff:
Senju Pharmaceutical Co., Ltd.
• Defendants:
Apotex Inc.; Apotex Corp.; Ista Pharmaceuticals, Inc; Bausch & Lomb
Inc.

Infringement
of U.S. Patent No. 6,335,335 ("Prolonged-Action Eye Drop," issued
January 1, 2002) following a Paragraph IV certification as part of Apotex's
filing of an ANDA to manufacture a generic version of Senju's Istalol® (timolol
maleate ophthalmic solution, 0.5%, used treat elevated intraocular pressure in
patients with ocular hypertension or open-angle glaucoma). View the complaint here.
Conference & CLE Calendar

June 23, 2013

June 25, 2013 – AIA Impact on Section 103 and Non-Obviousness:
Navigating Timing Changes, Post-AIA Treatment of KSR, and Secondary Considerations to Meet Patent Validity
Requirements (Strafford) – 1:00 – 2:30 pm (EDT)

June 25-26, 2013 – Maximising
Pharma Patents (C5 (UK)) – London, England

June 26, 2013 – The Supreme
Court Decision(s) in Myriad: What Did
the Justices Say? What Does It Mean for Industry? (Foley
& Lardner) – 12:00
to 1:15 pm (Eastern)

July 1-2, 2013 – TTS Europe (TTS Ltd. and Wellcome Trust) – London, UK

July 10, 2013 – CLS Bank v. Alice Corp.: Navigating Patent
Eligibility of Software-Related Inventions Absent Clear Guidance (Strafford) – 1:00 to 2:30 pm (EDT)

July
10-12, 2013 – Fundamentals of Patent Prosecution
2013: A Boot Camp for Claim Drafting & Amendment Writing (Practising
Law Institute) – San Francisco, CA

July 11, 2013 – Biotechnology Patents at the U.S. Supreme
Court: 2012-2013 Term (McDonnell
Boehnen Hulbert & Berghoff LLP) – 10:00 to 11:15 am
(CT)

July 15-16, 2013 – Global Patenting Strategy and Practice (American Conference
Institute) – New
York, NY

July 15-19, 2013 – Patent Law Summer
Intensive (Benjamin N. Cardozo School of Law) – New York, NY

July 17-18, 2013 – Legal
and Regulatory Summit on Generic Drugs (American Conference
Institute) – New York, NY

July 28-30, 2013 – 2013 Annual Meeting & Conference (National Association of Patent Practitioners) – San
Diego, CA

July 31 to August 2, 2013 – Advanced Patent Law Seminar (Chisum Patent Academy) – Seattle, WA

August 5-7, 2013 – Advanced Patent Law Seminar (Chisum Patent Academy) – Seattle, WA

***Patent Docs is a media partner of this conference or CLE
ACI Legal and Regulatory Summit on Generic Drugs

June 21, 2013

American Conference
Institute (ACI) will be holding its Legal
and Regulatory Summit on Generic Drugs on July 17-18, 2013 in New York,
NY. ACI faculty will help attendees:

• Adapt to the implementation
and economic impacts of the Generic Drug User Fee Amendments
• Understand the
opportunities and challenges presented by the Health Care Reform Law's provisions
on generic drug reimbursement
• Prepare for the viability and exposure of product liability claims against
generic companies
• Comply with new FDA
regulations and comprehend the impact of structural changes at FDA's Office of
Generic Drugs
• Devise tactics to
overcome REMS roadblocks
• Anticipate the
possible repercussions of the U.S. Supreme Court's pending decision on reverse
settlement payments in the Watson case
• Understand the partnership
decisions that can advance your biosimilars agenda
• Grasp the nuances
of breaking developments in Hatch-Waxman litigation that extend beyond IP

In particular,
ACI's faculty will offer presentations on the following topics:

• The politics and policy of the generic drug
industry: Understanding the role of the 113th Congress in shaping the future of
generic pharma
• The game changer: Analyzing the legal and
business impact of the generic drug user fee amendments
• Breaking developments in Hatch-Waxman
litigation . . . Paragraph IV disputes and beyond
• Examining branded-generic alliances that
maximize the potential of biosimilars and minimize investment risks
• Reverse payments update: Key strategies to
bring to the settlement table
• The evolution of authorized generics
agreements including new controversies under health care reform
• A view from the bench: The judges speak on
major developments in case law impacting the pharmaceutical industry
• Developing strategies for bypassing
roadblocks to REMS-controlled drugs access
• How generic companies are defending against
evolving theories of products liability law following Pliva v. Mensing
• Protecting your company from price erosion
through improved pricing reimbursement strategies tailored to the generics
industry
• Insights from the office of generic drugs
• Eyes on the 180-day prize: Identifying current
and future trends to successfully position your generic pipeline strategy

Two pre-conference workshops
will be held on July 16, 2013. The first,
entitled "Industry Roundtable:
Addressing the Day to Day Legal, Regulatory, and Business Challenges of Generic
Manufacturers," will be offered from 10:00 am to 12:00 pm. The second, entitled "Business Development Master Class: In-House
Counsel Perspectives on Selecting and Evaluating Outside Counsel,"
will be offered from 2:00 pm to 4:00 pm.

The agenda for the Legal and Regulatory Summit on Generic Drugs
can be found here,
and additional information about the post-conference workshops can be found
here. A complete brochure for this conference,
including an agenda, detailed descriptions of conference sessions, list of
speakers, and registration form can be obtained here.

The registration
fee for the conference is $2,295 (conference alone), $2,695 (conference and one
workshop), or $2,895 (conference and both workshops). Those registering by June 26, 2013 will
receive a $200 discount. Those
interested in registering for the conference can do so here,
by e-mailing CustomerService@AmericanConference.com, by calling 1-888-224-2480,
or by faxing a registration form to 1-877-927-1563.
Novo Nordisk A/S v. Caraco Pharmaceutical Laboratories, Ltd. (Fed. Cir. 2013)

June 20, 2013

By
Andrew Williams —

When
is a combination of two separate treatments for a particular disease obvious-to-try,
such that it is rendered obvious for the purposes of patentability? The Supreme Court answered this question in KSR Int'l Co. v. Teleflex Inc., 550 U.S.
398 (2007), when it said that "obvious to try might show that [the
combination] was obvious . . . [if] there are a finite number of identified,
predictable solutions." Id. at 421. Therefore, the answer appears to turn on
predictability. Correspondingly, in its
third Novo Nordisk A/S v. Caraco Pharm.
Labs. Ltd. opinion, rendered earlier this week, the Federal Circuit found
no error in the lower court's finding that the synergistic effects of two Type
II Diabetes treatments were predictable, thereby rendering the combination
obvious. However, at the same time, the
Court appeared to criticize almost all of the studies by (or cited by) Novo
that supported this "obvious" synergistic effect, and found that
there were plenty of other studies that had contradictory results. This, of course, begs the question that, if
such unexpected results were predictable before the invention, why were they so
difficult to establish after the invention.
Judge Newman provided a dissent to the obviousness determination because
she felt that the lower court did not address the correct question: "whether
it was obvious that the combination of metformin and repaglinide would exhibit
synergism and that the combination would be 800% more effective than the
additive effect of the components separately." She found sufficient evidence in the record
to answer this question in the negative, and would therefore have upheld the
validity of the patent.

As
alluded to above, this Novo case has
had an extensive history, including a stop last year at the Supreme Court. We provided analysis at the time of the
Supreme Court's opinion (see "Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S (2012)"), as well as the two previous Federal Circuit opinions (see "Novo Nordisk A/S v. Caraco Pharmaceutical Laboratories, Ltd. (Fed. Cir. 2010)" and "Novo Nordisk A/S v. Caraco Pharmaceutical Laboratories, Ltd. (Fed. Cir. 2012)"),
so this post will only provide enough introduction for the proper context of
this case. Novo markets the drug PRANDIN^®
for the treatment of Type 2 (adult-onset) diabetes. Repaglinide is the active ingredient in
PRANDIN^®, and the use of repaglinide in combination with metformin
is covered by U.S. Patent No. 6,677,358 ("the '358 patent"). The previous Supreme Court decision stemmed
from Caraco's ANDA filing to market a generic Repaglinide monotherapy, which
contained a Section viii statement to "carve-out" the '358 patent's
claimed method of use. However, because
Novo had provided a use code for the Orange Book listing broad enough to cover
the non-patented uses, the FDA rejected Caraco's carve-out label. Ultimately, the Supreme Court held that 21
U.S.C. § 355(j)(5)(c)(ii)(I) provided an ANDA applicant an opportunity to
challenge inaccurate use codes and designations, and as a result, the use code
for PRANDIN^®now reads "Patented Method of Using Repaglinide in
Combination With Metformin as Indicated For Improving Glycemic Control in
Adults with Type 2 Diabetes Mellitus."
Nevertheless, according to statements made during the oral argument for
the present case, Caraco had not been successful in receiving FDA approval for
the Repaglinide monotherapy. Therefore,
the validity of claim 4 of the '358 patent was apparently the only remaining obstacle
for the approval of Caraco's ANDA.

Claim
4 of the '358 patent reads:

4. A method for treating
non-insulin dependent diabetes mellitus (NIDDM) comprising administering to a
patient in need of such treatment repaglinide in combination with metformin.

Repaglinide
falls within the functional class referred to as "insulin secretagogues,"
which work by stimulating insulin release from pancreatic beta cells. There are two subclasses of secretagogues:
meglitinides (of which repaglinide is an example) and sulfonylureas (of which
glyburide is an example). However, according
to a prior art article, Wolffenbuttel B.H.R. et al., Eur. J. Clin. Pharmacol. 45(2):113-16 (1993), repaglinide "differs
from the sulfonylureas in its molecular structure, profile of action, and
excretion mechanism." For example,
the structure of repaglinide is:

while
the structure of glyburide is:

Metformin,
on the other hand, falls within the functional class of "insulin
sensitizers," a class which works to reduce insulin resistance by acting
on the liver to reduce insulin production.
This improves sensitivity in muscle and fat tissue.

Repaglinide
was found to be rapid and short acting, and therefore quickly eliminated from
the body. Therefore, its value as a
pharmaceutical was questioned.
Nevertheless, the inventors of the '358 patent conducted a study on
Australian patients ("the Moses Study") which showed that, when given
the combination of repaglinide and metformin, the fasting plasma glucose ("FPG")
levels of patients that had failed on metformin alone decreased eight times
lower than what was typically achieved by metformin alone. This was particularly surprising, because repaglinide
on its own actually tended to increase patient's FPG levels. Therefore, the scientists concluded that the
combination therapy yielded a synergistic effect (instead of an additive
effect), because the effect of the combination exceeded the sum of the
separately administered effect.

Based
on the Moses study, Novo filed a provisional application, to which the '358
patent claimed priority. During
prosecution of the resulting non-provisional patent application, the examiner
rejected the claims four times, reasoning that it would have been obvious to
try combining the two drugs, because it was predictable that there would be at
least an additive effect. In its fifth
response, Novo filed a declaration by Dr. Sturis, in which he disclosed results
of a test with "Zucker obese rats."
The rats were divided into four groups, one of which received a placebo,
two of which received either repaglinide or metformin alone, and the last of
which received the combination. The
blood glucose levels were measured at various time points, and the area under
the curve calculated. According to the
results, the combination therapy proved to be more effective than the "hypothetical
additive effect" of the two drugs, with a p-value of 0.061 (just shy of
statistical significance). However, when
the final time point of 120 minutes was considered alone, the p-value related
to the synergistic effect was 0.02, in other words, it was statistically
significant. The examiner withdrew the
rejection based solely on Dr. Sturis' declaration, and the patent ultimately
issued as the '358 patent.

As
also alluded to earlier, Caraco filed an ANDA in 2005 requesting approval to
sell a generic version of repaglinide.
Caraco certified that that the '358 patent was either invalid or not
infringed, and after Novo filed suit alleging that claim 4 was infringed,
Caraco counterclaimed that the patent was, inter
alia, obvious and unenforceable. The
lower court sided with Caraco on both of these points, and Novo appealed.

Obviousness: Obvious
to Try

Novo's
strongest argument related to the obviousness of claim 4 was that the lower
court did not properly review the scope and content of the prior art. Specifically, the lower court considered that
the closest prior art was the combination therapy using metformin and
sulfonylurea, but did not consider repaglinide's known efficacy as a
monotherapy. The lower court justified
its analysis because the sulfonylureas are secretagogues, just like repaglinide,
and therefore repaglinide (supposedly) would have a similar mechanism of
action. And, because the combination of
metformin and one of the sulfonylureas were well known in the art to produce
beneficial, and even synergistic, results, it would have been predictable that
the claimed combination would also have had synergistic results, at least enough
to make the combination obvious to try.
The Federal Circuit found no clear error with this finding.

However,
as highlighted by Judge Newman's dissent, repaglinide is not structurally
similar to the sulfonylureas, and the action profile of these two subclasses in
the body are different. Instead of
finding support that these chemically distinct molecules would behave similarly
on pancreatic beta cells, the District Court apparently assumed that because
the effect that these two subclasses have on such cells is similar (stimulating
insulin release), they must act in the same way. But the lower court apparently did not consider
the Wolffenbuttel article, which suggested just the opposite — that the two
subclasses act differently. Also,
according to Judge Newman, not all sulfonylureas exhibit synergy when combined
with metformin, thereby making the predictability of the repaglinide/metformin
synergy even more suspect. As Judge
Newman put it, the District Court concluded that one skilled in the art would "perhaps"
have expected the synergistic results of the claimed combination, but "perhaps"
is not sufficient to overcome the clear and convincing evidentiary hurdle.

Perhaps
more surprising, all of the studies that Novo cited as demonstrating the
unexpected synergistic results were criticized by the District Court. Other than the Moses study, which showed an
eight-fold reduction in FPG levels, the lower court did not find a single study
that established that the repaglinide/metformin combination would be
synergistic. For example, it was pointed
out that the Sturis declaration study in rats did not result in a statistically
significant outcome as the experiment was designed, and the only way to obtain a
significant result statistically was to cherry pick the data from the last time
point (120 minutes). In addition,
another study (the Pfeiffer study) compared insulin sensitivity of eleven
patients, and the combination therapy resulted in a 35% improvement over
patients on metformin alone. However,
these results were downplayed because of the small sample size. Even the Moses study itself was criticized
because the near-term and long-term benefits observed were "generally
inferior" to those of the combination of metformin with
sulfonylureas. In fact, the lower court
noted that other tests contradicted the positive results obtained from these
three cited studies. It is curious that
the lower court could have made a determination that such a synergistic result
was predictable so as to make the combination obvious to try when it apparently
had concerns with any study used to find unexpected result after the fact.

To
be clear, the Federal Circuit thought that the record was clear that there
were, in fact, synergistic results based on the combination. In fact, during oral argument, when Caraco's
counsel appeared evasive on acknowledging that such synergistic results existed,
Judge Newman told him that "[i]f your case turns on whether there is or is
not synergism, I think you might as well sit down." Not to be outdone,
during the same questioning regarding whether there were synergistic results,
Judge Dyk exclaimed: "The answer is "yes," of course there is
synergistic results . . . Why are you
fighting that? Isn't that true? . . . The
record establishes it, what are you arguing . . . I don't know why you are
fighting this." Therefore, the only
question should have been whether these synergistic results were predictable,
and it is unclear that they were.

As
Judge Newman pointed out, the lower court and the majority used the inventors'
exceptional intellect against them, because they had tried this particular
combination. However, the proper legal
test is not whether it would have been "obvious to try" for the
inventors, but rather whether one skilled in the art would have found the
combination obvious to try. If the
former were the case, Judge Newman explained, than "[s]uch a thesis would
expunge patentability for all except random observations." It appears that the Court may have used hindsight
reasoning to reach its conclusion, which is of course inappropriate.

Burden
of Proof

Novo
also argued that the District Court misallocated the burden of persuasion,
thereby forcing Novo to "overcome" Caraco's "prima facie"
case of obviousness. The argument was
based primarily on the particular wording in the lower court's opinion. Nevertheless, the Federal Circuit did not
agree. Instead, after Caraco had
presented its case, Novo had the burden of production to come forward with
evidence to rebut the "prima facie" case. Nevertheless, the burden of persuasion never
shifted, remaining with Caraco to establish obviousness by clear and convincing
evidence.

Deference
to the Office

Novo
finally argued that the District Court should have deferred to the examiner's
original findings that the cited studies demonstrated unexpected results of
synergy. As support, Novo cited to Kappos v. Hyatt, 132 S. Ct. 1690
(2012). However, the Federal Circuit
pointed out that Novo inverted the holding of that case, which instead stated
that no deference should be given to the Office's factual findings when those
findings are contradicted by new evidence.
Novo appeared to be suggesting that the reverse also holds, and that if
there is no new evidence, there should deference given. This does not necessarily follow. But, more importantly, the Hyatt case, and others like it, were
concerned with review of a PTO rejection in Federal Court, not with an alleged
infringer's challenge to an issued patent.
Instead, the presumption of validity applies to such a patent, but no
additional deference to the Patent Office's findings need be given.

Inequitable
Conduct

The
lower court had also found that the '358 patent was unenforceable due to
inequitable conduct during its prosecution.
These allegations stemmed from the Sturis Declaration. Specifically, Caraco alleged that not
informing the Patent Office that Dr. Sturis' original test protocol did not
include looking at individual time points, and that therefore none of the
findings originally sought were statistically significant, amounted to fraud on
the Office. In addition, the prosecuting
attorney, Dr. Richard Bork, made statements suggesting that the Sturis
Declaration provides clear evidence of synergy, which according to Caraco
overstated the evidence. Because the
examiner acknowledged that the rejection was withdrawn because of the Sturis
Declaration, Caraco continued, the Therasense
"but for" materiality standard was satisfied. The District Court agreed with Caraco.

The
Federal Circuit was less convinced.
First, with regard to the Sturis Declaration, the Court found that the
omission of the original test protocol was slightly troubling, but that it did
not qualify as "but for" materiality.
This was not a case in which adverse results were hidden in favor of
more positive data. Nor did the omission
undermine the opinion stated in the declaration. Bascially, Dr. Sturis was accused of failing
to notify the Patent Office that the original test plan did not include the
data calculation at 120 minutes. Even
though this ideally should have been disclosed, the Federal Circuit found it to
be a non-material omission. Moreover,
with regard to Dr. Bork's statements during prosecution, the Court found them
troubling but not material. Important in
this determination was that Dr. Bork referred to Dr. Sturis' test results as "evidence"
rather than "proof." In fact,
during oral argument, the panel noted that such grandiose statements are often
made by attorneys, and did not even Caraco's counsel make the same type of
statements before the Court?
Nevertheless, going forward, it is probably advisable for anyone
prosecuting before the Office to speak of "evidence" when referring
to test data, and to avoid making the conclusion that the data is definitive
proof.

It
would, therefore, appear that the saga of Novo v. Caraco is coming to a
close. With claim 4 of the '358 patent
invalidated, there would appear to be no more barriers remaining to the
approval of Caraco's ANDA. Of course,
there is always the possibility of another trip to the Supreme Court, however
unlikely that may be.

Novo Nordisk A/S v.
Caraco Pharmaceutical Laboratories, Ltd. (Fed. Cir.
2013)
Panel:
Circuit Judges Newman, Dyk, and Prost
Opinion
by Circuit Judge Prost; opinion concurring in part and dissenting in part by Circuit
Judge Newman
Does the Myriad Decision Presage a Golden Age of Patent-Free Personalized Medicine?

June 19, 2013

By
Kevin E. Noonan —

The
Supreme Court's decision in the Myriad case has been almost universally
hailed as being a great victory for patients, doctors, personalized medicine, and research. Precluding patenting for "merely"
isolated human DNA, while permitting cDNA to be patent-eligible, is seen as
being a rational compromise ("The Supreme Court got it exactly right,"
according to amicus Eric Lander of the Broad Institute) and no less a legal
luminary than Nina Totenberg has said that the decision has "enormous implications for the future of personalized
medicine and in many ways is likely to shape the future of science and
technology." Medical practitioners
and media pundits agree: with this decision, the Court swept away a significant
barrier to patient access for BRCA gene tests and, by implication, genetic
testing more generally. Indeed, several
genetic analysis companies (including Ambry Genetics, and of course Dr. Harry Ostrer, the
only plaintiff with standing to sue), announced plans to offer BRCA gene
testing.

The natural question to ask is: are
all these "experts" correct? The answer may surprise you. During oral argument before the Federal Circuit the first time the case
came before the appellate court, Gregory Castanias, representing Myriad, argued that the
plaintiffs did not have standing to bring the lawsuit under the doctrine of
redressability. The plaintiffs would not
be able to perform genetic diagnostics on the BRCA genes, according to Mr.
Castanias, because Myriad's patents contained additional method claims of
different scope (other than the claims targeted by plaintiffs in their lawsuit)
that Myriad could assert against Dr. Harry Ostrer. Specifically, the District Court and the
Federal Circuit recognized that the claims put at issue by plaintiffs were
generally directed broadly to "comparing" a patient's BRCA gene
sequence with a wildtype sequence, which failed the then-prevailing "machine
or transformation" test for patent-eligibility of method claims. Claim 1
of U.S. Patent No. 6,033,857 is illustrative of the invalidated claims:

1. A method for identifying a mutant BRCA2
nucleotide sequence in a suspected mutant BRCA2 allele which comprises
comparing the nucleotide sequence of the suspected mutant BRCA2 allele with the
wild-type BRCA2 nucleotide sequence, wherein a difference between the suspected
mutant and the wild-type sequences identifies a mutant BRCA2 nucleotide
sequence.

Whether Mr. Castanias is correct depends on how the
Court's Mayo v. Prometheus and Myriad decisions affect the
patent-eligibility of these remaining claims. These claims include claims 3, 4, and 9 of U.S. Patent 5,709,999:

3. A method for detecting a germline
alteration in a BRCA1 gene, said alteration selected from the group consisting
of the alterations set forth in Tables 12A, 14, 18 or 19 in a human which
comprises analyzing a sequence of a BRCA1 gene or BRCA1 RNA from a human sample
or analyzing a sequence of BRCA1 cDNA
made from mRNA from said human sample with the proviso that said germline
alteration is not a deletion of 4 nucleotides corresponding to base numbers
4184-4187 of SEQ ID NO:1, which comprises analyzing
BRCA1 RNA from the subject and wherein a germline alteration is detected by
hybridizing a BRCA1 gene probe which
specifically hybridizes to nucleic acids containing at least one of said
alterations and not to wild-type BRCA1 sequences to RNA isolated from said
human sample and detecting the presence of a hybridization product, wherein
the presence of said product indicates the presence of said alteration in said
RNA and thereby the presence of said germline alteration in said sample.

4. A method for detecting a germline
alteration in a BRCA1 gene, said alteration selected from the group consisting
of the alterations set forth in Tables 12A, 14, 18 or 19 in a human which
comprises analyzing a sequence of a BRCA1 gene or BRCA1 RNA from a human sample
or analyzing a sequence of BRCA1 cDNA
made from mRNA from said human sample with the proviso that said germline
alteration is not a deletion of 4 nucleotides corresponding to base numbers
4184-4187 of SEQ ID NO:1,wherein a germline alteration is detected by obtaining a first BRCA1 gene fragment from a
BRCA1 gene isolated from said human sample and a second BRCA1 gene fragment
from a wild-type BRCA1 gene, said second fragment corresponding to said
first fragment, forming single-stranded
DNA from said first BRCA1 gene fragment and from said second BRCA1 gene
fragment, electrophoresing said
single-stranded DNAs on a non-denaturing polyacrylamide gel, comparing the mobility of said
single-stranded DNAs on said gel to determine if said single-stranded DNA from
said first BRCA1 gene fragment is shifted relative to said second BRCA1 gene
fragment and sequencing said
single-stranded DNA from said first BRCA1 gene fragment having a shift in
mobility.

9. A method for detecting a germline
alteration in a BRCA1 gene, said alteration selected from the group consisting
of the alterations set forth in Tables 12A, 14, 18 or 19 in a human which
comprises analyzing a sequence of a BRCA1 gene or BRCA1 RNA from a human sample
or analyzing a sequence of BRCA1 cDNA
made from mRNA from said human sample with the proviso that said germline
alteration is not a deletion of 4 nucleotides corresponding to base numbers
4184-4187 of SEQ ID NO:1, wherein a germline alteration is detected by forming a heteroduplex consisting of a first
strand of nucleic acid selected from the group consisting of BRCA1 gene genomic
DNA fragment isolated from said sample, BRCA1 RNA fragment isolated from said
sample and BRCA1 cDNA fragment made from mRNA from said sample and a second
strand of a nucleic acid consisting of a corresponding human wild-type BRCA1
gene fragment, analyzing for the
presence of a mismatch in said heteroduplex, and sequencing said first strand of nucleic acid having a mismatch.

Claim 10 from U.S. Patent No. 5,710,001:

10. A method for screening a tumor sample
from a human subject for a somatic alteration in a BRCA1 gene in said tumor
which comprises gene comparing a first sequence selected form the group
consisting of a BRCA1 gene from said tumor sample, BRCA1 RNA from said tumor
sample and BRCA1 cDNA made from mRNA from
said tumor sample with a second sequence selected from the group consisting
of BRCA1 gene from a nontumor sample of said subject, BRCA1 RNA from said
nontumor sample and BRCA1 cDNA made from
mRNA from said nontumor sample, wherein a difference in the sequence of the
BRCA1 gene, BRCA1 RNA or BRCA1 cDNA from said tumor sample from the sequence of
the BRCA1 gene, BRCA1 RNA or BRCA1 cDNA from said nontumor sample indicates a
somatic alteration in the BRCA1 gene in said tumor sample, wherein the nucleic acid sequence is compared
by molecularly cloning all or part of
the BRCA1 gene from said tumor sample and from said nontumor sample to produce cloned nucleic acids and sequencing the cloned nucleic acids.

Claim 9 of U.S. Patent No. 5,753,441:

9. A method for screening germline of a
human subject for an alteration of a BRCA1 gene which comprises comparing
germline sequence of a BRCA1 gene or BRCA1
RNA from a tissue sample from said subject or a sequence of BRCA1 cDNA made from mRNA from said sample
with germline sequences of wild-type BRCA1 gene, wild-type BRCA1 RNA or
wild-type BRCA1 cDNA, wherein a difference in the sequence of the BRCA1 gene,
BRCA1 RNA or BRCA1 cDNA of the subject from wild-type indicates an alteration
in the BRCA1 gene in said subject, wherein a germline nucleic
acid sequence is compared by amplifying
all or part of a BRCA1 gene using a primer
specific for a specific BRCA1 mutant allele and detecting the presence of an amplified product, wherein the
presence of said product indicates the presence of said specific allele.

And claim 4 of U.S. Patent No. 6,033,857:

4. A method for diagnosing a
predisposition for breast cancer in a human subject which comprises comparing
the germline sequence of the BRCA2 gene or the
sequence of its mRNA [= cDNA] in a tissue sample from said subject with the
germline sequence of the wild-type BRCA2 gene or the sequence of its mRNA,
wherein an alteration in the germline sequence of the BRCA2 gene or the
sequence of its mRNA [= cDNA] of the subject indicates a predisposition to said
cancer, wherein the detection in the alteration in the germline sequence is
determined by an assay selected from the group consisting of
    (a) observing shifts
in electrophoretic mobility of single-stranded DNA on non-denaturing
polyacrylamide gels,
    (b) hybridizing a BRCA2 gene probe to genomic DNA
isolated from said tissue sample,
    (c) hybridizing an allele-specific probe to genomic
DNA of the tissue sample,
    (d) amplifying
all or part of the BRCA2 gene from said tissue sample to produce an
amplified sequence and sequencing the
amplified sequence,
    (e) amplifying
all or part of the BRCA2 gene from said tissue sample using primers for a specific BRCA2 mutant allele,
    (f) molecularly
cloning all or part of the BRCA2 gene from said tissue sample to produce a
cloned sequence and sequencing the cloned sequence,
    (g) identifying a mismatch between (1) a BRCA2 gene
or a BRCA2 mRNA isolated from said tissue sample, and (2) a nucleic acid probe
complementary to the human wild-type BRCA2 gene sequence, when molecules (1)
and (2) are hybridized to each other to form a duplex,
    (h) amplification of BRCA2 gene sequences in said
tissue sample and hybridization of the amplified sequences to nucleic acid
probes which comprise wild-type BRCA2 gene sequences,
    (i) amplification of BRCA2 gene sequences in said
tissue sample and hybridization of the amplified sequences to nucleic acid
probes which comprise mutant BRCA2 gene sequences,
    (j) screening for a deletion mutation in said
tissue sample,
    (k) screening for a point mutation in said tissue
sample,
    (l) screening for an insertion mutation in said
tissue sample, and
(m) in situ
hybridization of the BRCA2 gene of said tissue sample with nucleic acid
probes which comprise the BRCA2 gene.

The italicized portion of these claims constitute
affirmative limitations that are more than merely comparing two sequences, the
deficiency that formed the basis for the Federal Circuit to affirm the District
Court's invalidation of these claims. As
stated in Justice Thomas' opinion:

[T]his case
does not involve patents on new applications of knowledge about the BRCA1 and
BRCA2 genes. Judge Bryson aptly noted that, "[a]s the first party
with knowledge of the [BRCA1 and BRCA2] sequences, Myriad was in an excellent
position to claim applications of that knowledge. Many of its unchallenged
claims are limited to such applications."

These methods are clearly "applications"
of the "knowledge of the [BRCA1 and BRCA2] sequences" and constitute
applications to which the unchallenged claims are limited. The Court's Myriad decision not only does not
preclude patent-eligibility for these claims, it affirmatively suggests that
claims to such applications (particularly when directed to using cDNA) are the
type of claims the Court believes do not suffer from the deficiencies the Court
found attached to claims to "merely" isolated genomic DNA.

But what of the effects of the Court's Mayo decision? Recall that Justice Breyer's opinion (like Myriad, for a unanimous Court) mandates
that to be patent eligible a claim cannot merely recite a law of nature and
direct that it be applied. Claims
to "a process that focuses upon the use of a natural law must also contain other
elements or a combination of elements, sometimes referred to as an 'inventive
concept,' sufficient to ensure that the patent in practice amounts to
significantly more than a patent upon the natural law itself." Here, the "law of
nature" would putatively be the correlation between certain alterations
in the sequence of the BRCA 1 or BRCA 2 genes with an increased risk or
predilection for developing breast or ovarian cancer. An important part of the Court's reasoning
concerning the patent-ineligibility of the claims at issue in Mayo is that the limitation(s) in the
claims relating to detection methods were not specified or limited to any
specific methods. Moreover, both
administration of 6-thioguanine (6-TG) to patients and assaying blood from such
patients for 6-TG or its metabolites was "well-understood, routine and
conventional" and had been "previously
engaged in by researchers in the field." In Mayo,
"scientists already understood that the levels in a
patient's blood of certain metabolites, including, in particular, 6-thioguanine
and its nucleotides (6–TG) and 6-methyl-mercaptopurine (6–MMP), were correlated
with the likelihood that a particular dosage of a thiopurine drug could cause
harm or prove ineffective," circumstances that supported the Court's
determination regarding what was "well-understood,
routine and conventional."

Myriad's
method claims differ in two important ways from the claims in Mayo with regard to these
considerations. First, even the Supreme
Court acknowledged that Myriad had "discovered the precise location and
sequence of two human genes, mutations of which can substantially increase the
risks of breast and ovarian cancer" and that this discovery was "a
medical breakthrough." It seems
evident that methods directed to previously undetected BRCA genes cannot be "well-understood,
routine and conventional." And
another aspect of the Court's decision in Mayo, that administering 6-TG to
patients constituted a "pre-existing" audience (doctors) who had been
performing the administration step in the prior art, cannot be the case here where the Court
recognized that the BRCA genes were unknown prior to Myriad's "discovery."

In addition, unlike Myriad's invalidated method
claims or the claims at issue in Mayo,
how genetic alterations correlated
with cancer risk are detected in the remaining Myriad method claims is recited with specificity. A
consequence of this specificity is that Myriad's claims have a much more narrow
scope and thus exert a much more restricted preclusive effect than the claims
in Mayo.

And the Court's other concern in Mayo, that the claims at issue "threaten
to inhibit the development of more refined treatment recommendations (like that
embodied in Mayo's test), that combine Prometheus' correlations with later
discovered features of metabolites, human physiology or individual patient
characteristics" are contravened here because these claims are all limited
to detecting specific mutations disclosed in Myriad's patent
specifications. New mutations and their
detection fall outside the scope of these remaining claims and thus what is "preempted"
by Myriad in these claims is both properly within the scope of the patent
disclosure and does not pose the impediment that raised concern with the Court
in Mayo.

In view of these considerations, it should
be clear that any "victory" claimed by the ACLU or Public Patent
Foundation is of the Pyrrhic variety; tragically, the women patients, whose
banner was used to engender sympathy and support from the public and press
(with attendant publicity from The New
York Times to People and Marie Clare) are in no better a position
than they were before the Court's decision. As for Myriad, the fact that they can
sue unlicensed purveyors of BRCA gene testing doesn't mean that they will. Under circumstances where asserting their patent rights throughout this case
put the patent rights of many biotechnology companies at risk for patents
Myriad itself admitted were not critically important to protect their
commercial interests, it would be regrettable if Myriad did not defend their
remaining method claims with the same vigor and tenacity.
SAP America, Inc. v. Versata Development Group, Inc. (PTAB 2013)

June 18, 2013

By Michael Borella —

In an example of judicial reasoning rolling downhill, the U.S. Patent and Trademark Office's Patent Trial and Appeal Board (PTAB) has struck down claims directed to a computer-implemented business method as failing to meet the requirements of 35 U.S.C. § 101. Applying the Supreme Court's test of Mayo v. Prometheus, and with a nod to the Federal Circuit's recent CLS Bank v. Alice decision, the PTAB panel found Versata's claims encompassing unpatentable abstract ideas, and lacking additional meaningful limitations that would thwart preemption of these ideas.

Procedurally, this case followed an unusual path. In 2007, Versata sued SAP, alleging infringement of U.S. Patent No. 6,553,350. At trial, SAP was found to infringe, and Versata was awarded lost profits and reasonable royalty damages. Both parties cross-appealed to the Federal Circuit, which affirmed the infringement and damages verdicts. However, before the Federal Circuit's decision came down, SAP petitioned the U.S. Patent and Trademark Office under the America Invents Act's (AIA's) Covered Business Method Patent Review Program (this case was the first ever under the Covered Business Method Patent Review Program, and was filed on September 16, 2012, the day that the program became available), contending that several of Versata's claims were invalid under (among other sections of the statute) § 101.

One of the claims at issue, claim 17, reads as follows:

17. A method for determining a price of a product offered to a purchasing organization comprising:
    arranging a hierarchy of organizational groups comprising a plurality of branches such that an organizational group below a higher organizational group in each of the branches is a subset of the higher organizational group;
    arranging a hierarchy of product groups comprising a plurality of branches such that a product group below a higher product group in each of the branches in a subset of the higher product group;
    storing pricing information in a data source, wherein the pricing information is associated, with (i) a pricing type, (ii) the organizational groups, and (iii) the product groups;
    retrieving applicable pricing information corresponding to the product, the purchasing organization, each product group above the product group in each branch of the hierarchy of product groups in which the product is a member, and each organizational group above the purchasing organization in each branch of the hierarchy of organizational groups in which the purchasing organization is a member;
    sorting the pricing information according to the pricing types, the product, the purchasing organization, the hierarchy of product groups, and the hierarchy of organizational groups;
    eliminating any of the pricing information that is less restrictive; and
    determining the product price using the sorted pricing information.

This rather lengthy claim is virtually devoid of physical structure. The only conceivable "hardware" recited by claim 17 is the data source. Thus, not unlike the business method claims of Bilski v. Kappos and CLS Bank, Versata's claim could arguably be performed as a series of mental steps or with pencil and paper.

Unlike the District Court, the panel construed the claims using the Office's "broadest reasonable interpretation" (BRI) standard during the PTAB trial. Versata argued that the panel had erred in doing so, and should instead adopt the District Court's narrower construction. The panel, however, disagreed.

Noting that the proceeding was before the Office rather than a court, and that Versata had the opportunity to amend its claims, the panel concluded that using the BRI standard was proper. The panel noted that use of the BRI standard facilitated the notice function of a patentee's claims. Specifically, the BRI standard would "encourage inventors to amend their claims to remove uncertainties and over breadth of claim scope."

Versata also challenged the PTAB's use of the BRI standard as exceeding the Office's rulemaking authority. The panel found this line of reasoning unavailing as well. Instead, the panel noted that in passing the AIA, Congress granted the Office broad new rulemaking authority to "establish and govern the new reviews and the relationship of the reviews to other proceedings under title 35" in order to provide a viable alternative for litigating patents. Thus, the panel concluded that the Office had proper authority to implement the BRI standard during post-grant reviews, and that this authority furthered existing policies encouraging clarity of claim scope.

Turning to the claims themselves, the panel construed a number of claim terms, including the term "data source." Versata asserted that this term refers to a computer database, while SAP contended that the term was broad enough to cover "any data source that may be different from a conventional database." Ultimately, the panel construed the term as requiring use of a computer storage medium because the specification defined the field of invention as limited to computer-based pricing of products. Still, the panel noted that adopting either construction would have no impact on the analysis of patent-eligibility under § 101.

With respect to that analysis, the panel began by noting the difficulty of applying § 101, but focused its analysis on the law set forth by Gottschalk v. Benson and Prometheus. The former held that claims reciting an algorithmic abstract idea with "no substantial practical application except in connection with a digital computer" are unpatentable even if they recite some computer structure, because they effectively would be "a patent on the algorithm itself." The latter held that claims including a law of nature are unpatentable unless the claims also recite additional features encompassing "more than a drafting effort designed to monopolize the law of nature."

The panel quickly determined that the claimed process was directed to "determining a price using organizational and product group hierarchies, which are akin to management organizational charts." This, the panel decided, was a "disembodied concept," and was capable of being performed mentally or on paper — an abstract idea. With that out of the way, the panel carried out a three-step analysis, examining the claim for meaningful limitations.

First, the panel found that computer implementation of an abstract idea is not enough to meet the requirements of § 101. Comparing Versata's claims to those of Benson, the panel determined that even if a computer is required to implement the Versata invention, "[t]he mere recitation of computer implementation or hardware in combination with an abstract idea, however, is not itself a significant, meaningful limitation on the scope of the claims." Thus, the panel concluded that, like Benson, the claims were directed to an abstract idea performed by a computer.

Second, the panel determined whether this computer implementation itself included a "contribution to the arts that lies not in the type of computing device or processing environment employed." Finding that the claimed process could be performed by a well-known, general-purpose computer, the panel answered this question in the negative.

Third, the panel found no additional meaningful limitations. Based largely on expert testimony, the panel found that any additional steps recited by the claims consisted of merely routine and conventional activities. While noting that it was improper to combine the inquiries of § 101, with those of § 102 and § 103, the panel agreed with SAP's expert that "the additionally claimed steps of storing, retrieving, sorting, eliminating and receiving are well-known, routine, and conventional steps." Consequently, the panel concluded that the claims preempted the abstract idea recited therein, and were patent-ineligible.

Perhaps the most perplexing aspect of the reasoning leading to this conclusion is the panel's insistence that they did not combine the subject matter eligibility, novelty, and obviousness tests. Nonetheless, they went straight on to compare a claimed invention to prior art when considering the subject matter eligibility of the claims. Undoubtedly, this rationale is the red-headed step child of Prometheus, which influenced the Federal Circuit in CLS Bank, and now has risen at the PTAB.

This case also illustrates how some federal judges, and now some PTAB panels, have soured on the general purpose computer. General-purpose computing has grown dramatically over the last 25 years, replacing special-purpose computing in many fields and applications. Much of the Internet, which is a major driver of the U.S. economy, is based on general purpose computing. Still, the courts and the Office have lately taken to finding that implementing an algorithm on such a computer does not create a special purpose computer, as held by the Federal Circuit in 1994's In re Alappat.

But software patents are far from extinct. One common thread through Bilski, CLS Bank, and this case is that broadly-drafted business method claims are likely subject to attack under § 101, even if they recite some computer structure. If anything, these cases provide a roadmap for drafting claims that would pass muster under § 101. For instance, tying together software steps with particular hardware components may provide limitations that a court finds "meaningful."

Nonetheless, cases like this one exemplify that the viability of many computer-implemented patents is uncertain. Markets abhor uncertainty. If the goal of the patent system is to encourage disclosure of important inventions in which organizations and individuals invest, there is a disconnect between this objective and the current state of the law.

SAP America, Inc. v. Versata Development Group, Inc. (P.T.A.B. 2013)
Panel: Administrative Patent Judges Medley, Tierney, and Elluru
Final Written Decision by Administrative Patent Judge Tierney
IPO Webinar on FTC v. Actavis

June 18, 2013

The
Intellectual Property Owners Association (IPO) will offer a one-hour webinar entitled
"Reverse
Payments: Impact of U.S. Supreme Court on Hatch-Waxman Litigation"
on June 20, 2013 beginning at 4:30 pm (ET).
A panel consisting of Jeffery
Cross of Freeborn & Peters; Albert Foer, president and founder of the
American Antitrust Institute; and Lawrence Rosenberg of Jones Day will consider
such questions as:

• How
will the "rule of reason" structure evolve in these cases?
• What
are the new rules for counseling generic companies considering launching a
challenge?
• Will
the number of patent challenges by generic companies decline?
• How
will plaintiffs in antitrust cases meet post-Twombley pleading standards?
• What
will be the role of the merit of the patent?
• Is
Chief Justice Roberts' correct in his dissent that the "court's attempt to
limit its holding to the context of patent settlements under Hatch-Waxman will
not long hold"?

The
registration fee for the webinar is $120 (government and academic rates are
available upon request). Those
interested in registering for the webinar can do so here.

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