Patent Docs

Streck, Inc. v. Research & Diagnostic Systems, Inc. (Fed. Cir. 2012)

By Andrew Williams --

In a sequel of sorts to the hugely popular Streck, Inc. v. Research & Diagnostic Systems, Inc. (Fed. Cir. 2011), the Federal Circuit released Streck II (Streck, Inc. v. Research & Diagnostic Systems, Inc. (Fed. Cir. 2012)) earlier this month.  Not to be upstaged by the original, this ambitious follow-up leaves the priority determination behind, and instead focuses on the infringement proceeding appeal.  Notably, Streck II clocks in at over twice the length of its predecessor.  However, if you have ever asked yourself whether a counterclaimant could maintain the full scope of a declaratory judgment challenge if a plaintiff narrows the scope of asserted claims early on in litigation, then Streck II could keep you on the edge of your seat.  Spoiler alert -- the answer is "no."

The background and cast of characters was basically the same for both opinions.  For those unfamiliar with the original Streck, the technology at issue in both cases was integrated controls for hematology analyzers.  Prior to 1996, such instruments measured reticulocytes and white blood cells separately, because the various blood components would interfere with each other, causing error in counting or classifying.  Such stand-alone controls using either true reticulocytes (also referred to as natural reticulocytes) or reticulocytes analogs were known before the filing dates of the patents-at-issue.  As the instrument makers began attempting to develop an integrated analyzer that could measure the different blood components in the same sample, both Streck and Research & Diagnostic Systems (R&D) sought to create an integrated control.  As we learned in Streck, one of the difficulties to overcome was the stability of the controls over extended periods of time.  Streck obtained a patent to such controls, U.S. Patent No. 6,221,668, and sued R&D in the U.S. District Court for the District of Nebraska for infringement of three patents.  Claim 1 of the '668 patent is representative:

1.  A hematology control composition comprising:
    a)  a stabilized reticulocyte component; and
    b)  a fixed and stabilized white blood cell component capable of exhibiting a five-part differential.

The District Court construed the claims to encompass both true reticulocytes and reticulocyte analogs.  Streck's inventor, however, only actually reduced his invention to practice with his previous developed reticulocyte analogs, while R&D's commercial product used true reticulocytes.

At this point, the plot of Streck II gets a bit convoluted.  As previously mentioned, Streck filed its lawsuit in Nebraska.  However, both parties agreed to be bound by the local patent rules of the United States District Court for the Northern District of California.  As a result, Streck served a Disclosure of Asserted Claims and Preliminary Infringement Contentions shortly after the initial case management conference.  In this disclosure, Streck narrowed the scope of asserted claims.  R&D followed up with preliminary invalidity contentions narrowly drawn to the asserted claims, but later expanded the contentions to include all but one of the claims in the patents-at-issue.  Streck further narrowed its asserted claims to ten, and then to nine, prior to the Court's Summary Judgment decision.  On September 9, 2009, the Court held that Streck's patents satisfied the Written Description requirement with respect to integrated controls with true reticulocytes, and denied R&D's motion for summary judgment on enablement.  The Court also dismissed the counterclaims with respect to Claim 3 of two of the patents, because there was "no reasonable apprehension of suit," and found that, as a matter of law, R&D infringed the asserted claims (and that there was evidence from which a jury could find willfulness).  Subsequently, just before trial, the Court sided with Streck and excluded the evidence related to the validity of all unasserted claims, stating that the validity of these claims would not go to the jury.  After an eight-day jury trial, the Court granted JMOL for Streck on enablement.  The only issues submitted to the jury were priority, damages, and willfulness.  The jury did not find R&D's infringement to be willful and awarded damages of 12.5%.  As the priority issue was covered in Streck, it will not be addressed here.  The procedural background concluded with the District Court entering an injunction against R&D.

Declaratory Judgment Jurisdiction over Counterclaims

The first issue on appeal was whether R&D could maintain invalidity counterclaims against claims that Streck was no longer asserting.  Steck originally filed suit in June 2006 alleging infringement of all claims in the patents-in-suit, but within six months, it had narrowed the asserted claims to fifteen specific claims.  R&D, in turn, responded with preliminary invalidity contentions against those fifteen claims, but expanded the scope of its invalidity contentions in the next two years to all but one claim of the patents-in-suit.  Streck subsequently narrowed the asserted claims to ten, and then to nine.  As a result, the District Court dismissed R&D's invalidity counterclaims against two claims because it had "no reasonable apprehension" it would face an infringement suit on any claim other than the claims asserted by Streck.  Moreover, prior to trial, the Court excluded R&D's evidence with regard to the unasserted claims, because of these same jurisdictional concerns.

The Federal Circuit agreed with the District Court that there was no jurisdiction, even though it used the outdated "reasonable apprehension" test.  As the Federal Circuit pointed out, even though MedImmune rejected strict reliance on the "reasonable apprehension of suit" test, it did not do away with the relevance of this test.  The Federal Circuit looked favorably on a New Jersey District Court case as persuasive authority, Hoffman-La Roche Inc. v. Mylan Inc., No. 2:09cv1692, 2009 U.S. Dist. LEXIS 114784, at *17-18 (D.N.J. Dec. 9, 2009).  In that case, like here, the patentee narrowed the scope of the asserted claims when it served infringement contentions.  That court noted that jurisdiction exists on a claim-by-claim basis at every stage of the litigation, and that even though the plaintiff's decision to change the scope of the suit did not automatically divest the court of jurisdiction, the counterclaimant must show why jurisdiction continues to exist.  Applying the same reasoning, the Federal Circuit found that "there was no evidence that R&D met its burden of showing a continuing case or controversy with respect to the unasserted claims."  In fact, the Court noted that R&D relied too heavily on the District Court's use of the "reasonable apprehension" test, and pointed out that MedImmune doesn't stand for the proposition that jurisdiction automatically exists whenever a competitor wants to mount a validity challenge.

Interestingly, the Federal Circuit cited favorably to Streck's narrowing of the scope of the claims at the outset of the litigation, prior to any dispositive rulings.  In fact, it appears that neither party cited to the preliminary infringement and invalidity contentions, but instead the Court itself identified the early nature of the narrowing of scope of the litigation.  This begs the question, therefore, of when is it advisable to narrow the scope of the claims in an infringement suit?  Should it be done as soon as possible, thereby possibly foreclosing the ability to assert relevant claims before fact discovery is completed (or perhaps has even begun)?  Or can a patentee wait until the eve of filing of Summary Judgment motions?  Of course, after MedImmune, courts must look to "all the circumstances," and therefore the answer will be fact specific.  Nevertheless, it would be advisable to monitor the claims one is asserting in an infringement suit during all stages of the litigation, especially if it is desirable to move some of those claims out of harm's way, or if the validity of those claims is in such question that taking them to the jury could have prejudicial affect.

Written Description

The second issue on appeal was whether Streck's patents satisfied the written description requirement of 35 U.S.C. § 112, ¶ 1.  Specifically, R&D alleged that the patents failed to provide sufficient details to establish that Streck was in possession of a true reticulocyte integrated control.  The test, according to Ariad Pharm., Inc. v. Eli Lilly & Co., 598 F.3d 1336 (Fed. Cir. 2010) (en banc), is whether the disclosure "conveys to those skilled in the art that the inventor had possession of the claimed subject matter as of the filing date."  Id. at 1351.  The Federal Circuit implicitly noted that there are generally two situations where written description can be found lacking:  (1) when newly added claim language is not supported by the specification as filed, and (2) when patentees attempt to claim a broad genus without providing adequate support for enough species within that genus.  The Court found that neither of these situations applied, because the patents-in-suit specifically referred to several types of true reticulocytes, i.e., several species, as possible embodiments of the claimed invention.  And, even though it was more relevant to the enablement requirement, the Court did note that because analogs are designed to mimic true reticulocytes, and because stand-alone true reticulocytes were known in the art, it was not difficult to conclude that one skilled in the art would have recognized that the claimed integrated controls could be made with either true reticulocytes or analogs.

R&D did not appear to take its written description challenge very seriously.  Indeed, the District Court noted that the R&D focused primarily on enablement, and the Federal Circuit argument centered almost exclusively on the enablement issue.  Instead, R&D appeared to rely mainly on the testimony of a Streck inventor to establish a lack of written description.  However, R&D apparently mischaracterized the testimony.  The inventor did testified to the commercial practicalities of the use of true reticulocytes, but such evidence does not speak to the feasibility or viability of the use of true reticulocytes in a control.  Instead, it merely reflects the inventor's personal preference.  Also, R&D pointed to the inventor's difficulty in identifying support in the specification for true reticulocytes.  However, he later clarified that the patent covers both kinds of reticulocytes, and cited to the language referenced above.  Finally, R&D cited the lack of any reduction to practice by Streck of true reticulocytes.  However, actual reduction to practice is not necessary because the filed specification constitutes a constructive reduction to practice.  Therefore, such an allegation is without merit.

Enablement

R&D's lack of enablement assertions appeared to have more credibility, but they also ultimately fell short.  In fact, the Federal Circuit held that the evidence clearly supported a finding of enablement, and therefore met the exacting standard of taking this fact-laden inquiry away from the jury.  The District Court had granted JMOL after the close of evidence but before the case went to the jury, and the Federal Circuit affirmed that decision.

Much like with the written description challenge, R&D alleged that the patents-in-suit do not enable true reticulocyte integrated controls.  Of course, to satisfy the enablement requirement, the specification must enable one skilled in the art how to make and use the claimed invention without undue experimentation.  And, even though the specification need not disclose what is well known in the art, this rule is not a substitute for a basic enabling disclosure.

The question in this case appeared to center around what the novel aspects of the invention were.  R&D relied on Automotive Technologies Int'l, Inc. v. BMW of North America, Inc., 501 F.3d 1274 (Fed. Cir. 2007), which held that a patent that disclosed mechanical side-impact crash sensors for automobile airbags did not, without more, enable the use of electronic side-impact crash sensors.  In that case, the Court determined that the electronic sensors were novel, and distinctly different than mechanical sensors.  Moreover, the knowledge of one of skill in the art could not supply the missing information, especially when that missing information constituted the novel aspect of the invention.  In contrast, in the present case, the novel aspect of the invention was the integrated reticulocyte control, and the use of true reticulocyte in the invention is virtually indistinguishable from analogs.  Moreover, even though the burden was on R&D to establish lack of enablement by clear and convincing evidence, R&D failed to submit sufficient evidence to submit the case to a jury.  R&D relied heavily on its expert, but the expert provided conclusory assertions which do not give rise to a genuine issue of fact.  In fact, R&D's expert admitted on cross-examination that he had never been involved in developing controls.  Finally, R&D pointed to the testimony of the Streck inventors that the quantity of experimentation to make and use a true reticulocyte integrated control would be high.  However, this testimony was referring to the difficulties of using such a control prior to the patent disclosure.

Overbreadth of Injunction

After a quick flashback to Streck, in which the Court dismissed R&D's appeal of priority and evidentiary ruling as controlled by the outcome of the first case, Streck II concluded rather anticlimactically.  R&D argued that the permanent injunction entered by the District Court was over broad because it prohibited R&D "from otherwise infringing the asserted claims of [the Patents-in-Suit] until the expiration of the last to expire of the Patents-in-Suit."  Specifically, R&D wanted the injunction limited to the adjudicated products, and products not more than colorably different therefrom.  However, the Federal Circuit noted that the injunction as a whole did specifically refer to the products at issue in the case.  Therefore, because the injunction already contained the limitation sought, the Federal Circuit affirmed the permanent injunction entered by the District Court.

In conclusion, even though it had its slow points, we would give Streck II two thumbs up, and would recommend it to most patent practitioners, especially those embroiled in litigation, trying to determine whether it is advantageous to narrow the scope of asserted claims.

Streck, Inc. v. Research & Diagnostic Systems, Inc. (Fed. Cir. 2012)
Panel: Circuit Judges Newman, O'Malley, and Reyna
Opinion by Circuit Judge O'Malley

Celsis In Vitro, Inc. v. Cellzdirect, Inc. (Fed. Cir. 2012)

By Kevin E. Noonan --

The effects of the Supreme Court's decision in KSR Int'l Co. v. Teleflex Inc. continue to ripple unpredictably through the Federal Circuit's jurisprudence, promoting inconsistencies in obviousness determinations by the Court that seem contrary to its mandate to harmonize U.S. patent law.  The most recent illustration of this effect is in Celsis In Vitro, Inc. v. Cellzdirect, Inc., where a divided panel affirmed the grant of a preliminary injunction over a dissent based, in part, on a rigid understanding of the implications of the KSR decision.

The suit by Celsis alleged infringement of U.S. Patent No. 7,604,929, specifically a method for providing cryopreserved human hepatocytes:

A method of producing a desired preparation of multi-cryopreserved hepatocytes, said hepatocytes, being capable of being frozen and thawed at least two times, and in which greater than 70% of the hepatocytes of said preparation are viable after the final thaw, said method comprising:
    (A)  subjecting hepatocytes that have been 
frozen and thawed to density gradient fractionation to separate viable hepatocytes from non-viable hepatocytes,
    (B)  recovering the separated viable hepatocytes, and
    (C)  cryopreserving the recovered viable hepatocytes to thereby form said desired preparation of hepatocytes without requiring a density gradient step after thawing the hepatocytes for the second time, wherein the hepatocytes are not plated between the first and second cryopreservations, and wherein greater than 70% of the hepatocytes of said preparation are viable after the final thaw.

Thus, the claim recited three steps:  subjecting frozen and thawed hepatocytes to a density gradient to separate viable from non-viable cells; recovering the viable cells, and freezing the cells again that have >70% viable cells after a second thaw without requiring density gradient step.  Evidence before the District Court established that human hepatocytes are fragile and hard to cryopreserve, being very susceptible to damage when frozen and thawed and that there was an expectation in the art that repetition would make that worse, i.e., there would be even fewer viable cells after several freeze/thaw cycles.  Human hepatocytes were in short supply and there was large demand, with available sources in the art being limited to fresh tissue that is rarely available.  As a consequence, research was disrupted because it was dependent on sporadic availability of these cells.  The opinion in the art was that hepatocytes could not be productively cryopreserved because too many non-viable cells were produced, the Court noting that "experts in this field met initial attempts to freeze hepatocytes with skepticism."  The accused infringing article was a pooled multi-cryopreserved hepatocyte product allegedly produced using the claimed method (although the opinion does not give the details of the accused products "[f]or confidentiality reasons") sold in direct competition with the Celsis product (also a pooled multi-cryopreserved hepatocyte product).  The District Court (Judge Milton Shadur of the Northern District of Illinois) granted the preliminary injunction.

The Federal Circuit affirmed, in an opinion by Chief Judge Rader joined by Judge Prost, with a dissent by Judge Gajarsa.  The majority opinion recited the "four factors" considered with regard to a preliminary injunction:  "(1) likelihood of success on the merits, (2) irreparable harm, (3) balance of hardships, and (4) public interest."  Defendants challenged the District Court's decision on the first prong based on non-infringement and invalidity (for obviousness).  Regarding infringement, there was a "battle of the experts" won by Celsis, perhaps in part because defendants put forward their marketing director as an expert.  The Celsis expert provided testimony on the meaning of claim term "density gradient fractionation" and then "applied the term to the accused process."  The District Court's decision regarding infringement was also based decision on construction of the term "not requiring" for performing a second density gradient fractionation as being inclusive of methods that actually perform a second density gradient fractionation (provided it is not "required").  The District Court expressly rejected defendants' construction that "not requiring" was equivalent to "prohibited," based on its interpretation that this construction incorporated a limitation from the specification into the claim (which the Court characterized as "hokum").  On this record, the Federal Circuit found no abuse of discretion by the District Court in deciding there was a likelihood that Celsis would succeed in its infringement claim.

The second issue was non-obviousness.  Evidence from both parties included a "vast proliferation of authors and articles dealing with hepatocytes and use of cryopreservation."  The District Court concluded that the claimed method was non-obvious because "not a single one of that astonishingly large body of literature was devoted to the subject of multi-cryopreservation of hepatocytes" (with the District Court noting stress on "multi").  The District Court rejected testimony from defendants' expert that one of his articles disclosed multi-cryopreservation of hepatocytes, finding that the reference was limited to fetal hepatocytes, which were not the same as adult hepatocytes.  Also, since fetal cells were replication-competent, District Court credited testimony from the Celsis expert that it was not possible to determine "whether the same cells were cryopreserved more than once" (which was conceded by defendants' expert).  This reference not the issue on appeal, however; there was another reference that taught whether single-cryopreserved hepatocytes could substitute for fresh hepatocytes (in humans, dogs and monkeys).

In reviewing the District Court's non-obviousness determination, the majority recited the Graham v. John Deere Co. analytical framework of factual inquiries regarding:  "(1) the scope and content of the prior art; (2) the level of ordinary skill in the art; (3) the differences between the claimed invention and the prior art; and (4) objective evidence of nonobviousness," citing Eli Lilly & Co. v. Teva Pharm. USA, Inc., 619 F.3d 1329, 1336 (Fed. Cir. 2010).  On this record, the majority found no abuse of discretion, while noting that defendants would be able to "expand upon the arguments it made at the preliminary injunction stage" at trial.  The majority "does not opine on the final determination, which lays in the realm of the district court in the first instance."  The opinion emphasized the unpredictability in the art, affirming the District Court's finding that "the art was a crowded field for many years and yet there was not one reference to multi-cryopreservation" and "taught away from multiple freezings."  In addition, the opinion noted that the expectation in the art was that a second freezing would result in "greater loss of cells after the second cryopreservation than after the first" and relied upon this understanding as grounds for deciding the art did not render obvious the claimed invention.

In a passage noted in the dissent, the majority specifically found that the second reference relied upon in the appeal did not provide "any teaching, suggestion, or motivation . . . that multiple rounds of freezing would somehow increase rather than decrease cell viability" and criticized defendants' argument as "vague reference[] to 'market need.'"  Rather, the majority said that "without more" this was evidence of the objective criteria of "long felt need" and thus was "supportive of non-obviousness."  And as part of its analysis, the majority found the District Court's decision to be based in art on a (negative) assessment of defendants' witnesses' credibility, something the reviewing court gives "wide discretion" to the district court, citing Conoco, Inc. v. Energy & Envtl. Int'l, L.C., 460 F.3d 1349, 1362-63 (Fed. Cir. 2006), Bristol- Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1236 (Fed. Cir. 2003), Nilssen v. Osram Sylvania, Inc., 504 F.3d 1223, 1231-32 (Fed. Cir. 2007), and Agfa Corp. v. Creo Prods. Inc., 451 F.3d 1366, 1379 (Fed. Cir. 2006).  Rather, the opinion states:

Not one of LTC's experts testified to actually performing the claimed process or documenting their alleged understanding before the time of the invention, despite having the financial, scientific, and professional incentive to do so.  The district court found that LTC's experts did not predict the results of the claimed methods at the time of the invention, nor could they find any reference in the prior art suggesting that any other scientist had.

The Federal Circuit also found no abuse of discretion by the District Court in determining that the other prongs of the test, irreparable harm, balance of the hardships and the public interest, were satisfied.  "Irreparable harm" in this case included "price erosion, damage to ongoing customer relationships, loss of customer goodwill (e.g., when an effort is later made to restore the original price), and loss of business opportunities," all of which the majority found were "valid grounds for finding irreparable harm," citing Abbott Labs. v. Sandoz, Inc., 544 F.3d 1341, 1362 (Fed. Cir. 2008), and Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1382-83 (Fed. Cir. 2006).  The Court based its agreement on the balance of the hardships on the fact that "[defendant's] losses were the result of its own calculated risk in selling a product with knowledge of Celsis' patent," citing Sanofi-Synthelabo v. Apotex, Inc., 470 F.3d 1368, 1383 (Fed. Cir. 2006).  The public interest "favors the enforcement of Celsis' patent rights" in this case because "investment in drug research and development must be encouraged and protected by the exclusionary rights conveyed in valid patents," and does not constitute an abuse of discretion because "[t]hat incentive would be adversely affected by taking market benefits away from the patentee and giving them to the accused infringer in this case."

Judge Gajarsa's dissent illustrates how the Supreme Court's KSR decision has a tendency to tip the balance between an objective assessment of the prior art as understood by one having ordinary skill in the art and its relevance to the claimed invention in favor of a court's subjective determination that an invention is obvious (the "I know it when I see it" standard).  In addition, Judge Gajarsa evinces a belief that a preliminary injunction is "an 'extraordinary and drastic' remedy" that should be denied if a defendant can raise a (presumably unrebutted) "substantial question" on the patent's validity.  Here, he writes that the District Court abused its discretion by committing legal error with regard to obviousness by holding defendants "to a clear and convincing standard of proof" and "reinvigorate[ing] the pre-KSR standard for obviousness, rigidly requiring an explicit teaching, suggestion, or motivation for multi- cryopreserving hepatocytes."

The basis for this opinion is that, in his view, the absence of "two limitations of the claimed invention" (freezing and thawing hepatocytes a second time and making the density gradient fractionation optional after the second thaw)" in the prior art did not defeat defendants' obviousness argument, because "obviousness does not require that each element of the claimed invention must be present in the prior art," citing Tegal Corp. v. Tokyo Electron Am., Inc., 257 F.3d 1331, 1349 (Fed. Cir. 2001).  Indeed, in his view "all of the claimed elements were present in the prior art," including "(1) thawing cryopreserved hepatocytes; (2) using density gradient fractionation to separate viable and non-viable cells; and (3) refreezing and rethawing the hepatocytes."  Taking each limitation individually (rather than considering the invention as a whole according to the plain language of the statute), the dissent notes that "[b]oth cryopreservation and density gradient fractionation were well known in the art at the time of the invention."  In Judge Gajarsa's opinion, the remaining step recited in the claim was "nothing more than measuring the viability of cells thawed for a second time.  If the cells have more than 70% viability, they meet this limitation; if they do not have 70% viability, they do not meet this limitation."  Citing Great Atl. & Pac. Tea Co. v. Supermarket Equip. Corp., 340 U.S. 147, 152-153 (1950), the dissent characterizes the invention as a "patent for a combination which only unites old elements with no change in their respective functions [and] obviously withdraws what already is known into the field of its monopoly."  The invention in Judge Gajarsa's view of nothing more than "[r]epeating known steps to obtain a desired result" which is not inventive, citing Perfect Web Techs., Inc. v. InfoUSA, Inc., 587 F.3d 1324, 1330-31 (Fed. Cir. 2009).  The dissent also characterizes the majority's recognition that the art was unpredictable, and would have expected the claimed invention to be inoperative, as trying to "have it both ways," citing Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1364 (Fed. Cir. 2007), for the principle that "some degree of unpredictability" cannot render an invention non-obvious "so long as there was a reasonable expectation of success," despite the majority's reliance on evidence that there was no such reasonable expectation of success in this case.

The dissent also finds fault with the majority's citation of defendants' failure to provide evidence of any "teaching, suggestion or motivation" in the art as being contrary to the Supreme Court's KSR precedent, eliding the nuance that the Court corrected the Federal Circuit for rigid application of the test and, in fact, preserved the TSM test as being a useful analytical tool for deciding obviousness provided it was not rigidly applied.

The dissent illustrates the difficulties that arise from the Supreme Court's most quoted passage from KSR:

'When there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions, a person of ordinary skill in the art has good reason to pursue the known options within his or her technical grasp,' the invention is likely obvious.

The first portion of the sentence conflates the obviousness analysis from Graham v. John Deere with one of the objective indicia of non-obviousness; it is clear that grounds for finding an invention non-obviousness ("long-felt need in the art") cannot also be a basis for finding an invention obvious ("when there is a design need or market pressure to solve a problem").  Rather, it is only when the Supreme Court's statement is taken in its entirety that the two analytical frameworks can be reconciled:  that in response to the need (long-felt or otherwise), and when there exists a "finite number of identified, predictable solutions" and (in a portion of the Supreme Court's teachings not recited in the dissent) "[i]f this leads to the anticipated success," then "it is likely the product not of innovation but of ordinary skill and common sense."  It would appear that the required expectation of success was missing under the facts of this case.

The other basis for Judge Gajarsa's disagreement with the majority relates to the burden placed on defendant in avoiding the preliminary injunction.  According to the dissenting opinion, defendants were required merely to provide evidence that the asserted claims were "vulnerable" and did not need to establish (by clear and convincing evidence) that the claims were invalid.  This amounts to merely raising a "substantial question" regarding the claims' validity according to Judge Gajarsa, citing Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir. 2001); Genentech, Inc. v. Novo Nordisk A/S, 108 F.3d 1361, 1364 (Fed. Cir. 1997), and Kimberly-Clark Worldwide, Inc. v. First Quality Baby Products, LLC, 431 Fed. Appx. 884, 886-7 (Fed. Cir. 2011).  The District Court (and the majority) improperly shifted the burden to defendants, according to the dissent, and should have "simply decide[d] whether it is more likely than not that the patent will be proven invalid at trial," citing Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1379-80 (Fed. Cir. 2009).

Once again, these diverging standards for deciding questions of obviousness create a certain nostalgia for the wisdom of Judge Learned Hand in considering obviousnses:

The test laid down [in 35 U.S.C. § 103] is indeed misty enough.  It directs us to surmise what was the range of ingenuity of a person "having ordinary skill" in an "art" with which we are totally unfamiliar; and we do not see how such a standard can be applied at all except by recourse to the earlier work in the art, and to the general history of the means available at the time.  To judge on our own that this or that new assemblage of old factors was, or was not, "obvious" is to substitute our ignorance for the acquaintance with the subject of those who were familiar with it.  Reiner v. I. Leon Co., 285 F.2d 501 (2d Cir. 1960)

Courts, made up of laymen as they must be, are likely either to underrate, or to overrate, the difficulties in making new and profitable discoveries in fields with which they cannot be familiar; and so far as it is available, they had best appraise the originality involved by the circumstance which preceded, attended and succeeded the appearance of the invention.  Safety Car Heat & Light Co. v. General Electric Co., 155 F.2d 937 (2d Cir. 1946).

Celsis In Vitro, Inc. v. Cellzdirect, Inc. (Fed. Cir. 2012)
Panel:  Chief Judge Rader and Circuit Judges Gajarsa and Prost
Opinion by Chief Judge Rader; dissenting opinion by Circuit Judge Gajarsa

Warner Chilcott Labs. Ireland Ltd. v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2011)

By Kevin E. Noonan --

The Federal Circuit reversed the grant of a preliminary injunction in Warner Chilcott Labs. Ireland Ltd. v. Mylan Pharmaceuticals Inc., an ANDA case brought before Judge Martini in the New Jersey District Court.  While not extending or changing the law on the requirements for a preliminary injunction grant, the decision illuminates the considerations the Court finds important in deciding whether a district court has abused its discretion.

The case involved the antibiotic doxycycline hyclate, sold in 75-, 100-, and 150 mg tablets by Warner Chilcott as Doryx® under a license from the NDA holder, Mayne Pharma International Pty.  Mayne also owns Orange Book listed U.S. Patent No. 6,958,161, which is related to a modified release coated form of doxycycline.  Suit was initiated subject to the Hatch-Waxman statutory scheme when defendant Mylan filed an ANDA for the 150 mg tableted version of the drug containing a Paragraph IV certification that the listed patent was invalid, unenforceable, and not infringed.  Filing the lawsuit triggered the automatic 30-month stay of FDA approval of the generic drug, and Warner Chilcott moved the District Court for a preliminary injunction shortly before the period of the stay would have expired (when Mylan anticipated the FDA would grant its approval).

As part of the litigation below, the District Court construed the asserted claims in a Markman hearing.  While claim construction was not directly at issue in the appeal, it was relevant to the first prong of the preliminary injunction test:  whether Warner Chilcott had shown a reasonable likelihood of success on the merits.  The District Court considered expert witness reports from both Warner Chilcott and Mylan regarding whether Mylan's product satisfied the recited limitations of the claims.  (The Federal Circuit characterized this as "a battle of the experts.")  The outcome of the "battle" was hardly definitive, the District Court saying that there were "some serious factual disputes" between the parties' experts that would need to be resolved after "further testimony and examination and credibility" at trial.  The District Court denied Mylan's request for an evidentiary hearing and, despite its reservations about the differences between the experts, granted a preliminary injunction to Warner Chilcott, finding that it had fulfilled the requirements of (1) a likelihood of success on the merits; (2) irreparable harm; and (3) a balancing of the hardships in favor of the plaintiff.  Neither the parties nor the Court appear to have considered the fourth prong, the public interest.  "Notably," the opinion states, "the district court did not address Mylan's arguments that the '161 Patent is invalid because of anticipation or obviousness."

There is one additional factor at play in the case.  The District Court informed the parties that it would not be able to conduct a trial on the merits until January 2012 due to a lengthy murder trial scheduled for autumn 2011.

The Federal Circuit reversed, in an opinion by Judge O'Malley joined by Chief Judge Rader and Judge Dyk.  The Court applied the law of the regional (Third) Circuit for whether the preliminary injunction was granted as the result of "an abuse of discretion, an error of law or a clear mistake in the consideration of proof."  Factual findings were reviewed for clear error.  Here, the panel found clear abuse of discretion, based on the District Court's failure to hold an evidentiary hearing, which the Federal Circuit found was an absolute requirement in the Third Circuit for grant of a preliminary injunction.  The opinion states that the District Court granted the injunction on "an unsettled record" in full appreciation that there was a factual dispute between the parties' experts that it did not resolve prior to the injunction grant.  While the Federal Circuit "recognize[d] and [was] not unsympathetic to the district court's scheduling demands and the difficulty in balancing a busy criminal docket with pressing civil matters," the opinion reversed because the District Court's decision to grant the injunction was "contrary to Third Circuit law."

Finally, the opinion asserted as another ground for reversing the preliminary injunction that the District Court "failed to make any findings as to Mylan's invalidity challenge" and as a consequence the Federal Circuit was prevented "from engaging in any meaningful review of that issue."  Under Federal Rule of Civil Procedure 52(a)(1), a district court must "find the facts specially and state its conclusions of law separately" and here the District Court failed to comply with the Rule.  Supreme Court (Mayo v. Lakeland Highlands Canning Co., 309 U.S. 310, 316 (1940)) and Third Circuit (Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700, 708 (3d Cir. 2004)) precedent (as well as Federal Circuit law, for example, Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1378-79 (Fed. Cir. 2009)) mandated compliance with Rule 52.  The District Court's "utter failure" to comply with Rule 52 with regard to Mylan's invalidity allegations provided yet another basis for overturning the District Court's injunction.  Nevertheless, the opinion vacated and remanded with instructions that the District Court could consider entering a temporary restraining order and consolidating the evidentiary hearing for the injunction with a (bench) trial on the merits.  The opinion also "[took] no issue with the adequacy of the trial court's findings on irreparable harm and the balance of the hardships" and mandated no reconsideration of these prongs of the test "unless [the District Court] chooses to do so."

While not breaking new ground on preliminary injunction jurisprudence, the case does present an interesting issue, particularly in view of the Supreme Court's penchant over the last decade to chastise the Federal Circuit for adopting patent-specific rules for matters like injunctions.  The High Court has made it very clear (in cases such as eBay Inc. v. MercExchange, L.L.C.) that the Federal Circuit is bound by and must apply the same rubrics for making decisions about injunctions and other procedural matters as are applied in the other several circuit courts.  And as the Federal Circuit has done here, the Court must apply the law of the regional circuit in which the district court sits.

This raises the question of whether it might be better for appeals such as this one, which depends more on the application of procedural rules and precedent developed in said regional circuits (rather than Federal Circuit-specific case law) to be decided by the regional circuit courts of appeal.  The question presented for review in this case is illustrative:  the Federal Circuit did not apply any patent-specific rules or precedent to the matter; indeed, the cases cited were (by and large) Third Circuit cases.  For both procedural consistency and as a way to reduce the workload on the Federal Circuit it might make sense for these cases not to go to that Court.  The particular regional circuit court could always (on party motion or sua sponte) transfer the appeal to the Federal Circuit if the issues appeared to be controlled by questions of patent law.  But for many cases, judicial efficiency might be better served to render unto the Federal Circuit those things limited to patent law, and to leave for the regional circuits those issues that are not so limited.

Warner Chilcott Labs. Ireland Ltd. v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2011)
Panel: Chief Judge Rader and Circuit Judges Dyk and O'Malley
Opinion by Circuit Judge O'Malley

Sanofi-Aventis v. Sandoz, Inc. (Fed. Cir. 2010)

By Donald Zuhn --

Last week, in Sanofi-Aventis v. Sandoz, Inc., the Federal Circuit vacated the entry of a consent judgment and an injunction by the District Court for the District of New Jersey, which enjoined Defendants-Appellants Sun Pharmaceutical Industries, Ltd. and Caraco Pharmaceutical Laboratories, Ltd. ("Sun") from manufacturing and selling a generic version of the colorectal cancer drug oxaliplatin.  The appeal arose from a dispute between Sun and Plaintiffs-Appellees Sanofi-Aventis, Sanofi-Aventis U.S. LLC, and Debiopharm, S.A. ("Sanofi") following Sun's filing of an Abbreviated New Drug Application (ANDA) for generic oxaliplatin and Sanofi's filing of suit against Sun in response to Sun's ANDA filing.  Sanofi also filed suit against other generic drug manufacturers who filed ANDAs for generic oxaliplatin.

After Sanofi filed suit against Sun, the parties entered into settlement negotiations, eventually agreeing to a license that contained the following provision (i.e., Section 3.5, with emphasis added by the Federal Circuit):

At-Risk-Launch.  In the event that, during the term of the Licensed Patents and without Sanofi's permission, any defendant in the Consolidated Eloxatin Patent Litigation sells a generic version of a Sanofi NDA Product in the Territory prior to a Final Court Decision ("At-Risk-Launch"), [Sun] will have the option of selling its Generic Equivalent prior to the Launch Date.  Should Sun exercise such an option and a Court subsequently enters a decision(s) enjoining each such At-Risk Launch product(s), Sun agrees that Sun will not sell its Generic Equivalent from the time the Court enters an injunction(s) against each such At-Risk Launch Product(s) until the Launch Date.

The license agreement was submitted by the parties to the District Court with a proposed consent judgment and order.   Pursuant to the consent judgment and order, which incorporated Section 3.5 of the license agreement, Sun could market its version of generic oxaliplatin if other generic drug manufacturers were marketing their generic version of the drug, but if a "Court subsequently enter[ed] a decision(s) enjoining" other generic manufacturers from marketing a generic version of oxaliplatin, Sun would also be enjoined.

Two days after Sanofi and Sun reached the settlement agreement, the District Court denied summary judgment of invalidity and granted summary judgment of noninfringement of Sanofi's U.S. Patent No. 5,338,874.  A series of challenges to the original license agreement followed.

While the parties attempted to resolve the enforceability of the original agreement, the other generic drug manufacturers launched at-risk versions of generic oxaliplatin.  Sanofi responded by negotiating settlement agreements with the other defendants that included a proposed consent order with a provision requiring that Sun be enjoined from marketing a generic equivalent of oxaliplatin by a certain date, and allowing the other defendants to reenter the market if Sun was not enjoined.  Sanofi then sought entry by the District Court of a revised version of the original consent judgment, with the revised version containing a provision stating that "[u]nder the License Agreement, if an injunction [was] entered preventing the other defendants from selling their Eloxatin product at risk, then Sun [was] obligated to stop selling its generic Eloxatin product at risk."  In response, Sun argued that the revised consent judgment was not the same as the original and that Sun had not agreed to the revised version.  Notwithstanding Sun's objections, the District Court entered the consent judgment and order proposed by Sanofi.

On appeal, Sun argued that the District Court had erred by entering a consent judgment to which it did not agree.  Sanofi countered that the revised consent judgment was correctly entered because it was consistent with the license agreement.  The dispute centered on the meaning of Section 3.5 of the license agreement.  Sanofi contended that under Section 3.5, Sun was required to cease sales of generic oxaliplatin after entry of an injunction against the other defendants -- even if the injunction is the result of a consent judgment agreed to by any of the other defendants.  Thus, the term "decision(s) enjoining" in Section 3.5 is synonymous with "orders enjoining" or "judgments enjoining."  Sun, however, argued that it had a right to continue selling generic oxaliplatin, even if other defendants settle and consent to an injunction, because an injunction entered by consent is not the result of a court decision.

Looking at the disputed section, the Federal Circuit determined that "[t]he language 'decision(s) enjoining' in Section 3.5 is ambiguous as to whether a 'decision' includes a consent judgment and injunction resulting from a settlement between parties or whether it requires an injunction issued by a court following a decision on the merits."  The panel noted that while Sanofi argued that the language of the section clearly includes consent judgments, "Sanofi now represents to this court that the license agreement is clear and unambiguous, despite its earlier need to 'clarif[y] Sun’s obligations [via the revised consent judgment],'" adding that "Sanofi's own recognition that the agreement required clarification is itself powerful evidence of ambiguity."  As a result of this ambiguity, the panel found that the District Court had erred by not affording Sun "a full and fair hearing as to material disputed language of the agreement."  The panel noted that "[m]aterial terms of a consent judgment that are objectively ambiguous and clearly contested prior to entry of the consent judgment require a determination by the court as to the parties' obligations under those terms before entry of that revised consent judgment."  The Federal Circuit therefore vacated the consent judgment and remanded the case with instructions to provide the parties an opportunity to conduct discovery and present their evidence as to the proper resolution of the ambiguous language in the license agreement that is incorporated into the parties' original proposed consent judgment.

Sanofi-Aventis v. Sandoz, Inc. (Fed. Cir. 2010)
Nonprecedential disposition
Panel: Circuit Judges Dyk, Prost, and Moore
Opinion by Circuit Judge Prost

Federal Circuit Grants Injunction Pending Disposition of Lilly v. Actavis Elizabeth

By Donald Zuhn --

The U.S. Court of Appeals for the Federal Circuit issued an Order today in Eli Lilly & Co. v. Actavis Elizabeth LLC, granting Lilly's request for an injunction to prevent Defendants-Appellees from launching generic versions of Lilly's ADHD drug Strattera® until Lilly's appeal has been resolved.  On August 25, Lilly filed a notice of appeal seeking review of a decision by the District Court for the District of New Jersey invalidating Lilly's U.S. Patent No. 5,658,590 for lack of enablement, and then immediately moved for an injunction pending disposition of its appeal.  Defendants-Appellees opposed Lilly's request for an injunction in a response that was due Monday.  In granting Lilly's motion, the Court stated that Lilly had met its burden to obtain an injunction pending appeal.

In addition, two of the Appellees (Aurobindo Phrama and Mylan Pharmaceuticals) moved for clarification of the Court's August 26 Order continuing a 14-day injunction granted by the District Court one week earlier.  The Federal Circuit's August 26 Order also set an expedited briefing schedule in which Lilly's opening brief is due by Thursday, September 9; Defendants-Appelllees' briefs are due by Thursday, September 23; and Lilly's reply brief and the joint appendix are due by Thursday, September 30.  It is the expedited briefing schedule for which Aurobindo and Mylan sought clarification.  In particular, Aurobindo and Mylan asserted that in view of cross-appeals that had been filed, the briefing schedule required revision.  The Court, however, dismissed the cross-appeals for lack of jurisdiction and denied the motion for clarification.

For additional information regarding this topic, please see:
• "Federal Circuit Continues Temporary Injunction in Lilly v. Actavis Elizabeth," August 30, 2010
• "Biotech/Pharma Docket," August 26, 2010
• "Biotech/Pharma Docket," August 19, 2010

Amgen and Hoffman-LaRoche Settle Mircera® Litigation

    By Kevin E. Noonan --

The latest challenge to Amgen's erythropoietin (EPO) franchise ended today, when Hoffman-La Roche agreed to keep its pegylated derivative of human EPO, Mircera®, off the market until July 1, 2014.  The U.S. Food and Drug Administration granted approval for Roche to market Mircera® in November, 2007 (it has already been approved in Europe and is sold in Austria, Sweden, Germany, the United Kingdom, and Norway) but the company has been under an injunction issued by Federal District Court Judge William G. Young pursuant to a judgment of infringement against Roche at trial (see "Victory for Amgen in District Court Decision" - Part I, Part II, Part III).  While the terms of the settlement are not public, according to Amgen there will be no payments from either company.

The parties stipulated to final judgment and a permanent injunction against Roche in a paper filed jointly with the District Court on Monday.  In the stipulation, Roche agreed that the following claims of the patents-in-suit are "valid, enforceable and infringed by Roche's Mircera® product":

(i)   U.S. Patent No. 5,756,349 (the '349 patent) claim 7,
(ii)  U.S. Patent No. 5,547,933 (the '933 patent) claims 3, 7-8,
(iii)  U.S. Patent No. 5,955,422 (the '422 patent) claim 1,
(iv)  U.S. Patent No. 5,441,868 (the '868 patent) claims 1 and 2, and
(v)  U.S. Patent No. 5,618,698 (the '698 patent) claims 6-9.

Roche also agreed to dismissal with prejudice of its "claims, defenses and counterclaims."  The stipulation was entered by the court as an order, to which it appended the following:

Except as allowed under any license agreement reached between the parties, Roche, its agents, servants, employees, counsel, and all persons and entities acting in concert therewith, are hereby permanently enjoined for the life of U.S. Patent No. 5,441,868, U.S. Patent No. 5,547,933, U.S. Patent No. 5,618,698, U.S. Patent No. 5,955,422 and U.S. Patent No. 5,756,349 from infringing said patents by the manufacture, importation, sale, offer for sale or non-exempt use of pegylated Epoetin beta (otherwise referred to as "MIRCERA" or "CERA") in the United States.

Settlement eliminates risks for both parties.  Amgen sued Roche in a declaratory judgment action in Massachusetts, asserting six patents:  U.S. Patent Nos. 5,547,933; 5,441,868; 5,618,698; 5,955,422 (claim 1); 5,756,349 (claim 7); and 5,621,080 (the '080 patent)  On October 23, 2007, a jury found that Mircera® infringed the '933 patent, the '868 patent, and the '698 patent, and that these patents, as well as the '422 patent and the '349 patent, were not invalid.  (The jury reached neither infringement nor validity of the '080 patent).  Specifically, the jury found that Roche's Mircera® infringed claims 3, 7, and 8 of the '933 patent (claim 12 was found not to be literally infringed but infringed under the Doctrine of Equivalents); claims 1 and 2 of the '868 patent; and claims 6 through 9 of the '698 patent.  On October 1, 2008, Massachusetts District Court Judge William Young ruled (in Amgen's favor for each) on several post-trial motions, including:  1) affirming the jury's infringement decision by denying Roche's motion for judgment as a matter of law (JMOL); 2) reaffirming its pretrial decision to grant summary judgment regarding infringement of claim 1 of the '422 patent; 3) "explaining" its reasoning for ruling, also pretrial, that the claims of Amgen's patents-in-suit are not invalid for obviousness-type double patenting (despite the intervening Federal Circuit decision in Pfizer, Inc. v. Teva Pharmaceuticals USA, Inc.); 4) denying Roche's motion for JMOL that claim 1 of the '422 patent and claims 3, 7, and 9 of the '933 patent are not invalid for indefiniteness for reciting the term "human erythropoietin"; and 5) granting Amgen a permanent injunction barring "Roche, its agents, servants, employees, counsel, and all persons and entities acting in concert therewith" from infringing the claims of the patents-in-suit for the remaining life of those patents.

The Federal Circuit affirmed most of the determinations by the District Court and the jury, including that the asserted claims of the '868 patent (claims 1 and 2) and the '698 patent (claims 6-9) are not invalid and were infringed, that claims 3, 7, and 8 of the '933 patent and claim 1 of the '422 patent were infringed, and that claims 9, 11, 12, and 14 of the '933 patent are not infringed by Mircera®.  However, the panel opinion vacated Judge Young's decision that the '933 (claims 3, 7, and 8), '349 (claim 7), and '422 (claim 1) patents are not invalid under obviousness-type double patenting and remanded this issue to the trial court.  The Federal Circuit also vacated the judgment that claim 7 of the '349 patent was not infringed and remanded for a new trial on that issue.  This decision put several of Amgen's patents at risk for invalidation under the Federal Circuit's recent jurisprudence interpreting the scope of the "safe harbor" of 35 U.S.C. § 121 (Pfizer, Inc. v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2008) and Takeda Pharmaceutical Co. v. Doll (Fed. Cir. 2009)).  Invalidation of the '933, '349, and '422 patents would have reduced Amgen's patent protection on its various EPO products (including Aranesp® and Epogen®) from May 2015 to August 2012 (more than 3 years), which would have a significant (negative) effect on the corporate bottom line.  Thus, by settling, Amgen has avoided invalidation of these three patents, and Roche has avoided any damages or attorneys' fees Amgen may have pursued.  Roche also has obtained a date certain for entering the U.S. market with its pegylated EPO product.

For additional information regarding this and other related topics, please see:

• "Obviousness-type Double Patenting after Amgen v. F. Hoffman-La Roche," September 27, 2009
• "Amgen Inc. v. Hoffman-La Roche Ltd. (Fd. Cir. 2009)," September 15, 2009
• "Amgen v. Hoffmann-LaRoche: Remaining Issues," October 13, 2008
• "Amgen v. Hoffmann-LaRoche: Back to the District Court," October 10, 2008
• "Victory for Amgen in District Court Decision - Part III," October 9, 2008
• "Victory for Amgen in District Court Decision - Part II," October 8, 2008
• "Victory for Amgen in District Court Decision - Part I," October 6, 2008
• "BIO Submits Amicus Brief in Amgen v. Hoffman-LaRoche," July 7, 2008
• "How to Avoid a Permanent Injunction: The Lessons of Amgen v. Hoffmann-LaRoche," April 28, 2008
• "Glasses Half-full or Half-empty: Hoffman-LaRoche's Different Interpretation of Pfizer v. Teva," April 15, 2008
• "Hoffmann-LaRoche Can't Wait, Files Notice of Appeal to the Federal Circuit," April 11, 2008
• "Will the Federal Circuit's Pfizer v. Teva Decision Spell the End of Amgen's Patent Rights to Recombinant Human Erythropoietin?" March 31, 2008
• "Court Still Cannot Decide on Amgen's Permanent Injunction," March 26, 2008
• "Amgen Inc. v. International Trade Commission (Fed. Cir. 2008)," March 20, 2008
• "Roche Agrees to Court's Conditions for Modifying Preliminary Injunction," March 20, 2008
• "Roche's Mircera® Remains Off the Market (For Now)," March 2, 2008

Amgen Inc. v. F. Hoffman-La Roche Ltd. (Fed. Cir. 2009)

Something for Everyone, but the Injunction Stands

    By Kevin E. Noonan --

Amgen has several times successfully defended its erythropoietin (EPO) franchise, the company's first commercial success and in many ways the crown jewel of its (or anyone's) biologics drug pipeline.  That string of successes continued today with a decision by the Federal Circuit against its latest challenger, Hoffman-La Roche.  But the decision also put several of the patents protecting Amgen's EPO at risk, making this a mixed victory at best for the biotechnology company.

The case involved the most recent challenge, Roche's Mircera® product, a pegylated derivative of human EPO.  Amgen sued Roche in a declaratory judgment action in Massachusetts asserting six patents:  U.S. Patent Nos. 5,547,933 (the '933 patent), 5,441,868 (the '868 patent), and 5,618,698 (the '698 patent), U.S. Patent Nos. 5,955,422 (the '422 patent, claim 1) and 5,756,349 (the '349 patent, claim 7) and U.S. Patent No. 5,621,080 (the '080 patent).  On October 23, 2007, a jury found that Mircera® infringed the '933 patent, the '868 patent and the '698 patent, and that these patents as well as the '422 patent and the '349 patent were not invalid.  (The jury reached neither infringement nor validity of the '080 patent).  Specifically, the jury found that Roche's Mircera® infringed claims 3, 7, and 8 of the '933 patent (claim 12 was found not to be literally infringed but infringed under the Doctrine of Equivalents); claims 1 and 2 of the '868 patent; and claims 6 through 9 of the '698 patent.  On October 1, 2008, Massachusetts District Court Judge William Young ruled (in Amgen's favor for each) on several post-trial motions, including:  1) affirming the jury's infringement decision by denying Roche's motion for judgment as a matter of law (JMOL); 2) reaffirming its pretrial decision to grant summary judgment regarding infringement of claim 1 of the '422 patent; 3) "explaining" its reasoning for ruling, also pretrial, that the claims of Amgen's patents-in-suit are not invalid for obviousness-type double patenting (despite the intervening Federal Circuit decision in Pfizer, Inc. v. Teva Pharmaceuticals USA, Inc.); 4) denying Roche's motion for JMOL that claim 1 of the '422 patent and claims 3, 7, and 9 of the '933 patent are not invalid for indefiniteness for reciting the term "human erythropoietin"; and 5) granting Amgen a permanent injunction barring "Roche, its agents, servants, employees, counsel, and all persons and entities acting in concert therewith" from infringing the claims of the patents-in-suit for the remaining life of those patents.

The Federal Circuit's decision, written by Judge Schall and joined by Judges Mayer and Clevenger, affirmed most of the determinations by the District Court and the jury.  These will be discussed more extensively in future posts, but can be summarized simply here:  the panel vacated Judge Young's decision on whether the '933 (claims 3, 7, and 8), '349 (claim 7) and '422 (claim 1) patents are not invalid under obviousness-type double patenting and remanded this issue to the trial court; vacated the judgment that claim 7 of the '349 patent was not infringed and remanded for a new trial on that issue; affirmed the judgments that the asserted claims of the '868 patent (claims 1 and 2) and the '698 patent (claims 6-9) are not invalid and were infringed, and that claims 3, 7, and 8 of the '933 patent and claim 1 of the '422 patent were infringed; and finally that claims 9, 11, 12, and 14 of the '933 patent are not infringed by Mircera®.

Because of the number claims asserted and the status of these various claims under the CAFC's opinion, a scorecard seems in order:

The following claims of the '933 patent are infringed but may be invalidated by the trial court for obviousness-type double patenting:

3.  A non-naturally occurring glycoprotein product of the expression in a mammalian host cell of an exogenous DNA sequence comprising a DNA sequence encoding human erythropoietin said product possessing the in vivo biological property of causing bone marrow cells to increase production of reticulocytes and red blood cells.

7.  The glycoprotein product according to claim 3 . . . wherein the host cell is a non-human mammalian cell.

8.  The glycoprotein product according to claim 7 wherein the non-human mammalian cell is a CHO cell.

The following claim is infringed by Mircera® under the doctrine of equivalents, but its status with regard to the obviousness-type double patenting question is uncertain (it does not fall within the CAFC's remand):

12.  A pharmaceutical composition comprising an effective amount of a glycoprotein product effective for erythropoietin therapy according to claim 7 and a pharmaceutically acceptable diluent, adjuvant or carrier.  [Infringed under the doctrine of equivalents.]

The following claims of the '868 patent are both not invalid and are infringed:

1.  A process for the production of a glycosylated erythropoietin polypeptide having the in vivo biological property of causing bone marrow cells to increase production of reticulocytes and red blood cells comprising the steps of:
    (a)  growing, under suitable nutrient conditions, mammalian host cells transformed or transfected with an isolated DNA sequence encoding human erythropoietin; and
    (b)  isolating said glycosylated erythropoietin polypeptide therefrom.

2.  The process according to claim 1 wherein said host cells are CHO cells.

The following claims of the '698 patent are not invalid and are infringed:

6.  A process for the production of a glycosylated erythropoietin polypeptide having the in vivo biological property of causing bone marrow cells to increase production of reticulocytes and red blood cells comprising the steps of:
    a) growing, under suitable nutrient conditions, vertebrate cells comprising amplified DNA encoding the mature erythropoietin amino acid sequence of FIG. 6; and
    b) isolating said glycosylated erythropoietin polypeptide expressed by said cells.

7.  The process of claim 6 wherein said vertebrate cells further comprise amplified marker gene DNA.

8.  The process of claim 7 wherein said amplified marker gene DNA is Dihydrofolate reductase (DHFR) gene DNA.

9.  The process according to claims 2, 4 and 6 wherein said cells are mammalian cells.

Claim 1 of the '422 patent is infringed but may be invalidated for obviousness-type double patenting:

1.  A pharmaceutical composition comprising a therapeutically effective amount of human erythropoietin and a pharmaceutically acceptable diluent, adjuvant or carrier, wherein said erythropoietin is purified from mammalian cells grown in culture.

Finally, infringement of claim 7 of the '349 patent will be decided in a new trial, but may be invalid under obviousness-type double patenting:

7.  A process for producing erythropoietin comprising the step of culturing, under suitable nutrient conditions, vertebrate cells according to claim 1, 2, 3, 4, 5 or 6.

Wherein claims 1 through 6 of the '349 patent related to vertebrate cells encoding recombinant EPO:

1.  Vertebrate cells which can be propagated in vitro and which are capable upon growth in culture of producing erythropoietin in the medium of their growth in excess of 100 U of erythropoietin per 10⁶ cells in 48 hours as determined by radioimmunoassay, said cells comprising non-human DNA sequences which control transcription of DNA encoding human erythropoietin.

The significance of the Federal Circuit's decision, and the consequences of an adverse decision on remand for the '933, '349 and '422 patents are illustrated by the respective expiration dates of the five patents at issue in the litigation:

*term shortened by terminal disclaimer

Thus, invalidation of the '933, '349 and '422 patents would reduce Amgen's patent protection on its various EPO products (including Aranesp® and Epogen®) from May 2015 to August 2012 (more than 3 years), which would have a significant (negative) effect on the corporate bottom line.  Accordingly, Amgen can be expected to continue this litigation.

The CAFC's opinion did not disturb the permanent injunction imposed by Judge Young, preventing Roche from marketing Mircera® in the U.S. despite obtaining FDA approval in November, 2007, giving Roche more than sufficient incentive to continue as well.

The substance of the Federal Circuit's opinion, including its reasoning on the standards for obviousness type double patenting, will be the subject of later posts.     

Amgen Inc. v. F. Hoffman-La Roche Ltd. (Fed. Cir. 2009)
Panel: Circuit Judges Mayer, Clevenger, and Schall
Opinion by Circuit Judge Schall

Altana Pharma AG v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2009)

    By Andrew Williams --

Last Thursday, the Federal Circuit affirmed the decision of the District Court for the District of New Jersey denying a request by Altana Pharma and Wyeth (collectively "Altana") for a preliminary injunction to prevent Teva Pharmaceuticals ("Teva") from marketing a generic version of the antiulcer drug Protonix®.

The active ingredient of Protonix® is the compound pantoprazole, which belongs to a class of compounds known as proton pump inhibitors ("PPI") that are used to treat gastric acid disorders in the stomach.  A predecessor company to AstraZeneca began commercializing the first PPI compound, omeprazole, in 1989 under the trade name Prilosec®.  After Prilosec®'s success, many drug companies, including Altana's predecessor, began to develop new PPIs to compete with omeprazole.  In conjunction with this research, and before the filing of the application that was the subject of this litigation, Altana filed an application that issued as U.S. Patent No. 4,555,518 (the '518 patent).  The '518 patent does not disclose pantoprazole and is not related to the patent-at-issue.  However, the '518 patent does contain a pharmacology section that compared the effectiveness of eighteen claimed compounds against four prior art compounds, and one of the claimed compounds (compound 12) is structurally very similar to pantoprazole.  Altana subsequently filed an application claiming pantoprazole, and this application issued on February 9, 1988 as U.S. Patent 4,758,579 (the '579 patent).  The Patent Office also granted a 5-year term extension pursuant to the Hatch-Waxman Act, and thus the '579 patent expires on July 19, 2010.

On or about April 6, 2004, Teva filed an ANDA with the FDA requesting approval to market a generic version of Protonix®.  Sun filed similarly directed ANDA applications on or about March 1, 2005 and June 25, 2005.  Both Teva and Sun filed Paragraph IV certifications in conjunction with their respective ANDAs, and Altana filed suit against both parties.  The District Court consolidated these cases.  Altana subsequently filed a motion for preliminary injunction on June 22, 2007, presumably near the expiration of the 30-month stay for FDA approval of Teva's ANDA application.  In opposition, both Teva and Sun conceded infringement, but maintained that the '579 patent was invalid because it was obvious in light of the teaching in the following prior art references:  (1) Altana's '518 patent, (2) the Sachs reference (3) the Bryson reference, and (4) the patent covering the omeprazole compound.  The District Court denied the request for preliminary injunction because the Court found that Teva had demonstrated a substantial question of invalidity and that Altana had not shown that it lacked substantial merit.  Specifically, the District Court found that one of skill in the art would have selected compound 12 from the '518 patent as a lead compound for modification, and that the additional references provided both the motivation to modify compound 12, and the teaching that such a substitution was feasible.  In addition, the District Court rejected Altana's position that allowing generic entry into the market would cause irreparable harm.  Based on these reasons, the District Court denied the motion for preliminary injunction.

The Federal Circuit began its analysis by highlighting that an appellant carries a heavier burden when seeking to reverse the denial of a preliminary injunction motion than when seeking to reverse the grant of a preliminary injunction motion.  This is because the movant must show not only that one or more factors relied on by the district court was clearly erroneous, but that the denial of relief amounted to an abuse of the court's discretion.  A court examines four factors when determining whether to grant a preliminary injunction:

(1)  a reasonable likelihood of success on the merits;
(2)  irreparable harm if an injunction is not granted;
(3)  a balance of hardships; and
(4)  the impact on the public interest.

Essentially, a movant must establish the existence of both of the first two factors to be entitled to an injunction.  Only these two first factors were at issue in the present case

Likelihood of Success on the Merits

At the preliminary injunction stage, an accused infringer must show a substantial question of invalidity.  This burden is lower than what is required to prove invalidity at trial.  If the accused infringer meets this requirement, the burden shifts to the patentee to show that the defense lacks substantial merit.  Altana first argued that the District Court applied an incorrect standard.  However, the Federal Circuit quickly dispensed with this argument, explaining why the District Court's standard was consistent with Federal Circuit precedent.

Altana also challenged the District Court's obviousness analysis on the merits.  First, Altana argued that the District Court allowed defendants to select compound 12 of the '518 patent as a lead compound when the prior art suggested the availability of numerous other compounds.  The general formula of the PPI at issue, as found in the '579 patent, is reproduced below:

The three main structural elements are the benzimidazole ring (left), the methylsulfinyl bridge (middle), and the pyridine ring (right).  The issues in this case primarily relate to the R groups located on the pyridine ring.  In fact, the only difference between pantoprazole and compound 12 of the '518 application is that pantoprazole has a methoxy group (–OCH³) at the R3 position, while compound 12 has a methyl group (–CH³) in the same position.  In other words, the only difference between these two compounds is the substitution of an alkoxy group for an alkyl group.  The District Court found that Teva raised a substantial argument that compound 12 was a natural choice for further development, and the Federal Circuit found that there was ample evidence supporting this finding.  First, the '518 patent asserted that its compounds, including compound 12, were improvements over the prior art, specficailly omeprazole.  In addition, the '518 patent disclosed that compound 12 was one of the more potent of the eighteen compounds provided.  Moreover, the District Court considered the opinions of qualified experts, and relied on Teva's expert, Dr. Mitscher, that one of skill in the art would have selected the eighteen exemplary compounds of the '518 patent from which to pursue further development efforts.  Finally, the District Court found that compound 12 was a natural choice for further developmental efforts because the '518 patent identified it as one of the more potent disclosed PPI compounds.  The Federal Circuit noted that while potency of a compound is not dispostive, it was not unreasonable for the District Court to use this factor to conclude that one skilled in the art would have selected compound 12 from the group for further study.  The Federal Circuit noted as apparent support for this proposition that Altana itself had selected compound 12 for further development efforts, but it is hard to see how such an observation does not amount to hindsight reasoning using the disclosure of the '518 patent to justify the obviousness determination.

It is important to keep in mind the procedural posture of this case in determining what precedential value it has.  One clear conclusion, however, is that the Federal Circuit rejected Altana's suggestion that the prior art must point to only a single lead compound for further development efforts.  Such a restrictive view of the lead compound test, the Court reasoned, would suffer the same fate of the rigidly applied teaching-suggestion-motivation test that was explicitly rejected by the Supreme Court in KSR.  The District Court's flexible approach, therefore, concluding that Teva has raised a substantial question that one of skill in the art would have used the more potent compounds of the '518 patent, including compound 12, as a starting point was not clearly erroneous.

Altana also challenged the District Court's findings with respect to the teachings of one of the supporting references, the Bryson article.  After focusing on the selection of compound 12 as a lead compound for modification, Teva argued that the Sachs article provided motivation to lower the pKa of a PPI to a value of 4 in order to provide better stability of the compound in the patient's body.  Altana did not challenge the determination related to the Sachs article before the Federal Circuit.  Teva further argued that the Bryson article taught that a methoxy group at the 3-position of a pyridine ring provides a lower pKa than a methyl group at the same position.  The District Court agreed, but in doing so included erroneous statements regarding the pKa values of such methoxy group substitutions.  For example, the District Court reported that Bryson stated that a methoxy group would have a pKa of 4, where in reality Bryson disclosed the values of 4.83 and 4.91.  And, because the pKa values are measured on a logarithmic scale, even an apparently small difference results in a very substantial mathematical difference.  Nevertheless, because Altana did not establish that such an error resulted in an abuse of discretion, the Federal Circuit did not disturb the District Court's decision on this ground.  The CAFC found that even though the District Court erred in its representation of the pKa values, the reference to the values correlated with the difference in magnitude of the pKa values of the substituted pyridines described in Bryson.  Moreover, the District Court relied on Teva's expert, Dr. Mitscher, who not surprisingly disclosed the correct pKa values.  The District Court understood that the obviousness position depended on Byrson's teaching of a way to substantially lower the pKa value of the pyridine ring, and therefore the Court's determination was not an abuse of discretion.

Judge Newman concurred in the decision because of the discretionary weight that must be given to a district court's determination.  However, it was her view that the evidence presented to the District Court in this case does not establish invalidity of the patent on pantoprazole.  This just highlights the fact that the analysis and outcome of this case might have been different had it resulted from the District Court's determination of obviousness of the patent-at-issue rather than from the denial of a preliminary injunction.

Irreparable Harm

The Federal Circuit also found that there was no error in the District Court's determination that Altana would not suffer irreparable harm without the issuance of a preliminary injunction.  Important in this determination were the facts that there was no indication that Teva could not respond in money damages, and that it was unlikely that Altana did not have a business plan to deal with the launch of generic competition.  In fact, the District Court found it difficult to accept that Nycomed, who purchased Altana during the pendency of this case, had failed to account for potential generic launches.  Altana argued that the District Court dismissed certain harms, such as price erosion, loss of market share, loss of profits, loss of research opportunities, and possible layoffs, as not irreparable.  However, the Federal Circuit pointed out that a carful reading of the District Court's entire analysis reveals that the District Court correctly understood that these very factors can, in fact, support a finding of irreparable harm.  It is also likely that Federal Circuit's analysis was influenced by the fact that Wyeth launched a generic version of pantoprazole, which is currently being distributed by Prasco, shortly after the denial of the preliminary injunction motion.  The Federal Circuit noted that the District Court's determination that Altana's argument that its business would be crushed by the entry of a generic was exaggerated in view of the events subsequent to the expiration of the Hatch-Waxman stay.  Of course, just because Wyeth launched its own generic version of pantoprazole does not necessarily mean that its business was not crushed by the denial of the injunction.  Still, because the CAFC found that the District Court's determination was not clearly erroneous, the Federal Circuit affirmed.

Altana Pharma AG v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2009)
Panel: Circuit Judges Newman and Gajarsa and District Judge Ward
Opinion by District Judge Ward; concurring opinion by Circuit Judge Newman

Top Stories of 2008: #13 to #10

    By Donald Zuhn --

Reflecting upon the events of the past twelve months, Patent Docs presents its second annual list of top biotech/pharma stories.  For 2008, we identified a baker's dozen of top stories covered on Patent Docs.  Today we will count down stories #13 to #10.  On Sunday, we will present stories #9 to #6, and on Monday, we will count down the top five stories.  As with last year's list, links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look.  As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with our rankings, please let us know.

#13 -- Pharma Patent Injunctions in View of Amgen v. F. Hoffmann-La Roche

In the fall of 2007, a jury returned verdicts in Amgen Inc. v. F. Hoffmann-La Roche Ltd., finding five of Amgen's patents not invalid and three of these patents infringed by Roche's Mircera®, a form of recombinant EPO that has been covalently linked to polyethylene glycol.  The District Court for the District of Massachusetts entered a preliminary injunction in February preventing Roche from putting Mircera® on the market.  In granting the injunction, the Court found that Amgen had satisfied all but the public interest prong of the classic four-factor test discussed in eBay Inc. v. MercExchange, L.L.C.  The District Court struggled with the public interest prong of the test, in view of Roche's argument that the public interest was served, at least in part, by the presumed reduced price that would ensue from competition between Mircera® and Amgen's Epogen® and Aranesp® products.  The Court, expressly refraining from entering any findings on the fourth prong, left open the possibility that the injunction could be modified under a handful of conditions.  Roche agreed to the Court's conditions, but Amgen did not, and the Court subsequently appointed a special master to consider the question of how dosing and pricing of Amgen's and Roche's products should be compared.  Roche responded to the Court's appointment of the special master by filing a Notice of Appeal.  On October 2nd, the Court issued a 150-page opinion in the case, handing victory to Amgen, and eight days later, the Federal Circuit affirmed the preliminary injunction without opinion.

For information regarding this and other related topics, please see:

• "Amgen v. Hoffmann-LaRoche: Remaining Issues," October 13, 2008
• "Amgen v. Hoffmann-LaRoche: Back to the District Court," October 10, 2008
• "Victory for Amgen in District Court Decision - Part III," October 9, 2008
• "Victory for Amgen in District Court Decision - Part II," October 8, 2008
• "Victory for Amgen in District Court Decision - Part I," October 6, 2008
• "BIO Submits Amicus Brief in Amgen v. Hoffman-LaRoche," July 7, 2008
• "How to Avoid a Permanent Injunction: The Lessons of Amgen v. Hoffmann-LaRoche," April 28, 2008
• "Glasses Half-full or Half-empty: Hoffman-LaRoche's Different Interpretation of Pfizer v. Teva," April 15, 2008
• "Hoffmann-LaRoche Can't Wait, Files Notice of Appeal to the Federal Circuit," April 11, 2008
• "Will the Federal Circuit's Pfizer v. Teva Decision Spell the End of Amgen's Patent Rights to Recombinant Human Erythropoietin?" March 31, 2008
• "Court Still Cannot Decide on Amgen's Permanent Injunction," March 26, 2008
• "Amgen Inc. v. International Trade Commission (Fed. Cir. 2008)," March 20, 2008
• "Roche Agrees to Court's Conditions for Modifying Preliminary Injunction," March 20, 2008
• "Roche's Mircera® Remains Off the Market (For Now)," March 2, 2008

#12 -- International Enforcement of Drug Patents

Last year, drug pricing and compulsory licensing in the developing world took the #10 spot on our list of top stories.  The fact that this story dropped two places on this year's list should not, however, be taken to mean that developing countries and the pharmaceutical industry have reached accord regarding this issue.  For example, in February, Novartis responded to Thailand's threats to issue a compulsory license by agreeing to supply its cancer drug Gleevac® (imatinib mesylate) at no cost to Thai patients -- provided that the Thai gvernment did not issue any compulsory licenses.  One month later, Thailand instead announced that it would maintain its compulsory licensing policy for Gleevac® as well as three other anti-cancer drugs (Novartis' Letrozole®, Sanofi-Aventis' Docetaxel®, and Roche's Erlotinib®).  The use by developing countries of tools provided in international agreements such as GATT, TRIPS, and the Doha Declaration (e.g., compulsory licensing and parallel importing) will no doubt continue to be a hotly debated in 2009.

For information regarding this and other related topics, please see:

• "Recent Developments in Pharmaceutical Patenting and Compulsory Licensing of Pharmaceutical Patents in Developing Countries," July 8, 2008
• "Congressmen Criticize U.S. Trade Representative over Special 301 Report," July 1, 2008
• "U.S. Continues Efforts to Protect Patent Rights Abroad," April 29, 2008
• "Thailand Continues Its Compulsory Licensing Practices," March 11, 2008
• "Indian Generic Drug Maker Seeks to Invalidate Cancer Drug Patent," February 29, 2008
• "Novartis to Supply Cancer Drug to Thai Patients," February 5, 2008


#11 -- Greater Cooperation between Patent Offices

When your backlog of unexamined applications rises from 760,924 to 771,529, as it did for the USPTO in 2008, you should be searching for all reasonable ways to reduce that backlog.  Last year, the USPTO attempted to address its application backlog by focusing on the development of a number of worksharing programs with foreign patent offices.  In particular, the USPTO expanded its Patent Prosecution Highway (PPH) program to include pilots with the Canadian Intellectual Property Office (CIPO), Korean Intellectual Property Office (KIPO), IP Australia (IPAU), European Patent Office (EP), and Danish Patent and Trademark Office (DKPTO); extended its PPH pilot program with the CIPO; entered into an agreement with IPAU, in which the IPAU will act as an International Searching Authority (ISA) and International Preliminary Examining Authority (IPEA) for certain International applications filed with the USPTO Receiving Office; added the KIPO as a participating foreign patent office in the Priority Document Exchange (PDX) system; initiated the "Triway" worksharing program between the USPTO, EPO, and JPO; initiated the "New Route" worksharing program with the JPO; announced a new worksharing initiative with the KIPO, EPO, JPO, and State Intellectual Property Office of the People's Republic of China (SIPO); and released information about a Common Application Format (CAF) that arose out of an agreement between the USPTO, EPO, and JPO at the 25th Annual Trilateral Conference.

For information regarding this topic, please see:

• "Patent Prosecution Highway Pilot with CIPO Is Extended," December 23, 2008
• "Additional Application Types Eligible for Participation in PPH Between USPTO and EPO," December 11, 2008
• "'Blueprint' Announced for Work Sharing Initiative Between Five IP Offices," November 6, 2008
• "IP Australia Now Competent ISA for PCT Applications Received by USPTO," November 3, 2008
• "Patent Prosecution Highway Pilot Program Between U.S. and Danish Patent Offices," October 29, 2008
• "KIPO Becomes Participating Foreign Office in PDX Program," October 21, 2008
• "Online Priority Document Exchange Service Between USPTO and KIPO," October 9, 2008
• "USPTO and JPO Sign Statement of Enhanced Mutual Cooperation," September 29, 2008
• "IP Australia to Provide International Search and Examination Services for Certain PCT Applications," September 29, 2008
• "Patent Prosecution Highway Expands to Europe," September 25, 2008
• "USPTO and KIPO Sign Memoradum on Cooperative Patent Examination," September 24, 2008
• "USPTO and UKIPO Extend Patent Prosecution Highway Pilot Program," September 3, 2008
• "PTO Announces 'Triway' Pilot Program," July 15, 2008
• "Docs at BIO: Representatives from JPO, EPO, SIPO, and USPTO Discuss Recent Developments in Japan, Europe, China, and the U.S.," June 22, 2008
• "USPTO and EPO to Implement Pilot Patent Prosecution Highway Program," April 29, 2008
• "Patent Office Announces Common Application Format," April 28, 2008
• "Patent Prosecution Highway Extended to IP Australia," April 2, 2008
• "Patent Prosecution Highway Network Expands to Canada & Korea," January 29, 2008
• "'New Route' Created between USPTO and JPO," January 25, 2008
• "USPTO Announces Two Additional Partners in the Patent Prosecution Highway Pilot Program," January 17, 2008


#10 -- USPTO's PTA Calculations Called into Question

On September 30th, the District Court for the District of Columbia issued a decision in Wyeth v. Dudas that could eventually impact the manner in which Patent Term Adjustment (PTA) determinations are made.  In particular, the Court granted summary judgment in favor of Wyeth, determining that the USPTO had misconstrued 35 U.S.C. § 154(b)(2)(A), and as a result, had denied Wyeth a portion of patent term to which it was entitled.  Less than a month later, USPTO Director Jon Dudas filed a Notice of Appeal in the District Court for the District of Columbia, appealing the Court's decision in Wyeth to the United States Court of Appeals for the District of Columbia Circuit, thus indicating how the Office would rule on requests for reconsideration being filed by patentees that had been similarly deprived of patent term.  Having no other recourse under 35 U.S.C. § 154(b)(4)(A), which requires patentees to file actions seeking corrected PTA determinations within 180 days of a patent's issuance, Napo Pharmaceuticals, Inc.; Ironwood Pharmaceuticals, Inc.; Solvay Pharmaceuticals GmbH; Biogen Idec Inc.; Purac Biochem B.V.; and Molecular Insight Pharmaceuticals, Inc. all followed Wyeth's lead by filing lawsuits against Director Dudas this fall.

For information regarding this topic, please see:

• "More Patentees Follow Wyeth's Lead in Seeking Additional PTA," December 3, 2008
• "USPTO to Appeal Wyeth v. Dudas," December 2, 2008
• "Two Patentees Follow Wyeth's Lead in Seeking Additional PTA," November 12, 2008
• "Wyeth v. Dudas (D.D.C. 2008)," October 16, 2008

Acumed LLC v. Stryker Corp. (Fed. Cir. 2008)

    By Kevin E. Noonan --

There are the inklings of a stratagem taking shape in certain of the Federal Circuit's decisions since the spate of Supreme Court rejections of large portions of its jurisprudence.  That stratagem involves refusing to overturn district court decisions based on applying an abuse of discretion standard, as evidenced in the Federal Circuit's decision to affirm grant of a permanent injunction in Acumed LLC v. Stryker Corp.

The case involved a patent to an orthopedic nail used to reconstruct and stabilize a broken humerus.  The CAFC previously vacated a permanent injunction granted prior to the Supreme Court's decision in eBay Inc. v. MercExchange, L.L.C., which mandated that the traditional "four factor" test for granting injunctions was to be applied in patent cases.  This mandate overruled the Federal Circuit's "general rule [in patent cases] that an injunction will issue, once infringement and validity have been adjudged . . . unless there are some exceptional circumstances that justify denying injunctive relief."  Thus, the District Court revisited the issue based on a proper application of the law and arrived at the same conclusion.

In making its determination that a permanent injunction was permissible in this case, the District Court considered together the four-factor test prongs of whether there was irreparable harm to patentee Acumed and whether the remedy at law (money damages) was adequate compensation as a remedy.  Stryker presented evidence that Acumed previously had granted licenses for the patent-in-suit (U.S. Patent No. 5,472,444) to two other competitors, Smith & Nephew and Zimmer.  The District Court distinguished this behavior on the grounds that, first, Acumed had granted the Smith & Nephew license to settle litigation, and second, that Zimmer was not direct competitor when Acumed granted it a license.

The Federal Circuit, in a unanimous opinion written by Judge Lourie and joined by Judges Mayer and Gajarsa, found none of this to be an abuse of discretion.  The Court asserted that eBay itself stated that a patentee's willingness to license patents to others was not sufficient by itself to preclude a determination that a patentee would be irreparably harmed or that money damages would be an insufficient remedy.  The Court asserted that prior licenses were but one factor a court could consider in deciding whether the evidence favored vel non grant of a permanent injunction.  "Adding a new competitor to the market may create an irreparable harm that the prior licenses did not," according to the Court.  In a footnote, the Court noted that it did not consider whether an injunction would be appropriate in other circumstances where a patentee had granted licenses to third parties, thus avoiding creation of any per se rules in this regard.

Regarding the balance of the hardships, the District Court was persuaded by Acumed's evidence that Stryker had available a non-infringing alternative (a straight rather than a curved humeral nail), and that Stryker was the world's largest orthopedic implant company (so sales of its infringing humeral nail were only a small portion of its sales, whereas the Acumed nail was its flagship product).  The District Court rejected Stryker's argument that a permanent injunction would cause harm to itself, its customers and patients, as well as Stryker's argument that Acumed would benefit from receiving a royalty, since it would gain access to Stryker's "otherwise inaccessible" customers.  The Federal Circuit found none of the District Court's reasoning to be error or an abuse of discretion.  Stryker's evidence of the expense incurred in designing and marketing were irrelevant to the hardships determination, according to the CAFC, because "[o]ne who elects to build a business on a product found to infringe cannot be heard to complain if an injunction against continuing infringement destroys the business so elected," citing Windsurfing Int'l. Inc. v. AMF, Inc., 782 F.2d 995, 1003 n.12 (Fed. Cir. 1986).  The Federal Circuit also found no abuse of discretion in the District Court's determination that Stryker's failure to introduce into the U.S. a straight-nail embodiment of its humeral nail was a business decision that did not tip the balance of hardships in Stryker's favor. 

For the fourth factor, the public interest, the District Court found that this factor did not mitigate against the permanent injunction.  Stryker argued that its infringing humeral nail was "demonstrably safer and superior" to Acumed's product, citing trial testimony from five expert witnesses.  Stryker also contended that Acumed's product had specific deficiencies compared with its infringing product.  The District Court found that Stryker had not established "sufficient objective evidence of any public health issue" that would turn the public interest prong of the four-factor test in its favor.  The lower court also noted that "there was 'considerable dispute at trial' whether Stryker's evidence was the product of biased experts."  Finally, the District Court found that there were non-infringing alternatives to Acumed's product (ironically, the Zimmer and Smith & Nephew licensed products) available to satisfy any portion of the market Acumed was incapable of serving, so that patients would not be harmed by the injunction.  The Federal Circuit credited all these decisions as being within the sound discretion of the trial court, and found none of them to be an abuse of discretion.

Perhaps it is the proper role of an appellate court to defer so assiduously to the decisions made by a district court that rely heavily of factual determinations depending on the demeanor and believability of witnesses, live testimony, and trial advocacy relating thereto.  And perhaps it has been the tendency of the Federal Circuit in many areas, most notably claim construction, to refuse to so defer, or to provide reasoning supporting its lack of deference (such as its Congressionally-mandated role of providing consistency and harmony to patent law) that makes it appear unusual that the Federal Circuit is so compliant with regard to the district court's assessment and balancing of the evidence in granting the injunction.  An inescapable consequence of this compliance, however, is that Federal Circuit also avoids any substantive decision-making in affirming the injunction, based on an abuse of discretion standard it defines as "a clear error of judgment in weighing relevant factors or exercised its discretion based upon an error of law or clearly erroneous factual findings."  Using this standard makes it less likely that there will be any readily-reviewable basis for the Supreme Court to grant certiorari in a case like this.  Avoiding another opportunity for its jurisprudence to be overruled may be all the justification the CAFC needs to be deferential for a while.

Acumed LLC v. Stryker Corp. (Fed. Cir. 2008)
Panel: Circuit Judges Mayer, Lourie, and Gajarsa
Opinion by Circuit Judge Lourie

Abbott Laboratories v. Sandoz, Inc. (Fed. Cir. 2008)

Opposing Federal Circuit Preliminary Injunction Standards in Abbott Laboratories v. Sandoz

    By Kevin E. Noonan --

The Court of Appeals for the Federal Circuit affirmed grant of a preliminary injunction in Abbott Laboratories v. Sandoz on October 21, and also affirmed the District Court's determination that the patents-in-suit were not rendered unenforceable by inequitable conduct during prosecution (although defendant Sandoz will be able to pursue this defense at trial).  In coming to both conclusions, the majority decision illustrated nicely the appellate penchant (and prerogative) of deciding where lines are to be drawn when considering equitable issues.

Abbott's patents-in-suit, U.S. Patent Nos. 6,010,718 and 6,551,616, relate to extended release formulations of clarithromycin, the active ingredient in Abbott's Biaxin® XL product.  Abbott filed suit after Sandoz file an ANDA having a Paragraph IV certification that Abbot's patents were invalid or unenforceable.

Claim 1 of the '718 patent is representative:

1.  A pharmaceutical composition for extended release of an erythromycin derivative in the gastrointestinal environment, comprising an erythromycin derivative and from about 5 to about 50% by weight of a pharmaceutically acceptable polymer, so that when ingested orally, the composition induces statistically significantly lower mean fluctuation index in the plasma than an immediate release composition of the erythromycin derivative while maintaining bioavailability substantially equivalent to that of the immediate release composition of the erythromycin derivative.

As are claims 1 and 2 of the '616 patent (which is a continuation-in-part of the '718 patent):

1.  A method of reducing gastrointestinal adverse side effects comprising administering an effective amount of extended release pharmaceutical composition comprising an erythromycin derivative and a pharmaceutically acceptable polymer.

2.  The method according to claim 1, wherein the erythromycin derivative is clarithromycin.

The District Court granted Abbott a preliminary injunction "to preserve the status quo" using the conventional four-factor test:  whether there was a "(1) likelihood of success on the merits of the underlying litigation, (2) whether irreparable harm is likely if the injunction is not granted, [considering] (3) the balance of hardships as between the litigants, and (4) factors of the public interest."  The Federal Circuit reviewed the grant of preliminary injunction based on an abuse of discretion standard.  Sandoz alleged that Abbott's claims were anticipated and/or obvious over several prior art references, which the District Court found were not sufficient to establish that the claims were invalid.  An interesting feature of the District Court's analysis was a reconsideration of the obviousness question in view of the Supreme Court's KSR v. Teleflex decision, which came down after the District Court originally considered Sandoz's obviousness contentions.

The question decided by the Federal Circuit was not concerned with the merits per se of the District Court's decision on the substantive question of whether Abbott's claims were anticipated or obvious; the panel found no clear error in the lower Court's factual determinations and no errors of law in its legal conclusions.  The Federal Circuit also found no error in the District Court's claim construction or determination that Abbott was likely to establish at trial that Sandoz's product infringed at least one asserted claim of the patents-in-suit.  Rather, the question before the Federal Circuit was the extent of the showing sufficient to preclude a district court from granting a preliminary injunction based on the likelihood of success on the merits prong of the four-factor test.  This discussion was cast in Section VI of the decision, where Judge Newman was joined in her opinion upholding the injunction by Judge Archer, and from which Judge Gajarsa dissented.

Judge Newman (at left) rejected Sandoz's contention, and the dissent's, that a defendant must merely "[raise] a substantial question concerning either infringement or validity" to render grant of a preliminary injunction to be an abuse of discretion.  Rather than being merely a question of whether a defendant could show claims were "vulnerable" to an invalidity challenge, at this stage Judge Newman said that sound precedent made the question whether there was a likelihood of success on the merits.  In making this determination, the opinion sets forth what Judge Newman termed "the law governing the grant of a preliminary injunction."  This precedent includes Supreme Court, "every regional circuit, and controlling Federal Circuit precedent," including Gillette Co. v. Energizer Holdings, Inc., 405 F.3d 1367 (Fed. Cir. 2005); Ranbaxy Pharmaceuticals., Inc. v. Apotex, Inc., 350 F.3d 1235 (Fed. Cir. 2003); Reebok Int'l Ltd. v. J. Baker, Inc., 32 F.3d 1552 (Fed. Cir. 1994); and Smith Int'l, Inc. v. Hughes Tool Co., 718 F.2d 1573 (Fed. Cir. 1983).  The opinion characterized a "substantial question" as "more than a scintilla but less than a preponderance of evidence in support of its side," and further noted that there are also equitable factors that "are of particular significance at a preliminary stage," citing University of Texas v. Camenisch, 451 U.S. 390 (1981), and that a court must consider these factors in addition to whether a defendant has raised a "substantial question."  The opinion also cited the Supreme Court's decision in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), that patent cases are not deserving of unique treatment" when courts consider these equitable factors in deciding whether to grant a preliminary injunction.

The opinion then sets forth what the dissent characterizes as "a superfluity of citations" to decisions from all the regional circuits and the Supreme Court in support of it thesis that the "likelihood of success on the merits" is the principal criterion used by district courts in deciding whether to grant a preliminary injunction, and by reviewing courts when deciding whether a lower court has abused its discretion.  The opinion specifically cites Hybritech Inc. v. Abbott Laboratories, 849 F.2d 1446 (Fed. Cir. 1988); Roper Corp. v. Litton Systems Inc., 757 F.2d 1266 (Fed. Cir. 1985); Pretty Punch Shoppettes, Inc. v. Hauk, 844 F.2d 782 (Fed. Cir. 1988); Nutrition 21 v. United States, 930 F.2d 867 (Fed. Cir. 1991); and Texas Instruments Inc. v. Tessera, Inc., 231 F.3d 1325 (Fed. Cir. 2000) (as well as another dozen cases) as Federal Circuit precedent in support of the "likelihood of success" standard for preliminary injunctive relief, all of which are in accord with the principles the Supreme Court enunciated in eBay, according to the majority opinion.  The opinion contrasts this standard with the adequacy of the "substantial question" standard for averting judgment on the pleadings or summary judgment, citing Christianson v. Colt Industries Operating Corp., 486 U.S. 800 (1988).

The dissent takes the opposite position, and Judge Gajarsa (at right) has a number of Federal Circuit opinions in support of the "substantial question" standard.  Like the majority opinion, the dissent focuses on the first prong, the need for a plaintiff patentee to show a likelihood of success on the merits for a court to grant an injunction.  Judge Gajarsa opines that the District Court abused its discretion because Sandoz had raised enough of a question on the validity of the patents-in-suit to preclude Abbott from satisfying the "likelihood of success" prong of the preliminary injunction standard.  He emphasizes that the burden is on the patentee, in view of the "extraordinary nature of the relief" sought (i.e., an injunction) to establish this prong.  However, if a defendant "raises a substantial question concerning either infringement or validity, i.e., asserts an infringement or invalidity defense that the patentee cannot prove 'lacks substantial merit,' the preliminary injunction should not issue," citing Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343 (Fed. Cir. 2001).  The dissent bases its argument that a showing by a defendant that claims are "vulnerable" is supported by language from Abbott Labs. v. Andrx Pharms., Inc., 452 F.3d 1331 (Fed. Cir. 2006) (quoting Amazon):

In resisting a preliminary injunction, however, one need not make out a case of actual invalidity.  Vulnerability is the issue at the preliminary injunction stages, while validity is the issue at trial.  The showing of a substantial question as to invalidity thus requires less proof than the clear and convincing showing necessary to establish invalidity itself.

Judge Gajarsa's point is that the District Court imposed a requirement that Sandoz show, by clear and convincing evidence, that the asserted claims of the patents-in-suit were invalid in order to defeat the grant of a preliminary injunction to Abbott, and that this burden was improper at the preliminary injunction stage.  The precedential basis for his contention that Sandoz merely needed to raise a substantial question as to validity includes E.I. du Pont de Nemours & Co. v. MacDermid Printing Solutions, L.L.C., 525 F.3d 1353 (Fed. Cir. 2008); Genentech, Inc. v. Novo Nordisk A/S, 108 F.3d 1361 (Fed. Cir. 1997); Tate Access Floors v. Interface Architectural Res., 279 F.3d 1357 (Fed. Cir. 2002); Erico Int'l Corp. v. Vutec Corp., 516 F.3d 1350 (Fed. Cir. 2008); and PHG Techs., LLC v. St. John Cos., 469 F.3d 1361 (Fed. Cir. 2006).  Moreover, Sandoz having established to Judge Gajarsa's satisfaction that its claims were vulnerable to being invalidated on obviousness grounds, the burden was on Abbott to show that Sandoz's invalidity contentions lacked "substantial merit."

The differences in opinion, and copious citation of authority by both the majority and the dissent, perhaps suggest that there is a split in the Federal Circuit's jurisprudence that requires the Court to revisit this question en banc (or for the Supreme Court to weigh in on the quanta of evidence required to uphold vel non the likelihood of success on the merits for preliminary injunctions).  It is equally likely, however, that these cases illustrate how courts must balance the evidence presented by each party in making a determination of whether the patentee is likely to succeed on the merits.  The majority and dissent each assert different opinions on whether Sandoz's obviousness contentions have merit and raise a "substantial question" of invalidity.  For the majority, the deficiencies in Sandoz's evidence lead to the conclusion that Abbott is likely to prevail on the merits, and hence the majority upholds the District Court's grant of a preliminary injunction.  The dissent, on the other hand, believes Sandoz's contentions have merit, and that granting a preliminary injunction under these circumstances is an abuse of discretion.  The perhaps inevitable consequence of this equitable balancing is that the Federal Circuit applies its "abuse of discretion" standard to questions of whether a district court's grant of a preliminary injunction is upheld or overturned by substituting (or imposing) its judgment for the judgment of the district court.  It is reasonable to ask, as it has been asked in other contexts, whether the Federal Circuit's mandate justifies this result, and whether its penchant for so extending its plenary authority is contrary to the behavior and outcome in the other regional circuit courts of appeal.  It is also reasonable to ask whether this penchant is precisely the kind of jurisprudence that has so motivated the Supreme Court to review, and reverse, the Federal Circuit so often over the past ten years.

Abbott Laboratories v. Sandoz, Inc. (Fed. Cir. 2008)
Panel: Circuit Judge Newman, Senior Circuit Judge Archer, and Circuit Judge Gajarsa
Opinion by Circuit Judge Newman; dissenting opinion by Circuit Judge Gajarsa

Amgen v. Hoffmann-LaRoche: Remaining Issues

    By Kevin E. Noonan --

On October 2, 2008, Judge William Young of the District Court of the District of Massachusetts issued his 150-page opinion in Amgen Inc. v. F. Hoffmann-La Roche Ltd. , Amgen's patent infringement suit over Roche's Mircera® drug product (see "Victory for Amgen in District Court Decision - Part I").  On October 23, 2007, Amgen received a jury verdict that Amgen's patents-in-suit (U.S. Patent Nos. 5,547,933; 5,441,868; 5,618,698; 5,955,422; and 5,756,349) were not invalid and Mircera® infringed the claims of the '933, '868 and '698 patents (see "Amgen Survives Another EPO Challenge").  Thereafter, Judge Young entered a preliminary injunction to prevent Roche from putting Mircera® on the market while the Court prepared its opinion.  On Friday, the Federal Circuit affirmed the preliminary injunction without an opinion, under Federal Circuit Rule 36 (see "Amgen v. Hoffmann-LaRoche: Back to the District Court").

The Federal Circuit considered none of Judge Young's findings of fact and conclusions of law, maintaining that none of these issues were before the CAFC since Judge Young was precluded from entering a final judgment until after the Federal Circuit made its decision and returned jurisdiction to the District Court.  These decisions by the District Court included:  1) affirming the jury's infringement decision by denying Roche's motion for judgment as a matter of law (JMOL); 2) reaffirming its pretrial decision to grant summary judgment regarding infringement of claim 1 of the '422 patent; 3) "explaining" its reasoning for ruling, also pretrial, that the claims of Amgen's patents-in-suit are not invalid for obviousness-type double patenting (despite the intervening Federal Circuit decision in Pfizer, Inc. v. Teva Pharmaceuticals USA, Inc.); 4) denying Roche's motion for JMOL that claim 1 of the '422 patent and claims 3, 7, and 9 of the '933 patent are not invalid for indefiniteness for reciting the term "human erythropoietin"; and 5) granting Amgen a permanent injunction.  Previous Patent Docs posts have discussed the obviousness-type double patenting (Part I) and permanent injunction (Part II) aspects of the District Court's decision.  Here, we discuss some of the remaining grounds for the Court's deciding this case in Amgen's favor.

The Court denied Roche's motions for judgment as a matter of law (JMOL) that Amgen's claims were invalid.  Although the Court noted that Roche's motion raised issued of invalidity on the grounds of anticipation, obviousness, indefiniteness, and non-enablement, the Court addressed two of these arguments:  first, that the claims of the '422 patent were anticipated by the Goldwasser study, and second that the term "human erythropoietin" is indefinite.

Regarding the anticipation argument, this was ground well-traveled and familiar to the Court.  Hoechst Marion Roussel (HMR) used the same prior art study of Goldwasser to support the same anticipation argument in Amgen Inc. v. Hoechst Marion Roussel, Inc., and the court there, as the Court here, found claim 1 of the '422 patent not to be anticipated when the Goldwasser study was applied as a § 102 reference.  In this case, the Court gave effect to the limitation "purified from mammalian cells grown in culture" to distinguish over the Goldwasser EPO preparations that were made from urine, as a matter of law based on the Court's claim construction.  The Court construed claim 1 of the '422 patent as reciting 5 elements:

A [1] pharmaceutical composition comprising a [2] therapeutically effective amount of [3] human erythropoietin and a [4] pharmaceutically acceptable diluent, adjuvant or carrier, wherein said erythropoietin is [5] purified from mammalian cells grown in culture.

The Court said that Roche tried to improperly shift the invalidity burden to Amgen, by arguing that Amgen was required to show that the "source" limitation "imparts novel structure to an otherwise non-novel product."  As for the propriety of finding that the process/source limitation was a substantive limitation, the Court found that it was a well-established way of distinguishing claimed subject matter over the prior art.  This conclusion was based, in part, on Dr. Lin's testimony that "'the only way [to] characterize [his claimed] product is by the way they were making [it]'."  This claim construction was affirmed by the Federal Circuit in Amgen Inc. v. Hoechst Marion Roussel, Inc. (although in that case the issue was whether the term could be construed to mean that the EPO product was purified from the culture media as opposed to being purified from the cells themselves).  The Court also noted that there were "observed distinctions" between "recombinant EPO [rEPO] and the urinary EPO [uEPO] employed by Goldwasser."  These included what the Court termed "critical distinctions" in glycosylation and specific activity in vivo, which "may . . . reflect recombinant EPO's resistance to degradation in the human body," which the Court cited as reasons for imbuing the source limitation as a real limitation on the EPO product claim

"It is also significant that the source is what enables mass production and commercial viability," according to the Court.  In the Court's view, the simple fact is that the prior art Goldwasser method would require a drug manufacturer to "scour the world" for aplastic anemia patients whose urine could be processed to produce purified uEPO, "transforming the company into a glorified urine collection agency."  The "genius," in part, of rEPO is that it frees drug manufacturers from this dependency on urine as a source of EPO, according to the opinion.

Procedurally, the Court also disagreed with whether the issue was a question of fact for the jury, casting the question not as whether Amgen's claim 1 of the '422 patent was anticipated but on the question of claim construction.  The Court said that Roche's arguments were contrary to Markman v. Westview Instruments, Inc., wherein the meaning of claims is a question of law solely within the province of the court.  According to the District Court, having construed the "purified from mammalian cells grown in culture" limitation as discussed above, no jury could decide that the Goldwasser reference anticipated, since Goldwasser taught uEPO, and the Court cited In re Luck for the principle that process limitations in a product claim "must be given the same consideration as traditional product characteristics."

The Court also based its decision on its conclusion that imposing on Amgen the burden argued by Roche would contravene the statutory presumption of validity.  The Court distinguished Roche's authority to the contrary, In re Moeller, 117 F.2d 565 (CCPA 1941), by pointing out that the Moeller case was an appeal from a decision of the PTO Board of Appeals, where the presumption of validity does not apply.  The Court was also unpersuaded by Roche's argument that the distinctions between rEPO and uEPO were undefined, and that it was possible that an rEPO preparation could be identical to the uEPO preparation of Goldwasser, saying that any such speculation failed to satisfy Roche's burden of establishing invalidity by clear and convincing evidence.

Finally, the Court noted that its construction, that the source is a substantive limit on the product in the claim, has been twice appealed to the Federal Circuit and twice affirmed:

As to the '422 patent, the limitation "purified from mammalian cells grown in culture" in claim 1 clearly limits the source of the EPO used in the claimed "pharmaceutical composition."  The limitation only speaks to the source of the EPO and does not limit the process by which the EPO is expressed.  Rather, the claim is broadly drawn to a "pharmaceutical composition" having certain elements, one of those being EPO "purified from mammalian cells in culture."  This reading is in line with the district court's construction.

Turning to Roche's allegations that the claims of the '422 patent (claim 1) and '933 patent (claims 3, 7, and 9) were indefinite for reciting "human erythropoietin," the Court said that the "touchstone" of the indefiniteness inquiry is whether the skilled worker would understand what was being claimed.  This question, according to the Court, was addressed by competing expert testimony (Dr. Lodish for Amgen and Dr. Flavell for Roche).  However, the Court said that its role was not to re-weigh the evidence but to determine whether the evidence provided "a sufficient basis for a reasonable jury to conclude Roche failed to prove indefiniteness by clear and convincing evidence."  The Court found that it did, saying that the claims are sufficiently definite even if the specification is unclear on whether it is 165-166 amino acids.  Part of the basis for the Court's decision is that "in fields of new and evolving knowledge . . . claims can be no more precise than the knowledge of the field permits" (citing PharmaStem Therapeutics Inc v. Viacell, Inc., 491 F.3d 1342, 1373 (Fed. Cir. 2007)).  Roche argued that the disclosure in the specification of undefined "mutants, analogs and allelic variants" as falling within the scope of the term "human erythropoietin" was enough to render the term indefinite, and the Court disagreed.  The Court also opined that Roche's "focus on the number of amino acids" (165 or 166) was "misplaced," since the Court's construction of the phrase did not require that the amino acid sequence have a precisely-defined length.

Finally, the Court denied Roche's motion for JMOL on the question of infringement, based on evidence that Roche's Mircera® drug product contained erythropoietin that fell within the scope of Amgen's claims.  In doing so, the Court rejected Roche's theory that Mircera® should be considered as a "single molecule" (i.e., peg-EPO), but rather characterized it as rEPO modified by conjugation with polyethylene glycol.  In the Court's view, "[p]egylation merely attaches a sugar, via a single carbon bond, to a recombinant glycoprotein with the patented amino acid sequence; it does not alter the patented properties of EPO."  This alteration was not sufficient for the Court to overturn the jury verdict of infringement.  In support of its decision, the Court cited testimony, internal Roche documents, and Roche's representations to the FDA to the effect that peglylating rEPO did not change its "amino acid sequence, glycosylation or carbohydrate content," i.e., that Mircera® retained rEPO's biological properties.

For additional information regarding this topic, please see:

• "Amgen v. Hoffmann-LaRoche: Back to the District Court," October 10, 2008
• "Victory for Amgen in District Court Decision - Part III," October 9, 2008
• "Victory for Amgen in District Court Decision - Part II," October 8, 2008
• "Victory for Amgen in District Court Decision - Part I," October 6, 2008
• "BIO Submits Amicus Brief in Amgen v. Hoffman-LaRoche," July 7, 2008
• "Glasses Half-full or Half-empty: Hoffman-LaRoche's Different Interpretation of Pfizer v. Teva," April 15, 2008
• "Hoffmann-LaRoche Can't Wait, Files Notice of Appeal to the Federal Circuit," April 11, 2008
• "Will the Federal Circuit's Pfizer v. Teva Decision Spell the End of Amgen's Patent Rights to Recombinant Human Erythropoietin?" March 31, 2008
• "Court Still Cannot Decide on Amgen's Permanent Injunction," March 26, 2008
• "Amgen Inc. v. International Trade Commission (Fed. Cir. 2008)," March 20, 2008
• "Roche Agrees to Court's Conditions for Modifying Preliminary Injunction," March 20, 2008
• "Roche's Mircera® Remains Off the Market (For Now)," March 2, 2008
• "Amgen Survives Another EPO Challenge," October 28, 2007

Amgen v. Hoffmann-LaRoche: Back to the District Court

    By Kevin E. Noonan --

The Federal Circuit today issued an Order, pursuant to Federal Circuit Rule 36, affirming the District Court's grant of a preliminary injunction in Amgen Inc. v. F. Hoffmann-La Roche Ltd., Amgen's patent infringement suit over Roche's Mircera® drug product.  The District Court granted the preliminary injunction on February 28, 2008, after a jury verdict that Amgen's patents-in-suit (U.S. Patent Nos. 5,547,933; 5,441,868; 5,618,698; 5,955,422; and 5,756,349) were not invalid and Mircera® infringed the claims of the '933, '868, and '698 patents (see "Amgen Survives Another EPO Challenge").  Massachusetts District Court Judge William Young entered the injunction to prevent Roche from putting Mircera® on the market while the Court prepared its opinion.  The Court issued that opinion, 150 pages in length, last Thursday (see "Victory for Amgen in District Court Decision" - Part I, Part II), which presented procedural and other problems for the parties and the Federal Circuit during oral argument just this Wednesday (Part III).

By ruling as it did, without an opinion, the Federal Circuit did the only thing both parties agreed would help move the case to resolution:  get the case back within Judge Young's jurisdiction so he can enter a final judgment.  Lacking a final judgment precluded the Federal Circuit panel hearing oral argument on Wednesday from considering the merits of any of the parties' contentions, a circumstance all agreed was "unusual."

Upon questioning from the panel at oral argument on Wednesday, Amgen's counsel Rusty Day suggested that Amgen might file post-judgment motions, and indicated that Amgen expected to file a notice of appeal on some issues.  Roche filed its notice of appeal last Friday; that notice will not become effective until Judge Young enters his opinion as a final judgment.  The parties and the panel expected entry of judgment to happen rapidly; as Judge Plager asked, "don't you think Judge Young is waiting by his telephone [for their opinion]?"

It is unlikely that the Federal Circuit will hold oral arguments on the merits much before next summer, even if Roche moves to expedite the briefing schedule as their counsel, Leora Ben-Ami, told the panel Roche intended to do.  This just delays even further Mircera®'s entry into the marketplace, to Roche's detriment.  They may have to be satisfied for the foreseeable future by selling Mircera® in Europe, a circumstance mentioned by Judge Young in his opinion:

European companies such as Roche can profit from building upon American discoveries by producing and selling infringing products in Europe and throughout the rest of the world.  Nevertheless, the fact that Roche "built up its manufacturing facility in [Europe] and prepared to market its product was simply a risk it took with eyes open to the" possibility that it would not be permitted to market MIRCERA in the United States.

Victory for Amgen in District Court Decision - Part III

    By Kevin E. Noonan --

As Patent Docs has reported (see Part I and Part II), last week District Court Judge William G. Young (D. Mass) issued a 150-page decision on post-trial motions and a permanent injunction, and provided his rationale for a number of pretrial summary judgment motion decisions, in Amgen Inc. v. Hoffmann-LaRoche, Amgen's patent infringement suit over Roche's Mircera® drug product.  The District Court was precluded from entering final judgment in the case, however, because Roche had appealed a preliminary injunction entered by the Court on February 28, 2008, a decision that kept Roche from putting Mircera® on the market while the Court prepared its opinion.  Instead, the Court ordered the case "administratively closed" until the Federal Circuit renders its decision on the appeal.

Oral arguments on that appeal occurred yesterday, and the consequences of Judge Young's eleventh hour decision-making were fully appreciated by both the parties and the CAFC (audio of oral arguments on this appeal can be found here).  The panel, consisting of Judge Rader, presiding, joined by Judges Gajarsa and Plager, began the proceedings by admonishing counsel that the only issue before the Court was the preliminary injunction; Judge Young's opinion was not in the record and was not at issue in this appeal.

The Court asked Roche's attorney, Leora Ben-Ami, what Roche wanted them to do, and she responded by saying the Court should consolidate the appeal of the preliminary injunction with Roche's appeal of Judge Young's decision(s) below.  The Court aggressively challenged the idea of consolidating -- there was "nothing to consolidate."  Ms. Ben-Ami responded that in Roche's view, the District Court had come to a final judgment, but the panel told her "[w]e do not have a paper that says 'Judgment?'"  They said they don't have it, and (facetiously) asked her to forward it to the bench.  The panel said they have an opinion, but not a judgment, and the rules require a judgment.

Ms. Ben-Ami conceded that it was "an unusual circumstance," and while the Court agreed, and agreed that they could take judicial notice of the existence of the opinion (but not taking judicial notice of its contents), they could not take judicial notice "of a judgment that doesn't exist."

Ms. Ben-Ami also asked the Court to find on the merits that Amgen's patents were invalid for obviousness-type double patenting, which produced (amongst a gale of laughter from the bench) the admonition that the Court needed a record and they did not have it.  Ms. Ben-Ami persisted that they did have a sufficient record to decide substantive issues.  In this case, she asserted, unlike the typical preliminary injunction case, the Court had a complete trial record.  Yes, the Court agreed, but they did not have the judge's findings of fact and conclusions of law.  How were they to proceed without that, the Court asked her?  Ms. Ben-Ami responded that Roche had been very careful to only ask the Court to decide questions of law, for which they need give no deference to Judge Young's decision below, and so didn't need anything more from Judge Young.

The panel persisted, asking her how they could address these issues on the procedural posture of the case.  She said they could vacate the preliminary injunction and require the District Court to enter judgment and move the case back up to the Federal Circuit.  This suggestion was also not well-received by the panel, who asked her what basis would they have to vacate the injunction?  When Ms. Ben-Ami responded with the "likelihood of success" prong of the standard, the Court countered that they have a trial verdict that Judge Young agreed with, giving them no basis for vacating the injunction on that ground.

In response to a (seemingly sincere) question of whether Roche was merely being frugal in asking the Court to get to the merits here, Ms. Ben-Ami asserted that this wasn't a case about "ball-bearings or widgets," but was a case where the proceedings were keeping a drug from patients who needed it.  She reminded the Court that the FDA had approved Mircera® as a new drug with a different label than Amgen's EPO products, and that Mircera® was approved and being sold in Europe.  When she brought up Judge Young's evidentiary rulings that prevented the jury from being told about FDA's determination that Mircera® is a "new chemical entity" and that it was being sold in Europe, the panel reminded her that the jury wasn't being asked to decide that question:  the issue before the jury was "something called patent infringement . . . it's a little different."

The Court returned to the question of what they could do to expedite the case towards resolution.  Ms. Ben-Ami repeated the idea that they vacate the preliminary injunction, based on the likelihood of success.  Faced with the panel's resistance to this suggestion, Ms. Ben-Ami argued that the questions Roche asked the Court to decide -- whether continuation applications fell within the ambit of 35 U.S.C. § 121, how should the statute be construed, and the issue of claim construction -- were all questions of law.  She told the panel that they had the views of the trial judge from the Markman hearing and jury instructions.  Ms. Ben-Ami also contended, in answer to a question from the panel, that Roche would agree to an expedited briefing schedule should the panel give her the relief Roche sought by vacating the injunction.

The Court next heard from Amgen, represented by Rusty Day.  He told the panel he had an answer to the question of what they should do.  The answer was either to affirm the preliminary injunction, or dismiss the appeal and remand so Judge Young could enter judgment.  Either resolution would get the case to final judgment and ready for a merits panel to address the substantive issues, he said.  Consolidation would not achieve that result, Mr. Day asserted, reminding the panel that consolidation disregards Amgen's right to appeal.  (To which the panel responded that there was nothing to consolidate.)  Mr. Day suggested that entry of a permanent injunction would moot the appeal, but the panel disagreed -- on the record before them there was no basis for mooting the appeal.  The panel also said they would be "hard-pressed" to find grounds to dismiss.

The Court then asked Mr. Day, what would be the implications if they affirmed (without deciding the substantive issues)?  What would Amgen argue was the precedential effect of an affirmance?  Mr. Day responded that the District Court had entered the preliminary injunction as a way to preserve the status quo, preventing Roche from launching Mircera®, while Judge Young was writing his opinion.  Under these circumstances, Mr. Day said, the only question the panel needed to answer was whether it was an abuse of discretion for Judge Young to enter the preliminary injunction under these circumstances.

The panel asked Mr. Day whether he was ready to agree to an expedited briefing schedule, and while he didn't refuse, he did remind the Court that Roche had filed its notice of appeal with 26 issues to be appealed, and whether briefing could be expedited would depend on what was being appealed.  He did respond to the panel that the Federal Circuit could expect that Amgen would file a notice of appeal once the District Court entered final judgment.  And he reminded the panel that, although Roche had filed its notice of appeal either last Friday or Monday and it was a valid notice, it did not take effect until the District Court entered final judgment, so merely filing the notice did not "move the case forward."

In her rebuttal time, Ms. Ben-Ami again argued the equities, that Roche had been precluded from putting its FDA-approved drug on the market, and that any procedural scenario the Court was considering would result in further delay.  The panel posed a hypothetical, wherein the Court did reach the merits, and found some issues in favor of Roche and some in favor of Amgen.  They would have to remand, asking whether that wouldn't also result in delay, since the District Court would then have another trial and have to write another opinion, even without an injunction, that would return the case to the Federal Circuit in a year or so?  What have we achieved, asked the panel?  Ms. Ben-Ami argued a result expediting resolution of the case could occur from the Court deciding dispositive issues now, but the panel resisted the idea of  "piecemealing" the record to reach a decision on the issues.  The panel said they understood the importance of these issues, that they "don't want people dying," but that they cannot see a way to shorten the time it will take to reach a resolution on the procedural posture of the case.  Ms. Ben-Ami's final argument to the Court was that they could order Judge Young to enter final judgment immediately, which raised another chuckle; the panel asked, don't you think Judge Young is waiting by his telephone for their opinion?  Ms. Ben-Ami's final request, that the Court also order Judge Young to expedite his decision on any post-judgment motions Amgen might file, met with little sympathy:  "They [Amgen] have their rights," said the Court, and "you have yours."

The Court's decision should be available in the next few months.

For additional information regarding this topic, please see:

• "Victory for Amgen in District Court Decision - Part II," October 8, 2008
• "Victory for Amgen in District Court Decision - Part I," October 6, 2008
• "BIO Submits Amicus Brief in Amgen v. Hoffman-LaRoche," July 7, 2008
• "Glasses Half-full or Half-empty: Hoffman-LaRoche's Different Interpretation of Pfizer v. Teva," April 15, 2008
• "Hoffmann-LaRoche Can't Wait, Files Notice of Appeal to the Federal Circuit," April 11, 2008
• "Will the Federal Circuit's Pfizer v. Teva Decision Spell the End of Amgen's Patent Rights to Recombinant Human Erythropoietin?" March 31, 2008
• "Court Still Cannot Decide on Amgen's Permanent Injunction," March 26, 2008
• "Amgen Inc. v. International Trade Commission (Fed. Cir. 2008)," March 20, 2008
• "Roche Agrees to Court's Conditions for Modifying Preliminary Injunction," March 20, 2008
• "Roche's Mircera® Remains Off the Market (For Now)," March 2, 2008
• "Amgen Survives Another EPO Challenge," October 28, 2007

Victory for Amgen in District Court Decision - Part II

    By Kevin E. Noonan --

On October 2nd, District Court Judge William G. Young (D. Mass) issued a decision on post-trial motions and a permanent injunction in Amgen Inc. v. Hoffmann-LaRoche, Amgen's patent infringement suit over Roche's Mircera® drug product.  In a 150-page opinion, Judge Young handed Amgen nothing less than a complete victory.

Amgen procured a jury judgment on October 23, 2007 that Mircera® infringed several Amgen patents, including U.S. Patent Nos. 5,547,933; 5,441,868; and 5,618,698.  In addition, the jury found these and two other patents (U.S. Patent Nos. 5,955,422 and 5,756,349) not to be invalid (see "Amgen Survives Another EPO Challenge").  The District Court entered a preliminary injunction on February 28, 2008, which prevented Roche from launching Mircera® (the FDA approved Mircera® in November 2007).  In entering the preliminary injunction, Judge Young assessed whether Amgen was entitled to an injunction using the four-factor test set forth by the Supreme Court in eBay Inc. v. MercExchange, L.L.C.  Judge Young found that Amgen satisfied all the eBay requirements except the public interest prong.  The District Court expressly did not enter any findings on the fourth prong, but left open the possibility that the injunction could be modified under four conditions.  Roche agreed to the Court's conditions (see "Roche Agrees to Court's Conditions for Modifying Preliminary Injunction"), but Amgen did not, and the Court appointed a special master to consider the question of how dosing and pricing of Amgen's and Roche's products should be compared (see "Court Still Cannot Decide on Amgen's Permanent Injunction").  Roche responded by filing its notice of appeal to the Federal Circuit on April 11, 2008 (see "Hoffmann-LaRoche Can't Wait, Files Notice of Appeal to the Federal Circuit"); that appeal was scheduled to be argued today (October 8).

In last Thursday's ruling, the District Court ruled in Amgen's favor on all issues.  An earlier post discussed the Court's reasoning on its decision that the claims are not invalid under the judicially-created doctrine of obviousness-type double patenting (ODP) (see "Victory for Amgen in District Court Decision - Part I").  This post will discuss the Court's reasons for granting a permanent injunction to Amgen (subject to Roche's appeal of the preliminary injunction, or a consolidated appeal that Roche may file in response to this decision).  The remaining grounds for the Court's decision will be addressed in future posts.

The Court first reiterated its earlier opinion that Amgen fulfilled the first three of the four equitable considerations enunciated by the Supreme Court in eBay:  Amgen's asserted claims were infringed and not invalid; Amgen's injury would not be adequately compensated merely with money damages; and the balance of the hardships weighed in favor of granting the injunction.  The District Court opined that while eBay has made it easier to deny an injunction to a non-practicing entity (aka a "patent troll"), in the Court's view eBay "changed little where a prevailing plaintiff seeks an injunction to keep an infringing competitor out of the market."  (The Court stated that, with but two exceptions, district courts have granted permanent injunctions in 26 cases where infringement was found between direct competitors.)  The Court also opined that the Supreme Court "does not appear to have intended eBay to be pathbreaking precedent," calling the decision  a "barebones majority opinion" that did "little more than remind court[s] that they must exercise discretion in accordance with the framework Congress approved" (i.e., that a court "may" enter an injunction "in accordance with the principles of equity," see 35 U.S.C. § 283).

The District Court then discussed the factors it considered in determining whether the public interest would favor granting Amgen a permanent injunction.  Judge Young conceded that, initially, he was inclined to decide in Roche's favor, on the grounds that introducing Mircera® would increase competition in the pharmaceutical market place and reduce prices accordingly.  The Court was not willing to rest on this initial assumption, however, but held "extensive evidentiary hearings" on the effects of permitting Roche to introduce Mircera®, as well as appointing both a special master and a technical advisor to help the Court understand the economics of the pharmaceutical industry.  The result was that "[t]he Court's initial impression [did] . . . not withstand a reflective and detailed analysis."

In coming to its decision, the Court identified three factors it balanced in considering the public interest:  patient health, Medicare savings, and "the public's interest in a robust patent system."  With regard to patient health, the Court found no compelling evidence that the more limited dosing Roche asserted for its Mircera® produce would greatly increase benefits to patients.  The Court's conclusion was based to some extent on how erythropoiesis stimulating agents (ESAs) like Mircera® are administered:  kidney dialysis patents, for example, receive dialysis three times a week, so more frequent administration of an ESA has no effect on the patient (albeit perhaps incurring additional ancillary administrative costs).  The Court also credited expert testimony that more frequent dosing may have beneficial effects in titrating the effect of the drug, leading to more stable and consistent red blood cell levels.  The Court also considered the benefits of reducing the "vulnerability" to patients from manufacturing problems stemming from a sole source of approved ESAs, as well as "expanding the armamentarium" available to physicians to treat anemia.

On the other hand, the Court considered testimony that the longer dosing intervals achieved with Mircera® were associated with greater variability in blood hemoglobin levels, and with some evidence from clinical trials that there was a greater mortality rate for patients treated with pegylated erythropoietin.  The Court appreciated that the parties' experts would disagree on the relative patient benefits of their respective products.  The Court took a slightly longer view of the question, however, in terms of the risks associated with introducing a new product into a treatment regimen:

[O]ne set of facts is clear and warrants particularly strong consideration.  Although clinical studies in support of a Biologics License Application at the United States Food and Drug Administration or at the European Medicinal Evaluation Agency frequently involve several thousand patients, it often takes many years before the medical community learns how new therapies are to be used safely and effectively, for what patients and at what doses, and conditions under which their use is not advised.  As physician/patient experience accumulates and scientific evidence evolves, the benefit/risk calculation underlying treatment often shifts as well.

The Court noted that even for Amgen's erythropoietin products (Aranesp® and Epogen®) the FDA was continuing to evaluate risks and changing labeling requirements and treatment guidelines (see "FDA Makes Changes in Erythropoietin Labeling"), despite their longevity as approved drugs (Epogen® was launched in 1989 and Aranesp® in 2001).

The Court concluded that:

Given that both the FDA and the European Medicines Agency have approved MIRCERA as safe and effective for the treatment of anemia in patients with chronic renal failure, it seems likely that some patients might well benefit from MIRCERA being on the market as an additional element in the physicians' armamentarium due to clinical, convenience, and quality-of-life concerns.  Nevertheless, with major changes in recommended treatment modalities still occurring many years after the initial product launch for currently available ESAs, it is also plausible that, were MIRCERA allowed to be marketed in the United States, information and consensus on its risk/benefit profile relative to those of EPOGEN, Procrit, and Aranesp would also evolve and change, perhaps substantially.  . . .  Hence, it is difficult if not impossible to predict with any reasonable level of confidence what the net clinical, convenience, and quality-of-life benefits of Mircera will be relative to those of the existing ESAs.

Turning to the second consideration, Medicare savings, the Court set forth a detailed "primer" on drug pricing under Medicare.  This factor was an important consideration for the Court because "government purchasers comprised approximately 80% of EPOGEN sales," with 75 of that 80% being incurred under the Medicare Part B program.  The Court acknowledged the assistance of "Ernest Berndt, an applied economics professor at the Massachusetts Institute of Technology Sloan School of Business," a court-appointed special master and technical advisor on these matters.  (A detailed explication of this analysis would overly burden this post and risk introducing inaccuracies into the Court's careful analysis; thus, only a brief synopsis of the Court's conclusions is provided here.)  Simply put, under the complex scheme for calculating reimbursements to drug providers and physicians, the Court found that introducing a new drug into an established market was likely to have the paradoxical effect of causing drug prices to increase.  In this case, such increases could arise from Roche charging at least as great a price for Mircera® as Amgen charges for Aranesp® or Epogen®.  The Court was clear to acknowledge that this outcome was the result of Medicare's method for calculating reimbursement rates, which provided an incentive to keep ESA prices high.  The Court also noted that Amgen's expert testified that there were at least three differences between "textbook" or "plain vanilla" competition and competition between drug providers caused by Medicare reimbursement policies:  first, that under Medicare it is the physician rather than the patient that makes drug choice decisions; second, that end-users (i.e., patients) pay only a small fraction of the drug costs, thereby reducing patient incentive for cheaper drugs; and third, "perhaps most important," "providers are drawn to the drugs that offer the largest difference between the amount the provider is reimbursed  . . . under Medicare . . . and that the provider actually paid for the drug," a difference the Court said is called "cost recovery" in the industry.

The result of this economic analysis convinced the Court that Roche was "likely to enter the market at a price higher than that of Amgen's products and to maintain high prices over time."  This conclusion was supported by testimony from Roche witnesses that cost recovery was "a major factor" in developing Roche's pricing strategy for Mircera®.  The Court also recognized that Roche's pricing behavior would be dependent, in part, on Amgen's reaction to Mircera® entering the market.  And on top of these uncertainties, the Court also recognized that Congress and administrative agencies could alter the Medicare drug reimbursement calculation at any time and in unpredictable ways.  On balance, the Court concluded that Mircera® market entry was unlikely to reduce Medicare costs for ESA products, saying that "[i]t is simply impossible to predict with certainty the effect that MIRCERA's entry would have on prices and, accordingly, on Medicare expenditures."

Finally, the Court opined that "[p]ermitting Roche to enter the [ESA] market would undermine the incentives for innovation" provided by patenting.  The Court relied on testimony from Amgen's CEO on the importance of patents in protecting pharmaceutical innovation, citing statistics on the cost of bringing a successful drug to market, and more importantly, the costs associated with the very many more failures incurred for every successful drug product.

The Court synopsized these considerations, and its ultimate determination, as follows:

If the Court allowed Roche to introduce MIRCERA into the market, perhaps a few patients would benefit, and maybe Medicare would save a few dollars.  These arguments, however, could be made for almost any infringing drug.  Were courts to refuse injunctions on the basis of such speculation, then pharmaceutical patents would be worth far less than they are today because they would no longer include a right to exclude infringers from the market.  The diminishing returns would disincentivize research and development for pathbreaking drugs by lowering the expected value of discovery.  By contrast, granting injunctions encourages companies to devote their energies toward developing drugs that
will satisfy unmet medical needs.

As for the equities, as to Roche:

At bottom, Roche attached a sugar to a patented protein.  As the jury concluded, this was not innovation.  Of course, Roche's efforts to modify Amgen's patented product will not go entirely unrewarded.  As it stands, European companies such as Roche can profit from building upon American discoveries by producing and selling infringing products in Europe and throughout the rest of the world.  Nevertheless, the fact that Roche "built up its manufacturing facility in [Europe] and prepared to market its product was simply a risk it took with eyes open to the" possibility that it would not be permitted to market MIRCERA in the United States.

And as to Amgen:

The Court has relinquished any notion that the long-suffering or terminally ill among our number may rely upon "the benevolence of" pharmaceutical companies.  Companies like Amgen invest in risky research and development to discover drugs like EPO because such drugs are worth tens of billions of dollars, period.  If America is to continue to be an engine of medical innovation it will be because we protect the right of inventors to exploit the limited monopoly granted in the Patent Clause.

Accordingly:

[T]he Court cannot conclude with any certainty that MIRCERA will save lives or money.  Failure to enter a permanent injunction, however, would risk undermining the incentives for innovation that have produced, and hopefully will continue to produce, medical advances that extend and enhance the value of life.  The Court therefore concludes that the public interest will not be disserved by a permanent injunction.

Injunction granted.

For additional information regarding this topic, please see:

• "Victory for Amgen in District Court Decision - Part I," October 6, 2008
• "BIO Submits Amicus Brief in Amgen v. Hoffman-LaRoche," July 7, 2008
• "Glasses Half-full or Half-empty: Hoffman-LaRoche's Different Interpretation of Pfizer v. Teva," April 15, 2008
• "Hoffmann-LaRoche Can't Wait, Files Notice of Appeal to the Federal Circuit," April 11, 2008
• "Will the Federal Circuit's Pfizer v. Teva Decision Spell the End of Amgen's Patent Rights to Recombinant Human Erythropoietin?" March 31, 2008
• "Court Still Cannot Decide on Amgen's Permanent Injunction," March 26, 2008
• "Amgen Inc. v. International Trade Commission (Fed. Cir. 2008)," March 20, 2008
• "Roche Agrees to Court's Conditions for Modifying Preliminary Injunction," March 20, 2008
• "Roche's Mircera® Remains Off the Market (For Now)," March 2, 2008
• "Amgen Survives Another EPO Challenge," October 28, 2007

Victory for Amgen in District Court Decision - Part I

    By Kevin E. Noonan --

On October 2nd, District Court Judge William G. Young (D. Mass) issued a decision on post-trial motions and a permanent injunction in Amgen Inc. v. Hoffmann-LaRoche, Amgen's patent infringement suit over Roche's Mircera®  drug product.  In a 150-page opinion, Judge Young handed Amgen nothing less than a complete victory.

Amgen procured a jury judgment on October 23, 2007 that Mircera® infringed several Amgen patents.  That verdict found Roche's Mircera® infringed claims 3, 7, and 8 of Amgen's U.S. Patent No. 5,547,933 (claim 12 was found not to be literally infringed but infringed under the Doctrine of Equivalents); claims 1 and 2 of U.S. Patent No. 5,441,868; and claims 6 through 9 of U.S. Patent No. 5,618,698.  Two other patents asserted in the litigation were found not invalid:  U.S. Patent Nos. 5,955,422 (claim 1) and 5,756,349 (claim 7); and the jury did not reach a determination with respect to infringement and validity for U.S. Patent No. 5,621,080.  Amgen's infringed claims were directed to recombinant methods and recombinant EPO protein, and Roche's Mircera® drug product is a form of recombinant EPO that has been covalently linked to polyethylene glycol.  In addition, the jury found that Roche had not sustained its burden of establishing that any of Amgen's asserted claims were invalid (see "Amgen Survives Another EPO Challenge ").

The District Court then entered a preliminary injunction on February 28, 2008 foreclosing Roche from launching Mircera®; Roche had been granted approval by the U.S. Food and Drug Administration to market Mircera® almost a year ago (in November 2007).  In entering the preliminary injunction, Judge Young assessed whether Amgen was entitled to an injunction using the four-factor test set forth by the Supreme Court in eBay Inc. v. MercExchange, L.L.C.  Judge Young expressly found that Amgen satisfied three of the four requirements (Amgen's asserted claims were infringed and not invalid; Amgen's injury would not be adequately compensated merely with money damages; and the balance of the hardships weighed in favor of granting the injunction).  However, the Court at that time did not decide in Amgen's favor as to the fourth prong, the public interest, particularly in view of Roche's representations of the advantages of its Mircera® product over Amgen's version of EPO (including inter alia less frequent dosing; see "Long-Acting Drug for Dialysis Anemia Equivalent to Weekly Agent").

The Court left open the possibility that the injunction could be modified under the following four conditions:  that Roche would pay Amgen a royalty of 22.5% (Amgen having already rejected an offer for a 20% royalty from Roche; see "Amgen Rejects Roche's Micera [sic] License Payment Offer"); that Roche would introduce Mircera® to the Medicare patient population at a cost no more than the average sales price of Amgen's EPO products (sold under the names Epogen® and Aranesp®); that Roche would have to provide clinical evidence to permit the District Court to determine a "dosage conversion factor" between Mircera® and Epogen®; and that Roche would pay for an independent agency to monitor sales and determine royalty payments owed to Amgen.  In addition, Roche would agree to supply Mircera® to any patient needing it, at or below the authorized price.  Although Roche ultimately agreed to these conditions (see "Roche Agrees to Court's Conditions for Modifying Preliminary Injunction"), Amgen did not, and the Court appointed a special master to consider the question of how dosing and pricing of Amgen's and Roche's products should be compared (see "Court Still Cannot Decide on Amgen's Permanent Injunction").  Roche responded by filing its notice of appeal to the Federal Circuit on April 11, 2008 (see "Hoffmann-LaRoche Can't Wait, Files Notice of Appeal to the Federal Circuit"); that appeal is scheduled to be argued on October 8th.

In last Thursday's ruling, the Court ruled in Amgen's favor on all issues, including:  1) affirming the jury's infringement decision by denying Roche's motion for judgment as a matter of law (JMOL); 2) reaffirming its pretrial decision to grant summary judgment regarding infringement of claim 1 of the '422 patent; 3) "explaining" its reasoning for ruling, also pretrial, that the claims of Amgen's patents-in-suit are not invalid for obviousness-type double patenting (despite the intervening Federal Circuit decision in Pfizer, Inc. v. Teva Pharmaceuticals USA, Inc.); 4) denying Roche's motion for JMOL that claim 1 of the '422 patent and claims 3, 7, and 9 of the '933 patent are not invalid for indefiniteness for reciting the term "human erythropoietin"; and 5) granting Amgen a permanent injunction barring "Roche, its agents, servants, employees, counsel, and all persons and entities acting in concert therewith" from infringing the claims of the patents-in-suit for the remaining life of those patents.

This post will discuss the Court's reasoning on its decision that the claims are not invalid under the judicially-created doctrine of obviousness-type double patenting (ODP).  The remaining grounds for the Court's decision will be addressed in future posts.

The relationships between Amgen's various patents-in-suit, and the earlier-filed '008 patent, are set forth in the following diagram:

Roche argued that the claims of the patents-in-suit were invalid for obviousness-type double patenting (ODP) over claim 10 of U.S. Patent No. 4,667,016:

10.  A process for the efficient recovery of recombinant erythropoietin from a mammalian cell culture supernatant fluid, said process comprising the following steps in sequence:
    (1)  subjecting the fluid to ion exchange chromatographic separation at about pH 7.0, thereby to selectively bind erythropoietin in said sample to a DEAE agarose cationic resin;
    (2)  stabilizing materials bound to said resin against degradation by acid activated proteases through treatment with urea;
    (3)  selectively eluting bound materials having a pKa greater than that of erythropoietin by treatment with aqueous acid at a pH of about 4.3.
    (4)  selectively eluting erythropoietin by treatment with an aqueous salt at a pH of about 7.0;
    (5)  subjecting erythropoietin -containing eluent fractions to reverse phase liquid chromatographic separation involving an immobilized C.sub.4 resin, thereby to selectively bind erythropoietin in said fluid to said resin;
    (6)  selectively eluting bound erythropoietin from said resin with an aqueous ethanol solution of about 60 percent at a pH of about 7.0; and,
    (7)  isolating erythropoietin -containing fractions of the eluent.

The Court denied Roche's summary judgment motion based on claim 10 of the '016 patent pretrial, and granted (in part) Amgen's cross-motion for summary judgment that the claims of its patents-in-suit were not invalid for ODP over both the '016 patent and U.S. Patent No. 4,703,008.

In its October 2nd decision, the Court explained that it had made its determination by application of the "two-way" test for ODP.  Under the Court's understanding of Federal Circuit precedent, this was a case of a patent on a "follow-on" invention granting before a patent on an earlier-filed application to an "original" invention.  Moreover, the order in which the patents were granted was "a function of a restriction requirement imposed by the PTO," and the claims of the patents in suit were "consonant" with this restriction requirement.  Thus, according to the Court, "the claims of the '933, '422, and '349 patents are immune from ODP" over the '016 or '008 patents pursuant to 35 U.S.C. § 121.

The Court set forth its legal analysis:  "[i]n most cases, courts employ a 'one-way' test where the court compared the claims according to the order in which the patents issued."  There are exceptions to this rule under Federal Circuit precedent, according to the Court, citing In re Berg, 140 F.3d 1428 (Fed. Cir. 1998).  These circumstances are the result of "the reality that the Patent Office is perennially underfunded and slow."  Accordingly, occasionally patents will issue such that "a patent covering a subsequently conceived follow-on invention" will issue "before the patent covering the underlying invention."  Using the two-way test prevents the inequity that would arise from applying the one-way test under circumstances where the internal workings of the Patent Office invert the order in which patents are granted on such "underlying" and "follow-on" inventions.

Which test is to be used is, according to the Court, a matter of law, depending on a two-prong test:  first, that an applicant could not have filed the claims in the same (i.e., the earlier-filed) application; and second, that the applicant did not cause a delay in prosecution of the earlier-filed application.

The Court found that any delay in the grant of the earlier-filed application was caused by the Patent Office.  The application resulting in the '008 patent (USSN 06/675,298; see diagram) was filed November 20, 1984, while the application resulting in the '016 patent (USSN 06/747,119) was filed on June 20, 1985.  Claim 10 is clearly directed to a specific 7-part process for purifying erythropoietin.  The Court characterized as "undisputed" that the '016 patent inventors did not conceive of their process until after Amgen filed the '298 application.  Under these circumstances, the Court found the first prong of the test was satisfied, that the applicants could not have filed claim 10 of the '016 patent in the earlier-filed '298 application because it had not been invented yet.

As to the second prong, the PTO imposed a restriction requirement on the claims of the '298 application as follows:

I.  Claims 1-13, 16, 39-41, 47-54 and 59, drawn to polypeptide, classified in Class 260, subclass 112.
II.  Claims 14, 15, 17-36, 58 and 61-72, drawn to DNA, classified in Class 536, subclass 27.
III.  Claims 37-38, drawn to plasmid, classified in Class 435, subclass 240.
IV.  Claims 42-46, drawn to cells, classified in Class 435, subclass 240.
V.  Claims 55-57, drawn to pharmaceutical composition, classified in Class 435, subclass 177.
VI.  Claim 60, drawn to assay, classified in Class 435, subclass 6.

Amgen elected to pursue claims in Group II in the '298 application, and the granted claims of the '008 patent were confined to claims from that Group.  Amgen also filed two divisional applications, USSN 07/113,178 (having claims from Groups I and VI) and USSN 07/113,179 (having claims from Group I) (see diagram).  The Court defined the co-pendency period of the applications resulting in the '008 and '016 patents narrowly (between the time the application resulting in the '016 patent was filed on June 20, 1985 and when it granted on May 19, 1987), and found that during that period Amgen did nothing to delay prosecution of the '298 patent application.  "[I]t was the PTO, not Amgen, that caused the later-filed '016 patent to issue before Dr. Lin's '298 application" in the Court's estimation.

The Court expressly rejected Roche's contention that recitation of the term "recombinant erythropoietin from a mammalian cell culture supernatant fluid" in claim 10 of the '016 patent was sufficient to satisfy ODP requirements.  The decision characterized as "fatally flawed" the assumption (attributed to Roche by the Court) that the disclosure found in the '016 patent specification was relevant to the question of whether the claims of the patents-in-suit were patentably-distinct over claim 10 of the '016 patent.  According to the Court, the Federal Circuit had "made clear that '[d]ouble patenting is altogether a matter of what is claimed," citing General Foods Corp. v. Studiengesellschaft Kohle mbH, 972 F.2d 1272, 1277 (Fed. Cir. 1992).  The Court expressly distinguished the Federal Circuit decision, relied upon by Roche, in Geneva Pharmaceuticals, Inc. v. GlaxoSmithKline PLC, 349 F.3d 1373 (Fed. Cir. 2003).  Roche argued that this case stood for the proposition that a court can rely on disclosure in the parent specification as well as the parent's granted claims in determining whether claims in a later-granted patent are invalid for ODP.  According to Judge Young, the reason that the Federal Circuit considered the specification in Geneva was a part of construing the claims to understand their metes and bounds.  Reliance on the specification is not only unnecessary but improper where, as here, that scope and meaning are evident from the express language of the claims of the patents-in-suit and claim 10 of the '016 patent, and thus the Court found that Geneva did not support Roche's position.

The Court also noted that Roche had the burden of establishing ODP by clear and convincing evidence, a burden made more difficult in this case because the Patent Office had twice rejected that argument in finding that the claims of the patents-in-suit were not invalid under ODP over the claims of the '016 patent.

Finally, the Court turned to the question of whether the claims of Amgen's patents-in-suit were entitled to the safe harbor of 35 U.S.C. § 121.  In addition to "the express requirements" of § 121 (i.e., the plain meaning of the statute), the Court interpreted Federal Circuit precedent to require "consonance":  "the applicant must maintain the line of demarcation between the independent and distinct inventions that prompted the restriction requirement," citing Pfizer Inc. v. Teva Pharms. USA, Inc., 518 F.3d 1358, 1359 (Fed. Cir. 2008).  Consonance thus required the Court to determine whether the patents-in-suit were the product of applications filed in response to a PTO-imposed restriction requirement, and whether the claims in those patents "remained faithful" to the claim groupings that made up the restriction.  In answer to the first question, the Court found that the '178 and '179 applications (that resulted ultimately in the '933, '422, and '349 patents-in-suit; see diagram) were filed in response to the restriction requirement imposed on the '298 application.  The Court also found that these claims "remained faithful" to the groupings that made up the restriction.  In coming to this conclusion, the Court was persuaded by the fact that none of the claims prosecuted in the '178 or '179 applications, or granted in the '933, '422, or '349 patents-in-suit, were members of restriction Group II that had been elected in response to the restriction requirement in the '298 application and comprised the claims granted in the '008 patent.

In reaching this decision, the Court rejected Roche's argument that Amgen had "broken consonance" by including claims from Groups I and V in the '178 application, and similarly rejected Roche's argument that Amgen's combining claims from Groups V and VII had the same effect during prosecution of the '422 patent.  The Court held that these arguments were "without legal foundation" because Roche cited no case supporting the proposition that Amgen was required to file a separate divisional for each restriction group to maintain consonance with the original restriction requirement.  The Court cited Symbol Technologies, Inc. v. Opticon, Inc., 935 F.2d 1569, 1579 (Fed. Cir. 1991) for the rule that "new or amended claims in a divisional application are entitled to the benefit of [section] 121 if the claims do not cross the line of demarcation drawn around the invention elected in the restriction requirement."  In addition, the Court rejected Roche's contention that reciting erythropoietin as a "non-naturally occurring glycoprotein" in the claims of the '933 patent implicated the DNA claims of restriction Group II (based in the premise that such "non-naturally occurring erythropoietin required recombinant DNA for its production).  While agreeing that the Examiner's written description of the restriction groupings was consistent with Roche's argument, the Court drew the "relevant line of demarcation" between the claims as "the grouping restriction actually imposed by the examiner (rather than her characterization thereof), citing Texas Instruments Inc. v. ITC, 988 F.2d 1165, 1179 (Fed. Cir. 1993) (which interpretation did not support Roche's argument).

This portion of the opinion was directed towards the Court's grant of partial summary judgment to Amgen prior to trial.  However, this did not decide the issue, since Roche was able to convince the Court that there were fact issues remaining to be determined relating to two additional theories (that the Court termed "number 3 and number 4") and that the Court decided in this opinion.  These issues were tried to the Court and not to the jury, since the Court held that ODP was related to the metes and bounds of how claims were construed and thus solely within its province.

Roche theory number 3 relates to the claims of the '868 and '698 patents that are clearly outside the scope of the § 121 safe harbor.  The asserted claims of the '868 and '698 patents are process claims, and the task for the Court was to determine whether they are patentably distinct from the claims of the '008 patent.  Simply put, Roche's argument was that claim 1 of the '868 patent:

1.  A process for the production of glycosylated erythropoietin polypeptide having the in vivo biological property of causing bone marrow cells to increase production of reticulocytes and red blood cells comprising the steps of:
    (a) growing, under suitable nutrient conditions, mammalian host cells transformed or transfected with an isolated DNA sequence encoding human erythropoietin; and
    (b) isolating said glycosylated erythropoietin polypeptide therefrom.

" . . . simply tells one skilled in the art to 'take the cells that were claimed in the '008 patent and grow them, let[ting] them do what they normally do.'"  The Court disagreed, adopting Amgen's argument that the cells claimed in the '008 patent were not required to "actually express any EPO polypeptide" (a rationale that would seem to call into question satisfaction by such a claim of the utility requirement of 35 U.S.C. § 101).  The Court opined that "simply having the starting material" (the cells claimed in the '008 patent) was not equivalent to "having an actual process that successfully" produces useful quantities of erythropoietin.  This clarity of this reasoning improves when the Court puts it in proper context, that Roche did not carry its burden of establishing by clear and convincing evidence that the claims of the '868 and '008 patents are not patentably distinct and thus invalid for ODP.

The Court came to the same conclusion for claims 6-9 of the '698 patent:

6.  A process for the production of a glycosylated erythropoietin polypeptide having the in vivo biological property of causing bone marrow cells to increase production of reticulocytes and red blood cells comprising the steps of:
    (a) growing, under suitable nutrient conditions, vertebrate cells comprising amplified erythropoietin amino acid sequence of [figure] 6, and
    (b) isolating said glycosylated erythropoietin polypeptide expressed by said cells.

7.  The process of claim 6 wherein said vertebrate cells further comprise amplified marker gene DNA.

8.  The process of claim 7 wherein said amplified marker gene DNA is Dihydrofolate reductase (DHFR) gene DNA.

9.  The process according to claims 2, 4, and 6 wherein said cells are mammalian cells.

For these claims, limitations relating to the presence of amplified EPO-encoding DNA provided additional points of patentable distinction supporting the Court's decision.

Finally, Roche's theory number 4 was that the claims of the '933, '422, and '349 patents-in-suit were invalid over the claims of the '868 and '698 patents for ODP.  The viability of this argument rested, according to the Court, on whether Amgen could avail itself of the § 121 safe harbor.  This, in turn, depended on whether the '933, '422, and '349 patents-in-suit "arose from" an application resulting from a PTO restriction requirement and whether these claims "are consonant with the restriction requirement."  The Court relied in its analysis on its decision in granting partial summary judgment that the '933, '422, and '349 patents-in-suit all "arose from" the restriction requirement imposed by the PTO in the '298 application.  The Court also determined that, while the issued claims of the '933, '422, and '349 patents-in-suit were not identical to the claims in the two divisional applications (the '178 and '179 applications) as filed, they maintained the required consonance with the restriction requirement imposed in the '298 patent.

In making this determination, the Court directly addressed the question of whether the § 121 safe harbor was available in a continuation application claiming priority to a divisional application that itself was clearly within the § 121 safe harbor.  This is because the '698 patent was granted on a continuation application claiming priority to the '179 divisional application.  In making its determination, the Court appeared to adopt Amgen's position that Federal Circuit precedent established that such a continuation application would fall within the protection of the § 121 safe harbor.  The Court cited in support of its determination Applied Materials, Inc. v. Advanced Semiconductor Materials Am., Inc., 98 F.3d 1563 (Fed. Cir. 1996) and Symbol Technologies, Inc. v. Opticon, Inc., 935 F.2d 1569 (Fed. Cir. 1991), cases cited by Amgen in its bench brief submitted in response to the Federal Circuit's Pfizer v. Teva Pharmaceuticals decision (see "Will the Federal Circuit's Pfizer v. Teva Decision Spell the End of Amgen's Patent Rights to Recombinant Human Erythropoietin? ").  In something of an anticlimax, the Federal Circuit's recent decision in Pfizer v. Teva Pharmaceuticals had little impact; the Court relegated its discussion of the decision to a footnote (no. 8), and limited the Pfizer decision to its facts, that the § 121 safe harbor does not apply to continuation-in-part applications:

Pfizer, Inc. v. Teva Pharmaceuticals USA, Inc. does not invalidate this precedent.  As an initial matter, Pfizer did not name Symbol Technologies as one of the decisions that was possibly at odds with the Pfizer decision.  See Pfizer, 518 F.3d at 1362 (naming other cases).  Furthermore, Pfizer addressed the scope of section 121 in the context of a continuation-in-part application filed in lieu of a divisional application when responding directly to a restriction requirement.  Id. at 1362.  It said nothing about what happens if an applicant files a divisional application – which is eligible for section 121's safe harbor – and then files a continuation application to that divisional application.

For additional information regarding this topic, please see:

• "BIO Submits Amicus Brief in Amgen v. Hoffman-LaRoche," July 7, 2008
• "Glasses Half-full or Half-empty: Hoffman-LaRoche's Different Interpretation of Pfizer v. Teva," April 15, 2008
• "Hoffmann-LaRoche Can't Wait, Files Notice of Appeal to the Federal Circuit," April 11, 2008
• "Will the Federal Circuit's Pfizer v. Teva Decision Spell the End of Amgen's Patent Rights to Recombinant Human Erythropoietin?" March 31, 2008
• "Court Still Cannot Decide on Amgen's Permanent Injunction," March 26, 2008
• "Amgen Inc. v. International Trade Commission (Fed. Cir. 2008)," March 20, 2008
• "Roche Agrees to Court's Conditions for Modifying Preliminary Injunction," March 20, 2008
• "Roche's Mircera® Remains Off the Market (For Now)," March 2, 2008
• "Amgen Survives Another EPO Challenge," October 28, 2007

BIO Submits Amicus Brief in Amgen v. Hoffman-LaRoche

    By Kevin E. Noonan --

The Biotechnology Industry Organization (BIO) submitted an amicus brief today to the Court of Appeals for the Federal Circuit in the Amgen v. Hoffman-LaRoche case (see "Brief of Biotechnology Industry Organization as Amicus Curiae in Support of Appellee and Affirmance ").  This case involves Roche's Mircera® drug product, a form of recombinant EPO that has been covalently linked to polyethylene glycol.  Last October, a jury found that Mircera® infringed several Amgen patents.  That verdict found that Roche's Mircera® infringed claims 3, 7, and 8 of Amgen's U.S. Patent No. 5,547,933 (claim 12 was found not to be literally infringed but infringed under the Doctrine of Equivalents); claims 1 and 2 of U.S. Patent No. 5,441,868; and claims 6 through 9 of U.S. Patent No. 5,618,698.  (Amgen's infringed claims were directed to recombinant methods and recombinant EPO protein.)  In addition, the jury found that Roche had not sustained its burden of establishing that any of Amgen's asserted claims were invalid (see "Amgen Survives Another EPO Challenge").

On February 28, 2008, the U.S. District Court for the District of Massachusetts (Judge William G. Young, presiding) granted a preliminary injunction to Amgen against Hoffman La-Roche, preventing Roche from selling Mircera®.  Using the four-factor test set forth by the Supreme Court in eBay Inc. v. MercExchange, L.L.C., the District Court relied upon the jury verdict that Amgen's asserted claims were infringed and not invalid; in addition, the Court found that Amgen's injury would not be adequately compensated merely with money damages, and that the balance of the hardships weighed in favor of granting the injunction.  The District Court struggled with the public interest prong of the test, in view of Roche's argument that the public interest was served by the (presumed) reduced drug price that would ensue from competition between Mircera® and Amgen's Epogen® and Aranesp® products, as well as Roche's representations of the advantages of its Mircera® product over Amgen's version of EPO (including inter alia less frequent dosing; see "Long-Acting Drug for Dialysis Anemia Equivalent to Weekly Agent").

The District Court set out conditions under which it would modify the injunction, conditions that amounted to a compulsory license.  These included:  first, that Roche would pay Amgen a royalty of 22.5%; second, Mircera® would be introduced to the Medicare patient population at a cost no less than the average sales price of Amgen's EPO products; third, Roche would have to provide clinical evidence to permit the Court to determine a "dosage conversion factor" between Mircera® and Epogen®; fourth, Roche would pay for an independent agency to monitor sales and determine royalty payments owed to Amgen; and finally, Roche would agree to supply Mircera® to any patient needing it, at or below the authorized price.  Although Roche agreed to these terms (see "Roche Agrees to Court's Conditions for Modifying Preliminary Injunction"), the Court decided it needed the advice of a special master to consider the question of how dosing and pricing of Amgen's and Roche's products should be compared.  Instead of agreeing to provide the District Court with a list of candidates to be special master, Roche filed its appeal to the Federal Circuit on April 11, 2008 (see "Hoffmann-LaRoche Can't Wait, Files Notice of Appeal to the Federal Circuit").

BIO's brief addresses a single issue before the Federal Circuit:  should the public interest prong of the eBay four-factor test be construed to encompass the "public interest" in lower drug prices.  BIO's brief argues that it should not.  First, BIO argues that the prospect of patent exclusivity is an important part of the patent grant, particularly for biotechnology companies.  The brief recites the economic realities:  that it can cost $1.2 billion to get a biologic drug to market; that "[b]iologics research and development is high-risk, with greater capital costs, higher material costs, greater manufacturing costs and uncertainties, longer development times, and lower late-stage success rates than small molecule pharmaceutical drugs"; and that sales of a biologic drug reach the break-even point for recovering the research and development costs at between approximately 12 and 16 years after the drug enters the marketplace.  These economic realities are important, according to BIO, because investors will not be willing to take the significant risks attendant upon this technology unless there is a sufficient likelihood that a biologic drug will retain its market exclusivity for the maximum patent term.

BIO's brief also notes the irreparable harm to the patentee that would be caused by improvidently permitting an infringing product to enter the marketplace, particularly for a preliminary injunction.  Besides price erosion, the brief notes that market entry of a competing product would be "virtually impossible to undo."  Indeed, such a policy would serve to create a "public interest" when a court, as here in the face of a verdict of infringement and non-invalidity, would be considering a permanent injunction after the public has come to rely on a lower-priced competitor product.

The brief distinguishes eBay on its facts, being limited to a patentee that did not practice a business-method patent.  BIO reminds the Federal Circuit that the Supreme Court held that the exercise of a court's injunctive relief powers "must be exercised consistent with traditional principles of equity, in patent disputes no less than in other cases governed by such standards," which standards have traditionally granted injunctions against infringing competitors.  eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).  The proper focus of the public interest analysis, according to BIO, should be "whether there exists some critical public interest that would be injured by the grant" of injunctive relief (citing Hybritech Inc. v. Abbott Laboratories , 849 F.2d 1446, 1458 (Fed. Cir. 1988)).  In this regard, the brief cites numerous examples of courts granting injunctions but staying their implementation, in the public interest, to permit the patentee to obtain regulatory approval (Johns Hopkins Univ. v. CellPro, No. 94-105-RRM, 1997 U.S. Dist. LEXIS 24162, at *20-22, 50 (D. Del. July 24, 1997), aff'd in part, vacated in part, 152 F.3d 1342 (Fed. Cir. 1998)), or being capable of supplying the market with the patented article.

The brief also notes that considering the public interest in lower priced drugs as an appropriate measure of the "public interest" prong of the four-factor test is contrary to policy decisions made by Congress.  In this regard, the brief cites the Bayh-Dole act, which contains severely restricted "march-in" rights provisions only in the face of unmet medical need, as well as the Hatch-Waxman Act, that actually increases patent term to an innovator as a recompense for regulatory delay.  Nor does the Medicare Act support using lower drug prices as a sufficient equitable reason for denying an injunction, since Congress has refused to reduce reimbursement (which would achieve a similar purpose) without further study, which BIO's brief argues attests to the "the multifaceted nature of drug pricing issues, and underscores the delicate balance of competing economic and health care policies that is best left to the legislative branch."  The brief also cites the numerous failed attempts to pass legislation authorizing compulsory patent licenses.

BIO reminds the Federal Circuit that is has already decided that it should be up to Congress, not the courts, to make the kinds of drug pricing decisions that would result from the proposed compulsory license for Mircera®.  In Biotechnology Indus. Org. v. District of Columbia, 496 F.3d 1362, 1373 (Fed. Cir. 2007), a case involving a District of Columbia city ordinance that would have mandated pricing of patented drugs, the Court said:

The present patent system reflects the result of Congress' deliberations.  Congress has decided that patentees' present amount of exclusionary power, the present length of patent terms, and the present conditions for patentability represent the best balance between exclusion and free use.

And BIO argues that this represents a policy judgment by Congress that the Federal Circuit should respect "in applying the public interest prong of the four factor injunction test."

The brief makes one more, forceful and thoughtful point.  If the Federal Circuit should hold that district courts can consider the "public interest" of lower drug prices as part of the public interest prong of the injunctive relief test under eBay, then the hallmark of the patent grant, exclusivity, would be decided in a case-by-case, ad hoc manner that would completely undermine the economic basis for patent protection and the benefits of the patent grant relied upon by investors.  Moreover, appellate review of the district court's decision would be "under the deferential abuse of discretion standard," which would do nothing to ensure predictability of outcomes or the Federal Circuit's supervisory role under its Congressional implementing statute to bring consistency to U.S. patent law.  Indeed, the brief argues that the effect of permitting district courts to consider lower drug prices would result in each district court acting as a drug "price czar," thereby undermining public policy and substituting Congressional deliberation with "a limited evidentiary record and the exercise of [a court's] equitable discretion."  And the irony according to the brief is that the result may not be lower drug prices:  in the case before the CAFC, the proposed compulsory license required Mircera® to be priced "at or less than" Amgen's erythropoietin products.  This raises the real possibility that a compulsory license could be granted to an infringing competitor "with no price advantage to the consumer."

This can't be what the Supreme Court had in mind when it decided eBay, but the expansiveness of its pronouncements, in this as in other areas of patent law, have done little to promote the kind of certainty in this area of the law that Congress intended.  A less activist Court might be willing to recognize, as the Supreme Court had been until recently, that patent law is one area where restraint in exercising its authority can be the more prudent course of action.

For additional information regarding this and other related topics, please see:

• "How to Avoid a Permanent Injunction: The Lessons of Amgen v. Hoffmann-LaRoche," April 28, 2008
• "Glasses Half-full or Half-empty: Hoffman-LaRoche's Different Interpretation of Pfizer v. Teva," April 15, 2008
• "Hoffmann-LaRoche Can't Wait, Files Notice of Appeal to the Federal Circuit," April 11, 2008
• "Will the Federal Circuit's Pfizer v. Teva Decision Spell the End of Amgen's Patent Rights to Recombinant Human Erythropoietin?" March 31, 2008
• "Court Still Cannot Decide on Amgen's Permanent Injunction," March 26, 2008
• "Amgen Inc. v. International Trade Commission (Fed. Cir. 2008)," March 20, 2008
• "Roche Agrees to Court's Conditions for Modifying Preliminary Injunction," March 20, 2008
• "Roche's Mircera® Remains Off the Market (For Now)," March 2, 2008
• "Amgen Survives Another EPO Challenge," October 28, 2007

Ortho-McNeil Pharmaceutical, Inc. v. Cobalt Pharmaceuticals Inc. (Fed. Cir. 2008)

    By Donald Zuhn --

Last week, the Federal Circuit issued an opinion in Ortho-McNeil Pharmaceutical, Inc. v. Mylan Laboratories, Inc.  In Mylan Laboratories, the Federal Circuit determined that the District Court for the District of New Jersey properly construed claim 1 of U.S. Patent No. 4,513,006, owned by Plaintiff-Appellee Ortho-McNeil Pharmaceutical, Inc., to encompass Ortho-McNeil's epilepsy drug topiramate, and affirmed the District Court's decision to (1) permanently enjoin Defendants-Appellees Mylan Laboratories, Inc. and Mylan Pharmaceuticals, Inc. (Mylan) from infringing the '006 patent, (2) dismiss Mylan's invalidity defenses based on obviousness, inequitable conduct, and non-enablement, and (3) reset the effective date of Mylan's Abbreviated New Drug Application (ANDA).  A full discussion of Mylan Laboratories can be found here.

On the same day that the Federal Circuit issued its decision in Mylan Laboratories, it also issued a nonprecedential opinion in a companion case: Ortho-McNeil Pharmaceutical, Inc. v. Cobalt Pharmaceuticals Inc.  In this case, Defendant-Appellant Cobalt Pharmaceuticals Inc. (Cobalt) stipulated that it would be bound by the District Court's final judgment order in Mylan Pharmaceuticals.  Although Cobalt retained its right to appeal, it also stipulated that the appeal would be based on the record in Mylan Pharmaceuticals.  Thus, in affirming the District Court's judgment against Mylan, the Federal Circuit affirmed the District Court's judgment against Cobalt.

Cobalt attempted to present an additional argument on appeal; namely, that claim 1 is rendered indefinite by the use of the term "may be."  The Federal Circuit, however, declined to consider this argument in view of Cobalt's stipulation that its appeal be based on the record in Mylan Pharmaceuticals.

Ortho-McNeil Pharmaceutical, Inc. v. Cobalt Pharmaceuticals Inc. (Fed. Cir. 2008)
Nonprecedential disposition
Panel: Chief Judge Michel and Circuit Judges Rader and Linn
Opinion by Circuit Judge Rader

CAFC Reissues Opinion Affirming Denial of PI to Force Interim Patent Term Extension as Precedential

Somerset Pharm., Inc. v. Dudas (Fed. Cir. 2007) (reissued as precedential)

    By Sherri Oslick --

The Federal Circuit has now reissued its earlier Somerset opinion as precedential; a summary of the original, non-precedential opinion can be found in our earlier post here.  In view of the CAFC's recent reissue of the identical opinion as precedential, a brief revisit is in order.

Somerset had applied for a patent term extension on U.S. Patent No. RE34,579, covering methods of using Emsam®, a transdermal patch containing selgline, to treat depression.  Six months prior to the expiration date of the patent, with no ruling yet on their original patent term extension application, Somerset applied for an interim patent term extension, a discretionary solution where a patent expiration is imminent.  One month later, Somerset filed suit in the District Court of Delaware to compel the Director to act on - and to grant - the interim extension.  Somerset also moved for a preliminary injunction for the same relief.  The District Court denied the preliminary injunction and Somerset appealed.

While on appeal and prior to briefing, both Somerset's application for interim patent extension, as well as their original application for extension, were denied.  Somerset withdrew its appeal as moot insofar as it pertained to compelling the Director to act on the application for interim extension, but moved forward with the appeal as it pertained to compelling the Director to grant the request for interim extension.

The CAFC affirmed the District Court's denial of the PI based on the inability of Somerset to show reasonable likelihood of success on the merits.  The statute authorizing interim patent term extension, reasoned the CAFC, only provided for such an extension where a certificate of extension could not be granted or denied prior to expiration of the patent.  Because Somerset's certificate has already been denied, a petition for interim patent term extension was not statutorily authorized and as such, Somerset had no reasonable likelihood of success.

Somerset Pharmaceuticals, Inc. v. Dudas (Fed. Cir. 2007)

Denial of PI for Interim Patent Term Extension Affirmed

    By Sherri Oslick --

In a nonprecedential opinion, the Federal Circuit affirmed the District Court of Delaware's denial of Somerset's request for preliminary injunction to compel the Director of the USPTO to grant an interim patent term extension.  Somerset is the owner of U.S. Patent No. RE34,579 ("Method of treating depression," issued April 5, 1994), which is set to expire on August 18, 2007.  Somerset sought an extension in term of the '579 patent after receiving FDA approval to market Emsam®, a transdermal patch containing selgline; the '579 patent covers methods of treating depression using Somerset's patch.

On April 27, 2006, pursuant to 35 U.S.C. § 156(d)(1), which authorizes an applicant to file for an extension of patent term based on regulatory delay, Somerset filed an application for term extension with the USPTO.  On February 21, 2007, Somerset filed a request for interim extension under § 156(e)(2), which authorizes the Director, where a patent is set to expire before a certificate of extension can be either granted or denied, to extend the term of a patent for up to one year until such a decision is made, provided that the patent is eligible for extension.

On May 22, 2007, with no decision from the USPTO in hand, Somerset filed suit in the District Court of Delaware to compel the Director to act on - and grant - its request for interim extension.  Somerset also moved for a preliminary injunction for the same relief.  The District Court denied the preliminary injunction on June 29, 2007.  Somerset appealed to the CAFC, moving for, and receiving, an expedited briefing schedule.  The motion for expedited briefing was granted on July 12, and on that same day the Director denied Somerset's application for interim extension as well as its original application for term extension under § 156(d)(1).

In view of the USPTO's decision, Sommerset withdrew the portion of its appeal directed at compelling the Director to act on its request for interim extension, and as such, the CAFC dismissed that portion of the appeal as moot.  Sommerset nevertheless maintained the appeal insofar as it sought injunctive relief to compel the Director to grant the interim extension.

The CAFC affirmed the lower court's denial of preliminary injunction on the basis that Somerset could not show a reasonable likelihood of success.  The statute authorizing the Director to grant an interim extension, noted the CAFC, only did so in situations where a certificate of extension could not be granted or denied prior to expiration of the patent at issue.  Because the USPTO had already denied Somerset's original application for extension, the Director had no authority to grant an interim extension, and Somerset therefore had no reasonable likelihood of success on the merits.  The CAFC did add in a footnote, however, that nothing in their opinion was intended to address the merits of the Director's decision to deny a term extension.

Somerset Pharmaceuticals, Inc. v. Dudas (Fed. Cir. 2007)
Nonprecedential disposition
Panel: Chief Judge Michel and Circuit Judges Prost and Moore
Opinion by Circuit Judge Moore

Additional information regarding this case can be found at Orange Book Blog .