Patent Docs

Novartis AG v. Ezra Ventures LLC (Fed. Cir. 2018)

By Kevin E. Noonan --

In Novartis AG v. Ezra Ventures LLC, the Federal Circuit addressed a narrow but important question regarding its jurisprudence on the issue of obviousness-type double patenting (OTPD).  That question was whether its decision in Gilead Sciences Inc. v. Natco Pharma Ltd., which established that a first patent filed earlier than a second patent but that issued later, could be used to invalidate the second patent on OTDP grounds, if the reason the later-expiring patent was later-expiring was due to Patent Term Extension under 35 U.S.C. § 156.

To recap, the Gilead Court decided that a later-issued but earlier-expiring patent could be used to establish OTDP over the later-expiring patent, as illustrated here:

In rendering its decision, the Gilead panel held that the intervening change in U.S. patent term occasioned by ratification of the GATT-TRIPS agreement did not influence its decision.  Rather, the panel grounded its decision on the "bedrock" principle that the public had a right to practice an invention (and its obvious variants) once a patent on that invention had expired.  Important to the instant Novartis decision, the Gilead panel also voiced its concern that holding to the contrary in that case could raise the possibility of "significant gamesmanship" regarding patent term depending on when related applications were filed and when they were allowed to issue.  The Gilead decision has been applied to mean that the relevant dates for considering OTDP are the expiration dates of the later and earlier-expiring patents, and whether the claims in the later-expiring patent were mere obvious variants of the earlier-expiring claims.

The Novartis case arose in ANDA litigation brought by Novartis against Ezra Ventures over its multiple sclerosis drug Gilenya^® over Orange Book-listed U.S. Patent No. 5,604,229.  As explained in the opinion, claims of the '229 patent encompassed fingolimod, the active ingredient in Gilenya^®.  The '229 patent was filed prior to the GATT-TRIPS changes in U.S. patent law, and thus had a patent term calculated as 17 years after issuance (in this case, corresponding to February 18, 2014).  In addition, Novartis had been granted five years of Patent Term Extension under § 156, thus expiring on February 18, 2019.

Novartis owned another patent, U.S. Patent No. 6,004,565 that claims methods for administering fingolimod; this patent was filed after the U.S. changed how patent term was calculated under the GATT-TRIPS agreement and thus expired September 23, 2017 (20 years from its filing date).  The filing and expiration dates of the '229 and '565 patents are related as illustrated below:

Before the District Court, Ezra Ventures filed a motion to dismiss (that the Court denied) under Fed. R. Civ. Pro. 12(c) for judgment on the pleadings, on three grounds.  First, that extension of the '229 patent "de facto also extends the life of the '565 patent, and thereby violates § 156(c)(4)'s requirement that only 'one patent be extended.'"  Second, that this extension "violates the 'bedrock principle' that the public may practice an expired patent."  And third, that the '565 patent "renders the '229 patent invalid for statutory- and obviousness-type double patenting because Novartis's '229 patent claims are not patentably distinct from its '565 patent claims."  With regard to the argument that this is an impermissible extension in violation of § 156(c)(4), the District Court held that "de facto" extension as argued here was inconsistent with the meaning of the extension statute.  In addition, the lower court relied on the Federal Circuit's decision in Merck & Co. v. Hi-Tech Pharmacal Co., 482 F.3d 1317 (Fed. Cir. 2007), that the term of a terminally disclaimed patent can be extended under § 156, which "de facto" extends the term of that patent over the term of the patent over which it has been terminally disclaimed.  Thereafter, Ezra Ventures stipulated infringement and withdrew its defenses, and the District Court entered final judgment against Ezra Ventures, clearing the procedural path for this appeal.

The Federal Circuit affirmed, in an opinion by Judge Chen joined by Judges Moore and Hughes.  The panel first addressed Ezra Venture's argument that extension of the '229 patent by Patent Term Extension also (improperly) extended the term of the '565 patent.  As an initial matter, the opinion notes that "nothing in the statute restricts the patent owner's choice for patent term extension among those patents whose terms have been partially consumed by the regulatory review process," despite it not being uncommon for a patented drug to also be the subject of patents on "a product, a method of using that product, and/or a method of manufacturing the product."  The panel agreed with the District Court that Congress did not choose language that would preclude extension of a patent on a drug product because it also "effectively" extends the patent, for example, on a method of using that drug product.  Here, only one patent term was extended -- the '229 patent -- and this satisfies the statutory mandate and does not violate § 156(c)(4).

Next the Federal Circuit considered the "interaction" between § 156 and OTDP.  In what the panel states is "a logical extension" of its holding in Merck & Co. v. Hi-Tech Pharmacal Co., the Court held here that OTDP does not invalidate extension of the patent term under § 156.  After explicating the Court's basis for its Merck opinion (inter alia, the plain meaning of the § 156 and the differences in statutory language between § 156 and § 154, the patent term adjustment statute, which cannot extend the term of a terminally disclaimed patent) the opinion notes that the Merck decision involved just the issue raised here:  that a terminally disclaimed patent can still receive the benefit of a patent term extension under § 156.  Accordingly, extension of the term of the '229 patent past the expiration date of the '565 patent was not improper.

It is when the opinion turns to "Ezra's policy concerns" that the panel took the opportunity to set forth its reasoning on the question of the function of the OTDP doctrine.  Citing Proctor & Gamble Co. v. Teva Pharm. USA, Inc., 566 F.3d 989, 999 (Fed. Cir. 2009), the opinion states that the instant situation "does not raise the traditional concern with obviousness-type double patenting of a patent owner 'extending his exclusive rights to an invention through claims in a later-filed patent that are not patentably distinct from claims in the earlier filed patent.'"  The opinion then distinguishes the policy considerations at play here with more recent OTDP decisions of the Court, particularly Gilead Sciences, Inc. v. Natco Pharma Ltd., specifically referring to that Court's concerns with gamesmanship not present here.

The other distinction between the situation in Gilead and the one here is whether the differences in the relationship between the patents (patents filed pre- and post-URAA here, in contrast to having two post-URAA patents in Gilead) are addressed in the opinion accompanying this one, Novartis Pharmaceuticals Corp. v. Breckenridge Pharmaceutical.  That case will be the subject of a later post.

Novartis AG v. Ezra Ventures LLC (Fed. Cir. 2018)
Panel: Circuit Judges Moore, Chen, and Hughes
Opinion by Circuit Judge Chen

Conference & CLE Calendar

December 11, 2018 - "Patent Eligibility Post-Alice: Navigating the Nuances, Guidance From the Federal Circuit, the PTAB, and the USPTO" (Strafford) - 1:00 to 2:30 pm (EST)

December 11, 2018 - "Enforcing Patents: Global Strategies and Tactics" (Intellectual Property Owners Association) - 2:00 to 3:00 pm (ET)

December 11, 2018 - "Customer Perceptions of Patent Quality and New Customer Experience (CX) Initiative" (U.S. Patent and Trademark Office) - 12:00 to 1:00 pm (ET)

December 13, 2018 - "Nuts & Bolts of the Federal Circuit's Rules" (Federal Circuit Bar Association Rules Committee) - 1:00 pm to 2:00 pm (EST)

December 13, 2018 - "Protecting IP Rights in Joint Development Agreements and Strategic Alliances -- Structuring JDAs to Apportion Contributed, Joint and Derivative IP; Planning for Involuntary Early Endings; Avoiding Unintended Consequences" (Strafford) - 1:00 to 2:30 pm (EST)

December 18, 2018 - "Navigating the USPTO Examiner Count System and Other USPTO Programs" (Strafford) - 1:00 to 2:30 pm (EST)

December 20, 2018 - "Antibody Patenting After Amgen v. Sandoz: U.S. and European Perspectives -- Meeting Written Description and Obviousness Requirements" (Strafford) - 1:00 to 2:30 pm (EST)

IPO Webinar on Global Patent Enforcement

The Intellectual Property Owners Association (IPO) will offer a one-hour webinar entitled "Enforcing Patents: Global Strategies and Tactics" on December 11, 2018 from 2:00 to 3:00 pm (ET).  Steven Carlson of Robins Kaplan LLP, Johannes Heselberger on Bardehle Pagenberg Partnerschaft MbB, and Boris Teksler of Conversant Intellectual Property Management Inc. will discuss:

• The decisions necessary before launching foreign litigation
• Important differences between legal systems
• Using foreign litigation to encourage global settlement
• The reality of what it takes to enforce an injunction in Germany
• Whether European decisions make any impact on U.S. courts
• The risk that foreign litigation could backfire in the U.S.

The registration fee for the webinar is $135 (government and academic rates are available upon request).  Those interested in registering for the webinar can do so here.

Webinar on USPTO Examiner Count System

Strafford will be offering a webinar entitled "Navigating the USPTO Examiner Count System and Other USPTO Programs" on December 18, 2018 from 1:00 to 2:30 pm (EST).  Adriana L. Burgy, Christopher C. Johns, and Kai Rajan of Finnegan Henderson Farabow Garrett & Dunner will provide guidance on leveraging the U.S. Patent & Trademark Office (USPTO) Examiner Count System to prosecute patents more effectively, provide insight into the count system, and offer strategies for interacting with patent examiners.  The webinar will review the following issues:

• What impact does the number of claims in the application have on the quality of examination in the first office action?
• How can patent counsel use the incentives of the count system to the client’s advantage?
• How and when should patent counsel interact with examiners for effective and efficient prosecution?

The registration fee for the webcast is $347.  Those interested in registering for the webinar, can do so here.

USPTO Patent Quality Chat Webinar Series

The U.S. Patent and Trademark Office will be offering the next webinar in its Patent Quality Chat webinar series from 12:00 to 1:00 pm (ET) on December 11, 2018.  In the latest webinar, entitled "Customer Perceptions of Patent Quality and New Customer Experience (CX) Initiative," Marty Rater, Chief Statistician for Patent Quality; Michael Easdale, Statistician, Office of Patent Quality Assurance (OPQA); and David Fitzpatrick, Statistician, Office of Patent Quality Assurance (OPQA) will discuss how the USPTO measures and monitors customer perceptions of patent examination quality, and about the Office’s new initiative related to customer experience. The panel will also discuss the most recent findings from the semi-annual external quality survey and how that information is used in conjunction with the Office’s internal quality review program.

Additional information regarding this webinar, including instructions for viewing the webinar, can be found here.

Webinar on Antibody Patenting

Strafford will be offering a webinar entitled "Antibody Patenting After Amgen v. Sandoz: U.S. and European Perspectives -- Meeting Written Description and Obviousness Requirements" on December 20, 2018 from 1:00 to 2:30 pm (EST).  Hazel Ford of Mathys & Squire and Jeffrey M. Jacobstein and Amanda K. Murphy of Finnegan Henderson Farabow Garrett & Dunner will provide guidance to patent counsel on the patentability requirements in the USPTO and EPO for claiming a broad genus of antibodies, recent case law that could impact those claims, and how to best protect antibody inventions in light of the recent developments.  The webinar will review the following issues:

• How broadly can the applicant claim? How much support is needed on a filing?
• What are the differences between U.S. requirements and EPO requirements?
• What is a sufficient description of a genus? Can functional language be included?
• When can post-filing data be used?

The registration fee for the webcast is $297.  Those interested in registering for the webinar, can do so here.

Supreme Court Hears Oral Argument in Helsinn v. Teva

By Kevin E. Noonan --

The Supreme Court's recent forays into patent law cases have evinced a tendency towards statutory construction analysis, whether regarding substantive law (see, e.g., WesternGeco LLC v. ION Geophysical Corp. (2018); Sandoz Inc. v. Amgen Inc. (2017); Impression Products, Inc. v. Lexmark International, Inc. (2017); TC Heartland LLC v. Kraft Foods Group Brands LLC (2017); SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC (2017); Life Technologies Corp. v. Promega Corp. (2017); Halo Electronics, Inc. v. Pulse Electronics, Inc. and Stryker Corp. v. Zimmer, Inc. (2016); Kimble v. Marvel Entertainment, LLC (2015); and Commil USA, LLC v. Cisco Systems, Inc. (2015)) or the procedural niceties of Federal Circuit review and U.S. Patent and Trademark Office procedures (see Oil States Energy Services, LLC. v. Greene's Energy Group, LLC (2018); SAS Institute Inc. v. Iancu (2018); Cuozzo Speed Technologies LLC v. Lee (2016); Teva Pharmaceuticals USA, Inc. v. Sandoz Inc. (2015)).  This trend could be considered a marked improvement over the Court's penchant for imposing their views on patent eligibility displayed earlier in this decade (see "Supreme Court Issues Decision in Alice Corp. v. CLS Bank"; Association for Molecular Pathology v. Myriad Genetics, Inc. (2013); and Mayo Collaborative Services v. Prometheus Laboratories, Inc. (2012)).  Consistent with this latest inclination, the Court will decide the extent to which Congress changed what is novelty-destroying under U.S. patent law when it revised 35 U.S.C. § 102 under the Leahy-Smith America Invents Act (AIA) in 2012 in Helsinn Healthcare S.A. v. Teva Pharmaceuticals Inc.

The Court heard oral argument in this case on Tuesday.  It is impossible to know, and even more foolhardy to guess, what the members of the Court are thinking from their questions during oral argument, but that cannot stop an attempted analysis of the aspects of the issues before them that naturally arises when reviewing an oral argument transcript.

Kannon K. Shanmugam argued for Petitioner Helsinn; William M. Jay argued for Respondent Teva; and Malcolm L. Stewart, Deputy Solicitor General, argued for the Government.  The Chief Justice posed the first question to Mr. Shanmugam, noting that Helsinn's interpretation of the word "sale" in the statute (to mean sales to the general public) is not necessarily consistent with the plain meaning of the word (Mr. Shanmugam attempted to distinguish on the basis of their being a linguistic difference between "sale" and the statutory language "on sale").  New Justice Kavanaugh jumped on Mr. Shanmugam's hypothetical (regarding a purported private sale of Mr. Shanmugam's overcoat to Mr. Jay), disputing why that wouldn't be a sale ("it's pretty hard to say something that has been sold was not on sale").  Justice Breyer, referring to Helsinn's argument in the brief, questioned whether Helsinn's contentions that its position was supported by the Court's precedents ("we only have Justice Story, Learned Hand, and I guess various others, maybe John Marshall for all I know", which in vacuo seem pretty solid), and opined that "the purpose of this on-sale rule including private sales is to prevent people from benefiting from their invention prior to and beyond the 20 years that they're allowed."  Mr. Shanmugam countered that "the predominant purpose of the on-sale bar was preserving the public's access to inventions that have entered the public domain."  Justice Kavanaugh mentioned "commercial exploitation" as another aspect of the bar, and Justice Breyer interjected that such sales (like the one here) can be secret sales.  Mr. Shanmugam, attempting to provide clarification to Justice Ginsberg, said that Congress intended to "clarify" the scope of what would be considered to be "on sale" with, inter alia, the catchall phrase "or otherwise available to the public," which Justice Kavanaugh opined was "a terrible clarification," stating that there were many efforts during debate over the AIA to "actually change the 'on sale language, and all those failed."  Mr. Shanmugam countered by suggesting that the way Congress had revised the statute was appropriate to its purpose, which included "abrogating some of the outlying lower court decisions that had extended both the on-sale bar and the public use bar to cases where there was not public availability."  Mr. Shanmugam responded directly to Justice Kavanaugh's citation of an amicus brief by Mark Lemley (and other legal academics) that the on-sale bar always included secret sales, a statement challenged by Justice Breyer based on the Court's citation in its Bonito Boats case of Learned Hand's dichotomy that a patentee "has to go ahead and patent [her invention] or keep it a secret forever."  To Justice Breyer's accompanying hypothetical of an inventor selling her invention to multiple parties under confidentiality agreements, Mr. Shanmugam says his "submission is a much more modest one," to "correct the Federal Circuit's error, which is to say that public availability is not required."

The Government argued next.  Justice Sotomayor responded negatively to Mr. Stewart's hypothetical, regarding sales of iPhones to distributors wherein being "on sale" should be considered to arise upon sales to consumers, saying that this might be true if you asked a consumer, but if you asked the industry they would say the phones were on sale when they were purchased by the distributor.  The Justice further said she has found no support for the Government's argument ("I've looked at the history cited in the briefs, I looked at the cases, I don't find it anywhere") and further said that the Government's assertion of the meaning of the statute was not the words Congress used.  Indeed, the words Congress did use, "on sale," were fraught with their historical meaning that did not support the Government's position.  Justice Kagan followed by asking whether the changes to the statute under the AIA were "capable of flipping [] settled law."  After further colloquy, Mr. Stewart conceded that the change in language would not be so capable, but only if he accepted Justice Kagan's assumption (and it's "a big assumption," the Justice herself conceded) that the law was indeed settled on the question of what activities fell under the on sale bar under prior law.  Justice Kavanaugh returned to the questioning, asking whether this wasn't "a classic example of trying to snatch victory from defeat in some of the legislative statements?" in view of Congress's failure to affirmatively revise the statute to exclude secret sales.  Mr. Stewart aptly (but not necessarily persuasively) responded, referring to how those failed proposals would have otherwise modified the statute to require that the invention be disclosed, even under circumstances where it would not upon sale.

Mr. Jay argued last, leading with the simple proposition that "[a] product that is sold or offered for commercial sale is on sale."  Justice Alito questioned whether Respondent's position, if stated in statutory language not used by Congress ("on sale publicly or on sale privately"), "would be nonsense," because this phrase would be followed by "or otherwise available to the public" and "otherwise" should indicate that "all of the things that went before are public."  Mr. Jay responded by saying:

So we think that the function of "otherwise" in the statute as amended [] is to acknowledge that there is overlap between the previous four categories and the new category of invalidating prior art that's being added, so as to make sure that the new category doesn't swallow or change the meaning of a prior one.

This "new category" would include "An oral presentation at a conference without slides" and "a collaboration among many people on an app."  In Respondent's view, by including the phrase "or otherwise available to the public," Congress intended "to create new invalidating prior art disclosures that weren't invalidating before the AIA."  Mr. Jay clarified for Justice Sotomayor that the U.S. is the only country where "secret" prior art could be novelty destroying, and that "otherwise" is intended to "make clear that that new category was a residual category intended to catch things not already caught."  Various members of the Court (as is their wont) engaged counsel with an extended exercise in analogy-making, involving collections of sports ("football, baseball, swimming," Justices Alito and Breyer), coupled with a hypothetical catch-all of "amended to add 'or any other activity that involves the use of a ball,'" and a proscription against "peanut butter cookies, pecan pie[, and] brownies" (Justice Kagan), coupled with the question of whether the proscription would be violated by "nutless brownies."  Despite yeoman effort to address these analogies, Mr. Jay was able to forthrightly respond to Justice Kagan's question asking whether it was Respondent's position that "it's not even like a little bit doubtful what 'on sale' means?" by saying "[c]ertainly not by the time the AIA was enacted."  After additional colloquy with Justice Kavanaugh regarding whether the term "on sale" is ambiguous, Justice Gorsuch asked whether the Court should consider how the Patent Office has interpreted the statute regarding the on-sale bar.  Mr. Jay reminded the Justice that "[t]his Court has never given deference to the Patent Office on substantive questions of patentability, on what it takes to overcome the bars put in the statute by Congress where Congress has said you may not have a patent if X, Y, or Z" and that "this Court has any number of decisions in which it has held that a patent issued by the Patent Office in conformance with the -- with the office's then examination guidelines were invalid."  Justice Kagan completed the Court's questioning of Mr. Jay by asking "would the prior secret sale of an invention by somebody other than the patentholder invalidate the patentholder's patent?", to which Mr. Jay answered "yes" (while acknowledging that "I've not seen cases like that because I think it would be exceptionally difficult to").

Petitioner's rebuttal drew questioning only from Justice Breyer, regarding the meaning of the term "otherwise."  Argument concluded with rather jocular reference to the excellence of the briefs (Justice Breyer having earlier noted "I thought the bar really earned its pay on both sides") with the Chief Justice saying "I am sure we'll come up with an excellent opinion."