United Therapeutics Corp. v. Liquidia Technologies Inc. (Fed. Cir. 2024)

By Kevin E. Noonan --

Zealous advocacy is a hallmark of adversarial proceedings, whether in district court or before the USPTO, where the opportunities for such advocacy have multiplied with the establishment by the Leahy-Smith America Invents Act of inter partes review or IPRs (and to a lesser extent post-grant review or PGRs).  But sometimes such advocacy can morph into overzealousness and an example of this form of advocacy arose in an IPR between United Therapeutics Corp. v. Liquidia Technologies Inc. decided in a recent decision by the Federal Circuit.

There was extensive (ANDA) litigation between the parties over inhaled formulations of treprostinil (UTC's Tyvaso®, Liquidia's Yutrepia™) for treating pulmonary hypertension, wherein UTC asserted claims in U.S. Patent No. 9,593,066 as well as U.S. Patent No. 10,716,793.  The District Court held that the asserted claims of the '066 patent were invalid for anticipation or were not infringed, a decision affirmed in all respects by the Federal Circuit, and that the asserted claims in the '793 patent were infringed and were not invalid; see "United Therapeutics Corp. v. Liquidia Technologies, Inc. (Fed. Cir. 2023)".  In an inter partes review proceeding, the Patent Trial and Appeal Board held that the challenged claims of the '793 patent (which the District Court held were infringed) were invalid for obviousness, a decision also affirmed by the Federal Circuit; see "United Therapeutics Corp. v. Liquidia Technologies, Inc. (Fed. Cir. 2024)".

In the matter at hand, Liquidia challenged in a separate IPR UTC's claims in U.S. Patent No. 9,604,901 for obviousness of a method of making treprostinil; claim 1 is representative:

A pharmaceutical batch consisting of treprostinil or a salt thereof and impurities resulting from (a) alkylating a benzindene triol, (b) hydrolyzing the product of step (a) to form a solution comprising treprostinil, (c) contacting the solution comprising treprostinil from step (b) with a base to form a salt of treprostinil, (d) isolating the salt of treprostinil, and (e) optionally reacting the salt of treprostinil with an acid to form treprostinil, and wherein the pharmaceutical batch contains at least 2.9 g of treprostinil or its salt.

Liquidia submitted an expert declaration in support of its IPR petition that did not contain the conventional recognition that the declaration testimony was made under oath and the penalties for perjury that would arise for false swearing.  UTC timely objected to the declaration and moved to exclude on 35 U.S.C. § 25 and 37 C.F.R. § 42.2 grounds; Liquidia attempted (unsuccessfully) to cured by submitting a substitute declaration having the necessary language but this submission was held to be untimely by the PTAB and insufficient because it contained no evidence in substantive response to UTC's objection.  However, and importantly, UTC deposed Liquidia's expert prior to filing its Patent Owner response, where the deponent affirmed his duty to provide "truthful and accurate testimony."  At oral argument, Liquidia explained that the deficiencies in the declaration were inadvertent and an accidental deletion of the language during drafting, was not intentional, and argued that UTC was not prejudiced due to its exercised ability to depose the expert before filing its Owner's statement and oral argument.  During oral argument, UTC's representative conceded that "he would be 'hard pressed to sit here and say, you know, that we suffered a specific cognizable prejudice.'"  The PTAB filed a Final Written Decision (FWD) that some but not all of the challenged claims were invalid, relying in some part on Liquidia's expert declaration.  The Board considered this evidence despite its deficiencies because UTC had not been prejudiced, in its view, because UTC had had the opportunity to depose the expert.  This appeal followed.

The Federal Circuit affirmed in a decision by Judge Stoll joined by Judges Hughes and Cunningham.  The panel affirmed the PTAB's reliance and consideration on Liquidia's expert declaration based on compliance with the Administrative Procedures Act (APA).  Specifically, the Court held that the Board's decision was not "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law" under 5 U.S.C. § 706, citing In re Sullivan, 362 F.3d 1324, 1326 (Fed. Cir. 2004).  Nor was the decision an abuse of discretion (defined as a decision that is "(1) is clearly unreasonable, arbitrary, or fanciful; (2) is based on an erroneous conclusion of law; (3) rests on [a] clearly erroneous fact finding; or (4) involves a record that contains no evidence on which the Board could rationally base its decision) under Intelligent Bio-Sys., Inc. v. Illumina Cambridge Ltd., 821 F.3d 1359, 1367 (Fed. Cir. 2016) (quoting Bilstad v. Wakalopulos, 386 F.3d 1116, 1121 (Fed. Cir. 2004)).  While acknowledging the aptness of UTC's assertions regarding the statutory and regulatory standards for declarations and affidavits to be sworn under oath, the purpose for the rule is "to provide a guarantee of truthfulness where, as here, the testimonial evidence is in paper form," reciting Former Emps. of Barry Callebaut v. Chao, 357 F.3d 1377, 1383 (Fed. Cir. 2004), and is not burdensome ("easy to satisfy").  The opinion notes that UTC "made a strategic decision" to "rigorously" depose Liquidia's expert and established under oath that "there were no issues concerning the truthfulness of the opinions" therein.  The Court found "no harmful error" in the Board's reliance on the witness's testimony in rendering its FWD under these circumstances, and in the absence of an error "that was genuinely harmful or prejudicial" had no basis for finding the Board had abused its discretion, citing Swagway, LLC v. Int'l Trade Comm'n, 934 F.3d 1332, 1343 (Fed. Cir. 2019), for the opportunity for the Board and the Court to recognize harmless error under the APA.  On the merits the opinion notes that "UTC responded to Dr. Winkler's opinions in its Preliminary Response, Patent Owner Response, Sur-Reply, and its own expert's declaration" and thus had had "a full and fair opportunity to litigate Dr. Winkler's sworn opinions and suffered no prejudice."  "At bottom, under the facts here, substance beats form" the panel pithily summarized its opinion on UTC's arguments challenging the PTAB's decision (the panel relying on the parties' judgment in not having this decision used to "create a perverse incentive for a party to not depose a declarant who failed to include an oath or declaration with her affidavit").

The opinion also affirmed the PTAB's obviousness determination based on that determination being supported by substantial evidence provided by the cited prior art and Liquidia's expert.  The opinion also rejected UTC's argument that the PTAB's finding of obviousness was contrary to the Court's limitations of reliance on "common sense" in obviousness determinations enunciated in Arendi S.A.R.L. v. Apple Inc., 832 F.3d 1355 (Fed. Cir. 2016), because the Board had relied on "more than common sense" in the form of "reasoned analysis and evidentiary support."

United Therapeutics Corp. v. Liquidia Technologies Inc. (Fed. Cir. 2024)
Nonprecedential disposition
Panel: Circuit Judges Hughes, Stoll, and Cunningham
Opinion by Circuit Judge Stoll

Comments

[Paul F. Morgan]

It blows my mind that an IPR party law firm would not catch, and submit, an evidentiary expert declaration without the essential oath under penalties for perjury. However, this report also emphasizes a long-standing good practice of always having the declarant reaffirm the declaration contents* under oath in the live cross-examination
*with any needed corrections