Astellas Pharma, Inc. v. Sandoz Inc. (Fed. Cir. 2024)

By Kevin E. Noonan --

One of the anticipated consequences of the Supreme Court's Loper Bright decision is that it will unleash judges to impose their statutory interpretations of administrative agencies' applications of the law within their areas of purported expertise.  Whether that outcome arises, (relatively) recent experience has shown that the "tyranny of the judiciary" can be and has been unleashed in other aspects of U.S. patent law; an example is the recent District Court decision (thankfully overturned by the Federal Circuit, albeit on procedural grounds) in Astellas Pharma, Inc. v. Sandoz Inc.

The case arose in ANDA litigation prompted by Sandoz's application for a generic equivalent of Astellas' Myrbetriq® drug (mirabegron) for treatment of overactive bladder conditions.  The opinion sets forth the mechanistic basis for the efficacy of the drug, which "is a beta-3 agonist that stimulates beta receptors in the bladder, thereby inducing bladder relaxation and improving bladder function."  However, during drug development it was discovered that it had a "food effect," i.e., the bioavailability of the drug was undesirably diminished by the presence of food in a patient's stomach (the drug was absorbed by the food and amounts below the clinically effective levels were absorbed by the patient's body).  Moreover, taking the drug on an "empty stomach" resulted in bioavailable levels that "reach[ed] potentially toxic [blood] concentrations."  Astellas developed sustained release formulations that were patented in U.S. Patent No. 10,842,780; after some litigation interplay, Astellas asserted claims 5, 20, and 25 of the '780 patent which were set forth in the opinion (italicized claims were independent or earlier claims in a dependency chain that are set forth for a clearer understanding of what was claimed):

1.  A pharmaceutical composition, comprising 10 mg to 200 mg of [mirabegron], or a pharmaceutically acceptable salt thereof, in a sustained release hydrogel-forming formulation comprising a hydrogel-forming polymer having an average molecular weight of 100,000 to 8,000,000 and an additive having a water solubility of at least 0.1 g/mL at 20±5° C.,
    wherein the hydrogel-forming polymer is at least one compound selected from the group consisting of polyethylene oxide, hydroxypropyl methylcellulose, hydroxypropyl cellulose, carboxymethyl cellulose sodium, hydroxyethyl cellulose, and a carboxyvinyl polymer,
    wherein the additive is at least one selected from the group consisting of polyethylene glycol, polyvinylpyrrolidone, D-mannitol, D-sorbitol, xylitol, lactose, sucrose, anhydrous maltose, D-fructose, dextran, glucose, polyoxyethylene hydrogenated castor oil, polyoxyethylene polyoxypropylene glycol, polyoxyethylene sorbitan higher fatty acid ester, sodium chloride, magnesium chloride, citric acid, tartaric acid, glycine, β-alanine, lysine hydrochloride, and meglumine, and
    wherein a drug dissolution rate from the pharmaceutical composition is 39% or less after 1.5 hours, and at least 75% after 7 hours, as measured in accordance with United States Pharmacopoeia in 900 mL of a USP buffer having a pH of 6.8 at a paddle rotation speed of 200 rpm.

5.  The pharmaceutical composition according to claim 1, wherein the hydrogel-forming polymer is at least one compound selected from the group consisting of polyethylene oxide, hyd[r]oxypropyl methylcellulose, and hydroxypropyl cellulose.

20.  A method for treating overactive bladder comprising administering the tablet according to claim 18 to a subject in need thereof.

22.  A pharmaceutical composition, comprising 10 mg to 200 mg of [mirabegron], or a pharmaceutically acceptable salt thereof, in a sustained release hydrogel-forming formulation comprising a means for forming a hydrogel and a means for ensuring penetration of water into the pharmaceutical composition, wherein a drug dissolution rate from the pharmaceutical composition is 39% or less after 1.5 hours, and at least 75% after 7 hours, as measured in accordance with United States Pharmacopoeia in 900 mL of a USP buffer having a pH of 6.8 at a paddle rotation speed of 200 rpm.

23.  The pharmaceutical composition according to claim 22, comprising 10mg to 200 mg of [mirabegron].

25.  A tablet, comprising the pharmaceutical composition according to claim 23.

During pretrial proceedings, Sandoz limited its defenses to 35 U.S.C. § 112 (for each of written description, enablement, and indefiniteness).  A five-day bench trial and filing of post-trial motions by the parties followed.

The District Court issued its final decision based on none of the parties' contentions.  Instead, "sua sponte," the District Court held that the claims were ineligible for patenting under § 101 under Mayo Collaborative Servs. v. Prometheus Lab'ys, Inc., 566 U.S. 66 (2012).  Support for this decision came from arguments and assertions in Astellas' post-trial briefing, specifically (in arguing enablement) that "[the] "inventive concept of the '780 Patent was discovering the dissolution rate that would address the food effect and achieving it using previously known formulation technology," which the District Court took to mean that "Astellas concedes that the '780 patent is enabled because it claims invalid subject matter: a natural law applied via routine, conventional, and well-known methods."  (A reminder that the aphorism that "everything you say can be used against you" is not limited to criminal law or police procedurals.)  In the District Court's view, "the claimed invention 'reflects merely the discovery of the food-effect-resolving dissolution profile," the District Court deemed the asserted claims invalid as patent ineligible'" and entered judgment for Sandoz.  The District Court denied Sandoz's motion under Federal Rule of Civil Procedure 52(b) to make findings of fact and conclusions of law to preserve the issues that were presented at trial.  The District Court's basis for denying the motion was that "[t]he [c]ourt could not have better invoked [Mayo]."  This appeal followed.

The Federal Circuit vacated and remanded, in a decision by Judge Lourie joined by Judges Prost and Reyna.  The Court did not reach the merits (expressly; vide infra) but held that the District Court had abused its discretion based on the principle of party presentation, i.e., that courts "rely on the parties to frame the issues for decision and assign to courts the role of neutral arbiter of matters the parties present," citing Greenlaw v. United States, 554 U.S. 237, 243 (2008) (the District Court helped the panel reach this decision by stating in its ruling that it "sits not [as] an arbiter to resolve the disputes on the parties' favored terrain").  Support for the Court's finding can be found, according to the opinion, by copious precedent, including United States v. Sineneng-Smith, 590 U.S. 371, 375 (2020); United States v. Dowdell, 70 F.4th 134, 146 (3d Cir. 2023) (the opinion noting that "[w]e review procedural issues not unique to patent law under regional circuit law"); and Innogenetics, N.V. v. Abbott Lab'ys, 512 F.3d 1363, 1371 (Fed. Cir. 2008) (the opinion also noting that while not "ironclad" "rendering a patent invalid on a basis not advanced by any party is not . . . a circumstance [that would justify straying from the party presentation principle]").

The opinion also invokes the presumption of validity codified under 35 U.S.C. § 282, which imposes on the party asserting invalidity the burden of establishing it by clear and convincing evidence, citing Microsoft Corp. v. I4I Ltd. P'ship, 564 U.S. 91, 95 (2011), and the impropriety for a court to declare a patent "valid," citing Panduit Corp. v. Dennison Mfg. Co., 810 F.2d 1561, 1569 (Fed. Cir. 1987); Shelcore, Inc. v. Durham Indus., Inc., 745 F.2d 621, 627 (Fed. Cir. 1984); and Env't Designs, Ltd. v. Union Oil Co. of Cal., 713 F.2d 693, 699 n.9 (Fed. Cir. 1984) (and continuing the analogy herein, akin to a criminal defendant being found not guilty rather than innocent).  The court's role is only "to determine whether the patent's challenger carried the burden of establishing invalidity," citing Lindemann Maschinenfabrik GMBH v. Am. Hoist & Derrick Co., 730 F.2d 1452, 1457 n.1 (Fed. Cir. 1984).  (It should not pass notice that much of this precedent stems from the time when a newly minted Federal Circuit began to flex its judicial muscles in setting forth consistent applications of the law over the district courts, which had been governed by the regional circuit courts of appeal with varying "takes" on how patent law should be applied.)

Under the Federal Circuit's view of the law "the district court appears to have misapprehended its role in adjudicating the issue of patentability" according to the opinion.  Synthesizing Astellas' arguments concerning enablement under § 112 to arrive at a concession of ineligibility under § 101 was an abuse of discretion in view of these legal principles.  The panel also rejected the District Court's rationale for its decision on an issue never raised by the parties, that "it sensed 'in the [parties'] assertion that patent litigants may, in essence, consent around the bounds of patent eligibility.'"  According to the panel, "[i]t is for the parties—not the court—to chart the course of the litigation," citing Lannom Mfg. Co. v. U.S. Int'l Trade Comm'n, 799 F.2d 1572, 1579 (Fed. Cir. 1986), being directly on point, finding in that case the rubric that "[i]t is beyond cavil that a district court does not have authority to invalidate a patent at its own initiative if validity is not challenged by a party."  Another basis for criticism of the District Court was that court's belief that patent eligibility was "a threshold inquiry that it had a duty to address—even in the silence of the parties" (although to be fair it can be understood why over a decade of Federal Circuit precedent affirming motions to dismiss on § 101 grounds could have left that impression; see examples in earlier posts too numerous to set forth here).  According to the opinion, the presumption of validity under § 282 applies to "all grounds of validity" (emphasis in opinion), citing Cellspin Soft, Inc. v. Fitbit, Inc., 927 F.3d 1306, 1319 (Fed. Cir. 2019).

For its part, Sandoz supported the District Court's decision, but was limited to citing "cases from the late 1800s and certain non-binding out-of-circuit cases," which were not persuasive (but do provide an interesting history lesson regarding the Supreme Court's and certain Circuit Courts of Appeal's varying historical antipathy to patents).  Moreover, the timing of these decisions, prior to enactment of the presumption of validity in the 1952 Patent Act provides the panel with sufficient justification to ignore whatever precedential force these decisions may retain.

Astellas was less successful in having the Federal Circuit remand this matter to a different district court judge.  In addition to the abuse of discretion against them, the District Court made several statements (presumably on the record) that tended to evince a prejudice against patents to pharmaceuticals and the companies that asserted them.  These statements included that "[t]he pharmaceutical industry, to put it mildly, has perverted th[e] intent [of the Hatch-Waxman Amendments].  With alarming regularity since, brand and generic drug manufacturers have colluded to protect weak or invalid patents and share in the startling profits"; and that "this 'case is about the pharmaceutical industry's long-standing 'innovation' of patenting extended-release formulas for soon-to-expire active-ingredient patents."  Astellas asserted that the District Court's sua sponte entry of judgment against them on § 101 grounds was by itself enough to justify removal.  The Federal Circuit did not agree, first because the panel considered mandating reassignment on remand to be "an exceptional remedy, one that we weigh seriously and order sparingly," citing United States v. Kennedy, 682 F.3d 244, 258 (3d Cir. 2012), and Lazare Kaplan Int'l, Inc. v. Photoscribe Techs., Inc., 714 F.3d 1289, 1298 (Fed. Cir. 2013).  The Court expressly relied upon the Third Circuit standard for reassignment set forth in Arrowpoint Cap. Corp. v. Arrowpoint Asset Mgmt., LLC, 793 F.3d 313, 329 (3d Cir. 2015), requiring that "a reasonable person, with knowledge of all the facts, would conclude that the judge's impartiality might reasonably be questioned."  Astellas did not meet this standard, according to the opinion.*  But the District Court judge's record (having "overseen nearly two hundred patent cases and has ruled in favor of both innovative and generic manufacturers alike") and that Astellas could not provide any instance in which the District Court judge had "acted in a way that called into question his ability to . . . resolve the outstanding issues impartially and fairly" over the "life of this nearly four-year-old litigation" was enough to dissuade the Federal Circuit from mandating removal on remand.  In view of the Court' believing it had "clarified the proper course for adjudication," the opinion closes with the statement that "we trust that, upon remand, the district court can and will take an objective, measured, and thorough look into the legal issues and evidence of record to resolve only those disputes that exist between the parties."

• In stating the Court's reasons for making this determination, the opinion provides, for the rest of us, the hopeful opinion that "we have serious doubts that, on the merits, the asserted claims—directed to nonnatural compositions of matter and associated methods of use—are ineligible for patent protection," albeit this being "an issue [the Court] decline[d] to resolve."

Astellas Pharma, Inc. v. Sandoz Inc. (Fed. Cir. 2024)
Panel: Circuit Judges Lourie, Prost, and Reyna
Opinion by Circuit Judge Lourie

Comments

[Paul F. Morgan]

I'm curious why a defendant in a patent suit would make such a highly unusual pre-trial stipulation - to waive the two most commonly effective defenses - 103 and 101?

[Kevin E Noonan]

Could be cost, could be that the arguments weren't that strong. Will be interesting to see if they go back to those arguments on remand (at least insofar as they rely on the judge's argument/opinion).

Thanks for the comment.