By Kevin E. Noonan --
As has been noted recently (Agilent Technologies, Inc. v. Synthego Corp.), fact-based decisions from the U.S. Patent and Trademark Office (typically from the Patent Trial and Appeal Board) are reviewed under the substantial evidence standard enunciated in the Administrative Procedures Act (5 U.S.C. § 706) according to the Supreme Court's decision in Dickinson v. Zurko. The stringency of this standard of review has reduced the frequency with which the Federal Circuit has reversed (or vacated and remanded) PTAB decisions, but such decisions still exist. The circumstances under which such consequences can arise are illustrated in MSN Laboratories Private Ltd. v. Bausch Health Ireland Ltd. (non-precedential) (wherein questions arose regarding the PTAB's factual determinations for both parties).
The appeal arose from separate inter partes review challenges for obviousness by Mylan Pharmaceuticals and MSN Laboratories over Bausch's U.S. Patent No. 7,041,786, directed towards guanylate cyclase receptor agonist peptides, used to treat gastrointestinal disorders. These compounds are understood to work by stimulating production of cyclic guanosine monophosphate (cGMP) which "regulates sodium and water secretion in the intestinal lumen." Bausch sells its patented product as Trulance® "for use as an oral laxative to treat constipation."
A relevant feature of these compounds is that they are known to exhibit topoisomerism, wherein the peptide can exist in alternate three-dimensional forms, one of which being biologically active and the other inactive. Claim 1 of the '786 patent is reproduced in the opinion as being representative:
1. A peptide consisting of the amino acid of SEQ ID NO:20.
Wherein SEQ ID NO. 20 is a synthetic analog (plecanatide) of prior art uroguanylin that differs by a single amino acid substitution (aspartic acid (Asp)-to-glutamic acid (Glu)):
Uroguanylin: Asn1-Asp2-Asp3-Cys4-Glu5-Leu6-Cys7-Val8-Asn9-Val10-Ala11-Cys12-Thr13-Gly14-Cys15-Leu16
Plecanatide: Asn1-Asp2-Glu3- Cys4-Glu5-Leu6-Cys7-Val8-Asn9-Val10-Ala11-Cys12-Thr13-Gly14-Cys15-Leu16
(this substitution is termed "conservative" due to the similarities between the amino acids, i.e., differing on a single methylene (-CH2-) in the amino acid sidechain).
MSN's IPR obviousness challenge asserted two principle references: U.S. Patent No. 5,489,670 and a scientific publication to Li entitled "Purification, cDNA Sequence, and Tissue Distribution of Rat Uroguanylin." MSN argued that there was motivation in the art to make the Asp->Glu substitution distinguishing plecanatide from uroguanylin because first, the '670 patent taught the use of uroguanylin for treating constipation; second, the Li reference taught that this specific amino acid substitution would produce a compound (plecanatide) "having an affinity to guanylate cyclase receptors"; and third, that the person of ordinary skill in the art would understand the conservative nature of the Asp->Glu substitution and the consequences thereof. Bausch countered by arguing first, that the skilled worker would not have been motivated to select uroguanylin as a "lead compound" under the Federal Circuit's analytical framework for chemical obviousness (see, e.g., Otsuka Pharm. Co. v. Sandoz, Inc., 678 F.3d 1280, 1291 (Fed. Cir. 2012)). Second, Bausch argued that there would not have been a reasonable expectation of success in making this substitution resulting in the desired biological activity.
While the PTAB disagreed with Bausch's arguments and instituted the IPR, additional argument proffered by Bausch asserting unexpected results was persuasive during the IPR proceedings. In its Final Written Decision, the Board found that there was motivation to select uroguanylin as the lead compound and that there would have been a reasonable expectation of success in making the aspartic acid-to-glutamic acid substitution, but that the asserted unexpected results arising from Bausch's proffered experiments outweighed MSN's prima facie obviousness case. Importantly for the Federal Circuit's opinion, the Board asserted as its basis for this finding that this evidence "reflect[ed] the use of human uroguanylin as it naturally exists, i.e., a mixture with some interconversion between topoisomers, which is the closest prior art to the peptide of claim 1." This appeal followed.*
The Federal Circuit vacated the PTAB's decision and remanded, in an opinion by Judge Lourie joined by Judges Dyk and Chen. Both parties appealed, with Bausch asking the Court to reverse the Board's finding that the skilled worker would have been motivated to select uroguanylin as a lead compound (a finding that the panel held was supported by substantial evidence). According to Bausch's argument, the skilled worker would have chosen a different lead compound, bacterial ST peptide, which was a "far more promising option," inter alia because it did not have the topoisomerism property (wherein a portion of the compound is inactive) and it produced "'remarkabl[y]' more cGMP than uroguanylin." The panel agreed with the Board's decision against finding the ST peptide to be the preferred lead compound because it was produced by a pathogenic bacteria and thus posed a danger in being administered to humans and that this apprehension was consistent with the disclosure in the cited prior art. On these grounds (and because Bausch did not challenge the Board's decision regarding the reasonable expectation of success attendant upon the conservative substitution), the panel affirmed the Board's finding that MSN had established a prima facie obviousness case.
Turning to the Board's decision that Bausch had rebutted MSN's obviousness case with a showing of unexpected results, the Federal Circuit recognized four sets of experiments proffered for this showing:
(1) the amount of cGMP produced by each peptide at a neutral pH, (2) the amount of cGMP produced by each peptide across different pHs found in the GI tract, (3) the binding affinity of each peptide for guanylate cyclase receptors, and (4) the ratio of active to inactive topoisomers after each peptide was incubated in an acidic solution.
Although MSN asserted four arguments in response (that the experiments did not compare plecanatide with the closest prior art; that the experiments were not "commensurate on scope"; that these experiments just showed "difference in degree" and not a "difference in kind"; and that these experiments failed to rebut their prima facie case), the panel rendered its decision solely on the first of these arguments. The opinion asserts that the standard for establishing unexpected results is that the claimed compound must be compared with the closest prior art, citing In re Merchant, 575 F.2d 865, 869 (CCPA 1978). Where, as here, the comparator compound can exist in two alternative forms the comparison must be between the "structurally closest" forms of the compounds under AstraZeneca Pharms. LP v. Teva Pharms. USA, Inc., 583 F.3d 766, 775 (Fed. Cir. 2009) (relying on Merchant). One basis for MSN's argument was that plecanatide, like uroguanylin, can exist in two alternative forms, only one of which is biologically active (relying on assertions by Bausch made before the EPO) and on Bausch's challenged claims not reciting any limitations regarding the existence of such alternative forms. MSN further argued that the experimental evidence proffered by Bausch used only the active form of plecanatide while both active and inactive forms of uroguanylin were used for comparison (despite the availability in the art of methods for producing pure biologically active forms of uroguanylin). Under these conditions (asserted but not definitively established by MSN), MSN argued that Bausch's evidence considered by the Board did not satisfy the requirement for comparison of the lead compound with the structurally closest prior art compound. The Board had rejected this argument from MSN, finding that there was an inevitable production of a mixture of active and inactive forms of uroguanylin and thus such mixtures were the closest prior art compounds. The Board recognized that such a topoisomeric mixture was the comparator used in Bausch's experiments but did not make a determination regarding whether plecanatide used in those experiments interconverted between active and inactive forms (the opinion stating that "[t]hose would seem to be essential inquiries").
Based on these considerations, the panel held that "the Board's determination that the experiments compared the claimed invention with the closest prior art lacks adequate explanation" based on three reasons. First, the opinion states that "the Board sidestepped the critical threshold issue of whether the claims encompass plecanatide compounds in both the active and inactive forms . . . explicitly leaving open the question whether the challenged claims encompass both active and inactive topoisomers of plecanatide." Second, the panel held that the Board had erred for failing to determine whether pure preparations of biologically active uroguanylin could be obtained suitable for comparison with putatively pure preparations of biologically active forms of plecanatide. Third, according to the Federal Circuit the Board had not addressed whether the uroguanylin preparations used by Bausch were actually the closest prior art (based on the experimental evidence submitted by Bausch in support of its conclusions).
The panel mandated that on remand "the Board should determine, based on the evidence put forward by the parties, whether plecanatide exhibits topoisomerism and whether the testing of the challenged claims should encompass both the active and inactive forms" and "reevaluate the experimental evidence consistent with its determination regarding what is the closest prior art compound."
(Not limiting its discernment of error to the Board (or Bausch), the panel also found that MSN had taken "contradictory positions" regarding a prior art description of methods for determining levels of purity for the topoisomeric forms relevant to its "commensurate in scope" arguments presented to the panel.)
The Federal Circuit recognized that resolution of these issues is necessary in order to decide whether Bausch's experiments compared its claimed plecanatide to the closest prior art, and that to the extent they do not "their value with respect to its unexpected results determination is considerably diminished."
* Mylan separately appealed and then voluntarily dismissed its appeal according to the opinion.
MSN Laboratories Private Ltd. v. Bausch Health Ireland Ltd. (Fed. Cir. 2025)
Nonprecedential disposition
Panel: Circuit Judges Lourie, Dyk, and Chen
Opinion by Circuit Judge Lourie