AIA On-Sale Bar Applies to Publicized Sales, Even When Knowledge of Sale Did Not Disclose the Underlying Invention

By Reza Mollaaghababa
The Court of Appeals for the Federal Circuit (CAFC) recently construed the on-sale bar provision of 35 U.S.C. 102(a) in a way that will make it easier for petitioners to challenge third party patents. While in an inter-partes review proceeding, a petitioner can rely only on prior art patents and printed publications to challenge the validity of one or more claims of a third-party patent, in a post-grant review proceeding, a petitioner can raise any statutory ground of invalidity including the on-sale bar provision of 35 U.S.C. 102(a).  This statutory provision, as modified by America Invents Act (AIA), bars patenting a claimed invention if the “claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed inventions.”

Prior to the enactment of AIA, it was well established that the sale of a claimed invention more than one year from the effective filing date of a patent application, even if the sale did not involve disclosing the underlying invention, would bar patenting the invention. However, the change in the wording of this statutory provision introduced by AIA, and particularly, the use of the phrase “otherwise available to the public” immediately following “on sale” created ambiguity about whether a sale of a claimed invention without disclosing the underlying invention would trigger the on-sale bar provision.

Recently, in the case of Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., the CAFC cleared up this ambiguity and held that the on-sale bar provision of 35 USC 102(a) applies to the sale of a claimed invention even if the sale did not involve disclosing the underlying invention.  This decision can provide yet another tool for challenging patents in a post-grant proceeding.    Continue reading

Posted in America Invents Act, Court of Appeals Fed Circuit, District Court, Federal Circuit, On-Sale BAR, Post Grant Review, Trial Tactics | Tagged , , , , , ,

IPR Estoppel Provisions May Not Be That Scary After All

By Yue (Joy) Wang
IPR petitioners wary of the statutory estoppel under 35 U.S.C. § 315(e)(2) may have reason to be cautiously optimistic.   Judge Sue Robinson of the Federal District Court of Delaware recently held that Toshiba is not estopped from presenting invalidity grounds at trial that it did not raise in an earlier IPR.  Intellectual Ventures I LLC v. Toshiba Corp. No. 1:13-cv-00453, D.I. 559 & 574 (D. Del. December 19, 2016 & January 11, 2017).

35 U.S.C. § 315(e)(2) reads in relevant part:

The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a) . . . may not assert . . . in a civil action arising in whole or in part under section 1338 of title 28 . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.

In her opinion, Judge Robison noted that the Federal Circuit has interpreted Section 315(e)(2) very literally. “[E]stoppel applies to grounds for invalidity upon which the Board instated review in the IPR proceeding, whether or not the Board addresses those grounds in its final decision (‘instituted grounds’). . . . [T]here likewise can be no dispute that estoppel does not apply to invalidity grounds that were raised by a petitioner in an IPR, but rejected by the Board as instituted grounds (i.e., ‘noninstituted grounds’).” Intellectual Ventures I LLC v. Toshiba Corp. No. 1:13-cv-00453, D.I. 574 (D. Del. January 11, 2017).

As background, Intellectual Ventures sued Toshiba for infringement of claims 17 and 19 of the ’819 Patent in Delaware in 2013. Toshiba petitioned for IPR of the ’819 Patent in 2014. Toshiba prevailed in the IPR, with the PTAB invalidating claims 17 and 19 in a final written decision. Toshiba Corp. v. Intellectual Ventures II LLC, No. IPR2014-00418, Paper No. 28 (P.T.A.B. Aug. 7, 2015).

Before the Delaware court, Intellectual Ventures moved for summary judgment that Toshiba is estopped from raising one of its invalidity grounds at trial because the ground was based on publicly available prior art that could have been raised in Toshiba’s IPR petition. Intellectual Ventures I LLC v. Toshiba Corp., No. 1:13-cv-00453, D.I. 559 at p.26 (D. Del. December 19, 2016). Judge Robinson disagreed, citing Shaw Indus. Group, Inc. v. Automated Creel Systems. Id. In Shaw, the Federal Circuit held that Section 315(e)(2) does not estop a ground rejected by the PTAB at the institution stage because, since “[t]he IPR does not begin until it is instituted,” the petitioner “could [not] have reasonably raised – the [rejected] ground during the IPR.” 817 F.3d 1293, 1300 (Fed. Cir. 2016) (emphasis in original). Extending the Shaw logic, Judge Robinson found that Toshiba is not estopped from raising its invalidity ground that was not raised at all in IPR. No. 1:13-cv-00453, D.I. 559 at 27 (D. Del. December 19, 2016). But Judge Robinson expressed misgivings at this result, noting that “[a]lthough extending the [Shaw] logic to prior art references that were never presented to the PTAB at all (despite their public nature) confounds the very purpose of this parallel administrative proceeding, the court cannot divine a reasoned way around the Federal Circuit’s interpretation in Shaw.” Id. Continue reading

Posted in America Invents Act, Anticipation/Obvious, Appeals, Court of Appeals Fed Circuit, District Court, Estoppel, Federal Circuit, Final PTAB Decision, Instittion Decision, Post Grant Review, Section 315(e) bar | Tagged , , , , , , , , , , , ,

State Universities Rejoice: PTAB Recognizes Sovereign Immunity Defense

By Sean Gloth
In Covidien LP v. University of Florida Research Foundation Inc., the Patent Trial and Appeal Board (the “Board”) upheld a defense of sovereign immunity asserted by the University of Florida Research Foundation (the “Foundation”) and dismissed three Petitions for Inter Partes Review (“IPR”) filed by Covidien LP (“Covidien”) against a patent owned by the Foundation. (See IPR2016-01274, IPR2016-01275, IPR2016-01276) The Board relied on the Supreme Court’s decision in Fed. Mar. Comm’n v. South Carolina State Ports Auth., 535 U.S. 743 (2002) (“FMC”) in its determination that the sovereign immunity defense applies to IPR proceedings, and it concluded that the Foundation was eligible to assert the defense as an “arm of the State” under Manders v. Lee, 338 F.3d 1304, *1309 (11th Cir. 2003) (en banc).

The Eleventh Amendment provides that the “judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another state, or by citizens or subjects for any foreign State.” The Supreme Court has interpreted the Eleventh Amendment as a grant of immunity to the States against certain adjudicative proceedings brought against them by private parties. In FMC, the Supreme Court held that the sovereign immunity defense applied to administrative adjudications before the Federal Maritime Commission, grounding its determination in the similarities between the Commission’s proceedings and civil litigation. The Board relied on the Supreme Court’s analysis in FMC in determining whether the sovereign immunity defense could similarly be implicated in IPR proceedings.

Covidien filed IPRs against the Foundation as a counter-action to a breach of license suit brought by the Foundation against it. The Foundation argued that the IPRs should be dismissed, asserting that it was an arm of the State of Florida, and as such entitled to sovereign immunity under the Eleventh Amendment. The Board’s decision was limited to the Foundation’s sovereign immunity defense. This decision appears to be the first extension of the sovereign immunity defense to an IPR proceeding.

Covidien argued that under FMC the sovereign immunity defense should not apply to IPR proceedings, distinguishing IPRs from civil litigation. Most notably, Covidien argued that IPRs are adjudications directed against the validity of a patent itself, unlike civil litigation which resolves disputes between two parties. Thus, Covidien argued, the subject of the IPRs were the Foundation’s patents, not the Foundation itself, and therefore the IPRs were not proceedings brought against the State. Covidien also warned that implicating the sovereign immunity defense in IPR proceedings would effectively insulate invalid patents from scrutiny just because they were owned by a State, an outcome that would thwart the purpose of creating IPRs. In addition, Covidien noted that if the Foundation’s defense was upheld, a private party could never counter a State’s infringement action by petitioning for IPR proceedings, giving States a stronger position in district court actions.

Relying on FMC, the Board rejected Covidien’s distinctions between IPRs and civil litigation. The Board noted that IPRs are adversarial proceedings between two parties decided by an impartial adjudicator, the Board. The Board also likened the discovery rules and procedures of IPRs with those in civil litigation, and noted that final decisions by the Board created issue estoppel. Additionally, the Board noted that the Federal Circuit had previously held that interference proceedings can be characterized as a lawsuit when determining whether sovereign immunity can be applied in Vas-Cath, Inc. v. Curators of University of Missouri, 473 F.3d 1376 (Fed. Cir. 2007). Thus, the Board held that the similarities between civil litigation and IPR proceedings were sufficient to implicate the sovereign immunity defense in IPR actions under FMC.

Continue reading

Posted in America Invents Act, Final PTAB Decision, Inter Partes Review, Post Grant Review, PTAB Procedure, Sovereign Immunity, Trial Tactics, USPTO | Tagged , , , , , , ,

Federal Circuit Requires Standing To Appeal An IPR Decision

By Reza Mollaaghababa
In the case of Phygenix, Inc. v. ImmunoGen, Inc., the Court of Appeals for the Federal Circuit (CAFC) held that the petitioner (Phygenix) that had unsuccessfully challenged certain claims of ImmunoGen’s U.S. Patent No. 8,337,856 (“the ‘856 patent”) in an inter partes review (IPR) lacked standing to appeal a Patent Trial and Appeal Board (PTAB) decision that affirmed the validity of the challenged claims because Phigenix had “not offered sufficient proof establishing that it has suffered an injury in fact…”  Although the Federal Circuit has required appellants to demonstrate standing in other proceedings, the Phygenix case is the first time this doctrine has been applied to bar an appeal of a final written decision in an IPR proceeding.

ImmunoGen owns the ‘856 patent, which is directed to an antibody-maytansinoid conjugate that is purportedly useful in combating a variety of cancers. Genentech has a worldwide exclusive license to the ‘856 patent for producing the drug Kadcyla®. Phigenix in turn owns U.S. Patent No. 8,080,534 (“the ‘534 patent”). Phigenix alleged that the ‘534 patent covers Genentech’s activities relating to Kadcyla and hence the subject matter claimed in the ‘856 patent.

The America Invents Act (AIA) provides that “a person who is not the owner of a patent may file with the Office a petition to institute an inter partes review of the patent.” 35 U.S.C. 311(a). The AIA does not impose a standing requirement for a challenger to request the institution of an inter partes review (IPR) of a patent.  However, the patent appellate court recently held that an IPR petitioner must have standing in order seek the appellate review of a PTAB’s final decision.

Phigenix sought inter partes review of the claims of the ‘856 patent based on an obviousness challenge.  The PTAB initiated a trial but ultimately found the challenged claims to be nonobvious.  Following the final written decision, Phigenix appealed the PTAB’s decision to the CAFC.  In response, ImmunoGen filed a motion to dismiss arguing that Phigenix lacked standing to appeal the PTAB’s decision.  A single judge of the CAFC denied ImmunoGen’s motion but requested that the parties file briefs addressing the standing issue. 

Phigenix provided declarations in support of its standing to appeal the PTAB’s decision and argued that ImmunoGen’s ‘856 patent increases competition between itself and ImmunoGen and increased competition represents a cognizable injury.  In particular, Phigenix argued that “[t]he existence of ImmunoGen’s ‘856 patent has … encumber[ed] Phigenix’s licensing efforts while ImmunoGen receives millions of dollars in licensing revenue.” Phigenix did not, however, contend that it faced the risk of infringing the ‘856 patent, or that it was an actual or prospective licensee of the ‘856 patent, or that it planned to take any action that would implicate the ‘856 patent.

The CAFC emphasized that a party’s standing to sue is a doctrine that is rooted in the case or controversy requirement of Article III of the U.S. constitution. In particular, in order to have standing, an appellant “must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the [appellee], (3) that is likely to be redressed by a favorable judicial decision.”  Further, the CAFC stressed that although Article III standing is not necessarily a requirement to appear before an administrative agency, “an appellant must nonetheless supply the requisite proof of an injury in fact when it seeks review of an agency’s final action in a federal court.”  Continue reading

Posted in America Invents Act, Appeals, Court of Appeals Fed Circuit, Federal Circuit, Final PTAB Decision, Inter Partes Review, Post Grant Review, Trial Tactics | Tagged , , , , , , , , ,

Bass’s First IPR Decision Rendered – Victory for Patent Owner, Shire Lpc

By Tom Engellenner
If Kyle Bass’s Coalition for Affordable Drugs Series II hedge fund was hoping to reap a windfall from short positions in Shire Plc’s stock this week, it was dealt a major setback by a Patent Trial and Appeal Board (PTAB) decision to uphold Shire’s patent on its colitis drug, Lialda®.  In a final written decision on U.S. Patent 6,773,720 (IPR2015-00988, Oct. 5, 2016), the PTAB found that Bass’s group had failed to meet its burden of proof that the challenged claims were obvious over the prior art.

According to the PTAB panel, “[a]t best for Petitioner, the record before us indicates a close call, but certainly not a strong case, regarding a showing of obviousness by the preponderance of evidence based on our analysis of the prior art. To the extent that it is a close call, it is noteworthy that the burden of persuasion is on Petitioner.”  Final decision,. p. 23.

The patent in issue was directed to controlled release formulations of an active ingredient, 5-amino salicylic acid (5-ASA) having an inner matrix chosen from a list of lipophilic materials and an outer matrix of certain hydrophilic materials.  Bass’s group relied on two references for its obviousness argument: Groenendall, which taught that 5-ASA could be delivered in a controlled release manner and Leslie, which taught the use of combined lipophilic and hydrophilic matrices – but not the specific lipophilic compositions listed in the patent’s claim.

The PTAB decision also concluded that even if Lelslie taught a lipophilic matric as recited in the Shire patent’s principal claim, it would not have been obvious to combine the references given the myriad of controlled release formulations:

Petitioner does not explain adequately, however, why one “would have been motivated to look to Leslie” in particular to “improve” the 5-ASA compositions disclosed in Groenendaal when one takes into account the crowded art of controlled release formulations generally.

Shire’s stock closed on Wednesday, October 5th essentially unchanged from the beginning of the week.  Liadla® sales reportedly generated over $600 million last year (about 11 percent of Shire’s total revenue).  The lack of any boost in Shire’s stock price may reflect the bigger battlefield over this drug.  Shire is concurrently fighting several generic drug companies, including Teva, Mylan and Zydus in federal court patent infringement litigations based on the ‘720 patent.

The decision this week is the first final written decision to be handed down by the PTAB on the numerous petitions filed by Bass’s so-called Coalitions for Affordable Drugs (Series I-XI).  These hedge funds had filed 33 petitions in 2015, and 18 were accepted for review.  Decisions are also expected this month on two blood cancer treatment patents owned by Celgene Corp – and a decision on another Bass group petition (against U.S. Patent No. 7,056,886, for Shire’s Gattex, a treatment for short bowel syndrome) should be rendered by Oct. 23, 2016

Posted in Anticipation/Obvious, Claim Construction, Final PTAB Decision, Inter Partes Review, PTAB Procedure | Tagged , , , , , , ,