CAFC Affirms PTAB’s Decision To Invalidate Cialis and Adcirca Patents

By Reza Mollaaghababa
In a recent decision, the Court of Appeals for the Federal Circuit (CAFC) affirmed decisions in two inter-partes review (IPR) proceedings that patents owned by ICOS Corporation directed to tadalafil formulations (used in the erectile dysfunction drug, Cialis, and the pulmonary arterial hypertension drug, Adcirca) were invalid as obvious. (CAFC Decision Nos. 17-1071 and 1018, April 18, 2018.)

The challenged claims were directed to a pharmaceutical formulation comprising micronized tadalafil – the active ingredient of the drugs. The challenger, Actelion Pharmaceuticals, argued that the claims were obvious in view of the teachings of four prior art references: Daugan, Butler, Seth and Wadke.  In particular, the challenger argued that Daugan disclosed tadalafil and the excipients included in the claims, Butler disclosed that tadalafil was poorly water soluble, Seth disclosed that micronization was a frequently used method for improving the rate of dissolution of poorly soluble hydrophobic drugs, and Wadke disclosed that it was generally recognized that poorly soluble drugs will be more readily bioavailable when administered in a finely subdivided state preferably in a 10-40 micron range.  The challenger hence argued that it was obvious to combine the references with a reasonable expectation of success.

The Patent Trial and Appeal Board found that, while Seth recognized disadvantages to micronization, those disadvantages would not have stopped ordinarily skilled artisans from using the technique, and held that there was a reasonable expectation of success in combining the teachings of these references. (IPR2015-00561 and IPR2015-00562.)

The CAFC held that substantial evidence supported the Board’s findings. The CAFC did not agree with ICOS’ argument that the prior art taught away from micronization. In particular, the CAFC indicated that although Butler disclosed coprecipitation as a solution to tadalafil’s poor solubility, the Board had credited Actelion’s expert’s testimony that Bulter did not suggest that micronization would not work but rather it had chosen a different solution.  Further, while Seth recognized problems with agglomeration when micronizing, the Board had similarly credited Actelion’s expert’s testimony that there were recognized solutions in the art for the agglomeration problem.  Moreover, the Board determined that Wadke did not teach a sequential approach that favored coprecipitates over micronization but instead described two alternative approaches.

The outcome of these cases appears to demonstrate that “teaching away” arguments have a low probability of success before the Board in defending challenged claims.  The fact that a reference points out the disadvantages associated with a particular approach may not be sufficient to persuade the Board that the reference teaches away from that approach.  For example, the Board may find that the reference simply compares alternative approaches but does not dissuade one of ordinary skill from using the less advantageous approach, or the Board may find that there are known solutions to overcome the cited disadvantages.

Posted in Anticipation/Obvious, Court of Appeals Fed Circuit, Federal Circuit, Inter Partes Review, Post Grant Review, PTAB Procedure, Trial Tactics, USPTO | Tagged , , , , , , , ,

PTAB gives Apple’s Foe a Second Bite by Granting Realtime Data’s Motion to Amend

By Reza Mollaaghababa
In an inter partes review (IPR) proceeding, a patent owner may file one motion to amend the patent in one or more of the following ways: (a) cancel any challenged patent claim, or (b) for each challenged claim, propose a reasonable number of substitute claims.  35 U.S.C. §316(d).  1290.  With regard to substitute claims, the Patent Owner needs to demonstrate that (1) the amendment is responsive to a ground of unpatentability raised in the IPR, (2) that amendment does not broaden the scope of the claims or introduce new subject matter, and (3) the amendment proposes a reasonable number of substitute claims.  37 C.F.R. §42.121.

Through the end of Fiscal year 2017 (which ended on September 30, 2017), only fourteen motions to amend had been granted out of 275 completed trials in which a motion to amend was filed.

In October of 2017, the patent appellate court (CAFC) ruled that that Board must assess the patentability of the substitute claims proposed by the patent owner “without placing the burden of persuasion on the patent owner.” Aqua Products, Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017).  It is not yet clear whether this ruling will significantly impact the PTAB’s reluctance is granting motions to amend.  But in a recent IPR (IPR2016-01737) in which Apple had challenged certain claims of U.S. Patent 8,880,862 (the “’862 Patent”) owned by Realtime Data LLC, the PTAB granted the Realtime’s motion to amend.

The ‘862 Patent relates to “providing accelerated loading of operating system and application programs upon system boot or application launch,” and the use of data compression and decompression techniques for such purpose. Apple had challenged certain claims of the ‘862 Patent as being obvious in view of combined teachings of a number of references.  After the institution of trial, the patent owner filed a Patent Owner Response to rebut the petitioner’s obviousness allegations and further filed a contingent motion to amend.

The PTAB ruled that the challenged claims were in fact obvious in view of the art cited by Apple, but granted Realtime’s motion to amend. The PTAB noted that the patent owner sought to add 55 substitute claims to replace the 55 challenged claims, where each substitute claim added limitations that narrow the scope of the claim that it replaced.  The PTAB further noted that the patent owner identified support in the original disclosure for the proposed substitute claims including the narrowing amendments. Further, the narrowing amendments were in direct response to the grounds of unpatentability raised in the trial.  Thus, the PTAB concluded that the patent owner had satisfied the procedural requirements of filing a motion to amend.

With regard to the distinction of the substitute claims relative to the art cited by the petitioner, the PTAB emphasized that the patent owner did not have the burden of persuasion with respect to the patentability of the substitute claims. The PTAB indicated that it determines “whether the substitute claim is unpatentable by a preponderance of the evidence based on the entirety of the record, including any opposition made by the petitioner.” The PTAB concluded that based on the entirety of the record, the preponderance of the evidence showed that the petitioner had failed to establish that the proposed substitute claims were obvious over the art cited by the petitioner.

Notwithstanding patent owner’s success in this IPR, patent owners may need to wait for future decisions of PTAB regarding motions to amend to determine whether filing a motion to amend is a tool that can be effectively utilized in defending challenged patents before the PTAB.

Posted in Amendments before the PTAB, America Invents Act, Anticipation/Obvious, Inter Partes Review, PTAB Procedure, Trial Tactics | Tagged , , , ,

First AIA Derivation Trial Instituted by PTAB

By Aparna Nemlekar
On March 21, 2018, the Patent Trial and Appeal Board (“PTAB”) instituted the first AIA derivation proceeding to determine whether patent claims to a window frame component should be canceled because they were derived from others not listed as inventors.

The Leahy-Smith America Invents Act (AIA) amended 35 U.S.C. § 135 to replace interference proceedings with a new process called derivation proceedings. Derivation proceedings may be filed to determine whether (i) an inventor named in an earlier application derived the claimed invention from an inventor named in the petitioner’s application, and (ii) the earlier application claiming such invention was filed without authorization. Accordingly, the petitioner must file a patent application before or with a derivation petition and the petitioner’s patent application must include at least one claim that is the same or substantially the same as a claim in the earlier application.

Only about fourteen petitions for institution of derivation proceedings have been filed since such proceedings became available on March 16, 2013. However, in the five years since these proceedings have been available, this petition is the first to trigger the institution of a trial.

The petition is due by the earlier of (1) one year from the date on which a patent based on the earlier application was granted or (2) one year from the date on which the earlier application was published. The PTAB will institute proceedings if they determine the petition provides substantial evidence that the claimed invention was derived from an inventor named in the petitioner’s application.

In Andersen Corporation v. GED Integrated Solutions, Inc. (DER2017-00007), Andersen Corp. alleged that its employee Sammy Oquendo was the true inventor of a spacer frame unit, which provides a hermetic seal on windows.  Andersen Corp. alleges that, in 2009, Mr. Oquendo developed prototypes of the spacer frame unit and GED learned of this invention during a glass symposium.  Interestingly, Andersen alleged that Mr. Oquendo should be an inventor of each of the claims—asserting, in effect, 22 different derivations in the same proceeding.

After the PTAB panel reviewed the record evidence, including the numerous interactions between Mr. Oquendo and employees of GED, the Board concluded that there was substantial evidence to support Andersen’s claim that each of claims 1-22 of U.S Patent No. 9,428,953 was derived from Mr. Oquendo.  Accordingly, the derivation proceeding was instituted and there will finally be some clarity regarding the conduct of a derivation proceeding.

If the Board concludes that claims from the earlier-filed application were derived without authorization and the application is pending, the Board’s decision acts as a final refusal by the USPTO of the derived claims. If a finding of derivation is made regarding claims of a patent and the Board’s decision is not timely appealed to the Federal Circuit, the Board’s decision results in cancellation of those claims.

Posted in America Invents Act, Derivation Proceedings, Instittion Decision, Trial Tactics, USPTO | Tagged , , , ,

Allergan’s Mohawk Gambit Fails at the PTAB

By Tom Engellenner
The Patent Trial and Appeal Board (PTAB) has not taken kindly to a move by the Irish drug company Allergan to shield its key patents on its dry-eye drug Restasis from challenge at the U.S. Patent Office by assigning these patents to the Saint Regis Mohawk Tribe in return for a commitment by the tribe, as new owner of the patents, to invoke “sovereign immunity.”  In a decision rendered last Friday (February 23, 2017), the PTAB panel handling these cases rejected the Tribe’s claim to immunity and denied the new patent owner’s motion to terminate.

However, the PTAB panel decision denying the motion to terminate in these IPR cases (Mylan Pharmaceuticals, et al. v. Allergan, Inc., PR2016-01127, etc.) is surprising because the panel declined to take the easy way out, that being to follow the reasoning of a recent PTAB ruling in another sovereign immunity case, Ericsson Inc. v. Regents of the University of Minnesota, IPR2017-01186.

The enlarged PTAB panel in the Ericsson case (which included the PTAB’s Chief Judge and three other additional panel members selected by the Chief Judge) found that sovereign immunity was waived when a Patent Owner chose to enforce its patent rights in a federal district court action.  The easiest resolution would have been to extend the Ericsson reasoning to find a waiver of immunity equally applies to sovereign assignees of patents already in litigation.

Instead, the panel in the Mylan cases chose a frontal assault on tribal immunity.  The Mylan panel held that the AIA was an act of Congress of general applicability and “general acts of Congress apply to Indians . . . in the absence of clear expression to the contrary.”  The panel also appears to have adopted the position that IPR trials are in rem proceedings, not exercises of personal jurisdiction over private entities holding private property rights – a theory that has not been embraced in any of the previous IPR decisions involving sovereign immunity claims asserted by state university patent owners.

The Mylan panel also found that, even assuming arguendo that the Mohawk Tribe was entitled to assert immunity, the proceedings can continue without the tribe’s participation because the Mohawks had granted essentially all rights under the patent back to the original owner, Allergan.  The Mylan panel stopped short of concluding that the transaction was a sham transaction, but essentially found that none of the rights retained by the Tribe following its exclusive license back to Allergan amounted to anything substantial and that the Tribe was not an indispensable party because “Allergan has at least an identical interest to the Tribe.”

Posted in America Invents Act, Inter Partes Review, Motion to Terminate, PTAB Procedure, Sovereign Immunity, USPTO | Tagged , , , , , , , , , , ,

Allergan’s Mohawk Gambit May Be Doomed – PTAB Rethinks the Scope of Sovereign Immunity

By Tom Engellenner
A few months ago, the Irish drug company Allergan moved to shield its key patents on its dry-eye drug Restasis from challenge at the Patent Trial and Appeal Board (PTAB) of the U.S. Patent Office by assigning these patents to the Saint Regis Mohawk Tribe in return for a commitment by the tribe, as new owner of the patents, to invoke “sovereign immunity” and request that the PTAB dismiss pending administrative challenges.

However, a recent decision in an unrelated case before the PTAB casts doubt on the viability of this strategy.  In Ericsson v. Regents of the University of Minnesota, IPR2017-01186 (Paper 16 PTAB Dec. 19, 2017), an expanded panel of seven PTAB judges denied the University of Minnesota’s motion to dismiss an inter partes review (IPR) proceeding on the basis of sovereign immunity.  According to the PTAB panel, by filing a patent infringement suit that asserted the challenged patent, the University had waived its immunity at least with respect to the defendants.  One of defendants in that suit, Ericsson, Inc., had initiated the IPR proceeding.

The Ericsson decision involved the questionable practice of “panel-packing” by the PTAB’s chief judge, David Ruschke.  In this instance, the Chief Judge added himself and three of his deputies to the original three judges assigned to the case for the purpose of deciding the University’s motion to dismiss, ostensibly to address the “exceptional nature of the issues presented.”

Two prior PTAB decisions by different panels of judges involving University-owned patents have upheld the sovereign immunity principle.  In Covidien LP v. Univ. of Fla. Research Found., Inc., Case IPR2016-01274 (PTAB Jan. 25, 2017) and NeoChord, Inc. v. Univ. of Md., Balt., Case IPR2016-00208 (PTAB May 23, 2017), prior panels of PTAB judges faced with this issue had found that an IPR proceeding was an adjudicatory proceeding of a federal agency from which state entities are immune.

Judge Ruschke’s opinion on behalf of the enlarged panel confirmed that the sovereign immunity defense was generally available to state universities (and, by implication, other sovereigns like native American tribes) but the immunity was not absolute.  By suing in federal court, Ruschke reasoned that University of Minnesota had waivered this immunity.  He distinguished the prior PTAB panel decisions dismissing IPR petitions on sovereign immunity grounds because they did not involve “a State that filed an action in federal court alleging infringement of the same patent.”  (The Covidien v. Florida case arose out of a licensing dispute in which the university had sued to enforce a patent license agreement and the disgruntled licensee then challenged the patent via an IPR petition.  The Neochord v. Maryland case likewise involved a licensing dispute.)

Nonetheless, Judge Ruschke’s opinion has a logical weakness.  The panel’s finding of a waiver appears to turn on the fact that an invalidity challenge to a patent in a federal infringement case is a compulsory counterclaim.  Because the invalidity challenge must be brought or “be forever barred from doing so, it is not unreasonable to view the state as having consented to such counterclaims.”  The opinion fails to explain why the counterclaim inherent in an infringement suit (i.e. a trial of the invalidity issue in the federal court) is not sufficient in and of itself or why the compulsory nature of the counterclaim should spawn a right to raise this issue in an alternative forum with significantly different (challenger-friendly) rules.  Continue reading

Posted in America Invents Act, Court of Appeals Fed Circuit, Covered Business Methods, Enlarged PTAB Panels, Federal Circuit, Final PTAB Decision, Instittion Decision, Inter Partes Review, Motion to Dimiss, Post Grant Review, PTAB Procedure, Sovereign Immunity, Trial Tactics, USPTO | Tagged , , , , , , , , , , , , , , ,