Orange Book Blog

Federal Circuit Dramatically Narrows Scope of Proper Venue in Paragraph IV Litigation

Valeant v. Mylan, No. 19-2402 (Fed. Cir.)

    by Alex Menchaca

In a precedential decision last week, the Federal Circuit settled how the Supreme Court's TC Heartland decision bears on venue issues in Hatch-Waxman litigation. Valeant details the court's pre-TC Heartland patent venue jurisprudence when venue for patent infringement cases could be established by showing personal jurisdiction—i.e., for large corporations, virtually anywhere in the United States. Valeant further explains how the court's Acorda decision, addressing specific personal jurisdiction in ANDA cases, led to a wide-open venue analysis. In Acorda, the Federal Circuit had held that "planned future acts were sufficient to justify the exercise of specific personal jurisdiction over a defendant in ANDA cases." As noted, pre-TC Heartland wherever there was personal jurisdiction, there was venue.

Valeant settles that venue in Hatch-Waxman litigation must follow the example of TC Heartland and its narrow reading of 35 U.S.C. § 1400(b). The patent venue statute provides for establishing venue in two ways: (i) where a defendant resides or (ii) where the defendant has committed acts of infringement and has an established place of business. TC Heartland established that for purposes of this statute a defendant resides only in its place of incorporation, thus eliminating the pre-TC Heartland wide-open venue analysis based on a mere showing of personal jurisdiction. With the first prong of the venue statute narrowed by TC Heartland, patent owners relied on the second prong to litigate in their favored districts—in ANDA cases often New Jersey and Delaware. Valeant addresses the second prong of the patent venue statute and greatly narrows its reach, likely limiting access to those favored districts.

Before Valeant, district courts struggled to define what was the "act of infringement" in an ANDA case for purposes of the venue statute. In Valeant, the Federal Circuit examines two district court decisions—one from Delaware and the other from New Jersey—that conclude potential future nationwide sales of the generic product may be considered the act of infringement for purposes of establishing venue. Such an analysis subjects the ANDA applicant to nationwide venue. The Federal Circuit, however, rejects that analysis and instead defines a much more narrow conduct that may constitute the act of infringement for venue purposes: "it is the submission of the ANDA, and only the submission, that constitutes an act of infringement." Therefore, when a patent owner seeks to establish venue by alleging a local act of infringement (35 U.S.C. § 1400(b)), only the submission qualifies as such an act and not some potential future plans to sell the ANDA product throughout the United States. In Valeant, the ANDA was sent from West Virginia for filing with the FDA in Maryland. West Virginia (and perhaps Maryland (question not considered)) is the proper venue in this case. This decision dramatically restricts the scope of proper venue for U.S.-based ANDA filers, and will likely lead to a dispersal of ANDA cases outside of Delaware and New Jersey in the future.

Interestingly, the Federal Circuit criticizes the characterization of 35 U.S.C. § 271(e)(2) infringement as an "artificial act of infringement." The statute defines what constitutes infringement and the ANDA filing is simply another form of infringement, according to the court. Perhaps this criticism will remove the phrase "artificial act of infringement" from patent bar parlance.

Also interesting is the Federal Circuit's discussion of Acorda. As noted above, Acorda established specific personal jurisdiction based on "planned future acts." In limiting "acts of infringement" to the sending and filing of the ANDA, Valeant criticized consideration of "planned future acts" in venue considerations. Acorda appears inconsistent with Valeant, but the Federal Circuit may not need to address that inconsistency because Valeant’s clear-cut venue rule may short-circuit any consideration of specific personal jurisdiction issues.

Split Federal Circuit Panel Reinstates Jury Verdict of Induced Infringement in Coreg (carvedilol) Case

GlaxoSmithKline v. Teva, No. 18-1976 (Fed. Cir. 2020)

     by Alex Menchaca

In our last post, we reported that Chief Judge Stark of the District of Delaware granted Judgment as a Matter of Law of no induced infringement in a case concerning Coreg® (carvedilol) tablets, wiping away a $200 million jury verdict in favor of GSK and against Teva.

In a precedential decision on October 2nd, a split Federal Circuit panel reversed that judgment, finding that the jury verdict was supported by substantial evidence. Judge Newman, joined by Judge Moore, wrote the majority opinion. Chief Judge Prost dissented.

This note addresses primarily the Federal Circuit's treatment of Teva's "skinny label" as evidence of inducement. Teva sold with a skinny label from September 2007 until April 2011 and with a full label after April 2011. At the end of this note (in case you want to skip the juicy details), we state our hopes for the next steps in this case.

A skinny label alone cannot support a determination of induced infringement. Warner-Lambert Co. v. Apotex Corp., 316 F.3d 1348, 1364-65 (Fed. Cir. 2003) ("the request to make and sell a drug labeled with a permissible (non-infringing) use cannot reasonably be interpreted as an act of infringement (induced or otherwise) with respect to a patent on an unapproved use, as the ANDA does not induce anyone to perform the unapproved acts required to infringe.").

The question then is what was the additional evidence, as evaluated by the Federal Circuit, that justified a jury verdict of induced infringement. That additional evidence had to show "an affirmative act to encourage infringement with the knowledge that the induced acts constitute patent infringement." Power Integrations, Inc. v. Fairchild Semiconductor Int'l, Inc., 843 F.3d 1315, 1332 (Fed. Cir. 2016)).

The claim at issue included detailed instructions for administering the drug:

1. A method of decreasing mortality caused by congestive heart failure in a patient in need thereof which comprises administering a therapeutically acceptable amount of carvedilol in conjunction with one or more other therapeutic agents, said agents being selected from the group consisting of an angiotensin converting enzyme inhibitor (ACE), a diuretic, and digoxin,

wherein the administering comprises administering to said patient daily maintenance dosages for a maintenance period to decrease a risk of mortality caused by congestive heart failure, and said maintenance period is greater than six months.

According to the claim, there must be daily administering for a period greater than six months. If there is no daily administering, there is no infringement. If there is no six months of administering, there is no infringement. And, if Teva did not undertake an affirmative act to induce those administering claim limitations, there is no induced infringement. Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 766 (2011) ("we now hold that induced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement."); Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1219 (Fed. Cir. 2014) ("In order to prove induced infringement, the patentee must show that the alleged infringer performs, or induces another party to perform, every single step in the method.")

So what evidence did the Federal Circuit identify that the jury relied on as an affirmative act by Teva to induce physicians to undertake daily administering for greater than six months? Spoiler – it's really hard to find.

The evidence introduced at trial and referenced by the Federal Circuit is described below with discussion from both the majority and the dissent. There is a lot of discussion for some of the evidence, so we limited our recitation to the best quotes (unless indicated otherwise the below are direct quotes from the opinion):

A general statement by the majority: "Teva’s promotional materials referred to Teva’s carvedilol tablets as AB rated equivalents of the Coreg® tablets."

Majority

• [GSK's expert], testified that doctors are "completely reliant" on information provided by the generic producers, and that doctors receive Teva’s product catalogs, visit its website, and read its product guides.

Dissent

• [I]n closing arguments to the jury, GSK's counsel acknowledged that "the fact that Teva said they were AB rated isn’t enough to prove inducement . . . . [W]e have to show you more than just the AB rating."
• In marketing its generic carvedilol, Teva never stated that it was approved, or could be used, to treat CHF. In fact, the record suggests Teva hardly marketed its generic at all.
• [E]ven if Teva's documents suggested using its carvedilol products to treat CHF, which they do not, such a suggestion would not be enough to induce infringement of the ’000 patent. ([GSK's doctor expert]agree[d] that not every CHF patient treated with carvedilol infringes the claimed method). 

Teva June 9, 2004 press release describing Teva’s carvedilol as the "AB-rated generic equivalent of GSK's Coreg® tablets."

Majority

• [GSK's expert] testified that he saw the 2004 press release, in which "Teva is telling doctors that they had received tentative approval for generic carvedilol, and that its final approval is anticipated in 2007."
• He testified that Teva was telling him, as a physician, that Teva was "expecting to have a generic version of GlaxoSmithKline Coreg that is AB rated, and that it is indicated for the treatment of heart failure."

Dissent

• [The 2004 press release was] published before the '000 patent issued in 2008 and therefore cannot alone be an act of infringement.
• [T]he 2004 press release . . . reports only "tentative approval." . . . The suggestion that a practicing physician would (or should) rely on an announcement for "tentative approval" in making prescribing decisions over three years in the future seems unlikely.
• GSK's counsel acknowledged that "the fact that Teva said they were AB rated isn't enough to prove inducement."

Teva's 2007 press release remained on Teva's website; screenshot bearing the date "4/14/2015" with the caption . . . “Teva Announces Approval and Shipment of Generic Coreg® Tablets”

Majority

• [GSK's expert] told the jury that [the 2007 press] release "indicates that we should be able to prescribe generic carvedilol for heart failure."
• [T]he 2007 press release remained on Teva's website throughout the life of the '000 patent [which the Federal Circuit characterized as] continued affirmative promotion of its carvedilol tablet as the AB generic equivalent of Coreg®.

Dissent

• Teva's short [2007] press release stated that it had been granted "final approval . . . to market . . . Generic . . . Coreg® (Carvedilol) Tablets."
• [The 2007 press release was] published before the '000 patent issued in 2008 and therefore cannot alone be an act of infringement.
• [P]assive maintenance of the pre-issuance press releases [on the Teva website] is not an affirmative act of inducement.
• Teva's press releases . . . do not promote treating CHF at all.

Teva Spring 2008 Product Catalog [listing the AB rating of Teva's carvedilol]

Majority

• [GSK's expert] testified that Teva's Spring 2008 catalog lists Teva's carvedilol tablets next to Coreg® tablets and uses the phrase "AB rating," and that this would lead a doctor to believe that "they're therapeutically interchangeable."
• GSK [regulatory expert] . . . explained the drug approval process, and explained that the AB-rating means that "if the generic drug is used in accordance with its label, you would expect it to have the same clinical effect" as the brand drug. She introduced Teva's product catalogs that "list the AB ratings and they compare Teva's carvedilol with Coreg on that table with carvedilol on the left and Coreg on the right,"

Dissent

• The product catalogs likewise said nothing about the product’s indications.
• GSK's counsel acknowledged that "the fact that Teva said they were AB rated isn’t enough to prove inducement."
• GSK's [regulatory expert] testified that AB rating "is an indication that the product is therapeutically equivalent when used as labeled" and [not] with respect to the off-label uses."

None of the cited evidence supports a finding of an affirmative act by Teva to induce physicians to undertake the administering steps. As the dissent notes, "the Majority seems to rely on references to Teva's 'AB rating' or therapeutic equivalence as evidence of inducement." But that also cannot support induced infringement by Teva, GSK's counsel acknowledged that.

With respect to the full label period, the only additional evidence was the full label and product reference guides. The reference guides stated nothing more than that Teva's generic was "AB Rated and bioequivalent to Coreg® Tablets." The full label included reference to treatment of CHF, but there was no evidence that any doctor even read the full label. Still, it seems to us, not enough.

We think the dissent has the better position. But the dissent overstates the majority's view when it states that the "Majority [holds] that the content of Teva's skinny label can itself establish inducement." The majority did not really say that, generally stating: "[p]recedent has recognized that the content of the product label is evidence of inducement to infringe" (citing cases).

The real problem in the majority opinion is that it conflates its treatment of the skinny label period with that of the full label period. The majority lumps the documentary evidence for both periods into one paragraph (Slip Op. pp. 12-13) and glosses over the language distinctions of the labels (Slip Op. pp. 16-17). Perhaps that is why the dissent understood the majority opinion to "nullif[y] Congress's statutory provision for skinny labels—creating liability for inducement where there should be none."

What would we like to see happen in this case? We would like to see the panel or the en banc Federal Circuit revisit this opinion and clearly break out the skinny label period from the full label period. Everybody involved in the case understood that each period deserved its own treatment; the dissent emphasized that GSK's counsel argued "[n]o label, no inducement." There simply is no evidence to support a finding of induced infringement during the skinny label period. A clear statement to that effect following Supreme Court and Federal Circuit precedent would undo the damage this opinion could do to the rights of ANDA applicants to pursue approval of skinny labels and file Section viii statements rather than paragraph IV certifications.

Regarding the full label period? Based on the evidence detailed in the opinions, we don’t see inducement. But that is what the jury considered and perhaps the Federal Circuit may simply rely on that jury finding.

Judge Stark (D. Del.) Holds Generic Label Including Patented Indication is Insufficient to Prove Inducement

GlaxoSmithKline v. Teva, No. 14-878-LPS-CJB (D. Del.)

    by Aaron F. Barkoff

In an opinion last week, Judge Stark of the District of Delaware granted Teva's motion for judgment as a matter of law that GSK failed to present sufficient evidence to support a jury verdict that Teva induced infringement of U.S. Patent No. RE40,000.  Judge Stark's decision effectively vacates a jury award of more than $200 million to GSK.

Here is an abbreviated chronology of the relevant facts:

• May 1997: GSK obtains FDA approval of Coreg® (carvedilol) tablets for the treatment of congestive heart failure (CHF)
• June 1998: U.S. Patent No. 5,760,069 issues to GSK, claiming a method of treating CHF by administering carvedilol
• March 2002: Teva files an ANDA for carvedilol tablets with a para. III certification to U.S. Patent No. 4,503,067, which claims the carvedilol compound, and a para. IV certification to the '069 patent
• March 2007: the '067 patent expires
• August 2007: Teva amends its para. IV certification against the '069 patent to a section viii statement, carving out the CHF indication from its label and leaving indications for hypertension and left ventricular dysfunction
• September 2007: FDA approves Teva's ANDA; Teva launches generic carvedilol
• January 2008: the '069 patent reissues as the '000 patent
• April 2011: Teva amends its label, adding back the CHF indication, making Teva's label essentially a copy of GSK's full label
• June 2015:  the '000 patent expires

Judge Stark held a seven-day jury trial last year.  The jury found that Teva willfully induced infringement of certain claims of the '000 patent during two time periods: (1) January 2008 to April 2011 (the "skinny label" period); and (2) May 2011 to June 2015 (the "full label" period).  The jury awarded $234 million in lost profits and $1.4 million in reasonable royalty damages to GSK.  The parties then filed post-trial motions.

In granting Teva's motion for JMOL, the court summarized its conclusion as follows:

The Court agrees with Teva that neither sufficient nor substantial evidence supports the jury's finding of inducement.  GSK failed to prove by a preponderance of the evidence that "Teva's alleged inducement, as opposed to other factors, actually caused the physicians [i.e., as a class or even at least one of them] to directly infringe," by prescribing generic carvedilol and to do so for the treatment of mild to severe CHF.  Without proof of causation, which is an essential element of GSK's action, a finding of inducement cannot stand.

The court's decision that no reasonable jury could have found that Teva induced infringement of the '000 patent during the skinny label period is not surprising.  But the court's decision of no inducement during the "full label" period is unexpected.

The court found that many factors--but not Teva's label or marketing materials--caused doctors to prescribe generic carvedilol.  For instance, the court found:

In addition to the knowledge and experience that ordinarily skilled cardiologists had acquired by July 2007 about the benefits of treatment with carvedilol, such doctors had access to American Heart Association and American College of Cardiology guidelines, carvedilol research studies published in the New England Journal of Medicine, The Lancet, and the British Heart Journal, GSK's own Coreg® label and product insert, and GSK's extensive promotional activity--totaling nearly $1 billion--which included sending doctors to hospitals, giving seminars, and detailing, marketing, and advertising Coreg®.

Further, Teva showed that once generic carvedilol entered the market in September 2007, and continuing beyond 2007, doctors continued prescribing carvedilol (be it Coreg® or a generic) in the same manner as they had prior to the generics' entrance, as they based their prescription decisions on the various factors addressed above without relying on Teva's--or any other generic manufacturers'--label.  GSK's expert, Dr. McCullough, testified that he had not read Teva's generic label before he started writing prescriptions for carvedilol.  As GSK concedes, prior to the generics' entrance into the market in 2007, physicians already knew how to use carvedilol for treating CHF.  Three cardiologists testified at trial . . . and all three agreed that even in September 2007, when generic companies (including Teva) began selling carvedilol, doctors relied on guidelines and research, as well as their own experience, in addition to GSK marketing.  None viewed generic labeling, including Teva's label, as impacting prescribing behavior.

As Teva correctly notes, no direct evidence was presented at trial that any doctor was ever induced to infringe the '000 patent by Teva's label (either skinny or full).  There was no direct evidence that Teva's label caused even a single doctor to prescribe generic carvedilol to a patient to treat mild to severe CHF.  Hence, in order to uphold the verdict, the Court must find in the record substantial evidence to render it reasonable for the jury to have inferred that at least one doctor was so induced.  GSK, as the verdict winner, is entitled to the benefit of all reasonable inferences that may be drawn from the evidence presented to the jury.  The Court's determination, however, is that--given the dearth of evidence that doctors read and understand and are affected by labels, and given the vast amount of evidence that doctors' decisions to prescribe carvedilol during the relevant periods were influenced by multiple non-Teva factors--such an inference was an unreasonable one for the jury to have drawn.

The court distinguished more typical ANDA cases that involve a method-of-use patent, in which the patent owner alleges inducement of infringement before a generic launch and the court heavily relies on the proposed ANDA label when evaluating the inducement claim:

For instance, GSK directs the Court to Sanofi v. Watson Laboratories Inc., 875 F.3d 636, for the proposition that the marketing of a generic drug with labeling that encourages infringement can be viewed as causing infringement despite the fact that the innovator company published the results of clinical studies and promoted the patented use.  That case does not persuade the Court to reach a different conclusion than described above.  Sanofi involved the ordinary Hatch-Waxman framework, where a claim of induced infringement is filed before the generic has launched its product, and necessarily, before the generic has even attempted to communicate with any direct infringer.  In those cases, as this Court held during earlier portions of this case, the focus must be on intent, rather than actual inducement.  Here, by contrast, GSK filed its case almost seven years after Defendants launched their generic carvedilol products into the market.  Hence, GSK's inducement claims are not premised on a hypothetical, but instead must be supported by sufficient evidence as to what actually happened during the relevant time period.  This Court has decided that reliance on a label and speculation about what may occur in the future cannot substitute for actual evidence about what has actually occurred in the past when, as in this case, there has been a period of actual, past conduct that is pertinent to infringement.

This case is relatively unique--particularly because it involved an at-risk launch.  It will be interesting to see how the case affects litigation strategies used in other ANDA cases involving method-of-use patents.  And we will certainly be paying attention to the inevitable appeal.

Federal Circuit Holds That Specific Personal Jurisdiction Exists Anywhere an ANDA Applicant Intends to Market its ANDA Product

Acorda Therapeutics v. Mylan Pharms., 2015-1456 (Fed. Cir. March 18, 2016)

AstraZeneca v. Mylan Pharms, 2015-1460 (Fed. Cir. March 18, 2016)

    by Alex Menchaca

Where is an ANDA applicant subject to personal jurisdiction when the only act of infringement is "artificial" infringement under 35 U.S.C. § 271(e)(2)(A)? This question has generated a great deal of interest recently--especially since the Supreme Court's Daimler decision two years ago. In a precedential opinion on Friday, the Federal Circuit answered the question and determined that personal jurisdiction exists in any state where the ANDA applicant intends to market its product--essentially everywhere in the United States.

Mylan filed ANDAs in connection with Ampyra® (dalfampridine), Onglyza® (saxagliptin), and Kombiglyze® (saxagliptin/metformin). Acorda markets Ampyra® for the treatment of multiple sclerosis while AstraZeneca markets Onglyza® and Kombiglyze® for the treatment of type 2 diabetes. Both Acorda and AstraZeneca sued Mylan in Delaware, and Mylan filed motions to dismiss for lack of personal jurisdiction in both cases.

Both motions were denied. In the dalfampridine case, Judge Stark held that Mylan was subject to both general and specific personal jurisdiction. In the saxagliptin case, Judge Sleet held that Mylan was subject to specific personal jurisdiction, but not general personal jurisdiction. Mylan sought and obtained interlocutory review by the Federal Circuit of both of those orders. The appeal attracted six amicus filings, including briefs from GPhA, Teva, BIO, and PhRMA.

The Federal Circuit majority opinion limited its analysis to specific personal jurisdiction. The court began with the rule from International Shoe:  specific personal jurisdiction may be exercised over a defendant "when the defendant has certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Further, "the minimum contacts requirement focuses on whether the defendant's suit-related conduct creates a substantial connection with the form State."

In short, the Federal Circuit held that specific personal jurisdiction may be exercised over Mylan because "the minimum-contacts standard is satisfied by the particular actions Mylan has already taken--its ANDA filings--for the purpose of engaging in that injury-causing and allegedly wrongful marketing conduct in Delaware."

The fact that the infringement at issue in the cases was "artificial" infringement under 35 U.S.C. § 271(e)(2)(A) was used by the Federal Circuit to support its holding. The court explained that this statute is directed to the real-world consequence of marketing a generic in competition with the brand name drug: "concrete, non-artificial acts of infringement." Having determined that infringement under section 271(e)(2)(A) carries real-world consequences (and is more than an "artificial" construct), the Federal Circuit analogized the lawsuits against Mylan for intended future actions to "suits for retrospective relief based on past acts" and noted that the Supreme Court has defined minimum contacts in those retrospective contexts:

In a formulation worded to address suits for retrospective relief based on past acts, the Supreme Court has said that the minimum-contacts requirement is met when the defendant "purposefully directed" activities at the forum, and the litigation results from alleged injuries that "arise out of or relate to" those activities.

The Federal Circuit explained that Mylan's ANDA filings constituted activities purposefully directed at Delaware and that the lawsuits resulted from injuries that the plaintiffs would sustain by Mylan's activity:

Mylan's ANDA conduct is "suit-related" and has a "substantial connection" with Delaware because the ANDA filings are tightly tied, in purpose and planned effect, to the deliberate making of sales in Delaware (at least) and the suit is about whether that in-State activity will infringe valid patents. Thus, Mylan's ANDA filings constitute formal acts that reliably indicate plans to engage in marketing of the proposed generic drugs. Delaware is undisputedly a State where Mylan will engage in that marketing if the ANDAs are approved. And the marketing in Delaware that Mylan plans is suit-related: the suits over patent validity and coverage will directly affect when the ANDA can be approved to allow Mylan's Delaware marketing and when such marketing can lawfully take place.

Although the majority opinion did not address the issue of general personal jurisdiction, Judge O'Malley's concurring opinion did. Judge O'Malley wrote that a straightforward application of Supreme Court precedent also establishes general personal jurisdiction in these cases. It may be, however, that the question of general personal jurisdiction is now moot given the court's analysis of specific personal jurisdiction.

Case or Controversy Exists Where Generic Manufacturer Seeks Declaratory Judgment of Non-Infringement of Orange Book-Listed Patent Disclaimed by Brand Manufacturer

Apotex Inc. v. Daiichi Sankyo, Inc., Nos. 2014-1282, 2014-1291 (Fed. Cir. Mar. 31, 2015)

    by Dunstan H. Barnes

Apotex, Inc. sued Daiichi Sankyo Co., Ltd. and Daiichi Sankyo, Inc. in the United States District Court for the Northern District of Illinois for a declaratory judgment of non-infringement of a Daiichi-owned, but Daiichi-disclaimed, patent, if Apotex were to manufacture or sell a generic drug bioequivalent of Daiichi’s Benicar®. On March 31, 2015, a three-judge Federal Circuit panel unanimously reversed the district court’s dismissal for lack of case of controversy. The Federal Circuit found that Apotex has a concrete, potentially high-value stake in obtaining a declaratory judgment, and that both Daiichi and generic manufacturer Mylan Pharmaceuticals, Inc. have a concrete, potentially high-value stake in denying Apotex that judgment and thereby delaying Apotex’s market entry.

The factual background is key to understanding the debate. Daiichi listed two patents covering Benicar® in the Orange Book. The first, U.S. Patent No. 5,616,599, covers the active ingredient of the drug, and expires on April 25, 2016. Because Daiichi provided the FDA with pediatric test results, the FDA must wait a further six months, until October 25, 2016, to approve a generic version of the drug. The second, U.S. Patent No. 6,878,703, covers methods of treatment, and expires on November 19, 2021.

In April 2006, Mylan filed an ANDA with a paragraph IV certification that both the ’599 and ’703 patents were invalid or not infringed by Mylan’s proposed generic drug. In July 2006, for reasons that remain unexplained, Daiichi disclaimed all claims of the ’703 patent, as permitted under 35 U.S.C. § 253. Daiichi then sued Mylan for infringing the ’599 patent. Only validity was disputed in the case, and after trial, the court upheld the validity of the ’599 patent and entered judgment of infringement against Mylan. With the validity of the ’599 patent intact, Mylan’s earliest date for market entry is October 26, 2016, six months after the ’599 patent expires. Note that as a result of the court’s decision, Mylan did not have a lawfully-maintained paragraph IV certification with respect to the ’599 patent.

In June 2012, Apotex filed its own ANDA with a paragraph III certification stating that the ’599 patent is valid and a paragraph IV certification that Apotex would not infringe the now-disclaimed ’703 patent. Essentially, Apotex sought approval to enter the market for generic versions of Benicar® at the same time as Mylan—on October 26, 2016.

The wrinkle is that Daiichi did not sue Apotex for infringing the disclaimed ’703 patent, and the FDA has not removed the ’703 patent from the Orange Book. Under § 355(j)(5)(B)(iv), because Mylan was the first ANDA filer and Mylan has lawfully maintained a paragraph IV certification regarding the ’703 patent, Mylan is presumptively entitled to 180 days’ exclusivity before facing competition from another generic manufacturer. Thus, if Mylan were to enter the market for generic version of Benicar® on October 26, 2016, it would presumptively be entitled to exclusivity until April 23, 2017.

By filing its declaratory judgment action, Apotex sought to enforce a provision provided in § 355(j)(5)(D)(i)(I)(bb)(AA) for forfeiture of Mylan’s 180-day exclusivity period if Mylan has not marketed its generic drug 75 days after a court has entered a final decision from which no appeal (certiorari aside) has been or can be taken that the ’703 patent is invalid or not infringed.

The parties did not dispute that allowing Apotex to enter the market earlier would likely transfer sales from Daiichi and Mylan to Apotex. But Daiichi maintained that there was no case or controversy because it could not assert its disclaimed ’703 patent against Apotex, and Mylan additionally argued that Apotex lacks a “tentative approval” from the FDA for its ANDA and thus any delayed-market-entry injury is unduly speculative.

The Federal Circuit found, in contrast to the district court, that a case or controversy did exist, because the drug sales over a potential six-month period of exclusivity are concrete and substantial. The court contrasted the present parties’ substantial, concrete stakes in a judgment of non-infringement with cases in which a case or controversy was missing because the plaintiffs had generalized or bystander interest in others’ compliance with law.

The Federal Circuit also provided a common sense reasoning regarding the fact that the now-disclaimed ’703 patent is the only barrier to Apotex entering the market at the same time as Mylan. Had Daiichi never listed the ’703 patent in the Orange Book, Mylan would not be eligible for an exclusivity period. Thus, Apotex seeks through its declaratory judgment action to eliminate the entry barrier created by Daiichi’s listing of the ’703 patent that Daiichi subsequently disclaimed.

Federal Circuit Revives Mutual's Antitrust Counterclaims Arising From Temazepam ANDA Litigation

Tyco Healthcare et al. v. Mutual Pharm. et al., No. 2013-1386 (Fed. Cir.)

    by Aaron F. Barkoff

In 2006, Mutual filed an ANDA for a generic version of Restoril (temazepam), including a paragraph IV certification to Tyco's U.S. Patent No. 5,211,954.  Tyco filed suit against Mutual under 35 USC 271(e)(2), Mutual responded with antitrust counterclaims (which the court temporarily stayed pending resolution of the case), and the case proceeded to judgment.

The district court found in 2009 that Mutual did not infringe the '954 patent under section 271(e)(2) because Mutual's product, when manufactured to the ANDA's specification (i.e., where temazepam has a specific surface area of at least 2.2 m²/g), could not infringe the patent (which claims temazepam having a specific surface area of 0.65-1.1 m²/g).

On August 5, 2009, the day after the district court entered its judgment of noninfringement, Tyco filed a citizen petition urging the FDA to change the criteria for evaluating the bioequivalence of generic temazepam products in order to "help ensure therapeutic equivalence."  On September 8, 2009, while the citizen petition was still pending, the FDA approved Mutual's ANDA.  The FDA denied Tyco's citizen petition in its entirety five months later.

After the Federal Circuit affirmed the district court's later decision that the '954 patent was invalid for obviousness, the district court lifted the stay of Mutual's antitrust counterclaims.  In an opinion on January 18, 2013, the district court granted summary judgment to Tyco on Mutual's counterclaims, which, according to the Federal Circuit, were based on four arguments:

1. That Tyco's section 271(e)(2) infringement claim constituted sham litigation that subjected Tyco to antitrust liability for using illegitimate means to keep Mutual's product off the market.
2. That no reasonable litigant could have expected Tyco's patent to withstand a validity challenge.
3. That Tyco's citizen petition was a sham.
4. That Tyco's infringement suit was the product of fraud under Walker Process.

In a 2-1 decision last week (over Judge Newman's dissent), the Federal Circuit affirmed two aspects of the district court decision and vacated two others.  The court affirmed the summary judgment against Mutual's claim that no reasonable litigant could have expected Tyco's patent to be upheld as valid and affirmed the summary judgment against Mutual's Walker Process fraud claim.  The court vacated the summary judgment that Tyco's infringement claim under 271(e)(2) was not sham and that Tyco's citizen petition to the FDA was not a sham.

The premise of Mutual's argument that Tyco's 271(e)(2) infringement claim was a sham was that Mutual's ANDA specified that the temazepam in Mutual's ANDA product would have a specific surface area outside of the range claimed in the '954 patent.  The Federal Circuit stated that "it is not unreasonable for a patent owner to allege infringement under section 271(e)(2)(A) if the patent owner has evidence that the as-marketed commercial ANDA product will infringe, even though the hypothetical product specified in the ANDA could not infringe."  But the court found that there was conflicting evidence concerning the specific surface area of the temazepam in Mutual's ANDA product, and remanded for the district court to "determine whether Mutual has shown that the subjective element of the sham-litigation test has been satisfied."

Similarly, the Federal Circuit found that there were disputed issues of fact precluding summary judgment with respect to whether Tyco's citizen petition was a sham.  The court stated:

Particularly probative of whether the citizen petition was reasonable is the FDA's response, which denied the petition in terms indicating that, in the FDA's view, it was wholly without merit.  The FDA found that Tyco had "provided no evidence from clinical trials, pharmacokinetic studies, bioequivalence testing, or any other source . . . .  Instead the petition relies entirely on uncorroborated generalities and theoretical speculation to support its critical point."

The court also noted that "Mutual's expert reviewed the citizen petition and concluded that 'Tyco did not have a scientific basis to conclude that Mutual's production would not be bioequivalent to Restoril.'"  The court concluded, "The testimony of Mutual's expert and the FDA's response to the citizen petition are sufficient evidence from which a reasonable finder of fact could conclude that Tyco's citizen petition was objectively baseless."

With regard to the subjective prong of the test, the Federal Circuit found it significant that Tyco filed the citizen petition just one day after the district court granted summary judgment of noninfringement.  Mutual argued that "filing the citizen petition at that late date caused the FDA to delay the approval of Mutual's ANDA, and thus resulted in a further period of market exclusivity for Tyco."  Mutual also pointed to an email from Tyco's R&D group stating that a temazepam formulation that was bioequivalent to Restoril could be made from temazepam having a different specific surface area.  The court concluded, "The timing of the citizen petition and the email are sufficient evidence from which a reasonable finder of fact could determine that Mutual had satisfied the subjective element necessary to show that Tyco's citizen petition was a sham."

The Federal Circuit found, however, that there was an open issue "as to whether the filing of the citizen petition caused any antitrust injury to Mutual."  Thus, the court remanded the case with instructions for the district court to "determine whether Mutual suffered an anticompetitive harm in the form of a delay in the approval of its ANDA due to the filing of Tyco's citizen petition with the FDA."

District of New Jersey Allows ANDA Filer's Declaratory Judgment Action to Proceed Despite Covenant Not to Sue

Purdue Pharm. Products v. TWI Pharms., No. 12-5311 (D.N.J.)

    by Alex Menchaca

In an opinion last week, the U.S. District Court for the District of New Jersey stymied what appears to be an attempt by Purdue Pharma to prevent TWi Pharmaceuticals from obtaining a final judgment of noninfringement of all four Orange Book-listed patents on Intermezzo® (zolpidem tartrate).  A final judgment could trigger the marketing requirement of the first ANDA filer.  If the first filer does not market its product within 75 days of a final judgment, it will forfeit its 180-day exclusivity.

Purdue holds the NDA for Intermezzo®, a drug used to treat middle-of-the-night insomnia.  Four patents are listed in the Orange Book in connection with the NDA.  By the time TWi filed its ANDA, four other ANDAs had already been filed and presumably at least one of those is entitled to 180-day exclusivity.  Purdue sued TWi on only two of the patents, and granted TWi a covenant not to sue on the other two.  TWi filed a DJ counterclaim for noninfringement of all four Orange Book-listed patents.

As simplified by the court, TWi's DJ counterclaim is important because it "could potentially trigger the first ANDA filer's 180-day exclusivity period.  This would have the effect of expediting TWi's ability to market its generic version of Intermezzo®."

Purdue filed a motion to dismiss TWi's counterclaim, presenting three arguments that no case or controversy exists and therefore the court lacks jurisdiction: (1) the "covenant not to sue rendered moot any such controversy," (2) "the Court cannot redress TWi's alleged injury," and (3) "the dispute is not ripe in light of TWi's inability to obtain tentative approval."

In response to Purdue's mootness argument, the court stated, "[t]here is ample authority supporting the proposition that a later ANDA filer's declaratory judgment claims involving patents for which the patent holder has given a covenant not to sue are justiciable."  The court therefore held that "the binding principles the Federal Circuit set forth in Dey and Caraco compel this Court to conclude that Plaintiffs' covenant not to sue TWi on the '945 and '628 patents does not moot TWi's counterclaims seeking declaratory judgment that these patents are not infringed."

With regard to whether TWi's injury is redressable, Purdue argued that "a judgment favorable to TWi on the '945 and '628 patents will not redress any injury arising from delay in TWi's ability to market its generic version of Intermezzo® because such a judgment would not independently trigger the first ANDA filer's exclusivity period as TWi has not received tentative approval from the FDA to market its generic product."  In other words, Purdue argued that because "an applicant in TWi's position cannot trigger the first applicant's exclusivity period through a declaratory judgment action unless it has first received tentative approval," the court cannot redress TWi's purported injury.

The court noted that the Federal Circuit has not addressed whether a subsequent ANDA filer must first have tentative approval to maintain a declaratory judgment action like TWi's.  Nevertheless, it rejected Purdue's argument based largely on Judge Dow's decision in Seattle Children's Hospital v. Akorn (N.D. Ill. 2011).  The Akorn court recognized that the Hatch-Waxman Act "created a civil action to obtain patent certainty ("CAPC") that could be brought by an ANDA applicant at a time when it likely would not have tentative approval," indicating that other DJ actions similarly do not require that the ANDA filer must have tentative approval.  Following Akorn, the court held that tentative approval is not required for TWi to maintain its DJ counterclaim.

Finally, the court held that the case is indeed ripe, noting that "delaying judicial consideration of TWi's counterclaims could result in depriving TWi of the ability to trigger the first ANDA filer's 180-day exclusivity period, thus causing TWi to lose profits during the period of time it is excluded from the market.  Accordingly, the court found that "delay in resolving TWi's counterclaims will have an immediate and substantial impact on TWi."

Although not settled until the Federal Circuit weighs in, based on this case and Akorn it appears that the courts will permit ANDA filers to assert DJ counterclaims even before receiving tentative approval from the FDA and despite having a covenant not to sue from the patent owner.

Federal Circuit Affirms Validity of Pfizer's Lyrica (Pregabalin) Patent

Pfizer Inc. et al. v. Teva Pharms. USA et al., No. 2012-1576 (Fed. Cir.)

Teva and several other generic pharmaceutical companies each submitted an ANDA seeking approval to market a generic version of Lyrica, for treating seizures and pain. In a unanimous decision last Thursday, the Federal Circuit affirmed the judgment of the U.S. District Court for the District of Delaware by finding claim 2 of U.S. Patent Nos. 6,197,819, covering the active ingredient of Lyrica, pregabalin, infringed and not invalid for lack of enablement, written description, or obviousness.

Pfizer and Northwestern University initally asserted four Orange Book-listed patents against the ANDA filers, but the case ultimately hinged on claim 2 of the '819 patent, which reads quite simply:

2. 4-amino-3-(2-methylpropyl) butanoic acid, or a pharmaceutically acceptable salt thereof.

The compound of claim 2 contains a single chiral center, and may exist, for example, in enantiomerically pure (R)- or (S)- forms or a racemic form, the latter containing equal quantities of both enantiomers. Lyrica and the proposed generic products each contain pregabalin, which is only the S-enantiomer of 4-amino-3-(2-methylpropyl) butanoic acid. Before the district court, the defendants asserted that claim 2 of the '819 patent should be interpreted to cover only the racemic form of 4-amino-3-(2-methylpropyl) butanoic acid (also "3-isobutyl-gamma-aminobutyric acid" or "3-isobutylGABA"). If so construed, the proposed products would not literally infringe the claim. Further, the defendants alleged that claim 2 is invalid for failing the enablement and written description requirements of 35 U.S.C. 112(a) and for obviousness under 35 U.S.C. 103 in view of three asserted prior art references.

The district court's Markman order construed claim 2 of the '819 patent to encompass all stereochemical forms of 3-isobutylGABA. The parties stipulated to infringment by the defendants' proposed products if claim 2 was found valid and enforceable, as interpreted by the district court. This appeal followed the district court's finding that claim 2 of the '819 patent was enforceable and not invalid for the reasons offered by the defendants. On appeal, the defendants asserted that the district court erred in claim construction and its findings with respect to enablement, written description, and obviousness. The Federal Circuit affirmed the district court on all issues.

With respect to claim construction and infringement, the Federal Circuit declined to read limitations into claim 2 that were not present in the claim text. After noting that the defendants' expert admitted that claim 2 covers "3-isobutylGABA in any isomeric form," the court stated that the '819 patent made clear that the patent applicants were capable of indicating when individual enantiomers and when racemic forms of compounds were intended, by using the appropriate (R,S)- or (R)- or (S)- prefixes. Nor could the court find any clear disavowal in the '819 patent that would indicate that a lack of stereochemical indication was intended to limit the disclosure to only the racemic form. In view of the lack of any stereochemical limitation within claim 2, the court upheld the district court's interpretation and finding of infringement of claim 2 of the '819 patent.

On enablement, the ANDA filers asserted that if claim 2 were interpreted to cover all compositions of 3-isobutylGABA, regardless of enantiomeric form, then the specification failed to "teach a skilled artisan how to prepare every conceivable mixture of 3-isobutylGABA’s enantiomer." However, the defendants failed to convince the court that such mixtures were anything other than routine to one of ordinary skill in the art. The court noted that the '819 patent disclosed the method for synthesizing the compound and states that the compound's "enantiomers may be prepared or isolated by methods already well known in the art." Citing In re Hogan, 559 F.2d 595, 606 (CCPA 1977), the court declined to require an applicant to disclose "a detailed recipe for preparing every conceivable permutation of the compound they invented to be entitled to a claim covering that compound."

For written description, Appellant Sun Pharmaceuticals (only) focused on a lack of disclosure by the '819 patent regarding isolation of the individual enantiomers. Sun proposed that since later application filings by the patentee indicated that enantiomer separation for 3-isobutylGABA may have been less than routine, and that the inventors admitted that at the time of filing of their original applications, they had not yet actually separated the 3-isobutylGABA enantiomers, then the applicants were not in possession of the broader claim scope. However, the court found Sun's focus on the enantiomers to be unpersuasive. Rather, the court focused on whether "relevant identifying characteristics" were provided such that "persons of ordinary skill in the art [] recognize that the inventor invented what is claimed." Here, the court noted that disclosure of the claimed structure (in the absence of stereochemical definition), in vitro and in vivo data for the compound, and a method of synthesizing the compound satisfied the statutory requirements.

Finally, the ANDA applicants argued that the district court erred in finding claim 2 of the '819 patent not obvious in view of three proffered prior art references. The references were alleged to disclose that 3-isopropylGABA and other homologous compounds may have anticonvulsant activity, that 3-isobutylGABA would have been expected to have similar activity because of its close structural simlarity to the former, and that the anti-convulsant gabapentin, another 3-substituted gamma-amino butyric acid (GABA) derivative, provided motivation to try other substitutions as the 3-position of GABA.

The court applied the two-part test for obviousness of a chemical compound outlined in Eisai and Takeda by reviewing for (1) whether the asserted prior art compound would have been selected as a lead compound for further modification and (2) whether the prior art would have taught a skilled artisan to make the "specific molecular modifications" necessary to the selected lead compound to yield the claimed compound with a reasonable expectation of success.

As to the first prong, the court reiterated that more than "mere structural similarity" is necessary for a prior art compound to serve as a lead compound. Rather, other properties, such as chemical activity or potency, inform the lead compound selection. Here, the court was unmoved by the offer of either 3-isopropylGABA or gabapentin as a lead compound. The court found insufficient details in the cited art regarding properties of either compound that would have lead to their selection for further research. With respect to gabapentin, the prior art was vague as to whether the compound was in the prior art at all, and if so, whether any of its relevant properties, such as anticonvulsant activities in the context of other anticonvulsants known at the time would have highlighted the compound for further modification. For 3-isopropylGABA, the court noted that the prior art failed to teach its "mechanisms of action, including whether it has anticonvulsive properties."

Moving to the second prong, the court noted that even if either compound were selected as a lead compound, the proffered art failed to teach the precise modifications necessary to yield 3-isobutylGABA. Rather, the court noted that the cited art merely suggest "trillions" of compounds "without calling out alkyl groups in particular or singling out isobutyl specifically." The court concluded by agreeing with the district court's finding that the appellees had convincingly established the complicated and unpredictable nature of anticonvulsant field at the time of filing, thereby precluding any reasonable expectation of success in achieving anticonvulsant in 3-isobutylGABA "even if Appellants were able to establish that the prior art taught the substitution of isobutyl at GABA’s 3-position."

PTAB Institutes Inter Partes Review of Oracea (doxycycline) Formulation Patents

Amneal Pharmaceuticals, LLC v. Supernus Pharmaceuticals, Inc., IPR2013-00368, IPR2013-00371, IPR2013-00372 (PTAB)

    by Robert F. Kappers

The U.S. Patent Trial and Appeal Board issued a trio of related decisions on December 17, 2013, each instituting inter partes review of one of three related patents on once-daily formulations of tetracycline. 

On June 20, 2013, Amneal Pharmaceuticals filed three petitions for inter partes review, seeking to invalidate a family of patents owned by Supernus Pharmaceuticals.  Each of the challenged patents--U.S. Patent Nos. 8,206,740; 8,394,405; and 8,394,406--relates to once-daily, sub-antimicrobial formulations of doxycycline used to inhibit collagen destruction enzymes without provoking undesired side effects attendant to an antibacterial dose.

Claim 1 of the '740 patent is illustrative of the claimed subject matter: 

1. An oral pharmaceutical composition of doxycycline, which at a once-daily dosage will give steady state blood levels of doxycycline of a minimum of 0.1 μg/ml and a maximum of 1.0 μg/ml, the composition consisting of

(i) an immediate release (IR) portion comprising 30 mg doxycycline;

(ii) a delayed release (DR) portion comprising 10 mg doxycycline; and optionally,

(iii) one or more pharmaceutically acceptable excipients.

Amneal asserted the same four grounds of unpatentability in each petition, but the Board accepted only two.  Amneal first asserted that the challenged claims were unpatentable for obviousness over WO 02/080932 A1 ("Ashley '932") as it incorporates Ser. No. 60/281,854 ("Ashley '854").  Amneal also asserted that the challenged claims were unpatentable for obviousness over Ashley '932 as it incorporates Ashley '854 in combination with U.S. 5,348,748 ("Sheth").  According to the petitions, Ashley '932 discloses administering a tetracycline compound in sub-antibacterial doses to treat acne, and further cites and incorporates Ashley '894 for disclosure of administering by sustained release, while Sheth discloses a once-daily formulation of minocycline with varying proportions of quick-release and delayed release dosage forms.

In each decision (-00368; -00371; -00372), the Board determined that Amneal had failed to demonstrate a reasonable likelihood of unpatentability for obviousness over Ashley '932 alone.  The Board rejected Amneal's argument that a person of ordinary skill would have envisaged the claimed ratios of immediate-release to delayed-release portions from the disclosure in Ashley '854 that at least half of the doxycycline dose be released in the upper GI tract.

The Board was more receptive to Amneal's second proffered ground of unpatentability; namely, that the subject matter of the challenged claims is obvious over the combination of Ashley '932 and Sheth.  Specifically, Amneal argued that Ashley '932 discloses all limitations of the illustrative claims except for the particular ratios of immediate-release and delayed-release portions of the formulation.  Rejecting Supernus’s counterarguments, the Board agreed that Sheth disclosed formulations of minocycline having a range of immediate-release to delayed-release ratios from which a person of ordinary skill could have envisaged the claimed ratios.

In the end, the Board instituted inter partes review of each of the three challenged patents, finding that Amneal had demonstrated a reasonable likelihood that the challenged claims in each patent were unpatentable over the combination of Ashley '932 and Sheth.

The petitions are related to ongoing litigation between the parties (currently stayed by joint stipulation), in which Galderma and Supernus alleged infringement of the '740 patent (the parent of the '405 and '406 patents) by Amneal's ANDA No. 203-278 and proposed generic version of Oracea.  See Galderma Labs. Inc., et al. v. Amneal Pharms., LLC, et al., C.A. No. 11-1106-LPS (D. Del.).

Divided Federal Circuit Panel Strikes Down Galderma’s Patents as Obvious—in Shifting the Burden of Production Regarding Secondary Considerations to the Patentee, Did the Majority in Fact Shift the Burden of Persuasion, Too?

Galderma Labs., L.P. et al. v. Tolmar, Inc., No. 2013-1034 (Fed. Cir.)

    by Dunstan H. Barnes

On December 11, 2013, a three-judge Federal Circuit panel struck down the asserted claims of five patents belonging to Galderma Laboratories for being invalid as obvious.  In Judge Sharon Prost's opinion for the court, joined by Judge William Bryson, she sought to draw a narrow distinction between shifting to the patentee the burden of production rather than the burden of persuasion, once an accused infringer has shown that the claimed invention falls within a range disclosed in the prior art.  Judge Pauline Newman vociferously criticized this burden-shifting in her dissent.

The five patents-in-suit are directed to a topical medication used to treat acne that contains 0.3% adapalene.  Claim 5 of U.S. Patent No. 7,838,558 is representative:

5. A topically applicable pharmaceutical composition comprising 0.3% by weight of [adapalene] relative to the total weight of the composition, effective for the treatment of acne, formulated into a topically applicable, pharmaceutically acceptable medium therefor, said composition being in the form of a topically applicable, pharmaceutically acceptable aqueous gel comprising at least one carbomer gelling agent and wherein the sole anti-acne ingredient is adapalene.

In September 2009, Tolmar filed an ANDA seeking approval to market a generic version of the patented product, Differin Gel, 0.3%.  In response, in January 2010, Galderma sued Tolmar for patent infringement in the United States District Court for the District of Delaware.  After a bench trial, the district court ruled in favor of Galderma on several issues, including validity.  On appeal to the Federal Circuit, the sole issue before the court was invalidity for obviousness under 35 U.S.C. § 103.

The Federal Circuit panel majority held that Tolmar had proven obviousness by clear and convincing evidence, and therefor reversed the district court's decision.  Tolmar's obviousness argument relied primarily on three prior art references:  two prior art patents ("Shroot '720 patent" and "Shroot '440 patent") and Galderma's data sheet for its earlier-marketed 0.1% adapalene gel product ("Data Sheet").  Tolmar further supported its obviousness argument with nine scientific journal articles.

The Shroot '720 patent disclosed several compositions containing a broad range of adapalene concentrations:  0.001%, 0.1%, and 1%.  Similarly, claim 4 of the Shroot '440 patent listed a preferred range of 0.01 to 1% for cosmetic compounds including the inventive compounds, such as adapalene, as the active ingredient.  The majority pointed out that both Shroot patents were listed in the FDA's Orange Book for Galderma's prior art 0.1% adapalene gel product and its 0.3% adapalene gel product.  Although the Data Sheet disclosed simply 0.1% adapalene as an acne treatment and not a range, it also disclosed virtually every inactive ingredient listed in the asserted claims.

In addition to the three primary prior art references, Tolmar supported its obviousness argument with nine scientific journal articles that Tolmar believed showed using 0.3% adapalene for acne treatment would have been obvious to a person of ordinary skill in the art at the time of the invention.  The majority noted that "many skilled artisans believed at the time of the invention that 0.1% was the optimal concentration of adapalene for the treatment of acne," a statement that Judge Newman seized upon in her dissent.

The most interesting aspect of this case involves a legal standard regarding the burdens of production and persuasion.  The majority stated:

where there is a range disclosed in the prior art, and the claimed invention falls within that range, the burden of production falls upon the patentee to come forward with evidence that (1) the prior art taught away from the claimed invention; (2) there were new and unexpected results relative to the prior art; or (3) there are other pertinent secondary considerations. 

To support this burden-shifting standard, the majority cited Novo Nordisk A/S v. Caraco Pharm. Labs. Ltd., 719 F.3d 1346, 1352-54 (Fed. Cir. 2013), a case bearing certain similarities to the present case:  Judge Prost authored the majority opinion and Judge Newman wrote a dissenting opinion.  And even though the issue in Novo Nordisk was not precisely the same—the prior art suggested an allegedly obvious combination of two drugs rather than disclosing a range—the Federal Circuit held that there is a shift to the patentee to bear "the burden of production once the court determined that the challenger has established a prima facie case of obviousness."  Id. at 1354.  The Novo Nordisk majority emphasized that it was not shifting the burden of persuasion, "as long is the [district] court reserved its ultimate conclusion on validity until after it considered the evidence from both sides . . . ."  Id.

In applying this standard, the panel majority examined three secondary consideration factors in reaching its conclusion that the claims are invalid as obvious:  (1) teaching away; (2) unexpected results; and (3) commercial success.  First, the majority held that the district court "clearly erred" by finding that the prior art taught away from a 0.3% concentration, because although the prior art understanding was that 0.1% was the optimal concentration, "[a] teaching that a composition may be optimal . . . does not criticize, discredit, or otherwise discourage investigation into other compositions," and therefore does not qualify as a "teaching away."  Second, the majority found that there were no unexpected results because although "the expected result was an increase . . . in . . . certain side effects[,] [t]he failure of that . . . increase to materialize, though unexpected, constitutes a only a difference in degree from the prior art results."  Third, the majority discounted the commercial success of Galderma's 0.3% gel product because "[t]he now expired Shroot patents blocked the market entry of 0.3% adapalene products until their expiration in 2010," which meant that "no entity other than Galderma could have successfully brought . . . 0.3% to market prior to 2010."

In her dissent, Judge Newman accused her colleagues of "distort[ing] the burdens of proof and production, ignor[ing] the applicable standard of proof and rely[ing] on their own factual determinations and creative theories of law . . . ."  In doing so, she stated, the panel majority "places on the patentee the burden of establishing patentability based on 'secondary considerations.'"  She suggests that the majority's standard, quoted above, does not shift only the burden of production, but the burden of persuasion, too, because the majority held that Tolmar had met its evidentiary burden simply by demonstrating that "the invention fell within a broad range disclosed in the prior art . . . ."  In addition, Judge Newman was clearly bothered by the majority's lack of deference to the district court, which "applied the correct law to a vast body of evidence, most of which is not discussed by the panel majority."

Judge Newman also analyzed the secondary consideration factors of "teaching away" and "unexpected results."  First, she relied upon the district court's finding (based on "prior art" and "expert testimony presented by both sides") that the prior art as a whole taught away from increasing the adapalene concentration above 0.1%.  Second, Judge Newman found no clear error in the district court's holdings that:  (a) it was "unexpected that the tolerability profile of 0.3% adapalene was not statistically different from that of 0.1% adapalene"; and (b) that the difference was "in kind, not in degree," because Galderma's products "violated the trend" of exhibiting "increased adverse side effects with increased concentration."

It will be interesting to see whether Galderma petitions for en banc review of this opinion in light of the potentially controversial burden-shifting standard adopted by the panel majority.