The Federal Circuit reversed a finding of non-obviousness on Friday based on clear error by the District Court on factual underpinnings of its obviousness determination, in Bayer Pharma AG v. Watson Laboratories, Inc. Such decisions are rare, in view of the relevant standard of review.
The standard of review after a bench trial on a district court's determination of whether a claim is obvious is clear error for factual questions and de novo review for questions of law (including obviousness itself). Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1359 (Fed. Cir. 2007). Clear error is a relatively deferential standard; as enunciated by the Supreme Court:
"A finding is 'clearly erroneous' when[,] although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948).
The question arose in ANDA litigation over oral disintegration tablet (ODT) formulations of the erectile dysfunction drug vardenafil, wherein the formulation is an uncoated tablet that disintegrates rapidly when ingested orally; it is sold by Bayer as Staxyn® (an alternative formulation to Bayer's brand name Levitra® product).
Litigation ensued over Orange Book-listed U.S. Patent No. 8,613,950, with Bayer asserting claims 9 and 11:
8. A drug formulation in the form of an uncoated tablet which disintegrates rapidly in the mouth and releases the drug in the mouth without swallowing the tablet comprising vardenafil hydrochloride trihydrate, and at least two sugar alcohols.
9. The drug formulation according to claim 8, wherein said sugar alcohols are a mixture of sorbitol and mannitol.
11. The drug formulation of claim 8, wherein at least one sugar alcohol is sorbitol.
Watson adduced evidence of nine prior art references relevant to the ODT limitation recited in these claims, and another seven references asserted for the sorbitol and mannitol limitations. Watson argued that the skilled worker would be motivated to make an ODT formulation for vardenafil, choose sorbitol and mannitol as component sugar alcohols, and make the formulation an immediate release formulation (required by the limitation "releases the drug in the mouth without swallowing the tablet"). The District Court rejected Watson's arguments and also opined that the cited art taught away from immediate release ODT formulations and that the objective indicia supported its nonobviousness determination. As a consequence, the District Court held that Watson had not proven by clear and convincing evidence that asserted claims 9 and 11 would have been obvious.
The Federal Circuit reversed in an opinion by Judge Moore, joined by Judges Lourie and O'Malley. The opinion finds clear error in the factual findings of the District Court (although it leaves undisturbed the District Court's finding that the objective indicia support the nonobviousness decision). With regard to ODT vardenafil formulations, the opinion attributes the District Court's finding to the testimony of Bayer's expert, Dr. Wicks being more persuasive than Watson's expert, Dr. Jacobs. This testimony was directed to the absence of ODT formulations for erectile dysfunction drugs reflecting a general inapplicability of this formulation technology to be used with this class of drug. This conclusion was based on the scarcity of ODT formulations for these drugs on the presumptive filing date, and failure of others (such as Pfizer with its Viagra® product) to market such drugs after announcing their intention to do so. The Federal Circuit found clear error in this conclusion, in the face of the nine references adduced by Watson to support its argument with regard to ODT formulations. In particular the opinion states:
Dr. Jacobs testified that the Chang reference states "drugs for [ED] would be good candidates for ODT formulation." He testified the Boolell and Fryburg references each disclose formulating vardenafil as an ODT. He testified that numerous companies had already begun formulating ODT versions of ED drugs: Pfizer filed the Bell-Huff patent application directed to sildenafil ODT; Eisai filed the Furitsu patent application claiming an ODT formulation of phosphodiesterase inhibitors; and Lavipharm filed the Chen international patent application, identifying ODT versions of sildenafil [citations to the record omitted].
And the nature of the District Court's contrary determination as clear error arose at least in substantial part because "[t]hese six references—Chang, Boolell, Fryburg, BellHuff, Furitsu, and Chen—are absent from the district court's decision."
Moreover, specific statements in the District Court's opinion relating to its determination that the recited claims were non-obvious were "contradicted by the references cited by Dr. Jacobs that the court failed to consider," according to the Court's opinion. The panel also identified positive statements from each of these references supporting the use of ODT formulations with vardenafil. In addition, the opinion noted that "more than one company" applied for patents on ODT vardenafil formulations (a almost "reverse" objective index) and that the cited references were particularly directed to ODT and rapid dissolving ED formulations. "All of these references indicate a person of ordinary skill in the art would have considered ODT formulations applicable to ED drugs," according to the opinion, and that some of them indicated that the skilled worker would have understood the references to apply particularly to vardenafil. And Bayer's expert, Dr. Wicks, did not "cast doubt" on the weight of Watson's evidence in this regard in the Federal Circuit's view. Rather, the opinion states that "[t]his case does not present a situation in which the district court's credibility determination can be understood to discount the prior art references it failed to address based on one expert's characterization of the prior art," citing Senju Pharm. Co. v. Lupin Ltd, 780 F.3d 1337, 1351 (Fed. Cir. 2015).
The panel recognized that "[i]t is understood [that the District Court] discount[ed] the prior art references it failed to address based on [Bayer's] expert's characterization of the prior art," citing FilmTec Corp. v. Hydranautics, 982 F.2d 1546, 1553 (Fed. Cir.1992). But the panel notes "a district court cannot, through a credibility determination, ignore the wealth of evidence, especially as in this case where the expert did not even address it." A specific failure by the District Court was its reliance in the absence of ODT formulations of ED on the market at the relevant time as evidence of nonobviousness, because "[t]he motivation to combine inquiry is not limited to what products are forthcoming or currently available on the market" (if only in this case because of the vagaries of navigating the regulatory pathway at the FDA). The motivation to prepare an ODT formulation of vardenafil was evident to the panel from the cited references, which were enough for the Federal Circuit to find clear error in the District Court's contrary determination.
With regard to the choice of sugar alcohol components of the claimed formulation, the opinion notes that it was known in the art to include a sugar alcohol in ODT formulations (regardless of the active ingredient). The dispute, according to the opinion, was whether the choice of sorbitol and mannitol as component sugar alcohols would have been obvious. As with the ODT limitation, the Federal Circuit characterized the District Court's factual findings on this issue to be based on the competing testimony of Drs. Wick (Bayer) and Jacobs (Watson). While not "question[ing] the district court's credibility determinations," here too the Federal Circuit found clear error in its conclusions. The error was once again the District Court's reliance and focus on commercial availability rather than what was taught in the art, in the panel's opinion. Part of that prior art was an off-the-shelf ODT excipient ("Pharmaburst") present in embodiments comprising mannitol alone or a combination of mannitol and sorbitol; the opinion notes that use of this excipient was taught in the '950 patent specification. The District Court's conclusion that "there was nothing in the prior art that would have given the [person of ordinary skill in the art] a reason to use sorbitol in addition to mannitol in an ODT" was clearly erroneous in light of this evidence, according to the opinion. The remainder of Watson's cited prior art was consistent with this understanding that mannitol or the combination of mannitol and sorbitol in ODT formulations was known in the prior art, and thus the District Court's determination to the contrary was clear error according to the Federal Circuit. Particularly in regard to the relevance of FDA approval on the question of obviousness for a pharmaceutical formulation, the opinion states that "[w]hile FDA approval may be relevant to the obviousness inquiry,[] a lack of FDA approval cannot negate an otherwise apparent motivation to formulate a product."
Finally, with regard to the question of whether it would have been obvious to develop an immediate-release ODT formulation of vardenafil, the District Court had held that the prior art taught away from making an oral immediate-release formulation based on expert testimony that vardenafil was bitter-tasting and that the expected increased bioavailability resulting from such a formulation would be deleterious for older men (an obvious target population for the drug). While leaving undisturbed these factual findings, the panel found clear error in "elevat[ing] these findings to teaching away" as the District Court had done. This error arose because the District Court's decision (in the panel's view) was based on whether the skilled worker would favor one formulation over another (e.g., delayed release), whereas the proper inquiry is whether the art taught that the alternative was "unlikely to be productive," citing Santarus, Inc. v. Par Pharm., Inc., 694 F.3d 1344, 1354 (Fed. Cir. 2012) (quoting Medichem, S.A. v. Rolabo, S.L., 437 F.3d 1157, 1165 (Fed. Cir. 2006). "When there are only two possible formulations and both are known in the art at the time, the fact that there may be reasons a skilled artisan would prefer one over the other does not amount to a teaching away from the lesser preferred but still workable option," and "obviousness 'does not require that the motivation be the best option, only that it be a suitable option from which the prior art did not teach away,'" according to the opinion, citing Par Pharm., Inc. v. TWI Pharm., Inc., 773 F.3d 1186, 1197–98 (Fed. Cir. 2014).
In addition to overturning the District Court's obviousness determination the Federal Circuit awarded costs to Watson.
Bayer Pharma AG v. Watson Laboratories, Inc. (Fed. Cir. 2017)
Panel: Circuit Judges Lourie, Moore, and O'Malley
Opinion by Circuit Judge Moore
