In a precedential decision delivered this week, the Federal Circuit shot down arguments from Appellants BTG International Limited; Janssen Biotech, Inc.; Janssen Oncology, Inc.; and Janssen Research & Development, LLC (BTG), that the Patent Trial and Appeals Board (PTAB) erred in finding U.S. Patent No. 8,822,438, which covered a method for the treatment of prostate cancer with abiraterone acetate (Johnson & Johnson’s blockbuster prostate cancer drug Zytiga^®) in combination with the steroid prednisone, invalid as obvious.

Beginning in July 2015, BTG sued a number of generic drug manufacturers in the District of New Jersey alleging infringement of the ʼ438 patent. In response, some of the same generic drug manufacturers facing the infringement allegations filed three petitions for Inter Partes Review (IPR) in district court. The IPRs challenged the claims of the ʼ438 patent as obvious over a combination of prior art references, and the primary issue to be resolved by the PTAB was whether a skilled artisan would have known from the prior art that prednisone could be used as a cancer treatment.

Before it reached its ultimate conclusion of obviousness, the Patent Trial and Appeals Board (PTAB) first interpreted the term “treatment” to require “the eradication, removal, modification, management or control of a tumor or primary, regional, or metastatic cancer cells or tissue and the minimization or delay of the spread of cancer.” This construction was contrary to BTG’s argument that the term “treatment” should be limited to only anti-cancer effects rather than both anti-cancer effects and palliation or reduction in side effects of a different anti-cancer drug. In other words, BTG’s proposed construction was based on the premise that abiraterone acetate and prednisone must have the same treatment effect, i.e., an anti-cancer effect.

Based on the PTAB’s construction, the board held that the claims of the ʼ438 patent were invalid as obvious over the cited prior art because the use of the transitional language “comprising” in the claims demonstrated that the “treatment” “can include eradication of a tumor, as would be expected of an anti-cancer agent, and that “[t]reatment by steroids can also refer to the other treatments that are ‘included’ in the construction.” The PTAB denied BTG’s subsequent requests for rehearing of the IPR decisions.

Meanwhile, in the district court litigation, BTG attempted to prevent the generic drug manufacturers from presenting at trial in district court the invalidity arguments used successfully before the PTAB. After denying BTG’s motion in limine, the district court also concluded de novo that the ʼ438 patent was invalid based on the same prior art used before the PTAB in the IPRs. BTG appealed from both the district court litigation and the PTAB proceedings. 

The Federal Circuit consolidated the appeals and chose to focus on the appellants’ arguments relating to the purported erroneous claim construction and ultimate conclusion of obviousness by the PTAB in the IPRs. In doing so, the court looked to the claim language and the specification, which stated that a therapeutic agent, of which prednisone was one, may be either “an anti-cancer agent or a steroid” and explained that the use of “or” suggests that a steroid was not necessarily the same thing as an anti-cancer agent.

The specification also described prednisone as both a glucocorticoid (which is a steroid) and an antibiotic agent (which was exemplified as an anti-cancer agent). Accordingly, the court determined that prednisone was described in the specification as both a steroid and an anti-cancer agent and, thus, “treating” with prednisone “must logically include more than just anti-cancer effects and should include the long-familiar steroid effects of palliation and reduction of side effects.” The court also found that the prosecution history supported the PTAB’s construction of “treatment.” With the PTAB’s construction found to be sound, the Federal Circuit disregarded the appellants’ remaining arguments since they were essentially grounded on the premise that the PTAB’s erroneous construction infected the obviousness analysis.

The decision also provided more guidance as to what is acceptable as evidence of industry skepticism in the context of objective indicia of non-obviousness. In its opinion, the Federal Circuit explained that the evidence BTG proffered in support of non-obviousness did not establish that there was a specific unsolved, long-felt need for the treatment and “at most demonstrated that some researchers were simply unenthusiastic about abiraterone in combination with a glucocorticoid.” Thus, adding to our recent article discussing industry skepticism in the context of obviousness, we now know:

(1) Industry skepticism is not necessarily required to be in the form of third-party opinion of impossibility, infeasibility or unworkability and can be evidence that third parties were “worried” or “surprised.”

(2) “Lack of enthusiasm by a few is not equivalent to skepticism or failure of others such that the combination would not have been obvious. . .”. 

As an aside, with the patentability of the claims of the ʼ438 patent resolved, the court refused to grapple with BTG’s argument on appeal related to the district court litigation.  In fact, the only reference to this line of argument by BTG appeared in a short footnote in which the court relied on its earlier opinion in Synopsis, Inc. v. Lee (812 F.3d 1076, 1077 [Fed. Cir. 2016]) as a basis for dismissing the district court appeal as moot. 

Despite the court’s reluctance to reach the merits of the district court appeal, it is worthwhile to briefly touch on the contrasting positions of the parties with respect to the effect of 35 U.S.C. § 315(e)(2). In short, BTG argued on appeal that the district court erred in allowing the generic drug manufacturers to present an invalidity defense successfully used in the IPRs because the literal language of § 315(e)(2) precludes assertion in litigation of any ground (unsuccessful or successful) of invalidity raised in the IPR. In stark contrast, the generic drug manufacturers argued that “[t]he statute should be construed consistent with traditional collateral-estoppel principles” and, as such, the intent behind § 315(e)(2) was to prevent a defendant from trying to get a different result from a federal court with arguments already rejected in the IPR – not to apply estoppel against the victor in an IPR. Interestingly, in an amicus brief, the USPTO agreed with BTG’s position, stating that § 315(e)(2) (1) applies to “any invalidity ground that was or reasonably could have been raised during the inter partes review, regardless of the actual outcome of that decision” and (2) “does not distinguish between successful and unsuccessful petitioners.”

We cannot know whether the Federal Circuit was at all persuaded by BTG’s and the USPTO’s seemingly counterintuitive interpretation of the statute. It would seem, however, from the overall approach to the companion appeals here that the Federal Circuit may be indicating that an IPR petitioner does not, as many had feared, have to choose between the PTAB or a district court to present its strongest case on invalidity and that § 315(e)(2) functions as a collateral-estoppel provision.