[co-authors: Greg Chopskie and Steve Keane]

This month, we highlight significant developments in May 2018, including a stunning reverse payment decision at the FTC, draft guidance from the FDA intended to curb REMS “abuses,” and case law developments at the Federal Circuit such as Endo (controlled release pharmacokinetic and dissolution claims not obvious) and UCB (enantiomers and the lead compound analysis).

CASES

FEDERAL CIRCUIT

Future ANDA applicant has standing to appeal PTAB decision upholding validity
Altaire Pharmaceuticals, Inc. v. Paragon Bioteck, Inc., 5/2/18 (Fed. Cir.) No. 2017-1487

On appeal from a post grant review (PGR) decision upholding the validity of Paragon’s patent, Altaire argued it had standing to appeal even though it was potentially several years from filing its ANDA. The Federal Circuit agreed that under the unique facts of the case, Altaire had demonstrated imminent and concrete harm. That injury was “compounded” by the likely estoppel faced by Altaire. Judge Schall, dissenting, would have found Altaire lacked standing. As to the merits, the court found the Patent Trial and Appeal Board (PTAB) erred in not considering certain testimony and data.

Space Invader? No venue restrictions on aliens in patent cases
In re HTC Corp., 5/9/18 (Fed. Cir.) No. 2018-130

The Federal Circuit denied HTC’s petition for a writ of mandamus by HTC, which alleged that venue over a foreign defendant is improper under 28 U.S.C. § 1400(b). “In short, while § 1400(b) governs venue in patent cases, it governs only to displace otherwise-applicable venue standards, not where there are no such standards due to the alien-venue rule.” The “centuries-old understanding” is that venue, as opposed to personal jurisdiction, “does not restrict the location of suits against alien defendants.”

AIDS foundation lacks standing to challenge HIV drug patents
AIDS Healthcare Foundation, Inc. v. Gilead Sciences, Inc.,5/11/18 (Fed. Cir.) No. 2016-2475

AIDS Healthcare Foundation (AHF) brought a declaratory judgment action seeking invalidity of five patents based on AHF’s status as a potential consumer of future generic HIV drugs. The Federal Circuit affirmed the district court’s dismissal of the action for lack of standing. The appellate court first rejected AHF’s argument that immediate action was needed to secure a generic product following the exclusivity period because uncertainty existed about future generic products. It then rejected AHF’s argument that it was presently inducing infringement, as no direct infringement had taken place. The court further explained that an interest in buying an infringing product does not create a sufficient adverse legal interest for standing. Moreover, a refusal to grant a covenant not to sue does not convey standing absent an affirmative act threatening litigation.

Limited structural similarity can still lead to obviousness
Anacor Pharmaceuticals, Inc. v. Iancu,5/14/18 (Fed. Cir.) No. 2017-1947

The Federal Circuit upheld the PTAB’s decision that all claims of Anacor’s patent were obvious. According to the court, the “obviousness inquiry often depends on whether there is evidence demonstrating a nexus between structural similarities (or dissimilarities) and functional similarities (or dissimilarities).” Here, “although there is only limited structural similarity between the compounds disclosed in Austin and Brehove,” substantial evidence supported the Board’s obviousness findings “in light of the combination of the structural and functional similarities between the compounds.”

Choose wisely: Venue in multi-district states
In re BigCommerce, Inc.,5/15/18 (Fed. Cir.)

The Federal Circuit granted writs of mandamus vacating the district court’s holding that venue was proper in the Eastern District of Texas. The district court had concluded that, under TC Heartland, if a defendant’s state of incorporation “contains more than one judicial district, the corporate defendant resides in each such judicial district for venue purposes.” The Federal Circuit disagreed, holding that “a corporation incorporated in a multi-district state is not a resident of every district in the state.” Instead, the proper venue is the district that includes the defendant’s principal place of business. If there is no principal place of business in the state of incorporation, the proper venue is the district that includes the defendant’s registered office.

Not a dead letter: Printed matter doctrine takes down providing information to medical provider claims
Praxair Distribution, Inc. v. Mallinckrodt Hospital Products IP LTD.,5/16/18 (Fed. Cir.)

Praxair filed an inter partes review (IPR) petition to Mallinckrodt’s patent directed to methods of distributing nitric oxide gas cylinders for pharmaceutical applications. The PTAB instituted review and held that all claims but one were unpatentably obvious over multiple references. The Federal Circuit affirmed in part and reversed as to the sole surviving claim. The PTAB properly applied the “printed matter doctrine” during claim construction to exclude certain limitations as having no patentable weight. The printed matter doctrine provides that claim limitations directed to printed matter are not entitled to patentable weight unless the printed matter is functionally related to the substrate on which the printed matter is applied. The Federal Circuit rejected Mallinckrodt’s arguments that the doctrine does not encompass mental steps, and that claims directed to mental steps may be considered only in determining patent eligibility. “[A]dding an ineligible mental process to ineligible information still leaves the claim limitation directed to printed matter. To hold otherwise would make the printed matter doctrine a dead letter, requiring no more than a “think about it” step to give patentable weight to a claim limitation directed to information content.” Judge Newman concurred in the judgment of unpatentability, but disagreed that the printed matter doctrine applied.

Controlled release pharmacokinetic and dissolution claims not obvious
Endo Pharmaceuticals Inc. v. Teva Pharmaceuticals USA, Inc., 5/16/18 (Fed. Cir.)

The Federal Circuit held that appellants failed to carry their burden to show obviousness because, “among other things, the prior art references in the record strongly discourage[d] a controlled release formulation of opioids with low bioavailability, such as oxymorphone.” “[M]ore critically, [the references did] not suggest the dissolution and pharmacokinetic limitations recited in the asserted claims.” The prior art gave no indication that oxymorphone could have been developed into a controlled release formulation providing effective analgesia over a twelve-hour period. Accordingly, the pharmacokinetic limitations were not “necessarily . . . present” or “the natural result of the combination of elements explicitly disclosed by the prior art.” The court also rejected appellants’ written description and indefiniteness arguments, affirmed on infringement given the AUC and Cmax data in defendants’ package inserts, and held that the district court properly permanently enjoined defendants.

Enantiomers: to “lead compound” or not to “lead compound”
UCB, Inc. v. Accord Healthcare, Inc., 5/23/18 (Fed. Cir.) Nos. 2016-2610, 2016-2683, 2016-2685, 2016-2698, 2016-2710, 2017-1001

In this enantiomer case, the Federal Circuit affirmed the district court’s holding of no invalidity. As to obviousness-type double patenting, ample evidence supported the district court’s finding that there was no reasonable expectation of success of making the claimed compound or that it would be therapeutically effective. Chief Judge Prost dissented on this point. The court also rejected appellants’ argument that as a matter of law a reasonable expectation of success was established because the claimed compound fell within the scope of the presumably enabled reference patent claim. As the court explained, “such a result would have a chilling effect on genus claiming in the chemical arts as there would be double patenting in all chemical compound cases where a parent patent claims a genus.” Regarding obviousness, the district court did not err by using a lead compound analysis, although this case allegedly “merely involves purification (not structural modification) of a known compound.” The court agreed that a “lead compound analysis is not required in analyzing obviousness of a chemical compound when, in the inventing process, there was no lead compound.” But the court then held that, “even if a lead compound analysis [were] required here, . . . the district court did not clearly err in finding that a person of ordinary skill in the art would not have selected” the prior art compounds as leads.

DISTRICT COURT

Motivation to engage in commercial development of known pharmaceuticals may be obvious, but stable claimed preparation is not
Valeant Pharmaceuticals Int’l, Inc. v. Mylan Pharmaceuticals, Inc., 5/1/18 (DNJ)
Civil Action No. 15-8180 (SRC)

The district court granted summary judgment that a claim to a 24 month room temperature stable preparation with pH between about 3.0 and about 4.0 was not invalid as obvious. “The heart of Defendants’ obviousness case – and the major point on which they fail – is their argument that a pH range of 3 to 4 would have been obvious to try. The legal test this Court applies centers on the crucial question of whether the invention is an ‘identified, predictable solution’ and an ‘anticipated success.’” No evidence suggested the claimed invention was either an ‘identified, predictable solution’ or an ‘anticipated success.’” The court rejected plaintiffs’ argument that there was no motivation to make the claimed formulation, explaining that “[t]he motivation to engage in commercial pharmaceutical development of known pharmaceuticals is, for lack of a better word, obvious.”

Dance off: DJ cases tossed for failure to complete patent dance
Celltrion, Inc. v. Genentech, Inc., 5/9/18 (N.D. Cal.) Case No. 18-cv-00276-JSW and Case No. 18-cv-00274-JSW – subscription required

The district court granted defendant’s motions to dismiss declaratory judgment actions brought by biosimilar developers related to Rituxan® and Herceptin®. The plaintiffs filed suit after completing only a portion of the patent dance and providing notices of commercial marketing.
The court first rejected the argument that the plaintiffs’ failure to complete the patent dance deprived it of subject matter jurisdiction, finding “no ‘clear statement’ by Congress suggesting that Congress intended the BPCIA’s requirements to be jurisdictional prerequisites.” The court found instead that “a review of the BPCIA reveals that the ‘patent dance’ is a series of statutory conditions an applicant must satisfy before bringing an action for declaratory judgment.”  The court therefore treated the motions as seeking dismissal for failure to state a claim under Rule 12(b)(6). Because plaintiffs did not complete their obligations under section (l)(5) of the BPCIA patent dance, the court held that section (l)(9)(B) barred filing actions for declaratory judgment. Leave to amend was granted.

Claims describing specific dosage regimen to treat specific condition are patent eligible
Pernix Ireland Pain DAC v. Alvogen Malta Operations Ltd., 5/15/18 (D. Del.) Civil Action No. 16-139-WCB

The district court (Judge Bryson, sitting by designation) granted plaintiffs summary judgment motion that the claims of its patents in suit are not patent ineligible under section 101. “Although the inventions recited in those claims were based upon a natural law—the physiological response to hydrocodone in individuals with or without mild or moderate hepatic impairment—the claims do more than merely report those physiological responses. Rather, like the claim discussed in Vanda, the claims asserted in this case describe a specific dosing regimen to treat a specific condition based on the patient’s medical status.”

Intent to sell ANDA product sufficient for specific personal jurisdiction
Endo Pharmaceuticals, Inc. v. Lupin Atlantis Holdings SA, 5/31/18 (E.D. Tex.) Civil Action No. 2:17-CV-00558-JRG – subscription required

The district court followed In re HTC (see above) to hold that venue was proper as to the Swedish defendant company. Personal jurisdiction was established because “Lupin’s intent to sell its ANDA Product here is sufficient to support a finding of specific personal jurisdiction.” The court nonetheless transferred the action to D.N.J. for convenience under 28 U.S.C. § 1404(a).

PTAB

Challenge to “lead compound” analysis rejected by PTAB
Sawai USA, Inc. v. Astellas Pharma Inc., Case IPR 2018-00079 (PTAB 5/4/18) – subscription required

The “crux” of the petitioner’s argument was that the lead compound analysis for determining obviousness of a new chemical compound is wrong and that this “strict threshold requirement” improperly restricts the knowledge of one skilled in the art. According to the petitioner, any structurally similar compound in the prior art should be available, if it has utility and a motivation to make a modified compound with similar utility exists. The PTAB rejected the petitioner’s arguments and found that it had failed to meet its burden to show the skilled artisan would have selected petitioner’s compounds as leads.

The end for BRI?

On May 3, 2018, the PTO issued a Notice of Proposed Rulemaking that proposes changes to the claim construction standard for interpreting claims in IPRs, PGRs, and covered business method patent (CBM) proceedings before the PTAB. “In particular, the Office proposes to replace the broadest reasonable interpretation (‘BRI’) standard for construing unexpired patent claims and proposed claims in these trial proceedings with a standard that is the same as the standard applied in federal district courts and International Trade Commission (ITC) proceedings. The Office also proposes to amend the rules to add that the Office will consider any prior claim construction determination concerning a term of the involved claim in a civil action, or an ITC proceeding, that is timely made of record in an IPR, PGR, or CBM proceeding.”

Read more at the Federal Register.

OTHER

FDA approves tenth biosimilar under BPCIA

On May 15, 2018, the FDA announced the approval of Retacrit (epoetin alfa-epbx) as a biosimilar to Epogen®/Procrit® for the treatment of anemia. Retacrit is the tenth biosimilar approved by the FDA under the approval pathway established by the BPCIA, and the first approved in 2018. The FDA approved five biosimilars in 2017, three in 2016, and one in 2015. Although ten biosimilars have now been approved under the BPCIA, only three have launched in the U.S. None has received an “interchangeable” designation.

New Plot for The Wire? Combat opioid crisis by seizing patents

In a May 3, 2018 letter addressed to Kellyanne Conway, the city of Baltimore and Public Citizen asked the government to consider using the provisions of 38 U.S.C. § 1498 to authorize the manufacture of Narcan and Ezvio, which are used to treat drug overdoses. Section 1498 allows the government to make and use a patented invention without the permission of the patent holder in exchange for “reasonable compensation.” When the government exercises its authority under this provision, the patent holder may not seek injunctive relief, and there is no liability for infringement. If the patentee believes it is not being adequately compensated, it can file suit against the government seeking such compensation.

FDA takes on alleged REMS abuses

On May 17, 2018, the FDA published a list of pharmaceutical companies that have allegedly used the REMS procedure to refuse to sell samples of their drugs to generics. The FDA contends that refusals to provide samples for bioequivalence testing based on REMS hinders competition and leads to higher prices. On May 31, 2018, the FDA published draft guidance on REMS waivers and the development of shared system REMS.

Read more here.

Reverse payment stunner at the FTC
In re Impax Laboratories, Inc., Docket No. 9373 (5/18/18 FTC)

In an Initial Decision in the first reverse payment administrative trial at the Federal Trade Commission (FTC) since the Supreme Court’s decision in Actavis, the Chief Administrative Law Judge dismissed the FTC’s complaint. The Chief ALJ found that the “magnitude and extent of any anticompetitive harm is largely theoretical, based on an inference that, absent the Challenged Agreement, Impax’s entry date, and therefore generic competition, would have been earlier than January 2013.” But the evidence showed that “such earlier entry was unlikely.” Moreover, “the evidence demonstrates that the Challenged Agreement provided real and substantial procompetitive benefits to consumers that outweigh any anticompetitive effect.” Accordingly, the evidence failed to demonstrate that the Challenged Agreement constituted an unreasonable restraint of trade and thus, failed to prove a Section 5 violation.

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