The mere fact that generic pharmaceutical companies seek approval to market a generic version of a drug, without more, is not evidence of commercial success that speaks to the nonobviousness of patent claims.

On December 11, 2013, in Galderma Labs., L.P. v. Tolmar, Inc., the U.S. Court of Appeals for the Federal Circuit (Newman, Bryson, Prost*) reversed the district court's judgment that U.S. Patents No. 7,579,377, No. 7,737,181, No. 7,834,060, No. 7,838,558, and No. 7,868,044, which related to a topical medication containing 0.3% by weight adapalene approved for the treatment of acne marketed by Galderma as Differin® Gel, were not invalid for obviousness under 35 U.S.C. § 103. The Federal Circuit stated:

The determination of invalidity for reasons of obviousness under 35 U.S.C. § 103 is a legal conclusion based on underlying facts. . . . Factual considerations that underlie the obviousness inquiry include the scope and content of the prior art, the differences between the prior art and the claimed invention, the level of ordinary skill in the art, and any relevant secondary considerations. Relevant secondary considerations include commercial success, long-felt but unsolved needs, failure of others, and unexpected results. Because patents are presumed valid, Tolmar was required to prove that the asserted claims were obvious by clear and convincing evidence.

[T]he parties do not dispute the obviousness of the inactive ingredients of the formulation. Rather, the sole dispute between the parties is whether it was obvious to use a 0.3% adapalene composition for the treatment of acne. Accordingly, Tolmar argues that the asserted claims are obvious because they claim nothing more than the use of an old compound for a known purpose in a concentration that falls within a range disclosed in the prior art as preferred for that purpose. Tolmar['s] evidence includes a study that used a lotion containing 0.3% adapalene in an animal model to determine that adapalene was "particularly suitable for the treatment of acne." Additionally, the prior art showed that 0.03% and 0.1% adapalene products were suitable for the treatment of acne and that 0.3% adapalene products were suitable for the treatment of other conditions without intolerable irritability. Moreover, the prior art indicated that dermatologists desired acne treatments that came in varying concentrations. According to Tolmar, this provides further motivation to select a 0.3% adapalene composition for the treatment of acne. [T]he dispute is whether there was motivation to select the claimed 0.3% adapalene composition in the disclosed range. In these circumstances, 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. . . .

A reference may be said to teach away when a person of ordinary skill, upon reading the reference, would be discouraged from following the path set out in the reference, or would be led in a direction divergent from the path that was taken by the applicant. A reference does not teach away, however, if it merely expresses a general preference for an alternative invention but does not criticize, discredit, or otherwise discourage investigation into the invention claimed. With respect to the prior art teachings of dose-dependent side effects, the district court relied on the Verschoore 1991 and Alirezai 1996 articles. [They] show increased side effects associated with 0.1% adapalene as compared to 0.03% adapalene, yet they failed to discourage even the use of 0.1% adapalene. To the contrary, as the district court found, 0.1% was the optimal concentration of adapalene at the time of the invention. Moreover, there is nothing in either of these references to indicate that increasing the concentration to 0.3% would be unproductive, nor do these articles indicate in any way that the side effects would be serious enough to dissuade the development of a 0.3% adapalene product. Therefore, the Verschoore 1991 and Alirezai 1996 articles fail to teach away from the claimed invention. The district court relied on the Allec 1997, Verschoore 1997, and Czernielewski 2001 articles to demonstrate that 0.1% was the standard or optimal concentration of adapalene for the treatment of acne. The court concluded that this fact teaches away from 0.3% adapalene compositions. It does not. "A reference does not teach away. . . if it. . . does not 'criticize, discredit, or otherwise discourage' investigation into the invention claimed." A teaching that a composition may be optimal or standard does not criticize, discredit, or otherwise discourage investigation into other compositions. Accordingly, the Allec 1997, Verschoore 1997, and Czernielewski 2001 articles do not teach away from the claimed invention. . . . Unexpected results that are probative of nonobviousness are those that are "different in kind and not merely in degree from the results of the prior art." Results which differ by percentages are differences in degree rather than kind, where the modification of the percentage is within the capabilities of one skilled in the art at the time. Thus, where an unexpected increase in efficacy is measured by a small percentage, as here, and the evidence indicates that skilled artisans were capable of adjusting the percentage, the result constitutes a difference in degree, not kind. So too, where an increase by a percentage is expected but not found, that result is also likely only a difference in degree. In this case, the expected result was an increase, by some percentage, in the prevalence of certain side effects. The failure of that percent increase to materialize, though unexpected, constitutes only a difference in degree from the prior art results. Accordingly, the comparable tolerability of 0.1% and 0.3% adapalene does not indicate that the asserted claims are nonobvious.

"Evidence of commercial success. . . is only significant if there is a nexus between the claimed invention and the commercial success." "When a patentee can demonstrate commercial success, usually shown by significant sales in a relevant market, and that the successful product is the invention disclosed and claimed in the patent, it is presumed that the commercial success is due to the patented invention." However, "if the feature that creates the commercial success was known in the prior art, the success is not pertinent.". . . The mere fact that generic pharmaceutical companies seek approval to market a generic version of a drug, without more, is not evidence of commercial success that speaks to the nonobviousness of patent claims. Plainly, Tolmar believes that it can make a profit selling a generic version of the claimed invention. This is likely true in all Hatch-Waxman cases, if not all patent cases generally. However, that fact tells us very little about the level of commercial success of the patented invention relative to the prior art or the extent to which the commercial success of the branded drug is "due to the merits of the claimed invention beyond what was readily available in the prior art." As such, it does not support a finding of nonobviousness. . . .

"Commercial success is relevant because the law presumes an idea would successfully have been brought to market sooner, in response to market forces, had the idea been obvious to persons skilled in the art." Where "market entry by others was precluded [due to blocking patents], the inference of nonobviousness of [the asserted claims], from evidence of commercial success, is weak." This principle applies forcefully to the present case.