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Federal Circuit Review - February 2019

Tuesday, March 12, 2019
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Federal Circuit Review - February 2019

PTAB May Invalidate Claims on Reconsideration Based on Grounds Raised in the Institution Decision that Were Not Originally Instituted

In AC Technologies S.A., V. Amazon.Com, Inc., Blizzard Entertainment, Inc., Appeal No. 2018-1433, the Federal Circuit held that the PTAB correctly invalidated claims on reconsideration, based on a ground raised in the instituted petition that was not addressed in the final written decision.  

Amazon and Blizzard petitioned for IPR of a patent owned by AC.  The petition presented three grounds.  In ground 1, petitioners argued all claims were obvious if the claims were construed narrowly.  If the claims were construed broadly, petitioners argued some claims were anticipated (ground 2) and other claims were obvious (ground 3).  The PTAB adopted the broad construction, but instituted review only on grounds 1 and 2.  In the final written decision, the PTAB rejected ground 1 and adopted ground 2 based on the broad construction.  Petitioners requested rehearing by arguing that the PTAB should have considered ground 3.  The PTAB permitted additional discovery, granted the request for rehearing, and adopted ground 3.  Thus, the PTAB held all claims were invalid as anticipated or obvious under grounds 2 and 3.  AC appealed.  

The Federal Circuit affirmed.  In SAS v. Iancu, the Supreme Court held that if the PTAB institutes an IPR, it must issue a final written decision addressing all challenged claims.  The final written decision must also address all grounds of unpatentability raised by the petitioner.  Thus, not only did the PTAB properly grant reconsideration to consider ground 3, failing to do so would have been error.  The Federal Circuit also rejected AC’s due process challenge because the parties received adequate notice and had an opportunity to conduct additional discovery on ground 3.   

 


 

 PTAB Does Not Have an Obligation to Find Motivation to Combine When a Claim Is Determined to Be Invalid Under §103 Based on a Single Reference

In Realtime Data, LLC. v. Iancu, Appeal No. 2018-1154, the Federal Circuit held that the PTAB did not err in concluding a claim was invalid under §103 based on a single reference. 

Hewlett Packard (“HP”) sought inter partes review of a patent owned by Realtime Data, LLC. The patent at issue described a system and method for lossless data compression using dictionary encoding. HP alleged that the claims were obvious over a U.S. patent (“O’Brien”) in view of Nelson, a data compression textbook. HP argued that O’Brien disclosed all claim elements. Although O’Brien did not use the claim term “dictionary,” HP relied on Nelson to explain that a person of ordinary skill in the art would have recognized that the algorithm disclosed in O’Brien was a dictionary algorithm. The Board held that the claims would have been unpatentable under § 103 over O’Brien alone or, alternatively, in view of Nelson. Realtime appealed on two grounds: (1) that the Board erred in its determination that a person of ordinary skill would have been motivated to combine the teachings of O’Brien and Nelson, and (2) that the Board erred by failing to construe the “maintaining the dictionary” limitation and in finding that O’Brien disclosed the limitation. 

The Federal Circuit affirmed the Board’s findings. First, the Board had no obligation to find a motivation to combine the two references because the Board did not rely on Nelson for the disclosure of a particular element or teaching, instead finding that O’Brien alone disclosed all claim elements. HP’s primary argument relied on Nelson merely to explain that O’Brien’s algorithm was a dictionary algorithm, which Realtime conceded was correct. The Federal Circuit also rejected Realtime’s proposed construction of “maintaining the dictionary,” which attempted to add additional unstated elements to the claim term.  

 


 

 A Generic Pharmaceutical Company May Appeal a PTAB IPR Decision Even if the Company Could Not Maintain a Parallel Hatch-Waxman Lawsuit

In Amerigen Pharmaceuticals v. UCB Pharma GmbH, Appeal No. 2017-2596, the Federal Circuit held that a generic pharmaceutical company had standing to appeal the PTAB’s IPR decision, even though the generic pharmaceutical company would be incapable of maintaining a parallel Hatch-Waxman suit, because it demonstrated a controversy traceable to the patent and redressable by the Court.  

Mylan Pharmaceuticals sought inter partes review of claims in a patent owned by UCB Pharma GmbH (“UCB”) which relates to a compound called fesoterodine.  Fesoterodine is an antimuscarinic drug marketed as Toviaz® to treat urinary incontinence.  Mylan alleged that the claims were obvious based on prior art.  After institution, Amerigen joined as a party to the proceeding.  The Board held that the claims were patentable, and Amerigen appealed to the Federal Circuit. UCB moved to dismiss for lack of standing. 

The Federal Circuit considered the issue of standing, first noting that although the Federal Circuit has jurisdiction to review a final decision of the PTAB, an appellant must meet “the irreducible constitutional minimum of standing,” even if there is no such requirement to appear before the administrative agency being reviewed.  The Federal Circuit found that Amerigen had standing because the invalidation of UCB’s patent would advance the final approval and launch of Amerigen’s product.  

UCB argued that Amerigen lacked standing to appeal because the FDA would not approve Amerigen’s ANDA until the expiration of UCB’s patent in 2022, which was previously upheld in a separate suit in the District of Delaware.  Amerigen had initially filed a Paragraph IV certification against the patent, and Pfizer and UCB sued Amerigen for patent infringement in the District of Delaware.  In that case, Amerigen stipulated to infringement, and the district court held the patent was valid.  Amerigen waived its right to appeal, and the district court’s holding resulted in the conversion of Amerigen’s Paragraph IV certification to a Paragraph III certification.  Thus, the FDA will only approve Amerigen’s ANDA after the patent has expired; UCB contended that Amerigen was foreclosed from infringing the patent on this basis.

Amerigen responded by stating that it had secured tentative approval from the FDA, that the patent delays entry of its competing product, and that invalidating the claims of the patent would advance the launch of its product.  If the patent was held unpatentable through reversal of the Board’s decision, then UCB would have to notify the FDA that the patent may no longer be listed in the FDA’s Orange Book entry for Toviaz®.  The FDA would then remove the patent from the list “if there is no first applicant eligible for 180 day exclusivity based on Paragraph IV or after the 180 day exclusivity period of a first applicant based on that patent has expired or been extinguished.”  Amerigen represented that its ANDA had received tentative approval, and it would be able to obtain final approval for launch in 2019 if the patent was invalidated.  Thus, there was a three-year period in which Amerigen’s sales would be blocked by the patent.  The Federal Circuit agreed that Amerigen had a concrete economic interest in advancing the sale of its tentatively approved drug and that Amerigen had therefore demonstrated a controversy of sufficient immediacy and reality for Article III.  

UCB’s argument that Amerigen lacked standing was premised on the Hatch-Waxman Act. Under the Hatch-Waxman Act, a Paragraph IV certification is the fundamental jurisdictional basis for enabling parties to litigate Orange Book listed patents in Article III courts; without that basis there can be no injury in fact.  However, this case did not arise under the Hatch-Waxman Act.  Amerigen did not rely on a risk of infringement liability as a basis for injury.  Instead, Amerigen contended that the mere listing of the patent in the Orange Book inflicts concrete commercial injury redressable by the Court.   While the Federal Circuit found that Amerigen had standing, the Federal Circuit affirmed the Board’s finding that the claims were not obvious.  

 


 

 Federal Circuit Finds That Testing Outside the Critical Date May Not Trigger the Public Use Bar If Follow-Up After the Critical Date Is Required

In Barry v. Medtronic, Inc., Appeal No. 2017-2463, the Federal Circuit held that, under pre-AIA law, an invention may not be known to work for its intended purpose and therefore “ready for patenting” until it has been tested in a variety of settings. 

Dr. Barry sued Medtronic for infringing patents related to correcting spinal column anomalies such as scoliosis.  From 2002 to 2003, Dr. Barry developed a surgical tool that was the subject of the asserted patents.  In August and October 2003, he used the tool in three surgeries.  Dr. Barry had post-surgical visits with each patient—two visits in November 2003 and one in January 2004.  Dr. Barry filed for his patent on December 30, 2004, making December 30, 2003 the critical date for purposes of the public-use bar under pre-AIA law.  During trial, Medtronic asserted that Dr. Barry successfully used his invention and knew his invention worked before the critical date.  Dr. Barry argued that, although he used his invention in three surgeries, he did not know his invention would work until his last follow-up visit in January 2004.  The jury found for Dr. Barry.

The Federal Circuit affirmed, noting that substantial evidence supported the jury’s verdict. The Federal Circuit acknowledged that Dr. Barry knew he had successfully performed two surgeries before the critical date. But Dr. Barry did not determine his invention would work for its intended purpose until after his final follow-up visit, which was after the critical date.  The Federal Circuit held that an inventor may not know his invention works for its intended purpose until it has been tested in a variety of real-world settings.  Here, the three surgeries represented the three most common types of scoliosis.  Because each type of scoliosis represented a different setting in which Dr. Barry’s invention would operate, Dr. Barry did not know his invention would work for its intended purpose until he was sure it could treat all three common types of scoliosis.  

Chief Judge Prost dissented, writing that the decision improperly broadened the scope of “intended purpose.”  According to Chief Judge Prost, a patent’s intended purpose should be defined by the patent’s claims and specification. Chief Judge Prost believed the intended purpose was to adjust a patient’s vertebrae, which Dr. Barry achieved twice before the critical date.  Requiring a third successful surgery went beyond what was stated in the claims and specification. 

 

Meet the Knobbe Martens Attorneys

Federal Circuit Review - February 2019
Irfan Lateef brings a wide range of experiences to helping clients achieve their goals. He works tirelessly to provide the right result in litigation, negotiation, risk management,...
Federal Circuit Review - February 2019
Daniel Kiang is an associate in the firm's Orange County office, with a focus on patent litigation.  Daniel earned his J.D. from the UCLA School of Law in 2015, where he was a...
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