May Federal Circuit Newsletter (Japanese)
May Federal Circuit Newsletter (Chinese)
Invoking the Hatch-Waxman Safe Harbor Does Not Necessarily Require Factual Development That Such Activities Fall Within its Scope
In Jazz Pharmaceuticals, Inc. v. Avadel Cns Pharmaceuticals, LLC, Appeal No. 24-2274, the Federal Circuit held that injunctions prohibiting the initiation of new clinical trials for paper NDA drugs before patent expiration violate the Hatch-Waxman Act’s safe harbor provision and are therefore “unlawfully broad.”
Jazz Pharmaceuticals, the maker of FDA-approved drugs Xywav® and Xyrem® for treating Idiopathic Hypersomnia (“IH”), sued competitor Avadel, which filed a paper NDA for its once-nightly IH treatment Lumryz. Jazz asserted the ’782 patent against Avadel, even though Xywav and Xyrem did not practice the patent. After finding the ’782 patent valid and infringed, the Delaware District Court issued a permanent injunction preventing Avadel from (1) initiating new clinical trials for Lumryz, (2) offering open-label extensions (OLEs) in ongoing clinical trials, and (3) applying for FDA approval of Lumryz for IH.
Avadel appealed, and the Federal Circuit reversed-in-part, vacated-in-part, and remanded. On point (1), the court held that the injunction was unlawful on its face because 35 U.S.C. § 271(e)(3) specifically prohibits injunctions on this kind of activity—namely, making, using, or selling a drug solely for uses reasonably related to developing and submitting information to the FDA. While Avadel had not factually developed its reliance on the safe harbor defense (e.g., that each use of Lumryz in each future clinical trial qualifies for safe harbor protection), the Federal Circuit ruled in its favor because the challenge was purely a legal invocation of the safe harbor requiring no factual development.
On point (2), the Federal Circuit reversed and remanded for the district court to consider whether Avadel’s use of an OLE period falls within the safe harbor and whether the eBay factors for injunctive relief are satisfied. On point (3), the court vacated and remanded to determine whether Avadel’s paper NDA filing for Lumryz constituted infringement under § 271(e)(2). If so, injunctive relief would be improper because § 271(e)(4) does not permit courts to enjoin an adjudicated infringer from applying for additional FDA approvals of a patented drug. On the other hand, if the filing was not an act of infringement, then the district court was to consider the eBay factors before imposing any injunction.
Finding Common Ground? — Federal Circuit Clarifies IPR Estoppel
In Ingenico Inc. v. Ioengine, LLC, Appeal No. 23-1367, the Federal Circuit held that IPR estoppel does not preclude reliance on public-use evidence that is substantively identical to printed publications that could have been raised in the IPR.
Ingenico filed a declaratory judgment action against IOENGINE, alleging invalidity. Before trial, Ingenico also filed IPR petitions challenging the validity of IOENGINE’s patents, which led to final written decisions. At trial, Ingenico introduced evidence of prior art systems, alleging invalidity based on public use. The jury found the claims invalid as anticipated and obvious.
On appeal, IOENGINE argued Ingenico should have been estopped from introducing its public-use evidence. IOENGINE argued that Ingenico’s prior art systems were cumulative of substantively identical printed publications that reasonably could have been raised in IPR, including the system’s Readme instruction document. The Federal Circuit disagreed. The court noted that IPR estoppel prohibits a petitioner from asserting grounds that were raised or reasonably could have been raised in an IPR. The Federal Circuit held that “grounds” in this context refers to theories of invalidity rather than the prior art itself. Because theories of invalidity based in part on a public use cannot be raised in an IPR, they are not subject to estoppel in district court. Accordingly, the Federal Circuit affirmed the district court’s decision.
Speculative Plans Are Insufficient to Establish Standing in PTAB Appeals
In Incyte Corporation v. Sun Pharmaceutical Industries, Inc. , Appeal No. 25-1162, the Federal Circuit held that speculative plans for potentially infringing activity are insufficient to establish Article III standing to appeal the Board’s decision.
Incyte filed a petition for post-grant review of Sun’s patent covering a compound for treating hair loss. The PTAB found Incyte failed to prove unpatentability. Incyte appealed, and argued that it had standing based on potential infringement liability and the competitor standing doctrine.
The Federal Circuit held Incyte failed to establish an injury in fact sufficient to confer standing. Regarding potential infringement liability, the court found that Incyte failed to demonstrate concrete plans to develop and market a product that would create a substantial risk of future infringement. Rather, Incyte’s development plans were too speculative. For example, the amount of money spent was small and was spread across several related products, some of which would not create a risk of infringement, and Incyte did not identify what portion of its allocated funding was directed toward developing a product covered by the claims. The court also rejected Incyte’s competitor-standing argument because that doctrine also requires a showing of concrete injury.
Reissue Applications Are Bound by the Scope of the Claims as Written, Not as Intended
IN RE KOSTIC, Appeal No. 23-1437, the Federal Circuit held that when considering whether a reissue claim broadens the scope of the original patent, the PTAB determines the actual scope of the original claim, not the scope the inventors intended.
Kostic filed a reissue application for their patent directed to a method of selling online advertising, which had issued more than two years before. Independent claim 1 of the patent recited a step of conducting a trial process, and dependent claim 3 recited the method of claim 1 “without a trial process.” The reissue application attempted to rewrite dependent claim 3 in independent form, making the trial process optional. The examiner rejected the reissue for impermissibly broadening the claims beyond the two-year limit. The PTAB affirmed the examiner’s rejection, and Kostic appealed.
On appeal, Kostic argued that the proper inquiry was not whether the scope of the reissue claim was broader than the actual scope of the original claim, but whether the scope of the reissue claim was broader than the intended scope of the original claim. The Federal Circuit disagreed, holding that the claims are to be construed as written, not as the patentee intended. Because reissue claim 3, which recited a trial process as optional, would be broader than the original claims, which required a trial process, the reissue application was barred.
Running In Place: When a Running Royalty is Actually a Lump Sum License
In Ecofactor, Inc. v. Google LLC, Appeal No. 23-1101, the Federal Circuit held that a district court’s denial of a motion for a new trial on damages was an abuse of discretion because the expert opinion was not based upon sufficient facts or data.
EcoFactor sued Google for infringement of their patent relying on an expert opinion to calculate the damages. The expert opinion used the “willing licensor-willing licensee” framework in combination with three licenses that EcoFactor had previously negotiated to calculate a hypothetical running-royalty agreement as the basis for damages and testimony from EcoFactor’s CEO. Upon a jury finding in favor of EcoFactor, Google filed a motion for a new trial on damages, under the theory that EcoFactor’s expert testimony should have been excluded because it was unreliable. The district court denied this motion.
On appeal, the Federal Circuit held that district court abused its discretion in denying a new trial on damages because the existing licenses and CEO testimony that formed the basis of the expert testimony were insufficient. The existing licenses could not be a sufficient basis for the testimony because (1) there is a fundamental difference between a running-royalty agreement and a lump sum license, (2) the unilateral assertion of a running-royalty agreement in the existing licenses was contradicted within each license, and (3) the existing licenses were lump sum licenses. The Federal Circuit further explained that testimony from EcoFactor’s CEO could not provide a factual basis for the expert testimony, because it amounted to an unsupported assertion from an interested party due to the absence of evidence. The Federal Circuit further found that the admission of the expert testimony was not a harmless error. Accordingly, the Federal Circuit reversed the district court’s denial of Google’s motion for a new trial and remanded the case for a new trial on damages.
“Enough” is Enough: “Between 1 and 10” Includes Slightly More than 1
In Sigray, Inc. v. Carl Zeiss X-Ray Microscopy, Inc., Appeal No. 23-2211, the Federal Circuit held that magnification “between 1 and 10 times” includes miniscule, even undetectable, amounts of magnification.
Sigray, Inc. requested IPR of a patent owned by Carl Zeiss X-Ray Microscopy, Inc. directed to X-ray imaging systems. The independent claim required “magnification … between 1 and 10 times.” The Board determined that the prior art did not inherently disclose magnification within the claimed range, finding that Sigray failed to show that the X-ray beam “diverges enough” to result in the claimed magnification. The Board therefore found the challenged claims not anticipated or obvious. Sigray appealed.
The Federal Circuit held that the Board erred in implicitly construing “magnification … between 1 and 10 times” as excluding miniscule levels of magnification. Because the Board stated that Sigray failed to show “enough” divergence, and because it was undisputed that any divergence would result in some magnification, the Board must have implicitly construed the claim to require a certain amount of magnification. The Federal Circuit held that the implicit construction was erroneous because the plain meaning of “between 1 and 10 times” included miniscule and even undetectable magnification and nothing required another meaning. Applying the proper claim construction, the Federal Circuit held that the evidence compelled the conclusion that the prior art inherently disclosed some miniscule amount of magnification. The Federal Circuit therefore reversed the Board’s determination certain claims were not anticipated and remanded for further proceedings.
