United States: PTAB Not Bound By Prior Court Decisions Upholding Exelon Patents

In Novartis v. Noven Pharmaceuticals, Inc., the Federal Circuit affirmed the USPTO Patent Trial and Appeal Board (PTAB) decisions invalidating certain claims of two Orange Book-listed Exelon patents. This decision has garnered attention because the patents previously were upheld by the U.S. District Court for the District of Delaware in a decision that also was affirmed by the Federal Circuit. The court blames Congress, not the PTAB, for these different outcomes.

The Exelon Patents At Issue

The patents at issue were U.S. Patent No. 6,316,023 and U.S. Patent No. 6,335,031, which are listed in the Orange Book for Novartis's Exelon® Patch (transdermal rivastigmine system), which is approved for the treatment of Alzheimer's Disease. Claim 1 of the '023 patent recites:

1. A pharmaceutical composition comprising 1 to 40 weight percent of (S)-N-ethyl-3-[(1-dimethylamino)ethyl]-N-methylphenyl carbamate in the form of a free base or acid addition salt, 0.01 to 0.5 weight percent of an antioxidant, and a diluent or carrier, wherein the weight percents are based on the total weight of the pharmaceutical composition.

The claims were found obvious over various combinations of references:

  • Claims 1–2, 4–5, and 7 of the '023 patent were found obvious over GB 2,203,040 ("Enz") and JP 59-184121 ("Sasaki") (J.A. 634–37)
  • Claim 8 of the '023 patent was found obvious over Enz, Sasaki, and two other references.
  • Claims 1–3, 7, 15–16, and 18 of the '031 patent were found obvious over Enz and Sasaki.

The Federal Circuit Decision

The Federal Circuit decision was authored by Judge Wallach and joined by Chief Judge Prost and Judge Stoll. The most interesting aspect of the decision addresses Novartis's arguments that the PTAB decisions were legally improper in view of the prior court decisions upholding the patents. In particular, Novartis relied on the following statement from In re Baxter International, Inc., 678 F.3d 1357, 1365 (Fed. Cir. 2012):

When a party who has lost in a court proceeding challenging a patent, from which no additional appeal is possible, provokes a reexamination in the PTO, using the same presentations and arguments, even with a more lenient standard of proof, the PTO ideally should not arrive at a different conclusion.

(Baxter related to an inter partes reexamination proceeding, and is discussed in this article.)

The Federal Circuit soundly rejected Novartis's arguments, under the following heading:

Prior Judicial Opinions Did Not Bind the PTAB

Although the Federal Circuit opinion first notes that Novartis's arguments fail on factual grounds because "the record here differed from that in the prior litigation," the court goes on to explain that even if that had not been the case, the PTAB would not have been bound by the previous court decisions, because of the different legal standards at play:

[E]ven if the record were the same, Novartis's argument would fail as a matter of law. The PTAB determined that a "petitioner in an inter partes review proves unpatentability by a preponderance of the evidence (see 35 U.S.C. § 316(e)) rather than by clear and convincing evidence[] as required in district court litigation," meaning that the PTAB properly may reach a different conclusion based on the same evidence.

The court cites the Supreme Court's discussion in Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2146 (2016), for its explanation of the statutory basis for the possibility of different outcomes:

A district court may find a patent claim to be valid, and the [USPTO] may later cancel that claim in its own review. . . . This possibility, however, has long been present in our patent system, which provides different tracks—one in the [USPTO] and one in the courts—for the review and adjudication of patent claims. As we have explained . . . , inter partes review imposes a different burden of proof on the challenger. These different evidentiary burdens mean that the possibility of inconsistent results is inherent to Congress'[s] regulatory design.

Turning back to Baxter, the Federal Circuit noted that the very next sentence after the one Novartis relied upon recognizes that the USPTO is not bound by prior court decisions:

However, the fact is that Congress has provided for a reexamination system that permits challenges to patents by third parties, even those who have lost in prior judicial proceedings.

Indeed, in Baxter the Federal Circuit upheld the USPTO decision invalidating patents in a reexamination proceeding that had been upheld in litigation.

Does § 315(b) Prevent A Second Bite At The Apple?

Although some may see this decision as giving infringement defendants a second bite at the apple, the IPR statute imposes time limits on when a party charged with infringement can challenge the patent in an IPR proceeding. Specifically, 35 USC § 315(b) imposes a one-year time limit for filing an IPR petition, measured from "the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent." Thus, a defendant in an infringement action must pursue an IPR before it knows whether its invalidity defenses will be successful in the litigation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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