Post-Grant Proceedings

As a special feature of our blog, we include special guest postings by experts, clients, and other professionals—please enjoy this blog entry which includes guest author Rolf J. Haag.[1]

It has been impossible to miss the surreal volatility in Bitcoin’s per unit price—having gone from $1,000 in January 2017 to almost $20,000 (~$750B mkt. cap) toward the end of last year and retracting to under $8,000 (~$500B mkt. cap) in February 2018. Whether these G-LOC-inducing price undulations are reflective of a radical paradigm shift in the mode of financial transactions, history’s greatest pyramid scheme, or some mix thereof, remains to be seen. Continue Reading Will Blockchain Revolutionize Bio/Pharma R&D, Tech Transfer, and IP?

In an unprecedented move by the U.S. Patent and Trademark Office (USPTO), the Patent Trials and Appeals Board (PTAB) has permitted the filing of amicus briefs on whether the Saint Regis Mohawk Tribe (“Tribe”) should be permitted to terminate the inter partes review of Allergan’s patents contested in IPR2016-00127, IPR2016-01128, IPR2016-01129, IPR2016-01130, IPR2016-01131, and IPR2016-01132. Allergan assigned the patents challenged in these IPRs to the Tribe, while retaining an exclusive license in exchange for ongoing payments. As a sovereign entity, the Tribe seeks to terminate the IPR challenges of these patents, a move which the PTAB had ruled in 2016 shielded the University of Florida Research Foundation as a sovereign entity from IPRs. See Covidien LP v University of Florida Research Foundation Inc., IPR2016-01274, Paper 21 (PTAB Jan. 25, 2016). Amicus briefs of no more than 15 pages are due to be filed by December 1, 2017, and the Petitioners and Tribe are each authorized to file a single response to any amicus brief by December 15, 2017.

This maneuvering has caught the attention of many, including members of Congress and the district court specifically addressing the validity of these patents. In response to a bipartisan committee investigating the Allergan-Tribe deal, Senator McCaskill has already drafted a bill to block tribal claims of sovereign immunity, which could otherwise preclude USPTO review of patents assigned to tribes. Court of Appeals for the Federal Circuit Judge William Bryson, sitting by “designation” in the Eastern District Court of Texas, expressed concerned that Allergan sought to “rent” sovereign immunity from the Tribe. On the other hand, heralded as an innovative defense, patent attorneys now seek such a defense to patent challenges before the USPTO. The Saint Regis Mohawk Tribe has reportedly already taken ownership of patents from SRC Labs and is in discussion with another technology company.

Interestingly, the district court under Judge Bryson recently found four of the six patents invalid, a decision which will likely be appealed to the CAFC. However, the PTAB nevertheless will need to answer, inter alia, the question of  whether the Tribe’s right as a sovereign immunity will shield the Allergan patents from IPRs. Due to additional parties joining as Petitioner and the complicated issues surrounding this challenge, the PTAB has extended a deadline to render its final decision in the IPR from December 8, 2016, to April 6, 2018.

The America Invents Act (“AIA”) provides for post grant challenges of U.S. patents in the Patent Trial and Appeal Board (“PTAB”) of the U.S. Patent and Trademark Office. One type of AIA proceeding, Inter Partes Review (“IPR”), came into effect in September 2012, and provides a process for relatively quick determination of invalidity of challenged patent claims based on published prior art. [1] IPR decisions rendered in the past five years have created a body of law addressing a variety of issues related to invalidity challenges before the PTAB. In a recent IPR proceeding, a novel strategy has arisen that posts an interesting question of first impression, whether the assignment of a patent involved in an IPR proceeding to a U.S. Indian tribe can avoid an IPR proceeding based on a sovereign immunity defense. The present blog post summarizes the new issue that the PTAB will be required to decide in the IPR. Continue Reading Indian Tribal Sovereign Immunity Asserted in an IPR

shutterstock_350539772In a recent case involving Apotex’s proposed biosimilar product to Amgen’s Neulasta® (pegfilgrastim), Amgen sought a preliminary injunction to enforce the Biologic Price Competition and Innovation Act (BPCIA) provision that requires an applicant to give notice 180 days before marketing an FDA-licensed product.1 In Amgen v. Sandoz, a divided Federal Circuit held that “the 180-day period runs from post-licensure notice.”2 In that case, the biosimilar applicant defaulted on the statutory process for exchanging patent information and channeling patent litigation (“information exchange”) required by 42 U.S.C. § 262(l), by not providing the reference product sponsor with a copy of the biosimilar application, as required by 42 U.S.C. § 262(l)(2)(A).

In the instant case, Apotex argued that the commercial marketing provision of the BPCIA was not mandatory because it did engage in the information exchange.3 Apotex filed a biologics application for Amgen’s Neulasta® in October 2014, and the FDA accepted the application for review on December 15, 2014.4 Apotex and Amgen engaged in the required information exchange, during which Apotex provided notice of future commercial marketing pursuant to paragraph (l)(8)(A) of the BPCIA, even though Apotex lacked an FDA license.5 In October 2015, Amgen asked the district court to issue a preliminary injunction that would require Apotex to provide paragraph (l)(8)(A) notice “if an when it receives a license, and to delay any commercial marketing from that notice.”6 The district court agreed with Amgen, and granted a preliminary injunction.7

On appeal, a unanimous Federal Circuit affirmed the district court ruling, and determined that the notice provision is mandatory regardless of whether the applicant provides the paragraph (2)(A) notice that begins the information-exchange process.8 The court also rejected Apotex’s argument that its decision would give reference product sponsors 12.5 years of exclusivity, rather than the 12 years envisioned by the statute.9

The court stated:

[I]t is implicit in the Biologics Act that any such delay beyond 12 years should occur less and less as time goes by. Doubtless, there will be some exclusivity periods beyond 12 years in the early years of the Biologics Act, as biosimilars are introduced for reference products licensed well before the Act was adopted in 2010. But as time passes, more and more of the reference products will be newer, and a biosimilar-product applicant, entitled to file an application a mere four years after licensure of the reference product … can seek approval long before the 12-year exclusivity period is up.10

The court concluded that the purpose of paragraph (8)(A) is “to ensure that, starting from when the applicant’s product, uses, and processes are fixed by the license, the necessary decision-making regarding further patent litigation is not conducted under time pressure that will impair its fairness and accuracy,” covers applicants that file paragraph (2)(A) notices as well as those who do not.11

1 42 U.S.C. § 262(l)(8)(A).
2 Amgen v. Sandoz Inc., 794 F.3d 1347, 1357-68 (Fed. Cir. 2015).
3 Amgen v. Apotex Inc., No. 16-1308, slip op. at 4 (Fed. Cir. 2016).
4 Id. at 11.
5 Id. at 11-12
6 Id. at 13.
7 Id. at 14
8 See id. at 15.
9 See id. at 16.
10 Id. at 17.
11 Id.

shutterstock_533480197On May 9, 2016, the U.S. Court of Appeals for the Federal Circuit upheld the U.S. Patent and Trademark Office (PTO) Patent Trial and Appeal Board (PTAB) inter partes review determination that claims 1-6 and 8 of U.S Patent Number 7,566,537 (the ‘537 patent) were not invalid for obviousness under 35 U.S.C. § 103.1

Intelligent Bio-Systems (IBS) filed a revised petition requesting inter partes of review of some of the claims of the ‘537 patent, owned by Illumina Cambridge Ltd. (Illumina) on August 30, 2013, alleging the claims were invalid as obvious under section 103 in view of certain prior art.2 The ‘537 patent relates to the sequencing by synthesis (SBS) method of labelling nucleotide bases. Claim 1, the only independent claim under review, states:

1. A method of labeling a nucleic acid molecule, the method comprising incorporating into the nucleic acid molecule a nucleotide or nucleoside molecule, wherein the nucleotide or nucleoside molecule has a base that is linked to a detectable label via a cleavable linker and the nucleotide or nucleoside molecule has a ribose or deoxyribose sugar moiety, wherein the ribose or deoxyribose sugar moiety comprises a protecting group attached via the 2′ or 3′ oxygen atom, and said protecting group can be modified or removed to expose a 3′ OH group and the protecting group comprises an azido group.3

There were three prior art references at issue, Ju and Tsien, which PTAB determined “describe[] a process of labeling, and ultimately sequencing, a nucleic acid molecule,” by a polymerase, but did not “disclose protecting a protecting group that comprises an azido group.”4 Zavgorodny, however, taught “that an azidomethyl moiety is a suitable protecting group for … precisely the position requiring protecting in Ju’s [or Tsien’s] process.”5

Before PTAB, Illumina argued that “an ordinary artisan would not expect the azidomethyl group of Zavgorodny to meet the specific criteria or Tsien or Ju,” in particular, the “quantitative and rapid removal [essentially 100% removal]” required by Tsien.6 The Board agreed, deciding that IBS failed to prove the claims were obvious under the prior art.7 IBS challenged the Board’s decision.8

Before the Federal Circuit, IBS argued that the Board erred by imposing a quantitative cleavage requirement into the claims “through the reasonable expectation of success analysis.”9

The Federal Circuit stated:

The reasonable expectation of success requirement refers to the likelihood of success in combining references to meet the limitations of the claimed invention.

The Board seemed to believe that the “reasonable expectation of success” inquiry looked to whether one would reasonably expect the prior art references to operate as those references intended once combined. That is not the correct inquiry—one must have a motivation to combine accompanied by a reasonable expectation of achieving what is claimed in the patent-at-issue. The Board’s reliance on the absence of a reasonable expectation of success was, thus, improper.10

However, the Federal Circuit agreed with the Board’s ultimate decision of nonobviousness.11

[W]hile the Board conflated two different legal concepts—reasonable expectation of success and motivation to combine—it nevertheless made sufficient factual findings to support its judgment that the claims at issue are not invalid. It was IBS’s burden to demonstrate both “that a skilled artisan would have been motivated to combine the teachings of the prior art references to achieve the claimed invention, and that the skilled artisan would have had a reasonable expectation of success in doing so.

Despite the loose language employed by the Board, its factual findings support its conclusion that the claims are not invalid.12

Secondarily, because IBS presented a new argument in its reply brief, the Board refused to consider the brief and accompanying expert declaration “because it found that IBS’s reply was improper under two regulations: first under 37 C.F.R. § 42.23(b), which provides that a ‘reply may only respond to arguments raided in the corresponding opposition or patent owner response,’ and then under 37 C.F.R. § 42.6(a)(3), which states that ‘[a]rguments must not be incorporated by reference from one document into another document.’”13

The Federal Circuit found that the “reply brief and accompanying declaration exceeded the scope of the reply under § 42.23(b), and therefore, that the Board did not abuse its discretion in excluding those documents.”14 Thus, the court found that it did not need to reach a determination as to whether the brief complied with § 42.6(a)(3).15

The Federal Circuit emphasized that:

Unlike district court litigation—where parties have greater freedom to revise and develop their arguments over time and in response to newly discovered material—the expedited nature of IPRs bring with it an obligation for petitioners to make their case in their petition to institute. While the Board’s requirements are strict ones, they are requirements of which petitioners are aware when they seek to institute an IPR.16

1 Intelligent Bio-Systems, Inc. v. Illumina Cambridge Ltd., No. 15-1693, slip op. at 2 (Fed. Cir. May 9, 2016).
2 Id.
3 Id. at 4. emphases in original
4 Id. at 5.
5 Id.
6 Id. at 7.
7 Id.
8 Id. at 10.
9 Id. at 12.
10 Id.
11 Id. at 12.
12 Id. at 13.
13 Id. at 10.
14 Id. at 17.
15 Id.
16 Id. at 16.

shutterstock_553962622On April 26, 2016, the Federal Circuit denied a petition for rehearing en banc, filed by Merck and Cie. The Federal Circuit maintained that the “substantial evidence” review standard applies for an appeal from an IPR proceeding.1 Judge O’Malley, with whom Judges Wallach and Stoll concurred in the denial of the petition, stated that in light of §§ 7 and 144 of Title 35, “we review Board decisions ‘on the record of an agency hearing provided by statute,’ and that we should therefore review Board fact-finding for ‘substantial evidence.’”2 The court explained its decision to deny the petition, “[i]n light of In re Gartside, [it] has reviewed all of the Board’s factual findings including those in IPRs, for substantial evidence.”3

Judge O’Malley, stated that the substantial evidence standard of review is seemingly inconsistent with the purpose and content of the America Invents Act (“AIA”). Indeed, according to Judge O’Malley, “[t]o the extent IPR proceedings were intended to replace district court litigation, it would make sense for this court to review factual findings by the Board in these new IPR proceedings under the same standard we employ when reviewing factual findings of district judges – for clear error.”4 However, Judge O’Malley recognized that the court is bound by the Supreme Court precedent in Dickinson v. Zurko5, and its own precedent in In re Gartside.6 Before Dickinson, the Federal Circuit had a “settled practice of reviewing factual findings of the board’s patentability determinations for clear error.”7 In Dickinson, the Supreme Court disagreed, “conclud[ing] that [5U.S.C. § 706 of the APA] does apply [to Board findings], and the Federal Circuit must use the framework set forth in that section.”8

The opinion further stated that the failure to change the standard of review at Federal Circuit is inconsistent with what Congress sought to accomplish by creating IPR proceedings;9 and, unless and until the Congress or the Supreme Court sees fit to expressly change the standard of review, the Federal Court will continue to review factual findings of the Board for substantial evidence.10 Judge O’Malley explained “when authorizing IPR proceedings under the AIA . . . Congress viewed IPR proceedings as cost-efficient substitutes for litigation in federal district courts” and, therefore, it makes sense for the Federal Circuit to review factual findings by PTAB under the AIA with the same standard employed when reviewing factual findings of district judges.11 However, the Court acknowledged, “[b]ecause Congress failed to expressly change the standard of review employed by this court in reviewing Board decisions when it created IPR proceedings via the AIA, we are not free to do so now.”12

The opinion also distinguished inter partes reexamination (which were reviewed under the standard of substantial evidence) from IPR proceedings, and explained that “Congress … enacted substantive and procedural changes that brought IPR proceedings in line with district court in meaningful ways.”13

Judge Newman, consistent with her dissent in the December 2015 decision,14 reiterated that (i) the precedence does not prohibit objective review of PTAB decisions15, (ii) the substantial evidence standard does not conform to the statutory plan,16 and (iii) the PTAB proceeding is a trial between private parties, and requires commensurate review.17 The dissent further stated that the purpose of AIA to provide a substitute for district court proceedings is “thwarted” if on appeal the Federal Circuit simply looks for substitutional evidence on the side of the PTAB decision.18

Given that (i) at least four Federal Circuit judges do not seem to think that the Court’s application of, and failure to change, the substantial evidence standard of review is consistent with the AIA, and (ii) three of the four Judges clearly call on Congress and/or the Supreme Court to address the issue of standard of review to be applied by the Federal Circuit judges, it will be interesting to see whether Merck pursues its petition to alter the standard of review to the Supreme Court.

1 Merck & Cie v. Gnosis S.P.A. et al., Case No. 2014-1779 (Fed. Cir., Apr. 26, 2016).
2 Id. at 3.
3 Id.
4 Id. at 4.
5 Dickinson v. Zurko, 527 U.S. 150 (1999).
6 In re Gartside, 203 F.3d 1305, 1313 (Fed. Cir. 2000).
7 In re Zurko, 142 F.3d 1447, 1458 (Fed. Cir. 1998) (en banc).
8 Dickenson, 527 U.S. at 152.
9 Merck & Cie at 6.
10 Id. at 7.
11 Merck & Cie at 3.
12 Id. at 2.
13 Id. at 5.
14 Merck & Cie v. Gnosis S.p.A., 808 F.3d 829 (Fed. Cir. 2015).
15 Merck & Cie (Fed. Cir., Apr. 26, 2016) at 11-12.
16 Id. at 12-14.
17 Id. at 14-15.
18 Id. at 15.

shutterstock_521023699On April 1, 2016, the U.S. Patent and Trademark Office (USPTO) released a number of amendments to the final rules of trial practices for post-issuance proceedings, i.e., inter parties review, post-grant review, the transitional program for covered business method patents, and derivation proceedings to be effective on May 2, 2016.1 In mid 2014, the USPTO had solicited input from practitioners on ways to make the trial proceedings more effective and fair. The final rules released on April 1, 2016 result from rulemaking related to some of the input. This article discusses some of the changes below.

One change to the rules that applies to all phases of these post-issuance proceedings concerns the duty of candor rule, 37 CFR 42.11, specifically requiring a Rule 11-type certification for papers filed, or later advocated, wherein the person signing the papers must attest to compliance with 37 CFR 11.18(b)(2). For example, the position advanced in the paper filed is warranted by law and not for any improper purpose. Specifically requiring compliance with 37 CFR 11.18(b)(2) could be viewed as redundant because practitioners and parties have been bound by 37 CFR 11.18(b)(2) even before the current change to 37 CFR 42.11. However, it should be noted that what was changed is more than just an explicit requirement of Rule 11-type certification. Rule 42.11 has also been amended to allow the Board to impose sanction for any violation of Rule 42.11, and a party may move for sanction after receiving authorization from the Board, which will authorize the motion if the alleged violation has not been timely cured. However, based on past USPTO experiences, sanctions are expected to be infrequent.2

Currently, claim construction is performed by the Patent Trial and Appeal Board (PTAB) with the broadest reasonable interpretation (BRI).3 However, on April 1, 2016, 37 CFR 42.100(b), 42.200(b) and 42.300(b) were amended to allow either party to move for claim construction using the standard set forth in Phillips4 if the movant certifies that the patent will expire within 18 months from the entry of the Notice of Filing Date Accorded to Petition. The motion must be filed within 30 days from the filing of the petition because the USPTO prefers to resolve the issue of which claim construction standard is applicable before the institution decision.5 PTAB will use BRI in claim construction unless the motion is granted.

The PTAB’s use of BRI was affirmed by the Federal Circuit in Cuozzo, but the Supreme Court will decide on the issue within the next several months.6 If the Supreme Court affirms the use of BRI, whether a party should move for the Phillips-type standard over the BRI has to be analyzed on a case-by-case basis. If the claims are constructed with the potentially narrower Phillips-type standard, rather than BRI, invalidation of the claims based on prior art could be less likely, but the petitioner could have a better non-infringement position in court in case the post-issuance proceeding fails to invalidate all the claims that cover the petitioner’s product or activity. For the patent owner, other than the invalidation potential versus infringement potential discussed above, the potentially narrower Phillips-type standard may cause the product or activity of a licensee to become not covered by a license resulting in less royalty income, which the patent owner may rely upon. Thus, both the petitioner and patent owner need to analyze the pros and cons to determine whether it should file the motion for the Phillips-type standard.

On April 1, 2016, 37 CFR 42.24 was amended by replacing the page limits with word counts in petitions, patent owner preliminary responses, patent owner responses and replies to patent owner responses. However, motions including motions to amend, and replies to oppositions are still subjected to page limits. The USPTO replaced the page limits with word counts to gain administrative efficiencies.7 The use of word counts instead of page limits could improve advocacy by encouraging more concise major briefings. Word counts are also a more precise way, than page numbers, to determine the volume of written information presented in the major briefings that the PTAB panel has to review.

The April 1, 2016 final rules also allow new testimonial evidence to be submitted in the patent owner preliminary response.8 However, in the event the new testimonial evidence would create a genuine issue of material fact, the issue will be resolved in favor of the petitioner only in the stage of institution decision.9 Nevertheless, the patent owner should consider presenting the new testimonial evidence, if available, in the preliminary response because the evidence may help convince the PTAB panel to not institute the post-issuance review if there is no genuine issue of material fact. Even if the panel is not convinced by the new evidence, it would be useful for the patent owner to get a reading from the panel in the Decision for Institution so that the patent owner could decide what other more convincing evidence should be presented in the patent owner response.

Some of these changes would be expected to require adjustments. Strategies used in the past may need to be revised. Nevertheless, hopefully some practitioners would find that at least some of the changes would make the post-issuance proceedings more effective and fair.

1 Amendments to the Rules of Practice for Trials Before the Patent and Trial and Appeal Board, 81 FR 18750 (April 1, 2016).
2 Id. at 18760.
3 Id. at 18752.
4 Phillips v. AWH Corp., 415 F3d 1303, 1314-1323 (Fed. Cir. 2005) (en banc).
5 81 FR at 18753.
6 In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1278 (Fed. Cir. 2015), cert. granted sub nom., Cuozzo Speed Techs., LLC. v. Lee, 136 S. Ct. 890 (mem.) (2016).
7 81 FR at 18761.
8 Id. at 18755.
9 Id.

shutterstock_153244313The PTAB recently deemed as precedential two decisions that further clarify when a petitioner can have a second chance to challenge a patent before the Board. In order for a PTAB decision to be designated precedential, it must be nominated – anyone can nominate, including the public. Then the chief judge, the director, and a majority of the PTAB judges who vote on it must agree that opinion should be precedential. Because of the length of the process, decisions are usually retroactively designated as precedential.

The precedential decisions explain that (1) estoppel at the PTAB applies on a claim-by-claim basis and only to those claims that have resulted in a final written decision (CBM2014-00176), and (2) a second complaint does not restart the one year clock to file a petition when a first complaint was dismissed both with and without prejudice, at least under the facts of this particular IPR (IPR2015-00937).

In CBM2014-00176,1 the Petitioner requested review of claims 1-42 of U.S. 6,950,807. The PTAB instituted a trial as to a subset of the challenged claims (claims 1-9, 13, and 34-42) and issued a Final Written Decision finding those claims unpatentable.

The same Petitioner requested review of the remaining claims of the same patent, (i.e., claims 10-12, and 14-33, which were not the subject of the first CBM), resulting in the institution of this case.
The Patent Owner moved for termination of the second CBM, arguing that a final decision in a post grant proceeding applies to “any patent claim challenged by the petitioner,” included those claims that were challenged but not instituted in the first CBM. If the PTAB took this approach, the Petitioner would be estopped from challenging any claims of the ‘807 before the Board.

The PTAB, however, decided that “estoppel is applied on a claim-by-claim basis” and thus, estoppel does not apply to non-instituted claims because those claims did not result in a final written decision. The PTAB therefore denied the Patent Owner’s motion for termination of the second CBM.

In IPR2015-00937,2 at issue was whether “a complaint” in 35 U.S.C. § 315(b) refers to a first complaint that was dismissed both with and without prejudice. In other words, the PTAB ruled on whether the deadline under § 315(b) barring an IPR from being filed more than one year after the date of service of a complaint applies to the first complaint, or whether the clock restarts after service of the second complaint.

The Petitioner (LG) was served with a complaint alleging infringement of U.S. 6,513,088 on two separate occasions: January 11, 2008 and October 16, 2014. The first complaint was dismissed both with and without prejudice. Within one year of receiving the second complaint, the Petitioner requested inter partes review of the ‘088 patent stating that, even though the petition was filed one year after the first complaint was served: (1) the petition was filed within one year of receiving “a complaint” thereby satisfying the requirement of § 315(b); (2) after the dismissal of the first lawsuit, both parties were left in the same position as though the first complaint had never been filed, and (3) equitable and public policy consideration favor a “broad” interpretation of § 315(b).

The PTAB interpreted the statutory timeline to end one year after the first complaint was filed because the parties were not left as though the action resulting from the first complaint had never been brought. The PTAB reasoned that the parties were not, in fact, in the same position after settlement of the 2008 complaint because the parties were prohibited from pursuing their prior claims with respect to certain products. Further, the parties were obligated to uphold the terms of their settlement agreement. Also, the PTAB found insufficient equitable or public policy reasons to allow LG a chance at filing an IPR, for example, LG still has the option to challenge the patent at the PTO in an ex parte reexamination.

1 Westlake Services, LLC v. Credit Acceptance Corp., CBM2014-00176, Paper 28 (PTAB May 14, 2015).
2 LG Electronics, Inc. v. Mondis Technology LTD., IPR2015-00937, Paper 8 (PTAB September 17, 2015).

shutterstock_464657279In Ethicon Endo-Surgery, Inc. v. Covidien LP, a majority Federal Circuit held that neither the relevant statute nor the Constitution precludes the same Patent Trial and Appeal Board panel (“Board”) from making a decision to institute an inter partes review and from also making the final determination on the validity of the claims at issue.1

Covidien filed a petition with the U.S. Patent and Trademark Office on March 25, 2013, requesting inter partes review of claims 1–14 of U.S. patent number 8,317,070 (“the ‘070 patent”) on the ground that the claims would have been obvious over the prior art. The Board granted the petition on August 26, 2013.2 In a June 9, 2014, final decision, the same panel of the Board that instituted the inter partes review rejected all of Ethicon’s arguments and found all of the challenged claims of the ’070 patent obvious under 35 U.S.C. § 103.3

Ethicon did not challenge the institution decision, but rather alleged a defect in the final decision. It argued that the final decision was invalid because it was made by the same panel that instituted inter partes review. According to Ethicon, having the same panel make the decision to institute and then later decide the merits of the inter partes review raises “serious due process concerns.”4

The Federal Circuit in confirming that it had jurisdiction, cited its recent holding in In re Cuozzo Speed Techs.5 According to the Federal Circuit, Section 314(d) provides that “[t]he determination by the Director whether to institute an inter partes review shall be final and nonappealable. Section 314(d) here plainly ‘prohibits review of the decision to institute [inter partes review] even after a final decision.’ It does not, however, preclude review of the final decision.”6

Turning to the merits, the Federal Circuit, citing several precedential cases from multiple courts including the U.S. Supreme Court, determined that there was no due process or statutory concerns in combining the functions of initial decision and final disposition in the same Board panel. According to the majority, “the inter partes review procedure is directly analogous to a district court determining whether there is “a likelihood of success on the merits” and then later deciding the merits of a case.7

The majority also disagreed with Ethicon’s argument that because Congress (1) specifically gave the Director the power to institute, (2) did not explicitly give the Director authority to delegate the institution decision to the Board, and (3) gave the Board the power to make the final determination, Congress intended to keep the functions of institution and final decision separate. According to the majority,

there is nothing in the statute or legislative history of the statute indicating a concern with separating the functions of initiation and final decision. Ethicon ignores the longstanding rule that agency heads have implied authority to delegate to officials within the agency, even without explicit statutory authority and even when agency officials have other statutory duties. Congress regularly gives heads of agencies more tasks than a single person could ever accomplish, necessarily assuming that the head of the agency will delegate the task to a subordinate officer.8

Judge Newman, dissenting, disagreed with the majority’s statement that “there is nothing in the Constitution or the statute that precludes the same Board panel from making the decision to institute and then rendering the final opinion.”9 Judge Newman believed that the statute requires that the proceedings be separated, the first decision required to be made by the Director, and the second decision made by the Board. According to Judge Newman,

the threshold determination to institute post-grant review requires the Director to find that there is more likely-than-not an error in the grant of at least one claim of the patent. When such finding is made by the Director, the newly created independent tribunal in the PTO conducts a full trial, with discovery, testimony, experts, and other trappings of district court litigation. This trial, and the ensuing Board decision, are independent of and give no deference to the Director’s decision “to institute” the proceeding.10

1 Ethicon Endo-Surgery, Inc. v. Covidien LP, 2016 U.S. App. LEXIS 473 (Fed. Cir. Jan. 13, 2016).drugs/guidancecomplianceregulatoryinformation/-guidances/ucm459987.pdf;”> (hereinafter “FDA Guidance”)
2 Id. at *6
3 Id. at *7
4 Id. at *10
5 In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1273 (Fed. Cir. 2015).
6 Ethicon Endo-Surgery, Inc. v. Covidien LP, 2016 U.S. App. LEXIS 473, *10 (Fed. Cir. Jan. 13, 2016).
7 <span id=”seven”See, e.g., Fed. R. Civ. P. 65; Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008).
8 Ethicon Endo-Surgery, Inc. v. Covidien LP, 2016 U.S. App. LEXIS 473, *17 (Fed. Cir. Jan. 13, 2016).
9 Id. at *29
10 Id.

shutterstock_524795992In two recent companion cases, the Federal Circuit upheld the Board’s decision that claims related to administering a natural stereoisomer to treat symptoms of folate deficiency would have been obvious.

During the inter partes review, the Board considered two prior art references: a European patent application that discloses treating elevated levels of homocysteine, often associated with folate deficiency, with folate or a suitable active folate metabolite along with B vitamins. The second reference identified the stereoisomer recited in the claims at issue as a “natural metabolite” of folate. The Board then concluded that a person of ordinary skill would have been motivated to combine these references in order to arrive at the claimed invention.

During IPR, the Board also considered and rejected objective indicia of non-obviousness. Regarding commercial success of the products, the Board found that such success was not reasonably commensurate in scope with contested claims.

Regarding industry praise, the Court agreed with the Board that the praise was particularly directed to the use of a specific stereoisomer that was already known in the art. The Court concluded that the patent owner failed to connect the evidence of industry praise to the novel elements of the claims. Likewise, the inventors’ recognition that a subset of the population had difficulty processing folic acid was not adequately tied to the novel features of the claim. The Court also noted that the claims were not limited to a particular subpopulation.

Although the Court found that the Board erred in assessing the patent owner’s licensing evidence, it also found the error harmless. The Court stated the Board erred in considering whether the licensees’ product embodied the claimed invention, but rather should have considered whether the licensing activity arose out of recognition of the subject matter claimed in the patent. Nevertheless, the Court stated that even if the Board had correctly considered the evidence of licensing, that evidence was not enough to overcome the strong evidence of obviousness.

1 On December 17, 2015, the Federal Circuit decided on appeals from the PTAB decision in two companion cases, Merck & Cie v. Gnosis S.p.A., No. 14-1779 (Fed. Cir. Dec. 17, 2015) (Gnosis I) and South Alabama Medical Science v. Gnosis S.p.A., No. 14-1778 (Fed. Cir. Dec. 17, 2015) (Gnosis II).
2 See Gnosis II, at 3-4.
3 See Gnosis II, at 6.
4 See id.
5 See id. at 6-7 (“[E]vidence was not adequately tied to the novel features of the claimed invention.”).
6 See id. at 7-8 (The Court held that this error was “harmless” to the overall determination).