Timing the filing of an inter partes review for companies in the early stage of developing a biosimilar product should be carefully considered based on the recent Federal Circuit case, Momenta Pharmaceuticals, Inc. v Bristol-Myers Squibb Co., Appeal No. 2017-1694 (February 7, 2019). Momenta filed an IPR before the PTAB to challenge the validity of a BMS patent covering Orencia® (abatacept) while in its Phase I trials for its own biosimilar product. The PTAB instituted review, conducted trial, and sustained the validity of the BMS patent claims. During this period, however, Momenta’s own product failed its Phase I trials and subsequently decided to terminate its pursuit of the biosimilar to the abatacept product at that time. As an Article III court, the Federal Circuit held that Momenta’s decision to no longer pursue its biosimilar product rendered its standing to appeal the PTAB’s decision moot as there was no judiciable injury. Nevertheless, the question of when to file an IPR remains largely unanswered for a biosimilar manufacturer. Given the expense, duration, and uncertainty of getting approval, biosimilar companies will want to retain its right to appeal an adverse IPR decision. In contrast, an adverse IPR decision for the brand company is retained regardless of the status of the biosimilar. While the Court did not specifically address whether Momenta could have met its standing requirement if it remained actively pursuing its biosimilar, it is clear that the position of brand vs. biosimilar companies vastly contrast as the amici clearly established in this case. According to BIO and PhRMA, the earliest time for a biosimilar company to have standing is upon the filing of its Biologics Licensing Application under the Biologics Price Competition and Innovation Act. Irrespective of the holding of Momenta, timing the filing of an IPR by a biosimilar company is a decision that may be best addressed by future cases that are directly on point.
Seyfarth Shaw is pleased to announce The BioLoquitur Bulletin: Drugs Available in 2018 for Generic Competition, published by the Life Sciences team. The BioLoquitur Bulletin provides a brief overview of selected New Chemical Entities (NCE) that were approved by the FDA in the year 2014. While not every NCE will be a target for NCE-1 litigation, the Dissection Guide offers information about the drug products, indications, and Orange Book patents.
In calendar year 2014, the FDA’s Center for Drug Evaluation and Research (CDER) approved 41 novel new drugs as new molecular entities (NMEs) under New Drug Applications (NDAs) or as new therapeutic biologics under Biologics License Applications (BLAs). More than one-third of the novel new drugs approved in 2014 (17 of 41 or about 41%) were identified as First-in-Class and about 41% of the novel new drugs approved in 2014 (17 of 41) were approved to treat rare or “orphan” diseases.
CDER designated 41% as fast track, 22% as breakthrough therapies, 61% as priority review and 20% under FDA’s Accelerated Approval program. Further, a majority of the novel new drugs of 2014 (32 of 41, 78%) were approved on the “first cycle” of review, meaning without requests for additional information that would delay approval and lead to another cycle of review. See The Bulletin for more information.
Seyfarth’s Life Sciences team includes a multidisciplinary group of legal professionals with strong technical backgrounds in biology, biochemistry, organic chemistry, molecular biology, and pharmacology. Our team of experienced trial and appellate lawyers craft and execute comprehensive intellectual property strategies from initial drug development through trial and appeal.
How to Get Your Copy of The BioLoquitur Bulletin
Click here to download the pdf.
In a few short days, the United States will mark the eight-year anniversary of the Biologics Price Competition and Innovation Act (“BPCIA”). Signed into law on March 23, 2010, the BPCIA creates a regulatory pathway for the approval of biosimilar drugs in the United States and a mechanism, albeit voluntary, for resolving patent right disputes relating to the innovator biologic products. Continue Reading “Rigged” Pricing, Contracting and Rebate “Schemes,” and Drug Pricing “Shell Games:” FDA Commissioner Scott Gottlieb Lets Loose on the U.S. Biosimilar Market While Offering Peek at New Policies
The Hatch-Waxman Act was enacted in 1984 to address two main congressional goals: (1) to encourage innovation in pharmaceutical research and development; and (2) to help generic drugs reach the market more quickly. Through amendments to both the patent and the food and drug laws, the Act established several practices intended to provide brand-name firms with incentives to innovate while facilitating the marketing of generic pharmaceuticals. Whether or not it was envisioned at the time, the use of generic drugs in the US has seen a tremendous increase since the enactment of the Act. From about 13% (of all prescriptions) in 1984, use of generic drugs grew to 50% by the late 1990s and currently constitute well over 80% of all prescriptions in the US.
Among other things, the Act included elaborate provisions governing the mechanisms through which a potential generic manufacturer may obtain marketing approval for a drug that has been patented by another party. It also put in place an expedited approval processes for generic drugs. In doing so, the Act launched a new type of litigation, “Hatch-Waxman” or “ANDA” litigation. The evolution of the US generic drug industry has been shaped, in part, as a result of such litigation proceedings that unfolded many questions critical to understanding the generic approval process.
Although generic drug usage is over 80% of all prescriptions in the US, as of 2015 the sale of generics were only a quarter as large as those of patented drugs. In the past several years, the number of ANDA litigations has significantly increased. As an active member of the legal community within the ANDA space, we took a look at the latest developments in the field and now share our observations. In the article titled “Hatch-Waxman And Biosimilars Litigation: 2017 Year-in-Review,” we provide a brief overview of the Hatch-Waxman Act, a summary of the recently released FDA Draft Guidance, a general timeline of Hatch-Waxman and Biosimilars litigation, and summaries of some of the related decisions issued by the U.S. Supreme Court and Court of Appeals for the Federal Circuit in the year 2017. If you would like to order a hard copy of the Year in Review, please see our blog post.
In late December the FDA issued a new guidance, entitled “Best Practices for Communication Between IND Sponsors and FDA During Drug Development.” The purpose of the guidance is to “describe best practices and procedures for timely, transparent, and effective communications between investigational new drug application (IND) sponsors and FDA at critical junctures in drug development.” The hope is the guidance facilitates an earlier availability of safe, effective and high-quality drugs to the American public, including biosimilars.
The IND phase of drug development is the time during which human trials of investigational drugs are conducted. From the FDA’s perspective, the IND phase spans the time from the first IND-related submission (including a pre-IND or Biosimilar Initial Advisory (BIA) meeting request or an original IND) to the submission of a marketing application. The FDA engages in thousands of communication with drug sponsors during the IND phase. As such, the FDA’s guidance encourages efficient, consistent, clear and concise communications.
The new guidance particularly lays out and describes the following: the FDA’s philosophy regarding timely communications with IND sponsors as a core activity; the scope of appropriate interactions between review teams and IND sponsors; the types of advice that are appropriate for IND sponsors to seek from FDA; the expectations for the timing of FDA responses to IND sponsor inquiries; the best practices and communication methods to facilitate interactions with the FDA; and the expectations for appropriate methods of communication with the FDA.
At bottom, the FDA engages in thousands of communications with IND sponsors each year. Given the sheer volume of communications the FDA must review and respond to, facilitating a consistent, complete and concise communication protocol will assist the FDA in reviewing and providing timely and cogent feedback to the sponsors where appropriate. This, in turn, should result in greater efficiency during the drug development process to the benefit of the American public.
Finding against the Federal Circuit once again on a patent case, the Supreme Court issued a unanimous decision in Sandoz v. Amgen relating to the interpretation of the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”) in its first decision on the Act. The Supreme Court’s decision firmly establishes the availability of a third biosimilar “dance,” at least as far as Federal law is concerned.
The BPCIA provides the mechanism by which companies can bring to market “biosimilar” compounds, i.e., products that can compete with biological drugs much the same way as generic drugs compete with traditional “brand” pharmaceutical products. On appeal, the Supreme Court considered two issues. First, the biosimilar applicant, Sandoz, challenged the Federal Circuit’s interpretation of the BPCIA as requiring an applicant to wait until after the FDA approved its biosimilar application before providing the requisite 180-day notice of commercial marketing to the brand company. This meant that a biosimilar applicant had to wait an additional 180 days after its application was granted before it could launch a competing product. The FDA cannot approve (“license”) a biosimilar product until twelve years after the biologic was first approved by the agency. Thus, the Federal Circuit’s decision effectively provided the brand manufacturer with 12½ years rather than 12 years of market exclusivity.
The Supreme Court reversed the Federal Circuit and explicitly determined that applicants can provide notice before or after FDA approval. According to the Supreme Court, the pertinent statutory language in the BPCIA has two separate requirements: (1) that the biosimilar application is “licensed” before it is marketed; and (2) that the biosimilar applicant gives notice 180 days before marketing occurs. The Federal Circuit thus erred in requiring licensure before notice could be given.
The second issue tackled by the Supreme Court relates to the “patent dance” provisions of the BPCIA. The “patent dance” is a statutory scheme through which the biosimilar applicant and the brand manufacturer exchange information and legal theories until deciding upon which patents to litigate first. Sandoz refused to provide the biosimilar application and manufacturing information contemplated in the dance, leading Amgen to seek an injunction under federal and state law to compel participation. The district court and Federal Circuit determined that an injunction was not available.
On cross-appeal, the Supreme Court agreed with the Federal Circuit that injunctions under federal law are not permitted, but remanded the case to review state law remedies. According to the Court, the BPCIA allows the brand company immediately to bring a declaratory judgment action against the biosimilar applicant if they do not provide their application and manufacturing information. This remedy deprives the applicant of the ability to control the scope of the litigation (i.e., which patents to litigate) and the timing of the suit. The Supreme Court determined that the remedy of immediate suit was the only federal remedy contemplated for an applicant’s failure to dance. The Supreme Court remanded the case to address whether non-compliance with the BPCIA can be considered a violation of California law entitling Amgen to an injunction and/or whether the BPCIA’s remedy pre-empts any state law remedies.
Seyfarth will be closely monitoring the remand of Sandoz in the coming months.
The SANDOZ Dance
Step 1: Skip
|Applicant refuses to provide aBLA and information describing manufacturing|
Step 2: File Suit
|Reference sponsor chooses what patents to sue upon and when to bring suit against Applicant|
The FAST BPCIA Dance
The SLOW BPCIA Dance
The Biologics Price Competition and Innovation Act of 2009 (“BPCIA”) amended Section 351(k) of the Public Health Service Act (42 U.S.C. § 262(k)) in providing ways to obtain licenses for certain biological products via abbreviated applications from the Food and Drug Administration (“FDA”) in order to market biosimilar products or interchangeable products for therapeutic uses. According to 42 U.S.C. § 262(i)(1), the term “biological product” is defined as “a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, protein (except chemically synthesized polypeptide), or analogous product, or arsphenamine or derivative of arsphenamine (or any other trivalent organic arsenic compound)” useful for preventing, treating, or curing a human disease or condition. By allowing abbreviated applications for biological products biosimilar to, or interchangeable with, FDA-licensed reference biological products, BPCIA could do for therapeutic biological products, similar to what the Hatch-Waxman Act does for small molecule drugs, in fostering the development of generic therapeutic products.
A biosimilar product is a biological product (a) highly similar to a reference product even though there could be minor differences in clinically inactive components; and (b) having no clinically meaningful differences from the reference product regarding safety, purity, and potency (42 U.S.C. § 262(i)(2)). A reference product is a biological product which has obtained a biologics license via 42 U.S.C. § 262(a), i.e., a biological product for which a Biologics License Application (“BLA”) has been approved by the FDA for its introduction into interstate commerce. An interchangeable product is a biological product that (a) is biosimilar to a reference product; (b) “can be expected to produce the same clinical result as the reference product in any given patient;” and (c) would have a risk based on safety or diminished efficacy not greater than the risk of using the reference product alone without any switch or alternation, when the biological product is switched or alternated with the reference product administered more than once, so that the interchangeable product “may be substituted for the reference product without the intervention of the health care provider who prescribed the reference product.” 42 U.S.C. § 262(i)(3) and (k)(4).
One of the requirements of an abbreviated BLA (“aBLA”) to show that a proposed biological product is interchangeable with a reference product is to demonstrate that the proposed biological product and the reference product are biosimilar. Biosimilarity must be demonstrated with data obtained from (a) analytical studies showing that the proposed biological product and the reference product are highly similar other than minor differences in clinically inactive components; (b) animal studies including toxicity assessments; and (c) a clinical study or studies, including assessments of pharmacokinetics, pharmacodynamics and immunogenicity to show safety, purity, and potency in at least one of the therapeutic uses licensed for the reference product. 42 U.S.C. § 262(k)(2)(A)(i)(I).
As mentioned above, the terms “biosimilar product” and “interchangeable product” pertain to certain biological products, and the term “biological product” covers a number of biological substances. However, regarding guidance on the various studies that should be performed to gather the data or information needed for the aBLA, FDA has taken a stepwise approach in concentrating on only therapeutic protein products so far, but not on other biological products such as viruses, therapeutic sera, etc. For proposed therapeutic protein products, FDA has published a guidance document on analytical studies that should be conducted to obtain the needed chemistry, manufacturing, and controls (CMC) information relevant to the assessment of whether the reference product and the proposed therapeutic protein product are highly similar. There is also an FDA guidance document pertaining to only proposed therapeutic protein products for gathering data or information in order to demonstrate biosimilarity based on structural studies, functional assays, animal studies, and clinical studies. Nevertheless, despite the focus of the above mentioned guidance documents on only therapeutic protein products, FDA did publish a guidance to help sponsors of biosimilar products in general to design and use clinical pharmacology studies to gather pharmacokinetic and pharmacodynamic data on proposed biological products, without limitation on the types of the biological products.
The FDA guidance documents referred to above concern only the demonstration of biosimilarity, but not interchangeable products per se. In fact, in one of the guidance documents, the FDA cautioned that the document was not intended to present the FDA’s approach to determining interchangeability, which would be dealt with in a separate guidance document. Recently, the FDA finally published a draft guidance on the demonstration of interchangeability for therapeutic protein products. The intention of the draft guidance is to help sponsors in showing that a proposed therapeutic protein product is interchangeable with a reference product. The FDA invited public comments for the draft guidance, and at the closure of the comment period on March 20, 2017, nine public comments have been received.
As pointed out in the draft guidance, to show interchangeability, an aBLA is required to also demonstrate that the proposed biological product is biosimilar to the reference product. In addition, the sponsor of the proposed interchangeable biological product must show that the proposed product is “expected to produce the same clinical result as the reference product in any given patient” as set forth in 42 U.S.C. § 262(k)(4)(A)(ii). Based on this statutory requirement, the FDA expects data and information to show that the proposed interchangeable biological product can be expected to produce the same clinical results as the reference product in all of the conditions of use licensed by the FDA for the reference product. However, that is only a recommendation by the FDA, and the draft guidance indicates that an aBLA is permitted to demonstrate the same clinical results in less than all of the conditions of use. The data and information needed may vary depending on the nature of the proposed interchangeable biological product, and may include (a) any analytical differences between the proposed product and the reference product, and an analysis of the resulting potential clinical impact, if any; (b) “an analysis of the mechanism(s) of action in each condition of use,” including the target receptor(s), binding to the target receptor(s), molecular signaling associated with the binding, dose or concentration response, the expression and location of the target receptor(s), and the relationship between product structure and interactions with the target receptor(s); (c) pharmacokinetics and distribution of the proposed product in the bodies of different patients; (d) immunogenicity; (e) any differences in expected toxicities in each condition of use and patient population; and (f) any other factor that may influence the efficacy or safety of the proposed product in each condition of use and patient population.
Furthermore, for any biological product expected to be administered more than once, the statute requires that “the risk in terms of safety or diminished efficacy of alternating or switching between use of the biological product and the reference product is not greater than the risk of using the reference product without such alternation or switch,” 42 U.S.C. § 262(k)(4)(B). The FDA expects that the aBLA would present data from a switching study or studies in one or more conditions of use, and that the data will be useful in assessing the safety risk and risk of diminished efficacy of switching or alternating between the proposed product and the reference product.
The draft guidance includes detailed description of the scientific studies recommended by the FDA for the sponsors to perform in order to gather data and information useful for assessing interchangeability. A discussion of all the scientific studies is beyond the scope of this blog post, which is merely a summary intended to alert the blog readers of the existence of the draft guidance, so that the readers could consult with the draft guidance directly if more scientific information is needed.
The draft guidance shows that more data and information, as a result more studies, would be needed in an aBLA for an interchangeable product, than for a biosimilar product, which is consistent with the statutory requirements. That may explain why as of today the FDA has not approved any interchangeable product, while four biological products have been licensed by the FDA as biosimilar to reference products. However, a sponsor putting in more effort and expenses for getting a biologics license for an interchangeable product, compared with only a biologics license for a biosimilar product, could be rewarded in at least two ways. First, under the statute, an interchangeable product may be substituted for the corresponding reference product without the intervention of the health care provider who prescribed the reference product. 42 U.S.C. § 262(i)(3). That means if a prescription of the reference product does not specify no generic substitution, a pharmacy could legally fill the prescription by substituting the prescribed reference product with an interchangeable product upon the patient’s request. Second, if the sponsor obtains an FDA license on the first interchangeable product for any condition of use of a reference product, the sponsor will obtain exclusivity so that the FDA will not determine whether a proposed biological product of the second or later aBLA is interchangeable for any condition of use until the earlier of (a) one year after the first commercial marketing of the first interchangeable product licensed for the reference product; (b) 18 months after a final court decision on all patents in suit in an action instituted against the aBLA applicant for the first interchangeable product, or after the dismissal of the court action; or (c) 42 months after approval of the first interchangeable product if the applicant has been sued and such litigation is still ongoing within the 42 months, or 18 months after approval of the first interchangeable product if the applicant has not been sued. 42 U.S.C. § 262(k)(6).
It should be noted that “FDA’s guidance documents do not establish legally enforceable responsibilities. Instead, guidances describe the Agency’s current thinking on a topic and should be viewed only as recommendations, unless specific regulatory or statutory requirements are cited.” That means the FDA could not properly force a sponsor of a proposed interchangeable therapeutic protein product to perform all the studies mentioned in the guidance documents discussed herein. However, the FDA guidance documents are useful for the sponsor to design studies to be carried out in order to gather the required information to demonstrate that a proposed therapeutic protein product is interchangeable with a reference product because the guidance documents show how the FDA interprets the law pertaining to biosimilar and/or interchangeable products.
 See the guidance for industry, Quality Considerations in Demonstrating Biosimilarity of a Therapeutic Protein Product to a Reference Product, April 28, 2015.
 See the guidance for industry, Scientific Considerations in Demonstrating Biosimilarity of a Therapeutic Protein Product to a Reference Product, April 28, 2015.
 See the guidance for industry, Clinical Pharmacology Data to Support a Demonstration of Biosimilarity to a Reference Product, December 28, 2016.
 See Quality Considerations in Demonstrating Biosimilarity of a Therapeutic Protein Product to a Reference Product, 2015, page 4, Section III.
 See the draft guidance for industry, Considerations in Demonstrating Interchangeability with a Reference Product, January 17, 2017.
 Id, page 3.
 Id, page 3, emphasis added.
 Id, page 3.
 Id, page 3.
 Id, page 4.
 See CDER List of Licensed Biological Products with (1) Reference Product Exclusivity and (2) Biosimilarity or Interchangeability Evaluations to Date, https://www.fda.gov/downloads/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/TherapeuticBiologicApplications/Biosimilars/UCM549201.pdf
 See Clinical Pharmacology Data to Support a Demonstration of Biosimilarity to a Reference Product, 2016, page 1.
Many companies obtain opinions of counsel with respect to certain threatening patents as a form of “insurance” to demonstrate good faith and ward off the enhanced damages and attorneys’ fees associated with willful infringement. In Commil v. Cisco Systems, the Federal Circuit held that “evidence of an accused inducer’s good-faith belief of invalidity may negate the requisite intent for induced infringement[under 35 U.S.C. § 271(b)].”i The court’s opinion did not describe the kind of proof needed to show good faith, but it is reasonable to expect that a competent opinion of counsel may meet this requirement. This holding potentially underscores the value of invalidity opinions, particularly in the context of method of treatment claims. In fact, in Commil, the court reiterated that opinions of counsel regarding non-infringement are admissible to show the defendant’s state of mind and its bearing on indirect infringement.ii The Federal Circuit has now further opened the door to allowing the existence of an invalidity opinion to negate the intent required to demonstrate inducement of infringement. The Supreme Court granted certiorari and heard oral arguments in this case on March 31, 2015.
In-house counsel tasked with asserting their companies’ patent rights, as well as generic and biosimilar companies, are no doubt watching this case closely, especially with regard to enforcement of medical and diagnostic method claims. Generally, clinicians directly infringe such claim. However, deeper pocketed companies manufacturing the relevant kits and products are pursued by patentees under a theory of inducement of infringement. If a good-faith belief of invalidity is sufficient to negate the specific intent for induced infringement, opinions of counsel regarding invalidity will become critical to generics and biosimilar manufacturers alike. For example, under the Federal Circuit’s holding, an accused induced infringer could escape liability even if the court finds that the asserted patent is valid. In other words, the accused inducer could assert a defense of patent invalidity and lose, but ultimately prevail by asserting an opinion of counsel to show a good-faith belief of invalidity. This strategy raises the stakes for outside counsel’s invalidity opinions, the importance of which were somewhat diminished in 2004.
Until 2004, accused infringers who were aware of a competitor’s patent had a duty to obtain competent legal advice before engaging in any potentially infringing activity. If they failed to meet this obligation, the jury could draw an “adverse inference” against the defendant during trial with respect to having engaged in willful infringement. In 2004, the Federal Circuit eliminated the jury’s ability to draw such an adverse inference.iii
Congress has since codified the Knorr-Bremse holding for AIA patents, stating that “[t]he failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of the infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent.”iv This statute thus addresses both willful infringement and induced infringement, eliminating negative inferences in cases where formal opinions had not been obtained. However, the new statute does not address whether the existence of an opinion as to patent invalidity has a bearing on whether a defendant had the intent required to induce infringement under 35 U.S.C § 271(b).
While the Knorr-Bremse case and 35 U.S.C. § 298 moderately diminished the importance of opinions of counsel, the Supreme Court’s decision in the Commil case has the potential to again render formal opinions of counsel critical to defending against charges of induced infringement under 35 U.S.C. § 271(b).
ii Commil, 383 F.3d at 1367-68.
iii Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d 1337 (Fed. Cir. 2014).
iv 35 U.S.C. § 298.
In Commil v. Cisco Systems, the Federal Circuit held that “evidence of an accused inducer’s good-faith belief of invalidity may negate the requisite intent for induced infringement.” CITE. The court’s opinion did not explore the proof needed to show good faith, but it is reasonable to expect that a competent opinion of counsel may meet this requirement, potentially resurrecting the importance of invalidity opinions.
The relevance of opinions of counsel during litigation has been diminished in the willfulness context. Before 2004, accused infringers who were aware of a competitor’s patent had a duty to obtain competent legal advice before engaging in any potentially infringing activity. If they didn’t fulfill this duty, the jury was allowed to draw an “adverse inference” against the defendant during trial. In 2004, the Federal Circuit eliminated the jury’s ability to draw such an adverse inference. Knorr-Bremse Systeme Fuer Nuetzfahrezeuge GMBH v. Dana Corp., et al.
Congress has since codified the Knorr-Bremse holding for AIA patents, stating that “[t]he failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of the infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent.” 35 U.S.C. § 298. This statute thus addresses both willful infringement and induced infringement, eliminating negative inferences from the failure to produce such evidence. But the statute, of course, does not prohibit using opinions of counsel as evidence of lack of intent.
Indeed, citing previous case law, the Federal Circuit in Commil v. Cisco Systems reiterated that opinions of counsel regarding non-infringement were admissible to show the defendant’s state of mind and its bearing on indirect infringement. CITE. The Federal Circuit has now opened the door for using opinions of counsel to show good faith belief of invalidity. The Supreme Court granted certiori and heard oral arguments in this case on March 31, 2015, and may keep that door open in its final opinion.
If the Court agrees with the Federal Circuit, it appears up for debate whether opinions of counsel of invalidity under the PTAB standards of claim construction and burden of proof will be sufficient. The Federal Circuit has affirmed that the broadest reasonable construction standard is appropriate at the PTAB, making it easier to invalidate patents than in District court in most instances. Also, the well-known lower burden of proof to show invalidity at the PTAB makes this a more attractive venue for patent challengers. For example, if a patent is upheld in district court, will a competent opinion of counsel of invalidity under the PTAB standards be sufficient to show good faith?
In-house counsel charged with asserting patent rights, as well as generic and biosimilar counsel at life science companies no doubt are watching this case closely, especially with regard to method claim patents. Most of the time, if direct infringement of such claims occurs, it is by physicians, whereas the companies manufacturing the drug will be the inducers. Of course, the drug manufacturers will be who the patent holders will want to go after for damages. If a good-faith belief of invalidity is sufficient to negate the specific intent for induced infringement, opinions of counsel regarding invalidity will become very important to generics and biosimilar manufacturers alike.
Judge Newman’s dissent in Enzoidemonstrates that the Federal Circuit is struggling with how much deference to give to a district court’s claim construction in view of the Supreme Court’s ruling in Teva.ii
In Enzo, the majority found that the district court’s claim construction of the phrase “at least one component of a signaling moiety,” was incorrect when reviewing the intrinsic evidence and taking into account the ordinary and customary meaning of the term “component.”iii The court pointed to a number of instances in the specification where the only examples of “signaling moiety” required at least two components and thus the claims encompassed only indirect detection.iv This was contrary to the district court’s claim construction, which determined that direct detection of the signaling moiety without an additional compound was also encompassed by the claims.v
However, the majority seemed to gloss over the specific factual findings supported by expert testimony that, in fact, at least one example in the specification did support a construction that “at least one component” could mean a single signaling moiety.iv Instead, the Federal Circuit noted that “this sole factual finding does not override our analysis of the totality of the specification.”vii In addition, rather awkwardly, the Federal Circuit dismissed the use of claim differentiation used by the district court to support its holding, stating that a dependent claim cannot broaden claim 1.viiiThis conclusion, however, came only after the majority first found claim 1 should have been construed more narrowly.
In the dissent, Judge Newman identifies several instances where the majority failed to follow the Supreme Court’s holding in Teva. For instance, she argues that the majority opinion “ignore[s] the testimony and the district court’s findings and the jury verdict based on the evidence at trial.”ix As argued by Judge Newman, the majority reviewed all aspects of the claim construction under a de novo standard, rather than reviewing the findings of fact that the district court found critical to its decision for clear error.x
With Enzo, it would appear that the Federal Circuit is reluctant to let go of its hold on the review of claim construction. Perhaps when the district court relies more heavily on expert testimony, its claim construction would be given more deference. But according to Judge Newman, the majority “show[s] error in neither fact nor law in the court’s findings and conclusions,”xi which makes it difficult to predict the court’s reasoning in subsequent claim construction rulings.
ii Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015).
iii Enzo, 780 F.3d at 1154.
iv Id. at 1155.
v Id. at 1153.
vi Id. at 1155-56.
vii Id. at 1156.
ix Id. at 1159.