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Hatch-Waxman and BPCIA Developments for April 2018

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This month, we highlight several significant cases, including the Supreme Court’s decisions in Oil States and SAS, and the Federal Circuit’s decisions in Vanda Pharmaceuticals and Gilead v. Merck. <h3>CASES</h3>SUPREME COURTIPRs Don’t Violate the Constitution <a href="https://www.supremecourt.gov/opinions/17pdf/16-712_87ad.pdf">Oil States Energy Services, LLC v. Greene’s Energy Group, LLC</a> (S.Ct. 4/24/18 No. 16-712)In a 7-2 decision, the Supreme Court affirmed the judgment of the Federal Circuit and held that inter partes review does not violate Article III or the Seventh Amendment of the Constitution.  Justice Thomas authored the opinion; Justice Gorsuch and Chief Justice Roberts dissented.Read our <a href="https://www.mofo.com/resources/publications/180424-inter-partes-review.html">client alert</a>.PTO Must Review All Challenged Claims When IPRs Instituted <a href="https://www.supremecourt.gov/opinions/17pdf/16-969_f2qg.pdf">SAS Institute Inc. v. Iancu</a> (S. Ct. 4/24/18 No. 16-969)In a 5-4 decision, the Supreme Court reversed the judgment of the Federal Circuit and held that when the Patent Office initiates inter partes review of a patent, the Patent Office cannot limit its review to only some of the claims challenged by the petitioner but instead must review all of them.   Justice Gorsuch authored the opinion; Justices Breyer, Ginsburg, Sotomayor, and Kagan dissented. Read our <a href="https://www.mofo.com/resources/publications/180425-supreme-court-ptab.html">client alert</a>.FEDERAL CIRCUITAll You Can Eat Hatch-Waxman Buffet from CAFC: Jurisdiction, Inducement, §101, and Remedies <a href="https://law.justia.com/cases/federal/appellate-courts/cafc/16-2707/16-2707-2018-04-13.html">Vanda Pharmaceuticals, Inc. v. West-Ward Pharmaceuticals Int’l Ltd.</a> (CAFC 4/13/18; Nos. 2016-2707, 2016-2708)This case addresses several issues meriting mention in a lengthy opinion, over a dissent by Chief Judge Prost. First, because the patent-in-suit issued after the ANDA at issue was originally filed, defendants argued that section 271(e)(2) did not create a basis for subject matter jurisdiction.  The Federal Circuit disagreed, holding that Vanda’s complaint alleged infringement under section (e)(2)(A) by the filing of the ANDA and “[n]othing more was required to establish” subject matter jurisdiction.  Whether there was a “qualifying” act of infringement goes to the merits, not jurisdiction.  As to the merits, the court held that amending an ANDA to add a PIV certification is a “qualifying” act of infringement under section 271(e)(2)(A).  In any event, an actual controversy existed even though defendants had not yet filed their PIV certification when suit was filed. Second, the court held the patentee need not prove an actual past instance of direct infringement by a physician to establish inducement under section 271(e)(2)(A).  “[P]atentees in Hatch-Waxman litigations asserting method patents do not have to prove the prior use of the NDA-approved drug satisfies the limitations of the asserted claims.”  Rather, Vanda could “prove the predicate direct infringement by showing that if the proposed ANDA product were marketed,” it would infringe.   The court then analyzed the product label and found sufficient support, including for the claimed genotyping step, for the district court’s infringement finding.Third, the court rejected defendants’ argument that the claims were patent-ineligible because “they are directed to a natural relationship between iloperidone, CYP2D6 metabolism, and QT prolongation.”  Applying step one of the two-part section 101 test, the court held that the claims were not directed at ineligible subject matter.  Rather, the claims required obtaining a sample, determining the CYP2D6 genotype, and administering specific dose ranges depending on genotype.  Mayo was distinguished because the claims here are directed at a specific disease (schizophrenia) and no preemption because the claims do not “tie up the doctor’s subsequent treatment decision.”  “At bottom, the claims here are directed to a specific method of treatment for specific patients using a specific compound at specific doses to achieve a specific outcome” and, thus, are patent-eligible.  Judge Prost dissented, stating she would find patent-ineligibility, consistent with Mayo.Finally, the court held that section 271(e)(4) contains no carve-out for patents issuing after submission of the original ANDA.  Upon a finding of infringement under section (e)(2), “the district court must order remedies in accordance with” section (e)(4). Enantiomer Claim “at a minimum” Covers Enantiomer <a href="https://law.justia.com/cases/federal/appellate-courts/cafc/17-1798/17-1798-2018-04-16.html">Sumitomo Dainippon Pharma Co. v. Emcure Pharmaceuticals Ltd.</a> (CAFC 4/16/18; Nos. 2017-1798, 2017-1799, 2017-1800)The Federal Circuit affirmed the district court’s claim construction in this ANDA enantiomer case.  Both parties agreed that the specific three-dimensional structure depicted in the claim at issue was the (–)-enantiomer.  Appellants, however, sought a claim construction limiting the claim to “a racemic mixture of two enantiomers of which the structural formula is representative.”  The Federal Circuit rejected this argument because “the plain claim language and specification demonstrate that, at a minimum, claim 14 covers what it depicts: the (–)-enantiomer.” Unclean Hands Wipes Out $200 Million Jury Award <a href="https://law.justia.com/cases/federal/appellate-courts/cafc/16-2302/16-2302-2018-04-25.html">Gilead Sciences, Inc. v. Merck & Co., Inc.</a> (CAFC 4/25/18; Nos. 2016-2302, 2016-2615)The Federal Circuit affirmed the district court’s decision that unclean hands barred Merck’s assertion of the patents in suit against Gilead, based on Merck’s business and litigation misconduct.  Conscious of both “the judicial system’s vital commitment to the standards of probity protected by the [unclean hands] doctrine and, also, of the potential for misuse of this necessarily flexible doctrine by parties who would prefer to divert attention away from dry, technical, and complex merits issues toward allegations of misconduct based on relatively commonplace disputes over credibility” the court found no “sufficient basis to set aside the district court’s determination of unclean hands under the applicable deferential standard of review.”  Adequate evidence supported the district court’s finding that “Dr. Durette’s knowledge of PSI-6130, acquired improperly [by violating a diligence firewall], influenced Merck’s filing of narrowed claims, a filing that held the potential for expediting patent issuance and for lowering certain invalidity risks. Those findings establish serious misconduct, violating clear standards of probity in the circumstances, that led to the acquisition of the less risky ’499 patent and, thus, was immediately and necessarily related to the equity of giving Merck the relief of patent enforcement it seeks in this litigation.”  Adequate evidence likewise supported the finding of litigation misconduct because Durette, also Merck’s 30(b)(6) witness, gave intentionally false deposition testimony about his participation in the diligence and about the narrowing of claims at deposition and trial and the finding that this false testimony  was sufficiently related to the equity Merck sought.DISTRICT COURTANDA Litigation Is Real and Immediate <a href="http://www.ded.uscourts.gov/sites/default/files/opinions/mpt/2018/april/17-894.pdf">Ferring Pharmaceuticals Inc. v. Novel Laboratories, Inc. </a>(D. Del. 04/02/18; C.A. No. 17-894-RGA-MPT)The magistrate judge recommended denial of Novel’s motion to dismiss plaintiffs’ declaratory judgment claims in this ANDA case.  Defendants asserted that the declaratory judgment claims under 35 U.S.C. §§271 (a), (b), and (g) “lacked sufficient immediacy and reality to warrant subject matter jurisdiction, as they are based on FDA approval of the ANDA and Defendants’ intention to market a generic drug pursuant to the approved ANDA, both of which, Defendants claim, are uncertain to occur.”  ANDA Case Transferred from E.D. Texas <a href="https://www.docketnavigator.com/document/order/412dc121-0837-eaa8-4ea2-d92c2db08004">Duke University v. Sandoz Inc.</a> (E.D. Tex. 4/3/18; Civil Action No. 2:17-CV-00528-JRG) – subscription requiredThe parties all agreed that venue was improper in ED Texas in this ANDA case.  They disputed, however, whether the case should be dismissed or transferred.  The court determined that—in the interests of justice—transfer under 28 U.S.C. § 1406(a) was appropriate because the case had been pending for eight months, and discovery and the claim construction process had begun.  “Dismissing the case at this stage would render this progress a wasted effort.”  However, the court also found that severance of the case was appropriate because venue as to Sandoz and Alcon would not rest in a single forum.  Accordingly, the court transferred the action as to Sandoz to the District of Colorado, and the action as to Alcon to the District of Delaware.No Case or Controversy over Future Commercial Marketing of Biosimilar <a href="http://www.ded.uscourts.gov/sites/default/files/opinions/gms/2018/april/17-1407.pdf">Genentech, Inc. v. Amgen Inc.</a> (D. Del. 4/17/18; Civ. Nos. 17-1407-GMS and 17-1471-GMS)During the patent dance, Amgen stated in its section 3B response that it did not intend to begin commercial marketing before December 18, 2018.  Amgen later served a section 8A notice stating that it would not begin commercial marketing before April 4, 2018.  Genentech then sought declaratory judgment that Amgen was bound by its earlier statement and could not market the biosimilar before December 18, 2018 and argued its claims are based on a private right of action arising under the BPCIA.  Observing that “[t]his is a novel legal theory not yet addressed by any court,” the court found “there is no need to delve into this unchartered territory at this time.”  Rather, the court found no actual controversy existed because it is unclear if defendant will actually launch its biosimilar before December 18, 2018, and accordingly granted defendant’s motion to dismiss the commercial marketing claim.  The court noted that plaintiffs can seek a TRO or preliminary injunction if the biosimilar is launched before December 18, 2018.  Plaintiffs’ infringement claims remain in the case, and trial is set for June 2020.Failure to Timely Disclose Non-Infringement Theory Violates DNJ Local ANDA Patent Rules <a href="https://www.docketnavigator.com/document/order/ef70ab03-d2da-b55f-2251-c02476cd04eb">Impax Laboratories, Inc. v. Actavis Laboratories Fl,</a> (D.N.J. 4/18/18 Civil Action No. 15-6934 (SRC)) – subscription requiredThe court granted summary judgment of no literal infringement as to certain formulation patents because the phrase “the carboxylic acid is in a distinct bead from (a) or (b)” clearly required that the carboxylic acid be in a bead with no carbidopa or decarboxylase inhibitor. “Impax has no basis–none–for its interpretation to the contrary. Impax has offered no basis for this court to understand this phrase in a way that is contrary to its plain meaning.”  The court denied the motion as to the doctrine of equivalents because the briefing was inadequate to establish prosecution history estoppel.  Regarding other patent claims directed to certain pK profiles, the court first agreed that defendant’s new non-infringement argument was barred because it had not been adequately disclosed as required by the court’s local patent rules.  As to pK claims requiring a “maximum concentration,” the court granted summary judgment of no literal infringement because there was no basis to read a specific measurement procedure into the limitation.  The court also denied summary judgment of no inducement or contributory infringement.Defendants’ Experts “Cherry-Picked” Their Way to Claimed Compound <a href="https://www.docketnavigator.com/document/order/44a2544d-ff63-8ef0-bacf-c835e74fec14">Sanofi-Aventis U.S. LLC v. Fresenius Kabi USA, LLC</a> (D.N.J. 4/25/18, Civil Action No. 14-7869 (MAS) (LHG)) – subscription requiredDefendants failed to prove that the claimed compound was obvious.  The court found that “based on their selection of prior art references and the specific portions of those references upon which they relied,” defendants’ experts “each cherry-picked his way to cabazitaxel.”  While the experts “took different paths to their obviousness conclusions, it was clear to the court from their testimony that ‘all paths led to cabazitaxel.’”  That was an impermissible hindsight analysis.  The court also found that unexpected results, failure of others, and commercial success all pointed to non-obviousness.  The court also found that defendants induced infringement of a second (method of treatment) patent, but that patent was invalid for obviousness.<h3>PTAB</h3>Guidance from PTAB Following SAS Likely Expands IPR Estoppel PTAB GuidanceOn April 26, the PTAB issued a memorandum announcing that, in light of the Supreme Court’s decision in SAS, “[a]s required by the decision, the PTAB will institute as to all claims or none. At this time, if the PTAB institutes a trial, the PTAB will institute on all challenges raised in the petition.” (Emphasis added).  The PTAB also said it will “continue to assess the impact of this decision on its operations and will provide further guidance in the future if appropriate.”<h3>OTHER</h3>Non-profits Request HHS Exercise Bayh-Dole March-in Rights for Exondys 51 March-in Rights LetterThird-party non-profits filed a request with the Secretary of Health and Human Services asking that HHS exercise “march-in rights” under Bayh-Dole as to Sarepta Therapeutics Inc.’s muscular dystrophy drug, Exondys 51, alleging that federal funding underlying the patented inventions wasn’t properly disclosed in patent applications. “Specifically, we are asking that HHS exercise its rights, under the Bayh-Dole Act and contractual agreements with funding agencies, to take title to five patents on eteplirsen, as a remedy to a failure to disclose NIH funding of the inventions, and to use the ownership of those patents as leverage to obtain lower prices.”Read more at <a href="https://media2.mofo.com/v3/assets/blt5775cc69c999c255/blt9e48f6f2894ebd4f/6273ec70b5ad5f2863c5ac35/180405-law360-sarepta-exondys-patents.pdf">Law360</a>.