Clarification on Obviousness-Type Double Patenting? The Federal Circuit Issues Two Decisions in One Day

On Friday, December 7, 2018, the Federal Circuit issued two important decisions involving obviousness-type double patenting.  In the first decision, Novartis Pharmaceuticals Corporation v. Breckenridge Pharmaceutical Inc., the Court addressed the question of whether a patent filed after June 8, 1995 (post-Uruguay Round Agreements Act of 1994 (URAA)) but expires before a pre-URAA patent can qualify as a double patenting reference against the pre-URAA patent.  In the second decision, Novartis AG v. Ezra Ventures LLC, the Court addressed the interplay between patent term extension (PTE) under 35 U.S.C. § 156 and obviousness-type double patenting.  Judge Chen was the author of both decisions.

Novartis Pharmaceuticals Corporation v. Breckenridge Pharmaceutical Inc., No. 2017-2173, 2017-2175, 2017-2176, 2017-2178, 2017-2179, 2017-2180, 2017-2182, 2017-2183, 2017-2184 (Fed. Cir. Dec. 7, 2018)

Novartis sells everolimus, which is the active ingredient in Zortress® and Afinitor®, for treating certain cancers and preventing rejection in patients that have received kidney and liver transplants.  Novartis owns several patents covering everolimus, including: (1) U.S. Patent No. 5,665,772 (the ‘772 patent) which claims the compound everolimus; and (2) U.S. Patent No. 6,440,990 (the ‘990 patent) which claims methods of treatment using everolimus and specific pharmaceutical compositions comprising everolimus.  Both the ‘772 and ‘990 patents have the same priority date of September 24, 1993.  The ‘990 patent was filed on May 23, 1997 (after the June 8, 1995 effective date of the URAA) and expired on September 23, 2013 (20 years from its earliest effective filing date), prior to the expiration date of the ‘772 patent.  The ‘772 patent was filed on April 7, 1995 (before the effective date of the URAA) and was set to expire on September 9, 2014 (17 years from issuance).  However, Novartis obtained five years of PTE under 35 U.S.C. § 156.  With the PTE, the ‘772 patent expires on September 9, 2019.  The diagram below illustrates the relevant dates for each patent, and how, because of the URAA, the ‘990 patent expires earlier than the ‘772 patent:

GRAPHIC1

Novartis sued Breckenridge Pharmaceutical Inc., Par International Ltd. (collectively, Defendants) for infringing claims 1-3, 7, and 10 of the ‘772 patent after the Defendants filed Abbreviated New Drug Applications (ANDAs) to market generic versions of Zortress® and Afinitor®.  In district court, the Defendants conceded that their proposed products infringed the asserted claims of the ‘772 patent.  The parties stipulated that:  (1) the ‘772 and ‘990 patents were assigned to the same entity and shared common inventors; and (2) if the district court found the ‘990 patent to be a proper double patenting reference to the ‘772 patent, then the claims of the ‘990 patent would render the asserted claims of the ‘772 patent invalid for obviousness-type double patenting.  Therefore, the only question before the district court was whether the ‘990 patent could serve as an obviousness-type double patenting reference against the ‘772 patent. Relying on the Federal Circuit’s decision in Gilead Sciences, Inc. v. Natco Pharma Ltd., 753 F.3d 1208 (Fed. Cir. 2014), the district court found that the ‘990 patent was a proper double patenting reference against the ‘772 patent and found the asserted claims of the ‘772 patent invalid for obviousness-type double patenting (as not patentably distinct from the claims of the ‘990 patent).  Interestingly, the district court acknowledged that there was no binding precedent addressing the precise issue of whether a post-URAA patent could serve as a double patenting reference against a pre-URAA patent; however, it concluded that the Federal Circuit’s rational regarding the public’s right to practice an invention after a patent expires, as discussed in Gilead, applied.

With respect to Novartis’s arguments, the district court:

  1. Rejected Novartis’s argument that there was no unjustified extension of patent rights or public harm because the expiration date of the ‘772 patent was the same as it would have been if the ‘990 patent had never issued;
  2. Dismissed Novartis’s argument that, unlike the patent owners in Gilead and AbbVie Inc. v. Mathilda & Terence Kennedy Institute of Rheumatology Trust., 764 F.3d 1366 (Fed. Cir. 2014), Novartis did not engage in any gamesmanship such as the structuring of priority claims among related patents to obtain the benefit of one patent gaining a later expiration date (the district court held that a patentee need not engage in gamesmanship in order to violate the principles of double patenting because neither Gilead nor AbbVie held that gamesmanship is required);
  3. Was unpersuaded by Novartis’s argument that allowing an earlier-expiring post-URAA patent to serve as a double patenting reference for a later-expiring, pre-URAA patent would effectively shorten the statutorily mandated 17-year term of the pre-URAA patent (the district court found that Novartis ran this risk by seeking a second patent on an obvious variant of its invention claimed in the first issued patent); and
  4. Acknowledged that although Novartis’s arguments that the patent term extension it received for the ‘772 patent was not an unjustified extension of patent rights and effectively immunized its patent from a double patenting challenge was correct in the abstract, Novartis’s patent term extension grant was not at issue in the case and, moreover, it had not cited any case law supporting its proposition that patent term extension immunizes a patent from a double patenting challenge (The Federal Circuit noted in footnote 2 of the decision that this issue was being addressed in the concurrently issued opinion Novartis AG v. Ezra Ventures LLC, 2017-2284 (Fed. Cir. Dec. 7, 2018) which is discussed below).

Novartis appealed.

The Federal Circuit (Prost, Wallach and Chen) narrowly framed the issue on appeal as follows: “[C]an a post-URAA patent that issues after and expires before a pre-URAA patent qualify as a double patenting reference against the pre-URAA patent?”  The Federal Circuit held that “…under the circumstances of this case that it cannot” and reversed the district court.

In its decision, the Federal Circuit acknowledged that Gilead addressed a question that was not applicable in this case.  Specifically, Gilead involved two post-URAA patents having the same inventors and a common owner (Gilead).  In this case, Novartis owned one pre-URAA patent (the ‘772 patent) and one post-URAA patent (the ‘990 patent), and that the 17-year term granted to the ‘772 patent did not pose the unjustified time extension problem that was the case for patent invalidated in Gilead.

Readers will recall that the issue in Gilead was whether a patent that issues after but expires before another patent (U.S. Patent No. 5,952,374 (the ‘375 patent)) can qualify as a double patenting reference against an earlier-issuing, but later expiring patent (U.S Patent No. 5,673,483 (the ‘483 patent)) as shown by the below diagram:

GRAPHIC2

The Federal Circuit clarified in this decision that even though it held in Gilead that the ‘375 patent could serve as a double patenting reference against the ‘483 patent (even though the ‘483 patent issued first and expired 22 months after the ‘375 patent), its holding was limited to the post-URAA context.  Specifically, the Court stated:

“Throughout Gilead, we repeatedly noted that our analysis was rooted in the consequences that flow from the implementation of the URAA’s new patent term rule under which a patent expires 20 years from the effective filing date:

[F]or double patenting inquires, looking to patent issue dates had previously served as a reliable stand-in for the date that really mattered – patent expiration.  But as this case illustrates, that tool does not necessarily work properly for patents to which the URAA applies, because there are now instances, like here, in which a patent that issues first does not expire first.”

The Court further noted that the facts of this case did not give rise to the patent prosecution gamesmanship that it worried about in Gilead because here, the later expiration of the ‘772 patent after the ‘990 patent occurred as a result of an intervening change in patent term law.  The Court noted that both the ‘772 and ‘990 patents shared the same effective filing date (September 24, 1993) and that if both had been pre-URAA patents, the ‘990 patent would have expired on the same day as the ‘772 patent by operation of the terminal disclaimer Novartis filed on the ‘990 patent (tying its expiration to that of the ‘772 patent).  Thus, had both patents been post-URAA patents, both would have expired on the same day.  Therefore, in view of the different circumstances in this case, the Federal Circuit held that its holding in Gilead did not resolve the narrow question presented on appeal in this case.

The Federal Circuit disagreed with the Defendants that AbbVie was controlling in this case.  The below diagram illustrates the relevant dates for the two patents at issue in AbbVie, U.S. Patent Nos. 7,846,442 (the ‘442 patent) and 6,270,766 (the ‘766 patent).

GRAPHIC3

The Court noted that AbbVie was distinguishable because (1) it involved two post-URAA patents; and (2) the ‘766 patent had an earlier issuance and earlier expiration date than the ‘422 patent.

The Court concluded by stating:

“In this particular situation where we have an earlier-filed, earlier-issued, pre-URAA patent that expires after the later-filed, later-issued, post-URAA patent due to a change in statutory patent term law, we decline to invalidate the challenged pre-URAA patent by finding the post-URAA patent to be a proper obviousness-type double patenting reference (citing footnote 3).  Instead, we apply our traditional, pre-URAA obviousness-type double patenting practice, see supra, to Novartis’s challenged pre-URAA patent.  That is, we use the ‘772 patent’s issuance date as the reference point for our obviousness-type double patenting analysis.  As we recognized in Gilead, looking to the patent issuance dates pre-URAA serves as a reliable guide for assessing whether a patent may serve as a double patenting reference against another patent.  See 753 F.3d at 1215.  Under this analysis, the ‘990 patent is not a proper obviousness-type double patenting reference for the ‘772 patent.  When the ‘772 patent issued, the ‘990 patent had not yet issued and thus did not exist as a double patenting reference against the ‘772 patent.”

Finally, the Court noted that Novartis did not seek to extend its patent rights over everolimus beyond one patent term (namely, beyond 17 years from issuance).  According to the Court, had the law not changed, regardless of whether Novartis had obtained the ‘990 patent, the ‘772 patent would have expired on September 9, 2014 (September 9, 2019 with the patent term extension).  The fact that the law for patent term changed, resulting in the later-issued ‘990 patent having an earlier expiration date than it would have pre-URAA, should not affect the statutorily granted 17-year patent term for the ‘772 patent.  The Court noted that Novartis did not receive a windfall with the 17-year term for the ‘772 patent because the term of the ‘990 patent was truncated by the intervening change in law.

Novartis AG v. Ezra Ventures LLC, No. 2017-2284 (Fed. Cir. Dec. 7, 2018).

Novartis sells fingolimod, which is the active ingredient in Gilenya®, for the treatment of relapsing forms of multiple sclerosis.  Novartis owns a number of patents covering Gilenya® including: (1) U.S. Patent No. 5,604,229 (the ‘229 patent) which claims a large group of compounds, including fingolimod; and (2) U.S. Patent No. 6,004,565 (the ‘565 patent), which claims a method of administering fingolimod.

Because the ‘229 patent was filed before the effective date of the URAA, it was set to expire on February 18, 2014 (17 years from its issue date).  However, Novartis obtained a PTE of five years pursuant to 35 U.S.C. § 156.  With the PTE, the ‘229 patent expires on February 18, 2019.  The ‘565 patent issued from a patent application filed after the effective date of the URAA, thus its term expired on September 23, 2017 (20 years from its earliest effective filing date).  Thus, because the ‘229 patent is a pre-URAA patent and the ‘565 patent is a post-URAA patent, each is governed by different statutory patent term regimes as shown by the graphic below:

GRAPHIC4

Ezra Ventures (Ezra) filed an ANDA for a generic version of Gilenya®.  Novartis filed an infringement suit against Ezra in response asserting claims 9, 10, 35, 36, 46 and 48 of the ‘229 patent.

On September 22, 2016, the district court denied Ezra’s Federal Rule of Civil Procedure 12(c) motion for judgment on the pleadings.  Specifically, Ezra argued that the ‘229 patent should be ruled invalid, or otherwise terminally disclaimed for the patent term of the expiration date of the ‘565 patent.  Ezra argued that the granted extension of the ‘229 patent term beyond the life of the ‘565 patent was impermissible because it:

  1. De facto extended the life of the ‘565 patent, and violated § 156 (c)(4)’s requirement that only “one patent be extended” (namely, by extending “two” patents);
  2. Violated the “bedrock principle” that the public may practice an expired patent; and
  3. Rendered the ‘229 patent invalid for statutory and obviousness-type double patenting because Novartis’s ‘229 patent claims were not patentably distinct from the ‘565 patent claims.

The district court denied Ezra’s Rule 12(c) motion:

  1. Concluding that Ezra’s argument regarding the de facto extension of the ‘565 patent required reading “effectively” into the statute as a modifier of “extended” and this a reading did not make sense, particularly when compared to other uses of the word “extend” in the statute.
  2. Relying on the Federal Circuit’s holding in Merck & Co. v. Hi-Tech Pharmacal Co., 482 F.3d 1317 (Fed. Cir. 2007) that a terminally disclaimed patent could still have its term extended with a PTE because “Congress chose not to limit the availability of a patent term extension to a specific parent or continuation patent but instead chose a flexible approach which gave the patentee a choice.”  The district court reasoned that “[e]xtension of the term of a patent that has been terminally disclaimed [as allowed in Merck] ‘de facto’ or ‘effectively’ extends the life of the patent over which it is terminally disclaimed,” much like the extension of the ‘229 patent’s term effectively extended the life of the related ‘565 patent in this case.  Thus, the district court concluded that the ‘229 patent’s term extension was permitted under § 156.
  3. Explaining that the expiration of a patent does not grant the public an affirmative right to practice a patent, rather, it merely ends the term of the patentee’s right to exclude others from practicing the patent. In fact, the district court pointed to other ways that the ‘565 patent could be blocked from public use, such as by other patent rights or contractual obligations.
  4. Found that judgment on the pleadings was improper for a double patenting challenge because the analysis included factual issues underlying a “construction of the claims in [the] earlier patent and later “patent” and a “determination of whether differences between claims rendered them patentably distinct”.

Five months after the district court denied Ezra’s Rule 12(c) motion, Ezra stipulated that its ANDA product infringed claims 9, 10, 35, 36, 45 and 48 of the ‘229 patent if the claims were not invalid, expired, or unenforceable.  Shortly thereafter, Ezra sent a letter to the district court stating it would not present any further evidence on the issue of statutory and obviousness-type double patenting and withdrew its other pending defenses stating its decision disposed of all pending triable issues and rendered a trial moot.  On June 9, 2017, the district court entered judgment finding the ‘229 patent valid, unexpired and unenforceable with the PTE, found infringement of the ‘229 patent and imposed an injunction on Ezra’s product until the expiration of the ‘229 patent in 2019.

Ezra appealed and the Federal Circuit (Judges Moore, Chen and Hughes) affirmed the District Court.

Validity of the ‘229 Patent’s Term Extension

  1. Section 156’s “One Extended Patent” Rule

The “one extended patent” rule found in section 156(c)(4) provides that “in no event shall more than one patent be extended under subsection (e)(1) for the same regulatory review period for any product”.  The Federal Circuit agreed with the district court that there was no reason to read “effectively” as a modifier to “extend” in the language of § 156(c)(4).  Additionally, it noted, as the district court had found, “throughout the rest of § 156, ‘extend,’ ‘extension,’ and ‘extending’ refer to the legal status conferred upon a patent chosen to benefit from PTE.”  Thus, this “legal status was the literal changing of the patent’s expiration date by the Director under § 156, ensuring a government-granted de jure exclusionary right for an extended time period as opposed to an “effective” or “de facto” exclusion.  According to the Court, only the ‘229 patent was selected and legally extended and the fact that the ‘565 patent could not be practiced during the extended term of the ‘229 patent was a permissible consequence of the legal status conferred upon the ‘229 patent by § 156.

Ezra contended that to comply with § 156 Novartis had to choose a patent to extend and ensure that no more than one patent was extended.  The Federal Circuit rejected this argument stating that they saw nothing in the text, structure, or history of § 156 that imposed such a requirement on patent owners.  Instead, it stated that Congress chose not to limit the availability of patent term extension to a specific patent but chose a flexible approach which gave the patentee a choice.  Therefore, the Court concluded that Novartis’s selection of the ‘229 patent for extension did not violate § 156(c)(4).

  1. Interaction Between Section 156 and Obviousness-Type Double Patenting

The Federal Circuit rejected Ezra’s argument that the ‘229 patent was invalid due to obviousness-type double patenting because the patent term extension of the ‘229 patent caused it to expire after the ‘565 patent.  Specifically, the Court concluded that such a conclusion was a logical extension of its holding in Merck.  The Federal Circuit agreed with the district court’s observation that if a patent was terminally disclaimed to another patent to overcome an obviousness-type double patenting rejection and then term-extended under § 156 (as in Merck), it will expire after the patent to which it had been subject to a double patenting rejection.  According to the Court, “[S]uch an extension would result in the situation, as here, where the term of patent protection afforded to the patentably indistinct patent to which the extended patent was terminally disclaimed is – in Ezra’s words – ‘effectively’ extended because of a PTE granted pursuant to § 156.”

Ezra argued that a PTE “must not be granted if such an extension violates other provisions of law, such as invalidity under 35 U.S.C. §§ 102 and 103 or obviousness-type double patenting.  The Federal Circuit agreed to the extent of considering a patent’s validity without a § 156 extension.  Specifically, the Court stated that “…if a patent, under its original expiration date without a PTE, should have been (but was not terminally disclaimed because of obviousness-type double patenting, then this court’s obviousness-type double patenting case law would apply, and the patent could be invalidated.  However, if a patent, under its pre-PTE expiration date, is valid under all other provisions of law, then it is entitled to the full turn of its PTE.”

Policy Concerns

The Court concluded by noting that this case did not raise the traditional concerns with obviousness-type double patenting of a patent owner trying to extend his exclusive rights through claims in a later-file patent that are not patentably distinct from claims in an earlier patent.   Here, the ‘229 patent was earlier-filed and earlier issued but had a later expiration date due to the PTE.  The ‘565 patent was later-filed and later-issued.  Additionally, the Federal Circuit found that this case did not present the concerns that resulted in previous decisions regarding obviousness-type double patenting in the post-URAA context.  Namely, there was no potential gamesmanship issues here through the structuring of priority claims like in Gilead.  Instead, in this case, the ‘229 patent would have expired before the ‘565 patent but for the patent term extension.  Thus, there was no concern here that once Novartis had obtained the ‘229 patent that it sought to obtain a second, later expiring patent for the same invention as in AbbVie.

This post was written by Lisa Mueller.