The Patent Application At Issue

The patent application at issue was U.S. Patent Application 11/118,824, filed April 29, 2005, as the U.S. national stage of a PCT application filed October 19, 1998, that claimed priority to two UK applications filed May 20, 1998 and October 17, 1997, respectively.

As described in the Federal Circuit opinion, the application was “directed to inhibitors of the renin-angiotensin system (“RAS”), which is ‘important in the maintenance and control of blood pressure as well as the regulation of salt and water metabolism.’” The opinion characterizes the specification as being “largely directed to treating wasting diseases such as cachexia, and to improving cardiovascular fitness and physical endurance,” but notes that it does disclose “[s]troke treatment and prevention,” although no clinical data is provided.

There were three claims at issue:

42. A method for the treatment or prevention of stroke or its recurrence, wherein said method comprises administering, to a patient diagnosed as in need of such treatment or prevention, an inhibitor of the rennin-angiotensin system, said inhibitor having a ClogP of greater than about 1.

43. The method as claimed in claim 42, wherein the inhibitor of the rennin-angiotensin system comprises at least one inhibitor of angiotensin-converting enzyme.

45. The method as claimed in claim 43, wherein the inhibitor of angiotensin-converting enzyme comprises ramipril.

The Board had construed claim 42 as having two elements:

1. “to administer an inhibitor of the rennin-angiotensin system” and
2. “the patient population receiving the inhibitor . . . encompasses patients diagnosed as required stroke treatment or prevention.”

According to the Federal Circuit, although “the Board did not rule directly on whether Montgomery’s claims required that the administration be effective at treating or preventing stroke, it appeared to assume that they did include such a requirement.”

The Prior Art

The USPTO Examiner had rejected the claims as anticipated by four prior references, and the USPTO Board of Patent Appeals and Interferences affirmed the rejections. On appeal, the Federal Circuit focused on the “HOPE” reference.

The HOPE Study Investigators, The HOPE (Heart Outcomes Prevention Evaluation) Study: The Design of a Large, Simple Randomized Trial of an Angiotensin-Converting Enzyme Inhibitor (Ramipril) and Vitamin E in Patients at High Risk of Cardiovascular Events, 12 Can. J. Cardiology 127 (1996)

According to the Federal Circuit opinion:

HOPE describes the design of “a large, simple randomized trial of . . . ramipril . . . and vitamin E . . . in the prevention of myocardial infarction, stroke, or cardiovascular death,” which recruited “[o]ver 9000 [patients] at high risk for cardiovascular events such as myocardial infarction and stroke.” HOPE at 127. HOPE discloses that at the time of its publication, all 9541 patients had been randomized and had been receiving ramipril or a placebo for at least one month. (The HOPE study ultimately found that patients receiving ramipril had a statistically significant reduction in the risk of stroke, but these results were not published until after Montgomery’s priority date and thus are irrelevant to an anticipation analysis.)

The Board found that “each reference teaches administration of ramipril to stroke-prone patients,” and characterized the HOPE study as being “clearly enabled to treat patients, including patients with previous stroke, with ramipril.”

The Federal Circuit Decision 

The Federal Circuit opinion was authored by Judge Dyk and joined by Judge Prost. Judge Lourie wrote a dissenting opinion.

With regard to the rejection based on the HOPE reference, the only “contested” claim element was the administration of ramipril “for the treatment or prevention of stroke or its recurrence.” 

The court first considered whether the claims include “an efficacy requirement,” and expressed skepticism that they did. The court found it more likely that the language “expressed . . . a purpose . . . rather than requiring a particular result.” Interestingly, the court found that this construction was supported by the lack of experimental data in the specification:

Nothing in the ’824 specification suggests that a narrower construction is appropriate: the specification does not describe any studies that show that RAS inhibitors are effective for stroke treatment or prevention, see J.A. 224-52, thus also suggesting that the claims do not incorporate such a requirement . . . .

 The court determined that it did not have to decide the issue, however, because “even if the claim includes an efficacy requirement, efficacy is inherent in carrying out the claim steps.” The court explained:

 We have repeatedly held that “[n]ewly discovered results of known processes directed to the same purpose are not patentable because such results are inherent.” . . . . “It matters not that those of ordinary skill heretofore may not have recognized the[] inherent characteristics of the [prior art].”

HOPE discloses a protocol for the administration of ramipril to stroke-prone patients, and administering ramipril to stroke-prone patients inevitably treats or prevents stroke. See HOPE at 127. Thus, HOPE inherently anticipates the claims at issue.

The court also emphasized that it did not matter whether the HOPE trial actually had been carried out:

[A]nticipation “requires only an enabling disclosure,” not “actual creation or reduction to practice,” so that “actual administration . . . to patients [in the prior art] is irrelevant”—the prior art patent inherently anticipated as long as it “disclose[d] in an enabling manner the administration . . . to patients.”

The court acknowledged the principle that “[a]n invitation to investigate is not an inherent disclosure,” but characterized the HOPE reference as providing a detailed protocol, “far from an abstract theory.” Indeed, the court noted that “[i]n all relevant respects, HOPE is identical to the patent itself, which does not disclose actual results from the administration of ramipril for these purposes.”

Judge Lourie’s Dissent

Judge Lourie dissented from the majority opinion and wrote separately to emphasize the care with which the doctrine of inherency must be applied.

Inherency is a very tricky concept in patent law. Its salutary goal is to prevent subject matter that is effectively in the public’s possession from being retrieved by a patent and withdrawn from the public domain. On the other hand, its downside is withholding patent protection from that which the public knew nothing about until a later inventor found it.

According to Judge Lourie, one safeguard against the liberal use of “inherency” is the requirement of inevitability:

The keystone of the inherency doctrine is inevitability. For anticipation by inherency, a later-claimed invention must have necessarily resulted from the practice of a prior art reference. Our precedent has been steadfast in this strict requirement of inevitability.

Judge Lourie found the HOPE reference to fall short in this regard.

The HOPE paper . . . describes a plan designed to administer a combination of ramipril and vitamin E to patients at risk of a major vascular event including myocardial infarction, stroke, or death from cardiovascular disease. But HOPE . . . truly expresses only a hope, not achievement of that hope. . . . The results of a proposed study . . . are neither predictable nor inevitable. . . . Inherency follows from the carrying out of an activity that inherently produces what is claimed; inherency does not arise from a plan whose description does not indicate its realization.

A description of a process, even if not carried out, is an anticipation of that process. But a mere description of a process that, if it had been carried out, might yield a particular undisclosed result is not an inherent anticipation of that result. Stated somewhat differently, inherency requires description of action that inevitably produces a result, not merely description of action that might have been carried out, but was not, and might have yielded a particular result, but did not.

The Court’s Claim Construction

I find it odd that the court considered it feasible—even probable—that the claims do not embody a requirement for efficacy. Wouldn’t the claims lack utility if they did not recite an effective method?

Would the outcome have been any different if the claims had recited administering “an effective amount” of a RAS inhibitor? With that claim language, would the USPTO have to have shown that the doses of the HOPE protocol were indeed effective for preventing stroke?

Was the applicant unable to include such claim language in the claims because the specification did not include experimental data demonstrating efficacy at a specific dose? The specification does include one paragraph that at least proposes a specific dose to use to prevent stroke.

Are there any claim construction arguments that the applicant could have made that might have affected the outcome?

The Hatch-Waxman ANDA Framework

The Orange Book

When a brand manufacturer obtains FDA approval for a new drug product, it submits to the FDA a list of relevant patents and their expiration dates. The FDA publishes this information in its “Approved Drug Products With Therapeutic Equivalence Evaluations,” a/k/a, the Orange Book.

A generic drug manufacturer may seek FDA approval to market a generic version of an approved drug by filing an Abbreviated New Drug Application (ANDA). An ANDA must include a certification regarding each patent listed in the Orange Book for the product at issue. Relevant to this case is the “paragraph IV” certification, which is an assertion that the listed patent is invalid or will not be infringed by the generic product.

ANDA Litigation

According to the Hatch-Waxman Act, the filing of an ANDA with a paragraph IV certification constitutes an act of patent infringement.  The FDA will approve the generic drug notwithstanding the Orange Book listed patent(s) unless the patent owner brings an infringement action against the ANDA applicant within 45 days of receiving notice of the paragraph IV certification. If the patent owner commences such ANDA litigation, the FDA will not approve the drug for thirty months (this is often referred to as a “thirty month stay”), unless the litigation is resolved earlier.

If the patent holder does not bring suit within 45 days, the ANDA filer can bring a declaratory judgment action to adjudicate the validity and/or infringement issues. This 45-day time period applies to both the first ANDA filer and subsequent ANDA filers.

180 Day Exclusivity Period

In order to incentivize generic manufacturers to challenge possibly invalid patents, the Hatch-Waxman Act awards a first ANDA filer who has made a paragraph IV certification with a 180 day exclusivity period.  That is, the FDA will not approve a subsequent ANDA until 180 days after first ANDA filer has commercially marketed the drug product at issue.

The 180 day exclusivity period can be forfeited if, for example, the generic manufacturer fails to enter the market within 75 days of a final judgment that the relevant patent(s) is(are) invalid or not infringed, whether that judgment is obtained in a litigation involving the first ANDA filer or a subsequent ANDA filer. Thus, if the first ANDA filer reaches an agreement with the brand manufacturer to not enter the market (thereby “parking” its exclusivity period), a subsequent ANDA filer can force the first ANDA filer to enter the market (or forfeit its exclusivity period) by challenging the Orange Book listed patents itself.

The ANDA Proceedings

The product at issue is Xopenex, a fast-acting drug for the treatment of bronchospasm caused by asthma or chronic obstructive pulmonary disease .  The Orange Book lists three patents for Xopenex:

1. U.S. Patent 5,362,755, which expires March 25, 2013
2. U.S. Patent 5,547,994, which expires August 20, 2013
3. U.S. Patent 6,451,289, which expires March 21, 2021

Breath was the first ANDA filer, and made paragraph IV certifications against all three patents. Sunovion brought suit on all three patents, but the ANDA litigation was settled by an agreement between the parties. According to the terms of the settlement agreement, Breath may begin selling generic Xopenex on August 20, 2012.

Dey was the second ANDA filer, and made paragraph IV certifications against all three patents. Sunovion brought suit against Dey on the first two patents, but not on the ’289 patent. Dey then brought a declaratory judgment action regarding the ’289 patent. In response, Sunovion provided Dey with a covenant not to sue, and then moved to dismiss the declaratory judgment action for lack of subject matter jurisdiction.

The district court denied Sunovion’s motion, the parties stipulated to noninfringement, and Sunovion appealed the jurisdiction issue.

The Federal Circuit Decision

As in Teva, the Federal Circuit noted that declaratory judgment jurisdiction is governed by MedImmune, Inc. v. Genentech, Inc., which provides that a justiciable ”case or controversy” exists when “‘the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.’” The court referred to Caraco and Janssen as being pertinent to the specific issues raised in this case. (These cases are discussed in more detail in this article.)

The Federal Circuit cited Caraco for the principle that a covenant not to sue does not moot declaratory judgment jurisdiction, “because only a court judgment of noninfringement or invalidity” would trigger the first ANDA filer’s exclusivity period and have an impact on Dey’s ability to enter the market.

Indeed, as summarized by the Federal Circuit, Sunovion’s “only argument against finding that declaratory jurisdiction existed [when Dey filed its declaratory judgment action] is that success in the declaratory judgment action alone is insufficient to redress Dey’s injury because Dey would still need to succeed in the separate infringement litigation over the other Orange Book patents.” But, the Federal Circuit addressed a similar fact pattern in Caraco, and found declaratory judgment jurisdiction to exist. Likewise, the court noted that here ”a favorable declaratory judgment for Dey on the ’289 patent will eliminate the potential for that patent to exclude Dey from the market, and Dey would then only need a judgment of invalidity or noninfringement on the other Orange Book patents to trigger Breath’s exclusivity period.” Thus, the Federal Circuit concluded

eliminating one barrier is sufficient for declaratory jurisdiction, so long as litigation is also pending that could eliminate the other barriers.

Having determined that declaratory judgment jurisdiction existed when Dey filed its declaratory judgment action, the Federal Circuit considered whether declaratory judgment jurisdiction still exists. Sunovion had two arguments on this issue:

1. “as a practical matter, the separate litigation over the ’755 and ’994 patents cannot be concluded by a final judgment before Breath is entitled to launch its generic product on August 20, 2012.”
2. “once Breath is entitled to launch its generic product, there will no longer be a case or controversy necessary to support declaratory judgment jurisdiction”

The Federal Circuit summarized Sunovion’s position as being that

the court should not allow a declaratory action challenging any Orange Book patent to proceed unless all actions challenging the Orange Book patents can be completed before the date of potential generic entry will arrive and, in Sunovion’s view, deprive the district court of jurisdiction.

The court rejected this position for several reasons. First, the court noted that there is no guarantee that Breath will enter the market on August 20, 2012. “If Breath chooses to delay triggering its 180-day exclusivity period, Dey . . . could potentially be kept off the market until the expiration of the ’289 patent in 2021, absent a judgment of noninfringement or invalidity.”

The court distinguished its holding in Janssen that “a possible delay in the future of a first Paragraph IV ANDA filer in launching its generic product does not give rise to declaratory judgment jurisdiction” based on the “difference between finding that a controversy exists to initiate a suit and determining that the controversy has become moot.” The court explained:

If a party to an appeal suggests that the controversy has, since the rendering of judgment below, become moot, that party bears the burden of coming forward with the subsequent events that have produced that alleged result.

The Federal Circuit determined that Sunovion had not met this burden.  Indeed, the court agreed that “this case will not be moot until Breath actually goes on the market in a way that would trigger its 180-day exclusivity period.”

The court therefore affirmed the district court’s determination that it could exercise jurisdiction over Dey’s declaratory judgment action and its judgment of noninfringement.

Looking Beyond ANDA Litigation

While this case may be helpful to ANDA litigants in that it addresses the declaratory judgment jurisdiction question in yet another fact pattern, it also may be of interest to biotech and personalized medicine companies who are closely following the Myriad “isolated DNA” case. This is because while the Federal Circuit determined that at least one plaintiff in Myriad satisfied the standing requirement necessary to support jurisdiction, Myriad has raised an issue as to whether a change in that plaintiff’s employment has eliminated his standing. (I wrote more about this issue here.) While the Federal Circuit’s discussion of mootness in this case may not apply directly to the question of standing, it indicates that Myriad will have to present strong arguments and evidence on standing if it is going to prevail on that issue.

The Current IDS Rules

As recognized in the Federal Register Notice, the current IDS rules do not provide a mechanism to obtain consideration of a reference discovered after the Issue Fee has been paid, without reopening prosecution.

[A]pplicants who determine that they need to file an IDS after payment of the issue fee must either file a petition under 37 CFR § 1.313(c)(2) to withdraw the application from issue in order to permit entry of an RCE and have the accompanying IDS considered by the examiner, or file a petition under 37 CFR § 1.313(c)(3) to withdraw the application from issue for express abandonment in favor of a continuing application.

Applicants may go through this expensive and time-consuming process even if the reference is not believed to impact the patentability of the allowed claims, in order to ensure compliance with the USPTO’s “duty of disclosure” rules (which still have not been updated after Therasense!).

The QPIDS Pilot Program

Under the QPIDS Pilot Program, an Applicant will be able to obtain consideration of an IDS after the Issue Fee has been paid under certain, limited circumstances. Importantly, the Applicant must be able to make one of the statements set forth in 37 CFR § 1.97(e) regarding the items of information being submitted:

(e) A statement under this section must state either:
(1) That each item of information contained in the information disclosure statement was first cited in any communication from a foreign patent office in a counterpart foreign application not more than three months prior to the filing of the information disclosure statement; or
(2) That no item of information contained in the information disclosure statement was cited in a communication from a foreign patent office in a counterpart foreign application, and, to the knowledge of the person signing the certification after making reasonable inquiry, no item of information contained in the information disclosure statement was known to any individual designated in § 1.56(c) more than three months prior to the filing of the information disclosure statement.

(If appropriate, a statement under 37 CFR § 1.704(d) also can be included to avoid a Patent Term Adjustment (PTA) deduction under 37 CFR § 1.704(c)(10).)

The filing as a whole must include

1. A transmittal form that designates the submission as a QPIDS submission, such as form PTO/SB/09
2. An IDS accompanied by a timeliness statement as set forth in 37 CFR § 1.97(e)
3. The IDS fee set forth in 37 CFR § 1.17(p)
4. An ePetition to withdraw the application from issue under 37 CFR § 1.313(c)(2)
5. The petition fee set forth in 37 CFR § 1.17(h)
6. An RCE, which will be treated as a “conditional” RCE
7. The RCE fee under 37 CFR § 1.17(e).

All papers must be filed via the USPTO’s Electronic Filing System-Web (EFS-Web) and all fees must be paid by authorization to charge a deposit account.

Processing of a QPIDS Pilot Program IDS

According to the Federal Register Notice, if all papers are “compliant” with the QPIDS Pilot Program, the following will occur:

• the petition to withdraw will be granted immediately
• the IDS will be placed on the Examiner’s “expedited” docket

If the Examiner determines that prosecution does not need to be reopened:

• a corrected Notice of Allowability will be issued that acknowledges consideration of the IDS
• the RCE fee automatically will be refunded

If the Examiner determines that prosecution does need to be reopened:

• the RCE will be processed and placed on the Examiner’s docket
• the IDS fee automatically will be refunded
• a notice will be issued that prosecution is being reopened

On the other hand, if the QPIDS submission is not fully compliant with the Pilot Program, but “otherwise complies with the [RCE] requirements,” it will be treated as an RCE.

As always, Applicants “are strongly encouraged to file IDS submissions . . . as soon as the applicants become aware that it is necessary to submit an IDS.”

What About The Rest Of The RCE Problem?

While the QPIDS Pilot Problem may save some applications from languishing on an Examiner’s “special new” docket, it does not justify other USPTO policies that permit—or require—Examiners to put off reconsideration of an RCE for months or even years. Even under the QPIDS program, an RCE will be required if a foreign patent office identifies a relevant reference after the Issue Fee has been paid. That means that instead of considering the impact of the new reference while the invention and other prior art are fresh in the Examiner’s mind, the application will be put aside for as long as it takes to reach the top of the Examiner’s “special new” docket. By that time, the Examiner will have to refamiliarize him/herself with the case, and it will require more time to conduct the same analysis that could have been completed more efficiently when the RCE and IDS first were filed.

All in all, I find the USPTO’s treatment of RCEs wholly at odds with the agency’s focus on compact prosecution and efficiency. Prompt examination of all RCEs would reduce pendency and “promote efficiency in the examination process.”

The Congressional Request

As set forth in the Federal Register Notice, the Commerce, Justice, Science, and Related Agencies Subcommittee’s report on the 2012 Appropriations Bill stated:

By statute, patent applications are published no earlier than 18 months after the filing date, but it takes an average of about three years for a patent application to be processed. This period of time between publication and patent award provides worldwide access to the information included in those applications. In some circumstances, this information allows competitors to design around U.S. technologies and seize markets before the U.S. inventor is able to raise financing and secure a market.

 H.R. Rpt. 112-169, at page 18 (July 20, 2011).

The Subcommittee has instructed the USPTO to study these issues:

PTO, in consultation with appropriate agencies, shall develop updated criteria to evaluate the national security applications of patentable technologies [and] to evaluate and update its procedures with respect to its review of applications for foreign filing licenses that could potentially impact economic security.

H.R. Rpt. 112-169, at page 19 (July 20, 2011).

According to the Subcommittee, protecting “economic security” would ensure that “the United States receives the first benefits of innovations conceived within this country, so as to promote domestic development, future innovation and continued economic expansion.”

Thus, the USPTO is seeking comments as to “whether an economic security screening procedure, which borrows from the current national security screening procedure, should be considered.

The National Security Screening Program

As explained in the Federal Register Notice, in accordance with 35 USC § 181, “all U.S. patent applications are screened to determine whether the publication or disclosure of the application might be detrimental to national security.” If such a question arises, the application is forwarded to a defense agency (e.g., the Atomic Energy Commission or Department of Defense) for further review. If the defense agency determines that publication of the application would be detrimental to the national security, the application is placed under a secrecy order, and is withheld from publication and grant “for such period as the national interest requires.” In accordance with 35 USC § 184, it is against the law to file a foreign patent application directed to an invention that is subject to a secrecy order without first obtaining permission from the relevant defense agency.

An applicant whose patent is withheld from grant can seek compensation under 35 USC § 183 from the relevant defense agency “for the damage caused by the order of secrecy.”

An Economic Security Screening Program? 

As summarized in the Federal Register Notice, “the Subcommittee has raised the concern of a potential risk of loss of competitive advantage during the period of time between publication and patent grant.” In response, the USPTO is considering whether there should be “a new regulatory scheme” modeled on the national security screening program. As outlined in the Federal Register Notice, the new program “would institute a secrecy order that forbids applicants from disclosing subject matter deemed to be detrimental to national economic security for such period as the national interest requires.”

Other Currently Available Options

The Federal Register Notice points out that an applicant currently can elect to maintain his application in confidence by filing a nonpublication request under 35 USC § 122(b)(2)(B)(i). Importantly, “[a]n applicant making such a request must certify that the invention disclosed in the application has not and will not be the subject of an application filed in another country, or filed under a multilateral  international agreement that requires publication of applications 18 months after filing.”

The Federal Register Notice also points out that an applicant currently can elect to expedite prosecution of his application by filing a request for expedited examination (e.g., under the Track I program). 

Thus, to the extent that Congress is concerned about the impact of the delay between publication and grant, applicants already have options to shorten this time period, by delaying publication or expediting examination.

The USPTO’s Questions

The USPTO is soliciting comments on these questions in particular:

On the possible economic security program:

1. Should the USPTO institute a plan to identify patent applications relating to critical technologies or technologies important to the United States economy to be placed under secrecy orders?

2. Which governmental body should be designated by the President to provide the USPTO with the final determination as to which applications should receive this treatment?

3. Which mechanisms should a governmental body use, at the time a patent application is filed, to determine that publication at 18-months of that particular application would be detrimental to national economic security?

4. What criteria should be used in determining that dissemination of a patent application would be detrimental to national economic security such that an application should be placed under a secrecy order?

5. Would regulations authorizing economic secrecy orders be covered by the current statutory authority provided to the USPTO, or would such orders require a new statutory framework?

6. What would be the effect of establishing a new regulatory scheme based on economic security on businesses, industries, and the economy?

7. How could Government agencies best perform such a determination while remaining in compliance with applicable laws and treaty obligations?

8. How would such a policy affect the public notice function that underlies the policy of publication, including the ability of United States inventors and innovators to timely access the newest technical information upon which to build and stay ahead?

9. What would be the impact on United States innovators, companies, and employers? How would such a secrecy order affect United States businesses that currently have substantial business operations or sales in foreign countries?

10. Are the procedures currently available before the USPTO, such as nonpublication requests and prioritized examination, sufficient to minimize risks to applicants and allay concerns with 18-month publication of their invention? If not, why?

11. What are the risks that an economic secrecy order regime would influence other nations to implement similar laws? Would the global implementation of an economic secrecy order regime benefit or hinder the progress of innovation in the United States?

12. How would such a secrecy order regime affect international efforts toward a more harmonized patent system?

13. Should the USPTO consider limiting what is published at 18 months?

On the current national security program:

14. How should criteria currently used by United States defense agencies to screen patent applications for potential national security- based secrecy orders pursuant to 35 U.S.C. 181 properly encompass the scope of invention, which may have a bearing on ensuring the United States maintains its technical advantages in defense-related fields?

15. Are there examples where technologies that could relate to United States defense capabilities that were excluded from consideration for a secrecy order?

16. What is the competitive cost to expanding the scope of the criteria used to screen applications for security order consideration?

17. Among patent practitioners, is there a common practice of attempting to avoid consideration for a secrecy order by drafting the patent disclosure in such a way as to not raise national security implications of an invention?

The Questions The USPTO Should Be Asking Congress

After reading this Federal Register Notice, I have my own list of questions for Congress:

How could preventing a U.S. applicant from obtaining patent protection possibly ensure that “the United States receives the first benefits of innovations conceived within this country”?

Does Congress not understand that the ability to obtain foreign patents can be essential to the ability of a U.S. applicant to secure an international market position?

Does Congress really believe that economically significant inventions (whatever they may be) can be kept secret for as long as it might take for the U.S. inventor “to raise financing and secure a market”?

To the extent that the time between publication and grant poses a risk to economic security, wouldn’t a better solution be to expedite examination of economically significant applications instead of burying them under secrecy orders?

 I.   Proposed Rule 37 CFR § 42.51(b)(3) – Routine discovery of inconsistent information

Perhaps the rule that generated the biggest public outcry is the USPTO’s proposal to impose a pre-Therasense duty of disclosure on all parties in patent trials by requiring them to submit “noncumulative information that is inconsistent with a position advanced by the patent owner or petitioner during the proceeding” and further requiring the party submitting the information to “specify the relevance of the information, including where the information is presented in a document and, where applicable, how the information is pertinent to the claims.”  Proposed Rule 37 CFR § 42.51(b)(3).  Public reaction to this proposal was strongly negative:

• Bruce Stoner (former Chief Judge, BPAI, 1995-2003): “THE PTO SHOULD NOT ADOPT 37 CFR § 42.51(b)(3)….  [T]he effect of the underlined language regarding ‘inconsistent’ noncumulative information appears to me to impose an additional duty of disclosure beyond that imposed in the rule addressing this matter, specifically 37 CFR § 1.56. Having a separate duty embedded in the discovery rules appears unwise to me.”
• ABA-IPL, AIPLA and IPO: “The Committee cautions against the adoption of disclosure obligations that may give rise to disputes in subsequent litigation over subjective determinations, such as whether undisclosed information was ‘cumulative’ or ‘inconsistent’ with a position advanced by a party; or if the information was disclosed, whether its ‘relevance’ was properly or adequately explained.”
• Microsoft: “We believe that such an affirmative disclosure mandate will be unduly burdensome on the patent owner and result in the type of unnecessary, ancillary disputes that are frequently seen in the federal district courts.”
• Genentech: “A positive obligation to discover information contrary to one’s position is incompatible with an adversarial proceeding, and would impose an unreasonably broad and difficult to satisfy obligation.”
• Association of Corporate Counsel: “This requirement goes beyond the Rule 1.56 duty of candor and conflicts with the practitioner’s duty zealously to advocate for his client. This conflict places the practitioner in a tenuous position between his ethical obligations to his client and the PTO’s requirement that he articulate positions that contradict the positions of his client.”

 II.   Proposed Rule 37 CFR § 42.73(d)(3) – Estoppel against patent applicant or owner

I had pointed out that the USPTO’s proposed “Estoppel against patent applicant or owner” rule (37 CFR § 42.73(d)(3)) lacks any apparent statutory basis in the AIA.  Unlike the statutory estoppel provisions that apply against petitioners in post-grant and inter partes review proceedings, the USPTO’s proposal would estop patent owners and applicants from ”from taking action inconsistent with the adverse judgment, including obtaining in any patent: (i) A claim to substantially the same invention as the finally refused or cancelled claim; (ii) A claim that could have been filed in response to any properly raised ground of unpatentability for a finally refused or cancelled claim; or (iii) An amendment of a specification or of a drawing that was denied during the trial proceeding.”  Proposed 37 CFR § 42.73(d)(3).  The public’s response to this proposal is negative:

• Bruce Stoner (former Chief Judge, BPAI, 1995-2003): “[H]owever necessary such provisions may be to preserve a uniform set of consequences to all parties, these provisions appear to not be warranted by the existing statute. Presumably, the PTO has proposed this rule as an analogy to interference estoppel (briefly summarized in MPEP § 2308.03). I think it is not quite so clear that the case law of interferences will be adopted. Seeking amendment of the law seems preferable to me.”
• ABA-IPL, AIPLA and IPO: “This rule, nowhere authorized in the AIA, would be unfair to patent owners. It also appears to exceed the PTO’s rulemaking authority. See Tafas v. Doll, 559 F.3d at 1352.”
• IEEE: “The Umbrella Rule imposes an estoppel beyond that authorized by statute…. [B]y statute, 35 U.S.C. § 120, an applicant that is entitled to file a continuation application is entitled to all rights arising in that application. The USPTO cannot by regulation attenuate this statutory right.”
• IBM: “The rule is troubling since it raises the specter of foreclosing closely related claims in (for example) continuation or parent applications based on the PTO’s determination of whether those claims might be considered to be ‘substantially the same invention’, or might have been filed in the inter partes review.”
• PhRMA: “Contrary to the proposed rules, no estoppels against presenting different claims in a later continuation should arise against a patent owner. This rule, nowhere authorized in the AIA, could be grossly unfair to patent owners.”

My colleagues Courtenay Brinckerhoff and Max Colice have described a scenario that highlights some potential consequences of this rule, and the inequities that could arise if the same prior art is cited in a patent trial proceeding as opposed to during prosecution.

III.   Proposed 37 CFR § 42.121/42.221 – Amendments

Comments also were filed in connection with USPTO’s proposed rules governing patent owners’ motions to amend claims in both inter partes and post-grant review.   As proposed, the rules would require patent owners to “confer[] with the Board” prior to filing a motion to amend the patent, and such motion would be procedurally denied if “(1) The amendment does not respond to a ground of unpatentability involved in the trial; or (2) The amendment seeks to enlarge the scope of the claims of the patent or introduce new subject matter.”  Proposed 37 CFR § 42.121/42.221.  Here is what commenters had to say:

• PhRMA: “[B]ecause the first motion to amend is by right, there should be no burden to ‘confer’ with the Board.”
• Intellectual Ventures: “Because questions of enlarged claim scope and new matter are substantive questions that arise under statutory provisions, amendments raising such questions should not be procedurally denied, but rather entered and substantively rejected so that the questions can be appropriately reviewed.”
• AIPLA: “Certain aspects of the proposed rules directed to amended claims are not required by the text of the AIA, and may be viewed as not entirely consistent with the statutory language. For example, the Office’s proposed rules state that a motion to amend the patent will not be granted where ‘the amendment does not respond to a ground of unpatentability involved in the trial.’ . . . . [T]his restriction is not found in the text of the AIA.”
• Abbott Laboratories: “[T]he AIA expressly allows a patent owner to file one motion to amend as of right – that is, without permission from the Board. Compare 35 U.S.C. §316(d)(1) with 35 U.S.C. §316(d)(2). This rule suggests that a patent owner has a burden in relation to its first motion to amend, beyond what is expressly stated in the statute.” 

What Will the USPTO Do?

I am hopeful that the USPTO will heed the public’s well-reasoned comments and simply drop these three proposals. According to a statement by Janet Gongola, Patent Reform Coordinator for the USPTO, “[t]he agency will respond to the comments in the aggregate” when it publishes the Notices of Final Rules, which it plans to do “by August 16, 2012.” Because the rules must take effect on September 16, 2012, when the new patent trial proceedings become available under the AIA, the USPTO’s timetable may leave us only 30 days to study the final rules and devise appropriate strategies.

The Court’s Order

As set forth in the Federal Circuit order, “[t]he parties are requested to file simultaneous supplemental briefs, not exceeding 20 pages, not later than June 15, 2012, addressing the following issue:

What is the applicability of the Supreme Court’s decision in Mayo to Myriad’s isolated DNA claims and to method claim 20 of the ’282 patent?

The court also invites amicus briefs (limited to 15 pages) filed by the same deadline, and notes that “any such amicus briefs may be filed without consent and leave of court,” although they must comply with comply with the other requirements for amicus briefs, including Federal Rule of Appellate Procedure 29 and Federal Circuit Rule 29.

The court also “expressly invite[s]” the United States to file an amicus brief.

Oral Argument

According to the order, oral argument will be held at 10:00 a.m. on July 20, 2012.

The Claims At Issue

Claim 1 of U.S. Patent 5,747,282 is representative of the “isolated DNA” claims:

An isolated DNA coding for a BRCA1 polypeptide, said polypeptide having the amino acid sequence set forth in SEQ ID NO:2.

I explained in this article how the Supreme Court’s Prometheus decision might be applied to such claims, and discussed in this vlog why the outcome in Prometheus should not govern the issues raised in Myriad.

Claim 20 of the ’282 patent recites:

A method for screening potential cancer therapeutics which comprises: growing a transformed eukaryotic host cell containing an altered BRCA1 gene causing cancer in the presence of a compound suspected of being a cancer therapeutic, growing said transformed eukaryotic host cell in the absence of said compound, determining the rate of growth of said host cell in the presence of said compound and the rate of growth of said host cell in the absence of said compound and comparing the growth rate of said host cells, wherein a slower rate of growth of said host cell in the presence of said compound is indicative of a cancer therapeutic.

I hope that Myriad does not need to devote many of its 20 pages to explain why this claim recites a method that “amounts to significantly more” than any natural law that might be embodied in the underlying biological processes, but perhaps an amicus brief should focus on this claim to ensure that biotechnology patents are not completely eviscerated!

The Required Information

The Federal Register Notice encompasses information collected during examination of a U.S. patent application, including Information Disclosure Statements, Requests for an Interview, Amendments and Responses, Disclaimers, Petitions for Extensions of Time, Requests for Continued Examination, Notices of Appeal, Requests for Pre-Appeal Brief Review, Requests for Oral Hearing, and Petitions to Revive.  The Federal Register Notice sets forth the estimated time burden associated with each item of information.

Request For Comments

As set forth in the Federal Register Notice, the USPTO invites comments on the following:

• Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility
• The accuracy of the agency’s estimate of the burden (including hours and cost) of the proposed collection of information
• Ways to enhance the quality, utility, and clarity of the information to be collected
• Ways to minimize the burden of the collection of information on respondents, e.g., the use of automated collection techniques or other forms of information technology

The USPTO’s Time Estimates

On the whole, I think the USPTO’s time estimates grossly underestimate the time required to submit the information at issue, particularly where the information is substantive. According to the Federal Register Notice, the USPTO estimates that it will take an average of anywhere from 1 minute, 48 seconds (for a Certificate of Mailing) to 10 hours (for a Declaration under Rule 1.130, 1.131 or 1.132) to comply with its information collection requirements, including the time required “to gather the necessary information, create the documents, and mail the completed request, depending upon the complexity of the situation.”  

The USPTO estimates 5 minutes for a Request for a Corrected Filing Receipt. I find it hard to believe that someone could carefully review the filing date, title, inventor information and priority information listed on a filing receipt, determine the source of any discrepancies, and prepare a request in 5 minutes or less.

The USPTO estimates 12 minutes for an Express Abandonment.  While it might be possible to prepare the paperwork that quickly, I certainly would take more time gathering the necessary information, such as confirming the Applicant’s intention and explaining the irrevocability of an express abandonment.

The USPTO estimates 12 minutes for a Disclaimer. Again, while it might be possible to prepare the paperwork that quickly, I certainly would take more time gathering the necessary information, such as confirming that a disclaimer is necessary and appropriate and that the Applicant understands its consequences.

The USPTO estimates 1 hour for a Petition to Revive an unintentionally abandoned application. While there might be some cases where the underlying facts can be ascertained and confirmed in under an hour, I would imagine that for most applications it could take at least one hour just to determine how/why the application became abandoned, as required to support the averment that the abandonment was unintentional.

The USPTO estimates 8 hours for an Amendment/Response, 10 hours for a Declaration, and 5 hours for a Request for Pre-Appeal Brief Review. These estimates are not completely out of line, but it is difficult to believe that they are true averages, i.e., that enough Responses take only a few hours to balance the Responses that take many more hours. While I could accept that the average response takes 8 hours or less to write, I would think that the time required to “gather the necessary information”—to review the Office Action, study the cited references, consider response strategies, prepare claim amendments and formulate arguments—will take more than 8 hours on average.

The Unnecessary Burdens Associated With Information Disclosure Statements

I am hopeful that this Paperwork Reduction Act review will force the USPTO to address the unnecessary burdens associated with its Information Disclosure Statement (IDS) rules. As I have written previously, the USPTO’s current IDS rules do not provide an efficient framework for citing information from a co-pending U.S. application that is undergoing parallel examination (McKesson-type IDSs), and require Applicants to submit copies of documents that already are in the USPTO’s possession.   

The current IDS rules impose unnecessary burdens on both Applicants and the USPTO. For example, as I wrote previously, in the context of McKesson-type IDSs, the current IDS rules require the same documents to be processed at least three times:

1. First, when the USPTO issues the first Office Action and provides copies of non-patent references. 
2. Second, when the applicant copies the Office Action and references for the IDS in the co-pending application.
3. Third, when the USPTO scans/uploads the Office Action and references from the IDS for the electronic file of the co-pending application

There is no legitimate justification for these wasteful and duplicative requirements, particularly where there are straight-forward regulatory fixes that would go far to alleviate these burdens:

(1) Extend MPEP 2001.06(b) to Co-Pending U.S. Applications

MPEP 2001.06(b) provides that if an application is filed as a CON, DIV or CIP of an earlier application, the examiner will consider the prior art cited in the earlier application without the applicant having to cite to same art in the later application. The USPTO should extend this provision to co-pending U.S. applications that are identified by the applicant. For example, once an Applicant has identified a co-pending U.S. application (such as in an initial IDS), the examiner could periodically check the co-pending application file for new information that may be material to patentability, such as prior to issuing each Office Action or Notice of Allowance. Alternatively, the applications could be linked electronically, such that new information in one application automatically would be added to the electronic file wrapper of the other application.

(2) Extend 37 CFR 1.97 to Co-Pending Applications

The timing requirements of the current IDS rules include several exceptions for information first cited in a counterpart foreign application. The USPTO should extend these provisions to co-pending U.S. patent applications. There is no reason the USPTO should make it more difficult for applicants to obtain consideration of information originating from a co-pending U.S. application as compared to a foreign application.

(3) Extend 37 CFR 1.98 to Co-Pending U.S. Applications  

The documentation requirements of the current IDS rules require applicants to submit copies of all references (other than U.S. patent documents) unless the references already were cited in an earlier U.S. parent application. The USPTO should extend this exception to references that already were cited in co-pending U.S. applications. An examiner can access information of record in the co-pending application electronically, and nearly as easily as information of record in the application at hand. Alternatively, the applications could be linked electronically, such that new information in one application automatically would be added to the electronic file wrapper of the other application. Thus, there is no justification for imposing this burden on applicants. Indeed, this rule stems from the days of paper patent files, and now is obsolete in view of the USPTO’s electronic file system.

The USPTO should use the new Common Citation Document Application (CCD) tool to reduce the burdens associated with submitting copies of documents cited in co-pending EPO or JPO applications.  As I wrote previously, the CCD tool “enables patent examiners as well as innovators to search for and view, in a single screen, the prior art cited by the [EPO, JPO and USPTO] patent offices for the family members of a patent application.” Now that this tool is available the USPTO should tweak these IDS rules:

(4) Extend MPEP 2001.06(b) to Foreign Applications encompassed by the CCD

As noted above, MPEP 2001.06(b) provides that if an application is filed as a CON, DIV or CIP of an earlier application, the examiner will consider the prior art cited in the earlier application without the applicant having to cite to same art in the later application. The USPTO should extend this provision to related foreign applications encompassed by the CCD (e.g., at least corresponding EPO and JPO applications), such that the examiner would use the CCD tool to determine if any potentially relevant references are cited in co-pending EPO or JPO applications.  Alternatively, the applications could be linked electronically, such that new information in a EPO or JPO CCD application automatically would be added to the electronic file wrapper of the U.S. application.

(5) Extend 37 CFR 1.98 to References available on the CCD

As noted above, the documentation requirements of the current IDS rules require applicants to submit copies of all references other than U.S. patent documents unless the references already were cited in an earlier U.S. parent application. The USPTO should extend this exception to include references available on the CCD.

The USPTO also should take advantage of free patent databases and should not require Applicants to submit copies of documents that it has ready access to, such as published PCT applications and other foreign patent documents that are freely available on-line. Now that that WIPO maintains a database with over 10.5 million patent documents including over 2 million published PCT applications, the USPTO should tweak this IDS rule:

(6) Extend 37 CFR 1.98 to Freely Available PCT and Foreign Patent Documents

In addition to expanding the exception in 37 CFR 1.98 to include references available on the CCD, the USPTO should extend the exception to include freely available PCT and foreign patent documents, such as those freely available through the WIPO Patentscope website.

A Window Of Opportunity

I have  been writing about the unnecessary burdens associated with complying with the IDS rules since I first started this blog. While I understand that the USPTO has other important work to do, I hope that they take this Paperwork Reduction Act review seriously. What could fall more squarely under unnecessary paperwork burdens than rules that require Applicants to submit to the USPTO documents already in its possession and documents freely available to the USPTO with a few keystrokes or via processes that could be automated?

Here’s what I had to say:

WLF Legally Brief: Supreme Court Prometheus Patent Decision

While this case is similar to Caraco Pharmaceutical Labs., Ltd. v. Novo Nordisk A/S, in that it relates to a method of use patent in the ANDA framework, it raises different issues than those decided by the Supreme Court a day after this Federal Circuit decision was issued. (Please see this article for a discussion of Caraco.)

The Hatch-Waxman ANDA Framework

The Orange Book

When a brand manufacturer obtains FDA approval for a new drug product or method treatment, it submits to the FDA a list of relevant patents and their expiration dates. The FDA does not investigate or verify the identified patents, but publishes the information in its “Approved Drug Products With Therapeutic Equivalence Evaluations,” a/k/a, the Orange Book.

A generic drug manufacturer may seek FDA approval to market a generic version of an approved drug by filing an Abbreviated New Drug Application (ANDA). An ANDA must include a certification regarding each patent listed in the Orange Book for the product at issue. Relevant to this case is the “paragraph IV” certification, which is an assertion that the listed patent is invalid or will not be infringed by the generic product.

ANDA Litigation

According to the Hatch-Waxman Act, the filing of an ANDA with a paragraph IV certification constitutes an act of patent infringement. Thus, a patent owner can bring an infringement action against an ANDA applicant who has made a paragraph IV certification, permitting resolution of the patent issues before the generic product enters the market. Two additional principles of this “artificial” infringement are relevant to this case:

• By its express terms, 35 USC § 271(e)(2) makes it an act of infringement to file an ANDA “for a drug claimed in a patent or the use of which is claimed in a patent”
• In accordance with the 2003 Federal Circuit decision in Warner-Lambert Co. v. Apotex, Corp., the artificial infringement pertains only to “a patented use that has been approved by the FDA.”

The Product At Issue

The product at issue is Bayer’s Yasmin product, which is approved for oral contraception.

The patent at issue is U.S. Patent 5,569,652, which claims methods of “simultaneously achieving . . . a gestagenic effect, antiandrogenic effect, and an antialdosterone effect ….” (Two other patents listed in the Orange Book for Yasmin are not at issue in this case.)

The District Court Litigation

The defendants in this case—Lupin, Watson and Sandoz—each filed ANDAs with paragraph IV certifications regarding the Orange Book listed patents, including that ’652 patent. Bayer sued each defendant, alleging infringement under 35 USC § 271(e)(2) of the ’652 patent  (only).

Watson and Sandoz moved for judgment of noninfringement on the pleadings (under Federal Rule of Civil Procedure 12(c)), arguing that “their ANDAs related to the use of the generic form of Yasmin only for oral contraception and not for the combination of uses claimed in the ’652 patent.” The district court agreed, and granted their motions. In so doing, the court “noted that the FDA had approved the use of Yasmin only for oral contraception, and not for the simultaneous treatment of three conditions . . . [as] claimed in the ’652 patent.” Moreover, because “there was nothing in the record to indicate that the defendants sought to promote their generic versions of Yasmin based on the anti-androgenic or anti-aldosterone properties claimed in the ’652 patent, the court rejected Bayer’s claim that the defendants were liable for inducement of infringement.” Based on that ruling, Bayer and Lupin stipulated to, and the court entered, final judgment in that suit as well.

The Federal Circuit Decision

The court summarized the governing principles as follows:

Based on Warner-Lambert and Allergan, the defendants’ conduct would constitute infringement under section 271(e)(2)(A) (or inducement of infringement under section 271(b)) only if the defendants’ ANDAs sought approval for the use protected by the ’652 patent, i.e., for the combination of a gestagenic effect, an anti-androgenic effect, and an anti-aldosterone effect in patients needing that combination of effects.

Given the ANDA framework, “the use or uses for which the ANDAs seek FDA approval are necessarily the same as the uses for which the FDA has given its approval by granting Bayer’s NDA.” Thus, the “narrow” question before the court was:

whether the FDA has approved the use of Yasmin to achieve the combination of the three effects claimed in the ’652 patent.

In deciding this issue, the Federal Circuit noted that the “Indications and Usage” section of the approved Yasmin label states:

Yasmin is indicated for the prevention of pregnancy in women who elect to use an oral contraceptive.

The court noted that “that characterization tracks the FDA’s approval letter for Yasmin, which stated that the NDA ‘provides for the use of Yasmin . . . for oral contraception.’”

Bayer cited information set forth in the “Pharmacodynamics” subsection of the “Clinical Pharmacology” section of the label, which states that drospirenone (one of the two active ingredients in Yasmin):

is a spironolactone analogue with antimineralocorticoid activity. Preclinical studies in animals and in vitro have shown that drospirenone has no androgenic, estrogenic, glucocorticoid, and antiglucocorticoid activity. Preclinical studies in animals have also shown that drospirenone has antiandrogenic activity.

The Federal Circuit disagreed that the presence of this information indicated that the FDA had approved Yasmin for those uses. To the contrary, the court found no indication that the FDA had determined that Yasmin is “safe or effective in inducing those effects.”

The court concluded:

The defendants’ ANDAs seek approval to market the generic form of Yasmin solely for contraceptive use, and there is no valid patent on the use of the drug for that purpose alone. The FDA-approved label for Yasmin does not indicate to physicians that the specific use claimed in the ’652 patent, i.e., producing contraceptive, anti-mineralocorticoid, and anti-androgenic effects in premenopausal and menopausal women with a specific need of all three effects, is safe and effective. Therefore, we agree with the district court that the FDA has not approved such use and that the defendants cannot be held liable for infringement of the patent.

Judge Newman’s Dissent

Judge Newman wrote a dissenting opinion that disagreed with the majority decision on procedural, factual, and legal grounds.

• Procedurally, Judge Newman disagrees that this case properly was decided at the pleadings stage, because infringement is a question of fact and the court did not accept all of Bayer’s factual assertions as true.
• Factually, Judge Newman disagrees that the FDA did not approve the antiandrogenic and antialdosterone effects recited in the ’652 patent.
• Legally, Judge Newman disagrees that the infringement inquiry should focus on the FDA-approved labeling instead of the actual (planned) marketing and use of the generic product.

(For a discussion of labeling that was found to support a claim of induced infringment, please see this article on Astra Zeneca LP v. Apotex, Inc.)

Now What?

It will be interesting to see what happens next. Once the FDA approves the ANDAs and the defendants prepare to market generic versions of Yasmin, Bayer may have several additional options to keep them off the market. As noted above, there are two other patents listed in the Orange Book for Yasmin. While Bayer chose not to litigate those patents in the ANDA framework, it still could assert them in an infringement action under 35 USC § 271(a) (direct infringement). Moreover, Bayer even may be able to assert the ’652 patent in infringement actions under 35 USC § 271(b) (induced infringment), because the infringement inquiry will not be restricted by the FDA-approved labeling, but could include broader consideration of, for example, the defendants’ marketing programs.

The Hatch-Waxman ANDA Framework

The Federal Circuit decision and Supreme Court decision provide good summaries of the Hatch-Waxman ANDA framework, so I will provide only a skeleton outline of the most relevant provisions here.

The Orange Book

When a brand manufacturer obtains FDA approval for a new drug product or method treatment, it submits to the FDA a list of relevant patents and their expiration dates. For method of use patents, the brand manufacturer must provide a description of the methods, which is referred to as the “use code narrative.” The FDA publishes this information in its “Approved Drug Products With Therapeutic Equivalence Evaluations,” a/k/a, the Orange Book.

A generic drug manufacturer may seek FDA approval to market a generic version of an approved drug by filing an Abbreviated New Drug Application (ANDA). An ANDA must include a certification regarding each patent listed in the Orange Book for the product at issue, chosen from the following:

A paragraph I certification states that there is no patent information listed in the Orange Book
A paragraph II certification states that the listed patent has expired
A paragraph III certification seeks approval on date on which the listed patent will expire
A paragraph IV certification states that the listed patent is invalid or will not be infringed by the generic product

Generic Carve-Out Labeling

When a product is covered only by one or more method of use patents (as opposed to product patents), a generic manufacturer can file an Abbreviated New Drug Application (ANDA) that seeks FDA approval for a use that is not covered by the patents. Under these circumstances, the generic manufacturer must make a ”section viii” statement certifying that the method of use patent “does not claim a use for which the [ANDA] applicant is seeking approval,” as reflected in the generic manufacturer’s proposed labeling. When reviewing this type of ANDA, the FDA compares the brand product’s use code narrative with the generic manufacturer’s proposed labeling to confirm that there is no overlap between the uses.

ANDA Litigation

According to the Hatch-Waxman Act, the filing of an ANDA with a paragraph IV certification constitutes an act of patent infringement.  The FDA will approve the generic drug notwithstanding the Orange Book listed patent(s) unless the patent owner brings an infringement action against the ANDA applicant within 45 days of receiving notice of the paragraph IV certification. If the patent owner commences such ANDA litigation, the FDA will not approve the drug for thirty months (this is often referred to as a “thirty month stay”), unless the litigation is resolved earlier.

ANDA Litigation Counterclaim

The Hatch-Waxman Act ANDA litigation provisions include a clause introduced by a 2003 amendment (21 USC § 355(j)(5)(C)(ii)(I)) that permits a generic manufacturer to challenge the Orange Book listing under certain circumstances:

[The ANDA] applicant may assert a counterclaim seeking an order requiring the holder to correct or delete the patent information submitted by the holder under subsection (b) or (c) of this section on the ground that the patent does not claim either–
(aa) the drug for which the application was approved; or
(bb) an approved method of using the drug.

The Caraco Question

This issue presented in Caraco is whether this clause permits a counterclaim when the listed patent does claim an approved method of using the drug, but the use code narrative describes the use (allegedly) over-broadly.

The Caraco Dispute

The Original Orange Book Listing

The product at issue is the drug repaglinide, which Novo Nordisk A/S markets under the brand name Prandin®. The FDA has approved the drug for three uses:

1. repaglinide by itself (i.e., monotherapy)
2. repaglinide in combination with metformin
3. repaglinide in combination with thiazolidinediones 

The Orange Book listed two patents for Prandin®: 

1. U.S. RE 37,035, which includes product claims and expired March 14, 2009
2. U.S. 6,677,358, which includes combination product and method claims using repaglinide and metformin, and which is set to expire June 12, 2018:

A method for treating non-insulin dependent diabetes mellitus (NIDDM) comprising administering to a patient in need of such treatment repaglinide in combination with metformin.

The ’358 patent originally was listed with the following use code:

U-546–Use of repaglinide in combination with metformin to lower blood glucose.

The Caraco Carve-Out

After Novo Nordisk initiated ANDA litigation against Caraco, Caraco submitted an amended ANDA seeking approval with a carve-out of the repaglinide-metformin combination therapy. The FDA indicated that it would approve Caraco’s proposed carve-out label, but then Novo Nordisk submitted an amended form to modify the use code narrative to conform to the indication on its labeling. Pursuant to that filing, the FDA removed the use code U-546 from the Orange Book listing and substituted a new use code:

U-968–A method for improving glycemic control in adults with type 2 diabetes mellitus.

Because Caraco’s proposed carve-out no longer avoided the method encompassed by the new use code narrative, the FDA would not approve Caraco’s proposed carve-out labeling.

Caraco’s Counterclaim

After the FDA adopted the new use code, Caraco asserted a counterclaim in the ANDA litigation, “requesting an order requiring Novo to change the use code for the ’358 patent” and alleging that the new use code “was overbroad because it incorrectly suggested that the ’358 patent covered all three approved methods of using repaglinide even though it claimed only one approved method.”

The district court granted Caraco’s request, and issued the following order:

Novo Nordisk is hereby directed by mandatory injunction under 21 U.S.C. § 355(j)(5)(C)(ii)(1)(bb) to correct within twenty (20) days from the date of this Order and Injunction its inaccurate description of the ’358 patent by submitting to FDA an amended Form FDA 3542 that reinstates its former U-546 listing for Prandin and describes claim 4 of the ’358 patent in section 4.2b as covering the “use of repaglinide in combination with metformin to lower blood glucose.”

The Federal Circuit Decision

On appeal, the Federal Circuit construed the counterclaim provision narrowly, and reversed the district court. The Federal Circuit read the plain language of clause (bb) as ”authoriz[ing] a counterclaim only if the listed patent does not claim any approved methods of using the listed drug.” Because the patent at issue claimed one of the three approved uses for Prandin®, the counterclaim provision did not apply. Moreover, the court read the main clause as “only authoriz[ing] suits to correct or delete an erroneous patent number or expiration date,” not to correct any alleged errors in the use code narrative.

The Supreme Court Decision

 In a unanimous decision, the Supreme Court reversed the Federal Circuit decision and held that a generic manufacturer can use the counterclaim provision of 21 U. S. C. §355(j)(5)(C)(ii)(I) to “force correction of a use code that inaccurately describes the brand’s patent as covering a particular method of using the drug in question.”

The Supreme Court arrived at its interpretation of the statute after considering together both its “statutory text and context.” The Supreme Court noted that the FDA itself does not review the accuracy of the use code information provided by the innovator patent holder, but “takes that code as a given.” The Supreme Court recalled the context of the counterclaim provision, noting that it was enacted after the 2002 FTC report that highlighted the problem of  “brands’ submission of inaccurate patent information” and the 2002 Federal Circuit decision in Mylan Pharmaceuticals, Inc. v. Thompson, where the court held that there was no private right of action to delist an allegedly improperly listed patent.

The Supreme Court explained: 

The statutory scheme, in other words, contemplates that one patented use will not foreclose marketing a generic drug for other unpatented ones. Within that framework, the counterclaim naturally functions to challenge the brand’s assertion of rights over whichever discrete use (or uses) the generic company wishes to pursue. That assertion, after all, is the thing blocking the generic drug’s entry on the market. The availability of the counterclaim thus matches the availability of FDA approval under the statute: A company may bring a counterclaim to show that a method of use is unpatented because establishing that fact allows the FDA to authorize a generic drug via section viii.

The Supreme Court noted that its construction “fit within the statutory scheme” and promoted the Congressional purpose of “facilitating the approval of non-infringing generic drugs.”

Not A Cure-All?

Justice Sotomayor wrote a concurring opinion to discuss problems that still might arise from an overly broad use code. In particular, she notes that correction of an overly broad use code via 21 U. S. C. §355(j)(5)(C)(ii)(I) requires the generic manufacturer to do the following:

submit an ANDA with a paragraph IV certification (which requires a proposed label materially identical to the brand manufacturer’s label)
wait for the brand manufacturer to institute suit
file a counterclaim
litigate the counterclaim
file an ANDA with a section viii statement and a carve-out label

Justice Sotomayor correctly points out that this is a lengthy and expensive process and—perhaps even more significantly—depends on the brand manufacturer bringing an ANDA litigation.  The counterclaim provision is just that—available only as a counterclaim in an ANDA suit. By its express terms, it is not available in any other civil action or proceeding.

If the brand manufacturer does not bring an ANDA litigation, the generic manufacturer’s ANDA would be approved, but its labeling would be the same as that of the brand manufacturer, and so might support a finding of liability for inducing infringement.  (See my article on AstraZeneca LP v. Apotex, Inc for a discussion of this issue.) Thus, the generic manufacturer may be left with an unsatisfactory choice between staying off the market until the patent at issue expires, or entering the market and risking liability for inducing infringement.

Justice Sotomayor concludes that further action by the FDA or Congress is required to provide a mechanism to “restore the smooth working of a statutory scheme thrown off kilter by an overly broad use code,” and takes the FDA to task for providing “remarkably opaque” guidance “as to what is required . . . in use codes.” Indeed, she does not fault Novo Nordisk for its actions in this case, blaming instead the FDA’s use code instructions.

**Foley & Lardner LLP Involvement In This Case**

One of my colleagues at Foley & Lardner LLP served as an expert witness in this case. I personally had no confidential knowledge or involvement in the proceedings, and based this article entirely on public records.