IP News

Federal Circuit Focuses on Burdens Of Proof in Travatan Z' Case

On March 18, 2014, a Federal Circuit panel of Judges Newman, Lourie, and Bryson issued a decision in Alcon Research Ltd., v. Barr Laboratories., Inc., No. 2012-1340. The unanimous decision, authored by Judge Lourie, affirmed the district court's finding of noninfringment, reversed the finding of invalidity, and affirmed the denial of a motion for judgment as a matter of law (JMOL) of noninfringement with respect to patents not asserted at trial.

Alcon owns several patents relating to its glaucoma and ocular hypertension drug Travatan Z'. Two of these patents cover methods of enhancing the chemical stability of prostaglandin compositions, by adding polyethoxylated castor oil (PECO patents). Barr filed an ANDA for Travatan Z' with the FDA, and Alcon initiated suit in U.S. District Court for the District of Delaware. The complaint initially referenced six patents but only the PECO patents were eventually asserted at trial. At trial, Alcon only presented accelerated stability study results performed on their developmental formulation as evidence of infringement.

After a bench trial, the district court found Barr's ANDA product did not infringe the PECO patents and held the PECO patent's claims invalid for lack of enablement and lack of written description. Alcon's evidence of infringement was lacking, because the formulations “differed significantly from Barr's ANDA product.” Alcon Research Ltd. v. Barr Labs. Inc., 837 F. Supp. 2d 364, 376 (D. Del. 2011). The district court then compared the scope of the claims with the level of disclosure and held that in the context of the unpredictable art of chemically stabilizing prostaglandins, one of ordinary skill in the art could not carry out the full scope of the claims without undue experimentation. The claims lacked written description “for essentially the same reason that they fail the enablement requirement.” Id. at 384. Finally, the district court denied the motion for JMOL of noninfringment of patents listed in the complaint but later dropped, because they were not “actually litigated and adjudicated during trial.” Id. at 371, 392.

The Federal Circuit agreed that test results from “meaningfully different” formulations could not serve as a basis from which to draw a reliable inference regarding infringement. Slip Op. at 10. Alcon failed to prove by a preponderance of the evidence that Barr's ANDA product infringed the asserted claims.

With respect to enablement, the Federal Circuit found the district court erred by failing to require Barr to make an initial threshold showing that any experimentation is necessary to practice the claimed invention. Id. at 12. They emphasized that the level of experimentation required to optimize the invention is not relevant to whether any experimentation is required to practice the invention. Id. at 13.

Moving on to the issue of written description, the Federal Circuit found Barr also failed to meet its burden of proof that an ordinarily skilled artisan would not have understood from the disclosure that the patentees invented, or possessed, the methods of the asserted claims. The Federal Circuit stressed that the tests for enablement and written description are distinct, and held that the district court erred when it applied the test for enablement to a written description analysis. Id. at 17-18.

Finally, the Federal Circuit found that “a reference in the complaint is not sufficient to support a judgment. The scope of any judgment should conform to the issues that were actually litigated.” Id. at 20 (internal citations omitted). The Federal Circuit also pointed out that unlike other co-defendants, Barr never counterclaimed to seek a declaratory judgment of noninfringement, which could have preserved its ability to seek an adjudication of the patents not asserted at trial.

History of Patent Litigation May Establish Justiciable Controversy

On Mar. 11, 2014, a Federal Circuit panel of Judges Lourie, Prost, and O'Malley issued a unanimous opinion, authored by Judge Lourie, in Danisco US Inc., v. Novozymes A/S, No. 2013-1214, reversing the dismissal of plaintiff's declaratory judgment action for lack of subject matter jurisdiction and remanding the case to the Northern District of California.

Danisco and Novozymes are makers of Rapid Starch Liquefaction (RSL) products containing genetically modified industrial enzymes used to convert plant based materials into ethanol. Novozymes has a history of suing Danisco and its predecessors for patent infringement dating back to about 2001. In 2011, a US patent issued relating to an enzyme that is the active ingredient in Danisco's RSL products. Novozymes quickly challenged Danisco's patent by filing a request for continued examination. At the time, Novozymes had a patent application pending for its version of the enzyme.

Upon issuance of Novozymes' patent, Danisco immediately filed concurrent district court actions seeking declaratory judgments of noninfringement, invalidity, and priority in the Northern District of Iowa and Northern District of California. The parties stipulated to dismissal of the Iowa action in favor of the California action. Novozymes then moved to dismiss the complaint for lack of subject matter jurisdiction. The district court granted the motion, holding that Danisco did not have a justiciable controversy. First Novozymes did not have an opportunity to take an affirmative act of enforcement, because the Danisco's declaratory judgment action was filed on the same day that the patent issued. Second, pre-issuance conduct did not qualify as an affirmative act of enforcement.

On appeal the Federal Circuit disagreed with the focus on affirmative acts of enforcement and the distinction between pre and post-issuance conduct in determining whether a justiciable controversy exists. The Supreme Court only requires that under a totality of the circumstances there exists a substantial controversy between parties having adverse legal interests and the controversy has sufficient immediacy to warrant a declaratory judgment. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). Therefore an affirmative act is not necessary and the district court's bright line distinction between pre and post-issuance conduct is irreconcilable with the flexibility of the Supreme Court's totality of the circumstances test.

The Federal Circuit found Novozymes exhibited a preparedness and willingness to enforce its patent rights through its history of patent litigation against Danisco on related products. Slip Op. at 10-11. Therefore under the totality of the circumstances test, Danisco demonstrated a substantial risk of harm and established subject matter jurisdiction.

Federal Circuit Holds a Reexamined Patent is 'Same Patent' as Original For Claim Preclusion

On Mar. 31, 2014, a Federal Circuit panel of Judges Newman, Plager, and O'Malley decided Senju Pharma. Co. v. Apotex Inc., No. 2013-1027. The majority opinion, authored by Judge Plager and joined by Judge Newman, affirmed the district court's finding that Senju's suit was barred by claim preclusion. Judge O'Malley dissented.

Senju owns a patent relating to a pharmaceutical ophthalmic solution containing the antimicrobial agent Gatifloxacin in combination with a chelation agent disodium edetate. Apotex filed an ANDA with the FDA in July 2007 and Senju filed suit the following November in the District of Delaware.

In June of 2010, the district court issued findings of fact and conclusions of law following a bench trial, finding that the ANDA product infringed certain claims, but that all infringed claims were invalid for obviousness. Senju filed a timely motion for a new trial or to amend the judgment and findings. Senju also filed a request for reexamination with the U.S. Patent and Trademark Office. A reexamination certificate was issued in October 2011 under which seven claims were canceled, one claim was amended, and five new claims were issued. In November 2011, Senju filed a second suit based on the amended and new claims. A final judgment for the first suit was not entered until December 2011.

In January 2012, Apotex filed a Rule 12(b)(6) motion to dismiss the second suit under the doctrine of claim preclusion. The district court granted the motion, rendering a final judgment for Apotex in the second suit.

On appeal, the Federal Circuit agreed that the suit based on the reexamined patent was correctly barred under claim preclusion. The majority found the question of whether the suit for the original patent is the same cause of action as that of the reexamined patent boiled down to whether the patents involved in both suits are the same. The majority held that because reexamined patents are statutorily limited by the scope of the original patent, for purposes of claim preclusion they are the same. Id. at 14. Therefore, in the absence of a clear showing of material factual differences between the original and reexamined claims, it is assumed that a new cause of action is not created regardless of whether the first judgment was based on invalidity or non-infringement. Id. at 15.

The dissenting opinion stressed that the majority misplaced their focus on the scope of reexamined claims. Id. at 2 (O'Malley dissenting). While patent scope is crucial to the issue of infringement, the issue of validity is essentially about whether rights exist under the patent. As a result, the application of claim preclusion in infringement cases must be fundamentally different from that relating to validity cases. If reexamination created rights that did not exist at the time of the first action, then the patent holder should not be precluded from asserting its new rights in a later action. Therefore the majority's analysis results in “an unprecedented expansion of the doctrine of claim preclusion.” Id. at 9.

Howard Shire is a Partner at Kenyon & Kenyon and the Editor-in-Chief of this newsletter. Tyler Doh is an associate with the firm.

Federal Circuit Focuses on Burdens Of Proof in Travatan Z' Case

On March 18, 2014, a Federal Circuit panel of Judges Newman, Lourie, and Bryson issued a decision in Alcon Research Ltd., v. Barr Laboratories., Inc., No. 2012-1340. The unanimous decision, authored by Judge Lourie, affirmed the district court's finding of noninfringment, reversed the finding of invalidity, and affirmed the denial of a motion for judgment as a matter of law (JMOL) of noninfringement with respect to patents not asserted at trial.

Alcon owns several patents relating to its glaucoma and ocular hypertension drug Travatan Z'. Two of these patents cover methods of enhancing the chemical stability of prostaglandin compositions, by adding polyethoxylated castor oil (PECO patents). Barr filed an ANDA for Travatan Z' with the FDA, and Alcon initiated suit in U.S. District Court for the District of Delaware. The complaint initially referenced six patents but only the PECO patents were eventually asserted at trial. At trial, Alcon only presented accelerated stability study results performed on their developmental formulation as evidence of infringement.

After a bench trial, the district court found Barr's ANDA product did not infringe the PECO patents and held the PECO patent's claims invalid for lack of enablement and lack of written description. Alcon's evidence of infringement was lacking, because the formulations “differed significantly from Barr's ANDA product.” Alcon Research Ltd. v. Barr Labs. Inc., 837 F. Supp. 2d 364, 376 (D. Del. 2011). The district court then compared the scope of the claims with the level of disclosure and held that in the context of the unpredictable art of chemically stabilizing prostaglandins, one of ordinary skill in the art could not carry out the full scope of the claims without undue experimentation. The claims lacked written description “for essentially the same reason that they fail the enablement requirement.” Id. at 384. Finally, the district court denied the motion for JMOL of noninfringment of patents listed in the complaint but later dropped, because they were not “actually litigated and adjudicated during trial.” Id. at 371, 392.

The Federal Circuit agreed that test results from “meaningfully different” formulations could not serve as a basis from which to draw a reliable inference regarding infringement. Slip Op. at 10. Alcon failed to prove by a preponderance of the evidence that Barr's ANDA product infringed the asserted claims.

With respect to enablement, the Federal Circuit found the district court erred by failing to require Barr to make an initial threshold showing that any experimentation is necessary to practice the claimed invention. Id. at 12. They emphasized that the level of experimentation required to optimize the invention is not relevant to whether any experimentation is required to practice the invention. Id. at 13.

Moving on to the issue of written description, the Federal Circuit found Barr also failed to meet its burden of proof that an ordinarily skilled artisan would not have understood from the disclosure that the patentees invented, or possessed, the methods of the asserted claims. The Federal Circuit stressed that the tests for enablement and written description are distinct, and held that the district court erred when it applied the test for enablement to a written description analysis. Id. at 17-18.

Finally, the Federal Circuit found that “a reference in the complaint is not sufficient to support a judgment. The scope of any judgment should conform to the issues that were actually litigated.” Id. at 20 (internal citations omitted). The Federal Circuit also pointed out that unlike other co-defendants, Barr never counterclaimed to seek a declaratory judgment of noninfringement, which could have preserved its ability to seek an adjudication of the patents not asserted at trial.

History of Patent Litigation May Establish Justiciable Controversy

On Mar. 11, 2014, a Federal Circuit panel of Judges Lourie, Prost, and O'Malley issued a unanimous opinion, authored by Judge Lourie, in Danisco US Inc., v. Novozymes A/S, No. 2013-1214, reversing the dismissal of plaintiff's declaratory judgment action for lack of subject matter jurisdiction and remanding the case to the Northern District of California.

Danisco and Novozymes are makers of Rapid Starch Liquefaction (RSL) products containing genetically modified industrial enzymes used to convert plant based materials into ethanol. Novozymes has a history of suing Danisco and its predecessors for patent infringement dating back to about 2001. In 2011, a US patent issued relating to an enzyme that is the active ingredient in Danisco's RSL products. Novozymes quickly challenged Danisco's patent by filing a request for continued examination. At the time, Novozymes had a patent application pending for its version of the enzyme.

Upon issuance of Novozymes' patent, Danisco immediately filed concurrent district court actions seeking declaratory judgments of noninfringement, invalidity, and priority in the Northern District of Iowa and Northern District of California. The parties stipulated to dismissal of the Iowa action in favor of the California action. Novozymes then moved to dismiss the complaint for lack of subject matter jurisdiction. The district court granted the motion, holding that Danisco did not have a justiciable controversy. First Novozymes did not have an opportunity to take an affirmative act of enforcement, because the Danisco's declaratory judgment action was filed on the same day that the patent issued. Second, pre-issuance conduct did not qualify as an affirmative act of enforcement.

On appeal the Federal Circuit disagreed with the focus on affirmative acts of enforcement and the distinction between pre and post-issuance conduct in determining whether a justiciable controversy exists. The Supreme Court only requires that under a totality of the circumstances there exists a substantial controversy between parties having adverse legal interests and the controversy has sufficient immediacy to warrant a declaratory judgment. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). Therefore an affirmative act is not necessary and the district court's bright line distinction between pre and post-issuance conduct is irreconcilable with the flexibility of the Supreme Court's totality of the circumstances test.

The Federal Circuit found Novozymes exhibited a preparedness and willingness to enforce its patent rights through its history of patent litigation against Danisco on related products. Slip Op. at 10-11. Therefore under the totality of the circumstances test, Danisco demonstrated a substantial risk of harm and established subject matter jurisdiction.

Federal Circuit Holds a Reexamined Patent is 'Same Patent' as Original For Claim Preclusion

On Mar. 31, 2014, a Federal Circuit panel of Judges Newman, Plager, and O'Malley decided Senju Pharma. Co. v. Apotex Inc., No. 2013-1027. The majority opinion, authored by Judge Plager and joined by Judge Newman, affirmed the district court's finding that Senju's suit was barred by claim preclusion. Judge O'Malley dissented.

Senju owns a patent relating to a pharmaceutical ophthalmic solution containing the antimicrobial agent Gatifloxacin in combination with a chelation agent disodium edetate. Apotex filed an ANDA with the FDA in July 2007 and Senju filed suit the following November in the District of Delaware.

In June of 2010, the district court issued findings of fact and conclusions of law following a bench trial, finding that the ANDA product infringed certain claims, but that all infringed claims were invalid for obviousness. Senju filed a timely motion for a new trial or to amend the judgment and findings. Senju also filed a request for reexamination with the U.S. Patent and Trademark Office. A reexamination certificate was issued in October 2011 under which seven claims were canceled, one claim was amended, and five new claims were issued. In November 2011, Senju filed a second suit based on the amended and new claims. A final judgment for the first suit was not entered until December 2011.

In January 2012, Apotex filed a Rule 12(b)(6) motion to dismiss the second suit under the doctrine of claim preclusion. The district court granted the motion, rendering a final judgment for Apotex in the second suit.

On appeal, the Federal Circuit agreed that the suit based on the reexamined patent was correctly barred under claim preclusion. The majority found the question of whether the suit for the original patent is the same cause of action as that of the reexamined patent boiled down to whether the patents involved in both suits are the same. The majority held that because reexamined patents are statutorily limited by the scope of the original patent, for purposes of claim preclusion they are the same. Id. at 14. Therefore, in the absence of a clear showing of material factual differences between the original and reexamined claims, it is assumed that a new cause of action is not created regardless of whether the first judgment was based on invalidity or non-infringement. Id. at 15.

The dissenting opinion stressed that the majority misplaced their focus on the scope of reexamined claims. Id. at 2 (O'Malley dissenting). While patent scope is crucial to the issue of infringement, the issue of validity is essentially about whether rights exist under the patent. As a result, the application of claim preclusion in infringement cases must be fundamentally different from that relating to validity cases. If reexamination created rights that did not exist at the time of the first action, then the patent holder should not be precluded from asserting its new rights in a later action. Therefore the majority's analysis results in “an unprecedented expansion of the doctrine of claim preclusion.” Id. at 9.

Howard Shire is a Partner at Kenyon & Kenyon and the Editor-in-Chief of this newsletter. Tyler Doh is an associate with the firm.