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The district court found that Telebrands' invalidity arguments failed to raise a substantial question of validity. Slip Op. at 7. Specifically, the court determined that Telebrands' argument that the claim term “substantially filled” is indefinite failed to raise a substantial question of validity, noting that there are “specific parameters” in the claims describing how to determine whether a container is substantially filled — e.g., when the water overcomes the connecting force and causes the containers to detach from the hollow tubes. Id. The court also determined that Telebrands' obviousness arguments based on U.S. Patent No. 5,826,803 (Cooper), U.S. Patent Publ. No. 2013/0118640 (Saggio), and U.S. Patent Publ. No. 2005/0004430 (Lee), did not raise a substantial question of validity because none of those prior art references disclose the claimed “elastic fasteners.” Id. at 10.

Telebrands' PGR petition seeking to invalidate the '066 patent operated in parallel to the district court proceeding. Slip Op. at 12. In the PGR proceeding, Telebrands relied upon the same evidence and arguments with respect to patentability as it did before the district court. Id. The PTAB found that claim 1 was likely indefinite because the specification and prior art fail to provide any objective standard for measuring the scope of “filled” or “substantially filled.” Id. at 12-13. The PTAB also found that a combination of Cooper, Saggio, and Lee likely renders claim 1 obvious. Id. at 13.

On appeal of the district court's injunction order, Telebrands challenged the district court's conclusions regarding, among other things, the validity of the claims of the '066 patent. Telebrands contended, at the outset, that the dcourt improperly shifted the burden of proving invalidity to Telebrands, rather than requiring Tinnus to establish a likelihood of success in proving the patent's validity. Slip Op. at 18-19. The Federal Circuit rejected that argument, explaining that, under 35 U.S.C. § 282, the presumption that a patent is valid is sufficient to establish a likelihood of success on the validity issue, absent a challenge by the accused infringer. Id. at 19. It further explained that where the alleged infringer attacks the validity of the patent, the burden is on the challenger to come forward with evidence of invalidity, which the patentee must then rebut. Id. The Federal Circuit determined that the district court properly applied this analytical framework. Id.

Telebrands also contended that the claim term “substantially filled” is indefinite because a skilled artisan would not be able to determine whether an expandable container meets this limitation. Slip Op. at 19. The Federal Circuit first noted that Telebrands did not previously object to the Magistrate Judge's indefiniteness ruling, and explained that, under Fifth Circuit law, where a party fails to object to a magistrate judge's findings of fact, conclusions of law, or recommendation to the district court, a “plain error” standard of review applies to the findings and conclusions adopted by the district court, which is a “deferential standard.” Id. at 12, 15, 20. The Federal Circuit found “it difficult to believe that a person with an associate's degree in a science or engineering discipline who had read the specification and relevant prosecution history would be unable to determine with reasonable certainty when a water balloon is 'substantially filled.'” Id. at 21.

Telebrands further argued that the district court erred in finding no motivation to combine Lee with Cooper and Saggio by failing to consider whether Lee was reasonably pertinent to the particular problem the inventor solved. Slip Op. at 22. Specifically, Telebrands argued that Cooper, Saggio, and Lee all relate to the same problem addressed by the '066 patent: automatically sealing a balloon or multiple balloons at one time. Id. The Federal Circuit, however, determined that “Telebrands has not demonstrated that Lee is reasonably pertinent to the problem addressed in the '066 patent,” because Lee was concerned with “problems associated with an endoscopic balloon insertion device for treating obesity,” and those are “far removed” from the former. Id. at 23.

Based on the record and the applicable standard of review, the Federal Circuit concluded that the district court did not abuse its discretion in issuing a preliminary injunction. Slip Op. at 13 n.7. The Federal Circuit noted that while PTAB's Final Written Decision finding the claims of the '066 patent invalid over the same prior art is not binding on the district court, Telebrands is “free to ask the district court to reconsider its preliminary injunction in light of the PTAB's Decision.” Id.

Federal Circuit: Proving Derivation Requires a Showing That All Limitations Were Conceived and Communicated

On Jan. 26, 2017, a Federal Circuit panel of Judges Moore, Reyna, and Taranto issued a unanimous opinion, authored by Judge Taranto, in Cumberland Pharm., Inc. v. Mylan Institutional, LLC., Case Nos. 2016-1155, 2016-1259. The panel affirmed the Northern District of Illinois' decision rejecting Mylan's invalidity defenses based on derivation and obviousness, after a bench trial.

Cumberland Pharmaceuticals, Inc. (Cumberland) owns U.S. Patent No. 8,399,445 (the '445 patent), which describes and claims acetylcysteine compositions substantially free of chelating agents. Slip Op. at 2. It is listed in the Food and Drug Administration's Approved Drug Products the Therapeutic Equivalence Evaluations (the Orange Book) as covering Cumberland's chelating-free formulation of Acetadote®, an intravenous antidote for acetaminophen overdoses. Id. When Mylan Institutional, LLC (Mylan) filed an abbreviated new drug application (ANDA) to market its own chelating-agent-free acetylcysteine formulation, Cumberland sued Mylan for patent infringement. Id. Mylan stipulated to infringement, but asserted invalidity on two grounds: derivation of the claimed invention from someone at the FDA and obviousness. Id.

In December 2002, almost three years before the priority date of the '445 patent, the FDA was considering Cumberland's application for permission to market the original EDTA-containing formulation of Acetadote®. Slip Op. at 3. The FDA requested data from Cumberland to support its inclusion of a non-trivial amount of EDTA in its formulation. Id. at 3-4. Cumberland responded with a letter in which it explained that EDTA was included to stabilize the formulation. Id. at 4. In a subsequent phone call between the FDA and Mr. Pavliv, the inventor named on the '455 patent, the FDA representatives indicated that they were not prepared to say whether they considered the inclusion of EDTA was justified. Id. Mr. Pavliv then proposed to the FDA that he perform a study of the stability of an acetylcysteine formulation without EDTA. Id. at 4-5. At least one FDA representative on the call approved of his idea, and asked him to submit a proposal in writing, and Cumberland did so. Id. at 5. In November 2004, three months into the study, Mr. Pavliv received encouraging stability data, and in August 2005, Cumberland filed its application for what became a parent of the '445 patent at issue. Id. at 6.

The district court held that: 1) Mylan had not proved that anyone at the FDA conceived of the invention before Cumberland's inventor did; and 2) there was no reasonable expectation that a formulation without any chelating agents would be successful, given the prevailing skilled-artisan view that chelating agents were necessary to prevent degradation of acetylcysteine. Slip Op. at 7. Accordingly, the court entered a final judgment of validity and infringement against Mylan. Id.

The Federal Circuit explained that the ultimate question of whether a patentee derived an invention from another is one of fact, and the determination of whether there was a prior conception by another is a question of law, which is based upon subsidiary factual findings. Slip Op. at 7. Obviousness is a question of law based on underlying questions of fact. Id. The Federal Circuit reviewed the district court's conclusions of law de novo and its findings of fact for clear error. Id. The Federal Circuit explained that a challenger asserting invalidity on the ground of derivation under 35 U.S.C. §102(f) must show that there was a “prior conception of the claimed subject matter and communication of the conception” to the named inventor, where the conception must be a “definite and permanent,” “specific, settled idea” that encompasses all limitations of the claimed invention. Id. at 8-9.

The Federal Circuit noted that the claim language requires that the product be “free of chelating agents,” which meant not only that the EDTA would have to be removed, but also that another chelating agent could not be added in its place. Slip Op. at 10. The Federal Circuit then determined that the district court could properly view the FDA's request for justification for the inclusion of EDTA, in the form of data, as not the same as a suggestion to remove it, let alone remove it and not replace it with another chelating agent. Id. While Mylan argued that the FDA's request for data required Cumberland to undertake research that would have inevitably led it to the invention, the Federal Circuit explained that it has held that derivation is not proved by showing conception and communication of an idea different from the claimed invention even where that idea would make the claimed invention obvious. Id. at 10-11. The Federal Circuit also found that subsequent discussions between the FDA and Cumberland regarding removal of EDTA could properly be viewed as originating from Mr. Pavliv's idea of performing a study of the stability of an acetylcysteine formulation without EDTA. Id. at 11. Further, the Federal Circuit found no error in the district court's finding that, in view of the state of the prior art, there would not have been a reasonable expectation of success in obtaining a stable acetylcysteine formulation by removing EDTA, yet not replacing it with another chelating agent. Id. at 16. Accordingly, the Federal Circuit affirmed the district court's decision.

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Jeffrey S. Ginsberg is Assistant Editor of this newsletter and a partner at Patterson Belknap Webb & Tyler LLP. Abhishek Bapna is an associate at Patterson Belknap Webb & Tyler LLP.

Federal Circuit Affirms Grant of a Preliminary Injunction Despite PTAB's Final Written Decision

On Jan. 24, 2017, a Federal Circuit panel of Judges Moore, Wallach, and Stoll issued a unanimous opinion, authored by Judge Stoll, in Tinnus Enterprises, LLC v. Telebrands Corp., Case No. 2016-1410. The panel affirmed the Eastern District of Texas' grant of a preliminary injunction barring Telebrands Corp. (Telebrands) from selling its accused product, Balloon Bonanza, or any colorable imitation thereof.

Tinnus Enterprises, LLC (Tinnus) produces a toy for filling water balloons covered by U.S. Patent No. 9,051,066 (the '066 patent), “Bunch O Balloons,” which competes with Telebrands “Balloon Bonanza.” Id. Both products attach to a hose and are designed to fill multiple water balloons at once by channeling water into the balloons through a set of hollow tubes. Id. Tinnus sued Telebrands for infringement of the '066 patent, and subsequently moved for a preliminary injunction. Id. at 3. The district court granted Tinnus' motion. Id. Shortly thereafter, the Patent Trial and Appeal Board (PTAB) instituted a post-grant review proceeding (PGR) on the '066 patent, finding all claims were more likely than not invalid. Id. While Telebrands' appeal of the preliminary injunction was pending, the PTAB issued a Final Written Decision concluding that the claims of the '066 patent are indefinite. Id. at 13 n.7.

The district court found that Telebrands' invalidity arguments failed to raise a substantial question of validity. Slip Op. at 7. Specifically, the court determined that Telebrands' argument that the claim term “substantially filled” is indefinite failed to raise a substantial question of validity, noting that there are “specific parameters” in the claims describing how to determine whether a container is substantially filled — e.g., when the water overcomes the connecting force and causes the containers to detach from the hollow tubes. Id. The court also determined that Telebrands' obviousness arguments based on U.S. Patent No. 5,826,803 (Cooper), U.S. Patent Publ. No. 2013/0118640 (Saggio), and U.S. Patent Publ. No. 2005/0004430 (Lee), did not raise a substantial question of validity because none of those prior art references disclose the claimed “elastic fasteners.” Id. at 10.

Telebrands' PGR petition seeking to invalidate the '066 patent operated in parallel to the district court proceeding. Slip Op. at 12. In the PGR proceeding, Telebrands relied upon the same evidence and arguments with respect to patentability as it did before the district court. Id. The PTAB found that claim 1 was likely indefinite because the specification and prior art fail to provide any objective standard for measuring the scope of “filled” or “substantially filled.” Id. at 12-13. The PTAB also found that a combination of Cooper, Saggio, and Lee likely renders claim 1 obvious. Id. at 13.

On appeal of the district court's injunction order, Telebrands challenged the district court's conclusions regarding, among other things, the validity of the claims of the '066 patent. Telebrands contended, at the outset, that the dcourt improperly shifted the burden of proving invalidity to Telebrands, rather than requiring Tinnus to establish a likelihood of success in proving the patent's validity. Slip Op. at 18-19. The Federal Circuit rejected that argument, explaining that, under 35 U.S.C. § 282, the presumption that a patent is valid is sufficient to establish a likelihood of success on the validity issue, absent a challenge by the accused infringer. Id. at 19. It further explained that where the alleged infringer attacks the validity of the patent, the burden is on the challenger to come forward with evidence of invalidity, which the patentee must then rebut. Id. The Federal Circuit determined that the district court properly applied this analytical framework. Id.

Telebrands also contended that the claim term “substantially filled” is indefinite because a skilled artisan would not be able to determine whether an expandable container meets this limitation. Slip Op. at 19. The Federal Circuit first noted that Telebrands did not previously object to the Magistrate Judge's indefiniteness ruling, and explained that, under Fifth Circuit law, where a party fails to object to a magistrate judge's findings of fact, conclusions of law, or recommendation to the district court, a “plain error” standard of review applies to the findings and conclusions adopted by the district court, which is a “deferential standard.” Id. at 12, 15, 20. The Federal Circuit found “it difficult to believe that a person with an associate's degree in a science or engineering discipline who had read the specification and relevant prosecution history would be unable to determine with reasonable certainty when a water balloon is 'substantially filled.'” Id. at 21.

Telebrands further argued that the district court erred in finding no motivation to combine Lee with Cooper and Saggio by failing to consider whether Lee was reasonably pertinent to the particular problem the inventor solved. Slip Op. at 22. Specifically, Telebrands argued that Cooper, Saggio, and Lee all relate to the same problem addressed by the '066 patent: automatically sealing a balloon or multiple balloons at one time. Id. The Federal Circuit, however, determined that “Telebrands has not demonstrated that Lee is reasonably pertinent to the problem addressed in the '066 patent,” because Lee was concerned with “problems associated with an endoscopic balloon insertion device for treating obesity,” and those are “far removed” from the former. Id. at 23.

Based on the record and the applicable standard of review, the Federal Circuit concluded that the district court did not abuse its discretion in issuing a preliminary injunction. Slip Op. at 13 n.7. The Federal Circuit noted that while PTAB's Final Written Decision finding the claims of the '066 patent invalid over the same prior art is not binding on the district court, Telebrands is “free to ask the district court to reconsider its preliminary injunction in light of the PTAB's Decision.” Id.

Federal Circuit: Proving Derivation Requires a Showing That All Limitations Were Conceived and Communicated

On Jan. 26, 2017, a Federal Circuit panel of Judges Moore, Reyna, and Taranto issued a unanimous opinion, authored by Judge Taranto, in Cumberland Pharm., Inc. v. Mylan Institutional, LLC., Case Nos. 2016-1155, 2016-1259. The panel affirmed the Northern District of Illinois' decision rejecting Mylan's invalidity defenses based on derivation and obviousness, after a bench trial.

Cumberland Pharmaceuticals, Inc. (Cumberland) owns U.S. Patent No. 8,399,445 (the '445 patent), which describes and claims acetylcysteine compositions substantially free of chelating agents. Slip Op. at 2. It is listed in the Food and Drug Administration's Approved Drug Products the Therapeutic Equivalence Evaluations (the Orange Book) as covering Cumberland's chelating-free formulation of Acetadote®, an intravenous antidote for acetaminophen overdoses. Id. When Mylan Institutional, LLC (Mylan) filed an abbreviated new drug application (ANDA) to market its own chelating-agent-free acetylcysteine formulation, Cumberland sued Mylan for patent infringement. Id. Mylan stipulated to infringement, but asserted invalidity on two grounds: derivation of the claimed invention from someone at the FDA and obviousness. Id.

In December 2002, almost three years before the priority date of the '445 patent, the FDA was considering Cumberland's application for permission to market the original EDTA-containing formulation of Acetadote®. Slip Op. at 3. The FDA requested data from Cumberland to support its inclusion of a non-trivial amount of EDTA in its formulation. Id. at 3-4. Cumberland responded with a letter in which it explained that EDTA was included to stabilize the formulation. Id. at 4. In a subsequent phone call between the FDA and Mr. Pavliv, the inventor named on the '455 patent, the FDA representatives indicated that they were not prepared to say whether they considered the inclusion of EDTA was justified. Id. Mr. Pavliv then proposed to the FDA that he perform a study of the stability of an acetylcysteine formulation without EDTA. Id. at 4-5. At least one FDA representative on the call approved of his idea, and asked him to submit a proposal in writing, and Cumberland did so. Id. at 5. In November 2004, three months into the study, Mr. Pavliv received encouraging stability data, and in August 2005, Cumberland filed its application for what became a parent of the '445 patent at issue. Id. at 6.

The district court held that: 1) Mylan had not proved that anyone at the FDA conceived of the invention before Cumberland's inventor did; and 2) there was no reasonable expectation that a formulation without any chelating agents would be successful, given the prevailing skilled-artisan view that chelating agents were necessary to prevent degradation of acetylcysteine. Slip Op. at 7. Accordingly, the court entered a final judgment of validity and infringement against Mylan. Id.

The Federal Circuit explained that the ultimate question of whether a patentee derived an invention from another is one of fact, and the determination of whether there was a prior conception by another is a question of law, which is based upon subsidiary factual findings. Slip Op. at 7. Obviousness is a question of law based on underlying questions of fact. Id. The Federal Circuit reviewed the district court's conclusions of law de novo and its findings of fact for clear error. Id. The Federal Circuit explained that a challenger asserting invalidity on the ground of derivation under 35 U.S.C. §102(f) must show that there was a “prior conception of the claimed subject matter and communication of the conception” to the named inventor, where the conception must be a “definite and permanent,” “specific, settled idea” that encompasses all limitations of the claimed invention. Id. at 8-9.

The Federal Circuit noted that the claim language requires that the product be “free of chelating agents,” which meant not only that the EDTA would have to be removed, but also that another chelating agent could not be added in its place. Slip Op. at 10. The Federal Circuit then determined that the district court could properly view the FDA's request for justification for the inclusion of EDTA, in the form of data, as not the same as a suggestion to remove it, let alone remove it and not replace it with another chelating agent. Id. While Mylan argued that the FDA's request for data required Cumberland to undertake research that would have inevitably led it to the invention, the Federal Circuit explained that it has held that derivation is not proved by showing conception and communication of an idea different from the claimed invention even where that idea would make the claimed invention obvious. Id. at 10-11. The Federal Circuit also found that subsequent discussions between the FDA and Cumberland regarding removal of EDTA could properly be viewed as originating from Mr. Pavliv's idea of performing a study of the stability of an acetylcysteine formulation without EDTA. Id. at 11. Further, the Federal Circuit found no error in the district court's finding that, in view of the state of the prior art, there would not have been a reasonable expectation of success in obtaining a stable acetylcysteine formulation by removing EDTA, yet not replacing it with another chelating agent. Id. at 16. Accordingly, the Federal Circuit affirmed the district court's decision.

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Jeffrey S. Ginsberg is Assistant Editor of this newsletter and a partner at Patterson Belknap Webb & Tyler LLP. Abhishek Bapna is an associate at Patterson Belknap Webb & Tyler LLP.