Federal Circuit Judges Disagree on Use of Post Filing Date Evidence of Nonobviousness

On October 20, 2014, the Federal Circuit issued an order denying the petition for rehearing or rehearing en banc filed in Bristol-Meyers Squibb Co. v. Teva Pharmaceuticals, USA, Inc. While the order itself may not be surprising, with two opinions concurring in the denial and two dissenting, it is clear that there is more to the story. Indeed, the judges seem to disagree as to the permitted use of post-filing date evidence in a nonobviousness analysis. 

The Crux Of The Matter?

When I wrote about the original decision in this article, I focused on the court’s emphasis on unexpected results that reflected a “difference in kind” instead of a “difference in degree.” In the opinions issued with the order, however, the judges focused on the panel’s refusal to give weight to post-filing date discoveries when affirming the district court’s selection of 2´-CDG as a “lead compound” for the obviousness analysis.

The relevant portion of the original decision appears to be this passage:

BMS challenges the selection of 2´-CDG as a lead compound because it was discovered to be toxic in the 1990s. However, at the time of entecavir’s invention, the Price reference showed that 2´-CDG was generally understood to be safe and nontoxic, and other researchers were already using it as a lead compound. As the district court points out, in “October 1990, 2´-CDG was not yet known to have high toxicity,” and BMS’s expert, Dr. Schneller, agreed that researchers at the time treated 2´-CDG as a “promising compound.” J.A. 104, 111 (emphasis in original).

Therefore, we see no error in the selection of 2´-CDG as the lead compound here. See Velander v. Garner, 348 F.3d 1359, 1377 (Fed. Cir. 2003) (“Obviousness, and expectation of success, are evaluated from the perspective of a person having ordinary skill in the art at the time of invention.” (emphasis added) (citation omitted)); see also Eisai, 533 F.3d at 1359. Accordingly, we therefore agree with the district court that those of ordinary skill in the art would have selected 2´-CDG, a carbocyclic analog, as a lead compound for further development efforts before BMS applied for the ’244 patent in October 1990. See Daiichi, 619 F.3d at 1354 (explaining that more than mere structural similarity

Judge Dyk’s Concurrence

Judge Dyk wrote a two-paragraph opinion concurring in the denial of the petition for rehearing en banc. According to Judge Dyk:

This case presents a question of obviousness, in particular whether evidence postdating the invention can be used to establish unexpected results. The panel holds that it cannot be considered in the circumstances of this case. That position is correct. It is mandated by the statute, which provides that an invention is not patentable if it “would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains.” 35 U.S.C. § 103 (emphasis added).

The patent applicant’s discovery of unexpected results at the time of the invention can help to establish that the invention would not have been obvious to another skilled person. But hindsight bias must be avoided in determining obviousness. And under longstanding Supreme Court authority, the pertinent knowledge is that possessed at the time of the invention. See KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 416 (2007) …. This decision properly does not allow consideration of post-invention evidence in the circumstances of this case. There is no basis for rehearing en banc.

Judge Wallach joined Judge Dyk’s opinion.

Judge O’Malley’s Concurrence 

Judge O’Malley wrote an 11 page opinion intended “to assuage Bristol-Myers Squibb Co.’s (“BMS”) and the amici’s fears that this panel decision has rewritten the test for obviousness for pharmaceutical patents.” Unlike Judge Dyk, she found a body of precedent that “clearly allows the consideration of later-discovered differences between the prior art and the invention.” On the other hand, she agreed with the panel that “the inquiry into what one of skill in the art understood and reasonably expected must be fixed as of the time of the invention.”

What the district court found was that the later evidence of 2´-CDG’s toxicity was insufficient to overcome the strong evidence that researchers at the time had a motivation to start with 2´-CDG as the lead compound and modify it in such a way as to make entecavir. ….

*****

While the later findings regarding 2´-CDG’s toxicity certainly make claims regarding the reasonableness of any expectation of success less credible, on this record, the panel did not act beyond the pale in concluding that the district court’s factual conclusion … was not clearly erroneous.

Judge Newman’s Dissent

Judge Newman dissented from the denial of the petition for rehearing en banc, disagreeing with the verdict of obviousness and highlighting four aspects of the panel decision that she found particularly troubling. She wrote the most on the first aspect, which she referred to as “Restriction on comparative data showing unexpected properties.” Judge Newman reviewed the longstanding practice of obtaining comparative experimental data to establish nonobviousness, and noted:

Precedent is clear that the information and comparative data presented as evidence of nonobviousness need not have existed before the patent application was filed. ….

*****

Information learned after the patent application was filed may provide evidence of unexpected or unpredicted properties.

Judge Newman also criticized the panel decision for “The misapplication of ‘secondary considerations,’” “The holding that an unexpected property is insufficient ‘by itself’ to show nonobviousness,” and ”The court’s oversimplified distinction between ’difference in degree’ and ‘difference in kind.’”

Judge Lourie and Judge Reyna joined Judge Newman’s dissent.

Judge Taranto’s Dissent

Judge Taranto dissented from the denial of the petition for rehearing en banc, largely because the panel decision “raises questions about core aspects of the widely used approach to obviousness analysis—particularly, the proper meaning of the related elements, ’reasonable expectation of success’ and ‘unexpected results’ … [that] would benefit from plenary consideration.

En banc review would allow a focus on and full analysis of the doctrinal issues, considering the language of section 103 (what it resolves and what it leaves open); the role of section 103 in the statute as a whole (which places a premium on early filing); Supreme Court precedents elaborating on the policy of section 103; our own precedents; congressional actions in light of those precedents; and pertinent, reliable information that may bear on assessing the real-world consequences of one answer or another in an industry where research is  especially expensive and uncertain. The widened inquiry seems to me worthwhile.

On the question of the post-filing date evidence at issue, Judge Taranto states:

As a general evidentiary matter, it seems relevant to determining the reasonableness of any expectation before conducting a readily available animal test that the very first animal test immediately showed such toxicity that 2´-CDG has never since been tried in humans. Even in the arena of business forecasts—where changes in the world over time can dramatically affect results—courts temper a great caution about hindsight bias with a recognition that “a gross disparity between prediction and fact” may be relevant to assessing the reasonableness of the prediction. All the more so in the present context, which involves a general biological property (toxicity of a particular compound) that should be the same today as it will be next year. But  whether this is a sensible analysis may well depend on precisely what “reasonable expectation” means in the present context.

I would grant rehearing en banc to enable a full exploration of these questions.

Judge Lourie and Judge Reyna also joined Judge Taranto’s dissent.

A Glimmer Of Hope

Perhaps the best thing I can say about these opinions is that at least five Federal Circuit judges disagree with Judge Dyk’s apparent interpretation of § 103 as prohibiting the use of post-filing date data to support nonobviousness. As Judge Newman points out, the generation and reliance on post-filing date experimental data is a common practice in the prosecution of chemical, biotechnology, and pharmaceutical applications.