In Galderma Laboratories v. Tolmar, Inc., the Federal Circuit reversed the district court’s findings that the Orange Book-listed patents for Galderma’s Differin® 0.3% gel product were not invalid as obvious. In so doing, the Federal Circuit took a narrow view of “unexpected results” that Judge Newman warns may “disincentivize” improvement patents in the field of medicine.
The Patents At Issue
The patents at issue were the five Orange Book-listed patents for Galderma’s Differin® 0.3% gel product: U.S. Patent No. 7,579,377; U.S. Patent No. 7,737,181; U.S. Patent No. 7,834,060; U.S. Patent No. 7,838,558; and U.S. Patent No. 7,868,044.
The Federal Circuit identified claim 5 of the ’558 patent are representative:
5. A topically applicable pharmaceutical composition comprising 0.3% by weight of [adapalene] relative to the total weight of the composition, effective for the treatment of acne, formulated into a topically applicable, pharmaceutically acceptable medium therefor, said composition being in the form of a topically applicable, pharmaceutically acceptable aqueous gel comprising at least one carbomer gelling agent and wherein the sole anti acne ingredient is adapalene.
The ANDA Litigation
The case stemmed from Tolmar’s filing of an Abbreviated New Drug Application (“ANDA”) seeking FDA approval of a generic version of Galderma’s Differin® Gel 0.3% product. As noted by the Federal Circuit, the product “is a topical medication containing 0.3% by weight adapalene approved for the treatment of acne.” Galderma brought suit in the U.S. District Court for the District of Delaware, which ultimately ruled in Galderma’s favor.
The Asserted Prior Art
Tolmar asserted that the patents were obvious in view of three primary references: U.S. Patent No. 4,717,720 (referred to by the Federal Circuit as the “Shroot ’720 patent”), U.S. Reissue Patent No. 34,440 (referred to by the Federal Circuit as the “Shroot ’440 patent”), and the Differin® 0.1% Gel Data Sheet (referred to by the Federal Circuit as the “Data Sheet”). The 0.1% gel product had been approved about 10 years before the 0.3% gel product, and the Shroot patents had been listed in the Orange Book for the 0.1% gel product until they expired.
According to the Federal Circuit, the Shroot patents disclosed adapalene for use in treating acne, at concentrations “preferably between 0.01 and 1 weight percent,” with examples of compositions with concentrations of 0.001%, 0.1%, and 1%. The Data Sheet disclosed the formulation for the 0.1% gel product, which includes inactive ingredients recited in the asserted claims, except that it listed “poloxamer 182,” while certain asserted claims recited “poloxamer 124.” (The district court determined that the two polaxamers were equivalent.)
Tolmar also cited other references testing a 0.3% adapalene composition in an animal model and disclosing a 0.3% adapalene composition for other purposes “without intolerable irritability.”
The Federal Circuit Decision
The Federal Circuit decision was authored by Judge Prost and joined by Judge Bryson. Judge Newman authored a dissenting opinion.
Judge Prost begins her analysis with this summary statement:
Tolmar presents an obviousness case that is both straightforward and potent.
According to Judge Prost, because the prior art disclosed a range of adapalene concentrations that encompassed the claimed 0.3% amount, “the burden of production falls upon the patentee to come forward with evidence that (1) the prior art taught away from the claimed invention; (2) there were new and unexpected results relative to the prior art; or (3) there are other pertinent secondary considerations.” Still, the “ultimate burden of proving obviousness rests with Tolmar.”
No Teaching Away
Although the district court found “teaching away” in the discussion of the “dose-dependent increase in side effects,” the Federal Circuit majority disagreed, because there was no teaching “that increasing the concentration to 0.3% would be unproductive,” or “that the side effects would be serious enough to dissuade the development of a 0.3% adapalene product.”
Although the district court found “teaching away” in the discussion of the 0.1% product as “optimal,” the Federal Circuit majority disagreed, based on the principle that “[a] teaching that a composition may be optimal or standard does not criticize, discredit, or otherwise discourage investigation into other compositions.”
Non-Probative Unexpected Results
While the district court found unexpected results in the “comparable tolerability” of the 0.1% and 0.3% products, the Federal Circuit majority determined that these unexpected results were “not probative of nonobviousness.” In so doing, the majority drew a distinction between results that reflect a difference in degree (not probative) versus results that reflect a difference in kind (probative).
Unexpected results that are probative of nonobviousness are those that are “different in kind and not merely in degree from the results of the prior art.” …. Results which differ by percentages are differences in degree rather than kind, where the modification of the percentage is within the capabilities of one skilled in the art at the time. Thus, where an unexpected increase in efficacy is measured by a small percentage, as here, and the evidence indicates that skilled artisans were capable of adjusting the percentage, the result constitutes a difference in degree, not kind. So too, where an increase by a percentage is expected but not found, that result is also likely only a difference in degree. In this case, the expected result was an increase, by some percentage, in the prevalence of certain side effects. The failure of that percent increase to materialize, though unexpected, constitutes only a difference in degree from the prior art results. Accordingly, the comparable tolerability of 0.1% and 0.3% adapalene does not indicate that the asserted claims are non-obvious.
Non-Probative Commercial Success
While the district court found evidence of commercial success in the fact that Tolmar and others had filed ANDA applications for the patented product, the Federal Circuit majority disagreed, noting:
The fact that Tolmar “believes that it can make a profit selling a generic version of the claimed invention” … tells us very little about the level of commercial success of the patented invention relative to the prior art or the extent to which the commercial success of the branded drug is “due to the merits of the claimed invention.”
While the district court found evidence of commercial success in the fact that the 0.3% product “quickly gained and maintained market share,” the Federal Circuit majority determined that the commercial success was “of limited value in determining whether or not the presently asserted claims are obvious,” because “market entry by others was precluded [due to blocking patents],” e.g., the Shroot patents.
Thus, the Federal Circuit reversed the district court and held “that claims 35 and 36 of the ’181 patent, claims 24 and 27 of the ’060 patent, claim 5 of the ’558 patent, and claims 40 and 41 of the ’044 patent are invalid as obvious.”
Judge Newman’s Dissent
Judge Newman filed a 17 page dissenting opinion that takes the majority to task for failing to give proper weight to the district court’s factual findings and analysis, and “instead making their own findings, and applying flawed procedural and substantive law.”
My colleagues do not identify clear error in the district court’s findings; instead they distort the burdens of proof and production, ignore the applicable standard of proof and rely on their own factual determinations and creative theories of law, and eradicate the patent.
According to Judge Newman:
Particularly for close questions of patentability, the district court’s findings and assessments of credibility and weight of evidence, and the district court’s application of law to found facts, compel appellate attention. The role of the trial court in considering the evidence that each party provides through examination and cross-examination of witnesses and documents, with judicial elaboration and interaction, cannot be matched on appeal.
With regard to the analytical framework applied by the majority, and its burden-shifting, Judge Newman emphasized:
The district court correctly explained that “the proper analysis of obviousness under 35 U.S.C. §103 requires that ‘all evidence relevant to obviousness or nonobviousness be considered, and be considered collectively,’ without resort to presumptions of prima facie obviousness or burden-shifting.”…. This is the correct standard, established in Graham v. John Deere and reiterated consistently and exhaustively.
Judge Newman presents a different view of the prior art, in a light indicating that the district court’s determination was not clearly erroneous. With regard to Galderma’s evidence of unexpected results, Judge Newman notes:
[B]ased on expert testimony from both sides, the district court found that “[w]hereas the prior art suggested a dose-dependent, clinically meaningful increase in side effects would result from increasing the concentration of adapalene from 0.03% to 0.1%, the claimed inventions achieved a difference in kind by discontinuing that trend.” …. The district court explained that differences in degree occur when the invention is merely a continuation of a trend previously described in the prior art. … Here, the prior art showed a trend to increased adverse side effects with increased concentration, while Galderma’s products violated that trend. This was a difference in kind, not in degree.
The District Court’s Legal Error?
The bulk of the majority decision does read like a de novo determination of validity. However, before Judge Prost commences her analysis of Galderma’s objective evidence of non-obviousness, she notes this legal error in the district court’s analysis:
Prior to addressing the obviousness of the asserted claims, we note an error in the district court’s obviousness analysis. The district court framed the obviousness inquiry as requiring Tolmar to provide motivation in the prior art to triple the concentration of adapalene from 0.1% to 0.3%. … Tolmar carried no such burden. …. Nothing in the statute or our case law requires Tolmar to prove obviousness by starting with a prior art commercial embodiment and then providing motivation to alter that commercial embodiment. …. This is particularly true where, as here, the prior art teaches a range that encompasses both the prior art commercial embodiment and the claimed invention.
Having found that the district court’s determination rested on an incorrect legal footing, should the Federal Circuit have remanded the case for consideration under the proper legal framework?