Federal Circuit Accords Presumption Of Validity To Erroneously Issued Claims

In Sciele Pharma Inc. v. Lupin Ltd., the Federal Circuit addressed the impact of an unusual patent prosecution history, and held that even erroneously issued claims are entitled to a presumption of validity under 35 USC § 282. Still, the Federal Circuit found that Lupin had raised a substantial question of invalidity, and vacated and remanded the district court decision that had granted a preliminary injunction against Lupin’s generic metformin product.

The Patent At Issue

The patent at issue was U.S. Patent 6,866,866, directed to an extended-release tablet of metformin hydrochloride, and listed in the Orange Book for Sciele’s Fortamet® product. (Sciele Pharma Inc. is now known as Shionogi Pharma Inc., which is the party name used in the Federal Circuit decision.)

Claim 1 as issued recites:

1. A controlled release oral dosage form for the reduction of serum glucose levels in human patients with NIDDM, comprising an effective dose of metformin or a pharmaceutically acceptable salt thereof and a controlled-release carrier to control the release of said metformin or pharmaceutically acceptable salt thereof from said dosage form, said dosage form being suitable for providing once-a-day oral administration of the metformin or pharmaceutically acceptable salt thereof, wherein following oral administration of a single dose, the dosage form provides a mean time to maximum plasma concentration (Tmax) of the metformin from 5.5 to 7.5 hours after administration following dinner.

However, during prosecution, this claim was rejected as obvious. The patent was allowed after the applicant canceled claim 1 and focused on claims that recited a Tmax range with an upper limit of 7.0 hours. Although the applicant noticed the error in the Notice of Allowance (which indicated that canceled claim 1 was allowed), pointed out the mistake to the USPTO, and received a Supplemental Notice of Allowance that referred to the correct claims, the patent still granted with the erroneous set of claims. According to the Federal Circuit decision, “[a]fter issuance, the patentee did not pursue further action, and claim 1 of the issued patent continues to recite the higher Tmax limit of 7.5 hours.”

The District Court Decision

The district court proceeding stemmed from ANDA litigation commenced after Lupin filed an Abbreviated New Drug Application for a generic version of Fortamet® with a Paragraph IV certification asserting that the ’866 patent was invalid, unenforceable, and/or would not be infringed by Lupin’s product. The district court litigation still was pending after the 30-month stay period, and once the FDA approved Lupin’s ANDA, Shionogi sought a preliminary injunction to keep Lupin’s generic drug off the market.

In its first decision, the district court rejected Lupin’s argument that the asserted claims “were erroneously issued.” As summarized by the Federal Circuit, the court found that “in light of the presumption of validity and ‘the very steep requirement that the Defendant show clear and convincing evidence of the invalidity of Plaintiff’s patent, the factual dispute concerning the prosecution of the ’866 patent is not sufficient to persuade the Court to resolve the question of validity in Defendant’s favor at this preliminary stage.’”

That decision was vacated by the Federal Circuit in a decision issued February 6, 2012, because the court had not addressed the merits of Lupin’s obviousness defense.

In the decision at issue in this appeal, the district court again gave little consideration to Lupin’s obviousness arguments.  As characterized by the Federal Circuit, the district court made three legal determinations:

• First, the court concluded that it was required to defer to the PTO as a “qualified government agency,” notwithstanding the odd sequence of events that gave rise to the ’866 patent.
• Second, the court held that KSR was not directly applicable to the current case because [in this case] the prior art was before the PTO when the ’866 patent issued.
• Finally, the court rejected Lupin’s argument that statements from the prosecution regarding enablement could also be used as proof of obviousness.

The Federal Circuit Decision

The Federal Circuit reviewed the four factors to be considered when deciding to grant a preliminary injunction:

1. a reasonable likelihood of success on the merits
2. irreparable harm if an injunction is not granted
3. a balance of hardships tipping in its favor
4. the injunction’s favorable impact on the public interest

The appeal focused on the first factor, which the court explained further:

To demonstrate a likelihood of success on the merits, a patentee must show that, in light of the presumptions and burdens that will inhere at trial on the merits: (1) the patentee will likely prove that the accused infringer infringes the asserted patent; and, (2) the patentee’s infringement claim will likely withstand the accused infringer’s challenges to the validity and enforceability of the patent.

As noted by the Federal Circuit, “[b]oth parties argue[d] that the presumption of validity and the accompanying burden of proof is altered due to the facts of this case.” Lupin argued that “the presumption of validity should not attach because of the erroneous issuance of the cancelled claims.” On the other hand, Shionogi argued that “there should be a heightened presumption of validity because the prior art references relied upon by Lupin (Cheng and Timmins) were before the Patent Office during prosecution.” The court disagreed with both arguments.

The presumption of validity attaches to all issued patents and the clear and convincing evidence burden applies to all issued patents. . . .

Whether a reference was previously considered by the PTO, the burden of proof is the same: clear and convincing evidence of invalidity.

On the other hand, the Federal Circuit did not turn a blind eye to the “bizarre” prosecution history. To the contrary, the court noted that it could “take it all into account”:

• that the Cheng and Timmins references were before the Patent Office
• [that] the examiner concluded that the claims with an upper Tmax limit of 7.5 were not patentable in view of Cheng
• that the applicant acquiesced in that conclusion and cancelled those claims
• [that] the rejected and later cancelled claims with the upper Tmax limit of 7.5 were ultimately issued by the PTO.

The court considered this prosecution history and the cited references, and concluded that “Lupin’s obviousness arguments . . . raise a substantial question of invalidity.” The court therefore vacated the preliminary injunction and remanded to the district court for further proceedings.

Down The Rabbit Hole

While the Federal Circuit’s ultimate conclusion on Lupin’s obviousness arguments appears to be supported by the prosecution history, the way the Federal Circuit gets there is as bizarre as the prosecution history at issue. The court starts with a statutory presumption of validity that is grounded in an assumption that the PTO has “done its job” correctly, and then applies it to claims that the PTO Examiner determined were not patentable!