Novartis v. Noven: The PTAB is not Bound by Prior Decisions of District Courts

Novartis, together with LTS Lohmann Therapie-Systeme, owns a pair of patents covering rivastigmine transdermal patches. These patches are useful for treating Alzheimer’s disease. Noven Pharmaceuticals filed an abbreviated new drug application (ANDA) seeking FDA authorization to manufacture a generic version of the patch. When Novartis sued for infringement, Noven unsuccessfully defended in the ANDA litigation on the grounds of obvious over GB 2 203 040 A (“Enz”), JP 59-184121 (“Sasaki”), and a variety of other references. The Delaware court found that a person of ordinary skill would not have been motivated at the time of invention to add Sasaki’s antioxidant to Enz’s rivastigmine patch, because it was not known at that time that rivastigmine was subject to oxidative decay. Noven did not appeal this loss to the Federal Circuit (CAFC).

However, while the ANDA litigation was proceeding in Delaware district court, Noven had also lodged a series of IPR petitions arguing obviousness over Enz, Sasaki, and a variety of other references. The PTAB instituted four IPRs on these petitions, and held the challenged claims unpatentable as obvious. Novartis appealed from the adverse PTAB decisions. Novartis AG v. Noven Pharm., 2016-1678 (Fed. Cir. Apr. 4, 2017).

Novartis’ principal argument before the CAFC was that the PTAB improperly ignored the Delaware court’s conclusion that there was no motivation to combine Enz and Sasaki at the time of invention. Novartis believed that the Delaware court’s decision should bind the PTAB. The CAFC disagreed for two reasons: first, there were expert declarations in the IPRs that had not been presented to the Delaware district court; and second, the standard for proving obviousness is higher in district court (clear and convincing evidence) than in an IPR (preponderance of the evidence). Therefore, the CAFC concluded that the PTAB should not be bound by Delaware court’s conclusions. The CAFC affirmed the IPR holdings.

It is somewhat unclear how issue preclusion should have applied between the Delaware district court’s conclusions and the PTAB’s fact-findings. Indeed, the CAFC never uses the words “issue preclusion” or “collateral estoppel” in the appeal decision, as if this legal doctrine were not implicated. In contrast to the Delaware court’s finding of no motivation to combine, however, the PTAB found that the person of ordinary skill at the time of invention would have expected rivastigmine to be subject to oxidative decay because Sasaki reports amino groups in other drugs that are prone to oxidative decay and rivastigmine has an amino group. It would have been hard for the PTAB to reach a conclusion of obviousness if it had adopted Delaware’s fact-findings about what the person of ordinary skill would have known, but the CAFC never addresses why the PTAB was not obliged as a matter of issue preclusion to adopt the Delaware fact-findings.

In any event, this case is a solid holding that the PTAB is not bound by a contrary decision in a district court, at least where there is some evidence in the PTAB proceedings that was not part of the district court proceedings. In other words, a patent challenger who loses in the district court need not count on also losing in a parallel PTAB trial.