PTAB Rejects Challenge to Onglyza® Patent

32481593_sThe lower burden of proof associated with inter partes reviews should make IPRs attractive to generic pharmaceutical companies, but even with that lower burden, success is not guaranteed, as illustrated by IPR2015-01340.  Mylan Pharmaceuticals challenged AstraZeneca’s patent RE44,186 on saxagliptin, the active ingredient in Onglyza® (used to treat type 2 diabetes).  Mylan’s petition argued the structure of the drug would have been obvious.  The Board disagreed, determining that the prior art did not provide sufficient motivation to modify the lead compound chosen by Mylan.  The Board denied review.

The Board started with the legal standard for this sort of issue:  “A determination of whether a new chemical compound would have been obvious over the prior art typically follows a two prong inquiry considering first, whether one of ordinary skill would have selected one or more lead compounds for further development and, second, whether the prior art would have supplied sufficient motivation to modify a lead compound to arrive at the compound claimed with a reasonable expectation of success.”

Here, the Board accepted Petitioner’s proposed lead compound, but found the record did not support the second prong of the test, modification of the lead compound to arrive at the claimed invention.  The Board analyzed the two aspects of the modification argument, stability and potency, and found both lacking.  As to stability, Petitioner argued that the person of ordinary skill would have been motivated to change one group on the lead compound to a more stable adamantyl group (as one would expect, the more stable group is also on the claimed compound).  The problem, though, was that the lead compound was noted for its stability, and the Board found the record was insufficient to establish a person of ordinary skill in the art would have been motivated to make it even more stable.  As to potency, Petitioner argued for a second substitution of a different group, which combined with the first substitution would yield the claimed compound.  The Board found the record failed to show that the proposed substitution would have been expected to increase potency.

The Board thus denied review.

Lessons Learned from a Rare CAFC Opinion on an IPR Matter

cafc1To date, the Federal Circuit has issued Rule 36 affirmances in over 80% of the cases it has heard. Thus, when a new, substantive opinion is issued by the Court, it is an opportunity to learn. On November 5th, the Federal Circuit issued an opinion in Belden Inc. v. Berk-Tek LLC, relating to the Final Written Decision issued in IPR2014-00057. The Federal Circuit affirmed the Board’s decision that claims 1-4 were determined to be unpatentable and reversed the Board’s decision that claims 5 and 6 were not determined to be unpatentable. It was a rough decision for the Patent Owner and some key lessons can be learned from the Court’s analysis:

The Board Can Rely on its Own Reading of the Prior Art: Despite the fact that the Petition was unaccompanied by expert testimony, the Court gave deference to the Board’s determination that claims 1 and 4 were obvious because those findings were supported by substantial evidence. Op. at 12-14. In so doing, the Court noted the discretion the Board can exercise in this type of case: “In the circumstances here, involving a simple point in a mechanical field and one very close piece of prior art, the Board was entitled to rely on its own reading of [the prior art]–supported by the Petition’s observations about it–to find that a skilled artisan would have understood the importance of [the key reference]”. Id. at 14. Thus, although the Petition only briefly addressed this key issue, the Board’s own view of the art can overcome such a shortcoming of the Petition.

Rationale to Combine Must Be Based on More than a General Statement: In affirming the unpatentability of claims 2 and 3, the Court noted that the Board made the correct inquiry regarding why a skilled artisan would have had reason to combine the prior art references at issue. Referencing the Board’s recitation of the KSR decision, the Court stated that “[t]he Supreme Court’s passage does not establish that it suffices for obviousness that a variation of the prior art would predictably work, but requires consideration of whether, in light of factors such as ‘design incentives and other market forces,’ the hypothetical skilled artisan would recognize the potential benefits and pursue the variation.” Op. at 15.

Broad Teaching in the Prior Art Can Provide Rationale to Combine: Relative to the decision to reverse the Board regarding the patentability of Claims 5 and 6, the Court found that the Board did not given sufficient weight to the teaching of the prior art and, instead, focused to much on the particular invention it was describing and attempted to protect. Id. at 18. Dismissing the other arguments from the Board to support patentability, the Court decided that, even in view of the substantial evidence deference afforded to the Board on factual issues, “the record is one-sided on the proper question of whether [the first prior art reference] taught a solution to the problem…that a skilled artisan would have been motivated to use in making [the disclosed product from the second prior art reference].” Id. at 20.

The PTAB, because of its Expertise, Does Not Always Need Expert Assistance to Understand Prior Art: Patent Owner argued that the evidence provided in Petitioner’s reply brief, in the form of expert testimony, was necessary to establish a prima facie case of obviousness. The Federal Circuit disagreed, finding that (1) the testimony was responsive to issues raised in the Patent Owner Response (i.e., each point from the declarant responded to a statement from Patent Owner’s declarant), and (2) the evidence was not needed to make out a prima facie case of obviousness. Although the Board often cited to the expert declaration, that did not mean the testimony was necessary for a prima facie case of obviousness. Op. at 23. The Federal Circuit concluded that the prior art itself contained all the information necessary to make out a prima facie case, especially in view of the Board’s technical expertise.

New Expert Testimony in the Petitioner Reply is Here to Stay: Patent Owner’s argument that it did not have a reasonable opportunity to the expert testimony provided in the Petitioner Reply. The Federal Circuit disagreed again, finding that there are numerous ways to respond to such testimony, including (1) cross-examination, with a motion for observation; (2) motion to exclude; (3) dispute the testimony at the oral hearing; (4) move for permission to submit a surreply; and (5) seek a waiver of any regulation that impairs its opportunity to respond.

In the end, this is a strong case for Petitioners to rely upon for all of the above-referenced aspects of the decision.

Board Has Change of Heart On Rehearing

37396761_sA request for rehearing is generally considered the IPR equivalent of an end-of-the-game Hail Mary pass, but just like in football, sometimes it works, as illustrated by the Board’s reversal of its prior decision denying review in Handi Quilter, Inc. & Tacony Corporation v. Bernina International AG, IPR2013-00270.

The Board originally denied review based on its determination that the Petitioner only showed that a person of ordinary skill in the art could have combined the relied-on references, but not why the person of ordinary skill would have done so.  Decision at 2.  Following the Petitioner’s request for a hearing, though, the Board had a change of heart and decided to institute inter partes review.  Under 37 C.F.R. § 42.71(d), “[t]he burden of showing a decision should be modified lies with the party challenging the decision” and the rehearing “request must specifically identify all matters the party believes the Board misapprehended or overlooked.”  Decision at 23.  Petitioners here successfully argued that the Board had previously misapprehended its argument (supported by declaration testimony) that its primary reference (Watabe) itself provided sufficient rationale for why a person of ordinary skill in the art would have looked to the secondary references and combine them with Watabe.  Thus, the Board instituted review.

Toward a Bullet-Proof Petition – Motivation to Combine

white puzzle with one piece missing, on blueWhile 8 out of 10 Petitions seeking inter partes review are granted by the PTAB, there remain several key errors that unsuccessful Petitioners make. Among them is the failure to provide sufficient factual basis for a rationale to combine prior art references in an obviousness analysis. That issue arose, in an unsuccessful petition, in Kinetic Technologies, Inc. v. Skyworks Solutions, Inc., IPR2014-00529, where the Board found Petitioner’s motivation to combine arguments inadequate. The case involved US Pat. No. 7,921,320, directed to a single wire serial interface that may be used to control stand-alone power integrated circuits and other devices.  Decision at 3.

Petitioner, in arguing obviousness of the challenged claims, asserted that combining to two prior art references was a matter of combining know elements to yield predictable results, among other conclusory remarks. Petitioner did list several similarities in the circuits of the two references, and provided expert testimony, but did not provide much in the way of details. Id. at 14.

As such, the Board was unpersuaded by Petitioner’s argument for motivation to combine. First, the Board gave little or no weight to the expert testimony, since it was virtually identical in content to the arguments presented in the petition, and lacked facts or data to support the opinion of the expert. Specifically, the Board criticized the expert declaration as filing to “expain the ‘how,’ ‘what,’ and ‘why’ of the proposed combination of references.” Id. at 15. To that end, the Board found that the expert did not explain how the references could be combined, or how such combination would yield a predictable result.  In the final criticism of the expert testimony, the Board noted that the expert failed to explain why the ordinary artisan would have combined elements from the two references in the specific way the ‘320 invention does.

Accordingly, the Board reminded Petitioner that there must be reasoning supporting combination of references in an obviousness challenge, and rejected Petitioner’s argument for motivation to combine references, stating that the argument lacked articulated reasoning with rational underpinning. Id. at 16. As such, the Board determined that Petitioner failed to demonstrate a reasonable likelihood that it would prevail in establishing the challenged claims as unpatentable.

Teaching Away Arguments Fail to Gain Traction with PTAB

19802083_s (1)A favored, but largely unsuccessful, line of defense for Patent Owners in inter partes review proceedings is the argument that the prior art references-at-issue teach away from their combination. A typical form of this teaching away argument arose in IPR2013-00465, styled as SDI Tech. v. Bose Corp., involving US Pat. No. 8,364,295, where Patent Owner argued that the references of record taught two different combinations other than the one that allegedly renders the ‘295 claims obvious, and that these separate teachings constituted teaching away from the claimed invention of the ‘295 patent.  Decision at 19.  The Board rejected this argument.  Id. at 4.

The ‘295 patent relates to audio systems for playing sound from computer files and computer network radio stations.  Patent Owner contended that the references asserted by Petitioner taught two alternative combinations, in addition to the combination asserted by Petitioner, each of which are contrary to the claims at issue.  In the first alternative combination, the computer would be configured to accept the remote control signal and control of all functions would go through the computer, not the speaker system.  This is contrary to the claims at issue, which require the speaker system to control the computer.  The second alternative combination involved the use of a single universal remote to communicate with the device.  This is contrary to the ‘295 claims, which required two separate signal types from the controlling remote(s). Id. at 20.

In rejecting Patent Owner’s arguments, the Board reiterated the principle that disclosure of alternative embodiments does not constitute teaching away.  The Board elaborated that circumstances could arise where the ordinary artisan would choose each of the different combinations depending on his/her purpose.  Id. at 21.

The Board further noted that adding Patent Owner’s alternative combinations to Petitioner’s proposed combination “renders the latter no more than an obvious selection from a finite number (here, three) of predictable solutions.”  Id. at 23.  The three combinations, according to the Board, are essentially three predicable rearrangements of the same elements usable for their intended purpose, and thus, precisely how to arrange these elements would have been only a matter of design choice for the skilled artisan to arrive at the claimed invention.  Id.

Patent Owner also argued that Petitioner’s expert testimony was driven by hindsight because the testimony did not describe the two alternative combinations proposed by Patent Owner.  The expert responded that he did not discuss Patent Owner’s proposed combinations because they would not render the claims obvious.  The Board decided that such focusing of expert testimony on allegedly invalidating combinations was not hindsight bias, noting particularly that the issue is not whether the expert did not describe combinations of the references that would not have rendered the claims obvious, but whether the expert provided a reason, with rational underpinning, for combining the references in the way proposed by the expert.  Id. at 22.

Another IPR Petition Comes Up Short for Failing to Adequately Show Rationale to Combine

9710318_sMany Patent Owners are finding success in undermining the challenge grounds of a Petition by arguing that the Petition fails to make an adequate showing that a person of ordinary skill in the art would have combined the relied-on references. That was the case in Zimmer Holdings, Inc. and Zimmer, Inc. v. Bonutti Skeletal Innovations LLC, involved US Pat. No. 7,837,736, where the Board rejected a Petition due to an inadequate combination argument.

Relying on expert testimony, the Petitioner argued that it would have been obvious to the ordinary artisan to substitute a “dovetail joint” described in one reference (Beuchel) for the “abutment and recess” structure described in a second reference (Walker) to arrive at the ‘736 invention.  Specifically, the expert testified that the “dovetail” joints of Beuchel perform the same function as the “abutment and recess” of Walker—i.e., “constrained movement of meniscal components relative to the tray in mobile bearing knee implants.”  With that predicate, the expert posited that substituting the “dovetail” joints in place of the “abutment and recess” joints was simply a matter of design choice.

The Board disagreed, because Beuchel’s “dovetail” joints had substantially different structure and function than Walker’s “abutement and recess.”  Decision at 20–21.  Specifically, Beuchel’s “dovetail” joint functioned to limit or prevent rotation, while Walker’s “abutment and recess” functioned to facilitate rotation.  Decision at 21.  Accordingly, the Board found that Petitioner failed to support its substitution argument with “adequate articulated reasoning with rational underpinnings.”  Decision at 21 (citing In re Gal, 980 F.2d 717, 719 (Fed. Cir. 1992) (design choice is not a sufficient rationale for obviousness where the structure recited in claim and the function it performs are different from the prior art).  Accordingly, the Board declined to institute review.  Id.

Rationale from Denied Ground Used By PTAB In Final Written Decision

13329201_s (1)Lost a challenge ground in the Board’s Decision to Institute? The Board has given some hope that such denied grounds may still of use in an IPR proceeding in McClinton Energy Group, LLC v. Magnum Oil Tools International, Ltd., IPR2013-00231, involving US Pat. No. 8,079,413. In this decision on a motion for rehearing, the Board affirmed the propriety of its use of rationale from a denied ground from the Petition to support a final decision of unpatentability.

Earlier in the proceeding, the Board instituted inter partes review of the challenged claims based on six grounds of unpatentability, each of which was based on three references (References A, B, and C). The Petition also contained numerous grounds of unpatentability based in part on a fourth reference (Reference D), all of which were denied by the Board. Decision at 3-4. In the Petition, to support an argument that one of skill in the art would combine references A, B, and C, Petitioner made reference to the rationale for combining of references from denied-grounds relying on Reference D. The Board then relied upon this rationale in determining that all challenge grounds were unpatentable.

In the Motion for Rehearing, Patent Owner argued that by incorporating this argument from a denied ground, the Board was including a new ground of unpatentability in the final written decision and Patent Owner was therefore denied due process. Id. at 4.  The Board disagreed, pointing out that Patent Owner addressed the rationale at issue in the Patent Owner Response. That the same rationale to combined was used in both a sustained challenge ground and a denied challenge ground was not enough to change the thrust of the grounds of unpatentability. Accordingly, the fact that the Board adopted the rationale to combine references presented in a denied-ground of the petition in a granted-ground in final written decision does not create a new ground of unpatentability.  Id. at 5.

IPR Obviousness Challenge of Design Patent Denied

7981714_sThrough two years of inter partes review practice, only 8 petitions were filed that were directed to design patents (out of 1773 total petitions). Given this limited number of petitions, lessons are going to be difficult to learn regarding the treatment of design patents in IPR proceedings. As such, we take a look at a failed petition, filed in Dorman Products v. Paccar, IPR2014-00555, wherein the Board had to consider the differences between functionality, pursuant to 35 USC § 171 and obviousness, pursuant to 35 USC § 103.

In determining whether a design patent claim is obvious, the parties agreed that the focus should be on the visual impression of the claimed design, as a whole. Order at 4. That is where the parties agreement, however, ended. In the Petition, Petitioner argued that certain functional elements of the design should not be considered part of the design patent claim. Patent Owner disagreed, arguing that, whether or not the elements are functional, they must still be considered as part of the visual impression created by the design as a whole. Id. 

In explaining its rational, the Board stated an ornamental design for an article of manufacture may not be patented if the design is “primarily functional” rather than “primarily ornamental.”  Order at 4. Further, of course, a design patent must not be obvious, pursuant to §103. Id. The inquiry into functionality, however, is separate and distinct from the obviousness analysis. Id. at 5. As such, the allegedly functional elements of a design patent must be considered in an obviousness analysis of the visual impression created by the patented design as a whole. Id.

After deciding that the “functional” characteristics issue, the Board turned to the obviousness analysis, citing Apple, Inc. v. Samsung Elecs. Co., 678 F.3d 1314, 1329 (Fed. Cir. 2012), for the proposition that, in an obviousness challenge to a design patent, the ultimate inquiry is “whether the claimed design would have been obvious to a designer of ordinary skill who designs articles of the type involved.” Order at 6.

Primarily because the functional characteristics of the design claim were considered in the obviousness analysis, the Board concluded that Petitioner failed to demonstrate a reasonable likelihood that a designer of ordinary skill would have viewed the primary prior art reference to give the same visual impression as the challenged design patent. Id. at 21. As such, the Petition was denied.

Ornamental Feature of Claim Given No Patentable Weight by PTAB in Obviousness Analysis

21315324_sNot all claim limitations are treated equally. In Crocs, Inc. v. Polliwalks, Inc., IPR2014-00424, involving US Pat. No. 8,613,148, the Board addressed an argument for patentability based on an ornamental feature found in the challenged claims. But, the Board found the ornamental feature (a specific animal design incorporated into shoes) could not be relied upon to impart patentability to the claims.

Patent Owner had argued that a prior art reference raised against the ‘148 patent did not disclose an animal character or design which was formed by projections and recesses, as recited in the claims.  The Board disagreed because ornamental features cannot be relied upon to impart patentability. This doctrine applied here, even though the design or ornamental feature was recited in the claim. As such, the Petition was granted and an IPR trial instituted. It is worth noting that the Board did go on to cover its bases and found that, even if the ornamental feature was to be given patentable weight, the references cited by Petitioner sufficiently suggested making shoes with the claimed animal character or design.

PTAB Discusses Nexus in Secondary Considerations Argument

plan CThere have been many attempts by Patent Owners to rebut a prima facie case of obviousness by pointing to secondary considerations of non-obviousness. To date, such efforts have been unsuccessful. Like the largely unsuccessful motion to amend practice, the best practitioners can hope for is to learn from the shortcomings of other attempts and hope to eventually hit upon the magic formula that leads to a successful presentation of such secondary considerations. In that light we discuss the Final Written Decision in Kyocera Corp. and Motorola Mobility, Inc. v. Softview, LLC, IPR2013-00007 and IPR2013-00256, involving US Pat. No. 7,461,353, wherein the Board addressed several types of failed secondary considerations arguments. The ‘353 patent relates to a scalable display of internet content.

Patent Owner made several arguments involving objective indicia of non-obviousness, all of which were rejected as not being linked to the claimed subject matter: First, Patent Owner argued that the praise it received from competitors was evidence of non-obviousness.  The Board disagreed, finding that the praise Patent Owner received from a competitor was not in praise of the ‘353 claimed subject matter or product, but rather in praise of a company-vision speech by Patent Owner’s CEO.  Therefore, there was no nexus between the secondary consideration and the claimed subject matter. Order at 31.

Second, Patent Owner argued that the commercial success of products (iPhone and Android devices) incorporating the claimed subject matter of the ‘353 patent is evidence of non-obviousness.  However, Patent Owner was unable to prove that commercial success of the iPhone and Android devices which incorporated the claimed matter of the ‘353 patent was a result of the presence of the ‘353 invention in devices (a requirement for a valid commercial success non-obviousness argument).  In fact, expert testimony supported the idea that numerous factors contribute to the commercial success of iPhone and Android devices, not just one factor such as the ‘353 claimed subject matter. Therefore, the Board again found no nexus between the secondary consideration and the claimed subject matter. Id. at 32.

With Patent Owner’s arguments for secondary indicia of non-obviousness failing on lack of nexus to the claimed subject matter, the Board found all challenged claims of the ‘353 patent to be unpatentable.