Federal Circuit Affirms The PTAB's Decision Finding The Patent Claims Unpatentable As Obvious Where The Patent Owner Did Not Demonstrate That The Board Violated The Administrative Procedure Act Requirements Of Notice And An Opportunity To Respond - Patent

NOVARTIS AG, MITSUBISHI PHARMA CORP., v. TORRENT PHARM. LTD.: April 12, 2017. Before Taranto, Chen, and Stoll. (precedential).

Takeaways:

The Patent Trial and Appeal Board did not violate the requirements of notice and an opportunity to respond found in the Administrative Procedure Act when it relied on a prior art reference in the final written decision because the discussion of the reference in the final written decision was not inconsistent with its review of the reference in the institution decision.
In order for objective indicia evidence to be accorded substantial weight by the PTAB, a nexus must exist between the evidence and the merits of the claimed invention. If commercial success is due to an element in the prior art, there is no nexus. If the feature that creates the commercial success was known in the prior art, the success of the claimed invention is not probative.

Procedural Posture:

Novartis AG appealed the Final Written Decision of the Patent Trial and Appeal Board in two consolidated inter partes review proceedings finding all of the patent claims unpatentable as obvious. CAFC affirmed.

Synopsis:

APA Due Process: The Administrative Procedure Act imposes certain procedural requirements on agencies, including that in an inter partes review proceeding, the PTAB must provide the patent owner with timely notice of "the matters of fact and law asserted," and an opportunity to submit facts and argument. Novartis argued that the Board violated these requirements of notice and an opportunity to respond when the Board used the Sakai reference as part of its motivation to combine analysis in the Final Written Decision. Novartis argued that the Board ruled Sakai entirely out of the case in the Institution Decision and that Novartis consequently relied on that ruling and submitted a "vastly different" record than it would have if it had known Sakai was still a live issue. The CAFC disagreed with Novartis that the Board ruled Sakai out of the case in the Institution Decision, finding instead that the Board did not find that Sakai anticipated, but did find it relevant to one of skill in the art in deciding which excipients to use in formulating a solid oral dosage form of fingolimod. The CAFC found that the Board's discussion of Sakai in the Final Written Decision was not inconsistent with its review of Sakai in the Institution Decision. In addition, the CAFC found that the petitioners repeatedly referenced Sakai as evidence that the claims would have been obvious to a person skilled in the art, and that both sides' experts went into significant detail in their post-institution declarations discussing Sakai and its applicability to the motivation to combine inquiry. The Board rejected Novartis' APA challenge, and found no violation of the APA with respect to the Board's discussion of Sakai in the Final Written Decision.
Motivation to Combine: Novartis argued that the Board erred in its motivation to combine analysis because it failed to read the prior art as a whole and overlooked critical evidence of mannitol's known disadvantages as an excipient for solid compositions. Novartis argued that it pointed out mannitol's negative properties, and that because the Board did not expressly state that it was weighing the negatives against mannitol's positives, the Board's motivation to combine analysis was legally flawed. The CAFC found that the Board expressly addressed one of mannitol's negative properties in the Final Written Decision. Moreover, the CAFC found that the Board's consideration of mannitol's negative properties in the Final Written Decision was commensurate with Novartis' presentation of those issues to the Board in its Patent Owner Response. Thus, the CAFC was not persuaded that Novartis presented its arguments against the use of mannitol in such a way that it would be appropriate to find fault in the Board's treatment of those arguments in the Final Written Decision. The CAFC concluded that substantial evidence supported the Board's finding that, despite mannitol's potentially negative characteristics, it was nevertheless a valid consideration and one skilled in the art would have been motivated to combine mannitol with fingolimod as claimed.
Unexpected Results / Waiver: Novartis argued that the Board erred when it grouped several dependent claims with their independent claims when considering Novartis' unexpected results evidence. The CAFC noted that the argument Novartis raised with the Board during the IPR (that the combination of fingolimod and mannitol stabilized low dose compositions) was different than Novartis' characterization of that argument on appeal. The CAFC found that during the IPR Novartis focused its arguments on the mere combination of fingolimod and mannitol, without regard to any dosage amount. Moreover, Novartis conceded at oral argument that the focus of its unexpected results argument was that fingolimod was unexpectedly stable across the entire dosage range. The CAFC thus found that Novartis had waived the argument.
Nexus: Novartis argued that the Board erred as a matter of law in its analysis of the "nexus" requirement with respect to the objective evidence of nonobviousness. Novartis argued that, as a matter of law, a feature that is known in the art but not actually available to the market, i.e. in commerce, cannot be used to disprove Novartis' attempts to establish a nexus based on that claimed feature. The CAFC disagreed, finding that in evaluating whether the requisite nexus exists, the identified objective indicia must be directed to what was not known in the prior art, which may be the novel combination or arrangement of known individual elements. Novartis' nexus argument for its objective indicia evidence was based solely on the premise that Gilenya was the first commercially-available solid oral multiple sclerosis treatment. The Board found evidence that a prior art reference suggested treating multiple sclerosis using a solid oral form of fingolimod. The CAFC found that the fact that Gilenya was the first to receive FDA approval for commercial marketing did not overcome the fact that solid multiple sclerosis compositions were already known. The CAFC agreed with the Board that Novartis' proffered evidence is not probative of the nonobviousness inquiry.

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