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Fresh From the Bench: Recent Patent Cases From the Federal Circuit

April 16, 2014

Overview

Trebro – The Circuit reversed the denial of a motion for preliminary injunction, holding that an infringement finding was "more likely than not," that defendant had "not raised a substantial question as to validity," and that the patentee had demonstrated irreparable harm even though it did not practice the patented invention.

Hoffman-La Roche – In asplit decision, the court affirmed a summary judgment determination of invalidity of patents directed to Roche's popular Boniva®‎ osteoporosis drug, the panel members vehemently disagreeing on the teachings of the prior art and the proper analysis for the "obvious to try" issue.

Trebro Manufacturing, Inc. v. FireFly Equipment, LLC, Fed. Cir. Case ‎‎2013-1437 (4/9/2014)

Chief Judge Rader, writing for a unanimous panel, found that the district ‎court abused its discretion in denying Trebro's motion for preliminary ‎injunction ‎

The technology at issue involves sod harvesters – vehicles having knives ‎that cut sod pieces from the ground, conveyor belts to transport the pieces, ‎and mechanisms to stack them on a pallet. Trebro filed a motion for ‎preliminary injunction shortly after filing suit. The district court denied the motion, finding there was ‎no likelihood of success on the merits because the accused harvester did ‎not meet the "horizontal conveyor moveable in a vertical direction" limitation ‎of the claims. The court also found a substantial question as to validity. Finally, no irreparable harm was found, the court holding that evidence of alleged lost ‎customers and theoretical loss of market share could be compensated ‎by an award of lost profits or reasonable royalty. ‎

The panel first described the burden a preliminary injunction movant must carry:‎ "A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is ‎likely to suffer irreparable harm in the absence of ‎preliminary relief, that the balance of equities tips in his ‎favor, and that an injunction is in the public interest." ‎Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 ‎‎(2009). To prove a likelihood of success on the merits, a patentee must prove that ‎success in establishing ‎infringement is "more likely than not." An accused infringer can defeat such a motion by demonstrating "a ‎substantial question of validity or infringement."

The parties' infringement dispute focuses on whether the FireFly unit ‎practices the last limitation of the claim 1: "wherein said horizontal ‎conveyor is moveable in a vertical direction toward said sod carrier." ‎The district court did not engage in explicit claim construction, but concluded that ‎claim 1 required a "bed frame." The panel first noted that nothing in ‎claim 1 mentions or implies that a "bed frame" must be part of, or ‎otherwise attached to, the horizontal conveyor. Second, ‎imposing the use of a bed frame in claim 1 improperly imports a ‎limitation into the claim from a preferred embodiment. Finally, "and convincingly," claim 10 (which depends from claims 1 ‎and 9) is explicitly limited to the "bed frame" embodiment ‎envisioned by the district court. To read the bed frame limitation ‎from claim ‎10 into claim 1 renders the term redundant and ‎offends principles of claim differentiation. Applying the proper claim construction, the panel held that Trebro had established that it is "more likely than not" to succeed on infringement. The district court therefore abused its discretion in finding to the contrary.

Even if a patentee shows the likelihood of proving infringement, the accused infringer can defeat the likelihood of success by raising a substantial question as to validity. The panel noted its appreciation that the district court has a short timeframe for consideration of a preliminary injunction motion, but the court made its invalidity findings relying on conveyors that were not in fact prior art. The court therefore abused its discretion in concluding there was no likelihood of success on the merits on the basis of validity.

The district court also abused its discretion in determining that Trebro did not show a likelihood of irreparable harm. Specifically, Trebro presented testimony that Trebro would lose market share and have to lay off employees. The sod harvester market is a tiny market with only three players—Trebro, FireFly, and a third company licensed under the patent in suit. Trebro sells roughly eight sod harvesters per year. The opportunities to attract customers and make sales are thus scarce in this tight market. Every sale to FireFly is essentially a lost sale to Trebro. This lost sale also translates into a lost customer: "Once a farmer buys a sod harvester, they're not going to replace it for many years in the future." Given the realities of this business, the record shows that an infringing product in this market inflicts a real non-speculative harm on Trebro, a harm that would not be reparable through a damage award.

Finally, according to the panel, the fact that Trebro does not presently practice the patent does not detract from its likely irreparable harm. To the contrary, Trebro and FireFly are direct competitors selling competing products in this market. Thus, district court abused its discretion in denying that there was a likelihood of irreparable harm.

Because it found the first two elements of the Winter test for preliminary injunctions unmet, the district court did not consider the final two elements. Rather than deciding these issues in the first instance on appeal— whether the "balance of equities tips in Trebro's favor, and whether an injunction is in the public interest"— the panel vacated the order and remanded the case for further proceedings in light of its opinion. However, the panel briefly reviewed the evidence as to the balance of equities and the public interest, and noted that it appeared Trebro should prevail on these factors as well.

The panel's analysis regarding irreparable injury is interesting. The defendant had done well in competing for sales and therefore would have been able to satisfy any monetary judgment. However, the Circuit found to be critical the fact that very few machines were sold each year, and that once a machine was sold, that customer was likely to be lost to FireFly forever. This may be true to a certain extent in every case. It shows the importance of statistics in briefing irreparable injury, on the rate at which customers buying from the accused infringer return to purchase again from the patentee.

Hoffman-La Roche Inc. and Genentech, Inc. v. Orchid Chemicals & Pharmaceuticals Ltd. et al., Fed. Cir. Cases 2013-1128, 1161-1164 (4/11/2014)

Here a divided panel affirmed the summary judgment of invalidity of two patents directed to methods of treating osteoporosis through the once monthly administration of ibandronate, one of a class of compounds known as bisphosphonates. The defendants are generic drug manufacturers who submitted Abbreviated New ‎Drug Applications ("ANDAs") to the FDA for approval to engage in the manufacture ‎and sale of generic versions of Boniva® prior to the expiration of Roche's patents. ‎Roche sued the defendants based on the ANDA filings and moved for a ‎preliminary injunction. The district court denied the motion, holding that Roche ‎had failed to prove it was likely to succeed in defeating the defendants' obviousness ‎challenge. While the appeal of the preliminary injunction decision was pending, which the Circuit affirmed in an earlier ruling, ‎the district court granted defendants' motion for summary judgment ‎of invalidity as to the two patents at issue.‎

‎Osteoporosis is a disease characterized by abnormal bone reabsorption, the biological process by which bone is broken down, causes decreased bone strength and an increased risk of fractures. Bisphosphonates are generally known to have a low bioavailability when administered orally, i.e., only a small fraction of a given dose is absorbed into the blood. Additionally, oral administration of bisphosphonates can result in adverse esophageal and gastrointestinal side effects. As a result of the side effects and to improve the bioavailability of the drug, patients taking bisphosphonates must adhere to a dosing regimen that requires a bisphosphonate tablet to be taken in a fasting state at least 30 minutes before eating or drinking. In the past, the inconvenience of that regimen created problems of patient compliance. Researchers in the field believed that less-frequent dosing would result in patients continuing the treatment for the long term, which is required for bisphosphonate treatments to be successful.

The issue in this case is whether it would have been obvious at the time of invention to select a once monthly oral dosing regimen of ibandronate to treat osteoporosis and to set that dose at 150 mg.

As to the ‎frequency of dosing, the majority found that there was at least a reasonable expectation that once monthly ‎dosing ‎of ibandronate could successfully ‎treat osteoporosis and reduce fracture ‎risk. A relatively infrequent dosing schedule has long been viewed as a ‎potential solution to the problem of patient compliance stemming from the ‎inconvenience of oral bisphosphonate regimens. According to the majority, conclusive proof of efficacy is not necessary to show ‎obviousness. The prior ‎art established at least a reasonable expectation that once monthly ‎dosing ‎of ibandronate could successfully treat osteoporosis and reduce fracture ‎risk

As to the amount of ‎the ‎monthly dose, the panel found that the combination of several prior art ‎references ‎suggested a dosage level of about 150 mg per month, or at ‎least indicated that a ‎monthly dose of 150 mg was obvious to try.‎ A person skilled in the art looking to scale to a monthly dose of oral ibandronate ‎from a known-effective daily dose was faced with a very limited set of ‎possibilities, and all the law requires is a reasonable expectation of success. ‎

The majority then reviewed the ‎objective indicia ‎of nonobviousness and concluded that Roche's ‎evidence does not rise to the level of a mere scintilla, and it is not ‎sufficient ‎to defeat the motion for summary judgment." ‎

Roche also contended that findings by the FDA taught away from further development of the 5 mg daily dose (and its total-dose equivalents) because the FDA approved 2.5 mg daily dose of ibandronate instead of a 5 mg daily dose. The panel disagreed, concluding that the FDA never made any findings contrary to the 5 mg daily dose, because it was never asked to approve that dose. Instead, in approving the 2.5 mg daily dose, the FDA merely concluded that the 2.5 mg daily dose of ibandronate has the most favorable benefit – risk ratio and is the most appropriate dose for the prevention and treatment of postmenopausal osteoporosis.

Roche also contended that there are disputed issues of fact as to whether it would have been obvious to administer once monthly doses of 150 mg in light of alleged safety concerns about the adverse gastrointestinal effects of ibandronate and other bisphosphonates. The panel reviewed the prior art allegedly exhibiting safety concerns and concluded that there was no genuine issue of fact concerning whether the prior art taught away from the 150 mg dose based on safety concerns.

Finally, Roche argued that the claimed invention achieved an unexpected result but the majority rejected that as well. While the evidence would support a finding of superior efficacy of the 150 mg monthly dose in raising BMD levels, as compared to a 2.5 mg daily dose, that improved efficacy does not rebut the strong showing that the prior art disclosed monthly dosing and that there was a reason to set that dose at 150 mg.

In a spirited dissent, Judge Newman determined that invalidation of these patents invokes judicial hindsight to reconstruct the patented subject matter. The majority's ruling violates the principles of Graham v. John Deere Co., 383 U.S. 1 (1966) as to the objective considerations and the guidance of KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 421 (2007), holding that the standard of obvious-to-try requires a limited number of specific alternatives offering a likelihood of success in light of the prior art and common sense.

According to Judge Newman, Roche's once-a-month Boniva® ibandronate medication required twelve years of research and clinical testing and ‎evaluation to demonstrate its efficacy when dosed once a month and its ‎safety at this high monthly dosage. Nowhere amid the many studies of bisphosphonate osteoporosis treatments did any reference show or suggest the Boniva® combination of a single 150 mg dose and once-a-month administration. Nonetheless, my colleagues declare this treatment obvious to them, even though 150 mg is thirty times the daily dose of 5 mg, and the FDA refused to approve the 5 mg dose due to its toxic side effects. Surely this leads away from the obviousness of a single dose thirty times larger.

These opinions present a good example of how important it is to draw the correct panel. It is hard to imagine a more divergent analysis of the prior art and the "obvious to try" issue.

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