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

January 13, 2017

Overview

This week the Circuit affirms a finding of induced infringement as to generic drug companies who wanted to come out with their own versions of Lilly’s highly successful Alimta® cancer drug. In a second case, the panel rules that Phigenix, which claims it would have greater success licensing its own patent if an ImmunoGen patent is invalidated, has no standing to appeal its unsuccessful IPR since Phigenix does not manufacture infringing product.

Pete

Eli Lilly and Company v. Teva Parenteral Medicines, Inc., Fed. Cir. Case 2015-2067 (January 12, 2017)

The Circuit finds that Teva, Barr and other generic drug manufacturers would infringe, either directly or by inducement, Eli Lilly’s patent covering its Alimta® chemotherapy drug (comprised of pemetrexed disodium “pemtrexed”) designed to treat lung cancer and mesothelioma, when used in combination with folic acid and vitamin B12. This case provides an interesting application of Akamai because no single actor would perform all of the steps of the method claims: physicians administer B12 and pemetrexed, while patients self-administer folic acid under the guidance of physicians. The history of Akamai was described in our recent discussion of the Medgraph v. Medtronic case, which wound its way through the courts during this litigation.

There were two bench trials in the present case, the first finding that the asserted claims were not invalid, and the second finding that defendants would induce infringement if they introduced their generics. In the second trial, the district court applied the rulings in the Akamai V en banc decision, which held that, ‎in addition to an agency or contractual relationship, induced infringement may be found where an alleged infringer “conditions participation in an activity on receipt of a benefit ‎upon ‎performance of a step or steps of a patented method and establishes the manner and timing of ‎that ‎performance.”

The panel cites Akamai V for the proposition that where, as here, no single actor performs all steps of a method claim, direct infringement only occurs if “the acts of one are attributable to the other such that a single entity is responsible for the infringement.” The performance of method steps is attributable to a single entity in two types of circumstances: when that entity “directs or controls” others’ performance, or when the actors “form a joint enterprise,” which is not alleged here. Therefore, the issue here is whether physicians direct or control their patients’ administration of folic acid.

In Akamai V, the Circuit held that directing or controlling others’ performance includes circumstances in which an actor: (1) “conditions participation in an activity or receipt of a benefit” upon others’ performance of one or more steps of a patented method, and (2) “establishes the manner or timing of that performance.” The district court’s finding here that physicians “condition” pemetrexed treatment on the administration of folic acid is supported by the evidence. Defendants argue that mere guidance or instruction is insufficient to show “conditioning” under Akamai V, but the evidence regarding the critical nature of folic acid pretreatment and physicians’ practices supports a finding that physicians cross the line from merely guiding or instructing patients to take folic acid to conditioning pemetrexed treatment on their administration of folic acid. The panel also rejects defendants’ argument that an actor can only condition the performance of a step by imposing a legal obligation to do so, by interposing that step as an unavoidable technological prerequisite to participation, or, as in Akamai V, both.

With respect to the second prong—establishing the manner or timing of performance—the panel rejects defendants’ argument that the product labeling “gives patients wide berth to select the dose, the dosage form, and the timing of folic acid self-administration.” The product labeling demonstrates that physicians prescribe a dose of folic acid, specify that patients must ingest the folic acid daily during a particular span of days, and withhold pemetrexed if patients do not follow orders.

The panel concludes its 31 page opinion by rejecting defendants’ arguments that the limitation “vitamin B12” is indefinite, and that the asserted claims are indefinite due to obviousness and obviousness-type double patenting.

Phigenix, Inc. v. Immunogen, Inc., Fed. Cir. Case 2016-1544 (January 9, 2017)

The panel rules that Phigenix has no standing to appeal its unsuccessful IPR, challenging an ImmunoGen patent even though Phigenix contends it would have additional licensing opportunities if the patent is invalidated. Phigenix is a research ‎and licensing entity that ‎does not manufacture any products. ‎

According to the Circuit’s 2014 Consumer Watchdog case involving an appeal from a reexamination proceeding, although Article III standing is not necessary to appear before an administrative agency, an appellant must nevertheless have standing if it seeks review of the agency’s action in federal court. ‎‎Citing the Supreme Court’s recent Spokeo decision, the panel states that the test to determine appellate standing is that an appellant must have ‎(1) suffered an injury in fact, (2) that is fairly traceable to ‎the challenged conduct of the appellee, and (3) that is likely to be redressed by a favorable judicial decision.‎ ‎‎

ImmunoGen exclusively licensed its ’856 patent to Genentech, which markets the breast cancer drug Kadcyla. Phigenix owns the ’534 patent, which, according to Phigenix, covers Kadcyla and, thus, ‎the subject matter claimed in the ’856 patent. Phigenix asserted that it has suffered ‎an actual injury because at least a portion of the licensing revenue that ImmunoGen receives would inure to Phigenix if ‎the ’856 patent were invalidated.‎ The panel rules that Phigenix’s declarations are not adequate because there is no ‎allegation that Phigenix ever licensed the ’534 ‎patent to anyone, much less to entities that have obtained licenses to the ’856 patent. Moreover, Phigenix is not engaged in any activity that ‎would give rise to a possible infringement suit.‎

The panel also rejects Phigenix’s argument that 35 U.S.C. § 141(c) gives it the right to appeal a final Board decision since Congress cannot erase Article III’s standing requirements. ‎‎Finally, while 35 U.S.C. ‎§ 315(e)(1)‎ does create an estoppel, in Consumer Watchdog the Circuit held that a similar estoppel ‎provision in the patent reexamination statute does not constitute an injury in fact. The panel sees no reason to depart from the holding of that case here.

Comment: This case should give pause to a party considering filing an IPR unless it is arguably infringing the patent‎. This might not only concern public interest organizations like Consumer Watchdog, but also investors in competitive companies whose investments might appreciate if a blocking patent is invalidated. Even a company considering entering a field has to be concerned since it may not have the right to appeal an adverse ruling, even though it would be estopped from ‎challenging the patent in the future.

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