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

October 27, 2017

Overview

In Merck v. Hospira, the only precedential case decided this week, a majority of the panel affirms a determination of obviousness, noting that despite the objective indicia supporting patentability, the claimed process was substantially described in the prior art and simply required improvement through the use of established experimental variations.

Thanks to one of my newest colleagues, Steve Sullivan of our growing Mountain View office, for his help with this week’s report.

Pete Heuser

Merck Sharp & Dohme Corp. v. Hospira, Fed. Cir. Case 2017-1115 (October 26, 2017)

In a split decision, the Circuit affirms a district court bench trial ruling that a Merck patent directed to a process for preparing an antibiotic compound was properly determined to be invalid as obvious, since the claimed process was substantially described in the prior art and simply required improvement through the use of established variations.

Hospira filed an ANDA seeking approval to manufacture and sell a generic form of Merck’s Invanz® antibiotic drug. In response, Merck sued Hospira for infringement of its ’323 and ’150 patents. The district court concluded that the asserted claims of the ’323 patent were not invalid and were infringed, while the claims of the ’150 patent would also have been infringed but were invalid as being obvious over the ’323 patent in view of other prior art. Merck appealed the invalidity ruling as to the ’150 patent but Hospira did not appeal the infringement ruling as to the ’323 patent because that patent was soon expiring.

A majority of the panel rejects Merck’s argument that the district court erred in invoking “common sense,” and rules that the district court did not err in finding that the claimed process would have been obvious. While the claimed temperature range was not explicitly taught in the prior art, it was understood that degradation is minimized at low temperatures, so one of ordinary skill would have wanted to keep the temperature as low as possible without freezing. Those findings are supported by substantial record evidence and, according to the majority, it was reasonable for the district court to deduce that the order and detail of the steps, if not already known, would have been discovered by routine experimentation while implementing known principles.

The most interesting part of the opinion deals with the objective indicia of nonobviousness. The district court found that Merck’s Invanz® product achieved dramatic commercial success and that such success was sufficiently linked to the asserted claims. However, the district court found that this evidence was weakened by the blocking effect of the ’820 patent, which is directed to ertapenem, the active ingredient, itself. According to the court, the commercial success was not due to the qualities of the antibiotic, but instead was due to the fact that Merck had another patent that precluded competition from others.

In the Circuit’s opinion, the majority notes that there is some Circuit precedence for considering evidence of commercial success to be weak where there is another blocking patent, but that multiple patents do not necessarily detract from evidence of commercial success that speaks to “the merits of the invention.” The majority opines that it is more significant that the claimed process is substantially described in the prior art and required only improvement by the use of established variations.

The district court also found that there was evidence of copying by others because Hospira tried five alternative formulations in an attempt to avoid copying the ’150 patent, but ultimately had to rely on the accused process. Hospira argued on appeal that evidence of copying is not compelling in the context of ANDA cases because the Hatch-Waxman Act requires generic drug manufacturers to copy the approved drug. The majority rejects that argument, noting that the Act does not require the generic manufacturer to copy the NDA holder’s process of manufacturing the drug. In any event, as with the evidence of commercial success, the majority agrees with the district court that the evidence of copying could not overcome the weight of the competing evidence of obviousness of the claimed process.

In her dissent, Judge Newman argues that the majority in this case and in some other recent Circuit cases has ignored the dictates of Graham v. Deere and KSR, which require that the objective indicia of nonobviousness must play a critical role in the obviousness analysis. These indicia are not just a cumulative or confirmatory part of the obviousness calculus but constitute independent evidence of nonobviousness, and are often the most probative and cogent evidence in the record. According to Judge Newman, the objective indicia are to be considered as part of all the evidence, not just when the decision maker remains in doubt after reviewing the art.

Read the full opinion

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