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Federal Circuit Flash Digest: Cases in Brief

Commentary Federal Circuit Comment First Amendment

PTAB not Bound by Federal Court Decisions on Validity of Patents

Last week in Novartis AG v. Noven Pharms., Inc., Nos. 2016-1678, 2016-1679 (Fed. Cir. Apr. 4, 2017), the Federal Circuit confirmed precedent in Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016) hosted by, that as a matter of law, the Patent Trial and Appeal Board ("PTAB") may reach a different conclusion than federal courts regarding the validity of a particular patent. PTAB concluded on inter partes review ("IPR") that two of the claims regarding Novartis' Alzheimer-medication preserving compounds were invalid due to obviousness, as multiple prior art references disclosed the compound and its usefulness at preserving other chemicals. Id. at 4. Novartis appealed, arguing that the validity had been established by two federal courts, the Federal Circuit and the District Court for the District of Delaware. Id. at 5–6. However, as Robert Schaffer and Joseph Robinson of IPWatchdog explain, the Federal Circuit held that the PTAB may, as a matter of law, reach a different conclusion on validity, even if the records were identical because PTAB uses a “preponderance of the evidence” standard, 35 U.S.C. § 316(e), whereas federal courts use a “clear and convincing” standard. David Crouch of Patently-O argues that the verdict represents a “failure of system design[,]” as parties who have lost on a validity challenge should not be able to relitigate the claim.

Federal Circuit Facilitates Sales of Generic Drug by Narrowly Construing Pharma Patent to Avoid Invalidity

Reversing a district court decision, the Federal Circuit adopted a canon of construction in Meds. Co. v. Mylan, Inc., Nos. 2015-1113, 2015-1151, 2015-1181 (Fed. Cir. Apr. 6, 2017), last week to narrowly construe certain patent claims to avoid invalidating two drug patents. The Medicines Company (“MedCo”) holds two patents on a blood-clotting prevention drug that disclose, but do not expressly require or claim, an “efficient mixing” process for ensuring the batch has a consistent pH at the required level. Id. at 3–4. In MedCo’s infringement case against Mylan, the District Court concluded that both patents were valid, and only one required efficient mixing; consequently Mylan, which did not perform the mixing, violated the remaining patent. Id. at 2–4. The Federal Circuit recognized that if certain claims required pH consistency only in individual batches of the drug, the patent would be invalid under prior art. Id. at 23–24. Consequently, the court read the claim to require consistency across batching through the disclosed “efficient mixing” process, wiping out both Mylan’s invalidity claims and MedCo’s infringement claims. Dennis Crouch of Patently-O believes the de novo  review played a significant role in the court’s ability to reach this conclusion and that the decision will “clear the way for Mylan’s generic launch.”

Federal Circuit Reverses its Earlier Decision to Enjoin a Non-Party in Asetek Patent Case

Last month, the Federal Circuit decided to adjust its original order in Asetek Danmark v. CMI USA, Inc., Nos. 2016-1026, 2016-1183 (Fed. Cir. Dec. 6, 2016), which maintained an injunction against a non-party, Taiwanese company called Cooler Master Co., Ltd., to be decided by the lower court.  Asetek, which holds several patents on computer fans, won the jury trial and was granted an injunction against infringer CMI, as well as Cooler Master Co., Ltd., which was no longer a party in the suit. Id. at 2. On appeal, the Federal Circuit originally upheld much of the decision, and though the Court remanded on the injunction, it remained active against Cooler Master Co., Ltd. until reviewed by the lower court, id. at 28, a peculiarity pointed out by the Chief Judge Prost in his dissent in the original opinion, id. at 2 (Prost, C.J., dissenting).  The new opinion vacates the offending injunction. Dennis Crouch of Patently-O believes the Federal Circuit reached the correct decision but suggests that this decision rewards companies like CMI who deliberately alter their corporate structure to avoid liability and may “substantially raise the costs of enforcement without providing any social benefit.”