In re Kao: Federal Circuit Provides Guidance for Obviousness Determinations by the PTO and the Board of Patent Appeals and Interferences

In re Kao, 2010-1307 (Fed. Cir. May 13, 2011)

Slip Opinion

The Federal Circuit vacated and remanded a decision of the Board of Patent Appeals and Interferences (“Board”), which had rejected patent application 11/680,432 (“the ‘432 application”) for obviousness. The Federal Circuit also affirmed findings of obviousness by the Board regarding patent applications 12/167,859 (“the ‘859 application”) and11/766,740 (the ‘740 application”). All of the patent applications at issue claimed controlled release drug formulations containing the opioid pain reliever oxymorphone.

In vacating and remanding the Board’s decision regarding the ‘432 application, the Federal Circuit held that the Board lacked “substantial evidence” in its determination that it would have been obvious for someone skilled in the art to combine the claims of a prior art reference with the controlled release oxymorphone formulation. In addition, the Board did not properly analyze the evidence of secondary considerations of nonobviousness that were presented by the patent holder. The Court agreed with the Board that both the ‘859 and the ‘740 applications were obvious in view of certain prior art references.

PatentlyO provides an overview of the case. Patent Docs provides detailed commentary and analysis.

Endo Pharmaceuticals, Inc. (“Endo”) is the assignee of three patent applications, ‘432, ‘859, and ‘740, that claim inventions relating to controlled release drug formulations containing the opioid oxymorphone. While immediate release opioid drugs are rapidly metabolized by the liver and therefore must be administered every four to six hours, controlled release drug formulations can relieve pain for between twelve and twenty-four hours. The Board affirmed the PTO examiner’s rejection of all three patents as obvious in view of Patent Cooperation Treaty Publication No. WO 01/08661 to Maloney (“Maloney”). Although Maloney disclosed an opioid formulation containing oxycodone, rather than oxymorphone, the examiner and the Board determined that it would have been obvious to one having ordinary skill in the art to replace oxycodone with oxymorphone because Maloney identified oxymorphone as a preferred opioid for use in his invention. While Endo had overcome a prima facie case of obviousness by presenting evidence of commercial success and unexpected results, the Board concluded that the evidence was insufficient to overcome the rejections.

The Federal Circuit disagreed with the Board’s rejection of the ‘432 patent. In vacating and remanding the Board’s decision, the Federal Circuit held that the Board’s findings were not supported by “substantial evidence,” i.e., “such evidence as a reasonable mind might accept as adequate to support a conclusion.” Kao at 15. The Federal Circuit found a lack of factual support in the record for the Board’s decision that Endo’s claimed rates of drug dissolution overlap with the dissolution rate disclosed in Maloney. The Court remanded the case for the Board to decide the importance – or lack thereof – of the claimed range of dissolution rates to the nonobviousness of the invention. The Court reminded the Board that it “should neither rely upon conclusory reasoning nor its own conjecture in assessing the weight of the evidence.” Kao at 16.

The Federal Circuit also remanded because the Board did not properly consider secondary considerations of nonobviousness that were presented by Endo. Relying on precedent, the Court stated that objective evidence of secondary considerations can only be given substantial weight when there is a nexus between the evidence and the merits of what is both claimed and novel in the claim. On remand, the Board is charged with determining whether there is a nexus between the evidence of unexpected results and commercial success and aspects of the invention not already in the prior art.

The Federal Circuit affirmed the Board’s rejection of the ‘859 and ‘740 applications, holding that “substantial evidence” supported the Board’s findings of obviousness.

This case demonstrates how the Federal Circuit is applying the obviousness doctrine set forth by the Supreme Court in KSR International v. Teleflex, 548 U.S 902 (2006). The Federal Circuit reiterated that obviousness determinations by the PTO and the Board of Patent Appeals and Interferences must be supported by substantial evidence and cannot rely on conclusory reasoning or conjecture. In addition, this case serves to remind the PTO and the Board that predictability is important in deciding whether or not a claim is obvious.