On Monday, April 4, 2017, the Federal Circuit issued a precedential decision demonstrating how the differing burdens of proof in district court litigation and inter partes review proceedings can permissibly lead to inconsistent validity determinations.
In Novartis AG v. Noven Pharms. Inc., No. 2016-1678, slip op. (Fed. Cir. Apr. 4, 2017), the Federal Circuit affirmed two inter partes review decisions finding the patents at issue unpatentable as obvious. Id. at 2-3. The patents had been the subject of prior district court litigation, and had been found nonobvious by both the district court and the Federal Circuit. Id. at 5-6. On appeal, the patentee urged that it was fundamental legal error for the Patent Trial and Appeal Board to reach a different conclusion based on substantively the same arguments and evidence. Id.
The Federal Circuit disagreed, reasoning that the patentee’s arguments failed on “factual and legal grounds.” Id. at 6. Factually, the Federal Circuit found that the record “differed from that in the prior litigation,” noting that the Board found the petitioner presented additional prior art and testimonial evidence that was not raised in the district court litigation. Id. at 6-7. Significantly, the Federal Circuit went on to conclude that “even if the record were the same,” the Board “properly may reach a different conclusion based on the same evidence.” Id. at 7-8.
This conclusion, the Federal Circuit noted, comported with the Supreme Court’s decision in Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016), which held that:
[a] district court may find a patent claim to be valid, and the [USPTO] may later cancel that claim in its own review. . . . This possibility, however, has long been present in our patent system, which provides different tracks—one in the [USPTO] and one in the courts—for the review and adjudication of patent claims. As we have explained . . . , inter partes review imposes a different burden of proof on the challenger. These different evidentiary burdens mean that the possibility of inconsistent results is inherent to Congress’[s] regulatory design.
Novartis, slip op. at 8 (quoting Cuozzo, 136 S. Ct. at 2146). The Federal Circuit then further clarified a prior statement in In re Baxter International, Inc., 678 F.3d 1357 (Fed. Cir. 2012), in which it had commented that the USPTO “ideally should not arrive at a different conclusion” when faced with the same evidence and argument as a district court. Novartis, slip op. at 8 (quoting Baxter, 678 F.3d at 1365). According to the Federal Circuit in Novartis, that comment merely connoted an “aspiration”—“not a mandate.” Id.
This case serves as a good example of how the “possibility of inconsistent results . . . inherent to Congress’ regulatory design” can play out in real life, and it demonstrates that prior success in district court litigation may not always be a reliable indicator of a patentee’s chances in inter partes review proceedings.
Other Notable Decisions — Week of April 7, 2017
The Medicines Co. v. Maylan, Inc., Nos. 2015-1113, 2015-1151, 2015-1181 (Fed. Cir. Apr. 6, 2017) (precedential): In Medicines Co., the Federal Circuit affirmed a district court’s summary judgment of non-infringement with respect to one patent and reversed the district court’s judgment of infringement with respect to another. The Federal Circuit rejected the patentee’s claim construction arguments, reasoning that they would be “unworkable” in that “proof of infringement would necessitate forward-looking assessments” of whether certain limitations would be met (e.g., an accused infringer could not determine if it was infringing until after the infringement occurred). It also concluded that the patentee’s interpretations were “not permissible” to the extent they would “claim all solutions” to an identified problem without “describing the entire range of solutions to that problem.” Although the claim language did not expressly recite the requirements in dispute, the Federal Circuit found that the specification’s only disclosed embodiment was “highly indicative of the scope of the claims” and adopted a narrowing construction based on that embodiment as “the construction that stays true to the claim language and most naturally aligns with the patent’s description of the invention.”
Wasica Finance GmbH v. Continental Automotive Sys., Inc., No. 2015-2078 (Fed. Cir. Apr. 4, 2017) (precedential): In Wasica, the Federal Circuit largely affirmed the unpatentability and patentability determinations of the Patent Trial and Appeal Board in two related inter partes review proceedings. The patentee only challenged the unpatentability determinations based on the Board’s claim constructions; it did not dispute that the claims at issue were unpatentable under the Board’s constructions. Because the Federal Circuit concluded that the Board’s did not err in construing the claims at issue, the Federal Circuit upheld the unpatentability findings. With respect to the patentability determinations, the Federal Circuit reversed with respect to one claim based on claim construction grounds. But it found substantial evidence supported the Board’s findings with respect to the remaining claims, agreeing with the Board that it was “unclear” whether the prior art disclosed a particular claim limitation and emphasizing that “[a]mbiguous references do not anticipate a claim.”